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EXHIBIT 10.11(d)
DEMAND DEBENTURE
DATE: May 6, 1994
PRINCIPAL SUM: U.S. $20,000,000
INTEREST RATE: 20% per annum
CREDITOR'S ADDRESS: CONTINENTAL BANK N.A., as Agent
231 South LaSalle Street
Chicago, Illinois
U.S.A. 60697
(312) 987-5500 (Facsimile)
MANCHESTER PLASTICS, LTD. (the "Debtor") has entered into a
Credit Agreement dated as of May 6, 1994 (as amended or otherwise modified from
time to time, the "Credit Agreement") with various financial institutions
(collectively the "Banks" and individually each a "Bank"), and CONTINENTAL BANK
N.A., in its capacity as agent for the Banks (in such capacity, the "Agent"),
pursuant to which the Banks have agreed to make loans to the Debtor;
FOR VALUABLE CONSIDERATION, the Debtor hereby acknowledges
itself indebted and promises to pay on demand to or to the order of the Agent,
the above-mentioned principal sum on presentation and surrender of this
Debenture at the Agent's address mentioned above, or at such other place as the
Agent may designate by notice in writing to the Debtor, and to pay interest
thereon from the date hereof at the above-mentioned annual rate calculated
daily in like money at the same place on the last day of each month, and,
should the Debtor at any time make default in payment of any principal or
interest, to pay interest on the amount in default, to the extent permitted by
applicable law, both before and after default and judgment at the same rate in
like money at the same place on the same dates.
1. DEFINED TERMS. In this Debenture, the following terms will
have the following meanings:
"BUSINESS DAY" means any day, other than a Saturday, Sunday or
statutory holiday in the Province of Ontario, on which chartered banks
generally are open for business in Toronto, Ontario;
"CHARGE" means any mortgage, charge, pledge, hypothecation,
lien (statutory or otherwise), assignment, lease (other than an operating
lease), title retention agreement or arrangement, security interest or other
encumbrance of any nature, or any other security agreement or arrangement
creating in favour of any creditor a right in respect of a particular property
that is prior to the right of any other creditor in respect of such property.
"COLLATERAL" means the collateral charged pursuant to this
Debenture and, unless the context otherwise requires, any reference to
"Collateral" includes the Collateral or any part of it;
"DEFAULT" means any default by the Company in the payment of
the principal of or interest on this Debenture or any other amount payable
hereunder;
"LANDS" has the meaning set forth in Section 2(a)(i) of this
Debenture;
"LEASES" means all present and future leases, subleases,
agreements to lease or sublease, offers to lease or sublease, licenses,
concessions or other occupancy agreements, if any, relating to the whole or any
part or parts of the Project made by or on behalf of the
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Debtor, as landlord, pursuant to which any Person is given the right (other
than an easement or a right in the nature of an easement) to use or occupy the
whole or any part or parts of the Project, in each case for the time being in
effect, and all revisions, alterations, modifications, amendments, changes,
extensions, renewals, replacements or substitutions thereof or therefor which
may hereafter be effected or entered into with the consent of the Agent; and
"Lease" means any one of them;
"OBLIGATIONS" means the principal, interest and other amounts
owing hereunder and any other indebtedness, liabilities and obligations of the
Debtor hereunder;
"PERSON" includes an individual, a partnership, a corporation,
a trust, an unincorporated organization, a government or any department or
agency thereof or any other juridical entity and the heirs, executors,
administrators or other legal representatives of an individual;
"PROCEEDS" means property in any form derived directly or
indirectly from any dealing with any Collateral or the proceeds therefrom, and
includes any payment representing indemnity or compensation for loss or damage
to any Collateral or proceeds therefrom;
"PROJECT" means the Lands and all other property, whether real
or personal, and all rights, interests and benefits now owned or hereafter
acquired by the Debtor in connection with the Lands.
"PROJECT LEASE" means the lease between Ronita Properties
Limited as landlord, Larizza Industries, Inc. and the Debtor as tenant made as
of the 25th day of March, 1993 in respect of the land and premises municipally
known as 165 Milner Avenue, Scarborough, Ontario as the same may be amended
from time to time.
"PROJECT DOCUMENTS" means any present or future agreements
entered into by the Debtor in connection with or pertaining to the development,
leasing and management of the Project and any delivery facilities, including
(without limitation) agreements with the municipality in which the Lands are
situate, government approvals, the Leases, soil tests, a current survey,
agreements with adjoining landowners, easements, rights-of-way, rights of
access, rights of support and other such rights as may be required by the Agent
from time to time, and all revisions, alterations, modifications, amendments,
changes, extensions, renewals, replacements or substitutions thereof or
therefor which may hereafter be effected or entered into with the consent of
the Agent.
"RENTS" means all rent, additional rent, deposits held as
security or otherwise, revenues, other moneys, issues, monetary benefits,
rights and profits, if any, present and future, to be derived by the Debtor
from the Leases and the Project.
"SECURITY INTERESTS" means the Charges granted by the Debtor
to the Agent under this Debenture.
2. GRANT OF SECURITY. As security for the due payment of the
principal of and interest on this Debenture and all other moneys payable
hereunder, the Debtor hereby:
(a) Specific Charge: grants, transfers, assigns, conveys, pledges,
mortgages and charges as and by way of a fixed and specific mortgage,
pledge and charge to and in favour of the Agent, its successors and
assigns and grants to the Agent, its successors and assigns a security
interest in and to:
(i) all of the Debtor's right, title, estate and interest, present
and future, in and to the lands and premises described or
referred to in Schedule I to this debenture (and in any
schedules, debentures, documents or other instruments from
time to
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time made supplemental to this debenture) together with
all buildings, improvements, fixtures, fixed plant, fixed
machinery and fixed equipment now or hereafter located,
constructed or placed in, under or upon such lands and
premises and all rights of way, easements, licences,
franchises and privileges appurtenant or appertaining to such
lands and premises (collectively, the "Lands");
(ii) the unexpired residue of the term under the Project Lease; and
(iii) all of the Debtor's right, title and interest, present and
future, in and to all machinery, equipment, plant, vehicles,
apparatus, fittings, fixtures, furniture, goods, chattels and
other items of personal property, and all franchises, licences
and permits, of any nature and description whatsoever which
are now or hereafter owned by the Debtor or in which the
Debtor now or hereafter has any interest of any nature
whatsoever or which may be hereafter acquired by the Debtor or
of which the Debtor may hereafter become possessed or obtain
any interest or to which the Debtor may hereafter become
entitled, in any such case wherever located, and including,
without limiting the generality of the foregoing, all
machinery, plant, vehicles, apparatus, fittings, fixtures,
furniture, goods, chattels, and other items of personal
property described or referred to in any schedules,
debentures, documents or other instruments from time to time
made supplemental to this Debenture or which are presently
situate on, or which may at any time hereafter be constructed
or brought or placed on or used in connection with, any of the
lands and premises described or referred to in Schedule I
hereto; provided, however, that if the assignment by the
Debtor to the Agent of any franchise, licence or permit might
result in the termination or breach of such franchise, licence
or permit, then such franchise, licence or permit will not be
assigned hereunder but will be held in trust by the Debtor for
the benefit of the Agent;
(b) Unconditional Assignment: unconditionally assigns, transfers and sets
over to and in favour of the Agent, its successors and assigns, as and
by way of a mortgage and charge all of the right, title and interest
of the Debtor in and to:
(i) all debts, accounts receivable, claims, moneys and choses in
action which are at present or which may at any time hereafter
be due or owing to or owned by the Debtor relating to the
Lands, including without limitation all moneys and other sums
payable to or receivable by the Debtor under or in respect of
any Project Documents; any and all proceeds from any insurance
maintained in respect of the Lands; and realty tax recoveries
with respect to the Lands, and all bills, notes and other
documents now held or owned or which may be hereafter taken,
held or owned by the Debtor or anyone on behalf of the Debtor
in respect of such debts, accounts receivable, claims, moneys
and choses in action or any part thereof, and all books and
papers recording, evidencing or relating to such debts,
accounts receivable, claims, moneys and choses in action or
any part thereof;
(ii) all Leases and all Rents payable thereunder, and all benefit
and advantage to be derived from such Leases and Rents and the
covenants, obligations and agreements of the tenants
thereunder and the benefit of any guarantees of and
indemnities with respect to any such Leases; and
(iii) all Project Documents and all moneys and other sums payable to
or receivable by the Debtor thereunder, and all benefit and
advantage to be derived from such Project Documents and the
covenants, obligations and agreements of the other parties
thereto and the benefit of any guarantees of and indemnities
with respect to any such Project Documents,
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together 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 Debtor
thereunder in the name of the Debtor; and
(c) Floating Charge: grants, transfers, assigns, conveys, pledges,
mortgages and charges, as and by way of a floating charge to and in
favour of the Agent, its successors and assigns, all of the present
and future undertaking of the Debtor, and all property, assets,
rights, entitlements, privileges, licenses, permits and benefits of
the Debtor, real and personal, moveable or immoveable, tangible or
intangible, both present and future, of every nature and kind
whatsoever and wherever situate (other than such as are at all times
effectively and validly subjected to the fixed and specific mortgages
and charges hereby created); provided, however, that if the assignment
by the Debtor to the Agent of any contract, intellectual property
right, licence or permit might result in the termination or breach of
such contract, intellectual property right, licence or permit, then
such contract, intellectual property right, licence or permit will not
be assigned hereunder but will be held in trust by the Debtor for the
benefit of the Agent.
TO HAVE AND TO HOLD the rights conferred unto the Agent, its
successors and assigns, subject to the terms and conditions of this Debenture.
3. CONSENTS AND APPROVALS. If any Lease, Project Document,
agreement, account, claims, demand or choses in action may not be assigned,
transferred, subleased, charged or encumbered without the consent or approval
of some other Person, then the Security Interests granted hereunder shall only
apply to such Lease, Project Document, agreement, account, claim, demand or
choses in action upon such consent or approval being obtained.
4. ENFORCEMENT; REMEDIES.
(a) If a Default occurs and is continuing, the Agent may exercise,
in addition to all other rights and remedies granted to it in this Debenture,
all rights and remedies of a secured party provided at law. Without limiting
the generality of the foregoing, the Agent may at any time or from time to time
take any one or more of the following actions:
(i) enter into possession and use of the Collateral,
whether in whole or in part, with full power, among
other things, to exclude the Debtor therefrom, to
carry on and manage the business and operations of
the Debtor, to make such repairs, replacements,
alterations and additions to the whole or any part of
the Collateral that the Agent thinks advisable, to
receive the Rents, incomes and profits of the
Collateral or parts thereof so taken possession of
and of the said business and operations and to pay
therefrom all expenses of the business and operations
of the Debtor and of maintaining, preserving,
protecting and operating the Collateral, including
payments which may be due for insurance, taxes,
assessments, charges or liens prior to the charge of
this Debenture upon the Collateral and for the
services of lawyers (on a solicitor and his own
client basis), agents and other Persons, and all
costs, charges and expenses incurred in connection
with the execution of the powers contained in this
Debenture;
(ii) commence proceedings in any court of competent
jurisdiction for sale or foreclosure of all or any
part of the Collateral;
(iii) file proofs of claim and any other documents to
establish its claims in any proceeding relative to
the Debtor;
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(iv) take possession of, collect, receive, appropriate and
realize upon the Collateral, and/or sell, lease,
assign, license, give one or more options to
purchase, or otherwise dispose of and deliver the
Collateral (or contract to do any of the foregoing),
in one or more parcels at public or private sale or
sales (including, in the case of motor vehicles, at
auctions for sales of motor vehicles to motor vehicle
dealers), at any exchange, broker's board or office
of the Agent or elsewhere upon such terms and
conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit
risk. The Agent will have the right upon any such
public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase
the Collateral so sold, free of any right or equity
of redemption in the Debtor, which right or equity is
hereby waived and released to the extent permitted by
applicable law. The Debtor agrees, at the Agent's
request, to assemble the Collateral and make it
available to the Agent at places which the Agent will
reasonably select, whether at the Debtor's premises
or elsewhere;
(v) by an instrument in writing appoint a receiver (which
term as used herein will include a receiver and
manager) of the Collateral and may remove or replace
such receiver from time to time or may institute
proceedings in any court of competent jurisdiction
for the appointment of such receiver;
(vi) commence proceedings in any court of competent
jurisdiction for the appointment of a receiver of the
Collateral;
(vii) transfer any securities forming part of the
Collateral into the name of the Agent or its nominee,
with or without disclosing that such securities are
subject to the Charge hereunder;
(viii) exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or
options pertaining to any securities forming part of
the Collateral as if it were the absolute owner
thereof, including the right to exchange at its
discretion any and all securities upon the merger,
consolidation, reorganization, recapitalization or
other readjustment of any issuer thereof or upon the
exercise by any issuer thereof or the Agent of any
right, privilege or option pertaining to any of the
securities, and in connection therewith, to deposit
and deliver any and all securities with any
committee, depositary, transfer agent, registrar or
other designated agency upon such terms and
conditions as the Agent may determine, all without
liability except to account for property actually
received by the Agent; and/or
(ix) exercise any other remedy or proceeding authorized or
permitted hereby or by applicable law.
(b) The Agent may take any or all of the foregoing action without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except as required by law) to or upon the Debtor or any
other Person, and the Debtor hereby waives each such demand, presentment,
protest, advertisement and notice to the extent permitted by applicable law.
(c) The Agent may apply the net proceeds of any collection,
recovery, receipt, appropriation, realization or sale of any Collateral, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Agent hereunder, including
legal fees and disbursements on a solicitor and his own client basis and the
costs of any receiver,
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to the payment in whole or in part of the Obligations, in such order as the
Agent may elect, and only after such application and after the payment by the
Agent of any other amount required by applicable law, need the Agent account
for the surplus, if any, to the Debtor.
(d) To the extent permitted by applicable law, the Debtor waives
all claims, damages and demands it may acquire against the Agent arising out of
the exercise by the Agent or any receiver of any rights or remedies hereunder
in the absence of its gross negligence or wilful misconduct. The Debtor will
remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay and satisfy the
Obligations.
(e) The Debtor agrees that in connection with any offer or sale of
any securities forming part of the Collateral, the Agent is authorized to
comply with any limitation or restriction in connection with any such offer or
sale as it may be advised by counsel is necessary in order to avoid any
violation of applicable law, including compliance with such procedures as may
restrict the number of prospective bidders and purchasers, requiring that such
prospective bidders and purchasers have certain qualifications, and restricting
such prospective bidders and purchasers to Persons who will represent and agree
that they are purchasing for their own account or investment and not with a
view to the distribution or resale of such securities. The Debtor further
agrees that such compliance will not result in such sale being considered or
deemed not to have been made in a commercially reasonable manner, and the Agent
will not be liable or accountable to the Debtor for any discount allowed by
reason of the fact that such securities are sold in compliance with any such
limitation or restriction.
(f) In addition to the rights of the Agent specified in Section
6(c) hereof with respect to payments of accounts, if a Default has occurred and
is continuing: (i) all Proceeds received by the Debtor consisting of cash,
cheques and other near-cash items will be held by the Debtor in trust for the
Agent, segregated from other funds of the Debtor, and will, forthwith upon
receipt by the Debtor, be turned over to the Agent in the exact form received
by the Debtor (duly endorsed by the Debtor to the Agent, if required); and (ii)
any and all such Proceeds received by the Agent (whether from the Debtor or
otherwise) may, in the sole discretion of the Agent, be held by the Agent as
collateral security for, and/or then or at any time thereafter may be applied
by the Agent against, the Obligations, such application to be in such order as
the Agent will elect. Any balance of such Proceeds remaining after the
Obligations will have been paid in full will be paid over to the Debtor or to
any other Person lawfully entitled to receive the same.
(g) The Agent shall not, nor shall any receiver appointed by it
hereunder, be under any obligation to take any action or exercise any remedy in
collection or recovery of any Rents, moneys or proceeds or to see to or enforce
the performance of the obligations of any party or parties under or in respect
of the Leases, the Project Documents or any other Collateral or any of them.
The Agent shall not, nor shall any receiver appointed by it hereunder, be
responsible or liable for any debts contracted by it for damages to persons or
property, or for salaries or non-fulfilment of contracts during any period
wherein the Agent or such receiver shall manage the Collateral upon or after
entry, as herein provided, nor shall the Agent or the receiver be liable to
account as mortgagee in possession for anything except actual receipts other
than liability resulting directly from the gross negligence or wilful
misconduct of the Agent or such receiver.
(h) This Debenture is for security purposes only and shall not
impair or diminish any obligation of the Debtor or any other party or parties
under the Leases, the Project Documents or any other Collateral given by the
Debtor.
5. POWER OF SALE.
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Any sale under the Debenture may be by public auction, by
public tender or by private sale, with only such notice as may be required by
law, at such time or times as the Agent may determine and either for cash or
part cash and part credit, and with or without advertisement, and with or
without a reserve bid and otherwise upon such terms and conditions as the Agent
may determine, and the proceeds of any sale may be applied in payment of any
costs, charges and expenses incurred in taking, recovering or keeping
possession of the Collateral or endeavouring to procure payment of the
Obligations Secured. Sales may be made from time to time of portions of the
Collateral or of the equity of redemption in the Lands and the Project Lease
and the Agent may make any stipulations as to title evidence or commencement of
title or otherwise that the Agent may deem proper and may rescind or vary any
contract for sale of any of the Collateral and resell without being answerable
for any loss occasioned thereby. On any sale under this Debenture, the Agent
shall be accountable only for monies actually received by the Agent as and when
so received and for any of the said purposes may make and execute all such
agreements and assurances as it shall think fit.
6. POWERS OF RECEIVER.
(a) Any receiver appointed by the Agent hereunder may be vested
with the rights and powers of the Agent hereunder and after a Default will have
power to take possession of and collect the Collateral and for that purpose, to
take proceedings in the name of the Debtor or otherwise and to make any
arrangement or compromise and to carry on, or concur in carrying on, all or any
part of the business of the Debtor and to use, collect, sell, dispose of,
realize upon, release to third parties and otherwise deal with the Collateral
or any part thereof as to it seems best. The Agent may from time to time fix
the remuneration of the receiver. Without limiting the generality of the
foregoing, any receiver appointed by the Agent hereunder will have power after
a Default to:
(i) from time to time and without any previous notice or
demand and free of charge enter upon or into and
occupy and use all or any of the premises, buildings,
warehouse and undertaking of or occupied or used by
the Debtor;
(ii) borrow or raise money on the security of the
Collateral in priority to this Debenture or otherwise
for such purposes as may be approved by the Agent;
and
(iii) sell or otherwise dispose of or concur in selling or
otherwise disposing of the Collateral without notice,
to the extent permitted by applicable law, and in
such manner as may seem advisable to the receiver,
and to effect such sale or disposition by conveying
in the name and on behalf of the Debtor or otherwise;
and
(iv) exercise any and all rights of the Debtor under any
Project Document or the Project Lease or the Leases
and do or cause to be done any and all acts and
things under any Project Document, the Project Lease
or the Leases and adjust and settle all matters
relating to such performance.
(b) The receiver may be vested with such other rights and powers
of the Agent hereunder and such other discretions and powers after a Default as
are granted in the instrument of appointment and any supplement thereto, to the
extent consistent with this Debenture. The receiver will for all purposes be
deemed to be the agent of the Debtor and not of the Agent, and the Debtor will
be solely responsible for his acts or defaults and for his remuneration, to the
extent permitted by law.
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7. RIGHTS OF AGENT; LIMITATIONS ON AGENT'S
OBLIGATIONS
(a) Limitation on Duties Regarding Preservation of Collateral.
The Agent's sole duty with respect to the custody, safekeeping and physical
preservation of Collateral in its possession or under its control will be to
use reasonable care in the custody and preservation of such Collateral. The
Debtor agrees that the Agent will be deemed to have used reasonable care in the
custody and preservation of Collateral if the Agent deals with such Collateral
in the same manner as the Agent deals with similar property for its own account
and, to the extent permitted by applicable law, the Agent need not take any
steps to preserve rights against any other Person (including prior parties).
Neither the Agent nor any of its directors, officers, employees or agents will
be liable for failure to demand, collect or realize upon the Collateral or for
any delay in doing so or will be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Debtor or otherwise. The
Agent shall not, nor shall any receiver appointed by it be responsible or
liable otherwise than as an agent and trustee for any debts contracted by it
for salaries during any period wherein the Agent or such receiver is managing
the Collateral or any part or parts of it upon or after entry, nor shall the
Agent nor the receiver be liable to account as mortgagee in possession for
anything except actual receipts or be liable for any loss on realization or for
any default or omission for which a mortgagee in possession might be liable.
(b) Notice to Account Debtors and Contracting Parties. The Agent
may, and upon the request of the Agent after a Default has occurred and during
its continuance, the Debtor will, notify account debtors on its accounts and
parties to its contracts that the accounts and the contracts have been assigned
to the Agent and that payments in respect thereof will be made directly to the
Agent. The Agent may in its own name or in the name of others (including the
Debtor) communicate with account debtors on the accounts and parties to the
contracts to verify with them to its satisfaction the existence, status, amount
and terms of any account or any contract.
(c) Collections on Accounts and Contracts. The Agent hereby
authorizes the Debtor to collect its accounts and payments under its contracts
in the normal course of its business and for the purpose of carrying on the
same, subject to the Agent's direction and control, and the Agent may curtail
or terminate said authority at any time after a Default. If required by the
Agent at any time after a Default, any payments of accounts or under contracts,
when collected by the Debtor, will be forthwith (and, in any event, within two
Business Days) deposited by the Debtor in the exact form received, duly
endorsed by the Debtor to the Agent if required, in a special collateral
account maintained by the Agent, subject to withdrawal by the Agent, as
hereinafter provided, and, until so deposited, will be held by the Debtor in
trust for the Agent, segregated from other funds of the Debtor.
(d) Project Documents. Nothing contained in this Debenture shall
render the Agent liable to any Person for the fulfilment or non-fulfilment of
the obligations, covenants and agreements (including, without limitation, the
payment of any monies thereunder or in respect thereof) of the Debtor pursuant
to any of the Project Documents or the Project Lease.
8. COVENANTS. The Debtor covenants and agrees with the Agent
that:
(a) Further Documentation; Pledge of Instruments. At any time and
from time to time, upon the written request of the Agent, and at the sole
expense of the Debtor, the Debtor will promptly and duly execute and deliver
such further instruments and documents and take such further action as the
Agent may reasonably request for the purpose of obtaining or preserving the
full benefits of this Debenture and of the rights and powers herein granted.
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(b) Payment of Expenses; Indemnification. The Debtor agrees to
pay, and to indemnify and save the Agent and any Bank harmless from, any and
all liabilities, costs and expenses (including legal fees and expenses on a
solicitor and his own client basis): (i) incurred by the Agent or any Bank in
the preparation, registration, administration or enforcement of this Debenture;
(ii) with respect to, or resulting from, any delay by the Debtor in paying any
and all excise, sales, goods and services or other taxes with respect to any of
the Collateral before they are delinquent; (iii) with respect to, or resulting
from, any delay by the Debtor in complying with any requirement of law
applicable to any of the Collateral; or (iv) incurred by the Agent or any Bank
in connection with any of the transactions contemplated by this Debenture in
the absence of its gross negligence or wilful misconduct. The amount of all
such liabilities, costs and expenses will be deemed to form part of the
Obligations, will be payable on demand by the Agent and the payment of all such
liabilities, costs and expenses will be secured hereby.
(c) Limitation on Charges on Collateral. The Debtor will not
create, incur or permit to exist, will defend the Collateral against, and will
take such other action as is necessary to remove, any Charge or claim on or to
the Collateral, other than the Charges created hereby and other than as
permitted in writing by the Agent, and, subject to the foregoing exclusions,
the Debtor will defend the right, title and interest of the Agent in and to any
of the Collateral against the claims and demands of all Persons.
(d) Limitations on Dispositions of Collateral. The Debtor will
not sell, transfer, lease or otherwise dispose of any of the Collateral, except
as permitted in writing by the Agent; provided, however, that the Debtor may
sell, transfer, lease or otherwise dispose of inventory in the ordinary course
of business.
(e) Notices. The Debtor will advise the Agent promptly, in
reasonable detail, of: (i) any Charge (other than the Security Interests or
any Charges permitted in writing by the Agent) on, or claim asserted against,
any of the Collateral; (ii) the existence of any material right of set-off,
counterclaim or other adverse claim in respect of any material portion of the
Collateral; (iii) the occurrence of any other event, claim or occurrence which
could reasonably be expected to have a material adverse effect on the aggregate
value of the Collateral or on the Charges created hereunder; (iv) any change in
the name of the Debtor; and (v) any material loss of or damage to any of the
Collateral.
(f) Insurance. The Debtor will keep the tangible Collateral
insured under policies maintained with reputable and financially sound
insurance companies against loss, damage, theft and other risks to such extent
as is customarily maintained by companies similarly situated, and cause all
such policies to provide that the loss thereunder shall be payable to the Agent
as its interests may appear, and such policies or certificates thereof shall,
if the Agent so requests, be deposited with or furnished to the Agent.
9. REPRESENTATIONS AND WARRANTIES. The Debtor represents and
warrants to the Agent that:
(a) Title; No Other Charges. Except for: (i) the Security
Interests, and (ii) any other Charges permitted in writing by the Agent, the
Debtor owns (or, with respect to any leased or licensed property forming part
of the Collateral, holds a valid leasehold or licensed interest in) all of the
Collateral free and clear of any and all Charges. On Default and enforcement,
the Agent shall have quiet possession of the Lands, the Project Lease and the
Project Documents, free from all encumbrances, subject only to those
encumbrances specifically permitted by the Agent in writing.
(b) Name of Debtor. The Debtor is not now known, and during the
five years preceding the date hereof has not previously been known, by any
trade name or business name except as previously disclosed to the Agent and the
Banks in writing prior to the date hereof (including those set forth in
Schedule II). During the five years preceding the date hereof, the
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Debtor has not been known by any legal name different from the one set forth on
the signature page of this Agreement except as previously disclosed to the
Agent in writing prior to the date hereof (including those set forth in
Schedule II), nor has the Debtor been the subject of any amalgamation or other
corporate reorganization except as previously disclosed to the Agent in writing
prior to the date hereof (including those set forth in Schedule II).
(c) Corporate Authority, Execution, Delivery etc. The execution
and delivery of this Debenture and the performance by the Debtor of its
obligations hereunder are within the Debtor's corporate powers, have been duly
authorized by all necessary corporate action, have received all necessary
governmental approval (if any shall be required), and do not and will not
contravene or conflict with any provision of law or of the charter documents of
the Debtor or of any agreement (including, without limitation, any account or
contract), indenture, instrument or other document, or any judgment, order or
decree, which is binding upon the Debtor.
(d) Enforceability. This Debenture is a legal, valid and binding
obligation of the Debtor, enforceable in accordance with its terms, except that
the enforceability of this Debenture may be limited by bankruptcy, insolvency,
fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and by general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
(e) Compliance with Laws. The Debtor is in compliance with the
requirements of all applicable laws, rules, regulations and orders of every
governmental authority, the non-compliance with which would materially
adversely affect any material portion of the Collateral.
10. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT. The Debtor hereby
irrevocably constitutes and appoints the Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Debtor and in the name of the Debtor or in its own name, from time
to time in the Agent's discretion after and during the continued existence of a
Default, for the purpose of carrying out the terms of this Debenture, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Debenture. The Debtor hereby ratifies all that said attorney will
lawfully do or cause to be done by virtue hereof. This power of attorney is a
power coupled with an interest and will be irrevocable until the Obligations
have been paid and performed in full. The Debtor also authorizes the Agent, at
any time and from time to time, after and during the continued existence of a
Default to execute any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral in connection with the
sale provided for in Section 4 hereof.
11. PERFORMANCE BY AGENT OF DEBTOR'S OBLIGATIONS. If the Debtor
fails to perform or comply with any of its agreements contained herein and the
Agent, as provided for by the terms of this Debenture, will itself perform or
comply, or otherwise cause performance or compliance, with any such agreements,
the expenses of the Agent incurred in connection with such performance or
compliance will be payable by the Debtor to the Agent on demand and will be
added to the Obligations.
12. SEVERABILITY. Any provision of this Debenture which is
prohibited or unenforceable in any jurisdiction will, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction will not invalidate or render
unenforceable such provision in any other jurisdiction.
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13. INTERPRETATION. The paragraph headings used in this Debenture
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof. When used
in this Debenture, the word "including" means "including without limitation".
Any reference in this Debenture to any statute will include all regulations
made thereunder from time to time, and will include such statute as the same
may be amended, supplemented or replaced from time to time.
14. NO WAIVER; CUMULATIVE REMEDIES. The Agent will not by any
act, delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any breach of any of the
terms and conditions hereof unless such waiver or acquiescence is specifically
set forth in writing signed by the Agent. No failure to exercise, nor any
delay in exercising, on the part of the Agent, any right, power or privilege
hereunder will operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder will preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Agent of any right or remedy hereunder on any one occasion will
not be construed as a bar to any right or remedy which the Agent would
otherwise have on any future occasion. Without limiting the generality of the
foregoing, this Debenture may not be waived, amended, supplemented or otherwise
modified except by a written instrument executed by the Debtor and the Agent.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and in any order and are not exclusive of any rights or
remedies provided by law.
15. DEALINGS BY AGENT. The Agent may grant extensions of time and
other indulgences, take and give up security, accept compositions, grant
releases and discharges and otherwise deal with the Debtor and any third party
having dealings with the Debtor, and with the Collateral or any part thereof,
and with other security and sureties, as the Agent may see fit, all without
prejudice to the Obligations or to the rights of the Agent under this
Debenture. The powers conferred on the Agent hereunder are solely to protect
the interests of the Agent in the Collateral and will not impose any duty upon
the Agent to exercise any such powers. The Agent will be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither it nor any of its officers, directors, employees or agents will be
responsible to the Debtor for any act or failure to act hereunder, except for
its or their own gross negligence or wilful misconduct.
16. IMPLIED COVENANTS. Certain covenants implied by the Land
Registration Reform Act (Ontario) shall be varied as follows:
(a) the covenants implied by paragraphs 1 and 3 of Section 7(1) of
the said Act (as varied herein) shall be in addition to, and
not in substitution for, the covenants and other provisions
set forth in this Debenture. In the event of any conflict
between any of such implied covenants (as varied herein) and
any other covenant or provision of this Debenture, such other
covenant or provision of this Debenture shall prevail;
(b) the covenant deemed to be included in this Debenture by clause
7(1)1(iii) of the said Act is varied so that such covenant is
as follows: "That the Debtor has not done, omitted or
permitted any thing whereby the Land or the Project Lease is
or may be encumbered, except as provided herein or by those
encumbrances provided and permitted in writing by the Agent or
disclosed by registered title; and
(c) the covenant deemed to be included in this Debenture by clause
7(1)1(v) of the said Act is excluded from this Debenture.
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17. SUCCESSORS AND ASSIGNS. This Debenture will be binding upon
the Debtor and its successors and assigns and will enure to the benefit of the
Agent and its successors and assigns.
18. COMMUNICATION. All communications provided for or permitted
hereunder will be in writing, personally delivered to an officer or other
responsible employee of the addressee or sent by registered or certified mail,
charges prepaid, or by telecopy, telex or telegram or other similar means of
recorded communication, charges prepaid, to the address or facsimile number set
forth, in the case of the Agent, under its name on the first page of this
Debenture or in the case of the Debtor, opposite its name on the execution page
of this Debenture, or to such other address as the recipient may from time to
time designate to the other in such manner, provided that no communication will
be sent by mail pending any threatened or during any actual postal strike or
other disruption of postal service in Canada or the U.S.A. Any communication
so personally delivered will be deemed to have been validly and effectively
given and received on the date of such delivery. Any communication so sent by
telecopy, telex, telegram or other similar means of recorded communication will
be deemed to have been validly and effectively given and received on the
Business Day following the day on which it is sent. Any communication so sent
by mail will be deemed to have been validly and effectively given and received
on the fifth Business Day following the day on which it is sent.
19. NON-EXCLUSIVITY OF REMEDIES. This Debenture and the Charges
arising hereunder are in addition to and not in substitution for any other
security now or hereafter held by the Agent in respect of the Debtor, the
Obligations or the Collateral. No remedy for the enforcement of the rights of
the Agent hereunder will be exclusive of or dependent on any other such remedy
but any one or more of such remedies may from time to time be exercised
independently or in combination.
20. RELEASE OF INFORMATION. The Debtor hereby authorizes the
Agent to provide a copy of this Debenture and such other information as may be
requested of the Agent by Persons entitled thereto pursuant to any applicable
legislation and otherwise with the consent of the Debtor.
21. GOVERNING LAW. This Debenture will be governed by and
construed in accordance with the laws of Ontario and the laws of Canada
applicable therein, and without prejudice to the ability of the Agent to
enforce this Debenture in any other proper jurisdiction, the Debtor hereby
irrevocably submits and attorns to the jurisdiction of the courts of the
Province of Ontario for the purposes of this Debenture.
22. MISCELLANEOUS PROVISIONS. Possession of an executed copy of
this Debenture by the Agent constitutes conclusive evidence that this Debenture
was executed and delivered by the Debtor, free of all conditions not set forth
in this Debenture or permitted in writing by Agent. The Debtor confirms that
value has been given, that the Debtor has rights in the Collateral, and that
the parties have not agreed to postpone the time for attachment of the Charge
constituted hereby to any of the Collateral.
23. ACKNOWLEDGMENT OF RECEIPT. The Debtor acknowledges receipt
of an executed copy of this Debenture.
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24. AGENT ENTITLED TO PAYMENT. The Agent is entitled to receive
the principal of and interest required under this Debenture and all other
moneys payable hereunder and the Agent is entitled to give a discharge hereof.
25. LAST DAY OF LEASES. The Charge hereof will not extend or
apply to the last day of the term of any lease or agreement therefor under
which the Debtor is the lessee, now held or hereafter acquired by the Debtor
but, upon the enforcement of the Charge hereof, the Debtor will stand possessed
of such last day in trust to assign the same to any Person acquiring such term.
26. PLEDGE OF DEBENTURE. This Debenture may be transferred and
assigned, deposited with and pledged by the Debtor as a general and collateral
security for the payment and performance of its present and future
indebtedness, obligations and liabilities and, when redelivered to the Debtor
or its nominees, will be forthwith cancelled; but this Debenture will not be
deemed to have been redeemed by reason of the account of the Debtor having
ceased to be in debt while this Debenture was so assigned, deposited or pledged
and no payment will reduce the amount secured under this Debenture unless
specifically appropriated to and noted on this Debenture at the time of
payment.
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27. NON-APPORTIONMENT. Every part or lot into which the Lands are
or may hereafter be divided does and shall stand charged with the whole of the
principal and interest and all other amounts payable under this Debenture, and
no Person shall have any right to require the principal or interest or such
other amounts to be apportioned upon or in respect of any such part or lot.
28. SECURITY IN ADDITION. This Debenture is in addition to and
not in substitution for any other in security now or hereafter held by the
Agent and no payment to the Agent shall constitute payment on account of any of
the principal, interest or other monies from time to time owing hereunder
unless specifically so appropriated by the Agent by notation of such payment on
this Debenture at the time of payment.
29. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All agreements,
representations, warranties and covenants made by or on behalf of the Debtor
herein are material, will be considered to have been relied upon by the Agent
and will survive the execution and delivery of this Debenture or any
investigation made at any time by or on behalf of the Agent and any disposition
or payment of the Obligations until repayment in full thereof.
IN WITNESS WHEREOF, the Debtor has caused this Debenture to be
duly executed and delivered as of the date first above written.
MANCHESTER PLASTICS, LTD.
Address: 900 Queen Street By: /s/ Terence C. Seikel
Gananoque, Ontario, Canada Name: Terence C. Seikel c/s
K7G 2W7 Title: Chief Financial Officer
Facsimile: (613) 382-8687
Attention: President
Schedule I - Real Property
Schedule II - Names of Debtor