EXHIBIT 4.7
SECURITY AGREEMENT
SECURITY AGREEMENT, dated June 10, 2004, made by each of the
Grantors referred to below, in favor of U.S. Bank National Association, in its
capacity as Collateral Agent for the Trustee and the Holders (as such terms are
defined below) pursuant to the Indenture referred to below (in such capacity,
together with any permitted successors and assigns, the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, Milacron Inc., a Delaware corporation (the "Company"), each
subsidiary of the Company listed as a "Guarantor" on the signature pages of the
supplemental indenture dated the date hereof to the Indenture (each such
subsidiary which is a Canadian Restricted Subsidiary, a "Grantor" and
collectively, the "Grantors"), the Collateral Agent and U.S. Bank National
Association, in its capacity as trustee (in such capacity, together with any
permitted successors and assigns, the "Trustee") are parties to an indenture,
dated as of May 26, 2004 (as amended, restated, supplemented or otherwise
modified from time to time, being hereinafter referred to as the "Indenture"),
with respect to the Company's 11-1/2% Senior Secured Notes due 2011 (the
"Notes");
WHEREAS, pursuant to the Indenture, the Company has issued the Notes
to the Holders;
WHEREAS, it is a condition to the release to the Company from the
Escrow Account of the proceeds from the offering of the Notes that each Grantor
shall execute and deliver this Agreement;
WHEREAS, the Grantors are mutually dependent on each other in the
conduct of their respective businesses as an integrated operation, with the
credit needed from time to time by each Grantor often being provided through
financing obtained by the other Grantors and the ability to obtain such
financing being dependent on the successful operations of all of the Grantors as
a whole; and
WHEREAS, each Grantor has determined that the execution, delivery
and performance of this Agreement directly benefits, and are in the best
interest of, such Grantor;
NOW, THEREFORE, in consideration of the premises and the agreements
herein, the Grantors hereby jointly and severally agree with the Collateral
Agent, for the benefit of the Trustee and Holders, as follows:
ARTICLE 1
DEFINITIONS.
(a) Reference is hereby made to the Indenture for a statement of the terms
thereof. All terms used in this Agreement and the recitals hereto which are
defined in the Indenture or in the Personal Property Security Act (Ontario), as
in effect from time to time (the "PPSA") and which are not otherwise defined
herein shall have the same meanings herein as set forth therein; provided that
terms used herein which are defined in the PPSA as in effect on the date hereof
shall continue to have the same meaning notwithstanding any replacement or
amendment of such statute except as the Collateral Agent may otherwise
determine.
(b) The following terms shall have the respective meanings provided for in
the PPSA: "Account", "Chattel Paper", "Document of Title", "Intangible",
"Instrument", "Inventory", "Security", "Proceeds", "Money", "financing
statement" and "financing change statement".
(c) As used in this Agreement, the following terms shall have the
respective meanings indicated below, such meanings to be applicable equally to
both the singular and plural forms of such terms:
"Collateral" has the meaning given to it in ARTICLE 2(a), and any
reference herein to "Collateral" shall, unless the context otherwise requires,
be deemed a reference to "Collateral or any part thereof".
"Discharge of Senior Secured Note Obligations" means the payment in
full of the Senior Secured Note Obligations that are outstanding and unpaid at
the time the Notes are paid in full.
"Excluded Accounts" means: (i) deposit accounts for which the
Collateral Agent is the depositary and (ii) deposit accounts specially and
exclusively used for payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of a Grantor's salaried employees.
"Holder" means a Person in whose name a Note is registered.
"Material Adverse Effect" means a material adverse effect on the
condition (financial or other), business, properties or results of operations of
the Grantors and their respective subsidiaries taken as a whole.
"Receiver has the meaning given to it in ARTICLE 7(a)
"Restricted Cash" means any cash or cash equivalents permitted to be
deposited or pledged under clause (7), (12) or (14) of the definition of
"Permitted Liens" in the Indenture.
ARTICLE 2
GRANT OF SECURITY INTEREST.
(a) As collateral security for all of the Senior Secured Note Obligations,
each Grantor hereby pledges and assigns to the Collateral Agent, and grants to
the Collateral Agent, for the benefit of the Trustee and the Holders, a
continuing security interest in the following personal property of such Grantor,
wherever located and whether now or hereafter existing and whether now owned or
hereafter acquired, of every kind and description, tangible or intangible (the
"Collateral"):
(i) all Accounts, claims, choses in action and demands of every
nature and kind howsoever arising or secured, including letters of credit and
advices of credit, which are
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now due, owing or accruing or growing due to or owned by or which may hereafter
become due, owing or accruing or growing due to or owned by such Grantor;
(ii) all Chattel Paper (whether tangible or electronic);
(iii) all Instruments;
(iv) all Inventory;
(v) (a) all deposit accounts and Money and all cash, checks, other
negotiable instruments, funds and other evidences of payments held therein and
(b) all Securities, security entitlements, and securities accounts, in each
case, to the extent constituting cash or cash equivalents or representing a
claim to cash equivalents, except the cash management and lockbox account
specified in the ABL Facility;
(vi) all proceeds, products, offspring, accessions, rents, profits,
income, benefits, substitutions and replacements of and to any of the property
of such Grantor described in the preceding clauses of this ARTICLE 2(a)
(including, without limitation, any proceeds of insurance thereon and all causes
of action, claims and warranties now or hereafter held by such Grantor in
respect of any of the items listed above), and all books, correspondence, files
and other records, including, without limitation, all tapes, disks, cards,
software, data and computer programs in the possession or under the control of
such Grantor or any other Person from time to time acting for such Grantor that
at any time evidence or contain information relating to any of the property
described in the preceding clauses of this ARTICLE 2(a) or are otherwise
necessary or helpful in the collection or realization thereof; and
(vii) all Proceeds, and products of all Proceeds, and renewals thereof,
accretions to, substitutions for, and products of, any and all of the foregoing
Collateral.
in each case howsoever such Grantor's interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise).
(b) If the Collateral is realized upon and the security interest in
the Collateral is not sufficient to satisfy all the Senior Secured Note
Obligations, each Grantor acknowledges and agrees that such Grantor shall
continue to be liable for any Senior Secured Note Obligations remaining
outstanding and the Collateral Agent shall be entitled to pursue full payment
thereof.
(c) Nothing in this Agreement shall constitute an assignment or
attempted assignment of any agreement which by its provisions or by law is not
assignable or which requires the consent of a third party to its assignment
unless such consent has been obtained. In each such case, the applicable Grantor
shall, unless the Collateral Agent otherwise agrees in writing, promptly, upon
written request by the Collateral Agent, attempt to obtain the consent of any
necessary third party to its assignment under this Agreement and to its further
assignment by the lender to any third party as a result of the exercise by the
Collateral Agent of remedies after demand. Upon such consent being obtained or
waived, this Agreement shall apply to the applicable agreement without regard to
this section and without the necessity of any further assurance to effect such
assignment. Unless and until the consent to assignment is obtained as provided
above, the applicable Grantor shall, to the extent it may do so at law or
pursuant to the
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interest in question hold all benefit to be derived from such agreements in
trust for the Collateral Agent (including, without limitation, such Grantor's
beneficial interest in any agreement which may be held in trust for such Grantor
by a third party), as additional security for payment of the Senior Secured Note
Obligations and shall deliver up all such benefit to the Collateral Agent,
promptly upon demand by the Collateral Agent.
ARTICLE 3
SECURITY FOR SENIOR SECURED NOTE OBLIGATIONS.
The security interest created hereby in the Collateral constitutes continuing
collateral security for the Senior Secured Note Obligations.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Each Grantor jointly and severally represents and warrants as follows (it being
understood and agreed that, to the extent any Schedule hereto is required to be
supplemented pursuant to ARTICLE 5 to reflect any change in facts or
circumstances after the date hereof and such Schedule is supplemented for such
change in accordance with ARTICLE 5, such Schedule shall be deemed supplemented
to reflect such change in facts or circumstances from time to time of such
change for all purposes of this ARTICLE 4:
(a) Schedule I hereto sets forth the exact legal name of each
Grantor, including any French language version of its incorporated name.
(b) Each Grantor (i) is a corporation, limited liability company or
limited partnership duly organized, validly existing and in good standing under
the laws of its respective jurisdiction of organization as set forth on Schedule
I hereto, (ii) has all requisite power and authority to conduct its business as
now conducted and as presently contemplated and to execute, deliver and perform
this Agreement and each other Senior Secured Note Document to be executed and
delivered by it pursuant hereto and to consummate the transactions contemplated
hereby and thereby, and (iii) is duly qualified to do business and is in good
standing in each jurisdiction in which the character of the properties owned or
leased by it or in which the transaction of its business makes such
qualification necessary, except where the absence of any such qualification
could not reasonably be expected to result in a Material Adverse Effect.
(c) The execution, delivery and performance by each Grantor of this
Agreement and each other Senior Secured Note Document to which such Grantor is
or will be a party (i) have been duly authorized by all necessary action, (ii)
do not and will not contravene its constating documents or by-laws, its limited
liability company or operating agreement or its certificate of partnership or
partnership agreement, as applicable, or any material applicable law or any
material contractual restriction binding on or otherwise affecting such Grantor
or any of its properties, (iii) do not and will not result in or require the
creation of any Lien (other than pursuant to any Senior Secured Note Document)
upon or with respect to any of its properties, other than Liens securing
obligations in an aggregate amount not exceeding $100,000 and (iv) do not and
will not result in any default, noncompliance, suspension, revocation,
impairment,
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forfeiture or nonrenewal of any material permit, license, authorization or
approval applicable to it or its operations or any of its properties.
(d) This Agreement is, and each other Senior Secured Note Document
to which any Grantor is or will be a party, when executed and delivered, will
be, a legal, valid and binding obligation of such Grantor, enforceable against
such Grantor in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
(e) There is no pending or, to the best knowledge of any Grantor,
threatened action, suit or proceeding affecting any Grantor or its properties,
before any court or other governmental authority or any arbitrator, or any
order, judgment or award by any governmental authority or arbitrator, that could
reasonably be expected to materially affect the grant by any Grantor, or the
perfection, of the security interest purported to be created hereby in the
Collateral, or the exercise by the Collateral Agent of any of its rights or
remedies hereunder.
(f) All federal, provincial, and material local and foreign tax
returns and other reports required by applicable law to be filed by any Grantor
have been filed, or extensions have been obtained, and all taxes, assessments
and other governmental charges imposed upon any Grantor or any property of any
Grantor and which have become due and payable on or prior to the date hereof
have been paid, except such taxes, assessments and governmental charges in an
aggregate amount not exceeding $100,000 or to the extent contested in good faith
by proper proceedings which stay the imposition of any penalty, fine or Lien
resulting from the non-payment thereof and with respect to which adequate
reserves have been set aside for the payment thereof on the most recently
available consolidated financial statements of the Company to the extent
required by and in accordance with GAAP.
(g) All Inventory now existing and constituting Collateral is
located and/or based at the addresses specified therefor in Schedule II hereto
(as amended, supplemented or otherwise modified from time to time in accordance
with the terms hereof), other than Inventory in transit between any such
locations and Inventory that has been sold (including sales on consignment or
approval in the ordinary course of business) and each Grantor's chief executive
office, principal place of business, domicile (within the meaning of the Civil
Code of Quebec), registered office according to its constating documents,
corporate offices, the locations of all of its books and records concerning the
Collateral and all Account Debtors, and all originals of all Chattel Paper are
located at the addresses specified therefor in Schedule II hereto; provided that
Schedule II hereto shall not contain any name or location of any Person (other
than a Grantor) having possession of any Inventory, records or other assets
having an aggregate book value of less than $25,000. As of the date hereof, none
of the Accounts are evidenced by promissory notes or other Instruments. Set
forth in Schedule III hereto is a complete and accurate list, as of the date of
this Agreement, of each bank account, Securities Account and commodities account
located in Canada of each Grantor, together with the name and address of each
institution at which each such account is maintained, the account number for
each such account and a description of the purpose of each such account.
(h) INTENTIONALLY DELETED.
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(i) INTENTIONALLY DELETED.
(j) The Grantors are and will be at all times the sole and exclusive
owners of, or otherwise have and will have adequate rights in, the Collateral
free and clear of any Lien except for (i) the Lien created by this Agreement,
(ii) unpaid suppliers' rights to repossess Inventory purchased by such Grantors
under Section 81.1 of the Bankruptcy and Insolvency Act (Canada) and such
suppliers' substantially similar rights under the Civil Code of Quebec, and (ii)
the Permitted Prior Liens. No effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in any
recording or filing office except (A) such as may have been filed in favor of
the Collateral Agent relating to this Agreement and (B) such as may have been
filed to perfect or protect any Permitted Prior Lien.
(k) The exercise by the Collateral Agent of any of its rights and
remedies expressly enumerated in this Agreement, subject to the terms of the
Intercreditor Agreement and the rights of Persons holding Permitted Prior Liens,
will not contravene any law or any material contractual restriction binding on
or otherwise affecting any Grantor or any of its material properties and will
not result in, or require the creation of, any Lien upon or with respect to any
of its properties.
(l) No consent, authorization or approval or other action by, and no
notice to or filing with, any governmental authority is required for (i) the
grant by any Grantor, or the perfection, of the security interest purported to
be created hereby in the Collateral or (ii) the exercise by the Collateral Agent
of any of its rights and remedies expressly enumerated in this Agreement except
(A) for the filing under the PPSA as in effect in the applicable jurisdiction of
the financing statements as described in Schedule III hereto, all of which
financing statements, filings and other recordings, as applicable, have been
duly filed and are in full force and effect, (B) with respect to any action that
may be necessary to obtain control of Collateral described in ARTICLE 5(i)
hereof, the taking of such actions (C) the taking possession of all Chattel
Paper, Instruments and cash constituting Collateral, and (D) to the extent
applicable, as may be required in connection with any sale of any Collateral by
laws affecting the offering and sale of Securities generally other than those
that have been obtained or made and are in full force and effect.
(m) INTENTIONALLY DELETED.
(n) This Agreement creates in favor of the Collateral Agent for the
benefit of the Trustee and the Holders a legal, valid and enforceable security
interest in the Collateral, as security for the Senior Secured Note Obligations.
The Credit Facility Agent having possession, as bailee for the Collateral Agent
pursuant to the terms of the Intercreditor Agreement, of all Instruments and
Chattel Paper and cash constituting Collateral results in the perfection of such
security interests, to the extent governed by the PPSA. To the extent governed
by the PPSA, such security interests are, or in the case of Collateral in which
any Grantor obtains rights after the date hereof, will be, perfected security
interests, subject only to the Permitted Prior Liens that are prior to Liens in
favor of the Collateral Agent, for the benefit of the Trustee and the Holders,
and the recording of such instruments of assignment or amendment. All such
recordings and filings and all other actions necessary or desirable to perfect
and protect such security interest have been duly taken, except for (i) the
Collateral Agent's having possession of Instruments and Chattel Paper and cash
(other than Restricted Cash) constituting Collateral after the date hereof, and
(ii) the other filings and recordations described in ARTICLE 4(l) hereof.
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ARTICLE 5
COVENANTS AS TO THE COLLATERAL
Until the Discharge of the Senior Secured Note Obligations, unless the
Collateral Agent shall otherwise consent in writing:
(a) Further Assurances. Each Grantor will at its expense, at any time and
from time to time, promptly execute and deliver all further instruments and
documents (including titles of indebtedness and deeds of hypothec with respect
to Collateral located in the Province of Quebec) and take all further action
that the Collateral Agent may determine to be reasonably necessary or desirable
to (i) perfect and protect the security interest purported to be created hereby;
(ii) enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder in respect of the Collateral; or (iii) otherwise effect the purposes
of this Agreement, including, without limitation: (A) from and after the date
upon which the Discharge of Credit Facility Obligations has occurred, marking
conspicuously all Chattel Paper (to the extent such Chattel Paper is not in the
possession of the Collateral Agent) with a legend, in form and substance
reasonably satisfactory to the Collateral Agent, indicating that such Chattel
Paper is subject to the security interest created hereby, (B) from and after the
date upon which the Discharge of Credit Facility Obligations has occurred,
delivering and pledging to the Collateral Agent hereunder all Collateral
consisting of certificated Securities, Chattel Paper and Instruments, in each
case, duly endorsed and accompanied by executed (in blank) instruments of
transfer or assignment, all in form and substance reasonably satisfactory to the
Collateral Agent, (C) executing and filing (to the extent, if any, that such
Grantor's signature is required thereon) or authenticating the filing of, such
financing or financing change statements, or amendments thereto, as the
Collateral Agent may determine to be reasonably necessary or desirable to
perfect and preserve the security interest purported to be created hereby, (D)
furnishing to the Collateral Agent from time to time statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as the Collateral Agent may reasonably request,
all in reasonable detail, and (E) if any Collateral shall be in the possession
of a third party, notifying such Person of the Collateral Agent's security
interest created hereby and using its reasonable efforts to obtain a landlord
waiver or bailee letter or such other written acknowledgment from such Person
that such Person holds possession of the Collateral for the benefit of the
Collateral Agent, which such written acknowledgment shall be in form and
substance reasonably satisfactory to the Collateral Agent, provided that, such
Grantor's obligation to obtain such landlord waiver, bailee letter or other
written acknowledgement shall only be applicable from and after the date upon
which the Discharge of Credit Facility Obligations has occurred.
(b) Location of Inventory. Each Grantor will keep the Inventory (other
than Inventory sold in the ordinary course of business in accordance with
ARTICLE 5(g) hereof and Inventory not required to be at such location pursuant
to ARTICLE 4(g) hereof) at one or more of the locations specified therefor in
Section ARTICLE 4(g) hereof or, upon not less than thirty (30) days' prior
written notice to the Collateral Agent accompanied by a new Schedule II hereto
indicating each new location of the Inventory with an aggregate book value
exceeding $100,000, at such other locations in Canada as the Grantors may elect,
provided that (i) all action has been taken to grant to the Collateral Agent a
perfected security interest in such Inventory (subject only to Permitted Prior
Liens and Credit Facility Liens that are held by the Collateral Agent, for the
benefit of the Trustee and the Holders, and (ii) the Collateral Agent's rights
in such Inventory,
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including, without limitation, the existence, perfection and priority of the
security interest created hereby in such Inventory, are not adversely affected
thereby.
(c) INTENTIONALLY DELETED
(d) Taxes, Etc.
(i) Each Grantor jointly and severally agrees to pay promptly when
due all property and other taxes, assessments and governmental charges or levies
imposed upon, and all claims (including claims for labor, materials and
supplies) against, the equipment and Inventory, except to the extent the
validity thereof is being contested in good faith by proper proceedings which
stay the imposition of any penalty, fine or Lien resulting from the non-payment
thereof and with respect to which adequate reserves, if any, in accordance with
GAAP have been set aside for the payment thereof.
(ii) Without limiting any of the Grantors' other obligations under
any other Senior Secured Note Document, and for greater certainty, each Grantor
agrees to pay and remit to the Canada Revenue Agency and any other applicable
Governmental Authority when due all Canadian withholding taxes exigible in
respect of any transfers from any bank accounts pledged in favour of the
Collateral Agent. Upon request from the Collateral Agent, each Grantor shall
provide to the Collateral Agent the original or a certified copy of a receipt
evidencing such payment or, if such taxes are not exigible on any such transfer,
a reasonably detailed explanation (with reference to the type of intercompany
transaction to which the transfer/payment relates) therefor.
(e) Insurance.
(i) Each Grantor will, at its own expense:
(A) keep its properties adequately insured at all times
by responsible and reputable insurers;
(B) maintain such other insurance, to such extent and
against such risks (and with such deductibles,
retentions and exclusions), including fire and other
risks insured against by extended coverage and coverage
for acts of terrorism, as is customary with companies in
the same or similar businesses operating in the same or
similar locations, including public liability insurance
against claims for personal injury or death or property
damage occurring upon, in, about or in connection with
the use of any properties owned, occupied or controlled
by it;
(C) maintain such other insurance as may be required by
law
provided, however, that each Grantor may maintain self-insurance (which
shall include insurance maintained through Milacron Assurance Ltd., a Bermuda
company) in connection with the above insurance requirements to the extent,
reasonably prudent and consistent with past practice. In addition, (A) each such
liability policy (other than any Director's and Officer's
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liability policy and any Fiduciary Responsibility liability policy) shall name
each Grantor and the Collateral Agent (and such other Persons as the Collateral
Agent may designate from time to time) as additional insured thereunder (without
any representation or warranty by or obligation upon the Collateral Agent or
such other Person) as their interests may appear and each property policy shall
name each Grantor and the Collateral Agent as loss payees as their interests may
appear, (B) each property policy shall contain an agreement by the insurer that
any loss thereunder shall be payable to the Collateral Agent on its own account
notwithstanding any action, inaction or breach of representation or warranty by
any Grantor, (C) each such policy shall provide that there shall be no recourse
against the Collateral Agent for payment of premiums or other amounts with
respect thereto and (D) each such policy shall provide that at least thirty (30)
days' prior written notice of cancellation, lapse, expiration or other adverse
change shall be given to the Collateral Agent by the insurer. Each Grantor will,
if so requested by the Collateral Agent, deliver to the Collateral Agent
certificates of insurance evidencing such insurance and, as often as the
Collateral Agent may reasonably request, a report of a reputable insurance
broker with respect to such insurance. Each Grantor will also, at the request of
the Collateral Agent, execute and deliver instruments of assignment of such
insurance policies and cause the respective insurers to acknowledge notice of
such assignment.
(ii) Reimbursement under any liability insurance maintained by any
Grantor pursuant to this ARTICLE 5(e) may be paid directly to
the Person who shall have incurred liability covered by such
insurance.
(f) Provisions Concerning Certain Accounts
(i) No Grantor shall, without notice to the Collateral Agent, change
(A) such Grantor's name, identity or organizational structure or (B) its
jurisdiction of incorporation as set forth in ARTICLE 4(b) hereto. Each Grantor
shall keep adequate records concerning the Accounts and Chattel Paper and permit
representatives of the Collateral Agent upon reasonable prior notice and during
normal business hours, to inspect and make abstracts from such records and
Chattel Paper.
(ii) Each Grantor will, except as otherwise provided in this ARTICLE
5(f), continue to collect, at its own expense, all amounts due or to become due
under the Accounts. In connection with such collections, each Grantor may (and,
at the Collateral Agent's (or its agent) direction, will) take such action as
such Grantor or the Collateral Agent may deem reasonably necessary or advisable
to enforce collection or performance of the Accounts; provided, however, that
the Collateral Agent (or its agent) shall have the right at any time, following
the date upon which the Discharge of Credit Facility Obligations has occurred,
upon the occurrence and during the continuance of an Event of Default, to notify
the Account Debtors or obligors under any Accounts of the assignment of such
Accounts to the Collateral Agent (or its agent) and to direct such Account
Debtors or obligors to make payment of all amounts due or to become due to such
Grantor thereunder directly to the Collateral Agent or its designated agent and,
upon such notification and at the expense of such Grantor and to the extent
permitted by law, to enforce collection of any such Accounts and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as such Grantor might have done. After receipt by any Grantor of
a notice from the Collateral Agent that the Collateral Agent has notified,
intends to notify, or has enforced or intends to enforce a Grantor's rights
against the
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Account Debtors or obligors under any Accounts as referred to in the proviso to
the immediately preceding sentence, (A) all amounts and proceeds (including
Instruments) received by such Grantor in respect of the Accounts shall be
received in trust for the benefit of the Collateral Agent hereunder, shall be
segregated from other funds of such Grantor and shall be forthwith paid over to
the Collateral Agent or its designated agent in the same form as so received
(with any necessary endorsement) to be held as cash collateral and if an Event
of Default shall have occurred and be continuing, applied as specified in
ARTICLE 7(j) hereof, and (B) such Grantor will not adjust, settle or compromise
the amount or payment of any Account or release wholly or partly any Account
Debtor or obligor thereof or allow any credit or discount thereon. In addition,
following the date upon which the Discharge of Credit Facility Obligations has
occurred, upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent (or its agent) may (in its sole and absolute discretion)
direct any or all of the banks and financial institutions with which any Grantor
either maintains a deposit account or a lockbox or deposits the proceeds of any
Accounts to send immediately to the Collateral Agent or its designated agent by
wire transfer (to such cash management accounts as the Collateral Agent shall
specify, or in such other manner as the Collateral Agent shall direct) all or a
portion of such securities, cash, investments and other items held by such
institution. Any such securities, cash, investments and other items so received
by the Collateral Agent or its designated agent shall (in the sole and absolute
discretion of the Collateral Agent or such designated agent) be held as
additional Collateral for the Senior Secured Note Obligations or distributed in
accordance with ARTICLE 7 hereof.
(g) Transfers and Other Liens.
(i) Except to the extent not prohibited by Section 4.10 of the
Indenture, no Grantor will sell, assign (by operation of law or otherwise),
lease, license, exchange or otherwise transfer or dispose of any of the
Collateral.
(ii) Except to the extent not prohibited by Section 4.12 of the
Indenture, no Grantor will create, suffer to exist or grant any Lien upon or
with respect to any Collateral.
(h) INTENTIONALLY DELETED
(i) Deposit, Commodities and Securities Accounts. Each Grantor shall cause
each bank and other financial institution with an account referred to in
Schedule IV hereto to execute and deliver to the Collateral Agent (or its agent)
a control agreement, in form and substance reasonably satisfactory to the
Collateral Agent, duly executed by such Grantor and such bank or financial
institution, or enter into other arrangements in form and substance satisfactory
to the Collateral Agent, pursuant to which such institution shall irrevocably
agree (except to the extent otherwise agreed to by the Trustee and the Holders),
among other things, that (i) it will comply at any time with the instructions
originated by the Collateral Agent (or its agent) to such bank or financial
institution directing the disposition of cash, commodity contracts, Securities,
and other items from time to time credited to such account, without further
consent of such Grantor, which instructions the Collateral Agent (or its agent)
will not give to such bank or other financial institution in the absence of a
continuing Event of Default, (ii) all cash, commodity contracts, Securities, and
other items of such Grantor deposited with such institution shall be subject to
a perfected, [first priority] security interest in favor of the Collateral Agent
(or its agent), (iii) any
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right of set off, banker's Lien or other similar Lien, security interest or
encumbrance shall be fully waived as against the Collateral Agent (or its
agent), and (iv) such bank or financial institution shall immediately send to
the Collateral Agent (or its agent) by wire transfer (to such account as the
Collateral Agent (or its agent) shall specify, or in such other manner as the
Collateral Agent (or its agent) shall direct) all such cash, the value of any
commodity contracts, Securities, and other items held by it. The Collateral
Agent agrees with each of the Grantors that in respect of any control agreement
that provides for shared control between the Collateral Agent and a Grantor in
respect of any deposit account, commodity account or Securities Account, the
Collateral Agent (or its agent) shall not deliver to the bank or financial
institution a notice of exclusive control in respect of such deposit account,
commodity account or Securities Account unless there is an occurrence and
continuance of an Event of Default. The Collateral Agent further agrees with
each of the Grantors to withdraw any such notice of exclusive control as soon as
practicable upon such Event of Default ceasing to exist. Without the prior
written consent of the Collateral Agent (or its agent), no Grantor shall make or
maintain any deposit account, commodity account or Securities Account except for
the accounts set forth in Schedule IV hereto. The provisions of this ARTICLE
5(i) shall not apply to Excluded Accounts or, until the date upon which the
Discharge of Credit Facility Obligations has occurred, any other Collateral.
(j) INTENTIONALLY DELETED.
(k) Inspection and Reporting. Each Grantor shall permit the Collateral
Agent, or any agents or representatives thereof or such professionals or other
Persons as the Collateral Agent may reasonably designate, subject to a
confidentiality agreement reasonably satisfactory to the Company upon reasonably
prior notice and during normal business hours (i) to examine and make copies of
and abstracts from such Grantor's records and books of account, (ii) to visit
and inspect its properties, (iii) to verify materials, leases, notes, Accounts,
Inventory and other assets comprising the Collateral of such Grantor from time
to time and (iv) to conduct audits, physical counts, appraisals and/or
valuations or examinations at the locations of such Grantor.
ARTICLE 6
ADDITIONAL PROVISIONS CONCERNING THE COLLATERAL.
(a) Each Grantor hereby (i) authorizes the Collateral Agent to file, one
or more financing or financing change statements relating to the Collateral and
(ii) ratifies such authorization to the extent that the Collateral Agent has
filed any such financing or financing change statements prior to the date
hereof. A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement or for recordal purposes where permitted by law.
(b) Each Grantor hereby irrevocably appoints the Collateral Agent as its
attorney-in-fact and proxy, with full authority in the place and stead of such
Grantor and in the name of such Grantor or otherwise, and upon the occurrence
and during the continuance of an Event of Default, the Collateral Agent may take
any action and execute any instrument which the Collateral Agent may deem
reasonably necessary or advisable to accomplish the purposes of this Agreement
(subject to the rights of a Grantor under ARTICLE 5 hereof), including, without
limitation, (i) to ask, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any Collateral, (ii) to
11
receive, endorse, and collect any drafts or other instruments, documents and
chattel paper in connection with clause (i) above, (iii) to file any claims or
take any action or institute any proceedings which the Collateral Agent, the
Trustee or the Holders may deem necessary or desirable for the collection of any
Collateral or otherwise to enforce the rights of the Trustee and the Holders
with respect to any Collateral, and (v) to execute assignments, licenses and
other documents to enforce the rights of the Trustee and the Holders with
respect to any Collateral. This power is coupled with an interest and is
irrevocable until the date on which the Discharge of Senior Secured Note
Obligations has occurred.
(c) If any Grantor fails to perform any agreement contained herein, the
Collateral Agent may itself perform, or cause performance of, such agreement or
obligation, in the name of such Grantor or the Collateral Agent, and the
expenses of the Collateral Agent incurred in connection therewith shall be
jointly and severally payable by the Grantors pursuant to ARTICLE 8 hereof and
shall be secured by the Collateral.
(d) The powers conferred on the Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
ARTICLE 7
REMEDIES UPON DEFAULT
(a) Upon the occurrence of and during the continuance of any Event of
Default, the Collateral Agent may appoint or reappoint by instrument in writing,
any Person or Persons, whether an officer or officers or an employee or
employees of the Collateral Agent or not, to be an interim receiver, receiver or
receivers (hereinafter called a "Receiver", which term when used herein shall
include a receiver and manager) of the Collateral (including any interest,
income or profits therefrom) and may remove any Receiver so appointed and
appoint another in its stead. Any such Receiver shall, so far as concerns
responsibility for its acts, be deemed the agent of the Grantors and not of the
Collateral Agent, and the Collateral Agent shall not be in any way responsible
for any misconduct, negligence or non-feasance on the part of any such Receiver
or its servants, agents or employees. Subject to the provisions of the
instrument appointing it, any such Receiver shall have power to take possession
of the Collateral, to preserve the Collateral or its value, to carry on or
concur in carrying on all or any part of the business of any Grantor and to
sell, lease, license or otherwise dispose of or concur in selling, leasing,
licensing or otherwise disposing of the Collateral. To facilitate the foregoing
powers, any such Receiver may, to the exclusion of all others, including the
Grantors, enter upon, use and occupy all premises owned or occupied by any
Grantor wherein the Collateral may be situate, maintain the Collateral upon such
premises, borrow money on a secured or unsecured basis and use the Collateral
directly in carrying on any Grantor's business or as security for loans or
advances to enable the Receiver to carry on any Grantor's business or otherwise,
as such Receiver shall, in its discretion, determine. Except as may be otherwise
directed by the Collateral Agent, all Money received from time to time by such
Receiver in carrying out its appointment shall be received in trust for and be
paid over to the Collateral Agent. Every such Receiver may, in the discretion of
the Collateral Agent,
12
be vested with all or any of the rights and powers of the Collateral Agent. The
identity of the Receiver, its replacement and its remuneration shall be within
the sole and unfettered discretion of the Collateral Agent.
(b) Upon the occurrence of and during the continuance of any Event of
Default, the Collateral Agent may, either directly or through its agents or
nominees, exercise any or all of the powers and rights given to a Receiver by
virtue of ARTICLE 7(a).
(c) In addition to those rights granted herein and in any other agreement
now or hereafter in effect between any Grantor and the Collateral Agent, and in
addition to any other rights the Collateral Agent may have at law or in equity,
the Collateral Agent shall have, both before and after the occurrence of any
Event of Default, all rights and remedies of a secured party under the PPSA.
However, the Collateral Agent shall not be liable or accountable for any failure
to exercise its remedies, take possession of, collect, enforce, realize, sell,
lease, license or otherwise dispose of the Collateral or to institute any
proceedings for such purposes. Furthermore, the Collateral Agent shall have no
obligation to take any steps to preserve rights against prior parties to any
Instrument or Chattel Paper, whether Collateral or proceeds and whether or not
in the Collateral Agent's possession, and shall not be liable or accountable for
failure to do so.
(d) Upon the occurrence of and during the continuance of any Event of
Default, the Collateral Agent may take possession of, collect, demand, sue on,
enforce, recover and receive the Collateral and give valid and binding receipts
and discharges therefor and in respect thereof and the Collateral Agent also may
sell, license, lease or otherwise dispose of the Collateral in such manner, at
such time or times and place or places, for such consideration and upon such
terms and conditions as to the Collateral Agent may seem reasonable and in
compliance with applicable law.
(e) Each Grantor acknowledges that, upon the occurrence of and during the
continuance of any Event of Default, the Collateral Agent or any Receiver
appointed by it may take possession of the Collateral wherever it may be located
and by any method permitted by law and each Grantor agrees upon request from the
Collateral Agent or any such Receiver to assemble and deliver possession of the
Collateral at such place or places as directed.
(f) The Collateral Agent will give Grantor such notice, if any, of the
date, time and place of any public sale or of the date after which any private
disposition of the Collateral is to be made as may be required by the PPSA.
(g) Each Grantor hereby acknowledges that if the Collateral Agent complies
with any applicable provincial or federal law requirements in connection with a
disposition of the Collateral, such compliance will not adversely affect the
commercial reasonableness of any sale or other disposition of the Collateral.
(h) Each Grantor agrees to be liable for and to pay all costs, charges and
expenses reasonably incurred by the Collateral Agent or any Receiver appointed
by the Collateral Agent, whether directly or for services rendered (including
reasonable legal and auditors' costs and expenses and Receiver remuneration), in
operating such Grantor's accounts, in preparing or
13
enforcing this Agreement, taking and maintaining custody of, preserving,
repairing, processing, preparing for disposition and disposing of the Collateral
and in enforcing or collecting indebtedness and all such costs, charges and
expenses, together with any amounts owing as a result of any borrowing by the
Collateral Agent or any Receiver appointed by the Collateral Agent, as permitted
hereby, shall be a first priority security interest on the proceeds of
realization, collection or disposition of the Collateral and shall be secured
hereby.
(i) To the maximum extent permitted by applicable law, each Grantor waives
all claims, damages and demands against the Collateral Agent or any Receiver
appointed by the Collateral Agent arising out of the repossession, retention or
sale of the Collateral except such as arise solely out of the gross negligence
or wilful misconduct of the Collateral Agent or any Receiver appointed by the
Collateral Agent as finally determined by a court of competent jurisdiction.
(j) Any cash held by the Collateral Agent as Collateral and all cash
Proceeds received by the Collateral Agent in respect of any sale of or
collection from, or other realization upon, all or any part of the Collateral
may, in the discretion of the Collateral Agent, be held by the Collateral Agent
as collateral for, and/or then or at any time thereafter applied (after payment
of any amounts payable to the Collateral Agent pursuant to ARTICLE 8 hereof) in
whole or in part by the Collateral Agent against, all or any part of the Senior
Secured Note Obligations in such order as the Collateral Agent shall elect,
consistent with the provisions of the Indenture. Any surplus of such cash or
cash Proceeds held by the Collateral Agent and remaining after the date on which
the Discharge of Senior Secured Note Obligations has occurred shall be paid over
to whomsoever shall be lawfully entitled to receive the same or as a court of
competent jurisdiction shall direct.
(k) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Trustee and the
Holders are legally entitled, the Grantors shall be jointly and severally liable
for the deficiency, together with interest thereon at the highest rate specified
in any applicable Senior Secured Note Document for interest on overdue principal
thereof or such other rate as shall be fixed by applicable law, together with
the reasonable out-of-pocket costs of collection and the reasonable fees, costs,
expenses and other client charges of any attorneys employed by the Collateral
Agent to collect such deficiency.
(l) The Collateral Agent shall not be required to marshal any present or
future collateral security (including, but not limited to, this Agreement and
the Collateral) for, or other assurances of payment of, the Senior Secured Note
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the Collateral Agent's
rights hereunder and in respect of such collateral security and other assurances
of payment shall be cumulative and in addition to all other rights, however
existing or arising. To the extent that any Grantor lawfully may, such Grantor
hereby agrees that it will not invoke any law relating to the marshalling of
collateral which might cause delay in or impede the enforcement of the
Collateral Agent's rights under this Agreement or under any other instrument
creating or evidencing any of the Senior Secured Note Obligations or under which
any of the Senior Secured Note Obligations is outstanding or by which any of the
Senior Secured Note Obligations is secured or payment thereof is otherwise
assured, and, to the extent that it lawfully may, each Grantor hereby
irrevocably waives the benefits of all such laws.
14
ARTICLE 8
INDEMNITY AND EXPENSES.
(a) Each Grantor jointly and severally agrees to defend, protect,
indemnify and hold harmless the Collateral Agent and the Trustee (and all of
their respective officers, directors, employees, attorneys, consultants and
agents) from and against any and all claims, damages, losses, liabilities,
obligations, penalties, fees and reasonable out-of-pocket costs and expenses
(including, without limitation, reasonable legal fees, costs, expenses and
disbursements of counsel for the Collateral Agent and the Trustee) to the extent
that they arise out of or otherwise result from this Agreement (including,
without limitation, enforcement of this Agreement), except claims, losses or
liabilities resulting solely and directly from such Person's gross negligence or
willful misconduct, as determined by a final judgment of a court of competent
jurisdiction.
(b) Each Grantor jointly and severally agrees to pay to the Collateral
Agent upon demand the amount of any and all reasonable out-of-pocket costs and
expenses of the Collateral Agent, including the reasonable fees, costs, expenses
and disbursements of counsel for the Collateral Agent and of any experts and
agents (including, without limitation, any collateral trustee which may act as
agent of the Collateral Agent), which the Collateral Agent may incur in
connection with (i) the preparation, negotiation, execution, delivery,
recordation, administration, amendment, waiver or other modification or
termination of this Agreement, (ii) the custody, preservation, use or operation
of, or the sale of, collection from, or other realization upon, any Collateral,
(iii) the exercise or enforcement of any of the rights of the Collateral Agent
hereunder, or (iv) the failure by any Grantor to perform or observe any of the
provisions hereof.
ARTICLE 9
NOTICES, ETC
(a) All notices and other communications provided for hereunder shall be
in writing and shall be mailed (by certified mail, postage prepaid and return
receipt requested), telecopied or delivered, if to a Grantor, to it in care of
the Company at its address specified in the Indenture and if to the Collateral
Agent, to it at U.S. Bank National Association, 425 Walnut Street, Cincinnati,
Ohio 45202, Fax: (513)-632-5511, Attention: Corporate Trust Office; or as to any
such Person, at such other address as shall be designated by such Person in a
written notice to such other Person complying as to delivery with the terms of
this ARTICLE 9(a). All such notices and other communications shall be effective
(a) if mailed (by certified mail, postage prepaid and return receipt requested),
when received or three (3) days after deposited in the mails, whichever occurs
first, (b) if telecopied, when transmitted and confirmation received or (c) if
delivered, upon delivery.
ARTICLE 10
SECURITY INTEREST ABSOLUTE
(a) All rights of the Collateral Agent, the Trustee and the Holders, all
Liens and all obligations of each of the Grantors hereunder shall be absolute
and unconditional irrespective of (a) any lack of validity or enforceability of
the Indenture or any other Senior Secured Note Document, (b) any change in the
time, manner or place of payment of, or in any other term in
15
respect of, all or any of the Senior Secured Note Obligations, or any other
amendment or waiver of or consent to any departure from the Indenture or any
other Senior Secured Note Document, (c) any exchange or release of, or
non-perfection of any Lien on any Collateral, or any release or amendment or
waiver of or consent to departure from any guaranty, for all or any of the
Senior Secured Note Obligations, or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any of the
Grantors in respect of the Senior Secured Note Obligations. All authorizations
and agencies contained herein with respect to any of the Collateral are
irrevocable and powers coupled with an interest.
(b) Each Grantor acknowledges and agrees that, in the event it amalgamates
with any other company or companies, it is the intention of the parties hereto
that the term "Grantor", when used herein, shall apply to each of the
amalgamating companies and to the amalgamated company, such that the security
interest granted hereby: (i) shall extend to "Collateral" (as that term is
herein defined) owned by each of the amalgamating companies and the amalgamated
company at the time of amalgamation and to any "Collateral" thereafter owned or
acquired by the amalgamated company, and (ii) shall secure all "Senior Secured
Note Obligations" (as that term is herein defined) of each of the amalgamating
companies and the amalgamated company to the Collateral Agent, the Trustee and
the Holders at the time of amalgamation and all "Senior Secured Note
Obligations" of the amalgamated company to the Collateral Agent and the Lenders
thereafter arising. The security interest created herein shall attach to all
"Collateral" owned by each company amalgamating with such Grantor, and by the
amalgamated company, at the time of the amalgamation, and shall attach to all
"Collateral" thereafter owned or acquired by the amalgamated company when such
becomes owned or is acquired.
ARTICLE 11
MISCELLANEOUS
(a) No amendment of any provision of this Agreement (including any
Schedule attached hereto) shall be effective unless it is in writing and signed
by each Grantor and the Collateral Agent, and no waiver of any provision of this
Agreement, and no consent to any departure by any Grantor therefrom, shall be
effective unless it is in writing and signed by the Collateral Agent, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
(b) No failure on the part of the Collateral Agent, the Trustee or the
Holders to exercise, and no delay in exercising, any right hereunder or under
any other Senior Secured Note Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The rights and
remedies of the Collateral Agent, the Trustee or the Holders provided herein and
in the other Senior Secured Note Documents are cumulative and are in addition
to, and not exclusive of, any rights or remedies provided by law. The rights of
the Collateral Agent, the Trustee or the Holders under any Senior Secured Note
Document against any party thereto are not conditional or contingent on any
attempt by such Person to exercise any of its rights under any other Senior
Secured Note Document against such party or against any other Person, including
but not limited to, any Grantor.
16
(c) Any provision of this Agreement 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
portions hereof or thereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the date on which
the Discharge of Senior Secured Note Obligations has occurred and (ii) be
binding on each Grantor and their respective successors (including any successor
by reason of amalgamation) and assigns, and all other Persons who become bound
as debtor to this Agreement in accordance with any other Senior Secured Note
Document and shall enure, together with all rights and remedies of the
Collateral Agent, the Trustee or the Holders hereunder, to the benefit of the
Collateral Agent, the Trustee or the Holders and their respective permitted
successors, transferees and assigns. Upon any such assignment or transfer, all
references in this Agreement to any such Collateral Agent, Trustee or Holders
shall mean the assignee of Collateral Agent, Trustee or the Holders. None of the
rights or obligations of any Grantor hereunder may be assigned or otherwise
transferred without the prior written consent of the Collateral Agent, and any
such assignment or transfer shall be null and void.
(e) Upon the date on which the Discharge of Senior Secured Note
Obligations has occurred, this Agreement and the security interests created
hereby shall terminate and all rights to the Collateral shall revert to the
Grantors. Notwithstanding the foregoing, the Collateral Agent's Liens upon the
Collateral shall automatically be released upon any of the events specified in
Section 10.03 of the Indenture in accordance with the terms of the Indenture,
and the Collateral of any Grantor that is released from its Note Guarantee
obligations and is no longer a Guarantor pursuant to Section 11.05 of the
Indenture shall automatically be released upon such an event in accordance with
the terms of the Indenture, and such Grantor shall no longer be a party to this
Agreement.. In connection with any termination or release pursuant to this
ARTICLE 11(e), the Collateral Agent will, upon any Grantor's request and at such
Grantor's expense, without any representation, warranty or recourse whatsoever,
(i) return to such Grantor such Collateral to be released (in the case of a
release) as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof and (ii) execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination
or release.
(f) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE PROVINCE OF ONTARIO AND THE FEDERAL LAWS OF CANADA APPLICABLE
THEREIN, AS THE SAME MAY FROM TIME TO TIME BE IN EFFECT, INCLUDING, WHERE
APPLICABLE, THE PPSA EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR
THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY
INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAW OF SOME OTHER JURISDICTION.
17
(g) ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY DOCUMENT RELATED THERETO MAY BE BROUGHT IN THE COURTS OF THE PROVINCE OF
ONTARIO, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR HEREBY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH GRANTOR HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS OR LACK OF PERSONAL
JURISDICTION, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT.
(h) Each Grantor irrevocably consents to the service of process of any of
the aforesaid courts in any such action, suit or proceeding by the mailing of
copies thereof by registered or certified mail (or any substantially similar
form of mail), postage prepaid, to such Grantor at its address provided herein,
such service to become effective ten (10) days after such mailing.
(i) Nothing contained herein shall affect the right of the Collateral
Agent to serve process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against any Grantor or any property of any
Grantor in any other jurisdiction.
(j) Each Grantor irrevocably and unconditionally waives any right it may
have to claim or recover in any legal action, suit or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
(k) Section headings herein are included for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.
(l) This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed
to be an original, but all of which taken together constitute one in the same
Agreement. Delivery of an executed counterpart of this Agreement by facsimile
shall be equally effective as delivery of an original executed counterpart.
(m) All of the obligations of the Grantors hereunder are joint and
several. The Collateral Agent may, in its sole and absolute discretion, enforce
the provisions hereof against any of the Grantors and shall not be required to
proceed against all Grantors jointly or seek payment from the Grantors ratably.
In addition, the Collateral Agent may, in its sole and absolute discretion,
select the Collateral of any one or more of the Grantors for sale or application
to the Senior Secured Note Obligations, without regard to the ownership of such
Collateral, and shall not be required to make such selection ratably from the
Collateral owned by all of the Grantors. The release or discharge of any Grantor
by the Collateral Agent shall not release or discharge any other Grantor from
the obligations of such Person hereunder.
18
Notwithstanding any other provision contained in this Agreement or any other
Senior Secured Note Document, if a "secured creditor" (as that term is defined
under the Bankruptcy and Insolvency Act (Canada)) is determined by a court of
competent jurisdiction not to include a Person to whom obligations are owed on a
joint or joint and several basis, then each Grantor's Senior Secured Note
Obligations, to the extent such Senior Secured Note Obligations are secured,
only shall be several obligations (each as to 100% of the Senior Secured Note
Obligations) and not joint or joint and several obligations.
(n) When the context so requires, the singular number shall be read as if
the plural were expressed and the provisions hereof shall be read with all
grammatical changes necessary dependent upon the person referred to being a
male, female, firm or corporation.
(o) The Collateral Agent acknowledges and agrees, on behalf of itself, the
Trustee and the Holders, that, any provision of this Agreement to the contrary
notwithstanding, (i) no Grantor shall be required to act or refrain from acting
(A) in a manner that is inconsistent with the terms and provisions of the
Intercreditor Agreement or (B) with respect to any Collateral in any manner that
would result in a default under the terms and provisions of any Credit Facility
Document and (ii) any action required to be taken by a Grantor (or omission to
act) pursuant to the terms of any Credit Facility Document in respect of
Collateral will not put such Grantor in violation of or result in a default
under the terms of this Agreement or any other Senior Secured Note Document.
(p) Each Grantor and the Collateral Agent hereby acknowledge that (i)
value has been given, (ii) such Grantor has rights in the Collateral and, to the
extent that such Grantor does not acquire rights or interests in any of the
Collateral until after the execution and delivery of this Agreement, the
security interest created hereby shall attach to such Collateral at the time
such Grantor acquires rights or interests therein, and (iii) this Agreement
constitutes a security agreement as that term is defined in the PPSA.
(q) Notwithstanding any provision to the contrary contained herein, the
terms of this Agreement, the Liens created hereby and the rights and remedies of
the Collateral Agent, the Trustee and the Holders hereunder are subject to the
terms of the Intercreditor Agreement.
(r) This Agreement shall remain in full force and effect and continue to
be effective should any petition be filed by or against any Grantor for
liquidation or reorganization, should any Grantor become insolvent or make an
assignment for the benefit of any creditor or creditors or should a receiver or
trustee or similar Person be appointed for all or any significant part of any
Grantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Senior Secured Note
Obligations, or any part thereof, is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned by any obligee of
the Senior Secured Note Obligations, whether as a "voidable preference",
"fraudulent conveyance", or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Senior Secured Note Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
(s) Each Grantor hereby acknowledges receipt of a copy of this Agreement.
19
(t) To the extent permitted by applicable law, each Grantor waives such
Grantor's 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 or financing change statement registered
by the Collateral Agent.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
20
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed
and delivered by its officer thereunto duly authorized, as of the date first
above written.
GRANTORS:
MILACRON CANADA INC. (ONTARIO)
By: /s/ Hugh C. O'Donnell
---------------------
Name: Hugh C. O'Donnell
Title: Secretary
2913607 CANADA LIMITED
By: /s/ John C. Francy
------------------
Name: John C. Francy
Title: Assistant Treasurer
450500 ONTARIO LIMITED
By: /s/ Hugh C. O'Donnell
---------------------
Name: Hugh C. O'Donnell
Title: Secretary
528650 ONTARIO LIMITED
By: /s/ John C. Francy
------------------
Name: John C. Francy
Title: Assistant Treasurer
D-M-E OF CANADA LIMITED
By: /s/ John C. Francy
------------------
Name: John C. Francy
Title: Treasurer
PROGRESS PRECISION INC.
By: /s/ R. P. Lienesch
------------------
Name: R. P. Lienesch
Title: Treasurer
COLLATERAL AGENT:
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Karolina K. Dies
_______________________________
Name: Karolina K. Dies
Title: Trust Officer
Schedule I
Legal Names: Jurisdiction of Organization
JURISDICTION OF
COMPANY ORGANIZATION
- ----------------------------------------------------------------------------
Milacron Canada Inc. Ontario
2913607 Canada Limited Canada
450500 Canada Limited Ontario
528650 Ontario Limited Ontario
D-M-E of Canada Limited Ontario
Progress Precision Inc. Ontario
Schedule II (i)
Locations with Chattel Paper, Inventory, Equipment and / or Fixtures
COMPANY ADDRESS COUNTRY
- -----------------------------------------------------------------------------------------------
D-M-E of Canada Limited 6210 Northwest Drive Canada
Mississauga, Ontario
L4V 1J6
450500 Ontario Limited 3275 Deziel Drive Canada
Windsor, Ontario
N8W 5A5
Milacron Canada Inc. 1175 Appleby Line Canada
Unit #B1
Burlington, Ontario
L7L 5H9
Progress Precision Inc. 3555 & 3557 Hawkestone Road Canada
Mississauga, Ontario
L5C 2V1
528650 Ontario Limited 155 West Beaver Creek Road Canada
Units 8
Richmond Hill, Ontario
L4B 1E1
2913607 Canada Limited 1100 rue Berlier Canada
Laval, Quebec
H7L 3R9
Schedule II (ii)
Current Executive Offices
COMPANY ADDRESS STATE/COUNTRY
- ---------------------------------------------------------------------------------------------------
D-M-E of Canada Limited 6210 Northwest Drive Canada
Mississauga, Ontario
L4V 1J6
450500 Ontario Limited 3275 Deziel Drive Canada
Windsor, Ontario
N8W 5A5
Milacron Canada Inc. 1175 Appleby Line Canada
Unit #B1
Burlington, Ontario
L7L 5H9
Progress Precision Inc. 3555 & 3557 Hawkestone Canada
Road Mississauga,
Ontario
L5C 2V1
528650 Ontario Limited 155 West Beaver Creek Rd Canada
Unit 8
Richmond Hill, Ontario
L4B 1E1
2913607 Canada Limited 1100 rue Berlier Canada
Laval, Quebec
H7L 3R9
Schedule II (iii)
Location of Books and Records
COMPANY ADDRESS COUNTY STATE/COUNTRY
- ---------------------------------------------------------------------------------------------------------------------
D-M-E of Canada Limited 6210 Northwest Drive Canada
Mississauga, Ontario
L4V 1J6
D-M-E of Canada Ltd. 29111 Stephenson Highway Oakland Michigan
Madison Heights 48071
450500 Ontario Limited 3275 Deziel Drive Canada
Windsor, Ontario
N8W 5A5
Milacron Canada Inc. 1175 Appleby Line Canada
Unit #B1
Burlington, Ontario
L7L 5H9
Progress Precision Inc. 3555 & 3557 Canada
Hawkestone Road
Mississauga, Ontario
L5C 2V1
Progress Precision Inc. 4165 Half Acre Road Clermont Ohio
Batavia 45103
528650 Ontario Limited 155 West Beaver Creek Road Canada
Units 8
Richmond Hill, Ontario
L4B 1E1
528650 Ontario Limited 29111 Stephenson Highway Oakland Michigan
Madison Heights 48071
2913607 Canada Limited 29111 Stephenson Highway Oakland Michigan
Madison Heights 48071
2913607 Canada Limited 1100 rue Berlier Canada
Laval, Quebec
H7L 3R9
Schedule III
Bank Account Information
NAME AND ADDRESS OF
INSTITUTION MAINTAINING
LOAN PARTY ACCOUNT ACCOUNT NUMBER TYPE OF ACCOUNT
- -----------------------------------------------------------------------------------------------------------------------------
Milacron Canada Inc. Bank of Nova Scotia 1253-18 (USD) Deposit/Disbursement-USD
O/A Milacron Canada Commercial Banking Centre
1001 Champlain Avenue 941-10 (CAD) Deposit/Disbursement-CAD
Suite #100
Burlington, Ontario L7L
5Z4
Progress Precision Inc. TD Canada Trust 1552-7314542 (USD) Deposit - USD
O/A Progress Precision 2038 Kipling Avenue
Rexdale, Ontario M9W 4K1 0566-5208160 (CAD) Deposit/Disbursement-CAD
450500 Ontario Limited Royal Bank of Canada 400 891 8 (USD) Deposit/Disbursement-USD
O/A 450500 Ontario 245 Ouellette Avenue
Limited Canada Windsor, Ontario N9A 7J2 147 909 6 (CAD) Deposit/Disbursement-CAD
528650 Ontario Limited Scotiabank 405920277819 (USD) Deposit/Disbursement-USD
O/A Ontario Heater and 101 Main Street North
Supply Company Markham, Ontario L3P 1X9 405920157910 (CAD) Deposit/Disbursement-CAD
2913607 Canada Limited Scotiabank 315910111015 (USD) Deposit/Disbursement-USD
O/A Rite Tek 101 Main Street North
Markham, Ontario L3P 1X9 405920310719 (CAD) Deposit/Disbursement-CAD
D-M-E of Canada Limited Royal Bank of Canada 100-607-1 (CAD) Deposit/Disbursement-CAD
O/A DME of Canada Ltd. Airport & American Branch
6504 Airport Road 100-608-1 (CAD) Imprest Acct -
Mississauga, Ontario L4V 1E1 Disbursement - CAD
SCHEDULE IV
FINANCING STATEMENTS
PPSA financing statements have been filed in the jurisdictions below
against the Grantors:
Name of Debtor Jurisdiction
- -------------------------------------------------------------------
Milacron Canada Inc. Ontario
450500 Ontario Limited Ontario
Progress Precision Inc. Ontario
2913607 Canada Limited Ontario and Quebec
528650 Ontario Limited Ontario
D-M-E of Canada Limited Ontario