Exhibit 10.5
EXECUTION COPY
PPSA SECURITY AGREEMENT
DATED AS OF JULY 30, 2004
AMONG
THE CREDIT PARTIES FROM TIME TO TIME PARTY HERETO
AND
NATIONAL BANK OF CANADA,
AS CANADIAN COLLATERAL AGENT
TABLE OF CONTENTS
Section 7.09 Counterparts; Effectiveness................................................................36
Section 7.10 Additional Canadian Credit Parties.........................................................36
Section 7.11 Termination................................................................................37
Section 7.12 Entire Agreement...........................................................................37
Section 7.13 Conflict...................................................................................37
SCHEDULES:
Schedule 3.05 - Schedule of Deposit Accounts, Individual Stock Accounts
and Securities Accounts
Schedule 4.01 - Schedule of Filings Made to Perfect Security Interests
EXHIBITS:
Exhibit A - Form of Deposit Account Control Agreement
Exhibit B - Form of Landlord's Waiver and Consent
- -
PPSA SECURITY AGREEMENT dated as of July 30, 2004 (as amended,
modified or supplemented from time to time, this "AGREEMENT") among the
Canadian Credit Parties from time to time party hereto and National Bank
of Canada, as Canadian Collateral Agent for the benefit of the Finance
Parties referred to herein.
THE XXXX XXXXX GROUP (PJC) INC., a company formed and existing under the
laws of the Province of Quebec (together with its successors and permitted
assigns, the "PARENT BORROWER"), proposes to enter into a Credit Agreement dated
as of July 30, 2004 (as amended, restated, modified or supplemented from time to
time and including any agreement extending the maturity of, refinancing or
otherwise restructuring all or any portion of the obligations of the Parent
Borrower under such agreement or any successor agreement, the "CREDIT
AGREEMENT") among the Parent Borrower, THE XXXX XXXXX GROUP (PJC) USA, INC., a
corporation formed and existing under the laws of the State of Delaware (the
"U.S. BORROWER") and, together with the Parent Borrower, the "BORROWERS"), the
banks and other financial institutions from time to time party thereto (the
"LENDERS"), XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED, as Global
Transaction Coordinator, DEUTSCHE BANK SECURITIES INC., XXXXXXX LYNCH, PIERCE,
XXXXXX & XXXXX INCORPORATED and NATIONAL BANK FINANCIAL INC., as U.S. Joint Lead
Arrangers, DEUTSCHE BANK SECURITIES INC. and XXXXXXX LYNCH, PIERCE, XXXXXX &
XXXXX INCORPORATED, as U.S. Joint Bookrunners, NATIONAL BANK FINANCIAL INC.,
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED and DEUTSCHE BANK SECURITIES
INC., as Canadian Joint Lead Arrangers and as Canadian Joint Bookrunners,
NATIONAL BANK OF CANADA, as the Canadian Administrative Agent, DEUTSCHE BANK
TRUST COMPANY AMERICAS, as the Term B Administrative Agent, XXXXXXX LYNCH,
PIERCE, XXXXXX & XXXXX INCORPORATED and NATIONAL BANK OF CANADA, as U.S.
Co-Syndication Agents, XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED and
DEUTSCHE BANK SECURITIES INC., as Canadian Co-Syndication Agents.
Certain Lenders and their affiliates acting as Derivatives Creditors (as
defined in the Credit Agreement) may from time to time provide forward rate
agreements, options, swaps, caps, floors and other Derivatives Agreements (as
defined in the Credit Agreement) to the Credit Parties. The Lenders, each
Issuing Lender, each Swingline Lender, the Administrative Agents, the
Co-Syndication Agents, the Global Transaction Coordinator, the U.S. Joint Lead
Arrangers, the Canadian Joint Lead Arrangers, the U.S. Collateral Agent, the
Canadian Collateral Agent, as collateral agent for the benefit of the Lenders
(together with its successor or successors in such capacity, the "CANADIAN
COLLATERAL AGENT"), each Indemnitee and each Derivatives Creditor and their
respective successors and assigns are herein referred to individually as a
"FINANCE PARTY" and collectively as the "FINANCE PARTIES".
To induce the Lenders to enter into the Credit Agreement and the other
Senior Finance Documents (as defined in the Credit Agreement) and the
Derivatives Creditors to enter into the Derivatives Agreements constituting
Finance Documents under the Credit Agreement (collectively with the Senior
Finance Documents and the Derivatives Agreements evidencing Derivatives
Obligations (as hereinafter defined) permitted under the Credit Agreement, the
"FINANCE DOCUMENTS"), and as a condition precedent to the obligations of the
Finance Parties thereunder, the Parent Borrower and certain of its subsidiaries
(each a "GUARANTOR" and, collectively, the "GUARANTORS") have agreed, jointly
and severally, to provide a guaranty of all obligations of the Borrowers and the
other Credit Parties under or in respect of the Finance Documents.
As a further condition precedent to the obligations of the Lenders and
the Derivatives Creditors under the Senior Finance Documents, the Parent
Borrower and each Canadian Subsidiary Guarantor (each a "CANADIAN CREDIT PARTY"
and, together with each other person that becomes a party hereto pursuant to
Section 7.10 hereof and the respective successors and permitted assigns of each
of the foregoing, the "CANADIAN CREDIT PARTIES") has agreed or will agree to
grant a continuing security interest in favor of the Canadian Collateral Agent
in and to the Collateral (as hereinafter defined) to secure the Finance
Obligations (as defined in the Credit Agreement). Accordingly, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 TERMS DEFINED IN THE FINANCE DOCUMENTS
Capitalized terms defined in the Credit Agreement and not otherwise
defined herein have, as used herein, the respective meanings provided for
therein.
SECTION 1.02 TERMS DEFINED IN THE PPSA
Unless otherwise defined herein or in the Credit Agreement or the
context otherwise requires, the following terms, together with any uncapitalized
terms used herein which are defined in the PPSA (as defined below), have the
respective meanings provided in the PPSA: (i) Chattel Paper; (ii) Document of
Title; (iii) Goods; (iv) Instrument; (v) Money; (vi) Proceeds and (vii)
Security.
SECTION 1.03 ADDITIONAL DEFINITIONS
Terms defined in the introductory section hereof have the respective
meanings set forth therein. The following additional terms, as used herein, have
the following respective meanings:
"ACCOUNT CONTROL AGREEMENT" means (i) with respect to a Deposit Account,
a deposit account control agreement, substantially in the form of EXHIBIT A
hereto or otherwise containing similar terms and reasonably acceptable in form
and substance to the Canadian Collateral Agent, among one or more Canadian
Credit Parties, the Canadian Collateral Agent and the Financial Intermediary
which maintains such Deposit Account and (ii) with respect to a Securities
Account, a securities account control agreement, substantially in the form of
EXHIBIT A to the Pledge Agreement or otherwise containing similar terms and
reasonably acceptable in form and substance to the Canadian Collateral Agent,
among one or more Canadian Credit Parties, the Canadian Collateral Agent and the
Financial Intermediary which maintains such Securities Account, in each case as
the same may be amended, restated, modified or supplemented from time to time.
"ASSIGNED AGREEMENTS" means with respect to each Canadian Credit Party
those contracts and agreements of such Canadian Credit Party identified in or
pursuant to Section VI of such Canadian Credit Party's Perfection Certificate,
as the same may be amended, modified or supplemented from time to time, and all
supporting obligations of any kind given by any Person with respect to all or
any of the foregoing.
"CANADIAN SUBSIDIARY GUARANTOR" means each Subsidiary of the Parent
Borrower existing on the Closing Date (other than a U.S. Subsidiary Guarantor or
a Foreign Subsidiary) and each Subsidiary
- -
of the Parent Borrower (other than a U.S. Subsidiary Guarantor or a Foreign
Subsidiary, except to the extent otherwise provided in Section 6.10 of the
Credit Agreement) that becomes a party to a Guaranty guaranteeing the
obligations of the Borrowers after the Closing Date (by execution of an
Accession Agreement referring to such Guaranty or otherwise), and "Canadian
Subsidiary Guarantors" means any two or more of them.
"CASH PROCEEDS ACCOUNT" has the meaning set forth in Section 2.04(a) of
this Agreement.
"COLLATERAL" has the meaning set forth in Section 2.01 of this
Agreement.
"COLLATERAL ACCOUNTS" means one or more of the Cash Proceeds Account,
the XX Xxxx Collateral Account, the Reinvestment Funds Account and any other
Securities Accounts or Deposit Accounts established with or in the possession or
under the control of the Canadian Collateral Agent (including Individual Store
Accounts) into which cash or cash Proceeds (including cash Proceeds of insurance
policies, awards of condemnation or other compensation) of any Collateral are
deposited from time to time, collectively.
"COMPUTER HARDWARE" means all computer and other electronic data
processing hardware of a Canadian Credit Party, whether now or hereafter owned,
licensed or leased by such Canadian Credit Party, including, without limitation,
all integrated computer systems, central processing units, memory units, display
terminals, printers, features, computer elements, card readers, tape drives,
hard and soft disk drives, cables, electrical supply hardware, generators, power
equalizers, accessories, peripheral devices and other related computer hardware,
all documentation, flowcharts, logic diagrams, manuals, specifications, training
materials, charts and pseudo codes associated with any of the foregoing and all
options, warranties, services contracts, program services, test rights,
maintenance rights, support rights, renewal rights and indemnifications relating
to any of the foregoing.
"COPYRIGHT" means any of the following, whether now existing or
hereafter arising, created or acquired:
(i) the Canadian and foreign copyrights described on
SCHEDULE V to any Canadian Credit Party's Perfection Certificate (as each
such schedule may be amended, modified or supplemented from time to time)
and any renewals thereof;
(ii) all other common law and/or statutory rights in all
copyrightable subject matter under the Laws of Canada or any other country
(whether or not the underlying works of authorship have been published);
(iii) all registrations and applications for registration of
any such copyright in Canada or any other country, including registrations,
recordings, supplemental, derivative or collective work registrations and
pending applications for registrations in the Copyright Office of the
Canadian Intellectual Property Office or any other country;
(iv) all computer programs, web pages, computer data bases and
computer program flow diagrams, including all source codes and object codes
related to any or all of the foregoing;
- -
(v) all tangible property embodying or incorporating any or
all of the foregoing, whether in completed form or in some lesser state of
completion, and all masters, duplicates, drafts, versions, variations and
copies thereof, in all formats;
(vi) all claims for, and rights to xxx for, past, present and
future infringement of any of the foregoing;
(vii) all income, royalties, damages and payments now or
hereafter due or payable with respect to any of the foregoing, including,
without limitation, damages and payments for past, present or future
infringements thereof and payments and damages under all Copyright Licenses
in connection therewith;
(viii) all rights in any of the foregoing, whether arising under
the Laws of Canadian or any foreign country or otherwise, to copy, record,
synchronize, broadcast, transmit, perform and/or display any of the
foregoing or any matter which is the subject of any of the foregoing in any
manner and by any process now known or hereafter devised; and
(ix) the name and title of each Copyright item and all rights
of any Canadian Credit Party to the use thereof, including, without
limitation, rights protected pursuant to trademark, service xxxx, unfair
competition, anti-cybersquatting and/or the rules and principles of any
other applicable statute, common law or other rule or principle of law now
existing or hereafter arising.
"COPYRIGHT LICENSE" means any agreement now or hereafter in existence
granting to any Canadian Credit Party any rights, whether exclusive or
non-exclusive, to use another Person's copyrights or copyright applications, or
pursuant to which any Canadian Credit Party has granted to any other Person, any
right, whether exclusive or non-exclusive, with respect to any Copyright,
whether or not registered, including, without limitation, the Copyright Licenses
described on SCHEDULE V to any Canadian Credit Party's Perfection Certificate
(as each such schedule may be amended, modified or supplemented from time to
time).
"DEPOSIT ACCOUNTS" means all demand, time, savings, passbook or similar
accounts maintained by a Canadian Credit Party with a Financial Intermediary,
whether or not evidenced by an Instrument, all cash and other funds held therein
and all passbooks related thereto and all certificates and Instruments, if any,
from time to time representing, evidencing or deposited into such deposit
accounts.
"DERIVATIVES OBLIGATIONS" of any Person means all obligations
(including, without limitation, any amounts which accrue after the commencement
of any bankruptcy or insolvency proceeding with respect to such Person, whether
or not allowed or allowable as a claim under any bankruptcy or insolvency
proceeding) of such Person in respect of any Derivatives Agreement, excluding
any amounts which such Person is entitled to set-off against its obligations
under applicable Law.
"DIRECT EXPOSURE" has the meaning set forth in Section 2.06 of this
Agreement.
"EQUIPMENT" has the meaning set forth in Section 2.01 of this Agreement.
"EXEMPT DEPOSIT ACCOUNTS" means Deposit Accounts the balance of which
consists exclusively of (i) withheld income taxes, federal, provincial or local
employment taxes in such amounts
- -
as are required in the reasonable judgment of the Parent Borrower to be paid to
the federal, provincial or local government authorities within the following two
months with respect to employees of any of the Credit Parties or (ii) amounts
required to be paid over to the Canada Pension Plan, Regie des rentes du Quebec
or under the EMPLOYMENT INSURANCE ACT (Canada)
"FINANCE OBLIGATIONS" means:
(i) all Senior Obligations and
(ii) all Derivatives Obligations permitted under the Credit
Agreement owed or owing to any Derivatives Creditor,
in each case whether now or hereafter due, owing or incurred in any manner,
whether actual or contingent, whether incurred solely or jointly with any other
Person and whether as principal or surety (and including all liabilities in
connection with any notes, bills or other instruments accepted by any Finance
Party in connection therewith), together in each case with all renewals,
modifications, consolidations or extensions thereof.
"FINANCIAL INTERMEDIARY" means a Person, including a bank, other
financial institution or broker, that in the ordinary course of its business
maintains banks accounts or Securities Accounts for others.
"INDIVIDUAL STORE ACCOUNTS" means Deposit Accounts, the balance of which
consists exclusively of a single retail store's receipts that is in the ordinary
course of the business swept daily into a concentration account.
"INTELLECTUAL PROPERTY" means all Patents, Trademarks, Copyrights,
Software, Licenses, rights in intellectual property, goodwill, trade names,
service marks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how, domain names, mask works, customer lists,
vendor lists, subscription lists, data bases and related documentation,
registrations, franchises and all other intellectual or other similar property
rights.
"INVENTORY" has the meaning set forth in Section 2.01 of this Agreement.
"LICENSE" means any Patent License, Trademark License, Copyright
License, Software License or other license or sublicense as to which any
Canadian Credit Party is a party.
"LIQUID INVESTMENTS" has the meaning set forth in Section 2.07 of this
Agreement.
"XX XXXX COLLATERAL ACCOUNT" has the meaning set forth in Section 2.06
of this Agreement.
"MATERIAL REAL PROPERTY" has the meaning given to it in the Credit
Agreement.
"PATENT" means any of the following:
(i) the Canadian and foreign patents described on SCHEDULE V
to any Canadian Credit Party's Perfection Certificate (as each such
schedule may be amended, modified or supplemented from time to time) and
any renewals thereof;
- -
(ii) all other letters patent and design letters patent of
Canada or any other country;
(iii) all applications filed or in preparation for filing for
letters patent and design letters patent in Canada or any other country
including, without limitation, applications in the Patent Branch of the
Canadian Intellectual Property Office or in any similar office or agency of
Canada or any other country or political subdivision thereof;
(iv) all reissues, divisions, continuations,
continuations-in-part, revisions, renewals or extensions thereof;
(v) all claims for, and rights to xxx for, past, present or
future infringement of any of the foregoing;
(vi) all income, royalties, damages and payments now or
hereafter due or payable with respect to any of the foregoing, including,
without limitation, damages and payments for past, present or future
infringements thereof and payments and damages under all Patent Licenses in
connection therewith; and
(vii) all rights corresponding to any of the foregoing whether
arising under the Laws of Canada or any foreign country or otherwise.
"PATENT LICENSE" means any agreement now or hereafter in existence
granting to any Canadian Credit Party any right, whether exclusive or
non-exclusive, with respect to any Person's patent or any invention now or
hereafter in existence, whether or not patentable, or pursuant to which any
Canadian Credit Party has granted to any other Person, any right, whether
exclusive or non-exclusive, with respect to any Patent or any invention now or
hereafter in existence, whether or not patentable and whether or not a Patent or
application for Patent is in or hereafter comes into existence on such
invention, including, without limitation, the Patent Licenses described on
SCHEDULE V to any Canadian Credit Party's Perfection Certificate (as each such
schedule may be amended, modified or supplemented from time to time).
"PERFECTION CERTIFICATE" means with respect to each Canadian Credit
Party a certificate, substantially in the form of EXHIBIT F-1 to the Credit
Agreement, completed and supplemented with the schedules and attachments
contemplated thereby.
"PERMITTED LIEN" means any Lien referred to in, and permitted by,
Section 7.02 of the Credit Agreement.
"PPSA" means the PERSONAL PROPERTY SECURITY ACT (
Ontario) as now enacted
or as the same may from time to time be amended, re-enacted or replaced.
"RECEIVABLES" has the meaning set forth in Section 2.01 of this
Agreement.
"RECORDABLE INTELLECTUAL PROPERTY" means Intellectual Property the
transfer of which is required to be recorded in the Canadian Intellectual
Property Office in order to be effective against subsequent third party
transferees; PROVIDED that the following shall not be considered "RECORDABLE
INTELLECTUAL PROPERTY" hereunder: (i) unregistered Canadian Copyrights and (ii)
non-exclusive Licenses.
- -
"REINVESTMENT FUNDS" has the meaning set forth in Section 2.05(a) of
this Agreement.
"REINVESTMENT FUNDS ACCOUNT" has the meaning set forth in Section
2.05(a) of this Agreement.
"RELEVANT CONTINGENT EXPOSURE" has the meaning set forth in Section
2.06 of this Agreement.
"REPURCHASE AGREEMENT" means (a) the Sale and Purchase Agreement which
provides that the Parent Borrower will purchase the Preferred Shares the U.S.
Borrower holds in JCG Holdings (USA), Inc. and will grant to the U.S. Borrower a
non-assignable right to repurchase from the Parent Borrower (subject to the Xxxx
Xxxxx Group Holdings (USA), LLC's right of first refusal) such Preferred Shares
in whole or in part, at any time for U.S.$1,486,400,000 and any accrued but
unpaid dividends and (b) the Forward Sale Agreement which provides that the U.S.
Borrower will be required to purchase in 10 years from Closing the Preferred
Shares for U.S.$1,486,400,000 and any accrued but unpaid dividends and any board
of director's resolution and proxy statement incident thereto.
"SECURITIES ACCOUNT" means an account to which Securities or other
financial assets are or may be credited or debited.
"SECURITY INTERESTS" means the security interests in the Collateral
granted under this Agreement or any other Collateral Documents.
"SENIOR OBLIGATIONS" means with respect to each Credit Party, without
duplication:
(i) in the case of each Borrower, all principal of and
interest (including, without limitation, any interest which accrues after
the commencement of any bankruptcy or insolvency proceeding with respect
to, whether or not allowed or allowable as a claim under any bankruptcy or
insolvency proceeding) on any Loan made to or LC Obligation or BA
Reimbursement Obligation under, or any Note issued, pursuant to the Credit
Agreement or any other Senior Finance Document;
(ii) all fees, expenses, indemnification obligations, foreign
currency exchange obligations and other amounts of whatever nature now or
hereafter payable by such Credit Party (including, without limitation, any
amounts which accrue after the commencement of any bankruptcy or insolvency
proceeding with respect to such Credit Party, whether or not allowed or
allowable as a claim under any bankruptcy or insolvency proceeding)
pursuant to the Credit Agreement, this Agreement or any other Senior
Finance Document;
(iii) all expenses of any Finance Party as to which it has a
right to reimbursement under Section 7.03(a) or Section 7.03(b) of this
Agreement or under any other similar provision of any other Senior Finance
Document, including, without limitation, any and all sums advanced by the
Canadian Collateral Agent to preserve any Collateral or preserve its
security interests in any Collateral;
(iv) all amounts paid by any Indemnitee as to which such
Indemnitee has the right to reimbursement under Section 7.03(c) of this
Agreement, Section 10.05 of the Credit Agreement or under any other similar
provision of any other Senior Finance Document; and
- -
(v) in the case of each Borrower and each Subsidiary
Guarantor, all amounts now or hereafter payable by such Borrower or such
Subsidiary Guarantor and all other obligations or liabilities now existing
or hereafter arising or incurred (including, without limitation, any
amounts which accrue after the commencement of any bankruptcy or insolvency
proceeding with respect to any Credit Party, whether or not allowed or
allowable as a claim under any bankruptcy or insolvency proceeding) on the
part of such Borrower or such Subsidiary Guarantor pursuant to the Guaranty
in respect of the Credit Agreement or any other Senior Finance Document;
in each case whether now or hereafter due, owing or incurred in any manner,
whether actual or contingent, whether incurred solely or jointly with any other
Person and whether as principal or surety (and including all liabilities in
connection with any notes, bills or other instruments accepted by any Finance
Party in connection therewith), together in each case with all renewals,
modifications, consolidations or extensions thereof.
"SOFTWARE" means all software programs, whether now or hereafter owned,
licensed or leased by a Canadian Credit Party, designed for use on Computer
Hardware, including, without limitation, all operating system software,
utilities and application programs in whatever form and whether or not embedded
in Goods, all source code and object code in magnetic tape, disk or hard copy
format or any other listings whatsoever, all firmware associated with any of the
foregoing all documentation, flowcharts, logic diagrams, manuals,
specifications, training materials, charts and pseudo codes associated with any
of the foregoing, and all options, warranties, services contracts, program
services, test rights, maintenance rights, support rights, renewal rights and
indemnifications relating to any of the foregoing.
"SOFTWARE LICENSE" means any agreement (including any agreement
constituting a Copyright License, Patent License and/or Trademark License) now
or hereafter in existence granting to any Canadian Credit Party any right,
whether exclusive or non-exclusive, to use another Person's Software, or
pursuant to which any Canadian Credit Party has granted to any other Person, any
right, whether exclusive or non-exclusive, to use any Software, whether or not
subject to any registration.
"TRADEMARK" means any of the following:
(i) the Canadian and foreign trademarks described on
SCHEDULE V to any Canadian Credit Party's Perfection Certificate (as each
such schedule may be amended, modified or supplemented from time to time)
and any renewals thereof;
(ii) all other trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos, certification marks, collective marks, brand names
and trade dress which are or have been used in Canada or in any province,
territory or possession thereof, or in any other place, nation or
jurisdiction, along with all prints and labels on which any of the
foregoing have appeared or appear, package and other designs, and any other
source or business identifiers, and general intangibles of like nature, and
the rights in any of the foregoing which arise under applicable law;
(iii) the goodwill of the business symbolized thereby or
associated with each of the foregoing;
- -
(iv) all registrations and applications in connection
therewith, including, without limitation, registrations and applications in
the Trademarks Office of the Canadian Intellectual Property Office or in
any similar office or agency of Canada, any province or territory thereof
or any other country or any political subdivision thereof;
(v) all reissues, extensions and renewals thereof;
(vi) all claims for, and rights to xxx for, past, present or
future infringements of any of the foregoing;
(vii) all income, royalties, damages and payments now or
hereafter due or payable with respect to any of the foregoing, including,
without limitation, damages and payments for past, present or future
infringements thereof and payments and damages under all Trademark Licenses
in connection therewith; and
(viii) all rights corresponding to any of the foregoing whether
arising under the Laws of Canada or any foreign country or otherwise.
"TRADEMARK LICENSE" means any agreement now or hereafter in existence
granting to any Canadian Credit Party any right, whether exclusive or
non-exclusive, to use another Person's trademarks or trademark applications, or
pursuant to which any Canadian Credit Party has granted to any other Person, any
right, whether exclusive or non-exclusive, to use any Trademark, whether or not
registered, including, without limitation, the Trademark Licenses described on
SCHEDULE V to any Canadian Credit Party's Perfection Certificate (as each such
schedule may be amended, modified or supplemented from time to time) and the
rights to prepare for sale, sell and advertise for sale, all of the inventory
now or hereafter owned by any Canadian Credit Party and now or hereafter covered
by such license agreements.
SECTION 1.04 TERMS GENERALLY
The definitions in Section 1.02 and Section 1.03 shall apply equally to
both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement unless
the context shall otherwise require. Unless otherwise expressly provided herein,
the word "day" means a calendar day.
ARTICLE II
SECURITY INTERESTS
SECTION 2.01 GRANT OF SECURITY INTERESTS
To secure the due and punctual payment of all Finance Obligations,
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing or due or to become due, in accordance
with the terms thereof and to secure the performance of all of the obligations
of each Canadian Credit Party hereunder and under the other Finance Documents,
each Canadian Credit Party hereby grants to the Canadian Collateral Agent for
the benefit of the Finance Parties a security interest in, and each Canadian
Credit Party hereby pledges and collaterally assigns to
- -
the Canadian Collateral Agent for the benefit of the Finance Parties, all of
such Canadian Credit Party's right, title and interest in and to all now owned
or held and after acquired or held personal property, assets and undertakings,
of whatever nature or kind and wheresoever situated, and all Proceeds thereof
and therefrom (all of which is hereinafter collectively called the "COLLATERAL")
including, without limiting the generality of the foregoing:
(i) all equipment, including, without limiting the generality
of the foregoing, machinery, tools, fixtures, furniture, furnishings,
chattels, motor vehicles, vessels and other tangible personal property that
is not Inventory, and all parts, components, attachments, accessories,
accessions, replacements, substitutions, additions and improvements to any
of the foregoing (all of which is collectively called the "EQUIPMENT");
(ii) all inventory, including, without limiting the generally
of the foregoing, Goods acquired or held for sale or lease or furnished or
to be furnished under contracts of rental or service, all raw materials,
work in process, finished Goods, returned Goods, repossessed Goods, and all
packaging materials, supplies and containers relating to or used or
consumed in connection with any of the foregoing (all of which is
collectively called the "INVENTORY");
(iii) all debts, accounts, claims, demands, Money and choses in
action which now are, or which may at any time hereafter be, due, owing to
or accruing due to the Canadian Credit Party (all of which is collectively
called the "RECEIVABLES");
(iv) all Documents of Title, Chattel Paper, Instruments,
Securities and Money, and all other Goods of the Canadian Credit Party that
are not Equipment, Inventory or Receivables;
(v) all contractual rights, goodwill, Intellectual Property,
all other choses in action of the Canadian Credit Party of every kind which
now are, or which may at any time hereafter be, due or owing to or owed by
the Canadian Credit Party;
(vi) all books, records, documents, papers and electronically
recorded data recordings evidencing or relating to any of the Collateral;
(vii) all other intangible property of the Canadian Credit
Party not otherwise referred to in this Section 2.01; and
(viii) all Proceeds of any Collateral in any form derived
directly or indirectly from any dealing with the Collateral or that
indemnifies or compensates for the loss of a damage to the Collateral.
PROVIDED, HOWEVER that the Collateral shall not include any Exempt Deposit
Accounts.
SECTION 2.02 CONTINUING LIABILITY OF EACH CANADIAN CREDIT PARTY
Anything herein to the contrary notwithstanding, each Canadian Credit
Party shall remain liable to observe and perform all the terms and conditions to
be observed and performed by it under any contract, agreement, warranty or other
obligation with respect to the Collateral. Neither the Canadian Collateral Agent
nor any Finance Party shall have any obligation or liability under any such
contract, agreement, warranty or obligation by reason of or arising out of this
Agreement or the receipt by the
- -
Canadian Collateral Agent or any Finance Party of any payment relating to any
Collateral, nor shall the Canadian Collateral Agent or any Finance Party be
required to perform or fulfill any of the obligations of any Canadian Credit
Party with respect to any of the Collateral, to make any inquiry as to the
nature or sufficiency of any payment received by it or the sufficiency of the
performance of any party's obligations with respect to any Collateral.
Furthermore, neither the Canadian Collateral Agent nor any Finance Party shall
be required to file any claim or demand to collect any amount due or to enforce
the performance of any party's obligations with respect to the Collateral.
SECTION 2.03 SECURITY INTERESTS ABSOLUTE
All rights of the Canadian Collateral Agent, all security interests
hereunder and all obligations of each Canadian Credit Party hereunder are
unconditional and absolute and independent and separate from any other security
for or guaranty of the Finance Obligations, whether executed by such Canadian
Credit Party, any other Credit Party or any other Person. Without limiting the
generality of the foregoing, the obligations of each Canadian Credit Party
hereunder shall not be released, discharged or otherwise affected or impaired
by:
(i) any extension, renewal, settlement, compromise,
acceleration, waiver or release in respect of any obligation of any other
Credit Party under any Finance Document or any other agreement or
instrument evidencing or securing any Finance Obligation, by operation of
law or otherwise;
(ii) other than pursuant to Section 7.05 hereof, any change in
the manner, place, time or terms of payment of any Finance Obligation or
any other amendment, supplement or modification to any Finance Document or
any other agreement or instrument evidencing or securing any Finance
Obligation;
(iii) any release, non-perfection or invalidity of any direct
or indirect security for any Finance Obligation, any sale, exchange,
surrender, realization upon, offset against or other action in respect of
any direct or indirect security for any Finance Obligation or any release
of any other obligor or Credit Parties in respect of any Finance
Obligation;
(iv) any change in the existence, structure or ownership of
any Credit Party, or any insolvency, bankruptcy, reorganization,
arrangement, readjustment, composition, liquidation or other similar
proceeding affecting any Credit Party or its assets or any resulting
disallowance, release or discharge of all or any portion of any Finance
Obligation;
(v) the existence of any claim, set-off or other right which
any Credit Party may have at any time against the Borrowers, any other
Credit Party, any Agent, any other Finance Party or any other Person,
whether in connection herewith or any unrelated transaction; PROVIDED that
nothing herein shall prevent the assertion of any such claim by separate
suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against
the Borrowers or any other Credit Party for any reason of any Finance
Document or any other agreement or instrument evidencing or securing any
Finance Obligation or any provision of applicable Law or regulation
purporting to prohibit the payment by the Borrowers or any other Credit
Party of any Finance Obligation;
- -
(vii) any failure by any Finance Party: (A) to file or enforce
a claim against any Credit Party or its estate (in a bankruptcy or other
proceeding); (B) to give notice of the existence, creation or incurrence by
any Credit Party of any new or additional indebtedness or obligation under
or with respect to the Finance Obligations; (C) to commence any action
against any Credit Party; (D) to disclose to any Credit Party any facts
which such Finance Party may now or hereafter know with regard to any
Credit Party; or (E) to proceed with due diligence in the collection,
protection or realization upon any collateral securing the Finance
Obligations;
(viii) any direction as to application of payment by the
Borrowers, any other Credit Party or any other Person;
(ix) any subordination by any Finance Party of the payment of
any Finance Obligation to the payment of any other liability (whether
matured or unmatured) of any Credit Party to its creditors;
(x) any act or failure to act by the Canadian Collateral
Agent or any other Finance Party under this Agreement or otherwise which
may deprive any Credit Party of any right to subrogation, contribution or
reimbursement against any other Credit Party or any right to recover full
indemnity for any payments made by such Credit Party in respect of the
Finance Obligations; or
(xi) any other act or omission to act or delay of any kind by
any Credit Party or any Finance Party or any other Person or any other
circumstance whatsoever which might, but for the provisions of this clause,
constitute a legal or equitable discharge of any Credit Party's obligations
hereunder.
Each Canadian Credit Party has irrevocably and unconditionally delivered
this Agreement to the Canadian Collateral Agent, for the benefit of the Finance
Parties, and the failure by any other Person to sign this Agreement or a
security agreement similar to this Agreement or otherwise shall not discharge
the obligations of any Canadian Credit Party hereunder.
This Agreement shall remain fully enforceable against each Canadian
Credit Party irrespective of any defenses that any other Credit Party may have
or assert in respect of the Finance Obligations, including, without limitation,
failure of consideration, breach of warranty, payment, statute of frauds,
statute of limitations, accord and satisfaction and usury.
SECTION 2.04 SEGREGATION OF PROCEEDS; CASH PROCEEDS ACCOUNT.
(a) CREATION OF CASH PROCEEDS ACCOUNT. There is hereby
established with the Canadian Collateral Agent a collateral account (the "CASH
PROCEEDS ACCOUNT") in the name of "National Bank of Canada, as Canadian
Collateral Agent" and under the exclusive control of the Canadian Collateral
Agent, into which there shall be deposited from time to time the cash Proceeds
of the Collateral required to be delivered to the Canadian Collateral Agent
pursuant to subsection (b) of this Section. Any income received by the Canadian
Collateral Agent with respect to the balance from time to time standing to the
credit of the Cash Proceeds Account, including any interest or capital gains on
Liquid Investments, shall remain, or be deposited, in the Cash Proceeds Account.
All right, title and interest in and to the cash amounts on deposit from time to
time in the Cash Proceeds Account together with any Liquid Investments from time
to time made pursuant to Section 2.07 and any other property or assets from time
- -
to time deposited in or credited to the Cash Proceeds Account shall vest in and
be under the sole dominion and control of the Canadian Collateral Agent for the
benefit of the Finance Parties, shall constitute part of the Collateral
hereunder and shall not constitute payment of the Finance Obligations until
applied thereto as hereinafter provided.
(b) DEPOSITS TO CASH PROCEEDS ACCOUNT. Upon the occurrence and
during the continuance of a Default or an Event of Default, except as otherwise
provided in Section 2.05 and Section 2.06, each Canadian Credit Party, promptly
after receiving written instructions from the Canadian Collateral Agent to do
so, shall instruct all account debtors and other Persons obligated in respect of
its Receivables and other Collateral to make all payments in respect of its
Receivables and other Collateral either (i) directly to the Canadian Collateral
Agent (by instructing that such payments be remitted by direct wire transfer to
the Canadian Collateral Agent at its address referred to in Section 7.01 or to a
post office box which shall be in the name and under the control of the Canadian
Collateral Agent) or (ii) to one or more other banks or financial institutions
in Canada (by instructing that such payments be remitted by direct wire transfer
to, or to a post office box which shall be in the name and under the control of,
such bank or financial institution) under an Account Control Agreement duly
executed by each relevant Canadian Credit Party and such bank or financial
institution or under other arrangements, in form and substance satisfactory to
the Canadian Collateral Agent, pursuant to which each relevant Canadian Credit
Party shall have irrevocably instructed such other bank or financial institution
(and such other bank shall have agreed) to remit all proceeds of such payments
directly to the Canadian Collateral Agent for deposit into the Cash Proceeds
Account or as the Canadian Collateral Agent may otherwise instruct such bank or
financial institution. All such payments made to the Canadian Collateral Agent
shall be deposited in the Cash Proceeds Account. In addition to the foregoing,
each Canadian Credit Party agrees that if the proceeds of any Collateral
hereunder (including the payments made in respect of Receivables) shall be
received by it after the occurrence and during the continuance of a Default or
an Event of Default and receipt of the Canadian Collateral Agent's written
instructions pursuant to the first sentence of this clause (b), such Canadian
Credit Party shall as promptly as possible deposit such Proceeds into the Cash
Proceeds Account. Until so deposited, all such proceeds shall be held in trust
by the relevant Canadian Credit Party for and as the property of the Canadian
Collateral Agent for the benefit of the Finance Parties and shall not be
commingled with any other funds or property of any Canadian Credit Party;
PROVIDED, however, that until a Default or an Event of Default shall occur and
receipt of the Canadian Collateral Agent's written instructions pursuant to the
first sentence of this clause (b), all collected funds on deposit in the Cash
Proceeds Account, or so much thereof as is not required to make payment of the
Finance Obligations which have become due and payable (whether by scheduled
maturity, acceleration or otherwise), shall be withdrawn by the Canadian
Collateral Agent on the next Business Day following the day on which the
Canadian Collateral Agent considers the funds deposited therein to be collected
funds and disbursed to the Borrowers or its order. Each Canadian Credit Party
hereby irrevocably consents and agrees to such disbursement. After satisfaction
of the conditions specified in this clause (b), each Canadian Credit Party
hereby irrevocably authorizes and empowers the Canadian Collateral Agent, its
officers, employees and authorized agents to endorse and sign its name on all
checks, drafts, money orders or other media of payment so delivered, and such
endorsements or assignments shall, for all purposes, be deemed to have been made
by the relevant Canadian Credit Party prior to any endorsement or assignment
thereof by the Canadian Collateral Agent. The Canadian Collateral Agent may use
any convenient or customary means for the purpose of collecting such checks,
drafts, money orders or other media of payment.
SECTION 2.05 REINVESTMENT FUNDS ACCOUNT.
- -
(a) CREATION OF AND DEPOSITS TO THE REINVESTMENT FUNDS ACCOUNT.
Promptly upon and at all times after the receipt by any Canadian Credit Party of
any Net Cash Proceeds from an Asset Disposition (other than an Excluded Asset
Disposition), Insurance Proceeds or Condemnation Awards or other amounts
required to be paid to the Canadian Collateral Agent pursuant to Section 2.10
(c) or 6.06(b) of the Credit Agreement, Section 4.10 hereof or pursuant to any
similar provision of any other Finance Document (collectively, "REINVESTMENT
FUNDS"), such Canadian Credit Party shall establish and shall thereafter
maintain an additional collateral account (the "REINVESTMENT FUNDS ACCOUNT") at
the offices of the Canadian Collateral Agent or such other bank or other
financial institution as such Canadian Credit Party and the Canadian Collateral
Agent may agree, in the name and under the exclusive control of the Canadian
Collateral Agent. If the Reinvestment Funds Account is not maintained at an
office of the Canadian Collateral Agent, then forthwith upon the establishment
of such account, the applicable Canadian Credit Party shall notify the Canadian
Collateral Agent of the location, account name and account number of such
account and shall deliver to the Canadian Collateral Agent an Account Control
Agreement with respect to such Reinvestment Funds Account duly executed by such
Canadian Credit Party and the Financial Intermediary maintaining such
Reinvestment Funds Account. Each Canadian Credit Party hereby agrees to cause
any Reinvestment Funds received from time to time after the establishment of the
Reinvestment Funds Account to be deposited therein as set forth in this
paragraph. Any Casualty Proceeds or Condemnation Proceeds in excess of
U.S.$5,000,000 (or the Canadian Dollar Equivalent thereof) received from time to
time by the Canadian Collateral Agent in respect of which the Canadian
Collateral Agent is an insured party and loss payee and any other Reinvestment
Funds shall be promptly deposited in the Reinvestment Funds Account as set forth
in this paragraph. Any income received with respect to the balance from time to
time standing to the credit of the Reinvestment Funds Account, including any
interest or capital gains on Liquid Investments, shall remain, or be deposited,
in the Reinvestment Funds Account until withdrawn pursuant to clause (b) below
or applied in accordance with Section 2.10(b) of the Credit Agreement. All
right, title and interest in and to the cash amounts on deposit from time to
time in the Reinvestment Funds Account together with any Liquid Investments from
time to time made pursuant to Section 2.07 and any other property or assets from
time to time deposited in or credited to the Reinvestment Funds Account shall
vest in the Canadian Collateral Agent for the benefit of the Finance Parties,
shall constitute part of the Collateral hereunder and shall not constitute
payment of the Finance Obligations until applied thereto as hereinafter
provided. The Canadian Collateral Agent shall apply to repayment of the Loans
those amounts on deposit in the Reinvestment Funds Account which are required to
be applied to the repayment of the Loans in accordance with Section 2.10(b)(iv)
and 2.10(c) of the Credit Agreement or any other applicable term of any Finance
Document, and, unless a Default or an Event of Default shall have occurred and
be continuing, shall promptly in accordance with subsection (b) below release
to, or upon the order of the Canadian Credit Party in respect of which such
Reinvestment Funds were delivered, those amounts on deposit in the Reinvestment
Funds Account which are not required to be so applied or retained in the
Reinvestment Funds Account pursuant to any other provision of any Finance
Document for application as provided in subsection (b) below.
(b) WITHDRAWALS FROM REINVESTMENT FUNDS ACCOUNT. The balance
from time to time standing to the credit of the Reinvestment Funds Account (to
the extent not applied pursuant to the last sentence of Section 2.05(a)) shall
be subject to withdrawal only upon the instructions of the Canadian Collateral
Agent. Except upon the occurrence and continuation of a Default or an Event of
Default, the Canadian Collateral Agent agrees to give instructions to distribute
such amounts to the applicable Canadian Credit Party at such times and in such
amounts as such Canadian Credit Party shall request for the purpose of (i) in
the case of Reinvestment Funds received on account of an Asset Disposition,
reinvesting such Reinvestment Funds in accordance with Section 2.10(c)(i) of the
Credit Agreement or (ii) in the case of Reinvestment Funds received on account
of Casualty or Condemnation, repairing,
- -
reconstructing or replacing the property in respect of which such Reinvestment
Funds were received or for the purpose of repaying indebtedness secured by a
Permitted Lien on, or meeting other liabilities in respect of, the property in
respect of which such Reinvestment Funds were received, all in accordance with
Section 2.10(c)(ii) of the Credit Agreement. Each Canadian Credit Party hereby
irrevocably consents and agrees to such distribution. To the extent required by
any Finance Document, any such request shall be accompanied by a certificate of
the chief executive officer or chief financial officer of such Canadian Credit
Party setting forth in detail reasonably satisfactory to the Canadian Collateral
Agent the reinvestment, repair, reconstruction or replacement for which such
funds will be expended. If immediately available cash on deposit in the
Reinvestment Funds Account is not sufficient to make any distribution to a
Canadian Credit Party referred to in the previous sentence of this Section
2.05(b), the Canadian Collateral Agent shall cause to be liquidated as promptly
as practicable such Liquid Investments in the Reinvestment Funds Account
designated by such Canadian Credit Party and the Borrowers as are required to
obtain sufficient cash to make such distribution and, notwithstanding any other
provision of this Article II, such distribution shall not be made until such
liquidation has taken place. Upon the occurrence and continuation of an Event of
Default, the Canadian Collateral Agent may apply or cause to be applied (subject
to collection) any or all of the balance from time to time standing to the
credit of the Reinvestment Funds Account in the manner specified in Section 5.04
hereof.
SECTION 2.06 XX XXXX COLLATERAL ACCOUNT
All amounts required to be deposited by any Canadian Credit Party as
cash collateral for LC Obligations pursuant to Section 2.10(b)(i), (ii) or (iii)
or Section 8.02(c) of the Credit Agreement, any similar provision of any other
Finance Document or pursuant to Section 5.04 hereof shall be deposited in a
collateral account (the "XX XXXX COLLATERAL ACCOUNT") established and maintained
by such Canadian Credit Party at the offices of the Canadian Collateral Agent or
such other bank or other financial institution as such Canadian Credit Party and
the Canadian Collateral Agent may agree, in the name and under the exclusive
control of the Canadian Collateral Agent. If the XX Xxxx Collateral Account is
not maintained at an office of the Canadian Collateral Agent, then forthwith
upon the establishment of such account, the applicable Canadian Credit Party
shall notify the Canadian Collateral Agent of the location, account name and
account number of such account and shall deliver to the Canadian Collateral
Agent an Account Control Agreement with respect to such XX Xxxx Collateral
Account duly executed by such Canadian Credit Party and the Financial
Intermediary maintaining such XX Xxxx Collateral Account. Any income received
with respect to the balance from time to time standing to the credit of the XX
Xxxx Collateral Account, including any interest or capital gains on Liquid
Investments, shall remain, or be deposited, in the XX Xxxx Collateral Account.
All right, title and interest in and to the cash amounts on deposit from time to
time in the XX Xxxx Collateral Account together with any Liquid Investments from
time to time made pursuant to Section 2.07 and any other property or assets from
time to time deposited in or credited to the XX Xxxx Collateral Account shall
vest in and be under the sole dominion and control of the Canadian Collateral
Agent for the benefit of the Finance Parties, shall constitute part of the
Collateral hereunder and shall not constitute payment of the Finance Obligations
until applied thereto as hereinafter provided. If and when any portion of the LC
Obligations on which any deposit in the XX Xxxx Collateral Account was based
(the "RELEVANT CONTINGENT EXPOSURE") shall become fixed (a "DIRECT EXPOSURE") as
a result of the payment by the Issuing Lender with respect thereto of a draft
presented under any Letter of Credit, the amount of such Direct Exposure (but
not more than the amount in the XX Xxxx Collateral Account at the time) shall be
withdrawn by the Canadian Collateral Agent from the XX Xxxx Collateral Account
and shall be paid to the relevant Administrative Agent for application pursuant
to the Credit Agreement, and the Relevant Contingent Exposure shall thereupon be
reduced by such amount. In addition, funds will be released from the XX Xxxx
Collateral Account at such times and in
- -
such amounts as provided in Section 2.05(r) of the Credit Agreement. Each
Canadian Credit Party hereby irrevocably consents and agrees to each such
distribution. If a Default or an Event of Default shall have occurred and be
continuing, the excess of the funds in the XX Xxxx Collateral Account over the
Relevant Contingent Exposure shall be retained in the XX Xxxx Collateral Account
and, upon the occurrence and continuation of an Event of Default, may be
withdrawn by the Canadian Collateral Agent and applied in the manner specified
in Section 5.04. If immediately available cash on deposit in the XX Xxxx
Collateral Account is not sufficient to make any distribution to a Canadian
Credit Party referred to in this Section 2.06, the Canadian Collateral Agent
shall cause to be liquidated as promptly as practicable such Liquid Investments
in the Cash Collateral Account designated by such Canadian Credit Party as are
required to obtain sufficient cash to make such distribution and,
notwithstanding any other provision of this Section 2.06, such distribution
shall not be made until such liquidation has taken place.
SECTION 2.07 INVESTMENT OF FUNDS IN COLLATERAL ACCOUNTS
Amounts on deposit in the Collateral Accounts shall be invested and
re-invested from time to time in such Liquid Investments as the Parent Borrower
shall determine, which Liquid Investments shall be held in the name and be under
the control of the Canadian Collateral Agent; PROVIDED that, if an Event of
Default has occurred and is continuing, the Canadian Collateral Agent may
liquidate any such Liquid Investments and apply or cause to be applied the
proceeds thereof in the manner specified in Section 5.04. For this purpose,
"LIQUID INVESTMENTS" means Cash Equivalents maturing within 30 days after a Cash
Equivalent is acquired by the Canadian Collateral Agent.
SECTION 2.08 LEASES; NON-ASSIGNABLE CONTRACTS
The grant of any Security Interest in respect of the Collateral shall
not include, with respect to any Canadian Credit Party, any item of property to
the extent the grant by such Canadian Credit Party of the Security Interest
pursuant to this Agreement in such Canadian Credit Party's right, title and
interest in such item of property is prohibited by an applicable enforceable
contractual obligation or requirement of Law or would give any other Person the
enforceable right to terminate its obligations with respect to such item of
property and provided, further, that the limitation in the foregoing proviso
shall not affect, limit, restrict or impair the grant by any Canadian Credit
Party of a security interest pursuant to this Agreement in any money or other
amounts due or to become due under any account, contract, agreement or
intangible. In addition, the Security Interests created by this Agreement do not
extend to the last day of the term of any lease or agreement for lease of Real
Property. Such last day shall be held by the applicable Canadian Credit Party in
trust for the Canadian Collateral Agent (for the benefit of the Finance Parties)
and, on the exercise by the Canadian Collateral Agent of any of its rights under
this Agreement following the occurrence and during the continuance of an Event
of Default, will be assigned by such Canadian Credit Party as directed by the
Canadian Collateral Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Canadian Credit Party represents and warrants that:
SECTION 3.01 TITLE TO COLLATERAL
Such Canadian Credit Party has good and marketable title to, or valid
license, leasehold or similar interests in, all of the Collateral in which it
has granted a security interest hereunder, free and
- -
clear of any Liens other than Permitted Liens. Such Canadian Credit Party has
taken all actions necessary under applicable Law to perfect its interest in any
Receivables purchased by or assigned to it, as against its assignors and
creditors of its assignors. Other than financing statements or other similar or
equivalent documents or instruments with respect to the Security Interests,
Permitted Liens and Liens securing indebtedness to be repaid with the proceeds
of the Finance Obligations and in respect of which the Administrative Agents
have received pay-off letters and instruments appropriate under local Law to
effect the termination of such Liens, no financing statement, mortgage, security
agreement or similar or equivalent document or instrument covering all or any
part of the Collateral is on file or of record in any jurisdiction in which such
filing or recording would be effective to perfect a Lien on such Collateral. No
Collateral is in the possession or control of any Person (other than a Canadian
Credit Party) asserting any claim thereto or security interest therein, except
that the Canadian Collateral Agent or its designee may have possession and/or
control of Collateral as contemplated hereby and by the other Finance Documents.
SECTION 3.02 VALIDITY, PERFECTION AND PRIORITY OF SECURITY INTERESTS.
(a) The Security Interests constitute valid security interests
under the applicable Law securing the Finance Obligations.
(b) When financing statements shall have been filed in the offices
specified in Schedule 4.01 hereto, the Security Interests will constitute
perfected security interests in all right, title and interest of such Canadian
Credit Party in the Collateral to the extent that a security interest therein
may be perfected by filing pursuant to the PPSA, the PERSONAL PROPERTY SECURITY
ACT (Nova Scotia), the PERSONAL PROPERTY SECURITY ACT (New Brunswick) or the
personal property security legislation of any other Canadian province (other
than the Province of Quebec), prior to all other Liens and rights of others
therein except for Permitted Liens.
(c) When a copy of this Agreement or a document evidencing the
assignment made under Section 2.01 has been filed with the Canadian Intellectual
Property, the Security Interests will constitute perfected security interests in
all right, title and interest of such Canadian Credit Party in the Recordable
Intellectual Property therein described to the extent that a security interest
therein may be perfected by such filing pursuant to applicable Law, prior to all
other Liens and rights of others therein except for Permitted Liens.
SECTION 3.03 RECEIVABLES
With respect to each material Receivable of such Canadian Credit Party,
all material records, papers and documents relating thereto (if any) are genuine
and in all respects what they purport to be, and all papers and documents (if
any) relating thereto (i) represent legal, valid and binding obligations of the
respective account debtor, subject to adjustments customary in the business of
such Canadian Credit Party, with respect to unpaid indebtedness or other
monetary obligations incurred by such account debtor in respect of the
performance of labor or services, the sale, lease, license, assignment, exchange
and delivery of the merchandise or other property listed therein, the incurrence
of a secondary obligation as set forth therein or the use of a credit or charge
card or information contained on or for use with such a card or any combination
of the foregoing, and (ii) are the only original writings evidencing and
embodying such obligations of the account debtor named therein (other than
copies created for general accounting purposes) and are in compliance in all
material respects with all applicable federal, provincial and local Laws and
applicable Laws of any relevant foreign jurisdiction.
- -
SECTION 3.04 NO CONSENTS
No consent of any other Person (including, without limitation, any
stockholder or creditor of such Canadian Credit Party or any of its
Subsidiaries) and no order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by any
Governmental Authority is required to be obtained by such Canadian Credit Party
in connection with the execution, delivery or performance of this Agreement, or
in connection with the exercise of the rights and remedies of the Canadian
Collateral Agent pursuant to this Agreement, except (i) as may be required to
perfect (as described in Schedule 4.01 hereto) and maintain the perfection of
the Security Interests, or (ii) in connection with the disposition of the
Collateral by Laws affecting the offering and sale of Securities generally;
PROVIDED, HOWEVER, that to the extent that recordation of the Security Interests
in the Canadian Intellectual Property Office is necessary to perfect the
Security Interests or to render the Security Interests effective against
subsequent third parties, such recordations will not have been made with respect
to the items that are not Recordable Intellectual Property.
SECTION 3.05 DEPOSIT AND SECURITIES ACCOUNTS
Schedule 3.05 sets forth as of the date hereof a complete and correct
list of each Canadian Credit Party's Deposit Accounts, Individual Store Accounts
and Securities Accounts, the name and address of the bank or financial
institution which maintains each such account and the purpose for which such
account is used.
SECTION 3.06 REPURCHASE AGREEMENT. (i) the Repurchase Agreement has
not been amended or modified, nor has any condition thereof been waived by the
U.S. Borrower or the Parent Borrower in a manner adverse in any material respect
to the rights or interests of the Lenders, and (ii) no event of default has
occurred thereunder.
ARTICLE IV
COVENANTS
Each Canadian Credit Party covenants and agrees that until the payment
in full of all Finance Obligations and until there is no commitment by any
Finance Party to make further advances, incur obligations or otherwise give
value, such Canadian Credit Party will comply with the following:
SECTION 4.01 DELIVERY OF PERFECTION CERTIFICATE; INITIAL PERFECTION
AND DELIVERY OF SEARCH REPORTS
Such Canadian Credit Party has (i) delivered its Perfection Certificate
to the Canadian Collateral Agent, (ii) delivered, or will deliver as required by
Section 6.10(f) of the Credit Agreement, to the Canadian Collateral Agent a
fully executed Account Control Agreement with respect to each of its Deposit
Accounts (other than Deposit Accounts maintained with the Canadian Collateral
Agent, Exempt Deposit Accounts and Individual Store Accounts) and Securities
Accounts, and (iii) cause all filings and recordings specified in Schedule
Section 4.01 hereto to have been completed. The information set forth in the
Perfection Certificate shall be correct and complete as of the Closing Date.
- -
SECTION 4.02 CHANGE OF NAME, IDENTITY, STRUCTURE OR LOCATION;
SUBJECTION TO OTHER SECURITY AGREEMENTS
Except pursuant to Asset Dispositions permitted by the Credit Agreement,
such Canadian Credit Party will not change its name, identity, structure, or the
location of its head office or chief executive office in any manner, and shall
not become bound by a security agreement entered into by another Person, in each
case unless it shall have given the Canadian Collateral Agent not less than 30
days' prior notice thereof. Except pursuant to Asset Dispositions permitted by
the Credit Agreement, such Canadian Credit Party shall not in any event change
the location of any Collateral or its name, identity, structure or the location
of its head office or chief executive office or become bound, by a security
agreement entered into by another Person, if such change would cause the
Security Interests to lapse or cease to be perfected unless such Canadian Credit
Party has taken on or before the date of lapse all actions necessary to ensure
that the Security Interests in the Collateral do not lapse or cease to be
perfected.
SECTION 4.03 FURTHER ACTIONS
Such Canadian Credit Party will, from time to time at its expense and in
such manner and form as the Canadian Collateral Agent may reasonably request,
execute, deliver, file and record any financing statement, specific assignment,
instrument, document, agreement or other paper and take any other action
(including, without limitation, any filings of financing or continuation
statements under the PPSA or the personal property security legislation of any
other jurisdiction and any filings with the Canadian Intellectual Property
Office) that from time to time may be necessary or advisable under the PPSA or
with respect to Recordable Intellectual Property, or that the Canadian
Collateral Agent may reasonably request, in order to create, preserve, perfect,
confirm or validate the Security Interests or to enable the Canadian Collateral
Agent and the Finance Parties to obtain the full benefit of this Agreement or to
exercise and enforce any of its rights, powers and remedies created hereunder or
under applicable Law with respect to any of the Collateral it being understood
and agreed that no Account Control Agreements need to be delivered with respect
to the Individual Store Accounts. To the extent permitted by applicable Law,
such Canadian Credit Party hereby authorizes the Canadian Collateral Agent to
file, in the name of such Canadian Credit Party or otherwise and without the
signature or other separate authorization or authentication of such Canadian
Credit Party appearing thereon, such financing statements or continuation
statements as the Canadian Collateral Agent in its sole discretion may deem
necessary or appropriate to further perfect or maintain the perfection of the
Security Interests. Such Canadian Credit Party hereby authorizes the Canadian
Collateral Agent to file financing and continuation statements describing as the
Collateral covered thereby "all of the debtor's personal property and assets" or
words to similar effect, notwithstanding that such description may be broader in
scope than the Collateral described in this Agreement. Such Canadian Credit
Party agrees, where so permitted by applicable Law, that a carbon, photographic,
photostatic or other reproduction of this Agreement or of a financing statement
is sufficient as a financing statement. The Canadian Credit Parties shall pay
the costs of, or incidental to, any recording or filing of any financing or
continuation statements or other assignment documents concerning the Collateral.
SECTION 4.04 COLLATERAL IN POSSESSION OF OTHER PERSONS, LEASED REAL
PROPERTY LOCATIONS
If any of such Canadian Credit Party's Collateral is at any time in the
possession or control of any warehouseman, vendor, bailee or any agents or
processors of any Canadian Credit Party,
- -
such Canadian Credit Party shall (i) notify such warehouseman, vendor, bailee,
agent or processor of the Security Interests, (ii) instruct such warehouseman,
vendor, bailee, agent or processor to hold all such Collateral for the Canadian
Collateral Agent's account and subject to the Canadian Collateral Agent's
instructions and (iii) use commercially reasonable efforts to cause such
warehouseman, vendor, bailee, agent or processor to authenticate a record
acknowledging that it holds possession of such Collateral for the benefit of the
Canadian Collateral Agent and the Finance Parties and make such authenticated
record available to the Canadian Collateral Agent. If any Canadian Credit Party
enters into any lease of Material Real Property after the date hereof, such
Canadian Credit Party will use commercially reasonable efforts to obtain waivers
from the landlords of all such real estate, substantially in the form of Exhibit
B hereto or in such other form as shall be reasonably acceptable to the Canadian
Collateral Agent.
SECTION 4.05 BOOKS AND RECORDS
Such Canadian Credit Party shall keep full and accurate books and
records relating to the Collateral, including, but not limited to, the originals
of all documentation with respect thereto, records of all payments received, all
credits granted thereon, all merchandise returned and all other dealings
therewith, and such Canadian Credit Party will make the same available to the
Canadian Collateral Agent for inspection, as required by Section 6.09 of the
Credit Agreement. Upon direction by the Canadian Collateral Agent, such Canadian
Credit Party shall stamp or otherwise xxxx such books and records in such manner
as the Canadian Collateral Agent may reasonably require in order to reflect the
Security Interests.
SECTION 4.06 DELIVERY OF INSTRUMENTS, ETC.
Such Canadian Credit Party will immediately deliver each Instrument and
each certificated security (other than (i) Cash Equivalents held in a Deposit
Account or a Securities Account and subject to an effective Account Control
Agreement as required by Section 4.14 hereof and (ii) instruments or
certificated Securities received in connection with bankruptcy or reorganization
of suppliers and customers and in settlement of delinquent obligations of, and
other disputes with, customers and suppliers in the ordinary course of business
having individually, a face amount of less than U.S.$750,000 (or the Canadian
Equivalent Amount thereof) in the case of instruments or certificated Securities
subject to this CLAUSE (II)) to the Canadian Collateral Agent, appropriately
indorsed to the Canadian Collateral Agent; PROVIDED that so long as no Default
or Event of Default shall have occurred and be continuing, and except as
required by any other Finance Document, such Canadian Credit Party may (unless
otherwise provided in Section 2.04(b)) retain for collection in the ordinary
course of business any checks, drafts and other Instruments received by it in
the ordinary course of business, and the Canadian Collateral Agent shall,
promptly upon request of such Canadian Credit Party, make appropriate
arrangements for making any other instrument or certificated security pledged by
such Canadian Credit Party available to it for purposes of presentation,
collection or renewal (any such arrangement to be effected, to the extent deemed
appropriate to the Canadian Collateral Agent, against trust receipt or like
document).
SECTION 4.07 COLLECTION AND VERIFICATION OF RECEIVABLES.
(a) COLLECTION OF RECEIVABLES. Such Canadian Credit Party shall
not rescind or cancel any material indebtedness or material obligation evidenced
by any material Receivable, modify, make adjustments to, extend, renew,
compromise or settle any material dispute, claim, suit or legal proceeding
relating to, or sell or assign, any material Receivable, or interest therein,
without the prior
- -
written consent of the Canadian Collateral Agent, except that, subject to the
rights of the Canadian Collateral Agent and the Finance Parties hereunder,
notwithstanding the occurrence and continuance of an Event of Default, such
Canadian Credit Party may allow as adjustments to amounts owing under its
Receivables (i) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which such Canadian Credit
Party finds appropriate in accordance with sound business judgment and (ii) a
refund or credit due as a result of returned or damaged merchandise, all in
accordance with such Canadian Credit Party's ordinary course of business
consistent with its historical collection practices. The costs and expenses
(including, without limitation, attorneys' fees) of collection of Receivables,
whether incurred by such Canadian Credit Party or the Canadian Collateral Agent,
shall be borne by the Canadian Credit Parties.
(b) VERIFICATION OF RECEIVABLES. Upon the occurrence and during the
continuance of an Event of Default, the Canadian Collateral Agent shall have the
right to make test verifications of Receivables in any manner and through any
medium that it considers advisable, and each Canadian Credit Party agrees to
furnish all such assistance and information as the Canadian Collateral Agent may
require in connection therewith. Upon the occurrence and during the continuance
of an Event of Default, each Canadian Credit Party, at its own expense, will
cause its financial officer to furnish to the Canadian Collateral Agent at any
time and from time to time promptly upon the Canadian Collateral Agent's request
(i) a reconciliation of all Receivables, (ii) an aging of all Receivables, (iii)
trail balances and (iv) a test verification of such Receivables as the Canadian
Collateral Agent may request.
SECTION 4.08 NOTIFICATION TO ACCOUNT DEBTORS
Upon the occurrence and during the continuance of any Event of Default
and if so requested by the Canadian Collateral Agent, such Canadian Credit Party
will promptly notify (and such Canadian Credit Party hereby authorizes the
Canadian Collateral Agent so to notify) each account debtor in respect of any
Receivable that such Collateral has been assigned to the Canadian Collateral
Agent hereunder for the benefit of the Finance Parties, and that any payments
due or to become due in respect of such Collateral are to be made by such
account debtor and any other Person via direct wire transfer to the Canadian
Collateral Agent or its designee in accordance with Section 2.04 hereof.
SECTION 4.09 DISPOSITION OF COLLATERAL
Such Canadian Credit Party will not sell, lease, exchange, license,
assign or otherwise dispose of, or grant any option with respect to, any
Collateral or create or suffer to exist any Lien (other than the Security
Interests and Permitted Liens) on any Collateral except that, subject to the
rights of the Canadian Collateral Agent and the Finance Parties hereunder if a
Default or an Event of Default shall have occurred and be continuing, such
Canadian Credit Party may sell, lease, exchange, license, assign or otherwise
dispose of, or grant options with respect to, Collateral to the extent expressly
permitted by the Credit Agreement, whereupon, in the case of any such
disposition, the Security Interests created hereby in such item (but not in any
Proceeds arising from such disposition) shall cease immediately without any
further action on the part of the Canadian Collateral Agent.
SECTION 4.10 INSURANCE
Prior to the Closing Date, such Canadian Credit Party will cause the
Canadian Collateral Agent (together with the Canadian Collateral Agent) to be
named as an insured party and loss payee, effective at all times on and after
the Closing Date, on each insurance policy covering risks relating to any
- -
of its Inventory and Equipment. Each such insurance policy shall include
effective waivers by the insurer of all claims for insurance premiums against
the Canadian Collateral Agent and the Finance Parties, provide for coverage to
the Canadian Collateral Agent for the benefit of the Finance Parties regardless
of the breach by such Canadian Credit Party of any warranty or representation
made therein, not be subject to co-insurance, provide that all insurance
proceeds in excess of U.S.$5,000,000 (or the Canadian Equivalent Amount thereof)
per claim shall be adjusted with and payable to the Canadian Collateral Agent
(for payment to the relevant Administrative Agent for application as required by
Section 2.10(b), (c) or 6.06(b) of the Credit Agreement, if then in effect, or
otherwise as contemplated by the other Finance Documents) and provide that no
cancellation, termination or material modification thereof shall be effective
until at least 30 days after receipt by the Canadian Collateral Agent of notice
thereof. Such Canadian Credit Party hereby appoints the Canadian Collateral
Agent as its attorney-in-fact, effective during the continuance of an Event of
Default, to make proof of loss, claims for insurance and adjustments with
insurers, and to execute or endorse all documents, checks or drafts in
connection with payments made as a result of any insurance policies.
Such Canadian Credit Party assumes all liability and responsibility in
connection with the Collateral acquired by it and the liability of such Canadian
Credit Party to pay the Finance Obligations shall in no way be affected or
diminished by reason of the fact that such Collateral may be lost, destroyed,
stolen, damaged or for any reason whatsoever unavailable to such Canadian Credit
Party.
SECTION 4.11 INFORMATION REGARDING COLLATERAL
Such Canadian Credit Party will, promptly upon request, provide to the
Canadian Collateral Agent all information and evidence it may reasonably request
concerning the Collateral to enable the Canadian Collateral Agent to enforce the
provisions of this Agreement.
SECTION 4.12 COVENANTS REGARDING INTELLECTUAL PROPERTY.
(a) Such Canadian Credit Party (either itself or through licensees)
will, for each Patent, not do any act, or omit to do any act, whereby any Patent
may become invalidated or dedicated to the public, and shall continue to xxxx
any products covered by a Patent with the relevant patent number or indication
that a Patent is pending as required by the patent laws, unless such Canadian
Credit Party shall reasonably and in good faith determine (and notice of such
determination shall have been delivered to the Canadian Collateral Agent) that
any of the Patent is of negligible economic value to such Canadian Credit Party.
(b) Such Canadian Credit Party (either itself or, if permitted
by Law, through its licensees or its sublicensees) will, for each Trademark, (i)
maintain such Trademark in full force free from any claim of abandonment or
invalidity from non-use, material alteration, naked licensing or genericide,
(ii) maintain the quality of products and services offered under such Trademark
in a manner substantially consistent with or better than the quality of such
products and services as of the date hereof, (iii) display such Trademark with
proper notice, including notice of federal registration to the extent permitted
by applicable Law, (iv) not knowingly use or knowingly permit the use of such
Trademark in violation of any third party rights, (v) not permit any assignment
in gross of such Trademark, unless such Canadian Credit Party shall reasonably
and in good faith determine (and notice of such determination shall have been
delivered to the Canadian Collateral Agent) that any of the Trademarks is of
negligible economic value to such Canadian Credit Party and (vi) allow the
Canadian Collateral Agent and its designees the right, at any time and from time
to time, to inspect such Canadian Credit Party's premises and to examine
- -
and observe such Canadian Credit Party's books, records and operations,
including, without limitation, its quality control processes, upon reasonable
notice and at such reasonable times and as often as may be reasonably requested.
(c) Such Canadian Credit Party (either itself or through licensees
or sublicensees) will, for each work covered by a Copyright material to the
conduct of its business, continue to publish, reproduce, display, adopt and
distribute the work with appropriate copyright notice.
(d) Such Canadian Credit Party shall promptly notify the Canadian
Collateral Agent if a Responsible Officer knows or has reason to know that any
Patent, Trademark or Copyright (or any application or registration relating
thereto) may become abandoned or dedicated to the public, or of any adverse
determination or development (including, without limitation, the institution of,
or any such determination or development in, any proceeding in the Canadian
Intellectual Property Office or any court) regarding such Canadian Credit
Party's ownership of any Patent, Trademark, Copyright or Software, its right to
register the same or to keep, use or maintain the same unless such Canadian
Credit Party shall reasonably and in good faith determine (and notice of such
determination shall have been delivered to the Canadian Collateral Agent) that
any of the Patents, Trademarks and Copyrights is of negligible economic value to
such Canadian Credit Party.
(e) Unless such Canadian Credit Party shall reasonably and in good
faith determine (and notice of such determination shall have been delivered to
the Canadian Collateral Agent) that any of the Patents, Trademarks and
Copyrights is of negligible economic value to such Canadian Credit Party, such
Canadian Credit Party Canadian Credit Party will take all necessary steps to
file, maintain and pursue each application relating to the Patents, Trademarks
and/or Copyrights (and to obtain the relevant grant or registration) and to
preserve and maintain all common law rights in any Trademarks and each
registration of the Patents, Trademarks and Copyrights, including filing and
paying fees for applications for renewal, reissues, divisions, continuations,
continuations-in-part, affidavits of use, affidavits of incontestability and
maintenance, and, unless such Canadian Credit Party shall reasonably determine
that any such action would be of negligible economic value, to initiate
opposition, interference, reexamination and cancellation proceedings against
third parties that infringe a Patent, Trademark or Copyright.
(f) If any rights to any Patent, Trademark, Copyright, Software or
License relating thereto is believed infringed, misappropriated, breached or
diluted by a third party, such Canadian Credit Party shall notify the Canadian
Collateral Agent promptly after a Responsible Officer obtains knowledge thereof
and shall, unless such Canadian Credit Party shall reasonably determine that any
such action would be of negligible economic value, promptly xxx for
infringement, misappropriation, breach or dilution and to recover any and all
damages for such infringement, misappropriation or dilution, and take such other
actions as such Canadian Credit Party shall reasonably deem appropriate under
the circumstances to protect such Patent, Trademark, Copyright, Software or
License unless such Canadian Credit party shall reasonably and in good faith
determine (and notice of such determination shall have been delivered to the
Canadian Collateral Agent) that any of the Patents, Trademarks and Copyrights is
of negligible economic value to such Canadian Credit Party.
(g) Within 45 days after the end of each fiscal quarter of the
Parent Borrower, each Canadian Credit Party will (i) inform the Canadian
Collateral Agent of all applications for Patents, Trademarks or Copyrights filed
during such fiscal quarter by such Canadian Credit Party or by any agent,
employee, licensee or delegate on its behalf with the Canadian Intellectual
Property Office or any office or agency in any political subdivision of Canada
or in any other country or any political subdivision
- -
thereof and (ii) upon request of the Canadian Collateral Agent, execute any and
all agreements, instruments, documents and papers as the Canadian Collateral
Agent may reasonably request to evidence the Security Interests in such
application, any resulting Patent, Trademark or Copyright and the goodwill or
Accounts and general intangibles of such Canadian Credit Party relating thereto
or represented thereby, and such Canadian Credit Party hereby appoints the
Canadian Collateral Agent its attorney-in-fact to execute and file such writings
for the foregoing purposes.
(h) As to all material Licenses (excluding non-exclusive Licenses of
Software) entered into after the date hereof with any third party licensor, such
Canadian Credit Party will use commercially reasonable and good faith efforts to
obtain all requisite consents or approvals by the licensor to perfect the
Security Interests therein.
(i) Such Canadian Credit Party has taken, and shall take all actions
(and cause all other Persons, including licensees, to the extent such other
Persons are subject to its control) which are necessary or advisable to protect,
preserve and confirm the validity, priority, perfection or enforcement of the
rights granted to the Canadian Collateral Agent under this Agreement and (iii)
give the Canadian Collateral Agent prompt written notice in accordance with
Section 4.12(g) above, if, after the date hereof, such Canadian Credit Party
shall obtain rights to any Trademarks, Patents or Copyrights, or enter into any
new license agreements regarding any of the foregoing, and such Canadian Credit
Party hereby agrees that the provisions of this Agreement shall automatically
apply thereto. Such Canadian Credit Party will use commercially reasonable
efforts so as not to permit the inclusion in any material contract or agreement
governing or relating to any Trademarks, Patents or Copyrights obtained after
the date hereof or any license agreements entered into after the date hereof
relating to any of the foregoing of any provisions that could or might in any
way prevent or materially impair the creation of a security interest in, or the
assignment of, such Canadian Credit Party's rights and interests therein. Such
Canadian Credit Party will execute any and all agreements, instruments,
documents and papers as the Canadian Collateral Agent may request to evidence
the Security Interests in any Patent, Trademark or Copyright (or application
therefor) and the goodwill or accounts and general intangibles of such Canadian
Credit Party relating thereto or represented thereby, and such Canadian Credit
Party hereby appoints the Canadian Collateral Agent its attorney-in-fact to
execute and file such writings for the foregoing purposes.
SECTION 4.13 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS
No Canadian Credit Party shall establish after the date hereof or permit
to exist any Deposit Account (except for any such account maintained with the
Canadian Collateral Agent, Exempt Deposit Accounts and Individual Store
Accounts) or any Securities Account (except any such account maintained with the
Canadian Collateral Agent or constituting Collateral Accounts) without promptly
delivering to the Canadian Collateral Agent a fully executed Account Control
Agreement with respect to such account. Subject to Section 2.04(b) hereof and
the rights of the Canadian Collateral Agent under Article V hereof, each
Canadian Credit Party shall cause all Proceeds of Collateral hereunder to be
deposited in a Deposit Account maintained with the Canadian Collateral Agent or
with respect to which an effective Account Control Agreement has been delivered
to the Canadian Collateral Agent. No Canadian Credit Party shall permit the
aggregate amount of overnight funds on deposit in all Exempt Deposit Accounts
and Individual Store Accounts to exceed U.S.$5,000,000 (or the Canadian
Equivalent Amount thereof).
- -
SECTION 4.14 MODIFICATION OF ASSIGNED AGREEMENTS, ETC.
Such Canadian Credit Party will not, except with the consent of the
relevant Administrative Agent, terminate any Assigned Agreement, waive any
default under or breach of any Assigned Agreement, compromise or settle any
material dispute, claim, suit or legal proceeding relating to any Assigned
Agreement, sell or assign any Assigned Agreement or interest therein, consent to
or permit or accept any prepayment of amounts to become due under or in
connection with any Assigned Agreement, except as expressly provided therein, or
take any other action in connection with any Assigned Agreement which would
impair the value of the interests or rights of such Canadian Credit Party
thereunder or which would materially impair the interests or rights of the
Canadian Collateral Agent under this Agreement, except that, unless the Canadian
Collateral Agent shall have notified such Canadian Credit Party upon the
occurrence of a Default or an Event of Default that this exception is no longer
applicable, such Canadian Credit Party may modify, make adjustments with respect
to, extend or renew any Assigned Agreements in the ordinary course of business.
ARTICLE V
GENERAL AUTHORITY; REMEDIES
SECTION 5.01 GENERAL AUTHORITY
Each Canadian Credit Party hereby irrevocably appoints the Canadian
Collateral Agent and any officer or agent duly appointed by the Canadian
Collateral Agent as its true and lawful attorney-in-fact, with full power of
substitution, in the name of such Canadian Credit Party, the Canadian Collateral
Agent, the Finance Parties or otherwise, for the sole use and benefit of the
Canadian Collateral Agent and the Finance Parties, but at such Canadian Credit
Party's expense, to the extent permitted by Law, to exercise at any time and
from time to time while an Event of Default has occurred and is continuing all
or any of the following powers with respect to all or any of the Collateral, all
acts of such attorney being hereby ratified and confirmed; such power, being
coupled with an interest, is irrevocable until the Finance Obligations are paid
in full and until there is no commitment by any Finance Parties to make further
advances, incur obligations or otherwise give value:
(i) to take any and all appropriate action and to execute any
and all documents and instruments which may be necessary or desirable to
carry out the terms of this Agreement;
(ii) to receive, take, indorse, assign and deliver any and all
checks, notes, drafts, acceptances, documents and other negotiable and
non-negotiable instruments taken or received by such Canadian Credit Party
as, or in connection with, Collateral;
(iii) to accelerate any Receivable which may be accelerated in
accordance with its terms, and to otherwise demand, xxx for, collect,
receive and give acquittance for any and all monies due or to become due on
or by virtue of any Collateral;
(iv) to commence, settle, compromise, compound, prosecute,
defend or adjust any claim, suit, action or proceeding with respect to, or
in connection with, the Collateral;
(v) to sell, transfer, assign or otherwise deal in or with
the Collateral or the Proceeds or avails thereof, including, without
limitation, for the implementation of any
- -
assignment, lease, License, sublicense, grant of option, sale or other
disposition of any Patent, Trademark, Copyright or Software or any action
related thereto, as fully and effectually as if the Canadian Collateral
Agent were the absolute owner thereof;
(vi) to extend the time of payment of any or all of the
Collateral and to make any allowance and other adjustments with respect
thereto; and
(vii) to do, at its option, but at the expense of such Canadian
Credit Party, at any time or from time to time, all acts and things which
the Canadian Collateral Agent reasonably deems necessary to protect or
preserve the Collateral and to realize upon the Collateral.
SECTION 5.02 REMEDIES UPON EVENT OF DEFAULT.
(a) If any Event of Default has occurred and is continuing, the
Canadian Collateral Agent may, in addition to all other rights and remedies
granted to it in this Agreement and in any other agreement securing, evidencing
or relating to the Finance Obligations: (i) exercise on behalf of the Finance
Parties all rights and remedies of a secured party under the PPSA (whether or
not in effect in the jurisdiction where such rights are exercised) and, in
addition, (ii) without demand of performance or other demand or notice of any
kind (except as herein provided or as may be required by mandatory provisions of
Law) to or upon any Canadian Credit Party or any other Person (all of which
demands and/or notices are hereby waived by each Canadian Credit Party), (A)
withdraw all cash and Liquid Investments in the Collateral Accounts and apply
such cash and Liquid Investments and other cash, if any, then held by it as
Collateral as specified in Section 5.04, (B) give notice and take sole
possession and control of all amounts on deposit in or credited to any
Collateral Account pursuant to the related Account Control Agreement and apply
all such funds as specified in Section 5.04 and (C) if there shall be no such
cash, Liquid Investments or other amounts or if such cash, Liquid Investments
and other amounts shall be insufficient to pay all the Finance Obligations in
full or cannot be so applied for any reason or if the Canadian Collateral
Account determines to do so, collect, receive, appropriate and realize upon the
Collateral and/or sell, assign, give an option or options to purchase or
otherwise dispose of and deliver the Collateral (or contract to do so) or any
part thereof at public or private sale, at any office of the Canadian Collateral
Agent or elsewhere in such manner as is commercially reasonable and as the
Canadian Collateral Agent may deem best, for cash, on credit or for future
delivery, without assumption of any credit risk and at such price or prices as
the Canadian Collateral Agent may deem satisfactory.
(b) The Canadian Collateral Agent shall give each Canadian Credit
Party not less than 15 days' prior notice of the time and place of any sale or
other intended disposition of any of the Collateral, except any Collateral which
is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market. Any such notice shall (i) in the case
of a public sale, state the time and place fixed for such sale, (ii) in the case
of a private sale, state the day after which such sale may be consummated, (iii)
contain the information specified in the personal property security legislation
of the applicable jurisdiction, (iv) be authenticated and (v) be sent to the
parties required to be notified pursuant to the applicable Law; PROVIDED that,
if the Canadian Collateral Agent fails to comply with this sentence in any
respect, its liability for such failure shall be limited to the liability (if
any) imposed on it as a matter of law under the personal property security
legislation of the applicable jurisdiction. Except as otherwise provided herein,
each Canadian Credit Party hereby waives, to the extent permitted by applicable
Law, notice and judicial hearing in connection with the Canadian Collateral
Agent's taking possession or disposition of any of the Collateral.
- -
(c) The Canadian Collateral Agent or any Finance Party may be the
purchaser of any or all of the Collateral so sold at any public sale (or, if the
Collateral is of a type customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard price quotations, at any
private sale). Each Canadian Credit Party will execute and deliver such
documents and take such other action as the Canadian Collateral Agent reasonably
deems necessary or advisable in order that any such sale may be made in
compliance with Law. Upon any such sale, the Canadian Collateral Agent shall
have the right to deliver, assign and transfer to the purchaser thereof the
Collateral so sold. Each purchaser at any such sale shall hold the Collateral so
sold to it absolutely and free from any claim or right of whatsoever kind. Any
such public sale shall be held at such time or times within ordinary business
hours and at such place or places as the Canadian Collateral Agent may fix in
the notice of such sale. At any such sale, the Collateral may be sold in one lot
as an entirety or in separate parcels, as the Canadian Collateral Agent may
determine. The Canadian Collateral Agent shall not be obligated to make any such
sale pursuant to any such notice. The Canadian Collateral Agent may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
the sale, and such sale may be made at any time or place to which the same may
be so adjourned without further notice. In the case of any sale of all or any
part of the Collateral on credit or for future delivery, the Collateral so sold
may be retained by the Canadian Collateral Agent until the selling price is paid
by the purchaser thereof, but the Canadian Collateral Agent shall not incur any
liability in the case of the failure of such purchaser to take up and pay for
the Collateral so sold and, in the case of any such failure, such Collateral may
again be sold upon like notice.
(d) For the purpose of enforcing any and all rights and remedies
under this Agreement, the Canadian Collateral Agent may, if any Event of Default
has occurred and is continuing, (i) require each Canadian Credit Party to, and
each Canadian Credit Party agrees that it will, at its expense and upon the
request of the Canadian Collateral Agent, forthwith assemble, store and keep all
or any part of the Collateral as directed by the Canadian Collateral Agent and
make it available at a place designated by the Canadian Collateral Agent which
is, in the Canadian Collateral Agent's opinion, reasonably convenient to the
Canadian Collateral Agent and such Canadian Credit Party, whether at the
premises of such Canadian Credit Party or otherwise, it being understood that
such Canadian Credit Party's obligation so to deliver the Collateral is of the
essence of this Agreement and that, accordingly, upon application to a court of
equity having jurisdiction, the Canadian Collateral Agent shall be entitled to a
decree requiring specific performance by such Canadian Credit Party of such
obligation; (ii) to the extent permitted by applicable Law, enter, with or
without process of law and without breach of the peace, any premise where any of
the Collateral is or may be located, and without charge or liability to any
Canadian Credit Party, seize and remove such Collateral from such premises;
(iii) have access to and use such Canadian Credit Party's books and records
relating to the Collateral; and (iv) prior to the disposition of the Collateral,
store or transfer it without charge in or by means of any storage or
transportation facility owned or leased by such Canadian Credit Party, process,
repair or recondition it or otherwise prepare it for disposition in any manner
and to the extent the Canadian Collateral Agent deems appropriate and, in
connection with such preparation and disposition, use without charge any
Intellectual Property or technical process used by such Canadian Credit Party.
The Canadian Collateral Agent may also render any or all of the Collateral
unusable at any Canadian Credit Party's premises and may dispose of such
Collateral on such premises without liability for rent or costs.
(e) Without limiting the generality of the foregoing, if any Event
of Default has occurred and is continuing:
- -
(i) the Canadian Collateral Agent may, subject to the express
terms of any valid and enforceable restriction in favor of a Person who is
not a Group Company that prohibits, or requires any consent or establishes
any other conditions for, an assignment thereof, license, or sublicense,
whether general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any Patents, Trademarks or Copyrights included in the
Collateral throughout the world for such term or terms, on such conditions
and in such manner as the Canadian Collateral Agent shall determine subject
to the requirements of the PPSA in respect thereof;
(ii) the Canadian Collateral Agent may (without assuming any
obligations or liability thereunder), at any time and from time to time,
enforce (and shall have the exclusive right to enforce) against any
Licensee or sublicensee all rights and remedies of any Canadian Credit
Party in, to and under any License and take or refrain from taking any
action under any provision thereof, and each Canadian Credit Party hereby
releases the Canadian Collateral Agent and each of the Finance Parties
from, and agrees to hold the Canadian Collateral Agent and each of the
Finance Parties free and harmless from and against any claims arising out
of, any lawful action so taken or omitted to be taken with respect thereto;
(iii) upon request by the Canadian Collateral Agent, each
Canadian Credit Party will use its commercially reasonable efforts to
obtain all requisite consents or approvals by the licensor or sublicensor
of each License to effect the assignment of all of such Canadian Credit
Party's right, title and interest thereunder to the Canadian Collateral
Agent or its designee and will execute and deliver to the Canadian
Collateral Agent a power of attorney, in form and substance reasonably
satisfactory to the Canadian Collateral Agent, for the implementation of
any lease, assignment, License, sublicense, grant of option, sale or other
disposition of a Patent, Trademark or Copyright; and
(iv) the Canadian Collateral Agent may direct each Canadian
Credit Party to refrain, in which event each such Canadian Credit Party
shall refrain, from using or practicing any Trademark, Patent or Copyright
in any manner whatsoever, directly or indirectly, and shall, if requested
by the Canadian Collateral Agent, change such Canadian Credit Party's name
to eliminate therefrom any use of any Trademark and will execute such other
and further documents as the Canadian Collateral Agent may request to
further confirm this change and transfer ownership of the Trademarks,
Patents, Copyrights and registrations and any pending applications therefor
to the Canadian Collateral Agent.
(f) In the event of any disposition following the occurrence and
during the continuance of any Event of Default of any Patent, Trademark or
Copyright pursuant to this Article V, each Canadian Credit Party shall supply
its know-how and expertise relating to the manufacture and sale of the products
or services bearing Trademarks or the products, services or works made or
rendered in connection with or under Patents, Trademarks or Copyrights, and its
customer lists and other records relating to such Patents, Trademarks or
Copyrights and to the distribution of said products, services or works, to the
Canadian Collateral Agent.
(g) If any Event of Default has occurred and is continuing, the
Canadian Collateral Agent, instead of exercising the power of sale conferred
upon it pursuant to this Section 5.02, may proceed by a suit or suits at law or
in equity to foreclose the Security Interests and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts of competent
jurisdiction, and may in
- -
addition institute and maintain such suits and proceedings as the Canadian
Collateral Agent may deem appropriate to protect and enforce the rights vested
in it by this Agreement.
(h) If any Event of Default has occurred and is continuing, the
Canadian Collateral Agent shall, to the extent permitted by applicable Law,
without notice to any Canadian Credit Party or any party claiming through any
Canadian Credit Party, without regard to the solvency or insolvency at such time
of any Person then liable for the payment of any of the Finance Obligations,
without regard to the then value of the Collateral and without requiring any
bond from any complainant in such proceedings, be entitled as a matter of right
to the appointment of a receiver or receivers (who may be the Canadian
Collateral Agent) of the Collateral or any part thereof, and of the profits,
revenues and other income thereof, pending such proceedings, with such powers as
the court making such appointment shall confer, and to the entry of an order
directing that the profits, revenues and other income of the property
constituting the whole or any part of the Collateral be segregated, sequestered
and impounded for the benefit of the Canadian Collateral Agent and the Finance
Parties, and each Canadian Credit Party irrevocably consents to the appointment
of such receiver or receivers and to the entry of such order.
(i) Each Canadian Credit Party agrees, to the extent it may lawfully
do so, that it will not at any time in any manner whatsoever claim or take the
benefit or advantage of, any appraisal, valuation, stay, extension, moratorium,
turnover or redemption Law, or any Law permitting it to direct the order in
which the Collateral shall be sold, now or at any time hereafter in force which
may delay, prevent or otherwise affect the performance or enforcement of this
Agreement, and each Canadian Credit Party hereby waives all benefit or advantage
of all such Laws. Each Canadian Credit Party covenants that it will not hinder,
delay or impede the execution of any power granted to the Canadian Collateral
Agent, the Administrative Agents or any other Finance Party in any Finance
Document.
(j) Each Canadian Credit Party, to the extent it may lawfully do so,
on behalf of itself and all who claim through or under it, including, without
limitation, any and all subsequent creditors, vendees, assignees and lienors,
waives and releases all rights to demand or to have any marshalling of the
Collateral upon any sale, whether made under any power of sale granted herein or
pursuant to judicial proceedings or under any foreclosure or any enforcement of
this Agreement, and consents and agrees that all of the Collateral may at any
such sale be offered and sold as an entirety.
(k) Each Canadian Credit Party waives, to the extent permitted by
Law, presentment, demand, protest and any notice of any kind (except the notices
expressly required hereunder or in the other Finance Documents) in connection
with this Agreement and any action taken by the Canadian Collateral Agent with
respect to the Collateral.
SECTION 5.03 LIMITATION ON DUTY OF CANADIAN COLLATERAL AGENT IN
RESPECT OF COLLATERAL
Beyond the exercise of reasonable care in the custody thereof, neither
the Canadian Collateral Agent nor the Finance Parties shall have any duty to
exercise any rights or take any steps to preserve the rights of any Canadian
Credit Party in the Collateral in its or their possession or control or in the
possession or control of any agent or bailee or any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto, nor shall the Canadian Collateral Agent or any Finance Party be liable
to any Canadian Credit Party or any other Person for failure to meet any
obligation imposed by the PPSA. Each Canadian Credit Party agrees that the
Canadian Collateral Agent shall at no time be required to, nor shall the
Canadian Collateral Agent be liable to any Canadian Credit
- -
Party for any failure to, account separately to any Canadian Credit Party for
amounts received or applied by the Canadian Collateral Agent from time to time
in respect of the Collateral pursuant to the terms of this Agreement. Without
limiting the foregoing, the Canadian Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Canadian Collateral Agent accords its own property, and shall not
be liable or responsible for any loss or damage to any of the Collateral, or for
any diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee or other agent or bailee
selected by the Canadian Collateral Agent in good faith.
SECTION 5.04 APPLICATION OF PROCEEDS.
(a) PRIORITY OF DISTRIBUTIONS. The Proceeds of any sale of, or other
realization upon, all or any part of the Collateral and any cash held in the
Collateral Accounts shall be applied as provided in Section 8.03 of the Credit
Agreement. The Canadian Collateral Agent may make distributions hereunder in
cash or in kind or, on a ratable basis, in any combination thereof.
(b) DISTRIBUTIONS WITH RESPECT TO LETTERS OF CREDIT AND BANKERS'
ACCEPTANCES. Each of the Canadian Credit Parties and the Finance Parties agrees
and acknowledges that if (after all outstanding Loans, LC obligations and BA
Reimbursement Obligations have been paid in full) the Lenders are to receive a
distribution on account of undrawn amounts with respect to Letters of Credit
issued (or deemed issued) or Bankers' Acceptances issued under the Credit
Agreement, such amounts shall be deposited in the applicable XX Xxxx Collateral
Account (in the case of Letters of Credit), or the relevant cash collateral
account established pursuant to Section 2.06(k) of the Credit Agreement (the "XX
XXXX COLLATERAL ACCOUNT") (in the case of Bankers' Acceptances), as cash
security for the repayment of Finance Obligations owing to the Lenders as such.
Upon termination of all outstanding Letters of Credit and Bankers' Acceptances,
all of such cash security shall be applied to the remaining Finance Obligations
of the Lenders. If there remains any excess cash security, such excess cash
shall be withdrawn by the Canadian Collateral Agent or by the U.S. Collateral
Agent, as the case may be, from the U.S. XX Xxxx Collateral Account or the
Canadian XX Xxxx Collateral Account, respectively, or by the Canadian Collateral
Agent from the XX Xxxx Collateral Account, and distributed in accordance with
Section 5.04(a) hereof.
(c) RELIANCE BY CANADIAN COLLATERAL AGENT. For purposes of applying
payments received in accordance with this Section 5.04, the Canadian Collateral
Agent shall be entitled to rely upon (i) the relevant Administrative Agent under
the Credit Agreement and (ii) the authorized representative (the
"REPRESENTATIVE") for the Derivatives Creditors for a determination (which the
relevant Administrative Agent, each Representative for any Derivatives Creditor
and the Finance Parties agree (or shall agree) to provide upon request of the
Canadian Collateral Agent) of the outstanding Senior Obligations and Derivatives
Obligations owed to the Finance Parties, and shall have no liability to any
Canadian Credit Party or any other Finance Party for actions taken in reliance
on such information except in the case of its gross negligence or willful
misconduct. Unless it has actual knowledge (including by way of written notice
from a Derivatives Creditor) to the contrary, the Canadian Collateral Agent, in
acting hereunder, shall be entitled to assume that no Derivatives Agreements are
in existence. All distributions made by the Canadian Collateral Agent pursuant
to this Section shall be presumptively correct (except in the event of manifest
error), and the Canadian Collateral Agent shall have no duty to inquire as to
the application by the Finance Parties of any amounts distributed to them.
- -
(d) DEFICIENCIES. It is understood that the Canadian Credit Parties
shall remain liable to the extent of any deficiency between the amount of the
proceeds of the Collateral and the amount of the Finance Obligations.
SECTION 5.05 ASSIGNED AGREEMENTS
Each Canadian Credit Party hereby irrevocably authorizes and empowers
the Canadian Collateral Agent, in the Canadian Collateral Agent's sole
discretion, if an Event of Default has occurred and is continuing, to assert,
either directly or on behalf of such Canadian Credit Party, any claims such
Canadian Credit Party may have from time to time against any other party to any
Assigned Agreement or to otherwise exercise any right or remedy of such Canadian
Credit Party under any Assigned Agreement (including without limitation, the
right to enforce directly against any party to an Assigned Agreement all of such
Canadian Credit Party's rights thereunder, to make all demands and give all
notices and make all requests required or permitted to be made by such Canadian
Credit Party under any Assigned Agreements) as the Canadian Collateral Agent may
deem proper. Each Canadian Credit Party hereby irrevocably makes, constitutes
and appoints the Canadian Collateral Agent (and all officers, employees or
agents designated by the Canadian Collateral Agent) as such Canadian Credit
Party's true and lawful attorney-in-fact for the purpose of enabling the
Canadian Collateral Agent to assert and collect such claims and to exercise such
rights and remedies.
ARTICLE VI
COLLATERAL AGENT
SECTION 6.01 CONCERNING THE CANADIAN COLLATERAL AGENT
The provisions of Article IX of the Credit Agreement shall inure to the
benefit of the Canadian Collateral Agent in respect of this Agreement and shall
be binding upon all Canadian Credit Parties and all Finance Parties and upon the
parties hereto in such respect. In furtherance and not in derogation of the
rights, privileges and immunities of the Canadian Collateral Agent therein set
forth:
(i) The Canadian Collateral Agent is authorized to take all
such actions as are provided to be taken by it as Canadian Collateral Agent
hereunder and all other action reasonably incidental thereto. As to any
matters not expressly provided for herein (including, without limitation,
the timing and methods of realization upon the Collateral), the Canadian
Collateral Agent shall act or refrain from acting in accordance with
written instructions [from the Required Lenders] or, in the absence of such
instructions or provisions, in accordance with its discretion.
(ii) The Canadian Collateral Agent shall not be responsible
for the existence, genuineness or value of any of the Collateral or for the
validity, perfection, priority or enforceability of the Security Interests
in any of the Collateral, whether impaired by operation of law or by reason
of any action or omission to act on its part hereunder unless such action
or omission constitutes gross negligence or willful misconduct. The
Canadian Collateral Agent shall have no duty to ascertain or inquire as to
the performance or observance of any of the terms of this Agreement by any
Canadian Credit Party.
- -
SECTION 6.02 APPOINTMENT OF CO-AGENT
At any time or times, in order to comply with any legal requirement in
any jurisdiction, the Canadian Collateral Agent may appoint another bank or
trust company or one or more other persons, either to act as co-agent or
co-agents, jointly with the Canadian Collateral Agent, or to act as separate
agent or agents on behalf of the Finance Parties with such power and authority
as may be necessary for the effectual operation of the provisions hereof and may
be specified in the instrument of appointment (which may, in the discretion of
the Canadian Collateral Agent, include provisions for the protection of such
co-agent or separate agent similar to the provisions of Section 6.01).
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 NOTICES
(a) Unless otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be in writing (including by
facsimile transmission) and mailed, faxed or delivered, to the address,
facsimile number or (subject to SUBSECTION (B) below) electronic mail address
specified for notices: (i) in the case of any Subsidiary Guarantor, as set forth
in Section 5.01 of the Guaranty; (ii) in the case of the Borrowers, the
Administrative Agents or any Lender, as specified in or pursuant to Section
10.01 of the Credit Agreement; (iii) in the case of the Canadian Collateral
Agent, as set forth in the signature pages hereto; (iv) in the case of any
Derivatives Creditor as set forth in any applicable Derivatives Agreement; or
(v) in the case of any party, at such other address as shall be designated by
such party in a notice to the Canadian Collateral Agent and each other party
hereto. All such notices and other communications shall be deemed to be given or
made upon the earlier to occur of: (i) actual receipt by the intended recipient
and (ii)(A) if delivered by hand or by courier, when signed for by the intended
recipient; (B) if delivered by mail, four Business Days after deposit in the
mails, postage prepaid; (C) if delivered by facsimile transmission, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic
mail (which form of delivery is subject to the provisions of SUBSECTION (b)
below), when delivered. Rejection or refusal to accept, or the inability to
deliver because of a changed address of which no notice was given, shall not
affect the validity of notice given in accordance with this Section.
(b) Except as expressly provided herein or as may be agreed by the
Administrative Agents in their sole discretion, electronic mail and internet and
intranet websites may be used only to distribute routine communications, such as
financial statements and other information, and to distribute Finance Documents
for execution by the parties thereto, to distribute executed Finance Documents
in Adobe PDF format and may not be used for any other purpose.
SECTION 7.02 NO WAIVERS; NON-EXCLUSIVE REMEDIES
No failure or delay on the part of the Canadian Collateral Agent or any
Finance Party to exercise, no course of dealing with respect to, and no delay in
exercising, any right, power or privilege under this Agreement or any other
Finance Document or any other document or agreement contemplated hereby or
thereby and no course of dealing between the Canadian Collateral Agent or any
Finance Party and any of the Canadian Credit Parties shall operate as a waiver
thereof nor shall any single or partial exercise of any such right, power or
privilege hereunder or under any Finance Document preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder or
- -
thereunder. The rights and remedies provided herein and in the other Finance
Documents are cumulative and are not exclusive of any other remedies provided by
Law. Without limiting the foregoing, nothing in this Agreement shall impair the
right of any Finance Party to exercise any right of set-off or counterclaim it
may have and to apply the amount subject to such exercise to the payment of
indebtedness of any Canadian Credit Party other than its indebtedness under the
Finance Documents. Each Canadian Credit Party agrees, to the fullest extent it
may effectively do so under applicable Law, that any holder of a participation
in a Finance Obligation, whether or not acquired pursuant to the terms of any
applicable Finance Document, may exercise rights of set-off or counterclaim or
other rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Canadian Credit Party in the amount
of such participation.
SECTION 7.03 COMPENSATION AND EXPENSES OF THE CANADIAN COLLATERAL
AGENT; INDEMNIFICATION.
(a) EXPENSES. The Canadian Credit Parties, jointly and severally,
agree (i) to pay or reimburse the Canadian Collateral Agent for all
out-of-pocket costs and expenses incurred in connection with the preparation,
negotiation and execution of this Agreement and any amendment, waiver, consent
or other modification of the provisions hereof (whether or not the transactions
contemplated hereby are consummated), and the consummation of the transactions
contemplated hereby, including all fees, disbursements and other charges of
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP, the U.S. counsel for the Canadian
Collateral Agent and XxXxxxxx Xxxxxxxx LLP, the Canadian counsel for the
Canadian Collateral Agent, (ii) to pay or reimburse the Canadian Collateral
Agent and the other Finance Parties for all taxes which the Canadian Collateral
Agent or any Finance Party may be required to pay by reason of the security
interests granted in the Collateral (including any applicable transfer taxes) or
to free any of the Collateral from the lien thereof and (iii) to pay or
reimburse each Agent, any Representative of one or more Derivatives Creditors
and each other Finance Party for all reasonable costs and expenses incurred in
connection with the enforcement, attempted enforcement or preservation of any
rights and remedies under this Agreement (including all such costs and expenses
incurred during any "workout" or restructuring in respect of the Finance
Obligations and during any legal proceeding, including any proceeding under any
bankruptcy or insolvency proceeding), including all reasonable fees and
disbursements of counsel (including the allocated charges of internal counsel).
The foregoing costs and expenses shall include all search, filing, recording,
title insurance and appraisal charges and fees and taxes related thereto, and
other out-of-pocket expenses incurred by any Agent and the costs of independent
public accountants and other outside experts retained by or on behalf of the
Agents and the Finance Parties. The agreements in this Section 7.03(a) shall
survive the termination of the Commitments and Derivatives Agreements and
repayment of all Finance Obligations.
(b) PROTECTION OF COLLATERAL. If any Canadian Credit Party fails to
comply with the provisions of any Finance Document, such that the value of any
Collateral or the validity, perfection, rank or value of any Security Interest
is thereby diminished or potentially diminished or put at risk, the Canadian
Collateral Agent may, but shall not be required to, effect such compliance on
behalf of such Canadian Credit Party, and the Canadian Credit Parties shall
reimburse the Canadian Collateral Agent for the costs thereof on demand. All
insurance expenses and all expenses of protecting, storing, warehousing,
appraising, handling, maintaining and shipping the Collateral, any and all
excise, property, sales and use taxes imposed by any provincial, federal or
local authority on any of the Collateral, or in respect of periodic appraisals
and inspections of the Collateral (as permitted by the Credit Agreement), or in
respect of the sale or other disposition thereof shall be borne and paid by the
Canadian Credit Parties. If any Canadian Credit Party fails to promptly pay any
portion thereof when due, the Canadian Collateral Agent
- -
may, at its option, but shall not be required to, pay the same and charge the
Canadian Credit Parties' account therefor, and the Canadian Credit Parties agree
to reimburse the Canadian Collateral Agent therefor on demand. All sums so paid
or incurred by the Canadian Collateral Agent for any of the foregoing and any
and all other sums for which any Canadian Credit Party may become liable
hereunder and all costs and expenses (including attorneys' fees, legal expenses
and court costs) reasonably incurred by the Canadian Collateral Agent or any
Finance Party in enforcing or protecting the Security Interests or any of their
rights or remedies under this Agreement, shall, together with interest thereon
until paid at the Base Rate (expressed as a rate per annum in accordance with
Section 2.15(c) of the Credit Agreement) applicable to Canadian Revolving Base
Rate Loans plus 2% per annum, be additional Finance Obligations hereunder.
(c) INDEMNIFICATION. Whether or not the transactions contemplated
hereby or by the other Finance Documents are consummated, each Canadian Credit
Party, jointly and severally, agrees to indemnify, save and hold harmless each
Indemnitee from and against: (i) any and all claims, demands, actions or causes
of action that may at any time (including at any time following repayment of the
Finance Obligations and the resignation or removal of any Agent or
Representative or the replacement of any Lender) be asserted or imposed against
any Indemnitee, arising out of or in any way relating to or arising out of the
manufacture, ownership, ordering, purchasing, delivery, control, acceptance,
lease, financing, possession, operation, condition, sale, return or other
disposition or use of the Collateral (including, without limitation, latent or
other defects, whether or not discoverable), the violation of the Laws of any
country, state or other Governmental Authority, or any tort (including, without
limitation, any claims, arising or imposed under the doctrine of strict
liability, or for or on account of injury to or the death of any Person
(including any Indemnitee), or property damage) or contract claim;; (ii) any
administrative or investigative proceeding by any Governmental Authority arising
out of or related to a claim, demand, action or cause of action described in
CLAUSE (I) above; and (iii) any and all liabilities (including liabilities under
indemnities), losses, costs or expenses (including fees and disbursements of
counsel) that any Indemnitee suffers or incurs as a result of the assertion of
any foregoing claim, demand, action or cause of action or proceeding, or as a
result of the preparation of any defense in connection with any foregoing claim,
demand, action or cause of action or proceeding, in all cases, and whether or
not an Indemnitee is a party to such claim, demand, action or cause of action,
or proceeding; PROVIDED that no Indemnitee shall be entitled to indemnification
for any claim to the extent such claim is determined by a court of competent
jurisdiction in a final non-appealable judgment to have been caused by its own
gross negligence or willful misconduct; and PROVIDED FURTHER that the Canadian
Credit Parties shall not be required to reimburse the legal fees and expenses of
more than one outside counsel (in addition to up to one local counsel in each
applicable local jurisdiction) for all Indemnitees unless, in the written
opinion of outside counsel reasonably satisfactory to the Canadian Credit
Parties and the Canadian Collateral Agent, representation of all such
Indemnitees would be inappropriate due to the existence of an actual or
potential conflict of interest. In the case of an investigation, litigation or
other proceeding to which the indemnity in this Section 7.03(b) applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by any Canadian Credit Party, its directors, shareholders
or creditors or an Indemnitee or any other Person or any Indemnitee is otherwise
a party thereto and whether or not the transactions contemplated hereby are
consummated. Without prejudice to the survival of any other agreement of the
Canadian Credit Parties hereunder and under the other Finance Documents, the
agreements and obligations of the Canadian Credit Parties contained in this
Section 7.03(b) shall survive the repayment of the Loans, LC Obligations, BA
Reimbursement Obligations and other obligations under the Finance Documents and
the termination of the Commitments. Any amounts paid by any Indemnitee as to
which such Indemnitee has a right to reimbursement hereunder shall constitute
Finance Obligations.
- -
(d) CONTRIBUTION. If and to the extent that the obligations of any
Canadian Credit Party under this Section 7.03 are unenforceable for any reason,
each Canadian Credit Party hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations which is permissible under
applicable Law.
SECTION 7.04 ENFORCEMENT
The Finance Parties agree that this Agreement may be enforced only by
the action of the Canadian Collateral Agent, acting upon the instructions of the
Required Lenders (or, after the date on which all Senior Obligations have been
paid in full and all Commitments with respect thereto terminated, the holders of
at least 51% of the outstanding Derivatives Obligations) and that no other
Finance Party shall have any right individually to seek to enforce this
Agreement or to realize upon the security to be granted hereby, it being
understood and agreed that such rights and remedies may be exercised by the
Canadian Collateral Agent or the holders of at least 51% of the outstanding
Derivatives Obligations, as the case may be, for the benefit of the Finance
Parties upon the terms of this Agreement and the other Finance Documents.
SECTION 7.05 AMENDMENTS AND WAIVERS
Any provision of this Agreement may be amended, changed, discharged,
terminated or waived if, but only if, such amendment or waiver is in writing and
is signed by each Canadian Credit Party directly affected by such amendment,
change, discharge, termination or waiver (it being understood that the addition
or release of any Canadian Credit Party hereunder shall not constitute an
amendment, change, discharge, termination or waiver affecting any Canadian
Credit Party other than the Canadian Credit Party so added or released) and
either (i) the Canadian Collateral Agent (with the consent of the Required
Lenders or, to the extent required by Section 10.06 of the Credit Agreement, all
or other required percentage of the Lenders), at all times prior to the time on
which all Finance Obligations have been paid in full and all Commitments with
respect thereto have been terminated or (ii) the holders of at least 51% of all
Derivatives Obligations then outstanding, at all times after the time at which
the Finance Obligations have been paid in full and all Commitments with respect
thereto have been terminated; PROVIDED, HOWEVER, that no such amendment, change,
discharge, termination or waiver shall be made to Section 5.04 hereof or this
Section 7.05 without the consent of each Finance Party adversely affected
thereby; and PROVIDED further that any amendment, change, discharge, termination
or waiver adversely affecting the rights and benefits of a single Class of
Finance Parties (and not all Finance Parties in a like or similar manner) shall
require the written consent of the Required Finance Parties of such Class of
Finance Parties. For the purposes of this Section 7.05, the term "CLASS" means
each class of Finance Parties, i.e., whether (x) the Lenders, as holders of the
Senior Obligations or (y) the Derivatives Creditors, as holders of the
Derivatives Obligations. For the purposes of this Section 7.05, the term
"REQUIRED FINANCE PARTIES" of any Class means each of (x) with respect to the
Senior Obligations, the Required Lenders (as defined in the Senior Credit
Agreement), (y) with respect to the Derivatives Obligations, the holders of 51%
of all Derivatives Obligations outstanding from time to time.
SECTION 7.06 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon each of the parties hereto and
inure to the benefit of the Canadian Collateral Agent and the Finance Parties
and their respective successors and assigns. In the event of an assignment of
all or any of the Finance Obligations, the rights hereunder, to the extent
applicable to the indebtedness so assigned, may be transferred with such
indebtedness. No Canadian
- -
Credit Party shall assign or delegate any of its rights and duties hereunder
without the prior written consent of the Required Lenders or all of the Lenders
as provided in Section 10.03 of the Credit Agreement.
SECTION 7.07 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the Province of
Ontario and the laws of Canada applicable therein.
SECTION 7.08 LIMITATION OF LAW; SEVERABILITY.
(i) All rights, remedies and powers provided in this
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 Agreement are intended to be subject to all applicable mandatory
provisions of Law which may be controlling and be limited to the extent
necessary so that they will not render this Agreement invalid,
unenforceable in whole or in part, or not entitled to be recorded,
registered or filed under the provisions of any applicable Law.
(ii) If any provision hereof is invalid or unenforceable in
any jurisdiction, then, to the fullest extent permitted by Law, (i) the
other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Canadian
Collateral Agent and the Finance Parties in order to carry out the
intentions of the parties hereto as nearly as may be possible, and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provisions in any
other jurisdiction.
SECTION 7.09 COUNTERPARTS; EFFECTIVENESS
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become effective
with respect to each Canadian Credit Party when the Canadian Collateral Agent
shall receive counterparts hereof executed by itself and such Canadian Credit
Party.
SECTION 7.10 ADDITIONAL CANADIAN CREDIT PARTIES
It is understood and agreed that any Affiliate of any Borrower that is
required by any Finance Document to execute a counterpart of this Agreement
after the date hereof shall automatically become a Canadian Credit Party
hereunder with the same force and effect as if originally named as a Canadian
Credit Party hereunder by executing an instrument of accession or joinder
satisfactory in form and substance to the Canadian Collateral Agent and
delivering the same to the Canadian Collateral Agent. Concurrently with the
execution and delivery of such instrument, such Affiliate shall take all such
actions and deliver to the Canadian Collateral Agent all such documents and
agreements as such Affiliate would have been required to deliver to the Canadian
Collateral Agent on or prior to the date of this Agreement had such Affiliate
been a party hereto on the date of this Agreement. Such additional materials
shall include, among other things, supplements to SCHEDULES 3.05 and 4.01 hereto
(which Schedules shall thereupon automatically be amended and supplemented to
include all information contained in such supplements) such that, after giving
effect to the joinder of such Affiliate, each of SCHEDULES 3.05 and 4.01 hereto
is true, complete and correct with respect to such Affiliate as of the effective
date of such
- -
joinder. The execution and delivery of any such instrument of accession or
joinder, and the amendment and supplementation of the Schedules hereto as
provided in the immediately preceding sentence, shall not require the consent of
any other Canadian Credit Party hereunder. The rights and obligations of each
Canadian Credit Party hereunder shall remain in full force and effect
notwithstanding the addition of any new Canadian Credit Party as a party to this
Agreement.
SECTION 7.11 TERMINATION
Upon the full, final and irrevocable payment and performance of all
Finance Obligations, the cancellation or expiration of all outstanding LC
Obligations, BA Reimbursement Obligations and Derivatives Agreements and the
termination of all Commitments under the Finance Documents, the Security
Interests shall terminate and all rights to the Collateral shall revert to the
Canadian Credit Parties. In addition, at any time and from time to time prior to
such termination of the Security Interests, the Canadian Collateral Agent may
release any of the Collateral with the prior written consent of the Required
Lenders; PROVIDED that the release of all or substantially all of the Collateral
shall require the consent of all of the Lenders. Upon any such termination of
the Security Interests or release of Collateral, the Canadian Collateral Agent
will, upon request by and at the expense of any Canadian Credit Party, execute
and deliver to such Canadian Credit Party such documents as such Canadian Credit
Party shall reasonably request to evidence the termination of the Security
Interests or the release of such Collateral, as the case may be. Any such
documents shall be without recourse to or warranty by the Canadian Collateral
Agent or the Finance Parties. The Canadian Collateral Agent shall have no
liability whatsoever to any Finance Party as a result of any release of
Collateral by it as permitted by this Section 7.11. Upon any release of
Collateral pursuant to this Section 7.11, none of the Finance Parties shall have
any continuing right or interest in such Collateral or the Proceeds thereof.
SECTION 7.12 ENTIRE AGREEMENT
This Agreement and the other Finance Documents and, in the case of the
Derivatives Creditors, the Derivatives Agreements, constitute the entire
agreement and understanding among the parties hereto and supersede any and all
prior agreements and understandings, oral or written, and any contemporaneous
oral agreements and understandings relating to the subject matter hereof and
thereof.
SECTION 7.13 CONFLICT
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of the Credit Agreement, on
the other hand, the Credit Agreement shall control.
[Signature Pages Follow]
- -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first written above.
CANADIAN CREDIT PARTIES: THE XXXX XXXXX GROUP (PJC) INC.
By:
------------------------------
Name:
Title:
SERVICES SECURIVOL INC.
By:
------------------------------
Name:
Title:
RX INFORMATION CENTRE LTD.
By:
------------------------------
Name:
Title:
PATERSON'S PHARMACIES LIMITED
By:
------------------------------
Name:
Title:
3090671 NOVA SCOTIA COMPANY
By:
------------------------------
Name:
Title:
3090672 NOVA SCOTIA COMPANY
By:
------------------------------
Name:
Title:
S-
COLLATERAL AGENT: NATIONAL BANK OF CANADA
as Canadian Collateral Agent
By:
------------------------------
Name:
Title:
0000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Syndication Canada
Telecopier: (000) 000-0000
S-
