Exhibit 10.11
WEIGH-TRONIX CANADA, ULC
as Obligor
and
FLEET NATIONAL BANK
as Collateral Agent
________________________________________________________________________________
AMENDED AND RESTATED SECURITY AGREEMENT
June 13, 2000
________________________________________________________________________________
Stikeman Elliott
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
Section 1.1 Defined Terms................................................................. 2
Section 1.2 Terms Incorporated by Reference............................................... 5
Section 1.3 Certain Phrases, etc.......................................................... 5
Section 1.4 Gender and Number............................................................. 5
Section 1.5 Headings, etc................................................................. 6
Section 1.6 Schedules..................................................................... 6
ARTICLE 2
SECURITY
Section 2.1 Grant of Security............................................................. 6
Section 2.2 Secured Obligations Secured................................................... 7
Section 2.3 Attachment.................................................................... 7
Section 2.4 Scope of Security Interest.................................................... 8
Section 2.5 Grant of Licence to Use Intellectual Property................................. 9
Section 2.6 Care and Custody of Collateral................................................ 10
Section 2.7 Rights of the Obligor......................................................... 10
ARTICLE 3
ENFORCEMENT
Section 3.1 Enforcement................................................................... 11
Section 3.2 Remedies...................................................................... 11
Section 3.3 Additional Rights............................................................. 12
Section 3.4 Receiver's Powers............................................................. 13
Section 3.5 Appointment of Attorney....................................................... 13
Section 3.6 Dealing with the Collateral................................................... 14
Section 3.7 Standards of Sale............................................................. 14
Section 3.8 Dealings by Third Parties..................................................... 15
Section 3.9 Registration Rights........................................................... 15
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.1 General Representations, Warranties and Covenants............................. 16
Section 4.2 Representations, Warranties and Covenants Concerning Intellectual Property.... 22
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ARTICLE 5
GENERAL
Section 5.1 Notices..................................................... 24
Section 5.2 Releases.................................................... 25
Section 5.3 No Merger, Survival of Representations and Warranties....... 25
Section 5.4 Further Assurances.......................................... 25
Section 5.5 Supplemental Security....................................... 26
Section 5.6 Successors and Assigns...................................... 26
Section 5.7 Overdue Amounts............................................. 26
Section 5.8 Severability................................................ 26
Section 5.9 Waivers, etc................................................ 26
Section 5.10 Application of Proceeds..................................... 26
Section 5.11 Collateral Agent............................................ 27
Section 5.12 No Novation................................................. 28
Section 5.13 Governing Law............................................... 28
AMENDED AND RESTATED SECURITY AGREEMENT
Amended and Restated Security Agreement dated as of the 13th day of June,
2000, made by WEIGH-TRONIX CANADA, ULC, an unlimited company incorporated and
existing under the laws of the Province of Nova Scotia, to and in favour of
FLEET NATIONAL BANK for the benefit of and as agent of the Secured Creditors.
WHEREAS:
A. the Obligor, the guarantors referred to therein, the Original Borrowers,
Fleet National Bank (as successor to BankBoston N.A.), as Foreign Agent and as
Foreign Bank, the other lending institutions listed on Schedule I thereto and
the Original Agent entered into the Existing Credit Agreement providing for the
making of credit facilities available to the Original Borrowers;
B. the Obligor entered into the Original Guarantee pursuant to which the
Obligor guaranteed the Obligations (as defined in the Existing Credit Agreement)
of the Original Borrowers under the Existing Credit Agreement;
C. the Obligor entered into the Original Security Agreement as security for
the payment and performance of the Obligor"s obligations under the Existing
Credit Agreement, the Original Guarantee and the other Loan Documents (as such
term is defined in the Existing Credit Agreement);
D. pursuant to an assignment and acceptance agreement dated as of the 13th day
of June, 2000 between, inter alia, the Obligor, the Original Borrowers, the
Original Creditors, the Lenders, the Agent and the Collateral Agent, the parties
to the Existing Credit Agreement assigned, inter alia, all of their respective
rights and obligations under the Existing Credit Agreement and the other Loan
Documents to the parties to the Amended and Restated Credit Agreement;
E. in connection with the foregoing, the Obligor and SWT, as borrowers, Weigh-
Tronix, LLC, certain banks and financial institutions party thereto, Lehman
Brothers Inc., as sole advisor, Lehman Brothers Inc. and FleetBoston Robertson
Stephens Inc., as co-arrangers and co-book managers, Lehman Commercial Paper
Inc., as syndication agent, Fleet National Bank, as security agent, and the
Agent have amended and restated the Existing Credit Agreement on the terms and
conditions contained in the Amended and Restated Credit Agreement; and
F. it is a condition precedent to the continued extensions of credit to the
Obligor and SWT on the terms and conditions of the Amended and Restated Credit
Agreement that the Obligor amend and restate the Original Security Agreement in
its entirety on the terms and conditions herein contained.
NOW THEREFORE, in consideration of the foregoing premises, the sum of
Cdn.$10.00 in lawful money of Canada now paid by the Collateral Agent to the
Obligor
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and other good and valuable consideration (the receipt and adequacy of which are
hereby acknowledged), the Obligor agrees as follows:
ARTICLE 1
INTERPRETATION
Section 1.1 Defined Terms.
As used in this amended and restated security agreement and the recitals
hereto, the following terms have the following meanings:
"Agent" means Fleet National Bank acting as administrative agent for the
Lenders under the Amended and Restated Credit Agreement and any successor
appointed pursuant to the Amended and Restated Credit Agreement.
"Amended and Restated Credit Agreement" means the amended and restated
credit agreement dated as of the 13/th/ day of June, 2000, among the Obligor and
SWT, as borrowers, Weigh-Tronix, LLC, certain banks and financial institutions
party thereto, as lenders, Lehman Brothers Inc., as sole advisor, Lehman
Brothers Inc. and FleetBoston Robertson Stephens Inc., as co-arrangers and co-
book managers, Lehman Commercial Paper Inc., as syndication agent, Fleet
National Bank, as security agent, and the Agent, as the same may be further
amended, modified, extended, renewed, replaced, restated, supplemented or
refinanced from time to time and including any agreement extending the maturity
of, refinancing or restructuring (including the inclusion of additional
borrowers thereunder or any increase in the amount borrowed) all or any portion
of, the indebtedness under such agreement or any successor agreements, whether
or not with the same agent or lenders.
"Amended and Restated Guarantee" means the Original Guarantee, as amended
and restated by the amended and restated guarantee made as of the date hereof by
the Obligor in favour of the Secured Creditors and the Collateral Agent, as the
same may be further amended, modified, extended, renewed, replaced, restated or
supplemented from time to time.
"Borrowers" means, collectively, the Obligor and SWT.
"Collateral" has the meaning ascribed thereto in Section 2.1.
"Collateral Agent" means the Agent acting as collateral agent for the
Secured Creditors.
"Credit Documents" means, collectively, the Amended and Restated Credit
Agreement, the Loan Documents, the Letters of Credit, any Specified Hedge
Agreement and any other document, made, delivered or given in connection
therewith.
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"Event of Default" shall mean any Event of Default under, and as defined
in, the Amended and Restated Credit Agreement or any payment default after any
applicable grace period, under any other Credit Document.
"Existing Credit Agreement" means the credit agreement dated as of the 1st
day of May, 1998 among the Original Borrowers, Fleet National Bank (as successor
to BankBoston N.A.), as Foreign Agent and as Foreign Bank, the other lending
institutions listed on Schedule I thereto, and the Original Agent as amended,
restated, modified and in effect immediately prior to the date of execution of
the Amended and Restated Credit Agreement.
"Governmental Entity" means any (i) multinational, federal, provincial,
state, municipal, local or other government, governmental or public department,
central bank, court, commission, board, bureau, agency or instrumentality,
domestic or foreign, (ii) any subdivision or authority of any of the foregoing,
or (iii) any quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any of the above.
"Instruments" means, (i) a bill, note or cheque within the meaning of the
Bills of Exchange Act (Canada) or any other writing that evidences a right to
the payment of money and is of a type that in the ordinary course of business is
transferred by delivery with any necessary endorsement or assignment, or (ii) a
letter of credit and an advice of credit if the letter or advice states that it
must be surrendered upon claiming payment thereunder, or (iii) chattel paper or
any other writing that evidences both a monetary obligation and a security
interest in or a lease of specific goods, or (iv) documents of title or any
other writing that purports to be issued by or addressed to a bailee and
purports to cover such goods in the bailee"s possession as are identified or
fungible portions of an identified mass, and that in the ordinary course of
business is treated as establishing that the person in possession of it is
entitled to receive, hold and dispose of the document and the goods it covers,
or (v) any document or writing commonly known as an instrument.
"Lenders" means, collectively, Lehman Brothers Inc., as sole advisor,
Lehman Brothers Inc. and FleetBoston Robertson Stephens Inc., as co-arrangers
and co-book managers, Lehman Commercial Paper Inc., as syndication agent, the
Agent and the several banks and other financial institutions or entities from
time to time parties to the Amended and Restated Credit Agreement, and their
respective successors and permitted assigns.
"Letters of Credit" has the meaning ascribed thereto in the Amended and
Restated Credit Agreement.
"Lien" has the meaning ascribed thereto in the Amended and Restated Credit
Agreement.
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"Loan Documents" has the meaning ascribed thereto in the Amended and
Restated Credit Agreement.
"Material Adverse Effect" has the meaning ascribed thereto in the Amended
and Restated Credit Agreement.
"Negotiable Collateral" has the meaning ascribed thereto in Section 2.3(3).
"Obligor" means Weigh-Tronix Canada, ULC, an unlimited company incorporated
and existing under the laws of the Province of Nova Scotia and its successors
and permitted assigns.
"Original Agent" means Fleet National Bank, as successor to BankBoston,
N.A., acting as administrative agent for the Original Lenders under the Existing
Credit Agreement.
"Original Borrowers" means, collectively, Palometa Investments B.V., SWT
Limited, Salter Housewares Holdings Limited, and Salter Housewares Limited, as
borrowers under the Existing Credit Agreement and their respective successors
and permitted assigns.
"Original Collateral Agent" means the Original Agent acting as collateral
agent for various secured creditors pursuant to the Original Security Agreement.
"Original Creditors" means, collectively, the Original Lenders, the
Original Agent and the Original Collateral Agent.
"Original Guarantee" means a guaranty by the Obligor dated as of the 1/st/
day of May, 1998, guaranteeing the payment and performance of the Original
Borrowers" obligations under the Existing Credit Agreement as amended, modified,
supplemented and in effect immediately prior to the execution and delivery of
the Amended and Restated Guarantee.
"Original Lenders" means, collectively, the lenders party to the Existing
Credit Agreement and their respective successors and assigns.
"Original Security Agreement" means a security agreement between the
Obligor and the Original Agent dated as of the 1/st/ day of May, 1998, as
security for payment and performance of the Obligor"s obligations under the
Existing Credit Agreement and the other Obligations (as defined therein), as
amended, modified, supplemented and in effect immediately prior to the execution
and delivery of this amended and restated security agreement.
"Person" means a natural person, partnership, corporation, joint stock
company, trust, unincorporated association, joint venture or other entity or
Governmental Entity, and pronouns have a similarly extended meaning.
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"Restricted Asset" has the meaning ascribed thereto in Section 2.4(1).
"Secured Creditors" means, collectively, the Agent, the Collateral Agent,
the Lenders, and each of the Agent, a Lender or any affiliate of such Lender, as
a counterparty under any Specified Hedge Agreement.
"Secured Obligations" has the meaning ascribed thereto in Section 2.2.
"Securities" means a document that is, (i) issued in bearer, order or
registered form, (ii) of a type commonly dealt in upon securities exchanges or
markets or commonly recognized in any area in which it is issued or dealt in as
a medium for investment, (iii) one of a class or series or by its terms is
divisible into a class or series of documents, and (iv) evidence of a share,
participation or other interest in property or in any enterprise or is evidence
of an obligation of the issuer and includes an uncertificated security.
"Security Documents" has the meaning ascribed thereto in the Amended and
Restated Credit Agreement.
"Security Interest" has the meaning ascribed thereto in Section 2.2.
"Specified Hedge Agreement" has the meaning ascribed thereto in the Amended
and Restated Credit Agreement.
"Subsidiaries" has the meaning ascribed thereto in the Amended and Restated
Credit Agreement.
"SWT" means SWT Finance B.V., a limited liability company organized under
the laws of The Netherlands, and its successors and permitted assigns.
Section 1.2 Terms Incorporated by Reference.
Terms defined in the Personal Property Security Act (Ontario) (as amended
from time to time, the "PPSA") and used but not otherwise defined in this
amended and restated security agreement shall have the same meanings.
Section 1.3 Certain Phrases, etc.
In this amended and restated security agreement the words "including" and
"includes" mean "including (or includes) without limitation".
Section 1.4 Gender and Number.
Any reference in this amended and restated security agreement to gender
shall include all genders and words importing the singular number only shall
include the plural and vice versa.
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Section 1.5 Headings, etc.
The division of this amended and restated security agreement into Articles
and Sections and the insertion of headings are for convenient reference only and
are not to affect its interpretation.
Section 1.6 Schedules.
The Schedules A to D attached to this amended and restated security
agreement shall, for all purposes of this amended and restated security
agreement, form an integral part of it.
ARTICLE 2
SECURITY
Section 2.1 Grant of Security.
Subject to Section 2.4, the Obligor grants, assigns, mortgages, charges,
hypothecates and pledges to and deposits with (to the extent the Obligor has
possession thereof) the Collateral Agent, for the benefit of the Secured
Creditors, a security interest in all of the Obligor"s right, title and interest
in and to the personal property and undertaking of the Obligor now owed or
hereafter acquired (collectively, the "Collateral") including any and all of the
Obligor's:
(a) inventory including goods held for sale, lease or resale, goods
furnished or to be furnished to third parties under contracts of
lease, consignment or service, goods which are raw materials or work
in process, goods used in or procured for packing and materials used
or consumed in the business of the Obligor;
(b) equipment, machinery, furniture, fixtures, plant, vehicles and other
goods of every kind and description and all licences and other rights
and all records, files, charts, plans, drawings, specifications,
manuals and documents relating thereto;
(c) accounts due or accruing and all agreements, books, accounts,
invoices, letters, documents and papers recording, evidencing or
relating thereto;
(d) money, documents of title, chattel paper, Instruments and Securities,
including the Instruments and Securities listed in Schedule "A";
(e) intangibles including all security interests, goodwill, choses in
action, contracts, contract rights, software and other contractual
benefits;
(f) all trademarks, trademark registrations and pending trademark
applications, patents and pending patent applications and copyrights,
designs, confidential information and other intellectual property
(collectively, the "Intellectual Property");
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(g) all substitutions and replacements of and increases, additions and,
where applicable, accessions to the property described in Sections
2.1(a)-(f) inclusive; and
(h) proceeds in any form derived directly or indirectly from any dealing
with all or any part of the property described in Sections 2.1(a)-(g)
inclusive or the proceeds of such proceeds.
Section 2.2 Secured Obligations Secured.
(1) The security interest granted hereby (the "Security Interest") secures the
payment and performance of all debts, liabilities and obligations, present
or future, direct or indirect, absolute or contingent, matured or
unmatured, at any time or from time to time due or accruing due and owing
by or otherwise payable by the Obligor to the Collateral Agent and the
Secured Creditors, in any currency, and whether incurred by the Obligor
alone or with another or others, arising out of, in connection with or
pursuant to the Amended and Restated Credit Agreement, the Amended and
Restated Guarantee and the other Credit Documents (collectively, and
together with the expenses, costs and charges set out in Section 2.2(2),
the "Secured Obligations").
(2) All expenses, costs and charges incurred by or on behalf of the Collateral
Agent and the Secured Creditors in connection with this amended and
restated security agreement, the Security Interest or the Collateral,
including all legal fees, court costs, receiver's or agent's remuneration
and other expenses of taking possession of, repairing, protecting,
insuring, preparing for disposition, realizing, collecting, selling,
transferring, delivering or obtaining payment for the Collateral, and of
taking, defending or participating in any action or proceeding in
connection with any of the foregoing matters or otherwise in connection
with the Secured Creditors' interest in any Collateral, whether or not
directly relating to the enforcement of this amended and restated security
agreement or any other Credit Document, shall be added to and form a part
of the Secured Obligations.
Section 2.3 Attachment.
(1) The Obligor acknowledges that (i) value has been given, (ii) it has rights
in the Collateral (other than after-acquired Collateral), (iii) it has not
agreed to postpone the time of attachment of the Security Interest, and
(iv) it has received a duplicate original copy of this amended and restated
security agreement.
(2) If any Security or Instrument is now or at any time hereafter becomes
evidenced, in whole or in part, by uncertificated securities registered or
recorded in records maintained by or on behalf of the issuer thereof in the
name of a clearing agency or a custodian or of a nominee of either, the
Obligor shall, at the request of the Collateral Agent, cause the Security
or Instrument to be entered in the records of the clearing agency or
custodian.
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(3) The Obligor hereby deposits with the Collateral Agent any and all
certificates evidencing the Securities listed in Schedule "A", each
registered in the name of the Collateral Agent or its nominee. If the
Obligor acquires any chattel paper, instrument, security or negotiable
document of title, Instrument, Security or other certificate, document,
instrument or other writing constituting Collateral (collectively,
"Negotiable Collateral"), the Obligor will, within 15 days after receipt
notify the Collateral Agent thereof, and upon request by the Collateral
Agent will promptly deliver to the Collateral Agent the Negotiable
Collateral as security for the Secured Obligations and shall, at the
request of the Collateral Agent (i) cause the transfer of the Negotiable
Collateral to the Collateral Agent to be registered wherever, in the
reasonable opinion of the Collateral Agent, such registration may be
required or advisable, (ii) duly endorse the same for transfer in blank or
as the Collateral Agent may reasonably direct, and (iii) immediately
deliver to the Collateral Agent any and all consents or other documents
which may be necessary to effect the transfer of the Negotiable Collateral
to the Collateral Agent or any third party.
(4) The Obligor will promptly inform the Collateral Agent in writing of the
acquisition by the Obligor of any personal property which is not adequately
described in Section 2.1, and the Obligor will execute and deliver, at its
own expense, from time to time, amendments to this amended and restated
security agreement and its schedules or additional security agreements or
schedules as may be reasonably required by the Collateral Agent.
Section 2.4 Scope of Security Interest.
(1) To the extent that an assignment of amounts payable and other proceeds
arising under or in connection with any agreement, licence, permit or quota
of the Obligor (each, a "Restricted Asset") is prohibited by the terms
thereof, the Security Interest created hereunder will constitute a trust
created in favour of the Collateral Agent and the Secured Creditors
pursuant to which the Obligor shall hold as trustee all proceeds arising
under or in connection with the Restricted Asset in trust for the
Collateral Agent on the following basis:
(i) until the Security Interest has become enforceable, the Obligor
shall be entitled to receive all such proceeds; and
(ii) whenever the Security Interest has become enforceable, all rights
of the Obligor to receive such proceeds shall cease, the Obligor
shall at the request of the Collateral Agent take all such
actions to collect and enforce payment and other rights arising
under the Restricted Asset in accordance with the instructions of
the Collateral Agent and all such proceeds arising under or in
connection with the Restricted Asset shall be immediately paid
over to the Collateral Agent for the benefit of the Secured
Creditors.
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The Obligor shall not exercise any rights of set off with respect to amounts
payable under or in connection with any Restricted Asset and shall use all
commercially reasonable efforts to ensure that no other party to the Restricted
Asset shall exercise any rights of set off against any amounts payable
thereunder. The Obligor shall use all commercially reasonable efforts to obtain
the consent of each other party to the Restricted Asset to the assignment of the
Restricted Asset to the Collateral Agent in accordance with this amended and
restated security agreement and shall use all commercially reasonable efforts to
ensure that all agreements entered into on and after the date hereof expressly
permit assignments of the benefits of such agreements as collateral security to
the Collateral Agent in accordance with the terms of this amended and restated
security agreement.
(2) Until the Security Interest shall have become enforceable, the grant of the
Security Interest in the Intellectual Property shall not affect in any way
the Obligor's rights to commercially exploit the Intellectual Property,
defend it, enforce the Obligor's rights in it or with respect to it against
third parties in any court or claim and be entitled to receive any damages
with respect to any infringement of it.
(3) The Security Interest shall not extend to consumer goods.
(4) The Security Interest shall not extend or apply to the last day of the term
of any lease or sublease or any agreement for a lease or sublease, now held
or hereafter acquired by the Obligor in respect of real property, but the
Obligor shall stand possessed of any such last day upon trust to assign and
dispose of it as the Collateral Agent may reasonably direct.
(5) To the extent that the creation of the Security Interest will constitute a
breach under any real property lease or sub-lease (each a "Restricted
Lease"), the Security Interest will not attach to the Restricted Lease but
the Obligor shall hold its interest in the Restricted Lease in trust for
the Collateral Agent and shall, upon the request therefor from the
Collateral Agent, (i) obtain the consent of the other party thereto; and
(ii) assign such Restricted Lease to the Collateral Agent, or as it may
direct, immediately upon obtaining the consent of the other party. The
Corporation shall use all commercially reasonable efforts to ensure that
all real property leases, sub-leases and other agreements entered into on
and after the date hereof expressly permit the creation of Security
Interest in the interests of the Corporation therein and assignments of the
benefits of such agreements as collateral security to the Collateral Agent
in each case in accordance with the terms of this amended and restated
security agreement.
Section 2.5 Grant of Licence to Use Intellectual Property.
For purposes of enabling the Collateral Agent to exercise its rights and
remedies pursuant to Article 3, at such time as the Collateral Agent shall be
lawfully entitled to exercise its rights and remedies and for no other purpose,
the Obligor grants to the Collateral Agent an irrevocable, nonexclusive licence
(exercisable without payment of
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royalty or other compensation to the Obligor) to use, assign or sublicense any
of the Intellectual Property wherever the same may be located, including in such
licence access to (i) all media in which any of the licensed items may be
recorded or stored, and (ii) all software and computer programs used for
compilation or print-out.
Section 2.6 Care and Custody of Collateral.
(1) The Collateral Agent and the Secured Creditors shall have no obligation to
keep Collateral in their possession identifiable.
(2) The Collateral Agent may, after the Security Interest shall have become
enforceable, (i) notify any Person obligated on an account or on chattel
paper or any obligor on an instrument to make payments to the Collateral
Agent, whether or not the Obligor was previously making collections on such
accounts, chattel paper, instruments, (ii) assume control of any proceeds
arising from the Collateral.
(3) The Collateral Agent need not see to the collection of dividends on, or
exercise any option or right in connection with, the Securities and
Instruments and need not protect or preserve them from depreciating in
value or becoming worthless and is released from all responsibility for any
loss of value. The Collateral Agent shall be bound to exercise in the
physical keeping of the Collateral only the same degree of care as it would
exercise with respect to its own Securities kept at the same place.
Section 2.7 Rights of the Obligor.
(1) Until the Security Interest has become enforceable, the Obligor shall be
entitled to vote the Securities and to receive all cash dividends. In
order to allow the Obligor to vote the Securities, the Collateral Agent
shall from time to time, at the request and the expense of the Obligor, (i)
execute valid proxies appointing proxyholders to attend and act at meetings
of shareholders, and (ii) execute resolutions in writing, all pursuant to
the relevant provisions of the issuer's governing legislation. Whenever
the Security Interest has become enforceable, all rights of the Obligor to
vote (under any proxy given by the Collateral Agent (or its nominee) in
connection herewith or otherwise) or to receive dividends shall cease and
all such rights shall become vested solely and absolutely in the Collateral
Agent.
(2) Any dividends received by the Obligor contrary to Section 2.7(1) or any
other moneys or property which may be received by the Obligor after the
Security Interest has become enforceable for, or in respect of, the
Collateral shall be received as trustee for the Collateral Agent and the
Secured Creditors and shall be immediately paid over to the Collateral
Agent.
(3) For greater certainty, the Securities and Instruments shall include any
substitutions therefor, additions thereto or proceeds thereof and all
interests, rights and claims of the Obligor in respect thereof, arising out
of any
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consolidation, subdivision, reclassification, stock dividend or similar
increase or decrease in or alteration of the capital of the issuer of the
Securities and Instruments or any other event and all interest, dividends,
cash, options, warrants, rights, instruments and other property and monies
now or hereafter received, distributed or declared in respect of or in
exchange for such Securities and Instruments and all other rights,
interests and claims of the Obligor in respect of such Securities and
Instruments or evidenced thereby.
ARTICLE 3
ENFORCEMENT
Section 3.1 Enforcement.
The Security Interest shall be and become enforceable against the Obligor
if and when the Obligor shall fail to pay or perform all or any portion of the
Secured Obligations, when due and payable or to be performed, as the case may
be.
Section 3.2 Remedies.
Whenever the Security Interest has become enforceable, the Collateral Agent
may realize upon the Collateral and enforce the rights of the Collateral Agent
and the Secured Creditors by:
(a) entry onto any premises where Collateral consisting of tangible
personal property may be located;
(b) entry into possession of the Collateral by any method permitted by
law;
(c) sale or lease of all or any part of the Collateral;
(d) exercise and enforce all rights and remedies of a holder of the
Securities and Instruments as if the Collateral Agent were the
absolute owner thereof (including, if necessary, causing the
Collateral to be registered in the name of the Collateral Agent or its
nominee if not already done);
(e) collection of any proceeds arising in respect of the Collateral;
(f) collection, realization or sale of, or other dealing with, the
accounts;
(g) license or sublicense, whether on an exclusive or nonexclusive basis,
any Intellectual Property for such term and on such conditions and in
such manner as the Collateral Agent shall in its sole judgment
determine (taking into account such provisions as may be necessary to
protect and preserve such Intellectual Property);
(h) appointment by instrument in writing of a receiver (which term as used
in this amended and restated security agreement includes a receiver
and
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manager) or agent of all or any part of the Collateral and removal or
replacement from time to time of any receiver or agent;
(i) institution of proceedings in any court of competent jurisdiction for
the appointment of a receiver of all or any part of the Collateral;
(j) institution of proceedings in any court of competent jurisdiction for
sale or foreclosure of all or any part of the Collateral;
(k) filing of proofs of claim and other documents to establish claims to
the Collateral in any proceeding relating to the Obligor; and
(l) any other remedy or proceeding authorized or permitted under the PPSA
or otherwise by law or equity.
Such remedies may be exercised from time to time separately or in combination
and are in addition to, and not in substitution for, any other rights of the
Collateral Agent and the Secured Creditors however created. The Collateral
Agent shall not be bound to exercise any right or remedy, and the exercise of
rights and remedies shall be without prejudice to the rights of the Collateral
Agent and the Secured Creditors in respect of the Secured Obligations including
the right to claim for any deficiency.
Section 3.3 Additional Rights.
In addition to the remedies set forth in Section 3.2, the Collateral Agent
may, whenever the Security Interest has become enforceable:
(a) require the Obligor, at the Obligor's expense, to assemble the
Collateral at a place or places designated by notice in writing and
the Obligor agrees to so assemble the Collateral;
(b) require the Obligor, by notice in writing, to disclose to the
Collateral Agent the location or locations of the Collateral and the
Obligor agrees to make such disclosure when so required;
(c) repair, process, modify, complete or otherwise deal with the
Collateral and prepare for the disposition of the Collateral, whether
on the premises of the Obligor or otherwise;
(d) carry on all or any part of the business of the Obligor and, to the
exclusion of all others including the Obligor, enter upon, occupy and
use all or any of the premises, buildings, and other property of or
used by the Obligor for such time as the Collateral Agent sees fit,
free of charge, and the Collateral Agent and the Secured Creditors
shall not be liable to the Obligor for any act, omission or negligence
in so doing or for any rent, charges, depreciation or damages incurred
in connection with or resulting from such action;
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(e) borrow for the purpose of carrying on the business of the Obligor or
for the maintenance, preservation or protection of the Collateral and
grant a security interest in the Collateral, whether or not in
priority to the Security Interest, to secure repayment; and
(f) commence, continue or defend any judicial or administrative
proceedings for the purpose of protecting, seizing, collecting,
realizing or obtaining possession or payment of the Collateral, and
give good and valid receipts and discharges in respect of the
Collateral and compromise or give time for the payment or performance
of all or any part of the accounts or any other obligation of any
third party to the Obligor.
Section 3.4 Receiver's Powers.
(1) Any receiver appointed by the Collateral Agent shall be vested with the
rights and remedies which could have been exercised by the Collateral Agent
in respect of the Obligor or the Collateral and such other powers and
discretions as are granted in the instrument of appointment and any
supplemental instruments. The identity of the receiver, its replacement
and its remuneration shall be within the sole and unfettered discretion of
the Collateral Agent.
(2) Any receiver appointed by the Collateral Agent shall act as agent for the
Collateral Agent for the purposes of taking possession of the Collateral,
but otherwise and for all other purposes (except as provided below), as
agent for the Obligor. The receiver may sell, lease, or otherwise dispose
of Collateral as agent for the Obligor or as agent for the Collateral Agent
as the Collateral Agent may determine in its discretion. The Obligor
agrees to ratify and confirm all actions of the receiver acting as agent
for the Obligor, and to release and indemnify the receiver in respect of
all such actions.
(3) The Collateral Agent, in appointing or refraining from appointing any
receiver, shall not incur liability to the receiver, the Obligor or
otherwise and shall not be responsible for any misconduct or negligence of
such receiver.
Section 3.5 Appointment of Attorney.
The Obligor hereby irrevocably appoints the Collateral Agent (and any
officer thereof) as attorney of the Obligor (with full power of substitution) to
exercise in the name of and on behalf of the Obligor, whenever the Security
Interest has become enforceable, any of the Obligor's right (including the right
of disposal), title and interest in and to the Collateral including the
execution, endorsement, delivery and transfer of the Collateral to the
Collateral Agent, its nominees or transferees, and the Collateral Agent and its
nominees or transferees are hereby empowered to exercise all rights and powers
and to perform all acts of ownership with respect to the Collateral to the same
extent as the Obligor might do. All acts of the attorney are ratified and
approved, and the attorney shall not be liable for any act, failure to act or
any other matter or thing, except for its own gross negligence or wilful
misconduct. This appointment and power
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of substitution, being coupled with an interest, are irrevocable and shall not
terminate upon the bankruptcy, dissolution, winding up or insolvency of the
Obligor.
Section 3.6 Dealing with the Collateral.
(1) The Collateral Agent and the Secured Creditors shall not be obliged to
exhaust their recourse against the Obligor or any other Person or against
any other security they may hold in respect of the Secured Obligations
before realizing upon or otherwise dealing with the Collateral in such
manner as the Collateral Agent may consider desirable.
(2) The Collateral Agent and the Secured Creditors may grant extensions or
other indulgences, take and give up securities, accept compositions, grant
releases and discharges and otherwise deal with the Obligor and with other
Persons, sureties or securities as they may see fit without prejudice to
the Secured Obligations, the liability of the Obligor or the rights of the
Collateral Agent and the Secured Creditors in respect of the Collateral.
(3) Except as otherwise provided by law or this amended and restated security
agreement, the Collateral Agent and the Secured Creditors shall not be (i)
liable or accountable for any failure to collect, realize or obtain payment
in respect of the Collateral, (ii) bound to institute proceedings for the
purpose of collecting, enforcing, realizing or obtaining payment of the
Collateral or for the purpose of preserving any rights of any persons in
respect of the Collateral, (iii) responsible for any loss occasioned by any
sale or other dealing with the Collateral or by the retention of or failure
to sell or otherwise deal with the Collateral, or (iv) bound to protect the
Collateral from depreciating in value or becoming worthless.
Section 3.7 Standards of Sale.
Without prejudice to the ability of the Collateral Agent to dispose of the
Collateral in any manner which is commercially reasonable, the Obligor
acknowledges that:
(a) the Collateral may be disposed of in whole or in part;
(b) the Collateral may be disposed of by public auction, public tender or
private contract, with or without advertising and without any other
formality;
(c) any assignee of such Collateral may be the Collateral Agent, a Secured
Creditor or a customer of any such Person;
(d) any sale conducted by the Collateral Agent shall be at such time and
place, on such notice and in accordance with such procedures as the
Collateral Agent, in its sole discretion, may deem advantageous;
-15-
(e) the Collateral may be disposed of in any manner and on any terms
necessary to avoid violation of applicable law (including compliance
with such procedures as may restrict the number of prospective bidders
and purchasers, require that the prospective bidders and purchasers
have certain qualifications, and restrict the prospective bidders and
purchasers to persons who will represent and agree that they are
purchasing for their own account for investment and not with a view to
the distribution or resale of the Collateral) or in order to obtain
any required approval of the disposition (or of the resulting
purchase) by any governmental or regulatory authority or official;
(f) a disposition of the Collateral may be on such terms and conditions as
to credit or otherwise as the Collateral Agent, in its sole
discretion, may deem advantageous; and
(g) the Collateral Agent may establish an upset or reserve bid or price in
respect of the Collateral.
Section 3.8 Dealings by Third Parties.
(1) No Person dealing with the Collateral Agent, any of the Secured Creditors
or an agent or receiver shall be required to determine (i) whether the
Security Interest has become enforceable, (ii) whether the powers which
such Person is purporting to exercise have become exercisable, (iii)
whether any money remains due to the Collateral Agent or the Secured
Creditors by the Obligor, (iv) the necessity or expediency of the
stipulations and conditions subject to which any sale or lease is made, (v)
the propriety or regularity of any sale or other dealing by the Collateral
Agent or any Secured Creditor with the Collateral, or (vi) how any money
paid to the Collateral Agent or the Secured Creditors has been applied.
(2) Any bona fide purchaser of all or any part of the Collateral from the
Collateral Agent or any receiver or agent shall hold the Collateral
absolutely, free from any claim or right of whatever kind, including any
equity of redemption, of the Obligor, which it specifically waives (to the
fullest extent permitted by law) as against any such purchaser together
with all rights of redemption, stay or appraisal which the Obligor has or
may have under any rule of law or statute now existing or hereafter
adopted.
Section 3.9 Registration Rights
If the Collateral Agent shall determine to exercise its right to sell any
or all of the Securities pledged hereunder, and if in the opinion of the
Collateral Agent it is necessary or advisable to have any such Securities to be:
(a) qualified for distribution by prospectus pursuant to the applicable
securities legislation in any or all provinces of Canada, the Obligor
will cause the issuer thereof to (i) use its best efforts to file, and
obtain a receipt from the applicable securities regulatory
authorities, for a preliminary and
-16-
final prospectus offering for sale such number of Securities as the
Collateral Agent shall direct; and (ii) execute and deliver, and cause
the directors and officers of such issuer to execute and deliver, all
such certificates, instruments and documents, and do or cause to be
done all such other acts as may be, in the opinion of the Collateral
Agent, necessary or advisable to qualify such Securities for
distribution by prospectus pursuant to the applicable securities
legislation in any or all provinces of Canada; or
(b) sold or registered under the provisions of the U.S. Securities Act of
1933, as amended, the Obligor will cause the issuer thereof to (i)
execute and deliver, and cause the directors and officers of such
issuer to execute and deliver, all such instruments and documents, and
do or cause to be done all such other acts as may be, in the opinion
of the Collateral Agent, necessary or advisable to register the
Securities pledged hereunder, or that portion thereof to be sold,
under the provisions of the U.S. Securities Act of 1933, as amended,
(ii) use its best efforts to cause the registration statement relating
thereto to become effective and to remain effective for a period of
one year from the date of the first public offering of the Securities
pledged hereunder, or that portion thereof to be sold, and (iii) make
all amendments thereto and/or to the related prospectus which, in the
opinion of the Collateral Agent, are necessary or advisable, all in
conformity with the requirements of the U.S. Securities Act of 1933,
as amended, and the rules and regulations applicable thereto.
The Obligor agrees to cause such issuer to comply with the provisions of the
securities legislation in effect in any or all of the provinces of Canada, the
U.S. Securities Act of 1933, as amended, and the securities or "Blue Sky" laws
of any jurisdictions outside Canada, in each case, which the Collateral Agent
shall designate.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.1 General Representations, Warranties and Covenants.
The Obligor hereby represents and warrants and covenants and agrees that:
(a) Title to Collateral, etc. The Obligor is the owner of the Collateral
free from any adverse lien, security interest or other encumbrance,
except for the Security Interest created by this security agreement
and other liens permitted by the Amended and Restated Credit
Agreement. Except for outstanding accounts in the aggregate amount of
no more than Cdn. $50,000, none of the account debtors in respect of
any accounts, chattel paper or general intangibles and none of the
obligors in respect of any instruments included in the Collateral is a
Governmental Entity.
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(b) Continuous Perfection. The Obligor's place of business or, if more
than one, the chief executive office is indicated on the perfection
certificate delivered by the Obligor to the Collateral Agent herewith
and attached as Schedule "B" (the "Perfection Certificate"). The
Obligor will not change the same, or the name, identity or corporate
structure of the Obligor in any manner, without providing at least
fifteen (15) days prior written notice to the Collateral Agent.
Except for sales of inventory made in the ordinary course of business,
the Collateral, to the extent not delivered to the Collateral Agent
pursuant to Section 2.3(3), will be kept at those locations listed on
the Perfection Certificate, and the Obligor will not remove the
Collateral from such locations, without providing at least fifteen
(15) days prior written notice to the Collateral Agent.
(c) No Liens. Except for the Security Interest herein granted and liens
permitted by the Amended and Restated Credit Agreement, the Obligor
shall be the owner of the Collateral free from any lien, security
interest or other encumbrance, and the Obligor shall defend the same
against all claims and demands of all persons at any time claiming the
same or any interests therein adverse to the Collateral Agent or any
of the Secured Creditors. The Obligor shall not pledge, mortgage or
create, or suffer to exist a security interest in the Collateral in
favour of any person other than the Collateral Agent, for the benefit
of the Secured Creditors, except for liens permitted by the Amended
and Restated Credit Agreement.
(d) Pledged Securities and Instruments.
(i) The shares pledged by the Obligor hereunder constitute all the
issued and outstanding shares of all classes and instruments of
the shares and instruments of each issuer owned by the Obligor
and have been duly and validly issued and are fully paid and
non-assessible;
(ii) No person, firm or corporation has or will have any written or
oral option, warrant, right, call, commitment, conversion right,
right of exchange or other agreement or any right or privilege
(whether by law, pre-emptive or contractual) capable of becoming
an option, warrant, right, call, commitment, conversion right,
right of exchange or other agreement to acquire any right or
interest in any of the Securities and Instruments;
(iii) Each of the Securities and Instruments pledged by the Obligor
hereunder constitutes, where applicable, the legal, valid and
binding obligation of the Obligor with respect thereto,
enforceable in accordance with its terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization
and other similar laws relating to or affecting creditors"
rights severally,
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general equitable principles (whether considered in a proceeding
in equity or at law) and an implied covenant of good faith and
fair dealing;
(iv) Without the prior written consent of the Collateral Agent, the
Obligor will not (A) vote to enable, or take any other action to
permit, any issuer to issue any shares or other equity securities
of any nature or to issue any other securities convertible into
or granting the right to purchase or exchange for any shares or
other equity securities of any nature of any issuer, (B) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Securities and Instruments or
proceeds thereof (except pursuant to a transaction expressly
permitted by the Amended and Restated Credit Agreement), (C)
create, incur or permit to exist any Lien or option in favour of,
or any claim of any person with respect to, any of the Securities
and Instruments or proceeds thereof, or any interest therein,
except for the security interests created by this amended and
restated security agreement or (D) enter into any agreement or
undertaking restricting the right or ability of the Obligor or
the Collateral Agent to sell, assign or transfer any of the
Securities pledged hereunder or proceeds thereof;
(v) In the case where the Obligor is an issuer, such issuer agrees
that (A) it will be bound by the terms of this amended and
restated security agreement relating to the Securities pledged
hereunder and issued by it and will comply with such terms
insofar as such terms are applicable to it, and (B) the terms of
Section 4.1(d)(vi) and Section 3.9 shall apply to it, mutatis
mutandis, with respect to all actions that may be required of it
pursuant to Section 4.1(d)(vi) and Section 3.9 with respect to
the Securities pledged hereunder and issued by it; and
(vi) The Obligor hereby authorizes and instructs each issuer of any
Securities pledged by the Obligor hereunder to (A) comply with
any instruction received by it from the Collateral Agent in
writing that (x) states that an Event of Default has occurred and
is continuing and (y) is otherwise in accordance with the terms
of this amended and restated security agreement, without any
other or further instructions from the Obligor, and the Obligor
agrees that each issuer shall be fully protected in so complying,
and (B) unless otherwise expressly permitted hereby, pay any
dividends or other payments with respect to the Securities
pledged hereunder by the Obligor directly to the Collateral
Agent.
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(e) No Transfers. The Obligor will not sell or offer to sell or otherwise
transfer the Collateral or any interest therein except as permitted
under the Amended and Restated Credit Agreement.
(f) Maintenance of Insurance. The Obligor will maintain with financially
sound and reputable insurers insurance with respect to its properties
and business against such casualties and contingencies as shall be in
accordance with general practices of businesses engaged in similar
activities in similar geographic areas. Such insurance shall be in
such minimum amounts that the Obligor will not be deemed a co-insurer
under applicable insurance laws, regulations and policies and
otherwise shall be in such amounts, contain such terms, be in such
forms and be for such periods as may be reasonably satisfactory to the
Collateral Agent. In addition, all such insurance shall be payable to
the Collateral Agent as loss payee under a "standard" or "New York"
loss payee clause for the benefit of the Secured Creditors. Without
limiting the foregoing, the Obligor will (a) keep all of its physical
property insured with casualty or physical hazard insurance on an "all
risks" basis, with broad form flood and earthquake coverages and
electronic data processing coverage, with a full replacement cost
endorsement and an "agreed amount" clause in an amount equal to 100%
of the full replacement cost of such property, (b) maintain all such
workers' compensation or similar insurance as may be required by law
and (c) maintain, in amounts and with deductibles equal to those
generally maintained by businesses engaged in similar activities in
similar geographic areas, general public liability insurance against
claims of bodily injury, death or property damage occurring, on, in or
about the properties of the Obligor business interruption insurance;
and product liability insurance.
(g) Insurance Proceeds. The proceeds of any casualty insurance in respect
of any casualty loss of any of the Collateral shall, subject to the
rights, if any, of the other parties with a prior interest in the
property covered thereby, (a) so long as no Event of Default (as
defined in the Amended and Restated Credit Agreement) has occurred and
is continuing, be disbursed to the Obligor for direct application by
such Obligor solely to the repair or replacement of its property so
damaged or destroyed and (b) in all other circumstances, be at its
sole option, disburse from time to time all or any part of such
proceeds so held as cash collateral, upon such terms and conditions as
the Collateral Agent may reasonably prescribe, for direct application
by the Obligor solely to the repair or replacement of the Obligor's
property so damaged or destroyed, or the Collateral Agent may apply
all or any part of such proceeds to the Secured Obligations in
accordance with the provisions of the Amended and Restated Credit
Agreement.
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(h) Notice of Cancellation, etc. All policies of insurance shall provide
for at least fifteen (15) days prior written cancellation notice to
the Collateral Agent. In the event of failure by the Obligor to
provide and maintain insurance as herein provided, the Collateral
Agent may, at its option, provide such insurance and charge the amount
thereof to the Obligor. The Obligor shall furnish the Agent with
certificates of insurance and policies evidencing compliance with the
foregoing insurance provision.
(i) Maintenance of Collateral; Compliance with Law. The Obligor will keep
its Collateral in good order and repair, ordinary wear and tear
excepted, and will not use the same in violation of law or any policy
of insurance therein. The Collateral Agent, or its designee, may
inspect the Collateral at any reasonable time, wherever located. The
Obligor will pay promptly when due all taxes, assessments,
governmental charges and levies upon the Collateral or incurred in
connection with the use or operation of such Collateral or incurred in
connection with this amended and restated security agreement except to
the extent otherwise expressly permitted by the Amended and Restated
Credit Agreement. The Obligor has at all times operated and will
continue to operate its business in compliance with all applicable
provisions of federal, provincial and local statutes and regulations
dealing with the control, shipment, storage or disposal of hazardous
materials or substances, except where a failure to so comply would not
have a Material Adverse Effect (as defined in the Amended and Restated
Credit Agreement).
(j) Status of Accounts Collateral. The Obligor will, with respect to the
Collateral (i) maintain books and records pertaining to the Collateral
in such detail, form and scope as the Collateral Agent reasonably
requires, (ii) immediately notify the Collateral Agent if any account
in excess of Cdn.$50,000 arises out of contracts with any Governmental
Entity, and execute any instruments and take any steps required by the
Collateral Agent in order that all moneys due or to become due under
the contract are assigned to the Collateral Agent and notice of such
assignment be given to the Governmental Entity, and (iii) if any
amount payable under or in connection with any account in excess of
Cdn.$50,000 is evidenced by a promissory note or other instrument,
immediately pledge, endorse, assign and deliver to the Collateral
Agent the promissory note or instrument, as additional Collateral.
(k) Perfection and Protection of Security Interest. The Obligor will
perform, execute and deliver, all acts, agreements and other documents
as may be reasonably requested by the Collateral Agent at any time to
register, file, signify, publish, perfect, maintain, protect, and
enforce the Security Interest including (i) executing, recording and
filing of the financing or other statements in connection therewith,
in form and substance satisfactory to the Collateral Agent and pay all
taxes, fees and other
-21-
charges payable in connection therewith, (ii) delivering to the
Collateral Agent the originals of all instruments, documents and
chattel paper and all other Collateral of which the Collateral Agent
determines it should have physical possession in order to perfect and
protect the Security Interest, duly endorsed or assigned to the
Collateral Agent, (iii) delivering to the Collateral Agent warehouse
receipts covering any portion of the Collateral located in warehouses
and for which warehouse receipts are listed, (iv) placing notations on
its books of account to disclose the Security Interest, (v) delivering
to the Collateral Agent all letters of credit on which the Obligor is
named beneficiary, and (vi) taking such other steps as are deemed
necessary by the Collateral Agent to maintain the Security Interest.
(l) Additional Security. The Obligor will grant to the Collateral Agent,
for the benefit of the Secured Creditors, security interests and
mortgages in such assets and properties of the Obligor as are not
covered hereunder or as may be requested from time to time by the
Collateral Agent pursuant to documentation reasonably satisfactory in
form and substance to the Collateral Agent constituting valid and
enforceable perfected security interests superior to and prior to the
rights of all third persons and subject to no other Liens, except as
permitted under the Amended and Restated Credit Agreement.
Immediately upon the request of the Collateral Agent, the Obligor
shall furnish the Collateral Agent in writing the description of all
Intellectual Property or applications for Intellectual Property of the
Obligor. In addition, the Obligor shall deliver to the Collateral
Agent a copy of the certificate of registration of, or application
for, such Intellectual Property with a Confirmation of Security
Interest in the form of Schedule "D" hereto in respect of such
Intellectual Property confirming the assignment for security of such
Intellectual Property to the Collateral Agent hereunder and, upon
request of the Collateral Agent, shall immediately make all such
filings, registrations and recordings as are necessary or appropriate
to perfect the Security Interest granted to the Collateral Agent in
the Intellectual Property.
(m) Further Assurances. The Obligor will make, execute, endorse,
acknowledge, file and/or deliver, or cause to be made, executed,
endorsed, acknowledged, filed or delivered, to the Collateral Agent
from time to time such vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements,
powers of attorney, certificates, real property surveys, reports and
other assurances or instruments and take such further steps relating
to the Collateral or any other property or assets of the Obligor as
the Collateral Agent may reasonably require. The Obligor will cause
to be delivered to the Collateral Agent such opinions of counsel,
title insurance and other related documents as may be reasonably
requested by the Collateral Agent to assure themselves that this
Section 4.1 has been complied with.
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Section 4.2 Representations, Warranties and Covenants Concerning Intellectual
Property.Section"4.2 Representations, Warranties and Covenants
Concerning Intellectual Property.
(a) Schedule "C" lists all intellectual property owned by the Obligor in
its own name on the date hereof.
(b) On the date hereof, all material Intellectual Property of the Obligor
described in Schedule "C" is valid, subsisting, unexpired and
enforceable, has not been abandoned and does not infringe the
intellectual property rights of any other person.
(c) Except as set forth in Schedule "C", on the date hereof, none of the
Intellectual Property is the subject of any licensing or franchise
agreement pursuant to which the Obligor is the licensor or franchisor.
(d) No decision or judgment has been rendered by any Governmental Entity
which would limit, cancel or question the validity of, or the
Obligor"s rights in, any Intellectual Property in any respect that
could reasonably be expected to have a Material Adverse Effect.
(e) No action or proceeding is pending, or, to the knowledge of the
Obligor, threatened, on the date hereof seeking to limit, cancel or
question the validity of any Intellectual Property or the Obligor"s
ownership interest therein, or which, if adversely determined, would
have a material adverse effect on the value of any Intellectual
Property.
(f) The Obligor (either itself or through licensees) will (A) continue to
use each material trademark on each and every trademark class of goods
applicable to its current line as reflected in its current catalogues,
brochures and price lists in order to maintain such trademark in full
force free from any claim of abandonment for non-use, (B) maintain as
in the past the quality of products and services offered under such
trademark, (C) use such trademark with the appropriate notice of
registration and all other notices and legends required by applicable
requirements of law, (D) not adopt or use any mark which is
confusingly similar or a colourable imitation of such trademark unless
the Collateral Agent, for the ratable benefit of the Secured
Creditors, shall obtain a perfected security interest in such mark
pursuant to this amended and restated security agreement, and (v) not
(and not permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby such trademark may become
invalidated or impaired in any way.
(g) The Obligor (either itself or through licensees) will not do any act,
or omit to do any act, whereby any material patent may become
forfeited, abandoned or dedicated to the public.
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(h) The Obligor (either itself or through licensees) (A) will employ each
material copyright and (B) will not (and will not permit any licensee
or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any material portion of the copyrights may become invalidated
or otherwise impaired. The Obligor will not (either itself or through
licensees) do any act whereby any material portion of the copyrights
may fall into the public domain.
(i) The Obligor (either itself or through licensees) will not do any act
that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.
(j) The Obligor will notify the Collateral Agent and the Secured Creditors
immediately if it knows, or has reason to know, that any application
or registration relating to any material Intellectual Property may
become forfeited, abandoned or dedicated to the public, or of any
adverse determination or development (including, without limitation,
the institution of, or any such determination or development in, any
proceeding in the Canadian Intellectual Property Office or any court
or tribunal in any country) regarding the Obligor's ownership of, or
the validity of, any material Intellectual Property or the Obligor's
right to register the same or to own and maintain the same.
(k) Whenever the Obligor, either by itself or through any agent, employee,
licensee or designee, shall file an application for the registration
of any Intellectual Property with the Canadian Intellectual Property
Office or any similar office or agency in any other country or any
political subdivision thereof, the Obligor shall report such filing to
the Collateral Agent within five Business Days after the last day of
the fiscal quarter in which such filing occurs. Upon request of the
Collateral Agent, the Obligor shall execute and deliver, and have
recorded, any and all agreements, instruments, documents, and papers
as the Collateral Agent may request to evidence the Collateral Agent's
and the Secured Creditors' security interest in any copyright, patent
or trademark and the goodwill and general intangibles of the Obligor
relating thereto or represented thereby.
(l) The Obligor will take all reasonable and necessary steps, including,
without limitation, in any proceeding before the Canadian Intellectual
Property Office or any similar office or agency in any other country
or any political subdivision thereof, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain
each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of
use and affidavits of incontestability.
-24-
(m) In the event that any material Intellectual Property is infringed,
misappropriated or diluted by a third party, the Obligor shall (A)
take such actions as the Obligor shall reasonably deem appropriate
under the circumstances to protect such Intellectual Property and (B)
if such Intellectual Property is of material economic value, promptly
notify the Collateral Agent after it learns thereof and sue for
infringement, misappropriation or dilution, to seek injunctive relief
where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution, to seek injunctive relief
where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution.
ARTICLE 5
GENERAL
Section 5.1 Notices
All notices, requests and demands to or upon the respective parties hereto
shall be in writing (including by telecopy), and unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered,
or three business days after being deposited in the mail, postage prepaid, or,
in the case of telecopy notice, when received, addressed as follows:
(a) to the Obligor at:
Weigh-Tronix Canada, ULC
c/o Weigh-Tronix, LLC
293 S. Main Street
Providence, Rhode Island 02903
Attention: Don MacKenzie
Chief Financial Officer
Telephone: (401) 272-4402
Facsimile: (401) 751-8829
(b) to the Collateral Agent or the Secured Creditors, to the Collateral Agent
at:
Fleet National Bank
100 Federal Street
Boston, MA 02110
USA
Attention: Connie Moore
Telephone: (617) 434-9383
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Facsimile: (617) 434-4929
provided that any notice, request or demand to or upon the Collateral Agent or
any Secured Creditor shall not be effective until received.
Section 5.2 Releases.
(a) At such time as the Loans, the Reimbursement Obligations and the Other
Obligations (other than Borrower Hedge Agreement Obligations) (as such
capitalized terms are defined in the Amended and Restated Credit
Agreement) shall have been paid in full, the Commitments (as defined
in the Amended and Restated Credit Agreement) have been terminated and
no Letters of Credit shall be outstanding, the Collateral shall be
released from the Security Interest created hereby, and this amended
and restated security agreement and all obligations (other than those
expressly stated to survive such termination) of the Collateral Agent
and the Obligor hereunder shall terminate, all without delivery of any
instrument or performance of any act by any party, and all rights to
the Collateral shall revert to the Obligor. At the request and sole
expense of the Obligor following any such termination, the Collateral
Agent shall deliver to the Obligor any Collateral held by the
Collateral Agent hereunder, and execute and deliver to the Obligor
such documents as the Obligor shall reasonably request to evidence
such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by the Obligor in a transaction permitted by the Amended
and Restated Credit Agreement, then the Collateral Agent, at the sole
expense of the Obligor, shall execute and deliver to the Obligor all
releases or other documents reasonably necessary or desirable for the
release of the Security Interest created hereby in such Collateral.
Section 5.3 No Merger, Survival of Representations and Warranties.
This amended and restated security agreement shall not operate by way of
merger of any of the Secured Obligations and no judgment recovered by the
Collateral Agent or any of the Secured Creditors shall operate by way of merger
of, or in any way affect, the Security Interest, which is in addition to, and
not in substitution for, any other security now or hereafter held by the
Collateral Agent and the Secured Creditors in respect of the Secured
Obligations.
Section"5.4 Further Assurances.Section"5.4 Further Assurances.
The Obligor shall from time to time, whether before or after the Security
Interest shall have become enforceable, do all acts and things and execute and
deliver all transfers, assignments and instruments as the Collateral Agent may
reasonably require for (i) protecting the Collateral, (ii) perfecting the
Security Interest, and (iii) exercising all powers, authorities and discretions
conferred upon the Collateral Agent. The Obligor shall, from time to time after
the Security Interest has become enforceable, do all acts and things and execute
and deliver all transfers, assignments and instruments as
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the Collateral Agent may require for facilitating the sale or other disposition
of the Collateral in connection with its realization.
Section 5.5 Supplemental Security.
This amended and restated security agreement is in addition and without
prejudice to and supplemental to all other security now held or which may
hereafter be held by the Collateral Agent or the Secured Creditors.
Section 5.6 Successors and Assigns.
This amended and restated security agreement shall be binding upon the
Obligor, its successors and assigns, and shall enure to the benefit of the
Securred Creditors, the Collateral Agent and their respective successors and
assigns. The Obligor may not assign, transfer or delegate any of its rights or
obligations under this amended and restated security agreement without the prior
written consent of the Collateral Agent.
Section 5.7 Overdue Amounts.
Until paid, all amounts due and payable by the Obligor hereunder shall be a
debt secured by the Collateral and shall bear, whether before or after
judgement, interest at the rate of interest for overdue principal set forth in
the Amended and Restated Credit Agreement.
Section 5.8 Severability.
If any provision of this amended and restated security agreement is deemed
by any court of competent jurisdiction to be invalid or void, the remaining
provisions shall remain in full force and effect.
Section 5.9 Waivers, etc.
No amendment of this amended and restated security agreement and no consent
or waiver by the Collateral Agent or the Secured Creditors in respect hereof
shall be effective unless made in writing and signed by an authorized officer of
the Collateral Agent and then such amendment, consent or waiver shall be
effective only in the specific instance and for the specific purpose for which
given. Any such amendment shall be effective only if also signed by the Obligor.
No failure or delay on the part of the Collateral Agent or the Secured Creditors
in exercising a right under this amended and restated security agreement shall
operate as a waiver of, or impair, any right of the Collateral Agent or the
Secured Creditors however created. No single or partial exercise of a right
shall preclude any further exercise of such right or the exercise of any other
right.
Section 5.10 Application of Proceeds.
(1) At such intervals as may be agreed upon by the Borrowers and the Collateral
Agent, or if an Event of Default shall have occurred and be continuing, at
any time at the Collateral Agent"s election, the Collateral Agent may apply
all or any
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part of the proceeds constituting the Collateral, in payment of
the Secured Obligations in the following order:
(i) to pay incurred and unpaid fees of the Collateral Agent under
the Loan Documents;
(ii) to the Collateral Agent, for application by it towards payment
of amounts then due and owing and remaining unpaid in respect
of the Secured Obligations, pro rata among the Secured
Creditors according to the amounts of the Secured Obligations
then due and owing and remaining unpaid to the Secured
Creditors;
(iii) to the Collateral Agent, for the application by it towards
repayment of the Secured Obligations, pro rata among the
Secured Creditors according to the amounts of the Secured
Obligations then held by the Secured Creditors; and
(iv) any balance of such proceeds remaining after the Secured
Obligations have been paid in full, no Letters of Credit shall
be outstanding and the Commitments (as defined in the Amended
and Restated Credit Agreement) shall have been terminated
shall be paid over to the Borrowers or to whomsoever may be
lawfully entitled to receive the same.
(2) It is understood that the Obligor shall remain liable to the extent of any
deficiency between (x) the amount of the proceeds of the Collateral and (y)
the aggregate outstanding amount of the Secured Obligations.
Section 5.11 Collateral Agent
By accepting the benefits of this amended and restated security agreement,
each Secured Creditor acknowledges and agrees that the rights and obligations of
the Collateral Agent shall be as set forth in Section 9 of the Amended and
Restated Credit Agreement.
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Section 5.12 No Novation.
Neither the execution and delivery of this amended and restated security
agreement nor the grant of the Security Interest hereunder shall constitute or
create any novation of the Original Security Agreement. Except as amended and
restated in this amended and restated security agreement, the Collateral Agent
and the Obligor acknowledge and agree that the Original Security Agreement
continues in full force and effect and is enforceable against the Obligor in
accordance with its terms.
Section 5.13 Governing Law.
This amended and restated security agreement shall be governed by and
interpreted and enforced in accordance with the laws of the Province of Ontario
and the federal laws of Canada applicable therein.
IN WITNESS WHEREOF the parties hereto have caused this amended and restated
security agreement to be executed by their duly authorized officers as of the
date first above written.
WEIGH-TRONIX CANADA, ULC
Per: /s/ Weigh-Tronix Canada, ULC
------------------------------
Authorized Signing Officer
FLEET NATIONAL BANK
Per: /s/ Fleet National Bank
--------------------------
Authorized Signing Officer
SCHEDULE A
INSTRUMENTS AND SECURITIES
Nil.
SCHEDULE B
PERFECTION CERTIFICATE
SCHEDULE C
INTELLECTUAL PROPERTY
Nil.
SCHEDULE "D"
FORM OF CONFIRMATION OF SECURITY INTEREST
IN INTELLECTUAL PROPERTY
WHEREAS:
A. Weigh-Tronix Canada, ULC (the "Debtor"), an unlimited company
incorporated and existing under the laws of the Province of Nova Scotia with
offices at [address], is the owner of the [trade-
marks/patents/copyrights/industrial designs] set forth in Exhibit A hereto, the
registrations and applications for the [trade-
marks/patents/copyrights/industrial designs] identified therein and the
underlying goodwill associated with such [trade-
marks/patents/copyrights/industrial designs] (collectively, the "[Trade-Marks/
Patents/Copyrights/Industrial Designs]"); and
B. Fleet National Bank, as agent for certain lenders (the "Collateral
Agent"), with offices at [address], has entered into an agreement with the
Debtor, as reflected by a separate document entitled the "Amended and Restated
Security Agreement" dated as of the [*] day of [*], [*] by which the Debtor
granted to the Collateral Agent, a security interest in certain property,
including the [Trade-Marks/Patents/Copyrights/Industrial Designs], in
consideration of the provision of certain credit facilities to the Debtor;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged and in accordance with the terms and
obligations set forth in the Amended and Restated Security Agreement, the Debtor
confirms the grant to the Collateral Agent of a security interest in and to the
[Trade-Marks/Patents/Copyrights/Industrial Designs].
DATED at Toronto on this [*] day of [*], [*].
WEIGH-TRONIX CANADA, ULC
Per:/s/ Weigh-Tronix Canada, ULC
----------------------------
Authorized Signing Officer
DATED at Toronto on this [*] day of [*], [*], before me appeared and the
person who signed this instrument, who acknowledged that [he/she] signed it as a
free act on [his/her] behalf or on behalf of the corporation identified and
referred to herein as the Debtor.
____________________________
Signature of Notary Public
EXHIBIT A
TRADE-MARKS/PATENTS/COPYRIGHTS/INDUSTRIAL DESIGNS