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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
AMENDMENT NO. 2 TO THE ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996 Commission file number 0-19596
SLM INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
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Delaware 13-36-32297
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
c/o Maska U.S., Inc., 77 Route 25, Pierson
Industrial Park, Bradford VT 05033
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (518) 773-4401
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock,
Par Value $.01
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days: YES /X/ No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of April 14, 1997 was $1,168,908.
As of April 14, 1997, 6,500,000 shares of the Registrant's Common Stock, $.01
par value per share, were outstanding.
Documents Incorporated By Reference
None
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<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1)Financial Statements required by Item 14 are included and indexed in Part
II, Item 8.
(a)(2)The financial statement schedules filed as part of this report include the
following:
Schedule Page
-------- ----
II Valuation and Qualifying Accounts and Reserves 52
(a)(3)The following is a list of all Exhibits filed as part of this Report:
Exhibit No. Description
- ----------- -----------
2.1 First Amended Joint Chapter 11 Plan (as modified), dated
November 12, 1996, filed with the United States Bankruptcy Court
for the District of Delaware. Filed as Exhibit 1 to the
Company's Current Report on Form 8-K dated December 6, 1996,
incorporated herein by reference.
2.2 First Modification, dated January 15, 1997, to First Amended
Joint Chapter 11 Plan (as modified). (Previously filed).
2.3 Second Modification, dated January 23, 1997, to First Amended
Joint Chapter 11 Plan (as modified), dated November 12, 1996.
(Previously filed).
2.4 Third Modification, dated March 14, 1997,.to First Amended Joint
Chapter 11 Plan (as modified), dated November 12, 1996.
(Previously filed).
3.1 Amended and Restated Certificate of Incorporation of the Company
dated March 31, 1997. (Previously filed).
3.2 Amended and Restated By-Laws of the Company. (Previously filed).
4.1 Form of Senior Secured Note Indenture, dated as of April 1,
1997, among the Company, as Issuer, the Guarantors named therein
and The Bank of New York, as Trustee. (Previously filed).
10.1 Cash Option Agreement, dated January 6, 1997 between the Company
and Wellspring Associates L.L.C. (filed herewith).
10.2 Amendment to Cash Option Agreement, dated April 8, 1997, between
the Company and Wellspring Associates L.L.C. (Previously filed).
10.3 Stockholders Agreement, dated as of April 11, 1997, between the
Company and the persons set forth on Schedule A thereto.
(Previously filed).
10.4 Warrant Agreement, dated as of April 11, 1997, between the
Company and American Stock Transfer & Trust Company, as Warrant
Agent. (Previously filed).
10.5 Form of Credit Agreement, dated as of April 1, 1997, among the
Company, Maska U.S., Inc., #1 Apparel, Inc., the Lenders
referred to therein and The Chase Manhattan Bank, as Agent.
(Previously filed).
10.6 Credit Agreement, dated April 1, 1997, between Sport Maska Inc.
and The Chase Manhattan Bank of Canada. (Previously filed).
10.7 Form of Security Agreement, dated as of April 1, 1997, among the
Company, certain subsidiaries of the Company and The Chase
Manhattan Bank, as Agent. (Previously filed).
10.8 Form of Security Agreement and Mortgage - Trademarks and
Patents, dated as of April 1, 1997, among the Company, certain
subsidiaries of the Company and The Chase Manhattan Bank, as
Agent. (Previously filed).
10.9 Security Agreement (Intellectual Property), dated as of April 1,
1997, between Sport Maska Inc. and The Chase Manhattan Bank, as
Agent (filed herewith).
10.10 Form of Pledge Agreement and Irrevocable Proxy, dated as of
April 1, 1997, among the Company, certain subsidiaries of the
Company and The Chase Manhattan Bank, as Agent.
(Previously filed).
10.11 Form of Charge Over Shares and Irrevocable Proxy, dated as of
April 1, 1997, among the Company and The Chase Manhattan Bank,
as Agent. (Previously filed).
10.12 Pledge Agreement and Irrevocable Proxy, dated April 1, 1997,
between SLM Trademark Acquisition Canada Corporation and The
Chase Manhattan Bank (filed herewith).
10.13 Form of U.S. Guaranty, dated as of April 1, 1997, from SLM
Trademark Acquisition Corp. (filed herewith).
10.14 Form of Canadian Guarantee, dated April 1, 1997, from each
Canadian and U.S. subsidiary of the Company. (filed herewith).
10.15 Form of Debenture, dated April 1, 1997, between each of the
Company, Maska U.S., Inc., #1 Apparel, Inc., SLM Trademark
Acquisition Corp., The Chase Manhattan Bank. (filed herewith).
10.16 Form of Deed of Hypothec, bearing formal date as of April 1,
1997, between each of the Company, Maska U.S., Inc., #1 Apparel,
Inc., SLM Trademark Acquisition Corp., Sport Maska Inc., #1
Apparel Canada Inc., and SLM Trademark Acquisition Canada
Corporation and The Chase Manhattan Bank (filed herewith).
10.17 Form of Debenture, dated as of April 1, 1997, between each of
Sport Maska Inc., #1 Apparel Canada Inc. and SLM Trademark
Acquisition Canada Corporation and The Chase Manhattan Bank of
Canada. (filed herewith).
10.18 Form of Deed of Hypothec, bearing formal date as of April 1,
1997, between each of Sport Maska Inc., #1 Apparel Canada Inc.
and SLM Trademark Acquisition Canada Corporation and The Chase
Manhattan Bank of Canada (filed herewith).
10.19 Form of Mortgage, Security Agreement, and Assignment of Leases
and Rents, dated as of April 1, 1997, from Maska U.S., Inc. to
The Chase Manhattan Bank, as Agent. (Previously filed).
10.20 Form of Inter-Creditor Agreement, dated as of April 1, 1997,
among The Chase Manhattan Bank, The Chase Manhattan Bank of
Canada and The Bank of New York. (Previously filed).
10.21 Form of Senior Secured Note. (Previously filed).
10.22 Form of Security Agreement, dated as of April 1, 1997, among the
Company, certain subsidiaries of the Company and The Bank of New
York, as Trustee. (Previously filed).
10.23 Form of Security Agreement and Mortgage - Trademarks and
Patents, dated as of April 1, 1997, among the Company, certain
subsidiaries of the Company and The Bank of New York, as
Trustee. (Previously filed).
10.24 Form of Pledge Agreement and Irrevocable Proxy, dated as of
April 1, 1997, among the Company, certain subsidiaries of the
Company and The Bank of New York, as Trustee. (Previously
filed).
10.25 Form of Charge Over Shares and Irrevocable Proxy, dated as of
April 1, 1997, between the Company and The Bank of New York, as
Trustee. (Previously filed).
10.26 Pledge Agreement and Irrevocable Proxy, dated April 1, 1997,
between SLM Trademark Acquisition Canada Corporation and The
Bank of New York, as Trustee. (filed herewith).
2
<PAGE>
10.27 Form of Deed of Hypothec, dated April 1, 1997, between each of
SLM Trademark Acquisition Canada Corporation, Maska U.S., Inc.,
#1 Apparel, Inc., Sport Maska Inc., #1 Apparel Canada Inc. and
Mitchel & King Skates Limited and The Bank of New York, as
Trustee (filed herewith).
10.28 Form of Security Agreement (Intellectual Property), dated as of
April 1, 1997, between each of Sport Maska Inc., #1 Apparel
Canada Inc., and SLM Trademark Acquisition Canada Corporation
and The Bank of New York, as Trustee. (Previously filed).
10.29 Form of Debenture, dated as of April 1, 1997, between each of
SLM Trademark Acquisition Canada Corporation, Maska U.S., Inc.,
#1 Apparel, Inc., Sport Maska Inc., #1 Apparel Canada Inc. and
Mitchel & King Skates Limited and The Bank of New York.
(Previously filed).
10.30 Form of Mortgage, Security Agreement, and Assignment of Leases
and Rents, dated as of April 1, 1997, from Maska U.S., Inc. to
The Bank of New York, as Trustee. (Previously filed).
10.31 Debenture, dated as of April 1, 1997, between the Company and
The Bank of New York (Previously filed).
10.32 Deed of Hypothec, dated as of April 1, 1997, between the Company
and The Bank of New York. (filed herewith).
10.33 Retail License Agreement, dated March 8, 1995, between Maska
U.S. Inc. and NHL Enterprises Inc. Filed as Exhibit 10.30 to the
Company's Annual Report on Form 10-K for the year ended December
31, 1994 and incorporated herein by reference.
10.34 Retail License Agreement, dated March 8, 1995, between Sport
Maska, Inc. and NHL Enterprises Canada Inc. Filed as Exhibit
10.31 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994 and incorporated herein by reference.
10.35 Retail License Agreement, dated October 6, 1995, between NHL
Enterprises and Maska U.S., Inc. Filed as Exhibit 10.31 to the
Company's Annual Report on Form 10-K for the year ended December
31, 1995 and incorporated herein by reference.
10.36 Retail License Agreement, dated October 6, 1995, between NHL
Enterprises and Sport Maska Inc. Filed as Exhibit 10.32 to the
Company's Annual Report on Form 10-K for the year ended December
31, 1995 and incorporated herein by reference.
10.37 Lease, dated January 18, 1994, between Secretariat Realty Corp.
and Maska U.S., Inc. Filed as Exhibit 10.34 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1995
and incorporated herein by reference.
10.38 Deed of Lease, dated April 11, 1997, between ZMD Sports
Investments Inc. and Sport Maska Inc. (filed herewith).
10.39 Deed of Lease, dated January 27, 1995, between Doulka
Investments Inc. and Buddy L Canada Inc. Filed as Exhibit 10.36
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 and incorporated herein by reference.
3
<PAGE>
10.40 Deed of Lease, dated April 11, 1997, between ZMD Sports
Investments Inc. and Sport Maska Inc. (filed herewith).
10.41 Deed of Lease, dated April 11, 1997, between ZMD Sports
Investments Inc. and Sport Maska Inc. (filed herewith).
10.42 Deed of Lease, dated April 11, 1997, between 2938201 Canada Inc.
and Sport Maska Inc. (filed herewith).
10.43 Settlement Agreement, dated November 21, 1995, among the
Company, certain subsidiaries, the Buddy L Creditors Committee
and certain Lenders. Filed as Exhibit 10.40 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1995
and incorporated herein by reference.
10.44 Form of U.S. Debenture Delivery Agreement, dated as of April 1,
1997. (filed herewith).
10.45 Form of Security Agreement (Intellectual Property), dated as of
April 1, 1997, from each Canadian Subsidiary to The Chase
Manhattan Bank and The Chase Manhattan Bank of Canada
(filed herewith).
10.46 Security, dated as of April 1, 1997, from Sport Maska Inc. to
The Chase Manhattan Bank of Canada (filed herewith).
10.47 Form of Canadian Debenture Delivery Agreement, dated April 1,
1997. (filed herewith).
10.48 Charge/Mortgage of Land by #1 Apparel Canada Inc. in favor of
The Chase Manhattan Bank. (filed herewith).
10.49 Charge/Mortgage of Land Delivery Agreement dated as of
April 1 1997 in favor of The Chase Manhattan Bank.
(filed herewith).
10.50 Charge/Mortgage of Land 41 Apparel Canada Inc. in favor of The
Bank of New York. (filed herewith).
10.51 Charge/Mortgage of Land Delivery Agreement, dated as of
April 1, 1997 in favor of Bank of New York. (filed herewith).
21 Subsidiaries of the Company (filed herewith).
23.1 Consent of Coopers & Lybrand L.L.P. (Previously filed).
23.2 Consent of Raymond, Chabot, Martin, Pare. (Previously filed).
27.1 Financial Data Schedule.(Previously filed).
(b) Reports on Form 8-K.
1. On March 19, 1996, the Company filed a current report on Form 8-K. This
report was filed in compliance with Items 5 and 7 of Form 8-K.
2. On June 27, 1996, the Company filed a current report on Form 8-K. This
report was filed in compliance with Items 5 and 7 of Form 8-K.
3. On October 1, 1996, the Company filed a current report on Form 8-K. This
report was filed in compliance with Item 5 of Form 8-K.
4. On December 6, 1996, the Company filed a current report on Form 8-K. This
report was filed in compliance with Items 5 and 7 of Form 8-K.
5. On March 5, 1997, the Company filed a current report on Form 8-K. This
report was filed in compliance with Items 5 and 7 of Form 8-K.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this Form 10-K/A to be signed on its behalf
by the undersigned, thereunto duly authorized, in the Town of Bradford, State of
Vermont, on the 9th day of May, 1997.
SLM INTERNATIONAL, INC.
By: /s/ Russell J. David
------------------------------
Name: Russell J. David
Title: Vice President, Finance
Pursuant to the requirements of the Securities Act of 1934, this Form 10-K/A has
been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
* Chief Executive Officer, President May 9, 1997
- ---------------------------------------- and Director (Principal Executive Officer)
Gerald B. Wasserman
/s/ Russell J. David Vice President, Finance May 9, 1997
- ---------------------------------------- (Principal Financial and Accounting Officer)
Russell J. David
/s/ Paul M. Chute Director May 9, 1997
- ----------------------------------------
Paul M. Chute
* Director May 9, 1997
- ----------------------------------------
Martin S. Davis
* Director May 9, 1997
- ----------------------------------------
Douglas W. Rotatori
* Director May 9, 1997
- ----------------------------------------
James C. Pendergast
</TABLE>
*By: Russell J. David
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Attorney-in-Fact
5
SECURITY AGREEMENT
(INTELLECTUAL PROPERTY)
THE UNDERSIGNED, SPORT MASKA INC. (the "Corporation"), a corporation
continued and subsisting under the laws of the Province of New Brunswick, hereby
enters into this Security Agreement, made effective as of the 1st day of April
1, 1997 in favour of The Chase Manhattan Bank (the "Agent") as collateral and
security agent for the benefit of the lenders named in a credit agreement dated
as of April 1, 1997 between SLM International, Inc., Maska U.S., Inc. and #1
Apparel, Inc., as borrowers (collectively, the "Borrowers"), the lenders named
therein (hereinafter collectively referred to as the "Lenders") and the Agent
(that credit agreement, as amended, restated or supplemented from time to time
being referred to below as the "Credit Agreement");
WHEREAS the Lenders have agreed to make certain credit facilities
available to the Borrowers pursuant to the Credit Agreement on and subject to
the terms and conditions thereof, including without limitation the condition
precedent that this Agreement be entered into;
AND WHEREAS the Corporation has entered into a guarantee dated as of
April 1, 1997 in favour of the Agent in which the undersigned has guaranteed
repayment of the indebtedness and liability of the Borrowers under the Credit
Agreement on, and subject to, the terms and conditions thereof (that guarantee,
as it may be amended, restated, or supplemented from time to time being referred
to below as the "Guarantee") and has agreed to enter into this Agreement to
secure repayment of its indebtedness and liability under the Guarantee, now or
hereafter existing, absolute or contingent, joint or several together with all
reasonable expenses (including legal fees and disbursements on a solicitor and
his or her own client basis) incurred by the Agent or any of the Lenders and/or
any agent or receiver or receiver/manager acting on behalf of the Agent or any
of the Lenders in connection with the preparation, registration, enforcement of
rights under or analysis of rights under the Guarantee and this Agreement from
time to time (all of which present and future indebtedness, liabilities,
obligations and expenses, together with all extensions and renewals thereof, are
hereinafter collectively referred to as the "Indebtedness");
NOW THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt, sufficiency and adequacy
of which are hereby acknowledged, the Corporation agrees as follows:
1. Creation of Security Interest. As security for the complete and timely
payment and satisfaction of all of the Indebtedness, the Corporation hereby
grants to the Agent a security interest, and assigns, transfers and conveys to
the Agent, and
<PAGE>
2.
hypothecates in favour of the Agent (collectively, the "Security Interest"),
with unfettered rights to power of sale, to the extent permitted by law or by
the specific license agreements, if relevant, in and to all of the right, title
and interest of the Corporation in and to all of its now existing and hereafter
created or acquired:
(a) computer programs, application software, hardware and/or software
maintenance support agreements and all documentation relating
thereto, licences of software, copyrights, patents and inventions,
industrial designs, trade secrets, inventor certificates, statutory
invention registrations and all know-how obtained, developed or used
by the Corporation in connection with its business, including,
without limitation the patents, industrial designs and software
listed in Exhibit "A" attached hereto and hereby made a part hereof
and (i) renewals or extensions thereof; (ii) all income, damages and
payments now or hereafter due or payable with respect thereto,
including, without limitation, damages and payments for past or
future infringements thereof; (iii) the right to sue for past,
present and future infringements thereof; and (iv) all rights
corresponding thereto throughout the world (all of the foregoing
computer programs, application software, hardware and/or software
maintenance support agreements, licenses of software, copyrights,
patents and inventions, industrial designs, trade secrets and
know-how, and applications and registrations thereof, together with
the items described in clauses (i) - (iv) of this subsection 1(a)
are sometimes hereinafter collectively referred to as the
"Patents/Designs/Copyrights");
(b) trademarks, trademark registrations, trademark applications, trade
names, business names, trade styles, logos, service marks, and all
other forms of business identifiers, including, without limitation,
the trademarks, trademark registrations, trademark applications,
trade names, business names, trade styles, logos and all other forms
of business identifiers listed on Exhibit "B" attached hereto and
hereby made a part hereof, and (i) renewals or extensions thereof,
(ii) all income, damages and payments now or hereafter due or
payable with respect thereto, including, without limitation, damages
and payments for past or future infringements thereof, (iii) the
right to sue for past, present and future infringements thereof, and
(iv) all rights corresponding thereto throughout the world (all of
the foregoing trademarks, trade names and trade styles, and
applications and registrations thereof, together with the items
described in clauses (i)-(iv) of this subsection 1(b), are sometimes
hereinafter referred to individually as a "Trademark", and,
collectively, as the "Trademarks");
<PAGE>
3.
(c) all license agreements with respect to any of the Trademarks or any
Trademark or any application or registration therefor or any other
trade name or trade style, between the Corporation and any other
party, whether the Corporation is a licensor or licensee under any
such license agreement, including, without limitation, the licenses
listed on Exhibit "C" attached hereto and hereby made a part hereof,
and (i) renewals or extensions thereof, (ii) all income, damages and
payments now or hereafter due or payable with respect thereto,
including, without limitation, damages and payments for past or
future breaches thereof, (iii) the right to sue for past, present
and future breaches thereof, and (iv) all rights corresponding
thereto throughout the world (all of the foregoing license
agreements and the rights of the Corporation thereunder, together
with the items described in clauses (i)-(iv) of this subsection
1(c), are sometimes hereinafter referred to individually as a
"License", and, collectively, as the "Licenses"); and
(d) the goodwill of the business of the Corporation connected with and
symbolized by any one or more of the Patents/Designs/Copyrights,
Trademarks and Licences, and (i) all damages and payments now or
hereafter due or payable with respect thereto, including, without
limitation, damages and payments for past or future depreciation
thereof or injury thereto, (ii) the right to sue for past, present
and future depreciation thereof or injury thereto, and (iii) all
rights corresponding thereto throughout the world (the foregoing
goodwill, together with the items described in clauses (i)-(iii) of
this subsection 1(d), are referred to as the "Goodwill").
(The Patents/Designs/Copyrights, Trademark or Trademarks, License or Licenses
and Goodwill referred to in subparagraphs 1(a), (b), (c) and (d) above are
sometimes collectively referred to below as the "Collateral").
The Corporation and the Agent agree that they have not agreed to
postpone the time for attachment of the Security Interests granted hereby with
respect to the Corporation's presently existing Collateral and that such
Security Interests shall attach to the Collateral acquired after the date hereof
as soon as the Corporation has rights in such Collateral. From time to time, at
the request of the Agent, the Corporation shall make and do all acts and things
and execute and deliver all documents, agreements and instruments as the Agent
reasonably may request by notice in writing to the Corporation in order to
create, preserve, perfect, validate or otherwise protect the Security Interests
to enable the Agent to exercise and enforce its rights and remedies hereunder
(except that nothing hereunder shall constitute a waiver of any rights available
to the Corporation at law to the extent that such rights cannot be lawfully
waived) and generally to carry out the provisions and purposes of this
Agreement. The Agent agrees that it shall have no right to be
<PAGE>
4.
assigned the title to any of the Collateral unless and until the Security
Interest hereby constituted shall become enforceable as hereinafter provided.
The amount of the hypothec referred to in this Section 1 is one
hundred million dollars ($100,000,000.00) in lawful money of the United States
of America with interest thereon from the date of this Agreement at the rate of
twenty-five percent (25%) per annum.
2. (a) Warranties and Representations. Subject to paragraph 2(b) below, the
Corporation warrants and represents to the Agent that:
(i) all registrations, applications for registration, filings and
notices thereof in respect of the Collateral, including all relevant
renewals, have been duly and properly made, are in full force and
effect and are not subject to dispute by any governmental authority
or agency and all leases, licences and other agreements affecting
any right, title or interest of the Corporation in any of the
Collateral (collectively, the "Third Party Agreements") are in good
standing;
(ii) none of the Collateral has been adjudged invalid or unenforceable or
has been cancelled, in whole or in part, and all such Collateral is
presently subsisting, valid, in good standing and enforceable, with
the exception of those set out in the Exhibits hereto and identified
as "pending applications", "cancelled/expunged registrations",
"abandoned applications" or "registrations no longer in name of the
Corporation";
(iii) the Corporation is the exclusive owner or in the case of licensed
Collateral, the sole and exclusive licensee, of the entire and
unencumbered right, title and interest in and to each of the
Collateral (except as otherwise expressly described in the Exhibits
hereto) free and clear of any liens, charges and encumbrances except
for liens permitted under the Credit Agreement or otherwise approved
by the Agent in writing (the "Permitted Encumbrances");
(iv) the Collateral listed on Exhibits "A", "B" and "C", respectively,
constitute all of the Patents/Designs/Copyrights, Trademarks and
Licenses now owned by the Corporation;
(v) the Corporation has adopted, used continuously and currently is
using all of the Patents/Designs/Copyrights, Trademarks and
Licences; all licensees of the Collateral (or all relevant portions
thereof) from the Corporation as licensor have been licensed
properly to use such Collateral and the Corporation has retained
under license the direct or indirect control of the character or
quality of the goods or services in
<PAGE>
5.
connection with which use of such Collateral has been licensed by
it; all use of such Collateral has been proper both in form and in
relation to the goods or services in connection with which the
Collateral is used by the Corporation or its licensees; and proper
ownership notices have been used by the Corporation or its
licensees;
(vi) other than as set forth in Schedule 4.06(a) annexed to the Credit
Agreement, the Corporation has no notice of any suits or actions
commenced or threatened in respect of any of the Collateral,
including, without limitation, any suits or actions which contain
allegations respecting the validity, enforceability, infringement or
ownership of any of the Collateral, including, without limitation,
any of the Corporation's right, title and interest in the Collateral
and no notice, or knowledge, of any person infringing any of the
Collateral;
(vii) the Corporation has the right to execute and deliver this Agreement
and to perform its covenants and obligations hereunder;
(viii) this Agreement is a valid, legal and binding obligation of the
Corporation subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting
creditors' rights and the discretion exercisable by Courts of
competent jurisdiction in respect of the availability of equitable
remedies; and
(ix) nothing contained in this Agreement, the Guarantee or the Credit
Agreement, including, without limitation, the granting of the
Security Interest by the Corporation in favour of the Agent,
constitutes a breach under any Third Party Agreement.
(b) The foregoing representations and warranties shall be continuing
representations and warranties which, for greater certainty, shall apply at the
date hereof to all Collateral owned or licensed by the Corporation on the date
hereof including, without limitation, the Collateral described in Exhibits "A",
"B" and "C" hereto and shall be deemed to be given by the Corporation and to
apply to all after acquired Collateral immediately upon the Corporation
acquiring the same.
3. Covenants of the Corporation. The Corporation covenants and agrees that until
the Indebtedness shall have been satisfied in full, the Corporation shall:
(a) use the Trademarks only on goods of at least as high quality as the
goods on which the Corporation or its predecessor used the goods as
of the date hereof and maintain the quality of any and all products
in connection with which the Trademarks and other Collateral is
used, consistent with the quality of said products as of the date
hereof;
<PAGE>
6.
(b) take or cause to be undertaken all steps necessary to protect the
Corporation's interest in and to maintain the
Patents/Designs/Copyrights, Trademarks and Licenses and other
Collateral in good standing, including without limitation, to pursue
diligently all applications through to registration and to renew all
registrations and pay all maintenance fees as applicable, as well as
attending to the filing of all required documentation;
(c) vigorously protect, preserve and maintain all of the Corporation's
right, title and interest in the Collateral, including, without
limitation, the prosecution and/or defence against any and all suits
concerning validity, infringement, enforceability, ownership or
other aspects affecting any of the Collateral (any expenses incurred
in protecting, preserving and maintaining any of the Collateral
shall be borne by the Corporation);
(d) upon written request by the Agent, execute and deliver any and all
agreements, instruments, documents and papers as the Agent may
reasonably request to evidence the Agent's Security Interest in the
Collateral;
(e) perform all covenants required under any Third Party Agreement
including, inter alia, promptly paying all required fees, royalties
and taxes to maintain each and every item of the Collateral in full
force and effect;
(f) if at any time or from time to time, before the Indebtedness shall
have been satisfied in full, the Corporation (i) becomes aware of
any existing Patents/Designs/Copyrights, Trademarks or Licenses of
which the Corporation has not previously informed the Agent, (ii)
obtains rights to any new Patents/Designs/Copyrights, Trademarks or
Licenses, or (iii) becomes entitled to the benefit of any
Patents/Designs/Copyrights, Trademarks, or Licenses not identified
on any of Exhibits "A", "B" or "C", then the Corporation shall
promptly notify the Agent and regardless of when the Corporation so
notifies the Agent, Exhibits "A", "B" and "C" hereto, as applicable,
automatically shall be modified and amended to include any such
Patents/Designs/Copyrights, Trademarks and Licenses and the
provisions of this Agreement automatically shall apply thereto;
(g) maintain up to date records regarding the Collateral;
(h) provide the Agent with a written report on each anniversary of this
Agreement regarding the status of all Patents/Designs/Copyrights,
Trademarks and Licenses;
<PAGE>
7.
(i) provide the Agent, upon request by the Agent from time to time, with
a certificate of an officer of the Corporation certifying the
compliance of the Corporation with this Agreement;
(j) not sell, transfer, assign or dispose of its interest in, or grant
any license or sublicense under any of the
Patents/Designs/Copyrights or Trademarks or the Licenses or the
Goodwill, or enter into any other agreement with respect to any of
the Collateral, without the prior written consent of the Agent,
which consent shall not be unreasonably withheld;
(k) not abandon any right to file a trademark application or patent
application, or abandon any pending trademark or patent application,
or abandon any of the Patents/Designs/Copyrights, Trademarks,
Licenses or Goodwill or any suits involving any of the Collateral,
without the prior written consent of the Agent, which consent of the
Agent shall not be unreasonably withheld;
(l) not take any action, or permit any action to be taken by any person
or persons subject to its control, including licensees, or fail to
take any action, which would adversely affect the validity,
enforceability or transferability (to the Agent or otherwise) of all
or any of the Collateral; and
(m) not create or permit to exist any mortgage, hypothec, pledge,
charge, lien or other encumbrance upon the Collateral, other than
the existing Permitted Encumbrances, except as expressly consented
to in writing by the Agent.
4. Right of the Agent to Inspect. The Agent shall have the right, at any time
and from time to time upon reasonable notice and upon such terms as are agreed
to in advance by the Corporation and prior to payment in full of the
Indebtedness and release and discharge by the Agent of the Guarantee and this
Agreement and termination of the Commitments (as defined under the Credit
Agreement) (collectively, the "Termination"), to inspect the premises of the
Corporation and to examine the books, records and operations of the Corporation,
including, without limitation, the quality control processes of the Corporation.
5. Term of Security Interest; Royalties. The term of the Security Interest
granted herein shall continue until the Termination. The Corporation agrees that
the assignment or transfer to and use by the Agent of all Collateral shall be
worldwide and without any liability on the part of the Agent or any of the
Lenders for royalties or other related charges from the Agent or any of the
Lenders to the Corporation.
<PAGE>
8.
6. Expenses. All expenses incurred by or on behalf of the Agent or any of the
Lenders in connection with the performance of any of the covenants and
agreements set forth herein shall be borne by the Corporation in accordance with
the Credit Agreement.
7. Duties of the Corporation. Until the Termination, the Corporation shall, at
its own expense:
(a) diligently prosecute any and all Patent/Designs/Copyrights and
Trademark applications pending as of the date hereof or thereafter;
(b) make application to register all Patent/Designs/Copyrights and
Trademarks, as appropriate and to the extent commercially
reasonable;
(c) protect, preserve and maintain vigorously all of the right, title
and interest of the Corporation in and to the Collateral, including,
without limitation, the prosecution or defence of all suits
concerning the validity, infringement, breach, enforceability,
ownership or other aspects affecting any of the Collateral; and
(d) ensure generally that the Collateral is and remains valid, in good
standing and enforceable.
8. Default. Without prejudice to the right of the Agent to demand payment of all
or any part of the Indebtedness hereby secured at any time or times, pursuant to
the Guarantee, the Indebtedness shall, at the option of the Agent, become
payable and the security hereby constituted shall become enforceable in each and
every of the events following:
(a) if the Corporation makes default in the observance or performance of
any written agreement or undertaking heretofore or hereafter given
by the Corporation to the Agent or the Lenders pursuant to or in
connection with the Credit Agreement, whether contained herein or
not;
(b) if the Corporation makes default in payment of all or any portion of
the Indebtedness when due whether the same is secured hereby or not;
(c) if an order is made or a resolution passed for the winding-up of the
Corporation, or if a petition is filed for the winding-up of the
Corporation;
(d) if the Corporation ceases or threatens to cease to carry on business
or if the Corporation commits or threatens to commit any act of
bankruptcy or if the Corporation becomes insolvent or makes an
assignment or
<PAGE>
9.
proposal in bankruptcy or gives notice of its intention to do so or
makes a bulk sale of its assets or if a bankruptcy petition is filed
or presented against the Corporation;
(e) if any proceedings with respect to the Corporation are commenced
under the Companies' Creditors Arrangement Act (Canada) or the
Bankruptcy and Insolvency Act (Canada) or if the Corporation shall
seek relief or consent to the filing of a petition against it under
any law which involves any arrangement with or any compromise of any
rights of any one or more creditors of the Corporation;
(f) if an execution or any other process of any court becomes
enforceable against the Corporation or if a distress or analogous
process is levied upon the property of the Corporation or any part
thereof;
(g) if any sum which has been admitted as due by the Corporation or is
not disputed to be due by it and which forms or is capable of being
made a charge upon any of the Collateral in priority to the Security
Interest created by this Agreement is unpaid;
(h) if the Corporation shall default in the observance or performance of
any material provision relating to any material indebtedness or
liability of the Corporation to any creditor other than the Agent or
the Lenders;
(i) if any material licences, permits or approvals required by any law,
regulation or governmental policy or any governmental agency or
commission for the operation by the Corporation of its business
shall be withdrawn or cancelled; or
(j) if any representation or warranty made by the Company or any of its
officers, employees or agents to the Agent shall be false or
inaccurate in any material respect.
9. Waivers. No course of dealing between the Corporation and the Agent, nor any
failure to exercise, nor any delay in exercising, on the part of the Agent, any
right, power or privilege hereunder or under the Guarantee or the Credit
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The Agent may waive, in whole or in part, any breach of any
provisions of this Agreement by the Corporation, any breach of any provisions of
the Guarantee or the Credit Agreement or any of the rights and remedies of the
Agent whether provided hereunder or otherwise, provided that no such waiver
shall be considered to have been given unless given expressly in writing by the
Agent to the Corporation. No
<PAGE>
10.
waiver given by the Agent in accordance with this Section 9 shall be construed
as a waiver of any other or subsequent breach or default by the Corporation.
10. Severability. The provisions of this Agreement are severable, and if any
clause or provision shall be held invalid and unenforceable in whole or in part
in any jurisdiction by a Court of competent jurisdiction, then such invalidity
or unenforceability shall affect only such clause or provision, or part thereof,
in such jurisdiction, and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or provision of this
Agreement in any jurisdiction.
11. Modification. This Agreement cannot be altered, amended or modified in any
way, or by any other document or instrument signed by each of the Corporation
and the Agent.
12. Cumulative Remedies. All of the rights and remedies of the Agent with
respect to the Collateral, whether established hereby or by the Guarantee or the
Credit Agreement, or by any other agreements or by law shall be cumulative and
may be exercised singularly or concurrently.
13. Irrevocable Power of Attorney. The Corporation irrevocably constitutes and
appoints the Agent and each of its authorized employees from time to time as the
true and lawful attorney of the Corporation with full power of substitution in
the name of the Corporation, with power after the security constituted hereby
shall have become enforceable to:
(a) endorse or sign the name of the Corporation on and execute and
deliver all applications, registrations, recordings, reissues,
continuations, continuations in part, term restorations and
extensions thereof, documents, papers, agreements, assignments and
instruments necessary or desirable for the purpose of recording,
registering and filing of, or accomplishing any other formality with
respect to the Collateral or any part thereof or otherwise regarding
the Collateral, or any part thereof;
(b) take any other actions with respect to the Collateral, or any part
thereof, as the Agent deems to be in the best interest of the Agent
or the Lenders, including without limitation, the realization or
collection of all or any income, damages or payments related
thereto;
(c) grant or issue any exclusive or non-exclusive license or sublicense
under or in respect of the Collateral, or any part thereof to
anyone; or
(d) assign, pledge, convey, sell, license, or otherwise transfer title
in or dispose of the Collateral or any part thereof (or the right,
title and
<PAGE>
11.
interest of the Corporation therein) to anyone by private or public
sale, lease or otherwise upon such terms and conditions as the Agent
may determine as permitted by law and whether or not the Agent has
taken possession of any of the Collateral.
The Corporation and the Agent acknowledge and agree that any disposition
referred to in clause (d) in this Section 13 may be either a disposition of all
or any of the Collateral and may be by way of public auction, public tender,
private contract or otherwise as permitted by law. The Agent may sell or dispose
of the Collateral for consideration payable by installments either with or
without taking security for the payment of such installments and may make and
deliver to any purchaser thereof good and sufficient assignment, documents or
instruments and give receipts for the purchase money, and any such sale or
disposition shall be a perpetual bar, both at law and in equity, against the
Corporation and all those claiming an interest in and to the Collateral by,
from, through or under the Corporation. The Corporation hereby ratifies all acts
of any such attorney taken, done or caused to be taken or done in accordance
with this Section 13. This power of attorney shall be irrevocable unless and
until the Indebtedness shall have been paid in full and the Termination has
occurred. Upon execution of this Agreement, the Corporation shall execute the
power of attorney in the same or substantially the same form as set forth in
Exhibit "D" to this Agreement.
14. Remedies. Whenever the Security Interest granted pursuant to this Agreement
shall have become enforceable, and so long as it shall remain enforceable, the
Agent may, in addition to all other rights and remedies available to it at law
or in equity, proceed to realize upon such security and to enforce its rights
by:
(a) the appointment by instrument in writing of a receiver or receivers
of the Collateral or any part thereof (which receiver or receivers
may be any person or persons, whether an officer or officers or
employee or employees of the Agent or not and the Agent may remove
any receiver or receivers so appointed and appoint another or others
in his, her or their stead);
(b) proceedings in any court of competent jurisdiction for the
appointment of a receiver or receivers or for sale of the Collateral
or any part thereof;
(c) any other action, suit, remedy or proceeding authorized or permitted
hereby or by law or by equity;
(d) exercising all of the rights of the Corporation under all contracts,
agreements or other instruments in writing relating to the
Collateral as fully and effectually as if the Agent were the
absolute owner thereof;
<PAGE>
12.
(e) commencing legal proceedings for and on behalf of and in the name of
the Agent and at the expense of the Corporation in order to enforce
the rights of the Corporation under any contracts, agreements, or
other instruments in writing which may relate to the Collateral; or
(f) exercising any of the rights and/or remedies referred to in Section
13 hereof.
Any receiver or receivers appointed pursuant to this Section 14 shall have power
to: (i) take possession of and to use the Collateral or any part thereof; (ii)
borrow money required for the maintenance, preservation or protection of the
Collateral or any part thereof or the carrying on of the business of the
Corporation; (iii) further charge the Collateral in priority to the security
interests of this Agreement as security for money so borrowed; and (iv) sell,
lease or otherwise dispose of the whole or any part of the Collateral on such
terms and conditions and in such manner as the receiver shall determine as
permitted by law. The term "receiver" as used in this Agreement includes a
receiver and manager. The Agent may file such proofs of claim and other
documents as may be necessary or advisable in order to have its claim lodged in
any bankruptcy, winding-up or other judicial proceedings relating to the
Corporation. In addition, the Agent may use and possess the Collateral or any
part thereof, free from all encumbrances, liens and charges (unless otherwise
expressly provided for herein) without hindrance, interruption or denial of the
same by the Corporation or by any other person or persons and may lease or sell
the whole or any part or parts of the Collateral . Any sale hereunder may be
made by public auction, by public tender or by private contract or as otherwise
permitted by applicable law. Such sale shall be on such terms and conditions as
to credit or otherwise and as to upset or reserve bid or price as to the Agent
acting in a commercially reasonable manner may seem advantageous. Such sale may
take place whether or not the Agent has taken possession of the Collateral. No
remedy for the realization of the Security Interest granted herein or for the
enforcement of the rights of the Agent shall be exclusive of or dependent on any
other such remedy, but any one or more of such remedies may from time to time be
exercised independently or in combination.
15. Effect on Other Agreements. The Corporation acknowledges and agrees that
this Agreement is not intended to limit or restrict in any way the rights and
remedies of the Agent under the Guarantee or the Credit Agreement, or any other
security granted by the Corporation to the Agent pursuant thereto, but rather is
intended to facilitate the exercise of such rights and remedies. The Agent shall
have, in addition to all other rights and remedies given to it by the terms of
this Agreement, the Guarantee and the Credit Agreement, all rights and remedies
allowed by law and the rights and remedies of a secured party under the Personal
Property Security Act as enacted in any jurisdiction in which the Collateral may
be located (including, without limitation, any of the hypothecary rights
provided for under articles 2748 to 2794 of the Civil Code of Quebec).
<PAGE>
13.
16. Binding Effect; Benefits. This Agreement, receipt of a true copy of which is
hereby acknowledged by the Corporation, shall be binding upon the Corporation
and its respective successors and permitted assigns, and shall enure to the
benefit of and be enforceable by the Agent, its successors, nominees and
assigns. The Agent may, upon the terms provided in the Credit Agreement, assign,
transfer and deliver to any transferee any or all of the Indebtedness secured by
this Agreement or any security or any documents or instruments held by the Agent
in respect thereof, including, without limitation, the Guarantee, provided that
no such assignment, transfer or delivery shall release the Corporation from any
of the Indebtedness secured by this Agreement and provided that on or before the
completion of such assignment, transfer or delivery, any assignee, transferee or
holder shall enter into an agreement with the Corporation to the effect that
such assignee, transferee or holder agrees to be bound by and observe the
provisions of this Agreement; and thereafter the Agent shall, to the extent
provided in the Credit Agreement, be fully discharged from any and all further
responsibility with respect to the Indebtedness, including without limitation
all documents and instruments so assigned, transferred or delivered. Such
transferee shall be vested with all powers and rights of the Agent under such
security, documents or instruments but the Agent shall retain all rights and
powers with respect to any such security, documents or instruments not so
assigned, transferred or delivered. The Corporation shall not sell or assign its
interest in, or grant any license or sublicense under the Collateral without the
prior written consent of the Agent.
17. Release of Security Interest. Upon Termination, the Agent shall upon request
in writing by the Corporation and at the expense of the Corporation execute and
deliver to the Corporation all documents and instruments, and shall take such
other actions, as may be necessary or proper to release the lien on and security
interest in the Collateral, subject to any disposition thereof which may have
been made by the Agent pursuant hereto.
18. Governing Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the Province of New Brunswick and the
federal laws of Canada applicable therein. The Corporation agrees that any
lawsuit, action or proceeding arising out of or relating to this Agreement may
be instituted in the Courts of New Brunswick and the Corporation hereby accepts
and irrevocably submits to the non-exclusive jurisdiction of the said Courts and
acknowledges their competence and agrees to be bound by any judgment thereof;
provided that nothing herein shall limit the rights of the Agent to bring or
initiate proceedings against the Corporation or any other person elsewhere.
19. Headings. Paragraph headings used herein are for convenience only and shall
not modify nor interpret the provisions which they precede.
<PAGE>
14.
20. Further Assurances. The Corporation agrees to execute and deliver such
further agreements, instruments and documents, and to perform such further acts,
as the Agent reasonably may request from time to time in order to carry out the
purpose of this Agreement and the covenants and agreements set forth herein.
21. Survival of Representations. All representations and warranties of the
Corporation contained in this Agreement shall survive the execution and delivery
of this Agreement and shall be remade on the date of each and every borrowing
made by the Borrowers under the Credit Agreement.
22. Counterparts. This Agreement may be executed by the parties in counterparts,
each of which shall be deemed to be an original and all of which together shall
constitute one and the same agreement.
23. Inconsistencies. This Agreement is executed pursuant to the Guarantee and
the Credit Agreement and is subject to the terms thereof. In the event of any
contradiction between the terms hereof and the comparable terms of the Guarantee
or the Credit Agreement, the terms of the Guarantee or the Credit Agreement
shall prevail.
24. Selection of Language. It is the express wish of the Parties that this
agreement and any related documents be drawn up and executed in English. Les
parties conviennent que la presente convention et tous les documents s'y
rattachant soient rediges et signes en anglais.
IN WITNESS WHEREOF, this Agreement has been executed by the Corporation,
effective as of the date first written above.
SPORT MASKA INC.
By: /s/ D. Bruce Randall
------------------------------------- c/s
Name: D. Bruce Randall
Title: Secretary
THE CHASE MANHATTAN BANK, as Agent for
the Lenders
By: /s/ Daniel M. Tulloch
------------------------------------- c/s
Name: Daniel M. Tulloch
Title: Vice President
<PAGE>
EXHIBIT "A"
SPORT MASKA INC.
REGISTERED PATENTS AND INDUSTRIAL
DESIGNS / APPLICATIONS
UNITED STATES
Application Date Patent / Industrial Design
- ------------------ --------------------------------------------------------
April 20,1982 Uniforms for Hockey Players
(REGISTRATION NO 4,325,148)
May 31, 1983 Preformed Lining Component for Skate Boots
(REGISTRATION NO 4,385,456)
June 13, 1989 Double knit fabric with holes therethrough and knitted
color bands
(REGISTRATION NO 4,838,045)
January 9, 1990 Double knit fabric with holes therethrough and knitted
color bands
(REGISTRATION NO 4,891,958)
June 5, 1990 Hockey glove having lateral padded wart with split and
flexible insert
(REGISTRATION NO 4,930,162)
July 17, 1990 Method of producing double knit fabric with holes
therethrough and knitted color bands
(REGISTRATION NO 4,941,331)
October 23, 1990 Method and apparatus for vacuum molding multi-layer
footwear
(REGISTRATION NO 4,964,229)
March 19, 1991 Shin guard
(REGISTRATION NO 4,999,847)
April 16, 1991 Chest protector
(REGISTRATION NO 5,007,108)
March 10, 1992 Protective equipment having a rebound controlling insert
(REGISTRATION NO 5,093,931)
June 7, 1994 Runner support for a skate
(REGISTRATION NO 5,318,310)
February 10, 1995 Protective sports glove
(Serial No 08/386,534)
December 26, 1995 Skate Toe Area Bumper
(Serial No 29/048,340)
December 26, 1995 Boot Design for an In-line Skate
(Serial No 29/048,341)
December 26, 1995 Chassis Design for In-line Skates
(Serial No 29/048,347)
<PAGE>
-2-
UNITED STATES
Application Date Patent / Industrial Design
- ------------------ --------------------------------------------------------
December 26, 1995 Heel Wedge Design for a skate
(Serial No 29/048,339)
November 22, 1996 Boot Design for a Skate
(Serial No 29/062,739)
November 22, 1996 Tongue Insert Design for a Boot
(Serial No 29/062,711)
November 22, 1996 Outsole Design for a Boot
(Serial No 29/062,738)
November 22, 1996 Tongue Design for a Boot
(Serial No 29/062,746)
November 22, 1996 Tongue Design for a Boot
(Serial No 29/062,747)
December 12, 1996 Protective Pants
(Serial No. 29/063,685)
January 16, 1997 Outsole Design for a Boot Having an Insert
(Serial No. 29/064,971)
January 24, 1997 Skate Boot Having an Outsole with a Rigid Insert
(Serial No. 08/787,304)
AUSTRALIA
Application Date Patent / Industrial Design
- ------------------ --------------------------------------------------------
August 27, 1993 Runner Support for a skate (Serial No: 49381/93). (This
patent was applied for in Australia by PCT patent Serial
No: PCT/CA93/00350)
CANADA
Application Date Patent / Industrial Design
- ------------------ --------------------------------------------------------
July 12, 1983 Uniforms for Ice Hockey Players
(REGISTRATION NO 1,149,554)
August 28, 1984 Uniforms for Ice Hockey Players
(REGISTRATION NO 1,173,203)
June 28, 1983 Preformed lining component for skate boots
(REGISTRATION NO 1,148,738)
December 28, 1988 Double Knit fabric with holes througbout and knitted color
bands
(REGISTRATION NO 1,247,393)
<PAGE>
-3-
CANADA
Application Date Patent / Industrial Design
- ------------------ --------------------------------------------------------
December 28, 1988 Method of producing double knit fabric with holes
throughout and knitted color bands
(REGISTRATION NO 1,247,392)
July 14, 1989 Method and apparatus for vacuum molding multi-layer
footwear
(REGISTRATION NO 1,318,502)
September 12, 1989 Hockey glove having lateral padded wart with split and
flexible insert
(REGISTRATION NO 1,272,352)
August 28, 1990 Chest protector
(Serial No 2,065,327)
August 29, 1990 Shin guard
(Serial No 2,024,251)
July 20, 1990 Protective equipment having a rebound controlling insert
(Serial No 2,063,814)
October 19, 1990 Protective rim configuration for hard-shelled safety helmet
(REGISTRATION NO 2,067,739)
January 26,1993 Runner support for a skate
(Serial No 2,088,077)
February 2, 1995 Protective sports glove
(Serial No 2,141,702)
June 26, 1996 Toe Area Bumper for Skate
(Serial No 1996 - 1467 Industrial Design)
June 26, 1996 Skate Boot
(Serial No 1996 - 1468 Industrial Design)
June 26, 1996 Wheel Support for In-line Skates
(Serial No 1996 - 1469 Industrial Design)
June 26, 1996 Heel Wedge Design for Skate
(Serial No 1996- 1466 Industrial Design)
CZECH REPUBLIC
Application Date Patent / Industrial Design
- ------------------ --------------------------------------------------------
August 27, 1993 Runner support for a skate
(Serial No PV 522-95)
(This patent was applied for in the Czech Republic by PCT
patent Serial No PCT/CA93/00350)
<PAGE>
-4-
EUROPEAN PATENT
Application Date Patent / Industrial Design
- ------------------ --------------------------------------------------------
February 5, 1990 Method and apparatus for vacuum molding
multi-layer footwear
(REGISTRATION NO 391,752)
Runner support for a skate
(Serial No 93 918 832.2)
FINLAND
Application Date Patent / Industrial Design
- ------------------ --------------------------------------------------------
February 2, 1990 Method and apparatus for vacuum molding
multi-layer footwear
(REGISTRATION NO 92,011)
August 27, 1993 Runner support for a skate (Serial No 950867). (This patent
was applied for in Finland by PCT patent Serial No
PCT/CA93/00350)
JAPAN
Application Date Patent / Industrial Design
- ------------------ --------------------------------------------------------
August 27, 1993 Runner support for a skate (Serial No 506,709/94). This
patent was applied for in Japan by PCT patent Serial No
PCT/CA93/00350)
NORWAY
Application Date Patent / Industrial Design
- ------------------ --------------------------------------------------------
February 2, 1990 Method and apparatus for vacuum molding multi-layer
footwear (REGISTRATION NO 175,801)
PCT PATENT
Application Date Patent / Industrial Design
- ------------------ --------------------------------------------------------
August 27, 1993 Runner support for a skate (Serial No PCT/CA93/OO350)
SWEDEN
Application Date Patent / Industrial Design
- ------------------ --------------------------------------------------------
September 13, 1982 Hockey helmet (REGISTRATION NO 452,412)
<PAGE>
EXHIBIT "B"
SPORT MASKA INC.
REGISTERED TRADE-MARKS -- APPLICATIONS
UNITED STATES / CANADA
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL NO REG. NO WARES
- -------------------------------- ----------------- --------------- --------------- ---------------------------------------------
<S> <C> <C> <C> <C>
ACUFLEX Canada 405,109 TMA 228,153 Ice hockey sticks.
AIR KNIT Canada 572,109 TMA 339,498 Hockey and baseball jerseys.
AIR KNIT U.S. 73/644,425 1,552,007 Sweaters for hockey, baseball, ringuette,
rugby and broomball.
ARMORLITE Canada 290,330 TMA 145,520 Hockey protective equipment; chin and knee
guards, gloves and shoulder pads.
ARRESTER Canada 744,875 In-line skate brakes.
ARRESTER U.S. 74/480,370 In-line skate brakes.
Back of skate design (#5) Canada 573,667 TMA 335,064 Skates.
Back of skate design (#5) U.s. 73/658,870 1,518,093 Ice Skates.
Back of skate design (#17) Canada 652,193 Skates.
CHAMPION Canada 158,777 TMDA056,266 Ice skates; hockey sticks, pucks, tennis
rackets and badminton rackets.
CLASSIC Canada 624,556 Sports apparel, hockey protective
equipment
COBRA U.S. 74/415,188 1,902,205 In-line roller skates.
CONCORDE Canada 732,972 TMA 432,525 In-line roller skates.
CONCORDE U.S. 74/415,179 In-line roller skates.
CORSAIR Canada 732,969 TMA 432,523 In-line roller skates.
CORSAIR U.S. 74/415,178 1,873,342 In-line roller skates.
CYCLONE Canada 509,947 TMA 294,472 Ice skates.
DUOPRO Canada 473,265 TMA 274,326 Vests (jerseys).
DUOPRO; Design (#10) Canada 473,648 TMA 277,412 Vests (jerseys).
</TABLE>
<PAGE>
-2-
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL NO REG. NO WARES
- -------------------------------- ----------------- --------------- --------------- ---------------------------------------------
<S> <C> <C> <C> <C>
DURA TAN Canada 609,152 TMA 353,060 Treated leather used inside of skates.
DYNASTEEL Canada TMA 326,316 Ice Skate blades.
DYNO MAX Canada 465,204 TMA 269,379 Ice hockey skates.
EAGLE Canada 732,967 TMA 432,521 In-line roller skates.
EAGLE U.S. 74/415,190 1,924,720 In-line roller skates.
ELEGANCE Canada 529,570 TMA 310,931 Skates.
EXPRESSIONS Canada 529,569 TMA 307,477 Skates.
FALCON Canada 732,971 In-line roller skates.
FALCON U.S. 74/415,189 In-line roller skates.
FAST FORWARD Canada 735,370 In-line roller skates.
FLEXWART Canada 624,557 TMA 363,814 Hockey gloves.
GARA U.S. 1,690,343 1,690,343 Protective sports crash helmets.
GCK Canada 439,217 TMA 261,202 Hockey jerseys and socks, football, soccer
and baseball jerseys.
GCK & Design Canada 322,971 TMA 174,681 Jerseys and vests.
GCK & Design Canada 404,670 TMA 229,051 Hockey jerseys and socks, football, soccer
and baseball jerseys.
GRIPTITE Canada 640,424 TMA 379,694 Lining for ice skates.
HELL LACE Canada 616,290 TMA 390,056 Ice Skates.
Heel wedge design (#16) Canada 651,813 TMA 400,728 Skates.
Heel wedge design (#16) U.S. 74/467,943 Skates.
Hockey helmet design (#22) Canada 717,150 Hockey helmet.
Hockey player design (#14) Canada 621,220 TMA 364,289 Jerseys.
ICE QUEEN Canada 489,659 TMA 299,940 Ice skates.
IMPERIAL Canada 511,601 TMA 302,320 Skates.
IMPERIAL & Design (#11) Canada 158,771 TMDA56111 Hockey sticks.
INTRUDER Canada 732,962 TMA 432,518 In-line roller skates.
</TABLE>
<PAGE>
-3-
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL NO REG. NO WARES
- -------------------------------- ----------------- --------------- --------------- ---------------------------------------------
<S> <C> <C> <C> <C>
INTRUDER U.S. 74/415,186 1,899,995 In-line roller skates.
Irregular design (#4) Canada 589,579 TMA 346,635 Skates.
Irregular design (#4) Canada 589,580 TMA 346,636 Skates.
Lateral window design (#6) Canada 622,189 TMA 365,552 Ice skates.
Lateral window design (#6) U.S. 73/833,925 Ice skates.
MASKA Canada 387,837 TMA 277,946 Jerseys, hockey jerseys.
MASKA U.S. 73/183,066 1,159,225 Sports clothing, namely, shorts, pants,
shirts, sweaters, socks, warm-up and
practice suits.
MK & DESIGN Canada TMA 236,679 Ice skates.
MK & DESIGN Canada TMA 237,887 Ice skates.
MUSTANG Canada 621,028 TMA 360,366 Skates.
MUSTANG U.S. 73/782,809 1,592,164 Ice skates.
NTR & Design (#24) Canada 708,565 TMA 423,731 Roller skates and clothing.
NTR & Design (#24) U.S. 74/348,290 Roller skates and in-line skates.
NYLITE U.S. 73/031,568 1,043,627 Ice skates.
ORBIT Canada 380,309 TMA 210,775 Ice skates and Inner boots.
ORBIT U.S. 73/050,420 1,056,153 Hockey skates and figure skates.
ORBIT SUPER COMP Canada 500,756 TMA 288,359 Hockey skates and figure skates.
ORBIT SUPER PRO Canada 477,940 TMA 273,021 Skates.
Oval design (#3) Canada 589,576 TMA 357,581 Skates.
Oval design (#3) Canada 589,578 TMA 346,634 Skates.
Oval on skate tongue design (#25) Canada 751,218 Skates.
PASTIME Canada 082,200 TMDA19859 Ice Skates and Blades.
PLEINE PUISSANCE Canada 711,178 TMA 415,836 Ice skates; advertisement campaign for ice
skates.
POWERLINE Canada 627,075 TMA 374,817 Hockey equipment.
PRO 1 Canada 494,685 TMA 286,676 Skates.
</TABLE>
<PAGE>
-4-
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL NO REG. NO WARES
- -------------------------------- ----------------- --------------- --------------- ---------------------------------------------
<S> <C> <C> <C> <C>
PRO-GARD Canada 263,497 TMA 124,604 Heel protectors for skates, gloves,
helmets, chin guards and mouth guards.
PRO-GARD U.S. 72/128,248 738,975 Heel protectors for skates, gauntlets,
helmets and body protective equiptment.
PROLITE Canada 163,620 UCA 02346 Ice skates, protective hockey equipment,
hockey gloves.
PROLITE U.S. 71/698,770 637,101 Ice skates, bicycles and hockey sticks.
PROLITE II Canada 453,584 TMA 260,127 Steel blades for ice skates.
PROPAC Canada 458,735 TMA 268,301 Body protectors for ice hockey.
PRO-PAC U.S. 74/430,885 Body protectors.
PROWLER Canada 732,968 TMA 432,522 In-line roller skates.
PROWLER U.S. 74/415,176 1,871,999 In-line roller skates.
RAPIDE Canada 379,991 TMA 214,942 Skating boots.
Rectangle tongue design (#15) Canada 651,814 Skates.
REVOLVER Canada 740,168 TMA 434,561 In-line roller skates and chassis.
REVOLVER U.S. 74/454,126 In-line roller skates and chassis.
ROLLERMAN Canada 768,455 Clothing.
ROLLERMAN U.S. 74/595,665 Clothing.
Rollerman & Design Canada 781,431 Clothing.
Rollerman & Design Canada 781,430 Clothing.
Rollerman & Design Canada 781,429 Clothing.
Rollerman & Design U.S. 2,037,755 Clothing.
Rollerman & Design U.S. 2,037,754 Clothing.
Rollerman & Design U.S. 74,667,475 Clothing.
Roller skater design (#31) Canada 708,639 TMA 440,812 In-line roller skates and protective
equipment.
Roller skater design (#31) U.S. 74/348,380 In-line roller skates and protective
equipment.
Shield design (#1) Canada 589,573 TMA 345,475 Skates.
Shield design (#1) Canada 589,575 TMA 345,476 Skates.
</TABLE>
<PAGE>
-5-
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL NO REG. NO WARES
- -------------------------------- ----------------- --------------- --------------- ---------------------------------------------
<S> <C> <C> <C> <C>
Shield design (#2) Canada 589,504 TMA 353,527 Skates.
Shield design (#2) Canada 589,574 TMA 357,580 Skates.
SILHOUETTE Canada 465,584 TMA 269,382 Ladies figure skates.
SILHOUETTE Canada 531,848 TMA 313,161 Skates.
SKATE ON THE WILD SIDE Canada 757,340 In-line roller skates.
SKATE ON THE WILD SIDE U.S. 74/541,022 In-line roller skates.
SKYHAWK Canada 732,966 TMA 441,394 In-line roller skates.
SKYHAWK U.S. 74/415,187 In-line roller skates.
SL 5000 Canada TMA 326,315 Ice Skate blades and guards.
SLM Canada TMA 215,566 Ice Skate blades.
SLM Canada TMA 262,331 Core-caps for the newspaper print
industry, toe caps for safety shoes.
SLM & Design Canada TMA 361,133 Ice Skates, sledges, snow discs,
children's skis and poles, shovels;
mechanic creepers.
SLM Canada TMA 263,523 Ice Skate blades.
SLM & DESIGN U.S. 1,584,533 Sporting Goods.
SPORT TACKS Canada 543,903 TMA 314,832 Skates.
STARFIGHTER Canada 732,970 TMA 432,524 In-line roller skates.
STARFIGHTTR U.S. 74/415,184 1,873,343 In-line roller skates.
SUPERFIL Canada 403,220 TMA 241,265 Jerseys.
SUPER LINE design (#19) Canada 652,220 TMA 414,320 Protective hockey equipment.
SUPER TACKS Canada 411,737 TMA 230,793 Skating boots and skiing outfits, namely,
skating boots and skates.
SUPRA Canada 538,758 TMA 359,918 Hockey equipment, namely, hockey pants,
elbow pads, shoulder pads, leg protectors
and hockey gloves.
SUPRA U.S. 74/596,851 Hockey pants, elbow pads, shoulder pads,
leg protectors and hockey gloves.
</TABLE>
<PAGE>
-6-
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL NO REG. NO WARES
- -------------------------------- ----------------- --------------- --------------- ---------------------------------------------
<S> <C> <C> <C> <C>
SUPRA Canada 769,189 Hockey equipment, namely ice hockey
sticks, in-line hockey sticks, street
hockey sticks and their components.
SUPRA U.S. 74/595,663 Hockey equipment, namely ice hockey
sticks, in-line hockey sticks, street
hockey sticks and their components.
T Design (#20) Canada 655,330 TMA 389,383 Hockey skates.
T Design (#21) Canada 655,334 TMA 384,713 Hockey skates.
TACKABERRY Canada 189,763 UCA 23338 Boots and shoes and skates and skating
boots.
TACKABERRY U.S. 75/207,841 Skating boots and skating sets comprising
skates and boots.
TACKS Canada 307,832 TMA 161,826 Skates.
TACKS U.S. 72/379,341 934,407 Combined skating boots and skates.
TACKS DESIGN (#12) Canada 589,505 TMA 345,223 Skates.
TACKSACK Canada 624,467 TMA 363,413 Skate molds.
TACKSACK U.S. 73/796,465 1,665,650 Skate fitting system.
TALON Canada 732,965 TMA 432,520 In-line roller skates.
TALON U.S. 74/415,182 In-line roller skates.
TEMPO U.S. 74/185,788 1,735,015 Protective sports crash helmets and body
pads.
TOMCAT Canada 732,963 TMA 432,519 In-line roller skates.
TOMCAT U.S. 74/415,183 In-line roller skates.
TPP Canada 458,739 TMA 276,596 Hockey equipment.
TURN ON THE POWER Canada 711,176 TMA 415,526 Ice skates.
Two lines on glove design (#17) Canada 505,395 TMA 296,361 Hockey gloves.
ULTRA PAC Canada 479,249 TMA 312,225 Hockey equipment.
ULTRA TACKS Canada 497,248 TMA 306,794 Skates.
ULTRAFIL Canada 447,279 TMA 273,539 Jerseys, hockey jerseys.
VAKUTACK U.S. 73/782,212 1,601,040 Ice skates.
</TABLE>
<PAGE>
-7-
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL NO REG. NO WARES
- -------------------------------- ----------------- --------------- --------------- ---------------------------------------------
<S> <C> <C> <C> <C>
VAKUTACK Canada 619,217 TMA 360,783 Ice skates.
VOYAGEUR Canada 511,600 TMA 313,101 Skates.
</TABLE>
FOREIGN COUNTRIES
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL NO REG. NO WARES
- -------------------------------- ----------------- --------------- --------------- ---------------------------------------------
<S> <C> <C> <C> <C>
PROLITE Australia B281,916 Hockey equipment including ice hockey
equipment.
TACKS Australia A281,915 Hockey equipment.
- ------------------------------------------------------------------------------------------------------------------------------------
TACKS Austria 65,301 Bicycles and accessories, rowing machines;
skates, protective equipment, pucks,
roller skates, tennis and badminton
racquets, hockey sticks, gym equipment.
TACKS Austria 132,454
PROLITE Austria 64,821 Hockey equipment.
TACKABERRY Austria 64,882 Bicycles and accessories, rowing machines;
skates, protective equipment, pucks,
roller skates, tennis and badminton
racquets, hockey sticks, gym equipment.
- ------------------------------------------------------------------------------------------------------------------------------------
ORBIT Benelux 352.017 Hockey skates and figure skates.
PROLITE Benelux 1719 Protective helmets, bicycles and
accessories, skates, protective equipment,
tennis and badminton racquets,
exercise machines.
TACKABERRY Benelux 1830 Protective helmets, bicycles and
accessories, skates, protective equipment,
tennis and badminton racquets, exercise
machines.
TACKS Benelux 1950 Bicycles and accessories, ice skates,
exercise machines.
- ------------------------------------------------------------------------------------------------------------------------------------
TACKABERRY Finland 58,817 Hockey skates and figure skates.
TACKS Finland 59,307 Sporting and gymnasium equipment, sport
shoes.
PROLITE II Finland 84,042 Skate blades.
PROLITE Finland 59,111 Hockey equipment.
</TABLE>
<PAGE>
-8-
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL NO REG. NO WARES
- -------------------------------- ----------------- --------------- --------------- ---------------------------------------------
<S> <C> <C> <C> <C>
PROPAC Finland 84,431
- ------------------------------------------------------------------------------------------------------------------------------------
ORBIT France 1,469,749 Hockey skates and figure skates.
TACKS France 1,524,859 Sporting and gymnasium equipment,
bicycles, sport shoes.
PROLITE France 1,524,860 Sporting and gymnasium articles, bicycles
and accessories.
PROLITE II France 1,622,043 Skate blades.
TACKABERRY France 1,524,858 Sporting and gymnasium articles, bicycles
and accessories.
- ------------------------------------------------------------------------------------------------------------------------------------
Back of Skate Design Germany 2,093,858 Hockey skates.
PROLITE Germany 872,209 Bicycles; skates, protective equipment,
tennis and badminton racquets, hockey
sticks, baseball bats, skis, helmets,
training machines; separate for hockey and
other play racquets.
PROLITE II Germany 1,019,726 Skate blades.
TACKABERRY Germany 872,210 Bicycles; skates, protective equipment,
tennis and badminton racquets, hockey
sticks, baseball bats, skis, helmets,
training machines; separate for hockey and
other play racquets.
TACKS Germany 907,230 Sporting and gymnasium equipment, sport
shoes.
- ------------------------------------------------------------------------------------------------------------------------------------
PROLITE II Italy 488,108 Skate blades.
PROLITE Italy 249,656 Ice skates, protective equipment, helmets,
exercise machines, racquets.
TACKABERRY Italy 249,889 Ice skates, protective equipment, helmets,
exercise machines, racquets.
TACKS Italy 249,890 Ice skates, protective equipment, helmets,
exercise machines, racquets.
- ------------------------------------------------------------------------------------------------------------------------------------
PROLITE II Japan 2,206,714 Steel blades for ice skates and all other
goods included in this class.
PROLITE Japan 910,500 Ice skates and hockey equipment.
</TABLE>
<PAGE>
-9-
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL NO REG. NO WARES
- -------------------------------- ----------------- --------------- --------------- ---------------------------------------------
<S> <C> <C> <C> <C>
PROPAC Japan 2,009,783 Hockey equipment.
TACKS Japan 910,502 Ice skates and hockey equipment.
PRO-GARD Japan 604,462 Hockey equipment.
- ------------------------------------------------------------------------------------------------------------------------------------
TACKS New Zealand 109,079 Hockey equipment, ice skates and ice
skating sets, being ice skates fitted to
skating boots.
- ------------------------------------------------------------------------------------------------------------------------------------
PROLITE Norway 81,590 Skates, protective equipment, hockey
sticks, exercise machines.
TACKABERRY Norway 81,589 Skates, protective equipment, hockey
sticks, exercise machines.
TACKS Norway 81,588 Skates, protective equipment, bicycles
and accessories, hockey sticks, helmets,
exercise machines.
- ------------------------------------------------------------------------------------------------------------------------------------
PROLITE II Slovak Republic 165,662 Steel blades for ice skates.
PROLITE Slovak Republic 165,154 Hockey equipment.
- ------------------------------------------------------------------------------------------------------------------------------------
ORBIT Sweden 165,113
TACKABERRY Sweden 130,549 Games and playthings; gymnastic and
sporting articles (except clothing),
ornaments and decorations for
Christmas trees.
TACKS Sweden 130,665 Games and playthings, gymnastic and
sporting articles (except clothing),
ornaments and decorations for
Christmas trees.
PROLITE II Sweden 177,561
PROPAC Sweden 177,778
PROLITE Sweden 101,307
PROLITE Sweden 142,044
PROGARD Sweden 106,509
PROGARD Sweden 193,703
- ------------------------------------------------------------------------------------------------------------------------------------
PRO-GARD & DESIGN Switzerland 379,340 Hockey gloves.
PROLITE Switzerland 374,833 Skates, protective equipment, exercise
equipment, racquets, bicycles.
</TABLE>
<PAGE>
- 10-
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL NO REG. NO WARES
- -------------------------------- ----------------- --------------- --------------- ---------------------------------------------
<S> <C> <C> <C> <C>
PROLITE II Switzerland 309,554 Skate blades.
TACKABERRY Switzerland 374,483 Exercise and sports equipment; skates,
sticks, protective equipment, bicycles,
racquets.
TACKS Switzerland 874,834 Exercise and sports equipment; skates,
bicycles and accessories, sports
clothing, protective equipment.
- ------------------------------------------------------------------------------------------------------------------------------------
PROLITE U.K. 924,501 Ice skates, ice skating sets, being
ice skates fitted to skating boots.
PROUTE II U.K. 1,143,595 Ice skates and parts and fittings
therefor.
TACKABERRY U.K. 924,503
TACKS U.K. 924,502 Ice skates and ice skating sets, being
ice skates fitted to skating boots.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SUPPLEMENTAL LIST
SPORT MASKA INC.
REGISTERED TRADEMARKS - APPLICATIONS
<TABLE>
<CAPTION>
CANADA
TRADEMARK SERIAL NO WARES
- --------------------------------------------------- --------------- -----------------------------------------
<S> <C> <C>
DRYLAND 819,172 In-line, street & roller hockey
equipment & apparel.
DRYLAND & SKULL DESIGN 819,173 In-line, street & roller hockey
equipment & apparel.
</TABLE>
<TABLE>
<CAPTION>
UNITED STATES
TRADEMARK SERIAL NO WARES
- --------------------------------------------------- --------------- -----------------------------------------
<S> <C> <C>
THE HOCKEY COMPANY 75/015,219 Ice, street & roller hockey equipment,
accessories & clothing.
YA WANNA GO 75/035,669 Clothing in Class 25.
DRYLAND 75/138,305 In-line, street & roller hockey
equipment & apparel.
</TABLE>
<PAGE>
- 11 -
<TABLE>
<CAPTION>
TRADEMARK SERIAL NO WARES
- --------------------------------------------------- --------------- -----------------------------------------
<S> <C> <C>
DRYLAND & SKULL DESIGN 75/069,210 In-line, street & roller hockey
equipment & apparel.
DES 75/148,937 In-line skates.
DYNAMIC ENERGY SYSTEM 75/148,938 In-line skates.
ACTIVE VENTILATION 75/147,985 In-line skates.
TECHNOLOGY
AVT 75/147,986 In-line skates.
ES 75/197,104 In-line skates.
ES & DESIGN 75/197,105 In-line skates.
DST 75/219,014 Hockey skates.
</TABLE>
<PAGE>
EXHIBIT "C"
-----------
LICENSE AGREEMENTS
<PAGE>
EXHIBIT "D"
-----------
IRREVOCABLE POWER OF ATTORNEY
REGARDING INTELLECTUAL PROPERTY
-------------------------------
The undersigned, SPORT MASKA INC., a corporation duly continued, organized and
existing under the laws of the Province of New Brunswick, having its office and
principal place of business at 7405 Trans Canada Highway, Suite 300, St-Laurent,
Quebec (hereinafter referred to as the "Grantor"), hereby irrevocably
constitutes and appoints The Chase Manhattan Bank (the "Bank") and its
successors and permitted assigns, and each of their respective directors,
officers, employees, agents and representatives, as the true and lawful attorney
of the Grantor with full power of substitution in the name of the Grantor for
the following purposes:
1. To do any and all such acts and things and to endorse or sign the name of
the Grantor and execute and deliver all applications, registrations,
recordings, reissues, continuations, continuations in part, term
restorations and extensions thereof, documents, papers, agreements,
assignments and instruments as the Bank in its sole discretion, considers
necessary or desirable for the purpose of recording, registering and filing
with or accomplishing any other formality with respect to the Collateral
(as defined in the Security Agreement hereinafter mentioned), or any part
thereof, in the Canadian Intellectual Property Office, the United States
Patent and Trademark Office or any other governmental office, bureau or
agency dealing with intellectual property rights or otherwise regarding the
Collateral or any part thereof or accomplishing any other formality with
respect to carrying out the provisions and purposes of the security
agreement dated as of April 1, 1997 made between the Grantor and the Bank
(the "Security Agreement") a copy of which is attached hereto as Schedule
"A" and any other security with respect to all or any part of the
Collateral granted by the Grantor in favour of the Bank, or its assigns,
including a hypothec bearing a formal date of April 1, 1997 (collectively,
the "Other Security") or to take any other action with respect to the
Collateral or any part thereof or to exercise any of its rights and
remedies under the Security Agreement or under the Other Security, and to
do all acts or things necessary or desirable to grant or issue any
exclusive or non-exclusive licence or sub-licence under or in respect of
the Collateral, or any part thereof, to anyone or to transfer, assign,
pledge, convey, sell, license or otherwise transfer, take in or dispose of
all rights, title and interest of the Grantor in and to the Collateral or
any parts thereof to any person or persons by private or public sale, lease
or otherwise, upon such terms and conditions as the Bank may determine
best, otherwise in compliance with applicable law, and whether or not the
Bank has taken possession of the
<PAGE>
2.
Collateral or to otherwise realize on the Collateral in any manner
contemplated in the Security Agreement or in the Other Security or to
realize or collect all or any income, damages, payments or proceeds related
thereto; and
2. To do or take any step appropriate for the preservation or protection of
any or all of the Collateral for the benefit of the Bank.
The Grantor hereby acknowledges and ratifies all acts accomplished in connection
herewith. Capitalized terms used herein and not otherwise defined herein shall
have their respective meanings as defined in the Security Agreement . This power
of attorney is made pursuant to the Security Agreement and will take effect
solely in the event or upon the occurrence of a Default under the Security
Agreement and this power of attorney is coupled with an interest and may not be
revoked until the payment or performance in full of all Indebtedness (as that
term is defined in the Security Agreement) owing to the Bank or the Lenders.
This Power of Attorney shall be governed by the laws of the Province of New
Brunswick and the federal laws of Canada applicable therein.
DATED as of this 1st day of April, 1997.
SPORT MASKA INC.
Per: c/s
---------------------------------
Name: D. Bruce Randall
Title: Secretary
EXECUTION COPY
PLEDGE AGREEMENT
AND IRREVOCABLE PROXY
PLEDGE AGREEMENT dated as of April 1, 1997 between SLM Trademark
Acquisition Canada Corporation, a New Brunswick corporation (the "Grantor"), and
The Chase Manhattan Bank, a New York banking corporation (the "Agent"). All
capitalized terms used herein and not defined herein shall have the meanings set
forth in the Credit Agreement hereinafter mentioned.
The Agent and the lenders (the "Lenders") referred to in the Credit
Agreement have agreed to extend Credits to or for the account of SLM
International, Inc., a Delaware corporation, #1 Apparel, Inc., a Delaware
corporation, and Maska U.S., Inc., a Vermont corporation (collectively, the
"Borrowers") pursuant to, and subject to the terms and conditions of the Credit
Agreement dated as of the date hereof, among the Borrowers, the Lenders and the
Agent, as agent for the Lenders (as amended, modified or supplemented from time
to time in accordance with its terms, the "Credit Agreement"). The obligation of
the Lenders to extend such Credits under the Credit Agreement is conditioned on
the execution and delivery by the Grantor of a pledge agreement in the form
hereof to secure the following (collectively, the "Secured Obligations"): all
Obligations (such Obligations to include, without limitation, the due and
punctual payment and performance of (a) the principal of and interest on the
Loans (including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. ss.362(a), and interest that, but for the filing of a petition in
bankruptcy with respect to any Borrower, would accrue on such obligations,
whether or not a claim is allowed against such Borrower for such interest in the
related bankruptcy proceeding), when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (b)
Indebtedness at any time and from time to time under the Letters of Credit, (c)
all obligations of the Grantor at any time and from time to time under this
Pledge Agreement and (d) all other obligations of the Grantor and the Guarantors
at any time and from time to time under the Credit Agreement and the other Loan
Documents).
Accordingly, the Grantor and the Agent hereby agree as follows:
1. Pledge. As security for the payment and performance in full of the
Secured Obligations, the Grantor hereby pledges and delivers unto the Agent, and
hypothecates to the Agent, all of the Grantor's right, title and interest in and
to, (a) the 2,000 Class A shares in the capital of CCM Holdings (1983)
Inc./Gestion CCM (1983) Inc. ("CCM") owned by the Grantor (the "Initial Pledged
Stock") represented by certificate no. 5, and hereby hypothecates in favor of
the Agent any additional shares of the capital of, and all securities
convertible into and warrants, options and other rights
1
<PAGE>
to purchase or otherwise acquire, shares in the capital of CCM or any
corporation successor thereto pursuant to an amalgamation or other
reorganization, obtained in the future by the Grantor (collectively, the Initial
Pledged Stock together with all such additional shares and securities pledged in
the future, the "Pledged Stock") and (b) subject to Section 5 below, all
proceeds of the Pledged Stock, including, without limitation, all cash,
dividends, securities or other property at any time and from time to time
receivable or otherwise distributed in respect of or in exchange pursuant to a
purchase, redemption, conversion or cancellation or other transformation for any
of or all such Pledged Stock, and all accessions and substitutions thereto (the
items referred to in clauses (a) and (b) being collectively called the
"Collateral"). Upon delivery to the Agent, all securities now or hereafter
included in the Collateral including, without limitation, the Pledged Stock
shall be accompanied by an undated stock power, duly executed in blank or
another instrument of transfer satisfactory to the Agent and by such other
instruments and documents as the Agent may reasonably request. Each delivery of
Pledged Stock shall be accompanied by a schedule showing a description of the
securities theretofore and then being pledged hereunder, which schedule shall be
attached hereto as Schedule I and made a part hereof. Each schedule so delivered
shall supersede any prior schedules so delivered.
The amount of the hypothec granted hereby shall be $150,000,000 in lawful
money of Canada, with interest at the rate of 25% per annum.
2. Delivery of Collateral. The Grantor agrees to deliver promptly or cause
to be delivered promptly to the Agent any and all Pledged Stock, and any and all
certificates or other instruments or documents representing any of the
Collateral (together with any necessary stock power or endorsement).
3. Representations, Warranties and Covenants. The Grantor hereby
represents, warrants and covenants as to itself and the Collateral pledged by it
hereunder to and with the Agent that:
(a) except for the hypothecs and pledge granted to the Agent and Liens
permitted under the Credit Agreement, the Grantor (i) is and, subject to
the provisions of the Credit Agreement, will at all times continue to be
the direct owner, beneficially and of record, of the Pledged Stock that it
is pledging hereunder, (ii) holds the Collateral that it is pledging
hereunder free and clear of all Liens, charges, encumbrances and security
interests of every kind and nature, (iii) will make no as signment, pledge,
hypothecation or, subject to the provisions of the Credit Agreement,
transfer of, grant any option or similar right with respect to, or create
or suffer to exist any security interest in, the Collateral (or any part
thereof) that it is pledging hereunder including, without limitation, by
virtue of becoming bound by any agreement which restricts in any manner the
rights of any present or future holder of any Pledged Stock with respect
thereto, and (iv) subject to Section 5 below, will cause any and all
2
<PAGE>
Collateral, whether for value paid by the Grantor or otherwise, to be
forthwith deposited with the Agent and pledged hereunder;
(b) the Grantor (i) has the requisite power and authority to pledge
the Collateral it is pledging hereunder in the manner hereby done or
contemplated and (ii) will defend its title or interest thereto or therein
against any and all Liens, however arising, of all persons whomsoever
(other than the Liens permitted by the Credit Agreement);
(c) no consent or approval not obtained of any governmental body or
regulatory authority or any securities exchange was or is necessary to the
validity of the pledge and hypothec effected hereby;
(d) by virtue of the execution and delivery by the Grantor of this
Agreement, when the certificates, instruments or other documents
representing or evidencing the Collateral are delivered to the Agent in
accordance with this Agreement, the Agent will obtain a valid first ranking
hypothec in such Collateral as security for the repayment of the Secured
Obligations;
(e) the pledge effected hereby is effective to vest in the Agent the
rights of the Agent in the Collateral as set forth herein;
(f) all of the Pledged Stock has been duly authorized and validly
issued and as at the date hereof, the Initial Pledged Stock constitutes 50%
of the issued and outstanding shares of the capital of CCM;
(g) the Grantor shall pledge hereunder, immediately upon its
acquisition (directly of indirectly) thereof, any and all shares of the
capital of any person that, after the date of this Agreement, becomes, as a
result of any occurrence, a direct subsidiary of the Grantor.
All representations, warranties and covenants of the Grantor contained in this
Agreement shall survive the execution, delivery and performance of this
Agreement until the termination of this Agreement pursuant to Section 14 hereof.
4. Registration in Nominee Name; Denominations. Upon the occurrence and
during the continuance of an Event of Default, the Agent shall have the right
(in its sole and absolute discretion with subsequent notice to the Grantor) to
hold the Pledged Stock in its own name or the name of its nominee. In addition,
the Agent shall at all times have the right to exchange the certificates
representing any of the Pledged Stock for certificates of smaller or larger
denominations for any purpose consistent with this Agreement.
3
<PAGE>
5. Voting Rights; Dividends; Irrevocable Proxy; etc. (a) Unless and until
an Event of Default shall have occurred and be continuing:
(i) The Grantor shall be entitled to exercise any and all voting
and/or consensual rights and powers accruing to an owner of the Pledged
Stock or any part thereof for any purpose not inconsistent with the terms
of this Agreement, the Credit Agreement and the other Loan Documents,
provided that such action would not adversely affect the rights and
remedies inuring to the Agent under this Agreement or the Credit Agreement
or the ability of the Agent to exercise the same.
(ii) The Agent shall execute and deliver to the Grantor, or cause to
be executed and delivered to the Grantor, all such proxies, powers of
attorney, and other instruments as the Grantor may reasonably request for
the purpose of enabling the Grantor to exercise the voting and/or
consensual rights and powers which it is entitled to exercise pursuant to
subparagraph (i) above and to receive the cash dividends it is entitled to
receive pursuant to subparagraph (iii) below.
(iii) The Grantor shall be entitled to receive and retain any and all
cash dividends paid on the Pledged Stock only to the extent that such cash
dividends are permitted by, and otherwise paid in accordance with the terms
and conditions of the Credit Agreement, the other Loan Documents and
applicable laws. Any and all x. noncash dividends, y. return of capital,
capital surplus or paid-in surplus, dividends paid or payable in cash or
otherwise in connection with a partial or total liquidation or dissolution,
and z. other distributions made on or in respect of Pledged Stock (other
than distributions described in the initial sentence in (a)(iii) above),
whether paid or payable in cash or otherwise, whether resulting from a
subdivision, combination or reclassification of the outstanding share
capital of CCM or received in exchange for Pledged Stock or any part
thereof, or in redemption thereof, as a result of any merger,
consolidation, acquisition or other exchange of assets to which CCM may be
a party or otherwise, shall be and become part of the Collateral, and, if
received by the Grantor, shall not be commingled by the Grantor with any of
its other funds or property but shall be held separate and apart therefrom,
shall be held in trust for the benefit of the Agent and shall be forthwith
delivered to the Agent in the same form as so received (with any necessary
endorsement).
4
<PAGE>
(b) Upon the occurrence and during the continuance of an Event of Default,
all rights of the Grantor to receive any dividends, stock, instruments,
securities, and other distributions which the Grantor is authorized to receive
pursuant to paragraph (a)(iii) of this Section 5 shall cease, and all such
rights shall thereupon become vested in the Agent, which shall have the sole and
exclusive right and authority to receive and retain the dividends, shares,
instruments, securities and other distributions which the Grantor is authorized
to receive pursuant to paragraph (a)(iii) of this Section 5. All dividends,
shares, instruments, securities and other distributions which the Grantor is
authorized to receive pursuant to paragraph (a)(iii) of this Section 5 which are
received by the Grantor contrary to the provisions of this Section 5(b) shall be
received in trust for the benefit of the Agent, shall be segregated from other
property or funds of the Grantor and shall be forthwith delivered to the Agent
as Collateral in the same form as so received (with any necessary endorsement).
Any and all money and other property paid over to or received by the Agent
pursuant to the provisions of this Section 5(b) shall be retained by the Agent
in an account to be established by the Agent upon receipt of such money or other
property and shall be applied in accordance with the provisions of Section 9
hereof. After all Events of Default have been cured or waived, within five
Business Days after all such Events of Default have been cured or waived, the
Grantor shall again be entitled to receive dividends, shares, instruments,
securities and other distributions which the Grantor is entitled to receive
pursuant to paragraph (a)(iii) of this Section 5.
(c) Upon the occurrence and during the continuance of an Event of Default,
all rights of the Grantor to exercise the voting and consensual rights and
powers which it is entitled to exercise pursuant to Section 5(a)(i) shall cease,
and pursuant to the irrevocable proxy granted herein, all such rights shall
thereupon become vested in the Agent, which shall have the sole and exclusive
right and authority to exercise such voting and consensual rights and powers;
provided that, unless otherwise directed by the Required Lenders, the Agent
shall have the right from time to time following and during the continuance of
an Event of Default to permit the Grantor to exercise such rights. After all
Events of Default have been cured or waived, the Grantor shall have the right to
exercise the voting and consensual rights and powers that it would otherwise be
entitled to exercise pursuant to the terms of paragraph (a) (i) above and the
obligations of the Agent pursuant to the terms of paragraph (a) (ii) of this
Section 5 shall be reinstated.
(d) In order to permit the Agent to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant to Section 5(c)
and to receive all dividends and other distributions which it may be entitled to
receive under Section 5(a)(iii) or Section 5(b), the Grantor shall promptly
execute and deliver (or cause to be executed and delivered) to the Agent all
such proxies, dividend payment orders and other instruments as the Agent may
from time to time reasonably request.
5
<PAGE>
Without limiting the effect of the foregoing, the Grantor does hereby
constitute and appoint the Agent as its proxy, and, upon the occurrence and
during the continuance of an Event of Default, the Agent shall have the right to
exercise all rights, benefits, privileges and powers accruing to the Grantor, as
owner of the Pledged Stock, including, without limitation, giving or withholding
consent, calling and attending shareholders meetings to be held from time to
time with full power to vote and act for and in the name, place and stead of the
Grantor and in the same manner, to the same extent, and with the same effect
that the Grantor would if personally present at such meetings, giving to the
Agent full power of substitution and revocation, which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Stock on the record books of CCM) by any person (including CCM or
any officer or agent thereof).
THIS PROXY IS IRREVOCABLE
Other than the proxies given by the Grantor to the Indenture Trustee, any
proxy of proxies heretofore given by any Grantor to any person or persons
whatsoever are hereby revoked. THIS PROXY SHALL CONTINUE IN FULL FORCE AND
EFFECT UNTIL SUCH TIME AS ALL SECURED OBLIGATIONS ARE PAID AND SATISFIED IN FULL
IN ACCORDANCE WITH THE TERMS OF THE CREDIT AGREEMENT.
6. Issuance of Additional Stock. Except as may be permitted by the Credit
Agreement, the Grantor agrees that it will cause each of its subsidiaries not to
issue any shares or other securities, whether in addition to, by stock dividend
or other distribution upon, or in substitution for, the Pledged Stock or
otherwise.
7. Supplemental Documentation. In connection with the execution and
delivery of this Agreement the Grantor shall furnish or cause to be furnished to
the Agent on or prior to the Closing Date a certificate, substantially in the
form of Annex A hereto, signed by a Responsible Officer of the Grantor dated the
Closing Date, certifying that, as of the date of such certificate, all
representations and warranties of the Grantor in Section 3 hereof are true and
correct and that the Grantor is in compliance with all conditions, agreements
and covenants to be observed or performed hereunder.
8. Remedies upon Event of Default. If an Event of Default shall have
occurred and be continuing, the Agent may, in addition to all other rights and
remedies provided for herein or otherwise available to it, including all the
rights and remedies of a hypothecary creditor under the Civil Code of Quebec,
sell or otherwise dispose of all or any part of the Collateral, at public or
private sale or at any broker's board or on any securities exchange, for cash,
upon credit or for future delivery as the Agent shall deem appropriate. Each
such purchaser at any such sale shall hold the property sold absolutely free
from any claim or right on the part of the Grantor, and the Grantor hereby
waives (to the extent permitted by law) all rights of redemption, stay and
6
<PAGE>
appraisal which the Grantor now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted.
The Agent shall give the Grantor 10 days' written notice (which Grantor
agrees is reasonable notice for all purposes under applicable law) of the
Agent's intention to make any sale of the Grantor's Collateral. Such notice, in
the case of a public sale, shall state the time and place for such sale and, in
the case of a sale at a broker's board or on a securities exchange, shall state
the board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board or
exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Agent may fix and
state in the notice of such sale. At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Agent may (in its sole and absolute discretion) determine. The
Agent shall not be obligated to make any sale of any Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Agent until the sale price is paid in full by the purchaser or purchasers
thereof, but the Agent shall not incur any liability in case any such purchaser
or purchasers shall fail to take up and pay for the Collateral so sold and, in
case of any such failure, such Collateral may be sold again upon like notice. At
any public sale made pursuant to this Section 8, the Agent may bid for or
purchase, free (to the extent permitted by law) from any right of redemption,
stay or appraisal on the part of the Grantor (all said rights being also hereby
waived and released to the extent permitted by law), with respect to the
Collateral or any part thereof offered for sale and the Agent may make payment
on account thereof by using any claim then due and payable to the Agent or any
Lender from the Grantor as a credit against the purchase price, and the Agent
may, upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to the Grantor therefor. The Grantor
shall remain liable for any deficiency. For purposes hereof, a written agreement
to purchase the Collateral or any portion thereof shall be treated as a sale
thereof; the Agent shall be free to carry out such sale pursuant to such
agreement, and the Grantor shall not be entitled to the return of the Collateral
or any portion thereof subject thereto, notwithstanding the fact that after the
Agent shall have entered into such an agreement all Events of Default shall have
been remedied and the Secured Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the Agent may proceed by
a suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.
7
<PAGE>
9. Application of Proceeds of Sale. The proceeds of any sale of Collateral,
as well as any Collateral consisting of cash, shall be applied by the Agent as
follows:
FIRST, to the Agent to reimburse the Agent for that portion of the
payments, if any, made by it with respect to Letters of Credit for which a
Lender, as a participant in such Letter of Credit pursuant to Section 2.18 of
the Credit Agreement, failed to pay its pro rata share thereof as required
pursuant to such Section 2.18;
SECOND, to the payment of all reasonable costs and expenses incurred by the
Agent in connection with such collection or sale or otherwise in connection with
this Agreement or any of the Secured Obligations, including, but not limited to,
all court costs and the reasonable fees and expenses of its agents and legal
counsel, the repayment of all advances made by the Agent hereunder on behalf of
the Grantor and other reasonable costs or expenses incurred in connection with
the exercise of any right or remedy hereunder;
THIRD, to the Agent to be held as cash collateral to the extent of undrawn
amounts, if any, of outstanding Letters of Credit;
FOURTH, pro rata to the payment in full of principal and interest in
respect of any Loans outstanding (pro rata as among the Lenders in accordance
with the amounts of the Loans made by them pursuant to the Credit Agreement);
FIFTH, to the payment in full of all Secured Obligations (other than those
referred to above) owed to the Lenders (pro rata as among the Lenders in
accordance with the amounts of Secured Obligations owed to them on the date of
any such distribution); and
SIXTH, to the Indenture Trustee for the Senior Secured Notes, to the
Grantor, its successors or assigns, or to whosoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may otherwise direct.
10. Agent Appointed Attorney-in-Fact. The Grantor hereby appoints the Agent
the attorney-in-fact of the Grantor upon the occurrence and during the
continuance of an Event of Default solely for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any instrument
which the Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment is irrevocable. Without limiting the generality of the
foregoing, the Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Agent's name or in the name of the Grantor, to ask for, demand, sue for,
collect, receive receipt and give acquittance for any and all moneys due or to
become due and under and by virtue of any Collateral, to endorse checks, drafts,
orders and other instruments for the payment of money payable
8
<PAGE>
to the Grantor representing any interest or dividend, or other distribution
payable in respect of the Collateral or any part thereof or on account thereof
and to give full discharge for the same, to settle, compromise, prosecute or
defend any action, claim or proceeding with respect thereto, and to sell,
assign, endorse, pledge, transfer and make any agreement respecting, or
otherwise deal with, the same; provided, however, that nothing herein contained
shall be construed as requiring or obligating the Agent or the Lenders to make
any commitment or to make any inquiry as to the nature or sufficiency of any
payment received by the Agent or the Lenders, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered
thereby, and no action taken by the Agent or the Lenders or omitted to be taken
with respect to the Collateral or any part thereof shall give rise to any
defense, counterclaim or offset in favor of the Grantor or to any claim or
action against the Agent or the Lenders in the absence of the gross negligence
or wilful misconduct of the Agent or the Lenders.
11. No Waiver. No failure on the part of the Agent to exercise, and no
delay 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 by the Agent preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. The
Agent and the Lenders shall not be deemed to have waived any rights hereunder or
under any other agreement or instrument unless such waiver shall be in writing
and signed by such parties.
12. Security Interest Absolute. All rights of the Agent hereunder, the
grant of a hypothec and pledge in the Collateral and all obligations of the
Grantor hereunder, shall be absolute and unconditional irrespective of (i) any
lack of validity or enforceability of the Credit Agreement, any guarantee or
other agreement with respect to any of the Secured Obligations or any other
agreement or instrument relating to any of the foregoing, (ii) any change in
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 or any other agreement or instrument, (iii)
any exchange, release or nonperfection of any Lien on other collateral, or any
release or amendment or waiver of or consent to or departure from any guarantee,
for all or any of the Secured Obligations or (iv) any other circumstance which
might otherwise constitute a defense available to, or a discharge of, the
Grantor in respect of the Secured Obligations or in respect of this Agreement
(other than the indefeasible payment in full of all of the Secured Obligations
and subject to Section 14 of this Agreement).
13. Agent's Fees and Expenses. The provisions of Section 11.04 of the
Credit Agreement with respect to the reimbursement of fees and expenses and
indemnification are hereby deemed incorporated herein in their entirety and
shall be
9
<PAGE>
binding upon the Grantor as if set forth herein, and the Grantor shall be
obligated to, (x) upon demand, pay to the Agent the amount of any and all
reasonable expenses, including the reasonable fees and expenses of its counsel
and of any experts or agents which the Agent may incur in connection with (i)
the administration of this Agreement, (ii) the custody or preservation of, or
the sale or other disposition of, collection from, or other realization upon,
any of the Collateral, (iii) the exercise or enforcement of any of the rights of
the Agent hereunder or (iv) the failure by the Grantor to perform or observe any
of the provisions hereof, and (y) indemnify the Agent and the Lenders, in each
case to the same extent set forth in Section 11.04 of the Credit Agreement. Any
such amounts payable as provided hereunder or thereunder shall be additional
Secured Obligations secured hereby and by the other Security Documents.
14. Termination. This Agreement shall terminate when (a) all the Secured
Obligations have been fully and indefeasibly paid in cash, (b) the Lenders have
no further commitment to make any Loans under the Credit Agreement, and (c) the
Agent shall have no further obligation to issue any Letters of Credit, at which
time the Agent shall reassign without any representations or warranties and
deliver, to the extent required by the Intercreditor Agreement, to the Indenture
Trustee, or otherwise to the Grantor, or to such person or persons as the
Grantor shall designate, against receipt, such of the Collateral (if any) as
shall not have been sold or otherwise still be held by it hereunder, together
with appropriate instruments of reassignment and release; provided, however,
that all indemnities of the Grantor contained in this Agreement shall survive,
and remain operative and in full force and effect regardless of, the termination
of this Agreement. Any such reassignment shall be without recourse to or
warranty by the Agent and at the expense of the Grantor. The security interest
hereunder shall automatically terminate in any Collateral that is permitted to
be sold or disposed of by the Credit Agreement or in the case of any sale that
is consented pursuant to Section 11.08 of the Credit Agreement. The Agent shall
promptly take such action, and execute such releases, termination statements or
other documents as may be reasonably requested by an interested party, at the
expense of the Grantor, to evidence the termination and releases contemplated
hereby.
15. Notices. All communications and notices hereunder shall be in writing
and shall be given (i) in the case of the Grantor, in care of SLM International,
Inc. at 7405 Trans Canada Highway, Suite 300, St. Laurent, Quebec H4T 1Z2,
Canada, Attention: Russell David, Vice President-Finance (Telecopy No. (514)
331-7061), with a copy to Morgan, Lewis & Bockius, LLP, 101 Park Avenue, New
York, New York 10178-0060, Attention: David W. Pollak, Esq. (Telecopy No. (212)
309-6273), and (ii) in the case of the Agent, as provided in the Credit
Agreement.
16. Further Assurances. The Grantor agrees at its expense to do such
further acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Agent may at any time reasonably
request in connection with the administration and enforcement of this Agreement
or
10
<PAGE>
with respect to the Collateral or any part thereof or in order better to assure
and confirm unto the Agent its rights and remedies hereunder.
17. Binding Agreement; Assignments. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
the Grantor shall not be permitted to assign this Agreement or any interest
herein or in the Collateral, or any part thereof, or otherwise pledge, encumber
or grant any option with respect to the Collateral, or any part thereof, or any
cash or property held by the Agent as Collateral under this Agreement, except as
contemplated or permitted by this Agreement or the Credit Agreement. In the
event the Agent assigns or transfers the Secured Obligations, the Credit
Agreement or the Loan Documents, or any part thereof, to one or more assignees
or transferees, the Grantor agrees that the Agent may continue to hold the
Collateral for the benefit of itself and each such assignee or transferee as
security for the Secured Obligations and may take all actions and exercise all
powers with respect to this Agreement and the Collateral on behalf of each
assignee or transferee.
18. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE PROVINCE OF QUEBEC AND THE FEDERAL LAWS OF CANADA
APPLICABLE THEREIN.
19. Severability. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired.
20. Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute an original, but all of which, when taken together, shall
constitute but one instrument. This Agreement shall be effective when a
counterpart which bears the signature of the Grantor shall have been delivered
to the Agent, and the Agent shall have executed this Agreement.
11
<PAGE>
21. Section Headings. Section headings used herein are for convenience only
and are not to affect the construction of, or be taken into consideration in
interpreting, this Agreement.
22. English Language. The parties hereto confirm that it is their wish that
this Agreement as well as any other documents relating thereto, including
notices, have been and shall be drawn up in the English language only.
Les parties aux presentes confirment leur volonte que cette convention de
meme que tous les documents, y compris tous avis, s'y rattachant, solent rediges
en langue anglaise seulement.
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Pledge
Agreement as of the day and year first above written.
SLM TRADEMARK ACQUISITION
CANADA CORPORATION
By:
-----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By:
-----------------------------
Name:
Title:
13
<PAGE>
SCHEDULE I
to Pledge Agreement
PART A - Description of Pledged Securities:
<TABLE>
<CAPTION>
Percentage
Stock of
Certificate Par Number Outstanding
Grantor Stock Issuer Class of Stock No(s) Value of Shares Shares
- ------- ------------ -------------- ----- ----- --------- -----------
<S> <C> <C> <C> <C> <C>
SLM Trademark CCM Holdings Class A 5 2,000 50%
Acquisition Canada (1983) Inc.
Corporation
</TABLE>
14
<PAGE>
ANNEX A
OFFICER'S CERTIFICATE
The undersigned officer of SLM TRADEMARK ACQUISITION CANADA CORPORATION, a
New Brunswick corporation, (the "Corporation") hereby certifies on behalf of the
Corporation as follows:
1. The undersigned has read the Pledge Agreement dated as of April 1,
1997 (the "Pledge Agreement"), between the Corporation and The Chase
Manhattan Bank, a New York banking corporation.
2. The representations and warranties contained in Section 3 of the
Pledge Agreement are true and correct as of the date hereof.
3. The Corporation is in compliance with all conditions, agreements
and covenants to be observed or performed under the Pledge Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this 11th
day of April, 1997.
SLM TRADEMARK ACQUISITION CANADA CORPORATION
By:
----------------------------------
Name:
Title:
15
Exhibit 10.13
EXECUTION COPY
GUARANTY
GUARANTY dated as of April 1, 1997, by SLM Trademark Acquisition Corp., a
Delaware corporation (the "Guarantor"), in favor of The Chase Manhattan Bank, a
New York banking corporation, as agent ("Agent") for (i) the Lenders (the
"Lenders") referred to in the Credit Agreement dated as of the date hereof,
among SLM International, Inc., a Delaware corporation, #1 Apparel, Inc., a
Delaware corporation, and Maska U.S., Inc., a Vermont corporation (collectively,
the "Borrowers"), the Agent and the Lenders (as amended, modified or
supplemented from time to time in accordance with its terms, the "Credit
Agreement"; capitalized terms used herein and not otherwise defined herein shall
have the meanings attributed thereto in the Credit Agreement) and (ii) itself as
issuer of the Letters of Credit.
The Agent and the Lenders have agreed to extend Credits to or for the
account of the Borrowers pursuant to, and subject to the terms and conditions
of, the Credit Agreement. The obligation of the Lenders to extend such Credits
under the Credit Agreement is conditioned on the execution and delivery by the
Guarantor of a guaranty in the form hereof of the Obligations (such Obligations
to include, without limitation, the due and punctual payment and performance of
(a) the principal of and interest on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (b) Indebtedness at any time and from time to time under the Letters
of Credit, (c) all other obligations of the Borrowers at any time and from time
to time under the Credit Agreement and the other Loan Documents and (d) all
obligations of the Guarantor at any time and from time to time under the Loan
Documents).
Accordingly, in consideration of the premises and in order to induce the
Agent and the Lenders to make Credits under the Credit Agreement, the Guarantor
hereby agrees as follows:
Section 1. Guaranty. The Guarantor hereby irrevocably and unconditionally
guarantees the punctual payment when due in accordance with the terms of the
Loan Documents, whether at stated maturity, by acceleration or otherwise, and
the punctual performance, of all present and future Obligations of the Borrowers
(the foregoing being herein referred to as the "Guaranteed Obligations").
Section 2. Waiver. The Guarantor hereby absolutely, unconditionally and
irrevocably waives, to the fullest extent permitted by law, (i) promptness,
diligence, notice of acceptance and any other notice with respect to this
Guaranty, (ii) present-
<PAGE>
ment, demand of payment, protest, notice of dishonor or nonpayment and any other
notice with respect to the Guaranteed Obligations, (iii) any requirement that
the Agent or Lenders protect, secure, perfect or insure any security interest or
Lien or any property subject thereto or exhaust any right or take any action
against any Borrower or any other person or any Collateral, and (iv) any other
action, event or precondition to the enforcement of this Guaranty or the
performance by the Guarantor of the obligations hereunder.
Section 3. Guaranty Absolute. (a) The Guarantor guarantees that, to the
fullest extent permitted by law, the Guaranteed Obligations will be paid or
performed strictly in accordance with their terms, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Agent or any Lender with respect thereto.
(b) No invalidity, irregularity, voidability, voidness or unenforceability
of the Credit Agreement, the Notes, or any other Loan Document or any other
agreement or instrument relating thereto, or of all or any part of the
Guaranteed Obligations or of any security therefor shall affect, impair or be a
defense to this Guaranty.
(c) This Guaranty is one of payment and performance, not collection, and
the obligations of the Guarantor under this Guaranty are independent of the
Obligations of the Borrowers, and a separate action or actions may be brought
and prosecuted against the Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against any Borrower or whether any Borrower is
joined in any such action or actions.
(d) The liability of the Guarantor under this Guaranty shall be absolute
and unconditional irrespective of:
(i) any change in the manner, place or terms of payment or
performance, and/or any change or extension of the time of payment or
performance of, renewal or alteration of, any Obligation, any security
therefor, or any liability incurred directly or indirectly in respect
thereof, or any other amendment or waiver of or any consent to departure
from the Credit Agreement or the Notes or any other Loan Document,
including any increase in the Guaranteed Obligations resulting from the
extension of additional credit to any Borrower or any of its respective
subsidiaries or otherwise;
(ii) any sale, exchange, release, surrender, realization upon any
property by whomsoever at any time pledged or mortgaged to secure, or
howsoever securing, all or any of the Guaranteed Obligations, and/or any
offset thereagainst, or failure to perfect, or continue the perfection of,
any Lien in any such property, or delay in the perfection of any such
Lien, or any amendment or
2
<PAGE>
waiver of or consent to departure from any other guaranty for all or any
of the Guaranteed Obligations;
(iii) any exercise or failure to exercise any rights against any
Borrower or others (including the Guarantor);
(iv) any settlement or compromise of any Obligation, any security
therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and any subordination
of the payment of all or any part thereof to the payment of any Obligation
(whether due or not) of any Borrower to creditors of such Borrower other
than the Guarantor;
(v) any manner of application of Collateral, or proceeds thereof, to
all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other assets of any Borrower or any of its subsidiaries;
(vi) any change, restructuring or termination of the existence of
any Borrower or any of its subsidiaries; or
(vii) any other agreements or circumstance of any nature whatsoever
which might otherwise constitute a defense available to, or a discharge
of, this Guaranty and/or obligations of the Guarantor hereunder, or a
defense to, or discharge of, any Borrower or any other person or party
relating to this Guaranty or the obligations of the Guarantor hereunder or
otherwise with respect to the Credits.
(e) The Agent may at any time and from time to time (whether or not after
revocation or termination of this Guaranty) without the consent of, or notice
(except as shall be required by applicable statute and cannot be waived) to, the
Guarantor, and without incurring responsibility to the Guarantor or impairing or
releasing the obligations of the Guarantor hereunder, apply any sums by
whomsoever paid or howsoever realized to any Guaranteed Obligation regardless of
what Guaranteed Obligations remain unpaid.
(f) This Guaranty shall continue to be effective or be reinstated, as the
case may be, if claim is ever made upon the Agent or any Lender for repayment or
recovery of any amount or amounts received by the Agent or such Lender in
payment or on account of any of the Guaranteed Obligations and the Agent or such
Lender repays all or part of said amount by reason of any judgment, decree or
order of any court or administrative body having jurisdiction over the Agent or
such Lender or the respective property of each, or any settlement or compromise
of any such claim effected by the Agent or such Lender with any such claimant
(including the Borrowers),
3
<PAGE>
then and in such event the Guarantor agrees that any such judgment, decree,
order, settlement or compromise shall be binding upon the Guarantor,
notwithstanding any revocation hereof or the cancellation of any note (including
the Notes) or other instrument evidencing any Obligation, and the Guarantor
shall be and remain liable to the Agent and/or such Lender hereunder for the
amount so repaid or recovered to the same extent as if such amount had never
originally been received by the Agent or such Lender.
Section 4. Continuing Guaranty. This Guaranty is a continuing one and
shall (i) remain in full force and effect until the indefeasible payment and
satisfaction in full of the Guaranteed Obligations, (ii) be binding upon the
Guarantor, its successors and assigns, and (iii) inure to the benefit of, and be
enforceable by, the Agent and its successors, transferees and assigns. All
obligations to which this Guaranty applies or may apply under the terms hereof
shall be conclusively presumed to have been created in reliance hereon.
Section 5. Terms. (a) All terms defined in the UCC and used herein shall
have the meanings as defined in the UCC, unless the context otherwise requires.
(b) The words "include," "includes" and "including" shall be deemed to be
followed by the phrase "without limitation".
(c) All references herein to Sections and subsections shall be deemed to
be references to Sections and subsections of this Guaranty unless the context
shall otherwise require.
Section 6. Amendments and Modification. No provision hereof shall be
modified, altered or limited except by written instrument expressly referring to
this Guaranty and to such provision, and executed by the party to be charged.
Section 7. Waiver of Subrogation Rights. Unless and until all Guaranteed
Obligations have been indefeasibly paid, the Guarantor hereby waives and
releases any and all rights and claims it may now or hereafter have or acquire
against any of the Borrowers that would constitute it a "creditor" of such
Borrower for purposes of the Federal Bankruptcy Code, including all rights of
subrogation against any Borrower and its property and all rights of
indemnification, contribution and reimbursement from any Borrower and its
property, regardless of whether such rights arise in connection with this
Guaranty, by operation of law, pursuant to contract or otherwise.
Section 8. Remedies Upon Default; Right of Set-Off. (a) Upon the
occurrence and during the continuance of any Event of Default, the Agent may,
subject to and in accordance with the terms of the Credit Agreement, without
notice to or
4
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demand upon any Borrower or the Guarantor, declare any Guaranteed Obligations
immediately due and payable, and shall be entitled to enforce the obligations of
the Guarantor hereunder.
(b) Upon such declaration by the Agent, the Agent and any Lender is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by the Agent or any Lender to or for the credit or the account of the
Guarantor against any and all of the obligations of the Guarantor now or
hereafter existing under this Guaranty, whether or not the Agent or such Lender
shall have made any demand under this Guaranty and although such obligations may
be contingent and unmatured. The Agent agrees promptly to notify the Guarantor
after any such set-off and application, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of the Agent and Lenders under this Section 9 are in addition to other rights
and remedies (including other rights of set-off) which the Agent and Lenders may
have.
Section 9. Statute of Limitations. Any acknowledgment or new promise,
whether by payment of principal or interest or otherwise and whether by the
Borrower or others (including the Guarantor), with respect to any of the
Guaranteed Obligations shall, if the statute of limitations in favor of the
Guarantor against the Agent or Lenders shall have commenced to run, toll the
running of such statute of limitations and, if the period of such statute of
limitations shall have expired, prevent the operation of such statute of
limitations.
Section 10. Rights and Remedies Not Waived. No act, omission or delay by
the Agent shall constitute a waiver of its rights and remedies hereunder or
otherwise. No single or partial waiver by the Agent of any default hereunder or
right or remedy which it may have shall operate as a waiver of any other
default, right or remedy or of the same default, right or remedy on a future
occasion.
Section 11. Admissibility of Guaranty. The Guarantor agrees that any copy
of this Guaranty signed by the Guarantor and transmitted by telecopier for
delivery to the Agent shall be admissible in evidence as the original itself in
any judicial or administrative proceeding, whether or not the original is in
existence.
Section 12. Notices. All communications and notices hereunder shall be in
writing and shall be given (i) in the case of the Guarantor, in care of Maska
U.S., Inc. at 77 Route 25, Pierson Industrial Park, Bradford, Vermont 05033,
Attention: Russell David, Vice President - Finance, (Telecopy No. (802)
222-5781), with a copy to Morgan, Lewis & Bockius, LLP, 101 Park Avenue, New
York, New York 10178-0060, Attention: David W. Pollak, Esq. (Telecopy No. (212)
309-6273), and (ii) in the case of any other
5
<PAGE>
person, as provided in the Credit Agreement.
SECTION 13. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; ETC. (a) ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS GUARANTY,
THE GUARANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS. THE GUARANTOR HEREBY IRREVOCABLY WAIVES, IN CONNECTION WITH ANY SUCH
ACTION OR PROCEEDING, (i) EXCEPT AS PROHIBITED BY LAW, TRIAL BY JURY, (ii) TO
THE EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND (iii) THE RIGHT TO
INTERPOSE ANY SET-OFF, COUNTERCLAIM OR CROSS-CLAIM (UNLESS SUCH SET-OFF,
COUNTERCLAIM OR CROSS-CLAIM COULD NOT, BY REASON OF ANY APPLICABLE FEDERAL OR
STATE PROCEDURAL LAWS, BE INTERPOSED, PLEADED OR ALLEGED IN ANY OTHER ACTION).
(b) The Guarantor irrevocably consents to the service of process of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by certified mail, postage prepaid, to the Guarantor at its
address determined pursuant to Section 14 hereof.
(c) Nothing herein shall affect the right of the Agent to serve process in
any other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Guarantor in any other jurisdiction.
(d) The Guarantor hereby waives presentment, notice of dishonor and
protests of all instruments included in or evidencing any of the Guaranteed
Obligations, and any and all other notices and demands whatsoever (except as
expressly provided herein).
SECTION 14. GOVERNING LAW. THIS GUARANTY AND THE GUARANTEED OBLIGATIONS
SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED IN SUCH STATE, WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
Section 15. Captions; Separability. (a) The captions of the Sections
6
<PAGE>
and subsections of this Guaranty have been inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Guaranty.
(b) If any term of this Guaranty shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby.
Section 16. Acknowledgment of Receipt. The Guarantor acknowledges receipt
of a copy of this Guaranty and each of the Loan Documents.
7
<PAGE>
IN WITNESS WHEREOF, the Guarantor has duly executed or caused this
Guaranty to be duly executed in the State of New York as of the date first above
set forth.
SLM TRADEMARK ACQUISITION CORP.
By: /s/ Russell J. David
-----------------------------------
Name: Russell J. David
Title: Vice President, Finance
GUARANTEE
TO: THE CHASE MANHATTAN BANK (the "Agent"), as agent for and on behalf of the
lenders named in that certain credit agreement dated as of April 1, 1997
made among The Chase Manhattan Bank, in its own capacity as lender and in
its capacity as agent, the lenders named therein, in their capacity as
lenders and SLM International Inc., Maska U.S., Inc. and #1 Apparel, Inc.,
as borrowers (that credit agreement as it may be amended, supplemented,
extended or restated from time to time being referred to below as the
"Credit Agreement")
IN CONSIDERATION of the Agent and the lenders named in the Credit Agreement
(hereinafter collectively referred to as the "Lenders") extending credit to or
otherwise dealing with SLM International, Inc., Maska U.S., Inc. and #1 Apparel,
Inc. (hereinafter collectively referred to as the "Borrowers") and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the undersigned, SPORT MASKA INC. (hereinafter referred to as
the "Guarantor"), hereby unconditionally guarantees, as primary obligor and not
merely as surety, the due and punctual payment of the principal of and interest
on each of the Notes, when and as due, whether at maturity, by acceleration, by
notice of prepayment or otherwise and the due and punctual performance of all
other Obligations, together with all expenses (including legal fees on a
solicitor and client basis) incurred by the Agent and each of the Lenders, its
receiver or agent in the preparation, perfection and enforcement of this
Guarantee and related security or other agreements held by the Agent or any of
the Lenders in respect of the Credit Agreement and all other Obligations
(collectively, the "Indebtedness").
THE OBLIGATIONS OF THE GUARANTOR hereunder in respect of the Indebtedness
shall be for an unlimited amount.
AND IT IS FURTHER AGREED, SUBJECT TO THE FOREGOING, THAT:
(1) No change in the name, objects, capital stock or constitution of any of the
Borrowers shall in any way affect the liability of the Guarantor hereunder,
either with respect to transactions occurring before or after any such
change, and the Agent and the Lenders shall not be concerned to see or
inquire into the powers of the Borrowers or any of their directors or other
agents acting or purporting to act on their behalf, and moneys, advances,
renewals or credits in fact borrowed or obtained from the Agent and the
Lenders in connection with the Credit Agreement in professed exercise of
such powers shall be deemed to form part of the Indebtedness
notwithstanding that such borrowing or obtaining of moneys, advances,
renewals or credits shall be in excess of the powers of the Borrowers or of
their directors or other agents aforesaid, or be in any way irregular,
defective or informal.
(2) All monies received by the Agent and the Lenders in respect of the
Indebtedness may be applied on such part or parts of the Indebtedness as
the Agent and the Lenders may see fit, subject to and in accordance with
the relevant provisions, if any, of any written agreement between the Agent
and the Guarantor and the Agent and the Lenders shall at all times and from
time to time have the right to change any appropriation of any moneys
received by them and to reapply the same on any other part or parts of the
Indebtedness as the Agent and the Lenders may see fit, notwithstanding any
previous application by whomsoever made.
(3) All dividends, compositions and moneys received by the Agent and the
Lenders from the Borrowers or from any other person or estate capable of
being applied by the Agent and the Lenders in reduction of the Indebtedness
shall be regarded for all purposes as payments in gross, and the Agent and
the Lenders shall be entitled to prove against the estate of the Borrowers
upon any insolvency or winding-up in respect of the whole of the
Indebtedness, and upon payment by the Guarantor of any sums on account of
the Indebtedness, all rights of the Guarantor against the Borrowers arising
as a result thereof by way of right of subrogation or otherwise shall in
all respects be subordinated and junior in right of payment to the prior
indefeasible payment in full of all of the Indebtedness to the Agent and
the Lenders.
<PAGE>
2.
(4) This Guarantee will not be diminished or affected on account of any act or
failure to act on the part of the Agent or the Lenders which would prevent
subrogation from operating in favour of the Guarantor. Without limiting the
generality of the foregoing and for greater certainty, the obligations of
the Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible
payment of the Indebtedness in full), including, without limitation, any
claim of waiver, release, surrender, alteration or compromise and shall not
be subject to any defense or set-off, compensation, counterclaim,
recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Indebtedness or otherwise. To the
fullest extent permitted by applicable law, the Guarantor waives
presentment to, demand of payment from and protest to the Borrowers or the
Guarantor or both of any of the Indebtedness and also waives notice of
acceptance of this Guarantee and notice of protest for nonpayment. The
obligations of the Guarantor hereunder shall not be discharged or impaired
or otherwise affected by (a) the failure of the Agent or any of the Lenders
to assert any claim or demand or to enforce any right or remedy against any
of the Borrowers or the Guarantor under the provisions of this Guarantee,
the Credit Agreement, the Notes, any of the other Loan Documents or any
other agreement or otherwise or against any other guarantor of all or any
part of the Indebtedness; b) any rescission, waiver, amendment or
modification of any of the terms or provisions of this Guarantee, the
Credit Agreement, the Notes, any other Loan Documents or any other
agreement or otherwise; (c) the release or termination of any security or
any Loan Document held by the Agent or any of the Lenders with respect to
the Indebtedness or any part thereof; (d) the failure by the Agent or the
Lenders to exercise any right or remedy against any co-guarantor of the
Indebtedness or by any default, failure or delay, willful or otherwise in
the performance of the Obligations or other Indebtedness; or (e) any other
act or omission which may or might in any manner or to any extent vary the
risk of the Guarantor or otherwise operate as a discharge of the Guarantor
or any co-guarantor as a matter of law or equity unless the Indebtedness
has been indefeasibly paid in full and the Commitments have been
terminated.
(5) The Agent and the Lenders, without exonerating in whole or in part the
Guarantor, may grant time, renewals, extensions, indulgences, releases and
discharges to, may take securities from and give the same and any or all
existing securities up to, may abstain from taking securities from or from
perfecting, registering, renewing or realizing upon securities of, may
accept compositions from, and may otherwise deal with any of the Borrowers
and all other persons (including the Guarantor and any co-guarantor) and
securities as the Agent and the Lenders may see fit, without notice to or
further assent from the Guarantor, except as otherwise may be specifically
required by the Loan Documents.
(6) This Guarantee constitutes a guarantee of payment when due and not of
collection, and the Guarantor waives any right to require that any resort
be had by the Agent or any of the Lenders to any covenant or security
(including, without limitation, any Collateral) held for payment of the
Indebtedness or to any balance of any deposit account or credit on the
books of the Agent or any of the Lenders in favour of any of the Borrowers
or any other person.
(7) No invalidity, irregularity or unenforceability (by reason of any
bankruptcy or similar law, any law or order of any government or agency
thereof purporting to reduce, amend or otherwise affect the Indebtedness of
the Borrowers, or otherwise) of the Indebtedness of any of the Borrowers or
of any security therefor shall affect, impair or be a defence to this
Guarantee. If one or more of the provisions contained herein shall be
invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not
in any way be affected or impaired thereby.
(8) The Guarantor hereby renounces the benefits of discussion and division. Any
request by the Guarantor to the Agent or any Lender for useful information
respecting the content or terms and conditions of the Indebtedness hereby
guaranteed or the progress made in their performance shall be made in
writing to the Agent. The Guarantor shall at all times and from time to
time do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered all and singular every such further act, deed,
transfer, assignment, assurance, document and instrument as the Agent and
the Lenders may reasonably require for the better accomplishing and
effectuating of this
<PAGE>
3.
Guarantee and the provisions contained herein, and every officer of the
Agent and the Lenders and each of them are irrevocably appointed attorneys
or attorney to execute in the name and on behalf of the Guarantor any
document or instrument for the said purpose if the Guarantor fails to
perform its further assurance obligations set out in this paragraph 8
promptly upon the Agent's request therefor.
(9) The obligations and undertakings of the Guarantor hereunder together with
the obligations and undertakings owing by the Borrowers towards the Agent
or any of the Lenders in respect of the Indebtedness shall be joint and
several (or for purposes of enforcement of this Guarantee in the courts of
Quebec such obligations and undertakings shall be solidary). The
obligations and undertakings of the Guarantor hereunder and the obligations
and undertakings of any other present or future guarantor of all or any
part of the Indebtedness shall be joint and several (or for purposes of
enforcement of this Guarantee in the courts of Quebec such obligations and
undertakings shall be solidary).
(10) This Guarantee shall be a continuing guarantee and shall cover and secure
any ultimate balance of the Indebtedness owing to the Agent and the Lenders
notwithstanding that any other security for the repayment of the
Indebtedness of the Borrowers to the Agent and the Lenders may no longer be
enforceable, and the Agent and the Lenders shall not be obliged to seek or
exhaust any recourse against any of the Borrowers or co-guarantors or other
persons or the securities they may hold before being entitled to payment
from the Guarantor of all of the Indebtedness.
(11) 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 principal or
interest on any Indebtedness of the Borrowers to the Agent or the Lenders
is rescinded or must otherwise be returned by the Agent or any Lender upon
the insolvency, bankruptcy or reorganization of any of the Borrowers or
otherwise, all as though such payment to the Agent and the Lenders had not
been made.
(12) The Agent and the Lenders may, without the consent of the Guarantor,
assign, transfer and deliver to any transferee of the Indebtedness or any
part thereof, the liability of the Guarantor under this Guarantee and any
security, documents or instruments held by the Agent or the Lenders in
respect of the Guarantee provided that no such assignment, transfer or
delivery shall release the Guarantor from said liability and such assignees
or transferees shall have the full benefit of this Guarantee and all
security, documents or instruments held in connection therewith and such
assignees or transferees shall be vested with all powers and rights of the
Lender hereunder and under such security, documents or instruments to the
full extent of such assignment or transfer; and thereafter the Agent or the
Lenders shall be fully discharged from all responsibility with respect to
and to the extent of that portion of the Indebtedness and this Guarantee
and security, documents and instruments so assigned, transferred and/or
delivered but the Agent and the Lenders shall retain all rights and powers
with respect to any such security, documents or instruments not so
assigned, transferred or delivered.
(13) The Guarantor shall pay the reasonable expenses (including reasonable legal
fees on a solicitor and client basis) incurred by the Agent and the Lenders
in endeavouring to collect the Indebtedness, or any part thereof, and in
enforcing this Guarantee.
(14) The records of the Agent and the Lenders as to the balance of the
Indebtedness at any time and from time to time shall be prima facie proof
thereof, absent manifest error, without further or other proof. No
provision of this Guarantee may be amended, modified or waived without the
prior written consent of the Agent and the Lenders.
(15) This Guarantee shall be binding upon the Guarantor and its respective
trustees, executors, administrators, successors and assigns including any
successor by reason of amalgamation of or any other change in the Guarantor
and shall enure to the benefit of the Agent and the Lenders and their
successors and assigns.
(16) Without limiting the generality of Article VI of the Credit Agreement, the
Guarantor hereby agrees with and confirms to the Agent and the Lenders that
the financial reporting provisions set out in section 6.05 of the Credit
Agreement (the "Financial Reporting Requirements"), with all changes and
modifications as the context requires,
<PAGE>
4.
are incorporated by reference herein and that the Guarantor shall strictly
comply with and be bound by such provisions, where applicable.
(17) The Guarantor hereby represents and warrants to the Agent and the Lenders
that the representations and warranties set out in Article IV of the Credit
Agreement, as they relate to the Guarantor are true and correct as of the
date hereof.
(18) With respect to any portion of the Indebtedness which is payable in a
currency other than Canadian currency (the "Foreign Currency Obligation"),
the following provisions shall apply:
(a) Payment hereunder with respect to the Foreign Currency Obligation
shall be made in immediately available funds in lawful money of the
currency of which the Foreign Currency Obligation is payable (the
"Foreign Currency") in such form as shall be customary at the time of
payment for settlement of international payments in New York, New York
without set-off, compensation or counterclaim.
(b) The Borrowers and the Guarantor shall indemnify and hold the Agent and
the Lenders harmless from any loss or deficiency incurred by the Agent
or the Lenders arising from any change in the value of Canadian
currency in relation to the Foreign Currency between the date the
Foreign Currency Obligation becomes due and the date of payment
thereof.
(c) In the event of a judgment or order being rendered by any court or
tribunal for the payment of any amounts owing to the Agent or the
Lenders under any obligation hereunder or for the payment of damages
in respect of any breach of any obligation hereunder or under or in
respect of a judgment or order of another court or tribunal for the
payment of such amounts or damages, such judgment or order being
expressed in a currency which is other than the currency in which such
amount is payable pursuant to such obligation (the "Agreed Currency"),
the Guarantor shall indemnify and hold the Agent and the Lenders
harmless from any loss or deficiency in terms of the Agreed Currency
in the amounts received by the Agent and the Lenders arising or
resulting from any variation as between (i) the rate of exchange at
which the Agreed Currency is converted into such other currency for
the purposes of such judgment or order, and (ii) the noon spot rate of
the Agent at its Domestic Lending Office at which it will purchase the
Agreed Currency on the date of receipt of such other currency with the
amount of the currency actually received by the Agent in respect of
such judgment or order.
(d) The indemnities contained in paragraphs (b) and (c) above shall
constitute separate and independent obligations of the Guarantor from
its other obligations hereunder and shall apply irrespective of any
indulgence granted by the Agent or the Lenders or any of them and no
proof or evidence of any actual loss shall be required by the
Guarantor, but the Agent or the Lender claiming such indemnity shall,
as soon as reasonably possible (but not as a condition precedent to
payment of the amount claimed), provide the Guarantor with a statement
as to the reason for and as to the amount and calculation of the claim
for indemnity. Absent manifest error, such statement shall be binding
and conclusive.
(19) The Guarantor hereby postpones all debts and liabilities of any of the
Borrowers to the Guarantor, both present and future, to the Indebtedness,
and all moneys received by the Guarantor thereon shall upon either: (a)
notice by the Agent to the Guarantor addressed to the Guarantor at the
address and in the manner provided for in paragraph 27 below; or, (b) the
occurrence and continuance of an Event of Default under the Credit
Agreement be received in trust for the Agent and the Lenders and shall be
paid over to the Agent and the Lenders.
(20) The Guarantor hereby grants to the Agent and the Lenders the right to set
off, upon the occurrence and continuance of an Event of Default, or
compensate against any and all accounts, credits or balances maintained by
it with the Agent or the Lenders, the
<PAGE>
5.
aggregate amount of any and all liabilities of the Guarantor hereunder if
and when the same shall become due and payable.
(21) The Guarantor acknowledges that this Guarantee has been delivered free of
any conditions, except pursuant to the Credit Agreement, and that no
representations have been made to the Guarantor affecting the liability of
the Guarantor under this Guarantee save as may be specifically embodied
herein and agrees that this Guarantee is in addition to and not in
substitution for any other guarantee held or which may hereafter be held by
the Agent or the Lenders. The rights, remedies and benefits herein are
cumulative and not in substitution for or exclusive of any rights, remedies
or benefits which the Agent or the Lenders may otherwise have.
(22) All payments made hereunder shall be made to the Agent and the Lenders
without set-off, compensation or counterclaim and free and clear of and
without deduction for any and all present and future taxes, levies,
imposts, deductions or withholdings of any nature whatsoever now or
hereafter imposed (collectively, the "Taxes") (except only such as are
levied on the net income of the Agent and the Lenders or franchise or
capital taxes imposed upon them). Should any such payment be subject to any
such Taxes, the Guarantor shall pay to the Agent and the Lenders such
additional amounts as may be necessary to cause the Lenders to receive a
net amount equal to the amount they would have received had such payment
not been subject to such Taxes, provided that the Agent and each of the
Lenders shall return to the Guarantor an amount equal to any such Taxes
which are subsequently refunded to the Agent or such Lender (subject to the
right of the Agent and such Lender to reclaim from the Guarantor an amount
equal to any amount which the Agent or such Lender is required to repay,
together with any penalties, interest or other charges).
(23) This Guarantee shall be construed in accordance with and be governed by the
laws of the Province of New Brunswick and the federal laws of Canada
applicable therein, and for the purpose of legal proceedings this Guarantee
shall be deemed to have been made in the said Province of New Brunswick and
to be performed there, and the Courts of New Brunswick shall have
jurisdiction over all disputes which may arise under this Guarantee and the
Guarantor hereby irrevocably and unconditionally submits to the
non-exclusive jurisdiction of such Courts, provided always that nothing
herein contained shall prevent the Lenders from proceeding at their
election against the Guarantor in the Courts of any other province, state,
country or jurisdiction.
(24) In this Guarantee, unless otherwise defined herein, all words and phrases
used beginning with initially capitalized letters shall have the same
meanings herein as in the Credit Agreement.
(25) In this Guarantee, words importing the singular include the plural and vice
versa, and words importing gender shall include all genders.
(26) Subject to paragraph 11 above, this Guarantee shall terminate upon the full
and final payment in full of the Indebtedness and when the Lenders have no
further commitment to make any Loans under the Credit Agreement.
(27) All communications and notices hereunder shall be in writing and given as
provided in the Credit Agreement. All communications and notices hereunder
to the Guarantor shall be given to it at 7405 Trans Canada Highway, Suite
200, St. Laurent, Quebec, H4T 1Z2, Canada (Telecopy No. 514-331-7061)
Attention: Russell J. David, Vice President, Finance, with a copy to
Morgan, Lewis & Bockius, LLP, 101 Park Avenue, New York, New York,
10178-0060, Attention: David W. Pollak, Esq. (Telecopy No. 212-309-6273).
(28) The Guarantor hereby acknowledges having received and read an executed copy
of the Credit Agreement.
(29) It is the express wish of the parties that this Guarantee and any related
documents be drawn up and executed in English. Il est la volonte expresse
des parties que cette convention et tous les documents s'y rattachant
soient rediges et signes en anglais.
<PAGE>
6.
IN WITNESS WHEREOF the undersigned has executed this Guarantee as of this 1st
day of April, 1997.
SPORT MASKA INC.
Per: /s/ D. Bruce Randall c.s.
-------------------------------
Name: D. Bruce Randall
Title: Secretary
SLM INTERNATIONAL, INC., #1 APPAREL, INC. and MASKA U.S., INC.
DEBENTURE $100,000,000 U.S.
A. PROMISE TO PAY
1. SLM INTERNATIONAL, INC., #1 APPAREL, INC. and MASKA U.S., INC. (the
"Borrowers") and SLM TRADEMARK ACQUISITION CORP. (the "Guarantor" and
collectively with the Borrowers, the "Companies") for value received hereby
jointly and severally agree with THE CHASE MANHATTAN BANK for its own benefit
and for the pro rata benefit of certain Lenders (as hereafter defined) from time
to time (the "Secured Party") that they will, subject to the provisions of that
certain Delivery Agreement made in favour of the Lenders by the Companies of
even date herewith (the "Delivery Agreement") on demand pay to the Secured Party
the principal sum of ONE HUNDRED MILLION UNITED STATES DOLLARS ($100,000,000
U.S.). The Companies will also, subject to the provisions of the Delivery
Agreement, jointly and severally pay to the Secured Party, as and when demanded,
interest on the said principal sum. The Companies will pay jointly and severally
such interest at the rate of 25% per annum calculated and payable monthly not in
advance, both before and after demand and before and after default, judgment and
execution from the date hereof until payment in full of all amounts owing
hereunder.
B. GRANT OF MORTGAGES, CHARGES AND SECURITY INTERESTS
2. As security for payment of the principal and interest and all other
indebtedness and liability from time to time payable hereunder, the Companies
hereby jointly and severally:
(a) mortgage and charge (subject to the exceptions as to leaseholds
hereinafter contained) as and by way of a fixed and specific mortgage and charge
to and in favour of the Secured Party, and grant to the Secured Party a security
interest in, all real and immovable property (including, by way of sub-lease,
leasehold lands) now or hereafter owned or acquired by the Companies or any of
them and all buildings, erections, improvements, fixtures and plant now or
hereafter owned or acquired by the Companies or any of them (whether the same
form part of the realty or not) and all appurtenances to any of the foregoing
(collectively, the "Lands"); "real and immovable
<PAGE>
2.
property" shall include any interest in or right with respect to real and
immovable property;
(b) mortgage and charge to the Secured Party as and by way of a fixed and
specific mortgage and charge, and grant to the Secured Party a security interest
in all present and future:
(i) income, revenues and profits derived from any tenancy, use or
occupation of the Lands and rents and other sums payable to the
Companies or any of them pursuant to the terms of any leases,
licences, subleases, agreements to lease, license or sublease, or
rights to occupy the Lands (each a "lease");
(ii) benefits, advantages and powers to be derived from such leases,
with full power and authority to demand, sue for, recover, receive and
give receipts for all rents and other moneys payable thereunder and
otherwise to enforce the rights of the landlord thereunder on behalf
of and in the name of the Companies or any of them; and
(iii) benefit of all guarantees and indemnities with respect to any
leases and the performance of any obligations of any tenant
thereunder;
(c) mortgage and charge to the Secured Party as and by way of a fixed and
specific mortgage and charge, and grant to the Secured Party a security interest
in, all their present and future equipment, including, without limiting the
generality of the foregoing, all fixtures, plant, machinery, tools and furniture
now or hereafter owned or acquired and any equipment specifically listed or
otherwise described in any schedule hereto;
(d) mortgage and charge to the Secured Party, and grant to the Secured
Party a security interest in, all their present and future inventory, including,
without limiting the generality of the foregoing, all raw materials, goods in
process, finished goods and packaging material and goods acquired or held for
sale or furnished or to be furnished under contracts of rental or service;
(e) mortgage and charge to the Secured Party, and grant to the Secured
Party a security interest in, all their other goods and tangible personal
property;
(f) mortgage and charge to the Secured Party, and grant to the Secured
Party a security interest in all their present and future intangibles,
including, without limiting the generality of the foregoing, all their present
and future book debts, accounts and other amounts receivable, contract rights
and chooses in action of every kind or nature including insurance rights arising
from or out of the assets referred to in subparagraphs (a), (b), (c), (d) or (e)
hereof, goodwill, chattel paper, instruments of title, negotiable documents of
title, investments, money and securities and all dividends, income or
<PAGE>
3.
other distributions, whether paid or distributed in cash, securities or other
property, in respect of any of the property described in this section 2;
(g) charge in favour of the Secured Party as and by way of a floating
charge, and grant to the Secured Party a security interest in, their business
and undertaking and all their property and assets, real and personal, moveable
or immovable, of whatsoever nature and kind, both present and future (other than
property and assets hereby validly assigned or subjected to a specific mortgage,
charge or security interest by subparagraphs (a), (b), (c), (d), (e) or (f)
hereof and the exceptions hereinafter contained); and
(h) mortgage and charge in favour of the Secured Party and grant to the
Secured Party a security interest in the proceeds arising from any of the assets
referred to in this paragraph 2;
all of which present and future property and assets of the Companies and each of
them referred to in subparagraphs 2 (a), (b), (c), (d), (e), (f), (g) and (h)
hereof are hereinafter collectively called the "Charged Assets". All rights of
the Secured Party hereunder, the security, and all obligations of the Companies
hereunder, shall be absolute and unconditional irrespective of (i) any lack of
validity or enforceability of any loan document including the Credit Agreement
dated as of April 1, 1997 among the Companies and the Secured Party and certain
lenders named therein (such lenders, and any other lenders from time to time
herein called the "Lenders") (which, as amended, supplemented or restated from
time to time is herein called the "Credit Agreement"), the Guarantee granted by
the Guarantor to the Secured Party of even date herewith (the "Guarantee"), any
other agreement with respect to the indebtedness and liability secured hereby or
any other agreement or instrument relating to the foregoing, (ii) any change in
the time, manner or place of payment of, or in any other term of, all or any of
the indebtedness and liability under the Credit Agreement or the Guarantee or
any indebtedness or liability secured hereby or any other amendment or waiver of
or consent to any departure from any guarantee, any loan document, including the
Credit Agreement and the Guarantee, or any other agreement or instrument, (iii)
any exchange, release or nonperfection of any Charged Asset or any release or
amendment or waiver of or consent to or departure from any guarantee for all or
any of the indebtedness and liability under the Credit Agreement or the
Guarantee or any indebtedness or liability secured hereby, or (iv)any other
circumstance which might otherwise constitute a defence available to, or
discharge of, the Companies, any guarantor or any other obligor in respect of
the indebtedness and liability, secured by or in respect of this debenture.
<PAGE>
4.
C. LOCATION OF CHARGED ASSETS
3. Each of the Companies hereby represents and warrants to the Secured Party
that there are no Charged Assets in Ontario.
4. Prior to acquiring any Charged Assets in Ontario or moving any Charged Assets
into Ontario, a Company shall first give ten (10) days prior written notice to
the Secured Party.
D. LIMITED EXCEPTIONS TO GRANT OF CHARGE
5. The last day of any term reserved by any lease or sublease, oral or written,
or any agreement therefor, now held or hereafter acquired by any of the
Companies, and whether falling within the general or particular description of
the Charged Assets, is hereby and shall be excepted out of the mortgage, charge
and security interest hereby or by any other instrument created, but such
Company shall stand possessed of the reversion of one day remaining in such
Company in respect of any such term, for the time being demised, as aforesaid,
upon trust to assign and dispose of the same as any purchaser of such term shall
direct.
E. AGREEMENTS OF THE COMPANY
6. Each of the Companies and the Secured Party covenant and agree that:
(a) they have not agreed to postpone the time for attachment of the
security interests granted hereby with respect to the Charged Assets presently
existing and that such security interests shall attach to the Charged Assets
acquired after the date hereof as soon as any of the Companies has rights in
such assets;
(b) in accordance with subsection 7(3) of the Land Registration Reform Act
(Ontario), the covenants deemed to be included in a charge by subsection 7(1) of
such Act are expressly excluded from this debenture; and
(c) subject to paragraph 30 hereof, the Companies shall not at any time
hereafter make any claim to the Charged Assets, challenge the Secured Party's
rights thereto or make any demands upon the Secured Party with respect to the
Charged Assets and that the Secured Party shall from this time forward be
exonerated and discharged of and from all claims and demands which the Companies
or any of them might or could have against the Secured Party with respect to the
Charged Assets.
<PAGE>
5.
7. Each of the Companies represents and warrants to the Secured Party that:
(a) it is the sole legal and beneficial owner of the Charged Assets charged
by it (except for future property), free of encumbrances or other right
whatsoever except for the liens permitted under the Credit Agreement or the
Guarantee or otherwise approved by the Secured Party in writing ("Permitted
Encumbrances");
(b) it is duly incorporated and in good standing under the laws of its
jurisdiction of incorporation;
(c) neither the execution of this debenture nor the performance by it of
its obligations hereunder will result in any breach of or default under any law
or any other agreement or document to which it is a party or by which it may be
bound; and
(d) it has the right, power and lawful authority to charge and mortgage to
the Secured Party, and otherwise grant security interests in all of its right,
title and interest in and to, the Charged Assets charged by it as provided for
in this debenture and this debenture constitutes a legal, valid and binding
obligation enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting creditors' rights and the discretion exercisable by Courts
of competent jurisdiction in respect of the availability of equitable remedies.
8. Each of the Companies agrees with the Secured Party that until all
indebtedness and liability owing by the Companies to the Secured Party are paid
in full:
(a) it will not, without the prior written consent of the Secured Party:
(i) incur, create, assume or permit to exist any further or
additional indebtedness except as permitted under the terms of
the Credit Agreement or the Guarantee;
(ii) create, assume or permit to exist any liens upon, assign,
transfer, mortgage, charge, pledge, hypothecate or otherwise
grant security over or a security interest in any of the Charged
Assets except to the Secured Party and except Permitted
Encumbrances;
(iii) sell, transfer, assign, or otherwise dispose of any of the
Charged Assets or any group of property and assets forming part
of the Charged Assets except for a sale of inventory in the
ordinary course of business and such other sales as permitted
under the Credit Agreement or the Guarantee;
<PAGE>
6.
(iv) merge or amalgamate with any other corporation except as
permitted under the Credit Agreement or the Guarantee;
(v) change the location of its chief executive office, place of
business or principal place of residence without providing the
Secured Party with fifteen days' prior written notice;
(vi) take any action (or not take any action) which would result in a
default hereunder or an Event of Default under the Credit
Agreement or the Guarantee; or
(vii) change its name without giving prior written notice to the
Secured Party of the new name and the date upon which such change
of name will take effect; and
(b) it will:
(i) hold the proceeds received from any direct or indirect dealing
with the Charged Assets in trust for the Secured Party after
either the occurrence of a default under the Credit Agreement or
the Guarantee or the security constituted by this debenture
becoming enforceable or any of the Charged Assets charged by it
are sold other than in the ordinary course of its business and
for the purpose of carrying on such business save and except
pursuant to subsection 7.05(b) of the Credit Agreement, and
forthwith remit such proceeds to the Secured Party;
(ii) strictly comply with every covenant and undertaking heretofore or
hereafter given by it to the Secured Party and take any action
that may be necessary to enable any other Company to comply with
its Obligations under the Credit Agreement or, as the case may
be, the Guarantee;
(iii) permit the Secured Party at any time and from time to time, when
the security granted pursuant to this debenture shall have become
enforceable, to require any of its account debtors to make
payment to the Secured Party of any or all amounts owing by such
account debtors and the Secured Party may take control of any
proceeds referred to in subparagraph 2(h) hereof and may hold all
such amounts received from any account debtor and any such
proceeds as cash collateral as part of the Charged Assets and as
security for the indebtedness and liability secured by this
debenture;
(iv) deliver to the Secured Party promptly upon request, any documents
of title, instruments, securities and chattel paper
<PAGE>
7.
constituting, representing or relating to the Charged Assets and
all statements of account, bills, invoices and books of account
relating to accounts and all records, ledgers, reports,
correspondence, schedules, documents, statements, lists and other
writings relating to the Charged Assets for the purpose of
inspecting, auditing or copying same;
(v) at the Secured Party's request, cause all securities which
constitute Charged Assets to be registered in the name of the
Secured Party or its nominee and the Secured Party is hereby
authorized to transfer such securities into the name of the
Secured Party or its nominee so that the Secured Party or its
nominee may appear as the sole owner of record of such
securities; at the request of the Secured Party, it shall deliver
to the Secured Party appropriate powers of attorney for transfer
in blank, duly executed and with signatures guaranteed, in
respect of such securities;
(vi) immediately upon becoming aware thereof, notify the Secured Party
of any loss or destruction of, or substantial damage to, any
material portion of the Collateral (as defined in the Credit
Agreement), and any other matters materially affecting the value,
enforceability or collectibility of any of such Collateral;
(vii) promptly notify the Secured Party of the acquisition by it of
receivables or other amounts owing to it from persons located in
any jurisdiction in Canada;
(viii) conduct a physical count of its inventory as provided in the
Credit Agreement.
9. Each of the Companies agrees with the Secured Party that:
(a) it will at all times fully perform and comply with all obligations
imposed on, assumed by or agreed to by it pursuant to any prior encumbrance of
the Lands or any part thereof or its interest therein, that it will pay all
rents and perform all obligations under the leases charged by this debenture and
that, if it shall fail so to do, the Secured Party may (but shall not be obliged
to) take any action the Secured Party deems necessary or desirable acting
reasonably to cure any default by it in the performance of or compliance with
any of its obligations hereunder, under any lease or imposed upon, assumed by or
agreed to by the Companies pursuant to any such prior encumbrance;
<PAGE>
8.
(b) upon receipt by the Secured Party in regard to any such prior
encumbrance or any lease of any written notice of default by any of the
Companies, the Secured Party may rely thereon and take any action as aforesaid,
acting reasonably, to cure such default even though the existence of such
default or the nature thereof may be questioned or denied by any of the
Companies or by any party on behalf of any of the Companies;
(c) at its option, the Secured Party may discharge past due taxes, liens,
security interests or other encumbrances (other than Permitted Encumbrances
which are not in default) at any time levied or placed on the Charged Assets and
may pay for the maintenance and preservation of the Charged Assets to the extent
any of the Companies fails to do so, provided, however, that the Secured Party
shall not discharge such taxes, liens, security interests or other encumbrances
or pay for such maintenance or preservation prior to the occurrence and
continuance of an Event of Default under the Credit Agreement or the Guarantee
unless the Secured Party shall have requested the Companies to discharge such
taxes, liens, security interests or other encumbrances or pay such amounts (to
the extent required by the Credit Agreement or the Guarantee) and the Companies
shall have failed or refused to do so within such period of time as shall have
been specified by the Secured Party in such notice; provided that nothing in
this debenture shall excuse any of the Companies from the performance of any
covenants or other promises with respect to taxes, liens, security interests,
hypothecs, mortgages, prior claims or other encumbrances and maintenances;
(d) the Secured Party shall have (and for such purpose hereby expressly
grants to the Secured Party) the absolute and immediate right to enter in and
upon the Lands or any part thereof to such extent and as often as the Secured
Party, in its sole discretion, acting reasonably, deems necessary or desirable,
in order to cure any such default by any of the Companies;
(e) the Secured Party may pay and expend such sums of money as the Secured
Party in its sole discretion, acting reasonably, deems necessary for any purpose
provided for in subparagraphs 9(a), (b), (c) and (d), and each of the Companies
hereby agrees to pay to the Secured Party, immediately upon notification by the
Secured Party and without demand, all such sums so paid and expended by the
Secured Party, together with interest thereon at the Alternate Base Rate plus
the then applicable Interest Margin both as defined in the Credit Agreement
calculated and payable as provided for in the Credit Agreement (the "Interest
Rate");
(f) all sums so paid and expended by the Secured Party and such interest
thereon, shall be secured hereby in addition to all other moneys hereby secured
and in priority to all other mortgages and charges;
<PAGE>
9.
(g) if this debenture is or shall be outstanding at the expiration of the
term of any lease (a "material lease") of real property forming part of the
Charged Assets which is material to the conduct of any Company's business and
such Company shall refuse or neglect to exercise its right, if any, to renew
such material lease and to pay the fees, costs, charges and expenses incidental
to and payable upon such renewals, then, and as often as it shall happen, the
Secured Party may, at its sole discretion, effect such renewals in its own name
or otherwise, and in such case every such renewed material lease and the lands
and buildings thereby demised shall remain and be security to the Secured Party
for the indebtedness and liability secured by this debenture and as well for the
payment of all money paid by the Secured Party for every such renewal and the
Secured Party's costs, charges, and expenses and interest thereon at the
Interest Rate;
(h) it will not: (i) surrender any material lease or any rights of renewal
with respect thereto (except for the lease of the premises located at 9 Vose
Farm Road, Peterborough, New Hampshire and except in any case where the prior
written consent of the Secured Party has been obtained); subordinate any
material lease to any mortgage of the fee interest of the landlord thereof in
the lands subject to a material lease, unless in connection with any such
subordination it obtains from the holder of such mortgage a non-disturbance
agreement in favour of it and its successors and assigns (including the Secured
Party) in form and substance satisfactory to the Secured Party; (ii) terminate
or cancel any material lease without the prior written consent of the Secured
Party; or (iii) without the prior written consent of the Secured Party, modify,
change, supplement, alter or amend any material lease either orally or in
writing;
(i) no release or forbearance of any of its obligations pursuant to any
material lease or pursuant to any prior encumbrance of its interest in the Lands
or any part thereof including without limitation its obligations with respect to
the payment of rent as provided for in any such lease shall release it from any
of its obligations pursuant to this debenture;
(j) unless the Secured Party shall otherwise expressly consent in writing,
the title in fee simple to the property demised by any material lease and the
leasehold estate shall not merge but shall always remain separate and distinct,
notwithstanding the union of said estates either in the landlord of any such
lease or any Company pursuant to any such lease or in a third party, by purchase
or otherwise; and
(k) if it shall, at any time before payment in full of the indebtedness and
liability secured by this debenture, acquire the freehold title to the lands
demised by any such lease, this mortgage and charge shall attach and extend to,
and constitute a mortgage and charge of such freehold estate; and
<PAGE>
10.
(l) it hereby agrees that it will not place the Charged Assets charged by
it or allow the Charged Assets charged by it to be placed on any premises that
are leased unless the lessor of such premises has first agreed in writing with
the Secured Party to subordinate and postpone any and all of its claims,
security and rights to the claims and security of the Secured Party; provided
that this covenant will not prohibit it from selling the Charged Assets charged
by it in the normal course of its business as hereinbefore provided.
10. The Companies hereby agree that they will at all times, both before and
after default, do or cause to be done such additional things and execute and
deliver or cause to be executed and delivered all such further acts and
documents as the Secured Party may reasonably require for the better mortgaging,
charging, confirming and granting of security interests in the present or future
Charged Assets to the Secured Party, including, without limitation, the payment
of any fees and taxes required in connection with the execution and delivery of
this debenture, the granting of the security and the filing, recording, or
registering of any financing statements or other documents in connection
therewith. If any amount payable under, or in connection with, any of the
Charged Assets shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be promptly pledged and delivered to
the Secured Party, duly endorsed in a manner satisfactory to the Secured Party.
If at any time any of the Companies shall take and perfect a security interest
or hypothec in any property of an account debtor or any other person to secure
payment and performance of an account receivable, it shall promptly assign such
security interest or hypothec to the Secured Party. Such assignment need not be
filed, recorded or registered of public record unless necessary to continue the
perfected status of the security interest or hypothec against creditors of and
transferees from the account debtor or other person granting the security
interest or hypothec.
11. The Companies shall, at their own cost and expense, take any and all actions
reasonably necessary to defend title to the Charged Assets against all persons
and to defend the security of the Secured Party in such Charged Assets, and the
priority thereof, against any adverse lien or encumbrance of any nature
whatsoever, except for such liens or encumbrances permitted by the Secured Party
including, without limitation, the Permitted Encumbrances.
12. The Companies shall remain liable to observe and perform all the conditions
and obligations to be observed and performed by them or any of them under each
contract and agreement, interest or obligation relating to the Charged
<PAGE>
11.
Assets, all in accordance with the terms and conditions thereof and shall
indemnify and hold harmless the Secured Party and the Lenders from any and all
such liabilities.
13. The Companies will not, without the Secured Party's prior written consent,
grant any extension of the time of payment of any of their accounts receivable,
or compromise, compound or settle the same for less than the full amount
thereof, or release, in whole or in part, any person liable for the payment
thereof, or allow any credit or discount whatsoever thereon other than
extensions, credits, discounts, compromises or settlements granted or made in
the ordinary course of business. The provisions of Article X of the Credit
Agreement with respect to the collection of receivables and the management of
the Charged Assets are hereby deemed incorporated herein in their entirety and
shall be binding upon the Companies with respect to their accounts receivable as
if set forth herein.
F. DEFAULT
14. All indebtedness and liability owing by the Companies to the Secured Party
and hereby secured shall, at the option of the Secured Party but subject to the
provisions of the Delivery Agreement, become payable and the security hereby
constituted shall become enforceable upon demand by the Secured Party.
15. The Secured Party may in writing (and not otherwise) waive any breach by any
of the Companies of any of the provisions contained in this debenture or any
default by any of the Companies in the observance or performance of any
provision of this debenture; provided always that no waiver by the Secured Party
shall extend to or be taken in any manner whatsoever to affect any subsequent
breach or default, whether of the same or a different nature, or the rights
resulting therefrom.
G. REMEDIES OF THE SECURED PARTY
16. Whenever the security hereby constituted shall have become enforceable, and
so long as it shall remain enforceable, the Companies will have no right to vote
or take any other action with respect to any securities constituting Charged
Assets or receive any dividends or interest (whether declared or payable before
or after the security hereby constituted becoming enforceable) in respect of the
Charged Assets, and the Secured Party may proceed to realize such security and
to enforce its rights by:
(a) entry;
<PAGE>
12.
(b) the appointment by instrument in writing of a receiver or receivers of
the Charged Assets or any part thereof (which receiver or receivers may be any
person or persons, whether an officer or officers or employee or employees of
the Secured Party or not and the Secured Party may remove any receiver or
receivers so appointed and appoint another or others in his or their stead);
(c) proceedings in any court of competent jurisdiction for the appointment
of a receiver or receivers or for sale of the Charged Assets or any part
thereof; or
(d) any other action, suit, remedy or proceeding authorized or permitted
hereby or by law or by equity.
In addition, the Secured Party may file such proofs of claim and other
documents as may be necessary or advisable in order to have its claim lodged in
any bankruptcy, insolvency winding-up or other judicial proceedings relative to
any of the Companies.
The Secured Party or any receiver or receivers so appointed shall have
power to:
(i) take possession of and to use the Charged Assets or any part thereof
with power to exclude the Companies and their officers, employees and
agents therefrom;
(ii) carry on the business of the Companies (including, but not limited to,
the taking or defending of any actions or legal proceedings, and the
doing or refraining from doing all other things as to it, acting
reasonably, may seem necessary or desirable in connection with the
business, operations and affairs of the Companies);
(iii) take all such steps as it may consider necessary or desirable for the
purposes of preserving, maintaining and completing all or any part of
the Charged Assets and making such replacements thereof and
improvements and additions thereto as it shall consider expedient;
(iv) receive the rents, incomes and profits of any kind whatsoever from the
Charged Assets and pay therefrom
(A) any expenses of preserving, maintaining and completing the
Charged Assets, of making such replacements thereof and
improvements and additions thereto as it may consider expedient
and of carrying on all or any part of the business of the
Companies relating to the Charged Assets, and
<PAGE>
13.
(B) any charges against the Charged Assets ranking in priority to or
pari passu with the security created by this debenture or the
payment of which may be necessary or desirable to preserve or
protect all or any part of the Charged Assets or the interest of
the Secured Party therein;
(v) lease all or any part of the Charged Assets and renew from time to
time all or any of the leases on such terms and conditions as the
Secured Party may determine;
(vi) with or without taking possession, take any action or proceedings to
enforce the performance of any covenant contained in any of the
leases;
(vii) enjoy and exercise all the powers of the Companies or any of them as
it considers necessary or desirable for the exercise of any and all of
the remedies provided for herein, including, without limitation, the
powers to make any arrangement or compromise on behalf and in the name
of the Companies or any of them which it considers expedient, to
purchase on credit and borrow money on behalf and in the name of the
Companies or any of them and to advance its own moneys to the
Companies or any of them, all at such rates of interest as it may
consider reasonable, and to enter into contracts and undertake
obligations on behalf of and in the name of any of the Companies for
any and all of the foregoing purposes or which it considers necessary
or desirable for the exercise of any of the rights, powers and
remedies provided for herein, all of which borrowings, advances and
obligations together with interest thereon shall, at the discretion of
the Secured Party, be entitled to the security hereof in priority to
the payment of the obligations secured by this debenture;
Every receiver appointed by the Secured Party shall be deemed to be an
agent of the Companies or one or more of them and not of the Secured
Party for the purposes of (i) carrying on and managing the business
and affairs of any one or more of such Companies
<PAGE>
14.
and (ii) establishing liability for all of the acts or omissions of
the receiver while acting as such and the Secured Party shall not be
in any way responsible for any acts or omissions on the part of any
such receiver, its officers, employees and agents; provided that,
without restricting the generality of the foregoing, each of the
Companies irrevocably authorizes the Secured Party to give
instructions to the receiver relating to the performance of its powers
and discretions. The appointment of a receiver or any thing which may
be done by the receiver shall not have the effect of constituting the
Secured Party a mortgagee in possession.
(viii) borrow money required for the maintenance, preservation or
protection of the Charged Assets or any part thereof or the carrying
on of the business of any of the Companies;
(ix) further charge the Charged Assets in priority to the charge of this
debenture as security for money so borrowed;
(x) vote and take all other action with respect to the securities
constituting Charged Assets and collect all revenues, dividends and
distributions distributed in connection with such securities; and
(xi) sell, lease or otherwise dispose of the whole or any part of the
Charged Assets on such terms and conditions and in such manner as the
receiver shall determine.
The Secured Party shall not be responsible for any actions or errors of omission
by the receiver or receivers in exercising any such powers.
In addition, the Secured Party may enter upon, use, occupy and possess the
Charged Assets or any part thereof, free from all encumbrances, liens and
charges, except for Permitted Encumbrances, without hindrance, interruption or
denial of the same by the Companies or by any other person or persons, and may
lease or sell the whole or any part or parts of the Charged Assets. Any sale
hereunder may be made by public auction, by public tender or by private
contract, with or without notice and with or without advertising and without any
other formality (except as required by law), all of which are hereby waived by
the Companies. Such sale shall be on such terms and conditions as to credit or
otherwise and as to upset or reserve bid or price as to the Secured Party in its
sole discretion may seem advantageous. In the case of any sale on credit or
partly on credit, the Secured Party shall not be accountable for any proceeds
thereof unless and until actually received by the Secured Party in cash. Such
sale may
<PAGE>
15.
take place whether or not the Secured Party has taken possession of the Charged
Assets.
The Companies agree to pay to the Secured Party forthwith on demand all
expenses incurred by the Secured Party in the preparation, perfection,
administration and enforcement of this debenture (including without limitation
expenses incurred in considering and protecting or improving the Secured Party's
position, or attempting to do so, whether before or after default), all amounts
borrowed by the receiver from the Secured Party as hereinbefore provided and all
costs, charges, expenses and fees (including, without limiting the generality of
the foregoing, the fees and expenses of any receiver and legal fees on a
solicitor and client basis) of or incurred by the Secured Party and by any
receiver or receivers or agent or agents appointed by the Secured Party in
connection with the recovery or enforcing of payment of any moneys owing
hereunder, whether by realization, by taking possession or otherwise. All such
sums, together with interest thereon at the Interest Rate, shall be secured by
the charges contained herein. To the extent that the aggregate of the principal
and accrued interest secured hereby and such borrowed money, costs, fees and
expenses exceed the principal amount of this debenture, the Companies hereby
mortgage and charge and grant a security interest in the Charged Assets to the
Secured Party to secure payment of such excess amount.
No remedy for the realization of the security hereof or for the enforcement
of the rights of the Secured Party shall be exclusive of or dependent on any
other such remedy, but any one or more of such remedies may from time to time be
exercised independently or in combination; and the exercise of any remedy under
any document in any jurisdiction shall not prejudice or affect the exercise of
any remedy under another document in any jurisdiction. The term "receiver" as
used in this debenture includes a receiver and manager.
The Secured Party shall not, nor shall any receiver appointed by it, be
liable for any failure to exercise its rights, powers or remedies arising
hereunder or otherwise, including without limitation any failure to take
possession of, collect, enforce, realize, sell, lease or otherwise dispose of,
preserve, maintain, complete, protect, replace or improve all or any part of the
Charged Assets, to carry on all or any part of the business of the Companies or
to take any steps or proceedings for any such purposes. Neither the Secured
Party nor any receiver appointed by it shall have any obligation to take any
steps or proceedings to preserve rights against prior parties to or in respect
of all or any part of the Charged Assets, whether or not in its possession and
neither the Secured Party nor any receiver appointed by its shall be liable for
failure to
<PAGE>
16.
do so. Subject to the foregoing, the Secured Party shall use reasonable care in
the custody and preservation of the Charged Assets in its possession.
17. Unless the provisions of the Credit Agreement otherwise provide, any and all
payments made in respect of the indebtedness and liability secured by this
debenture from time to time may be applied to such part or parts of the
indebtedness and liability secured by this debenture as the Secured Party may
see fit, and unless the provisions of the Credit Agreement otherwise provide,
the Secured Party shall at all times and from time to time have the right to
change any appropriation as the Secured Party may see fit.
18. The proceeds of any collection or sale of the Charged Assets, as well as any
Charged Asset consisting of cash, shall be applied by the Secured Party as
provided in section 16 of the Security Agreement among the Companies, Sport
Maska Inc., SLM Trademark Acquisition Canada Corporation and the Lenders dated
as of April1, 1997 (the "Security Agreement"). Upon any sale of the Charged
Assets by the Secured Party (including, without limitation, pursuant to a power
of sale granted by statute or under a judicial proceeding) the receipt of the
Secured Party or of the officer making the sale shall be a sufficient discharge
to the purchaser or purchasers of the Charged Assets so sold and such purchaser
or purchasers shall not be obligated to see to the application of any part of
the purchase money paid over to the Secured Party or such officer or be
answerable in any way for the misapplication thereof.
H. RIGHTS OF THE SECURED PARTY
19. The Secured Party may, in accordance with subparagraph 9(c) of this
debenture, pay and satisfy the whole or any part of any liens, taxes, rates,
charges or encumbrances now or hereafter existing in respect of any of the
Charged Assets (other than Permitted Encumbrances which are not in default) and
such payments together with all costs, charges and expenses which may be
incurred in connection with making such payments shall form part of the
indebtedness and liability secured by this debenture and shall be secured by the
mortgages, charges and security interests granted herein. In the event of the
Secured Party satisfying any such lien, charge or encumbrance, it shall be
entitled to all the equities and securities of the person or persons so paid and
is hereby authorized to obtain any discharge thereof and hold such discharge
without registration for so long as it may deem advisable to do so.
<PAGE>
17.
20. The Companies grant to the Secured Party the right to set off against any
and all accounts, credits or balances maintained by them with the Secured Party,
the aggregate amount of any of the indebtedness and liability secured by this
debenture provided the same is due.
21. The Secured Party, without exonerating in whole or in part the Companies,
may grant time, renewals, extensions, indulgences, releases and discharges to,
may take securities from and give the same and any or all existing securities up
to, may abstain from taking securities from or from perfecting securities of,
may accept compositions from, and may otherwise deal with the Companies and all
other persons and securities as the Secured Party may see fit.
22. Nothing herein shall obligate the Secured Party to extend or amend any
credit to the Companies.
23. The Secured Party may, upon the terms provided in the Credit Agreement,
assign, transfer and deliver to any transferee any of the indebtedness and
liability secured by this debenture or any security or any documents or
instruments held by the Secured Party in respect thereof provided that no such
assignment, transfer or delivery shall release the Companies from any of the
indebtedness and liability secured by this debenture; and thereafter the Secured
Party shall be fully discharged from all responsibility with respect to the
indebtedness and liability secured by this debenture and security, documents and
instruments so assigned, transferred or delivered. Such transferee shall be
vested with all powers and rights of the Secured Party under such security,
documents or instruments but the Secured Party shall retain all rights and
powers with respect to any such security, documents or instruments not so
assigned, transferred or delivered. The Companies shall not assign any of their
rights or obligations hereunder without the prior written consent of the Secured
Party.
24. The Secured Party is hereby authorized to file, record or register, as the
case may be, one or more financing statements, financing change statements or
other documents in all jurisdictions which the Secured Party deems necessary or
appropriate for the purpose of perfecting, confirming, continuing, enforcing or
protecting the security held by the Secured Party in respect of the indebtedness
and liability secured by this debenture.
<PAGE>
18.
25. Each of Companies hereby appoints the Secured Party as its attorney solely
for the purposes of carrying out the provisions of this debenture and taking any
action or executing any instrument which the Secured Party may deem necessary or
advisable to accomplish the purposes herewith, which appointment is irrevocable
and coupled with an interest.
26. The Secured Party and such persons as the Secured Party may designate shall
have the right in the manner provided in the Credit Agreement to inspect the
Charged Assets, all records related thereto (and to make extracts and copies
from such records) and the premises upon which any such Charged Assets are
located, to discuss each of the Companies' affairs with the officers of such
Companies and their independent accountants. Subject to the conditions of the
Credit Agreement, the Secured Party shall have the absolute right to share any
information that it gains from such inspection or verification with any or all
of the Lenders.
I. BENEFIT TO THE LENDERS
27. All grants of mortgages, charges and security interests and all covenants
and agreements herein shall be for the benefit of the Secured Party and for the
pro rata benefit of the Lenders.
J. MISCELLANEOUS
28. If one or more of the provisions contained herein shall be invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby.
29. No amendment of this debenture shall be binding unless executed in writing
by the party to be bound thereby.
30. Until the security hereby constituted shall have become enforceable, the
Companies shall have quiet possession of the Charged Assets. Upon payment by the
Companies, their successors or permitted assigns, of all indebtedness and
liability of the Companies to the Secured Party secured hereby and the
fulfilment of all other obligations of the Companies to the Secured Party
secured hereby and provided that the Secured Party is then under no obligation
(conditional or otherwise) to make any further loan or extend any other type of
credit to the Companies, the Secured Party shall, upon request in writing by the
Companies, delivered to the Secured Party at 633 Third Avenue, New York, New
York, U.S.A. 10017 Attention: Credit Deputy, and at the
<PAGE>
19.
Companies' expense, discharge this debenture. The security hereby constituted
and the charges hereunder shall automatically terminate in any of the Charged
Assets when they are sold or disposed of as permitted by the Credit Agreement or
hereunder or with the consent of the Secured Party. The Secured Party shall, at
the expense of the Companies, promptly take such actions, and execute such
releases and financing change statements or other documents, which may be
reasonably requested by an interested party to evidence the termination and
releases contemplated hereby.
31. This debenture shall be construed in accordance with and be governed by the
laws of the Province of Ontario. For the purpose of legal proceedings, this
debenture shall be deemed to have been made in the said Province and to be
performed therein and the courts of that Province shall have jurisdiction over
all disputes which may arise under this debenture. The Companies hereby
irrevocably and unconditionally submit to the non-exclusive jurisdiction of such
courts, provided always that nothing herein contained shall prevent the Secured
Party from proceeding at its election against the Companies in the courts of any
other province, country or jurisdiction.
32. The headings in this debenture are included for convenience of reference
only, and shall not constitute a part of this debenture for any other purpose.
33. This debenture is in addition to and not in substitution for any other
security now or hereafter held by the Secured Party and shall be general and
continuing security notwithstanding that the indebtedness and liability of the
Companies to the Secured Party shall be at any time or from time to time fully
satisfied or paid.
34. This debenture and all its provisions shall enure to the benefit of the
Secured Party, its successors and assigns, and shall be binding on the
Companies, their respective successors and permitted assigns.
35. Any demand or notice by the Secured Party in connection with this debenture
shall be given to the Companies at the place and in accordance with the terms
set out in the Credit Agreement or, as the case may be, the Guarantee, for the
giving of notices thereunder.
36. In construing this debenture, terms herein shall have the same meaning as
defined in the Personal Property Security Act (Ontario), unless the context
otherwise requires. The word "Companies", the personal pronoun "it" or "its" and
any verb
<PAGE>
20.
relating thereto and used therewith shall be read and construed as required by
and in accordance with the context in which such words are used depending upon
whether the Companies is one or more individuals, corporations or partnerships
and, if more than one, shall apply and be binding upon each of them jointly and
severally. The term "successors" shall include, without limiting its meaning,
any corporation resulting from the amalgamation of a corporation with another
corporation and, where the Companies is a partnership, any new partnership
resulting from the admission of new partners or any other change in the
Companies, including, without limiting the generality of the foregoing, the
death of any or all of the partners.
IN WITNESS WHEREOF the Companies have executed this debenture as of the 1st
day of April, 1997.
SLM INTERNATIONAL, INC.
By: /s/ D. Bruce Randall C.S.
-----------------------------------
title - Secretary
#1 APPAREL, INC.
By: /s/ D. Bruce Randall C.S.
-----------------------------------
title - Secretary
MASKA U.S., INC.
By: /s/ D. Bruce Randall C.S.
-----------------------------------
title - Secretary
SLM TRADEMARK ACQUISITION CORP.
By: /s/ D. Bruce Randall C.S.
-----------------------------------
title - Secretary
================================================================================
DEED OF HYPOTHEC
between
THE CHASE MANHATTAN BANK
and
SLM INTERNATIONAL, INC.
dated as of
April 1st, 1997
<PAGE>
TABLE OF CONTENTS
Page
1.INTERPRETATION ....................................................... 1
2.[NOT USED] ........................................................... 3
3.[NOT USED] ........................................................... 3
4.HYPOTHEC: DESCRIPTION OF CHARGED PROPERTY ........................... 3
5.AMOUNT OF THE HYPOTHEC ............................................... 6
6.SECURED OBLIGATIONS .................................................. 6
7.ADDITIONAL PROVISIONS PERTAINING TO THE
HYPOTHEC ON RENTAL INCOME AND LEASES ................................ 6
8.ADDITIONAL PROVISIONS TO THE HYPOTHEC ON CLAIMS
(OTHER THAN RENTALS) ................................................. 7
9.ADDITIONAL PROVISIONS TO THE HYPOTHEC ON
SECURITIES ........................................................... 8
10.ASSIGNMENT OF CLAIMS SUBJECT TO THE FINANCIAL
ADMINISTRATION ACT .................................................. 8
11.REPRESENTATIONS AND WARRANTIES ...................................... 9
12.COVENANTS ........................................................... 11
13.EVENTS OF DEFAULT ................................................... 15
14.HOLDER'S RECOURSES IN CASE OF DEFAULT ............................... 16
15.GENERAL PROVISIONS .................................................. 21
16.[NOT USED] .......................................................... 24
17.GOVERNING LAW ....................................................... 24
18.AMENDMENTS .......................................................... 24
19.FORMAL DATE ......................................................... 24
20.ENGLISH LANGUAGE .................................................... 24
21.INCONSISTENCIES ..................................................... 24
(i)
<PAGE>
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DEED OF HYPOTHEC
EXECUTED ON THE ELEVENTH DAY OF APRIL NINETEEN HUNDRED AND NINETY-SEVEN (1997).
BEFORE: Mtre Rtichard Trudeau, Notary, practising in the City of Longueuil,
Province of Quebec.
APPEARED: THE CHASE MANHATTAN BANK, a bank chartered under the laws of New York
(USA), having its head office at 633 Third Avenue, New York, New York,
U.S.A. 10017 (Attention: Credit Deputy), hereinacting and represented
by , Daniel M. Tullach duly authorized as he/she so declares.
AND: SLM INTERNATIONAL, INC., a legal person being a corporation
constituted under the laws of the State of Delaware (USA), having its
registered office at 1209 Orange Street, Wilmington, Delaware, 19801,
USA, herein acting and represented by D. Bruce Randall, its Secretary,
duly authorized pursuant to a resolution dated March 24, 1997, a
certified copy of which is annexed hereto after having been
acknowledged true and signed for the purpose of identification by said
representative in the presence of the undersigned Notary.
(hereinafter the "Grantor")
WHICH PARTIES HAVE DECLARED AS FOLLOWS:
WHEREAS the Grantor is desirous of securing its obligations under the Credit
Agreement (as hereinafter defined) in the manner hereinafter appearing;
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. INTERPRETATION
1.1 Definitions
The following terms, wherever used in this Deed, shall, unless there be
something in the context inconsistent therewith, have the following meanings:
1.1.1 "Business Day" means a day on which the Holder's branch in New
York is opened for business but does not include Saturday and Sunday;
1.1.2 "Charged property" shall have the meaning ascribed to it in
Section 4 hereof;
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-- 2 --
1.1.3 "Collateral" shall have the meaning ascribed to it in paragraph
4.8 hereof;
1.1.4 "Credit Agreement" means the Credit Agreement dated as of April
1st, 1997 among the Grantor, Maska U.S., Inc., #1 Apparel, Inc., as
borrowers, the lenders named therein and The Chase Manhattan Bank, as
agent for the lenders, as such Credit Agreement may be amended,
restated or supplemented from time to time.
1.1.5 "Default" means one or the other events set out in Section
13 hereof;
1.1.6 "Dollars" or "$" means the legal currency in Canada;
1.1.7 "Grantor" means SLM International, Inc. and any of its
successors or assigns;
1.1.8 [NOT USED]
1.1.9 "Holder" means The Chase Manhattan Bank and shall include its
successors or assigns pursuant to an amalgamation or other corporate
reorganization or otherwise;
1.1.10 "Hypothec" shall have the meaning ascribed to it in Section
4 hereof;
1.1.11 "Property in stock" shall have the meaning ascribed to it in
paragraph 4.4 hereof;
1.1.12 "Secured Obligations" means all of the obligations which are to
be secured by the Hypothec pursuant to Section 6 hereof;
1.1.13 "This Deed", "these presents", "herein", "hereby", "hereunder",
"hereof" and similar expressions refer to this Deed, and the
accompanying schedules and to any deed or document supplemental or
complementary hereto or restating this Deed.
1.2 Gender
Unless there be something in the context inconsistent therewith, words
importing any gender shall include any other gender as may be applicable under
the circumstances.
1.3 Headings
The division of this Deed into Sections, subsections and paragraphs and the
insertion of titles are for convenience of reference only and do not affect the
meaning or the interpretation of the present Deed. Unless otherwise indicated, a
reference to a particular Section, subsection or paragraph is a reference to the
particular Section, subsection or paragraph in this Deed.
1.4 [NOT USED]
1.5 Schedules
The Schedules annexed hereto shall form an integral part of this Deed.
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<PAGE>
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-- 3 --
1.6 Delays and calculation of delays
The delays provided hereunder are calculated simultaneously with the delays
imposed by law and are not in addition to such delays. In the calculation of any
period of delay, the period shall exclude the day from which the period
commences and the period shall include the last day thereof.
1.7 Business Day
When the date on which a delay expires or a payment has to be made or an
act has to be done is not a Business Day, the delay expires or the payment must
be made or the act must be done on the next following Business Day, unless
expressly provided otherwise in this Deed.
2. [NOT USED]
3. [NOT USED]
4. HYPOTHEC: DESCRIPTION OF CHARGED PROPERTY
The Grantor hereby hypothecates in favour of the Holder the universality of
all of the Grantor's moveable and immoveable property, present and future,
corporeal and incorporeal, of whatever nature and kind and wherever situate (the
"Charged property") and, with respect to incorporeal or intangible property,
property located outside of the Province of Quebec or used in more than one
jurisdiction, hereby charges, assigns and mortgages in favour of the Holder and
creates a security interest in the Charged property (the hypothec, charge,
mortgage and assignment and the security interest hereinafter collectively
referred to as the "Hypothec"), the whole including without limitation the
following universalities of present and future properties:
4.1 Immoveables
All the immoveable properties of the Grantor, along with all property
permanently physically attached or joined thereto so as to ensure the utility
thereof (including the heating and air conditioning apparatus and watertanks)
and which become immoveable by the effect of law, the hypothec on future
immoveables to become effective upon the registration of a notice to that effect
in accordance with section 2949 of the Civil Code of Quebec (collectively
hereinafter referred to as the "Immoveables").
4.2 Rentals, Revenues and leases of immoveables
All rentals, annuities and revenues which are or may be produced by the
Immoveables as well as any other right of the Grantor in any lease, present and
future, which may affect such Immoveables.
4.3 Rental Insurance
Proceeds of any insurance covering losses of revenue and rentals described
in paragraph 4.2 above.
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<PAGE>
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-- 4 --
4.4 Property in Stock
All property in stock or inventory of every nature and kind of the Grantor
whether in its possession, in transit or held on its behalf, including raw
materials, work in process, finished goods or other materials, goods
manufactured or transformed, or in the process of being so, by the Grantor or by
others, packaging materials, property evidenced by bill of lading, animals,
mineral substances, hydrocarbons and other products of the soil as well as all
fruits thereof from the time of their extraction (hereinafter the "Property in
stock").
The Property in stock held by third parties under a lease agreement, a
leasing contract, a franchise or licence agreement, or any other agreement
entered into with or on behalf of the Grantor, is also subject to this Hypothec.
Property having formed part of the Property in stock which is alienated by
the Grantor in favour of a third person but in respect of which the Grantor has
retained title pursuant to a reservation of ownership provision, shall remain
charged by the Hypothec until title is transferred; any Property in stock the
ownership of which reverts to the Grantor pursuant to the resolution or
resiliation of any agreement or following its repossession is also subject to
the Hypothec.
4.5 Claims, Book Debts and Other Movable Property
4.5.1 Claims, Receivables and Book Debts
All of the Grantor's claims, debts, demands and choses in action, whatever
their cause or nature, whether or not they are certain, liquid or exigible;
whether or not evidenced by any title (and whether or not such title is
negotiable), note, acceptances, bill of exchange or drafts; whether litigious or
not; whether or not they have been previously or are to be invoiced; whether or
not they constitute book debts. Hypothecated claims shall include: (i)
indemnities payable to the Grantor under any all risk insurance policy, any life
insurance policy or any liability insurance policy, subject to the rights of
other creditors holding subsequent ranking hypothecs on the insured property,
(ii) the sums owing to the Grantor in connection with interest or currency
exchange contracts and other treasury or hedging instruments, management of
risks or derivative instruments existing in favour of the Grantor ("SWAPS"), and
(iii) the Grantor's rights in any credit balances, monies or deposits in
accounts held for it by the Holder (subject to the Holder's compensation or
set-off rights) or by any financial institution or any other person.
4.5.2 Rights of Action
The Grantor's rights under contract with third parties as well as the
Grantor's rights of action and claims against third persons.
4.5.3 Accessories
The hypothecs, security interest, security agreement, guarantees,
suretyships, notes, acceptances and accessories to the claims and rights
described above and other rights relating thereto (including, without
limitation, the rights of the Grantor in its capacity as seller under any
instalment sale, with respect to the claims hereby hypothecated which are the
result of such sale).
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<PAGE>
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-- 5 --
4.5.4 Movable Property
All moveable property owned by the Grantor and covered by the instalment
sales mentioned in paragraph 4.5.3 hereof.
A right or a claim shall not be excluded from the Charged property merely
because: (i) the debtor thereof is not domiciled in the Province of Quebec or
(ii) the debtor thereof is an affiliate (as such term is defined in the Canada
Business Corporations Act) of the Grantor (regardless of the law of the
jurisdiction of its incorporation) or (iii) such right or claim is not related
to the ordinary course of business or the operations of the Grantor.
4.6 Securities
All securities (including shares, debentures, units, bonds, obligations,
rights, options, warrants, debt securities, investment certificates, units in
mutual funds, certificates or other instruments representing such property) now
or hereafter owned by the Grantor or held by the Grantor or on its behalf,
including without limitation those issued or which will be issued by the
corporations or partnerships listed in Schedule "B" or by any corporation or
partnership successor thereto pursuant to an amalgamation or any other
reorganization (a copy of which Schedule "B" remains annexed hereto after having
been recognized as true and signed for identification by the representatives of
the parties hereto); as well as all those which are delivered by the Grantor to
the Holder or to a third party on its behalf from time to time.
4.7 Equipment and Road Vehicles
The equipment, office furniture, appliances, supplies, apparatus, tools,
patterns, models, dies, blueprints, fittings, furnishings, fixtures, machinery
and rolling stock (including road vehicles) of the Grantor, including additions
and accessories and spare parts.
4.8 Trade-Marks and Other Intellectual Property Rights
All of the Grantor's rights in any trade-mark, copyright, industrial
design, patent, goodwill, invention, trade name, trade secret, trade process,
license, permit, franchise, know-how, plant breeders' right, integrated circuit
topography and in any other intellectual property right, including any
application or registration relating thereto if any, improvements and
modifications thereto as well as rights in any claim against third parties in
connection with the protection of any such intellectual property rights or
infringement thereto, in Canada or abroad (sometimes hereinafter referred to
collectively as the "Collateral"), including without limitation those listed in
Schedule "B" hereto.
4.9 Fruits and Revenues
All cash, profits, proceeds, fruits, dividends, rights and revenues which
are or may be produced by or declared or distributed with respect to the Charged
property or in exchange thereof as well as the proceeds of the Charged property,
including without limitation any property, equipment, negotiable instrument,
bill, commercial paper, security, money, compensation for expropriation
remitted, given in exchange or paid pursuant to a sale, repurchase, distribution
or any other transaction with respect to the Charged property.
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<PAGE>
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-- 6 --
4.10 Records and Others
All records, data, vouchers, invoices and other documents related to the
Charged property described above, including without limitation, computer
programs, disks, tapes and other means of electronic communication of the
Grantor, as well as the rights of the Grantor to recover such property from
third parties, receipts, customer lists, distribution lists, directories and
other similar property of the Grantor.
Any and all Charged property which is acquired, transformed or manufactured
after the date of this Deed shall be charged by the Hypothec, (i) whether or not
such property has been acquired in replacement of other Charged property which
may have been alienated by the Grantor in the ordinary course of business, (ii)
whether or not such property results from a transformation, mixture or
combination of any Charged property, and (iii) in the case of securities,
whether or not they have been issued pursuant to the purchase, redemption,
conversion or cancellation or any other transformation of the charged securities
and without the Holder being required to register or re-register any notice
whatsoever, the property charged under the Hypothec being the universality of
the Grantor's present and future property.
5. AMOUNT OF THE HYPOTHEC
The amount for which the Hypothec is granted is a principal amount of one
hundred and fifty million dollars ($150,000,000) with interest thereon from the
date of this Deed at the rate of twenty-five percent (25%) per annum.
6. SECURED OBLIGATIONS
The Hypothec secures the due and punctual payment of all sums due or to
become due by the Grantor under or pursuant to the Credit Agreement and the due
and punctual performance of all other present and future obligations of the
Grantor under or pursuant to the Credit Agreement and under and pursuant to this
Deed, in each case whether now existing or hereafter arising, direct or
indirect, absolute or contingent, matured or not.
Any future obligation hereby secured shall be deemed to be one in respect
of which the Grantor has once again obligated itself hereunder according to the
provisions of section 2797 of the Civil Code of Quebec.
7. ADDITIONAL PROVISIONS PERTAINING TO THE HYPOTHEC ON RENTAL INCOME AND
LEASES
With respect to any Immoveables generating rentals and revenues:
7.1 List of tenants
The Grantor shall provide the Holder before January 30 each year, with a
list containing the name of all tenants and details as to their leases as at the
immediately preceding December 31. The Grantor shall obtain the prior written
consent of the Holder with respect to the terms and conditions of any new lease
or the modifications or renewals of any existing leases provided nothing herein
shall compel the Holder to waive any right it may have pursuant to Article 1887
of the Civil Code of Quebec. Upon request of the
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<PAGE>
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-- 7 --
Holder, acting reasonably, the Grantor shall further provide (i) a copy (or the
original, when requested by the Holder) of all leases, present and future,
relating to the Immoveables and any document and any useful information in
connection therewith, and (ii) a written acknowledgment by the tenants, present
and future, of the hypothec on rentals hereby created in the form required by
the Holder.
7.2 Leases and statement of revenues
The Holder may require that all leases be subject to its approval, that
they be subordinated to its rights hereunder and that the Grantor provide it on
a yearly basis with a statement of revenues and expenditures concerning the
Immoveables.
7.3 Rents, annuities and revenues collection
The Holder hereby authorizes the Grantor to collect all rents, annuities
and revenues which are rental income; however, the Grantor shall not collect in
advance more than one month of rent (other than a security deposit) nor shall it
renounce to the payment of any rent. Such authorization may be revoked at any
time by the Holder in accordance with what is provided for by law; in such a
case, the Holder may exercise as it deems appropriate, to the exclusion of the
Grantor, all rights, claims, privileges and hypothecs (legal or conventional) of
the Grantor in order to maintain, renew, grant or terminate any lease, and to
further protect or collect rents, annuities and revenues from the Immoveables.
7.4 Collection
The Holder shall have the right to bring an action for recovery of rentals,
impleading the Grantor, it being understood that the Holder shall be under no
obligation to exercise such right and shall not be liable for any loss or damage
which may result from its failure to collect such rentals. The Holder shall have
the right to deduct a ten per cent (10%) collection fee from any rentals
collected as well as any commission usually charged by the Holder for the
collection of rentals, miscellaneous costs and expenses (copies, service fees,
legal counsel fees and others, opening files, surveillance fees, execution fees
or fees for cancellation of lease) incurred as a result of such collection.
8. ADDITIONAL PROVISIONS TO THE HYPOTHEC ON CLAIMS (OTHER THAN RENTALS)
8.1 Authorization to Recover
Save and except for claims resulting from an expropriation, those referred
to in Section 9 hereof and save for any other claims for which collection is
otherwise dealt with pursuant to any agreement entered into with the Holder or
any other person, the Holder hereby authorizes the Grantor to recover all claims
and other Charged property referred to in paragraph 4.5. Such authorization may
be revoked at any time by the Holder by written notice with respect to all or
any part of the hypothecated claims, whereupon the Holder shall be free to
itself effect such recovery and to exercise any of the rights referred to in
paragraph 8.2 below; the Grantor shall then remit to the Holder all records,
books, invoices, bills, contracts, titles, papers and other documents related to
the claims. If, after such authorization is revoked (and even if such revocation
is not yet registered or delivered to the holders of such claims), sums payable
under such claims and property are paid to the Grantor, it shall receive same as
mandatary of the Holder and shall remit same to the Holder promptly without the
necessity of any demand to this effect.
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<PAGE>
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-- 8 --
8.2 Recovery
The Holder may recover all claims and other Charged property referred to in
paragraph 4.5 in accordance with what is provided for by law; it may further
exercise any rights regarding such Charged property and more particularly, it
may grant or refuse any consent which may be required from the Grantor in its
capacity as owner of such Charged property, and shall not, in the exercise of
such right, be required to obtain the consent of the Grantor or serve the
Grantor any notice thereof, nor shall it be under any obligation to establish
that the Grantor has refused or neglected to exercise such rights, and it may
further grant delays, take or abandon any security, make arrangements with
debtors of any hypothecated claims, make compromises, grant releases and
generally deal at its discretion with matters concerning all Charged property
referred to in paragraph 4.5 without the intervention or consent of the Grantor.
9. ADDITIONAL PROVISIONS TO THE HYPOTHEC ON SECURITIES
The Holder may, at any time after the occurrence of a Default, transfer any
securities or any part thereof into its own name or that of a third party
appointed by it so that the Holder or its nominee(s) may appear as the sole
registered holder, in which case:
9.1 Voting rights
All voting rights and any other right attached to such securities may be
exercised by the Holder (without any obligation of the Holder to do so) or on
behalf of the Holder.
9.2 Revenues, dividends and others
The Holder shall collect revenues, dividends and capital distributions and
the Grantor shall cease to have any right thereto and the Holder may either hold
same as Charged property or apply them in reduction of the Secured Obligations.
9.3 Physical possession of the certificates
The certificates representing the hypothecated securities may be kept in
the possession of the Holder or in the possession of its agent.
The Grantor hereby irrevocably appoints any officer or employee of the
Holder as its attorney with full power of substitution and authority to execute
such documents necessary to render effective the rights granted to the Holder
pursuant to this Section 9.
10. ASSIGNMENT OF CLAIMS SUBJECT TO THE FINANCIAL ADMINISTRATION ACT
The Grantor hereby assigns to the Holder by way of absolute assignment all
its present and future claims which are subject to Sections 67 and 68 of the
Financial Administration Act, as collateral and continuing security of all
Secured Obligations. The Holder may, at any time, fulfill any of the formalities
required by law to make such transfer enforceable, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally, from time to time in
effect.
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11. REPRESENTATIONS AND WARRANTIES
The Grantor hereby represents and warrants that:
11.1 Legal person
It is a legal person (corporation).
11.2 Head office
The registered office or domicile of the Grantor is located in the State of
Delaware, USA.
11.3 Incorporation
It is duly incorporated and in good standing under the law of its
jurisdiction of incorporation.
11.4 Powers
It has the capacity and the powers necessary to grant the Hypothec and to
bind itself as herein provided for; the execution of this Deed, the compliance
with its provisions and the performance of its covenants shall not entail or
result in any breach of or default under any other agreement or document to
which the Grantor is bound.
11.5 Authorization of this Deed
This Deed has been duly authorized by resolution or by any other necessary
action under its constating documents, by-laws or otherwise, in order to give it
full effect and to render its obligations fully enforceable, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally, from time to time
in effect.
11.6 Execution of this Deed
This Deed has been executed by duly authorized persons.
11.7 Business or firm names
It uses no business or firm name other than those referred to in Schedule
"B" hereof.
11.8 Titles of ownership and existing charges
It is the unconditional and absolute owner of the Charged property, except
for future property, and all such property is free and clear of any prior claim,
hypothec, charge, security or security interest, seizure by garnishment, right
of resolution or repossession or of any other right whatsoever existing in
favour of persons other than the Holder and other than any such right which
constitutes a Lien (as defined in the Credit Agreement) which is permitted in
accordance with paragraphs (a) and following of Section 7.01 of the Credit
Agreement.
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11.9 Shareholder Agreement
There exists no shareholders' agreement in connection with securities which
are charged under this agreement other than a declaration made by the Grantor on
April 9, 1997 pursuant to Section 99 of the Business Corporations Act (New
Brunswick) with respect to Sport Maska Inc. and #1 Apparel Canada Inc. There
exists no restriction in the articles or other constating documents of the
Grantor regarding the assignment or transfer of securities which are charged
hereunder other than the restrictions pertaining to a closed company (as such
term is defined in the Securities Act (Quebec)) and those declared in writing to
the Holder.
11.10 Location of Charged property
None of the Charged property referred to in paragraphs 4.4, 4.6, 4.7 and
4.10 hereinabove is currently located in Quebec.
11.11 Disposition of Charged property
Except for property referred to in paragraph 4.4 hereinabove, it does not,
in the ordinary course of its business, sell property similar to or of the same
nature as the Charged property.
11.12 Claims subject to the Financial Administration Act
It has no claim falling under Section 10 hereof, other than those indicated
in Schedule "B" hereof.
11.13 Claims secured by registered hypothec
It has no claim which is secured by registered hypothec other than those
indicated in Schedule "B" hereof.
11.14 [NOT USED]
11.15 Litigation
There are not any actions, suits or proceedings at law or by or before any
governmental instrumentality or other agency or other regulatory authority now
pending or, to the knowledge of any Responsible Officer (as defined in the
Credit Agreement) of the Grantor, threatened against or affecting the Grantor to
its businesses, assets or rights, as to which there is a reasonable likelihood
of an adverse determination and which, if adversely determined, would,
individually or in the aggregate, materially impair the ability of the Grantor
to conduct business substantially as now conducted, or result in a Material
Adverse Effect (as defined in the Credit Agreement).
Grantor is not in violation of any law, or in default with respect to any
judgment, writ, injunction, decree, rule or regulation of any court or
governmental agency or instrumentality where such violation or default would
result in a Material Adverse Effect.
11.16 Default
It is not in default under the present Deed.
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11.17 Intellectual Property
11.17.1 all registration, applications for registration, filings and
notices thereof in respect of the Collateral, including all relevant
renewals, have been duly and properly made, are in full force and
effect and are not subject to dispute by any governmental authority or
agency and all leases, licences and other agreements affecting any
right, title or interest of the Grantor in any of the Collateral
(collectively, the "Third Party Agreements") are in good standing;
11.17.2 none of the Collateral has been adjudged invalid or
unenforceable or has been cancelled, in whole or in part, and all such
Collateral is presently subsisting, valid, in good standing and
enforceable, with the exception of those, if any, set out in Schedule
B and identified as "pending applications", "cancelled/expunged
registrations", "abandoned applications" or "registrations no longer
in name of the Grantor";
11.17.3 the Grantor is the exclusive owner or in the case of licensed
Collateral, the sole and exclusive licensee, of the entire and
unencumbered right, title and interest in and to each of the
Collateral free and clear of any liens, charges and encumbrances
except for any such lien, charge or encumbrance which constitutes a
Lien which is permitted in accordance with paragraphs (a) and
following of Section 7.01 of the Credit Agreement;
11.17.4 the Collateral listed in Schedule B constitutes all of the
intellectual property rights now owned by the Grantor;
11.17.5 the Grantor has adopted, used continuously and currently is
using all of the Collateral; all licensees of the Collateral (or all
relevant portions thereof) from the Grantor as licensor have been
licensed properly to use such Collateral and the Grantor has retained
under license the direct or indirect control of the character or
quality of the goods or services in connection with which use of such
Collateral has been licensed by it; all use of such Collateral has
been proper both in form and in relation to the goods or services in
connection with which the Collateral is used by the Grantor or its
licensees; and proper ownership notices have been used by the Grantor
or its licensees; and
11.17.6 nothing contained in this Deed or the Credit Agreement,
including, without limitation, the granting of the Hypothec by the
Grantor in favour of the Holder, constitutes a breach under any Third
Party Agreement.
12. COVENANTS
The Grantor hereby covenants:
12.1 Information
To give notice in writing to the Holder:
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- of any change whatsoever in its name and business names or in the
representations and warranties hereinabove mentioned in Section 11;
- of the name of any surety (guarantor) which may have guaranteed the
payment of claims hypothecated hereby and other Charged property
mentioned in paragraph 4.5 hereof;
- of the name of the insurers to the insurance contracts referred to
herein;
- of the existence of any security, hypothec, prior claims or property
right retained or assigned securing claims and other Charged property
referred to in paragraph 4.5 hereof and, in such cases, to provide the
Holder, upon demand, with satisfactory proof that such security or
hypothec has been registered or published in accordance with
applicable law in order for the rights of the Holder to be set up
against third persons;
- of the existence and details of any new claim arising hereafter, which
claim, alone or together with any other claim falling under Section
10 hereof is material.
12.2 Additional Information
To provide the Holder with any information it may reasonably request with
respect to the Charged property or in order to determine whether or not the
Grantor is in compliance with its undertakings and obligations hereunder. The
Grantor shall inform the Holder of any event, occurrence, or fact which might
have a Material Adverse Effect.
12.3 [NOT USED]
12.4 Inspection
To enable the Holder to examine, inspect and appraise, at the Grantor's
expense, any Charged property, and to grant to the Holder access to all premises
where such property may be located, all in accordance with the terms established
in Section 6.08 of the Credit Agreement.
12.5 Preservation of the Hypothec
To perform all acts and execute all deeds and documents (including notices
of renewal) necessary to give full effect to the Hypothec and to ensure that it
is at all times fully opposable against third persons.
12.6 Compensation, Fees and Expenses
To pay to the Holder from time to time all out of pocket costs and expenses
relating to this Deed and to the exercise of all rights resulting in favour of
the Holder from such Deed as well as all out of pocket costs and expenses
incurred to set up the rights of the Holder against third persons, and all
discharge fees (such costs and expenses shall include all reasonable fees and
expenses of consultants, agents or counsels retained by the Holder); to
reimburse the Holder for all out of pocket costs and expenses incurred by it for
the purpose of carrying out the Grantor's obligations or of exercising its
rights, all such costs and expenses bearing interest at an annual rate equal to
the base rate of National Bank of Canada which shall be in force from time to
time, plus 3%; National Bank of Canada's base rate shall be the one advertised
as its rate of reference for
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determining the interest rate on commercial loans in Dollars granted in Canada;
the obligations arising from this paragraph shall not exceed twenty-five per
cent (25%) of the nominal value of the Hypothec; the repayment of such costs and
expenses shall be secured by the Hypothec.
12.7 Encumbrances and Title
Not to grant, at any time hereafter, any easement, right-of ways, servitude
or any other charges against the Charged property without having first obtained
the prior written consent of the Holder, (save for public easements granted for
utility purposes which do not affect materially unfavourably the Charged
property) and to maintain the Charged property free and clear of any
conventional or legal hypothec, prior claim under Articles 2650 et seq. of the
Civil Code of Quebec, charge, security, garnishment, right of resolution or
repossession or any other right in favour of a person or persons other than the
Holder and, in each case, other than in regard to a lien which is permitted in
accordance with paragraphs (a) and following of Section 7.01 of the Credit
Agreement; to preserve, warrant and defend its title against any claim, action
or contestation.
12.8 List of Property in Stock and Book Debts
To give the Holder, from time to time, upon demand, a statement of the
value of its Property in stock and a list of its book debts shown in the reverse
order of their due date in accordance with the Credit Agreement.
12.9 [NOT USED]
12.10 [NOT USED]
12.11 Lease and transfer
Not to lease, sell, assign or otherwise alienate the Charged property, in
whole or in part, without the prior written consent of the Holder, except for
property referred to in paragraph 4.4 above which may be leased or sold in the
ordinary course of business of the Grantor and except as expressly permitted in
the Credit Agreement.
12.12 Maintenance
The Grantor shall diligently pay the cost of any public utility services
and authorizes the Holder to obtain from the related authorities the amounts due
to this account and any information relating to payment of such charges.
12.13 [NOT USED]
12.14 Location of property
Not to change the location of the Charged property unless it obtains the
prior written consent of the Holder.
12.15 Title
To ensure that its right of ownership in any Charged property in the hands
or possession of any third party remains opposable against third parties and,
accordingly, that such right has been registered or published, if registration
or publication is required by law for the purpose of opposability against third
parties.
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12.16 Lessors
If any of the Charged property is located in premises leased pursuant to a
lease executed before January 1, 1994 (and where the registration of a legal
hypothec has been perfected) or if it were moved to premises leased as
aforesaid, to obtain a full cession of priority in favour of the rights of the
Holder under the present Hypothec and to immediately notify, following the
execution of the present Deed or immediately following the moving into the
leased premises, the lessor of such premises, in writing, of the present
Hypothec and to deliver to the Holder within three (3) days after such
notification proof of same.
12.17 [NOT USED]
12.18 Use and destination
Not to change the use or destination of the Charged property unless it
obtains the prior written consent of the Holder.
12.19 Value
To protect and use the Charged property and to carry on its business so as
to preserve its value.
12.20 Release of Collateral
The Hypothec shall not be discharged prior to the indefeasible payment in
full of all amounts owing hereunder and under the Credit Agreement and the
performance of all obligations of the Grantor hereunder and under the Credit
Agreement.
12.21 Intellectual Property
The Grantor shall:
12.21.1 use its trade-marks, trade-mark registrations, trade-mark
applications, trade names, business names, trade styles, logos,
service marks, and all other forms of business identifiers
(hereinafter the "Trade-marks") only on goods of at least as high
quality as the goods on which the Grantor or its predecessor used the
goods as of the date hereof and maintain the quality of any and all
products in connection with which the Trade-marks and other Collateral
is used, consistent with the quality of said products as of the date
hereof;
12.21.2 take or cause to be undertaken all steps necessary to protect
the Grantor's interest in and to maintain the Collateral in good
standing, including without limitation, to pursue diligently all
applications through to registration and to renew all registrations
and pay all maintenance fees as applicable, as well as attending to
the filing of all required documentation;
12.21.3 vigorously protect, preserve and maintain all of the Grantor's
right, title and interest in the Collateral, including, without
limitation, the prosecution and/or defence against any and all suits
concerning validity, infringement, enforceability, ownership or other
aspects affecting any of the Collateral (any expenses incurred in
protecting,
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preserving and maintaining any of the Collateral shall be borne by the
Grantor);
12.21.4 upon written request by the Holder, execute and deliver any
and all agreements, instruments, documents and papers as the Holder
may reasonably request to evidence the Holder's Hypothec in the
Collateral;
12.21.5 perform all covenants required under any Third Party Agreement
including, inter alia, promptly paying all required fees, royalties
and taxes to maintain each and every item of the Collateral in full
force and effect;
12.21.6 if at any time or from time to time, Grantor (i) becomes aware
of any Collateral of which the Grantor has not previously informed the
Holder, (ii) obtains rights to any new Collateral, or (iii) becomes
entitled to the benefit of any Collateral not identified in Schedule
B, then the Grantor shall promptly notify the Holder and regardless of
when the Grantor so notifies the Holder, Schedule B automatically
shall be modified and amended to include any such Collateral and the
provisions of this Deed automatically shall apply thereto;
12.21.7 maintain up to date records regarding the Collateral;
12.21.8 provide the Holder with a written report on each anniversary
of this Deed regarding the status of the Collateral;
12.21.9 not abandon any right to file a trade-mark application or
patent application, or abandon any pending trade-mark or patent
application, or abandon any of the Collateral or any suits involving
any of the Collateral, without the prior written consent of the
Holder, which consent of the Holder shall not be reasonably withheld;
and
12.21.10 not take any action, or permit any action to be taken by any
person or persons subject to its control, including licensees, or fail
to take any action, which would adversely affect the validity,
enforceability or transferability (to the Holder or otherwise) of all
or any of the Collateral, and ensure generally that the Collateral is
and remains valid, in good standing and enforceable.
13. EVENTS OF DEFAULT
The Grantor shall be in default hereunder without notice or other formality
and the security hereby constituted shall immediately become enforceable, if it
fails to pay any amount due or to become due under the Credit Agreement when due
and in any of the following events ("Default"):
13.1 [NOT USED]
13.2 [NOT USED]
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13.3 [NOT USED]
13.4 Cross default
An Event of Default (as defined in the Credit Agreement) occurs under the
Credit Agreement.
13.5 Charged property
If the Grantor fails at any time to maintain, preserve or protect all
property material to the conduct of its businesses and keep such property in
good repair, working order and condition (reasonable wear and tear excepted) or
fails from time to time to make, or cause to be made, all needful and proper
repairs, renewals, additions, improvements and replacements thereto which are
necessary in order that the business carried on in connection therewith may be
properly conducted in all material respects at all times.
13.6 Other agreements
The Grantor fails to pay any indebtedness or to perform any of the
Grantor's obligations required to be paid or performed under any other agreement
creating a charge against the Charged property.
13.7 Insolvency and bankruptcy
The Grantor ceases to carry on its enterprise or an important part thereof,
becomes insolvent or becomes subject to proceedings, makes an assignment or
files a notice to file a proposal under any law relating to insolvency,
bankruptcy, reorganization or to arrangements with creditors or any petition in
bankruptcy is taken against the Grantor.
13.8 [NOT USED]
13.9 [NOT USED]
13.10 Hypothecary rights
Any of the Charged property is subject to a hypothecary right from another
creditor, a partition procedure, a "sale of an enterprise" as it is understood
under sections 1767 and ssq. of the Civil Code of Quebec or an expropriation,
except to the extent or under circumstances permitted in accordance with the
Credit Agreement.
14. HOLDER'S RECOURSES IN CASE OF DEFAULT
14.1 Payment of Indebtedness
In case the Hypothec shall have become enforceable, on account of one or
the other of the events mentioned in Section 13 or paragraph 13.1 through 13.10
above, the Holder may, in its discretion, at any time or times, demand payment
of all or any part of the Secured Obligations and the same shall forthwith
become immediately due and payable to the Holder. Any payment then made by the
Grantor shall be deemed to have been made in discharge of its obligations
hereunder or under the Credit Agreement, and
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any money so received by the Holder shall be applied as provided for in
paragraphs 14.13 and 15.4 hereof.
14.2 Exercise of rights
In case the Hypothec shall have become enforceable and the Grantor shall
have failed to pay the Holder, on demand, the outstanding amount due under the
Credit Agreement together with any other amounts secured hereunder, the Holder
may in its discretion through its officers, agents or attorneys, exercise any
right of action provided for under this Deed (and more particularly under this
Section 14) or by law or in equity including without limitation any of the
hypothecary rights provided for under sections 2748 to 2794 of the Civil Code of
Quebec and any rights or remedies provided to secured parties under any
applicable personal property security legislation.
14.3 Rights of the Holder
Whatever hypothecary rights the Holder elects to exercise or whatever
rights or recourses the Holder elects to exercise either pursuant to the law of
any other jurisdiction or in equity, the following provisions shall apply:
14.3.1 the Holder may, in its discretion, at the Grantor's expense:
14.3.1.1 pursue the transformation of the Charged property or any
work in process or unfinished goods comprised in the Charged
property and complete the manufacture or processing thereof
or proceed with any operations to which such property is
submitted by the Grantor in the ordinary course of its
business and acquire property for such purposes;
14.3.1.2 alienate or dispose of any Charged property which may be
obsolete, may perish or is likely to depreciate rapidly;
14.3.1.3 use for its benefit all information obtained while
exercising its rights;
14.3.1.4 perform any of the Grantor's obligations or covenants
hereunder;
14.3.1.5 exercise any right attached to the Charged property on such
conditions and in such manner as it may determine, acting
reasonably, including without restriction the grant of
licences whether general or special on an exclusive or non
exclusive basis, of any intellectual property charged
hereunder;
14.3.1.6 for the exercise of any of its rights, utilize without
charge the Grantor's plant, equipment, machinery, process,
informations, records, computer programs and intellectual
property; for the purposes hereof the Grantor shall, at the
request of the Holder, concurrently with or after the
execution of these presents execute a power of attorney with
respect to intellectual property (in conformity with Section
15.9 hereof) in favour of the Holder;
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14.3.1.7 borrow monies or lend monies and, in such cases, the monies
borrowed or lent by the Holder shall bear interest at the
rate then obtained or charged by the Holder for such
borrowing or loan; these monies shall be reimbursed by the
Grantor on demand and, until they have been repaid in full,
such monies and interest thereon shall be secured by the
present Hypothec and be paid in priority of any other sums
secured hereunder;
14.3.1.8 maintain or repair, restore or renovate, begin or complete
any construction work on or related to the Charged property;
14.3.2 the Holder shall exercise its rights in good faith in order
to attempt to reduce the Secured Obligations, in a
reasonable manner, taking into account all circumstances;
14.3.3 the Holder may, directly or indirectly, purchase or
otherwise acquire the Charged property;
14.3.4 the Holder, when exercising its rights, may waive any right
of the Grantor, with or without consideration therefor;
14.3.5 the Holder shall have no obligation to make an inventory of
the Charged property, to take out any kind of insurance with
respect thereof or to grant any security whatsoever;
14.3.6 the Holder shall not be bound to continue to carry on the
Grantor's enterprise or to make any productive use of the
Charged property or to maintain such property in operating
condition;
14.3.7 the Grantor shall, upon request of the Holder, move the
Charged property and render it available to the Holder unto
premises designated by the Holder and which, in its opinion,
shall be more suitable in the circumstances.
14.4 Grantor's remedy
If the Grantor remedies the default mentioned in any prior notice of
exercise of hypothecary right, the Grantor shall, as required by law, pay all
reasonable fees incurred by the Holder by reason of the default; these fees
shall include without limitation the administrative fees of the Holder, the
legal fees of its legal advisers and fees paid to experts.
14.5 Taking in payment
If the Holder elects to exercise its right to take in payment the Charged
property and the Grantor requires that the Holder instead sell by itself or
under judicial authority, the Charged property on which such right is exercised,
the Grantor hereby acknowledges that the Holder shall not be bound to abandon
its recourse of taking in payment unless, prior to the expiry of the time period
allocated for surrender, the Holder (i) has been granted a security satisfactory
to it, to ensure that the proceeds of the sale of the Charged property will be
sufficient to pay the Secured Obligations in full, (ii) has been reimbursed for
all reasonable costs and expenses incurred in connection to this Deed, including
all fees of consultants and legal counsel and (iii) has been advanced the
necessary sums for the sale of said Charged property; the Grantor further
acknowledges that the Holder alone is entitled to select the type of sale it may
wish to conduct or have conducted.
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14.6 Surrender of Charged property
The Grantor will be deemed to have surrendered the Charged property which
is in the possession of the Holder, or of a third party on its behalf, if the
Holder has not, within the delays determined by law or by a tribunal to
surrender, received written notice from the Grantor to the effect that it
intends to contest the exercise of the hypothecary recourse set forth in the
prior notice.
14.7 Evaluation
Where the Holder sells the Charged property itself, it shall not be
required to obtain any prior evaluation by a third party.
14.8 Sale of Charged property
The Holder may elect to sell the Charged property after giving such prior
notices as may be required by law, in which event (i) the sale may be made with
legal warranty given by the Grantor or with complete or partial exclusion of
such warranty; (ii) the sale may be made cash or with a term or under such
reasonable conditions determined by the Holder; and (iii) upon failure of
payment of the purchase price, the Holder may resiliate or resolve such sale and
such Charged property may then be resold.
14.9 Use of premises
In order to exercise any of its rights, the Holder may use the premises
located in the Immoveables.
14.10 Several Administrators
Where several administrators are involved, the parties hereto waive the
applications of sections 1332 to 1338 inclusively of the Civil Code of Quebec.
14.11 Appointment of Agent
The Holder may appoint an agent or a receiver and manager (collectively a
"Receiver") over all or any portion of the Charged property by written
instrument in accordance with Section 14.12 or may apply to a court for the
appointment of a Receiver to take possession of all or such part of the Charged
property as the Holder shall designate, with such duties, powers and obligations
as the court making the appointment shall confer, and the Grantor hereby
irrevocably consents to the appointment of such Receiver.
14.12 Appointment of Receiver
The Holder may with or without taking possession, by instrument executed by
the Holder, appoint a Receiver of all or any part of the Charged property and of
the rents, income and profits therefrom and may from time to time by similar
instrument remove any Receiver and appoint another in its place and upon the
appointment of any such Receiver or Receivers from time to time the following
provisions shall apply:
14.12.1 every such Receiver shall be vested with all of the rights, powers,
remedies and discretions of the Holder set forth in Section 14.3.1.1 to
14.3.1.8, inclusively, including, without limitation, the power to sell, for
cash or credit or part cash and part credit, lease
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or dispose of all or any part of the Charged property, whether by public
auction or by private sale or lease in such manner and on such terms as it
may determine in its absolute discretion acting reasonably and to do all
acts, exercise all discretions and make all determinations of the Holder
described therein;
14.12.2 every such Receiver shall have the power to borrow money on the
security of the Charged property in priority to the security created by
this Deed for the purpose of the preservation, maintenance, completion or
protection of the Charged property or any part thereof or for making any
replacements thereof or improvements and additions thereto or for carrying
on all or any part of the business of the Grantor relating to the Charged
property, and in so doing the Receiver may issue certificates designated as
"Receiver's Certificates" which may be payable either to order or to bearer
and may be payable at such time or times as the Receiver may think
expedient and shall bear interest at such rates of interest as the Receiver
may consider reasonable, and the amounts from time to time payable pursuant
to such Receiver's Certificates shall form a charge upon the Charged
property in priority to the security created by this Deed;
14.12.3 the Holder may from time to time fix the remuneration of every such
Receiver who shall be entitled to deduct the same out of the receipts
derived from or comprising part of the Charged property or the proceeds
thereof;
14.12.4 every such Receiver shall be deemed to be an agent of the Grantor
and not of the Holder for the purposes of:
(i) carrying on and managing the business and affairs of the Grantor,
and
(ii) establishing liability for all of the acts or omissions of the
Receiver while acting as such and the Holder shall not be in any
way responsible for any acts or omissions on the part of any such
Receiver, its officers, employees and agents,
the Grantor hereby irrevocably authorizing the Holder to give
instructions to the Receiver relating to the performance of its powers
and discretions as set out herein;
14.12.5 the appointment of every such Receiver by the Holder or
anything which may be done by any such Receiver or the removal of any
such Receiver or the termination of any such receivership shall not
have the effect of constituting the Holder a mortgagee in possession
in respect of the Charged property or any part thereof;
14.12.6 no such Receiver shall be liable to the Grantor to account for
moneys other than moneys actually received by such Receiver in respect
of the Charged property and every such Receiver shall apply such
moneys so received in the manner provided in Section 14.3; and
14.12.7 the Holder may at any time and from time to time terminate any
such receivership by notice in writing executed by the Holder to any
such Receiver;
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<PAGE>
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-- 21 --
14.13 Imputation of payments
Except as herein otherwise expressly provided, to the greatest extent
permitted by applicable law, all monies arising from any sale or realization of
the Charged property, in whole or in part, whether under any sale by the Holder
or by judicial process or otherwise, shall be applied, together with any other
monies then in the hands of the Holder and available for such purpose, in the
first place to pay or reimburse the Holder's fees, charges, expenses, borrowing,
advances and all other moneys provided or obtained by it or at its request in or
about the execution of its powers and rights with respect to these presents,
with interest thereon as herein provided, and the residue of the said moneys
shall be applied on account of Secured Obligations or, at the option of the
Holder, may be held unappropriated in a collateral account in order to provide
for payment of any charge ranking prior to the Hypothec.
The Grantor shall only be credited with amounts received by the Holder in
cash from the possession, sale, lease or other disposition of, or realization
upon, the Charged property as and when such cash is received.
14.14 Liability of Grantor
The Grantor shall remain liable to the Holder for any deficiency remaining
after the application of the proceeds of any sale, lease or disposition of the
Charged property by the Holder.
15. GENERAL PROVISIONS
15.1 Additional Security
The Hypothec created hereby is in addition to and not in substitution of or
in replacement for any other hypothec or security held by the Holder and shall
not impair the Holder's rights of compensation and set-off.
15.2 Investments
The Holder may, at its entire discretion, invest any monies or instruments
received or held by it pursuant of this Deed or deposit same in a non-interest
bearing account without having to comply with any legal provisions concerning
the investment of property of others.
15.3 Set-off
Provided the Secured Obligations are due and exigible or that the Holder is
entitled to declare them owing and exigible, the Holder may compensate and
set-off any Secured Obligations with any and all amounts then owed to the
Grantor by the Holder in any capacity, whether due or not, and the Holder shall
then be deemed to have exercised such right to compensate and set-off as at the
time the decision was taken by it even though the entry therefor is made on the
Holder's record subsequent thereto.
15.4 Imputation of Payments
The Holder shall be at liberty to impute any amounts collected in the
exercise of its rights prior to or after any Default as it may choose without
having to comply with any provisions of the Civil Code of Quebec concerning the
imputation of payments.
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<PAGE>
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-- 22 --
15.5 Delays
The Holder may grant delays, take any security or renounce thereto, accept
compromises, grant quittances and releases and generally deal, with any matters
related to the Charged property, the whole without limiting the rights of the
Holder and without reducing the liability of the Grantor.
15.6 Continuing Security
The Hypothec shall be a continuing security and shall remain in full force
and effect despite the repayment from time to time, of the whole or of any part
of the Secured Obligations; it shall remain in full force until the execution of
a final release by the Holder.
15.7 Time of Essence
The mere lapse of time provided for the Grantor to perform its obligations
or the expiry of any term therefor shall automatically create a default
hereunder, without the Holder being obliged to serve any notice or prior notice
upon the Grantor.
15.8 Cumulative Rights
The rights and recourses of the Holder hereunder are cumulative and do not
exclude any other rights and recourses which the Holder might have. No omission
or delay on the part of the Holder in the exercise of any right shall have the
effect of operating as a waiver of such right. The partial or sole exercise of a
right or power will not prevent the Holder from exercising thereafter any other
right or power. The Holder may exercise its right hereunder without any
obligation to exercise any right against any other person liable for payment of
the Secured Obligations and without having to enforce any other security granted
with respect to the Secured Obligations.
15.9 Irrevocable power of attorney
The Holder is hereby designated as the irrevocable attorney of the Grantor
with full powers of substitution for the purposes hereof or for the purpose of
carrying out any and all acts and executing any and all deeds, proxies or other
documents which the Holder may deem useful in order to exercise its rights or
which the Grantor neglects or refuses to execute or to carry out, provided
however that, if a Default has not occurred and is not continuing, the Grantor
shall have been requested by the Holder to do so by a three (3) Business Days
prior written notice.
15.10 Performance
The Holder may, at its entire discretion, perform any of the Grantor's
liabilities under this Deed. It may then immediately request payment of any
expense incurred in doing so, including interest at the rate provided for in
paragraph 12.6 above, and such repayment is secured by the Hypothec.
15.11 Delegation
The Holder may, at its entire discretion, appoint any person or persons for
the purpose of exercising any of its rights, actions or the performance of any
covenant resulting from this Deed or law or equity; in such case, the Holder may
supply such person with any information it holds relating to the Grantor or to
the Charged property.
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<PAGE>
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-- 23 --
15.12 Title deeds
All titles of ownership, land surveys, certificates of location and other
documents related to the Immoveables shall upon request be remitted to the
Holder who is entitled to keep them until a final release and discharge of this
Hypothec is obtained.
15.13 Waiver
Where the Grantor has taken an Immoveable in payment for an hypothecated
claim ranking prior to the present Hypothec, the Grantor waives its right to
take advantage of the provisions of section 2771 of the Civil Code of Quebec.
15.14 Liability
The Holder shall not be liable for material injuries or damages resulting
from its fault, or the fault of its agents, officers, consultants, unless such
fault is gross or intentional.
15.15 Successors and Assigns
The rights hereby conferred upon the Holder shall benefit all its
successors, nominees and assigns including any entity resulting from the merger
of the Holder with any other person or persons. The Holder may assign, transfer
and deliver to any transferee any or all of the Secured Obligations or any
security or any documents or instruments held by the Holder in respect thereof,
including, without limitation, the Credit Agreement, provided that no such
assignment, transfer or delivery shall release the Grantor from any of the
Secured Obligations. Such transferee shall be vested with all powers and rights
of the Holder under such security, documents or instruments to the extent of any
such assignment, transfer or delivery but the Holder shall retain all rights and
powers with respect to any such security documents or instruments not so
assigned, transferred or delivered.
15.16 Notices
Any notice to the Grantor shall be delivered to its address set out above
or to any other address in Canada of which the Holder has been given written
notice; any notice to the Holder shall be delivered to the Holder's branch
located at the address set out above.
15.17 Receipt of Notice
A notice given hereunder shall be deemed to have been received by the other
party on the date of its delivery, when delivered on a Business Day, or on the
third (3rd) Business Day after it has been mailed, if sent prepaid by certified
or registered mail, or the day of its transmission, if transmitted by facsimile
on or before 3:00 p.m. on a Business Day or on the Business Day next following
the day of transmission if transmitted by facsimile after 3:00 p.m.
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<PAGE>
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-- 24 --
15.18 Severability
Every provision of this Deed is and shall be independent of the other and
in the event that any part of this Deed is declared invalid, illegal or
unenforceable, then the remaining terms, clauses and provisions of this Deed
shall not be affected by such declaration and all the remaining clauses of this
Deed shall remain valid, binding and enforceable.
16. [NOT USED]
17. GOVERNING LAW
This Deed shall be governed by and construed in accordance with the laws of
the Province of Quebec, including the rules relating to conflicts of laws
provided for thereunder.
18. AMENDMENTS
No amendment may be made to this Deed unless signed by the Grantor and the
Holder.
19. FORMAL DATE
This Deed may be referred to as bearing formal date of the first (1st) day
of April, Nineteen hundred and ninety-seven (1997), notwithstanding the actual
date of its execution.
20. ENGLISH LANGUAGE
The parties hereto confirm that the present agreement has been drawn up in
the English language at their request. Les parties aux presentes confirment que
la presente convention a ete redigee en langue anglaise a leur demande.
21. INCONSISTENCIES
This Deed is executed pursuant to the Credit Agreement and is subject to
the terms thereof. In the event of any contradiction between the terms hereof
and the comparable terms of the Credit Agreement, the terms of the Credit
Agreement shall prevail.
WHEREOF ACTE:
DONE and PASSED at the City of Montreal, Province of Quebec, on the date
aforesaid, and remains of record in the office of the undersigned Notary under
his minute number Five Thousand Seven Hundred and Ninety - One(5791).
---------------------------------------------------------
AND after the parties had declared to have taken cognizance of these presents
and to have exempted the said Notary from reading them or causing them to be
read, the said duly
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<PAGE>
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-- 25 --
authorized officers of the Grantor and the Holder respectively have signed these
presents, all in the presence of the said Notary who has also signed.
SLM INTERNATIONAL, INC.
per:/s/D. Bruce Randall
---------------------------------
THE CHASE MANHATTAN BANK
per:/s/illegdable
---------------------------------
/s/Richard Trudeau
---------------------------------
Mtre Richard Trudeau, Notary
TRUE COPY OF THIS
ORIGINAL WHICH
REMAIMS IN MY OFFICE
/s/Richard Trudeau
================================================================================
<PAGE>
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SCHEDULE "A"
[NOT USED]
================================================================================
<PAGE>
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SCHEDULE "B"
B.1 Securities (par. 4.6)
Mitchel and King Skates Ltd.
Sport Maska Inc.
Maska U.S., Inc.
#1 Apparel, Inc.
#1 Apparel Canada Inc.
SLM Trademark Acquisition Corp.
B.2 Trade-Marks and Other Intellectual Property (par. 4.8)
None.
B.3 Business or Firm names (par. 11.7)
SLM
/S/ SLM /S/ DBR
B.4 [NOT USED]
B.5 Claims subject to the Financial Administration Act (par 11.12)
None.
B.6 Claims Secured by registered hypothecs (par. 11.13)
None.
***** ***** *****
The foregoing is Schedule "B" annexed to the Deed of hypothec granted by SLM
International, Inc. in favour of The Chase Manhattan Bank dated as of the first
(1st) day of April, Nineteen hundred and ninety-seven (1997) and recognized as
true and signed by the representatives therein mentioned.
/s/ illegible
--------------------------------------
/s/D. Bruce Randall
--------------------------------------
/s/ illegible
--------------------------------------
--------------------------------------
================================================================================
TRUE COPY
/s/ illegible
SPORT MASKA INC.
(Continued under the laws of the Province of New Brunswick)
DEBENTURE $50,000,000 U.S.
A. PROMISE TO PAY
1. SPORT MASKA INC. (the "Company") for value received hereby agrees with THE
CHASE MANHATTAN BANK OF CANADA from time to time (the "Secured Party") that it
will, subject to the provisions of that certain Delivery Agreement made in
favour of the Secured Party by the Company of even date herewith (the "Delivery
Agreement") on demand pay to the Secured Party the principal sum of FIFTY
MILLION UNITED STATES DOLLARS ($50,000,000 U.S.). The Company will also, subject
to the provisions of the Delivery Agreement, pay to the Secured Party, as and
when demanded, interest on the said principal sum. The Company will pay such
interest at the rate of 25% per annum calculated and payable monthly not in
advance, both before and after demand and before and after default, judgment and
execution from the date hereof until payment in full of all amounts owing
hereunder.
B. GRANT OF MORTGAGES, CHARGES AND SECURITY INTERESTS
2. As security for payment of the principal and interest and all other
indebtedness and liability from time to time payable hereunder, the Company
hereby:
(a) mortgages and charges (subject to the exceptions as to leaseholds
hereinafter contained) as and by way of a fixed and specific mortgage and charge
to and in favour of the Secured Party, and grants to the Secured Party a
security interest in, all real and immovable property (including, by way of
sublease, leasehold lands) now or hereafter owned or acquired by the Company
and all buildings, erections, improvements, fixtures and plant now or hereafter
owned or acquired by the Company (whether the same form part of the realty or
not) and all appurtenances to any of the foregoing including without limiting
the generality of the foregoing the property described in Appendix "A" hereto
(collectively, the "Lands"); "real and immovable
<PAGE>
2.
property" shall include any interest in or right with respect to real and
immovable property;
(b) mortgages and charges to the Secured Party as and by way of a fixed and
specific mortgage and charge, and grants to the Secured Party a security
interest in all present and future:
(i) all income, revenues and profits derived from any tenancy, use or
occupation of the Lands and all rents and other sums payable to the
Company pursuant to the terms of any leases, licences, subleases,
agreements to lease, license or sublease, or rights to occupy the
Lands (each a "lease");
(ii) benefits, advantages and powers to be derived from such leases,
with full power and authority to demand, sue for, recover, receive and
give receipts for all rents and other moneys payable thereunder and
otherwise to enforce the rights of the landlord thereunder on behalf
of and in the name of the Company; and
(iii) benefit of all guarantees and indemnities with respect to any
leases and the performance of any obligations of any tenant
thereunder;
(c) mortgages and charges to the Secured Party as and by way of a fixed and
specific mortgage and charge, and grants to the Secured Party a security
interest in, all its present and future equipment, including, without limiting
the generality of the foregoing, all fixtures, plant, machinery, tools and
furniture now or hereafter owned or acquired and any equipment specifically
listed or otherwise described in Appendix "B" hereto;
(d) mortgages and charges to the Secured Party, and grants to the Secured
Party a security interest in, all its present and future inventory, including,
without limiting the generality of the foregoing, all raw materials, goods in
process, finished goods and packaging material and goods acquired or held for
sale or furnished or to be furnished under contracts of rental or service;
(e) mortgages and charges to the Secured Party, and grants to the Secured
Party a security interest in, all its other goods and tangible personal
property;
(f) mortgages and charges to the Secured Party, and grants to the Secured
Party a security interest in all its present and future intangibles, including,
without limiting the generality of the foregoing, all its present and future
book debts, accounts and other amounts receivable, contract rights and chooses
in action of every kind or nature including insurance rights arising from or out
of the assets referred to in subparagraphs (a), (b), (c), (d) or (e) hereof,
goodwill, chattel paper, instruments of title, negotiable documents of title,
investments, money and securities and all
<PAGE>
3.
dividends, income or other distributions, whether paid or distributed in cash,
securities or other property, in respect of any of the property described in
this section 2;
(g) charges in favour of the Secured Party as and by way of a floating
charge, and grants to the Secured Party a security interest in, its business and
undertaking and all its property and assets, real and personal, moveable or
immovable, of whatsoever nature and kind, both present and future (other than
property and assets hereby validly assigned or subjected to a specific mortgage,
charge or security interest by subparagraphs (a), (b), (c), (d), (e) or (f)
hereof and the exceptions hereinafter contained); and
(h) mortgages and charges in favour of the Secured Party and grants to the
Secured Party a security interest in the proceeds arising from any of the assets
referred to in this paragraph 2;
all of which present and future property and assets of the Company referred to
in subparagraphs 2 (a), (b), (c), (d), (e), (f), (g) and (h) hereof are
hereinafter collectively called the "Charged Assets". All rights of the Secured
Party hereunder, the security, and all obligations of the Company hereunder,
shall be absolute and unconditional irrespective of (i) any lack of validity or
enforceability of any loan document including the credit agreement dated as of
April 1, 1997 between Sport Maska Inc. (the "Borrower") and the Secured Party
(which, as amended, supplemented or restated from time to time is herein called
the "Credit Agreement") any other agreement with respect to the indebtedness and
liability secured hereby or any other agreement or instrument relating to the
foregoing, (ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the indebtedness and liability under the Credit
Agreement or any indebtedness or liability secured hereby or any other amendment
or waiver of or consent to any departure from any guarantee, any loan document,
including the Credit Agreement, or any other agreement or instrument, (iii) any
exchange, release or nonperfection of any Charged Asset or any release or
amendment or waiver of or consent to or departure from any guarantee for all or
any of the indebtedness and liability under the Credit Agreement or any
indebtedness or liability secured hereby, or (iv) any other circumstance which
might otherwise constitute a defence available to, or discharge of, the Company,
any guarantor or any other obligor in respect of the indebtedness and liability,
secured by or in respect of this debenture.
C. LOCATION OF CHARGED ASSETS
3. The Company hereby represents and warrants to the Secured Party that:
<PAGE>
4.
(a) its chief executive office is presently at:
7405 TransCanada Highway
Suite 300
St.-Laurent, Quebec
H4T 1Z2;
(b) all of its ledgers, books of account and other financial records are
presently at the location set out in subparagraph 3(a) and at:
6375 Picard Street
St.-Hyacinthe, Quebec
J2S 1H3;
(c) the Charged Assets (other than the assets described in subparagraph
3(b)) are presently at the locations set out in subparagraphs 3(a) and
(b) and in Appendix "C" hereto.
4. The Charged Assets now situate in the Provinces of Ontario and Quebec are on
the date hereof primarily situate or located at the location(s) set out in
paragraph 3 hereof but may from time to time be located at other premises of the
Company in Ontario or Quebec. The tangible personal property constituting the
Charged Assets may also be located at other places in Ontario or Quebec while in
transit to and from such locations and premises and may, from time to time, be
situate or located at any other place in Ontario or Quebec when on lease or
consignment to any lessee or consignee from the Company.
D. LIMITED EXCEPTIONS TO GRANT OF CHARGE
5. The last day of any term reserved by any lease or sublease, oral or written,
or any agreement therefor, now held or hereafter acquired by the Company, and
whether falling within the general or particular description of the Charged
Assets, is hereby and shall be excepted out of the mortgage, charge and security
interest hereby or by any other instrument created, but the Company shall stand
possessed of the reversion of one day remaining in the Company in respect of any
such term, for the time being demised, as aforesaid, upon trust to assign and
dispose of the same as any purchaser of such term shall direct.
E. AGREEMENTS OF THE COMPANY
6. The Company and the Secured Party covenant and agree that:
<PAGE>
5.
(a) they have not agreed to postpone the time for attachment of the
security interests granted hereby with respect to the Charged Assets presently
existing and that such security interests shall attach to the Charged Assets
acquired after the date hereof as soon as the Company has rights in such assets;
(b) in accordance with subsection 7(3) of the Land Registration Reform Act
(Ontario), the covenants deemed to be included in a charge by subsection 7(1) of
such Act are expressly excluded from this debenture; and
(c) subject to paragraph 29 hereof, the Company shall not at any time
hereafter make any claim to the Charged Assets, challenge the Secured Party's
rights thereto or make any demands upon the Secured Party with respect to the
Charged Assets and that the Secured Party shall from this time forward be
exonerated and discharged of and from all claims and demands which the Company
might or could have against the Secured Party with respect to the Charged
Assets.
7. The Company represents and warrants to the Secured Party that:
(a) the Company is the sole registered, legal and beneficial owner of an
estate in fee simple in the Lands described in Appendix "A" hereto with good and
marketable title thereto, and the Company is the sole legal and beneficial owner
of the remainder of the Charged Assets, free of encumbrances or other right
whatsoever except for the liens permitted under the Credit Agreement or
otherwise approved by the Secured Party in writing ("Permitted Encumbrances");
(b) the Company is the sole owner of the Charged Assets (except for future
property);
(c) the Company is duly incorporated and in good standing under the laws of
its jurisdiction of incorporation;
(d) neither the execution of this debenture nor the performance by the
Company of its obligations hereunder will result in any breach of or default
under any law or any other agreement or document to which the Company is a party
or by which it may be bound; and
(e) the Company has the right, power and lawful authority to charge and
mortgage to the Secured Party, and otherwise grant security interests in all of
its right, title and interest in and to, the Charged Assets as provided for in
this debenture and this debenture constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting creditors' rights and the discretion
exercisable by Courts of competent jurisdiction in respect of the availability
of equitable remedies.
<PAGE>
6.
8. The Company agrees with the Secured Party that until all indebtedness and
liability owing by the Company to the Secured Party are paid in full:
(a) it will not, without the prior written consent of the Secured Party:
(i) incur, create, assume or permit to exist any further or
additional indebtedness except as permitted under the terms of
the Credit Agreement;
(ii) create, assume or permit to exist any liens upon, assign,
transfer, mortgage, charge, pledge, hypothecate or otherwise
grant security over or a security interest in any of the Charged
Assets except to the Secured Party and except Permitted
Encumbrances;
(iii) sell, transfer, assign, or otherwise dispose of any of the
Charged Assets or any group of property and assets forming part
of the Charged Assets except for a sale of inventory in the
ordinary course of business and such other sales as permitted
under the Credit Agreement;
(iv) merge or amalgamate with any other corporation except as
permitted under the Credit Agreement;
(v) change the location of its chief executive office, place of
business or principal place of residence without providing the
Secured Party with fifteen days' prior written notice;
(vi) take any action (or not take any action) which would result in a
default hereunder or an Event of Default under the Credit
Agreement;
(vii) remove the Charged Assets from the locations referred to in
paragraph 3 hereof unless such removal is a permitted sale of the
Charged Assets or keep the Charged Assets at a location other
than the locations referred to in paragraph 3 hereof provided
that the Company may also remove Charged Assets to another
location upon the condition that it provide the Secured Party
with at least 14 days prior written notice of its intention to do
so and provides to the Secured Party prior to such removal an
agreement from any lessor of such location as provided in
subparagraph 9(1) hereof; or
(viii) change its name without giving prior written notice to the
Secured Party of the new name and the date upon which such change
of name will take effect; and
(b) it will:
<PAGE>
7.
(i) hold the proceeds received from any direct or indirect dealing
with the Charged Assets in trust for the Secured Party after
either the occurrence of a default under the Credit Agreement or
the security constituted by this debenture becoming enforceable
or any of the Charged Assets are sold other than in the ordinary
course of business of the Company and for the purpose of carrying
on such business save and except as otherwise permitted by the
Credit Agreement, and forthwith remit such proceeds to the
Secured Party;
(ii) strictly comply with every covenant and undertaking heretofore or
hereafter given by it to the Secured Party and take any action
that may be necessary to enable any Borrower under the Credit
Agreement to comply with its Obligations thereunder;
(iii) permit the Secured Party at any time and from time to time, when
the security granted pursuant to this debenture shall have become
enforceable, to require any account debtor of the Company to make
payment to the Secured Party of any or all amounts owing by the
account debtor to the Company and the Secured Party may take
control of any proceeds referred to in subparagraph 2(h) hereof
and may hold all such amounts received from any account debtor
and any such proceeds as cash collateral as part of the Charged
Assets and as security for the indebtedness and liability secured
by this debenture;
(iv) deliver to the Secured Party promptly upon request, any documents
of title, instruments, securities and chattel paper constituting,
representing or relating to the Charged Assets and all statements
of account, bills, invoices and books of account relating to
accounts and all records, ledgers, reports, correspondence,
schedules, documents, statements, lists and other writings
relating to the Charged Assets for the purpose of inspecting,
auditing or copying same;
(v) at the Secured Party's request, cause all securities which
constitute Charged Assets to be registered in the name of the
Secured Party or its nominee and the Company hereby authorizes
the Secured Party to transfer such securities into the name of
the Secured Party or its nominee so that the Secured Party or its
nominee may appear as the sole owner of record of such
securities; the Company shall, at
<PAGE>
8.
the request of the Secured Party, deliver to the Secured Party
appropriate powers of attorney for transfer in blank, duly
executed and with signatures guaranteed, in respect of such
securities;
(vi) immediately upon becoming aware thereof, notify the Secured Party
of any loss or destruction of, or substantial damage to, any
material portion of the Collateral (as defined in the Credit
Agreement), and any other matters materially affecting the value,
enforceability or collectibility of any of such Collateral;
(vii) promptly notify the Secured Party of the acquisition by it of
receivables or other amounts owing to it from persons located in
any jurisdiction other than Ontario or Quebec;
(viii) conduct a physical count of its inventory as provided in the
Credit Agreement.
9. The Company agrees with the Secured Party that:
(a) it will at all times fully perform and comply with all obligations
imposed on, assumed by or agreed to by it pursuant to any prior encumbrance of
the Lands or any part thereof or its interest therein, that it will pay all
rents and perform all obligations under the leases charged by this debenture and
that, if the Company shall fail so to do, the Secured Party may (but shall not
be obliged to) take any action the Secured Party deems necessary or desirable
acting reasonably to cure any default by the Company in the performance of or
compliance with any of the Company's obligations hereunder, under any lease or
imposed upon, assumed by or agreed to by the Company pursuant to any such prior
encumbrance;
(b) upon receipt by the Secured Party in regard to any such prior
encumbrance or any lease of any written notice of default by the Company, the
Secured Party may rely thereon and take any action as aforesaid, acting
reasonably, to cure such default even though the existence of such default or
the nature thereof may be questioned or denied by the Company or by any party on
behalf of the Company;
(c) at its option, the Secured Party may discharge past due taxes, liens,
security interests or other encumbrances (other than Permitted Encumbrances
which are not in default) at any time levied or placed on the Charged Assets and
may pay for the maintenance and preservation of the Charged Assets to the extent
the Company fails to do so, provided, however, that the Secured Party shall not
discharge such taxes, liens, security interests or other encumbrances or pay for
such maintenance or preservation prior to the occurrence and continuance of an
Event of Default under the Credit Agreement unless the Secured Party shall have
requested the Company to
<PAGE>
9.
discharge such taxes, liens, security interests or other encumbrances or pay
such amounts (to the extent required by the Credit Agreement) and the Company
shall have failed or refused to do so within such period of time as shall have
been specified by the Secured Party in such notice; provided that nothing in
this debenture shall excuse the Company from the performance of any covenants or
other promises with respect to taxes, liens, security interests, hypothecs,
mortgages, prior claims or other encumbrances and maintenances;
(d) the Company hereby expressly grants to the Secured Party, and agrees
that the Secured Party shall have the absolute and immediate right to enter in
and upon the Lands or any part thereof to such extent and as often as the
Secured Party, in its sole discretion, acting reasonably, deems necessary or
desirable, in order to cure any such default by the Company;
(e) the Secured Party may pay and expend such sums of money as the Secured
Party in its sole discretion, acting reasonably, deems necessary for any purpose
provided for in subparagraphs 9(a), (b), (c) and (d), and the Company hereby
agrees to pay to the Secured Party, immediately upon notification by the Secured
Party and without demand, all such sums so paid and expended by the Secured
Party, together with interest thereon at the rate applicable to Prime Rate Loans
as defined in the Credit Agreement calculated and payable as provided for in the
Credit Agreement (the "Interest Rate");
(f) all sums so paid and expended by the Secured Party and such interest
thereon, shall be secured hereby in addition to all other moneys hereby secured
and in priority to all other mortgages and charges;
(g) if this debenture is or shall be outstanding at the expiration of the
term of any lease (a "material lease") of real property forming part of the
Charged Assets which is material to the conduct of the Company's business and
the Company shall refuse or neglect to exercise its right, if any, to renew such
material lease and to pay the fees, costs, charges and expenses incidental to
and payable upon such renewals, then, and as often as it shall happen, the
Secured Party may, at its sole discretion, effect such renewals in its own name
or otherwise, and in such case every such renewed material lease and the lands
and buildings thereby demised shall remain and be security to the Secured Party
for the indebtedness and liability secured by this debenture and as well for the
payment of all money paid by the Secured Party for every such renewal and the
Secured Party's costs, charges, and expenses and interest thereon at the
Interest Rate;
(h) it will not: (i) surrender any material lease or any rights of renewal
with respect thereto (except for the leases of premises located at 2245 St.
Paul, St.-Hyacinthe, Quebec and 3030 Ste. Anne Boulevard, Beauport, Quebec);
subordinate any material
<PAGE>
10.
lease to any mortgage of the fee interest of the landlord thereof in the lands
subject to a material lease, unless in connection with any such subordination
the Company obtains from the holder of such mortgage a non-disturbance agreement
in favour of the Company and its successors and assigns (including the Secured
Party) in form and substance satisfactory to the Secured Party (save and except
that with respect to existing leases, the Company shall only be required to use
commercially reasonable efforts to obtain such a non-disturbance agreement);
(ii) terminate or cancel any material lease without the prior written consent of
the Secured Party; or (iii) without the prior written consent of the Secured
Party, modify, change, supplement, alter or amend any material lease either
orally or in writing;
(i) no release or forbearance of any of the Company's obligations pursuant
to any material lease or pursuant to any prior encumbrance of the Company's
interest in the Lands or any part thereof including without limitation the
Company's obligations with respect to the payment of rent as provided for in any
such lease shall release the Company from any of the Company's obligations
pursuant to this debenture;
(j) unless the Secured Party shall otherwise expressly consent in writing,
the title in fee simple to the property demised by any material lease and the
leasehold estate shall not merge but shall always remain separate and distinct,
notwithstanding the union of said estates either in the landlord of any such
lease or the Company pursuant to any such lease or in a third party, by purchase
or otherwise; and
(k) if the Company shall, at any time before payment in full of the
indebtedness and liability secured by this debenture acquire the freehold title
to the Lands demised by any such lease, this mortgage and charge shall attach
and extend to, and constitute a mortgage and charge of such freehold estate; and
(l) the Company hereby agrees that it will not place the Charged Assets or
allow the Charged Assets to be placed on any premises that are leased unless the
lessor of such premises has first agreed in writing with the Secured Party to
subordinate and postpone any and all of its claims, security and rights to the
claims and security of the Secured Party; provided that this covenant will not
prohibit the Company from selling the Charged Assets in the normal course of the
Company's business as hereinbefore provided.
10. The Company hereby agrees that it will at all times, both before and after
default, do or cause to be done such additional things and execute and deliver
or cause to be executed and delivered all such further acts and documents as the
Secured Party may reasonably require for the better mortgaging, charging,
confirming and granting of security interests in the present or future Charged
Assets to the Secured Party,
<PAGE>
11.
including, without limitation, the payment of any fees and taxes required in
connection with the execution and delivery of this debenture, the granting of
the security and the filing, recording, or registering of any financing
statements or other documents in connection therewith. If any amount payable
under, or in connection with, any of the Charged Assets shall be or become
evidenced by any promissory note or other instrument, such note or instrument
shall be promptly pledged and delivered to the Secured Party, duly endorsed in a
manner satisfactory to the Secured Party. If at any time the Company shall take
and perfect a security interest or hypothec in any property of an account debtor
or any other person to secure payment and performance of an account receivable,
the Company shall promptly assign such security interest or hypothec to the
Secured Party. Such assignment need not be filed, recorded or registered of
public record unless necessary to continue the perfected status of the security
interest or hypothec against creditors of and transferees from the account
debtor or other person granting the security interest or hypothec.
11. The Company shall, at its own cost and expense, take any and all actions
reasonably necessary to defend title to the Charged Assets against all persons
and to defend the security of the Secured Party in such Charged Assets, and the
priority thereof, against any adverse lien or encumbrance of any nature
whatsoever, except for such liens or encumbrances permitted by the Secured Party
including, without limitation, the Permitted Encumbrances.
12. The Company shall remain liable to observe and perform all the conditions
and obligations to be observed and performed by it under each contract and
agreement, interest or obligation relating to the Charged Assets, all in
accordance with the terms and conditions thereof and shall indemnify and hold
harmless the Secured Party from any and all such liabilities.
13. The Company will not, without the Secured Party's prior written consent,
grant any extension of the time of payment of any of its accounts receivable, or
compromise, compound or settle the same for less than the full amount thereof,
or release, in whole or in part, any person liable for the payment thereof, or
allow any credit or discount whatsoever thereon other than extensions, credits,
discounts, compromises or settlements granted or made in the ordinary course of
business. The provisions of Article IX of the Credit Agreement with respect to
the collection of receivables and the management of the Charged Assets are
hereby deemed incorporated herein in their entirety and shall be binding upon
the Company with respect to its accounts receivable as if set forth herein.
<PAGE>
12.
F. DEFAULT
14. All indebtedness and liability owing by the Company to the Secured Party and
hereby secured shall, at the option of the Secured Party but subject to the
provisions of the Delivery Agreement, become payable and the security hereby
constituted shall become enforceable upon demand by the Secured Party.
15. The Secured Party may in writing (and not otherwise) waive any breach by the
Company of any of the provisions contained in this debenture or any default by
the Company in the observance or performance of any provision of this debenture;
provided always that no waiver by the Secured Party shall extend to or be taken
in any manner whatsoever to affect any subsequent breach or default, whether of
the same or a different nature, or the rights resulting therefrom.
G. REMEDIES OF THE SECURED PARTY
16. Whenever the security hereby constituted shall have become enforceable, and
so long as it shall remain enforceable, the Company will have no right to vote
or take any other action with respect to any securities constituting Charged
Assets or receive any dividends or interest (whether declared or payable before
or after the security hereby constituted becoming enforceable) in respect of the
Charged Assets and the Secured Party may proceed to realize such security and to
enforce its rights by:
(a) entry;
(b) the appointment by instrument in writing of a receiver or
receivers of the Charged Assets or any part thereof (which receiver or
receivers may be any person or persons, whether an officer or officers or
employee or employees of the Secured Party or not and the Secured Party may
remove any receiver or receivers so appointed and appoint another or others
in his or their stead);
(c) proceedings in any court of competent jurisdiction for the
appointment of a receiver or receivers or for sale of the Charged Assets or
any part thereof; or
(d) any other action, suit, remedy or proceeding authorized or
permitted hereby or by law or by equity.
In addition, the Secured Party may file such proofs of claim and other
documents as may be necessary or advisable in order to have its claim lodged in
any bankruptcy, insolvency winding-up or other judicial proceedings relative to
the Company.
<PAGE>
13.
The Secured Party or any receiver or receivers so appointed shall have
power to:
(i) take possession of and to use the Charged Assets or any part thereof
with power to exclude the Company and its officers, employees and
agents therefrom;
(ii) carry on the business of the Company (including, but not limited to,
the taking or defending of any actions or legal proceedings, and the
doing or refraining from doing all other things as to it, acting
reasonably, may seem necessary or desirable in connection with the
business, operations and affairs of the Company);
(iii) take all such steps as it may consider necessary or desirable for the
purposes of preserving, maintaining and completing all or any part of
the Charged Assets and making such replacements thereof and
improvements and additions thereto as it shall consider expedient;
(iv) receive the rents, incomes and profits of any kind whatsoever from the
Charged Assets and pay therefrom
(A) any expenses of preserving, maintaining and completing the
Charged Assets, of making such replacements thereof and
improvements and additions thereto as it may consider expedient
and of carrying on all or any part of the business of the Company
relating to the Charged Assets, and
(B) any charges against the Charged Assets ranking in priority to or
pari passu with the security created by this debenture or the
payment of which may be necessary or desirable to preserve or
protect all or any part of the Charged Assets or the interest of
the Secured Party therein;
(v) lease all or any part of the Charged Assets and renew from time to
time all or any of the leases on such terms and conditions as the
Secured Party may determine;
(vi) with or without taking possession, take any action or proceedings to
enforce the performance of any covenant contained in any of the
leases;
<PAGE>
14.
(vii) enjoy and exercise all the powers of the Company as it considers
necessary or desirable for the exercise of any and all of the remedies
provided for herein, including, without limitation, the powers to make
any arrangement or compromise on behalf and in the name of the Company
which it considers expedient, to purchase on credit and borrow money
on behalf and in the name of the Company and to advance its own moneys
to the Company, all at such rates of interest as it may consider
reasonable, and to enter into contracts and undertake obligations on
behalf of and in the name of the Company for any and all of the
foregoing purposes or which it considers necessary or desirable for
the exercise of any of the rights, powers and remedies provided for
herein, all of which borrowings, advances and obligations together
with interest thereon shall, at the discretion of the Secured Party,
be entitled to the security hereof in priority to the payment of the
obligations secured by this debenture;
Every receiver appointed by the Secured Party shall be deemed to be an
agent of the Company and not of the Secured Party for the purposes of
(i) carrying on and managing the business and affairs of the Company
and (ii) establishing liability for all of the acts or omissions of
the receiver while acting as such and the Secured Party shall not be
in any way responsible for any acts or omissions on the part of any
such receiver, its officers, employees and agents; provided that,
without restricting the generality of the foregoing, the Company
irrevocably authorizes the Secured Party to give instructions to the
receiver relating to the performance of its powers and discretions.
The appointment of a receiver or any thing which may be done by the
receiver shall not have the effect of constituting the Secured Party a
mortgagee in possession.
(viii) borrow money required for the maintenance, preservation or
protection of the Charged Assets or any part thereof or the carrying
on of the business of the Company;
(ix) further charge the Charged Assets in priority to the charge of this
debenture as security for money so borrowed;
<PAGE>
15.
(x) vote and take all other action with respect to the securities
constituting Charged Assets and collect all revenues, dividends and
distributions distributed in connection with such securities; and
(xi) sell, lease or otherwise dispose of the whole or any part of the
Charged Assets on such terms and conditions and in such manner as the
receiver shall determine.
The Secured Party shall not be responsible for any actions or errors of omission
by the receiver or receivers in exercising any such powers.
In addition, the Secured Party may enter upon, use, occupy and possess the
Charged Assets or any part thereof, free from all encumbrances, liens and
charges, except for Permitted Encumbrances, without hindrance, interruption or
denial of the same by the Company or by any other person or persons, and may
lease or sell the whole or any part or parts of the Charged Assets. Any sale
hereunder may be made by public auction, by public tender or by private
contract, with or without notice and with or without advertising and without any
other formality (except as required by law), all of which are hereby waived by
the Company. Such sale shall be on such terms and conditions as to credit or
otherwise and as to upset or reserve bid or price as to the Secured Party in its
sole discretion may seem advantageous. In the case of any sale on credit or
partly on credit, the Secured Party shall not be accountable for any proceeds
thereof unless and until actually received by the Secured Party in cash. Such
sale may take place whether or not the Secured Party has taken possession of the
Charged Assets.
The Company agrees to pay to the Secured Party forthwith on demand all
expenses incurred by the Secured Party in the preparation, perfection,
administration and enforcement of this debenture (including without limitation
expenses incurred in considering and protecting or improving the Secured Party's
position, or attempting to do so, whether before or after default), all amounts
borrowed by the receiver from the Secured Party as hereinbefore provided and all
costs, charges, expenses and fees (including, without limiting the generality of
the foregoing, the fees and expenses of any receiver and legal fees on a
solicitor and client basis) of or incurred by the Secured Party and by any
receiver or receivers or agent or agents appointed by the Secured Party in
connection with the recovery or enforcing of payment of any moneys owing
hereunder, whether by realization, by taking possession or otherwise. All such
sums, together with interest thereon at the Interest Rate, shall be secured by
the charges contained herein. To the extent that the aggregate of the principal
and accrued interest secured hereby and such borrowed money, costs, fees and
expenses exceed the
<PAGE>
16.
principal amount of this debenture, the Company hereby mortgages and charges and
grants a security interest in the Charged Assets to the Secured Party to secure
payment of such excess amount.
No remedy for the realization of the security hereof or for the enforcement
of the rights of the Secured Party shall be exclusive of or dependent on any
other such remedy, but any one or more of such remedies may from time to time be
exercised independently or in combination; and the exercise of any remedy under
any document in any jurisdiction shall not prejudice or affect the exercise of
any remedy under another document in any jurisdiction. The term "receiver" as
used in this debenture includes a receiver and manager.
The Secured Party shall not, nor shall any receiver appointed by it, be
liable for any failure to exercise its rights, powers or remedies arising
hereunder or otherwise, including without limitation any failure to take
possession of, collect, enforce, realize, sell, lease or otherwise dispose of,
preserve, maintain, complete, protect, replace or improve all or any part of the
Charged Assets, to carry on all or any part of the business of the Company or to
take any steps or proceedings for any such purposes. Neither the Secured Party
nor any receiver appointed by it shall have any obligation to take any steps or
proceedings to preserve rights against prior parties to or in respect of all or
any part of the Charged Assets, whether or not in its possession and neither the
Secured Party nor any receiver appointed by its shall be liable for failure to
do so. Subject to the foregoing, the Secured Party shall use reasonable care in
the custody and preservation of the Charged Assets in its possession.
17. Unless the provisions of the Credit Agreement otherwise provide any and all
payments made in respect of the indebtedness and liability secured by this
debenture from time to time may be applied to such part or parts of the
indebtedness and liability secured by this debenture as the Secured Party may
see fit, and unless the provisions of the Credit Agreement otherwise provide,
the Secured Party shall at all times and from time to time have the right to
change any appropriation as the Secured Party may see fit.
18. The proceeds of any collection or sale of the Charged Assets, as well as any
Charged Asset consisting of cash, shall be applied by the Secured Party as
provided in section 8.01 of the Credit Agreement.
Upon any sale of the Charged Assets by the Secured Party (including,
without limitation, pursuant to a power of sale granted by statute or under a
judicial proceeding) the receipt of the Secured Party or of the officer making
the sale shall be a
<PAGE>
17.
sufficient discharge to the purchaser or purchasers of the Charged Assets so
sold and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Secured Party or
such officer or be answerable in any way for the misapplication thereof.
H. RIGHTS OF THE SECURED PARTY
19. The Secured Party may, in accordance with subparagraph 9(c) of this
debenture, pay and satisfy the whole or any part of any liens, taxes, rates,
charges or encumbrances now or hereafter existing in respect of any of the
Charged Assets (other than Permitted Encumbrances which are not in default) and
such payments together with all costs, charges and expenses which may be
incurred in connection with making such payments shall form part of the
indebtedness and liability secured by this debenture and shall be secured by the
mortgages, charges and security interests granted herein. In the event of the
Secured Party satisfying any such lien, charge or encumbrance, it shall be
entitled to all the equities and securities of the person or persons so paid and
is hereby authorized to obtain any discharge thereof and hold such discharge
without registration for so long as it may deem advisable to do so.
20. The Company grants to the Secured Party the right to set off against any and
all accounts, credits or balances maintained by it with the Secured Party, the
aggregate amount of any of the indebtedness and liability secured by this
debenture provided the same is due.
21. The Secured Party, without exonerating in whole or in part the Company, may
grant time, renewals, extensions, indulgences, releases and discharges to, may
take securities from and give the same and any or all existing securities up to,
may abstain from taking securities from or from perfecting securities of, may
accept compositions from, and may otherwise deal with the Company and all other
persons and securities as the Secured Party may see fit.
22. Nothing herein shall obligate the Secured Party to extend or amend any
credit to the Company.
23. The Secured Party may, upon the terms provided in the Credit Agreement,
assign, transfer and deliver to any transferee any of the indebtedness and
liability secured by this debenture or any security or any documents or
instruments
<PAGE>
18.
held by the Secured Party in respect thereof provided that no such assignment,
transfer or delivery shall release the Company from any of the indebtedness and
liability secured by this debenture; and thereafter the Secured Party shall be
fully discharged from all responsibility with respect to the indebtedness and
liability secured by this debenture and security, documents and instruments so
assigned, transferred or delivered. Such transferee shall be vested with all
powers and rights of the Secured Party under such security, documents or
instruments but the Secured Party shall retain all rights and powers with
respect to any such security, documents or instruments not so assigned,
transferred or delivered. The Company shall not assign any of its rights or
obligations hereunder without the prior written consent of the Secured Party.
24. The Secured Party is hereby authorized to file, record or register, as the
case may be, one or more financing statements, financing change statements or
other documents in all jurisdictions which the Secured Party deems necessary or
appropriate for the purpose of perfecting, confirming, continuing, enforcing or
protecting the security held by the Secured Party in respect of the indebtedness
and liability secured by this debenture.
25. The Company hereby appoints the Secured Party the attorney of such Company
solely for the purposes of carrying out the provisions of this debenture and
taking any action or executing any instrument which the Secured Party may deem
necessary or advisable to accomplish the purposes herewith, which appointment is
irrevocable and coupled with an interest.
26. The Secured Party and such persons as the Secured Party may designate shall
have the right in the manner provided as provided in the Credit Agreement to
inspect the Charged Assets, all records related thereto (and to make extracts
and copies from such records) and the premises upon which any such Charged
Assets are located, to discuss the Company's affairs with the officers of the
Company and its independent accountants.
I. MISCELLANEOUS
27. If one or more of the provisions contained herein shall be invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby.
<PAGE>
19.
28. No amendment of this debenture shall be binding unless executed in writing
by the party to be bound thereby.
29. Until the security hereby constituted shall have become enforceable, the
Company shall have quiet possession of the Charged Assets. Upon payment by the
Company, its successors or permitted assigns, of all indebtedness and liability
of the Company to the Secured Party secured hereby and the fulfilment of all
other obligations of the Company to the Secured Party secured hereby and
termination of the Credit Agreement and provided that the Secured Party is then
under no obligation (conditional or otherwise) to make any further loan or
extend any other type of credit to the Company, the Secured Party shall, upon
request in writing by the Company, delivered to the Secured Party at 1 First
Canadian Place, Suite 6900, Toronto, Ontario M5X 1A4 Attention: Christine Chan,
and at the Company's expense, discharge this debenture. The security hereby
constituted and the charges hereunder shall automatically terminate in any of
the Charged Assets when they are sold or disposed of as permitted by the Credit
Agreement or hereunder or with the consent of the Secured Party. The Secured
Party shall, at the expense of the Company, promptly take such actions, and
execute such releases and financing change statements or other documents, which
may be reasonably requested by an interested party to evidence the termination
and releases contemplated hereby.
30. This debenture shall be construed in accordance with and be governed by the
laws of the Province of New Brunswick. For the purpose of legal proceedings,
this debenture shall be deemed to have been made in the said Province and to be
performed therein and the courts of that Province shall have jurisdiction over
all disputes which may arise under this debenture. The Company hereby
irrevocably and unconditionally submits to the non-exclusive jurisdiction of
such courts, provided always that nothing herein contained shall prevent the
Secured Party from proceeding at its election against the Company in the courts
of any other province, country or jurisdiction.
31. The headings in this debenture are included for convenience of reference
only, and shall not constitute a part of this debenture for any other purpose.
32. This debenture is in addition to and not in substitution for any other
security now or hereafter held by the Secured Party and shall be general and
continuing security notwithstanding that the indebtedness and liability of the
Company to the Secured Party shall be at any time or from time to time fully
satisfied or paid.
33. This debenture and all its provisions shall enure to the benefit of the
Secured Party, its successors and assigns, and shall be binding on the Company,
its successors and permitted assigns.
<PAGE>
20.
34. Any demand or notice by the Secured Party in connection with this debenture
shall be given to the Company at the place and in accordance with the terms set
out in the Credit Agreement for the giving of notices thereunder.
35. In construing this debenture, terms herein shall have the same meaning as
defined in the Personal Property Security Act (Ontario), unless the context
otherwise requires. The word "Company", the personal pronoun "it" or "its" and
any verb relating thereto and used therewith shall be read and construed as
required by and in accordance with the context in which such words are used
depending upon whether the Company is one or more individuals, corporations or
partnerships and, if more than one, shall apply and be binding upon each of them
severally. The term "successors" shall include, without limiting its meaning,
any corporation resulting from the amalgamation of a corporation with another
corporation and, where the Company is a partnership, any new partnership
resulting from the admission of new partners or any other change in the Company,
including, without limiting the generality of the foregoing, the death of any or
all of the partners.
IN WITNESS WHEREOF the Company has executed this debenture as of the 1st
day of April, 1997.
SPORT MASKA INC.
By: /s/ D. Bruce Randall C.S.
--------------------
D. Bruce Randall
Secretary
<PAGE>
APPENDIX "A"
[intentionally blank]
<PAGE>
APPENDIX "B"
List of Equipment
[intentionally blank]
<PAGE>
APPENDIX "C"
Locations where Charged Property Located
#1 APPAREL CANADA INC. HOLT MANUFACTURING CO., INC.
375 Sligo Road West P.O. Box 2017
P.O .Box 850 2208 Air Park Drive
Mount Forest, Ontario Burlington, N.C. 27216
N0G 2L0 USA
COMDYE INC. KEBEC SUBLIME INC.
33 Louvain Street West 8401 Ray-Lawson Boulevard
Montreal, Quebec Anjou, Quebec
H2N 1B2 H1J 1K6
CONFECTION ST-MATHIEU KNITRAMA FABRICS
3125 Bernard Pilon 7801 Jarry East
Loc. H-8 Anjou, Quebec
St-Mathieu de Beloeil, Quebec H1J 1H3
J3G 4S5
CORALTEX INC. PETE'S CRESTING LTD.
800 Melchers 1 Adelaide St.N., Unit 13
Berthierville, Quebec London, Ontario
J0K 1A0 N6B 3P8
CREATION JADE INC. PRIMOTEX KNITTING INC.
5699, rue Principale 432 Isabey
Ascot Corner, Quebec St-Laurent, Quebec
J0B 1A0 H4T 1V3
DANSK PRO-JOY
Marsvej 7-9 530 Governors Road
DK-7430, IKAST Guelph, Ontario
DENMARK N1K 1E3
FIN-PRINT INC. TRICOTS J.T.S.
530 Governors Road 500 Sauve West #104A
Guelph, Ontario Montreal, Quebec
N1K 1E3 H3L 1Z8
BECKWITH BEMIS INC. LAMINATED TEXTILES LTD.
1145 Belanger (LAMTEX)
Sherbrooke, Quebec 155 Signet Drive
J1K 2B1 Weston, Ontario
M9L 1V1
SONATEX LAMINATING INC. TEXTILES M.T.C. LTEE
3335 North Service Road 5575 Casgrain
Unit 2-3 Montreal, Quebec
Burlington, Ontario H2T 1Y1
L7N 3G2
3030 Ste-Anne Boulevard 15855 Hubert
Beauport, Quebec St-Hyacinthe, Quebec
G1E 6N1 J2T 4C9
<PAGE>
2245 St-Paul 600 Industriel
St-Hyacinthe, Quebec St-Jean-sur-Richelieu, Quebec
J2T 2A2 J3B 4S7
175 Dessureault 6539A Missauga Road
Cap-de-la-Madeleine, Quebec Missisauga, Ontario
G8T 2L5 L5N 1A6
DEED OF HYPOTHEC
between
THE CHASE MANHATTAN BANK OF CANADA
and
SPORT MASKA INC.
dated as of
April 1st, 1997
<PAGE>
TABLE OF CONTENTS
Page
1. INTERPRETATION..................................................... 1
2. [NOT USED]......................................................... 3
3. [NOT USED]......................................................... 3
4. HYPOTHEC: DESCRIPTION OF CHARGED PROPERTY......................... 3
5. AMOUNT OF THE HYPOTHEC............................................. 6
6. SECURED OBLIGATIONS................................................ 6
7. ADDITIONAL PROVISIONS PERTAINING TO THE
HYPOTHEC ON RENTAL INCOME AND LEASES............................... 6
8. ADDITIONAL PROVISIONS TO THE HYPOTHEC ON CLAIMS
(OTHER THAN RENTALS)............................................... 7
9. ADDITIONAL PROVISIONS TO THE HYPOTHEC ON
SECURITIES......................................................... 8
10. ASSIGNMENT OF CLAIMS SUBJECT TO THE FINANCIAL
ADMINISTRATION ACT................................................. 9
11. REPRESENTATIONS AND WARRANTIES..................................... 9
12. COVENANTS......................................................... 12
14. HOLDER'S RECOURSES IN CASE OF DEFAULT............................. 17
15. GENERAL PROVISIONS................................................ 22
16. [NOT USED]........................................................ 24
17. GOVERNING LAW..................................................... 24
18. AMENDMENTS........................................................ 24
19. FORMAL DATE....................................................... 25
20. ENGLISH LANGUAGE.................................................. 25
21. INCONSISTENCIES................................................... 25
(i)
<PAGE>
================================================================================
DEED OF HYPOTHEC
EXECUTED ON THE ELEVENTH (11TH) DAY OF APRIL NINETEEN HUNDRED AND NINETY-SEVEN
(1997).
BEFORE: Mtre Richard Trudeau, Notary, practising in the City of
Longueuil, Province of Quebec.
APPEARED: THE CHASE MANHATTAN BANK OF CANADA, a Canadian chartered bank
governed by the Bank Act (Canada) having its head office at 1
First Canadian Place, Suite 6900, 100 King Street West,
Toronto, Ontario, N5X 1A4, herein acting and represented by
Christine Chan, its authorized officer, duly authorized for
the purposes hereof as he/she so declares.
(hereinafter the "Holder")
AND: SPORT MASKA INC., a legal person being a corporation
continued under the Business Corporations Act (New
Brunswick), having its registered office at 44 Chipman Hill,
10th Floor, Brunswick House, P.O. Box 7289, Postal Station A,
Saint-John, New Brunswick, E2L 4S6 and having its principal
place of business at 7405 Trans-Canada Highway, Suite 300,
Ville Saint-Laurent, Quebec H4T 1Z2, herein acting and
represented by D. Bruce Randall, its Secretary, duly
authorized pursuant to a resolution dated April 9, 1997, a
certified copy of which is annexed hereto after having been
acknowledged true and signed for purposes of identification
by the said representative in the presence of the undersigned
Notary.
(hereinafter the "Grantor")
WHICH PARTIES HAVE DECLARED AS FOLLOWS:
WHEREAS the Grantor is desirous of securing its obligations under the Credit
Agreement (as hereinafter defined) in the manner hereinafter appearing;
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. INTERPRETATION
1.1 Definitions
The following terms, wherever used in this Deed, shall, unless there be
something in the context inconsistent therewith, have the following meanings:
1.1.1 "Business Day" means a day on which the Holder's branch in
Toronto is opened for business but does not include Saturday and
Sunday;
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1.1.2 "Charged property" shall have the meaning ascribed to it in
Section 4 hereof;
1.1.3 "Collateral" shall have the meaning ascribed to it in paragraph
4.8 hereof;
1.1.4 "Credit Agreement" means the Credit Agreement dated as of April
1st, 1997 between the Grantor, as borrower and the Holder, as lender,
as such Credit Agreement may be amended, restated or supplemented from
time to time.
1.1.5 "Default" means one or the other events set out in Section
13 hereof;
1.1.6 "Dollars" or "$" means the legal currency in Canada;
1.1.7 "Grantor" means Sport Maska Inc. and any of its successors or
assigns;
1.1.8 [NOT USED]
1.1.9 "Holder" means The Chase Manhattan Bank of Canada and shall
include its successors or assigns pursuant to an amalgamation or other
corporate reorganization or otherwise;
1.1.10 "Hypothec" shall have the meaning ascribed to it in Section
4 hereof;
1.1.11 "Property in stock" shall have the meaning ascribed to it in
paragraph 4.4 hereof;
1.1.12 "Secured Obligations" means all of the obligations which are to
be secured by the Hypothec pursuant to Section 6 hereof;
1.1.13 "This Deed", "these presents", "herein", "hereby", "hereunder",
"hereof" and similar expressions refer to this Deed, and the
accompanying schedules and to any deed or document supplemental or
complementary hereto or restating this Deed.
1.2 Gender
Unless there be something in the context inconsistent therewith, words
importing any gender shall include any other gender as may be applicable under
the circumstances.
1.3 Headings
The division of this Deed into Sections, subsections and paragraphs and the
insertion of titles are for convenience of reference only and do not affect the
meaning or the interpretation of the present Deed. Unless otherwise indicated, a
reference to a particular Section, subsection or paragraph is a reference to the
particular Section, subsection or paragraph in this Deed.
1.4 [NOT USED]
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1.5 Schedules
The Schedules annexed hereto shall form an integral part of this Deed.
1.6 Delays and calculation of delays
The delays provided hereunder are calculated simultaneously with the delays
imposed by law and are not in addition to such delays. In the calculation of any
period of delay, the period shall exclude the day from which the period
commences and the period shall include the last day thereof.
1.7 Business Day
When the date on which a delay expires or a payment has to be made or an
act has to be done is not a Business Day, the delay expires or the payment must
be made or the act must be done on the next following Business Day, unless
expressly provided otherwise in this Deed.
2. [NOT USED]
3. [NOT USED]
4. HYPOTHEC: DESCRIPTION OF CHARGED PROPERTY
The Grantor hereby hypothecates in favour of the Holder the universality of
all of the Grantor's moveable and immoveable property, present and future,
corporeal and incorporeal, of whatever nature and kind and wherever situate (the
"Charged property") and, with respect to incorporeal or intangible property,
property located outside of the Province of Quebec or used in more than one
jurisdiction, hereby charges, assigns and mortgages in favour of the Holder and
creates a security interest in the Charged property (the hypothec, charge,
mortgage and assignment and the security interest hereinafter collectively
referred to as the "Hypothec"), the whole including without limitation the
following universalities of present and future properties:
4.1 Immoveables
All the immoveable properties of the Grantor, along with all property
permanently physically attached or joined thereto so as to ensure the utility
thereof (including the heating and air conditioning apparatus and watertanks)
and which become immoveable by the effect of law, the hypothec on future
immoveables to become effective upon the registration of a notice to that effect
in accordance with section 2949 of the Civil Code of Quebec (collectively
hereinafter referred to as the "Immoveables").
4.2 Rentals, Revenues and leases of immoveables
All rentals, annuities and revenues which are or may be produced by the
Immoveables as well as any other right of the Grantor in any lease, present and
future, which may affect such Immoveables.
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4.3 Rental Insurance
Proceeds of any insurance covering losses of revenue and rentals described
in paragraph 4.2 above.
4.4 Property in Stock
All property in stock or inventory of every nature and kind of the Grantor
whether in its possession, in transit or held on its behalf, including raw
materials, work in process, finished goods or other materials, goods
manufactured or transformed, or in the process of being so, by the Grantor or by
others, packaging materials, property evidenced by bill of lading, animals,
mineral substances, hydrocarbons and other products of the soil as well as all
fruits thereof from the time of their extraction (hereinafter the "Property in
stock").
The Property in stock held by third parties under a lease agreement, a
leasing contract, a franchise or licence agreement, or any other agreement
entered into with or on behalf of the Grantor, is also subject to this Hypothec.
Property having formed part of the Property in stock which is alienated by
the Grantor in favour of a third person but in respect of which the Grantor has
retained title pursuant to a reservation of ownership provision, shall remain
charged by the Hypothec until title is transferred; any Property in stock the
ownership of which reverts to the Grantor pursuant to the resolution or
resiliation of any agreement or following its repossession is also subject to
the Hypothec.
4.5 Claims, Book Debts and Other Movable Property
4.5.1 Claims, Receivables and Book Debts
All of the Grantor's claims, debts, demands and choses in action,
whatever their cause or nature, whether or not they are certain, liquid or
exigible; whether or not evidenced by any title (and whether or not such
title is negotiable), note, acceptances, bill of exchange or drafts;
whether litigious or not; whether or not they have been previously or are
to be invoiced; whether or not they constitute book debts. Hypothecated
claims shall include: (i) indemnities payable to the Grantor under any all
risk insurance policy, any life insurance policy or any liability insurance
policy, subject to the rights of other creditors holding subsequent ranking
hypothecs on the insured property, (ii) the sums owing to the Grantor in
connection with interest or currency exchange contracts and other treasury
or hedging instruments, management of risks or derivative instruments
existing in favour of the Grantor ("SWAPS"), and (iii) the Grantor's rights
in any credit balances, monies or deposits in accounts held for it by the
Holder (subject to the Holder's compensation or set-off rights) or by any
financial institution or any other person.
4.5.2 Rights of Action
The Grantor's rights under contract with third parties as well as the
Grantor's rights of action and claims against third persons.
4.5.3 Accessories
The hypothecs, security interest, security agreement, guarantees,
suretyships, notes, acceptances and accessories to the claims and rights
described above and other rights relating thereto (including, without
limitation, the rights of the Grantor
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in its capacity as seller under any instalment sale, with respect to the
claims hereby hypothecated which are the result of such sale).
4.5.4 Movable Property
All moveable property owned by the Grantor and covered by the
instalment sales mentioned in paragraph 4.5.3 hereof.
A right or a claim shall not be excluded from the Charged property
merely because: (i) the debtor thereof is not domiciled in the Province of
Quebec or (ii) the debtor thereof is an affiliate (as such term is defined
in the Canada Business Corporations Act) of the Grantor (regardless of the
law of the jurisdiction of its incorporation) or (iii) such right or claim
is not related to the ordinary course of business or the operations of the
Grantor.
4.6 Securities
All securities (including shares, debentures, units, bonds, obligations,
rights, options, warrants, debt securities, investment certificates, units in
mutual funds, certificates or other instruments representing such property) now
or hereafter owned by the Grantor or held by the Grantor or on its behalf,
including without limitation those issued or which will be issued by the
corporations or partnerships listed in Schedule "B" or by any corporation or
partnership successor thereto pursuant to an amalgamation or any other
reorganization (a copy of which Schedule "B" remains annexed hereto after having
been recognized as true and signed for identification by the representatives of
the parties hereto); as well as all those which are delivered by the Grantor to
the Holder or to a third party on its behalf from time to time.
4.7 Equipment and Road Vehicles
The equipment, office furniture, appliances, supplies, apparatus, tools,
patterns, models, dies, blueprints, fittings, furnishings, fixtures, machinery
and rolling stock (including road vehicles) of the Grantor, including additions
and accessories and spare parts.
4.8 Trade-Marks and Other Intellectual Property Rights
All of the Grantor's rights in any trade-mark, copyright, industrial
design, patent, goodwill, invention, trade name, trade secret, trade process,
license, permit, franchise, know-how, plant breeders' right, integrated circuit
topography and in any other intellectual property right, including any
application or registration relating thereto if any, improvements and
modifications thereto as well as rights in any claim against third parties in
connection with the protection of any such intellectual property rights or
infringement thereto, in Canada or abroad (sometimes hereinafter referred to
collectively as the "Collateral"), including without limitation those listed in
Schedule "B" hereto.
4.9 Fruits and Revenues
All cash, profits, proceeds, fruits, dividends, rights and revenues which
are or may be produced by or declared or distributed with respect to the Charged
property or in exchange thereof as well as the proceeds of the Charged property,
including without limitation any property, equipment, negotiable instrument,
bill, commercial paper, security, money, compensation for expropriation
remitted, given in exchange or paid pursuant to
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a sale, repurchase, distribution or any other transaction with respect to the
Charged property.
4.10 Records and Others
All records, data, vouchers, invoices and other documents related to the
Charged property described above, including without limitation, computer
programs, disks, tapes and other means of electronic communication of the
Grantor, as well as the rights of the Grantor to recover such property from
third parties, receipts, customer lists, distribution lists, directories and
other similar property of the Grantor.
Any and all Charged property which is acquired, transformed or manufactured
after the date of this Deed shall be charged by the Hypothec, (i) whether or not
such property has been acquired in replacement of other Charged property which
may have been alienated by the Grantor in the ordinary course of business, (ii)
whether or not such property results from a transformation, mixture or
combination of any Charged property, and (iii) in the case of securities,
whether or not they have been issued pursuant to the purchase, redemption,
conversion or cancellation or any other transformation of the charged securities
and without the Holder being required to register or re-register any notice
whatsoever, the property charged under the Hypothec being the universality of
the Grantor's present and future property.
5. AMOUNT OF THE HYPOTHEC
The amount for which the Hypothec is granted is a principal amount of one
hundred million dollars ($100,000,000) with interest thereon from the date of
this Deed at the rate of twenty-five percent (25%) per annum.
6. SECURED OBLIGATIONS
The Hypothec secures the due and punctual payment of all sums due or to
become due by the Grantor under or pursuant to the Credit Agreement and the due
and punctual performance of all other present and future obligations of the
Grantor under or pursuant to the Credit Agreement and under or pursuant to this
Deed, in each case whether now existing or hereafter arising, direct or
indirect, absolute or contingent, matured or not.
Any future obligation hereby secured shall be deemed to be one in respect
of which the Grantor has once again obligated itself hereunder according to the
provisions of section 2797 of the Civil Code of Quebec.
7. ADDITIONAL PROVISIONS PERTAINING TO THE HYPOTHEC ON RENTAL INCOME AND
LEASES
With respect to any Immoveables generating rentals and revenues:
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7.1 List of tenants
The Grantor shall provide the Holder before January 30 each year, with a
list containing the name of all tenants and details as to their leases as at the
immediately preceding December 31. The Grantor shall obtain the prior written
consent of the Holder with respect to the terms and conditions of any new lease
or the modifications or renewals of any existing leases provided nothing herein
shall compel the Holder to waive any right it may have pursuant to Article 1887
of the Civil Code of Quebec. Upon request of the Holder, acting reasonably, the
Grantor shall further provide (i) a copy (or the original, when requested by the
Holder) of all leases, present and future, relating to the Immoveables and any
document and any useful information in connection therewith, and (ii) a written
acknowledgment by the tenants, present and future, of the hypothec on rentals
hereby created in the form required by the Holder.
7.2 Leases and statement of revenues
The Holder may require that all leases be subject to its approval, that
they be subordinated to its rights hereunder and that the Grantor provide it on
a yearly basis with a statement of revenues and expenditures concerning the
Immoveables.
7.3 Rents, annuities and revenues collection
The Holder hereby authorizes the Grantor to collect all rents, annuities
and revenues which are rental income; however, the Grantor shall not collect in
advance more than one month of rent (other than a security deposit) nor shall it
renounce to the payment of any rent. Such authorization may be revoked at any
time by the Holder in accordance with what is provided for by law; in such a
case, the Holder may exercise as it deems appropriate, to the exclusion of the
Grantor, all rights, claims, privileges and hypothecs (legal or conventional) of
the Grantor in order to maintain, renew, grant or terminate any lease, and to
further protect or collect rents, annuities and revenues from the Immoveables.
7.4 Collection
The Holder shall have the right to bring an action for recovery of rentals,
impleading the Grantor, it being understood that the Holder shall be under no
obligation to exercise such right and shall not be liable for any loss or damage
which may result from its failure to collect such rentals. The Holder shall have
the right to deduct a ten per cent (10%) collection fee from any rentals
collected as well as any commission usually charged by the Holder for the
collection of rentals, miscellaneous costs and expenses (copies, service fees,
legal counsel fees and others, opening files, surveillance fees, execution fees
or fees for cancellation of lease) incurred as a result of such collection.
8. ADDITIONAL PROVISIONS TO THE HYPOTHEC ON CLAIMS (OTHER THAN RENTALS)
8.1 Authorization to Recover
Save and except for claims resulting from an expropriation, those referred
to in Section 9 hereof and save for any other claims for which collection is
otherwise dealt with pursuant to any agreement entered into with the Holder or
any other person, the Holder hereby authorizes the Grantor to recover all claims
and other Charged property referred to in paragraph 4.5. Such authorization may
be revoked at any time by the Holder by
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written notice with respect to all or any part of the hypothecated claims,
whereupon the Holder shall be free to itself effect such recovery and to
exercise any of the rights referred to in paragraph below; the Grantor shall
then remit to the Holder all records, books, invoices, bills, contracts, titles,
papers and other documents related to the claims. If, after such authorization
is revoked (and even if such revocation is not yet registered or delivered to
the holders of such claims), sums payable under such claims and property are
paid to the Grantor, it shall receive same as mandatary of the Holder and shall
remit same to the Holder promptly without the necessity of any demand to this
effect.
8.2 Recovery
The Holder may recover all claims and other Charged property referred to in
paragraph 4.5 in accordance with what is provided for by law; it may further
exercise any rights regarding such Charged property and more particularly, it
may grant or refuse any consent which may be required from the Grantor in its
capacity as owner of such Charged property, and shall not, in the exercise of
such right, be required to obtain the consent of the Grantor or serve the
Grantor any notice thereof, nor shall it be under any obligation to establish
that the Grantor has refused or neglected to exercise such rights, and it may
further grant delays, take or abandon any security, make arrangements with
debtors of any hypothecated claims, make compromises, grant releases and
generally deal at its discretion with matters concerning all Charged property
referred to in paragraph 4.5 without the intervention or consent of the Grantor.
9. ADDITIONAL PROVISIONS TO THE HYPOTHEC ON SECURITIES
The Holder may, at any time after the occurrence of a Default, transfer any
securities or any part thereof into its own name or that of a third party
appointed by it so that the Holder or its nominee(s) may appear as the sole
registered holder, in which case:
9.1 Voting rights
All voting rights and any other right attached to such securities may be
exercised by the Holder (without any obligation of the Holder to do so) or on
behalf of the Holder.
9.2 Revenues, dividends and others
The Holder shall collect revenues, dividends and capital distributions and
the Grantor shall cease to have any right thereto and the Holder may either hold
same as Charged property or apply them in reduction of the Secured Obligations.
9.3 Physical possession of the certificates
The certificates representing the hypothecated securities may be kept in
the possession of the Holder or in the possession of its agent.
The Grantor hereby irrevocably appoints any officer or employee of the
Holder as its attorney with full power of substitution and authority to execute
such documents necessary to render effective the rights granted to the Holder
pursuant to this Section 9.
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10. ASSIGNMENT OF CLAIMS SUBJECT TO THE FINANCIAL ADMINISTRATION ACT
The Grantor hereby assigns to the Holder by way of absolute assignment all
its present and future claims which are subject to Sections 67 and 68 of the
Financial Administration Act, as collateral and continuing security of all
Secured Obligations. The Holder may, at any time, fulfill any of the formalities
required by law to make such transfer enforceable, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally, from time to time in
effect.
11. REPRESENTATIONS AND WARRANTIES
The Grantor hereby represents and warrants that:
11.1 Legal person
It is a legal person (corporation).
11.2 Head office
The registered office or domicile of the Grantor is located in New
Brunswick.
11.3 Incorporation
It is duly incorporated and in good standing under the law of its
jurisdiction of incorporation.
11.4 Powers
It has the capacity and the powers necessary to grant the Hypothec and to
bind itself as herein provided for; the execution of this Deed, the compliance
with its provisions and the performance of its covenants shall not entail or
result in any breach of or default under any other agreement or document to
which the Grantor is bound.
11.5 Authorization of this Deed
This Deed has been duly authorized by resolution or by any other necessary
action under its constating documents, by-laws or otherwise, in order to give it
full effect and to render its obligations fully enforceable, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally, from time to time
in effect.
11.6 Execution of this Deed
This Deed has been executed by duly authorized persons.
11.7 Business or firm names
It uses no business or firm name other than those referred to in Schedule
"B" hereof.
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11.8 Titles of ownership and existing charges
It is the unconditional and absolute owner of the Charged property, except
for future property, and all such property is free and clear of any prior claim,
hypothec, charge, security or security interest, seizure by garnishment, right
of resolution or repossession or of any other right whatsoever existing in
favour of persons other than the Holder and other than any such right which
constitutes a Lien (as defined in the Credit Agreement) which is permitted in
accordance with Section 7.01 of the Credit Agreement.
11.9 Shareholder Agreement
There exists no shareholders' agreement in connection with securities which
are charged under this agreement other than a unanimous shareholders' agreement
within the meaning of Section 99 of the Business Corporations Act (New
Brunswick) between Sport Maska Inc. and SLM Trademark Acquisition Corp. dated
April 9th, 1997 with respect to securities issued by SLM Trademark Acquisition
Canada Corporation. There exists no restriction in the articles or other
constating documents of the Grantor regarding the assignment or transfer of
securities which are charged hereunder other than the restrictions pertaining to
a closed company (as such term is defined in the Securities Act (Quebec)) and
those declared in writing to the Holder.
11.10 Location of Charged property
The Charged property referred to in paragraphs 4.4, 4.6, 4.7 and 4.10
hereinabove is located in the premises described in Schedule "C" hereof or in
transit thereto or therefrom (a copy of which Schedule "C" remains annexed
hereto after having been acknowledged as true and signed for identification by
the representatives of the parties hereto).
11.11 Disposition of Charged property
Except for property referred to in paragraph 4.4 hereinabove, it does not,
in the ordinary course of its business, sell property similar to or of the same
nature as the Charged property.
11.12 Claims subject to the Financial Administration Act
It has no claim falling under Section hereof, other than those indicated in
Schedule "B" hereof.
11.13 Claims secured by registered hypothec
It has no claim which is secured by registered hypothec other than those
indicated in Schedule "B" hereof.
11.14 [NOT USED]
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11.15 Litigation
There are not any actions, suits or proceedings at law or by or before any
governmental instrumentality or other agency or other regulatory authority now
pending or, to the knowledge of any Responsible Officer (as defined in the
Credit Agreement) of the Grantor, threatened against or affecting the Grantor to
its businesses, assets or rights, as to which there is a reasonable likelihood
of an adverse determination and which, if adversely determined, would,
individually or in the aggregate, materially impair the ability of the Grantor
to conduct business substantially as now conducted, or result in a Material
Adverse Effect (as defined in the Credit Agreement).
Grantor is not in violation of any law, or in default with respect to any
judgment, writ, injunction, decree, rule or regulation of any court or
governmental agency or instrumentality where such violation or default would
result in a Material Adverse Effect.
11.16 Default
It is not in default under the present Deed.
11.17 Intellectual Property
11.17.1 all registration, applications for registration, filings and
notices thereof in respect of the Collateral, including all relevant
renewals, have been duly and properly made, are in full force and
effect and are not subject to dispute by any governmental authority or
agency and all leases, licences and other agreements affecting any
right, title or interest of the Grantor in any of the Collateral
(collectively, the "Third Party Agreements") are in good standing;
11.17.2 none of the Collateral has been adjudged invalid or
unenforceable or has been cancelled, in whole or in part, and all such
Collateral is presently subsisting, valid, in good standing and
enforceable, with the exception of those, if any, set out in Schedule
B and identified as "pending applications", "cancelled/expunged
registrations", "abandoned applications" or "registrations no longer
in name of the Grantor";
11.17.3 the Grantor is the exclusive owner or in the case of licensed
Collateral, the sole and exclusive licensee, of the entire and
unencumbered right, title and interest in and to each of the
Collateral free and clear of any liens, charges and encumbrances
except for any such lien, charge or encumbrance which constitutes a
Lien which is permitted in accordance with paragraphs (a) and
following of Section 7.01 of the Credit Agreement;
11.17.4 the Collateral listed in Schedule B constitutes all of the
intellectual property rights now owned by the Grantor;
11.17.5 the Grantor has adopted, used continuously and currently is
using all of the Collateral; all licensees of the Collateral (or all
relevant portions thereof) from the Grantor as licensor have been
licensed properly to use such Collateral and the Grantor has retained
under license the direct or indirect control of the character or
quality of the goods or services in connection with which use of such
Collateral has been licensed by it; all use of such Collateral has
been proper both in
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form and in relation to the goods or services in connection with which
the Collateral is used by the Grantor or its licensees; and proper
ownership notices have been used by the Grantor or its licensees; and
11.17.6 nothing contained in this Deed or the Credit Agreement,
including, without limitation, the granting of the Hypothec by the
Grantor in favour of the Holder, constitutes a breach under any Third
Party Agreement.
12. COVENANTS
The Grantor hereby covenants:
12.1 Information
To give notice in writing to the Holder:
- of any change whatsoever in its name and business names or in the
representations and warranties hereinabove mentioned in Section 11;
- of the name of any surety (guarantor) which may have guaranteed the
payment of claims hypothecated hereby and other Charged property
mentioned in paragraph 4.5 hereof;
- of the name of the insurers to the insurance contracts referred to
herein;
- of the existence of any security, hypothec, prior claims or property
right retained or assigned securing claims and other Charged property
referred to in paragraph 4.5 hereof and, in such cases, to provide the
Holder, upon demand, with satisfactory proof that such security or
hypothec has been registered or published in accordance with
applicable law in order for the rights of the Holder to be set up
against third persons;
- of the existence and details of any new claim arising hereafter, which
claim, alone or together with any other claim falling under Section 10
hereof is material.
12.2 Additional Information
To provide the Holder with any information it may reasonably request with
respect to the Charged property or in order to determine whether or not the
Grantor is in compliance with its undertakings and obligations hereunder. The
Grantor shall inform the Holder of any event, occurrence, or fact which might
have a Material Adverse Effect.
12.3 [NOT USED]
12.4 Inspection
To enable the Holder to examine, inspect and appraise, at the Grantor's
expense, any Charged property, and to grant to the Holder access to all premises
where such property may be located, all in accordance with the terms established
under Section 6.01 of the Credit Agreement.
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12.5 Preservation of the Hypothec
To perform all acts and execute all deeds and documents (including notices
of renewal) necessary to give full effect to the Hypothec and to ensure that it
is at all times fully opposable against third persons.
12.6 Compensation, Fees and Expenses
To pay to the Holder from time to time all out of pocket costs and expenses
relating to this Deed and to the exercise of all rights resulting in favour of
the Holder from such Deed as well as all out of pocket costs and expenses
incurred to set up the rights of the Holder against third persons, and all
discharge fees (such costs and expenses shall include all reasonable fees and
expenses of consultants, agents or counsels retained by the Holder); to
reimburse the Holder for all out of pocket costs and expenses incurred by it for
the purpose of carrying out the Grantor's obligations or of exercising its
rights, all such costs and expenses bearing interest at an annual rate equal to
the base rate of National Bank of Canada which shall be in force from time to
time, plus 3%; National Bank of Canada's base rate shall be the one advertised
as its rate of reference for determining the interest rate on commercial loans
in Dollars granted in Canada; the obligations arising from this paragraph shall
not exceed twenty-five per cent (25%) of the nominal value of the Hypothec; the
repayment of such costs and expenses shall be secured by the Hypothec.
12.7 Encumbrances and Title
Not to grant, at any time hereafter, any easement, right-of ways, servitude
or any other charges against the Charged property without having first obtained
the prior written consent of the Holder, (save for public easements granted for
utility purposes which do not affect materially unfavourably the Charged
property) and to maintain the Charged property free and clear of any
conventional or legal hypothec, prior claim under Articles 2650 et seq. of the
Civil Code of Quebec, charge, security, garnishment, right of resolution or
repossession or any other right in favour of a person or persons other than the
Holder and other than in regard to a lien which is permitted in accordance with
Section 7.01 of the Credit Agreement; to preserve, warrant and defend its title
against any claim, action or contestation.
12.8 List of Property in Stock and Book Debts
To give the Holder, from time to time, upon demand, a statement of the
value of its Property in stock and a list of its book debts shown in the reverse
order of their due date in accordance with the Credit Agreement.
12.9 [NOT USED]
12.10 [NOT USED]
12.11 Lease and transfer
Not to lease, sell, assign or otherwise alienate the Charged property, in
whole or in part, without the prior written consent of the Holder, except for
property referred to in paragraph 4.4 above which may be leased or sold in the
ordinary course of business of the Grantor and except as expressly permitted in
the Credit Agreement.
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12.12 Maintenance
The Grantor shall diligently pay the cost of any public utility services
and authorizes the Holder to obtain from the related authorities the amounts due
to this account and any information relating to payment of such charges.
12.13 [NOT USED]
12.14 Location of property
Not to change the location of the Charged property unless it obtains the
prior written consent of the Holder.
12.15 Title
To ensure that its right of ownership in any Charged property in the hands
or possession of any third party remains opposable against third parties and,
accordingly, that such right has been registered or published, if registration
or publication is required by law for the purpose of opposition against third
parties.
12.16 Lessors
If any of the Charged property is located in premises leased pursuant to a
lease executed before January 1, 1994 (and where the registration of a legal
hypothec has been perfected) or if it were moved to premises leased as
aforesaid, to obtain a full cession of priority in favour of the rights of the
Holder under the present Hypothec and to immediately notify, following the
execution of the present Deed or immediately following the moving into the
leased premises, the lessor of such premises, in writing, of the present
Hypothec and to deliver to the Holder within three (3) days after such
notification proof of same.
12.17 [NOT USED]
12.18 Use and destination
Not to change the use or destination of the Charged property unless it
obtains the prior written consent of the Holder.
12.19 Value
To protect and use the Charged property and to carry on its business so as
to preserve its value.
12.20 Release of Collateral
The Hypothec shall not be discharged prior to the indefeasible payment in
full of all amounts owing hereunder and under the Credit Agreement and the
performance of all obligations of the Grantor hereunder and under the Credit
Agreement.
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12.21 Intellectual Property
The Grantor shall:
12.21.1 use its trade-marks, trade-mark registrations, trade-mark
applications, trade names, business names, trade styles, logos,
service marks, and all other forms of business identifiers
(hereinafter the "Trade-marks") only on goods of at least as high
quality as the goods on which the Grantor or its predecessor used the
goods as of the date hereof and maintain the quality of any and all
products in connection with which the Trade-marks and other Collateral
is used, consistent with the quality of said products as of the date
hereof;
12.21.2 take or cause to be undertaken all steps necessary to protect
the Grantor's interest in and to maintain the Collateral in good
standing, including without limitation, to pursue diligently all
applications through to registration and to renew all registrations
and pay all maintenance fees as applicable, as well as attending to
the filing of all required documentation;
12.21.3 vigorously protect, preserve and maintain all of the Grantor's
right, title and interest in the Collateral, including, without
limitation, the prosecution and/or defence against any and all suits
concerning validity, infringement, enforceability, ownership or other
aspects affecting any of the Collateral (any expenses incurred in
protecting, preserving and maintaining any of the Collateral shall be
borne by the Grantor;
12.21.4 upon written request by the Holder, execute and deliver any
and all agreements, instruments, documents and papers as the Holder
may reasonably request to evidence the Holder's Hypothec in the
Collateral;
12.21.5 perform all covenants required under any Third Party Agreement
including, inter alia, promptly paying all required fees, royalties
and taxes to maintain each and every item of the Collateral in full
force and effect;
12.21.6 if at any time or from time to time, Grantor (i) becomes aware
of any Collateral of which the Grantor has not previously informed the
Holder, (ii) obtains rights to any new Collateral, or (iii) becomes
entitled to the benefit of any Collateral not identified in Schedule
B, then the Grantor shall promptly notify the Holder and regardless of
when the Grantor so notifies the Holder, Schedule B automatically
shall be modified and amended to include any such Collateral and the
provisions of this Deed automatically shall apply thereto;
12.21.7 maintain up to date records regarding the Collateral;
12.21.8 provide the Holder with a written report on each anniversary
of this Deed regarding the status of the Collateral;
12.21.9 not abandon any right to file a trade-mark application or
patent application, or abandon any pending trade-mark or patent
application,
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or abandon any of the Collateral or any suits involving any of the
Collateral, without the prior written consent of the Holder, which
consent of the Holder shall not be reasonably withheld; and
12.21.10 not take any action, or permit any action to be taken by any
person or persons subject to its control, including licensees, or fail
to take any action, which would adversely affect the validity,
enforceability or transferability (to the Holder or otherwise) of all
or any of the Collateral, and ensure generally that the Collateral is
and remains valid, in good standing and enforceable.
13. EVENTS OF DEFAULT
The Grantor shall be in default hereunder without notice or other formality
and the security hereby constituted shall immediately become enforceable, if it
fails to pay any amount due or to become due under the Credit Agreement when due
and in any of the following events ("Default"):
13.1 [NOT USED]
13.2 [NOT USED]
13.3 [NOT USED]
13.4 Cross default
An Event of Default (as defined in the Credit Agreement) occurs under the
Credit Agreement.
13.5 Charged property
If the Grantor fails at any time to maintain, preserve or protect all
property material to the conduct of its businesses and keep such property in
good repair, working order and condition (reasonable wear and tear excepted) or
fails from time to time to make, or cause to be made, all needful and proper
repairs, renewals, additions, improvements and replacements thereto which are
necessary in order that the business carried on in connection therewith may be
properly conducted in all material respects at all times.
13.6 Other agreements
The Grantor fails to pay any indebtedness or to perform any of the
Grantor's obligations required to be paid or performed under any other agreement
creating a charge against the Charged property.
13.7 Insolvency and bankruptcy
The Grantor ceases to carry on its enterprise or an important part thereof,
becomes insolvent or becomes subject to proceedings, makes an assignment or
files a notice to file a proposal under any law relating to insolvency,
bankruptcy, reorganization or to arrangements with creditors or any petition in
bankruptcy is taken against the Grantor.
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13.8 [NOT USED]
13.9 [NOT USED]
13.10 Hypothecary rights
Any of the Charged property is subject to a hypothecary right from another
creditor, a partition procedure, a "sale of an enterprise" as it is understood
under sections 1767 and ssq. of the Civil Code of Quebec or an expropriation,
except to the extent or under circumstances permitted in accordance with the
Credit Agreement.
14. HOLDER'S RECOURSES IN CASE OF DEFAULT
14.1 Payment of Indebtedness
In case the Hypothec shall have become enforceable, on account of one or
the other of the events mentioned in Section 13 or paragraph 13.1 through 13.10
above, the Holder may, in its discretion, at any time or times, demand payment
of all or any part of the Secured Obligations and the same shall forthwith
become immediately due and payable to the Holder. Any payment then made by the
Grantor shall be deemed to have been made in discharge of its obligations
hereunder or under the Credit Agreement, and any money so received by the Holder
shall be applied as provided for in paragraphs 14.13 and 15.4 hereof.
14.2 Exercise of rights
In case the Hypothec shall have become enforceable and the Grantor shall
have failed to pay the Holder, on demand, the outstanding amount due under the
Credit Agreement together with any other amounts secured hereunder, the Holder
may in its discretion through its officers, agents or attorneys, exercise any
right of action provided for under this Deed (and more particularly under this
Section 14) or by law or in equity including without limitation any of the
hypothecary rights provided for under sections 2748 to 2794 of the Civil Code of
Quebec and any rights or remedies provided to secured parties under any
applicable personal property security legislation.
14.3 Rights of the Holder
Whatever hypothecary rights the Holder elects to exercise or whatever
rights or recourses the Holder elects to exercise either pursuant to the law of
any other jurisdiction or in equity, the following provisions shall apply:
14.3.1 the Holder may, in its discretion, at the Grantor's
expense:
14.3.1.1 pursue the transformation of the Charged property or any
work in process or unfinished goods comprised in the
Charged property and complete the manufacture or processing
thereof or proceed with any operations to which such
property is submitted by the Grantor in the ordinary course
of its business and acquire property for such purposes;
14.3.1.2 alienate or dispose of any Charged property which may be
obsolete, may perish or is likely to depreciate rapidly;
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14.3.1.3 use for its benefit all information obtained while
exercising its rights;
14.3.1.4 perform any of the Grantor's obligations or covenants
hereunder;
14.3.1.5 exercise any right attached to the Charged property on such
conditions and in such manner as it may determine, acting
reasonably, including without restriction the grant of
licences whether general or special on an exclusive or non
exclusive basis, of any intellectual property charged
hereunder;
14.3.1.6 for the exercise of any of its rights, utilize without
charge the Grantor's plant, equipment, machinery, process,
informations, records, computer programs and intellectual
property; for the purposes hereof the Grantor shall, at the
request of the Holder, concurrently with or after the
execution of these presents execute a power of attorney
with respect to intellectual property (in conformity with
Section 15.9 hereof) in favour of the Holder;
14.3.1.7 borrow monies or lend monies and, in such cases, the monies
borrowed or lent by the Holder shall bear interest at the
rate then obtained or charged by the Holder for such
borrowing or loan; these monies shall be reimbursed by the
Grantor on demand and, until they have been repaid in full,
such monies and interest thereon shall be secured by the
present Hypothec and be paid in priority of any other sums
secured hereunder;
14.3.1.8 maintain or repair, restore or renovate, begin or complete
any construction work on or related to the Charged
property;
14.3.2 the Holder shall exercise its rights in good faith in order to
attempt to reduce the Secured Obligations, in a reasonable manner,
taking into account all circumstances;
14.3.3 the Holder may, directly or indirectly, purchase or otherwise
acquire the Charged property;
14.3.4 the Holder, when exercising its rights, may waive any right of
the Grantor, with or without consideration therefor;
14.3.5 the Holder shall have no obligation to make an inventory of the
Charged property, to take out any kind of insurance with respect
thereof or to grant any security whatsoever;
14.3.6 the Holder shall not be bound to continue to carry on the
Grantor's enterprise or to make any productive use of the Charged
property or to maintain such property in operating condition;
14.3.7 the Grantor shall, upon request of the Holder, move the Charged
property and render it available to the Holder unto premises
designated by the Holder and which, in its opinion, shall be more
suitable in the circumstances.
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14.4 Grantor's remedy
If the Grantor remedies the default mentioned in any prior notice of
exercise of hypothecary right, the Grantor shall, as required by law, pay all
reasonable fees incurred by the Holder by reason of the default; these fees
shall include without limitation the administrative fees of the Holder, the
legal fees of its legal advisers and fees paid to experts.
14.5 Taking in payment
If the Holder elects to exercise its right to take in payment the Charged
property and the Grantor requires that the Holder instead sell by itself or
under judicial authority, the Charged property on which such right is exercised,
the Grantor hereby acknowledges that the Holder shall not be bound to abandon
its recourse of taking in payment unless, prior to the expiry of the time period
allocated for surrender, the Holder (i) has been granted a security satisfactory
to it, to ensure that the proceeds of the sale of the Charged property will be
sufficient to pay the Secured Obligations in full, (ii) has been reimbursed for
all reasonable costs and expenses incurred in connection to this Deed, including
all fees of consultants and legal counsel and (iii) has been advanced the
necessary sums for the sale of said Charged property; the Grantor further
acknowledges that the Holder alone is entitled to select the type of sale it may
wish to conduct or have conducted.
14.6 Surrender of Charged property
The Grantor will be deemed to have surrendered the Charged property which
is in the possession of the Holder, or of a third party on its behalf, if the
Holder has not, within the delays determined by law or by a tribunal to
surrender, received written notice from the Grantor to the effect that it
intends to contest the exercise of the hypothecary recourse set forth in the
prior notice.
14.7 Evaluation
Where the Holder sells the Charged property itself, it shall not be
required to obtain any prior evaluation by a third party.
14.8 Sale of Charged property
The Holder may elect to sell the Charged property after giving such prior
notices as may be required by law, in which event (i) the sale may be made with
legal warranty given by the Grantor or with complete or partial exclusion of
such warranty; (ii) the sale may be made cash or with a term or under such
reasonable conditions determined by the Holder; and (iii) upon failure of
payment of the purchase price, the Holder may resiliate or resolve such sale and
such Charged property may then be resold.
14.9 Use of premises
In order to exercise any of its rights, the Holder may use the premises
located in the Immoveables.
14.10 Several Administrators
Where several administrators are involved, the parties hereto waive the
applications of sections 1332 to 1338 inclusively of the Civil Code of Quebec.
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14.11 Appointment of Agent
The Holder may appoint an agent or a receiver and manager (collectively a
"Receiver") over all or any portion of the Charged property by written
instrument in accordance with Section 14.12 or may apply to a court for the
appointment of a Receiver to take possession of all or such part of the Charged
property as the Holder shall designate, with such duties, powers and obligations
as the court making the appointment shall confer, and the Grantor hereby
irrevocably consents to the appointment of such Receiver.
14.12 Appointment of Receiver
The Holder may with or without taking possession, by instrument executed by
the Holder, appoint a Receiver of all or any part of the Charged property and of
the rents, income and profits therefrom and may from time to time by similar
instrument remove any Receiver and appoint another in its place and upon the
appointment of any such Receiver or Receivers from time to time the following
provisions shall apply:
14.12.1 every such Receiver shall be vested with all of the rights,
powers, remedies and discretions of the Holder set forth in Section
14.3.1.1 to 14.3.1.8, inclusively, including, without limitation, the
power to sell, for cash or credit or part cash and part credit, lease
or dispose of all or any part of the Charged property, whether by
public auction or by private sale or lease in such manner and on such
terms as it may determine in its absolute discretion acting reasonably
and to do all acts, exercise all discretions and make all
determinations of the Holder described therein;
14.12.2 every such Receiver shall have the power to borrow money on
the security of the Charged property in priority to the security
created by this Deed for the purpose of the preservation, maintenance,
completion or protection of the Charged property or any part thereof
or for making any replacements thereof or improvements and additions
thereto or for carrying on all or any part of the business of the
Grantor relating to the Charged property, and in so doing the Receiver
may issue certificates designated as "Receiver's Certificates" which
may be payable either to order or to bearer and may be payable at such
time or times as the Receiver may think expedient and shall bear
interest at such rates of interest as the Receiver may consider
reasonable, and the amounts from time to time payable pursuant to such
Receiver's Certificates shall form a charge upon the Charged property
in priority to the security created by this Deed;
14.12.3 the Holder may from time to time fix the remuneration of every
such Receiver who shall be entitled to deduct the same out of the
receipts derived from or comprising part of the Charged property or
the proceeds thereof;
14.12.4 every such Receiver shall be deemed to be an agent of the
Grantor and not of the Holder for the purposes of:
(i) carrying on and managing the business and affairs of the Grantor,
and
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(ii) establishing liability for all of the acts or omissions of the
Receiver while acting as such and the Holder shall not be in any
way responsible for any acts or omissions on the part of any such
Receiver, its officers, employees and agents,
the Grantor hereby irrevocably authorizing the Holder to give
instructions to the Receiver relating to the performance of its powers
and discretions as set out herein;
14.12.5 the appointment of every such Receiver by the Holder or
anything which may be done by any such Receiver or the removal of any
such Receiver or the termination of any such receivership shall not
have the effect of constituting the Holder a mortgagee in possession
in respect of the Charged property or any part thereof;
14.12.6 no such Receiver shall be liable to the Grantor to account for
moneys other than moneys actually received by such Receiver in respect
of the Charged property and every such Receiver shall apply such
moneys so received in the manner provided in Section 14.13; and
14.12.7 the Holder may at any time and from time to time terminate any
such receivership by notice in writing executed by the Holder to any
such Receiver;
14.13 Imputation of payments
Except as herein otherwise expressly provided, to the greatest extent
permitted by applicable law, all monies arising from any sale or realization of
the Charged property, in whole or in part, whether under any sale by the Holder
or by judicial process or otherwise, shall be applied, together with any other
monies then in the hands of the Holder and available for such purpose, in the
first place to pay or reimburse the Holder's fees, charges, expenses, borrowing,
advances and all other moneys provided or obtained by it or at its request in or
about the execution of its powers and rights with respect to these presents,
with interest thereon as herein provided, and the residue of the said moneys
shall be applied on account of Secured Obligations or, at the option of the
Holder, may be held unappropriated in a collateral account in order to provide
for payment of any charge ranking prior to the Hypothec.
The Grantor shall only be credited with amounts received by the Holder in
cash from the possession, sale, lease or other disposition of, or realization
upon, the Charged property as and when such cash is received.
14.14 Liability of Grantor
The Grantor shall remain liable to the Holder for any deficiency remaining
after the application of the proceeds of any sale, lease or disposition of the
Charged property by the Holder.
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15. GENERAL PROVISIONS
15.1 Additional Security
The Hypothec created hereby is in addition to and not in substitution of or
in replacement for any other hypothec or security held by the Holder and shall
not impair the Holder's rights of compensation and set-off.
15.2 Investments
The Holder may, at its entire discretion, invest any monies or instruments
received or held by it pursuant of this Deed or deposit same in a non-interest
bearing account without having to comply with any legal provisions concerning
the investment of property of others.
15.3 Set-off
Provided the Secured Obligations are due and exigible or that the Holder is
entitled to declare them owing and exigible, the Holder may compensate and
set-off any Secured Obligations with any and all amounts then owed to the
Grantor by the Holder in any capacity, whether due or not, and the Holder shall
then be deemed to have exercised such right to compensate and set-off as at the
time the decision was taken by it even though the entry therefor is made on the
Holder's record subsequent thereto.
15.4 Imputation of Payments
The Holder shall be at liberty to impute any amounts collected in the
exercise of its rights prior to or after any Default as it may choose without
having to comply with any provisions of the Civil Code of Quebec concerning the
imputation of payments.
15.5 Delays
The Holder may grant delays, take any security or renounce thereto, accept
compromises, grant quittances and releases and generally deal, with any matters
related to the Charged property, the whole without limiting the rights of the
Holder and without reducing the liability of the Grantor.
15.6 Continuing Security
The Hypothec shall be a continuing security and shall remain in full force
and effect despite the repayment from time to time, of the whole or of any part
of the Secured Obligations; it shall remain in full force until the execution of
a final release by the Holder.
15.7 Time of Essence
The mere lapse of time provided for the Grantor to perform its obligations
or the expiry of any term therefor shall automatically create a default
hereunder, without the Holder being obliged to serve any notice or prior notice
upon the Grantor.
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15.8 Cumulative Rights
The rights and recourses of the Holder hereunder are cumulative and do not
exclude any other rights and recourses which the Holder might have. No omission
or delay on the part of the Holder in the exercise of any right shall have the
effect of operating as a waiver of such right. The partial or sole exercise of a
right or power will not prevent the Holder from exercising thereafter any other
right or power. The Holder may exercise its right hereunder without any
obligation to exercise any right against any other person liable for payment of
the Secured Obligations and without having to enforce any other security granted
with respect to the Secured Obligations.
15.9 Irrevocable power of attorney
The Holder is hereby designated as the irrevocable attorney of the Grantor
with full powers of substitution for the purposes hereof or for the purpose of
carrying out any and all acts and executing any and all deeds, proxies or other
documents which the Holder may deem useful in order to exercise its rights or
which the Grantor neglects or refuses to execute or to carry out, provided
however that, if a Default has not occurred and is not continuing, the Grantor
shall have been requested by the Holder to do so by a three (3) Business Days
prior written notice.
15.10 Performance
The Holder may, at its entire discretion, perform any of the Grantor's
liabilities under this Deed. It may then immediately request payment of any
expense incurred in doing so, including interest at the rate provided for in
paragraph 12.6 above, and such repayment is secured by the Hypothec.
15.11 Delegation
The Holder may, at its entire discretion, appoint any person or persons for
the purpose of exercising any of its rights, actions or the performance of any
covenant resulting from this Deed or law or equity; in such case, the Holder may
supply such person with any information it holds relating to the Grantor or to
the Charged property.
15.12 Title deeds
All titles of ownership, land surveys, certificates of location and other
documents related to the Immoveables shall upon request be remitted to the
Holder who is entitled to keep them until a final release and discharge of this
Hypothec is obtained.
15.13 Waiver
Where the Grantor has taken an Immoveable in payment for an hypothecated
claim ranking prior to the present Hypothec, the Grantor waives its right to
take advantage of the provisions of section 2771 of the Civil Code of Quebec.
15.14 Liability
The Holder shall not be liable for material injuries or damages resulting
from its fault, or the fault of its agents, officers, consultants, unless such
fault is gross or intentional.
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15.15 Successors and Assigns
The rights hereby conferred upon the Holder shall benefit all its
successors, nominees and assigns including any entity resulting from the merger
of the Holder with any other person or persons. The Holder may assign, transfer
and deliver to any transferee any or all of the Secured Obligations or any
security or any documents or instruments held by the Holder in respect thereof,
including, without limitation, the Credit Agreement, provided that no such
assignment, transfer or delivery shall release the Grantor from any of the
Secured Obligations. Such transferee shall be vested with all powers and rights
of the Holder under such security, documents or instruments to the extent of any
such assignment, transfer or delivery but the Holder shall retain all rights and
powers with respect to any such security documents or instruments not so
assigned, transferred or delivered.
15.16 Notices
Any notice to the Grantor shall be delivered to its address set out above
or to any other address in Canada of which the Holder has been given written
notice; any notice to the Holder shall be delivered to the Holder's branch
located at the address set out above.
15.17 Receipt of Notice
A notice given hereunder shall be deemed to have been received by the other
party on the date of its delivery, when delivered on a Business Day, or on the
third (3rd) Business Day after it has been mailed, if sent prepaid by certified
or registered mail, or the day of its transmission, if transmitted by facsimile
on or before 3:00 p.m. on a Business Day or on the Business Day next following
the day of transmission if transmitted by facsimile after 3:00 p.m.
15.18 Severability
Every provision of this Deed is and shall be independent of the other and
in the event that any part of this Deed is declared invalid, illegal or
unenforceable, then the remaining terms, clauses and provisions of this Deed
shall not be affected by such declaration and all the remaining clauses of this
Deed shall remain valid, binding and enforceable.
16. [NOT USED]
17. GOVERNING LAW
This Deed shall be governed by and construed in accordance with the laws of
the Province of Quebec, including the rules relating to conflicts of laws
provided for thereunder.
18. AMENDMENTS
No amendment may be made to this Deed unless signed by the Grantor and the
Holder.
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19. FORMAL DATE
This Deed may be referred to as bearing formal date of the first (1st) day
of April, Nineteen hundred and ninety-seven (1997), notwithstanding the actual
date of its execution.
20. ENGLISH LANGUAGE
The parties hereto confirm that the present agreement has been drawn up in
the English language at their request. Les parties aux presentes confirment que
la presente convention a ete redigee en langue anglaise a leur demande.
21. INCONSISTENCIES
This Deed is executed pursuant to the Credit Agreement and is subject to
the terms thereof. In the event of any contradiction between the terms hereof
and the comparable terms of the Credit Agreement, the terms of the Credit
Agreement shall prevail.
WHEREOF ACTE:
DONE and PASSED at the City of Montreal, Province of Quebec, on the date
aforesaid, and remains of record in the office of the undersigned Notary under
his minute number
Five Thousand Seven Hundred and Eighty-Seven
____________________________________________ ( 5787 ).
AND after the parties had declared to have taken cognizance of these presents
and to have exempted the said Notary from reading them or causing them to be
read, the said duly authorized officers of the Grantor and the Holder
respectively have signed these presents, all in the presence of the said Notary
who has also signed.
SPORT MASKA INC.
per: /s/ D. Bruce Randall
------------------------
D. Bruce Randall
Secretary
THE CHASE MANHATTAN
BANK OF CANADA
per: /s/ Illegible
------------------------
/s/ Mtre Richard Trudeau
-----------------------------
Mtre Richard Trudeau, Notary
Doc. 394989.06
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TRUE COPY OF THIS
ORIGINAL WHICH
REMAINS IN MY OFFICE
/s/ Illegible
<PAGE>
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SCHEDULE "A"
[NOT USED]
#394989.06
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<PAGE>
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SCHEDULE "B"
B.1 Securities (par. 4.6)
Sport Maska Europe S.A.R.L.
SLM Trademark Acquisition Canada Corporation
St-Lawrence Manufacturing Canada Inc. - Manufactures St-Laurent Canada Inc.
B.2 Trade-Marks and Other Intellectual Property (par. 4.8)
SPORT MASKA INC.
REGISTERED PATENTS AND INDUSTRIAL
DESIGNS / APPLICATIONS
UNITED STATES
Application Date Patent / Industrial Design
- ------------------------ ---------------------------------------------------
April 20, 1982 Uniforms for Hockey Players
(Registration N(degree) 4,325,148)
May 31, 1983 Preformed Lining Component for Skate Boots
(Registration N(degree) 4,385,456)
June 13, 1989 Double knit fabric with holes therethrough and
knitted color bands
(Registration N(degree) 4,838,045)
January 9, 1990 Double knit fabric with holes therethrough and
knitted color bands
(Registration N(degree) 4,891,958)
June 5, 1990 Hockey glove having lateral padded wart with split
and flexible insert
(Registration N(degree) 4,930,162)
July 17, 1990 Method of producing double knit fabric with holes
therethrough and knitted color bands
(Registration N(degree) 4,941,331)
October 23, 1990 Method and apparatus for vacuum molding
multi-layer footwear
(Registration N(degree) 4,964,229)
March 19, 1991 Shin guard
(Registration N(degree) 4,999,847)
April 16, 1991 Chest protector
(Registration N(degree) 5,007,108)
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UNITED STATES
Application Date Patent / Industrial Design
- ------------------------ ---------------------------------------------------
March 10, 1992 Protective equipment having a rebound controlling
insert
(Registration N(degree) 5,093,931)
June 7, 1994 Runner support for a skate
(Registration N(degree) 5,318,310)
February 10, 1995 Protective sports glove
(Serial N(degree) 08/386,534)
December 26, 1995 Skate Toe Area Bumper
(Serial N(degree) 29/048,340)
December 26, 1995 Boot Design for an In-line Skate
(Serial N(degree) 29/048,341)
December 26, 1995 Chassis Design for In-line Skates
(Serial N(degree) 29/048,347)
December 26, 1995 Heel Wedge Design for a skate
(Serial N(degree) 29/048,339)
November 22, 1996 Boot Design for a Skate
(Serial N(degree) 29/062,739)
November 22, 1996 Tongue Insert Design for a Boot
(Serial N(degree) 29/062,711)
November 22, 1996 Outsole Design for a Boot
(Serial N(degree) 29/062,738)
November 22, 1996 Tongue Design for a Boot
(Serial N(degree) 29/062,746)
November 22, 1996 Tongue Design for a Boot
(Serial N(degree) 29/062,747)
December 12, 1996 Protective Pants
(Serial No. 29/063,685)
January 16, 1997 Outsole Design for a Boot Having an Insert
(Serial No. 29/064,971)
January 24, 1997 Skate Boot Having an Outsole with a Rigid Insert
(Serial No. 08/787,304)
AUSTRALIA
Application Date Patent / Industrial Design
- ------------------------ ---------------------------------------------------
August 27, 1993 Runner Support for a skate (Serial N(degree):
49381/93). (This patent was applied for in
Australia by PCT patent Serial N(degree):
PCT/CA93/00350)
================================================================================
<PAGE>
================================================================================
-- 3 --
CANADA
Application Date Patent / Industrial Design
- ------------------------ ---------------------------------------------------
July 12, 1983 Uniforms for Ice Hockey Players
(Registration N(degree) 1,149,554)
August 28, 1984 Uniforms for Ice Hockey Players
(Registration N(degree) 1,173,203)
June 28, 1983 Preformed lining component for skate boots
(Registration N(degree) 1,148,738)
December 28, 1988 Double Knit fabric with holes throughout and
knitted color bands
(Registration N(degree) 1,247,393)
December 28, 1988 Method of producing double knit fabric with holes
throughout and knitted color bands
(Registration N(degree) 1,247,392)
July 14, 1989 Method and apparatus for vacuum molding
multi-layer footwear
(Registration N(degree) 1,318,502)
September 12, 1989 Hockey glove having lateral padded wart with split
and flexible insert
(Registration N(degree) 1,272,352)
August 28, 1990 Chest protector (Serial N(degree) 2,065,327)
August 29, 1990 Shin guard (Serial N(degree) 2,024,251)
July 20, 1990 Protective equipment having a rebound controlling
insert
(Serial N(degree) 2,063,814)
October 19, 1990 Protective rim configuration for hard-shelled
safety helmet
(Registration N(degree) 2,067,739)
January 26, 1993 Runner support for a skate
(Serial N(degree) 2,088,077)
February 2, 1995 Protective sports glove
(Serial N(degree) 2,141,702)
June 26, 1996 Toe Area Bumper for Skate
(Serial N(degree) 1996 -- 1467 Industrial Design)
June 26, 1996 Skate Boot
(Serial N(degree) 1996 -- 1468 Industrial Design)
June 26, 1996 Wheel Support for In-line Skates
(Serial N(degree) 1996 -- 1469 Industrial Design)
June 26, 1996 Heel Wedge Design for Skate
(Serial N(degree) 1996-- 1466 Industrial Design)
================================================================================
<PAGE>
================================================================================
-- 4 --
CZECH REPUBLIC
Application Date Patent / Industrial Design
- ------------------------ ---------------------------------------------------
August 27, 1993 Runner support for a skate
(Serial N(degree) PV 522-95)
(This patent was applied for in the Czech Republic
by PCT patent Serial N(degree) PCT/CA93/00350)
EUROPEAN PATENT
Application Date Patent / Industrial Design
- ------------------------ ---------------------------------------------------
February 5, 1990 Method and apparatus for vacuum molding
multi-layer footwear
(Registration N(degree) 391,752)
Runner support for a skate
(Serial N(degree) 93 918 832.2)
FINLAND
Application Date Patent / Industrial Design
- ------------------------ ---------------------------------------------------
February 2, 1990 Method and apparatus for vacuum molding
multi-layer footwear
(Registration N(degree) 92,011)
August 27, 1993 Runner support for a skate (Serial N(degree)
950867). (This patent was applied for in Finland by
PCT patent Serial N(degree) PCT/CA93/00350)
JAPAN
Application Date Patent / Industrial Design
- ------------------------ ---------------------------------------------------
August 27, 1993 Runner support for a skate (Serial N(degree)
506,709/94). (This patent was applied for in Japan
by PCT patent Serial N(degree) PCT/CA93/00350)
NORWAY
Application Date Patent / Industrial Design
- ------------------------ ---------------------------------------------------
February 2, 1990 Method and apparatus fore vacuum molding
multi-layer footwear (Registration N(degree)
175,801)
PCT PATENT
Application Date Patent / Industrial Design
- ------------------------ ---------------------------------------------------
August 27, 1993 Runner support for a skate (Serial
N(degree) PCT/CA93/00350)
================================================================================
<PAGE>
================================================================================
-- 5 --
SWEDEN
Application Date Patent / Industrial Design
- ------------------------ ---------------------------------------------------
September 13, 1982 Hockey helmet (Registration N(degree) 452,412)
<PAGE>
-- 6 --
SPORT MASKA INC.
REGISTERED TRADE-MARKS -- APPLICATIONS
UNITED STATES / CANADA
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL No REG. No WARES
- ------------------------------ ------------- ---------- ------------ --------------------------------------------------------
<S> <C> <C> <C> <C>
ACUFLEX Canada 405,109 TMA 228,153 Ice hockey sticks.
AIR KNIT Canada 572,109 TMA 339,498 Hockey and baseball jerseys.
AIR KNIT U.S. 73/644,425 1,552,007 Sweaters for hockey, baseball, ringuette, rugby and
broomball.
ARMORLITE Canada 290,330 TMA 145,520 Hockey protective equipment; chin and knee guards,
gloves and shoulder pads.
ARRESTER Canada 744,875 In-line skate brakes.
ARRESTER U.S. 74/480,370 In-line skate brakes.
Back of skate design (#5) Canada 573,667 TMA 335,064 Skates.
Back of skate design (#5) U.S. 73/658,870 1,518,093 Ice Skates.
Back of skate design (#17) Canada 652,193 Skates.
CHAMPION Canada 158,777 TMDA056,266 Ice skates; hockey sticks, pucks, tennis rackets and
badminton rackets.
CLASSIC Canada 624,556 Sports apparel, hockey protective equipment.
COBRA U.S. 74/415,188 1,902,205 In-line roller skates.
CONCORDE Canada 732,972 TMA 432,525 In-line roller skates.
CONCORDE U.S. 74/415,179 In-line roller skates.
CORSAIR Canada 732,969 TMA 432,523 In-line roller skates.
CORSAIR U.S. 74/415,178 1,873,342 In-line roller skates.
</TABLE>
<PAGE>
-- 7 --
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL No REG. No WARES
- ------------------------------ ------------- ---------- ------------ --------------------------------------------------------
<S> <C> <C> <C> <C>
CYCLONE Canada 509,947 TMA 294,472 Ice skates.
DUOPRO Canada 473,265 TMA 274,326 Vests (jerseys).
DUOPRO; Design (#10) Canada 473,648 TMA 277,412 Vests (jerseys).
DURA TAN Canada 609,152 TMA 353,060 Treated leather used inside of skates.
DYNASTEEL Canada TMA 326,316 Ice Skate blades.
DYNO MAX Canada 465,204 TMA 269,379 Ice hockey skates.
EAGLE Canada 732,967 TMA 432,521 In-line roller skates.
EAGLE U.S. 74/415,190 1,924,720 In-line roller skates.
ELEGANCE Canada 529,570 TMA 310,931 Skates.
EXPRESSIONS Canada 529,569 TMA 307,477 Skates.
FALCON Canada 732,971 In-line roller skates.
FALCON U.S. 74/415,189 In-line roller skates.
FAST FORWARD Canada 735,370 In-line roller skates.
FLEXWART Canada 624,557 TMA 363,814 Hockey gloves.
GARA U.S. 1,690,343 1,690,343 Protective sports crash helmets.
GCK Canada 439,217 TMA 261,202 Hockey jerseys and socks, football, soccer and baseball
jerseys.
GCK & Design Canada 322,971 TMA 174,681 Jerseys and vests.
GCK & Design Canada 404,670 TMA 229,051 Hockey jerseys and socks, football, soccer and baseball
jerseys.
GRIPTITE Canada 640,424 TMA 379,694 Lining for ice skates.
HELL LACE Canada 616,290 TMA 390,056 Ice Skates.
Heel wedge design (#16) Canada 651,813 TMA 400,728 Skates.
</TABLE>
<PAGE>
-- 8 --
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL No REG. No WARES
- ------------------------------ ------------- ---------- ------------ --------------------------------------------------------
<S> <C> <C> <C> <C>
Heel wedge design (#16) U.S. 74/467,943 Skates.
Hockey helmet design (#22) Canada 717,150 Hockey helmet.
Hockey player design (#14) Canada 621,220 TMA 364,289 Jerseys.
ICE QUEEN Canada 489,659 TMA 299,940 Ice skates.
IMPERIAL Canada 511,601 TMA 302,320 Skates.
IMPERIAL & Design (#11) Canada 158,771 TMDA56111 Hockey sticks.
INTRUDER Canada 732,962 TMA 432,518 In-line roller skates.
INTRUDER U.S. 74/415,186 1,899,995 In-line roller skates.
Irregular design (#4) Canada 589,579 TMA 346,635 Skates.
Irregular design (#4) Canada 589,580 TMA 346,636 Skates.
Lateral window design (#6) Canada 622,189 TMA 365,552 Ice skates.
Lateral window design (#6) U.S. 73/833,925 Ice skates.
MASKA Canada 387,837 TMA 277,946 Jerseys, hockey jerseys.
MASKA U.S. 73/183,066 1,159,225 Sports clothing, namely, shorts, pants, shirts,
sweaters, socks, warm-up and practice suits.
MK & DESIGN Canada TMA 236,679 Ice skates.
MK & DESIGN Canada TMA 237,887 Ice skates.
MUSTANG Canada 621,028 TMA 360,366 Skates.
MUSTANG U.S. 73/782,809 1,592,164 Ice skates.
NTR & Design (#24) Canada 708,565 TMA 423,731 Roller skates and clothing.
NTR & Design (#24) U.S. 74/348,290 Roller skates and in-line skates.
NYLITE U.S. 73/031,568 1,043,627 Ice skates.
ORBIT Canada 380,309 TMA 210,775 Ice skates and Inner boots.
</TABLE>
<PAGE>
-- 9 --
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL No REG. No WARES
- ------------------------------ ------------- ---------- ------------ --------------------------------------------------------
<S> <C> <C> <C> <C>
ORBIT U.S. 73/050,420 1,056,153 Hockey skates and figure skates.
ORBIT SUPER COMP Canada 500,756 TMA 288,359 Hockey skates and figure skates.
ORBIT SUPER PRO Canada 477,940 TMA 273,021 Skates.
Oval design (#3) Canada 589,576 TMA 357,581 Skates.
Oval design (#3) Canada 589,578 TMA 346,634 Skates.
Oval on skate tongue design (#25) Canada 751,218 Skates.
PASTIME Canada 082,200 TMDA19859 Ice Skates and Blades.
PLEINE PUISSANCE Canada 711,178 TMA 415,836 Ice skates; advertisement campaign for ice skates.
POWERLINE Canada 627,075 TMA 374,817 Hockey equipment.
PRO 1 Canada 494,685 TMA 286,676 Skates.
PRO-GARD Canada 263,497 TMA 124,604 Heel protectors for skates, gloves, helmets, chin guards
and mouth guards.
PRO-GARD U.S. 72/128,248 738,975 Heel protectors for skates, gauntlets, helmets and body
protective equipment.
PROLITE Canada 163,620 UCA 02346 Ice skates, protective hockey equipment, hockey gloves.
PROLITE U.S. 71/698,770 637,101 Ice skates, bicycles and hockey sticks.
PROLITE II Canada 453,584 TMA 260,127 Steel blades for ice skates.
PROPAC Canada 458,735 TMA 268,301 Body protectors for ice hockey.
PRO-PAC U.S. 74/430,885 Body protectors.
PROWLER Canada 732,968 TMA 432,522 In-line roller skates.
PROWLER U.S. 74/415,176 1,871,999 In-line roller skates.
RAPIDE Canada 379,991 TMA 214,942 Skating boots.
Rectangle tongue design (#15) Canada 651,814 Skates.
</TABLE>
<PAGE>
-- 10 --
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL No REG. No WARES
- ------------------------------ ------------- ---------- ------------ --------------------------------------------------------
<S> <C> <C> <C> <C>
REVOLVER Canada 740,168 TMA 434,561 In-line roller skates and chassis.
REVOLVER U.S. 74/454,126 In-line roller skates and chassis.
ROLLERMAN Canada 768,455 Clothing.
ROLLERMAN U.S. 74/595,665 Clothing.
Rollerman & Design Canada 781,431 Clothing.
Rollerman & Design Canada 781,430 Clothing.
Rollerman & Design Canada 781,429 Clothing.
Rollerman & Design U.S. 2,037,755 Clothing.
Rollerman & Design U.S. 2,037,754 Clothing.
Rollerman & Design U.S. 74,667,475 Clothing.
Roller skater design (#31) Canada 708,639 TMA 440,812 In-line roller skates and protective equipment.
Roller skater design (#31) U.S. 74/348,380 In-line roller skates and protective equipment.
Shield design (#1) Canada 589,573 TMA 345,475 Skates.
Shield design (#1) Canada 589,575 TMA 345,476 Skates.
Shield design (#2) Canada 589,504 TMA 353,527 Skates.
Shield design (#2) Canada 589,574 TMA 357,580 Skates.
SILHOUETTE Canada 465,584 TMA 269,382 Ladies figure skates.
SILHOUETTE Canada 531,848 TMA 313,161 Skates.
SKATE ON THE WILD SIDE Canada 757,340 In-line roller skates.
SKATE ON THE WILD SIDE U.S. 74/541,022 In-line roller skates.
SKYHAWK Canada 732,966 TMA 441,394 In-line roller skates.
SKYHAWK U.S. 74/415,187 In-line roller skates.
</TABLE>
<PAGE>
-- 11 --
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL No REG. No WARES
- ------------------------------ ------------- ---------- ------------ --------------------------------------------------------
<S> <C> <C> <C> <C>
SL 5000 Canada TMA 326,315 Ice Skate blades and guards.
SLM Canada TMA 215,566 Ice Skate blades.
SLM Canada TMA 262,331 Core-caps for the newspaper print industry, toe caps for
safety shoes.
SLM & Design Canada TMA 361,133 Ice Skates, sledges, snow discs, children's skis and
poles, showels; mechanic creepers.
SLM Canada TMA 263,523 Ice Skate blades.
SLM & DESIGN U.S. 1,584,533 Sporting Goods.
SPORT TACKS Canada 543,903 TMA 314,832 Skates.
STARFIGHTER Canada 732,970 TMA 432,524 In-line roller skates.
STARFIGHTER U.S. 74/415,184 1,873,343 In-line roller skates.
SUPERFIL Canada 403,220 TMA 241,265 Jerseys.
SUPER LINE design (#19) Canada 652,220 TMA 414,320 Protective hockey equipment.
SUPER TACKS Canada 411,737 TMA 230,793 Skating boots and skating outfits, namely, skating boots
and skates.
SUPRA Canada 538,758 TMA 359,918 Hockey equipment, namely hockey pants, elbow pads,
shoulder pads, leg protectors and hockey gloves.
SUPRA U.S. 74/596,851 Hockey pants, elbow pads, shoulder pads, leg
protectors and hockey gloves.
SUPRA Canada 769,189 Hockey equipment, namely ice hockey sticks, in-line
hockey sticks, street hockey sticks and their
components.
</TABLE>
<PAGE>
-- 12 --
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL No REG. No WARES
- ------------------------------ ------------- ---------- ------------ --------------------------------------------------------
<S> <C> <C> <C> <C>
SUPRA U.S. 74/595,663 Hockey equipment, namely ice hockey sticks, in-line
hockey sticks, street hockey sticks and their
components.
T Design (#20) Canada 655,330 TMA 389,383 Hockey skates.
T Design (#21) Canada 655,334 TMA 384,713 Hockey skates.
TACKABERRY Canada 189,763 UCA 23338 Boots and shoes and skates and skating boots.
TACKABERRY U.S. 75/207,841 Skating boots and skating sets comprising skates and
boots.
TACKS Canada 307,832 TMA 161,826 Skates.
TACKS U.S. 72/379,341 934,407 Combined skating boots and skates.
TACKS DESIGN (#12) Canada 589,505 TMA 345,223 Skates.
TACKSACK Canada 624,467 TMA 363,413 Skate molds.
TACKSACK U.S. 73/796,465 1,665,650 Skate fitting system.
TALON Canada 732,965 TMA 432,520 In-line roller skates.
TALON U.S. 74/415,182 In-line roller skates.
TEMPO U.S. 74/185,788 1,735,015 Protective sports crash helmets and body pads.
TOMCAT Canada 732,963 TMA 432,519 In-line roller skates.
TOMCAT U.S. 74/415,183 In-line roller skates.
TPP Canada 458,739 TMA 276,596 Hockey equipment.
TURN ON THE POWER Canada 711,176 TMA 415,526 Ice skates.
Two lines on glove design (#17) Canada 505,395 TMA 296,361 Hockey gloves.
ULTRA PAC Canada 479,249 TMA 312,225 Hockey equipment.
ULTRA TACKS Canada 497,248 TMA 306,794 Skates.
</TABLE>
<PAGE>
-- 13 --
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL No REG. No WARES
- ------------------------------ ------------- ---------- ------------ --------------------------------------------------------
<S> <C> <C> <C> <C>
ULTRAFIL Canada 447,279 TMA 273,539 Jerseys, hockey jerseys.
VAKUTACK U.S. 73/782,212 1,601,040 Ice skates.
VAKUTACK Canada 619,217 TMA 360,783 Ice skates.
VOYAGEUR Canada 511,600 TMA 313,101 Skates.
</TABLE>
<PAGE>
-- 14 --
FOREIGN COUNTRIES
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL No REG. No WARES
- ------------------------------ ------------- ---------- ------------ --------------------------------------------------------
<S> <C> <C> <C> <C>
PROLITE Australia B281,916 Hockey equipment including ice hockey equipment.
TACKS Australia A281,915 Hockey equipment.
- ------------------------------------------------------------------------------------------------------------------------------------
TACKS Austria 65,301 Bicycles and accessories, rowing machines; skates,
protective equipment, pucks, roller skates, tennis and
badminton racquets, hockey sticks, gym equipment.
TACKS Austria 132,454
PROLITE Austria 64,821 Hockey equipment.
TACKABERRY Austria 64,882 Bicycles and accessories, rowing machines; skates,
protective equipment, pucks, roller skates, tennis and
badminton racquets, hockey sticks, gym equipment.
- ------------------------------------------------------------------------------------------------------------------------------------
ORBIT Benelux 352.017 Hockey skates and figure skates.
PROLITE Benelux 1719 Protective helmets, bicycles and accessories, skates,
protective equipment, tennis and badminton racquets,
exercise machines.
TACKABERRY Benelux 1830 Protective helmets, bicycles and accessories, skates,
protective equipment, tennis and badminton racquets,
exercise machines.
TACKS Benelux 1950 Bicycles and accessories, ice skates, exercise machines.
- ------------------------------------------------------------------------------------------------------------------------------------
TACKABERRY Finland 58,817 Hockey skates and figure skates.
TACKS Finland 59,307 Sporting and gymnasium equipment, sport shoes.
PROLITE II Finland 84,042 Skate blades.
PROLITE Finland 59,111 Hockey equipment.
</TABLE>
<PAGE>
-- 15 --
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL No REG. No WARES
- ------------------------------ ------------- ---------- ------------ --------------------------------------------------------
<S> <C> <C> <C> <C>
PROPAC Finland 84,431
- ------------------------------------------------------------------------------------------------------------------------------------
ORBIT France 1,469,749 Hockey skates and figure skates.
TACKS France 1,524,859 Sporting and gymnasium equipment, bicycles, sport
shoes.
PROLITE France 1,524,860 Sporting and gymnasium articles, bicycles and
accessories.
PROLITE II France 1,622,043 Skate blades.
TACKABERRY France 1,524,858 Sporting and gymnastic articles, bicycles and
accessories.
- ------------------------------------------------------------------------------------------------------------------------------------
Back of Skate Design Germany 2,093,858 Hockey skates.
PROLITE Germany 872,209 Bicycles; skates, protective equipment, tennis and
badminton racquets, hockey sticks, baseball bats, skis,
helmets, training machines; separate for hockey and
other play racquets.
PROLITE II Germany 1,019,726 Skate blades.
TACKABERRY Germany 872,210 Bicycles; skates, protective equipment, tennis and
badminton racquets, hockey sticks, baseball bats, skis,
helmets, training machines; separate for hockey and
other play racquets.
TACKS Germany 907,230 Sporting and gymnasium equipment, sport shoes.
- ------------------------------------------------------------------------------------------------------------------------------------
PROLITE II Italy 488,108 Skate blades.
PROLITE Italy 249,656 Ice skates, protective equipment, helmets, exercise
machines, racquets.
TACKABERRY Italy 249,889 Ice skates, protective equipment, helmets, exercise
machines, racquets.
</TABLE>
<PAGE>
-- 16 --
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL No REG. No WARES
- ------------------------------ ------------- ---------- ------------ --------------------------------------------------------
<S> <C> <C> <C> <C>
TACKS Italy 249,890 Ice skates, protective equipment, helmets, exercise
machines, racquets.
- ------------------------------------------------------------------------------------------------------------------------------------
PROLITE II Japan 2,206,714 Steel blades for ice skates and all other goods included
in this class.
PROLITE Japan 910,500 Ice skates and hockey equipment.
PROPAC Japan 2,009,783 Hockey equipment.
TACKS Japan 910,502 Ice skates and hockey equipment.
PRO-GARD Japan 604,462 Hockey equipment.
- ------------------------------------------------------------------------------------------------------------------------------------
TACKS New Zealand 109,079 Hockey equipment, ice skates and ice skating sets,
being ice skates fitted to skating boots.
- ------------------------------------------------------------------------------------------------------------------------------------
PROLITE Norway 81,590 Skates, protective equipment, hockey sticks, exercise
machines.
TACKABERRY Norway 81,589 Skates, protective equipment, hockey sticks, exercise
machines.
TACKS Norway 81,588 Skates, protective equipment, bicycles and accessories,
hockey sticks, helmets, exercise machines.
- ------------------------------------------------------------------------------------------------------------------------------------
PROLITE II Slovak Republic 165,662 Steel blades for ice skates.
PROPAC Slovak Republic 165,154 Hockey equipment.
- ------------------------------------------------------------------------------------------------------------------------------------
ORBIT Sweden 165,113
TACKABERRY Sweden 130,549 Games and playthings; gymnastic and sporting articles
(except clothing), ornaments and decorations for
Christmas trees.
</TABLE>
<PAGE>
-- 17 --
<TABLE>
<CAPTION>
TRADEMARK COUNTRY SERIAL No REG. No WARES
- ------------------------------ ------------- ---------- ------------ --------------------------------------------------------
<S> <C> <C> <C> <C>
TACKS Sweden 130,665 Games and playthings, gymnastic and sporting articles
(except clothing), ornaments and decorations for
Christmas trees.
PROLITE II Sweden 177,561
PROPAC Sweden 177,778
PROLITE Sweden 101,307
PROLITE Sweden 142,044
PROGARD Sweden 106,509
PROGARD Sweden 193,703
- ------------------------------------------------------------------------------------------------------------------------------------
PRO-GARD & DESIGN Switzerland 379,340 Hockey gloves.
PROLITE Switzerland 374,833 Skates, protective equipment, exercise equipment,
racquets, bicycles.
PROLITE II Switzerland 309,554 Skate blades.
TACKABERRY Switzerland 374,483 Exercise and sports equipment; skates, sticks,
protective equipment, bicycles, racquets.
TACKS Switzerland 874,834 Exercise and sports equipment; skates, bicycles and
accessories, sports clothing, protective equipment.
- ------------------------------------------------------------------------------------------------------------------------------------
PROLITE U.K. 924,501 Ice skates, ice skating sets, being ice skates fitted to
skating boots.
PROLITE II U.K. 1,143,595 Ice skates and parts and fittings therefor.
TACKABERRY U.K. 924,503
TACKS U.K. 924,502 Ice skates and ice skating sets, being ice skates fitted
to skating boots.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-- 18 --
SUPPLEMENTAL LIST
SPORT MASKA INC.
REGISTERED TRADE-MARKS -- APPLICATIONS
<TABLE>
<CAPTION>
CANADA
Trademark Serial No Wares
- -------------------------------------- ------------------ ----------------------------------------------------------------
<S> <C> <C>
DRYLAND 819,172 In-line, street & roller hockey equipment & apparel.
DRYLAND & SKULL DESIGN 819,173 In-line, street & roller hockey equipment & apparel.
<CAPTION>
UNITED STATES
Trademark Serial No Wares
- -------------------------------------- ------------------ ----------------------------------------------------------------
<S> <C> <C>
THE HOCKEY COMPANY 75/015,219 Ice, street & roller hockey equipment, accessories & clothing.
YA WANNA GO 75/035,669 Clothing in Class 25.
DRYLAND 75/138,305 In-line, street & roller hockey equipment & apparel.
DRYLAND & SKULL DESIGN 75/069,210 In-line, street & roller hockey equipment & apparel.
DES 75/148,937 In-line skates.
DYNAMIC ENERGY SYSTEM 75/148,938 In-line skates.
ACTIVE VENTILATION 75/147,985 In-line skates.
TECHNOLOGY
AVT 75/147,986 In-line skates.
ES 75/197,104 In-line skates.
ES & DESIGN 75/197,105 In-line skates.
</TABLE>
<PAGE>
-- 19 --
<TABLE>
<CAPTION>
CANADA
Trademark Serial No Wares
- -------------------------------------- ------------------ ----------------------------------------------------------------
<S> <C> <C>
DST 75/219,014 Hockey skates.
</TABLE>
<PAGE>
================================================================================
-- 20 --
B.3 Business or Firm names (par. 11.7)
CCM/Sport Maska
CCM - Maska
CCM - Sport Maska
Sport Maska - CCM
Sport Maska / CCM
SLM Canada
SLM
The Hockey Company
/s/CCM/Maska /s/CC /s/DBR
B.4 [NOT USED]
B.5 Claims subject to the Financial Administration Act
(par 11.12)
NONE
B.6 Claims Secured by registered hypothecs (par. 11.13)
NONE
***** ***** *****
The foregoing is Schedule "B" annexed to the Deed of hypothec granted by Sport
Maska Inc. in favour of The Chase Manhattan Bank of Canada dated as of the first
(1st) day of April, Nineteen hundred and ninety-seven (1997) and recognized as
true and signed by the representatives therein mentioned.
/s/ Illegible
----------------------------------------
/s/ Illegible
----------------------------------------
/s/ Illegible
----------------------------------------
----------------------------------------
TRUE COPY
/s/ Illegible
================================================================================
<PAGE>
================================================================================
SCHEDULE "C"
(par. 11.10)
Location of Charged Property
C.1 Charged Property Located in Quebec
Address(es)
15855 Hubert 8401 Ray-Lawson Boulevard
St-Hyacinthe, Quebec Anjou, Quebec
J2T 4C9 H1J 1K5
2245 St-Paul 7801 Jarry East
St-Hyacinthe, Quebec Anjou, Quebec
J2T 2A2 H1J 1H3
600 Industriel 432 Isabey
St-Jean-sur-Richelieu, Quebec St.Laurent, Quebec
J3B 4S7 H4T 1V3
175 Dessaureault 500 Sauve West
Cap-de-la-Madeleine, Quebec #104A
G8T 2L5 Montreal, Quebec
H3L 1Z8
6375 Picard 1145 Belanger
St-Hyacinthe, Quebec Sherbrooke, Quebec
J2S 1H3 J1K 2E1
7405 Trans-Canada Highway 3030 Ste-Anne Boulevard
Suite 300 Beauport, Quebec
Ville Saint-Laurent, Quebec G1E 6N1
H4T 1Z2
3125 Bernard Pilon 5889, rue Principale
Loc. H-8 Ascot Corner, Quebec
St-Mathieu de Beloeil, Quebec J0S 1A0
J3G 4S5
800 Melchers 5575, Casgrain
Berthierville, Quebec Montreal, Quebec
J0K 1A0 H2T 1Y1
================================================================================
<PAGE>
================================================================================
-- 2 --
C.2. Charged Property Located Outside of Quebec
Address(es)
6539A Mississauga Road P.O. Box 20172208 Air Park
Mississauga, Ontario Drive
L5N 1A6 Burlington, N.C. 27218
USA
1 Adelaide St. N., Unit 13
London, Ontario
N6B 3P8
530 Governors Road 155 Signet Drive
Guelph, Ontario Weston, Ontario
N1K 1E3 M9L 1V1
375 Sligo Road West 3336 North Service Road
P.O. Box 850 Unit 2-3
Mount Forest, Ontario Burlington, Ontario
N0G 2L0 L7N 3G2
Maravel 7-9
OK-7430, IKAST
DENMARK
C.3. Property Intended to be Used in More Than One Province or Jurisdiction
Address(es), Provinces or States
NONE
***** ***** *****
The foregoing is Schedule "C" annexed to the Deed of hypothec granted by Sport
Maska Inc. in favour of The Chase Manhattan Bank of Canada on the first (1st)
day of April, Nineteen hundred and ninety-seven (1997) and recognized as true
and signed by the representatives therein mentioned.
/s/ Illegible
----------------------------------------
/s/ Illegible
----------------------------------------
/s/ Illegible
----------------------------------------
----------------------------------------
================================================================================
TRUE COPY
/s/ Illegible
PLEDGE AGREEMENT
AND
IRREVOCABLE PROXY
BEFORE Mtre Richard Trudeau, the undersigned notary for the
Province of Quebec, practicing in the City of Longueuil,
APPEARED: THE BANK OF NEW YORK, a banking corporation organized under the Laws
of the State of New York, (U.S.A.) having its head office at 101 Barclay Street,
21 West, New York, New York, 10286, U.S.A., herein acting and represented by
Marie E. Trimboli, its Assistant Treasurer, hereunto duly authorized for the
purposes hereof as she so declares. Notice of its address will be registered at
the Register of Personal and Movable Real Rights concurrently with the
registration of this Deed.
(hereinafter the "Trustee")
AND: SLM TRADEMARK ACQUISITION CANADA CORPORATION, a legal person being a
corporation continued under the Business Corporations Act (New Brunswick),
having its registered office at c/o Stewart McKelvey Stirling Scales, 10th
Floor, Brunswick House, 44 Chipman Hill, P.O. Box 7289, Postal Station "A",
Saint John, New Brunswick, E2L 4S6 and its principal place of business at 7405
Trans-Canada Highway, Suite 300, Ville Saint-Laurent, Quebec H4T 1Z2, herein
acting and represented by Bruce Randall, its Secretary, duly authorized for the
purposes hereof pursuant to a resolution adopted by its shareholders on April ,
1997, a certified copy of which is annexed hereto after having been acknowledged
true and signed for the purpose of identification by said representative in the
presence of the undersigned Notary.
(hereinafter the "Grantor")
WHICH PARTIES HAVE DECLARED AS FOLLOWS:
WHEREAS THIS PLEDGE AGREEMENT shall bear formal date of April 1, 1997,
notwithstanding it actual date of execution, and
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is made between SLM Trademark Acquisition Canada Corporations Act (the
"Grantor") and The Bank of New York, a banking corporation organized and
existing under the laws of the State of New York, as trustee and collateral
agent (the "Trustee") for the Holders referred to in the Senior Secured Note
Indenture dated as of the date hereof, among SLM International, Inc. (the
"Company"), as issuer, the Guarantors named therein, as guarantors, and the
Trustee (as supplemented or modified from time to time in accordance with its
terms, the "Indenture"). All capitalized terms used herein and not defined
herein shall have the meanings set forth in the Indenture.
WHEREAS the Holders have agreed to acquire the Securities pursuant to, and
subject to the terms and conditions of, the Indenture. Pursuant to the terms of
the Indenture, the Grantor is required to execute and deliver a pledge agreement
in the form hereof to secure the following (collectively, the "Secured
Obligations"): all Obligations (such Obligations to include, without limitation,
the due and punctual payment and performance of (a) the principal of and
interest on the Securities (including the payment of amounts that would become
due but for the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, 11 U.S.C. ss.362(a), and interest that, but for the filing of a
petition in bankruptcy with respect to the Company, would accrue on such
obligations, whether or not a claim is allowed against the Company for such
interest in the related bankruptcy proceeding), when and as due, whether at
maturity, by acceleration, upon one or more dates set for redemption or
otherwise, (b) all obligations of the Grantor at any time and from time to time
under this Pledge Agreement and (c) all other obligations of the Grantor at any
time and from time to time under the Indenture and the Collateral Documents).
Accordingly, the Grantor and the Trustee hereby agree as follows:
1. Pledge. As security for the payment and performance in full of the Secured
Obligations, the Grantor hereby pledges
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(hypothecates) and, subject to the Intercreditor Agreement, delivers unto the
Trustee all of the Grantor's right, title and interest in and to, 2,000 class A
shares in the capital of Gestion CCM (1983) Inc./CCM Holdings (1983) Inc.
("CCM") owned by the Grantor (the "Initial Pledged Stock") represented by
certificate No.: 5 and hereby hypothecates any additional shares of the capital
of, and all securities convertible into and warrants, options and other rights
to purchase or otherwise acquire shares in the capital of CCM or any corporation
successor thereto pursuant to an amalgamation or other reorganization, obtained
in the future by the Grantor (collectively, the Initial Pledged Stock together
with all such additional shares and securities pledged in the future, the
"Pledged Stock") and (b) subject to Section 5 below, all proceeds of the Pledged
Stock, including, without limitation, all cash, dividends, securities or other
property at any time and from time to time receivable or otherwise distributed
in respect of or in exchange for pursuant to a purchase, redemption, conversion
or cancellation or other transformation for any of or all such Pledged Stock and
all accessions and substitutions thereto (the items referred to in clauses (a)
and (b) being collectively called the "Collateral"). Upon delivery to the
Trustee, all securities now or hereafter included in the Collateral including,
without limitation, the Pledged Stock shall be accompanied by an undated stock
power duly executed in blank or another an other instrument of transfer
satisfactory to the Trustee and by such other instruments and documents as the
Trustee may reasonably request. Each delivery of Pledged Securities shall be
accompanied by a schedule showing a description of the securities theretofore
and then being pledged hereunder. Each schedule so delivered shall supersede any
prior schedules so delivered.
The amount of the hypothecs granted hereby shall be Cdn $75,000,000 with
interest thereon, from the date hereof at the rate of 25% per annum.
2. Delivery of Collateral. Subject to the Intercreditor Agreement, the Grantor
agrees to deliver promptly or cause to be delivered promptly to the Trustee, for
its own benefit and for the
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benefit of the Holders, any and all Pledged Stock, and any and all certificates
or other instruments or documents representing any of the Collateral (together
with any necessary stock power or endorsement).
3. Representations, Warranties and Covenants. The Grantor hereby represents,
warrants and covenants as to itself and the Collateral pledged by it hereunder
to and with the Trustee that:
(a) except for the hypothecs granted to the Trustee and Liens permitted
under the Indenture, the Grantor (i) is and, subject to the provisions of the
Indenture, will at all times continue to be the direct owner, beneficially and
of record, of the Pledged Stock that it is pledging hereunder, (ii) holds the
Collateral that it is pledging hereunder free and clear of all Liens, charges,
encumbrances and security interests of every kind and nature, and (iii) will
make no assignment, pledge, hypothecation or, subject to the provisions of the
Indenture, transfer of, grant any option or similar right with respect to, or
create or suffer to exist any security interest in, the Collateral (or any part
thereof) that it is pledging hereunder including, without limitation, by virtue
of becoming bound by any agreement which restricts in any manner the rights of
any present or future holder of any Pledged Stock with respect thereto, and (iv)
subject to Section 5 below and the Intercreditor Agreement, will cause any and
all Collateral, whether for value paid by the Grantor or otherwise, to be
forthwith deposited with the Trustee and pledged or assigned hereunder;
(b) the Grantor (i) has the requisite power and authority to pledge the
Collateral it is pledging hereunder in the manner hereby done or contemplated
and (ii) will defend its title or interest thereto or therein against any and
all Liens, however arising, of all Persons whomsoever (other than the Liens
permitted by the Indenture);
(c) no consent or approval not obtained of any governmental body or
regulatory authority or any securities
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exchange was or is necessary to the validity of the pledge and
Hypothec effected hereby;
(d) by virtue of the execution and delivery by the Grantor of this
Agreement, when the certificates, instruments or other documents representing or
evidencing the Collateral are delivered to the Trustee in accordance with this
Agreement, the Trustee will obtain a valid hypothec in such Collateral as
security for the repayment of the Secured Obligations;
(e) the pledge effected hereby is effective to vest in the Trustee the
rights of the Trustee in the Collateral as set forth herein;
(f) all of the Pledged Stock has been duly authorized and validly issued
and as at the date hereof, the Initial Pledged Stock constitutes 50% of the
issued and outstanding shares of the capital stock of CCM;
(g) the Grantor shall pledge hereunder, immediately upon its acquisition
(directly of indirectly) thereof, any and all shares of the capital of any
Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct Subsidiary of the Grantor.
All representations, warranties and covenants of the Grantor contained in this
Agreement shall survive the execution, delivery and performance of this
Agreement until the termination of this Agreement pursuant to Section 14 hereof.
4. Registration in Nominee Name; Denominations. Subject to the Intercreditor
Agreement, upon the occurrence and during the continuance of an Event of
Default, the Trustee shall have the right (in its sole and absolute discretion
with subsequent notice to the Grantor) to hold the Pledged Securities in its own
name or the name of its nominee. In addition, the Trustee shall at all times
have the right to exchange the certificates representing any of the
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Pledged Stock for certificates of smaller or larger denominations for any
purpose consistent with this Agreement.
5. Voting Rights; Dividends; Irrevocable Proxy; etc. (a) Unless and until an
Event of Default shall have occurred and be continuing:
(i) The Grantor shall be entitled to exercise any and all voting and/or
consensual rights and powers accruing to an owner of the Pledged Stock or any
part thereof for any purpose not inconsistent with the terms of this Agreement,
the Indenture, and the other Collateral Documents, provided that such action
would not adversely affect the rights and remedies inuring to the Trustee or the
Holders under this Agreement or the Indenture or the ability of the Trustee or
the Holders to exercise the same.
(ii) The Trustee shall execute and deliver to the Grantor, or cause to be
executed and delivered to the Grantor, all such proxies, powers of attorney, and
other instruments as the Grantor may reasonably request for the purpose of
enabling the Grantor to exercise the voting and/or consensual rights and powers
which it is entitled to exercise pursuant to subparagraph (i) above and to
receive the cash dividends it is entitled to receive pursuant to subparagraph
(iii) below.
(iii) The Grantor shall be entitled to receive and retain any and all cash
dividends paid on the Pledged Stock only to the extent that such cash dividends
are permitted by, and otherwise paid in accordance with the terms and conditions
of the Indenture, the Collateral Documents and applicable laws. Any and all
x. noncash dividends,
y. return of capital, capital surplus or paid-in surplus, dividends paid or
payable in cash or otherwise in connection with a partial or total liquidation
or dissolution, and
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z. other distributions made on or in respect of Pledged Securities (other
than distributions described in the initial sentence in (a)(iii) above), whether
paid or payable in cash or otherwise, whether resulting from a subdivision,
combination or reclassification of the outstanding share capital of CCM or
received in exchange for Pledged Stock or any part thereof, or in redemption
thereof, as a result of any merger, consolidation, acquisition or other exchange
of assets to which CCM may be a party or otherwise, shall be and become part of
the Collateral, and, if received by the Grantor, shall not be commingled by the
Grantor with any of its other funds or property but shall be held separate and
apart therefrom, shall be held in trust for the benefit of the Trustee and the
Holders and, subject to the Intercreditor Agreement, shall be forthwith
delivered to the Trustee in the same form as so received (with any necessary
endorsement).
(b) Upon the occurrence and during the continuance of an Event of Default,
all rights of the Grantor to receive any dividends, shares, instruments,
securities, and other distributions which the Grantor is authorized to receive
pursuant to paragraph (a)(iii) of this Section 5 shall cease, and all such
rights shall thereupon become vested in the Trustee, which shall have the sole
and exclusive right and authority to receive and retain the dividends, shares,
instruments, securities and other distributions which the Grantor is authorized
to receive pursuant to paragraph (a)(iii) of this Section 5. All dividends,
shares, instruments, securities and other distributions which the Grantor is
authorized to receive pursuant to paragraph (a)(iii) of this Section 5 which are
received by the Grantor contrary to the provisions of this Section 5(b) shall be
received in trust for the benefit of the Trustee, shall be segregated from other
property or funds of the Grantor and shall be forthwith delivered to the Trustee
as Collateral in the same form as so received (with any necessary endorsement).
Any and all money and other property paid over to or received by the Trustee
pursuant to the provisions of this Section 5(b) shall be retained by the Trustee
in an account to be established by the Trustee upon receipt of such money or
other property and shall be applied in accordance with the provisions of
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Section 9 hereof. After all Events of Default have been cured or waived, in
writing, the Grantor shall again be entitled to receive dividends, shares,
instruments, securities and other distributions which the Grantor is entitled to
receive pursuant to paragraph (a)(iii) of this Section 5.
(c) Upon the occurrence and during the continuance of an Event of Default,
all rights of the Grantor to exercise the voting and consensual rights and
powers which it is entitled to exercise pursuant to Section 5(a)(i) shall cease,
and pursuant to the irrevocable proxy granted herein, all such rights shall
thereupon become vested in the Trustee, which shall have the sole and exclusive
right and authority to exercise such voting and consensual rights and powers;
provided that, unless otherwise directed by the Requisite Holders, the Trustee
shall have the right from time to time following and during the continuance of
an Event of Default to permit the Grantor to exercise such rights. After all
Events of Default have been cured or waived, the Grantor shall have the right to
exercise the voting and consensual rights and powers that it would otherwise be
entitled to exercise pursuant to the terms of paragraph (a)(i) above and the
obligations of the Trustee pursuant to the terms of paragraph (a)(ii) of this
Section 5 shall be reinstated.
(d) In order to permit the Trustee to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant to Section 5(c)
and to receive all dividends and other distributions which it may be entitled to
receive under Section 5(a)(iii) or Section 5(b), the Grantor shall promptly
execute and deliver (or cause to be executed and delivered) to the Trustee all
such proxies, dividend payment orders and other instruments as the Trustee may
from time to time reasonably request.
Without limiting the effect of the foregoing, each Grantor does hereby
constitute and appoint the Trustee as its proxy, and the Trustee shall have the
right, upon the occurrence and during the continuance of an Event of Default, to
exercise all rights, benefits, privileges and powers accruing to the Grantor, as
owner of the
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Pledged Stock, including, without limitation, giving or withholding consent,
calling and attending shareholders meetings to be held from time to time with
full power to vote and act for and in the name, place and stead of the Grantor
and in the same manner, to the same extent, and with the same effect that the
Grantor would if personally present at such meetings, giving to the Trustee full
power of substitution and revocation, which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Stock on the record books of CCM) by any Person (including CCM or
any officer or agent thereof).
THIS PROXY IS IRREVOCABLE
Other than the proxies given by the Grantor to the Agent, any proxy of proxies
heretofore given by any Grantor to any Person or Persons whatsoever are hereby
revoked. This proxy shall continue in full force and effect until such time as
all Secured Obligations are paid and satisfied in full in accordance with the
terms of the Indenture.
6. Issuance of Additional Stock. Except as may be permitted by the Indenture,
the Grantor agrees that it will cause each of its Subsidiaries not to issue any
shares or other securities, whether in addition to, by stock dividend or other
distribution upon, or in substitution for, the Pledged Stock or otherwise.
7. Supplemental Documentation. In connection with the execution and delivery of
this Agreement the Grantor shall furnish or cause to be furnished to the Trustee
on or prior to the Closing Date a certificate, substantially in the form of
Annex A annexed hereto after having been acknowledged true and signed for the
purpose of identification by the representatives herein mentioned with and in
the presence of the undersigned notary, signed by an Authorized Officer of the
Grantor dated the Closing Date, certifying that, as of the date of such
certificate, all representations and warranties of the Grantor in Section 3
hereof are true and
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correct and that the Grantor is in compliance with all conditions, agreements
and covenants to be observed or performed hereunder.
8. Remedies upon Event of Default. Subject to the Intercreditor Agreement, if an
Event of Default shall have occurred and be continuing, the Trustee may, in
addition to all other rights and remedies provided for herein or otherwise
available to it, including all the rights and remedies of hypothecary creditor
under the Civil Code of Quebec, sell or otherwise dispose of all or any part of
the Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the Trustee
shall deem appropriate. Each such purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of the
Grantor, and the Grantor hereby waives (to the extent permitted by law) all
rights of redemption, stay and appraisal which the Grantor now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted.
The Trustee shall give the Grantor 10 days' written notice (which the Grantor
agrees is reasonable notice for all purposes under applicable law) of the
Trustee's intention to make any sale of the Grantor's Collateral. Such notice,
in the case of a public sale, shall state the time and place for such sale and,
in the case of a sale at a broker's board or on a securities exchange, shall
state the board or exchange at which such sale is to be made and the day on
which the Collateral, or portion thereof, will first be offered for sale at such
board or exchange. Any such public sale shall be held at such time or times
within ordinary business hours and at such place or places as the Trustee may
fix and state in the notice of such sale. At any such sale, the Collateral, or
portion thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Trustee may (in its sole and absolute discretion) determine. The
Trustee shall not be obligated to make any sale of any Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Trustee may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time
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by announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Trustee until the sale price is paid in full by the purchaser or purchasers
thereof, but the Trustee shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public sale made pursuant to this Section 8, the Trustee may bid
for or purchase, free (to the extent permitted by law) from any right of
redemption, stay or appraisal on the part of the Grantor (all said rights being
also hereby waived and released to the extent permitted by law), with respect to
the Collateral or any part thereof offered for sale and the Trustee may make
payment on account thereof by using any claim then due and payable to the
Trustee from the Grantor as a credit against the purchase price, and the Trustee
may, upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to the Grantor therefor. The Grantor
shall remain liable for any deficiency. For purposes hereof, a written agreement
to purchase the Collateral or any portion thereof shall be treated as a sale
thereof; the Trustee shall be free to carry out such sale pursuant to such
agreement, and the Grantor shall not be entitled to the return of the Collateral
or any portion thereof subject thereto, notwithstanding the fact that after the
Trustee shall have entered into such an agreement all Events of Default shall
have been remedied and the Secured Obligations paid in full. As an alternative
to exercising the power of sale herein conferred upon it, the Trustee may
proceed by a suit or suits at law to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.
9. Application of Proceeds of Sale. The proceeds of any sale of Collateral, as
well as any Collateral consisting of cash, shall be
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applied by the Trustee in accordance with Section 506 of the Indenture.
10. Trustee Appointed Attorney-in-Fact. The Grantor hereby appoints the Trustee
the attorney-in-fact of the Grantor upon the occurrence and during the
continuance of an Event of Default solely for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any instrument
which the Trustee may deem necessary or advisable to accomplish the purposes
hereof, which appointment is irrevocable. Without limiting the generality of the
foregoing, the Trustee shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Trustee's name or in the name of the Grantor, to ask for, demand, sue for,
collect, receive receipt and give acquittance for any and all moneys due or to
become due and under and by virtue of any Collateral, to endorse checks, drafts,
orders and other instruments for the payment of money payable to the Grantor
representing any interest or dividend, or other distribution payable in respect
of the Collateral or any part thereof or on account thereof and to give full
discharge for the same, to settle, compromise, prosecute or defend any action,
claim or proceeding with respect thereto, and to sell, assign, endorse, pledge,
transfer and make any agreement respecting, or otherwise deal with, the same;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Trustee or the Holders to make any commitment or to make any
inquiry as to the nature or sufficiency of any payment received by the Trustee
or the Holders, or to present or file any claim or notice, or to take any action
with respect to the Collateral or any part thereof or the moneys due or to
become due in respect thereof or any property covered thereby, and no action
taken by the Trustee or the Holders or omitted to be taken with respect to the
Collateral or any part thereof shall give rise to any defense, counterclaim or
offset in favor of the Grantor or to any claim or action against the Trustee or
the Holders in the absence of the gross negligence or wilful misconduct of the
Trustee or the Holders.
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11. No Waiver. No failure on the part of the Trustee to exercise, and no delay
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 by the Trustee preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. The
Trustee and the Holders shall not be deemed to have waived any rights hereunder
or under any other agreement or instrument unless such waiver shall be in
writing and signed by such parties.
12. Security Interest Absolute. All rights of the Trustee hereunder, the grant
of hypothecs in the Collateral and all obligations of the Grantor hereunder,
shall be absolute and unconditional irrespective of (i) any lack of validity or
enforceability of the Indenture, any guarantee or other agreement with respect
to any of the Secured Obligations or any other agreement or instrument relating
to any of the foregoing, (ii) any change in 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 Indenture or any
other agreement or instrument, (iii) any exchange, release or nonperfection of
any Lien on other collateral, or any release or amendment or waiver of or
consent to or departure from any guarantee, for all or any of the Secured
Obligations or (iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Grantor in respect of the Secured
Obligations or in respect of this Agreement (other than the indefeasible payment
in full of all of the Secured Obligations and subject to Section 14 of this
Agreement).
13. Trustee's Fees and Expenses. The provisions of Sections 503 and 607 of the
Indenture with respect to the reimbursement of fees and expenses and
indemnification are hereby deemed incorporated herein in their entirety and
shall be binding upon the Grantor as if set forth herein, and the Grantor shall
be obligated to, (x) upon demand, pay to the Trustee the amount of any and all
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reasonable expenses, including the reasonable fees and expenses of its counsel
and of any experts or agents which the Trustee may incur in connection with (i)
the administration of this Agreement, (ii) the custody or preservation of, or
the sale or other disposition of, collection from, or other realization upon,
any of the Collateral, (iii) the exercise or enforcement of any of the rights of
the Trustee hereunder or (iv) the failure by the Grantor to perform or observe
any of the provisions hereof, and (y) indemnify the Trustee and the Holders. Any
such amounts payable as provided hereunder or thereunder shall be additional
Secured Obligations secured hereby and by the other Security Documents. The
obligations contained in this Section 13 shall survive the termination of this
Agreement or the resignation or removal of the Trustee.
14. Termination. This Agreement shall terminate when all the Secured Obligations
have been fully and indefeasibly paid in cash, at which time the Trustee shall
reassign without any representations or warranties and deliver, to the Grantor,
or to such Person or Persons as the Grantor shall designate, against receipt,
such of the Collateral (if any) as shall not have been sold or otherwise still
be held by it hereunder, together with appropriate instruments of reassignment
and release; provided, however, that all indemnities of the Grantor contained in
this Agreement shall survive, and remain operative and in full force and effect
regardless of, the termination of this Agreement. Any such reassignment shall be
without recourse to or warranty by the Trustee and at the expense of the
Grantor. The security interest hereunder shall automatically terminate in any
Collateral that is permitted to be sold or disposed of by the Indenture or as
otherwise released pursuant to Section 1103 of the Indenture. The Trustee shall
promptly take such action, and execute such releases, termination statements or
other documents as may be reasonably requested by an interested party, at the
expense of the Grantor, to evidence the termination and releases contemplated
hereby.
15. Notices. All communications and notices hereunder shall be in writing and
shall be given (i) in the case of the Grantor in
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care of SLM International, Inc. at 7405 Trans Canada Highway, Suite 300, St.
Laurent Quebec H4T 1Z2, Canada (Telecopy No. (514) 331-7061), Attention: Russell
David, Vice President- Finance, with a copy to Morgan, Lewis & Bockius, LLP, 101
Park Avenue, New York, New York 10178-0060, Attention: David W. Pollak, Esq.
(Telecopy No. (212) 309-6273), and (ii) in the case of the Trustee, The Bank of
New York at 101 Barclay Street, 21 West, New York, New York 10286, (Telecopy
No.: 212-815-5915) Attention: Corporate Trust Administrator.
16. Further Assurances. The Grantor agrees at its expense to do such further
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Trustee may at any time
reasonably request in connection with the administration and enforcement of this
Agreement or with respect to the Collateral or any part thereof or in order
better to assure and confirm unto the Trustee its rights and remedies hereunder.
17. Binding Agreement; Assignments. This Agreement, and the terms, covenants and
conditions hereof, shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Grantor
shall not be permitted to assign this Agreement or any interest herein or in the
Collateral, or any part thereof, or otherwise pledge, encumber or grant any
option with respect to the Collateral, or any part thereof, or any cash or
property held by the Trustee as Collateral under this Agreement, except as
contemplated or permitted by this Agreement or the Indenture.
18. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE PROVINCE OF QUEBEC AND THE FEDERAL LAWS OF CANADA
APPLICABLE THEREIN.
19. Severability. In case any one or more of the provisions contained in this
Agreement should be invalid, illegal or
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unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired.
20. Counterparts. This Agreement may be executed in counterparts, each of which
shall constitute an original, but all of which, when taken together, shall
constitute but one instrument. This Agreement shall be effective when a
counterpart which bears the signature of the Grantor shall have been delivered
to the Trustee, and the Trustee shall have executed this Agreement.
21. Section Headings. Section headings used herein are for convenience only and
are not to affect the construction of, or be taken into consideration in
interpreting, this Agreement.
22. English Language. The parties hereto confirm that it is their wish that this
Agreement as well as any other documents relating thereto, including notices,
have been and shall be drawn up in the English language only.
Les parties aux presentes confirment leur volonte que cette convention de meme
que tous les documents, y compris tous avis, s'y rattachant, solent rediges en
langue anglaise seulement.
23. Intercreditor Agreement. This Agreement, including the right of Trustee to
exercise remedies hereunder, shall be subject to the terms and conditions of the
Intercreditor Agreement. Notwithstanding the foregoing or any reference to the
Intercreditor Agreement herein, the Grantor agrees and acknowledges that neither
this Agreement nor the Intercreditor Agreement provides such Grantor with any
rights as a third party beneficiary or otherwise.
WHEREOF ACT:
DONE AND PASSED in the City of Montreal, Province of Quebec, on this eleventh
day (11th) of April, Nineteen hundred and ninety-seven (1997), under number
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of the original of the minutes of the undersigned notary.
AND after the parties had declared to have taken cognizance of these presents
and to have exempted the said Notary from reading them or causing them to be
read, the said duly authorized representative of the Grantor and the Trustee
respectively have signed these presents, all in the presence of the said Notary
who has also signed.
SLM TRADEMARK ACQUISITION
CANADA CORPORATION
By: _____________________________
Bruce Randall
THE BANK OF NEW YORK, as Trustee
By: _____________________________
Marie E. Trimboli
_________________________________
Me Richard Trudeau, Notary
<PAGE>
ANNEX A
OFFICER'S CERTIFICATE
The undersigned officer of SLM Trademark Acquisition Canada Corporation, a New
Brunswick corporation, (the "Corporation") hereby certifies on behalf of the
Corporation as follows:
1. The undersigned has read the Pledge Agreement dated as of April 1, 1997 (the
"Pledge Agreement"), between the Corporation and The Bank of New York, a New
York banking corporation, as trustee and collateral agent (the "Trustee") for
the Holders referred to in the Senior Secured Note Indenture dated as of the
date hereof, among SLM International, Inc., as issuer, the guarantors named
therein (the "Guarantors") and the Trustee.
2. The representations and warranties contained in Section 3 of the Pledge
Agreement are true and correct as of the date hereof.
3. The Corporation is in compliance with all conditions, agreements and
covenants to be observed or performed under the Pledge Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this ____ day
of April, 1997.
SLM Trademark Acquisition Canada Corporation
By: _______________________________________
Name:
Title:
****** ****** *****
The foregoing is Annex A annexed to the Pledge Agreement and Irrevocable Proxy
granted by SLM Trademark Acquisition Canada Corporation in favour of The Bank of
New York before Mtre
<PAGE>
Richard Trudeau, Notary, on the eleventh (11th) day of April Nineteen hundred
and ninety-seven (1997) under number
( ) of his minutes and recognized as true and signed by the
representatives therein mentioned with and in the presence of the undersigned
Notary.
_________________________________________
_________________________________________
_________________________________________
Mtre Richard Trudeau, Notary
- 1 -
DEED OF HYPOTHEC
BETWEEN
THE BANK OF NEW YORK
AND
SLM TRADEMARK ACQUISITION CANADA CORPORATION
BEARING FORMAL DATE AS OF
APRIL 1ST, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. INTERPRETATION ........................................ 2
2. [NOT USED] ............................................ 4
3. [NOT USED] ............................................ 4
4. HYPOTHEC: DESCRIPTION OF CHARGED PROPERTY ............. 4
5. AMOUNT OF THE HYPOTHEC ................................ 7
6. SECURED OBLIGATIONS ................................... 7
7. ADDITIONAL PROVISIONS PERTAINING TO THE HYPOTHEC ON
RENTAL INCOME AND LEASES .............................. 8
8. ADDITIONAL PROVISIONS TO THE HYPOTHEC ON CLAIMS
(OTHER THAN RENTALS) ................................... 9
9. ADDITIONAL PROVISIONS TO THE HYPOTHEC ON SECURITIES ... 9
10. ASSIG SUBJECT TO THE FINANCIAL
ADMINISTRATION ACT .................................... 10
11. REPRESENTATIONS AND WARRANTIES ........................ 10
12. COVENANTS ............................................. 14
13. EVENTS OF DEFAULT ..................................... 20
14. TRUSTEE'S RECOURSES IN CASE OF DEFAULT ................ 21
15. GENERAL PROVISIONS .................................... 27
16. INTERCREDITOR AGREEMENT ............................... 30
17. GOVERNING LAW ......................................... 30
18. AMENDMENTS ............................................ 30
19. FORMAL DATE ........................................... 30
20. ENGLISH LANGUAGE ...................................... 31
<PAGE>
DEED OF HYPOTHEC
B E F O R E Mtre Richard Trudeau, the undersigned notary for the Province of
Quebec, practicing in the City of Longueuil.
APPEARED: THE BANK OF NEW YORK, a banking corporation organized under the Laws
of the State of New York, (U.S.A.) having its head office at 101 Barclay Street,
21 West, New York, New York, 10286, U.S.A., herein acting and represented by
Marie E. Trimboli, its Assistant Treasurer, hereunto duly authorized for the
purposes hereof as she so declares. Notice of its address will be registered at
the Register of Personal and Movable Real Rights concurrently with the
registration of this Deed.
(hereinafter the "TRUSTEE")
AND: SLM TRADEMARK ACQUISITION CANADA CORPORATION , a legal person being a
corporation continued under the Business Corporations Act (New Brunswick),
having its registered office at c/o Stewart McKelvey Stirling Scales, 10th
Floor, Brunswick House, 44 Chipman Hill, P.O. Box 7289, Postal Station "A",
Saint John, New Brunswick, E2L 4S6 and its principal place of business at 7405
Trans-Canada Highway, Suite 300, Ville Saint-Laurent, Quebec H4T 1Z2, herein
acting and represented by Bruce Randall, its Secretary, duly authorized for the
purposes hereof pursuant to a resolution adopted by its shareholders on April ,
1997, a certified copy of which is annexed hereto after having been acknowledged
true and signed for the purpose of identification by said representative in the
presence of the undersigned Notary.
(hereinafter the "GRANTOR")
WHICH PARTIES HAVE DECLARED AS FOLLOWS:
WHEREAS the Grantor is desirous of securing its Guaranty (as hereinafter
defined) in the manner hereinafter appearing;
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
<PAGE>
-2-
1. INTERPRETATION
1.1 DEFINITIONS
The following terms, wherever used in this Deed or in the accompanying
schedules, shall, unless there be something in the context inconsistent
therewith, have the following meanings:
1.1.1 "BUSINESS DAY" means a day on which the Trustee's branch is
opened for business but does not include Saturday and Sunday.
1.1.2 "CHARGED PROPERTY" shall have the meaning ascribed to it in
Section 4 hereof;
1.1.3 "COLLATERAL" shall have the meaning ascribed to it in paragraph
4.8 hereof;
1.1.4 "DEFAULT" means one or the other events set out in Section 13
hereof;
1.1.5 "DOLLARS" or "$" means the legal currency in Canada;
1.1.6 "GRANTOR" means SLM Trademark Acquisition Canada Corporation
and any of its successors or assigns;
1.1.7 "GUARANTY" means the guaranty provided by the Grantor under
Article 10 of that certain Senior Secured Note Indenture (the
"INDENTURE") dated as of April 1st, 1997 between SLM
International, Inc., Sport Maska Inc., Maska U.S., Inc., #1
Apparel, Inc., #1 Apparel Canada Inc., SLM Trademark
Acquisition Corp., SLM Trademark Acquisition Canada Corporation
and The Bank of New York, pursuant to which the Grantor shall
have guaranteed, among other things, the payment of the
Securities issued pursuant to the Indenture;
1.1.8 "HYPOTHEC" shall have the meaning ascribed to it in Section 4
hereof;
1.1.9 "PROPERTY IN STOCK" shall have the meaning ascribed to it in
paragraph 4.4 hereof;
1.1.10 "SECURED OBLIGATIONS" means all of the obligations which are to
be secured by the Hypothec pursuant to Section 6 hereof;
<PAGE>
-3-
1.1.11 "THIS DEED", "THESE PRESENTS", "HEREIN", "HEREBY",
"HEREUNDER", "HEREOF" and similar expressions refer to this
Deed, and the accompanying schedules and to any deed or
document supplemental or complementary hereto or restating this
Deed;
1.1.12 "TRUSTEE" means The Bank of New York and shall include any
successor thereto pursuant to the applicable provisions of the
Indenture.
1.2 GENDER
Unless there be something in the context inconsistent therewith, words
importing any gender shall include any other gender as may be applicable under
the circumstances.
1.3 HEADINGS
The division of this Deed into Sections, subsections and paragraphs and
the insertion of titles are for convenience of reference only and do not affect
the meaning or the interpretation of the present Deed. Unless otherwise
indicated, a reference to a particular Section, subsection or paragraph is a
reference to the particular Section, subsection or paragraph in this Deed.
1.4 SCHEDULES
The Schedules annexed hereto shall form an integral part of this Deed.
1.5 DELAYS AND CALCULATION OF DELAYS
The delays provided hereunder are calculated simultaneously with the
delays imposed by law and are not in addition to such delays. In the calculation
of any period of delay, the period shall exclude the day from which the period
commences and the period shall include the last day thereof.
1.6 BUSINESS DAY
When the date on which a delay expires or a payment has to be made or an
act has to be done is not a Business Day, the delay expires or the payment must
be made or the act must be done on the next following Business Day, unless
expressly provided otherwise in this Deed.
1.7 TERMS DEFINED IN THE INDENTURE
The terms defined in the Indenture shall have the same meaning when used
herein unless otherwise defined herein.
<PAGE>
-4-
2. [NOT USED]
3. [NOT USED]
4. HYPOTHEC: DESCRIPTION OF CHARGED PROPERTY
The Grantor hereby hypothecates in favour of the Trustee for its own
benefit and for the equal and rateable benefit of each Holder of a Security
issued pursuant to the Indenture and authenticated and delivered by the Trustee,
the universality of all of the Grantor's movable and immovable property, present
and future, corporeal and incorporeal, of whatever nature and kind and wherever
situate (the "Charged property") and, with respect to incorporeal or intangible
property, property located outside of the Province of Quebec or used in more
than one jurisdiction, hereby charges, assigns and mortgages in favour of the
Trustee for its own benefit and for the equal and rateable benefit of each
Holder of a Security issued pursuant to the Indenture and authenticated and
delivered by the Trustee and creates a security interest in the Charged property
(the hypothec, charge, mortgage and assignment and the security interest
hereinafter collectively referred to as the "Hypothec"), the whole including
without limitation the following universalities of present and future
properties:
4.1 IMMOVABLES
All the immovable properties of the Grantor, along with all property
permanently physically attached or joined thereto so as to ensure the utility
thereof (including the heating and air conditioning apparatus and watertanks)
and which become immovable by the effect of law, the hypothec on future
immovables to become effective upon the registration of a notice to that effect
in accordance with section 2949 of the Civil Code of Quebec (collectively
hereinafter referred to as the "IMMOVABLES").
4.2 RENTALS, REVENUES AND LEASES OF IMMOVABLES
All rentals, annuities and revenues which are or may be produced by the
Immovables as well as any other right of the Grantor in any lease, present and
future, which may affect such Immovables.
4.3 RENTAL INSURANCE
Proceeds of any insurance covering losses of revenue and rentals described
in paragraph 4.2 above.
4.4 PROPERTY IN STOCK
All property in stock or inventory of every nature and kind of the Grantor
whether in its possession, in transit or held on its behalf, including raw
materials, work in process, finished goods or other materials, goods
manufactured or
<PAGE>
-5-
transformed, or in the process of being so, by the Grantor or by others,
packaging materials, property evidenced by bill of lading, animals, mineral
substances, hydrocarbons and other products of the soil as well as all fruits
thereof from the time of their extraction (hereinafter the "Property in stock").
The Property in stock held by third parties under a lease agreement, a
leasing contract, a franchise or licence agreement, or any other agreement
entered into with or on behalf of the Grantor, is also subject to this Hypothec.
Property having formed part of the Property in stock which is alienated by
the Grantor in favour of a third person but in respect of which the Grantor has
retained title pursuant to a reservation of ownership provision, shall remain
charged by the Hypothec until title is transferred; any Property in stock the
ownership of which reverts to the Grantor pursuant to the resolution or
resiliation of any agreement or following its repossession is also subject to
the Hypothec.
4.5 CLAIMS, BOOK DEBTS AND OTHER MOVABLE PROPERTY
4.5.1 CLAIMS, RECEIVABLES AND BOOK DEBTS
All of the Grantor's claims, debts, demands and choses in action,
whatever their cause or nature, whether or not they are certain, liquid or
exigible; whether or not evidenced by any title (and whether or not such
title is negotiable), note, acceptances, bill of exchange or drafts;
whether litigious or not; whether or not they have been previously or are
to be invoiced; whether or not they constitute book debts. Hypothecated
claims shall include: (i) indemnities payable to the Grantor under any all
risk insurance policy, any life insurance policy or any liability
insurance policy, subject to the rights of other subsequent ranking
hypothecs on the insured property, (ii) the sums owing to the Grantor in
connection with interest or currency exchange contracts and other treasury
or hedging instruments, management of risks or derivative instruments
existing in favour of the Grantor ("SWAPS"), and (iii) the Grantor's
rights in any credit balances, monies or deposits in accounts held for it
by the Trustee (subject to the Trustee's compensation or set-off rights)
or by any financial institution or any other person.
4.5.2 RIGHTS OF ACTION
The Grantor's rights under contract with third parties as well as
the Grantor's rights of action and claims against third persons.
4.5.3 ACCESSORIES
The hypothecs, security interest, security agreement, guarantees,
suretyships, notes, acceptances and accessories to the claims and rights
described above and other rights relating thereto (including, without
limitation, the rights of the Grantor in its capacity as seller under any
<PAGE>
-6-
instalment sale, with respect to the claims hereby hypothecated which are
the result of such sale).
4.5.4 MOVABLE PROPERTY
All movable property owned by the Grantor and covered by the
instalment sales mentioned in paragraph 4.5.3 hereof.
A right or a claim shall not be excluded from the Charged property merely
because: (i) the debtor thereof is not domiciled in the Province of Quebec or
(ii) the debtor thereof is an affiliate (as such term is defined in the Canada
Business Corporations Act) of the Grantor (regardless of the law of the
jurisdiction of its incorporation) or (iii) such right or claim is not related
to the ordinary course of business or the operations of the Grantor.
4.6 SECURITIES
All securities (including shares, debentures, units, bonds, obligations,
rights, options, warrants, debt securities, investment certificates, units in
mutual funds, certificates or other instruments representing such property) now
or hereafter owned by the Grantor or held by the Grantor or on its behalf,
including without limitation those issued or which will be issued by the
corporations or partnerships listed in Schedule "B" or by any corporation or
partnership successor thereto pursuant to an amalgamation or any other
reorganization (a copy of which Schedule "B" remains annexed hereto after having
been recognized as true and signed for identification by the representatives of
the parties hereto with and in the presence of the undersigned notary); as well
as all those which are delivered by the Grantor to the Trustee or to a third
party on its behalf from time to time.
4.7 EQUIPMENT AND ROAD VEHICLES
The equipment, office furniture, appliances, supplies, apparatus, tools,
patterns, models, dies, blueprints, fittings, furnishings, fixtures, machinery
and rolling stock (including road vehicles) of the Grantor, including additions
and accessories and spare parts.
4.8 TRADE-MARKS AND OTHER INTELLECTUAL PROPERTY RIGHTS
All of the Grantor's rights in any trade-mark, copyright, industrial
design, patent, goodwill, invention, trade name, trade secret, trade process,
license, permit, franchise, know-how, plant breeders' right, integrated circuit
topography and in any other intellectual property right, including any
application or registration relating thereto if any, improvements and
modifications thereto as well as rights in any claim against third parties in
connection with the protection of any such intellectual property rights or
infringement thereto, in Canada or abroad, (sometimes hereinafter referred to
collectively as the "Collateral") including without limitation those listed in
Schedule "B" hereto.
<PAGE>
-7-
4.9 FRUITS AND REVENUES
All cash, profits, proceeds, fruits, dividends, rights and revenues which
are or may be produced by or declared or distributed with respect to the Charged
property or in exchange thereof as well as the proceeds of the Charged property,
including without limitation any property, equipment, negotiable instrument,
bill, commercial paper, security, money, compensation for expropriation
remitted, given in exchange or paid pursuant to a sale, repurchase, distribution
or any other transaction with respect to the Charged property.
4.10 RECORDS AND OTHERS
All records, data, vouchers, invoices and other documents related to the
Charged property described above, including without limitation, computer
programs, disks, tapes and other means of electronic communication of the
Grantor, as well as the rights of the Grantor to recover such property from
third parties, receipts, customer lists, distribution lists, directories and
other similar property of the Grantor.
Any and all Charged property which is acquired, transformed or
manufactured after the date of this Deed shall be charged by the Hypothec, (i)
whether or not such property has been acquired in replacement of other Charged
property which may have been alienated by the Grantor in the ordinary course of
business, (ii) whether or not such property results from a transformation,
mixture or combination of any Charged property, and (iii) in the case of
securities, whether or not they have been issued pursuant to the purchase,
redemption, conversion or cancellation or any other transformation of the
charged securities and without the Trustee being required to register or
re-register any notice whatsoever, the property charged under the Hypothec being
the universality of the Grantor's present and future property.
5. AMOUNT OF THE HYPOTHEC
The amount for which the Hypothec is granted is a principal amount of
Seventy-five million dollars ($75,000,000) with interest thereon from the date
of this Deed at the rate of twenty-five percent (25%) per annum.
6. SECURED OBLIGATIONS
The Hypothec secures the payment of all sums due or to become due by the
Grantor under the Guaranty and/or pursuant to this Deed and the performance of
all obligations of the Grantor provided for under this Deed and/or under the
Guaranty.
Any future obligation hereby secured shall be deemed to be one in respect
of which the Grantor has once again obligated itself hereunder according to the
provisions of section 2797 of the Civil Code of Quebec.
<PAGE>
-8-
7. ADDITIONAL PROVISIONS PERTAINING TO THE HYPOTHEC ON
RENTAL INCOME AND LEASES
With respect to any Immovables generating rentals and revenues:
7.1 LIST OF TENANTS
The Grantor shall provide the Trustee, before January 30th each year, with
a list containing the name of all tenants and details as to their leases as at
the immediately preceding December 31st. The Grantor shall obtain the prior
written consent of the Trustee with respect to the terms and conditions of any
new lease or the modifications or renewals of any existing leases provided
nothing herein shall compel the Trustee to waive any right it may have pursuant
to Article 1887 of the Civil Code of Quebec. Upon request of the Trustee, acting
reasonably, the Grantor shall further provide (i) a copy (or the original, when
requested by the Trustee) of all leases, present and future, relating to the
Immovables and any document and any useful information in connection therewith,
and (ii) a written acknowledgment by the tenants, present and future, of the
hypothec on rentals hereby created in the form required by the Trustee.
7.2 LEASES AND STATEMENT OF REVENUES
The Trustee may require that all leases be subject to its approval, that
they be subordinated to its rights hereunder and that the Grantor provide it on
a yearly basis with a statement of revenues and expenditures concerning the
Immovables.
7.3 RENTS, ANNUITIES AND REVENUES COLLECTION
The Trustee hereby authorizes the Grantor to collect all rents, annuities
and revenues which are rental income; however, the Grantor shall not collect in
advance more than one month of rent (other than as a security deposit) nor shall
it renounce to the payment of any rent. Such authorization may be revoked at any
time by the Trustee in accordance with what is provided for by law; in such a
case, the Trustee may exercise as it deems appropriate, to the exclusion of the
Grantor, all rights, claims, privileges and hypothecs (legal or conventional) of
the Grantor in order to maintain, renew, grant or terminate any lease, and to
further protect or collect rents, annuities and revenues from the Immovables.
7.4 COLLECTION
The Trustee shall have the right to bring an action for recovery of
rentals, impleading the Grantor, it being understood that the Trustee shall be
under no obligation to exercise such right and shall not be liable for any loss
or damage which may result from its failure to collect such rentals. The Trustee
shall have the right to deduct a ten per cent (10%) collection fee from any
rentals collected as well as any commission usually charged by the Trustee for
the collection of rentals, miscellaneous costs and expenses (copies, service
fees, legal counsel fees and others, opening files, surveillance fees, execution
fees or fees for cancellation of lease) incurred as a result of such collection.
<PAGE>
-9-
8. ADDITIONAL PROVISIONS TO THE HYPOTHEC ON CLAIMS (OTHER THAN RENTALS)
8.1 AUTHORIZATION TO RECOVER
Save and except for claims resulting from an expropriation, those referred
to in Section 9 and paragraph 12.9 hereof and save for any other claims for
which collection is otherwise dealt with pursuant to any agreement entered into
with the Trustee or any other person, the Trustee hereby authorizes the Grantor
to recover all claims and other Charged property referred to in paragraph 4.5.
Such authorization may be revoked at any time by the Trustee by written notice
with respect to all or any part of the hypothecated claims, whereupon the
Trustee shall be free to itself effect such recovery and to exercise any of the
rights referred to in paragraph 8.2 below; the Grantor shall then remit to the
Trustee all records, books, invoices, bills, contracts, titles, papers and other
documents related to the claims. If, after such authorization is revoked (and
even if such revocation is not yet registered or delivered to the holders of
such claims), sums payable under such claims and property are paid to the
Grantor, it shall receive same as mandatary of the Trustee and shall remit same
to the Trustee promptly without the necessity of any demand to this effect.
8.2 RECOVERY
The Trustee may recover all claims and other Charged property referred to
in paragraph 4.5 in accordance with what is provided for by law; it may further
exercise any rights regarding such Charged property and more particularly, it
may grant or refuse any consent which may be required from the Grantor in its
capacity as owner of such Charged property, and shall not, in the exercise of
such right, be required to obtain the consent of the Grantor or serve the
Grantor any notice thereof, nor shall it be under any obligation to establish
that the Grantor has refused or neglected to exercise such rights, and it may
further grant delays, take or abandon any security, make arrangements with
debtors of any hypothecated claims, make compromises, grant releases and
generally deal at its discretion with matters concerning all Charged property
referred to in paragraph 4.5 without the intervention or consent of the Grantor.
9. ADDITIONAL PROVISIONS TO THE HYPOTHEC ON SECURITIES
9.1 TRUSTEE'S RIGHTS
The Trustee may, at any time after the occurrence of a Default, transfer
any securities or any part thereof into its own name or that of a third party
appointed by it so that the Trustee or its nominee(s) may appear as the sole
registered holder, in which case:
<PAGE>
-10-
9.1.1 Voting rights
All voting rights and any other right attached to such securities
may be exercised by the Trustee (without any obligation of the Trustee to
do so) or on behalf of the Trustee.
9.1.2 Revenues, dividends and others
The Trustee shall collect revenues, dividends and capital
distributions and the Grantor shall cease to have any right thereto and
the Trustee may either hold same as Charged property or apply them in
reduction of the Secured Obligations.
9.2 PHYSICAL POSSESSION OF THE CERTIFICATES
The certificates representing the hypothecated securities may be kept in
the possession of the Trustee or in the possession of its agent.
The Grantor hereby irrevocably appoints any officer or employee of the
Trustee as its attorney with full power of substitution and authority to execute
such documents necessary to render effective the rights granted to the Trustee
pursuant to this Section 9.
10. ASSIGNMENT OF CLAIMS SUBJECT TO THE FINANCIAL ADMINISTRATION ACT
The Grantor hereby assigns to the Trustee by way of absolute assignment
all its present and future claims which are subject to Sections 67 and 68 of the
Financial Administration Act, as collateral and continuing security of all
Secured Obligations. The Trustee may, at any time, fulfill any of the
formalities required by law to make such transfer enforceable.
11. REPRESENTATIONS AND WARRANTIES
The Grantor hereby represents and warrants that:
11.1 LEGAL PERSON
It is a legal person (corporation).
11.2 HEAD OFFICE
The registered office or domicile of the Grantor is located in New
Brunswick.
<PAGE>
-11-
11.3 INCORPORATION
It is duly incorporated and in good standing under the law of its
jurisdiction of incorporation.
11.4 POWERS
It has the capacity and the powers necessary to grant the Hypothec and to
bind itself as herein provided for; the execution of this Deed, the compliance
with its provisions and the performance of its covenants shall not entail or
result in any breach of or default under any other agreement or document to
which the Grantor is bound.
11.5 AUTHORIZATION OF THIS DEED
This Deed has been duly authorized by resolution or by any other necessary
action under its constating documents, by-laws or otherwise, in order to give it
full effect and to render its obligations fully enforceable, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally from time to time
in effect.
11.6 EXECUTION OF THIS DEED
This Deed has been executed by duly authorized persons.
11.7 BUSINESS OR FIRM NAMES
It uses no business or firm name other than those referred to in Schedule
"B" hereof.
11.8 TITLES OF OWNERSHIP AND EXISTING CHARGES
It is the unconditional and absolute owner of the Charged property, except
for future property, and all such property is free and clear of any prior claim,
hypothec, charge, security or security interest, seizure by garnishment, right
of resolution or repossession or of any other right whatsoever existing in
favour of persons other than the Trustee and other than any such right which
constitutes a Lien which is permitted in accordance with paragraphs (a) and
following of Section 412 of the Indenture.
11.9 SHAREHOLDER AGREEMENT
There exists no shareholders' agreement in connection with securities
which are charged under this agreement other than that certain shareholders
agreement originally made between Sport Maska Inc. (now known as ZMD Sports
Investments Inc.) and Gestion Pro Velo Inc. on April 8, 1993 and that certain
agreement between Sport Maska Inc. (now known as ZMD Sports Investments Inc.)
and Gestion Pro Velo Inc. dated October 9, 1992. There exists no restriction in
the articles or other constating documents of the Grantor regarding the
assignment or transfer of
<PAGE>
-12-
securities which are charged hereunder other than the restrictions pertaining to
a closed company (as such term is defined in the Securities Act (Quebec)) and
those declared in writing to the Trustee.
11.10 LOCATION OF CHARGED PROPERTY
The Charged property referred to in paragraphs 4.4, 4.6, 4.7 and 4.10
hereinabove is located in the premises described in Schedule "C" hereof (a copy
of which Schedule "C" remains annexed hereto after having been acknowledged as
true and signed for identification by the representatives of the parties hereto
with and in the presence of the undersigned notary). The Trustee acknowledges
that items of Charged Property may, from time to time, be located at other
places in Quebec or Ontario when in transit to and from such premises.
11.11 DISPOSITION OF CHARGED PROPERTY
Except for property referred to in paragraph 4.4 hereinabove, it does not,
in the ordinary course of its business, sell property similar to or of the same
nature as the Charged property.
11.12 CLAIMS SUBJECT TO THE FINANCIAL ADMINISTRATION ACT
It has no claim falling under Section 10 hereof, other than those
indicated in Schedule "B" hereof.
11.13 CLAIMS SECURED BY REGISTERED HYPOTHEC
It has no claim which is secured by registered hypothec other than those
indicated in Schedule "B" hereof.
11.14 [NOT USED]
11.15 LITIGATION
It has knowledge of no suit or action against it, as to which there is a
reasonable likelihood of an adverse determination and which, if adversely
determined, would likely materially affect unfavorably the Charged property.
Grantor is not in violation of any law, or in default with respect to any
judgment, writ, injunction, decree, rule or regulation of any court or
governmental agency or instrumentality where such violation or default would
result in a Material Adverse Effect.
11.16 DEFAULT
It is not in default under the present Deed.
<PAGE>
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11.17 INTELLECTUAL PROPERTY
11.17.1 all registrations, applications for registration, filings
and notices thereof in respect of the Collateral, including
all relevant renewals, have been duly and properly made, are
in full force and effect and are not subject to dispute by
any governmental authority or agency and all leases,
licences and other agreements affecting any right, title or
interest of the Grantor in any of the Collateral
(collectively, the "Third Party Agreements") are in good
standing;
11.17.2 none of the Collateral has been adjudged invalid or
unenforceable or has been cancelled, in whole or in part,
and all such Collateral is presently subsisting, valid, in
good standing and enforceable, with the exception of those,
if any, set out in the Schedule "B" hereto and identified as
"pending applications", "cancelled/expunged registrations",
"abandoned applications" or "registrations no longer in name
of the Grantor";
11.17.3 the Grantor is the exclusive owner or in the case of
licensed Collateral, the sole and exclusive licensee, of the
entire and unencumbered right, title and interest in and to
each of the Collateral free and clear of any liens, charges
and encumbrances except for any Lien which is permitted in
accordance with paragraph (a) and following of Section 412
of the Indenture;
11.17.4 the Collateral listed in Schedule "B", constitutes all of
the intellectual property rights now owned by the Grantor;
11.17.5 the Grantor has adopted, used continuously and currently is
using all of the Collateral; all licensees of the Collateral
(or all relevant portions thereof) from the Grantor as
licensor have been licensed properly to use such Collateral
and the Grantor has retained under license the direct or
indirect control of the character or quality of the goods or
services in connection with which use of such Collateral has
been licensed by it; all use of such Collateral has been
proper both in form and in relation to the goods or services
in connection with which the Collateral is used by the
Grantor or its licensees; and proper ownership notices have
been used by the Grantor or its licensees;
<PAGE>
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11.17.6 nothing contained in this Deed or the Indenture, including,
without limitation, the granting of the Hypothec by the
Grantor in favour of the Trustee, constitutes a breach under
any Third Party Agreement.
12. COVENANTS
The Grantor hereby covenants:
12.1 INFORMATION
To give notice in writing to the Trustee:
- of any change whatsoever in its name and business names or in the
representations and warranties hereinabove mentioned in Section 11;
- of the name of any surety (guarantor) which may have guaranteed the
payment of claims hypothecated hereby and other Charged property mentioned
in paragraph 4.5 hereof;
- of the name of the insurers to the insurance contracts referred to herein;
- of the existence of any security, hypothec, prior claims or property right
retained or assigned securing claims and other Charged property referred
to in paragraph 4.5 hereof and, in such cases, to provide the Trustee,
upon demand, with satisfactory proof that such security or hypothec has
been registered or published in accordance with applicable law in order
for the rights of the Trustee to be set up against third persons;
- of the existence and details of any new claim arising hereafter which
alone or together with any other claims falling under Section 10 hereof is
material.
12.2 ADDITIONAL INFORMATION
To provide the Trustee with any information it may reasonably request with
respect to the Charged property or in order to determine whether or not the
Grantor is in compliance with its undertakings and obligations hereunder. The
Grantor shall inform the Trustee of any event, occurrence, or fact which might
have a Material Adverse Effect.
12.3 ACCOUNTING BOOKS
To keep, with respect to the Charged property, books, vouchers and other
documentation, as would a reasonable and diligent administrator, including a
list containing the names and addresses of all debtors of the hypothecated
claims, and keep them available for the Trustee to examine and obtain copies
thereof.
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12.4 [NOT USED]
12.5 PRESERVATION OF THE HYPOTHEC
To perform all acts and execute all deeds and documents (including notices
of renewal) necessary to give full effect to the Hypothec and to ensure that it
is at all times fully opposable against third persons.
12.6 COMPENSATION, FEES AND EXPENSES
To pay to the Trustee from time to time all out-of-pocket costs and
expenses relating to this Deed and to the exercise of all rights resulting in
favour of the Trustee from such Deed as well as all out-of-pocket costs and
expenses incurred to set up the rights of the Trustee against third persons, and
all discharge fees (such costs and expenses shall include all reasonable fees
and expenses of consultants, agents or counsels retained by the Trustee); to
reimburse the Trustee for all out-of-pocket costs and expenses incurred by it
for the purpose of carrying out the Grantor's obligations or of exercising its
rights, all such costs and expenses bearing interest at an annual rate equal to
the base rate of National Bank of Canada which shall be in force from time to
time, plus 3%; National Bank of Canada's base rate shall be the one advertised
as its rate of reference for determining the interest rate on commercial loans
in Dollars granted in Canada; the obligations arising from this paragraph shall
not exceed twenty-five per cent (25%) of the nominal value of the Hypothec; the
repayment of such costs and expenses shall be secured by the Hypothec.
12.7 ENCUMBRANCES AND TITLE
Not to grant, at any time hereafter, any easement, right-of ways,
servitude or any other charges against the Charged property without having first
obtained the prior written consent of the Trustee, (save for public easements
granted for utility purposes which do not materially affect unfavourably the
Charged property) and to maintain the Charged property free and clear of any
conventional or legal hypothec, prior claim under Articles 2650 et seq. of the
Civil Code of Quebec, charge, security, garnishment, right of resolution or
repossession or any other right in favour of a person or persons other than the
Trustee, in each case other than in regard to a Lien which is permitted in
accordance with paragraphs (a) and following of Section 412 of the Indenture; to
preserve, warrant and defend its title against any claim, action or
contestation.
12.8 LIST OF PROPERTY IN STOCK AND BOOK DEBTS
To give the Trustee, from time to time, upon demand, a statement of the
value of its Property in stock and a list of its book debts shown in the reverse
order of their due date.
<PAGE>
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12.9 INSURANCE
The Grantor covenants to:
12.9.1 keep its insurable properties adequately insured at all
times by financially sound and reputable insurers;
12.9.2 maintain such other insurance, to such extent and against
such risks, including fire and other risks insured against
by extended coverage, as is customary for the Charged
Property and as is customary with companies similarly
situated and in the same or similar businesses, provided,
however, that such insurance shall insure the property of
the Grantor against all risk of physical damage,
including, without limitation, loss by fire, explosion,
theft, fraud and such other casualties as may be
reasonably satisfactory to the Trustee, and in no event at
any time in an amount less than the replacement value of
the Charged Property;
12.9.3 maintain in full force and effect public liability
insurance against claims for bodily injury or death or
property damage occurring upon, in, about or in connection
with the use of any properties owned, occupied or
controlled by the Grantor or any of its subsidiaries, as
is customary with companies similarly situated and in the
same or similar businesses;
12.9.4 maintain business interruption and product liability
insurance to such extent as is customary with companies
similarly situated and in the same or similar businesses;
and
12.9.5 maintain such other insurance as may be required by law or
as may be reasonably requested by the Trustee for purposes
of assuring compliance with this paragraph 12.9;
it being understood that:
12.9.6 the Trustee is forthwith named as beneficiary of the
indemnities payable pursuant to these policies (excluding
those pertaining to civil liability) and the Grantor shall
cause the recording of this designation on the policies
which must also contain (i) a standard hypothecary
warranty clause approved by the Insurance Bureau of
Canada, preventing the invalidation of the policies
because of any reference or declaration contained in the
insurance application or omitted therefrom or any act or
negligence by the Grantor and (ii) provisions preventing
their cancellation or amendment to the detriment of the
<PAGE>
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Trustee, for any reason whatsoever, including failure to
pay the premiums, unless the omission or Default is not
remedied within thirty (30) days following receipt of
written notification thereof by the Trustee;
12.9.7 the insurance policies do not contain coinsurance clauses
save with the prior written agreement of the Trustee;
12.9.8 the Grantor will deliver to the Trustee all policies and
certificates of insurance maintained in accordance with
this paragraph 12.9;
12.9.9 in the event of any material loss or damage, the Grantor
shall immediately notify the Trustee of the loss incurred
or damage sustained. The indemnity, with respect to
property and damage insurance, shall be paid to the
Trustee to the extent of its interest. The Trustee may
apply any indemnity received by it to reduce any amount
owed to it hereunder and/or under the Guaranty. However,
the reduction shall be effective only once the Trustee has
informed the Grantor of such choice. The indemnity may
also be remitted to the insured to be used for
replacement, repair or reconstruction purposes, according
to terms and conditions pre-determined by the Trustee.
12.10 LOSS OR DAMAGE
To immediately notify the Trustee of any loss of, or substantial damage
to, any material portion of the Charged property and take all diligent steps to
ensure that the insurer pays the indemnity to the Trustee.
12.11 LEASE AND TRANSFER
Not to lease, sell, assign or otherwise alienate the Charged property, in
whole or in part, without the prior written consent of the Trustee, except for
property referred to in paragraph 4.4 above which may be leased or sold in the
ordinary course of business of the Grantor and except as expressly permitted in
the Indenture.
12.12 MAINTENANCE
The Grantor shall diligently pay the cost of any public utility services
and authorizes the Trustee to obtain from the related authorities the amounts
due to this account and any information relating to payment of such charges.
12.13 LOCATION OF PROPERTY
Not to change the location of the Charged property unless it obtains the
prior written consent of the Trustee.
<PAGE>
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12.14 TITLE
To ensure that its right of ownership in any Charged property in the hands
or possession of any third party remains opposable against third parties and,
accordingly, that such right has been registered or published, if registration
or publication is required by law for the purpose of opposability against third
parties.
12.15 LESSORS
If any of the Charged property is located in premises leased pursuant to a
lease executed before January 1, 1994 (and where the registration of a legal
hypothec has been perfected) or if it were moved to premises leased as
aforesaid, to obtain a full cession of priority in favour of the rights of the
Trustee under the present Hypothec and to immediately notify, following the
execution of the present Deed or immediately following the moving into the
leased premises, the lessor of such premises, in writing, of the present
Hypothec and to deliver to the Trustee within three (3) days after such
notification proof of same.
12.16 USE AND DESTINATION
Not to change the use or destination of the Charged property unless it
obtains the prior written consent of the Trustee.
12.17 VALUE
To protect and use the Charged property and to carry on its business so as
to preserve its value.
12.18 INTELLECTUAL PROPERTY
The Grantor shall:
12.18.1 use its trade-marks, trade-mark registrations, trade-mark
applications, trade names, business names, trade styles,
logos, service marks, and all other forms of business
identifiers (hereinafter the "Trademarks") only on goods
of at least as high quality as the goods on which the
Grantor or its predecessor used the goods as of the date
hereof and maintain the quality of any and all products in
connection with which the Trademarks and other Collateral
is used, consistent with the quality of said products as
of the date hereof;
12.18.2 take or cause to be undertaken all steps necessary to
protect the Grantor's interest in and to maintain the
Collateral in good standing, including without limitation,
to pursue diligently all applications through to
registration and to renew all registrations and pay all
<PAGE>
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maintenance fees as applicable, as well as attending to
the filing of all required documentation;
12.18.3 vigorously protect, preserve and maintain all of the
Grantor's right, title and interest in the Collateral,
including, without limitation, the prosecution and/or
defence against any and all suits concerning validity,
infringement, enforceability, ownership or other aspects
affecting any of the Collateral (any expenses incurred in
protecting, preserving and maintaining any of the
Collateral shall be borne by the Grantor);
12.18.4 upon written request by the Trustee, execute and deliver
any and all agreements, instruments, documents and papers
as the Trustee may reasonably request to evidence the
Hypothec in the Collateral;
12.18.5 perform all covenants required under any Third Party
Agreement including, inter alia, promptly paying all
required fees, royalties and taxes to maintain each and
every item of the Collateral in full force and effect;
12.18.6 if at any time or from time to time, the Grantor (i)
becomes aware of any existing Collateral of which the
Grantor has not previously informed the Trustee, (ii)
obtains rights to any new Collateral, or (iii) becomes
entitled to the benefit of any Collateral not identified
in Schedule "B", then the Grantor shall promptly notify
the Trustee and regardless of when the Grantor so notifies
the Trustee, Schedule "B" hereto, as applicable,
automatically shall be modified and amended to include any
such Collateral and the provisions of this Deed
automatically shall apply thereto;
12.18.7 maintain up to date records regarding the Collateral;
12.18.8 provide the Trustee with a written report on each
anniversary of this Deed regarding the status of the
Collateral;
12.18.9 not abandon any right to file a trademark application or
patent application, or abandon any pending trademark or
patent application, or abandon any of the Collateral or
any suits involving any of the Collateral, without the
prior written consent of the Trustee, which consent of the
Trustee shall not be unreasonably withheld;
<PAGE>
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12.18.10 not take any action, or permit any action to be taken by
any person or persons subject to its control, including
licensees, or fail to take any action, which would
adversely affect the validity, enforceability or
transferability (to the Trustee or otherwise) of all or
any of the Collateral; and ensure generally that the
Collateral is and remains valid, in good standing and
enforceable.
12.19 RELEASE OF COLLATERAL
The Hypothec shall not be discharged prior to the indefeasible payment in
full of all amounts owing hereunder and under the Guaranty and the performance
of all obligations of the Grantor hereunder and under the Guaranty.
13. EVENTS OF DEFAULT
The Grantor shall be in default hereunder without notice or other
formality and the security hereby constituted shall immediately become
enforceable, if it fails to pay any amount due or to become due under the
Guaranty, upon demand and in any of the following events ("DEFAULT"):
13.1 [NOT USED]
13.2 [NOT USED]
13.3 [NOT USED]
13.4 CROSS DEFAULT
An Event of Default (as defined in the Indenture) occurs under the
Indenture on the part of SLM International, Inc. or under the Guaranty on the
part of the Grantor.
13.5 CHARGED PROPERTY
If the Grantor fails at any time to maintain, preserve or protect all
property material to the conduct of its businesses and keep such property in
good repair, working order and condition (reasonable wear and tear excepted) or
fails from time to time to make, or cause to be made, all needful and proper
repairs, renewals, additions, improvements and replacements thereto which are
necessary in order that the business carried on in connection therewith may be
properly conducted in all material respects at all times.
<PAGE>
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13.6 OTHER AGREEMENTS
The Grantor fails to pay any indebtedness or to perform any of the
Grantor's obligations required to be paid or performed under any other agreement
creating a charge against the Charged property.
13.7 INSOLVENCY AND BANKRUPTCY
The Grantor ceases to carry on its enterprise or an important part
thereof, becomes insolvent or becomes subject to proceedings, makes an
assignment or files a notice to file a proposal under any law relating to
insolvency, bankruptcy, reorganization or to arrangements with creditors or any
petition in bankruptcy is taken against the Grantor.
13.8 [NOT USED]
13.9 LEGAL EXISTENCE
The Grantor loses its legal existence; an order is issued or a resolution
is adopted for its winding-up or liquidation.
13.10 HYPOTHECARY RIGHTS
Any of the Charged property is subject to a hypothecary right from another
creditor, a partition procedure, a "sale of an enterprise" as it is understood
under sections 1767 and ssq. of the Civil Code of Quebec or an expropriation,
except to the extent or under circumstances permitted in accordance with the
Indenture.
14. TRUSTEE'S RECOURSES IN CASE OF DEFAULT
14.1 PAYMENT OF INDEBTEDNESS
In case the Hypothec shall have become enforceable, on account of one or
the other of the events mentioned in Section 13 or paragraphs 13.1 through 13.10
above, the Trustee may, in its discretion, at any time or times, demand payment
of all or any part of the Secured Obligations and the same shall forthwith
become immediately due and payable to the Trustee. Any payment then made by the
Grantor shall be deemed to have been made in discharge of its obligations
hereunder or under the Guaranty, and any money so received by the Trustee shall
be applied as provided for in paragraphs 14.13 and 15.4 hereof.
14.2 EXERCISE OF RIGHTS
In case the Hypothec shall have become enforceable and the Grantor shall
have failed to pay the Trustee, on demand, the outstanding amount due under the
Guaranty together with any other amounts secured hereunder, the Trustee may in
its discretion, through its officers, agents or attorneys, exercise any right of
action provided for under this Deed (and more particularly under this Section
14) or by law
<PAGE>
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or in equity including without limitation any of the hypothecary rights provided
for under sections 2748 to 2794 of the Civil Code of Quebec and any rights or
remedies provided to secured parties under any applicable personal property
security legislation.
14.3 RIGHTS OF THE TRUSTEE
Whatever hypothecary rights the Trustee elects to exercise or whatever
rights or recourses the Trustee elects to exercise either pursuant to the law of
any other jurisdiction or in equity, the following provisions, to the greatest
extent permitted by applicable law, shall apply:
14.3.1 the Trustee may, in its discretion, at the Grantor's expense:
14.3.1.1 pursue the transformation of the Charged property or
any work in process or unfinished goods comprised in
the Charged property and complete the manufacture or
processing thereof or proceed with any operations to
which such property is submitted by the Grantor in
the ordinary course of its business and acquire
property for such purposes;
14.3.1.2 alienate or dispose of any Charged property which
may be obsolete, may perish or is likely to
depreciate rapidly;
14.3.1.3 use for its benefit all information obtained while
exercising its rights;
14.3.1.4 perform any of the Grantor's obligations or
covenants hereunder;
14.3.1.5 exercise any right attached to the Charged property
on such conditions and in such manner as it may
determine, acting reasonably, including without
restriction the grant of licences whether general or
special on an exclusive or non exclusive basis, of
any intellectual property charged hereunder;
14.3.1.6 for the exercise of any of its rights, utilize
without charge the Grantor's plant, equipment,
machinery, process, information, records, computer
programs and intellectual property; for the purposes
hereof the Grantor shall, at the request of the
Trustee, concurrently with or after the execution of
these presents execute a power of attorney with
respect to intellectual property (in
<PAGE>
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conformity with paragraph 15.9 hereof) in favour of
the Trustee;
14.3.1.7 borrow monies or lend monies and, in such cases, the
monies borrowed or lent by the Trustee shall bear
interest at the rate then obtained or charged by the
Trustee for such borrowing or loan; these monies
shall be reimbursed by the Grantor on demand and,
until they have been repaid in full, such monies and
interest thereon shall be secured by the present
Hypothec and be paid in priority of any other sums
secured hereunder;
14.3.1.8 maintain or repair, restore or renovate, begin or
complete any construction work on or related to the
Charged property;
14.3.2 the Trustee shall exercise its rights in good faith in order
to attempt to reduce the Secured Obligations, in a reasonable
manner, taking into account all circumstances;
14.3.3 the Trustee may, directly or indirectly, purchase or
otherwise acquire the Charged property;
14.3.4 the Trustee, when exercising its rights, may waive any right
of the Grantor, with or without consideration therefor;
14.3.5 the Trustee shall have no obligation to make an inventory of
the Charged property, to take out any kind of insurance with
respect thereof or to grant any security whatsoever;
14.3.6 the Trustee shall not be bound to continue to carry on the
Grantor's enterprise or to make any productive use of the
Charged property or to maintain such property in operating
condition;
14.3.7 the Grantor shall, upon request of the Trustee, move the
Charged property and render it available to the Trustee unto
premises designated by the Trustee and which, in its opinion,
shall be more suitable in the circumstances.
14.4 GRANTOR'S REMEDY
If the Grantor remedies the default mentioned in any prior notice of
exercise of hypothecary right, the Grantor shall, as required by law, pay all
reasonable fees incurred by the Trustee by reason of the default; these fees
shall include without limitation the administrative fees of the Trustee, the
legal fees of its legal advisers and fees paid to experts.
<PAGE>
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14.5 TAKING IN PAYMENT
If the Trustee elects to exercise its right to take in payment the Charged
property and the Grantor requires that the Trustee instead sell by itself or
under judicial authority, the Charged property on which such right is exercised,
the Grantor hereby acknowledges that the Trustee shall not be bound to abandon
its recourse of taking in payment unless, prior to the expiry of the time period
allocated for surrender, the Trustee (i) has been granted a security
satisfactory to it, to ensure that the proceeds of the sale of the Charged
property will be sufficient to pay the Guaranty in full, (ii) has been
reimbursed for all reasonable costs and expenses incurred in connection to this
Deed, including all fees of consultants and legal counsel and (iii) has been
advanced the necessary sums for the sale of said Charged property; the Grantor
further acknowledges that the Trustee alone is entitled to select the type of
sale it may wish to conduct or have conducted.
14.6 SURRENDER OF CHARGED PROPERTY
The Grantor will, to the greatest extent permitted by applicable law, be
deemed to have surrendered the Charged property which is in the possession of
the Trustee, or of a third party on its behalf, if the Trustee has not, within
the delays determined by law or by a tribunal to surrender, received written
notice from the Grantor to the effect that it intends to contest the exercise of
the hypothecary recourse set forth in the prior notice.
14.7 EVALUATION
Where the Trustee sells the Charged property itself, to the greatest
extent permitted by applicable law, it shall not be required to obtain any prior
evaluation by a third party.
14.8 SALE OF CHARGED PROPERTY
The Trustee, to the greatest extent permitted by applicable law, may elect
to sell the Charged property after giving such prior notices as may be required
by law in which event (i) the sale may be made with legal warranty given by the
Grantor or with complete or partial exclusion of such warranty; (ii) the sale
may be made cash or with a term or under such reasonable conditions determined
by the Trustee; and (iii) upon failure of payment of the purchase price, the
Trustee may resiliate or resolve such sale and such Charged property may then be
resold.
14.9 USE OF PREMISES
In order to exercise any of its rights, the Trustee may use the premises
located in the Immovables.
<PAGE>
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14.10 SEVERAL ADMINISTRATORS
Where several administrators are involved hereunder, the parties, to the
greatest extent permitted by applicable law, waive the application of sections
1332 to 1338 inclusively of the Civil Code of Quebec.
14.11 APPOINTMENT OF AGENT
The Trustee, to the greatest extent permitted by applicable law, may
appoint an agent or a receiver and manager (collectively a "Receiver") over all
or any portion of the Charged property by written instrument in accordance with
paragraph 14.12 or may apply to a court for the appointment of a Receiver to
take possession of all or such part of the Charged property as the Trustee shall
designate, with such duties, powers and obligations as the court making the
appointment shall confer, and the Grantor hereby irrevocably consents to the
appointment of such Receiver.
14.12 APPOINTMENT OF RECEIVER
The Trustee, to the greatest extent permitted by applicable law, may with
or without taking possession, by instrument executed by the Trustee, appoint a
Receiver of all or any part of the Charged property and of the rents, income and
profits therefrom and may from time to time by similar instrument remove any
Receiver and appoint another in its place and upon the appointment of any such
Receiver or Receivers from time to time the following provisions, to the
greatest extent permitted by applicable law, shall apply:
14.12.1 every such Receiver shall be vested with all of the rights,
powers, remedies and discretions of the Trustee set forth in paragraphs
14.3.1.1 to 14.3.1.8, inclusively, including, without limitation, the
power to sell, for cash or credit or part cash and part credit, lease or
dispose of all or any part of the Charged property, whether by public
auction or by private sale or lease in such manner and on such terms as it
may determine in its absolute discretion acting reasonably and to do all
acts, exercise all discretions and make all determinations of the Trustee
described therein;
14.12.2 every such Receiver shall have the power to borrow money on
the security of the Charged property in priority to the security created
by this Deed for the purpose of the preservation, maintenance, completion
or protection of the Charged property or any part thereof or for making
any replacements thereof or improvements and additions thereto or for
carrying on all or any part of the business of the Grantor relating to the
Charged property, and in so doing the Receiver may issue certificates
designated as "Receiver's Certificates" which may be payable either to
order or to bearer and may be payable at such time or times as the
Receiver may think expedient and shall bear interest at such rates of
interest as the Receiver may consider reasonable, and the amounts from
time to time payable pursuant to such Receiver's Certificates shall form a
charge upon the Charged property in priority to the security created by
this Deed;
<PAGE>
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14.12.3 the Trustee may from time to time fix the remuneration of
every such Receiver who shall be entitled to deduct the same out of the
receipts derived from or comprising part of the Charged property or the
proceeds thereof;
14.12.4 every such Receiver shall be deemed to be an agent of the
Grantor and not of the Trustee for the purposes of:
(i) carrying on and managing the business and affairs of the
Grantor, and
(ii) establishing liability for all of the acts or omissions
of the Receiver while acting as such and the Trustee shall not be in
any way responsible for any acts or omissions on the part of any
such Receiver, its officers, employees and agents,
the Grantor hereby irrevocably authorizing the Trustee to give
instructions to the Receiver relating to the performance of its powers and
discretions as set out herein;
14.12.5 the appointment of every such Receiver by the Trustee or
anything which may be done by any such Receiver or the removal of any such
Receiver or the termination of any such receivership shall not have the
effect of constituting the Trustee a mortgagee in possession in respect of
the Charged property or any part thereof;
14.12.6 no such Receiver shall be liable to the Grantor to account
for moneys other than moneys actually received by such Receiver in respect
of the Charged property and every such Receiver shall apply such moneys so
received in the manner provided in paragraph 14.13; and
14.12.7 the Trustee may at any time and from time to time terminate
any such receivership by notice in writing executed by the Trustee to any
such Receiver;
14.13 IMPUTATION OF PAYMENTS
Except as herein otherwise expressly provided, to the greatest extent
permitted by applicable law, all monies arising from any sale or realization of
the Charged property, in whole or in part, whether under any sale by the Trustee
or by judicial process or otherwise, shall be applied, together with any other
monies then in the hands of the Trustee and available for such purpose, in the
first place to pay or reimburse the Trustee's fees, charges, expenses,
borrowing, advances and all other moneys provided or obtained by it or at its
request in or about the execution of its powers and rights with respect to these
presents, with interest thereon as herein provided, and the residue of the said
moneys shall be applied on account of Secured Obligations or, at the option of
the Trustee, may be held unappropriated in a
<PAGE>
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collateral account in order to provide for payment of any charge ranking prior
to the Hypothec.
The Grantor shall only be credited with amounts received by the Trustee in
cash from the possession, sale, lease or other disposition of, or realization
upon, the Charged property as and when such cash is received.
14.14 LIABILITY OF GRANTOR
The Grantor shall remain liable to the Trustee for any deficiency
remaining after the application of the proceeds of any sale, lease or
disposition of the Charged property by the Trustee.
15. GENERAL PROVISIONS
15.1 ADDITIONAL SECURITY
The Hypothec created hereby is in addition to and not in substitution of
or in replacement for any other hypothec or security held by the Trustee and
shall not impair the Trustee's rights of compensation and set-off.
15.2 INVESTMENTS
The Trustee, to the greatest extent permitted by applicable law, may, at
its entire discretion, invest any monies or instruments received or held by it
pursuant of this Deed or deposit same in a non-interest bearing account without
having to comply with any legal provisions concerning the investment of property
of others.
15.3 SET-OFF
Provided the Secured Obligations are due and exigible or that the Trustee
is entitled to declare them owing and exigible, the Trustee may, to the greatest
extent permitted by applicable law, compensate and set-off any Secured
Obligations with any and all amounts then owed to the Grantor by the Trustee in
any capacity, whether due or not, and the Trustee shall then be deemed to have
exercised such right to compensate and set-off as at the time the decision was
taken by it even though the entry therefor is made on the Trustee's record
subsequent thereto.
15.4 IMPUTATION OF PAYMENTS
The Trustee, to the greatest extent permitted by applicable law, shall be
at liberty to impute any amounts collected in the exercise of its rights prior
to or after any Default as it may choose without having to comply with any
provisions of the Civil Code of Quebec concerning the imputation of payments.
<PAGE>
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15.5 DELAYS
The Trustee, to the greatest extent permitted by applicable law, may grant
delays, take any security or renounce thereto, accept compromises, grant
quittances and releases and generally deal, with any matters related to the
Charged property, the whole without limiting the rights of the Trustee and
without reducing the liability of the Grantor.
15.6 CONTINUING SECURITY
The Hypothec shall be a continuing security and shall remain in full force
and effect despite the repayment from time to time, of the whole or of any part
of the Secured Obligations; it shall remain in full force until the execution of
a final release by the Trustee.
15.7 TIME OF ESSENCE
The mere lapse of time provided for the Grantor to perform its obligations
or the expiry of any term therefor shall automatically create a default
hereunder, without the Trustee being obliged to serve any notice or prior notice
upon the Grantor.
15.8 CUMULATIVE RIGHTS
The rights and recourses of the Trustee hereunder are cumulative and do
not exclude any other rights and recourses which the Trustee might have. No
omission or delay on the part of the Trustee in the exercise of any right shall
have the effect of operating as a waiver of such right. The partial or sole
exercise of a right or power will not prevent the Trustee from exercising
thereafter any other right or power. The Trustee may exercise its right
hereunder without any obligation to exercise any right against any other person
liable for payment of the Secured Obligations and without having to enforce any
other security granted with respect to the Secured Obligations.
15.9 IRREVOCABLE POWER OF ATTORNEY
The Trustee is hereby designated as the irrevocable attorney of the
Grantor with full powers of substitution for the purposes hereof or for the
purpose of carrying out any and all acts and executing any and all deeds,
proxies or other documents which the Trustee may deem useful in order to
exercise its rights or which the Grantor neglects or refuses to execute or to
carry out, provided however that, if a Default has not occurred and is not
continuing, the Grantor shall have been requested by the Trustee to do so by a
three (3) Business Days prior written notice.
15.10 PERFORMANCE
The Trustee may, at its entire discretion, perform any of the Grantor's
liabilities under this Deed. It may then immediately request payment of any
expense
<PAGE>
-29-
incurred in doing so, including interest at the rate provided for in paragraph
12.6 above, and such repayment is secured by the Hypothec.
15.11 DELEGATION
The Trustee may, at its entire discretion, appoint any person or persons
for the purpose of exercising any of its rights, actions or the performance of
any covenant resulting from this Deed or law or equity; in such case, the
Trustee may supply such person with any information it holds relating to the
Grantor or to the Charged property.
15.12 TITLE DEEDS
All titles of ownership, land surveys, certificates of location and other
documents related to the Immovables shall upon request be remitted to the
Trustee who is entitled to keep them until a final release and discharge of this
Hypothec is obtained.
15.13 WAIVER
Where the Grantor has taken an Immovable in payment for an hypothecated
claim ranking prior to the present Hypothec, the Grantor waives its right to
take advantage of the provisions of section 2771 of the Civil Code of Quebec.
15.14 LIABILITY
The Trustee shall not be liable for material injuries or damages resulting
from its fault, or the fault of its agents, officers, consultants, unless such
fault is gross or intentional.
15.15 SUCCESSORS
The rights hereby conferred upon the Trustee shall benefit all its
successors and nominees.
15.16 NOTICES
Any notice to the Grantor shall be delivered to its address set out above
or to any other address in Canada of which the Trustee has been given written
notice; any notice to the Trustee shall be delivered to the Trustee's branch
located at the address set out above.
15.17 RECEIPT OF NOTICE
A notice given hereunder shall be deemed to have been received by the
other party on the date of its delivery, when delivered on a Business Day, or on
the third (3rd) Business Day after it has been mailed, if sent prepaid by
certified or registered mail, or the day of its transmission, if transmitted by
facsimile on or
<PAGE>
-30-
before 3:00 p.m. on a Business Day or on the Business Day next following the day
of transmission if transmitted by facsimile after 3:00 p.m.
15.18 SEVERABILITY
Every provision of this Deed is and shall be independent of the other and
in the event that any part of this Deed is declared invalid, illegal or
unenforceable, then the remaining terms, clauses and provisions of this Deed
shall not be affected by such declaration and all the remaining clauses of this
Deed shall remain valid, binding and enforceable.
15.19 TRUST PROVISIONS
Notwithstanding the references herein to The Bank of New York (or its
successor hereunder, if any) as a "trustee" or to it acting as trustee, no trust
within the meaning of Chapter II of Title Six of Book Four of the Civil Code of
Quebec is intended to be or is created or constituted hereby. In addition, the
provisions of Title Seven of Book Four of the Civil Code of Quebec shall not
apply to any administration by the Trustee hereunder.
16. INTERCREDITOR AGREEMENT
This Deed including the right of the Trustee to exercise remedies
hereunder, shall be subject to the terms and conditions of the Intercreditor
Agreement. Notwithstanding the foregoing or any reference to the Intercreditor
Agreement, the Grantor agrees and acknowledges that neither this Deed nor the
Intercreditor Agreement provides such Grantor with any rights as a third party
beneficiary or otherwise.
17. GOVERNING LAW
This Deed shall be governed by and construed in accordance with the laws
of the Province of Quebec, including the rules relating to conflicts of laws
provided for thereunder.
18. AMENDMENTS
No amendment may be made to this Deed unless signed by the Grantor and the
Trustee.
19. FORMAL DATE
This Deed may be referred to as bearing formal date of the first (1st) day
of April, Nineteen hundred and ninety-seven (1997), notwithstanding the actual
date of its execution.
<PAGE>
-31-
20. ENGLISH LANGUAGE
The parties hereto confirm that the present agreement has been drawn up in
the English language at their request. Les parties aux presentes confirment que
la presente convention a ete redigee en langue anglaise a leur demande.
WHEREOF ACT:
DONE AND PASSED in the City of Montreal, Province of Quebec, on this eleventh
day (11th) of April, Nineteen hundred and ninety-seven (1997), under number five
thousand seven hundred and ninety-nine (5799) of the original of the minutes of
the undersigned notary.
AND after the parties had declared to have taken cognizance of these presents
and to have exempted the said Notary from reading them or causing them to be
read, the said duly authorized officers of the Grantor and the Trustee
respectively have signed these presents, all in the presence of the said Notary
who has also signed.
SLM TRADEMARK ACQUISITION
CANADA CORPORATION
per: /s/ BRUCE RANDALL
--------------------------
Bruce Randall
THE BANK OF NEW YORK
per: /s/ MARIE E. TRIMBOLI
--------------------------
Marie E. Trimboli
/s/ RICHARD TRUDEAU
--------------------------
Mtre Richard Trudeau, Notary
TRUE COPY OF THIS ORIGINAL REMAINS IN MY OFFICE.
/s/ SPECIMEN
--------------------------
<PAGE>
SCHEDULE "B"
B.1 Securities (par. 4.6)
Gestion CCM (1983) Inc. / CCM Holdings (1983) Inc.
B.2 Trade-Marks and Other Intellectual Property (par. 4.8)
None
B.3 Business or Firm names (par.11.7 )
3166694 Canada Inc.
B.4 Claims subject to the Financial Administration Act (par 11.12)
None
B.5 Claims Secured by registered hypothecs (par. 11.13)
None
***** ***** *****
The foregoing is Schedule "B" annexed to the Deed of hypothec granted by SLM
Trademark Acquisition Canada Corporation. in favour of The Bank of New York
before Mtre Richard Trudeau, Notary, on the eleventh (11th) day of April
Nineteen hundred and ninety-seven (1997) under number five thousand seven
hundred and ninety-nine (5799) (__________________ ) of his minutes annexed
thereto and recognized as true and signed by the representatives therein
mentioned with and in the presence of the undersigned Notary.
MARIE E. TRIMBOLI
------------------------------
BRUCE RANDALL
------------------------------
RICHARD TRUDEAU
------------------------------
Mtre Richard Trudeau, Notary
TRUE COPY
/s/ SPECIMEN
- ------------------------------
<PAGE>
SCHEDULE "A"
[NOT USED]
<PAGE>
SCHEDULE "C"
(par. 11.10)
Location of Charged Property
C.1 Charged Property Located in Quebec
7405 Trans-Canada Highway
Suite 300
Ville St-Laurent, Quebec
H4T 1Z2
C.2. Charged Property Located Outside of Quebec
Address(es)
None
C. 3. Property Intended to be Used in More Than One Province or Jurisdiction
Address(es), Provinces or States
None
***** ***** *****
The foregoing is Schedule "C" annexed to the Deed of hypothec granted by SLM
Trademark Acquisition Canada Corporation in favour of The Bank of New York
before Mtre Richard Trudeau, Notary, on the eleventh (11th) day of April
Nineteen hundred and ninety-seven (1997) under number five thousand seven
hundred and ninety-nine (5799______________) of his minutes and recognized as
true and signed by the representatives therein mentioned with and in the
presence of the undersigned Notary.
MARIE E. TRIMBOLI
------------------------------
BRUCE RANDALL
------------------------------
RICHARD TRUDEAU
------------------------------
Mtre Richard Trudeau, Notary
TRUE COPY
/s/ SPECIMEN
- ------------------------------
DEED OF HYPOTHEC
BETWEEN
THE BANK OF NEW YORK
AND
SLM INTERNATIONAL, INC.
BEARING FORMAL DATE AS OF
APRIL 1ST, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. INTERPRETATION.......................................2
2. [NOT USED]...........................................3
3. [NOT USED]...........................................3
4. HYPOTHEC: DESCRIPTION OF CHARGED PROPERTY............4
5. AMOUNT OF THE HYPOTHEC...............................7
6. SECURED OBLIGATIONS..................................7
7. ADDITIONAL PROVISIONS PERTAINING TO THE HYPOTHEC ON
RENTAL INCOME AND LEASES.............................8
8. ADDITIONAL PROVISIONS TO THE HYPOTHEC ON CLAIMS
(OTHER THAN RENTALS).................................9
9. ADDITIONAL PROVISIONS TO THE HYPOTHEC ON SECURITIES...9
10. ASSIGNMENT OF CLAIMS SUBJECT TO THE FINANCIAL
ADMINISTRATION ACT..................................10
11. REPRESENTATIONS AND WARRANTIES......................10
12. COVENANTS...........................................14
13. EVENTS OF DEFAULT...................................19
14. TRUSTEE'S RECOURSES IN CASE OF DEFAULT..............21
15. GENERAL PROVISIONS..................................26
16. INTERCREDITOR AGREEMENT.............................29
17. GOVERNING LAW.......................................29
18. AMENDMENTS..........................................30
19. FORMAL DATE.........................................30
20. ENGLISH LANGUAGE....................................30
<PAGE>
DEED OF HYPOTHEC
B E F O R E Mtre Richard Trudeau, the undersigned notary for the Province of
Quebec, practicing in the City of Longueuil.
APPEARED: THE BANK OF NEW YORK, a banking corporation organized under the Laws
of the State of New York, (U.S.A.) having its head office at 101 Barclay Street,
21 West, New York, New York, 10286, U.S.A., herein acting and represented by
Marie E. Trimboli, its Assistant Treasurer, hereunto duly authorized for the
purposes hereof for the purposes hereof as she so declares. Notice of its
address will be registered at the Register of Personal and Movable Real Rights
concurrently with the registration of this Deed.
(hereinafter the "TRUSTEE")
AND: SLM INTERNATIONAL, INC., a legal person being a corporation constituted
under the Laws of the State of Delaware, (U.S.A.) having its registered office
at 1209 Orange Street, Wilmington, Delaware, 19801, U.S.A. herein acting and
represented by Bruce Randall, its Secretary, duly authorized for the purposes
hereof pursuant to a resolution adopted by its Board of Directors on March 24,
1997, a certified copy of which is annexed hereto after having been acknowledged
true and signed for the purpose of identification by said representative in the
presence of the undersigned Notary.
(hereinafter the "GRANTOR")
WHICH PARTIES HAVE DECLARED AS FOLLOWS:
WHEREAS the Grantor is desirous of securing its obligation under the Indenture
(as hereinafter defined) in the manner hereinafter appearing;
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
<PAGE>
2
1. INTERPRETATION
1.1 DEFINITIONS
The following terms, wherever used in this Deed shall, unless there be
something in the context inconsistent therewith, have the following meanings:
1.1.1 "BUSINESS DAY" means a day on which the Trustee's branch in
the city of New York is opened for business but does not
include Saturday and Sunday.
1.1.2 "CHARGED PROPERTY" shall have the meaning ascribed to it in
Section 4 hereof;
1.1.3 "COLLATERAL" shall have the meaning ascribed to it in
paragraph 4.8 hereof;
1.1.4 "DEFAULT" means one or the other events set out in Section 13
hereof;
1.1.5 "DOLLARS" or "$" means the legal currency in Canada;
1.1.6 "GRANTOR" means SLM International, Inc. and any of its
successors or assigns;
1.1.7 "INDENTURE" means that certain Senior Secured Note Indenture
dated as of April 1st, 1997 between SLM International, Inc.,
Sport Maska Inc., Maska U.S., Inc., #1 Apparel, Inc., #1
Apparel Canada Inc., SLM Trademark Acquisition Corp., SLM
Trademark Acquisition Canada Corporation and The Bank of New
York;
1.1.8 "HYPOTHEC" shall have the meaning ascribed to it in Section 4
hereof;
1.1.9 "PROPERTY IN STOCK" shall have the meaning ascribed to it in
paragraph 4.4 hereof;
1.1.10 "SECURED OBLIGATIONS" means all of the obligations which are
to be secured by the Hypothec pursuant to Section 6 hereof;
1.1.11 "THIS DEED", "THESE PRESENTS", "HEREIN", "HEREBY",
"HEREUNDER", "HEREOF" and similar expressions refer to this
Deed, and the accompanying schedules and to any deed or
document supplemental or complementary hereto or restating
this Deed;
<PAGE>
3
1.1.12 "TRUSTEE" means The Bank of New York and shall include any
successor thereto pursuant to the applicable provisions of
the Indenture.
1.2 GENDER
Unless there be something in the context inconsistent therewith, words
importing any gender shall include any other gender as may be applicable under
the circumstances.
1.3 HEADINGS
The division of this Deed into Sections, subsections and paragraphs and
the insertion of titles are for convenience of reference only and do not affect
the meaning or the interpretation of the present Deed. Unless otherwise
indicated, a reference to a particular Section, subsection or paragraph is a
reference to the particular Section, subsection or paragraph in this Deed.
1.4 SCHEDULES
The Schedules annexed hereto shall form an integral part of this Deed.
1.5 DELAYS AND CALCULATION OF DELAYS
The delays provided hereunder are calculated simultaneously with the
delays imposed by law and are not in addition to such delays. In the calculation
of any period of delay, the period shall exclude the day from which the period
commences and the period shall include the last day thereof.
1.6 BUSINESS DAY
When the date on which a delay expires or a payment has to be made or an
act has to be done is not a Business Day, the delay expires or the payment must
be made or the act must be done on the next following Business Day, unless
expressly provided otherwise in this Deed.
1.7 TERMS DEFINED IN THE INDENTURE
The terms defined in the Indenture shall have the same meaning when used
herein unless otherwise defined herein.
2. [NOT USED]
3. [NOT USED]
<PAGE>
4
4. HYPOTHEC: DESCRIPTION OF CHARGED PROPERTY
The Grantor hereby hypothecates in favour of the Trustee for its own
benefit and for the equal and rateable benefit of each Holder of a Security
issued pursuant to the Indenture and authenticated and delivered by the Trustee,
the universality of all of the Grantor's movable and immovable property, present
and future, corporeal and incorporeal, of whatever nature and kind and wherever
situate (the "Charged property") and, with respect to incorporeal or intangible
property, property located outside of the Province of Quebec or used in more
than one jurisdiction, hereby charges, assigns and mortgages in favour of the
Trustee for its own benefit and for the equal and rateable benefit of each
Holder of a Security issued pursuant to the Indenture and authenticated and
delivered by the Trustee and creates a security interest in the Charged property
(the hypothec, charge, mortgage and assignment and the security interest
hereinafter collectively referred to as the "Hypothec"), the whole including
without limitation the following universalities of present and future
properties:
4.1 IMMOVABLES
All the immovable properties of the Grantor, along with all property
permanently physically attached or joined thereto so as to ensure the utility
thereof (including the heating and air conditioning apparatus and watertanks)
and which become immovable by the effect of law, the hypothec on future
immovables to become effective upon the registration of a notice to that effect
in accordance with section 2949 of the Civil Code of Quebec (collectively
hereinafter referred to as the "IMMOVABLES").
4.2 RENTALS, REVENUES AND LEASES OF IMMOVABLES
All rentals, annuities and revenues which are or may be produced by the
Immovables as well as any other right of the Grantor in any lease, present and
future, which may affect such Immovables.
4.3 RENTAL INSURANCE
Proceeds of any insurance covering losses of revenue and rentals described
in paragraph 4.2 above.
4.4 PROPERTY IN STOCK
All property in stock or inventory of every nature and kind of the Grantor
whether in its possession, in transit or held on its behalf, including raw
materials, work in process, finished goods or other materials, goods
manufactured or transformed, or in the process of being so, by the Grantor or by
others, packaging materials, property evidenced by bill of lading, animals,
mineral substances, hydrocarbons and other products of the soil as well as all
fruits thereof from the time of their extraction (hereinafter the "Property in
stock").
<PAGE>
5
The Property in stock held by third parties under a lease agreement, a
leasing contract, a franchise or licence agreement, or any other agreement
entered into with or on behalf of the Grantor, is also subject to this Hypothec.
Property having formed part of the Property in stock which is alienated by
the Grantor in favour of a third person but in respect of which the Grantor has
retained title pursuant to a reservation of ownership provision, shall remain
charged by the Hypothec until title is transferred; any Property in stock the
ownership of which reverts to the Grantor pursuant to the resolution or
resiliation of any agreement or following its repossession is also subject to
the Hypothec.
4.5 CLAIMS, BOOK DEBTS AND OTHER MOVABLE PROPERTY
4.5.1 CLAIMS, RECEIVABLES AND BOOK DEBTS
All of the Grantor's claims, debts, demands and choses in action,
whatever their cause or nature, whether or not they are certain, liquid or
exigible; whether or not evidenced by any title (and whether or not such
title is negotiable), note, acceptances, bill of exchange or drafts;
whether litigious or not; whether or not they have been previously or are
to be invoiced; whether or not they constitute book debts. Hypothecated
claims shall include: (i) indemnities payable to the Grantor under any all
risk insurance policy, any life insurance policy or any liability
insurance policy, subject to the rights of other subsequent ranking
hypothecs on the insured property, (ii) the sums owing to the Grantor in
connection with interest or currency exchange contracts and other treasury
or hedging instruments, management of risks or derivative instruments
existing in favour of the Grantor ("SWAPS"), and (iii) the Grantor's
rights in any credit balances, monies or deposits in accounts held for it
by the Trustee (subject to the Trustee's compensation or set-off rights)
or by any financial institution or any other person.
4.5.2 RIGHTS OF ACTION
The Grantor's rights under contract with third parties as well as
the Grantor's rights of action and claims against third persons.
4.5.3 ACCESSORIES
The hypothecs, security interest, security agreement, guarantees,
suretyships, notes, acceptances and accessories to the claims and rights
described above and other rights relating thereto (including, without
limitation, the rights of the Grantor in its capacity as seller under any
instalment sale, with respect to the claims hereby hypothecated which are
the result of such sale).
4.5.4 MOVABLE PROPERTY
All movable property owned by the Grantor and covered by the
instalment sales mentioned in paragraph 4.5.3 hereof.
<PAGE>
6
A right or a claim shall not be excluded from the Charged property merely
because: (i) the debtor thereof is not domiciled in the Province of Quebec or
(ii) the debtor thereof is an affiliate (as such term is defined in the Canada
Business Corporations Act) of the Grantor (regardless of the law of the
jurisdiction of its incorporation) or (iii) such right or claim is not related
to the ordinary course of business or the operations of the Grantor.
4.6 SECURITIES
All securities (including shares, debentures, units, bonds, obligations,
rights, options, warrants, debt securities, investment certificates, units in
mutual funds, certificates or other instruments representing such property) now
or hereafter owned by the Grantor or held by the Grantor or on its behalf,
including without limitation those issued or which will be issued by the
corporations or partnerships listed in Schedule "B" or by any corporation or
partnership successor thereto pursuant to an amalgamation or any other
reorganization (a copy of which Schedule "B" remains annexed hereto after having
been recognized as true and signed for identification by the representatives of
the parties hereto with and in the presence of the undersigned notary); as well
as all those which are delivered by the Grantor to the Trustee or to a third
party on its behalf from time to time.
4.7 EQUIPMENT AND ROAD VEHICLES
The equipment, office furniture, appliances, supplies, apparatus, tools,
patterns, models, dies, blueprints, fittings, furnishings, fixtures, machinery
and rolling stock (including road vehicles) of the Grantor, including additions
and accessories and spare parts.
4.8 TRADE-MARKS AND OTHER INTELLECTUAL PROPERTY RIGHTS
All of the Grantor's rights in any trade-mark, copyright, industrial
design, patent, goodwill, invention, trade name, trade secret, trade process,
license, permit, franchise, know-how, plant breeders' right, integrated circuit
topography and in any other intellectual property right, including any
application or registration relating thereto if any, improvements and
modifications thereto as well as rights in any claim against third parties in
connection with the protection of any such intellectual property rights or
infringement thereto, in Canada or abroad, (sometimes hereinafter referred to
collectively as the "Collateral") including without limitation those registered
in Canada and listed in Schedule "B" hereto.
4.9 FRUITS AND REVENUES
All cash, profits, proceeds, fruits, dividends, rights and revenues which
are or may be produced by or declared or distributed with respect to the Charged
property or in exchange thereof as well as the proceeds of the Charged property,
including without limitation any property, equipment, negotiable instrument,
bill, commercial paper, security, money, compensation for expropriation
remitted, given in exchange or paid pursuant to a sale, repurchase, distribution
or any other transaction with respect to the Charged property.
<PAGE>
7
4.10 RECORDS AND OTHERS
All records, data, vouchers, invoices and other documents related to the
Charged property described above, including without limitation, computer
programs, disks, tapes and other means of electronic communication of the
Grantor, as well as the rights of the Grantor to recover such property from
third parties, receipts, customer lists, distribution lists, directories and
other similar property of the Grantor.
Any and all Charged property which is acquired, transformed or
manufactured after the date of this Deed shall be charged by the Hypothec, (i)
whether or not such property has been acquired in replacement of other Charged
property which may have been alienated by the Grantor in the ordinary course of
business, (ii) whether or not such property results from a transformation,
mixture or combination of any Charged property, and (iii) in the case of
securities, whether or not they have been issued pursuant to the purchase,
redemption, conversion or cancellation or any other transformation of the
charged securities and without the Trustee being required to register or
re-register any notice whatsoever, the property charged under the Hypothec being
the universality of the Grantor's present and future property.
5. AMOUNT OF THE HYPOTHEC
The amount for which the Hypothec is granted is a principal amount of
Seventy-five million dollars ($75,000,000) with interest thereon from the date
of this Deed at the rate of twenty-five percent (25%) per annum.
6. SECURED OBLIGATIONS
The Hypothec secures the due and punctual payment of the principal of,
premium, if any, and interest with respect to the Securities, when and as the
same shall become due and payable and the due and punctual payment of interest
on the overdue principal of premium, if any, and the interest on the Securities
as well as the due performance of all obligations of the Grantor resulting from
this Deed, the Securities and the Indenture.
Any future obligation hereby secured shall be deemed to be one in respect
of which the Grantor has once again obligated itself hereunder according to the
provisions of section 2797 of the Civil Code of Quebec.
<PAGE>
8
7. ADDITIONAL PROVISIONS PERTAINING TO THE HYPOTHEC ON
RENTAL INCOME AND LEASES
With respect to any Immovables generating rentals and revenues:
7.1 LIST OF TENANTS
The Grantor shall provide the Trustee, before January 30th each year, with
a list containing the name of all tenants and details as to their leases as at
the immediately preceding December 31st. The Grantor shall obtain the prior
written consent of the Trustee with respect to the terms and conditions of any
new lease or the modifications or renewals of any existing leases provided
nothing herein shall compel the Trustee to waive any right it may have pursuant
to Article 1887 of the Civil Code of Quebec. Upon request of the Trustee, acting
reasonably, the Grantor shall further provide (i) a copy (or the original, when
requested by the Trustee) of all leases, present and future, relating to the
Immovables and any document and any useful information in connection therewith,
and (ii) a written acknowledgment by the tenants, present and future, of the
hypothec on rentals hereby created in the form required by the Trustee.
7.2 LEASES AND STATEMENT OF REVENUES
The Trustee may require that all leases be subject to its approval, that
they be subordinated to its rights hereunder and that the Grantor provide it on
a yearly basis with a statement of revenues and expenditures concerning the
Immovables.
7.3 RENTS, ANNUITIES AND REVENUES COLLECTION
The Trustee hereby authorizes the Grantor to collect all rents, annuities
and revenues which are rental income; however, the Grantor shall not collect in
advance more than one month of rent (other than as a security deposit) nor shall
it renounce to the payment of any rent. Such authorization may be revoked at any
time by the Trustee in accordance with what is provided for by law; in such a
case, the Trustee may exercise as it deems appropriate, to the exclusion of the
Grantor, all rights, claims, privileges and hypothecs (legal or conventional) of
the Grantor in order to maintain, renew, grant or terminate any lease, and to
further protect or collect rents, annuities and revenues from the Immovables.
7.4 COLLECTION
The Trustee shall have the right to bring an action for recovery of
rentals, impleading the Grantor, it being understood that the Trustee shall be
under no obligation to exercise such right and shall not be liable for any loss
or damage which may result from its failure to collect such rentals. The Trustee
shall have the right to deduct a ten per cent (10%) collection fee from any
rentals collected as well as any commission usually charged by the Trustee for
the collection of rentals, miscellaneous costs and expenses (copies, service
fees, legal counsel fees and others, opening files, surveillance fees, execution
fees or fees for cancellation of lease) incurred as a result of such collection.
<PAGE>
9
8. ADDITIONAL PROVISIONS TO THE HYPOTHEC ON CLAIMS (OTHER
THAN RENTALS)
8.1 AUTHORIZATION TO RECOVER
Save and except for claims resulting from an expropriation, those referred
to in Section 9 and paragraph 12.9 hereof and save for any other claims for
which collection is otherwise dealt with pursuant to any agreement entered into
with the Trustee or any other person, the Trustee hereby authorizes the Grantor
to recover all claims and other Charged property referred to in paragraph 4.5.
Such authorization may be revoked at any time by the Trustee by written notice
with respect to all or any part of the hypothecated claims, whereupon the
Trustee shall be free to itself effect such recovery and to exercise any of the
rights referred to in paragraph 8.2 below; the Grantor shall then remit to the
Trustee all records, books, invoices, bills, contracts, titles, papers and other
documents related to the claims. If, after such authorization is revoked (and
even if such revocation is not yet registered or delivered to the holders of
such claims), sums payable under such claims and property are paid to the
Grantor, it shall receive same as mandatary of the Trustee and shall remit same
to the Trustee promptly without the necessity of any demand to this effect.
8.2 RECOVERY
The Trustee may recover all claims and other Charged property referred to
in paragraph 4.5 in accordance with what is provided for by law; it may further
exercise any rights regarding such Charged property and more particularly, it
may grant or refuse any consent which may be required from the Grantor in its
capacity as owner of such Charged property, and shall not, in the exercise of
such right, be required to obtain the consent of the Grantor or serve the
Grantor any notice thereof, nor shall it be under any obligation to establish
that the Grantor has refused or neglected to exercise such rights, and it may
further grant delays, take or abandon any security, make arrangements with
debtors of any hypothecated claims, make compromises, grant releases and
generally deal at its discretion with matters concerning all Charged property
referred to in paragraph 4.5 without the intervention or consent of the Grantor.
9. ADDITIONAL PROVISIONS TO THE HYPOTHEC ON SECURITIES
9.1 TRUSTEE'S RIGHTS
The Trustee may, at any time after the occurrence of a Default, transfer
any securities or any part thereof into its own name or that of a third party
appointed by it so that the Trustee or its nominee(s) may appear as the sole
registered holder, in which case:
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10
9.1.1 Voting rights
All voting rights and any other right attached to such securities
may be exercised by the Trustee (without any obligation of the Trustee to
do so) or on behalf of the Trustee.
9.1.2 Revenues, dividends and others
The Trustee shall collect revenues, dividends and capital
distributions and the Grantor shall cease to have any right thereto and
the Trustee may either hold same as Charged property or apply them in
reduction of the Secured Obligations.
9.2 PHYSICAL POSSESSION OF THE CERTIFICATES
The certificates representing the hypothecated securities may be kept in
the possession of the Trustee or in the possession of its agent.
The Grantor hereby irrevocably appoints any officer or employee of the
Trustee as its attorney with full power of substitution and authority to execute
such documents necessary to render effective the rights granted to the Trustee
pursuant to this Section 9.
10. ASSIGNMENT OF CLAIMS SUBJECT TO THE FINANCIAL
ADMINISTRATION ACT
The Grantor hereby assigns to the Trustee by way of absolute assignment
all its present and future claims which are subject to Sections 67 and 68 of the
Financial Administration Act, as collateral and continuing security of all
Secured Obligations. The Trustee may, at any time, fulfill any of the
formalities required by law to make such transfer enforceable.
11. REPRESENTATIONS AND WARRANTIES
The Grantor hereby represents and warrants that:
11.1 LEGAL PERSON
It is a legal person (corporation).
11.2 HEAD OFFICE
The registered office or domicile of the Grantor is located in the State
of Delaware, U.S.A.
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11
11.3 INCORPORATION
It is duly incorporated and in good standing under the law of its
jurisdiction of incorporation.
11.4 POWERS
It has the capacity and the powers necessary to grant the Hypothec and to
bind itself as herein provided for; the execution of this Deed, the compliance
with its provisions and the performance of its covenants shall not entail or
result in any breach of or default under any other agreement or document to
which the Grantor is bound.
11.5 AUTHORIZATION OF THIS DEED
This Deed has been duly authorized by resolution or by any other necessary
action under its constating documents, by-laws or otherwise, in order to give it
full effect and to render its obligations fully enforceable, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally from time to time
in effect.
11.6 EXECUTION OF THIS DEED
This Deed has been executed by duly authorized persons.
11.7 BUSINESS OR FIRM NAMES
It uses no business or firm name other than those referred to in Schedule
"B" hereof.
11.8 TITLES OF OWNERSHIP AND EXISTING CHARGES
It is the unconditional and absolute owner of the Charged property, except
for future property, and all such property is free and clear of any prior claim,
hypothec, charge, security or security interest, seizure by garnishment, right
of resolution or repossession or of any other right whatsoever existing in
favour of persons other than any such right which constitutes a Lien which is
permitted in accordance with paragraphs (a) and following of Section 412 of the
Indenture.
11.9 SHAREHOLDER AGREEMENT
There exists no shareholders' agreement in connection with securities
which are charged under this agreement other than a declaration made by the
Grantor on April 9, 1997 pursuant to Section 99(3) of the Business Corporations
Act (New Brunswick) with respect to Sport Maska Inc. and #1 Apparel Canada Inc.
There exists no restriction in the articles or other constating documents of the
Grantor regarding the assignment or transfer of securities which are charged
hereunder other than the restrictions pertaining to a closed company (as such
term is defined in the Securities Act (Quebec)) and those declared in writing to
the Trustee.
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11.10 [NOT USED]
11.11 DISPOSITION OF CHARGED PROPERTY
Except for property referred to in paragraph 4.4 hereinabove, it does not,
in the ordinary course of its business, sell property similar to or of the same
nature as the Charged property.
11.12 CLAIMS SUBJECT TO THE FINANCIAL ADMINISTRATION ACT
It has no claim falling under Section 10 hereof, other than those
indicated in Schedule "B" hereof.
11.13 CLAIMS SECURED BY REGISTERED HYPOTHEC
It has no claim which is secured by registered hypothec other than those
indicated in Schedule "B" hereof.
11.14 [NOT USED]
11.15 LITIGATION
It has knowledge of no suit or action against it, as to which there is a
reasonable likelihood of an adverse determination and which, if adversely
determined, would likely materially affect unfavorably the Charged property.
Grantor is not in violation of any law, or in default with respect to any
judgment, writ, injunction, decree, rule or regulation of any court or
governmental agency or instrumentality where such violation or default would
result in a Material Adverse Effect.
11.16 DEFAULT
It is not in default under the present Deed.
11.17 INTELLECTUAL PROPERTY
11.17.1 all registrations, applications for registration, filings
and notices thereof in respect of the Collateral, including
all relevant renewals, have been duly and properly made,
are in full force and effect and are not subject to dispute
by any governmental authority or agency and all leases,
licences and other agreements affecting any right, title or
interest of the Grantor in any of the Collateral
(collectively, the "Third Party Agreements") are in good
standing;
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13
11.17.2 none of the Collateral has been adjudged invalid or
unenforceable or has been cancelled, in whole or in part,
and all such Collateral is presently subsisting, valid, in
good standing and enforceable, with the exception of those,
if any, set out in the Schedule "B" hereto and identified
as "pending applications", "cancelled/expunged
registrations", "abandoned applications" or "registrations
no longer in name of the Grantor";
11.17.3 the Grantor is the exclusive owner or in the case of
licensed Collateral, the sole and exclusive licensee, of
the entire and unencumbered right, title and interest in
and to each of the Collateral free and clear of any liens,
charges and encumbrances except for any Lien which is
permitted in accordance with paragraph (a) and following of
Section 412 of the Indenture;
11.17.4 the Collateral listed in Schedule "B", constitutes all of
the intellectual property rights now owned by the Grantor;
11.17.5 the Grantor has adopted, used continuously and currently is
using all of the Collateral; all licensees of the
Collateral (or all relevant portions thereof) from the
Grantor as licensor have been licensed properly to use such
Collateral and the Grantor has retained under license the
direct or indirect control of the character or quality of
the goods or services in connection with which use of such
Collateral has been licensed by it; all use of such
Collateral has been proper both in form and in relation to
the goods or services in connection with which the
Collateral is used by the Grantor or its licensees; and
proper ownership notices have been used by the Grantor or
its licensees;
11.17.6 nothing contained in this Deed or the Indenture, including,
without limitation, the granting of the Hypothec by the
Grantor in favour of the Trustee, constitutes a breach
under any Third Party Agreement.
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14
12. COVENANTS
The Grantor hereby covenants:
12.1 INFORMATION
To give notice in writing to the Trustee:
- of any change whatsoever in its name and business names or in the
representations and warranties hereinabove mentioned in Section 11;
- of the name of any surety (guarantor) which may have guaranteed the
payment of claims hypothecated hereby and other Charged property mentioned
in paragraph 4.5 hereof;
- of the name of the insurers to the insurance contracts referred to herein;
- of the existence of any security, hypothec, prior claims or property right
retained or assigned securing claims and other Charged property referred
to in paragraph 4.5 hereof and, in such cases, to provide the Trustee,
upon demand, with satisfactory proof that such security or hypothec has
been registered or published in accordance with applicable law in order
for the rights of the Trustee to be set up against third persons;
- of the existence and details of any new claim arising hereafter which
alone or together with any other claims falling under Section 10 hereof is
material.
12.2 ADDITIONAL INFORMATION
To provide the Trustee with any information it may reasonably request with
respect to the Charged property or in order to determine whether or not the
Grantor is in compliance with its undertakings and obligations hereunder. The
Grantor shall inform the Trustee of any event, occurrence, or fact which might
have a Material Adverse Effect.
12.3 ACCOUNTING BOOKS
To keep, with respect to the Charged property, books, vouchers and other
documentation, as would a reasonable and diligent administrator, including a
list containing the names and addresses of all debtors of the hypothecated
claims, and keep them available for the Trustee to examine and obtain copies
thereof.
12.4 [NOT USED]
12.5 PRESERVATION OF THE HYPOTHEC
To perform all acts and execute all deeds and documents (including notices
of renewal) necessary to give full effect to the Hypothec and to ensure that it
is at all times fully opposable against third persons.
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15
12.6 COMPENSATION, FEES AND EXPENSES
To pay to the Trustee from time to time all out-of-pocket costs and
expenses relating to this Deed and to the exercise of all rights resulting in
favour of the Trustee from such Deed as well as all out-of-pocket costs and
expenses incurred to set up the rights of the Trustee against third persons, and
all discharge fees (such costs and expenses shall include all reasonable fees
and expenses of consultants, agents or counsels retained by the Trustee); to
reimburse the Trustee for all out-of-pocket costs and expenses incurred by it
for the purpose of carrying out the Grantor's obligations or of exercising its
rights, all such costs and expenses bearing interest at an annual rate equal to
the base rate of National Bank of Canada which shall be in force from time to
time, plus 3%; National Bank of Canada's base rate shall be the one advertised
as its rate of reference for determining the interest rate on commercial loans
in Dollars granted in Canada; the obligations arising from this paragraph shall
not exceed twenty-five per cent (25%) of the nominal value of the Hypothec; the
repayment of such costs and expenses shall be secured by the Hypothec.
12.7 ENCUMBRANCES AND TITLE
Not to grant, at any time hereafter, any easement, right-of ways,
servitude or any other charges against the Charged property without having first
obtained the prior written consent of the Trustee, (save for public easements
granted for utility purposes which do not materially affect unfavourably the
Charged property) and to maintain the Charged property free and clear of any
conventional or legal hypothec, prior claim under Articles 2650 et seq. of the
Civil Code of Quebec, charge, security, garnishment, right of resolution or
repossession or any other right in favour of a person or persons other than the
Trustee, in each case other than in regard to a Lien which is permitted in
accordance with paragraphs (a) and following of Section 412 of the Indenture; to
preserve, warrant and defend its title against any claim, action or
contestation.
12.8 LIST OF PROPERTY IN STOCK AND BOOK DEBTS
To give the Trustee, from time to time, upon demand, a statement of the
value of its Property in stock and a list of its book debts shown in the reverse
order of their due date.
12.9 INSURANCE
The Grantor covenants to:
12.9.1 keep its insurable properties adequately insured at all times by
financially sound and reputable insurers;
12.9.2 maintain such other insurance, to such extent and against such
risks, including fire and other risks insured against by extended
coverage, as is customary for the Charged Property and as is
customary with companies similarly situated and in the same or
similar businesses, provided,
<PAGE>
16
however, that such insurance shall insure the property of the
Grantor against all risk of physical damage, including, without
limitation, loss by fire, explosion, theft, fraud and such other
casualties as may be reasonably satisfactory to the Trustee, and in
no event at any time in an amount less than the replacement value
of the Charged Property;
12.9.3 maintain in full force and effect public liability insurance
against claims for bodily injury or death or property damage
occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by the Grantor or any of
its subsidiaries, as is customary with companies similarly situated
and in the same or similar businesses;
12.9.4 maintain business interruption and product liability insurance to
such extent as is customary with companies similarly situated and
in the same or similar businesses; and
12.9.5 maintain such other insurance as may be required by law or as may
be reasonably requested by the Trustee for purposes of assuring
compliance with this paragraph 12.9;
it being understood that:
12.9.6 the Trustee is forthwith named as beneficiary of the indemnities
payable pursuant to these policies (excluding those pertaining to
civil liability) and the Grantor shall cause the recording of this
designation on the policies which must also contain provisions
preventing their cancellation or amendment to the detriment of the
Trustee, for any reason whatsoever, including failure to pay the
premiums, unless the omission or Default is not remedied within
thirty (30) days following receipt of written notification thereof
by the Trustee;
12.9.7 the insurance policies do not contain coinsurance clauses save with
the prior written agreement of the Trustee;
12.9.8 the Grantor will deliver to the Trustee all policies and
certificates of insurance maintained in accordance with this
paragraph 12.9;
12.9.9 in the event of any material loss or damage, the Grantor shall
immediately notify the Trustee of the loss incurred or damage
sustained. The indemnity, with respect to property and damage
insurance, shall be paid to the Trustee to the extent of its
interest. The Trustee may apply any indemnity received by it to
reduce any amount owed
<PAGE>
17
to it hereunder and/or under the Guaranty. However, the reduction
shall be effective only once the Trustee has informed the Grantor
of such choice. The indemnity may also be remitted to the insured
to be used for replacement, repair or reconstruction purposes,
according to terms and conditions pre-determined by the Trustee.
12.10 LOSS OR DAMAGE
To immediately notify the Trustee of any loss of, or substantial damage
to, any material portion of the Charged property and take all diligent steps to
ensure that the insurer pays the indemnity to the Trustee.
12.11 LEASE AND TRANSFER
Not to lease, sell, assign or otherwise alienate the Charged property, in
whole or in part, without the prior written consent of the Trustee, except for
property referred to in paragraph 4.4 above which may be leased or sold in the
ordinary course of business of the Grantor and except as expressly permitted in
the Indenture.
12.12 MAINTENANCE
The Grantor shall diligently pay the cost of any public utility services
and authorizes the Trustee to obtain from the related authorities the amounts
due to this account and any information relating to payment of such charges.
12.13 LOCATION OF PROPERTY
Not to change the location of the Charged property unless it obtains the
prior written consent of the Trustee.
12.14 TITLE
To ensure that its right of ownership in any Charged property in the hands
or possession of any third party remains opposable against third parties and,
accordingly, that such right has been registered or published, if registration
or publication is required by law for the purpose of opposability against third
parties.
12.15 LESSORS
If any of the Charged property is located, in the province of Quebec, in
premises leased pursuant to a lease executed before January 1, 1994 (and where
the registration of a legal hypothec has been perfected) or if it were moved to
premises leased as aforesaid, to obtain a full cession of priority in favour of
the rights of the Trustee under the present Hypothec and to immediately notify,
following the execution of the present Deed or immediately following the moving
into the leased premises, the lessor of such premises, in writing, of the
present Hypothec and to deliver to the Trustee within three (3) days after such
notification proof of same.
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12.16 USE AND DESTINATION
Not to change the use or destination of the Charged property unless it
obtains the prior written consent of the Trustee.
12.17 VALUE
To protect and use the Charged property and to carry on its business so as
to preserve its value.
12.18 INTELLECTUAL PROPERTY
The Grantor shall:
12.18.1 use its trade-marks, trade-mark registrations, trade-mark
applications, trade names, business names, trade styles,
logos, service marks, and all other forms of business
identifiers (hereinafter the "Trademarks") only on goods of
at least as high quality as the goods on which the Grantor
or its predecessor used the goods as of the date hereof and
maintain the quality of any and all products in connection
with which the Trademarks and other Collateral is used,
consistent with the quality of said products as of the date
hereof;
12.18.2 take or cause to be undertaken all steps necessary to
protect the Grantor's interest in and to maintain the
Collateral in good standing, including without limitation,
to pursue diligently all applications through to
registration and to renew all registrations and pay all
maintenance fees as applicable, as well as attending to the
filing of all required documentation;
12.18.3 vigorously protect, preserve and maintain all of the
Grantor's right, title and interest in the Collateral,
including, without limitation, the prosecution and/or
defence against any and all suits concerning validity,
infringement, enforceability, ownership or other aspects
affecting any of the Collateral (any expenses incurred in
protecting, preserving and maintaining any of the
Collateral shall be borne by the Grantor);
12.18.4 upon written request by the Trustee, execute and deliver
any and all agreements, instruments, documents and papers
as the Trustee may reasonably request to evidence the
Hypothec in the Collateral;
12.18.5 perform all covenants required under any Third Party
Agreement including, inter alia, promptly paying all
<PAGE>
19
required fees, royalties and taxes to maintain each and
every item of the Collateral in full force and effect;
12.18.6 if at any time or from time to time, the Grantor (i)
becomes aware of any existing Collateral of which the
Grantor has not previously informed the Trustee, (ii)
obtains rights to any new Collateral, or (iii) becomes
entitled to the benefit of any Collateral not identified in
Schedule "B", then the Grantor shall promptly notify the
Trustee and regardless of when the Grantor so notifies the
Trustee, Schedule "B" hereto, as applicable, automatically
shall be modified and amended to include any such
Collateral and the provisions of this Deed automatically
shall apply thereto;
12.18.7 maintain up to date records regarding the Collateral;
12.18.8 provide the Trustee with a written report on each
anniversary of this Deed regarding the status of the
Collateral;
12.18.9 not abandon any right to file a trademark application or
patent application, or abandon any pending trademark or
patent application, or abandon any of the Collateral or any
suits involving any of the Collateral, without the prior
written consent of the Trustee, which consent of the
Trustee shall not be unreasonably withheld;
12.18.10 not take any action, or permit any action to be taken by
any person or persons subject to its control, including
licensees, or fail to take any action, which would
adversely affect the validity, enforceability or
transferability (to the Trustee or otherwise) of all or any
of the Collateral; and ensure generally that the Collateral
is and remains valid, in good standing and enforceable.
12.19 RELEASE OF COLLATERAL
The Hypothec shall not be discharged prior to the indefeasible payment in
full of all amounts owing hereunder and under the Indenture and the performance
of all obligations of the Grantor hereunder and under the Indenture.
13. EVENTS OF DEFAULT
The Grantor shall be in default hereunder without notice or other
formality and the security hereby constituted shall immediately become
enforceable, if it fails
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to pay any amount due or to become due under the Indenture and/or the Securities
upon demand, and in any of the following events ("DEFAULT"):
13.1 [NOT USED]
13.2 [NOT USED]
13.3 [NOT USED]
13.4 CROSS DEFAULT
An Event of Default (as defined in the Indenture) occurs under the
Indenture on the part of the Grantor or under the Guaranty on the part of any
Guarantor.
13.5 CHARGED PROPERTY
If the Grantor fails at any time to maintain, preserve or protect all
property material to the conduct of its businesses and keep such property in
good repair, working order and condition (reasonable wear and tear excepted) or
fails from time to time to make, or cause to be made, all needful and proper
repairs, renewals, additions, improvements and replacements thereto which are
necessary in order that the business carried on in connection therewith may be
properly conducted in all material respects at all times.
13.6 OTHER AGREEMENTS
The Grantor fails to pay any indebtedness or to perform any of the
Grantor's obligations required to be paid or performed under any other agreement
creating a charge against the Charged property.
13.7 INSOLVENCY AND BANKRUPTCY
The Grantor ceases to carry on its enterprise or an important part
thereof, becomes insolvent or becomes subject to proceedings, makes an
assignment or files a notice to file a proposal under any law relating to
insolvency, bankruptcy, reorganization or to arrangements with creditors or any
petition in bankruptcy is taken against the Grantor.
13.8 [NOT USED]
13.9 LEGAL EXISTENCE
The Grantor loses its legal existence; an order is issued or a resolution
is adopted for its winding-up or liquidation.
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13.10 HYPOTHECARY RIGHTS
Any of the Charged property is subject to a hypothecary right from another
creditor, a partition procedure, a "sale of an enterprise" as it is understood
under sections 1767 and ssq. of the Civil Code of Quebec or an expropriation,
except to the extent or under circumstances permitted in accordance with the
Indenture.
14. TRUSTEE'S RECOURSES IN CASE OF DEFAULT
14.1 PAYMENT OF INDEBTEDNESS
In case the Hypothec shall have become enforceable, on account of one or
the other of the events mentioned in Section 13 or paragraphs 13.1 through 13.10
above, the Trustee may, in its discretion, at any time or times, demand payment
of all or any part of the Secured Obligations and the same shall forthwith
become immediately due and payable to the Trustee. Any payment then made by the
Grantor shall be deemed to have been made in discharge of its obligations
hereunder or under the Indenture, and any money so received by the Trustee shall
be applied as provided for in paragraphs 14.13 and 15.4 hereof.
14.2 EXERCISE OF RIGHTS
In case the Hypothec shall have become enforceable and the Grantor shall
have failed to pay the Trustee, on demand, the outstanding amount due under the
Indenture together with any other amounts secured hereunder, the Trustee may in
its discretion, through its officers, agents or attorneys, exercise any right of
action provided for under this Deed (and more particularly under this Section
14) or by law or in equity including without limitation any of the hypothecary
rights provided for under sections 2748 to 2794 of the Civil Code of Quebec and
any rights or remedies provided to secured parties under any applicable personal
property security legislation.
14.3 RIGHTS OF THE TRUSTEE
Whatever hypothecary rights the Trustee elects to exercise or whatever
rights or recourses the Trustee elects to exercise either pursuant to the law of
any other jurisdiction or in equity, the following provisions, to the greatest
extent permitted by applicable law, shall apply:
14.3.1 the Trustee may, in its discretion, at the Grantor's expense:
14.3.1.1 pursue the transformation of the Charged property or
any work in process or unfinished goods comprised in
the Charged property and complete the manufacture or
processing thereof or proceed with any operations to
which such property is submitted by the Grantor in
the ordinary course of its business and acquire
property for such purposes;
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14.3.1.2 alienate or dispose of any Charged property which
may be obsolete, may perish or is likely to
depreciate rapidly;
14.3.1.3 use for its benefit all information obtained while
exercising its rights;
14.3.1.4 perform any of the Grantor's obligations or
covenants hereunder;
14.3.1.5 exercise any right attached to the Charged property
on such conditions and in such manner as it may
determine, acting reasonably, including without
restriction the grant of licences whether general or
special on an exclusive or non exclusive basis, of
any intellectual property charged hereunder;
14.3.1.6 for the exercise of any of its rights, utilize
without charge the Grantor's plant, equipment,
machinery, process, information, records, computer
programs and intellectual property; for the purposes
hereof the Grantor shall, at the request of the
Trustee, concurrently with or after the execution of
these presents execute a power of attorney with
respect to intellectual property (in conformity with
paragraph 15.9 hereof) in favour of the Trustee;
14.3.1.7 borrow monies or lend monies and, in such cases, the
monies borrowed or lent by the Trustee shall bear
interest at the rate then obtained or charged by the
Trustee for such borrowing or loan; these monies
shall be reimbursed by the Grantor on demand and,
until they have been repaid in full, such monies and
interest thereon shall be secured by the present
Hypothec and be paid in priority of any other sums
secured hereunder;
14.3.1.8 maintain or repair, restore or renovate, begin or
complete any construction work on or related to the
Charged property;
14.3.2 the Trustee shall exercise its rights in good faith in order
to attempt to reduce the Secured Obligations, in a reasonable
manner, taking into account all circumstances;
14.3.3 the Trustee may, directly or indirectly, purchase or otherwise
acquire the Charged property;
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23
14.3.4 the Trustee, when exercising its rights, may waive any right
of the Grantor, with or without consideration therefor;
14.3.5 the Trustee shall have no obligation to make an inventory of
the Charged property, to take out any kind of insurance with
respect thereof or to grant any security whatsoever;
14.3.6 the Trustee shall not be bound to continue to carry on the
Grantor's enterprise or to make any productive use of the
Charged property or to maintain such property in operating
condition;
14.3.7 the Grantor shall, upon request of the Trustee, move the
Charged property and render it available to the Trustee unto
premises designated by the Trustee and which, in its opinion,
shall be more suitable in the circumstances.
14.4 GRANTOR'S REMEDY
If the Grantor remedies the default mentioned in any prior notice of
exercise of hypothecary right, the Grantor shall, as required by law, pay all
reasonable fees incurred by the Trustee by reason of the default; these fees
shall include without limitation the administrative fees of the Trustee, the
legal fees of its legal advisers and fees paid to experts.
14.5 TAKING IN PAYMENT
If the Trustee elects to exercise its right to take in payment the Charged
property and the Grantor requires that the Trustee instead sell by itself or
under judicial authority, the Charged property on which such right is exercised,
the Grantor hereby acknowledges that the Trustee shall not be bound to abandon
its recourse of taking in payment unless, prior to the expiry of the time period
allocated for surrender, the Trustee (i) has been granted a security
satisfactory to it, to ensure that the proceeds of the sale of the Charged
property will be sufficient to pay the Guaranty in full, (ii) has been
reimbursed for all reasonable costs and expenses incurred in connection to this
Deed, including all fees of consultants and legal counsel and (iii) has been
advanced the necessary sums for the sale of said Charged property; the Grantor
further acknowledges that the Trustee alone is entitled to select the type of
sale it may wish to conduct or have conducted.
14.6 SURRENDER OF CHARGED PROPERTY
The Grantor will, to the greatest extent permitted by applicable law, be
deemed to have surrendered the Charged property which is in the possession of
the Trustee, or of a third party on its behalf, if the Trustee has not, within
the delays determined by law or by a tribunal to surrender, received written
notice from the Grantor to the effect that it intends to contest the exercise of
the hypothecary recourse set forth in the prior notice.
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24
14.7 EVALUATION
Where the Trustee sells the Charged property itself, to the greatest
extent permitted by applicable law, it shall not be required to obtain any prior
evaluation by a third party.
14.8 SALE OF CHARGED PROPERTY
The Trustee, to the greatest extent permitted by applicable law, may elect
to sell the Charged property after giving such prior notices as may be required
by law in which event (i) the sale may be made with legal warranty given by the
Grantor or with complete or partial exclusion of such warranty; (ii) the sale
may be made cash or with a term or under such reasonable conditions determined
by the Trustee; and (iii) upon failure of payment of the purchase price, the
Trustee may resiliate or resolve such sale and such Charged property may then be
resold.
14.9 USE OF PREMISES
In order to exercise any of its rights, the Trustee may use the premises
located in the Immovables.
14.10 SEVERAL ADMINISTRATORS
Where several administrators are involved hereunder, the parties, to the
greatest extent permitted by applicable law, waive the application of sections
1332 to 1338 inclusively of the Civil Code of Quebec.
14.11 APPOINTMENT OF AGENT
The Trustee, to the greatest extent permitted by applicable law, may
appoint an agent or a receiver and manager (collectively a "Receiver") over all
or any portion of the Charged property by written instrument in accordance with
paragraph 14.12 or may apply to a court for the appointment of a Receiver to
take possession of all or such part of the Charged property as the Trustee shall
designate, with such duties, powers and obligations as the court making the
appointment shall confer, and the Grantor hereby irrevocably consents to the
appointment of such Receiver.
14.12 APPOINTMENT OF RECEIVER
The Trustee, to the greatest extent permitted by applicable law, may with
or without taking possession, by instrument executed by the Trustee, appoint a
Receiver of all or any part of the Charged property and of the rents, income and
profits therefrom and may from time to time by similar instrument remove any
Receiver and appoint another in its place and upon the appointment of any such
Receiver or Receivers from time to time the following provisions, to the
greatest extent permitted by applicable law, shall apply:
14.12.1 every such Receiver shall be vested with all of the rights,
powers, remedies and discretions of the Trustee set forth in paragraphs
14.3.1.1 to 14.3.1.8, inclusively, including, without limitation,
<PAGE>
25
the power to sell, for cash or credit or part cash and part credit, lease
or dispose of all or any part of the Charged property, whether by public
auction or by private sale or lease in such manner and on such terms as it
may determine in its absolute discretion acting reasonably and to do all
acts, exercise all discretions and make all determinations of the Trustee
described therein;
14.12.2 every such Receiver shall have the power to borrow money on
the security of the Charged property in priority to the security created
by this Deed for the purpose of the preservation, maintenance, completion
or protection of the Charged property or any part thereof or for making
any replacements thereof or improvements and additions thereto or for
carrying on all or any part of the business of the Grantor relating to the
Charged property, and in so doing the Receiver may issue certificates
designated as "Receiver's Certificates" which may be payable either to
order or to bearer and may be payable at such time or times as the
Receiver may think expedient and shall bear interest at such rates of
interest as the Receiver may consider reasonable, and the amounts from
time to time payable pursuant to such Receiver's Certificates shall form a
charge upon the Charged property in priority to the security created by
this Deed;
14.12.3 the Trustee may from time to time fix the remuneration of
every such Receiver who shall be entitled to deduct the same out of the
receipts derived from or comprising part of the Charged property or the
proceeds thereof;
14.12.4 every such Receiver shall be deemed to be an agent of the
Grantor and not of the Trustee for the purposes of:
(i) carrying on and managing the business and affairs of the
Grantor, and
(ii) establishing liability for all of the acts or omissions of
the Receiver while acting as such and the Trustee shall not
be in any way responsible for any acts or omissions on the
part of any such Receiver, its officers, employees and
agents,
the Grantor hereby irrevocably authorizing the Trustee to give instructions to
the Receiver relating to the performance of its powers and discretions as set
out herein;
14.12.5 the appointment of every such Receiver by the Trustee or
anything which may be done by any such Receiver or the removal of any such
Receiver or the termination of any such receivership shall not have the
effect of constituting the Trustee a mortgagee in possession in respect of
the Charged property or any part thereof;
14.12.6 no such Receiver shall be liable to the Grantor to account
for moneys other than moneys actually received by such Receiver in respect
<PAGE>
26
of the Charged property and every such Receiver shall apply such moneys so
received in the manner provided in paragraph 14.13; and
14.12.7 the Trustee may at any time and from time to time terminate
any such receivership by notice in writing executed by the Trustee to any
such Receiver;
14.13 IMPUTATION OF PAYMENTS
Except as herein otherwise expressly provided, to the greatest extent
permitted by applicable law, all monies arising from any sale or realization of
the Charged property, in whole or in part, whether under any sale by the Trustee
or by judicial process or otherwise, shall be applied, together with any other
monies then in the hands of the Trustee and available for such purpose, in the
first place to pay or reimburse the Trustee's fees, charges, expenses,
borrowing, advances and all other moneys provided or obtained by it or at its
request in or about the execution of its powers and rights with respect to these
presents, with interest thereon as herein provided, and the residue of the said
moneys shall be applied on account of Secured Obligations or, at the option of
the Trustee, may be held unappropriated in a collateral account in order to
provide for payment of any charge ranking prior to the Hypothec.
The Grantor shall only be credited with amounts received by the Trustee in
cash from the possession, sale, lease or other disposition of, or realization
upon, the Charged property as and when such cash is received.
14.14 LIABILITY OF GRANTOR
The Grantor shall remain liable to the Trustee for any deficiency
remaining after the application of the proceeds of any sale, lease or
disposition of the Charged property by the Trustee.
15. GENERAL PROVISIONS
15.1 ADDITIONAL SECURITY
The Hypothec created hereby is in addition to and not in substitution of
or in replacement for any other hypothec or security held by the Trustee and
shall not impair the Trustee's rights of compensation and set-off.
15.2 INVESTMENTS
The Trustee, to the greatest extent permitted by applicable law, may, at
its entire discretion, invest any monies or instruments received or held by it
pursuant of this Deed or deposit same in a non-interest bearing account without
having to comply with any legal provisions concerning the investment of property
of others.
<PAGE>
27
15.3 SET-OFF
Provided the Secured Obligations are due and exigible or that the Trustee
is entitled to declare them owing and exigible, the Trustee may, to the greatest
extent permitted by applicable law, compensate and set-off any Secured
Obligations with any and all amounts then owed to the Grantor by the Trustee in
any capacity, whether due or not, and the Trustee shall then be deemed to have
exercised such right to compensate and set-off as at the time the decision was
taken by it even though the entry therefor is made on the Trustee's record
subsequent thereto.
15.4 IMPUTATION OF PAYMENTS
The Trustee, to the greatest extent permitted by applicable law, shall be
at liberty to impute any amounts collected in the exercise of its rights prior
to or after any Default as it may choose without having to comply with any
provisions of the Civil Code of Quebec concerning the imputation of payments.
15.5 DELAYS
The Trustee, to the greatest extent permitted by applicable law, may grant
delays, take any security or renounce thereto, accept compromises, grant
quittances and releases and generally deal, with any matters related to the
Charged property, the whole without limiting the rights of the Trustee and
without reducing the liability of the Grantor.
15.6 CONTINUING SECURITY
The Hypothec shall be a continuing security and shall remain in full force
and effect despite the repayment from time to time, of the whole or of any part
of the Secured Obligations; it shall remain in full force until the execution of
a final release by the Trustee.
15.7 TIME OF ESSENCE
The mere lapse of time provided for the Grantor to perform its obligations
or the expiry of any term therefor shall automatically create a default
hereunder, without the Trustee being obliged to serve any notice or prior notice
upon the Grantor.
15.8 CUMULATIVE RIGHTS
The rights and recourses of the Trustee hereunder are cumulative and do
not exclude any other rights and recourses which the Trustee might have. No
omission or delay on the part of the Trustee in the exercise of any right shall
have the effect of operating as a waiver of such right. The partial or sole
exercise of a right or power will not prevent the Trustee from exercising
thereafter any other right or power. The Trustee may exercise its right
hereunder without any obligation to exercise any right against any other person
liable for payment of the Secured Obligations and without having to enforce any
other security granted with respect to the Secured Obligations.
<PAGE>
28
15.9 IRREVOCABLE POWER OF ATTORNEY
The Trustee is hereby designated as the irrevocable attorney of the
Grantor with full powers of substitution for the purposes hereof or for the
purpose of carrying out any and all acts and executing any and all deeds,
proxies or other documents which the Trustee may deem useful in order to
exercise its rights or which the Grantor neglects or refuses to execute or to
carry out, provided however that, if a Default has not occurred and is not
continuing, the Grantor shall have been requested by the Trustee to do so by a
three (3) Business Days prior written notice.
15.10 PERFORMANCE
The Trustee may, at its entire discretion, perform any of the Grantor's
liabilities under this Deed. It may then immediately request payment of any
expense incurred in doing so, including interest at the rate provided for in
paragraph 12.6 above, and such repayment is secured by the Hypothec.
15.11 DELEGATION
The Trustee may, at its entire discretion, appoint any person or persons
for the purpose of exercising any of its rights, actions or the performance of
any covenant resulting from this Deed or law or equity; in such case, the
Trustee may supply such person with any information it holds relating to the
Grantor or to the Charged property.
15.12 TITLE DEEDS
All titles of ownership, land surveys, certificates of location and other
documents related to the Immovables shall upon request be remitted to the
Trustee who is entitled to keep them until a final release and discharge of this
Hypothec is obtained.
15.13 WAIVER
Where the Grantor has taken an Immovable in payment for an hypothecated
claim ranking prior to the present Hypothec, the Grantor waives its right to
take advantage of the provisions of section 2771 of the Civil Code of Quebec.
15.14 LIABILITY
The Trustee shall not be liable for material injuries or damages resulting
from its fault, or the fault of its agents, officers, consultants, unless such
fault is gross or intentional.
15.15 SUCCESSORS
The rights hereby conferred upon the Trustee shall benefit all its
successors and nominees.
<PAGE>
29
15.16 NOTICES
Any notice to the Grantor shall be delivered to its address set out above
or to any other address in Canada of which the Trustee has been given written
notice; any notice to the Trustee shall be delivered to the Trustee's branch
located at the address set out above.
15.17 RECEIPT OF NOTICE
A notice given hereunder shall be deemed to have been received by the
other party on the date of its delivery, when delivered on a Business Day, or on
the third (3rd) Business Day after it has been mailed, if sent prepaid by
certified or registered mail, or the day of its transmission, if transmitted by
facsimile on or before 3:00 p.m. on a Business Day or on the Business Day next
following the day of transmission if transmitted by facsimile after 3:00 p.m.
15.18 SEVERABILITY
Every provision of this Deed is and shall be independent of the other and
in the event that any part of this Deed is declared invalid, illegal or
unenforceable, then the remaining terms, clauses and provisions of this Deed
shall not be affected by such declaration and all the remaining clauses of this
Deed shall remain valid, binding and enforceable.
15.19 TRUST PROVISIONS
Notwithstanding the references herein to The Bank of New York (or its
successor hereunder, if any) as a "trustee" or to it acting as trustee, no trust
within the meaning of Chapter II of Title Six of Book Four of the Civil Code of
Quebec is intended to be or is created or constituted hereby. In addition, the
provisions of Title Seven of Book Four of the Civil Code of Quebec shall not
apply to any administration by the Trustee hereunder.
16. INTERCREDITOR AGREEMENT
This Deed including the right of the Trustee to exercise remedies
hereunder, shall be subject to the terms and conditions of the Intercreditor
Agreement. Notwithstanding the foregoing or any reference to the Intercreditor
Agreement, the Grantor agrees and acknowledges that neither this Deed nor the
Intercreditor Agreement provides such Grantor with any rights as a third party
beneficiary or otherwise.
17. GOVERNING LAW
This Deed shall be governed by and construed in accordance with the laws
of the Province of Quebec, including the rules relating to conflicts of laws
provided for thereunder.
<PAGE>
30
18. AMENDMENTS
No amendment may be made to this Deed unless signed by the Grantor and the
Trustee.
19. FORMAL DATE
This Deed may be referred to as bearing formal date of the first (1st) day
of April, Nineteen hundred and ninety-seven (1997), notwithstanding the actual
date of its execution.
20. ENGLISH LANGUAGE
The parties hereto confirm that the present agreement has been drawn up in
the English language at their request. Les parties aux presentes confirment que
la presente convention a ete redigee en langue anglaise a leur demande.
WHEREOF ACT:
DONE AND PASSED in the City of Montreal, Province of Quebec, on this eleventh
day (11th) of April, Nineteen hundred and ninety-seven (1997), under number five
thousand seven hundred and ninety-five (5795) ______________________________ of
the original of the minutes of the undersigned notary.
AND after the parties had declared to have taken cognizance of these presents
and to have exempted the said Notary from reading them or causing them to be
read, the said duly authorized officers of the Grantor and the Trustee
respectively have signed these presents, all in the presence of the said Notary
who has also signed.
SLM INTERNATIONAL, INC.
per: /s/ BRUCE RANDALL
---------------------------
Bruce Randall
THE BANK OF NEW YORK
per: /s/ MARIE E. TRIMBOLI
---------------------------
Marie E. Trimboli
/s/ RICHARD TRUDEAU
---------------------------
Mtre Richard Trudeau, Notary
TRUE COPY OF THIS ORIGINAL REMAINS IN MY OFFICE.
/s/ [SPECIMEN]
-----------------------
<PAGE>
SCHEDULE "A"
[NOT USED]
<PAGE>
SCHEDULE "B"
B.1 Securities (par. 4.6)
Mitchel & King Skates Ltd.
Sport Maska Inc.
Maska U.S., Inc.
#1 Apparel, Inc.
#1 Apparel Canada Inc.
SLM Trademark Acquisition Corp.
B.2 Trade-Marks and Other Intellectual Property (par. 4.8)
None.
B.3 Business or Firm names (par 11.7)
SLM
SLMI
B.4 Claims subject to the Financial Administration Act (par 11.12)
None.
B.5 Claims Secured by registered hypothecs (par. 11.13)
None.
***** ***** *****
The foregoing is Schedule B annexed to the Deed of hypothec granted by SLM
International, Inc. in favour of The Bank of New York before Mtre Richard
Trudeau, Notary, on the eleventh (11th) day of April Nineteen hundred and
ninety-seven (1997) under number five thousand seven hundred and ninety-five
(5795__________) of his minutes and recognized as true and signed by the
representatives therein mentioned with and in the presence of the undersigned
Notary.
/s/ MARIE E. TRIMBOLI
---------------------------
Marie E. Trimboli
/s/ BRUCE RANDALL
---------------------------
Bruce Randall
/s/ RICHARD TRUDEAU
---------------------------
Mtre Richard Trudeau, Notary
/s/ [SPECIMEN]
-----------------------
FILE NO. 581-2575
DEED OF LEASE
BETWEEN
ZMD SPORTS INVESTMENTS INC.
(THE "LANDLORD")
AND
SPORT MASKA INC.
(THE "TENANT")
<PAGE>
TABLE OF CONTENTS
ZMD SPORTS INVESTMENTS INC.
SECTION PAGE
------- ----
1. CERTAIN BASIC LEASE PROVISIONS ................................. 1
2. DEFINITIONS .................................................... 2
3. TERM ........................................................... 5
4. OCCUPANCY ...................................................... 6
5. MINIMUM NET NET RENTAL ......................................... 6
6. RENTAL ON NET NET RETURN BASIS ................................. 6
7. ADDITIONAL RENTAL .............................................. 7
8. PAYMENT OF TENANT'S PROPORTIONATE SHARE ........................ 7
9. CONTESTATION OF TAXES .......................................... 8
10. UTILITIES AND EQUIPMENT ........................................ 8
11. USE OF PREMISES ................................................ 8
12. PLATE GLASS AND DOOR SIGNS ..................................... 9
13. PROHIBITED ACTIVITIES .......................................... 9
14. CONDITION OF PREMISES .......................................... 9
15. INTENTIONALLY DELETED .......................................... 9
16. MAINTENANCE AND REPAIRS ........................................ 9
17. INSPECTION AND REPAIR .......................................... 10
18. ODOURS, DUST OR NOISE .......................................... 10
19. GARBAGE, DEBRIS, REFUSE AND EXTERMINATION ...................... 10
20. ACCESS ......................................................... 11
21. PARKING ........................................................ 11
22. SIGNS OF LANDLORD .............................................. 11
23. SIGNS OF TENANT ................................................ 11
24. LANDLORD'S WORK ................................................ 12
25. IMPROVEMENTS AND ALTERATIONS ................................... 12
26. CSST ........................................................... 14
27. INSURANCE REQUIREMENTS ......................................... 15
28. CANCELLATION OF INSURANCE ...................................... 16
29. DAMAGE OR DESTRUCTION .......................................... 16
30. TRANSFER CONSENT REQUIRED ...................................... 19
31. INTENTIONALLY DELETED .......................................... 21
31A. NONDISTURBANCE AGREEMENTS, USE OF RENT AND TENANT FINANCING .... 21
32. ASSIGNMENT BY LANDLORD ......................................... 21
33. EXPROPRIATION .................................................. 22
34. EXTENSIONS ..................................................... 22
35. DEFAULT ........................................................ 23
36. FAILURE OF TENANT TO PERFORM ................................... 24
37. BANKRUPTCY AND INSOLVENCY ...................................... 24
38. INDEMNIFICATION ................................................ 24
39. DISTURBANCE .................................................... 25
40. NONWAIVER ...................................................... 25
41. WAIVER OF COMPENSATION ......................................... 26
42. IMPUTATION OF PAYMENTS ......................................... 26
43. CUMULATIVE REMEDIES ............................................ 26
44. UNAVOIDABLE DELAY .............................................. 26
45. MANAGEMENT OF THE PROPERTY ..................................... 27
46. RULES AND REGULATIONS .......................................... 27
47. COMPLIANCE WITH LAWS AND REGULATIONS ........................... 27
48. WINDOW COVERINGS ............................................... 27
49. PERMITS AND LICENSES ........................................... 28
50. EXPIRATION OF LEASE ............................................ 28
51. MOVEABLE HYPOTHEC .............................................. 28
52. DOMICILE AND NOTICES ........................................... 29
53. SUCCESSORS AND ASSIGNS ......................................... 29
54. DESCRIPTIVE HEADINGS ........................................... 29
55. GOVERNING LAW / SEVERABILITY ................................... 29
56. COST OF PREPARATION, REGISTRATION AND RADIATION ................ 29
57. BROKERAGE COMMISSION ........................................... 30
58. SCHEDULES ...................................................... 30
59. CERTIFICATE OF INCORPORATION ................................... 30
60. ENTIRE AGREEMENT ............................................... 30
61. LANGUAGE ....................................................... 31
<PAGE>
DEED OF LEASE
BETWEEN: ZMD SPORTS INVESTMENTS INC., a body politic and
corporate, duly incorporated, having its head
office and principal place of business in Montreal,
Quebec herein acting and represented by Michael
Zunenshine its duly authorized representative
(hereinafter the "Landlord")
PARTY OF THE FIRST PART
AND: SPORT MASKA INC., a body politic and corporate,
duly incorporated, having its head office and
principal place of business in Montreal, Quebec,
herein acting through and represented by Russell J.
David, its Vice-President - Finance hereunto duly
authorized as he so declares,
(hereinafter the "Tenant")
PARTY OF THE SECOND PART
1. CERTAIN BASIC LEASE PROVISIONS
The following are certain basic Lease provisions of this Lease.
1..1 Addresses for purposes of notice:
Landlord: 6500 Trans Canada Highway, Suite 210
St. Laurent, Quebec H4T 1X4
Tenant: 15855 Hubert Street
St. Hyacinthe, Quebec
1..2 Location of Premises: Leased Premises comprising of the Building and the
property found on the land described in Schedule "B" annexed hereto.
1..3 Property: 15855 Hubert Street
St. Hyacinthe, Quebec
1..4 Area: Approximately seventy-eight thousand
(78,000) square feet.
1..5 Term: APRIL 11, 1997 TO JANUARY 31, 2005
1..6 Commencement Date: APRIL 11, 1997
1..7 Termination Date: January 31, 2005
1..8 Minimum Net Net Rental: An amount equal to TWO HUNDRED AND THIRTY-SIX
THOUSAND NINE HUNDRED THREE DOLLARS AND TWENTY-EIGHT CENTS ($236,903.28)
per annum, during the period from MAY 1, 1997 TO JANUARY 31, 2000 and
TWO HUNDRED SIXTY-NINE THOUSAND THREE HUNDRED THREE DOLLARS AND
TWENTY-EIGHT CENTS ($269,303.28) PER ANNUM, DURING THE PERIOD FROM
FEBRUARY 1, 2000 TO JANUARY 31, 2005, the whole payable pursuant to the
Article entitled "Minimum Net Net Rental".
1..9 Schedules:
"B" - Cadastral Description
"D" - MEASUREMENT OF PREMISES
"E" - Rules and Regulations
"F" - MOVEABLE HYPOTHEC
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 2
2. DEFINITIONS
2..1 Additional Rental means: Any and all amounts due or becoming payable to
the Landlord pursuant to this Lease other than the Minimum Net Net
Rental, whether such amounts are specifically referred to as Additional
Rental or not, the whole payable pursuant to the Article entitled
"Additional Rental".
2..2 Architect means: The independent architect, engineer, or land surveyor
named by Landlord from time to time.
2..3 Area means: The area of the Leased Premises as calculated in the manner
stipulated in Schedule "D".
2..4 Building means: The building found on the parcel of land described in
Schedule "B".
2..5 Capital Tax means: For the purpose of this lease, "Capital Tax" means
the capital tax liability of the Landlord for each of the Landlord's
fiscal years during the Term or any renewal thereof as per the
Landlord's tax returns multiplied by the proportion that the net book
value of the Property is of the net book value of the total assets of
the Landlord, as determined in accordance with the Landlord's audited
financial statements.
2..6 Commencement Date means: The first day of the Term.
2..7 Common Areas and Facilities means:
(a) Those areas, facilities, utilities, improvements, equipment and
installations in the Property which, from time to time, are not
designated or intended by the Landlord to be used exclusively
for the benefit of any individual tenant of the Property; and
(b) Those areas, facilities, utilities, improvements, equipment and
installations which serve or are for the benefit of the
Property, whether or not located within, adjacent to, or near
the Property and which are designated from time to time by the
Landlord as part of the Common Areas and Facilities of the
Property. Common Areas and Facilities include, without
limitation, all areas, facilities, utilities, improvements,
equipment and installations which are provided or designated
(and which may be changed from time to time) by the Landlord for
the use or benefit of the tenants, their employees, customers
and other Persons for whom Landlord shall permit the use or
benefit thereof, in the manner and for the purposes permitted by
the Lease.
(c) Without limiting the generality of (a) and (b) above, Common
Areas and Facilities include the roof, exterior wall assemblies
including weather walls, exterior and interior structural
elements and bearing walls in the buildings and improvements
comprising the Property; parking areas and parking garages, all
entrances and exits thereto and all structural elements thereof,
employee parking areas, truck courts, access roads, driveways,
truckways, delivery passages, package pick-up stations; loading
docks and related areas; pedestrian sidewalks, covered walkways
and sidewalks; roadways; landscaped and planted areas; courts
and arcades; public seating and service areas; corridors; bus
kiosk, if any; roadways and stops; equipment, furniture,
furnishings and fixtures; first aid stations; stairways, ramps,
moving sidewalks, and other transportation equipment and
systems; electrical, telephone, meter, valve, mechanical, mail,
storage, service and janitor rooms and galleries; communication,
security and fire prevention and protection
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 3
systems; general signs; columns, pipes, electrical, plumbing,
drainage, mechanical and all other installations, equipment or
services located therein or related thereto, as well as the
structures housing the same.
2..8 CPI means: The Consumer Price Index, all items Montreal, established by
Statistics Canada or any index in substitution and/or replacement
thereof, published by Statistics Canada or any other federal or
provincial governmental agency. In the case of any required
substitution, Landlord shall be entitled to make all necessary
conversions for comparison purposes.
2..9 Date of Occupancy means: The date on which Landlord is ready to give
possession of the Leased Premises to the Tenant, subject to the terms
stipulated in the Article entitled "Occupancy".
2..10 INTENTIONALLY DELETED.
2..11 Landlord means: The party first hereinabove described or its successors
and assigns.
2..12 Landlord's Work means: The work to be executed by Landlord as stipulated
in the Articles entitled "Landlord's Work" and "Landlord's Work at
Tenant's Expense".
2..13 Lease means: This agreement and all attached Schedules.
2..14 Leased Premises means: THE PREMISES DESCRIBED IN PARAGRAPH 1.2.
2..15 Lease Year means: In the case of the first Lease Year, a period
commencing on the Commencement Date and terminating on the last day of
the twelfth month thereafter and shall also refer to any succeeding
twelve (12) month period thereafter.
2..16 Minimum Net Net Rental means: The amount stipulated in the Article
entitled "Minimum Net Net Rental".
2..17 Operating Costs means: The aggregate of Landlord's annual costs and
expenses incurred in insuring, operating, administering and if
applicable, maintaining the Property and shall include, without
duplication or limitation, the cost of:
(i) all expenses incurred by Landlord in obtaining or attempting to
obtain a reduction of real estate taxes, the whole subject to
the Article of this Lease entitled "Contestation of Taxes";
(ii) the cost of insuring the Property (including such insurance as
the Landlord shall effect or shall be required to effect by
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 4
any secured creditor) against fire and any other perils which
presently are or hereafter may be, from time to time, embraced
by or defined in a standard fire insurance policy with extensive
coverage, comprehensive general liability insurance, boiler and
pressure vessel insurance, business interruption and/or loss of
rentals insurance and such other insurance as the Landlord,
acting reasonably, may deem necessary or advisable.
(iii) Capital Tax as defined herein.
(iv) Debt Service in accordance with the Article entitled "Rental on
Net Net Return Basis".
2..18 Person means, depending on context: Any person, firm, company,
corporation, partnership, association, or any group or combination
thereof.
2..19 Property means: The lands and buildings found on the lots described in
Schedule "B".
2..20 Proportionate Share means: 100% of the Operating Costs and Taxes of the
property and of the Leased Premises.
2..21 Sales Tax means: Any goods and services tax, business transfer tax,
value-added tax, multi-stage sales tax, sales tax or any other tax
imposed with respect to Minimum Net Net Rental and Additional Rental
payable under this Lease, whatever name such tax may bear and whether
such tax is in force at the date hereof or whether it is adopted
subsequently. The amount of the Sales Tax so payable by Tenant shall be
calculated by Landlord in accordance with the applicable legislation and
shall be paid to Landlord at the same time as the amounts to which such
Sales Tax apply or at such other time as Landlord may from time to time
determine. Landlord shall have the same remedies for and rights of
recovery of such amounts as it has for the recovery of Additional
Rental.
2..22 Security means: Any hypothec, trust deed, debenture or other security to
be placed from time to time on the Property or any part thereof for the
purpose of securing any indebtedness of Landlord.
2..23 Taxes means: All taxes, whether special or general, including, without
limitation, property taxes, municipal taxes, school taxes, levies,
charges, rates including local improvement rates, duties and assessments
that may now or in the future be levied, rated, charged or assessed
against the Property, and/or all equipment and facilities thereon or
therein, and/or the land described in Schedule "B" attached hereto,
and/or any property on or in the Building owned or brought thereon or
therein by the Landlord and/or against Landlord or Tenant and/or its
Transferees in respect thereof, whether such taxes, rates, duties or
assessments are charged by a municipal, parliamentary,
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 5
school or any other body of competent jurisdiction. If the system of
real estate taxation shall be altered or varied and any new tax shall be
levied or imposed on the Property and/or the revenues therefrom and/or
the Landlord in substitution for and/or in addition to real estate taxes
presently levied or imposed on immovables in the City, Region, Province
or Country in which the Property is situated, then any such new tax or
levy shall be included within the present definition of Taxes. However,
Tenant shall not be responsible for any income tax or corporation taxes
of the Landlord, save and except for its Proportionate Share of Capital
Tax and Tenant shall be solely responsible for any Sales Tax.
2..24 Tenant means: The person executing this Lease as Tenant. Tenant also
includes all employees, mandatories and contractors of Tenant, as well
as any Person under Tenant's control or for whom Tenant is responsible.
2..25 Tenant Security means: Any trust deed, bond, debenture, pledge,
commercial pledge, warehouse receipt, conditional sales contract,
privilege, hypothec, charge or any other form of encumbrance or security
granted by or agreed to by Tenant or any other Person (other than
Landlord) with respect to its rights in this Lease, the Leased Premises,
or any property, whether movable or immovable, located in or forming
part of the Leased Premises, to secure, in whole or in part, any loan,
indebtedness, credit line, or other obligation.
2..26 Tenant's Work means: The work to be executed by Tenant as stipulated in
the Article entitled "Tenant's Work".
2..27 Term means: The period specified in the Article entitled "Term" and
includes all renewals or extensions agreed to in writing by the
Landlord.
2.28 Termination Date means: The last day of the Term as herein defined or
any renewal thereof, or the last day of the Term or renewal thereof
which is terminated prior to the Termination Date.
2..28 Transfer means: Any assignment or transfer of this Lease (other than as
Tenant Security), any sublease or permitted occupation of all or any
part of the Leased Premises to any Person (hereinafter the "Transferee")
and any amalgamation or change in the effective control of the voting
shares of Tenant if Tenant is a corporation, or any change in the
partners constituting the partnership or any change in the interest of
the partners in the partnership if Tenant is a partnership, from
conditions existing on the date the corporation or the partnership first
incurs any obligations to Landlord pursuant to this Lease, the whole
whether effected by sale, by assignment, by operation of law or
otherwise.
3. TERM
Landlord hereby leases the Leased Premises to Tenant for a Term
commencing on the 11 day of APRIL 1997 and terminating on the last day of
January 2005 unless sooner terminated under the provisions hereof.
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MONTREAL INDUSTRIAL LEASE
PAGE 6
Should the Tenant continue to occupy the Leased Premises after the
expiry of the Term, without a written agreement there shall be no tacit renewal
and the Tenant shall pay to the Landlord, per diem, as liquidated damages, the
highest per diem Minimum Net Net Rental payable during the Term and Additional
Rental for the period of occupancy plus fifty percent (50%) thereof, without
prejudice to any of Landlord's other rights and recourses including Landlord's
right to obtain vacant possession or the Leased Premises. Tenant acknowledges
that it is not to have the right to occupy the Leased Premises beyond the expiry
of the Term.
4. OCCUPANCY
Tenant shall be allowed to occupy the Leased Premises on APRIL 11, 1997
(hereinafter referred to as the "Date of Occupancy").
5. MINIMUM NET NET RENTAL
DURING THE PERIOD FROM MAY 1, 1997 TO JANUARY 31, 2000, Tenant covenants
and agrees to pay to Landlord in lawful money of Canada without deduction,
abatement or set-off, a Minimum Net Net Rental OF TWO HUNDRED THIRTY-SIX
THOUSAND NINE HUNDRED THREE DOLLARS AND TWENTY-EIGHT CENTS ($236,903.28) per
annum, net, net, payable in equal consecutive monthly instalments, each in
advance, on the first day of each month of NINETEEN THOUSAND SEVEN HUNDRED
FORTY-ONE DOLLARS AND NINETY-FOUR CENTS ($19,741,94) each.
DURING THE PERIOD FROM FEBRUARY 1, 2000 TO JANUARY 31, 2005, Tenant
covenants and agrees to pay to Landlord in lawful money of Canada without
deduction, abatement or set-off, a Minimum Net Net Rental OF TWO HUNDRED
SIXTY-NINE THOUSAND THREE HUNDRED THREE DOLLARS AND TWENTY-EIGHT CENTS
($269,303.28) per annum, net, net payable in equal consecutive monthly
instalments, each in advance, on the first day of each month of TWENTY-TWO
THOUSAND FOUR HUNDRED FORTY-ONE DOLLARS AND NINETY-FOUR CENTS ($22,441.94) each.
Any Minimum Net Net Rental due for any period of time during the Term
which is less than a month shall be paid for on a pro-rated basis.
The Minimum Net Net Rental shall be considered as annual and accruing
from day to day and where it becomes necessary for any reason to calculate such
rental for an irregular period of less than one (1) Lease Year, an appropriate
apportionment and adjustment shall be made.
The Minimum Net Net Rental as herein provided shall be paid to Landlord
and/or its nominee at the Head Office of the Landlord, at 6500 Trans Canada
Highway, SUITE 210, St. Laurent, Quebec, H4T 1X4, or at such other place in
Canada as shall be designated by Landlord in writing to Tenant.
6. RENTAL ON NET NET RETURN BASIS
It is agreed and understood between the parties that the Minimum Net Net
Rental herein shall be a revenue absolutely net, net to the Landlord, free of
any and all costs and expenses of any nature whatsoever. Tenant shall pay on its
own account, to the complete exoneration of Landlord, all Operating Costs and
Taxes and any Additional Rental with respect to the Leased Premises unless
otherwise stipulated in this Lease. The Landlord shall be responsible for any
income tax or corporation taxes due by Landlord. Tenant shall pay its
Proportionate Share of Capital Tax and Tenant shall be solely responsible for
any Sales Tax.
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MONTREAL INDUSTRIAL LEASE
PAGE 7
Without limiting the generality of the foregoing, Tenant shall, in each
and every Lease Year, pay and discharge or cause to be paid and discharged all
license fees, public utility charges, water rates, sewer rates and other like
fees, charges, rates and assessments that may be levied, charged, rated or
assessed against the Leased Premises and/or all equipment and facilities thereon
or therein and/or any property on the Leased Premises owned or brought thereon
by Tenant, and any and every of its Transferees or visitors and/or against
Landlord or Tenant in respect thereof, and every tax and license fee in respect
of any and every business carried on therein, or with respect to the occupancy
of the Leased Premises by Tenant (and any and every of its Transferees), whether
such license fees, charges, rates, assessments and taxes are charged by
municipal, parliamentary, school or any other body of competent jurisdiction,
and all charges for public utilities including electric current, gas, water,
steam or hot water used upon or in respect of the Leased Premises and for
fittings, machines, apparatus, meters or other things leased in respect thereof
and for all work or services performed by a corporation or commission in
connection with such public utilities. Tenant shall indemnify and hold the
Landlord harmless from and against payment of all losses, costs, charges and
expenses occasioned by and arising from any and every such duty, license fee,
charge, rate, assessment and tax.
It is further agreed and understood that any amount and any obligation
which is not expressly declared in this Lease to be that of the Landlord shall
be deemed to be the obligation of the Tenant. Without limiting the generality of
the foregoing, should at any time the taxation authorities directly attribute
any part of the Taxes to the Leased Premises or the improvements therein, Tenant
shall pay for same in addition to Tenant's Proportionate Share of the remainder
of the Taxes.
Tenant shall furnish to Landlord, immediately upon Landlord's request, a
receipt or other appropriate evidence satisfactory to Landlord as to the payment
of any amounts payable by Tenant pursuant to the present Article.
7. ADDITIONAL RENTAL
It is agreed and understood that Additional Rental other than Tenant's
Proportionate Share, shall be payable on the first day of the month immediately
following the date the said amount is claimed, or on such date as the Landlord
may designate. Where the calculation of any Additional Rental is not made until
after the Termination Date, the obligation of the Tenant to pay such Additional
Rental shall survive the termination of this Lease and such amounts shall be
payable by the Tenant upon demand by the Landlord.
8. PAYMENT OF TENANT'S PROPORTIONATE SHARE
Tenant shall pay to the Landlord throughout the Term or any renewals,
its Proportionate Share of the Operating Costs and Taxes, as well as an
administration fee equal to three percent (3%) of the said Operating Costs and
Taxes and of the Minimum Net Net Rental.
Notwithstanding anything to the contrary herein contained, the Landlord
may, prior to the commencement of each calendar year or as soon thereafter as is
reasonably possible, furnish to the Tenant an estimate of the Operating Costs
and Taxes for such calendar year, and the Tenant shall pay to the Landlord, in
advance, on the first day of each month during the year in question, Additional
Rental equal to one twelfth (1/12) of the Tenants Proportionate Share of the
estimated Operating Costs and Taxes. Should the first Lease Year of the Term not
commence on the first (1st) day of January or should the last Lease Year of the
Term not terminate on the thirty-first (31st) day of December, then prior to the
Commencement Date of the Term or prior
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MONTREAL INDUSTRIAL LEASE
PAGE 8
to the anniversary of the Commencement Date in the last Lease Year of the Term,
as the case may be, or as soon thereafter as is reasonably possible, Landlord
shall furnish to Tenant an estimate of the Operating Costs and Taxes for the
part of the Lease Year in question, and the Tenant shall pay to the Landlord, in
advance, on the first day of each month during the part of the Lease Year in
question, Additional Rental equal to the Tenant's Proportionate Share of the
estimated Operating Costs and Taxes divided by the number of months for that
part of the Lease Year in question.
After the end of each calendar year, or after the end of the Term in the
case of the final Lease Year, the Landlord shall furnish the Tenant with
financial statements setting forth the actual Operating Costs and Taxes for such
calendar year (or part of the Lease Year, as the case may be) and the Tenant
shall pay to the Landlord forthwith an amount equal to its Proportionate Share
of the excess of the actual Operating Costs and Taxes over the estimated
Operating Costs and Taxes. Should the estimated Operating Costs and Taxes exceed
the actual Operating Costs and Taxes, the Tenant shall receive credit for its
Proportionate Share of the excess. The appropriate adjustments shall be made
between the parties hereto within thirty (30) days after the date on which the
Landlord has furnished the Tenant with such statement.
9. CONTESTATION OF TAXES
Landlord shall have no obligation to contest, appeal, object to or
litigate the levying or imposition of Taxes and/or any valuation imposed with
respect thereto, and Landlord may settle, compromise, consent to, waive or
otherwise determine, in its sole discretion, all matters and things relating
thereto. Tenant MAY, UPON THE REASONABLE CONSENT OF LANDLORD, contest, appeal,
object to or litigate the levying or imposition of real estate taxes.
In the event that Landlord should contest any Taxes and thereafter
receive a refund of any portion thereof, and provided Tenant shall have paid its
Proportionate Share of said Taxes, the Landlord shall reimburse to the Tenant
the Tenant's Proportionate Share of such refund.
10. UTILITIES AND EQUIPMENT
The Tenant shall pay for its electricity (including without limitation
any electricity used for heating and/or air conditioning the Leased Premises),
for the cost of operating, repairing, maintaining, replacing and inspecting the
machinery and other facilities required for the heating, ventilating and air
conditioning of the Leased Premises and facilities and gas, water, sewer and
electric utility costs relating to same, telephone and all public utilities with
respect to the Leased Premises.
Throughout the Term of the Lease, the Tenant shall engage a qualified
air conditioning maintenance contractor to maintain and repair the heating,
ventilating and air conditioning system. The Tenant shall, within thirty (30)
days of signing these presents, provide the Landlord with a copy of a duly
executed heating, ventilating and air conditioning maintenance and repair
contract, as well as all renewals of the said contract.
11. USE OF PREMISES
The Leased Premises shall be used by the Tenant only for offices,
warehousing, manufacturing and distribution and for no other purpose.
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MONTREAL INDUSTRIAL LEASE
PAGE 9
12. PLATE GLASS AND DOOR SIGNS
Any breakage of glass or plate glass in or about the Leased Premises and
any damage to signs on Tenant's doors, except for breakage or damage caused by
the negligence or fault of the Landlord or its employees or mandatories shall be
charged to and payable by the Tenant.
13. PROHIBITED ACTIVITIES
Subject to the other terms and conditions of the Lease and in addition
to any other prohibitions stipulated in the Lease, the Tenant undertakes:
(i) not to bring upon the Leased Premises or any part thereof any
machinery, equipment, article or thing that by reason of its
weight, function or size might, AS REASONABLY DETERMINED BY
TENANT, damage the Leased Premises and not to overload the
floors of the Leased Premises at any time and if any damage is
caused to the Leased Premises by any machinery, equipment,
article or thing or by overloading or by any act, neglect or
misuse on the part of Tenant, Tenant will forthwith pay to
Landlord the cost of restoring the Leased Premises to their
original condition;
(ii) not to obstruct the sidewalks, entries, passage corridors and
stairways, or use same for purposes other than for ingress and
egress to or from the Leased Premises, and the Tenant shall save
the Landlord harmless from damages to persons or property
because of any articles thrown by the Tenant out of the windows
or doors or down the passages of the Building.
14. CONDITION OF PREMISES
The Tenant represents that the Leased Premises have been examined by the
Tenant and that the Tenant accepts the same, in the condition or state in which
they are at the Date of Occupancy by Tenant, without representation or warranty,
expressed or implied, oral or written, in fact or in law, by the Landlord, and
without recourse to the Landlord as to the nature, condition or usability
thereof or as to the use or uses to which the Leased Premises or any part
thereof may be put.
15. INTENTIONALLY DELETED
16. MAINTENANCE AND REPAIRS
Notwithstanding the provisions of Articles 1604(2), 1605 and 1627 of the
Civil Code of Lower Canada, the Tenant shall, at its own expense, operate,
maintain and keep the Leased Premises including all facilities, equipment and
services, both inside and outside, available to the Tenant exclusively, in such
good order and condition as they would be kept by a prudent owner and Tenant
shall promptly make all needed repairs and replacements to the Leased Premises
(save and except for those structural repairs and replacements that are
exceptional, nonrecurring and result from latent defects) which a careful owner
would make, including without limitation, the water, gas, drain and sewer
connections, pipes and mains, electrical wiring, water closets, sinks and
accessories thereof, and all equipment belonging to or connected with the Leased
Premises or used in its operation.
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MONTREAL INDUSTRIAL LEASE
PAGE 10
17. INSPECTION AND REPAIR
Landlord and its representatives shall have the right, during all
reasonable business hours during the Term, to enter the Leased Premises to
examine the condition thereof and to ascertain whether Tenant is performing its
obligations hereunder, and Tenant shall make any repairs which Tenant is obliged
to make pursuant to the terms of this Lease. If Tenant fails to make any such
repairs within thirty (30) days after written notice from Landlord requesting
Tenant to do so, provided that such repairs may reasonably be made within the
said period, Landlord may, without prejudice to any other rights or remedies it
may have, make such repairs and charge the REASONABLE cost thereof to Tenant.
Nothing in this Lease shall be construed to obligate or require Landlord to make
any repairs for which the Tenant is responsible hereunder but Landlord shall
have the right at any time to make emergency or urgent repairs without prior
notice to Tenant and charge the REASONABLE cost thereof to Tenant. Any costs
chargeable to Tenant hereinabove shall be payable forthwith on demand as
Additional Rental and IF NOT PAID WITHIN THIRTY (30) DAYS shall bear interest
from the date of such demand at the prime lending rate as determined by the
Royal Bank of Canada on a daily basis plus four percent (4%) until paid to
Landlord in full.
18. ODOURS, DUST OR NOISE
The Tenant warrants that no noxious/obnoxious odours, dust or noise will
emanate from the Leased Premises as a result of the operations conducted by the
Tenant therein and Tenant further covenants that it will not cause or maintain
any nuisance in, at or on the Leased Premises and/or the Property and Tenant
further warrants that it will not use the Leased Premises for any purpose or in
any manner notwithstanding anything stated in this Lease which may cause noise,
disturbance or noxious/obnoxious odours to the discomfort of other tenants,
neighbours or to the public in general. Accordingly, the Tenant agrees that
should such noxious/obnoxious odour, dust or noise conditions exist, or should
Landlord receive any complaint of odours, dust, noise or any other nuisance,
Tenant will, at its own cost and expense, take such steps as may be necessary to
rectify the same, including any expertise Landlord may require, which expertise
must be acceptable to Landlord, provided further that if the Tenant shall fail
to commence to do so within TEN (10) DAYS hours and complete the same within a
reasonable time after notice is received by the Tenant from the Landlord, then
the Landlord may at its option and without prejudice to its other rights and
recourses PROCEED FORTHWITH TO TAKE REASONABLE MEASURES TO CORRECT THE SAME.
19. GARBAGE, DEBRIS, REFUSE AND EXTERMINATION
The Tenant shall not place or leave or permit to be placed or left in or
upon any part of the Property outside of the Leased Premises any debris or
refuse except as allowed by the Landlord at specific times and deposited in
areas indicated by the Landlord in proper receptacles provided and placed for
that purpose by the Tenant and Tenant shall furthermore comply with any of
Landlord's rules and regulations with respect to garbage containers. The Tenant
shall arrange and pay for the cost of those services required to remove
diligently and efficiently all of Tenant's garbage and refuse of any nature
whatsoever.
Tenant, at its sole cost shall keep, the Leased Premises shall be kept
in a clean and sanitary condition and in accordance with the laws of the
municipality in which the Property is located and in accordance with all other
regulations of any agency having jurisdiction over the Property and in
accordance with the instructions, policies and recommendations of Landlord's
insurers. If any such laws, instructions, policies and recommendations by
Landlord's insurers require any changes whatsoever to the Leased Premises, the
Tenant shall effect such changes at its own expense but subject to the
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MONTREAL INDUSTRIAL LEASE
PAGE 11
approval of the Landlord. The Tenant agrees to provide strict measures for rat
prevention and pest control and shall, if the Landlord deems the same to be
necessary, enter into a regular contract with a firm of exterminators acceptable
to Landlord. In the event that the Tenant fails to comply with the foregoing
provisions, then Landlord, without prejudice to all of its other rights and
recourses, shall have the right, without prior notice to the Tenant, to engage a
firm of exterminators and to enter the Leased Premises with representatives of
said firm in order to rectify the situation, the whole at Tenant's cost as
Additional Rental.
20. ACCESS
The Landlord shall have the right of access to the Leased Premises only
during reasonable business hours (except in the case of an emergency when
Landlord shall have access at all times), and the right to perform such work as
it chooses to do upon the Leased Premises, the Tenant renouncing any claim to
any indemnity or reduction in rental provided such work be carried out with
reasonable diligence AND PROVIDED SUCH WORK DOES NOT INTERFERE WITH THE TENANT'S
BUSINESS.
21. PARKING
The Tenant acknowledges that the parking of its vehicle(s) and those of
its customers in the parking facilities shall be at the risk and peril of Tenant
and/or its customers, and that the Landlord shall not be responsible for any
damages or loss whatsoever, whether caused by theft, fire or any other cause, to
the Tenant's vehicle(s) or to those of its customers or to any property found in
Tenant's vehicle(s) or those of its customers or for any injury to Tenant or
other Persons on or in the immediate vicinity of the parking facilities and
Tenant hereby releases Landlord of all liabilities of whatsoever nature with
respect to the above.
22. SIGNS OF LANDLORD
Landlord shall have the right, SIX (6) MONTHS PRIOR TO THE TERMINATION
DATE, to place upon the Property a notice of reasonable dimensions and
reasonably placed in order not to interfere with the business of Tenant, stating
that the Property is for sale and/or rent, and Landlord shall have the right,
during the last six (6) months prior to the Termination Date, to place upon the
Leased Premises a notice of reasonable dimensions and reasonably placed stating
that the Leased Premises are for rent and Tenant will not remove any such notice
or knowingly permit either of them to be removed.
Landlord shall have the right to exhibit the Leased Premises DURING THE
LAST SIX (6) MONTHS OF THE LEASE TO ANY PROSPECTIVE TENANT OR AT ANY TIME DURING
THE LEASE TO ANY HYPOTHECARY CREDITOR OR POTENTIAL PURCHASER, DURING ALL
business hours of the Tenant and Tenant hereby renounces to Article 1645 of the
Civil Code of Lower Canada.
23. SIGN OF TENANT
The Tenant shall be entitled, at its expense, to install on the Leased
Premises such signs as are normally installed in connection with its business,
as well as to identify itself on the exterior front of the Building provided
such signs comply with municipal by-laws and with the Rules and Regulations as
established from time to time by Landlord in accordance with the Article
entitled "Rules and Regulations", and provided further that the Tenant obtains
Landlord's consent for both the sign and its location. Furthermore, the
authorization
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MONTREAL INDUSTRIAL LEASE
PAGE 12
to install a sign will be issued in exchange for a deposit equivalent to the
estimated cost of the repair of the supporting Building surface following the
removal of the sign and Landlord shall not pay any interest to Tenant on said
deposit. The installed sign must be subject to inspection by the Landlord who
will proceed to the inspection upon receipt of proof of municipal permit and, in
the case of electrified signs, of proof of approval by the Canadian Standards
Association or other governing body.
Except as provided above and unless specifically provided for in this
Lease, Tenant shall not be entitled to install or put up any signs or posters of
whatsoever nature on the windows of the Leased Premises and/or the Building
and/or the Property.
All civic numbers are supplied and installed at Tenants expense by the
Landlord according to its standards. The Tenants identification at the rear of
the Building is also supplied and installed by the Landlord at Tenants expense
according to Landlord's standard # 20.11.87 attached to the Rules and
Regulations in Schedule E.
In the event that Tenant installs any sign without satisfying the
requirements of this Article, Tenant shall remove such sign upon receipt of
Landlord's notice. If Tenant fails to remove such sign within twenty-four (24)
hours of receipt of Landlord's notice, then Landlord shall have the right,
without further notice or any form of legal process, to remove same at Tenants
expense and to repair any damages caused by such removal. Landlord shall not be
responsible for damages to Tenant's property or sign resulting from such
removal. Tenant expressly waives its recourse in damages against the Landlord
and shall hold Landlord harmless of any claim by any third party with respect to
the said sign. Tenant shall immediately pay Landlord for all costs described
hereinabove, upon demand, as Additional Rental.
24. LANDLORD'S WORK
The Leased Premises shall be delivered in an "as is" basis and Tenant
accepts same in the condition in which they are at the signing of these
presents.
25. IMPROVEMENTS AND ALTERATIONS
(a) The Tenant shall not have the right to execute any changes,
alterations, additions, erections, leasehold improvements, repairs and
installations to the Leased Premises (hereinafter the "Work"), unless it
has obtained Landlord's prior written consent, WHICH WILL NOT BE
UNREASONABLY WITHHELD OR DELAYED. In the event Landlord consents to such
Work, then Tenant undertakes to conform to the conditions stipulated
hereunder.
(i) All Work shall be carried out with reasonable dispatch and in a
good workmanlike manner and in compliance with all applicable
permits, authorizations, building and zoning bylaws and with all
regulations and requirements of all competent authorities having
jurisdiction over the Leased Premises;
(ii) The Property shall at all times be free of all pledges,
registered privileges and any other encumbrances;
(iii) If the cost of any Work shall be in excess of five thousand
dollars ($5,000.00) as reasonably estimated by Landlord,
Landlord may require Tenant to furnish security REASONABLY
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 13
satisfactory to Landlord guaranteeing the completion of the
Work, the payment of the cost thereof and that the Property is
free and clear of all pledges, registered privileges and any
other encumbrances;
(iv) Tenant shall maintain workmen's compensation insurance covering
all persons employed in connection with the Work and shall
produce evidence of such insurance to Landlord and Tenant shall
also maintain such general liability insurance for the
protection of Landlord and Tenant upon the terms Landlord may
reasonably require, as well as contractor's protective liability
insurance. Tenant shall further comply with all of the
stipulations of the Article entitled "CSST" (Commission de la
Sante et de la Securite au Travail du Quebec);
(v) The Tenant shall promptly pay for all materials supplied and
work done in respect of the Leased Premises in order to ensure
that no privilege is registered against any portion of the
Property. If a privilege is registered or filed, the Tenant
shall forthwith discharge it at its expense, failing which the
Landlord may, at its option, discharge the same by paying the
amount claimed to be due into court or directly to any such
privilege claimant and the amount so paid and all expenses of
the Landlord including any judicial and extrajudicial costs and
attorney's fees incurred by the Landlord shall be paid by the
Tenant to the Landlord within five (5) days after demand.
It is agreed and understood that no Work by or on behalf of
Tenant shall be permitted which, in Landlord's REASONABLE judgement, may
weaken or endanger the structure or adversely affect the condition or
operation of the Leased Premises and/or the Property or diminish the
value thereof or restrict or reduce Landlord's coverage for insurance
purposes.
(b) Notwithstanding the contents of (a) above, Landlord may, at its sole
option and discretion SUBMIT A BID FOR THE PERFORMANCE OF THE WORK
APPROVED BY LANDLORD. IF TENANT DOES NOT SELECT LANDLORD'S BID, TENANT
SHALL BE OBLIGED TO PAY TO LANDLORD ALL OF LANDLORD'S COSTS, OVERHEAD,
ADMINISTRATION IN THE REVIEW AND APPROVAL OF SUCH WORK, AS WELL AS, ALL
COSTS ASSOCIATED WITH ARCHITECTURAL OR ENGINEERING CONSULTANTS,
PREPARATION OR AMENDMENT OF PLANS, THE WHOLE SUBJECT TO AN UPPER MAXIMUM
CAP EQUIVALENT TO TEN PERCENT (10%) OF THE VALUE OF THE WORK AND SUBJECT
TO A MINIMUM CHARGE OF TWO THOUSAND DOLLARS ($2,000.00).
(c) Any Work by the Tenant made without the REASONABLE prior written
consent of the Landlord, or which is not made in accordance with the
design criteria and specifications approved by the Landlord, shall be
removed by the Tenant immediately upon demand and the Leased Premises
shall be restored to their previous condition by Tenant, the whole at
the Tenant's cost, failing which Landlord shall have the right to remove
said Work at Tenant's entire cost and Landlord shall not be responsible
for damages to Tenant's property resulting from such removal.
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MONTREAL INDUSTRIAL LEASE
PAGE 14
(d) Notwithstanding anything contained in this Article, Tenant shall not
have the right to do any structural, mechanical or electrical Work in
the Leased Premises.
In the event that Tenant requests any structural, mechanical or
electrical Work, Landlord, at its sole option and discretion, shall be
entitled to execute said Work. Said Work shall be governed by the
provisions of sub-paragraph (b) above.
In the event that Landlord does not choose to execute said Work
and consents to having Tenant execute same, then Tenant shall furnish to
Landlord plans and specifications showing in reasonably complete detail
the Work proposed to be carried out and the estimated cost thereof.
Landlord shall, ACTING REASONABLY, approve or reject such plans and
specifications within thirty (30) days after receipt of the same. If
such plans and specifications are approved, all Work shall be carried
out in compliance with the same. Furthermore, in the case where Tenant
is authorized to carry out said Work, Tenant shall, at its cost, provide
Landlord with an engineer's certificate upon completion of said Work.
Any REASONABLE costs incurred by Landlord of any nature whatsoever in
order to permit Landlord to approve or reject Tenant's plans and
specifications shall be reimbursed by Tenant immediately upon Landlord's
request. In addition to the above, Tenant shall comply with all the
conditions stipulated in (a) and (c) above.
It is agreed and understood that when completed, all Work shall be
comprised in and form part of the Leased Premises and be subject to all the
provisions of this Lease. Furthermore, any authorization given by Landlord to
Tenant to do any Work in accordance with this Article, shall not relieve Tenant
of its responsibility for the Work in question.
Subject to the terms and conditions of this Article, in the event that
the Tenant constructs a mezzanine in the Leased Premises, the Tenant will pay
the amount of any increase in Taxes on the whole of the Building of which the
Leased Premises form part, if such increase is caused by the construction or
occupancy of said mezzanine. Furthermore, the Tenant will pay for any increase
in Operating Costs resulting from the construction or occupancy of the said
mezzanine.
Tenant shall not make use or cause to be removed any part or all of the
ceiling system for any purposes, including that of storage.
Moreover, Tenant shall pay to Landlord the amount of any increase for
any Taxes to the extent that such increase is directly attributable to any
action by Tenant under this Article.
26. CSST (COMMISSION DE LA SANTE ET DE LA SECURITE AU TRAVAIL DU QUEBEC)
Tenant shall ensure itself that its contractor and/or subcontractors
comply with all the requirements established by La Commission de la Sante et de
la Securite au Travail du Quebec (hereinafter the "CSST") and more specifically,
Tenant shall ensure itself that its contractor and/or subcontractors have
instituted a safety program for its employees. Tenant shall provide proof to
Landlord, upon demand, that all requirements of the CSST have been met. It is
expressly understood that Tenant shall indemnify and hold Landlord harmless from
any proceedings, claim or demand which could be instituted against Landlord for
the failure of Tenant's contractor and/or subcontractors to comply with CSST's
requirements and the Tenant shall pay upon demand any judicial or extrajudicial
costs so incurred by Landlord.
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MONTREAL INDUSTRIAL LEASE
PAGE 15
27. INSURANCE REQUIREMENTS
Tenant shall not do or commit any act upon the Leased Premises or bring
into or keep upon the Leased Premises any article which will affect the fire
risk or increase the rate of fire insurance or other insurance on the Property.
Tenant shall not commit any act upon the Leased Premises or make any use
thereof which may make void or voidable any insurance on the Leased Premises or
on the Building or Property and should any act so committed or any use so made
by Tenant, including any unauthorized vacancy thereof, result in an increased or
extra premium payable for insurance on the Leased Premises, Building or
Property, then SHALL PAY SUCH INCREASE OR EXTRA PREMIUM
Tenant shall comply with the rules and requirements of the Insurers'
Advisory Organization of Canada or any successor body, and/or a loss prevention
firm or consultant chosen by Landlord's insurers, and with the requirements of
all insurance companies having policies of any kind whatsoever in effect
covering the Property, including policies insuring against delictual liability.
In no event shall any inflammable material, except for kinds and
quantities permitted by the insurance policies covering the Property, or any
explosives or radioactive material whatsoever, be taken into the Leased Premises
or retained therein.
Tenant shall take out and keep in force the following insurance:
(a) comprehensive general liability insurance including blanket
contractual liability and broad form property damage coverage,
with respect to the business carried on in or from the Leased
Premises and the use and occupancy thereof, for bodily injury
and death and damage to property of others in an amount of at
least two million dollars ($2,000,000.00) for each occurrence or
such greater amount as Landlord may, from time to time,
reasonably require;
(b) an "all risks" insurance with extended coverage including the
perils of fire, leakage from sprinklers and other fire
protective devices, earthquake, collapse, flood and sewer
back-ups in respect to furniture, equipment, inventory and stock
in trade, fixtures (plate glass if appropriate) and leasehold
improvements located within the Leased Premises and such other
property located in or forming part of the Leased Premises,
including all mechanical or electrical systems (or portions
thereof) installed by Tenant in the Leased Premises, the whole
for the full replacement value thereof (without depreciation) in
each such instance;
(c) Tenant's legal liability insurance in an amount equal to the
replacement cost of the Leased Premises or such greater amount
as Landlord may, from time to time, reasonably require;
(d) an environmental liability policy of a coverage of at least one
million dollars ($1,000,000.00); and
(e) such additional insurance as Landlord or its insurers, acting
reasonably, may from time to time require.
All the above-mentioned policies of insurance shall (i) be in form
REASONABLY satisfactory to Landlord; (ii) be placed with insurers REASONABLY
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MONTREAL INDUSTRIAL LEASE
PAGE 16
acceptable to Landlord and (iii) provide that they will not be cancelled or
permitted to lapse unless the insurer notifies Landlord in writing at least
sixty (60) days prior to the date of cancellation or lapse. Each such policy
shall name Landlord and any other party required by Landlord, as an additional
insured as their interest may appear. Each liability policy will contain a
provision of cross-liability and severability of interest as between Landlord
and Tenant. All other policies referred to above shall contain a waiver of
subrogation rights which Tenant's insurers may have against Landlord, Landlord's
insurers and any Persons for whom Landlord is responsible. Notwithstanding
anything to the contrary contained in this Lease, Tenant hereby releases and
waives any and all claims against Landlord and any Persons for whom Landlord is
responsible with respect to occurrences which are or which are required to be
insured against by Tenant hereunder. Tenant shall provide Landlord with copies
of each insurance policy referred to above upon execution of said policy and at
the latest fifteen (15) days prior to the Tenant's occupation of the Leased
Premises. It is understood that no review or approval of any insurance
certificate or policy by Landlord shall derogate from or diminish Landlord's
rights under this Lease.
Tenant agrees that if Tenant fails to take out or to keep in force such
insurance Landlord may, at its sole option and discretion, do so and pay the
premium therefor and in such event Tenant shall repay to Landlord the amount
paid as a premium, which repayment shall be collectible as Additional Rental.
28. CANCELLATION OF INSURANCE
If any insurance policy mentioned in the preceding Article and/or any
insurance contracted by Landlord or any part of it is cancelled and/or
threatened to be cancelled by the insurer, or if the coverage under it is
reduced by the insurer (TO AN AMOUNT LESS THAN THAT WHICH IS REQUIRED BY SECTION
27) because of the use or occupation of any part of the Leased Premises, and if
the Tenant fails to remedy the condition giving rise to the cancellation,
threatened cancellation or reduction of coverage within TEN (10) DAYS after
notice from the Landlord, the Landlord may, either:
(a) enter and take possession of the Leased Premises immediately by
leaving upon the Leased Premises a notice of its intention to do
so, upon which the Landlord will have the same rights and
remedies that are available to him under this Lease or in virtue
of the law; or,
(b) enter upon the Leased Premises and remedy the condition giving
rise to the cancellation, threatened cancellation or reduction of
coverage and the Tenant will immediately pay the costs to the
Landlord, together with a fee of fifteen percent (15%) of such
costs representing the Landlord's overhead, which costs may be
collected by the Landlord as Additional Rental, and the Landlord
will not be liable for any damage caused to any property of the
Tenant or others located on the Leased Premises as a result of
the entry.
29. DAMAGE OR DESTRUCTION
29..1 If the Leased Premises are at any time destroyed or damaged, the
following provisions will apply:
(i) if the Leased Premises are fit for tenancy in whole or in part,
the Lease shall continue in full force and effect without
abatement or diminution of any Minimum Net Net Rental or
Operating Costs and Taxes;
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MONTREAL INDUSTRIAL LEASE
PAGE 17
(ii) if the Leased Premises are rendered partly unfit for tenancy,
this Lease shall continue in full force and effect, except that
the Minimum Net Net Rental and Operating Costs and Taxes will
abate to the extent Landlord's Architect determines that the
Leased Premises cannot reasonably be used for their intended
purposes;
(iii) if the Leased Premises are rendered wholly unfit for tenancy,
this Lease shall continue in full force and effect, except that
Minimum Net Net Rental and Operating Costs and Taxes will fully
abate, PROVIDED, HOWEVER, THAT IF SUCH CONDITION(S) ARE NOT
RECTIFIED WITHIN SEVENTY-FIVE (75) DAYS, TENANT MAY TERMINATE
THIS LEASE UPON TEN (10) DAYS NOTICE;
(iv) all abatements will occur from the date of the damage or
destruction until the date that the Leased Premises are
delivered to Tenant;
(v) Landlord will commence and proceed diligently to reconstruct,
rebuild or repair any damage to the Leased Premises to meet
Landlord's base building criteria for that Property which
Landlord may modify to be consistent with the plans,
specifications and design criteria for the rebuilding of the
Building and/or the Leased Premises, chosen by Landlord acting
reasonably;
(vi) to restore the Leased Premises, Landlord will be under no
obligation to perform work other than that stipulated in
subparagraph (v) above;
(vii) whether or not the damage to the Leased Premises may have been
caused by Tenant's negligence or fault, Tenant shall commence to
repair, rebuild or reconstruct, at its own cost, all leasehold
improvements, fixturing and equipment in the Leased Premises
within fifteen (15) days from Landlord's notice that Landlord
has completed its work and Tenant shall complete said work
within thirty (30) days from Landlord's notice;
(viii) Tenant shall not be entitled to any allowance, inducement,
payment or other consideration from Landlord in connection with
Tenant's work described in sub-paragraph (vii) above, even if
such allowance, inducement, payment or other consideration was
made at the time of original construction of the Leased
Premises.
29..2 Despite any provision to the contrary contained in this Lease and,
specifically but without limitation, anything contained in the present Article,
if the Property is totally or partially damaged or destroyed (whether the Leased
Premises are affected or not), and:
(i) in the Landlord's opinion, the damaged or destroyed portions
cannot reasonably be repaired, restored or rebuilt within one
(1) year following the occurrence without overtime or other
special arrangements; or
(ii) INTENTIONALLY DELETED
(iii) less than two (2) years remain during the Term;
then in any of the above cases, Landlord may, at its option (to be
exercised by written notice to Tenant within ninety (90) days following
any such occurrence) elect to terminate this Lease.
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MONTREAL INDUSTRIAL LEASE
PAGE 18
If Landlord elects to terminate this Lease, then the following will
apply:
(iv) if the Leased Premises have been rendered wholly unfit for
tenancy, the termination will take effect from the date of the
damage or destruction and all Minimum Net Net Rental and
Operating Costs and Taxes be adjusted to that date;
(v) if the Leased Premises have been rendered only partly unfit for
tenancy and Tenant has occupied or has been reasonably capable
of occupying any part of the Leased Premises from the date of
the damage or destruction, the Lease will terminate ten (10)
days from Landlord's notice. All unabated Minimum Net Net Rental
and Operating Costs and Taxes will be adjusted to the date of
termination. Minimum Net Net Rental and Operating Costs and
Taxes will abate from the date of the damage and destruction
until the date of termination to the extent the Leased Premises
cannot reasonably be used for their intended purposes;
(vi) if the Leased Premises were not rendered wholly or partly unfit
for tenancy, the Lease will terminate ten (10) days from
Landlord's notice and all Minimum Net Net Rental and Operating
Costs and Taxes will be adjusted to that date;
If the Property is totally or partially damaged or destroyed and
Landlord does not elect to terminate this Lease, subject to
paragraph (viii) below, Landlord shall commence and proceed
diligently to reconstruct, rebuild or repair, TO A SIMILAR STATE
PRIOR TO THE OCCURRENCE OF DAMAGE OR DESTRUCTION, as necessary,
those portions of the Property which have been so damaged or
destroyed in accordance with Landlord's base building criteria
for said Property, exclusive of obligations of tenants in
respect of the Property pursuant to any lease. Furthermore, if
the Leased Premises are being repaired, rebuilt or
reconstructed, the provisions of the present Article relating to
the Leased Premises shall apply.
(vii) Tenant acknowledges and agrees that if Landlord does any
reconstruction, rebuilding or repairing of the Property,
Landlord may do any one or more of the following:
(a) use plans, specifications and working drawings which
differ from those applicable to the Property in
existence prior to the damage or destruction;
(b) PROVIDED THE LEASED PREMISES REMAIN IN A SUBSTANTIALLY
SIMILAR STATE, change the configuration, design and/or
size of the Property or any of its component parts to
suit Landlord's needs at the time, including, without
limitation, the location and size of any court,
entrance, parking facility or any other Common Area or
Facility;
(c) INTENTIONALLY DELETED.
It is further understood and agreed that nothing herein shall oblige
Landlord, under any circumstances and in any manner whatsoever, to spend an
amount greater than the proceeds of insurance received by Landlord as a result
of the damage or destruction described in the present Article for any
reconstruction contemplated herein.
Tenant agrees that none of the foregoing shall constitute a change of
form or destination, nor shall the validity or enforceability of this Lease be
<PAGE>
Montreal Industrial Lease
Page 19
affected in any manner by any of the foregoing.
30. TRANSFER CONSENT REQUIRED
No Transfer of this Lease shall be effected by Tenant without the prior
written consent of the Landlord in each instance, which consent may not be
unreasonably withheld OR DELAYED.
Landlord's refusal of consent shall be deemed reasonable (without in any
way restricting Landlord's right to refuse its consent on other reasonable
grounds) under the following circumstances:
(a) INTENTIONALLY DELETED;
(b) where Tenant is in default under any provisions of this Lease;
(c) where the Landlord has reasonable grounds to believe that the
proposed Transferee does not possess the financial means
necessary to fulfil all its financial obligations herein, AND
TENANT REFUSES TO REMAIN JOINTLY AND SOLIDARILY LIABLE TOGETHER
WITH TRANSFEREE TOWARDS LANDLORD;
(d) where the Transfer applies to part of the Leased Premises only;
(e) where the proposed Transferee's use of the Leased Premises
violates any laws or rights granted to other tenants or retained
by Landlord, or where such use may be disruptive or
objectionable to other tenants or to the Landlord, or where such
use shall detract from the dignity or character of the Property;
(f) where the Landlord has not obtained the consent of a secured
creditor or any Person who may have the right to approve the
Transfer;
If the Tenant intends to effect a Transfer of all or any part of the
Leased Premises, with Landlord's consent, of this Lease or of any interest
hereunder, then the Tenant undertakes not to print, publish, post, display or
broadcast any notice or advertisement or otherwise advertise the whole or any
part of the Leased Premises for purposes of a Transfer, and shall not permit any
broker or other Person to do any of the foregoing, unless the complete text and
format of any such notice, advertisement, or offer is first approved in writing
by the Landlord. Without in any way restricting or limiting the Landlord's right
to refuse any text or format on other grounds, any text or format proposed by
the Tenant shall not contain any reference to the rental rate of the Leased
Premises. Notwithstanding anything contained herein, no sign shall be posted,
affixed, displayed or inscribed in any manner whatsoever on the Leased Premises
or the Property advertising that the Leased Premises are for rent.
If the Tenant intends to effect a Transfer of all or any part of the
Leased Premises, of this Lease or of any interest hereunder, then, and as often
as such event shall occur, the Tenant shall give prior written notice to the
Landlord of such intent, specifying therein the proposed Transferee, providing
such information with respect thereto, including without limitation, information
concerning the principals thereof and as to any credit, financial or business
information relating to the proposed Transferee as the Landlord or the
hypothecary creditor requires, and shall pay Landlord in advance for the cost of
Landlord's inquiries as well as its processing REASONABLE fee for the
examination of Tenant's request, and the Landlord shall, within thirty (30) days
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 20
following Tenant's request, notify the Tenant in writing that:
(a) it consents or does not consent to the Transfer in accordance
with the provisions and qualifications of this Article;
(b) INTENTIONALLY DELETED.
The mere occupation of all or part of the Leased Premises or Landlord's
tolerance thereof the payment of any amount by the proposed Transferee to
Landlord, or the consent to any previous Transfer shall not constitute a waiver
of Tenants obligation to obtain Landlord's consent to any Transfer, nor will any
of the foregoing be construed to constitute a consent by Landlord to the
proposed Transfer. Nevertheless, whether or not Landlord consents to any
Transfer, it may collect rent or other amounts from any proposed Transferee and
apply the said amount to the amounts payable under this Lease, without in any
manner prejudicing any of its rights.
Notwithstanding any such Transfer consented to by the Landlord, no
acceptance by the Landlord of any payments by a Transferee shall be deemed a
waiver of the requirements contained herein or a release of the Tenant from the
further performance by the Tenant of the obligations on the part of the Tenant
herein contained and the Tenant shall be jointly and severally liable with the
Transferee for all of the Tenant's obligations stipulated in the Lease and shall
not be released from performing any of the obligations under the Lease during
the Term.
In addition to any of the requirements stipulated herein, Landlord's
consent to the Transfer is conditional upon Tenant and Transferee signing with
Landlord a document prepared by Landlord evidencing such Transfer, and Tenant
undertakes to cause the Transferee to promptly sign said document in which
Transferee shall agree to be bound directly with Landlord to all of the
obligations contained in this Lease as if such Transferee had originally
executed this Lease as Tenant. The above-mentioned document shall further
provide that the Tenant transfers to the Transferee any rights it may have with
respect to the Deposit retained by Landlord pursuant to this Lease and Tenant
renounces all of its rights thereto. In addition thereto, the Transferee may be
required by Landlord to supplement any security deposit given in this Lease.
Should the Minimum Net Net Rental per square foot to be paid by a
Transferee, whether in cash, goods, services or other consideration, exceed the
Minimum Net Net Rental per square foot payable hereunder, then Tenant shall pay
to Landlord monthly, as Additional Rental, the amount of or an amount equivalent
to such excess.
Notwithstanding anything contained in this Article, the Tenant may
sublet the Leased Premises or assign the Lease to a parent, subsidiary or
affiliate company without seeking the consent of the Landlord provided, however,
that such sub-tenant or assignee shall remain bound jointly and severally with
the Tenant for all the terms and covenants of this Lease, and provided further
that Tenant shall notify Landlord in writing prior to such sublet or assignment.
Upon the execution of this Lease and upon each succeeding anniversary
date or at any sooner time requested by the Landlord, the Tenant shall deliver
to the Landlord a statement, certified as being true and correct and verified by
the corporate secretary, showing the names of all existing shareholders of
record and their respective ownership interests as at that date. The Tenant
shall, at the request of the Landlord, make available to the Landlord
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 21
for inspection or copying or both, all books and records of the Tenant which,
alone or with other data, show the applicability or inapplicability of this
Article. If any shareholder of the Tenant shall, after the request of the
Landlord to do so, fail or refuse to furnish forthwith to the Landlord any data
verified by the affidavit of such shareholder or other credible person, which
data, alone or with other data show the applicability or inapplicability of this
paragraph, the Landlord may terminate this Lease by giving the Tenant prior
written notice of thirty (30) days of such termination.
31. INTENTIONALLY DELEIED
31A. NON-DISTURBANCE AGREEMENTS, USE OF RENT AND TENANT FINANCING
Landlord agrees (a) to use commercially reasonable efforts to obtain
non-disturbance agreements from holders of any mortgages which may now or
hereafter affect this Lease or the Property, which non-disturbance agreements
shall provide that, in the event of foreclosure, such mortgagee(s) shall abide
by such leases and permit the Tenant to continue possession and quiet enjoyment
of the Property, and (b) not to seek a modification of any mortgage or any other
document that would result in the elimination of a non-disturbance provision or
agreement then in existence. In the event that the Landlord is unable, prior to,
May 31, 1997 to obtain each such non-disturbance agreement on terms reasonably
satisfactory to the Tenant, the Landlord agrees to meet and confer with the
Tenant as to the status of negotiations with the mortgagees and to discuss and
pursue mutually agreeable procedures for obtaining such non-disturbance
agreements.
Landlord hereby covenants and agrees that unless and until Landlord has
obtained for the benefit of Tenant a non-disturbance agreement from each holder
of a mortgage which may now or hereafter affect this Lease or the Property, the
Landlord shall apply all rent payments made by the Tenant under this Lease to
the extent necessary to satisfy all monthly monetary obligations under the
mortgages as they become due.
The Landlord hereby agrees to provide any documents reasonably necessary
for the Tenant to obtain any financing subsequent to the date hereof and/or in
replacement of Tenant's financing existing as of the date hereof (each, a
"Subsequent Financing" and each provider of financing thereunder, a "Subsequent
Financier"). Without limiting the generality of the foregoing, Landlord agrees
to enter, with respect top any Subsequent Financing, into AN agreement in form
and substance similar to the lntercreditor Agreement pursuant to which
Landlord's hypothec, if any, shall be subordinate to the lien of the Subsequent
Financier.
32. ASSIGNMENT BY LANDLORD
Landlord declares that it may assign its rights under this Lease to a
lending institution or to any Person as collateral security for a loan to
Landlord and, in the event that such an assignment is given and executed by
Landlord and notification thereof is given to Tenant by or on behalf of
Landlord, it is expressly agreed that this Lease shall not be cancelled or
modified for any reason whatsoever without the consent in writing of such
lending institution or Person if such consent is required.
This Lease and all rights of the Tenant under the Lease shall be subject
to and subordinate to any Security. Tenant hereby covenants and agrees that it
will, whenever reasonably required by Landlord and at Landlord's expense,
consent to and become a party to any instrument
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 22
subordinating the Lease to any Security. However, no subordination by the Tenant
shall have the effect of permitting the holder of any Security to disturb the
Tenant's enjoyment of the Leased Premises as long as the Tenant shall comply
with the covenants to be kept and performed by it under this Lease.
The Tenant will, upon request of the Landlord or the Person holding the
Security or any Person having an interest in the project, execute and deliver
promptly those instruments referred to herein. However, if ten (10) days after
the date of request, the Tenant has not executed and delivered them, the Tenant
hereby irrevocably appoints the Landlord as the Tenant's attorney with full
power and authority to execute and deliver in the name of the Tenant said
instruments or the Landlord may, at its sole option and discretion, terminate
this Lease upon giving Tenant a THREE (3) BUSINESS DAYS notice of its intention
to do so, the whole without incurring any liability whatsoever and without
prejudice to all of its other rights and recourses.
It is agreed and understood that in the event of any sale of the
Property by Landlord, then Landlord shall automatically be relieved of any and
all obligations and liabilities under this Lease accruing from and after the
date of such sale, PROVIDED THAT THE PURCHASER OF THE PROPERTY ASSUMES ALL
OBLIGATIONS OF LANDLORD UNDER THIS LEASE..
33. EXPROPRIATION
If the whole or any part of the Leased Premises and/or the Property
shall be condemned, expropriated or taken in any manner for any public or
quasi-public use or purpose, Landlord OR TENANT may terminate this Lease by
giving notice in writing to THE OTHER that the Term hereof shall expire upon the
day when possession is required for such purpose and in the event of such
expiration Landlord AND TENANT shall have no liability of any nature to EACH
OTHER resulting from said expiration.
34. EXTENSIONS
PROVIDED LEASED PREMISES DO NOT SUBSTANTIALLY CHANGE the Landlord shall
have the right, at its option and from time to time, to make extensions and/or
additions and/or to add one or more additional floors or storeys onto all or
part of the building comprising the Leased Premises, or on to any other
buildings of the Property, or to add one or more buildings to the Property.
In the event the Landlord exercises said option, the Tenant agrees to
permit the Landlord to install and/or extend and/or add all the required
improvements including supports, beams, wiring, piping, stairways, elevators,
ramps, vents, ducts, shafts and openings for view or light and the like and to
close all borrowed lights and the windows and openings which may be required to
be closed as a consequence of such construction, the whole without any claims
for disturbance and/or inconvenience and the like which may be caused to the
Tenant, provided always that the required work is carried out within a
reasonable delay and that this Article shall not absolve or release the Landlord
from liability in respect of any damage or loss caused to the Tenant as a
consequence of any negligence or fault of the Landlord, its employees or
representatives. If the Tenant loses the use of any part of the Leased Premises
during the making of such additions and/or extensions, the Tenant shall be
granted a proportionate reduction in Minimum Net Net Rental as compensation for
loss of use (during the period and for the area of loss of use only); all of the
foregoing without any other claims by the Tenant against the Landlord for damage
and loss of use.
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 23
In the event the Landlord exercises said option, the Tenant agrees to
permit the Landlord to install and/or extend and/or add all the required
improvements including supports, beams, wiring, piping, stairways, elevators,
ramps, vents, ducts, shafts and openings for view or light and the like and to
close all borrowed lights and the windows and openings which may be required to
be closed as a consequence of such construction, the whole without any claims
for disturbance and/or inconvenience and the like which may be caused to the
Tenant, provided always that the required work is carried out within a
reasonable delay and that this Article shall not absolve or release the Landlord
from liability in respect of any damage or loss caused to the Tenant as a
consequence of any negligence or fault of the Landlord, its employees or
representatives. If the Tenant loses the use of any part of the Leased Premises
during the making of such additions and/or extensions, the Tenant shall be
granted a proportionate reduction in Minimum Net Net Rental as compensation for
loss of use (during the period and for the area of loss of use only): all of the
foregoing without any other claims by the Tenant against the Landlord for damage
and loss of use.
Without limiting the generality of the foregoing, the Landlord hereby
reserves the right, at any time and from time to time, to make changes in,
additions to, subtractions from or rearrangements of the Building including,
without limitation, all improvements at any time thereon, all entrances and
exits thereto, PROVIDED THE LEASED PREMISES DO NOT SUBSTANTIALLY CHANGE, and to
grant, modify and terminate any servitudes or other agreements pertaining to the
use and maintenance of all or parts of the Building and to make changes or
additions to the pipes, conduits, wires, ducts, utilities and other necessary
building services in the Leased Premises which serve other premises. The
Landlord agrees that in performing such alterations, it shall do so in such
manner as to minimize any material interference with the Tenant's use and
enjoyment of the Leased Premises. The Landlord shall not however, be responsible
for any damages of whatsoever nature to Tenant except for physical damages to
the Leased Premises.
35. DEEFAULT
The following shall be considered a default under the terms of this
Lease:
(a) In the event that Tenant shall be in default under any provision
of this Lease providing for the payment of Minimum Net Net
Rental and/or Additional Rental, WHICH IS NOT CURED WITHIN TEN
(10) DAYS OF TENANT'S RECEIPT OF A NOTICE OF SUCH DEFAULT;
(b) In the event Tenant does not take possession of the Leased
Premises or abandons or attempts to abandon the Leased Premises
before the Termination Date, with or without Landlord's
knowledge; or in the event the Leased Premises are used by any
Person other than the Person entitled to use them hereunder; or
any procedure in execution is issued pursuant to a judgment
rendered against Tenant; or if an agent, receiver or trustee
acting under a trust deed or other security, takes possession of
the Tenant's assets and/or any equipment, fixtures, furniture or
movable effects in the Leased Premises; or if the Tenant shall
make a bulk sale of its goods; or if the Tenant should attempt
to move its belongings out of the Leased Premises;
(c) In the event that Tenant shall be in default in observing any
covenant herein contained and/or performing any of its
obligations contained in this Lease (other than a default
stipulated in sub-paragraphs (a) and (b) above) and such default
shall continue for fifteen (15) days after written notice
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 24
specifying such default shall have been given by Landlord to
Tenant, unless Tenant, ACTING REASONABLY AND DILIGENTLY CAN NOT,
cure such default within the said delay of fifteen (15) days, in
which case Tenant shall. upon written request to Landlord, be
entitled to such reasonable extension of time to enable such
default to be remedied.
In the event of any default on the part of the Tenant under the terms of
this Lease, Landlord shall have the right, at its sole and absolute discretion,
to terminate this Lease and in addition, Landlord may, UPON FIFTEEN (15) DAYS
notice forthwith enter upon and take possession of the Leased Premises AND any
statute or law to the contrary notwithstanding, the whole without prejudice to
and under reserve of all other rights and recourses of Landlord to claim any and
all losses and damages of any nature whatsoever sustained by the Landlord by
reason of or arising from any default of the Tenant including, without
limitation, the expenses of reletting the Leased Premises (including the costs
of any repairs, decorating, alterations or improvements necessitated thereby),
as well as REASONABLE attorney's fees WHICH SHALL NOT EXCEED of fifteen percent
(15%) of any amount granted by judgment. Where Landlord shall have instituted
proceedings to cancel, terminate or confirm its cancellation or termination of
this Lease, notwithstanding any law or custom to the contrary, Tenant, IF IN
DEFAULT FOR FOUR (4) CONSECUTIVE MONTHS, shall not have any right to prevent
such cancellation or termination by remedying its default or defaults subsequent
to the institution of such legal proceedings.
36. FAILURE OF TENANT TO PERFORM
If Tenant fails to pay when due any taxes, rates, insurance premiums,
charges, debts or any other amounts which it owes or has herein covenanted to
pay, all such amounts shall be deemed to be and be treated as Additional Rental
and payable and recoverable as Additional Rental. Landlord may pay the same and
shall be entitled to charge the sums so paid to Tenant who shall pay them
forthwith on demand as Additional Rental.
All arrears of Minimum Net Net Rental and Additional Rental shall bear
interest at the prime lending rate as determined by the Royal Bank of Canada on
a daily basis plus four percent (4%) from the time such arrears become due until
paid to Landlord.
37. BANKRUPTCY AND INSOLVENCY
In the event that Tenant shall be adjudicated bankrupt or make any
general assignment for the benefit of its creditors, or make a proposal to its
creditors, or take or attempt to take the benefit of any insolvency or
bankruptcy law, or if a receiver or trustee be appointed for the property of the
Tenant or any part thereof, the present Lease shall automatically terminate on
the occurrence of any of the aforesaid events without further notice or delay,
and Landlord shall be entitled to recover all arrears of Minimum Net Net Rental
and Additional Rental as well as six (6) months of future Minimum Net Net Rental
and Additional Rental or such other accelerated amount that the law may at any
time provide.
38. INDEMNIFICATION
Except if caused directly by the negligence or fault of the Landlord,
its mandatories, employees, or representatives, or by any breach or
nonperformance by the Landlord of any covenant undertaken by virtue hereof, the
Landlord shall not be liable nor responsible in any way for any injury of
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 25
any nature whatsoever that may be suffered or sustained by the Tenant or any
other Person who may be upon the Leased Premises or for any loss of or damage to
any property belonging to the Tenant or to any other Person while such property
is on the Leased Premises and in particular (but without limiting the generality
of the foregoing), the Landlord shall not be liable for any damage or damages of
any nature whatsoever to any such property caused by the failure, by reason of a
breakdown or other cause, to supply adequate drainage, or by reason of the
interruption of any public utility or service or in the event of steam, water,
rain or snow which may leak into, issue or flow from any part of the Property or
from the water, steam, sprinkler, or drainage pipes or plumbing works of the
same, or from any other place or quarter or for any damage caused by anything
done or omitted by any tenant. The Landlord, however, shall use all reasonable
diligence to remedy such condition, failure or interruption of service when not
attributable to the Tenant, after notice of same, when it is within its power
and obligation to do so.
The Tenant will indemnify and hold Landlord harmless from and against
all fines, liability, damage suits, claims, demands and actions of any kind or
nature for which the Landlord shall or may become liable for or suffer by reason
of:
(a) any breach or nonperformance by the Tenant of any provision
hereof; and/or
(b) any injury (including death resulting at any time therefrom) or
damage to property occasioned to or suffered by any Person
including the parties hereto by reason of any such breach or
nonperformance or of any wrongful act, neglect, or fault on the
part of the Tenant; and/or
(c) any damage to the Property caused by the Tenant's use and
occupancy of the Leased Premises; and/or
(d) any injury to any Person including death, sickness and diseases
resulting at any time therefrom, whether caused by a virus,
bacteria or any substance brought upon the Leased Premises and
manipulated by Tenant and/or located on or about the Leased
Premises; and/or
(e) any injuries, damages or costs relating to any environmental
impairment arising out of the occupancy of the Leased Premises.
Such indemnification by the Tenant for any of the above items shall
survive the termination of this Lease, anything in this Lease to the contrary
notwithstanding.
39. DISTURBANCE
Notwithstanding anything to the contrary stipulated in the present
Lease, the Tenant will not hold the Landlord in any way responsible for any
damages or annoyance which the Tenant may sustain through the fault of any
tenant who occupies any premises adjacent to, near, above or under the Leased
Premises. and renounces any claims it may have against the Landlord pursuant to
Article 1636 of the Civil Code of Lower Canada.
40. NONWAIVER
The failure of Landlord OR TENANT to insist upon a strict performance of
any of the terms hereof shall not be deemed a waiver of any rights or remedies
that Landlord OR TENANT AS APPROPRIATE, may have and shall not be
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 26
deemed a waiver of any subsequent default by Tenant OR LANDLORD (AS APPROPRIATE)
of any such terms.
41. WAIVER OF COMPENSATION
The Tenant hereby waives and renounces any and all existing and future
claims, offsets and compensation against any Minimum Net Net Rental or
Additional Rental due hereunder and agrees to pay such Minimum Net Net Rental
and Additional Rental on their respective due dates, regardless of any claim,
offset or compensation which may be asserted by the Tenant or on its behalf,
except to the extent permitted hereunder.
42. IMPUTATION OF PAYMENTS
No payment by the Tenant or receipt by the Landlord of a lesser amount
than the monthly payment of Minimum Net Net Rental and Additional Rental shall
be deemed to be payments on account of the earliest stipulated Minimum Net Net
Rental and Additional Rental, nor is any endorsement or statement on any cheque
or any letter accompanying any cheque or payment as rent deemed as
acknowledgement of full payment or an agreement or acquiescence of or to the
terms thereof, and the Landlord may accept and cash such cheque or payment
without prejudice to the Landlord's right to recover the balance of such rental
or pursue any other remedy provided in this Lease. The Landlord may, at its
option, apply sums received from the Tenant against any amounts due and payable
by the Tenant under this Lease in such manner as the Landlord sees fit.
43. CUMULATIVE REMEDIES
No reference to or exercise of any specific right or remedy by the
Landlord shall preclude the Landlord from or prejudice the Landlord in
exercising any other right under this Lease or pursuing any other remedy or
maintaining any action to which it may otherwise be entitled at law.
44. UNAVOIDABLE DELAY
Save and except for any monetary obligation under this Lease, Landlord
and Tenant shall not be liable for failure or delays in performing any of their
obligations hereunder should such failure or delay be caused by any event
(excluding the financial conditions of either party) which is beyond the
reasonable control of either party including, without limitation, cas fortuit,
force majeure, strikes, lockouts, labour troubles, inability to procure
materials, restrictive governmental rules, regulations, orders or bankruptcy of
contractors.
Without limiting the generality of the foregoing and in particular, it
is understood and agreed that whenever and to the extent that the Landlord
shall, AFTER REASONABLE ATTEMPTS TO MITIGATE, be unable to fulfil, or shall be
delayed or restricted in the fulfilment of any obligation hereunder in respect
of the supply or provision of any service or utility or the doing of any work or
the making of any repairs by reason of being unable to obtain the material,
goods, equipment, service, utility or labour required to enable it to fulfil
such obligation, or by reason of any statute, law or order in council or any
regulation or order passed or made pursuant thereto or by reason of the order or
directive of any competent authority having jurisdiction over the Property, or
inability to obtain any required authorization therefrom, or by reason of any
other cause beyond its REASONABLE control, the Landlord shall be entitled to
extend the time for fulfilment of such obligation by a time equal to the
duration of such delay or restriction, and the Tenant shall not be entitled to
compensation for any damages of whatsoever nature arising therefrom.
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 27
45. MANAGEMENT OF THE PROPERTY
The Tenant hereby acknowledges to the Landlord that the Property may be
managed by any party other than the Landlord, as the Landlord from time to time
may in writing designate and, to all intents and purposes, any manager so
designated shall be the party at the Property authorized to deal with the
Tenant. All payments to Landlord in virtue of this Lease shall be made by cheque
payable to the Landlord in full unless otherwise specified in writing by
Landlord to Tenant.
46. RULES AND REGULATIONS
There is a schedule of rules and regulations annexed hereto as Schedule
"E" and the Tenant binds and obliges itself to abide by the said rules and
regulations.
The Landlord shall have the right to amend and/or rescind the rules and
regulations in Schedule "E" from time to time and to make any other reasonable
rules and regulations not contrary to the spirit and intent of this Lease as, in
its discretion, may from time to time be needful for the safety, care,
cleanliness and proper administration of the Property including the Leased
Premises, and for the preservation of good order therein, and the same shall be
observed and performed by the Tenant and by its customers, and all such rules
and regulations now or hereafter to be established by the Landlord as herein
provided shall form part of this Lease as if recited at length herein and any
such new rules and regulations shall be binding upon Tenant upon written
notification from Landlord.
Furthermore, in the event that Tenant does not comply with the rules and
regulations, Landlord shall have the right, without notice, to enter the Leased
Premises and execute any work necessary to rectify Tenant's noncompliance, the
cost of which shall immediately, upon Landlord's request, be payable by Tenant
as Additional Rental. It is agreed and understood that the terms and conditions
of this Lease shall prevail over any of the terms of the rules and regulations.
47. COMPLIANCE WITH LAWS AND REGULATIONS
The Tenant shall, at its own expense, promptly comply with the
requirements of every applicable statute, law and ordinance and with every
applicable lawful regulation or order with respect to the removal of any
encroachment placed by the Tenant, or to the condition, equipment, furniture,
fixtures, maintenance, or use, or occupation of the Leased Premises, including
the making of any alteration, addition in or to any structure upon, connected
with or appurtenant to the Leased Premises, whether or not such alteration be
structural or be required on account of any particular use to which the Leased
Premises or part thereof may be put and whether or not such requirement,
regulation or order be of a kind now existing or within the contemplation of the
parties hereto; and shall comply with any applicable regulation, recommendation
or order of the Insurers' Advisory Organization of Canada, or any body having
similar functions or of any liability or fire insurance company by which the
Landlord and/or the Tenant may be insured.
48. WINDOW COVERINGS
In order to preserve a more uniform and attractive appearance of the
Property for the benefit of all the tenants, the Tenant herein binds and obliges
itself to place vertical blinds for air porosity, over all windows which are
located in the front of the Building or on any side of the Building which faces
a public street and where such windows are for other than office areas, such
vertical
<PAGE>
Montreal Industrial Lease
Page 28
blinds shall remain drawn at all times.
49. PERMITS AND LICENSES
The Tenant shall obtain all necessary permits and licenses required for
the occupancy and carrying on of its business, the Landlord making no
representations or warranties whatsoever as to whether said permits and licenses
may be obtained by Tenant. Should the Tenant fail to obtain any required permit
and/or license, it shall nevertheless remain bound to perform all of its
obligations pursuant to the present Lease including, without limitation, payment
of Minimum Net Net Rental and Additional Rental.
50. EXPIRATION OF LEASE
Tenant shall, at the expiration or sooner termination of the Term,
peaceably surrender and yield up unto Landlord, who shall become absolute owner
thereof, the Leased Premises together with all buildings, alterations,
additions, erections, leasehold improvements, repairs and installations,
including the air-conditioning and heating system, done or made by the Tenant,
both movable and immovable, except the equipment and furniture belonging to
Tenant which must be removed at Tenant's expense on or before the expiration of
the Lease. Tenant shall repair any and all damages caused to the Leased Premises
and/or to the Building as a result of such removal, using materials equal in
quality to that of the damaged materials, failing which Landlord may do so at
Tenant's expense.
Notwithstanding the above, Landlord may at its option advise Tenant in
writing that he does not wish the ownership of all or any part of the above
described property, in which case Tenant shall remain owner of such property
refused by Landlord and shall, at its own expense, immediately remove such
property and repair any damage to the Leased Premises and/or the Building caused
by the original installation and/or removal, using materials equal in quality to
that of the damaged materials, failing which Landlord may do so at Tenant's
expense.
If Tenant leaves any equipment or furniture in the Leased Premises
following the expiration of the Term, it is understood that Landlord may then,
at its option, either accept full and absolute ownership of same and may use it
or dispose of it as Landlord determines, without compensation payable to Tenant
and without incurring any liability to Tenant, or Landlord may dispose of same
as it sees fit, at Tenant's expense, without incurring any liability to Tenant.
If the Tenant has failed to fulfil its obligations under this lease with
respect to the maintenance, repair and alteration of the Leased Premises and
removal of improvements and fixtures from the Leased Premises during or at the
end of the Term, such obligations and the Landlord's rights in respect thereto
shall remain in full force and effect notwithstanding the expiration or sooner
termination of the Term.
51. MOVEABLE HYPOTHEC
IN ORDER TO GUARANTEE THE FULL AND PROPER PERFORMANCE OF ALL OF THE
OBLIGATIONS TO BE PERFORMED BY TENANT UNDER THIS LEASE, TENANT HEREBY UNDERTAKES
TO EXECUTE IN FAVOUR OF LANDLORD SIMULTANEOUSLY WITH THESE PRESENTS, A DEED OF
MOVEABLE HYPOTHEC, WHICH SAID HYPOTHEC, SUBJECT TO THE TREATMENT SET FORTH IN
THE LANDLORD AGREEMENTS ATTACHED HEREWITH OR ANY OTHER AGREEMENT ENTERED IN
CONNECTION WITH A SUBSEQUENT FINANCING, SHALL RANK AHEAD OF ALL OTHER HYPOTHECS
OR RIGHTS OF ANY NATURE OF ANY AND ALL OTHER CREDITORS, ON THE UNIVERSALITY OF
THE MOVEABLE PROPERTY OF TENANT, PRESENT OR FUTURE, CORPOREAL OR NON-CORPOREAL,
SITUATED IN OR NEAR THE LEASED PREMISES IN THE BUILDING, OR WITH RESPECT TO THE
OPERATION OF BUSINESS OF
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 29
TENANT IN THE LEASED PREMISES, WHICH SAID HYPOTHEC SHALL BE A CONTINUING
GUARANTEE BY TENANT IN FAVOUR OF LANDLORD IN ORDER TO SECURE MINIMUM NET NET
RENTAL AND ADDITIONAL RENTAL THROUGHOUT THE TERM OF THIS LEASE AND ANY RENEWAL
PERIOD THEREOF. THE SAID DEED OF MOVEABLE HYPOTHEC TO BE EXECUTED BY TENANT
SHALL BE THAT DOCUMENT HERETO ATTACHED AS SCHEDULE "F".
52. DOMICILE AND NOTICES
The Tenant hereby elects domicile at the Leased Premises for the purpose
of service of any writs of summons or other legal document in any action or
proceeding whatsoever by the Landlord against the Tenant.
Any notice or demand given by Landlord to Tenant or by Tenant to
Landlord pursuant to the present Lease shall be deemed to be duly given if
served upon the Tenant or Landlord personally, or if delivered or mailed by
prepaid certified or registered mail to:
(a) LANDLORD: 6500 Trans Canada Highway, SUITE 210
St. Laurent, Quebec H4T 1X4
(b) TENANT: At the Leased Premises
Landlord may, by notice in writing to the Tenant, change the address to
which any notice or demand intended for the Landlord shall be addressed. Tenant
may, by notice in writing, require that a copy of any writ of summons or other
legal document or proceeding and a notice or demand served on the Leased
Premises be mailed by regular mail to an additional address.
53. SUCCESSORS AND ASSIGNS
This Lease shall enure to the benefit of Landlord's or Tenant's
respective heirs, executors, administrators, successors and assigns.
54. DESCRIPTIVE HEADINGS
Any descriptive headings appearing in this Lease have been inserted as a
matter of convenience and reference only and in no way define, limit or enlarge
the scope or meaning of this Lease or any provisions hereof.
55. GOVERNING LAW / SEVERABILITY
The present Lease shall be construed and governed by the laws of the
Province of Quebec. Should any provision of this Lease be or become illegal or
not enforceable, it shall be considered separate and severable from the present
Lease and the remaining provisions shall continue in full force and effect and
be binding upon the parties hereto as though said provisions had never been
included. In this Lease, singular words shall be interpreted as including the
plural and vice versa and the words of masculine gender shall be interpreted as
including the feminine gender. Where more than one landlord or tenant is
referred to or when Tenant shall be of feminine gender or a corporation, all
the proper grammatical changes shall be inferred.
56. COST OF PREPARATION, REGISTRATION AND RADIATION
THE PARTIES HERETO UNDERTAKE TO EXECUTE A DUPLICATE SHORT FORM LEASE FOR
THE PURPOSES OF REGISTRATION ONLY, IN CONFORMITY WITH THE SHORT FORM LEASE SET
OUT AT SCHEDULE "G". THE PARTIES AGREE THAT, EXCEPT FOR THE SOLE PURPOSE OF
REGISTRATION, THE PARTIES SHALL BE EXCLUSIVELY GOVERNED BY
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 30
THE TERMS OF THIS LEASE.
In addition, Tenant shall, at its own cost, at the expiration of the
Term, radiate the registration of the Lease from the Index of Immovables.
In the event the said registration is not radiated within thirty (30)
days from the expiration of the Term, Tenant hereby irrevocably appoints the
Landlord as the Tenant's attorney with full power and authority to execute in
the name of the Tenant any documents and instruments required to effect the said
radiation of the registration of the Lease from the Index of Immovables and
Tenant further authorizes Landlord to deliver the said instruments and documents
to the appropriate Registry Office for the purpose of effecting all the
appropriate registrations and radiations. The cost of the preparation of said
documents and instruments as well as the cost of registering said documents and
instruments shall be borne by Tenant.
57. BROKERAGE COMMISSION
The Landlord and Tenant hereby guarantee that no brokerage commission or
charges are owing to any broker or brokerage company with respect to the present
transaction.
Tenant shall indemnify and hold Landlord harmless from any and all
brokerage claims as described above.
58. SCHEDULES
Schedules "B", "D", "E", "F" AND "G" hereto form an integral part of
this Lease.
59. CERTIFICATE OF INCORPORATION
Where Tenant is a corporation, Tenant undertakes to remit to Landlord
upon the signing of the Lease, a copy of its Certificate of Incorporation.
60. ENTIRE AGREEMENT
Except as otherwise provided herein, no subsequent alteration,
amendment, change or addition to this Lease shall be binding upon the Landlord
or the Tenant unless agreed to in writing by the parties. THE PARTIES AGREE THAT
UPON SIGNATURE OF THIS LEASE, THIS LEASE WILL SUPERSEDE ALL OTHER LEASES
EXECUTED BETWEEN THE PARTIES HERETO IN RESPECT TO THESE LEASED PREMISES AND
SHALL BE THE ONLY VALID AND BINDING LEASE BETWEEN THE PARTIES.
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 31
61. LANGUAGE
Each of the parties does hereby confirm that it has expressly required
that this contract, as well as any document related hereto, be drawn up in the
English language. Chacune des parties confirme par les presentes avoir
expressement demande que le present contrat, ainsi que tous les documents y
afferent, soient rediges en anglais.
IN WITNESS WHEREOF THE LANDLORD HAS SIGNED AT ST. LAURENT, QUEBEC, THIS
7 DAY OF March 1997.
ZMD SPORTS INVESTMENTS INC.
Per: [Illegible]
---------------------------
[Illegible]
- -----------------------------
Witness
[Illegible]
- -----------------------------
Witness
IN WITNESS WHEREOF THE TENANT HAS SIGNED AT THIS 8th DAY OF April, 1997.
SPORT MASKA INC.
Per: [Illegible]
---------------------------
- -----------------------------
Witness
[Illegible]
- -----------------------------
Witness
<PAGE>
SCHEDULE "B"
EXTRACT OF A CERTIFICATE OF LOCATION DATED AUGUST 25, 1989:
L'emplacement est designe sous le numero CENT, subdivision QUATRE-VINGT-QUATRE
(100-84) dn cadastre de la paroisse de Notre-Dame-de-Saint-Hyacinthe, division
d'enregistrement de Saint-Hyacinthe, et peut etre plus particulierement decrit
comme suit:
Borne au nord-est par les lots 100-65 et 100-66 (avenue Hubert), au
sud-est par le lot 100-67 (rue St-Charles), au sud-ouest par les lots
99-2 et 99-3, au nord-ouest par le lot 100-78; mesurant,
successivement, dix-sept metres et soixante-huit centiemes (17,68 m),
onze metres et vingt et un centiemes (11,21 m) suivant un arc engendre
par un rayon de quarante-huit metres et soixante-dix-sept centiemes
(48,77 m), quarante-huit metres et cinquante et un centiemes (48,51 m),
cent quarante et un metres et quatre-vingt-quinze centiemes (141,95 m)
le tout le long d'une ligne brisee au nord-est, quarante-huit metres et
soixante-cinq centiemes (48,65 m) au sud-est, deux cent dix-sept metres
et quatre-vingt-quinze centiemes (217,95 m) au sud-ouest, trente-six
metres et treize centiemes (36,13 m) au nord-ouest; contenant, en
superficie, neuf mille neuf cent soixante-dix-sept metres carres et deux
dixiemes (9 977,2 m^2)
<PAGE>
SCHEDULE "D"
MEASUREMENT OF LEASED PREMISES
The Leased Premises are measured (i) from the furthest exterior face of
the exterior walls, and the centre line of all interior walls separating the
Leased Premises from adjoining leasable premises as designated by Landlord,
and/or Common Areas, hereinafter defined, with no deduction for space occupied
by projections, structures, or columns, structural or nonstructural where
applicable; and (ii) by adding to the square footage obtained in (i) above, a
number of square feet corresponding to a proportion of the Common Areas
attributed to Tenant, which proportion is calculated as follows:
The proportion comprised by the total Common Area expressed as a
percentage of the total net Building area (total gross building area minus total
Common Area) multiplied by the area of the Leased Premises as calculated in (i)
above. For the purpose of these presents "Common Area" means:
(a) those areas, facilities, utilities, and installations in the
Property which, from time to time, are not designated or intended by the
Landlord to be leased to tenants of the Property, and
(b) those areas, facilities, and installations which serve or are for
the benefit of the Property, whether or not located within, adjacent to, or near
the Property and which are designated from time to time by the Landlord as part
of the Common Areas of the Property. Common Areas include, without limitation,
all areas, facilities, utilities, and installations which are provided or
designated (and which may be changed from time to time) by the Landlord for the
use or benefit of the tenants, their employees, customers and other persons
permitted by the Landlord in common with others entitled to the use or benefit
hereof in the manner for the purposes permitted by the lease.
<PAGE>
SCHEDULE "E"
RULES AND REGULATIONS
1. The Landlord reserves entire control of the sidewalks, entries,
corridors and passages; washrooms and lavoratories; fan rooms, janitor's
closets, electrical closets and other closets; stairs, flues, stacks,
pipe shafts, and ducts; the whole not within the Leased Premises, and of
all parts of the Building employed for the common benefit of the
Tenants, and shall have the right to place such signs and appliances
therein, as they may deem advisable, provided that ingress to and egress
from the Leased Premises is not impaired thereby.
2. The Landlord shall have the exclusive right to prescribe the weight and
proper positions of metal safes or machinery as well as the right to
prescribe the weight and position of any floor load. All damage done to
the Building or the Leased Premises by moving or using heavy equipment
of any description or furniture contrary to the Landlords' prescriptions
shall be repaired at the expense of the Tenant. No such equipment or
furniture shall be moved unless a time therefor has been arranged with
and consented to by the Landlord.
3. The Tenant shall not permit the introduction into the Leased Premises or
the Building of any machine or mechanical device of any nature
whatsoever which may be liable to cause objectionable noise or vibration
or be injurious to the Leased Premises or Building.
4. Canvassing, soliciting and peddling in the Building are prohibited.
5. Furniture, bulky articles and construction materials which the Tenant
may require from time to time for the construction of internal
partitions or for the purpose of effecting alterations or improvements,
the whole provided Tenant has obtained Landlord's approval pursuant to
the Article of this Lease entitled "Improvements and Alterations", shall
be carried to the Leased Premises at such hour and in such manner as the
Landlord may reasonably designate. Any damage which may be caused to the
Building or the Leased Premises by the carrying of such furniture, bulky
articles or construction materials to or from the Leased Premises shall
be at the responsibility and cost of the Tenant.
6. Any hand trucks, carryalls, or similar appliances used for the delivery
or receipt of merchandise or equipment shall be equipped with rubber
tires, side guards and such other safeguards as the Landlord shall
require.
7. If any apparatus used or installed by the Tenant requires a permit as a
condition for its installation, the Tenant must file a copy of such
permit with the Landlord.
8. The Tenant shall give the Landlord prompt written notice of any accident
to or defect in water or gas pipes, heating or sprinkler system in the
demised Leased Premises, of which he is aware.
9. The Tenant shall not place any additional locks upon any doors of the
Leased Premises or the Building without the written consent of the
Landlord.
10. No animals or birds shall be brought or kept in or about the Leased
Premises or the Building.
11. No auction sales shall be allowed in the Leased Premises or the
Building.
12. The water closets and other water apparatus of the Building or Leased
Premises shall not be used for any purpose but those for which they are
constructed. and no sweepings, rubbish, rags, ashes, chemicals or other
substances shall be thrown therein.
13. The Tenant shall not permit any employees to smoke or congregate in the
halls (if any) of the said Building.
14. The Tenant, when closing the premises, during the day or evening, shall
have all windows closed, to avoid possible damage from fire, storms,
rain or freezing, and will not shut off the radiators and/or baseboard
heaters
<PAGE>
MONTREAL INDUSTRIAL LEASE
SCHEDULE "E"
PAGE 2
when the premises are locked.
15. The Tenant shall follow such instructions, if any, as Tenant may from
time to time receive from Landlord relating to the maintenance and care
of the heating, ventilating and air-conditioning equipment installed
within the Leased Premises.
16. Front Signage
The Tenant may identify his business with a front sign, the whole
provided Tenant complies with the conditions stipulated hereunder:
(a) Letter: individual to the Tenant's style.
(b) Height: 24".
(c) Permitted materials - plastic, composite or solid
- rustproof metal, composite or solid.
(d) Lighting (optional) - integrated
- halo-lit (back-lighting)
(e) Lighting control - dedicated circuit
- photo-cell switch, timer switch or manual
switch
Before the fabrication of any signage, the Tenant must obtain the written
approval of the Landlord. A request for approval must be accompanied by the
following information:
(a) Elevation plan indicating the proposed sign -- (Scale - 3/8" =
1').
(b) Sign dimensions: height, length, thickness, and distance from
wall.
(c) Construction and installation details.
(d) Material and finish specifications (use of styrofoam is
prohibited).
(e) Colour specifications.
(f) Lighting specifications: number of amperes, volts and circuits.
(g) Name of designer and of fabrication and installation
contractors.
(h) Request for Municipal permit.
(i) Any other additional information that the Landlord may require
to study a particular sign request.
Furthermore, Tenant shall only be entitled to purchase any signage
approved from the following suppliers which may be changed by Landlord from time
to time:
Enseignes Trans Canada Signs Inc.
9310 Parkway
Ville d'Anjou, Quebec
H1J 1W7
Claude Neon Limitee
1855 Hymus Boulevard
Dorval, Quebec
H9P 1J8
Enseicom Inc.
1700 Claire Crescent
Lachine, Quebec
H8S 1A2
17. Facade and secondary windows
(a) All front windows must have off-white vertical blinds.
(b) Adjustment of vertical blinds of front windows of storage space
must be half closed.
(c) All windows, including secondary windows, must be washed by
Tenant at its cost, at least twice a year on both the interior
and exterior faces.
<PAGE>
MONTREAL INDUSTRIAL LEASE
SCHEDULE "E"
PAGE 3
18. Miscellaneous signage
Miscellaneous traffic and "no parking" signs are supplied and installed
by the Landlord.
19. Garbage container
(a) The Tenant must provide the garbage container which best
satisfies its business activity so that the size and water
tightness retain all garbage without affecting the environment.
(b) The Tenant must assure that the container is neatly located on
the designated area and that the lids are kept closed.
20. Exterior storage
(a) It is strictly forbidden to store anything outside the Building,
even on a temporary basis.
(b) Used boxes, pallets must be kept inside the Building until
collected for disposal.
21. Special installations
Tenant must obtain Landlord's approval prior to the installation of any
equipment, machinery, fixtures and furniture which have to be attached
to, mounted to or pierced through any element of the Leased Premises
and/or the Building. Furthermore, Tenant must obtain Landlord's approval
prior to the installation of any equipment, tank and any other item that
Tenant wants to install outside the Building (hereinafter the "Special
Installation").
Any request for the approval of a Special Installation must be submitted
in writing along with the technical drawings or pertinent data which can
easily identify the specific nature of the installation. Furthermore,
Special Installation must conform to terms and conditions stipulated in
the lease.
Following completion of a Special Installation which conforms to
preceding authorization, the Landlord will proceed, at Tenant's cost,
with the inspection of the installation for final acceptance.
<PAGE>
SCHEDULE "F"
MEMORANDUM OF AGREEMENT OF HYPOTHEC ON UNIVERSALITY OF MOVEABLE
PROPERTY.
BY AND BETWEEN: ZMD SPORTS INVESTMENTS INC., a body
politic and corporate, duly
incorporated, having its head office and
principal place of business in Montreal,
Quebec herein acting and represented by
Michael Zunenshine its duly authorized
representative
(hereinafter the "Landlord")
AND: SPORT MASKA INC., a body politic and
corporate, duly incorporated, having its
head office and principal place of
business in Montreal, Quebec, herein
acting though and represented by Russell
J. David, its Vice President - Finance
hereunto duly authorized as he so
declares,
(hereinafter called "Tenant")
WHEREAS the Landlord and Tenant have entered into a lease for those
certain premises located at 15855 HUBERT STREET, ST. HYCACINTHE, QUEBEC (the
"Premises") signed by the Landlord on the 7 day of April 1997, signed by the
Tenant on the 8 day of April 1997 (the "Lease"):
WHEREAS the Tenant has agreed to grant the Landlord security on its
moveable property as security for the full and due performance of all its
obligations under the Lease including, without limitation, the payment of all
rentals and additional rentals;
WHEREFORE, THE PARTIES HERETO HEREBY AGREE AS FOLLOWS:
1. PREAMBLE
The preamble hereto shall form part hereof as though fully recited at
length herein.
2. HYPOTHEC
In order to guarantee the full and proper performance of all of the
obligations to be performed by the Tenant under the Lease, including, without
limitation, the payment of all rent, additional rental and any other sums
payable by the Tenant under the Lease, the Tenant hereby grants to the Landlord
a hypothec in favour of the Landlord in the amount of TWO MILLION TWO HUNDRED
SEVENTY-SIX THOUSAND EIGHT HUNDRED TWENTY DOLLARS AND NINETY CENTS
($2,276,820.90) on the moveable property of the Tenant, both present and future,
and constituting the universality or universalities hereinafter described,
including all property of the same nature acquired as replacements for the said
properties:
Description
(a) the universality of all moveable improvements, equipment,
machinery, furniture and trade fixtures of every kind, present
and future, located on or upon the Premises or used directly or
indirectly in connection with the business of the Tenant carried
on at the Premises, including all indemnities or proceeds paid
under insurance contracts or policies pertaining to or covering
such moveables; and
(b) INTENTIONALLY DELETED.
(c) all of Tenants right, title and interest in, to and under the
Lease and in and to the Premises.
<PAGE>
Schedule "F" to Lease
Moveable Hypothec - Page 2
The hypothec constituted herein is not and shall not be construed as
being an open or floating hypothec pursuant to the provisions of the Civil Code
of Quebec.
3. COSTS AND FEES
The Tenant shall pay the costs and fees OF PUBLICATION OF THE HYPOTHEC
CREATED HEREBY AND THE OUT OF POCKET COSTS OF THE LANDLORD WITH REGARD TO the
renewal, notice, hypothecation, renunciation, quittance or mainlevee with
respect thereto.
4. REPRESENTATIONS OF THE TENANT
The Tenant hereby agrees that it shall not, OUTSIDE OF THE ORDINARY
COURSE OF BUSINESS, sell, transfer or alienate all or SUBSTANTIALLY ALL of the
property hypothecated herein without the prior written consent of the Landlord,
WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD.
In the event of a transfer or alienation of the property to which the
Landlord has granted its consent, the Tenant shall formally advise the Landlord
by way of a written notice containing the name of the vendor and the purchaser
and a description of the property sold. This notice must be accompanied by a
copy of all deeds and documents relating to the sale, transfer or alienation of
property, together with a certified copy of the inscription of a notice of
conservation of the hypothec under the name of the purchaser with proof of
transmission of such notice to the purchaser. In addition to the foregoing, it
shall be required that any new PURCHASER shall be required to assume, solidarily
with the Tenant, all of the obligations of the Tenant contained in the Lease.
5. LEASE OF PROPERTY HYPOTHECATED
The Tenant shall not, without the prior written consent of the Landlord,
lease the property hypothecated in whole or in part.
6. MOVEMENT OF PROPERTY HYPOTHECATED
The Tenant shall not, without the prior written consent of the Landlord,
change the location of the property hypothecated unless SUCH CHANGE IS MADE, in
the ordinary course of the enterprise of the Tenant.
7. INTENTIONALLY DELETED
8. ADDITIONAL HYPOTHEC
If the Landlord should so require, the Tenant hereby obliges itself to
consent to any additional hypothec which the Landlord may judge necessary or
useful in order to maintain the value of the guarantees accorded by these
presents.
9. ENTERPRISE
The Tenant hereby expressly obliges itself for the duration of the
present agreement to continue to exploit its enterprise in the ordinary course
of business and not to do anything which would have as its object the cessation
of the activities of ITS enterprise or the liquidation of its property.
The Tenant shall administer and operate its enterprise in a proper and
efficient manner and shall respect all the standards of financing agreed to with
the Landlord.
10. DEFAULTS
<PAGE>
Schedule "F" to Lease
Moveable Hypothec - Page 3
The Tenant shall be in default under the terms of these presents where:
(a) the Tenant has defaulted in the performance of its obligations
contained in the present Agreement;
(b) there has been DEFAULT under the Lease, including the
non-payment of Basic Rent, Additional Rent and any other sums
which may be due by the Tenant to the Landlord under the Lease;
(c) any steps are taken or any action or proceedings are instituted
by any person for the dissolution, winding-up or liquidation of
the Tenant or its assets and Tenant is not diligently proceeding
to have same dismissed;
(d) the Tenant has made a MATERIAL representation herein or in the
Lease which proves untrue or incomplete.
In the Event of Default, the Landlord shall have the right under reserve
of all other rights and recourses herein contained or by law;
(a) to require the immediate payment of the full amount of any sums
which may be due or become due under the Lease in capital,
interest, costs and accessories;
(b) to demand the execution of any obligation not respected by the
Tenant;
(c) to exercise all hypothecary recourses which may be conferred
upon it by law.
11. TIME OF ESSENCE
Time shall be the essence of this Agreement and every part hereof.
12. PROPER LAW
This Agreement shall be construed in accordance with the laws of the
Province of Quebec.
13. SEVERABILITY
The invalidity of any provision of this Agreement or any covenant herein
contained on the part of any party hereto shall not affect the validity of any
other provision or covenant hereof or herein contained.
14. BINDING AGREEMENT
This Agreement shall enure to the benefit of and be binding upon the
heirs, executors, administrators, personal representatives, successors and
assigns of the parties hereto.
15. NOTICE
Any notice or any communication required or permitted to be given to any
party pursuant to any of the provisions of this Agreement shall be sufficiently
given if such notice or other communication is in writing and is delivered to
such party personally, or mailed by registered mail, postage prepaid, addressed
to such party as follows:
TO Landlord: 6500 Trans Canada Highway
Suite 210
St. Laurent, Quebec H4T 1X4
TO THE Tenant: At the Premises, any other place of business of
<PAGE>
Schedule "F" to Lease
Moveable Hypothec - Page 4
the Tenant or to any principal, officer or director of
the Tenant
or to such other address of such party as any of them may from time to time
notify the other parties in the manner hereinbefore provided, and any such
notice, or other communications shall be deemed to have been received by any
such party when delivered to it or to him, or if mailed as aforesaid, on the
fifth (5th) business day following the date of mailing. In the event of an
interruption or slow down in the postal system, all notices shall be delivered.
16. LANGUAGE
The parties hereby confirm that they have requested that the present
document be drafted in the English language. Les parties confirment par les
presentes qu'elles on demande que le present document soit redige dans la langue
anglaise.
IN WITNESS WHEREOF THE LANDLORD HAS SIGNED AT ON THIS 19 DAY OF March,
1997.
ZMD SPORTS INVESTMENTS INC.
Per: [Illegible]
--------------------------------
Edith L. [Illegible]
- -----------------------------------
Witness
[Illegible]
- -----------------------------------
Witness
IN WITNESS WHEREOF THE TENANT HAS SIGNED AT ON THIS 8TH DAY OF April,
1997.
SPORT MASKA INC.
Per: [Illegible]
--------------------------------
- -----------------------------------
Witness
[Illegible]
- -----------------------------------
Witness
<PAGE>
Schedule G
DEED OF LEASE
LEASE entered into as of ____ day of April, nineteen hundred and ninety-seven
(1997)
BETWEEN: ZMD Sports Investments, Inc., a body politic and corporate, duly
incorporated, having its head office and principal place of
business in Montreal, Quebec, herein acting and represented by
Michael Zunenshine, its duly authorized representative
(hereinafter called the "Landlord")
AND: Sport Maska Inc., a body politic and corporate, duly
incorporated, having its head office and principal place of
business in Montreal, Quebec, herein acting through and
represented by Russell J. David, its Vice President-Finance
hereunto duly authorized as he so declares (hereinafter called
the "Tenant")
1. DESCRIPTION OF THE PREMISES
Landlord, in consideration of the rents, covenants and agreements herein
contained on the part of Tenant to be paid, kept and performed, does
hereby lease to Tenant and Tenant does hereby hire and take from
Landlord the space (hereinafter referred to as the "Premises"):
Borne au nord-est par les lots 100-65 et 100-66 (avenue Hubert),
au sud-est par le lot 100-67 (rue St-Charles), au sud-ouest par
les lots 99-2 et 99-3, au nord-ouest par le lot 100-78;
mesurant, successivement, dix-sept metres et soixante-huit
centiemes (17,68 m), onze metres et vingt et un centiemes (11,21
m) suivant un arc engentre par un rayon de quarante-huit metres
et soixante-dix-sept centiemes (48,77 m), quarante-huit metres
et cinquante et un centiemes (48, 51 m), cent quarante et un
metres et quatre-vingt-quinze centiemes (141,95 m) le tout le
long d'une ligne brisee au nord-est, quarante-huit metres et
soixante-cinq centiemes (48,65 m) au sudest, deux cent dix-sept
(metres et quatre-vingt-quinze centiemes (217,95 m) au sudouest,
trente-six metres et treize centiemes (36,13 m) au nord-ouest;
contenant, en superficie, neuf mille neuf cent soixante-dix-sept
metres carre et deux dixie-mes (9 997, 2m^2)
2. MODE OF ACQUISITION
[TO BE COMPLETED BY ZMD]
3. CHARACTERIZATION OF RIGHT
A lease of a non-residential immoveable.
4. TERM OF LEASE
The term of this lease shall commence on April __, 1997 and shall expire
at 11:59 p.m. on January 31, 2005, unless the said term shall sooner be
terminated under the provisions hereof.
<PAGE>
5. EXTENT OF RIGHT
USE OF PREMISES
The Premises hereby leased shall be used and occupied by Tenant solely
offices, warehousing, manufacturing and distribution.
GOVERNING LAW
The present lease shall be construed and governed by the laws of the
Province of Quebec.
Executed in Montreal as of the ____ day of April, 1997.
ZMD SPORTS INVESTMENTS, INC.
Per:
---------------------------- --------------------------------
Witness Michael Zunenshine
[title]
Executed in New York, New York, U.S.A., as of the ____ day of April,
1997.
SPORT MASKA, INC.
Per:
---------------------------- --------------------------------
Witness Russell J. David
Vice President-Finance
-2-
File No. 586-2578
DEED OF LEASE
BETWEEN
ZMD SPORTS INVESTMENTS INC.
(the "Landlord")
AND
SPORT MASKA INC.
(the "Tenant")
<PAGE>
TABLE OF CONTENTS
ZMD SPORTS INVESTMENTS INC.
SECTION PAGE
------- ----
1. CERTAIN BASIC LEASE PROVISIONS .................................... 1
2. DEFINITIONS ....................................................... 2
3. TERM .............................................................. 6
4. OCCUPANCY ......................................................... 6
5. MINIMUM NET NET RENTAL ............................................ 6
6. RENTAL ON NET NET RETURN BASIS .................................... 6
7. ADDITIONAL RENTAL ................................................. 7
8. PAYMENT OF TENANT'S PROPORTIONATE SHARE ........................... 7
9. CONTESTATION OF TAXES ............................................. 8
10. UTILITIES AND EQUIPMENT ........................................... 8
11. USE OF PREMISES ................................................... 9
12. PLATE GLASS AND DOOR SIGNS ........................................ 9
13. PROHIBITED ACTIVITIES ............................................. 9
14. CONDITION OF PREMISES ............................................. 9
15. INTENTIONALLY DELETED ............................................. 9
16. MAINTENANCE AND REPAIRS ........................................... 9
17. INSPECTION AND REPAIR ............................................. 10
18. ODOURS, DUST OR NOISE ............................................. 10
19. GARBAGE, DEBRIS, REFUSE AND EXTERMINATION ......................... 10
20. ACCESS ............................................................ 11
21. PARKING ........................................................... 11
22. SIGNS OF LANDLORD ................................................. 11
23. SIGNS OF TENANT ................................................... 12
24. LANDLORD'S WORK ................................................... 12
25. IMPROVEMENTS AND ALTERATIONS ...................................... 12
26. CSST .............................................................. 15
27. INSURANCE REQUIREMENTS ............................................ 15
28. CANCELLATION OF INSURANCE ......................................... 16
29. DAMAGE OR DESTRUCTION ............................................. 17
30. TRANSFER CONSENT REQUIRED ......................................... 19
31. INTENTIONALLY DELETED ............................................. 21
31A. NON-DISTURBANCE AGREEMENTS, USE OF RENT AND TENANT FINANCING ...... 21
32. ASSIGNMENT BY LANDLORD ............................................ 22
33. EXPROPRIATION ..................................................... 22
34. EXTENSIONS ........................................................ 22
35. DEFAULT ........................................................... 23
36. FAILURE OF TENANT TO PERFORM ...................................... 24
37. BANKRUPTCY AND INSOLVENCY ......................................... 25
38. INDEMNIFICATION ................................................... 25
39. DISTURBANCE ....................................................... 25
40. NONWAIVER ......................................................... 26
41. WAIVER OF COMPENSATION ............................................ 26
42. IMPUTATION OF PAYMENTS ............................................ 26
43. CUMULATIVE REMEDIES ............................................... 26
44. UNAVOIDABLE DELAY ................................................. 26
45. MANAGEMENT OF THE PROPERTY ........................................ 27
46. RULES AND REGULATIONS ............................................. 27
47. COMPLIANCE WITH LAWS AND REGULATIONS .............................. 27
48. WINDOW COVERINGS .................................................. 28
49. PERMITS AND LICENSES .............................................. 28
50. EXPIRATION OF LEASE ............................................... 28
51. MOVEABLE HYPOTHEC ................................................. 28
52. DOMICILE AND NOTICES .............................................. 29
[ILLEGIBLE]................................................................. 30
<PAGE>
DEED OF LEASE
BETWEEN: ZMD SPORTS INVESTMENTS INC., a body politic and corporate,
duly incorporated, having its head office and principal
place of business in Montreal, Quebec herein acting and
represented by Michael Zunenshine its duly authorized
representative
(hereinafter the "Landlord")
PARTY OF THE FIRST PART
AND: SPORT MASKA INC., a body politic and corporate, duly
incorporated, having its head office and principal place of
business in Montreal, Quebec, herein acting through and
represented by Russell J. David, its Vice President-Finance
hereunto duly authorized as he so declares,
(hereinafter the "Tenant")
PARTY OF THE SECOND PART
1. CERTAIN BASIC LEASE PROVISIONS
The following are certain basic Lease provisions of this Lease.
1..1 Addresses for purposes of notice:
Landlord: 6500 Trans Canada Highway, Suite 210
St. Laurent, Quebec
H4T 1X4
Tenant: 175 Dessureault
Cap-de-la-Madeleine, Quebec
1..2 Location of Premises: Leased Premises comprising of the Building and the
property found on the land described in Schedule "B" annexed hereto.
1..3 Property: 175 Dessureault
Cap-de-la-Madeleine, Quebec
1..4 Area: Approximately twelve thousand (12,000) square feet.
1..5 Term: April 11, 1997 to January 31, 2005
1..6 Commencement Date: April 11, 1997
1..7 Termination Date: January 31, 2005
1..8 Minimum Net Net Rental: An amount equal to thirty-five thousand four
hundred dollars ($35,400.00) per annum during the period from May 1, 1997
to January 31, 2000 and an amount of forty-four thousand one hundred
ninety-nine dollars and ninety-six cents ($44,199.96) per [ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 2
1..9 Schedules:
"B" - Cadastral Description
"D" - Measurement of premises
"E" - Rules and Regulations
"F" - Moveable Hypothec
2. DEFINITIONS
2..1 Additional Rental means: Any and all amounts due or becoming payable to the
Landlord pursuant to this Lease other than the Minimum Net Net Rental,
whether such amounts are specifically referred to as Additional Rental or
not, the whole payable pursuant to the Article entitled "Additional
Rental".
2..2 Architect means: The independent architect, engineer, or land surveyor
named by Landlord from time to time.
2..3 Area means: The area of the Leased Premises as calculated in the manner
stipulated in Schedule "D".
2..4 Building means: The building found on the parcel of land described in
Schedule"B".
2..5 Capital Tax means: For the purpose of this lease, "Capital Tax" means the
capital tax liability of the Landlord for each of the Landlord's fiscal
years during the Term or any renewal thereof as per the Landlord's tax
returns multiplied by the proportion that the net book value of the
Property is of the net book value of the total assets of the Landlord, as
determined in accordance with the Landlord's audited financial statements.
2..6 Commencement Date means: The first day of the Term.
2..7 Common Areas and Facilities means:
(a) Those areas, facilities, utilities, improvements, equipment and
installations in the Property which, from time to time, are not
designated or intended by the Landlord to be used exclusively for the
benefit of any individual tenant of the Property; and
(b) Those areas, facilities, utilities, improvements, equipment and
installations which serve or are for the benefit of the Property,
whether or not located within, adjacent to, or near the Property and
which are designated from time to time by the Landlord as part of the
Common Areas and Facilities of the Property. Common Areas and
Facilities include, without limitation, all areas, facilities,
utilities, improvements, equipment and installations which are
provided or designated (and which may be changed from time to time) by
the Landlord for the use or benefit of the tenants, their employees,
customers and other Persons for whom Landlord [ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 3
elements and bearing walls in the buildings and improvements
comprising the Property; parking areas and parking garages, all
entrances and exits thereto and all structural elements thereof,
employee parking areas, truck courts, access roads, driveways,
truckways, delivery passages, package pickup stations; loading docks
and related areas; pedestrian sidewalks, covered walkways and
sidewalks; roadways; landscaped and planted areas; courts and arcades;
public seating and service areas; corridors; bus kiosk, if any;
roadways and stops; equipment, furniture, furnishings and fixtures;
first aid stations; stairways, ramps, moving sidewalks, and other
transportation equipment and systems; electrical, telephone, meter,
valve, mechanical, mail, storage, service and janitor rooms and
galleries; communication, security and fire prevention and protection
systems; general signs; columns, pipes, electrical, plumbing,
drainage, mechanical and all other installations, equipment or
services located therein or related thereto, as well as the structures
housing the same.
2..8 CPI means: The Consumer Price Index, all items Montreal, established by
Statistics Canada or any index in substitution and/or replacement thereof,
published by Statistics Canada or any other federal or provincial
governmental agency. In the case of any required substitution, Landlord
shall be entitled to make all necessary conversions for comparison
purposes.
2..9 Date of Occupancy means: The date on which Landlord is ready to give
possession of the Leased Premises to the Tenant, subject to the terms
stipulated in the Article entitled "Occupancy".
2..10 INTENTIONALLY DELETED
2..11 Landlord means: The party first hereinabove described or its successors
and assigns.
2..12 Landlord's Work means: The work to be executed by Landlord as stipulated
in the Articles entitled "Landlord's Work" and "Landlord's Work at
Tenant's Expense".
2..13 Lease means: This agreement and all attached Schedules.
2..14 Leased Premises means: THE PREMISES DESCRIBED IN PARAGRAPH 1.2.
2..15 Lease Year means: In the case of the first Lease Year, a period commencing
on the Commencement Date and terminating on the last day of the twelfth
month thereafter and shall also refer to any succeeding twelve (12) month
period thereafter.
<PAGE>
Montreal Industrial Lease
Page 4
and expenses incurred in insuring, operating, administering and if
applicable, maintaining the Property and shall include, without
duplication or limitation, the cost of:
(i) all expenses incurred by Landlord in obtaining or attempting to
obtain a reduction of real estate taxes, the whole subject to the
Article of this Lease entitled "Contestation of Taxes";
(ii) the cost of insuring the Property (including such insurance as the
Landlord shall effect or shall be required to effect by any secured
creditor) against fire and any other perils which presently are or
hereafter may be, from time to time, embraced by or defined in a
standard fire insurance policy with extensive coverage,
comprehensive general liability insurance, boiler and pressure
vessel insurance, business interruption and/or loss of rentals
insurance and such other insurance as the Landlord, acting
reasonably, may deem necessary or advisable.
(iii) Capital Tax as defined herein.
(iv) Debt Service in accordance with the Article entitled "Rental on Net
Net Return Basis".
2..18 Person means, depending on context: Any person, firm, company,
corporation, partnership, association, or any group or combination
thereof.
2..19 Property means: The lands and buildings found on the lots described in
Schedule "B".
2..20 Proportionate Share means: 100% of the Operating Costs and Taxes of the
Property and of the Leased Premises.
2..21 Sales Tax means: Any goods and services tax, business transfer tax,
value-added tax, multi-stage sales tax, sales tax or any other tax imposed
with respect to Minimum Net Net Rental and Additional Rental payable under
this Lease, whatever name such tax may bear and whether such tax is in
force at the date hereof or whether it is adopted subsequently. The amount
of the Sales Tax so payable by Tenant shall be calculated by Landlord in
accordance with the applicable legislation and shall be paid to Landlord
at the same time as the amounts to which such Sales Tax apply or at such
other time as Landlord may from time to time determine. Landlord shall
have the same remedies for and rights of recovery of such amounts as it
has [ILLEGIBLE]
<PAGE>
MONTREAL INDUSTRIAL LEASE
Page 5
thereof for the purpose of securing any indebtedness of Landlord.
2..23 Taxes means: All taxes, whether special or general, including, without
limitation, property taxes, municipal taxes, school taxes, levies,
charges, rates including local improvement rates, duties and assessments
that may now or in the future be levied, rated, charged or assessed
against the Property, and/or all equipment and facilities thereon or
therein, and/or the land described in Schedule "B" attached hereto, and/or
any property on or in the Building owned or brought thereon or therein by
the Landlord and/or against Landlord or Tenant and/or its Transferees in
respect thereof, whether such taxes, rates, duties or assessments are
charged by a municipal, parliamentary, school or any other body of
competent jurisdiction. If the system of real estate taxation shall be
altered or varied and any new tax shall be levied or imposed on the
Property and/or the revenues therefrom and/or the Landlord in substitution
for and/or in addition to real estate taxes presently levied or imposed on
immovables in the City, Region, Province or Country in which the Property
is situated, then any such new tax or levy shall be included within the
present definition of Taxes. However, Tenant shall not be responsible for
any income tax or corporation taxes of the Landlord, save and except for
its Proportionate Share of Capital Tax and Tenant shall be solely
responsible for any Sales Tax.
2..24 Tenant means: The person executing this Lease as Tenant. Tenant also
includes all employees, mandatories and contractors of Tenant, as well as
any Person under Tenant's control or for whom Tenant is responsible.
2..25 Tenant Security means: Any trust deed, bond, debenture, pledge, commercial
pledge, warehouse receipt, conditional sales contract, privilege,
hypothec, charge or any other form of encumbrance or security granted by
or agreed to by Tenant or any other Person (other than Landlord) with
respect to its rights in this Lease, the Leased Premises, or any property,
whether movable or immovable, located in or forming part of the Leased
Premises, to secure, in whole or in part, any loan, indebtedness, credit
line or other obligation.
2..26 Tenant's Work means: The work to be executed by Tenant as stipulated in
the Article entitled "Tenant's Work".
2..27 Term means: The period specified in the Article entitled "Term" and
includes all renewals or extensions agreed to in writing by the Landlord.
2..28 Termination Date means: The last day of the Term as herein defined or any
renewal thereof, or the last day of the Term or renewal thereof which is
terminated prior to the Termination Date.
2..28 Transfer means: Any assignment or transfer of this Lease (other than as
Tenant Security), any sublease or permitted occupation of all or any part
of the Leased Premises to any Person (hereinafter the "Transferee") and
any amalgamation or change in the effective control of the voting shares
of Tenant if Tenant is a corporation, or any [ILLEGIBLE]
<PAGE>
MONTREAL INDUSTRIAL LEASE
Page 6
3. TERM
Landlord hereby leases the Leased Premises to Tenant for a Term commencing
on the 11 day of April 1997 and terminating on the last day of January 2005
unless sooner terminated under the provisions hereof.
Should the Tenant continue to occupy the Leased Premises after the expiry
of the Term, without a written agreement there shall be no tacit renewal and
the Tenant shall pay to the Landlord, per diem, as liquidated damages, the
highest per diem Minimum Net Net Rental payable during the Term and Additional
Rental for the period of occupancy plus fifty percent (50%) thereof, without
prejudice to any of Landlord's other rights and recourses including Landlord's
right to obtain vacant possession of the Leased Premises. Tenant acknowledges
that it is not to have the right to occupy the Leased Premises beyond the expiry
of the Term.
4. OCCUPANCY
Tenant shall be allowed to occupy the Leased Premises on April 11, 1997
(hereinafter referred to as the "Date of Occupancy").
5. MINIMUM NET NET RENTAL
Tenant covenants and agrees to pay to Landlord in lawful money of Canada
without deduction, abatement or set-off, a Minimum Net Net Rental as follows:
(a) during the period from May 1, 1997 to January 31, 2000, the amount of
thirty-five thousand four hundred dollars ($35,400.00) per annum, net,
net, payable in equal consecutive monthly instalments, each in advance, on
the first day of each month during the said period of two thousand nine
hundred and fifty dollars ($2,950.00) each;
(b) during the period from February 2000 to January 31, 2005, the amount
of forty-four thousand one hundred ninety-nine dollars and ninety-six
cents ($44,199.96) per annum, net, net, payable in equal consecutive
monthly instalments, each in advance, on the first day of each month
during the said period of three thousand six hundred eighty-three dollars
and thirty-three cents ($3,683.33) each.
Any Minimum Net Net Rental due for any period of time during the Term which is
less than a month shall be paid for on a pro-rated basis.
The Minimum Net Net Rental shall be considered as annual and accruing from
day to day and where it becomes necessary for any reason to calculate such
rental for an irregular period of less than one (1) Lease Year, an appropriate
apportionment and adjustment shall be made.
The Minimum Net Net Rental as herein provided shall be paid to Landlord
and/or its nominee at the Head Office of the Landlord, at 6500 Trans Canada
Highway, Suite 210, St. Laurent, Quebec, H4T 1X4, or at such other place in
Canada as shall be designated by Landlord in writing to Tenant.
[ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 7
on its own account, to the complete exoneration of Landlord, all Operating Costs
and Taxes and any Additional Rental with respect to the Leased Premises unless
otherwise stipulated in this Lease. The Landlord shall be responsible for any
income tax or corporation taxes due by Landlord. Tenant shall pay its
Proportionate Share of Capital Tax and Tenant shall be solely responsible for
any Sales Tax.
Without limiting the generality of the foregoing, Tenant shall, in each
and every Lease Year, pay and discharge or cause to be paid and discharged all
license fees, public utility charges, water rates, sewer rates and other like
fees, charges, rates and assessments that may be levied, charged, rated or
assessed against the Leased Premises and/or all equipment and facilities thereon
or therein and/or any property on the Leased Premises owned or brought thereon
by Tenant, and any and every of its Transferees or visitors and/or against
Landlord or Tenant in respect thereof, and every tax and license fee in respect
of any and every business carried on therein, or with respect to the occupancy
of the Leased Premises by Tenant (and any and every of its Transferees), whether
such license fees, charges, rates, assessments and taxes are charged by
municipal, parliamentary, school or any other body of competent jurisdiction,
and all charges for public utilities including electric current, gas, water,
steam or hot water used upon or in respect of the Leased Premises and for
fittings, machines, apparatus, meters or other things leased in respect thereof
and for all work or services performed by a corporation or commission in
connection with such public utilities. Tenant shall indemnify and hold the
Landlord harmless from and against payment of all losses, costs, charges and
expenses occasioned by and arising from any and every such duty, license fee,
charge, rate, assessment and tax.
It is further agreed and understood that any amount and any obligation
which is not expressly declared in this Lease to be that of the Landlord shall
be deemed to be the obligation of the Tenant. Without limiting the generality of
the foregoing, should at any time the taxation authorities directly attribute
any part of the Taxes to the Leased Premises or the improvements therein, Tenant
shall pay for same in addition to Tenant's Proportionate Share of the remainder
of the Taxes.
Tenant shall furnish to Landlord, immediately upon Landlord's request, a
receipt or other appropriate evidence satisfactory to Landlord as to the payment
of any amounts payable by Tenant pursuant to the present Article.
7. ADDITIONAL RENTAL
It is agreed and understood that Additional Rental other than Tenant's
Proportionate Share, shall be payable on the first day of the month immediately
following the date the said amount is claimed, or on such date as the Landlord
may designate. Where the calculation of any Additional Rental is not made until
after the Termination Date, the obligation of the Tenant to pay such Additional
Rental shall survive the termination of this Lease and such amounts shall be
payable by the Tenant upon demand by the Landlord.
8. PAYMENT OF TENANT'S PROPORTIONATE SHARE
Tenant shall pay to the Landlord throughout the Term or any renewals, its
Proportionate Share of the Operating Costs and Taxes, as well as an
administration fee equal to three percent (3%) of the said Operating Costs and
Taxes and of the Minimum Net Net Rental relating to Tenant's Costs.
[ILLEGIBLE]
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Montreal Industrial Lease
Page 8
question, Additional Rental equal to one twelfth (1/12) of the Tenant's
Proportionate Share of the estimated Operating Costs and Taxes. Should the first
Lease Year of the Term not commence on the first (1st) day of January or should
the last Lease Year of the Term not terminate on the thirty-first (31st) day of
December, then prior to the Commencement Date of the Term or prior to the
anniversary of the Commencement Date in the last Lease Year of the Term, as the
case may be, or as soon thereafter as is reasonably possible, Landlord shall
furnish to Tenant an estimate of the Operating Costs and Taxes for the part of
the Lease Year in question, and the Tenant shall pay to the Landlord, in
advance, on the first day of each month during the part of the Lease Year in
question, Additional Rental equal to the Tenant's Proportionate Share of the
estimated Operating Costs and Taxes divided by the number of months for that
part of the Lease Year in question.
After the end of each calendar year, or after the end of the Term in the
case of the final Lease Year, the Landlord shall furnish the Tenant with
financial statements setting forth the actual Operating Costs and Taxes for such
calendar year (or part of the Lease Year, as the case may be) and the Tenant
shall pay to the Landlord forthwith an amount equal to its Proportionate Share
of the excess of the actual Operating Costs and Taxes over the estimated
Operating Costs and Taxes. Should the estimated Operating Costs and Taxes exceed
the actual Operating Costs and Taxes, the Tenant shall receive credit for its
Proportionate Share of the excess. The appropriate adjustments shall be made
between the parties hereto within thirty (30) days after the date on which the
Landlord has furnished the Tenant with such statement.
9. CONTESTATION OF TAXES
Landlord shall have no obligation to contest, appeal, object to or
litigate the levying or imposition of Taxes and/or any valuation imposed with
respect thereto, and Landlord may settle, compromise, consent to, waive or
otherwise determine, in its sole discretion, all matters and things relating
thereto. Tenant may, upon the reasonable consent of Landlord, contest, appeal,
object to or litigate the levying or imposition of real estate taxes.
In the event that Landlord should contest any Taxes and thereafter receive
a refund of any portion thereof, and provided Tenant shall have paid its
Proportionate Share of said Taxes, the Landlord shall reimburse to the Tenant
the Tenant's Proportionate Share of such refund.
10. UTILITIES AND EQUIPMENT
The Tenant shall pay for its electricity (including without limitation any
electricity used for heating and/or air conditioning the Leased Premises), for
the cost of operating, repairing, maintaining, replacing and inspecting the
machinery and other facilities required for the heating, ventilating and air
conditioning of the Leased Premises and facilities and gas, water, sewer and
electric utility costs relating to same, telephone and all public utilities with
respect to the Leased Premises.
Throughout the Term of the Lease, the Tenant shall engage a qualified air
conditioning maintenance contractor to maintain and repair the heating,
ventilating and air conditioning system. The Tenant shall, within thirty (30)
days of signing these presents, provide the Landlord with a copy of a duly
executed [ILLEGIBLE]
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Montreal Industrial Lease
Page 9
11. USE OF PREMISES
The Leased Premises shall be used by the Tenant only for offices,
warehousing, manufacturing and distribution and for no other purpose.
12. PLATE GLASS AND DOOR SIGNS
Any breakage of glass or plate glass in or about the Leased Premises and
any damage to signs on Tenant's doors, except for breakage or damage caused by
the negligence or fault of the Landlord or its employees or mandatories shall be
charged to and payable by the Tenant.
13. PROHIBITED ACTIVITIES
Subject to the other terms and conditions of the Lease and in addition to
any other prohibitions stipulated in the Lease, the Tenant undertakes:
(i) not to bring upon the Leased Premises or any part thereof any
machinery, equipment, article or thing that by reason of its weight,
function or size might, as reasonably determined by Tenant, damage
the Leased Premises and not to overload the floors of the Leased
Premises at any time and if any damage is caused to the Leased
Premises by any machinery, equipment, article or thing or by
overloading or by any act, neglect or misuse on the part of Tenant,
Tenant will forthwith pay to Landlord the cost of restoring the
Leased Premises to their original condition;
(ii) not to obstruct the sidewalks, entries, passage corridors and
stairways, or use same for purposes other than for ingress and
egress to or from the Leased Premises, and the Tenant shall save the
Landlord harmless from damages to persons or property because of any
articles thrown by the Tenant out of the windows or doors or down
the passages of the Building.
14. CONDITION OF PREMISES
The Tenant represents that the Leased Premises have been examined by the
Tenant and that the Tenant accepts the same, in the condition or state in which
they are at the Date of Occupancy by Tenant, without representation or warranty,
expressed or implied, oral or written, in fact or in law, by the Landlord, and
without recourse to the Landlord as to the nature, condition or usability
thereof or as to the use or uses to which the Leased Premises or any part
thereof may be put.
15. INTENTIONALLY DELETED
[ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 10
good order and condition as they would be kept by a prudent owner and Tenant
shall promptly make all needed repairs and replacements to the Leased Premises
(save and except for those structural repairs and replacements that are
exceptional, nonrecurring and result from latent defects) which a careful owner
would make, including without limitation, the water, gas, drain and sewer
connections, pipes and mains, electrical wiring, water closets, sinks and
accessories thereof, and all equipment belonging to or connected with the Leased
Premises or used in its operation.
17. INSPECTION AND REPAIR
Landlord and its representatives shall have the right, during all
reasonable business hours during the Term, to enter the Leased Premises to
examine the condition thereof and to ascertain whether Tenant is performing its
obligations hereunder, and Tenant shall make any repairs which Tenant is obliged
to make pursuant to the terms of this Lease. If Tenant fails to make any such
repairs within thirty (30) days after written notice from Landlord requesting
Tenant to do so, provided that such repairs may reasonably be made within the
said period, Landlord may, without prejudice to any other rights or remedies it
may have, make such repairs and charge the reasonable cost thereof to Tenant.
Nothing in this Lease shall be construed to obligate or require Landlord to make
any repairs for which the Tenant is responsible hereunder but Landlord shall
have the right at any time to make emergency or urgent repairs without prior
notice to Tenant and charge the reasonable cost thereof to Tenant. Any costs
chargeable to Tenant hereinabove shall be payable forthwith on demand as
Additional Rental and if not paid within thirty (30) days shall bear interest
from the date of such demand at the prime lending rate as determined by the
Royal Bank of Canada on a daily basis plus four percent (4%) until paid to
Landlord in full.
18. ODOURS, DUST OR NOISE
The Tenant warrants that no noxious/obnoxious odours, dust or noise will
emanate from the Leased Premises as a result of the operations conducted by the
Tenant therein and Tenant further covenants that it will not cause or maintain
any nuisance in, at or on the Leased Premises and/or the Property and Tenant
further warrants that it will not use the Leased Premises for any purpose or in
any manner notwithstanding anything stated in this Lease which may cause noise,
disturbance or noxious/obnoxious odours to the discomfort of other tenants,
neighbours or to the public in general. Accordingly, the Tenant agrees that
should such noxious/obnoxious odour, dust or noise conditions exist, or should
Landlord receive any complaint of odours, dust, noise or any other nuisance,
Tenant will, at its own cost and expense, take such steps as may be necessary to
rectify the same, including any expertise Landlord may require, which expertise
must be acceptable to Landlord, provided further that if the Tenant shall fail
to commence to do so within ten (10) days and complete the same within a
reasonable time after notice is received by the Tenant from the Landlord, then
the Landlord may at its option and without prejudice to its other rights and
recourses proceed forthwith to take reasonable measures to correct the same.
[ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 11
areas indicated by the Landlord in proper receptacles provided and placed for
that purpose by the Tenant and Tenant shall furthermore comply with any of
Landlord's rules and regulations with respect to garbage containers. The Tenant
shall arrange and pay for the cost of those services required to remove
diligently and efficiently all of Tenant's garbage and refuse of any nature
whatsoever.
Tenant, at its sole cost shall keep, the Leased Premises shall be kept in
a clean and sanitary condition and in accordance with the laws of the
municipality in which the Property is located and in accordance with all other
regulations of any agency having jurisdiction over the Property and in
accordance with the instructions, policies and recommendations of Landlord's
insurers. If any such laws, instructions, policies and recommendations by
Landlord's insurers require any changes whatsoever to the Leased Premises, the
Tenant shall effect such changes at its own expense but subject to the approval
of the Landlord. The Tenant agrees to provide strict measures for rat prevention
and pest control and shall, if the Landlord deems the same to be necessary,
enter into a regular contract with a firm of exterminators acceptable to
Landlord. In the event that the Tenant fails to comply with the foregoing
provisions, then Landlord, without prejudice to all of its other rights and
recourses, shall have the right, without prior notice to the Tenant, to engage a
firm of exterminators and to enter the Leased Premises with representatives of
said firm in order to rectify the situation, the whole at Tenant's cost as
Additional Rental.
20. ACCESS
The Landlord shall have the right of access to the Leased Premises only
during reasonable business hours (except in the case of an emergency when
Landlord shall have access at all times), and the right to perform such work as
it chooses to do upon the Leased Premises, the Tenant renouncing any claim to
any indemnity or reduction in rental provided such work be carried out with
reasonable diligence and provided such work does not interfere with the Tenant's
business.
21. PARKING
The Tenant acknowledges that the parking of its vehicle(s) and those of
its customers in the parking facilities shall be at the risk and peril of Tenant
and/or its customers, and that the Landlord shall not be responsible for any
damages or loss whatsoever, whether caused by theft, fire or any other cause, to
the Tenant's vehicle(s) or to those of its customers or to any property found in
Tenant's vehicle(s) or those of its customers or for any injury to Tenant or
other Persons on or in the immediate vicinity of the parking facilities and
Tenant hereby releases Landlord of all liabilities of whatsoever nature with
respect to the above.
22. SIGNS OF LANDLORD
Landlord shall have the right, six (6) months prior to the Termination
Date, to place upon the Property a notice of reasonable dimensions and
reasonably placed in order not to interfere with the business [TEXT MISSING]
<PAGE>
Montreal Industrial Lease
Page 12
Landlord shall have the right to exhibit the Leased Premises during the
last six (6) months of the Lease to any prospective tenant or at any time during
the Lease to any hypothecary creditor or potential purchaser during all business
hours of the Tenant and Tenant hereby renounces to Article 1645 of the Civil
Code of Lower Canada.
23. SIGNS OF TENANT
The Tenant shall be entitled, at its expense, to install on the Leased
Premises such signs as are normally installed in connection with its business,
as well as to identify itself on the exterior front of the Building provided
such signs comply with municipal by-laws and with the Rules and Regulations as
established from time to time by Landlord in accordance with the Article
entitled "Rules and Regulations", and provided further that the Tenant obtains
Landlord's consent for both the sign and its location. Furthermore, the
authorization to install a sign will be issued in exchange for a deposit
equivalent to the estimated cost of the repair of the supporting Building
surface following the removal of the sign and Landlord shall not pay any
interest to Tenant on said deposit. The installed sign must be subject to
inspection by the Landlord who will proceed to the inspection upon receipt of
proof of municipal permit and, in the case of electrified signs, of proof of
approval by the Canadian Standards Association or other governing body.
Except as provided above and unless specifically provided for in this
Lease, Tenant shall not be entitled to install or put up any signs or posters of
whatsoever nature on the windows of the Leased Premises and/or the Building
and/or the Property.
All civic numbers are supplied and installed at Tenant's expense by the
Landlord according to its standards. The Tenant's identification at the rear of
the Building is also supplied and installed by the Landlord at Tenant's expense
according to Landlord's standard # 20.11.87 attached to the Rules and
Regulations in Schedule E.
In the event that Tenant installs any sign without satisfying the
requirements of this Article, Tenant shall remove such sign upon receipt of
Landlord's notice. If Tenant fails to remove such sign within twenty-four (24)
hours of receipt of Landlord's notice, then Landlord shall have the right,
without further notice or any form of legal process, to remove same at Tenant's
expense and to repair any damages caused by such removal. Landlord shall not be
responsible for damages to Tenant's property or sign resulting from such
removal. Tenant expressly waives its recourse in damages against the Landlord
and shall hold Landlord harmless of any claim by any third party with respect to
the said sign. Tenant shall immediately pay Landlord for all costs described
hereinabove, upon demand, as Additional Rental.
24. LANDLORD'S WORK
The Leased Premises shall be delivered in an "as is" basis and Tenant
accepts same in the condition in which they are at the signing of these
presents.
25. IMPROVEMENTS AND ALTERATIONS
[ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 13
installations to the Leased Premises (hereinafter the "Work"), unless it
has obtained Landlord's prior written consent, which will not be
unreasonably withheld or delayed. In the event Landlord consents to such
Work, then Tenant undertakes to conform to the conditions stipulated
hereunder.
(i) All Work shall be carried out with reasonable dispatch and in a good
workmanlike manner and in compliance with all applicable permits,
authorizations, building and zoning bylaws and with all regulations
and requirements of all competent authorities having jurisdiction
over the Leased Premises;
(ii) The Property shall at all times be free of all pledges, registered
privileges and any other encumbrances;
(iii) If the cost of any Work shall be in excess of five thousand dollars
($5,000.00) as reasonably estimated by Landlord, Landlord may
require Tenant to furnish security reasonably satisfactory to
Landlord guaranteeing the completion of the Work, the payment of the
cost thereof and that the Property is free and clear of all pledges,
registered privileges and any other encumbrances;
(iv) Tenant shall maintain workmen's compensation insurance covering all
persons employed in connection with the Work and shall produce
evidence of such insurance to Landlord and Tenant shall also
maintain such general liability insurance for the protection of
Landlord and Tenant upon the terms Landlord may reasonably require,
as well as contractor's protective liability insurance. Tenant shall
further comply with all of the stipulations of the Article entitled
"CSST" (Commission de la Sante et de la Securite au Travail du
Quebec);
(v) The Tenant shall promptly pay for all materials supplied and work
done in respect of the Leased Premises in order to ensure that no
privilege is registered against any portion of the Property. If a
privilege is registered or filed, the Tenant shall forthwith
discharge it at its expense, failing which the Landlord may, at its
option, discharge the same by paying the amount claimed to be due
into court or directly to any such privilege claimant and the amount
so paid and all expenses of the Landlord including any judicial and
extrajudicial costs and attorney's fees incurred by the Landlord
shall be paid by the Tenant to the Landlord within five (5) days
after demand.
It is agreed and understood that no Work by or on behalf of Tenant
shall be permitted which, in Landlord's reasonable judgement, may weaken
or endanger the structure or adversely affect the condition or operation
of the Leased Premises and/or the Property or diminish the value thereof
or restrict or reduce Landlord's coverage for insurance purposes.
(b) Notwithstanding the contents of (a) above, Landlord may, at
[ILLEGIBLE]
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MONTREAL INDUSTRIAL LEASE
Page 14
AMENDMENT OF PLANS, THE WHOLE SUBJECT TO AN UPPER MAXIMUM CAP EQUIVALENT
TO TEN PERCENT (10%) OF THE VALUE OF THE WORK AND SUBJECT TO A MINIMUM
CHARGE OF TWO THOUSAND DOLLARS ($2,000.00).
(c) Any Work by the Tenant made without the reasonable prior written
consent of the Landlord, or which is not made in accordance with the
design criteria and specifications approved by the Landlord, shall be
removed by the Tenant immediately upon demand and the Leased Premises
shall be restored to their previous condition by Tenant, the whole at the
Tenant's cost, failing which Landlord shall have the right to remove said
Work at Tenant's entire cost and Landlord shall not be responsible for
damages to Tenant's property resulting from such removal.
(d) Notwithstanding anything contained in this Article, Tenant shall
not have the right to do any structural, mechanical or electrical Work in
the Leased Premises.
In the event that Tenant requests any structural, mechanical or
electrical Work, Landlord, at its sole option and discretion, shall be
entitled to execute said Work. Said Work shall be governed by the
provisions of sub-paragraph (b) above.
In the event that Landlord does not choose to execute said Work and
consents to having Tenant execute same, then Tenant shall furnish to
Landlord plans and specifications showing in reasonably complete detail
the Work proposed to be carried out and the estimated cost thereof.
Landlord shall, ACTING REASONABLY, approve or reject such plans and
specifications within thirty (30) days after receipt of the same. If such
plans and specifications are approved, all Work shall be carried out in
compliance with the same. Furthermore, in the case where Tenant is
authorized to carry out said Work, Tenant shall, at its cost, provide
Landlord with an engineer's certificate upon completion of said Work. Any
reasonable costs incurred by Landlord of any nature whatsoever in order to
permit Landlord to approve or reject Tenant's plans and specifications
shall be reimbursed by Tenant immediately upon Landlord's request. In
addition to the above, Tenant shall comply with all the conditions
stipulated in (a) and (c) above.
It is agreed and understood that when completed, all Work shall be
comprised in and form part of the Leased Premises and be subject to all the
provisions of this Lease. Furthermore, any authorization given by Landlord to
Tenant to do any Work in accordance with this Article, shall not relieve Tenant
of its responsibility for the Work in question.
Subject to the terms and conditions of this Article, in the event that the
Tenant constructs a mezzanine in the Leased Premises, the Tenant will pay the
amount of any increase in Taxes on the whole of the Building of which the Leased
Premises form part, if such increase is caused by the construction or occupancy
of said mezzanine. Furthermore, the Tenant will pay for any increase in
Operating Costs resulting from the construction or occupancy of the said
mezzanine.
Tenant shall not make use or cause to be removed any part or all of the
ceiling system for any purposes, including that of storage.
<PAGE>
Montreal Industrial Lease
Page 15
26. CSST (COMMISSION DE LA SANTE ET DE LA SECURITE AU TRAVAIL DU QUEBEC)
Tenant shall ensure itself that its contractor and/or subcontractors
comply with all the requirements established by La Commission de la Sante et de
la Securite au Travail du Quebec (hereinafter the "CSST") and more specifically,
Tenant shall ensure itself that its contractor and/or subcontractors have
instituted a safety program for its employees. Tenant shall provide proof to
Landlord, upon demand, that all requirements of the CSST have been met. It is
expressly understood that Tenant shall indemnify and hold Landlord harmless from
any proceedings, claim or demand which could be instituted against Landlord for
the failure of Tenant's contractor and/or subcontractors to comply with CSST's
requirements and the Tenant shall pay upon demand any judicial or extrajudicial
costs so incurred by Landlord.
27. INSURANCE REQUIREMENTS
Tenant shall not do or commit any act upon the Leased Premises or bring
into or keep upon the Leased Premises any article which will affect the fire
risk or increase the rate of fire insurance or other insurance on the Property.
Tenant shall not commit any act upon the Leased Premises or make any use
thereof which may make void or voidable any insurance on the Leased Premises or
on the Building or Property and should any act so committed or any use so made
by Tenant, including any unauthorized vacancy thereof, result in an increased or
extra premium payable for insurance on the Leased Premises, Building or
Property, then Tenant shall pay such increase or extra premium.
Tenant shall comply with the rules and requirements of the Insurers'
Advisory Organization of Canada or any successor body, and/or a loss prevention
firm or consultant chosen by Landlord's insurers, and with the requirements of
all insurance companies having policies of any kind whatsoever in effect
covering the Property, including policies insuring against delictual liability.
In no event shall any inflammable material, except for kinds and
quantities permitted by the insurance policies covering the Property, or any
explosives or radioactive material whatsoever, be taken into the Leased Premises
or retained therein.
Tenant shall take out and keep in force the following insurance:
(a) comprehensive general liability insurance including blanket
contractual liability and broad form property damage coverage, with
respect to the business carried on in or from the Leased Premises
and the use and occupancy thereof, for bodily injury and death and
damage to property of others in an amount of at least two million
dollars ($2,000,000.00) for each occurrence or such greater amount
as Landlord may, from time to time, reasonably require;
(b) an "all risks" insurance with extended coverage including the perils
of fire, leakage from sprinklers and other fire protective
[ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 16
portions thereof) installed by Tenant in the Leased Premises, the
whole for the full replacement value thereof (without depreciation)
in each such instance;
(c) Tenant's legal liability insurance in an amount equal to the
replacement cost of the Leased Premises or such greater amount as
Landlord may, from time to time, reasonably require;
(d) an environmental liability policy of a coverage of at least one
million dollars ($1,000,000.00); and
(e) such additional insurance as Landlord or its insurers, acting
reasonably, may from time to time require.
All the above-mentioned policies of insurance shall (i) be in form
reasonably satisfactory to Landlord; (ii) be placed with insurers reasonably
acceptable to Landlord and (iii) provide that they will not be cancelled or
permitted to lapse unless the insurer notifies Landlord in writing at least
sixty (60) days prior to the date of cancellation or lapse. Each such policy
shall name Landlord and any other party required by Landlord, as an additional
insured as their interest may appear. Each liability policy will contain a
provision of cross-liability and severability of interest as between Landlord
and Tenant. All other policies referred to above shall contain a waiver of
subrogation rights which Tenant's insurers may have against Landlord, Landlord's
insurers and any Persons for whom Landlord is responsible. Notwithstanding
anything to the contrary contained in this Lease, Tenant hereby releases and
waives any and all claims against Landlord and any Persons for whom Landlord is
responsible with respect to occurrences which are or which are required to be
insured against by Tenant hereunder. Tenant shall provide Landlord with copies
of each insurance policy referred to above upon execution of said policy and at
the latest fifteen (15) days prior to the Tenant's occupation of the Leased
Premises. It is understood that no review or approval of any insurance
certificate or policy by Landlord shall derogate from or diminish Landlord's
rights under this Lease.
Tenant agrees that if Tenant fails to take out or to keep in force such
insurance Landlord may, at its sole option and discretion, do so and pay the
premium therefor and in such event Tenant shall repay to Landlord the amount
paid as a premium, which repayment shall be collectible as Additional Rental.
28. CANCELLATION OF INSURANCE
If any insurance policy mentioned in the preceding Article and/or any
insurance contracted by Landlord or any part of it is cancelled and/or
threatened to be cancelled by the insurer, or if the coverage under it is
reduced by the insurer (to an amount less than that which is required by section
27), because of the use or occupation of any part of the Leased Premises, and if
the Tenant fails to remedy the condition giving rise to the cancellation,
threatened cancellation or reduction of coverage within ten (10) days after
notice from the Landlord, the Landlord may, either:
(a) enter and take possession of the Leased Premises immediately by
leaving upon the Leased Premises a notice of its intention to do so,
upon which the Landlord will have the same rights and remedies that
are available to him under [ILLEGIBLE]
<PAGE>
MONTREAL INDUSTRIAL LEASE
Page 17
percent (15%) of such costs representing the Landlord's overhead,
which costs may be collected by the Landlord as Additional Rental,
and the Landlord will not be liable for any damage caused to any
property of the Tenant or others located on the Leased Premises as a
result of the entry.
29. DAMAGE OR DESTRUCTION
29..1 If the Leased Premises are at any time destroyed or damaged, the following
provisions will apply:
(i) if the Leased Premises are fit for tenancy in whole or in part, the
Lease shall continue in full force and effect without abatement or
diminution of any Minimum Net Net Rental or Operating Costs and
Taxes;
(ii) if the Leased Premises are rendered partly unfit for tenancy, this
Lease shall continue in full force and effect, except that the
Minimum Net Net Rental and Operating Costs and Taxes will abate to
the extent Landlord's Architect determines that the Leased Premises
cannot reasonably be used for their intended purposes;
(iii) if the Leased Premises are rendered wholly unfit for tenancy, this
Lease shall continue in full force and effect, except that Minimum
Net Net Rental and Operating Costs and Taxes will fully abate,
PROVIDED, HOWEVER, THAT IF SUCH CONDITION(S) ARE NOT RECTIFIED
WITHIN SEVENTY-FIVE (75) DAYS, TENANT MAY TERMINATE THIS LEASE UPON
TEN (10) DAYS NOTICE;
(iv) all abatements will occur from the date of the damage or destruction
until the date that the Leased Premises are delivered to Tenant;
(v) Landlord will commence and proceed diligently to reconstruct,
rebuild or repair any damage to the Leased Premises to meet
Landlord's base building criteria for that Property which Landlord
may modify to be consistent with the plans, specifications and
design criteria for the rebuilding of the Building and/or the Leased
Premises, chosen by Landlord acting reasonably;
(vi) to restore the Leased Premises, Landlord will be under no obligation
to perform work other than that stipulated in subparagraph (v)
above;
(vii) whether or not the damage to the Leased Premises may have been
caused by Tenant's negligence or fault, Tenant shall commence to
repair, rebuild or reconstruct, at its own cost, all leasehold
improvements, fixturing and equipment in the Leased Premises within
fifteen (15) days from Landlord's notice that Landlord has completed
its work and Tenant shall complete said work within thirty (30) days
from Landlord's notice;
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MONTREAL INDUSTRIAL LEASE
Page 18
29..2 Despite any provision to the contrary contained in this Lease and,
specifically but without limitation, anything contained in the present Article,
if the Property is totally or partially damaged or destroyed (whether the Leased
Premises are affected or not), and:
(i) in the Landlord's opinion, the damaged or destroyed portions cannot
reasonably be repaired, restored or rebuilt within one (1) year
following the occurrence without overtime or other special
arrangements; or
(ii) INTENTIONALLY DELETED
(iii) less than two (2) years remain during the Term;
then in any of the above cases, Landlord may, at its option (to be exercised by
written notice to Tenant within ninety (90) days following any such occurrence)
elect to terminate this Lease.
If Landlord elects to terminate this Lease, then the following will apply:
(iv) if the Leased Premises have been rendered wholly unfit for tenancy,
the termination will take effect from the date of the damage or
destruction and all Minimum Net Net Rental and Operating Costs and
Taxes be adjusted to that date;
(v) if the Leased Premises have been rendered only partly unfit for
tenancy and Tenant has occupied or has been reasonably capable of
occupying any part of the Leased Premises from the date of the
damage or destruction, the Lease will terminate ten (10) days from
Landlord's notice. All unabated Minimum Net Net Rental and Operating
Costs and Taxes will be adjusted to the date of termination. Minimum
Net Net Rental and Operating Costs and Taxes will abate from the
date of the damage and destruction until the date of termination to
the extent the Leased Premises cannot reasonably be used for their
intended purposes;
(vi) if the Leased Premises were not rendered wholly or partly unfit for
tenancy, the Lease will terminate ten (10) days from Landlord's
notice and all Minimum Net Net Rental and Operating Costs and Taxes
will be adjusted to that date;
If the Property is totally or partially damaged or destroyed and Landlord
does not elect to terminate this Lease, subject to paragraph (viii) below,
Landlord shall commence and proceed diligently to reconstruct, rebuild or repair
TO A SIMILAR STATE PRIOR TO THE OCCURRENCE OF DAMAGE OR DESTRUCTION, as
necessary, those portions of the Property which have been so damaged or
destroyed in accordance with Landlord's base building criteria for said
Property, exclusive of obligations of tenants in respect of the Property
pursuant to any lease. Furthermore, if the Leased Premises are being repaired,
rebuilt or reconstructed, the provisions of the present Article relating to the
Leased Premises shall apply.
(vii) Tenant acknowledges and agrees that if Landlord does any
reconstruction, rebuilding or repairing of the Property, Landlord
may do any one or more of the following: [ILLEGIBLE]
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MONTREAL INDUSTRIAL LEASE
Page 19
SUBSTANTIALLY SIMILAR STATE, change the configuration, design and/or
size of the Property or any of its component parts to suit
Landlord's needs at the time, including, without limitation, the
location and size of any court, entrance, parking facility or any
other Common Area or Facility;
(c) INTENTIONALLY DELETED
It is further understood and agreed that nothing herein shall oblige
Landlord, under any circumstances and in any manner whatsoever, to spend an
amount greater than the proceeds of insurance received by Landlord as a result
of the damage or destruction described in the present Article for any
reconstruction contemplated herein.
Tenant agrees that none of the foregoing shall constitute a change of form
or destination, nor shall the validity or enforceability of this Lease be
affected in any manner by any of the foregoing.
30. TRANSFER CONSENT REQUIRED
No Transfer of this Lease shall be effected by Tenant without the prior
written consent of the Landlord in each instance, which consent may not be
unreasonably withheld OR DELAYED.
Landlord's refusal of consent shall be deemed reasonable (without in any
way restricting Landlord's right to refuse its consent on other reasonable
grounds) under the following circumstances:
(a) INTENTIONALLY DELETED.
(b) where Tenant is in default under any provisions of this Lease;
(c) where the Landlord has reasonable grounds to believe that the
proposed Transferee does not possess the financial means necessary
to fulfil all its financial obligations herein and Tenant refuses
TO REMAIN JOINTLY AND SOLIDARILY LIABLE TOGETHER WITH TRANSFEREE
TOWARD LANDLORD;
(d) where the Transfer applies to part of the Leased Premises only;
(e) where the proposed Transferee's use of the Leased Premises violates
any laws or rights granted to other tenants or retained by Landlord,
or where such use may be disruptive or objectionable to other
tenants or to the Landlord, or where such use shall detract from the
dignity or character of the Property;
(f) where the Landlord has not obtained the consent of a secured
creditor or any Person who may have the right to approve the
Transfer;
If the Tenant intends to effect a Transfer of all or any part of the
[ILLEGIBLE]
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Montreal Industrial Lease
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writing by the Landlord. Without in any way restricting or limiting the
Landlord's right to refuse any text or format on other grounds, any text or
format proposed by the Tenant shall not contain any reference to the rental rate
of the Leased Premises. Notwithstanding anything contained herein, no sign shall
be posted, affixed, displayed or inscribed in any manner whatsoever on the
Leased Premises or the Property advertising that the Leased Premises are for
rent.
If the Tenant intends to effect a Transfer of all or any part of the
Leased Premises, of this Lease or of any interest hereunder, then, and as often
as such event shall occur, the Tenant shall give prior written notice to the
Landlord of such intent, specifying therein the proposed Transferee, providing
such information with respect thereto, including without limitation, information
concerning the principals thereof and as to any credit, financial or business
information relating to the proposed Transferee as the Landlord or the
hypothecary creditor requires, and shall pay Landlord in advance for the cost of
Landlord's inquiries as well as its reasonable processing fee for the
examination of Tenant's request, and the Landlord shall, within thirty (30) days
following Tenant's request, notify the Tenant in writing that:
(a) it consents or does not consent to the Transfer in accordance with
the provisions and qualifications of this Article;
(b) intentionally deleted
The mere occupation of all or part of the Leased Premises or Landlord's
tolerance thereof, the payment of any amount by the proposed Transferee to
Landlord, or the consent to any previous Transfer shall not constitute a waiver
of Tenant's obligation to obtain Landlord's consent to any Transfer, nor will
any of the foregoing be construed to constitute a consent by Landlord to the
proposed Transfer. Nevertheless, whether or not Landlord consents to any
Transfer, it may collect rent or other amounts from any proposed Transferee and
apply the said amount to the amounts payable under this Lease, without in any
manner prejudicing any of its rights.
Notwithstanding any such Transfer consented to by the Landlord, no
acceptance by the Landlord of any payments by a Transferee shall be deemed a
waiver of the requirements contained herein or a release of the Tenant from the
further performance by the Tenant of the obligations on the part of the Tenant
herein contained and the Tenant shall be jointly and severally liable with the
Transferee for all of the Tenant's obligations stipulated in the Lease and shall
not be released from performing any of the obligations under the Lease during
the Term.
In addition to any of the requirements stipulated herein, Landlord's
consent to the Transfer is conditional upon Tenant and Transferee signing with
Landlord a document prepared by Landlord evidencing such Transfer, and Tenant
undertakes to cause the Transferee to promptly sign said document in which
Transferee shall agree to be bound directly with Landlord to all of the
obligations contained in this Lease as if such Transferee had originally
executed this Lease as Tenant. The above-mentioned document shall further
provide that the Tenant transfers to the Transferee any rights it may have with
respect to the Deposit retained by Landlord pursuant to this Lease and Tenant
renounces all of its rights thereto. In addition thereto, the Transferee may be
required by Landlord to supplement any security deposit given in this Lease.
[ILLEGIBLE]
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Montreal Industrial Lease
Page 21
the Minimum Net Net Rental per square foot payable hereunder, then Tenant shall
pay to Landlord monthly, as Additional Rental, the amount of or an amount
equivalent to such excess.
Notwithstanding anything contained in this Article, the Tenant may sublet
the Leased Premises or assign the Lease to a parent, subsidiary or affiliate
company without seeking the consent of the Landlord provided, however, that such
sub-tenant or assignee shall remain bound jointly and severally with the Tenant
for all the terms and covenants of this Lease, and provided further that Tenant
shall notify Landlord in writing prior to such sublet or assignment.
Upon the execution of this Lease and upon each succeeding anniversary date
or at any sooner time requested by the Landlord, the Tenant shall deliver to the
Landlord a statement, certified as being true and correct and verified by the
corporate secretary, showing the names of all existing shareholders of record
and their respective ownership interests as at that date. The Tenant shall, at
the request of the Landlord, make available to the Landlord for inspection or
copying or both, all books and records of the Tenant which, alone or with other
data, show the applicability or inapplicability of this Article. If any
shareholder of the Tenant shall, after the request of the Landlord to do so,
fail or refuse to furnish forthwith to the Landlord any data verified by the
affidavit of such shareholder or other credible person, which data, alone or
with other data show the applicability or inapplicability of this paragraph, the
Landlord may terminate this Lease by giving the Tenant prior written notice of
thirty (30) days of such termination.
31. INTENTIONALLY DELETED
31A. NON-DISTURBANCE AGREEMENTS, USE OF RENT AND TENANT FINANCING
Landlord agrees (a) to use commercially reasonable efforts to obtain
non-disturbance agreements from holders of any mortgages which may now or
hereafter affect this Lease or the Property, which non-disturbance agreements
shall provide that, in the event of foreclosure, such mortgagee(s) shall abide
by such leases and permit the Tenant to continue possession and quiet enjoyment
of the Property, and (b) not to seek a modification of any mortgage or any other
document that would result in the elimination of a non-disturbance provision or
agreement then in existence. In the event that the Landlord is unable, prior to,
May 31, 1997 to obtain each such non-disturbance agreement on terms reasonably
satisfactory to the Tenant, the Landlord agrees to meet and confer with the
Tenant as to the status of negotiations with the mortgagees and to discuss and
pursue mutually agreeable procedures for obtaining such non-disturbance
agreements.
Landlord hereby covenants and agrees that unless and until Landlord has
obtained for the benefit of Tenant a non-disturbance agreement from each holder
of a mortgage which now or hereafter affect this Lease or the Property, the
Landlord shall apply all rent payments made by the Tenant under this Lease to
the extent necessary to satisfy all monthly monetary obligations under the
mortgages as they become due.
[ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 22
generality of the foregoing, Landlord agrees to enter, with respect to any
Subsequent Financing, into an agreement in form and substance similar to the
Intercreditor Agreement pursuant to which Landlord's hypothec, if any, shall be
subordinate to the lien of the Subsequent Financier.
32. ASSIGNMENT BY LANDLORD
Landlord declares that it may assign its rights under this Lease to a
lending institution or to any Person as collateral security for a loan to
Landlord and, in the event that such an assignment is given and executed by
Landlord and notification thereof is given to Tenant by or on behalf of
Landlord, it is expressly agreed that this Lease shall not be cancelled or
modified for any reason whatsoever without the consent in writing of such
lending institution or Person if such consent is required.
This Lease and all rights of the Tenant under the Lease shall be subject
to and subordinate to any Security. Tenant hereby covenants and agrees that it
will, whenever reasonably required by Landlord and at Landlord's expense,
consent to and become a party to any instrument subordinating the Lease to any
Security. However, no subordination by the Tenant shall have the effect of
permitting the holder of any Security to disturb the Tenant's enjoyment of the
Leased Premises as long as the Tenant shall comply with the covenants to be kept
and performed by it under this Lease.
The Tenant will, upon request of the Landlord or the Person holding the
Security or any Person having an interest in the project, execute and deliver
promptly those instruments referred to herein. However, if ten (10) days after
the date of request, the Tenant has not executed and delivered them, the Tenant
hereby irrevocably appoints the Landlord as the Tenant's attorney with full
power and authority to execute and deliver in the name of the Tenant said
instruments or the Landlord may, at its sole option and discretion, terminate
this Lease upon giving Tenant a three (3) business days notice of its intention
to do so, the whole without incurring any liability whatsoever and without
prejudice to all of its other rights and recourses.
It is agreed and understood that in the event of any sale of the Property
by Landlord, then Landlord shall automatically be relieved of any and all
obligations and liabilities under this Lease accruing from and after the date of
such sale, provided that the purchaser of the Property assumes all obligations
of Landlord under this Lease.
33. EXPROPRIATION
If the whole or any part of the Leased Premises and/or the Property shall
be condemned, expropriated or taken in any manner for any public or quasi-public
use or purpose, Landlord or Tenant may terminate this Lease by giving notice in
writing to the other that the Term hereof shall expire upon the day when
possession is required for such purpose and in the event of such expiration
Landlord and Tenant shall have no liability of any nature to each other
resulting from said expiration.
34. EXTENSIONS
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Montreal Industrial Lease
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In the event the Landlord exercises said option, the Tenant agrees to
permit the Landlord to install and/or extend and/or add all the required
improvements including supports, beams, wiring, piping, stairways, elevators,
ramps, vents, ducts, shafts and openings for view or light and the like and to
close all borrowed lights and the windows and openings which may be required to
be closed as a consequence of such construction, the whole without any claims
for disturbance and/or inconvenience and the like which may be caused to the
Tenant, provided always that the required work is carried out within a
reasonable delay and that this Article shall not absolve or release the Landlord
from liability in respect of any damage or loss caused to the Tenant as a
consequence of any negligence or fault of the Landlord, its employees or
representatives. If the Tenant loses the use of any part of the Leased Premises
during the making of such additions and/or extensions, the Tenant shall be
granted a proportionate reduction in Minimum Net Net Rental as compensation for
loss of use (during the period and for the area of loss of use only); all of the
foregoing without any other claims by the Tenant against the Landlord for damage
and loss of use.
In the event the Landlord exercises said option, the Tenant agrees to
permit the Landlord to install and/or extend and/or add all the required
improvements including supports, beams, wiring, piping, stairways, elevators,
ramps, vents, ducts, shafts and openings for view or light and the like and to
close all borrowed lights and the windows and openings which may be required to
be closed as a consequence of such construction, the whole without any claims
for disturbance and/or inconvenience and the like which may be caused to the
Tenant, provided always that the required work is carried out within a
reasonable delay and that this Article shall not absolve or release the Landlord
from liability in respect of any damage or loss caused to the Tenant as a
consequence of any negligence or fault of the Landlord, its employees or
representatives. If the Tenant loses the use of any part of the Leased Premises
during the making of such additions and/or extensions, the Tenant shall be
granted a proportionate reduction in Minimum Net Net Rental as compensation for
loss of use (during the period and for the area of loss of use only); all of the
foregoing without any other claims by the Tenant against the Landlord for damage
and loss of use.
Without limiting the generality of the foregoing, the Landlord hereby
reserves the right, at any time and from time to time, to make changes in,
additions to, subtractions from or rearrangements of the Building including,
without limitation, all improvements at any time thereon, all entrances and
exits thereto, provided the Leased Premises do not substantially change, and to
grant, modify and terminate any servitudes or other agreements pertaining to the
use and maintenance of all or parts of the Building and to make changes or
additions to the pipes, conduits, wires, ducts, utilities and other necessary
building services in the leased Premises which serve other premises. The
Landlord agrees that in performing such alterations, it shall do so in such
manner as to minimize any material interference with the Tenant's use and
enjoyment of the Leased Premises. The Landlord shall not however, be responsible
for any damages of whatsoever nature to Tenant except for physical damages to
the Leased Premises.
35. DEFAULT
The following shall be considered a default under the terms of this Lease:
[ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 24
(b) In the event Tenant does not take possession of the Leased Premises
or abandons or attempts to abandon the Leased Premises before the
Termination Date, with or without Landlord's knowledge; or in the
event the Leased Premises are used by any Person other than the
Person entitled to use them hereunder; or any procedure in execution
is issued pursuant to a judgment rendered against Tenant; or if an
agent, receiver or trustee acting under a trust deed or other
security, takes possession of the Tenant's assets and/or any
equipment, fixtures, furniture or movable effects in the Leased
Premises; or if the Tenant shall make a bulk sale of its goods; or
if the Tenant should attempt to move its belongings out of the
Leased Premises;
(c) In the event that Tenant shall be in default in observing any
covenant herein contained and/or performing any of its obligations
contained in this Lease (other than a default stipulated in
sub-paragraphs (a) and (b) above) and such default shall continue
for fifteen (15) days after written notice specifying such default
shall have been given by Landlord to Tenant, unless Tenant, acting
reasonably and diligently can not cure such default within the said
delay of fifteen (15) days, in which case Tenant shall, upon written
request to Landlord, be entitled to such reasonable extension of
time to enable such default to be remedied.
In the event of any default on the part of the Tenant under the terms of
this Lease, Landlord shall have the right, at its sole and absolute discretion,
to terminate this Lease and in addition, Landlord may, upon fifteen (15) days,
notice, forthwith enter upon and take possession of the Leased Premises and, any
statute or law to the contrary notwithstanding, the whole without prejudice to
and under reserve of all other rights and recourses of Landlord to claim any and
all losses and damages of any nature whatsoever sustained by the Landlord by
reason of or arising from any default of the Tenant including, without
limitation, the expenses of reletting the Leased Premises (including the costs
of any repairs, decorating, alterations or improvements necessitated thereby),
as well as reasonable attorney's fees which shall not exceed fifteen percent
(15%) of any amount granted by judgment. Where Landlord shall have instituted
proceedings to cancel, terminate or confirm its cancellation or termination of
this Lease, notwithstanding any law or custom to the contrary, Tenant, if in
default for four (4) consecutive months, shall not have any right to prevent
such cancellation or termination by remedying its default or defaults subsequent
to the institution of such legal proceedings.
36. FAILURE OF TENANT TO PERFORM
If Tenant fails to pay when due any taxes, rates, insurance premiums,
charges, debts or any other amounts which it owes or has herein covenanted to
pay, all such amounts shall be deemed to be and be treated as Additional Rental
and payable and recoverable as Additional Rental. Landlord may pay the same and
shall be entitled to charge the sums so paid to Tenant who shall pay them
forthwith on demand as Additional Rental.
All arrears of Minimum Net Net Rental and Additional Rental shall bear
interest at the prime lending rate as determined by the Royal Bank of Canada
[ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 25
37. BANKRUPTCY AND INSOLVENCY
In the event that Tenant shall be adjudicated bankrupt or make any general
assignment for the benefit of its creditors, or make a proposal to its
creditors, or take or attempt to take the benefit of any insolvency or
bankruptcy law, or if a receiver or trustee be appointed for the property of the
Tenant or any part thereof, the present Lease shall automatically terminate on
the occurrence of any of the aforesaid events without further notice or delay,
and Landlord shall be entitled to recover all arrears of Minimum Net Net Rental
and Additional Rental as well as six (6) months of future Minimum Net Net Rental
and Additional Rental or such other accelerated amount that the law may at any
time provide.
38. INDEMNIFICATION
Except if caused directly by the negligence or fault of the Landlord, its
mandatories, employees, or representatives, or by any breach or nonperformance
by the Landlord of any covenant undertaken by virtue hereof, the Landlord shall
not be liable nor responsible in any way for any injury of any nature whatsoever
that may be suffered or sustained by the Tenant or any other Person who may be
upon the Leased Premises or for any loss of or damage to any property belonging
to the Tenant or to any other Person while such property is on the Leased
Premises and in particular (but without limiting the generality of the
foregoing), the Landlord shall not be liable for any damage or damages of any
nature whatsoever to any such property caused by the failure, by reason of a
breakdown or other cause, to supply adequate drainage, or by reason of the
interruption of any public utility or service or in the event of steam, water,
rain or snow which may leak into, issue or flow from any part of the Property or
from the water, steam, sprinkler, or drainage pipes or plumbing works of the
same, or from any other place or quarter or for any damage caused by anything
done or omitted by any tenant. The Landlord, however, shall use all reasonable
diligence to remedy such condition, failure or interruption of service when not
attributable to the Tenant, after notice of same, when it is within its power
and obligation to do so.
The Tenant will indemnify and hold Landlord harmless from and against all
fines, liability, damage suits, claims, demands and actions of any kind or
nature for which the Landlord shall or may become liable for or suffer by reason
of:
(a) any breach or nonperformance by the Tenant of any provision hereof;
and/or
(b) any injury (including death resulting at any time therefrom) or
damage to property occasioned to or suffered by any Person including
the parties hereto by reason of any such breach or nonperformance or
of any wrongful act, neglect, or fault on the part of the Tenant;
and/or
(c) any damage to the Property caused by the Tenant's use and occupancy
of the Leased Premises; and/or
(d) any injury to any Person including death, sickness and diseases
resulting at any time therefrom, whether caused by a virus, bacteria
or any substance brought upon the Leased [ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 26
Such indemnification by the Tenant for any of the above items shall
survive the termination of this Lease, anything in this Lease to the contrary
notwithstanding.
39. DISTURBANCE
Notwithstanding anything to the contrary stipulated in the present Lease,
the Tenant will not hold the Landlord in any way responsible for any damages or
annoyance which the Tenant may sustain through the fault of any tenant who
occupies any premises adjacent to, near, above or under the Leased Premises, and
renounces any claims it may have against the Landlord pursuant to Article 1636
of the Civil Code of Lower Canada.
40. NONWAIVER
The failure of Landlord or Tenant to insist upon a strict performance of
any of the terms hereof shall not be deemed a waiver of any rights or remedies
that Landlord or Tenant, as appropriate, may have and shall not be deemed a
waiver of any subsequent default by Tenant or Landlord (as appropriate) of any
such terms.
41. WAIVER OF COMPENSATION
The Tenant hereby waives and renounces any and all existing and future
claims, offsets and compensation against any Minimum Net Net Rental or
Additional Rental due hereunder and agrees to pay such Minimum Net Net Rental
and Additional Rental on their respective due dates, regardless of any claim,
offset or compensation which may be asserted by the Tenant or on its behalf,
except to the extent permitted hereunder.
42. IMPUTATION OF PAYMENTS
No payment by the Tenant or receipt by the Landlord of a lesser amount
than the monthly payment of Minimum Net Net Rental and Additional Rental shall
be deemed to be payments on account of the earliest stipulated Minimum Net Net
Rental and Additional Rental, nor is any endorsement or statement on any cheque
or any letter accompanying any cheque or payment as rent deemed as
acknowledgement of full payment or an agreement or acquiescence of or to the
terms thereof, and the Landlord may accept and cash such cheque or payment
without prejudice to the Landlord's right to recover the balance of such rental
or pursue any other remedy provided in this Lease. The Landlord may, at its
option, apply sums received from the Tenant against any amounts due and payable
by the Tenant under this Lease in such manner as the Landlord sees fit.
43. CUMULATIVE REMEDIES
No reference to or exercise of any specific right or remedy by the
Landlord shall preclude the Landlord from or prejudice the Landlord in
exercising any other right under this Lease or pursuing any other remedy or
maintaining any action to which it may otherwise be entitled at law.
<PAGE>
Montreal Industrial Lease
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44. UNAVOIDABLE DELAY
Save and except for any monetary obligation under this Lease, Landlord and
Tenant shall not be liable for failure or delays in performing any of their
obligations hereunder should such failure or delay be caused by any event
(excluding the financial conditions of either party) which is beyond the
reasonable control of either party including, without limitation, cas fortuit,
force majeure, strikes, lockouts, labour troubles, inability to procure
materials, restrictive governmental rules, regulations, orders or bankruptcy of
contractors.
Without limiting the generality of the foregoing and in particular, it is
understood and agreed that whenever and to the extent that the Landlord shall,
after reasonable attempts to mitigate, be unable to fulfil, or shall be delayed
or restricted in the fulfillment of any obligation hereunder in respect of the
supply or provision of any service or utility or the doing of any work or the
making of any repairs by reason of being unable to obtain the material, goods,
equipment, service, utility or labour required to enable it to fulfil such
obligation, or by reason of any statute, law or order in council or any
regulation or order passed or made pursuant thereto or by reason of the order or
directive of any competent authority having jurisdiction over the Property, or
inability to obtain any required authorization therefrom, or by reason of any
other cause beyond its reasonable control, the Landlord shall be entitled to
extend the time for fulfillment of such obligation by a time equal to the
duration of such delay or restriction, and the Tenant shall not be entitled to
compensation for any damages of whatsoever nature arising therefrom.
45. MANAGEMENT OF THE PROPERTY
The Tenant hereby acknowledges to the Landlord that the Property may be
managed by any party other than the Landlord, as the Landlord from time to time
may in writing designate and, to all intents and purposes, any manager so
designated shall be the party at the Property authorized to deal with the
Tenant. All payments to Landlord in virtue of this Lease shall be made by cheque
payable to the Landlord in full unless otherwise specified in writing by
Landlord to Tenant.
46. RULES AND REGULATIONS
There is a schedule of rules and regulations annexed hereto as Schedule
"E" and the Tenant binds and obliges itself to abide by the said rules and
regulations.
The Landlord shall have the right to amend and/or rescind the rules and
regulations in Schedule "E" from time to time and to make any other reasonable
rules and regulations not contrary to the spirit and intent of this Lease as, in
its discretion, may from time to time be needful for the safety, care,
cleanliness and proper administration of the Property including the Leased
Premises, and for the preservation of good order therein, and the same shall be
observed and performed by the Tenant and by its customers, and all such rules
and regulations now or hereafter to be established by the Landlord as herein
provided shall form part of this Lease as if recited at length herein and any
such new rules and regulations shall be binding upon Tenant upon written
notification from Landlord.
[ILLEGIBLE]
<PAGE>
MONTREAL INDUSTRIAL LEASE
PAGE 28
rules and regulations.
47. COMPLIANCE WITH LAWS AND REGULATIONS
The Tenant shall, at its own expense, promptly comply with the
requirements of every applicable statute, law and ordinance and with every
applicable lawful regulation or order with respect to the removal of any
encroachment placed by the Tenant, or to the condition, equipment, furniture,
fixtures, maintenance, or use, or occupation of the Leased Premises, including
the making of any alteration, addition in or to any structure upon, connected
with or appurtenant to the Leased Premises, whether or not such alteration be
structural or be required on account of any particular use to which the Leased
Premises or part thereof may be put and whether or not such requirement,
regulation or order be of a kind now existing or within the contemplation of the
parties hereto; and shall comply with any applicable regulation, recommendation
or order of the Insurers' Advisory Organization of Canada, or any body having
similar functions or of any liability or fire insurance company by which the
Landlord and/or the Tenant may be insured.
48. WINDOW COVERINGS
In order to preserve a more uniform and attractive appearance of the
Property for the benefit of all the tenants, the Tenant herein binds and obliges
itself to place vertical blinds for air porosity, over all windows which are
located in the front of the Building or on any side of the Building which faces
a public street and where such windows are for other than office areas, such
vertical blinds shall remain drawn at all times.
49. PERMITS AND LICENSES
The Tenant shall obtain all necessary permits and licenses required for
the occupancy and carrying on of its business, the Landlord making no
representations or warranties whatsoever as to whether said permits and licenses
may be obtained by Tenant. Should the Tenant fail to obtain any required permit
and/or license, it shall nevertheless remain bound to perform all of its
obligations pursuant to the present Lease including, without limitation, payment
of Minimum Net Net Rental and Additional Rental.
50. EXPIRATION OF LEASE
Tenant shall, at the expiration or sooner termination of the Term,
peaceably surrender and yield up unto Landlord, who shall become absolute owner
thereof, the Leased Premises together with all buildings, alterations,
additions, erections, leasehold improvements, repairs and installations,
including the air-conditioning and heating system, done or made by the Tenant,
both movable and immovable, except the equipment and furniture belonging to
Tenant which must be removed at Tenant's expense on or before the expiration of
the Lease. Tenant shall repair any and all damages caused to the Leased Premises
and/or to the Building as a result of such removal, using materials equal in
quality to that of the damaged materials, failing which Landlord may do
[ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 29
property and repair any damage to the Leased Premises and/or the Building caused
by the original installation and/or removal, using materials equal in quality to
that of the damaged materials, failing which Landlord may do so at Tenant's
expense.
If Tenant leaves any equipment or furniture in the Leased Premises
following the expiration of the Term, it is understood that Landlord may then,
at its option, either accept full and absolute ownership of same and may use it
or dispose of it as Landlord determines, without compensation payable to Tenant
and without incurring any liability to Tenant, or Landlord may dispose of same
as it sees fit, at Tenant's expense, without incurring any liability to Tenant.
If the Tenant has failed to fulfil its obligations under this lease with
respect to the maintenance, repair and alteration of the Leased Premises and
removal of improvements and fixtures from the Leased Premises during or at the
end of the Term, such obligations and the Landlord's rights in respect thereto
shall remain in full force and effect notwithstanding the expiration or sooner
termination of the Term.
51. MOVEABLE HYPOTHEC
In order to guarantee the full and proper performance of all of the
obligations to be performed by Tenant under this Lease, Tenant hereby undertakes
to execute in favour of Landlord simultaneously with these presents, a deed of
moveable hypothec, which said hypothec, subject to the treatment set forth in
the Landlord Agreements attached herewith or any other agreement entered into in
connection with a Subsequent Financing, shall rank ahead of all other hypothecs
or rights of any nature of any and all other creditors, on the universality of
the moveable property of Tenant, present or future, corporeal or non-corporeal,
situated in or near the Leased Premises in the Building, or with respect to the
operation of business of Tenant in the Leased Premises, which said hypothec
shall be a continuing guarantee by Tenant in favour of Landlord in order to
secure Minimum Net Net Rental and Additional Rental throughout the term of this
Lease and any renewal period thereof. The said deed of moveable hypothec to be
executed by Tenant shall be that document hereto attached as Schedule "F".
52. DOMICILE AND NOTICES
The Tenant hereby elects domicile at the Leased Premises for the purpose
of service of any writs of summons or other legal document in any action or
proceeding whatsoever by the Landlord against the Tenant.
Any notice or demand given by Landlord to Tenant or by Tenant to Landlord
pursuant to the present Lease shall be deemed to be duly given if served upon
the Tenant or Landlord personally, or if delivered or mailed by prepaid
certified or registered mail to:
(a) LANDLORD: 6500 Trans Canada Highway, Suite 210
St. Laurent, Quebec H4T 1X4
(b) TENANT: At the Leased Premises
<PAGE>
Montreal Industrial Lease
Page 30
53. SUCCESSORS AND ASSIGNS
This Lease shall enure to the benefit of Landlord's or Tenant's respective
heirs, executors, administrators, successors and assigns.
54. DESCRIPTIVE HEADINGS
Any descriptive headings appearing in this Lease have been inserted as a
matter of convenience and reference only and in no way define, limit or enlarge
the scope or meaning of this Lease or any provisions hereof.
55. GOVERNING LAW/SEVERABILITY
The present Lease shall be construed and governed by the laws of the
Province of Quebec. Should any provision of this Lease be or become illegal or
not enforceable, it shall be considered separate and severable from the present
Lease and the remaining provisions shall continue in full force and effect and
be binding upon the parties hereto as though said provisions had never been
included. In this Lease, singular words shall be interpreted as including the
plural and vice versa and the words of masculine gender shall be interpreted as
including the feminine gender. Where more than one landlord or tenant is
referred to or when Tenant shall be of feminine gender or a corporation, all the
proper grammatical changes shall be inferred.
56. COST OF PREPARATION, REGISTRATION AND RADIATION
The parties hereto undertake to execute a duplicate short form lease for
the purposes of registration only, in conformity with the short form lease set
out at Schedule "G". The parties agree that, except for the sole purpose of
registration, the parties shall be exclusively governed by the terms of this
Lease.
In addition, Tenant shall, at its own cost, at the expiration of the Term,
radiate the registration of the Lease from the Index of Immovables.
In the event the said registration is not radiated within thirty (30) days
from the expiration of the Term, Tenant hereby irrevocably appoints the Landlord
as the Tenant's attorney with full power and authority to execute in the name of
the Tenant any documents and instruments required to effect the said radiation
of the registration of the Lease from the Index of Immovables and Tenant further
authorizes Landlord to deliver the said instruments and documents to the
appropriate Registry Office for the purpose of effecting all the appropriate
registrations and radiations. The cost of the preparation of said documents and
instruments as well as the cost of registering said documents and instruments
shall be borne by Tenant.
57. BROKERAGE COMMISSION
The Landlord and Tenant hereby guarantee that no brokerage commission or
charges are owing to any brokerage company with respect to the present
transaction.
<PAGE>
Montreal Industrial Lease
Page 31
58. SCHEDULES
Schedules "B", "D", "E", "F" and "G" hereto form an integral part of this
Lease.
59. CERTIFICATE OF INCORPORATION
Where Tenant is a corporation, Tenant undertakes to remit to Landlord upon
the signing of the Lease, a copy of its Certificate of Incorporation.
60. ENTIRE AGREEMENT
Except as otherwise provided herein, no subsequent alteration, amendment,
change or addition to this Lease shall be binding upon the Landlord or the
Tenant unless agreed to in writing by the parties. The parties agree that upon
signature of this Lease, this Lease will supersede all other leases executed
between the parties hereto in respect to these Leased Premises and shall be the
only valid and binding lease between the parties.
61. LANGUAGE
Each of the parties does hereby confirm that it has expressly required
that this contract. as well as any document related hereto, be drawn up in the
English language. Chacune des parties confirme par les presentes avoir
expressement demande que le present contrat, ainsi que tous les documents y
afferent, soient rediges en anglais.
<PAGE>
Montreal Industrial Lease
Page 32
IN WITNESS WHEREOF THE LANDLORD HAS SIGNED AT ST. LAURENT, QUEBEC, THIS 7
DAY OF MARCH, 1997.
ZMD SPORTS INVESTMENTS INC.
Per: /s/ [Illegible]
---------------------------------
/s/ [Illegible]
- -------------------------------
Witness
/s/ [Illegible]
- -------------------------------
Witness
IN WITNESS WHEREOF THE TENANT HAS SIGNED AT THIS 8TH DAY OF
APRIL, 1997.
SPORT MASKA, INC.
Per: /s/ [Illegible]
---------------------------------
/s/ [Illegible]
- -------------------------------
Witness
/s/ [Illegible]
- -------------------------------
Witness
<PAGE>
SCHEDULE "B"
EXTRACT OF A CERTIFICATE OF LOCATION DATED MAY 21, 1985:
Toute cette propriete est designee comme etant les lots:
-Le lot numero QUATRE, de la subdivision C, de la subdivision du lot
originaire QUATRE CENT VINGT-DEUX (422-C-4)
-Le lot numero DEUX, de la subdivision du lot TRENTE-SIX, de la
subdivision du lot originaire QUATRE CENT VINGT-TROIS (423-36-2).
-Le lot numero SOIXANTE-SEIZE, de la subdivision du lot originaire QUATRE
CENT VINGT-TROIS (423-76).
Ces lots sont tous du Cadastre de la Paroisse de Cap-de-la-Madeleine, en
la division d'enregistrement de Champlain
<PAGE>
S C H E D U L E "D"
MEASUREMENT OF LEASED PREMISES
The Leased Premises are measured (i) from the furthest exterior face of
the exterior walls, and the centre line of all interior walls separating the
Leased Premises from adjoining leasable premises as designated by Landlord,
and/or Common Areas, hereinafter defined, with no deduction for space occupied
by projections, structures, or columns, structural or nonstructural where
applicable; and (ii) by adding to the square footage obtained in (i) above, a
number of square feet corresponding to a proportion of the Common Areas
attributed to Tenant, which proportion is calculated as follows:
The proportion comprised by the total Common Area expressed as a
percentage of the total net Building area (total gross building area minus total
Common Area) multiplied by the area of the Leased Premises as calculated in (i)
above. For the purpose of these presents "Common Area" means:
(a) those areas, facilities, utilities, and installations in the Property
which, from time to time, are not designated or intended by the Landlord to be
leased to tenants of the Property, and
(b) those areas, facilities, and installations which serve or are for the
benefit of the Property, whether or not located within, adjacent to, or near the
Property and which are designated from time to time by the Landlord as part of
the Common Areas of the Property. Common Areas include, without limitation, all
areas, facilities, utilities, and installations which are provided or designated
(and which may be changed from time to time) by the Landlord for the use or
benefit of the tenants, their employees, customers and other persons permitted
by the Landlord in common with others entitled to the use or benefit hereof in
the manner for the purposes permitted by the lease.
<PAGE>
S C H E D U L E "E"
RULES AND REGULATIONS
1. The Landlord reserves entire control of the sidewalks, entries, corridors
and passages; washrooms and lavoratories; fan rooms, janitor's closets,
electrical closets and other closets; stairs, flues, stacks, pipe shafts,
and ducts; the whole not within the Leased Premises, and of all parts of
the Building employed for the common benefit of the Tenants, and shall
have the right to place such signs and appliances therein, as they may
deem advisable, provided that ingress to and egress from the Leased
Premises is not impaired thereby.
2. The Landlord shall have the exclusive right to prescribe the weight and
proper positions of metal safes or machinery as well as the right to
prescribe the weight and position of any floor load. All damage done to
the Building or the Leased Premises by moving or using heavy equipment of
any description or furniture contrary to the Landlords' prescriptions
shall be repaired at the expense of the Tenant. No such equipment or
furniture shall be moved unless a time therefor has been arranged with and
consented to by the Landlord.
3. The Tenant shall not permit the introduction into the Leased Premises or
the Building of any machine or mechanical device of any nature whatsoever
which may be liable to cause objectionable noise or vibration or be
injurious to the Leased Premises or Building.
4. Canvassing, soliciting and peddling in the Building are prohibited.
5. Furniture, bulky articles and construction materials which the Tenant may
require from time to time for the construction of internal partitions or
for the purpose of effecting alterations or improvements, the whole
provided Tenant has obtained Landlord's approval pursuant to the Article
of this Lease entitled "Improvements and Alterations", shall be carried to
the Leased Premises at such hour and in such manner as the Landlord may
reasonably designate. Any damage which may be caused to the Building or
the Leased Premises by the carrying of such furniture, bulky articles or
construction materials to or from the Leased Premises shall be at the
responsibility and cost of the Tenant.
6. Any hand trucks, carryalls, or similar appliances used for the delivery or
receipt of merchandise or equipment shall be equipped with rubber tires,
side guards and such other safeguards as the Landlord shall require.
7. If any apparatus used or installed by the Tenant requires a permit as a
condition for its installation, the Tenant must file a copy of such permit
with the Landlord.
8. The Tenant shall give the Landlord prompt written notice of any accident
to or defect in water or gas pipes, heating or sprinkler system in the
demised Leased Premises, of which he is aware.
9. The Tenant shall not place any additional locks upon any doors of the
Leased Premises or the Building without the written consent of the
Landlord.
10. No animals or birds shall be brought or kept in or about the Leased
Premises or the Building.
11. No auction sales shall be allowed in the Leased Premises or the Building.
12. The water closets and other water apparatus of the Building or Leased
Premises shall not be used for any purpose but those for which they are
[ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Schedule "E"
Page 2
have all windows closed, to avoid possible damage from fire, storms, rain
or freezing, and will not shut off the radiators and/or baseboard heaters
when the premises are locked.
15. The Tenant shall follow such instructions, if any, as Tenant may from time
to time receive from Landlord relating to the maintenance and care of the
heating, ventilating and air-conditioning equipment installed within the
Leased Premises.
16. Front Signage
The Tenant may identify his business with a front sign, the whole provided
Tenant complies with the conditions stipulated hereunder:
(a) Letter: individual to the Tenant's style.
(b) Height: 24".
(c) Permitted materials - plastic, composite or solid
- rustproof metal, composite or solid.
(d) Lighting (optional) - integrated
- halo-lit (back-lighting)
(e) Lighting control - dedicated circuit
- photo-cell switch, timer switch or
manual switch
Before the fabrication of any signage, the Tenant must obtain the written
approval of the Landlord. A request for approval must be accompanied by the
following information:
(a) Elevation plan indicating the proposed sign -- (Scale - 3/8" = 1').
(b) Sign dimensions: height, length, thickness, and distance from wall.
(c) Construction and installation details.
(d) Material and finish specifications (use of styrofoam is prohibited).
(e) Colour specifications.
(f) Lighting specifications: number of amperes, volts and circuits.
(g) Name of designer and of fabrication and installation contractors.
(h) Request for Municipal permit.
(i) Any other additional information that the Landlord may require to
study a particular sign request.
Furthermore, Tenant shall only be entitled to purchase any signage
approved from the following suppliers which may be changed by Landlord from time
to time:
Enseignes Trans Canada Signs Inc.
9310 Parkway
Ville d'Anjou, Quebec
H1J 1W7
Claude Neon Limitee
1855 Hymus Boulevard
Dorval, Quebec
H9P 1J8
<PAGE>
Montreal Industrial Lease
Schedule "E"
Page 3
17. Facade and secondary windows
(a) All front windows must have off-white vertical blinds.
(b) Adjustment of vertical blinds of front windows of storage space must
be half closed.
(c) All windows, including secondary windows, must be washed by Tenant
at its cost, at least twice a year on both the interior and exterior
faces.
18. Miscellaneous signage
Miscellaneous traffic and "no parking" signs are supplied and installed by
the Landlord.
19. Garbage container
(a) The Tenant must provide the garbage container which best satisfies
its business activity so that the size and water tightness retain
all garbage without affecting the environment.
(b) The Tenant must assure that the container is neatly located on the
designated area and that the lids are kept closed.
20. Exterior storage
(a) It is strictly forbidden to store anything outside the Building,
even on a temporary basis.
(b) Used boxes, pallets must be kept inside the Building until collected
for disposal.
21. Special installations
Tenant must obtain Landlord's approval prior to the installation of any
equipment, machinery, fixtures and furniture which have to be attached to,
mounted to or pierced through any element of the Leased Premises and/or the
Building. Furthermore, Tenant must obtain Landlord's approval prior to the
installation of any equipment, tank and any other item that Tenant wants to
install outside the Building (hereinafter the "Special Installation").
Any request for the approval of a Special Installation must be submitted
in writing along with the technical drawings or pertinent data which can easily
identify the specific nature of the installation. Furthermore, Special
Installation must conform to terms and conditions stipulated in the lease.
Following completion of a Special Installation which conforms to preceding
authorization, the Landlord will proceed, at Tenant's cost, with the inspection
of the installation for final acceptance.
<PAGE>
SCHEDULE "F"
MEMORANDUM OF AGREEMENT OF HYPOTHEC ON UNIVERSALITY OF MOVEABLE PROPERTY.
BY AND BETWEEN: ZMD SPORTS INVESTMENTS INC., a body politic and corporate,
duly incorporated, having its head office and principal
place of business in Montreal, Quebec herein acting and
represented by Michael Zunenshine its duly authorized
representative
(hereinafter the "Landlord")
AND: SPORT MASKA INC., a body politic and corporate, duly
incorporated, having its head office and principal place of
business in Montreal, Quebec, herein acting through and
represented by Russell J. David, its Vice President -
Finance hereunto duly authorized as he so declares,
(hereinafter called "Tenant")
WHEREAS the Landlord and Tenant have entered into a lease for those
certain premises located at 175 Dessureault, Cap-de-la-Madeleine, Quebec (the
"Premises") signed by the Landlord on the 7 day of April 1997, signed by the
Tenant on the 8 day of April 1997 (the "Lease");
WHEREAS the Tenant has agreed to grant the Landlord security on its
moveable property as security for the full and due performance of all its
obligations under the Lease including, without limitation, the payment of all
rentals and additional rentals;
WHEREFORE, THE PARTIES HERETO HEREBY AGREE AS FOLLOWS:
1. PREAMBLE
The preamble hereto shell form part hereof as though fully recited at
length herein.
2. HYPOTHEC
In order to guarantee the full and proper performance of all of the
obligations to be performed by the Tenant under the Lease, including, without
limitation, the payment of all rent, additional rental and any other sums
payable by the Tenant under the Lease, the Tenant hereby grants to the Landlord
a hypothec in favour of the Landlord in the amount of three hundred seventy-two
thousand eight hundred sixty dollars and fifty-three cents ($372,860.53), on the
moveable property of the Tenant, both present and future, and constituting the
universality or universalities hereinafter described, including all property of
the same nature acquired as replacements for the said properties:
Description
[ILLEGIBLE]
<PAGE>
Schedule "F" to Lease
Moveable Hypothec - Page 2
pertaining to or covering such moveables; and
(b) intentionally deleted.
(c) all of Tenant's right, title and interest in, to and under the Lease
and in and to the Premises.
The hypothec constituted herein is not and shall not be construed as being
an open or floating hypothec pursuant to the provisions of the Civil Code of
Quebec.
3. COSTS AND FEES
The Tenant shall pay the costs and fees of the publication of the hypothec
created hereby and the out of pocket costs of the Landlord with regard to the
renewal, notice, hypothecation, renunciation, quittance or mainlevee with
respect thereto.
4. REPRESENTATIONS OF THE TENANT
The Tenant hereby agrees that it shall not, outside the ordinary course of
business, sell, transfer or alienate all or substantially all of the property
hypothecated herein without the prior written consent of the Landlord, which
consent shall not unreasonably be withheld.
In the event of a transfer or alienation of the property to which the
Landlord has granted its consent, the Tenant shall formally advise the Landlord
by way of a written notice containing the name of the vendor and the purchaser
and a description of the property sold. This notice must be accompanied by a
copy of all deeds and documents relating to the sale, transfer or alienation of
property, together with a certified copy of the inscription of a notice of
conservation of the hypothec under the name of the purchaser with proof of
transmission of such notice to the purchaser. In addition to the foregoing, it
shall be required that any purchaser shall be required to assume, solidarily
with the Tenant, all of the obligations of the Tenant contained in the Lease.
5. LEASE OF PROPERTY HYPOTHECATED
The Tenant shall not, without the prior written consent of the Landlord,
lease the property hypothecated in whole or in part.
6. MOVEMENT OF PROPERTY HYPOTHECATED
The Tenant shall not, without the prior written consent of the Landlord,
change the location of the property hypothecated unless such change is made, in
the ordinary course of the enterprise of the Tenant.
7. INTENTIONALLY DELETED
8. ADDITIONAL HYPOTHEC
If the Landlord should so require, the Tenant hereby obliges itself to
consent to any additional hypothec which the Landlord may judge necessary or
useful in order to maintain the value of the guarantees accorded by these
presents.
<PAGE>
Schedule "F" to Lease
Moveable Hypothec - Page 3
The Tenant shall administer and operate its enterprise in a proper and
efficient manner and shall respect all the standards of financing agreed to with
the Landlord.
10. DEFAULTS
The Tenant shall be in default under the terms of these presents where:
(a) the Tenant has defaulted in the performance of its obligations
contained in the present Agreement;
(b) there has been an Event of Default under the Lease, including the
non-payment of Basic Rent, Additional Rent and any other sums which
may be due by the Tenant to the Landlord under the Lease;
(c) any steps are taken or any action or proceedings are instituted by
any person for the dissolution, winding-up or liquidation of the
Tenant or its assets and Tenant is not diligently proceeding to have
same dismissed;
(d) the Tenant has made a material representation herein or in the Lease
which proves untrue or incomplete.
In the Event of Default, the Landlord shall have the right under reserve
of all other rights and recourses herein contained or by law;
(a) to require the immediate payment of the full amount of any sums
which may be due or become due under the Lease in capital, interest,
costs and accessories;
(b) to demand the execution of any obligation not respected by the
Tenant;
(c) to exercise all hypothecary recourses which may be conferred upon it
by law.
11. TIME OF ESSENCE
Time shall be the essence of this Agreement and every part hereof.
12. PROPER LAW
This Agreement shall be construed in accordance with the laws of the
Province of Quebec.
13. SEVERABILITY
The invalidity of any provision of this Agreement or any covenant herein
contained on the part of any party hereto shall not affect the validity of any
other provision or covenant hereof or herein contained.
14. BINDING AGREEMENT
This Agreement shall enure to the benefit of and be binding upon the
[ILLEGIBLE]
<PAGE>
Schedule "F" to Lease
Moveable Hypothec - Page 4
any party pursuant to any of the provisions of this Agreement shall be
sufficiently given if such notice or other communication is in writing and is
delivered to such party personally, or mailed by registered mail, postage
prepaid, addressed to such party as follows:
TO Landlord: 6500 Trans Canada Highway
Suite 210
St. Laurent, Quebec H4T 1X4
TO THE Tenant: At the Premises, any other place of business of the
Tenant or to any principal, officer or director of
the Tenant
or to such other address of such party as any of them may from time to time
notify the other parties in the manner hereinbefore provided, and any such
notice, or other communications shall be deemed to have been received by any
such party when delivered to it or to him, or if mailed as aforesaid, on the
fifth (5th) business day following the date of mailing. In the event of an
interruption or slow down in the postal system, all notices shall be delivered.
16. LANGUAGE
The parties hereby confirm that they have requested that the present
document be drafted in the English language. Les parties confirment par les
presentes qu'elles on demande que le present document soit redige dans la langue
anglaise.
IN WITNESS WHEREOF THE LANDLORD HAS SIGNED AT ________________ ON THIS
7 DAY OF MARCH, 1997.
ZMD SPORTS INVESTMENTS, INC.
Per: /s/ [Illegible]
---------------------------
/s/
- ---------------------------
Witness
/s/
- ---------------------------
Witness
IN WITNESS WHEREOF THE TENANT HAS SIGNED AT __________________ON THIS
8TH DAY OF APRIL, 1997.
SPORT MASKA INC.
Per: /s/ [Illegible]
---------------------------
/s/
- ---------------------------
Witness
/s/
- ---------------------------
Witness
[TEXT MISSING]
<PAGE>
Schedule G
DEED OF LEASE
LEASE entered into as of _____ day of April, nineteen hundred and ninety-seven
(1997)
BETWEEN: ZMD Sports Investments, Inc., a body politic and corporate,
duly incorporated, having its head office and principal
place of business in Montreal, Quebec, herein acting and
represented by Michael Zunenshine, its duly authorized
representative (hereinafter called the "Landlord")
AND: Sport Maska, Inc., a body politic and corporate, duly
incorporated, having its head office and principal place of
business in Montreal, Quebec, herein acting through and
represented by Russell J. David, its Vice President -
Finance hereunto duly authorized as he so declares
(hereinafter called the "Tenant")
1. DESCRIPTION OF THE PREMISES
Landlord, in consideration of the rents, covenants and agreements herein
contained on the part of Tenant to be paid, kept and performed, does
hereby lease to Tenant and Tenant does hereby hire and take from Landlord
the following property space (hereinafter referred to as the "Premises"):
Toute cette propriete est designee comme etant les lots:
- Le lot numero QUATRE, de la subdivision C, de la subdivision du lot
originaire QUATRE CENT VINGT-DEUX (422-C-4)
- Le lot numero DEUX, de la subdivision du lot TRENTE-SIX, de la
subdivision du lot originaire QUATRE CENT VINGT-TROIS (423-36-2).
- Le lot numero SOIXANTE-SEIZE, de la subdivision du lot originaire
QUATRE CENT VINGT-TROIS (423-76).
Ces lots sont tous du Cadastre de la Paroisse de
Cap-de-la-Madeleine, en la division d'enregistrement de Champlain
2. MODE OF ACQUISITION
[TO BE COMPLETED BY ZMD]
3. CHARACTERIZATION OF RIGHT
A lease of a non-residential immoveable.
4. TERM OF LEASE
The term of this lease shall commence on April ____, 1997 and shall expire
at 11:59 p.m. on January 31, 2005, unless the said term shall sooner be
terminated under the provisions hereof.
<PAGE>
5. EXTENT OF RIGHT
USE OF PREMISES
The Premises hereby leased shall be used and occupied by Tenant solely for
offices, warehousing, manufacturing and distribution.
GOVERNING LAW
The present lease shall be construed and governed by the laws of the
Province of Quebec.
Executed in Montreal, as of the _____ day of April, 1997.
ZMD SPORTS INVESTMENTS, INC.
__________________________ Per:____________________________________
Witness Michael Zunenshine
[title]
Executed in New York, New York, U.S.A., as of the ____ day of April, 1997.
SPORT MASKA, INC.
__________________________ Per:____________________________________
Witness Russell J. David
Vice President - Finance
-2-
File No. 582-2576
DEED OF LEASE
BETWEEN
ZMD SPORTS INVESTMENTS INC.
(the "Landlord")
AND
SPORT MASKA INC.
(the "Tenant")
<PAGE>
TABLE OF CONTENTS
ZMD SPORTS INVESTMENTS INC.
SECTION PAGE
------- ----
1. CERTAIN BASIC LEASE PROVISIONS ........................................ 1
2. DEFINITIONS ........................................................... 2
3. TERM .................................................................. 5
4. OCCUPANCY ............................................................. 5
5. MINIMUM NET NET RENTAL ................................................ 6
6. RENTAL ON NET NET RETURN BASIS ........................................ 6
7. ADDITIONAL RENTAL ..................................................... 7
8. PAYMENT OF TENANT'S PROPORTIONATE SHARE ............................... 7
9. CONTESTATION OF TAXES ................................................. 7
10. UTILITIES AND EQUIPMENT ............................................... 8
11. USE OF PREMISES ....................................................... 8
12. PLATE GLASS AND DOOR SIGNS ............................................ 8
13. PROHIBITED ACTIVITIES ................................................. 8
14. CONDITION OF PREMISES ................................................. 9
15. INTENTIONALLY DELETED ................................................. 9
16. MAINTENANCE AND REPAIRS ............................................... 9
17. INSPECTION AND REPAIR ................................................. 9
18. ODOURS, DUST OR NOISE ................................................. 10
19. GARBAGE, DEBRIS, REFUSE AND EXTERMINATION ............................. 10
20. ACCESS ................................................................ 11
21. PARKING ............................................................... 11
22. SIGNS OF LANDLORD ..................................................... 11
23. SIGNS OF TENANT ....................................................... 11
24. LANDLORD'S WORK ....................................................... 12
25. IMPROVEMENTS AND ALTERATIONS .......................................... 12
26. CSST .................................................................. 14
27. INSURANCE REQUIREMENTS ................................................ 14
28. CANCELLATION OF INSURANCE ............................................. 16
29. DAMAGE OR DESTRUCTION ................................................. 16
30. TRANSFER CONSENT REQUIRED ............................................. 19
31. INTENTIONALLY DELETED ................................................. 21
31A. NON-DISTURBANCE AGREEMENTS, USE OF RENT AND TENANT FINANCING .......... 21
32. ASSIGNMENT BY LANDLORD ................................................ 22
33. EXPROPRIATION ......................................................... 22
34. EXTENSIONS ............................................................ 23
35. DEFAULT ............................................................... 24
36. FAILURE OF TENANT TO PERFORM .......................................... 24
37. BANKRUPTCY AND INSOLVENCY ............................................. 25
39. DISTURBANCE ........................................................... 26
40. NONWAIVER ............................................................. 26
41. WAIVER OF COMPENSATION ................................................ 26
42. IMPUTATION OF PAYMENTS ................................................ 26
43. CUMULATIVE REMEDIES ................................................... 27
44. UNAVOIDABLE DELAY ..................................................... 27
45. MANAGEMENT OF THE PROPERTY ............................................ 27
46. RULES AND REGULATIONS ................................................. 27
47. COMPLIANCE WITH LAWS AND REGULATIONS .................................. 28
48. WINDOW COVERINGS ...................................................... 28
49. PERMITS AND LICENSES .................................................. 28
50. EXPIRATION OF LEASE ................................................... 29
51. MOVEABLE HYPOTHEC ..................................................... 29
52. DOMICILE AND NOTICES .................................................. 30
53. SUCCESSORS AND ASSIGNS ................................................ 30
54. DESCRIPTIVE HEADINGS .................................................. 30
55. GOVERNING LAW/SEVERABILITY ............................................ 30
56. COST OF PREPARATION, REGISTRATION AND RADIATION ....................... 30
57. BROKERAGE COMMISSION .................................................. 31
58. SCHEDULES ............................................................. 31
59. CERTIFICATE OF INCORPORATION .......................................... 31
60. ENTIRE AGREEMENT ...................................................... 31
61. LANGUAGE .............................................................. 31
<PAGE>
DEED OF LEASE
BETWEEN: ZMD SPORTS INVESTMENTS INC., a body politic and corporate, duly
incorporated, having its head office and principal place of business
Montreal, Quebec herein acting and represented by Michael
Zunenshine its duly authorized representative
(hereinafter the "Landlord")
PARTY OF THE FIRST PART
AND: SPORT MASKA INC., a body politic and corporate, duly incorporated,
having its head office and principal place of business in Montreal,
Quebec, herein acting through and represented by Russell J. David
____________, its Vice President-Finance hereunto duly authorized as
he so declares,
(hereinafter the "Tenant")
PARTY OF THE SECOND PART
1. CERTAIN BASIC LEASE PROVISIONS
The following are certain basic Lease provisions of this Lease.
1..1 Addresses for purposes of notice:
Landlord: 6500 Trans Canada Highway, Suite 210
St. Laurent, Quebec
H4T 1X4
Tenant: 600 Industrial Boulevard
St-Jean-sur-Richelieu, Quebec
1..2 Location of Premises: Leased Premises comprising of the Building and the
property found on the land described in Schedule "B" annexed hereto.
1..3 Property: 600 Industrial Boulevard
St-Jean-sur-Richelieu, Quebec
1..4 Area: Approximately one hundred thirty-eight thousand (138,000) square
feet.
1..5 Term: April 11, 1997 to November 30, 2004
1..6 Commencement Date: April 11, 1997
1..7 Termination Date: November 30, 2004
1..8 Minimum Net Net Rental: An amount equal to $434,700.00 per annum from May
1, 1997 until November 30, 1999 and $483,000.00 per annum for the last
five (5) years of the Term payable pursuant to the Article entitled
"Minimum Net Net Rental".
1..9 Schedules:
"B" - Cadastral Description
"D" - Measurement of Premises
"E" - Rules and Regulations
"F" - Moveable Hypothec
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2. DEFINITIONS
2..1 Additional Rental means: Any and all amounts due or becoming payable to
the Landlord pursuant to this Lease other than the Minimum Net Net Rental,
whether such amounts are specifically referred to as Additional Rental or
not, the whole payable pursuant to the Article entitled "Additional
Rental".
2..2 Architect means: The independent architect, engineer, or land surveyor
named by Landlord from time to time.
2..3 Area means: The area of the Leased Premises as calculated in the manner
stipulated in Schedule "D".
2..4 Building means: The building found on the parcel of land described in
Schedule"B".
2..5 Capital Tax means: For the purpose of this lease, "Capital Tax" means the
capital tax liability of the Landlord for each of the Landlord's fiscal
years during the Term or any renewal thereof as per the Landlord's tax
returns multiplied by the proportion that the net book value of the
Property is of the net book value of the total assets of the Landlord, as
determined in accordance with the Landlord's audited financial statements.
2..6 Commencement Date means: The first day of the Term.
2..7 Common Areas and Facilities means:
(a) Those areas, facilities, utilities, improvements, equipment and
installations in the Property which, from time to time, are not
designated or intended by the Landlord to be used exclusively for
the benefit of any individual tenant of the Property; and
(b) Those areas, facilities, utilities, improvements, equipment and
installations which serve or are for the benefit of the Property,
whether or not located within, adjacent to, or near the Property and
which are designated from time to time by the Landlord as part of
the Common Areas and Facilities of the Property. Common Areas and
Facilities include, without limitation, all areas, facilities,
utilities, improvements, equipment and installations which are
provided or designated (and which may be changed from time to time)
by the Landlord for the use or benefit of the tenants, their
employees, customers and other Persons for whom Landlord shall
permit the use or benefit thereof, in the manner and for the
purposes permitted by the Lease.
(c) Without limiting the generality of (a) and (b) above, Common Areas
and Facilities include the roof, exterior wall assemblies including
weather walls, exterior and interior structural elements and bearing
walls in the buildings and improvements comprising the Property;
parking areas and parking garages, all entrances and exits thereto
and all structural elements thereof, employee parking areas, truck
courts, access roads, driveways, truckways, delivery passages,
package pick-up stations; loading docks and related areas;
pedestrian sidewalks, covered walkways and sidewalks; roadways;
landscaped and planted areas; courts and arcades; public seating and
service areas; corridors; bus
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kiosk, if any; roadways and stops; equipment, furniture, furnishings
and fixtures; first aid stations; stairways, ramps, moving
sidewalks, and other transportation equipment and systems;
electrical, telephone, meter, valve, mechanical, mail, storage,
service and janitor rooms and galleries; communication, security and
fire prevention and protection systems; general signs; columns,
pipes, electrical, plumbing, drainage, mechanical and all other
installations, equipment or services located therein or related
thereto, as well as the structures housing the same.
2..8 CPI means: The Consumer Price Index, all items Montreal, established
by Statistics Canada or any index in substitution and/or replacement
thereof, published by Statistics Canada or any other federal or
provincial governmental agency. In the case of any required
substitution, Landlord shall be entitled to make all necessary
conversions for comparison purposes.
2..9 Date of Occupancy means: The date on which Landlord is ready to give
possession of the Leased Premises to the Tenant, subject to the
terms stipulated in the Article entitled "Occupancy".
2..10 Intentionally deleted.
2..11 Landlord means: The party first hereinabove described or its
successors and assigns.
2..12 Landlord's Work means: The work to be executed by Landlord as
stipulated in the Articles entitled "Landlord's Work" and
"Landlord's Work at Tenant's Expense".
2..13 Lease means: This agreement and all attached Schedules.
2..14 Leased Premises means: The premises described in paragraph 1.2.
2..15 Lease Year means: In the case of the first Lease Year, a period
commencing on the Commencement Date and terminating on the last day
of the twelfth month thereafter and shall also refer to any
succeeding twelve (12) month period thereafter.
2..16 Minimum Net Net Rental means: The amount stipulated in the Article
entitled "Minimum Net Net Rental".
2..17 Operating Costs means: The aggregate of Landlord's annual costs and
expenses incurred in insuring, operating, administering and if
applicable, maintaining the Property and shall include, without
duplication or limitation, the cost of:
(i) all expenses incurred by Landlord in obtaining or attempting
to obtain a reduction of real estate taxes, the whole subject
to the Article of this Lease entitled "Contestation of Taxes";
(ii) the cost of insuring the Property (including such insurance as
the Landlord shall effect or shall be required to effect by
any secured creditor) against fire and any other perils which
presently are or hereafter may be, from time to time, embraced
by or defined in a standard fire insurance policy with
extensive coverage, comprehensive general liability insurance,
boiler and pressure vessel insurance, business
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interruption and/or loss of rentals insurance and such other
insurance as the Landlord, acting reasonably, may deem
necessary or advisable.
(iii) Capital Tax as defined herein.
(iv) Debt Service in accordance with the Article entitled "Rental
on Net Net Return Basis".
2..18 Person means, depending on context: Any person, firm, company,
corporation, partnership, association, or any group or combination
thereof.
2..19 Property means: The lands and buildings found on the lots described
in Schedule "B".
2..20 Proportionate Share means: 100% of the Operating Costs and Taxes of
the property and of the Leased Premises.
2..21 Sales Tax means: Any goods and services tax, business transfer tax,
value-added tax, multi-stage sales tax, sales tax or any other tax
imposed with respect to Minimum Net Net Rental and Additional Rental
payable under this Lease, whatever name such tax may bear and
whether such tax is in force at the date hereof or whether it is
adopted subsequently. The amount of the Sales Tax so payable by
Tenant shall be calculated by Landlord in accordance with the
applicable legislation and shall be paid to Landlord at the same
time as the amounts to which such Sales Tax apply or at such other
time as Landlord may from time to time determine. Landlord shall
have the same remedies for and rights of recovery of such amounts as
it has for the recovery of Additional Rental.
2..22 Security means: Any hypothec, trust deed, debenture or other
security to be placed from time to time on the Property or any part
thereof for the purpose of securing any indebtedness of Landlord.
2..23 Taxes means: All taxes, whether special or general, including,
without limitation, property taxes, municipal taxes, school taxes,
levies, charges, rates including local improvement rates, duties and
assessments that may now or in the future be levied, rated, charged
or assessed against the Property, and/or all equipment and
facilities thereon or therein, and/or the land described in Schedule
"B" attached hereto, and/or any property on or in the Building owned
or brought thereon or therein by the Landlord and/or against
Landlord or Tenant and/or its Transferees in respect thereof,
whether such taxes, rates, duties or assessments are charged by a
municipal, parliamentary, school or any other body of competent
jurisdiction. If the system of real estate taxation shall be altered
or varied and any new tax shall be levied or imposed on the Property
and/or the revenues therefrom and/or the Landlord in substitution
for and/or in addition to real estate taxes presently levied or
imposed on immovables in the City, Region, Province or Country in
which the Property is situated, then any such new tax or levy shall
be included within the present definition of Taxes. However, Tenant
shall not be responsible for any income tax or corporation taxes of
the Landlord, save and except for its Proportionate Share of Capital
Tax and Tenant shall be solely responsible for any Sales Tax.
2..24 Tenant means: The person executing this Lease as Tenant. Tenant also
includes all employees, mandatories and contractors of Tenant,
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as well as any Person under Tenant's control or for whom Tenant is
responsible.
2..25 Tenant Security means: Any trust deed, bond, debenture, pledge,
commercial pledge, warehouse receipt, conditional sales contract,
privilege, hypothec, charge or any other form of encumbrance or
security granted by or agreed to by Tenant or any other Person
(other than Landlord) with respect to its rights in this Lease, the
Leased Premises, or any property, whether movable or immovable,
located in or forming part of the Leased Premises, to secure, in
whole or in part, any loan, indebtedness, credit line or other
obligation.
2..26 Tenant's Work means: The work to be executed by Tenant as stipulated
in the Article entitled "Tenant's Work".
2..27 Term means: The period specified in the Article entitled "Term" and
includes all renewals or extensions agreed to in writing by the
Landlord.
2..28 Termination Date means: The last day of the Term as herein defined
or any renewal thereof, or the last day of the Term or renewal
thereof which is terminated prior to the Termination Date.
2..28 Transfer means: Any assignment or transfer of this Lease (other than
as Tenant Security), any sublease or permitted occupation of all or
any part of the Leased Premises to any Person (hereinafter the
"Transferee") and any amalgamation or change in the effective
control of the voting shares of Tenant if Tenant is a corporation,
or any change in the partners constituting the partnership or any
change in the interest of the partners in the partnership if Tenant
is a partnership, from conditions existing on the date the
corporation or the partnership first incurs any obligations to
Landlord pursuant to this Lease, the whole whether effected by sale,
by assignment, by operation of law or otherwise.
3. TERM
Landlord hereby leases the Leased Premises to Tenant for a Term commencing
on the 11 day of April 1997 and terminating on the last day of November 2004
unless sooner terminated under the provisions hereof.
Should the Tenant continue to occupy the Leased Premises after the expiry
of the Term, without a written agreement there shall be no tacit renewal and the
Tenant shall pay to the Landlord, per diem, as liquidated damages, the highest
per diem Minimum Net Net Rental payable during the Term and Additional Rental
for the period of occupancy plus fifty percent (50%) thereof, without prejudice
to any of Landlord's other rights and recourses including Landlord's right to
obtain vacant possession of the Leased Premises. Tenant acknowledges that it is
not to have the right to occupy the Leased Premises beyond the expiry of the
Term.
4. OCCUPANCY
Tenant shall be allowed to occupy the Leased Premises on April 11, 1997
(hereinafter referred to as the "Date of Occupancy").
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5. MINIMUM NET NET RENTAL
Tenant covenants and agrees to pay to Landlord in lawful money of Canada
without deduction, abatement or setoff, a Minimum Net Net Rental of $434,700.00
per annum from May 1, 1997 until November 30, 1999, and $483,000.00 per annum
for the last five years of the Term, net, net, payable in equal consecutive
monthly instalments, each in advance, on the first day of each month during the
entire Term, the first instalment becoming due and payable on the Commencement
Date. Any Minimum Net Net Rental due for any period of time during the Term
which is less than a month shall be paid for on a pro-rated basis.
The Minimum Net Net Rental shall be considered as annual and accruing from
day to day and where it becomes necessary for any reason to calculate such
rental for an irregular period of less than one (1) Lease Year, an appropriate
apportionment and adjustment shall be made.
The Minimum Net Net Rental as herein provided shall be paid to Landlord
and/or its nominee at the Head Office of the Landlord, at 6500 Trans Canada
Highway, Suite 210, St. Laurent, Quebec, H4T 1X4, or at such other place in
Canada as shall be designated by Landlord in writing to Tenant.
6. RENTAL ON NET NET RETURN BASIS
It is agreed and understood between the parties that the Minimum Net Net
Rental herein shall be a revenue absolutely net, net to the Landlord, free of
any and all costs and expenses of any nature whatsoever. Tenant shall pay on its
own account, to the complete exoneration of Landlord, all Operating Costs and
Taxes and any Additional Rental with respect to the Leased Premises unless
otherwise stipulated in this Lease. The Landlord shall be responsible for any
income tax or corporation taxes due by Landlord. Tenant shall pay its
Proportionate Share of Capital Tax and Tenant shall be solely responsible for
any Sales Tax.
Without limiting the generality of the foregoing, Tenant shall, in each
and every Lease Year, pay and discharge or cause to be paid and discharged all
license fees, public utility charges, water rates, sewer rates and other like
fees, charges, rates and assessments that may be levied, charged, rated or
assessed against the Leased Premises and/or all equipment and facilities thereon
or therein and/or any property on the Leased Premises owned or brought thereon
by Tenant, and any and every of its Transferees or visitors and/or against
Landlord or Tenant in respect thereof, and every tax and license fee in respect
of any and every business carried on therein, or with respect to the occupancy
of the Leased Premises by Tenant (and any and every of its Transferees), whether
such license fees, charges, rates, assessments and taxes are charged by
municipal, parliamentary, school or any other body of competent jurisdiction,
and all charges for public utilities including electric current, gas, water,
steam or hot water used upon or in respect of the Leased Premises and for
fittings, machines, apparatus, meters or other things leased in respect thereof
and for all work or services performed by a corporation or commission in
connection with such public utilities. Tenant shall indemnify and hold the
Landlord harmless from and against payment of all losses, costs, charges and
expenses occasioned by and arising from any and every such duty, license fee,
charge, rate, assessment and tax.
It is further agreed and understood that any amount and any obligation
which is not expressly declared in this Lease to be that of the Landlord shall
be deemed to be the obligation of the Tenant. Without limiting the generality of
the foregoing, should at any time the taxation authorities directly attribute
any part of the Taxes to the Leased Premises or the improvements therein, Tenant
shall
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Montreal Industrial Lease
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pay for same in addition to Tenant's Proportionate Share of the remainder of the
Taxes.
Tenant shall furnish to Landlord, immediately upon Landlord's request, a
receipt or other appropriate evidence satisfactory to Landlord as to the payment
of any amounts payable by Tenant pursuant to the present Article.
7. ADDITIONAL RENTAL
It is agreed and understood that Additional Rental other than Tenant's
Proportionate Share, shall be payable on the first day of the month immediately
following the date the said amount is claimed, or on such date as the Landlord
may designate. Where the calculation of any Additional Rental is not made until
after the Termination Date, the obligation of the Tenant to pay such Additional
Rental shall survive the termination of this Lease and such amounts shall be
payable by the Tenant upon demand by the Landlord.
8. PAYMENT OF TENANT'S PROPORTIONATE SHARE
Tenant shall pay to the Landlord throughout the Term or any renewals, its
Proportionate Share of the Operating Costs and Taxes, as well as an
administration fee equal to three percent (3%) of the said Operating Costs and
Taxes and of the Minimum Net Net Rental.
Notwithstanding anything to the contrary herein contained, the Landlord
may, prior to the commencement of each calendar year or as soon thereafter as is
reasonably possible, furnish to the Tenant an estimate of the Operating Costs
and Taxes for such calendar year, and the Tenant shall pay to the Landlord, in
advance, on the first day of each month during the year in question, Additional
Rental equal to one twelfth (1/12) of the Tenant's Proportionate Share of the
estimated Operating Costs and Taxes. Should the first Lease Year of the Term not
commence on the first (1st) day of January or should the last Lease Year of the
Term not terminate on the thirty-first (31st) day of December, then prior to the
Commencement Date of the Term or prior to the anniversary of the Commencement
Date in the last Lease Year of the Term, as the case may be, or as soon
thereafter as is reasonably possible, Landlord shall furnish to Tenant an
estimate of the Operating Costs and Taxes for the part of the Lease Year in
question, and the Tenant shall pay to the Landlord, in advance, on the first day
of each month during the part of the Lease Year in question, Additional Rental
equal to the Tenant's Proportionate Share of the estimated Operating Costs and
Taxes divided by the number of months for that part of the Lease Year in
question.
After the end of each calendar year, or after the end of the Term in the
case of the final Lease Year, the Landlord shall furnish the Tenant with
financial statements setting forth the actual Operating Costs and Taxes for such
calendar year (or part of the Lease Year, as the case may be) and the Tenant
shall pay to the Landlord forthwith an amount equal to its Proportionate Share
of the excess of the actual Operating Costs and Taxes over the estimated
Operating Costs and Taxes. Should the estimated Operating Costs and Taxes exceed
the actual Operating Costs and Taxes, the Tenant shall receive credit for its
Proportionate Share of the excess. The appropriate adjustments shall be made
between the parties hereto within thirty (30) days after the date on which the
Landlord has furnished the Tenant with such statement. [ILLEGIBLE]
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Montreal Industrial Lease
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respect thereto, and Landlord may settle, compromise, consent to, waive or
otherwise determine, in its sole discretion, all matters and things relating
thereto. Tenant may, upon the reasonable consent of Landlord, contest, appeal,
object to or litigate the levying or imposition of real estate taxes.
In the event that Landlord should contest any Taxes and thereafter receive
a refund of any portion thereof, and provided Tenant shall have paid its
Proportionate Share of said Taxes, the Landlord shall reimburse to the Tenant
the Tenant's Proportionate Share of such refund.
10. UTILITIES AND EQUIPMENT
The Tenant shall pay for its electricity (including without limitation any
electricity used for heating and/or air conditioning the Leased Premises), for
the cost of operating, repairing, maintaining, replacing and inspecting the
machinery and other facilities required for the heating, ventilating and air
conditioning of the Leased Premises and facilities and gas, water, sewer and
electric utility costs relating to same, telephone and all public utilities with
respect to the Leased Premises.
Throughout the Term of the Lease, the Tenant shall engage a qualified air
conditioning maintenance contractor to maintain and repair the heating,
ventilating and air conditioning system. The Tenant shall, within thirty (30)
days of signing these presents, provide the Landlord with a copy of a duly
executed heating, ventilating and air conditioning maintenance and repair
contract, as well as all renewals of the said contract.
11. USE OF PREMISES
The Leased Premises shall be used by the Tenant only for offices,
warehousing, manufacturing and distribution and for no other purpose.
12. PLATE GLASS AND DOOR SIGNS
Any breakage of glass or plate glass in or about the Leased Premises and
any damage to signs on Tenant's doors, except for breakage or damage caused by
the negligence or fault of the Landlord or its employees or mandatories shall be
charged to and payable by the Tenant.
13. PROHIBITED ACTIVITIES
Subject to the other terms and conditions of the Lease and in addition to
any other prohibitions stipulated in the Lease, the Tenant undertakes:
(i) not to bring upon the Leased Premises or any part thereof any
machinery, equipment, article or thing that by reason of
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Premises to their original condition;
(ii) not to obstruct the sidewalks, entries, passage corridors and
stairways, or use same for purposes other than for ingress and
egress to or from the Leased Premises, and the Tenant shall
save the Landlord harmless from damages to persons or property
because of any articles thrown by the Tenant out of the
windows or doors or down the passages of the Building.
14. CONDITION OF PREMISES
The Tenant represents that the Leased Premises have been examined by the
Tenant and that the Tenant accepts the same, in the condition or state in which
they are at the Date of Occupancy by Tenant, without representation or warranty,
expressed or implied, oral or written, in fact or in law, by the Landlord, and
without recourse to the Landlord as to the nature, condition or usability
thereof or as to the use or uses to which the Leased Premises or any part
thereof may be put.
15. INTENTIONALLY DELETED
16. MAINTENANCE AND REPAIRS
Notwithstanding the provisions of Articles 1604(2), 1605 and 1627 of the
Civil Code of Lower Canada, the Tenant shall, at its own expense, operate,
maintain and keep the Leased Premises including all facilities, equipment and
services, both inside and outside, available to the Tenant exclusively, in such
good order and condition as they would be kept by a prudent owner and Tenant
shall promptly make all needed repairs and replacements to the Leased Premises
(save and except for those structural repairs and replacements that are
exceptional, nonrecurring and result from latent defects) which a careful owner
would make, including without limitation, the water, gas, drain and sewer
connections, pipes and mains, electrical wiring, water closets, sinks and
accessories thereof, and all equipment belonging to or connected with the Leased
Premises or used in its operation.
17. INSPECTION AND REPAIR
Landlord and its representatives shall have the right, during all
reasonable business hours during the Term, to enter the Leased Premises to
examine the condition thereof and to ascertain whether Tenant is performing its
obligations hereunder, and Tenant shall make any repairs which Tenant is obliged
to make pursuant to the terms of this Lease. If Tenant fails to make any such
repairs within thirty (30) days after written notice from Landlord requesting
Tenant to do so, provided that such repairs may reasonably be made within the
said period, Landlord may, without prejudice to any other rights or remedies it
may have, make such repairs and charge the reasonable cost [ILLEGIBLE]
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(30) days shall bear interest from the date of such demand at the prime lending
rate as determined by the Royal Bank of Canada on a daily basis plus four
percent (4%) until paid to Landlord in full.
18. ODOURS, DUST OR NOISE
The Tenant warrants that no noxious/obnoxious odours, dust or noise will
emanate from the Leased Premises as a result of the operations conducted by the
Tenant therein and Tenant further covenants that it will not cause or maintain
any nuisance in, at or on the Leased Premises and/or the Property and Tenant
further warrants that it will not use the Leased Premises for any purpose or in
any manner notwithstanding anything stated in this Lease which may cause noise,
disturbance or noxious/obnoxious odours to the discomfort of other tenants,
neighbours or to the public in general. Accordingly, the Tenant agrees that
should such noxious/obnoxious odour, dust or noise conditions exist, or should
Landlord receive any complaint of odours, dust, noise or any other nuisance,
Tenant will, at its own cost and expense, take such steps as may be necessary to
rectify the same, including any expertise Landlord may require, which expertise
must be acceptable to Landlord, provided further that if the Tenant shall fail
to commence to do so within ten (10) days and complete the same within a
reasonable time after notice is received by the Tenant from the Landlord, then
the Landlord may at its option and without prejudice to its other rights and
recourses Landlord may proceed forthwith to take reasonable measures to correct
the same.
19. GARBAGE, DEBRIS, REFUSE AND EXTERMINATION
The Tenant shall not place or leave or permit to be placed or left in or
upon any part of the Property outside of the Leased Premises any debris or
refuse except as allowed by the Landlord at specific times and deposited in
areas indicated by the Landlord in proper receptacles provided and placed for
that purpose by the Tenant and Tenant shall furthermore comply with any of
Landlord's rules and regulations with respect to garbage containers. The Tenant
shall arrange and pay for the cost of those services required to remove
diligently and efficiently all of Tenant's garbage and refuse of any nature
whatsoever.
Tenant, at its sole cost shall keep, the Leased Premises shall be kept in
a clean and sanitary condition and in accordance with the laws of the
municipality in which the Property is located and in accordance with all other
regulations of any agency having jurisdiction over the Property and in
accordance with the instructions, policies and recommendations of Landlord's
insurers. If any such laws, instructions, policies and recommendations by
Landlord's insurers require any changes whatsoever to the Leased Premises, the
Tenant shall effect such changes at its own expense but subject to the approval
of the Landlord. The Tenant agrees to provide strict measures for rat prevention
and pest control and shall, if the Landlord deems the same to be necessary,
enter into a regular contract with a firm of exterminators acceptable to
Landlord. In the event that the Tenant fails to comply with the foregoing
provisions, then Landlord, without prejudice to all of its other rights and
recourses, shall have the right, without prior notice to the Tenant, to engage a
[ILLEGIBLE]
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20. ACCESS
The Landlord shall have the right of access to the Leased Premises only
during reasonable business hours (except in the case of an emergency when
Landlord shall have access at all times), and the right to perform such work as
it chooses to do upon the Leased Premises, the Tenant renouncing any claim to
any indemnity or reduction in rental provided such work be carried out with
reasonable diligence and provided such work does not interfere with the Tenant's
business.
21. PARKING
The Tenant acknowledges that the parking of its vehicle(s) and those of
its customers in the parking facilities shall be at the risk and peril of Tenant
and/or its customers, and that the Landlord shall not be responsible for any
damages or loss whatsoever, whether caused by theft, fire or any other cause, to
the Tenant's vehicle(s) or to those of its customers or to any property found in
Tenant's vehicle(s) or those of its customers or for any injury to Tenant or
other Persons on or in the immediate vicinity of the parking facilities and
Tenant hereby releases Landlord of all liabilities of whatsoever nature with
respect to the above.
22. SIGNS OF LANDLORD
Landlord shall have the right, six (6) months prior to the Termination
Date, to place upon the Property a notice of reasonable dimensions and
reasonably placed in order not to interfere with the business of Tenant, stating
that the Property is for sale and/or rent, and Landlord shall have the right,
during the last six (6) months prior to the Termination Date, to place upon the
Leased Premises a notice of reasonable dimensions and reasonably placed stating
that the Leased Premises are for rent and Tenant will not remove any such notice
or knowingly permit either of them to be removed.
Landlord shall have the right to exhibit the Leased Premises during the
last six (6) months of the Lease to any prospective tenant or at any time during
the Lease to any hypothecary creditor or potential purchaser during all business
hours of the Tenant and Tenant hereby renounces to Article 1645 of the Civil
Code of Lower Canada.
23. SIGNS OF TENANT
The Tenant shall be entitled, at its expense, to install on the Leased
Premises such signs as are normally installed in connection with its business,
as well as to identify itself on the exterior front of the Building provided
such signs comply with municipal by-laws and with the Rules and Regulations as
established from time to time by Landlord in accordance with the Article
entitled "Rules and Regulations", and provided further that the Tenant obtains
Landlord's consent for both the sign and its location. Furthermore, the
authorization to install a sign will be issued in exchange for a deposit
equivalent to the estimated cost of the repair of the supporting Building
surface following the [ILLEGIBLE]
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Montreal Industrial Lease
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Except as provided above and unless specifically provided for in this
Lease, Tenant shall not be entitled to install or put up any signs or posters of
whatsoever nature on the windows of the Leased Premises and/or the Building
and/or the Property.
All civic numbers are supplied and installed at Tenant's expense by the
Landlord according to its standards. The Tenant's identification at the rear of
the Building is also supplied and installed by the Landlord at Tenant's expense
according to Landlord's standard # 20.11.87 attached to the Rules and
Regulations in Schedule E.
In the event that Tenant installs any sign without satisfying the
requirements of this Article, Tenant shall remove such sign upon receipt of
Landlord's notice. If Tenant fails to remove such sign within twenty-four (24)
hours of receipt of Landlord's notice, then Landlord shall have the right,
without further notice or any form of legal process, to remove same at Tenant's
expense and to repair any damages caused by such removal. Landlord shall not be
responsible for damages to Tenant's property or sign resulting from such
removal. Tenant expressly waives its recourse in damages against the Landlord
and shall hold Landlord harmless of any claim by any third party with respect to
the said sign. Tenant shall immediately pay Landlord for all costs described
hereinabove, upon demand, as Additional Rental.
24. LANDLORD'S WORK
The Leased Premises shall be delivered in an "as is" basis and Tenant
accepts same in the condition in which they are at the signing of these
presents.
25. IMPROVEMENTS AND ALTERATIONS
(a) The Tenant shall not have the right to execute any changes,
alterations, additions, erections, leasehold improvements, repairs and
installations to the Leased Premises (hereinafter the "Work"), unless it
has obtained Landlord's prior written consent, which will not be
unreasonably withheld or delayed. In the event Landlord consents to such
Work, then Tenant undertakes to conform to the conditions stipulated
hereunder.
(i) All Work shall be carried out with reasonable dispatch and in a good
workmanlike manner and in compliance with all applicable permits,
authorizations, building and zoning by-laws and with all regulations
and requirements of all competent authorities having jurisdiction
over the Leased Premises;
(ii) The Property shall at all times be free of all pledges, registered
privileges and any other encumbrances;
(iii) If the cost of any Work shall be in excess of five thousand dollars
($5,000.00) as reasonably estimated by Landlord, [ILLEGIBLE]
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Montreal Industrial Lease
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covering all persons employed in connection with the Work and shall
produce evidence of such insurance to Landlord and Tenant shall also
maintain such general liability insurance for the protection of
Landlord and Tenant upon the terms Landlord may reasonably require,
as well as contractor's protective liability insurance. Tenant shall
further comply with all of the stipulations of the Article entitled
"CSST" (Commission de la Sante et de la Securite au Travail du
Quebec);
(v) The Tenant shall promptly pay for all materials supplied and work
done in respect of the Leased Premises in order to ensure that no
privilege is registered against any portion of the Property. If a
privilege is registered or filed, the Tenant shall forthwith
discharge it at its expense, failing which the Landlord may, at its
option, discharge the same by paying the amount claimed to be due
into court or directly to any such privilege claimant and the amount
so paid and all expenses of the Landlord including any judicial and
extrajudicial costs and attorney's fees incurred by the Landlord
shall be paid by the Tenant to the Landlord within five (5) days
after demand.
It is agreed and understood that no Work by or on behalf of Tenant
shall be permitted which, in Landlord's reasonable judgement, may weaken
or endanger the structure or adversely affect the condition or operation
of the Leased Premises and/or the Property or diminish the value thereof
or restrict or reduce Landlord's coverage for insurance purposes.
(b) Notwithstanding the contents of (a) above, Landlord may, at its sole
option and discretion submit a bid for the performance of the Work
approved by Landlord. If Tenant does not select Landlord's bid, Tenant
shall be obliged to pay to Landlord all of Landlord's costs, overhead,
administration in the review and approval of such work, as well as, all
costs associated with architectural or engineering consultants,
preparation or amendment of plans, the whole subject to an upper maximum
cap equivalent to ten percent (10%) of the value of the Work and subject
to a minimum charge of two thousand dollars ($2,000.00).
(c) Any Work by the Tenant made without the reasonable prior written
consent of the Landlord, or which is not made in accordance with the
design criteria and specifications approved by the Landlord, shall be
removed by the Tenant immediately upon demand and the Leased Premises
shall be restored to their previous condition by Tenant, the whole at the
Tenant's cost, failing which Landlord shall have the right to remove said
Work at Tenant's entire cost and Landlord shall not be responsible for
damages to Tenant's property resulting from such removal.
(d) Notwithstanding anything contained in this Article, Tenant shall not
have the right to do any structural, mechanical or electrical [ILLEGIBLE]
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Montreal Industrial Lease
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In the event that Landlord does not choose to execute said Work and
consents to having Tenant execute same, then Tenant shall furnish to
Landlord plans and specifications showing in reasonably complete detail
the Work proposed to be carried out and the estimated cost thereof.
Landlord shall, acting reasonably, approve or reject such plans and
specifications within thirty (30) days after receipt of the same. If such
plans and specifications are approved, all Work shall be carried out in
compliance with the same. Furthermore, in the case where Tenant is
authorized to carry out said Work, Tenant shall, at its cost, provide
Landlord with an engineer's certificate upon completion of said Work. Any
reasonable costs incurred by Landlord of any nature whatsoever in order to
permit Landlord to approve or reject Tenant's plans and specifications
shall be reimbursed by Tenant immediately upon Landlord's request. In
addition to the above, Tenant shall comply with all the conditions
stipulated in (a) and (c) above.
It is agreed and understood that when completed, all Work shall be
comprised in and form part of the Leased Premises and be subject to all the
provisions of this Lease. Furthermore, any authorization given by Landlord to
Tenant to do any Work in accordance with this Article, shall not relieve Tenant
of its responsibility for the Work in question.
Subject to the terms and conditions of this Article, in the event that the
Tenant constructs a mezzanine in the Leased Premises, the Tenant will pay the
amount of any increase in Taxes on the whole of the Building of which the Leased
Premises form part, if such increase is caused by the construction or occupancy
of said mezzanine. Furthermore, the Tenant will pay for any increase in
Operating Costs resulting from the construction or occupancy of the said
mezzanine.
Tenant shall not make use or cause to be removed any part or all of the
ceiling system for any purposes, including that of storage.
Moreover, Tenant shall pay to Landlord the amount of any increase for any
Taxes to the extent that such increase is directly attributable to any action by
Tenant under this Article.
26. CSST (COMMISSION DE LA SANTE ET DE LA SECURITE AU TRAVAIL DU QUEBEC)
Tenant shall ensure itself that its contractor and/or subcontractors
comply with all the requirements established by La Commission de la Sante et de
la Securite au Travail du Quebec (hereinafter the "CSST") and more specifically,
Tenant shall ensure itself that its contractor and/or subcontractors have
instituted a safety program for its employees. Tenant shall provide proof to
Landlord, upon demand, that all requirements of the CSST have been met. It is
expressly understood that Tenant shall indemnify and hold Landlord harmless from
any proceedings, claim or demand which could be instituted against Landlord for
the failure of Tenant's contractor and/or subcontractors to comply with CSST's
requirements and the Tenant shall pay upon demand any judicial or extrajudicial
costs so incurred by Landlord [ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 15
Property.
Tenant shall not commit any act upon the Leased Premises or make any use
thereof which may make void or voidable any insurance on the Leased Premises or
on the Building or Property and should any act so committed or any use so made
by Tenant, including any unauthorized vacancy thereof, result in an increased or
extra premium payable for insurance on the Leased Premises, Building or
Property, then Tenant shall pay such increase or extra premium.
Tenant shall comply with the rules and requirements of the Insurers'
Advisory Organization of Canada or any successor body, and/or a loss prevention
firm or consultant chosen by Landlord's insurers, and with the requirements of
all insurance companies having policies of any kind whatsoever in effect
covering the Property, including policies insuring against delictual liability.
In no event shall any inflammable material, except for kinds and
quantities permitted by the insurance policies covering the Property, or any
explosives or radioactive material whatsoever, be taken into the Leased Premises
or retained therein.
Tenant shall take out and keep in force the following insurance:
(a) comprehensive general liability insurance including blanket
contractual liability and broad form property damage coverage, with
respect to the business carried on in or from the Leased Premises
and the use and occupancy thereof, for bodily injury and death and
damage to property of others in an amount of at least two million
dollars ($2,000,000.00) for each occurrence or such greater amount
as Landlord may, from time to time, reasonably require;
(b) an "all risks" insurance with extended coverage including the perils
of fire, leakage from sprinklers and other fire protective devices,
earthquake, collapse, flood and sewer back-ups in respect to
furniture, equipment, inventory and stock in trade, fixtures (plate
glass if appropriate) and leasehold improvements located within the
Leased Premises and such other property located in or forming part
of the Leased Premises, including all mechanical or electrical
systems (or portions thereof) installed by Tenant in the Leased
Premises, the whole for the full replacement value thereof (without
depreciation) in each such instance;
(c) Tenant's legal liability insurance in an amount equal to the
replacement cost of the Leased Premises or such greater amount as
Landlord may, from time to time, reasonably require;
(d) an environmental liability policy of a coverage of at least one
million dollars ($1,000,000.00); and [ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 16
(60) days prior to the date of cancellation or lapse. Each such policy shall
name Landlord and any other party required by Landlord, as an additional insured
as their interest may appear. Each liability policy will contain a provision of
cross-liability and severability of interest as between Landlord and Tenant. All
other policies referred to above shall contain a waiver of subrogation rights
which Tenant's insurers may have against Landlord, Landlord's insurers and any
Persons for whom Landlord is responsible. Notwithstanding anything to the
contrary contained in this Lease, Tenant hereby releases and waives any and ail
claims against Landlord and any Persons for whom Landlord is responsible with
respect to occurrences which are or which are required to be insured against by
Tenant hereunder. Tenant shall provide Landlord with copies of each insurance
policy referred to above upon execution of said policy and at the latest fifteen
(15) days prior to the Tenant's occupation of the Leased Premises. It is
understood that no review or approval of any insurance certificate or policy by
Landlord shall derogate from or diminish Landlord's rights under this Lease.
Tenant agrees that if Tenant fails to take out or to keep in force such
insurance Landlord may, at its sole option and discretion, do so and pay the
premium therefor and in such event Tenant shall repay to Landlord the amount
paid as a premium, which repayment shall be collectible as Additional Rental.
28. CANCELLATION OF INSURANCE
If any insurance policy mentioned in the preceding Article and/or any
insurance contracted by Landlord or any part of it is cancelled and/or
threatened to be cancelled by the insurer, or if the coverage under it is
reduced by the insurer (to an amount less than that which is required by Section
27),because of the use or occupation of any part of the Leased Premises, and if
the Tenant fails to remedy the condition giving rise to the cancellation,
threatened cancellation or reduction of coverage within ten (10) days after
notice from the Landlord, the Landlord may, either:
(a) enter and take possession of the Leased Premises immediately by
leaving upon the Leased Premises a notice of its intention to do so,
upon which the Landlord will have the same rights and remedies that
are available to him under this Lease or in virtue of the law; or,
(b) enter upon the Leased Premises and remedy the condition giving rise
to the cancellation, threatened cancellation or reduction of
coverage and the Tenant will immediately pay the costs to the
Landlord, together with a fee of fifteen percent (15%) of such costs
representing the Landlord's overhead, which, costs may be collected
by the Landlord as Additional Rental, and the Landlord will not be
liable for any damage caused to any property of the Tenant or others
located on the Leased Premises as a result of the entry.
29. DAMAGE OR DESTRUCTION
[ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 17
(ii) if the Leased Premises are rendered partly unfit for tenancy, this
Lease shall continue in full force and effect, except that the
Minimum Net Net Rental and Operating Costs and Taxes will abate to
the extent Landlord's Architect determines that the Leased Premises
cannot reasonably be used for their intended purposes:
(iii) if the Leased Premises are rendered wholly unfit for tenancy, this
Lease shall continue in full force and effect, except that Minimum
Net Net Rental and Operating Costs and Taxes will fully abate,
provided, however, that if such condition(s) are not rectified
within seventy-five (75) days, Tenant may terminate this Lease upon
ten (10) days notice;
(iv) all abatements will occur from the date of the damage or destruction
until the date that the Leased Premises are delivered to Tenant;
(v) Landlord will commence and proceed diligently to reconstruct,
rebuild or repair any damage to the Leased Premises to meet
Landlord's base building criteria for that Property which Landlord
may modify to be consistent with the plans, specifications and
design criteria for the rebuilding of the Building and/or the Leased
Premises, chosen by Landlord acting reasonably;
(vi) to restore the Leased Premises, Landlord will be under no obligation
to perform work other than that stipulated in subparagraph (v)
above;
(vii) whether or not the damage to the Leased Premises may have been
caused by Tenant's negligence or fault, Tenant shall commence to
repair, rebuild or reconstruct, at its own cost, all leasehold
improvements, fixturing and equipment in the Leased Premises within
fifteen (15) days from Landlord's notice that Landlord has completed
its work and Tenant shall complete said work within thirty (30) days
from Landlord's notice;
(viii)Tenant shall not be entitled to any allowance, inducement, payment
or other consideration from Landlord in connection with Tenant's
work described in sub-paragraph (vii) above, even if such allowance,
inducement, payment or other consideration was made at the time of
original construction of the Leased Premises.
29..2 Despite any provision to the contrary contained in this Lease and,
specifically but without limitation, anything contained in the present Article,
if the Property is totally or partially damaged or destroyed (whether the Leased
Premises are affected or not), and;
(i) in the Landlord's opinion, the damaged or destroyed portions cannot
reasonably be repaired, restored or rebuilt within one (1) year
following the occurrence without overtime or other [ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 18
(ii) intentionally deleted.
(iii) less than two (2) years remain during the Term;
then in any of the above cases, Landlord may, at its option (to be
exercised by written notice to Tenant within ninety (90) days following
any such occurrence) elect to terminate this Lease.
If Landlord elects to terminate this Lease, then the following will apply:
(iv) if the Leased Premises have been rendered wholly unfit for tenancy,
the termination will take effect from the date of the damage or
destruction and all Minimum Net Net Rental and Operating Costs and
Taxes be adjusted to that date;
(v) if the Leased Premises have been rendered only partly unfit for
tenancy and Tenant has occupied or has been reasonably capable of
occupying any part of the Leased Premises from the date of the
damage or destruction, the Lease will terminate ten (10) days from
Landlord's notice. All unabated Minimum Net Net Rental and Operating
Costs and Taxes will be adjusted to the date of termination. Minimum
Net Net Rental and Operating Costs and Taxes will abate from the
date of the damage and destruction until the date of termination to
the extent the Leased Premises cannot reasonably be used for their
intended purposes;
(vi) if the Leased PremIses were not rendered wholly or partly unfit for
tenancy, the Lease will terminate ten (10) days from Landlord's
notice and all Minimum Net Net Rental and Operating Costs and Taxes
will be adjusted to that date;
(vii) intentionally deleted
(a) intentionally deleted
(b) provided the Leased Premises remain in a substantially similar
state, change the configuration, design and/or size of the
Property or any of its component parts to suit
<PAGE>
Montreal Industrial Lease
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Landlord's needs at the time, including, without limitation,
the location and size of any court, entrance, parking facility
or any other Common Area or Facility;
(c) intentionally deleted..
It is further understood and agreed that nothing herein shall oblige
Landlord, under any circumstances and in any manner whatsoever, to spend an
amount greater than the proceeds of insurance received by Landlord as a result
of the damage or destruction described in the present Article for any
reconstruction contemplated herein.
Tenant agrees that none of the foregoing shall constitute a change of form
or destination, nor shall the validity or enforceability of this Lease be
affected in any manner by any of the foregoing.
30. TRANSFER CONSENT REQUIRED
No Transfer of this Lease shall be effected by Tenant without the prior
written consent of the Landlord in each instance, which consent may not be
unreasonably withheld or delayed.
Landlord's refusal of consent shall be deemed reasonable (without in any
way restricting Landlord's right to refuse its consent on other reasonable
grounds) under the following circumstances:
(a) intentionally deleted.
(b) where Tenant is in default under any provisions of this Lease;
(c) where the Landlord has reasonable grounds to believe that the
proposed Transferee does not possess the financial means necessary
to fulfil all its financial obligations herein, and Tenant refuses
to remain jointly and solidarily liable together with Transferee
toward Landlord;
(d) where the Transfer applies to part of the Leased Premises only;
(e) where the proposed Transferee's use of the Leased Premises violates
any laws or rights granted to other tenants or retained by Landlord,
or where such use may be disruptive or objectionable to other
tenants or to the Landlord, or where such use shall detract from the
dignity or character of the Property;
(f) where the Landlord has not obtained the consent of a secured
creditor or any Person who may have the right to approve the
Transfer;
[ILLEGIBLE]
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Montreal Industrial Lease
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part of the Leased Premises for purposes of a Transfer, and shall not permit any
broker or other Person to do any of the foregoing, unless the complete text and
format of any such notice, advertisement, or offer is first approved in writing
by the Landlord. Without in any way restricting or limiting the Landlord's right
to refuse any text or format on other grounds, any text or format proposed by
the Tenant shall not contain any reference to the rental rate of the Leased
Premises. Notwithstanding anything contained herein, no sign shall be posted,
affixed, displayed or inscribed in any manner whatsoever on the Leased Premises
or the Property advertising that the Leased Premises are for rent.
If the Tenant intends to effect a Transfer of all or any part of the
Leased Premises, of this Lease or of any interest hereunder, then, and as often
as such event shall occur, the Tenant shall give prior written notice to the
Landlord of such intent, specifying therein the proposed Transferee, providing
such information with respect thereto, including without limitation, information
concerning the principals thereof and as to any credit, financial or business
information relating to the proposed Transferee as the Landlord or the
hypothecary creditor requires, and shall pay Landlord in advance for the cost of
Landlord's inquiries as well as its reasonable processing fee for the
examination of Tenant's request, and the Landlord shall, within thirty (30) days
following Tenant's request, notify the Tenant in writing that:
(a) it consents or does not consent to the Transfer in accordance with
the provisions and qualifications of this Article;
(b) intentionally deleted.
The mere occupation of all or part of the Leased Premises or Landlord's
tolerance thereof, the payment of any amount by the proposed Transferee to
Landlord, or the consent to any previous Transfer shall not constitute a waiver
of Tenant's obligation to obtain Landlord's consent to any Transfer, nor will
any of the foregoing be construed to constitute a consent by Landlord to the
proposed Transfer. Nevertheless, whether or not Landlord consents to any
Transfer, it may collect rent or other amounts from any proposed Transferee and
apply the said amount to the amounts payable under this Lease, without in any
manner prejudicing any of its rights.
Notwithstanding any such Transfer consented to by the Landlord, no
acceptance by the Landlord of any payments by a Transferee shall be deemed a
waiver of the requirements contained herein or a release of the Tenant from the
further performance by the Tenant of the obligations on the part of the Tenant
herein contained and the Tenant shall be jointly and severally liable with the
Transferee for all of the Tenant's obligations stipulated in the Lease and shall
not be released from performing any of the obligations under the Lease during
the Term.
In addition to any of the requirements stipulated herein, Landlord's
consent to the Transfer is conditional upon Tenant and Transferee signing with
Landlord a document prepared by Landlord evidencing such Transfer, and Tenant
undertakes to cause the Transferee to promptly sign said document in which
Transferee shall agree to be bound directly with Landlord to all of the
obligations contained in this Lease as if such Transferee had originally
[ILLEGIBLE]
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Montreal Industrial Lease
Page 21
provide that the Tenant transfers to the Transferee any rights it may have with
respect to the Deposit retained by Landlord pursuant to this Lease and Tenant
renounces all of its rights thereto. In addition thereto, the Transferee may be
required by Landlord to supplement any security deposit given in this Lease.
Should the Minimum Net Net Rental per square foot to be paid by a
Transferee, whether in cash, goods, services or other consideration, exceed the
Minimum Net Net Rental per square foot payable hereunder, then Tenant shall pay
to Landlord monthly, as Additional Rental, the amount of or an amount equivalent
to such excess.
Notwithstanding anything contained in this Article, the Tenant may sublet
the Leased Premises or assign the Lease to a parent, subsidiary or affiliate
company without seeking the consent of the Landlord provided, however, that such
sub-tenant or assignee shall remain bound jointly and severally with the Tenant
for all the terms and covenants of this Lease, and provided further that Tenant
shall notify Landlord in writing prior to such sublet or assignment.
Upon the execution of this Lease and upon each succeeding anniversary date
or at any sooner time requested by the Landlord, the Tenant shall deliver to the
Landlord a statement, certified as being true and correct and verified by the
corporate secretary, showing the names of all existing shareholders of record
and their respective ownership interests as at that date. The Tenant shall, at
the request of the Landlord, make available to the Landlord for inspection or
copying or both, all books and records of the Tenant which, alone or with other
data, show the applicability or inapplicability of this Article. If any
shareholder of the Tenant shall, after the request of the Landlord to do so,
fail or refuse to furnish forthwith to the Landlord any data verified by the
affidavit of such shareholder or other credible person, which data, alone or
with other data show the applicability or inapplicability of this paragraph, the
Landlord may terminate this Lease by giving the Tenant prior written notice of
thirty (30) days of such termination.
31. INTENTIONALLY DELETED
31A. NON-DISTURBANCE AGREEMENTS, USE OF RENT AND TENANT FINANCING
Landlord agrees (a) to use commercially reasonable efforts to obtain
non-disturbance agreements from holders of any mortgages which may now or
hereafter affect this Lease or the Property, which non-disturbance agreements
shall provide that, in the event of foreclosure, such mortgagee(s) shall abide
by such leases and permit the Tenant to continue possession and quiet-enjoyment
of the Property, and (b) not to seek a modification of any mortgage or any other
document that would result in the elimination of a non-disturbance provision or
agreement then in existence. In the event that the Landlord is unable, prior to,
May 31, 1997 to obtain each such non-disturbance agreement on terms reasonably
satisfactory to the Tenant, the Landlord agrees to meet and confer with the
Tenant as to the status of negotiations with the mortgagees and to discuss and
pursue mutually agreeable procedures for obtaining such
<PAGE>
Montreal Industrial Lease
Page 22
to satisfy all monthly monetary obligations under the mortgages as they become
due.
The Landlord hereby agrees to provide any documents reasonably necessary
for the Tenant to obtain any financing subsequent to the date hereof and/or in
replacement of Tenant's financing existing as of the date hereof (each, a
"Subsequent Financing" and each provider of financing thereunder, a "Subsequent
Financier"). Without limiting the generality of the foregoing, Landlord agrees
to enter, with respect to any Subsequent Financing, into an agreement in form
and substance similar to the Intercreditor Agreement pursuant to which
Landlord's hypothec, if any, shall be subordinate to the lien of the Subsequent
Financier.
32. ASSIGNMENT BY LANDLORD
Landlord declares that it may assign its rights under this Lease to a
lending institution or to any Person as collateral security for a loan to
Landlord and, in the event that such an assignment is given and executed by
Landlord and notification thereof is given to Tenant by or on behalf of
Landlord, it is expressly agreed that this Lease shall not be cancelled or
modified for any reason whatsoever without the consent in writing of such
lending institution or Person if such consent is required.
This Lease and all rights of the Tenant under the Lease shall be subject
to and subordinate to any Security. Tenant hereby covenants and agrees that it
will, whenever reasonably required by Landlord and at Landlord's expense,
consent to and become a party to any instrument subordinating the Lease to any
Security. However, no subordination by the Tenant shall have the effect of
permitting the holder of any Security to disturb the Tenant's enjoyment of the
Leased Premises as long as the Tenant shall comply with the covenants to be kept
and performed by it under this Lease.
The Tenant will, upon request of the Landlord or the Person holding the
Security or any Person having an interest in the project, execute and deliver
promptly those instruments referred to herein. However, if ten (10) days after
the date of request, the Tenant has not executed and delivered them, the Tenant
hereby irrevocably appoints the Landlord as the Tenant's attorney with full
power and authority to execute and deliver in the name of the Tenant said
instruments or the Landlord may, at its sole option and discretion, terminate
this Lease upon giving Tenant a three (3) business days notice of its intention
to do so, the whole without incurring any liability whatsoever and without
prejudice to all of its other rights and recourses.
It is agreed and understood that in the event of any sale of the Property
by Landlord, then Landlord shall automatically be relieved of any and all
obligations and liabilities under this Lease accruing from and after the date of
such sale, provided that the purchaser of the Property assumes all obligations
of Landlord under this Lease.
33. EXPROPRIATION
[ILLEGIBLE]
<PAGE>
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Page 23
34. EXTENSIONS
Provided Leased Premises do not substantially change, the Landlord shall
have the right, at its option and from time to time, to make extensions and/or
additions and/or to add one or more additional floors or storeys onto all or
part of the building comprising the Leased Premises, or on to any other
buildings of the Property, or to add one or more buildings to the Property.
In the event the Landlord exercises said option, the Tenant agrees to
permit the Landlord to install and/or extend and/or add all the required
improvements including supports, beams, wiring, piping, stairways, elevators,
ramps, vents, ducts, shafts and openings for view or light and the like and to
close all borrowed lights and the windows and openings which may be required to
be closed as a consequence of such construction, the whole without any claims
for disturbance and/or inconvenience and the like which may be caused to the
Tenant, provided always that the required work is carried out within a
reasonable delay and that this Article shall not absolve or release the Landlord
from liability in respect of any damage or loss caused to the Tenant as a
consequence of any negligence or fault of the Landlord, its employees or
representatives. If the Tenant loses the use of any part of the Leased Premises
during the making of such additions and/or extensions, the Tenant shall be
granted a proportionate reduction in Minimum Net Net Rental as compensation for
loss of use (during the period and for the area of loss of use only); all of the
foregoing without any other claims by the Tenant against the Landlord for damage
and loss of use.
In the event the Landlord exercises said option, the Tenant agrees to
permit the Landlord to install and/or extend and/or add all the required
improvements including supports, beams, wiring, piping, stairways, elevators,
ramps, vents, ducts, shafts and openings for view or light and the like and to
close all borrowed lights and the windows and openings which may be required to
be closed as a consequence of such construction, the whole without any claims
for disturbance and/or inconvenience and the like which may be caused to the
Tenant, provided always that the required work is carried out within a
reasonable delay and that this Article shall not absolve or release the Landlord
from liability in respect of any damage or loss caused to the Tenant as a
consequence of any negligence or fault of the Landlord, its employees or
representatives. If the Tenant loses the use of any part of the Leased Premises
during the making of such additions and/or extensions, the Tenant shall be
granted a proportionate reduction in Minimum Net Net Rental as compensation for
loss of use (during the period and for the area of loss of use only); all of the
foregoing without any other claims by the Tenant against the Landlord for damage
and loss of use.
Without limiting the generality of the foregoing, the Landlord hereby
reserves the right, at any time and from time to time, to make changes in,
additions to, subtractions from or rearrangements of the Building including,
without limitation, all improvements at any time thereon, all entrances and
exits thereto, provided the Leased Premises do not substantially change, and to
grant, modify and terminate any servitudes or other agreements pertaining to the
use and maintenance of all or parts of the Building and to make changes or
additions to the pipes, conduits, wires, ducts, utilities and other necessary
[ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 24
35. DEFAULT
The following shall be considered a default under the terms of this Lease:
(a) In the event that Tenant shall be in default under any provision of
this Lease providing for the payment of Minimum Net Net Rental
and/or Additional Rental, which is not cured within ten (10) days of
Tenant's receipt of a notice of such default;
(b) In the event Tenant does not take possession of the Leased Premises
or abandons or attempts to abandon the Leased Premises before the
Termination Date, with or without Landlord's knowledge; or in the
event the Leased Premises are used by any Person other than the
Person entitled to use them hereunder; or any procedure in execution
is issued pursuant to a judgment rendered against Tenant; or if an
agent, receiver or trustee acting under a trust deed or other
security, takes possession of the Tenant's assets and/or any
equipment, fixtures, furniture or movable effects in the Leased
Premises; or if the Tenant shall make a bulk sale of its goods; or
if the Tenant should attempt to move its belongings out of the
Leased Premises;
(c) In the event that Tenant shall be in default in observing any
covenant herein contained and/or performing any of its obligations
contained in this Lease (other than a default stipulated in
sub-paragraphs (a) and (b) above) and such default shall continue
for fifteen (15) days after written notice specifying such default
shall have been given by Landlord to Tenant, unless Tenant, acting
reasonably and diligently can not cure such default within the said
delay of fifteen (15) days, in which case Tenant shall, upon written
request to Landlord, be entitled to such reasonable extension of
time to enable such default to be remedied.
In the event of any default on the part of the Tenant under the terms of
this Lease, Landlord shall have the right, at its sole and absolute discretion,
to terminate this Lease and in addition, Landlord may, upon fifteen (15) days,
notice, forthwith enter upon and take possession of the Leased Premises and, any
statute or law to the contrary notwithstanding, the whole without prejudice to
and under reserve of all other rights and recourses of Landlord to claim any and
all losses and damages of any nature whatsoever sustained by the Landlord by
reason of or arising from any default of the Tenant including, without
limitation, the expenses of reletting the Leased Premises (including the costs
of any repairs, decorating, alterations or improvements necessitated thereby),
as well as reasonable attorney's fees which shall not exceed fifteen percent
(15%) of any amount granted by judgment. Where Landlord shall have instituted
proceedings to cancel, terminate or confirm its cancellation or termination of
this Lease, notwithstanding any law or custom to the contrary, Tenant, if in
default for four consecutive (4) months, shall not have any right to prevent
such cancellation or termination by remedying its default or defaults subsequent
to the institution of such legal proceedings [ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 25
to pay, all such amounts shall be deemed to be and be treated as Additional
Rental and payable and recoverable as Additional Rental. Landlord may pay the
same and shall be entitled to charge the sums so paid to Tenant who shall pay
them forthwith on demand as Additional Rental.
All arrears of Minimum Net Net Rental and Additional Rental shall bear
interest at the prime lending rate as determined by the Royal Bank of Canada on
a daily basis plus four percent (4%) from the time such arrears become due until
paid to Landlord.
37. BANKRUPTCY AND INSOLVENCY
In the event that Tenant shall be adjudicated bankrupt or make any general
assignment for the benefit of its creditors, or make a proposal to its
creditors, or take or attempt to take the benefit of any insolvency or
bankruptcy law, or if a receiver or trustee be appointed for the property of the
Tenant or any part thereof, the present Lease shall automatically terminate on
the occurrence of any of the aforesaid events without further notice or delay,
and Landlord shall be entitled to recover all arrears of Minimum Net Net Rental
and Additional Rental as well as six (6) months of future Minimum Net Net Rental
and Additional Rental or such other accelerated amount that the law may at any
time provide.
38. INDEMNIFICATION
Except if caused directly by the negligence or fault of the Landlord, its
mandatories, employees, or representatives, or by any breach or nonperformance
by the Landlord of any covenant undertaken by virtue hereof, the Landlord shall
not be liable nor responsible in any way for any injury of any nature whatsoever
that may be suffered or sustained by the Tenant or any other Person who may be
upon the Leased Premises or for any loss of or damage to any property belonging
to the Tenant or to any other Person while such property is on the Leased
Premises and in particular (but without limiting the generality of the
foregoing), the Landlord shall not be liable for any damage or damages of any
nature whatsoever to any such property caused by the failure, by reason of a
breakdown or other cause, to supply adequate drainage, or by reason of the
interruption of any public utility or service or in the event of steam, water,
rain or snow which may leak into, issue or flow from any part of the Property or
from the water, steam, sprinkler, or drainage pipes or plumbing works of the
same, or from any other place or quarter or for any damage caused by anything
done or omitted by any tenant. The Landlord, however, shall use all reasonable
diligence to remedy such condition, failure or interruption of service when not
attributable to the Tenant, after notice of same, when it is within its power
and obligation to do so.
The Tenant will indemnify and hold Landlord harmless from and against all
fines, liability, damage suits, claims, demands and actions of any kind or
nature for which the Landlord shall or may become liable for or suffer by reason
of:
(a) any breach or nonperformance by the Tenant of any provision hereof;
and/or [ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 26
or damage to property occasioned to or suffered by any Person
including the parties hereto by reason of any such breach or
nonperformance or of any wrongful act, neglect, or fault on the part
of the Tenant; and/or
(c) any damage to the Property caused by the Tenant's use and occupancy
of the Leased Premises; and/or
(d) any injury to any Person including death, sickness and diseases
resulting at any time therefrom, whether caused by a virus, bacteria
or any substance brought upon the Leased Premises and manipulated by
Tenant and/or located on or about the Leased Premises; and/or
(e) any injuries, damages or costs relating to any environmental
impairment arising out of the occupancy of the Leased Premises.
Such indemnification by the Tenant for any of the above items shall
survive the termination of this Lease, anything in this Lease to the contrary
notwithstanding.
39. DISTURBANCE
Notwithstanding anything to the contrary stipulated in the present Lease,
the Tenant will not hold the Landlord in any way responsible for any damages or
annoyance which the Tenant may sustain through the fault of any tenant who
occupies any premises adjacent to, near, above or under the Leased Premises, and
renounces any claims it may have against the Landlord pursuant to Article 1636
of the Civil Code of Lower Canada.
40. NONWAIVER
The failure of Landlord or Tenant to insist upon a strict performance of
any of the terms hereof shall not be deemed a waiver of any rights or remedies
that Landlord or Tenant, as appropriate may have and shall not be deemed a
waiver of any subsequent default by Tenant or Landlord (as appropriate) of any
such terms.
41. WAIVER OF COMPENSATION
The Tenant hereby waives and renounces any and all existing and future
claims, offsets and compensation against any Minimum Net Net Rental or
Additional Rental due hereunder and agrees to pay such Minimum Net Net Rental
and Additional Rental on their respective due dates, regardless of any claim,
offset or compensation which may be asserted by the Tenant or on its behalf,
except to the extent permitted hereunder.
42. IMPUTATION OF PAYMENTS
[ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 27
acquiescence of or to the terms thereof, and the Landlord may accept and cash
such cheque or payment without prejudice to the Landlord's right to recover the
balance of such rental or pursue any other remedy provided in this Lease. The
Landlord may, at its option, apply sums received from the Tenant against any
amounts due and payable by the Tenant under this Lease in such manner as the
Landlord sees fit.
43. CUMULATIVE REMEDIES
No reference to or exercise of any specific right or remedy by the
Landlord shall preclude the Landlord from or prejudice the Landlord in
exercising any other right under this Lease or pursuing any other remedy or
maintaining any action to which it may otherwise be entitled at law.
44. UNAVOIDABLE DELAY
Save and except for any monetary obligation under this Lease, Landlord and
Tenant shall not be liable for failure or delays in performing any of their
obligations hereunder should such failure or delay be caused by any event
(excluding the financial conditions of either party) which is beyond the
reasonable control of either party including, without limitation, cas fortuit,
force majeure, strikes, lockouts, labour troubles, inability to procure
materials, restrictive governmental rules, regulations, orders or bankruptcy of
contractors.
Without limiting the generality of the foregoing and in particular, it is
understood and agreed that whenever and to the extent that the Landlord shall.
after reasonable attempts to mitigate, be unable to fulfil, or shall be delayed
or restricted in the fulfillment of any obligation hereunder in respect of the
supply or provision of any service or utility or the doing of any work or the
making of any repairs by reason of being unable to obtain the material, goods,
equipment, service, utility or labour required to enable it to fulfil such
obligation, or by reason of any statute, law or order in council or any
regulation or order passed or made pursuant thereto or by reason of the order or
directive of any competent authority having jurisdiction over the Property, or
inability to obtain any required authorization therefrom, or by reason of any
other cause beyond its reasonable control, the Landlord shall be entitled to
extend the time for fulfillment of such obligation by a time equal to the
duration of such delay or restriction, and the Tenant shall not be entitled to
compensation for any damages of whatsoever nature arising therefrom.
45. MANAGEMENT OF THE PROPERTY
The Tenant hereby acknowledges to the Landlord that the Property may be
managed by any party other than the Landlord, as the Landlord from time to time
may in writing designate and, to all intents and purposes, any manager so
designated shall be the party at the Property authorized to deal with the
Tenant. All payments to Landlord in virtue of this Lease shall be made by cheque
payable to the Landlord in full unless otherwise specified in writing by
Landlord to Tenant.
<PAGE>
Montreal Industrial Lease
Page 28
The Landlord shall have the right to amend and/or rescind the rules and
regulations in Schedule "E" from time to time and to make any other reasonable
rules and regulations not contrary to the spirit and intent of this Lease as, in
its discretion, may from time to time be needful for the safety, care,
cleanliness and proper administration of the Property including the Leased
Premises, and for the preservation of good order therein, and the same shall be
observed and performed by the Tenant and by its customers, and all such rules
and regulations now or hereafter to be established by the Landlord as herein
provided shall form part of this Lease as if recited at length herein and any
such new rules and regulations shall be binding upon Tenant upon written
notification from Landlord.
Furthermore, in the event that Tenant does not comply with the rules and
regulations, Landlord shall have the right, without notice, to enter the Leased
Premises and execute any work necessary to rectify Tenant's noncompliance, the
cost of which shall immediately, upon Landlord's request, be payable by Tenant
as Additional Rental. It is agreed and understood that the terms and conditions
of this Lease shall prevail over any of the terms of the rules and regulations.
47. COMPLIANCE WITH LAWS AND REGULATIONS
The Tenant shall, at its own expense, promptly comply with the
requirements of every applicable statute, law and ordinance and with every
applicable lawful regulation or order with respect to the removal of any
encroachment placed by the Tenant, or to the condition, equipment, furniture,
fixtures, maintenance, or use, or occupation of the Leased Premises, including
the making of any alteration, addition in or to any structure upon, connected
with or appurtenant to the Leased Premises, whether or not such alteration be
structural or be required on account of any particular use to which the Leased
Premises or part thereof may be put and whether or not such requirement,
regulation or order be of a kind now existing or within the contemplation of the
parties hereto; and shall comply with any applicable regulation, recommendation
or order of the Insurers' Advisory Organization of Canada, or any body having
similar functions or of any liability or fire insurance company by which the
Landlord and/or the Tenant may be insured.
48. WINDOW COVERINGS
In order to preserve a more uniform and attractive appearance of the
property for the benefit of all the tenants, the Tenant herein binds and obliges
itself to place vertical blinds for air porosity, over all windows which are
located in the front of the Building or on any side of the Building which faces
a public street and where such windows are for other than office areas, such
vertical blinds shall remain drawn at all times.
49. PERMITS AND LICENSES
The Tenant shall obtain all necessary permits and licenses required for
the occupancy and carrying on of its business, the Landlord making no
representations or warranties whatsoever as to whether said permits and
[ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 29
50. EXPIRATION OF LEASE
Tenant shall, at the expiration or sooner termination of the Term,
peaceably surrender and yield up unto Landlord, who shall become absolute owner
thereof, the Leased Premises together with all buildings, alterations,
additions, erections, leasehold improvements, repairs and installations,
including the air-conditioning and heating system, done or made by the Tenant,
both movable and immovable, except the equipment and furniture belonging to
Tenant which must be removed at Tenant's expense on or before the expiration of
the Lease. Tenant shall repair any and all damages caused to the Leased Premises
and/or to the Building as a result of such removal, using materials equal in
quality to that of the damaged materials, failing which Landlord may do so at
Tenant's expense.
Notwithstanding the above, Landlord may at its option advise Tenant in
writing that he does not wish the ownership of all or any part of the above
described property, in which case Tenant shall remain owner of such property
refused by Landlord and shall, at its own expense, immediately remove such
property and repair any damage to the Leased Premises and/or the Building caused
by the original installation and/or removal, using materials equal in quality to
that of the damaged materials, failing which Landlord may do so at Tenant's
expense.
If Tenant leaves any equipment or furniture in the Leased Premises
following the expiration of the Term, it is understood that Landlord may then,
at its option, either accept full and absolute ownership of same and may use it
or dispose of it as Landlord determines, without compensation payable to Tenant
and without incurring any liability to Tenant, or Landlord may dispose of same
as it sees fit, at Tenant's expense, without incurring any liability to Tenant.
If the Tenant has failed to fulfil its obligations under this lease with
respect to the maintenance, repair and alteration of the Leased Premises and
removal of improvements and fixtures from the Leased Premises during or at the
end of the Term, such obligations and the Landlord's rights in respect thereto
shall remain in full force and effect notwithstanding the expiration or sooner
termination of the Term.
51. MOVEABLE HYPOTHEC
In order to guarantee the full and proper performance of all of the
obligations to be performed by Tenant under this Lease, Tenant hereby undertakes
to execute in favour of Landlord simultaneously with these presents, a deed of
moveable hypothec, which said hypothec, subject to the treatment set forth in
the Landlord Agreements attached herewith or any other agreement entered in
connection with a Subsequent Financing subject shall rank ahead of all other
hypothecs or rights of any nature of any and all other creditors, on the
universality of the moveable property of Tenant, present or future, corporeal or
non-corporeal, situated in or near the Leased Premises in the Building, or with
respect to the operation of business of Tenant in the Leased Premises, which
said hypothec shall be a continuing guarantee by Tenant in favour of Landlord in
order to [ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 30
52. DOMICILE AND NOTICES
The Tenant hereby elects domicile at the Leased Premises for the purpose
of service of any writs of summons or other legal document in any action or
proceeding whatsoever by the Landlord against the Tenant.
Any notice or demand given by Landlord to Tenant or by Tenant to Landlord
pursuant to the present Lease shall be deemed to be duly given if served upon
the Tenant or Landlord personally, or if delivered or mailed by prepaid
certified or registered mail to:
(a) LANDLORD: 6500 Trans Canada Highway, Suite 210
St. Laurent, Quebec H4T 1X4
(b) TENANT: At the Leased Premises
Landlord may, by notice in writing to the Tenant, change the address to
which any notice or demand intended for the Landlord shall be addressed. Tenant
may, by notice in writing, require that a copy of any writ of summons or other
legal document or proceeding and a notice or demand served on the Leased
Premises be mailed by regular mail to an additional address.
53. SUCCESSORS AND ASSIGNS
This Lease shall enure to the benefit of Landlord's or Tenant's respective
heirs, executors, administrators, successors and assigns.
54. DESCRIPTIVE HEADINGS
Any descriptive headings appearing in this Lease have been inserted as a
matter of convenience and reference only and in no way define, limit or enlarge
the scope or meaning of this Lease or any provisions hereof.
55. GOVERNING LAW/SEVERABILITY
The present Lease shall be construed and governed by the laws of the
Province of Quebec. Should any provision of this Lease be or become illegal or
not enforceable, it shall be considered separate and severable from the present
Lease and the remaining provisions shall continue in full force and effect and
be binding upon the parties hereto as though said provisions had never been
included. In this Lease, singular words shall be interpreted as including the
plural and vice versa and the words of masculine gender shall be interpreted as
including the feminine gender. Where more than one landlord or tenant is
referred to or when Tenant shall be of feminine gender or a corporation, all the
proper grammatical changes shall be inferred.
56. COST OF PREPARATION, REGISTRATION AND RADIATION
The parties hereto undertake to execute a duplicate short form lease for
the purposes of registration only, in conformity with the short form lease set
out at Schedule "G". The parties agree that, except for the [ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Page 31
In the event the said registration is not radiated within thirty (30) days
from the expiration of the Term, Tenant hereby irrevocably appoints the Landlord
as the Tenant's attorney with full power and authority to execute in the name of
the Tenant any documents and instruments required to effect the said radiation
of the registration of the Lease from the Index of Immovables and Tenant further
authorizes Landlord to deliver the said instruments and documents to the
appropriate Registry Office for the purpose of effecting all the appropriate
registrations and radiations. The cost of the preparation of said documents and
instruments as well as the cost of registering said documents and instruments
shall be borne by Tenant.
57. BROKERAGE COMMISSION
The Landlord and Tenant hereby guarantee that no brokerage commission or
charges are owing to any broker or brokerage company with respect to the present
transaction.
Tenant shall indemnify and hold Landlord harmless from any and all
brokerage claims as described above.
58. SCHEDULES
Schedules "B", "D", "E", "F" and "G" hereto form an integral part of this
Lease.
59. CERTIFICATE OF INCORPORATION
Where Tenant is a corporation, Tenant undertakes to remit to Landlord upon
the signing of the Lease, a copy of its Certificate of Incorporation.
60. ENTIRE AGREEMENT
Except as otherwise provided herein, no subsequent alteration, amendment,
change or addition to this Lease shall be binding upon the Landlord or the
Tenant unless agreed to in writing by the parties. The parties agree that upon
signature of this Lease, this Lease will supersede all other leases executed
between the parties hereto in respect to these Leased Premises and shall be the
only valid and binding lease between the parties.
61. LANGUAGE
Each of the parties does hereby confirm that it has expressly required
that this contract. as well as any document related hereto, be drawn up in the
English language. Chacune des parties confirme par les presentes avoir
expressement demande que le present contrat, ainsi que tous les documents y
afferent, soient rediges en anglais.
<PAGE>
Montreal Industrial Lease
Page 32
IN WITNESS WHEREOF THE LANDLORD HAS SIGNED AT ST. LAURENT, QUEBEC, THIS 7
DAY OF MARCH, 1997.
ZMD SPORTS INVESTMENTS INC.
Per: /s/ [ILLEGIBLE]
---------------------------
/s/ [ILLEGIBLE]
- ------------------
Witness
/s/ [ILLEGIBLE]
- ------------------
Witness
IN WITNESS WHEREOF THE TENANT HAS SIGNED AT THIS 8TH DAY OF APRIL, 1997.
SPORT MASKA, INC.
Per: /s/ [ILLEGIBLE]
---------------------------
/s/ [ILLEGIBLE]
- ------------------
Witness
/s/ [ILLEGIBLE]
- ------------------
Witness
<PAGE>
SCHEDULE "B"
EXTRACT OF A CERTIFICATE OF LOCATION DATED SEPTEMBER 12, 1989:
1 - The building bearing civic number 600 on Industriel
Boulevard in the City of Saint-Jean-sur-Richelieu is erected
entirely within the limits of a building lot composed of those
lots known and designated upon the Plan and Book of Reference
of the Official Cadastres of the Parish of Saint-Jean and
Parish of Saint-Luc, Registration Division of Saint-Jean, as
being the following.
- original lot number four hundred and fifty three ( 453 ) of
the Official Cadastre of the Parish of Saint-Jean
- original lot number two hundred and seventy one ( 271 ) of
the Official Cadastre of the Parish of Saint-Luc
<PAGE>
SCHEDULE "D"
MEASUREMENT OF LEASED PREMISES
The Leased Premises are measured (i) from the furthest exterior face of
the exterior walls, and the centre line of all interior walls separating the
Leased Premises from adjoining leasable premises as designated by Landlord,
and/or Common Areas, hereinafter defined, with no deduction for space occupied
by projections, structures, or columns, structural or nonstructural where
applicable; and (ii) by adding to the square footage obtained in (i) above, a
number of square feet corresponding to a proportion of the Common Areas
attributed to Tenant, which proportion is calculated as follows:
The proportion comprised by the total Common Area expressed as a
percentage of the total net Building area (total gross building area minus total
Common Area) multiplied by the area of the Leased Premises as calculated in (i)
above. For the purpose of these presents "Common Area" means:
(a) those areas, facilities, utilities, and installations in the Property
which, from time to time, are not designated or intended by the Landlord to be
leased to tenants of the Property, and
(b) those areas, facilities, and installations which serve or are for the
benefit of the Property, whether or not located within, adjacent to, or near the
Property and which are designated from time to time by the Landlord as part of
the Common Areas of the Property. Common Areas include, without limitation, all
areas, facilities, utilities, and installations which are provided or designated
(and which may be changed from time to time) by the Landlord for the use or
benefit of the tenants, their employees, customers and other persons permitted
by the Landlord in common with others entitled to the use or benefit hereof in
the manner for the purposes permitted by the lease.
<PAGE>
SCHEDULE "E"
RULES AND REGULATIONS
1. The Landlord reserves entire control of the sidewalks, entries, corridors
and passages; washrooms and lavoratories; fan rooms, janitor's closets,
electrical closets and other closets; stairs, flues, stacks, pipe shafts,
and ducts; the whole not within the Leased Premises, and of all parts of
the Building employed for the common benefit of the Tenants, and shall
have the right to place such signs and appliances therein, as they may
deem advisable, provided that ingress to and egress from the Leased
Premises is not impaired thereby.
2. The Landlord shall have the exclusive right to prescribe the weight and
proper positions of metal safes or machinery as well as the right to
prescribe the weight and position of any floor load. All damage done to
the Building or the Leased Premises by moving or using heavy equipment of
any description or furniture contrary to the Landlords' prescriptions
shall be repaired at the expense of the Tenant. No such equipment or
furniture shall be moved unless a time therefor has been arranged with and
consented to by the Landlord.
3. The Tenant shall not permit the introduction into the Leased Premises or
the Building of any machine or mechanical device of any nature whatsoever
which may be liable to cause objectionable noise or vibration or be
injurious to the Leased Premises or Building.
4. Canvassing, soliciting and peddling in the Building are prohibited.
5. Furniture, bulky articles and construction materials which the Tenant may
require from time to time for the construction of internal partitions or
for the purpose of effecting alterations or improvements, the whole
provided Tenant has obtained Landlord's approval pursuant to the Article
of this Lease entitled "Improvements and Alterations", shall be carried to
the Leased Premises at such hour and in such manner as the Landlord may
reasonably designate. Any damage which may be caused to the Building or
the Leased Premises by the carrying of such furniture, bulky articles or
construction materials to or from the Leased Premises shall be at the
responsibility and cost of the Tenant.
6. Any hand trucks, carryalls, or similar appliances used for the delivery or
receipt of merchandise or equipment shall be equipped with rubber tires,
side guards and such other safeguards as the Landlord shall require.
7. If any apparatus used or installed by the Tenant requires a permit as a
condition for its installation, the Tenant must file a copy of such permit
with the Landlord.
8. The Tenant shall give the Landlord prompt written notice of any accident
to or defect in water or gas pipes, heating or sprinkler system in the
demised Leased Premises, of which he is aware.
9. The Tenant shall not place any additional locks upon any doors of the
Leased Premises or the Building without the written consent of the
Landlord.
10. No animals or birds shall be brought or kept in or about the Leased
Premises or the Building.
11. No auction sales shall be allowed in the Leased Premises or the Building.
12. The water closets and other water apparatus of the Building or Leased
Premises shall not be used for any purpose but those for which they are
[ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Schedule "E"
Page 2
14. The Tenant, when closing the premises, during the day or evening, shall
have all windows closed, to avoid possible damage from fire, storms, rain
or freezing, and will not shut off the radiators and/or baseboard heaters
when the premises are locked.
15. The Tenant shall follow such instructions, if any, as Tenant may from time
to time receive from Landlord relating to the maintenance and care of the
heating, ventilating and air-conditioning equipment installed within the
Leased Premises.
16. Front Signage
The Tenant may identify his business with a front sign, the whole provided
Tenant complies with the conditions stipulated hereunder:
(a) Letter: individual to the Tenant's style.
(b) Height: 24".
(c) Permitted materials - plastic, composite or solid
- rustproof metal, composite or solid.
(d) Lighting (optional) - integrated
- halo-lit (back-lighting)
(e) Lighting control - dedicated circuit
- photo-cell switch, timer switch or
manual switch
Before the fabrication of any signage, the Tenant must obtain the written
approval of the Landlord. A request for approval must be accompanied by the
following information:
(a) Elevation plan indicating the proposed sign -- (Scale - 3/8" = 1').
(b) Sign dimensions: height, length, thickness, and distance from wall.
(c) Construction and installation details.
(d) Material and finish specifications (use of styrofoam is prohibited).
(e) Colour specifications.
(f) Lighting specifications: number of amperes, volts and circuits.
(g) Name of designer and of fabrication and installation contractors.
(h) Request for Municipal permit.
(i) Any other additional information that the Landlord may require to
study a particular sign request.
Furthermore, Tenant shall only be entitled to purchase any signage
approved from the following suppliers which may be changed by Landlord from time
to time:
Enseignes Trans Canada Signs Inc.
9310 Parkway
Ville d'Anjou, Quebec
H1J 1W7
Claude Neon Limitee
1855 Hymus Boulevard
Dorval, Quebec
[ILLEGIBLE]
<PAGE>
Montreal Industrial Lease
Schedule "E"
Page 3
17. Facade and secondary windows
(a) All front windows must have off-white vertical blinds.
(b) Adjustment of vertical blinds of front windows of storage space must
be half closed.
(c) All windows, including secondary windows, must be washed by Tenant
at its cost, at least twice a year on both the interior and exterior
faces.
18. Miscellaneous signage
Miscellaneous traffic and "no parking" signs are supplied and installed by
the Landlord.
19. Garbage container
(a) The Tenant must provide the garbage container which best satisfies
its business activity so that the size and water tightness retain
all garbage without affecting the environment.
(b) The Tenant must assure that the container is neatly located on the
designated area and that the lids are kept closed.
20. Exterior storage
(a) It is strictly forbidden to store anything outside the Building,
even on a temporary basis.
(b) Used boxes, pallets must be kept inside the Building until collected
for disposal.
21. Special installations
Tenant must obtain Landlord's approval prior to the installation of any
equipment, machinery, fixtures and furniture which have to be attached to,
mounted to or pierced through any element of the Leased Premises and/or the
Building. Furthermore, Tenant must obtain Landlord's approval prior to the
installation of any equipment, tank and any other item that Tenant wants to
install outside the Building (hereinafter the "Special Installation").
Any request for the approval of a Special Installation must be submitted
in writing along with the technical drawings or pertinent data which can easily
identify the specific nature of the installation. Furthermore, Special
Installation must conform to terms and conditions stipulated in the lease.
Following completion of a Special Installation which conforms to preceding
authorization, the Landlord will proceed, at Tenant's cost, with the inspection
of the installation for final acceptance.
<PAGE>
SCHEDULE "F"
MEMORANDUM OF AGREEMENT OF HYPOTHEC ON UNIVERSALITY OF MOVEABLE PROPERTY.
BY AND BETWEEN: ZMD SPORTS INVESTMENTS INC., a body politic and
corporate, duly incorporated, having its head office and
principal place of business in Montreal, Quebec herein
acting and represented by Michael Zunenshine its duly
authorized representative
(hereinafter the "Landlord")
AND: SPORT MASKA INC., a body politic and corporate, duly incorporated,
having its head office and principal place of business in Montreal,
Quebec, herein acting through and represented by Russell J. David,
its Vice President - Finance (hereunto duly authorized as he so
declares,
(hereinafter called "Tenant")
WHEREAS the Landlord and Tenant have entered into a lease for those
certain premises located at 600 Industrial Boulevard, St-Jean-sur-Richelieu,
Quebec (the "Premises") signed by the Landlord on the 7 day of April 1997,
signed by the Tenant on the 8 day of April 1997 (the "Lease");
WHEREAS the Tenant has agreed to grant the Landlord security on its
moveable property as security for the full and due performance of all its
obligations under the Lease including, without limitation, the payment of all
rentals and additional rentals;
WHEREFORE, THE PARTIES HERETO HEREBY AGREE AS FOLLOWS:
1. PREAMBLE
The preamble hereto shall form part hereof as though fully recited at
length herein.
2. HYPOTHEC
In order to guarantee the full and proper performance of all of the
obligations to be performed by the Tenant under the Lease, including, without
limitation, the payment of all rent, additional rental and any other sums
payable by the Tenant under the Lease, the Tenant hereby grants to the Landlord
a hypothec in favour of the Landlord in the amount of four million one hundred
fifty-five thousand five hundred and forty dollars ($4,155,540.00), on the
moveable property of the Tenant, both present and future, and constituting the
universality or universalities hereinafter described, including all property of
the same nature acquired as replacements for the said properties:
Description [ILLEGIBLE]
<PAGE>
Schedule "F" to Lease
Moveable Hypothec - Page 2
pertaining to or covering such moveables; and
(b) intentionally deleted.
(c) all of Tenant's right, title and interest in, to and under the Lease
and in and to the Premises.
The hypothec constituted herein is not and shall not be construed as being
an open or floating hypothec pursuant to the provisions of the Civil Code of
Quebec.
3. COSTS AND FEES
The Tenant shall pay the costs and fees of the publication of the hypothec
created hereby and the out of pocket costs of the Landlord with regard to the
renewal, notice, hypothecation, renunciation, quittance or mainlevee with
respect thereto.
4. REPRESENTATIONS OF THE TENANT
The Tenant hereby agrees that it shall not, outside the ordinary course of
business, sell, transfer or alienate all or substantially all of the property
hypothecated herein without the prior written consent of the Landlord, which
consent shall not unreasonably be withheld.
In the event of a transfer or alienation of the property to which the
Landlord has granted its consent, the Tenant shall formally advise the Landlord
by way of a written notice containing the name of the vendor and the purchaser
and a description of the property sold. This notice must be accompanied by a
copy of all deeds and documents relating to the sale, transfer or alienation of
property, together with a certified copy of the inscription of a notice of
conservation of the hypothec under the name of the purchaser with proof of
transmission of such notice to the purchaser. In addition to the foregoing, it
shall be required that any purchaser shall be required to assume, solidarily
with the Tenant, all of the obligations of the Tenant contained in the Lease.
5. LEASE OF PROPERTY HYPOTHECATED
The Tenant shall not, without the prior written consent of the Landlord,
lease the property hypothecated in whole or in part.
6. MOVEMENT OF PROPERTY HYPOTHECATED
The Tenant shall not, without the prior written consent of the Landlord,
change the location of the property hypothecated unless such change is made, in
the ordinary course of the enterprise of the Tenant.
7. intentionally deleted
8. ADDITIONAL HYPOTHEC
If the Landlord should so require, the Tenant hereby obliges itself to
consent to any additional hypothec which the Landlord may judge necessary or
useful in order to maintain the value of the guarantees accorded by these
presents.
[ILLEGIBLE]
<PAGE>
Schedule "F" to Lease
Moveable Hypothec - Page 3
The Tenant shall administer and operate its enterprise in a proper and
efficient manner and shall respect all the standards of financing agreed to with
the Landlord.
10. DEFAULTS
The Tenant shall be in default under the terms of these presents where:
(a) the Tenant has defaulted in the performance of its obligations
contained in the present Agreement;
(b) there has been an Event of Default under the Lease, including the
non-payment of Basic Rent, Additional Rent and any other sums which
may be due by the Tenant to the Landlord under the Lease;
(c) any steps are taken or any action or proceedings are instituted by
any person for the dissolution, winding-up or liquidation of the
Tenant or its assets and Tenant is not diligently proceeding to have
same dismissed;
(d) the Tenant has made a material representation herein or in the Lease
which proves untrue or incomplete.
In the Event of Default, the Landlord shall have the right under reserve
of all other rights and recourses herein contained or by law;
(a) to require the immediate payment of the full amount of any sums
which may be due or become due under the Lease in capital, interest,
costs and accessories;
(b) to demand the execution of any obligation not respected by the
Tenant;
(c) to exercise all hypothecary recourses which may be conferred upon it
by law.
11. TIME OF ESSENCE
Time shall be the essence of this Agreement and every part hereof.
12. PROPER LAW
This Agreement shall be construed in accordance with the laws of the
Province of Quebec.
13. SEVERABILITY
The invalidity of any provision of this Agreement or any covenant herein
contained on the part of any party hereto shall not affect the validity of any
other provision or covenant hereof or herein contained.
14. BINDING AGREEMENT
This Agreement shall enure to the benefit of and be binding upon the
heirs, executors, administrators, personal representatives, successors and
assigns of the parties hereto.
[ILLEGIBLE]
<PAGE>
Schedule "F" to Lease
Moveable Hypothec - Page 4
sufficiently given if such notice or other communication is in writing and is
delivered to such party personally, or mailed by registered mail, postage
prepaid, addressed to such party as follows:
TO Landlord: 6500 Trans Canada Highway
Suite 210
St. Laurent, Quebec H4T 1X4
TO THE Tenant: At the Premises, any other place of business of the
Tenant or to any principal, officer or director of the
Tenant
or to such other address of such party as any of them may from time to time
notify the other parties in the manner hereinbefore provided, and any such
notice, or other communications shall be deemed to have been received by any
such party when delivered to it or to him, or if mailed as aforesaid, on the
fifth (5th) business day following the date of mailing. In the event of an
interruption or slow down in the postal system, all notices shall be delivered.
16. LANGUAGE
The parties hereby confirm that they have requested that the present
document be drafted in the English language. Les parties confirment par les
presentes qu'elles on demande que le present document soit redige dans la langue
anglaise.
IN WITNESS WHEREOF THE LANDLORD HAS SIGNED AT [ILLEGIBLE] ON THIS 7 DAY OF
MARCH, 1997.
ZMD SPORTS INVESTMENTS INC.
Per: /s/ [ILLEGIBLE]
--------------------
/s/ [ILLEGIBLE]
- -----------------
Witness
/s/ [ILLEGIBLE]
- -----------------
Witness
IN WITNESS WHEREOF THE TENANT HAS SIGNED AT ON THIS 8TH DAY OF , 1997.
SPORT MASKA INC.
Per: /s/ [ILLEGIBLE]
--------------------
/s/ [ILLEGIBLE]
- -----------------
Witness
/s/ [ILLEGIBLE]
- -----------------
Witness
<PAGE>
Schedule G
DEED OF LEASE
LEASE entered into as of ___ day of April, nineteen hundred and ninety-seven
(1997)
BETWEEN: ZMD Sports Investments, Inc., a body politic and corporate, duly
incorporated, having its head office and principal place of business
in Montreal, Quebec, herein acting and represented by Michael
Zunenshine, its duly authorized representative (hereinafter called
the "Landlord")
AND: Sport Maska Inc., a body politic and corporate, duly incorporated, having
its head office and principal place of business in Montreal, Quebec,
herein acting through and represented by Russell J. David, its Vice
President-Finance hereunto duly authorized as he so declares (hereinafter
called the "Tenant")
1. DESCRIPTION OF THE PREMISES
Landlord, in consideration of the rents, covenants and agreements herein
contained on the part of Tenant to be paid, kept and performed, does hereby
lease to Tenant and Tenant does hereby hire and take from Landlord the space the
building bearing civic number 600 on Industriel Boulevard in the City of
Saint-Jean-sur-Richelieu (hereinafter referred to as the "Premises") which is
erected entirely within the limits of a building lot composed of those lots
known and designated upon the Plan and Book of Reference of the Official
Cadastres of the Parish of Saint-Jean and Parish of Saint-Luc, Registration
Division of Saint-Jean, as being the following:
o original lot number of four hundred and fifty three (453) of the
Official Cadastre of the Parish of Saint-Jean
o original lot number two hundred and seventy one (271) of the
Official Cadastre of the Parish of Saint-Luc
2. MODE OF ACQUISITION
[TO BE COMPLETED BY ZMD]
3. CHARACTERIZATION OF RIGHT
A lease of a non-residential immoveable.
4. TERM OF LEASE
The term of this lease shall commence on April __, 1997 and shall expire
at 11:59 p.m. on November 30, 2004, unless the said term shall sooner be
terminated under the provisions hereof.
5. EXTENT OF RIGHT
USE OF PREMISES
The Premises hereby leased shall be used and occupied by Tenant solely for
offices, warehousing, manufacturing and distribution.
<PAGE>
GOVERNING LAW
The present lease shall be construed and governed by the laws of the Province of
Quebec.
Executed in Montreal, as of the ___ day of April, 1997.
ZMD SPORTS INVESTMENTS, INC.
Per:
- ------------------------ --------------------------------
Witness Michael Zunenshine
[title]
Executed in New York, New York, U.S.A., as of the ___ day of April, 1997.
SPORT MASKA, INC.
Per:
- ------------------------ --------------------------------
Witness Russell J. David
Vice President - Finance
File: 563-1686
D E E D O F L E A S E
BETWEEN
2938201 CANADA INC.
"The Landlord"
AND
SPORT MASKA INC.
"The Tenant"
<PAGE>
T A B L E O F C O N T E N T S
Article Page
- ------- ----
1. DESCRIPTION AND LEASE OF PREMISES ...................................... 1
2. TERM OF LEASE .......................................................... 2
3. DATE OF OCCUPANCY ...................................................... 2
4. USE OF PROPERTY ........................................................ 2
5. NET NET RENTAL ......................................................... 2
6. ADDITIONAL RENTAL ...................................................... 4
7. NET NET LEASE .......................................................... 4
8. PAYMENT OF TAXES, ASSESSMENTS, ETC ..................................... 5
9. UTILITIES AND EQUIPMENT ................................................ 8
10. SUBLETTING AND ASSIGNMENT .............................................. 8
11. EXPROPRIATION .......................................................... 10
12. INSPECTION AND REPAIR .................................................. 10
13. OBSTRUCTIONS ........................................................... 11
14. EXPIRATION OF LEASE .................................................... 11
15. PLATE GLASS AND DOOR SIGNS ............................................. 12
16. WAIVER ................................................................. 12
17. COMPLIANCE WITH LAWS AND REGULATIONS ................................... 12
18. FAILURE OF TENANT TO PERFORM ........................................... 13
19. DEFAULT ................................................................ 13
20. BANKRUPTCY AND INSOLVENCY .............................................. 14
21. MAINTENANCE AND REPAIRS ................................................ 14
22. IMPROVEMENTS AND ALTERATIONS ........................................... 15
23. MOVEABLE HYPOTHEC [ILLEGIBLE] .......................................... 16
24. DAMAGE AND DESTRUCTION ................................................. 17
25. INSURANCE REQUIREMENTS ................................................. 18
26. CANCELLATION OF INSURANCE .............................................. 20
27. ASSIGNMENT BY LANDLORD ................................................. 21
28. ATTORNEY ............................................................... 21
29. INDEMNIFICATION ........................................................ 22
30. CONDITION OF PREMISES .................................................. 23
31. INTENTIONALLY DELETED .................................................. 24
32. [ILLEGIBLE]
33. [ILLEGIBLE]
<PAGE>
I.C.N.N.
Table of Contents
Page 2
34. HEATING ................................................................ 24
35. SIGNS & IDENTIFICATION ................................................. 24
36. RIGHT OF ENTRY ......................................................... 25
37. DISTURBANCE ............................................................ 26
38. NOTICE AND DEMANDS ..................................................... 26
39. RULES AND REGULATIONS .................................................. 26
40. LANDLORD'S WORK ........................................................ 27
41. EXTRA WORK ............................................................. 27
42. COST OF PREPARATION, REGISTRATION AND RADIATION ........................ 28
43. WASTE OR GARBAGE ....................................................... 28
44. ODOURS, DUST OR NOISE .................................................. 29
45. MANAGEMENT OF PROPERTY ................................................. 29
46. CUMULATIVE REMEDIES .................................................... 29
47. ACCORD AND SATISFACTION ................................................ 30
48. WAIVER OF COMPENSATION ................................................. 30
49. EXTENSIONS ............................................................. 30
50. WINDOW COVERINGS ....................................................... 31
51. ACCESS ................................................................. 31
52. FLOOR LOADING .......................................................... 31
53. PARKING ................................................................ 32
54. WAIVER OF RESPONSIBILITY ............................................... 32
55. INTENTIONALLY DELETED .................................................. 32
56. BROKERAGE COMMISSION ................................................... 33
57. CERTIFICATE OF INCORPORATION ........................................... 33
58. SUCCESSORS AND ASSIGNS ................................................. 33
59. DESCRIPTIVE HEADINGS ................................................... 33
60. INTERPRETATION ......................................................... 33
61. ENTIRE AGREEMENT ....................................................... 33
62. LANGUAGE ............................................................... 34
<PAGE>
DEED OF LEASE
BETWEEN: 2938201 CANADA INC., a body politic and corporate, duly
incorporated, having its head office and principal place of
business in Montreal, Quebec herein acting and represented by
Michael Zunenshine its duly authorized representative,
(hereinafter the "Landlord")
PARTY OF THE FIRST PART
AND: SPORT MASKA INC., a body politic and corporate, duly
incorporated, having an office and place of business in the
District of Montreal, Province of Quebec, herein acting
through and represented by Russell J. David, hereunto duly
authorized as he declares (hereinafter referred to as the
"Tenant");
PARTY OF THE SECOND PART
1. DESCRIPTION AND LEASE OF PREMISES
Landlord, in consideration of the rents, covenants and agreements
hereinafter contained on the part of the Tenant to be paid, kept and performed,
hereby leases to Tenant and Tenant does hereby hire and take from Landlord that
certain one hundred and eighty thousand (180,000) square feet measured in
accordance with Schedule "D" attached hereto and initialled by the parties for
identification to form an integral part of this lease, being the building
(hereinafter referred to as the "Leased Premises") bearing civic number 6375
Picard Street, St. Hyacinthe, Quebec, which building is erected upon that
certain parcel of land more specifically described as comprising subdivision One
of Lot One Thousand Two Hundred (1200-1), subdivision Two of Lot One Thousand
Two Hundred and One (1200-2), subdivision Six of Lot One Thousand Two Hundred
and Two (1202-6), subdivision Nine of Lot One Thousand Two Hundred and Fourteen
(1214-9), subdivision Five of Lot One Thousand Two Hundred and Fifteen (1215-5)
and subdivision Five of Lot One Thousand Two Hundred and Sixteen (1216-5) of the
Official Plan and Book of Reference of the Parish of St. Hyacinthe, the said
building and land hereinafter referred to as the "Property".
<PAGE>
I.C.N.N.
Page 2
2. TERM OF LEASE
The term of this lease shall commence on the 11 day of April 1997
(hereinafter referred to as the "Commencement Date") and shall terminate on the
last day of January 2005 (hereinafter referred to as the "Termination Date")
(hereinafter referred to as the "Term") unless sooner terminated under the
provisions hereof.
3. DATE OF OCCUPANCY
Tenant shall be allowed to occupy the Leased Premises on April 11, 1997
(hereinafter referred to as the "Date of Occupancy").
4. USE OF PROPERTY
The Tenant covenants that the Leased Premises shall be used solely for
offices, warehousing, manufacturing and distribution and for other purpose.
5. NET NET RENTAL
From May 1, 1997 until January 31, 2000 the Tenant covenants and agrees to
pay to the Landlord during the said period, in lawful money of Canada without
deduction,
<PAGE>
I.C.N.N.
Page 3
abatement or set-off, the annual sum of eight hundred thirty-one thousand six
hundred dollars ($831,600.00) calculated on the basis of four dollars and
sixty-two cents ($4.62) per square foot per annum, payable in equal, consecutive
monthly instalments of sixty-nine thousand three hundred dollars ($69,300.00)
each, in advance of the first day of each month during the said period
(hereinafter referred to as the "Minimum Net Net Rental").
For the last five (5) years of the Term of the Lease, the Tenant covenants
and agrees to pay to the Landlord during the said period, in lawful money of
Canada without deduction, abatement or set-off, the annual sum of nine hundred
ninety-seven thousand two hundred dollars ($997,200.00) calculated on the basis
of five dollars and fifty-four cents ($5.54) per square foot per annum, payable
in equal, consecutive monthly instalments of eighty-three thousand one hundred
dollars ($83,100.00) each, in advance of the first day of each month during the
said period (hereinafter referred to as the "Minimum Net Net Rental").
The Minimum Net Net Rental as herein provided shall be paid to the
Landlord and/or its nominee at the Head Office of the Landlord in the City of
St. Laurent, at 6500 Trans Canada Highway, #210, in the Province of Quebec, or
at such other place in Canada as shall be designated by the Landlord in writing
to the Tenant.
In the event that the Commencement Date is on a day other than the first
day of a calendar month, then the Tenant will pay on the Commencement Date a
part of the Minimum Net Net Rental as prorated on a per diem basis from the
Commencement Date to the end of the month in which the Commencement Date occurs,
based upon a period of three hundred and sixty-five (365) days.
Should the Tenant continue to occupy the Leased Premises after the expiry
of the Term without a written agreement there shall be no tacit renewal and the
Tenant shall pay the Landlord per diem Minimum Net Net Rental, Additional Rental
and its [ILLEGIBLE]
<PAGE>
I.C.N.N.
Page 4
to the Landlord against Tenant. However, the Tenant is not to have the right to
such occupancy beyond the expiry of the Term.
6. ADDITIONAL RENT
In this lease, unless there is something in the context inconsistent
herewith, the parties agree that "Additional Rental" means any and all amounts
due or becoming payable to the Landlord pursuant to this lease other than the
Minimum Net Net Rental, whether such amounts are specifically referred to as
Additional Rent or not.
It is agreed and understood that such amounts whether specifically
referred to as Additional Rent or not, shall be payable on the first day of the
month immediately following the date the said amount is claimed, or such other
date that Landlord designates.
7. NET NET LEASE
It is the intention of the parties that the Minimum Net Net Rental set out
in the article of this lease entitled "Net Net Rental" shall be net net to the
Landlord and that the Tenant shall pay for its own account, to the complete
exoneration of the Landlord, all costs and expenses affecting the Leased
Premises by the business carried on therein, and all Property taxes and costs as
hereinafter defined, other than those taxes, costs and expenses otherwise
payable by Landlord pursuant to this lease and other than any interest or
amortization charges of Landlord in respect of mortgages, hypothecs, or other
security and other than any capital gain or income tax due by Landlord, save and
except that Tenant shall be responsible for any business transfer tax, goods and
services tax or any other tax on rental income that nay be levied by any
government or other applicable taxing authority against the Landlord whatever
name such tax may have and whether such tax is in force at the date hereof or
whether it is adopted subsequently.
<PAGE>
I.C.N.N.
Page 5
8. PAYMENT OF TAXES, ASSESSMENTS, ETC.
The Tenant shall pay without duplication as Additional rental in each
lease year all Property taxes and costs, which include without limitation:
(i) The total cost if insuring the Property (including such insurance as
the Landlord shall effect or shall be required to effect by any secured
creditor) against fire and any other perils which presently are or
hereafter may be from time to time embraced by or defined in a standard
fire insurance policy with extensive coverage, comprehensive general
liability insurance, boiler and pressure vessel insurance, business
interruption and/or loss of rentals insurance and such other insurance as
the Landlord, acting reasonably may deem necessary or advisable.
(ii) The cost of cleaning, sweeping, snow removal, gardening and
landscaping, maintaining and operating the Property.
(iii) The cost of policing and supervising and seeing to the security of
the Property, including policing and supervising traffic to and from the
Property.
(iv) The cost of repairs and replacements to (including major repairs and
replacements, except for those caused by latent defects) and maintenance
of the building and improvements of the Property and their appurtenances
and equipment including the common areas and facilities.
(v) Remuneration, including contributions toward usual fringe benefits,
unemployment insurance and similar contributions, of employees engaged in
maintaining, operating and supervising the Property.
(vi) The Taxes on Capital as defined hereafter.
<PAGE>
I.C.N.N.
Page 6
Capital Tax means: For the purpose of this lease, "Capital Tax"
means the capital or large corporation tax laibility of the Landlord for
each of the Landlord's fiscal years during the Term or any renewal thereof
as per the Landlord's tax returns multiplied by the proportion that the
net book value of the Property is of the net book value of the total
assets of the Landlord, as determined in accordance with the Landlord's
audited financial statements, but excluding those assets in respect of
which Landlord is entitled to a deduction in the calculation of its
capital tax liability toward the tax authorities.
(vii) All Urban Community, municipal, school and special taxes
(hereinafter collectively referred to as the "Real Estate Taxes"), for the
Property on which the Leased Premises are situated and any other taxes
assessed against the building and/or land during the Term of the lease.
Should the mode of collecting business taxes, water taxes or other
assessments be such that the Landlord shall be required to pay for same,
or if the system of Real Estate Taxation shall be altered or varied and
any new tax or levy shall be levied or imposed on the building and/or the
land and/or the revenues therefrom and/or the Landlord in substitution for
and/or in addition to Real Estate Taxes presently levied or imposed on
immoveables in the City or Urban Community in which the Property is
situated, then any such new tax or levy shall be included within the
definition of Real Estate Taxes as contained in this section and the
provisions of this section shall apply mutatis mutandis.
In the event that there are separate assessments and tax bills for
the Leased Premises (including but not limited to all licence fees,
charges, rates assessed against the Leased Premises and/or all equipment
and [ILLEGIBLE]
<PAGE>
I.C.N.N.
Page 7
Premises by the Tenant), the Tenant shall pay as Additional Rental to the
Landlord or to the taxing authority, if the Landlord so directs, and
discharge in each lease year during the Term and within the times provided
for by the taxing authority all taxes so levied, the Tenant shall provide
the Landlord within ten (10) days after receipt with a copy of any
separate tax bills and assessments for the leased Premises and shall
promptly deliver to the Landlord receipts evidencing the payment of such
taxes.
(viii) Administrative costs equal to 15% of all taxes, costs and expenses
incurred by the Landlord including but not limited to all of the costs and
expenses enumerated in all the subparagraphs (i) to (vii) inclusively of
the present article.
The amount payable by the Tenant under the provisions of this
section shall be estimated by the Landlord in advance for each calendar year;
the Tenant agrees to pay to the Landlord such amount in equal, monthly
instalments in advance, during such period together with the Minimum Net Net
Rental provided for in the article of this lease entitled "Net Net Rental"; at
the end of the period for which such estimated payments have been made, the
Landlord shall send the Tenant a certified financial statement showing the
actual amount required to be paid under the provisions of this Article;
overpayment or underpayment shall be adjusted within thirty (30) days after the
delivery of the Landlord's statement.
Should the first year of the Term not commence on the first day of
January, or should the last year of the Term not terminate on the thirty-first
day of December, then, prior to the commencement of the Term, or of the last
year of the Term, as the case may be, or as soon thereafter as is reasonably
possible, the Landlord shall furnish to the Tenant an estimate of the charges
for the part of the year in question and the Tenant shall pay to the Landlord on
the first day of each month in advance during the part of the year in question
forming part of the Term, Additional Rental equal to the estimated charges
divided by the number of months during the part of the year in question.
<PAGE>
I.C.N.N.
Page 8
9. UTILITIES AND EQUIPMENT
The Tenant shall pay for its electricity (including without limitation any
electricity used for heating and/or air conditioning the Leased Premises), for
the cost of operating, repairing, maintaining, replacing and inspecting the
machinery and other facilities required for the heating, ventilating and air
conditioning of the Leased Premises and facilities and gas, water, sewer and
electric utility costs relating to same, telephone and all public utilities with
respect to the Leased Premises.
Throughout the Term of the lease, the Tenant shall engage a qualified air
conditioning maintenance contractor to maintain and repair the heating,
ventilating and air conditioning system. The Tenant, shall, within thirty (30)
days of signing these presents, provide the Landlord with a copy of a duly
executed heating, ventilating and air conditioning maintenance and repair
contract, as well as all renewals of the said contract.
10. SUBLETTING AND ASSIGNMENT
Tenant shall not be entitled to assign, transfer, or encumber this lease,
or any part thereof, or any of Tenant's title or interest therein or thereto or
sublet the whole or any part of the Leased Premises or permit the Leased
Premises or any part thereto to be used by another without conforming to the
terms herein contained, and in any event without the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed.
Landlord's refusal of consent shall be deemed reasonable (without in any
way restricting Landlord's right to refuse its consent on other reasonable
grounds) under the following circumstances:
<PAGE>
I.C.N.N.
Page 9
The consent of Landlord to any such assignment, transfer, encumbrance,
subletting and/or use shall not constitute a waiver of this Article and shall
not be deemed to permit any further assignment, transfer, encumbrance,
subletting or use by another. Notwithstanding any such assignment, transfer,
encumbrance, subletting and/or use, Tenant shall remain jointly and severally
without benefit of division or discussion, responsible for the performance of
all the terms and conditions of the present lease for the residue of the Term
and any renewal thereof.
If the Tenant wishes to so sublet or assign, it must submit to the
Landlord a copy of the offer to sublet or assign, together with a request for
consent of the Landlord.
Should the net rent per square foot to be paid by a subtenant or assignee,
whether in cash, goods, services or other consideration, exceed the Minimum Net
Net Rental per square foot payable hereunder, the Tenant shall pay to Landlord
monthly the amount of, or an amount equivalent to such excess.
The Tenant may sublet the Leased Premises or assign the lease to a parent,
subsidiary or affiliate company without seeking the consent of the Landlord
provided, however, that such subtenant or assignee shall remain bound jointly
and severally with the Tenant for all the terms and covenants of this lease for
the residue of the Term and any renewal thereof, and provided further that
Tenant shall notify Landlord in writing prior to such sublet or assignment.
<PAGE>
I.C.N.N.
Page 10
Landlord or its attorneys and all reasonable legal costs with respect thereto
shall be paid by the Tenant to the Landlord forthwith upon demand as Additional
Rental.
11. EXPROPRIATION
If the whole or any part of the building shall be condemned, expropriated
or taken in any manner for any public or quasi-public use or purpose, Landlord
or Tenant may terminate this lease by giving notice in writing to the other that
the Term hereof shall expire upon the day when possession is required for such
purpose and in the event of such expiration Landlord and Tenant shall have no
liability to each other of any nature.
12. INSPECTION AND REPAIR
Landlord and its agent shall have the right at all reasonable hours during
the Tern of this lease to enter the Leased Premises to examine the condition
thereof and to ascertain whether Tenant is performing its obligations hereunder,
and Tenant shall make any repairs which Tenant is obliged to make pursuant to
the terms of this lease. If Tenant fails to make any such repairs within thirty
(30) days after written notice from Landlord requesting Tenant to do so,
provided that such repairs may reasonably be made within the said period,
Landlord may, without prejudice to any other rights or remedies it may have,
make such repairs and charge the reasonable cost thereof to Tenant. Nothing in
this lease shall be construed to obligate or require Landlord to make any
repairs for which the Tenant is responsible hereunder, but Landlord shall have
the right at any time to make emergency repairs without prior notice to Tenant
and charge the reasonable cost thereof to Tenant. Any costs chargeable to Tenant
hereunder shall be payable forthwith on written demand as Additional Rental and
if not paid within thirty (30) days shall bear interest at the prime lending
rate as determined by the Royal Bank of Canada on a daily basis plus four
percent (4%) from the date of such written demand until paid.
<PAGE>
I.C.N.N.
Page 10
Landlord or its attorneys and all reasonable legal costs with respect thereto
shall be paid by the Tenant to the Landlord forthwith upon demand as Additional
Rental.
11. EXPROPRIATION
If the whole or any part of the building shall be condemned, expropriated
or taken in any manner for any public or quasi-public use or purpose, Landlord
or Tenant may terminate this lease by giving notice in writing to the other that
the Term hereof shall expire upon the day when possession is required for such
purpose and in the event of such expiration Landlord and Tenant shall have no
liability to each other of any nature.
12. INSPECTION AND REPAIR
Landlord and its agent shall have the right at all reasonable hours during
the Term of this lease to enter the Leased Premises to examine the condition
thereof and to ascertain whether Tenant is performing its obligations hereunder,
and Tenant shall make any repairs which Tenant is obliged to make pursuant to
the terms of this lease. If Tenant fails to make any such repairs within thirty
(30) days after written notice from Landlord requesting Tenant to do so,
provided that such repairs may reasonably be made within the said period,
Landlord may, without prejudice to any other rights or remedies it may have,
make such repairs and charge the reasonable cost thereof to Tenant. Nothing in
this lease shall be construed to obligate or require Landlord to make any
repairs for which the Tenant is responsible hereunder, but Landlord shall have
the right at any time to make emergency repairs without prior notice to Tenant
and charge the reasonable cost thereof to Tenant. Any costs chargeable to Tenant
hereunder shall be payable forthwith on written demand as Additional Rental and
if not paid within thirty (30) days shall bear interest at the rate of eighteen
percent (18%) per annum from the date of such written demand. Moreover, Landlord
may, but shall not be obliged, to make any repairs of an urgent nature without
prior notice to Tenant, provided that the Landlord advises the Tenant thereof as
soon as is reasonably possible, but for the
<PAGE>
I.C.N.N.
Page 11
Tenant.
13. INTENTIONALLY DELETED
14. EXPIRATION OF LEASE
The Tenant shall, at the expiration or sooner termination of the Term of
this lease, peaceably surrender with all additions, alterations, changes or
erections which at any time during the Term hereof shall be made therein or
thereon whether by Landlord or Tenant, in good repair and condition, subject to
reasonable wear and tear only the whole without any compensation whatsoever
being allowed to the Tenant for same, said alterations or installations then
becoming Landlord's sole and absolute property. Any and all damages caused to
the building shall be repaired to meet the original quality of the damaged
materials.
Notwithstanding the foregoing, the Tenant shall at the termination of the
lease or sooner termination thereof pursuant to the terms and conditions of the
lease remove its movable effects and/or articles belonging to or brought upon
the Leased Premises by Tenant and the Tenant shall repair any damages caused by
such removal, similarly at such time. Any fixtures and any movable effects or
articles which are affixed on the Leased Premises in any manner whatsoever shall
become Landlord's sole and absolute property.
Notwithstanding the foregoing, Tenant shall, upon [ILLEGIBLE]
<PAGE>
I.C.N.N.
Page 12
this lease, Landlord shall have the right, at Tenant's expense, to repair any
damages caused to the Leased Premises and not repaired by Tenant, the whole
subject to reasonable wear and tear. Furthermore, Landlord shall have the right
at Tenant's expense to remove any signage that Tenant may have left on the
building and to repair any damages caused by such removal to restore the
building to its original condition, the whole without any compensation
whatsoever being allowed to the Tenant for same.
15. PLATE GLASS AND DOOR SIGNS
Any breakage of glass or plate glass in or about the Leased Premises and
any damage to signs on Tenant's doors, except breakage or damage caused by the
negligence of the Landlord or of its employees, servants or agents, shall be
charged to and payable by the Tenant.
16. WAIVER
The failure of the Landlord or Tenant to insist upon a strict performance
of any of the agreements, terms, covenants and conditions hereof shall not be
deemed a waiver of any subsequent breach or default in any of such agreements,
terms, covenants and conditions.
17. COMPLIANCE WITH LAWS AND REGULATIONS
The Tenant shall, at its own expense, promptly comply with the requirements
of every applicable statute, law and ordinance and with every applicable lawful
regulation or order with respect to the removal of any encroachment placed by
the Tenant, or to the condition, equipment, maintenance, or use of occupation of
the Leased Premises, including the making of any alteration addition in or to
any structure upon, connected with or appurtenant to the Leased Premises,
whether or not such alteration be structural or be required on account of any
particular use of which the Leased Premises or part thereof may be put and
whether or not such requirement, regulation or order be of a kind now existing
or within the [ILLEGIBLE]
<PAGE>
I.C.N.N.
Page 13
Fire Underwriters' Association, or any body having similar functions or of any
liability or fire insurance company by which the Landlord and/or the Tenant may
be insured.
18. FAILURE OF TENANT TO PERFORM
If the Tenant fails to pay any taxes, rates, insurance premiums or charges
which it has herein covenanted to pay, the Landlord may pay the same and shall
be entitled to charge the sums so paid to the Tenant who shall pay them
forthwith on demand, as Additional Rental and the Landlord, in addition to any
other rights, shall have the same remedies and may take the same steps for all
such sums as it might take for the recovery of rent. Such amounts so paid by the
Landlord and any payments of Minimum Net Net Rental and/or Additional Rental
when not paid on any due date as provided for herein shall bear interest at the
prime lending rate as determined by the Royal Bank of Canada on a daily basis
plus four percent (4%) per annum from the time such arrears become due until
paid to the Landlord.
19. DEFAULT
The following shall be considered defaults under the terms of this lease:
(a) In the event that Tenant shall be in default under any provision of
this lease providing for the payment of Minimum Net Net Rental or Additional
Rental or of any other amounts required to be paid by the Tenant to the Landlord
under this lease which amounts shall be deemed and treated as rent and payable
and recoverable as rent, which is not cured within ten (10) days of Tenant's
receipt of notice of such default;
(b) In the event Tenant abandons or attempts to abandon the Leased
Premises before the expiry of the present lease, whether with the knowledge of
Landlord or not, or in the event the Leased Premises are used by any person,
firm or corporation other than those that are entitled to use them hereunder; or
any execution be issued pursuant to a judgement rendered against Tenant or
pursuant to this lease, or if an agent acting under a Trust Deed or Hypothec
takes possession of the Tenant's inventory assets, etc.. or [ILLEGIBLE]
<PAGE>
I.C.N.N.
Page 14
of its obligations contained in this lease (other than a default in a) and b)
stipulated above) and such default shall continue for fifteen (15) days after
written notice specifying such default shall have been given by Landlord to
Tenant, unless Tenant shall commence to cure the default with reasonable
diligence, in which case Tenant shall upon written request to Landlord be
entitled to such reasonable extension of time to enable such default to be
remedied.
In the event of any default under the terms of this lease, on the part of
the Tenant, Landlord shall have the right, at its option and absolute
discretion, to terminate this lease and in addition, Landlord, may, upon fifteen
(15) days notice forthwith enter upon and take possession of the Leased Premises
and/or remove the Tenant's effects therefrom, any statute or law to the contrary
notwithstanding the whole without prejudice to and under reserve of, all other
rights and recourses of Landlord to claim any and all losses and damages
sustained by the Landlord by reason of or arising from and default of the
Tenant,*
* including without limitation the expenses of reletting the Leased Premises
(including the cost of any repairs, decorating, alterations or improvements
necessitated thereby as well as reasonable attorney fees which shall not exceed
fifteen percent (15%) of the amount granted by judgement.
20. BANKRUPTCY AND INSOLVENCY
In the event that Tenant shall be adjudicated bankrupt or make general
assignment for the benefit of creditors, or take, the benefit of any insolvency
or bankruptcy act, or if a receiver or trustee be appointed for the property of
the Tenant, or any part thereof, the present lease shall automatically terminate
on the occurrence of any of the aforesaid events without further notice or
delay, and Landlord shall be entitled to recover all arrears of Minimum Net Net
Rental and Additional Rental as well as six (6) months of future Minimum Net Net
Rental and Additional Rental or such other accelerated amount that the law may
at any time provide.
21. MAINTENANCE AND REPAIRS
Notwithstanding the provisions of Articles 1604, 1605, and 1627 of the
Civil Code of Lower Canada, the Tenant, at its own expense shall operate,
maintain and keep the Leased [ILLEGIBLE]
<PAGE>
I.C.N.N.
Page 15
all needed repairs and replacements to the Leased Premises (save and except for
repairs caused by latent defects) which a careful owner would make, including
without limitations, the water, gas, drain and sewer connections, pipes and
mains, electrical wiring, water closets, sinks and accessories thereof, and all
equipment belonging to or connected with the Leased Premises or used in its
operation.
22. IMPROVEMENTS AND ALTERATIONS
The Tenant shall have the right to make at its own expense, with the prior
written consent of the Landlord, which consent shall not be unreasonably
withheld, additions, alterations and changes in the Leased Premises provided,
however, that no structural alterations and no construction of new or additional
buildings or structures shall be commenced except with the prior written consent
of Landlord and except on compliance with the following conditions (such
structural alterations and construction of new or additional buildings or
structures being hereinafter referred to as the "work").
(i) Tenant shall furnish to Landlord plans and specifications showing in
reasonably complete detail the work proposed to be carried out and the
estimated cost thereof and Landlord shall approve or reject such plans and
specifications within thirty (30) days after receipt of the same. If such
plans and specifications are approved, all work shall be carried out in
compliance with the same;
(ii) The value of the Leased Premises shall not, as a result of any work
proposed to be carried on by Tenant, be less than the value of the Leased
Premises before the commencement of such work and Landlord shall be the
sole judge of such value;
(iii) All work shall be carried out with reasonable dispatch and in a good
workmanlike manner and in compliance with all applicable permits,
authorizations, building and zoning by-laws and with all regulations and
[ILLEGIBLE]
<PAGE>
I.C.N.N.
Page 16
(iv) The Leased Premises shall at all times be free of all conditional
bills of sale, pledges, registered privileges, workmen's and suppliers
liens and other similar liens and charges;
(v) If the cost of any work shall be in excess of five thousand dollars
($5,000.00) as reasonably estimated by Landlord, Landlord may require
Tenant to furnish security reasonably satisfactory to Landlord
guaranteeing the completion of the work and the payment of the cost
thereof free and clear of all conditional bills of sale, pledges,
privileges, workmen's and suppliers' liens and other similar liens and
charges;
(vi) Tenant shall maintain Workmen's Compensation insurance covering all
persons employed in connection with the work and shall produce evidence of
such insurance to Landlord and shall also maintain such general liability
insurance for the protection of Landlord and Tenant as Landlord may
reasonably require;
(vii) all work, then completed, shall be comprised in, and form part of,
the Leased Premises and shall be subject to all the provisions of this
lease and Tenant shall not have any right to claim compensation therefor
and the same shall not be removed by Tenant on termination of this lease.
Landlord may, at its sole option and discretion submit a bid for the
performance of the Work approved by Landlord. If Tenant does not select
Landlord's bid, Tenant shall be obliged to pay to Landlord all of Landlord's
costs, overhead, administration in the review and approval of such work, as well
as, all costs associated with architectural or engineering consultants,
preparation or amendment of plans, the whole subject to an upper maximum cap
equivalent to ten percent (10%) of the value of the Work and subject to a
minimum charge of two thousand dollars ($2,000.00).
23. MOVEABLE HYPOTHEC
In order to guarantee the full and proper performance of all of the
obligations to be performed by Tenant under this Lease, Tenant hereby undertakes
to execute in favour of Landlord simultaneously with these presents, a deed of
moveable hypothec, subject to the treatment set forth in the Landlord Agreements
or any other agreement entered into in connection with a subsequent financing,
which said hypothec shall rank ahead of all other hypothecs or rights of any
nature of any and all other creditors, on the universality of the moveable
property of Tenant, present or future, corporeal or non-corporeal, situated in
or near the Leased Premises in the Building, or with respect to the [ILLEGIBLE]
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I.C.N.N.
Page 17
24. DAMAGE AND DESTRUCTION
In the event that the Leased Premises shall be destroyed or damaged by
fire or other casualty, insurable under fire and all risks insurance coverage,
then:
(i) If the damage or destruction is such that the Leased Premises are
rendered wholly unfit for occupancy or it is impossible or unsafe to use
and occupy them, and if in either event the damage, in the further opinion
of Landlord (which shall be given by written notice to Tenant within
thirty (30) days of the happening of such damage or destruction) cannot be
repaired with reasonable diligence within seventy-five (75) days from the
happening of such damage or destruction, either Landlord or Tenant may
within five (5) days next succeeding the giving of Landlord's opinion as
aforesaid, terminate this lease by giving to the other notice in writing
of such termination, in which event the Term of this lease shall cease and
be at an end as of the date of such destruction or damage and the rent and
all other payments for which Tenant is liable under the terms of this
lease shall be apportioned and paid in full to the date of such
destruction or damage. In the event that neither Landlord nor Tenant so
terminates this lease, rent and all other payments for which Tenant is
liable hereunder shall abate from the date of the happening of the damage
until the damage shall be made good to the extent of enabling Tenant to
use and occupy the Leased Premises;
(ii) if the damage be such that the Leased Premises are wholly unfit for
occupancy, or if it is impossible or unsafe to use or occupy them but if
in either event the damage, in the opinion of Landlord (which shall be
given to Tenant within thirty (30) days from the happening of such damage)
can be repaired with reasonable diligence within seventy-five (75)
[ILLEGIBLE]
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I.C.N.N.
Page 18
abate from the date of the happening of the damage until the damage shall
be made good to the extent of enabling Tenant to use and occupy the Leased
Premises provided, moreover that if such damage is not fully repaired
within seventy-five (75) days of the happening of the damage, Tenant may
terminate this Lease upon ten (10) days notice;
(iii) if the damage can be made good as aforesaid within seventy-five (75)
days of the happening of such destruction or damage, and the damage is
such that the Leased Premises are capable of being partially used for the
purposes for which leased, until such damage has been repaired, rent and
all other payments for which Tenant is liable hereunder shall abate in the
proportion that the part of the Leased Premises rendered unfit for
occupancy bears to the whole of the Leased Premises.
In the event that the building is partially destroyed or damaged so
as to affect fifty percent (50%) or more of the rentable area of the
building containing the Leased Premises, or in the opinion of Landlord the
building is rendered unsafe, and whether or not the Leased Premises are
affected, and in the opinion of Landlord (which shall be given by written
notice to Tenant within thirty (30) days of the happening of such
destruction, cannot be repaired with reasonable diligence within
seventy-five (75) days from the happening of such damage or destruction,
Landlord may within five (5) days next succeeding the giving of Landlord's
opinion as aforesaid, terminate this lease by giving to Tenant notice in
writing of such termination, in which event the Term of this lease shall
cease and be at an end as of the date of such destruction or damage and
the rent and all other payments for which the Tenant is liable under the
terms of this lease shall be apportioned and paid in full to the date of
such destruction or damage.
Nothing herein contained shall oblige Landlord to repair or reconstruct
any alterations, improvements, or the Property of Tenant.
25. INSURANCE REQUIREMENTS
[ILLEGIBLE]
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I.C.N.N.
Page 19
Premises or bring into or keep upon the premises any article which will affect
the fire risk or increase the rate of fire insurance or other insurance on the
building.
Tenant shall comply with the rules and requirements of the Insurers'
Advisory Organization of Canada or any successor body, and/or a loss prevention
from or consultant chosen by Landlord's insurers, and with the requirements of
all insurance companies having policies of any kind whatsoever in effect
covering the building, including policies insuring against tort or delictual
liability.
In no event shall any inflammable material, except for kinds and
quantities required for ordinary office occupancy and permitted by the insurance
policies covering the building, or any explosives or radio active material
whatsoever, be taken into the Leased Premises or retained therein.
Should the rate of any type of insurance on the building be increased by
reason of any violation of this lease by Tenant; Tenant in addition to all other
remedies of Landlord, shall pay the amount of such increase.
Tenant shall take out and keep in force during the Term of this lease
comprehensive general liability insurance in amounts and with policies in form
reasonably satisfactory from time to time to Landlord and with insurers
acceptable to Landlord, the comprehensive general liability insurance in no
event to be for less than five million dollars ($5,000,000.00), inclusive limits
and all risks insurance covering furniture, fixtures and improvements in an
amount equal to the full replacement value thereof Tenant agrees to provide
Landlord with copies of each insurance policy upon execution of said policies
and at the latest fifteen (15) days prior to Tenant's occupancy of the Leased
Premises. Each such policy shall contain a sixty (60) day cancellation clause
and shall name Landlord as an additional insured as its interest may appear.
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Page 20
Tenant will pay the amount of any increase in insurance premiums on the
whole of the Property of which the Leased Premises form part, if such increased
is caused by Tenant's operations in the Leased Premises.
Tenant agrees that if Tenant fails to take out or to keep in force such
insurance Landlord will have the right to do so and to pay the premium therefor
and in such event Tenant shall repay to Landlord the amount paid as premium,
which repayment shall be collectible as Additional Rental payable on the first
day of the next month following the said payment of Landlord.
Moreover Tenant shall take out and keep in force during the Term of this
lease an environmental liability policy of a coverage of at least one million
dollars ($1,000,000.00) and Landlord shall be added as an additional insured
under said policy. Copy of said policy shall be provided to Landlord.
26. CANCELLATION OF INSURANCE
If any insurance policy on the Property or any part of it is cancelled or
threatened by the insurer to be cancelled, or if the coverage under it is
reduced by the insurer to an amount less than that which is required by section
25, because of the use of occupation any part of the Leased Premises by the
Tenant or by any occupant of the Leased Premises, and if the Tenant fails to
remedy the condition giving rise to the cancellation, threatened cancellation or
reduction of coverage within ten (10) days after notice by Landlord, the
Landlord may, either:
(a) reenter and take possession of the Leased Premises immediately by
leaving upon the Leased Premises a notice of its intention to do so upon
which the Landlord will have the same rights and remedies that are
available to him under this lease or in virtue of the general law; or
(b) enter upon the Leased Premises and remedy the [ILLEGIBLE]
<PAGE>
I.C.N.N.
Page 21
of such costs and expenses representing the Landlord's overhead, which costs and
expenses may be collected by the Landlord as Additional Rental and the Landlord
will not be liable for any damage or injury caused to any property of the Tenant
or others located on the Leased Premises as the result of the entry. Such an
entry by the Landlord is not a reentry or a breach of any covenant for quiet
enjoyment.
Tenant covenants that nothing will be done or omitted to be done whereby
any policy shall be cancelled or the Leased Premises rendered uninsurable.
27. ASSIGNMENT BY LANDLORD
The Landlord declares that it may assign its rights under this lease to a
lending institution as collateral security for a loan to the Landlord and in the
event that such an assignment is given and executed by the Landlord and
notification thereof is given to the Tenant by or on behalf of the Landlord, it
is expressly agreed between the Landlord and Tenant that this lease shall not be
cancelled or modified for any reason whatsoever without the consent in writing
of such lending institution whenever such consent is so required.
Tenant hereby covenants and agrees that it will and whenever reasonably
required by Landlord and at Landlord's expense, consent to and become a party to
any instrument or instruments permitting a mortgage, trust deed or hypothec to
be placed on the Property, or any part thereof of which the Leased Premises are
a part as security for any indebtedness covered by the said trust deed, mortgage
or hypothec in order to subordinate this lease to the said trust deed, mortgage
or hypothec. However, no subordination by the Tenant shall have the effect of
permitting the holder of any trust deed, hypothec or mortgage to disturb the
Tenant's enjoyment of the Leased Premises as long as the Tenant shall comply
with the covenants and agreements to be kept and performed by it under this
lease.
It is agreed and understood that in the event of any sale of the Property
by Landlord, then Landlord shall automatically be relieved of any and all
obligations and liabilities under this Lease accruing from and after the date of
such sale, provided that the purchaser of the Property assumes all obligations
of Landlord under this Lease.
27A. DISTURBANCE AGREEMENTS, USE OF RENT AND TENANT FINANCING
Landlord agrees (a) to use commercially reasonable efforts to obtain
non-disturbance agreements from holders of any mortgages which may now or
hereafter affect this Lease or the Property, which non-disturbance agreements
shall provide that, in the event of foreclosure, such mortgage(s) shall abide by
such leases and permit the Tenant to continue possession and quiet enjoyment of
the Property, and (b) not to seek a modification of any mortgage or any other
document that would result in the elimination of a non-disturbance provision or
agreement then in existence. In the event that the Landlord is unable, prior to,
May 31, 1997 to obtain each such non-disturbance agreement on terms reasonably
satisfactory to the Tenant, the Landlord agrees to meet and confer with the
Tenant as to the status of negotiations with the mortgagees and to discuss and
pursue mutually agreeable procedures for obtaining such non-disturbance
agreements.
Landlord hereby covenants and agrees that unless and until Landlord has
obtained for the benefit of Tenant a non-disturbance agreement from each holder
of a mortgage which may now or hereafter affect this Lease or the Property, the
Landlord shall apply all rent payments made by the Tenant under this Lease to
the extent necessary to satisfy all monthly monetary obligations under the
mortgages as they become due.
The Landlord hereby agrees to provide any documents reasonably necessary
for the Tenant to obtain any financing subsequent to the date hereof and/or in
replacement of Tenant's financing existing as of the date hereof (each, a
"Subsequent Financing" and each provider of financing thereunder, a "Subsequent
Financier"). Without limiting the generality of the foregoing, Landlord agrees
to enter, with respect to any Subsequent Financing, into an agreement in form
and substance similar to the Intercreditor Agreement pursuant to which
Landlord's hypothec, if any, shall be subordinate to the
<PAGE>
I.C.N.N.
Page 22
execute and deliver promptly those instruments and certificates referred to in
the Article entitled "Assignment by Landlord" which are requested by the
Landlord. However, if ten (10) days after the date of request by the Landlord
the Tenant has not executed and delivered them, the Tenant hereby irrevocably
appoints the Landlord as the Tenant's attorney with full power and authority to
execute and deliver in the name of the Tenant the instruments and certificates
required or the Landlord may, at its sole option and discretion, terminate this
lease upon giving Tenant a three (3) business day notice of its intent without
incurring any liability.
[28. SECTION MISSING]
29. INDEMNIFICATION
Except if caused directly by the negligence of the Landlord, its agents,
employees, or representatives, or by any breach, violation or nonperformance by
the Landlord of any covenant, term or provision hereof, the Landlord shall not
be liable nor responsible in any way for an injury of any nature whatsoever that
may be suffered or sustained by Tenant or any employee, agent or customer of the
Tenant or any other person who may be upon the Leased Premises or for any loss
or damage to and property belonging to the Tenant or to its employees or to any
other person while such property is on the Leased Premises and in particular
(but without limiting the generality of the foregoing) the Landlord shall not be
liable for any damage or damages, of any nature whatsoever to any such property
caused by the failure, by reason of a breakdown or other cause to supply
adequate drainage, snow or ice removal or by reason of the interruption of any
public utility or service or in the event of steam, water, rain or snow which
may leak into, issue or flow from any part of the building or from the water,
steam, sprinkler, or drainage pipes or plumbing works of the same, or from any
other place or quarter or for any damage caused by anything done or omitted by
any tenant, but the Landlord shall use all reasonable diligence to remedy such
condition, failure or interruption of service when not directly or indirectly
attributable to the Tenant, after notice of same, when it is within its power
and obligation to do so.
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Page 23
The Tenant shall indemnify and hold harmless the Landlord from and against
all liability, claims, damages or expenses of any kind or nature due to or
arising out of:
(i) any breach, violation or nonperformance of any provision of this lease
set forth and contained on the part of the Tenant to be fulfilled, kept,
observed and performed; and/or
(ii) any damage to the Property caused by the Tenant's use and occupancy
of the Leased Premises; and/or
(iii) any injury to person or persons including death, resulting at any
time therefrom, occurring in or about the Leased Premises by reason of a
breach or non-performance or of any wrongful act, neglect or fault on the
part of the Tenant;
(iv) any injury to person or persons including death, sickness and
diseases resulting at any time therefrom, whether caused by a virus,
bacteria or any substance brought upon the Leased Premises and manipulated
by Tenant, its employees, agents or representatives and/or located on or
about the Property; and/or
(v) any injuries, damages or costs arising out of the occupancy of the
Leased Premises in connection with any environmental impairment;
the whole save that the Tenant shall not be liable for the fault of the Landlord
or persons for whom it is legally responsible. Such indemnification by the
Tenant for any of the above items occurring during the Term of this lease shall
survive the termination of this lease, anything in this lease to the contrary
notwithstanding.
30. CONDITION OF PREMISES
The Tenant represents that the Leased Premises have been [TEXT MISSING]
<PAGE>
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Page 24
representation or warranty, expressed or implied, in fact or by law, by the
Landlord, and without recourse to the Landlord as to the nature, condition or
usability thereof or as to the use or uses to which the Leased Premises or ny
part thereof may be put.
31. INTENTIONALLY DELETED
32. OUTSIDE AREAS
The Tenant shall not use any part of the exterior parking and loading
areas or any other areas outside the Leased Premises for any purpose other than
parking, shipping or receiving in the areas designated by the Landlord for same.
33. PERMITS, ETC.
The Tenant shall obtain all necessary permits and licenses required for
the occupancy and carrying on of its business, the Landlord making no warranties
whatsoever regarding zoning, permits and licenses, which may be required by the
Tenant. Should the Tenant fail to obtain any required permit and/or license, it
shall remain bound to perform its obligations under the present lease.
34. HEATING
Tenant shall suitably heat the Leased Premises at its own cost and
expense.
35. SIGNS & IDENTIFICATION
The Tenant shall be entitled to install on the Leased Premises such signs
as are normally installed in connection with its business, as well as identify
itself on the exterior [TEXT MISSING?]
<PAGE>
I.C.N.N.
Page 25
identification to form an integral part of this lease and provided further that
Tenant obtains Landlord's consent which consent shall not be unreasonably
withheld. Furthermore, the authorization to install a sign will be issued in
exchange of a deposit equivalent to the estimated cost for the repair of the
supporting building surface following the removal of the sign. Installation, if
approved, will be at the sole expense of the Tenant. Following a sign
installation which conforms to preceding authorization and with proof of
municipal permit and in the case of electrified signs with CSA approval or the
approval of other governing body, the Landlord will proceed with the inspection
of the installed sign for final acceptance.
All civic numbers are supplied and installed at Tenant's expense by the
Landlord according to its standards. The Tenant's identification at the rear of
the building is also supplied and installed by the Landlord at Tenant's expense
according to Belcourt's standard # 20.11.87 attached to the Rules and
Regulations in Schedule E.
In the event that Tenant installs any sign without obtaining Landlord's
prior approval, Tenant shall remove such sign upon receipt of Landlord's notice.
If Tenant fails to remove such sign within twenty-four (24) hours of receipt of
Landlord's notice, then Landlord shall have the right, at Tenant's expense, to
remove such sign and to repair any damages caused by such removal and Tenant
shall immediately pay for such costs, upon demand, said costs bearing the
interest rate as provided for in the Article entitled "Failure of Tenant to
Perform" of the present lease, the whole without further notice or any form of
legal process.
36. RIGHT OF ENTRY
The Landlord shall have the right to exhibit the Property from time to
time to any prospective mortgagee, purchaser or Tenant at all reasonable
business hours.
The Tenant hereby renounces to Article 1645 of the Civil Code of Lower
Canada.
<PAGE>
I.C.N.N.
Page 26
of reasonable dimensions and reasonably placed so as not to interfere with the
business of Tenant, stating that the Leased Premises are for sale and for six
(6) months prior to the Termination Date of this lease Landlord shall have the
right to place upon the Leased Premises a similar notice that the Leased
Premises are for rent and Tenant will not remove such notice or knowingly permit
same to be removed.
37. DISTURBANCE
Tenant shall not use the Leased Premises for any purpose, notwithstanding
anything stated herein, which may cause noise, disturbance or noxious odours, to
the discomfort of the other tenants and neighbours, and renounces to any claims
he may have or acquire against the Landlord under Article 1636 of the Civil Code
of the Province of Quebec.
38. NOTICE AND DEMANDS
Any notice or demand given by the Landlord to the Tenant shall be deemed
to be duly given when served upon the Tenant personally, or when mailed
(registered) to the Tenant at the address of the premises.
The Tenant elects domicile at the Leased Premises for the purpose of
service of all notices, writs of summons or other legal documents in any suit at
law, action or proceeding which the Landlord may take under this lease.
Any notice or demand given by the Tenant to the Landlord shall be deemed
to be duly given when served upon the Landlord personally or when mailed
(registered) to the Landlord at the address designated by the Landlord for
purposes of payment of rent hereunder.
39. RULES AND REGULATIONS
There is a schedule of Rules and Regulations annexed hereto as Schedule
"E" initialled by the parties for identification to form an integral part herein
and the Tenant [ILLEGIBLE]
<PAGE>
I.C.N.N.
Page 27
reasonable rules and regulations not contrary to the spirit and intent of this
lease as in its discretion may from time to time be needful for the safety,
care, cleanliness and proper administration of the Property including the Leased
Premises, and for the preservation of good order therein, and the same be
observed and performed by the Tenant and by the clerks, servants, employees,
agents and customers of the Tenant, and all such rules and regulations now or
hereafter to be established by the Landlord as herein provided shall form part
of this lease as if now set forth at length herein. Any default under the Rules
and Regulations shall constitute a default hereunder.
Furthermore, in the event that Tenant does not comply with the rules and
regulations, Landlord shall have the right without notice, to enter the Leased
Premises and execute any extra cleaning or work necessary to rectify Tenant's
infraction, the cost of which shall be immediately payable by Tenant as
Additional Rental upon Landlord's request. It is agreed and understood that the
terms and conditions of this lease shall prevail over any of the terms of the
Rules and Regulations.
40. LANDLORD'S WORK
The Landlord will deliver the Leased Premises to the Tenant in an "as is"
condition.
41. EXTRA WORK
Should the Tenant require modifications which involve work other than work
which Landlord has obliged itself to perform pursuant to the section of this
lease entitled "Landlord's Work", the said work shall be deemed an extra at
Tenant's cost.
In the event Landlord agrees to execute the said extra work, it shall
forward Tenant a written estimate indicating the cost of said extra work. Tenant
shall have a delay of five (5) days upon receipt of said estimate to confirm, in
[ILLEGIBLE]
<PAGE>
I.C.N.N.
Page 28
(a) the date Tenant takes occupancy, or
(b) the date Tenant signs the lease.
42. COST OF REGISTRATION AND RADIATION
The parties hereto undertake to execute a duplicate short form lease for
the purposes of registration only, in conformity with the short form lease set
out at Schedule "G". The parties agree that, except for the sole purpose of
registration, the parties shall be exclusively governed by the terms of this
Lease.
In addition, Tenant shall, at its own cost, at the expiration of the Term
radiate the registration of the lease from the Index of Immoveables.
In the event the said registration is not radiated within thirty (30) days
from the expiration of the Term, Tenant hereby irrevocably appoints the Landlord
as the Tenant's attorney with full power and authority to execute in the name of
the Tenant any documents and instruments required to effect the said radiation
of the registration of the lease from the Index of Immoveables and Tenant
further authorizes Landlord to deliver the said instruments and documents to the
appropriate Registry Office for the purpose of effecting all the appropriate
registrations and radiations. The cost of the preparation of said documents and
instruments as well as the cost of registering said documents and instruments
shall be borne by Tenant.
43. WASTE OR GARBAGE
The Tenant agrees that it will keep the Leased Premises and common areas
and facilities (as defined in Schedule "D") adjacent thereto in a clean and tidy
condition and will not permit waste paper, garbage, ashes, waste, debris or
other objectionable material to accumulate thereon.
Tenant shall arrange for removal and disposal of waste [ILLEGIBLE]
<PAGE>
I.C.N.N.
Page 29
44. ODOURS, DUST OR NOISE
The Tenant warrants that no noxious odours, dust or noise will emanate
from the Leased Premises as a result of the operations conducted by the Tenant
therein and Tenant further covenants that it will not cause or maintain any
nuisance in, at or on the Leased Premises and/or the Property. Accordingly, the
Tenant agrees that should such noxious odour, dust or noise conditions exist, it
will, at its own expense, take such steps as may be necessary to rectify the
same, provided further that if the Tenant shall fail to commence to do so within
ten (10) days and complete the same within a reasonable time after notice is
received by the Tenant from Landlord, without prejudice to its other rights and
recourses.
45. MANAGEMENT OF PROPERTY
The Landlord shall have the right to have the Property managed by a
property management corporation that it designates in writing from time to time.
46. CUMULATIVE REMEDIES
No reference to or exercise of any specific right or remedy by the
Landlord shall preclude the Landlord from or [ILLEGIBLE]
<PAGE>
I.C.N.N.
Page 30
47. ACCORD AND SATISFACTION
No payment by the Tenant or receipt by the Landlord of a lesser amount
other than the monthly payment of Minimum Net Net Rental is to be construed as
other than on account of the earliest stipulated Minimum Net Net Rental and/or
Additional Rental nor is any endorsement or statement on any cheque or any
letter accompanying any cheque or payment as rent to be considered in
acknowledgement of full payment or an accord and satisfaction, and the Landlord
may accept payment and cash cheques without prejudice to the Landlord's right to
recover the balance of the rent or pursue its other remedies.
48. WAIVER OF COMPENSATION
The Tenant hereby waives and renounces any and all existing and future
claims, offsets and compensation against any Minimum Net Net Rental and
Additional Rental or other amounts due hereunder and agrees to pay such Minimum
Net Net Rental and Additional Rental and other amounts regardless of any claim,
offset or compensation which may be asserted by the Tenant or on its behalf.
49. EXTENSIONS
Provided the Leased Premises do not substantially change, the Landlord
shall have the right at its option and from time to time during the Term to make
extensions and/or additions and/or to add one or more additional floors or
storeys onto all or part of the Property comprising the Leased Premises.
In the event the Landlord exercises said option the Tenant agrees to
permit the Landlord to install and/or extend and/or add all the required
improvements including supports, beams, wiring, piping, stairways, elevators,
ramps, vents, ducts, shafts and openings for view or light and the like and to
close all borrowed lights and the windows and openings which may be required to
be closed as a consequence of such construction, the whole without any claims
for disturbance and/or inconveniences and the like which may be caused to the
[TEXT MISSING]
<PAGE>
I.C.N.N.
Page 31
any negligence of the Landlord, its employees or representatives. If the Tenant
loses the use of any part of the Leased Premises during the making of such
additions and/or extensions the Tenant shall be granted a proportionate
reduction rent as compensation for loss of use (during the period and for the
area of loss of use only). All of the foregoing without any other claims by the
Tenant against the Landlord for damage and loss of use.
50. WINDOW COVERINGS
In order to preserve a more uniform and attractive appearance of the
Property for the benefit of all the tenants, the Tenant herein binds and obliges
itself to place vertical blinds for good air porosity, over all windows which
are located in the front of the building or on any side of the building which
faces a public street and where such windows are for other than office areas,
such vertical blinds shall remain drawn at all times.
51. ACCESS
The Landlord shall have the right of access to the Leased Premises only
during reasonable business hours except in an emergency, to perform such work as
it chooses to do upon the Leased Premises, the Tenant renouncing any claim to
any indemnity or reduction of rent provided the same be carried out with
reasonable diligence, and provided such work does not interfere with Tenant's
business.
52. FLOOR LOADING
Tenant shall not bring upon the Leased Premises or any part thereof any
machinery, equipment, article or thing that by reason of its weight or size
might damage the Leased Premises and will not at any time overload the floors of
the leased Premises and if any damage is caused to the Leased Premises by any
machinery, equipment, article or thing or by overloading or by any act,
neglect or misuse on the part of Tenant or any of its servants, agents or
employees or any person having business with Tenant, Tenant will forthwith pay
[TEXT MISSING]
<PAGE>
I.C.N.N.
Page 32
53. PARKING
Tenant shall be entitled to the use of any parking facilities of the
Property.
The Tenant acknowledges that the parking of its vehicle(s) in the parking
facilities is at its own risk and peril and that the Landlord shall not be
responsible for any damages or loss whatsoever, whether cause by theft, fire or
any other cause including without limitation a failure of the entrance
mechanism, to the Tenant's vehicle(s) or to any property found in Tenant's
vehicles or for any injury to Tenant or others on/or in the immediate vicinity
of the parking facilities and Tenant hereby releases Landlord of all liabilities
of whatsoever nature with respect to the above.
54. WAIVER OF RESPONSIBILITY
Landlord and Tenant shall not be liable for failure or delays in
performing any of their obligations hereunder, should such failure or delays be
caused by fire or other casualty, war, disaster, riots, strikes, walk-outs, Acts
of God, or other causes beyond Landlord's or Tenant's reasonable control.
55. INTENTIONALLY DELETED
<PAGE>
I.C.N.N.
Page 33
56. BROKERAGE COMMISSION
Landlord and Tenant warrant that no brokerage commission or fees are
payable with respect to the present lease. Tenant shall indemnify and hold
Landlord harmless from any and all claims from any brokers or agents claiming
commissions or fees with respect to the present lease.
57. CERTIFICATE OF INCORPORATION
Tenant undertakes to remit to Landlord upon the signing of these presents
a copy of its Certificate of Incorporation.
58. SUCCESSORS AND ASSIGNS
The lease binds and benefits the parties and their respective heirs,
executives, administrators, successors and assigns as limited in this lease.
59. DESCRIPTIVE HEADINGS
The descriptive headings of this lease are inserted for convenience in
reference for possible registration purposes only and do not constitute a part
of this lease.
60. INTERPRETATION
This lease shall be construed and governed by the laws of the Province of
Quebec. Should any of the provisions of this lease and/or its conditions be
illegal or not enforceable under the laws of the Province of Quebec, it or they
shall be considered severable and the lease and its conditions shall remain in
force and be binding upon the parties as though the said provisions or
conditions had never been included.
<PAGE>
I.C.N.N.
Page 34
61. ENTIRE AGREEMENT
No alteration, amendment, change or addition hereto will be binding upon
Landlord unless made in writing. The parties agree that upon signature of this
Lease, this Lease will supercede all other leases executed between the parties
hereto in respect to these Leased Premises and shall be the only valid and
binding lease between the parties.
62. LANGUAGE
The parties hereby confirm that they have requested that the present
document be drafted in the English language. Les parties certifient qu'elles ont
requis que les presentes soient redigees en langue anglaise.
IN WITNESS WHEREOF THE LANDLORD HAS SIGNED AT ST. LAURENT, QUEBEC, THIS 7
DAY OF MARCH, 1997.
2938201 CANADA INC.
Per: /s/[ILLEGIBLE]
-------------------
/s/[ILLEGIBLE]
- ----------------
Witness
/s/[ILLEGIBLE]
- ----------------
Witness
IN WITNESS WHEREOF THE TENANT HAS SIGNED AT THIS 8TH DAY OF APRIL, 1997.
SPORT MASKA INC.
Per: /s/[ILLEGIBLE]
-------------------
<PAGE>
S C H E D U L E "D"
MEASUREMENT OF LEASED PREMISES
The Leased Premises are measured (i) from the furthest exterior face of
the exterior walls, and the centre line of all interior walls separating the
Leased Premises from adjoining leasable premises as designated by Landlord,
and/or Common Areas, hereinafter defined, with no deduction for space occupied
by projections, structures, or columns, structural or nonstructural where
applicable; and (ii) by adding to the square footage obtained in (i) above, a
number of square feet corresponding to a proportion of the Common Areas
attributed to Tenant, which proportion is calculated as follows:
The proportion comprised by the total Common Area expressed as a
percentage of the total net Building area (total gross building area minus total
Common Area) multiplied by the area of the Leased Premises as calculated in (i)
above. For the purposes of these presents "Common Area" means:
(a) those areas, facilities, utilities, and installations in the Property
which, from time to time, are not designated or intended by the Landlord to be
leased to tenants of the Property, and
(b) those areas, facilities, and installations which serve or are for the
benefit of the Property, whether or not located within, adjacent to, or near the
Property and which are designated from time to time by the Landlord as part of
the Common Areas of the Property. Common Areas include, without limitation, all
areas, facilities, utilities, and installations which are provided or designated
(and which may be changed form time to time) by the Landlord for the use or
benefit of the tenants, their employees, customers and other persons permitted
by the Landlord in common with others entitled to the use or benefit hereof in
the manner for the purposes permitted by the lease.
<PAGE>
S C H E D U L E "E"
RULES AND REGULATIONS
1. The sidewalks, entries, passages and staircases shall not be obstructed
or used by the Tenant, its agents or servants for any purpose other than ingress
to and egress from the offices. The Landlord reserves entire control of the
sidewalks, entries, corridors and passages not within the premises, washrooms,
lavatories, air conditioning, closets, fan rooms, janitor's closets, electrical
closets and other closets, stairs, flues, stacks, pipe shafts, ducts and all
parts of the building employed for the common benefit of the Tenants, and shall
have the right to place such signs and appliances therein, as they may deem
advisable, provided that ingress to and egress from the premises is not impaired
thereby. Furthermore, nothing shall be thrown by the Tenant, the officers,
clerks, or servants of the Tenant out of the windows or doors, or down the
passage or lightwells of the building.
2. The Landlord shall have the exclusive right to prescribe the weight and
proper positions of metal safes or machinery as well as the right to prescribe
the weight and position of any floor load. All damage done to the building or
premises by moving or using heavy equipment of any description or furniture
contrary to the Landlord's prescriptions shall be repaired at the expense of the
Tenant. No such equipment or furniture shall be moved unless a time therefor has
been arranged with and consented to by the Landlord.
3. The Tenant shall not permit the introduction into the premises or the
building of any machine or mechanical device of any nature whatsoever which may
be liable to cause objectionable noise or vibration or be injurious to the
premises or building.
4. Canvassing, soliciting and peddling in the building are prohibited.
5. Furniture, bulky articles and construction materials which the Tenant
may require from time to time for the construction of internal partitions or for
the purpose of [ILLEGIBLE] improvements shall be carried to the [TEXT MISSING]
<PAGE>
I.C.N.N.
Schedule "E"
Page 2
building or the premises by the carrying of such furniture, bulky articles or
construction materials to or from the premises shall be at the responsibility
and cost of the Tenant.
6. Any hand trucks, carryalls, or similar appliances used for the delivery
or receipt of merchandise or equipment shall be equipped with rubber tires, side
guards and such other safeguards as the Landlord shall require.
7. If any apparatus used or installed by the Tenant requires a permit as a
condition for its installation, the Tenant must file a copy of such permit with
the Landlord.
8. The Tenant shall give the Landlord prompt written notice of any
accident to or defect in water or gas pipes, heating or sprinkler system in the
demised premises, of which he is aware.
9. The Tenant shall not permit or allow any employee or other person to
conduct any business, enterprise of any kind in or from the premises other than
that specifically provided for in the present lease.
10. The Tenant shall not place any additional locks upon any doors of the
premises or the building without the written consent of the Landlord.
11. No animals or birds shall be brought or kept in or about the premises
or the building.
12. No auction sales shall be allowed in the premises of the building.
13. The Tenant shall be responsible for the cleaning of any drapes and/or
curtains that may be installed by the Tenant in the premises.
14. The water closets and other water apparatus shall not be used for any
purpose but those for which they are [TEXT MISSING]
<PAGE>
I.C.N.N.
Schedule "E"
Page 3
15. The Tenant will not do anything nor permit anything to be done on the
Leased Premises or in the said building which may be injurious or annoying to
the Landlord or to any person lawfully on the premises of the Landlord, or
anything which the Landlord may reasonably deem to be a nuisance, or which may
be calculated to damage the business or reputation of the Landlord, or the
satisfactory operation of the building, and the Tenant shall not do or permit
anything to be done in or upon the Leased Premises or the building which will in
any way obstruct or interfere with the rights of any tenants or persons having
business with them, or permit any employees to smoke or congregate in the halls
of the said building, or do or permit anything to be done or bring or keep
anything upon the Leased Premises or in said building which will, in any way,
increase the risk of fire, and/or the rate of fire insurance on the building or
any part thereof or on any property kept therein, or conflict with the laws
relating to fires or with the regulations of the Fire department and/or the
Health Department, or with any of the Rules, Regulations, By-Laws and/or
Ordinances of the City where the Property is located and/or the Fire
Underwriters and/or of any other lawful authority.
16. The Tenant shall not be permitted to use or keep in the said building
any coal oil, gasoline, burning fluid, or other inflammable, explosive or
illuminating material, except such as are permitted by the Fire Underwriters'
Association.
17. The Tenant, when closing the premises, during the day or evening,
shall have all windows closed, to avoid possible damage from fire, storms, rain
or freezing, and will not shut off the radiators when the premises are locked.
18. Front Signage
The Tenant may identify his business with a front sign in accordance with
the following criterias:
(a) Letter: individual to the Tenant's style.
(b) Height: 24"
<PAGE>
I.C.N.N.
Schedule "E"
Page 4
(c) Permitted materials - plastic, composite or solid.
- rustproof metal, composite or solid.
(d) Lighting (optional) - integrated
- halo-lit (back-lighting)
(e) Lighting control - dedicated circuit
- photo-cell switch, timer switch or manual
switch
Before the installation of any signage, the Tenant must obtain the written
approval of the Landlord. A request for approval must be accompanied by the
following information:
(a) Elevation plan indicating the proposed sign - (Scale - 3/8" = 1').
(b) Sign dimensions: height, length, thickness, and distance from wall.
(c) Construction and installation details.
(d) Material and finish specifications.
(e) Colour specifications.
(f) Lighting specifications: amperage and voltage.
(g) Name of designer and of fabrication and installation contractors.
(h) Request for Municipal permit.
(i) Any other additional information that the Landlord may require to
study a particular sign request.
19. Facade and secondary windows
(a) It is strictly forbidden to affix posters or other signs in the
windows.
(b) All front windows must have off-white vertical blinds.
(c) Adjustment of vertical blinds of front windows of storage space must
be half closed.
(d) All windows, including secondary windows, must be washed at least
twice a year on both the interior and exterior faces.
<PAGE>
I.C.N.N.
Schedule "E"
Page 5
20. Miscellaneous signage
Miscellaneous traffic and "no parking" signs are supplied and installed by
the Landlord.
21. Garbage container
(a) The Tenant must provide the garbage container which best satisfies
its business activity so that the size and water tightness retain
all garbage without affecting the environment.
(b) The Tenant must assure that the container is neatly located on the
designated area and that the lids are kept closed.
22. Exterior storage
(a) lt is strictly forbidden to store anything outside the building,
even on a temporary basis.
(b) Used boxes, palettes must be kept inside the building until
collected for disposal.
23. Special installations
(a) It is forbidden to modify any architectural elements of the building
without the Landlord's approval.
(b) It is forbidden to install outside the building, any type of
equipment, tank, etc..., without the approval of the Landlord.
(c) Any request for the approval of a special installation must be
submitted in writing along with the technical drawings or pertinent
data which can easily identify the specific nature of the
installation.
<PAGE>
I.C.N.N.
Schedule "E"
Page 6
Following completion of a special installation which conforms to preceding
authorization, the Landlord will proceed with the inspection of the installation
for final acceptance.
<PAGE>
SCHEDULE "F"
MEMORANDUM OF AGREEMENT OF HYPOTHEC ON UNIVERSALITY OF MOVEABLE PROPERTY.
BY AND BETWEEN: 2938201 CANADA INC., a body politic and corporate, duly
incorporated, having its head office and principal place of
business in Montreal, Quebec herein acting and represented by
Michael Zunenshine its duly authorized representative,
(hereinafter the "Landlord")
AND: SPORT MASKA INC., a body politic and corporate, duly
incorporated, having its head office and principal place of
business in Montreal, Quebec, herein acting through and
represented by Russell J. David, its Vice President-Finance
hereunto duly authorized as he so declares,
(hereinafter called "Tenant")
WHEREAS the Landlord and Tenant have entered into a lease for
those certain premises located at 6375 Picard Street, St. Hyacinthe, Quebec (the
"Premises") signed by the Landlord on the 7 day of April 1997, signed by the
Tenant on the 8 day of April 1997 (the "Lease");
WHEREAS the Tenant has agreed to grant the Landlord security on its
moveable property as security for the full and due performance of all its
obligations under the Lease including, without limitation, the payment of all
rentals and additional rentals;
WHEREFORE, THE PARTIES HERETO HEREBY AGREE AS FOLLOWS:
1. PREAMBLE
The preamble hereto shall form part hereof as though fully recited at
length herein.
2. HYPOTHEC
In order to guarantee the full and proper performance of all of the
obligations to be performed by the Tenant under the Lease, including, without
limitation, the payment of all rent, additional rental and any other sums
payable by the Tenant under the Lease, the Tenant hereby grants to the Landlord
a hypothec in favour of the Landlord in the amount of eight million five hundred
twenty-four thousand seven hundred forty-five dollars and sixty-four cents
($8,524,745.64), on the moveable property of the Tenant, both present and
future, and constituting the universality or universalities hereinafter
described, including all property of the same nature acquired as replacements
for the said properties:
Description
(a) the universality of all moveable improvements, equipment, [ILLEGIBLE]
<PAGE>
Schedule "F" to Lease
Moveable Hypothec - Page 2
insurance contracts or policies pertaining to or covering such
moveables; and
(b) intentionally deleted
(c) all of Tenant's right, title and interest in, to and under the Lease
and in and to the Premises.
The hypothec constituted herein is not and shall not be construed as being
an open or floating hypothec pursuant to the provisions of the Civil Code of
Quebec.
3. COSTS AND FEES
The Tenant shall pay the costs and fees of the publication of the hypothec
created hereby and the out of pocket costs of the Landlord with regard to the
renewal, notice, hypothecation, renunciation, quittance or mainlevee with
respect thereto.
4. REPRESENTATIONS OF THE TENANT
The Tenant hereby agrees that it shall not, outside the ordinary course of
business, sell, transfer or alienate all or substantially all of the property
hypothecated herein without the prior written consent of the Landlord, which
consent will not unreasonably be withheld.
In the event of a transfer or alienation of the property to which the
Landlord has granted its consent, the Tenant shall formally advise the Landlord
by way of a written notice containing the name of the vendor and the purchaser
and a description of the property sold. This notice must be accompanied by a
copy of all deeds and documents relating to the sale, transfer or alienation of
property, together with a certified copy of the inscription of a notice of
conservation of the hypothec under the name of the purchaser with proof of
transmission of such notice to the purchaser. In addition to the foregoing, it
shall be required that any purchaser shall be required to assume, solidarily
with the Tenant, all of the obligations of the Tenant contained in the Lease.
5. LEASE OF PROPERTY HYPOTHECATED
The Tenant shall not, without the prior written consent of the Landlord,
lease the property hypothecated in whole or in part.
5. MOVEMENT OF PROPERTY HYPOTHECATED
The Tenant shall not, without the prior written consent of the Landlord,
change the location of the property hypothecated unless such change is made, in
the ordinary course of the enterprise of the Tenant.
7. INTENTIONALLY DELETED
8. ADDITIONAL HYPOTHEC
If the Landlord should so require, the Tenant hereby obliges itself to
[ILLEGIBLE]
<PAGE>
Schedule "F" to Lease
Moveable Hypothec - Page 3
9. ENTERPRISE
The Tenant hereby expressly obliges itself for the duration of the present
agreement to continue to exploit its enterprise in the ordinary course of
business and not to do anything which would have as its object the cessation of
the activities of the enterprise or the liquidation of its property.
The Tenant shall administer and operate its enterprise in a proper and
efficient manner and shall respect all the standards of financing agreed to with
the Landlord.
10. DEFAULTS
The Tenant shall be in default under the terms of these presents where:
(a) the Tenant has defaulted in the performance of its obligations
contained in the present Agreement;
(b) there has been an Event of Default under the Lease, including the
non-payment of Basic Rent, Additional Rent and any other sums which
may be due by the Tenant to the Landlord under the Lease;
(c) any steps are taken or any action or proceedings are instituted by
any person for the dissolution, winding-up or liquidation of the
Tenant or its assets and Tenant is not diligently proceeding to have
same dismissed;
(d) the Tenant has made a material representation herein or in the Lease
which proves untrue or incomplete.
In the Event of Default, the Landlord shall have the right under reserve
of all other rights and recourses herein contained or by law;
(a) to require the immediate payment of the full amount of any sums
which may be due or become due under the Lease in capital, interest,
costs and accessories;
(b) to demand the execution of any obligation not respected by the
Tenant;
(c) to exercise all hypothecary recourses which may be conferred upon it
by law.
11. TIME OF ESSENCE
Time shall be the essence of this Agreement and every part hereof.
12. PROPER LAW
This Agreement shall be construed in accordance with the laws of the
Province of Quebec.
13. SEVERABILITY
The invalidity of any provision of this Agreement or any covenant herein
contained on the part of any party hereto shall not affect the validity of any
other provision or covenant hereof or herein contained.
<PAGE>
Schedule "F" to Lease
Moveable Hypothec - Page 4
15. NOTICE
Any notice or any communication required or permitted to be given to any
party pursuant to any of the provisions of this Agreement shall be sufficiently
given if such notice or other communication is in writing and is delivered to
such party personally, or mailed by registered mail, postage prepaid, addressed
to such party as follows:
TO Landlord: 6500 Trans Canada Highway
Suite 210
St. Laurent, Quebec H4T 1X4
TO THE Tenant: At the Premises, any other place of business of the
Tenant or to any principal, officer or director of the
Tenant
or to such other address of such party as any of them may from time to time
notify the other parties in the manner hereinbefore provided, and any such
notice, or other communications shall be deemed to have been received by any
such party when delivered to it or to him, or if mailed as aforesaid, on the
fifth (5th) business day following the date of mailing. In the event of an
interruption or slow down in the postal system, all notices shall be delivered.
16. LANGUAGE
The parties hereby confirm that they have requested that the present
document be drafted in the English language. Les parties confirment par les
presentes qu'elles on demande que le present document soit redige dans la langue
anglaise.
IN WITNESS WHEREOF THE LANDLORD HAS SIGNED AT ON THIS 7 DAY OF MARCH,
1997.
2938201 CANADA INC.
Per: /s/ [ILLEGIBLE]
--------------------
/s/[ILLEGIBLE]
- ----------------
Witness
/s/[ILLEGIBLE]
- ----------------
Witness
IN WITNESS WHEREOF THE TENANT HAS SIGNED AT ON THIS 8TH DAY OF APRIL,
1997.
SPORT MASKA INC.
Per: /s/ [ILLEGIBLE]
--------------------
/s/[ILLEGIBLE]
- ----------------
Witness
/s/[ILLEGIBLE]
- ----------------
Witness
<PAGE>
Schedule G
DEED OF LEASE
LEASE entered into as of __ day of April, nineteen hundred and ninety-seven
(1997)
BETWEEN: 2938201 Canada, Inc., a body politic and corporate, duly
incorporated, having its head office and principal place of business
in Montreal, Quebec, herein acting and represented by _______, its
duly authorized representative (hereinafter called the "Landlord")
AND: Sport Maska Inc., a body politic and corporate, duly incorporated,
having its head office and principal place of business in Montreal,
Quebec, herein acting through and represented by Russell J. David,
its Vice President-finance hereunto duly authorized as he so
declares (hereinafter called the "Tenant")
1. DESCRIPTION OF THE PREMISES
Landlord, in consideration of the rents, covenants and agreements herein
contained on the part of Tenant to be paid, kept and performed, does hereby
lease to Tenant and Tenant does hereby hire and take from Landlord that certain
one hundred and eighty thousand (180,000) square feet, being the building
(hereinafter referred to as the "Leased Premises") bearing civic number 6375
Picard Street, St. Hyacinthe, Quebec, which building is erected upon that
certain parcel of land more specifically described as comprising subdivision One
of Lot One Thousand Two Hundred (1200-1), subdivision Two of Lot One Thousand
Two Hundred One (1201-2), subdivision Six of Lot one Thousand Two Hundred and
Two (1202-6), subdivision Nine of Lot One Thousand Two Hundred and Fourteen
(1214-9), subdivision Five of Lot One Thousand Two Hundred and Fifteen (1215-5)
and subdivision Five of Lot One Thousand Two Hundred and Sixteen (1216-5) of the
Official Plan and Book of Reference of the Parish of St. Hyacinthe, the said
building and land hereinafter referred to as the "Premises".
2. MODE OF ACQUISITION
[TO BE COMPLETED BY LANDLORD]
3. CHARACTERIZATION OF RIGHT
A lease of a non-residential immoveable.
4. TERM OF LEASE
The term of this lease shall commence on April , 1997 and shall expire at
11:59 p.m. on January 31, 2005, unless the said term shall sooner be terminated
under the provisions hereof.
5. EXTENT OF RIGHT
USE OF PREMISES
The Premises hereby leased shall be used and occupied by Tenant solely for
offices, warehousing, manufacturing and distribution.
<PAGE>
GOVERNING LAW
The present lease shall be construed and governed by the laws of the Province of
Quebec.
Executed in Montreal, as of the __ day of April, 1997.
2938201
CANADA, INC.
Per:
- ----------------------- ---------------------------------
Witness (authorized corporate officer)
Executed in New York, New York, U.S.A., as of the __ day of April, 1997.
SPORT MASKA, INC.
Per:
- ----------------------- ---------------------------------
Witness Russell J. David
Vice President - Finance
-2-
TO: THE CHASE MANHATTAN BANK
DELIVERY AGREEMENT
WHEREAS SLM INTERNATIONAL, INC., #1 APPAREL, INC. and MASKA U.S., INC.
(hereinafter called the "Borrowers") have agreed jointly and severally to
execute and deliver to THE CHASE MANHATTAN BANK for its own benefit and for the
pro rata benefit of the Lenders (as defined in the Credit Agreement referred to
hereafter) (hereinafter called the "Secured Party") a credit agreement dated as
of April 1, 1997 with the Secured Party (which as amended, supplemented or
restated from time to time is herein called, the "Credit Agreement") and SLM
TRADEMARK ACQUISITION CORP. (the "Guarantor" and, collectively with the
Borrowers, the "Companies") has agreed to execute and deliver to the Secured
Party a guarantee (which as amended, supplemented or restated from time to time
is herein called the "Guarantee") dated as of April 1, 1997 and, as security for
the indebtedness and liability under the Credit Agreement and the Guarantee, the
Companies have agreed to execute and deliver to the Secured Party a debenture in
the principal amount of ONE HUNDRED MILLION UNITED STATES DOLLARS ($100,000,000
U.S.) for the purpose of securing payment or performance of any and all
indebtedness, obligations and liabilities, joint or several, of the Companies to
the Secured Party pursuant to the Credit Agreement and the Guarantee and any
security therefor, whether as principal or surety (all of which present and
future indebtedness, obligations and liabilities are hereinafter collectively
called the "Obligations");
NOW THEREFORE in consideration of the foregoing and for other good and
valuable consideration the Companies hereby agree with the Secured Party as
follows:
1. Delivery. The Companies herewith deliver to the Secured Party a debenture of
the Companies in the principal amount of ONE HUNDRED
<PAGE>
2.
MILLION UNITED STATES DOLLARS ($100,000,000 U.S.) bearing interest at the rate
of TWENTY-FIVE PERCENT (25%) per annum from the date hereof (hereinafter as it
may be amended, supplemented or restated from time to time called the
"Debenture"), charging by way of a fixed and specific mortgage and charge and
granting security interests in certain property and assets of the Companies and
charging by way of a floating charge and granting a security interest in all the
undertaking, property and assets of the Companies (except as therein provided).
2. Continuing Security. The Debenture shall be held by the Secured Party as
general and continuing security to secure payment and performance of the whole
of the Obligations as existing from time to time and any ultimate unpaid balance
of any indebtedness forming part of the Obligations notwithstanding any change
in:
(a) the nature or form of the Obligations;
(b) the accounts or the bills of exchange, promissory notes and/or other
obligations evidencing or creating the Obligations or any part
thereof;
(c) the names of the parties to the accounts or to the said bills, notes
and/or obligations; or
(d) the name or constitution of any of the Companies,
and notwithstanding the opening of any new account and the closing in the books
of the Companies or the Secured Party of any other account with respect to the
Obligations or any part thereof.
3. Default. Upon the occurrence of an Event of Default (as defined under the
Credit Agreement or the Guarantee), the Secured Party may forthwith without
notice, without demand for payment, without advertisement and without any other
formality (all of which are hereby waived), but in accordance with applicable
law, enforce any and all security which it may hold including, without
limitation, the Debenture. All rights and remedies of the Secured Party may be
exercised independently or in combination. The rights and remedies specified
herein shall be in addition to and not in substitution for any other rights and
remedies of the Secured Party at law or in equity or otherwise.
<PAGE>
3.
4. Application of Payments. Unless the provisions of the Credit Agreement
otherwise provide, any and all payments made in respect of the Obligations may
be applied on such part or parts of the Obligations as the Secured Party may see
fit. Unless the provisions of the Credit Agreement otherwise provide, the
Secured Party shall at all times and from time to time have the right to change
any appropriation of any moneys received by it and to reapply the same on any
other part or parts of the Obligations as the Secured Party may see fit,
notwithstanding any previous application by whomsoever made.
The proceeds of any collection or sale of the Charged Assets (as
defined in the Debenture), as well as any Charged Asset consisting of cash,
shall be applied by the Secured Party as provided in section 16 of the Security
Agreement among the Companies, Sport Maska Inc., SLM Trademark Acquisition
Canada Corporation and the Lenders dated as of April 1, 1997 (the "Security
Agreement").
Upon any sale of the Charged Assets by the Secured Party (including,
without limitation, pursuant to a power of sale granted by statute or under a
judicial proceeding) the receipt of the Secured Party or of the officer making
the sale shall be a sufficient discharge to the purchaser or purchasers of the
Charged Assets so sold and such purchaser or purchasers shall not be obligated
to see to the application of any part of the purchase money paid over to the
Secured Party or such officer or be answerable in any way for the misapplication
thereof.
5. Dealings by the Secured Party. The Secured Party may grant extensions, take
and give up securities, accept compositions, grant releases and discharges and
otherwise make arrangements with the Companies and deal with other persons and
securities as the Secured Party may see fit without prejudice to the joint and
several liability of the Companies or the Secured Party's right to hold, deal
with and realize the security of the Debenture.
6. No Merger. The Debenture shall not operate by way of merger of any
indebtedness or liability of the Companies or any other person or
<PAGE>
4.
persons to the Secured Party hereunder or under any document or negotiable
instrument by which the same may now or at any time hereafter be represented or
evidenced. No judgment recovered by the Secured Party shall operate by way of
merger of or in any way affect the security created by the Debenture or the
Secured Party's right to interest as aforesaid.
7. Additional Security. This agreement and the security afforded by the
Debenture shall be in addition to and not in replacement of or substitution for
any security now or hereafter held by the Secured Party in respect of any
indebtedness, liabilities or obligations, present or future, of the Companies to
the Secured Party or any part thereof, and shall not be prejudiced by any such
security or by any exchange, release or variation of any such security.
8. Expenses. All reasonable expenses (including without limitation legal fees on
a solicitor and his own client basis and the fees and expenses of any receiver
or receiver and manager appointed under the provisions of the Debenture)
incurred by the Secured Party in connection with:
(a) the preparation and registration of the Debenture;
(b) recovering or enforcing payment or performance of all or part of the
Obligations (including without limitation expenses incurred in
considering and protecting or improving its position, or attempting to
do so, whether before or after default); and
(c) realizing upon or otherwise dealing with the assets charged by the
Debenture (including without limitation expenses of taking possession,
protecting, preparing for sale and realizing upon any such assets),
shall be payable upon demand, shall be added to and shall be deemed to be a part
of the Obligations, shall bear interest at the Interest Rate provided for in the
Debenture and the payment thereof shall be secured by the Debenture.
9. No Obligation to Advance. Notwithstanding anything in this agreement or in
the Debenture contained, the Secured Party shall not be obligated thereby to
make any loan or other extension of credit or further loan or extension of
credit or to extend any time for payment or performance of all or any part of
the Obligations.
<PAGE>
5.
10. Interest. Any provision of the Debenture or of this agreement
notwithstanding, payment by the Companies of interest on all indebtedness
comprising, or forming part of, the Obligations at the current rate at which
such indebtedness may bear interest for any period of time shall constitute
satisfaction of interest on the Debenture for the equivalent period of time.
11. Sale of Debenture. Any sale, transfer, delivery, negotiation or assignment
of the Debenture by the Secured Party will be made subject to the provisions of
this agreement.
12. Claims Under Debenture. Neither the Secured Party nor any subsequent holder
of the Debenture shall, at any time, claim payment under the Debenture (whether
for principal, interest or both) in an amount greater than the amount of the
indebtedness forming part of the Obligations at such time. Notwithstanding that
the Debenture is stated to be payable on demand, no demand for payment shall be
made under the Debenture unless demand is concurrently being made, or has been
made, for payment of indebtedness forming part of the Obligations in an amount
not less than the amount demanded under the Debenture.
13. Discharge. Upon payment and performance by the Companies of the Obligations,
the Secured Party shall, upon request in writing by the Companies delivered to
the Secured Party at a time when the Secured Party is under no obligation
(conditional or otherwise) to make any loan or extend any other type of credit
under the Credit Agreement, and at the expense of the Companies, discharge the
Debenture and upon the delivery by the Secured Party to the Companies of a
discharge of the Debenture, this agreement shall be terminated.
14. Set-Off. The Companies jointly and severally grant to the Secured Party the
right to set off against any and all accounts, credits or balances maintained by
any of them with the Secured Party the Obligations or any part thereof when due
and payable.
<PAGE>
6.
15. Illegality. If one or more of the provisions of this agreement shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired.
16. Benefit of the Lenders All covenants and agreements herein shall be joint
and several and shall be for the benefit of the Secured Party and for the pro
rata benefit of the Lenders.
<PAGE>
7.
17. Gender and Headings. Words importing the singular include the plural and
vice versa and words importing gender shall include all genders. The headings in
this agreement are included for convenience of reference only, and shall not
constitute a part of this agreement for any other purpose.
IN WITNESS WHEREOF this agreement has been executed by the Companies
as of the 1st day of April, 1997.
SLM INTERNATIONAL, INC.
By: /s/ D. Bruce Randall C.S.
----------------------
title - Secretary
#1 APPAREL, INC.
By: /s/ D. Bruce Randall C.S.
----------------------
title - Secretary
MASKA U.S., INC.
By: /s/ D. Bruce Randall C.S.
----------------------
title - Secretary
SLM TRADEMARK ACQUISITION CORP.
By: /s/ D. Bruce Randall C.S.
----------------------
title - Secretary
SECURITY AGREEMENT
(INTELLECTUAL PROPERTY)
THE UNDERSIGNED, SPORT MASKA INC. (the "Corporation"), a corporation
continued and subsisting under the laws of the Province of New Brunswick, hereby
enters into this Security Agreement, made effective as of the 1st day of April,
1997 in favour of The Chase Manhattan Bank of Canada (the "Lender");
WHEREAS the Lender has agreed to make certain credit facilities available
to the Corporation pursuant to a credit agreement dated as of April 1, 1997 made
between the Corporation and the Lender (that credit agreement, as amended,
restated or supplemented from time to time being referred to below as the
"Credit Agreement") on and subject to the terms and conditions thereof,
including without limitation the condition precedent that this Agreement be
entered into to secure repayment of its indebtedness and liability under the
Credit Agreement, now or hereafter existing, absolute or contingent, joint or
several together with all reasonable expenses (including legal fees and
disbursements on a solicitor and his or her own client basis) incurred by the
Lender and/or any agent or receiver or receiver/manager acting on behalf of the
Lender in connection with the preparation, registration, enforcement of rights
under or analysis of rights under the Credit Agreement and this Agreement from
time to time (all of which present and future indebtedness, liabilities,
obligations and expenses, together with all extensions and renewals thereof, are
hereinafter collectively referred to as the "Indebtedness");
NOW THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt, sufficiency and adequacy of
which are hereby acknowledged, the Corporation agrees as follows:
1. Creation of Security Interest. As security for the complete and timely
payment and satisfaction of all of the Indebtedness, the Corporation hereby
grants to the Lender a security interest, and assigns, transfers and conveys to
the Lender, and hypothecates in favour of the Lender (collectively, the
"Security Interest"), with unfettered rights to power of sale, to the extent
permitted by law or by the specific license agreements, if relevant, in and to
all of the right, title and interest of the Corporation in and to all of its now
existing and hereafter created or acquired:
(a) computer programs, application software, hardware and/or software
maintenance support agreements and all documentation relating thereto,
licences of software, copyrights, patents and inventions, industrial
designs, trade secrets, inventor certificates, statutory invention
registrations and all know-how obtained, developed or used by the
Corporation in connection with its business, including, without
limitation
<PAGE>
2.
by the Corporation in connection with its business, including, without
limitation the patents, industrial designs and software listed in
Exhibit "A" attached hereto and hereby made a part hereof and (i)
renewals or extensions thereof; (ii) all income, damages and payments
now or hereafter due or payable with respect thereto, including,
without limitation, damages and payments for past or future
infringements thereof; (iii) the right to sue for past, present and
future infringements thereof; and (iv) all rights corresponding
thereto throughout the world (all of the foregoing computer programs,
application software, hardware and/or software maintenance support
agreements, licenses of software, copyrights, patents and inventions,
industrial designs, trade secrets and know-how, and applications and
registrations thereof, together with the items described in clauses
(i) - (iv) of this subsection 1(a) are sometimes hereinafter
collectively referred to as the "Patents/Designs/Copyrights");
(b) trademarks, trademark registrations, trademark applications, trade
names, business names, trade styles, logos, service marks, and all
other forms of business identifiers, including, without limitation,
the trademarks, trademark registrations, trademark applications, trade
names, business names, trade styles, logos and all other forms of
business identifiers listed on Exhibit "B" attached hereto and hereby
made a part hereof, and (i) renewals or extensions thereof, (ii) all
income, damages and payments now or hereafter due or payable with
respect thereto, including, without limitation, damages and payments
for past or future infringements thereof, (iii) the right to sue for
past, present and future infringements thereof, and (iv) all rights
corresponding thereto throughout the world (all of the foregoing
trademarks, trade names and trade styles, and applications and
registrations thereof, together with the items described in clauses
(i)-(iv) of this subsection 1(b), are sometimes hereinafter referred
to individually as a "Trademark", and, collectively, as the
"Trademarks");
(c) all license agreements with respect to any of the Trademarks or any
Trademark or any application or registration therefor or any other
trade name or trade style, between the Corporation and any other
party, whether the Corporation is a licensor or licensee under any
such license agreement, including, without limitation, the licenses
listed on Exhibit "C" attached hereto and hereby made a part hereof,
and (i) renewals or extensions thereof, (ii) all income, damages and
payments now or hereafter due or payable with respect thereto,
including, without limitation, damages and payments for past or future
breaches thereof, (iii) the right to sue for past, present and future
breaches thereof, and (iv) all rights corresponding thereto throughout
the world
<PAGE>
3.
(all of the foregoing license agreements and the rights of the
Corporation thereunder, together with the items described in clauses
(i)-(iv) of this subsection 1(c), are sometimes hereinafter referred
to individually as a "License", and, collectively, as the "Licenses");
and
(d) the goodwill of the business of the Corporation connected with and
symbolized by any one or more of the Patents/Designs/Copyrights,
Trademarks and Licences, and (i) all damages and payments now or
hereafter due or payable with respect thereto, including, without
limitation, damages and payments for past or future depreciation
thereof or injury thereto, (ii) the right to sue for past, present and
future depreciation thereof or injury thereto, and (iii) all rights
corresponding thereto throughout the world (the foregoing goodwill,
together with the items described in clauses (i)-(iii) of this
subsection 1(d), are referred to as the "Goodwill").
(The Patents/Designs/Copyrights, Trademark or Trademarks, License or Licenses
and Goodwill referred to in subparagraphs 1(a), (b), (c) and (d) above are
sometimes collectively referred to below as the "Collateral").
The Corporation and the Lender agree that they have not agreed to
postpone the time for attachment of the Security Interests granted hereby with
respect to the Corporation's presently existing Collateral and that such
Security Interests shall attach to the Collateral acquired after the date hereof
as soon as the Corporation has rights in such Collateral. From time to time, at
the request of the Lender, the Corporation shall make and do all acts and things
and execute and deliver all documents, agreements and instruments as the Lender
reasonably may request by notice in writing to the Corporation in order to
create, preserve, perfect, validate or otherwise protect the Security Interests
to enable the Lender to exercise and enforce its rights and remedies hereunder
(except that nothing hereunder shall constitute a waiver of any rights available
to the Corporation at law to the extent that such rights cannot be lawfully
waived) and generally to carry out the provisions and purposes of this
Agreement. The Lender agrees that it shall have no right to be assigned the
title to any of the Collateral unless and until the Security Interest hereby
constituted shall become enforceable as hereinafter provided.
The amount of the hypothec referred to in this Section 1 is fifty
million dollars ($50,000,000.00) in lawful money of the United States of America
with interest thereon from the date of this Agreement at the rate of twenty-five
percent (25%) per annum.
2. (a) Warranties and Representations. Subject to paragraph 2(b) below, the
Corporation warrants and represents to the Lender that:
<PAGE>
4.
(i) all registrations, applications for registration, filings and notices
thereof in respect of the Collateral including, all relevant renewals,
have been duly and properly made, are in full force and effect and are
not subject to dispute by any governmental authority or agency and all
leases, licences and other agreements affecting any right, title or
interest of the Corporation in any of the Collateral (collectively,
the "Third Party Agreements") are in good standing;
(ii) none of the Collateral has been adjudged invalid or unenforceable or
has been cancelled, in whole or in part, and all such Collateral is
presently subsisting, valid, in good standing and enforceable, with
the exception of those set out in the Exhibits hereto and identified
as "pending applications", "cancelled/expunged registrations",
"abandoned applications" or "registrations no longer in name of the
Corporation";
(iii) the Corporation is the exclusive owner or in the case of licensed
Collateral, the sole and exclusive licensee, of the entire and
unencumbered right, title and interest in and to each of the
Collateral (except as otherwise expressly described in the Exhibits
hereto) free and clear of any liens, charges and encumbrances except
for liens permitted under the Credit Agreement or otherwise approved
by the Lender in writing (the "Permitted Encumbrances");
(iv) the Collateral listed on Exhibits "A", "B" and "C", respectively,
constitute all of the Patents/Designs/Copyrights, Trademarks and
Licenses now owned by the Corporation;
(v) the Corporation has adopted, used continuously and currently is using
all of the Patents/Designs/Copyrights, Trademarks and Licences; all
licensees of the Collateral (or all relevant portions thereof) from
the Corporation as licensor have been licensed properly to use such
Collateral and the Corporation has retained under license the direct
or indirect control of the character or quality of the goods or
services in connection with which use of such Collateral has been
licensed by it; all use of such Collateral has been proper both in
form and in relation to the goods or services in connection with which
the Collateral is used by the Corporation or its licensees; and proper
ownership notices have been used by the Corporation or its licensees;
(vi) other than as set forth in SCHEDULE 4.06(a) annexed to the Credit
Agreement, the Corporation has no notice of any suits or actions
commenced or threatened in respect of any of the Collateral,
including, without limitation, any suits or actions which contain
allegations respecting the validity, enforceability, infringement or
ownership of
<PAGE>
5.
any of the Collateral, including, without limitation, any of the
Corporation's right, title and interest in the Collateral and no
notice, or knowledge, of any person infringing any of the Collateral;
(vii) the Corporation has the right to execute and deliver this Agreement
and to perform its covenants and obligations hereunder;
(viii) this Agreement is a valid, legal and binding obligation of the
Corporation subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting creditors'
rights and the discretion exercisable by Courts of competent
jurisdiction in respect of the availability of equitable remedies; and
(ix) nothing contained in this Agreement or the Credit Agreement,
including, without limitation, the granting of the Security Interest
by the Corporation in favour of the Lender, constitutes a breach under
any Third Party Agreement.
(b) The foregoing representations and warranties shall be continuing
representations and warranties which, for greater certainty, shall apply at the
date hereof to all Collateral owned or licensed by the Corporation on the date
hereof including, without limitation, the Collateral described in Exhibits "A",
"B" and "C" hereto and shall be deemed to be given by the Corporation and to
apply to all after acquired Collateral immediately upon the Corporation
acquiring the same.
3. Covenants of the Corporation. The Corporation covenants and agrees that until
the Indebtedness shall have been satisfied in full, the Corporation shall:
(a) use the Trademarks only on goods of at least as high quality as the
goods on which the Corporation or its predecessor used the goods as of
the date hereof and maintain the quality of any and all products in
connection with which the Trademarks and other Collateral is used,
consistent with the quality of said products as of the date hereof;
(b) take or cause to be undertaken all steps necessary to protect the
Corporation's interest in and to maintain the Patents/Designs/
Copyrights, Trademarks and Licenses and other Collateral in good
standing, including without limitation, to pursue diligently all
applications through to registration and to renew all registrations
and pay all maintenance fees as applicable, as well as attending to
the filing of all required documentation;
(c) vigorously protect, preserve and maintain all of the Corporation's
right, title and interest in the Collateral including, without
limitation, the prosecution and/or defence against any and all suits
concerning
<PAGE>
6.
validity, infringement, enforceability, ownership or other aspects
affecting any of the Collateral (any expenses incurred in protecting,
preserving and maintaining any of the Collateral shall be borne by the
Corporation);
(d) upon written request by the Lender, execute and deliver any and all
agreements, instruments, documents and papers as the Lender may
reasonably request to evidence the Lender's Security Interest in the
Collateral;
(e) perform all covenants required under any Third Party Agreement
including, inter alia, promptly paying all required fees, royalties
and taxes to maintain each and every item of the Collateral in full
force and effect;
(f) if at any time or from time to time, before the Indebtedness shall
have been satisfied in full, the Corporation (i) becomes aware of any
existing Patents/Designs/Copyrights, Trademarks or Licenses of which
the Corporation has not previously informed the Lender, (ii) obtains
rights to any new Patents/Designs/Copyrights, Trademarks or Licenses,
or (iii) becomes entitled to the benefit of any Patents/Designs/
Copyrights, Trademarks, or Licenses not identified on any of Exhibits
"A", "B" or "C", then the Corporation shall promptly notify the Lender
and regardless of when the Corporation so notifies the Lender,
Exhibits "A", "B" and "C" hereto, as applicable, automatically shall
be modified and amended to include any such
Patents/Designs/Copyrights, Trademarks and Licenses and the provisions
of this Agreement automatically shall apply thereto;
(g) maintain up to date records regarding the Collateral;
(h) provide the Lender with a written report on each anniversary of this
Agreement regarding the status of all Patents/Designs/Copyrights,
Trademarks and Licenses;
(i) provide the Lender, upon request by the Lender from time to time, with
a certificate of an officer of the Corporation certifying the
compliance of the Corporation with this Agreement;
(j) not sell, transfer, assign or dispose of its interest in, or grant any
license or sublicense under any of the Patents/Designs/Copyrights or
Trademarks or the Licenses or the Goodwill, or enter into any other
agreement with respect to any of the Collateral, without the prior
written consent of the Lender, Which consent shall not be unreasonably
withheld;
<PAGE>
7.
(k) not abandon any right to file a trademark application or patent
application, or abandon any pending trademark or patent application,
or abandon any of the Patents/Designs/Copyrights, Trademarks, Licenses
or Goodwill or any suits involving any of the Collateral, without the
prior written consent of the Lender, which consent of the Lender shall
not be unreasonably withheld;
(l) not take any action, or permit any action to be taken by any person or
persons subject to its control, including licensees, or fail to take
any action, which would adversely affect the validity, enforceability
or transferability (to the Lender or otherwise) of all or any of the
Collateral; and
(m) not create or permit to exist any mortgage, hypothec, pledge, charge,
lien or other encumbrance upon the Collateral, other than the existing
Permitted Encumbrances, except as expressly consented to in writing by
the Lender.
4. Right of the Lender to Inspect. The Lender shall have the right, at any time
and from time to time upon reasonable notice and upon such terms as are agreed
to in advance by the Corporation and prior to payment in full of the
Indebtedness and release and discharge by the Lender of the Credit Agreement and
this Agreement (collectively, the "Termination"), to inspect the premises of the
Corporation and to examine the books, records and operations of the Corporation,
including, without limitation, the quality control processes of the Corporation.
5. Term of Security Interest; Royalties. The term of the Security Interest
granted herein shall continue until the Termination. The Corporation agrees that
the assignment or transfer to and use by the Lender of all Collateral shall be
worldwide and without any liability on the part of the Lender for royalties or
other related charges from the Lender to the Corporation.
6. Expenses. All expenses incurred by or on behalf of the Lender in connection
with the performance of any of the covenants and agreements set forth herein
shall be borne by the Corporation in accordance with the Credit Agreement.
7. Duties of the Corporation. Until the Termination, the Corporation shall, at
its own expense:
(a) diligently prosecute any and all Patent/Designs/Copyrights and
Trademark applications pending as of the date hereof or thereafter;
(b) make application to register all Patent/Designs/Copyrights and
Trademarks, as appropriate and to the extent commercially reasonable;
<PAGE>
8.
(c) protect, preserve and maintain vigorously all of the fight, title and
interest of the Corporation in and to the Collateral, including,
without limitation, the prosecution or defence of all suits concerning
the validity, infringement, breach, enforceability, ownership or other
aspects affecting any of the Collateral; and
(d) ensure generally that the Collateral is and remains valid, in good
standing and enforceable.
8. Default. Without prejudice to the right of the Lender to demand payment of
all or any part of the Indebtedness hereby secured at any time or times,
pursuant to the Credit Agreement, the Indebtedness shall at the option of the
Lender, become payable and the security hereby constituted shall become
enforceable in each and every of the events following:
(a) if the Corporation makes default in the observance or performance of
any written agreement or undertaking heretofore or hereafter given by
the Corporation to the Lender pursuant to or in connection with the
Credit Agreement, whether contained herein or not;
(b) if the Corporation makes default in payment of all or any portion of
the Indebtedness when due whether the same is secured hereby or not;
(c) if an order is made or a resolution passed for the winding-up of the
Corporation, or if a petition is filed for the winding-up of the
Corporation;
(d) if the Corporation ceases or threatens to cease to carry on business
or if the Corporation commits or threatens to commit any act of
bankruptcy or if the Corporation becomes insolvent or makes an
assignment or proposal in bankruptcy or gives notice of its intention
to do so or makes a bulk sale of its assets or if a bankruptcy
petition is filed or presented against the Corporation;
(e) if any proceedings with respect to the Corporation are commenced under
the Companies' Creditors Arrangement Act (Canada) or the Bankruptcy
and Insolvency Act (Canada) or if the Corporation shall seek relief or
consent to the filing of a petition against it under any law which
involves any arrangement with or any compromise of any rights of any
one or more creditors of the Corporation;
(f) if an execution or any other process of any court becomes enforceable
against the Corporation or if a distress or analogous process is
levied upon the property of the Corporation or any part thereof;
<PAGE>
9.
(g) if any sum which has been admitted as due by the Corporation or is not
disputed to be due by it and which forms or is capable of being made a
charge upon any of the Collateral in priority to the Security Interest
created by this Agreement is unpaid;
(h) if the Corporation shall default in the observance or performance of
any material provision relating to any material indebtedness or
liability of the Corporation to any creditor other than the Lender;
(i) if any material licences, permits or approvals required by any law,
regulation or governmental policy or any governmental agency or
commission for the operation by the Corporation of its business shall
be withdrawn or cancelled; or
(j) if any representation or warranty made by the Company or any of its
officers, employees or agents to the Lender shall be false or
inaccurate in any material respect.
9. Waivers. No course of dealing between the Corporation and the Lender, nor any
failure to exercise, nor any delay in exercising, on the part of the Lender, any
right, power or privilege hereunder or under the Credit Agreement shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
Lender may waive, in whole or in part, any breach of any provisions of this
Agreement by the Corporation, any breach of any provisions of the Credit
Agreement or any of the rights and remedies of the Lender whether provided
hereunder or otherwise, provided that no such waiver shall be considered to have
been given unless given expressly in writing by the Lender to the Corporation.
No waiver given by the Lender in accordance with this Section 9 shall be
construed as a waiver of any other or subsequent breach or default by the
Corporation.
10. Severability. The provisions of this Agreement are severable, and if any
clause or provision shall be held invalid and unenforceable in whole or in part
in any jurisdiction by a Court of competent jurisdiction, then such invalidity
or unenforceability shall affect only such clause or provision, or part thereof,
in such jurisdiction, and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or provision of this
Agreement in any jurisdiction.
11. Modification. This Agreement cannot be altered, amended or modified in any
way, or by any other document or instrument signed by each of the Corporation
and the Lender.
<PAGE>
10.
12. Cumulative Remedies. All of the rights and remedies of the Lender with
respect to the Collateral, whether established hereby or by the Credit
Agreement, or by any other agreements or by law shall be cumulative and may be
exercised singularly or concurrently.
13. Irrevocable Power of Attorney. The Corporation irrevocably constitutes and
appoints the Lender and each of its authorized employees from time to time as
the true and lawful attorney of the Corporation with full power of substitution
in the name of the Corporation, with power after the security constituted hereby
shall have become enforceable to:
(a) endorse or sign the name of the Corporation on and execute and deliver
all applications, registrations, recordings, reissues, continuations,
continuations in part, term restorations and extensions thereof,
documents, papers, agreements, assignments and instruments necessary
or desirable for the purpose of recording, registering and filing of,
or accomplishing any other formality with respect to the Collateral or
any part thereof or otherwise regarding the Collateral, or any part
thereof;
(b) take any other actions with respect to the Collateral, or any part
thereof, as the Lender deems to be in the best interest of the Lender,
including without limitation, the realization or collection of all or
any income, damages or payments related thereto;
(c) grant or issue any exclusive or non-exclusive license or sublicense
under or in respect of the Collateral, or any part thereof to anyone;
or
(d) assign, pledge, convey, sell, license, or otherwise transfer title in
or dispose of the Collateral or any part thereof (or the right, title
and interest of the Corporation therein) to anyone by private or
public sale, lease or otherwise upon such terms and conditions as the
Lender may determine as permitted by law and whether or not the Lender
has taken possession of any of the Collateral.
The Corporation and the Lender acknowledge and agree that any disposition
referred to in clause (d) in this Section 13 maybe either a disposition of all
or any of the Collateral and may be by way of public auction, public tender,
private contract or otherwise as permitted by law. The Lender may sell or
dispose of the Collateral for consideration payable by instalments either with
or without taking security for the payment of such instalments and may make and
deliver to any purchaser thereof good and sufficient assignment, documents or
instruments and give receipts for the purchase money, and any such sale or
disposition shall be a perpetual bar, both at law and in equity, against the
Corporation and all those claiming an interest in and to the Collateral by,
from, through or under the Corporation. The Corporation
<PAGE>
11.
hereby ratifies all acts of any such attorney taken, done or caused to be taken
or done in accordance with this Section 13. This power of attorney shall be
irrevocable unless and until the Indebtedness shall have been paid in full and
the Termination has occurred. Upon execution of this Agreement, the Corporation
shall execute the power of attorney in the same or substantially the same form
as set forth in Exhibit "D" to this Agreement.
14. Remedies. Whenever the Security Interest granted pursuant to this Agreement
shall have become enforceable, and so long as it shall remain enforceable, the
Lender may, in addition to all other rights and remedies available to it at law
or in equity, proceed to realize upon such security and to enforce its rights
by:
(a) the appointment by instrument in writing of a receiver or receivers of
the Collateral or any part thereof (which receiver or receivers may be
any person or persons, whether an officer or officers or employee or
employees of the Lender or not and the Lender may remove any receiver
or receivers so appointed and appoint another or others in his, her or
their stead);
(b) proceedings in any court of competent jurisdiction for the appointment
of a receiver or receivers or for sale of the Collateral or any part
thereof;
(c) any other action, suit, remedy or proceeding authorized or permitted
hereby or by law or by equity;
(d) exercising all of the rights of the Corporation under all contracts,
agreements or other instruments in writing relating to the Collateral
as fully and effectually as if the Lender were the absolute owner
thereof;
(e) commencing legal proceedings for and on behalf of and in the name of
the Lender and at the expense of the Corporation in order to enforce
the rights of the Corporation under any contracts, agreements, or
other instruments in writing which may relate to the Collateral; or
(f) exercising any of the rights and/or remedies referred to in Section 13
hereof.
Any receiver or receivers appointed pursuant to this Section 14 shall have power
to: (i) take possession of and to use the Collateral or any part thereof; (ii)
borrow money required for the maintenance, preservation or protection of the
Collateral or any part thereof or the carrying on of the business of the
Corporation; (iii) further charge the Collateral in priority to the security
interests of this Agreement as security for money so borrowed; and (iv) sell,
lease or otherwise dispose of the whole or any part of the Collateral on such
terms and conditions and in such manner as the receiver
<PAGE>
12.
shall determine as permitted by law. The term "receiver" as used in this
Agreement includes a receiver and manager. The Lender may file such proofs of
claim and other documents as may be necessary or advisable in order to have its
claim lodged in any bankruptcy, winding-up or other judicial proceedings
relating to the Corporation. In addition, the Lender may use and possess the
Collateral or any part thereof, free from all encumbrances, liens and charges
(unless otherwise expressly provided for herein) without hindrance, interruption
or denial of the same by the Corporation or by any other person or persons and
may lease or sell the whole or any part or parts of the Collateral . Any sale
hereunder may be made by public auction, by public tender or by private contract
or as otherwise permitted by applicable law. Such sale shall be on such terms
and conditions as to credit or otherwise and as to upset or reserve bid or price
as to the Lender acting in a commercially reasonable manner may seem
advantageous. Such sale may take place whether or not the Lender has taken
possession of the Collateral. No remedy for the realization of the Security
Interest granted herein or for the enforcement of the rights of the Lender shall
be exclusive of or dependent on any other such remedy, but any one or more of
such remedies may from time to time be exercised independently or in
combination.
15. Effect on Other Agreements. The Corporation acknowledges and agrees that
this Agreement is not intended to limit or restrict in any way the rights and
remedies of the Lender under the Credit Agreement, or any other security granted
by the Corporation to the Lender pursuant thereto, but rather is intended to
facilitate the exercise of such rights and remedies. The Lender shall have, in
addition to all other rights and remedies given to it by the terms of this
Agreement and the Credit Agreement, all rights and remedies allowed by law and
the rights and remedies of a secured party under the Personal Property Security
Act as enacted in any jurisdiction in which the Collateral may be located
(including, without limitation, any of the hypothecary rights provided for under
articles 2748 to 2794 of the Civil Code of Quebec).
16. Binding Effect; Benefits. This Agreement, receipt of a true copy of which is
hereby acknowledged by the Corporation, shall be binding upon the Corporation
and its respective successors and permitted assigns, and shall enure to the
benefit of and be enforceable by the tender, its successors, nominees and
assigns. The Lender may, upon the terms provided in the Credit Agreement,
assign, transfer and deliver to any transferee any or all of the Indebtedness
secured by this Agreement or any security or any documents or instruments held
by the Lender in respect thereof, provided that no such assignment, transfer or
delivery shall release the Corporation from any of the Indebtedness secured by
this Agreement and provided that on or before the completion of such assignment,
transfer or delivery, any assignee, transferee or holder shall enter into an
agreement with the Corporation to the effect that such assignee, transferee or
holder agrees to be bound by and observe the provisions of this Agreement; and
thereafter the Lender shall, to
<PAGE>
13.
the extent provided in the Credit Agreement, be fully discharged from any and
all further responsibility with respect to the Indebtedness, including without
limitation all documents and instruments so assigned, transferred or delivered.
Such transferee shall be vested with all powers and rights of the Lender under
such security, documents or instruments but the Lender shall retain all rights
and powers with respect to any such security, documents or instruments not so
assigned, transferred or delivered. The Corporation shall not sell or assign its
interest in, or grant any license or sublicense under the Collateral without the
prior written consent of the Lender.
17. Release of Security Interest. Upon Termination, the Lender shall upon
request in writing by the Corporation and at the expense of the Corporation
execute and deliver to the Corporation all documents and instruments, and shall
take such other actions, as may be necessary or proper to release the lien on
and security interest in the Collateral, subject to any disposition thereof
which may have been made by the Lender pursuant hereto.
18. Governing Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the Province of New Brunswick and the
federal laws of Canada applicable therein. The Corporation agrees that any
lawsuit, action or proceeding arising out of or relating to this Agreement may
be instituted in the Courts of New Brunswick and the Corporation hereby accepts
and irrevocably submits to the non-exclusive jurisdiction of the said Courts and
acknowledges their competence and agrees to be bound by any judgment thereof;
provided that nothing herein shall limit the rights of the Lender to bring or
initiate proceedings against the Corporation or any other person elsewhere.
19. Headings. Paragraph headings used herein are for convenience only and shall
not modify nor interpret the provisions which they precede.
20. Further Assurances. The Corporation agrees to execute and deliver such
further agreements, instruments and documents, and to perform such further acts,
as the Lender reasonably may request from time to time in order to carry out the
purpose of this Agreement and the covenants and agreements set forth herein.
21. Survival of Representations. All representations and warranties of the
Corporation contained in this Agreement shall survive the execution and delivery
of this Agreement and shall be remade on the date of each and every borrowing
made by the Corporation under the Credit Agreement.
22. Counterparts. This Agreement may be executed by the parties in counterparts,
each of which shall be deemed to be an original and all of which together shall
constitute one and the same agreement.
<PAGE>
14.
23. Inconsistencies. This Agreement is executed pursuant to the Credit Agreement
and is subject to the terms thereof. In the event of any contradiction between
the terms hereof and the comparable terms of the Credit Agreement, the terms of
the Credit Agreement shall prevail.
24. Selection of Language. It is the express wish of the Parties that this
agreement and any related documents be drawn up and executed in English. Les
parties conviennent que la presente convention et tous les documents s'y
rattachant soient rediges et signes en anglais.
IN WITNESS WHEREOF, this Agreement has been executed by the Corporation,
effective as of the date first written above.
SPORT MASKA INC.
By: /s/ D. Bruce Randall c/s
-----------------------------
Name: D. Bruce Randall
Title: Secretary
THE CHASE MANHATTAN BANK OF CANADA
By: c/s
-----------------------------
Name: Christine Chan
Title:
SECURITY UNDER SECTION 427(1) OF THE BANK ACT.
(SECURITY ON ALL PROPERTY OF SPECIFIED KINDS)
FOR GOOD AND VALUABLE CONSIDERATION, the undersigned hereby assigns
to THE CHASE MANHATTAN BANK OF CANADA (hereinafter called the "Bank") as
continuing security for the payment of all loans and advances made or that may
be made by the Bank to the undersigned up to and including the 11th day of
April, 1998 pursuant to the application for credit and promise to give security
made by the undersigned to the bank and dated as of the 21ST DAY OF MARCH, 1997
and any application(s) for credit and promise(s) to give security supplemental
thereto made or that may be made by the undersigned to the bank or renewals of
such loans and advances or substitutions therefor and interest on such loans and
advances and on any such renewals and substitutions, all property of the kind(s)
hereinafter described of which the undersigned is now or may hereafter become
the owner, or in respect of which the undersigned does now have or hereafter may
acquire rights, to wit:
all goods, wares and merchandise, manufactured or otherwise, of
which the undersigned is now or may hereafter become a wholesale or
retail purchaser or a shipper or in which the undersigned is now or
may hereafter become a dealer, and all goods, wares and merchandise,
manufactured or produced by the undersigned or procured for such
manufacture or production, and all goods, wares and merchandise used
or produced in or procured for the packing of such goods, wares and
merchandise
and that is now or may hereafter be in the place or places hereinafter
designated, to wit:
1. 6537 `A' Mississauga Road, Mississauga, Ontario
2. 6375 Picard Street, St. Hyacinthe, Quebec
3. 15855 Hubert Street, St. Hyacinthe, Quebec
4. 600 Boulevard Industriel, St. Jean, Quebec
5. 175 Dessureault, Cap de la Madelaine, Quebec
6. 7405 Trans Canada Highway, Suite 300, St. Laurent, Quebec
7. 3030 Ste. Anne, Beauport, Quebec
8. 2245 St. Paul, St. Hyacinthe, Quebec
or, in transit thereto or therefrom or in any other place or places in Canada in
which any of the said property may be located.
This security is given under the provisions of section 427 of the
Bank Act.
The property now owned by the undersigned or in respect of which the
undersigned now has or may hereafter acquire rights and hereby assigned is free
from any mortgage, lien or charge thereon, other than Permitted Encumbrances (as
hereinafter defined) and previous assignments, if any, to the Bank, and the
undersigned warrants that the property that may hereafter be acquired by the
undersigned and is hereby assigned shall be free from any mortgage, lien or
charge thereon, other than Permitted Encumbrances (as hereinafter defined) and
previous assignments, if any, to the Bank.
<PAGE>
2.
For the purposes hereof, "Permitted Encumbrances" shall mean any
Liens (as that term is defined in that certain credit agreement dated as of
April 1, 1997 made among The Chase Manhattan Bank, on its own behalf and in its
capacity as agent for certain other parties, SLM International, Inc., Maska
U.S., Inc. and #1 Apparel, Inc. (the "U.S. Credit Agreement")), permitted in
accordance with section 7.01 of the U.S. Credit Agreement.
This agreement shall be construed in accordance with and be governed
by the laws of the Province of New Brunswick and for the purpose of legal
proceedings this agreement shall be deemed to have been made in the said
Province and to be performed there and the courts of that Province shall have
jurisdiction over all disputes which may arise under this agreement and the
Borrower hereby irrevocably and unconditionally submits to the non-exclusive
jurisdiction of such courts, provided always that nothing herein contained shall
prevent the Bank from proceeding at is election against the Borrower in the
courts of any other province, country or jurisdiction.
It is the express wish of the Parties that this agreement and any
related documents be drawn up and executed in English. Il est la volonte
expresse des parties que cette convention et tous les documents s'y rattachant
soient rediges et signes en anglais.
DATED at Montreal, Quebec this 14th day of April, 1997.
SPORT MASKA INC.
Per: /s/ D. Bruce Randall C.S.
------------------------------
Name: D. Bruce Randall
Title: Secretary
<PAGE>
---------------------------------
01001-252
STAMP BRANCH TRANSIT NUMBER
---------------------------------
NOTICE OF INTENTION TO GIVE SECURITY
UNDER SECTION 427 OF THE BANK ACT
To Whom It May Concern:
SPORT MASKA INC., 7405 Trans Canada Highway, Suite 300, St. Laurent, Quebec, H4T
1Z2, hereby gives notice that it is its intention to give security under the
authority of Section 427 of the Bank Act to THE CHASE MANHATTAN BANK OF CANADA.
DATED at /s/Ville St. Laurent, Quebec this 21st day of March, 1997.
SPORT MASKA INC.
Per: /s/ D. Bruce Randall c.s.
--------------------------
Name: D. Bruce Randall
Title: Secretary
<PAGE>
DATED: March 21, 1997
APPLICATION FOR CREDIT AND PROMISE TO GIVE
BILLS OF LADING, WAREHOUSE RECEIPTS, OR
SECURITY UNDER SECTION 427 OF THE BANK ACT
TO: The Chase Manhattan Bank of Canada
1 First Canadian Place
Suite 6900
Toronto, Ontario
M5X 1B2
The Chase Manhattan Bank of Canada (the "Bank") is hereby requested by the
undersigned to grant and continue up to and including the 11th day of April,
1998 a revolving line of credit (whether by loans, the acceptance of our bills
of exchange or otherwise) of an amount not exceeding the Canadian equivalent of
THIRTY FIVE MILLION DOLLARS (USD35,000,000) of lawful money of the United States
of America in accordance with the provisions of that certain credit agreement
dated as of April 1, 1997 made between the Bank and the undersigned and to make
loans or advances to the undersigned thereunder on the security of all property
of the kind(s) hereinafter described of which the undersigned is now or may
hereafter become the owner, or in respect of which the undersigned does now have
or hereafter may acquire rights, to wit:
all goods, wares and merchandise, manufactured or otherwise, of which the
undersigned is now or may hereafter become a wholesale or retail purchaser
or a shipper or in which the undersigned is now or may hereafter become a
dealer, and all goods, wares and merchandise, manufactured or produced by
the undersigned or procured for such manufacture or production, and all
goods, wares and merchandise used or produced in or procured for the
packing of such goods, wares and merchandise
and/or on the security of warehouse receipts and/or bills of lading covering
such property.
And the undersigned promise(s) and agree(s) to give the Bank security for
all loans and advances by the Bank to the undersigned pursuant to this
application for credit and promise(s) to give security and any application(s)
for credit and promise(s) to give security supplemental hereto by way of
assignment under section 427 of the Bank Act covering all the property aforesaid
which is now or may hereafter be in the place or places hereinafter designated,
to wit:
1. 6537 'A' Mississauga Road, Mississauga, Ontario
2. 6375 Picard Street, St. Hyacinthe, Quebec
3. 15855 Hubert Street, St. Hyacinthe, Quebec
4. 600 Boulevard Industriel, St. Jean, Quebec
5. 175 Dessureault, Cap de la Madelaine, Quebec
6. 7405 Trans Canada Highway, Suite 300, St. Laurent, Quebec
7. 3030 Ste. Anne, Beauport, Quebec
8. 2245 St. Paul, St-Hyacinthe, Quebec
<PAGE>
2.
and at any other place or places whatsoever and in transit thereto and therefrom
and/or elsewhere in Canada wheresoever situate and the undersigned promise(s)
and agree(s) to give the Bank from time to time and as often as requested by the
Bank warehouse receipts and/or bills of lading covering all the property
aforesaid or any part thereof which is now or may hereafter be covered by
warehouse receipts or bills of lading, as security for all the said loans and
advances.
And the undersigned will pay the Bank all costs, charges and expenses
which the Bank may incur in enforcing or obtaining payment of the sums of money
due to the Bank from the undersigned or in attempting so to do.
The undersigned hereby appoint(s) the person for the time being acting as
manager of the above-mentioned branch of the Bank and/or any officer of the Bank
employed by the Bank at the said branch the attorney of the undersigned, on
behalf of the undersigned to give from time to time to the Bank any and all
security mentioned above and to sign or endorse and deliver any and all
instruments and documents in connection therewith.
The Bank may from time to time take from the undersigned notes
representing the said loans and advances or any part thereof; and any notes so
taken shall not extinguish or pay the indebtedness created by such loans and
advances but shall represent the same only.
No security acquired by the Bank shall be merged in any subsequent
security or be taken to be substituted for any security previously acquired.
It is the express which of the Parties that this agreement and any related
documents be drawn up and executed in English. Il est volonte expresse des
parties que cettee convention et tous les documents s'y rattachant soient
rediges et signes en anglais.
SPORT MASKA INC.
Per: /s/ D. Bruce Randall c.s.
------------------------------
Name: D. Bruce Randall
Title: Secretary
<PAGE>
AGREEMENT AS TO LOANS AND
ADVANCES AND SECURITY THEREFOR
TO: THE CHASE MANHATTAN BANK OF CANADA
(hereinafter called the "Bank")
In consideration of the loan(s) or advance(s) being made and/or to be made
hereafter by the Bank to the undersigned (hereinafter called the "Borrower"),
but subject to the provisions of any other agreement between the Bank and the
Borrower relating to the debt or liability of the Borrower to the Bank, the
Borrower agrees with the Bank as follows:
1. All security now or at any time hereafter held by the Bank for the payment of
any debt or liability of the Borrower (the said security being hereinafter
called the "Security"), including, without limiting the generality of the
foregoing, security by way of warehouse receipt or bill of lading or under
section 427 of the Bank Act, together with all property covered by or comprised
in the Security (the said property being hereinafter called the "Property"), and
all proceeds of the Security and of the Property, shall be continuing collateral
security for the payment of such debt or liability and also for the payment of
interest thereon, which unless otherwise agreed shall be at the Bank's Prime
Rate (at the date of this agreement, such Prime Rate is 4.75%) and shall be
calculated and payable monthly, not in advance, and of all costs, charges and
expenses of or incurred by the Bank in connection therewith, including solicitor
and his own client legal costs, whether in protecting, preserving, realizing or
collecting the Security or the Property or attempting so to do or otherwise, and
interest thereon at the rate and calculated in the manner aforesaid, all of
which the Borrower agrees to pay to the Bank. The words "Prime Rate" shall mean
the floating annual rate of interest established from time to time by the Bank
as the base rate it will use to determine rates of interest on Canadian dollar
loans to customers in Canada and designated as its prime rate.
2. The Borrower shall keep the Property insured to its full insurable value
against loss or damage by fire, and, if requested by the Bank, against loss or
damage from any other cause, with insurers approved by the Bank, and shall
assign to the Bank the policies evidencing such insurance or all claims
thereunder and/or have the loss made payable to the Bank as the Bank may require
and shall deliver the policies to the Bank, and in the event of failure so to do
the Bank may but shall not be bound to effect such insurance on the Property as
it sees fit and the Borrower will on demand repay to the Bank the amount of any
premiums paid by it with interest thereon at the rate and calculated in the
manner aforesaid.
3. If the Bank surrenders to the Borrower the Security or the Property or any
part of either of them, the Borrower shall receive the same in trust for and on
behalf of the Bank and from time to time shall deal therewith as the Bank may
direct and, at the request of the Bank, shall give to the Bank security on the
Property so surrendered, or covered by the Security so surrendered, to the
satisfaction of the Bank.
4. The proceeds of all sales by the Borrower of the Property or any part
thereof, including, without limiting the generality of the foregoing, cash,
debts arising from such sales or otherwise, evidences of title, instruments,
documents and securities, which the Borrower may receive or be entitled to
receive in respect thereof, are hereby assigned to the Bank and shall be paid or
transferred to the Bank forthwith, and until so paid or transferred shall be
held by the Borrower in trust for the Bank. Execution by the Borrower and
acceptance by the Bank of an assignment of book debts or any additional
assignment of any of such proceeds shall be
<PAGE>
2.
deemed to be in furtherance hereof and not an acknowledgement by the Bank of any
right or title on the part of the Borrower to such book debts or proceeds.
5. The Borrower shall at all times duly pay and discharge all claims whatsoever
in any way secured by or constituting a charge upon the Property or any part
thereof and particularly, but without limiting the generality of the foregoing,
all wages, salaries and other remuneration of all employees employed by the
Borrower in connection with the business of the Borrower in respect of which any
Property is held or acquired by the Borrower, and shall from time to time at the
request of the Bank exhibit to the Bank evidence of such discharge and obtain
and deliver to the Bank such waivers or releases as the Bank may deem necessary
to secure to the Bank the priority of its rights in the Property.
6. The Borrower shall from time to time on demand and to the satisfaction of the
Bank deliver to the Bank additional security, and in the event of failure by the
Borrower so to do or to make due payment to the Bank of any debt or liability or
part thereof or to observe any provision of this agreement, the Bank may in its
discretion cease or refrain from making loans or advances to the Borrower
whether under any credit extended by the Bank or otherwise, and all debts and
liabilities of the Borrower to the Bank shall at the option of the Bank be
payable forthwith and without any demand, and the Bank is hereby authorized from
time to time to sell at public or private sale or otherwise realize upon the
Security or any part thereof and all or any of the Property whenever and
wherever and for such price in money or other consideration and in such manner
and upon such terms and conditions as the Bank deems best, the whole without
advertisement or notice to the Borrower or others and to deal with the proceeds
as in this agreement provided or as otherwise agreed, without prejudice to its
claim for any deficiency and free from any right of redemption on the part of
the Borrower which is hereby waived and released, the Borrower expressly waiving
all and every formality prescribed by custom or by law in relation to any such
sale or other realization.
7. The Bank may from time to time without any demand forcibly break open, enter
upon or into and occupy and use, enjoy and exercise free of charge and to the
exclusion of all others, including the Borrower, any and all premises and
property (real and personal, immovable and movable) and rights, powers and
privileges of or used, enjoyed or exercised by the Borrower in connection with
the Property or any part thereof or in or upon which the same may be (not being
the premises of a warehouseman or carrier) until the Property shall be fully
realized upon, and may may from time to time appoint a receiver or agent to act
for the Borrower, for whose acts the Borrower alone shall be responsible, and
the Borrower shall have no power to revoke such appointment or determine such
agency. Such receiver or agent shall have and may exercise all the powers,
rights and discretions granted to the Bank by this agreement and the Bank and
any such receiver or agent shall have the right from time to time in the name of
the Borrower to exercise any and all of the Borrower's rights, powers and
privileges of every kind and to do all acts and things which the Borrower could
do if acting, for the purpose of completing, selling, shipping or otherwise
dealing with the Property in such manner as the Bank may deem best for the
purpose of realizing upon the Property.
8. Any promissory note or bill of exchange received by the Bank together with
any securities or documents attached thereto or received by therewith shall be
subject to the terms of this agreement and the Bank and holders for the time
being of any such bill or note may at any time before or after its maturity and
whether or not it has been dishonoured accept payment and deliver the securities
or documents or accept partial payment from time to time and thereupon release
part of the securities or of the property covered by the documents or any of
them.
9. The Bank may from time to time apply
<PAGE>
3.
(a) all payments which it receives,
(b) the proceeds of sales by the Borrower of the Property or any part
thereof, and
(c) the proceeds of realization of any part of the Security or of the
Property which are applicable generally to the debts and liabilities
of the Borrower to the Bank,
against or, as the Bank deems best, hold the same with all the powers, rights
and discretions conferred on it by this agreement or otherwise, as continuing
collateral security for the fulfillment of any or all indebtedness, obligations
and liabilities of any kind, now or hereafter existing, direct or indirect,
absolute or contingent, joint or several of the Borrower to the Bank whether as
principal or surety, together with all expenses (including legal fees on a
solicitor and client basis) incurred by the Bank, its receiver or agent in the
preparation, perfection and enforcement of security or other agreements held by
the Bank in respect of such indebtedness, obligations or liabilities and
interest thereon and the Band shall at all times and from time to time have the
right to change any appropriation of any moneys received by it and to reapply
the same on any other part or parts of the said debts and liabilities as the
Bank may see fit, notwithstanding any previous application by whomsoever made.
The proceeds of realization of any part of the Security or of the Property which
are applicable only to part of the debts and liabilities of the Borrower to the
Bank shall first be applied to such part of the debts and liabilities, and any
surplus remaining after payment of such part may from time to time be held or
applied by the Bank for the purposes set out in and in accordance with the
preceding paragraph of this Clause 9.
10. The Bank may release, compromise, settle and adjust any claim, dispute or
difference which may arise in respect of the Security or of the Property or the
proceeds of either of them and may grant extensions of time and indulgences,
without prejudice to the debts and liabilities of the Borrower or the Bank's
right to hold, deal with and realize the Security or the Property or the
proceeds thereof. The Bank may use any Clearing Houses established by The
Canadian Bankers' Association and in all dealings with the Borrower's accounts
and with instruments may act pursuant to the rules and regulations under which
such Clearing Houses are operated.
11. The Borrower shall at all times and from time to time do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged or delivered
all and singular every such further act, deed, transfer, assignment, assurance,
document or instrument as the Bank may reasonably require for the purpose of
perfecting the title of the Bank to the Security or the Property or the proceeds
of either of them and for the better accomplishing and effectuating of this
agreement and the provisions contained herein and every officer of the Bank and
each of them is irrevocably appointed attorneys or attorney to execute in the
name and on behalf of the Borrower any document or instrument for the said
purposes, and this appointment being made in consideration of a loan or loans,
advance or advances, by the Bank to the Borrower shall be irrevocable and shall
be of full force and effect whenever and so often as any loan or advance by the
Bank to the Borrower is unpaid or any such obligation as aforesaid to the Bank
is unfulfilled and notwithstanding any occurrence or event which would otherwise
terminate such agency. Every power, right and discretion vested by law in the
Bank or conferred upon it by this agreement may be exercised on its behalf by
the said officers or acting officers of the Bank or any person from time to time
named by the Bank for such purpose, and any one of them acting alone.
<PAGE>
4.
12. The Bank shall not be responsible for any failure to exercise or enforce or
for any delay in the exercise or enforcement of any powers, rights or
discretions of the Bank nor for any act, default or misconduct of any agent,
officer, employee or servant of the Bank and the Bank shall be accountable only
for such moneys as it shall actually receive.
13. Any notice or statement referred to herein may be delivered, or providing
that postal service throughout Canada is fully operative, may be mailed by
ordinary prepaid mail to the Borrower at the address of the Borrower as shown
on the books of the Bank and the Borrower shall be deemed to have received such
notice or statement on the day of delivery, if delivered, and three business
days after mailing, if mailed.
14. The benefit of all rules of law or equity and compliance with any statutory
provisions now or hereafter in force inconsistent with any of the provisions of
this agreement are hereby waived by the Borrower.
15. The rights, remedies and benefits herein are cumulative and not in
substitution for or exclusive of any rights, remedies or benefits which the bank
may otherwise have and no sale or delivery by the Borrower of the Property or
any part thereof shall prejudice or affect the rights however arising of the
Bank in or with respect to Property so sold or delivered, and this shall be a
continuing agreement and all its provisions shall extend to all loans and
advances to the Borrower by the Bank and all obligations of the Borrower to the
Bank at any time outstanding and to the Security and the Property as they may
exist from time to time and all proceeds thereof; and every loan and advance
heretofore, now or hereafter made shall be deemed to have been made upon the
agreements herein contained.
16. This agreement shall be binding upon the Borrower and its heirs, legatees,
trustees, executors, administrators, successors and assigns including any
successor by reason of amalgamation of or any other change in the Borrower and
shall enure to the benefit of the Bank and its successors and assigns.
17. This agreement shall be construed in accordance with and be governed by the
laws of the Province of New Brunswick and for the purpose of legal proceedings
this agreement shall be deemed to have been made in the said Province and to be
performed there and the courts of that Province shall have jurisdiction over all
disputes which may arise under this agreement and the Borrower hereby
irrevocably and unconditionally submits to the non-exclusive jurisdiction of
such courts, provided always that nothing herein contained shall prevent the
Bank from proceeding at its election against the Borrower in the courts of any
other province, country or jurisdiction.
18. If one or more of the provisions contained herein shall be invalid, illegal
or unenforceable in any respect, the validity, legality and enforeability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby.
19. Words importing the singular include the plural and vice versa; and words
importing gender shall include all genders.
<PAGE>
5.
20. It is the express wish of the Parties that this agreement and any related
documents be drawn up and executed in English. Il est la volonte expresse des
parties que cette convention et tous les documents s'y rattachant soient rediges
et signes en anglais.
SIGNED AND SEALED at Montreal, Quebec this 14th day of April, 1997.
SPORT MASKA INC.
Per:/s/ D Bruce Randall c.s.
--------------------------
Name: D. Bruce Randall
Title: Secretary
TO: THE CHASE MANHATTAN BANK
DELIVERY AGREEMENT
WHEREAS SPORT MASKA INC. (hereinafter called the "Company") has agreed to
execute and deliver to THE CHASE MANHATTAN BANK OF CANADA (hereinafter called
the "Secured Party") a credit agreement dated as of April 1, 1997 with the
Secured Party which as amended, supplemented or restated from time to time is
herein called, the "Credit Agreement" and, as security for the indebtedness and
liability under the Credit Agreement the Company has agreed to execute and
deliver to the Secured Party a debenture in the principal amount of FIFTY
MILLION UNITED STATES DOLLARS ($50,000,000 U.S.) for the purpose of securing
payment or performance of any and all indebtedness, obligations and liabilities,
joint or several, of the Company to the Secured Party pursuant to the Credit
Agreement and any security therefor, whether as principal or surety (all of
which present and future indebtedness, obligations and liabilities are
hereinafter collectively called the "Obligations");
NOW THEREFORE in consideration of the foregoing and for other good and
valuable consideration the Company hereby agrees with the Secured Party as
follows:
1. Delivery. The Company herewith delivers to the Secured Party a debenture of
the Company in the principal amount of FIFTY MILLION UNITED STATES DOLLARS
($50,000,000 U.S.) bearing interest at the rate of TWENTY-FIVE PERCENT (25%) per
annum from the date hereof (hereinafter as it may be amended, supplemented or
restated from time to time called the "Debenture"), charging by way of a fixed
and specific mortgage and charge and granting security interests in certain
property and assets of the Company and charging by way of a floating charge and
granting a security interest in all the undertaking, property and assets of the
Company (except as therein provided).
2. Continuing Security. The Debenture shall be held by the Secured Party as
general and continuing security to secure payment and
<PAGE>
2.
performance of the whole of the Obligations as existing from time to time and
any ultimate unpaid balance of any indebtedness forming part of the Obligations
notwithstanding any change in:
(a) the nature or form of the Obligations;
(b) the accounts or the bills of exchange, promissory notes and/or other
obligations evidencing or creating the Obligations or any part
thereof;
(c) the names of the parties to the accounts or to the said bills, notes
and/or obligations; or
(d) the name or constitution of the Company,
and notwithstanding the opening of any new account and the closing in the books
of the Company or the Secured Party of any other account with respect to the
Obligations or any part thereof.
3. Default. Upon the occurrence of an Event of Default (as defined under the
Credit Agreement), the Secured Party may forthwith without notice, without
demand for payment, without advertisement and without any other formality (all
of which are hereby waived), but in accordance with applicable law, enforce any
and all security which it may hold including, without limitation, the Debenture.
All rights and remedies of the Secured Party may be exercised independently or
in combination. The rights and remedies specified herein shall be in addition to
and not in substitution for any other rights and remedies of the Secured Party
at law or in equity or otherwise.
4. Application of Payments. Unless the provisions of the Credit Agreement
otherwise provide, any and all payments made in respect of the Obligations may
be applied on such part or parts of the Obligations as the Secured Party may see
fit. Unless the provisions of the Credit Agreement otherwise provide, the
Secured Party shall at all times and from time to time have the right to change
any appropriation of any moneys received by it and to reapply the same on any
other part or parts of the Obligations as the Secured Party may see fit,
notwithstanding any previous application by whomsoever made.
The proceeds of any collection or sale of the Charged Assets (as defined in
the Debenture), as well as any Charged Asset consisting of cash, shall
<PAGE>
3.
be applied by the Secured Party as provided in section 8.01 of the Credit
Agreement.
Upon any sale of the Charged Assets by the Secured Party (including,
without limitation, pursuant to a power of sale granted by statute or under a
judicial proceeding) the receipt of the Secured Party or of the officer making
the sale shall be a sufficient discharge to the purchaser or purchasers of the
Charged Assets so sold and such purchaser or purchasers shall not be obligated
to see to the application of any part of the purchase money paid over to the
Secured Party or such officer or be answerable in any way for the misapplication
thereof.
5. Dealings by the Secured Party. The Secured Party may grant extensions, take
and give up securities, accept compositions, grant releases and discharges and
otherwise make arrangements with the Company and deal with other persons and
securities as the Secured Party may see fit without prejudice to the liability
of the Company or the Secured Party's right to hold, deal with and realize the
security of the Debenture.
6. No Merger. The Debenture shall not operate by way of merger of any
indebtedness or liability of the Company or any other person or persons to the
Secured Party hereunder or under any document or negotiable instrument by which
the same may now or at any time hereafter be represented or evidenced. No
judgment recovered by the Secured Party shall operate by way of merger of or in
any way affect the security created by the Debenture or the Secured Party's
right to interest as aforesaid.
7. Additional Security. This agreement and the security afforded by the
Debenture shall be in addition to and not in replacement of or substitution for
any security now or hereafter held by the Secured Party in respect of any
indebtedness, liabilities or obligations, present or future, of the Company to
the Secured Party or any part thereof, and shall not be prejudiced by any such
security or by any exchange, release or variation of any such security.
<PAGE>
4.
8. Expenses. All reasonable expenses (including without limitation legal fees on
a solicitor and his own client basis and the fees and expenses of any receiver
or receiver and manager appointed under the provisions of the Debenture)
incurred by the Secured Party in connection with:
(a) the preparation and registration of the Debenture;
(b) recovering or enforcing payment or performance of all or part of the
Obligations (including without limitation expenses incurred in
considering and protecting or improving its position, or attempting to
do so, whether before or after default); and
(c) realizing upon or otherwise dealing with the assets charged by the
Debenture (including without limitation expenses of taking possession,
protecting, preparing for sale and realizing upon any such assets),
shall be payable upon demand, shall be added to and shall be deemed to be a part
of the Obligations, shall bear interest at the interest rate provided for in
Section 2.09 of the Credit Agreement and the payment thereof shall be secured by
the Debenture.
9. No Obligation to Advance. Notwithstanding anything in this agreement or in
the Debenture contained, the Secured Party shall not be obligated thereby to
make any loan or other extension of credit or further loan or extension of
credit or to extend any time for payment or performance of all or any part of
the Obligations.
10. Interest. Any provision of the Debenture or of this agreement
notwithstanding, payment by the Company of interest on all indebtedness
comprising, or forming part of, the Obligations at the current rate at which
such indebtedness may bear interest for any period of time shall constitute
satisfaction of interest on the Debenture for the equivalent period of time.
11. Sale of Debenture. Any sale, transfer, delivery, negotiation or assignment
of the Debenture by the Secured Party will be made subject to the provisions of
this agreement.
12. Claims Under Debenture. Neither the Secured Party nor any subsequent holder
of the Debenture shall, at any time, claim payment under the
<PAGE>
5.
Debenture (whether for principal, interest or both) in an amount greater than
the amount of the indebtedness forming part of the Obligations at such time.
Notwithstanding that the Debenture is stated to be payable on demand, no demand
for payment shall be made under the Debenture unless demand is concurrently
being made, or has been made, for payment of indebtedness forming part of the
Obligations in an amount not less than the amount demanded under the Debenture.
13. Discharge. Upon payment and performance by the Company of the Obligations,
the Secured Party shall, upon request in writing by the Company delivered to the
Secured Party at a time when the Secured Party is under no obligation
(conditional or otherwise) to make any loan or extend any other type of credit
to the Company under the Credit Agreement, and at the expense of the Company,
discharge the Debenture and upon the delivery by the Secured Party to the
Company of a discharge of the Debenture, this agreement shall be terminated.
14. Set-Off. The Company grants to the Secured Party the right to set off
against any and all accounts, credits or balances maintained by it with the
Secured Party the Obligations or any part thereof when due and payable.
15. Illegality. If one or more of the provisions of this agreement shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired.
16. Gender and Headings. Words importing the singular include the plural and
vice versa and words importing gender shall include all genders. The headings in
this agreement are included for convenience of reference only, and shall not
constitute a part of this agreement for any other purpose.
<PAGE>
6.
IN WITNESS WHEREOF this agreement has been executed by the Company as of
the 1st day of April, 1997.
SPORT MASKA INC.
By: /s/ D. Bruce Randall C.S.
-------------------------
D. Bruce Randall
Secretary
[Logo] Province Charge/Mortgage of Land
of Ontario Form 2 - Land Registration Reform Act, 1984 B
CERTIFICATE OF REGISTRATION
771376
'97 APR 11 PM 3 44
FOR OFFICE USE ONLY
- --------------------------------------------------------------------------------
New Property Identifiers
Additional See Schedule | |
- --------------------------------------------------------------------------------
Executions
Additional See Schedule | |
- --------------------------------------------------------------------------------
(1) Registry |X| Land Titles | | (2) Page 1 of 29 pages
- --------------------------------------------------------------------------------
(3) Property Block Property
Identifier(s)
Additional See Schedule | |
- --------------------------------------------------------------------------------
(4) Principal Amount
ONE HUNDRED MILLION UNITED STATES
Dollars $100,000,000 U.S.
- --------------------------------------------------------------------------------
(5) Description
Part of Lot Thirty-Three (33), Concession One (1), (formerly of the Township
of Normanby), Part of Lot Ten (10) and Part of Duke Street according to
Foster's Survey of Part of the Town of Mount Forest, in the County of
Wellington and as more particularly described in the Schedule attached page
23. Appendix "A".
SEE SCHEDULE
- --------------------------------------------------------------------------------
(6) This (a) Redescription (b) Schedule for
Document New Easement Additional
Contains Plan/Sketch | | Description |X| Parties | | Other |X|
- --------------------------------------------------------------------------------
(7) Interest/Estate Charged
Fee Simple
- --------------------------------------------------------------------------------
(8) Standard Charge Terms - The parties agree to be bound by the provisions in
Standard Charge Terms filed as number and the Chargor(s)
hereby acknowledge(s) receipt of a copy of these terms. n/a
- --------------------------------------------------------------------------------
(9) Payment Provisions
(a) Principal (b) Interest
Amount $100,000,000 U.S. Rate SEE SCHEDULE % per annum
(c) Calculation Period SEE SCHEDULE
- --------------------------------------------------------------------------------
Interest Y M D Payment
(d) Payment (e) Date and
Date Period SEE SCHEDULE
First Y M D
(f) Payment
Date
- --------------------------------------------------------------------------------
Last Y M D Amount
(g) Payment (h) of Each
Date Payment Dollars $
- --------------------------------------------------------------------------------
Balance Y M D
(i) Due Date (j) Insurance Dollars $
- --------------------------------------------------------------------------------
(10) Additional Provisions
THIS CHARGE IS A DEBENTURE
Continued on
Schedule | x |
- --------------------------------------------------------------------------------
(11) Chargor(s) The chargor hereby charges the land to the chargee
................................................................................
................................................................................
The chargor(s) acknowledge(s) receipt of a true copy Date of Signature
of this charge. Y M D
Name(s) Signature(s)
#1 APPAREL CANADA INC. /s/ D. Bruce Randall 1997 04 11
................................................................................
Per: D. Bruce Randall, Secretary
............................... ................................................
............................... ................................................
I/We have authority to bind the corporation
- --------------------------------------------------------------------------------
(12) Spouse(s) of Chargor(s) I hereby consent to Date of Signature
this transaction. Y M D
Name(s) Signature(s)
............................... ................................................
- --------------------------------------------------------------------------------
(13) Chargor(s) Address
for Service
375 Sligo Road West, P.O. Box 850, Mount Forest, Ontario N0G 2L0
- --------------------------------------------------------------------------------
(14) Chargee(s)
THE CHASE MANHATTAN BANK
................................................................................
- --------------------------------------------------------------------------------
(15) Chargeee(s) Address
for service 633 Third Avenue, New York, New York, USA 10017
Attention: Credit Deputy
- --------------------------------------------------------------------------------
(16) Assessment Roll Number Cty. Mun. Map Sub. Par
of Property NOT ASSIGNED
- --------------------------------------------------------------------------------
(17) Municipal Address of Property (18) Document Prepared by:
FRASER & BEATTY
P.O. BOX 100
MULTIPLE FIRST CANADIAN PLACE
TORONTO, ONTARIO M5X 1B2
ATT: R. Matheson
- --------------------------------------------------------------------------------
FOR OFFICE USE ONLY
- --------------------------------------------------------------------------------
FEES
- ---------------------------------------
Registration Fee 50.00
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
=======================================
Total 50.00
- ---------------------------------------
<PAGE>
Gtee of U.S. Form (#1ACI)
#1 APPAREL CANADA INC.
(Continued under the laws of the Province of New Brunswick)
DEBENTURE $100,000,000 U.S.
A. PROMISE TO PAY
1. #1 APPAREL CANADA INC. (the "Company") for value received hereby agrees with
THE CHASE MANHATTAN BANK for its own benefit and for the pro rata benefit of
certain Lenders (as hereafter defined) from time to time (the "Secured Party")
that it will, subject to the provisions of that certain Delivery Agreement made
in favour of the Lenders by the Company of even date herewith (the "Delivery
Agreement") on demand pay to the Secured Party the principal sum of ONE HUNDRED
MILLION UNITED STATES DOLLARS ($100,000,000 U.S.). The Company will also,
subject to the provisions of the Delivery Agreement, pay to the Secured Party,
as and when demanded, interest on the said principal sum. The Company will pay
such interest at the rate of 25% per annum calculated and payable monthly not in
advance, both before and after demand and before and after default, judgment and
execution from the date hereof until payment in full of all amounts owing
hereunder.
B. GRANT OF MORTGAGES, CHARGES AND SECURITY INTERESTS
2. As security for payment of the principal and interest and all other
indebtedness and liability from time to time payable hereunder, the Company
hereby:
(a) mortgages and charges (subject to the exceptions as to leaseholds
hereinafter contained) as and by way of a fixed and specific mortgage and charge
to and in favour of the Secured Party, and grants to the Secured Party a
security interest in, all real and immovable property (including, by way of
sublease, leasehold lands) now or hereafter owned or acquired by the Company
and all buildings, erections, improvements, fixtures and plant now or hereafter
owned or acquired by the Company (whether the same form part of the realty or
not) and all appurtenances to any of the foregoing including without limiting
the generality of the foregoing the property described in Appendix "A" hereto
(collectively, the "Lands"); "real and
<PAGE>
2.
immovable property" shall include any interest in or right with respect to real
and immovable property;
(b) mortgages and charges to the Secured Party as and by way of a fixed
and specific mortgage and charge, and grants to the Secured Party a security
interest in all present and future:
(i) income, revenues and profits derived from any tenancy, use or
occupation of the Lands and rents and other sums payable to the
Company pursuant to the terms of any leases, licences, subleases,
agreements to lease, license or sublease, or rights to occupy the
Lands (each a "lease");
(ii) benefits, advantages and powers to be derived from such leases,
with full power and authority to demand, sue for, recover, receive
and give receipts for all rents and other moneys payable thereunder
and otherwise to enforce the rights of the landlord thereunder on
behalf of and in the name of the Company; and
(iii) benefit of all guarantees and indemnities with respect to any
leases and the performance of any obligations of any tenant
thereunder;
(c) mortgages and charges to the Secured Party as and by way of a fixed
and specific mortgage and charge, and grants to the Secured Party a security
interest in, all its present and future equipment, including, without limiting
the generality of the foregoing, all fixtures, plant, machinery, tools and
furniture now or hereafter owned or acquired and any equipment specifically
listed or otherwise described in Appendix "B" hereto;
(d) mortgages and charges to the Secured Party, and grants to the Secured
Party a security interest in, all its present and future inventory, including,
without limiting the generality of the foregoing, all raw materials, goods in
process, finished goods and packaging material and goods acquired or held for
sale or furnished or to be furnished under contracts of rental or service;
(e) mortgages and charges to the Secured Party, and grants to the Secured
Party a security interest in, all its other goods and tangible personal
property;
(f) mortgages and charges to the Secured Party, and grants to the Secured
Party a security interest in all its present and future intangibles, including,
without limiting the generality of the foregoing, all its present and future
book debts, accounts and other amounts receivable, contract rights and chooses
in action of every kind or nature including insurance rights arising from or out
of the assets referred to in subparagraphs (a), (b), (c), (d) or (e) hereof,
goodwill, chattel paper,
<PAGE>
3.
instruments of title, negotiable documents of title, investments, money and
securities and all dividends, income or other distributions, whether paid or
distributed in cash, securities or other property, in respect of any of the
property described in this section 2;
(g) charges in favour of the Secured Party as and by way of a floating
charge, and grants to the Secured Party a security interest in, its business and
undertaking and all its property and assets, real and personal, moveable or
immovable, of whatsoever nature and kind, both present and future (other than
property and assets hereby validly assigned or subjected to a specific mortgage,
charge or security interest by subparagraphs (a), (b), (c), (d), (e) or (f)
hereof and the exceptions hereinafter contained); and
(h) mortgages and charges in favour of the Secured Party and grants to the
Secured Party a security interest in the proceeds arising from any of the assets
referred to in this paragraph 2;
all of which present and future property and assets of the Company referred to
in subparagraphs 2 (a), (b), (c), (d), (e), (f), (g) and (h) hereof are
hereinafter collectively called the "Charged Assets". All rights of the Secured
Party hereunder, the security, and all obligations of the Company hereunder,
shall be absolute and unconditional irrespective of (i) any lack of validity or
enforceability of any loan document including the guarantee granted by the
Company to the Secured Party with respect to the obligations of SLM
International, Inc., Maska U.S., Inc. and #1 Apparel, Inc. (the "Borrowers")
dated as of April 1, 1997 (the "Guarantee") or the Credit Agreement dated as of
April 1, 1997 among the Borrowers and the Secured Party and certain lenders
named therein (such lenders, and any other lenders from time to time herein
called the "Lenders") (which, as amended, supplemented or restated from time to
time is herein called the "Credit Agreement") any other agreement with respect
to the indebtedness and liability secured hereby or any other agreement or
instrument relating to the foregoing, (ii) any change in the time, manner or
place of payment of, or in any other term of, all or any of the indebtedness and
liability under the Guarantee or any indebtedness or liability secured hereby or
any other amendment or waiver of or consent to any departure from any guarantee,
any loan document, including the Credit Agreement, or any other agreement or
instrument, (iii) any exchange, release or nonperfection of any Charged Asset or
any release or amendment or waiver of or consent to or departure from any
guarantee for all or any of the indebtedness and liability under the Guarantee
or any indebtedness or liability secured hereby, or (iv) any other circumstance
which might otherwise
<PAGE>
4.
constitute a defence available to, or discharge of, the Company, any guarantor
or any other obligor in respect of the indebtedness and liability, secured by or
in respect of this debenture.
C. LOCATION OF CHARGED ASSETS
3. The Company hereby represents and warrants to the Secured Party that:
(a) its chief executive office is presently at:
375 Sligo Road West
P.O. Box 85O
Mount Forest, Ontario
N0G 2L0;
(b) all of its ledgers, books of account and other financial records are
presently at the location set out in subparagraph 3(a);
(c) the other Charged Assets are presently at the locations set out in
subparagraph 3(a) and in Appendix "C" hereto.
4. The Charged Assets now situate in the Provinces of Ontario and Quebec are on
the date hereof primarily situate or located at the location(s) set out in
paragraph 3 hereof but may from time to time be located at other premises of the
Company in Ontario or Quebec. The tangible personal property constituting the
Charged Assets may also be located at other places in Ontario or Quebec while in
transit to and from such locations and premises and may, from time to time, be
situate or located at any other place in Ontario or Quebec when on lease or
consignment to any lessee or consignee from the Company.
D. LIMITED EXCEPTIONS TO GRANT OF CHARGE
5. The last day of any term reserved by any lease or sublease, oral or written,
or any agreement therefor, now held or hereafter acquired by the Company, and
whether falling within the general or particular description of the Charged
Assets, is hereby and shall be excepted out of the mortgage, charge and security
interest hereby or by any other instrument created, but the Company shall stand
possessed of the reversion of one day remaining in the Company in respect of any
such term, for the time being demised, as aforesaid, upon trust to assign and
dispose of the same as any purchaser of such term shall direct.
<PAGE>
5.
E. AGREEMENTS OF THE COMPANY
6. The Company and the Secured Party covenant and agree that:
(a) they have not agreed to postpone the time for attachment of the
security interests granted hereby with respect to the Charged Assets presently
existing and that such security interests shall attach to the Charged Assets
acquired after the date hereof as soon as the Company has rights in such assets;
(b) in accordance with subsection 7(3) of the Land Registration Reform Act
(Ontario), the covenants deemed to be included in a charge by subsection 7(1) of
such Act are expressly excluded from this debenture; and
(c) subject to paragraph 30 hereof, the Company shall not at any time
hereafter make any claim to the Charged Assets, challenge the Secured Party's
rights thereto or make any demands upon the Secured Party with respect to the
Charged Assets and that the Secured Party shall from this time forward be
exonerated and discharged of and from all claims and demands which the Company
might or could have against the Secured Party with respect to the Charged
Assets.
7. The Company represents and warrants to the Secured Party that:
(a) the Company is the sole registered, legal and beneficial owner of an
estate in fee simple in the Lands described in Appendix "A" hereto with good and
marketable title thereto, and the Company is the sole legal and beneficial owner
of the remainder of the Charged Assets, free of encumbrances or other right
whatsoever except for the liens permitted under the Credit Agreement or
otherwise approved by the Secured Party in writing ("Permitted Encumbrances");
(b) the Company is the sole owner of the Charged Assets (except for future
property);
(c) the Company is duly incorporated and in good standing under the laws
of its jurisdiction of incorporation;
(d) neither the execution of this debenture nor the performance by the
Company of its obligations hereunder will result in any breach of or default
under any law or any other agreement or document to which the Company is a party
or by which it may be bound; and
(e) the Company has the right, power and lawful authority to charge and
mortgage to the Secured Party, and otherwise grant security interests in all of
its right, title and interest in and to, the Charged Assets as provided for in
this debenture and this debenture constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to
<PAGE>
6.
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting creditors' rights and the discretion exercisable by Courts
of competent jurisdiction in respect of the availability of equitable remedies.
8. The Company agrees with the Secured Party that until all indebtedness and
liability owing by the Company to the Secured Party are paid in full:
(a) it will not, without the prior written consent of the Secured Party:
(i) incur, create, assume or permit to exist any further or
additional indebtedness except as permitted under the terms of
the Guarantee or the Credit Agreement;
(ii) create, assume or permit to exist any liens upon, assign,
transfer, mortgage, charge, pledge, hypothecate or otherwise
grant security over or a security interest in any of the
Charged Assets except to the Secured Party and except
Permitted Encumbrances;
(iii) sell, transfer, assign, or otherwise dispose of any of the
Charged Assets or any group of property and assets forming
part of the Charged Assets except for a sale of inventory in
the ordinary course of business and such other sales as
permitted under the Credit Agreement;
(iv) merge or amalgamate with any other corporation except as
permitted under the Credit Agreement;
(v) change the location of its chief executive office, place of
business or principal place of residence without providing the
Secured Party with fifteen days' prior written notice;
(vi) take any action (or not take any action) which would result in
a default hereunder or an Event of Default under the Credit
Agreement;
(vii) remove the Charged Assets from the locations referred to in
paragraph 3 hereof unless such removal is a permitted sale of
the Charged Assets or keep the Charged Assets at a location
other than the locations referred to in paragraph 3 hereof
provided that the Company may also remove Charged Assets to
another location upon the condition that it provide the
Secured Party with at least 14 days prior written notice of
its intention to do so and provides to the Secured Party prior
to such removal an
<PAGE>
7.
agreement from any lessor of such location as provided in
subparagraph 9(1) hereof; or
(viii) change its name without giving prior written notice to the
Secured Party of the new name and the date upon which such
change of name will take effect; and
(b) it will:
(i) hold the proceeds received from any direct or indirect dealing
with the Charged Assets in trust for the Secured Party after
either the occurrence of a default under the Credit Agreement
or the security constituted by this debenture becoming
enforceable or any of the Charged Assets are sold other than
in the ordinary course of business of the Company and for the
purpose of carrying on such business save and except pursuant
to subsection 7.05(b) of the Credit Agreement, and forthwith
remit such proceeds to the Secured Party;
(ii) strictly comply with every covenant and undertaking heretofore
or hereafter given by it to the Secured Party and take any
action that may be necessary to enable any Borrower under the
Credit Agreement to comply with its Obligations thereunder;
(iii) permit the Secured Party at any time and from time to time,
when the security granted pursuant to this debenture shall
have become enforceable, to require any account debtor of the
Company to make payment to the Secured Party of any or all
amounts owing by the account debtor to the Company and the
Secured Party may take control of any proceeds referred to in
subparagraph 2(h) hereof and may hold all such amounts
received from any account debtor and any such proceeds as cash
collateral as part of the Charged Assets and as security for
the indebtedness and liability secured by this debenture;
(iv) deliver to the Secured Party promptly upon request, any
documents of title, instruments, securities and chattel paper
constituting, representing or relating to the Charged Assets
and all statements of account, bills, invoices and books of
account relating to accounts and all records, ledgers,
reports, correspondence, schedules, documents, statements,
lists and other writings relating to the Charged Assets for
the purpose of inspecting, auditing or copying same;
<PAGE>
8.
(v) at the Secured Party's request, cause all securities which
constitute Charged Assets to be registered in the name of the
Secured Party or its nominee and the Company hereby authorizes
the Secured Party to transfer such securities into the name of
the Secured Party or its nominee so that the Secured Party or
its nominee may appear as the sole owner of record of such
securities; the Company shall, at the request of the Secured
Party, deliver to the Secured Party appropriate powers of
attorney for transfer in blank, duly executed and with
signatures guaranteed, in respect of such securities;
(vi) immediately upon becoming aware thereof, notify the Secured
Party of any loss or destruction of, or substantial damage to,
any material portion of the Collateral (as defined in the
Credit Agreement), and any other matters materially affecting
the value, enforceability or collectibility of any of such
Collateral;
(vii) promptly notify the Secured Party of the acquisition by it of
receivables or other amounts owing to it from persons located
in any jurisdiction other than Ontario or Quebec;
(viii) conduct a physical count of its inventory as provided in the
Credit Agreement.
9. The Company agrees with the Secured Party that:
(a) it will at all times fully perform and comply with all obligations
imposed on, assumed by or agreed to by it pursuant to any prior encumbrance of
the Lands or any part thereof or its interest therein, that it will pay all
rents and perform all obligations under the leases charged by this debenture and
that, if the Company shall fail so to do, the Secured Party may (but shall not
be obliged to) take any action the Secured Party deems necessary or desirable
acting reasonably to cure any default by the Company in the performance of or
compliance with any of the Company's obligations hereunder, under any lease or
imposed upon, assumed by or agreed to by the Company pursuant to any such prior
encumbrance;
(b) upon receipt by the Secured Party in regard to any such prior
encumbrance or any lease of any written notice of default by the Company, the
Secured Party may rely thereon and take any action as aforesaid, acting
reasonably, to cure such default even though the existence of such default or
the nature thereof may be questioned or denied by the Company or by any party on
behalf of the Company;
<PAGE>
9.
(c) at its option, the Secured Party may discharge past due taxes, liens,
security interests or other encumbrances (other than Permitted Encumbrances
which are not in default) at any time levied or placed on the Charged Assets and
may pay for the maintenance and preservation of the Charged Assets to the extent
the Company fails to do so, provided, however, that the Secured Party shall not
discharge such taxes, liens, security interests or other encumbrances or pay for
such maintenance or preservation prior to the occurrence and continuance of an
Event of Default under the Credit Agreement unless the Secured Party shall have
requested the Company to discharge such taxes, liens, security interests or
other encumbrances or pay such amounts (to the extent required by the Credit
Agreement) and the Company shall have failed or refused to do so within such
period of time as shall have been specified by the Secured Party in such notice;
provided that nothing in this debenture shall excuse the Company from the
performance of any covenants or other promises with respect to taxes, liens,
security interests, hypothecs, mortgages, prior claims or other encumbrances and
maintenances;
(d) the Company hereby expressly grants to the Secured Party, and agrees
that the Secured Party shall have the absolute and immediate right to enter in
and upon the Lands or any part thereof to such extent and as often as the
Secured Party, in its sole discretion, acting reasonably, deems necessary or
desirable, in order to cure any such default by the Company;
(e) the Secured Party may pay and expend such sums of money as the Secured
Party in its sole discretion, acting reasonably, deems necessary for any purpose
provided for in subparagraphs 9(a), (b), (c) and (d), and the Company hereby
agrees to pay to the Secured Party, immediately upon notification by the Secured
Party and without demand, all such sums so paid and expended by the Secured
Party, together with interest thereon at the Alternate Base Rate plus the then
applicable Interest Margin both as defined in the Credit Agreement calculated
and payable as provided for in the Credit Agreement (the "Interest Rate");
(f) all sums so paid and expended by the Secured Party and such interest
thereon, shall be secured hereby in addition to all other moneys hereby secured
and in priority to all other mortgages and charges;
(g) if this debenture is or shall be outstanding at the expiration of the
term of any lease (a "material lease") of real property forming part of the
Charged Assets which is material to the conduct of the Company's business and
the Company shall refuse or neglect to exercise its right, if any, to renew such
material lease and to pay the fees, costs, charges and expenses incidental to
and payable upon such renewals, then, and as often as it shall happen, the
Secured Party may, at its sole discretion,
<PAGE>
10.
effect such renewals in its own name or otherwise, and in such case every such
renewed material lease and the lands and buildings thereby demised shall remain
and be security to the Secured Party for the indebtedness and liability secured
by this debenture and as well for the payment of all money paid by the Secured
Party for every such renewal and the Secured Party's costs, charges, and
expenses and interest thereon at the Interest Rate;
(h) it will not: (i) surrender any material lease or any rights of renewal
with respect thereto (except in any case where the prior written consent of the
Secured Party has been obtained); subordinate any material lease to any mortgage
of the fee interest of the landlord thereof in the lands subject to a material
lease, unless in connection with any such subordination the Company obtains from
the holder of such mortgage a non-disturbance agreement in favour of the Company
and its successors and assigns (including the Secured Party) in form and
substance satisfactory to the Secured Party (save and except that with respect
to existing leases, the Company shall only be required to use commercially
reasonable efforts to obtain such a non-disturbance agreement); (ii) terminate
or cancel any material lease without the prior written consent of the Secured
Party; or (iii) without the prior written consent of the Secured Party, modify,
change, supplement, alter or amend any material lease either orally or in
writing;
(i) no release or forbearance of any of the Company's obligations pursuant
to any material lease or pursuant to any prior encumbrance of the Company's
interest in the Lands or any part thereof including without limitation the
Company's obligations with respect to the payment of rent as provided for in any
such lease shall release the Company from any of the Company's obligations
pursuant to this debenture;
(j) unless the Secured Party shall otherwise expressly consent in writing,
the title in fee simple to the property demised by any material lease and the
leasehold estate shall not merge but shall always remain separate and distinct,
notwithstanding the union of said estates either in the landlord of any such
lease or the Company pursuant to any such lease or in a third party, by purchase
or otherwise; and
(k) if the Company shall, at any time before payment in full of the
indebtedness and liability secured by this debenture acquire the freehold title
to the Lands demised by any such lease, this mortgage and charge shall attach
and extend to, and constitute a mortgage and charge of such freehold estate; and
(1) the Company hereby agrees that it will not place the Charged Assets or
allow the Charged Assets to be placed on any premises that are leased unless the
<PAGE>
11.
lessor of such premises has first agreed in writing with the Secured Party to
subordinate and postpone any and all of its claims, security and rights to the
claims and security of the Secured Party; provided that this covenant will not
prohibit the Company from selling the Charged Assets in the normal course of the
Company's business as hereinbefore provided.
10. The Company hereby agrees that it will at all times, both before and after
default, do or cause to be done such additional things and execute and deliver
or cause to be executed and delivered all such further acts and documents as the
Secured Party may reasonably require for the better mortgaging, charging,
confirming and granting of security interests in the present or future Charged
Assets to the Secured Party, including, without limitation, the payment of any
fees and taxes required in connection with the execution and delivery of this
debenture, the granting of the security and the filing, recording, or
registering of any financing statements or other documents in connection
therewith. If any amount payable under, or in connection with, any of the
Charged Assets shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be promptly pledged and delivered to
the Secured Party, duly endorsed in a manner satisfactory to the Secured Party.
If at any time the Company shall take and perfect a security interest or
hypothec in any property of an account debtor or any other person to secure
payment and performance of an account receivable, the Company shall promptly
assign such security interest or hypothec to the Secured Party. Such assignment
need not be filed, recorded or registered of public record unless necessary to
continue the perfected status of the security interest or hypothec against
creditors of and transferees from the account debtor or other person granting
the security interest or hypothec.
11. The Company shall, at its own cost and expense, take any and all actions
reasonably necessary to defend title to the Charged Assets against all persons
and to defend the security of the Secured Party in such Charged Assets, and the
priority thereof, against any adverse lien or encumbrance of any nature
whatsoever, except for such liens or encumbrances permitted by the Secured Party
including, without limitation, the Permitted Encumbrances.
12. The Company shall remain liable to observe and perform all the conditions
and obligations to be observed and performed by it under each contract and
agreement, interest or obligation relating to the Charged Assets, all in
accordance with the terms and conditions thereof and shall indemnify and hold
harmless the Secured Party and the Lenders from any and all such liabilities.
<PAGE>
12.
13. The Company will not, without the Secured Party's prior written consent,
grant any extension of the time of payment of any of its accounts receivable, or
compromise, compound or settle the same for less than the full amount thereof,
or release, in whole or in part, any person liable for the payment thereof, or
allow any credit or discount whatsoever thereon other than extensions, credits,
discounts, compromises or settlements granted or made in the ordinary course of
business. The provisions of Article X of the Credit Agreement with respect to
the collection of receivables and the management of the Charged Assets are
hereby deemed incorporated herein in their entirety and shall be binding upon
the Company with respect to its accounts receivable as if set forth herein.
F. DEFAULT
14. All indebtedness and liability owing by the Company to the Secured Party and
hereby secured shall, at the option of the Secured Party but subject to the
provisions of the Delivery Agreement, become payable and the security hereby
constituted shall become enforceable upon demand by the Secured Party.
15. The Secured Party may in writing (and not otherwise) waive any breach by the
Company of any of the provisions contained in this debenture or any default by
the Company in the observance or performance of any provision of this debenture;
provided always that no waiver by the Secured Party shall extend to or be taken
in any manner whatsoever to affect any subsequent breach or default, whether of
the same or a different nature, or the rights resulting therefrom.
G. REMEDIES OF THE SECURED PARTY
16. Whenever the security hereby constituted shall have become enforceable, and
so long as it shall remain enforceable, the Company will have no right to vote
or take any other action with respect to any securities constituting Charged
Assets or receive any dividends or interest (whether declared or payable before
or after the security hereby constituted becoming enforceable) in respect of the
Charged Assets, and the Secured Party may proceed to realize such security and
to enforce its rights by:
(a) entry;
(b) the appointment by instrument in writing of a receiver or receivers of
the Charged Assets or any part thereof (which receiver or receivers may be any
<PAGE>
13.
person or persons, whether an officer or officers or employee or employees of
the Secured Party or not and the Secured Party may remove any receiver or
receivers so appointed and appoint another or others in his or their stead);
(c) proceedings in any court of competent jurisdiction for the appointment
of a receiver or receivers or for sale of the Charged Assets or any part
thereof; or
(d) any other action, suit, remedy or proceeding authorized or permitted
hereby or by law or by equity.
In addition, the Secured Party may file such proofs of claim and
other documents as may be necessary or advisable in order to have its claim
lodged in any bankruptcy, insolvency winding-up or other judicial proceedings
relative to the Company.
The Secured Party or any receiver or receivers so appointed shall
have power to:
(i) take possession of and to use the Charged Assets or any part
thereof with power to exclude the Company and its officers,
employees and agents therefrom;
(ii) carry on the business of the Company (including, but not
limited to, the taking or defending of any actions or legal
proceedings, and the doing or refraining from doing all other
things as to it, acting reasonably, may seem necessary or
desirable in connection with the business, operations and
affairs of the Company);
(iii) take all such steps as it may consider necessary or desirable
for the purposes of preserving, maintaining and completing all
or any part of the Charged Assets and making such replacements
thereof and improvements and additions thereto as it shall
consider expedient;
(iv) receive the rents, incomes and profits of any kind whatsoever
from the Charged Assets and pay therefrom
(A) any expenses of preserving, maintaining and completing
the Charged Assets, of making such replacements thereof
and improvements and additions thereto as it may
consider expedient and of carrying on all or any part of
the business of the Company relating to the Charged
Assets, and
<PAGE>
14.
(B) any charges against the Charged Assets ranking in
priority to or pari passu with the security created by
this debenture or the payment of which may be necessary
or desirable to preserve or protect all or any part of
the Charged Assets or the interest of the Secured Party
therein;
(v) lease all or any part of the Charged Assets and renew from
time to time all or any of the leases on such terms and
conditions as the Secured Party may determine;
(vi) with or without taking possession, take any action or
proceedings to enforce the performance of any covenant
contained in any of the leases;
(vii) enjoy and exercise all the powers of the Company as it
considers necessary or desirable for the exercise of any and
all of the remedies provided for herein, including, without
limitation, the powers to make any arrangement or compromise
on behalf and in the name of the Company which it considers
expedient, to purchase on credit and borrow money on behalf
and in the name of the Company and to advance its own moneys
to the Company, all at such rates of interest as it may
consider reasonable, and to enter into contracts and undertake
obligations on behalf of and in the name of the Company for
any and all of the foregoing purposes or which it considers
necessary or desirable for the exercise of any of the rights,
powers and remedies provided for herein, all of which
borrowings, advances and obligations together with interest
thereon shall, at the discretion of the Secured Party, be
entitled to the security hereof in priority to the payment of
the obligations secured by this debenture;
Every receiver appointed by the Secured Party shall be deemed
to be an agent of the Company and not of the Secured Party for
the purposes of (i) carrying on and managing the business and
affairs of the Company and (ii) establishing liability for all
of the acts or
<PAGE>
15.
omissions of the receiver while acting as such and the Secured
Party shall not be in any way responsible for any acts or
omissions on the part of any such receiver, its officers,
employees and agents; provided that, without restricting the
generality of the foregoing, the Company irrevocably
authorizes the Secured Party to give instructions to the
receiver relating to the performance of its powers and
discretions. The appointment of a receiver or any thing which
may be done by the receiver shall not have the effect of
constituting the Secured Party a mortgagee in possession.
(viii) borrow money required for the maintenance, preservation or
protection of the Charged Assets or any part thereof or the
carrying on of the business of the Company;
(ix) further charge the Charged Assets in priority to the charge of
this debenture as security for money so borrowed;
(x) vote and take all other action with respect to the securities
constituting Charged Assets and collect all revenues,
dividends and distributions distributed in connection with
such securities; and
(xi) sell, lease or otherwise dispose of the whole or any part of
the Charged Assets on such terms and conditions and in such
manner as the receiver shall determine.
The Secured Party shall not be responsible for any actions or errors of omission
by the receiver or receivers in exercising any such powers.
In addition, the Secured Party may enter upon, use, occupy and
possess the Charged Assets or any part thereof, free from all encumbrances,
liens and charges, except for Permitted Encumbrances, without hindrance,
interruption or denial of the same by the Company or by any other person or
persons, and may lease or sell the whole or any part or parts of the Charged
Assets. Any sale hereunder may be made by public auction, by public tender or by
private contract, with or without notice and with or without advertising and
without any other formality (except as required by law), all of which are hereby
waived by the Company. Such sale shall be on such terms and conditions as to
credit or otherwise and as to upset or reserve bid or price as to the Secured
Party in its sole discretion may seem advantageous. In the case of any sale on
credit or partly on credit, the Secured Party shall not be accountable for any
proceeds thereof unless and until actually received
<PAGE>
16.
by the Secured Party in cash. Such sale may take place whether or not the
Secured Party has taken possession of the Charged Assets.
The Company agrees to pay to the Secured Party forthwith on demand
all expenses incurred by the Secured Party in the preparation, perfection,
administration and enforcement of this debenture (including without limitation
expenses incurred in considering and protecting or improving the Secured Party's
position, or attempting to do so, whether before or after default), all amounts
borrowed by the receiver from the Secured Party as hereinbefore provided and all
costs, charges, expenses and fees (including, without limiting the generality of
the foregoing, the fees and expenses of any receiver and legal fees on a
solicitor and client basis) of or incurred by the Secured Party and by any
receiver or receivers or agent or agents appointed by the Secured Party in
connection with the recovery or enforcing of payment of any moneys owing
hereunder, whether by realization, by taking possession or otherwise. All such
sums, together with interest thereon at the Interest Rate, shall be secured by
the charges contained herein. To the extent that the aggregate of the principal
and accrued interest secured hereby and such borrowed money, costs, fees and
expenses exceed the principal amount of this debenture, the Company hereby
mortgages and charges and grants a security interest in the Charged Assets to
the Secured Party to secure payment of such excess amount.
No remedy for the realization of the security hereof or for the
enforcement of the rights of the Secured Party shall be exclusive of or
dependent on any other such remedy, but any one or more of such remedies may
from time to time be exercised independently or in combination; and the exercise
of any remedy under any document in any jurisdiction shall not prejudice or
affect the exercise of any remedy under another document in any jurisdiction.
The term "receiver" as used in this debenture includes a receiver and manager.
The Secured Party shall not, nor shall any receiver appointed by it,
be liable for any failure to exercise its rights, powers or remedies arising
hereunder or otherwise, including without limitation any failure to take
possession of, collect, enforce, realize, sell, lease or otherwise dispose of,
preserve, maintain, complete, protect replace or improve all or any part of the
Charged Assets, to carry on all or any part of the business of the Company or to
take any steps or proceedings for any such purposes. Neither the Secured Party
nor any receiver appointed by it shall have any obligation to take any steps or
proceedings to preserve rights against prior parties to or in respect of all or
any part of the Charged Assets, whether or not in its possession and neither the
Secured Party nor any receiver appointed by its shall be liable for failure to
do so. Subject to the foregoing, the Secured Party shall use
<PAGE>
17.
reasonable care in the custody and preservation of the Charged Assets in its
possession.
17. Unless the provisions of the Credit Agreement otherwise provide, any and all
payments made in respect of the indebtedness and liability secured by this
debenture from time to time may be applied to such part or parts of the
indebtedness and liability secured by this debenture as the Secured Party may
see fit, and unless the provisions of the Credit Agreement otherwise provide,
the Secured Party shall at all times and from time to time have the right to
change any appropriation as the Secured Party may see fit.
18. The proceeds of any collection or sale of the Charged Assets, as well as any
Charged Asset consisting of cash, shall be applied by the Secured Party as
provided in section 16 of the Security Agreement among the Borrowers, SLM
Trademark Acquisition Corp., the Company, SLM Trademark Acquisition Canada
Corporation and the Lenders dated as of April 1, 1997 (the "Security
Agreement"). Upon any sale of the Charged Assets by the Secured Party
(including, without limitation, pursuant to a power of sale granted by statute
or under a judicial proceeding) the receipt of the Secured Party or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Charged Assets so sold and such purchaser or purchasers shall
not be obligated to see to the application of any part of the purchase money
paid over to the Secured Party or such officer or be answerable in any way for
the misapplication thereof.
H. RIGHTS OF THE SECURED PARTY
19. The Secured Party may, in accordance with subparagraph 9(c) of this
debenture, pay and satisfy the whole or any part of any liens, taxes, rates,
charges or encumbrances now or hereafter existing in respect of any of the
Charged Assets (other than Permitted Encumbrances which are not in default) and
such payments together with all costs, charges and expenses which may be
incurred in connection with making such payments shall form part of the
indebtedness and liability secured by this debenture and shall be secured by the
mortgages, charges and security interests granted herein. In the event of the
Secured Party satisfying any such lien, charge or encumbrance, it shall be
entitled to all the equities and securities of the person or persons so paid and
is hereby authorized to obtain any discharge thereof
<PAGE>
18.
and hold such discharge without registration for so long as it may deem
advisable to do so.
20. The Company grants to the Secured Party the right to set off against any and
all accounts, credits or balances maintained by it with the Secured Party, the
aggregate amount of any of the indebtedness and liability secured by this
debenture provided the same is due.
21. The Secured Party, without exonerating in whole or in part the Company, may
grant time, renewals, extensions, indulgences, releases and discharges to, may
take securities from and give the same and any or all existing securities up to,
may abstain from taking securities from or from perfecting securities of, may
accept compositions from, and may otherwise deal with the Company and all other
persons and securities as the Secured Party may see fit.
22. Nothing herein shall obligate the Secured Party to extend or amend any
credit to the Company.
23. The Secured Party may, upon the terms provided in the Credit Agreement,
assign, transfer and deliver to any transferee any of the indebtedness and
liability secured by this debenture or any security or any documents or
instruments held by the Secured Party in respect thereof provided that no such
assignment, transfer or delivery shall release the Company from any of the
indebtedness and liability secured by this debenture; and thereafter the Secured
Party shall be fully discharged from all responsibility with respect to the
indebtedness and liability secured by this debenture and security, documents and
instruments so assigned, transferred or delivered. Such transferee shall be
vested with all powers and rights of the Secured Party under such security,
documents or instruments but the Secured Party shall retain all rights and
powers with respect to any such security, documents or instruments not so
assigned, transferred or delivered. The Company shall not assign any of its
rights or obligations hereunder without the prior written consent of the Secured
Party.
24. The Secured Party is hereby authorized to file, record or register, as the
case may be, one or more financing statements, financing change statements or
other documents in all jurisdictions which the Secured Party deems necessary or
appropriate for the purpose of perfecting, confirming, continuing, enforcing or
<PAGE>
19.
protecting the security held by the Secured Party in respect of the indebtedness
and liability secured by this debenture.
25. The Company hereby appoints the Secured Party the attorney of such Company
solely for the purposes of carrying out the provisions of this debenture and
taking any action or executing any instrument which the Secured Party may deem
necessary or advisable to accomplish the purposes herewith, which appointment is
irrevocable and coupled with an interest.
26. The Secured Party and such persons as the Secured Party may designate shall
have the right in the manner provided in the Credit Agreement to inspect the
Charged Assets, all records related thereto (and to make extracts and copies
from such records) and the premises upon which any such Charged Assets are
located, to discuss the Company's affairs with the officers of the Company and
its independent accountants. Subject to the conditions of the Guarantee or the
Credit Agreement, the Secured Party shall have the absolute right to share any
information that it gains from such inspection or verification with any or all
of the Lenders.
I. BENEFIT TO THE LENDERS
27. All grants of mortgages, charges and security interests and all covenants
and agreements herein shall be for the benefit of the Secured Party and for the
pro rata benefit of the Lenders.
I. MISCELLANEOUS
28. If one or more of the provisions contained herein shall be invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaming provisions contained herein shall not in any way be affected or
impaired thereby.
29. No amendment of this debenture shall be binding unless executed in writing
by the party to be bound thereby.
30. Until the security hereby constituted shall have become enforceable, the
Company shall have quiet possession of the Charged Assets. Upon payment by the
Company, its successors or permitted assigns, of all indebtedness and liability
of
<PAGE>
20.
the Company to the Secured Party secured hereby and the fulfilment of all other
obligations of the Company to the Secured Party secured hereby and termination
of the Guarantee and provided that the Secured Party is then under no obligation
(conditional or otherwise) to make any further loan or extend any other type of
credit to the Company or the Borrowers, the Secured Party shall, upon request in
writing by the Company, delivered to the Secured Party at 633 Third Avenue, New
York, New York, U.S.A. 10017 Attention: Credit Deputy, and at the Company's
expense, discharge this debenture. The security hereby constituted and the
charges hereunder shall automatically terminate in any of the Charged Assets
when they are sold or disposed of as permitted by the Credit Agreement or
hereunder or with the consent of the Secured Party. The Secured Party shall, at
the expense of the Company, promptly take such actions, and execute such
releases and financing change statements or other documents, which may be
reasonably requested by an interested party to evidence the termination and
releases contemplated hereby.
31. This debenture shall be construed in accordance with and be governed by the
laws of the Province of Ontario. For the purpose of legal proceedings, this
debenture shall be deemed to have been made in the said Province and to be
performed therein and the courts of that Province shall have jurisdiction over
all disputes which may arise under this debenture. The Company hereby
irrevocably and unconditionally submits to the non-exclusive jurisdiction of
such courts, provided always that nothing herein contained shall prevent the
Secured Party from proceeding at its election against the Company in the courts
of any other province, country or jurisdiction.
32. The headings in this debenture are included for convenience of reference
only, and shall not constitute a part of this debenture for any other purpose.
33. This debenture is in addition to and not in substitution for any other
security now or hereafter held by the Secured Party and shall be general and
continuing security notwithstanding that the indebtedness and liability of the
Company to the Secured Party shall be at any time or from time to time fully
satisfied or paid.
34. This debenture and all its provisions shall enure to the benefit of the
Secured Party, its successors and assigns, and shall be binding on the Company,
its successors and permitted assigns.
35. Any demand or notice by the Secured Party in connection with this debenture
shall be given to the Company c/o SLM International, Inc. at the place and in
accordance with the terms set out in the Credit Agreement for the giving of
notices thereunder.
<PAGE>
21.
36. In construing this debenture, terms herein shall have the same meaning as
defined in the Personal Property Security Act (Ontario), unless the context
otherwise requires. The word "Company", the personal pronoun "it" or "its" and
any verb relating thereto and used therewith shall be read and construed as
required by and in accordance with the context in which such words are used
depending upon whether the Company is one or more individuals, corporations or
partnerships and, if more than one, shall apply and be binding upon each of them
severally. The term "successors" shall include, without limiting its meaning,
any corporation resulting from the amalgamation of a corporation with another
corporation and, where the Company is a partnership, any new partnership
resulting from the admission of new partners or any other change in the Company,
including, without limiting the generality of the foregoing, the death of any or
all of the partners.
IN WITNESS WHEREOF the Company has executed this debenture as of the
1st day of April 1997.
#1 APPAREL CANADA INC.
By: /s/ D. Bruce Randall C.S.
---------------------------
D. Bruce Randall
Secretary
I HAVE AUTHORITY TO BIND THE CORPORATION.
<PAGE>
APPENDIX "A"
Legal description of freehold lands
FIRSTLY
In the Town of Mount Forest, in the County of Wellington and Province of Ontario
and being composed of Part of Lot Thirty-three (33), Concession One (1),
(formerly of the Township of Normanby), Part of Lot Ten (10) and Part of Duke
Street according to Foster's Survey of Part of the said Town of Mount Forest and
being more particularly described as follows:
PREMISING the Northwesterly limit of Sligo Road to have a bearing of North
Forty-five degrees, Thirty Minutes, Zero Zero Seconds East (N45(degrees) 30'
00"E) and relating all bearings herein thereto;
COMMENCING at a Standard Iron Bar marking the most Southerly angle of said Lot
Ten (10);
THENCE North Forty-two Degrees, Fifty-six Minutes, Zero Zero Seconds West
(N42(degrees) 56' 00"W) along the Northeasterly limit of Perth Street and the
Northwesterly production thereof, in all Eight Hundred and Six point Six One
Feet (806.61) to an Iron Bar planted in the line of a post and wire fence
marking the limit between the said Lot Thirty-three (33), Concession One (1) and
Division Three (3) of Lot Thirty-two (32), Concession One (1), Township of
Normanby;
THENCE North Forty-five Degrees, Zero Six Minutes, Fifty-five Seconds East
(N45(degrees) 06' 55"E) along the said post and wire fence, Three Hundred and
Seventy-eight point Zero Eight Feet (378.08) feet to an Iron Bar planted;
THENCE South Forty-two Degrees, Fifty-six Minutes, Zero Zero Seconds East
(S42(degrees) 56' 00"E), Eight Hundred and Nine point One Five Feet (809.15
feet) to an Iron Bar planted in the Northwesterly limit of Sligo Road being also
the Southeasterly limit of the said Lot Ten (10);
THENCE South Forty-five Degrees, Thirty Minutes, Zero Zero Seconds West
(S45(degrees) 30' 00"W) along the last mentioned limit, Three Hundred and
Seventy-eight Feet (378.00 feet) to the Point of Commencement, containing by
admeasurement 7.008 acres be the same more or less;
Being the lands described in Instrument No. 47626D.
SECONDLY
In the Town of Mount Forest, in the County of Wellington and Province of Ontario
and being composed of Part of Lot Thirty-three (33), Concession One (1),
(formerly of the Township of Normanby), Part of Lot Ten (10) and Part of Duke
Street (as closed by By-Law No.2013, registered as Instrument No. 6730D)
according to Foster's Survey of Part of the said Town of Mount Forest and
designated as Part One (1) on Reference Plan No. 60R-1863.
<PAGE>
APPENDIX "B"
# 1 APPAREL CANADA
COMPUTER
12/31/96
Account # 0850-2360
DESCRIPTION
FIXED ASSET ADDITIONS
- --------------------------------------
IBM THINKPAD
IBM 4865X\25 4MB/212MB
COMPAQ PROLINEA 4\50 MDL 200
COMPAQ PROSIGNIA 4\66 MDL 1050
COMPAQ PROUNEA 4\50 MDL 200
COMPAQ PROLINEA 4\50 MDL 200
MICROSOFT OFFICE PRO
MC 12 PORT ETHERNET HUB
ETHERCARD ULTRA
ETHERCARD ULTRA
MC 12 PORT ETHERNET HUB
MC 12 PORT ETHERNET HUB
COMPAQ 32B1T NETFLEX CONTROLLER
AMERICAN POWER BACK UPS 1250
APC APSOO3 POWERCHUTE
NOVELL NETWARE 3.12-50 USERS
MICROSOFT MAIL SERVER
PERSOFT SMARTERM 420 WIN V3.0
PERSOFT SMARTERM 420 WIN 3.0-5LP
PERSOFT SMARTERM 420 WIN 3.O-5LP
HP SR ROUTER W\V.35 SYNC CABLE
ADAPTEC 1510A SCSI CONTROLLER
U.S. ROBOTICS FAX\MODEM
HP 4 PLUS LASER PRINTER
HP 4 PLUS LASER PRINTER
HP 4MB RAM UPGRADE MEM
HP 4MB RAM UPGRADE MEM
HP JETOIRECT CARD LJ4
HP JETDIRECT CARD LJ4
HP 500 SHEET PAPER TRAY ASSEMBLY
HP 500 SHEET PAPER TRAY ASSEMBLY
HP ENVELOPE FEEDER F\LJ4
HPLASERJET 4L
HP LASERJET 4L
HP12C POSTSCRIPT INKJET PRINTER
IBM 4226 LINE PRINTER
PRTMATE NOVEL 1OBSET
PRTMATE NOVEL 1OBSET
MICROSOFT OFFICE PRO V4.3 MLP
MICR9SOFT OFFICE PRO V4.3 MLP
MICROSOFT OFFICE PRO V4.3 MLP
MICROSOFT OFFICE PRO V4.3 MLP
MICROSOFT OFFICE PRO V4.3 MLP
MICROSOFT OFFICE PRO V4.3 MLP
MICROSOFT OFFICE PRO V4.3 MLP
MICROSOFT OFFICE PRO V4.3 MLP
MICROSOFT OFFICE PRO V4.2 WIN MLP
MICROSOFT OFFICE PRO V4.2 WIN MLP
MICROSOFT OFFICE PRO V4.2 WIN MLP
MICROSOFT OFFICE PRO V4.2 WIN MLP
SMC ETHERCARD ULTRA 16T 6 PACK
SMC ETHERCARD ULTRA 16T 6 PACK
SMC ETHERCARD ULTRA 16T 6 PACK
IBM ETHERNET PCMCIA lOBASET
IBM ETHERNET PCMCIA lOBASET
POWERSURGES - 40
COMPAQ PROLINEA 4\50 MDL 200
COMPAQ PROLINEA 4\50 MDL 200
<PAGE>
# 1 APPAREL CANADA
COMPUTER
12/31/96
Account # 0850-2360
DESCRIPTION
FIXED ASSET ADDITIONS
- --------------------------------------
COMPAQ PROLINEA 4\50 MDL 200
COMPAQ PROLINEA 4\50 MDL 200
COMPAQ PROLINEA 4\50 MDL 200
COMPAQ PROLINEA 4\50 MDL 200
COMPAQ PROLINEA 4\50 MDL 200
TTL DESKPRO 386N\S\20 4MB SIMM
TTL DESKPRO 386N\S\20 4MB SIMM
TTL DESKPRO 386N\S\20 4MB SIMM
TTL DESKPRO 386N\S\20 4MB SIMM
TTL DESKPRO 386N\S\20 4MB SIMM
TTL DESKPRO 386N\S\20 4MB SIMM
TTL DESKPRO 386N\S\20 4MB SIMM
TTL DESKPRO 386N\S\20 4MB SIMM
TTL DESKPRO 386N\S\20 4MB SIMM
COMPAQ 14" SVGA MONITOR
COMPAQ 14" SVGA MONITOR
COMPAQ 14" SVGA MONITOR
COMPAQ 14" SVGA MONITOR
COMPAQ 14" SVGA MONITOR
COMPAQ 14" SVGA MONITOR
COMPAQ 14" SVGA MONITOR
COMPAQ 14" SVGA MONITOR
COMPAQ 14" SVGA MONITOR
COMPAQ PROLINEA 4\66 MDL 525
COMPAQ PROLINEA 4\66 MDL 525
ASANTE FRIENDLYNET 1OTA ADAPTR
ASANTE LITE NB1OT ADAPTER
ASANTE LITE NB1OT ADAPTER
ASANTE LITE NB1OT ADAPTER
ASANTE LITE NB1OLC ADAPTER
IBM TCP/IP FOR DOS NETBIOS AL
IBM TCP/IP FOR DOS NETBIOS AL
IBM TCP/IP FOR DOS NETBIOS AL
IBM TCP/IP FOR DOS NETBIOS AL
IBM TCP/IP FOR DOS NETBIOS AL
IBM TCP/IP FOR DOS NETBIOS AL
IBM TCP/IP FOR DOS NETBIOS AL
IBM TCP/IP FOR DOS NETBIOS AL
IBM TCP/IP FOR DOS NETBIOS AL
IBM TCP/IP FOR DOS NETBIOS AL
HP 900 SERIES 800 MODEL G40
UPGRADE FROM 32MB MEMORY MODULE
ADD ON 32MB MEMORY MODULE
2 GB SE SCSI DISK
2 GB SE SCSI DISK
HALF-HEIGHT DDS\DAT DRIVE
4-8 GB DDS\DAT DRIVE
SYSTEM CONSOLE - GREEN SCREEN
HP-PB 16 PORT RS-232 DIRECT CONNECT MU
HP-UX 9.0 SERVER OPERATING SYSTEM
HP-UX 9.0 64 USER LICENSE FOR SERIES 800
HP-UX USER MEDIA ON DDS MEDIA
HP-UX 9.0 SYSTEM ADMIN DOCUMENTATION
HP-UX 9.0 USER GUIDES
1.3 KVA UPS
BBX - 64 USERS
INSTALLATION & CONFIGURATION
<PAGE>
# 1 APPAREL CANADA
COMPUTER
12/31/96
Account N 0850-2360
DESCRIPTION
FIXED ASSET ADDITIONS
- --------------------------------------
DFX 5000 EPSON PRINTER WITH STAND
SMC 3812TP/24 ETHER HUB
SMC 3812TP/24 ETHER HUB
SMC 3812TP/24 ETHER HUB
COMPAQ PROLINEA 4/50 270MB SYSTEM
COMPAQ PROLINEA 4/50 270MB SYSTEM
COMPAQ PROLINEA 4/50 270MB SYSTEM
COMPAQ PROLINEA 4/50 270MB SYSTEM
COMPAQ PROLINEA 4/50 270MB SYSTEM
COMPAQ 14" SCGA MONITOR
COMPAQ 14" SCGA MONITOR
COMPAQ 14" SCGA MONITOR
COMPAQ 14" SCGA MONITOR
COMPAQ 14" SCGA MONITOR
COMPAQ WARRANTY
COMPAQ WARRANTY
COMPAQ WARRANTY
COMPAQ WARRANTY
COMPAQ WARRANTY
PDI ETHERNET ADAPTER 16BIT
PDI ETHERNET ADAPTER 16BIT
PD1 ETHERNET ADAPTER 16BIT
PD1 ETHERNET ADAPTER 16BIT
PD1 ETHERNET ADAPTER 16BIT
MICROSOFT OFFICE 4.2 WIN MIP
MICROSOFT OFFICE 4.2 WIN MIP
MICROSOFT OFFICE 4.2 WIN MIP
MICROSOFT OFFICE 4.2 WIN MIP
MICROSOFT OFFICE 4.2 WIN MIP
AMERICAN POWER SURGE
AMERICAN POWER SURGE
AMERICAN POWER SURGE
AMERICAN POWER SURGE
AMERICAN POWER SURGE
- -----------------------
HP LASER JET 4L PRINTER
- -----------------------
- -----------------------
CASTELLE LANPRESS 2P
- -----------------------
ALLIED TELESYS TRANSCEIVER
NOVELL LAN WORKPLACE DOS S-U
NOVELL FKEX I/P 1.2C
ABACUS SERVICE & INSTALLATION
TARGET SIMMPLY RAM BOARD
TTL 1MB SIMM MODULE 90NS
PANASONIC 24P1N WIDE CART PRINTER
SCANTEAM 2000 BARCODE WAND\RDR
SCANTEAM 2000 BARCODE WAND\RDR
ASANTE FN1OTA TRANSCEIVER
COMPAQ PROLINEA 4/50 MDL 200
COMPAQ PROLINEA 4/50 MDL 200
TTL DESKPRO 386N/S/20 4MB SIMM
TTL DESKPRO 386N/S/20 4MB SIMM
<PAGE>
# 1 APPAREL CANADA
COMPUTER
12/31/96
Account #0850-2360
DESCRIPTION
FIXED ASSET ADDITIONS
- --------------------------------------
COMPAQ 14" SVGA MONITOR
PDI ETHERNET ADAPTER 16BIT
PDI ETHERNET ADAPTER 16BIT
PANASONIC 24PIN WIDE CARR PRINTER
PANASONIC 24PIN WIDE CARR PRINTER
PANASONIC 24PIN WIDE CARR PRINTER
COMPAQ MONITOR
HAYES OPTIMA EXT MODEM
486/33 4/170
VAULT 433 486/33 4/170
VAULT 433 486/33 4/170
IMPULSE NOTEBOOK
ZEBRA 140 PRINTER
SERVICE & INSTALLATION
28 - COMPAQ PROLINEA 4/50 270MB SYS
33 - KINGSTON 4MB MEMORY
28 - COMPAQ 14" SVGA MONITOR
28 - PDI ETHERNET ADAPTER 16BIT
SERVICE & INSTALLATION - 28 PC'S
MICROSOFT OFFICE 4.2 WIN MLP
MICROSOFT OFFICE 4.2 WIN MLP
MICROSOFT OFFICE 4.2 WIN MLP
MICROSOFT OFFICE 4.2 WIN MLP
MICROSOFT OFFICE 4.2 WIN MLP
SMC 12 PORT ETHERNET HUB
SMC 12 PORT ETHERNET HUB
SMC 12 PORT ETHERNET HUB
NOVELL 3.12 50 TO 100 UPGRADE
8 - AMERICAN POWER SURGE
8 - PERSOFT SMARTERM 420W1N 3.0-5LP
MS OFFICE 4.2 F\WIN LIC 20 USR
50 - KEYBOARD SKINS
AUI TO FIBER TRANSCEIVER
AUI TO FIBER TRANSCEIVER
ZEBRA 170X1 BAR CODE PRINTER
LEDGETRONICS V1 .70 FOR DOS
MICROSOFT OFFICE 4.2 WIN MLP
MICROSOFT OFFICE 4.2 WIN MLP
MICROSOFT OFFICE 4.2 WIN MLP
MICROSOFT MAIL SERVER+1O 3.5
2934 PRINTER
LASERJET IV PRINTER
TTX 88 MG COMPUTER
CITIZEN PRINTER
<PAGE>
# 1 APPAREL CANADA
COMPUTER
12/31/96
Account # 0850-2360
DESCRIPTION
FIXED ASSET ADDITIONS
- --------------------------------------
RANDY PC
RANDY PRINTER
SAMSUNG
PRINTER PANASONIC
EPSON PRINTER
BROTHER Ml809 PANASONIC
AAMAZING PC WORK TYPING
IBM PC LANA
PRINTER PANASONIC
PRINTER EPSON
IBM CINDY GRAHAM
IBM PC CREDIT
PRINTER KXP1180 PANASONIC
EPSON PC PAYROLL
PRINTER BROTHERS
IBM PC ERICA
PRINTER PANASONIC
======================================
1995 ADDITIONS
LEXMARK 4039 PRINTER WITH ETHERNET AD
HP LASERJET 4 PLUS
1996 ADDITIONS
COMPAQ PROLINEA 575 8/630MB, 14" MONIT
COMPAQ PROLINEA 575 8/630MB, 14" MONIT
COMPAQ PROLINEA 575 8/630MB, 14" MONIT
COMPAQ PROLINEA 575 8/630MB, 14" MONIT
LASER TOUCH BAR CODE SCANNER
APPLE POWER MacINTOSH 7200/120
SEAGATE TAPE DRIVE
<PAGE>
APPENDIX "C"
Locations where Charged Property Located
#1 APPAREL CANADA INC. HOLT MANUFACTURING CO., INC.
375 Sligo Road West P.O. Box 2017
P.O. Box 850 2208 Air Park Drive
Mount Forest, Ontario Burlington, N.C. 27216
NOG 2L0 USA
COMDYE NC. KEBEC SUBLIME INC.
33 Louvain Street West 8401 Ray-Lawson Boulevard
Montreal, Quebec Anjou, Quebec
H2N 1B2 H1J 1K6
CONFECTION ST-MATHIEU KNITRAMA FABRICS
3125 Bernard Pilon 7801 Jarry East
Loc. H-8 Anjou, Quebec
St-Mathieu de Beloeii, Quebec H1J 1H3
J3G 4S5
CORALTEX INC. PETE'S CRESTNG LTD.
800 Melchers 1 Adelaide St.N., Unit 13
Berthierville, Quebec London, Ontario
JOK lAO N6B 3P8
CREATION JADE INC. PRIMOTEX KNITTING NC.
5699, rue Principale 432 Isabey
Ascot Corner, Quebec St-Laurent, Quebec
JOB lAO H4T 1V3
DANSK PRO-JOY
Marsvej 7-9 530 Governors Road
DK-7430, IKAST Guelph, Ontario
DENMARK N1K 1E3
FIN-PRINT NC. TRICOTS J.T.S.
530 Governors Road 500 Sauve West #104A
Guelph, Ontario Montreal, Quebec
N1K 1E3 H3L 1Z8
BECKWITH BEMIS NC. LAMINATED TEXTILES LTD.
1145 Belanger (LAMTEX)
Sherbrooke, Quebec 155 Signet Drive
J1K 2B1 Weston, Ontario
M9L 1V1
SONATEX LAMINATING INC. TEXTILES M.T.C. LTEE
3335 North Service Road 5575 Casgrain
Unit 2-3 Montreal, Quebec
Burlington, Ontario H2T lYl
L7N 3G2
3030 Ste-Anne Boulevard
Beauport, Quebec
GlE 6N1
TO: THE CHASE MANHATTAN BANK
DELIVERY AGREEMENT
WHEREAS #1 APPAREL CANADA INC. (hereinafter called the "Company") has
agreed to execute and deliver to THE CHASE MANHATTAN BANK (hereinafter called
the "Secured Party") a guarantee (which, as amended, supplemented or restated
from time to time is herein called the "Guarantee") dated as of April 1, 1997
pursuant to which the Company will guarantee the Obligations (as defined in the
credit agreement dated as of April 1, 1997 among SLM INTERNATIONAL, INC., MASKA
U.S., INC., #1 APPAREL, INC. (collectively, the "Borrowers") and the Secured
Party which as amended, supplemented or restated from time to time is herein
called the "Credit Agreement") and, as security for the Guarantee, the Company
has agreed to execute and deliver to the Secured Party a debenture in the
principal amount of ONE HUNDRED MILLION UNITED STATES DOLLARS ($100,000,000
U.S.) for the purpose of securing payment or performance of any and all
indebtedness, obligations and liabilities, joint or several, of the Company to
the Secured Party pursuant to the Guarantee and any security therefor, whether
as principal or surety (all of which present and future indebtedness,
obligations and liabilities are hereinafter collectively called the
"Obligations");
NOW THEREFORE in consideration of the foregoing and for other good and
valuable consideration the Company hereby agrees with the Secured Party as
follows:
1. Delivery. The Company herewith delivers to the Secured Party a debenture of
the Company in the principal amount of ONE HUNDRED MILLION UNITED STATES DOLLARS
($100,000,000 U.S.) bearing interest at the rate of TWENTY-FIVE PERCENT (25%)
per annum from the date hereof and a related charge/mortgage of land in the form
prescribed by the Land Registration Reform Act (Ontario) having attached thereto
as a schedule and incorporating as a part thereof a copy of the said debenture
(hereinafter as they may each be amended, supplemented or restated from time to
time collectively called the "Debenture"), charging by way of a fixed and
specific mortgage and
<PAGE>
2.
charge and granting security interests in certain property and assets of the
Company and charging by way of a floating charge and granting a security
interest in all the undertaking, property and assets of the Company (except as
therein provided).
2. Continuing Security. The Debenture shall be held by the Secured Party as
general and continuing security to secure payment and performance of the whole
of the Obligations as existing from time to time and any ultimate unpaid balance
of any indebtedness forming part of the Obligations notwithstanding any change
in:
(a) the nature or form of the Obligations;
(b) the accounts or the bills of exchange, promissory notes and/or other
obligations evidencing or creating the Obligations or any part
thereof;
(c) the names of the parties to the accounts or to the said bills, notes
and/or obligations; or
(d) the name or constitution of the Company,
and notwithstanding the opening of any new account and the closing in the books
of the Company or the Secured Party of any other account with respect to the
Obligations or any part thereof.
3. Default. Upon the occurrence of an Event of Default (as defined under the
Credit Agreement), the Secured Party may forthwith without notice, without
demand for payment, without advertisement and without any other formality (all
of which are hereby waived), but in accordance with applicable law, enforce any
and all security which it may hold including, without limitation, the Debenture.
All rights and remedies of the Secured Party may be exercised independently or
in combination. The rights and remedies specified herein shall be in addition to
and not in substitution for any other rights and remedies of the Secured Party
at law or in equity or otherwise.
4. Application of Payments. Unless the provisions of the Credit Agreement
otherwise provide, any and all payments made in respect of the Obligations may
be applied on such part or parts of the Obligations as the Secured Party may see
fit. Unless the provisions of the Credit Agreement otherwise provide, the
Secured Party shall at all times and from time to time
<PAGE>
3.
have the right to change any appropriation of any moneys received by it and to
reapply the same on any other part or parts of the Obligations as the Secured
Party may see fit, notwithstanding any previous application by whomsoever made.
The proceeds of any collection or sale of the Charged Assets (as defined in
the Debenture), as well as any Charged Asset consisting of cash, shall be
applied by the Secured Party as provided in section 16 of the Security Agreement
among the Borrowers, SLM TRADEMARK ACQUISITION CORP., SPORT MASKA INC., #1
APPAREL CANADA INC., the Company and the Secured Party dated as of April 1st,
1997 (the "Security Agreement").
Upon any sale of the Charged Assets by the Secured Party (including,
without limitation, pursuant to a power of sale granted by statute or under a
judicial proceeding) the receipt of the Secured Party or of the officer making
the sale shall be a sufficient discharge to the purchaser or purchasers of the
Charged Assets so sold and such purchaser or purchasers shall not be obligated
to see to the application of any part of the purchase money paid over to the
Secured Party or such officer or be answerable in any way for the misapplication
thereof.
5. Dealings by the Secured Party. The Secured Party may grant extensions, take
and give up securities, accept compositions, grant releases and discharges and
otherwise make arrangements with the Company and deal with other persons and
securities as the Secured Party may see fit without prejudice to the liability
of the Company or the Secured Party's right to hold, deal with and realize the
security of the Debenture.
6. No Merger. The Debenture shall not operate by way of merger of any
indebtedness or liability of the Company or any other person or persons to the
Secured Party hereunder or under any document or negotiable instrument by which
the same may now or at any time hereafter be represented or evidenced. No
judgment recovered by the Secured Party shall operate by way of merger of or in
any way affect the security created by the Debenture or the Secured Party's
right to interest as aforesaid.
<PAGE>
4.
7. Additional Security. This agreement and the security afforded by the
Debenture shall be in addition to and not in replacement of or substitution for
any security now or hereafter held by the Secured Party in respect of any
indebtedness, liabilities or obligations, present or future, of the Company to
the Secured Party or any part thereof, and shall not be prejudiced by any such
security or by any exchange, release or variation of any such security.
8. Expenses. All reasonable expenses (including without limitation legal fees on
a solicitor and his own client basis and the fees and expenses of any receiver
or receiver and manager appointed under the provisions of the Debenture)
incurred by the Secured Party in connection with:
(a) the preparation and registration of the Debenture;
(b) recovering or enforcing payment or performance of all or part of the
Obligations (including without limitation expenses incurred in
considering and protecting or improving its position, or attempting to
do so, whether before or after default); and
(c) realizing upon or otherwise dealing with the assets charged by the
Debenture (including without limitation expenses of taking possession,
protecting, preparing for sale and realizing upon any such assets),
shall be payable upon demand, shall be added to and shall be deemed to be a part
of the Obligations, shall bear interest at the Interest Rate provided for in the
Debenture and the payment thereof shall be secured by the Debenture.
9. No Obligation to Advance. Notwithstanding anything in this agreement or in
the Debenture contained, the Secured Party shall not be obligated thereby to
make any loan or other extension of credit or further loan or extension of
credit or to extend any time for payment or performance of all or any part of
the Obligations.
10. Interest. Any provision of the Debenture or of this agreement
notwithstanding, payment by the Company of interest on all indebtedness
comprising, or forming part of, the Obligations at the current rate at which
such
<PAGE>
5.
indebtedness may bear interest for any period of time shall constitute
satisfaction of interest on the Debenture for the equivalent period of time.
11. Sale of Debenture. Any sale, transfer, delivery, negotiation or assignment
of the Debenture by the Secured Party will be made subject to the provisions of
this agreement.
12. Claims Under Debenture. Neither the Secured Party nor any subsequent holder
of the Debenture shall, at any time, claim payment under the Debenture (whether
for principal, interest or both) in an amount greater than the amount of the
indebtedness forming part of the Obligations at such time. Notwithstanding that
the Debenture is stated to be payable on demand, no demand for payment shall be
made under the Debenture unless demand is concurrently being made, or has been
made, for payment of indebtedness forming part of the Obligations in an amount
not less than the amount demanded under the Debenture.
13. Discharge. Upon payment and performance by the Company of the Obligations,
the Secured Party shall, upon request in writing by the Company delivered to the
Secured Party at a time when the Secured Party is under no obligation
(conditional or otherwise) to make any loan or extend any other type of credit
to the Company under the Credit Agreement, and at the expense of the Company,
discharge the Debenture and upon the delivery by the Secured Party to the
Company of a discharge of the Debenture, this agreement shall be terminated.
14. Set-Off. The Company grants to the Secured Party the right to set off
against any and all accounts, credits or balances maintained by it with the
Secured Party the Obligations or any part thereof when due and payable.
15. Illegality. If one or more of the provisions of this agreement shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired.
<PAGE>
6.
16. Gender and Headings. Words importing the singular include the plural and
vice versa and words importing gender shall include all genders. The headings in
this agreement are included for convenience of reference only, and shall not
constitute a part of this agreement for any other purpose.
IN WITNESS WHEREOF this agreement has been executed by the Company as of
the 1st day of April, 1997.
#1 APPAREL CANADA INC.
By: /s/ D. Bruce Randall C.S.
-------------------------
D. Bruce Randall
Secretary
<TABLE>
<CAPTION>
Province Charge/Mortgage of Land
[LOGO] of
Ontario Form 2 - Land Registration Reform Act B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(1) Registry [x] Land Titles [ ] (2) Page 1 of 25 pages
---------------------------------------------------------------------------------
(3) Property Block Property
Identifier(s) Additional:
See
Schedule [ ]
FOR OFFICE USE ONLY ---------------------------------------------------------------------------------
(4) Principal Amount
SEVENTY-FIVE MILLION --------------------------------------------------------
---------------------00/100 Dollars $75,000,000.00
---------------------------------------------------------------------------------
(5) Description
Part of Lot Thirty-Three (33), Concession One (1), (formerly of the
Township of Normandy), Part of Lot Ten (10) and Part of Duke Street
according to Foster's Survey of Part of the Town of Mount Forest, in the
New Property Identifiers County of Wellington and as more particularly described in the Schedule
Additional: attached.
See Page 23, Appendix "A".
Schedule [ ] See Schedule.
- ---------------------------------------------------
Executions
Additional:
See
Schedule [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
(6) This (a) Redescription | (b) Schedule for: | (7) Interest/Estate Charged
Document New Easement | Additional | Fee Simple
Contains Plan/Sketch [ ] | Description [x] Parties [ ] Other [x] | See Schedule
| |
- ------------------------------------------------------------------------------------------------------------------------------------
(8) Standard Charge Terms - The parties agree to be bound by the provisions in Standard Charge Terms filed as number and the
Chargor(s) hereby acknowledge(s) receipt of a copy of these terms.
- ------------------------------------------------------------------------------------------------------------------------------------
(9) Payment Provisions | |
(a) Principal | (b) Interest | (c) Calculation
Amount $75,000,000.00 | Rate See Schedule % per annum. | Period See Schedule
- ------------------------------------------------------------------------------------------------------------------------------------
Interest | Y | M | D | Payment | First | Y | M | D
(d) Adjustment | | | | (e) Date and | (f) Payment | | |
Date | | | | Period See Schedule | Date | | |
- ------------------------------------------------------------------------------------------------------------------------------------
Last | Y | M | D | Amount
(g) Payment | | | | (h) of Each
Date | | | | Payment Dollars $
- ------------------------------------------------------------------------------------------------------------------------------------
Balance | Y | M | D |
(i) Due | | | | (j) Insurance
Date | | | | Dollars $
- ------------------------------------------------------------------------------------------------------------------------------------
(10) Additional Provisions
THIS CHARGE IS A DEBENTURE.
Continued on
Schedule [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
(11) Chargor(s) The chargor hereby charges the land to the chargee and certifies that the chargor is at least eighteen years old and
that
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
The chargor(s) acknowledge(s) receipt of a true copy of this charge. Date of Signature
Name(s) Signature(s) Y M D
#1 APPAREL CANADA, INC. Per: /s/ D Bruce Randall | 1977 | 04 | 11
Name: D. Brude Randall | | |
________________________________________________________________ Title: Secretary | | |
I/We have authority to bind the Corporation. | | |
Per:____________________________________________ | | |
Name: | | |
________________________________________________________________ Title: | | |
I/We have authority to bind the Corporation.
- ------------------------------------------------------------------------------------------------------------------------------------
12 Spouse(s) of Chargor(s) I hereby consent to this transaction. Date of Signature
Name(s) Signature(s) Y M D
| | |
________________________________________________________________ ________________________________________________ | | |
| | |
- ------------------------------------------------------------------------------------------------------------------------------------
(13) Chargor(s) Address
for Service 375 Sligo Road West, P.O. Box 850, Mount Forest, Ontario, N0G 2L0
- ------------------------------------------------------------------------------------------------------------------------------------
(14) Chargee(s)
THE BANK OF NEW YORK
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
(15) Chargee(s) Address
for Service
101 Barclay Street, Floor 21W, New York, New York 01286 FOR OFFICE USE ONLY
- ------------------------------------------------------------------------------------------------------------------------------------
(16) Assessment Roll Number | Cty. | Muni. | Map | Sub. | Par. | | Fees
of Property | | | | | | not assigned |---------------------------------------------
- --------------------------------------------------------------------------------------| Registration Fee |
(17) Municipal Address of Property | (18) Document Prepared by: |-----------------------|---------------------
| |
Multiple TORY TORY DESLAURIERS & BINNINGTON |-----------------------|---------------------
Suite 3000, Aetna Tower, P.O. Box 270 | |
Toronto-Dominion Centre |-----------------------|---------------------
Toronto, Ontario M5K 1N2 | |
(416) 865-0040 |=======================|=====================
| Total |
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
#1 APPAREL CANADA INC.
DEBENTURE $75,000,000
A. PROMISE TO PAY
1. #1 APPAREL CANADA INC. (the "Company") for value received hereby agrees with
THE BANK OF NEW YORK (the "Secured Party"), for its own benefit and for the
benefit of the Holders from time to time that it will, subject to the provisions
of that certain Delivery Agreement made in favour of the Secured Party by the
Company of even date herewith (the "Delivery Agreement") on demand pay to the
Secured Party the principal sum of SEVENTY-FIVE MILLION DOLLARS ($75,000,000).
The Company will also, subject to the provisions of the Delivery Agreement, pay
to the Secured Party, as and when demanded, interest on the said principal sum.
The Company will pay such interest at the rate of 25% per annum calculated and
payable monthly not in advance, both before and after demand and before and
after default, judgment and execution from the date hereof until payment in full
of all amounts owing hereunder.
B. GRANT OF MORTGAGES, CHARGES AND SECURITY INTERESTS
2. As security for payment of the principal and interest and all other
indebtedness and liability from time to time payable hereunder, the Company
hereby:
(a) mortgages and charges (subject to the exceptions as to leaseholds
hereinafter contained) as and by way of a fixed and specific mortgage and charge
to and in favour of the Secured Party, and grants to the Secured Party a
security interest in, all real and immovable property (including, by way of
sub-lease, leasehold lands) (collectively, the "Lands") now or hereafter owned
or acquired by the Company and all buildings, erections, improvements, fixtures
and plant now or hereafter owned or acquired by the Company (whether the same
form part of the realty or not) and all appurtenances to any of the foregoing
including without limiting the generality of the foregoing the property
described in Appendix "A" hereto; "real and immovable property" shall include
any interest in or right with respect to real and immovable property;
(b) mortgages and charges to the Secured Party as and by way of a fixed and
specific mortgage and charge, and grants to the Secured Party a security
interest in all present and future:
(i) income, revenues and profits derived from any tenancy, use or
occupation of the Lands and rents and other sums payable to the
Company pursuant to the terms of any leases, licences, subleases,
<PAGE>
2.
agreements to lease, license or sublease, or rights to occupy (each a
"lease") the Lands;
(ii) benefits, advantages and powers to be derived from such leases,
with full power and authority to demand, sue for, recover, receive and
give receipts for all rents and other moneys payable thereunder and
otherwise to enforce the rights of the landlord thereunder on behalf
of and in the name of the Company; and
(iii) benefit of all guarantees and indemnities with respect to any
leases and the performance of any obligations of any tenant
thereunder;
(c) mortgages and charges to the Secured Party as and by way of a fixed and
specific mortgage and charge, and grants to the Secured Party a security
interest in, all its present and future equipment, including, without limiting
the generality of the foregoing, all fixtures, plant, machinery, tools and
furniture now or hereafter owned or acquired and any equipment specifically
listed or otherwise described in Appendix "B" hereto;
(d) mortgages and charges to the Secured Party, and grants to the Secured
Party a security interest in, all its present and future inventory, including,
without limiting the generality of the foregoing, all raw materials, goods in
process, finished goods and packaging material and goods acquired or held for
sale or furnished or to be furnished under contracts of rental or service;
(e) mortgages and charges to the Secured Party, and grants to the Secured
Party a security interest in, all its other goods and tangible personal
property;
(f) mortgages and charges to the Secured Party, and grants to the Secured
Party a security interest in all its present and future intangibles, including,
without limiting the generality of the foregoing, all its present and future
book debts, accounts and other amounts receivable, contract rights and chooses
in action of every kind or nature including insurance rights arising from or out
of the assets referred to in subparagraphs (a), (b), (c), (d) or (e) hereof,
goodwill, chattel paper, instruments of title, negotiable documents of title,
investments, money and securities and all dividends, income or other
distributions, whether paid or distributed in cash, securities or other
property, in respect of any of the property described in this section 2;
(g) charges in favour of the Secured Party as and by way of a floating
charge, and grants to the Secured Party a security interest in, all of its
business, undertaking, property and assets, real and personal, moveable or
immovable, of whatsoever nature and kind, both present and future (other than
property and assets hereby validly subjected to a specific mortgage, charge or
security interest by subparagraphs (a), (b), (c), (d), (e) or (f) hereof and the
exceptions hereinafter contained); and
<PAGE>
3.
(h) mortgages and charges in favour of the Secured Party, and grants to the
Secured Party a security interest in, the proceeds arising from any of the
assets referred to in this paragraph 2;
all of which present and future property and assets of the Company referred to
in subparagraphs 2 (a), (b), (c), (d), (e), (f), (g) and (h) hereof are
hereinafter collectively called the "Charged Assets". All rights of the Secured
Party hereunder, the security, and all obligations of the Company hereunder,
shall be absolute and unconditional irrespective of (i) any lack of validity or
enforceability of any loan document including the Senior Secured Note Indenture
(the "Indenture") dated as of April 1, 1997 among SLM International, Inc. (the
"Borrower"), Sport Maska Inc., Maska U.S., Inc., #1 Apparel, Inc., #1 Apparel
Canada Inc., SLM Trademark Acquisition Corp., SLM Trademark Acquisition Canada
Corporation and the Secured Party, as the same may be amended, restated or
supplemented from time to time, the guarantee granted by the Company in favour
of the Secured Party pursuant to Article 10 of the Indenture, any other
agreement with respect to the indebtedness and liability under the Indenture or
any indebtedness or liability secured hereby or any other agreement or
instrument relating to the foregoing, (ii) any change in the time, manner or
place of payment of, or in any other term of, all or any of the indebtedness and
liability under the Indenture or any indebtedness or liability secured hereby or
any other amendment or waiver of or consent to any departure from any guarantee,
any loan document, the Indenture, or any other agreement or instrument, (iii)
any exchange, release or nonperfection of any Charged Asset or any release or
amendment or waiver of or consent to or departure from the indebtedness under
the Indenture or any guarantee for all or any of the indebtedness and liability
secured hereby, or (iv) any other circumstance which might otherwise constitute
a defence available to, or discharge of, the Company, any guarantor or any other
obligor in respect of the indebtedness and liability, secured by or in respect
of this debenture.
C. LOCATION OF CHARGED ASSETS
3. The Company hereby represents and warrants to the Secured Party that:
(a) its chief executive office is presently at:
375 Sligo Road West
P.O. Box 850
Mount Forest, Ontario
N0G 2L0;
<PAGE>
4.
(b) all of its ledgers, books of account and other financial records are
presently at the location set out in subparagraph 3(a):
(c) the Charged Assets (other than the assets described in subparagraph
3(b)) are presently at the locations set out in subparagraphs 3(a) and
in Appendix "C" hereto.
4. The Charged Assets now situate in the Provinces of Ontario and Quebec are on
the date hereof primarily situate or located at the location(s) set out in
Appendix "C" hereto but may from time to time be located at other premises of
the Company in Ontario. The tangible personal property constituting the Charged
Assets may also be located at other places in Ontario or Quebec while in transit
to and from such locations and premises and may, from time to time, be situate
or located at any other place in Ontario or Quebec when on lease or consignment
to any lessee or consignee from the Company.
D. LIMITED EXCEPTIONS TO GRANT OF CHARGE
5. The last day of any term reserved by any lease or sublease, oral or written,
or any agreement therefor, now held or hereafter acquired by the Company, and
whether falling within the general or particular description of the Charged
Assets, is hereby and shall be excepted out of the mortgage, charge and security
interest hereby or by any other instrument created, but the Company shall stand
possessed of the reversion of one day remaining in the Company in respect of any
such term, for the time being demised, as aforesaid, upon trust to assign and
dispose of the same as any purchaser of such term shall direct.
E. AGREEMENTS OF THE COMPANY
6. The Company and the Secured Party covenant and agree that:
(a) they have not agreed to postpone the time for attachment of the
security interests granted hereby with respect to the Charged Assets presently
existing and that such security interests shall attach to the Charged Assets
acquired after the date hereof as soon as the Company has rights in such assets;
(b) in accordance with subsection 7(3) of the Land Registration Reform Act
(Ontario), the covenants deemed to be included in a charge by subsection 7(1) of
such Act are expressly excluded from this debenture; and
(c) subject to paragraph 29 hereof, the Company shall not at any time
hereafter make any claim to the Charged Assets, challenge the Secured Party's
rights thereto or make any demands upon the Secured Party with respect to the
Charged Assets and the Secured Party shall from this time forward be exonerated
and
<PAGE>
5.
discharged of and from all claims and demands which the Company might or
could have against the Secured Party with respect to the Charged Assets.
7. The Company represents and warrants to the Secured Party that:
(a) the Company is the sole registered, legal and beneficial owner of an
estate in fee simple in the Lands described in Appendix "A" hereto with good and
marketable title thereto, and the Company is the sole legal and beneficial owner
of the remainder of the Charged Assets, free of any Lien, encumbrance or other
right whatsoever except for Permitted Encumbrances (as defined in the
Indenture);
(b) the Company is duly incorporated and in good standing under the laws of
its jurisdiction of incorporation, has the right, power and lawful authority to
charge and mortgage to the Secured Party, and otherwise grant security interests
in all of its right, title and interest in and to, the Charged Assets as
provided for in this debenture and this debenture constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting creditors' rights and the
discretion exercisable by Courts of competent jurisdiction in respect of the
availability of equitable remedies; and
(c) neither the execution of this debenture nor the performance by the
Company of its obligations hereunder will result in any breach of or default
under any law or any other agreement or document to which the Company is a party
or by which it may be bound.
8. The Company agrees with the Secured Party that until all indebtedness and
liability owing by the Company to the Secured Party are paid in full:
(a) it will not, without the prior written consent of the Secured Party:
(i) incur, create, assume or permit to exist any further or
additional indebtedness except as permitted under the terms of
the Indenture;
(ii) create, assume or permit to exist any Liens upon, assign,
transfer, mortgage, charge, pledge, hypothecate or otherwise
grant security over or a security interest in any of the Charged
Assets except to the Secured Party and except Permitted
Encumbrances;
(iii) sell, transfer, assign, or otherwise dispose of any of the
Charged Assets or any group of property and assets forming part
of the Charged Assets except for a sale of inventory in the
ordinary course of business and such other sales as permitted
under the Indenture;
(iv) merge or amalgamate with any other corporation except as
permitted under the Indenture;
<PAGE>
6.
(v) change the location of its chief executive office, place of
business or principal place of residence without providing the
Secured Party with fifteen days' prior written notice;
(vi) take any action (or not take any action) which would result in a
default or an Event of Default under the Indenture or hereunder;
(vii) remove the Charged Assets from the locations referred to in
paragraph 3 hereof unless such removal is a permitted sale of the
Charged Assets or keep the Charged Assets at a location other
than the locations referred to in paragraph 3 hereof provided
that the Company may also remove Charged Assets to another
location upon the condition that it provide the Secured Party
with at least 14 days prior written notice of its intention to do
so and provides to the Secured Party prior to such removal an
agreement from any lessor of such location as provided in
subparagraph 9(l) hereof; or
(viii) change its name without giving prior written notice to the
Secured Party of the new name and the date upon which such change
of name will take effect; and
(b) it will:
(i) hold the proceeds received from any direct or indirect dealing
with the Charged Assets in trust for the Secured Party after
either the occurrence of a default under the Indenture or the
security constituted by this debenture becoming enforceable, hold
the proceeds of any Asset Sale permitted under the Indenture
which are payable to the Secured Party or the Holders and the
proceeds of any Asset Sale which is not permitted under the
Indenture in trust for the Secured Party, and, if required in
accordance with the terms of the Indenture, hold all proceeds of
any sale, lease, assignment or other transfer of all or any part
of the Charged Assets made outside the ordinary course of
business of the Company in trust for the Secured Party, and in
each case, forthwith remit such proceeds to the Secured Party;
(ii) strictly comply with every covenant and undertaking heretofore or
hereafter given by it to the Secured Party and take any action
that may be necessary to enable the Borrower to comply with its
obligations under the Indenture, the Securities and the
Collateral Documents;
(iii) permit the Secured Party at any time and from time to time, when
the security granted pursuant to this debenture shall have become
enforceable, to require any account debtor of the Company to make
<PAGE>
7.
payment to the Secured Party of any or all amounts owing by the
account debtor to the Company and the Secured Party may take
control of any proceeds referred to in subparagraph 2(h) hereof
and may hold all such amounts received from any account debtor
and any such proceeds as cash collateral as part of the Charged
Assets and as security for the indebtedness and liability secured
by this debenture; (iv) deliver to the Secured Party promptly
upon request, any documents of title, instruments, securities and
chattel paper constituting, representing or relating to the
Charged Assets and all statements of account, bills, invoices and
books of account relating to accounts and all records, ledgers,
reports, correspondence, schedules, documents, statements, lists
and other writings relating to the Charged Assets for the purpose
of inspecting, auditing or copying same;
(v) at the Secured Party's request, cause such of the securities
which constitute Charged Assets to be registered in the name of
the Secured Party or its nominee and the Company hereby
authorizes the Secured party to transfer such securities into the
name of the Secured Party or its nominee so that the Secured
Party or its nominee may appear as the sole owner of record of
such securities; the Company shall, at the request of the Secured
Party, deliver to the Secured Party appropriate powers of
attorney for transfer in blank, duly executed and with signatures
guaranteed, in respect of such securities; (vi) immediately upon
becoming aware thereof, give the Secured Party written notice of
any loss or destruction of, or substantial damage to, any
material portion of the Charged Assets which alone, or together
with any other Collateral (as defined in the Indenture) which is
lost, destroyed or substantially damaged, constitutes a material
portion of the Collateral;
(vii) promptly notify the Secured Party of the acquisition by it of
receivables or other amounts owing to it from persons located in
any jurisdiction other than Ontario or Quebec;
(viii) keep its insurable properties adequately insured at all times
by financially sound and reputable insurers;
(ix) maintain such other insurance, to such extent and against such
risks, including fire and other risks insured against by extended
coverage, as is customary for the Charged Assets and as is
<PAGE>
8.
customary with companies similarly situated and in the same or
similar businesses, provided, however, that such insurance shall
insure the property of the Company against all risk of physical
damage, including, without limitation, loss by fire, explosion,
theft, fraud and such other casualties as may be reasonably
satisfactory to the Secured Party, and in no event at any time in
an amount less than the replacement value of the Charged Assets;
(x) maintain in full force and effect public liability insurance
against claims for bodily injury or death or property damage
occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by the Company or any of
its subsidiaries, as is customary with companies similarly
situated and in the same or similar businesses;
(xi) maintain business interruption and product liability insurance to
such extent as is customary with companies similarly situated and
in the same or similar businesses;
(xii) maintain such other insurance as may be required by law or as
may be reasonably requested by the Secured Party for purposes of
assuring compliance with this subparagraph 8(b);
(xiii) ensure that all insurance covering tangible personal property
subject to a Lien in favour of the Secured Party granted pursuant
hereto shall provide that, in the case of each separate loss, the
full amount of insurance proceeds shall be payable to the Secured
Party subject to the rights of the holders of prior ranking
Permitted Encumbrances, and shall further provide for at least 30
days' prior written notice to the Secured Party of the
cancellation or substantial modification thereof;
(xiv) deliver to the Secured Party all policies and certificates of
insurance maintained in accordance with this subparagraph 8(b);
and
(xv) provide to the Secured Party, from time to time upon demand, a
statement of the value of its inventory and a list of its book
debts shown in the reverse order of their due date.
9. The Company agrees with the Secured Party that:
(a) it will at all times fully perform and comply with all obligations
imposed on, assumed by or agreed to by it pursuant to this debenture and any
prior encumbrance of the Lands or any part thereof or its interest therein, that
it will pay all rents and perform all obligations under the leases charged by
this debenture and that, if the Company shall fail so to do, the Secured Party
may (but shall not be obliged to)
<PAGE>
9.
take any action the Secured Party deems necessary or desirable acting reasonably
to cure any default by the Company in the performance of or compliance with any
of the Company's obligations hereunder, under any lease or imposed upon, assumed
by or agreed to by the Company pursuant to any such prior encumbrance;
(b) upon receipt by the Secured Party in regard to any such prior
encumbrance or any lease of any written notice of default by the Company, the
Secured Party may rely thereon and take any action as aforesaid, acting
reasonably, to cure such default even though the existence of such default or
the nature thereof may be questioned or denied by the Company or by any party on
behalf of the Company;
(c) at its option, the Secured Party may discharge past due taxes, Liens,
or other encumbrances (other than Permitted Encumbrances which are not in
default) at any time levied or placed on the Charged Assets and may pay for the
maintenance and preservation of the Charged Assets to the extent the Company
fails to do so in accordance with the Indenture or this debenture, provided,
however, that the Secured Party shall not discharge such taxes, Liens or other
encumbrances or pay for such maintenance or preservation prior to the occurrence
and continuance of an Event of Default under the Indenture unless the Secured
Party shall have requested the Company to discharge such taxes, Liens or other
encumbrances or pay such amounts and the Company shall have failed or refused to
do so within such period of time as shall have been specified by the Secured
Party in such notice; provided that nothing in this debenture shall excuse the
Company from the performance of any covenants or other promises with respect to
taxes, Liens, prior claims or other encumbrances and maintenances;
(d) the Company hereby expressly grants to the Secured Party, and agrees
that the Secured Party shall have the absolute and immediate right to enter in
and upon the Lands or any part thereof to such extent and as often as the
Secured Party, in its sole discretion, acting reasonably, deems necessary or
desirable, in order to cure any such default by the Company;
(e) the Secured Party may pay and expend such sums of money as the Secured
Party in its sole discretion, acting reasonably, deems necessary for any purpose
provided for in subparagraphs 9(a), (b), (c) and (d), and the Company hereby
agrees to pay to the Secured Party, immediately upon notification by the Secured
Party and without demand, all such sums so paid and expended by the Secured
Party, together with interest thereon at the Interest Rate then in effect in
accordance with the Indenture;
(f) all sums so paid and expended by the Secured Party and such interest
thereon, shall be secured hereby in addition to all other moneys hereby secured
and in priority to all other mortgages and charges;
(g) if this debenture is or shall be outstanding at the expiration of the
term of any lease (a "material lease") of real property forming part of the
Charged Assets
<PAGE>
10.
which is material to the conduct of the Company's business and the Company shall
refuse or neglect to exercise its right, if any, to renew such material lease
and to pay the fees, costs, charges and expenses incidental to and payable upon
such renewals, then, and as often as it shall happen, the Secured Party may, at
its sole discretion, effect such renewals in its own name or otherwise, and in
such case every such renewed material lease and the lands and buildings thereby
demised shall remain and be security to the Secured Party for the indebtedness
and liability secured by this debenture and as well for the payment of all money
paid by the Secured Party for every such renewal and the Secured Party's costs,
charges, and expenses and interest thereon at the Interest Rate then in effect
in accordance with the Indenture;
(h) it will not: (i) surrender any material lease or any rights of renewal
with respect thereto (except in any case where the prior written consent of the
Secured Party has been obtained); subordinate any material lease to any mortgage
of the fee interest of the landlord thereof in the lands subject to such lease,
unless in connection with any such subordination the Company obtains from the
holder of such mortgage a non-disturbance agreement in favour of the Company and
its successors and assigns (including the Secured Party) in form and substance
satisfactory to the Secured Party (save and except that with respect to existing
leases, the Company shall only be required to use commercially reasonable
efforts to obtain such a non-disturbance agreement); (ii) terminate or cancel
any material lease without the prior written consent of the Secured Party; or
(iii) without the prior written consent of the Secured Party, modify, change,
supplement, alter or amend any material lease either orally or in writing;
(i) no release or forbearance of any of the Company's obligations pursuant
to any material lease or pursuant to any prior encumbrance of the Company's
interest in the Lands or any part thereof, including without limitation the
Company's obligations with respect to the payment of rent as provided for in any
such lease, shall release the Company from any of the Company's obligations
pursuant to this debenture;
(j) unless the Secured Party shall otherwise expressly consent in writing,
the title in fee simple to the property demised by any material lease and the
leasehold estate shall not merge but shall always remain separate and distinct,
notwithstanding the union of said estates either in the landlord of any such
lease or the Company pursuant to any such lease or in a third party, by purchase
or otherwise;
(k) if the Company shall, at any time before payment in full of the
indebtedness and liability secured by this debenture, acquire the freehold title
to the Lands demised by any lease, this mortgage and charge shall attach and
extend to, and constitute a mortgage and charge of such freehold estate; and
(l) the Company hereby agrees that it will not place the Charged Assets or
allow the Charged Assets to be placed on any premises that are leased unless the
lessor
<PAGE>
11.
of such premises has first agreed in writing with the Secured Party to
subordinate and postpone any and all of its claims, security and rights to the
claims and security of the Secured Party; provided that this covenant will not
prohibit the Company from selling the Charged Assets in the normal course of the
Company's business.
10. The Company hereby agrees that it will at all times, both before and after
default, do or cause to be done such additional things and execute and deliver
or cause to be executed and delivered all such further acts and documents as the
Secured Party may reasonably require for the better mortgaging, charging,
confirming and granting of security interests in the present or future Charged
Assets to the Secured Party, including, without limitation, the payment of any
fees and taxes required in connection with the execution and delivery of this
debenture, the granting of the security and the filing, recording, or
registering of any financing statements or other documents in connection
therewith. If any amount payable under, or in connection with, any of the
Charged Assets shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be promptly pledged and delivered to
the Secured Party, duly endorsed in a manner satisfactory to the Secured Party.
If at any time the Company shall take and perfect a security interest or
hypothec in any property of an account debtor or any other person to secure
payment and performance of an account receivable, the Company shall promptly
assign such security interest or hypothec to the Secured Party. Such assignment
need not be filed, recorded or registered of public record unless necessary to
continue the perfected status of the security interest or hypothec against
creditors of and transferees from the account debtor or other person granting
the security interest or hypothec.
11. The Company shall, at its own cost and expense, take any and all actions
reasonably necessary to defend title to the Charged Assets against all persons
and to defend the security of the Secured Party in such Charged Assets, and the
priority thereof, against any adverse Lien or encumbrance of any nature
whatsoever, except for such Liens or encumbrances permitted by the Secured Party
in writing, including, without limitation, the Permitted Encumbrances.
12. The Company shall remain liable to observe and perform all the conditions
and obligations to be observed and performed by it under each contract and
agreement, interest or obligation relating to the Charged Assets, all in
accordance with the terms and conditions thereof and shall indemnify and hold
harmless the Secured Party and the Holders from any and all such liabilities.
<PAGE>
12.
13. The Company will not, without the Secured Party's prior written consent,
grant any extension of the time of payment of any its accounts receivable, or
compromise, compound or settle the same for less than the full amount thereof,
or release, in whole or in part, any person liable for the payment thereof, or
allow any credit or discount whatsoever thereon other than extensions, credits,
discounts, compromises or settlements granted or made in the ordinary course of
business.
F. DEFAULT
14. Subject to the terms of the Delivery Agreement, all indebtedness and
liability owing by the Company to the Secured Party and hereby secured shall
become payable and the security hereby constituted shall become enforceable upon
the demand by the Secured Party.
15. The Secured Party may in writing (and not otherwise) waive any breach by the
Company of any of the provisions contained in this debenture or any default by
the Company in the observance or performance of any provision of this debenture;
provided always that no waiver by the Secured Party shall extend to or be taken
in any manner whatsoever to affect any subsequent breach or default, whether of
the same or a different nature, or the rights resulting therefrom.
G. REMEDIES OF THE SECURED PARTY
16. Whenever the security hereby constituted shall have become enforceable, and
so long as it shall remain enforceable, the Company will have no right to vote
or take any other action with respect to any securities constituting Charged
Assets or receive any dividends or interest (whether declared or payable before
or after the security hereby constituted becoming enforceable) in respect of the
Charged Assets, and the Secured Party may proceed to realize such security and
to enforce its rights by:
(a) entry;
(b) the appointment by instrument in writing of a receiver or receivers of
the Charged Assets or any part thereof (which receiver or receivers may be any
Person or Persons, whether an officer or officers or employee or employees of
the Secured Party or not) and the Secured Party may remove any receiver or
receivers so appointed and appoint another or others in his or their stead;
(c) proceedings in any court of competent jurisdiction for the appointment
of a receiver or receivers or for sale of the Charged Assets or any part
thereof; or
(d) any other action, suit, remedy or proceeding authorized or permitted
hereby or by law or by equity.
<PAGE>
15.
In addition, the Secured Party may file such proofs of claim and other
documents as may be necessary or advisable in order to have its claim lodged in
any bankruptcy, insolvency, winding-up or other judicial proceedings relative to
the Company.
The Secured Party or any receiver or receivers so appointed shall have
power to:
(i) take possession of and to use the Charged Assets or any part thereof
with power to exclude the Company and its officers, employees and
agents therefrom;
(ii) carry on the business of the Company (including, but not limited to,
the taking or defending of any actions or legal proceedings, and the
doing or refraining from doing all other things as to it, acting
reasonably, may seem necessary or desirable in connection with the
business, operations and affairs of the Company);
(iii) take all such steps as it may consider necessary or desirable for the
purposes of preserving, maintaining and completing all or any part of
the Charged Assets and making such replacements thereof and
improvements and additions thereto as it shall consider expedient;
(iv) receive the rents, incomes and profits of any kind whatsoever from the
Charged Assets and pay therefrom
(A) any expenses of preserving, maintaining and completing the
Charged Assets, of making such replacements thereof and
improvements and additions thereto as it may consider expedient
and of carrying on all or any part of the business of the Company
relating to the Charged Assets, and
(B) any charges against the Charged Assets ranking in priority to or
pari passu with the security created by this debenture or the
payment of which may be necessary or desirable to preserve or
protect all or any part of the Charged Assets or the interest of
the Secured Party therein;
(v) lease all or any part of the Charged Assets and renew from time to
time all or any of the leases on such terms and conditions as the
Secured Party may determine;
(vi) with or without taking possession, take any action or proceedings to
enforce the performance of any covenant contained in any of the
leases;
(vii) enjoy and exercise all the powers of the Company as it considers
necessary or desirable for the exercise of any and all of the remedies
provided for herein, including, without limitation, the
<PAGE>
14.
powers to make any arrangement or compromise on behalf and in the name
of the Company which it considers expedient, to purchase on credit and
borrow money on behalf and in the name of the Company and to advance
its own moneys to the Company, all at such rates of interest as it may
consider reasonable, and to enter into contracts and undertake
obligations on behalf of and in the name of the Company for any and
all of the foregoing purposes or which it considers necessary or
desirable for the exercise of any of the rights, powers and remedies
provided for herein, all of which borrowings, advances and obligations
together with interest thereon shall, at the discretion of the Secured
Party, be entitled to the security hereof in priority to the payment
of the obligations secured by this debenture;
(viii) borrow money required for the maintenance, preservation or
protection of the Charged Assets or any part thereof or the carrying
on of the business of the Company;
(ix) further charge the Charged Assets in priority to the charge of this
debenture as security for money so borrowed;
(x) vote and take all other action with respect to any securities
constituting Charged Assets and collect all revenues, dividends and
distributions distributed in connection with such securities; and
(xi) sell, lease or otherwise dispose of the whole or any part of the
Charged Assets on such terms and conditions and in such manner as the
receiver shall determine.
Every receiver appointed by the Secured Party shall be deemed to be an agent of
the Company and not of the Secured Party for the purposes of (i) carrying on and
managing the business and affairs of the Company and (ii) establishing liability
for all of the acts or omissions of the receiver while acting as such and the
Secured Party shall not be in any way responsible for any acts or omissions on
the part of any such receiver, its officers, employees and agents; provided
that, without restricting the generality of the foregoing, the Company
irrevocably authorizes the Secured Party to give instructions to each receiver
relating to the performance of its powers and discretions. The appointment of a
receiver or any thing which may be done by the receiver shall not have the
effect of constituting the Secured Party a mortgagee in possession.
In addition, the Secured Party may enter upon, use, occupy and possess the
Charged Assets or any part thereof, free from all encumbrances, Liens and
charges,
<PAGE>
15.
except for Permitted Encumbrances, without hindrance, interruption or denial of
the same by the Company or by any other person or persons, and may lease or sell
the whole or any part or parts of the Charged Assets. Any sale hereunder may be
made by public auction, by public tender or by private contract, with or without
notice and with or without advertising and without any other formality (except
as required by law), all of which are hereby waived by the Company. Such sale
shall be on such terms and conditions as to credit or otherwise and as to upset
or reserve bid or price as to the Secured Party in its sole discretion may seem
advantageous. In the case of any sale on credit or partly on credit, the Secured
Party shall not be accountable for any proceeds thereof unless and until
actually received by the Secured Party in cash. Such sale may take place whether
or not the Secured Party has taken possession of the Charged Assets.
The Company agrees to pay to the Secured Party forthwith on demand all
expenses incurred by the Secured Party in the preparation, perfection,
administration and enforcement of this debenture (including without limitation
expenses incurred in considering and protecting or improving the Secured Party's
position, or attempting to do so, whether before or after default), all amounts
borrowed by the receiver from the Secured Party as hereinbefore provided and all
costs, charges, expenses and fees (including, without limiting the generality of
the foregoing, the fees and expenses of any receiver and legal fees on a
solicitor and client basis) of or incurred by the Secured Party and by any
receiver or receivers or agent or agents appointed by the Secured Party in
connection with the recovery or enforcing of payment of any moneys owing
hereunder, whether by realization, by taking possession or otherwise. All such
sums, together with interest thereon at the Interest Rate then in effect in
accordance with the Indenture, shall be secured by the charges contained herein.
To the extent that the aggregate of the principal and accrued interest secured
hereby and such borrowed money, costs, fees and expenses exceed the principal
amount of this debenture, the Company hereby mortgages and charges and grants a
security interest in the Charged Assets to the Secured Party to secure payment
of such excess amount.
No remedy for the realization of the security hereof or for the enforcement
of the rights of the Secured Party shall be exclusive of or dependent on any
other such remedy, but any one or more of such remedies may from time to time be
exercised independently or in combination; and the exercise of any remedy under
any document in any jurisdiction shall not prejudice or affect the exercise of
any remedy under another document in any jurisdiction. The term "receiver" as
used in this debenture includes a receiver and manager.
The Secured Party shall not, nor shall any receiver appointed by it, be
liable for any failure to exercise its rights, powers or remedies arising
hereunder or otherwise, including without limitation any failure to take
possession of, collect,
<PAGE>
16.
enforce, realize, sell, lease or otherwise dispose of, preserve, maintain,
complete, protect, replace or improve all or any part of the Charged Assets, to
carry on all or any part of the business of the Company or to take any steps or
proceedings for any such purposes. Neither the Secured Party nor any receiver
appointed by it shall have any obligation to take any steps or proceedings to
preserve rights against prior parties to or in respect of all or any part of the
Charged Assets, whether or not in its possession and neither the Secured Party
nor any receiver appointed by it shall be liable for failure to do so. Subject
to the foregoing, the Secured Party shall use reasonable care in the custody and
preservation of the Charged Assets in its possession.
17. Subject to the provisions of the Indenture, any and all payments made in
respect of the indebtedness and liability secured by this debenture from time to
time may be applied to such part or parts of the indebtedness and liability
secured by this debenture as the Secured Party may see fit, and the Secured
Party shall at all times and from time to time have the right to change any
appropriation as the Secured Party may see fit.
18. Upon any sale of the Charged Assets by the Secured Party (including, without
limitation, pursuant to a power of sale granted by statute or under a judicial
proceeding) the receipt of the Secured Party or of the officer making the sale
shall be a sufficient discharge to the purchaser or purchasers of the Charged
Assets so sold and such purchaser or purchasers shall not be obligated to see to
the application of any part of the purchase money paid over to the Secured Party
or such officer or be answerable in any way for the misapplication thereof.
H. RIGHTS OF THE SECURED PARTY
19. The Secured Party may, in accordance with subparagraph 9(c) of this
debenture, pay and satisfy the whole or any part of any Liens, taxes, rates,
charges or encumbrances now or hereafter existing in respect of any of the
Charged Assets (other than Permitted Encumbrances which are not in default) and
such payments together with all costs, charges and expenses which may be
incurred in connection with making such payments shall form part of the
indebtedness and liability secured by this debenture and shall be secured by the
mortgages, charges and security interests granted herein. In the event of the
Secured Party satisfying any such lien, charge or encumbrance, it shall be
entitled to all the equities and securities of the person or persons so paid and
is hereby authorized to obtain any discharge thereof and hold such discharge
without registration for so long as it may deem advisable to do so.
<PAGE>
17.
20. The Company grants to the Secured Party the right to set off against any and
all accounts, credits or balances maintained by it with the Secured Party, the
aggregate amount of any of the indebtedness and liability secured by this
debenture provided the same is due.
21. The Secured Party, without exonerating in whole or in part the Company, may
grant time, renewals, extensions, indulgences, releases and discharges to, may
take securities from and give the same and any or all existing securities up to,
may abstain from taking securities from or from perfecting securities of, may
accept compositions from, and may otherwise deal with the Company and all other
persons and securities as the Secured Party may see fit.
22. Nothing herein shall obligate the Secured Party to extend or amend any
credit to the Company.
23. The Secured Party may, in accordance with the Indenture, assign, transfer
and deliver to any transferee any of the indebtedness and liability secured by
this debenture or any security or any documents or instruments held by the
Secured Party in respect thereof provided that no such assignment, transfer or
delivery shall release the Company from any of the indebtedness and liability
secured by this debenture; and thereafter the Secured Party shall be fully
discharged from all responsibility with respect to the indebtedness and
liability secured by this debenture and security, documents and instruments so
assigned, transferred or delivered. Such transferee shall be vested with all
powers and rights of the Secured Party under such security, documents or
instruments but the Secured Party shall retain all rights and powers with
respect to any such security, documents or instruments not so assigned,
transferred or delivered. The Company shall not assign any of its rights or
obligations hereunder without the prior written consent of the Secured Party.
24. The Secured Party is hereby authorized to file, record or register, as the
case may be, one or more financing statements, financing change statements or
other documents in all jurisdictions which the Secured Party deems necessary or
appropriate for the purpose of perfecting, confirming, continuing, enforcing or
protecting the security held by the Secured Party in respect of the indebtedness
and liability secured by this debenture.
25. The Company hereby appoints the Secured Party the attorney of such Company
solely for the purposes of carrying out the provisions of this debenture and
taking any action or executing any instrument which the Secured Party may deem
<PAGE>
18.
necessary or advisable to accomplish the purposes herewith, which appointment is
irrevocable and coupled with an interest.
26. The Secured Party and such persons as the Secured Party may designate shall
have the right, at any reasonable time or times during Company's usual business
hours, and upon reasonable notice, (which may be by telephone) to inspect the
Charged Assets, all records related thereto (and to make extracts and copies
from such records) and the premises upon which any such Charged Assets are
located, to discuss the Company's affairs with the officers of the Company and
its independent accountants and to verify under reasonable procedures, the
validity, amount, quality, quantity, value and condition of or any other matter
relating to, such Charged Assets, including, in the case of accounts receivable
or Charged Assets in the possession of a third person, contacting account
debtors and third persons possessing such Charged Assets. The Secured Party
shall have the absolute right to share any information that it gains from such
inspection or verification with any or all of the Holders.
J. MISCELLANEOUS
27. If one or more of the provisions contained herein shall be invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby.
28. No amendment of this debenture shall be binding unless executed in writing
by the party to be bound thereby.
29. Until the security hereby constituted shall have become enforceable, the
Company shall have quiet possession of the Charged Assets. Upon payment by the
Company, its successors or permitted assigns, of all indebtedness and liability
of the Company to the Secured Party secured hereby and the fulfilment of all
other obligations of the Company to the Secured Party secured hereby and
termination of the Company's guarantee given pursuant to the Indenture and
provided that the Secured Party is then under no obligation (conditional or
otherwise) to make any further loan or extend any other type of credit to the
Company or the Borrower, the Secured Party shall, upon request in writing by the
Company and at the Company's expense, discharge this debenture.
30. This debenture shall be construed in accordance with and be governed by the
laws of the Province of Ontario. For the purpose of legal proceedings, this
<PAGE>
19.
debenture shall be deemed to have been made in the said Province and to be
performed therein and the courts of that Province shall have jurisdiction over
all disputes which may arise under this debenture. The Company hereby
irrevocably and unconditionally submits to the non-exclusive jurisdiction of
such courts, provided always that nothing herein contained shall prevent the
Secured Party from proceeding at its election against the Company in the courts
of any other province, country or jurisdiction.
31. The headings in this debenture are included for convenience of reference
only, and shall not constitute a part of this debenture for any other purpose.
32. This debenture is in addition to and not in substitution for any other
security now or hereafter held by the Secured Party and shall be general and
continuing security notwithstanding that the indebtedness and liability of the
Company to the Secured Party shall be at any time or from time to time fully
satisfied or paid.
33. This debenture and all its provisions shall enure to the benefit of the
Secured Party, its successors and assigns, and shall be binding on the Company,
its successors and permitted assigns.
34. Any demand or notice by the Secured Party in connection with this debenture
shall be given to the Company c/o SLM International, Inc. at the place and in
accordance with the terms set out in the Indenture for the giving of notices
thereunder.
35. In construing this debenture, terms herein shall have the same meaning as
defined in the Personal Property Security Act (Ontario), unless the context
otherwise requires and capitalized terms not defined herein will have the
meaning attributed to such terms in the Indenture. The word "Company", the
personal pronoun "it" or "its" and any verb relating thereto and used therewith
shall be read and construed as required by and in accordance with the context in
which such words are used depending upon whether the Company is one or more
individuals, corporations or partnerships and, if more than one, shall apply and
be binding upon each of them severally. The term "successors" shall include,
without limiting its meaning, any corporation resulting from the amalgamation of
a corporation with another corporation and, where the Company is a partnership,
any new partnership resulting from the admission of new partners or any other
change in the Company, including, without limiting the generality of the
foregoing, the death of any or all of the partners.
<PAGE>
20.
35. The Secured Party acknowledges that it has entered into an Intercreditor
Agreement (as that term is defined in the Indenture). Notwithstanding the
foregoing, the Grantor agrees and acknowledges that the Intercreditor Agreement
does not provide the Grantor with any rights as a third party beneficiary or
otherwise.
<PAGE>
21.
IN WITNESS WHEREOF the Company has executed this debenture as of the 1st
day of April, 1997.
#1 APPAREL CANADA INC.
By: /s/ D Bruce Randall c/s
----------------------------------------
title - SECRETARY
I Have Authority to Bind the Corporation.
<PAGE>
APPENDIX "A"
Legal description of freehold lands
FIRSTLY
In the Town of Mount Forest, in the County of Wellington and Province of Ontario
and being composed of Part of Lot Thirty-three (33), Concession One (1),
(formerly of the Township of Normanby), Part of Lot Ten (10) and Part of Duke
Street according to Foster's Survey of Part of the said Town of Mount Forest and
being more particularly described as follows:
PREMISING the Northwesterly limit of Sligo Road to have a bearing of North
Forty-five degrees, Thirty Minutes, Zero Zero Seconds East (N45(degree) 30'
00"E) and relating all bearings herein thereto;
COMMENCING at a Standard Iron Bar marking the most Southerly angle of said Lot
Ten (10);
THENCE North Forty-two Degrees, Fifty-six Minutes, Zero Zero Seconds West
(N42(degree) 56' 00"W) along the Northeasterly limit of Perth Street and the
Northwesterly production thereof, in all Eight Hundred and Six point Six One
Feet (806.61) to an Iron Bar planted in the line of a post and wire fence
marking the limit between the said Lot Thirty-three (33), Concession One (1) and
Division Three (3) of Lot Thirty-two (32), Concession One (1), Township of
Normanby;
THENCE North Forty-five Degrees, Zero Six Minutes, Fifty-five Seconds East
(N45(degree) 06' 55"E) along the said post and wire fence, Three Hundred and
Seventy-eight point Zero Eight Feet (378.08) feet to an Iron Bar planted;
THENCE South Forty-two Degrees, Fifty-six Minutes, Zero Zero Seconds East
(S42(degree) 56' 00"E), Eight Hundred and Nine point One Five Feet (809.15 feet)
to an Iron Bar planted in the Northwesterly limit of Sligo Road being also the
Southeasterly limit of the said Lot Ten (10);
THENCE South Forty-five Degrees, Thirty Minutes, Zero Zero Seconds West
(S45(degree) 30' 00"W) along the last mentioned limit, Three Hundred and
Seventy-eight Feet (378.00 feet) to the Point of Commencement, containing by
admeasurement 7.008 acres be the same more or less;
Being the lands described in Instrument No. 47626D.
SECONDLY
In the Town of Mount Forest, in the County of Wellington and Province of Ontario
and being composed of Part of Lot Thirty-three (33), Concession One (1),
(formerly of the Township of Normanby), Part of Lot Ten (10) and Part of Duke
Street (as closed by By-Law No. 2013, registered as Instrument No. 6730D)
according to Foster's Survey of Part of the said Town of Mount Forest and
designated as Part One (1) on Reference Plan No. 60R-1863.
<PAGE>
APPENDIX "B"
List of Equipment
Intentionally blank.
<PAGE>
APPENDIX "C"
Locations where Charged Property Located
MASKA-APPAREL PRODUCTS LOCATIONS
#1 APPAREL CANADA INC. HOLT MANUFACTURING CO., INC.
375 Sligo Road West P.O. Box 2017
P.O. Box 850 2208 Air Park Drive
Mount Forest, Ontario Burlington, N.C. 27216
N0G 2L0 USA
COMDYE INC. KEBEC SUBLIME INC.
33 Louvain Street West 8401 Ray-Lawson Boulevard
Montreal, Quebec Anjou, Quebec
H2N 1B2 H1J 1K6
CONFECTION ST-MATHIEU KNITRAMA FABRICS
3125 Bernard Pilon 7801 Jarry East
Loc. H-8 Anjou, Quebec
St-Mathieu de Beloeil, Quebec H1J 1H3
J3G 4S5
CORALTEX INC. PETE'S CRESTING LTD.
800 Melchers 1 Adelaide St. N., Unit 13
Berthierville, Quebec London, Ontario
J0K 1A0 N6B 3P8
CREATION JADE INC. PRIMOTEX KNITTING INC.
5699, rue Principale 432 Isabey
Ascot Corner, Quebec St-Laurent, Quebec
J0B 1A0 H4T 1V3
DANSK PRO-JOY
Marsvej 7-9 530 Governors Road
DK-7430, IKAST Guelph, Ontario
DENMARK N1K 1E3
FIN-PRINT INC. TRICOTS J.T.S.
530 Governors Road 500 Sauve West #104A
Guelph, Ontario Montreal, Quebec
N1K 1E3 H3L 1Z8
CCM-HARDGOODS PRODUCTS LOCATIONS
BECKWITH BEMIS INC. LAMINATED TEXTILES LTD.
1145 Belanger (LAMTEX)
Sherbrooke, Quebec 155 Signet Drive
J1K 2B1 Weston Ontario
M9L 1V1
SONATEX LAMINATING INC. TEXTILES M.T.C. LTEE
3335 North Service Road 5575 Casgrain
Unit 2-3 Montreal, Quebec
Burlington, Ontario H2T 1Y1
L7N 3G2
3030 Ste-Anne Boulevard
Beauport, Quebec
G1E 6N1
TO: THE BANK OF NEW YORK
DELIVERY AGREEMENT
WHEREAS #1 APPAREL CANADA INC. (hereinafter called the "Company") has
guaranteed in favour of THE BANK OF NEW YORK for its own benefit and for the
benefit of the Holders (as defined in the Indenture) (hereinafter called the
"Secured Party") the liabilities and obligations under (i) a Senior Secured Note
Indenture dated as of April 1, 1997, among SLM International, Inc. (the
"Borrower"), Sport Maska Inc., Maska U.S., Inc., #1 Apparel, Inc., #1 Apparel
Canada Inc., SLM Trademark Acquisition Corp., SLM Trademark Acquisition Canada
Corporation and the Secured Party (which as amended, supplemented or restated
from time to time is herein called, the "Indenture"), (ii) the Securities (as
defined in the Indenture) and (iii) the Collateral Documents (as defined in the
Indenture) and, as security for its guarantee (given pursuant to Article 10 of
the Indenture) the "Guarantee") the Company has agreed to execute and deliver to
the Secured Party a debenture in the principal amount of SEVENTY-FIVE MILLION
DOLLARS ($75,000,000) for the purpose of securing payment or performance of any
and all indebtedness, obligations and liabilities, joint or several, of the
Company to the Secured Party pursuant to the Guarantee and any security
therefor, whether as principal or surety (all of which present and future
indebtedness, obligations and liabilities are hereinafter collectively called
the "Obligations");
NOW THEREFORE in consideration of the foregoing and for other good and
valuable consideration the Company hereby agrees with the Secured Party as
follows:
1. Delivery. The Company herewith delivers to the Secured Party a
debenture of the Company in the principal amount of SEVENTY-FIVE MILLION
DOLLARS ($75,000,000) bearing interest at the rate of TWENTY-FIVE PERCENT
(25%) per annum from the date hereof and a related charge/mortgage of land
in the form prescribed by the Land Registration Reform Act (Ontario) having
attached thereto as a schedule and incorporating as a part thereof a copy
of the said debenture (hereinafter as they may each be amended,
supplemented or restated from time to time collectively called the
"Debenture"), charging by way of a fixed and specific mortgage and charge
and granting security interests in certain property and assets of the
Company and charging by way of a floating charge and granting a security
interest in all the undertaking, property and assets of the Company (except
as therein provided).
2. Continuing Security. The Debenture shall be held by the Secured
Party as general and continuing security to secure payment and performance
of the whole of the Obligations as existing from time to time and any
ultimate unpaid balance of any indebtedness forming part of the Obligations
notwithstanding any change in:
<PAGE>
(a) the nature or form of the Obligations;
(b) the accounts or the bills of exchange, promissory notes
and/or other obligations evidencing or creating the Obligations or any
part thereof;
(c) the names of the parties to the accounts or to the said
bills, notes and/or obligations; or
(d) the name or constitution of the Company,
and notwithstanding the opening of any new account and the closing in the books
of the Company or the Secured Party of any other account with respect to the
Obligations or any part thereof.
3. Default. Upon the occurrence of an Event of Default (as defined
under the Indenture), the Secured Party may forthwith without notice,
without demand for payment, without advertisement and without any other
formality (all of which are hereby waived), but in accordance with
applicable law, enforce any and all security which it may hold including,
without limitation, the Debenture. All rights and remedies of the Secured
Party may be exercised independently or in combination. The rights and
remedies specified herein shall be in addition to and not in substitution
for any other rights and remedies of the Secured Party at law or in equity
or otherwise.
4. Application of Payments. Unless the provisions of the Indenture
require otherwise, any and all payments made in respect of the Obligations
may be applied on such part or parts of the Obligations as the Secured
Party may see fit. The Secured Party shall at all times and from time to
time have the right to change any appropriation of any moneys received by
it and to reapply the same on any other part or parts of the Obligations as
the Secured Party may see fit, notwithstanding any previous application by
whomsoever made.
Upon any sale of the Charged Assets (as defined in the Debenture) by the
Secured Party (including, without limitation, pursuant to a power of sale
granted by statute or under a judicial proceeding) the receipt of the
Secured Party or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Charged Assets so sold and
such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Secured
Party or such officer or be answerable in any way for the misapplication
thereof.
5. Dealings by the Secured Party. The Secured Party may grant
extensions, take and give up securities, accept compositions, grant
releases and discharges and otherwise make arrangements with the Company
and deal with other persons and securities as the Secured Party may see fit
without prejudice to the liability of the Company or the Secured Party's
right to hold, deal with and realize the security of the Debenture.
<PAGE>
6. No Merger. The Debentures shall not operate by way of merger of any
indebtedness or liability of the Company or any other person or persons to
the Secured Party hereunder or under any document or negotiable instrument
by which the same may now or at any time hereafter be represented or
evidenced. No judgment recovered by the Secured Party shall operate by way
of merger of or in any way affect the security created by the Debenture or
the Secured Party's rights to interest as aforesaid.
7. Additional Security. This agreement and the security afforded by
the Debenture shall be in addition to and not in replacement of or
substitution for any security now or hereafter held by the Secured Party in
respect of any indebtedness, liabilities or obligations, present or future,
of the Company to the Secured Party or any part thereof, and shall not be
prejudiced by any such security or by any exchange, release or variation of
any such security.
8. Expenses. All reasonable expenses (including without limitation
legal fees on a solicitor and his own client basis and the fees and
expenses of any receiver or receiver and manager appointed under the
provisions of the Debenture) incurred by the Secured Party in connection
with:
(a) the preparation and registration of the Debenture;
(b) recovering or enforcing payment or performance of all or part
of the Obligations (including without limitation expenses incurred in
considering and protecting or improving its position, or attempting to
do so, whether before or after default); and
(c) realizing upon or otherwise dealing with the assets charged
by the Debenture (including without limitation expenses of taking
possession, protecting, preparing for sale and realizing upon any such
assets),
shall be payable upon demand, shall be added to and shall be deemed to be a
part of the Obligations, shall bear interest at the Interest Rate provided
for in the Indenture and the payment thereof shall be secured by the
Debenture.
9. No Obligation to Advance. Notwithstanding anything in this
agreement or in the Debenture contained, the Secured Party shall not be
obligated thereby to make any loan or other extension of credit or further
loan or extension of credit or to extend anytime for payment or performance
of all or any part of the Obligations.
10. Interest. Any provision of the Debenture or of this agreement
notwithstanding, payment by the Company of interest on all indebtedness
comprising, or forming part of, the Obligations at the current rate at
which such indebtedness may
<PAGE>
bear interest for any period of time shall constitute satisfaction of
interest on the Debenture for the equivalent period of time.
11. Sale of Debenture. Any sale, transfer, delivery, negotiation or
assignment of the Debenture by the Secured Party will be made subject to
the provisions of this agreement.
12. Claims Under Debenture. Neither the Secured Party nor any
subsequent holder of the Debenture shall, at any time, claim payment under
the Debenture (whether for principal, interest or both) in an amount
greater than the amount of the indebtedness forming part of the Obligations
at such time. Notwithstanding that the Debenture is stated to be payable on
demand, no demand for payment shall be made under the Debenture unless
demand is concurrently being made, or has been made, for payment of
indebtedness forming part of the Obligations in an amount not less than the
amount demanded under the Debenture.
13. Discharge. Upon payment and performance by the Company of the
Obligations, the Secured Party shall, upon request in writing by the
Company delivered to the Secured Party at a time when the Secured Party is
under no obligation (conditional or otherwise) to make any loan or extend
any other type of credit to the Company or the Borrower under the
Indenture, the Securities or the Collateral Documents, and at the expense
of the Company, discharge the Debenture and upon the delivery by the
Secured Party to the Company of a discharge of the Debenture, this
agreement shall be terminated.
14. Set-Off. The Company grants to the Secured Party the right to set
off against any and all accounts, credits or balances maintained by it with
the Secured Party the Obligations or any part thereof when due and payable.
15. Illegality. If one or more of the provisions of this agreement
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions shall not in any
way be affected or impaired.
16. Benefit of the Holders. All covenants and agreements herein shall
be for the benefit of the Secured Party and the Holders (as defined in the
Indenture).
<PAGE>
17. Gender and Headings. Words importing the singular include the
plural and vice versa and words importing gender shall include all genders.
The headings in this agreement are included for convenience of reference
only, and shall not constitute a part of this agreement for any other
purpose. Capitalized terms not defined in this agreement will have the
meaning attributed to such terms in the Indenture.
IN WITNESS WHEREOF this agreement has been executed by the Company as of
the 1st day of April, 1997.
#1 APPAREL CANADA INC.
By: /s/ D. BRUCE RANDALL c/s
---------------------------
Title-Secretary
Maska U.S., Inc.
#1 Apparel, Inc.
SLM Trademark Acquisition Corp.
Sport Maska Inc.
#1 Apparel Canada Inc.
SLM Trademark Acquisition Canada Corporation
Mitchel and King Skates Limited
Sport Maska Europe S.A.R.L.
Buddy L. International Ltd.
Buddy L. St. Thomas, Inc.
Consumer InfoMarketing, Inc.
Maska H.K. Limited
Smedley (Hong Kong) Limited (f/k/a Buddy L. (Hong Kong) Limited)
Smedley Industries, Inc. (f/k/a/ Buddy L., Inc.)
The Toy Factory, Inc.
St. Lawrence Manufacturing Canada Inc.
