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EXHIBIT 4.2
DEED OF HYPOTHEC
ON the Thirtieth (30th) day of October, Nineteen hundred and ninety-seven
(1997),
BEFORE Me Kevin Leonard, the undersigned Notary for the Province of Quebec,
practising in the City of Montreal
APPEARED: PCI CHEMICALS CANADA INC./PRODUITS CHIMIQUES PCI CANADA INC., a
corporation duly incorporated pursuant to the New Brunswick Business
Corporations Act (New Brunswick), having its registered office at 44 Chipman
Hill, Suite 1000, in the City of Saint John, Province of New Brunswick, E2L
4S6, herein acting and represented by Robert C. Williams, its representative,
hereunto duly authorized in virtue of a resolution of the board of directors of
the said corporation duly adopted on the Twenty-ninth (29th) day of October,
Nineteen hundred and ninety-seven (1997), a certified copy of which remains
hereto annexed after having been acknowledged true and signed for
identification by the said representative in the presence of the undersigned
Notary (hereinafter referred to as the "GRANTOR");
PARTY OF THE FIRST PART
AND: UNITED STATES TRUST COMPANY OF NEW YORK, a New York banking corporation,
having a place of business at 114 West 47th Street, in the City of New York,
State of New York, USA, 10036-1532, herein acting and represented by Rita Lc de
Santis, duly authorized as she so declares, hereinacting for its own account
and for the account of, and as holder of an irrevocable power of attorney of,
the Trustee, the Administrative Agent, the Noteholders and the Lenders
(hereinafter referred to as the "COLLATERAL AGENT").
PARTY OF THE SECOND PART
WHICH PARTIES HAVE DECLARED AND AGREED, IN THE PRESENCE OF THE UNDERSIGNED
NOTARY, AS FOLLOWS:
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1. DEFINITIONS: The following words or expressions, wherever
used in this Deed, shall have the following meanings:
1.1 "ACCESSORIES" means any interest, interest on
interest, indebtedness resulting from exchange rate fluctuations, legal fees,
charges, costs of realization, expenses, insurance premiums, Taxes and sums
incurred by the Collateral Agent, acting for its own account or for the account
of the Trustee, the Administrative Agent, the Noteholders or the Lenders to
protect, preserve or enforce its rights under this Deed and the security herein
created;
1.2 "ACCOUNTS RECEIVABLE" means the universality
consisting of all the right, title and interest which the Grantor has from time
to time in and to any and all present and future accounts and any other right
of Grantor to payment for goods sold or leased or for services rendered,
whether or not evidenced by an instrument or chattel paper and whether or not
yet earned by performance;
1.3 "ACM has the meaning ascribed thereto in section
7.24;
1.4 "ADDITIONAL UNDERTAKING" means (i) cash or cash
equivalents or (ii) a Surety Bond, an Additional Undertaking Guarantee or an
Additional Undertaking Letter of Credit which is provided by a Person, whose
long-term unsecured debt is rated at least "AA" (or equivalent) by a nationally
recognized statistical rating agency and is otherwise satisfactory to the
Collateral Agent; Additional Undertakings are addressed directly to the
Collateral Agent and name the Collateral Agent as the beneficiary thereof and
the party entitled to make claims thereunder;
1.5 "ADDITIONAL UNDERTAKING GUARANTEE" means the
unconditional guarantee of payment of any corporation or partnership organized
and existing under the laws of the United States of America or any State or the
District of Columbia or Canada or province thereof that has a long-term
unsecured debt rating satisfactory to the Collateral Agent at the time such
guarantee is delivered, given to the Collateral Agent, accompanied by an
opinion of counsel to such guarantor to the effect that such guarantee has been
duly authorized, executed and delivered by such guarantor and constitutes the
legal, valid and binding obligation of such guarantor enforceable against such
guarantor by the
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Collateral Agent in accordance with its terms, subject to customary exceptions
at the time for opinions for such instruments, together with an opinion of
counsel to the effect that, taking into account the purpose under this Deed of
Hypothec for which such guarantee will be given, such guarantee and
accompanying opinion are responsive to the requirements of this Deed of
Hypothec;
1.6 "ADDITIONAL UNDERTAKING LETTER OF CREDIT" means a
clean, irrevocable, unconditional letter of credit in favour of the Collateral
Agent and entitling the Collateral Agent to draw thereon in the City of New
York issued by a bank satisfactory to the Collateral Agent, accompanied by an
opinion of counsel to such bank to the effect that such letter of credit has
been duly authorized, executed and delivered by such bank and constitutes the
legal, valid and binding obligation of such bank enforceable against such bank
by the Collateral Agent in accordance with its terms subject to customary
exceptions at the time for opinions for such instruments, together with an
opinion of counsel to the effect that, taking into account the purpose under
this Deed of Hypothec for which such letter of credit will be given, such
letter of credit and accompanying opinion are responsive to the requirements of
this Deed of Hypothec;
1.7 "ADMINISTRATIVE AGENT" means Bank of America National
Trust and Savings Association, and includes each other Person as shall have
subsequently been appointed as the successor Administrative Agent pursuant to
the Term Loan Agreement;
1.8 "ALTERATION" has the meaning ascribed thereto in
section 7.22;
1.9 "ARCHITECT'S CERTIFICATE" has the meaning ascribed
thereto in section 7.21.4.3;
1.10 "BOND" means the Bond of even date herewith issued by
PAI to and in favour of the Collateral Agent, in the principal amount of One
Hundred and Forty Million Dollars ($140,000,000) in lawful currency of Canada,
together with all renewals thereof, substitutions thereafter and supplements
thereto;
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1.11 "BOND PLEDGE AGREEMENT" means the Bond Pledge
Agreement of even date between PAI and the Collateral Agent, as same may be
amended, supplemented or restated from time to time;
1.12 "BUILDINGS" means the universality consisting of all
the right, title and interest which the Grantor has from time to time in and to
(i) any and all present and future structures and works of a permanent nature
located, from time to time in, on or upon the Lands, including, without
limitation, all buildings, structures, facilities, accessories, appurtenances
and other improvements (including present and future parking areas) located
from time to time in, on or upon the Lands, (ii) any and all present and future
movable property which is deemed by Law to be immovable for purposes of
hypothecation located or incorporated from time to time therein, thereon or
thereupon, and (iii) any and all alterations, reconstructions, additions or
expansions to and all repairs or replacements of any such property during the
term of this Deed;
1.13 "CERTIFICATE OF LOCATION" means the certificate of
location prepared by Mr. Gaston Lemay, Quebec Land Surveyor, dated October 14,
1997, bearing his minute number 2812 (his file number 4-14614-C-1);
1.14 "CLAIMS" means the universality consisting of all the
right, title and interest which the Grantor has from time to time, directly or
indirectly, in and to any and all present and future claims in respect of the
Immovable Property, the Leases, the Licenses, the Contracts, the Equipment, the
Securities and the Intellectual Property, including, without limitation, solely
to the extent they relate to the Immovable Property, the Leases, the Licenses,
the Contracts, the Equipment, the Securities and the Intellectual Property: (a)
all accounts, accounts receivable, book accounts, book debts, debts, claims,
customer accounts, bank accounts, rentals, revenues, income, loans receivable,
choses in action, judgments, proceeds of sale, bills of exchange, notes,
negotiable instruments, letters of credit or guarantees, promissory notes,
rebates, refunds, amounts owing by or claimable from the Crown, state or
government (or any departments, agents or agencies thereof), warehouse
receipts, bills of lading and any other amounts or demands of every nature and
kind howsoever arising, whether or not secured, which are now or become
hereafter due or owing to the Grantor; (b) all security present or future
including all legal or conventional hypothecs, held from
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time to time by the Grantor; (c) the benefit of all guarantees and indemnities
for the performance of the obligations of any party to which the Grantor is or
may become entitled; (d) all indemnities, insurance proceeds and expropriation
proceeds received, which may be received or to which the Grantor is or may
become entitled, the hypothecation of which would not result in an immovable
hypothec; (e) the benefit of any contractor's, manufacturer's and supplier's
warranties which relate to the Equipment: (f) all proceeds of sale, lease or
other disposition of any part or parts of the Hypothecated Property; and (g)
all Rents, the hypothecation of which would not result in an immovable
hypothec; provided that, for greater certainty, Immovable Claims are excluded
from "Claims" and further provided that all Accounts Receivable, Contract
Rights and General Intangibles are also excluded;
1.15 "CLOSING DATE" has the meaning ascribed thereto in
the Purchase Agreement;
1.16 "COLLATERAL AGENT" means the Party of the Second Part
and its successors and permitted assigns;
1.17 "COLLATERAL ACCOUNT" has the meaning ascribed thereto
in the Intercreditor and Collateral Agency Agreement;
1.18 "COLLATERAL PROCEEDS" has the meaning ascribed
thereto in the Indenture;
1.19 "CONTRACT RIGHT" means the universality consisting of
all right, title and interest which the Grantor has from time to time in and to
any payment under any contract (now existing or hereafter arising) for the sale
or lease of goods or the rendering of services, which right is not yet earned
by performance;
1.20 "CONTRACTS" means the universality consisting of all
the right, title and interest which the Grantor has from time to time in and to
(a) any and all present and future contracts, leases, options, subcontracts,
agreements, service agreements, warranties, purchase orders, construction
contracts, subscriber contracts, customer service agreements, management
agreements, rights of way, servitudes, transmission capacity agreements, public
utility contracts and other agreements, the whole as they relate to Immovable
Property to which the Grantor is or may become entitled, or any part or parts
thereof and all
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extensions, amendments, renewals or substitutions thereof or therefore which
may hereafter be affected or entered into and all benefits, power, and
advantage of the Grantor, and (b) any and all licences, permits, approvals,
certificates and agreements with or from the Crown, state or government (or any
departments, agents or agencies thereof) relating directly or indirectly to the
Immovable Property or the Movable Property, (c) any and all existing or future
agreements of purchase and sale, options to purchase or mortgage, loan or other
financing commitment affecting the Hypothecated Property or any part or parts
thereof (but excluding all proceeds and other moneys now due and payable or
hereafter to become due and payable thereunder which, for certainty, constitute
Claims) and all benefits, power and advantage of the Grantor to be derived
therefrom, and the benefit of all covenants, obligations, agreements,
representations, warranties and undertakings in favour of the Grantor relating
to the Immovable Property or the Movable Property; provided that, for greater
certainty, Leases and Contract Rights are excluded from "CONTRACTS";
1.21 "DEED" means collectively this Deed of Hypothec, all
of the Schedules hereto, and every deed amending, supplementing or implementing
the same; "this Deed", "these presents", "hereto", "herein", "hereof",
"hereby", "hereunder", and any similar expressions refer to this Deed and not
to any particular Article or other portion thereof;
1.22 "DESTRUCTION" has the meaning ascribed thereto in
section 7.21.1;
1.23 "ENVIRONMENT" means all components of the earth,
including, without limitation, air (and all layers of the atmosphere), land
(and all surface and subsurface soil, underground spaces and cavities and all
land submerged under water) and water (and all surface and underground water),
organic and inorganic matter and living organisms, and the interacting natural
systems that include components referred to above in this definition of
"Environment";
1.24 "ENVIRONMENTAL LAWS" means all applicable Laws
relating to the Environment, Hazardous Substances, pollution or protection of
the Environment, including Laws relating to: (i) on site or off-site
contamination; (ii) chemical substances or products; (iii) Releases of
pollutants, contaminants, chemicals or other industrial, toxic or radioactive
substances or Hazardous Substances into the Environment;
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and (iv) the manufacture, processing, distribution, use, treatment, storage,
transport, packaging, labelling, sale, recycling, disposal, destruction,
incineration, burial, advertising, display or handling of Hazardous Substances;
1.25 "EQUIPMENT" means the universality consisting of all
the right, title and interest which the Grantor has from time to time in and to
any and all present and future equipment now owned or hereafter acquired by the
Grantor including, without limitation, all plants, facilities, machinery,
tools, equipment, computer equipment, software, office furniture, furnishings,
motor vehicles, towers, antennas, distribution systems and all components
thereof, hardware, cables, fibre optic cables, switches, amplifiers, associated
devices and rolling stock as well as any and all movable equipment used in
connection with the operation, security, maintenance, management, cleaning,
landscaping, snow removal, repairs and improvements to the Lands or the
Buildings; and all accessories, additions, attachments, improvements,
substitutions and replacements therefor and all accessories related thereto and
all licenses and other rights and all records, files, software, charts, plans,
drawings, specifications, manuals and documents relating thereto;
1.26 "ESTIMATE" has the meaning ascribed thereto in
section 7.21.4.3;
1.27 "EVENT OF DEFAULT" has the meaning ascribed thereto
in Article 8;
1.28 "EXCLUDED PROPERTY" means (i) the Accounts Receivable,
(ii) the Inventory, (iii) the General Intangibles, (iv) the Contract Rights,
(v) any and all balances, credits, deposits (general or special, time or demand,
provisional or final), accounts or monies of or in the name of the Grantor now
or hereafter with the agent, any lender or any participant under the Grantor's
working capital loan facility and any and all property of every kind or
description of or in the name of the Grantor now or hereafter, for any reason
or purpose whatsoever, in the possession or control of, or in transit to, or
standing to the Grantor's credit on the books of, such agent, any agent or
bailee for such agent, any such lender, or any such participant, (vi) to the
extent related to the property described in clauses (i) through (v) above, all
books, correspondence, credit files, records, invoices and other papers and
documents, including without limitation, to the extent so related, all
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tapes, cards, computer runs, computer programs and other papers and documents
in the possession or control of the Grantor or any computer bureau from time to
time acting for the Grantor, and, to the extent so related, all rights in, to
and under all policies of insurance, including claims of rights to payments
thereunder and proceeds therefrom, including business interruption insurance
and any credit insurance, and (vii) all products and proceeds (including but
not limited to any Accounts Receivable or other proceeds arising from the sale
or other disposition of any property described above, any returns of Inventory
sold by the Grantor, and the proceeds of any insurance covering any of the
property described above) of any of the foregoing;
1.29 "GENERAL INTANGIBLES" means the universality
consisting of all of the right, title and interest which the Grantor has from
time to time in and to all present and future incorporeal property, to the
extent that any of the foregoing arises out of or relates to Accounts
Receivable or Inventory, including without limitation, all right, title and
interest of the Grantor in and to: (i) all tax refunds and tax refund claims;
(ii) registered and unregistered patents, service marks, copyrights and
applications for any of the foregoing; and (iii) all trade secrets and other
confidential information relating to the business of the Grantor, in each case
to the extent that any of the foregoing arises out of or relates to Accounts
Receivable or Inventory;
1.30 "GOVERNMENTAL AUTHORITY" means the country, state,
province, county, city and political subdivisions in which any Person or such
Person's property is located or which exercises valid jurisdiction over any
such Person or such Person's property, and any court, agency, department,
commission, board, bureau or instrumentality of any of them including monetary
authorities which exercise valid jurisdiction over any such Person or such
Person's property; unless otherwise specified, all references to "Governmental
Authority" herein means a Governmental Authority having jurisdiction over,
where applicable, the Grantor;
1.31 "GOVERNMENTAL REQUIREMENT" means any law, statute,
code, ordinance, order, determination, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license, authorization or other
directive or requirement, including, without limitation, Environmental Laws,
energy regulations and occupational safety and health standards or controls, of
any Governmental Authority;
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1.32 "GRANTOR" means the Party of the First Part and its
successors and permitted assigns;
1.33 "HAZARDOUS SUBSTANCE" means any Substance which is or
is deemed to be, alone or in any combination, hazardous, hazardous waste,
toxic, a pollutant, a deleterious substance, a contaminant or a source of
pollution or contamination under any applicable Environmental Laws;
1.34 "HYPOTHEC OBLIGATIONS" means all of the obligations,
liabilities and indebtedness of the Grantor to the Collateral Agent, the
Administrative Agent, the Trustee, the Lenders and the Noteholders, or any one
of them, from time to time, whether present or future, direct or indirect,
absolute or contingent, liquidated or unliquidated, as principal or surety,
alone or with others (including principal, interest, interest on interest,
accessories, and all other expenses incurred from time to time by the
Collateral Agent, the Administrative Agent, the Trustee, the Lenders or the
Noteholders for the protection of their rights, or in pursuance of their
recourses hereunder or at Law) under or in respect of or arising from this
Deed, as same may be amended, restated or supplemented from time to time;
1.35 "HYPOTHECATED PROPERTY" means the universality
comprising all of the Grantor's property, rights, interests and assets, movable
and immovable, corporeal and incorporeal, both present and future, of
whatsoever nature or kind and wheresoever situate, including, without
limitation, the Immovable Property and the Movable Property, but excluding the
Excluded Property.
1.36 "IMMOVABLE CLAIMS" means the universality consisting
of all the right, title and interest which the Grantor has from time to time in
and to any and all present and future immovable claims directly or indirectly
held or enjoyed by the Grantor including, without limitation, all Rents which
may be received or to which the Grantor is or may become entitled in connection
with the Leases, the hypothecation of which would result in an immovable
hypothec, and all immovable insurance proceeds;
1.37 "IMMOVABLE PROPERTY" means collectively the Lands,
the Buildings, the Immovable Claims and all other present and future immovable
property, assets or rights of the Grantor;
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1.38 "INDENTURE" means the Indenture of even date among
the Grantor, as issuer, Pioneer Americas Acquisition Corp, PAI, certain other
guarantors thereunder, the Trustee, as trustee for the Noteholders, and the
Collateral Agent, as same may be amended, supplemented or restated from time to
time;
1.39 "INDENTURE OBLIGATIONS" means all of the obligations,
liabilities and indebtedness of the Grantor to the Collateral Agent, the
Trustee and the Noteholders, or any one of them, from time to time, whether
present or future, direct or indirect, absolute or contingent, liquidated or
unliquidated, as principal or as surety, alone or with others (including
principal, interest, interest on interest, accessories, and all other expenses
incurred from time to time by the Collateral Agent, the Trustee or the
Noteholders for the protection of their rights, or in pursuance of their
recourses hereunder or at Law) under or in respect of or arising from:
1.39.1 the Indenture; and
1.39.2 the Notes;
or any one or more of the aforesaid as the same may be amended, restated or
supplemented from time to time;
1.40 "INSURANCE PROCEEDS" has the meaning ascribed thereto
in section 7.21.1;
1.41 "INTELLECTUAL PROPERTY" means the universality
consisting of any and all present and future goodwill of the Grantor, and the
present and future right, title and interest of the Grantor in and to any and
all patents and patents pending, registered and unregistered trademarks, trade
or brand names, service marks, copyrights, industrial designs, formulae,
processes, trade secrets or inventions, licenses, permits and all other
intellectual property; provided however, that General Intangibles are excluded
from Intellectual Property;
1.42 "INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT" means
the Intercreditor and Collateral Agency Agreement of even date herewith, among
the Trustee, the Collateral Agent, Pioneer Americas Acquisition Corp., PAI, the
Grantor and Bank of America National Trust and Savings Association, as
administrative agent and as agent under a
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certain revolving credit facility, as same may be amended, supplemented or
restated from time to time;
1.43 "INVENTORY" means the universality consisting of all
the right, title and interest which the Grantor has from time to time in and to
any and all present and future movable inventory, goods, wares and merchandise,
property in stock, raw materials, components, work in process, goods in
transit, new and unused production, packing and shipping materials, and any
other movable property directly or indirectly kept by or on behalf of the
Grantor for sale, lease, processing, manufacture, transformation, packing,
shipping, advertising, selling or furnishing of goods and services and all
goods the sale or other disposition of which has given rise to an Account
Receivable or Contract Right which are returned to and/or repossessed and/or
stopped in transit by, or at any time hereafter, are in the possession or under
the control of the Grantor or of any of its affiliates or of the agent or any
lender under the Grantor's working capital loan facility, or any agent or
bailee of any of them, and all documents of title or other documents
representing same; provided however, that material used in connection with the
operation, security, maintenance, management, cleaning, landscaping, snow
removal, repairs and improvements to the Lands or Buildings are excluded from
Inventory;
1.44 "LANDS" means all right, title, and interest of the
Grantor in and to all present and future immovable property, including without
limitation, the Lands described in the First Schedule hereto;
1.45 "LAWS" means all statutes, codes, ordinances,
decrees, rules, regulations, municipal by-laws, judicial or arbitral or
administrative or ministerial or departmental or regulatory judgments, orders,
decisions, rulings or awards, policies and guidelines which are binding (or, if
not binding, the observance of which are in accordance with the practice of the
relevant industry in the jurisdiction concerned), or any provisions of the
foregoing, including general principles of common and civil law and equity,
binding on (or, if not binding, the observance of which are in accordance with
the practice of the relevant industry in the jurisdiction concerned) the Person
referred to in the context in which such word is used; and "LAW" means any one
of such Laws;
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1.46 "LEASES" means the universality consisting of all
right, title and interest which the Grantor has from time to time in and to any
and all present and future leases, offers to lease and other agreements to
lease of the whole or any part of Lands or Buildings and any and all present or
future agreements and licences whereby the Grantor gives any other Person the
right to use or occupy the whole or any part of the Lands or Buildings, in each
case for the time being in effect, and all revisions, alterations,
modifications, amendments, extensions, renewals, replacements or substitutions
thereof or therefor which may hereafter be effected or entered into but does
not include registered servitudes, rights of superficies, or rights in the
nature of a servitude, or a right of superficies;
1.47 "LENDERS" has the meaning ascribed thereto in the
Term Loan Agreement;
1.48 "LICENSES" means all franchises, licenses,
authorizations, approvals, permits and operating rights of the Grantor;
1.49 "LIEN" means, with respect to any property of any
Person, any charge, mortgage, prior claims, pledge, hypothec, security
interest, security under the Bank Act (Canada), lien, conditional sales (or
other title retention agreement or lease in the nature hereof, lease (where
such Person is the lessee of such property), servitudes, assignment, adverse
claims, defect of title, restriction, trust, right of set-off or other
encumbrance of any kind in respect of such property, whether or not filed,
recorded or otherwise perfected under applicable law;
1.50 "MATERIAL ADVERSE EFFECT" means, as to any Person,
asset or property, a material adverse effect on the business, assets,
properties, condition (financial or other), operations or results of operations
of such Person, asset or property, which effect is not adequately and
effectively insured or indemnified against by a financially sound insurance
company, and excepting effects arising solely out of general national economic
conditions and/or effects arising solely out of matters affecting the industry
in which such Person, asset or property conducts business a whole;
1.51 "MONEY" or "MONEYS" means those certain proceeds set
forth in sections 7.21.1 and 7.21.2;
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1.52 "MOVABLE PROPERTY" means collectively the Claims, the
Contracts, the Equipment, the Intellectual Property, the Leases (other than
Rent payable thereunder), the Licenses, the Securities and all movable
property, assets or rights, present and future, corporeal and incorporeal of
the Grantor, including (i) cash on hand and in bank or other deposit accounts
and certificates of deposit and other deposit instruments; and (ii) immovable
property located or incorporated in, on, at or upon the Lands and the Buildings
which is deemed by Law to be movable for purposes of hypothecation; provided
however, that Excluded Property is excluded from Movable Property;
1.53 "NET AWARD" has the meaning ascribed thereto in
section 7.21.2;
1.54 "NOTEHOLDERS" means the Persons in whose names the
Notes are registered at any time in the Security Register, as such term is
defined in the Indenture;
1.55 "NOTES" has the meaning ascribed to "Securities"
under the Indenture;
1.56 "OBLIGATIONS" means the Indenture Obligations, the
Term Loan Obligations and the Hypothec Obligations, collectively;
1.57 "PAI" means Pioneer Americas, Inc. and its successors
and assigns;
1.58 "PARTIES" means, collectively, the Grantor and the
Collateral Agent;
1.59 "PERMIT" or "PERMITS" has the meaning ascribed
thereto in section 7.14.4;
1.60 "PERMITTED LIENS" has the meaning ascribed thereto in
the Term Loan Agreement;
1.61 "PERSON" or "PERSONS" means a corporation, a legal
person, a legal entity, an association, a partnership, an organization, a
business, an individual, a government or political subdivision thereof or a
government agency;
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1.62 "PLANS AND SPECIFICATIONS" has the meaning ascribed
thereto in section 7.21.4.1;
1.63 "PLANT" means the Lands and the Building,
collectively;
1.64 "PURCHASE AGREEMENT" means the Asset Purchase
Agreement dated as of the 22nd day of September, 1997 between the Grantor, ICI
Canada Inc., PCI Carolina Inc., Pioneer Companies, Inc., ICI Americas Inc. and
Imperial Chemical Industries PLC, as same may be amended from time to time;
1.65 "RATE OF INTEREST" means the rate of interest of
twenty-five percent (25%) per annum;
1.66 "RECEIVER" means any agent appointed by the
Collateral Agent or a court of competent jurisdiction to possess and administer
all or any of the Hypothecated Property after the security has become
enforceable;
1.67 "RELEASE" when used as a verb includes release,
spill, leak, emit, deposit, discharge, leach, migrate, dump, issue, empty,
place, seep, exhaust, abandon, bury, incinerate or dispose into the Environment
and "RELEASE" when used as a noun has a correlative meaning;
1.68 "RENTS" means all the right, title and interest the
Grantor has from time to time in and to (i) any and all rent, income, revenues
and profits and other amounts payable or derived from the Leases or securing
obligations thereunder; and (ii) any and all indemnities and insurance proceeds
received, which may be received or to which the Grantor is or may become
entitled in connection with the Rents;
1.69 "RESTORATION" has the meaning ascribed thereto in
section 7.21.3;
1.70 "RESTORATION ELECTION NOTICE" has the meaning
ascribed thereto in section 7.21.3;
1.71 "SECURITIES" means all shares, stocks, warrants,
bonds, debentures, debenture stock, stock options and other securities
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now or hereafter held, owned or acquired by or on behalf of the Grantor,
together with all renewals thereof, substitutions therefor, accretions thereto
and all rights, claims and proceeds in respect thereof and including, without
limitation, any such securities of the Grantor which are now or hereafter held
by or delivered to the Grantor and all rights, title and interest in any of the
foregoing which the Grantor now or at any time in the future has or may have;
1.72 "SUBSTANCE" means any substance, waste, liquid,
gaseous or solid matter, fuel, micro-organism, sound, vibration, ray, heat,
odour, radiation, energy vector, plasma, and organic or inorganic matter;
1.73 "SURETY BOND" means a clean irrevocable surety bond
or credit insurance policy in favour of the Collateral Agent issued by an
insurance company the claims paying ability rating of which at the time such
surety bond or credit insurance policy is delivered is satisfactory to the
Collateral Agent, accompanied by an opinion of counsel to such insurance
company to the effect that such surety bond or credit insurance policy has been
duly authorized, executed and delivered by such insurance company and
constitutes the legal, valid and binding obligation of such insurance company
enforceable against such insurance company by the Collateral Agent in
accordance with its terms subject to customary exceptions at the time for
opinions for such instruments, together with an opinion of counsel to the
effect that, taking into account the purpose under this Deed of Hypothec for
which such surety bond will be given, such surety bond and accompanying
opinions are responsive to the requirements of this Deed of Hypothec;
1.74 "TAKING" has the meaning ascribed thereto in section
7.21.2;
1.75 "TAXES" means all taxes, surtaxes, rates or
assessments, general or special, municipal, regional or for school or
ecclesiastic purposes, which now are or may hereafter be imposed, charged or
levied upon any of the Hypothecated Property (or any portion thereof, or upon
any property, asset or right comprised therein); and
1.76 "TERM LOAN AGREEMENT" means the Term Loan Agreement
of even date herewith, among PAI, as borrower, Pioneer Americas Acquisition
Corp., as the parent guarantor, the Lenders, DLJ Capital Funding Inc, as the
syndication agent for the Lenders, Salomon
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Brothers Holding Company Inc, as the documentation agent for the Lenders, the
Administrative Agent, as administrative agent for the Lenders and the
Collateral Agent, as the same may be amended, supplemented or restated from
time to time;
1.77 "TERM LOAN OBLIGATIONS" means all of the obligations,
liabilities and indebtedness of PAI to the Collateral Agent, the Administrative
Agent and the Lenders, or any one of them, from time to time, whether present
or future, direct or indirect, absolute or contingent, liquidated or
unliquidated, as principal or as surety, alone or with others (including
principal, interest, interest on interest, accessories and all other expenses
incurred from time to time by the Collateral Agent, the Administrative Agent or
the Lenders, for the protection of their rights, or in pursuance of their
recourses hereunder or at Law) under or in respect of or arising from:
1.77.1 the Bond;
1.77.2 the Bond Pledge Agreement;
1.77.3 the Term Notes; and
1.77.4 the Term Loan Agreement;
or any one or more of the aforesaid as the same may be amended, restated or
supplemented from time to time, whether or not the Grantor (if not a party
thereto) shall have consented thereto;
1.78 "TERM NOTES" has the meaning ascribed thereto in the
Term Loan Agreement;
1.79 "TRANSFER" has the meaning ascribed thereto in
section 7.20;
1.80 "TRUSTEE" means United States Trust Company of New
York, and includes each other Person as shall have subsequently been appointed
as the successor Trustee pursuant to the Indenture.
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2. CHARGING PROVISIONS:
2.1 HYPOTHEC: As continuing and collateral security for
the due and punctual payment, performance and fulfilment of the Obligations and
Accessories, the Grantor does hereby hypothecate in favour of the Collateral
Agent, the Hypothecated Property for the sum of THREE HUNDRED AND EIGHTY-FIVE
MILLION DOLLARS ($385,000,000) in lawful money of Canada with interest thereon
at the Rate of Interest, calculated daily and payable monthly in arrears, from
the date hereof and before and after demand, default and judgment.
2.2 ADDITIONAL HYPOTHEC: As additional security for the
due and punctual payment, performance and fulfilment of the Accessories,
including without limitation the payment of interest on interest, legal fees,
costs of realization, expenses incurred by the Collateral Agent in connection
with the preservation and maintenance of the hypothecs hereby created and of
the Hypothecated Property or otherwise in connection with the Obligations and
Accessories, the Grantor does hereby further hypothecate, with effect as of and
from this date, the Hypothecated Property in favour of the Collateral Agent,
for an additional sum of SEVENTY-SEVEN MILLION DOLLARS ($77,000,000) in lawful
money of Canada with interest thereon at the Rate of Interest calculated daily
and payable monthly, in arrears, from the date hereof and before and after
demand, default and judgment; the hypothecs created by the Grantor in favour of
the Collateral Agent, pursuant to this Deed being for the aggregate sum of FOUR
HUNDRED AND SIXTY-TWO MILLION DOLLARS ($462,000,000) in lawful money of Canada.
2.3 NO FLOATING HYPOTHEC: The hypothecs granted
hereunder do not constitute and shall not constitute nor be construed as
floating hypothecs within the meaning of Article 2715 of the Civil Code of
Quebec.
2.4 CONTINUING VALIDITY: The full amount of the
foregoing hypothecs shall be and remain continuing collateral security in
favour of the Collateral Agent for the full payment or fulfilment of the
Obligations and Accessories, if any, and such hypothecs shall be and remain in
full force and effect notwithstanding the repayment and reduction or fulfilment
at any time and from time to time of the Obligations and Accessories, if any,
or any part thereof or the fact that at any time and from time to time there
may be no Obligations and Accessories, if any, owing by the Grantor or PAI, as
the case may be,
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the whole until all Obligations and Accessories, if any, at any time and from
time to time existing shall have been entirely repaid, fulfilled and released
to the reasonable satisfaction of the Collateral Agent, and such hypothecs
shall not be reduced unless and until a document evidencing the discharge is
executed by the Collateral Agent and is delivered in which it shall be
expressly stated that the amounts therein referred to are in reduction of the
hypothecs hereby created and until the hypothecs herein created are released
and discharged to the extent therein stated.
2.5 NO REDUCTION: No payment made by the Grantor or by
any Person on its behalf to the Collateral Agent shall in any way operate to
extinguish the hypothecs created herein or as a reduction of said hypothecs
hereby created, or effect novation, save only as and when such payment is
expressly applied by the Collateral Agent in reduction of the said hypothecs by
means of a document evidencing the discharge executed by the Collateral Agent,
pursuant to Article 2.4 hereof.
2.6 REQUIRED CONSENTS: Notwithstanding any other
provision of this Deed, the hypothecs granted by the Grantor shall not extend
or apply to any Contracts, or rights or interests arising thereunder or subject
thereto, as to which the grants, creation or making of a hypothec would
constitute a violation or a breach of a validly enforceable restriction
thereon.
2.7 NO NOVATION: Nothing herein shall affect, novate,
terminate or supersede any covenants and obligations of the Grantor under the
Bond.
2.8 FURTHER ASSURANCES: The Grantor will at its own
expense do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered all such further acts, deeds, assignments,
registrations, publications and assurances (including instruments supplemental
or ancillary hereto) as the Collateral Agent may from time to time reasonably
request to perfect its security on the Hypothecated Property, including,
without limitation, specifically hypothecating in favour of the Collateral
Agent the right, title and interest of the Grantor in all property and assets
subject to, or intended to be subject to, the charges of this Deed which the
Grantor will hereafter acquire.
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3. PAST, PRESENT OR FUTURE ADVANCES: The security hereby
constituted shall have effect whether or not the Obligations thereby secured
shall have been incurred before or after or upon the date of the execution of
this Deed.
4. POSSESSION BY GRANTOR: Until the security hereby constituted
shall become enforceable, the Grantor shall, subject always to the provisions
of this Deed, peaceably and quietly have, hold, use, occupy, possess and enjoy
the Hypothecated Property and manage and operate the same for its own use and
benefit.
5. COLLECTION OF CLAIMS AND RENTS:
5.1 AUTHORIZATION TO COLLECT: The Collateral Agent
hereby expressly authorizes the Grantor to manage and collect the Claims and
the Rents as and when they become due. If an Event of Default has occurred and
is continuing, the Collateral Agent shall have the right to serve upon the
Grantor and the debtors under such Claims and Rents a notice withdrawing such
authorization, whereupon the Collateral Agent shall, subject to applicable Law,
immediately have the right to collect all such Claims and Rents.
5.2 COLLECTION: In the event that the Grantor receives
payment of any Claims or Rents after an Event of Default has occurred and is
continuing, whether or not the Collateral Agent shall have served upon the
Grantor and the debtors under such Claims and Rents such notice withdrawing the
authorization granted to the Grantor to collect the Claims and the Rents, the
Grantor shall receive payment of the Claims and the Rents as mandatary or
depositary of the Collateral Agent and the Grantor hereby undertakes to pay
forthwith to the Collateral Agent all Claims and Rents so received.
5.3 STATEMENTS OF CLAIMS: Following the occurrence and
continuation of an Event of Default, should the Collateral Agent serve such a
notice withdrawing the authorization granted to the Grantor to collect all
Claims and Rents as provided herein, the Grantor hereby agrees that all
statements provided by the Collateral Agent to the Grantor with respect to the
Claims and Rents received and their application by the Collateral Agent, shall
be prima facie conclusive and binding unless manifestly wrong or incorrect.
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5.4 NO REQUIREMENT TO ENFORCE: The Collateral Agent
shall have no obligation to exercise any rights in respect of any Claims or
Rents nor to enforce or to see to payment of the same, whether by legal action
or otherwise. The Collateral Agent shall not be liable for any loss or damage
resulting from any decision on the part of the Collateral Agent not to
exercise, to exercise only in part or to delay or suspend the exercise or any
failure or delay by the Collateral Agent in exercising any of its rights under
this Article 5, Article 10 or any other provision of this Deed or under the
Bond.
5.5 DEALINGS BY COLLATERAL AGENT: The Collateral Agent
may give acquittances for any sums it collects and may, but shall not be
obligated to, realize any of the claims, grant extensions, grant releases,
accept compositions, renounce and generally deal with the Claims or Rents, and
any guarantees or security therefor, and take any action to preserve, protect
or secure such Claims or Rents, at such times and in such manner as it deems
advisable in its sole discretion, without notice to or the consent of the
Grantor, and without incurring any liability therefor.
5.6 IRREGULAR PAYMENTS: The Collateral Agent shall have
no obligation to inform the Grantor of any irregularity in the payment of the
Claims and Rents.
5.7 APPLICATION: Any amounts collected by the Collateral
Agent on account of Claims or Rents may, at the Collateral Agent's option,
either be deposited by the Collateral Agent in a bank account in the name of
the Grantor, subject to such conditions as the Collateral Agent may determine
to be necessary or appropriate in the circumstances (in which event, for
certainty, such proceeds shall form part of the Hypothecated Property and be
subject to the hypothecs herein created) or applied towards payment of any part
or parts of the Obligations and Accessories as the Collateral Agent, in
accordance with the provisions of the Intercreditor and Collateral Agency
Agreement, the Indenture or the Term Loan Agreement in respect of application
of payments, acting reasonably, shall decide.
6. NO ASSUMPTION OF OBLIGATIONS: The Collateral Agent does not,
in exercising any of its rights and recourses under this Deed or at Law, in any
way personally assume the obligations of the
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Grantor. The Grantor will remain liable under the Contracts and the Leases to
observe and perform all the conditions and obligations to be observed and
performed by the Grantor thereunder.
7. REPRESENTATIONS AND COVENANTS OF THE GRANTOR:
The Grantor hereby represents and covenants to the Collateral
Agent that:
7.1 CORPORATE POWER AND AUTHORITY: The Grantor has the
full corporate power and authority to enter into this Deed and to grant the
hypothecs herein created without obtaining the waiver, consent or approval of
any lessor, sublessor, Governmental Authority or entity or other party
whomsoever and whatsoever which has not been obtained except in the case of
certain environmental permits and approvals which, by their terms, are not
transferable or cannot be transferred without the prior approval of the issuing
agency.
7.2 EXECUTION AND DELIVERY: The execution and delivery
of this Deed have been duly authorized by all necessary corporate action.
7.3 BINDING OBLIGATION: This Deed, when duly executed
and delivered, will be a legal, valid and binding obligation of the Grantor
enforceable against it in accordance with its terms; provided that such
enforcement may be limited by bankruptcy, insolvency, reorganization or similar
Laws affecting creditors' rights generally.
7.4 GOOD TITLE: The Grantor has good and marketable title
to the Hypothecated Property. The Buildings upon the Land are all within the
boundary lines of the Lands except as may be set forth in the Certificate of
Location, and there are no encroachments thereon that would materially impair
the use thereof. The Hypothecated Property is free and clear of any and all
Liens or encumbrances of any nature or kind except for the Permitted Liens.
7.5 ALL PERMITS: The Grantor has all necessary permits,
franchises, licenses, rights-of-way, servitudes or other rights or authority
needed in connection with the operation and maintenance of the
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Plant, except where the failure to have the same would not have a Material
Adverse Effect; all of the Contracts are presently in full force and effect and
no default has occurred or exists thereunder, except where such default would
not individually or in the aggregate have a Material Adverse Effect; except for
Permitted Liens, the Grantor's grant of the hypothecs in the Hypothecated
Property in the manner herein provided does not result in the creation or
imposition of any other Lien or security interest, adverse claim or option upon
any of the Hypothecated Property.
7.6 PLACE OF BUSINESS: The Grantor's registered office
is located in the City of Saint John, New Brunswick. The Grantor will not
change its name, identity or corporate structure or its registered office or
chief place of business without notifying the Collateral Agent at least thirty
(30) days prior to the effective date of such change.
7.7 DEFENCE OF TITLE: The Grantor will warrant and
defend title to the Hypothecated Property, subject to Permitted Liens, against
the claims and demands of all other Persons whomsoever and will maintain and
preserve the hypothecs created hereby so long as any of the Obligations secured
hereby remain outstanding. Should an adverse claim be made against the title
to any material part of the Hypothecated Property, the Grantor agrees it will
immediately notify the Collateral Agent in writing thereof and defend against
such adverse claim to the extent necessary to preserve the Collateral Agent's
rights and benefits hereunder, subject to Permitted Liens, and the Grantor
further agrees that the Collateral Agent may take such other reasonable action
as it deem advisable to protect and preserve its interests in the Hypothecated
Property, and in such event the Grantor will indemnify the Collateral Agent
against any and all costs, reasonable attorney's fees and other expenses which
it may incur in defending against any such adverse claim. Such obligations
shall be payable on demand and shall bear interest from the date of demand
therefor until paid at the Rate of Interest. Any proceeds of any policy of
title insurance maintained by the Grantor with respect to the Hypothecated
Property shall, for the purposes of this Deed of Hypothec, be paid and applied
in the same manner as Insurance Proceeds.
7.8 FIRST-RANKING HYPOTHEC: This Deed of Hypothec is, and
always will be maintained as first-ranking hypothec upon the Hypothecated
Property, subject to the Permitted Liens, and the Grantor will not create or
suffer to be created or permit to exist any Lien,
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security interest or charge prior or junior to or on parity with the hypothecs
created under this Deed of Hypothec upon the Hypothecated Property or any part
thereof or upon the rents, issues, revenues, profits or other income therefrom,
except for the Permitted Liens.
7.9 MAINTENANCE OF HYPOTHECATED PROPERTY: The Grantor
will, at its own expense, do or cause to be done all things necessary to
preserve and keep in full repair, working order and efficiency, reasonable wear
and tear excepted, all of the Hypothecated Property, including, without
limitation, all Equipment and, from time to time, will make all the needful and
proper repairs, renewals and replacements so that at all times the state and
condition of the Hypothecated Property will be fully preserved and maintained,
unless the failure to repair, renew or replace would not materially interfere
with the present use or operation of the Hypothecated Property.
7.10 PERFORMANCE OF CONTRACTS: The Grantor will promptly
pay and discharge all rentals, or other payments and will perform or cause to
be performed each and every act, matter or thing required by, each and all of
the contracts, instruments or agreements executed in connection with or
incident to the ownership and operation of the Plant and being a portion of the
Hypothecated Property and will do all other things necessary to keep unimpaired
the Grantor's rights with respect thereto and to prevent any forfeiture thereof
or default thereunder, unless such forfeiture or default shall not individually
or in the aggregate have a Material Adverse Effect. The Grantor will operate
the facilities comprising the Plant in a good and workmanlike manner and in
accordance with the practices of the industry and in compliance in all material
respects with all Governmental Requirements affecting ownership and operation
of such facilities, including without limitation, Environmental Laws.
7.11 NAME OF GRANTOR: The Grantor does not do business
with respect to the Hypothecated Property under any name other than PCI
Chemicals Canada Inc./Produits Chimiques PCI Canada Inc.
7.12 OPERATION BY THIRD PARTIES: To the extent any of the
Hypothecated Property is operated by a party or parties other than the Grantor,
the Grantor's covenants as expressed hereunder are modified to require that the
Grantor use its best efforts (including without limitation the reasonable
exercise of all rights and remedies as are
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available to the Grantor) to obtain compliance with such covenants by the
operator or operators of the Hypothecated Property.
7.13 COMPLIANCE WITH LAWS: The Plant complies in all
material respects with all local zoning, land use, setback and other
development, use and occupancy requirements of Governmental Authorities except
for possible nonconforming uses or violations which do not and will not
materially interfere with the present use, operation or maintenance thereof as
now used, operated or maintained.
7.14 PAYMENT OF TAXES, INSURANCE PREMIUMS, ASSESSMENTS;
COMPLIANCE WITH LAWS AND INSURANCE REQUIREMENTS:
7.14.1 Unless contested in accordance with the provisions
of section 7.14.5 hereof, the Grantor shall pay and discharge or cause to be
paid and discharged, from time to time when the same shall become due, all real
estate and other taxes, special assessments, levies, permits, inspection and
license fees, all premiums for insurance, all water and sewer rents and
charges, and all other public charges imposed upon or assessed against the
Hypothecated Property or any part thereof or upon the revenues, rents, issues,
income and profits of the Hypothecated Property, including, without limitation,
those arising in respect of the occupancy, use or possession thereof.
7.14.2 During the continuance of an Event of Default, the
Grantor shall deposit with the Collateral Agent, on the first day of each
month, an amount reasonably estimated by the Grantor to be equal to one-
twelfth (1/12th) of the annual taxes, assessments and other items required to
be discharged by the Grantor under section 7.14.1 and amounts reasonably
estimated by the Grantor to be necessary to maintain the insurance coverages
contemplated in section 7.16 below, which estimates shall not be less than
one-twelfth (1/12th) of the annual taxes, assessments, insurance premiums and
other items required to be discharged by the Grantor during the year
immediately preceding the year during which such Event of Default occurred.
Such amounts shall be held by the Collateral Agent without interest to the
Grantor and applied to the payment of each obligation in respect of which such
amounts were deposited, in such order or priority as the Collateral Agent shall
determine, on or before the date on which such obligation would become
delinquent. If at any time the amounts so deposited by the
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Grantor shall, in the Collateral Agent's judgment, be insufficient (when added
to the instalments anticipated to be paid thereafter) to discharge any of such
obligations when due, the Grantor shall, immediately upon demand, deposit with
the Collateral Agent such additional amounts as may be requested by the
Collateral Agent. Nothing contained in this section 7.14 shall affect any
right or remedy of the Collateral Agent under any provision of this Deed of
Hypothec or of any statute or rule of Law to pay any such amount from its own
funds (provided, however, that the Collateral Agent shall not in any event be
obligated to pay any of such amounts from its own funds) and to add the amount
so paid, together with interest at the Rate of Interest, to the obligations, or
relieve the Grantor of its obligations to make or provide for the payment of
the annual taxes, assessments and other charges required to be discharged by
the Grantor under section 7.14.1. All sums held pursuant to this section 7.14
shall form part of the Hypothecated Property. During the continuance of any
Event of Default, the Collateral Agent may apply all or any part of the sums
held pursuant to this section 7.14 to payment and performance of the
Obligations in accordance with the provisions of the Intercreditor and
Collateral Agency Agreement. The Grantor shall redeposit with the Collateral
Agent an amount equal to all amounts so applied as a condition to the cure, if
any, of such Event of Default, in addition to fulfilment of any other required
conditions.
7.14.3 Unless contested in accordance with the provisions
of section 7.14.5, the Grantor shall timely pay (or obtain a bond in the amount
of) all lawful claims and demands of mechanics, materialmen, labourers,
warehousemen, employees, suppliers, government agencies administering worker's
compensation insurance, old age pensions and social security benefits and all
other claims, judgments, demands or amounts of any nature which, if unpaid or
not bonded, could result in or permit the creation of a Lien (other than a
Permitted Lien) on the Hypothecated Property or any part thereof or the Rents
arising therefrom, or which might result in forfeiture of all or any part of
the Hypothecated Property.
7.14.4 The Grantor shall maintain, or cause to be
maintained, in full force and effect, all permits, certificates, authorizations,
consents, approvals, registrations, filings, licenses, franchises or other
instruments now or hereafter required by any Governmental Authority to operate
or use and occupy the Immovable Property and the Equipment for its intended uses
(collectively, the
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"PERMITS"; each, a "PERMIT"), unless the failure to maintain such Permits would
not individually or in the aggregate have a Material Adverse Effect. Unless
contested in accordance with the provisions of section 7.14.5, the Grantor
shall comply promptly with, or cause prompt compliance with, all requirements
set forth in the Permits and all Governmental Requirements applicable to all or
any part of the Hypothecated Property or the condition, use or occupancy of all
or any part thereof or any recorded deed of restriction, declaration, covenant
running with the land or otherwise, now or hereafter in force unless the
compliance therewith would not individually or in the aggregate have a Material
Adverse Effect. The Grantor shall not initiate or consent to any change in the
zoning, subdivision or any other use classification of the Lands, if such
action could have a material adverse effect on the hypothecs granted under of
this Deed of Hypothec or materially impair the present use and operation of the
Hypothecated Property or materially impair the Collateral Agent's rights or
benefits hereunder, without the prior written consent of the Collateral Agent.
7.14.5 The Grantor may at its own expense contest the
amount or applicability of any of the obligations described in sections 7.14.1,
7.14.3 and 7.14.4 by appropriate legal proceedings, prosecution of which
operates to prevent the collection or enforcement thereof or the sale or
forfeiture of the Hypothecated Property or any part thereof to satisfy such
obligations; provided, however, that:
7.14.5.1 any such contest shall be conducted in good
faith by appropriate legal proceedings promptly instituted and diligently
conducted; and
7.14.5.2 in connection with such contest, the Grantor
shall have made provision for the payment or performance of such contested
obligation on the Grantor's books if and to the extent required by generally
accepted accounting principles then utilized by the Grantor in the preparation
of its financial statements, or shall have deposited with the Collateral Agent
a sum sufficient to pay and discharge such obligation and the Collateral
Agent's estimate of all interest and penalties related thereto.
Notwithstanding the foregoing provisions of this section 7.14.5:
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7.14.5.3 no contest of any such obligations may be
pursued by the Grantor if such contest would expose the Collateral Agent, or
any of the Administrative Agent, the Trustee, the Noteholders or the Lenders to
any possible criminal liability or, unless the Grantor shall have furnished an
Additional Undertaking therefor satisfactory to the Collateral Agent in respect
of any civil liability for failure to comply with such obligations; and
7.14.5.4 if at any time payment or performance of any
obligation contested by the Grantor pursuant to this section 7.14.5 shall
become necessary to prevent the delivery of a tax or similar deed conveying the
Hypothecated Property or any portion thereof because of nonpayment or
nonperformance, the Grantor shall pay or perform the same in sufficient time to
prevent the delivery of such tax or similar deed.
7.14.6 The Grantor shall, not in its use and
occupancy, of the Plant or the Equipment (including, without limitation, in the
making of any Alteration) take any action that would cause the termination,
revocation or denial of any insurance coverage required to be maintained under
this Deed of Hypothec or, that pursuant to written notice from any applicable
insurer, would be the basis for a defense to any claim under any insurance
policy maintained in respect of the Plant or the Equipment and the Grantor
shall otherwise comply in all material respects with the requirements of any
insurer that issues a policy of insurance in respect of the Plant or the
Equipment.
7.14.7 The Grantor shall, promptly upon receipt of
any written notice regarding any failure by the Grantor to pay or discharge any
of the obligations described in section 7.14.1 or 7.14.6, furnish a copy of
such notice to the Collateral Agent. The Grantor shall, promptly upon receipt
of any written notice regarding any failure by the Grantor to pay or discharge
any of the obligations described in section 7.14.3 or 7.14.4, furnish a copy of
such notice to the Collateral Agent, if such failure would have a Material
Adverse Effect.
7.15 CERTAIN TAX LAW CHANGES: In the event of the
passage after the date of this Deed of Hypothec of any Law deducting from the
value of immovable property, for the purpose of taxation, amounts in respect of
any Lien thereon or changing in any way the Laws for the taxation of deeds of
hypothec or debts secured by deeds of
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hypothec for federal, provincial, municipal or local purposes or the manner of
the collection of any such taxes, and imposing a new tax, either directly or
indirectly, on this Deed of Hypothec or the interest of any of the Collateral
Agent, the Administrative Agent, the Trustee, the Lenders and the Noteholders
in any Hypothecated Property (other than income, franchise or similar taxes
imposed on such Person), or in the event that any regulation or regulatory
amendment becoming effective after the date hereof imposes any federal or
provincial or municipal or local tax on interest income received with respect
to any Obligation, the Grantor shall promptly pay the Collateral Agent such
amount or amounts as may be necessary from time to time to pay such tax.
7.16 REQUIRED INSURANCE POLICIES:
7.16.1 The Grantor shall maintain, or cause to be
maintained, as of and from the Closing Date, in full force and effect the
following insurance coverages in respect of the Plant and the Equipment:
7.16.1.1 Physical hazard insurance on an "all risk"
basis covering hazards commonly covered by fire and extended coverage,
lightning, civil commotion, hail, riot, strike, water damage, sprinkler
leakage, collapse and malicious mischief, in an amount equal to the full
replacement cost of the Buildings and all Equipment, with such deductibles as
would be maintained by a prudent operator of property similar in use and
configuration to the Plant and located in the locality where the Plant is
located. "Full replacement cost" means the cost of construction to replace the
Buildings and the Equipment, exclusive of depreciation, excavation, foundation
and footings, as determined from time to time by a proper officer of the
Grantor in consultation with its insurance company or insurance agent, as
appropriate;
7.16.1.2 Comprehensive general liability insurance
against claims for bodily injury, death or property damage occurring on, in or
about the Plant and any adjoining streets, sidewalks and passageways and
covering any and all claims, including, without limitation, all legal
liability, subject to customary exclusions, to the extent insurable, imposed
upon the Collateral Agent or any of the Administrative Agent, Trustee, Lenders
or Noteholders, and all court costs and attorneys' fees, arising out of or
connected with the possession, use, leasing, operation or condition of the
Plant, with policy limits and deductibles in such amounts as would be
maintained by a prudent operator of property similar in use
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and configuration to the Plant and located in the locality where the Plant is
located;
7.16.1.3 Comprehensive boiler and machinery insurance
to cover sudden and accidental breakdown, including but not limited to,
explosion of any boilers and machinery located on the Plant or comprising any
Equipment, with policy limits and deductibles in such amounts as would be
maintained by a prudent operator of property similar in use and configuration
to the Plant and the Equipment and located in the locality where the Plant is
located;
7.16.1.4 Comprehensive automobile liability insurance
policy against claims for bodily injury, death and property damage covering all
owned, leased, non-owned and hired motor vehicles, including loading and
unloading in such amounts as would be maintained by a prudent operator of
property similar in use and configuration to the Plant and the Equipment and
located in the locality where the Plant is located;
7.16.1.5 Business interruption insurance on an annual
basis in amounts not less than the projected gross profit of the Plant during
the applicable twelve-month period but in no event less than the amount
necessary to pay the fixed charges and other expenses of owning, operating and
maintaining the Hypothecated Property for the same period;
7.16.1.6 To the extent not otherwise covered by the
insurance required under sections 7.16.1.1 and 7.16.1.2, during the performance
of any Alterations, renovations, repairs, restorations or construction, broad
form Builders Risk Insurance on an all-risk completed value basis; and
7.16.1.7 Such other insurance, against such risks and
with policy limits and deductibles in such amounts as would be maintained by a
prudent operator of property similar in use and configuration to the Plant and
located in the locality in which the Plant is located.
7.16.2 The Grantor may maintain the coverages
required by this section 7.16 under blanket policies covering the Plant and
other locations owned or operated by the Grantor if the terms of such blanket
policies otherwise comply with the provisions of this section 7.16 and contain
specific coverage allocations in respect of the Plant determined in accordance
with the provisions of this section 7.16. All insurance
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policies in respect of the coverages required by sections 7.16.1.1, 7.16.1.4,
7.16.1.6 and, if applicable, 7.16.1.7 shall be in amounts at least sufficient
to prevent coinsurance liability and all losses thereunder shall be payable to
the Collateral Agent, as loss payee, subject to the terms of the Intercreditor
and Collateral Agency Agreement, pursuant to a standard Canadian Insurance
Bureau standard mortgagee clause for use in the Province of Quebec, or any
equivalent thereof, and each such policy shall, to the extent obtainable at
commercially reasonable costs,
7.16.2.1 include effective waivers (whether under the
terms of such policy or otherwise) by the insurer of all claims for insurance
premiums against all loss payees and named insureds other than the Grantor and
all rights of subrogation against any named insured, and
7.16.2.2 provide that any losses thereunder shall be
payable notwithstanding (i) any act, failure to act, negligence of, or
violation or breach of warranties, declarations or conditions contained in such
policy by the Grantor or the Collateral Agent or any other named insured or
loss payee, (ii) the occupation or use of the Plant or the Equipment for
purposes more hazardous than permitted by the terms of the policy, (iii) any
foreclosure or other proceeding or notice of sale relating to the Plant or the
Equipment, or (iv) any change in the title to or ownership or possession of the
Plant or the Equipment; provided, however, that (with respect to items
contemplated in clauses (iii) and (iv) above) any notice requirements of the
applicable policies are satisfied. All insurance policies in respect of the
coverages required by sections 7.16.1.2, 7.16.1.5 and, if applicable, 7.16.1.7
shall name the Collateral Agent as an additional insured.
7.16.3 Each policy of insurance required under this
section 7.16 shall provide that:
7.16.3.1 notices of any failure by the Grantor to pay
any insurance premium in respect thereof, be furnished to the Collateral Agent
contemporaneously with any such notice given to the Grantor and
7.16.3.2 it may not be cancelled or otherwise
terminated without at least twenty (20) days' prior written notice to the
Collateral Agent and shall permit the Collateral Agent to pay any premium
therefor within twenty (20) days after receipt of any notice stating that such
premium has not been paid when due. The policy or policies of such
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insurance or certificates of insurance evidencing the required coverages and
all renewals or extensions thereof shall be delivered to the Collateral Agent
upon receipt by the Grantor. Settlement of any claim under any of the
insurance policies referred to in this section 7.16 (other than the insurance
contemplated in section 7.16.1.3 which in the Grantor's reasonable judgment
involves loss of $1,000,000 in lawful currency of the United States or more,
shall require the prior approval of the Collateral Agent (acting pursuant to
the provisions of the Intercreditor and Collateral Agency Agreement) and the
Grantor shall use its best efforts to cause each such insurance policy to
contain a provision to such effect.
7.16.4 At least fifteen (15) days prior to the
expiration of any insurance policy required by this section 7.16, the Grantor
shall deliver to the Collateral Agent evidence that such policy or policies
shall be renewed or extended and the Grantor shall deliver promptly to the
Collateral Agent after receipt thereof the policy or policies renewing or
extending such expiring policy or renewal or extension certificates or other
evidence of renewal or extension, together with a receipt showing payment of
the premium thereof.
7.16.5 The Grantor shall not purchase additional
policies in respect of the insurance coverages required to be maintained under
this section 7.16, unless the Collateral Agent is included thereon as an
additional named insured and, if applicable, with loss payable to the
Collateral Agent under an endorsement containing the provisions described in
section 7.16.2 and the policy evidencing such insurance otherwise complies with
the requirements of section 7.16.2. The Grantor immediately shall notify the
Collateral Agent whenever any such separate insurance policy is obtained and
promptly shall deliver to the Collateral Agent the policy or certificate
evidencing such insurance.
7.17 INSPECTION: The Grantor shall permit the
Collateral Agent, by its agents, accountants and attorneys, to visit and
inspect the Hypothecated Property upon reasonable prior notice at such times as
may be reasonably requested by the Collateral Agent.
7.18 THE GRANTOR TO MAINTAIN IMPROVEMENTS: The
Grantor shall not commit any waste on the Plant or with respect to any
Equipment or make any change in the use of the Plant or any Equipment. The
Grantor represents and warrants that:
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7.18.1 to the Grantor's knowledge, the Plant is
served by all electric, gas, sewer, water facilities and any other utilities
required or necessary for the current use thereof and any easements or
servitudes necessary to the furnishing of such utility service by the Grantor
have been obtained and duly recorded, and
7.18.2 the Grantor has access to the Plant from
public roads sufficient to allow the Grantor and its tenants and invitees to
conduct its and their businesses at the Plant as it is currently conducted.
The Grantor shall not materially alter the occupancy or use of the Plant
without the prior written consent of the Collateral Agent. Except as otherwise
permitted by the Intercreditor and Collateral Agency Agreement, no Buildings
comprising a portion of the Plant may be demolished nor shall any Equipment be
removed without the prior written consent of the Collateral Agent.
7.19 LEASES:
7.19.1 All of the Leases are valid and effective in
accordance with their respective terms, except that the enforcement thereof may
be subject to:
7.19.1.1 bankruptcy, insolvency, reorganization,
moratorium or other similar Laws affecting or relating to enforcement of
creditors' rights generally, and
7.19.1.2 general equitable principles.
To the Grantor's knowledge, the Grantor is not in material breach of or in
default (and to the Grantor's knowledge, no event has occurred which with due
notice or lapse of time or both, may constitute such a material breach or
default) under any Lease, and no party to any Lease has given the Grantor
written notice of or made a claim with respect to any breach or default, the
consequences of which, individually or in the aggregate, would have a Material
Adverse Effect on the Grantor.
7.19.2 The Grantor shall manage and operate the
Hypothecated Property or cause the Hypothecated Property to be managed and
operated in a reasonably prudent manner and, except as otherwise permitted
under section 7.20, will not enter into any Lease (or any amendment or
modification thereof) or other agreement subsequent
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to the date hereof with any Person which, in the reasonable judgment of the
Grantor, individually or in the aggregate, would have a Material Adverse Effect
on the value of the property subject thereto.
7.19.3 The Grantor shall not:
7.19.3.1 receive or collect, or permit the receipt or
collection of, any rental or other payments under any Lease more than one (1)
month in advance of the respective period in respect of which they are to
accrue, except that (i) in connection with the execution and delivery of any
Lease or of any amendment to any Lease, rental payments thereunder may be
collected and received in advance in an amount not in excess of one (1) month's
rent and (ii) the Grantor may receive and collect escalation and other charges
in accordance with the terms of each Lease;
7.19.3.2 assign, transfer or hypothecate (other than
to the Collateral Agent hereunder or as otherwise permitted under section 7.20
of this Deed of Hypothec) any rental or other payment under any Lease whether
then due or to accrue in the future, the interest of the Grantor as lessor
under any Lease or the Rents, issues, revenues, profits or other income of the
Hypothecated Property;
7.19.3.3 enter into any Lease after the date hereof
that does not contain terms to the effect as follows:
(i) such Lease and the rights of the tenant thereunder shall
be subject and subordinate to the rights of the Collateral
Agent under this Deed of Hypothec;
(ii) such Lease has been hypothecated by the Grantor, as
landlord thereunder, to the Collateral Agent under this Deed
of Hypothec;
(iii) in the case of any hypothecary recourse hereunder, the
rights and remedies of the tenant in respect of any
obligations of any successor landlord thereunder shall be
limited to the equity interest of such successor landlord in
the Plant and any successor landlord shall not (a) be liable
for any act, omission or default of any prior landlord under
the Lease or (b) be required to make or complete any tenant
improvements or
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capital improvements or repair, restore, rebuild or replace
the demised premises or any part thereof in the event of
damage, casualty or condemnation or (c) be required to pay any
amounts to tenant arising under the Lease prior to such
successor landlord taking possession;
(iv) the tenant's obligation to pay rent and any additional
rent shall not be subject to any abatement, deduction,
counterclaim or setoff as against the Collateral Agent or any
purchaser upon the exercise hereunder of any hypothecary
recourse in respect of any portion of the Plant, and the
Collateral Agent or such purchaser will not be bound by any
advance payments of rent in excess of one month or any
security deposits unless such security was actually received;
and
(v) the tenant agrees to attorn, at the option of the
Collateral Agent or any purchaser of the Plant, to the
successor owner upon the exercise hereunder of any hypothecary
recourse in respect of the Plant or the giving or granting of
a deed in lieu thereof; and
7.19.3.4 terminate or permit the termination of any
Lease of space, accept surrender of all or any portion of the space demised
under any Lease prior to the end of the term thereof or accept assignment of
any Lease to the Grantor which, in the reasonable judgment of the Grantor,
individually or in the aggregate, would have a Material Adverse Effect or
materially impair the hypothecs created under this Deed of Hypothec unless:
(i) the tenant under such Lease has not paid the equivalent
of two months' rent and the Grantor has made reasonable
efforts to collect such rent; or
(ii) the Grantor shall deliver to the Collateral Agent an
officer's certificate to the effect that the Grantor has
entered into a new Lease (or Leases) for the space covered by
the terminated or assigned Lease with a term (or terms) which
expire(s) no earlier than the date on which the terminated or
assigned Lease was to expire (excluding renewal options), and
with a tenant (or tenants) having a creditworthiness (as
reasonably determined by the Grantor) sufficient to pay the
rent and other charges due
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under the new Lease (or Leases), and the tenant(s) shall have
commenced paying rent, including, without limitation, all
operating expenses and other amounts payable under the new
Lease (or Leases), without any abatement or concession, in an
amount at least equal to the amount which would have then been
payable under the terminated or assigned Lease.
7.19.4 The Grantor timely shall perform and observe
all the terms, covenants and conditions required to be performed and observed
by the Grantor under each Lease and will not engage in any conduct in respect
of any Lease which would have individually or in the aggregate a Material
Adverse Effect or materially impair the hypothecs created under this Deed of
Hypothec. The Grantor promptly shall notify the Collateral Agent of the
receipt of any notice from any lessee under any Lease claiming that the Grantor
is in material default in the performance or observance of any of the terms,
covenants or conditions thereof to be performed or observed by the Grantor and
will cause a copy of each such notice to be delivered promptly to the
Collateral Agent.
7.20 TRANSFER RESTRICTIONS: Except as otherwise
permitted by the Intercreditor and Collateral Agency Agreement, the Grantor
shall not, without the prior written consent of the Collateral Agent, further
mortgage, encumber, hypothecate, sell, convey or assign all or any part of the
Hypothecated Property or suffer any of the foregoing to occur by operation of
Law or otherwise (each a "TRANSFER"); provided, however, the Grantor may so
encumber the Hypothecated Property to the extent such encumbrances are of the
kind listed in clause (d) of the definition of "Permitted Liens". Any proceeds
of such permitted Transfer shall be deemed Collateral Proceeds and are hereby
assigned and shall be paid to the Collateral Agent to be held in the Collateral
Account and disbursed pursuant to the Intercreditor and Collateral Agency
Agreement.
7.21 DESTRUCTION; CONDEMNATION:
7.21.1 If there shall occur any damage to, or loss
or destruction of, the Buildings and Equipment, or any part of any thereof
(each, a "DESTRUCTION"), the Grantor shall promptly send to the Collateral
Agent a notice setting forth the nature and extent of such Destruction. The
proceeds of any insurance payable in respect of any such Destruction are hereby
assigned and shall be paid to the Collateral Agent to be held
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in the Collateral Account; provided, however, that so long as no Event of
Default shall have occurred and be continuing, if such proceeds are in an
amount less than $1,000,000 in lawful currency of the United States, such
proceeds shall be paid directly to the Grantor. All insurance proceeds paid to
the Collateral Agent pursuant to this section, less the amount of any expenses
incurred in litigating, arbitrating, compromising or settling any claim arising
out of such Destruction (the "INSURANCE PROCEEDS"), shall constitute Moneys and
be applied in accordance with the provisions of sections 7.21.3, 7.21.4 and
7.21.5.
7.21.2 If there shall occur any taking of the
Hypothecated Property or any part thereof, in or by condemnation or other
eminent domain proceedings pursuant to any Law, general or special, or by
reason of the temporary requisition of the use or occupancy of the Hypothecated
Property or any part thereof, by any Governmental Authority, civil or military
(each, a "TAKING"), the Grantor immediately shall notify the Collateral Agent
upon receiving notice of such Taking or commencement of proceedings therefor.
The Collateral Agent may (but shall not be obligated to) participate in any
proceedings or negotiations which might result in any Taking. The Collateral
Agent may be represented by counsel satisfactory to it at the expense of the
Grantor. The Grantor shall deliver or cause to be delivered to the Collateral
Agent all instruments requested by it to permit such participation. The
Grantor shall in good faith and with due diligence file and prosecute what
would otherwise be the Grantor's claim for any such award or payment and cause
the same to be collected and paid over to the Collateral Agent, and hereby
irrevocably authorizes and empowers the Collateral Agent, in the name of the
Grantor as its true and lawful attorney-in-fact or otherwise, during the
continuance of an Event of Default to collect and to receipt for any such award
or payment, and, in the event the Grantor fails so to act, to file and
prosecute such claim. The Grantor shall pay all costs, fees and expenses
incurred by the Collateral Agent in connection with any Taking and seeking and
obtaining any award or payment on account thereof. Any proceeds, award or
payment in respect of any Taking are hereby assigned and shall be paid to the
Collateral Agent to be held in the Collateral Account; provided, however, that
so long as no Event of Default shall have occurred and be continuing, if such
proceeds are in an amount less than $1,000,000 in lawful currency of the United
States, such proceeds shall be paid directly to the Grantor. The Grantor shall
take all steps necessary to notify the condemning authority of such assignment.
Such proceeds, award or payment paid to the Collateral
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Agent, less the amount of any expenses incurred in litigating, arbitrating,
compromising or settling any claim arising out of such Taking ("NET AWARD"),
shall constitute Moneys and be applied in accordance with the provisions of
sections 7.21.3, 7.21.4 and 7.21.5.
7.21.3 So long as no Event of Default shall have
occurred and be continuing, the Grantor shall have the right, at the Grantor's
option, to perform a restoration (a "RESTORATION") of the affected portions of
the Plant and the Equipment. In the event the Grantor elects to perform a
Restoration, the Grantor shall give written notice ("RESTORATION ELECTION
NOTICE") of such election to the Collateral Agent within twenty (20) business
days after the date that the Collateral Agent receives the applicable Insurance
Proceeds or Net Award, as the case may be. The Grantor shall, within twenty
(20) business days following the date of delivery of a Restoration Election
Notice, commence and diligently continue to perform the Restoration of that
portion or portions of the Plant and Equipment subject to such Destruction or
affected by such Taking so that, upon the completion of the Restoration, the
Hypothecated Property shall be in the same condition and shall be of at least
equal utility for its intended purposes as the Hypothecated Property was
immediately prior to such Destruction or Taking. The Grantor shall so complete
such Restoration with its own funds to the extent that the amount of any Net
Award or Insurance Proceeds is insufficient for such purpose. In the event the
Collateral Agent does not receive a Restoration Election Notice within such
twenty (20) business day period, the Collateral Agent shall deal with such
Insurance Proceeds or Net Award in accordance with the provisions of the
Intercreditor and Collateral Agency Agreement.
7.21.4 In the event a Restoration is to be performed
under this section 7.21.4, the Collateral Agent shall not release any part of
the Net Award or the Insurance Proceeds except in accordance with the
provisions of section 7.21.5 and the Grantor shall, prior to commencing any
work to effect a Restoration of the Plant and the Equipment, promptly (but in
no event later than one-hundred twenty (120) days following any Destruction or
Taking) furnish to the Collateral Agent:
7.21.4.1 complete plans and specifications (the "PLANS
AND SPECIFICATIONS") for the Restoration;
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7.21.4.2 an officers' certificate stating that all
permits and approvals required by Law to commence work in connection with the
Restoration have been obtained;
7.21.4.3 a certificate (an "ARCHITECT'S CERTIFICATE")
of an independent, reputable architect or engineer acceptable to the Collateral
Agent and licensed in the Province of Quebec (i) stating that the Plans and
Specifications have been reviewed and approved by the signatory thereto, (ii)
containing such signatory's estimate (an "ESTIMATE") of the costs of completing
the Restoration, and (iii) upon completion of such Restoration in accordance
with the Plans and Specifications, the utility of the Plant and the Equipment
will be equal to or greater than the utility thereof immediately prior to the
Destruction or Taking relating to such Restoration; and
7.21.4.4 if the Estimate exceeds the Insurance
Proceeds or the Net Award, as the case may be, by $5,000,000 in lawful currency
of the United States or more, an Additional Undertaking in an amount equal to
not less than the Estimate less the amount of the Insurance Proceeds or the Net
Award, as the case may be, then held by the Collateral Agent for application
toward the cost of such Restoration.
Upon receipt by the Collateral Agent of each of the items
required pursuant to sections 7.21.4.1 through 7.21.4.4 above, the Collateral
Agent shall acknowledge receipt of the Plans and Specifications. Promptly upon
such acknowledgment of receipt by the Collateral Agent, the Grantor shall
commence and diligently continue to perform the Restoration substantially in
accordance with such Plans and Specifications and in material compliance with
all Governmental Requirements, free and clear of all Liens except Permitted
Liens. The Grantor shall so complete such Restoration with its own funds to
the extent that the amount of any Net Award or Insurance Proceeds is
insufficient for such purpose.
7.21.5 In the event the Grantor performs a
Restoration of the Plant and Equipment as provided in section 7.21.4, the
Collateral Agent shall apply any Insurance Proceeds or Net Award held by the
Collateral Agent on account of the Destruction or Taking to the payment of the
cost of performing such Restoration pursuant to the relevant provisions of the
Intercreditor and Collateral Agency Agreement. In the event there shall be any
surplus after application of the Net Award or the
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Insurance Proceeds to Restoration of the Plant and the Equipment, such surplus
shall become Net Proceeds, as defined in the Indenture for application in
accordance thereunder; provided, however, that if an Event of Default shall
have occurred and be continuing, such surplus shall be applied by the
Collateral Agent to the payment of the Obligations, in accordance with Article
6 of the Intercreditor and Collateral Agency Agreement. Notwithstanding
anything to the contrary herein, if a Destruction or Taking of all or
substantially all of the Hypothecated Property occurs on a date which is less
than 12 months prior to Maturity, as such term is defined in the Indenture, all
Insurance Proceeds and Net Awards shall be applied to the permanent repayment
or prepayment of any Secured Obligations then outstanding in accordance with
the Intercreditor and Collateral Agency Agreement.
7.22 ALTERATIONS: The Grantor shall not make any
material structural addition, modification or change (each, an "ALTERATION")
to the Plant or the Equipment which would materially diminish the utility of
the Hypothecated Property or impair the hypothecs under this Deed of Hypothec.
Whether or not the Collateral Agent has consented to the making of any
Alteration, the Grantor shall (i) complete each Alteration promptly, in a good
and workmanlike manner and in material compliance with all applicable local
Laws, and (ii) pay when due all claims for labour performed and materials
furnished in connection with such Alteration, unless contested in accordance
with the provisions of section 7.14.5.
7.23 HAZARDOUS MATERIAL:
7.23.1 Except with respect to those matters which
would not reasonably be expected to have a Material Adverse Effect, to the best
knowledge of the Grantor, the Grantor holds all Permits required to permit the
Grantor to conduct its business in the manner now conducted and none of the
Grantor's operations are being conducted in a manner that violates in any
material respect the terms and conditions under which any such Permit was
granted, including without limitation, under any Environmental Laws, except
those permits that are expected to be transferred in the ordinary course after
the date hereof; to the best of the knowledge of the Grantor all such Permits
are valid and in full force and effect; and to the knowledge of the Grantor, no
suspension, cancellation, revocation or termination of any such Permit is
threatened.
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7.23.2 Except as set forth in the Term Loan
Agreement, there are no material claims, actions, suits, proceedings or
investigations pending or to the knowledge of the Grantor, threatened, before
any Governmental Authority or before any arbitrator brought by or against the
Grantor or with respect to any of the Hypothecated Property the basis of which
is any Environmental Law.
7.23.3 The Grantor shall (or shall cause other
parties obligated to do so under or in accordance with contract or indemnity to
the Grantor):
7.23.3.1 take all commercially reasonable actions to
comply with any and all applicable present and future Environmental Laws
relating to the Plant;
7.23.3.2 pay in a timely fashion the cost of any
removal, response measure or corrective action relating to any Hazardous
Materials required by any Environmental Law or any order, regulation, consent
decree or similar agreement or instrument and keep the Hypothecated Property
free of any Lien imposed pursuant to any Environmental Law;
7.23.3.3 take all commercially reasonable actions to
not Release any Hazardous Materials on, under or from the Hypothecated Property
in violation of any Environmental Law;
7.23.3.4 apply any insurance proceeds or other sums
received by it in respect of the removal of any Hazardous Material or any other
corrective action relating to any Hazardous Material to such removal or
corrective action; and
7.23.3.5 not take, or fail to take any action required
under any Environmental Laws or in connection with any Hazardous Materials that
could reasonably be expected to result in the incurrence of any obligation or
liability of any of the Collateral Agent, Administrative Agent, Trustee,
Lenders or Noteholders. During the continuance of an Event of Default, in the
event the Grantor fails to comply with the covenants in the preceding sentence,
the Collateral Agent may (upon receipt of an indemnity satisfactory to the
Collateral Agent), in addition to any other remedies set forth herein, but
shall not be obligated to, as mandatary for and at the Grantor's sole cost and
expense cause to be taken, any
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remediation, removal, response or corrective action relating to Hazardous
Materials that is required by Environmental Law and is not being done or
contested by the Grantor. Any costs or expenses incurred by the Collateral
Agent for such purpose shall be immediately due and payable by the Grantor and
shall bear interest at the Rate of Interest. The Grantor shall provide to the
Collateral Agent and its agents and employees access to the Hypothecated
Property to take any action required by Environmental Laws, or in connection
with any Hazardous Materials, that could be expected to result in the
incurrence of any obligation or liability of any of the Collateral Agent,
Administrative Agent, Trustee, Lenders or Noteholders, if the Grantor fails to
do so and such action or removal is required under any Environmental Laws as
provided above. Upon written request by the Collateral Agent, which shall
include a reasonably specific statement of the basis thereof (which shall be
specific to the condition of the Hypothecated Property and the alleged
violation of Environmental Law) and which shall be made not more frequently
than once in any twelve-month period or at any time that the Collateral Agent
is exercising its remedies under this Deed of Hypothec, the Collateral Agent
shall have the right (upon receipt of an indemnity satisfactory to the
Collateral Agent), but shall not be obligated, at the sole cost and expense of
the Grantor, to conduct an environmental audit or review of the Hypothecated
Property relating to the specific items as required in writing or relating to
the remedy that the Collateral Agent is exercising under this Deed of Hypothec
by persons or firms appointed by the Collateral Agent, and the Grantor shall
cooperate in all reasonable respects in the conduct of such environmental audit
or review, including, without limitation, by providing reasonable access to the
Hypothecated Property and to all records relating thereto. The Grantor shall
indemnify and hold each of the Collateral Agent, Administrative Agent, Trustee,
Lenders and Noteholders harmless from and against all loss, cost, damage or
expense (including, without limitation, attorneys' fees) that any of the
Collateral Agent, Administrative Agent, Trustee, Lenders and Noteholders may
sustain by reason of the assertion against such party of any claim relating to
such Hazardous Materials or actions taken with respect thereto as authorized
hereunder. Nothing contained herein shall result in any of the Collateral
Agent, Administrative Agent, Trustee, Lenders and Noteholders being deemed an
"owner" or "operator" under applicable Environmental Law.
7.23.4 The Grantor may at its own expense contest
the amount or applicability of any of the obligations described in the first
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sentence of section 7.23.3 by appropriate legal proceedings, prosecution of
which operates to prevent the enforcement thereof; provided, however, that:
7.23.4.1 any such contest shall be conducted in good
faith by appropriate legal proceedings promptly instituted and diligently
conducted and
7.23.4.2 in connection with such contest, the Grantor
shall have made provision for the payment or performance of such contested
obligation on the Grantor's books if and to the extent required by generally
accepted accounting principles then utilized by the Grantor in the preparation
of its financial statements, or shall have deposited with the Collateral Agent
a sum sufficient to pay and discharge such obligation and the Collateral
Agent's estimate of all interest and penalties related thereto.
Notwithstanding the foregoing provisions of this section 7.23.4, no contest of
any such obligations may be pursued by the Grantor if such contest would expose
the Collateral Agent, or any of the Administrative Agent, Trustee, Lenders or
Noteholders to any possible criminal liability or, unless the Grantor shall
have furnished an Additional Undertaking therefor satisfactory to the
Collateral Agent or for any civil liability for failure to comply with such
obligations.
7.24 ASBESTOS: The Grantor shall not install nor
permit to be installed in the Hypothecated Property friable asbestos or any
asbestos-containing material (collectively, "ACM") except in compliance with
all applicable Environmental Laws respecting such material. With respect to
any ACM currently present in the Hypothecated Property, except with respect to
matters which would not have a Material Adverse Effect, the Grantor shall
comply with all Laws applicable to ACM located on the Plant, all at the
Grantor's sole cost and expense. If the Grantor shall fail so to comply with
such Laws, the Collateral Agent may (upon receipt of an indemnity satisfactory
to the Collateral Agent) during the continuance of an Event of Default, but
shall not be obligated to, in addition to any other remedies set forth herein,
take those steps reasonably necessary to comply with applicable Laws. Any
costs or expenses incurred by the Collateral Agent for such purpose shall be
immediately due and payable by the Grantor and bear interest at the Rate of
Interest. The Grantor shall provide to the Collateral Agent and its agents and
employees reasonable access to the Hypothecated Property upon reasonable prior
notice to remove such ACM if the Grantor fails to do so and removal is required
under any Environmental Law as provided
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for above; provided, however, that nothing contained herein shall obligate the
Collateral Agent to exercise any rights under such access. The Grantor shall
indemnify and hold each of the Collateral Agent, Administrative Agent, Trustee,
Lenders and Noteholders harmless from and against all loss, cost, damage and
expense that any of the Collateral Agent, Administrative Agent, Trustee,
Lenders and Noteholders may sustain as a result of the presence of any ACM and
any removal thereof in compliance with any applicable Environmental Law.
7.25 BOOKS AND RECORDS; REPORTS: The Grantor
shall keep proper books of record and account, which shall accurately represent
the financial condition of the Grantor and the business affairs of the Grantor
relating to the Hypothecated Property. The Collateral Agent and its authorized
representatives shall have the right, from time to time, upon reasonable prior
notice to examine the books and records of the Grantor relating to the
operation of the Hypothecated Property at the office of the Grantor.
7.26 NO CLAIMS AGAINST THE COLLATERAL AGENT:
Nothing contained in this Deed of Hypothec shall constitute any consent or
request by the Collateral Agent, express or implied, for the performance of any
labour or services or the furnishing of any materials or other property in
respect of the Plant or any part thereof, nor as giving the Grantor any right,
power or authority to contract for or permit the performance of any labour or
services or the furnishing of any materials or other property in such fashion
as would permit the making of any claim against the Collateral Agent in respect
thereof or any claim that any Lien based on the performance of such labour or
services or the furnishing of any such materials or other property is ranked in
priority to the hypothecs under this Deed of Hypothec.
7.27 UTILITY SERVICES: The Grantor shall pay, or
cause to be paid, when due all charges for all public or private utility
services, all public or private rail and highway services, all public or
private communication services, all sprinkler systems, and all protective
services, any other services of whatever kind or nature at any time rendered to
or in connection with the Plant or any part thereof, shall comply in all
material respects with all contracts relating to any such services, and shall
do all other things reasonably required for the maintenance and continuance of
all such services to the extent required to fulfil the obligations set forth in
section 7.18.
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8. DEFAULT:
8.1 EVENTS OF DEFAULT: Each and every one of the
following events shall constitute an Event of Default under this Deed:
8.1.1 an Event of Default as defined in the Term
Loan Agreement;
8.1.2 an Event of Default as defined in the
Indenture; or
8.1.3 if any representation or warranty of the
Grantor made hereunder is or shall be incorrect when made in any material
respect;
8.1.4 if the Grantor shall default in the due
performance and observance of any of the Hypothec Obligations;
8.1.5 the publication of any prior notice of the
exercise of a hypothecary recourse, or a notice of crystallization as required
by the Civil Code of Quebec with respect to the Hypothecated Property or any
part thereof, unless same is being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted, and provided there is
no immediate danger that such Hypothecated Property be taken in payment, be
taken for purposes of administration or be sold.
9. EFFECTS OF DEFAULT:
9.1 RIGHTS UPON DEFAULT: Upon the occurrence of
an Event of Default, the security hereby constituted shall become enforceable
and the Collateral Agent shall, in addition to any of its other rights,
forthwith be entitled to exercise any and all of the rights provided for in
this Deed and in Chapter V of Title III of Book VI of the Civil Code of Quebec
and in the Code of Civil Procedure of Quebec. In exercising any of the rights
and recourses available hereunder or at Law, the Collateral Agent may, at its
option, in respect of all or any part of the Hypothecated Property, exercise
such rights and recourses as are available hereunder or at Law, as it chooses
to exercise, without prejudicing the Collateral Agent's other rights and
recourses available in respect of all or part of the other Hypothecated
Property. Furthermore, the Collateral Agent may exercise any of its rights and
recourses in
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respect of all or any part of the Hypothecated Property, simultaneously or
successively. The Collateral Agent shall be entitled to acquire all or any
part of the Hypothecated Property, when permitted by Law.
9.2 PERFORMANCE: The Collateral Agent shall be
entitled, in its discretion, to perform on behalf of the Grantor any of the
Grantor's obligations hereunder, should there be an Event of Default which has
occurred and is continuing with respect thereto. In addition, the Collateral
Agent shall be entitled to do such things and make such reasonable expenditures
as it considers appropriate to enforce, preserve and protect its rights and
interests hereunder and the security constituted hereby.
9.3 NO WAIVER: Any action taken by or on behalf
of the Collateral Agent to remedy any Event of Default shall not constitute a
waiver of such default, nor be deemed to have relieved the Grantor therefrom.
Failure of the Collateral Agent to insist upon strict performance of any
covenants of this Deed or to exercise any right or option hereunder shall not
be construed as a waiver or relinquishment for the future of any such covenant,
right or option.
9.4 RIGHTS CUMULATIVE: The acceptance by the
Collateral Agent following the occurrence of any Event of Default or the
exercise by the Collateral Agent of any right or recourse hereunder or under
any other agreement between the Grantor and the Collateral Agent shall not
preclude the Collateral Agent from exercising any other right or recourse, all
rights and recourses of the Collateral Agent being cumulative and not
alternative.
9.5 SURRENDER: If the Collateral Agent gives the
Grantor a prior notice of its intention to exercise a hypothecary right, the
Grantor shall, and shall cause any other Person in possession of the
Hypothecated Property, to immediately voluntarily surrender same to the
Collateral Agent.
10. POSSESSION FOR PURPOSES OF ADMINISTRATION:
10.1 COLLATERAL AGENT'S RIGHTS: In addition to
the rights available to the Collateral Agent under the Bond and the rights and
recourses upon default described in Article 9 hereof, in the event that the
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Collateral Agent exercises the hypothecary right to take possession for
purposes of administration, the Collateral Agent shall have, in addition to the
rights and powers provided by Law as administrator entrusted with full
administration of the property of others, the rights and powers contained in
this Article 10.
10.2 ADMINISTRATION: The Collateral Agent shall
have the right, after having fulfilled all formalities provided for at Law for
the exercise of its hypothecary right of taking possession for purposes of
administration, to enter into and take possession of, through its officers,
representatives, Receivers or other lawful attorney, all or any part of each of
the Hypothecated Property, with full power of a Person entrusted with full
administration of the property of others including the full power to administer
all or any part of each of the Hypothecated Property, with the full power to
(i) manage, operate, repair, alter, preserve, maintain or extend all or any
part of the Hypothecated Property, including, without limitation, the full
power to make any improvements or additions to the Hypothecated Property, or
any part thereof, as the Collateral Agent shall deem desirable or necessary
(provided that the Collateral Agent shall not be under any obligation to take
any action of any nature in connection with the Hypothecated Property or any
part thereof) and in connection therewith the power to enter into any contracts
or other agreements in respect of all or any part of the Hypothecated Property
in the name of and for the account of the Grantor, the Grantor expressly
authorizing the Collateral Agent to execute any and all such contracts or
agreements for, in the name of and on behalf of the Grantor, and the power to
cancel any contracts entered into by the Grantor or by the Collateral Agent on
its behalf and the power to renew any such contracts, in each case for such
term and subject to such provisions as the Collateral Agent shall deem
advisable or expedient, and (ii) the power to exercise all rights of the
Grantor in connection with the Hypothecated Property, including without
limitation, all rights and recourses available to the Grantor in connection
with any contracts or agreements relating to the Hypothecated Property, the
full power to institute proceedings against any Person in connection therewith
and generally the full right, power and authority to carry on the business of
the Grantor in connection with the Hypothecated Property in the place and stead
of the Grantor. Furthermore, the Collateral Agent may, at its option, advance
its own moneys (and any such advance shall bear interest at the Rate of
Interest) for the payment of Taxes, wages and other charges or hypothecs, costs
or expenses ranking in priority to the Obligations or the security hereof and
other current operating expenses
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incurred before or after such taking of possession, or for any other purpose
which the Collateral Agent deems necessary or advisable, but the Collateral
Agent shall not in any event be obliged to advance any such moneys and shall
have no liability to the Grantor or any other Person in the event that it shall
elect not to do so. Moneys so advanced shall be repaid by the Grantor on
demand and until repaid, shall bear interest at the Rate of Interest and be
secured by the hypothecs constituted hereby. The Collateral Agent may borrow
money in connection with the business and affairs of the Grantor in connection
with the Hypothecated Property, in the name of and on behalf of the Grantor,
and may, in the name of and on behalf of the Grantor, grant security over all
or any part of the Hypothecated Property to secure the repayment of such money
or any other obligations undertaken by the Collateral Agent pursuant hereto in
connection with the Hypothecated Property.
10.3 SURRENDER: If the Collateral Agent exercises
its hypothecary right of taking possession for the purpose of administration,
the Grantor hereby binds and obliges itself to yield up possession of and
surrender the Hypothecated Property to the Collateral Agent on demand and
agrees to put no obstacles and not to hinder the rights and recourses of the
Collateral Agent, but to facilitate by all legal means, the actions of the
Collateral Agent hereunder and not to interfere with the powers hereby granted
to the Collateral Agent pursuant to this Deed and at Law.
10.4 DOCUMENTS: If an Event of Default occurs and
is continuing, the Grantor shall forthwith by and through its officers and
directors execute such documents and transfers as may be necessary to place the
Collateral Agent in legal possession of any or all of the Hypothecated Property
in order to transfer the control of the administration to the Collateral Agent
and thereupon all the powers, functions, rights and privileges of each and
every of the directors and officers of the Grantor shall cease and determine
with respect to such Hypothecated Property unless specifically continued in
writing by the Collateral Agent for specific purposes.
11. SALE BY COLLATERAL AGENT:
11.1 SALE: The Grantor agrees that with respect
to any sale by the Collateral Agent of all or any part of the Hypothecated
Property in the exercise of the Collateral Agent's rights hereunder or at
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Law upon the occurrence of an Event of Default which is continuing, it will be
commercially reasonable to sell all or any part of the Hypothecated Property:
11.1.1 together or separately;
11.1.2 by auction or by call for tenders by
advertising such sale or call for tenders once in a local daily newspaper of
the Collateral Agent's choice at least seven (7) days prior to such sale or
close of call for tenders;
11.1.3 by sale by agreement after receipt by the
Collateral Agent of a bona fide offer from at least one prospective purchaser,
who may include a Person related to or affiliated with the Collateral Agent or
customers of the Collateral Agent; and
11.1.4 by any combination of the foregoing;
and any such sale may be on such terms as to credit or otherwise and as to
upset price or reserve bid or price as the Collateral Agent in its sole
discretion may deem advantageous, and the Grantor agrees that the price
received at any such sale shall constitute a commercially reasonable price.
11.2 OTHER SALES: The foregoing shall not
preclude the Collateral Agent from agreeing to sell, or making any sale in any
other manner not prohibited by Law nor shall it be interpreted to mean that
only a sale made in conformity with the foregoing is commercially reasonable or
that only the price received at a sale made in conformity with the foregoing
shall constitute a commercially reasonable price.
11.3 TIMING OF SALE: The Collateral Agent may at
its entire discretion, determine the appropriate moment for such sale to be
conducted and the Grantor acknowledges and agrees that such determination by
the Collateral Agent will not constitute unnecessary delay.
12. APPLICATION OF MONEYS: All amounts collected by the
Collateral Agent (or collected by the Grantor as agent for the Collateral
Agent) in enforcing the rights under this Deed and all sums received by
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the Collateral Agent arising from the possession and administration of or from
the sale or other realization (except by way of taking in payment) of all or
any part of the Hypothecated Property, including Claims and Immovable Claims,
shall be applied by the Collateral Agent, to the extent permitted by applicable
Law, in accordance with the provisions of the Intercreditor and Collateral
Agency Agreement, the Term Loan Agreement or the Indenture in respect of the
application of moneys.
13. APPLICATION NOT PAYMENT: Notwithstanding any Law, agreement,
usage or custom to the contrary, including Article 2743 of the Civil Code of
Quebec, receipt by the Collateral Agent (or by the Grantor as agent for the
Collateral Agent) of any Claims, Rents or Immovable Claims shall not operate as
payment of any Obligations unless the Collateral Agent expressly applies the
amounts so received in reduction of such Obligations in accordance with this
Deed and to the extent only of such application.
14. APPOINTED ATTORNEY OF THE GRANTOR: The Grantor hereby
irrevocably nominates, constitutes and appoints the Collateral Agent and any
Person further designated by the Collateral Agent, upon the occurrence of an
Event of Default which is continuing, to be the lawful attorney-in-fact and
mandatary of the Grantor for and in the name and on behalf of the Grantor to
execute and do any deeds, documents, transfers, demands, conveyances,
assignments, assurances, consents and things which the Grantor ought to sign,
execute or do hereunder and to commence, continue and defend any proceedings
authorized to be taken hereunder and generally to use the name of the Grantor
in the exercise of all or any of the powers hereby conferred on the Collateral
Agent and any agent appointed hereunder.
15. REMEDIES CUMULATIVE: No remedy, right or recourse of the
Collateral Agent conferred or reserved hereunder is intended to be exclusive of
any other remedy, right or recourse under this Deed, under any other security
or at Law, but each and every such remedy shall be cumulative, and shall be in
addition to every other remedy, right or recourse given hereunder or now
existing or hereafter to exist by contract or by Law. The exercise by the
Collateral Agent of any right, remedy or recourse available to it pursuant to
this Deed or at Law shall not
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preclude the Collateral Agent from exercising any other right, remedy or
recourse at any time or from time to time.
16. JUDGMENT FOR AMOUNTS REMAINING DUE: In the case of any
judicial or other proceedings to enforce the security hereby constituted, and
without limiting any right of the Collateral Agent to obtain judgment for any
greater amount, judgment may be rendered against the Grantor in favour of the
Collateral Agent for any amount which may remain due in respect of the
Obligations after the application to the payment thereof of the proceeds of any
sale of all or part of each of the Hypothecated Property or any or all of them
or any additional security therefor.
17. PAYMENTS TO THIRD PARTIES: If the Collateral Agent is at any
time or from time to time required to make a payment pursuant to this Deed, any
such payment or payments, and all costs of the Collateral Agent (including
legal costs and legal fees) shall be at once payable by the Grantor and shall
bear interest at the Rate of Interest, and the repayment thereof to the
Collateral Agent shall be secured hereby.
18. OTHER PROVISIONS CONCERNING THE
COLLATERAL AGENT: By way of supplement to the provisions of
any applicable Laws and without limiting any provisions of this Deed dealing
with the same subject matters, the Grantor agrees that upon the occurrence of
an Event of Default which is continuing:
18.1 The Collateral Agent and any agent or
Receiver appointed by it shall, as regards all the powers, authorities and
discretions vested in them have absolute and uncontrolled discretion as to the
exercise thereof, whether in relation to the manner or as to the mode and time
for the exercise thereof;
18.2 Neither the Collateral Agent nor any agent or
Receiver appointed by it shall be responsible or liable, otherwise than for any
debts contracted by them, for damages to persons or property, or for salaries
or non-fulfilment of contracts during any period during which the Collateral
Agent or such agent or Receiver shall manage the Hypothecated Property or any
part thereof upon or after entry as herein
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provided and the Collateral Agent shall not be bound to do, observe or perform
or to see to the observance or performance by the Grantor of any of the
Grantor's obligations pursuant to this Deed or to other Persons, nor in any
other way to supervise or intervene in the conduct of the Grantor's operation
of any of the Hypothecated Property (or any portion thereof or any asset or
right comprised therein);
18.3 In the event of any sale in accordance with
the provisions of this Deed, whether by the Collateral Agent, by any agent or
Receiver or under judicial proceedings, the Grantor shall execute and deliver
to the purchaser on demand any instrument or assurance reasonably necessary to
confirm to the purchaser the title of the property so sold and, in the case of
any such sale, the Collateral Agent is hereby irrevocably authorized by the
Grantor to execute on its behalf any such confirmatory instrument or assurance;
18.4 No Person dealing with the Collateral Agent
or its agents or any Receiver shall be concerned to inquire whether the powers
which the Collateral Agent or such agents or Receiver are purporting to
exercise have become exercisable, or whether any money remains due on the
security of this Deed, or as to the necessity or expediency of the stipulations
and conditions subject to which any sale shall be made, or otherwise as to the
propriety or regularity of any sale or of any other dealing by the Collateral
Agent or such agents or Receiver with the Hypothecated Property or to see to
the application of any money paid to the Collateral Agent or such agents or
Receiver. In the absence of fraud on the part of such Person, such dealings
shall be deemed, insofar as regards the safety and protection of such Person,
to be within the powers hereby conferred and to be valid and effectual
accordingly;
18.5 Subject to applicable Laws, no delay or
omission of the Collateral Agent to exercise any right or power accruing upon
any Event of Default shall impair such right or power, or shall be construed to
be a waiver of any such Event of Default or an acquiescence therein and every
power and remedy given hereby to the Collateral Agent may be exercised by it
from time to time and as often as may be deemed expedient by it.
18.6 The Collateral Agent may invest any Person
with the powers vested in the Collateral Agent pursuant to this Deed or at Law,
or appoint any Person to perform the powers vested in the Collateral
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Agent pursuant to this Deed and at Law for and on behalf of the Grantor, in
which case the following provisions shall apply:
18.6.1 every such Person shall be the irrevocable
mandatary of the Grantor for the collection of all Claims or other sums falling
due in respect of all or any part of each of the Hypothecated Property or any
or all of them;
18.6.2 every such Person shall have the power to
carry on the enterprise of the Grantor, in whole or in part, with respect to
all or any part of each of the Hypothecated Property or any or all of them, and
may, in the discretion of the Collateral Agent, be vested with all or any of
the powers and discretion of the Collateral Agent hereunder;
18.6.3 the Collateral Agent may from time to time
determine the reasonable remuneration of every such Person who shall be
entitled to deduct the same out of the receipts from any part of each of the
Hypothecated Property or any or all of them or the proceeds therefrom;
18.6.4 every such Person shall, as concerns the
responsibility for his acts or omissions, be deemed the agent, or mandatary, or
attorney of, or employed or engaged by the Grantor and in no event an agent or
employee of the Collateral Agent;
18.6.5 the engagement or appointment of every such
Person by the Collateral Agent shall not create any liability on the part of
the Collateral Agent to such Person in any respect and such engagement,
appointment or delegation or anything which may be done by any such Person or
the removal of any Person or the termination of any such appointment or
engagement shall not have the effect of creating any liability of any nature
whatsoever of any such Person towards the Collateral Agent;
18.6.6 every such Person shall from time to time
have the power to operate, in accordance with normal practice, all or any part
of each of the Hypothecated Property or any or all of them, cancel any
contracts and renew from time to time any or all of the contracts, for such
term and subject to such provisions as such Person may deem advisable or
expedient including exercising all rights and recourses available to the
Grantor and in so doing every such Person shall act as
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the attorney, or mandatary, or agent of the Grantor and shall have the
authority to execute, whether or not under seal, any contract in the name of
and on behalf of the Grantor and the Grantor undertakes to and does hereby
ratify and confirm whatever any such Person may do;
18.6.7 every such Person shall have full power to
manage, operate, repair, alter, complete, preserve, maintain or extend all or
any part of each of the Hypothecated Property or any or all of them in the name
of the Grantor for the purpose of securing the payment of the Obligations,
including taking all such steps as the Collateral Agent may consider necessary
or desirable for the purposes of completing all or any part of each of the
Hypothecated Property or any or all of them, or any improvements or additions
thereto as the Collateral Agent may determine and for such purposes to enter
into all such contracts and undertake all such obligations as the Collateral
Agent may determine, and obtain security therefor upon the Hypothecated
Property; provided that the Collateral Agent shall not be under any obligation
to complete any Buildings or any additions or improvements thereto.
19. POWER TO INSTITUTE SUITS: The Collateral Agent shall have
power to institute and maintain such suits and proceedings as it may be deemed
necessary or expedient to prevent any impairment of the security hereunder by
any acts of the Grantor, or of others, in violation of this Deed or unlawful,
or as the Collateral Agent may deem necessary or expedient to preserve and to
protect its interests in respect of all or any part of the Hypothecated
Property.
20. OTHER SECURITY: In the event that the Collateral Agent for
its own account and for the account of the Trustee, the Administrative Agent,
the Noteholders and the Lenders, or any Noteholder or Lender holds any security
on account of the Obligations, or any part thereof, in addition to the
hypothecs constituted hereunder, no single or partial exercise by the
Collateral Agent for its own account or for the account of the Trustee, the
Administrative Agent, the Noteholders or the Lenders, or by the Noteholders or
the Lenders (or any of them), of any of their respective remedies under this
Deed or under any such additional security shall preclude any other and further
exercise of any other right, power or remedy pursuant to this Deed or pursuant
to any of such additional security. The Collateral Agent for its own
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account and for the account of the Trustee, the Administrative Agent, the
Noteholders and the Lenders, shall at all times have the right to proceed
against all or any portion of each of the Hypothecated Properties or such
additional security in such order and in such manner as it shall in its
discretion deem fit without waiving any rights which the Collateral Agent for
its own account and for the account of the Trustee, the Administrative Agent,
the Noteholders and the Lenders, may have pursuant to this Deed, any such
additional security, or in Law or in equity or otherwise. Without limiting the
generality of the foregoing, the Grantor hereby acknowledges and agrees that
the hypothecs granted hereunder are given in addition to and not in
substitution for any other security given by the Grantor or PAI in connection
with the Obligations.
21. DISCHARGE: After the Obligations and the Accessories have
been paid in full, the Collateral Agent shall, at the written request and
expense of the Grantor, cancel and discharge the charges of this Deed, relating
to the Hypothecated Property or otherwise, and execute and deliver to the
Grantor such deeds or other instruments as shall be requisite to effect the
cancellation of the publication hereof.
The registrar of any registration division in which any
properties affected by this Deed are situate shall discharge and cancel the
publication of any hypothec constituted hereby upon the publication of any
acquittance, discharge, release, main-levee or document to that effect signed
by the Collateral Agent, without being obliged to see that any of the
conditions of this Deed or the Bond have been fulfilled.
22. COMMUNICATIONS: All communications provided for or permitted
hereunder shall be given and any demand to any of the Parties shall be made in
accordance with the notice provisions of the Intercreditor and Collateral
Agency Agreement.
23. SCHEDULES
23.1 FIRST SCHEDULE: This is the First Schedule
referred to in this Deed:
An immovable property composed of the following:
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FACTORY:
An immovable property known and designated as being composed
of the following lots:
a) resubdivision ONE of subdivision ONE of original lot
EIGHT HUNDRED AND SEVENTY-NINE (879-1-1) of the
Official Cadastre of the Parish of
Saint-Edouard-de-Gentilly, Registration Division of
Nicolet;
b) subdivision SEVENTEEN of original lot EIGHT HUNDRED
AND SEVENTY-NINE (879-17) of the Official Cadastre of
the Parish of Saint-Edouard-de-Gentilly, Registration
Division of Nicolet;
c) subdivision THIRTY-FOUR of original lot SEVEN HUNDRED
AND EIGHT (708-34) of the Official Cadastre of the
Parish of Notre-Dame-de-la-Nativite-de-Becancour,
Registration Division of Nicolet;
d) subdivision ONE HUNDRED AND EIGHTEEN of original lot
SEVEN HUNDRED AND EIGHT (708-118) of the Official
Cadastre of the Parish of
Notre-Dame-de-la-Nativite-de-Becancour, Registration
Division of Nicolet;
With all the buildings, constructions and accessories thereon
erected, including the building bearing civic number 675
Alphonse Deshaies Boulevard, Town of Becancour, Province of
Quebec, G0X 1B0.
As the said immovable property now subsists, with all its
rights, members and appurtenances, without exception or
reserve of any kind.
With and subject to all active and passive, apparent or non
apparent servitudes attached thereto.
The said immovable property is shown on a plan prepared by Mr.
Gaston Lemay, Quebec Land Surveyor, dated October 14,
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1997, bearing his minute number 2812 (his file number
4-14614-C-1).
WASTE BURYING SITE:
A waste burying site known and designated as being composed of
the following lots, namely:
a) Subdivision ONE of original lot TWO HUNDRED AND
THIRTY-THREE (233-1) of the Official Cadastre of the
Parish of Notre-Dame-de-la-Nativite-de-Becancour,
Registration Division of Nicolet;
b) Subdivision ONE of original lot TWO HUNDRED AND
THIRTY-FIVE (235-1) of the Official Cadastre of the
Parish of Notre-Dame-de-la-Nativite-de-Becancour,
Registration Division of Nicolet;
c) Subdivision ONE of original lot TWO HUNDRED AND
SEVENTY-EIGHT (278-1) of the Official Cadastre of the
Parish of Notre-Dame-de-la-Nativite-de-Becancour,
Registration Division of Nicolet;
d) Original lot SEVEN HUNDRED AND TWENTY-EIGHT (728) of
the Official Cadastre of the Parish of
Notre-Dame-de-la-Nativite-de-Becancour, Registration
Division of Nicolet.
With all the buildings, constructions and accessories thereon
erected, including the building bearing civic number 6005 Du
Chemin de Fer Street, Town of Becancour, Province of Quebec,
GOX 1B0.
As the said immovable property now subsists, with all its
rights, members and appurtenances, without exception or
reserve of any kind.
With and subject to all active and passive, apparent or non
apparent servitudes attached thereto.
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The said immovable property is shown on a plan prepared by Mr.
Gaston Lemay, Quebec Land Surveyor, dated October 14, 1997,
bearing his minute number 2811 (his file number 4-14614-C-2).
VACANT LAND:
An emplacement being a vacant land situated in the Town of
Becancour, known and designated as being composed of the
following lots, namely:
a) Subdivision ONE of original lot TWO HUNDRED AND FORTY
(240-1) of the Official Cadastre of the Parish of
Notre-Dame-de-la-Nativite-de-Becancour, Registration
Division of Nicolet; and
b) Subdivision TWO of original lot TWO HUNDRED AND
FORTY-ONE (241-2) of the Official Cadastre of the
Parish of Notre-Dame-de-la-Nativite-de-Becancour,
Registration Division of Nicolet;
As the said immovable property now subsists, with all its
rights, members and appurtenances, without exception or
reserve of any kind.
With and subject to all active and passive, apparent or non
apparent servitudes attached thereto.
The said immovable property is shown on a plan prepared by Mr.
Gaston Lemay, Quebec Land Surveyor, dated October 14, 1997,
bearing his minute number 2810 (his file number 4-14614-C-3).
24. INTERPRETATION AND MISCELLANEOUS
24.1 CURRENCY: All dollar amounts expressed
herein are expressed as being lawful money of Canada except as otherwise
specifically expressed herein.
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24.2 HEADINGS: The headings of all the Articles
hereof are inserted for convenience of reference only and shall not affect the
construction or interpretation of this Deed.
24.3 GOVERNING LAW: This Deed shall be deemed to
be made under and governed by the Laws of the Province of Quebec and the rights
and obligations of the Parties contemplated hereunder shall be interpreted in
accordance with the Laws of the Province of Quebec. The Grantor hereby
irrevocably attorns to the jurisdiction of the Courts of Quebec.
24.4 INTERPRETATION: All references in this Deed
to designated "Articles", "sections" and other subdivisions or Schedules are to
the designated Articles, sections and other subdivisions or Schedules of or
attached to this Deed.
24.5 GENDER: The singular of any term includes
the plural, and vice versa; the use of any term is generally applicable to any
gender and where applicable, a body corporate; the word "or" is not exclusive;
and the word "including" is not limiting (whether or not non limiting language,
such as "without limitation" or "but not limited to" or words of similar
import, is used with reference thereto).
24.6 TIME OF ESSENCE: Time is in all respects of
the essence of this Deed. In addition to any other circumstances where the
Grantor has been put in default by operation of Law, the occurrence of an Event
of Default as provided hereunder shall constitute the Grantor in default
without any further requirement of notification or demand (other than as
specifically contemplated hereunder).
24.7 SEVERABILITY: If any covenant or condition
in this Deed or any provision or part thereof shall be invalid or void for any
reason, it shall be severed from the remainder of the provisions hereof and
such remainder shall remain in full force and effect notwithstanding such
severance.
24.8 SUCCESSOR: This Deed shall enure to the
benefit of and be binding upon the Grantor, the Collateral Agent and their
respective successors and assigns.
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24.9 ASSIGNMENT: The Collateral Agent, and any
assignee of the Collateral Agent, may at any time, and from time to time,
assign in whole or in part, their right, title and interest under this Deed,
including, without limitation, the security created hereunder.
24.10 CONFLICT: If any term, condition or
provision of this Deed is inconsistent or in conflict with any term, condition
or provision of the Term Loan Agreement or the Indenture, as the case may be,
the relevant term, condition or provision of the Term Loan Agreement or the
Indenture, as the case may be, shall govern and prevail and this Deed shall be
deemed to be amended to the extent necessary to eliminate such conflict or
inconsistency save and except in respect of the provisions of this Deed which
relate to the creation and enforcement of the hypothecs hereby constituted,
which provisions shall govern and prevail over the provisions of the Term Loan
Agreement or the Indenture, as the case may be.
24.11 LANGUAGE: The Parties have required that
this Deed and all related documents be in English; les parties ont exige que
cet acte ainsi que tous documents s'y rapportant soient rediges en anglais.
WHEREOF ACT, done and passed at the City of Montreal on the date
aforesaid, and remains of record in the office of the undersigned Notary under
his minute number Two thousand nine hundred and fifty-four (2,954).
The representatives of the parties declared to the Notary to
have taken cognizance of the present deed and to have exempted him from
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reading same, following which the representatives of the parties signed in the
presence of the Notary and as follows:
PCI CHEMICALS CANADA INC./
PRODUITS CHIMIQUES PCI CANADA
INC.
Per: /s/ Robert C. Williams
-------------------------
UNITED STATES TRUST COMPANY OF
NEW YORK
Per: /s/ Rita De Santis
-------------------------
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Kevin Leonard, Notary