Exhibit 10(z)(5)
DEED OF HYPOTHEC
ON THE UNIVERSALITY OF MOVABLE PROPERTY
BETWEEN: XXXXXXXX, INC., a Delaware corporation, having its head office at
0000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxx, 00000, X.X.X.
(the "GRANTOR")
AND: UNION BANK OF CALIFORNIA, N.A., a national banking association under
the federal laws of the United States, having an office at 000 X
Xxxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx, 00000-0000, U.S.A.
(Union Bank of California, N.A., acting for itself and as agent and
solidary creditor for the benefit of the Lenders under the
hereinafter defined Credit Agreement hereinafter referred to as the
"AGENT")
WHO HAVE DECLARED AS FOLLOWS:
WHEREAS the Grantor as Borrower, the financial institutions listed in the
signature pages thereto, as Lenders, and the Agent have been or will be entering
into contemporaneously herewith a revolving/term loan credit agreement
providing, inter alia, for credit facilities in an initial amount not to exceed
US $55,000,000 to be made available thereunder by the Lenders to the Grantor,
subject to the terms and conditions therein set forth (said credit agreement as
same may be amended, restated, supplemented or otherwise modified from time to
time, being hereinafter referred to as the "CREDIT AGREEMENT"); all capitalized
words and expressions used herein shall have the same meaning as ascribed
thereto in the Credit Agreement, unless otherwise defined herein or unless the
context otherwise requires;
WHEREAS the Grantor has agreed to grant a hypothec on the Hypothecated Property
(as such expression is hereinafter defined) in favour of the Agent to secure,
inter alia, the Grantor's obligations to the Lenders and the Agent pursuant to
the Credit Agreement;
WHEREAS pursuant to Section 9.12 of the Credit Agreement, the Agent, on one
hand, and each Lender, respectively, on the other hand, have been or will be
conferred the legal status of solidary creditors of the Loan Parties in respect
of all amounts, liabilities and other obligations owed by each of the Loan
Parties to the Agent and each such Lender, respectively, under the Credit
Agreement and the other Loan Documents, the whole in accordance with Article
1541 of the Civil Code of Quebec;
AND WHEREAS the Agent, as solidary creditor for the benefit of the Lenders, has
the authority to hold any and all Liens created by the Security Agreements or
any other Loan Document on the Facility Collateral, for the payment and
performance of all obligations to the Agent and the Lenders of the Obligated
Parties arising under or in connection with the Credit Agreement and the other
Loan Documents;
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NOW, THEREFORE, THE PARTIES HERETO HAVE AGREED AS FOLLOWS:
1. SECURED OBLIGATIONS
The hypothec granted by this deed secures the performance of the following
obligations (hereinafter collectively called the "OBLIGATIONS"):
1.1 the prompt payment, as and when due and payable, of all amounts in
principal, interest, fees, costs or otherwise now or hereafter owing
by the Grantor to the Agent and the Lenders under the Credit
Agreement or any other Loan Document to which the Grantor is or may
become a party;
1.2 the strict performance and observance by the Grantor of all
agreements, warranties, representations, covenants and conditions of
the Grantor made pursuant to this deed, the Credit Agreement, any
Loan Document to which the Grantor is or may become a party or any
other agreement between the Grantor and the Agent or any Lender all
as now in effect or as hereafter entered into or amended; and
1.3 the prompt payment, as and when due and payable, of all other
amounts now or hereafter owing by the Grantor to the Agent and the
Lenders, including by way of guarantee or indemnity, whether now
existing or hereafter incurred, matured or unmatured, direct,
indirect or contingent, including any extensions and renewals
thereof and including the payment of all amounts payable hereunder
and the legitimate costs that the Agent or any Lender may incur to
recover the obligations secured hereby and to preserve the
Hypothecated Property (as such expression is hereinbelow defined).
2. HYPOTHEC
2.1 Amount of Hypothec
To secure the performance of the Obligations, the Grantor hereby
hypothecates in favour of the Agent the property described in
Section 2.2 hereof for the sum of one hundred thirty seven million
five hundred thousand Canadian dollars (CDN $137,500,000) bearing
interest at the rate of twenty-five percent (25%) per annum from the
date hereof, compounded annually.
2.2 Description of Hypothecated Property
The hypothec charges the universality of all the Grantor's movable
property, present and future, corporeal and incorporeal, of
whatsoever nature and kind and wheresoever situated (hereinafter
collectively called the "HYPOTHECATED PROPERTY"), including, without
limitation, all tools and equipment pertaining to the enterprises of
the Grantor, all claims and customer accounts, all securities, all
patents, trademarks and other intellectual property rights and all
corporeal movables included in the assets of any of the Grantor's
enterprises kept for sale,
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lease or processing in the manufacture or transformation of property
intended for sale, for lease or for use in providing a service.
2.3 Interpretation
The parties hereto acknowledge and confirm as follows:
2.3.1 that the hypothec created on the Hypothecated Property
pursuant to this deed is not and shall not be construed as a
floating hypothec within the meaning of articles 2715 et seq.
of the Civil Code of Quebec;
2.3.2 that the hypothec constituted hereunder will remain in full
force and effect for the full amount stipulated in Section 2.1
hereof until such time' s an express written discharge is
executed by the Agent and delivered to the Grantor. The
hypothec, security and rights hereby created in favour of the
Agent will not be extinguished, reduced, novated or otherwise
affected by any payments made to or amounts received by the
Agent, directly or indirectly, from the Grantor or any other
party or as a result of any insurance indemnities arising from
loss or damage to any of the Hypothecated Property or by
reason of the collection of any claims hypothecated hereunder;
and
2.3.3 that should the Obligations at any time be fully extinguished
without an express discharge of the hypothec created hereunder
having been granted, and should any new Obligations arise, the
security created hereunder will secure such new Obligations in
the same manner and to the same extent as if there had never
occurred an extinction of any of the Obligations and the
Grantor is and shall remain obligated under the provisions
hereof. The Grantor shall be deemed to have obligated itself
for such new Obligations pursuant to the provisions hereof and
the hypothec herein created shall secure such new Obligations
as contemplated by Article 2797 of the Civil Code of Quebec.
3. GRANTOR'S UNDERTAKINGS
3.1 Alienation
Unless the Agent gives its prior written consent or unless otherwise
permitted under the Credit Agreement, the Grantor agrees not to
alienate, lease or otherwise dispose of any of the Hypothecated
Property outside the ordinary course of business of its enterprise.
3.2 Transformation
The Grantor may not, without the Agent's prior written consent,
transform any of the movables forming part of the Hypothecated
Property either by incorporating such movables into an immovable or
by combining or mixing them with other movables so as to form new
property, unless such immovable or new property are
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themselves subject or made subject to the hypothec hereby granted or
unless such transformation is made in the ordinary course of
operating an enterprise of the Grantor that is engaged in the
business of manufacturing or transforming property. In no event,
however, may the Grantor transform any such property where such
transformation would result in the Agent's security or rights
hereunder, including in particular their rank, being diminished.
In the event of any such transformation, even without the Agent's
authorization, the Grantor (who shall not be relieved of the default
resulting from the failure to obtain authorization) shall
immediately inform the Agent of the details of such transformation
and shall in particular provide the Agent with a description of the
property thereby affected, the name and address of the owner of the
property that may result therefrom and the address where such
property is located.
4. PROVISIONS APPLICABLE TO THE HYPOTHEC ON CLAIMS
The following provisions apply to claims owed to the Grantor and
hypothecated in favour of the Agent, including present and future rents
payable under current and future leases affecting all or part of the
Hypothecated Property.
4.1 Collection
Except for those claims consisting of securities pledged to the
Agent, the Grantor shall have authority to collect payments of
interest and repayments of capital made on the claims included in
the Hypothecated Property hypothecated in favour of the Agent
pursuant to this deed, as they fall due. The Agent may withdraw this
authorization by written notice at any time after the occurrence of
and during the continuance of an Event of Default. Notwithstanding
the foregoing, the Agent may at any time after the occurrence and
during the continuance of an Event of Default, take all necessary
steps to set up this hypothec against the debtors of the
hypothecated claims. In such event, the Grantor undertakes to remit
to the Agent, upon request, all titles, documents, registers,
invoices and accounts evidencing the claims or relating thereto,
whatever the nature of their medium and whatever the form in which
they are accessible, whether written, graphic, taped, filmed,
computerized, or other.
Any payment received by the Grantor on account of any hypothecated
claim other than pursuant to the foregoing authorization shall be
received for the Agent's account, shall not entitle the Grantor to
the amounts collected and shall be kept separate from the Grantor's
other property at all times and remitted forthwith by the Grantor to
the Agent without compensation.
Notwithstanding the provisions of Section 3.1 hereof, the Grantor is
not authorized to alienate any claim forming a part of a
universality of claims hypothecated in favour of the Agent without
the latter's prior written consent or as otherwise permitted by the
Credit Agreement.
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4.2 Agent's Rights
The Agent shall not be obliged to exercise its rights to the
hypothecated claims or to ensure their recovery from the debtors,
whether by legal proceedings or otherwise. Should the Agent decide
to collect the hypothecated claims, it shall be at liberty to
negotiate such arrangements as it deems appropriate with the debtors
or third parties, to enter into agreements with them with respect to
the claims and any security securing the claims, and even to waive
the claims and such security, the whole without the Grantor's
consent or intervention, and the Agent shall not thereby incur any
liability toward or be accountable to the Grantor. Unless the
Grantor so requests in writing, the Agent shall not be obliged to
inform the Grantor of any irregularity in the payment of any amounts
due on the claims. Apart from its obligation to remit to the Grantor
any sums collected over and above the amount of the Obligations in
principal, interest and costs, the Agent shall not be accountable to
the Grantor with respect to the status of the collections made or
any transactions and arrangements entered into.
4.3 Information
The Agent may, at its discretion, verify the existence and status of
the claims at any time. The Grantor shall provide the necessary
assistance and information for this purpose and shall take such
action in this respect as the Agent may reasonably request: in
particular, it shall allow the Agent and its agents, upon seven
days' prior notice, so long as no Event of Default shall have
occurred and be continuing, to enter the premises occupied by the
Grantor and to consult the Grantor's accounting books and registers
as well as any document relating to the claims and make copies
thereof.
At any time after the occurrence and during the continuance of an
Event of Default, the Grantor specifically authorizes the Agent to
communicate with any third party in order to obtain or transmit any
personal information and any information relating to the claims and
to the Grantor for the purpose of verifying and collecting the
claims.
Where the hypothec granted by this deed affects a claim that is
itself secured by a registered hypothec, the Grantor shall inform
the Agent accordingly and shall supply all the information that the
Agent may request in this connection.
4.4 Financial Administration Act (Canada)
Where any of the claims are subject to the provisions of the
Financial Administration Act (Canada), the Grantor hereby sells,
assigns and transfers the same absolutely to the Agent so that, upon
a withdrawal of authorization as referred to in Section 4.1 hereof,
the Agent shall be free to complete the formalities required to make
such assignment fully enforceable.
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5. POSSESSION OF PROPERTY
This deed creates a hypothec without delivery.
6. DEFAULT
6.1 Events of Default
The Grantor shall be considered in default upon the occurrence of
any of the following events:
6.1.1 an Event of Default under the Credit Agreement;
6.1.2 should the Grantor default in the performance of the
Obligations or to comply with any of its obligations or
undertakings under this deed;
6.1.3 should the Agent receive from any present or future guarantor
of all "or any of the Obligations a notice purporting to
terminate or limit such guarantor's liability under its
guarantee.
6.2 Effects
Without limiting its right, at any time and at its discretion, to
demand payment of any Obligations payable on demand and without
prejudice to any rights and remedies which it has pursuant to
agreements with the Grantor or at law (in particular with respect to
hypothecated claims), the Agent, upon the occurrence of any of the
events listed in Section 6.1 hereof, may demand immediate and full
payment of the amounts owing on account of the Obligations, which
shall forthwith become due and payable, and exercise, at its
discretion, without restriction and without any prior notice other
than such notices as are required by law, any rights and remedies
which it has pursuant to this deed or at law, including, in
particular, the following hypothecary rights:
- taking of possession for purposes of administration;
- taking in payment;
- sale by the Agent;
- sale by judicial authority.
6.3 Agent's Rights
Irrespective of the particular remedy exercised by the Agent in the
event of the Grantor's default, the following provisions shall apply
in addition to any provisions that may by law apply in the
circumstances, the Grantor expressly agreeing thereto:
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6.3.1 the Grantor undertakes to voluntarily surrender the
Hypothecated Property to the Agent upon request, and agrees
not to put any impediment in the way of, but rather to
facilitate by all legal means, the exercise of the powers
hereby granted to the Agent and not to interfere therewith; in
addition, the Agent may, but shall not be obliged to, conduct
a verification of the Hypothecated Property, assemble or move
any of such property or take proceedings or do or take any act
or action in relation to the Hypothecated Property that it may
deem advisable, the whole at the Grantor's expense;
6.3.2 the Agent may, in addition, at its discretion and at the
Grantor's expense, whether after the Grantor has surrendered
the Hypothecated Property and until the Agent has exercised
the hypothecary right which it intends to exercise, or whether
after the Agent has chosen to take possession of the
Hypothecated Property for purposes of administration, use or
operate all or any part of the Hypothecated Property (without
being obliged to make such property productive), change the
destination of or alienate such property by onerous title
(except for Hypothecated Property of little value) or charge
such property with a hypothec or other real right, enter into
or renew any leases for such amounts and on such terms and
conditions as the Agent deems appropriate, make any repairs or
renovations or undertake or complete any work;
6.3.3 the Agent may, in the exercise of its rights, renounce any
right belonging to the Grantor, even where no valuable
consideration is received;
6.3.4 the Agent shall not be bound to make an inventory, take out
insurance or furnish other security to secure the performance
of its obligations;
6.3.5 the Agent may, at its discretion, take possession, through its
officers, agents or mandataries, of all or any part of the
Hypothecated Property, with full power to carry on, manage and
conduct the Grantor's business; the Agent may use the
Hypothecated Property or any information that it obtains by
reason of its administration for its own benefit;
6.3.6 the Grantor, through its officers and directors, shall
forthwith execute such documents and transfers as may be
necessary to place the Agent in legal possession of the
Hypothecated Property and the business of the Grantor in
connection therewith, and thereupon all the powers, functions,
rights and privileges of each and every one of the directors
and officers of the Grantor shall cease and terminate with
respect to the Hypothecated Property;
6.3.7 the Agent shall not be obliged to render an account with
respect to its actions in the exercise of its hypothecary
rights, except as stipulated by law. Should the Agent see fit
to render an account, it may do so in summary fashion;
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6.3.8 for the purpose of exercising any of its rights, the Agent
may make use of any premises on which the Hypothecated
Property is located, the whole at the Grantor's expense;
6.3.9 the Agent may, at its discretion, decide to sell and dispose
of the Hypothecated Property as a whole or in separate
parcels, by tender, public auction or private contract, on
such date and on such terms and conditions as the Agent may
stipulate, after giving such prior notices as are required by
articles 2784 and following of the Civil Code of Quebec, and
the Agent may make such sale for cash or credit upon such
reasonable conditions as to upset or reserve bid or price and
as to terms of payment as it may deem proper, and may rescind
or vary any contract of sale that may have been entered into
and resell such property under any of the powers conferred by
this deed, adjourn any such sale from time to time and
execute and deliver to the purchaser or purchasers of the
said property or any part thereof good and sufficient deed or
deeds for the same, the Grantor hereby giving the Agent an
irrevocable power of attorney for the purpose of making such
sale and executing such deeds, and any such sale made as
aforesaid shall be a perpetual bar in law and in equity
against the Grantor and its assigns and against any other
persons who may claim the said property or any part thereof
from the Grantor or its assigns; and
6.3.10 the Agent, or its agents or representatives, may become
purchasers at any sale of the Hypothecated Property, whether
made under the power of sale herein contained or pursuant to
foreclosure or other legal proceedings.
7. MISCELLANEOUS PROVISIONS
7.1 Nature of the Obligations
Each of the Obligations of the Grantor is indivisible.
7.2 Nullity of a Provision
In the event that any provision of this deed is declared null and
void or is deemed not to have been written, the other provisions of
this deed shall be severable from such provision and shall continue
to have full force and effect.
7.3 Application of Payments
Any insurance indemnity, as well as any other amount or other
property received by the Agent in the exercise of the rights
conferred upon it by this deed or by law or in any other manner with
respect to any of the Hypothecated Property, may be
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retained by the Agent as Hypothecated Property or applied to the
payment of the Obligations, whether or not they are due. Any amount
collected by the Agent, even on account of the voluntary performance
of the Obligations, shall be applied at the Agent's discretion, and
the Agent may vary such application from time to time, in whole or
in part, as it sees fit.
Should any of the Hypothecated Property or its proceeds be in a
currency different from that of the Obligations, the Agent is hereby
authorized to convert the amount or the claim in question into the
currency of the Obligations at the Agent's rate of exchange for the
currencies concerned on the date the payment is applied or on such
other date as the Agent deems appropriate.
7.4 Rights Cumulative and Exercise of Remedies
The rights hereby created are in addition to and not in substitution
for any other right or security held by the Agent including, without
limitation, under the Credit Agreement. The exercise by the Agent of
any of its rights and remedies shall not prevent it from exercising
any other right or remedy conferred upon it by this deed or any
other security or by law.
The Agent may, separately or successively, exercise the rights
conferred upon it by this deed on any part of the Hypothecated
Property, without being obliged to do so on the entire Hypothecated
Property and without prejudice to its rights and remedies with
respect to the remaining Hypothecated Property, and it shall not be
in any way obliged to exercise its rights and remedies against any
other person liable for the Obligations or to realize any other
security securing the Obligations.
The Agent may delegate the exercise of its rights or the performance
of its obligations arising from this deed to another person and may
in such case supply to such other person any information that it
holds on the Grantor or on the Hypothecated Property.
7.5 Notice of Default
The mere expiry of the time limit for performing any of the
Obligations shall serve to put the Grantor in default, without any
notice or demand being required for that purpose.
7.6 Waivers
The Grantor may not claim that an act or omission by the Agent
constitutes or implies a waiver of its right to invoke a default by
the Grantor or to assert a right arising out of such default, unless
the Agent has expressly so stated after the occurrence of the
default.
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7.7 Power of Attorney
The Grantor hereby grants to the Agent and each of its officers,
agents, correspondents or mandataries, including any depositary, an
irrevocable power of attorney with full powers of substitution and
revocation, to do, make and execute, for the Grantor and in its
name, all such deeds, documents, transfers, assignments, hypothecs,
assurances, consents and things as the Agent may deem necessary or
appropriate to be done, made or executed by the Grantor to protect
the Agent's rights hereunder and/or preserve the Hypothecated
Property and to give effect to all the provisions of this deed and
the documents and other acts, matters and things that the Grantor
has agreed to do, make and execute or that may be required in the
exercise of the powers conferred upon the Agent by this deed, and in
particular, without limiting the generality of the foregoing, to
obtain from any taxation authority at any time, if deemed useful,
any information necessary to allow the Agent to determine the amount
of the Grantor's indebtedness to such taxation authorities. The
Grantor also grants to each of such persons holding its power of
attorney the right to use its name whenever they may deem it
necessary or appropriate to do so for the purposes hereof and the
Grantor further ratifies and confirms, and undertakes to ratify and
confirm, all acts and actions done or taken by each of such persons
in connection herewith.
7.8 Indemnification
The Grantor hereby agrees and undertakes to indemnify the Agent and
save and hold it harmless from and against any and all losses,
expenses, costs and liabilities (including reasonable legal fees and
disbursements) that the Agent or any of its mandataries or persons
holding its power of attorney may sustain or incur in the exercise
of the powers and rights conferred upon the Agent hereunder except
to the extent any such loss, expense, cost or liability results from
the gross negligence or wilful misconduct of the Agent.
7.9 Election of Domicile
Any service, notice or demand shall be given or made upon the
Grantor at the latter's address indicated in the appearance Section
hereof or at the last address communicated in writing by the Grantor
to the Agent.
7.10 Interpretation
References herein to gender shall include all genders and the
singular shall include the plural and vice versa, as required by the
context.
7.11 Further Assurances
The Grantor hereby agrees to do, make and execute, at its own
expense, all such deeds, documents and things as may be necessary or
advisable, in the opinion of the Agent's legal counsel, to give
effect to the provisions of this deed, including without limiting
the generality of the foregoing, in order that a valid and
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enforceable hypothec be created and maintained on any property
forming part of the Hypothecated Property as of the execution of
this deed or at any time in the future.
7.12 Divisions and Titles
The division of this deed into sections and subsections and the
insertion of titles are for ease of reference only and shall not
influence its meaning or construction.
7.13 Applicable Law
This deed shall be governed and construed in accordance with the
laws in force in the Province of Quebec.
7.14 Explanation of Contract
The Grantor confirms that the Agent has provided it with adequate
explanations concerning the nature and scope of this deed and that
it has had an opportunity to consult a lawyer, notary or other
adviser in connection therewith.
7.15 Counterparts
This deed may be executed in any number of counterparts each of
which when executed and delivered is an original but all of which
taken together constitute one and the same instrument; any party may
execute this deed by signing any counterpart of it.
7.16 Language
The parties hereto confirm that it is their wish that this deed and
all documents relating thereto, including notices, be drawn up in
the English language. Les parties aux presentes confirment leur
volonte que cet acte de meme que tous documents, y compris tous
avis, s'y rapportant soient rediges en langue anglaise.
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IN WITNESS WHEREOF, the parties hereto have executed this deed at Carlsbad,
State of California, as of the __ day of _________, 2004.
XXXXXXXX, INC.
By:_______________________________________
Xxxxxxx X. Xxxxx
Its: Executive Vice President, Chief
Operating Officer, Chief Financial Officer,
Chief Accounting Officer and Treasurer
UNION BANK OF CALIFORNIA, N.A., AS AGENT
Per: ____________________________________
Name: ____________________________________
Title: ____________________________________
Per: ____________________________________
Name: ____________________________________
Title: ____________________________________
[SIGNATURE PAGE TO DEED OF HYPOTHEC ON THE UNIVERSALITY OF MOVABLE PROPERTY]
