Exhibit 10.6
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CANADIAN SECURITY AGREEMENT
By
NORCRAFT CANADA CORPORATION,
as Pledgor,
and
UBS AG, STAMFORD BRANCH,
as Collateral Agent
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Dated as of October 21, 2003
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TABLE OF CONTENTS
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PREAMBLE......................................................................1
RECITALS......................................................................1
AGREEMENT.....................................................................2
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions....................................................2
SECTION 1.2. Interpretation................................................10
SECTION 1.3. Resolution of Drafting Ambiguities............................10
SECTION 1.4. Perfection Certificate........................................10
ARTICLE II
GRANT OF SECURITY AND SECURED OBLIGATIONS
SECTION 2.1. Pledge........................................................10
SECTION 2.2. Obligations...................................................11
SECTION 2.3. Security Interest.............................................11
ARTICLE III
PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
USE OF PLEDGED COLLATERAL
SECTION 3.1. Delivery of Certificated Securities Collateral................12
SECTION 3.2. Perfection of Uncertificated Securities Collateral............12
SECTION 3.3. Financing Statements and Other Filings; Maintenance
of Perfected Security Interest.............................12
SECTION 3.4. Other Actions.................................................13
SECTION 3.5. Joinder of Additional Guarantors..............................15
SECTION 3.6. Supplements; Further Assurances...............................16
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 4.1. Title.........................................................16
SECTION 4.2. Validity of Security Interest.................................17
SECTION 4.3. Defense of Claims/Transferability of Pledged Collateral.......17
SECTION 4.4. Other Financing Statements....................................17
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SECTION 4.5. Chief Executive Office; Change of Name; Jurisdiction of
Organization..............................................17
SECTION 4.6. Location of Inventory and Equipment..........................17
SECTION 4.7. Due Authorization and Issuance...............................18
SECTION 4.8. Consents, etc................................................18
SECTION 4.9. Pledged Collateral...........................................18
SECTION 4.10. Insurance....................................................18
SECTION 4.11. Payment of Taxes; Compliance with Laws; Contesting Liens;
Claims....................................................18
ARTICLE V
CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL
SECTION 5.1. Pledge of Additional Securities Collateral...................19
SECTION 5.2. Voting Rights; Distributions; etc............................19
SECTION 5.3. Operative Agreements.........................................20
SECTION 5.4. Defaults, etc................................................20
SECTION 5.5. Certain Agreements of Pledgors As Issuers and Holders of
Equity Interests..........................................21
ARTICLE VI
CERTAIN PROVISIONS CONCERNING INTELLECTUAL
PROPERTY COLLATERAL
SECTION 6.1. Grant of License.............................................21
SECTION 6.2. Protection of Collateral Agent's Security....................21
SECTION 6.3. After-Acquired Property......................................22
SECTION 6.4. Modifications................................................22
SECTION 6.5. Litigation...................................................22
ARTICLE VII
CERTAIN PROVISIONS CONCERNING ACCOUNTS
SECTION 7.1. Maintenance of Records.......................................23
SECTION 7.2. Legend.......................................................23
SECTION 7.3. Modification of Terms, etc...................................23
SECTION 7.4. Collection...................................................24
ARTICLE VIII
TRANSFERS
SECTION 8.1. Transfers of Pledged Collateral..............................24
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ARTICLE IX
REMEDIES
SECTION 9.1. Remedies....................................................24
SECTION 9.2. Notice of Sale..............................................26
SECTION 9.3. Waiver of Notice and Claims.................................26
SECTION 9.4. Certain Sales of Pledged Collateral.........................26
SECTION 9.5. No Waiver; Cumulative Remedies..............................27
SECTION 9.6. Certain Additional Actions Regarding Intellectual Property..28
ARTICLE X
PROCEEDS OF CASUALTY EVENTS AND COLLATERAL DISPOSITIONS/APPLICATION OF
PROCEEDS
SECTION 10.1. Proceeds of Casualty Events and Collateral Dispositions.....28
SECTION 10.2. Application of Proceeds.....................................28
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Concerning Collateral Agent.................................28
SECTION 11.2. Collateral Agent May Perform; Collateral Agent Appointed
Attorney-in-Fact.........................................29
SECTION 11.3. Continuing Security Interest; Assignment....................30
SECTION 11.4. Termination; Release........................................30
SECTION 11.5. Modification in Writing.....................................30
SECTION 11.6. Notices.....................................................30
SECTION 11.7. GOVERNING LAW...............................................31
SECTION 11.8. CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF
JURY TRIAL...............................................31
SECTION 11.9. Severability of Provisions..................................31
SECTION 11.10. Execution in Counterparts...................................31
SECTION 11.11. Business Days...............................................31
SECTION 11.12. Waiver of Stay..............................................31
SECTION 11.13. No Claims Against Collateral Agent..........................32
SECTION 11.14. No Release..................................................32
SECTION 11.15 Obligations Absolute........................................32
SECTION 11.16. Receipt of Copy and Waiver..................................33
SIGNATURES
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EXHIBIT 1 Form of Issuers Acknowledgment
EXHIBIT 2 Form of Securities Pledge Amendment
EXHIBIT 3 Form of Canadian Joinder Agreement
EXHIBIT 4 Form of Bailee's Letter
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CANADIAN SECURITY AGREEMENT
SECURITY AGREEMENT dated as of October 21, 2003 (as amended, amended
and restated, supplemented or otherwise modified from time to time in accordance
with the provisions hereof, the "Agreement") made by NORCRAFT CANADA CORPORATION
and THE GUARANTORS FROM TIME TO TIME PARTY HERETO BY EXECUTION OF A CANADIAN
JOINDER AGREEMENT (the "Additional Guarantors,"), as pledgors, assignors and
debtors (Norcraft Canada Corporation, together with the Additional Guarantors in
such capacities and together with any successors in such capacities, the
"Pledgors," and each, a "Pledgor"), in favor of the UBS AG, STAMFORD BRANCH, in
its capacity as collateral agent pursuant to the Credit Agreement (as
hereinafter defined), as pledgee, assignee and secured party (in such capacities
and together with any successors in such capacities, the "Collateral Agent").
R E C I T A L S :
A. Norcraft Companies, L.P., a Delaware limited partnership, as
borrower (the "Borrower"), the Collateral Agent, the Guarantors (as such term is
defined in Article I of the Credit Agreement), including the Pledgor, and the
lending institutions listed therein as lenders (the "Lenders") have, in
connection with the execution and delivery of this Agreement, entered into that
certain credit agreement, dated as of October 21, 2003 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement").
B. Each Guarantor has, pursuant to the Credit Agreement, among other
things, unconditionally guaranteed the Obligations.
C. The Pledgor will receive substantial benefits from the execution,
delivery and performance of the obligations under the Credit Agreement and the
other Loan Documents and it is, therefore, willing to enter into this Agreement.
D. Each Pledgor is or, as to Pledged Collateral (as hereinafter
defined) acquired by such Pledgor after the date hereof will be, the legal
and/or beneficial owner of the Pledged Collateral pledged by it hereunder.
E. This Agreement is given by each Pledgor in favor of the Collateral
Agent for the benefit of the Secured Parties (as hereinafter defined) to secure
the payment and performance of all of the Obligations.
F. It is a condition to the obligations of the Lenders to make the
Loans under the Credit Agreement and a condition to the Issuing Bank issuing
Letters of Credit under the Credit Agreement that each Pledgor execute and
deliver the applicable Loan Documents, including this Agreement.
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A G R E E M E N T :
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Pledgor and the Collateral Agent hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions
(a) Unless otherwise defined herein or in the Credit Agreement, terms
used herein that are defined in the PPSA shall have the meanings assigned to
them in the PPSA.
(b) Terms used but not otherwise defined herein that are defined in
the Credit Agreement shall have the meanings given to them in the Credit
Agreement.
(c) The following terms shall have the following meanings:
"Acquisition Document Rights" shall mean, with respect to each
Pledgor, collectively, all of such Pledgor's rights, title and interest in, to
and under the Acquisition Documents, including, without limitation (i) all
rights and remedies relating to monetary damages, including indemnification
rights and remedies, and claims for damages or other relief pursuant to or in
respect of the Acquisition Documents, (ii) all rights and remedies relating to
monetary damages, including indemnification rights and remedies, and claims for
monetary damages under or in respect of the agreements, documents and
instruments referred to in the Acquisition Documents or related thereto and
(iii) all proceeds, collections, recoveries and rights of subrogation with
respect to the foregoing.
"Additional Guarantors" shall have the meaning assigned to such term
in the Preamble hereof.
"Additional Pledged Interests" shall mean, collectively, with respect
to each Pledgor, (i) all options, warrants, rights, agreements, additional
membership, partnership or other equity interests of whatever class of any
issuer of Initial Pledged Interests or any interest in any such issuer, together
with all rights, privileges, authority and powers of such Pledgor relating to
such interests in each such issuer or under the Operative Agreement of any such
issuer, and the certificates, instruments and agreements representing such
membership, partnership or other interests and any and all interest of such
Pledgor in the entries on the books of any financial intermediary pertaining to
such membership, partnership or other equity interests from time to time
acquired by such Pledgor in any manner and (ii) all membership, partnership or
other equity interests, as applicable, of each limited liability company,
partnership or other entity (other than a corporation) hereafter acquired or
formed by such Pledgor and all options, warrants, rights, agreements, additional
membership, partnership or other equity interests of whatever class of such
limited liability company, partnership or other entity, together with all
rights, privileges, authority and powers of such Pledgor relating to such
interests or under the Operative Agreement of any such issuer, and the
certificates, instruments and agreements representing such membership,
partnership or other
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equity interests and any and all interest of such Pledgor in the entries on the
books of any financial intermediary pertaining to such membership, partnership
or other interests, from time to time acquired by such Pledgor in any manner.
"Additional Pledged Shares" shall mean, collectively, with respect to
each Pledgor, (i) all options, warrants, rights, agreements, additional shares
of capital stock of whatever class of any issuer of the Initial Pledged Shares
or any other equity interest in any such issuer, together with all rights,
privileges, authority and powers of such Pledgor relating to such interests
issued by any such issuer under the Operative Agreement of any such issuer, and
the certificates, instruments and agreements representing such interests and any
and all interest of such Pledgor in the entries on the books of any financial
intermediary pertaining to such interests, from time to time acquired by such
Pledgor in any manner and (ii) all the issued and outstanding shares of capital
stock of each corporation hereafter acquired or formed by such Pledgor and all
options, warrants, rights, agreements or additional shares of capital stock of
whatever class of such corporation, together with all rights, privileges,
authority and powers of such Pledgor relating to such shares or under the
Operative Agreement of such corporation, and the certificates, instruments and
agreements representing such shares and any and all interest of such Pledgor in
the entries on the books of any financial intermediary pertaining to such
shares, from time to time acquired by such Pledgor in any manner.
"Agreement" shall have the meaning assigned to such in the Preamble
hereof.
"Bailee Letter" shall be an agreement in form substantially similar to
Exhibit 4 annexed hereto.
"Bank" means an organization that is engaged in the business of
banking and includes saving banks, savings and loan associations, credit unions
and trust companies.
"Borrower" shall have the meaning assigned to such term in the
Preamble hereof.
"Canadian Joinder Agreement" shall mean an agreement substantially in
the form annexed hereto as Exhibit 3.
"Claims" shall mean any and all property and other taxes, assessments
and special assessments, levies, fees and all governmental charges imposed upon
or assessed against, and all claims (including, without limitation, landlords',
carriers', mechanics', workmen's, repairmen's, laborers', materialmen's,
builder's, suppliers' and warehousemen's Liens and other claims arising by
operation of law) against, all or any portion of the Pledged Collateral.
"Collateral Account" shall mean a collateral account or sub-account
established and maintained in accordance with the provisions of Section 9.01 of
the Credit Agreement and all property from time to time on deposit in the
Collateral Account.
"Collateral Agent" shall have the meaning assigned to such term in the
Preamble hereof.
"Commercial Tort Claim" shall have the meaning assigned thereto under
the UCC.
"Commodity Account" shall have the meaning assigned thereto under the
UCC.
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"Contested Liens" shall mean, collectively, any Liens incurred in
respect of any Claims to the extent that the amounts owing in respect thereof
are not yet delinquent or are being contested and otherwise comply with the
provisions of Section 4.11 hereof; provided, however, that such Liens shall in
all respects be subject and subordinate in priority to the Lien and security
interest created and evidenced by this Agreement, except if and to the extent
that the law or regulation creating, permitting or authorizing such Lien
provides that such Lien must be superior to the Lien and security interest
created and evidenced hereby.
"Contracts" shall mean, collectively, with respect to each Pledgor,
all sale, service, performance, equipment or property lease contracts,
agreements and grants and all other contracts, agreements or grants (in each
case, whether written or oral, or third party or intercompany), between such
Pledgor and third parties, and all assignments, amendments, restatements,
supplements, extensions, renewals, replacements or modifications thereof.
"Control" shall mean in the case of each Deposit Account, "control,"
as such term is defined in Section 9-104 of the UCC.
"Copyrights" shall mean, collectively, with respect to each Pledgor,
all copyrights (whether statutory or common law, whether established or
registered in the United States, Canada or any other country or any political
subdivision thereof, whether registered or unregistered and whether published or
unpublished) and all copyright registrations and applications made by such
Pledgor, in each case, whether now owned or hereafter created or acquired by or
assigned to such Pledgor, including, without limitation, the copyrights,
registrations and applications listed in Schedule 15(b) annexed to the
Perfection Certificate, together with any and all (i) rights and privileges
arising under applicable law with respect to such Pledgor's use of such
copyrights, (ii) reissues, renewals, continuations and extensions thereof, (iii)
income, fees, royalties, damages, claims and payments now or hereafter due
and/or payable with respect thereto, including, without limitation, damages and
payments for past, present or future infringements thereof, (iv) rights
corresponding thereto throughout the world and (v) rights to ▇▇▇ for past,
present or future infringements thereof.
"Copyright Security Agreement" shall mean a copyright security
agreement in form and substance reasonably satisfactory to the Collateral Agent.
"Credit Agreement" shall have the meaning assigned to such term in
Recital A hereof.
"Deposit Account Control Agreement" shall mean a deposit account
control agreement in form and substance reasonably satisfactory to the
Collateral Agent for use in the applicable provincial jurisdiction where the
Bank maintaining the Deposit Account is located.
"Deposit Accounts" shall mean, collectively, with respect to each
Pledgor, (i) all demand, time, savings, passbook, or similar accounts maintained
with a Bank and in any event shall include, without limitation, the LC
Sub-Account and the Collateral Account and all accounts and sub-accounts
relating to any of the foregoing accounts and (ii) all cash, funds, checks,
notes and instruments from time to time on deposit in any of the accounts or
sub-accounts described in clause (i) of this definition.
"Distributions" shall mean, collectively, with respect to each
Pledgor, all dividends, cash, options, warrants, rights, instruments,
distributions, returns of capital or principal, income, interest, profits and
other property, interests (debt or equity) or proceeds, including as a result of
a split, revision, reclassification or other like change of the Pledged
Securities, from time to time received, receivable or
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otherwise distributed to such Pledgor in respect of or in exchange for any or
all of the Pledged Securities or Intercompany Notes.
"Excluded Property" shall mean Special Property other than the
following:
(a) the right to receive any payment of money (including, without
limitation, Accounts, General Intangibles and Payment Intangibles) or any other
rights referred to in the PPSA to the extent that any sections in the PPSA are
effective to limit the prohibitions which make such property "Special Property";
and
(b) any Proceeds, substitutions or replacements of any Special Property
(unless such Proceeds, substitutions or replacements would constitute Special
Property).
"General Intangibles" shall mean, collectively, with respect to each
Pledgor, all "intangibles," as such term is defined in the PPSA, of such Pledgor
and, in any event, shall include, without limitation, (i) all of such Pledgor's
rights, title and interest in, to and under all insurance policies and
Contracts, (ii) all know-how and warranties relating to any of the Pledged
Collateral or the Mortgaged Property, (iii) any and all other rights, claims,
choses-in-action and causes of action of such Pledgor against any other person
and the benefits of any and all collateral or other security given by any other
person in connection therewith, (iv) all guarantees, endorsements and
indemnifications on, or of, any of the Pledged Collateral or any of the
Mortgaged Property, (v) all lists, books, records, correspondence, ledgers,
print-outs, files (whether in printed form or stored electronically), tapes and
other papers or materials containing information relating to any of the Pledged
Collateral or any of the Mortgaged Property, including, without limitation, all
customer or tenant lists, identification of suppliers, data, plans, blueprints,
specifications, designs, drawings, appraisals, recorded knowledge, surveys,
studies, engineering reports, test reports, manuals, standards, processing
standards, performance standards, catalogs, research data, computer and
automatic machinery software and programs and the like, field repair data,
accounting information pertaining to such Pledgor's operations or any of the
Pledged Collateral or any of the Mortgaged Property and all media in which or on
which any of the information or knowledge or data or records may be recorded or
stored and all computer programs used for the compilation or printout of such
information, knowledge, records or data, (vi) all licenses, consents, permits,
variances, certifications, authorizations and approvals, however characterized,
of any Governmental Authority (or any person acting on behalf of a Governmental
Authority) now or hereafter acquired or held by such Pledgor pertaining to
operations now or hereafter conducted by such Pledgor or any of the Pledged
Collateral or any of the Mortgaged Property including, without limitation,
building permits, certificates of occupancy, environmental certificates,
industrial permits or licenses and certificates of operation and (vii) all
rights to reserves, deferred payments, deposits, refunds, indemnification of
claims to the extent the foregoing relate to any Pledged Collateral or Mortgaged
Property and claims for tax or other refunds against any Governmental Authority
relating to any Pledged Collateral or any of the Mortgaged Property.
"Goodwill" shall mean, collectively, with respect to each Pledgor, the
goodwill connected with such Pledgor's business including, without limitation,
(i) all goodwill connected with the use of and symbolized by any Trademark in
which such Pledgor has any interest, (ii) all know-how, trade secrets, customer
and supplier lists, proprietary information, inventions, methods, procedures,
formulae, descriptions, compositions, technical data, drawings, specifications,
name plates, catalogs, confidential information and the right to limit the use
or disclosure thereof by any person, pricing and cost information, business and
marketing plans and proposals, consulting agreements, engineering contracts and
such other assets which relate to such goodwill and (iii) all product lines of
such Pledgor's business.
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"Governmental Authority" shall mean any federal, provincial, state,
local or foreign court, central bank or governmental agency, authority,
instrumentality or regulatory body.
"Guarantors" shall have the meaning assigned to such term in Article I
of the Credit Agreement.
"Initial Pledged Interests" shall mean, with respect to each Pledgor,
all membership, partnership or other equity interests (other than in a
corporation), as applicable, of each issuer described in Schedule 12 annexed to
the Perfection Certificate, together with all rights, privileges, authority and
powers of such Pledgor in and to each such issuer or under the Operative
Agreement of each such issuer, and the certificates, instruments and agreements
representing such membership, partnership or other interests and any and all
interest of such Pledgor in the entries on the books of any financial
intermediary pertaining to such membership, partnership or other interests.
"Initial Pledged Shares" shall mean, collectively, with respect to
each Pledgor, the issued and outstanding shares of capital stock of each issuer
described in Schedule 12 annexed to the Perfection Certificate together with all
rights, privileges, authority and powers of such Pledgor relating to such
interests in each such issuer or under the Operative Agreement of each such
issuer, and the certificates, instruments and agreements representing such
shares of capital stock and any and all interest of such Pledgor in the entries
on the books of any financial intermediary pertaining to the Initial Pledged
Shares.
"Instruments" shall mean, collectively, with respect to each Pledgor,
all "instruments," as such term is defined in the PPSA and shall include,
without limitation, all promissory notes, drafts, bills of exchange or
acceptances.
"Intellectual Property Collateral" shall mean, collectively, the
Patents, Trademarks, Copyrights, Licenses and Goodwill.
"Intercompany Notes" shall mean, with respect to each Pledgor, all
intercompany notes described in Schedule 13 annexed to the Perfection
Certificate and intercompany notes hereafter acquired by such Pledgor and all
certificates, instruments or agreements evidencing such intercompany notes, and
all assignments, amendments, restatements, supplements, extensions, renewals,
replacements or modifications thereof to the extent permitted pursuant to the
terms hereof.
"Investment Property" shall mean a security, whether certificated or
uncertificated, security entitlement, securities account, commodity contract or
commodity account, excluding, however, the Securities Collateral.
"Lenders" shall have the meaning assigned to such term in Recital A
hereof.
"Letter of Credit" shall mean a letter of credit or an advice of
credit as such terms are used under the PPSA.
"Letter-of-Credit Rights" shall mean a right to payment or performance
under a Letter of Credit, whether or not the beneficiary has demanded or is at
the time entitled to demand payment or performance.
"Licenses" shall mean, collectively, with respect to each Pledgor, all
license and distribution agreements with, and covenants not to ▇▇▇, any other
party with respect to any Patent,
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Trademark or Copyright or any other patent, trademark or copyright, whether such
Pledgor is a licensor or licensee, distributor or distributee under any such
license or distribution agreement, including, without limitation, the license
and distribution agreements listed in Schedules 15(a) and 15(b) annexed to the
Perfection Certificate, together with any and all (i) renewals, extensions,
supplements and continuations thereof, (ii) income, fees, royalties, damages,
claims and payments now and hereafter due and/or payable thereunder and with
respect thereto including, without limitation, damages and payments for past,
present or future infringements or violations thereof, (iii) rights to ▇▇▇ for
past, present and future infringements or violations thereof and (iv) other
rights to use, exploit or practice any or all of the Patents, Trademarks or
Copyrights or any other patent, trademark or copyright.
"Mortgaged Property" shall have the meaning assigned to such term in
the Mortgages.
"Obligations" has the meaning assigned thereto in Article I of the
Credit Agreement.
"Operative Agreement" shall mean (i) in the case of any limited
liability company or partnership or other non-corporate entity, any membership
or partnership agreement or other organizational agreement or document thereof
and (ii) in the case of any corporation, any charter or certificate of
incorporation and by-laws thereof.
"Patents" shall mean, collectively, with respect to each Pledgor, all
patents issued or assigned to and all patent applications and registrations made
by such Pledgor (whether established or registered or recorded in the United
States, Canada or any other country or any political subdivision thereof),
including, without limitation, those patents, patent applications and
registrations listed in Schedule 15(a) annexed to the Perfection Certificate,
together with any and all (i) rights and privileges arising under applicable law
with respect to such Pledgor's use of any patents, (ii) inventions and
improvements described and claimed therein, (iii) reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof, (iv)
income, fees, royalties, damages, claims and payments now or hereafter due
and/or payable thereunder and with respect thereto including, without
limitation, damages and payments for past, present or future infringements
thereof, (v) rights corresponding thereto throughout the world and (vi) rights
to ▇▇▇ for past, present or future infringements thereof.
"Patent Security Agreement" shall mean a patent security agreement in
form and substance reasonably satisfactory to the Collateral Agent.
"Payment Intangible" means a General Intangible under which the
account debtor's principal obligation is a monetary obligation.
"Perfection Certificate" shall mean that certain perfection
certificate dated October 21, 2003, executed and delivered by each Pledgor in
favor of the Collateral Agent for the benefit of the Secured Parties, and each
other Perfection Certificate (which shall be in form and substance reasonably
acceptable to the Collateral Agent) executed and delivered by the applicable
Guarantor in favor of the Collateral Agent for the benefit of the Secured
Parties contemporaneously with the execution and delivery of each Joinder
Agreement executed in accordance with Section 3.5 hereof, in each case, as the
same may be amended, amended and restated, supplemented or otherwise modified
from time to time in accordance with the Credit Agreement or upon the request of
the Collateral Agent, which request, unless an Event of Default has occurred and
is continuing, shall occur no more often than once every three months.
"Pledge Amendment" shall have the meaning assigned to such term in
Section 5.1 hereof.
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"Pledged Collateral" shall have the meaning assigned to such term in
Section 2.1 hereof.
"Pledged Interests" shall mean, collectively, the Initial Pledged
Interests and the Additional Pledged Interests; provided, however, that to the
extent applicable, Pledged Interests shall not include any interest which is not
required to be pledged pursuant to subsection 5.10(b) of the Credit Agreement.
"Pledged Securities" shall mean, collectively, the Pledged Interests,
the Pledged Shares and the Successor Interests.
"Pledged Shares" shall mean, collectively, the Initial Pledged Shares
and the Additional Pledged Shares; provided, however, that Pledged Shares shall
not include any shares which are not required to be pledged pursuant to
subsection 5.10(b) of the Credit Agreement.
"Pledgor" shall have the meaning assigned to such term in the Preamble
hereof.
"PPSA" shall mean The Personal Property Security Act of Manitoba, and
the regulations thereto, as in effect on the date hereof in the Province of
Manitoba; provided, however, that if by reason of mandatory provisions of law,
any or all of the attachment, perfection or priority of the Collateral Agent's
and the Secured Parties' security interest in any item or portion of the Pledged
Collateral is governed by the personal property security act as in effect in a
jurisdiction other than the Province of Manitoba, or by the UCC in such other
jurisdiction, the term "PPSA" shall mean the personal property security act or
the UCC, as the case may be, as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to such attachment,
perfection or priority and for purposes of definitions relating to such
provisions.
"Requirements of Law" shall mean, collectively, any and all
requirements of any Governmental Authority including, without limitation, any
and all laws, ordinances, rules, regulations or similar statutes or case law.
"Secured Parties" shall mean, collectively, the Administrative Agent,
the Collateral Agent, each other Agent, the Lenders and each party to a Hedging
Obligation relating to the Loans and up to $50.0 million of Senior Subordinated
Notes if at the date of entering into such Hedging Obligation such person was a
Lender or an Affiliate of a Lender and such person executes and delivers to the
Administrative Agent a letter agreement in form and substance acceptable to the
Administrative Agent pursuant to which such person (i) appoints the Collateral
Agent as its agent under the applicable Loan Documents and (ii) agrees to be
bound by the provisions of Section 9.03 of the Credit Agreement.
"Securities Account" shall have the meaning assigned thereto under the
UCC.
"Securities Collateral" shall mean, collectively, the Pledged
Securities, the Intercompany Notes and the Distributions.
"Special Property" shall mean:
(a) any permit, lease or license held by any Pledgor that validly prohibits
the creation by such Pledgor of a security interest therein;
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(b) any permit, lease or license held by any Pledgor to the extent that any
Requirement of Law applicable thereto prohibits the creation of a security
interest therein; and
(c) Equipment owned by any Pledgor on the date hereof or hereafter acquired
that is subject to a Lien securing a Purchase Money Obligation or Capital Lease
Obligation permitted to be incurred pursuant to the provisions of the Credit
Agreement if the contract or other agreement in which such Lien is granted (or
the documentation providing for such Purchase Money Obligation or Capital Lease
Obligation) validly prohibits the creation of any other Lien on such Equipment;
provided, however, that in each case described in clauses (a), (b) and (c) of
this definition, such property shall constitute "Special Property" only to the
extent and for so long as such permit, lease, license, contract or other
agreement or Requirement of Law applicable thereto validly prohibits the
creation of a Lien on such property in favor of the Collateral Agent and, upon
the termination of such prohibition (howsoever occurring), such property shall
cease to constitute "Special Property."
"Successor Interests" shall mean, collectively, with respect to each
Pledgor, all shares of each class of the capital stock of the successor
corporation or interests or certificates of the successor limited liability
company, partnership or other entity owned by such Pledgor (unless such
successor is such Pledgor itself) formed by or resulting from any consolidation
or merger in which any person listed in Schedule 1(a) annexed to the Perfection
Certificate is not the surviving entity; provided, however, that to the extent
applicable, Successor Interests shall not include any shares or interests which
are not required to be pledged pursuant to subsection 5.10(b) of the Credit
Agreement.
"Supporting Obligations" shall mean a Letter-of-Credit Right or
secondary obligation that supports the payment or performance of an Account,
Chattel Paper, a Document of Title, a General Intangible, an Instrument, or
Investment Property.
"Trademarks" shall mean, collectively, with respect to each Pledgor,
all trademarks (including service marks), slogans, logos, certification marks,
trade dress, uniform resource locations (URL's), domain names, corporate names
and trade names, whether registered or unregistered, owned by or assigned to
such Pledgor and all registrations and applications for the foregoing (whether
statutory or common law and whether established or registered in the United
States, Canada or any other country or any political subdivision thereof),
including, without limitation, the registrations and applications listed in
Schedule 15(a) annexed to the Perfection Certificate, together with any and all
(i) rights and privileges arising under applicable law with respect to such
Pledgor's use of any trademarks, (ii) reissues, continuations, extensions and
renewals thereof, (iii) income, fees, royalties, damages and payments now and
hereafter due and/or payable thereunder and with respect thereto, including,
without limitation, damages, claims and payments for past, present or future
infringements thereof, (iv) rights corresponding thereto throughout the world
and (v) rights to ▇▇▇ for past, present and future infringements thereof.
"Trademark Security Agreement" shall mean a trademark security
agreement in form and substance reasonably satisfactory to the Collateral Agent.
"UCC" shall mean the Uniform Commercial Code as in effect on the date
hereof in the State of New York; provided, however, that if by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of the Collateral Agent's and the Secured Parties' security interest in
any item or portion of the Pledged Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New York,
the term "UCC" shall mean the Uniform Commercial
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Code as in effect from time to time in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions relating to such provisions.
SECTION 1.2. Interpretation. Subject to Sections 11.7 and 11.8, the
rules of interpretation specified in the Credit Agreement shall be applicable to
this Agreement.
SECTION 1.3. Resolution of Drafting Ambiguities. Each Pledgor
acknowledges and agrees that it was represented by counsel in connection with
the execution and delivery hereof, that it and its counsel reviewed and
participated in the preparation and negotiation hereof and that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party (i.e., the Collateral Agent) shall not be employed in the
interpretation hereof.
SECTION 1.4. Perfection Certificate. The Collateral Agent and each
Secured Party agree that the Perfection Certificate and all descriptions of
Pledged Collateral, schedules, amendments and supplements thereto are and shall
at all times remain a part of this Agreement.
ARTICLE II
GRANT OF SECURITY AND SECURED OBLIGATIONS
SECTION 2.1. Pledge. As collateral security for the payment and
performance in full of all the Obligations, each Pledgor hereby pledges and
grants to the Collateral Agent for the benefit of the Secured Parties, a lien on
and security interest in and to all of the right, title and interest of such
Pledgor in, to and under the following property, wherever located, whether now
existing or hereafter arising or acquired from time to time (collectively, the
"Pledged Collateral"):
(i) all Accounts;
(ii) all Equipment, Goods, Inventory and Fixtures;
(iii) all Documents of Title, Instruments and Chattel Paper;
(iv) all Letters of Credit and Letter-of-Credit Rights;
(v) all Securities Collateral;
(vi) all Collateral Accounts;
(vii) all Investment Property;
(viii) all Intellectual Property Collateral;
(ix) the Commercial Tort Claims described on Schedule 16 to the
Perfection Certificate;
(x) all General Intangibles;
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(xi) all Deposit Accounts;
(xii) all Acquisition Documents and Acquisition Document Rights;
(xiii) all Supporting Obligations;
(xiv) all books and records relating to the Pledged Collateral; and
(xv) to the extent not covered by clauses (i) through (xiv) of this
sentence, all other personal property of such Pledgor, whether
tangible or intangible and all Proceeds and products of each of
the foregoing and all accessions to, substitutions and
replacements for, and rents, profits and products of, each of the
foregoing, any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to such Pledgor from time to time
with respect to any of the foregoing.
Notwithstanding anything to the contrary contained in clauses (i)
through (xv) above, the security interest created by this Agreement shall not
extend to, and the term "Pledged Collateral" shall not include, any Excluded
Property and (i) the Pledgors shall from time to time at the request of the
Collateral Agent give written notice to the Collateral Agent identifying in
reasonable detail any material Special Property (and stating in such notice that
such Special Property constitutes "Excluded Property") and shall provide to the
Collateral Agent such other information regarding such Special Property as the
Collateral Agent may reasonably request and (ii) from and after the Closing
Date, no Pledgor shall permit to become effective in any document creating,
governing or providing for any permit, lease or license, a provision that would
prohibit the creation of a Lien on such permit, lease or license in favor of the
Collateral Agent unless such Pledgor believes, in its reasonable judgment, that
such prohibition is usual and customary in transactions of such type.
SECTION 2.2. Obligations. This Agreement secures, and the Pledged
Collateral is collateral security for, the payment and performance in full when
due of the Obligations.
SECTION 2.3. Security Interest. (a) Each Pledgor hereby irrevocably
authorizes the Collateral Agent at any time and from time to time to file in any
relevant jurisdiction any initial financing statements (including fixture
filings) and amendments thereto that contain the information required by the
PPSA of each applicable jurisdiction for the filing of any financing statement
or amendment relating to the Pledged Collateral, including, without limitation,
(i) whether such Pledgor is an organization, the type of organization and any
organizational identification number issued to such Pledgor, (ii) any financing
or continuation statements or other documents without the signature of such
Pledgor where permitted by law, including, without limitation, the filing of a
financing statement describing the Pledged Collateral as "all assets in which
the Pledgor now owns or hereafter acquires rights" and " all Debtor's present
and after-acquired personal property" and (iii) in the case of a financing
statement filed as a fixture filing or covering Pledged Collateral constituting
minerals or the like to be extracted or timber to be cut, a sufficient
description of the real property to which such Pledged Collateral relates. Each
Pledgor agrees to provide all information described in the immediately preceding
sentence to the Collateral Agent promptly upon request.
(b) Each Pledgor hereby ratifies its authorization for the Collateral
Agent to file in any relevant jurisdiction any initial financing statements or
amendments thereto relating to the Pledged Collateral if filed prior to the date
hereof.
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(c) Each Pledgor hereby further authorizes the Collateral Agent to
file filings relating to the Pledged Collateral with the United States Patent
and Trademark Office or United States Copyright Office (or any successor office
or any similar office in Canada or any other country), including without
limitation, this Agreement, the Copyright Security Agreement, the Patent
Security Agreement and the Trademark Security Agreement, or other documents for
the purpose of perfecting, confirming, continuing, enforcing or protecting the
security interest granted by such Pledgor hereunder, without the signature of
such Pledgor, and naming such Pledgor, as debtor, and the Collateral Agent, as
secured party.
ARTICLE III
PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
USE OF PLEDGED COLLATERAL
SECTION 3.1. Delivery of Certificated Securities Collateral. Each
Pledgor represents and warrants that all certificates, agreements or instruments
representing or evidencing the Securities Collateral in existence on the date
hereof have been delivered to the Collateral Agent in suitable form for transfer
by delivery or accompanied by duly executed instruments of transfer or
assignment in blank and that the Collateral Agent has a perfected first priority
security interest therein. Each Pledgor hereby agrees that all certificates,
agreements or instruments representing or evidencing Securities Collateral
acquired by such Pledgor after the date hereof, shall immediately upon receipt
thereof by such Pledgor be delivered to and held by or on behalf of the
Collateral Agent pursuant hereto. All certificated Securities Collateral shall
be in suitable form for transfer by delivery or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. The Collateral Agent shall have
the right, at any time upon the occurrence and during the continuance of any
Event of Default, to endorse, assign or otherwise transfer to or to register in
the name of the Collateral Agent or any of its nominees or endorse for
negotiation any or all of the Securities Collateral, without any indication that
such Securities Collateral is subject to the security interest hereunder. In
addition, upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall have the right at any time to exchange certificates
representing or evidencing Securities Collateral for certificates of smaller or
larger denominations.
SECTION 3.2. Perfection of Uncertificated Securities Collateral. Each
Pledgor represents and warrants that the Collateral Agent has a perfected first
priority security interest in all uncertificated Pledged Securities pledged by
it hereunder that is in existence on the date hereof. Each Pledgor hereby agrees
that if any of the Pledged Securities are at any time not evidenced by
certificates of ownership, then each applicable Pledgor shall, to the extent
permitted by applicable law if necessary or desirable to perfect a security
interest in such Pledged Securities, cause such pledge to be recorded on the
equityholder register or the books of the issuer, cause the issuer to execute
and deliver to the Collateral Agent an acknowledgment of the pledge of such
Pledged Securities substantially in the form of Exhibit 1 annexed hereto,
execute any customary pledge forms or other documents necessary or appropriate
to complete the pledge and give the Collateral Agent the right to transfer such
Pledged Securities under the terms hereof and, upon request, provide to the
Collateral Agent an opinion of counsel, in form and substance reasonably
satisfactory to the Collateral Agent, confirming such pledge and perfection
thereof.
SECTION 3.3. Financing Statements and Other Filings; Maintenance of
Perfected Security Interest. Each Pledgor represents and warrants that all
filings, registrations and recordings necessary to create and perfect the
security interest granted by it to the Collateral Agent in respect of the
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Pledged Collateral have been delivered to the Collateral Agent in completed and,
to the extent necessary, duly executed form for filing in each governmental,
municipal or other office specified in Schedule 7 annexed to the Perfection
Certificate. Each Pledgor agrees that at the sole cost and expense of the
Pledgors, (i) such Pledgor will maintain the security interest created by this
Agreement in the Pledged Collateral as a perfected first priority security
interest and shall defend such security interest against the claims and demands
of all persons except Permitted Collateral Liens, (ii) such Pledgor shall
furnish to the Collateral Agent from time to time statements and schedules
further identifying and describing the Pledged Collateral and such other reports
in connection with the Pledged Collateral as the Collateral Agent may reasonably
request, all in reasonable detail and (iii) at any time and from time to time,
upon the written request of the Collateral Agent, such Pledgor shall promptly
and duly execute and deliver, and file and have recorded, such further
instruments and documents and take such further action as the Collateral Agent
may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and the rights and powers herein granted, including
the filing of any financing statements, continuation statements and other
documents (including the Agreement) under the PPSA (or other similar laws) in
effect in any jurisdiction with respect to the security interest created hereby
and the execution and delivery of Deposit Account Control Agreements, all in
form reasonably satisfactory to the Collateral Agent and in such offices
(including, without limitation, the United States Patent and Trademark Office or
any similar office in Canada) wherever required by law to perfect, continue and
maintain a valid, enforceable, first priority security interest in the Pledged
Collateral as provided herein and to preserve the other rights and interests
granted to the Collateral Agent hereunder, as against third parties, with
respect to the Pledged Collateral.
SECTION 3.4. Other Actions. In order to further insure the attachment,
perfection and priority of, and the ability of the Collateral Agent to enforce,
the Collateral Agent's security interest in the Pledged Collateral, each Pledgor
represents (as to itself) as follows and agrees, in each case at such Pledgor's
own expense, to take the following actions with respect to the following Pledged
Collateral:
(a) Instruments and Chattel Paper. As of the date hereof (i) no amount in
payable under or in connection with any of the Pledged Collateral, in the
aggregate for all Pledgors in excess of $200,000, is evidenced by any Instrument
or Chattel Paper other than such Instruments and Chattel Paper listed in
Schedule 13 annexed to the Perfection Certificate and (ii) each Instrument and
each item of Chattel Paper listed in Schedule 13 annexed to the Perfection
Certificate has been properly endorsed, assigned and delivered to the Collateral
Agent, accompanied by instruments of transfer or assignment duly executed in
blank. If any amount payable under or in connection with any of the Pledged
Collateral, in the aggregate for all Pledgors in excess of $200,000, shall be
evidenced by any Instrument or Chattel Paper, the Pledgor acquiring such
Instrument or Chattel Paper shall forthwith endorse, assign and deliver the same
to the Collateral Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as the Collateral Agent may from time to time
specify.
(b) Deposit Accounts. Each Pledgor (i) has neither opened nor maintains any
Deposit Accounts other than the accounts listed in Schedule 17 annexed to the
Perfection Certificate and, (ii) except as the Collateral Agent may otherwise
agree, the Collateral Agent has a perfected first priority security interest in
each Deposit Account listed in Schedule 17 annexed to the Perfection Certificate
by Control. No Pledgor shall hereafter establish and maintain any Deposit
Account unless (1) the applicable Pledgor shall have given the Collateral Agent
30 days' prior written notice (or such lesser notice period as the Collateral
Agent may agree to) of its intention to establish such new Deposit Account with
a Bank, (2) such Bank shall be reasonably acceptable to the Collateral Agent and
(3) except as the Collateral Agent may otherwise agree, such Bank and such
Pledgor shall have duly executed and delivered to the
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Collateral Agent a Deposit Account Control Agreement with respect to such
Deposit Account for use in the applicable provincial jurisdiction where the Bank
maintaining the Deposit Account is located. Each Pledgor agrees that at the time
it establishes any additional Deposit Accounts it shall, except as the
Collateral Agent may otherwise agree, enter into a duly authorized, executed and
delivered Deposit Account Control Agreement with respect to such Deposit Account
for use in the applicable provincial jurisdiction where the Bank maintaining the
such additional Deposit Account is located. The Collateral Agent agrees with
each Pledgor that the Collateral Agent shall not give any instructions pursuant
to any Deposit Account Control Agreement or withhold any withdrawal rights from
such Pledgor with respect to funds from time to time credited to any Deposit
Account unless an Event of Default has occurred and is continuing (except, if
the Collateral Agent is the Bank, the Collateral Agent may take such actions
pursuant to the operating agreement(s) governing such Deposit Account). The
provisions of this Section 3.4(b) shall not apply to the Collateral Account. No
Pledgor shall grant Control of any Deposit Account to any person other than the
Collateral Agent. Notwithstanding the foregoing, each applicable Pledgor shall,
and shall cause each of its Subsidiaries to, as expeditiously as possible, but
in no event later than the 60th day following the Closing Date (unless the
Administrative Agent, in its sole discretion, shall agree to a later date), to
the extent required under this subsection 3.4(b), unless the Collateral Agent
shall otherwise agree, endorse, execute and deliver, or cause to be endorsed,
executed and delivered, as applicable, all other certificates, agreements
(including Deposit Account Control Agreements), or instruments necessary to
perfect the Collateral Agent's security interest in each Deposit Account listed,
as of the date hereof, on Schedule 17 annexed to the Perfection Certificate,
together with all consents from all banks and other financial institutions in
which such Deposit Account is located.
(c) Investment Property. (i) Each Pledgor (1) has no Securities Accounts or
Commodity Accounts other than those listed in Schedule 17 annexed to the
Perfection Certificate and the Collateral Agent has a perfected first priority
security interest in such Securities Accounts and Commodity Accounts by Control,
(2) it does not hold, own or have any interest in any certificated securities or
uncertificated securities other than those constituting Pledged Securities and
those maintained in Securities Accounts or Commodity Accounts listed in Schedule
17 annexed to the Perfection Certificate.
(ii) If any Pledgor shall at any time hold or acquire any certificated
securities constituting Investment Property, in the aggregate for all Pledgors
in excess of $10,000, such Pledgor shall promptly endorse, assign and deliver
the same to the Collateral Agent, accompanied by such instruments of transfer or
assignment duly executed in blank, all in form and substance reasonably
satisfactory to the Collateral Agent. No Pledgor shall grant control over any
Investment Property to any person other than the Collateral Agent.
(iii) As between the Collateral Agent and the Pledgors, the Pledgors
shall bear the investment risk with respect to the Investment Property and
Pledged Securities, and the risk of loss of, damage to, or the destruction of
the Investment Property and Pledged Securities, whether in the possession of, or
maintained as a security entitlement or deposit by, or subject to the control
of, the Collateral Agent, any Pledgor or any other person; provided, however,
that nothing contained in this Section 3.4(c) shall release or relieve the
Collateral Agent of its duties and obligations to the Pledgors or under
applicable law. Each Pledgor shall promptly pay all Claims and fees of whatever
kind or nature with respect to the Investment Property and Pledged Securities
pledged by it under this Agreement. In the event any Pledgor shall fail to make
such payment contemplated in the immediately preceding sentence, the Collateral
Agent may do so for the account of such Pledgor and the Pledgors shall promptly
reimburse and indemnify the Collateral Agent from all costs and expenses
incurred by the Collateral Agent under this Section 3.4(c) in accordance with
Section 11.03 of the Credit Agreement.
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(d) Letter-of-Credit Rights. If the Pledgor is at any time a beneficiary
under Letters of Credit now or hereafter issued in favor of such Pledgor, other
than Letters of Credit issued pursuant to the Credit Agreement, in amounts in
the aggregate for all Pledgors in excess of $200,000, such Pledgor shall
promptly notify the Collateral Agent thereof and such Pledgor shall, at the
request of the Collateral Agent, pursuant to an agreement in form and substance
reasonably satisfactory to the Collateral Agent, either (i) arrange for the
issuer and any confirmer of such Letter of Credit to consent to an assignment to
the Collateral Agent of the proceeds of any drawing under the Letter of Credit
or (ii) arrange for the Collateral Agent to become the transferee beneficiary of
such Letter of Credit, with the Collateral Agent agreeing, in each case, that
the proceeds of any drawing under the Letter of Credit are to be applied as
provided in the Credit Agreement.
(e) Commercial Tort Claims. As of the date hereof each Pledgor hereby
represents and warrants that it holds no Commercial Tort Claims. If any Pledgor
shall at any time hold or acquire Commercial Tort Claims having a value in the
aggregate for all Pledgors in excess of $200,000, such Pledgor shall immediately
notify the Collateral Agent in writing signed by such Pledgor of the brief
details thereof and grant to the Collateral Agent in such writing a security
interest therein and in the Proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance reasonably satisfactory
to the Collateral Agent.
(f) Landlord Access Agreements/Bailee Letters. Each Pledgor shall use its
commercially reasonable efforts to obtain as soon as practicable after the date
hereof with respect to each location set forth in Schedule 4.01(m) annexed to
the Credit Agreement, where such Pledgor maintains Pledged Collateral, a waiver
of bailee's lien (substantially in the form of Exhibit 4 annexed hereto) and/or
a landlord access agreement, as applicable, and use commercially reasonable
efforts to obtain a Bailee Letter, landlord access agreement and/or landlord's
lien waiver, as applicable, from all such bailees and landlords, as applicable,
who from time to time have possession of Pledged Collateral in the ordinary
course of such Pledgor's business and if reasonably requested by the Collateral
Agent. A waiver of bailee's lien shall not be required if the value of the
Pledged Collateral held by such bailee is less than $25,000, provided that the
aggregate value of the Pledged Collateral held by all bailees who have not
delivered a Bailee Letter is less than $100,000 in the aggregate for all
Pledgors.
(g) Motor Vehicles. Upon the request of the Collateral Agent, each Pledgor
shall deliver to the Collateral Agent originals of the certificates of title or
ownership for the motor vehicles covered by Certificates of Title or ownership
owned by it with the Collateral Agent listed as lienholder therein. Such
requirement shall apply to the Pledgors only if any such motor vehicle has a
fair market value over $50,000, provided that the fair market value of all such
motor vehicles as to which any Pledgor has not delivered a certificate of title
or ownership is over $200,000.
SECTION 3.5. Joinder of Additional Guarantors. The Pledgors shall
cause each Canadian Subsidiary of the Borrower or the Pledgor which, from time
to time, after the date hereof shall be required to pledge any assets to the
Collateral Agent for the benefit of the Secured Parties pursuant to the
provisions of the Credit Agreement, (a) to execute and deliver to the Collateral
Agent (i) a Canadian Joinder Agreement substantially in the form of Exhibit 3
annexed hereto within thirty (30) Business Days on which it was acquired or
created and (ii) a Perfection Certificate, in each case, within thirty (30)
Business Days of the date on which it was acquired or created or (b) in the case
of a Subsidiary organized outside of Canada required to pledge any assets to the
Collateral Agent pursuant to the Credit Agreement, execute and deliver such
documentation as the Collateral Agent shall reasonably request and, in each
case, upon such execution and delivery, such Subsidiary shall constitute a
"Guarantor" and a "Pledgor"
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for all purposes hereunder with the same force and effect as if originally named
as a Guarantor and Pledgor herein. The execution and delivery of such Canadian
Joinder Agreement shall not require the consent of any Pledgor hereunder. The
rights and obligations of each Pledgor hereunder shall remain in full force and
effect notwithstanding the addition of any new Guarantor and Pledgor as a party
to this Agreement.
SECTION 3.6. Supplements; Further Assurances. Each Pledgor shall take
such further actions, and to execute and deliver to the Collateral Agent such
additional assignments, agreements, supplements, powers and instruments, as the
Collateral Agent may in its reasonable judgment deem necessary or appropriate,
wherever required by law, in order to perfect, preserve and protect the security
interest in the Pledged Collateral as provided herein and the rights and
interests granted to the Collateral Agent hereunder, to carry into effect the
purposes hereof or better to assure and confirm unto the Collateral Agent the
Pledged Collateral or permit the Collateral Agent to exercise and enforce its
rights, powers and remedies hereunder with respect to any Pledged Collateral.
Without limiting the generality of the foregoing, each Pledgor shall make,
execute, endorse, acknowledge, file or refile and/or deliver to the Collateral
Agent from time to time upon reasonable request such lists, descriptions and
designations of the Pledged Collateral, copies of warehouse receipts, receipts
in the nature of warehouse receipts, bills of lading, documents of title,
vouchers, invoices, schedules, confirmatory assignments, supplements, additional
security agreements, conveyances, financing statements, transfer endorsements,
powers of attorney, certificates, reports and other assurances or instruments.
If an Event of Default has occurred and is continuing, the Collateral Agent may
institute and maintain, in its own name or in the name of any Pledgor, such
suits and proceedings as the Collateral Agent may be advised by counsel shall be
necessary or expedient to prevent any impairment of the security interest in or
the perfection thereof in the Pledged Collateral. All of the foregoing shall be
at the sole cost and expense of the Pledgor. The Pledgor and the Collateral
Agent acknowledge that this Agreement is intended to grant to the Collateral
Agent for the benefit of the Secured Parties a security interest in and Lien
upon the Pledged Collateral and shall not constitute or create a present
assignment of any of the Pledged Collateral.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Pledgor represents, warrants and covenants as follows:
SECTION 4.1. Title. Except for the security interest granted to the
Collateral Agent for the ratable benefit of the Secured Parties pursuant to this
Agreement and Permitted Liens, each Pledgor owns and, as to Pledged Collateral
acquired by it from time to time after the date hereof, will own the rights in
each item of Pledged Collateral pledged by it hereunder free and clear of any
and all Liens or claims of others other than Permitted Collateral Liens. No
financing statement or other public notice with respect to all or any part of
the Pledged Collateral is on file or of record in any public office, except such
as have been filed in favor of the Collateral Agent pursuant to this Agreement,
as are permitted by the Credit Agreement or financing statements or public
notices relating to the termination statements listed on Schedule 9 to the
Perfection Certificate. No person other than the Collateral Agent has control or
possession of all or any part of the Pledged Collateral, except as permitted by
the Credit Agreement.
SECTION 4.2. Validity of Security Interest. The security interest in
and Lien on the Pledged Collateral granted to the Collateral Agent for the
benefit of the Secured Parties hereunder
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constitutes (a) a legal and valid security interest in all the Pledged
Collateral securing the payment and performance of the Obligations, and (b)
subject to the filings and other actions described in Schedule 7 annexed to the
Perfection Certificate a perfected security interest in all the Pledged
Collateral. The security interest and Lien granted to the Collateral Agent for
the benefit of the Secured Parties pursuant to this Agreement in and on the
Pledged Collateral will at all times constitute a perfected, continuing first
priority security interest therein, superior and prior to the rights of all
other persons therein subject only to Permitted Collateral Liens.
SECTION 4.3. Defense of Claims/Transferability of Pledged Collateral.
Each Pledgor shall, at its own cost and expense, defend title to the Pledged
Collateral pledged by it hereunder and the security interest therein and Lien
thereon granted to the Collateral Agent and the priority thereof against all
claims and demands of all persons, at its own cost and expense, at any time
claiming any interest therein adverse to the Collateral Agent or any other
Secured Party other than Permitted Collateral Liens (other than Contested
Liens). There is no agreement, and no Pledgor shall enter into any agreement or
take any other action, that would reasonably be expected to restrict the
transferability of any of the Pledged Collateral or otherwise impair or conflict
in any material respect with such Pledgors' obligations or the rights of the
Collateral Agent hereunder.
SECTION 4.4. Other Financing Statements. There is no (nor will there
be any) valid or effective financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) covering or
purporting to cover any interest of any kind in the Pledged Collateral other
than financing statements relating to Permitted Collateral Liens. So long as any
of the Obligations remain unpaid, no Pledgor shall execute, authorize or permit
to be filed in any public office any financing statement (or similar statement
or instrument of registration under the law of any jurisdiction) or statements
relating to any Pledged Collateral, except financing statements filed or to be
filed in respect of and covering the security interests granted by such Pledgor
to the holder of the Permitted Collateral Liens.
SECTION 4.5. Chief Executive Office; Change of Name; Jurisdiction of
Organization. (a) Such Pledgor shall comply with the provisions of Section
5.12(a) of the Credit Agreement and provide to the Collateral Agent any
comparable information, documents or registration or identification numbers as
may be required under Canadian law.
(b) The Collateral Agent may rely on opinions of counsel as to whether any
or all PPSA financing statements of the Pledgors need to be amended as a result
of any of the changes described in Section 5.12(a) of the Credit Agreement and
Section 4.5(a) above. If any Pledgor fails to provide information to the
Collateral Agent about such changes on a timely basis, the Collateral Agent
shall not be liable or responsible to any party for any failure to maintain a
perfected security interest in such Pledgor's property constituting Pledged
Collateral, for which the Collateral Agent needed to have information relating
to such changes. The Collateral Agent shall have no duty to inquire about such
changes if any Pledgor does not inform the Collateral Agent of such changes, the
parties acknowledging and agreeing that it would not be feasible or practical
for the Collateral Agent to search for information on such changes if such
information is not provided by any Pledgor.
SECTION 4.6. Location of Inventory and Equipment. Such Pledgor shall
not move any material Equipment or Inventory to any location other than one
within the Provinces of Manitoba and Nova Scotia or any of the other Provinces
of Canada where such Pledgor is permitted to maintain such Equipment and/or
Inventory, and otherwise in accordance with the terms of this Agreement, until
such Pledgor shall have taken all action reasonably satisfactory to the
Collateral Agent to maintain the
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perfection and priority of the security interest of the Collateral Agent for the
benefit of the Secured Parties in the Pledged Collateral intended to be granted
hereby, including, without limitation, using commercially reasonable efforts to
obtain waivers of landlord's or warehousemen's and/or bailee's liens with
respect to such new location, if applicable, and if requested by the Collateral
Agent. Pledgor agrees to provide the Collateral Agent with prompt notice
following the movement of any material Equipment or Inventory to any location
other than one within the Provinces of Manitoba and Nova Scotia that is listed
in such Schedules to the Perfection Certificate with respect to such Pledgor or
within any of the other Provinces of Canada where such Pledgor is permitted to
maintain such Equipment and/or Inventory and otherwise in accordance with the
terms of this Agreement. Notwithstanding the foregoing, such Pledgor may
contribute Equipment or Inventory to the pledgors under the U.S. Security
Agreement and move such Equipment and/or Inventory to a location at which such
pledgors under the U.S. Security Agreement are permitted to maintain such
Equipment and/or Inventory, and otherwise in accordance with the terms of the
applicable Security Documents.
SECTION 4.7 Due Authorization and Issuance. All of the Initial Pledged
Interests have been fully paid for, and there is no amount or other obligation
owing by any Pledgor to any issuer of the Initial Pledged Interests in exchange
for or in connection with the issuance of the Initial Pledged Interests or any
Pledgor's status as a partner or a member of any issuer of the Initial Pledged
Interests.
SECTION 4.8 Consents, etc. In the event that the Collateral Agent
desires to exercise any remedies, voting or consensual rights or
attorney-in-fact powers set forth in this Agreement and determines it necessary
to obtain any approvals or consents of any Governmental Authority or any other
person therefor, then, upon the reasonable request of the Collateral Agent, such
Pledgor agrees to use its best efforts to assist and aid the Collateral Agent to
obtain as soon as practicable any necessary approvals or consents for the
exercise of any such remedies, rights and powers.
SECTION 4.9 Pledged Collateral. All information set forth herein,
including the schedules annexed hereto, and all information contained in any
documents, schedules and lists heretofore, including without limitation, the
Perfection Certificate and the schedules thereto, delivered to any Secured Party
in connection with this Agreement, in each case, relating to the Pledged
Collateral, is accurate and complete in all material respects. The Pledged
Collateral described on the schedules annexed to the Perfection Certificate
constitutes all of the property of such type of Pledged Collateral owned or held
by the Pledgors as of the date hereof.
SECTION 4.10 Insurance. In the event that the proceeds of any
insurance claim are paid after the Collateral Agent has exercised its right to
foreclose after an Event of Default such Net Cash Proceeds shall be paid to the
Collateral Agent to satisfy any deficiency remaining after such foreclosure.
SECTION 4.11 Payment of Taxes; Compliance with Laws; Contesting Liens;
Claims. Each Pledgor represents and warrants that all Claims imposed upon or
assessed against the Pledged Collateral have been paid and discharged except to
the extent such Claims constitute a Lien not yet due and payable, which is a
Contested Lien or a Permitted Collateral Lien. Each Pledgor shall comply with
all Requirements of Law applicable to the Pledged Collateral the failure to
comply with which would, individually or in the aggregate, have a Material
Adverse Effect. Each Pledgor may at its own expense contest the validity, amount
or applicability of any Claims so long as the contest thereof shall be conducted
in accordance with, and permitted pursuant to the provisions of, the Credit
Agreement. Notwithstanding the foregoing provisions of this Section 4.11, (i) no
contest of any such obligation may be pursued by such Pledgor if such contest
would reasonably be expected to expose the Collateral Agent or any other Secured
Party to (A) any possible criminal liability or (B) any additional civil
liability for
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failure to comply with such obligations unless such Pledgor shall have furnished
a bond or other security therefor satisfactory to the Collateral Agent, or such
Secured Party, as the case may be and (ii) if at any time payment or performance
of any obligation contested by such Pledgor pursuant to this Section 4.11 shall
become necessary to prevent the imposition of remedies because of non-payment,
such Pledgor shall pay or perform the same, in sufficient time to prevent the
imposition of remedies in respect of such default or prospective default.
ARTICLE V
CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL
SECTION 5.1. Pledge of Additional Securities Collateral. Each Pledgor
shall, upon obtaining any Pledged Securities or Intercompany Notes of any
person, accept the same for the benefit of the Collateral Agent and forthwith
deliver to the Collateral Agent a pledge amendment, duly executed by such
Pledgor, in substantially the form of Exhibit 2 annexed hereto (each, a "Pledge
Amendment"), and the certificates and other documents required under Section 3.1
and Section 3.2 hereof in respect of the additional Pledged Securities or
Intercompany Notes which are to be pledged pursuant to this Agreement, and
confirming the attachment of the Lien hereby created on and in respect of such
additional Pledged Securities or Intercompany Notes. Each Pledgor hereby
authorizes the Collateral Agent to attach each Pledge Amendment to this
Agreement and agrees that all Pledged Securities or Intercompany Notes listed on
any Pledge Amendment delivered to the Collateral Agent shall for all purposes
hereunder be considered Pledged Collateral.
SECTION 5.2. Voting Rights; Distributions; etc.
(i) So long as no Event of Default shall have occurred and be
continuing:
(A) Each Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Securities Collateral or any part
thereof for any purpose not inconsistent with the terms or purposes hereof, the
Credit Agreement or any other document evidencing the Obligations; provided,
however, that no Pledgor shall in any event exercise such rights in any manner
which may have a Material Adverse Effect.
(B) Each Pledgor shall be entitled to receive and retain, and to
utilize free and clear of the Lien hereof, any and all Distributions, but only
if and to the extent made in accordance with the provisions of the Credit
Agreement; provided, however, that any and all such Distributions consisting of
rights or interests in the form of securities shall be forthwith delivered to
the Collateral Agent to hold as Pledged Collateral and shall, if received by any
Pledgor, be received for the benefit of the Collateral Agent, be segregated from
the other property or funds of such Pledgor and be forthwith delivered to the
Collateral Agent as Pledged Collateral in the same form as so received (with any
necessary endorsement).
(C) The Collateral Agent shall be deemed without further action or
formality to have granted to each Pledgor all necessary consents relating to
voting rights and shall, if necessary, upon written request of any Pledgor and
at the sole cost and expense of the Pledgors, from time to time execute and
deliver (or cause to be executed and delivered) to such Pledgor all such
instruments as such Pledgor may reasonably request in order to permit such
Pledgor to exercise the voting and other rights
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which it is entitled to exercise pursuant to Section 5.2(i)(A) hereof and to
receive the Distributions which it is authorized to receive and retain pursuant
to Section 5.2(i)(B) hereof.
(ii) Upon the occurrence and during the continuance of any Event of
Default:
(A) All rights of each Pledgor to exercise the voting and other
consensual rights it would otherwise be entitled to exercise pursuant to Section
5.2(i)(A) hereof shall cease, and all such rights shall thereupon become vested
in the Collateral Agent, which shall thereupon have the sole right to exercise
such voting and other consensual rights.
(B) All rights of each Pledgor to receive Distributions which it would
otherwise be authorized to receive and retain pursuant to Section 5.2(i)(B)
hereof shall cease and all such rights shall thereupon become vested in the
Collateral Agent, which shall thereupon have the sole right to receive and hold
as Pledged Collateral such Distributions.
(iii) Each Pledgor shall, at its sole cost and expense, from time to
time execute and deliver to the Collateral Agent appropriate instruments as the
Collateral Agent may request in order to permit the Collateral Agent to exercise
the voting and other rights which it may be entitled to exercise pursuant to
Section 5.2(i)(A) hereof and to receive all Distributions which it may be
entitled to receive under Section 5.2(i)(B) hereof.
(iv) All Distributions which are received by any Pledgor contrary to
the provisions of Section 5.2(i)(B) hereof shall be received for the benefit of
the Collateral Agent, shall be segregated from other funds of such Pledgor and
shall be forthwith delivered over to the Collateral Agent as Pledged Collateral
in the same form as so received (with any necessary endorsement).
SECTION 5.3. Operative Agreements. Each Pledgor has delivered to the
Collateral Agent true, correct and complete copies of the Operative Agreements.
The Operative Agreements are in full force and effect, have not as of the date
hereof been amended or modified except as disclosed to the Collateral Agent, and
there is no existing default by any party thereunder or any event which, with
the giving of notice of passage of time or both, would constitute a default by
any party thereunder. Each Pledgor shall deliver to the Collateral Agent a copy
of any notice of default given or received by it under any Operative Agreement
within fifteen (15) days after such Pledgor gives or receives such notice. No
Pledgor will terminate or agree to terminate any Operative Agreement or make any
amendment or modification to any Operative Agreement which may have a Material
Adverse Effect.
SECTION 5.4. Defaults, etc. Such Pledgor is not in default in the
payment of any portion of any mandatory capital contribution, if any, required
to be made under any agreement to which such Pledgor is a party relating to the
Pledged Securities pledged by it, and such Pledgor is not in violation of any
other material provisions of any such agreement to which such Pledgor is a
party, or otherwise in default or violation thereunder. No Securities Collateral
pledged by such Pledgor is subject to any defense, offset or counterclaim, nor
have any of the foregoing been asserted or alleged against such Pledgor by any
person with respect thereto, and as of the date hereof, there are no
certificates, instruments, documents or other writings (other than the Operative
Agreements and certificates, if any, delivered to the Collateral Agent) which
evidence any Pledged Securities of such Pledgor.
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SECTION 5.5. Certain Agreements of Pledgors As Issuers and Holders of
Equity Interests.
(i) In the case of each Pledgor which is an issuer of Securities
Collateral, such Pledgor agrees to be bound by the terms of this Agreement
relating to the Securities Collateral issued by it and will comply with such
terms insofar as such terms are applicable to it.
(ii) In the case each Pledgor which is a partner in a partnership,
limited liability company or other entity, such Pledgor hereby consents to the
extent required by the applicable Operative Agreement to the pledge by each
other of the Borrower, Guarantors or any other Pledgor, pursuant to the terms of
any of the Security Documents, of the Pledged Interests in such partnership,
limited liability company or other entity and, upon the occurrence and during
the continuance of an Event of Default, to the transfer of such Pledged
Interests to the Collateral Agent or its nominee and to the substitution of the
Collateral Agent or its nominee as a substituted partner or member in such
partnership, limited liability company or other entity with all the rights,
powers and duties of a general partner or a limited partner or member, as the
case may be.
ARTICLE VI
CERTAIN PROVISIONS CONCERNING INTELLECTUAL
PROPERTY COLLATERAL
SECTION 6.1. Grant of License. For the purpose of enabling the
Collateral Agent, only upon the occurrence and during the continuance of an
Event of Default, to exercise rights and remedies under Article IX hereof at
such time as the Collateral Agent shall be lawfully entitled to exercise such
rights and remedies, and for no other purpose, each Pledgor hereby grants to the
Collateral Agent, to the extent assignable, an irrevocable, non-exclusive
license (exercisable without payment of royalty or other compensation to such
Pledgor) to use, assign, license or sublicense any of the Intellectual Property
Collateral now owned or hereafter acquired by such Pledgor, wherever the same
may be located. Such license shall include access to all media in which any of
the licensed items may be recorded or stored and to all computer programs used
for the compilation or printout hereof.
SECTION 6.2. Protection of Collateral Agent's Security. On a
continuing basis, each Pledgor shall, at its sole cost and expense, (i) promptly
following its becoming aware thereof, notify the Collateral Agent of (A) any
materially adverse determination in any proceeding in the United States Patent
and Trademark Office or the United States Copyright Office (or its Canadian
equivalent) with respect to any material Patent, Trademark or Copyright or (B)
the institution of any proceeding or any adverse determination in any federal,
provincial, state or local court or administrative body regarding such Pledgor's
claim of ownership in or right to use any of the Intellectual Property
Collateral material to the use and operation of the Pledged Collateral or
Mortgaged Property, its right to register such Intellectual Property Collateral
or its right to keep and maintain such registration in full force and effect,
(ii) use commercially reasonable efforts to maintain and protect the
Intellectual Property Collateral material to the use and operation of the
Pledged Collateral or Mortgaged Property as presently used and operated and as
contemplated by the Credit Agreement, (iii) not permit to lapse or become
abandoned any Intellectual Property Collateral material to the use and operation
of the Pledged Collateral or Mortgaged Property as presently used and operated
and as contemplated by the Credit Agreement, and not settle or compromise any
pending or future litigation or administrative proceeding with respect to such
Intellectual Property
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Collateral, in each case except as shall be consistent with commercially
reasonable business judgment, (iv) upon such Pledgor obtaining knowledge
thereof, promptly notify the Collateral Agent in writing of any event which may
be reasonably expected to materially and adversely affect the value or utility
of the Intellectual Property Collateral or any portion thereof material to the
use and operation of the Pledged Collateral or Mortgaged Property, the ability
of such Pledgor or the Collateral Agent to dispose of the Intellectual Property
Collateral or any portion thereof or the rights and remedies of the Collateral
Agent in relation thereto including, without limitation, a levy or threat of
levy or any legal process against the Intellectual Property Collateral or any
portion thereof, (v) not license the Intellectual Property Collateral other than
licenses entered into by such Pledgor in, or incidental to, the ordinary course
of business or otherwise not prohibited by the Credit Agreement, or amend or
permit the amendment of any of the licenses in a manner that materially and
adversely affects the right to receive payments thereunder, or in any manner
that would materially impair the value of the Intellectual Property Collateral
or the Lien on and security interest in the Intellectual Property Collateral
intended to be granted to the Collateral Agent for the benefit of the Secured
Parties, without the consent of the Collateral Agent, not to be unreasonably
withheld, (vi) diligently keep adequate records respecting the Intellectual
Property Collateral and (vii) furnish to the Collateral Agent from time to time
upon the Collateral Agent's reasonable request therefor detailed statements and
amended schedules further identifying and describing the Intellectual Property
Collateral and such other materials evidencing or reports pertaining to the
Intellectual Property Collateral as the Collateral Agent may from time to time
request, which request, unless an Event of Default has occurred an is
continuing, or a Material Adverse Effect has occurred, shall occur no more often
than once every three months.
SECTION 6.3. After-Acquired Property. If any Pledgor shall, at any
time before the Obligations have been paid in full (other than contingent
indemnification obligations which, pursuant to the provisions of the Credit
Agreement or the Security Documents, survive the termination thereof), (i)
obtain any rights to any additional Intellectual Property Collateral or (ii)
become entitled to the benefit of any additional Intellectual Property
Collateral or any renewal or extension thereof, including any reissue, division,
continuation, or continuation-in-part of any Intellectual Property Collateral,
or any improvement on any Intellectual Property Collateral, the provisions
hereof shall automatically apply thereto and any such item enumerated in clause
(i) or (ii) of this Section 6.3 with respect to such Pledgor shall automatically
constitute Intellectual Property Collateral if such would have constituted
Intellectual Property Collateral at the time of execution hereof and be subject
to the Lien and security interest created by this Agreement without further
action by any party. Each Pledgor shall promptly (i) provide to the Collateral
Agent written notice of any of the foregoing and (ii) confirm the attachment of
the Lien and security interest created by this Agreement to any rights described
in clauses (i) and (ii) of the immediately preceding sentence of this Section
6.3 by execution of an instrument in form reasonably acceptable to the
Collateral Agent.
SECTION 6.4. Modifications. Each Pledgor authorizes the Collateral
Agent to modify this Agreement by amending Schedules 15(a) and 15(b) annexed to
the Perfection Certificate to include any Intellectual Property Collateral
acquired or arising after the date hereof of such Pledgor including, without
limitation, any of the items listed in Section 6.3 hereof.
SECTION 6.5. Litigation. Unless there shall occur and be continuing
any Event of Default, each Pledgor shall have the right to commence and
prosecute in its own name, as the party in interest, for its own benefit and at
the sole cost and expense of the Pledgor, such applications for protection of
the Intellectual Property Collateral and suits, proceedings or other actions to
prevent the infringement, counterfeiting, unfair competition, dilution,
diminution in value or other damage as are
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necessary to protect the Intellectual Property Collateral. Upon the occurrence
and during the continuance of any Event of Default, the Collateral Agent shall
have the right but shall in no way be obligated to file applications for
protection of the Intellectual Property Collateral and/or bring suit in the name
of any Pledgor, the Collateral Agent or the Secured Parties to enforce the
Intellectual Property Collateral and any license thereunder. In the event of
such suit, each Pledgor shall, at the reasonable request of the Collateral
Agent, do any and all lawful acts and execute any and all documents requested by
the Collateral Agent in aid of such enforcement and the Pledgor shall promptly
reimburse and indemnify the Collateral Agent, as the case may be, for all costs
and expenses incurred by the Collateral Agent in the exercise of its rights
under this Section 6.5 in accordance with Section 11.03 of the Credit Agreement.
In the event that the Collateral Agent shall elect not to bring suit to enforce
the Intellectual Property Collateral, each Pledgor agrees, at the reasonable
request of the Collateral Agent, to take all commercially reasonable actions
necessary, whether by suit, proceeding or other action, to prevent the
infringement, counterfeiting, unfair competition, dilution, diminution in value
of or other damage to any of the Intellectual Property Collateral by others (to
the extent the foregoing would have a Material Adverse Effect) and for that
purpose agrees to diligently maintain any suit, proceeding or other action
against any person so infringing necessary to prevent such infringement.
ARTICLE VII
CERTAIN PROVISIONS CONCERNING ACCOUNTS
SECTION 7.1. Maintenance of Records. Each Pledgor shall keep and
maintain at its own cost and expense complete records of each Account, in a
manner consistent with prudent business practice, including, without limitation,
records of all payments received, all credits granted thereon, all merchandise
returned and all other documentation relating thereto. Each Pledgor shall, at
such Pledgor's sole cost and expense, upon the Collateral Agent's demand made at
any time after the occurrence and during the continuance of any Event of
Default, deliver all tangible evidence of Accounts, including, without
limitation, all documents evidencing Accounts and any books and records relating
thereto to the Collateral Agent or to its representatives (copies of which
evidence and books and records may be retained by such Pledgor). Upon the
occurrence and during the continuance of any Event of Default, the Collateral
Agent may transfer a full and complete copy of any Pledgor's books, records,
credit information, reports, memoranda and all other writings relating to the
Accounts to and for the use by any person that has acquired or is contemplating
acquisition of an interest in the Accounts or the Collateral Agent's security
interest therein without the consent of any Pledgor.
SECTION 7.2. Legend. Each Pledgor shall legend, at the request of the
Collateral Agent made at any time after the occurrence of any Event of Default
or a Material Adverse Effect, and in form and manner satisfactory to the
Collateral Agent, the Accounts and the other books, records and documents of
such Pledgor evidencing or pertaining to the Accounts with an appropriate
reference to the fact that the Accounts have been assigned to the Collateral
Agent for the benefit of the Secured Parties and that the Collateral Agent has a
security interest therein.
SECTION 7.3. Modification of Terms, etc. No Pledgor shall rescind or
cancel any obligations evidenced by any Account or modify any term thereof or
make any adjustment with respect thereto except in the ordinary course of
business consistent with prudent business practice, or extend or renew any such
obligations except in the ordinary course of business consistent with prudent
business practice or compromise or settle any dispute, claim, suit or legal
proceeding relating thereto or sell any
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Account or interest therein except in the ordinary course of business consistent
with prudent business practice without the prior written consent of the
Collateral Agent. Each Pledgor shall timely fulfill all obligations on its part
to be fulfilled under or in connection with the Accounts.
SECTION 7.4. Collection. Each Pledgor shall cause to be collected from
the account debtor of each of the Accounts, as and when due in the ordinary
course of business consistent with prudent business practice (including, without
limitation, Accounts that are delinquent, such Accounts to be collected in
accordance with generally accepted commercial collection procedures), any and
all amounts owing under or on account of such Account (other than the collection
of Accounts which, consistent with prudent business practice, the Pledgor
determines should not be collected), and apply forthwith upon receipt thereof
all such amounts as are so collected to the outstanding balance of such Account,
except that any Pledgor may, with respect to an Account, allow in the ordinary
course of business (i) a refund or credit due as a result of returned or damaged
or defective merchandise and (ii) such extensions of time to pay amounts due in
respect of Accounts and such other modifications of payment terms or settlements
in respect of Accounts as shall be commercially reasonable in the circumstances,
all in accordance with such Pledgor's ordinary course of business consistent
with its collection practices as in effect from time to time. The costs and
expenses (including, without limitation, reasonable attorneys' fees) of
collection, in any case, whether incurred by any Pledgor, the Collateral Agent
or any Secured Party, shall be paid by the Pledgors.
ARTICLE VIII
TRANSFERS
SECTION 8.1. Transfers of Pledged Collateral. No Pledgor shall sell,
convey, assign or otherwise dispose of, or grant any option with respect to, any
of the Pledged Collateral pledged by it hereunder except as permitted by the
Credit Agreement.
ARTICLE IX
REMEDIES
SECTION 9.1. Remedies. Upon the occurrence and during the continuance
of any Event of Default, the Collateral Agent may from time to time exercise in
respect of the Pledged Collateral, in addition to the other rights and remedies
provided for herein or otherwise available to it:
(i) Personally, or by agents or attorneys, immediately take possession
of the Pledged Collateral or any part thereof, from any Pledgor or any other
person who then has possession of any part thereof with or without notice or
process of law, and for that purpose may, to the maximum extent permitted by
applicable law, enter upon any Pledgor's premises where any of the Pledged
Collateral is located, remove such Pledged Collateral, remain present at such
premises to receive copies of all communications and remittances relating to the
Pledged Collateral and use in connection with such removal and possession any
and all services, supplies, aids and other facilities of any Pledgor;
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(ii) Demand, ▇▇▇ for, collect or receive any money or property at any
time payable or receivable in respect of the Pledged Collateral including,
without limitation, instructing the obligor or obligors on any agreement,
instrument or other obligation constituting part of the Pledged Collateral to
make any payment required by the terms of such agreement, instrument or other
obligation directly to the Collateral Agent, and in connection with any of the
foregoing, compromise, settle, extend the time for payment and make other
modifications with respect thereto; provided, however, that in the event that
any such payments are made directly to any Pledgor, prior to receipt by any such
obligor of such instruction, such Pledgor shall segregate all amounts received
pursuant thereto for the benefit of the Collateral Agent and shall promptly (but
in no event later than two (2) Business Days after receipt thereof) pay such
amounts to the Collateral Agent;
(iii) Sell, assign, grant a license to use or otherwise liquidate, or
direct any Pledgor to sell, assign, grant a license to use or otherwise
liquidate, any and all investments made in whole or in part with the Pledged
Collateral or any part thereof, and take possession of the proceeds of any such
sale, assignment, license or liquidation in a manner consistent with Article X
hereof;
(iv) Take possession of the Pledged Collateral or any part thereof, by
directing any Pledgor in writing to deliver the same to the Collateral Agent at
any place or places so designated by the Collateral Agent and reasonably
convenient to the Pledgors, in which event such Pledgor shall at its own
expense: (A) forthwith cause the same to be moved to the place or places
designated by the Collateral Agent and therewith delivered to the Collateral
Agent, (B) store and keep any Pledged Collateral so delivered to the Collateral
Agent at such place or places pending further action by the Collateral Agent and
(C) while the Pledged Collateral shall be so stored and kept, provide such
security and maintenance services as shall be necessary to protect the same and
to preserve and maintain them in good condition. Each Pledgor's obligation to
deliver the Pledged Collateral as contemplated in this Section 9.1(iv) is of the
essence hereof. Upon application to a court of equity having jurisdiction, the
Collateral Agent shall be entitled to a decree requiring specific performance by
any Pledgor of such obligation;
(v) Withdraw all moneys, instruments, securities and other property in
any bank, financial securities, deposit or other account of any Pledgor
constituting Pledged Collateral for application to the Obligations as provided
in Article X hereof;
(vi) Retain and apply the Distributions to the Obligations as provided
in Article X hereof;
(vii) Exercise any and all rights as beneficial and legal owner of the
Pledged Collateral, including, without limitation, perfecting assignment of and
exercising any and all voting, consensual and other rights and powers with
respect to any Pledged Collateral; and
(viii) All the rights and remedies of a secured party on default under
the PPSA, and the Collateral Agent may also in its sole discretion, without
notice except as specified in Section 9.2 hereof, sell, assign or grant a
license to use the Pledged Collateral or any part thereof in one or more parcels
at public or private sale, at any exchange, broker's board or at any of the
Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as the
Collateral Agent may deem commercially reasonable. The Collateral Agent or any
other Secured Party or any of their respective Affiliates may be the purchaser,
licensee, assignee or recipient of any or all of the Pledged Collateral at any
such sale and shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Pledged Collateral sold, assigned or licensed at such sale, to use and apply any
of the Obligations owed to such person as a credit on
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account of the purchase price of any Pledged Collateral payable by such person
at such sale. Each purchaser, assignee, licensee or recipient at any such sale
shall acquire the property sold, assigned or licensed absolutely free from any
claim or right on the part of any Pledgor, and each Pledgor hereby waives, to
the fullest extent permitted by law, all rights of redemption, stay and/or
appraisal which it now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted. The Collateral Agent shall
not be obligated to make any sale of Pledged Collateral regardless of notice of
sale having been given. The Collateral Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned. Each Pledgor hereby waives, to the fullest extent permitted by
law, any claims against the Collateral Agent arising by reason of the fact that
the price at which any Pledged Collateral may have been sold, assigned or
licensed at such a private sale was less than the price which might have been
obtained at a public sale, even if the Collateral Agent accepts the first offer
received and does not offer such Pledged Collateral to more than one offeree.
SECTION 9.2. Notice of Sale. Each Pledgor acknowledges and agrees
that, to the extent notice of sale or other disposition of Pledged Collateral
shall be required by law, ten (10) days' prior notice to such Pledgor of the
time and place of any public sale or of the time after which any private sale or
other intended disposition is to take place shall be commercially reasonable
notification of such matters. No notification need be given to any Pledgor if it
has signed, after the occurrence and during the continuance of an Event of
Default, a written statement renouncing or modifying any right to notification
of sale or other intended disposition.
SECTION 9.3. Waiver of Notice and Claims. Each Pledgor hereby waives,
to the fullest extent permitted by applicable law, notice or judicial hearing in
connection with the Collateral Agent's taking possession or the Collateral
Agent's disposition of any of the Pledged Collateral, including, without
limitation, any and all prior notice and hearing for any prejudgment remedy or
remedies and any such right which such Pledgor would otherwise have under law,
and each Pledgor hereby further waives, to the fullest extent permitted by
applicable law: (i) all damages occasioned by such taking of possession, (ii)
all other requirements as to the time, place and terms of sale or other
requirements with respect to the enforcement of the Collateral Agent's rights
hereunder and (iii) all rights of redemption, appraisal, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law. The
Collateral Agent shall not be liable for any incorrect or improper payment made
pursuant to this Article IX in the absence of gross negligence or willful
misconduct. Any sale of, or the grant of options to purchase, or any other
realization upon, any Pledged Collateral shall operate to divest all right,
title, interest, claim and demand, either at law or in equity, of the applicable
Pledgor therein and thereto, and shall be a perpetual bar both at law and in
equity against such Pledgor and against any and all persons claiming or
attempting to claim the Pledged Collateral so sold, optioned or realized upon,
or any part thereof, from, through or under such Pledgor.
SECTION 9.4. Certain Sales of Pledged Collateral.
(i) Each Pledgor recognizes that, by reason of certain prohibitions
contained in law, rules, regulations or orders of any Governmental Authority,
the Collateral Agent may be compelled, with respect to any sale of all or any
part of the Pledged Collateral, to limit purchasers to those who meet the
requirements of such Governmental Authority. Each Pledgor acknowledges that any
such sales may be at prices and on terms less favorable to the Collateral Agent
than those obtainable through a public sale without such restrictions, and,
notwithstanding such circumstances, agrees that any such restricted sale
-27-
shall be deemed to have been made in a commercially reasonable manner and that,
except as may be required by applicable law, the Collateral Agent shall have no
obligation to engage in public sales.
(ii) Each Pledgor recognizes that, by reason of certain prohibitions
contained in applicable federal, provincial or state securities laws, the
Collateral Agent may be compelled, with respect to any sale of all or any part
of the Securities Collateral and Investment Property, to limit purchasers to
persons who will agree, among other things, to acquire such Securities
Collateral or Investment Property for their own account, for investment and not
with a view to the distribution or resale thereof. Each Pledgor acknowledges
that any such private sales may be at prices and on terms less favorable to the
Collateral Agent than those obtainable through a public sale without such
restrictions (including, without limitation, a public offering made pursuant to
a registration statement under the applicable federal, state or provincial
securities laws), and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner and that the Collateral Agent shall have no obligation to engage in
public sales and no obligation to delay the sale of any Securities Collateral or
Investment Property for the period of time necessary to permit the issuer
thereof to register it for a form of public sale requiring registration under
applicable federal, state or provincial securities laws, even if such issuer
would agree to do so.
(iii) If the Collateral Agent determines to exercise its right to sell
any or all of the Securities Collateral or Investment Property, upon written
request, the applicable Pledgor shall from time to time furnish to the
Collateral Agent all such information as the Collateral Agent may request in
order to determine the number of securities included in the Securities
Collateral or Investment Property which may be sold by the Collateral Agent as
exempt transactions under the applicable federal, state or provincial securities
laws and the rules of any regulatory commission or authority thereunder, as the
same are from time to time in effect.
(iv) Each Pledgor further agrees that a breach of any of the covenants
contained in this Section 9.4 will cause irreparable injury to the Collateral
Agent and other Secured Parties, that the Collateral Agent and the other Secured
Parties have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 9.4 shall be
specifically enforceable against such Pledgor, and such Pledgor hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants except for a defense that no Event of Default has occurred and
is continuing.
SECTION 9.5. No Waiver; Cumulative Remedies.
(i) No failure on the part of the Collateral Agent to exercise, no
course of dealing with respect to, and no delay on the part of the Collateral
Agent in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy; nor shall the Collateral Agent be
required to look first to, enforce or exhaust any other security, collateral or
guaranties. The remedies herein provided are cumulative and are not exclusive of
any remedies provided by law.
(ii) In the event that the Collateral Agent shall have instituted any
proceeding to enforce any right, power or remedy under this Agreement by
foreclosure, sale, entry or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Collateral Agent, then and in every such case, the Pledgor, the
Collateral Agent and each other Secured Party shall be restored to their
respective former positions and rights hereunder with respect
-28-
to the Pledged Collateral (except for determinations made in such proceedings),
and all rights, remedies and powers of the Collateral Agent and the other
Secured Parties shall continue as if no such proceeding had been instituted
(except for determinations made in such proceedings).
SECTION 9.6. Certain Additional Actions Regarding Intellectual
Property. If any Event of Default shall have occurred and be continuing, upon
the written demand of Collateral Agent, each Pledgor shall execute and deliver
to Collateral Agent an assignment or assignments of the registered Patents,
Trademarks and/or Copyrights and such other documents as are necessary to carry
out the intent and purposes hereof. Within five (5) Business Days of written
notice thereafter from Collateral Agent, each Pledgor shall make available to
Collateral Agent, to the extent within such Pledgor's power and authority, such
personnel in such Pledgor's employ on the date of the Event of Default as
Collateral Agent may reasonably designate to permit such Pledgor to continue,
directly or indirectly, to produce, advertise and sell the products and services
sold by such Pledgor under the registered Patents, Trademarks and/or Copyrights,
and such persons shall be available to perform their prior functions on
Collateral Agent's behalf.
ARTICLE X
PROCEEDS OF CASUALTY EVENTS AND COLLATERAL DISPOSITIONS/APPLICATION OF
PROCEEDS
SECTION 10.1. Proceeds of Casualty Events and Collateral Dispositions.
The Pledgor shall take all actions required by the Credit Agreement with respect
to any Net Cash Proceeds of any Casualty Event or from the sale or disposition
of any Pledged Collateral.
SECTION 10.2. Application of Proceeds. The proceeds received by the
Collateral Agent in respect of any sale of, collection from or other realization
upon all or any part of the Collateral pursuant to the exercise by the
Collateral Agent of its remedies shall be applied, together with any other sums
then held by the Collateral Agent pursuant to this Agreement, in accordance with
the Credit Agreement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Concerning Collateral Agent.
(i) The Collateral Agent has been appointed as collateral agent
pursuant to the Credit Agreement. The actions of the Collateral Agent hereunder
are subject to the provisions of the Credit Agreement. The Collateral Agent
shall have the right hereunder to make demands, to give notices, to exercise or
refrain from exercising any rights, and to take or refrain from taking action
(including, without limitation, the release or substitution of the Pledged
Collateral), in accordance with this Agreement and the Credit Agreement. The
Collateral Agent may employ agents and attorneys-in-fact in connection herewith
and shall not be liable for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. The Collateral Agent may resign
and a successor Collateral
-29-
Agent may be appointed in the manner provided in the Credit Agreement. Upon the
acceptance of any appointment as the Collateral Agent by a successor Collateral
Agent, that successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent under this Agreement, and the retiring Collateral Agent shall
thereupon be discharged from its duties and obligations under this Agreement.
After any retiring Collateral Agent's resignation, the provisions hereof shall
inure to its benefit as to any actions taken or omitted to be taken by it under
this Agreement while it was the Collateral Agent.
(ii) The Collateral Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Pledged Collateral in its possession
if such Pledged Collateral is accorded treatment substantially equivalent to
that which the Collateral Agent, in its individual capacity, accords its own
property consisting of similar instruments or interests, it being understood
that neither the Collateral Agent nor any of the Secured Parties shall have
responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any
Securities Collateral, whether or not the Collateral Agent or any other Secured
Party has or is deemed to have knowledge of such matters or (ii) taking any
necessary steps to preserve rights against any person with respect to any
Pledged Collateral.
(iii) The Collateral Agent shall be entitled to rely upon any written
notice, statement, certificate, order or other document or any telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person, and, with respect to all matters pertaining to this
Agreement and its duties hereunder, upon advice of counsel selected by it.
(iv) If any item of Pledged Collateral also constitutes collateral
granted to Collateral Agent under any other deed of trust, mortgage, security
agreement, pledge or instrument of any type, in the event of any conflict
between the provisions hereof and the provisions of such other deed of trust,
mortgage, security agreement, pledge or instrument of any type in respect of
such collateral, Collateral Agent, in its sole discretion, shall select which
provision or provisions shall control.
SECTION 11.2. Collateral Agent May Perform; Collateral Agent Appointed
Attorney-in-Fact. If any Pledgor shall fail to perform any covenants contained
in this Agreement (including, without limitation, such Pledgor's covenants to
(i) pay the premiums in respect of all required insurance policies hereunder,
(ii) pay Claims, (iii) make repairs, (iv) discharge Liens or (v) pay or perform
any obligations of such Pledgor under any Pledged Collateral) or if any
representation or warranty on the part of any Pledgor contained herein shall be
breached, the Collateral Agent may (but shall not be obligated to) do the same
or cause it to be done or remedy any such breach, and may expend funds for such
purpose; provided, however, that Collateral Agent shall in no event be bound to
inquire into the validity of any tax, lien, imposition or other obligation which
such Pledgor fails to pay or perform as and when required hereby and which such
Pledgor does not contest in accordance in accordance with the provisions of
Section 4.11 hereof. Any and all amounts so expended by the Collateral Agent
shall be paid by the Pledgor in accordance with the provisions of Section 11.03
of the Credit Agreement. Neither the provisions of this Section 11.2 nor any
action taken by Collateral Agent pursuant to the provisions of this Section 11.2
shall prevent any such failure to observe any covenant contained in this
Agreement nor any breach of representation or warranty from constituting an
Event of Default. Each Pledgor hereby appoints the Collateral Agent its
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor, or otherwise, upon the occurrence and during the
continuance of an Event of Default, in the Collateral Agent's discretion to take
any action and to execute any instrument consistent with the terms of the Credit
Agreement, this Agreement
-30-
and the other Security Documents which the Collateral Agent may deem necessary
or advisable to accomplish the purposes hereof. The foregoing grant of authority
is a power of attorney coupled with an interest and such appointment shall be
irrevocable for the term hereof. Each Pledgor hereby ratifies all that such
attorney shall lawfully do or cause to be done by virtue hereof.
SECTION 11.3 Continuing Security Interest; Assignment. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
(i) be binding upon the Pledgors, their respective successors and assigns and
(ii) inure, together with the rights and remedies of the Collateral Agent
hereunder, to the benefit of the Collateral Agent and the other Secured Parties
and each of their respective successors, transferees and assigns. No other
persons (including, without limitation, any other creditor of any Pledgor) shall
have any interest herein or any right or benefit with respect hereto. Without
limiting the generality of the foregoing clause (ii), any Secured Party may
assign or otherwise transfer any indebtedness held by it secured by this
Agreement to any other person, and such other person shall thereupon become
vested with all the benefits in respect thereof granted to such Secured Party,
herein or otherwise, subject however, to the provisions of the Credit Agreement
and any Hedging Obligation.
SECTION 11.4 Termination; Release. The Pledged Collateral shall be
released from the Lien of this Agreement in accordance with the provisions of
the Credit Agreement. Upon termination hereof or any release of Pledged
Collateral in accordance with the provisions of the Credit Agreement, the
Collateral Agent shall, upon the request and at the sole cost and expense of the
Pledgor, promptly assign, transfer and deliver to the Pledgor, against receipt
and without recourse to or warranty by the Collateral Agent except as to the
fact that the Collateral Agent has not encumbered the released assets, such of
the Pledged Collateral to be released (in the case of a release) as may be in
possession of the Collateral Agent and as shall not have been sold or otherwise
applied pursuant to the terms hereof, and, with respect to any other Pledged
Collateral, proper documents and instruments (including PPSA termination,
discharge, or financing change statements or releases) acknowledging the
termination hereof or the release of such Pledged Collateral, as the case may
be.
SECTION 11.5 Modification in Writing. No amendment, modification,
supplement, termination or waiver of or to any provision hereof, nor consent to
any departure by any Pledgor therefrom, shall be effective unless the same shall
be made in accordance with the terms of the Credit Agreement. Any amendment,
modification or supplement of or to any provision hereof, any waiver of any
provision hereof and any consent to any departure by any Pledgor from the terms
of any provision hereof shall be effective only in the specific instance and for
the specific purpose for which made or given. Except where notice is
specifically required by this Agreement or any other document evidencing the
Obligations, no notice to or demand on any Pledgor in any case shall entitle any
Pledgor to any other or further notice or demand in similar or other
circumstances.
SECTION 11.6 Notices. Unless otherwise provided herein or in the
Credit Agreement, any notice or other communication herein required or permitted
to be given shall be given in the manner and become effective as set forth in
the Credit Agreement, as to any Pledgor, addressed to it at the address of the
Borrower set forth in the Credit Agreement and as to the Collateral Agent,
addressed to it at the address set forth in the Credit Agreement, or in each
case at such other address as shall be designated by such party in a written
notice to the other party complying as to delivery with the terms of this
Section 11.6.
-31-
SECTION 11.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE PROVINCE OF
MANITOBA AND THE LAWS OF CANADA APPLICABLE THEREIN.
SECTION 11.8 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF
JURY TRIAL. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PLEDGOR WITH RESPECT TO
THIS AGREEMENT MAY BE BROUGHT IN THE COURT OF QUEEN'S BENCH OF THE PROVINCE OF
MANITOBA, WINNIPEG JUDICIAL DISTRICT AND APPELLATE COURTS OF ANY THEREOF, AND BY
EXECUTION AND DELIVERY HEREOF, EACH PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH PLEDGOR AGREES
THAT SERVICE OF PROCESS IN ANY PROCEEDING MAY BE EFFECTED BY MAILING A COPY
THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH IN THE CREDIT
AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH THE COLLATERAL AGENT SHALL HAVE BEEN
NOTIFIED PURSUANT THERETO. IF ANY AGENT APPOINTED BY ANY PLEDGOR REFUSES TO
ACCEPT SERVICE, SUCH PLEDGOR HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL
CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
COLLATERAL AGENT TO BRING PROCEEDINGS AGAINST ANY PLEDGOR IN THE COURTS OF ANY
OTHER JURISDICTION.
THE PLEDGORS HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 11.9 Severability of Provisions. Any provision hereof which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 11.10 Execution in Counterparts. This Agreement and any
amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original,
but all such counterparts together shall constitute one and the same agreement.
SECTION 11.11 Business Days. In the event any time period or any date
provided in this Agreement ends or falls on a day other than a Business Day,
then such time period shall be deemed to end and such date shall be deemed to
fall on the next succeeding Business Day, and performance herein may be made on
such Business Day, with the same force and effect as if made on such other day.
SECTION 11.12 Waiver of Stay. Each Pledgor covenants (to the extent it
may lawfully do so) that in the event that such Pledgor or any property or
assets of such Pledgor shall hereafter become the subject of a voluntary or
involuntary proceeding under Title 11 of the United States Code or the
Bankruptcy & Insolvency Act (Canada) or such Pledgor shall otherwise be a party
to any federal, provincial or state bankruptcy, insolvency, moratorium or
similar proceeding to which the provisions
-32-
relating to the automatic stay under ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code
or any similar provision in the Bankruptcy & Insolvency Act (Canada) or any such
law is applicable, then, in any such case, whether or not the Collateral Agent
has commenced foreclosure proceedings under this Agreement, such Pledgor shall
not, and each Pledgor hereby expressly waives its right to (to the extent it may
lawfully do so) at any time insist upon, plead or in any whatsoever, claim or
take the benefit or advantage of any such automatic stay or any such similar
provision as it relates to the exercise of any of the rights and remedies
(including, without limitation, any foreclosure proceedings) available to the
Collateral Agent as provided in this Agreement, in any other Collateral Document
or any other document evidencing the Obligations. Each Pledgor further covenants
(to the extent it may lawfully do so) that it will not hinder, delay or impede
the execution of any power granted herein to the Collateral Agent, but will
suffer and permit the execution of every such power as though no law relating to
any stay or similar provision had been enacted.
SECTION 11.13 No Claims Against Collateral Agent. Nothing contained in
this Agreement shall constitute any consent or request by the Collateral Agent,
express or implied, for the performance of any labor or services or the
furnishing of any materials or other property in respect of the Pledged
Collateral or any part thereof, nor as giving any Pledgor any right, power or
authority to contract for or permit the performance of any labor or services or
the furnishing of any materials or other property in such fashion as would
permit the making of any claim against the Collateral Agent in respect thereof
or any claim that any Lien based on the performance of such labor or services or
the furnishing of any such materials or other property is prior to the Lien
hereof.
SECTION 11.14 No Release. Nothing set forth in this Agreement shall
relieve any Pledgor from the performance of any term, covenant, condition or
agreement on such Pledgor's part to be performed or observed under or in respect
of any of the Pledged Collateral or from any liability to any person under or in
respect of any of the Pledged Collateral or shall impose any obligation on the
Collateral Agent or any other Secured Party to perform or observe any such term,
covenant, condition or agreement on such Pledgor's part to be so performed or
observed or shall impose any liability on the Collateral Agent or any other
Secured Party for any act or omission on the part of such Pledgor relating
thereto or for any breach of any representation or warranty on the part of such
Pledgor contained in this Agreement, the Credit Agreement or the other Loan
Documents, or under or in respect of the Pledged Collateral or made in
connection herewith or therewith. The obligations of each Pledgor contained in
this Section 11.14 shall survive the termination hereof and the discharge of
such Pledgor's other obligations under this Agreement, the Credit Agreement and
the other Loan Documents.
SECTION 11.15 Obligations Absolute. To the fullest extent permitted by
applicable law, all obligations of each Pledgor hereunder shall be absolute and
unconditional irrespective of:
(i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any other Pledgor;
(ii) any lack of validity or enforceability of the Credit Agreement,
any Hedging Obligation or any other Loan Document, or any other agreement or
instrument relating thereto against any other Pledgor;
(iii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any Hedging
Obligation or any other Loan Document or any other agreement or instrument
relating thereto;
-33-
(iv) any pledge, exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to any departure
from any guarantee, for all or any of the Obligations;
(v) any exercise, non-exercise or waiver of any right, remedy, power
or privilege under or in respect hereof, the Credit Agreement, any Hedging
Obligation or any other Loan Document except as specifically set forth in a
waiver granted pursuant to the provisions of Section 11.5 hereof; or
(vi) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, any Pledgor.
SECTION 11.16. Receipt of Copy and Waiver. Each Pledgor hereby
acknowledges receipt of a copy of this Agreement and waives its right to receive
a copy of any financing statement or financing change statement registered by
the Collateral Agent, or of any verification statement with respect to any
financing statement of financing change statement registered by the Collateral
Agent. (Applies in all PPSA provinces except Ontario.)
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the Pledgors and the Collateral Agent have caused
this Agreement to be duly executed and delivered by their duly authorized
officers as of the date first above written.
NORCRAFT CANADA CORPORATION,
as Pledgor
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
UBS AG, STAMFORD BRANCH,
as Collateral Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. Saint
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Saint
Title: Associate Director, Banking Products
Services US
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Associate Director, Banking
Products Services, US
S-1
EXHIBIT 1
[Form of]
ISSUERS ACKNOWLEDGMENT
The undersigned hereby (i) acknowledges receipt of a copy of that
certain security agreement (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Canadian Security Agreement;"
capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms in the Canadian Security Agreement), dated as of October
21, 2003, made by Norcraft Canada Corporation, a Nova Scotia corporation (the
"Pledgor") and UBS AG, STAMFORD BRANCH, as collateral agent (in such capacity
and together with any successors in such capacity, the "Collateral Agent"), (ii)
agrees promptly to note on its books the security interests granted to the
Collateral Agent and confirmed under the Canadian Security Agreement, (iii)
agrees that it will comply with instructions of the Collateral Agent with
respect to the applicable Securities Collateral without further consent by the
Pledgor, (iv) agrees to notify the Collateral Agent upon obtaining knowledge of
any interest in favor of any person in the applicable Securities Collateral that
is adverse to the interest of the Collateral Agent therein and (v) waives any
right or requirement at any time hereafter to receive a copy of the Canadian
Security Agreement in connection with the registration of any Securities
Collateral thereunder in the name of the Collateral Agent or its nominee or the
exercise of voting rights by the Collateral Agent or its nominee.
[ ]
By:__________________________________
Name:
Title:
EXHIBIT 2
[Form of]
SECURITIES PLEDGE AMENDMENT
This Security Pledge Amendment, dated as of [ ], is delivered pursuant
to Section 5.1 of that certain security agreement (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "Canadian
Security Agreement;" capitalized terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Canadian Security
Agreement), dated as of October 21, 2003, made by Norcraft Canada Corporation, a
Nova Scotia corporation (the "Pledgor") and UBS AG, STAMFORD BRANCH, as
collateral agent (in such capacity and together with any successors in such
capacity, the "Collateral Agent"). The undersigned hereby agrees that this
Pledge Amendment may be attached to the Canadian Security Agreement and that the
Pledged Securities and/or Intercompany Notes listed on this Pledge Amendment
shall be deemed to be and shall become part of the Pledged Collateral and shall
secure all Obligations.
PLEDGED SECURITIES
CLASS NUMBER OF PERCENTAGE OF
OF STOCK SHARES ALL ISSUED CAPITAL
OR PAR CERTIFICATE OR OR OTHER EQUITY
ISSUER INTERESTS VALUE NO(S). INTERESTS INTERESTS OF ISSUER
------ --------- ----- ----------- --------- -------------------
INTERCOMPANY NOTES
PRINCIPAL DATE OF INTEREST MATURITY
ISSUER AMOUNT ISSUANCE RATE DATE
------ --------- -------- -------- --------
[ ],
as Pledgor
By: _________________________________
Name:
Title:
AGREED TO AND ACCEPTED:
UBS AG, STAMFORD BRANCH,
as Collateral Agent
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
EXHIBIT 3
[Form of]
CANADIAN JOINDER AGREEMENT
[Name of New Pledgor]
[Address of New Pledgor]
[Date]
UBS AG, Stamford Branch
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to that certain security agreement (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Canadian Security Agreement;" capitalized terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the Canadian Security
Agreement), dated as of October 21, 2003, made by Norcraft Canada Corporation, a
Nova Scotia corporation (the "Pledgor") and UBS AG, STAMFORD BRANCH, as
collateral agent (in such capacity and together with any successors in such
capacity, the "Collateral Agent").
This letter supplements the Canadian Security Agreement and is
delivered by the undersigned, [ ] (the "New Pledgor"), pursuant to Section
3.5 of the Canadian Security Agreement. The New Pledgor hereby agrees to be
bound as a Guarantor and as a Pledgor by all of the terms, covenants and
conditions set forth in the Canadian Security Agreement to the same extent that
it would have been bound if it had been a signatory to the Canadian Security
Agreement on the execution date of the Canadian Security Agreement. The New
Pledgor also hereby agrees to be bound as a party by all of the terms, covenants
and conditions applicable to it set forth in Articles V, VI and VII of the
Credit Agreement to the same extent that it would have been bound if it had been
a signatory to the Credit Agreement on the execution date of the Credit
Agreement. Without limiting the generality of the foregoing, the New Pledgor
hereby grants and pledges to the Collateral Agent, as collateral security for
the full, prompt and complete payment and performance when due (whether at
stated maturity, by acceleration or otherwise) of the Obligations, a Lien on and
security interest in, all of its right, title and interest in, to and under the
Pledged Collateral and expressly assumes all obligations and liabilities of a
Guarantor and Pledgor thereunder. The New Pledgor hereby makes each of the
representations and warranties applicable to the Pledgors contained in the
Canadian Security Agreement and Section III of the Credit Agreement, except that
such representations and warranties shall expressly relate to the date hereof
Annexed hereto are supplements to each of the schedules to the Canadian
Security Agreement and the Credit Agreement, as applicable, with respect to the
New Pledgor. Such
supplements shall be deemed to be part of the Canadian Security Agreement or the
Credit Agreement, as applicable.
This agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original, but all such counterparts together shall
constitute one and the same agreement.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE PROVINCE OF MANITOBA AND THE LAWS
OF CANADA APPLICABLE THEREIN.
IN WITNESS WHEREOF, the New Pledgor has caused this letter agreement
to be executed and delivered by its duly authorized officer as of the date first
above written.
[NEW PLEDGOR]
By:
__________________________________
Name:
Title:
AGREED TO AND ACCEPTED:
UBS AG, STAMFORD BRANCH,
as Collateral Agent
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
EXHIBIT 4
[Form of]
FORM OF NOTICE TO BAILEE OF SECURITY INTEREST IN INVENTORY
CERTIFIED MAIL -- RETURN RECEIPT REQUESTED
[ ], 2003
TO: [Bailee's Name]
[Bailee's Address]
Re: Norcraft Canada Corporation
Ladies and Gentlemen:
In connection with that certain Canadian Security Agreement, dated as
of October 21, 2003 (the "Canadian Security Agreement"), made by Norcraft Canada
Corporation and UBS AG, Stamford Branch ("UBS") as Collateral Agent, we have
granted to UBS a security interest in substantially all of our personal
property, including our inventory.
This letter constitutes notice to you, and your signature below will
constitute your acknowledgment, of UBS's continuing first priority security
interest in all goods with respect to which you are acting as bailee. Until you
are notified in writing to the contrary by UBS, however, you may continue to
accept instructions from us regarding the delivery of goods stored by you.
Your acknowledgment also constitutes a waiver and release, for UBS's
benefit, of any and all claims, liens, including bailee's liens, and demands of
every kind which you have or may later have against such property (including,
without limitation, any right to include such property in any secured financing
to which you may become party).
In order to complete our records, kindly have a duplicate of this
letter signed by an officer of your company and return same to us at your
earliest convenience.
Receipt acknowledged, confirmed and Very truly yours,
approved:
[BAILEE] NORCRAFT CANADA CORPORATION
By: _________________________________ By: _________________________________
Name: Name:
Title: Title:
cc: UBS AG, Stamford Branch