EXHIBIT 4.6
-----------
▇▇▇▇▇▇▇▇ SCOTSMAN OF CANADA, INC.
as Obligor
and
DEUTSCHE BANK TRUST COMPANY AMERICAS
(formerly known as BANKERS TRUST COMPANY)
as Collateral Agent
--------------------------------------------------------------------------------
AMENDED AND RESTATED CANADIAN SECURITY AGREEMENT
August 18, 2003
--------------------------------------------------------------------------------
STIKEMAN ELLIOTT LLP
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
Section 1.1 Defined Terms................................................2
Section 1.2 Terms Incorporated by Reference.............................14
Section 1.3 Statutes....................................................14
Section 1.4 Certain Phrases, etc........................................14
Section 1.5 Gender and Number...........................................15
Section 1.6 Headings, etc...............................................15
Section 1.7 Schedules...................................................15
ARTICLE 2
SECURITY
Section 2.1 Grant of Security...........................................15
Section 2.2 Obligations Secured.........................................17
Section 2.3 Attachment..................................................17
Section 2.4 Scope of Security Interest..................................17
Section 2.5 Grant of Licence to Use Intellectual Property...............19
Section 2.6 Care and Custody of Collateral..............................19
Section 2.7 Rights of the Obligor.......................................20
ARTICLE 3
ENFORCEMENT
Section 3.1 Enforcement.................................................20
Section 3.2 Remedies....................................................20
Section 3.3 Additional Rights...........................................22
Section 3.4 Receiver's Powers...........................................23
Section 3.5 Appointment of Attorney.....................................23
Section 3.6 Dealing with the Collateral.................................24
Section 3.7 Standards of Sale...........................................24
Section 3.8 Dealings by Third Parties...................................25
Section 3.9 Registration Rights.........................................25
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.1 General Representations, Warranties and Covenants...........26
Section 4.2 After Acquired Receivables..................................33
Section 4.3 Maintenance of Records for Receivables and Contracts........33
Section 4.4 Modification of Terms, etc..................................34
Section 4.5 Collection..................................................34
(i)
Section 4.6 Obligor Remains Liable......................................34
Section 4.7 Collateral in the Possession of a Bailee....................35
Section 4.8 Intellectual Property.......................................35
Section 4.9 Representations and Warranties Concerning Trade-marks.......35
Section 4.10 Trade-▇▇▇▇ Licenses and Assignments.........................36
Section 4.11 Trade-▇▇▇▇ Infringements....................................36
Section 4.12 Preservation of Trade-marks.................................36
Section 4.13 Maintenance of Trade-▇▇▇▇ Registration......................36
Section 4.14 Future Registered Trade-marks...............................37
Section 4.15 Representations and Warranties Concerning Patents,
Copyrights and Designs......................................37
Section 4.16 Patent, Copyright and Design Licenses and Assignments.......38
Section 4.17 Patent, Copyright and Design Infringements..................38
Section 4.18 Maintenance of Patents, Copyrights and Designs..............38
Section 4.19 Prosecution of Patent, Copyright and Design Applications....38
Section 4.20 Future Patents, Copyrights and Designs......................38
Section 4.21 Remedies Concerning Intellectual Property...................39
Section 4.22 Status of Accounts Collateral...............................40
Section 4.23 Business Outside Certain Jurisdictions......................40
Section 4.24 Insurance...................................................41
Section 4.25 Perfection and Protection of Security Interest..............41
Section 4.26 Additional Security.........................................42
Section 4.27 Financing Statements........................................42
Section 4.28 Deposit Accounts............................................42
ARTICLE 5
GENERAL
Section 5.1 Notices.....................................................44
Section 5.2 Discharge...................................................46
Section 5.3 No Merger, Survival of Representations and Warranties.......47
Section 5.4 Further Assurances..........................................47
Section 5.5 Supplemental Security.......................................47
Section 5.6 Successors and Assigns......................................47
Section 5.7 Severability................................................48
Section 5.8 Waivers, etc................................................48
Section 5.9 Collateral Agent and/or Secured Creditors not a Partner
or Limited Liability Company Member.........................48
Section 5.10 Application of Proceeds.....................................49
Section 5.11 Indemnity...................................................49
Section 5.12 Indemnity Obligations Secured by Collateral; Survival.......50
Section 5.13 Collateral Agent............................................51
Section 5.14 Governing Law...............................................51
Section 5.15 Conflicts...................................................51
(ii)
Section 5.16 Acknowledgement and Confirmation............................51
ADDENDA
SCHEDULE 2.1(1)(f) SECURITIES AND INSTRUMENTS
SCHEDULE 2.1(1)(h) INTELLECTUAL PROPERTY
SCHEDULE 4.1(a) FORM OF CONFIRMATION OF SECURITY INTEREST IN
INTELLECTUAL PROPERTY
EXHIBIT "A" TO CONFIRMATION TRADE-
MARKS/PATENTS/COPYRIGHTS/INDUSTRIAL
DESIGNS
SCHEDULE 4.1(c) FINANCING STATEMENTS
SCHEDULE 4.1(d) LOCATION OF CHIEF EXECUTIVE OFFICE AND
CORPORATE MATTERS
SCHEDULE 4.1(e) LOCATION OF INVENTORY AND EQUIPMENT
SCHEDULE 4.1(g) TRADE NAMES
SCHEDULE 4.28 DEPOSIT ACCOUNTS
EXHIBIT "A" TO SCHEDULE 4.28 FORM OF CONTROL AGREEMENT
REGARDING DEPOSIT ACCOUNTS
(iii)
AMENDED AND RESTATED CANADIAN SECURITY AGREEMENT
Amended and restated security agreement dated as of the 18th day of
August, 2003, made by ▇▇▇▇▇▇▇▇ scotsman of canada, inc., a corporation
incorporated and existing under the laws of the Province of Ontario, to and in
favour of Deutsche Bank Trust Company Americas, as Collateral Agent for the
benefit of the Secured Creditors.
WHEREAS:
(a) Bankers Trust Company, as administrative agent and the Lenders
agreed to make certain credit facilities available to the
Borrower upon the terms and conditions contained in the
Original Credit Agreement;
(b) Bankers Trust Company has changed its name to Deutsche Bank
Trust Company Americas;
(c) the parties to the Original Credit Agreement have agreed to
amend the Original Credit Agreement pursuant to the provisions
of the Second Amendment;
(d) the Borrower may from time to time enter into one or more
Interest Rate Agreements with one or more Interest Rate
Creditors;
(e) pursuant to the Guarantee, the Obligor has guaranteed to the
First Lien Creditors the payment when due of the obligations
of the Borrower under the Credit Documents, as more
particularly described in the Guarantee;
(f) the Obligor granted a security interest to and in favour of
the Collateral Agent pursuant to the Original Security
Agreement to secure the payment and performance of its
obligations under the Guarantee;
(g) the Borrower, INTER ALIA, and the Senior Secured Notes
Trustee, as trustee, have entered into the Senior Secured
Notes Indenture providing for (i) the issuance by the Borrower
of the Senior Secured Notes to the Senior Secured Noteholders;
and (ii) the guarantee by the Obligor, INTER ALIA, of the
Borrower's obligations under the Senior Secured Notes
Documents;
(h) it is a condition precedent to the issuance of the Senior
Secured Notes by the Borrower that the Obligor grant a
security interest to and in favour of the Collateral Agent as
security for the payment and performance of the Obligor's
obligations under the applicable Senior Secured Notes
Documents; and
(i) the Collateral Agent, the Administration Agent for the benefit
of the First Lien Creditors and the Senior Secured Notes
Trustee for the
-2-
benefit of the Senior Secured Noteholders have agreed to enter
into the Intercreditor Agreement for the purposes of setting
out certain priorities;
(j) pursuant to the terms of the Second Amendment, the Bank
Creditors have authorized the Collateral Agent to amend and
restate the Original Security Agreement for the purposes of,
INTER ALIA, securing the obligations of the Obligor in respect
of the Senior Secured Notes Documents;
In consideration of the foregoing and the mutual agreements contained
herein (the receipt and adequacy of which are acknowledged), the parties hereto
agree that the Original Security Agreement be amended and restated in its
entirety as follows:
ARTICLE 1
INTERPRETATION
SECTION 1.1 DEFINED TERMS.
As used in this security agreement and the recitals hereto, the
following terms have the following meanings:
"ADMINISTRATIVE AGENT" means DBTCA acting as administrative agent for
the Lenders under the Credit Agreement and any successor appointed
pursuant to the Credit Agreement.
"APPLICABLE VALUE" means, with respect to any Subsidiary of the
Borrower, the aggregate amount, par value, book value as carried by the
Borrower or the market value, whichever is greater, of the capital
stock or other securities of such Subsidiary.
"BANK CREDITORS" means, collectively, the Lenders, the Collateral
Agent, the Issuing Lender, the Co-Syndication Agents, the
Co-Documentation Agents, the Administrative Agent and the Lead
Arranger.
"BORROWER" means ▇▇▇▇▇▇▇▇ Scotsman, Inc., a corporation incorporated
and existing under the laws of the State of Maryland, and its
successors and permitted assigns.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which shall be in the City of New York a legal holiday or a day in
which banking institutions are authorized by law or other governmental
actions to close.
"CO-DOCUMENTATION AGENTS" means Bank of America, N.A. and GMAC Business
Credit, LLC acting as co-documentation agents for the Lenders under
-3-
the Credit Agreement and any successors appointed pursuant to the
Credit Agreement, and their respective permitted assigns.
"CO-SYNDICATION AGENTS" means, collectively, Fleet Capital Corporation
and Congress Financial Corporation acting as co-syndication agents for
the Lenders under the Credit Agreement and any successors appointed
pursuant to the Credit Agreement, and their respective permitted
assigns.
"COLLATERAL" has the meaning ascribed thereto in Section 2.1(1).
"COLLATERAL AGENT" means DBTCA acting as collateral agent for the
Secured Creditors, and any successor thereto, or sub-collateral agent,
appointed pursuant to the Credit Agreement, and its permitted assigns.
"CONFIDENTIAL INFORMATION" means all trade secrets, confidential
information, proprietary information, and confidential know-how
including all unpatented inventions, all customer and supplier lists,
all unpublished studies and data, prototypes, drawings, design and
construction specifications and production, operating and quality
control manuals, all marketing strategies and business plans, all
current or proposed business opportunities, and all documents, material
and media embodying other items of Confidential Information.
"CONTRACT RIGHTS" means all rights of the Obligor (including all
Rentals and all other rights to payment) under each Contract.
"CONTRACTS" means all contracts between the Obligor and one or more
additional parties (including any and all Interest Rate Agreements,
Leases, licensing agreements and any partnership agreements, joint
venture agreements and limited liability company agreements).
"COPYRIGHTS" means all copyrights, all registrations and applications
that have been or shall be made or filed in the Canadian Intellectual
Property Office - Copyrights or any similar office in any country and
all records thereof and all reissues, extensions or renewals thereof,
and all common law and other rights in the foregoing.
"CREDIT AGREEMENT" means the Original Credit Agreement, as amended by
the Second Amendment and as the same may from time to time be amended,
modified, extended, renewed, replaced, restated, or supplemented and
including any agreement or agreements extending the maturity of
(including the inclusion of additional borrowers or guarantors
thereunder or any increase in the amount borrowed) all or any portion
of the indebtedness under such agreement or agreements or any successor
agreement, whether or not with the same agent, trustee, representative,
lenders or holders.
-4-
"CREDIT DOCUMENT OBLIGATIONS" has the meaning provided in the
definition of Obligations.
"CREDIT DOCUMENTS" means the Credit Agreement and each other Credit
Document under and as defined in the Credit Agreement.
"CREDIT PARTIES" means, collectively, Holdings, the Borrower and the
Subsidiary Guarantors.
"DBTCA" means Deutsche Bank Trust Company Americas, formerly named
Bankers Trust Company, and any successor thereto and its permitted
assigns.
"DEFAULT" means any event which, with notice or lapse of time, or both,
would constitute an Event of Default.
"DESIGNS" means all industrial designs and other designs and all
registrations and applications that have been or shall be made or filed
in the Canadian Intellectual Property Office - Designs or any similar
office in any country and all records thereof and all reissues,
extensions or renewals thereof, and all common law and other rights in
the foregoing.
"EVENT OF DEFAULT" means any Event of Default (or similar term) under,
and as defined in, the Credit Agreement or any Interest Rate Agreement
entered into with an Interest Rate Creditor and shall in any event
include (i) any payment default on any of the Obligations (as defined
in the respective agreements) under the Credit Agreement, any Interest
Rate Agreement or any Senior Secured Notes Document after the
expiration of any applicable grace period and (ii) at any time after
the First Lien Obligations have been paid in full, all Letters of
Credit have been terminated or cash collateralized in a manner
satisfactory to the Administrative Agent and all Commitments have been
terminated, any "Event of Default" (or similar term) under, and as
defined in, the Senior Secured Notes Indenture.
"FIRST LIEN CREDITORS" means, collectively, the Bank Creditors and the
Interest Rate Creditors.
"FIRST LIEN OBLIGATIONS" means all Credit Document Obligations and all
Interest Rate Obligations.
"GOVERNMENTAL ENTITY" means any (i) multinational, federal, provincial,
state, municipal, local or other government, governmental or public
department, central bank, court, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) any subdivision or authority
of any of the foregoing, or (iii) any quasi-governmental or private
body exercising any regulatory, expropriation or taxing authority under
or for the account of any of the above.
-5-
"GUARANTEE" means the guarantee dated March 26, 2002 made by the
Obligor in favour of the First Lien Creditors and the Collateral Agent,
as amended, modified, extended, restated or supplemented from time to
time.
"HOLDINGS" means Scotsman Holdings, Inc. and its successors and
permitted assigns.
"INDEMNITEES" has the meaning ascribed thereto in Section 5.11(1).
"INSTRUMENTS" means, (i) a ▇▇▇▇, note or cheque within the meaning of
the BILLS OF EXCHANGE ACT (Canada) or any other writing that evidences
a right to the payment of money and is of a type that in the ordinary
course of business is transferred by delivery with any necessary
endorsement or assignment, or (ii) a letter of credit and an advice of
credit if the letter or advice states that it must be surrendered upon
claiming payment thereunder, or (iii) chattel paper or any other
writing that evidences both a monetary obligation and a security
interest in or a lease of specific goods, or (iv) documents of title or
any other writing that purports to be issued by or addressed to a
bailee and purports to cover such goods in the bailee's possession as
are identified or fungible portions of an identified mass, and that in
the ordinary course of business is treated as establishing that the
person in possession of it is entitled to receive, hold and dispose of
the document and the goods it covers, or (v) any document or writing
commonly known as an instrument.
"INTELLECTUAL PROPERTY" has the meaning ascribed thereto in Section
2.1(1)(h).
"INTERCREDITOR AGREEMENT" means the intercreditor agreement dated the
date hereof among the Collateral Agent, the Administration Agent and
the Senior Secured Notes Trustee as the same may from time to time be
amended, modified, restated or supplemented.
"INTEREST RATE AGREEMENT" means any interest rate agreement (including
interest rate swaps, caps, floors, collars and similar agreements)
between the Borrower and any Interest Rate Creditor.
"INTEREST RATE CREDITORS" means, collectively, any Lender, any
affiliate thereof or a syndicate of financial institutions organized by
DBTCA or an affiliate of DBTCA (even if DBTCA or any such Lender
subsequently ceases to be a Lender under the Credit Agreement for any
reason) and any institution that participates, and in each case their
subsequent assigns, in any Interest Rate Agreement with the Borrower.
"INTEREST RATE OBLIGATIONS" has the meaning provided in the definition
of Obligations.
-6-
"INVENTORY" means (i) merchandise, inventory and goods, and all
additions, substitutions and replacements thereof and all accessions
thereto, wherever located, together with all goods, supplies,
incidentals, packaging materials, labels, materials and any other items
used or usable in manufacturing, processing, packaging or shipping
same, in all stages of production from raw materials through work in
process to finished goods, and all products and proceeds of whatever
sort and wherever located and any portion thereof which may be
returned, rejected, reclaimed or repossessed by the Collateral Agent
from the Obligor's customers, and (ii) any and all other "inventory" as
such term is defined in the PPSA as in effect on the date hereof.
"LEAD ARRANGER" means Deutsche Banc Alex. ▇▇▇▇▇ in its capacity as sole
lead arranger and sole book manager and any successors appointed
pursuant to the Credit Agreement, and any permitted assigns.
"LEASES" means any agreement between the Obligor and any other Person
for the lease or rental of Rental Equipment, Inventory or other assets
or property, whether (x) by the Obligor to such Person or (y) by such
Person to the Obligor.
"LENDERS" means, collectively, the financial institutions listed from
time to time on Schedule I to the Credit Agreement, as lenders, as well
as any Person which becomes a Lender pursuant to Section 11.6 of the
Credit Agreement, and their respective successors and assigns.
"LICENSED TRADE-MARKS" has the meaning ascribed thereto in Section 4.9.
"LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), security agreement
of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, any financing or similar statement or
notice filed under the PPSA or any other similar recording or notice
statute, and any lease having substantially the same effect as any of
the foregoing).
"NEGOTIABLE COLLATERAL" has the meaning ascribed thereto in Section
2.3(3).
"OBLIGATIONS" means:
(i) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all
obligations, liabilities and indebtedness (including
principal, premium, interest (including all interest
that accrues after the commencement of any case,
proceeding or other action relating to the
bankruptcy, insolvency, reorganization or similar
proceeding of the Obligor at the rate provided for in
the respective documentation, whether or not a claim
for post-
-7-
petition interest is allowed in any such proceeding),
reimbursement obligations under Letters of Credit,
fees, costs and indemnities) of the Obligor owing to
the Bank Creditors, now existing or hereafter
incurred under, arising out of or in connection with
any Credit Document to which the Obligor is a party
(including all such obligations, liabilities and
indebtedness under the Guarantee) and the due
performance and compliance by the Obligor, with the
terms, conditions and agreements of each such Credit
Document (all such obligations and liabilities under
this paragraph (i), except to the extent guaranteeing
obligations of the Borrower under Interest Rate
Agreements, being herein collectively called the
"CREDIT DOCUMENT OBLIGATIONS");
(ii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all
obligations, liabilities and indebtedness (including
all interest that accrues after the commencement of
any case, proceeding or other action relating to the
bankruptcy, insolvency, reorganization or similar
proceeding of the Obligor at the rate provided for in
the respective documentation, whether or not a claim
for post-petition interest is allowed in any such
proceeding) of the Obligor owing to the Interest Rate
Creditors, now existing or hereafter incurred under,
arising out of or in connection with any Interest
Rate Agreement, whether such Interest Rate Agreement
is now in existence or hereafter arising, and the due
performance and compliance by the Obligor with all of
the terms, conditions and agreements of each Interest
Rate Agreement including all obligations, liabilities
and indebtedness under the Guarantee (all such
obligations and liabilities under this paragraph (ii)
being herein collectively called the "INTEREST RATE
OBLIGATIONS");
(iii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all
obligations, indebtedness and liabilities (including
principal, premium and interest (including all
interest that accrues after the commencement of any
case, proceeding or other action relating to the
bankruptcy, insolvency, reorganization or similar
proceeding of the Obligor at the rate provided for in
the respective documentation, whether or not a claim
for post-petition interest is allowed in any such
proceeding)) owing by the Obligor to the Second Lien
Creditors, whether now existing or hereafter incurred
under, arising out of, or in connection with
-8-
the Senior Secured Notes and the other Senior Secured
Notes Documents to which the Obligor is a party
(including all such obligations, indebtedness and
liabilities of the Obligor under any guaranty
constituting a Senior Secured Notes Document) and the
due performance and compliance by the Obligor with
all of the terms, conditions and agreements contained
in the Senior Secured Notes and in such other Senior
Secured Notes Documents (all such obligations,
indebtedness and liabilities under this clause (iii)
being herein collectively called the "SECOND LIEN
OBLIGATIONS");
(iv) any and all sums advanced by the Collateral Agent in
order to preserve the Collateral or preserve its
security interest in the Collateral;
(v) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations or
liabilities of the Obligor referred to in paragraphs
(i), (ii) and (iii) above, after an Event of Default
shall have occurred and be continuing, the reasonable
expenses of re-taking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing
the Collateral, or of any exercise by the Collateral
Agent of its rights hereunder, together with
reasonable attorneys' fees and court costs;
(vi) all amounts paid by an Indemnitee as to which such
Indemnitee has the right to reimbursement under
Section 5.11 of this security agreement; and
(vii) all amounts owing to any Agent pursuant to any of the
Credit Documents in its capacity as such;
it being acknowledged and agreed that the "OBLIGATIONS" shall include
extensions of credit of the types described above, whether outstanding
on the date of this security agreement or extended from time to time
after the date of this security agreement.
"OBLIGOR" means ▇▇▇▇▇▇▇▇ Scotsman of Canada, Inc., a corporation
incorporated and existing under the laws of the Province of Ontario and
its successors and permitted assigns.
"ORIGINAL CREDIT AGREEMENT" means the credit agreement dated March 26,
2002 among Scotsman Holdings, Inc., the Borrower, the Lenders party
thereto from time to time, the Administrative Agent, Fleet Capital
Corporation and Congress Financial Corporation, as Co-Syndication
Agents, Bank of America, N.A. and GMAC Business Credit, LLC, as
Co-Documentation Agents, and
-9-
Deutsche Banc Alex. ▇▇▇▇▇ Inc., as sole lead arranger and sole book
manager, as amended by the first amendment dated as of February 27,
2003 among Scotsman Holdings, Inc., the Borrower, the Lenders and the
Administrative Agent.
"ORIGINAL SECURITY AGREEMENT" means the Canadian security agreement
dated March 26, 2002 made by the Obligor to and in favour of the
Collateral Agent.
"OWNED TRADE-MARKS" has the meaning ascribed thereto in Section 4.9.
"PATENTS" means all letters patent for an invention and all
registrations and applications that have been or shall be made or filed
in the Canadian Intellectual Property Office - Patents or any similar
office in any country and all records thereof and all renewals,
reissues, extensions, divisions, continuations and
continuations-in-part thereof and any and all resulting letters patent
and all other rights in the foregoing.
"PERSON" means a natural person, partnership, corporation, joint stock
company, trust, unincorporated association, joint venture or other
entity or Governmental Entity, and pronouns have a similarly extended
meaning.
"PPSA" has the meaning ascribed thereto in Section 1.2.
"RECEIVABLES" means, collectively:
(a) any "account" as such term is defined in the PERSONAL PROPERTY
SECURITY ACT (Ontario) as in effect on the date hereof and any
right to payment for goods sold or leased or services
performed whether now in existence or arising from time to
time hereafter, including any right evidenced by an account,
note, contract, security agreement, chattel paper or other
evidence of indebtedness or security; and
(b) all (i) security pledged, assigned, hypothecated or granted to
or held by the Obligor to secure the accounts and rights
described in paragraph (a); (ii) right, title and interest in
and to any goods, the sale of which gave rise to the accounts
and rights described in paragraph (a); (iii) guarantees,
endorsements and indemnifications on, or of, any of the
accounts and rights described in paragraph (a); (iv) powers of
attorney for the execution of any evidence of indebtedness or
security or other writing in connection with the accounts and
rights described in paragraph (a); (v) books, records, ledger
cards, and invoices relating to the accounts and rights
described in paragraph (a); (vi) evidences of the filing of
financing statements and other statements and the registration
of other instruments in connection with the accounts and
rights
-10-
described in paragraph (a) and amendments to the accounts and
rights described in paragraph (a), notices to other creditors
or secured parties, and certificates from filing or other
registration officers; (vii) credit information, reports and
memoranda relating to the accounts and rights described in
paragraph (a); and (viii) other writings related in any way to
the accounts and rights described in paragraph (a) and this
paragraph (b).
"RENTAL EQUIPMENT" means all Units which are sold or leased or held for
sale or lease, by the Obligor to one or more third persons.
"RENTALS" means all rents payable under the Leases in respect of the
use of any Rental Equipment by account debtors as lessees of such
Rental Equipment to the Obligor as the lessor of such Rental Equipment.
"REPRESENTATIVE" means, with respect to the Interest Rate Creditors,
the trustee, paying agent or other similar representative for the
Interest Rate Creditors.
"REQUIRED SECOND LIEN CREDITORS" means the holders of at least a
majority of the then outstanding principal amount of all Senior Secured
Notes.
"REQUIRED SECURED CREDITORS" shall mean (i) at any time when any Credit
Document Obligations are outstanding or any Commitments or Letters of
Credit under the Credit Agreement exist, the Required Lenders (or, to
the extent required by Section 11.10 of the Credit Agreement, each of
the Lenders), (ii) at any time after all of the Credit Document
Obligations have been paid in full in cash in accordance with the terms
thereof and all Commitments and Letters of Credit under the Credit
Agreement have been terminated, the holders of a majority of the
Interest Rate Obligations and Interest Rate Obligations have been paid
in full in cash in accordance with the terms thereof and all
Commitments and Letters of Credit under the Credit Agreement have been
terminated, the Senior Secured Notes Trustee acting at the direction of
the Required Second Lien Creditors.
"RESTRICTED ASSET" has the meaning ascribed thereto in Section 2.4(1).
"SECOND AMENDMENT" means the second amendment to the Original Credit
Agreement dated as of August 11, 2003 among Scotsman Holdings, Inc.,
the Borrower, the Lenders and the Administrative Agent, as the same may
from time to time be amended, modified, extended, renewed, replaced,
restated, or supplemented.
-11-
"SECOND LIEN CREDITORS" means collectively, the Senior Secured
Noteholders and the Senior Secured Notes Trustee.
"SECOND LIEN EXCLUDED COLLATERAL" means and includes (i) any property
or assets owned by any Unrestricted Subsidiary (as defined in the
Senior Secured Notes Indenture), (ii) all capital stock or other
securities of the Borrower or any Unrestricted Subsidiary, (iii) all
capital stock or other securities of Restricted Subsidiaries (as
defined in the Senior Secured Notes Indenture) to the extent the
Applicable Value of such capital stock or other securities (on a
Subsidiary by Subsidiary basis) is equal to or greater than 20% of the
then aggregate principal amount of the Senior Secured Notes
outstanding, and (iv) all proceeds and products from any and all of the
foregoing excluded Collateral described in clauses (i) through (iii),
unless such proceeds or products would otherwise constitute Collateral
without regard to preceding clauses (i) through (iii); provided,
however, in the event that Rule 3-10 or Rule 3-16 of Regulation S-X
under the Securities Act is amended, modified or interpreted by the SEC
to require (or is replaced with another rule or regulation, or any
other law, rule or regulation is adopted, which would require) the
filing with the SEC of separate financial statements of any Restricted
Subsidiary of the Borrower due to the fact that such Restricted
Subsidiary's capital stock or other securities secure the Senior
Secured Notes, then the capital stock or other securities of such
Restricted Subsidiary shall automatically be deemed not to be part of
the Collateral in which the Second Lien Creditors have a security
interest and shall automatically be deemed to be part of the Second
Lien Excluded Collateral, but only to the extent necessary to not be
subject to such requirement. In such event, the applicable Collateral
Documents shall be deemed to be amended or modified (without the
consent of any Secured Creditor) to include as Second Lien Excluded
Collateral the shares of capital stock or other securities that are so
deemed to no longer constitute part of the Collateral. In the event
that Rule 3-10 or Rule 3-16 of Regulation S-X under the Securities Act
is amended, modified or interpreted by the SEC to permit (or is
replaced with another rule or regulation or any other law, rule or
regulation is adopted, which would permit) such Restricted Subsidiary's
capital stock and other securities to secure the Senior Secured Notes
in excess of the amount or value then pledged pursuant to the
Collateral Documents without the filing with the SEC of separate
financial statements of such Restricted Subsidiary, then the capital
stock and other securities of such Restricted Subsidiary shall
automatically be deemed to be a part of the Collateral, but only to the
greatest extent which would not cause the financial statements of such
Restricted Subsidiary to be subject to any such financial statement
requirement.
"SECOND LIEN OBLIGATIONS" has the meaning provided in the definition of
Obligations.
-12-
"SECURED CREDITORS" means, collectively, the First Lien Creditors and
the Second Lien Creditors.
"SECURED DEBT AGREEMENTS" shall mean and include this security
agreement, the other Credit Documents, the Interest Rate Agreements
entered into with an Interest Rate Creditor and the Senior Secured
Notes Documents.
"SECURITIES" means a document that is, (i) issued in bearer, order or
registered form, (ii) of a type commonly dealt in upon securities
exchanges or markets or commonly recognized in any area in which it is
issued or dealt in as a medium for investments, (iii) one of a class or
series or by its terms is divisible into a class or series of
documents, and (iv) evidence of a share, participation or other
interest in property or in an enterprise or is evidence of an
obligation of the issuer, and includes an uncertificated security.
"SECURITY INTEREST" has the meaning ascribed thereto in Section 2.2(1).
"SENIOR SECURED NOTEHOLDERS" means collectively, the holders from time
to time of the Senior Secured Notes.
"SENIOR SECURED NOTES DOCUMENTS" means collectively, the guarantee by
the Obligor, INTER ALIA, of the Borrower's obligations under the Senior
Secured Notes, the Senior Secured Notes Indenture and the Senior
Secured Notes.
"SENIOR SECURED NOTES INDENTURE" means the indenture, dated the date
hereof among, the Senior Secured Notes Trustee and the Obligor, INTER
ALIA, as the same may from time to time be amended, modified or
supplemented.
"SENIOR SECURED NOTES" means collectively, the 10% senior secured notes
of the Borrower due 2008 and all Senior Secured Notes issued upon the
exchange offer contemplated in the Senior Secured Notes Indenture.
"SENIOR SECURED NOTES TRUSTEE" means U.S. Bank National Association and
any successor trustee;
"SOFTWARE" means all computer programs and databases and portions
thereof, in whatever form and on whatever medium those programs or
databases are expressed, fixed, embodied or stored from time to time,
and the copyright therein including, the object code and source code
versions of each such program and portions thereof and all corrections,
updates, enhancements, translations, modifications, adaptations and new
versions thereof together with both the media upon or in which such
programs, databases and portions thereof are expressed, fixed, embodied
or stored (such as disks, diskettes, tapes and semiconductor chips) and
all flow charts, manuals, instructions, documentation and other
material relating thereto.
-13-
"TERMINATION DATE" means the date upon which the Total Commitment under
the Credit Agreement has been terminated and all Interest Rate
Agreements entered into with any Interest Rate Creditor have been
terminated (or cash collateralized Collateral in a manner reasonably
satisfactory to the Administrative Agent), no Note under the Credit
Agreement is outstanding and all Loans thereunder have been repaid in
full in cash in accordance with the terms thereof, all Letters of
Credit issued under the Credit Agreement have been terminated (or cash
collateralized in a manner satisfactory to the Administrative Agent),
all Second Lien Obligations have been paid in full in cash (or defeased
or discharged) in accordance with the terms thereof and all other
Obligations then due and payable have been paid in full; provided,
however, at such time as (x) all First Lien Obligations have been paid
in full in cash in accordance with the terms thereof and all
Commitments under the Credit Agreement have been terminated and all
Letters of Credit have been terminated or cash collateralized in a
manner satisfactory to the Administrative Agent or (y) the First Lien
Creditors have released their Liens on all of the Collateral then, in
either case, this security agreement and the security interests created
hereby shall terminate (provided that all indemnities set forth herein
(including in Section 5.11 hereof) and in Section 6 of Annex N of the
U.S. Security Agreement shall survive such termination) unless, in the
case of preceding clause (x), any Event of Default under the Senior
Secured Notes Indenture exists as of the date on which the First Lien
Obligations are repaid in full and terminated as described in such
clause (x), in which case the security interests created under this
security agreement in favour of the Second Lien Creditors will not be
released except to the extent the Collateral or any portion thereof was
disposed of in order to repay the First Lien Obligations (although the
security interests created in favour of the Second Lien Creditors will
be released when such Event of Default and all other Events of Default
under the Senior Secured Notes Indenture cease to exist).
"TRADE-MARKS" means: (i) trade-marks, whether registered or
unregistered and whether in use or proposed; (ii) designs, logos,
indicia, trade names, corporate names, company names, business names,
trade styles and other source or business identifiers; (iii) fictitious
characters and names; (iv) prints and labels on which any of the
foregoing have appeared or appear or shall appear; (v) all
registrations and applications that have been or shall be made or filed
in the Canadian Intellectual Property Office - Trade-marks or any
similar office in any country and all records thereof and all reissues,
extensions, or renewals thereof, and (vi) all goodwill associated with
or symbolized by any of the above and all common law and other rights
in the foregoing.
-14-
"TRADE-▇▇▇▇ LICENSE AGREEMENT" means the trade-▇▇▇▇ licence agreement
dated November 23, 1998 between the Obligor and the Borrower pursuant
to which the Borrower has licensed the Trade-marks to the Obligor.
"UNITS" means the mobile structures generally constructed of steel or
using a steel frame and undercarriage with an exterior of wood or
aluminium owned by the Obligor used to provide office, classroom,
storage, commercial or other space, whether in single units or
physically attached to such other units (and including in such form,
storage containers, mobile offices and modular structures and related
equipment), which structures are capable of being transported to and
assembled on remote sites, and which may be equipped with air
conditioning and heating, electrical outlets, floors, partitions,
plumbing, carpeting, moldings, wall coverings, lighting and other
accessories.
"U.S. SECURITY AGREEMENT" has the meaning ascribed thereto in Section
3.2(i).
SECTION 1.2 TERMS INCORPORATED BY REFERENCE.
(1) Terms defined in the PERSONAL PROPERTY SECURITY ACT (Ontario) (as
amended from time to time, the "PPSA") and used but not otherwise
defined in this security agreement shall have the same meanings.
(2) Except as otherwise defined herein, all capitalized terms used herein
and defined in the Credit Agreement shall be used herein as therein
defined (or, at any time on or after the first date when all Credit
Document Obligations shall have been repaid in full and all Letters of
Credit have been terminated or cash collateralized in a manner
satisfactory to the Administrative Agent and the Total Commitment under
the Credit Agreement has been terminated and thereafter for so long as
no Credit Agreement is in effect, the Credit Agreement as in effect on
such date immediately prior to such repayment and termination, provided
that all determinations required to be made to the satisfaction of the
Administrative Agent and all matters required to be acceptable to the
Administrative Agent in each case as provided in any such definition
shall, after such date, instead be required to be made to the
satisfaction of the Collateral Agent or be required to be acceptable to
the Collateral Agent, as the case may be).
SECTION 1.3 STATUTES.
Unless specified otherwise, reference in this security agreement to a
statute refers to that statute as it may be amended, or to any restated or
successor legislation of comparable effect.
SECTION 1.4 CERTAIN PHRASES, ETC.
In this security agreement the words "INCLUDING" and "INCLUDES" mean
"INCLUDING (OR INCLUDES) WITHOUT LIMITATION".
-15-
SECTION 1.5 GENDER AND NUMBER.
Any reference in this security agreement to gender shall include all
genders and words importing the singular number only shall include the plural
and VICE VERSA.
SECTION 1.6 HEADINGS, ETC.
The division of this security agreement into Articles and Sections and
the insertion of headings are for convenient reference only and are not to
affect its interpretation. The expressions "Article" and "Section" followed by a
number mean and refer to the specified Articles or Section of this security
agreement.
SECTION 1.7 SCHEDULES.
The Schedules attached to this security agreement shall, for all
purposes of this security agreement, form an integral part of it.
ARTICLE 2
SECURITY
SECTION 2.1 GRANT OF SECURITY.
(1) Subject to Section 2.4, the Obligor charges, assigns, hypothecates,
pledges and transfers to the Collateral Agent, and grants to the
Collateral Agent for the benefit of the Secured Creditors (and, to the
extent the following constitutes "Collateral" under, and as defined in,
the Original Security Agreement, does hereby reconfirm (without
interruption) its charge, assignment, hypothecation, pledge, transfer
and grant to the Collateral Agent under the Original Security Agreement
of), a security interest in all the Obligor's right, title and interest
in and to the personal property and undertaking of the Obligor now
owned or hereafter acquired (collectively, the "COLLATERAL") including
any and all of the Obligor's:
(a) Inventory including goods held for sale, lease or resale,
goods furnished or to be furnished to third parties under
contracts of lease, consignment or service, goods which are
raw materials or work in process, goods used in or procured
for packing and materials used or consumed in the business of
the Obligor;
(b) equipment, machinery, furniture, fixtures, plant, vehicles and
other goods of every kind and description and all licences and
other rights and all records, files, charts, plans, drawings,
specifications, manuals and documents relating thereto;
(c) all Units;
(d) all Receivables and all agreements, books, accounts, invoices,
letters, documents and papers recording, evidencing or
relating thereto;
(e) money, documents of title and chattel paper;
-16-
(f) Securities and Instruments, including the Securities listed in
Schedule 2.1(1)(f);
(g) intangibles including all security interests, goodwill, choses
in action, Contracts, Contract Rights, Software and other
contractual benefits;
(h) all Copyrights, Designs, Patents, Confidential Information,
Trade Secret Rights and Trade-marks and other intellectual
property (collectively, the "INTELLECTUAL PROPERTY") including
the Intellectual Property described in Schedule 2.1(1)(h);
(i) all insurance policies;
(j) substitutions and replacements of and increases, additions
and, where applicable, accessions to the property described in
Section 2.1(1)(a) through Section 2.1(1)(i), inclusive; and
(k) proceeds in any form derived directly or indirectly from any
dealing with all or any part of the property described in
Section 2.1(1)(a), through Section 2.1(1)(j), inclusive, or
the proceeds of such proceeds.
(2) The security interest of the Collateral Agent under this security
agreement extends to all Collateral of the kind which is the subject of
this security agreement which the Obligor may acquire at any time
during the continuation of this security agreement.
(3) Notwithstanding anything to the contrary contained in this security
agreement, (x) the Second Lien Creditors shall not have a security
interest in, and the grant of security interests pursuant to this
security agreement for the benefit of the Second Lien Creditors shall
not extend to, any Second Lien Excluded Collateral, and with respect to
the Second Lien Creditors the term "Collateral" shall not include the
Second Lien Excluded Collateral, (y) to the extent that the granting or
perfecting of any assets or property of the Obligor acquired after the
date hereof requires the consent of a third party that has not been
obtained after the Obligor has used commercially reasonable efforts to
obtain such consent, the Second Lien Creditors shall not have a
security interest in, and the grant of security interest pursuant to
the security agreement for the benefit of the Second Lien Creditors
shall not extend to, any such property or assets and (z) to the extent
that a security interest in favour of the Second Lien Creditors cannot
be granted or perfected in certain assets or property of the Obligor
under applicable law, the Second Lien Creditors shall not have a
security interest in, and the grant of security interest pursuant to
this security agreement for the benefit of the Second Lien Creditors
that not extend to, any such assets or property.
-17-
SECTION 2.2 OBLIGATIONS SECURED.
(1) The security interest granted hereby (the "SECURITY INTEREST") secures
the payment and performance of all Obligations.
SECTION 2.3 ATTACHMENT.
(1) The Obligor acknowledges that (i) value has been given, (ii) it has
rights in the Collateral (other than after-acquired Collateral), (iii)
it has not agreed to postpone the time of attachment of the Security
Interest, and (iv) it has received a duplicate original copy of this
security agreement.
(2) If any Security or Instrument is now or at any time hereafter becomes
evidenced, in whole or in part, by uncertificated securities registered
or recorded in records maintained by or on behalf of the Issuer thereof
in the name of a clearing agency or a custodian or of a nominee of
either, the Obligor shall, at the request of the Collateral Agent,
cause the Security Interest to be entered in the records of the
clearing agency or custodian and provide evidence of such notation to
the Collateral Agent.
(3) The Obligor hereby deposits with the Collateral Agent any and all
certificates evidencing the Securities listed in Schedule 2.1(1)(f),
duly endorsed for transfer in blank. If the Obligor acquires any
Instrument, Security or negotiable document of title constituting
Collateral (collectively, "NEGOTIABLE COLLATERAL"), the Obligor will,
within 10 Business Days after receipt, notify the Collateral Agent
thereof, and upon request by the Collateral Agent will promptly deliver
to the Collateral Agent the Negotiable Collateral as security for the
Obligations and shall, at the request of the Collateral Agent (i) cause
the transfer of the Negotiable Collateral to the Collateral Agent to be
registered wherever, in the reasonable opinion of the Collateral Agent,
such registration may be required or advisable, (ii) duly endorse the
same for transfer in blank or as the Collateral Agent may reasonably
direct, and (iii) upon request of the Collateral Agent, use
commercially reasonable efforts to deliver to the Collateral Agent any
and all consents or other documents which may be necessary to effect
the transfer of the Negotiable Collateral to the Collateral Agent or
any third party.
(4) The Obligor will promptly inform the Collateral Agent in writing of the
acquisition by the Obligor of any personal property which is not
adequately described in Section 2.1(1), and the Obligor will execute
and deliver, at its own expense, from time to time, amendments to this
security agreement and its schedules or additional security agreements
or schedules as may be reasonably required by the Collateral Agent.
SECTION 2.4 SCOPE OF SECURITY INTEREST.
(1) To the extent that an assignment of amounts payable and other proceeds
arising under or in connection with any agreement, license, permit or
quota of
-18-
the Obligor (each, a "RESTRICTED ASSET") is prohibited by the terms
thereof, the Security Interest created hereunder will constitute a
trust created in favour of the Collateral Agent and the Secured
Creditors pursuant to which the Obligor shall hold as trustee all
proceeds arising under or in connection with the Restricted Asset in
trust for the Collateral Agent on the following basis:
(a) until the Security Interest has become enforceable, the
Obligor shall be entitled to receive all such proceeds; and
(b) whenever the Security Interest has become enforceable, all
rights of the Obligor to receive such proceeds shall cease,
the Obligor shall at the request of the Collateral Agent take
all such actions to collect and enforce payment and other
rights arising under the Restricted Asset in accordance with
the instructions of the Collateral Agent and all such proceeds
arising under or in connection with the Restricted Asset shall
be immediately paid over to the Collateral Agent for the
benefit of the Secured Creditors.
The Obligor shall not exercise any rights of set off with respect to
amounts payable by it under or in connection with any Restricted Asset
and shall use commercially reasonable efforts to ensure that no other
party to the Restricted Asset shall exercise any rights of set off
against any such amounts. The Obligor shall use commercially reasonable
efforts to obtain the consent of each other party to the Restricted
Asset to the assignment of the Restricted Asset to the Collateral Agent
in accordance with this security agreement and shall use commercially
reasonable efforts to ensure that all agreements entered into on and
after the date hereof expressly permit assignments of the benefits of
such agreement as collateral security to the Collateral Agent in
accordance with the terms of this security agreement.
(2) Until the Security Interest shall have become enforceable, the grant of
the Security Interest in the Intellectual Property shall not affect in
any way the Obligor's rights to commercially exploit the Intellectual
Property, defend it, enforce the Obligor's rights in it or with respect
to it against third parties in any court or claim and be entitled to
receive any damages with respect to any infringement of it.
(3) The Security Interest shall not extend to consumer goods.
(4) The Security Interest shall not extend or apply to the last day of the
term of any lease or sublease or any agreement for a lease or sublease,
now held or hereafter acquired by the Obligor in respect of real
property, but the Obligor shall stand possessed of any such last day
upon trust to assign and dispose of it as the Collateral Agent may
reasonably direct.
-19-
SECTION 2.5 GRANT OF LICENCE TO USE INTELLECTUAL PROPERTY.
Solely for purposes of enabling the Collateral Agent to exercise its
rights and remedies pursuant to Article 3 but subject to the next following
sentence, and for no other purpose, the Obligor grants to the Collateral Agent
an irrevocable, nonexclusive licence (exercisable without payment of royalty or
other compensation to the Obligor) to use, assign or sublicense, at any time
after the Security Interest shall have become enforceable, any of the
Intellectual Property owned or licensed by the Obligor wherever the same may be
located, including in such licence access to (i) all media in which any of the
licensed items may be recorded or stored, and (ii) all Software used for
compilation or print-out. To the extent that the grant of a license under this
Section 2.5 would constitute a breach or permit the acceleration or termination
of any Intellectual Property licensed by the Obligor, such Intellectual Property
shall not be subject to the licence in favour of the Collateral Agent but the
Obligor shall, upon the reasonable request therefor from the Collateral Agent,
use commercially reasonable efforts to obtain the consent of the third party to
such Intellectual Property to the grant of the licence to the Collateral Agent
hereunder and, upon obtaining such consent, the Obligor shall grant a license as
set forth in this Section 2.5 to the Collateral Agent.
SECTION 2.6 CARE AND CUSTODY OF COLLATERAL.
(1) The Collateral Agent and the Secured Creditors shall have no obligation
to keep fungible Collateral in their possession identifiable, but shall
be bound to exercise in the keeping of the Collateral the same degree
of care as it would exercise with respect to similar property owned by
it.
(2) The Collateral Agent may, after the Security Interest shall have become
enforceable, (i) notify any Person obligated on any Receivable or on
chattel paper or any obligor on an instrument or under any Contract to
make payments to the Collateral Agent, whether or not the Obligor was
previously making collections on such Receivables, chattel paper,
instruments or Contracts, (ii) assume control of any proceeds arising
from the Collateral, (iii) direct the Obligor to cause, and the Obligor
shall cause, all payments on account of the Receivables, chattel paper,
instruments and Contracts to be made directly to the Cash Collateral
Account, and (iv) direct the Obligor to promptly (and in any event
within 10 days) deliver all of its chattel paper to the Collateral
Agent.
(3) The Collateral Agent need not see to the collection of dividends on, or
exercise any option or right in connection with, the Securities and
Instruments that are Collateral hereunder and need not protect or
preserve them from depreciating in value or becoming worthless and is
released from all responsibility for any loss of value. The Collateral
Agent shall be bound to exercise in the physical keeping of such
Collateral only the same degree of care as it would exercise with
respect to its own securities.
-20-
SECTION 2.7 RIGHTS OF THE OBLIGOR.
(1) Until the Security Interest has become enforceable, the Obligor shall
be entitled to vote the Securities and to receive all cash dividends.
In order to allow the Obligor to vote the Securities, the Collateral
Agent shall from time to time, at the request and the expense of the
Obligor, (i) execute valid proxies appointing proxyholders to attend
and act at meetings of shareholders, and (ii) execute resolutions in
writing, all pursuant to the relevant provisions of the Issuer's
governing legislation. Whenever the Security Interest has become
enforceable, all rights of the Obligor to vote (under any proxy given
by the Collateral Agent (or its nominee) in connection herewith or
otherwise) or to receive dividends shall cease and all such rights
shall become vested solely and absolutely in the Collateral Agent.
(2) Any dividends received by the Obligor contrary to Section 2.7(1) or any
other moneys or property which may be received by the Obligor after the
Security Interest has become enforceable for, or in respect of, the
Collateral shall be received as trustee for the Collateral Agent and
the Lenders and shall be immediately paid over to the Collateral Agent.
ARTICLE 3
ENFORCEMENT
SECTION 3.1 ENFORCEMENT.
The Security Interest shall be and become enforceable against the
Obligor upon the occurrence and during the continuance of an Event of Default.
SECTION 3.2 REMEDIES.
Whenever the Security Interest has become enforceable, the Collateral
Agent may realize upon the Collateral and enforce the rights of the Collateral
Agent and the Secured Creditors by:
(a) entry onto any premises where Collateral consisting of
tangible personal property may be located;
(b) entry into possession of the Collateral by any method
permitted by law;
(c) sale or lease of all or any part of the Collateral;
(d) exercise and enforce all rights and remedies of a holder of
the Securities and Instruments as if the Collateral Agent were
the absolute owner thereof (including, if necessary, causing
the Collateral to be registered in the name of the Collateral
Agent or its nominee if not already done);
(e) collection of any proceeds arising in respect of the
Collateral;
(f) collection, realization or sale of, or other dealing with, the
Receivables;
-21-
(g) subject to the terms of any Intellectual Property licenses and
consents with respect thereto obtained pursuant to Section
2.5, license or sublicense, whether on an exclusive or
nonexclusive basis, any Intellectual Property owned or
licensed by the Obligor for such term and on such conditions
and in such manner as the Collateral Agent shall in its sole
judgment determine (taking into account such provisions as may
be necessary to protect and preserve such Intellectual
Property);
(h) instruction to all banks which have entered into a control
agreement with the Collateral Agent to transfer all moneys,
securities and instruments held by such depositary bank to an
account maintained with or by the Collateral Agent;
(i) application of any moneys constituting Collateral or proceeds
thereof in accordance with Section 7.4 of the amended and
restated security agreement dated as of March 26, 2003 and
amended and restated as of the date hereof (as such agreement
may be amended, restated, modified and/or supplemented from
time the "U.S. SECURITY AGREEMENT") among Holdings, the
Borrower, the other assignors party thereto and DBTCA, as
collateral agent for the secured creditors referred to
therein. Section 7.4 of the US Security Agreement is hereby
incorporated herein by reference and all of the provisions of
such section shall apply hereto, MUTATIS MUTANDIS;
(j) appointment by instrument in writing of a receiver (which term
as used in this security agreement includes a receiver and
manager) or agent of all or any part of the Collateral and
removal or replacement from time to time of any receiver or
agent;
(k) institution of proceedings in any court of competent
jurisdiction for the appointment of a receiver of all or any
part of the Collateral;
(l) institution of proceedings in any court of competent
jurisdiction for sale or foreclosure of all or any part of the
Collateral;
(m) filing of proofs of claim and other documents to establish
claims to the Collateral in any proceeding relating to the
Obligor; and
(n) any other remedy or proceeding authorized or permitted under
the PPSA or otherwise by law or equity.
Such remedies may be exercised from time to time separately or in combination
and are in addition to, and not in substitution for, any other rights of the
Collateral Agent and the Secured Creditors however created. The Collateral Agent
shall not be bound to exercise any right or remedy, and the exercise of rights
and remedies shall be without prejudice to the rights of the Collateral Agent
and the Secured Creditors in
-22-
respect of the Obligations including the right to claim for any deficiency. By
accepting the benefits of this security agreement and each other Collateral
Document, the Secured Creditors expressly acknowledge and agree that this
security agreement and each other Collateral Document may be enforced only by
the action of the Collateral Agent acting upon the instructions of the Required
Lenders (or, if no Credit Document Obligations remain outstanding, the holders
of at least a majority of the outstanding Interest Rate Obligations) and that no
other Secured Creditor shall have any right individually to seek to enforce this
security agreement or any other Collateral Document or to realize upon the
security to be granted hereby or thereby, it being understood and agreed that
such rights and remedies may be exercised by the Collateral Agent for the
benefit of the Secured Creditors upon the terms of this security agreement, the
Intercreditor Agreement and the other Collateral Documents.
SECTION 3.3 ADDITIONAL RIGHTS.
In addition to the remedies set forth in Section 3.2, the Collateral
Agent may, whenever the Security Interest has become enforceable:
(a) require the Obligor, at the Obligor's expense, to assemble the
Collateral at a place or places designated by notice in
writing and the Obligor agrees to so assemble the Collateral;
(b) require the Obligor, by notice in writing, to disclose to the
Collateral Agent the location or locations of the Collateral
and the Obligor agrees to make such disclosure when so
required;
(c) repair, process, modify, complete or otherwise deal with the
Collateral and prepare for the disposition of the Collateral,
whether on the premises of the Obligor or otherwise;
(d) carry on all or any part of the business of the Obligor and,
to the exclusion of all others including the Obligor
(excluding any tenant leases or other occupancy agreements
entered into by the Obligor, to the extent permitted by the
Credit Agreement, in accordance with the Credit Agreement),
enter upon, occupy and use all or any of the premises,
buildings, and other property of or used by the Obligor for
such time as the Collateral Agent sees fit, free of charge,
and, except as required by applicable law, the Collateral
Agent and the Secured Creditors shall not be liable to the
Obligor for any act, omission or negligence (other than wilful
misconduct and gross negligence (as determined by a court of
competent jurisdiction in a final and non-appealable decision)
in so doing or for any rent, charges, depreciation or damages
incurred in connection with or resulting from such action;
(e) borrow for the purpose of carrying on the business of the
Obligor or for the maintenance, preservation or protection of
the Collateral and grant
-23-
a security interest in the Collateral, whether or not in
priority to the Security Interest, to secure repayment; and
(f) commence, continue or defend any judicial or administrative
proceedings for the purpose of protecting, seizing,
collecting, realizing or obtaining possession or payment of
the Collateral, and give good and valid receipts and
discharges in respect of the Collateral and compromise or give
time for the payment or performance of all or any part of the
accounts or any other obligation of any third party to the
Obligor.
SECTION 3.4 RECEIVER'S POWERS.
(1) Any receiver appointed by the Collateral Agent shall be vested with the
rights and remedies which could have been exercised by the Collateral
Agent in respect of the Obligor or the Collateral and such other powers
and discretions as are granted in the instrument of appointment and any
supplemental instruments. The identity of the receiver, its replacement
and its remuneration shall be within the sole and unfettered discretion
of the Collateral Agent.
(2) Any receiver appointed by the Collateral Agent shall act as agent for
the Collateral Agent for the purposes of taking possession of the
Collateral, but otherwise and for all other purposes (except as
provided below), as agent for the Obligor. The receiver may sell,
lease, or otherwise dispose of Collateral as agent for the Obligor or
as agent for the Collateral Agent as the Collateral Agent may determine
in a commercially reasonable manner. The Obligor agrees to indemnify
the receiver in respect of all such actions (except for actions
constituting gross negligence and/or wilful misconduct as determined in
a final and unappealable decision by a court of competent
jurisdiction).
(3) The Collateral Agent, in appointing or refraining from appointing any
receiver, shall not incur liability to the receiver, the Obligor or
otherwise and shall not, except as required by applicable law, be
responsible for any misconduct or negligence of such receiver.
SECTION 3.5 APPOINTMENT OF ATTORNEY.
The Obligor hereby irrevocably appoints the Collateral Agent (and any
officer thereof) as attorney of the Obligor (with full power of substitution) to
exercise in the name of and on behalf of the Obligor, after the Security
Interest shall have become enforceable, any of the Obligor's right (including
the right of disposal), title and interest in and to the Collateral including
the execution, endorsement, assignment, delivery and transfer of the Collateral
to the Collateral Agent, its nominees or transferees, and the Collateral Agent
and its nominees or transferees are hereby empowered to exercise all rights and
powers and to perform all acts of ownership with respect to the Collateral to
the same extent as the Obligor might do. The
-24-
attorney shall not be liable for any act, failure to act or any other matter
or thing, except for its own gross negligence or wilful misconduct (as
determined by a court of competent jurisdiction in a final and non-appealable
decision). This appointment and power of substitution, being coupled with an
interest, are irrevocable and shall not terminate upon the bankruptcy,
dissolution, winding up or insolvency of the Obligor.
SECTION 3.6 DEALING WITH THE COLLATERAL.
(1) The Collateral Agent and the Secured Creditors shall not be obliged to
exhaust their recourse against the Obligor or any other Person or
against any other security they may hold in respect of the Obligations
before realizing upon or otherwise dealing with the Collateral in such
manner as the Collateral Agent may consider desirable.
(2) The Collateral Agent and the Secured Creditors may grant extensions or
other indulgences, take and give up securities, accept compositions,
grant releases and discharges and otherwise deal with the Obligor and
with other Persons, sureties or securities as they may see fit without
prejudice to the Obligations, the liability of the Obligor or the
rights of the Collateral Agent and the Secured Creditors in respect of
the Collateral.
(3) Except as otherwise provided by law or this security agreement
(including Section 2.6(3), the Collateral Agent and the Secured
Creditors shall not be (i) liable or accountable for any failure to
collect, realize or obtain payment in respect of the Collateral, (ii)
bound to institute proceedings for the purpose of collecting,
enforcing, realizing or obtaining payment of the Collateral or for the
purpose of preserving any rights of any persons in respect of the
Collateral, (iii) responsible for any loss occasioned by any sale or
other dealing with the Collateral or by the retention of or failure to
sell or otherwise deal with the Collateral, or (iv) bound to protect
the Collateral from depreciating in value or becoming worthless.
SECTION 3.7 STANDARDS OF SALE.
Without prejudice to the ability of the Collateral Agent to dispose of
the Collateral in any manner which is commercially reasonable, the Obligor
acknowledges that, to the extent not prohibited by law:
(a) Collateral may be disposed of in whole or in part;
(b) Collateral may be disposed of by public auction, public tender
or private contract;
(c) any assignee of such Collateral may be the Collateral Agent, a
Secured Creditor or a customer of any such Person;
-25-
(d) a disposition of Collateral may be on such terms and
conditions as to credit or otherwise as the Collateral Agent,
in its sole discretion, may deem advantageous; and
(e) the Collateral Agent may establish an upset or reserve bid or
price in respect of Collateral.
SECTION 3.8 DEALINGS BY THIRD PARTIES.
(1) No Person dealing with the Collateral Agent, any of the Secured
Creditors or an agent or receiver shall be required to determine (i)
whether the Security Interest has become enforceable, (ii) whether the
powers which such Person is purporting to exercise have become
exercisable, (iii) whether any money remains due to the Collateral
Agent or the Secured Creditors by the Obligor, (iv) the necessity or
expediency of the stipulations and conditions subject to which any sale
or lease is made, (v) the propriety or regularity of any sale or other
dealing by the Collateral Agent or any Secured Creditor with the
Collateral, or (vi) how any money paid to the Collateral Agent or the
Secured Creditors has been applied.
(2) Any BONA FIDE purchaser of all or any part of the Collateral from the
Collateral Agent or any receiver or agent shall hold the Collateral
absolutely, free from any claim or right of whatever kind, including
any equity of redemption, of the Obligor, which it specifically waives
(to the fullest extent permitted by law) as against any such purchaser
together with all rights of redemption, stay or appraisal which the
Obligor has or may have under any rule of law or statute now existing
or hereafter adopted.
SECTION 3.9 REGISTRATION RIGHTS.
If the Administrative Agent shall determine to exercise its right to
sell any or all of the Securities pledged hereunder, and if in the opinion of
the Administrative Agent it is necessary or advisable to have any such
Securities:
(a) qualified for distribution by prospectus pursuant to the
applicable securities legislation in any or all provinces of
Canada, the Obligor will cause the Issuer thereof to (i) use
its best efforts to file, and obtain a receipt from the
applicable securities regulatory authorities, for a
preliminary and final prospectus offering for sale such number
of Securities as the Administrative Agent shall direct; and
(ii) execute and deliver, and cause the directors and officers
of such Issuer to execute and deliver, all such certificates,
instruments and documents, and do or cause to be done all such
other acts as may be, in the opinion of the Administrative
Agent, necessary or advisable to qualify such Securities for
distribution by prospectus pursuant to the applicable
securities legislation in any or all provinces of Canada; or
-26-
(b) sold or registered under the provisions of the U.S. Securities
Act of 1933, as amended, the Obligor will cause the Issuer
thereof to (i) execute and deliver, and cause the directors
and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such
other acts as may be, in the opinion of the Administrative
Agent, necessary or advisable to register the Securities
pledged hereunder, or that portion thereof to be sold, under
the provisions of the U.S. Securities Act of 1933, as amended,
(ii) use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective
for a period of one year from the date of the first public
offering of the Securities pledged hereunder, or that portion
thereof to be sold, and (iii) make all amendments thereto
and/or to the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in
conformity with the requirements of the U.S. Securities Act of
1933, as amended, and the rules and regulations applicable
thereto.
The Obligor agrees to cause such Issuer to comply with the provisions
of the securities legislation in effect in any or all of the provinces of
Canada, the U.S. Securities Act of 1933, as amended, and the securities or "Blue
Sky" laws of any jurisdictions outside Canada, in each case, which the
Administrative Agent shall designate.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 4.1 GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
The Obligor hereby represents and warrants and covenants and agrees
that:
(a) NECESSARY FILINGS. Except as set out forth in Sections 11.19
(a) and (b) of the Credit Agreement, all filings,
registrations and recordings necessary or appropriate to
create, preserve and perfect the Security Interest granted
hereby in respect of the Collateral located in jurisdictions
(save and except for any filings, registrations or recordings:
(A) in respect of fixtures in the appropriate land registry
office; and (B) in respect of any assignment of Crown debts
(as that term is defined in the FINANCIAL ADMINISTRATION ACT
(Canada)) to which Part VII of the FINANCIAL ADMINISTRATION
ACT (Canada) applies), which filings, registrations or
recordings the Obligor is not required to make) have been
accomplished or will be accomplished within one Business Day
from the date hereof and upon such filings, registrations or
recordations, the Security Interest granted hereby in and to
the Collateral constitutes or will constitute a perfected
security interest therein prior to the rights of all other
Persons therein and subject to no
-27-
other Liens (other than Permitted Liens) and is entitled to
all the rights, priorities and benefits afforded by such
relevant laws as enacted in any relevant jurisdiction to
perfected security interests, in each case to the extent that
the Collateral consists of the type of property in which a
security interest may be created;
(b) NO LIENS. The Obligor is, and as to Collateral acquired by it
from time to time after the date hereof the Obligor will be,
the owner or licensee of all Collateral free from any Lien,
adverse claim or other right, title or interest of any other
Person (other than Permitted Liens and the Security Interest),
and the Obligor shall defend the Collateral to the extent of
its rights therein against all claims and demands of all
Persons at any time claiming the same or any interest therein
adverse to the Collateral Agent;
(c) OTHER FINANCING STATEMENTS. As of the date hereof, in
jurisdictions other than the Province of Ontario, there is no
financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) covering or
purporting to cover any interest of any kind in the Collateral
except as disclosed in Schedule 4.1(c), and as of February 13,
2002, in the Province of Ontario, there is no financing
statement under the PPSA covering or purporting to cover any
interest of any kind in the Collateral except as disclosed in
Schedule 4.1(c), and the Obligor will not execute or authorize
to be filed in any public office any financing statement (or
similar statement or instrument of registration under the law
of any jurisdiction) or statements relating to the Collateral,
except financing statements filed or to be filed in respect of
and covering the security interests granted hereby and by the
other Credit Documents to which the Obligor is a party or as
permitted by the Credit Agreement or in connection with
Permitted Liens;
(d) CHIEF EXECUTIVE OFFICE; RECORDS. The chief executive office of
the Obligor is located at the address indicated on Schedule
4.1(d). The Obligor will not move its chief executive office
except to such new location as the Obligor may establish in
accordance with the last sentence of this Section 4.1(d). The
originals of all documents evidencing all Receivables,
Contract Rights and Trade Secret Rights of the Obligor and the
only original books of account and records of the Obligor
relating thereto are, and will continue to be, kept at such
chief executive office, and/or one or more of the other record
locations set out on Schedule 4.1(d) or at such new locations
as the Obligor may establish in accordance with the last
sentence of this Section 4.1(d). All Receivables and Contract
Rights and Trade Secret Rights of the Obligor are, and will
continue to be, maintained at, and controlled and directed
(including for general accounting purposes) from, the office
locations
-28-
described above or such new location established in accordance
with the last sentence of this Section 4.1(d). The Obligor
shall not establish new locations for such offices until (i)
it shall have given to the Collateral Agent not less than 15
days' prior written notice (or such lesser notice as shall be
acceptable to the Collateral Agent in the case of a new record
location to be established in connection with newly acquired
Contracts) of its intention to do so, clearly describing such
new location and providing such other information in
connection therewith as the Collateral Agent may reasonably
request; (ii) with respect to such new location, it shall have
taken all action, reasonably satisfactory to the Collateral
Agent, to maintain the security interest of the Collateral
Agent in the Collateral intended to be granted hereby at all
times fully perfected and in full force and effect; and (iii)
at the reasonable request of the Collateral Agent, it shall
have furnished an opinion of counsel or other evidence
acceptable to the Collateral Agent to the effect that all
financing and continuation statements and amendments or
supplements thereto (and similar documents and filings under
the law of any relevant jurisdiction) have been filed in the
appropriate filing office or offices, and all other actions
(including the payment of all filing fees and taxes, if any,
payable in connection with such filings) have been taken, in
order to perfect (and maintain the perfection of and priority
of) the Security Interest granted hereby (subject only to
Permitted Liens) in respect of the types of Collateral
referred to in Section 2.1(1);
(e) LOCATION OF INVENTORY AND EQUIPMENT. All Inventory and
equipment (including Units) held on the date hereof by the
Obligor (excluding Units at such time leased to customers) are
located at one of the locations shown on Schedule 4.1(e). All
Units and other Inventory (including Units at such time leased
to customers) are located in one of the jurisdictions listed
on Schedule 4.1(e). The Obligor agrees that all Inventory and
equipment (including Units) now held or subsequently acquired
by it (excluding Units at such time leased to customers) shall
be kept at (or shall be in transport to or from) any one of
the locations listed on Schedule 4.1(e), or such new location
as the Obligor may establish in accordance with the last
sentence of this Section 4.1(e). The Obligor may establish a
new location for Inventory and equipment (including Units but
excluding Units leased to customers) if (i) it shall have
given to the Collateral Agent not less than 20 days prior
written notice of its intention so to do, clearly describing
such new location and providing such other information in
connection therewith as the Collateral Agent may reasonably
request, (ii) with respect to such new location, it shall have
taken all action reasonably satisfactory to the Collateral
Agent to maintain the security interest of the Collateral
-29-
Agent in the Collateral intended to be granted hereby at all
times fully perfected and in full force and effect and (iii)
at the reasonable request of the Collateral Agent, it shall
have furnished an opinion of counsel or other evidence
acceptable to the Collateral Agent to the effect that all
financing and continuation statements and amendments or
supplements thereto (and similar documents and filings under
the law of any relevant jurisdiction) have been filed in the
appropriate filing office or offices, and all other actions
(including the payment of all filing fees and taxes, if any,
payable in connection with such filings) have been taken, in
order to perfect (and maintain the perfection and priority of)
the Security Interest granted hereby (subject only to
Permitted Liens);
(f) RECOURSE. This security agreement is made with full recourse
to the Obligor and pursuant to and upon all the warranties,
representations, covenants and agreements on the part of the
Obligor contained herein, in the other Credit Documents to
which the Obligor is a party, in the Interest Rate Agreements,
if any, to which the Obligor is a party, and otherwise in
writing in connection herewith or therewith;
(g) TRADE NAMES, CHANGE OF NAME. The Obligor has not and does not
operate in any jurisdiction under, or in the preceding twelve
months has not had and has not operated in any jurisdiction
under, any trade names, fictitious names or other names
(including any names of divisions or operations) except its
legal name and such other trade, fictitious or other names as
are listed on Schedule 4.1(g) Schedule 4.1(g). The Obligor has
only operated under each name set forth in Schedule 4.1(g) in
the jurisdiction or jurisdictions set forth opposite each such
name on Schedule 4.1(g). The Obligor shall not change its
legal name or assume or operate in any jurisdiction under any
trade, fictitious or other name except those names listed on
Schedule 4.1(g) in the jurisdictions listed with respect to
such names (including any names of divisions or operations)
and new names and/or jurisdictions established in accordance
with the last sentence of this Section 4.1(g). The Obligor
shall not assume or operate in any jurisdiction under any new
trade, fictitious or other name or, to the extent such
operation might impair the creation, maintenance, perfection
or priority of any Security Interest granted hereunder,
operate under any existing name in any additional jurisdiction
until (i) it shall have given to the Collateral Agent not less
than 30 days' prior written notice of its intention so to do,
clearly describing such new name and/or jurisdiction and, in
the case of a new name, the jurisdictions in which such new
name shall be used and providing such other information in
connection therewith as the Collateral Agent may reasonably
request;
-30-
and (ii) with respect to such new name and/or new
jurisdiction, it shall have taken all action to maintain the
Security Interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and
in full force and effect and (iii) at the request of the
Collateral Agent, it shall have furnished an opinion of
counsel or other evidence reasonably acceptable to the
Collateral Agent to the effect that all financing and
continuation statements and amendments or supplements thereto
(and similar documents and filings under the law of any
relevant jurisdiction) have been filed in the appropriate
filing office or offices, and all other actions (including the
payment of all filing fees and taxes, if any, payable in
connection with such filings) have been taken, in order to
perfect (and maintain the perfection and priority of) the
security interest granted hereby (subject only to Permitted
Liens) in respect of the types of Collateral referred to in
Section 2.1(1).
(h) UNITS. Subject to Section 11.19(a) of the Credit Agreement and
Section 4.1(a), to the extent any Unit is, or under applicable
law is required to be, covered by any Unit Certificate and to
the extent that any action under any applicable law in lieu of
or in addition to the filing of financing statements under the
PPSA or any other personal property security legislation
enacted in any relevant jurisdiction are required to be taken
so that the security interests in the respective Units created
pursuant to this security agreement are fully perfected under
such law, all such actions have been taken. Subject to Section
11.19(a) of the Credit Agreement and Section 4.1(a), in the
event any change in applicable law in any relevant
jurisdiction where any Unit is located, or a decision,
opinion, ruling, regulation, decree or order of a court, or
administrative, regulatory or governmental authority, of any
relevant jurisdiction in which any Unit is located (whether
involving the Obligor or any unrelated third person) shall
render any of the information provided pursuant to the
preceding sentence inaccurate in any respect, then the Obligor
shall inform (in writing) the Collateral Agent of the
respective change and shall promptly take such actions or
cause such actions to be taken as the Collateral Agent shall
request in order to create, maintain, establish or preserve
the perfection of the security interest of the Collateral
Agent in such Unit. Subject to Section 11.19(a) of the Credit
Agreement and Section 4.1(a), as new Units are acquired after
the date of this security agreement, or to the extent that
Units are moved to different jurisdictions after the date of
this security agreement, the Obligor shall take all actions
with respect thereto (including, to the extent required under
applicable law, causing a Unit Certificate to be issued which
contains a notation of the security interest of the Collateral
Agent thereon) as shall be required under applicable
-31-
law to ensure that the security interests of the Collateral
Agent therein are perfected under relevant law. Immediately
upon any request of the Collateral Agent made for the purpose
set forth in this sentence, the Obligor shall provide the
serial numbers or vehicle identification numbers, as
applicable, for each Unit and shall promptly take such actions
or cause such actions to be taken as the Collateral Agent
shall request in order to create, maintain, establish or
preserve the perfection or priority of the Security Interest
over other creditors or buyers or lessees of the Units in
accordance with the PPSA or the personal property security
legislation enacted in any relevant jurisdiction. As of the
date hereof, none of the Units are self-propelled or
constitute "motor vehicles" within the meaning of the PPSA and
the Obligor will immediately notify the Collateral Agent if
any Units become self-propelled or become "motor vehicles"
within the meaning of the PPSA. None of the Units are
"equipment" (as that term is defined in the PPSA) to the
Obligor. None of the Contracts with account debtors (i)
located in the Province of Ontario for the purposes of the
PPSA constitute "security agreements" as defined therein; or
(ii) located outside of the Province of Ontario for the
purposes of the personal property security legislation enacted
in such jurisdiction are subject to the perfection,
registration and priority provisions of such legislation.
Subject to Section 11.19(a) of the Credit Agreement and
Section 4.1(a), the Obligor will take all such steps as may be
necessary to perfect under the PPSA or the personal property
security legislation enacted in any other relevant
jurisdiction its interest in any Contracts which are subject
to the perfection, registration and priority provisions of
such legislation.
(i) SECURITIES AND INSTRUMENTS.
(i) The Obligor is the legal and beneficial owner of, and
it has good and marketable title to all Collateral
consisting of one or more Securities and it has
sufficient interest in all Collateral in which a
security interest is purported to be created
hereunder for such security interest to attach
(subject, in each case, to no Lien, option or adverse
claim whatsoever, except the Security Interest
created by this security agreement);
(ii) No person, firm or corporation has or will have any
written or oral option, warrant, right, call,
commitment, conversion right, right of exchange or
other agreement or any right or privilege (whether by
law, pre-emptive or contractual) capable of becoming
an option, warrant, right, call, commitment,
conversion right, right of exchange or other
agreement to
-32-
acquire any right or interest in any of the
Collateral consisting of Securities or Instruments;
(iii) The Obligor has full power, authority and legal right
to pledge all the Collateral consisting of Securities
and Instruments pledged by it pursuant to this
security agreement;
(iv) All of the Collateral consisting of Securities and
Instruments has been duly and validly issued and
acquired, is fully paid and non-assessable and is
subject to no options to purchase or similar rights;
(v) Each of the Instruments pledged hereunder,
constitutes, or when executed by the obligor thereof
will to the knowledge of the Obligor constitute, the
legal, valid and binding obligation of such obligor,
enforceable in accordance with its terms, except to
the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws
generally affecting creditors' rights and by
equitable principles (regardless of whether
enforcement is sought in equity or at law);
(vi) the pledge, collateral assignment and delivery to the
Collateral Agent of the Collateral consisting of
certificated Securities pursuant to this security
agreement creates a valid and perfected first
priority security interest in such certificated
Securities, and the proceeds thereof, subject to no
prior Lien or to any agreement purporting to grant to
any third party a Lien on the property or assets of
such the Obligor which would include the Securities
(other than Permitted Liens) and the Collateral Agent
is entitled to all the rights, priorities and
benefits afforded by the PPSA or other relevant
personal property securities legislation as enacted
in any relevant jurisdiction to perfect security
interests in respect of such Collateral; and
(vii) "POSSESSION" (within the meaning of the PPSA) has
been obtained by the Collateral Agent over all
Collateral consisting of Securities and Instruments.
(j) TIMBER. The Obligor does not own, or expect to acquire, any
property which constitutes, or would constitute, timber. If at
any time after the date hereof, the Obligor owns, acquires or
obtains rights to any timber, the Obligor shall furnish the
Collateral Agent with prompt written notice thereof (which
notice shall describe in reasonable detail the timber and the
locations thereof) and shall take all actions as may be
-33-
deemed reasonably necessary or desirable by the Collateral
Agent to perfect the security interest of the Collateral Agent
therein.
SECTION 4.2 AFTER ACQUIRED RECEIVABLES.
As of the time when each of its Receivables arises, the Obligor shall
be deemed to have represented and warranted that each such Receivable, and all
records, papers and documents delivered to the Collateral Agent relating thereto
(if any) are genuine and in all respects what they purport to be, and that all
papers and documents (if any) relating thereto (i) will, to the knowledge of the
Obligor, represent the genuine, legal, valid and binding obligation of the
account debtor evidencing indebtedness unpaid and owed by the respective account
debtor arising out of the performance of labour or services or the sale or lease
and delivery of the merchandise listed therein, or both, (ii) will, to the
knowledge of the Obligor, be the only original writings evidencing and embodying
such obligation of the account debtor named therein (other than copies created
for general accounting purposes), (iii) will, to the knowledge of the Obligor,
evidence true and valid obligations, enforceable in accordance with their
respective terms, subject to adjustments customary in the business of the
Obligor in accordance with past practice, and (iv) will be in compliance and
will conform with all applicable federal, state and local laws and material
applicable laws of any relevant foreign jurisdiction.
SECTION 4.3 MAINTENANCE OF RECORDS FOR RECEIVABLES AND CONTRACTS.
The Obligor will keep and maintain at its own cost and expense accurate
records of its Receivables and Contracts, including the originals of all
documentation (including each Contract) with respect thereto, records of all
payments received, all credits granted thereon, all merchandise returned and all
other dealings therewith, and the Obligor will make the same available to the
Collateral Agent for inspection on the Obligor's premises, at the Obligor's own
cost and expense, at any and all reasonable times upon one Business Day's prior
notice. Upon the occurrence and during the continuance of an Event of Default,
at the request of the Collateral Agent, the Obligor shall, at its own cost and
expense, deliver all tangible evidence of its Receivables and Contract Rights
(including all documents evidencing its Receivables and all Contracts) and such
books and records to the Collateral Agent or to its representatives (copies of
which evidence and books and records may be retained by the Obligor). Upon the
occurrence and during the continuance of an Event of Default, if the Collateral
Agent so directs, the Obligor shall legend, in form and manner reasonably
satisfactory to the Collateral Agent, its Receivables and the Contracts, as well
as books, records and documents (if any) of the Obligor evidencing or pertaining
to such Receivables with an appropriate reference to the fact that such
Receivables and Contracts have been assigned to the Collateral Agent and that
the Collateral Agent has a security interest therein.
-34-
SECTION 4.4 MODIFICATION OF TERMS, ETC.
The Obligor shall not rescind or cancel any indebtedness evidenced by
any Receivable or under any Contract, or modify any term thereof or make any
adjustment with respect thereto, or extend or renew the same, or compromise or
settle any material dispute, claim, suit or legal proceeding relating thereto,
or, except as permitted by the respective Secured Debt Agreements, sell any
Receivable or Contract, or interest therein, without the prior written consent
of the Collateral Agent except as permitted by Section 4.5. The Obligor will
duly fulfill all obligations on its part to be fulfilled under or in connection
with its Receivables and the Contracts and will do nothing to impair the rights
of the Collateral Agent in the Receivables or Contracts.
SECTION 4.5 COLLECTION.
The Obligor shall, in accordance with its ordinary business practices,
endeavour to cause to be collected from the account debtor named in each of its
Receivables or obligor under any Contract, as and when due (including amounts,
services or products which are delinquent, such amounts, services or products to
be collected in accordance with generally accepted lawful collection procedures)
any and all amounts, services or products owing under or on account of such
Receivable or Contract, and apply forthwith upon receipt thereof all such
amounts as are so collected to the outstanding balance of such Receivable or
under such Contract, except that, prior to occurrence and continuance of an
Event of Default, the Obligor may allow in the ordinary course of business as
adjustments to amounts, services and products owing under its Receivables and
Contracts (i) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which the Obligor finds
appropriate in accordance with reasonable business judgment and (ii) a refund or
credit due as a result of returned or damaged merchandise or improperly
performed services or such other adjustments which the Obligor deems appropriate
in the exercise of its commercially reasonable business judgment. The costs and
expenses (including reasonable attorneys' fees) of collection, whether incurred
by the Obligor or the Collateral Agent, shall be borne by the Obligor.
SECTION 4.6 OBLIGOR REMAINS LIABLE.
Anything herein to the contrary notwithstanding, the Obligor shall
remain liable to observe and perform all of the conditions and obligations to be
observed and performed under or with respect to the Collateral. Neither the
Collateral Agent nor any Secured Creditor shall have any obligation or liability
under or with respect to any Collateral by reason of or arising out of this
security agreement or the receipt by the Collateral Agent or any Secured
Creditor of any Collateral pursuant hereto, nor shall the Collateral Agent or
any Secured Creditor be obligated in any manner to perform any of the
obligations of the Obligor under or with respect to any Collateral.
-35-
SECTION 4.7 COLLATERAL IN THE POSSESSION OF A BAILEE.
If any Inventory or other goods are at any time in the possession of a
bailee, the Obligor shall promptly notify the Collateral Agent thereof and, if
requested by the Collateral Agent, shall use its reasonable best efforts to
promptly obtain an acknowledgement from such bailee, in form and substance
reasonably satisfactory to the Collateral Agent, that the bailee holds such
Collateral for the benefit of the Collateral Agent and shall act upon the
instructions of the Collateral Agent, without the further consent of the
Obligor. The Collateral Agent agrees with the Obligor that the Collateral Agent
shall not give any such instructions unless an Event of Default has occurred and
is continuing or would occur after taking into account any action by the Obligor
with respect to any such bailee.
SECTION 4.8 INTELLECTUAL PROPERTY
As of the date hereof, the Obligor represents and warrants that, other
than the rights to use certain Trade-marks licensed to the Obligor, as more
particularly described in Section 4.9, there is no other Intellectual Property
owned by or licensed to the Obligor which is material to and used by the Obligor
in the conduct of its business.
SECTION 4.9 REPRESENTATIONS AND WARRANTIES CONCERNING TRADE-MARKS.
The Obligor represents and warrants that (i) pursuant to the Trade-▇▇▇▇
License Agreement, it is the authorized licensee of the Trade-marks listed on
Schedule 2.1(1)(h) (the "LICENSED TRADE-MARKS"), and the said trade-▇▇▇▇ license
is valid, subsisting and has not been cancelled, (ii) it is the true and lawful
owner of the Trade-marks listed on Schedule 2.1(1)(h) (the "OWNED TRADE-MARKS"),
and that such Licensed Trade-marks and Owned Trade-marks constitute all
trade-marks, registrations of trade-marks and applications for registrations of
trade-marks in the Canadian Intellectual Property Office - Trade-marks or the
equivalent thereof in any other country, that the Obligor owns or uses that are
material to its business as of the date hereof and that said registrations and
applications are valid, subsisting and have not been cancelled. The Obligor
represents and warrants that it owns, is licensed to use or otherwise has the
right to use, all Trade-marks that it uses. The Obligor further warrants that,
it has no knowledge of any third party claim received by it, that any aspect of
the Obligor's present or contemplated business operations infringes or will
infringe any trade-▇▇▇▇, service ▇▇▇▇ or trade name of any other Person other
than as could not, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Obligor represents and warrants
that the Obligor is not aware of any third-party claim that any registration is
invalid or unenforceable, and is not aware that there is any reason that any
registration is invalid or unenforceable. The Obligor represents and warrants
that upon the recordation of Confirmation of a Security Interest in Intellectual
Property in the form of Schedule 4.1(a) in the Canadian Intellectual Property
Office - Trade-marks, together with filings of financial statements under the
PPSA and pursuant to the personal property security legislation enacted in
Alberta, all filings, registrations and
-36-
recordings necessary or appropriate, to the extent permitted by applicable law,
to perfect any security interest granted to the Collateral Agent in the Owned
Trade-marks, if any, covered by this security agreement under applicable federal
and provincial law will have been accomplished. The Obligor agrees, if and when
it owns any Trade-marks, to execute such Confirmation of Security Interest in
Intellectual Property covering all right, title and interest in any such Owned
Trade-marks, and the associated goodwill, of the Obligor, and to record the same
in the Canadian Intellectual Property Office - Trade-marks.
SECTION 4.10 TRADE-▇▇▇▇ LICENSES AND ASSIGNMENTS.
Except as otherwise permitted by the Credit Agreement, the Obligor
hereby agrees not to divest itself of any right under any material Trade-▇▇▇▇,
including the Licensed Trade-marks, other than in the ordinary course of
business in accordance with its reasonable business judgment absent the prior
written approval of the Collateral Agent which shall not be unreasonably
withheld or delayed.
SECTION 4.11 TRADE-▇▇▇▇ INFRINGEMENTS.
The Obligor agrees, promptly upon learning thereof, to notify the
Collateral Agent in writing of the name and address of, and to furnish such
pertinent information that may be available with respect to, any party who the
Obligor believes is infringing, diluting or otherwise violating any of the
Obligor's rights in and to any material Trade-▇▇▇▇, including the Licensed
Trade-marks, in any manner that could reasonably be expected to have a Material
Adverse Effect, or with respect to any party claiming that the Obligor's use of
any material Trade-▇▇▇▇, including the Licensed Trade-marks, violates in any
material respect any property right of that party. The Obligor further agrees to
prosecute in accordance with reasonable business practices any person infringing
any Trade-▇▇▇▇, including the Licensed Trade-marks, in any manner that could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.12 PRESERVATION OF TRADE-MARKS.
The Obligor agrees to use its Trade-marks in connection with its
business sufficiently, and to take all other actions as are reasonably
necessary, to preserve such Trade-marks as trade-marks under the laws of Canada
and any relevant foreign jurisdiction (other than any such Trade-marks which the
Obligor determines, in its reasonable business judgement, are no longer used or
useful in its business or operations), provided that such use with respect to
the Licensed Trade-marks shall be subject to and in accordance with the terms of
the Trade-▇▇▇▇ License Agreement.
SECTION 4.13 MAINTENANCE OF TRADE-▇▇▇▇ REGISTRATION.
The Obligor shall, at its own expense, diligently (i) do all things
required by the Trade-▇▇▇▇ License Agreement to remain in good standing
thereunder, and (ii) process all documents, filings, applications, affidavits of
use and applications for renewal required by the TRADE-MARKS ACT (Canada), or
any other applicable law of Canada or any foreign equivalent thereof, to
maintain registrations in respect of its
-37-
material registered Trade-marks, if any, and shall pay all fees and
disbursements in connection therewith and shall not abandon any such filing of
affidavit of use or any such application of renewal prior to the exhaustion of
all administrative and judicial remedies without prior written consent of the
Collateral Agent (other than with respect to registrations and applications that
the Obligor determines, in its reasonable business judgement, are no longer
useful or prudent to pursue).
SECTION 4.14 FUTURE REGISTERED TRADE-MARKS.
If registration for any Trade-▇▇▇▇ which is material and/or necessary
to its business issues hereafter to the Obligor as a result of any application
now or hereafter pending before the Canadian Intellectual Property Office -
Trade-marks, or equivalent governmental agency in any foreign jurisdiction,
within 30 days of receipt of the certificate evidencing such registration, the
Obligor shall deliver to the Collateral Agent a copy of such certificate, and a
Confirmation of Security Interest in Intellectual Property in the form of
Schedule 4.1(a) in respect of such Trade-▇▇▇▇, to the Collateral Agent and at
the expense of the Obligor, confirming the grant of a security interest in such
Trade-▇▇▇▇ to the Collateral Agent hereunder.
SECTION 4.15 REPRESENTATIONS AND WARRANTIES CONCERNING PATENTS, COPYRIGHTS
AND DESIGNS.
The Obligor represents and warrants that it is the true and lawful
owner of all rights in or otherwise has the right to use (i) all trade secrets
and proprietary information necessary to operate the business of the Obligor
(the "TRADE SECRET RIGHTS"), (ii) the Patents listed on Schedule 2.1(1)(h) and
that such listed Patents include all the patents and applications for patents
that the Obligor owns as of the date hereof, (iii) the Copyrights listed in
Schedule 2.1(1)(h) and that such listed Copyrights constitute all registrations
of copyrights and applications for copyright registrations that the Obligor now
owns, and (iv) the Designs listed in Schedule 2.1(1)(h) and that such listed
Designs constitute all registrations of industrial designs and applications for
industrial design registrations that the Obligor now owns. The Obligor further
warrants that it has no knowledge of any third party claim that any aspect of
the Obligor's present or contemplated business operations infringes or will
infringe any patent or any copyright of any other Person or that the Obligor has
misappropriated any trade secret or proprietary information which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. The Obligor represents and warrants that upon the
recordation of Confirmation of a Security Interest in Intellectual Property in
the form of Schedule 4.1(a) in the Canadian Intellectual Property Office -
Patents, together with filings of financial statements under the PPSA and
pursuant to the personal property security legislation enacted in Alberta, all
filings, registrations and recordings necessary or appropriate, to the extent
permitted by applicable law, to perfect the security interest granted to the
Collateral Agent in the Patents covered by this security agreement, if any,
under applicable federal and provincial law will have been accomplished. The
Obligor agrees, if and when it owns any Patents, to execute such Confirmation of
-38-
Security Interest in Intellectual Property covering all right, title and
interest in each such Patent, and the associated goodwill, of the Obligor, and
to record the same in the Canadian Intellectual Property Office - Patents.
SECTION 4.16 PATENT, COPYRIGHT AND DESIGN LICENSES AND ASSIGNMENTS.
Except as otherwise permitted by the Secured Debt Agreements, the
Obligor hereby agrees not to divest itself of any right under any material
Patent or Copyright or Design other than in the ordinary course of business,
absent prior written approval of the Collateral Agent.
SECTION 4.17 PATENT, COPYRIGHT AND DESIGN INFRINGEMENTS.
The Obligor agrees, promptly upon learning thereof, to furnish the
Collateral Agent in writing with all pertinent information available to the
Obligor with respect to any infringement, contributory infringement or active
inducement to infringe in any Patent, Copyright or Design or with respect to any
claim that the practice of any Patent, or the use of any Copyright or Design
violates any property right of any other Person or with respect to any
misappropriation of any Trade Secret Right or any claim that practice of any
Trade Secret Right violates any property rights of any Person in each case, in
any manner which, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect. The Obligor further agrees, absent
direction of the Collateral Agent to the contrary, diligently to prosecute, in
accordance with its reasonable business judgment, any Person infringing or
misappropriating any Patent, Copyright, Design or Trade Secret Right, in each
case, to the extent that such infringement or misappropriation, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
SECTION 4.18 MAINTENANCE OF PATENTS, COPYRIGHTS AND DESIGNS.
At its own expense, the Obligor shall make timely payment of all
post-issuance or other fees and take all other actions necessary to maintain in
force its rights under each Patent, Copyright or Design of the Obligor, if any,
absent prior written approval of the Collateral Agent (other than any such
Patents, Copyrights or Designs which are no longer used or useful in its
business or operations).
SECTION 4.19 PROSECUTION OF PATENT, COPYRIGHT AND DESIGN APPLICATIONS.
At its own expense, the Obligor shall diligently prosecute all material
applications for Patents, Copyrights and Designs listed in Schedule 2.1(1)(h),
and shall not abandon any such application prior to exhaustion of all
administrative and judicial remedies, (other than applications deemed by the
Obligor to be no longer prudent to pursue) absent written consent of the
Collateral Agent.
SECTION 4.20 FUTURE PATENTS, COPYRIGHTS AND DESIGNS.
Within 30 days of the acquisition or issuance of a Patent, a Copyright
registration or Design, or of filing of an application for a Patent, Copyright
or Design, in each case, which is material or necessary to its business, the
Obligor shall deliver
-39-
to the Collateral Agent a copy of the certificate of registration of, or
application for, such Patent, Copyright or Design, with a Confirmation of
Security Interest in the form of Schedule 4.1(a) in respect of such Patent,
Copyright or Design to the Collateral Agent and at the expense of the Obligor,
confirming the grant of a security interest in such Patent, Copyright or Design
to the Collateral Agent hereunder.
SECTION 4.21 REMEDIES CONCERNING INTELLECTUAL PROPERTY.
In addition to the remedies set forth in Article 3, if the Security
Interest becomes enforceable, the Collateral Agent may by written notice to the
Obligor, take any or all of the following actions:
(a) exercise, with respect to the Licensed Trade-marks, its rights
pursuant to Section 2.5;
(b) declare the entire right, title and interest of the Obligor in
and to each of the Owned Trade-marks, if any, together with
all trade-▇▇▇▇ rights and rights of protection to the same,
vested in the Collateral Agent for the benefit of the Secured
Creditors, in which event such rights, title and interest
shall immediately vest in the Collateral Agent for the benefit
of the Secured Creditors, and the Collateral Agent shall be
entitled to exercise the power of attorney granted under
Section 3.5 to execute, cause to be acknowledged and notarized
and record any document required by the Canadian Trade-marks
Office or any equivalent government agency or office in any
foreign jurisdiction in order to effect an absolute assignment
of all right, title and interest in any Owned Trade-▇▇▇▇ to
the Collateral Agent and register the same with the applicable
agency;
(c) take and use or sell the Owned Trade-marks and the goodwill of
the Obligor's business symbolized by the Owned Trade-marks and
the right to carry on the business and use the assets of the
Obligor in connection with which the Owned Trade-marks have
been used;
(d) in connection with the exercise of any of the other remedies
provided for in this security agreement or any other Credit
Document, direct the Obligor to refrain, in which event the
Obligor shall refrain, from using the Owned Trade-marks or the
Licensed Trade-marks in any manner whatsoever, directly or
indirectly;
(e) direct the Obligor to execute such other and further documents
that the Collateral Agent may reasonably request to further
confirm the foregoing and to transfer ownership of the
Trade-marks and registrations and any pending trade-▇▇▇▇
application in the Canadian Intellectual Property Office -
Trade-marks or any equivalent government agency or office in
any foreign jurisdiction to the Collateral Agent;
-40-
(f) declare the entire right, title, and interest of the Obligor
in each of the Patents, Copyrights and Designs, if any, vested
in the Collateral Agent for the benefit of the Secured
Creditors, in which event such right, title, and interest
shall immediately vest in the Collateral Agent for the benefit
of the Secured Creditors, in which case the Collateral Agent
shall be entitled to exercise the power of attorney granted
under Section 3.5 to execute, cause to be acknowledged and
notarized and record any document required by the Canadian
Intellectual Property Office - Patents, - Copyrights or -
Industrial Designs, as the case may be, or any equivalent
government agency or office in any foreign jurisdiction in
order to effect an absolute assignment of all right, title and
interest in each Patent, each registered Copyright and each
registered Design, in each case if any, to the Collateral
Agent and register the same with the applicable agency;
(g) in connection with the exercise of any of the other remedies
provided for in this security agreement or any other
Collateral Document, take and practice or sell the Patents,
Copyrights and Designs, if any;
(h) in connection with the exercise of any of the other remedies
provided for in this security agreement or any other
Collateral Document, direct the Obligor to refrain, in which
event the Obligor shall refrain, from practising the Patents,
the Copyrights and the Designs, if any, directly or
indirectly; and
(i) the Obligor shall execute such other and further documents as
the Collateral Agent may reasonably request further to confirm
the foregoing and to transfer ownership of the Patents,
Copyrights and Designs, if any, to the Collateral Agent for
the benefit of the Secured Creditors.
SECTION 4.22 STATUS OF ACCOUNTS COLLATERAL.
The Obligor agrees that it shall, with respect to the Collateral (i)
maintain books and records pertaining to the Collateral in such detail, form and
scope as the Collateral Agent may reasonably require, and (ii) if any amount
payable under or in connection with any account in excess of Cdn.$150,000 is
evidenced by a promissory note, letter of credit or other instrument,
immediately pledge, endorse, assign and deliver to the Collateral Agent the
promissory note or instrument, as additional Collateral.
SECTION 4.23 BUSINESS OUTSIDE CERTAIN JURISDICTIONS.
The Obligor agrees that it shall notify the Collateral Agent in
writing:
(a) at least 10 Business Days prior to any of the following
changes becoming effective, of (i) any proposed change in the
location of any place of business of the Obligor or any of its
Subsidiaries and
-41-
(ii) tangible property of the Obligor or any of its
Subsidiaries being stored in any place outside the Province(s)
of Ontario, Quebec, Alberta, British Columbia, Manitoba and
Saskatchewan; and
(b) of (i) any change, to the knowledge of the Obligor, in the
location of the chief executive office or head office of each
account debtor of the Obligor and each of its Subsidiaries to
a jurisdiction other than any province of Canada or state in
the United States of America; or (ii) any new account debtor
with its chief executive office or head office in a
jurisdiction other than any province of Canada or state in the
United States of America; or (iii) any change, to the
knowledge of the Obligor, in the location of Units leased to
customers of the Obligor and each of its Subsidiaries to a
jurisdiction other than the jurisdictions specified under the
heading "LEASED UNITS" in Schedule 4.1(d).
SECTION 4.24 INSURANCE.
Except as otherwise permitted by the Credit Documents, the Obligor will
do nothing to impair the rights of the Collateral Agent in the Collateral. The
Obligor will at all times keep its Inventory and equipment (including the Units)
insured in favour of the Collateral Agent, at the Obligor's own expense to the
extent required by the Credit Agreement against fire, theft and all other risks
to which such Collateral may be subject; all policies or certificates with
respect to such insurance shall be endorsed to the Collateral Agent's reasonable
satisfaction for the benefit of the Collateral Agent (including by naming the
Collateral Agent as additional insured and loss payee) and deposited with the
Collateral Agent. If the Obligor shall fail to insure such Inventory and
equipment (including the Units) to the extent required by the Credit Agreement,
or if the Obligor shall fail to so endorse and deposit all policies or
certificates with respect thereto, the Collateral Agent, shall have the right
(but shall be under no obligation), upon five Business Days' prior written
notice to the Obligor, to procure such insurance and the Obligor agrees to
reimburse the Collateral Agent for all reasonable costs and expenses of
procuring such insurance. Upon the occurrence and during the continuance of an
Event of Default (or a Default under Section 9.1(e) of the Credit Agreement),
the Collateral Agent may apply any proceeds of such insurance required to be
maintained pursuant to this Section 4.24 in accordance with Section 5.10. The
Obligor assumes all liability and responsibility in connection with the
Collateral acquired by it and the liability of the Obligor to pay the
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 the Obligor.
SECTION 4.25 PERFECTION AND PROTECTION OF SECURITY INTEREST.
The Obligor agrees that it shall perform, execute and deliver, and
cause its Subsidiaries to perform, execute and deliver, all acts, agreements,
and other documents as may be reasonably requested by the Collateral Agent at
any time to register, file, signify, publish, perfect, maintain, protect, and
enforce the Security
-42-
Interest including (i) executing, recording and filing of the Credit Documents
and financing or continuation statements in connection therewith, in form and
substance satisfactory to the Collateral Agent, acting reasonably, and pay all
taxes, fees and other charges payable in connection therewith, (ii) delivering
to the Collateral Agent the originals of all instruments, documents and chattel
paper and all other Collateral of which the Collateral Agent reasonably
determines it should have physical possession in order to perfect and protect
the Security Interest, duly endorsed or assigned to the Collateral Agent, (iii)
delivering to the Collateral Agent warehouse receipts covering any portion of
the Collateral located in warehouses and for which warehouse receipts are
listed, (iv) placing notations on its books of account to disclose the Security
Interest, (v) delivering to the Collateral Agent all letters of credit on which
the Obligor or any of its Subsidiaries is named beneficiary, and (vi) taking
such other steps as are deemed necessary by the Collateral Agent, acting
reasonably, to maintain the Security Interest.
SECTION 4.26 ADDITIONAL SECURITY.
The Obligor agrees that it shall grant, and cause each of its
Subsidiaries to grant, to the Collateral Agent, for the benefit of the Secured
Creditors, security interests and mortgages in such assets and properties of the
Obligor or such Subsidiary as are not covered by the original Credit Documents
or as may be reasonably requested from time to time by the Collateral Agent
pursuant to documentation reasonably satisfactory in form and substance to the
Collateral Agent constituting valid and enforceable perfected security interests
superior to and prior to the rights of all third Persons and subject to no other
Liens, except for Permitted Liens.
SECTION 4.27 FINANCING STATEMENTS.
The Obligor agrees to execute and deliver to the Collateral Agent such
financing statements, in form reasonably acceptable to the Collateral Agent, as
the Collateral Agent may from time to time request or as are necessary in the
reasonable opinion of the Collateral Agent to establish and maintain a valid,
enforceable and first priority (subject only to Permitted Liens) perfected
security interest in the Collateral as provided herein and in the other rights
and security contemplated hereby all in accordance with the PPSA or the personal
property security legislation as enacted in any and all relevant jurisdictions
or any other relevant law. The Obligor will pay any applicable filing fees,
recordation taxes and related expenses relating to its Collateral. The Obligor
hereby authorizes the Collateral Agent to file any such financing statements
without the signature of the Obligor where permitted by law.
SECTION 4.28 DEPOSIT ACCOUNTS.
(1) The Obligor does not maintain, and shall not at any time after the date
hereof establish or maintain, any demand, time, savings, passbook or
similar account, except for such accounts which are permitted pursuant
to Section 8.16 of the
-43-
Credit Agreement. Schedule 4.28 accurately sets forth each account
maintained by the Obligor (including a description thereof and the
respective account number), the name of the respective bank with which
such account is maintained, and the branch of the bank at which such
account is maintained. For each account, the Obligor shall cause the
bank with which the account is maintained to execute and deliver to the
Collateral Agent, within 30 days after the Collateral Agent's request
therefor, a "control agreement" in the form of Exhibit "A" to Schedule
4.28 (appropriately completed) with such changes thereto as may be
acceptable to the Collateral Agent. The Collateral Agent and the
Obligor agree that: (i) the control agreement regarding deposit
accounts between the Obligor, The Bank of Nova Scotia and the
Collateral Agent dated as of May 10, 2002 (the "EXISTING CONTROL
AGREEMENT") constitutes a control agreement for the purposes of this
Section 4.28; and (ii) the Existing Control Agreement is confirmed in
all respects and shall continue in full force and effect. If any bank
with which such account is maintained refuses to, or does not, enter
into such a control agreement, the Obligor shall promptly (and in any
event within 30 days of the date of the respective request) close the
respective account and transfer all balances therein to another account
meeting the requirements of this Section 4.28 (with respect to which a
"control agreement" meeting the foregoing requirements has been entered
into and is in full force and effect). If any bank with which an
account is maintained refuses to subordinate all of its claims with
respect to such account to the Collateral Agent's security interest
therein on terms satisfactory to the Collateral Agent, then the
Collateral Agent, at its option, may (x) require that such account be
terminated in accordance with the immediately preceding sentence or (y)
agree to a control agreement without such subordination, provided that
in such event the Collateral Agent may at any time, at its option,
subsequently require that such account be terminated (within 30 days
after notice from the Collateral Agent) in accordance with the
requirements of the immediately preceding sentence.
(2) The Obligor shall not establish any new demand, time, savings, passbook
or similar accounts, except for accounts established and maintained
with banks and meeting the requirements of Section 4.28(1). At the time
such an account is established, to the extent so requested by the
Collateral Agent, the appropriate control agreement shall be executed
in accordance with the requirements of Section 4.28(1) and the Obligor
shall furnish to the Collateral Agent a supplement to Schedule 4.28
containing the relevant information with respect to the respective
account and the bank with which the same is established.
(3) The Collateral Agent (x) shall not deliver a Notice of Exclusive
Control (as defined in the Form of Control Agreement attached hereto as
Exhibit "B") pursuant to any "control agreement" (other than with
respect to any account
-44-
maintained with the Collateral Agent) to any bank with which the
Obligor has established an account unless an Event of Default then
exists and is continuing, (y) shall not give instructions (as
contemplated in the first sentence of Section 2(1) of Exhibit "B") as
to the withdrawal or disposition of funds in any account in any such
"control agreement" (other than with respect to any account maintained
with the Collateral Agent) unless an Event of Default then exists and
is continuing, and (z) shall provide the Borrower in accordance with
the notice provisions in the Credit Agreement with a copy of any such
Notice of Exclusive Control delivered pursuant to any such "control
agreement".
ARTICLE 5
GENERAL
SECTION 5.1 NOTICES.
Except as otherwise specified herein, all notices, requests, demands or
other communications to or upon the respective parties hereto shall be sent or
delivered by mail, telegraph, telex, telecopy, cable or courier service and all
such notices and communications shall, when mailed, telegraphed, telexed,
telecopied, or cabled or sent by courier, be effective when deposited in the
mails, delivered to the telegraph company, cable company or overnight courier,
as the case may be, or sent by telex or telecopier, except that notices and
communications to the Collateral Agent or the Obligor shall not be effective
until received by the Collateral Agent or the Obligor, as the case may be. All
notices and other communications shall be in writing and addressed as follows:
(a) to the Obligor at:
c/▇ ▇▇▇▇▇▇▇▇ Scotsman, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇ ▇▇▇.▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
With a copy to:
Davies ▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
1 First Canadian Place
44th Floor
▇.▇. ▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
-45-
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) to the Collateral Agent at:
Deutsche Bank Trust Company Americas
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Credit Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Deutsche Bank Securities Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) to any Bank Creditor, other than the Collateral Agent, at such
address as such Bank Creditor shall have specified in the
Credit Agreement;
(d) to any Interest Rate Creditor at such address as such Interest
Rate Creditor shall have specified in writing to the Obligor
and the Collateral Agent;
(e) to the Senior Secured Notes Trustee or any other Second Lien
Creditor, at:
U.S. Bank, National Association
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇-▇▇-▇▇▇▇
▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or at such address or addressed to such other individual as shall have been
furnished in writing by any Person described above to the party required to give
notice hereunder.
-46-
SECTION 5.2 DISCHARGE.
(1) The Security Interest shall be discharged upon, but only upon the
Termination Date. Upon discharge of the Security Interest and at the
request and expense of the Obligor, the Collateral Agent shall execute
and deliver to the Obligor such releases, discharges, financing
statements and other documents or instruments as the Obligor may
reasonably require and transfer and deliver to the Obligor the
Collateral in its possession.
(2) So long as no payment default on any of the Obligations is in existence
or would exist after the application of proceeds as provided below, the
Collateral Agent shall, at the request of the Obligor, release any or
all of the Collateral, provided that (x) such release is permitted by
the terms of the Secured Debt Agreements or otherwise has been approved
in writing by the Required Lenders or, to the extent required, all of
the Lenders and (y) the proceeds of such Collateral are applied to the
extent required pursuant to the respective Secured Debt Agreements or
any consent or waiver with respect thereto. Furthermore, upon the
release of the Obligor from the guarantee in accordance with the
provisions thereof, the Obligor (and the Collateral at such time
assigned by the Obligor pursuant hereto) shall be released from this
security agreement.
(3) At any time that the Obligor desires that the Collateral Agent take any
action to give effect to any release of Collateral pursuant to the
foregoing Section 5.2(1) or Section 5.2(2), it shall deliver to the
Collateral Agent a certificate signed by an authorized officer stating
that the release of the respective Collateral is permitted pursuant to
Section 5.2(1) or Section 5.2(2); provided that, so long as no Default
or Event of Default has occurred and is continuing, in the event the
Obligor sells Units or other Inventory in the ordinary course as (and
to the extent) permitted elsewhere in the Credit Documents, the Obligor
shall not be required to deliver a certificate in connection therewith
and the release of such Units or other Inventory shall be effected as
contemplated by the Bailee Agreement and Custodian Agreement. In the
event that any part of the Collateral is released as provided in
Section 5.2(2), the Collateral Agent, at the request and expense of the
Obligor, will duly assign, transfer and deliver to the Obligor or its
designee (without recourse and without any representation or warranty)
such of the Collateral as is then being (or has been) so sold and as
may be in the possession of the Collateral Agent and has not
theretofore been released pursuant to this security agreement. The
Collateral Agent shall have no liability whatsoever to any Secured
Creditor as the result of any release of Collateral by it as permitted
by this Section 5.2. Upon any release of Collateral pursuant to Section
5.2(1) or Section 5.2(2), none of the Secured Creditors shall have any
continuing right or interest in such Collateral, or the proceeds
thereof.
-47-
(4) To the extent not otherwise provided in preceding clauses, the
Collateral Agent shall without the consent of any Secured Creditor,
release all or any portion of the Collateral securing the Second Lien
Obligations to the extent provided in the Senior Secured Notes
Indenture.
SECTION 5.3 NO MERGER, SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
This security agreement shall not operate by way of merger of any of
the Obligations and no judgment recovered by the Collateral Agent or any of the
Secured Creditors shall operate by way of merger of, or in any way affect, the
Security Interest, which is in addition to, and not in substitution for, any
other security now or hereafter held by the Collateral Agent and the Secured
Creditors in respect of the Obligations. The representations and warranties
herein set forth or contained in any certificates or documents delivered to the
Collateral Agent or the Secured Creditors pursuant to this security agreement or
the other Credit Documents shall not merge in or be prejudiced by and shall
survive any accommodation under the Credit Agreement and shall continue in full
force and effect until the Security Interest has been discharged in accordance
with Section 5.2.
SECTION 5.4 FURTHER ASSURANCES.
The Obligor shall from time to time, whether before or after the
Security Interest shall have become enforceable, do all acts and things and
execute and deliver all transfers, assignments and instruments as the Collateral
Agent may reasonably require for (i) protecting the Collateral, (ii) perfecting
the Security Interest, and (iii) exercising all powers, authorities and
discretions conferred upon the Collateral Agent pursuant to or in connection
with this security agreement, or the other Credit Documents. The Obligor shall,
from time to time after the Security Interest has become enforceable, do all
acts and things and execute and deliver all transfers, assignments and
instruments as the Collateral Agent may reasonably require for facilitating the
sale or other disposition of the Collateral in connection with its realization.
SECTION 5.5 SUPPLEMENTAL SECURITY.
This security agreement is in addition and without prejudice to and
supplemental to all other security now held or which may hereafter be held by
the Collateral Agent or the Secured Creditors.
SECTION 5.6 SUCCESSORS AND ASSIGNS.
This security agreement shall be binding upon the Obligor, its
successors and assigns, and shall enure to the benefit of the Collateral Agent
and its successors and assigns. All rights of the Collateral Agent shall be
assignable and in any action brought by an assignee to enforce any such right,
the Obligor shall not assert against the assignee any claim or defence which the
Obligor now has or hereafter may have against the Collateral Agent or any of the
Secured Creditors.
-48-
SECTION 5.7 SEVERABILITY.
If any provision of this security agreement is deemed by any court of
competent jurisdiction to be invalid or void, the remaining provisions shall
remain in full force and effect.
SECTION 5.8 WAIVERS, ETC.
None of the terms and conditions of this security agreement or any of
the other Collateral Documents to which the Obligor is a party may be changed,
waived, modified or varied in any manner except as provided in the U.S. Security
Agreement, provided that for purposes of this Section 5.8 the term "Assignor" as
defined in the U.S. Security Agreement means "Obligor" as defined herein.
Nothing in this section shall be interpreted to derogate from the provisions
contained in Section 5.2 of this security agreement.
SECTION 5.9 COLLATERAL AGENT AND/OR SECURED CREDITORS NOT A PARTNER OR
LIMITED LIABILITY COMPANY MEMBER
(1) Nothing herein shall be construed to make the Collateral Agent or any
other Secured Creditor liable as a member of any limited liability
company, unlimited liability company or partnership and neither the
Collateral Agent nor any other Secured Creditor by virtue of this
security agreement or otherwise (except as referred to in the following
sentence) shall have any of the duties, obligations or liabilities of a
member of any limited liability company, unlimited liability company or
partnership. The parties hereto expressly agree that, unless the
Collateral Agent shall become the absolute owner of Collateral
consisting of the entire interest owned by the Obligor in a limited
liability company, unlimited liability company or partnership pursuant
hereto, this security agreement shall not be construed as creating a
partnership or joint venture among the Collateral Agent, any other
Secured Creditor and/or the Obligor.
(2) Except as provided in the last sentence of Section 5.9(1), the
Collateral Agent, by accepting this security agreement, did not intend
to become a member of any limited liability company, unlimited
liability company or partnership or otherwise be deemed to be a
co-venturer with respect to the Obligor or any limited liability
company, unlimited liability company or partnership either before or
after an Event of Default shall have occurred. The Collateral Agent
shall have only those powers set forth herein and the Secured Creditors
shall assume none of the duties, obligations or liabilities of a member
of any limited liability company, unlimited liability company or
partnership or the Obligor except as provided in the last sentence of
Section 5.9(1).
(3) The Collateral Agent and the other Secured Creditors shall not be
obligated to perform or discharge any obligation of the Obligor as a
result of the Security Interest hereby granted.
-49-
(4) The acceptance by the Collateral Agent of this security agreement, with
all the rights, powers, privileges and authority so created, shall not
at any time or in any event obligate the Collateral Agent or any other
Secured Creditor to appear in or defend any action or proceeding
relating to the Collateral to which it is not a party, or to take any
action hereunder or thereunder, or to expend any money or incur any
expenses or perform or discharge any obligation, duty or liability
under the Collateral.
SECTION 5.10 APPLICATION OF PROCEEDS.
(1) All monies collected by the Collateral Agent upon any sale or other
disposition of the Collateral, together with all other monies received
by the Collateral Agent hereunder or under any other Collateral
Document which requires proceeds of Collateral to be applied in
accordance with this security agreement, shall be applied and payments
shall be made in accordance with Section 7.4 of the U.S. Security
Agreement.
(2) It is understood that the Obligor shall remain liable to the extent of
any deficiency between (x) the amount of the proceeds of the Collateral
and (y) the aggregate outstanding amount of the Obligations.
SECTION 5.11 INDEMNITY.
(1) The Obligor agrees to indemnify, reimburse and hold the Collateral
Agent, each other Secured Creditor that is an indemnitee under Section
6 of Annex N to the U.S. Security Agreement and their respective
successors, permitted assigns, employees, affiliates and agents
(referred to individually as "Indemnitee", and collectively as
"INDEMNITEES") harmless from any and all liabilities, obligations,
damages, injuries, penalties, claims, demands, actions, suits,
judgments and any and all costs and expenses (including reasonable fees
and disbursements of counsel and other professionals) (for the purposes
of this Section 5.11 the foregoing are collectively called "EXPENSES")
of whatsoever kind and nature imposed on, asserted against or incurred
by any of the Indemnitees in any way relating to or arising out of this
security agreement, any other Secured Debt Agreement to which the
Obligor is a party or any other document executed in connection
herewith or therewith to which the Obligor is a party or in any other
way connected with the administration of the transactions contemplated
hereby or thereby or the enforcement of any of the terms of, or the
preservation of any rights hereunder or thereunder, or in any way
relating to or arising out of the manufacture, ownership, ordering,
purchase, delivery, control, acceptance, lease, financing, possession,
operation, condition, sale, return or other disposition, or use of the
Collateral (including latent or other defects, whether or not
discoverable), the violation of laws any country, state, province or
other Governmental Entity, any tort (including claims arising or
imposed under the doctrine of strict liability, or for or on account of
injury or death of any Person (including any Indemnitee), or property
damage), or contract claim; provided that no Indemnitee shall be
-50-
indemnified pursuant to this Section 5.11(1) for losses, damages or
liabilities to the extent caused by the gross negligence or wilful
misconduct of such Indemnitee (as determined by a court of competent
jurisdiction in a final and unappealable decision). The Obligor agrees
that upon written notice by any Indemnitee of the assertion of such
liability, obligation, damage, injury, penalty, claim, demand, action,
suit or judgement, the Obligor shall assume full responsibility for the
defence thereof. Each Indemnitee agrees to use its best efforts to
promptly notify the Obligor of any such assertion of which such
Indemnitee has knowledge.
(2) Without limiting the application of Section 5.11(1), the Obligor agrees
to pay, or reimburse the Collateral Agent for any and all reasonable
fees, costs and expenses of whatever kind or nature incurred in
connection with the creation, preservation or protection of the
Collateral Agent's Liens on, and the Security Interest in, the
Collateral, including all fees and taxes in connection with the
recording or filing of instruments and documents in public offices,
payment or discharge of any taxes or Liens upon or in respect of the
Collateral, premiums for insurance paid by the Collateral Agent with
respect to the Collateral and all other fees, costs and expenses in
connection with protecting, maintaining or preserving the Collateral
and the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions,
suits or proceedings arising out of or relating to the Collateral.
(3) Without limiting the application of Section 5.11(1) or Section 5.11(2),
the Obligor agrees to pay, indemnify and hold each Indemnitee harmless
from and against any loss, costs, damages and expenses which such
Indemnitee may suffer, expend or incur in consequence of or growing out
of any misrepresentation by the Obligor in this security agreement, any
other Secured Debt Agreement to which the Obligor is a party or in any
writing contemplated by or made or delivered pursuant to or in
connection with this security agreement or any other Secured Debt
Agreement to which the Obligor is a party.
(4) If and to the extent that the obligations of the Obligor under this
Section 5.11 are unenforceable for any reason, the Obligor hereby
agrees to make the maximum contribution to the payment and satisfaction
of such obligations which is permissible under applicable law.
SECTION 5.12 INDEMNITY OBLIGATIONS SECURED BY COLLATERAL; SURVIVAL.
Any amounts paid by any Indemnitee as to which such Indemnitee has the
right to reimbursement shall constitute Obligations secured by the Collateral.
The indemnity obligations of the Obligor contained in Section 5.11 and Section
5.12 shall continue in full force and effect notwithstanding the full payment of
all of the other Obligations and notwithstanding the full payment of all the
Notes issued and Loans
-51-
made, under the Credit Agreement, the termination of all Interest Rate
Agreements entered into with the Interest Rate Creditors, the full repayment of
all the outstanding Senior Secured Notes and the payment of all other
Obligations and notwithstanding the discharge thereof.
SECTION 5.13 COLLATERAL AGENT.
By accepting the benefits of this security agreement, each Secured
Creditor acknowledges and agrees that the rights and obligations of the
Collateral Agent shall be as set forth in this security agreement and in Annex N
to the U.S. Security Agreement. Notwithstanding anything to the contrary
contained in Section 5.8 of this security agreement or Section 11.10 of the
Credit Agreement, this Section 5.13, and the duties and obligations of the
Collateral Agent set forth in this Section 5.13, may not be amended or modified
without the consent of the Collateral Agent.
SECTION 5.14 GOVERNING LAW.
This security agreement shall be governed by and interpreted and
enforced in accordance with the laws of the Province of Ontario and the federal
laws of Canada applicable therein.
SECTION 5.15 CONFLICTS.
Notwithstanding anything to the contrary contained in this security
agreement, in the event of any conflict between the provisions of this security
agreement, the Intercreditor Agreement or any other Collateral Document and the
provisions of the Senior Secured Notes Documents, the terms of this security
agreement, the Intercreditor Agreement and the other Collateral Documents shall
prevail.
SECTION 5.16 ACKNOWLEDGEMENT AND CONFIRMATION
The Obligor hereby acknowledges, confirms and agrees to and with the
Collateral Agent and each of the First Lien Creditors that:
(1) it has been provided with and has reviewed the terms and conditions of
the Second Amendment and hereby consents to the terms and conditions of
the Second Amendment;
(2) the Guarantee extends to, INTER ALIA, the obligations of the Borrower
now or hereafter incurred under, arising out of or in connection with
the Original Credit Agreement, as amended by the Second Amendment, and
as the same may be from time to time further amended, modified,
extended, renewed, replaced, restated or supplemented and including any
agreement extending the maturity of (including the inclusion of
additional borrowers or guarantors thereunder or any increase in the
amount borrowed) all or any portion of the indebtedness under such
agreement or any successor agreement, whether or not with the same
agent, trustee, representative, lenders or holders; and
-52-
(3) the Guarantee and the other Credit Documents to which it is a party
remain in full force and effect notwithstanding the amendments to the
Original Credit Agreement pursuant to the Second Amendment and each
Credit Document to which it is a party constitutes a legal, valid and
binding obligation of the Obligor enforceable in accordance with its
terms.
IN WITNESS WHEREOF each of the Obligor and the Collateral Agent has
caused this security agreement to be executed by its duly authorized officer as
of the date first above written.
▇▇▇▇▇▇▇▇ SCOTSMAN OF CANADA, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President,
Chief Financial Officer
and Treasurer
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Authorized Signing Officer