Exhibit 10.4
AMERICAN ECO CORPORATION SECURITY AGREEMENT
This Agreement is made as of May 7, 1999, between
AMERICAN ECO CORPORATION, an Ontario corporation ("GRANTOR")
and
GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation, on its own behalf and as agent (together wit
its successors and assigns, "AGENT") for the financial
institutions and other entities that are from time to time
signatories, as lenders ("LENDERS") to the Credit Agreement
(as hereinafter defined)
RECITALS
A. Pursuant to that certain Credit Agreement dated as of the date hereof among
the Persons named therein as Borrowers, Grantor and the other Persons named
therein as Credit Parties, Agent and Lenders (as from time to time amended,
restated, supplemented or otherwise modified, the "CREDIT AGREEMENT"), Lenders
have agreed to make Loans to Borrowers and to incur Letter of Credit Obligations
on behalf of Borrowers.
B. Pursuant to a Guarantee dated as of the date hereof, given by Grantor in
favour of Agent and Lenders (as from time to time amended, restated,
supplemented or otherwise modified, the "GUARANTEE"), Grantor has guaranteed the
payment and performance of the obligations of Borrowers, the other Credit
Parties, Nucon Ltd. and Canadian Energy Services Limited to Agent and Lenders
under the Credit Agreement and the other Loan Documents.
C. In connection with the making of the Loans and the incurrence of Letter of
Credit Obligations under the Credit Agreement and as a condition precedent
thereto, Lenders require that Grantor shall have executed and delivered this
Agreement as security for its obligations under the Guarantee, the Credit
Agreement, this Agreement and any of the other Loan Documents.
FOR VALUE RECEIVED, the parties agree as follows:
SECTION 1 -- INTERPRETATION
1.1 TERMS DEFINED IN PPSA. The terms "Chattel Paper", "Document of Title",
"Instrument", "Intangible", "Security", "Proceeds", "inventory", "Accession",
"Money", "Account", "financing statement" and "financing change statement"
whenever used herein shall be interpreted in accordance with their respective
meanings when used in the Personal Property Security Act (Ontario), as amended
from time to time, which Act, including amendments thereto and any Act
substituted therefor and amendments thereto is herein referred to as the "PPSA".
Any reference herein to "Collateral" shall, unless the context otherwise
requires, be deemed a reference to "Collateral or any part thereof". The term
"Proceeds" whenever used herein and interpreted as above shall, by way of
example, include trade-ins, equipment, cash, bank accounts, notes, chattel
paper, goods, contracts rights, accounts and any other personal property or
obligation received when such Collateral or Proceeds are sold, exchanged,
collected or otherwise disposed of.
1.2 OTHER DEFINED TERMS. Unless otherwise defined, capitalized terms used herein
have the following meanings:
(1) AGREEMENT means this agreement and all schedules attached hereto as the same
may be amended, restated, supplemented and otherwise modified from time to time.
All uses of the words "hereto", "herein", "hereof", "hereby" and "hereunder" and
similar expressions refer to this security agreement and not to any particular
section or portion of it.
(2) CREDIT AGREEMENT has the meaning given to it in paragraph A of the Recitals.
(3) COLLATERAL has the meaning given to it in Section 2.1.
(4) CONTRACT has the meaning give to it in the Credit Agreement except that it
shall exclude rights evidenced by Chattel Paper, Documents of Title and
Instruments.
(5) GUARANTEE has the meaning given to it in paragraph B of the Recitals.
(6) INVENTORY has the meaning given to it in Section 2.1.
(7) OBLIGATIONS means any and all indebtedness, liabilities and obligations, now
or hereafter existing, direct or indirect, absolute or contingent, joint or
several, as principal or surety, of Grantor to Agent and Lenders or any of them
arising under, by virtue of or otherwise in connection with the Guarantee, this
Agreement, the Credit Agreement or any other Loan Document.
(8) RECEIVER has the meaning given to it in Section 8.1.
(9) SECURITY INTEREST has the meaning given to it in Section 2.1.
1.3 TERMS DEFINED IN CREDIT AGREEMENT. Other capitalized terms used herein and
not otherwise defined have the meanings given to them in the Credit Agreement or
in Annex "A" thereto.
SECTION 2 -- SECURITY INTEREST
2.1 GRANT OF SECURITY INTEREST. As continuing collateral security for the due
payment and performance by Grantor of all of the Obligations, Grantor hereby
grants to Agent for itself and for the benefit of Lenders a security interest
(the "SECURITY INTEREST") in all of its right, title and interest in, to and
under the following property, whether now owned by or owing to, or hereafter
acquired by or arising in favour of the Grantor (including under any trade
names, styles or derivations thereof), and whether owned or consigned by or to,
or leased from or to, the Grantor, and regardless of where located (all of which
being hereinafter collectively referred to as the "COLLATERAL"):
(1) all Accounts;
(2) all inventory of whatever kind and wherever situate, including,
for greater certainty, all raw materials, work in process or
materials used or consumed or to be used or consumed in the
processing, production, packaging, promotion, delivery or
shipping of the same, including other supplies (collectively,
"INVENTORY");
(3) all Intangibles and General Intangibles;
(4) all present and future Contracts and contract rights, to the
extent relating to Accounts and Inventory including, without
limitation, contract rights which evidence or support Accounts or
Inventory, choses in action or causes of actions or claims
arising out of Accounts or Inventory, agreements or arrangements
with sales agents, distributors or the like and/or consignees,
deposit accounts, letters of credit, Instruments (relating to
Accounts or Inventory), guaranty or warranty claims with respect
to Accounts or Inventory;
(5) all present and future Instruments and other forms of payment
relating to or evidencing the payment of money arising out of the
sale, lease or other disposition of Inventory or rendition of
services in the ordinary course of business, Chattel Paper and
Documents of Title; all Money, Securities and Investment Property
to the extent relating to any of the foregoing and the proceeds
thereof, now or hereafter held or received or held by, or in
transit to, Agent, any Lender or any of their respective
affiliates or participants, whether for safekeeping, pledge,
custody, transmission, collection or otherwise; deposits (general
or special) and balances to the extent relating to any of the
foregoing; all right, title and interest in, to and in
respect of all goods relating to, or which by sale have
resulted in any of the foregoing, including, without
limitation, all goods described in invoices, Documents of
Title, Contracts or Instruments with respect to, or otherwise
representing or evidencing, any of same, including, without
limitation, all returned, reclaimed or repossessed goods; all
right, title and interest, and all enforcement and other
rights, remedies, and security and liens, in, to and in
respect of any of the foregoing, including, without
limitation, rights of stoppage in transit, replevin,
repossession, sequestration and reclamation and other rights
and remedies of an unpaid vendor, lienor or secured party,
guaranties, or other Contracts of suretyship with respect
thereto, or deposits or other security for the obligation of
any Account Debtor, credit and other insurance to the extent
relating to the foregoing;
(6) Records;
(7) all deposit, disbursement, operating and other bank accounts
and all deposits therein;
(8) all Money, cash or cash equivalents of Grantor to the extent
related to any of the foregoing; and
(9) to the extent not otherwise included, all Proceeds and
products of the foregoing and all accessions to, substitutions
and replacements for, and rents and profits of, each of the
foregoing.
2.2 EXCEPTION TO LAST DAY. The Security Interest granted hereby shall not extend
or apply to, and Collateral shall not include, the last day of the term of any
lease or agreement therefor but upon the enforcement of the Security Interest
Grantor shall stand possessed of such last day in trust to assign the same to
any person acquiring such term.
2.3 LIABILITY FOR DEFICIENCY. If the Collateral is realized upon and the
Security Interest in the Collateral is not sufficient to satisfy all
Obligations, Grantor acknowledges and agrees that, subject to the provisions of
the PPSA, Grantor shall continue to be liable for any Obligations remaining
outstanding and Agent shall be entitled to pursue full payment thereof.
SECTION 3 -- AGENTS AND LENDERS' RIGHTS; LIMITATIONS ON AGENT'S
AND LENDERS' OBLIGATIONS
3.1 CONTINUED LIABILITY OF GRANTOR UNDER LICENSES, ETC. It is expressly agreed
by Grantor that, anything herein to the contrary notwithstanding, Grantor shall
remain liable under each of its Contracts and each of its Licenses to observe
and perform all the conditions and obligations to be observed and performed by
it thereunder. Neither Agent nor any Lender shall have any obligation or
liability under any Contract or License by reason of or arising out of this
Agreement or the granting herein of a Security Interest therein or the receipt
by Agent or any Lender of any payment relating to any Contract or License
pursuant hereto. Neither Agent nor any Lender shall be required or obligated in
any manner to perform or fulfill any of the obligations of Grantor under or
pursuant to any Contract or License, or to make any payment, or to make any
inquiry as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any Contract or License, or to
present or file any claims, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.
3.2 NOTICE TO ACCOUNT DEBTORS. Agent may at any time without prior notice to
Grantor, notify any Account Debtors obligated under any Account of Grantor,
parties to any Contracts of Grantor and obligors in respect of Instruments and
Chattel Paper, that such Accounts and the right, title and interest of Grantor
in and under such Contracts, Instruments and Chattel Paper have been assigned to
Agent, and, upon the occurrence of an Event of Default, may notify any such
Account Debtors, such parties to any Contracts of Grantor and such obligors that
payments shall be made directly to Agent. Upon the request of Agent, Grantor
shall so notify such Account Debtors, parties to Contracts and obligors in
respect of Instruments and Chattel Paper. Grantor acknowledges that any payments
on or other proceeds of Collateral received by Grantor from such Account
Debtors, whether before or after notification of this Security Interest to such
Account Debtors and whether before or after the occurrence of a Default or an
Event of Default, shall be received and held by Grantor in trust for Agent and
shall be turned over to Agent upon request.
3.3 VERIFICATION OF ACCOUNTS. Agent may at any time in Agent's own name or in
the name of Grantor communicate with Account Debtors, parties to Contracts,
obligors in respect of Instruments and obligors in respect of Chattel Paper to
verify with such Persons, to Agent's satisfaction, the existence, amount and
terms of any such Accounts, Contracts, Instruments or Chattel Paper. If an Event
of Default shall have occurred and be continuing, Grantor, at its own expense,
shall cause the independent chartered accountants then engaged by such Grantor
to prepare and deliver to Agent and each Lender at any time and from time to
time promptly upon Agent's request the following reports with respect to
Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all Accounts;
(iii) trial balances; and (iv) a test verification of such Accounts as Agent may
request. Grantor, at its own expense, shall deliver to Agent the results of each
physical verification, if any, which Grantor may in its discretion have made, or
caused any other Person to have made on its behalf, of all or any portion of its
Inventory.
SECTION 4 -- REPRESENTATIONS AND WARRANTIES OF GRANTOR
4.1 REPRESENTATIONS AND WARRANTIES. Grantor represents and warrants and so long
as this Agreement remains in effect shall be deemed to continuously represent
and warrant to Agent and Lenders that:
(1) Grantor is a corporation duly incorporated, validly existing
and in good standing under the laws of Ontario and has all
requisite power and authority to execute, deliver and perform
this Agreement;
(2) Grantor's correct legal name is "American Eco Corporation";
(3) the execution, delivery and performance by Grantor of this
Agreement is within its corporate power, has been duly
authorized by all necessary corporate action and does not
contravene any law or governmental regulation or any
contractual restriction binding on or affecting Grantor or any
of its property;
(4) no authorization or approval or other action by, and no notice
to or filing with, any governmental body is required for the
due execution, delivery and performance by Grantor of this
Agreement;
(5) this Agreement is a legal, valid and binding obligation of
Grantor, enforceable against Grantor in accordance with its
terms subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and (ii) the fact
that specific performance and injunctive relief may be given
at the discretion of the court;
(6) the Collateral is genuine and owned by Grantor free of all
Liens, save for Permitted Encumbrances;
(7) each Contract, Document of Title, Account, Chattel Paper and
Instrument constituting Collateral is enforceable in
accordance with its terms against the Account Debtor to pay
the same and the amount represented by Grantor to Agent from
time to time as owing by each Account Debtor or by all Account
Debtors will be the correct amount actually and
unconditionally owing by such Account Debtor or Account
Debtors, except for normal cash discounts where applicable,
and no Account Debtor will have any defence, set off, claim or
counterclaim against Grantor which can be asserted against
Agent, or Lenders whether in any proceeding to enforce
Collateral or otherwise;
(8) Grantor's chief executive office, principal place of business,
domicile (within the meaning of the Quebec Civil Code),
corporate offices, all warehouses and premises where
Collateral is stored or located, and the locations of all of
its books and records concerning the Collateral and all
Account Debtors are set forth on Schedule 4.1(8) hereto;
(9) the execution, delivery and performance of the obligations
under this Agreement and the creation of any security interest
in or assignment hereunder of Grantor's
rights in the Collateral to Agent will not result in a breach
of any agreement to which Grantor is a party or by which
Grantor or its property is bound;
(10) with respect to the Accounts of Grantor, (i) they represent
bona fide sales of Inventory or rendering of services to
Account Debtors in the ordinary course of Grantor's business
and are not evidenced by a judgment, Instrument or Chattel
Paper; (ii) the amounts shown on all invoices, statements and
Collateral Reports which may be delivered to Agent with
respect thereto are actually and absolutely owing to Grantor
as indicated thereon and are not in any way contingent; (iii)
no payments have been or shall be made thereon except payments
immediately delivered to the applicable Blocked Accounts or
Agent as required pursuant to the terms of Annex C to the
Credit Agreement; (iv) except as specifically disclosed in a
current Borrowing Base Certificate delivered to Agent, there
are no set-offs, claims or disputes existing or asserted with
respect thereto and Grantor has made no agreement with any
Account Debtor for any extension of time for the payment
thereof, any compromise or settlement for less than the full
amount thereof, any release of any Account Debtor from
liability therefor, or any deduction therefrom except a
discount or allowance allowed by Grantor in the ordinary
course of its business for prompt payment and disclosed to
Agent; (v) to Grantor's knowledge, except as specifically
disclosed in a Collateral Report delivered to Agent, there are
no facts, events or occurrences which in any way impair the
validity or enforceability thereof or could reasonably be
expected to reduce the amount payable thereunder as shown on
Grantor's books and records and any invoices, statements and
Collateral Reports delivered to Agent and Lenders with respect
thereto; (vi) to Grantor's knowledge, all Account Debtors have
the capacity to contract; (vii) except as specifically
disclosed in a Collateral Report delivered to Agent, Grantor
has no notice of proceedings or actions which are threatened
or pending against any Account Debtor which might result in
any adverse change in such Account Debtor's financial
condition; and (viii) except as specifically disclosed in a
Collateral Report delivered to Agent, Grantor has no knowledge
that any Account Debtor is unable generally to pay its
accounts as they become due;
(11) all Inventory purchased by Grantor is purchased free and clear
of any and all Liens and other adverse claims other than
unpaid suppliers' rights to repossess goods under Section 81.1
of the Bankruptcy and Insolvency Act (Canada) and such
suppliers' substantially similar rights under the Civil Code
of Quebec;
(12) with respect to any Inventory scheduled or listed on any
statement, Collateral Report or other report delivered to
Agent pursuant to the terms of this Security Agreement or the
Credit Agreement or any Loan Document, (i) such Inventory is
located at one of Grantor's locations set forth on Schedule
4.1(8) hereto, (ii) no Inventory is now, or shall at any time
or times hereafter be stored at any other location without
Agent's prior consent, and if Agent gives such consent,
Grantor will concurrently therewith obtain, to the extent
required by the Credit Agreement, bailee, landlord
and mortgagee agreements, (iii) the applicable Grantor has
good, indefeasible and marketable title to such property and,
subject to Section 4.1(11) hereof, such property is not
subject to any Lien or security interest or document
whatsoever except for the Security Interest granted to Agent,
for the benefit of Agent and Lenders, and except for Permitted
Encumbrances, (iv) except as specifically disclosed in a
Collateral Report delivered to Agent, such Inventory is
Eligible Inventory of good and merchantable quality, free from
any defects, (v) such property is not subject to any
licensing, patent, royalty, trademark, trade name or copyright
agreements with any third parties which would require any
consent of any third party upon sale or disposition of that
Inventory or the payment of any monies to any third party as a
precondition of such sale or other disposition, and (vi) the
completion of manufacture, sale or other disposition of such
property by Agent following default, shall not require the
consent of any Person and shall not constitute a breach or
default under any contract or agreement to which Grantor is a
party or to which such property is subject; and
(13) Grantor has no interest in, or title to, any Patent, Trademark
or Copyright except as set forth in Schedule 4.1(13)(A)
hereto. This Security Agreement is effective to create a valid
and continuing Lien on and, upon filing of this Agreement and
of the financing statements listed on Schedule 4.1(13)(B)
hereto, with the Canadian Intellectual Property Office,
perfected Liens in favour of Agent on Grantor's Patents,
Trademarks and Copyrights and such perfected Liens are
enforceable as such as against any and all creditors of and
purchasers from Grantor. Upon completion of the filings
referred to in the immediately preceding sentence, all action
necessary or desirable to protect and perfect Agent's Lien on
Grantor's Patents, Trademarks or Copyrights shall have been
duly taken.
SECTION 5 -- COVENANTS OF THE DEBTOR
5.1 COVENANTS. So long as this Agreement remains in effect, Grantor covenants
and agrees with Agent and Lenders as follows:
(1) DEFENCE OF COLLATERAL. Grantor shall defend the Collateral against the
claims and demands of all other parties claiming the same or an interest
therein; shall take all reasonable action to keep the Collateral free from all
Liens, except for Permitted Encumbrances or those Liens hereafter approved in
writing by Agent, prior to their creation or assumption, and shall not sell,
exchange, transfer, assign, lease, license or otherwise dispose of Collateral or
any interest therein without the prior written consent of Agent; provided always
that, until default Grantor may, in the ordinary course of Grantor's business,
sell or lease Inventory and, subject to the
Credit Agreement and the Canadian Blocked Account Agreement, use Money in the
Disbursement Account.
(2) NOTICE TO AGENT. Grantor shall notify Agent promptly of:
(a) any change in the information contained herein or in the
Schedules hereto relating to Grantor, Grantor's business or
Collateral,
(b) the details of any significant acquisition of Collateral,
(c) the details of any claims or litigation affecting Grantor or
Collateral,
(d) any loss or damage to Collateral, and
(e) any default by any Account Debtor in payment or other performance
of his/her/its obligations with respect to Collateral.
(3) MAINTENANCE OF COLLATERAL. Grantor shall keep Collateral in good order,
condition and repair and not use Collateral in violation of the provisions of
this Agreement or any other agreement relating to Collateral or any policy
insuring Collateral or any applicable statute, law, by-law, rule, regulation or
ordinance; shall keep all agreements, registrations and applications relating to
Intellectual Property constituting Collateral and such Intellectual Property
used by Grantor in its business in good standing and renew all agreements and
registrations as may be necessary or desirable to protect such Intellectual
Property, unless otherwise agreed in writing by Agent; and shall apply to
register all existing and future Intellectual Property constituting Collateral
whenever it is commercially reasonable to do so.
(4) FURTHER ASSURANCES; PLEDGE OF INSTRUMENTS. At any time and from time to
time, upon the written request of Agent and at the sole expense of Grantor,
Grantor shall promptly and duly execute and deliver any all such further
instruments and documents (including deeds of hypothec with respect to
Collateral located in the Province of Quebec) and take such further actions as
Agent may reasonably deem desirable to obtain the full benefits of this
Agreement and the other Loan Documents to which Grantor is a party and of the
rights and powers herein and therein granted, including (i) filing any financing
or continuation statements (or the applicable equivalent) under applicable law
with respect to the Liens granted hereunder or under any other Loan Document to
which Grantor is a party, and (ii) transferring Collateral to Agent's possession
(for the benefit of Agent and Lenders) if such Collateral consists of Documents
of Title, Securities, Investment Property, Chattel Paper, Instruments or if a
Lien on such Collateral can be perfected only by possession, or if requested by
Agent, Grantor also hereby authorizes Agent, for the benefit of Agent and
Lenders, to file any such financing or continuation statements (or the
applicable equivalent) without the signature of Grantor to the extent permitted
by applicable law. If any amount payable under or in connection with any of the
Collateral is or shall become evidenced by any Instrument, such Instrument,
other than cheques and notes received in the ordinary course of business, shall
be duly endorsed in a manner satisfactory to Agent immediately upon Grantor's
receipt thereof.
(5) TAXES. Grantor shall pay all taxes, rates, levies, assessments and other
charges of every nature which may be lawfully levied, assessed or imposed
against or in respect of Grantor or Collateral as and when the same become due
and payable.
(6) CONDUCT OF BUSINESS. Grantor shall carry on and conduct the business of
Grantor in a proper and efficient manner and so as to protect and preserve
Collateral and keep, in accordance with Canadian generally accepted accounting
principles, consistently applied, proper books of account for Grantor's business
as well as accurate and complete records concerning Collateral, and ▇▇▇▇ any and
all such records and Collateral at Agent's request so as to indicate Agent's
Security Interest.
(7) ADDITIONAL DOCUMENTS. Grantor shall deliver to Agent from time to time
promptly upon request:
(a) any Documents of Title, Instruments, Securities, Investment Property
and Chattel Paper constituting, representing or relating to
Collateral,
(b) all Records or other books of account, records, ledgers, reports,
correspondence, schedules, documents, statements, lists and other
writings relating to Collateral for the purpose of inspecting,
auditing or copying the same,
(c) all financial statements prepared by or for Grantor regarding
Grantor's business, and
(d) such information concerning Collateral, Grantor and Grantor's business
and affairs as Agent may reasonably request.
(8) INDEMNIFICATION. In any suit, proceeding or action brought by Agent or any
Lender relating to any Account, Chattel Paper, Contract, Document of Title,
Intangible or Instrument for any sum owing thereunder or to enforce any
provision of any Account, Chattel Paper, Contract, Document of Title, Intangible
or Instrument, Grantor will save, indemnify and keep Agent and Lenders harmless
from and against all expense (including reasonable legal fees and expenses),
loss or damage suffered by reason of any defence, set-off, counterclaim,
recoupment, or reduction of liability whatsoever of the obligor thereunder,
arising out of a breach by Grantor of any obligation thereunder or arising out
of any other agreement, indebtedness or liability at any time owing to, or in
favour of, such obligor or its successors from Grantor, except in the case of
Agent or any Lender, to the extent such expense, loss, or damage is attributable
solely to the gross negligence or wilful misconduct of Agent or such Lender as
finally determined by a court of competent jurisdiction. All such obligations of
Grantor shall be and remain enforceable against and only against Grantor and
shall not be enforceable against Agent or any Lender.
(9) CHANGE OF CORPORATE NAME OR LOCATION. Grantor shall not (1) change its
corporate name, or (2) change its chief executive office, principal place of
business, domicile (within the meaning of Quebec Civil Code), corporate offices
or warehouses or locations at which Collateral is held or stored, or the
location of its records concerning the Collateral, in any case without at least
thirty (30) days' prior written notice to Agent and after Agent's written
acknowledgment that any action requested by Agent in connection therewith,
including to continue the perfection of any Liens in favour of Agent, on behalf
of Agent and Lenders, or in favour of Agent and Lenders, as appropriate, in any
Collateral, has been completed or taken and provided that any such new location
shall be in Canada or the United States of America.
(10) INTELLECTUAL PROPERTY.
(a) Grantor shall notify Agent immediately if they know or have reason to
know that any application or registration relating to any of Grantor's
Patents, Trademarks or Copyrights (now or hereafter existing) may
become abandoned or dedicated, or of any adverse determination or
development (including the institution of, or any such determination
or development in, any proceeding in the Canadian Intellectual
Property Office or the United States Patent and Trademark Office or
the United States Copyright Office or any court) regarding Grantor's
ownership of any Patent, Trademark or Copyright, its rights to
register the same, or to keep and maintain the same.
(b) In no event shall Grantor, either itself or through any agent,
employee, licensee or designee, file an application for the
registration of any Patent, Trademark or Copyright with the Canadian
Intellectual Property Office or the United States Patent and Trademark
Office or the United States Copyright Office or any similar office or
agency without giving Agent prior written notice thereof, and, upon
request of Agent, Grantor shall execute and deliver any and all
intellectual property security agreements, as Agent may request to
evidence Agent's Lien on such Patent, Trademark or Copyright, and the
General Intangibles and Intangibles of Grantor relating thereto or
represented thereby.
(c) Grantor shall take all actions necessary or requested by Agent to
maintain and pursue each application, to obtain the relevant
registration and to maintain the registration of each of Grantor's
Patents, Trademarks and Copyrights (now or hereafter existing),
including the filing of applications for renewal, affidavits or
declarations of use, affidavits of non-contestability and opposition
and interference and cancellation proceedings, unless the Grantor
shall determine that such Patent, Trademark or Copyright is not
material to the conduct of its business.
(d) In the event that any of Grantor's Patent, Trademark or Copyright
Collateral is infringed upon, or misappropriated or diluted by a third
party, Grantor shall notify Agent promptly after Grantor learns
thereof. Grantor shall, unless Grantor shall
reasonably determine that such Patent, Trademark or Copyright
Collateral is in no way material to the conduct of its
business or operations, promptly ▇▇▇ for infringement,
misappropriation or dilution and to recover any and all
damages for such infringement, misappropriation or dilution,
and shall take such other actions as Agent shall deem
appropriate under the circumstances to protect such Patent,
Trademark or Copyright Collateral.
SECTION 6 -- USE AND VERIFICATION OF COLLATERAL
6.1 USE AND VERIFICATION OF COLLATERAL. Subject to compliance with Grantor's
covenants contained herein and Section 7.1 hereof, Grantor may, until the
occurrence of a Default or an Event of Default, possess, operate, collect, use
and enjoy and deal with Collateral in the ordinary course of Grantor's business
in any manner not inconsistent with the provisions hereof and the other Loan
Documents; provided always that Agent shall have the right at any time and from
time to time to verify the existence and state of the Collateral in any manner
Agent may consider appropriate and Grantor agrees to furnish all assistance and
information and to perform all such acts as Agent may reasonably request in
connection therewith and for such purpose to grant to Agent or its agents access
to all places where Collateral may be located and to all premises occupied by
Grantor, as contemplated by the Credit Agreement.
SECTION 7 -- SECURITIES
7.1 SECURITIES. If Collateral at any time includes Securities, Grantor
authorizes Agent to transfer the same or any part thereof into its own name or
that of its nominee(s) so that Agent or its nominee(s) may appear of record as
the sole owner thereof. Until the occurrence of a Default or an Event of
Default, Agent shall deliver promptly to Grantor all notices or other
communications received by it or its nominee(s) as such registered owner and,
upon demand and receipt of payment of any necessary expenses thereof, shall
issue to Grantor or its order a proxy to vote and take all action with respect
to such Securities. After the occurrence of a Default or an Event of Default,
Grantor waives all rights to receive any notices or communications received by
Agent or its nominee(s) as such registered owner and agrees that no proxy issued
by Agent to Grantor or its order as aforesaid shall thereafter be effective.
SECTION 8 -- REMEDIES
8.1 APPOINTMENT OF RECEIVER. Upon the occurrence of and during the continuance
of any Default or Event of Default, Agent may appoint or reappoint by instrument
in writing, any Person or Persons, whether an officer or officers or an employee
or employees of 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 Collateral (including any interest, income or profits therefrom) and may
remove any Receiver so appointed and appoint another in his/her/its stead. Any
such Receiver shall, so far as concerns responsibility for his/her/its acts, be
deemed the agent of Grantor and not Agent or any of Lenders, and neither Agent
nor any of Lenders shall be in any way responsible for any misconduct,
negligence or non-feasance on the part of any such Receiver, his/her/its
servants, agents or employees. Subject to the provisions of the instrument
appointing him/her/it, any such Receiver shall have power to take possession of
Collateral, to preserve Collateral or its value, to carry on or concur in
carrying on all or any part of the business of Grantor and to sell, lease,
license or otherwise dispose of or concur in selling, leasing, licensing or
otherwise disposing of Collateral. To facilitate the foregoing powers, any
such Receiver may, to the exclusion of all others, including Grantor, enter
upon, use and occupy all premises owned or occupied by Grantor wherein
Collateral may be situate, maintain Collateral upon such premises, borrow money
on a secured or unsecured basis and use Collateral directly in carrying on
Grantor's business or as security for loans or advances to enable the Receiver
to carry on Grantor's business or otherwise, as such Receiver shall, in its
discretion, determine. Except as may be otherwise directed by Agent, all Money
received from time to time by such Receiver in carrying out his/her/its
appointment shall be received in trust for and paid over to Agent. Every such
Receiver may, in the discretion of Agent, be vested with all or any of the
rights and powers of Agent.
8.2 EXERCISE OF RIGHTS BY AGENT. Upon and during the continuance of a Default or
Event of Default, Agent may, either directly or through its agents or nominees,
exercise any or all of the powers and rights given to a Receiver by virtue of
Section 8.1.
8.3 TAKING POSSESSION OF COLLATERAL. Agent may take possession of, collect,
demand, ▇▇▇ on, enforce, recover and receive Collateral and give valid and
binding receipts and discharges therefor and in respect thereof and, upon the
occurrence of a Default or an Event of Default, Agent may sell, license, lease
or otherwise dispose of Collateral in such manner, at such time or times and
place or places, for such consideration and upon such terms and conditions as to
Agent may seem reasonable.
8.4 RIGHTS AND REMEDIES UNDER PPSA. In addition to those rights granted herein
and in any other agreement now or hereafter in effect between Grantor and Agent
and any Lender and in addition to any other rights Agent or Lenders may have at
law or in equity, Agent shall have, both before and after the occurrence of a
Default or an Event of Default, all rights and remedies of a secured party under
the PPSA. However, Agent shall not be liable or accountable for any failure to
exercise its remedies, take possession of, collect, enforce, realize, sell,
lease, license or otherwise dispose of Collateral or to institute any
proceedings for such purposes. Furthermore, Agent shall have no obligation to
take any steps to preserve rights against prior parties to any Instrument or
Chattel Paper whether Collateral or proceeds and whether or not in Agent's
possession and shall not be liable or accountable for failure to do so.
8.5 COOPERATION OF GRANTOR WITH RESPECT TO TAKING POSSESSION. Grantor
acknowledges that Agent or any Receiver appointed by it may take possession of
Collateral wherever it may be located and by any method permitted by law and
Grantor agrees upon request from Agent or any such Receiver to assemble and
deliver possession of Collateral at such place or places as directed.
8.6 COSTS. Grantor agrees to be liable for and to pay all costs, charges and
expenses reasonably incurred by Agent, any Lender or any Receiver appointed by
it, whether directly or for services rendered (including reasonable solicitors
and auditors costs and other legal expenses and Receiver remuneration), in
operating Grantor's accounts, in preparing or enforcing this Agreement, taking
and maintaining custody of, preserving, repairing, processing, preparing for
disposition and disposing of Collateral and in enforcing or collecting
indebtedness and all such costs, charges and expenses, together with any amounts
owing as a result of any borrowing by Agent, any Lender or any Receiver
appointed by it, as permitted hereby, shall be a first charge on the proceeds of
realization, collection or disposition of Collateral and shall be secured
hereby.
8.7 NOTICE OF SALE. The Agent will give Grantor such notice, if any, of the
date, time and place of any public sale or of the date after which any private
disposition of Collateral is to be made as may be required by the PPSA.
8.8 GRANT OF LICENCE TO USE INTELLECTUAL PROPERTY COLLATERAL. For the purpose of
enabling Agent to exercise rights and remedies under Section 8 hereof
(including, without limiting the terms of Section 8 hereof, in order to take
possession of, hold, preserve, process, assemble, prepare for sale, market for
sale, sell or otherwise dispose of Collateral) at such time as Agent shall be
lawfully entitled to exercise such rights and remedies, Grantor hereby grants to
Agent, for the benefit of Agent and Lenders, an irrevocable, non-exclusive
licence (exercisable without payment of royalty or other compensation to such
Grantor) to use, license or sublicense any Intellectual Property now owned or
hereafter acquired by Grantor, and wherever the same may be located, and
including in such license access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof.
SECTION 9 -- MISCELLANEOUS
9.1 PERFORMANCE BY AGENT. Upon Grantor's failure to perform any of its duties
hereunder, Agent may, but shall not be obligated to, perform any or all of such
duties, and Grantor shall pay to Agent, forthwith upon written demand therefor,
an amount equal to the expense incurred by Agent in so doing plus interest
thereon from the date such expense is incurred until it is paid at an annual
rate of interest equal to the sum of the Index Rate plus the Applicable Revolver
Index Margin plus 2% per annum, as determined by Agent on the basis of a three
hundred and sixty (360) day year, in each case for the actual number of days
occurring in the period for which such interest is payable. The Index Rate shall
be determined each day based upon the Index Rate as in effect each day. For the
purposes of the Interest Act (Canada), such rate of interest shall be equivalent
to a rate based on a calendar year equal to such rate of interest multiplied by
the actual number of days in the calendar year of calculation and divided by
360.
9.2 EXTENSIONS, ETC. Agent may grant extensions of time and other indulgences,
take and give up security, accept compositions, compound, compromise, settle,
grant releases and discharges and otherwise deal with Grantor, debtors of
Grantor, any other Credit Party, sureties and others and with Collateral and
other security as Agent may see fit without prejudice to the liability of
Grantor or Agent's right to hold and realize the Security Interest. Furthermore,
Agent may demand, collect and ▇▇▇ on Collateral in either Grantor's or Agent's
name, at Agent's option, and may endorse Grantor's name on any and all cheques,
commercial paper, and any other Instruments pertaining to or constituting
Collateral.
9.3 NO WAIVER. No delay or omission by Agent in exercising any right or remedy
hereunder or with respect to any of the Obligations shall operate as a waiver
thereof or of any other right or remedy, and no single or partial exercise
thereof shall preclude any other or further exercise thereof or the exercise of
any other right or remedy. Furthermore, Agent may remedy any default by Grantor
hereunder or with respect to any Obligations in any reasonable manner without
waiving the default remedied and without waiving any other prior or subsequent
default by Grantor. All rights and remedies of Agent granted or recognized
herein are cumulative and may be exercised at any time and from time to time
independently or in combination.
9.4 WAIVER OF PROTEST. Grantor waives protest of any Instrument constituting
Collateral at any time held by Agent on which Grantor is in any way liable and,
subject to Section 9.5 hereof, notice of any other action taken by Agent.
9.5 ASSIGNMENT AND ENUREMENT. This Agreement shall enure to the benefit of and
be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns. In any action brought by an assignee of
this Agreement and the Security Interest or any part thereof to enforce any
rights hereunder, Grantor shall not assert against the assignee any claim or
defence which Grantor now has or hereafter may have against Agent or any Lender.
If more than one Grantor executes this Agreement the obligations of such
Grantors hereunder shall be joint and several.
9.6 AMENDMENT. Save for any schedules which may be added hereto pursuant to the
provisions hereof, no modification, variation or amendment of any provision of
this Agreement shall be made except by a written agreement, executed by the
parties hereto and no waiver of any provision hereof shall be effective unless
in writing.
9.7 NOTICES. Except as otherwise provided herein, each notice, demand, request,
consent, approval, declaration or other communication which shall or may be
given hereunder shall be in writing and shall be deemed to have been validly
served, given or delivered if served, given or delivered in accordance with
Section 11.10 of the Credit Agreement.
9.8 REMEDIES CUMULATIVE. This Agreement and the security afforded hereby is in
addition to and not in substitution for any other security now or hereafter held
by Agent and is intended to be a continuing security agreement and shall remain
in full force and effect until all Obligations and any extensions or renewals
thereof together with interest accruing thereon shall be paid in full.
9.9 HEADINGS. The headings used in this Agreement are for convenience only and
are not to be considered a part of this Agreement and do not in any way limit or
amplify the terms and provisions of this Agreement.
9.10 NUMBER AND GENDER. When the context so requires, the singular number shall
be read as if the plural were expressed and the provisions hereof shall be read
with all grammatical changes necessary dependent upon the person referred to
being a male, female, firm or corporation.
9.11 SEVERABILITY. In the event any provisions of this Agreement, as amended
from time to time, shall be deemed invalid or void, in whole or in part, by any
Court of competent jurisdiction, the remaining terms and provisions of this
Agreement shall remain in full force and effect.
9.12 EXTENSIONS. Nothing herein contained shall in any way obligate Agent to
grant, continue, renew, extend time for payment of or accept anything which
constitutes or would constitute Obligations.
9.13 ATTACHMENT. The Security Interest created hereby is intended to attach when
this Agreement is signed by Grantor and delivered to Agent.
9.14 AMALGAMATION. Grantor acknowledges and agrees that in the event it
amalgamates with any other company or companies it is the intention of the
parties hereto that the term "Grantor" when used herein shall apply to each of
the amalgamating companies and to the amalgamated company, such that the
Security Interest granted hereby:
(1) shall extend to "Collateral" (as that term is herein defined)
owned by each of the amalgamating companies and the
amalgamated company at the time of amalgamation and to any
"Collateral" thereafter owned or acquired by the amalgamated
company, and
(2) shall secure the "Obligations" (as that term is herein
defined) of each of the amalgamating companies and the
amalgamated company to Agent and Lenders at the time of
amalgamation and any "Obligations" of the amalgamated company
to Agent and Lenders thereafter arising. The Security Interest
shall attach to "Collateral" owned by each company
amalgamating with Grantor, and by the amalgamated company, at
the time of the amalgamation, and shall attach to any
"Collateral" thereafter owned or acquired by the amalgamated
company when such becomes owned or is acquired.
9.15 AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT. On the Closing Date, Grantor shall
execute and deliver to Agent a power of attorney (the "POWER OF ATTORNEY")
substantially in the form attached hereto as Exhibit A. The power of attorney
granted pursuant to the Power of Attorney is a power coupled with an interest
and shall be irrevocable until the Termination Date. The powers conferred on
Agent, for the benefit of Agent and Lenders, under the Power of Attorney are
solely to protect Agent's interests (for the benefit of Agent and Lenders) in
the Collateral and shall not impose any duty upon Agent or any Lender to
exercise any such powers. Agent agrees that (a) it shall not exercise any power
of attorney or authority granted under the Power of Attorney unless an Event of
Default has occurred and is continuing, and (b) Agent shall account for any
money received by Agent in respect of any foreclosure on or disposition of
Collateral pursuant to the Power of Attorney provided that none of Agent or
Lenders shall have any duty as to any Collateral, and Agent and Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers. NONE OF AGENT, LENDERS OR THEIR RESPECTIVE AFFILIATES,
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE
TO ANY GRANTOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR
OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL
DAMAGES.
9.16 FURTHER ASSURANCES. Grantor hereby authorizes Agent to file such financing
statements, financing change statements and other documents and do such acts,
matters and things (including completing and adding schedules hereto identifying
Collateral or any Permitted Encumbrances affecting Collateral or identifying the
locations at which Grantor's business is carried on and Collateral and records
relating thereto are situate) as Agent may deem appropriate to perfect on an
ongoing basis and continue the Security Interest, to protect and preserve
Collateral and, following an Event of Default, to realize upon the Security
Interest.
9.17 GOVERNING LAW. This Agreement and the transactions evidenced hereby shall
be governed by and construed in accordance with the laws of the province of
Ontario, as the same may from time to time be in effect, including, where
applicable, the PPSA.
SECTION 10 -- COPY OF AGREEMENT
10.1 COPY. Grantor hereby acknowledges receipt of a copy of this Agreement.
10.2 WAIVER. To the extent permitted by applicable law, Grantor waives Grantor's
right to receive a copy of any financing statement or financing change statement
registered by Agent, or of any verification statement with respect to any
financing statement or financing change statement registered by Agent.
The parties have executed this Agreement.
AMERICAN ECO CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
By:
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Duly Authorized Signatory