EXHIBIT (4)(l)(3)
CANADIAN GUARANTEE AND SECURITY AGREEMENT
dated as of
June 21, 2002
among
XEROX CANADA CAPITAL LTD.
THE GUARANTORS PARTY HERETO
and
▇▇▇▇ ▇▇▇, ▇▇, ▇▇▇▇▇▇ Branch
as Collateral Agent
TABLE OF CONTENTS
SECTION 1. DEFINITIONS ........................................................ 1
SECTION 2. GUARANTEES BY GUARANTORS ........................................... 10
SECTION 3. REPRESENTATIONS AND WARRANTIES AND COVENANTS ....................... 13
SECTION 4. THE SECURITY INTERESTS ............................................. 15
SECTION 5. FURTHER ASSURANCES; COVENANTS ...................................... 18
SECTION 6. RECORDABLE INTELLECTUAL PROPERTY ................................... 19
SECTION 7. PLEDGED SECURITIES ................................................. 20
SECTION 8. COLLATERAL ACCOUNT ................................................. 22
SECTION 9. TRANSFER OF RECORD OWNERSHIP ....................................... 24
SECTION 10. RIGHT TO VOTE SECURITIES AND RECEIVE DIVIDENDS ..................... 24
SECTION 11. GENERAL AUTHORITY .................................................. 25
SECTION 12. REMEDIES UPON ACTIONABLE EVENT OF DEFAULT OR ACCELERATION .......... 25
SECTION 13. LIMITATION ON DUTY OF COLLATERAL AGENT IN RESPECT OF COLLATERAL .... 28
SECTION 14. APPLICATION OF PROCEEDS ............................................ 28
SECTION 15. CONCERNING THE COLLATERAL AGENT .................................... 30
SECTION 16. APPOINTMENT OF CO-COLLATERAL AGENTS ................................ 30
SECTION 17. TAXES .............................................................. 31
SECTION 18. EXPENSES ........................................................... 32
SECTION 19. TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL ........... 32
SECTION 20. ADDITIONAL GUARANTORS AND LIEN GRANTORS ............................ 32
SECTION 21. CHANGE OF STATUS ................................................... 33
SECTION 22. NOTICES ............................................................ 33
SECTION 23. WAIVERS, NON-EXCLUSIVE REMEDIES .................................... 33
SECTION 24. SUCCESSORS AND ASSIGNS ............................................. 34
SECTION 25. CHANGES IN WRITING ................................................. 34
SECTION 26. ONTARIO LAW ........................................................ 34
SECTION 27. JUDGMENT CURRENCY .................................................. 34
SECTION 28. INTEREST ACT ....................................................... 35
SECTION 29. SASKATCHEWAN ....................................................... 35
i
SECTION 30. WAIVER OF JURY TRIAL .......................................... 35
SECTION 31. SEVERABILITY .................................................. 35
ii
CANADIAN GUARANTEE AND SECURITY AGREEMENT
AGREEMENT dated ., 2002 among XEROX CANADA CAPITAL LTD. (the "Canadian
Borrower"), the GUARANTORS party hereto and ▇▇▇▇ ▇▇▇, ▇▇, ▇▇▇▇▇▇ Branch, as
Canadian Collateral Agent (with its successors, the "Collateral Agent").
WHEREAS, Xerox Corporation ("Xerox"), the Canadian Borrower and certain
other Overseas Borrowers, certain financial institutions (each, a "Lender" and
collectively, the "Lenders"), Bank One, NA, as Administrative Agent and
Collateral Agent and LC Issuing Bank, JPMorgan Chase Bank, as Documentation
Agent, and Citibank, N.A., as Syndication Agent, are parties to an Amended and
Restated Credit Agreement dated as of June ., 2002 (as the same has been and may
be amended from time to time, the "Credit Agreement"); and
WHEREAS, the Canadian Borrower has agreed to grant a continuing
security interest in and to the Collateral (as hereafter defined) to secure its
obligations under the Credit Agreement and any Notes that may be issued pursuant
thereto by granting security interests on its assets to the Collateral Agent as
provided in the Canadian Security Documents (such term and each other
capitalized term used but not otherwise defined herein having the meaning
assigned to it in Section 1); and
WHEREAS, Xerox is willing to cause each Canadian Guarantor, and each
Canadian Guarantor, in its own interest recognizing the opportunity, directly or
indirectly available to it from time to time, to obtain the use of amounts
advanced to the Canadian Borrower under the Credit Agreement by way of further
advance from the Canadian Borrower to it and otherwise as a member of the group
of companies comprising the Canadian Borrower and the Canadian Subsidiaries
directly or indirectly to benefit therefrom, is willing to, guarantee the
foregoing obligations of the Canadian Borrower and, in the case of each Secured
Guarantor, to secure its guarantee thereof by granting security interests on its
assets which constitute Collateral to the Collateral Agent as provided in the
Canadian Security Documents; and
WHEREAS, it is required under the Credit Agreement that the parties
hereto enter into this Agreement to provide the guarantees and security
interests provided herein;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions.
(a) Terms Defined in Credit Agreement. Terms defined in the Credit
Agreement and not otherwise defined in subsection (b) or (c) of this Section
have, as used herein, the respective meanings provided for therein.
(b) Terms Defined in the PPSA. Terms defined in the PPSA and used
herein shall, unless otherwise defined herein, have the same meaning as ascribed
to such term in the PPSA, including "Accessions", "Chattel Paper", "Document of
Title", "Goods", "Intangible", "Instruments", "Money", "Security", "financing
statement" and "financing change statement".
However, the term "Goods" when used herein shall not include "consumer goods" as
that term is defined in the PPSA.
(c) Additional Definitions. The following additional terms, as used
herein, have the following meanings:
"Accounts" means all "accounts," as such term is defined in the PPSA,
now owned or hereafter acquired by any Lien Grantor and, in any event, shall
include all accounts due or accruing due and all agreements, books, accounts
receivable, other receivables, book debts, claims and demands of every nature
and kind and other forms of monetary obligations (other than forms of monetary
obligations evidenced by Chattel Paper, Securities or Instruments) now owned or
hereafter received or acquired by or belonging or owing to any Lien Grantor,
whether or not yet earned by performance on the part of such Lien Grantor and
all invoices, letters, documents and papers recording, evidencing or relating
thereto.
"Actionable Event of Default" means an Event of Default specified in
clause (a), (b), (h), (i) or (j) of Section 7.01 of the Credit Agreement.
"Business Day" means a day on which chartered banks are open for
over-the-counter business in the jurisdiction of incorporation or principal
place of business of the applicable Lien Grantor and excludes Saturdays, Sundays
and statutory holidays therein.
"CA Permitted Liens" means the Security Interests and Liens on the
Collateral permitted to be created, to be assumed or to exist pursuant to
Section 6.02 of the Credit Agreement.
"Canadian CA Secured Obligations" means (a) all principal of and
premium and interest (including, without limitation, any interest
("Post-Petition Interest") which accrues after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Canadian Borrower (or would accrue but for the operation
of applicable bankruptcy or insolvency laws), whether or not allowed or
allowable as a claim in any such proceeding) on any Loan of the Canadian
Borrower outstanding from time to time or any LC Reimbursement Obligations of
the Canadian Borrower under, or any promissory note issued by the Canadian
Borrower pursuant to, the Credit Agreement, and (b) all other amounts payable by
the Canadian Borrower under the Credit Agreement or under any other Loan
Document to which it is a party (as the same may hereafter be amended, restated,
supplemented or otherwise modified from time to time) (including any
Post-Petition Interest with respect to such amounts).
"Canadian Contingent CA Secured Obligations" means, at any time, any
Canadian CA Secured Obligation (or portion thereof) that is contingent in nature
at such time, including any Canadian CA Secured Obligation that is:
(i) an obligation to reimburse a Lender for drawings not yet
made under a Letter of Credit issued by it;
(ii) any other obligation (including any guarantee) that is
contingent in nature at such time; or
2
(iii) an obligation to provide collateral to secure any of
the foregoing types of obligations.
"Canadian Effective Date" means the date of this Agreement.
"Canadian Non-Contingent CA Secured Obligations" means at any time any
Canadian CA Secured Obligation (or portion thereof) that is not a Canadian
Contingent CA Secured Obligations at such time.
"Canadian Secured Guarantor Obligations" means, in respect of a Secured
Guarantor, all of its obligations under its guarantee of the Canadian CA Secured
Obligations set forth in Section 2 of this Agreement.
"Canadian Secured Obligations" means, in respect of the Canadian
Borrower, the Canadian CA Secured Obligations and in respect of the Secured
Guarantors, the Canadian Secured Guarantor Obligations.
"Canadian Subsidiary" means any Subsidiary of Xerox (which may be a
corporation, limited liability company, partnership or other legal entity)
organized under the laws of Canada or one of the provinces or territories of
Canada.
"Collateral" means all personal property, whether now owned or
hereafter acquired, on which a Lien is granted or purports to be granted to the
Collateral Agent pursuant to this Agreement. When used with respect to a
specific Lien Grantor, the term "Collateral" means all its property on which
such a Lien is granted or purports to be granted.
"Collateral Account" has the meaning specified in Section 8.
"Collateral Agent" means ▇▇▇▇ ▇▇▇, ▇▇, ▇▇▇▇▇▇ Branch, in its capacity
as collateral agent under the Canadian Security Documents.
"Copyright License" means any agreement now or hereafter in existence
granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to
any other Person, any right to use, copy, reproduce, distribute, prepare
derivative works, display or publish any records or other materials on which a
Copyright is in existence or may come into existence.
"Copyrights" means all copyrights and Intangibles of like nature under
the laws of Canada or any other country (whether or not the underlying works of
authorship have been published) that any Lien Grantor now or hereafter owns or
uses, including:
(i) all registrations and recordings thereof, all
copyrightable works of authorship (whether or not
published), and all applications for copyrights under
the laws of Canada or any other country, including
all registrations, recordings and applications in the
Canadian Intellectual Property Office or in any
similar office or agency in any other country or any
political subdivision thereof,
(ii) all restorations, extensions or renewals of any of
the foregoing,
3
(iii) all claims for, and rights to ▇▇▇ for, past or future
infringements of any of the foregoing, and
(iv) all income, royalties, damages and payments now or
hereafter due or payable with respect to any of the
foregoing, including damages and payments for past or
future infringements thereof.
"Covered Taxes" has the meaning specified in Section 17(a).
"Design License" means any agreement now or hereafter in existence
granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to
any other Person, any right with respect to any Design now or hereafter in
existence, whether or not registered or recorded and whether or not an
application shall, or is intended to be filed in respect thereof.
"Designs" means all industrial designs, design patents and other
designs under the laws of Canada or any other country that any Lien Grantor now
or hereafter owns or uses, including:
(i) all registrations and recordings thereof and all
applications in connection therewith including all
registrations, recordings and applications that have
been or shall be made or filed in the Canadian
Intellectual Property Office or any similar office in
any country or any political subdivision thereof,
(ii) all records, reissues, extensions or renewals of any
of the foregoing,
(iii) all claims for and rights to ▇▇▇ for, past or future
infringements of any of the foregoing, and
(iv) all income, royalties, damages and payments now or
hereafter due or payable with respect to any of the
foregoing, including damages and payments for past or
future infringements thereof.
"Equipment" means "equipment", as such term is defined in the PPSA,
whether now owned or hereafter acquired by any Lien Grantor, wherever located
and, in any event, includes all such Lien Grantor's machinery and equipment,
processing equipment, conveyors, machine tools, data processing and computer
equipment with software and peripheral equipment, and all engineering,
processing and manufacturing equipment, office machinery, furniture, materials
handling equipment, tools, attachments, accessories, automotive equipment,
trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock,
trade fixtures and fixtures together with all additions and accessions thereto,
replacements therefor, all parts therefor, all substitutes for any of the
foregoing, fuel therefor, and all manuals, drawings, instructions, warranties
and rights with respect thereto, and all products and proceeds thereof and
condemnation awards and insurance proceeds with respect thereto.
"Equity Interest" means (i) in the case of a corporation, any shares of
its capital stock, (ii) in the case of a partnership, any Partnership Interest
therein, (iii) in the case of any other business entity, any participation or
other interest in the equity or profits thereof or (iv) any warrant, option or
other right to acquire, in any form whatsoever, any Equity Interest described in
this definition.
4
"ESOP Guarantee Agreement" means the Guaranty and Agreement made by
Xerox dated as of October 1, 1993 (as amended from time to time) relating to the
Guaranteed ESOP Restructuring Notes due October 1, 2003 issued by Xerox
Corporation Employee Stock Ownership Plan Trust.
"ESOP Restricted Guarantor" means a Guarantor that is a "Restricted
Subsidiary" under the ESOP Guarantee Agreement.
"Federal and Provincial Government Receivables" means Accounts
(including without limitation, proceeds of Inventory to the extent it also
constitutes an Account, and Chattel Paper, Documents and Instruments and
proceeds thereof) that are owed from federal and provincial governments and
their subdivisions within Canada.
"Guarantee" means, with respect to each Guarantor, its guarantee of the
Canadian CA Secured Obligations under Section 2 hereof or Section 1 of a
Guarantee and Security Agreement Supplement.
"Guarantee and Security Agreement Supplement" means a Guarantee and
Security Agreement Supplement, substantially in the form of Exhibit B, signed
and delivered to the Collateral Agent for the purpose of adding a Canadian
Subsidiary as a party hereto pursuant to Section 20 and/or adding additional
property to the Collateral.
"Guarantors" means each entity listed on the signature pages hereof
under the caption "Guarantors" and each entity that shall, at any time after the
date hereof, become a "Guarantor" pursuant to Section 20.
"High Yield Indenture" means that certain Indenture dated as of January
17, 2002 among Xerox and ▇▇▇▇▇ Fargo Bank Minnesota National Association as
Trustee, with respect to the 9 3/4% Senior Notes due 2009 (denominated in U.S.
dollars).
"Hypothec" means a deed of hypothec and issue of bonds substantially in
the form of Exhibit C with such changes therein as the Agents and the Canadian
Borrower shall reasonably agree.
"Intellectual Property" means (i) Patents, (ii) Patent Licenses, (iii)
Trademarks, (iv) Trademark Licenses, (v) Designs, (vi) Design Licenses, (vii)
Copyrights, (viii) Copyright Licenses, (ix) confidential information, (x)
proprietary technology, (xi) trade secrets, (xii) domain names and (xiii)
integrated circuit topographies, and all rights in or under any of the
foregoing.
"Inventory" means any "inventory", as such term is defined in the PPSA,
now or hereafter owned or acquired by any Lien Grantor, wherever located, and in
any event including inventory, merchandise, Goods and other personal property
which are held by or on behalf of any Lien Grantor for sale or lease or are to
be furnished under a contract of service, or which constitute raw materials,
work in process or materials used or consumed or to be used or consumed in such
Lien Grantor's business or in the processing, production, packaging, promotion,
delivery or shipping of the same, including other supplies.
5
"Lien Grantors" means the Canadian Borrower and the Secured Guarantors.
"Liquid Investments" has the meaning specified in Section 8(d).
"Original Lien Grantor" means any Lien Grantor that grants a Lien on
any of its assets hereunder on the Canadian Effective Date.
"Partnership Interest" means a partnership interest, whether general or
limited.
"Patent License" means any agreement now or hereafter in existence
granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to
any other Person, any right with respect to any Patent or any invention now or
hereafter in existence, whether patentable or not, whether a patent or
application for patent is in existence on such invention or not, and whether a
patent or application for patent on such invention may come into existence or
not.
"Patents" means:
(i) all letters patent of invention issued by Canada or
any other country and all applications for letters
patent and all registrations and recordings thereof
pending before the Canadian Intellectual Property
Office or in any similar office or agency in any
other country or any political subdivision,
(ii) all reissues, divisions, continuations,
continuations-in-part, revisions and extensions of
any of the foregoing,
(iii) all claims for, and rights to ▇▇▇ for, past or future
infringements of any of the foregoing, and
(iv) all income, royalties, damages and payments now or
hereafter due or payable with respect to any of the
foregoing, including damages and payments for past or
future infringements thereof.
"Perfection Certificate" a certificate substantially in the form of
Exhibit A hereto, completed and supplemented with the schedules and attachments
contemplated thereby to the satisfaction of the Collateral Agent, and duly
executed by an executive officer of a Lien Grantor on or before the Relevant
Date applicable to such Lien Grantor.
"Permitted Encumbrances" means (i) any legally valid prohibitions on
granting a security interest to the Collateral Agent as part of the Collateral
in the Equity Interests of any Qualified Turnaround Program Subsidiary pursuant
to any agreement entered into in connection with the Turnaround Program with or
for the benefit of any other Person owning or acquiring Equity Interests in such
a Subsidiary, to the extent the Qualification Requirements have been met with
respect to such prohibitions, (ii) (A) any legally valid contractual
restrictions in connection with the Turnaround Program that do not prohibit the
granting of a security interest in any Xerox Company's Equity Interests in a
Turnaround Program Subsidiary to the Collateral Agent as part of the Collateral
or (B) any legally valid contractual restrictions that do not prohibit the
granting of a security interest in any Xerox Company's Equity Interests in any
other Subsidiary that is not a Xerox Company, but, in each case, that otherwise
restrict the Transfer by the Collateral Agent
6
of, or other rights (including voting rights) and remedies of the Collateral
Agent with respect to, such Equity Interests as a consequence of restrictions
imposed on the owner of such Equity Interests (including put and call
arrangements, rights of first refusal, rights of first offer, tag-along rights
and other similar rights to which such Equity Interest may be subject), (iii)
any legally valid and customary contractual restrictions on granting a security
interest to the Collateral Agent as part of the Collateral in the Equity
Interests of any Finance SPE or any Permitted Joint Venture created in
connection with any Qualified Receivables Transaction or that otherwise restrict
the Transfer by the Collateral Agent of, or other rights (including voting
rights) and remedies of the Collateral Agent with respect to, such Collateral,
(iv) any legally valid contractual restrictions granting a security interest to
the Collateral Agent as part of the Collateral in the Equity Interests of any
Third Party Vendor Financing Subsidiary or any Permitted Joint Venture created
in connection with the Third Party Vendor Financing Program or that otherwise
restrict the Transfer by the Collateral Agent of, or other rights (including
voting rights) and remedies of the Collateral Agent with respect to, such
Collateral, (v) any legally valid contractual restrictions existing on the date
hereof on granting a security interest to the Collateral Agent as part of the
Collateral in any Equity Interest or Intangible, owned by any Lien Grantor or
any legally valid contractual restrictions existing on the date hereof that
otherwise restrict the Transfer by the Collateral Agent of, or other rights
(including voting rights) and remedies of the Collateral Agent with respect to,
such Equity Interest or Intangible, (vi) any legally valid contractual
restrictions permitted by Section 6.10 of the Credit Agreement on the grant of a
security interest to the Collateral Agent in any of the Collateral, or on the
transfer by the Collateral Agent of any Collateral (including put and call
arrangements, rights of first refusal, rights of first offer, tag-along rights
and other similar rights to which any Pledged Equity Interest may be subject) or
(vii) the terms of any provision of Applicable Law which (A) prohibits the
creation of a security interest in any property or asset, (B) requires the
consent of any third party to the creation of a security interest in any
property or asset, (C) gives rise to any right of termination (including,
without limitation, the abandonment, invalidation, or rendering unenforceable
any right, title or interest in any Intellectual Property) or default remedy by
reason of the creation of a security interest in any property or asset or (D)
does not prohibit the creation of a security interest in any property or asset
but otherwise restricts the Transfer by the Collateral Agent of any such
property or asset or any other rights and remedies of the Collateral Agent.
"Pledged", when used in conjunction with any type of asset, means at
any time an asset of such type that is included (or that creates rights that are
included) in the Collateral at such time. For example, "Pledged Security" means
Security that is included in the Collateral at such time.
"PPSA" means the Personal Property Security Act as in effect from time
to time in the Province of Ontario; provided that, if validity, perfection or
the effect of perfection or non-perfection or the priority of any Lien on any
Collateral and the rights and remedies of secured parties are governed by the
PPSA or other similar legislation as in effect in a jurisdiction other than
Ontario, "PPSA" means the Personal Property Security Act or other similar
legislation as in effect from time to time in such other jurisdiction for
purposes of the provisions hereof relating to such validity, perfection, effect
of perfection or non-perfection or priority and to such rights and remedies.
7
"Proceeds" means all "proceeds", as such term is defined in the PPSA
and, in any event, shall include all proceeds of, and all other profits,
products, rents or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of, or other
realization upon, any Collateral, including without limitation all claims of the
relevant Lien Grantor against third parties for loss of, damage to, or
destruction of, or for proceeds payable under, or unearned premiums with respect
to, policies of insurance in respect of, any Collateral and any expropriation or
requisition payments with respect to any Collateral, in each case whether now
existing or hereafter arising.
"Program Receivables" means Receivables that are the subject of a
Qualified Receivables Transaction or a Third Party Vendor Financing Program.
"Recordable Intellectual Property" means Intellectual Property, the
transfer of which may be recorded with the Canadian Intellectual Property
Office.
"Release Conditions" means the following conditions for releasing all
the Guarantees and terminating all the Security Interests:
(i) either (A) all Revolving Commitments under the Credit
Agreement with respect to the Canadian Borrower shall have expired or
been terminated or (B) an Election to Terminate with respect to the
Canadian Borrower has been delivered pursuant to Section 2.19(b) of the
Credit Agreement;
(ii) all Canadian Non-Contingent CA Secured Obligations shall
have been paid in full; and
(iii) no Canadian Contingent CA Secured Obligation shall
remain outstanding;
provided that the condition in clause (iii) shall not apply to outstanding
Letters of Credit if (x) no Event of Default has occurred and is continuing and
(y) the Canadian Borrower has granted to the Collateral Agent, for the benefit
of the Revolving Lenders (or if the obligations of the Revolving Lenders to
reimburse the applicable Issuing Banks have been terminated, to such Issuing
Banks), a security interest in Liquid Investments (or causes a bank acceptable
to the Required Revolving Lenders or such Issuing Banks, as the case may be, to
issue a letter of credit naming the Collateral Agent or such Issuing Banks as
beneficiary) in an amount at least equal to 105% of the Canadian Borrower's LC
Exposure (plus any accrued and unpaid interest thereon) as of the date of such
termination, on terms and conditions and pursuant to documentation reasonably
satisfactory to the Required Revolving Lenders or such Issuing Banks, as the
case may be.
"Relevant Date" means, in the case of an Original Lien Grantor, the
Canadian Effective Date, or, in the case of a Guarantor which is not an Original
Lien Grantor, the date on which such Guarantor becomes a Secured Guarantor
pursuant to Section 4(g)or 4(h), as the case may be, of this Agreement.
"Restricted Guarantor" means a Guarantor that is a "Specified
Subsidiary" under the Reference Indenture or if the High Yield Indenture ceases
to be the Reference Indenture, a corresponding category under the new Reference
Indenture.
8
"RPMRR" has the meaning specified in Section 3(j).
"Secured Guarantee" means, with respect to each Secured Guarantor, its
Guarantee.
"Secured Guarantor" means (a) before the XCFI Release Date, a Guarantor
other than (i) a Restricted Guarantor, (ii) an ESOP Restricted Guarantor and
(iii) XCFI and (b) on or after the XCFI Release Date, a Guarantor other than (i)
a Restricted Guarantor and (ii) an ESOP Restricted Guarantor.
"Secured Parties" means the Agents, the Lenders and the LC Issuing
Banks.
"Secured Party Jurisdiction" means, with respect to any Secured Party:
(i) the jurisdiction under the laws of which such Secured
Party is organised or in which its principal office is located;
(ii) the jurisdiction in which its applicable lending office
is located; and
(iii) any jurisdiction in which it is treated as resident for
purposes of income or franchise taxes imposed on (or measured by) net
income (or is otherwise subject to such taxes) by reason of its
business activities and operations that are unrelated to the Credit
Agreement, the Existing Credit Agreement and the loans thereunder.
"Security Interests" means the security interests in the Collateral
granted under the Canadian Security Documents securing the Canadian Secured
Obligations.
"Third Party Vendor Financing Assets" means Equipment, Inventory and
related assets that are the subject of a Third Party Vendor Financing Program.
"Trademark License" means any agreement now or hereafter in existence
granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to
any other Person, any right to use any Trademark.
"Trademarks" means all of the following, whether registered or
unregistered and whether now owned, used or hereafter acquired or used by any
Lien Grantor:
(i) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade
styles, service marks, logos, brand names, other source
or business identifiers, prints and labels on which any
of the foregoing have appeared or appear, designs and
intangibles of like nature, all registrations and
recordings thereof, and all applications in connection
therewith, including registrations, recordings and
applications in the Canadian Intellectual Property
Office or in any similar office in any country or any
political subdivision thereof,
(ii) all extensions or renewals of any of the foregoing,
9
(iii) all claims for, and rights to ▇▇▇ for, past or future
infringements of any of the foregoing,
(iv) all income, royalties, damages and payments now or
hereafter due or payable with respect to any of the
foregoing, including damages and payments for past or
future infringements thereof, and
(v) all goodwill associated with or symbolized by any of
the foregoing.
"Transferred Intellectual Property" means any Intellectual Property
(including without limitation, proceeds thereof) that was Transferred as
permitted by the Credit Agreement.
"Unrestricted Guarantor" means a Guarantor that is not a Restricted
Guarantor.
"XCFI" means Xerox Canada Finance Inc., an Ontario corporation.
"XCFI Indentures" means (a) that certain Trust Indenture dated as of
December 15, 1986, as supplemented and amended by the First through Fourth
Supplemental Trust Indentures, among Xerox Canada Finance Inc., Xerox Canada
Inc., Xerox Canada Holdings Inc. and National Trust Company, as Trustee and (b)
that certain Trust Indenture dated as of October 27, 1987, as supplemented and
amended by the First through Fourth Supplemental Trust Indentures, among Xerox
Canada Finance Inc., Xerox Canada Inc., Xerox Canada Holdings Inc. and National
Trust Company, as Trustee, in each case as amended, modified or supplemented
from time to time.
"XCFI Release Date" means the first day after all obligations under the
XCFI Indentures and all principal, interest and fees outstanding thereunder and
under each of the debentures issued thereunder have been paid off.
SECTION 2. Guarantees by Guarantors.
(a) Guarantees.
(i) Each Guarantor unconditionally guarantees the full
and punctual payment of the Canadian CA Secured Obligations when due
(whether at stated maturity, upon acceleration or otherwise). If the
Canadian Borrower fails to pay any Canadian CA Secured Obligation
punctually when due, each Guarantor agrees that it will forthwith on
demand pay the amount not so paid at the place and in the manner
specified in the relevant Loan Document. The obligations of each
Guarantor under this Section 2(a) shall be limited as provided in
Section 2(j).
(b) Guarantees Unconditional. The obligations of each Guarantor
under its Guarantee shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of Xerox, the Canadian
Borrower, any other Overseas
10
Borrower, any other Guarantor or any other Person under any Loan
Document, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to any
Loan Document;
(iii) any release, impairment, non-perfection or invalidity of
any direct or indirect security for any obligation of Xerox, the
Canadian Borrower, any other Overseas Borrower, any other Guarantor or
any other Person under any Loan Document;
(iv) any change in the corporate existence, structure or
ownership of Xerox, the Canadian Borrower, any other Overseas Borrower,
any other Guarantor or any other Person or any of their respective
subsidiaries, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting Xerox, the Canadian Borrower, any other
Overseas Borrower, any other Guarantor or any other Person or any of
their assets or any resulting release or discharge of any obligation of
Xerox, the Canadian Borrower, any other Overseas Borrower, any other
Guarantor or any other Person under any Loan Document;
(v) the existence of any claim, set-off or other right that
such Guarantor may have at any time against Xerox, the Canadian
Borrower, any other Overseas Borrower, any other Guarantor, any Secured
Party or any other Person, whether in connection with the Loan
Documents or any unrelated transactions, provided that nothing herein
shall prevent the assertion of any such claim by separate suit or
counterclaim;
(vi) any invalidity or unenforceability relating to or
against Xerox, the Canadian Borrower, any other Overseas Borrower, any
other Guarantor or any other Person for any reason of any Loan
Document, or any provision of Applicable Law purporting to prohibit the
payment of any Canadian Secured Obligation by Xerox, the Canadian
Borrower, any other Overseas Borrower, any other Guarantor or any other
Person; or
(vii) any other act or omission to act or delay of any kind by
Xerox, the Canadian Borrower, any other Overseas Borrower, any other
Guarantor, any other party to any Loan Document, any Secured Party or
any other Person, or any other circumstance whatsoever that might, but
for the provisions of this Section 2(b)(vii), constitute a legal or
equitable discharge of or defense to any obligation of any Guarantor
hereunder.
(c) Release of Guarantees.
The Guarantees will be released in accordance with Section 9.02 and
9.03 of the Credit Agreement, as the case may be. In case of any release
pursuant to Section 9.03 of the Credit Agreement, the Collateral Agent shall be
fully protected in relying on a certificate of Xerox stating that the release of
the Guarantee is in accordance with and permitted by the terms of Section 9.03
of the Credit Agreement. If at any time any payment of a Canadian Secured
Obligation is rescinded or must be otherwise restored or returned upon the
insolvency or receivership of Xerox, the Canadian Borrower, any other Overseas
Borrower or otherwise, the relevant Guarantee or Guarantees shall be reinstated
with respect thereto as though such payment had been due but not made at such
time.
11
(d) Waiver by Guarantors. Each Guarantor irrevocably waives acceptance
hereof, presentment, demand, protest and any notice not provided for herein, as
well as any requirement that at any time any action be taken by any Person
against Xerox, the Canadian Borrower, any other Overseas Borrower, any other
Guarantor or any other Person.
(e) Subrogation. A Guarantor that makes a payment with respect to a
Canadian Secured Obligation hereunder, shall be subrogated to the rights of the
payee against the Canadian Borrower with respect to such payment; provided that
no Guarantor shall enforce any payment by way of subrogation, or by reason of
contribution against any other guarantor of such Canadian Secured Obligation
(including without limitation any other Guarantor), until all the Release
Conditions have been satisfied.
(f) Stay of Acceleration. If acceleration of the time for payment of
any Canadian Secured Obligation by the Canadian Borrower is stayed by reason of
the insolvency or receivership of the Canadian Borrower or otherwise, all
Canadian CA Secured Obligations otherwise subject to acceleration under the
terms of any Loan Document shall nonetheless be payable by the relevant
Guarantors hereunder forthwith on demand by the Collateral Agent.
(g) Right of Set-Off. If any Canadian Secured Obligation is not paid
promptly when due, each of the Secured Parties and their respective Affiliates
is authorized, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other obligations at any time owing by such Secured Party or
Affiliate to or for the credit or the account of any Guarantor against the
obligations of such Guarantor under its Guarantee, irrespective of whether or
not such Secured Party shall have made any demand thereunder and although such
deposits and other obligations may be unmatured. The rights of each Secured
Party under this Section 2(g) are in addition to all other rights and remedies
(including other rights of setoff) that such Secured Party may have.
(h) Payments. Each payment to be made by any Guarantor in respect of
any of the Canadian CA Secured Obligations shall be payable in the currency or
currencies in which such Canadian CA Secured Obligations are denominated at the
office of the Collateral Agent and to the extent permitted by law, shall be made
free and clear of and without deduction or withholding for or on account of any
present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any governmental authority excluding net
income taxes or branch profit taxes or franchise taxes imposed in lieu of net
income taxes imposed on the Collateral Agent or any of the Secured Parties as a
result of a present or former connection between the Collateral Agent or any of
the Secured Parties and the jurisdiction of the governmental authority imposing
such tax or any political subdivision or taxing authority thereof or therein
(other than any connection arising solely from the Collateral Agent or such
Secured Party having executed, delivered or performed its obligations or
received a payment under, or enforced, as provided herein).
(i) Continuing Guarantee. Each Guarantee is a continuing guarantee,
shall be binding on the relevant Guarantor and its successors and assigns, and
shall be enforceable by the Collateral Agent or the Secured Parties. If all or
part of any Secured Party's interest in any Canadian Secured Obligation is
assigned or otherwise transferred, the transferor's rights under
12
each Guarantee, to the extent applicable to the obligation so transferred,
shall automatically be transferred with such obligation.
(j) Limitation on Obligations of Guarantor. Notwithstanding any other
provision hereof, (i) the obligations of each Guarantor under its Guarantee
shall be limited to an aggregate amount equal to the largest amount that would
not render such Guarantee invalid or unenforceable under Applicable Laws and
(ii) the amount of the liability of each Guarantor for the Canadian CA Secured
Obligations (A) pursuant to Section 2.14(a) of the Credit Agreement or Section
2.14(b) of the Credit Agreement, to the extent Section 2.14(b) relates to Loans
or Letters of Credit, shall be limited to amounts so owing with respect to the
increased costs or reduced rates of return arising from Loans to, or Letters of
Credit issued for the account of, the Canadian Borrower and (B) except as set
out in (A) above, pursuant to Section 2.14(b), shall be limited, at any
particular time, to the amount which is proportionate to the ratio of the
aggregate outstanding principal amount of Loans to, and the aggregate of the LC
Exposure and LC Reimbursement Obligations with respect to Letters of Credit
issued for the account of, the Canadian Borrower to the aggregate outstanding
principal amount of Loans to, and the aggregate of the LC Exposure and LC
Reimbursement Obligations with respect to Letters of Credit issued for the
account of, all Borrowers at such time.
SECTION 3. Representations and Warranties and Covenants.
Each Lien Grantor and Guarantor represents and warrants, at the times set
forth below, and covenants where indicated below, as follows:
(a) It is duly organized, validly existing and in good standing under the
laws of the jurisdiction identified as its jurisdiction of organization in the
Perfection Certificate.
(b) The execution and delivery of this Agreement by it and the
performance by it of its obligations under this Agreement are (i) within its
corporate or other powers, (ii) have been duly authorized by all necessary
corporate or other action, (iii) require no consent or approval of, registration
or filing with, any Governmental Authority except (A) such as have been obtained
or made and are in full force and effect and (B) filings, recordings and
registrations necessary to perfect the Security Interests, (iv) do not violate
any Applicable Law or its organizational documents, (v) do not violate any order
of any Governmental Authority except in any such case where such violation could
not reasonably be expected to result in a Material Adverse Effect, (vi) do not
violate or result in a default under any indenture or material agreement or
other instrument binding upon it and (vii) do not result in any Lien on any of
its properties other than the Security Interests.
(c) This Agreement constitutes a valid and binding agreement of it,
enforceable in accordance with its terms, except as limited by (A) applicable
bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting
creditors' rights generally and (B) general principles of equity, regardless of
whether considered in a proceeding at equity or at law.
(d) Schedule 1 of this Agreement sets forth the name and jurisdiction of
organization of, and the ownership interest (including percentage owned and
number of shares or units) of such Original Lien Grantor in the Securities
issued by each of such Lien Grantor's direct
13
Subsidiaries as of the date hereof, which are required to be included in the
Collateral and pledged pursuant to Section 5.13(a) of the Credit Agreement and
the Post-Closing Collateral and Guarantee Requirement.
(e) All Pledged Securities owned by such Lien Grantor are owned by it
free and clear of any Lien other than (i) the Security Interests (ii) the
Permitted Encumbrances and (iii) any tax liens and judgment liens, that are CA
Permitted Liens. None of such Pledged Securities is subject to any option to
purchase or similar right of any Person other than Permitted Encumbrances, such
Lien Grantor is not and covenants that it will not, become a party to or
otherwise bound by any agreement (except the Loan Documents to which it is a
party) which restricts in any material manner the rights of any present or
future holder of any Pledged Securities with respect thereto.
(f) Except for the Disclosed Matters, such Lien Grantor has good title
to, or valid license or leasehold interests in, all of its Collateral which is
material to its business (other than after-acquired Collateral in which such
Lien Grantor will own or have rights in such Collateral at the time so acquired)
free and clear of any Liens other than the (i) the CA Permitted Liens, (ii) the
Permitted Encumbrances and (iii) other defects that could not reasonably be
expected to result in a Material Adverse Effect.
(g) Other than financing statements, financing change statements or other
similar or equivalent documents or instruments with respect to the Security
Interests and other CA Permitted Liens, or that are in respect of consignments,
sale of Accounts, operating leases or are otherwise precautionary, no financing
statement, financing change statement, security agreement or similar or
equivalent document or instrument covering all or any part of the Collateral is
on file or of record in any jurisdiction in which such filing or recording is
effective to perfect or record a Lien on such Collateral except (i) Liens that
have been released and (ii) Liens the obligations secured by which have been
satisfied, in each case as evidenced pursuant to the requirements of Section
4.01(f) of the Credit Agreement. After the Relevant Date applicable to a Lien
Grantor, no Collateral owned by such Lien Grantor will be in the possession or
under the control of any other Person having a claim thereto or security
interest therein, other than the CA Permitted Liens.
(h) The Security Interests on all Collateral to which the PPSA applies in
which such Lien Grantor has rights (i) have been, or will on the Relevant Date
applicable to such Lien Grantor be, validly created, (ii) will attach to each
item of such Collateral on the Relevant Date applicable to such Lien Grantor
(or, if such Lien Grantor first obtains rights thereto on a later date, on such
later date) and (iii) when so attached, will constitute Collateral for the
Canadian Secured Obligations of such Lien Grantor.
(i) The Canadian Borrower has heretofore delivered the Perfection
Certificate to the Collateral Agent. The information specified therein with
respect to such Lien Grantor is correct and complete in all material respects as
of the Relevant Date applicable to such Lien Grantor. Each other Lien Grantor
shall provide the Collateral Agent with a Perfection Certificate in respect of
such Lien Grantor on or before the Relevant Date applicable to it.
14
(j) When a PPSA financing statement or financing change statement
describing the Collateral and naming such Lien Grantor as debtor has been filed
in the applicable offices located in the jurisdictions where such Lien Grantor's
assets are located as specified in the Perfection Certificate and the security
interests in Collateral located in or subject to, the laws of the Province of
Quebec have been published in the Register of Personal and Movable Real Rights
("RPMRR"), the Security Interests will constitute perfected security interests
in the Collateral in which such Lien Grantor has rights in favour of the
Collateral Agent for the benefit of the Secured Parties to the extent that a
security interest therein may be perfected by filing pursuant to the PPSA or the
Civil Code of Quebec, as the case may be, prior to all Liens and rights of
others therein except Permitted Liens. Except for the filing of such PPSA
financing statements and financing change statements and the publication of the
security interests in Collateral located in the Province of Quebec in the RPMRR,
no registration, publication or filing with any Canadian, provincial or
territorial governmental body, agency or official is required in connection with
the execution or delivery of the Canadian Security Documents or is necessary for
the validity or enforceability thereof or for the perfection or due recordation
of the Security Interests in Canada or for the enforcement of the Security
Interests.
(k) As of the date hereof, the Inventory and Equipment are insured in
accordance with the requirements of the Credit Agreement.
SECTION 4. The Security Interests.
(a) The Canadian Borrower, in order to secure the Canadian CA Secured
Obligations and each Guarantor, if and when it becomes a Secured Guarantor, in
order to secure its Canadian Secured Guarantor Obligations, grants to the
Collateral Agent for the benefit of the Secured Parties a continuing security
interest in and to all of such Guarantor's respective right, title and interest
in and to its now owned or hereafter acquired personal property, including all
Proceeds, renewals, accretions and substitutions thereof, whether now owned or
existing or hereafter acquired or arising and regardless of where located, but
subject to the exclusions in Section 4(b), and including, without limitation,
the following:
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all deeds, documents, writings, papers, books of account and
other books relating to or being records of debts, Chattel Paper or
Documents of Title or by which such are or may hereafter be secured,
evidenced, acknowledged or made payable;
(iv) all Documents of Title (whether negotiable or not);
(v) all Equipment;
(vi) all Goods (including all parts, accessories, attachments,
special tools, additions and accessions thereto);
(vii) all Instruments;
15
(viii) all Inventory;
(ix) all Intangibles;
(x) all Securities directly owned by such Lien Grantor and issued
by a Material Canadian Subsidiary;
(xi) the Collateral Account, all financial assets credited to the
Collateral Account from time to time, all cash deposited therein from time
to time and the Liquid Investments made pursuant to Section 8(d);
(xii) all books and records (including, without limitation, customer
lists, credit files, computer programs, printouts and other computer
materials and records) of such Original Lien Grantor pertaining to any of
the Collateral; and
(xiii) all Proceeds of the Collateral described in Clauses 4(a)(i)
through 4(a)(xii) hereof.
(b) Notwithstanding anything to the contrary contained herein, the
Collateral shall not include:
(i) rights of such Lien Grantor in respect of any property or
asset which is prohibited from being pledged to the Collateral Agent as
part of the Collateral by any Permitted Encumbrances;
(ii) Program Receivables and (A) security interests or liens and
property subject thereto purporting to secure payment of such Program
Receivables, (B) leases, guaranties, insurance and other arrangements
supporting payment of such Program Receivables, (C) rights to payment and
collections in respect of such Program Receivables, (D) books, records and
similar information relating to such Program Receivables or the obligors
thereon, (E) with respect to any such Program Receivables, the transferee's
interest in goods (including, without limitation, Equipment or Inventory)
the sale of which gave rise to such Program Receivables and (F) if such
Program Receivables arise from a lease financing or installment sale
transaction, the Equipment or Inventory that is the subject of the
underlying transaction and is transferred to a Receivables SPE;
(iii) Transferred Intellectual Property;
(iv) Federal and Provincial Government Receivables of such Lien
Grantor;
(v) Third Party Vendor Financing Assets of such Lien Grantor;
(vi) the last day of the term of any lease or any extension or
renewal thereof, oral or written, or agreement therefor, now held or
hereafter acquired by any Lien Grantor but upon the enforcement of the
security interest hereunder, the applicable Lien Grantor shall stand
possessed of such last day in trust to assign the same to any Person
acquiring such term; and
16
(vii) Equity Interests in any Person that is not a Material Canadian
Subsidiary or which are not directly owned by such Lien Grantor.
(c) With respect to each right to payment or performance included in the
Collateral from time to time, the Security Interest granted therein includes,
subject to Permitted Encumbrances, a continuing security interest in (i) any
supporting obligation that supports such payment or performance and (ii) any
Lien that (x) secures such right to payment or performance or (y) secures any
such supporting obligation.
(d) The Security Interests are granted as security only and shall not
subject the Collateral Agent or any Secured Party to, or transfer or in any way
affect or modify, any obligation or liability of any Lien Grantor with respect
to any of the Collateral or any transaction in connection therewith.
(e) If the Collateral is realized upon and the security interest in the
Collateral is not sufficient to satisfy all Canadian Secured Obligations, each
Lien Grantor acknowledges and agrees that, subject to the provisions of the
PPSA, such Lien Grantor shall continue to be liable for any Canadian Secured
Obligations remaining outstanding and Collateral Agent shall be entitled to
pursue full payment thereof.
(f) Each Lien Grantor, on and from the Relevant Date applicable to such
Lien Grantor, and the Collateral Agent hereby acknowledge that value has been
given, such Lien Grantor has rights in the Collateral or, with respect to any
after acquired Collateral, will have rights in such Collateral when so acquired
and this Agreement constitutes a security agreement as that term is defined in
the PPSA.
(g) Each Guarantor (other than XCFI) shall be a Secured Guarantor, and
such Guarantor's grant of a Security Interest in its Collateral hereunder shall
become effective, on the date hereof, unless such Guarantor (other than XCFI) is
either (i) a Restricted Guarantor or (ii) an ESOP Restricted Guarantor on the
date hereof and in each case such Guarantor's grant of a Security Interest in
its Collateral hereunder shall not become effective until, and such Guarantor
shall not become a Secured Guarantor hereunder until, the first day after the
end of the first Fiscal Year during which such Guarantor ceases to be either a
Restricted Guarantor or an ESOP Restricted Guarantor.
(h) XCFI's grant of a security interest in its Collateral hereunder shall
not become effective until, and XCFI shall not become a Secured Guarantor
hereunder until, the first day after the end of the first Fiscal Quarter after
or containing the XCFI Release Date during which XCFI is not a Restricted
Guarantor or an ESOP Restricted Guarantor.
(i) Liens on the Collateral of any Secured Guarantor granted pursuant to
this Agreement shall lapse, and such Guarantor shall cease to be a Secured
Guarantor, starting on the day such Guarantor becomes a Restricted Guarantor;
provided, however, that such Guarantor's grant of a security interest in its
Collateral hereunder shall revive, and such Guarantor shall become a Secured
Guarantor again, on the first day after the end of the next first Fiscal Quarter
during which such Guarantor ceases to be a Restricted Guarantor.
17
SECTION 5. Further Assurances; Covenants.
Each Lien Grantor covenants as follows:
(a) Such Lien Grantor will furnish to the Collateral Agent promptly
(but in any event within 20 Business Days of the occurrence of such event)
written notice of any change in (i) its corporate, partnership, company or other
legal name, (ii) its place of business or chief executive office if there is
more than one principal place of business (determined as provided in the PPSA
applicable to such Lien Grantor) or, if applicable, its domicile (as defined in
the Civil Code of Quebec) or (iii) its identity or corporate structure.
(b) Such Lien Grantor will, from time to time, at its expense, execute,
deliver, file and record any statement, assignment, instrument, document,
agreement or other paper and take any other reasonable action, (including,
without limitation, any filings of financing or financing change statements
under the PPSA) that from time to time is required under the PPSA or the Civil
Code of Quebec to enable the Collateral Agent and the other Secured Parties to
obtain the full benefits of the Canadian Security Documents or to enable the
Collateral Agent to exercise and enforce any of its rights, powers and remedies
under the Canadian Security Documents with respect to any of the Collateral. To
the extent permitted by Applicable Law, such Lien Grantor hereby appoints the
Collateral Agent as such Lien Grantor's attorney-in-fact to execute and file all
filings in Canada, including financing statements and financing change
statements with respect to the Collateral, required or requested for the
purposes of creating, perfecting and preserving the Security Interests, all acts
of such attorney being hereby ratified and confirmed; and such power, is coupled
with an interest, includes the power of substitution and shall be irrevocable
until all the Security Interests granted by such Lien Grantor terminate pursuant
to Section 19. Such Lien Grantor shall pay the costs of, or reasonable costs
incidental to, any filing of any financing or financing change statements, the
publication of notice under the RPMRR or other documents registered, recorded or
filed pursuant thereto concerning the Collateral.
(c) Upon the occurrence and during the continuance of an Event of
Default, if any Collateral is in the possession or control of a warehouseman,
bailee or agent, such Lien Grantor will upon request of the Required Revolving
Lenders (i) notify such warehouseman, bailee or agent of the relevant Security
Interests, (ii) instruct such warehouseman, bailee or agent to hold all such
Collateral for the Collateral Agent's account subject to the Collateral Agent's
instructions and to permit such Collateral to be removed by such Lien Grantor in
the ordinary course of business until the Collateral Agent notifies such
warehouseman, bailee or agent that an Event of Default has occurred and is
continuing, (iii) use reasonable commercial efforts (without incurring material
obligations or foregoing material rights) to cause such warehouseman, bailee or
agent to enter into an agreement for the benefit of Collateral Agent and the
Secured Parties acknowledging that it holds possession of such Collateral for
the Collateral Agent's benefit and otherwise in form and substance satisfactory
to the Collateral Agent.
(d) If an Actionable Event of Default shall have occurred and be
continuing, such Lien Grantor shall stamp or otherwise ▇▇▇▇ all books and
records relating to the Collateral in such manner, if any, as the Required
Revolving Lenders may reasonably require in order to reflect the Security
Interests.
18
(e) Such Lien Grantor will, promptly upon request, provide to the
Collateral Agent all information and evidence in such Lien Grantor's possession,
or under such Lien Grantor's control, or that can be generated internally or, if
an Actionable Event of Default has occurred and is continuing, can otherwise be
obtained by such Lien Grantor, without unreasonable effort or expense, which the
Collateral Agent may reasonably request concerning the Collateral to enable the
Collateral Agent to enforce the provisions of the Canadian Security Documents.
(f) Such Lien Grantor will not Transfer, grant interests in, or grant
any option with respect to, any of its Collateral; provided that such Lien
Grantor may do any of the foregoing unless doing so would violate a covenant in
the Credit Agreement. Concurrently with any such Transfer (except a Transfer to
another Lien Grantor, a lease or a license) permitted by the foregoing proviso,
the Security Interests on such assets Transferred (but not in any Proceeds
arising from such Transfer) will cease immediately pursuant to Section 9.03 of
the Credit Agreement.
(g) Each Lien Grantor that owns or has rights in movable property
situated in, or subject to the laws of, the Province of Quebec shall execute and
deliver to the Collateral Agent a Hypothec in respect of movable property and
bond certificates and pledge agreement, if necessary (all substantially in the
form which the Collateral Agent may reasonably request) and all other ancillary
and supplementary documents or documentation required for publication with
respect to any of the foregoing.
SECTION 6. Recordable Intellectual Property.
Each Lien Grantor covenants as follows:
(a) Such Lien Grantor will notify the Collateral Agent promptly if it
knows that any application or registration relating to any material Recordable
Intellectual Property owned or licensed by it may become abandoned or dedicated
to the public, or of any adverse determination or development (including the
institution of, or any adverse determination or development in, any proceeding
in the Canadian Intellectual Property Office) regarding such Lien Grantor's
ownership of such material Recordable Intellectual Property, its right to
register or patent the same, or its right to keep and maintain the same, except
where the occurrence of the foregoing could not reasonably be expected to result
in a Material Adverse Effect. If any of such Lien Grantor's rights to any
material Recordable Intellectual Property are infringed, misappropriated or
diluted, by a third party, such Lien Grantor will notify the Collateral Agent
within 30 days after it learns thereof and will, unless such Lien Grantor shall
reasonably determine that such action would be of negligible value, economic or
otherwise, or the failure to take such action could not reasonably be expected
to result in a Material Adverse Effect, (i) promptly ▇▇▇ for infringement,
misappropriation or dilution and to recover any and all damages for such
infringement, misappropriation or dilution, (ii) take such other actions as such
Lien Grantor shall reasonably deem appropriate under the circumstances to
protect such material Recordable Intellectual Property and (iii) notify the
Collateral Agent thereof to the extent required by the Credit Agreement.
(b) Unless an Actionable Event of Default shall exist and the
Collateral Agent shall have notified such Lien Grantor that the Lien Grantor's
right to do so is terminated, suspended or
19
otherwise limited, the grant of Liens on Recordable Intellectual Property
pursuant hereto shall not preclude any Lien Grantor from entering into any
Copyright License, Design License, Patent License or Trademark License or,
subject to Section 5, from managing or maintaining its Recordable Intellectual
Property in a manner that is in the ordinary course of such Lien Grantor's
business and consistent with such Lien Grantor's historical practices, as
permitted by the Credit Agreement.
SECTION 7. Pledged Securities.
Each Lien Grantor represents, warrants and covenants as follows:
(a) Certificated Securities.
(i) With respect to each Original Lien Grantor, such
Original Lien Grantor will deliver (A), on the Canadian Effective Date
to the Collateral Agent as Collateral hereunder all certificates
representing Pledged certificated Securities ("Pledged Certificated
Securities") that are Equity Interests and issued by any Material
Canadian Subsidiary then directly owned by such Original Lien Grantor
and identified on Schedule 1 of this Agreement as required to be
pledged under Section 5.13(a) of the Credit Agreement and the
Post-Closing Collateral and Guarantee Requirement and (B) in accordance
with Section 5.13(b) of the Credit Agreement within 90 days after the
Restatement Date, to the Collateral Agent as Collateral hereunder all
certificates representing Pledged Certificated Securities that are
Equity Interests issued by any Material Canadian Subsidiary then
directly owned by such Original Lien Grantor (to the extent such
Securities have not been pledged and delivered pursuant to clause
(i)(A) of this Section 7(a)).
(ii) With respect to any other Lien Grantor, such Lien
Grantor will deliver, on the date on which it signs and delivers its
first Guarantee and Security Agreement Supplement (or on its Relevant
Date in the case of a Guarantor which is not an Original Lien Grantor)
to the Collateral Agent as Collateral hereunder all certificates
representing Pledged Certificated Securities that are Equity Interests
issued by any Material Canadian Subsidiary then directly owned by such
Lien Grantor and required to be included in the Collateral.
(iii) After the pledge and delivery of Pledged Certificated
Securities described in clause (i) or (ii) of this Section 7(a),
whenever such Original Lien Grantor or such Lien Grantor, as the case
may be, acquires direct ownership of any other certificate representing
a Pledged Certificated Security that is an Equity Interest and required
to be included in the Collateral, such Original Lien Grantor or such
Lien Grantor, as the case may be, will promptly deliver such
certificate to the Collateral Agent as Collateral hereunder.
The provisions of this subsection are subject to the
limitation in Section 7(g) in the case of Equity Interests that are
subject to Permitted Encumbrances.
(b) Uncertificated Securities.
20
(i) With respect to each Original Lien Grantor, such
Original Lien Grantor will, (A) on the Canadian Effective Date in
respect of each Pledged uncertificated Security ("Pledged
Uncertificated Security") that is an Equity Interest and issued by any
Material Canadian Subsidiary then directly owned by such Original Lien
Grantor and identified on Schedule 1 of this Agreement as required to
be pledged under Section 5.13(a) of the Credit Agreement and the
Post-Closing Collateral and Guarantee Requirement and (B) in accordance
with Section 5.13(b) of the Credit Agreement within 90 days after the
Restatement Date, in respect of each Pledged Uncertificated Security
that is an Equity Interest issued by any Material Canadian Subsidiary
then directly owned by such Original Lien Grantor (to the extent that
such Security has not been pledged pursuant to clause (i)(B) of this
Section 7(b)), (x) such Lien Grantor shall give written instructions to
the relevant depository institution or other applicable Person,
together with a written copy thereof to the Collateral Agent,
sufficient for the depository institution or other applicable Person to
record in its book entry system that the Collateral Agent is the
pledgee of each Pledged Uncertificated Security or (y) register the
Collateral Agent as the registered owner of such Security on the books
and records of the issuer, in each case as the Collateral Agent and
such Original Lien Grantor may reasonably agree.
(ii) With respect to any other Lien Grantor, such Lien
Grantor will, on the date on which it signs and delivers its first
Guarantee and Security Agreement Supplement (or on its Relevant Date in
the case of a Guarantor which is not an Original Lien Grantor) in
respect of each Pledged Uncertificated Security that is an Equity
Interest issued by any Material Canadian Subsidiary then directly owned
by such Lien Grantor and required to be included in the Collateral (x)
give written instructions to the relevant depository institution or
other applicable Person, together with a written copy thereof to the
Collateral Agent, sufficient for the depository institution or other
applicable Person to record in its book entry system that the
Collateral Agent is the pledgee of each Pledged Uncertificated Security
or (y) register the Collateral Agent as the registered owner of such
Security on the books and records of the issuer, in each case as the
Collateral Agent and such Lien Grantor may reasonably agree.
(iii) After the pledge of Pledged Uncertificated Securities
described in clause (i) or (ii) of this Section 7(b), whenever such
Original Lien Grantor or such Lien Grantor, as the case may be,
acquires any other Pledged Uncertificated Security that is an Equity
Interest and required to be included in the Collateral such Original
Lien Grantor or such Lien Grantor, as the case may be, will promptly
(x) give written instructions to the relevant depository institution or
other applicable Person, together with a written copy thereof to the
Collateral Agent, sufficient for the depository institution or other
applicable Person to record in its book entry system that the
Collateral Agent is the pledgee of each Pledged Uncertificated Security
or (y) register the Collateral Agent as the registered owner of such
Security on the books and records of the issuer, in each case as the
Collateral Agent and such Original Lien Grantor or Lien Grantor, as the
case may be, may reasonably agree.
The provisions of this subsection are subject to (X) Section
9(c), and (Y) the limitation in Section 7(g) in the case of Equity
Interests that are subject to Permitted Encumbrances.
21
(c) Perfection as to Certificated Securities. When such Lien Grantor
delivers the certificate representing any Pledged Certificated Security that is
an Equity Interest issued by any Material Canadian Subsidiary, the Collateral
Agent takes possession of the Pledged Certificated Securities or a person on its
behalf other than such Lien Grantor or its agent, and, provided that the
Collateral Agent has no notice of any adverse claim affecting the Pledged
Certificated Securities, the Security Interest in the Pledged Certificated
Securities has priority over any other security interest in the Pledged
Certificated Securities.
(d) Perfection as to Uncertificated Securities. When the Collateral
Agent takes possession or constructive possession or when the Collateral Agent
is registered as the registered owner of any Pledged Uncertificated Security
that is an Equity Interest issued by any Material Canadian Subsidiary owned by
such Lien Grantor the Security Interest on such Pledged Uncertificated Security
will be perfected, subject to no prior Liens or rights of others or a person on
its behalf other than such Lien Grantor or its agent, if the Collateral Agent
has no notice of any adverse claim affecting the Pledged Uncertificated
Securities.
(e) Delivery of Pledged Certificates. Any certificate representing a
Pledged Certificated Security that is an Equity Interest issued by any Material
Canadian Subsidiary, when delivered to the Collateral Agent, will be in suitable
form for transfer by delivery, or accompanied by duly executed instruments of
transfer or assignment in blank, signed by an authorized officer, all in form
and substance reasonably satisfactory to the Collateral Agent.
(f) Communications. If an Actionable Event of Default shall have
occurred and be continuing and the Collateral Agent shall have given notice to
the Lien Grantors that it elects to exercise the remedies provided in Section
12, such Lien Grantor will promptly give to the Collateral Agent copies of any
notices and other communications received by it with respect to Pledged
Certificated Securities that are Equity Interests issued by any Material
Canadian Subsidiary registered in the name of such Lien Grantor or its nominee.
(g) Equity Interests subject to Permitted Encumbrances. Such Lien
Grantor will not be obligated to comply with the provisions of this Section at
any time with respect to any Equity Interest issued by any Person if and to the
extent (but only to the extent) that such Equity Interest is excluded from the
Collateral at such time pursuant to Sections 4(b)(i) or 4(b)(vii).
(h) Direct Holding of Pledged Securities. Such Lien Grantor shall hold
directly, and not through any subsidiary, securities intermediary or other
Person, all Pledged Securities owned by it.
SECTION 8. Collateral Account.
(a) There is hereby established with the Collateral Agent, with respect
to each Lien Grantor, a cash collateral account (its "Collateral Account") in
the name and under the exclusive control of the Collateral Agent into which
there shall be deposited from time to time after the occurrence and during the
continuance of an Actionable Event of Default and upon notice from the
Collateral Agent that it elects to exercise the remedies provided in this
Section 8 the cash proceeds of the Collateral required to be delivered to the
Collateral Agent pursuant to subsection 8(b) hereof or any other provision of
any Canadian Security Document. Any income
22
received by the Collateral Agent with respect to the balance from time to
time standing to the credit of each Collateral Account, including any interest
or capital gains on Liquid Investments, shall remain, or be deposited, in the
Collateral Account. All cash amounts on deposit in each Collateral Account from
time to time after the occurrence and during the continuance of an Event of
Default, together with any Liquid Investments from time to time made pursuant to
subsection 8(d) hereof, shall at all times be within the exclusive possession,
dominion and control of the Collateral Agent, shall constitute part of the
Collateral hereunder and shall not constitute payment of the Canadian Secured
Obligations until applied thereto as hereinafter provided.
(b) If an Actionable Event of Default shall have occurred and be
continuing and if so requested by the Required Lenders each Lien Grantor shall
instruct all account debtors and other Persons obligated in respect of all
Accounts then included in the Collateral to make all payments in respect of the
Accounts either (i) directly to the Collateral Agent (by instructing that such
payments be remitted to a post office box which shall be in the name of such
Lien Grantor (with a notation that proceeds held therein are held in trust for
and subject to the Liens of the Secured Parties) and under the control of the
Collateral Agent) or (ii) under other arrangements, in form and substance
satisfactory to the Collateral Agent, pursuant to which such Lien Grantor shall
have irrevocably instructed such other bank (and such other bank shall have
agreed) to remit all proceeds of such payments directly to the Collateral Agent
for deposit into the Collateral Account or as the Collateral Agent may otherwise
instruct such bank. All such payments made to the Collateral Agent shall be
deposited in such Lien Grantor's Collateral Account. In addition to the
foregoing, such Lien Grantor agrees that if the proceeds of any Collateral
hereunder (including the payments made in respect of Accounts) are received by
it at a time when the foregoing provisions of this Section 8(b) are in effect,
such Lien Grantor shall as promptly as possible deposit such proceeds into its
Collateral Account. Until so deposited into the Collateral Account, all such
proceeds shall, during the continuation of such Event of Default, be held in
trust by such Lien Grantor for the Secured Parties and shall not be commingled
with any other funds or property of such Lien Grantor.
(c) Upon acceleration of the Loans in accordance with the terms of the
Credit Agreement, the Collateral Agent shall, if so instructed by the Required
Lenders, apply or cause to be applied (subject to collection) any or all of the
balance from time to time standing to the credit of each Collateral Account in
the manner specified in Section 14.
(d) If an Actionable Event of Default shall have occurred and be
continuing, amounts on deposit in each Collateral Account, to the extent not
applied in the manner specified in Section 14 pursuant to paragraph (c) above,
shall if permitted by the terms of any agreement between the relevant Lien
Grantor and the depository institution where such Collateral Account is held, be
invested and re-invested from time to time in such Liquid Investments as the
relevant Lien Grantor shall determine, which Liquid Investments shall be held in
the name and be under the control of the Collateral Agent, provided that the
Collateral Agent shall, if instructed by the Required Lenders, liquidate any
such Liquid Investments and apply or cause to be applied the proceeds thereof to
the payment of the Canadian Secured Obligations in the manner specified in
Section 14; and provided further that the Collateral Agent shall, if so
instructed by the relevant Lenders in the manner specified in Section 9.02 of
the Credit Agreement, liquidate any such Liquid Investments and release the
proceeds thereof to the relevant Lien Grantor. For this
23
purpose, "Liquid Investments" means Permitted Investments; provided that
each Liquid Investment shall mature within 30 days after it is acquired by the
Collateral Agent.
SECTION 9. Transfer of Record Ownership.
(a) If an Actionable Event of Default shall have occurred and be
continuing, the Collateral Agent may (and to the extent that action by it is
required, the relevant Lien Grantor, if directed to do so by the Collateral
Agent, will as promptly as practicable) cause each of the Pledged Securities (or
any portion thereof specified in such direction) to be transferred of record
into the name of the Collateral Agent or its nominee.
(b) Perfection upon Transfer of Record Ownership. If and when any Pledged
Security (whether certificated or uncertificated) owned by such Lien Grantor is
transferred of record into the name of the Collateral Agent or its nominee
pursuant to Section 7(b) or 9(a), the Security Interest on such Pledged Security
will be perfected, subject to no prior Liens or rights of others.
(c) Provisions Inapplicable after Transfer of Record Ownership. If the
provisions of Section 9(a) are implemented, Section 7(b) shall not thereafter
apply to any Pledged Security that is registered in the name of the Collateral
Agent or its nominee.
(d) Communications after Transfer of Record Ownership. The Collateral
Agent will promptly give to the relevant Lien Grantor copies of any notices and
other communications received by the Collateral Agent with respect to Pledged
Securities registered in the name of the Collateral Agent or its nominee.
SECTION 10. Right to Vote Securities and Receive Dividends.
(a) Unless an Actionable Event of Default shall have occurred and be
continuing and the Collateral Agent shall have notified such Lien Grantor that
it elects to exercise the remedies provided in this Section 10, each Lien
Grantor will have the right, from time to time, to vote and to give consents,
ratifications and waivers with respect to any Pledged Security owned by it, and
the Collateral Agent will, upon receiving a written request from such Lien
Grantor, deliver to such Lien Grantor or as specified in such request such
proxies, powers of attorney, consents, ratifications and waivers in respect of
any such Pledged Security that is registered in the name of the Collateral Agent
or its nominee, in each case as shall be reasonably requested by such Lien
Grantor. Unless an Actionable Event of Default shall have occurred and be
continuing and the Collateral Agent shall have notified such Lien Grantor that
it elects to exercise the remedies provided in this Section 10, the Collateral
Agent will have no right to take any action which the owner of a Pledged
Partnership Interest is entitled to take with respect thereto, except the right
to receive payments and other distributions to the extent provided herein.
(b) If an Actionable Event of Default shall have occurred and be
continuing and the Collateral Agent shall have notified such Lien Grantor that
it elects to exercise the remedies provided in this Section 10, the Collateral
Agent will have the right to the extent permitted by Applicable Law (and, in the
case of Collateral consisting of any Security that is subject to any Permitted
Encumbrances, by the relevant agreement or governing document to the extent of
any Permitted Encumbrances contained in such agreement or governing document) to
vote, to give
24
consents, ratifications and waivers and to take any other action with
respect to the Pledged Securities (if any) with the same force and effect as if
the Collateral Agent were the absolute and sole owner thereof, and each Lien
Grantor will take all such action as the Collateral Agent may reasonably request
from time to time to give effect to such right.
(c) Unless an Actionable Event of Default shall have occurred and be
continuing and the Collateral Agent shall have notified such Lien Grantor that
it elects to exercise the remedies provided in this Section 10, dividends or
other distributions paid on Pledged Equity Interests owned directly by such Lien
Grantor shall be paid to such Lien Grantor.
SECTION 11. General Authority.
Each Lien Grantor hereby irrevocably appoints the Collateral Agent its true
and lawful attorney, and such power is coupled with an interest with full power
of substitution, in the name of such Lien Grantor, the Collateral Agent, the
Secured Parties or otherwise, for the use and benefit of the Secured Parties,
but at the Borrowers' expense, to the extent permitted by law to exercise, upon
the occurrence and during the continuance of an Actionable Event of Default or
upon acceleration of the Loans in accordance with the terms of the Credit
Agreement, all or any of the following powers with respect to all or any of the
Collateral:
(a) to demand, ▇▇▇ for, collect, receive and give acquittance for any and
all monies due or to become due thereon or by virtue thereof,
(b) to settle, compromise, compound, prosecute or defend any action or
proceeding with respect thereto,
(c) upon acceleration of the Loans in accordance with the terms of the
Credit Agreement, to sell, transfer, assign or otherwise deal in or with the
same or the proceeds thereof, as fully and effectually as if the Collateral
Agent were the absolute owner of the Lien Grantor's right, title and interest
therein, and
(d) to extend the time of payment of any or all thereof and to make any
allowance and other adjustments with reference thereto;
provided that, except in the case of Collateral that is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market, the Collateral Agent will give the relevant Lien Grantor at least ten
days' prior written notice of the time and place of any public sale thereof or
the time after which any private sale or other intended disposition thereof will
be made. Any such notice comply with the provisions of the PPSA and all other
mandatory requirements of Applicable Law; provided that, if the Collateral Agent
fails to comply with this sentence in any respect, its liability for such
failure shall be limited to the liability (if any) imposed on it as a matter of
law under the PPSA.
SECTION 12. Remedies upon Actionable Event of Default or Acceleration.
(a) Upon acceleration of the Loans in accordance with the terms of the
Credit Agreement, the Collateral Agent may exercise (or cause its sub-agents to
exercise) any and all remedies available to it (or to such sub-agents) under the
Canadian Security Documents.
25
Without limiting the generality of the foregoing, upon acceleration of the Loans
in accordance with the terms of the Credit Agreement, the Collateral Agent may
exercise (or cause its sub-agents to exercise) on behalf of the Secured Parties
all rights of a secured party after default under the PPSA (whether or not in
effect in the jurisdiction where such rights are exercised) with respect to any
Collateral and, in addition, the Collateral Agent may, without being required to
give any notice, except as herein provided or as may be required by mandatory
provisions of law, (i) withdraw all cash and Liquid Investments in the
Collateral Accounts and apply such cash and Liquid Investments and other cash,
if any, then held by it as Collateral as specified in Section 14 and (ii) if
there shall be no such cash or Liquid Investments or if such cash and Liquid
Investments shall be insufficient to pay all the Canadian Secured Obligations in
full, take possession of, sell, lease, license or otherwise dispose of the
Collateral or any part thereof at public or private sale, for cash, upon credit
or for future delivery, and at such price or prices as the Collateral Agent may
deem satisfactory. Any Secured Party may be the purchaser of any or all of the
Collateral so sold at any public sale (or, if the Collateral is of a type
customarily sold in a recognized market or is of a type which is the subject of
widely distributed standard price quotations, at any private sale). The relevant
Lien Grantor will execute and deliver such documents and take such other action
as the Collateral Agent deems reasonably necessary or proper in order that any
such sale may be made in compliance with law. Upon any such sale the Collateral
Agent shall have the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold. Each purchaser at any such sale shall hold the
Collateral so sold to it absolutely and free from any claim or right of
whatsoever kind, including any equity or right of redemption of the relevant
Lien Grantor which may be waived, and such Lien Grantor, to the extent permitted
by law, hereby specifically waives all rights of redemption, stay or appraisal
which it has or may have under any law now existing or hereafter adopted. The
notice (if any) of such sale required by Section 11 shall comply with the
requirements set forth in Section 11. Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places as the
Collateral Agent may fix in the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may determine. The Collateral Agent shall not be obligated to
make any such sale pursuant to any such notice. The Collateral Agent may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
same may be so adjourned. In the case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Collateral Agent until the selling price is paid by the
purchaser thereof, but the Collateral Agent shall not incur any liability in the
case of the failure of such purchaser to take up and pay for the Collateral so
sold and, in the case of any such failure, such Collateral may again be sold
upon like notice. The Collateral Agent, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the Security Interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
(b) For the purpose of enforcing any and all rights and remedies under
the Canadian Security Documents upon the occurrence and during the continuance
of an Actionable Event of Default or upon acceleration of the Loans in
accordance with the terms of the Credit Agreement, as the case may be, the
Collateral Agent may (i) require any Lien Grantor to, and such Lien Grantor
agrees that it will, at its expense and upon the request of the Collateral
Agent, forthwith take reasonable steps to assemble all or any part of the
Collateral as directed by the Collateral
26
Agent and make it available at a place designated by the Collateral Agent which
is, in its opinion, reasonably convenient to the Collateral Agent and such Lien
Grantor, whether at the premises of such Lien Grantor or otherwise, (ii) to the
extent permitted by Applicable Law, enter, with or without process of law and
without breach of the peace, any premise where any of the Collateral is or may
be located, and without charge or liability to it seize and remove such
Collateral from such premises, (iii) have access to and use such Lien Grantor's
books and records relating to the Collateral upon reasonable notice and at
reasonable times and (iv) prior to the disposition of the Collateral, store or
transfer it without charge in or by means of any storage or transportation
facility owned or leased by such Lien Grantor, process, repair or recondition it
or otherwise prepare it for disposition in any manner and to the extent the
Collateral Agent reasonably deems appropriate and, in connection with such
preparation and disposition, use without charge any Intellectual Property or
technical process used by such Lien Grantor in connection therewith and included
in the Collateral, subject, with respect to products being sold under
Trademarks, to standards of quality with respect to such Products that are
reasonably comparable to those prevailing at the time of such Actionable Event
of Default. The Collateral Agent may also render any or all of the Collateral
unusable at such Lien Grantor's premises and may dispose of such Collateral on
such premises without liability for rent or costs.
(c) If an Actionable Event of Default exists, the Collateral Agent may
appoint or reappoint by instrument in writing, any person or persons, whether an
officer or officers or an employee or employees of the Collateral Agent or not,
to be a receiver or receivers (hereinafter called a "Receiver", which term when
used herein shall include a receiver and manager) of the Collateral (including
any interest, income or profits therefrom) and may remove any Receiver so
appointed and appoint another in his/her or its stead. Any such Receiver shall,
so far as concerns responsibility for his/her or its acts, be deemed the agent
of the Lien Grantors and not the Collateral Agent or any Secured Party, and
neither the Collateral Agent nor any Secured Party shall be in any way
responsible for any misconduct, negligence or non-feasance on the part of any
such Receiver, his/her or its servants, agents or employees. Subject to the
provisions of the instrument appointing him/her or it, any such Receiver shall
(i) have such powers as have been granted to the Collateral Agent under
subsection (a) and (b) above, and (ii) shall be entitled to exercise such powers
at any time that such powers would otherwise be exercisable by the Collateral
Agent under subsection (a) and (b) above, as applicable, which powers shall
include the power to preserve Collateral or its value, and to carry on or concur
in carrying on all or any part of the business of such Lien Grantor. To
facilitate the foregoing powers, any such Receiver may, to the exclusion of all
others, including such Lien Grantor, enter upon, use and occupy all premises
owned or occupied by such Lien Grantor wherein Collateral may be situate,
maintain Collateral upon such premises, and borrow money on a secured or
unsecured basis and use Collateral directly in carrying on such Lien Grantor's
business or as security for loans or advances to enable the Receiver to carry on
such Lien Grantor's business or otherwise, as such Receiver shall, in its
discretion, determine. Except as may be otherwise directed by the Collateral
Agent, all money received from time to time by such Receiver in carrying out
his/her or its appointment shall be received in trust for and paid over to the
Collateral Agent. Every such Receiver may, in the discretion of the Collateral
Agent, be vested with all or any of the rights and powers of the Collateral
Agent.
(d) The remedies specified in this Section 12 do not affect, and are in
addition to, remedies otherwise specified for or available to the Collateral
Agent or the Secured Parties under
27
this Agreement or any other Loan Document, including, but not limited to,
remedies available upon the occurrence and during the continuance of an Event of
Default, or Actionable Event of Default, as the case may be.
(e) The Collateral Agent hereby agrees that, notwithstanding anything to
the contrary set forth herein, the exercise of rights and remedies by the
Collateral Agent pursuant to this Section 12 (or otherwise) with respect to any
Collateral may be subject to the effect of any Permitted Encumbrances.
SECTION 13. Limitation on Duty of Collateral Agent in Respect of
Collateral.
Beyond the exercise of reasonable care in the custody thereof, the
Collateral Agent shall have no duty as to any Collateral in its possession or
control or in the possession or control of any agent or bailee or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which it
accords its own property, and shall not be liable or responsible for any loss or
damage to any of the Collateral, or for any diminution in the value thereof, by
reason of the act or omission of any warehouseman, carrier, forwarding agency,
consignee or other agent or bailee selected by the Collateral Agent in good
faith.
SECTION 14. Application of Proceeds.
(a) Upon (A) acceleration of the Loans in accordance with the terms of the
Credit Agreement and (B) the exercise of remedies by the Collateral Agent under
Section 12 hereof, the proceeds of any sale of, or other realization upon, all
or any part of the Collateral, shall be applied by the Collateral Agent as
follows:
first, to pay the expenses of such sale or other realization,
including reasonable compensation to agents contemplated by Section 16
and counsel for the Collateral Agent, and all expenses, liabilities
and advances incurred or made by the Collateral Agent in connection
with the Canadian Security Documents, and then ratably (based on the
proportion of the Loans to the Canadian Borrower to all Loans) to pay
any other unreimbursed expenses for which the Collateral Agent is to
be reimbursed pursuant to Section 18 hereof;
second, to pay the unpaid principal of Revolving Loans to the
Canadian Borrower (or provide for the payment thereof pursuant to
Section 14(b)), until payment in full of the principal of such Loans
shall have been made (or so provided for);
third, to pay all interest on the Loans to the Canadian Borrower
and fees (to the extent payable by the Canadian Borrower or by Xerox
on behalf of the Canadian Borrower) payable under the Credit Agreement
to Revolving Lenders until payment in full of all such interest and
fees shall have been made;
fourth, to pay all other Canadian Secured Obligations ratably (or
provide for the payment thereof pursuant to Section 14(b)), until
payment in full of all
28
such other Canadian Secured Obligations shall have been made (or so
provided for); and
finally, to pay to the relevant Lien Grantor, or as a court of
competent jurisdiction may direct, any surplus then remaining from the
proceeds of the Collateral owned by it.
The Collateral Agent may make distributions hereunder in cash or in
kind or, on a ratable basis, in any combination thereof.
(b) If at any time any portion of any monies collected or received by the
Collateral Agent would, but for the provisions of this Section 14(b), be payable
in respect of a Canadian Contingent CA Secured Obligation or any other Canadian
Secured Obligation that is not then due and payable (by reason of acceleration
or otherwise), the Collateral Agent shall not apply any monies to pay such
Canadian Secured Obligation but instead shall request the holder thereof, at
least 10 days before each proposed distribution hereunder, to notify the
Collateral Agent as to the maximum amount of such Canadian Secured Obligation if
then ascertainable (e.g., in the case of a Letter of Credit, the maximum amount
available for subsequent drawings thereunder, regardless of whether the
conditions to drawing thereunder are then satisfied). If the holder of such
Canadian Secured Obligation does not notify the Collateral Agent of the maximum
ascertainable amount thereof at least two Business Days before such
distribution, such holder will not be entitled to share in such distribution. If
such holder does so notify the Collateral Agent as to the maximum ascertainable
amount thereof, the Collateral Agent will allocate to such holder a portion of
the monies to be distributed in such distribution, calculated as if such
Canadian Secured Obligation were outstanding and then due and payable in such
maximum ascertainable amount. However, the Collateral Agent will not apply such
portion of such monies to pay such Canadian Secured Obligation, but instead will
hold such monies or invest such monies in Liquid Investments. All such monies
and Liquid Investments and all proceeds thereof will constitute Collateral
hereunder, but will be subject to distribution in accordance with this Section
14(b) rather than Section 14(a). The Collateral Agent will hold all such monies
and Liquid Investments and the net proceeds thereof in trust until all or part
of such Canadian Secured Obligation becomes due and payable (or, in the case of
a Canadian Contingent CA Secured Obligation, becomes a Canadian Non-Contingent
CA Secured Obligation), whereupon the Collateral Agent at the request of the
relevant Secured Party will apply the amount so held in trust to pay such
Canadian Secured Obligation; provided that, if the other Canadian Secured
Obligations theretofore paid pursuant to the same clause of Section 14(a) were
not paid in full, the Collateral Agent will apply the amount so held in trust to
pay the same percentage of such Canadian Secured Obligation as the percentage of
such other Canadian Secured Obligations theretofore paid pursuant to the same
clause of Section 14(a). If (i) the holder of such Canadian Secured Obligation
shall advise the Collateral Agent that no portion thereof (A) has not become due
and payable or (B) remains in the category of a Canadian Contingent CA Secured
Obligation, as the case may be, and (ii) the Collateral Agent still holds any
amount held in trust pursuant to this Section 14(b) in respect of such Canadian
Secured Obligation (after paying all amounts payable pursuant to the preceding
sentence with respect to any portions thereof that have become due and payable
or become Canadian Non-Contingent CA Secured Obligations, as the case may be),
such remaining amount will be applied by the Collateral Agent in the order of
priorities set forth in Section 14(a).
29
(c) In making the payments and allocations required by this Section, the
Collateral Agent may rely upon information supplied to it pursuant to Section
15(c). All distributions made by the Collateral Agent pursuant to this Section
shall be final (except in the event of manifest error) and the Collateral Agent
shall have no duty to inquire as to the application by any Secured Party of any
amount distributed to it.
SECTION 15. Concerning the Collateral Agent.
The provisions of Article VIII of the Credit Agreement shall inure to the
benefit of the Collateral Agent in respect of this Agreement (as if the
Collateral Agent were the Administrative Agent referred to therein) and shall be
binding upon the parties to this Agreement. In furtherance and not in derogation
of the rights, privileges and immunities of the Collateral Agent therein
specified:
(a) The Collateral Agent is authorized to take all such action as is
provided to be taken by it as Collateral Agent hereunder and all other action
reasonably incidental thereto. As to any matters not expressly provided for
herein (including, without limitation, the timing and methods of realization
upon the Collateral) the Collateral Agent shall act or refrain from acting in
accordance with written instructions from the Required Lenders or, in the
absence of such instructions, in accordance with its discretion.
(b) The Collateral Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part under the Canadian Security Documents. The Collateral Agent
shall have no duty to ascertain or inquire as to the performance or observance
of any of the terms of any Canadian Security Document by any Lien Grantor.
(c) For all purposes of the Canadian Security Documents, including
determining the amounts of the Canadian Secured Obligations and whether a
Canadian Secured Obligation is a Canadian Contingent CA Secured Obligation or
not, the Collateral Agent will be entitled to rely on information from (i) its
own records for information as to the Lender and Agents, their Canadian Secured
Obligations and actions taken by them, (ii) any Secured Party for information as
to its Canadian Secured Obligations and actions taken by it, to the extent that
the Collateral Agent has not obtained such information from the foregoing
sources, and (iii) Xerox, to the extent that the Collateral Agent has not
obtained information from the foregoing sources.
SECTION 16. Appointment of Co-Collateral Agents.
At any time or times, upon prior written notice to Xerox and in order (a)
to comply with any legal requirement in any jurisdiction, (b) preserve or
protect the Collateral, (c) exercise remedies specified in this Agreement or (d)
otherwise carry out duties or exercise rights specified in this Agreement, the
Collateral Agent may appoint another bank or trust company or one or more other
Persons, either to act as co-agent or co-agents, jointly with the Collateral
Agent, or to act as separate agent or agents on behalf of the Secured Parties
with such power and authority as may be necessary for the effective operation of
the provisions hereof and may be specified in the instrument of appointment
(which may, in the discretion of the Collateral Agent, include
30
provisions for the protection of such co-agent or separate agent similar to the
provisions of Section 15).
SECTION 17. Taxes
Each Guarantor agrees that:
(a) All payments of Canadian Secured Obligations and all amounts payable
on, under or in respect of this Agreement by such Guarantor, including, without
limitation, amounts payable by such Guarantor under clause (b) of this Section
17, shall be made free and clear of and without deduction for all present and
future Taxes (other than income or franchise taxes imposed on (or measured by)
the net income of a Secured Party by a Secured Party Jurisdiction of that
Secured Party) including any such Taxes imposed with respect to this Agreement,
the execution, registration, enforcement, notarization or other formalization of
any thereof, and any payments of principal, interest, charges, fees, commissions
or other amounts made on, under or in respect thereof (hereinafter called
"Covered Taxes"), provided that, if any Guarantor shall be required to deduct
any Covered Taxes from such payments, then (i) the sum payable will be increased
as necessary so that, after all required deductions (including deductions
applicable to additional sums payable under this Section) are made, each
relevant Secured Party receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Guarantor shall make such
deductions and (iii) such Guarantor shall pay the full amount deducted to the
relevant Governmental Authority in accordance with Applicable Law. The parties
agree to cooperate and provide information with respect to Canadian and foreign
withholding tax matters relating to payments under this Agreement in a manner
consistent with the principles of Section 2.16(e) of the Credit Agreement,
mutatis mutandis. The parties also agree that the provisions of Section 2.16(f)
of the Credit Agreement apply, mutatis mutandis, to Covered Taxes that are
deducted, withheld or paid by a Guarantor pursuant to this Agreement.
(b) Each Guarantor shall indemnify each Secured Party, within 15 Business
Days after written demand therefor, for the full amount of any Covered Taxes
paid or incurred by such Secured Party with respect to any payment by or
obligation of such Guarantor under or with respect to this Agreement or any
other Canadian Security Document (including Covered Taxes imposed or asserted on
or attributable to amounts payable under this Section 17) and any expenses
arising therefrom or with respect thereto, whether or not such Covered Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. Each Secured Party shall make a good faith effort to verify that such
Covered Taxes are correctly and legally imposed or asserted by the relevant
Governmental Authority. An officer's certificate as to the amount of any such
payment delivered to Xerox by a Secured Party on its own behalf, or by the
Collateral Agent on behalf of a Secured Party, shall be conclusive absent
manifest error.
(c) Within 15 Business Days after any Guarantor pays any Covered Taxes to a
Governmental Authority, such Guarantor shall deliver to the Collateral Agent the
original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment. Each Guarantor shall promptly furnish to each Secured
Party any other information, documents and receipts that the Secured Party may
from time to time reasonably request to establish to its satisfaction that full
and timely payment of all Covered Taxes has been made. The applicable
31
Guarantor will be deemed to have satisfied the requirement of this Section 17(c)
if it has furnished such information, documents and/or receipts to the
Collateral Agent.
(d) Notwithstanding paragraphs (a) and (b) above, the payment increases
and indemnities pursuant to those paragraphs will not apply to the payment of
any Canadian Secured Obligation to the extent that (in the absence of this
paragraph (d)) the Secured Party would thereby receive a net cash payment in
respect of that Canadian Secured Obligation greater than if that Canadian
Secured Obligation had been paid by the Borrower.
SECTION 18. Expenses.
The Canadian Borrower agrees that it will forthwith upon demand pay to the
Collateral Agent:
(i) the amount of any Taxes which the Collateral Agent may have been
required to pay by reason of the Security Interests or to free any of the
Collateral from any other Lien thereon; and
(ii) the amount of any and all reasonable out-of-pocket expenses,
including the reasonable fees and disbursements of counsel and, upon the
occurrence and during the continuation of an Event of Default, and of any
other experts, which the Collateral Agent may incur in connection with (w)
the administration or enforcement of the Canadian Security Documents,
including such expenses as are incurred to preserve the value of the
Collateral and the validity, perfection, rank and value of any Security
Interest, (x) the collection, sale or other disposition of any of the
Collateral, (y) the exercise by the Collateral Agent of any of the rights
conferred upon it under the Canadian Security Documents or (z) any Event of
Default.
Any such amount not paid on demand shall, unless prohibited by Applicable
Law, bear interest at the rate applicable to Base Rate Loans from time to time
plus 2% and shall be an additional Canadian Secured Obligation hereunder.
SECTION 19. Termination of Security Interests; Release of Collateral.
(a) Each Security Interest granted hereunder shall terminate, and all
rights to the relevant Collateral shall revert to the relevant Lien Grantor, if,
as and to the extent permitted by Section 9.02 and 9.03 of the Credit Agreement,
as the case may be.
(b) Upon any termination of a Security Interest or release of Collateral,
the Collateral Agent will, at the expense of the relevant Lien Grantor, execute
and deliver to such Lien Grantor such documents as such Lien Grantor shall
reasonably request to evidence the termination of such Security Interest or the
release of such Collateral, as the case may be.
SECTION 20. Additional Guarantors and Lien Grantors.
Any Canadian Subsidiary may become a party hereto by signing and delivering
to the Collateral Agent a Guarantee and Security Agreement Supplement, whereupon
such Subsidiary shall become (a) a "Guarantor" or (b) a "Guarantor" and a "Lien
Grantor" as defined herein.
32
SECTION 21. Change of Status.
(a) Notwithstanding any contrary provision of this Agreement, if any
Unrestricted Guarantor (other than XCFI before the XCFI Release Date) shall
become a "Specified Subsidiary" under the Reference Indenture (or if the High
Yield Indenture ceases to be the Reference Indenture, a corresponding category
under the new Reference Indenture) after the Canadian Effective Date, such
Guarantor shall be treated as a Restricted Guarantor for the purpose of this
Agreement, and Liens on the Collateral of such Guarantor shall lapse.
(b) Notwithstanding any contrary provision of this Agreement, if any
Restricted Guarantor (other than XCFI before the XCFI Release Date) shall cease
to be a "Specified Subsidiary" under the Reference Indenture (or if the High
Yield Indenture ceases to be the Reference Indenture, a corresponding category
under the new Reference Indenture) at the end of any Fiscal Year, such Guarantor
shall be treated as an Unrestricted Guarantor for the purpose of this Agreement,
and, unless such Guarantor is still an ESOP Restricted Guarantor, its grant of a
Security Interest in its Collateral pursuant hereto shall become effective,
starting the first day after the end of such Fiscal Year.
(c) Notwithstanding any contrary provision of this Agreement, a Guarantor
shall cease to be an ESOP Restricted Guarantor immediately after it or Xerox's
obligations under the ESOP Guarantee Agreement have been terminated.
(d) Upon becoming a Secured Guarantor under this Section 21, each such
Secured Guarantor shall at its own expense, promptly execute and deliver all
further documents and take all further action necessary or appropriate to give
effect to the provisions and intent of this Agreement and to complete the
transactions contemplated by this Agreement, including, without limitation,
deliver to Collateral Agent all documents and instruments required to be
delivered under Section 7 in respect of Pledged Securities.
SECTION 22. Notices.
All notices, requests and other communications to any party hereunder shall
be in writing (including bank wire, telex, facsimile transmission or similar
writing) and shall be given to such party at its address or telex or facsimile
number set forth on the signature pages hereof or at such other address or
facsimile number as such party may hereafter specify for such purpose by notice
to the Collateral Agent and the Canadian Borrower. All notices and other
communication given to any party hereto in accordance with the provisions of
this Agreement will be deemed to have been given on the date of receipt.
SECTION 23. Waivers, Non-Exclusive Remedies.
No failure on the part of the Collateral Agent or any Secured Party to
exercise, and no delay in exercising and no course of dealing with respect to,
any right or remedy under any Loan Document shall operate as a waiver thereof;
nor shall any single or partial exercise by the Collateral Agent or any Secured
Party of any right under any Loan Document preclude any other or further
exercise thereof or the exercise of any other right or remedy. The rights and
remedies in the Loan Documents are cumulative and are not exclusive of any other
rights or remedies provided by law.
33
SECTION 24. Successors and Assigns.
This Agreement is for the benefit of the Collateral Agent and the Secured
Parties and their successors and, in the case of the Lenders, permitted assigns
pursuant to Section 9.04 of the Credit Agreement and in the event of an
assignment of all or any of the Canadian Secured Obligations, the rights
hereunder, to the extent applicable to the obligation so assigned, shall be
automatically transferred with such obligation. This Agreement shall be binding
on the Canadian Borrower, each Guarantor and its successors and assigns.
SECTION 25. Changes in Writing.
Neither this Agreement nor any provision hereof may be waived, amended,
modified or terminated except pursuant to an agreement or agreements in writing
entered into by the parties hereto, with the consent of such Lenders as are
required to consent thereto under Section 9.02 of the Credit Agreement.
SECTION 26. Ontario Law.
This Agreement shall be construed in accordance with and governed by the
laws of the Province of Ontario and the laws of Canada applicable therein,
except as otherwise required by mandatory provisions of law and except to the
extent that remedies provided by the laws of any jurisdiction other than Ontario
are governed by the laws of such jurisdiction.
SECTION 27. Judgment Currency
If for the purpose of obtaining judgment in any court it is necessary to
convert a sum due from a Guarantor or the Canadian Borrower in the currency
expressed to be payable in any Loan Document (the "specified currency") into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Collateral Agent could purchase
the specified currency with such other currency at the Collateral Agent's
Toronto office on the domestic Business Day preceding that on which final
judgment is given. The obligations of the Guarantor or the Canadian Borrower in
respect of any sum due to the Collateral Agent hereunder shall, notwithstanding
any judgment in a currency other than the specified currency, be discharged only
to the extent that on the domestic Business Day following receipt by the
Collateral Agent of any sum adjudged to be so due in such other currency the
Collateral Agent may in accordance with normal banking procedures purchase the
specified currency with such other currency; if the amount of the specified
currency so purchased is less than the sum originally due to the Collateral
Agent, in the specified currency, the Guarantor or the Canadian Borrower agrees,
to the fullest extent that it may effectively do so, as a separate obligation
and notwithstanding any such judgment, to indemnify the Collateral Agent,
against such loss, and if the amount of the specified currency so purchased
exceeds the sum originally due to the Collateral Agent, in the specified
currency, then the Collateral Agent agrees to remit such excess to the Guarantor
or the Canadian Borrower.
34
SECTION 28. Interest Act
For purposes of disclosure pursuant to the Interest Act (Canada), the
annual rates of interest or fees to which the rates of interest or fees provided
in the Credit Agreement and in this Agreement (and stated herein as applicable
to be computed on the basis of a 365 day year or any other period of time less
than a calendar year) are equivalent are the rates so determined multiplied by
the actual number of days in the applicable calendar year and divided by 365 or
such other period of time.
SECTION 29. Saskatchewan
It is hereby agreed that The Limitation of Civil Rights Act of the Province
of Saskatchewan, or any provision thereof, shall have no application to this
Agreement or any agreement or instrument renewing or extending or collateral to
this Agreement.
SECTION 30. WAIVER OF JURY TRIAL.
EACH PARTY HERETO AND ANY OTHER SECURED PARTY BY ITS ACCEPTANCE OF THE
BENEFITS HEREOF OR BY SEEKING TO ENFORCE THIS AGREEMENT, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
ANY CANADIAN SECURITY DOCUMENT OR ANY TRANSACTION CONTEMPLATED THEREBY AND FOR
ANY COUNTERCLAIM THEREIN (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY),
AND OF EACH OF SUCH PARTIES (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
COUNSEL OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
SECTION 31. Severability.
If any provision of any Canadian Security Document is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions of the Canadian Security Documents shall remain in full
force and effect in such jurisdiction and shall be liberally construed in favor
of the Collateral Agent and the Secured Parties in order to carry out the
intentions of the parties hereto as nearly as may be possible; and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction shall
not affect the validity or enforceability of such provision in any other
jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
ADDRESS:
35
XEROX CANADA CAPITAL LTD.
By:________________________________
Name:
Title:
BANK ▇▇▇, ▇▇, ▇▇▇▇▇▇ Branch, as
Collateral Agent
By:________________________________
Name:
Title:
Guarantors:
[NAMES OF GUARANTORS]
By:________________________________
Name:
Title:
36
SCHEDULE 1
to Guarantee and
Security Agreement
PLEDGED SECURITIES
(as of the Canadian Effective Date)
Jurisdiction Owner of Percentage Number of
Issuer of Organization Security Owned Shares or Units
------ --------------- -------- ----- ---------------
Schedule 1-1
EXHIBIT A
to Guarantee and Security Agreement
PERFECTION CERTIFICATE
The undersigned is a duly authorized officer of [Insert Name of Lien
Grantor] ("Lien Grantor"). With reference to the Guarantee and Security
Agreement dated as of _________, 2002 among XEROX CANADA CAPITAL LTD., the
Guarantors party thereto and ▇▇▇▇ ▇▇▇, ▇▇, ▇▇▇▇▇▇ Branch, as Collateral Agent
(terms defined therein being used herein as therein defined), the undersigned
certifies to the Collateral Agent and each other Secured Party as follows:
A. Information Required for Filings and Searches for Prior Filings.
1. Jurisdiction of Organization. The jurisdiction of organization of
the Lien Grantor is set forth in Schedule 3.12 to the Credit Agreement.
2. Name. The exact legal name of the Lien Grantor as it appears in
its organizational documents is set forth in Schedule 3.12 to the Credit
Agreement.
3. Prior Names. (a) Set forth below is each other corporate or other
legal name that the Lien Grantor has had within the past five years, together
with the date of the relevant change:
(b) Except as set forth in Schedule 1 hereto, the Lien Grantor has
not changed its corporate structure/1/ in any way within the past five years.
4. Filing Office. In order to perfect, as of its Relevant Date, the
Security Interests granted by the Lien Grantor, a duly completed financing
statement in the prescribed form or publication of a notice in the RPMRR, with
the collateral described as set forth on Schedule 2 hereto, should be on file in
the case of Xerox Canada Capital Ltd., in the personal property security
registry ("PPSR") or RPMRR office in each of the following provinces.
B. Additional Information Required for Searches for Prior Filings.
1. Current Locations. (a) The principal place of business or, if
more than one, the chief executive office and, if applicable, the registered
head office or domicile (as defined in the Civil Code of Quebec), as the case
may be, of the Lien Grantor is located at the following address:
Name of Lien Grantor Mailing Address Province
-------------------- --------------- --------
__________
/1/ Changes in corporate structure would include mergers, amalgamations and
consolidations, as well as any change in the Lien Grantor's form of
organization. If any such change has occurred, include in Schedule __ the
information required by Part A of this certificate as to each constituent party
to a merger or consolidation and any other predecessor organization.
Exhibit A-1
(b) The following are all current locations in Canada not identified
above where the Lien Grantor maintains any Inventory or Equipment:
Name of Lien Grantor Mailing Address Province
-------------------- --------------- --------
2. Prior Locations. Set forth below is the information required by
paragraphs (c) and (d) of Part B-1 above with respect to each other location or
bailee where or with whom any Inventory or Equipment of the Lien Grantor has
been lodged at any time during the past four months:
C. Search Reports.
A true copy of a file search report from the PPSR and RPMRR filing
office in each jurisdiction identified in Part A-4 and Part B above with respect
to each name set forth in Part A-2 and Part A-3 above has been provided to the
Collateral Agent. This file search report covers the Lien Grantor.
D. Canadian Filings
Schedule 3 hereto sets forth the Lien Grantor's place of business or
chief executive office if there is more than one principal place of business
(determined as provided in the PPSA applicable to such Lien Grantor) or, if
applicable, its domicile (as defined in the Civil Code of Quebec).
IN WITNESS WHEREOF, I have hereunto set my hand this __ day of
__________, 2002
_________________________
Name:
Title:
Exhibit A-2
Schedule 1
to Perfection Certificate
CHANGES IN CORPORATE STRUCTURE
Schedule 2
to Exhibit A
Schedule 2
to Perfection Certificate
DESCRIPTION OF COLLATERAL
[Complete if required for registration]
Schedule 2
to Exhibit A
Schedule 3
to Perfection Certificate
PRINCIPAL PLACE OF BUSINESS/CHIEF EXECUTIVE OFFICE/DOMICILE
OF LIEN GRANTOR
Name of Lien Grantor Principal Place of Business/Chief Executive Office/Domicile
-------------------- -----------------------------------------------------------
Schedule 3
to Exhibit A
EXHIBIT B
to Guarantee and Security Agreement
GUARANTEE AND SECURITY AGREEMENT SUPPLEMENT
GUARANTEE AND SECURITY AGREEMENT SUPPLEMENT dated as of _______, ____,
between [NAME OF GUARANTOR OR GUARANTOR AND LIEN GRANTOR] (the "Guarantor" [and
"Lien Grantor"]) and ▇▇▇▇ ▇▇▇, ▇▇, ▇▇▇▇▇▇ Branch, as Collateral Agent.
WHEREAS, XEROX CANADA CAPITAL LTD. ("XEROX"), the Guarantors party
thereto and ▇▇▇▇ ▇▇▇, ▇▇, ▇▇▇▇▇▇ Branch, as Collateral Agent, are parties to a
Canadian Guarantee and Security Agreement dated as of ___________, 2002 (as
heretofore amended and/or supplemented, the "Guarantee and Security Agreement")
under which (1) Xerox secures certain of its obligations, (2) the Guarantors
guarantee certain obligations and (3) the Secured Guarantors secure their
respective guarantees thereof;
WHEREAS, [name of Guarantor or Guarantor and Lien Grantor] desires to
become [is] a party to the Guarantee and Security Agreement as a Guarantor [and
Lien Grantor] thereunder; and
WHEREAS, terms defined in the Guarantee and Security Agreement (or
whose definitions are incorporated by reference in Sections 1(a) and 1(b) of the
Guarantee and Security Agreement) and not otherwise defined herein have, as used
herein, the respective meanings provided for therein;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
[1. Guarantee. The Guarantor unconditionally guarantees the full and
punctual payment of each Canadian CA Secured Obligation when due (whether at
stated maturity, upon acceleration or otherwise). The Guarantor acknowledges
that, by signing this Guarantee and Security Agreement Supplement and delivering
it to the Collateral Agent, the Guarantor becomes a ["Guarantor" and/or "Lien
Grantor"] for all purposes of the Guarantee and Security Agreement and that its
obligations under the foregoing Guarantee are subject to all the provisions of
the Guarantee and Security Agreement (including those set forth in Section 2
thereof) applicable to the obligations of a Guarantor thereunder.]
2. Grant of Security Interests.
(a) In order to secure its [Canadian Secured Guarantor Obligations],
the Lien Grantor grants to the Collateral Agent for the benefit of the Secured
Parties a continuing security interest in all the following property of the Lien
Grantor, whether now owned or existing or hereafter acquired or arising and
regardless of where located, but subject to the exclusions in Section 2(b) (the
"New Collateral"): (i) all Accounts, (ii) all Chattel Paper, (iii) all deeds,
documents, writings, papers, books of account and other books relating to or
being records of
Exhibit B-1
debts, Chattel Paper or Documents of Title or by which such are or may
hereafter be secured, evidenced, acknowledged or made payable, (iv) all
Documents of Title (whether negotiable or not), (v) all Equipment, (vi) all
Goods (including all parts, accessories, attachments, special tools, additions
and accessions thereto), (vii) all Instruments, (viii) all Inventory, (ix) all
Intangibles, (x) all Securities directly owned by the Lien Grantor and issued by
a Material Canadian Subsidiary, (xi) the Collateral Account, all financial
assets credited to the Collateral Account from time to time, all cash deposited
therein from time to time and the Liquid Investments made pursuant to Section
8(d) of the Guarantee and Security Agreement, (xii) all books and records
(including, without limitation, customer lists, credit files, computer programs,
printouts and other computer materials and records) of such Lien Grantor
pertaining to any of the New Collateral and (xiii) all Proceeds of the New
Collateral described in Clauses 2(a)(i) through 2(a)(xii) hereof.
(b) The New Collateral shall not include:
(i) rights of the Lien Grantor in respect of any property or
asset which is prohibited from being pledged to the Collateral Agent as
part of the New Collateral by any Permitted Encumbrances;
(ii) Program Receivables and (A) security interests or liens
and property subject thereto purporting to secure payment of such
Program Receivables, (B) leases, guaranties, insurance and other
arrangements supporting payment of such Program Receivables, (C) rights
to payment and collections in respect of such Program Receivables, (D)
books, records and similar information relating to such Program
Receivables or the obligors thereon, (E) with respect to any such
Program Receivables, the transferee's interest in goods (including,
without limitation, Equipment or Inventory) the sale of which gave rise
to such Program Receivables and (F) if such Program Receivables arise
from a lease financing or installment sale transaction, the Equipment
or Inventory that is the subject of the underlying transaction and is
transferred to a Receivables SPE;
(iii) Transferred Intellectual Property;
(iv) Federal and Provincial Government Receivables of the
Lien Grantor;
(v) Third Party Vendor Financing Assets of the Lien Grantor;
and
(vi) the last day of the term of any lease or any extension
or renewal thereof, oral or written, or agreement therefor, now held or
hereafter acquired by any Lien Grantor but upon the enforcement of the
security interest hereunder, the applicable Lien Grantor shall stand
possessed of such last day in trust to assign the same to any person
acquiring such term.
(vii) Equity Interests in any Person that is not a Material
Canadian Subsidiary or which are not directly owned by such Lien
Grantor.
Exhibit B-2
(c) With respect to each right to payment or performance included in
the New Collateral from time to time, the Security Interest granted therein
includes, subject to Permitted Encumbrances, a continuing security interest in
(i) any supporting obligation that supports such payment or performance and (ii)
any Lien that (x) secures such right to payment or performance or (y) secures
any such supporting obligation.
(d) The foregoing Security Interests are granted as security only and
shall not subject the Collateral Agent or any other Secured Party to, or
transfer or in any way affect or modify, any obligation or liability of the Lien
Grantor with respect to any of the New Collateral or any transaction in
connection therewith.
(e) The Guarantor shall be a Secured Guarantor, and the Guarantor's
grant of a Security Interest in its New Collateral hereunder shall become
effective, on the date first above written, unless such Guarantor is either (i)
a Restricted Guarantor or (ii) an ESOP Restricted Guarantor on such date, in
which case the Guarantor's grant of a Security Interest in its New Collateral
hereunder shall not become effective until, and such Guarantor shall not become
a Secured Guarantor hereunder until, the first day after the end of the first
Fiscal Year after the date first above written during which such Guarantor
ceases to be either a Restricted Guarantor or an ESOP Restricted Guarantor.
(f) [Liens on the New Collateral of the Lien Grantor granted pursuant
to this Guarantee and Security Agreement Supplement shall lapse and such Lien
Grantor shall cease to be a Secured Guarantor starting on the day which the Lien
Grantor becomes a Restricted Guarantor, and such Liens on such New Collateral
shall revive starting the first day after the end of the next Fiscal Year after
the Canadian Effective Date during which the Lien Grantor ceases to be a Secured
Guarantor.]/1/
3. Delivery of Collateral. [Concurrently with delivering this Guarantee
and Security Agreement Supplement to the Collateral Agent] [As soon as the
Guarantor becomes a Secured Guarantor], the Guarantor [is] [will be] complying
with the provisions of either Section 7 or Section 9(a) (whichever is
applicable) of the Guarantee and Security Agreement with respect to Pledged
Securities, in each case if and to the extent included in the New Collateral at
such time.
4. Party to Guarantee and Security Agreement. Upon delivering this
Guarantee and Security Agreement Supplement to the Collateral Agent, the
Guarantor [and Lien Grantor] will become a party to the Guarantee and Security
Agreement and will thereafter have all the rights and obligations of a
"Guarantor" [and "Lien Grantor"] thereunder and be bound by all the provisions
thereof as fully as if the Guarantor [and Lien Grantor] were one of the original
parties thereto.
5. Representations and Warranties./2/ (a) Each of the representations
and warranties set forth in Sections 3, 5, 6, 7, 8 and 9 of the Security
Agreement is true as applicable as applied to
_______________________
/1/ Include this paragraph if the Guarantor is a Lien Grantor.
/2/ Modify as needed if the Lien Grantor is not a corporation.
Exhibit B-3
the Guarantor and [Lien Grantor] and the New Collateral. For purposes of the
foregoing sentence, references in said Sections (and elsewhere in the Security
Agreement) to a "Lien Grantor" shall be deemed to refer to the Lien Grantor,
references to a "Guarantor" shall be deemed to refer to the Guarantor,
references to Schedules to the Security Agreement shall be deemed to refer to
the corresponding Schedules to this Guarantee and Security Agreement Supplement,
references to "Collateral" shall be deemed to refer to the New Collateral, and
references to the "Canadian Effective Date" shall be deemed to refer to the date
on which the Guarantor [and Lien Grantor] signs and delivers this Guarantee and
Security Agreement Supplement.
(b) Schedule 1 hereto sets forth (i) the name and jurisdiction of
organization of, and the ownership interest (including percentage owned and
number of shares or units) of the Lien Grantor in the Securities issued by each
of the Lien Grantor's direct Subsidiaries as of the date hereof which are
required to be included in the New Collateral pledged pursuant to Section 5.13
of the Credit Agreement and the Post-Closing Collateral and Guarantee
Requirement and this Guarantee and Security Agreement Supplement. The Lien
Grantor holds all such Securities directly (i.e., not through a subsidiary, a
securities intermediary or any other Person).
6. Governing Law. This Guarantee and Security Agreement Supplement shall
be construed in accordance with and governed by the laws of the Province of
Ontario and the laws of Canada applicable therein.
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee and
Security Agreement Supplement to be duly executed by their respective authorized
officers as of the day and year first above written.
[NAME OF LIEN GRANTOR and/or GUARANTOR]
By: ___________________________
Name:
Title:
BANK ▇▇▇, ▇▇, ▇▇▇▇▇▇ Branch, as
` Collateral Agent
By: ___________________________
Name:
Title:
Exhibit B-4
Schedule 1
to Guarantee and Security Agreement
Supplement
PLEDGED SECURITIES
Jurisdiction
of Percentage Number of
Issuer Organization Owned Shares or Units
------ ------------ ----- ---------------
Schedule 1-1
to Exhibit B
EXHIBIT C
to Guarantee and
Security Agreement
FORM OF DEED OF HYPOTHEC
Exhibit C-1
