<PAGE> 1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): March 29, 1996
--------------
CEDAR GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-10372 23-2577796
-------- ------- ----------
State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation or
organization
500 Rue Notre Dame,
Lachine
Quebec, H8S 2B2
--------------------------------------
(Address of principal executive office)
Registrant's telephone number: (514) 634-3550
--------------
===============================================================================
<PAGE> 2
ITEM 2. ACQUISITION OF DISPOSITION OF ASSETS.
On March 29, 1996, Cedar Group Australia Pty Ltd. ("CGA"), an
Australian corporation and a wholly-owned subsidiary of Cedar Group, Inc. (the
"Registrant"), purchased through the facilities of the Australian Stock
Exchange 12,640,000 ordinary shares of McConnell Dowell Corporation Limited
("MDC"), constituting approximately 30.4% of the issued ordinary shares of MDC,
at a purchase price of A$20,224,000 (US$15,774,720), or A$1.60 (US$1.25) per
share. CGA had made a tender offer for all of the outstanding ordinary shares
of MDC, which expired on April 9, 1996, with 11,178,115 shares having been
tendered into the offer, constituting 26.89% of the issued ordinary shares of
MDC. The tender offer was for A$1.25 (US$.98) per share (later increased to
A$1.60 (US$1.25)), net to the seller in cash. Prior to the commencement of the
tender offer, CGA owned approximately 19.9% of the issued ordinary shares of
MDC, which it had acquired from Morrison Knudsen Corporation. As a result of
these transactions, CGA owns as of April 11, 1996, 32,091,400 ordinary shares,
constituting 77.19% of the issued ordinary shares of MDC. The total amount of
funds required to purchase all of the shares of MDC owned by CGA and to pay
related fees and expenses was U.S. $41,433,806.
The Registrant committed to provide these funds to CGA through another
of its wholly-owned subsidiary, Cedar Group Canada Inc., a Canadian corporation
("CGC"). CGC obtained such funds from a newly created credit facility ($30
million) pursuant to that certain credit facility agreement dated as of March
27, 1996 (the "Credit Agreement") among CGC, the Registrant and BT Commercial
Corporation ("BTCC"), as the Lender (the "Lender").
In addition, funds were provided by an offshore private placement of
US$15 million of 6% Convertible Preferred Shares (the "Preferred Shares") of
Cedar Group (TCI) Inc. LLC. The Preferred Shares pay cash dividends at the
rate of 6% per annum. The Preferred Shares are convertible into the
Registrant's Common Stock, beginning May 31, 1996, at a conversion price which
is equal to 12% less than the market price of the Common Stock during the five
trading days prior to conversion if converted prior to June 30, 1996, or 15%
less than the market price of the Common Stock during the five trading days
prior to conversion if converted thereafter. All Preferred Shares outstanding
on
<PAGE> 3
October 31, 1998 will be automatically converted into the Registrant's Common
Stock.
MDC's assets consist of cash, accounts receivable, inventories and
property, plant and equipment. These assets are utilized in its
infrastructure, including pipeline, mechanical and electrical, engineering and
construction groups operating throughout Asia, Australia, and New Zealand. The
Registrant plans for MDC to continue such course of business under its control.
The Consideration paid by CGA was determined by the Registrant's
management based on prevailing market conditions.
No material relationship existed between MDC and the Registrant or any
of its affiliates, any director or officer of the Registrant, or any associate
of any such director or officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
It is impracticable at the time of the filing of this Current
Report to provide the required financial statements for MDC. Accordingly, the
Registrant will file the required financial statements under cover of an
Amendment to this Current Report on Form 8-K as soon as practicable, but in any
event, not later than 60 days after the date on which this Current Report must
be filed with the Commission.
(b) Proforma financial information.
It is impracticable at the time of the filing of this Current
Report for the Registrant to provide the proforma financial information
required by Regulation S-X. Accordingly, the Registrant will file the required
proforma financial information under cover of an Amendment to this Current
Report on Form 8-K as soon as practicable, but in any event, not later than 60
days after this Current Report must be filed with the Commission.
(c) Exhibits (referenced to Item 601 of Regulations S-K).
2.1 Credit Facility Agreement
2.2 Cedar Group, Inc. Guarantee Agreement
2.3 Cedar Group, Inc. Pledge Agreement
2.4 Cedar Group, Inc. Security Agreement
2.5 Cedar Group Canada, Inc. Pledge Agreement
2.6 Cedar Group Canada, Inc. Security Agreement
4.1 Certificate of Designation
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CEDAR GROUP, INC.
Dated: April 12, 1996 By: /S/ Michel L. Marengere
--------------------------
Michel L. Marengere,
Chairman and CEO
(Chief Executive Officer)
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number
(Referenced to
Item 601 to
Reg. S-K) Description of Exhibit
- -------------- ----------------------
<S> <C>
2.1 Credit Facility Agreement
2.2 Cedar Group, Inc. Guarantee Agreement
2.3 Cedar Group, Inc. Pledge Agreement
2.4 Cedar Group, Inc. Security Agreement
2.5 Cedar Group Canada, Inc. Pledge Agreement
2.6 Cedar Group Canada, Inc. Security Agreement
4.1 Certificate of Designation
</TABLE>
<PAGE> 1
- -------------------------------------------------------------------------------
CREDIT FACILITY AGREEMENT
Dated as of March 27, 1996
Between
CEDAR GROUP CANADA INC.,
as Borrower,
CEDAR GROUP, INC.
AND CERTAIN OF ITS SUBSIDIARIES PARTY HERETO,
as Guarantors
and
BT COMMERCIAL CORPORATION
as Lender
- ------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PRELIMINARY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 1.3. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 1.4. Interpretation Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 1.5. Precedence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 1.6. Interest Act (Canada) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE II
THE LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.1. The Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.3. The Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.5. Repayment of the Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.7. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.8. Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.9. Payments and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.10. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.12. Increased Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.14. Right of Set Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III
CONDITIONS TO LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.1. Conditions Precedent to Making the Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE V
REPORTING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.2. Specific Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.2. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.3. Compliance with Laws, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 6.4. Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 6.5. Maintenance of Property; Good Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.6. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.7. Access to Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.8. Additional Security From Loan Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.9. Further Assurances Relating to the Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.10. Insurance; Casualty Loss; Performance Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.12. Business Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.13. End of Fiscal Years; Fiscal Quarters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.15. Listing of MDC on Stock Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.16. Intercompany Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.17. Additional Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.18. Ownership of MDC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.19. Payment of Obligations; Trade Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.23. Separate Corporate Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.24. Accounts and Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VII
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.2. Consolidation, Merger, Sale or Purchase of Assets, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.3. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.4. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 7.5. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.6. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.7. Dividends, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 7.8. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 7.9. Changes in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.10. Voluntary Payment or Redemption of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.11. Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.14. Amendment of Contractual Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.16. Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE VIII
FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IX
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 9.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 9.3. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 9.4. Remedies Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 9.5. Rights Under Facility Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE X
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE XI
ASSIGNMENTS & TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 11.1. Successors and Assigns; Participations; Assignments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE XII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 12.1. Payment of Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 12.2. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 12.3. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 12.4. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 12.5. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 12.6. Indemnity and Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 12.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 12.8. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 12.10. No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 12.11. Marshalling; Recapture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 12.12. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 12.13. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 12.14. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 12.15. Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 12.16. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 12.17. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 12.18. Language . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 12.20. Currency Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 12.21. Entire Agreement; Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 12.22. Waiver of Immunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
</TABLE>
iii
<PAGE> 5
SCHEDULES AND EXHIBITS:
<TABLE>
<S> <C>
Schedule 1.1(a) Lender and Lender Commitments
Schedule 1.1(b) Initial Borrowing Subsidiaries
Schedule 3.1(l)(i) Collateral Locations
Schedule 3.1(l)(ii) Royal Bank of Canada Liens
Schedule 4.1(i) Existing Liens
Schedule 4.1(k) Litigation
Schedule 4.1(n)A Subsidiaries
Schedule 4.1(n)B Organizational Chart
Schedule 4.1(s) Plan Information
Schedule 4.1(t) Environmental Compliance
Schedule 4.1(u) Disclosures
Schedule 4.1(ac) Filing Jurisdictions for Security Documents
Schedule 4.1(ad) Filing Jurisdictions for Intercompany Security Documents
Schedule 4.1(am) Bank Accounts
Schedule 4.1(an) Owned Real Property
Schedule 4.1(ao) Leased Real Property
Schedule 4.1(ap) Insurance
Schedule 4.1(aq) Performance Bond Arrangements
Schedule 7.4(b) Existing Indebtedness
Schedule 7.6(d) Existing Investments
Schedule 7.8 Transactions with Affiliates
Schedule 7.11 Contingent Liabilities
Exhibit A Form of Note
Exhibit B Form of Effectiveness Certificate
Exhibit C Form of Guarantor Certificate
Exhibit D Form of Quebec Immovable Hypothec
Exhibit E Form of Manitoba Mortgage
Exhibit F Form of Parent Guarantee
Exhibit G Form of Dominion Bridge Guarantee
Exhibit H Form of Cedar Australia Guarantee
Exhibit I Form of Cedar (TCI) Guarantee
Exhibit J Form of Parent Pledge Agreement
Exhibit K Form of Borrower Pledge Agreement
Exhibit L Form of Parent Security Agreement
Exhibit M Form of Parent Quebec Movable Hypothec
Exhibit N Form of Borrower Security Agreement
Exhibit O Form of Borrower Quebec Movable Hypothec
Exhibit P Form of Dominion Bridge Security Agreement
Exhibit Q Form of Dominion Bridge Quebec Movable Hypothec
Exhibit R Form of Cedar Australia Fixed and Floating Charge
Exhibit S Form of Intercompany Note
Exhibit T Form of Intercompany Canadian Security Agreement
Exhibit U Form of Subscription Agreement
</TABLE>
iv
<PAGE> 6
CREDIT FACILITY AGREEMENT
This CREDIT FACILITY AGREEMENT, dated as of March 27, 1996, is between
CEDAR GROUP CANADA INC., a company incorporated under the Canada Business
Corporations Act corporation (the "Borrower"), CEDAR GROUP, INC., a Delaware
corporation (the "Parent"), certain Subsidiaries of the Parent party hereto
from time to time (such Subsidiaries and the Parent, collectively, the
"Guarantors"), and BT COMMERCIAL CORPORATION (the "Lender").
PRELIMINARY STATEMENT
A. The Borrower has requested that the Lender lend to the
Borrower the amount of $26,000,000.
B. It is a condition precedent to the making of the Loan that
the obligations of the Borrower be guaranteed by each of the Guarantors and
that each of the Guarantors be party to this Agreement.
C. The Lender is willing to extend such credit on the terms
and conditions set out in this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
"Adjusted Base Rate" means an interest rate equal to the Base
Rate plus 1.50 percent per annum.
"Affiliate" of any Person means (a) any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person, or (b) any other Person who is a director or officer
of such Person or of any Person described in clause (a) above. For purposes of
this definition, "control" of a Person shall mean the possession, direct or
indirect, of the power (i) to vote securities having 10% or more (on a fully
diluted basis) of the outstanding shares of any class of capital stock of such
Person (or in the case of a Person that is not a corporation, 10% or more on a
fully diluted basis of any class of equity interest), or (ii) to direct or
cause the direction of the management and policies of such Person whether
through the ownership of voting securities, by contract or otherwise.
<PAGE> 7
"Agent" means BT Commercial Corporation, as agent in the
manner indicated in Section 11.
"Agreement" means this Credit Facility Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.
"Base Rate" means, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16th of 1%) equal to the greater of (a)
the Federal Funds Effective Rate in effect on such day plus 0.5% per annum and
(b) the rate of interest per annum announced from time to time by Bankers Trust
Company as its prevailing prime rate; each change in such announced rate being
effective on the date such change is announced. If for any reason the Lender
has determined that it cannot ascertain the Federal Funds Effective Rate, the
Base Rate shall be calculated without regard to clause (a) of this definition
until the circumstances giving rise to such inability no longer exist.
"Bidder" means Cedar Group Australia Pty Limited (ACN 070 811
139), a company incorporated in the Australian Capital Territory.
"Bidder's Offer" means the offer to acquire all the issued
shares of MDC set out in the document entitled "Offer" and dated March 9, 1996,
issued by the Bidder and being one of the Takeover Documents.
"Borrower" means Cedar Group Canada Inc., a company
incorporated under the Canada Business Corporations Act.
"Business Day" means any day other than a Saturday, Sunday or
any other day on which commercial banks are required by law or authorized to
close in New York City.
"Capital Expenditure" means any expenditure that is considered
to be a capital expenditure under GAAP, including any amount which is required
to be treated as an asset subject to a Capital Lease.
"Casualty Loss" has the meaning specified in Section 6.10(d).
"Cedar Group Company" means the Parent and any of its
Subsidiaries, direct or indirect.
"Cedar Group Trade Payables Policy" means the policy described
on Schedule 4.1(al).
"Cedar TCI" means Cedar Group (TCI) Inc. LLC, a limited life
company established under the laws of the Turks and Caicos Islands, British
West Indies.
"Change of Control" or "Change in Control" means such time as:
(a) a "person" or "group" (within the meaning of sections
13(d) and 14(d)(2) of the Exchange Act) becomes the "beneficial owner"
(as defined in Rule 13d-3 under
2
<PAGE> 8
the Exchange Act) of more than 25% of the total voting power of the
then outstanding Voting Stock of the Parent;
(b) the Borrower ceases to be a direct Wholly Owned
Subsidiary of the Parent or the Borrower consolidates or merges with
or into another Person or conveys, transfers or leases all or
substantially all of its assets to any Person in one transaction or a
series of related transactions, or any Person consolidates or merges
with or into the Borrower and, in any such event, the Parent owns,
directly, less than all of the Voting Stock of the surviving Person
immediately after such transaction or series of transactions;
(c) individuals who on the Funding Date constituted the Board
of Directors of either of the Borrower or the Parent (together with
(i) any directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Borrower or the
Parent, as the case may be, was approved by the vote of 50% of the
directors then still in office who were either directors on the
Funding Date or whose election or nomination was previously approved,
or (ii) in the case of the Borrower, any directors nominated by the
Parent) cease for any reason to constitute a majority of the Board of
Directors of the Borrower or the Parent then in office.
"Collateral" means the real and personal Property of any
Person from time to time subject to the Security Documents, as security for the
Obligations of the Borrower and the Guarantors hereunder and the Facility
Documents.
"Consolidated" with respect to the Parent means the
consolidation of the accounts of the Parent and its Subsidiaries in accordance
with GAAP.
"Contingent Liabilities" means, as to any Person, all
obligations under standby letters of credit, bank guarantees or similar
obligation issued for the account of such Person and any obligation of such
Person guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends, Guarantees or other obligations (the "primary obligations") of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent:
(a) to purchase any such primary obligation or any Property
constituting direct or indirect security therefor (except for
obligations to purchase Property which are undertaken solely for the
purpose of acquiring such Property and not for the purpose of
indirectly guaranteeing the primary obligation);
(b) to advance or supply funds (i) for the purchase or
payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor;
(c) to purchase Property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation; or
3
<PAGE> 9
(d) otherwise to assure or hold harmless the owner of any
such primary obligation against loss in respect thereof, provided,
however, that the term Contingent Liabilities shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business.
"Contractual Obligation" of any Person shall mean any
provision of any debt security or preferred stock or equity interest issued by
such Person or of any indenture, obligation, mortgage, agreement, deed of
trust, instrument or undertaking to which such Person is a party or by which it
or any of its assets or property is bound.
"Declarations of Trust" means, collectively, the two
declarations of trust each dated March 12, 1996 granted by the Bidder, as
trustee, in favor of the Borrower, as sole beneficiary, over shares in MDC.
"Default" means any event or condition that, with notice or
lapse of time or both, would become an Event of Default.
"Dividend" has the meaning specified in Section 7.7.
"Dominion Bridge" means Dominion Bridge, Inc., a company
incorporated under the Canada Business Corporation Act.
"Effectiveness Certificate" means a certificate, dated the
Funding Date and to be delivered to the Lender pursuant to Section 3.1,
substantially in the form of Exhibit B.
"Environmental Action" means any action, suit, demand, demand
letter, claim, notice of non-compliance or violation, investigation,
proceeding, consent order or consent agreement from any Governmental Authority
or other Person relating in any way to any Environmental Law or any
Environmental Permit.
"Environmental Law" means all federal, provincial, state and
local laws, rules, regulations, ordinances, programs, permits, guidelines,
voluntary agreements, control orders, approvals, orders and consent decrees,
all having the force of law, relating to Hazardous Materials, pollution, human
health, safety or the environment (including ambient air, surface water, ground
water, land surface or subsurface strata), including without limitation, all
agreements and arrangements with any Governmental Authority relating to air
emission standards or otherwise to Hazardous Materials all Environmental Action
Requests, work orders, laws and regulations relating to emissions, discharges,
releases or threatened releases of Hazardous Materials or otherwise relating to
the manufacturing, processing, distribution, use, treatment, storage, disposal
or transport of Hazardous Materials.
"Environmental Permit" means any permit, approval,
identification number, license or other authorization required under any
Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
4
<PAGE> 10
"Event of Default" has the meaning specified in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Facility Documents" means, collectively, this Agreement, the
Note, each Security Document, the Fee Letter, the Commitment Letter of BTCC to
the Borrower and the Parent dated February 20, 1996, and the Intercompany
Documents.
"Federal Funds Effective Rate" means, for any period, a
fluctuating interest rate per annum equal, for each day during such period, to
the weighted average of the rates on overnight Federal Funds transactions with
members of the Federal Reserve System arranged by Federal Funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day on such transactions received by the Lender from three
Federal Funds brokers of recognized standing selected by it.
"Fee Letter" means the fee letter between the Borrower, the
Parent and the Lender dated February 20, 1996.
"Financial Statements" means the Consolidated and
consolidating balance sheet and Consolidated statement of operations and
statement of cash flows and statements of changes in shareholder's equity of
each of the Parent and the Borrower, for the period specified, prepared in
accordance with GAAP and consistent with prior practices.
"Fully Satisfied" shall mean, with respect to the Obligations
or Guaranteed Obligations (as defined in the Security Agreements) as of any
date, that, on or before such date, (a) the principal of and interest accrued
to such date on such Obligations shall have been paid in full in cash, (b) all
fees, expenses and other amounts then due and payable which constituted
Obligations or Guaranteed Obligations as the case may be shall have been paid
in full in cash and (c) the Commitments shall have expired or irrevocably been
terminated.
"Funding Date" means the date hereof.
"GAAP" has the meaning specified in Section 1.3.
"Governmental Authority" means any nation or government, any
state, provincial, local, municipal or other political subdivision thereof and
any entity or instrumentality (of any nature whatsoever) exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and includes, without limitation, any pension board.
"Guarantee" means, as applied to any obligation, (a) a
guarantee (other than by endorsement of negotiable instruments for collection
in the ordinary course of business), direct or indirect, in any manner, of any
part or all of such obligation and (b) an agreement, direct or indirect,
contingent or otherwise, the practical effect of which is to assure in any way
the
5
<PAGE> 11
payment or performance (or payment of damages in the event of nonperformance)
of any part or all of such obligation, including, without limiting the
foregoing, the payment of amounts drawn down by letters of credit.
"Guaranteed Obligations" has the meaning specified in the Loan
Guarantees.
"Guarantors" means, collectively, the Parent, Dominion Bridge,
the Bidder and Cedar TCI and any other Person who is or becomes party to a Loan
Guarantee pursuant to the terms of this Agreement.
"Guarantor's Certificate" means a certificate, to be dated the
Funding Date and delivered to the Lender pursuant to Section 3.1, substantially
in the form of Exhibit C.
"Hazardous Materials" means (a) petroleum or petroleum
products, natural or synthetic gas, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation and radon gas; (b) any
substances defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", "toxic substances", "toxic pollutants",
"contaminants", "chemicals" or "pollutants", or words of similar import, under
any Environmental Law; and (c) any other substance exposure to which is
regulated under any Environmental Law.
"Indebtedness" of any Person means, without duplication, all
indebtedness and other Obligations of such Person, contingent or otherwise:
(a) for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a
portion thereof and including any indebtedness issued in exchange for
indebtedness for borrowed money);
(b) for or representing deferred/unpaid purchase price of
property or services;
(c) evidenced by notes, bonds, debentures or other similar
instruments;
(d) created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender
under such agreement in the event of default are limited to
repossession or sale of such property);
(e) as lessee under leases which have been or, in accordance
with GAAP should be, recorded as Capital Leases;
(f) under acceptance, letter of credit or similar facilities;
(g) to purchase, redeem, retire, defease or otherwise acquire
for value any capital stock or any warrants, rights or options to
acquire such capital stock, of such Person;
6
<PAGE> 12
(h) arising by way of Guarantee, directly or indirectly of
any Indebtedness of others referred to in clauses (a) through (g)
above in any manner by such Person, or in effect arising by way of
Guarantee directly or indirectly by such Person, through an agreement:
(i) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or purchase of such
Indebtedness;
(ii) to purchase, sell or lease (as lessee or
lessor) Property, or to purchase or sell services, primarily
for the purpose of enabling the debtor to make payment of such
Indebtedness or to assure the holder of such Indebtedness
against loss;
(iii) to supply funds to or invest in the debtor
(including any agreement to pay for Property or services
irrespective of whether such Property is received or such
services are rendered); or
(iv) otherwise to assure a creditor against loss;
(i) under executory obligations of such Person in respect of
interest rate agreements and foreign exchange and other financial
hedge contracts; and
(j) arising by way of Lien granted by such Person, directly
or indirectly with respect to any Indebtedness referred to in clauses
(a) through (g), where such Lien is on Property (including, without
limitation, accounts and contract rights) owned by such Person, and
even though such Person has not assumed or become liable for the
payment of such Indebtedness.
Notwithstanding any other provision in this definition, for
the purposes of computing Indebtedness outstanding at any time, all items
listed above shall be excluded to the extent that they would otherwise be
eliminated as intercompany items in consolidation.
Any reference to Indebtedness shall also be deemed to include
any renewals, extensions, deferrals, restructurings, refundings, amendments and
modifications of such Indebtedness.
"Indemnified Party" has the meaning specified in Section 12.7.
"Intellectual Property" of any Person means all trademarks,
tradenames, copyrights, patents, technology, know-how and processes necessary
for the conduct of such Person's business.
"Intercompany Documents" means, collectively, the Intercompany
Note and the Intercompany Security Documents.
7
<PAGE> 13
"Intercompany Note" means the form of note evidencing
Indebtedness of Dominion Bridge to the Borrower in accordance with the terms
thereof, substantially in the form of Exhibit S.
"Intercompany Security Agreement" means, collectively, the
security agreements granted by Dominion Bridge, as grantor, to the Borrower, as
secured party, securing the intercompany loan obligations of Dominion Bridge,
which shall be substantially in the form of Exhibit T.
"Intercompany Security Documents" means, collectively, each
Intercompany Security Agreement and all other documents incidental thereto
(e.g. Lien Statements) or otherwise securing the intercompany loan obligations
of Dominion Bridge.
"Interest Expense" means, for any period:
(a) the aggregate amount of interest that, in conformity with
GAAP, would be set forth opposite the caption "interest expense" or
any like caption on a Consolidated income statement of the Parent and
its Subsidiaries (including, but not limited to: (i) imputed interest
under Capital Leases; (ii) all commissions, discounts and other fees
and charges owed with respect to letters of credit and bankers'
acceptance financing; (iii) the net costs associated with hedging
obligations; (iv) the interest portion of any deferred payment
obligation; (v) amortization of discount or premium, if any; and (vi)
all other non-cash interest expense); plus, without duplication
(b) all capitalized interest of the Parent and its
Subsidiaries for such period, all interest accrued or paid by the
Parent or any of its Subsidiaries under any Guarantee of Indebtedness
(including a Guarantee of principal, interest or any combination
thereof) of any Person for such period; plus
(c) any amounts payable as dividends (whether or not paid) on
preferred stock permitted to be outstanding, including without
limitation the TCI Preferred Stock,
in each case determined on a Consolidated basis in accordance with GAAP, but
excluding amortization of financing fees and expenses.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Inventory" has the meaning specified in the Security
Agreements.
"Investment" by any Person means, directly or indirectly, any
advance, loan or other extension of credit or capital contribution to (by means
of any transfer of cash or other property to others or any payment for Property
or services for the account or use of others) or any purchase or acquisition by
such Person of any stock, bonds, notes, debentures or other securities issued
or owned by, any other Person. Investments shall exclude extensions of trade
credit on commercially reasonable terms in accordance with normal trade
practices.
8
<PAGE> 14
"Lender" means BT Commercial Corporation, a Delaware company.
"Lien" means any lien, charge, claim, mortgage, pledge,
security interest or other charge or encumbrance of any kind, or any other type
of preferential arrangement, upon or with respect to any property including any
title retention agreement or any lease in the nature thereof and any easement,
right of way or other encumbrance on title to real property.
"Lien Legislation" means, as applicable, the UCC, the Quebec
Civil Code, the PPSA, the Australian Corporations Law or similar legislation of
any jurisdiction which applies to or in connection with the issue, priority,
perfection, enforcement, validity or effect of Liens.
"Lien Statement" means, as applicable, a UCC financing
statement, ASC forms 309, 350, or similar forms required by any Lien
Legislation to be filed, recorded or registered with any Person (including a
Governmental Authority) in order to issue, perfect, enforce, validate or effect
any Lien.
"Loan" has the meaning specified in Section 2.1
"Loan Guarantees" means, collectively, each of the Loan
Guarantees delivered pursuant to this Agreement, to be dated as of the First
Funding Date substantially in the form of Exhibit F to I, as each of the same
may be amended, supplemented or otherwise modified from time to time.
"Loan Party" means, collectively, the Borrower and the
Guarantors.
"Loss" has the meaning specified in Section 11.8.
"Manitoba Mortgage" means the mortgage to be dated as of the
Funding Date given by Dominion Bridge, as mortgagor, to the Lender, for the
ratable benefit of the Lender, substantially in the form annexed hereto as
Exhibit E, and any other document, incidental to such Mortgage or otherwise
relating to the land referred to therein and securing the Obligations of the
Borrower.
"Margin Regulations" has the meaning specified in Section
4.1(p).
"Material Adverse Effect" means, with respect to any Person,
any change, or prospective change, or effect, or prospective effect, that has
occurred or is threatened, and that individually or in the aggregate might be
materially adverse to the business, results of operations, properties, assets,
prospects or condition (financial or otherwise) of such Person or any of its
Subsidiaries.
"Maturity Date" means April 12, 1996.
"MDC" means McConnell Dowell Corporation Limited (ACN 008 444
880), a company incorporated in the Australian Capital Territory.
9
<PAGE> 15
"Mortgages" means, collectively, the Manitoba Mortgage and the
Quebec Mortgage.
"Note" has the meaning specified in Section 2.3.
"Obligation" means, with respect to any Person, any obligation
of such Person of any kind, including, without limitation, any liability of
such Person on any claim, whether or not the right of any creditor to payment
in respect of such claim is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or
unsecured, and whether or not such claim is discharged, stayed or otherwise
affected by any proceeding referred to in Section 9.1(g). Without limiting the
generality of the foregoing, the Obligations of the Borrower under the Facility
Documents include the obligation to pay principal, interest, charges, expenses,
fees, attorneys' fees and disbursements, reimbursements, indemnities and other
amounts payable by the Borrower under any Facility Document.
"On Market Acquisitions" means the purchase by the Bidder, as
trustee for the Borrower, of 12,640,000 ordinary shares in MDC in transactions
conducted through County NatWest Securities on the Australian Stock Exchange on
March 21 and 22, 1996.
"Other Taxes" has the meaning specified in Section 2.11(b).
"Parent" means Cedar Group, Inc., a Delaware corporation.
"Performance Bonds" means guarantees, performance bonds, bid
bonds, warranty bonds and surety bonds or other instrument issued by a Person
in favor of a third party pursuant to which such Person undertakes or secures
to pay or satisfy any claim or entitlement or payment of damages, compensation
or other financial relief (whether or not up to a stated maximum amount) or to
perform, execute or guarantee the performance of one or more Cedar Group
Companies pursuant to a Contractual Obligation to which that Cedar Group
Company is a party.
"Permits" has the meaning specified in Section 4.1(g).
"Permitted Indebtedness" means any Indebtedness expressly
permitted to be incurred, created, assumed or contracted pursuant to Section
7.4.
"Permitted Liens" means Liens expressly permitted to exist or
to be created, incurred or assumed pursuant to Section 7.3.
"Person" means an individual, corporation, partnership,
business trust, joint venture, association, joint stock company, trust,
unincorporated organization or other entity, or a government or any agency or
political subdivision thereof.
"Plan" means any pension or other similar employee benefit
plan and which is (a) a plan maintained by a Cedar Group Company; (b) a plan to
which a Cedar Group Company contributes or is required to contribute; (c) a
plan to which a Cedar Group Company
10
<PAGE> 16
was required to make contributions at any time during the five (5) calendar
years preceding the date of this Agreement; or (d) any other plan with respect
to which a Cedar Group Company has incurred or may incur liability, including
contingent liability, either to such plan or to any Person, including any
administrator or Governmental Authority.
"Pledge Agreements" means, collectively, each of the Pledge
Agreements delivered pursuant to this Agreement, to be dated as of the Funding
Date in favor of the Lender, as pledgee, substantially in the form annexed
hereto as Exhibit J and K, as each of the same may be amended, supplemented or
otherwise modified from time to time, together with any other document required
to effect such agreements.
"Pledged Collateral" has the meaning specified in the Pledge
Agreements.
"Pledged Stock" has the meaning specified in the Pledge
Agreements.
"Pledgors" means, collectively, the pledgors party to the
Pledge Agreements.
"PPSA" means the Personal Property Securities Act of Ontario,
Canada or similar in equivalent legislation in any other province of Canada (or
any successor statute).
"Property" means any assets or property of any kind or nature
whatsoever, real, personal or mixed (including fixtures) whether tangible or
intangible.
"Quebec Mortgage" means the immovable hypothec to be dated as
of the Funding Date given by Dominion Bridge to the Lender substantially in the
form of Exhibit D and any other document incidental to such immovable hypothec
or otherwise relating to the land referred to therein and securing the
Obligations of the Borrower.
"Related Company" means any corporation "related" to any Loan
Party within the meaning of the Income Tax Act of Canada, as in effect on the
date hereof, any Affiliate of any Loan Party, or any trade or business (whether
or not incorporated) which, together with a Loan Party, would be treated as a
single employer.
"Remarketing Agreement" means the agreement between County
NatWest Securities Limited and the Bidder constituted by the letters from
County Natwest Securities Limited to the Parent dated January 25, 1996,
February 9, 1996 and February 19, 1996.
"Requirement of Law" means, as to any Person, the certificate
of incorporation, by-laws or other organizational or governing documents of
such Person, and each law, treaty, rule, regulation (including, without
limitation, the Margin Regulations), interpretation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its Property or to which such Person
or any of its Property is subject.
"Responsible Officer" means a Principal Accounting Officer,
Chief Financial Officer, Chief Executive Officer, President or Treasurer of the
Person, as the context requires.
11
<PAGE> 17
"Reversions" means any funds which may become due to any Loan
Party in connection with the termination of any Plan or other employee benefit
plan.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreements" means, collectively, the security
agreements delivered pursuant to this Agreement to be dated as of the Funding
Date given by a Loan Party, as grantor, to the Lender, as secured party, each
substantially in the form annexed attached hereto as Exhibit L to R, as each
may be amended, supplemented or otherwise modified from time to time.
"Security Documents" means, collectively, the Loan Guarantees,
the Mortgages, the Security Agreements, the Pledge Agreements, and all other
documents incidental thereto (e.g. Lien Statements) or otherwise securing the
Obligations of the Borrower or the Guaranteed Obligations.
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, Contingent
Liabilities, of such Person, (b) the present fair salable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts and liabilities beyond such Person's ability to pay as such debts
and liabilities mature and (d) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction, for
which such Person's property would constitute an unreasonably small capital.
The amount of Contingent Liabilities at any time shall be computed as the
amount that, in the light of all the facts and circumstances existing at such
time, represents the amount that can reasonably be expected to become an actual
or matured liability.
"Steen" means Steen Contractors Limited, an Ontario
corporation.
"Subscription Agreements" means subscription agreements in the
form of the Offshore Convertible Securities Subscription Agreements attached
hereto as Exhibit U, for the purchase of TCI Preferred Stock.
"Subsidiary" of any Person means (a) any corporation a
majority of the total voting power of the Voting Stock of which is at the time
owned by such Person, directly or indirectly through one or more such
Subsidiaries, or (b) any partnership, association, joint venture or other
entity in which such Person, directly or indirectly through Subsidiaries, is
either a general partner or has a 50% or more equity interest at the time.
"Takeover" means the offer to acquire all of the issued
ordinary shares in MDC by the Bidder and the acquisition of all such shares
upon the acceptance of such offer.
"Takeover Documents" means, collectively, the Bidder's Offer,
the Part A Statement registered and served under the Australian Corporations
Law on February 22, 1996,
12
<PAGE> 18
and all other agreements, notices, forms, authorities or documents required to
effect the Takeover, whether issued by the Bidder, MDC or any other Person.
"Taxes" has the meaning specified in Section 2.11(a).
"TCI Preferred Stock" means the shares of 6% cumulative
convertible preferred shares issued by Cedar TCI pursuant to its certificate of
designation, as provided to the Lender prior to the date hereof.
"Termination Event" means: (a) the cessation in whole or in
part by any Cedar Group Company or any Related Company of its participation in
a Plan during a plan year; or (b) the filing of a notice of intent to terminate
or wind up (in whole or in part) a Plan or the treatment of a Plan amendment as
such a termination or wind up; or (c) the doing of or failure to do any act or
thing in furtherance of any termination or wind up (in whole or in part) of any
Plan or which may result in such termination or wind up; or (d) the institution
of any proceedings or action by the Pension Commission of Ontario, any other
Governmental Authority or any other Person to terminate, wind up (in whole or
in part) or have a trustee appointed to administer a Plan; or (e) any
determination that a wind up (in whole or in part) or termination of any Plan
has occurred or will occur; (f) any Cedar Group Company being required to make
any payment in respect of any unfunded liability or solvency deficiency in
respect of any Plan in addition to its minimum regular monthly contribution
amounts from time to time required (inclusive of current service, solvency and
unfunded liability payments) in respect thereof; (g) any other event or
condition which may, as determined by the Lender in the exercise of its
discretion, constitute grounds for the termination or winding up (in whole or
in part) of or the appointment of a trustee to administer, any pension Plan or
which may (as determined by the Lender in its discretion) give rise to any Lien
in favor of any Person (except in respect of the regular monthly contribution
amount).
"Transaction Documents" means, collectively, the Facility
Documents, the Intercompany Documents, the Takeover Documents, the Remarketing
Agreement and the UDIL Agreement, or any one of them as the context requires.
"UCC" has the meaning specified in the Security Agreements.
"UDIL" means United Dominion Industries Ltd., a company
incorporated under the Canada Business Corporation Act.
"UDIL Agreement" means the Purchase and Settlement Agreement
dated as of December 28, 1995 between UDIL, the Parent and Dominion Bridge.
"United States" and "U.S." each means United States of
America.
"Voting Stock" means capital stock issued by, or equivalent
interests in, any Person, the holders of which are ordinarily, in the absence
of any contingency, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.
13
<PAGE> 19
"Wholly Owned Subsidiary" means any Subsidiary all of whose
outstanding Voting Stock (other than directors' qualifying shares, if any) is
owned, directly or indirectly, by the Borrower or the Parent, as the context
requires.
Section 1.2. Computation of Time Periods.
In this Agreement, in the computation of periods of time from
a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding."
Section 1.3. Accounting Terms.
All accounting terms herein shall be construed in accordance
with generally accepted accounting principles ("GAAP") on the date hereof
consistent with those applied in the preparation of the Financial Statements
referred to in Section 4.1(h). All financial computations required by this
Agreement or any document or certificate contemplated hereby shall be computed,
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the Financial Statements referred to in Section 4.1(h).
If any changes in accounting principles are hereafter occasioned by
promulgation of rules, regulations, pronouncements or opinions by or are
otherwise required by the Financial Accounting Standards Board, the Accounting
Principles Board, or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions), and any of such changes
result in a change in the method of calculation of, or affect the results of
such calculation of, any of the financial covenants, then the parties hereto
agree to enter into and diligently pursue negotiations in order to amend such
financial covenants or terms so as to equitably reflect such changes, with the
desired result that the criteria for evaluating the financial condition and
results of operations of the Parent and its Subsidiaries shall be the same
after such changes as if such changes had not been made.
Section 1.4. Interpretation Generally.
(a) The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
(b) The words section, subsection, schedule and
exhibit are to this Agreement unless otherwise specified.
(c) The meaning of defined terms shall be equally
applicable to the singular and plural forms of the defined terms.
(d) The headings of the several articles and
sections and subsections of this Agreement are inserted for convenience only
and shall not in any way affect the meaning or construction of any provision of
this Agreement.
14
<PAGE> 20
(e) A document, notice, note, bill of exchange or
other instrument shall be deemed to have been validly signed and executed if it
has been signed by either an original signature or a facsimile signature or
stamp.
(f) All references to amounts of money shall, unless
otherwise indicated, be references to United States dollars.
(g) The expression "Lender" shall so be construed
as to include its successors and permitted assigns.
Section 1.5. Precedence.
In the event that any provision of any other Facility Document
contradicts or is otherwise incapable of being construed in conjunction with
the provisions of this Agreement, the provisions of this Agreement shall take
precedence over those contained in the other Facility Document.
Section 1.6. Interest Act (Canada).
For the purposes of this Agreement, whenever interest to be
paid hereunder is to be calculated on the basis of a year of 360 days or any
other period of time that is less than a calendar year, the yearly rate of
interest to which the rate determined pursuant to such calculation is
equivalent is the rate so determined multiplied by the actual number of days in
the calendar year in which the same is to be ascertained and divided by either
360 or such other period of time, as the case may be.
ARTICLE II
THE LOAN
Section 2.1. The Loan.
Subject to and upon the terms and conditions of this
Agreement, the Lender agrees to make a loan to the Borrower (the "Loan") in a
sum of $26,000,000.
Section 2.2. [left blank intentionally]
Section 2.3. The Note.
The obligation of the Borrower to repay the Loan shall be
evidenced by a note (the "Note"), dated the Funding Date, payable to the order
of the Lender in the principal amount of the Loan and otherwise substantially
in the form of Exhibit A attached hereto. The Lender is hereby authorized to
record on its books and records, the date and amount of the Loan, the date and
amount of each payment or prepayment of principal thereof and the interest rate
with respect thereto. Any such recordation shall constitute prima facie
evidence of the accuracy of the information so recorded; provided, however,
that the failure to make any such
15
<PAGE> 21
recordation or any incorrect recordation shall not affect the Obligations of
the Borrower hereunder or under the Note. The Note shall be stated to mature
on the Maturity Date.
Section 2.4. [left blank intentionally]
Section 2.5. Repayment of the Loan.
(a) Voluntary Repayment. The Borrower may repay, in whole or
in part, the outstanding principal amount of the Loan, at any time and from
time to time upon giving at least one Business Day's prior (irrevocable)
written notice of its intent to prepay the Loan.
(b) Mandatory Repayment. The Loan shall mature on the
Maturity Date and shall be repaid by the Borrower on that date, without premium
or penalty or further action on the part of the Lender.
Section 2.6. [left blank intentionally]
Section 2.7. Interest.
(a) Interest. The Borrower shall pay interest on the unpaid
principal amount of the Loan from the Funding Date until such principal amount
has been repaid in full, payable upon each prepayment (on the amount prepaid)
and at maturity, in all cases at an annual rate equal to the Adjusted Base
Rate, which annual rate shall change simultaneously with each change in the
Base Rate.
(b) Default Interest. Upon the occurrence and during the
continuance of a Default, the Borrower shall pay, on demand, interest on the
unpaid principal amount of the Loan at a rate per annum equal to the
non-default rate of interest required to be paid on the unpaid principal amount
of the Loan during such period plus 2% per annum.
Section 2.8. Mandatory Prepayments.
(a) Prepayment Events. The following events shall be
Prepayment Events:
(i) the sale, lease, license, transfer or other
disposition of any assets of any Cedar Group Company, other than
transactions permitted under Section 7.2;
(ii) the receipt of proceeds by any Cedar Group
Company of any insurance payment or condemnation award in respect of
the loss, damage, destruction or taking of an asset of any Cedar Group
Company;
(iii) the issue of any equity or convertible
securities by any Cedar Group Company;
(iv) the sale or other disposition of any share in
MDC by any Cedar Group Company, whether pursuant to the Remarketing
Agreement or otherwise; and
16
<PAGE> 22
(v) the receipt by a Cedar Group Company of a
windfall gain (such as a judgment or similar award).
(b) Prepayment. Upon the occurrence of a Prepayment Event,
the Borrower shall prepay the Loan in an amount equal to the lesser of (i) the
sum of the then outstanding principal amount of the Loan, together with accrued
interest to the date of such prepayment and all fees, expenses and other
payments due to the Lender and (ii) the amount equal to the cash proceeds
received or receivable from such sale, lease, license, transfer or other
disposition, insurance payment, condemnation award, issue or receipt, except in
the case of the issue of equity or convertible securities where the amount to
be prepaid shall be limited to the first $11,515,000 of net proceeds. Any
prepayment referred to in this Section shall be applied in accordance with
Section 2.9(e).
Section 2.9. Payments and Computations.
(a) Payments. The Borrower shall make each payment hereunder
and under the Note not later than 11:00 am (New York time) on the day when
due, in United States dollars, to the Lender in immediately available funds.
Such payments shall be made by wire transfer to the account of the Lender at 14
Wall Street, New York, New York 10005, United States of America, ABA #021001033
(Account #00124556), Attention: Bruce Addison, or such other account as the
Lender may designate to the Borrower by notice.
(b) Computations. All computations of interest and fees
shall be made by the Lender on the basis of a year of 360 days, in each case
for the actual number of days (including the first day but excluding the last
day) occurring in the period for which such interest or fees are payable. Each
determination by the Lender of an interest rate or fee hereunder and under the
Note shall be conclusive and binding for all purposes, absent manifest error.
(c) Business Day. Whenever any payment hereunder or under
the Note shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day and such extension of
time shall, in each case, be included in the computation of payment of interest
or any fee, as the case may be; provided, however, that if such extension would
cause the payment of interest on or principal of the Loan to be made in the
next following calendar month, such payment shall be made on the immediately
preceding Business Day.
(d) No Defense. To the fullest extent permitted by law, the
Borrower shall make all payments hereunder and under the Note regardless of any
defense or counterclaim, including, without limitation, any defense or
counterclaim based on any law, rule or policy which is now or hereafter
promulgated by any Governmental Authority and which may adversely affect the
Borrower's obligation to make, or the right of the Lender to receive, such
payments.
(e) Allocation. Any money paid to, received by, or collected
by the Lender pursuant to this Agreement or any other Facility Document,
(including on the sale or other realization upon any Collateral), shall be
applied in the following order, at the date or dates fixed by the Lender:
17
<PAGE> 23
First: to the payment of all amounts due under the
Fee Letter;
Second: to the payment of all costs, expenses, other
fees, commissions and taxes incurred by the Lender (including costs
and expenses of collection or other realization incurred in relation
to the Collateral);
Third: to the indefeasible payment of all accrued
interest to the date of such payment or collection;
Fourth: to the indefeasible payment of the amounts
then due and unpaid under this Agreement, the Note or any other
Facility Document for principal, in respect of which or for the
benefit of which such money has been paid or collected, ratably,
without preference or priority of any kind, according to the
amounts due and payable on the Note for principal; and
Fifth: the balance, if any, to the Person lawfully
entitled thereto (including the relevant Loan Party or its successors
and assigns).
Section 2.10. Use of Proceeds.
(a) Purpose. Subject to the limits set forth in Section
2.10(b), the Borrower agrees to use the proceeds of the Loan as follows:
(i) to use such amount as is necessary, but not to
exceed $16,000,000, to pay for all shares of MDC acquired in the
On-Market Acquisitions, plus related stamp duty;
(ii) to use $1,200,000 to pay certain fees
associated with the Transaction Documents and the transactions
contemplated thereby;
(iii) to use $7,250,000 for the purpose of making
intercompany loans (pursuant to the terms of and evidenced by
Intercompany Note) to Dominion Bridge to allow it to refinance certain
outstanding Indebtedness to the Royal Bank of Canada as specified in a
letter delivered to the Lender pursuant to Section 3.1(c); and
(iv) to use the remaining amount for general working
capital requirements of the Borrower or Dominion Bridge.
Section 2.11. Taxes.
(a) Taxes. Any and all payments by the Borrower hereunder or
under the Note shall be made, in accordance with Section 2.9, free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, additions to tax, interest, penalties and
all other liabilities with respect thereto, excluding taxes imposed or levied
on or measured by the overall net income of the Lender (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law
to deduct any
18
<PAGE> 24
Taxes from or in respect of any sum payable hereunder or under the Note to the
Lender or any of its Affiliates who may become the holder of the Note: (i) the
sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.11) the Lender or any of its Affiliates receives an amount
equal to the sum it would have received had no such deductions been made; (ii)
the Borrower shall make such deductions; and (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) Other Taxes. In addition, the Borrower agrees to pay any
present or future stamp, mortgage recording or documentary taxes or any other
excise or property taxes, charges or similar levies which arise from any
payment made hereunder or under a Note or other Facility Document or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or the other Facility Documents (hereinafter referred to as "Other
Taxes") and hold the Lender harmless from and against any and all liabilities
with respect to or resulting from any delay or omission (other than to the
extent attributable to the Lender) to pay such Other Taxes.
(c) Indemnity. The Borrower will indemnify the Lender for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.11) paid by the Lender or any of its Affiliates and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made within seven (7)
days from the date the Lender or any of its Affiliates makes written demand
therefor.
(d) Furnish Evidence. Within 30 days after the date of any
payment of Taxes or Other Taxes, the Borrower will furnish to the Lender, in
accordance with Section 12.2, the original or a certified copy of a receipt
evidencing payment thereof. In the case of any payment hereunder or under a
Note by the Borrower through an account or branch outside the United States or
on behalf of the Borrower by a payor that is not a United States person, if the
Borrower determines no Taxes or Other Taxes are payable in respect of any
payment hereunder or under such Note, the Borrower will furnish to or will
cause such payor to furnish to the Lender a certificate from each appropriate
taxing authority, or an opinion of counsel acceptable to Lender, stating that
such payment is exempt from or not subject to Taxes or Other Taxes. For
purposes of this Section 2.11(d), the terms "United States" and "United States
person" shall have the meanings specified in Section 7701 of the Internal
Revenue Code.
(e) Survival. Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 2.11 shall survive the payment in full of
all amounts due hereunder and under the Note.
Section 2.12. Increased Cost.
(a) Increased Cost. If the Lender determines that the
adoption of any applicable law, rule, regulation, directive or guideline
(including those regarding capital adequacy), or any change therein, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable authority charged with the interpretation
19
<PAGE> 25
or administration thereof, or the effectiveness after the date hereof of any of
the foregoing which have been previously adopted but are not yet fully
effective (including, but not limited to, each phase in the effectiveness of
the "Risk-Based Capital Guidelines" which have been previously adopted by the
United States Office of the Comptroller of the Currency and certain other
United States banking regulatory agencies), or compliance by the Lender with
any direction, requirement or request regarding capital adequacy (whether or
nor having the force of law) of any Governmental Authority, central bank or
comparable agency:
(i) affects or would affect the amount of capital
required or expected to be maintained by the Lender or any corporation
controlling the Lender and the Lender determines that the amount of
such capital is increased as a consequence of such Lender's
obligations under this Agreement (taking into consideration the
Lender's policies (in effect on the date hereof) with respect to
capital adequacy and the Lender's targeted return on capital);
(ii) has or would have the effect of reducing the
rate of return on the capital or assets of the Lender or the Lender's
holding company as a consequence of its Obligations hereunder; or
(iii) subjects or would subject the Lender to any
tax, duty or other charge, or changes or would change the basis of
taxation of the Loan (other than income taxes payable by the Lender),
then, from time to time upon receiving notice as described in Section 2.12(b)
from the Lender, the Borrower shall promptly pay to the Lender, any additional
amounts as will compensate the Lender and/or any corporation controlling the
Lender for such change or effect.
(b) Notice, Evidence. The Lender will promptly notify the
Borrower of any event of which it has knowledge, occurring after the date
hereof, which will entitle the Lender to compensation pursuant to this Section
2.12. A certificate of the Lender claiming compensation under this Section and
setting forth in reasonable detail the basis for and the calculation of the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, the Lender may use
any reasonable averaging and attribution methods.
Section 2.13. [left blank intentionally]
Section 2.14. Right of Set Off
In addition to any rights now or hereafter granted under
applicable law or otherwise, and not by way of limitation of any such rights,
upon the occurrence and during the continuance of any Event of Default, each
Loan Party authorizes the Lender at any time or from time to time, without
presentment, demand, protest or other notice of any kind to a Loan Party or to
any other Person, any such notice being hereby expressly waived, to set off and
to appropriate and apply any and all deposits (general or special, time or
demand, provisional or final) in any currency and any other indebtedness at any
time held or owing by such Lender (including, without limitation, by branches
and agencies of the Lender wherever located) to or
20
<PAGE> 26
for the credit or the account of the relevant Loan Party against and on account
of the Obligations of the Loan Party to the Lender under this Agreement, the
Loan Guarantees or under any of the other Facility Documents, including,
without limitation, all interests in or participations in the Obligations
purchased by the Lender pursuant to Article 11, and all other claims of any
nature or description arising out of or in connection with this Agreement or
any other Facility Document, irrespective of whether or not the Lender shall
have made any demand hereunder and although the Obligations, liabilities or
claims, or any of them, shall be contingent or unmatured.
ARTICLE III
CONDITIONS TO LENDING
Section 3.1. Conditions Precedent to Making the Loan.
The obligation of the Lender to make the Loan is subject to
the satisfaction of the following conditions precedent, each of which shall be
satisfactory to the Lender:
(a) Loan Agreement. The Lender shall have received this
Agreement, duly executed by all the Loan Parties.
(b) Facility Documents. The Lender shall have received the
following documents, each duly executed by all relevant parties and dated the
Funding Date:
(i) an appropriately completed Note to the order of
the Lender;
(ii) each of the Mortgages;
(iii) each of the Security Agreements;
(iv) each of the Pledge Agreements together with (A)
the share certificates for all of the Pledged Stock in
certificated form which is delivered in connection with the
Pledge Agreements; (B) an undated stock power or share
transfer form for each such share certificate, duly executed
in blank and delivered by a duly authorized officer of the
Pledgor of such Pledged Stock represented by such stock
certificate; (C) a certified copy of resolutions of the
directors and shareholders of any Canadian incorporated issuer
of the Pledged Shares (other than Steen) approving the
hypothecation and pledge of the Pledged Shares to the Lender,
the notation of the Lender's interest on the relevant Pledged
Share certificate(s) and in the shareholder ledgers of the
Pledgor, any further transfers of the Pledged Shares made
pursuant to the relevant Pledge Agreement and the recording of
same in the books and records of the Pledgor and such issuer,
and which resolution shall state that it may not be amended or
revoked without the prior written consent of the Lender; (D) a
certified copy of resolutions of the directors and the
shareholders of Dominion Bridge and the Borrower irrevocably
agreeing to approve the registration of
21
<PAGE> 27
any transfer of the pledged shares upon the sale of those
shares in exercise of the Lender's rights of enforcement under
the Security Documents; (E) the original Declarations of
Trust; (F) the Intercompany Note; and (G) the agreements
referred to in Section 3.1(l)(ii) and (iii) below.
(v) each Loan Guarantee;
(vi) a Declaration of Possession in relation to the
Manitoba Mortgage;
(vii) an appropriately completed Intercompany Note
to the order of the Borrower from Dominion Bridge;
(viii) each Intercompany Security Agreement;
(ix) an appropriately completed Lien Statement for
each of the Loan Parties with respect to each of the
jurisdictions and locations listed on Schedule 4.1(ac) and the
Mortgages;
(x) an appropriately completed Lien Statement for
Dominion Bridge with respect to each of the jurisdictions and
locations listed on Schedule 4.1(ad);
(c) Royal Bank of Canada Documents. A waiver or consent
letter, dated the Funding Date and signed by Royal Bank of Canada, (w)
consenting to the execution of the Facility Documents and the Intercompany
Documents on the Funding Date; (x) terminating the loan arrangements between
the Royal Bank of Canada and all Cedar Group Companies (other than Steen) and
agreeing that no further loans will be made to any Cedar Group Company; (y)
specifying the amount of all indebtedness owed by each Cedar Group Company to
Royal Bank of Canada (which amount must correspond with the amount stipulated
in Section 2.10; and (z) agreeing to release and discharge all Liens held by
Royal Bank of Canada over the assets of any Cedar Group Company (other than
Steen) as soon as practicable.
(d) Effectiveness Certificate. The Lender shall have
received a duly completed Effectiveness Certificate duly executed by a
Responsible Officer of the Borrower and the Parent, dated the Funding Date
containing the certifications specified in Exhibit B and to which is attached
true and correct copies of each of the documents specified therein. The
Effectiveness Certificate and each such attachment shall be in form and
substance satisfactory to the Lender.
(e) Guarantor's Certificates. The Lender shall have received
a duly completed Guarantor's Certificate from each Guarantor duly executed by a
Responsible Officer of the relevant Guarantor, containing the certifications
specified in Exhibit C and to which is attached true and correct copies of each
of the documents specified therein, each such Guarantor's Certificate and each
such attachment to be in form and substance satisfactory to the Lender.
(f) Legal Opinions. The Lender shall have received:
22
<PAGE> 28
(i) a favorable opinion of Buchanan Ingersoll, New
York and U.S. counsel to the Borrower;
(ii) a favorable opinion of Chris Theodoropoulos,
General Counsel to the Borrower;
(iii) a favorable opinion of Smith Lyons Torrance
Stevenson & Mayer, Ontario counsel to the Borrower;
(iv) a favorable opinion of Pouliot Mercure,
Canadian counsel to the Borrower (including a title opinion
with respect to the land the subject of the Quebec Mortgage);
(v) a favorable opinion of Freehill Hollingdale &
Page, Australian counsel to the Borrower;
(vi) a favorable opinion of Dempsey & Company, Turks
& Caicos Islands counsel to the Borrower; and
All such opinions shall be accompanied by copies of the legal
opinions, if any, upon which counsel rely and, in each case, shall contain such
changes thereto as may be approved by, and as shall otherwise be in form and
substance satisfactory to the Lender and shall cover such matters relating to
the transactions contemplated by the Transaction Documents as the Lender may
require.
(g) [Left blank intentionally].
(h) Steen. The Lender shall have received evidence that the
Parent is the legal and beneficial owner of at least 75% of the issued capital
of Steen and that the Parent is entitled to acquire the remaining 25% of the
issued capital of Steen in its own name.
(i) Dominion Bridge. The Lender shall have received evidence
satisfactory to the Lender that (i) Dominion Bridge is a Wholly Owned
Subsidiary of the Borrower; (ii) all obligations or liabilities of any kind of
any Cedar Group Company to UDIL shall have been terminated or released in full
(other than the obligation of the Parent to issue equity in accordance with the
UDIL Agreement and other than the Specified Financial Obligations, as defined
in the UDIL Agreement, and the other obligations outlined in the UDIL
Agreement); (iii) all Liens held by UDIL or any of its Affiliates over the
assets of any Cedar Group Company have been discharged and released in full.
(j) Cedar Group Australia. The Lender shall have received
evidence satisfactory to it that (i) the Articles of Association of the Bidder
have been amended to permit the sale of shares in the Bidder by the Lender
without restriction, in a form and substance acceptable to the Lender; (ii) the
Bidder is a Wholly Owned, direct Subsidiary of the Borrower; and (iii) that
Cedar Australia has no liabilities or obligations to any Person and has gross
assets of less than AUD $10,000.
23
<PAGE> 29
(k) CT Corporation. The Lender shall have received evidence
satisfactory to it that CT Corporation System has accepted the appointment of
agency by each Loan Party pursuant to this Agreement and the other Facility
Documents.
(l) Cedar (TCI). The Lender shall have received (in a form
and substance satisfactory to it) a copy of (i) the terms of issue of the TCI
Preferred Stock; (ii) the agreement between Cedar TCI and the Parent pursuant
to which the proceeds of issuance of the TCI Preferred Stock was made available
to the Parent; (iii) the agreement between the Parent and the Borrower pursuant
to which the proceeds of the arrangement referred to in (ii) above were made
available to the Borrower by the Parent; (iv) a copy of duly completed,
executed and dated Subscription Agreements between TCI, the Parent and
financially reputable purchasers satisfactory to the Lender, pursuant to which
the purchasers commit to acquire TCI Preferred Stock in an amount which exceeds
$11,515,000 on or before Friday, March 29, 1996, which Subscription Agreements
shall be in full force and effect; (v) an irrevocable direction signed by Cedar
TCI and the Parent addressed to Shoreline Pacific, Financial West Group, as
placement agent, directing such placement agent to pay the first $10,000,000 of
net proceeds of the Subscription Agreements received from the Purchasers
directly to the Lender to the account specified in Section 2.9(a) on or before
Friday March 29, 1996; (vi) a copy of an acknowledgement agreement from
Shoreline Pacific addressed to the Lender agreeing to comply with the
irrevocable direction referred to in (v) above; and (vii) a copy of the
placement agency agreement between Cedar (TCI), the Parent and Shoreline
Pacific. .
(m) [Left blank intentionally]
(n) Representations and Warranties. The representations and
warranties of the Loan Parties or any other Person (other than the Lender)
contained in any Transaction Document shall be true and correct in all material
respects on such date both before and after giving effect to the making of the
Loan.
(o) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing either before or after giving
effect to the making of the Loan.
(p) Takeover. The Lender shall have received evidence
satisfactory to the Lender:
(i) that the purchase of the On-Market
Acquisitions, when added to the existing entitlement to
ordinary shares in MDC of the Borrower and after payment of
the takeover price and all applicable stamp duty, entitle the
Bidder (as trustee for the Borrower) to be registered as the
holder of not less than 50% of the issued ordinary shares
of MDC;
(ii) that the Remarketing Agreement is in full force
and effect, without amendment or modification from that
delivered to the Lender on February 20, 1996;
(q) Additional Matters. All corporate or other proceedings,
and all documents, instruments and other legal matters in connection with the
transactions contemplated by
24
<PAGE> 30
the Facility Documents or the Transaction Documents or which, in the discretion
of the Lender, affect the Loan, the Takeover or the transactions contemplated
by the Transaction Documents shall be in form and substance satisfactory to the
Lender and its counsel.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties.
Each Loan Party hereby jointly and severally represents and warrants to the
Lender and the Lender that each of the statements set forth below are true,
correct and complete:
(a) Due Incorporation, Etc. Each Cedar Group Company is a
corporation duly organized, validly existing and (to the extent applicable
under the laws of the jurisdiction of its incorporation) in good standing under
the laws of its jurisdiction of incorporation (as shown on Schedule 4.1(n)) and
has all requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted. Each Cedar Group Company is duly qualified or licensed to do
business as a foreign corporation in good standing in all jurisdictions in
which it owns or leases property or proposes to own or lease property or in
which the conduct of its business requires it to so qualify or be licensed,
except for such jurisdictions where the failure to so qualify or be licensed
would not have a Material Adverse Effect.
(b) Corporate Power, Etc. Each Loan Party and Steen has full
corporate power and authority to enter into, deliver and perform its
obligations under each Transaction Document to which it is a party and to
consummate each of the transactions contemplated by each such Transaction
Document, and has taken all necessary corporate action to authorize the
execution, delivery and performance of each Transaction Document to which it is
a party, and to authorize the transactions constituting the use of the proceeds
of the Loan as described in Section 2.10. This Agreement has been, and each of
the other Transaction Documents will be, executed and delivered by a duly
authorized officer of the Borrower and each other Cedar Group Company party
thereto.
(c) Validity of Facility Documents. Each Facility Document
when duly executed and delivered will constitute the legal, valid and binding
obligation of each party thereto other than the Lender or the Lender,
enforceable against each such party in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect affecting the enforcement
of creditors' rights generally and by general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law).
(d) Validity of Intercompany Documents. Each Intercompany
Document when duly executed and delivered will constitute the legal, valid and
binding obligation of the Borrower and Dominion Bridge, enforceable against
them in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or
25
<PAGE> 31
similar laws now or hereafter in effect affecting the enforcement of creditors'
rights generally and by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(e) No Conflict. Neither the execution and delivery of any
Transaction Document to which it is, or will be, a party by any Cedar Group
Company nor the performance by any Cedar Group Company of their respective
obligations thereunder, nor the consummation of the transactions contemplated
thereby, including the transactions constituting the use of the proceeds of any
Loan as described in Section 2.10 will:
(i) conflict with the charter, by-laws, memorandum
of association, articles of association, certificate of incorporation,
operating agreement or similar organizational document of any Cedar
Group Company;
(ii) violate or conflict with any current provision
of any Requirement of Law applicable to any Cedar Group Company; or
(iii) conflict with or result in a breach of, or
constitute a default under any Contractual Obligation to which a Cedar
Group Company is a party or by which any of its assets are bound;
(iv) conflict with, violate or breach any order,
award, writ, injunction or decree of any court, arbitrator or
Governmental Authority; or
(v) result in the creation or imposition of any Lien
(other than the Liens created pursuant to the Security Documents or
the Intercompany Security Documents) upon any of the Property of any
Cedar Group Company.
(f) No Approvals, No Recordation, Etc. This Agreement, each
Loan Guarantee, each Security Document and each Intercompany Security Document
is in proper legal form for the enforcement hereof and thereof against the Loan
Parties, under the respective laws of the jurisdiction of their organization or
of the laws of the jurisdictions in which the Collateral is located. No order,
license, consent, authorization or approval of, or exemption by, or notice to,
filing with, publication or registration with, any other Person (including,
without limitation, stockholders or creditors of any Cedar Group Company or any
Governmental Authority or regulatory body) is required in connection with the
execution, delivery and performance by any Cedar Group Company of any
Transaction Document, or for the legality, validity, binding effect,
enforceability, priority or admissibility in evidence thereof, except for:
(i) the filing of Lien Statements listed on
Schedules 4.1(ac) and 4.1(ad) to perfect the Liens that can be
perfected by such filings and for the granting of Liens in the
Collateral pursuant to the Security Documents and the Intercompany
Security Documents, as the case may be;
(ii) the filings required under the laws of the
Provinces of Quebec and Manitoba in Canada in connection with the
Mortgages.
26
<PAGE> 32
(iii) the payment of applicable stamp duty in
connection with the pledge of shares and assets by the Bidder;
(iv) the payment of applicable stamp duty in
connection with the Declarations of Trust;
(v) such consents required or purportedly required
only in connection with the execution, delivery or performance of any
Security Document or Intercompany Security Document, the absence of
which, in the aggregate, would not have a Material Adverse Effect on
the value of such category of the Collateral; and
(vi) any consents, licenses, permits, approvals,
authorizations, exemptions, registrations, filings or declarations
that have already been obtained and remain in full force and effect
and copies of which have been provided to the Lender.
(g) Permits, Etc. Each Cedar Group Company possesses all
certificates, licenses, authorities or permits and other governmental
authorizations (collectively, "Permits") issued by the appropriate Governmental
Authorities necessary to conduct the business now operated by it, and all such
Permits are in full force and effect. Each Cedar Group Company is operating in
compliance with the Permits in all material respects and no Cedar Group Company
has received any notice of proceedings relating to the revocation or
modification of any such Permit which, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, has or might have a
Material Adverse Effect.
(h) Financial Statements.
(i) Each of the balance sheet of the Parent and the
Consolidated and consolidating balance sheets of the Parent and its
Subsidiaries as of September 30, 1995, and the related statement of
income and cash flows of the Parent, and the Consolidated and
consolidating statements of income and cash flows of the Parent and
its Subsidiaries for the fiscal year ended September 30, 1995,
(accompanied by an opinion of Ernst & Young), copies of which have
been furnished to the Lender, fairly present the financial position of
the Parent and the Consolidated financial position of the Parent and
its Subsidiaries as of September 30, 1995 and the results of the
operations of the Parent and the Consolidated results of operations of
the Parent and its Subsidiaries for the period ended on such date.
(ii) Each of the unaudited balance sheet of the
Parent and the Consolidated and consolidating unaudited balance sheets
of the Parent and its Subsidiaries as of December 31, 1995, and the
related statement of income and cash flows of the Parent, and the
Consolidated and consolidating statements of income and cash flows of
the Parent and its Subsidiaries for the three month period ended
December 31, 1995, copies of which have been furnished to the Lender,
fairly present the financial position of the Parent and the
Consolidated financial position of the Parent and its Subsidiaries as
of December 31, 1995 and the results of the operations of the Parent
and the Consolidated results of operations of the Parent and its
Subsidiaries for the period ended on such date.
27
<PAGE> 33
(iii) All of the financial statements referred to in
the previous two paragraphs, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved.
(iv) No Cedar Group Company has any material
Contingent Liability or any other material obligation, liability or
commitment, other than those which are either (A) reflected in the
financial statements referred to in paragraphs (i) or (ii) above or
(B) permitted to be incurred under this Agreement.
(i) Good Title to Properties. Each Cedar Group Company has
good and marketable title to, or valid leasehold interests in, their respective
Properties, free and clear of all Liens, except (i) as set forth in the
Security Documents and the Intercompany Security Documents and (ii) as
described on Schedule 4.1(i). The Properties of each Cedar Group Company are
in good repair (reasonable wear and tear excepted), adequately insured and
suitable for their respective uses.
(j) No Material Adverse Change. Since September 30, 1995,
there has occurred no material adverse change in the business, operations,
properties, assets, prospects or condition (financial or otherwise) of any
Cedar Group Company, the Parent and its Subsidiaries taken as a whole, or, to
the knowledge of the Loan Parties, MDC, which has or might have a Material
Adverse Effect.
(k) Litigation, Etc. Except as disclosed on Schedule 4.1(k),
there is no pending or threatened litigation, investigation, inquiry, dispute,
action, suit or proceeding of or before any court, arbitrator or Governmental
Authority:
(i) seeking to restrain or prohibit the execution or delivery
of the Facility Documents or any other Transaction Document or seeking
to restrain or prohibit the performance of any of the transactions
contemplated thereby, including transactions constituting the use of
proceeds of the Loan as described in Section 2.10;
(ii) imposing material limitations on, or resulting in a
material delay in, the ability of any Person to execute or deliver the
Facility Documents or any other Transaction Document or perform any of
the transactions contemplated thereby, including transactions
constituting the use of proceeds of the Loan as described in Section
2.10;
(iii) which seeks to enjoin or prevent, or which purports to
affect the legality or validity of the Facility Documents or any other
Transaction Document or transactions contemplated thereby, including
transactions constituting the use of proceeds as described in Section
2.10;
(iv) which purports to affect the legality, validity or
enforceability of any Facility Document or any other Transaction
Document; or
(v) which has or might have a Material Adverse Effect.
28
<PAGE> 34
(l) No Violation, Etc. No Cedar Group Company is in
violation of:
(i) any term of its respective charter, by-laws,
memorandum of association, articles of association, certificate of
incorporation, operating agreement or similar organizational document;
(ii) any Requirement of Law;
(iii) any term of any Contractual Obligation; or
(iv) any order, award, writ, injunction or decree of
any court, arbitrator or Governmental Authority to which it is a party
or by which it is bound in any respect,
which individually or in the aggregate has or might have a Material Adverse
Effect.
(m) Indebtedness. At the time of and immediately after
giving effect to the Loan and the transactions constituting the use of proceeds
as described in Section 2.10, no Cedar Group Company has any Indebtedness,
other than Indebtedness expressly permitted under Section 7.4.
(n) Subsidiaries. Set forth on Schedule 4.1(n)A is a
complete and accurate list of all Subsidiaries of the Parent showing (as to
each Subsidiary) (i) the jurisdiction of its incorporation, (ii) the number of
shares of each class of capital stock authorized, and the number outstanding,
(iii) the percentage of the outstanding shares of each such class owned
(directly or indirectly) by the relevant holder and (iv) the number of shares
covered by all outstanding options, warrants, rights of conversion or purchase
and similar rights (together with an accurate description of any such rights).
All of the outstanding shares of capital stock of each Subsidiary of the Parent
are duly authorized, validly issued, fully paid and non-assessable, and free
and clear of all Liens except for Liens created by the Security Documents or
the Intercompany Security Documents. There are no outstanding rights, warrants
or options to acquire, or instruments convertible into or exchangeable for, or
agreements or understandings with respect to the sale or issuance of, any
shares of capital stock of or other equity interest in any Cedar Group Company
other than as described on Schedule 4.1(n)A. Attached as Schedule 4.1(n)B is
an organizational chart for the Parent and its Subsidiaries as in effect on the
date of this Agreement.
(o) Use of Proceeds. All proceeds of the Loan will be used
by the Borrower solely for the purposes set forth in Section 2.10 and the
proceeds of all loans made pursuant to the Intercompany Note will be used by
each Borrowing Subsidiary solely for the purpose set forth in the relevant
Intercompany Documents.
(p) Government Regulation.
(i) Margin Stock. No Cedar Group Company is
engaged or proposes to engage in the business of extending credit for
the purpose of purchasing or carrying margin stock within the meaning
of Regulations G, T, U and X issued by the Board of
29
<PAGE> 35
Governors of the Federal Reserve System from time to time and all
official rulings and interpretations thereunder or thereof (the
"Margin Regulations"); and no part of the proceeds of the Loan will be
used directly or indirectly to purchase or convey margin stock within
the meaning of the Margin Regulations or used for any other purpose
which entails a violation of, or which is inconsistent with, the
provisions of the Margin Regulations.
(ii) Investment Company Act. No Cedar Group Company
is an "investment company" or a company "controlled" by an "investment
company" (as each of such terms is defined or used in the Investment
Company Act of 1940, as amended).
(iii) Other Regulations. No Cedar Group Company (A)
is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, (B) is subject to regulation
under the Federal Power Act or the Interstate Commerce Act or (C) is
subject to any other statute or regulation which regulates the
incurrence of indebtedness for borrowed money, other than Federal and
state securities laws.
(q) Solvency. (i) Each Loan Party and Steen is, and (ii) the
Parent and its Subsidiaries, taken as a whole, are, and immediately after
giving effect to the Loan and the transactions contemplated by the Transaction
Documents, including the transactions constituting the use of proceeds as
described in Section 2.10, will be, Solvent.
Each Cedar Group Company is in compliance with all
Requirements of Law applicable to it with respect to capitalization and, to the
knowledge of any Loan Party, has sufficient capital with which to conduct its
business in accordance with past practice. No Cedar Group Company is
undercapitalized to such an extent that, solely as a result of such
undercapitalization (i) any Lender would be deemed under the laws of the
relevant jurisdiction to owe a fiduciary duty to any other creditor of such
Cedar Group Company or (ii) the loans evidenced by the Intercompany Note to any
Borrowing Subsidiary would be subordinated to any obligations of such Borrowing
Subsidiary owing to any other Person.
(r) Taxes.
(i) Each Cedar Group Company has filed all tax
returns (domestic and foreign) required to be filed by it and has paid
all taxes, assessments, fees and other charges (including interest and
penalties) due with respect to the years covered by such returns,
except for any such failures to file or to pay such amounts which, in
the aggregate, would not have a Material Adverse Effect and which are
being contested in good faith and by proper proceedings if the
relevant company has maintained adequate reserves with respect thereto
in accordance with GAAP.
(ii) There have been no adjustments to the Federal
income tax liability of any Cedar Group Company proposed by the
Internal Revenue Service or Revenue Canada. No issues have been
raised by the Internal Revenue Service or Revenue
30
<PAGE> 36
Canada in respect of the open returns that, singly or in the
aggregate, has or might have a Material Adverse Effect.
(iii) The aggregate unpaid amount of adjustments to
the state, local and foreign tax liability of the Cedar Group
Companies proposed by all state, local and foreign taxing authorities
(other than amounts arising from adjustments to Federal income tax
returns) does not exceed $100,000. No issues have been raised by such
taxing authorities that, singly or in the aggregate, have or might
have a Material Adverse Effect.
(iv) No Cedar Group Company has been audited by any
taxing authority.
(s) Employee Matters.
(i) No Cedar Group Company nor any Related Company
is or is required to be a member of, or a party to, any employee
benefit, pension or similar plan regulated or affected by ERISA.
(ii) No Cedar Group Company nor any Related Company
has any Plan other than those listed on Schedule 4.1(s) hereto and all
monthly and other payment obligations in respect of any Loan Party's
Plans which is a registered pension plan (on account of contributions,
special contributions or unfunded liability or solvency deficiency
deficiencies) are accurately set forth on Schedule 4.1(s);
(iii) No Plan which is a registered pension plan has
been terminated or partially terminated, nor have any proceedings been
instituted to terminate in whole or in part any such Plan;
(iv) No Cedar Group Company nor any Related Company
has ceased to participate (in whole or in part) as a participating
employer in any Plan which is a registered pension plan;
(v) except as disclosed on Schedule 4.1(s), no Cedar
Group Company nor any Related Company has or will have any unfunded
liability on wind up, including contingent unfunded liability on wind
up, to any Plan which is a registered pension plan or any solvency
deficiency in any such Plan;
(vi) except as disclosed on Schedule 4.1(s), no
Cedar Group Company nor any Related Company has any liability in
respect of any Plan other than for required insurance premiums or
contributions or remittances which have been paid, contributed and
remitted when due;
(vii) each Cedar Group Company has made all
contributions to its Plans required by law or the terms thereof to be
made by it when due and it is not in arrears in the payment of any
contribution, payment, remittance or assessment or in default in
filing any reports, returns, statements and similar documents in
respect of the
31
<PAGE> 37
Plans required to be made or paid by it pursuant to any Plan, any law,
act, regulation, directive or order or any employment, union, pension,
deferred profit sharing, benefit, bonus or other similar agreement or
arrangement;
(viii) no Cedar Group Company is liable or, to the
best of its knowledge, alleged to be liable, to any employee or former
employee, director or former director, officer or former officer
resulting from any violation or alleged violation of any Plan which is
a registered pension plan, any fiduciary duty, any law or agreement in
relation to any such Plan and, except as disclosed on Schedule 4.1(s),
does not have any unfunded pension or like obligations or solvency
deficiency (including any past service or experience deficiency
funding liabilities), other than accrued obligations not yet due, for
which it has made full provision in its books and records;
(ix) all vacation pay, bonuses, salaries and wages,
to the extent accruing due, are properly reflected in the books and
records of each Cedar Group Company;
(x) without limiting the foregoing, all of the Plans
are duly registered where required by, and are in compliance and good
standing in all material respects under, all Requirements of Law,
including, without limitation, the Income Tax Act of Canada, the
Pension Benefits Act of Ontario and other, similar provincial laws,
any successor legislation thereto, and other applicable laws of any
jurisdiction; and
(xi) except for claims for benefit payments in the
normal course, there are no outstanding or pending or threatened
investigations, claims, suits or proceedings in respect of any Plans
(including to assert rights or claims to benefit payment other than in
the normal course or that could give rise to any material liability).
(t) Environmental Laws.
(i) Compliance. Except as disclosed in Schedule
4.1(t), each Cedar Group Company complies, and the operations and
Properties of each Cedar Group Company comply, with all Environmental
Laws, except for non-compliance which singly or in the aggregate might
have a Material Adverse Effect or adversely affect the value of such
Properties as Collateral. All necessary Environmental Permits have
been obtained and are in effect for the operations and Properties of
each Cedar Group Company, except for such Environmental Permits where
the failure to obtain the same, in the aggregate, does not or might
not have a Material Adverse Effect or does not adversely affect the
value of any Property as Collateral. Each Cedar Group Company is in
compliance in all material respects with all such Environmental
Permits and no circumstances exist that could (x) form the basis of an
Environmental Action against any Cedar Group Company or any of their
respective Properties that could have a Material Adverse Effect or (y)
cause any such Property to be subject to any restrictions on
ownership, occupancy, use or transferability under any Environmental
Law that could have a Material Adverse Effect.
32
<PAGE> 38
(ii) Hazardous Materials. No Cedar Group Company
has transported or arranged for the transportation of any Hazardous
Materials to any location that is listed or proposed for listing on
the National Priorities List under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, or in
the Comprehensive Environmental Response, Compensation and Liability
Information System maintained by the Environmental Protection Agency
or any analogous state list. Hazardous Materials have not been
generated, used, treated, handled, stored or disposed of on, or
released or transported to or from, any Property of any Cedar Group
Company or, to the knowledge of any Loan Party, any adjoining
Property, except in compliance in all material respects with all
Environmental Laws and Environmental Permits. All other waste
generated at any Property of a Cedar Group Company has been disposed
of in compliance in all material respects with all Environmental Laws
and Environmental Permits, except in any such case, any such actions
that, in the aggregate, could not be reasonably expected to have a
Material Adverse Effect.
(u) Disclosure. All information which has been made
available to the Lender by any Cedar Group Company or any of their
representatives in connection with the Transaction Documents or the
transactions contemplated hereby or thereby, to the best of the Borrower's
knowledge, was, or has been subsequently supplemented (including by the
Schedules attached hereto) so as to be, complete and correct in all material
respects and does not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which
such statements were made. All financial projections and pro forma statements
that have been prepared by or on behalf of the Borrower and made available to
the Lender have been prepared in good faith based upon assumptions stated
therein, which assumptions were reasonable in light of conditions existing at
the time of delivery of such projections and pro forma financial statements and
represented, at the time of delivery, the Borrower's best estimate of the
future financial performance. No fact is known to any Loan Party or any
officer of any Loan Party, which could or might have a Material Adverse Effect,
other than has been set forth in the Financial Statements referred to in
Section 4.1(h), or otherwise disclosed in writing to the Lender prior to the
Funding Date (a list of which disclosures is contained on Schedule 4.1(u)).
The Loan Parties have fully disclosed in writing to the Lender all facts
relating to any Cedar Group Company, the Transaction Documents, the Collateral
and anything in connection with them which could be material to the assessment
and amount of risk underwritten by the Lender in entering into this Agreement
and the other Facility Documents and doing anything in connection with it.
(v) Transaction Documents. The Transaction Documents
disclosed to the Lender with the Effectiveness Certificate or otherwise
delivered to the Lender on or before the Funding Date constitute all the
material agreements and understandings of the parties thereto relating to the
matter thereof and the transactions contemplated thereby. There has been no
breach or default of any provision of any Transaction Document by any party
thereto. To the knowledge of the Loan Parties, all representations and
warranties set forth in the Transaction Documents by the parties thereto true
and correct on the Funding Date (except to the extent that such representations
and warranties expressly relate to an earlier date) as if such representations
and warranties were made on and as of such date.
33
<PAGE> 39
(w) Pledged Shares. Each Pledgor has good title to the
Pledged Shares referred to in the Pledge Agreement to which it is or will be a
party, free and clear of all Liens, other than as created by the Security
Documents or the Intercompany Security Documents.
(x) Representations. No representation or warranty made by
any Cedar Group Company under or in connection with any Transaction Document,
or any other document furnished to the Lender in connection with the
transactions contemplated hereby or thereby, contains any misrepresentation of
a material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading; and there is no fact known to any
Cedar Group Company which has, or might have, a Material Adverse Effect, or
which, to the best knowledge of each Cedar Group Company based on facts
currently known to it, might in the future have a Material Adverse Effect.
(y) Intellectual Property. Each Cedar Group Company has the
right to use its Intellectual Property. No claim has been asserted and is
pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of such Intellectual
Property, nor does it know of any valid basis for any such claim. To the
knowledge of any Loan Party, the use of such Intellectual Property does not
infringe on the rights of any Person.
(z) Brokerage Commissions. Except for fees paid to the
Lender hereunder and to County NatWest Securities Pty Limited pursuant to the
Remarketing Agreement, no Person is entitled to receive from any Cedar Group
Company any brokerage commission, finder's fee or similar fee or payment in
connection with the consummation of the transactions contemplated by this
Agreement or any other Transaction Document. No brokerage or other fee,
commission or compensation is to be paid by the Lender by reason of any act,
alleged act or omission of any Cedar Group Company with respect to the
transactions contemplated by this Agreement or any other Transaction Document.
(aa) Stock as Collateral. The Collateral does not include
any shares or stock in any corporation, other than the Pledged Shares.
(ab) Pledge Agreements. Each Pledge Agreement constitutes a
legal, valid and binding obligation of the Pledgor party thereto, enforceable
against it in accordance with its terms. Upon delivery to the Lender of the
stock certificates evidencing the Pledged Stock, each Pledge Agreement creates
in favor of the Lender a legal, valid and enforceable Lien in the Pledged
Collateral (as defined in the Pledge Agreement) and proceeds thereof and
constitutes a fully perfected, first priority Lien on, and security interest
in, all right, title and interest of each Pledgor in such Pledged Collateral
and the proceeds thereof, in each case prior and superior in right to any other
Person, except as specified in the Pledge Agreement.
(ac) Security Agreements. Each Security Agreement
constitutes a legal, valid and binding obligation of the Grantor party thereto,
enforceable against it in accordance with its terms, and creates in favor of
the Lender a legal, valid and enforceable security interest in the Collateral
(as defined in such Security Agreement) and proceeds thereof. Except with
respect to Collateral located in a facility which is not owned or leased by the
Loan Parties or with respect to which no filing is required perfect the Lien
created thereby, upon filing by the
34
<PAGE> 40
Lender of the Lien Statements listed on Schedule 4.1(ac) in each of the
jurisdictions or locations identified on such Schedule (and after the Funding
Date, any additional filings required to be made pursuant to the Facility
Documents), the Lien created under each Security Agreement constitutes a fully
perfected, first priority Lien on, and security interest in, all right, title
and interest of each Grantor in such Collateral and the proceeds thereof, in
each case prior and superior in right to any other Person.
(ad) Intercompany Security Documents. Each Security
Agreement constitutes a legal, valid and binding obligation of Dominion Bridge,
enforceable against it in accordance with its terms, and creates in favor of
the Borrower a legal, valid and enforceable security interest in the Collateral
(as defined in such Intercompany Security Agreement) and proceeds thereof.
Except with respect to Collateral located in a facility which is not owned or
leased by Dominion Bridge or with respect to which no filing is required to
perfect the Lien created thereby, upon filing by the Borrower of the Lien
Statements listed on Schedule 4.1(ad) in each of the jurisdictions or locations
identified on such Schedule (and after the Funding Date, any additional filings
required to be made pursuant to the Intercompany Documents), the Lien created
under each Intercompany Security Agreement constitutes a fully perfected,
second priority Lien on, and security interest in, all right, title and
interest of Dominion Bridge in such Collateral and the proceeds thereof, in
each case prior and superior in right to any other Person other than the Lender
pursuant to the Facility Documents
(ae) [left blank intentionally]
(af) Mortgages. Each Mortgage constitutes a legal, valid and
binding obligation of the mortgagor party hereto, enforceable in accordance
with its terms. Each Mortgage creates in favor of the Lender a legal, valid
and enforceable Lien, right, title and interest in and to the Property
described in such Mortgage and the proceeds thereof. When each Mortgage is
filed in the offices specified in the Mortgage and the applicable mortgage
security taxes and fees are paid, such Mortgage constitutes a first priority,
fully perfected Lien on, and security interest in, all right, title and
interest of the Mortgagor in such Property and the proceeds thereof, in each
case prior and superior in right to any Person.
(ag) [left blank intentionally]
(ah) Loan Guarantees. The provisions of each Loan Guarantee
are effective to create a legal, valid and binding and enforceable guarantee of
the obligations described therein. Each of the Guarantors, other than the
Parent and Cedar (TCI), is a Wholly Owned Subsidiary of the Borrower. The
Borrower and Cedar (TCI) are Wholly Owned Subsidiaries of the Parent.
(ai) Ranking of Indebtedness. The obligations of the
Borrower and the Guarantors for the payment of principal, interest and other
amounts under this Agreement and the Facility Documents constitute first
ranking, senior secured Indebtedness. The obligations of Dominion Bridge for
the payment of principal, interest and other amounts under the Intercompany
Documents to which Dominion Bridge, constitute senior, subordinated secured
Indebtedness.
35
<PAGE> 41
(aj) Affiliate Obligations. No Indebtedness is owing to any
Cedar Group Company from Affiliates of the Parent or any other Cedar Group
Company, other than amounts permitted pursuant to Section 7.6.
(ak) [Left blank intentionally]
(al) Trade Accounts. Each Cedar Group Company has paid all
Accounts, including contractors and subcontractors, in the ordinary course of
business and there are no arrearages on any trade Account of any Cedar Group
Company other than those awaiting payment in the ordinary course of the
relevant Cedar Group Company's business, consistent with past practice or being
contested in good faith by appropriate proceedings and reserves for which have
been made in the books and records of the relevant Cedar Group Company in
accordance with GAAP and which are not material to the Cedar Group Companies,
singly or in the aggregate.
(am) Bank Accounts. As of the Funding Date, Schedule 4.1(am)
accurately sets forth each bank account held by any Cedar Group Company.
(an) Location of Owned Real Property. Schedule 4.1(an) sets
forth completely and correctly as of the Funding Date all real property owned
by each Cedar Group Company, the addressees thereof and the jurisdictions (such
as local counties) in which such properties are situated. Each Cedar Group
Company owns in fee all the real property set forth on Schedule 4.1(an)
opposite its name.
(ao) Location of Leased Real Property. Schedule 4.1(ao)
lists completely and correctly as of the Funding Date all real property leased
by each Cedar Group Company, the addresses thereof and the jurisdictions (such
as local counties) in which such properties are situated. Each Cedar Group
Company has a valid lease in all the real property set forth on Schedule
4.1(ao) opposite its name.
(ap) Insurance. Schedule 4.1(ap) sets forth a true and
complete listing of all insurance (other than Performance Bonds described in
Section 4.1(aq)) maintained by the Borrower, the Parent and each of their
respective Subsidiaries as of the Funding Date.
(aq) Performance Bond Arrangements. Schedule 4.1(aq) sets
forth a true and complete listing of all Performance Bonds as at the Funding
Date, showing as of the date hereof the parties, subject matter and term
thereof. Each such Performance Bond has been duly authorized, executed and
delivered to the Cedar Group Company party thereto, and, to the Borrower's
knowledge, each other party thereto. Except as described on Schedule 4.1(aq),
none of the Performance Bonds contains any terms which are inconsistent with
standard prudent industry practice or which require any Cedar Group Company to
grant Liens on any of their respective Properties or otherwise impose on any
Cedar Group Company any liability or obligation which might have a Material
Adverse Effect. Each Performance Bond is in full force and effect and is
binding upon and enforceable against all parties thereto in accordance with its
terms, and there exists no default under such contract by any party thereto
which might have a Material Adverse Effect.
36
<PAGE> 42
(ar) UDIL. The UDIL Agreement is a legal, valid and binding
obligation of the parties thereto, enforceable in accordance with its terms.
No amendment, waiver or variation of the UDIL Agreement has been entered into
or agreed to be entered into. There has been no breach or default of any
provision of the UDIL Agreement by any party thereto. As a result of the
execution of the UDIL Agreement, no Cedar Group Company has any liability
obligation or other Indebtedness to UDIL or its Affiliates (except as expressly
provided in the UDIL Agreement) and all the terms, conditions and agreements
specified in the Original Agreements (as such term is defined in the UDIL
Agreement) have been terminated in full.
(as) Steen. [left blank intentionally]
(at) Cedar (TCI). All of the TCI Preferred Stock to be
issued pursuant to the Subscription Agreements have been duly authorised and,
upon payment of the subscription amounts pursuant thereto, all such TCI
Preferred Stock shall be duly and validly issued, fully paid and
non-assessable. No holder of TCI Preferred Stock is or has the right to become
a creditor of Cedar (TCI) as such in any circumstance, except on non-payment of
a declared (as opposed to an undeclared) dividend. No holder of TCI Preferred
Stock is or has the right to become a creditor of the Parent as such in any
circumstance, except pursuant to the guarantee set forth in the Subscription
Agreement. The sole obligation of any Cedar Group Company to any holder of TCI
Preferred Stock is to pay such holder dividends in accordance with the terms of
issue of the TCI Preferred Stock and to issue common stock of the Parent upon
conversion of the TCI Preferred Stock or liquidation of Cedar TCI.
ARTICLE V
REPORTING COVENANTS
Section 5.1. General.
Each Loan Party jointly and severally covenants and agrees
that, for so long as this Agreement is in effect or any amount is owing under
any of the Facility Documents, each Loan Party immediately shall furnish to, or
cause to be furnished to, the Lender such information, including financial
information and Financial Statements as the Lender may reasonably request.
Section 5.2. Specific Reports.
Without limitation to the generality of Section 5.1, the Loan
Parties agree to provide the Lender:
(a) Within three days of the earlier of the mailing or filing
thereof, (i) copies of all filings or other communications made by any Cedar
Group Company (including Parent and MDC) to holders of its publicly traded
securities or any Governmental Authority in connection with such securities,
including the Securities Exchange Commission, the NASD, the Australian, New
Zealand and Vancouver Stock Exchanges or the Australian Securities
37
<PAGE> 43
Commission from time to time; (ii) filings with other regulatory or
governmental agencies, (iii) notices to shareholders and (iv) notices to
holders of other Indebtedness.
(b) Immediately after an officer of any Loan Party becomes
aware:
(i) of the occurrence of a Default or Event of
Default or the occurrence of any default or event of default by any
Cedar Group Company under any Facility Document or other Contractual
Obligation to which it is a party;
(ii) of any development (including, without
limitation, any litigation, inquiry, dispute, investigation or
proceeding against or affecting the Borrower or any Cedar Group
Company) which has or might have a Material Adverse Effect, or, in the
case of any litigation, investigation or other proceeding, which, if
in existence on the date of such certificate would result in the
representations and warranties in Section 4.1(k) being incorrect (if
made as of such late) or which might, if adversely decided, have a
Material Adverse Effect;
a certificate of a Responsible Officer such Loan Party specifying the nature
thereof, the period of existence thereof and the Loan Party's (or such other
Cedar Group Company's) proposed response thereto, each in reasonable detail.
(c) Each Loan Party will deliver, or will cause to be
delivered to the Lender:
(i) immediately on their becoming available, copies
of all documents to which any Cedar Group Company and County NatWest
Securities Pty Limited is a party, whether in effect as of the Funding
Date or any date thereafter as well as any amendment, modification,
waiver or supplement to the Remarketing Agreement and any document,
correspondence or notice issued by any Person pursuant to the
Remarketing Agreement;
(ii) immediately on their becoming available, copies
of all Takeover Documents, including all notices, filings (including
Substantial Shareholder notices under the Corporations Law),
authorities, approvals and any other requirements in connection with
the Takeover whether issued by a Cedar Group Company or any other
Person and irrespective of when in effect;
ARTICLE VI
AFFIRMATIVE COVENANTS
Section 6.1. General.
Each Loan Party jointly and severally covenants and agrees
that, from and after the Funding Date and for so long as this Agreement is in
effect or any amount is owing under any of the Facility Documents, each Loan
Party shall and shall cause each of its Subsidiaries, where applicable, to
comply with each of the covenants in this Article 6.
38
<PAGE> 44
Section 6.2. Corporate Existence.
Each Loan Party will, and will cause each of its Subsidiaries
to, do or cause to be done, all things necessary to preserve and keep in full
force and effect its existence, material rights and authority to do business,
provided that any transaction permitted by Section 7.2 will not constitute a
breach of this Section 6.2,
As soon as practicable, and in any event by no later than
April 10, 1996, the Parent shall have done all things necessary to convene a
shareholders' meeting (which meeting shall be scheduled to take place on or
before May 1, 1996) for the purpose, inter alia, of increasing the authorised
capital of the Parent to an amount sufficient to permit it to issue all common
stock it shall have then agreed to issue, including on the exercise of
outstanding options, warrants or convertible securities.
Section 6.3. Compliance with Laws, etc.
(a) General. Each Loan Party will, and will cause each of
its Subsidiaries to, comply with all applicable Requirements of Law in respect
of the conduct of its business and the ownership of its Property, other than
those the non-compliance with which (individually or in the aggregate) would
not have a Material Adverse Effect.
(b) Hazardous Materials. Neither any Loan Party nor any of
its Subsidiaries will generate, use, treat, store, release or dispose of, or
permit the generation, use, treatment, storage, release or disposal of
Hazardous Materials on any of its Property, or transport or permit the
transportation of Hazardous Materials to or from any such Property, except for
quantities used or stored in material compliance with all applicable
Environmental Laws and required in connection with the normal operation, use
and maintenance of such Property or the operation of the business of the
relevant Cedar Group Company. If required to do so under any applicable
Environmental Law, each Loan Party agrees to undertake, and agrees to cause
each of its Subsidiaries to undertake, any cleanup, removal, remedial or other
action necessary to remove and clean up any Hazardous Materials from any real
Property in accordance with requirements of all such applicable Environmental
Laws and in accordance with orders and directives of all Governmental
Authorities; provided that neither any Loan Party nor any of its Subsidiaries
shall be required to take any such action where the same is being contested by
appropriate legal proceedings in good faith by any Loan Party or such
Subsidiary.
(c) Remedial Action. Each Loan Party shall take prompt and
appropriate action to respond to any non-compliance or alleged non-compliance
with Environmental Laws to the extent non-compliance has or might have a
Material Adverse Effect and shall regularly report to the Lender on such
response.
Section 6.4. Employee Plans.
Each Loan Party shall cause, and such cause their Subsidiaries
to cause, each Plan to continue to be duly qualified and administered in all
respects in compliance with all
39
<PAGE> 45
Requirements of Law and the terms of the Plans and any agreements relating
thereto. Each Loan Party shall ensure that:
(a) neither it nor any of its Subsidiaries have an
unfunded liability or contribution due and not paid which does or is
capable of giving rise to any trust or Lien;
(b) all amounts required to be paid by it or its
Subsidiaries under or in connection with any Plan are paid when due
and, notwithstanding the foregoing, that written notice is provided to
the Lender of any amount due and unpaid under or in connection with
any Plan;
(c) no liability upon it or its Subsidiaries or Lien
on any Property owned by it or any of its Subsidiaries arises in
respect of any Plan;
(d) no Termination Event occurs in respect of any
Plan;
(e) no payments in respect of any Plans are made by
it or any of its Subsidiaries in excess of the minimum amounts
required to be made by law and the terms of the Plans;
(f) after the Funding Date, no Plans are amended,
and no Plans are created, if the results thereof is to increase the
payment obligations of the Cedar Group Companies in respect of its
Plans or the amounts of any solvency deficiencies or liabilities on
windup (in whole or in part) of any Plan.
(g) it advises the Lender immediately of it or any
of its Subsidiaries becoming party to or obligated in relation to any
plan regulated or governed by ERISA.
Section 6.5. Maintenance of Property; Good Repair.
Each Loan Party will, and will cause each of its Subsidiaries
to, (a) preserve its title to its Properties, owned or leased; and (b) ensure
that its Properties that are or may be used or useful in its business in
whomsoever's possession they may be, are kept in good repair, working order and
condition, normal wear and tear excepted or make or cause to be made all
appropriate repairs, renewals or replacements thereof, consistent with past
practice.
Section 6.6. Books and Records.
(a) Each Loan Party agrees to maintain, and to cause each of
its Subsidiaries to maintain, proper books of record and accounts, in which
full and correct entries shall be made of all financial transactions and the
assets and business of such Loan Party and each of its Subsidiaries in
accordance with GAAP and all Requirements of Law or as otherwise required by
applicable rules and regulations of any Governmental Authority or regulatory
authority having jurisdiction over any Cedar Group Company.
(b) [left blank intentionally]
40
<PAGE> 46
(c) Each Loan Party shall advise the Lender promptly, in
sufficient detail, of any substantial change relating to the type, quantity or
quality of the Collateral, or any event (other than a change in price) which is
reasonably likely to have an adverse effect on the value of the Collateral or
on the security interests granted to the Lender therein.
(d) Each Loan Party agrees to execute and deliver, and to
cause each of its Subsidiaries to execute and deliver, to the Lender, from time
to time, solely for the Lender's convenience in maintaining a record of the
Collateral, such written statements and schedules as the Lender may reasonably
require, including, without limitation, those described in Article 5 of this
Agreement, designating, identifying or describing the Collateral pledged or
granted to the Lender under the Security Documents. The failure by any Loan
Party or any of its Subsidiaries, however, to promptly give the Lender such
statements or schedules shall not affect, diminish, modify or otherwise limit
the Lender's security interests in the Collateral.
Section 6.7. Access to Records.
Each Loan Party agrees to provide, and to cause each of its
Subsidiaries to provide, the Lender and their its advisors and representatives
reasonable access to all books, records, offices and other facilities and
Properties of any Cedar Group Company upon reasonable notice and allow the
Lender and their authorized advisors or representatives (as the case may be)
to:
(i) inspect the Collateral and/or make such
examinations thereof and copies of and abstracts from such books and
records as the Lender or its authorized advisors or representatives
(as the case may be) may reasonably request;
(ii) discuss the business, operations, properties,
financial and other conditions of any Cedar Group Company with the
Responsible Officers and such other officers and employees of any
Cedar Group Company as the Lender may from time to time reasonably
request; and
(iii) discuss the affairs of any Cedar Group Company
with the Auditors,
provided, however, that if a Default exists or an Event of Default has been
declared, the Lender or the Lender shall not be required to provide notice to
carry out the activities set forth above in (i), (ii) and (iii). Any
inspection conducted by the Lender or the Lender shall not relieve the Borrower
of any obligation to provide any notices required under the terms of this
Agreement or any of the Facility Documents.
Section 6.8. Additional Security From Loan Parties.
(a) Specific Agreements. On or before April 5, 1996, the
Borrower shall cause:
(i) Dominion Bridge to deliver to the Lender a
Security Agreement relating to Collateral located in the
Province of Alberta;
41
<PAGE> 47
(ii) Cedar (TCI) to deliver to the Agent a Security
Agreement in relation to all its assets; and
(iii) Cedar Australia to have executed and delivered
to the Lender a sponsorship agreement with a Person acceptable
to the Lender in connection with any shares in MDC held in
uncertificated form,
each in form and substance satisfactory to the Lender, granting the Lender a
first priority Lien in all such Collateral and accompanied by such opinions,
Lien Statements and other documents and instruments as reasonably required by
the Lender.
(b) General Agreement to Grant. Each Loan Party will grant to
the Lender, Liens in such assets and properties of such Loan Party as are not
covered by the original Security Documents or as may be requested from time to
time by the Lender (the "Additional Security Documents"). Such security
interests and mortgages shall be granted pursuant to documentation reasonably
satisfactory in form and substance to the Lender and shall constitute valid and
enforceable perfected security interests superior to and prior to the rights of
all third Persons and subject to no other Liens, except such Liens as are
permitted by Section 7.3. The Additional Security Documents or other
instruments related thereto shall have been duly recorded or filed in such
manner and in such places as are required by law to establish, perfect,
preserve and protect the Liens, in favor of the Lender required to be granted
pursuant to the Additional Security Documents and all taxes, fees and other
charges payable in connection therewith shall have been paid in full.
Section 6.9. Further Assurances Relating to the Collateral.
(a) Further Assurances Generally. Each Loan Party shall, and
shall cause each of its Subsidiaries to, defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any interest
therein. Each Loan Party shall, and shall cause its Subsidiaries to, comply
with the Requirements of Law in order to grant to the Lender valid and
perfected first priority security interests in the Collateral, subject only to
Permitted Liens. The Lender is hereby authorized by each Loan Party to file
any Lien Statements covering the Collateral whether or not the signature of
such Loan Party appears thereon. Each Loan Party shall do and shall cause any
other Cedar Group Company to do, whatever the Lender may reasonably request,
from time to time, to effect the purposes of this Agreement and the Security
Documents, including without limitation, filing Liens Statements and
amendments, renewals and continuations thereof; cooperating with the Lender's
representatives; keeping stock records, and paying claims which might, if
unpaid, become a Lien on the Collateral. Furthermore, each Loan Party shall
cause to be delivered to the Lender such opinions of counsel, title insurance
and other related documents as may be reasonably requested by the Lender to
assure itself that this Section 6.9 has been complied with.
(b) Timing. Each Loan Party agrees that each action required
by Section 6.8 and this Section 6.9 shall be completed as soon as possible.
(c) Dealings. Each Loan Party shall (i) deposit with the
Lender all insurance policies and certificates of insurance in connection with
or comprising part or the Collateral;
42
<PAGE> 48
(ii) pay each insurance premium at least three (3) days before the due date
and, on request from the Lender, produce receipts for the payment; (iii) not do
anything which prejudices any insurance policy.
(d) Quebec Notice. No Loan Party shall notify, nor shall it
permit any of its Subsidiaries to notify, the Lender or any Lender of its
intention not to be bound by any Security Document or other Facility Document
pursuant to Article 2362 Quebec Civil Code. If, for any reason, it is
determined under the Quebec Civil Code that any of the Facility Documents will
lapse or expire prior to the termination of this Agreement, the Loan Parties
shall, and shall cause their Subsidiaries, to execute any additional documents,
including this Agreement, a Loan Guarantee and Security Document and shall take
such other action as requested by the Lender to renew or extend their
respective obligations, prior to the time of such expiring or lapse.
(e) Discharges. On or prior to April 5, 1996, each Loan
Party shall have filed all the necessary Lien Statements or other documents
required to discharge and remove all Liens registered in favor of Royal Bank of
Canada and UDIL and the London Guarantee Insurance Company over any asset of a
Cedar Group Company in any jurisdiction.
Section 6.10. Insurance; Casualty Loss; Performance Bonds.
(a) Maintenance of Insurance. Each Loan Party agrees to
maintain, and to cause each of its Subsidiaries to maintain, public liability
insurance, key-man life insurance, workmen's compensation insurance, third
party property damage insurance and replacement and reinstatement value (or
such higher coverage as the relevant Cedar Group Company may obtain) insurance
on its Property under such policies of insurance, with financially sound and
reputable insurance companies, in such amounts and covering such risks in at
least such amounts and against at least such risks as are described on Schedule
4.1(ap) or as are at all times satisfactory to the Lender in its commercially
reasonable judgment. Notwithstanding the foregoing, each Cedar Group Company
shall maintain such insurance as required by or pursuant to the Security
Documents to which it is a party relating to insurance.
(b) Lender as Loss Payee. On or before April 5, 1996, all
policies covering the Collateral and all policies of key-man life insurance are
to name the Lender as an additional insured and the Lender as loss payee in
case of loss, as its interests may appear, and are to contain such other
provisions as the Lender may reasonably require to fully protect the Lender'
interest in the Collateral and to any payments to be made under such policies.
(c) No cancellation. All such insurance policies will
include a provision that such policy will not be cancelled, altered or in any
way limited in coverage or reduced in amount unless the Lender is notified in
writing by the relevant insurance company at least thirty (30) days prior to
such change.
(d) Notice of Certain Events. If any Collateral:
(i) is damaged or destroyed, or suffers any other
loss; or
43
<PAGE> 49
(ii) is condemned, confiscated or otherwise taken,
in whole or in part, or the use thereof is otherwise diminished so as
to render impracticable or unreasonable the use of such Collateral or
to materially diminish its marketability,
and, in either case, the amount of the damage, destruction, loss or diminution
in value is in excess of $500,000 (collectively, a "Casualty Loss"), each Loan
Party shall provide written notice to the Lender within five (5) Business Days
of such occurrence, which notice shall specify the nature of the Casualty Loss,
the estimated value of the Casualty Loss and the relevant Loan Party's proposed
response thereto, each in reasonable detail.
(e) Casualty Loss in Usual Circumstances. In the event of a
Casualty Loss, each Loan Party and/or each of its Subsidiaries shall:
(i) diligently file and prosecute their claim or
claims for any award or payment in connection with a Casualty Loss;
and
(ii) such Loan Party or such Subsidiary shall pay to
the Lender, promptly upon receipt thereof, any and all net insurance
proceeds and payments received by such Loan Party or such Subsidiary
on account of damage, destruction, loss, condemnation or eminent
domain proceedings.
(f) Casualty Loss When Event of Default Occurred. After the
occurrence and during the continuance of an Event of Default, (i) no settlement
on account of any such Casualty Loss shall be made without the consent of the
Lender and (ii) the Lender may participate in any such proceedings and such
Loan Party shall deliver to the Lender such documents as may be reasonably
requested by the Lender to permit such participation and shall consult with the
Lender, its attorneys and agents in the making and prosecution of such claim or
claims. Each Loan Party hereby irrevocably authorizes and appoints the Lender
its attorney-in-fact, after the occurrence and upon the continuance of an Event
of Default, to collect and receive for any such award or payment and to file
and prosecute such claim or claims, which power of attorney shall be
irrevocable and shall be deemed to be coupled with an interest, and each Loan
Party shall, upon demand of the Lender, make, execute and deliver any and all
assignments and other instruments sufficient for the purpose of assigning any
such award or payment to the Lender for the benefit of the Lender, free and
clear of any encumbrances of any kind or nature whatsoever, other than the
right of such Loan Party to any insurance proceeds remaining after application
thereof by the Lender as provided in this Section 6.10.
(g) Performance Bonds. The Loan Parties agree to obtain and
maintain, and to cause each of their Subsidiaries to obtain and maintain,
Performance Bonds (i) only in the ordinary course of its business; (ii) only
for Contractual Obligations which require Performance Bonds or which, in the
commercial reasonable judgment of the Loan Party ought be covered by a
Performance Bond, based on the past practices of the Parent and its
Subsidiaries; (iii) which contain terms and conditions and cover such risks as
are consistent with the then prevailing prudent industry practice and which
impose upon a Cedar Group Company terms no less favorable to it than could be
obtained by a similar company in similar circumstances; (iv) which are not the
subject of any Lien in favor of any Person and do not grant in favor of any
44
<PAGE> 50
Person any Lien or the right to obtain a Lien; and (v) which are issued by
financially sound and reputable insurance companies, bank or other financial
institutions.
Section 6.11. Taxes.
Each Loan Party will, and will cause each of its Subsidiaries
to, pay and discharge all income and other material taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits,
or upon any Properties belonging to it, or payable by it, prior to the date on
which penalties or interest attach thereto; provided, that neither any Loan
Party nor any of its Subsidiaries shall be required to pay any such tax,
assessment, charge or levy which is being contested in good faith and by proper
proceedings if it has maintained adequate reserves (in the good faith judgment
of the management of such Person) with respect thereto in accordance with GAAP.
Section 6.12. Business Affairs.
Each Loan Party will, and will cause each of its Subsidiaries
to, do or cause to be done all things necessary to preserve, renew and keep in
full force the rights, licenses, Permits, trademarks, trade names, privileges,
Intellectual Property and franchises necessary or desirable in the normal
conduct of its business, except for any trademarks, trade names, Permits,
Intellectual Property or franchises that are not material of the business of
the Parent and its Subsidiaries taken as a whole. Each Loan Party will, and
will cause each of its Subsidiaries to, maintain and operate its business in
substantially the manner in which it is currently conducted and operated.
Section 6.13. End of Fiscal Years; Fiscal Quarters.
Each Loan Party will, and will cause each of its Subsidiaries
to, fix for accounting and financial reporting purposes (a) their fiscal years
to end on September 30 of each year and (b) their fiscal quarters to end on
June 30, September 30, December 31 and March 31 of each year.
Section 6.14. [left blank intentionally]
Section 6.15. Listing of MDC on Stock Exchanges.
At all times after the Funding Date, the Borrower will use
its best efforts to cause MDC to continue to be listed on the Australian Stock
Exchange and the New Zealand Stock Exchange and shall use its best efforts to
cause MDC to comply with all the rules and regulations of such stock exchanges.
Section 6.16. Intercompany Loan.
(a) The Borrower will exercise and enforce all of its rights
and will pursue all of its remedies available to it under the Intercompany
Note, diligently, in good faith and in a timely manner and will cooperate fully
with the Lender with respect thereto. The Borrower
45
<PAGE> 51
will not grant any waiver, extension, release, modification or amendment of or
under the Intercompany Documents, once issued.
(b) The Borrower covenants that it will prohibit Dominion
Bridge from making a loan or advance to, or similar Investment in, any Person
while it has any amount outstanding under any Intercompany Note, other than
incidental amounts incurred in the ordinary course of business consistent with
past practice in favor of employees.
(c) The Borrower agrees, and will cause Dominion Bridge to
agree upon execution of an Intercompany Note, that (i) all Obligations of
Dominion Bridge under and in respect of the Intercompany Note and the other
Intercompany Documents (the "Intercompany Obligations") are subordinated in
right of payment, to the extent and in the manner provided in the Intercompany
Note and as otherwise required by the Lender, to the prior payment in full in
cash of all Guaranteed Obligations of Dominion Bridge; (ii) the subordination
of the Intercompany Obligations is for the ratable benefit of the Lender; and
(iii) after all Guaranteed Obligations has been Fully Satisfied and until the
Intercompany Obligations have been Fully Satisfied, the Borrower shall be
subrogated to the rights of the Lender to receive payments and other
distributions under the Facility Documents to the extent that distributions
otherwise payable to the Borrower have been applied to the payment of the
Guaranteed Obligations. A distribution made pursuant to these subrogation
arrangements to any Lender that would have been made to the Borrower will, as
between the Borrower and Dominion Bridge, be deemed to be a payment by Dominion
Bridge of the Intercompany Obligations.
Section 6.17. Additional Capital.
If, prior to the Maturity Date, the Borrower or the Parent
(directly or through one of its Subsidiaries) obtains additional capital,
whether by way of Subscription Agreements or other equity issuance over and
above the $11,515,000 referred to in Section 2.8, the Borrower or the Parent,
as the case may be, shall deposit the net proceeds of such capital in a bank
account with the Lender or another Bankers Trust Group company (over which the
Lender shall have a perfected Lien) after retaining the first $3,000,000 of
such net proceeds which, together with the amount borrowed and applied pursuant
to section 2.10(a)(iii), shall be available for genuine working capital
purposes of the Borrower, consistent with the Borrower's ordinary course of
business.
Section 6.18. Ownership of MDC.
(a) Neither the Bidder, the Borrower nor any Cedar Group
Company will sell or otherwise dispose of any interest in any shares in MDC.
(b) Neither the Bidder nor the Borrower will not waive,
release, modify or amend the Declarations of Trust.
(c) The Borrower will not permit MDC to issue any additional
equity, whether by way of rights issue to its shareholders or otherwise.
Section 6.19. Payment of Obligations; Trade Policies.
46
<PAGE> 52
(a) Payment Practices. Each Loan Party will, and will cause
each of its Subsidiaries to, pay, discharge or otherwise satisfy at or before
maturity all its Indebtedness and other material obligations of whatever
nature, except when the amount or validity thereof is then being contested in
good faith by appropriate proceedings and reserves with respect thereto to the
extent, if any, required by GAAP have been provided on the books of such Loan
Party or such other Cedar Group Company, as the case may be.
(b) Trade Accounts Payable. The Loan Parties shall, and
shall cause each of their Subsidiaries to, promptly pay all of their Accounts
payable when due or in conformity with the Cedar Group Trade Payables Policy.
The Loan Parties shall not permit late payments on any Accounts payable other
than those contemplated by the Cedar Group Trade Payables Policy or these being
contested in good faith by appropriate proceedings and reserves for which have
been made in the books and records of the appropriate Cedar Group Company in
accordance with GAAP and which payments, singly or in the aggregate, would not
have a Material Adverse Effect.
(c) Take or Pay Contracts, etc. None of the Loan Parties
shall, or shall permit or suffer any of their Subsidiaries to, enter into or be
a party to any arrangement for the purchase of materials, supplies, other
property or services if such arrangement by its express terms requires that a
payment be made by such Loan Party or such Subsidiary regardless of whether or
not such materials, supplies, other property or services are delivered or
furnished to it.
(d) Accounts Receivable. Each Loan Party shall, and shall
cause each of their Subsidiaries to, perform in all material respects all of
its obligations with respect to their Accounts Receivable. No Loan Party
shall, nor shall it permit any of its Subsidiaries to, amend, modify, terminate
or waive any provision of any Accounts Receivable in any manner which could
reasonably be expected to materially adversely affect the value of such
Accounts Receivable. Other than in the ordinary course of business as
generally conducted by it over a period of time, no Cedar Group Company shall
(i) grant any extension or renewal of the time of payment of any Accounts
Receivable; (ii) compromise or settle any dispute, claim or legal proceeding
with respect to any Accounts Receivable for less than the total unpaid balance
thereof; (iii) release, wholly or partially, any Person liable for the payment
thereof; or (iv) allow any credit or discount thereon.
Section 6.20. [left blank intentionally]
Section 6.21. [left blank intentionally]
Section 6.22. [left blank intentionally]
Section 6.23. Separate Corporate Conduct.
47
<PAGE> 53
Each Loan Party shall take, and shall cause each of its
Subsidiaries to take, all action as is necessary to keep the operations of the
Parent, the Borrower and their respective Subsidiaries separate and apart from
those of any other Subsidiary, including, without limitation, ensuring that all
customary formalities regarding their respective corporate existence (including
holding regular board of directors' and shareholders' meetings and maintenance
of corporate offices and records) are followed. Neither any Loan Party nor any
of its Subsidiaries shall make any payment to a creditor of any other Cedar
Group Company in respect of any liability of that other Cedar Group Company
(other than pursuant to a Loan Guarantee). All financial statements provided
to creditors shall clearly evidence the corporate separateness of the Parent,
the Borrower and their respective Subsidiaries and each such company shall
maintain its own payroll (if any) and separate books of account and bank
accounts. Each Cedar Group Company shall pay its respective liabilities,
including all administrative expenses, from its own separate assets, and the
assets of each Loan Party shall at all times be separately identified and
segregated from assets of any other Cedar Group Company. Finally, no Cedar
Group Company shall take any action, or conduct its affairs in a manner which
is likely to result in the corporate existence of any Cedar Group Company being
ignored, or in the assets and liabilities of any Cedar Group Company being
substantively consolidated with those of another Cedar Group Company in a
bankruptcy, reorganization or other insolvency proceeding.
Section 6.24. Accounts and Inventory. The Loan Parties shall
use, and shall cause their Subsidiaries to use, invoices for all of their
respective Accounts substantially in the form delivered to the Lender and with
such changes thereto as the Lender may from time to time have agreed in
writing. Payments with respect to all Accounts shall be remitted solely to the
respective Cedar Group Company generating such Account and to the Cedar Group
Company in accordance with any relevant Account Agreement.
Section 6.25. [left blank intentionally]
ARTICLE VII
NEGATIVE COVENANTS
Section 7.1. General.
Each Loan Party covenants and agrees that, from and after the
Funding Date and for so long as this Agreement is in effect and any Lender
shall have any obligation under Section 2.1 or any amount is owing under any of
the Facility Documents, each Loan Party shall, and shall cause each of its
Subsidiaries, where applicable, to comply with each of the covenants in this
Article 7.
Section 7.2. Consolidation, Merger, Sale or Purchase of
Assets, etc.
Each Loan Party will not, and will not permit any of its
Subsidiaries to, wind up, liquidate or dissolve its affairs, or enter into any
transaction of merger or consolidation, sell or otherwise dispose of all or any
part of its property or assets or purchase, lease or otherwise
48
<PAGE> 54
acquire (in one transaction or a series of related transactions) all or any
part of the property or assets of any Person or agree to do any of the
foregoing at any future time, except that the following shall be permitted:
(a) sales of Inventory in the ordinary course of business;
(b) purchases, leases or other acquisitions of goods,
inventory and equipment, and operating leases of property, in the
ordinary course of business consistent with past practice and it being
understood that all such purchases must be paid out of the working
capital funds permitted to the Borrower under Section 6.17..
(c) the investments, acquisitions and transfers or
dispositions of properties permitted pursuant to Section 7.6;
(d) the acquisition of ordinary shares in MDC pursuant to the
On-Market Acquisitions (but not pursuant to any other method, for
example pursuant to the Takeover or a rights issue by MDC); and
Section 7.3. Liens.
Each Loan Party will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to (i) the capital stock of such Loan Party or any of its Subsidiaries
(other than the Liens granted under the Pledge Agreements) or (ii) any Property
or assets of any kind (real or personal, tangible or intangible) of such Loan
Party or any of its Subsidiaries, whether now owned or hereafter acquired, or
sell any such Property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such Property or assets or to assign any
right to receive income, or file or permit the filing of any Lien Statement,
except:
(a) Liens for taxes not yet due and payable or Liens
for taxes being contested in good faith and by appropriate proceedings
for which adequate reserves have been established in accordance with
GAAP;
(b) Liens imposed by law or which were incurred in
the ordinary course of business, such as carriers', warehousemen's and
mechanics' Liens, statutory landlord's Liens, Liens in favor of
customs and revenue authorities to secure payment of customs duties in
connection with the importation of goods, and other similar Liens
arising in the ordinary course of business, and which (x) do not
exceed $250,000 in the aggregate at any time outstanding, (y) if any
such Property or asset is material, do not in the aggregate materially
detract from the value of such Property or assets or materially impair
the use thereof in the operation of the business of the relevant Cedar
Group Company or (z) which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or asset subject to
such Lien;
(c) Liens created by or pursuant to the Security
Documents;
49
<PAGE> 55
(d) Liens created by or pursuant to the Intercompany
Documents;
(e) Liens existing on the Funding Date and listed on
Schedule 4.1(i) hereto without giving effect to any subsequent
extensions, renewals or replacements thereof; provided that, with
respect to any Lien listed on Schedule 4.1(i) hereto, if there is
indicated on said Schedule a date for the required removal or
termination of such Lien, such Lien shall cease to be permitted on
the respective date so indicated;
(f) Liens (other than any Lien imposed by ERISA or
similar legislation) incurred or deposits made in the ordinary course
of business in connection with liability insurance, workers'
compensation, unemployment insurance and other types of social
security;
(g) leases or subleases granted to third Persons not
interfering with the ordinary course of business of the relevant Cedar
Group Company;
(h) Capital Leases to the extent permitted under
Section 7.4(b);
(i) [left blank intentionally]
(j) easements, rights-of-way, restrictions,
encroachments, licenses, zoning restrictions, and other similar
charges or encumbrances, in each case not interfering with the
business of the relevant Cedar Group Company;
(k) [left blank intentionally]
(l) Liens on assets of MDC and its Wholly Owned
Subsidiaries so long as such Liens (i) secure only Indebtedness of MDC
or its Wholly Owned Subsidiaries incurred pursuant to Section 7.4(g)
and (ii) apply only to the assets of MDC and its Wholly Owned
Subsidiaries.
Section 7.4. Indebtedness.
Each Loan Party will not, and will not permit any of its
Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to the Facility
Documents;
(b) Existing Indebtedness listed in Schedule 7.4(b)
hereto;
(c) Indebtedness of a Dominion Bridge and Steen
owing to the Borrower, in each case to the extent making such loan was
permitted in Section 2.10 and made pursuant to the Intercompany
Documents;
(d) Indebtedness of a Cedar Group Company evidenced
by Performance Bonds incurred in accordance with Section 6.10(g) not
to exceed in an aggregate the principal amount permitted under the
bond facility arrangements for the relevant
50
<PAGE> 56
Cedar Group Company, which Indebtedness shall not be the subject of
any Lien or agreement to grant a Lien;
(e) drafts payable for payroll and expense items
incurred in the ordinary course of business and consistent with past
practice;
(f) [left blank intentionally]
(g) Indebtedness of MDC and its Wholly owned
Subsidiaries which is to be used for their own corporate purposes, is
non-recourse to any Cedar Group Company (other than MDC or its
Subsidiaries) and their assets and, if incurred after the Funding
Date, contains express provisions, reasonably satisfactory to the
Lender, acknowledging and agreeing to the non-recourse nature thereof
as provided above;
(h) [left blank intentionally]
(i) [left blank intentionally]
(j) [left blank intentionally]
(k) Indebtedness of the Parent to Cedar TCI pursuant
to the intercompany loan agreement delivered to the Lender pursuant to
Section 3.1 (l)(ii); and
(l) Indebtedness of the Borrower to the Parent
pursuant to the intercompany loan agreement delivered to the Lender
pursuant to Section 3.1 (l)(iii)
Section 7.5. Capital Expenditures.
Each Loan Party will not, and will not permit any of its
Subsidiaries to, make Capital Expenditures.
Section 7.6. Investments.
Each Loan Party will not, and will not permit any of its
Subsidiaries to, directly or indirectly, make any Investment, or permit any
Investment to remain outstanding, or agree or commit to make any Investment,
except:
(a) a Cedar Group Company may acquire and hold
receivables owing to it, if created or acquired in the ordinary course
of business and payable or dischargeable in accordance with the Cedar
Group Trade Payables Policy;
(b) a Cedar Group Company may make and own
Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlements of
delinquent obligations of and other disputes with, customers and
suppliers arising in the ordinary course of business;
51
<PAGE> 57
(c) loans and advances to employees, officers and
directors in an aggregate principal amount not to exceed (i) the
amount already extended and as stipulated in a letter from the Parent
and delivered to the Lender in accordance with Section 3.1 dated the
Funding Date or (ii) $100,000 at any time outstanding for all other
purposes, shall be permitted, if they are made or incurred in the
ordinary course of business and an commercially reasonable terms.
(d) Investments existing on the Funding Date and
listed on Schedule 7.6(d) hereto, without giving effect to any
additions thereto, extensions or replacements thereof, shall be
permitted;
(e) Investments under Sections 2.10 and 7.2 shall be
permitted;
(f) a Cedar Group Company may purchase raw materials
in the ordinary course of business and consistent with past practices;
and
(g) additional Investments in MDC shall be permitted
to the extent of the On-Market Acquisitions.
Section 7.7. Dividends, etc.
Each Loan Party will not, and will not permit any of its
Subsidiaries to, declare or pay any dividends (other than dividends payable
solely in capital stock of the Person paying such dividend) or return any
capital to, its stockholders or authorize or make any other distribution,
payment or delivery of property or cash to its stockholders as such, or redeem,
retire, purchase or otherwise acquire, directly or indirectly, for a
consideration (other than consideration in the form of capital stock of the
Person paying the Dividend), any shares of any class of its capital stock now
or hereafter outstanding (or any warrants for or options or stock appreciation
rights in respect of any of such shares), or set aside any funds for any of the
foregoing purposes and each Loan Party will not, and will not permit any of its
Subsidiaries to, purchase or otherwise acquire for consideration any shares of
any class of the capital stock of the Borrower or the Parent now or hereafter
outstanding (or any warrants for or options or stock appreciation rights issued
by such Person in respect of any such shares) (all of the foregoing
"Dividends"), except that:
(a) any Subsidiary of the Borrower may pay dividends
to the Borrower or any Subsidiary of the Borrower which owns any
equity interests in the respective such Subsidiary; and
(b) MDC and the Subsidiaries of MDC and, for so long
as it is not Wholly-Owned, Steen and the Subsidiaries of Steen, may
pay dividends to their respective shareholders generally, so long (i)
as the Borrower and/or any other Subsidiary of the Borrower which owns
equity interests in such company receives at least its proportionate
share (based upon its respective equity interests) of any dividend so
paid, (ii) the company paying the Dividend is not then in default of
any obligation under a Transaction Document and (iii) such Dividend is
in the ordinary course of the relevant company's business (it being
understood that a Dividend contemplated by
52
<PAGE> 58
Section 3.08 of the Unanimous Shareholders Agreement for Steen shall
not be permitted).
Section 7.8. Transactions with Affiliates.
Each Loan Party will not, and will not permit any of its
Subsidiaries to, enter into any transaction or series of transactions involving
payments or property whether or not in the ordinary course of business, with
any Affiliate other than (i) Investments permitted under Section 7.6; (ii)
Dividends permitted under Section 7.7; (iii) amounts payable under the
Contractual Obligations listed in Schedule 7.8, as in effect as of the Funding
Date copies of which have been delivered to the Lender, (iv) employment
agreements entered into in the ordinary course of business; and (v) any other
transaction or series of transactions the terms and conditions of which are no
less favorable (or more favorable) to such Loan Party or such Subsidiary as
would be obtainable by such Loan Party or such Subsidiary at the time in a
comparable arm's-length transaction with a Person other than an Affiliate.
Except as expressly described on Schedule 7.8, no management or similar fees
shall be payable by any Cedar Group Company to any Person other than to another
Cedar Group Company.
Section 7.9. Changes in Business.
Each Loan Party will not, and will not permit any of its
Subsidiaries to, engage in any business other than the businesses being carried
on by them as of the Funding Date. The Parent shall have no significant assets
other than its ownership interest in its Subsidiaries and shall act as a
holding company, which does not engage in any material direct business
activity. Cedar Australia shall not have gross assets in excess of AUD$10,000
without twenty-one (21) days' prior notification to the Lender. Cedar (TCI)
shall have no creditors other than the Parent, no debtors other than the Parent
and no asset other than its receivable from the Parent.
Section 7.10. Voluntary Payment or Redemption of
Indebtedness.
Each Loan Party will not, and will not permit any of its
Subsidiaries to, voluntarily prepay, redeem, purchase, defease or otherwise
satisfy prior to the scheduled maturity thereof in any manner, or make any
payment in violation of any subordination terms of, any Indebtedness except, in
each case, the Loan.
Section 7.11. Contingent Liabilities.
Each Loan Party will not, and will not permit any of its
Subsidiaries to, agree to, undertake, assume or otherwise become responsible,
directly or indirectly, for any Contingent Liabilities other than the Loan
Guarantees and any Performance Bond entered into in accordance with Section
6.10(g).
53
<PAGE> 59
Section 7.12. [left blank intentionally]
Section 7.13. [left blank intentionally]
Section 7.14. Amendment of Contractual Obligations.
(a) General. Each Loan Party will not, and will not permit
any other Cedar Group Company, to amend, modify, any, change, waive, cancel or
terminate any material term or condition of (i) an Intercompany Document; (ii)
a Takeover Document; (iii) the Remarketing Agreement; (iv) a Steen Agreement;
(v) any material Contractual Obligation; (vi) any material Performance Bond; or
(vii) any material Permit, in each case without the prior written consent of
the Lender or (in the case of (v) and (vi) above, in the ordinary course of
business consistent with past practice of the Parent).
(b) Takeover Documents. Without limiting the foregoing, each
Loan Party shall not, and shall not permit the Bidder, to (i) at any time after
the Funding Date, extend the period for the close of the offers under the
Bidder's Offer; (ii) make any change to, or fail to comply with, the timetable
for the Takeover as previously disclosed to the Lender; (iii) increase the
offer price for the acquisition of MDC's ordinary shares under the Takeover
above AUD $1.60 per share; (iv) issue, publish or file any document referring
to the Loan, the Facility Documents, the Lender or the Lender in connection
with the Takeover, the Takeover Documents or the Remarketing Agreement; (v)
acquire any shares of MDC other than by way of acceptance of offers under the
Takeover in accordance with its terms; and (vi) resell or remarket any shares
in MDC, whether pursuant to the Remarketing Agreement or otherwise, at a price
less than the price paid by the Bidder in the Takeover (after reduction for
stamp duty and commissions), all without the prior written consent of the
Lender.
Section 7.15. [left blank intentionally]
Section 7.16. Bank Accounts. Each Loan Party and each of its
Subsidiaries will not permit the existence of any bank account except than
those accounts listed on Schedule 4.1(am).
ARTICLE VIII
FINANCIAL COVENANTS
[left blank intentionally]
ARTICLE IX
EVENTS OF DEFAULT
Section 9.1. Events of Default.
54
<PAGE> 60
The occurrence of each of the following events shall be Events
of Default:
(a) Borrower shall fail to make any payment or
payments of principal under this Agreement or the Note on the date
when any such payment becomes due and payable or Dominion Bridge shall
fail to make any payment or payments of principal under an
Intercompany Note when such payment became due and payable; or
(b) the Borrower or Dominion Bridge shall fail to
pay interest under this Agreement, any Note or an Intercompany Note
(as the case may be) when due or the Borrower or Dominion Bridge shall
fail to pay any other amount payable under any Facility Document
within 3 days after the date when same became due and payable; or
(c) any representation or warranty made by the
Borrower, Steen or any Guarantor (or any of its respective officers)
under or in connection with any Facility Document shall prove to have
been incorrect in any material respect when made; or
(d) there shall be a default in the observance or
performance of any term, agreement or covenant contained in Sections
6.8(a), 6.9(e), 6.18 or Article 7 or 8 of this Agreement; or
(e) the Borrower, Steen or any Guarantor shall fail
to perform or observe any term, covenant or agreement contained in
this Agreement and any other Facility Document (excluding any term,
covenant or agreement covered by Section 9.1(a) to (d)), if such
failure shall remain unremedied for a period of 10 days; or
(f) any Cedar Group Company shall fail to pay any
principal of, premium or interest on, or other amount payable in
respect of, any Indebtedness which is outstanding in a principal
amount of at least $500,000 in the aggregate of such Person when the
same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness; or any other
event shall occur or condition shall exist under any agreement or
instrument relating to any such Indebtedness and shall continue after
the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate,
or to permit the acceleration of, the maturity of such Indebtedness or
otherwise cause, or permit the holder thereof to cause, such
Indebtedness to mature; or any such Indebtedness shall be declared to
be due and payable, or required to be prepaid or redeemed (other than
by a regularly scheduled required prepayment or redemption), purchased
or defeased, or an offer to prepay, redeem, purchase or defease such
Indebtedness shall be required to be made, in each case prior to the
stated maturity thereof; or
(g) any Cedar Group Company shall generally not pay
its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against any Cedar Group Company seeking to adjudicate
it a
55
<PAGE> 61
bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debt under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors (including without
limitation, the Bankruptcy and Insolvency Act (Canada) or the
Companies' Creditors Arrangement Act (Canada)), or seeking the entry
of an order for relief or the appointment of a receiver, trustee, or
other similar official for it or for any substantial part of its
Property; or seeking a warrant of attachment, execution or similar
process against any substantial part of its Property and, in the case
of any such proceeding instituted against it (but not instituted by
it), either such proceeding shall remain undismissed or unstayed for a
period of twenty-one (21) days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for
relief against, or the appointment of a receiver, trustee, custodian
or other similar official for, or for any substantial part of, its
property) shall occur; or the relevant Cedar Group Company shall take
corporate action to authorize any of the actions set forth above in
this subsection (g); or
(h) any judgment or order for the payment of money
in excess of $1,000,000 shall be rendered against any Cedar Group
Company and either (i) an enforcement proceeding shall have been
commenced by any creditor upon such judgment or order or (ii) there
shall have been a period of fifteen (15) consecutive days during which
a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(i) any non-monetary judgment or order shall be
rendered against the any Cedar Group Company that might have a
Material Adverse Effect, and there shall be any period of fifteen (15)
consecutive days during which a stay of enforcement or such judgment
or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(j) any provision of any Facility Document
(including an Intercompany Document) after delivery thereof shall for
any reason cease to be valid and binding on, and enforceable against,
the Borrower, Steen or any Guarantor; or
(k) event or condition shall occur or exist with
respect to a Plan that could in the Majority Lender' reasonable
judgment, subject any Loan Party or any of its Subsidiaries to any
tax, penalty or other liabilities under any applicable law or statute
in the aggregate material (as determined by the Lender in the exercise
of its discretion) in relation to the business, operations, Property
or financial or other condition of the Loan Parties taken as a whole
or which has or might have a Material Adverse Effect; or if any Person
commences or threatens to commence any proceeding or otherwise does or
fails to do any act or thing whereby any Plan may be wound up,
terminated or discontinued, in whole or in part, or which may give
rise to any Lien under any law or regulation relating to a Plan; or if
any Termination Event occurs in respect of any Plan;
(l) any Change of Control shall occur; or
56
<PAGE> 62
(m) any Cedar Group Company or any of their
Affiliates contest the validity of any Facility Document (including an
Intercompany Document) or the extent and priority of the Liens granted
in favor of the Lender or the Borrower; or
(n) the Borrower or the Parent shall fail to own at
least the number of outstanding shares in each of their Subsidiaries
as it owned on February 20, 1996; or
(o) any material Lien purported to be created by any
Security Document or Intercompany Security Document shall cease to be,
or shall be asserted by any Cedar Group Company or any of their
Affiliates not to be a valid, perfected Lien in the Properties covered
thereby with the priority stipulated in this Agreement, except to the
extent that any such loss of perfection or priority resulted from the
failure of the Lender to maintain possession of Collateral actually
delivered to it under any of the Pledge Agreements, or otherwise take
any action within its control (including the filing of Lien
Statements, continuation statements or other similar forms); or
(p) any Loan Party or any of its Subsidiaries
violates any Requirement of Law, including without limitation, any
Environmental Law, which results in an Environmental Action Request or
other notice, control order, or cancellation of any Permit, in each
case that has or might have a Material Adverse Effect; or
(q) any Loan Party delivers a notice under section
2362 of the Quebec Civil Code.
(r) the failure by Cedar TCI and the Parent to
receive net proceeds in excess of $10,000,000 for the issue of TCI
Preferred Stock on or before March 29, 1996 or the failure of all such
net proceeds to be received and applied in prepayment of the Loan in
accordance with this Agreement by the close of business (New York
time) on that date.
Section 9.2. [left blank intentionally]
Section 9.3. Acceleration.
If an Event of Default shall occur and be continuing, the by
notice to Borrower may declare the entire unpaid principal amount of the Loan,
all interest accrued and unpaid thereon and all other amounts payable hereunder
and under the other Facility Documents to be forthwith due and payable,
whereupon the entire unpaid principal amount of the Loan, all interest accrued
and unpaid thereon and all other amounts payable hereunder and under the other
Facility Documents shall be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived by Borrower, provided, however, even if there is no notice to
the Borrower, the occurrence of the events described in Section 9.1(g) shall
result in an immediate acceleration of all amounts due by the Borrower under
the Note.
Section 9.4. Remedies Not Exclusive.
57
<PAGE> 63
The remedies provided in this Article 9 and in the other
Facility Documents are cumulative and not exclusive of any remedies provided by
law. The Lender is entitled to exercise any remedies simultaneously or in
whatever order the Lender deems appropriate.
Section 9.5. Rights Under Facility Documents.
Upon the occurrence and during the continuance of any Event of
Default, the Lender may take any lawful action against the Borrower to collect
the payments then due and thereafter to become due under the Facility
Documents.
ARTICLE X
THE AGENT
[left blank intentionally]
ARTICLE XI
ASSIGNMENTS & TRANSFERS
Section 11.1. Successors and Assigns; Participations;
Assignments.
(a) This Agreement shall be binding upon and inure to the
benefit of the Loan Parties, the Lender, all future holders of the Note and
their respective successors and assigns, except that the Loan Parties may not
assign or transfer any of their respective rights or obligations under this
Agreement. The Lender may participate, assign or sell any right or interest in
this Agreement, the Loans or the other Facility Documents with the consent of
the Loan Parties, which consent shall not be unreasonably withheld, or as
required by operation of law, in connection with the merger, consolidation or
dissolution of the Lender.
(b) Each Loan Party hereby agrees that, upon providing
its consent to the Lender for any assignment or participation requested by the
Lender, such Loan Party shall actively assist the Lender in the completion of
any assignment or participation, which shall include, but not be limited to,
providing additional information, being available to prospective assignees or
participants and participating in syndication meetings.
(c) Each Loan Party hereby acknowledges that each
Security Document and other Facility Documents refer to the financial
institutions may be party hereto from time to time as "Lenders" and BT
Commercial Corporation as the "Agent" for the benefit of the Lenders. Each
Loan Party hereby agrees that BT Commercial Corporation has entered into the
Agreement and each Facility Document both as Lender and as Agent in
contemplation of an assignment or a participation being made and that, from and
after any said assignment or participation it shall be the Agent for all such
financial institutions, as lenders in accordance with its standard terms of
Agency and that the parties hereto agree to enter into any additional
documentation as may be necessary in connection with any assignment or
participation.
58
<PAGE> 64
ARTICLE XII
MISCELLANEOUS
Section 12.1. Payment of Expenses.
(a) The Borrower shall, whether or not the transactions
hereby contemplated are consummated, pay all reasonable out-of-pocket costs,
charges and expenses of the Lender in connection with (i) the negotiation,
preparation, execution and delivery of the Facility Documents and the documents
and instruments referred to therein, (ii) the creation, perfection or
protection of any liens securing the Obligations, (iii) the Lender's review and
due diligence and (v) any amendment, waiver, consent, exercise of rights,
release or production (or action taken on request for any of the foregoing,
even if such request is rejected) relating to any of the Facility Documents
(including, without limitation, as to each of the foregoing, the fees and
disbursements of counsel to the Lender and any other attorneys retained by the
Lender).
(b) The Borrower shall pay all out-of-pocket costs and
expenses of the Lender in connection with the preservation of rights under, and
enforcement of, the Facility Documents and the documents and instruments
referred to therein or in connection with any restructuring or rescheduling of
the Obligations (including, without limitation, the fees and disbursements of
counsel for the Lender).
(c) The Borrower agrees that the costs, charges and expenses
referred to in this Section 12, include those payable to any independent
consultant or other person or agent appointed by the Lender, or any Receiver,
administrator, agent or similar controller or any attorney appointed by the
Lender under or in relation to any Facility Document.
(d) The Borrower agrees to pay all such costs and expenses
and or reimburse the Lender as the same are incurred or promptly thereafter.
Section 12.2. Notices.
Except as otherwise expressly provided herein, all notices,
requests and demands to or upon the respective parties hereto to be effective
shall be in writing (including by telecopy or cable communication), and shall
be deemed to have been duly given or made when delivered by hand, or five (5)
days after being deposited in the United States mail, postage prepaid, or, in
the case of telecopy notice, when confirmation is received, or, in the case of
a nationally recognized overnight courier service, one Business Day after
delivery to such courier service, addressed, in the case of each party hereto,
at its address specified opposite its signature below, or to such other address
as may be designated by any party in a written notice to the other parties
hereto, provided that notices and communications to the Lender by the Borrower
shall not be effective until received by the Lender, as the case may be.
Section 12.3. Amendments and Waivers.
59
<PAGE> 65
(a) General. Neither this Agreement, the Note, any other
Facility Document to which the Borrower or any Cedar Group Company is a party
nor any terms hereof or thereof may be amended, supplemented, modified or
waived except in accordance with the provisions of this Section 12.3.
(b) Required Consents. The Lender and the Loan Parties may,
from time to time, enter into written amendments or waivers of this Agreement,
the Note or any of the other Facility Documents, provided, that no such
amendment or waiver to this Agreement shall be effective unless it is in
writing and signed by the Borrower, the Lender and each of the Guarantors
(which consent, in the case of the Guarantors, must be effective in the opinion
of the Lender to avoid operation of Article 2355 of the Quebec Civil Code);
(c) Operation. In the case of any waiver, the Loan Parties,
any applicable Cedar Group Company and the Lender shall be restored to their
former position and rights hereunder and under the outstanding Note, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing, but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
Section 12.4. No Waiver; Remedies.
No failure on the part of the Lender to exercise, no course of
dealing with respect to and no delay in exercising, any right, power or remedy
hereunder or under any Facility Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The rights and remedies provided in this Agreement are
cumulative and not exclusive of any remedies provided in any other Facility
Document by law.
Section 12.5. Binding Effect.
This Agreement shall become effective when it has been
executed by the Borrower, the Lender and the same shall have been delivered to
the Lender, and each of the conditions precedent set forth in Section 3.1 have
been satisfied.
Section 12.6. Indemnity and Contribution.
(a) Indemnity. Each Loan Party hereby jointly and severally
agrees to indemnify and hold harmless the Arranger and the Lender and each of
their respective Affiliates and assignees and their respective directors,
officers, employees, agents and controlling persons (each, an "Indemnified
Party") from and against any and all losses, claims, damages, expenses,
obligations, judgments, costs and liabilities, joint or several, (collectively,
"Loss") to which such Indemnified Party may become subject under any applicable
Requirement of Law and related to or arising out of any transaction
contemplated by the Facility Documents or the execution, delivery and
performance of the Facility Documents or any other document in any way relating
to the Loan and the transactions contemplated by the Facility Documents (except
for federal, state and local taxes) and will reimburse any Indemnified Party
for all expenses (including counsel fees and expenses) as they are incurred in
connection with the investigation of, preparation for or defense of any pending
or threatened claim or any action or proceeding
60
<PAGE> 66
arising therefrom, whether or not such Indemnified Party is a party and whether
or not such claim, action or proceeding is initiated or brought by or on behalf
of the Borrower or any of its Subsidiaries. No Loan Party will be liable under
the foregoing indemnification provision to an Indemnified Party to the extent
that any Loss is found in a final judgment by a court of competent jurisdiction
to have resulted from such Indemnified Party's willful misconduct or gross
negligence. Each of the Loan Parties also agrees that no Indemnified Party
shall have any liability (whether direct or indirect, in contract or tort or
otherwise) to any Cedar Group Company or any security holders or creditors
thereof related to or arising out of the execution, delivery and performance of
any Facility Document or any other document in any way relating to the Loan or
the other transactions contemplated by the Facility Documents, including the
use of the proceeds of the Loan as described in Section 2.10, except to the
extent that any Loss is found in a final judgment by a court to have resulted
from such Indemnified Party's willful misconduct or gross negligence.
(b) Contribution. If the indemnification of an Indemnified
Party provided for in Section 12.6(a) is for any reason held unenforceable, the
Borrower agrees to contribute to the Losses for which such indemnification is
held unenforceable (i) in such proportion as is appropriate to reflect the
relative benefits to the Borrower, the Loan Parties and their Subsidiaries, on
the one hand, and the Lender, the Arranger or the Lender, as the case may be,
on the other hand, of the transactions contemplated by the Facility Documents,
including, without limitation, the Loan and the other transactions contemplated
by any other document in any way relating to the Loan, including the use of the
proceeds of the Loan as described in Section 2.10 (whether or not any of such
transactions are consummated), or (ii) if (but only if) the allocation provided
for in clause (i) is for any reason held unenforceable, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) but also the relative fault of the Loan Parties and their Subsidiaries, on
the one hand, and the Indemnified Parties, on the other hand, as well as any
other relevant equitable considerations. The Borrower agrees that for the
purposes of this Section 12.6(b) the relative benefits to the Loan Parties and
their Subsidiaries on the one hand, and the Indemnified Parties on the other
hand, of the transactions contemplated by this Agreement, including, without
limitation, the Loan and the other transactions contemplated by any other
document in any way relating to any Loan, including the use of the proceeds of
the Loan as described in Section 2.10, shall be deemed to be in the same
proportion that the proceeds of all Loan paid or to be paid to the Borrower
bears to the interest and fees paid or to be paid to the Lender in connection
with the Loan; provided, however, that, to the extent permitted by applicable
law, in no event shall the Indemnified Parties be required to contribute an
aggregate amount in excess of the aggregate interest and fees actually paid to
the Lender in connection with the Loan. The foregoing contribution agreement
shall be in addition to any rights that any Indemnified Party may have at
common law or otherwise. No investigation or failure to investigate by any
Indemnified Party shall impair the foregoing indemnification and contribution
agreement or any right an Indemnified Party may have.
(c) Settlement of Claims. The Borrower agrees that, neither
it nor any Loan Party or their Subsidiaries will settle, compromise or consent
to the entry of any judgment in any pending or threatened claim, action or
proceeding in respect of which indemnification could be sought under this
Section 12.6 (whether or not any Indemnified Party is an actual or potential
party to such claim, action or proceeding), unless such settlement, compromise
or
61
<PAGE> 67
consent includes any unconditional release of each Indemnified Party from all
liability arising out of such claim, action or proceeding.
(d) Appearance Expenses. If an Indemnified Party is
requested or required to appear as a witness in any action brought by or on
behalf of or against a Cedar Group Company or any Affiliate thereof in which
such Indemnified Party is not named as a defendant, the Borrower agrees to
reimburse such Indemnified Party for all reasonable expenses incurred by it in
connection with such Indemnified Party's appearing and preparing to appear as
such a witness, including, without limitation, the reasonable fees and
disbursements of its legal counsel.
(e) Survival. Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 12.6 shall survive the payment in full of
principal and interest hereunder and under the Note.
Section 12.7. Governing Law.
THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.
Section 12.8. Execution in Counterparts.
This Agreement may be executed in any number of counterparts
and by different parties thereto in separate counterparts, each of which when
so executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
Section 12.9. Consent to Jurisdiction, Lender for Service.
(a) Consent. Each Loan Party hereby irrevocably submits to
the jurisdiction of any New York State or Federal court, sitting in the City of
New York, New York County, and any appellate court form any thereof (each, a
"New York Court") in any action or proceeding arising out of or relating to
this Agreement or any other Facility Document or for recognition or enforcement
of any judgment, and each Loan Party hereby irrevocably agrees that all claims
in respect of such action or proceeding may be heard and determined in such New
York Court.
(b) Waivers. Each Loan Party hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any Facility Document in any New York Court. Each Loan Party also hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding. Each Loan
Party agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or by any other manner provided by law.
62
<PAGE> 68
(c) Service. Each Loan Party hereby irrevocably consents to
the service of copies of any summons and complaint and any other process which
may be served in any such action or proceeding by certified mail, return
receipt requested, or by delivering a copy of such process to the relevant Loan
Party, at its address specified in the signature pages or by any other method
permitted by law, in each case with a copy to be sent to Pouliot Mercure (fax
number (514) 875-4308), Attention Brian Riordan.
(d) Appointment of Lender. Each Loan Party designates and
appoints CT Corporation System, 1633 Broadway, New York, New York 10019 and
such other Persons as may irrevocably agree in writing to serve as their
respective agent to receive on their behalf service of all process in any
proceedings in any New York Court, such service being hereby acknowledged by
each Loan Party to be effective and binding in every respect. If any agent
appointed by a Loan Party refuses to receive and forward such service, that
Loan Party hereby agrees that service upon it by mail shall constitute
sufficient service.
(e) Other Rights. Nothing in this Section 12.9 shall affect
the right of the Lender or any Lender to serve legal process in any other
manner permitted by law or affect the right of the Lender or any Lender to
bring any action or proceeding against a Loan Party or its Property in the
courts of other jurisdictions.
Section 12.10. No Third Party Beneficiaries.
The agreement of the Lender to make the Loan on the terms and
conditions set forth in this Agreement is solely for the benefit of the Loan
Parties and no other Person shall have any rights hereunder, as against the
Lender or any Lender or with respect to the Loan or the proceeds thereof.
Section 12.11. Marshalling; Recapture.
The Lender, shall not be under any obligation to marshall any
assets in favor of any Loan Party or any other party or against or in payment
of any or all of the Obligations. To the extent the Lender receives any
payment by or on behalf of a Loan Party, which payment or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to that Loan Party or its estate, trustee, receiver,
custodian or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or
repayment, the obligation or part thereof which has been paid, reduced or
satisfied by the amount so repaid shall be reinstated by the amount so repaid
and shall be included within the liabilities of the Loan Party to such Lender
as of the date such initial payment, reduction or satisfaction occurred.
Section 12.12. Severability.
In case any provision in or obligation under this Agreement or
the Note or the other Facility Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
63
<PAGE> 69
Section 12.13. Survival.
All representations, warranties and indemnities in this
Agreement and any Facility Document shall survive the execution and delivery of
this Agreement and the Note and the making and repayment of the Loan. Each
indemnity in this Agreement or any other Facility Document is separate and
independent from the other Obligations of the Borrower or the other Loan
Parties.
Section 12.14. Limitation of Liability.
No claim may be made by any Loan Party or any other Person
against the Lender or its Affiliates, directors, officers, employees, attorneys
or agents for any special, indirect, consequential or punitive damages in
respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by this Agreement or
the other Facility Documents, or any act, omission or event occurring in
connection therewith; and each Loan Party hereby waives, releases and agrees
not to sue and shall cause each of their Subsidiaries to waive, release or
agree not to sue (if required), upon any claim for any such damages, whether or
not accrued and whether or not known or suspected to exist in its favor.
Section 12.15. Independence of Covenants.
All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or Event of Default if such action is taken or
condition exists.
Section 12.16. Confidentiality.
The Lender agrees (on behalf of itself and each of its
Affiliates, directors, officers, employees and representatives) to keep
confidential, in accordance with its customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, any non-public information supplied to it by a Loan Party
pursuant to this Agreement which is identified by the Borrower as being
confidential at the time the same is delivered to the Lender, provided that
nothing herein shall limit the disclosure of any such information:
(i) to the extent required by statute, rule,
regulation or judicial process;
(ii) at the request of any bank regulatory authority
or in connection with an examination of the Lender or such Lender by
any such authority;
(iii) in connection with any litigation to which
any one or more of the Lender or the Lender is a party;
64
<PAGE> 70
(iv) to the extent that such information is required
to be disclosed by a Governmental Authority in connection with a tax
audit or dispute;
(v) to the Lender's and such Lender's auditors,
counsel and accountants, which, in each case, have a reasonable need
to know such information, as determined by the Lender or such Lender
in their sole reasonable discretion; and
(vi) to any Affiliate, director, officer, employee
or representative who, in each case, have a reasonable need to know
such information as determined by the Lender or such Lender in their
sole reasonable discretion;
and; provided, further, that, (A) each person referred to in subclauses (v) and
(vi) to whom such information is to be disclosed shall be informed of the
confidential nature of such information and (B) unless specifically prohibited
by law, each Lender shall, prior to disclosure of any such non-public
information notify the Borrower of any request for disclosure of any such
non-public information (x) by any Governmental Authority (other than a request
in connection with an examination of the financial condition of the Lender by
such Governmental Authority) or (y) pursuant to legal process. In no event
shall any Lender or the Lender be obligated or required to return any materials
furnished by or on behalf of any Cedar Group Company.
Section 12.17. Waiver of Jury Trial.
EACH OF THE LOAN PARTIES AND THE LENDER HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE FACILITY DOCUMENTS,
ANY DOCUMENT DELIVERED UNDER THE FACILITY DOCUMENTS, THE LOAN OR THE ACTIONS OF
THE LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
THEREOF.
Section 12.18. Language.
The parties have agreed that this Agreement, all other
Facility Documents and all related documents, correspondence and notices
between them should be and will be drafted in the English language. Les
parties conviennent que la presente entente et tous les documents s'y
rattachant, y compris tout avis ou correspondance, ont ete et seront rediges en
langue anglaise.
Section 12.19. [left blank intentionally]
Section 12.20. Currency Indemnity.
The Loan Parties acknowledge and agree that this is a credit
transaction in which specification of U.S. dollars is of the essence and U.S.
dollars shall be the currency of account and payment in all events. If,
pursuant to a judgment or for any other reason, payment
65
<PAGE> 71
shall be made in another currency and such payment, after prompt conversion to
U.S. dollars and transfer to New York City in accordance with normal banking
procedures, falls short of the sum due the Lender in U.S. dollars, the Borrower
shall pay the Lender such shortfall and the Lender shall have a separate cause
of action for such amount.
Section 12.21. Entire Agreement; Benefit.
This Agreement and the other Facility Documents constitute the
entire contract among the parties relative to the subject matter hereof. Any
previous agreement among the parties with respect to the subject matter hereof
is superseded by this Agreement and the Facility Documents, except that neither
the Commitment Letter between the Lender, the Parent and the Borrower dated
February 20, 1996 (except as provided in the next sentence) nor the Fee Letter
shall be affected by this Agreement or any other Facility Document.
Notwithstanding the foregoing, the parties expressly agree that BT Commercial
Corporation shall have no obligation or commitment under the Commitment Letter
to make loans in excess of $30,000,000 in any circumstances.
Section 12.22. Waiver of Immunity.
To the extent that any of the Loan Parties has or hereafter
may acquire any immunity from:
(a) the jurisdiction of any court of (i) any jurisdiction in which any
Loan Party owns or leases property or assets or (ii) the United
States, the State of New York, Canada, Australia, the Turks and Caicos
Islands or any political subdivision thereof; or
(b) from any legal process (whether through service of notice,
attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property and
assets, this Agreement, any Facility Document or actions to enforce
judgments in respect of any thereof,
it hereby irrevocably waives such immunity in respect of its obligations under
the above-referenced documents.
66
<PAGE> 72
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first written above.
CEDAR GROUP CANADA INC.
By
-------------------------------
Name: Michel L. Marengere
Title:
CEDAR GROUP, INC.
By
-------------------------------
Name:
Tile:
DOMINION BRIDGE, INC.
By
-------------------------------
Name:
Tile:
CEDAR GROUP (TCI) INC. LLC
By
-------------------------------
Name:
Tile:
CEDAR GROUP AUSTRALIA PTY LIMITED
By Address for Notices for all above companies
--------------------------- -------------------------------------------
Name: 500 Notre Dame Street
Tile: Lachine, Quebec
H85 2B2 Canada
Attention: Michel L. Marengere
Telephone: (514) 634-3551
Fax: (514) 636-6247
67
<PAGE> 73
BT COMMERCIAL CORPORATION
as Lender and as a Lender
By Address for Notices
--------------------------- -------------------
Name: BT COMMERCIAL CORPORATION
Title: 14 Wall Street, 3rd Floor
New York, New York 10005
Attention: Bruce Addison
Telephone: (212) 618-3481
Fax: (212) 618-2640
<PAGE> 1
CEDAR GROUP, INC.
GUARANTEE
This GUARANTEE, dated as of March 27, 1996 (the "Guarantee"),
is made by CEDAR GROUP, INC., a Delaware corporation (the "Guarantor"), in
favor and for the benefit of BT COMMERCIAL CORPORATION, a Delaware corporation,
as Agent (in such capacity, the "Agent") for the lenders (collectively, with
their successors, indorsees, participants, transferees and assigns, the
"Guaranteed Parties") party to or that become party to the Credit Agreement (as
defined below).
PRELIMINARY STATEMENT
WHEREAS, Cedar Group Canada Inc., a company incorporated under
the Canada Business Corporations Act (the "Borrower"), the Guarantor and
certain of the Guarantor's Subsidiaries, as guarantors, the Guaranteed Parties,
as lenders, and the Agent have entered into the Credit Facility Agreement dated
as of the date of this Guarantee (as the same may from time to time be amended,
supplemented or otherwise modified and in effect, the "Credit Agreement"),
pursuant to which the Guaranteed Parties have agreed, according to the terms of
the Credit Agreement, to make Loans in an aggregate principal amount of up to
$43,000,000 or such other amount as may from time to time be specified in the
Credit Agreement;
WHEREAS, it is a condition precedent to the obligations of the
Guaranteed Parties to make the Loans to the Borrower under the Credit Agreement
that the Guarantor has executed and delivered this Guarantee to the Agent;
WHEREAS, the Guarantor is the sole shareholder of the Borrower
and expects to receive substantial benefit from the execution, delivery and
performance of the Credit Agreement and in connection therewith has agreed to
guarantee all Guaranteed Obligations (defined below) of the Borrower under the
Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing and to
induce the Guaranteed Parties to make their respective Loans, the Guarantor
hereby agrees with the Agent, for the ratable benefit of the Guaranteed
Parties, as follows:
Section 1. Defined Terms.
(a) General. Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to them in the Credit
Agreement.
<PAGE> 2
(b) "Guaranteed Obligations" means all indebtedness,
liabilities and obligations of the Borrower and the Guarantors (as defined in
the Credit Agreement) to the Guaranteed Parties (including fees and expenses,
and including amounts which would become due but for the operation of an
automatic stay under the Bankruptcy Code or similar legislation of any
applicable jurisdiction), whether now existing or hereafter incurred, direct or
indirect, absolute or contingent, secured or not secured, matured or not
matured, joint or several, whether for principal, interest, commissions, fees,
expenses, premiums, indemnities or otherwise, including, without limitation,
all the unpaid principal amount of, and accrued interest on, the Loans
evidenced thereby, and all other amounts due to the Guaranteed Parties from
time to time under, arising out of or in connection with the Credit Agreement
or the other Facility Documents.
(c) "Termination Date" means (subject to reinstatement
pursuant to Section 7 hereof) the earlier of (i) the date on which the Agent is
required to release the Guarantor from its guarantee obligations hereunder and
(ii) the date on which the Guaranteed Obligations have been Fully Satisfied.
Section 2. Guarantee.
(a) The Guarantor hereby unconditionally and irrevocably
guarantees to the Agent, for the benefit of the Guaranteed Parties, as a
primary obligor and not merely as a surety, the prompt and complete payment and
performance by the Borrower and the other Guarantors when due (whether at
stated maturity, by acceleration or otherwise) of the Guaranteed Obligations.
(b) The Guarantor further agrees to pay any and all
reasonable expenses which may be paid or incurred by the Guaranteed Parties in
enforcing any rights with respect to, or collecting, any or all of the
Guaranteed Obligations. The Guarantor hereby agrees to grant to the Agent for
the benefit of the Guaranteed Parties a valid, perfected, first priority Lien
on, and security interest in, all of the assets of the Guarantor.
(c) No payment or payments made by the Borrower, the
Guarantor, any other guarantor or any other Person or received or collected by
the Guaranteed Parties from the Borrower, the Guarantor, any other guarantor or
any other Person by virtue of any action or proceeding, any realization of
collateral or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Guaranteed Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of the
Guarantor hereunder, which shall, notwithstanding any such payment or payments
other than payments made to the Guaranteed Parties by the Guarantor or payments
received or collected by the Guaranteed Parties from the Guarantor, remain
liable for the Guaranteed Obligations until the Guaranteed Obligations are
Fully Satisfied.
2
<PAGE> 3
(d) This Guarantee shall remain in full force and effect
until the Termination Date, notwithstanding that from time to time prior
thereto the Borrower may be free from any Guaranteed Obligations. This
Guarantee shall terminate on the Termination Date. The provisions of Section
2(b) shall survive the termination of this Guarantee, the payment in full of
the Guaranteed Obligations and the termination of the Commitments.
(e) The Guarantor agrees that whenever, at any time, or from
time to time, it shall make any payment to a Guaranteed Party on account of its
liability hereunder, it will notify such Guaranteed Party in writing that such
payment is made under this Guarantee for such purpose.
(f) By its acceptance of the benefits hereof, each Guaranteed
Party agrees to make demand for payment from the Guarantor on account of this
Guarantee through the Agent, not to take any action to enforce this Guarantee
(other than actions contemplated by Section 6) without the consent of the Agent
and to notify the Agent in writing of any payments received by such Guaranteed
Party from any Person other than the Agent (including, without limitation, by
the exercise of any right of set-off) pursuant to this Guarantee.
(g) All payments made by the Guarantor hereunder shall be
made, in accordance with the Credit Agreement, free and clear of, and without
reduction for or on account of, any present or future Taxes. If any Taxes are
required to be withheld from or in respect of any amounts payable to any
Guaranteed Party hereunder by the Guarantor:
(i) the amounts so payable to such Guaranteed Party
shall be increased to the extent necessary to yield to such Guaranteed
Party (after payment of all Taxes) such amounts equal to the amounts
it would have received had no such withholding been made;
(ii) the Guarantor shall make such withholding; and
(iii) the Guarantor shall pay the full amount of the
Taxes to the relevant taxation authority in accordance with applicable
law.
If the Guarantor fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent the required receipts or other
required documentary evidence, the Guarantor shall indemnify each Guaranteed
Party for any incremental taxes, interest or penalties that may become payable
by such Guaranteed Party as a result of any such failure. The provisions of
this paragraph shall survive the termination of this Guarantee and the payment
in full of the Guaranteed Obligations and the termination of the Commitments.
Section 3. No Subrogation.
3
<PAGE> 4
Notwithstanding any payment or payments made by the Guarantor
hereunder or any set-off or application of funds of the Guarantor by any
Guaranteed Party, the Guarantor shall not be entitled to be subrogated to any
of the rights of any Guaranteed Party against the Borrower or any other
guarantor or any collateral security or guarantee or right of offset held by
any Guaranteed Party for the payment of the Guaranteed Obligations, nor shall
the Guarantor be entitled to seek any contribution or reimbursement from the
Borrower or any other guarantor in respect of payments made by the Guarantor
hereunder, until all amounts owing to the Guaranteed Parties by the Borrower on
account of the Guaranteed Obligations are Fully Satisfied. If any amount shall
be paid to the Guarantor on account of such subrogation rights at any time when
all of the Guaranteed Obligations have not been Fully Satisfied, such amount
shall be held by the Guarantor in trust for the Agent, (on behalf of the
Guaranteed Parties), segregated from other funds of the Guarantor, and shall,
forthwith upon receipt by the Guarantor, be turned over to the Agent (on behalf
of the Guaranteed Parties) in the exact form received by the Guarantor (duly
endorsed by the Guarantor, if required), to be applied against the Guaranteed
Obligations, whether matured or unmatured, in such order as the Agent may
determine.
Section 4. Consent by the Guarantor.
(a) Amendments, etc. The Guarantor hereby consents that,
without the necessity of any reservation of rights against the Guarantor and
without notice to or further assent by the Guarantor, any demand for payment of
any of the Guaranteed Obligations made by the Guaranteed Parties may be
rescinded by such Guaranteed Party, and any of the Guaranteed Obligations
continued, and the Guaranteed Obligations, or the liability of any other party
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered or released by any Guaranteed Party; and the Credit
Agreement or other Facility Document and any other document executed and
delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Guaranteed Parties may deem advisable
from time to time in accordance with the Credit Agreement; and any guarantee or
right of offset or any collateral at any time held by any Guaranteed Party for
the payment of the Guaranteed Obligations may be sold, exchanged, waived,
surrendered or released, all without the necessity of any reservation of rights
against the Guarantor and without notice to or further assent by the Guarantor,
which will remain bound hereunder, notwithstanding any such renewal, extension,
modification, acceleration, compromise, amendment, supplement, termination,
sale, exchange, waiver, surrender or release. No Guaranteed Party, nor any
other holder of Guaranteed Obligations, shall have any obligation to protect,
issue or insure any Lien at any time held by it as security for the Guaranteed
Obligations or for this Guarantee or any Property subject thereto.
4
<PAGE> 5
(b) Demands. When making any demand hereunder, the
Guaranteed Parties may, but shall be under no obligation to, make a similar
demand on the Borrower or any other Person or against any collateral security
or guarantee, and any failure by the Guaranteed Parties to make any such demand
or to collect any payments from, or any release of, the Borrower or of any
release of the Guarantor's obligations or liabilities hereunder or any release
of any collateral security or guarantee or any failure by the Guaranteed
Parties to pursue such other rights or remedies or proceed against, realize or
collect any such collateral security or other guarantee, shall not relieve the
Guarantor of any liability hereunder or impair or affect the rights and
remedies, express or implied, or as a matter of law, of the Guaranteed Parties
against the Guarantor hereunder. For the purposes hereof, "demand" shall
include the commencement and continuance of any legal proceedings and pursuing
any other right or remedy hereunder.
Section 5. Guarantee Absolute and Unconditional.
(a) The Guarantor waives any and all notice of the creation,
renewal, extension or accrual of any of the Guaranteed Obligations and notice
of or proof of reliance by any Guaranteed Party upon this Guarantee or
acceptance of this Guarantee. The Guaranteed Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred in
reliance upon this Guarantee. All dealings between the Borrower, the Guarantor
and any other guarantor, on the one hand, and the Guaranteed Parties, on the
other, shall likewise be conclusively presumed to have been had or consummated
in reliance upon this Guarantee.
(b) The Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Borrower
or the Guarantor with respect to the Guaranteed Obligations.
(c) This Guarantee shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to:
(i) the validity, regularity or enforceability of
any Facility Document, any of the Guaranteed Obligations or any
collateral security or guarantee therefor or right of offset with
respect thereto at any time or from time to time held by the
Guaranteed Parties;
(ii) any defense (other than the defense of
payment), set-off or counterclaim that may at any time be available to
or be asserted by the Borrower against the Guaranteed Parties;
(iii) any change in the time, manner or place of any
application of collateral security, or proceeds thereof, to all or any
of the Guaranteed Obligations, or any manner of sale or other
disposition of any collateral security for all or any of the
Guaranteed Obligations or any other assets of any Cedar Group Company;
5
<PAGE> 6
(iv) any change, restructuring or termination of the
corporate structure or existence of any Cedar Group Company; or
(v) any other circumstance whatsoever (with or
without notice to or knowledge of the Borrower or the Guarantor) which
constitutes, or might be construed to constitute, an equitable or
legal discharge of the Borrower or any other guarantor for the
Guaranteed Obligations, or of the Guarantor under this Guarantee, in
bankruptcy or in any other instance.
(d) The obligations and liabilities of the Guarantor
hereunder shall not be conditioned or contingent upon the pursuit by any
Guaranteed Party or any other Person at any time of any right or remedy against
the Borrower or against any other Person which may be or become liable in
respect of all or any part of the Guaranteed Obligations or against any
collateral security or guarantee therefor or right of offset with respect
thereto.
(e) This Guarantee shall remain in full force and effect and
be binding in accordance with and to the extent of its terms upon the Guarantor
and its successors and assigns, and shall inure to the benefit of the Lenders,
and their respective successors and assigns.
(f) For purposes of any proceeding in the Province of Quebec,
Canada, the Guarantor hereby binds itself as co-debtor of the Borrower to the
Credit Agreement and waives the benefits of division and discussion.
Section 6. Right of Setoff.
In addition to any rights now or hereafter granted under
applicable law or otherwise, and not by way of limitation of any such rights,
upon the occurrence and during the continuance of any Event of Default, each
Guaranteed Party is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to the Guarantor or to
any other Person, any such notice being hereby expressly waived, to set-off and
to appropriate and apply any and all deposits (general or special, time or
demand, provisional or final) in any currency and any other Indebtedness at any
time held or owing by such Guaranteed Party (including, without limitation, by
branches and agencies of such Guaranteed Party wherever located) to or for the
credit or the account of the Guarantor against and on account of the Guaranteed
Obligations and liabilities of the Guarantor to the Guaranteed Parties under
this Guarantee or under any other Facility Document, including, without
limitation, all interests in the Guaranteed Obligations of the Guarantor
purchased by any Guaranteed Party pursuant to Section 11 of the Credit
Agreement, and all other claims of any nature or description arising out of or
in
6
<PAGE> 7
connection with this Guarantee or any other Facility Document, irrespective of
whether or not any Guaranteed Party shall have made any demand hereunder and
although any of the Guaranteed Obligations, liabilities or claims, or any of
them, shall be contingent or unmatured. The Guaranteed Parties agree that the
operation of this section shall be subject to the provisions of Section 2.14 of
the Credit Agreement.
Section 7. Effectiveness; Reinstatement.
This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Guaranteed Obligations is rescinded or must otherwise be restored or
returned by any Guaranteed Party upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or the Guarantor, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Borrower or any substantial part of its
property, or the Guarantor or any substantial part of its property, or
otherwise, all as though such payments had not been made.
Section 8. Payment of Obligations.
The Guarantor hereby guarantees that the amounts payable by it
under this Guarantee will be paid to the Agent (for the benefit of the
Guaranteed Parties) without set-off or counterclaim in lawful currency of the
United States of America to the office of the Agent designated in Section 2.9
of the Credit Agreement or such other office that the Agent may designate in
writing. The Guarantor shall make any payments required hereunder immediately
upon receipt of written notice thereof from any Guaranteed Party; provided,
however, that the failure of the Borrower or any Guaranteed Party to give such
notice shall not affect the Guarantor's obligations hereunder.
Section 9. No Waiver; Cumulative Remedies.
(a) No failure on the part of the Agent or any Guaranteed
Party to exercise, no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or remedy hereunder
shall preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The rights and remedies herein provided are
cumulative, and are not exclusive of any rights or remedies provided by any
other Facility Document or by law.
(b) In the event the Agent or any of the Guaranteed Parties
shall have instituted any proceeding to enforce any right, power or remedy
under this Guarantee by sale or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined
adversely to the Guaranteed Parties, then and in every such case, the
Guarantor, the Agent and each Guaranteed Party shall be restored to
7
<PAGE> 8
its respective former position and right hereunder with respect to the
Collateral, and all rights, remedies and powers of the Agent and the Guaranteed
Parties shall continue as if no such proceeding had been instituted.
Section 10. Representations, Warranties and Covenants.
(a) The Guarantor represents and warrants that each of the
statements made in Article 4 of the Credit Agreement are true and correct.
(b) The Guarantor hereby agrees that until the Termination
Date, it will, and will cause each of its Subsidiaries, to comply with each of
the covenants set forth in Articles 5, 6, 7 and 8 of the Credit Agreement.
Section 11. Notices.
All notices or other communications herein required to be
given shall be given at the address and in the manner required in the Credit
Agreement (unless notice of a different address is given in writing by one
party to the other in the manner required in the Credit Agreement).
Section 12. Modification in Writing.
No amendment, modification, supplement, termination or waiver
of or to any provision of this Guarantee, nor consent to any departure by the
Guarantor therefrom, shall be effective unless the same shall be in writing and
signed by the Agent and in accordance with the terms of the Credit Agreement.
Any amendment, modification or supplement of or to any provision of this
Guarantee, any waiver of any provision of this Guarantee, and any consent to
any departure by the Guarantor from the terms of any provision of this
Guarantee, shall be effective only in the specific instance and for the
specific purpose for which made or given. Except where notice is specifically
required by this Guarantee, no notice to or demand on the Guarantor in any case
shall entitle the Guarantor to any other or further notice or demand in similar
or other circumstances.
Section 13. Assignment Prohibited.
The Guarantor may not assign or transfer any of its rights,
obligations or interests hereunder.
Section 14. Ratable Sharing.
The Guaranteed Parties, by acceptance of this Guarantee, agree
among themselves that with respect to all amounts received by them which are
applicable to the payment of obligations of the Guarantor under this Guarantee,
if the Guaranteed Parties
8
<PAGE> 9
exercise their rights hereunder, including, without limitation, acceleration of
the obligations of the Guarantor hereunder, equitable adjustment will be made
so that, in effect, all such amounts will be shared among the Guaranteed
Parties pro rata based on the relative outstanding Guaranteed Obligations owed
to each Guaranteed Party at such time. The Guarantor expressly consents to
this arrangement.
Section 15. Authority of Agent.
The Guarantor acknowledges that the rights and
responsibilities of the Agent under this Guarantee with respect to any action
taken by the Agent or the exercise or non-exercise by the Agent of any option,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Guarantee shall, as between the Guaranteed Parties, be
governed by the Credit Agreement, but, as between the Agent and the Guarantor,
the Agent shall be conclusively presumed to be acting as agent for the
Guaranteed Parties with full and valid authority so to act or refrain from
acting, and the Guarantor shall not be under any obligation, or entitlement, to
make any inquiry respecting such authority.
Section 16. Governing Law.
THIS GUARANTEE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.
Section 17. Severability of Provisions.
In case any provision in or obligation under this Guarantee
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
Section 18. Currency Indemnity.
The Guarantor acknowledges and agrees that this Guarantee
constitutes a credit transaction in which specification of U.S. dollars is of
the essence, and U.S. dollars shall be the currency of account and payment in
all events. If pursuant to a judgment or for any other reason payment shall be
made in another currency, and such payment after prompt conversion to U.S.
dollars and transfer to New York City in accordance with normal banking
procedures falls short of the sum due the Guaranteed Parties in U.S. dollars,
the Guarantor shall pay the Guaranteed Parties such shortfall and the
Guaranteed Parties shall have a separate cause of action for such amount.
9
<PAGE> 10
Section 19. Consent to Jurisdiction; Agent for Service.
(a) Consent. The Guarantor hereby irrevocably submits to the
jurisdiction of any New York State or Federal court, sitting in the City of New
York, New York County, and any appellate court form any thereof (each, a "New
York Court") in any action or proceeding arising out of or relating to this
Guarantee or for recognition or enforcement of any judgment, and the Guarantor
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York Court.
(b) Waivers. The Guarantor hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Guarantee in
any New York Court. The Guarantor also hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The Guarantor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or by any other manner
provided by law.
(c) Service. The Guarantor hereby irrevocably consents to
the service of copies of any summons and complaint and any other process which
may be served in any such action or proceeding by certified mail, return
receipt requested, or by delivering a copy of such process to the Guarantor, at
its address specified in the signature pages of the Credit Agreement or by any
other method permitted by law, in each case, with a copy by telecopy to Pouliot
Mercure at (514) 875-4308, attention Brian Riordan.
(d) Appointment of Agent. The Guarantor designates and
appoints CT Corporation System, 1633 Broadway, New York, New York 10019 and
such other persons as may irrevocably agree in writing to serve as its agent to
receive on its behalf service of all process in any proceedings in any court,
such service being hereby acknowledged by the Guarantor to be effective and
binding in every respect. If any agent appointed by a Guarantor refuses to
receive and forward such service, the Guarantor hereby agrees that service upon
it by mail shall constitute sufficient service.
(e) Other Rights. Nothing in this Section 19 shall affect
the right of the Agent or any Guaranteed Party to serve legal process in any
other manner permitted by law or affect the right of the Agent or any
Guaranteed Party to bring any action or proceeding against the Guarantor or its
Property in the courts of other jurisdictions.
Section 20. Indemnity.
(a) The Guarantor agrees to indemnify, pay and hold harmless
the Agent and the Guaranteed Parties and each of their respective Affiliates
and assignees and their
10
<PAGE> 11
respective officers, directors, employees, agents and affiliates of the Agent
and each of the Guaranteed Parties (collectively called the "Indemnitees") from
and against any and all other Losses, expenses or disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto), which may
be imposed on, incurred by, or asserted against that Indemnitee, in any manner
relating to or arising out of this Guarantee (including, without limitation,
any misrepresentation by the Guarantor in this Guarantee) (the "indemnified
liabilities"); provided, however, that the Guarantor shall not have any
obligation to an Indemnitee hereunder with respect to an indemnified liability
to the extent that such indemnified liability is determined by a court of
competent jurisdiction in a final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of that Indemnitee. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in
the preceding sentence may be unenforceable because it is violative of any law
or public policy, the 9 Guarantor shall contribute the maximum portion which it
is permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all indemnified liabilities incurred by the Indemnitees or any
of them.
(b) Survival. The obligations of the Guarantor
contained in this Section 20 shall survive the termination of this Guarantee
and the discharge of the Guarantor's other obligations under this Guarantee and
the other Facility Documents.
Section 21. Waiver of Jury Trial.
THE GUARANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO ANY OF THE FACILITY DOCUMENTS, ANY DOCUMENT DELIVERED UNDER THE
FACILITY DOCUMENTS, THE LOAN OR THE ACTIONS OF THE AGENT, THE ARRANGER OR ANY
LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
Section 22. Language.
The parties have agreed that this Guarantee and all related
documents, correspondence and notices between them should be and will be
drafted in the English language. Les parties conviennent que la presente
entente et tous les documents s'y rattachant, y compris tout avis ou
correspondance, ont ete et seront rediges en langue anglaise.
Section 23. Agency.
11
<PAGE> 12
The Guarantor acknowledges that a number of its Subsidiaries
have agreed to or, from time to time, will execute and deliver guarantees to
the Agent guaranteeing the Guaranteed Obligations. The Guarantor also
recognizes that these Subsidiaries have agreed or will agree to appoint the
Guarantor as their agent and representative in all dealings with the Agent and
the Guaranteed Parties in relation to the Facility Documents and the Guarantor
hereby accepts such appointment and agrees to notify and keep each such
Subsidiary fully informed of all relevant arrangements to the extent required
by law.
Section 24. Limitation of Liability.
No claim may be made by the Guarantor or any other Person
against the Agent or any Guaranteed Party or the Affiliates, directors,
officers, employees, attorneys or agent of any of them for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Guarantee, or any act, omission or event
occurring in connection therewith; and the Guarantor hereby waives, releases
and agrees not to sue upon any claim for any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
12
<PAGE> 13
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer on the day and
year first written above.
CEDAR GROUP, INC.
By:
-------------------------
Name:
Title:
ACCEPTED BY: BT COMMERCIAL CORPORATION
As Agent
By:
---------------------------
Name:
Title:
<PAGE> 1
CEDAR GROUP, INC.
PLEDGE AGREEMENT
This PLEDGE AGREEMENT, dated as of March 27, 1996 (as the same
may from time to time be amended, supplemented or otherwise modified, the
"Agreement"), is made by CEDAR GROUP, INC. (the "Pledgor"), in favor and for
the benefit of BT COMMERCIAL CORPORATION, a Delaware corporation, as agent (in
such capacity, the "Agent") for the lenders (collectively, with their
successors, indorsees, participants, transferees and assigns, the "Secured
Parties") party to or that become party to the Credit Agreement (as defined
below).
PRELIMINARY STATEMENT
WHEREAS, Cedar Group Canada Inc., a company incorporated under
the Canada Business Corporations Act (the "Borrower"), the Pledgor and certain
of its subsidiaries, as guarantors, the Secured Parties and the Agent have
entered into a Credit Facility Agreement, dated as of the date of this
Agreement (as the same may from time to time be amended, supplemented or
otherwise modified and in effect, the "Credit Agreement"), pursuant to which
the Secured Parties have agreed, according to the terms of the Credit
Agreement, to make Loans in an aggregate principal amount of up to $43,000,000
or such other amount as may from time to time be specified in the Credit
Agreement;
WHEREAS, the Pledgor has guaranteed the Obligations of the
Borrower described above pursuant to a Guarantee in favor of and for the
benefit of the Agent, as Agent for the Lenders, dated as of the date of this
Agreement (as amended, supplemented and otherwise modified from time to time,
the "Guarantee");
WHEREAS, the Pledgor is the legal and beneficial owner of the
Pledged Collateral (as defined below);
WHEREAS, it is a condition precedent to the obligations of the
Secured Parties to make the Loans to the Borrower under the Credit Agreement
that the Pledgor execute and deliver this Agreement to the Agent.
NOW, THEREFORE, in consideration of the foregoing and to
induce the Secured Parties to make their respective Loans, the Pledgor agrees
with the Agent, for the ratable benefit of the Secured Parties, as follows:
<PAGE> 2
Section 1. Defined Terms.
(a) General. Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to them in the Credit
Agreement.
(b) "Secured Obligations" means collectively (a) all
Obligations of the Pledgor now existing or hereafter arising under or in
respect of the Guarantee, including, without limitation, the obligations of the
Pledgor to pay principal, interest and all other charges, fees, expenses,
commissions, reimbursements, premiums, indemnities and other payments related
to or in respect of the Obligations of the Borrower contained in or relating to
the Credit Agreement, and (b) without duplication of the amounts described in
clause (a), all obligations of the Pledgor now existing or hereafter arising
under or in respect of this Agreement or any other Facility Document.
(c) "Termination Date" means (subject to reinstatement
pursuant to the terms of the Guarantee) the earlier of (i) the date on which
the Agent is required to release the Pledgor from its Guaranteed Obligations
and (ii) the date on which the Guaranteed Obligations have been Fully
Satisfied.
Section 2. Pledge.
As collateral security for the payment and performance when
due (whether at stated maturity, by acceleration or otherwise) of all the
Secured Obligations, the Pledgor hereby pledges, assigns, transfers and grants
to the Agent for its benefit and the benefit of the Secured Parties, a
continuing first priority security interest in and to all of the rights, title
and interest of the Pledgor in, to and under the following property, whether
now existing or hereafter acquired, (the "Pledged Collateral") and for the
purposes of the laws of the Province of Quebec, the Pledgor hereby hypothecates
in favor of the Secured Parties the Pledged Collateral for the principal amount
of CDN$100,000,000, bearing interest at the rate provided in the Credit
Agreement:
(a) issued and outstanding shares of Capital Stock
listed on Schedule A hereto of each Person listed on Schedule A hereto
(the "Pledged Shares") (which are and shall remain at all times until
this Agreement terminates, certificated shares), including the
certificates representing the Pledged Shares and any interest of the
Pledgor in the entries on the books of any financial intermediary
pertaining to the Pledged Shares;
(b) all additional shares of Capital Stock of any
issuer of the Pledged Shares from time to time acquired by the Pledgor
in any manner (which will be and shall remain at all times until this
Agreement terminates, certificated shares) (which shares shall be
deemed to be part of the Pledged Shares), including the certificates
representing such additional shares and any interest of the Pledgor
2
<PAGE> 3
in the entries on the books of any financial intermediary pertaining
to such additional shares;
(c) all dividends, cash, options, warrants, rights,
instruments, distributions, returns of capital, income, profits and
other property, interests or proceeds from time to time received,
receivable or otherwise distributed to the Pledgor in respect of or in
exchange for any or all of the Pledged Shares (collectively,
"Distributions"); and
(d) all Proceeds (as defined under the Uniform
Commercial Code ("UCC") or under other relevant law) of any of the
foregoing, and in any event, including, without limitation, any and
all (i) proceeds of any insurance, indemnity, warranty or guarantee
payable to the Agent or to the Pledgor from time to time with respect
to any of the Pledged Collateral, (ii) payments (in any form
whatsoever) made or due and payable to the Pledgor from time to time
in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Pledged Collateral by
any Governmental Authority (or any person acting under color of a
Governmental Authority), (iii) instruments representing obligations to
pay amounts in respect of Pledged Shares, (iv) products of the Pledged
Collateral, and (v) other amounts from time to time paid or payable
under or in connection with any of the Pledged Collateral.
This Agreement secures, and the Pledged Collateral is collateral security for,
the payment and performance in full when due, whether at stated maturity, by
acceleration or otherwise (including, without limitation, the payment of
interest and other amounts which would accrue and become due but for the filing
of a petition in bankruptcy or the operation of an automatic stay under any
applicable bankruptcy, insolvency or similar law) of the Secured Obligations.
Section 3. No Release.
Nothing set forth in this Agreement shall relieve the Pledgor
from the performance of any term, covenant, condition or agreement on the
Pledgor's part to be performed or observed under or in respect of any of the
Pledged Collateral or from any liability to any Person under or in respect of
any of the Pledged Collateral or shall impose any obligation on the Agent or
any Secured Party to perform or observe any such term, covenant, condition or
agreement on the Pledgor's part to be so performed or observed or shall impose
any liability on the Agent or any Secured Party for any act or omission on the
part of the Pledgor relating thereto or for any breach of any representation or
warranty on the part of the Pledgor contained in this Agreement or under or in
respect of the Pledged Collateral or made in connection herewith or therewith.
3
<PAGE> 4
Section 4. Delivery of Pledged Collateral.
(a) All certificates, agreements or instruments representing
or evidencing the Pledged Collateral, to the extent not previously delivered to
the Agent, shall immediately upon receipt thereof by the Pledgor be delivered
to and held by or on behalf of the Agent pursuant hereto. All Pledged
Collateral shall be in suitable form for transfer by delivery or shall be
accompanied by duly executed instruments of transfer or assignment in blank,
all in form and substance satisfactory to the Agent. The Agent shall have the
right, at any time upon the occurrence and during the continuance of an Event
of Default and without notice to the Pledgor, to endorse, assign or otherwise
transfer to or to register in the name of the Agent or any of its nominees any
or all of the Pledged Collateral. In addition, the Agent shall have the right
at any time after the occurrence and during the continuance of an Event of
Default to exchange certificates representing or evidencing Pledged Collateral
for certificates of smaller or larger denominations.
(b) If the issuer of Pledged Shares is incorporated in a
jurisdiction which does not permit the use of certificates to evidence equity
ownership, then the Pledgor shall, to the extent permitted by applicable law,
record such pledge on the stock register of the issuer, execute any customary
stock pledge forms or other documents necessary or appropriate to complete the
pledge and give the Agent the right to transfer such Pledged Shares under the
terms hereof and provide to the Agent an opinion of counsel, in form and
substance satisfactory to the Agent, confirming such pledge.
Section 5. Supplements; Further Assurances.
(a) The Pledgor agrees that at any time and from time to
time, at its sole cost and expense, it shall promptly execute and deliver all
further instruments and documents, including, without limitation, supplemental
or additional Lien Statements and take all further action that may be necessary
or that the Agent may request, in order to perfect and protect the pledge,
security interest and Lien granted or purported to be granted hereby or to
enable the Agent to exercise and enforce its rights and remedies hereunder with
respect to any Pledged Collateral.
(b) The Pledgor shall, upon obtaining any Pledged Shares of
any Person, promptly (and in any event within five Business Days) deliver to
the Agent a pledge amendment, duly executed by the Pledgor, in substantially
the form of Exhibit 1 hereto (each, a "Pledge Amendment"), in respect of the
additional Pledged Shares which are to be pledged pursuant to this Agreement,
and confirming the attachment of the Lien hereby created on and in respect of
such additional shares. The Pledgor hereby authorizes the Agent to attach each
Pledge Amendment to this Agreement and agrees that all Pledged Shares listed on
any Pledge Amendment delivered to the Agent shall for all purposes hereunder be
considered Pledged Collateral.
4
<PAGE> 5
Section 6. Representations, Warranties and Covenants.
The Pledgor represents, warrants or covenants (as applicable)
as follows:
(a) Corporate Power. The Pledgor is duly organized and
validly existing in good standing under the laws of the jurisdiction of its
formation and has the corporate power and authority and the legal right to
execute and deliver, to perform its obligations under, and to grant the Lien on
the Pledged Collateral pursuant to, this Agreement and has taken all necessary
corporate action to authorize its execution, delivery and performance of, and
grant of the Lien on the Pledged Collateral pursuant to, this Agreement.
(b) Enforceability. The Pledgor has duly executed and
delivered this Agreement and it constitutes a legal, valid and binding
obligation of the Pledgor, enforceable in accordance with its terms.
(c) No Violation. The execution, delivery and performance of
this Agreement will not violate any provision of any Requirement of Law or any
agreement, document or instrument of the Pledgor and will not result in the
creation or imposition of any Lien on any of the properties or revenues of the
Pledgor pursuant to any Requirement of Law or any agreement, document or
instrument, except as contemplated hereby.
(d) No Liens. The Pledgor is, and at the time of any
delivery of any Pledged Collateral to the Agent pursuant to Section 4 of this
Agreement will be, the sole legal and beneficial owner of the Pledged
Collateral. All Pledged Collateral is on the date hereof, and will be, so
owned by the Pledgor free and clear of any Liens except for the Lien created by
this Agreement.
(e) No Consents, etc. No consent of any party (including,
without limitation, stockholders or creditors of the Pledgor) (other than
consents which have been obtained by the Pledgor in writing and delivered to
the Agent) and no consent, authorization, approval, or other action by, and no
notice to or filing with, any Governmental Authority or regulatory body or
other Person is required (x) for the execution, delivery or performance of this
Agreement by the Pledgor or for the pledge by the Pledgor of the Pledged
Collateral pursuant to this Agreement, or (y) for the exercise by the Agent of
the voting or other rights provided for in this Agreement, or (z) for the
exercise by the Agent of the remedies in respect of the Pledged Collateral
pursuant to this Agreement.
(f) Due Authorization and Issuance. All of the Pledged
Shares have been, and to the extent hereafter issued will be upon such
issuance, duly authorized and validly issued and fully paid and nonassessable.
(g) Chief Executive Office. The Pledgor's chief executive
office is as of the date hereof located at 500 Notre-Dame Street, Lachine,
Quebec, H8S 2B2 Canada.
5
<PAGE> 6
The Pledgor shall not move its chief executive office except to such new
location as the Pledgor may establish in accordance with the Facility
Documents.
(h) Delivery of Pledged Collateral; Filings. The Pledgor has
delivered to the Agent all certificates representing the Pledged Shares
intended to be pledged pursuant to this Agreement and has caused to be filed
with all appropriate Governmental Authorities as described in the Credit
Agreement all necessary forms or Lien Statements evidencing the Lien created by
this Agreement, and such delivery, filing and pledge of the Pledged Collateral
pursuant to this Agreement creates a valid and perfected first priority
security interest in the Pledged Collateral securing the payment of the Secured
Obligations pursuant to the Lien Legislation in effect in each applicable
jurisdiction.
(i) Pledged Collateral. All information set forth herein,
including the Schedules annexed hereto, relating to the Pledged Collateral is
accurate and complete in all material respects.
(j) Ownership of Pledged Collateral. Except as otherwise
permitted by the Credit Agreement, the Pledgor at all times will be the sole
beneficial owner of the Pledged Collateral.
(k) No Options, Warrants, etc. There are no options,
warrants, calls, rights, commitments or agreements of any character to which
the Pledgor is a party or by which it is bound obligating the Pledgor to issue,
deliver or sell or cause to be issued, delivered or sold, additional Pledged
Shares or obligating the Pledgor to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement. There are no voting
trusts or other agreements or understandings to which the Pledgor is a party
with respect to the voting of the capital stock of any issuer of the Pledged
Shares.
(l) Other. The Pledgor hereby represents and warrants that
each of the statements set forth in Article 4 of the Credit Agreement is true
and correct.
Section 7. Voting Rights; Distributions; etc.
(a) So long as no Event of Default shall have occurred:
(i) The Pledgor shall be entitled to exercise any
and all voting and other consensual rights pertaining to the Pledged
Shares or any part thereof for any purpose not inconsistent with the
terms or purpose of this Agreement or any other Facility Document;
provided, however, that the Pledgor shall not in any event exercise
such rights in any manner which may have a material adverse effect on
the value of the Pledged Collateral or the security intended to be
provided by this Agreement.
6
<PAGE> 7
(ii) Subject to the terms of the Facility Documents,
the Pledgor shall be entitled to receive and retain, and to utilize
free and clear of the Lien of this Agreement, any and all
Distributions, but only if and to the extent made in accordance with
the provisions of the Facility Documents; provided, however, that any
and all such Distributions consisting of rights or interests in the
form of securities shall be, and shall be forthwith delivered to the
Agent to hold as Pledged Collateral and shall, if received by the
Pledgor, be received in trust for the benefit of the Agent, be
segregated from the other property or funds of the Pledgor, and be
forthwith delivered to the Agent as Pledged Collateral in the same
form as so received (with any necessary endorsement).
(iii) The Agent shall be deemed without further
action or formality to have granted to the Pledgor all necessary
consents relating to voting rights and shall, if necessary, upon
written request of the Pledgor and at the Pledgor's sole cost and
expense, from time to time execute and deliver (or cause to be
executed and delivered) to the Pledgor all such instruments as the
Pledgor may reasonably request in order to permit the Pledgor to
exercise the voting and other rights which it is entitled to exercise
pursuant to Section 7(a)(i) hereof and to receive the Distributions
which it is authorized to receive and retain pursuant to Section
7(a)(ii) hereof.
(b) Upon the occurrence of an Event of Default:
(i) All rights of the Pledgor to exercise the voting
and other consensual rights it would otherwise be entitled to exercise
pursuant to Section 7(a)(i) hereof without any action or the giving of
any notice shall cease, and all such rights shall thereupon become
vested in the Agent, which shall thereupon have the sole right to
exercise such voting and other consensual rights.
(ii) All rights of the Pledgor to receive
Distributions which it would otherwise be authorized to receive and
retain pursuant to Section 7(a)(ii) hereof shall cease and all such
rights shall thereupon become vested in the Agent, which shall
thereupon have the sole right to receive and hold as Pledged
Collateral such Distributions.
(c) The Pledgor shall, at its sole cost and expense, from
time to time execute and deliver to the Agent appropriate instruments as the
Agent may reasonably request in order to permit the Agent to exercise the
voting and other rights which it may be entitled to exercise pursuant to
Section 7(b)(i) hereof and to receive all Distributions which it may be
entitled to receive under Section 7(b)(ii) hereof.
(d) All Distributions which are received by the Pledgor
contrary to the provisions of Section 7(b)(ii) hereof shall be received in
trust for the benefit of the Agent,
7
<PAGE> 8
shall be segregated from other funds of the Pledgor and shall immediately be
paid over to the Agent as Pledged Collateral in the same form as so received
(with any necessary endorsement).
Section 8. Transfers and Other Liens; Additional Shares.
(a) The Pledgor shall not (i) sell, convey, assign or
otherwise dispose of, or grant any option, right or warrant with respect to,
any of the Pledged Collateral permitted by the Credit Agreement, (ii) create or
permit to exist any Lien upon or with respect to any Pledged Collateral, or
(iii) permit the issuer of any Pledged Shares to merge, consolidate or change
its legal form, except in each case as permitted by the Credit Agreement.
(b) The Pledgor shall (i) cause each issuer of the Pledged
Shares not to issue any stock or other securities in addition to or in
substitution for the Pledged Shares issued by such issuer, except to the
Pledgor and (ii) pledge hereunder, immediately upon its acquisition (directly
or indirectly) thereof, any and all additional shares of capital stock or other
equity securities of the issuer of the Pledged Shares which are required to be
pledged hereunder.
Section 9. Reasonable Care.
The Agent shall be deemed to have exercised reasonable care in
the custody and preservation of the Pledged Collateral in its possession if
such Pledged Collateral is accorded treatment substantially equivalent to that
which the Agent, in its individual capacity, accords its own property
consisting of similar instruments or interests, it being understood that
neither the Agent nor any of the Secured Parties shall have responsibility for
(i) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relating to any Pledged
Collateral, whether or not the Agent or any other Secured Party has or is
deemed to have knowledge of such matters, or (ii) taking any necessary steps to
preserve rights against any Person with respect to any Pledged Collateral.
Section 10. Remedies; Decisions Relating to Exercise of
Remedies.
(a) If any Event of Default shall have occurred and be
continuing, the Agent shall have the right, in addition to other rights and
remedies provided for herein or otherwise available to it to be exercised from
time to time, (i) to retain and apply the Distributions to the Secured
Obligations as provided in Section 11 hereof, and (ii) to exercise all the
rights and remedies of a secured party in default under any applicable Lien
Legislation at that time, and the Agent may also in its sole discretion,
without notice
8
<PAGE> 9
except as specified below, sell the Pledged Collateral or any part thereof
(including, without limitation, any partial interest in the Pledged Shares) in
one or more parcels at public or private sale, at any exchange, broker's board
or at any of the Agent's offices or elsewhere, for cash, on credit or for
future delivery, and at such price or prices and upon such other terms as the
Agent may deem commercially reasonable, irrespective of the impact of any such
sales on the market price of the Pledged Collateral. The Agent or any other
Secured Party or any of their respective Affiliates may be the purchaser of any
or all of the Pledged Collateral at any such sale and shall be entitled, for
the purpose of bidding and making settlement or payment of the purchase price
for all or any portion of the Pledged Collateral sold at such sale, to use and
apply any of the Secured Obligations owed to such Person as a credit on account
of the purchase price of any Pledged Collateral payable by such Person at such
sale. Each purchaser at any such sale shall acquire the property sold
absolutely free from any claim or right on the part of the Pledgor, and the
Pledgor hereby waives, to the fullest extent permitted by law, all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
The Pledgor acknowledges and agrees that, to the extent notice of sale shall be
required by law, fifteen (15) days' notice to the Pledgor of the time and place
of any public sale or the time after which any private sale or other intended
disposition is to take place shall constitute reasonable notification of such
matters. No notification need be given to the Pledgor if it has signed, after
the occurrence of an Event of Default, a statement renouncing or modifying any
right to notification of sale or other intended disposition. The Agent shall
not be obligated to make any sale of Pledged Collateral regardless of notice of
sale having been given. The Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned. The Pledgor hereby waives, to the fullest extent permitted by
law, any claims against the Agent arising by reason of the fact that the price
at which any Pledged Collateral may have been sold at such a private sale was
less than the price which might have been obtained at a public sale, even if
the Agent accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree.
(b) The Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, and applicable state or
foreign securities laws, the Agent may be compelled, with respect to any sale
of all or any part of the Pledged Collateral, to limit purchasers to Persons
who will agree, among other things, to acquire the Pledged Collateral for their
own account, for investment and not with a view to the distribution or resale
thereof. The Pledgor acknowledges that any such private sales may be at prices
and on terms less favorable to the Agent than those obtainable through a public
sale without such restrictions (including, without limitation, a public
offering made pursuant to a registration statement under the Securities Act or
any prospectus or public offering documents issued under the laws of Canada),
and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner and that
the Agent shall have no obligation to engage in public
9
<PAGE> 10
sales and no obligation to delay the sale of any Pledged Collateral for the
period of time necessary to permit the issuer thereof to register it for a form
of public sale requiring registration under any applicable state securities
laws (including U.S. or Canadian legislation), even if such issuer would agree
to do so.
(c) In addition to any of the other rights and remedies
hereunder, the Agent shall have the right to institute a proceeding seeking
specific performance in connection with any of the agreements or obligations
hereunder.
(d) Notwithstanding any other provision of this Agreement to
the contrary, if, after giving effect to (i) any sale, transfer or other
disposition of any or all of the Pledged Collateral pursuant hereto and after
the application of the proceeds hereunder to the Secured Obligations and (ii)
the sale, transfer or other disposition of any collateral pledged pursuant to
any other Security Document and the application of such proceeds thereunder,
any Secured Obligations remain unpaid or unsatisfied, the Pledgor shall remain
liable for the unpaid and unsatisfied amount of such Secured Obligations for
which the Pledgor is otherwise liable pursuant to the Guarantee, the Credit
Agreement or otherwise.
Section 11. Application of Proceeds.
All Distributions held from time to time by the Agent and all
proceeds received by the Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Pledged Collateral pursuant to
the exercise by the Agent of its remedies as a secured creditor as provided in
Section 10 hereof shall be applied, together with any other sums then held by
the Agent pursuant to this Agreement, promptly by the Agent in accordance with
the provisions of the Credit Agreement.
Section 12. No Subrogation.
Notwithstanding any payment or payments made by the Pledgor
hereunder, or any setoff or application of funds of the Pledgor by any Lender,
or the receipt of any amounts by the Agent or any Lender with respect to any of
the Pledged Collateral, the Pledgor shall not be entitled to be subrogated to
any of the rights of the Agent or any Lender against the Borrower or against
any other collateral security held by the Agent or any Lender for the payment
of the Secured Obligations, nor shall the Pledgor seek any reimbursement from
the Borrower or any Guarantor in respect of payments made by the Pledgor in
connection with the Pledged Collateral, or amounts realized by the Agent or any
Lender in connection with the Pledged Collateral, until all amounts owing to
the Agent and the Lenders on account of the Secured Obligations are Fully
Satisfied and the Commitments are terminated. If any amount shall be paid to
the Pledgor on account of such subrogation rights at any time when all of the
Secured Obligations shall not have been paid in full, such amount shall be held
by the Pledgor in trust for the Agent and the
10
<PAGE> 11
Lenders, segregated from other funds of the Pledgor, and shall, forthwith upon
receipt by the Pledgor, be turned over to the Agent in the exact form received
by the Pledgor (duly endorsed by the Pledgor to the Agent, if required) to be
applied against the Secured Obligations, whether matured or unmatured, in such
order as the Agent may determine.
Section 13. Amendments, etc. with respect to the Obligations.
The Pledgor shall remain obligated hereunder, and the Pledged
Collateral shall remain subject to the Lien granted hereby, notwithstanding
that, without any reservation of rights against the Pledgor, and without notice
to or further assent by the Pledgor, any demand for payment of any of the
Secured Obligations made by the Agent or any Secured Party may be rescinded by
the Agent or such Secured Party, and any of the Secured Obligations continued,
and the Secured Obligations, or the liability of the Borrower or any other
Person upon or for any part thereof, or any collateral security or guarantee
therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered, or released by the Agent or any Secured
Party, and the Credit Agreement, the Notes and any other Facility Documents
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or part, as the Lenders (or the Majority
Lenders, as the case may be) may deem advisable from time to time, and any
guarantee, right of offset or other collateral security at any time held by the
Agent or any Secured Party for the payment of the Secured Obligations may be
sold, exchanged, waived, surrendered or released. Neither the Agent nor any
Secured Party shall have any obligation to protect, secure, perfect or insure
this or any other Lien at any time held by it as security for the Secured
Obligations or any property subject thereto. The Pledgor waives any and all
notice of the creation, renewal, extension or accrual of any of the Secured
Obligations and notice of or proof of reliance by the Agent or any Secured
Party upon this Agreement; the Secured Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred in reliance
upon this Agreement; and all dealings between the Borrower and the Pledgor, on
the one hand, and the Agent and the Lenders, on the other, shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Agreement. The Pledgor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Pledgor with respect
to the Secured Obligations.
Section 14. Expenses.
The Pledgor will upon demand pay to the Agent the amount of
any and all expenses, including the fees and expenses of its counsel and the
fees and expenses of any experts and agents, which the Agent may incur in
connection with (a) the collection of the Secured Obligations, (b) the
enforcement and administration of this Agreement, (c) the custody or
preservation of, or the sale of, collection from, or other realization upon,
any of the Pledged Collateral, (d) the exercise or enforcement of any of the
rights of the Agent
11
<PAGE> 12
or any Secured Party hereunder or (e) the failure by the Pledgor to perform or
observe any of the provisions hereof. All amounts payable by the Pledgor under
this Section 14 shall be due upon demand and shall be part of the Secured
Obligations. The Pledgor's obligations under this Section shall survive the
termination of this Agreement and the discharge of the Pledgor's other
obligations hereunder.
Section 15. No Waiver; Cumulative Remedies.
(a) No failure on the part of the Agent to exercise, no
course of dealing with respect to, and no delay on the part of the Agent in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or
remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The rights and remedies herein provided
are cumulative and are not exclusive of any remedies provided in any other
Facility Document or by law.
(b) In the event the Agent or any of the Secured Parties
shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Agent, then and in every such case, the
Pledgor, the Agent and each holder of any of the Secured Obligations shall be
restored to their respective former positions and rights hereunder with respect
to the Pledged Collateral, and all rights, remedies and powers of the Agent and
the Secured Parties shall continue as if no such proceeding had been
instituted.
Section 16. Agent May Perform; Agent Appointed
Attorney-in-Fact.
If the Pledgor shall fail to do any act or thing that it has
covenanted to do hereunder or any warranty on the part of the Pledgor contained
herein shall be breached, the Agent or any Secured Party may (but shall not be
obligated to) do the same or cause it to be done or remedy any such breach, and
may expend funds for such purpose. Any and all amounts so expended by the
Agent or such Secured Party shall be paid by the Pledgor promptly upon demand
therefor, with interest at the highest rate then in effect under the Credit
Agreement during the period from and including the date on which such funds
were so expended to the date of repayment. The Pledgor's obligations under
this Section 16 shall survive the termination of this Agreement and the
discharge of the Pledgor's other obligations under this Agreement, the Credit
Agreement and the other Facility Documents. The Pledgor hereby appoints the
Agent its attorney-in-fact, with full authority in the place and stead of the
Pledgor and in the name of the Pledgor, or otherwise, from time to time in the
Agent's discretion to take any action and to execute any instrument consistent
with the terms of this Agreement and the other Facility Documents which the
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement. The foregoing grant of authority is a power of attorney coupled
with an interest and such appointment shall be
12
<PAGE> 13
irrevocable for the term of this Agreement. The Pledgor hereby ratifies all
that such attorney shall lawfully do or cause to be done by virtue hereof.
Section 17. Indemnity.
(a) Indemnity. The Pledgor agrees to indemnify, pay and hold
harmless the Agent and each of the Secured Parties and each of their respective
officers, directors, employees, agents and Affiliates (collectively called the
"Indemnitees") from and against any and all Losses, expenses or disbursements
of any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto), which may
be imposed on, incurred by, or asserted against that Indemnitee, in any manner
relating to or arising out of this Agreement (including, without limitation,
any misrepresentation by the Pledgor in this Agreement) (the "indemnified
liabilities"); provided, however, that the Pledgor shall not have any
obligation to an Indemnitee hereunder with respect to an indemnified liability
to the extent that such indemnified liability is determined by a court of
competent jurisdiction in a final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of that Indemnitee. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in
the preceding sentence may be unenforceable because it is violative of any law
or public policy, the Pledgor shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all indemnified liabilities incurred by the Indemnitees or any
of them.
(b) Survival. The obligations of the Pledgor contained in
this Section 17 shall survive the termination of this Agreement and the
discharge of the Pledgor's other obligations under this Agreement and the other
Facility Documents.
(c) Reimbursement. Any amounts paid by any Indemnitee as to
which such Indemnitee has the right to reimbursement shall constitute Secured
Obligations secured by the Pledged Collateral.
(d) Further Hypothecation. In order to secure the payments
of the amounts provided in Sections 14, 16 and 17, the Pledgor hereby
hypothecates in favor of the Secured Parties the Pledged Collateral for the
further principal amount of CDN$20,000,000, bearing interest at the rate
provided in the Credit Agreement.
Section 18. Modification in Writing.
No amendment, modification, supplement, termination or waiver
of or to any provision of this Agreement, nor consent to any departure by the
Pledgor therefrom, shall be effective unless the same shall be done in
accordance with the terms of the Credit
13
<PAGE> 14
Agreement and unless in writing and signed by the Agent. Any amendment,
modification or supplement of or to any provision of this Agreement, any waiver
of any provision of this Agreement and any consent to any departure by the
Pledgor from the terms of any provision of this Agreement shall be effective
only in the specific instance and for the specific purpose for which made or
given. Except where notice is specifically required by this Agreement or any
other Facility Document, no notice to or demand on the Pledgor in any case
shall entitle the Pledgor to any other or further notice or demand in similar
or other circumstances.
Section 19. Termination; Release.
(a) This Agreement shall terminate on the Termination Date,
and shall remain in full force and effect until the Termination Date,
notwithstanding that from time to time prior thereto the Borrower may be free
from any Obligations.
(b) Upon termination of this Agreement or any release of
Pledged Collateral in accordance with the provisions of the Credit Agreement,
the Agent shall, upon the request and at the sole cost and expense of the
Pledgor, forthwith assign, transfer and deliver to the Pledgor, against receipt
and without recourse to or warranty by the Agent, such of the Pledged
Collateral to be released (in the case of a release) as may be in the
possession of the Agent and as shall not have been sold or otherwise applied
pursuant to the terms hereof, and, with respect to any other Pledged
Collateral, proper instruments (including UCC termination statements on Form
UCC-3 or other similar release forms as may be required in a jurisdiction other
than the United States) acknowledging the termination of this Agreement or the
release of such Pledged Collateral, as the case may be.
Section 20. Notices.
Any notice or other communication herein required or permitted
to be given shall be given at the address and in the manner set forth in the
Credit Agreement (unless a different address as shall be designated by one
party in a written notice to the other in the manner required by the Credit
Agreement).
Section 21. Continuing Security Interest; Assignment.
This Agreement shall create a continuing security interest in
the Pledged Collateral and shall (a) be binding upon the Pledgor, and its
successors and assigns and (b) inure, together with the rights and remedies of
the Agent hereunder, to the benefit of the Agent and the other Secured Parties
and each of their respective successors, transferees and assigns; no other
Persons (including, without limitation, any other creditor of the Pledgor)
shall have any interest herein or any right or benefit with respect hereto.
Without limiting the generality of the foregoing clause (b), any Secured Party
may assign or
14
<PAGE> 15
otherwise transfer any indebtedness held by it secured by this Agreement to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party, herein or otherwise,
subject however, to the provisions of the Credit Agreement.
Section 22. Governing Law; Terms.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR PROPERTY ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Section 23. Severability of Provisions.
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 24. Execution in Counterparts.
This Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original, but all such
counterparts together shall constitute one and the same agreement.
Section 25. Obligations Absolute.
All obligations of the Pledgor hereunder shall be absolute and
unconditional irrespective of any of the following (and the Pledgor expressly
waives any and all defenses arising out of, or based on, any of the following):
(i) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or the like of the
Pledgor, the Borrower or any other Guarantor;
(ii) any lack of validity or enforceability of the
Credit Agreement, any other Facility Document or any other agreement
or instrument relating thereto;
15
<PAGE> 16
(iii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Secured
Obligations, or any other amendment or waiver of or any consent to any
departure from the Credit Agreement, any other Facility Document or
any other agreement or instrument relating thereto;
(iv) any exchange, release or non-perfection of any
other collateral, or any release or amendment or waiver of or consent
to any departure from any guarantee, for all or any of the Secured
Obligations;
(v) any exercise or non-exercise, or any waiver of
any right, remedy, power or privilege under or in respect of this
Agreement, or any other Facility Document except as specifically set
forth in a waiver granted pursuant to the provisions of Section 19
hereof; or
(vi) any other circumstances which might otherwise
constitute a defense available to, or a discharge of, the Pledgor.
Section 26. Irrevocable Authorization and Instruction to
Issuers.
The Pledgor hereby irrevocably authorizes and instructs the
issuers of the Pledged Shares (the "Issuers") to comply with any instruction
received by it from the Agent in writing that (a) states that an Event of
Default has occurred and (b) is otherwise in accordance with the terms of this
Agreement, without any other or further instructions from the Pledgor, and the
Pledgor agrees that the Issuers shall be fully protected in so complying.
Section 27. Authority of Agent.
The Pledgor acknowledges that the rights and responsibilities
of the Agent under this Agreement with respect to any action taken by the Agent
or the exercise or non-exercise by the Agent of any option, voting right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between the Agent and the Secured
Parties, be governed by the Credit Agreement, but, as between the Agent and the
Pledgor, the Agent shall be conclusively presumed to be acting as agent for the
Secured Parties with full and valid authority so to act or refrain from acting,
and neither the Pledgor nor the Issuers shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
Section 28. Consent to Jurisdiction, Agent for Service.
(a) Consent. The Pledgor hereby irrevocably submits to the
jurisdiction of any New York State or Federal court, sitting in the City of New
York, New York County, and any appellate court form any thereof (each, a "New
York Court") in any
16
<PAGE> 17
action or proceeding arising out of or relating to this Agreement or for
recognition or enforcement of any judgment, and the Pledgor hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York Court.
(b) Waivers. The Pledgor hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any New York Court. The Pledgor also hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The Pledgor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or by any other manner
provided by law.
(c) Service. The Pledgor hereby irrevocably consents to the
service of copies of any summons and complaint and any other process which may
be served in any such action or proceeding by certified mail, return receipt
requested, or by delivering a copy of such process to the Pledgor, at its
address specified in the signature pages to the Credit Agreement or by any
other method permitted by law, in each case, with a copy by telecopy to Pouliot
Mercure at (514) 875-4308, attention Brian Riordan.
(d) Appointment of Agent. The Pledgor designates and
appoints CT Corporation System, 1633 Broadway, New York, New York 10019 and
such other persons as may irrevocably agree in writing to serve as its agent to
receive on its behalf service of all process in any proceedings in any New York
Court, such service being hereby acknowledged by the Pledgor to be effective
and binding in every respect. If any agent appointed by the Pledgor refuses to
receive and forward such service, the Pledgor hereby agrees that service upon
it by mail shall constitute sufficient service.
(e) Other Rights. Nothing in this Section 28 shall affect
the right of the Agent or any Secured Party to serve legal process in any other
manner permitted by law or affect the right of the Agent or any Secured Party
to bring any action or proceeding against the Pledgor or its Property in the
courts of other jurisdictions.
Section 29. Waiver of Trial by Jury.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
PLEDGOR, THE AGENT AND THE SECURED PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY MATTER ARISING HEREUNDER.
17
<PAGE> 18
Section 30. Limitation of Liability.
No claim may be made by the Pledgor or any other Person
against the Agent or any Secured Party or the Affiliates, directors, officers,
employees, attorneys or agent of any of them for any special, indirect,
consequential or punitive damages in respect of any claim for breach of
contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and the Pledgor hereby waives, releases and
agrees not to sue upon any claim for any such damages, whether or not accrued
and whether or not known or suspected to exist in its favor.
Section 31. Currency Indemnity.
The Pledgor acknowledges and agrees that this Agreement
constitutes a credit transaction in which specification of U.S. dollars is of
the essence, and U.S. dollars shall be the currency of account and payment in
all events. If pursuant to a judgment or for any other reason payment shall be
made in another currency, and such payment after prompt conversion to U.S.
dollars and transfer to New York City in accordance with normal banking
procedures falls short of the sum due the Agent or the Secured Parties in U.S.
dollars, the Pledgor shall pay the Agent or the Secured Parties such shortfall
and the Lenders shall have a separate cause of action for such amount.
Section 32. Language.
The parties have agreed that this Agreement, and all related
documents, correspondence, and notices between them should be and will be
drafted in the English language. Les parties conviennent que la presente
entente et tous les documents s'y rattachant, y compris tout avis ou
correspondance, ont ete et seront rediges en langue anglaise.
18
<PAGE> 19
IN WITNESS WHEREOF, the Pledgor and the Agent have caused this
Agreement to be duly executed and delivered by their duly authorized officers
as of the date first written above.
CEDAR GROUP, INC.,
as the Pledgor
By:
-----------------------------
Name:
Title:
BT COMMERCIAL CORPORATION,
as Agent
By:
-----------------------------
Name:
Title:
<PAGE> 20
SCHEDULE A
Pledged Shares
PLEDGED SHARES
<TABLE>
<CAPTION>
PERCENTAGE OF ALL
CERTIFICATE NUMBER OF CAPITAL OR OTHER EQUITY
ISSUER CLASS OF STOCK NO(S). SHARES INTERESTS OF ISSUER
-------------------- ------------------- ------------- ----------- -------------------------
<S> <C> <C> <C> <C>
Cedar Group Canada Common C-1 1 0.000%
Inc. C-2 26,220,000 100%
Cedar Group (TCI) Common 1 5,000 100%
Inc. LLC
Steen Contractors Common C-81 105 75%
Limited
</TABLE>
<PAGE> 21
EXHIBIT 1
PLEDGE AMENDMENT
This Pledge Amendment, dated ______________, is delivered
pursuant to Section 5 of the Agreement referred to below. The undersigned
hereby agrees that this Pledge Amendment may be attached to the Pledge
Agreement, dated as of March 27, 1996, between the undersigned and BT
COMMERCIAL CORPORATION, as Agent (the "Agreement"; capitalized terms used
herein and not defined herein have the meanings ascribed to them in the
Agreement) and that the Pledged Shares listed on this Pledge Amendment shall be
deemed to be and shall become part of the Pledged Collateral and shall secure
all Secured Obligations.
CEDAR GROUP, INC., the Pledgor
By:
-----------------------------
Name:
Title:
<PAGE> 1
CEDAR GROUP, INC.
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of March 27, 1996 (as the
same may from time to time be amended, supplemented or otherwise modified, the
"Security Agreement"), is made by CEDAR GROUP, INC. (the "Grantor"), in favor
and for the benefit of BT COMMERCIAL CORPORATION, a Delaware corporation, as
agent (in such capacity, the "Agent") for the lenders (collectively, with their
successors, indorsees, participants, transferees and assigns, the "Secured
Parties") party to or that become party to the Credit Agreement (as defined
below).
PRELIMINARY STATEMENT
WHEREAS, Cedar Group Canada Inc., a company incorporated under
the Canada Business Corporations Act (the "Borrower"), the Grantor and certain
of its subsidiaries, as guarantors, the Secured Parties and the Agent have
entered into a Credit Facility Agreement, dated as of the date of this Security
Agreement (as the same may from time to time be amended, supplemented or
otherwise modified and in effect, the "Credit Agreement"), pursuant to which
the Secured Parties have agreed, according to the terms of the Credit
Agreement, to make Loans in an aggregate principal amount of up to $43,000,000
or such other amount as may from time to time be specified in the Credit
Agreement;
WHEREAS, the Grantor has guaranteed the Obligations of the
Borrower described above pursuant to a Guarantee in favor of and for the
benefit of the Agent, as Agent for the Lenders dated as of the date of this
Security Agreement (as amended, supplemented and otherwise modified from time
to time, the "Guarantee");
WHEREAS, the Grantor is the legal and beneficial owner of the
Collateral (as defined below);
WHEREAS, it is a condition precedent to the obligations of the
Secured Party to make the Loans to the Borrower under the Credit Agreement that
the Grantor execute and deliver this Security Agreement to the Agent.
NOW, THEREFORE, in consideration of the foregoing and to
induce the Secured Parties to make their respective Loans, the Grantor agrees
with the Agent, for the ratable benefit of the Secured Parties, as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
1.1 Defined Terms.
Unless otherwise defined in this Security Agreement, terms
defined in the Credit Agreement and used herein, shall have the meaning given
to them in the Credit Agreement.
"Account Debtor" shall mean the person who is obligated on
a Receivable.
"Accounts" shall mean "accounts" as such term is defined in
Section 9-106 of the UCC.
"Chattel Paper" shall mean "chattel paper" as such term is
defined in Section 9-105(b) of the UCC.
"Collateral" shall have the meaning assigned to it in
Article 2 hereof.
"Collateral Account" shall mean any account (which may be a
securities account) maintained pursuant to this Security Agreement or any other
Security Document by the Agent, and all funds, securities and instruments or
other items from time to time credited to such account and all interest
thereon.
"Collateral Records" shall mean books, records, computer
software, computer printouts, customer lists, blueprints, technical
specifications, manuals, and similar items which relate to any Collateral other
than such items obtained under license or franchise agreements which prohibit
assignment or disclosure of such items.
"Contracts" shall mean all contracts, agreements, documents,
permits, instruments, policies or documents used in or relating to the
Grantor's business during the term of this Security Agreement, as any of the
same may from time to time be amended, supplemented or otherwise modified and
as such schedule may be amended, modified or otherwise supplemented from time
to time, including, without limitation, (a) all rights of the Grantor to
receive moneys due and to become due to it thereunder or in connection
therewith, (b) all rights of the Grantor to damages arising out of or for
breach or default in respect thereof (c) all rights of the Grantor to receive
proceeds of any insurance, indemnity, warranty or guarantee with respect
thereto, and (d) all rights of the Grantor to exercise all remedies thereunder.
2
<PAGE> 3
"Copyrights" shall mean:
(a) all copyrights, whether registered or unregistered, and
whether or not the underlying works of authorship have been published, and all
works of authorship and other rights therein or derived therefrom, all
copyrights of works based on, incorporated in, derived from or relating to
works covered by such copyrights, all right, title and interest to make an
exploit all derivative works based upon or adopted from works covered by such
copyright and all copyright registrations and copyright applications, and any
renewals or extensions thereof, including without limitation, each copyright
registration and copyright applicable, if any, identified in Schedule 1 hereto,
and including, without limitation:
(i) all databases, source codes, object codes and
manuals, whether published or unpublished, now or
hereafter existing, in the United States and all
foreign countries other than confidential
information belonging to third parties;
(ii) all applications, registrations, renewals,
extensions and recordings relating thereto filed
in the United States Copyright Office or in any
other governmental office or agency in the United
States or elsewhere, in each case in which the
Grantor has any right, title or interest;
(iii) the right to print, publish and distribute any of
the foregoing;
(iv) the right to sue or otherwise recover for any and
all past, present and future infringements and
misappropriations thereof;
(v) all income, royalties, damages and other payments
now and hereafter due and/or payable with respect
thereto (including, without limitation, payments
under all licenses entered into in connection
therewith, and damages and payments for past or
future infringements thereof);
3
<PAGE> 4
(vi) all rights of each Grantor corresponding thereto
and all other rights of any kind whatsoever of
such Grantor accruing thereunder or pertaining
thereto; and
(vii) all other rights which the Grantor presently has
or hereafter acquires pursuant to any Copyright
License, including, without limitation, copyright
assignments, exclusive and nonexclusive licenses;
and
(b) all right, title and interest of the Grantor in all
physical materials embodying works with respect to which the Grantor owns or
holds rights in any Copyrights or Copyright Licenses.
"Copyright License" shall mean (a) any written agreement
naming the Grantor as a licensor or licensee, granting any right in or to any
Copyright or copyright registration in the United States or any foreign country
(including, without limitation, any thereof referred to on Schedule 1 hereto)
or (b) any and all present and future agreements, including, without
limitation, assignments and consents, as any such agreements may from time to
time be amended or supplemented, pursuant to which the Grantor now has or
hereafter acquires any direct or beneficial interest in any Copyright, or is a
grantor of rights to any third party with respect to any copyright, whether as
a party to any such agreement or as an assignee of any rights under any such
agreement (including, without limitation, any thereof referred to on Schedule 1
hereto) excluding, however, non-exclusive computer software licenses, subject
in each case to the terms of such license agreements, including, without
limitation, terms requiring consent to a grant of a security interest thereof.
"Deposit Accounts" shall mean the Collateral Account and any
deposit account, including without limitation, "deposit accounts" as such term
is defined in Section 9-105(e) of the UCC and any other deposit or securities
account (general or special), together with any funds, instruments or other
items credited to any such account from time to time, and all interest thereon.
"Documents" shall mean "documents" as such term is defined in
Section 9-105(f) of the UCC.
"Equipment" shall mean "equipment" as such term is defined in
Section 9-109(2) of the UCC, including, without limitation, machinery,
manufacturing equipment, data processing equipment, computers, office
equipment, furniture, appliances and tools.
4
<PAGE> 5
"Farm Products" shall mean crops, livestock or supplies used
or produced in farming operations or products of crops or livesock in their
unmanufactured state and goods in the possession of a debtor engaged in
raising, fattening, grazing or other farming operations.
"Fixtures" shall mean "fixtures" as such term is defined in
Section 9-313 of the UCC.
"General Intangibles" shall mean "general intangibles" as such
term is defined in Section 9-106 of the UCC, including, without limitation,
rights to the payment of money (other than Receivables), trademarks,
copyrights, patents, and contracts, licenses and franchises (except in the case
of licenses and franchises in respect of which the Grantor is the licensee or
franchisee if the agreement in respect of such license or franchise prohibits
by its terms any assignment or grant of a security interest) limited
and general partnership interests and joint venture interests, federal income
tax refunds, trade names, distributions on certificated securities (as defined
in Section 8-102 of the UCC) and uncertificated securities (as defined in
Section 8-102 of the UCC), computer programs and other computer software,
inventions, designs, trade secrets, goodwill, proprietary rights, customer
lists, supplier contracts, sale orders, correspondence, advertising materials,
payments due in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of any property, reversionary interests in pension and
profit-sharing plans and reversionary, beneficial and residual interests in
trusts, credits with and other claims against any Person, together with any
collateral for any of the foregoing and the rights under any security agreement
granting a security interest in such collateral.
"Guarantee" has the meaning specified in the Preliminary
Statement to this Security Agreement.
"Guaranteed Obligations" means all obligations of the Grantor
now existing or hereafter arising under or in respect of the Guarantee,
including, without limitation, the obligations of the Grantor to pay principal,
interest and all other charges, fees, expenses, commissions, reimbursements,
premiums, indemnities and other payments related to or in respect of the
Obligations of the Borrower contained in or relating to the Credit Agreement.
"Instruments" shall mean "instruments" as such term is defined
in Section 9-105(1)(i) of the UCC.
"Insurance Policies" shall mean all insurance policies of the
Grantor or under which the Grantor is a beneficiary, and all amendments,
modifications, supplements or renewals thereof, including without limitation
the insurance policies set forth in the schedules to the Credit Agreement.
5
<PAGE> 6
"Inventory" shall mean "inventory" as such term is defined in
Section 9-109(4) of the UCC, including without limitation, all goods
(whether such goods are in the possession of the Grantor or of a bailee or
other Person for sale, lease, storage, transit, processing, use or otherwise
and whether consisting of whole goods, spare parts, components, supplies,
materials or consigned or returned or repossessed goods), including without
limitation, all such goods which are held for sale or lease or are to be
furnished (or which have been furnished) under any contract of service or which
are raw materials or work in progress or materials used or consumed in the
Grantor's business.
"Material Contract" shall mean a Contract with a term greater
than six months and involving a dollar amount in excess of US$20,000.
"Money" shall mean "money" as such term is defined in Section
1-201(24) of the UCC.
"Patents" shall mean (a) all letters patent of the United
States or any other country and all reissues and extensions thereof, including,
without limitation, any thereof referred to in Schedule 2 hereto, and (b) all
applications for letters patent of the United States or any other country and
all divisions, continuations and continuations-in-part thereof, including,
without limitation, any thereof referred to in Schedule 2 hereto including
without limitation (i) all inventions and improvements described and claimed
therein, (ii) the right to sue or otherwise recover for any misappropriations
thereof, (iii) all income, royalties, damages and other payments now and
hereafter due and/or payable with respect thereto (including, without
limitation, payments under all licenses entered into in connection therewith,
and damages and payments for past and future infringements thereof), and (iv)
all rights corresponding thereto and all reissues, divisions, continuations,
continuations-part, substitutes, renewals, and extensions thereof, all
improvements thereon and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto.
"Patent License" shall mean all agreements, whether written or
oral, providing for the grant by or to the Grantor of any right to manufacture,
use or sell any invention covered by a Patent, including, without limitation,
any thereof referred to in Schedule 2 hereto, subject in each case to the terms
of such license agreements, including, without limitation, terms requiring
consent to a grant of a security interest thereof.
"Proceeds" shall mean "proceeds" as such term is defined in
Section 9-306 (1) of the UCC.
"Receivables" shall mean all rights to payment for goods sold
or leased or services rendered, whether or not earned by performance and all
rights in respect of the Account Debtor, including without limitation, all such
rights in which the Grantor has any right, title or interest by reason of the
purchase thereof by the Grantor, and including
6
<PAGE> 7
without limitation all such rights constituting or evidenced by any Account,
Chattel Paper, Instrument, General Intangible, note, contract, invoice,
purchase order, draft, acceptance, intercompany account, security agreement, or
other evidence of indebtedness or security, together with (a) any collateral
assigned, hypothecated or held to secure any of the foregoing and the rights
under any security agreement granting a security interest in such collateral,
(b) all goods, the sale of which gave rise to any of the foregoing, including,
without limitation, all rights in any returned or repossessed goods and unpaid
seller's rights, (c) all guarantees, endorsements and indemnifications on, or
of, any of the foregoing, and (d) all powers of attorney for the execution of
any evidence of indebtedness or security or other writing in connection
therewith.
"Receivables Records" shall mean (a) all original copies of
all documents, instruments or other writings evidencing the Receivables, (b)
all books, correspondence, credit or other files, records, ledger sheets or
cards, invoices, and other papers relating to Receivables, including without
limitation all tapes, cards, computer tapes, computer discs, computer runs,
record keeping systems and other papers and documents relating to the
Receivables, whether in the possession or under the control of the Grantor or
any computer bureau or agent from time to time acting for the Grantor or
otherwise, (c) all evidences of the filing of financing statements and the
registration of other instruments in connection therewith and amendments,
supplements or other modifications thereto, notices to other creditors or
secured parties, and certificates, acknowledgements, or other writings,
including without limitation lien search reports, from filing or other
registration officers, (d) all credit information, reports and memoranda
relating thereto, and (e) all other written or non-written forms of information
related in any way to the foregoing or any Receivable.
"Secured Obligations" shall mean (i) all Guaranteed
Obligations and (ii) without duplication, all obligations of the Grantor now
existing or hereafter arising under or in respect of this Security Agreement or
any other Facility Document, in each case whether in the regular course of
business or otherwise.
"Termination Date" means (subject to reinstatement pursuant to
the terms of the Guarantee) the earlier of (i) the date on which the Agent is
required to release the Grantor from its Secured Obligations and (ii) the date
on which the Secured Obligations have been Fully Satisfied.
"Trademarks" shall mean (a) all trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, service marks, logos and other source or business identifiers,
and the goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or otherwise,
including,
7
<PAGE> 8
without limitation, any thereof referred to in Schedule 3 hereto, and (b) all
renewals thereof, including without limitation (i) the right to sue or
otherwise recover for any and all past, present and future infringements and
misappropriations thereof, (ii) all income, royalties, damages and other
payments now and hereafter due and/or payable with respect thereto (including,
without limitation, payment under all licenses entered into in connection
therewith, and damages and payments for past or future infringements thereof),
and (iii) all rights corresponding thereto and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto.
"Trademark License" shall mean any agreement, written or oral,
providing for the grant by or to the Grantor of any right to use any Trademark,
including, without limitation, any thereof referred to in Schedule 3 hereto,
subject in each case to the terms of such license agreements, including,
without limitation, terms requiring consent to a grant of a security interest
thereof.
"UCC" shall mean the Uniform Commercial Code as in effect from
time to time in the State of New York, except to the extent perfection of the
securities interest is governed by the law of another jurisdiction in the
United States, in which case "UCC" shall mean the Uniform Commercial Code as in
effect from time to time in such other jurisdiction for such other purposes..
ARTICLE II
GRANT OF SECURITY INTERESTS
2.1 Grant of Security Interest. As security for the
prompt and complete payment and performance in full when due of all the Secured
Obligations, the Grantor hereby assigns, pledges and transfers to the Agent,
for itself and for the ratable benefit of the Secured Parties, and grants to
the Agent, for itself and for the ratable benefit of the Secured Parties, a
security interest in and continuing lien on all of the Grantor's right, title
and interest in, to and under the following, located anywhere in the world
other than in the Province of Quebec, Canada, in each case, whether now owned
or existing or hereafter acquired or arising (all of which being hereinafter
collectively called the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) the Collateral Account;
8
<PAGE> 9
(iv) all Collateral Records;
(v) all Contracts;
(vi) all Copyrights;
(vii) all Copyright Licenses;
(viii) all Deposit Accounts;
(ix) all Documents;
(x) all Equipment;
(xi) all Fixtures;
(xii) all General Intangibles;
(xiii) all Instruments;
(xiv) all Insurance Policies;
(xv) all Inventory;
(xvi) all Money;
(xvii) all Patents;
(xviii) all Patent Licenses;
(xix) all Receivables;
(xx) all Receivables Records;
(xxi) all Trademarks;
(xxii) all Trademark Licenses;
(xxiii) all other tangible and intangible
personal property;
(xxiv) all accessions and additions to any or
all of the foregoing, all substitutions and replacements for any or
all of the foregoing and
9
<PAGE> 10
all Proceeds or products of any or all of the foregoing; and
(xxv) to the extent not otherwise included,
all Proceeds (including, to the extent not otherwise included therein,
all (a) payments under insurance (whether or not the Agent is the loss
payee thereunder) or any indemnity, warranty or guarantee payable by
reason of loss or damage to or otherwise with respect to any of the
foregoing Collateral and (b) cash) and products of any and all of the
foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Grantor hereby represents and warrants to the Agent and
the Secured Parties, which representations and warranties shall survive
execution and delivery of this Security Agreement, as follows:
3.1 Organization; Power (a) The Grantor is duly organized
and validly existing in good standing under the laws of the jurisdiction of its
formation.
(b) The Grantor has the power and authority and the
legal right to execute, deliver and carry out the terms and provisions of this
Security Agreement and to grant the Lien in the Collateral pursuant to this
Security Agreement and has taken all necessary action to authorize the
execution, delivery and performance by it of this Security Agreement. The
Grantor has duly executed and delivered this Security Agreement, and this
Security Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
3.2 Validity, Perfection and Priority. (a) The security
interests in the Collateral granted to the Agent, for itself and the ratable
benefit of the Secured Parties, hereunder constitute valid and continuing
security interests in the Collateral;
(b) upon filing financing statements naming the
Grantor as "debtor" and the Agent as "secured party" in the filing offices set
forth on Schedule 4 hereto, the security interests in the Collateral granted to
the Agent, for itself and the ratable benefit of the Secured Parties, hereunder
will constitute perfected security interests therein superior and prior to all
Liens other than Permitted Liens, rights or claims of all other Persons and
will be enforceable as such as against all creditors of and purchasers from the
Grantor (except purchasers of Inventory in the ordinary course of business);
and
10
<PAGE> 11
(c) the Collateral granted hereunder includes all of
the personal property of the Grantor located anywhere in the world other than
in the Province of Quebec.
3.3 No Liens; Other Financing Statements. (a) Except for
the Lien granted to the Agent hereunder, the Grantor owns and, as to all
Collateral whether now existing or hereafter acquired, will continue to own,
each item of the Collateral free and clear of any and all Liens, rights or
claims of all other Persons other than Permitted Liens, and the Grantor shall
defend the Collateral against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to the Agent or any Secured
Party other than the holders of Permitted Liens.
(b) No financing statement or other evidence of Lien
covering or purporting to cover any of the Collateral is on file in any public
office other than (i) financing statements filed or to be filed in connection
with the security interests granted to the Agent for itself and the ratable
benefit of the Secured Parties hereunder, (ii) financing statements for which
proper termination statements have been delivered to the Secured Party for
filing, and (iii) financing statements filed in connection with the
Intercompany Security Documents or the Permitted Liens.
3.4 Chief Executive Office. The chief executive office of the
Grantor is located at 500 Notre Dame Street, Lachine, Quebec, H8S 2B2, Canada.
The Receivables, all Contracts and all Collateral Records are located at the
chief executive office of the Grantor. All Receivables and Contracts are
maintained at, and controlled and directed (including, without limitation, for
general accounting purposes) from the chief executive office.
3.5 Location of Inventory and Equipment. All Inventory and
Equipment now or from time to time included in the Collateral will be located
only at the locations listed on Schedule 5 or at such other locations within
the provinces of Canada or within the United States in which the Agent has a
valid, perfected, first priority security interest in such Inventory and
Equipment. None of such Inventory or Equipment is in the possession of a
bailee.
3.6 Receivables.
(a) Each Receivable is and will be the legal, valid
and binding obligation of the Account Debtor in respect thereof, representing
an unsatisfied obligation of such Account Debtor, and is and will be
enforceable in accordance with its terms.
(b) Each Receivable is and will be in full force and
effect and is not and will not be subject to any setoffs, defenses, taxes,
counterclaims (except (x) with respect to refunds, returns and allowances in
the ordinary course of business with respect
11
<PAGE> 12
to damaged merchandise and (y) to the extent that such Receivable may not yet
have been earned by performance).
(c) Each Receivable is and will be in compliance
with all applicable laws, whether federal, state, provincial, local or foreign.
(d) No Account Debtor in respect of any Receivable
is a Governmental Authority.
(e) No Receivables which are evidenced by Chattel
Paper require the consent of the Account Debtor in respect thereof in
connection with assignment hereunder and no other receivable purports to
prohibit assignment or require the consent of the Account Debtor thereunder in
connection with assignment.
(f) No Receivables are evidenced by any Instrument
or Chattel Paper which has not been delivered to the Agent.
3.7 Contracts. (a) Each Material Contract (i) is and will
be the legal, valid, and binding obligation of each of the parties thereto,
(ii) is and will be enforceable against each party thereto in accordance with
its terms, (iii) is and will be in full force and effect and is not subject to
any setoffs, defenses, taxes, counterclaims or other claims, nor have any of
the foregoing been asserted or alleged as to any Material Contract, and (iv) is
and will be in compliance with all applicable laws, whether federal, state,
provincial, local or foreign.
(b) No consent or authorization or filing with or
other act by or in respect of any governmental authority is required in
connection with the execution, delivery, performance, validity or
enforceability of any Contract by any party thereto other than those which have
been duly obtained, made or performed, are in full force and effect and do not
subject the scope of any Contract to any material adverse limitation, either
specific or general in nature.
(c) Neither the Grantor nor any other party to any
Material Contract is in default or likely to become in default in the
performance or observance of any of the terms thereof.
(d) The Grantor has delivered to the Agent a
complete and correct copy of each Material Contract, including all amendments,
supplements and other modifications thereto.
(e) No payments due the Grantor under any Contract
are evidenced by any Instrument or Chattel Paper which has not been delivered
to the Agent.
12
<PAGE> 13
(f) No party to any Contract is a Governmental
Authority.
(g) No Contract prohibits assignment or requires or
purports to require consent of or notice to any Person in connection with
assignment hereunder.
3.8 Intellectual Property. Schedules 1, 2 and 3 hereto list
all of the material Copyrights and Copyright Licenses, Patents and Patent
Licenses and Trademark and Trademark Licenses, respectively owned by the
Grantor. The Grantor has registered or filed for registration in all
Copyrights, Patents and Trademarks. Each such Copyright, Patent and Trademark
is valid, subsisting, unexpired, enforceable and has not been abandoned and has
not entered the public domain. No holding, decision or judgment has been
rendered by any Governmental Authority which would limit, cancel or question
the validity of any Copyright, Patent and Trademark and which could reasonably
be expected to have a material adverse effect on the business operations or
financial condition of the Grantor and its subsidiaries taken as a whole. No
action or proceeding is pending seeking to limit, cancel or question the
validity of any Copyright, Patent and Trademark which, if adversely determined,
could reasonably be expected to have a material adverse effect on the business
operations or financial condition of the Grantor and its subsidiaries, taken as
a whole.
3.9 Tradenames; Prior Names. The Grantor has not conducted
business under any tradename or prior name during the last five years.
3.10 Farm Products. None of the Collateral constitutes, or
is Proceeds of, Farm Products.
3.11 Other. The Grantor hereby represents and warrants that
each of the statements set forth in Article 4 of the Credit Agreement is true
and correct.
ARTICLE IV
COVENANTS
The Grantor covenants and agrees with the Agent and the
Secured Parties that from and after the date of this Security Agreement:
4.1 Further Assurances. The Grantor will from time to time at
the expense of the Grantor, promptly execute, deliver, file and record all
further instruments, indorsements and other documents, and take such further
action as the Agent may deem reasonably desirable in obtaining the full
benefits of this Security Agreement and of the rights, remedies and powers
herein granted, including, without limitation, the following:
13
<PAGE> 14
(i) the filing of any Lien Statements, in
form acceptable to the Agent under any Lien Legislation in effect in
any jurisdiction with respect to the Liens and security interests
granted hereby. The Grantor also hereby authorizes the Agent to file
any such Lien Statement without the signature of the Grantor to the
extent permitted by applicable law. A photocopy or other reproduction
of this Security Agreement shall be sufficient as a financing
statement and may be filed in lieu of the original to the extent
permitted by applicable law. The Grantor will pay or reimburse the
Agent for all filing fees and related expenses;
(ii) will make or reimburse the Agent for
making all searches deemed necessary by the Agent to establish and
determine the priority of the security interests of the Secured
Parties or to determine the presence or priority of other secured
parties;
(iii) furnish to the Agent from time to time
statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as
the Agent may reasonably request, all in reasonable detail and in form
satisfactory to the Agent.
4.2 Change of Name; Identity; Corporate Structure; Chief
Executive Office and Location of Inventory and Equipment. The Grantor will not
change its name, identity, corporate structure, the location of its chief
executive office or location of its Inventory or Equipment (other than to a
province in Canada or a location in the United States in which the Agent has a
valid, perfected, first priority security interest in such Inventory and
Equipment) without (i) giving the Agent at least thirty (30) days' prior
written notice clearly describing such new name, identity, corporate structure
or new location and providing such other information in connection therewith as
the Agent or any Secured Party may request, and (ii) taking all action
satisfactory to the Agent as the Agent may request to maintain the security
interest of the Agent and the Secured Parties in the Collateral intended to be
granted hereby (or any other Facility Document) at all times fully perfected
with the same or better priority and in full force and effect.
4.3 Delivery of Instruments and Chattel Paper. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any Instrument or Chattel Paper, such Instrument or Chattel Paper
shall be immediately delivered to the Agent, duly indorsed in a manner
satisfactory to the Agent, to be held as Collateral pursuant to this Security
Agreement.
14
<PAGE> 15
4.4 Maintain Records. The Grantor will keep and maintain at
its own cost and expense satisfactory and complete records of the Collateral.
4.5 Right of Inspection. The Agent and the Secured Parties
shall at all times upon reasonable notice to the Grantor, except upon the
occurrence and during the continuance of a Default or an Event of Default when
such notice shall not be required, have full and free access during normal
business hours to all the books, correspondence and records of the Grantor, and
the Agent and the Secured Parties and their representatives may examine the
same, take extracts therefrom and make photocopies thereof, and the Grantor
agrees to render to the Agent and the Secured Parties at the Grantor's cost and
expense, such clerical and other assistance as may be reasonable requested with
regard thereto. The Agent and the Secured Parties and their representatives
shall at all times also have the right to enter into and upon any premises
where any of the Inventory or Equipment is located for the purpose of
inspecting the same, observing its use or otherwise protecting its interests
therein.
4.6 Insurance. The Grantor will maintain, with financially
sound and reputable companies, insurance policies (i) insuring the Inventory,
Equipment and all other property against loss by fire, explosion, theft and
such other casualties as are usually insured against in the same general area
by companies engaged in the same or similar business and (ii) insuring the
Grantor against liability for personal injury and property damage relating to
such Inventory, Equipment and property, such policies to be in such form and
amounts as is required by the Credit Agreement or, in any event, in such form
and in such amounts as is customary in the same general area by companies
engaged in the same or similar business.
4.7 Receivables. (a) The Grantor shall perform in all
material respects all of its obligations with respect to the Receivables.
(b) The Grantor shall not amend, modify, terminate
or waive any provision of any Receivable in any manner which could reasonably
be expected to materially adversely affect the value of such Receivable as
Collateral. Other than in the ordinary course of business as generally
conducted by it over a period of time, the Grantor shall not (w) grant any
extension or renewal of the time of payment of any Receivable, (x) compromise
or settle any dispute, claim or legal proceeding with respect to any Receivable
for less than the total unpaid balance thereof, (y) release, wholly or
partially, any Person liable for the payment thereof, or (z) allow any credit
or discount thereon.
(c) The Grantor shall use its best efforts
(including, without limitation, prompt and diligent exercise of each material
right it may have under any Receivable (other than any right of termination))
to cause to be collected from each Account Debtor, as and when due (including,
without limitation, amounts which are
15
<PAGE> 16
delinquent, such amounts to be collected in accordance with generally accepted
lawful collection procedures) any and all amounts owing under or on account of
any Receivable, and apply all collected amounts to the outstanding balance of
such Receivable immediately upon receipt thereof. The costs of collection,
whether incurred by the Grantor or the Agent shall be borne by the Grantor and
if incurred by the Agent shall be reimbursed, together with interest thereon at
the rate then in effect under the Credit Agreement, to the Agent upon demand
and such reimbursement obligation shall be secured hereby.
(d) The Grantor will not fail to deliver to the
Agent a copy of each material demand, notice or document received by it
relating in any way to any agreement giving rise to any Receivable except to
the extent that such failure could not reasonably be expected to materially
adversely affect the value of the Receivables, taken as a whole, as Collateral.
(e) The Grantor will not remove its books and
records from the location specified in Section 3.4.
4.8 Contracts. (a) The Grantor shall perform in all
material respects all of its obligations under each Contract.
(b) The Grantor shall deliver promptly to the Agent
a copy of each material demand, notice or document received by it relating in
any way to any Contract.
(c) Without the prior written consent of the Agent,
the Grantor shall not amend, modify, terminate or supplement any provision of
any Contract or compromise or settle any dispute, claim or legal proceeding
with respect to any Contract, except in the manner permitted in the Credit
Agreement. Each such permitted amendment, modification, termination,
supplement, compromise, or settlement shall be in writing, a copy of which
shall be delivered promptly to the Agent.
(d) The Grantor shall promptly and diligently
exercise each material right it may have under any Contract (except the right
of termination), except to the extent that such failure could not reasonably be
expected to have a material adverse effect on the value of the Contracts, taken
as a whole, as Collateral. All costs and expenses in connection therewith,
whether incurred by the Grantor or the Agent, shall be borne by the Grantor and
if incurred by the Agent shall be reimbursed, with interest thereon at the rate
then in effect under the Credit Agreement, upon demand by the Agent and such
obligation to reimburse shall be secured hereby.
4.9 Copyrights. Except to the extent the failure by the
Grantor to do any of the following could have a Material Adverse Effect:
16
<PAGE> 17
(a) the Grantor (either itself or through licensees)
(i) will employ the Copyright for each published work with an appropriate
notice of copyright and (ii) will not (and will not knowingly permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any Copyright may become invalidated;
(b) the Grantor will not (either itself or knowingly
permit any licensee or sublicensee to) do any act, or knowingly omit to do any
act, whereby any Copyright may become injected into the public domain;
(c) the Grantor shall notify the Agent and the
Secured Parties immediately if it knows, or has reason to know, that any
Copyright may become injected into the public domain or of any adverse
determination or development (including, without limitation, the institution
of, or any such determination or development in, any court or tribunal in the
United States or any other country) regarding the Grantor's ownership of any
such Copyright or its validity;
(d) the Grantor will file in the United States
Copyright Office or any similar office in any other jurisdiction an application
for copyright registration for each Copyright and Copyright License other than
those of an immaterial nature and will take all necessary steps as it shall
reasonably deem appropriate under the circumstances, to maintain and pursue
each application (and to obtain the relevant registration) and to maintain each
registration of each material Copyright owned by the Grantor including, without
limitation, filing of applications for renewal, where necessary and shall
report all such filings and registrations to the Agent and Secured Parties
within five (5) Business Days after the same are made and execute and deliver
all documents and instruments necessary to perfect the Agent's and the Secured
Parties' security interest in any Copyright or Copyright License; and
(e) the Grantor will promptly notify the Agent and
the Secured Parties of any infringement, of any Copyright of which it becomes
aware and will take such actions as it shall reasonably deem appropriate under
the circumstances to protect such Copyright, including, where appropriate, the
bringing of suit for infringement, seeking injunctive relief and seeking to
recover any and all damages for such infringement.
4.10 Patents and Trademarks. Except to the extent that the
failure by the Grantor to do any of the following could have a Material Adverse
Effect:
(a) the Grantor will not, except with respect to any
Patent that the Grantor shall reasonably determine is of negligible economic
value to it, do any act, or omit to do any act, whereby any Patent may become
abandoned or dedicated;
17
<PAGE> 18
(b) the Grantor (either itself or through licensees)
will, except with respect to any Trademark that the Grantor shall reasonably
determine is of negligible economic value to it, (i) continue to use each
Trademark on each and every trademark class of goods applicable to its current
line as reflected in its current catalogs, brochures and price lists in order
to maintain such trademark in full force free from any claim of abandonment for
non-use, (ii) maintain as in the past the quality of products and services
offered under such Trademark, (iii) employ such Trademark with the appropriate
notice of registration, (iv) not adopt or use any mark which is confusingly
similar or a colorable limitation of such Trademark unless the Agent, for the
ratable benefit of the Lenders, shall obtain a perfected security interest in
such mark pursuant to this Agreement, and (v) not (and not permit any licensee
or sublicensee thereof to) do any act or omit to do any act whereby any
Trademark may become invalidated;
(c) the Grantor will notify the Agent and the
Secured Parties immediately if it knows, or has reason to know, that any
application or registration relating to any patent or Trademark may become
abandoned or dedicated, or of any adverse determination or development
(including, without limitation, the determination or development (including,
without limitation, the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office
any court or tribunal in any country) regarding the Grantor's ownership of any
Patent or Trademark or its right to register the same or to keep and maintain
the same;
(d) whenever the Grantor, either by itself or
through any agent, employee, licensee or designee, shall file an application
for the registration of any Patent or Trademark with the Canadian Trade Marks
Office, the United States Patent and Trademark Office or any similar office of
agency in any other country or any political subdivision thereof, the Grantor
shall report such filing to the Agent and the Secured Parties within five (5)
Business Days after the last day of the fiscal quarter in which such filing
occurs. Upon request of the Agent, the Grantor shall execute and deliver any
and all agreements, instruments, documents, and papers as the Agent may request
to evidence the Agent's and the Secured Parties' security interest in any
Patent or Trademark and the goodwill and general intangibles of the Grantor
relating thereto or represented thereby;
(e) the Grantor will take all reasonable and
necessary steps, including, without limitation, in any proceeding before the
Canadian Trade Marks Office, the United States Patent and Trademark Office or
any similar office or agency in any other country or any political subdivision
thereof, to maintain and pursue each application (and to obtain the relevant
registration) and to maintain each registration of the Patents and Trademarks,
including, without limitation, filing of applications for renewal, affidavits
of use and affidavits of incontestability;
(f) in the event that any Patent or Trademark
included in the Collateral is infringed, misappropriated or diluted by a third
party, the Grantor shall
18
<PAGE> 19
promptly notify the Agent and the Secured Parties after it learns thereof and
shall, unless the Grantor shall reasonably determine that such Patent or
Trademark is of negligible economic value to the Grantor, which determination
the Grantor shall promptly report to the Agent and the Secured Parties,
promptly sue for infringement, misappropriation or dilution, to seek injunctive
relief where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution, or take such other actions as the
Grantor shall reasonably deem appropriate under the circumstances to protect
such Patent or Trademark.
4.11 Compliance with Laws. The Grantor will comply in all
material respects with all Requirements of Law applicable to the Collateral or
to the operation of the Grantor's business.
4.12 No Impairment. The Grantor will not take or permit to
be taken any action which could impair the Agent's or any Secured Party's
rights in the Collateral.
4.13 Payment of Obligations. The Grantor will pay promptly
when due all taxes, assessments and governmental charges or levies imposed upon
the Collateral, as well as all claims of any kind (including, without
limitation, claims for labor, materials, supplies and services) against or with
respect to the Collateral, except that no such charge need be paid if
non-payment is permitted by the Credit Agreement.
4.14 Negative Pledge. The Grantor will not create, incur or
permit to exist, will defend the Collateral against, and will take such other
action as is necessary to remove, any Lien or claim on or to the Collateral,
other than the Liens created hereby and other than the Permitted Liens.
4.15 Limitations on Dispositions of Collateral. The Grantor
will not sell, transfer, lease or otherwise dispose of any of the Collateral,
or attempt, offer or contract to do so except as permitted in the Credit
Agreement.
4.16 Performance by the Secured Party of the Grantor's
Obligations; Reimbursement. If the Grantor fails to perform or comply with any
of its security agreements contained herein, the Agent may, without notice to
or consent by the Grantor, perform or comply or cause performance or compliance
therewith and the expenses of the Agent incurred in connection with such
performance or compliance, together with interest thereon at the rate then in
effect under the Credit Agreement, shall be payable by the Grantor to the Agent
on demand and such reimbursement obligation shall be secured hereby.
4.17 Notice. The Grantor will advise the Agent and the
Secured Parties promptly, in reasonable detail, in accordance with the
provisions hereof (a) of any Lien (other than Permitted Liens) on, or claim
asserted against, any of the Collateral and (b) of
19
<PAGE> 20
the occurrence of any other event which could reasonably be expected to have a
material adverse effect on the aggregate value of the Collateral or on the
Liens created hereunder.
ARTICLE V
SPECIAL PROVISIONS REGARDING
RECEIVABLES AND CONTRACTS
5.1 Grantor Remains Liable under Receivables and Contracts.
Anything herein to the contrary notwithstanding (including without limitation
the grant of any rights to the Agent) the Grantor shall remain liable under
each of the Receivables and Contracts to observe and perform all the conditions
and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise to each such Receivable
or Contract. Neither the Agent nor any Secured Party shall have any obligation
or liability under any Receivable (or any agreement giving rise thereto) or
Contract by reason of or arising out of this Security Agreement or the receipt
by the Agent or any of the Secured Parties of any payment relating to such
Receivable or Contract pursuant hereto, nor shall the Agent or any of the
Secured Parties be obligated in any manner to perform any of the obligations of
the Grantor under or pursuant to any Receivable (or any agreement giving rise
thereto) or under or pursuant to any Contract, to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received by it or as
to the sufficiency of any performance by any party under any Receivable (or any
agreement giving rise thereto) or under any Contract, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
5.2 Notice to Account Debtors and Contracting Parties. At
any time while an Event of Default shall have occurred and be continuing, the
Agent may, and upon request of the Agent the Grantor shall, notify Account
Debtors and parties to the Contracts that the Accounts and the Contracts have
been assigned to the Agent and that payments in respect thereof shall be made
directly to the Agent. The Agent may in its own name or in the name of others
communicate with Account Debtors and parties to the Contracts to verify with
them to its satisfaction the existence, amount and terms of any Receivables or
Contracts.
5.3 Analysis of Receivables. The Agent shall have the right
upon the occurrence and during the continuance of an Event of Default to make
test verifications of the Receivables in any manner and through any medium that
it reasonably considers advisable, and the Grantor shall furnish all such
assistance and information as the Agent may require in connection with such
test verifications. At any time and from time to time upon the occurrence and
during the continuance of an Event of Default, upon the Agent's
20
<PAGE> 21
request and at the expense of the Grantor, the Grantor shall cause independent
public accountants or others satisfactory to the Agent to furnish to the Agent
reports showing reconciliations, aging and test verifications of, and trial
balances for, the Receivables. Upon the occurrence and during the continuance
of the Event of Default the Agent in its own name or in the name of others may
communicate with Account Debtors on the Receivables to verify with them to the
Agent's satisfaction the existence, amount and terms of any Receivables.
5.4 Collections on Receivables and Contracts. The Agent
hereby authorizes the Grantor to collect the Receivables and Contracts, subject
to the Agent's direction and control, and the Agent may curtail or terminate
said authority at any time and itself, or by its agents, collect all
Receivables and amounts owing under Contracts. If required by the Agent at any
time, any payments of Receivables and Contracts, when collected by the Grantor,
shall be forthwith (and, in any event, within two Business Days) delivered by
the Grantor to the Agent in the exact form received, duly indorsed by the
Grantor to the Agent if required, and, until so turned over, shall be held by
the Grantor in trust for the Agent and the Secured Parties, segregated from
other funds of the Grantor. All Proceeds, while held by the Agent (or by the
Grantor in trust for the Agent and the Secured Parties) shall continue to be
Collateral security for all of the Secured Obligations and shall not constitute
payment thereof until applied as hereinafter provided.
ARTICLE VI
POWER OF ATTORNEY
The Grantor hereby irrevocably constitutes and appoints the
Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Grantor and in the name of
the Grantor or in its own name, from time to time in the Secured Party's
discretion, for the purpose of carrying out the terms of this Security
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Security Agreement.
The Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. This power of attorney is a
power coupled with an interest and shall be irrevocable.
21
<PAGE> 22
ARTICLE VII
REMEDIES; RIGHTS UPON DEFAULT
7.1 Rights and Remedies Generally. If an Event of Default
shall occur and be continuing, then and in every such case, the Agent and
Secured Parties shall have all the rights of a secured party under the UCC or
other applicable Lien Legislation, shall have all rights now or hereafter
existing under all other applicable laws, and, subject to any mandatory
requirements of applicable law then in effect, shall have all the rights set
forth in this Security Agreement and all the rights set forth with respect to
the Collateral or this Security Agreement in any other security agreement
between the parties.
7.2 Assembly of Collateral. If an Event of Default shall
occur and be continuing, upon five (5) Business Days notice to the Grantor, the
Grantor shall, at its own expense, assemble the Collateral (or from time to
time any portion thereof) and make it available to the Agent at any place or
places designated by the Agent which is reasonably convenient to both parties.
7.3 Proceeds. If an Event of Default shall occur and be
continuing:
(a) all Proceeds received by the Grantor consisting
of cash, checks and other near-cash items shall be held by the Grantor in trust
for the Agent and the Secured Parties, segregated from other funds of the
Grantor and shall forthwith upon receipt by the Grantor, be turned over to the
Agent, in the same form received by the Grantor (appropriately indorsed or
assigned by the Grantor to the order of the Agent or in such other manner as
shall be satisfactory to the Agent); and
(b) any and all such Proceeds received by the Agent
(whether from the Grantor or otherwise), or any part thereof, may, in the sole
discretion of the Agent, be held by the Agent as Collateral hereunder and/or
then or at any time or from time to time thereafter, be applied by the Agent
against the Secured Obligations (whether matured or unmatured), in such order
as the Agent may elect.
7.4 Disposition of Collateral. To the extent required by
applicable law, the Agent will give the Grantor reasonable notice of the time
and place of any public sale of the Collateral or any part thereof or of the
time after which any private sale or any other intended disposition thereof is
to be made. The Grantor agrees that the requirements of reasonable notice to it
shall be met if such notice is mailed, postage prepaid to its address specified
in Section 8.3 of this Security Agreement (or such other address that the
Grantor may provide to the Agent in writing) at least ten (10) days before the
time of any public sale or after which any private sale may be made.
22
<PAGE> 23
7.5 Waiver; Deficiency. The Grantor waives and agrees not to
assert any rights or privileges which it may acquire under Section 9-112 of the
UCC or similar provision under any other applicable Lien Legislation. The
Grantor shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to satisfy the Secured
Obligations. The Grantor shall also be liable for all expenses of the Secured
Party incurred in connection with collecting such deficiency, including,
without limitation, the fees and disbursements of any attorneys employed by the
Secured Party to collect such deficiency.
7.6 Expenses; Attorneys Fees. The Grantor shall reimburse
the Agent for all its expenses in connection with the exercise of its rights
hereunder, including, without limitation, all attorneys' fees and legal
expenses incurred by the Agent or any Secured Party. Expenses of retaking,
holding, preparing for sale, selling or the like shall include the attorneys'
fees and legal expenses of the Agent. All such expenses shall be secured
hereby. The Grantor's obligations under this Section shall survive the
termination of this Security Agreement and the discharge of the Grantor's other
obligations hereunder.
7.7 Application of Proceeds. All proceeds received by the
Agent in respect of any sale of, collection from, or other realization upon all
or any part of the Collateral pursuant to the exercise by the Agent of its
remedies as a secured creditor as provided in this Article hereof shall be
applied, together with any other sums then held by the Agent pursuant to this
Security Agreement, promptly by the Agent in the manner contemplated by Section
2.9 of the Credit Agreement:
7.8 Limitation on Duties Regarding Preservation of
Collateral. (a) The Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the UCC or otherwise, shall be to deal with it in the
same manner as the Agent deals with similar property for its own account.
(b) The Agent shall have no obligation to take any
steps to preserve rights against prior parties to any Collateral.
(c) Neither the Agent nor any of its directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Grantor or otherwise.
23
<PAGE> 24
ARTICLE VIII
MISCELLANEOUS
8.1 Indemnity. (a) The Grantor agrees to indemnify, pay and
hold harmless the Agent and the Secured Parties and each of their respective
Affiliates and assignees and their respective officers, directors, employees,
agents and affiliates of the Agent and each of the Secured Parties
(collectively called the "Indemnitees") from and against any and all other
Losses, expenses or disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitee shall be
designated a party thereto), which may be imposed on, incurred by, or asserted
against that Indemnitee, in any manner relating to or arising out of this
Security Agreement (including, without limitation, any misrepresentation by the
Grantor in this Security Agreement) (the "indemnified liabilities");
provided, however, that Grantor shall not have any obligation to an Indemnitee
hereunder with respect to an indemnified liability to the extent that such
indemnified liability is determined by a court of competent jurisdiction in a
final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of that Indemnitee. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the Grantor
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all indemnified
liabilities incurred by the Indemnitees or any of them.
(b) Survival. The obligations of the Grantor
contained in this Section 8.1 shall survive the termination of this Security
Agreement and the discharge of the Grantor's other obligations under this
Security Agreement and the other Facility Documents.
(c) Reimbursement. Any amounts paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement shall
constitute Secured Obligations secured by the Collateral.
8.2 Governing Law; Terms. THIS SECURITY AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS,
EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OR EFFECT OF PERFECTION OR
NON-PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR PROPERTY ARE MANDITORILY GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN
24
<PAGE> 25
THE STATE OF NEW YORK AND, IN EACH SUCH CASE AND TO SUCH EXTENT, THE LAWS OF
SUCH OTHER JURISDICTION SHALL GOVERN.
8.3 Notices. Any notice or other communication herein
required or permitted to be given shall be given at the address and in the
manner set forth in the Credit Agreement (unless a different address as shall
be designated by one party in a written notice to the other in the manner
required by the Credit Agreement).
8.4 Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of the Grantor, the Agent, the Secured
Parties, all future holders of the Secured Obligations and their respective
successors and assigns, except that the Grantor may not assign or transfer any
of its rights or obligations under this Security Agreement.
8.5 Amendments. None of the terms or provisions of this
Security Agreement may be waived, amended, supplemented or otherwise modified
except in the manner prescribed in the Credit Agreement and in writing signed
by the Agent. Any amendment, modification or supplement of or to any provision
of this Security Agreement, any waiver of any provision of this Security
Agreement and any consent to any departure by the Grantor from the terms of any
provision of this Security Agreement shall be effective only in the specific
instance and for the specific purpose for which made or given. Except where
notice is specifically required by this Security Agreement or any other
Facility Document, no notice to 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.
8.6 No Waiver; Remedies Cumulative. (a) No failure or delay
on the part of the Agent in exercising any right, power or remedy hereunder and
no course of dealing between the Grantor and the Agent with respect to any
right, power or remedy, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
remedy. A waiver by the Agent of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the Agent
would otherwise have on any future occasion. The rights and remedies herein
expressly provided are cumulative and may be exercised singly or concurrently
and as often and in such order as the Agent deems expedient and are not
exclusive of any rights or remedies which the Agent would otherwise have under
any other Facility Document or applicable law.
(b) In the event the Agent shall have instituted any
proceeding to enforce any right, power or remedy under this Security Agreement
by foreclosure, sale, entry or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined
adversely to the Agent, then and in every such case, the Grantor, the Agent and
each holder of any of the Secured Obligations shall be
25
<PAGE> 26
restored to their respective former positions and rights hereunder with respect
to the Collateral, and all rights, remedies and powers of the Agent and the
Secured Parties shall continue as if no such proceeding had been instituted.
8.7 Termination; Release. This Security Agreement shall
terminate on the Termination Date and shall remain in full force and effect
until the Termination Date, notwithstanding that, from time to time prior
thereto, the Borrower may be free from any Obligations. Upon the termination
of this Security Agreement or any release of Collateral in accordance with the
provisions of the Credit Agreement the Agent, at the request and sole expense
of the Grantor, will execute and deliver to the Grantor the proper instruments
(including UCC termination statements and similar forms or statements in other
jurisdictions) acknowledging the termination of this Security Agreement, and
will duly assign, transfer and deliver to the Grantor, without recourse,
representation or warranty of any kind whatsoever, such of the Collateral as
may be in possession of the Agent and has not theretofore been disposed of,
applied or released.
8.8 Authority of Agent. The Grantor acknowledges that the
rights and responsibilities of the Agent under this Security Agreement with
respect to any action taken by the Agent or the exercise or non-exercise by the
Agent of any option, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Security Agreement shall, as between
the Agent and the Secured Parties, be governed by the Credit Agreement, but, as
between the Agent and the Grantor, the Agent shall be conclusively presumed to
be acting as agent for the Secured Parties with full and valid authority so to
act or refrain from acting, and the Grantor shall not be under any obligation,
or entitlement, to make any inquiry respecting such authority.
8.9 Submission to Jurisdiction. (a) Consent. The Grantor
hereby irrevocably submits to the jurisdiction of any New York State or Federal
court, sitting in the City of New York, New York County, and any appellate
court form any thereof (each, a "New York Court") in any action or proceeding
arising out of or relating to this Security Agreement or for recognition or
enforcement of any judgment, and the Grantor hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
such New York Court.
(b) Waivers. The Grantor hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Security
Agreement in any New York Court. The Grantor also hereby irrevocably waives,
to the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding. The Grantor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or by any other manner
provided by law.
26
<PAGE> 27
(c) Service. The Grantor hereby irrevocably consents to the
service of copies of any summons and complaint and any other process which may
be served in any such action or proceeding by certified mail, return receipt
requested, or by delivering a copy of such process to the Grantor, at its
address specified in the signature pages of the Credit Agreement or by any
other method permitted by law, in each case, with a copy by telecopy to Pouliot
Mercure at (514) 875-4308, attention Brian Riordan.
(d) Appointment of Agent. The Grantor designates and
appoints CT Corporation System, 1633 Broadway, New York, New York 10019 and
such other persons as may irrevocably agree in writing to serve as its agent to
receive on its behalf service of all process in any proceedings in any court,
such service being hereby acknowledged by the Grantor to be effective and
binding in every respect. If any agent appointed by a Grantor refuses to
receive and forward such service, the Grantor hereby agrees that service upon
it by mail shall constitute sufficient service.
(e) Other Rights. Nothing in this Section 8.9 shall affect
the right of the Agent or any Secured Party to serve legal process in any other
manner permitted by law or affect the right of the Agent or any Secured Party
to bring any action or proceeding against the Grantor or its Property in the
courts of other jurisdictions.
8.10 Currency Indemnity. The Grantor acknowledges and agrees
that this Security Agreement constitutes a credit transaction in which
specification of U.S. dollars is of the essence, and U.S. dollars shall be the
currency of account and payment in all events. If pursuant to a judgment or
for any other reason payment shall be made in another currency, and such
payment after prompt conversion to U.S. dollars and transfer to New York City
in accordance with normal banking procedures falls short of the sum due the
Secured Parties in U.S. dollars, the Grantor shall pay the Secured Parties such
shortfall and the Secured Parties shall have a separate cause of action for
such amount.
8.11 Waiver of Trial by Jury. THE GRANTOR, THE AGENT AND THE
SECURED PARTIES HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE FACILITY DOCUMENTS, ANY DOCUMENT DELIVERED UNDER THE FACILITY
DOCUMENTS, THE LOAN OR THE ACTIONS OF THE AGENT, THE ARRANGER OR ANY LENDER IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
8.12 Limitation of Liability. No claim may be made by the
Grantor or any other Person against the Agent or any Secured Party or the
Affiliates, directors, officers, employees, attorneys or agent of any of them
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of
27
<PAGE> 28
liability arising out of or related to the transactions contemplated by this
Security Agreement, or any act, omission or event occurring in connection
therewith; and the Grantor hereby waives, releases and agrees not to sue upon
any claim for any such damages, whether or not accrued and whether or not known
or suspected to exist in its favor.
8.13 Headings Descriptive. The headings of the several
Sections and subsections of this Security Agreement are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Security Agreement.
8.14 Severability. In case any provision in or obligation
under this Security Agreement or the Secured Obligations shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
8.15 Counterparts. This Security Agreement may be executed
in any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
8.16 Marshalling. Neither the Agent nor any Secured Party
shall be under any obligation to marshall any assets in favor of the Grantor or
any other Person or against or in payment of any or all of the Secured
Obligations.
8.17 Language. The parties have agreed that this Security
Agreement and all related documents, correspondence and notices between them
should be and will be drafted in the English language. Les parties conviennent
que la presente entente et tous les documents s'y rattachant, y compris tout
avis ou correspondance, ont ete et seront rediges en langue anglaise.
8.18 Obligations Absolute. All obligations of the Grantor
hereunder shall be absolute and unconditional irrespective of any of the
following (and the Grantor expressly waives any and all defenses arising out
of, or based on, any of the following):
(i) any bankruptcy, insolvency,
reorganization, arrangement, readjustment, composition, liquidation or
the like of the Grantor, the Borrower or any other Guarantor;
(ii) any lack of validity or enforceability
of the Credit Agreement, any other Facility Document or any other
agreement or instrument relating thereto;
(iii) any change in the time, manner or
place of payment of, or in any other term of, all or any of the
Secured Obligations, or any other amendment or waiver of or any
consent to any departure from the Credit Agreement, any other
Facility
28
<PAGE> 29
Document or any other agreement or instrument relating thereto;
(iv) any exchange, release or
non-perfection of any other collateral, or any release or amendment or
waiver of or consent to any departure from any guarantee, for all or
any of the Secured Obligations;
(v) any exercise or non-exercise, or any
waiver of any right, remedy, power or privilege under or in respect of
this Agreement, or any other Facility Document except as specifically
set forth in a waiver granted pursuant to the provisions of Section
8.6 hereof; or
(vi) any other circumstances which might
otherwise constitute a defense available to, or a discharge of, the
Grantor.
29
<PAGE> 30
IN WITNESS WHEREOF, the Grantor and the Agent have caused this
Security Agreement to be duly executed and delivered as of the date first
written above.
CEDAR GROUP, INC.,
as Grantor
BY:
------------------------
Name:
Title:
BT COMMERCIAL CORPORATION,
as Agent
BY:
------------------------
Name:
Title:
<PAGE> 31
Schedule 1
Copyrights and Copyright Licenses
None
<PAGE> 32
Schedule 2
Patent and Patent Licenses
None
<PAGE> 33
Schedule 3
Trademark and Trademark Licenses
None
<PAGE> 34
Schedule 4
Filing Offices
Jurisdiction Office
<PAGE> 35
Schedule 5
Inventory and Equipment Locations
<PAGE> 1
CEDAR GROUP CANADA INC.
PLEDGE AGREEMENT
This PLEDGE AGREEMENT, dated as of March 27, 1996 (as the same
may from time to time be amended, supplemented or otherwise modified, the
"Agreement"), is made by CEDAR GROUP CANADA INC., a company incorporated under
the Canada Business Corporations Act (the "Pledgor"), in favor and for the
benefit of BT COMMERCIAL CORPORATION, a Delaware corporation, as agent (in such
capacity, the "Agent") for the lenders (collectively, with their successors,
indorsees, participants, transferees and assigns, the "Secured Parties") party
to or that become party to the Credit Agreement (as defined below).
PRELIMINARY STATEMENT
WHEREAS, the Pledgor, Cedar Group, Inc. (the "Parent") and
certain of its subsidiaries, as guarantors, the Secured Parties and the Agent
have entered into a Credit Facility Agreement, dated as of the date of this
Agreement (as the same may from time to time be amended, supplemented or
otherwise modified and in effect, the "Credit Agreement"), pursuant to which
the Secured Parties have agreed, according to the terms of the Credit
Agreement, to make Loans in an aggregate principal amount of up to $43,000,000
or such other amount as may from time to time be specified in the Credit
Agreement;
WHEREAS, the Pledgor is the legal and beneficial owner of the
Pledged Collateral (as defined below);
WHEREAS, it is a condition precedent to the obligations of the
Secured Parties to make the Loans to the Pledgor under the Credit Agreement
that the Pledgor execute and deliver this Agreement to the Agent.
NOW, THEREFORE, in consideration of the foregoing and to
induce the Secured Parties to make their respective Loans, the Pledgor agrees
with the Agent, for the ratable benefit of the Secured Parties, as follows:
Section 1. Defined Terms.
(a) General. Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to them in the Credit
Agreement.
<PAGE> 2
(b) "Secured Obligations" means collectively (a) all
Obligations of the Pledgor now existing or hereafter arising under or in
respect of the Credit Agreement, including, without limitation, the obligations
of the Pledgor to pay principal, interest and all other charges, fees,
expenses, commissions, reimbursements, premiums, indemnities and other payments
in connection therewith, and (b) without duplication of the amounts described
in clause (a), all obligations of the Pledgor now existing or hereafter arising
under or in respect of this Agreement or any other Facility Document.
(c) "Proceeds" means (a) identifiable or traceable personal
property, fixtures and crops (i) derived directly or indirectly from any
dealing with collateral or the proceeds of collateral, and (ii) in which the
debtor acquires an interest, (b) a right to an insurance payment or any other
payment as indemnity or compensation for loss of, or damage to, the collateral
or proceeds of the collateral, and (c) a payment made in total or partial
discharge or redemption of an intangible, an instrument, a security or chattel
paper;
(d) "Termination Date" means the earlier of (i) the date on
which the Agent is required to release the Pledgor from its Secured Obligations
and (ii) the date on which the Secured Obligations have been Fully Satisfied.
Section 2. Pledge.
As collateral security for the payment and performance when
due (whether at stated maturity, by acceleration or otherwise) of all the
Secured Obligations, the Pledgor hereby pledges, assigns, transfers and grants
to the Agent for its benefit and the benefit of the Secured Parties, a
continuing first priority security interest in and to all of the rights, title
and interest of the Pledgor in, to and under the following property, whether
now existing or hereafter acquired, (the "Pledged Collateral") and for the
purposes of the laws of the Province of Quebec, the Pledgor hereby hypothecates
in favor of the Secured Parties the Pledged Collateral for the principal amount
of CDN$100,000,000, bearing interest at the rate provided in the Credit
Agreement:
(a) issued and outstanding shares of Capital Stock
listed on Schedule A hereto of each Person listed on Schedule A hereto
(the "Pledged Shares") (which are and shall remain at all times until
this Agreement terminates, certificated shares), including the
certificates representing the Pledged Shares and any interest of the
Pledgor in the entries on the books of any financial intermediary
pertaining to the Pledged Shares;
(b) all additional shares of Capital Stock of any
issuer of the Pledged Shares from time to time acquired by the Pledgor
in any manner (which will be and shall remain at all times until this
Agreement terminates, certificated shares) (which shares shall be
deemed to be part of the Pledged Shares), including the certificates
representing such additional shares and any interest of the Pledgor
2
<PAGE> 3
in the entries on the books of any financial intermediary pertaining
to such additional shares;
(c) all dividends, cash, options, warrants, rights,
instruments, distributions, returns of capital, income, profits and
other property, interests or proceeds from time to time received,
receivable or otherwise distributed to the Pledgor in respect of or in
exchange for any or all of the Pledged Shares (collectively,
"Distributions"); and
(d) all Proceeds of any of the foregoing, and in any
event, including, without limitation, any and all (i) proceeds of any
insurance, indemnity, warranty or guarantee payable to the Agent or to
the Pledgor from time to time with respect to any of the Pledged
Collateral, (ii) payments (in any form whatsoever) made or due and
payable to the Pledgor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Pledged Collateral by any Governmental Authority
(or any person acting under color of a Governmental Authority), (iii)
instruments representing obligations to pay amounts in respect of
Pledged Shares, (iv) products of the Pledged Collateral, and (v) other
amounts from time to time paid or payable under or in connection with
any of the Pledged Collateral.
This Agreement secures, and the Pledged Collateral is collateral security for,
the payment and performance in full when due, whether at stated maturity, by
acceleration or otherwise (including, without limitation, the payment of
interest and other amounts which would accrue and become due but for the filing
of a petition in bankruptcy or the operation of an automatic stay under any
applicable bankruptcy, insolvency or similar law) of the Secured Obligations.
Section 3. No Release.
Nothing set forth in this Agreement shall relieve the Pledgor
from the performance of any term, covenant, condition or agreement on the
Pledgor's part to be performed or observed under or in respect of any of the
Pledged Collateral or from any liability to any Person under or in respect of
any of the Pledged Collateral or shall impose any obligation on the Agent or
any Secured Party to perform or observe any such term, covenant, condition or
agreement on the Pledgor's part to be so performed or observed or shall impose
any liability on the Agent or any Secured Party for any act or omission on the
part of the Pledgor relating thereto or for any breach of any representation or
warranty on the part of the Pledgor contained in this Agreement or under or in
respect of the Pledged Collateral or made in connection herewith or therewith.
3
<PAGE> 4
Section 4. Delivery of Pledged Collateral.
(a) All certificates, agreements or instruments representing
or evidencing the Pledged Collateral, to the extent not previously delivered to
the Agent, shall immediately upon receipt thereof by the Pledgor be delivered
to and held by or on behalf of the Agent pursuant hereto. All Pledged
Collateral shall be in suitable form for transfer by delivery or shall be
accompanied by duly executed instruments of transfer or assignment in blank,
all in form and substance satisfactory to the Agent. The Agent shall have the
right, at any time upon the occurrence and during the continuance of an Event
of Default and without notice to the Pledgor, to endorse, assign or otherwise
transfer to or to register in the name of the Agent or any of its nominees any
or all of the Pledged Collateral. In addition, the Agent shall have the right
at any time after the occurrence and during the continuance of an Event of
Default to exchange certificates representing or evidencing Pledged Collateral
for certificates of smaller or larger denominations.
(b) On or before the First Funding Date and at any time
thereafter, the Pledgor shall deliver to the Agent (i) a certified copy of
resolutions of the directors and shareholders of those Issuers which are
incorporated in Canada approving the hypothecation and pledge of the Pledged
Shares to the Agent, the notation of the Agent's interest on the relevant
Pledged Share certificate(s) and in the shareholder ledgers of such Canadian
Issuers, any further transfers of the Pledged Shares made pursuant to this
Agreement, and the recording of same in the books and records of such Canadian
Issuer, and which resolution shall state that it may not be amended or revoked
without the prior written consent of the Agent, and (ii) signed, undated
resignations addressed to such Canadian Issuer pursuant to which each officer
and director of the Issuer resigns from all offices with the Issuer and as a
director on its board of directors.
(c) If the issuer of Pledged Shares is incorporated in a
jurisdiction which does not permit the use of certificates to evidence equity
ownership, then the Pledgor shall, to the extent permitted by applicable law,
record such pledge on the stock register of the issuer, execute any customary
stock pledge forms or other documents necessary or appropriate to complete the
pledge and give the Agent the right to transfer such Pledged Shares under the
terms hereof and provide to the Agent an opinion of counsel, in form and
substance satisfactory to the Agent, confirming such pledge.
Section 5. Supplements; Further Assurances.
(a) The Pledgor agrees that at any time and from time to
time, at its sole cost and expense, it shall promptly execute and deliver all
further instruments and documents, including, without limitation, supplemental
or additional Lien Statements and take all further action that may be necessary
or that the Agent may reasonably request, in order to perfect and protect the
pledge, security interest and Lien granted or purported to
4
<PAGE> 5
be granted hereby or to enable the Agent to exercise and enforce its rights and
remedies hereunder with respect to any Pledged Collateral.
(b) The Pledgor shall, upon obtaining any Pledged Shares of
any Person, promptly (and in any event within five Business Days) deliver to
the Agent a pledge amendment, duly executed by the Pledgor, in substantially
the form of Exhibit 1 hereto (each, a "Pledge Amendment"), in respect of the
additional Pledged Shares which are to be pledged pursuant to this Agreement,
and confirming the attachment of the Lien hereby created on and in respect of
such additional shares. The Pledgor hereby authorizes the Agent to attach each
Pledge Amendment to this Agreement and agrees that all Pledged Shares listed on
any Pledge Amendment delivered to the Agent shall for all purposes hereunder be
considered Pledged Collateral.
Section 6. Representations, Warranties and Covenants.
The Pledgor represents, warrants or covenants (as applicable)
as follows:
(a) Corporate Power. The Pledgor is duly organized and
validly existing in good standing under the laws of the jurisdiction of its
formation and has the corporate power and authority and the legal right to
execute and deliver, to perform its obligations under, and to grant the Lien on
the Pledged Collateral pursuant to, this Agreement and has taken all necessary
corporate action to authorize its execution, delivery and performance of, and
grant of the Lien on the Pledged Collateral pursuant to, this Agreement.
(b) Enforceability. The Pledgor has duly executed and
delivered this Agreement and it constitutes a legal, valid and binding
obligation of the Pledgor, enforceable in accordance with its terms.
(c) No Violation. The execution, delivery and performance of
this Agreement will not violate any provision of any Requirement of Law or any
agreement, document or instrument of the Pledgor and will not result in the
creation or imposition of any Lien on any of the properties or revenues of the
Pledgor pursuant to any Requirement of Law or any agreement, document or
instrument, except as contemplated hereby.
(d) No Liens. The Pledgor is, and at the time of any
delivery of any Pledged Collateral to the Agent pursuant to Section 4 of this
Agreement will be, the sole legal and beneficial owner of the Pledged
Collateral. All Pledged Collateral is on the date hereof, and will be, so
owned by the Pledgor free and clear of any Liens except for the Lien created by
this Agreement.
(e) No Consents, etc. No consent of any party (including,
without limitation, stockholders or creditors of the Pledgor) (other than
consents which have been obtained by the Pledgor in writing and delivered to
the Agent) and no consent, authoriza-
5
<PAGE> 6
tion, approval, or other action by, and no notice to or filing with, any
Governmental Authority or regulatory body or other Person is required (x) for
the execution, delivery or performance of this Agreement by the Pledgor or for
the pledge by the Pledgor of the Pledged Collateral pursuant to this Agreement,
or (y) for the exercise by the Agent of the voting or other rights provided for
in this Agreement, or (z) for the exercise by the Agent of the remedies in
respect of the Pledged Collateral pursuant to this Agreement.
(f) Due Authorization and Issuance. All of the Pledged
Shares have been, and to the extent hereafter issued will be upon such
issuance, duly authorized and validly issued and fully paid and nonassessable.
(g) Chief Executive Office. The Pledgor's chief executive
office is as of the date hereof located at 500 Notre Dame Street, Lachine,
Quebec, Canada H8S 2B2. The Pledgor shall not move its chief executive office,
except to such new location as it may establish in accordance with the Facility
Documents.
(h) Delivery of Pledged Collateral; Filings. The Pledgor has
delivered to the Agent all certificates representing the Pledged Shares
intended to be pledged pursuant to this Agreement and each of the other
documents and approvals required by Section 4(b) or (c) of this Agreement and
has caused to be filed with all appropriate Governmental Authorities as
described in the Credit Agreement all necessary forms or Lien Statements
evidencing the Lien created by this Agreement, and such delivery, filing and
pledge of the Pledged Collateral pursuant to this Agreement creates a valid and
perfected first priority security interest in the Pledged Collateral securing
the payment of the Secured Obligations pursuant to the Lien Legislation in
effect in each applicable jurisdiction.
(i) Pledged Collateral. All information set forth herein,
including the Schedules annexed hereto, relating to the Pledged Collateral is
accurate and complete in all material respects.
(j) Ownership of Pledged Collateral. Except as otherwise
permitted by the Credit Agreement, the Pledgor at all times will be the sole
beneficial owner of the Pledged Collateral.
(k) No Options, Warrants, etc. There are no options,
warrants, calls, rights, commitments or agreements of any character to which
the Pledgor is a party or by which it is bound obligating the Pledgor to issue,
deliver or sell or cause to be issued, delivered or sold, additional Pledged
Shares or obligating the Pledgor to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement. There are no voting
trusts or other agreements or understandings to which the Pledgor is a party
with respect to the voting of the capital stock of any issuer of the Pledged
Shares.
6
<PAGE> 7
(l) Other. The Pledgor hereby represents and warrants that
each of the statements set forth in Article 4 of the Credit Agreement is true
and correct.
Section 7. Voting Rights; Distributions; etc.
(a) So long as no Event of Default shall have occurred:
(i) The Pledgor shall be entitled to exercise any
and all voting and other consensual rights pertaining to the Pledged
Shares or any part thereof for any purpose not inconsistent with the
terms or purpose of this Agreement or any other Facility Document;
provided, however, that the Pledgor shall not in any event exercise
such rights in any manner which may have a material adverse effect on
the value of the Pledged Collateral or the security intended to be
provided by this Agreement.
(ii) Subject to the terms of the Facility Documents,
the Pledgor shall be entitled to receive and retain, and to utilize
free and clear of the Lien of this Agreement, any and all
Distributions, but only if and to the extent made in accordance with
the provisions of the Facility Documents; provided, however, that any
and all such Distributions consisting of rights or interests in the
form of securities shall be, and shall be forthwith delivered to the
Agent to hold as Pledged Collateral and shall, if received by the
Pledgor, be received in trust for the benefit of the Agent, be
segregated from the other property or funds of the Pledgor, and be
forthwith delivered to the Agent as Pledged Collateral in the same
form as so received (with any necessary endorsement).
(iii) The Agent shall be deemed without further
action or formality to have granted to the Pledgor all necessary
consents relating to voting rights and shall, if necessary, upon
written request of the Pledgor and at the Pledgor's sole cost and
expense, from time to time execute and deliver (or cause to be
executed and delivered) to the Pledgor all such instruments as the
Pledgor may reasonably request in order to permit the Pledgor to
exercise the voting and other rights which it is entitled to exercise
pursuant to Section 7(a)(i) hereof and to receive the Distributions
which it is authorized to receive and retain pursuant to Section
7(a)(ii) hereof.
(b) Upon the occurrence of an Event of Default:
(i) All rights of the Pledgor to exercise the voting
and other consensual rights it would otherwise be entitled to exercise
pursuant to Section 7(a)(i) hereof without any action or the giving of
any notice shall cease, and all such rights shall thereupon become
vested in the Agent, which shall thereupon have the sole right to
exercise such voting and other consensual rights.
7
<PAGE> 8
(ii) All rights of the Pledgor to receive
Distributions which it would otherwise be authorized to receive and
retain pursuant to Section 7(a)(ii) hereof shall cease and all such
rights shall thereupon become vested in the Agent, which shall
thereupon have the sole right to receive and hold as Pledged
Collateral such Distributions.
(c) The Pledgor shall, at its sole cost and expense, from
time to time execute and deliver to the Agent appropriate instruments as the
Agent may reasonably request in order to permit the Agent to exercise the
voting and other rights which it may be entitled to exercise pursuant to
Section 7(b)(i) hereof and to receive all Distributions which it may be
entitled to receive under Section 7(b)(ii) hereof.
(d) All Distributions which are received by the Pledgor
contrary to the provisions of Section 7(b)(ii) hereof shall be received in
trust for the benefit of the Agent, shall be segregated from other funds of the
Pledgor and shall immediately be paid over to the Agent as Pledged Collateral
in the same form as so received (with any necessary endorsement).
Section 8. Transfers and Other Liens; Additional Shares.
(a) The Pledgor shall not (i) sell, convey, assign or
otherwise dispose of, or grant any option, right or warrant with respect to,
any of the Pledged Collateral permitted by the Credit Agreement, (ii) create or
permit to exist any Lien upon or with respect to any Pledged Collateral, or
(iii) permit the issuer of any Pledged Shares to merge, consolidate or change
its legal form, except in each case as permitted by the Credit Agreement.
(b) The Pledgor shall (i) cause each issuer of the Pledged
Shares not to issue any stock or other securities in addition to or in
substitution for the Pledged Shares issued by such issuer, except to the
Pledgor and (ii) pledge hereunder, immediately upon its acquisition (directly
or indirectly) thereof, any and all additional shares of capital stock or other
equity securities of the issuer of the Pledged Shares which are required to be
pledged hereunder.
Section 9. Reasonable Care.
The Agent shall be deemed to have exercised reasonable care in
the custody and preservation of the Pledged Collateral in its possession if
such Pledged Collateral is accorded treatment substantially equivalent to that
which the Agent, in its individual capacity, accords its own property
consisting of similar instruments or interests, it being understood that
neither the Agent nor any of the Secured Parties shall have responsibility for
(i) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relating to any Pledged
Collateral, whether
8
<PAGE> 9
or not the Agent or any other Secured Party has or is deemed to have knowledge
of such matters, or (ii) taking any necessary steps to preserve rights against
any Person with respect to any Pledged Collateral.
Section 10. Remedies; Decisions Relating to Exercise of
Remedies.
(a) If any Event of Default shall have occurred and be
continuing, the Agent shall have the right, in addition to other rights and
remedies provided for herein or otherwise available to it to be exercised from
time to time, (i) to retain and apply the Distributions to the Secured
Obligations as provided in Section 11 hereof, and (ii) to exercise all the
rights and remedies of a secured party in default under any applicable Lien
Legislation at that time, and the Agent may also in its sole discretion,
without notice except as specified below, sell the Pledged Collateral or any
part thereof (including, without limitation, any partial interest in the
Pledged Shares) in one or more parcels at public or private sale, at any
exchange, broker's board or at any of the Agent's offices or elsewhere, for
cash, on credit or for future delivery, and at such price or prices and upon
such other terms as the Agent may deem commercially reasonable, irrespective of
the impact of any such sales on the market price of the Pledged Collateral.
The Agent or any other Secured Party or any of their respective Affiliates may
be the purchaser of any or all of the Pledged Collateral at any such sale and
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Pledged Collateral sold at
such sale, to use and apply any of the Secured Obligations owed to such Person
as a credit on account of the purchase price of any Pledged Collateral payable
by such Person at such sale. Each purchaser at any such sale shall acquire the
property sold absolutely free from any claim or right on the part of the
Pledgor, and the Pledgor hereby waives, to the fullest extent permitted by law,
all rights of redemption, stay and/or appraisal which it now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted. The Pledgor acknowledges and agrees that, to the extent
notice of sale shall be required by law, fifteen (15) days notice to the
Pledgor of the time and place of any public sale or the time after which any
private sale or other intended disposition is to take place shall constitute
reasonable notification of such matters. No notification need be given to the
Pledgor if it has signed, after the occurrence of an Event of Default, a
statement renouncing or modifying any right to notification of sale or other
intended disposition. The Agent shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been given. The Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. The Pledgor hereby
waives, to the fullest extent permitted by law, any claims against the Agent
arising by reason of the fact that the price at which any Pledged Collateral
may have been sold at such a private sale was less than the price which might
have been obtained at a public sale, even if the Agent accepts the first offer
received and does not offer such Pledged Collateral to more than one offeree.
9
<PAGE> 10
(b) The Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, and applicable state or
foreign securities laws, the Agent may be compelled, with respect to any sale
of all or any part of the Pledged Collateral, to limit purchasers to Persons
who will agree, among other things, to acquire the Pledged Collateral for their
own account, for investment and not with a view to the distribution or resale
thereof. The Pledgor acknowledges that any such private sales may be at prices
and on terms less favorable to the Agent than those obtainable through a public
sale without such restrictions (including, without limitation, a public
offering made pursuant to a registration statement under the Securities Act or
any prospectus or public offering documents issued under the laws of Canada),
and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner and that
the Agent shall have no obligation to engage in public sales and no obligation
to delay the sale of any Pledged Collateral for the period of time necessary to
permit the issuer thereof to register it for a form of public sale requiring
registration under any applicable securities laws (including U.S. or Canadian
legislation), even if such issuer would agree to do so.
(c) In addition to any of the other rights and remedies
hereunder, the Agent shall have the right to institute a proceeding seeking
specific performance in connection with any of the agreements or obligations
hereunder.
(d) Notwithstanding any other provision of this Agreement to
the contrary, if, after giving effect to (i) any sale, transfer or other
disposition of any or all of the Pledged Collateral pursuant hereto and after
the application of the proceeds hereunder to the Secured Obligations and (ii)
the sale, transfer or other disposition of any collateral pledged pursuant to
any other Security Document and the application of such proceeds thereunder,
any Secured Obligations remain unpaid or unsatisfied, the Pledgor shall remain
liable for the unpaid and unsatisfied amount of such Secured Obligations for
which the Pledgor is otherwise liable pursuant to the Credit Agreement or
otherwise.
Section 11. Application of Proceeds.
All Distributions held from time to time by the Agent and all
proceeds received by the Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Pledged Collateral pursuant to
the exercise by the Agent of its remedies as a secured creditor as provided in
Section 10 hereof shall be applied, together with any other sums then held by
the Agent pursuant to this Agreement, promptly by the Agent in accordance with
the provisions of the Credit Agreement.
10
<PAGE> 11
Section 12. Expenses.
The Pledgor will upon demand pay to the Agent the amount of
any and all expenses, including the fees and expenses of its counsel and the
fees and expenses of any experts and agents, which the Agent may incur in
connection with (a) the collection of the Secured Obligations, (b) the
enforcement and administration of this Agreement, (c) the custody or
preservation of, or the sale of, collection from, or other realization upon,
any of the Pledged Collateral, (d) the exercise or enforcement of any of the
rights of the Agent or any Secured Party hereunder or (e) the failure by the
Pledgor to perform or observe any of the provisions hereof. All amounts
payable by the Pledgor under this Section 12 shall be due upon demand and shall
be part of the Secured Obligations. The Pledgor's obligations under this
Section shall survive the termination of this Agreement and the discharge of
the Pledgor's other obligations hereunder.
Section 13. No Waiver; Cumulative Remedies.
(a) No failure on the part of the Agent to exercise, no
course of dealing with respect to, and no delay on the part of the Agent in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or
remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The rights and remedies herein provided
are cumulative and are not exclusive of any remedies provided in any other
Facility Document or by law.
(b) In the event the Agent or any of the Secured Parties
shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Agent, then and in every such case, the
Pledgor, the Agent and each holder of any of the Secured Obligations shall be
restored to their respective former positions and rights hereunder with respect
to the Pledged Collateral, and all rights, remedies and powers of the Agent and
the Secured Parties shall continue as if no such proceeding had been
instituted.
Section 14. Agent May Perform; Agent Appointed
Attorney-in-Fact.
If the Pledgor shall fail to do any act or thing that it has
covenanted to do hereunder or any warranty on the part of the Pledgor contained
herein shall be breached, the Agent or any Secured Party may (but shall not be
obligated to) do the same or cause it to be done or remedy any such breach, and
may expend funds for such purpose. Any and all amounts so expended by the
Agent or such Secured Party shall be paid by the Pledgor promptly upon demand
therefor, with interest at the highest rate then in effect under the Credit
Agreement during the period from and including the date on which such funds
were so expended to the date of repayment. The Pledgor's obligations under
this Section 14
11
<PAGE> 12
shall survive the termination of this Agreement and the discharge of the
Pledgor's other obligations under this Agreement, the Credit Agreement and the
other Facility Documents. The Pledgor hereby appoints the Agent its
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor, or otherwise, from time to time in the Agent's
discretion to take any action and to execute any instrument consistent with the
terms of this Agreement and the other Facility Documents which the Agent may
deem necessary or advisable to accomplish the purposes of this Agreement. The
foregoing grant of authority is a power of attorney coupled with an interest
and such appointment shall be irrevocable for the term of this Agreement. The
Pledgor hereby ratifies all that such attorney shall lawfully do or cause to be
done by virtue hereof.
Section 15. Indemnity.
(a) Indemnity. The Pledgor agrees to indemnify, pay and hold
harmless the Agent and each of the Secured Parties and each of their respective
officers, directors, employees, agents and Affiliates (collectively called the
"Indemnitees") from and against any and all Losses, expenses or disbursements
of any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto), which may
be imposed on, incurred by, or asserted against that Indemnitee, in any manner
relating to or arising out of this Agreement (including, without limitation,
any misrepresentation by the Pledgor in this Agreement) (the "indemnified
liabilities"); provided, however, that the Pledgor shall not have any
obligation to an Indemnitee hereunder with respect to an indemnified liability
to the extent that such indemnified liability is determined by a court of
competent jurisdiction in a final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of that Indemnitee. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in
the preceding sentence may be unenforceable because it is violative of any law
or public policy, the Pledgor shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all indemnified liabilities incurred by the Indemnitees or any
of them.
(b) Survival. The obligations of the Pledgor contained in
this Section 15 shall survive the termination of this Agreement and the
discharge of the Pledgor's other obligations under this Agreement and the other
Facility Documents.
(c) Reimbursement. Any amounts paid by any Indemnitee as to
which such Indemnitee has the right to reimbursement shall constitute Secured
Obligations secured by the Pledged Collateral.
(d) Further Hypothecation. In order to secure the payments
of the amounts provided in Sections 12, 14 and 15, the Pledgor hereby
hypothecates in favor of
12
<PAGE> 13
the Secured Parties the Pledged Collateral for the further principal amount of
CDN$20,000,000, bearing interest at the rate provided in the Credit Agreement.
Section 16. Modification in Writing.
No amendment, modification, supplement, termination or waiver
of or to any provision of this Agreement, nor consent to any departure by the
Pledgor therefrom, shall be effective unless the same shall be done in
accordance with the terms of the Credit Agreement and unless in writing and
signed by the Agent. Any amendment, modification or supplement of or to any
provision of this Agreement, any waiver of any provision of this Agreement and
any consent to any departure by the Pledgor from the terms of any provision of
this Agreement shall be effective only in the specific instance and for the
specific purpose for which made or given. Except where notice is specifically
required by this Agreement or any other Facility Document, no notice to or
demand on the Pledgor in any case shall entitle the Pledgor to any other or
further notice or demand in similar or other circumstances.
Section 17. Termination; Release.
(a) This Agreement shall terminate on the Termination Date,
and shall remain in full force and effect until the Termination Date.
(b) Upon termination of this Agreement or any release of
Pledged Collateral in accordance with the provisions of the Credit Agreement,
the Agent shall, upon the request and at the sole cost and expense of the
Pledgor, forthwith assign, transfer and deliver to the Pledgor, against receipt
and without recourse to or warranty by the Agent, such of the Pledged
Collateral to be released (in the case of a release) as may be in the
possession of the Agent and as shall not have been sold or otherwise applied
pursuant to the terms hereof, and, with respect to any other Pledged
Collateral, proper instruments (including UCC termination statements on Form
UCC-3 or other similar release forms as may be required in a jurisdiction other
than the United States) acknowledging the termination of this Agreement or the
release of such Pledged Collateral, as the case may be.
Section 18. Notices.
Any notice or other communication herein required or permitted
to be given shall be given at the address and in the manner set forth in the
Credit Agreement (unless a different address as shall be designated by one
party in a written notice to the other in the manner required by the Credit
Agreement).
Section 19. Continuing Security Interest; Assignment.
13
<PAGE> 14
This Agreement shall create a continuing security interest in
the Pledged Collateral and shall (a) be binding upon the Pledgor, and its
successors and assigns and (b) inure, together with the rights and remedies of
the Agent hereunder, to the benefit of the Agent and the other Secured Parties
and each of their respective successors, transferees and assigns; no other
Persons (including, without limitation, any other creditor of the Pledgor)
shall have any interest herein or any right or benefit with respect hereto.
Without limiting the generality of the foregoing clause (b), any Secured Party
may assign or otherwise transfer any indebtedness held by it secured by this
Agreement to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Secured Party,
herein or otherwise, subject however, to the provisions of the Credit
Agreement.
Section 20. Governing Law; Terms.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR PROPERTY ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Section 21. Severability of Provisions.
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 22. Execution in Counterparts.
This Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original, but all such
counterparts together shall constitute one and the same agreement.
Section 23. Irrevocable Authorization and Instruction to
Issuers.
The Pledgor hereby irrevocably authorizes and instructs the
issuers of the Pledged Shares (the "Issuers") to comply with any instruction
received by it from the Agent in writing that (a) states that an Event of
Default has occurred and (b) is otherwise in accordance with the terms of this
Agreement, without any other or further instructions
14
<PAGE> 15
from the Pledgor, and the Pledgor agrees that the Issuers shall be fully
protected in so complying.
Section 24. Authority of Agent.
The Pledgor acknowledges that the rights and responsibilities
of the Agent under this Agreement with respect to any action taken by the Agent
or the exercise or non-exercise by the Agent of any option, voting right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between the Agent and the Secured
Parties, be governed by the Credit Agreement, but, as between the Agent and the
Pledgor, the Agent shall be conclusively presumed to be acting as agent for the
Secured Parties with full and valid authority so to act or refrain from acting,
and neither the Pledgor nor the Issuers shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
Section 25. Consent to Jurisdiction, Agent for Service.
(a) Consent. The Pledgor hereby irrevocably submits to the
jurisdiction of any New York State or Federal court, sitting in the City of New
York, New York County, and any appellate court form any thereof (each, a "New
York Court") in any action or proceeding arising out of or relating to this
Agreement or for recognition or enforcement of any judgment, and the Pledgor
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York Court.
(b) Waivers. The Pledgor hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any New York Court. The Pledgor also hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The Pledgor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or by any other manner
provided by law.
(c) Service. The Pledgor hereby irrevocably consents to the
service of copies of any summons and complaint and any other process which may
be served in any such action or proceeding by certified mail, return receipt
requested, or by delivering a copy of such process to the Pledgor, at its
address specified in the signature pages to the Credit Agreement or by any
other method permitted by law, in each case, with a copy by telecopy to Pouliot
Mercure at (514) 875-4308, attention Brian Riordan.
(d) Appointment of Agent. The Pledgor designates and
appoints CT Corporation System, 1633 Broadway, New York, New York 10019 and
such other
15
<PAGE> 16
persons as may irrevocably agree in writing to serve as its agent to receive on
its behalf service of all process in any proceedings in any New York Court,
such service being hereby acknowledged by the Pledgor to be effective and
binding in every respect. If any agent appointed by the Pledgor refuses to
receive and forward such service, the Pledgor hereby agrees that service upon
it by mail shall constitute sufficient service.
(e) Other Rights. Nothing in this Section 25 shall affect
the right of the Agent or any Secured Party to serve legal process in any other
manner permitted by law or affect the right of the Agent or any Secured Party
to bring any action or proceeding against the Pledgor or its Property in the
courts of other jurisdictions.
Section 26. Waiver of Trial by Jury.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
PLEDGOR, THE AGENT AND THE SECURED PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY MATTER ARISING HEREUNDER.
Section 27. Limitation of Liability.
No claim may be made by the Pledgor or any other Person
against the Agent or any Secured Party or the Affiliates, directors, officers,
employees, attorneys or agent of any of them for any special, indirect,
consequential or punitive damages in respect of any claim for breach of
contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and the Pledgor hereby waives, releases and
agrees not to sue upon any claim for any such damages, whether or not accrued
and whether or not known or suspected to exist in its favor.
Section 28. Currency Indemnity.
The Pledgor acknowledges and agrees that this Agreement
constitutes a credit transaction in which specification of U.S. dollars is of
the essence, and U.S. dollars shall be the currency of account and payment in
all events. If pursuant to a judgment or for any other reason payment shall be
made in another currency, and such payment after prompt conversion to U.S.
dollars and transfer to New York City in accordance with normal banking
procedures falls short of the sum due the Agent or the Secured Parties in U.S.
dollars, the Pledgor shall pay the Agent or the Secured Parties such shortfall
and the Lenders shall have a separate cause of action for such amount.
16
<PAGE> 17
Section 29. Language.
The parties have agreed that this Agreement, and all related
documents, correspondence, and notices between them should be and will be
drafted in the English language. Les parties conviennent que la presente
entente et tous les documents s'y rattachant, y compris tout avis ou
correspondance, ont ete et seront rediges en langue anglaise.
17
<PAGE> 18
IN WITNESS WHEREOF, the Pledgor and the Agent have caused this
Agreement to be duly executed and delivered by their duly authorized officers
as of the date first written above.
CEDAR GROUP CANADA INC.
as the Pledgor
By:
------------------------------
Name:
Title:
BT COMMERCIAL CORPORATION,
as Agent
By:
------------------------------
Name:
Title:
<PAGE> 19
SCHEDULE A
PLEDGED SHARES
<TABLE>
<CAPTION>
PERCENTAGE OF ALL
CERTIFICATE NUMBER OF CAPITAL OR OTHER EQUITY
ISSUER CLASS OF STOCK NO(S). SHARES INTERESTS OF ISSUER
------ -------------- ----------- --------- -----------------------
<S> <C> <C> <C> <C>
Dominion Bridge Inc. Common C-6 1000 100%
Preferred B-3 2,000,000
Preferred A-37 18,338,000
Cedar Group Common 100%
Australia Pty
Limited
</TABLE>
<PAGE> 20
EXHIBIT 1
PLEDGE AMENDMENT
This Pledge Amendment, dated ______________, is delivered
pursuant to Section 5 of the Agreement referred to below. The undersigned
hereby agrees that this Pledge Amendment may be attached to the Pledge
Agreement, dated as of March 27, 1996, between the undersigned and BT
COMMERCIAL CORPORATION, as Agent (the "Agreement"; capitalized terms used
herein and not defined herein have the meanings ascribed to them in the
Agreement) and that the Pledged Shares listed on this Pledge Amendment shall be
deemed to be and shall become part of the Pledged Collateral and shall secure
all Secured Obligations.
CEDAR GROUP CANADA INC., the Pledgor
By:
---------------------------
Name:
Title:
<PAGE> 1
CEDAR GROUP CANADA INC.
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of March 27, 1996 (as the
same may from time to time be amended, supplemented or otherwise modified, the
"Security Agreement"), is made by CEDAR GROUP CANADA INC., a company
incorporated under the Canada Business Corporations Act (the "Grantor"), in
favor and for the benefit of BT COMMERCIAL CORPORATION, a Delaware corporation,
as agent (in such capacity, the "Agent") for the lenders (collectively, with
their successors, indorsees, participants, transferees and assigns, the
"Secured Parties", and individually, a "Secured Party") party to or that become
party to the Credit Agreement (as defined below).
PRELIMINARY STATEMENT
WHEREAS, the Grantor, Cedar Group, Inc. (the "Parent") and
certain of the Parent's subsidiaries, as guarantors, the Secured Parties and
the Agent have entered into a Credit Facility Agreement, dated as of the date
of this Security Agreement (as the same may from time to time be amended,
supplemented or otherwise modified and in effect, the "Credit Agreement"),
pursuant to which the Secured Parties have agreed, according to the terms of
the Credit Agreement, to make Loans in an aggregate principal amount of up to
$43,000,000 or such other amount as may from time to time be specified in the
Credit Agreement;
WHEREAS, the Grantor is the legal and beneficial owner of the
Collateral (as defined below);
WHEREAS, it is a condition precedent to the obligations of the
Secured Party to make the Loans to the Grantor under the Credit Agreement that
the Grantor execute and deliver this Security Agreement to the Agent.
NOW, THEREFORE, in consideration of the foregoing and to
induce the Secured Parties to make their respective Loans, the Grantor agrees
with the Agent, for the ratable benefit of the Secured Parties, as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
1.1 Defined Terms.
Unless otherwise defined in this Security Agreement, terms
defined in the Credit Agreement and used herein, shall have the meaning given
to them in the Credit Agreement.
"Account Debtor" shall mean the person who is obligated on an
Account.
"Accounts" shall mean any monetary obligation for goods sold
or leased or services rendered, not evidenced by an Instrument or a Security,
whether or not earned by performance, together with (a) any collateral
assigned, hypothecated or held to secure any of the foregoing and the rights
under any security agreement granting a security interest in such collateral,
(b) all goods, the sale of which gave rise to any of the foregoing, including,
without limitation, all rights in any returned or repossessed goods and unpaid
seller's rights, (c) all guarantees, endorsements and indemnifications on, or
of, any of the foregoing, and (d) all powers of attorney for the execution of
any evidence of indebtedness or security or other writing in connection
therewith.
"Accounts Records" shall mean (a) all original copies of all
documents, instruments or other writings evidencing the Accounts, (b) all
books, correspondence, credit or other files, records, Accounts Records, ledger
sheets or cards, invoices, and other papers relating to Accounts, including
without limitation all tapes, cards, computer tapes, computer discs, computer
runs, record keeping systems and other papers and documents relating to the
Accounts, whether in the possession or under the control of the Grantor or any
computer bureau or agent from time to time acting for the Grantor or otherwise,
(c) all evidences of the filing of financing statements and the registration of
other instruments in connection therewith and amendments, supplements or other
modifications thereto, notices to other creditors or secured parties, and
certificates, acknowledgements, or other writings, including without limitation
lien search reports, from filing or other registration offices, (d) all credit
information, reports and memoranda relating thereto, and (e) all other written
or non-written forms of information related in any way to the foregoing or any
Account.
"Chattel Paper" shall mean one or more than one writing that
evidences both a monetary obligation and a security interest in or a lease of
specific goods.
"Collateral" shall have the meaning assigned to it in Article
2 hereof.
"Collateral Account" shall mean any account (which may be a
securities account) maintained pursuant to this Security Agreement or any other
Security Document
2
<PAGE> 3
by the Agent, and all funds, securities and instruments or other items from
time to time credited to such account and all interest thereon.
"Collateral Records" shall mean books, records, Accounts
Records computer software, computer printouts, customer lists, blueprints,
technical specifications, manuals, and similar items which relate to any
Collateral other than such items obtained under license or franchise agreements
which prohibit assignment or disclosure of such items.
"Consumer Goods" shall mean goods that are used or acquired
for use primarily for personal, family or household purposes.
"Contracts" shall mean all contracts, agreements, documents,
permits, instruments, policies or documents used in or in relation to the
Grantor's business during the term of this Security Agreement, as any of the
same may from time to time be amended, supplemented or otherwise modified and
as such schedule may be amended, modified or otherwise supplemented from time
to time, including, without limitation, (a) all rights of the Grantor to
receive moneys due and to become due to it thereunder or in connection
therewith, (b) all rights of the Grantor to damages arising out of or for
breach or default in respect thereof (c) all rights of the Grantor to receive
proceeds of any insurance, indemnity, warranty or guarantee with respect
thereto, and (d) all rights of the Grantor to exercise all remedies thereunder.
"Copyrights" shall mean:
(a) all copyrights, whether registered or unregistered,
and whether or not the underlying works of
authorship have been published, and all works of
authorship and other rights therein or derived
therefrom, all copyrights of works based on,
incorporated in, derived from or relating to works
covered by such copyrights, all right, title and
interest to make and exploit all derivative works
based upon or adopted from works covered by such
copyright and all copyright registrations and
copyright applications, and any renewals or
extensions thereof, including without limitation,
each copyright registration and copyright
applicable, if any, identified in Schedule 1 hereto,
and including, without limitation:
(i) all databases, source codes, object
codes and manuals, whether published
or unpublished, now or hereafter
existing, in Canada, the United
States and all other countries other
than confidential information
belonging to third parties;
3
<PAGE> 4
(ii) all applications, registrations,
renewals, extensions and recordings
relating thereto filed in the United
States Copyright Office or in any
other governmental office or agency
in Canada, the United States or
elsewhere, in each case in which the
Grantor has any right, title or
interest;
(iii) the right to print, publish and
distribute any of the foregoing;
(iv) the right to sue or otherwise
recover for any and all past,
present and future infringements and
misappropriations thereof;
(v) all income, royalties, damages and
other payments now and hereafter due
and/or payable with respect thereto
(including, without limitation,
payments under all licenses entered
into in connection therewith, and
damages and payments for past or
future infringements thereof);
(vi) all rights of the Grantor
corresponding thereto and all other
rights of any kind whatsoever of the
Grantor accruing thereunder or
pertaining thereto; and
(vii) all other rights which the Grantor
presently has or hereafter acquires
pursuant to any Copyright License,
including, without limitation,
copyright assignments, exclusive
and nonexclusive licenses; and
(b) all right, title and interest of the Grantor in all
physical materials embodying works with respect to
which the Grantor owns or holds rights in any
Copyrights or Copyright Licenses.
"Copyright License" shall mean (a) any written agreement
naming the Grantor as a licensor or licensee, granting any right in or to any
Copyright or copyright registration in Canada, the United States or any other
country (including, without limitation, any thereof referred to on Schedule 1
hereto) or (b) any and all present and future
4
<PAGE> 5
agreements, including, without limitation, assignments and consents, as any
such agreements may from time to time be amended or supplemented, pursuant to
which the Grantor now has or hereafter acquires any direct or beneficial
interest in any Copyright, or is a grantor of rights to any third party with
respect to any copyright, whether as a party to any such agreement or as an
assignee of any rights under any such agreement (including, without limitation,
any thereof referred to on Schedule 1 hereto) excluding, however, non-exclusive
computer software licenses, subject in each case to the terms of such license
agreements, including, without limitation, terms requiring consent to a grant
of a security interest thereof.
"Deposit Accounts" shall mean the Collateral Account and any
deposit or securities account (general or special), together with any funds,
instruments or other items credited to any such account from time to time, and
all interest thereon.
"Document of Title" shall mean any writing that purports to be
issued by or addressed to a bailee and purports to cover such goods in the
bailee's possession as are identified or fungible portions of an identified
mass, and that in the ordinary course of business is treated as establishing
that the person in possession of it is entitled to receive, hold and dispose of
the document and the goods it covers.
"Equipment" shall mean goods that are not Inventory or
Consumer Goods including, without limitation, machinery, manufacturing
equipment, data processing equipment, computers, office equipment, furniture,
appliances and tools.
"Farm Products" shall mean crops, livestock or supplies used
or produced in farming operations or products of crops or livesock in their
unmanufactured state and goods in the possession of a debtor engaged in
raising, fattening, grazing or other farming operations.
"Fixtures" shall mean goods which became so related to
particular real estate that an interest in such goods arises under applicable
real estate law.
"General Intangibles" shall mean all personal property,
including choses in action, that is not goods in Chattel Paper, Documents of
Title, Instruments, Money or Securities, including, without limitation,
trademarks, copyrights, patents, and contracts, licenses and franchises (except
in the case of licenses and franchises in respect of which the Grantor is the
licensee or franchisee if the agreement in respect of such license or franchise
prohibits by its terms any assignment or grant of a security interest) limited
and general partnership interests and joint venture interests, income tax
refunds, trade names, distributions on Securities, computer programs and other
computer software, inventions, designs, TRADE secrets, goodwill, proprietary
rights, customer lists, supplier contracts, sale orders, correspondence,
advertising materials, payments due in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of any property, reversionary
5
<PAGE> 6
interests in pension and profit-sharing plans and reversionary, beneficial and
residual interests in trusts, credits with and other claims against any Person,
together with any collateral for any of the foregoing and the rights under any
security agreement granting a security interest in such collateral.
"goods" shall mean tangible personal property other than
Chattel Paper, Documents of Title, Instruments, Money and Securities, and
includes fixtures, growing crops, the unborn young of animals, timber to be
cut, and minerals and hydrocarbons to be extracted.
"Instruments" shall mean:
(a) a bill, note or cheque within the meaning of the
Bills of Exchange Act (Canada) or any other writing
that evidences a right to the payment of money and is
of a type that in the ordinary course of business is
transferred by delivery with any necessary
endorsement or assignment, or
(b) a letter of credit and an advice of credit if the
letter or advice states that it must be surrendered
upon claiming payment thereunder,
but does not include a writing that constitutes part of Chattel Paper, a
Document of Title or a Security.
"Insurance Policies" shall mean all insurance policies of the
Grantor or under which the Grantor is a beneficiary, and all amendments,
modifications, supplements or renewals thereof, including without limitation
the insurance policies set forth in the schedules to the Credit Agreement.
"Inventory" shall mean all goods which are held for sale or
lease or that have been leased or are to be furnished (or which have been
furnished) under any contract of service or which are raw materials or work in
progress or materials used or consumed in the Grantor's business.
"Material Contract" shall mean a Contract with a term greater
than six months and involving a dollar amount in excess of US$20,000.
"Money" shall mean a medium of exchange authorized or adopted
by the Parliament of Canada as part of the currency of Canada or by a foreign
government as part of its currency.
6
<PAGE> 7
"Patents" shall mean (a) all letters patent of Canada, the
United States or any other country and all reissues and extensions thereof,
including, without limitation, any thereof referred to in Schedule 2 hereto,
and (b) all applications for letters patent of Canada, the United States or any
other country and all divisions, continuations and continuations-in-part
thereof, including, without limitation, any thereof referred to in Schedule 2
hereto including without limitation (i) all inventions and improvements
described and claimed therein, (ii) the right to sue or otherwise recover for
any misappropriations thereof, (iii) all income, royalties, damages and other
payments now and hereafter due and/or payable with respect thereto (including,
without limitation, payments under all licenses entered into in connection
therewith, and damages and payments for past and future infringements thereof),
and (iv) all rights corresponding thereto and all reissues, divisions,
continuations, continuations-part, substitutes, renewals, and extensions
thereof, all improvements thereon and all other rights of any kind whatsoever
of such Grantor accruing thereunder or pertaining thereto.
"Patent License" shall mean all agreements, whether written or
oral, providing for the grant by or to the Grantor of any right to manufacture,
use or sell any invention covered by a Patent, including, without limitation,
any thereof referred to in Schedule 2 hereto, subject in each case to the terms
of such license agreements, including, without limitation, terms requiring
consent to a grant of a security interest thereof.
"PPSA" shall mean the Personal Property Security Act (Ontario)
or similar or equivalent legislation in any other province of Canada, in each
case as the same may from time to time be amended, reenacted or replaced.
"Proceeds" shall mean identifiable or traceable personal
property in any form derived directly or indirectly from any dealing with
Collateral or the proceeds therefrom, and includes any payment representing
indemnity or compensation for loss of or damage to the Collateral or proceeds
therefrom.
"Secured Obligations" shall mean, collectively, (a) all
Obligations of the Grantor now existing or hereafter arising under or in
respect of the Credit Agreement, including, without limitation, the obligations
of the Grantor to pay principal, interest and all other charges, fees,
expenses, commissions, reimbursements, premiums, indemnities and other payments
in connection therewith, and (b) without duplication of the amounts described
in clause (a), all obligations of the Grantor now existing or hereafter arising
under or in respect of this Security Agreement or any other Facility Document.
"Security" shall mean a document that is:
(a) issued in bearer, order or registered form;
7
<PAGE> 8
(b) of a type commonly dealt in upon securities exchanges
or markets or commonly recognized in any area in
which it is issued or dealt in as a medium for
investment;
(c) one of a class or series or by its terms is divisible
into a class or series of documents; and
(d) evidence of a share, participation or other interest
in property or in an enterprise or is evidence of an
obligation of the issuer,
and includes an uncertificated security within the meaning of Part VI
(Investment Securities) of the Business Corporations Act (Ontario).
"Termination Date" means the earlier of (i) the date on which
the Agent is required to release the Grantor from its Secured Obligations and
(ii) the date on which the Secured Obligations have been Fully Satisfied.
"Trademarks" shall mean (a) all trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, service marks, certification marks, logos and other source or
business identifiers, and the goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and
all applications in connection therewith, whether in the Canadian Trade Mark
Office, the United States Patent and Trademark Office or in any similar office
or agency of Canada, the United States, any State thereof or any other country
or any political subdivision thereof, or otherwise, including, without
limitation, any thereof referred to in Schedule 3 hereto, and (b) all renewals
thereof, including without limitation (i) the right to sue or otherwise recover
for any and all past, present and future infringements and misappropriations
thereof, (ii) all income, royalties, damages and other payments now and
hereafter due and/or payable with respect thereto (including, without
limitation, payment under all licenses entered into in connection therewith,
and damages and payments for past or future infringements thereof), and (iii)
all rights corresponding thereto and all other rights of any kind whatsoever of
the Grantor accruing thereunder or pertaining thereto.
"Trademark License" shall mean any agreement, written or oral,
providing for the grant by or to the Grantor of any right to use any Trademark,
including, without limitation, any thereof referred to in Schedule 3 hereto,
subject in each case to the terms of such license agreements, including,
without limitation, terms requiring consent to a grant of a security interest
thereof.
"UCC" shall mean the Uniform Commercial Code as in effect from
time to time in the State of New York, except to the extent perfection of any
security interest is governed by the law of another jurisdiction in the United
States, in which case "UCC"
8
<PAGE> 9
shall mean the Uniform Commercial Code as in effect from time to time in such
other jurisdiction for such other purposes.
ARTICLE II
GRANT OF SECURITY INTERESTS
2.1 Grant of Security Interest. As security for the prompt
and complete payment and performance in full when due of all the Secured
Obligations, the Grantor hereby assigns, pledges, mortgages, charges and
transfers to the Agent, for itself and for the ratable benefit of the Secured
Parties, as and by way of a fixed and specific mortgage and charge, and grants
to the Agent, for itself and for the ratable benefit of the Secured Parties, a
security interest in and continuing lien on all of the Grantor's right, title
and interest in, to and under all of the Grantor's present and after-acquired
personal property, located anywhere in the world other than in the Province of
Quebec, Canada, including, without limitation, the following, in each case,
whether now owned or existing or hereafter acquired or arising (all of which
being hereinafter collectively called the "Collateral"):
(i) all Accounts;
(ii) all Accounts Records;
(iii) all Chattel Paper;
(iv) all Collateral Account;
(v) all Collateral Records;
(vi) all Contracts;
(vii) all Copyrights;
(viii) all Copyright Licenses;
(ix) all Deposit Accounts;
(x) all Documents of Title;
9
<PAGE> 10
(xi) all Equipment;
(xii) all Fixtures;
(xiii) all General Intangibles;
(xiv) all Instruments;
(xv) all Insurance Policies;
(xvi) all Inventory;
(xvii) all Money;
(xviii) all Patents;
(xix) all Patent Licenses;
(xx) all Securities;
(xxi) all Trademarks;
(xxii) all Trademark Licenses;
(xxiii) all other tangible and
intangible personal property;
(xxiv) all accessions and additions to
any or all of the foregoing, all substitutions and replacements for
any or all of the foregoing and all Proceeds or products of any or all
of the foregoing; and
(xxv) to the extent not otherwise
included, all Proceeds (including, to the extent not otherwise
included therein, all (a) payments under insurance (whether or not the
Agent is the loss payee thereunder) or any indemnity, warranty or
guarantee payable by reason of loss or damage to or otherwise with
respect to any of the foregoing
10
<PAGE> 11
Collateral and (b) cash and products of any and all of the foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Grantor hereby represents and warrants to the Agent and
the Secured Parties, which representations and warranties shall survive
execution and delivery of this Security Agreement, as follows:
3.1 Organization; Power. (a) The Grantor is duly organized
and validly existing in good standing under the laws of the jurisdiction of its
formation.
(b) The Grantor has the power and authority and the
legal right to execute, deliver and carry out the terms and provisions of this
Security Agreement and to grant the Lien in the Collateral pursuant to this
Security Agreement and has taken all necessary action to authorize the
execution, delivery and performance by it of this Security Agreement. The
Grantor has duly executed and delivered this Security Agreement, and this
Security Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
3.2 Validity, Perfection and Priority. (a) The security
interests in the Collateral granted to the Agent, for itself and the ratable
benefit of the Secured Parties, hereunder constitute valid and continuing
security interests in the Collateral;
(b) upon filing financing statements naming the
Grantor as "debtor" and the Agent as "secured party" in the filing offices set
forth on Schedule 4 hereto, the security interests in the Collateral granted to
the Agent, for itself and the ratable benefit of the Secured Parties, hereunder
will constitute perfected security interests therein superior and prior to all
Liens other than Permitted Liens, rights or claims of all other Persons and
will be enforceable as such as against all creditors of and purchasers from the
Grantor (except purchasers of Inventory in the ordinary course of business);
and
(c) the Collateral granted hereunder includes all of
the personal property of the Grantor located anywhere in the world other than
in the Province of Quebec.
3.3 No Liens; Other Financing Statements. (a) Except for
the Lien granted to the Agent hereunder, the Grantor owns and, as to all
Collateral whether now existing or hereafter acquired, will continue to own,
each item of the Collateral free and clear of any and all Liens, rights or
claims of all other Persons other than Permitted Liens, and the
11
<PAGE> 12
Grantor shall defend the Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein adverse to the
Agent or any Secured Party other than the holders of Permitted Liens.
(b) No financing statement or other evidence of Lien
covering or purporting to cover any of the Collateral is registered or on file
in any public office other than (i) financing statements registered or to be
registered in connection with the security interests granted to the Agent for
itself and the ratable benefit of the Secured Parties hereunder, (ii) financing
statements for which proper termination statements or discharges have been
delivered to the Agent for registration, and (iii) financing statements
registered in connection with the Intercompany Security Documents or the
Permitted Liens.
3.4 Chief Executive Office. The chief executive office of the
Grantor is located at 500 Notre Dame Street, Lachine, Quebec, Canada, H8S 2B2.
The Accounts, all Contracts and all Collateral Records are located at the chief
executive office of the Grantor. All Accounts and Contracts are maintained at,
and controlled and directed (including, without limitation, for general
accounting purposes) from the chief executive office.
3.5 Location of Inventory and Equipment. All Inventory and
Equipment now or from time to time included in the Collateral will be located
only at the locations listed on Schedule 5 or at such other locations within
the provinces of Canada in which the Agent has a valid, perfected, first
priority security interest in such Inventory and Equipment. None of such
Inventory or Equipment is in the possession of a bailee.
3.6 Accounts.
(a) Each Account is and will be the legal, valid and
binding obligation of the Account Debtor in respect thereof, representing an
unsatisfied obligation of such Account Debtor, and is and will be enforceable
in accordance with its terms.
(b) Each Account is and will be in full force and
effect and is not and will not be subject to any setoffs, defenses, taxes,
counterclaims (except (x) with respect to refunds, returns and allowances in
the ordinary course of business with respect to damaged merchandise and (y) to
the extent that such Account may not yet have been earned by performance).
(c) Each Account is and will be in compliance with
all applicable laws, whether federal, provincial, state, local or foreign.
(d) No Account Debtor in respect of any Account is
a Governmental Authority.
12
<PAGE> 13
(e) No Accounts which are evidenced by Chattel Paper
require the consent of the Account Debtor in respect thereof in connection with
assignment hereunder and no other receivable purports to prohibit assignment or
require the consent of the Account Debtor thereunder in connection with
assignment.
(f) No Accounts are evidenced by any Instrument or
Chattel Paper which has not been delivered to the Agent.
3.7 Contracts. (a) Each Material Contract (i) is and will
be the legal, valid, and binding obligation of each of the parties thereto,
(ii) is and will be enforceable against each party thereto in accordance with
its terms, (iii) is and will be in full force and effect and is not subject to
any setoffs, defenses, taxes, counterclaims or other claims, nor have any of
the foregoing been asserted or alleged as to any Material Contract, and (iv) is
and will be in compliance with all applicable laws, whether federal,
provincial, state, local or foreign.
(b) No consent or authorization or filing with or
other act by or in respect of any governmental authority is required in
connection with the execution, delivery, performance, validity or
enforceability of any Contract by any party thereto other than those which have
been duly obtained, made or performed, are in full force and effect and do not
subject the scope of any Contract to any material adverse limitation, either
specific or general in nature.
(c) Neither the Grantor nor any other party to any
Material Contract is in default or likely to become in default in the
performance or observance of any of the terms thereof.
(d) The Grantor has delivered to the Agent a
complete and correct copy of each Material Contract, including all amendments,
supplements and other modifications thereto.
(e) No payments due the Grantor under any Contract
are evidenced by any Instrument or Chattel Paper which has not been delivered
to the Agent.
(f) No party to any Contract is a Governmental
Authority.
(g) No Contract prohibits assignment or requires or
purports to require consent of or notice to any Person in connection with
assignment hereunder.
3.8 Intellectual Property. Schedules 1, 2 and 3 hereto list
all of the material Copyrights and Copyright Licenses, Patents and Patent
Licenses and Trademark and Trademark Licenses, respectively owned by the
Grantor. The Grantor has registered, or filed for registration in, all
Copyrights, Patents and Trademarks. Each such Copyright,
13
<PAGE> 14
Patent and Trademark is valid, subsisting, unexpired, enforceable and has not
been abandoned and has not entered the public domain. No holding, decision or
judgment has been rendered by any Governmental Authority which would limit,
cancel or question the validity of any Copyright, Patent or Trademark and which
could reasonably be expected to have a material adverse effect on the business
operations or financial condition of the Grantor and its subsidiaries taken as
a whole. No action or proceeding is pending seeking to limit, cancel or
question the validity of any Copyright, Patent or Trademark which, if adversely
determined, could reasonably be expected to have a material adverse effect on
the business operations or financial condition of the Grantor and its
Subsidiaries, taken as a whole.
3.9 Tradenames; Prior Names. The Grantor has not conducted
business under any tradename or prior name.
3.10 Farm Products. None of the Collateral constitutes, or
is Proceeds of, Farm Products.
3.11 Other. The Grantor hereby represents and warrants that
each of the statements set forth in Article 4 of the Credit Agreement is true
and correct.
ARTICLE IV
COVENANTS
The Grantor covenants and agrees with the Agent and the
Secured Parties that from and after the date of this Security Agreement:
4.1 Further Assurances. The Grantor will from time to time at
the expense of the Grantor, promptly execute, deliver, file and record all
further instruments, indorsements and other documents, and take such further
action as the Agent may deem reasonably desirable in obtaining the full
benefits of this Security Agreement and of the rights, remedies and powers
herein granted, including, without limitation, the following:
(i) the filing of any Lien Statements,
in form acceptable to the Agent under any Lien Legislation in effect
in any jurisdiction with respect to the Liens and security interests
granted hereby. The Grantor also hereby authorizes the Agent to file
any such Lien Statement without the signature of the Grantor to the
extent permitted by applicable law. A photocopy or other reproduction
of this Security Agreement shall be sufficient as a financing
14
<PAGE> 15
statement and may be filed in lieu of the original to the extent
permitted by applicable law. The Grantor will pay or reimburse the
Agent for all filing fees and related expenses;
(ii) will make or reimburse the Agent
for making all searches deemed necessary by the Agent to establish and
determine the priority of the security interests of the Secured
Parties or to determine the presence or priority of other secured
parties;
(iii) will furnish to the Agent from
time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with
the Collateral as the Agent may reasonably request, all in reasonable
detail and in form satisfactory to the Agent.
4.2 Change of Name; Identity; Corporate Structure; Chief
Executive Office and Location of Inventory and Equipment. The Grantor will not
change its name, identity, corporate structure, the location of its chief
executive office or location of its Inventory or Equipment (other than to a
province within Canada in which the Agent has a valid, perfected, first
priority security interest in such Inventory and Equipment) without (i) giving
the Agent at least thirty (30) days' prior written notice clearly describing
such new name, identity, corporate structure or new location and providing such
other information in connection therewith as the Agent or any Secured Party may
request, and (ii) taking all action satisfactory to the Agent as the Agent may
request to maintain the security interest of the Agent and the Secured Parties
in the Collateral intended to be granted hereby (or any other Facility
Document) at all times fully perfected with the same or better priority and in
full force and effect.
4.3 Delivery of Instruments and Chattel Paper. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any Instrument or Chattel Paper, such Instrument or Chattel Paper
shall be immediately delivered to the Agent, duly indorsed in a manner
satisfactory to the Agent, to be held as Collateral pursuant to this Security
Agreement.
4.4 Maintain Records. The Grantor will keep and maintain at
its own cost and expense satisfactory and complete records of the Collateral.
4.5 Right of Inspection. The Agent and the Secured Parties
shall at all times upon reasonable notice to the Grantor, except upon the
occurrence and during the
15
<PAGE> 16
continuance of a Default or an Event of Default when such notice shall not be
required, have full and free access during normal business hours to all the
books, correspondence and records of the Grantor, and the Agent and the Secured
Parties and their representatives may examine the same, take extracts therefrom
and make photocopies thereof, and the Grantor agrees to render to the Agent and
the Secured Parties at the Grantor's cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto. The Agent and
the Secured Parties and their representatives shall at all times also have the
right to enter into and upon any premises where any of the Inventory or
Equipment is located for the purpose of inspecting the same, observing its use
or otherwise protecting its interests therein.
4.6 Insurance. The Grantor will maintain, with financially
sound and reputable companies, insurance policies (i) insuring the Inventory,
Equipment and all other property against loss by fire, explosion, theft and
such other casualties as are usually insured against in the same general area
by companies engaged in the same or similar business and (ii) insuring the
Grantor against liability for personal injury and property damage relating to
such Inventory, Equipment and property, such policies to be in such form and
amounts as is required by the Credit Agreement or, in any event, in such form
and in such amounts as is customary in the same general area by companies
engaged in the same or similar business.
4.7 Accounts. (a) The Grantor shall perform in all
material respects all of its obligations with respect to the Accounts.
(b) The Grantor shall not amend, modify, terminate
or waive any provision of any Account in any manner which could reasonably be
expected to materially adversely affect the value of such Account as
Collateral. Other than in the ordinary course of business as generally
conducted by it over a period of time, the Grantor shall not (w) grant any
extension or renewal of the time of payment of any Account, (x) compromise or
settle any dispute, claim or legal proceeding with respect to any Account for
less than the total unpaid balance thereof, (y) release, wholly or partially,
any Person liable for the payment thereof, or (z) allow any credit or discount
thereon.
(c) The Grantor shall use its best efforts
(including, without limitation, prompt and diligent exercise of each material
right it may have under any Account (other than any right of termination)) to
cause to be collected from each Account Debtor, as and when due (including,
without limitation, amounts which are delinquent, such amounts to be collected
in accordance with generally accepted lawful collection procedures) any and all
amounts owing under or on account of any Account, and apply all collected
amounts to the outstanding balance of such Account immediately upon receipt
thereof. The costs of collection, whether incurred by the Grantor or the Agent
shall be borne by the Grantor and if incurred by the Agent shall be reimbursed,
together with
16
<PAGE> 17
interest thereon at the rate then in effect under the Credit Agreement, to the
Agent upon demand and such reimbursement obligation shall be secured hereby.
(d) The Grantor will not fail to deliver to the
Agent a copy of each material demand, notice or document received by it
relating in any way to any agreement giving rise to any Account except to the
extent that such failure could not reasonably be expected to materially
adversely affect the value of the Accounts, taken as a whole, as Collateral.
(e) The Grantor will not remove its books and
records from the location specified in Section 3.4.
4.8 Contracts. (a) The Grantor shall perform in all
material respects all of its obligations under each Contract.
(b) The Grantor shall deliver promptly to the Agent
a copy of each material demand, notice or document received by it relating in
any way to any Contract.
(c) Without the prior written consent of the Agent,
the Grantor shall not amend, modify, terminate or supplement any provision of
any Contract or compromise or settle any dispute, claim or legal proceeding
with respect to any Contract, except in the manner permitted in the Credit
Agreement. Each such permitted amendment, modification, termination,
supplement, compromise, or settlement shall be in writing, a copy of which
shall be delivered promptly to the Agent.
(d) The Grantor shall promptly and diligently
exercise each material right it may have under any Contract (except the right
of termination), except to the extent that such failure could not reasonably be
expected to have a material adverse effect on the value of the Contracts, taken
as a whole, as Collateral. All costs and expenses in connection therewith,
whether incurred by the Grantor or the Agent, shall be borne by the Grantor and
if incurred by the Agent shall be reimbursed, with interest thereon at the rate
then in effect under the Credit Agreement, upon demand by the Agent and such
obligation to reimburse shall be secured hereby.
4.9 Copyrights. Except to the extent the failure by the
Grantor to do any of the following could have a Material Adverse Effect:
(a) the Grantor (either itself or through licensees)
(i) will employ the Copyright for each published work with an appropriate
notice of copyright and (ii) will not (and will not knowingly permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any Copyright may become invalidated;
17
<PAGE> 18
(b) the Grantor will not (either itself or knowingly
permit any licensee or sublicensee to) do any act, or knowingly omit to do any
act, whereby any Copyright may become injected into the public domain;
(c) the Grantor shall notify the Agent and the
Secured Parties immediately if it knows, or has reason to know, that any
Copyright may become injected into the public domain or of any adverse
determination or development (including, without limitation, the institution
of, or any such determination or development in, any court or tribunal in
Canada, the United States or any other country) regarding the Grantor's
ownership of any such Copyright or its validity;
(d) the Grantor will file in the relevant Copyright
Office or any similar office in any other appropriate jurisdiction an
application for copyright registration for each Copyright and Copyright License
other than those of an immaterial nature and will take all necessary steps as
it shall reasonably deem appropriate under the circumstances, to maintain and
pursue each application (and to obtain the relevant registration) and to
maintain each registration of each material Copyright owned by the Grantor
including, without limitation, filing of applications for renewal, where
necessary and shall report all such filings and registrations to the Agent and
Secured Parties within five (5) Business Days after the same are made and
execute and deliver all documents and instruments necessary to perfect the
Agent's and the Secured Parties' security interest in any Copyright or
Copyright License; and
(e) the Grantor will promptly notify the Agent and
the Secured Parties of any infringement of any Copyright of which it becomes
aware and will take such actions as it shall reasonably deem appropriate under
the circumstances to protect such Copyright, including, where appropriate, the
bringing of suit for infringement, seeking injunctive relief and seeking to
recover any and all damages for such infringement.
4.10 Patents and Trademarks. Except to the extent that the
failure by the Grantor to do any of the following could have a Material Adverse
Effect:
(a) the Grantor will not, except with respect to any
Patent that the Grantor shall reasonably determine is of negligible economic
value to it, do any act, or omit to do any act, whereby any Patent may become
abandoned or dedicated;
(b) the Grantor (either itself or through licensees)
will, except with respect to any Trademark that the Grantor shall reasonably
determine is of negligible economic value to it, (i) continue to use each
Trademark on each and every trademark class of goods applicable to its current
line as reflected in its current catalogs, brochures and price lists in order
to maintain such trademark in full force free from any claim of abandonment for
non-use, (ii) maintain as in the past the quality of products and services
offered under such Trademark, (iii) employ such Trademark with the appropriate
notice of
18
<PAGE> 19
registration, (iv) not adopt or use any mark which is confusingly similar or a
colorable limitation of such Trademark unless the Agent, for the ratable
benefit of the Secured Parties, shall obtain a perfected security interest in
such mark pursuant to this Agreement, and (v) not (and not permit any licensee
or sublicensee thereof to) do any act or omit to do any act whereby any
Trademark may become invalidated;
(c) the Grantor will notify the Agent and the
Secured Parties immediately if it knows, or has reason to know, that any
application or registration relating to any Patent or Trademark may become
abandoned or dedicated, or of any adverse determination or development
(including, without limitation, the institution of, or any such determination
or development in, any proceeding in the Canadian Trade Marks Office, the
United States Patent and Trademark Office or any court or tribunal in any
country) regarding the Grantor's ownership of any Patent or Trademark or its
right to register the same or to keep and maintain the same;
(d) whenever the Grantor, either by itself or
through any agent, employee, licensee or designee, shall file an application
for the registration of any Patent or Trademark with the Canadian Trade Marks
Office, the United States Patent and Trademark Office or any similar office of
agency in any other country or any political subdivision thereof, the Grantor
shall report such filing to the Agent and the Secured Parties within five (5)
Business Days after the last day of the fiscal quarter in which such filing
occurs. Upon request of the Agent, the Grantor shall execute and deliver any
and all agreements, instruments, documents, and papers as the Agent may request
to evidence the Agent's and the Secured Parties' security interest in any
Patent or Trademark and the goodwill and general intangibles of the Grantor
relating thereto or represented thereby;
(e) the Grantor will take all reasonable and
necessary steps, including, without limitation, in any proceeding before the
Canadian Trade Marks Office, the United States Patent and Trademark Office or
any similar office or agency in any other country or any political subdivision
thereof, to maintain and pursue each application (and to obtain the relevant
registration) and to maintain each registration of the Patents and Trademarks,
including, without limitation, filing of applications for renewal, affidavits
of use and affidavits of incontestability;
(f) in the event that any Patent or Trademark
included in the Collateral is infringed, misappropriated or diluted by a third
party, the Grantor shall promptly notify the Agent and the Secured Parties
after it learns thereof and shall, unless the Grantor shall reasonably
determine that such Patent or Trademark is of negligible economic value to the
Grantor, which determination the Grantor shall promptly report to the Agent and
the Secured Parties, promptly sue for infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to recover any and
all damages for such infringement, misappropriation or dilution, or take such
other actions as the Grantor
19
<PAGE> 20
shall reasonably deem appropriate under the circumstances to protect such
Patent or Trademark.
4.11 Compliance with Laws. The Grantor will comply in all
material respects with all Requirements of Law applicable to the Collateral or
to the operation of the Grantor's business.
4.12 No Impairment. The Grantor will not take or permit to
be taken any action which could impair the Agent's or any Secured Party's
rights in the Collateral.
4.13 Payment of Obligations. The Grantor will pay promptly
when due all taxes, assessments and governmental charges or levies imposed upon
the Collateral, as well as all claims of any kind (including, without
limitation, claims for labor, materials, supplies and services) against or with
respect to the Collateral, except that no such charge need be paid if
non-payment is permitted by the Credit Agreement.
4.14 Negative Pledge. The Grantor will not create, incur or
permit to exist, will defend the Collateral against, and will take such other
action as is necessary to remove, any Lien or claim on or to the Collateral,
other than the Liens created hereby and other than the Permitted Liens.
4.15 Limitations on Dispositions of Collateral. The Grantor
will not sell, transfer, lease or otherwise dispose of any of the Collateral,
or attempt, offer or contract to do so except as permitted in the Credit
Agreement.
4.16 Performance by the Agent of the Grantor's Obligations;
Reimbursement. If the Grantor fails to perform or comply with any of its
agreements contained herein, the Agent may, without notice to or consent by the
Grantor, perform or comply or cause performance or compliance therewith and the
expenses of the Agent incurred in connection with such performance or
compliance, together with interest thereon at the rate then in effect under the
Credit Agreement, shall be payable by the Grantor to the Agent on demand and
such reimbursement obligation shall be secured hereby.
4.17 Notice. The Grantor will advise the Agent and the
Secured Parties promptly, in reasonable detail, in accordance with the
provisions hereof (a) of any Lien (other than Permitted Liens) on, or claim
asserted against, any of the Collateral and (b) of the occurrence of any other
event which could reasonably be expected to have a Material Adverse Effect on
the aggregate value of the Collateral or on the Liens created hereunder.
ARTICLE V
SPECIAL PROVISIONS REGARDING
20
<PAGE> 21
ACCOUNTS AND CONTRACTS
5.1 Grantor Remains Liable under Accounts and Contracts.
Anything herein to the contrary notwithstanding (including without limitation
the grant of any rights to the Agent) the Grantor shall remain liable under
each of the Accounts and Contracts to observe and perform all the conditions
and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise to each such Account or
Contract. Neither the Agent nor any Secured Party shall have any obligation or
liability under any Account (or any agreement giving rise thereto) or Contract
by reason of or arising out of this Security Agreement or the receipt by the
Agent or any of the Secured Parties of any payment relating to such Account or
Contract pursuant hereto, nor shall the Agent or any of the Secured Parties be
obligated in any manner to perform any of the obligations of the Grantor under
or pursuant to any Account (or any agreement giving rise thereto) or under or
pursuant to any Contract, to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Account (or any agreement
giving rise thereto) or under any Contract, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any
amounts which may have been assigned to it or to which it may be entitled at
any time or times.
5.2 Notice to Account Debtors and Contracting Parties. At
any time while an Event of Default shall have occurred and be continuing, the
Agent may, and upon request of the Agent the Grantor shall, notify Account
Debtors and parties to the Contracts that the Accounts and the Contracts have
been assigned to the Agent and that payments in respect thereof shall be made
directly to the Agent. The Agent may in its own name or in the name of others
communicate with Account Debtors and parties to the Contracts to verify with
them to its satisfaction the existence, amount and terms of any Accounts or
Contracts.
5.3 Analysis of Accounts. The Agent shall have the right
upon the occurrence and during the continuance of an Event of Default to make
test verifications of the Accounts in any manner and through any medium that it
reasonably considers advisable, and the Grantor shall furnish all such
assistance and information as the Agent may require in connection with such
test verifications. At any time and from time to time upon the occurrence and
during the continuance of an Event of Default, upon the Agent's request and at
the expense of the Grantor, the Grantor shall cause independent public
accountants or others satisfactory to the Agent to furnish to the Agent reports
showing reconciliations, aging and test verifications of, and trial balances
for, the Accounts. Upon the occurrence and during the continuance of the Event
of Default the Agent in its own name or in the name of others may communicate
with Account Debtors on the Accounts to verify with them to the Agent's
satisfaction the existence, amount and terms of any Accounts.
21
<PAGE> 22
5.4 Collections on Accounts and Contracts. The Agent hereby
authorizes the Grantor to collect the Accounts and Contracts, subject to the
Agent's direction and control, and the Agent may curtail or terminate said
authority at any time and itself, or by its agents, collect all Accounts and
amounts owing under Contracts. If required by the Agent at any time, any
payments of Accounts and Contracts, when collected by the Grantor, shall be
forthwith (and, in any event, within two Business Days) delivered by the
Grantor to the Agent in the exact form received, duly indorsed by the Grantor
to the Agent if required, and, until so turned over, shall be held by the
Grantor in trust for the Agent and the Secured Parties, segregated from other
funds of the Grantor. All Proceeds, while held by the Agent (or by the Grantor
in trust for the Agent and the Secured Parties) shall continue to be collateral
security for all of the Secured Obligations and shall not constitute payment
thereof until applied as hereinafter provided.
ARTICLE VI
POWER OF ATTORNEY
The Grantor hereby irrevocably constitutes and appoints the
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Grantor and in the name of the Grantor or in its own
name, from time to time in the Agent's discretion, for the purpose of carrying
out the terms of this Security Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Security Agreement.
The Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. This power of attorney is a
power coupled with an interest and shall be irrevocable.
ARTICLE VII
REMEDIES; RIGHTS UPON DEFAULT
7.1 Rights and Remedies Generally. If an Event of Default
shall occur and be continuing, then and in every such case, the Agent and
Secured Parties shall have all the rights of a secured party under the
applicable Lien Legislation, shall have all rights now or hereafter existing
under all other applicable laws, and, subject to any mandatory requirements of
applicable law then in effect, shall have all the rights set forth in this
Security Agreement and all the rights set forth with respect to the Collateral
or this Security Agreement in any other security agreement between the parties
including, without limitation, the ability to enforce their rights by
proceedings in any court of competent
22
<PAGE> 23
jurisdiction for the appointment of a receiver or receiver-manager of all or
any part of the Collateral and by sale or lease by the Agent of all or any part
of the Collateral (whether or not it has taken possession of the same).
7.2 Assembly of Collateral. If an Event of Default shall
occur and be continuing, upon five (5) Business Days notice to the Grantor, the
Grantor shall, at its own expense, assemble the Collateral (or from time to
time any portion thereof) and make it available to the Agent at any place or
places designated by the Agent which is reasonably convenient to both parties.
7.3 Proceeds. If an Event of Default shall occur and be
continuing:
(a) all Proceeds received by the Grantor consisting
of cash, checks and other near-cash items shall be held by the Grantor in trust
for the Agent and the Secured Parties, segregated from other funds of the
Grantor and shall forthwith upon receipt by the Grantor, be turned over to the
Agent, in the same form received by the Grantor (appropriately indorsed or
assigned by the Grantor to the order of the Agent or in such other manner as
shall be satisfactory to the Agent); and
(b) any and all such Proceeds received by the Agent
(whether from the Grantor or otherwise), or any part thereof, may, in the sole
discretion of the Agent, be held by the Agent as Collateral hereunder and/or
then or at any time or from time to time thereafter, be applied by the Agent
against the Secured Obligations (whether matured or unmatured), in such order
as the Agent may elect.
7.4 Disposition of Collateral. To the extent required by
applicable law, the Agent will give the Grantor reasonable notice of the time
and place of any public sale of the Collateral or any part thereof or of the
time after which any private sale or any other intended disposition thereof is
to be made. Subject to the requirements of any applicable Lien Legislation,
the Grantor agrees that the requirements of reasonable notice to it shall be
met if such notice is mailed, postage prepaid to its address specified in
Section 8.3 of this Security Agreement (or such other address that the Grantor
may provide to the Agent in writing) at least fifteen (15) days before the time
of any public sale or after which any private sale may be made.
7.5 Waiver; Deficiency. The Grantor waives and agrees not to
assert any rights or privileges which it may acquire under any applicable Lien
Legislation to the extent permitted thereunder. The Grantor also waives its
right to receipt of a copy of any Lien Statement, any financing change
statement and any verification statement registered or to be registered in
connection with this Security Agreement and the Grantor further acknowledges
receipt of a copy of this Security Agreement. The Grantor shall remain liable
for any deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to satisfy the Secured Obligations. The Grantor
shall also be liable for all
23
<PAGE> 24
expenses of the Secured Party incurred in connection with collecting such
deficiency, including, without limitation, the fees and disbursements of any
attorneys employed by the Secured Party to collect such deficiency.
7.6 Expenses; Attorneys Fees. The Grantor shall reimburse
the Agent for all its expenses in connection with the exercise of its rights
hereunder, including, without limitation, all attorneys' fees and legal
expenses incurred by the Agent or any Secured Party. Expenses of retaking,
holding, preparing for sale, selling or the like shall include the attorneys'
fees and legal expenses of the Agent. All such expenses shall be secured
hereby. The Grantor's obligations under this Section shall survive the
termination of this Security Agreement and the discharge of the Grantor's other
obligations hereunder.
7.7 Application of Proceeds. All Proceeds received by the
Agent in respect of any sale of, collection from, or other realization upon all
or any part of the Collateral pursuant to the exercise by the Agent of its
remedies as a secured creditor as provided in this Article hereof shall be
applied, together with any other sums then held by the Agent pursuant to this
Security Agreement, promptly by the Agent in the manner contemplated by Section
2.9 of the Credit Agreement:
7.8 Limitation on Duties Regarding Preservation of
Collateral. (a) The Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession,
under any applicable Lien Legislation or otherwise, shall be to deal with it
with reasonable care or in the same manner as the Agent deals with similar
property for its own account.
(b) The Agent shall have no obligation to take any
steps to preserve rights against prior parties to any Collateral.
(c) Neither the Agent nor any of its directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Grantor or otherwise.
ARTICLE VIII
MISCELLANEOUS
8.1 Indemnity. (a) The Grantor agrees to indemnify, pay and
hold harmless the Agent and the Secured Parties and each of their respective
Affiliates and assignees and their respective officers, directors, employees,
agents and affiliates of the Agent and each of the Secured Parties
(collectively called the "Indemnitees") from and against any and all other
Losses, expenses or disbursements of any kind or nature whatsoever (including,
24
<PAGE> 25
without limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitee shall be
designated a party thereto), which may be imposed on, incurred by, or asserted
against that Indemnitee, in any manner relating to or arising out of this
Security Agreement (including, without limitation, any misrepresentation by the
Grantor in this Security Agreement) (the "indemnified liabilities"); provided,
however, that Grantor shall not have any obligation to an Indemnitee hereunder
with respect to an indemnified liability to the extent that such indemnified
liability is determined by a court of competent jurisdiction in a final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of that Indemnitee. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the Grantor
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all indemnified
liabilities incurred by the Indemnitees or any of them.
(b) Survival. The obligations of the Grantor
contained in this Section 8.1 shall survive the termination of this Security
Agreement and the discharge of the Grantor's other obligations under this
Security Agreement and the other Facility Documents.
(c) Reimbursement. Any amounts paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement shall
constitute Secured Obligations secured by the Collateral.
8.2 Governing Law; Terms. THIS SECURITY AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS,
EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OR EFFECT OF PERFECTION
AND NON-PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER,
IN RESPECT OF ANY PARTICULAR PROPERTY ARE MANDITORILY GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK AND, IN EACH SUCH CASE AND TO
SUCH EXTENT, THE LAWS OF SUCH OTHER JURISDICTION SHALL GOVERN.
The Grantor agrees that The Limitation of Civil Rights Act
(Saskatchewan) shall have no application to this Security Agreement or to any
agreement or instrument renewing or extending Collateral pursuant to this
Security Agreement.
8.3 Notices. Any notice or other communication herein
required or permitted to be given shall be given at the address and in the
manner set forth in the Credit
25
<PAGE> 26
Agreement (unless a different address as shall be designated by one party in a
written notice to the other in the manner required by the Credit Agreement).
8.4 Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of the Grantor, the Agent, the Secured
Parties, all future holders of the Secured Obligations and their respective
successors and assigns, except that the Grantor may not assign or transfer any
of its rights or obligations under this Security Agreement.
8.5 Amendments. None of the terms or provisions of this
Security Agreement may be waived, amended, supplemented or otherwise modified
except in the manner prescribed in the Credit Agreement and in writing signed
by the Agent. Any amendment, modification or supplement of or to any provision
of this Security Agreement, any waiver of any provision of this Security
Agreement and any consent to any departure by the Grantor from the terms of any
provision of this Security Agreement shall be effective only in the specific
instance and for the specific purpose for which made or given. Except where
notice is specifically required by this Security Agreement or any other
Facility Document, no notice to 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.
8.6 No Waiver; Remedies Cumulative.
(a) No failure or delay on the part of the Agent in
exercising any right, power or remedy hereunder and no course of dealing
between the Grantor and the Agent with respect to any right, power or remedy,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. A waiver by the
Agent of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Agent would otherwise have
on any future occasion. The rights and remedies herein expressly provided are
cumulative and may be exercised singly or concurrently and as often and in such
order as the Agent deems expedient and are not exclusive of any rights or
remedies which the Agent would otherwise have under any other Facility Document
or applicable law.
(b) In the event the Agent shall have instituted any
proceeding to enforce any right, power or remedy under this Security Agreement
by foreclosure, sale, entry or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined
adversely to the Agent, then and in every such case, the Grantor, the Agent and
each holder of any of the Secured Obligations shall be restored to their
respective former positions and rights hereunder with respect to the
Collateral, and all rights, remedies and powers of the Agent and the Secured
Parties shall continue as if no such proceeding had been instituted.
26
<PAGE> 27
8.7 Termination; Release. This Security Agreement shall
terminate on the Termination Date and shall remain in full force and effect
until the Termination Date. Upon the termination of this Security Agreement or
any release of Collateral in accordance with the provisions of the Credit
Agreement the Agent, at the request and sole expense of the Grantor, will
execute and deliver to the Grantor the proper instruments (including UCC
termination statements, discharges of PPSA financing statements and similar
forms or statements in other jurisdictions) acknowledging the termination of
this Security Agreement, and will duly assign, transfer and deliver to the
Grantor, without recourse, representation or warranty of any kind whatsoever,
such of the Collateral as may be in possession of the Agent and has not
theretofore been disposed of, applied or released.
8.8 Authority of Agent. The Grantor acknowledges that the
rights and responsibilities of the Agent under this Security Agreement with
respect to any action taken by the Agent or the exercise or non-exercise by the
Agent of any option, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Security Agreement shall, as between
the Agent and the Secured Parties, be governed by the Credit Agreement, but, as
between the Agent and the Grantor, the Agent shall be conclusively presumed to
be acting as agent for the Secured Parties with full and valid authority so to
act or refrain from acting, and the Grantor shall not be under any obligation,
or entitlement, to make any inquiry respecting such authority.
8.9 Submission to Jurisdiction. (a) Consent. The Grantor
hereby irrevocably submits to the jurisdiction of any New York State or Federal
court, sitting in the City of New York, New York County, and any appellate
court form any thereof (each, a "New York Court") in any action or proceeding
arising out of or relating to this Security Agreement or for recognition or
enforcement of any judgment, and the Grantor hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
such New York Court.
(b) Waivers. The Grantor hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Security
Agreement in any New York Court. The Grantor also hereby irrevocably waives,
to the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding. The Grantor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or by any other manner
provided by law.
(c) Service. The Grantor hereby irrevocably
consents to the service of copies of any summons and complaint and any other
process which may be served in any such action or proceeding by certified mail,
return receipt requested, or by
27
<PAGE> 28
delivering a copy of such process to the Grantor, at its address specified in
the signature pages of the Credit Agreement or by any other method permitted by
applicable law, in each case, with a copy by telecopy to Pouliot Mercure at
(514) 875-4308, attention Brian Riordan.
(d) Appointment of Agent. The Grantor designates
and appoints CT Corporation System, 1633 Broadway, New York, New York 10019 and
such other persons as may irrevocably agree in writing to serve as its agent to
receive on its behalf service of all process in any proceedings in any court,
such service being hereby acknowledged by the Grantor to be effective and
binding in every respect. If any agent appointed by a Grantor refuses to
receive and forward such service, the Grantor hereby agrees that service upon
it by mail shall constitute sufficient service.
(e) Other Rights. Nothing in this Section 8.9 shall
affect the right of the Agent or any Secured Party to serve legal process in
any other manner permitted by law or affect the right of the Agent or any
Secured Party to bring any action or proceeding against the Grantor or its
Property in the courts of other jurisdictions.
8.10 Currency Indemnity. The Grantor acknowledges and agrees
that this Security Agreement constitutes a credit transaction in which
specification of U.S. dollars is of the essence, and U.S. dollars shall be the
currency of account and payment in all events. If pursuant to a judgment or
for any other reason payment shall be made in another currency, and such
payment after prompt conversion to U.S. dollars and transfer to New York City
in accordance with normal banking procedures falls short of the sum due the
Secured Parties in U.S. dollars, the Grantor shall pay the Secured Parties such
shortfall and the Secured Parties shall have a separate cause of action for
such amount.
8.11 Waiver of Trial by Jury. THE GRANTOR, THE AGENT AND THE
SECURED PARTIES HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE FACILITY DOCUMENTS, ANY DOCUMENT DELIVERED UNDER THE FACILITY
DOCUMENTS, THE LOAN OR THE ACTIONS OF THE AGENT, THE ARRANGER OR ANY LENDER IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
8.12 Limitation of Liability. No claim may be made by the
Grantor or any other Person against the Agent or any Secured Party or the
Affiliates, directors, officers, employees, attorneys or agent of any of them
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Security Agreement, or any
act, omission or event occurring in connection therewith; and the
28
<PAGE> 29
Grantor hereby waives, releases and agrees not to sue upon any claim for any
such damages, whether or not accrued and whether or not known or suspected to
exist in its favor.
8.13 Headings Descriptive. The headings of the several
Sections and subsections of this Security Agreement are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Security Agreement.
8.14 Severability. In case any provision in or obligation
under this Security Agreement or the Secured Obligations shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
8.15 Counterparts. This Security Agreement may be executed
in any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
8.16 Marshalling. Neither the Agent nor any Secured Party
shall be under any obligation to marshall any assets in favor of the Grantor or
any other Person or against or in payment of any or all of the Secured
Obligations.
8.17 Language. The parties have agreed that this Security
Agreement and all related documents, correspondence and notices between them
should be and will be drafted in the English language. Les parties conviennent
que la presente entente et tous les documents s'y rattchant, y compris tout
avis ou correspondance, ont ete et seront rediges en langue anglaise.
29
<PAGE> 30
IN WITNESS WHEREOF, the Grantor and the Agent have caused this
Security Agreement to be duly executed and delivered as of the date first
written above.
CEDAR GROUP CANADA INC.
as Grantor
BY:
------------------------
Name:
Title:
BT COMMERCIAL CORPORATION,
as Agent
BY:
------------------------
Name:
Title:
<PAGE> 31
Schedule 1
Copyrights and Copyright Licenses
None
<PAGE> 32
Schedule 2
Patent and Patent Licenses
None
<PAGE> 33
Schedule 3
Trademark and Trademark Licenses
None
<PAGE> 34
Schedule 4
Filing Offices
Jurisdiction Office
<PAGE> 35
Schedule 5
Inventory and Equipment Locations
<PAGE> 1
CERTIFICATE OF DESIGNATION
of
6% CUMULATIVE CONVERTIBLE PREFERRED SHARES
of
CEDAR GROUP (TCI) INC. LLC
Pursuant to the Companies Ordinance 1981
of the Turks and Caicos Islands
CEDAR GROUP (TCI) INC. LLC, a limited life company organized under the
laws of Turks and Caicos (the "Company"), certifies that pursuant to the
authority contained in its Certificate of Incorporation, and in accordance with
the provisions of the Companies Ordinance of the Turks and Caicos Islands, its
Board of Directors (the "Board of Directors") has adopted the following
resolution designating a series of its Preferred Shares, $8.50 par value per
share, as "6% Cumulative Convertible Preferred Shares":
WHEREAS, the Company's Certificate of Incorporation, dated October 13,
1995, establishes the authorization of 5,000,000 Preferred Shares, and
empowers the Board of Directors to issue, from time to time, Preferred Shares
in series and to fix the number of shares in each series and the designations,
powers, preferences and rights of such Preferred Shares;
WHEREAS, the Board of Directors deems it to be in the best interests
of the Company to designate and establish the powers, preferences and rights of
a series of Preferred Shares.
NOW THEREFORE, be it:
RESOLVED, that a series of the class of authorized Preferred Shares,
$8.50 par value per share, of the Company be hereby created, and that the
designation and amount thereof and the voting powers, preferences and relative
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount.
The shares of such series shall be designated as the "6% Cumulative
Convertible Preferred Shares" (the "6% Cumulative Convertible Preferred
Shares") and the number of shares initially constituting such series shall be
5,000,000 which number may
<PAGE> 2
be decreased or increased by the Board of Directors without a vote of
shareholders, subject to the overall limitations of the Company's Certificate
of Incorporation.
Section 2. Dividends and Distributions.
The holders of record of the 6% Cumulative Convertible
Preferred Shares shall be entitled to receive a cumulative dividend of six (6%)
percent per annum payable quarterly on December 31, March 31, June 30, and
September 30 of each year until conversion and at maturity. Under applicable
law, there will be no withholding taxes on any dividends paid by the Company.
Section A. Voting Rights.
The holders of shares of 6% Cumulative Convertible Preferred Shares
shall have no voting rights.
Section 1. Liquidation, Dissolution or Winding Up.
If the Company shall adopt a plan of liquidation or of
dissolution, or commence a voluntary case under the federal bankruptcy laws or
any other applicable state or federal bankruptcy, insolvency or similar law, or
consent to the entry of an order for relief in any involuntary case under such
law or to the appointment of a receiver, liquidator, assignee, custodian,
trustee or sequestrator (or similar official) of the Company or of any
substantial part of its property, or make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts generally as they
become due and on account of such event the Company shall liquidate, dissolve
or wind up, or upon any other liquidation, dissolution or winding up of the
Company, the holders of shares of 6% Cumulative Convertible Preferred Shares
shall have a liquidation preference of $8.50 per share.
Section 2. Conversion.
(a) Subject to the provisions for adjustment hereinafter
set forth, each share of 6% Cumulative Convertible Preferred Shares shall not
be convertible until May 31, 1996, and then will be convertible at the option
of the holders as follows: if the 6% Cumulative Convertible Preferred Shares is
converted between May 31, 1996 and June 30, 1996, it will be converted into
shares of common stock ("Common Stock") of Cedar Group, Inc., the Company's
parent and sole common shareholder ("Cedar Group"), at a purchase price twelve
percent (12%) less than the Closing Price; if the 6% Cumulative Convertible
Preferred Shares is converted after June 30,
2
<PAGE> 3
1996, it will be converted into shares of Common Stock at fifteen percent (15%)
less than the Closing Price. Any 6% Cumulative Convertible Preferred Shares
remaining outstanding on October 31, 1998 will be automatically converted into
shares of Common Stock on such date. As used herein, the term "Closing Price"
refers to the average closing price of the shares of Common Stock as listed on
NASDAQ over the five day trading period ending on the day prior to the date of
conversion.
(b) The number of shares of Cedar Group's Common Stock
into which each share of 6% Cumulative Convertible Preferred Shares is
convertible shall be subject to adjustment from time to time as follows:
(i) In case Cedar Group shall at any time or from
time to time declare a dividend, or make a distribution, on its outstanding
shares of Common Stock in shares of Common Stock or subdivide or reclassify its
outstanding shares of Common Stock into a greater number of shares or combine
or reclassify the outstanding shares of Common Stock into a smaller number of
shares of Common Stock, then, and in each case,
(A) the number of shares of Common Stock
into which each share of 6% Cumulative Convertible Preferred Shares is
convertible shall be adjusted so that the holder of each share thereof shall be
entitled to receive, upon the conversion thereof, the number of shares of
Common Stock which the holder of a share of 6% Cumulative Convertible Preferred
Shares would have been entitled to receive after the happening of any of the
events described above had such share been converted immediately prior to the
happening of such event or the record date therefor, whichever is earlier; and
(B) an adjustment made pursuant to this
clause (i) shall become effective (I) in the case of any such dividend or
distribution undertaken by Cedar Group, immediately after the close of business
on the record date for the determination of holders of shares of Common Stock
entitled to receive such dividend or distribution, or (II) in the case of any
such subdivision, reclassification or combination undertaken by Cedar Group, at
the close of business on the day upon which such corporate action becomes
effective.
(ii) In case Cedar Group shall be a party to any
transaction (including, without limitation, a merger, consolidation, sale of
all or substantially all of its assets, liquidation or recapitalization of its
Common Stock and excluding (X) any transaction to which clause (i) of this
paragraph (b) applies, and (Y) a merger or consolidation in which Cedar Group
is the surviving corporation in which its previously outstanding
3
<PAGE> 4
Common Stock shall be changed into or, pursuant to the operation of law or the
terms of the transaction to which it is a party, exchanged for different
securities of Cedar Group or common stock or other securities of another
corporation or interests in a noncorporate entity or other property (including
cash) or any combination of any of the foregoing, then, as a condition of the
consummation of such transaction, lawful and adequate provision shall be made
so that each holder of shares of 6% Cumulative Convertible Preferred Shares
shall be entitled, upon conversion, to an amount per share equal to (A) the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or which each share of Common Stock of
Cedar Group is changed or exchanged times (B) the number of shares of Common
Stock of Cedar Group into which a share of 6% Cumulative Convertible Preferred
Shares is convertible immediately prior to the consummation of such
transaction.
(c) In case Cedar Group shall be a party to a transaction
described in subparagraph (b) (ii) above resulting in the change or exchange of
its Common Stock then, from and after the date of announcement of the pendency
of such subparagraph (b)(ii) transaction until the effective date thereof, each
share of 6% Cumulative Convertible Preferred Shares may be converted, at the
option of the holder thereof, into shares of Common Stock of Cedar Group on the
terms and conditions set forth in this Section 5, and if so converted during
such period, such holder shall be entitled to receive such consideration in
exchange for such holder's shares of Common Stock of Cedar Group as if such
holder had been the holder of such shares of Common Stock of Cedar Group as of
the record date for such change or exchange of the Common Stock of Cedar Group.
(d) Except with respect to the automatic conversion of
the shares of 6% Cumulative Convertible Preferred Shares pursuant to paragraph
5(a) above, the holder of any shares of 6% Cumulative Convertible Preferred
Shares may exercise his right to convert such shares into shares of Common
Stock by providing a notice to the Company at its principal executive office
(which may be made by fax, telecopy or other electronic transmission) and by
surrendering for such purpose to the Company, not later than one Business Day
after such notice, a certificate or certificates representing the shares of 6%
Cumulative Convertible Preferred Shares to be converted with the form of
election to convert (the "Election to Convert") on the reverse side of the
stock certificate completed and executed as indicated, thereby stating that
such holder elects to convert all or a specified whole number of such shares in
accordance with the provisions of this Section 5 and specifying the name or
names in which such holder wishes the certificate or certificates for shares of
Common Stock to be issued. In case the
4
<PAGE> 5
Election to Convert shall specify a name or names other than that of such
holder, it shall be accompanied by payment of all transfer taxes payable upon
the issuance of shares of Common Stock of Cedar Group, in such name or names.
Other than such taxes, the Company will pay any and all taxes (other than taxes
based on income) that may be payable in respect of any issue or delivery of
shares of Common Stock of the Cedar Group on conversion of 6% Cumulative
Convertible Preferred Shares pursuant hereto. As promptly as practicable, and
in any event within three Business Days after the surrender of such certificate
or certificates and the receipt of the Election to Convert and, if applicable,
payment of all transfer taxes (or the demonstration to the satisfaction of the
Company that such taxes have been paid), the Company shall deliver or cause to
be delivered (i) certificates representing the number of validly issued, fully
paid and nonassessable full shares of Common Stock of Cedar Group to which the
holder of shares of 6% Cumulative Convertible Preferred Shares so converted
shall be entitled and (ii) if less than the full number of shares of 6%
Cumulative Convertible Preferred Shares evidenced by the surrendered
certificate or certificates are being converted, a new certificate or
certificates, of like tenor, for the number of shares evidenced by such
surrendered certificate or certificates less the number of shares converted.
Such conversion shall be deemed to have been made on the date of giving of the
Election to Convert and of such surrender of the certificate or certificates
representing the shares of 6% Cumulative Convertible Preferred Shares to be
converted, as applicable, so that the rights of the holder thereof as to the
shares being converted shall cease except for the right to receive shares of
Common Stock in accordance herewith, and the person entitled to receive the
shares of Common Stock shall be treated for all purposes as having become the
record holder of such shares of Common Stock at such time. The Company shall
not be required to convert, and no surrender of shares of 6% Cumulative
Convertible Preferred Shares shall be effective for that purpose, while the
transfer books of Cedar Group for the Common Stock are closed for any purpose
(but not for any period in excess of 15 calendar days); but the surrender of
shares of 6% Cumulative Convertible Preferred Shares for conversion during any
period while such books are so closed shall become effective for conversion
immediately upon the reopening of such books, as if the conversion had been
made on the date such shares of 6% Cumulative Convertible Preferred Shares were
surrendered, and at the conversion rate in effect at the date of such
surrender.
(e) In connection with the conversion of any shares of 6%
Cumulative Convertible Preferred Shares, at the election of Cedar Group no
fractions of shares of Common Stock shall be issued, but in lieu thereof the
Company shall pay a cash adjustment in respect of such fractional interest in
an amount equal to such
5
<PAGE> 6
fractional interest multiplied by the average of the high bid prices of Cedar
Group's Common Stock as reported on NASDAQ or last sale prices if the Common
Stock is listed on a national securities exchange or included in the NASDAQ
National Market System for a period of five (5) consecutive trading days prior
to the date such shares of 6% Cumulative Convertible Preferred Shares are
deemed to have been converted.
(f) In computing the adjustment which a holder of 6%
Cumulative Convertible Preferred Shares shall receive pursuant to paragraph (b)
of this Section 5, the fact that shares of 6% Cumulative Convertible Preferred
Shares may not be presently convertible shall be ignored and such computation
shall be made as if such shares were presently convertible.
Section 6. Reports as to Adjustments.
Whenever the number of shares of Common Stock into which each share of
6% Cumulative Convertible Preferred Shares is convertible is adjusted as
provided in Section 5 hereof, the Company shall promptly mail to the holders of
record of the outstanding shares of 6% Cumulative Convertible Preferred Shares
at their respective addresses as the same shall appear in the Company's stock
records a notice stating that the number of shares of Common Stock into which
the shares of 6% Cumulative Convertible Preferred Shares are convertible has
been adjusted and setting forth the new number of shares of Common Stock (or
describing the new stock, securities, cash or other property) into which each
share of 6% Cumulative Convertible Preferred Shares is convertible, as a result
of such adjustment, a brief statement of the facts requiring such adjustment
and the computation thereof, and when such adjustment became effective.
Section 7. Certain Definitions.
For the purposes of the Certificate of Designation of 6% Cumulative
Convertible Preferred Shares which embodies this resolution:
"Business Day" means any day other than a Saturday, Sunday, or a day
on which banking institutions in the state in which the Transfer Agent is
located are authorized or obligated by law or executive order to close.
"Trading Day" means a day on which the principal national securities
exchange on which the Common Stock is listed or admitted to trading is open for
the transaction of business or, if the Common Stock is not listed or admitted
to trading on any national securities exchange, any day other than a Saturday,
Sunday, or a
6
<PAGE> 7
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
IN WITNESS WHEREOF, the Company has caused this Certificate of
Designation of 6% Cumulative Convertible Preferred Shares to be duly executed
by its Chairman and attested to by its Secretary and has caused its corporate
seal to be affixed hereto, this 25th day of October, 1995.
CEDAR GROUP (TCI) INC. LLC
By:
----------------------------------
Authorized Executive Officer
ATTEST:
By:
------------------------------
, Secretary
-------------------
7
