Exhibit 10(i)(5)
DEED OF HYPOTHEC
ON THE UNIVERSALITY OF MOVABLE PROPERTY
BETWEEN: XXXXXXXX, INC., a Delaware corporation, having its head office
at 0000 Xxxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxx, 00000,
X.X.X.
(the "GRANTOR")
AND: BANK OF AMERICA, N.A., a national banking association under
the federal laws of the United States, having an office at 000
Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxxxxx, 00000, U.S.A..
(Bank of America, 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 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, lease or processing in
the manufacture or transformation of property intended for
sale, for lease or for use in providing a service.
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2.3 Interpretation
The parties hereto acknowledge and confirm as follows:
2.31 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 as
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 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
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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.
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
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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.
5. POSSESSION OF PROPERTY
This deed creates a hypothec without delivery.
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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:
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
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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;
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
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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 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.
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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.
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
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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 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.
