EXHIBIT 4.12
CASH COLLATERAL AND SECURITY AGREEMENT dated as of February 28, 1994,
between CDW CANADA ACQUISITION INC., an Ontario corporation (the
"Grantor") and WESTINGHOUSE CANADA INC., a Canadian corporation, as
-------
collateral agent (in such capacity, the "Collateral Agent") for the
----------------
Secured Parties, as defined herein.
Reference is made to the Canadian Asset Acquisition Agreement (the
"Acquisition Agreement") dated as of February 28, 1994, between the Grantor and
---------------------
Westinghouse Canada Inc., as seller (in such capacity, "Seller") pursuant to
------
which (a) Seller has agreed to transfer certain assets to the Grantor and the
Grantor has agreed to acquire such assets from Seller, (b) in partial
consideration for such acquisition, the Grantor has agreed to execute and
deliver, or cause to be executed and delivered, to Seller (i) C$6,757,250.00
Original Principal Amount of the Grantor's guaranteed first mortgage notes due
2001 (the "Notes"), (ii) the guaranties endorsed on the Notes by each of Buyer,
-----
Newco and Realco, (iii) mortgages by the Grantor on the real property acquired
by the Grantor from Seller securing the Notes and (iv) a security agreement by
the Grantor in the form hereof.
Accordingly, the Grantor and the Collateral Agent hereby agree as
follows:
ARTICLE I. DEFINITIONS
Section 1.01 Terms Defined in the Notes. Terms used herein and not
--------------------------
otherwise defined herein shall have the meanings set forth in the Notes.
Section 1.02 Definition of Certain Terms Used Herein. As used
---------------------------------------
herein, the following terms shall have the following meanings:
"Applicable Law" shall mean all applicable provisions of all (i)
--------------
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any Governmental Authority and (ii)
orders, decisions, injunctions, judgments, awards and decrees of or agreements
with any Governmental Authority.
"Cash Collateral Accounts" shall mean the Cash Consideration Account,
------------------------
the Reserve Account and the Specified Loss Account.
"Cash Consideration Account" shall mean the Cash Consideration
--------------------------
Account established pursuant to Section 5.01.
A "Change Prepayment Event" shall have occurred and be continuing if
-----------------------
(a) a Change of Control has occurred and (b) the Grantor has not yet discharged
in full its obligations with respect to giving notice of such Change of Control
to the holders of the Notes and the prepayment of Notes, in part or in whole, at
the request of such holders.
"Collateral" shall mean all right, title and interest of the Grantor
----------
in all (i) Permitted Non-Cash Consideration that forms part of the Net Proceeds
Allocable to Payee in respect of any Restricted Asset Sale and all related FMN
Mortgages, (ii) Cash Consideration that forms part of the Net Proceeds Allocable
to Payee in respect of any Restricted Asset Sale, (iii) amounts (including
Specified Loss Proceeds) required to be deposited in, and amounts from time to
time held in, the Cash Collateral Accounts, (iv) Permitted Investments held for
the account of any Cash Collateral Account, (v) Documents and (vi) Proceeds.
"Documents" shall mean all instruments, files, records, ledger sheets
---------
and documents covering or relating to any of the Collateral and includes, for
greater certainty, the Register.
"FMN Debtor" shall mean any Person who is or who may become obligated
----------
under, with respect to or on account of any Permitted Non-Cash Consideration
that forms part of the Collateral.
"FMN Mortgages" shall mean the mortgages that secure any Permitted
-------------
Non-Cash Consideration.
"Governmental Approval" shall mean any consent, approval,
---------------------
authorization, waiver, permit, grant, franchise, concession, agreement, license,
exemption or order of, registration, certificate, declaration or filing with or
report or notice to any Governmental Authority.
"Governmental Authority" shall mean any nation or government, any
----------------------
state, province, territory or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any government authority,
agency, department, board, commission or instrumentality of the United States,
Canada, any state of the United States, any province or territory of Canada or
any political subdivision thereof, and any tribunal or arbitrator(s) of
competent jurisdiction, and any self-regulatory organization.
"Liability Reserve", with respect to any Restricted Asset Sale, shall
-----------------
mean any reserve established by the Grantor in accordance with GAAP pursuant to
2
Section 5.03(a) at the time of such Restricted Asset Sale in connection with any
Permitted Liabilities in respect of such Restricted Asset Sale.
"Loan Documents" shall mean the Notes (including the Guaranties
--------------
endorsed thereon) and the Mortgage Documents.
"Mortgages" shall mean the mortgages of real property executed by the
---------
Grantor that by their terms secure the payment by the Grantor of its obligations
under the Notes (whether or not such mortgages also secure other obligations).
"Obligations" shall mean (i) the due and punctual payment by the
-----------
Grantor of (A) the Principal Amount of the Notes, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise and (B) all monetary obligations of the Grantor under the Loan
Documents and (ii) the due and punctual performance of all other obligations of
the Grantor under the Loan Documents.
"Permitted Encumbrances", with respect to any Replacement Property,
----------------------
shall mean the "Permitted Encumbrances", as defined in the Mortgage relating to
such Replacement Property.
"Permitted Investments" shall mean:
---------------------
(a) marketable direct obligations issued or unconditionally
guaranteed by the government of Canada or issued by any agency thereof and
backed by the full faith and credit of the government of Canada, in each
case maturing within one year from the date of acquisition thereof;
(b) marketable general obligations issued by any government of any
province of Canada or any political subdivision of any such province or any
public instrumentality thereof maturing within six months from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings generally obtainable from either CBRS Inc. or Dominion Bond
Rating Service Limited;
(c) commercial paper maturing no more than six months from the date
of creation thereof and, at the time of acquisition, having a rating of A-1
(low) or higher from CBRS Inc. or R-1 (low) or higher from Dominion Bond
Rating Service Limited;
(d) domestic certificates of deposit, guaranteed investment
certificates, deposit receipts or evidences of demand deposits or bankers'
acceptances
3
maturing within six months after the date of acquisition issued by any
Canadian chartered bank or any loan or trust company organized under the
laws of Canada or any province thereof, having combined capital, surplus
and undivided profits (less any undivided losses), as of its last annual
audited financial statements, of not less than C$250,000,000; and
(e) fully collateralized repurchase agreements with a term of not
more than 30 days for underlying securities of the type described in clause
(a) or (b) above entered into with any company which is registered and in
good standing as an investment dealer under the Securities Act (Ontario),
which is a member in good standing of the Investment Dealers Association of
Canada or any successor association thereof and which meets the
quantitative qualifications specified in clause (d) above;
provided, however, that any Permitted Investment (i) must have a stated maturity
- -------- -------
prior to Stated Maturity (ii) be denominated in Canadian Dollars and (iii) be in
bearer form or, if in registrable form, be registered in the name of the
Collateral Agent.
"Permitted Liens" shall mean any (i) Liens for taxes that are not yet
---------------
due and payable or that may after contest be paid without penalty or that are
being contested in good faith by the Grantor and (ii) Liens arising by reason of
any judgment, decree or order of any Governmental Authority that does not arise
out of any breach by the Grantor of any of the Loan Documents if (A) appropriate
legal proceedings have been duly initiated for the review of such judgment,
decree or order, are being diligently prosecuted and have not been finally
terminated or (B) the period within which such proceedings may be initiated has
not expired.
"PPSA" shall mean the Personal Property Security Act (Ontario).
----
"Proceeds" shall mean any consideration received from the sale,
--------
exchange, license, lease or other disposition of any asset or property which
constitutes Collateral, any payments received on Permitted Non-Cash
Consideration that forms part of the Collateral, any payments or other assets
received as a consequence of the possession of any Collateral and any payment
received from any insurer or other person or entity as a result of the
destruction, loss, theft, damage or other involuntary conversion of whatever
nature of any asset or property which constitutes Collateral (but only to the
extent such payment relates to any such asset or property), and shall include
all cash and negotiable instruments received or held on behalf of the Collateral
Agent pursuant to Article V.
"Replacement Property" shall have the meaning ascribed thereto in
--------------------
Section 5.01(d)(1).
4
"Reserve Account" shall mean the Reserve Account established
---------------
pursuant to Section 5.03.
"Secured Parties" shall mean (i) each holder of Notes, (ii) the
---------------
Collateral Agent in its capacity as such, (iii) the beneficiaries of each
indemnification obligation undertaken by the Grantor under any Mortgage Document
and (iv) the successors of the foregoing.
"Security Interest" shall have the meaning ascribed thereto in
-----------------
Section 2.01.
"Specified Loss Account" shall mean the Specified Loss Account
----------------------
established pursuant to Section 5.04.
"Specified Loss Proceeds" shall mean any amounts paid to the
-----------------------
Collateral Agent pursuant to Section 11 or 12 of any Mortgage.
Section 1.03 Extended Meanings. Words importing the singular
-----------------
include the plural thereof and vice versa, and words importing gender include
the masculine, feminine and neuter genders. Any defined term used in the
singular preceded by "any" or "each" shall be taken to indicate any number of
the members of the relevant class. When used in this Agreement, the following
words have the following meanings: (i) "mortgage" means "mortgage, charge or
hypothec"; (ii) "mortgaging" means "mortgaging, charging or hypothecating"; and
(iii) "real property" means "freehold real or immoveable property". Unless
otherwise specified, any reference in this Agreement to any statute will include
all regulations made thereunder or in connection therewith from time to time,
and will include such statute as it may be amended, supplemented or replaced
from time to time.
ARTICLE II. SECURITY INTEREST
Section 2.01 Security Interest. As security for the payment or
-----------------
performance, as the case may be, of the Obligations, the Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Collateral Agent and its successors, for the benefit of the
Secured Parties, and hereby grants to the Collateral Agent and its successors,
for the benefit of the Secured Parties, a security interest in, all the
Grantor's right, title and interest in, to and under the Collateral (the
"Security Interest").
-----------------
Section 2.02 No Assumption of Liability. The Security Interest is
--------------------------
granted as security only and shall not subject the Collateral Agent or any
Secured Party
5
to, or in any way alter or modify, any obligation or liability of the Grantor
with respect to or arising out of any of the Collateral.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
As of the date hereof and as of the date any Cash Consideration or
Permitted Non-Cash Consideration is delivered to the Collateral Agent to be held
pursuant to this Agreement, the Grantor represents and warrants to the
Collateral Agent and the Secured Parties that:
Section 3.01 Title and Authority. The Grantor has (or, in the case
-------------------
of after-acquired Collateral, on the date of its delivery to the Collateral
Agent, will have) good and valid rights in and title to the Collateral with
respect to which it has purported to grant a Security Interest hereunder and has
(or, in the case of after-acquired Collateral, on the date of its delivery to
the Collateral Agent, will have) full power and authority to grant to the
Collateral Agent the Security Interest in such Collateral pursuant hereto and
has full power and authority to execute, deliver and perform its obligations in
accordance with the terms of this Agreement, without the consent or approval of
any other Person, other than any consent or approval which has been obtained.
Section 3.02 Filings. The Grantor has (or promptly after the Closing
-------
Date, but in no event later than the date Collateral is first delivered to the
Collateral Agent, will have) made all the filings, recordings and registrations
listed on Schedule 3.02A, which are the only filings, recordings and
registrations necessary to create, preserve, perfect and protect the Security
Interest under all Applicable Laws (including, without limitation, the PPSA) in
all applicable jurisdictions in Canada, and no further or subsequent filing,
refiling, recording, rerecording, registration or reregistration, of the
filings, recordings and reregistrations listed on Schedule 3.02A is necessary
under any such Applicable Law in any such applicable jurisdiction, except as
provided under Applicable Law with respect to the filing, recording or
registration of continuation statements, financing change statements or
analogous documents and except that additional filings, recordings or
registrations may be necessary if the Grantor thereafter changes its name,
identity or corporate structure or the location of its places of business, its
chief executive office, its chief place of business or the Collateral or
thereafter transfers all or any part of the Collateral, with or without the
prior consent of the Collateral Agent. Without limiting the generality of the
foregoing or of Section 4.04, simultaneously with delivery of any Permitted Non-
Cash Consideration to the Collateral Agent or as soon thereafter as practicable,
the Grantor shall have taken all such actions and made all such filings,
recordings and registrations that are necessary in order to enable the
Collateral Agent to enforce directly against the applicable FMN
6
Debtor its obligations in respect of such Permitted Non-Cash Consideration and
to exercise remedies under the applicable FMN Mortgage, without the necessity of
any further consent or approval of the Grantor.
Section 3.03 Validity of Security Interest. The Security Interest
-----------------------------
constitutes (or, in the case of after-acquired Collateral, will on the date of
delivery of such after-acquired Collateral to the Collateral Agent constitute)
(a) a legal and valid security interest in all the Collateral securing the
payment and performance of the Obligations and (b) a perfected security interest
in all Collateral in which a security interest may be perfected by either (i)
possession of the Collateral by the Collateral Agent (assuming continuing
possession by the Collateral Agent) or (ii) filing, recording or registering a
financing statement or analogous document under the PPSA or any other Applicable
Law in any applicable jurisdiction in Canada. Except as otherwise agreed from
time to time by the Collateral Agent in writing, the Security Interest is and
shall be prior to any other Lien on any of the Collateral, including any
Permitted Lien.
Section 3.04 Absence of Other Liens. The Collateral is owned by the
----------------------
Grantor free and clear of any Lien (other than the Security Interest and any
Permitted Lien). Other than as contemplated hereby, the Grantor has not filed
or consented to the filing of (a) any financing statement or analogous document
under any Applicable Law covering any Collateral or (b) any assignment in which
the Grantor assigns any Collateral or any security agreement or similar
instrument covering any Collateral with any Governmental Authority.
Section 3.05 Location of Chief Executive Office. The registered
----------------------------------
office, principal place of business, chief place of business and chief executive
office of the Grantor, and the office where the Grantor keeps the Documents and
any other books and records concerning the Collateral, are located at the
address specified for the Grantor in Section 8.08. The exact corporate name of
the Grantor as it appears in its constating documents, each other corporate name
the Grantor has had, and all other names (including trade names or similar
appellations) under which the Grantor or any of its divisions, subsidiaries or
other business units has carried on business are as listed in the caption to
this Agreement or notified to the Collateral Agent pursuant to Section 4.01.
ARTICLE IV. COVENANTS
Section 4.01 Change of Name; Location of Collateral: Place of
------------------------------------------------
Business. The Grantor will promptly notify the Collateral Agent of any change
- --------
(i) in its corporate name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of its registered office, its chief
7
executive office, its chief place of business, its principal place of business
or any office in which it maintains books or records relating to Collateral or
(iii) in its identity or corporate structure. The Grantor will not effect or
permit any change referred to in the preceding sentence unless all filings,
recordings or registrations have been made under all Applicable Laws in all
applicable jurisdictions in Canada or otherwise which are required in order for
the Collateral Agent to continue at all times following such change to have a
legal, valid and perfected Lien in all the Collateral in which a Lien may be
perfected or by which the priority of the Lien may be protected under such
Applicable Law by filing, recording or registering this Agreement, any security
documentation delivered by the Grantor to the Collateral Agent pursuant hereto
or any by the Grantor to the Collateral Agent pursuant hereto or any financing
statement or similar document.
Section 4.02 Periodic Certification. Each year, at the time of
----------------------
delivery of Newco's annual financial statements with respect to the preceding
fiscal year pursuant to the U.S. Notes, the Grantor will deliver to the
Collateral Agent a certificate executed by a financial officer and the chief
legal officer of the Grantor (a) certifying that all appropriate financing
statements or analogous documents or other appropriate filings, recordings or
registrations (including registrations of notices of security interest in
fixtures, as applicable), including all refilings, rerecordings and
reregistrations have been filed, recorded or registered under all Applicable
Laws in all applicable jurisdictions in Canada to the extent necessary under (i)
the PPSA to protect and perfect the Security Interest for a period of not less
than 6 months after the date of such certificate and (ii) all other Applicable
Laws in all other applicable jurisdictions in Canada to create, preserve,
perfect and protect the Security Interest and any Lien constituted by any
security documentation delivered by the Grantor to the Collateral Agent pursuant
hereto, in each case for a period of not less than 6 months after the date of
such certificate, (b) setting forth all filings, recordings and registrations,
including all refilings, rerecordings and reregistrations, that, with respect to
the Collateral as of the date of such certificate, would be necessary under the
PPSA and under all other Applicable Laws in all other applicable jurisdictions
in Canada within 18 months after the date of such certificate in order to
create, preserve, perfect and protect the Security Interest in such Collateral
and any Lien in such Collateral constituted by any security documentation
delivered by the Grantor to the Collateral Agent pursuant hereto, (c) setting
forth, with respect to each filing, recording or registration (including each
refiling, rerecording or reregistration) made since the date of the most recent
certificate delivered pursuant to this Section, the filing office, the date of
filing, all relevant filing numbers thereof, the collateral description set out
therein and the expiry date thereof and (d) attaching true, correct and complete
verification statements, acknowledgment copies or copies of this Agreement or of
such other security documentation, as applicable, with filing particulars
officially stamped thereon, of each such filing, recording or registration not
theretofore delivered to the Collateral Agent.
8
Section 4.03 Protection of Security. The Grantor will, at its own
----------------------
cost and expense, take any and all actions necessary to (i) defend title to the
Collateral against all Persons and to defend the Security Interest or any other
Lien of the Collateral Agent in the Collateral and the priority thereof against
any Lien (other than any Permitted Lien) and (ii) resist enforcement of any
Permitted Lien against any Collateral.
Section 4.04 Further Assurances. (a) The Grantor will, at its own
------------------
cost and expense, execute, acknowledge, deliver and cause to be duly filed all
such further instruments and documents and take all such actions as the
Collateral Agent may from time to time reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the rights
and remedies created hereby, including the payment of any fees and filing,
registration, stamp and other similar taxes required in connection with the
execution and delivery of this Agreement, the granting of the Security Interest
or such other Lien and the filing or execution of any financing or financing
charge statements or analogous documents (including registrations of notices of
security interest in fixtures) under any Applicable Law in any jurisdiction with
respect to the Security Interest. The Grantor also hereby authorizes the
Collateral Agent to file any such financing or financing change statement or
analogous document without the signature of the Grantor to the extent permitted
by Applicable Law. If permitted by Applicable Law, a copy of this Agreement
will be sufficient as a financing statement or an analogous document for filing
in any jurisdiction. Without limiting the generality of the foregoing, the
Grantor acknowledges that this Agreement has been prepared based upon the
requirements of existing laws in the Province of Ontario and that such laws may
change. The Grantor also acknowledges that the laws of other jurisdictions may
require the execution and delivery of different forms of security documentation.
The Grantor agrees that the Collateral Agent will have the right to require that
this Agreement be amended or supplemented: (i) to reflect any changes in such
laws, whether arising as a result of statutory amendments, court decisions or
otherwise; (ii) to facilitate the creation and registration of appropriate
security in all appropriate jurisdictions; or (iii) if the Grantor merges or
amalgamates with any other Person or enters into any corporate reorganization,
in each case in order to confer upon the Collateral Agent the Security Interest
intended to be created hereby.
(b) Without limiting the generality of the foregoing, any Permitted
Non-Cash Consideration delivered to the Collateral Agent (and the related FMN
Mortgage) shall, unless otherwise requested by the Collateral Agent, be
registered in the name of the Collateral Agent or its nominee. If the
Collateral Agent requests that any such Permitted Non-Cash Consideration and the
related FMN Mortgage not be registered in the name of the Collateral Agent or
its nominee, such Permitted Non-Cash Consideration and related FMN Mortgage (i)
shall be duly endorsed in a manner, or accompanied by registrable instruments of
transfer or assignment in a form reasonably
9
satisfactory to the Collateral Agent (it being agreed that the Collateral Agent
may at any time in its sole and absolute discretion register any of such
instruments), (ii) shall provide that (A) the rights of the Grantor under such
Permitted Non-Cash Consideration and related FMN Mortgage may be assigned
without the consent of the applicable FMN Debtor, (B) any assignee of the
Grantor can exercise all of the rights of the Grantor under such Permitted Non-
Cash Consideration and related FMN Mortgage, (C) the applicable FMN Debtor will
make all payments under such Permitted Non-Cash Consideration as directed by the
Grantor, and (D) the terms of such Permitted Non-Cash Consideration and related
FMN Mortgage shall not be amended or modified, and the Grantor will not agree to
a waiver or compromise thereof, without the consent of the Grantor and any
assignee of the Grantor and (iii) shall be accompanied by an instrument duly
executed by the applicable FMN Debtor, in a form reasonably satisfactory to the
Collateral Agent, pursuant to which such FMN Debtor shall acknowledge the
assignment to the Collateral Agent of all the rights of the Grantor in respect
of such Permitted Non-Cash Consideration and related FMN Mortgage (it being
agreed that, as between the Grantor and the Collateral Agent, the exercise of
rights and powers accruing to the owner of any Permitted Non-Cash Consideration
shall be governed by this Agreement).
(c) The Collateral Agent shall have the right (in its sole and
absolute discretion) to hold any Permitted Non-Cash Consideration forming part
of the Collateral in its own name as pledgee, the name of its nominee or the
name of the Grantor. The Grantor will promptly give to the Collateral Agent
copies of any notices or other communications received by it with respect to any
Permitted Non-Cash Consideration forming part of the Collateral registered in
the name of the Grantor.
(d) The Collateral Agent shall, upon the reasonable request of the
Grantor, sign any financing statement or other similar document, in form and
substance reasonably satisfactory to the Collateral Agent, required to be filed
by the Grantor pursuant to this Agreement and that requires the signature of the
Collateral Agent.
Section 4.05 Rights and Obligations Under Permitted Non-Cash
-----------------------------------------------
Consideration. (a) Unless and until an Event of Default shall have occurred and
- -------------
be continuing and the Collateral Agent shall have notified the Grantor that the
Grantor's rights under this Section are being suspended:
(i) The Grantor shall be entitled to exercise any and all the rights
and powers of the owner of any Permitted Non-Cash Consideration forming
part of the Collateral (and the related FMN Mortgage) to amend, waive or
modify the terms thereof and to grant consents or approvals thereunder;
provided, however, that (A) such exercise could not reasonably be expected
-------- -------
to materially and adversely affect the rights inuring to a holder of such
Permitted Non-Cash
10
Consideration or the rights and remedies of the Collateral Agent or any of
the Secured Parties under any of the Loan Documents or any of the Secured
Parties to exercise the same and (B) the Grantor may not amend, waive,
modify or compromise any such Permitted Non-Cash Consideration (or the
related FMN Mortgage) to (w) extend the maturity or decrease the principal
amount of, or reduce the rate of interest or extend the time of payment of
any installment of principal of or interest on, any such Permitted Non-Cash
Consideration, (x) release or subordinate the Lien of any FMN Mortgage
forming part of the Collateral or adversely affect the ability to exercise
remedies thereunder, (y) permit any FMN Mortgage forming part of the
Collateral to secure any obligation other than an obligation to the Grantor
or an obligation under Permitted Non-Cash Consideration forming part of the
Collateral or (z) restrict the assignability thereof.
(ii) The Grantor shall be entitled to (and hereby agrees for the
benefit of the Secured Parties that it will exercise commercially
reasonable efforts to) enforce, in a commercially reasonable manner, the
rights and remedies accruing to the owner of any Permitted Non-Cash
Consideration forming part of the Collateral (and the related FMN
Mortgage), including enforcement of the payment when due of amounts payable
thereunder; provided, however, that the foregoing shall not be construed to
-------- -------
constitute a guarantee by the Grantor of collection or otherwise.
(iii) The Collateral Agent will execute and deliver to the Grantor, or
cause to be executed and delivered to the Grantor, all such proxies, powers
of attorney and other instruments as the Grantor may reasonably request for
the purpose of enabling the Grantor to exercise the rights and powers which
it is entitled (or obligated) to exercise pursuant to Section 4.05(a)(i) or
4.05(a)(ii).
(b) Upon the occurrence and during the continuance of an Event of
Default, after the Collateral Agent shall have notified the Grantor of the
suspension of its rights under Section 4.05(a), then all rights and obligations
of the Grantor to exercise the rights and powers which it is entitled to
exercise pursuant to Section 4.05(a), and the obligations of the Collateral
Agent under Section 4.05(a), shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall have the sole and exclusive
right and authority to exercise such rights and powers.
(c) Any notice given by the Collateral Agent to the Grantor
suspending its rights under Section 4.05(a) (i) may be given by telephone if
promptly confirmed in writing and (ii) may suspend the rights of the Grantor
under Section 4.05(a) in part without suspending all such rights (as specified
by the Collateral Agent in its sole and absolute discretion) and without waiving
or otherwise affecting the Collateral Agent's
11
rights to give additional notices from time to time suspending other rights so
long as an Event of Default has occurred and is continuing.
Section 4.06 Inspection and Verification. The Collateral Agent and
---------------------------
such persons as the Collateral Agent may reasonably designate shall have the
right, at any reasonable time or times, to inspect all records (including,
without limitation, all of the Documents) related to the Collateral (and to make
extracts and copies from such records) and to verify under reasonable procedures
the validity, amount, quality, quantity, value, condition and status of, or any
other matter relating to, the Collateral, including by contacting FMN Debtors.
The Collateral Agent shall have the absolute right to share any information it
gains from such inspection or verification with any Secured Party. Without the
prior written consent of the Grantor, the Collateral Agent shall not disclose,
and shall require as a condition to sharing such information with any Secured
Party or other Person that such Secured Party or other Person agree not to
disclose, to any Person that is not a Secured Party any such information which
is designated by the Grantor to the Collateral Agent in writing as confidential;
provided, however, that the Collateral Agent or any Secured Party may disclose
- -------- -------
such information (a) to any of their respective accountants, counsel,
consultants, employees or agents who are advised of the confidential nature of
such information, (b) if it becomes publicly available other than by reason of a
breach of this sentence, (c) if received from a third party not bound by any
confidentiality agreement with the Grantor, (d) required by Applicable Law or
any Governmental Approval to be disclosed by such Person, (e) necessary to
establish such Person's rights under any of the Loan Documents or (f) to any
prospective permitted assignee of all or a portion of the rights of such Person
under the Loan Documents if such prospective permitted assignee agrees to be
bound by the confidentiality provisions contained in this sentence.
Section 4.07 Taxes: Encumbrances. At its option, the Collateral
-------------------
Agent may discharge past-due taxes, assessments, charges, fees or other Liens at
any time levied or placed on the Collateral (other than any Permitted Lien), and
may pay for the maintenance and preservation of the Collateral to the extent the
Grantor fails to do so, and the Grantor agrees to reimburse the Collateral Agent
on demand for any payment made or any expense incurred by the Collateral Agent
pursuant to the foregoing authorization; provided, however, that nothing in this
-------- -------
Section shall be interpreted as excusing the Grantor from the performance of, or
imposing any obligation on the Collateral Agent or any Secured Party to cure or
perform, any covenants or other promises of the Grantor with respect to taxes,
assessments, charges, fees or other Liens and maintenance.
Section 4.08 Continuing Obligations of the Grantor. The Grantor
-------------------------------------
shall remain liable to observe and perform all the conditions and obligations
to be observed and performed by it under each contract, agreement or instrument
relating to the
12
Collateral unless and until title to such contract, agreement or instrument has
been indefeasibly vested in the Collateral Agent pursuant to the exercise of its
remedies under Article VI, all in accordance with the terms and conditions
thereof, and the Grantor will indemnify and hold harmless the Collateral Agent
and the Secured Parties from and against any and all liability arising out of
the Grantor's performance or failure to perform the same.
Section 4.09 Use and Disposition of Collateral. Except for the
---------------------------------
Security Interest, the Grantor will not (i) make or permit to be made an
assignment, pledge or hypothecation of the Collateral or (ii) grant any other
Lien in respect of the Collateral. The Grantor will not make or permit to be
made any transfer of the Collateral other than withdrawals from the Cash
Collateral Accounts made in accordance with Article V.
ARTICLE V. CASH COLLATERAL ACCOUNTS
Section 5.01 Cash Consideration Account. (a) Prior to the first
--------------------------
delivery to the Collateral Agent of any Cash Consideration or Permitted Non-Cash
Consideration constituting Net Proceeds Allocable to Payee, the Collateral Agent
will establish with a financial institution reasonably satisfactory to the
Grantor (it being agreed that such financial institution shall not be a creditor
of the Grantor or any of its Affiliates) an account maintained in the name of
the Collateral Agent and in Toronto, Ontario (the "Cash Consideration Account")
--------------------------
over which the Collateral Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal.
(b) Any Proceeds from the investment pursuant to Section 5.05 of
amounts of Net Proceeds Allocable to Payee in respect of any Restricted Asset
Sale, net of the amount so invested, shall, solely for the purposes of this
Section, constitute additional Net Proceeds in respect of such Restricted Asset
Sale.
(c) The Collateral Agent will, upon written request from the Grantor,
withdraw cash from the Cash Consideration Account and apply such cash to prepay,
in whole or in part, the Notes in accordance with the instructions of the
Grantor set forth in such written request; provided, however, that (i) such
-------- -------
instructions are consistent with paragraph 7(c) of the Notes, (ii) such written
request specifies each Restricted Asset Sale the Net Proceeds Allocable to Payee
in respect of which are to be so applied and, if more than one Restricted Asset
Sale is so specified, the amount of the Net Proceeds Allocable to Payee in
respect of each Restricted Asset Sale to be so applied, (iii) the amount of any
Net Proceeds Allocable to Payee in respect of any Restricted Asset Sale to be so
applied does not exceed the remaining balance of such Net Proceeds Allocable to
Payee in respect of such Restricted Asset Sale and (iv) any cash withdrawn from
the
13
Cash Consideration Account pursuant to this Section 5.01(c) shall be applied to
the prepayment of the Notes only at the direction of the Grantor.
(d) Unless an Event of Default has occurred and is continuing, the
Collateral Agent will withdraw cash from the Cash Consideration Account and pay
such cash at the direction of the Grantor on the date specified by the Grantor
if the following conditions shall have been satisfied:
(1) The Grantor shall have requested in writing that the Collateral
Agent effect such withdrawal not less than 10 Business Days prior to the
date on which such cash is to be withdrawn. Such request shall have
specified the amount of cash to be withdrawn and shall have been
accompanied by (A) a certificate, signed by the chief financial officer of
Newco, to the effect that (x) no Event of Default has occurred and is
continuing and (y) the proceeds of such withdrawal are to be used to
finance the purchase by the Grantor of a fee simple interest in real
property located in Canada (the "Replacement Property") from a Person who
--------------------
is not an Affiliate of the Grantor and (B) a copy of a contract for the
purchase of the Replacement Property.
(2) On or prior to the date on which such cash is to be withdrawn,
the Collateral Agent shall have received (A) a first mortgage securing the
Obligations, in registrable form and otherwise substantially in the form
and substance of the Mortgages, of the Replacement Property, duly executed
and delivered by the Grantor, (B) at the Collateral Agent's option (acting
reasonably), either (i) a title opinion rendered by legal counsel, duly
qualified in the jurisdiction in which the Replacement Property is located
and satisfactory to the Collateral Agent (acting reasonably), confirming
the fee simple interest of the Grantor in the Replacement Priority, the
priority of the Collateral Agent's mortgage therein (in each case, subject
only to standard exceptions and Permitted Encumbrances) and such other
matters as the Collateral Agent may reasonably request or (ii) a title
insurance policy, issued by a nationally recognized title insurance company
satisfactory to the Collateral Agent (acting reasonably), insuring the Lien
of the Collateral Agent's mortgage in the Replacement Property subject only
to standard exceptions and Permitted Encumbrances, in an amount not less
than the amount of the proposed withdrawal, and (C) such surveys,
environmental audits and documents relating to the Permitted Encumbrances
and compliance with Applicable Law and applicable Governmental Approvals,
as reasonably requested by the Collateral Agent, as shall be reasonably
necessary to satisfy the Collateral Agent that the mortgaging of the
Replacement Property to secure the Obligations and the proposed withdrawal,
taken together, would not materially and adversely affect the aggregate
value of the Mortgaged Property and the Collateral or the rights
14
and remedies of the Collateral Agent or any of the Secured Parties under
the Loan Documents or the ability of the Collateral Agent or any of the
Secured Parties to exercise the same.
(3) On the date on which such cash is to be withdrawn, the Collateral
Agent shall have received a certificate bringing down to date the
certificate referred to in Section 5.01(d)(1)(A).
(4) If the Replacement Property is being purchased in connection with
the purchase by the Grantor, or any of its Affiliates, of any assets or
services from the seller of the Replacement Property or any of its
Affiliates, the Collateral Agent shall be reasonably satisfied that the
amount of cash proposed to be withdrawn shall not be greater than the fair
market value of the Replacement Property. If the Replacement Property is
not being purchased in connection with the purchase by the Grantor, or any
of its Affiliates, of any assets or services from the seller of the
Replacement Property or any of its Affiliates, the Collateral Agent shall
be reasonably satisfied that the amount of cash proposed to be withdrawn
shall not be greater than the cash purchase price for the Replacement
Property.
(5) The Grantor directs that the cash withdrawn is to be paid to, or
at the direction of, the seller of the Replacement Property.
(6) The amount of cash to be withdrawn does not exceed (A) the amount
of Cash Consideration received by the Collateral Agent during the preceding
18 months (including in such amount any portion of Excess Reserved Amounts
transferred to the Cash Consideration Account from the Reserve Account
pursuant to Section 5.03(e) in respect of a Liability Reserve established
within the preceding 18 months) and not previously withdrawn from the Cash
Consideration Account plus (B) the amount of cash Proceeds received by the
Collateral Agent during the preceding 18 months in respect of Permitted
Non-Cash Consideration and not previously withdrawn from the Cash
Consideration Account plus (C) the amount of any Proceeds from the
investment pursuant to Section 5.05 of cash described in clause (A) or (B)
above to the extent not previously withdrawn from the Cash Consideration
Account.
(e) At least 10 days prior to each Interest Date that occurs at least
18 months after the receipt by the Collateral Agent of any Net Proceeds
Allocable to Payee, the Grantor shall direct the Collateral Agent in writing (1)
to retain in the Cash Consideration Account all Net Proceeds Allocable to Payee
deposited therein less than 18 months (including in such amount any amounts
transferred to the Cash Consideration Account from the Reserve Account pursuant
to Section 5.03(e) in respect
15
of a Liability Reserve established within the preceding 18 months) prior to such
Interest Date (and all Proceeds therefrom or from the investment thereof in
accordance with Sections 5.01(b) and 5.05) and (2) to apply any balance of the
amount in the Cash Collateral Account after such retention and after any
application pursuant to Section 5.01(d) to prepayment of the Notes on such
Interest Date. Upon such written direction of the Grantor the Collateral Agent
shall withdraw cash in an amount equal to such balance, if any, from the Cash
Consideration Account and apply such cash to prepay, in whole or in part, the
Notes in accordance with the instructions of the Grantor set forth in such
written direction; provided, however, that (i) such instructions are consistent
-------- -------
with paragraph 7(c) of the Notes and (ii) any cash withdrawn from the Cash
Consideration Account pursuant to this Section 5.01(e) shall be applied to the
prepayment of the Notes only at the direction of the Grantor.
(f) If an Event of Default has occurred and is continuing, the
Collateral Agent may, in its sole discretion, apply all amounts on deposit in
the Cash Consideration Account to satisfy in accordance with Section 6.02 any
Obligations then due and payable.
Section 5.02 Deposits. (a) The Grantor will notify and direct
--------
promptly each FMN Debtor and every other Person obligated to make payments on or
with respect to Permitted Non-Cash Consideration forming part of the Collateral
to make all such payments to the Cash Consideration Account. The Grantor shall
use all reasonable efforts to cause each FMN Debtor and every other Person
identified in the preceding sentence to make all payments on or with respect to
Permitted Non-Cash Consideration forming part of the Collateral directly to the
Cash Consideration Account.
(b) In the event that the Grantor directly receives any Proceeds on
or with respect to Permitted Non-Cash Consideration forming part of the
Collateral (including Proceeds from any exercise of remedies in respect thereof,
under any FMN Mortgage or otherwise) notwithstanding the arrangements for
payment directly into the Cash Consideration Account, such Proceeds shall be
held in trust for the benefit of the Collateral Agent and the Secured Parties
and shall be segregated from other funds of the Grantor, subject to the Security
Interest granted hereby, and the Grantor shall cause such Proceeds to be
deposited into the Cash Consideration Account as soon as practicable after the
Grantor's receipt thereof.
(c) All Cash Consideration constituting Net Proceeds Allocable to
Payee received by the Grantor or the Collateral Agent shall forthwith be
deposited into the Cash Consideration Account, subject to (i) the rights of the
Collateral Agent to apply Cash Consideration in accordance with Section 6.02 if
an Event of Default has
16
occurred and is continuing and (ii) the rights of the Grantor hereunder to
direct the Collateral Agent to withdraw amounts on deposit in the Cash
Consideration Account.
(d) All cash Proceeds from investments pursuant to Section 5.01(b)
shall be deposited into the Cash Consideration Account.
Section 5.03 Reserve Account. (a) In connection with any Restricted
---------------
Asset Sale, the Grantor may establish a Liability Reserve (not in excess of the
reserve in respect thereof required by GAAP) by:
(i) not less than five Business Days prior to the consummation of
such Restricted Asset Sale, giving the Collateral Agent written notice that
the Grantor intends to establish a Liability Reserve with respect to such
Restricted Asset Sale;
(ii) simultaneously with the consummation of such Restricted Asset
Sale, delivering to the Collateral Agent a certificate, signed by the chief
accounting officer of the Grantor, stating (A) that the Grantor is
establishing a reserve with respect to Permitted Liabilities in respect of
such Restricted Asset Sale and stating the initial balance of the related
Reserved Amount, (B) that the Grantor is required by GAAP to establish such
a reserve in an amount not less than such stated initial balance and (C)
whether the Grantor is obligated by paragraph 6(3)(b) of the Notes to
deliver cash equal to such Reserved Amount for deposit hereunder; and
(iii) simultaneously with the consummation of such Restricted Asset
Sale, if obligated to do so by paragraph 6(3)(b) of the Notes, delivering
to the Collateral Agent an amount of cash equal to the initial balance of
the Reserved Amount (such amount to be in addition to any Cash
Consideration paid to the Collateral Agent in connection with such
Restricted Asset Sale to be deposited in the Cash Consideration Account).
(b) Prior to the first delivery to the Collateral Agent of any cash
pursuant to Section 5.03(a)(iii), the Collateral Agent will establish with a
financial institution reasonably satisfactory to the Grantor (it being agreed
that such financial institution shall not be a creditor of the Grantor or any of
its Affiliates) an account maintained in the name of the Collateral Agent and in
Toronto, Ontario (the "Reserve Account") over which the Collateral Agent shall
---------------
have exclusive dominion and control, including the exclusive right of
withdrawal. All amounts received by the Collateral Agent pursuant to Section
5.03(a)(iii) and all cash Proceeds from investments thereof pursuant to Section
5.05 shall forthwith be deposited into the Reserve Account.
17
(c) The Reserved Amount in respect of any Restricted Asset Sale shall
be increased by the amount of any Proceeds from the investment of such Reserved
Amount pursuant to Section 5.05, net of the amount so invested, and reduced by
any withdrawals pursuant to this Section in respect of such Reserved Amount.
(d) The Collateral Agent will, upon written request from the Grantor,
withdraw cash from the Reserve Account and apply such cash to prepay, in whole
or in part, the Notes in accordance with the instructions of the Grantor set
forth in such written request; provided, however, that (i) such instructions are
-------- -------
consistent with paragraph 7(c) of the Notes, (ii) such written request specifies
each Restricted Asset Sale the Reserved Amount in respect of which is to be
reduced in connection with such withdrawal and, if more than one Restricted
Asset Sale is so specified, the amount by which each related Reserved Amount is
to be reduced, (iii) the amount by which any Reserved Amount is to be reduced
does not exceed the remaining balance of such Reserved Amount and (iv) any cash
withdrawn from the Reserve Account pursuant to this Section 5.03(d) shall be
applied to the prepayment of the Notes only at the direction of the Grantor.
(e) Unless an Event of Default has occurred and is continuing, the
Collateral Agent will, upon written request from the Grantor, transfer all or a
portion of any Excess Reserved Amount from the Reserve Account to the Cash
Consideration Account if the following conditions shall have been satisfied:
(1) Such request shall specify each Restricted Asset Sale with
respect to which such Excess Reserved Amount has arisen and, if more than
one Restricted Asset Sale is so specified, the amount of each related
Excess Reserved Amount.
(2) The amount of each Excess Reserved Amount does not exceed the
remaining balance of the related Reserved Amount.
(3) Such request shall be accompanied by a certificate, signed by the
chief accounting officer of the Grantor, to the effect that the Grantor is
no longer required by GAAP to maintain the related Excess Reserved Amount
in its reserve in respect of each such Restricted Asset Sale.
(4) The amount of each such Excess Reserved Amount to be transferred
constitutes Net Proceeds Allocable to Payee.
(f) Unless an Event of Default or a Change Prepayment Event has
occurred and is continuing, the Collateral Agent will withdraw cash from the
Reserve
18
Account and pay such cash at the direction of the Grantor on the date specified
by the Grantor if the following conditions shall have been satisfied:
(1) The Grantor shall have requested in writing that the Collateral
Agent effect such withdrawal not less than five Business Days prior to the
date on which such cash is to be withdrawn. Such request shall have been
accompanied by (A) a certificate, signed by the chief financial officer of
Newco, to the effect that no Event of Default or Change Prepayment Event
has occurred and is continuing and (B) a certificate, signed by the chief
accounting officer of the Grantor, to the effect that the proceeds of such
withdrawal are to be used to discharge a Permitted Liability which is then
due and payable (and describing such Permitted Liability in general terms,
including the Restricted Asset Sale out of which such Permitted Liability
has arisen).
(2) On the date on which such cash is to be withdrawn, the Collateral
Agent shall have received certificates bringing down to date the
certificates referred to in Section 5.03(f)(1).
(3) The amount of cash to be withdrawn does not exceed the remaining
balance of the Reserved Amount in respect of such Restricted Asset Sale.
(g) Unless an Event of Default has occurred and is continuing, the
Collateral Agent will withdraw cash from the Reserve Account and pay such cash
at the direction of the Grantor on the date specified by the Grantor if the
following conditions shall have been satisfied:
(1) The Grantor shall have requested in writing that the Collateral
Agent effect such withdrawal not less than five Business Days prior to the
date on which such cash is to be withdrawn. Such request shall have been
accompanied by (A) a certificate, signed by the chief financial officer of
Newco, to the effect that no Event of Default has occurred and is
continuing and (B) a certificate, signed by the chief accounting officer of
the Grantor, to the effect that the proceeds of such withdrawal are to be
used to discharge a Permitted Liability which is then due and payable (and
describing such Permitted Liability in general terms, including the
Restricted Asset Sale out of which such Permitted Liability has arisen).
(2) On the date on which such cash is to be withdrawn, the Collateral
Agent shall have received certificates bringing down to date the
certificates referred to in Section 5.03(g)(1).
19
(3) The amount of cash to be withdrawn does not exceed the remaining
balance of the Reserved Amount in respect of such Restricted Asset Sale.
(4) Such Restricted Asset Sale was a Mixed Asset Sale, and the
Shortfall Amount in respect of such Restricted Asset Sale is zero.
(h) Unless an Event of Default has occurred and is continuing, the
Collateral Agent will withdraw Cash from the Reserve Account representing all or
a portion of any Excess Reserved Amount and pay such cash to or at the direction
of the Grantor on the date specified by the Grantor if the following conditions
shall have been satisfied:
(1) The Grantor shall have requested in writing that the Collateral
Agent effect such withdrawal not less than five Business Days prior to the
date on which such cash is to be withdrawn. Such request shall have
specified each Restricted Asset Sale with respect to which such Excess
Reserved Amount arises, and, if more than one Restricted Asset Sale is so
specified, the amount of each related Excess Reserved Amount. Such request
shall have been accompanied by (A) a certificate, signed by the chief
financial officer of Newco, to the effect that no Event of Default has
occurred and is continuing and (B) a certificate, signed by the chief
accounting officer of the Grantor, to the effect that the Grantor is no
longer required by GAAP to maintain the related Excess Reserved Amount in
its reserve in respect of each such Restricted Asset Sale.
(2) On the date on which such cash is to be withdrawn, the Collateral
Agent shall have received certificates bringing down to date the
certificates referred to in Section 5.03(h)(1).
(3) The amount of each such Excess Reserved Amount to be withdrawn
does not exceed the then remaining balance of the related Reserved Amount.
(4) Each such Restricted Asset Sale was a Mixed Asset Sale, and the
Shortfall Amount in respect of each such Restricted Asset Sale is zero.
(i) If an Event of Default has occurred and is continuing, the
Collateral Agent may, in its sole discretion, apply all amounts on deposit in
the Reserve Account to satisfy in accordance with Section 6.02 any Obligations
then due and payable.
Section 5.04 Specified Loss Account. (a) Prior to the first
----------------------
delivery to the Collateral Agent of any Specified Loss Proceeds, the Collateral
Agent will establish with a financial institution reasonably satisfactory to the
Grantor (it being agreed that
20
such financial institution shall not be a creditor of the Grantor or any of its
Affiliates) an account maintained in the name of the Collateral Agent and in
Toronto, Ontario (the "Specified Loss Account") over which the Collateral Agent
----------------------
shall have exclusive dominion and control, including the exclusive right of
withdrawal. All Specified Loss Proceeds received by the Collateral Agent and all
cash Proceeds from investments thereof pursuant to Section 5.04(b) shall
forthwith be deposited into the Specified Loss Account.
(b) The amount of Specified Loss Proceeds in respect of any Mortgaged
Property shall be increased by the amount of any Proceeds from the investment of
amounts of such Specified Loss Proceeds pursuant to Section 5.05, net of the
amount so invested.
(c) The Collateral Agent will, upon written request from the Grantor,
withdraw cash from the Specified Loss Account and apply such cash to prepay, in
whole or in part, the Notes in accordance with the instructions of the Grantor
set forth in such written request; provided, however, that (i) such instructions
-------- -------
are consistent with paragraph 7(c) of the Notes, (ii) such written request
specifies the Mortgaged Property the Specified Loss Proceeds in respect of which
are to be reduced in connection with such withdrawal, (iii) the amount by which
the Specified Loss Proceeds in respect of any Mortgage Property are to be
reduced does not exceed the remaining balance of such Specified Loss Proceeds
and (iv) any cash withdrawn from the Specified Loss Account pursuant to this
Section 5.04(c) shall be applied to the prepayment of the Notes only at the
direction of the Grantor.
(d) Unless an Event of Default or a Change Prepayment Event has
occurred and is continuing, the Collateral Agent will withdraw cash from the
Specified Loss Account and pay such cash at the direction of the Grantor on the
date specified by the Grantor if the following conditions shall have been
satisfied:
(1) The Grantor shall have requested in writing that the Collateral
Agent effect such withdrawal not less than five Business Days prior to the
date on which such cash is to be withdrawn. Such request shall have been
accompanied by (A) a certificate, signed by the chief financial officer of
Newco, to the effect that no Event of Default or Change Prepayment Event
has occurred and is continuing and (B) a certificate, signed by the chief
accounting officer of the Grantor, to the effect that the proceeds of such
withdrawal are to be used to pay for costs of repairs to or restoration of
the Mortgaged Property in respect of which Specified Loss Proceeds were
received by the Collateral Agent pursuant to Section 11 or 12 of the
applicable Mortgage and (C) a copy of an invoice or invoices for such costs
(the issuer or issuers of which shall not be Affiliates of
21
the Grantor) evidencing that such costs have been incurred and are then due
(or have been paid).
(2) Such request shall have been received by the Collateral Agent not
sooner than 30 days following the most recent withdrawal from the Specified
Loss Account under this Section 5.04(d).
(3) On the date on which such cash is to be withdrawn, the Collateral
Agent shall have received certificates bringing down to date the
certificates referred to in Section 5.04(d)(1).
(4) The amount of cash to be withdrawn (i) does not exceed the
aggregate amount shown on the invoice or invoices accompanying the
certificate delivered pursuant to Section 5.04(d)(1)(B) and (ii) when
aggregated with all other amounts previously withdrawn pursuant to this
Section with respect to such Mortgaged Property, does not exceed such
Specified Loss Proceeds.
(5) Either (i) the cash withdrawn is paid to the Grantor to reimburse
the Grantor for amounts paid to the issuer of the invoice or invoices
accompanying the certificate delivered pursuant to Section 5.04(d)(1)(B)
that are marked "paid" or (ii) the Grantor directs that the cash withdrawn
is to be paid to, or at the direction of, the issuer or issuers of any
unpaid invoice or invoices.
(e) Unless an Event of Default has occurred and is continuing, the
Collateral Agent will withdraw cash from the Specified Loss Account and pay such
cash at the direction of the Grantor on the date specified by the Grantor if the
following conditions shall have been satisfied:
(1) The Grantor shall have requested in writing that the Collateral
Agent effect such withdrawal not less than 10 Business Days prior to the
date on which such cash is to be withdrawn. Such request shall have
specified the amount of cash to be withdrawn and specified the Mortgaged
Property the replacement of which is to be effected with the cash to be
withdrawn and shall have been accompanied by (A) a certificate, signed by
the chief financial officer of Newco, to the effect that (x) no Event of
Default has occurred and is continuing and (y) the proceeds of such
withdrawal are to be used to finance the purchase by the Grantor of
Replacement Property from a Person who is not an Affiliate of the Grantor
and (B) a copy of a contract for the purchase of the Replacement Property.
(2) On or prior to the date on which such cash is to be withdrawn,
the Collateral Agent shall have received (A) a first mortgage securing the
22
Obligations, in registrable form and otherwise substantially in the form
and substance of the Mortgages, of the Replacement Property, duly executed
and delivered by the Grantor, (B) at the Collateral Agent's option (acting
reasonably), either (i) a title opinion rendered by legal counsel, duly
qualified in the jurisdiction in which the Replacement Property is located
and satisfactory to the Collateral Agent (acting reasonably), confirming
the fee simple interest of the Grantor in the Replacement Priority, the
priority of the Collateral Agent's mortgage therein (in each case, subject
only to standard exceptions and Permitted Encumbrances) and such other
matters as the Collateral Agent may reasonably request or (ii) a title
insurance policy, issued by a nationally recognized title insurance company
satisfactory to the Collateral Agent (acting reasonably), insuring the Lien
of the Collateral Agent's mortgage in the Replacement Property subject only
to standard exceptions and Permitted Encumbrances, in an amount not less
than the amount of the proposed withdrawal, and (C) such surveys,
environmental audits and documents relating to the Permitted Encumbrances
and compliance with Applicable Law and applicable Governmental Approvals,
as reasonably requested by the Collateral Agent, as shall be reasonably
necessary to satisfy the Collateral Agent that the mortgaging of the
Replacement Property to secure the Obligations and the proposed withdrawal,
taken together, would not materially and adversely affect the aggregate
value of the Mortgaged Property and the Collateral or the rights and
remedies of the Collateral Agent or any of the Secured Parties under the
Loan Documents or the ability of the Collateral Agent or any of the Secured
Parties to exercise the same.
(3) On the date on which such cash is to be withdrawn, the Collateral
Agent shall have received a certificate bringing down to date the
certificate referred to in Section 5.04(e)(1)(A).
(4) If the Replacement Property is being purchased in connection with
the purchase by the Grantor, or any of its Affiliates, of any assets or
services from the seller of the Replacement Property or any of its
Affiliates, the Collateral Agent shall be reasonably satisfied that the
amount of cash proposed to be withdrawn shall not be greater than the fair
market value of the Replacement Property. If the Replacement Property is
not being purchased in connection with the purchase by the Grantor, or any
of its Affiliates, of any assets or services from the seller of the
Replacement Property or any of its Affiliates, the Collateral Agent shall
be reasonably satisfied that the amount of cash proposed to be withdrawn
shall not be greater than the cash purchase price for the Replacement
Property.
23
(5) The amount of cash to be withdrawn in respect of any Mortgaged
Property (when aggregated with all other amounts previously withdrawn
pursuant to this Section 5.04 with respect to such Mortgaged Property) does
not exceed the Specified Loss Proceeds received in respect of such
Mortgaged Property.
(6) The Grantor directs that the cash withdrawn is to be paid to, or
at the direction of, the seller of the Replacement Property.
(f) If Specified Loss Proceeds with respect to a Mortgaged Property
have been withdrawn from the Specified Loss Account pursuant to Section 5.04(d),
upon completion of the repairs to such Mortgaged Property the Grantor shall
direct the Collateral Agent pursuant to Section 5.04(c) to apply any balance of
such Specified Loss Proceeds with respect to such Mortgaged Property remaining
in the Specified Loss Account to the prepayment of the Notes. If the Grantor
has notified the Collateral Agent in accordance with the Mortgage that Specified
Loss Proceeds with respect to a Mortgaged Property are to be used to finance the
purchase of Replacement Property pursuant to Section 5.04(e), the Grantor may at
any time and from time to time direct the Collateral Agent pursuant to Section
5.04(c) to apply any portion of such Specified Loss Proceeds with respect to
such Mortgaged Property to the prepayment of the Notes.
(g) If an Event of Default has occurred and is continuing, the
Collateral Agent may, in its sole discretion, apply all amounts on deposit in
the Specified Loss Account to satisfy in accordance with Section 6.02 any
Obligations then due and payable.
Section 5.05 Investment. Unless an Event of Default has occurred and
----------
is continuing, the Collateral Agent will accept directions from the Grantor as
to the investment of any funds in any Cash Collateral Account in Permitted
Investments; provided, however, that (i) the Collateral Agent shall not be
-------- -------
required to make any investment that, in its sole judgment, would require or
cause the Collateral Agent to be, or would result in, any violation of
Applicable Law or any Governmental Approval, (ii) the Collateral Agent shall be
authorized to sell any investment held for the account of any Cash Collateral
Account to the extent cash is needed in such Cash Collateral Account to make a
withdrawal of cash from such Cash Collateral Account (and shall not be liable
for any loss resulting from any such sale) and (iii) the Collateral Agent shall
not be required to make any investment unless the Collateral Agent is able to
perfect the Security Interest in such investment. The Grantor will indemnify
the Collateral Agent for any losses resulting from such investments pursuant to
this Section. Except as expressly set forth in this Section, the Collateral
Agent shall not be obligated to invest any amounts on deposit in any Cash
Collateral Account, nor shall
24
any Cash Collateral Account pay interest. The Collateral Agent shall, upon
reasonable request from the Grantor from time to time, provide the Grantor with
a report as to the Collateral Agent's holdings of Permitted Investments.
ARTICLE VI. REMEDIES
Section 6.01 Remedies upon Default. (a) Upon the occurrence and
---------------------
during the continuance of an Event of Default, the Grantor will deliver each
item of Collateral at the time in the possession of the Grantor to the
Collateral Agent on demand, and it is agreed that the Collateral Agent shall
have the right (subject to applicable law), with or without legal process and
with or without previous notice or demand for performance, to exercise, in
addition to all other rights granted to the Collateral Agent in this Agreement,
any and all rights afforded to a secured party under the PPSA or other
Applicable Law. Without limiting the generality of the foregoing, the
Collateral Agent (and, in the case of Section 6.01(vi), any other Secured Party)
may at any time or from time to time upon the occurrence and during the
continuance of an Event of Default take any one or more of the following
actions:
(i) enter into possession of the Collateral;
(ii) commence proceedings in any court of competent jurisdiction for
sale or foreclosure of all or any part of the Collateral;
(iii) file proofs of claim and any other documents to establish its
claims in any proceeding relative to the Grantor;
(iv) collect, receive, appropriate and realize upon the Collateral,
and/or sell, give one or more options to purchase, or otherwise dispose of
and deliver all or any part of the Collateral (or contract to do any of the
foregoing), at public or private sale or sales, at any broker's board or on
any securities exchange or elsewhere upon such terms and conditions as the
Collateral Agent may deem advisable and at such prices as it may deem best,
for cash or on credit or future delivery without assumption of any credit
risk;
(v) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part of any
property in addition to the Collateral securing any of the Obligations, or
compromise or extend or renew for any period (whether or not longer than
the original period) any obligations of any nature of any Person with
respect to any such property; and/or
25
(vi) to the extent permitted by applicable law, purchase any or all of
the Collateral, whether in connection with a sale made under the power of
sale herein contained or pursuant to judicial proceedings or otherwise.
(b) Without limiting the generality of the foregoing and, in
particular, of Sections 6.01(l)(iv) and 6.01(l)(vi), the Collateral Agent shall
be authorized at any offer or sale of any of the Collateral (if it deems it
advisable to do so) to restrict the prospective bidders or purchasers to Persons
who will represent and agree that they are purchasing the Collateral for their
own account for investment and not with a view to the distribution or sale
thereof, and upon consummation of any such sale the Collateral Agent shall have
the right to assign, transfer and deliver to the purchaser or purchasers thereof
the Collateral so sold. Each such purchaser at any such public or private sale
shall hold the property sold absolutely, free from any claim or right on the
part of the Grantor, and the Grantor hereby waives (to the extent permitted by
law) all rights or equity of redemption, stay and appraisal which the Grantor
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted. At any such public or private sale, the
Collateral, or portion thereof, to be sold may be sold in one lot as an entirety
or in separate parcels, as the Collateral Agent may (in its sole and absolute
discretion) determine. The Collateral Agent shall not be obligated to make any
sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been given. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In case any
sale of all or any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by the Collateral Agent until
the sale price is paid by the purchaser or purchasers thereof, but the
Collateral Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like notice. At any
sale made pursuant to this Section 6.01 to any Secured Party, the Collateral or
any part thereof purchased by any such Secured Party shall be free (to the
extent permitted by law) from any right or equity of redemption, stay, valuation
or appraisal on the part of the Grantor (all said rights being also hereby
waived and released to the extent permitted by law). To the extent permitted by
law, such Secured Party may make payment on account of such sale by using any
claim under any Loan Document then due and payable to such Secured Party from
the Grantor as a credit against the purchase price, and such Secured Party may,
upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to the Grantor therefor. For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Collateral Agent shall be free to carry
out such sale pursuant to such agreement and the Grantor shall not be entitled
to the return of the Collateral or any
26
portion thereof subject thereto, notwithstanding the fact that after the
Collateral Agent shall have entered into such an agreement all Events of Default
shall have been remedied and the Obligations paid in full.
(c) The Collateral Agent may take any or all of the foregoing actions
without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except as required by law) to or upon the
Grantor or any other Person, and the Grantor hereby waives each such demand,
presentment, protest, advertisement and notice to the extent permitted by
applicable law.
(d) To the extent permitted by applicable law, the Grantor waives all
claims, damages and demands it may acquire against the Collateral Agent or any
other Secured Party arising out of the exercise by the Collateral Agent of any
rights hereunder. The Grantor will remain liable for any deficiency if the
proceeds from any proceeding or of any collection, receipt, appropriation,
realization, sale, other disposition or delivery of the Collateral are
insufficient to pay and satisfy the Obligations.
Section 6.02 Application of Proceeds. The Collateral Agent shall
-----------------------
apply the proceeds from any proceeding or of any collection, receipt,
appropriation, realization, sale, other disposition or delivery of any of the
Collateral, as well as any Collateral consisting of cash and any amounts paid to
the Collateral Agent pursuant to any Mortgage, as follows:
FIRST, to the payment of all costs and expenses incurred by the
Collateral Agent in connection with such collection or sale or otherwise in
connection with this Agreement, any of the Mortgages or any of the
Obligations or incidental to the care or safekeeping of any of the
Collateral, including all court costs and the reasonable fees and expenses
of its agents, experts and one legal counsel on a solicitor and his own
client basis for it and the holders of the Notes (plus any necessary local
counsel), the repayment of all advances made by the Collateral Agent
hereunder or under any Mortgage on behalf of the Grantor and any other
costs or expenses incurred in connection with the exercise of any right or
remedy hereunder or under any Mortgage;
SECOND, to the payment in full of the Obligations in such order as the
Collateral Agent may elect (the amounts so applied to be distributed among
the Secured Parties pro rata in accordance with the amounts of such
Obligations owed to them on the date of any such distribution); and
27
THIRD, after payment by the Collateral Agent of any other amount
required by applicable law, to the Grantor or its successors, or to
whomsoever may lawfully be entitled to receive the same.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement; provided, however, that the Collateral Agent shall apply such
-------- -------
proceeds, moneys or balances within 6 months of receipt thereof (such 6 months
to be subject to extension during any period for which the Collateral Agent is
not permitted by Applicable Law or this Agreement to apply such proceeds, moneys
or balances). Upon any sale of the Collateral by the Collateral Agent
(including pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Collateral Agent or of the officer making the
sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
ARTICLE VII. RIGHTS AND DUTIES OF COLLATERAL AGENT
SECTION 7.01. Delegation of Duties. The Collateral Agent may execute
--------------------
any of its duties under any Loan Document by or through agents or attorneys-in-
fact and shall be entitled to advice of counsel or other advisors concerning all
matters pertaining to its duties and rights hereunder. The Collateral Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care except to the extent
otherwise expressly required by Section 7.02 or 8.03.
SECTION 7.02. Powers; General Immunity. (a) Each Secured Party, by
------------------------
its acquisition of any Note, irrevocably authorizes the Collateral Agent to take
such action on such Secured Party's behalf and to exercise such powers under the
Loan Documents as are specifically delegated to it by the terms thereof,
together with such powers as are reasonably incidental thereto. The Collateral
Agent shall have only those duties and responsibilities which are expressly
specified in the Loan Documents and it may perform such duties by or through its
agents or employees. The duties of the Collateral Agent shall be mechanical and
administrative in nature; and the Collateral Agent shall not have by reason of
any Loan Document a fiduciary relationship in respect of any Secured Party; and
nothing in any of the Loan Documents, expressed or implied, is intended to or
shall be so construed as to impose upon the Collateral Agent any obligations in
respect of any of the Loan Documents except as expressly set forth therein.
28
(b) The Collateral Agent shall not be responsible to any Secured
Party for the execution, effectiveness, genuineness, validity, enforceability,
collectability or sufficiency of any of the Loan Documents or for any Liens or
Guaranties granted by, or purported to be granted by, any of the Loan Documents,
or for any representations, warranties, recitals or statements made herein or
therein or made in any written or oral statement or in any financial or other
statements, instruments, reports, certificates or any other documents in
connection herewith or therewith furnished or made by the Collateral Agent to
any Secured Party or by or on behalf of Buyer, Newco, Realco or the Grantor, to
the Collateral Agent or any Secured Party, or be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained herein or therein or of the
existence or possible existence of any Default or Event of Default.
(c) Notwithstanding anything to the contrary in this Agreement,
neither the Collateral Agent, nor any of its officers, directors, employees,
agents, investigators, consultants, attorneys-in-fact or Affiliates shall be
liable to any Secured Party for any action taken or omitted under any of the
Loan Documents or in connection herewith or therewith unless, but only to the
extent, caused by its or their gross negligence or willful misconduct. If the
Collateral Agent shall request instructions with respect to any act or action
(including the failure to take an action) in connection with any of the Loan
Documents, the Collateral Agent shall be entitled to refrain from such act or
taking such action unless and until it shall have received instructions from the
Required Mortgage Lenders. Without prejudice to the generality of the
foregoing, (i) the Collateral Agent shall be entitled to rely, and shall be
fully protected in relying, upon any communication, instrument or document
believed by it to be genuine and correct and to have been signed or sent by the
proper person or persons, and shall be entitled to rely and shall be protected
in relying on opinions and judgments of attorneys (who may be attorneys for the
Grantor or its Affiliates), accountants, experts and other professional advisors
selected by it; and (ii) no Secured Party shall have any right of action
whatsoever against the Collateral Agent as a result of the Collateral Agent
acting or (where so instructed) refraining from acting under any Loan Document
in accordance with the instructions of the Required Mortgage Lenders. The
Collateral Agent shall be entitled to refrain from exercising any power,
discretion or authority vested in it under the Loan Documents unless and until
it has obtained the instructions of Required Mortgage Lenders.
(d) The agency hereby created shall in no way impair or affect any of
the rights and powers of, or impose any duties or obligations upon, the
Collateral Agent in its individual capacity as a Secured Party. With respect to
any Notes that it holds, the Collateral Agent shall have the same rights and
powers hereunder as any other Secured Party and may exercise the same as though
it were not performing the duties and functions delegated to it hereunder. The
Collateral Agent and its Affiliates
29
may accept deposits from, lend money to and generally engage in any kind of
banking, trust, financial advisory or any other business with the Grantor or any
Affiliate of the Grantor as if it were not performing the duties specified
herein, and may accept fees and other consideration from the Grantor or any
Affiliate of the Grantor without having to account for the same to the Secured
Parties.
(e) Without limiting the foregoing, the Collateral Agent may deem and
treat the holder of any Note as the owner thereof for all purposes. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of that
Note or of any Note issued in exchange therefor.
(f) The Collateral Agent shall be entitled to rely, and shall be
fully protected in relying, on the Register and the copies of the Register, in
each case as provided to the Collateral Agent by the Grantor pursuant to Section
4.06, for purposes of determining the names and addresses of the holders of the
Notes.
Section 7.03 Non-Reliance on Agent. Each Secured Party, by its
---------------------
acquisition of any Note, expressly acknowledges that neither the Collateral
Agent, nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates have made any representations or warranties to it and that no act
by the Collateral Agent hereinafter taken shall be deemed to constitute any
representation or warranty by such Person. The Collateral Agent shall not have
any duty or responsibility either initially or on a continuing basis to make any
such investigation or any such appraisal on behalf of the Secured Parties or to
provide any Secured Party with any credit or other information with respect
thereto, and the Collateral Agent shall not have any responsibility with respect
to the accuracy of or the completeness of any information provided to the
Secured Parties.
Section 7.04 Determinations Pursuant to Loan Documents. In each
-----------------------------------------
circumstance where, under any provision of any Loan Document, the Collateral
Agent shall have the right to grant or withhold any consent, exercise any
remedy, make any determination or direct any action under such Loan Document,
the Collateral Agent shall act in respect of such consent, exercise of remedies,
determination or action, as the case may be, only with the consent of and at the
direction of the Required Mortgage Lenders; provided, however, that (i) no such
-------- -------
consent of the Required Mortgage Lenders shall be required with respect to any
consent, determination or other matter that is, in the Collateral Agent's
reasonable judgment, ministerial or administrative in nature or provided for in
such Loan Document, (ii) the Collateral Agent is hereby authorized on behalf of
all of the Secured Parties, without the necessity of any further consent from
any Secured Party, from time to time prior to an Event of Default, to
30
release the security interests and Liens imposed by the Mortgage Documents in
connection with any dispositions permitted by the terms of the Mortgage
Documents or as may be required by Applicable Law and (iii) the Collateral Agent
may in its discretion take such action as it deems necessary, without the
consent or direction of the Required Mortgage Lenders, if in the good faith
determination of the Collateral Agent the interests of the Secured Parties would
be adversely affected were such action to be delayed pending the obtaining of
such consent or direction. In each circumstance where any consent of or
direction from the Required Mortgage Lenders is required, the Collateral Agent
shall send to the Secured Parties a notice setting forth a description in
reasonable detail of the matter as to which consent or direction is requested
and the Collateral Agent's proposed course of action with respect thereto. In
the event the Collateral Agent shall not have received a response from any
Secured Party within five Business Days after the giving of such notice (unless
such notice is given by mail, in which case 10 Business Days after the giving of
such notice), such Secured Party shall be deemed to have agreed to the course of
action proposed by the Collateral Agent, provided that such notice states that a
failure to respond shall have the consequences specified in this sentence.
Section 7.05 Resignation of the Collateral Agent. The Collateral
-----------------------------------
Agent may at any time, by giving 30 days' prior written notice to the Grantor,
resign and be discharged from the responsibilities hereby created, such
resignation to become effective upon the earlier of (i) the acceptance of the
appointment of a successor pursuant to the next sentence of this Section or (ii)
the appointment of a successor by the Required Mortgage Lenders and the
acceptance of such appointment by such successor. If no successor shall be
appointed and approved pursuant to clause (ii) above within 30 days after the
date of any such resignation, the Collateral Agent may apply to any court of
competent jurisdiction to appoint a successor to act until a successor shall
have been appointed by the Required Mortgage Lenders as above provided or may,
on behalf of the Secured Parties, appoint a successor Collateral Agent. Any
successor Collateral Agent shall be (A) a Canadian chartered bank or any loan or
trust company organized under the laws of Canada or any province thereof with an
office in Toronto, Ontario, having a combined capital, surplus and undivided
profits (less any undivided losses), as of its last annual audited financial
statements, not less than C$250,000,000 and being authorized to perform the
functions of the Collateral Agent hereunder (who, if appointed after the fourth
anniversary of the Closing Date, shall be entitled to receive reasonable fees
from the Grantor for its services as Collateral Agent) or (B) the holder of at
least a majority of the aggregate Principal Amount of the Notes then outstanding
plus all accrued interest thereon from the immediately preceding Interest Date.
ARTICLE VII MISCELLANEOUS
31
Section 8.01 Security Interest Absolute; Release of Security
-----------------------------------------------
Interest. (a) All rights of the Collateral Agent hereunder, the Security
Interest and all obligations of the Grantor hereunder shall be absolute and
unconditional irrespective of (a) any lack of validity or enforceability of the
Notes (or any Guaranty endorsed thereon), any Mortgage, any agreement with
respect to any of the Obligations or any other agreement or instrument relating
to any of the foregoing, (b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Notes (or any
Guaranty endorsed thereon), any Mortgage or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance which might otherwise constitute a defense available to, or a
discharge of, the Grantor in respect of the Obligations or this Agreement,
except the payment in full of the Obligations and except for any matter approved
in writing by, subject to paragraph 14 of the Notes, the Required Mortgage
Lenders and the Collateral Agent.
(b) The consent or approval of any Secured Party shall not be
required for the release of any Collateral by the Collateral Agent to the
Grantor in accordance with the express provisions of this Agreement.
Section 8.02 Successors. Whenever in this Agreement any of the
----------
parties hereto is referred to, such reference shall be deemed to include the
successors of such party (including, in the case of the Collateral Agent, any
successor Collateral Agent); and all covenants, promises and agreements by or on
behalf of the Grantor or the Collateral Agent that are contained in this
Agreement shall bind and inure to the benefit of their respective successors
(including, in the case of the Collateral Agent, any successor Collateral
Agent).
Section 8.03 Collateral Agent Appointed Attorney-in-Fact. (a) The
-------------------------------------------
Grantor hereby appoints the Collateral Agent the attorney-in-fact of the
Grantor, with power of substitution and in the Grantor's name or otherwise, for
the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument which the Collateral Agent may reasonably
deem necessary or advisable to accomplish the purposes hereof, including, upon
the occurrence and during the continuance of an Event of Default, the power to
(a) receive, endorse, assign and/or deliver any and all notes, acceptances,
checks, drafts, money orders or other evidences of payment relating to the
Collateral or any part thereof; (b) demand, collect, receive payment of, give
receipt for and give discharges and releases of all or any of the Collateral;
(c) commence and prosecute any and all suits, actions or proceedings at law or
in equity in any court of competent jurisdiction to collect or otherwise realize
on all
32
or any of the Collateral or to enforce any rights in respect of any Collateral;
(d) settle, compromise, compound, adjust or defend any actions, suits or
proceedings relating to all or any of the Collateral; and (e) use, sell, assign,
transfer, pledge, make any agreement with respect to or otherwise deal with all
or any of the Collateral, and to do all other acts and things necessary to carry
out the purposes of this Agreement, as fully and completely as though the
Collateral Agent were the absolute owner of the Collateral for all purposes;
provided, however, that nothing contained in this Section or in this Agreement
- -------- -------
shall be construed as requiring or obligating the Collateral Agent to make any
commitment or to make any inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent, or to present or file any claim or notice, or
to take any action with respect to the Collateral or any part thereof or the
moneys due or to become due in respect thereof or any property covered thereby,
and no action taken or omitted to be taken by the Collateral Agent with respect
to the Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of the Grantor or to any claim or action against
the Collateral Agent, other than any such matter to the extent arising out of
the gross negligence or willful misconduct of the Collateral Agent. It is
understood and agreed that the appointment of the Collateral Agent as the agent
and attorney-in-fact of the Grantor for the purposes set forth above is coupled
with an interest and is irrevocable. The provisions of this Section shall in no
event relieve the Grantor of any of its obligations hereunder or under any
Mortgage with respect to the Collateral or any part thereof or impose any
obligation on the Collateral Agent or any Secured Party to proceed in any
particular manner with respect to the Collateral or any part thereof, or in any
way limit the exercise by the Collateral Agent or any Secured Party of any other
or further right which it may have on the date of this Agreement or hereafter,
whether hereunder, by law or otherwise; provided, however, that the Collateral
-------- -------
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession or under its control shall be
to use reasonable care in the custody and preservation of such Collateral. The
Grantor agrees that the Collateral Agent shall be deemed to have used reasonable
care in the custody and preservation of the Collateral if the Collateral Agent
deals with such Collateral in the same manner as the Collateral Agent deals with
similar property for its own account and, to the extent permitted by applicable
law, the Collateral Agent need not take any steps to preserve rights against any
other Person (including prior parties).
(b) The Grantor also authorizes the Collateral Agent, at any time and
from time to time, upon the occurrence and during the continuance of an Event of
Default, to execute any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral in connection with any
sale provided for in Section 6.01 hereof.
Section 8.04 Collateral Agent's Expenses; Indemnification. (a) The
--------------------------------------------
Grantor will pay upon demand to the Collateral Agent the amount of any and all
33
reasonable expenses, including the reasonable fees and expenses of one counsel
on a solicitor and his own client basis for it and the holders of the Notes
(plus any necessary local counsel), of any experts or agents and of any
financial institution with which any Cash Collateral Account is maintained,
which the Collateral Agent may incur in connection with (i) the administration
of the Mortgage Documents, (ii) the custody, preservation or investment of, or
the sale of, collection from or other realization upon any of the Collateral,
(iii) the exercise, enforcement or protection of any of the rights of the
Collateral Agent (hereunder, under any Mortgage or otherwise) or (iv) the
failure of the Grantor to perform or observe any of the provisions hereof, other
than any such expenses to the extent arising out of the gross negligence or
willful misconduct of the Collateral Agent. If the Grantor fails to perform or
observe any of the provisions hereof, then the Collateral Agent shall be
entitled, but shall have no obligation, to perform or observe or otherwise cause
the performance or observance of any of the provisions hereof.
(b) The Grantor will indemnify the Collateral Agent against, and hold
it harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees and expenses on a solicitor and his
own client basis, incurred by or asserted against it arising out of, in any way
connected with, or as a result of, the execution, delivery or performance of any
Mortgage Document, or any exercise of remedies thereunder, or any claim,
litigation, investigation or proceeding relating hereto or to the Collateral or
any Mortgage or Mortgaged Property, whether or not a party thereto, other than,
and only to the extent, caused by the gross negligence or willful misconduct of
the Collateral Agent.
(c) Any such amounts payable as provided hereunder shall be
additional Obligations. The provisions of this Section shall remain operative
and in full force and effect regardless of the termination of this Agreement,
the consummation of the transactions contemplated hereby, the invalidity or
unenforceability of any term or provision of this Agreement, any Note or any
Mortgage, or any investigation made by or on behalf of the Collateral Agent.
All amounts due under this Section shall be payable on written demand therefor.
Section 8.05 Waivers, Amendment. (a) No failure or delay of the
------------------
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
are cumulative, may be exercised singly or concurrently and in any order, and
are not exclusive of any rights or remedies which it would otherwise have. No
waiver of any provisions of this Agreement or consent to any departure by the
Grantor therefrom shall in any event be effective unless
34
the same shall be permitted by Section 8.05(b), and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on the Grantor in any case shall entitle the Grantor
to any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Grantor with respect to which such
waiver, amendment or modification is to apply, subject to any consent required
in accordance with paragraph 14 of the Notes.
Section 8.06 Termination. This Agreement (including the
-----------
representations and warranties herein) and the Security Interest shall terminate
when and only when all the Obligations have been paid in full. Upon such
termination, the Collateral Agent shall forthwith assign, transfer and deliver
any Collateral in the possession or under the control of the Collateral Agent
(including any Collateral in any Cash Collateral Account) to or on order of the
Grantor and, at the Grantor's expense, execute and deliver to the Grantor such
documents as the Grantor shall reasonably request to evidence such termination.
Any execution and delivery of such documents shall be without recourse to or
warranty by the Collateral Agent.
Section 8.07 Severability. If any provision of this Agreement is
------------
inoperative or unenforceable for any reason, such circumstances shall not have
the effect of rendering the provision in question inoperative or unenforceable
in any other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative or unenforceable to any extent
whatsoever. The invalidity of any one or more phrases, sentences, clauses,
Sections or subsections of this Agreement shall not affect the remaining
portions of this Agreement.
Section 8.08 Notices. All notices and other communications made in
-------
connection with this Agreement shall be in writing. Any notice or other
communication in connection herewith shall be deemed duly given (a) four
Business Days after it is sent by express, registered or certified mail, return
receipt requested, postage prepaid or (b) one Business Day after it is sent by
overnight courier, in each case, addressed as follows:
35
(i) if to the Grantor:
CDW Canada Acquisition Inc.
475 Hood Road
Markham, Ontario
L3R 0S8
Attention: Chief Financial Officer
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Attention: Steven Ostner
and a copy to each of Buyer, Newco and Realco at the
addresses set forth in paragraph 16 of the Notes
(ii) if to the Collateral Agent:
Westinghouse Canada Inc.
120 King Street West, 6th Floor
Hamilton, Ontario
L8N 3K2
Attention: General Counsel
or, in each case, at such other address as may be specified in writing to the
other parties hereto. Any party may give any notice or other communication in
connection herewith using any other means (including, without limitation,
personal delivery, messenger service, telecopy, telex or ordinary mail), but no
such notice or other communication shall be deemed to have been duly given
unless and until it is actually received by the individual for whom it is
intended.
Section 8.09 Headings. The headings contained in this Agreement are
--------
for purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.
36
Section 8.10 Entire Agreement. This Agreement, together with the
----------------
Acquisition Agreement, the Notes and the Mortgages, constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof.
Section 8.11 Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
Section 8.12 Governing Law. This Agreement shall be construed in
-------------
accordance with and governed by the laws of the Province of Ontario and the laws
of Canada applicable therein. Without prejudice to the ability of the
Collateral Agent to enforce this Agreement in any other proper jurisdiction, the
Grantor hereby irrevocably submits and attorns to the jurisdiction of the courts
of the Province of Ontario for the purposes of this Agreement.
Section 8.13 No Third Party Beneficiaries. Nothing in this Agreement
----------------------------
shall confer any right upon any Person, other than the parties hereto, the
Secured Parties and each such party's respective successors and permitted
assigns.
Section 8.14 No Merger. Neither the taking and holding of the
---------
Collateral nor the obtaining of any judgment by the Collateral Agent will
operate as a merger of any Obligation or any other indebtedness or liability of
the Grantor to the Collateral Agent, the Secured Parties or any of them or
operate to prejudice the security constituted by this Agreement. This Agreement
and the Security Interest are in addition to and not in substitution for any
other security now or hereafter held by the Collateral Agent in respect of the
Grantor, the Obligations or the Collateral. No remedy for the enforcement of
the rights of the Collateral Agent hereunder will be exclusive of or dependent
on any other such remedy but any one or more of such remedies may from time to
time be exercise0d independently or in combination.
Section 8.15 Release of Information. The Grantor hereby authorizes
----------------------
the Collateral Agent and any other Secured Party to deliver a copy of this
Agreement and to provide such other information as may be requested of any of
the Secured Parties by Persons entitled thereto pursuant to the PPSA, any other
applicable statute and otherwise with the consent of the Grantor.
Section 8.16 Miscellaneous Provisions. Possession of an executed
------------------------
copy of this Agreement by the Collateral Agent constitutes conclusive evidence
that this Agreement was executed and delivered by the Grantor, free of all
conditions. The
37
Grantor confirms that value has been given and that the parties have not agreed
to postpone the time for attachment of the Security Interest to any of the
Collateral.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
CDW CANADA ACQUISITION INC.,
By: /s/ R.J. Marshuetz
-----------------------------------
Name: R.J. Marshuetz
Title:
WESTINGHOUSE CANADA INC., as
Collateral Agent
By: /s/ Carolyn Crowe Worthington
-----------------------------------
Name: Carolyn Crowe Worthington
Title: Assistant Secretary
/s/ J.S. Cowan
-----------------------------------
J.S. Cowan
Vice President and Treasurer
38
SCHEDULE 3.02A
--------------
REQUIRED FILINGS, RECORDINGS AND REGISTRATIONS
1. Province of Ontario.
39