1
EXHIBIT 4.5(b)
DEMAND DEBENTURE (NOVA SCOTIA)
U.S. $500,000,000 Date: October 30, 1997
This debenture (as amended, supplemented, amended and restated
or otherwise modified from time to time, this "Debenture"), dated as of October
30, 1997, is made by PCI Chemicals Canada Inc., a New Brunswick corporation
(the "Corporation"), in favour of United States Trust Company of New York, as
collateral agent (together with any successors thereto in such capacity, the
"Collateral Agent") for its own benefit and the benefit of the Administrative
Agent (as defined below) and of the Lenders (as defined below), and the Trustee
(as defined below) and of the holders (the "Noteholders") of Notes (as defined
below), pursuant to that certain Intercreditor and Collateral Agency Agreement
(the "Intercreditor Agreement") dated the date hereof among the Corporation,
the Trustee, the Administrative Agent, the Collateral Agent, Pioneer Americas,
Inc. ("PAI") and Pioneer Americas Acquisition Corp. ("PAAC").
W I T N E S S E T H:
WHEREAS pursuant to a term loan agreement dated as of October
30, 1997 (as amended, supplemented, amended and restated or otherwise modified
from time to time, the "Term Loan Agreement"), among PAI, PAAC, as the parent
guarantor, the various financial institutions as are, or may from time to time
become, parties thereto (each individually a "Lender" and collectively the
"Lenders"), the Collateral Agent, Bank of America National Trust and Savings
Association, as administrative agent (together with any successor(s) thereto in
such capacity, the "Administrative Agent"), DLJ Capital Funding, Inc., as the
Syndication Agent for the Lenders and Salomon Brothers Holding Company Inc., as
the Documentation Agent for the Lenders, the Lenders have extended commitments
to make Term Loans (as defined therein) to PAI;
AND WHEREAS the Corporation has executed a guarantee (the
"Guarantee") dated the date hereof in favour of the Administrative Agent, for
its own benefit and the benefit of each of the Lenders, of the obligations of
PAI under the Term Loan Agreement;
AND WHEREAS the Corporation has issued notes ("Notes")
pursuant to that certain Indenture (the "Indenture") dated the date hereof
among the Corporation, PAAC and the other Guarantors named therein, and United
States Trust Company of New York (together with any successor(s) thereto in
such capacity, the "Trustee");
AND WHEREAS the Corporation has duly authorized the execution,
delivery and performance of this Debenture;
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NOW THEREFORE in consideration of the foregoing and for such
other good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged), the Corporation hereby covenants and agrees as follows:
ARTICLE 1
PROMISE TO PAY
1.1 PROMISE TO PAY. The Corporation, for value received, hereby
acknowledges itself indebted and promises to pay to or to the order of the
Collateral Agent, at such address or addresses as the Collateral Agent may
designate at any time and from time to time by notice in writing to the
Corporation, ON DEMAND, the maximum principal amount of five hundred million
dollars ($500,000,000) in lawful money of the United States of America, and to
pay interest on the principal amount outstanding under or in connection with
the Obligations from time to time and on all other amounts owing hereunder to
the date of payment in accordance with terms and provisions hereof at a rate of
twenty-five (25%) percent per annum; such interest to be calculated daily, not
in advance and to be payable in like money on demand, both before and after
maturity and default, with interest on overdue interest at the same rate.
ARTICLE 2
INTERPRETATION
2.1 DEFINITIONS.
"ACM" has the meaning ascribed thereto in section 4.24.
"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.
"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 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 Debenture for which such
guarantee will be given, such guarantee and accompanying opinion are
responsive to the requirements of this Debenture.
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"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 Debenture
for which such letter of credit will be given, such letter of credit
and accompanying opinion are responsive to the requirements of this
Debenture.
"ADMINISTRATIVE AGENT" has the meaning ascribed to it in the first
recital.
"ALTERATION" has the meaning ascribed thereto in section 4.22.
"ARCHITECT'S CERTIFICATE" has the meaning ascribed thereto in section
4.21(d)(iii).
"BUILDINGS" means all of the right, title and interest which the
Corporation 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 Real Property, 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 Real
Property and (ii) any and all alterations, reconstructions, additions
or expansions to and all repairs or replacements of any such property
during the term of this Debenture.
"BUSINESS DAY" means any day other than a Saturday or a Sunday and any
day on which banks situated in the Province of Nova Scotia are
authorized or obligated to be closed.
"CLOSING DATE" has the meaning ascribed thereto in the Purchase
Agreement.
"COLLATERAL" has the meaning ascribed thereto in Section 3.1(c).
"COLLATERAL AGENT" has the meaning ascribed thereto in the preamble to
this Debenture.
"COLLATERAL ACCOUNT" has the meaning ascribed thereto in the
Intercreditor Agreement.
"COLLATERAL PROCEEDS" has the meaning ascribed thereto in the
Indenture.
"CONTRACTS" has the meaning ascribed thereto in Section 3.1(b).
"CORPORATION" means PCI Chemicals Canada Inc./Produits Chimiques PCI
Canada Inc. and its successors and assigns.
"DESTRUCTION" has the meaning ascribed thereto in section 4.21(a).
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"EXCLUDED ASSETS" means (a) the inventory of the Corporation,
including goods held for sale or lease, goods furnished or to be
furnished to third parties under contracts of lease, consignment or
service, goods which are raw materials or work in process, goods used
in or procured for packing and materials used or consumed in the
business of the Corporation, (b) accounts due or accruing due and all
records entered or recorded by any system of mechanical or electronic
data processing or any other information storage device, agreements,
books, accounts, invoices, letters, documents and papers recording
evidencing or relating thereto, and (c) all contracts, contract
rights, chattel paper, documents, instruments, and general intangibles
arising from or relating to any of the foregoing.
"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".
"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;
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.
"EQUIPMENT" has the meaning ascribed thereto in section 3.1(c).
"EVENT OF DEFAULT" has the meaning ascribed thereto in section 5.1.
"GOVERNMENTAL ENTITY" means any: (i) multinational, federal,
provincial, state, regional, municipal, local or other government,
governmental or public department, central bank, court, commission,
board, bureau, agency or instrumentality, domestic or foreign; (ii)
any subdivision, agent, commission, board, or authority of any of the
foregoing; or (iii) any quasi-governmental or private body exercising
any regulatory, expropriation or taxing authority under or for the
account of any of the foregoing.
"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 Entity.
"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.
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"INDENTURE" has the meaning ascribed thereto in the third recital
hereof.
"INSURANCE PROCEEDS" has the meaning ascribed thereto in section
4.21(a).
"INTERCREDITOR AGREEMENT" has the meaning ascribed thereto in the
preamble.
"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, guidelines, or any provisions
of the foregoing, including general principles of common and civil law
and equity, binding on or affecting the Person referred to in the
context in which such word is used; and "LAW" means any one of such
Laws.
"LEASES" means all of the right, title and interest which the
Corporation 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 the Real Property, Leasehold Property or
Buildings and any and all present or future agreements and licences
whereby the Corporation gives any other Person the right to use or
occupy the whole or any part of the Real Property 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.
"LEASEHOLD PROPERTY" has the meaning ascribed thereto in Section
3.1(b).
"LEASEHOLD PROPERTY CONTRACTS" has the meaning ascribed thereto in
Section 3.1(b).
"LENDERS" has the meaning ascribed thereto in the first recital
hereof.
"LICENSES" has the meaning ascribed thereto in Section 3.1(a).
"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.
"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.
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"MONEY" or "MONEYS" means those certain proceeds set forth in sections
4.21(a) and 4.21(b).
"NEGOTIABLE COLLATERAL" has the meaning ascribed thereto in Section
3.1(c)(v).
"NET AWARD" has the meaning ascribed thereto in section 4.21(b).
"NOTEHOLDERS" has the meaning ascribed thereto in the preamble.
"NOTES" has the meaning ascribed thereto in the third recital hereof.
"OBLIGATIONS" has the meaning ascribed thereto in Section 3.2(a).
"PAI" means Pioneer Americas, Inc.
"PAAC" means Pioneer Americas Acquisition Corp.
"PPSA" means the Personal Property Security Act (Nova Scotia).
"PERMITTED LIENS" has the meaning ascribed thereto in the Term Loan
Agreement.
"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 subsdivision thereof or a
government agency.
"PLANT" or "PLANTS" means the Real Property and the Buildings,
collectively.
"PLANS AND SPECIFICATIONS" has the meaning ascribed thereto in section
4.21(d)(i).
"PURCHASE AGREEMENT" means the Asset Purchase Agreement dated as of
the 22nd day of September, 1997 between the Corporation, 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.
"RATE OF INTEREST" means the rate of interest of twenty-five percent
(25%) per annum.
"REAL PROPERTY" has the meaning ascribed thereto in Section 3.1(a).
"REAL PROPERTY CONTRACTS" has the meaning ascribed thereto in Section
3.1(a).
"RECEIVER" means any of a receiver, manager, receiver-manager and
receiver and manager.
"RELEASE" when used as a verb includes, 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.
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"RENTS" means all the right, title and interest the Corporation 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
Corporation is or may become entitled in connection with the Rents.
"RESTORATION" has the meaning ascribed thereto in section 4.21(c).
"RESTORATION ELECTION NOTICE" has the meaning ascribed thereto in
section 4.21(c).
"SECURITY INTEREST" has the meaning ascribed thereto in Section
3.2(a).
"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.
"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 Debenture for which
such surety bond will be given, such surety bond and accompanying
opinions are responsive to the requirements of this Debenture;
"TAKING" has meaning ascribed thereto in section 4.21(b).
"TERM LOAN AGREEMENT" has the meaning ascribed thereto in the first
recital hereof.
2.2 PPSA DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the PPSA
are used in this Debenture, including its preamble and recitals, with such
meanings.
2.3 INTERPRETATION. This Debenture shall be interpreted in
accordance with the following:
(a) words denoting the singular include the plural and vice versa
and words denoting any gender include all genders;
(b) the division of this Debenture into Articles and Sections and
the insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Debenture; and
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(c) the word "including" shall mean "including without limitation"
and "includes" shall mean "includes without limitation".
2.4 SEVERABILITY. If any provision of this Debenture is or
becomes illegal, invalid or unenforceable, such provision shall be severed from
this Debenture and be ineffective to the extent of such illegality, invalidity
or unenforceability. The remaining provisions hereof shall be unaffected by
such provision and shall continue to be valid and enforceable.
2.5 STATUTES, ETC.. Unless otherwise specified herein all
references to statutes or regulations are to be treated as references to the
same as amended, consolidated, revised or re-enacted from time to time, or to
any successor or replacement statutes or regulations.
2.6 GOVERNING LAW. This Debenture shall be governed by, and
interpreted in accordance with, the Laws of the Province of Nova Scotia and the
Laws of Canada applicable therein, without giving effect to any conflicts of
laws rules thereof. The Corporation hereby irrevocably attorns and submits to
the non-exclusive jurisdiction of the courts of Nova Scotia with respect to any
matter arising under or related to this Debenture.
2.7 SCHEDULES. The following schedule attached hereto shall, for
all purposes hereof, be incorporated in and form an integral part of this
Debenture:
Schedule "A" Real Property
ARTICLE 3
SECURITY
3.1 GRANT OF SECURITY.
(a) Subject to Section 3.4 hereof, the Corporation hereby: (i)
grants, mortgages, hypothecates and charges to and in favour of the Collateral
Agent, as and by way of a first fixed and specific mortgage, hypothec and
charge, all right, title and interest of the Corporation in and to all real
property now owned or hereafter acquired by the Corporation, including the real
property described in Schedule "A" hereto, including all buildings, erections
and improvements of every kind thereon from time to time and fixtures forming a
part thereof (collectively, the "Real Property"); and (ii) assigns and
transfers to the Collateral Agent by way of a specific assignment and transfer
and grants to the Collateral Agent a security interest in: (A) all Leases, all
income, revenues and profits derived from Leases and all rents and other sums
payable to the Corporation pursuant to the terms of any Leases and all
benefits, advantages and powers to be derived under such Leases, with full
power and authority to demand, sue for, recover, receive and give receipts for
all Rents and all other monies payable thereunder and otherwise to enforce the
rights of the Corporation thereunder; (B) all licenses, permits, approvals,
certificates and agreements with or from any Governmental Entity relating
directly or indirectly to the ownership, use, development, operation and
maintenance of the Real Property or the alteration or renovation or
construction of improvements on the Real Property, whether heretofore or
hereafter issued or executed (collectively, the "Licenses"); and (C) all
options, contracts, subcontracts, agreements, service agreements, warranties
and purchase orders which have heretofore been or will hereafter be
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executed by or on behalf of the Corporation or which have been assigned to the
Corporation, in connection with the use, development, operation and maintenance
of the Real Property or the construction of improvements on the Real Property
(collectively, the "Real Property Contracts").
(b) Subject to Section 3.4 hereof, the Corporation hereby grants,
assigns, mortgages, hypothecates and charges to and in favour of the Collateral
Agent as and by way of a fixed and specific mortgage, hypothec and charge and
sublease, all right, title and interest of the Corporation in all real property
now or hereafter leased by the Corporation, including all buildings, erections
and improvements of every kind thereon from time to time and fixtures forming a
part thereof (collectively, the "Leasehold Property") and all Leases relating
to such Leasehold Property (collectively, the "Leasehold Property Contracts"
and, together with the Real Property Contracts, the "Contracts").
(c) Subject to Section 3.4 hereof, the Corporation hereby
mortgages, hypothecates and charges to and in favour of the Collateral Agent as
and by way of a fixed and specific mortgage, hypothec and charge, pledges to
and in favour of the Collateral Agent, assigns and transfers to and in favour
of the Collateral Agent as and by way of specific transfer and assignment, and
grants to and in favour of the Collateral Agent a security interest in all of
the Corporation's right, title and interest in and to all of the following
personal property and undertaking of the Corporation now owned or hereafter
acquired (collectively, and together with the property described in Sections
3.1(a) and 3.1(b), the "Collateral", and all references thereto herein
including any part thereof):
(i) all equipment in all of its forms of the Corporation, wherever
located, including all parts thereof and all accessions,
additions, attachments, improvements, substitutions and
replacements thereto and therefor and all accessories related
thereto ("Equipment");
(ii) all contracts, contract rights, chattel paper, documents,
instruments, and general intangibles (excluding: (a) tax
refunds as they may arise from or relate solely to the sale of
inventory including, without limitation, excise, retail sales
and goods and services taxes; and (b) excluding any of the
foregoing as it may arise from or relate to inventory or
accounts receivables) of the Corporation (including without
limitation the asset purchase agreement made as of September
22, 1997 between the Corporation, PCI Carolina Inc., Pioneer
Companies, Inc., ICI Canada Inc., ICI Americas Inc. and
Imperial Chemical Industries PLC as same may be amended from
time to time, and all of the rights and benefits of the
Corporation thereunder), whether or not arising out of or in
connection with the sale or lease of goods, and all rights of
the Corporation now or hereafter existing in and to all
security agreements, guaranties, leases and other contracts
securing or otherwise relating to any such contracts, contract
rights, chattel paper, documents, instruments, and general
intangibles;
(iii) all Intellectual Property Collateral (as defined in the
Subsidiary (Canadian) Security Agreement dated of even date
herewith made by the Corporation in favour of the Collateral
Agent (the "Security Agreement")) of the Corporation;
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(iv) all books, records, writings, data bases, information and
other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of
the foregoing in this Section 3.1;
(v) all of the Corporation's other property and rights of every
kind and description and interests therein, including without
limitation, all shares, stock, warrants, deeds, debentures,
debenture stock and all other documents which constitute
evidence of a share, participation or other interest of the
Corporation in property or in an enterprise or which
constitutes evidence of an obligation of the issuer thereof
(excluding any Capital Stock (as defined in the Term Loan
Agreement) which is required to be pledged under the Existing
Term Loan Agreement or the Existing Senior Secured Note
Indenture (in each case as defined in the Term Loan Agreement)
until such time as the obligations pursuant to or under such
agreements have been paid in full) (collectively, the
"Negotiable Collateral"); and
(vi) all products, offspring, rents, issues, profits, returns,
income and proceeds of and from any and all of the foregoing
Collateral (including without limitation proceeds which
constitute property of the types described in this Section
3.1, proceeds deposited from time to time in the Collateral
Account (as defined in the Security Agreement) and in any lock
boxes of the Corporation in respect of the foregoing, and, to
the extent not otherwise included, all payments under
insurance (whether or not the Collateral Agent, the Trustee or
the Administrative Agent is a loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing
Collateral).
Notwithstanding the foregoing, "Collateral" shall not include the Excluded
Assets and any general intangibles or other rights arising under any contracts,
instruments, licenses or other documents as to which the grant of a security
interest would constitute a violation of a valid and enforceable restriction in
favour of a third party on such grant, unless and until any required consents
shall have been obtained. Upon the request of the Collateral Agent, the
Corporation shall use its best commercial efforts to obtain any consent
required.
(d) In addition, the Corporation hereby charges to and in favour
of the Collateral Agent as and by way of a floating charge, all Collateral,
both present and future, and every interest therein which the Corporation now
has or hereafter acquires (other than property and assets hereby effectively
assigned or subjected to a specific mortgage, hypothec and charge, and subject
to the exceptions hereinafter contained).
3.2 OBLIGATIONS SECURED.
(a) The mortgages, hypothecs, charges, subleases, pledges,
transfers, assignments and security interests granted hereby (collectively, the
"Security Interest") secure payment to the Collateral Agent, the Trustee, the
Noteholders, the Administrative Agent, the Lenders or any of them of the
principal amount hereof, interest thereon and all debts, liabilities and
obligations, present or future, direct or indirect, absolute or contingent,
matured or not, and all other amounts from time to time owing
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hereunder pursuant hereto or arising from dealings between the Collateral
Agent, the Trustee, the Noteholder, the Administrative Agent, the Lenders or
any of them and the Corporation or from any other dealings or proceedings by
which the Collateral Agent, the Trustee, the Noteholders, the Administrative
Agent, the Lenders or any of them may be or become in any manner whatever a
creditor of the Corporation, and wherever incurred and performance and
satisfaction by the Corporation of all its obligations hereunder and
thereunder, (collectively, and together with the expenses, costs and charges
set out in Section 3.2(b), the "Obligations").
(b) All expenses, costs and charges incurred by or on behalf of
the Collateral Agent, the Trustee, the Noteholders, the Administrative Agent or
the Lenders, or any of them, in connection with this Debenture, the Security
Interest or the realization of the Collateral, including, after the occurrence
and during the continuance of a Default (as defined therein) of the nature set
forth in Section 8.1.9 of the Term Loan Agreement or a Default (as defined
therein) of the nature set forth in Section 501(10) of the Indenture, or an
Event of Default (as defined in the Term Loan Agreement or the Indenture, as
the case may be), all legal fees, court costs, Receiver's remuneration and
other expenses of taking possession of, repairing, protecting, insuring,
preparing for disposition, realizing, collecting, selling, transferring,
delivering or obtaining payment of the Collateral shall be added to and form a
part of the Obligations.
3.3 ATTACHMENT.
(a) The Corporation hereby acknowledges and agrees that: (i)
value has been given; (ii) the Corporation has rights in the Collateral (other
than Collateral acquired after the date hereof); and (iii) the Corporation has
not agreed with any of the Collateral Agent, the Trustee, the Noteholders, the
Administrative Agent or the Lenders to postpone the time for attachment of the
Security Interest which shall attach upon the execution of this Debenture and,
in the case of Collateral acquired after the date hereof, when the Corporation
has rights therein.
(b) The Corporation hereby agrees to execute and deliver at its
own cost and expense from time to time amendments to this Debenture or the
schedules hereto or additional security or schedules as may be required by the
Collateral Agent in order that the Security Interest shall attach to any
personal property subsequently acquired by the Corporation or not adequately
described herein.
3.4 SCOPE OF SECURITY INTEREST.
(a) To the extent that the creation of the Security Interest would
constitute a breach or permit the acceleration of any agreement, lease, right,
license or permit to which the Corporation is a party, the Security Interest
shall not attach thereto but the Corporation shall hold its interest therein in
trust for the Collateral Agent and shall assign such agreement, right, license
or permit to the Collateral Agent or as the Collateral Agent may direct,
forthwith upon obtaining the consent of the other party thereto and the
Corporation hereby agrees that it shall, upon the request of the Collateral
Agent, use its best commercial efforts to obtain any consent required to permit
any such agreement, lease, right, license or permit to be subject to the
Security Interest.
(b) The Security Interest shall not extend or apply to the last
day of any term reserved by any lease, verbal or written, or any agreement
therefor, now held or hereafter acquired by the Corporation,
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but the Corporation shall stand possessed of any such reversion in trust to
assign and dispose thereof as the Collateral Agent may direct.
(c) Neither the Collateral Agent, the Trustee, the Noteholders,
the Administrative Agent nor the Lenders will be deemed in any manner to have
assumed any obligation of the Corporation under any of the Licenses or
Contracts nor shall the Collateral Agent, the Trustee, the Noteholders, the
Administrative Agent or the Lenders be liable to any Governmental Entity by
reason of any default by any Person under the Licenses or Contracts. The
Corporation agrees to indemnify and hold each of the Collateral Agent, the
Trustee, the Noteholders, the Administrative Agent and the Lenders harmless of
and from any and all liability, loss or damage which such persons incur by
reason of any claim or demand against it based on its alleged assumption of the
Corporation's duty and obligation to perform and discharge the terms, covenants
and agreements in the Licenses and Contracts.
(d) The Security Interest shall not extend or apply to Excluded
Assets.
3.5 CORPORATION'S DEALINGS WITH COLLATERAL. Except as permitted
by the Term Loan Agreement and the Indenture, the Corporation shall not:
(a) sell, exchange, lease, release or abandon or otherwise dispose
of or otherwise deal with the Collateral; or
(b) move or transfer the Collateral or any part thereof to a
location other than those specified in Schedule A, or, upon 30 days notice to
the Collateral Agent, to any location owned or leased by a subsidiary of the
Corporation or PAI.
ARTICLE 4
REPRESENTATIONS AND COVENANTS OF THE CORPORATION
The Corporation hereby represents and covenants to the
Collateral Agent that:
4.1 CORPORATE POWER AND AUTHORITY. The Corporation has the full
corporate power and authority to enter into this Debenture and to grant the
Security Interest without obtaining the waiver, consent or approval of any
lessor, sublessor, Governmental Entity 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.
4.2 EXECUTION AND DELIVERY. The execution and delivery of this
Debenture have been duly authorized by all necessary corporate action.
4.3 BINDING OBLIGATION. This Debenture, when duly executed and
delivered, will be a legal, valid and binding obligation of the Corporation
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.
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4.4 GOOD TITLE. The Corporation has good and marketable title to
the Collateral. The Buildings upon the Real Property are all within the
boundary lines of the Real Property and there are no encroachments thereon that
would materially impair the use thereof. The Collateral is free and clear of
any and all Liens or encumbrances of any nature or kind except for the
Permitted Liens.
4.5 ALL PERMITS. The Corporation 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 Plants, 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 Corporation's grant of the Security Interest 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 Collateral.
4.6 PLACE OF BUSINESS. The Corporation's registered office is
located in the City of Saint John, New Brunswick. The Corporation 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.
4.7 DEFENCE OF TITLE. The Corporation will warrant and defend
title to the Collateral, subject to Permitted Liens, against the claims and
demands of all other Persons whomsoever and will maintain and preserve the
Security Interest 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 Collateral, the Corporation 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 Corporation further agrees that
the Collateral Agent may take such other reasonable action as it deems
advisable to protect and preserve its interests in the Collateral, and in such
event the Corporation 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 Corporation with respect to the Collateral shall, for the purposes of
this Debenture, be paid and applied in the same manner as Insurance Proceeds.
4.8 FIRST-RANKING SECURITY INTEREST. This Debenture is, and
always will be maintained as first-ranking Security Interest upon the
Collateral, subject to the Permitted Liens, and the Corporation will not create
or suffer to be created or permit to exist any Lien, security interest or
charge prior or junior to or on parity with the Security Interest upon the
Collateral or any part thereof or upon the rents, issues, revenues, profits or
other income therefrom, except for the Permitted Liens.
4.9 MAINTENANCE OF COLLATERAL. The Corporation 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 Collateral, 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
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state and condition of the Collateral 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 Collateral.
4.10 PERFORMANCE OF CONTRACTS. The Corporation 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 Plants and being a portion of the Collateral
and will do all other things necessary to keep unimpaired the Corporation'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 Corporation will operate the
facilities comprising the Plants 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.
4.11 NAME OF CORPORATION. The Corporation does not do business
with respect to the Collateral under any name other than PCI Chemicals Canada
Inc./Produits Chimiques PCI Canada Inc.
4.12 OPERATION BY THIRD PARTIES. To the extent any of the
Collateral is operated by a party or parties other than the Corporation, the
Corporation's covenants as expressed hereunder are modified to require that the
Corporation use its best efforts (including without limitation the reasonable
exercise of all rights and remedies as are available to the Corporation) to
obtain compliance with such covenants by the operator or operators of the
Collateral.
4.13 COMPLIANCE WITH LAWS. The Plants comply in all material
respects with all local land use requirements of Governmental Entities 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.
4.14 PAYMENT OF TAXES, INSURANCE PREMIUMS, ASSESSMENTS; COMPLIANCE WITH
LAWS AND INSURANCE REQUIREMENTS.
(a) Unless contested in accordance with the provisions of section
4.14(e) hereof, the Corporation 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 Collateral or any
part thereof or upon the revenues, rents, issues, income and profits of the
Collateral, including, without limitation, those arising in respect of the
occupancy, use or possession thereof.
(b) During the continuance of an Event of Default, the Corporation
shall deposit with the Collateral Agent, on the first day of each month, an
amount reasonably estimated by the Corporation to be equal to one-twelfth
(1/12th) of the annual taxes, assessments and other items required to be
discharged by the Corporation under section 4.14(a) and amounts reasonably
estimated by the Corporation to be necessary to maintain the insurance
coverages contemplated in section 4.16 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 Corporation during the year
immediately preceding the year during
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which such Event of Default occurred. Such amounts shall be held by the
Collateral Agent without interest to the Corporation 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 Corporation 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 Corporation
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 4.14 shall affect any right or remedy of the
Collateral Agent under any provision of this Debenture 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
Corporation of its obligations to make or provide for the payment of the annual
taxes, assessments and other charges required to be discharged by the
Corporation under section 4.14(a). All sums held pursuant to this section 4.14
shall form part of the Collateral. 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 4.14 to payment and performance of the Obligations in
accordance with the provisions of the Intercreditor Agreement. The Corporation
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.
(c) Unless contested in accordance with the provisions of section
4.14(e), the Corporation 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 Collateral or any part thereof or the Rents arising
therefrom, or which might result in forfeiture of all or any part of the
Collateral.
(d) The Corporation 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 Entity to operate or use and
occupy the Plants and the Equipment for its intended uses (collectively, the
"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 4.14(e), the Corporation
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 Collateral 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 Corporation shall not initiate or consent to any change in the
zoning, subdivision or any other use classification of the Real Property, if
such action could have a material adverse effect on the Security Interest or
materially impair the present use and operation of the Collateral or materially
impair the Collateral Agent's rights or benefits hereunder, without the prior
written consent of the Collateral Agent.
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(e) The Corporation may at its own expense contest the amount or
applicability of any of the obligations described in sections 4.14(a), 4.14(c)
and 4.14(d) by appropriate legal proceedings, prosecution of which operates to
prevent the collection or enforcement thereof or the sale or forfeiture of the
Collateral or any part thereof to satisfy such obligations; provided, however,
that:
(i) any such contest shall be conducted in good faith by
appropriate legal proceedings promptly instituted and
diligently conducted; and
(ii) in connection with such contest, the Corporation shall have
made provision for the payment or performance of such
contested obligation on the Corporation's books if and to the
extent required by generally accepted accounting principles
then utilized by the Corporation 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
4.14(e):
(iii) no contest of any such obligations may be pursued by the
Corporation 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 Corporation 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
(iv) if at any time payment or performance of any obligation
contested by the Corporation pursuant to this section 4.14(e)
shall become necessary to prevent the delivery of a tax or
similar deed conveying the Collateral or any portion thereof
because of nonpayment or nonperformance, the Corporation shall
pay or perform the same in sufficient time to prevent the
delivery of such tax or similar deed.
(f) The Corporation shall not in its use and occupancy of the
Plants 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 Debenture
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 any of the Plants or the Equipment and the Corporation shall
otherwise comply in all material respects with the requirements of any insurer
that issues a policy of insurance in respect of any of the Plants or the
Equipment.
(g) The Corporation shall, promptly upon receipt of any written
notice regarding any failure by the Corporation to pay or discharge any of the
obligations described in section 4.14(a) or 4.14(f), furnish a copy of such
notice to the Collateral Agent. The Corporation shall, promptly upon receipt
of any written notice regarding any failure by the Corporation to pay or
discharge any of the obligations described in section 4.14(c) or 4.14(d),
furnish a copy of such notice to the Collateral Agent, if such failure would
have a Material Adverse Effect.
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4.15 CERTAIN TAX LAW CHANGES. In the event of the passage after
the date of this Debenture of any Law deducting from the value of real
property, for the purpose of taxation, amounts in respect of any Lien thereon
or changing in any way the Laws for the taxation of debentures or debts secured
by debentures 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 Debenture or the interest of any of the
Collateral Agent, the Administrative Agent, the Trustee, the Lenders and the
Noteholders in any Collateral (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 Corporation shall promptly pay the Collateral Agent such
amount or amounts as may be necessary from time to time to pay such tax.
4.16 REQUIRED INSURANCE POLICIES.
(a) The Corporation 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 Plants and the Equipment:
(i) 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
such 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 Corporation in consultation with its insurance company
or insurance agent, as appropriate;
(ii) Comprehensive general liability insurance against claims for
bodily injury, death or property damage occurring on, in or
about the any of the Plants 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
Plants, 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 where the Plant is located;
(iii) 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 Plants
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
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configuration to the Plant and the Equipment and located in
the locality where the Plant is located;
(iv) 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;
(v) Business interruption insurance on an annual basis in amounts
not less than the projected gross profit of each of the Plants
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 Collateral
for the same period;
(vi) To the extent not otherwise covered by the insurance required
under sections 4.16(a)(i) and (4.16)(a)(ii), during the
performance of any Alterations, renovations, repairs,
restorations or construction, broad form Builders Risk
Insurance on an all-risk completed value basis; and
(vii) 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 Plants and located in the localities in
which the Plants are located.
(b) The Corporation may maintain the coverages required by this
section 4.16 under blanket policies covering the Plants and other locations
owned or operated by the Corporation if the terms of such blanket policies
otherwise comply with the provisions of this section 4.16 and contain specific
coverage allocations in respect of each of the Plants determined in accordance
with the provisions of this section 4.16. All insurance policies in respect of
the coverages required by sections 4.16(a)(i), 4.16(a)(iv), 4.16(a)(vi) and, if
applicable, 4.16(a)(vii) 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
Agreement, pursuant to a standard Canadian Insurance Bureau standard mortgagee
clause for use in the Province of Nova Scotia, or any equivalent thereof, and
each such policy shall, to the extent obtainable at commercially reasonable
costs,
(i) 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 Corporation and all rights of subrogation
against any named insured, and
(ii) 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 Corporation 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,
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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 4.16(a)(ii),
4.16(a)(v) and, if applicable, 4.16(a)(vii) shall name the
Collateral Agent as an additional insured.
(c) Each policy of insurance required under this section 4.16
shall provide that:
(i) notices of any failure by the Corporation to pay any insurance
premium in respect thereof, be furnished to the Collateral
Agent contemporaneously with any such notice given to the
Corporation and
(ii) 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 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 Corporation. Settlement of any
claim under any of the insurance policies referred to in this
section 4.16 (other than the insurance contemplated in section
4.16(a)(iii) which in the Corporation'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 Agreement) and the Corporation shall use its
best efforts to cause each such insurance policy to contain a
provision to such effect.
(d) At least fifteen (15) days prior to the expiration of any
insurance policy required by this section 4.16, the Corporation shall deliver
to the Collateral Agent evidence that such policy or policies shall be renewed
or extended and the Corporation 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.
(e) The Corporation shall not purchase additional policies in
respect of the insurance coverages required to be maintained under this section
4.16, 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 4.16(b) and the
policy evidencing such insurance otherwise complies with the requirements of
section 4.16(b). The Corporation 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.
4.17 INSPECTION. The Corporation shall permit the Collateral
Agent, by its agents, accountants and attorneys, to visit and inspect the
Collateral upon reasonable prior notice at such times as may be reasonably
requested by the Collateral Agent.
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4.18 THE CORPORATION TO MAINTAIN IMPROVEMENTS. The Corporation
shall not commit any waste on the Plants or with respect to any Equipment or
make any change in the use of the Plant or any Equipment. The Corporation
represents and warrants that:
(a) to the Corporation's knowledge, the Plants are 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 Corporation have been obtained
and duly recorded, and
(b) the Corporation has access to the Plants from public roads
sufficient to allow the Corporation and its tenants and invitees to conduct its
and their businesses at the Plants as they are currently conducted. The
Corporation 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 Agreement, no Buildings comprising a portion of
any of the Plants may be demolished nor shall any Equipment be removed without
the prior written consent of the Collateral Agent.
4.19 LEASES.
(a) All of the Leases are valid and effective in accordance with
their respective terms, except that the enforcement thereof may be subject to:
(i) bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting or relating to enforcement of
creditors' rights generally, and
(ii) general equitable principles.
To the Corporation's knowledge, the Corporation is not in material breach of or
in default (and to the Corporation'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
Corporation 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 Corporation.
(b) The Corporation shall manage and operate the Collateral or
cause the Collateral to be managed and operated in a reasonably prudent manner
and, except as otherwise permitted under section 4.20, will not enter into any
Lease (or any amendment or modification thereof) or other agreement subsequent
to the date hereof with any Person which, in the reasonable judgment of the
Corporation, individually or in the aggregate, would have a Material Adverse
Effect on the value of the property subject thereto.
(c) The Corporation shall not:
(i) 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
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collected and received in advance in an amount not in excess
of one (1) month's rent and (ii) the Corporation may receive
and collect escalation and other charges in accordance with
the terms of each Lease;
(ii) assign, transfer, mortgage or grant a security interest in
(other than to the Collateral Agent hereunder or as otherwise
permitted under section 4.20 of this Debenture) any rental or
other payment under any Lease whether then due or to accrue in
the future, the interest of the Corporation as lessor under
any Lease or the Rents, issues, revenues, profits or other
income of the Collateral;
(iii) 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 Debenture;
(II) such Lease has been mortgaged or charged by the
Corporation, as landlord thereunder, to the
Collateral Agent under this Debenture;
(III) in the case of any foreclosure, 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 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
any foreclosure hereunder in respect of any portion
of a 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 a Plant, to the
successor owner upon any foreclosure hereunder in
respect of a Plant or the giving or granting of a
deed in lieu thereof; and
(iv) 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 Corporation which, in the
reasonable judgment of the Corporation, individually or in the
aggregate, would have a Material Adverse Effect or materially
impair the Security Interest unless:
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(I) the tenant under such Lease has not paid the
equivalent of two months' rent and the Corporation
has made reasonable efforts to collect such rent; or
(II) the Corporation shall deliver to the Collateral Agent
an officer's certificate to the effect that the
Corporation 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
Corporation) sufficient to pay the rent and other
charges due 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.
(d) The Corporation timely shall perform and observe all the
terms, covenants and conditions required to be performed and observed by the
Corporation 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 Security Interest. The Corporation promptly
shall notify the Collateral Agent of the receipt of any notice from any lessee
under any Lease claiming that the Corporation 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 Corporation and will cause a copy of each
such notice to be delivered promptly to the Collateral Agent.
4.20 TRANSFER RESTRICTIONS. Except as otherwise permitted by the
Intercreditor Agreement, the Corporation 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 Collateral or suffer any of the
foregoing to occur by operation of Law or otherwise (each a "TRANSFER");
provided, however, the Corporation may so encumber the Collateral 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 (as defined in the Indenture) and are hereby assigned and
shall be paid to the Collateral Agent to be held in the Collateral Account (as
defined in the Intercreditor Agreement) and disbursed pursuant to the
Intercreditor Agreement.
4.21 DESTRUCTION; EXPROPRIATION.
(a) 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 Corporation 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 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
Corporation. 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
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"INSURANCE PROCEEDS"), shall constitute Moneys and be applied in accordance
with the provisions of sections 4.21(c), 4.21(d) and 4.21(e).
(b) If there shall occur any taking of the Collateral or any part
thereof, in or by expropriation proceedings pursuant to any Law, general or
special, or by reason of the temporary requisition of the use or occupancy of
the Collateral or any part thereof, by any Governmental Entity, civil or
military (each, a "TAKING"), the Corporation 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 Corporation. The Corporation shall deliver or cause to
be delivered to the Collateral Agent all instruments requested by it to permit
such participation. The Corporation shall in good faith and with due diligence
file and prosecute what would otherwise be the Corporation'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 Corporation 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 Corporation fails
so to act, to file and prosecute such claim. The Corporation 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
Corporation. The Corporation shall take all steps necessary to notify the
condemning authority of such assignment. Such proceeds, award or payment paid
to the Collateral 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 4.21(c), 4.21(d) and 4.21(e).
(c) So long as no Event of Default shall have occurred and be
continuing, the Corporation shall have the right, at the Corporation's option,
to perform a restoration (a "RESTORATION") of the affected portions of the
Plant and the Equipment. In the event the Corporation elects to perform a
Restoration, the Corporation 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 Corporation 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
Collateral shall be in the same condition and shall be of at least equal
utility for its intended purposes as the Collateral was immediately prior to
such Destruction or Taking. The Corporation 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 Agreement.
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(d) In the event a Restoration is to be performed under this
section 4.21(d), the Collateral Agent shall not release any part of the Net
Award or the Insurance Proceeds except in accordance with the provisions of
section 4.21(e) and the Corporation 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:
(i) complete plans and specifications (the "PLANS AND
SPECIFICATIONS") for the Restoration;
(ii) an officers' certificate stating that all permits and
approvals required by Law to commence work in connection with
the Restoration have been obtained;
(iii) a certificate (an "ARCHITECT'S CERTIFICATE") of an
independent, reputable architect or engineer acceptable to the
Collateral Agent and licensed in the Province of Nova Scotia
(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
(iv) 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 4.21(d)(i) through 4.21(d)(iv) above, the
Collateral Agent shall acknowledge receipt of the Plans and Specifications.
Promptly upon such acknowledgment of receipt by the Collateral Agent, the
Corporation 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 Corporation 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.
(e) In the event the Corporation performs a Restoration of any of
the Plants and Equipment as provided in section 4.21(d), 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
Agreement. In the event there shall be any surplus after application of the
Net Award or the Insurance Proceeds to Restoration of the Plants 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 Agreement. Notwithstanding anything to the
contrary herein, if a Destruction or Taking of all or substantially all of the
Collateral
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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 Agreement.
4.22 ALTERATIONS. The Corporation shall not make any material
structural addition, modification or change (each, an "ALTERATION") to any
Plant or the Equipment which would materially diminish the utility of the
Collateral or impair the Security Interest. Whether or not the Collateral
Agent has consented to the making of any Alteration, the Corporation 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
4.14(e).
4.23 HAZARDOUS MATERIAL
(a) Except with respect to those matters which would not
reasonably be expected to have a Material Adverse Effect, to the best knowledge
of the Corporation, the Corporation holds all Permits required to permit the
Corporation to conduct its business in the manner now conducted and none of the
Corporation'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 Corporation all such
Permits are valid and in full force and effect; and to the knowledge of the
Corporation, no suspension, cancellation, revocation or termination of any such
Permit is threatened.
(b) 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 Corporation, threatened, before any Governmental Entity or
before any arbitrator brought by or against the Corporation or with respect to
any of the Collateral the basis of which is any Environmental Law.
(c) The Corporation shall (or shall cause other parties obligated
to do so under or in accordance with contracts with or indemnity to the
Corporation):
(i) take all commercially reasonable actions to comply with any
and all applicable present and future Environmental Laws
relating to the Plants;
(ii) 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 Collateral free of any Lien imposed pursuant to
any Environmental Law;
(iii) take all commercially reasonable actions to not Release any
Hazardous Materials on, under or from the Collateral in
violation of any Environmental Law;
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(iv) 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
(v) 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 Corporation 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
Corporation's sole cost and expense cause to be taken, any
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 Corporation. Any
costs or expenses incurred by the Collateral Agent for such
purpose shall be immediately due and payable by the
Corporation and shall bear interest at the Rate of Interest.
The Corporation shall provide to the Collateral Agent and its
agents and employees access to the Collateral 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 Corporation 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
Collateral 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 Debenture, 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 Corporation,
to conduct an environmental audit or review of the Collateral
relating to the specific items as required in writing or
relating to the remedy that the Collateral Agent is exercising
under this Debenture by persons or firms appointed by the
Collateral Agent, and the Corporation shall cooperate in all
reasonable respects in the conduct of such environmental audit
or review, including, without limitation, by providing
reasonable access to the Collateral and to all records
relating thereto. The Corporation 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.
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(d) The Corporation may at its own expense contest the amount or
applicability of any of the obligations described in the first sentence of
section 4.23(c) by appropriate legal proceedings, prosecution of which operates
to prevent the enforcement thereof; provided, however, that:
(i) any such contest shall be conducted in good faith by
appropriate legal proceedings promptly instituted and
diligently conducted and
(ii) in connection with such contest, the Corporation shall have
made provision for the payment or performance of such
contested obligation on the Corporation's books if and to the
extent required by generally accepted accounting principles
then utilized by the Corporation 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 4.23(d), no contest of any such
obligations may be pursued by the Corporation 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 Corporation shall
have furnished an Additional Undertaking therefor satisfactory
to the Collateral Agent or for any civil liability for failure
to comply with such obligations.
4.24 ASBESTOS. The Corporation shall not install nor permit to be
installed in the Collateral 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 Collateral, except with respect to matters which would not have
a Material Adverse Effect, the Corporation shall comply with all Laws
applicable to ACM located on any of the Plants, all at the Corporation's sole
cost and expense. If the Corporation 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 Corporation and bear interest at the Rate of Interest.
The Corporation shall provide to the Collateral Agent and its agents and
employees reasonable access to the Collateral upon reasonable prior notice to
remove such ACM if the Corporation fails to do so and removal is required under
any Environmental Law as provided for above; provided, however, that nothing
contained herein shall obligate the Collateral Agent to exercise any rights
under such access. The Corporation 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.
4.25 BOOKS AND RECORDS; REPORTS. The Corporation shall keep proper
books of record and account, which shall accurately represent the financial
condition of the Corporation and the business affairs of the Corporation
relating to the Collateral. 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 Corporation relating to the
operation of the Collateral at the office of the Corporation.
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4.26 NO CLAIMS AGAINST THE COLLATERAL AGENT. Nothing contained in
this Debenture 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 Corporation 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
Security Interest.
4.27 UTILITY SERVICES. The Corporation 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 Plants 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 4.18.
ARTICLE 5
DEFAULT AND ENFORCEMENT
5.1 DEFAULT. The Security Interest shall become enforceable
against the Corporation if and only if and when the Corporation shall fail to
pay, perform or satisfy any of the Obligations when due and payable or required
to be performed or satisfied, as the case may be, but not otherwise (each such
failure is an "Event of Default"). Upon the occurrence of an Event of Default,
the Obligations shall immediately become due and payable by the Corporation to
the Collateral Agent without necessity of any further act or formality and,
thereafter, the Corporation shall not be entitled to sell, assign, transfer,
exchange, lease or otherwise dispose of or deal with all or any part of the
Collateral.
5.2 REMEDIES. Whenever the Security Interest has become
enforceable, the Collateral Agent may in its discretion:
(a) take possession of all or any part of the Collateral with
power to exclude the Corporation and its officers, employees and agents
therefrom;
(b) take all such steps as the Collateral Agent may consider
necessary or desirable for the purposes of preserving, maintaining and
completing all or any part of the Collateral and making such replacements
thereof and improvements and additions thereto as the Collateral Agent may
consider expedient;
(c) carry on all or any part of the business of the Corporation
relating to the Collateral and use all or any part of the Collateral directly
in carrying on the Corporation's business or as security for loans or advances
to enable the Collateral Agent to carry on the Corporation's business or
otherwise;
(d) receive the rents, incomes and profits of any kind whatsoever
from the Collateral and pay therefrom: (i) any expenses of preserving,
maintaining and completing the Collateral, of making such
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replacements thereof and improvements and additions thereto as the Collateral
Agent may consider expedient and of carrying on all or any part of the
Corporation's business relating to the Collateral; and (ii) any charges against
the Collateral ranking in priority to or pari passu with the Security Interest
or the payment of which may be necessary or desirable to preserve or protect
all or any part of the Collateral or the interest of the Collateral Agent
therein;
(e) lease all or any part of the Collateral and renew from time to
time all or any of the Leases on such terms and conditions as the Collateral
Agent may determine;
(f) with or without taking possession, take any action or
proceedings to enforce the performance of any covenant contained in any of the
Leases;
(g) enjoy and exercise all the powers of the Corporation as the
Collateral Agent considers necessary or desirable for the exercise of any and
all of the remedies of the Collateral Agent provided for herein, including the
powers to make any arrangement or compromise on behalf and in the name of the
Corporation which the Collateral Agent considers expedient, to purchase on
credit and borrow money on behalf and in the name of the Corporation and to
advance moneys to the Corporation, all at such rates of interest as the
Collateral Agent may consider reasonable, and to enter into contracts and
undertake obligations on behalf of and in the name of the Corporation for any
and all of the foregoing purposes or which the Collateral Agent considers
necessary or desirable for the exercise of any of the rights, powers and
remedies of the Collateral Agent provided for herein, all of which borrowings,
advances and obligations together with interest thereon shall, at the
discretion of the Collateral Agent, be entitled to the security hereof in
priority to the payment of the Obligations;
(h) sell or otherwise dispose of all or any part of the
Collateral;
(i) apply to a court for the appointment of a Receiver to take
possession of all or such part of the Collateral as the Collateral Agent shall
designate, with such duties, powers and obligations as the court making the
appointment shall confer;
(j) appoint a Receiver of all or any part of the Collateral by
instrument in writing executed by the Collateral Agent;
(k) institute proceedings in any court of competent jurisdiction
for sale or foreclosure of the Collateral; and
(l) take any steps or proceedings of any kind permitted by
applicable Law or in equity or otherwise to enforce payment of the Obligations
or performance of any other covenant or obligation of the Corporation contained
herein, and exercise all rights and remedies of a secured party under the PPSA.
5.3 REMEDIES CUMULATIVE AND WAIVER. The rights and remedies
hereunder of the Collateral Agent are cumulative and are in addition to and not
in substitution for any other rights and remedies provided by law or by equity.
Any single or partial exercise by the Collateral Agent of any right or remedy
in respect of a default or breach of any term, covenant or condition contained
herein shall not be deemed to be a waiver thereof or to alter, affect or
prejudice any other right or remedy or other rights
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or remedies to which the Collateral Agent may be lawfully entitled, for such
default or breach. The Collateral Agent shall at all times have the right to
proceed against all or any portion of the Collateral or any other security in
such order and in such manner as it shall determine without waiving any rights,
powers or remedies which the Collateral Agent may have with respect to this
Debenture or any other security or at law, in equity or otherwise. No delay or
omission by the Collateral Agent in exercising any right, power or remedy
hereunder or otherwise shall operate as a waiver thereof or of any other right,
power or remedy. Any waiver by the Collateral Agent of the strict observance,
performance or compliance with any term, covenant, condition or agreement
herein contained and any indulgence granted, either expressly or by course of
conduct, by the Collateral Agent shall be effective only in the specific
instance and for the purpose of which it was given and shall be deemed not to
be a waiver of any rights and remedies of the Collateral Agent hereunder as a
result of any other default or breach hereunder. No consent or waiver by the
Collateral Agent shall be effective unless made in writing and signed by an
authorized officer of the Collateral Agent.
5.4 CONCERNING THE RECEIVER.
(a) Any Receiver appointed by the Collateral Agent shall be vested
with the rights and remedies which could have been exercised by the Collateral
Agent in respect of the Corporation or the Collateral and such other powers and
discretions as are granted in the instrument of appointment and any instrument
or instruments supplemental thereto. The identity of the Receiver, any
replacement thereof and any remuneration thereof shall be within the sole and
unfettered discretion of the Collateral Agent.
(b) Any Receiver appointed by the Collateral Agent shall act as
agent for the Collateral Agent for the purposes of taking possession of the
Collateral, but otherwise and for all other purposes (except as provided below)
as agent for the Corporation. The Receiver may sell, lease, or otherwise
dispose of the Collateral as agent for the Corporation or as agent for the
Collateral Agent as the Collateral Agent may determine in its discretion. The
Receiver shall apply all monies from time to time received by the Receiver in
such order or priority, as the Collateral Agent may at their option direct. If
there shall be a deficiency, the Corporation shall remain liable for such
deficiency and shall pay the amount of such deficiency to the Collateral Agent
forthwith. The balance of proceeds realized in respect of the Collateral, if
any, remaining after repayment in full of the Obligations shall be paid to the
Corporation or such other Person or Persons entitled thereto by applicable Law.
The Corporation agrees to ratify and confirm all actions of the Receiver acting
as agent for the Corporation, and to release and indemnify the Receiver in
respect of all such actions.
(c) The Collateral Agent, in appointing or refraining from
appointing any Receiver, shall not incur liability to the Receiver, the
Corporation or otherwise and shall not be responsible for any misconduct or
negligence of such Receiver.
5.5 APPOINTMENT OF ATTORNEY. The Corporation hereby irrevocably
appoints the Collateral Agent (and any of its officers) as attorney of the
Corporation with full power of substitution to exercise, at any time when the
Security Interest shall have become enforceable, in the name of and on behalf
of the Corporation any of the Corporation's right, title and interest in and to
the Collateral (including the right of disposal, execution, endorsement,
delivery and transfer of all or any part of the Collateral). All acts of any
such attorney are hereby ratified and approved, and such attorney shall not be
liable for any
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act, failure to act or any other matter or thing in connection therewith,
except for its own gross negligence or wilful misconduct.
5.6 DEALING WITH THE COLLATERAL AND THE SECURITY INTEREST.
(a) The Collateral Agent shall not be obliged to exhaust its
recourse against the Corporation or any other Person or Persons or against any
other security the Collateral Agent may hold in respect of the Obligations
before realizing upon or otherwise dealing with the Collateral in such manner
as the Collateral Agent may consider desirable.
(b) The Collateral Agent may grant extensions or other
indulgences, take and give up securities, accept compositions, grant releases
and discharges and otherwise deal with the Corporation and with other parties,
sureties or securities as the Collateral Agent may see fit without prejudice to
the Obligations or the rights of the Collateral Agent in respect of the
Collateral.
(c) The Collateral Agent shall not be: (i) liable or accountable
for any failure to collect, realize or obtain payment in respect of the
Collateral; (ii) bound to institute proceedings for the purpose of collecting,
enforcing, realizing or obtaining payment of the Collateral or for the purpose
of preserving any rights of the Collateral Agent, the Corporation or any other
Person in respect thereof; (iii) responsible for any loss occasioned by any
sale or other dealing with the Collateral or by the retention of or failure to
sell or otherwise deal therewith; or (iv) bound to protect the Collateral from
depreciating in value or becoming worthless.
5.7 STANDARDS OF SALE. Without prejudice to the ability of the
Collateral Agent to dispose of the Collateral in any manner which is
commercially reasonable, the Corporation acknowledges that a disposition of
Collateral by the Collateral Agent which takes place substantially in
accordance with the following provisions shall be deemed to be commercially
reasonable:
(a) Collateral may be disposed of in whole or in part;
(b) Collateral may be disposed of by public auction, public tender
or private contract, with or without advertising and without any other
formality;
(c) any purchaser or lessee of such Collateral may be a customer
of the Collateral Agent, provided that such transaction is bona fide;
(d) a disposition of Collateral may be on such terms and
conditions as to credit or otherwise as the Collateral Agent, in its sole
discretion, may deem advantageous; and
(e) the Collateral Agent may establish an upset or reserve bid or
price in respect of the Collateral.
5.8 DEALINGS BY THIRD PARTIES. No Person dealing with any of the
Collateral Agent or its agent or a Receiver shall be required: (i) to
determine whether the Security Interest has become enforceable; (ii) to
determine whether the powers which the Collateral Agent or its agent is
purporting
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to exercise have been exercisable; (iii) to determine whether any money remains
due to the Collateral Agent by the Corporation; (iv) to determine the necessity
or expediency of the stipulations and conditions subject to which any sale or
lease shall be made; (v) to determine the propriety or regularity of any sale
or any other dealing by the Collateral Agent with the Collateral; or (vi) to
see to the application of any money paid to the Collateral Agent. The Security
Interest is in addition to and not in substitution for any security now held or
hereafter acquired by the Collateral Agent as security for the Obligations.
5.9 CORPORATION LIABLE FOR THE DEFICIENCY. In the case of any
judicial or other steps or proceedings to enforce the Security Interest, and
without limiting any right of the Collateral Agent to obtain judgment for any
greater amount, the Corporation shall remain liable to the Collateral Agent for
any amount which may remain due in respect of the Obligations after application
to the payment thereof of the proceeds of any sale, lease or other disposition
of the Collateral or any part thereof.
5.10 NOTICE OF SALE. Unless required by applicable Law, neither
the Collateral Agent nor any Receiver appointed by them shall be required to
give the Corporation any notice of any sale, lease or other disposition of the
Collateral or any part thereof or the date after which any private disposition
of Collateral or any part thereof is to be made.
5.11 PAYMENT OF PRIOR CLAIMS. If the Collateral Agent is at any
time or from time to time required to make a payment to defeat or honour the
priority or possible priority of any Liens on or in respect of all or any part
of the Collateral, any such payment or payments, and the costs, charges and
expenses of the Collateral Agent in connection therewith (including legal fees
on a solicitor and client basis) shall be payable by the Corporation on demand.
ARTICLE 6
GENERAL
6.1 NOTICE. Any and all demands, notices or other communications
to be made or given pursuant to this Debenture shall be given and received in
the manner and at the addresses specified in Section 11.2 of the Intercreditor
Agreement.
6.2 RELEASES. Subject to the provisions of the Term Loan
Agreement and the Indenture, the Collateral Agent may in its discretion, from
time to time, release any part of the Collateral or any other security held by
the Collateral Agent either with or without any sufficient consideration
therefor, without responsibility therefor and without thereby releasing any
other part of the Collateral or any other security or any Person from the
security created by this Debenture or from any of the covenants herein
contained. Each and every portion into which the Collateral is or may
hereafter be divided does and shall stay charged with the Obligations. No
Person shall have the right to require the Obligations to be apportioned and
the Collateral Agent shall not be accountable to the Corporation for any moneys
except those actually received by the Collateral Agent.
6.3 EXPENSES. The Corporation shall pay to the Collateral Agent
on demand all of the costs, charges and expenses of the Collateral Agent
(including legal fees on a solicitor and client basis and Receiver's fees) in
connection with the preparation, registration or amendment of this Debenture,
the perfection or preservation of the Security Interest, the enforcement by any
means of any provision hereof
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or, after the occurrence of and during the continuance of a Default (as defined
therein) of the nature set forth in Section 8.1.9 of the Term Loan Agreement or
a Default (as defined therein) of the nature set forth in Section 501(10) of
the Indenture, or an Event of Default (as defined in the Term Loan Agreement or
the Indenture, as the case may be) the exercise of any rights, powers or
remedies hereunder, including all such costs, charges and expenses in
connection with taking possession, maintaining, completing, preserving,
protecting, collecting or realizing upon all or any part of the Collateral or
carrying on all or any part of the Corporation's business relating to the
Collateral.
6.4 DISCHARGE OF DEBENTURE. The Security Interest shall be
released and discharged upon full and complete payment, performance and
satisfaction of all of the Obligations and at the request and sole cost and
expense of the Corporation. The Collateral Agent, the Administrative Agent and
the Trustee shall execute and deliver to the Corporation such releases and
discharges as the Corporation may reasonably require.
6.5 NO MERGER OF ESTATES. There shall not be deemed to be any
merger of this Debenture, nor of the rights and interests of the Collateral
Agent hereunder, with the estate in the Real Property or with the reversion or
rights and interests of the Corporation or the Collateral Agent under any
instrument affecting the Collateral by reason only of the fact that the same
Person may own or acquire, directly or indirectly, two or more estates, rights
or interests in the Collateral until all Persons having any interest under this
Debenture, the estate in the Real Property or the reversion or rights and
interests of the Corporation or the Collateral Agent under any instrument
affecting the Collateral, by an appropriate instrument, so declare and provide.
6.6 NO OBLIGATION TO ADVANCE. Neither the issue nor delivery of
this Debenture shall obligate the Collateral Agent, the Trustee, any
Noteholder, the Administrative Agent or any Lender to advance any funds, or
otherwise make or continue to make any credit available, to the Corporation.
6.7 [THIS SECTION HAS BEEN INTENTIONALLY DELETED.]
6.8 PERFECTION OF SECURITY. The Corporation shall register, file
or record all financing statements and other documents in all offices where, in
the opinion of the Collateral Agent, such registration, filing or recording is
necessary or desirable to preserve, perfect or otherwise protect the Security
Interest and the priority thereof. The Collateral Agent shall have the right
to require that the form of this Debenture or any part thereof be amended to
reflect any changes in applicable Law whether arising as a result of statutory
amendments, court decisions or otherwise, in order to confer upon the
Collateral Agent the security interest intended to be created by this
Debenture, except that in no event shall the Collateral Agent require that any
such amendment be effected if the result thereof would be to grant to the
Collateral Agent greater rights than are otherwise contemplated herein.
6.9 ASSIGNMENTS AND PARTICIPATIONS. The Collateral Agent may
sell, assign, transfer or otherwise dispose of all or any of the Obligations in
accordance with the provisions governing the Obligations and, in such event,
each and every immediate and successive assignee, transferee or holder of all
or any of the Obligations, shall have, in respect of the rights or obligations
sold, assigned, transferred or otherwise disposed of, the full benefit hereof
to the same extent as if it were an original party to the Obligations or the
part thereof so sold, assigned, transferred or otherwise disposed. None
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of the rights or obligations hereunder of the Corporation may be assigned
without the prior written consent of the Collateral Agent, except in accordance
with the provisions of the Intercreditor Agreement.
6.10 ENUREMENT. This Debenture shall enure to the benefit of the
Collateral Agent, the Trustee, the Noteholders, the Administrative Agent and
the Lenders, their respective successors and assigns and be binding upon the
Corporation and its successors and permitted assigns.
6.11 TIME OF ESSENCE. Time shall be of the essence of this
Debenture with respect to the obligations of the Corporation hereunder.
6.12 AMENDMENTS. This Debenture may be amended only by written
agreement of the Corporation and the Collateral Agent.
6.13 FURTHER ASSURANCES. The Corporation shall from time to time,
whether before or after the Security Interest shall have become enforceable, at
its sole cost and expense, do all such acts and things and execute and deliver
all such deeds, transfers, assignments and instruments as the Collateral Agent
may reasonably require for protecting the Collateral or perfecting the Security
Interest and for exercising all powers, authorities and discretions hereby
conferred upon the Collateral Agent, and the Corporation shall, from time to
time after the Security Interest has become enforceable, at its sole cost and
expense, do all such acts and things and execute and deliver all such deeds,
transfers, assignments and instruments as the Collateral Agent may require for
facilitating the sale of the Collateral in connection with any realization
thereof.
6.14 JUDGMENT CURRENCY. If, for the purposes of obtaining judgment
in any court, it is necessary to convert any sum due, or owing to the
Collateral Agent in any currency (the "Original Currency") into another
currency (the "Other Currency"), the Corporation hereby agrees, to the fullest
extent that it may effectively do so, that the rate of exchange used shall be
that at which, in accordance with normal banking procedures, the Collateral
Agent could purchase the Original Currency with the Other Currency on the
Business Day preceding that on which the final judgment is granted. The
Obligations of the Corporation in respect of any sum due in the Original
Currency from it to the Collateral Agent shall, notwithstanding any judgment in
any Other Currency, be discharged only to the extent that on the Business Day
following receipt by the Collateral Agent of any such sum adjudged to be so due
or owing in such Other Currency, the Collateral Agent may in accordance with
normal banking procedures purchase the Original Currency with such Other
Currency. If the amount of the Original Currency so purchased is less than the
sum originally due or owing to the Collateral Agent in the Original Currency,
the Corporation shall, as a separate obligation and notwithstanding any such
judgment, indemnify the Collateral Agent for the benefit of the Trustee, on its
own account and on account of each Noteholder, and the Administrative Agent, on
its own account and on account of each of the Lenders, against such loss, and
if the amount of the Original Currency so purchased exceeds the sum originally
due or owing to the Collateral Agent in the Original Currency, the Collateral
Agent shall remit such excess to the Corporation.
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6.15 COPY RECEIVED. The Corporation acknowledges receipt of a copy
of this Debenture.
IN WITNESS WHEREOF the Corporation has executed this Debenture on the
date first above written.
PCI CHEMICALS CANADA INC.
Per: /s/ KENT R. STEPHENSON
-----------------------------------
Authorized Signing Officer
c/s