Possession and Care of Object of Pledge
The creditor cannot use the thing pledged,
Art. 2110. If the thing pledged is returned by the pledgee to
the pledgor or owner, the pledge is extinguished. Any
stipulation to the contrary shall be void.
If subsequent to the perfection of the pledge, the thing is in
the possession of the pledgor or owner, there is a prima facie
presumption that the same has been returned by the
pledgee. This same presumption exists if the thing pledged is
in the possession of a third person who has received it from
the pledgor or owner after the constitution of the pledge.
Art. 2098. The contract of pledge gives a right to the creditor
to retain the thing in his possession or in that of a third
person to whom it has been delivered, until the debt is paid.
Art. 2109. If the creditor is deceived on the substance or
quality of the thing pledged, he may either claim another
thing in its stead, or demand immediate payment of the
principal obligation. (n)
Art. 2100. The pledgee cannot deposit the thing pledged with
a third person, unless there is a stipulation authorizing him
to do so.
The pledgee is responsible for the acts of his agents or
employees with respect to the thing pledged. (n)
Art. 2104.
without the authority of the owner, and if he should do so,
or should misuse the thing in any other way, the owner may
ask that it be judicially or extrajudicially deposited. When the
preservation of the thing pledged requires its use, it must be
used by the creditor but only for that purpose.
Art. 2105. The debtor cannot ask for the return of the thing
pledged against the will of the creditor, unless and until he
has paid the debt and its interest, with expenses in a proper
case
Art. 2107. If there are reasonable grounds to fear the
destruction or impairment of the thing pledged, without the
fault of the pledgee, the pledgor may demand the return of
the thing, upon offering another thing in pledge, provided
the latter is of the same kind as the former and not of inferior
quality, and without prejudice to the right of the pledgee
under the provisions of the following article.
The pledgee is bound to advise the pledgor, without delay,
of any danger to the thing pledged. (n)
Art. 2108. If, without the fault of the pledgee, there is danger
of destruction, impairment, or diminution in value of the
thing pledged, he may cause the same to be sold at a public
sale. The proceeds of the auction shall be a security for the
principal obligation in the same manner as the thing
originally pledged. (n)
Art. 2109. If the creditor is deceived on the substance or
quality of the thing pledged, he may either claim another
thing in its stead, or demand immediate payment of the
principal obligation. (n)
Art. 2110. If the thing pledged is returned by the pledgee to
the pledgor or owner, the pledge is extinguished. Any
stipulation to the contrary shall be void.
If subsequent to the perfection of the pledge, the thing is in
the possession of the pledgor or owner, there is a prima facie
presumption that the same has been returned by the
pledgee. This same presumption exists if the thing pledged is
in the possession of a third person who has received it from
the pledgor or owner after the constitution of the pledge.
CHAPTER 2
MOVABLE PROPERTY
Art. 416. The following things are deemed to be personal
property:
(1) Those movables susceptible of appropriation which are
not included in the preceding article;
(2) Real property which by any special provision of law is
considered as personal property;
(3) Forces of nature which are brought under control by
science; and
(4) In general, all things which can be transported from place
to place without impairment of the real property to which
they are fixed. (335a)
Art. 417. The following are also considered as personal
property:
(1) Obligations and actions which have for their object
movables or demandable sums; and
(2) Shares of stock of agricultural, commercial and industrial
entities, although they may have real estate. (336a)
Art. 418. Movable property is either consumable or
nonconsumable. To the first class belong those movables
which cannot be used in a manner appropriate to their
nature without their being consumed; to the second class
belong all the others. (337)
Art. 2125. In addition to the requisites stated in Article 2085,
it is indispensable, in order that a mortgage may be validly
constituted, that the document in which it appears be
recorded in the Registry of Property. If the instrument is not
recorded, the mortgage is nevertheless binding between the
parties.
The persons in whose favor the law establishes a mortgage
have no other right than to demand the execution and the
recording of the document in which the mortgage is
formalized.

Art. 2126. The mortgage directly and immediately subjects

the property upon which it is imposed, whoever the
possessor may be, to the fulfillment of the obligation for
whose security it was constituted. (1876)

PPSA
Art. 2140. By a chattel mortgage, personal property is
recorded in the Chattel Mortgage Register as a security for
the performance of an obligation. If the movable, instead of
being recorded, is delivered to the creditor or a third person,
the contract is a pledge and not a chattel mortgage.
Personal Property Security Agreement
A. Introduction and General Concepts Civil Code Art. 2140
Republic Act No. 11057,
Sec. 2. – declaration of policy; promote econ activity;
access to least cost credit
Sec. 66, - repeal sec 1-15 of CM law; NCC prov; others
Sec. 60-62, Congressional oversight; Interpretation;
IRR
Sec. 67, - effectivity
Sec. 68, - implementation conditioned on
establishment of registry
Sec. 65. – separability clause
B. Scope of the PPSA
Sec. 4. – scope; obligation; security using movable
collateral; exceptions;
C. Security Interest
Sec. 3. (j) - defn: security interest
Sec. 3 (c)- defn: grantor – 4 instances
Sec. 3 (i) - defn: secured creditor
Sec. 9 – continuity of security interest – except:
sec21(transfree in GF) or agreement
Sec. 8 – right to proceeds; commigled funds
1. Security interest extends to
traceable/identifiable proceeds
2. Money commingled
a. Extend to funds
b. Limited to amount
c. If balance is less – limited to lowest
amount of commingled funds…
Sec. 3 (f) - defn: proceeds – from collateral
Civil Code, Art. 2126
1. Creation
R.A. No. 11057, Sec. 5 – Creation of a security interest: a. by
security agreement, b. in future properties
a. Object
Sec. 4 – scope: movable collateral
Sec. 5 – includes future prop
Civil Code,
Art. 416, Art. 417 – immovable prop
CASES:
Makati Leasing & Finance Corporation v. Wearever
Textile Mills, Inc. & Court of Appeals, G.R. No. L-58469,
May 16, 1983, 122 SCRA 296.
Manila Banking Corporation v. Teodoro, Jr. and
Teodoro, G.R. No. 53955, January 13, 1989, 169 SCRA
95.
Yau Chu v. Court of Appeals et al., G.R. No. L-78519,
September 26, 1989, 177
SCRA 793.
b. Form
Sec. 6 – written contract signed by parties; maybe 1 or
more writings; language -any
Sec. 3 (k) – denf – “writing” includes electronic records
Sec. 7 – Description of collateral – reasonably
identifies
c. Asset-Specific Rules - Accounts Receivable
Sec. 10 – Contractual Limitation on creation of a
security interest; right of a grantor to create security interest
d. Disclosure of Information by Secured Creditor
Sec. 37 – Disclosure of information; creditor to supply
information; creditor may require payment of fee for
information
2. Perfection
Sec. 11 – perfection of a security interest: refers to
sec12; perfection -> effective against 3rd persons
Sec. 25 – Fixtures, accessions, commingled goods –
security continues if it can be reasonably traced
Sec. 12 – means of perfection – registration,
possession of collateral or control of property
Sec. 15 - Change in means of perfection – remains
perfected
Civil Code, Art. 2125. - recording
R.A. No. 11057, Sec. 13 – Perfection by control:
a. deposit account/investment property – 3
instances
Sec. 3. (b) – control agreement
a. Disposition of Perfected Security Interest
Sec. 9 – continuity of SI
Sec. 21 – GF transferee exception
Sec. 14 – Perfection in Proceeds of a collateral;
Different means -> a. in money; b. not in money
Sec. 3 (f) – defn: proceeds
b. Assignment of Security Interest
Sec. 16. – Assignment of Security Interest: an
amendment notice may be registered
D. The Registry
Sec. 26 – Est. Electronic Registry- by LRA
Sec. 64 – Funds: from funds collected by LRA
Sec. 38 – Fees
Sec. 27 – Public Record: info in registered notice
Sec. 35 – Duties of Registry; admin in nature
Sec. 28-31 – Notice; *read more
Sec. 44 – civil and criminal penalties-malicious
registration/search
Sec. 36.
Sec. 32-34
Sec. 39- 43

E. Priority of Security Interest

Sec. 17-22
Sec. 3 (g), Sec. 23
PCI Leasing & Finance, Inc. v. Trojan Metal Industries Inc., et
al., G.R. No. 176381, December 15, 2010, 638 SCRA 615.
Sec. 24
Markets[show]
F. Enforcement of Security Interest Sec. 47, Sec. 63
Sec. 46, Sec. 48
Instruments[show]
Citibank, N.A. & Investors Finance Corporation v. Sabeniano,
G.R. No. 156132, October 12, 2006, 504 SCRA 378.
Sec. 49-51 Corporate[show]

Sec. 45
Paray & Espeleta v. Rodriguez, et al., G.R. No. 132287, Personal[show]

January 24, 2006, 479 SCRA 571.

Sec. 52-54 Public[show]
G. Transitional Provisions Sec. 55-59
Banking[show]

Regulation · Financial law[show]

Security interest Economic history[show]

From Wikipedia, the free encyclopedia
Jump to navigationJump to search
 v
Finance
 t
 e

A security interest is a legal right granted by a debtor to a creditor over

the debtor's property (usually referred to as the collateral[1]) which enables
the creditor to have recourse to the property if the debtor defaults in
making payment or otherwise performing the secured obligations.[2] One
of the most common examples of a security interest is a mortgage: When
person, by the action of an expressed conveyance, pledges by a promise
to pay a certain sum of money, with certain conditions, on a said date or
dates for a said period, that action on the page with wet ink applied on
the part of the one wishing the exchange creates the original funds and
negotiable Instrument. That action of pledging conveys a promise binding
upon the mortgagee which creates a face value upon the Instrument of
the amount of currency being asked for in exchange. It is therein in good
faith offered to the Bank in exchange for local currency from the Bank to
buy a house. The particular country's Bank Acts usually requires the
Banks to deliver such fund bearing negotiable instruments to the
Countries Main Bank such as is the case in Canada. This creates a
security interest in the land the house sits on for the Bank and they file a
caveat at land titles on the house as evidence of that security interest. If
the mortgagee[clarification needed]fails to pay defaulting in his promise to repay
the exchange, the bank then applies to the court to for-close on your
property to eventually sell the house and apply the proceeds to the
outstanding exchange.[3]
Although most security interests are created by agreement between the
parties, it is also possible for a security interest to arise by operation of
law.[4] For example, in many jurisdictions a mechanic who repairs a car
benefits from a lien over the car for the cost of repairs. This lien arises by
operation of law in the absence of any agreement between the parties.
Most security interests are granted by the person who owns the property
to secure their own indebtedness. But it is also possible for a person to
grant security over their property as collateral for the debts of another
person (often called third party security).[5] So a parent might grant a
security interest over their home to support a business loan being made
to their child. Similarly, most security interests operate to secure debts or
other direct financial obligations. But sometimes a security is granted to
secure a non-financial obligation. For example in construction
a performance bond may secure the satisfactory performance of non-
financial obligations.
The different types of security interest which can arise and the rights
which they confer will vary from country to country.[6]
Personal Property Security Act
(Canada)
From Wikipedia, the free encyclopedia
Jump to navigationJump to search
The Personal Property Security Act ("PPSA") is the name given to
each of the statutes passed by all common law provinces, as well as the
territories, of Canada. They regulate the creation and registration
of security interests in all personal property within their respective
jurisdictions.
It is similar in structure to Article 9 of the Uniform Commercial Code in the
United States, but there are important differences.[1]
Contents
 1PPSA regime
o 1.1Personal property subject to the Act
o 1.2Creation of security interests
o 1.3Purchase money security interests (PMSIs)
o 1.4Creation of "super-priorities"
o 1.5The PPSA and land
o 1.6Priorities of security interests
 2Regime under Québec legislation
 3Security interests created under Federal legislation
 4Conflicts between provincial PPSAs and federal legislation
 5Resources by province
 6Notable cases
 7Documents
 8References
PPSA regime[edit]
The legislation that implemented the PPSA scheme was first introduced
in Ontario, followed by the remaining provinces and territories (which
followed a newer uniform model with notable differences). The Atlantic
provinces, together with the Northwest Territories and Nunavut, have fully
computerized registries, while the others have varying degrees of
electronic and paper registration. The following is a brief outline of how
the regime generally works.
Personal property subject to the Act[edit]
The scope of the Act is extremely broad, as it is concerned with every
transaction which in substance creates a security interest, without regard
to its form and without regard to the person who has title to the collateral.
There are small differences between the provinces as to how far this
extends, but the concept is basically the same. That said, however, there
are some items that are specifically excluded: Type of interest Collateral

 liens
 interests in annuities and insurance policies
Loan to purchase goods The goods
 interests in land (other than interests arising under a license),
including leases
 assignments for the general benefit of creditors
 interests in any compensation for labour or personal services Sale of goods The goods

Personal property is classified into the following categories:

Leases (terms > 1 year) The leased asset
 goods (further classified into consumer goods, equipment
and inventory)
 instruments
 documents of title Consignment of goods The goods
 chattel paper (including leases and conditional sales
contracts) Creation of "super-priorities"[edit]
 securities
 money In specified circumstances, PPSA registrants can obtain
 intangibles (licenses and any other matter not included "super-priority" status over other secured parties, when the
above) following steps are taken:

Creation of security interests[edit]

Collateral Steps to take
Security interests are created through attachment, which can be
followed on by perfection.
Attachment occurs when Inventory Perfection at the time of possession,
provided that notice has been given to
 value is given, other secured parties before registration
 the debtor has rights in the collateral, and (and possession by the debtor)
 it is enforceable against third parties.
Perfection can occur by possession of the collateral, or by
registration. In certain circumstances, possession can be Intangibles Perfection no later than the specified
considered to be the superior form of perfection. number of days after attachment
Purchase money security interests (PMSIs)[edit]
A PMSI is a special type of security interest taken in
Other than the Perfection no later than the specified
collateral by a party who gives value for the purpose of
enabling the debtor to acquire rights in the collateral. Some above number of days after possession by the
examples are: debtor
The PPSA and land[edit]
PPSA security interests can have priority over real property Competing interests First interest to attach
security interests against fixtures, when the secured party are both unperfected
registers notice against the land at the local registry or land
titles office. Where attachment occurs before the affixation to
the land, the interest will have priority, However, where One interest is Perfected interest
attachment occurs after affixation, the interest is subordinate perfected, and the
unless where the debtor otherwise consents. other is unperfected
Other intersections can also occur with interests in land. For
example, a lender that grants a mortgage over a rental
property will also register a PPSA security interest against
the rents being generated, in order to attorn the rents in the
Regime under Québec
event the mortgage goes into default. legislation[edit]
Priorities of security interests[edit] For moveable property in Québec, secured creditors create
their security interests by way of hypothec through
In the absence of any other special priority rules, the general
the Registre des droits personnels et réels
order of priority is as follows:
mobiliers(RDPRM).[2][3]

Event Priority given Security interests created under

Federal legislation[edit]
Competing interests First interest to register Federal legislation has also created certain security interests
are perfected by that may take precedence over provincial legislation.[4] They
registration notably include:

 Bank Act security for loans granted by banks

 interests in patents, copyrights and trademarks
Competing interests First interest to perfect
 interests in railway and rolling stock
are perfected other
 federal property
than by registration
 matters relating to Indians and Indian lands
 deemed trusts under taxation laws
 priorities of claims under bankruptcy and insolvency laws
One interest is Registered interest takes priority if
perfected by registered and perfected before the
registration, and the other is perfected. Interest perfected Conflicts between provincial
other interest other other than by registration takes PPSAs and federal
than by registration priority if it is perfected prior to the
registration of the other interest.
legislation[edit]
S. 89(1) of the Indian Act governs the application of
security interests on reserves:
 “ 89. (1) Subject to this Act, the real and
personal property of an Indian or a band
situated on a reserve is not subject to charge,
Ontario RSO 1990,
c. P.10
Service Ontario

pledge, mortgage, attachment, levy, seizure,

distress or execution in favour or at the
New Brunswick SNB 1993, ACOL (electronic
instance of any person other than an Indian or
a band.[5] ” c. P-7.1 service only)

Recent jurisprudence[6] has tended to restrict how this

provision should be applied.[7] Nova Scotia SNS 1995- ACOL (electronic
96, c. 13 service only)
There can also be complex interplay with security
interests under admiralty law.[8]

SPEI 1997, ACOL (electronic

Resources by province[edit] Prince Edward
Island c.33, also service only)
referred
PPSA Provincial registry or to as c. P-
Province 3.1
Citation agent

British Columbia RSBC BC Registry Services Newfoundland SNL 1998, ACOL (electronic
1996, c. and Labrador c. P-7.1 service only)
359

Yukon RSY 2002, ACOL (electronic

Alberta RSA 2000, Service Alberta c. 169 service only) as of
c. P-7 Registries June 27, 2016.
Online (registration
through agents only)
Northwest SNWT ACOL (electronic
Territories 1998, c.8 service only)
Saskatchewan SS 1993, c. Information Services
P-6.2 Corporation
Nunavut As NWT ACOL (electronic
service only)
Manitoba CCSM c. The Property Registry
P35 of Manitoba
Notable cases[edit]
 Bank of Montreal v. Innovation Credit Union
Documents[edit]
 John R. Sandrelli, Christopher J. Ramsay and Anjili
I. Bahadoorsingh,Remedies under Security Interests
in Canada: An Overview (2002-09-18)
 Roderick J.Wood,The Concept of a Security Interest:
The Canadian Experience (2011-08-18)
References[edit]
1. ^ Daryl E. Clark (2003). "Revised Article 9 and the
PPSA - A comparison of the American and Canadian
secured property legal regimes". The Secured
Lender (as reprinted at the CBS Interactive Business
Network Resource Library). Retrieved 2011-09-29.
2. ^ Kiriakoula Hatzikiriako (Summer 2010). "An attempt
to "demystify" Québec secured transactions law (Part
I)" (PDF). ABA Commercial Law Newsletter as
reprinted by McMillan LLP. Retrieved 2011-09-13.
3. ^ "Registre des droits personnels et réels mobiliers".
Archived from the originalon 2011-10-29.
Retrieved 2011-09-13.
4. ^ "Federal Security Interests: Contract #99-08-
2" (PDF). Fraser Milner Casgrainunder contract to the
Law Commission of Canada. June 2000.
Retrieved 2011-09-14.
5. ^ "Indian Act (R.S.C., 1985, c. I-5), s. 89".
6. ^ McDiarmid Lumber Ltd. v. God's Lake First
Nation 2006 SCC 58, [2006] 2 SCR 846 (15
December 2006)
7. ^ Anita G. Wandzura (2007). "The Enforcement of
Security Interests Against the Personal Property of
First Nations Persons on a Reserve". Ottawa Law
Review. University of Ottawa. 39 (1). Archived
from the original on 2013-12-02.
8. ^ Christopher J. Giaschi. "Summary of Canadian Law
of Priorities". Archived from the original on 2002-06-
16. Retrieved 2011-09-30.
2. RYERSON CANADA, INC.
3. as Grantor
4. - and -
5. BANK OF AMERICA, N.A. (acting through its Canada branch)
6. as Canadian Agent
7.
8.
9. GENERAL SECURITY AGREEMENT
10.
11.
12. Dated as of October 19, 2007
13.
14. Execution Copy
15. GENERAL SECURITY AGREEMENT
16. General security agreement dated as of October 19, 2007 between Ryerson
Canada, Inc. (the “Grantor”) and Bank of America, NA. (acting through its
Canada branch), in its capacity as Canadian Agent for the benefit of the
Canadian Secured Parties (in such capacity together with any successor in
such capacity, the “Canadian Agent”).
17. WHEREAS the Lenders have agreed to make certain Loans available to the
Grantor upon the terms and conditions contained in a credit agreement
among, inter alia, the Grantor, as Canadian Borrower, Rhombus Merger
Corporation (to be merged with and into Ryerson Inc.) and Joseph T.
Ryerson & Son, Inc., as U.S. Borrowers, the financial institutions party
thereto, as Lenders, Bank of America, NA., as Administrative Agent and the
Canadian Agent dated as of the date hereof (such credit agreement as it may
at any time or from time to time, be amended, supplemented, restated or
replaced, the “Credit Agreement”);
18. AND WHEREAS the Grantor has agreed to execute and deliver this
security agreement to and in favour of the Canadian Agent as security for
the payment and performance of the Grantor’s obligations to the Canadian
Agent and the other Canadian Secured Parties under or in connection with
the Credit Agreement and the other Credit Documents to which the Grantor
is a party;
19. NOW THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which
are acknowledged by the parties, the parties agree as follows:
20. ARTICLE 1
21. SECURITY
22. Section 1.01 Terms Incorporated by Reference.
23. In this security agreement, “PPSA” shall mean the Personal Property
Security Act as in effect from time to time in the Province of Ontario;
 provided that, if validity, perfection or the effect of perfection or non-
perfection or the priority of the security interest granted by the Grantor in
any collateral and the rights and remedies of the Canadian Agent are
governed by the PPSA or other similar legislation as in effect in a
jurisdiction other than Ontario, then “PPSA” shall mean the Personal
Property Security Act or other similar legislation as in effect from time to
time in such other jurisdiction for purposes of the provisions hereof relating
to such validity, perfection, effect of perfection or non-perfection or priority
and to such rights and remedies. As used herein the following term shall
have the meaning specified in the section of the PPSA set forth in the
column beside it below:
24.
Term PPSA
Control 1(2)
25.
26. Other terms defined in the PPSA and used in this security agreement shall,
unless otherwise defined herein, have the same meaning as ascribed to such
terms in the PPSA.
27. The Canadian Agent and each Canadian Secured Party agree that the
Perfection Certificate and all descriptions of Collateral, schedules,
amendments and supplements thereto are and shall at all times remain a part
of this security agreement. For the purposes hereof; “Perfection
Certificate” shall mean that certain perfection certificate dated on or about
the date hereof executed and delivered by the Grantor in favour of the
Canadian Agent for the benefit of the Canadian Secured Parties.
28. Section 1.02 Grant of Security.
29. Subject to Section 1.05, as collateral security for the payment and
performance in full of its Obligations (as hereinafter defined), the Grantor
hereby pledges and grants to the Canadian Agent for the benefit of the
Canadian Secured Parties, a lien on and security interest in all of its right,
title and interest in, to and under the following property, wherever located,
and whether now existing or hereafter arising or acquired from time to time
(collectively, the “Collateral”):
30.
(1) (a) all accounts and (b) other rights to payment for inventory or related
services to the extent evidenced by chattel paper or instruments;
31.
(ii) all inventory or documents of title for any inventory;
32.
(iii)all money and all deposit accounts;
33.
(iv)all intangibles pertaining to the items referred to in clauses (i) through
(iii) above, including, without limitation, all contingent rights with respect to
warranties on inventory or accounts;
34.
(v) all records, supporting obligations and related Letters of Credit and rights
under Letters of Credit, pertaining to the items referred to in clauses
(i) through (iv) above, commercial tort claims (including commercial tort
claims described on Schedule 12 of the Perfection Certificate) or other claims
and causes of action, in each case, pertaining to the items referred to in clauses
(i) through (iv) above;
35.
(vi)all books and records relating to the Collateral referred to in clauses
(i) through (v) above; and
36.
(vii)substitutions, replacements, accessions, products and proceeds (including,
without limitation, insurance proceeds, licenses, royalties, income, payments,
claims, damages and proceeds of suit) of any or all of the foregoing, only to
the extent any of the foregoing would constitute property of the type
described in clauses (i) through (vi) above.
37. Section 1.03 Obligations Secured.
38. (1) The security interest granted hereby (the “Security Interest”) secures
the payment and performance of all of the Canadian Obligations (as such
term is defined in the Credit Agreement) of the Grantor (collectively, the
“Obligations”).
39.
40. - 2 -
41.
42. Section 1.04 Attachment.
43. (1) The Grantor acknowledges that (i) value has been given, (ii) it has rights
in the Collateral (other than after-acquired Collateral) or the power to
transfer rights in the Collateral (other than after-acquired Collateral) to the
Canadian Agent, (iii) it has not agreed to postpone the time of attachment of
the Security Interest, and (iv) it has received a duplicate original copy of
this security agreement.
44. Section 1.05 Scope of Security Interest.
45. (1) Notwithstanding anything to the contrary contained in Section 1.02, the
Security Interest created hereunder shall not extend to, and the term
“Collateral” shall not include, the following assets (collectively, the
“Excluded Assets” and each, an “Excluded Asset”):
46. (a) any permit, license, contract or other asset issued by a Governmental
Authority to the Grantor or any contract or other agreement to which the
Grantor is a party, in each case, only to the extent and for so long as the
terms of such permit, license, contract or other asset issued by a
Governmental Authority to the Grantor of such contract or other agreement
or any provision of law applicable thereto, validly prohibit the creation by
the Grantor of a security interest in such permit, license or agreement in
favour of the Canadian Agent (after giving effect to the PPSA, any other
applicable law (including the Bankruptcy and Insolvency Act (Canada)) or
principles of equity); and
47. (b) all accounts resulting from the sale or disposition of all property of the
Grantor other than the Collateral and all supporting obligations and books
and records relating thereto,
48. provided, however, that Excluded Assets shall not include any proceeds,
substitutions or replacements of any Excluded Assets referred to in clauses
(a) and (b) (unless such proceeds, substitutions or replacements would
constitute an Excluded Asset referred to in clauses (a) and (b).
49. (2) The Security Interest shall not extend to consumer goods.
50. (3) The Security Interest shall not extend or apply to the last day of the term
of any lease or sublease or any agreement for a lease or sublease, now held
or hereafter acquired by the Grantor in respect of real property, but the
Grantor shall stand possessed of any such last day upon trust to assign and
dispose of it as the Canadian Agent may direct.
51. Section 1.06 Care and Custody of Collateral.
52. (1) The Canadian Agent shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its possession if such
Collateral is treated substantially equivalent to that which the Canadian
Agent, its individual capacity, accords its own property consisting of similar
instruments, it being understood that neither the Canadian Agent nor any of
the Canadian Secured Parties shall have responsibility for taking any
necessary steps to preserve rights against any person with respect to any
Collateral.
53.
54. - 3 -
55.
56. (2) The Canadian Agent may, after the Security Interest shall have become
enforceable, (i) notify any person obligated on an account or on chattel
paper or any obligor on an instrument to make payments to the Canadian
Agent whether or not the Grantor was previously making collections on
such accounts, chattel paper or instruments, and (ii) assume control of any
proceeds arising from the Collateral.
57. Section 1.07 Perfection; Other Actions
58. (1) Financing Statements and Other Filings: Maintenance of Perfected
Security Interest. The Grantor represents and warrants that all financing
statements, agreements, instruments and other documents necessary to
perfect the Security Interest granted by it to the Canadian Agent in respect
of the Collateral have been delivered to the Canadian Agent in completed
and, to the extent necessary or appropriate, duly executed form for filing in
each governmental, municipal or other office specified in Schedule 6 to the
Perfection Certificate. The Grantor agrees that at the sole cost and expense
of the Grantor, the Grantor will maintain the Security Interest created
hereunder in the Collateral as a perfected first priority security interest
subject only to Permitted Liens. Notwithstanding anything contained herein
to the contrary, perfection of the Canadian Agent’s security interest in
money shall not be required other than to the extent it is (1) perfected as
proceeds of collateral or (ii) deposited in a deposit account subject to a
Control of the Canadian Agent.
59. (2) Other Actions. In order to further ensure the attachment, perfection and
priority of, and the ability of the Canadian Agent to enforce, the Canadian
Agent’s Security Interest in the Collateral, the Grantor represents and
warrants as follows and agrees, at the Grantor’s own expense, to take the
following actions with respect to the following Collateral:
60.
(a) Instruments and Tangible Chattel Paper. As of the date hereof, no
amounts payable under or in connection with any of the Collateral are
evidenced by any instrument or tangible chattel paper other than such
instruments and tangible chattel paper listed in Schedule 10 to the
Perfection Certificate. Each instrument and each item of tangible chattel
paper evidencing any of the Collateral listed in Schedule 10 to the
Perfection Certificate has been properly endorsed, assigned and delivered
to the Canadian Agent, accompanied by instruments of transfer or
assignment duly executed in blank. If any amount then payable under or
in connection with any of the Collateral shall be evidenced by any
instrument or tangible chattel paper, and such amount, together with all
amounts payable evidenced by any instrument or tangible chattel paper
evidencing any of the Collateral not previously delivered to the Canadian
Agent exceeds $5,000,000 individually or $10,000,000 in the aggregate
for the Grantor and all Canadian Subsidiary Guarantors, the Grantor
acquiring such instrument or tangible chattel paper shall on or before the
first date of delivery of quarterly financial statements pursuant to
Section 10.1.3(iii) of the Credit Agreement (the “Quarterly Update
Date”) following the receipt thereof by the Grantor endorse, assign and
deliver the same to the Canadian Agent, accompanied by such
instruments of transfer or assignment duly executed in blank as the
Canadian Agent may from time to time specify.
61.
62. - 4 -
63.
(b) Deposit Accounts. As of the date hereof, the Grantor does not have any
deposit accounts other than the accounts listed in Schedule 13 to the
Perfection Certificate. The Canadian Agent has a first priority security
interest in each such deposit account subject as to priority only to
Permitted Liens. The Grantor shall not hereafter establish and maintain
any deposit account unless (1) it shall give the Canadian Agent prompt
written notice that such new deposit account has been established with a
bank and (2) such bank, the Grantor and the Canadian Agent shall within
thirty (30) days of the date of acquisition of such deposit account have
duly executed and delivered to the Canadian Agent a deposit account
control agreement or a blocked account agreement with respect to such
 deposit account, such time to be extended in the Canadian Agent’s
reasonable sole discretion. The Canadian Agent agrees with the Grantor
that the Canadian Agent shall not give any instructions directing the
disposition of finds from time to time credited to any deposit account or
withhold any withdrawal rights from the Grantor with respect to funds
from time to time credited to any deposit account unless a Cash Dominion
Event or an Event of Default has occurred and is continuing. The
provisions of this Section 1.07(2)(b) shall not apply to deposit accounts
(i) for which the Canadian Agent is the bank, (ii) for which all of the
funds on deposit are used for funding (w) payroll, (x) retirement plans and
employee benefits, including rabbi trusts for deferred compensation,
(y) health care benefits and (z) escrow arrangements (e.g., environmental
indemnity accounts), (iii) (not already subject to the provisions of this
paragraph) with an aggregate avenge daily balance of all funds in all such
other deposit accounts for the Grantor and all Canadian Subsidiary
Guarantors not in excess of $10,000,000 at any time and (iv) located
outside of Canada. The Grantor shall not grant Control of any deposit
account to any person other than the Canadian Agent.
64.
(c) Electronic Chattel Paper and Transferable Records. As of the date hereof,
no amount under or in connection with any of the Collateral is evidenced
by any electronic chattel paper other than such electronic chattel paper
and transferable records listed in Schedule 10 to the Perfection
Certificate. If any amount payable under or in connection with any of the
Collateral shall be evidenced by any electronic chattel paper or
transferable record, the Grantor shall on or before the first Quarterly
Update Date following the receipt thereof by the Grantor notify the
Canadian Agent thereof and shall take such action as the Canadian Agent
may reasonably request to vest in the Canadian Agent Control of such
electronic chattel paper or transferable record under the PPSA. The
requirement in the preceding sentence shall not apply to the extent that
such amount, together with all amounts payable evidenced by electronic
chattel paper or transferable record in which the Canadian Agent has not
been vested Control within the meaning of the PPSA, does not exceed
$5,000,000 individually or $10,000,000 in the aggregate for the Grantor
and all Canadian Subsidiary Guarantors. The Canadian Agent agrees with
the Grantor that the Canadian Agent will arrange, pursuant to procedures
satisfactory to the Canadian Agent and so long as such procedures will
not result in the Canadian Agent’s loss of Control, for the Grantor to
make alterations to the electronic chattel paper or transferable record
permitted under the PPSA for a party in control to allow without loss of
control, unless an Event of Default has occurred and is continuing or
would occur after taking into account any action by the Grantor with
respect to such electronic chattel paper or transferable record.
65.
66. - 5 -
67.
(d) Letter-of-Credit Rights. If the Grantor is at any time a beneficiary under a
letter of credit relating to the Collateral now or hereafter issued, the
Grantor shall on or before the first Quarterly Update Date following the
receipt thereof by the Grantor notify the Canadian Agent thereof and the
Grantor shall, at the request of the Canadian Agent, pursuant to an
agreement in form and substance reasonably satisfactory to the Canadian
Agent, either (i) arrange for the issuer and any confirmer of such letter of
credit to consent to an assignment to the Canadian Agent of the proceeds
of any drawing under the letter of credit relating to the Collateral or
(ii) arrange for the Canadian Agent to become the transferee beneficiary
of such letter of credit, with the Canadian Agent agreeing, in each case,
that the proceeds of any drawing under the letter of credit are to be
applied as provided in the Credit Agreement. The actions in the preceding
sentence shall not be required to the extent that the amount of any such
letter of credit, together with the aggregate amount of all other letters of
credit relating to the Collateral for which the actions described above in
clause (i) and (ii) have not been taken, does not exceed $5,000,000
individually or $10,000,000 in the aggregate for the Grantor and all
Canadian Subsidiary Guarantors.
68.
(e) Commercial Tort Claims. As of the date hereof, the Grantor hereby
represents and warrants that it holds no commercial tort claims other than
those listed in Schedule 12 to the Perfection Certificate. If the Grantor
shall at any time hold or acquire a commercial tort claim relating to the
Collateral, the Grantor shall immediately notify the Canadian Agent in
writing signed by the Grantor of the brief details thereof and grant to the
Canadian Agent in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this security agreement, with such
writing to be in form and substance reasonably satisfactory to the
Canadian Agent The requirement in the preceding sentence shall not
apply to the extent that the amount of such commercial tort claim,
together with the amount of all other commercial tort claims relating to
the Collateral held by the Grantor and the Canadian Subsidiary
Guarantors in which the Canadian Agent does not have a security interest,
does not exceed $10,000,000 in the aggregate for the Grantor and all
Canadian Subsidiary Guarantors.
69. Section 1.08 Representations and Covenants.
70. The Grantor represents and warrants to the Canadian Agent, acknowledging
and confirming that the Canadian Agent is relying thereon without
independent inquiry, that:
71. (1) Title. Except for the security interest granted to the Canadian Agent for
the benefit of the Canadian Secured Parties pursuant to this security
agreement and Permitted Liens, the Grantor owns and has rights and, as to
Collateral acquired by it from time to time after the date hereof, will own
 and have rights in each item of Collateral pledged by it hereunder, free and
clear of any and all Liens or claims of others.
72. (2) Validity of Security Interest. The Security Interest in and Lien on the
Collateral granted to the Canadian Agent for the benefit of the Canadian
Secured Parties
73.
74. - 6 -
75.
76. hereunder constitutes (a) a legal and valid security interest in all the
Collateral securing the payment and performance of the Obligations, and
(b) subject to the filings and other actions described in Schedule 6 to the
Perfection Certificate (to the extent required to be listed on the schedules to
the Perfection Certificate as of the date this representation is made or
deemed made) being duly made, a perfected security interest in all the
Collateral, except as otherwise provided herein. The Security Interest and
Lien granted to the Canadian Agent for the benefit of the Canadian Secured
Parties pursuant to this security agreement in and on the Collateral will at
all times constitute a perfected, continuing security interest therein, prior to
all other Liens on the Collateral except for Permitted Liens.
77. (3) Defense of Claims: Transferability of Collateral. The Grantor shall, at its
own cost and expense, defend title to the Collateral pledged by it hereunder
and the security interest therein and Lien thereon granted to the Canadian
Agent and the priority thereof against all material claims and demands of all
persons, at its own cost and expense, at any time claiming any interest
therein adverse to the Canadian Agent or any other Canadian Secured Party
other than Permitted Liens. There is no agreement, order, judgment or
decree, and the Grantor shall not enter into any agreement or take any other
action, that would restrict the transferability of any of the Collateral or
otherwise impair or conflict with the Grantor’s obligations or the rights of
the Canadian Agent hereunder to the extent reasonably likely to have a
Material Adverse Effect and after giving effect to the PPSA, any other
applicable law (including the Bankruptcy and Insolvency Act (Canada)) or
principles of equity.
78. (4) Other Financing Statements. The Grantor has not filed, nor authorized
any third party to file (nor will there be), any valid or effective financing
statement (or similar statement, instrument of registration or public notice
under the law of any jurisdiction) covering or purporting to cover any
interest of any kind in the Collateral, except such as have been filed in
favour of the Canadian Agent pursuant to this security agreement or in
favour of any holder of a Permitted Lien with respect to such Permitted Lien
or financing statements or public notices relating to the termination
statements listed on Schedule 8 to the Perfection Certificate. The Grantor
shall not execute, authorize or permit to be filed in any public office any
financing statement (or similar statement, instrument of registration or
public notice under the law of any jurisdiction) relating to any Collateral,
except financing statements and other statements and instruments filed or to
be filed in respect of and covering the security interests granted by the
Grantor to the Canadian Agent and the holders of the Permitted Liens.
79. (5) Location of Inventory. In no event shall any inventory of the Grantor be
moved to any location except in accordance with the Credit Agreement and
in particular, Section 8.1.1 thereof.
80. (6) Consents. In the event that the Canadian Agent desires to exercise any
remedies, voting or consensual rights or attorney-in-fact powers set forth in
this security agreement and determines it necessary to obtain any approvals
or consents of any Governmental Authority or any other person therefor,
then, upon the reasonable request of the Canadian Agent, the Grantor agrees
to use its best efforts to assist and aid the Canadian Agent to obtain as soon
as practicable any necessary approvals or consents for the exercise of any
such remedies, rights and powers.
81.
82. - 7 -
83.
84. (7) Collateral. All information set forth herein, including the schedules
hereto, and all information contained in any documents, schedules and lists
heretofore delivered to any Canadian Secured Party, including the
Perfection Certificate and the schedules thereto, in connection with this
security agreement, in each case, relating to the Collateral, is accurate and
complete in all material respects.
85. (8) Insurance. In the event that the proceeds of any insurance claim with
respect to any of the Collateral are paid to the Grantor after the Canadian
Agent has exercised its right to foreclose after an Event of Default, such net
cash proceeds shall be held in trust for the benefit of the Canadian Agent
and immediately after receipt thereof shall be paid to the Canadian Agent in
the amount and for application in accordance with the Credit Agreement.
86. (9) Chief Executive Office; Change of Name; Jurisdiction of Organization.
The Grantor will not effect any change (i) to its legal name, (ii) in its
identity or organizational structure, (iii) in its organizational identification
number, if any, or (iv) in its jurisdiction of organization (in each case,
including by merging with or into any other entity, reorganizing, dissolving,
liquidating, reorganizing or organizing in any other jurisdiction), unless
(A) it shall have given the Canadian Agent promptly but in any event within
30 days after such change, written notice clearly describing such change and
providing such other information in connection therewith as the Canadian
Agent may reasonably request and (B) it shall have taken or will promptly
take all action necessary to maintain the perfection and priority of the
Security Interest of the Canadian Agent for the benefit of the Canadian
Secured Parties in the Collateral. The Canadian Agent shall have no duty to
inquire about any of the changes described in clauses (i) through
 (iv) inclusively, the parties acknowledging and agreeing that the Grantor is
solely responsible to take all action described in Section 1.08(9)(B) above.
87. (10) Transfer of Collateral. The Grantor shall not sell, convey, assign or
otherwise dispose of, or grant any option with respect to, any of the
Collateral pledged or charged by it hereunder except as permitted by the
Credit Agreement.
88. ARTICLE 2
89. ENFORCEMENT
90. Section 2.01 Enforcement.
91. (1) The Security Interest shall be and become enforceable against the
Grantor upon the occurrence and during the continuance of an Event of
Default.
92. Section 2.02 Remedies.
93. Whenever the Security Interest has become enforceable, the Canadian
Agent, for the benefit of the Canadian Secured Parties, may realize upon the
Collateral and enforce the rights of the Canadian Agent by:
94.
(a) entry onto any premises where the Collateral consisting of tangible personal
property may be located;
95.
(b) entry into possession of the Collateral by any method permitted by law;
96.
97. - 8 -
98.
(c) sale or lease of all or any part of the Collateral;
99.
(d) collection of any proceeds arising in respect of the Collateral;
100.
(e) collection, realization or sale of; or other dealing with, the accounts;
101.
(f) appointment by instrument in writing of a receiver (which term as used in this
security agreement includes a receiver and manager) or agent of all or any part
of the Collateral and removal or replacement from time to time of any receiver
or agent;
102.
(g) institution of proceedings in any court of competent jurisdiction for the
appointment of a receiver of all or any part of the Collateral;
103.
(h) institution of proceedings in any court of competent jurisdiction for sale or
foreclosure of all or any part of the Collateral;
104.
(i) filing of proofs of claim and other documents to establish claims to the
Collateral in any proceeding relating to the Grantor; and
105.
(j) any other remedy or proceeding authorized or permitted under the PPSA or
otherwise by law or equity.
106. Such remedies may be exercised from time to time separately or in
combination and are in addition to, and not in substitution for, any other
rights of the Canadian Agent however created. The Canadian Agent shall
not be bound to exercise any right or remedy, and the exercise of rights and
remedies shall be without prejudice to any other rights of the Canadian
Agent in respect of the Obligations including the right to claim for any
deficiency. The taking of any action or proceeding or refraining from doing
so, or any other dealings with any other security for the Obligations secured
by this security agreement shall not release or affect the Collateral or the
Security Interest.
107. Section 2.03 Additional Rights.
108. In addition to the remedies set forth in Section 2.02, the Canadian
Agent, for the benefit of the Canadian Secured Parties, may, whenever the
Security Interest has become enforceable:
109.
(a) require the Grantor, at the Grantor’s expense, to assemble the Collateral at a
place or places designated by notice in writing and the Grantor agrees to so
assemble the Collateral;
110.
(b) require the Grantor, by notice in writing, to disclose to the Canadian Agent the
location or locations of the Collateral and the Grantor agrees to make such
disclosure when so required;
111.
(c) repair, process, modify, complete or otherwise deal with the Collateral and
prepare for the disposition of the Collateral, whether on the premises of the
Grantor or otherwise;
112.
113. -9-
114.
(d) carry on all or any part of the business of the Grantor and, to the exclusion of
all others including the Grantor, enter upon, occupy and use all or any of the
premises, buildings, and other property of or used by the Grantor for such
time as the Canadian Agent sees fit, free of charge, and the Canadian Agent
shall not be liable to the Grantor for any act, omission or negligence in so
doing or for any rent charges, depreciation or damages incurred in connection
with or resulting from such action;
115.
(e) borrow for the purpose of carrying on the business of the Grantor or for the
maintenance, preservation or protection of the Collateral and mortgage, grant
or charge a security interest in the Collateral, whether or not in priority to the
Security interest, to secure repayment; and
116.
(f) commence, continue or defend any judicial or administrative proceedings for
the purpose of protecting, seizing, collecting, realizing or obtaining possession
or payment of the Collateral, and give good and valid receipts and discharges
in respect of the Collateral and compromise or give time for the payment or
performance of all or any part of the accounts or any other obligation of any
third party to the Grantor.
117. Section 2.04 Concerning the Receiver.
118. (1) Any receiver appointed by the Canadian Agent shall be vested
with the rights and remedies which could have been exercised by the
Canadian Agent in respect of the Grantor or the Collateral and such other
powers and discretions as are granted in the instrument of appointment and
any supplemental instruments. The identity of the receiver, its replacement
and its remuneration shall be within the sole and unfettered discretion of the
Canadian Agent.
119. (2) Any receiver appointed by the Canadian Agent shall act as
agent for the Canadian Agent for the purposes of taking possession of the
Collateral, but otherwise and for all other purposes (except as provided
below), as agent for the Grantor. The receiver may sell, lease, or otherwise
dispose of Collateral as agent for the Grantor or as agent for the Canadian
Agent as the Canadian Agent may determine in its discretion. The Grantor
agrees to ratify and confirm all actions of the receiver acting as agent for
the. Grantor, and to release and indemnify the receiver in respect of all such
actions.
120. (3) The Canadian Agent, in appointing or refraining from
appointing any receiver, shall not incur liability to the receiver, the Grantor
or otherwise and shall not be responsible for any misconduct or negligence
of such receiver.
121. Section 2.05 Appointment of Attorney.
122. The Grantor irrevocably appoints the Canadian Agent (and any of
its officers) as attorney of the Grantor (with full power of substitution),
whenever the Security Interest has become enforceable, to do, make and
execute, in the name of and on behalf of the Grantor, all such further acts,
documents, matters and things which the Canadian Agent may deem
necessary or advisable to accomplish the purposes of this security
agreement including the execution, endorsement and delivery of documents
and any notices, receipts, assignments or verifications of
123.
124. - 10 -
125.
126. the accounts and the delivery and transfer of any Collateral to the
Canadian Agent to its nominees or transferees. The powers of attorney
herein granted is in addition to, and not in substitution for any transfer
power of attorney delivered by the Grantor and such power of attorney may
be relied upon by the Canadian Agent severally or in combination. All acts
of the attorney are ratified and approved, and the attorney shall not be liable
for any act, failure to act or any other matter or thing, except for its own
gross negligence or wilful misconduct.
127. Section 2.06 Dealing with the Collateral.
128. (1) The Canadian Agent shall not be obliged to exhaust its recourse
against the Grantor or any other Person or against any other security it may
hold in respect of the Obligations before realizing upon or otherwise dealing
with the Collateral in such manner as the Canadian Agent may consider
desirable.
129. (2) The Canadian Agent may grant extensions or other
indulgences, take and give up securities, accept compositions, grant releases
and discharges and otherwise deal with the Grantor and with other Persons,
sureties or securities as it may see fit without prejudice to the Obligations,
the liability of the Grantor or the rights of the Canadian Agent in respect of
the Collateral.
130. (3) The Canadian Agent shall not be (i) liable or accountable for
any failure to collect realize or obtain payment in respect of the Collateral,
(ii) bound to institute proceedings for the purpose of collecting, enforcing,
realizing or obtaining payment of the Collateral or for the purpose of
preserving any rights of any Persons in respect of the Collateral,
(iii) responsible for any loss occasioned by any sale or other dealing with
the Collateral or by the retention of or failure to sell or otherwise deal with
the Collateral, or (iv) bound to protect the Collateral from depreciating in
value or becoming worthless.
131. Section 2.07 Standards of Sale.
132. Without prejudice to the ability of the Canadian Agent to dispose
of the Collateral in any manner which is commercially reasonable, the
Grantor acknowledges that a disposition of Collateral by the Canadian
Agent which takes place substantially in accordance with the following
provisions shall be deemed to be commercially reasonable:
133.
(a) the Collateral may be disposed of in whole or in part;
134.
(b) the Collateral may be disposed of by public auction, public tender or private
contract, with or without advertising and without any other formality;
135.
(c) any assignee of such Collateral may be the Canadian Agent or a customer of
the Canadian Agent;
136.
(d) any sale conducted by the Canadian Agent shall be at such time and place, on
such notice and in accordance with such procedures as the Canadian Agent, in
its sole discretion, may deem advantageous;
137.
138. - 11 -
139.
(e) a disposition of Collateral may be on such terms and conditions as to credit or
otherwise as the Canadian Agent in its sole discretion, may deem
advantageous; and
140.
(f) the Canadian Agent may establish an upset or reserve bid or price in respect of
any Collateral.
141. Section 2.08 Application of Proceeds.
142. The proceeds received by the Canadian Agent in respect of any
sale of, collection from or other realization upon all or any part of the
Collateral pursuant to the exercise by the Canadian Agent of its remedies
shall be applied, together with any other sums then held by the Canadian
Agent pursuant to this security agreement, in accordance with the Credit
Agreement.
143. Section 2.09 Dealings by Third Parties.
144. (1) No Person dealing with the Canadian Agent or an agent or
receiver shall be required to determine (i) whether the Security Interest has
become enforceable, (ii) whether the powers which such Person is
purporting to exercise have become exercisable, (iii) whether any money
remains due to the Canadian Agent by the Grantor, (iv) the necessity or
expediency of the stipulations and conditions subject to which any sale or
lease is made, (v) the propriety or regularity of any sale or other dealing by
the Canadian Agent with the Collateral, or (vi) how any money paid to the
Canadian Agent has been applied.
145. ARTICLE 3
146. GENERAL
147. Section 3.01 Notices, etc.
148. Any notice, direction, demand or other communication required or
permitted to be given under this security agreement shall be given in the
same manner as provided in the Credit Agreement.
149. Section 3.02 Defined Terms.
150. Capitalized terms used in this security agreement and not otherwise
defined shall have the respective meanings attributed to them in the Credit
Agreement.
151. Section 3.03 Discharge.
152. When all the Obligations have been paid in full and no
commitments remain under the Credit Agreement, this security agreement
shall terminate. Upon termination of this security agreement the Collateral
shall be released from the Lien of this security agreement. In addition, the
Collateral or any portion thereof shall be released from the Lien of this
security agreement pursuant to the Credit Agreement. Upon such release,
the Canadian Agent shall, upon the request and at the sole cost and expense
of the Grantor, assign, transfer and deliver to the Grantor, against receipt
and without recourse to or warranty by the Canadian Agent except as to the
fact that the Canadian Agent has not encumbered the released assets, such
of the Collateral or any part thereof to be released (in the case of a release)
as may be in possession of the Canadian
153.
154. - 12 -
155.
156. Agent and as shall not have been sold or otherwise applied
pursuant to the terms hereof, and, with respect to any other Collateral proper
documents and instruments (including termination financing statements or
releases, terminations of deposit account control agreements acknowledging
the termination hereof or the release of such Collateral as the case may be).
157. Section 3.04 No Merger.
158. This security agreement shall not operate by way of merger of any
of the Obligations and no judgment recovered by the Canadian Agent shall
operate by way of merger of, or in any way affect, the Security Interest,
which is in addition to, and not in substitution for, any other security now or
hereafter held by the Canadian Agent in respect of the Obligations.
159. Section 3.05 Further Assurances.
160. The Grantor shall take such further actions, and execute and/or
deliver to the Canadian Agent such additional financing statements,
amendments, assignments, agreements, supplements, powers and
instruments, as the Canadian Agent may in its reasonable judgment deem
necessary or appropriate in order to create, perfect, preserve and protect the
Security Interest in the Collateral as provided herein and the rights and
interests granted to the Canadian Agent hereunder, to carry into effect the
purposes hereof or better to assure and confirm the validity, enforceability
and priority of the Canadian Agent’s Security Interest in the Collateral or
permit the Canadian Agent to exercise and enforce its rights, powers and
remedies hereunder with respect to any Collateral, including the filing of
financing statements, continuation statements and other documents
(including this security agreement) under the Personal Property Security
Act (Ontario) or other similar laws in effect in any jurisdiction with respect
to the Security Interest created hereby and the execution and delivery of
deposit account control agreements, all in form reasonably satisfactory to
the Canadian Agent and in such offices wherever required by law to perfect,
continue and maintain the validity, enforceability and priority of the security
interest in the Collateral as provided herein and to preserve the other rights
and interests granted to the Canadian Agent hereunder, as against third
parties, with respect to the Collateral. Without limiting the generality of the
foregoing, the Grantor shall make, execute, endorse, acknowledge, file or
refile and/or deliver to the Canadian Agent from time to time upon
reasonable request by the Canadian Agent such lists, schedules, descriptions
and designations of the Collateral, copies of warehouse receipts, receipts in
the nature of warehouse receipts, bills of lading, documents of title,
vouchers, invoices, schedules, confirmatory assignments, supplements,
additional security agreements, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other assurances
or instruments as the Canadian Agent shall reasonably request. If an Event
of Default has occurred and is continuing, the Canadian Agent may institute
and maintain, in its own name or in the name of the Grantor, such suits and
 proceedings as the Canadian Agent may be advised by counsel shall be or proceeding brought in such a court has been brought in an inconvenient
necessary or expedient to prevent any impairment of the Security Interest in forum. The Grantor agrees that a final judgment in any such action or
or the perfection thereof in the Collateral, All of the foregoing shall be at the proceeding shall be conclusive and may be enforced in any other manner
sole cost and expense of the Grantor. provided by law. Nothing in this section shall affect the right of the
161. Section 3.06 Supplemental Security. Canadian Agent to serve process in any manner permitted by law or limit
the rights of the Canadian Agent to bring proceedings against the Grantor in
162. This security agreement is in addition to and without prejudice to the courts of any other jurisdiction.
all other security now held or which may hereafter be held by the Canadian
Agent. 177. (3) The Grantor hereby consents generally in respect of any legal
action or proceedings arising out of or in connection with this security
163. agreement to the giving of any relief or the issue of any process in
164. - 13 - connection with such action or proceedings, including, without limitation,
165. the making, enforcement or execution against the Grantor of any order or
166. Section 3.07 Successors and Assigns. judgment which may be made or given in such action or proceedings.
167. This security agreement shall be binding upon the Grantor, its 178.
successors and assigns, and shall enure to the benefit of the Canadian Agent 179. - 14 -
and its successors and assigns. All rights of the Canadian Agent shall be 180.
assignable and in any action brought by an assignee to enforce any of those
rights.
181. (4) To the extent that the Grantor has or hereafter may acquire any
immunity from the jurisdiction of any court or from any legal process
168. Section 3.08 Headings, etc. (whether service of notice, attachment prior to judgment, attachment in the
169. The division of this security agreement into articles, sections and aid of execution, execution or otherwise) with respect to itself or its assets,
subsections and the insertion of headings are for convenience of reference the Grantor hereby irrevocably waives, to the fullest extent permitted by
only and shall not affect the meaning or construction of this security law, such immunity in respect of its obligations under this security
agreement. agreement.
170. Section 3.09 Gender and Number. 182. Section 3.12 Counterparts.
171. Any reference in this security agreement to gender shall include all 183. This security agreement may be executed in counterparts
genders and words importing the singular number only shall include the (including by way of facsimile) and all such counterparts taken together
plural and vice versa. shall be deemed to constitute one and the same instrument.
172. Section 3.10 Severability. 184. (The remainder of this page is intentionally left blank]
173. If any provision of this security agreement shall be deemed by any 185.
court of competent jurisdiction to be invalid or void, the remaining
provisions shall remain in full force and effect.
174. Section 3.11 Governing Law.
175. (1) This security agreement shall be governed by and interpreted
and enforced in accordance with the laws of the Province of Ontario and the
laws of Canada applicable therein.
176. (2) The Grantor hereby (i) irrevocably submits to the non-exclusive
jurisdiction of any court sitting in the Province of Ontario over any suit,
action or proceeding arising out of or relating to this security agreement;
(ii) irrevocably agrees that all claims in respect of any suit, action or
proceeding may be heard and determined in such court; and (iii) irrevocably
waives, to the fullest extent permitted by law, any objection which it may
have or hereafter have to the laying of the venue of any such suit, action or
proceeding brought in such a court and any claim that any such suit, action