Exhibit 4.20
$75,000,000
DEMAND DEBENTURE
WESTCAN PHARMACEUTICALS LTD.
150 Beghin Avenue
Winnipeg, Manitoba
R2J 3W2
1. PROMISE TO PAY
The above-named corporation (the "CORPORATION") for value received
promises to pay to The Bank of Nova Scotia (the "CANADIAN AGENT") at its offices
at 44 King Street West, Toronto, Ontario, M5H 1Hl on demand all amounts now or
hereafter owing by the Corporation to the Canadian Secured Parties (as defined
below) or any of them, up to the maximum principal amount of $75,000,000 in
lawful money of Canada, and interest at the rate of 25% per annum, calculated
daily and payable on demand, both before and after maturity and default, with
interest on overdue interest at the same rate.
This Debenture is granted to the Canadian Agent on its own behalf and
as agent for the following:
(a) the Canadian Lenders and the Canadian Issuers, each as defined in the
credit agreement dated as of 30 June 1997 (as amended, supplemented,
restated and replaced from time to time, the "CREDIT AGREEMENT")
between Vita Health Company (1985) Ltd. (the "Canadian Borrower"), The
Bank of Nova Scotia as Canadian Agent, the Canadian Lenders and
certain other parties;
(b) each counterparty to a Rate Protection Agreement (as defined in the
Credit Agreement) entered into by the Corporation or the Canadian
Borrower that is (or at the time the Rate Protection Agreement was
entered into, was) a Canadian Lender or an Affiliate (as defined in
the Credit Agreement) of a Canadian Lender; and
(c) their respective successors, permitted transferees and permitted
assigns.
The Canadian Agent and the persons listed above are collectively referred to in
this Debenture as the "CANADIAN SECURED PARTIES". The Corporation and the
Canadian Borrower are collectively referred to in this Debenture as the
"CANADIAN OBLIGORS".
2. OBLIGATIONS SECURED
This Debenture secures payment and performance by the Canadian
Obligors or any of them to the Canadian Secured Parties or any of them of all
debts, liabilities and obligations, present or future, direct or indirect,
absolute or contingent, matured or not,
choate or inchoate, in any currency, at any time owing by the Canadian
Obligors or any of them to the Canadian Secured Parties or any of them under
or in connection with the Credit Documents (as defined below) or remaining
unpaid by the Canadian Obligors or any of them to the Canadian Secured
Parties or any of them under or in connection with the Credit Documents,
whether arising from dealings between the Canadian Secured Parties or any of
them and the Canadian Obligors or any of them or from any other dealings or
proceedings by which the Canadian Secured Parties or any of them may be or
become in any manner whatever a creditor of the Canadian Obligors or any of
them under or in connection with the Credit Documents, and wherever incurred,
and whether incurred by the Canadian Obligors or any of them alone or with
another or others and whether as principal or surety (including but not
limited to any guarantee by the Canadian Obligors or any of them of
obligations of other persons to the Canadian Secured Parties or any of them),
and all interest, commissions, legal and other costs, charges and expenses
(collectively, the "OBLIGATIONS SECURED"). The "CREDIT DOCUMENTS" include
the Credit Agreement, all promissory notes of the Corporation delivered under
or in connection with the Credit Agreement, as the promissory notes are
amended, endorsed or otherwise modified from time to time, standby or
documentary letters of credit issued for the account of the Corporation
pursuant to the Credit Agreement from time to time, any guarantee by the
Corporation required by the Credit Agreement, any Rate Protection Agreement
to which the Canadian Obligors or any of them is a party and any other Loan
Document (as defined in the Credit Agreement) to which the Canadian Obligors
or any of them is a party.
3. GRANT OF SECURITY
As security for the payment of the obligations secured, the
Corporation charges as and by way of a floating charge to and in favour of the
Canadian Agent, and grants to the Canadian Agent a security interest in, all of
the present and after-acquired property, undertaking and assets of the
Corporation for the time being, both real and personal, movable and immovable,
of whatsoever nature and kind now owned or hereafter acquired, including its
goodwill and uncalled capital, (all property, undertaking and assets subject to
the said mortgages, charges and security interests being collectively referred
to as the "MORTGAGED PROPERTY").
4. LEASES
The charge of the mortgaged property contained in section 3 shall not
extend or apply to the last day of the term of any lease or any agreement
therefor now held or hereafter acquired by the Corporation, but should the said
charge become enforceable the Corporation shall thereafter stand possessed of
such last day and shall hold it in trust to assign the same to any person
acquiring such term or the part thereof charged in the course of any enforcement
of the said charge or any realization of the subject matter thereof.
5. CONTRACTS, RIGHTS OR LICENCES
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In this section 5, "RESTRICTED ASSET" shall mean any contract, right
or licence of the Corporation, including any right of the Corporation as a
security holder, shareholder or holder of a partnership interest, if pursuant to
the terms of such contract, right or licence, or pursuant to the terms of any
agreement affecting such contract, right or licence, the contract, right or
licence would automatically terminate if it was part of the mortgaged property,
or would be terminable at the option of the other party thereto or of the
grantor thereof, or would be subject to disposition, alteration or amendment at
the option of another party including another security holder, shareholder or
holder of a partnership interest. The charge of the mortgaged property contained
in section 3 shall not extend or apply to any Restricted Asset. Should the
charge become enforceable, the Corporation shall thereafter stand possessed of
each Restricted Asset and shall hold it in trust to assign the same or dispose
of the same to any person as requested by the Canadian Agent. In order that the
full value of all such Restricted Assets may be realized for the benefit of the
Canadian Secured Parties, the Corporation shall at its expense and at the
request of the Canadian Agent from time to time, take all such action and do or
cause to be done all such things as shall, in the opinion of the Canadian Agent
acting reasonably (with advice of counsel as the Canadian Agent considers
appropriate), be necessary or proper in order that all such Restricted Assets
shall enure to the benefit of the Canadian Agent.
6. NEGATIVE PLEDGE
The Corporation covenants that it shall not, without the consent in
writing of the Canadian Agent, create, assume, incur or permit the existence of
any mortgage, hypothec, charge, lien or other encumbrance upon the mortgaged
property or any part thereof, other than as may be permitted by the Credit
Agreement.
7. INSPECTION OF MORTGAGED PROPERTY
Until an event of default occurs, the Corporation may use the
mortgaged property in any lawful manner not inconsistent with this Debenture,
but the Canadian Agent shall have the right at reasonable times and intervals to
verify the existence and state of the mortgaged property in any manner the
Canadian Agent may consider appropriate and the Corporation agrees to furnish
all assistance and information and to perform all such acts as the Canadian
Agent may reasonably request in connection therewith, and for such purpose shall
permit the Canadian Agent or its agents access at reasonable times and intervals
to all places where any mortgaged property may be located and to all premises
occupied by the Corporation to examine and inspect the mortgaged property and
related records and documents.
8. EVENTS OF DEFAULT
The obligations secured shall immediately become payable and the
security constituted by this Debenture shall immediately become enforceable in
each of the following events:
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(a) if any Canadian Obligor defaults in payment of any of the obligations
secured and the default continues beyond any applicable grace period;
(b) if the Corporation defaults in performance of any covenant or
condition of this Debenture and the default continues beyond any
applicable grace period; or
(c) if an event of default occurs and is continuing pursuant to the Credit
Agreement.
9. WAIVER OF DEFAULT
The Canadian Agent may by notice to the Corporation waive any default
of any Canadian Obligor on such terms and conditions as the Canadian Agent may
determine, but no such waiver shall be taken to affect any subsequent default or
the rights resulting therefrom.
10. REMEDIES
Whenever the security constituted by this Debenture becomes
enforceable and so long as it remains enforceable, the Canadian Agent may:
(a) immediately take possession of the mortgaged property and, whether or
not the Canadian Agent has done so, may sell, lease or otherwise
dispose thereof either as a whole or in separate parcels, at public
auction, by public tender or by private sale, with or without notice,
either for cash or upon credit, and upon such terms and conditions as
the Canadian Agent may determine; and the Canadian Agent may execute
and deliver to any purchaser of the mortgaged property or any part
thereof good and sufficient deeds and documents for the same, the
Canadian Agent being irrevocably constituted the attorney of the
Corporation for the purpose of making any such sale, lease or other
disposition and executing such deeds and documents;
(b) by instrument in writing appoint any person to be a receiver (which
term shall include a receiver and manager) of the mortgaged property
or of any part thereof and may remove any receiver so appointed and
appoint another in his stead; and any such receiver so appointed shall
have power:(i) to take possession of the mortgaged property or any
part thereof,(ii) to carry on all or any part of the business of the
Corporation relating to the mortgaged property,(iii) to borrow money
on the security of the mortgaged property in priority to the Debenture
for the purpose of the maintenance, preservation or protection of the
mortgaged property or any part thereof or for carrying on all or any
part of the business of the Corporation relating to the mortgaged
property, and (iv) to sell, lease or otherwise dispose of the whole or
any part of the mortgaged property, at public auction, by public
tender or by private sale,
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with or without notice, either for cash or upon credit, at such time
and upon such terms and conditions as the receiver may determine;
provided that any such receiver shall be deemed the agent of the
Corporation and the Canadian Secured Parties shall not be in any way
responsible for any misconduct or negligence of any such receiver;
and
(c) exercise any of the other rights to which the Canadian Agent is
entitled as holder of this Debenture, including the right to take
proceedings in any court of competent jurisdiction for the appointment
of a receiver and manager, for the sale of the mortgaged property or
any part thereof or for foreclosure, and the right to take any other
action, suit, remedy or proceeding authorized or permitted under the
Debenture or by law or by equity in order to enforce the security
constituted by this Debenture.
In the exercise of their rights, powers and authorities under this
Debenture, the Canadian Agent and any receiver or receiver and manager appointed
by the Canadian Agent shall be the agent of the Corporation, and the Canadian
Agent shall not be in any way responsible for any misconduct or negligence of
any such receiver or receiver and manager. The Canadian Agent or any agent or
representative thereof, may become purchasers at any public sale of the
mortgaged property, whether made under a power of sale provided for in this Deed
or pursuant to judicial proceedings.
11. TAXES AND OTHER CHARGES
The Corporation shall pay all rents, taxes, rates, levies, assessments
and government fees or dues levied, assessed or imposed in respect of the
mortgaged property or any part thereof (collectively "TAXES") as and when the
same shall become due and payable and shall pay all charges, liens and other
encumbrances on the mortgaged property (collectively "CHARGES") as and when the
same shall become due and payable. If the Corporation does not pay any Taxes or
Charges as and when the same shall become due and payable, the Canadian Agent
may, at its option, elect to pay any such amounts and charge to the Corporation
all amounts so paid as additional amounts secured under this Deed, together with
interest thereon from the date of payment by the Canadian Agent of any such
amounts at the highest rate applicable to Canadian dollar advances pursuant to
the Credit Agreement. The Corporation may contest in good faith the payment of
any Taxes or Charges provided that the Corporation is proceeding diligently and
in good faith and in the best possible manner to contest the claim, the
Corporation's interest in the mortgaged property cannot be forfeited, sold or
affected in any other way while contesting the claim, the Corporation keeps the
Canadian Agent fully informed of the proceedings, the Corporation has made
arrangements satisfactory to the Canadian Agent acting reasonably in respect of
the payment of the contested Taxes or Charges and the Corporation pays in
accordance with section 12 any expenses incurred by the Canadian Agent in
connection with the proceedings.
12. EXPENSES
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The Corporation shall pay to the Canadian Agent upon demand the amount
of all reasonable expenses incurred in recovering any obligations secured or in
enforcing the security constituted by this Debenture, including but not limited
to, the expenses incurred in connection with the repossession, holding,
repairing, processing, preparing for disposition, and disposing of any of the
mortgaged property (including reasonable legal and other expenses), with
interest thereon from the date of the incurring of such expenses at the highest
rate applicable to Canadian dollar advances pursuant to the Credit Agreement.
13. DISCHARGE
If the Corporation pays to the Canadian Agent the obligations secured
by this Debenture or if the obligations secured by this Debenture are otherwise
paid in full and the Corporation otherwise observes and performs the terms and
conditions of this Debenture, then the Canadian Agent shall at the request and
at the expense of the Corporation cancel and discharge the mortgage and charge
of this Debenture and execute and deliver to the Corporation such deeds and
other instruments as shall be requisite therefor. For the purposes of this
section 13 only, "obligations secured" shall not include Rate Protection
Agreements that are not entered into pursuant to the Credit Agreement.
14. NOTICES
Unless otherwise provided in any agreement to which the Canadian Agent
and the Corporation are parties, any notice or demand required or permitted to
be given or made under this Debenture by the Canadian Agent to the Corporation
may be served personally on a director, officer or employee of the Corporation
or may be given or made by mailing the same by prepaid registered mail addressed
to the Corporation at its address as set out above and shall, unless a different
date of receipt is established by law, be conclusively deemed to have been
received by the Corporation if served personally on the day served and if given
or made by mailing by prepaid registered mail on the third business day
following the date of such mailing.
15. CONTINUING AND ADDITIONAL SECURITY
This Debenture shall not be considered as satisfied or discharged by
any intermediate payment (as distinct from a final payment) of the whole or part
of the obligations secured but shall constitute and be a continuing security for
a current or running account and shall be in addition to and not in substitution
for any other security now or hereafter held by or for the benefit of the
Canadian Agent. The remedies of the Canadian Agent under this Debenture may be
exercised from time to time separately or in combination and are in addition to
and not in substitution for any other rights of the Canadian Agent however
created.
16. AMALGAMATIONS
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If the Corporation amalgamates with any corporation or corporations,
the obligations secured by this Debenture and the mortgage and charge created by
this Debenture shall continue and shall extend to the present and future
undertaking, property and assets of the amalgamated corporation, as if the
amalgamated corporation had executed this Debenture as the Corporation.
17. TRANSFERABLE
Subject to any restrictions on transfer contained in the Credit
Agreement or any other agreement to which the Corporation and the Canadian Agent
are parties, the obligations secured by this Debenture shall be paid and this
Debenture shall be transferable without regard to any set-off or counter-claim
between the Corporation and the Canadian Agent.
18. EFFECT OF HEADINGS
The headings and marginal notes of the sections in this Deed are
inserted for convenience of reference only and shall not affect the
interpretation of this Debenture.
19. LAW GOVERNING
This Debenture shall be governed in all respects by the law of the
Province of Manitoba and the federal laws of Canada applicable therein.
20. FURTHER COVENANTS
The Corporation shall not:
(a) change its name without providing the Canadian Agent with prior 30
days written notice thereof and promptly taking other steps, if any,
as the Canadian Secured Parties reasonably request to permit the
Canadian Agent to perfect the Security with respect to the change in
name;
(b) permit its chief executive office or chief place of business to be
located out of the Province of Manitoba without providing the Canadian
Agent with 30 days prior written notice thereof and promptly taking
other steps, if any, as the Canadian Secured Parties reasonably
request to permit the Canadian Agent to perfect the security with
respect to the change in location;
(c) permit any of its tangible personal property (other than (i) inventory
in transit (ii) goods of a type normally used in more than one
jurisdiction which are equipment or inventory leased or held for lease
by the Corporation to others or (iii) tangible personal property of a
value which is not material in relation to the obligations secured
which is temporarily located out of Manitoba) to be
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located out of Manitoba without providing the Canadian Agent with 30
days prior written notice thereof and promptly taking other steps, if
any, as the Canadian Secured Parties reasonably request to permit the
Canadian Agent to perfect the security with respect to the change in
location.
The Corporation shall, forthwith on demand, deliver to the Canadian
Agent possession of all "instruments," "securities," "letters of credit,"
"advices of credit" and "negotiable documents of title" as those terms are
defined or used in the Personal Property Security Act (Manitoba) as amended from
time to time. The Corporation shall also, forthwith on demand, deliver to the
Canadian Agent all such security agreements, mortgages and other documents as
may be reasonably required to provide the Canadian Agent with a fixed and
specific mortgage and charge and a security interest in all patents, trademarks
and other intellectual property in which the Corporation now or hereafter holds
an interest and to provide the Canadian Agent with a fixed and specific mortgage
and charge and a security interest in any or all real and immovable property
(including leaseholds), equipment, machinery, vehicles and other tangible
personal property hereafter acquired by the Corporation.
The Corporation represents and warrants that as of the date of this
Debenture, all of its tangible property, other than inventory in transit, is
located in the Province of Manitoba and all of its accounts receivable are
billed from, and payment is customarily received in, the same place.
IN WITNESS WHEREOF this Debenture has been signed by its duly
authorized officer as of 30 June 1997.
WESTCAN PHARMACEUTICALS LTD.
By: /s/ William B. Towne c/s
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Name: William B. Towne
Title: Treasurer
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