1
EXHIBIT 4.4
FORM A56
DEBENTURE
STANDARD FORMS OF CONVEYANCES ACT, S.N.B. 1980, c. S-12.2, s.2
The parties to this debenture are:
PCI CHEMICALS CANADA INC., of the City of Saint Xxxx, in the Province
of New Brunswick, a body corporate, the "CORPORATION"
and
UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent, of New
York, New York, U.S.A., a body corporate, the "LENDER"
For value received, the corporation promises to pay on demand to or to the
order of the lender the principal sum and interest as hereafter set out.
PRINCIPAL SUM: U.S. Five Hundred Million Dollars (U.S.
$500,000,000.00);
INTEREST RATE: Twenty-Five per cent (25%) per annum;
HOW INTEREST CALCULATED: Calculated daily, not in advance, both
before and after maturity and default, commencing from the date
hereof.
PLACE OF PAYMENT: At such address, or addresses, as the lender may
designate at any time and from time to time by notice in writing to
the corporation;
PAYMENTS ON PRINCIPAL SUM: On demand;
PAYMENTS ON INTEREST: Payable in lawful money of the United States of
America, on demand, both before and after maturity and default, with
interest on overdue interest at the same rate;
As security for the payment of all money payable hereunder and the performance
of the covenants and conditions herein contained, the corporation grants,
mortgages and charges, as applicable, to and in favour of the lender:
(a) [intentionally deleted];
(b) [intentionally deleted];
(c) [intentionally deleted];
(d) [intentionally deleted];
(e) [intentionally deleted];
(f) in accordance with Schedule "F".
2
2
This debenture contains the covenants and conditions which are set out in:
(a) [intentionally deleted];
(b) Schedule "C" attached hereto.
DATED on October 30, 1997.
IN WITNESS WHEREOF the corporation has executed this debenture.
SIGNED, SEALED AND ) PCI CHEMICALS CANADA INC.
DELIVERED )
in the presence of )
)
) Per: /s/ XXXXXX XXXXXXXXXX
) ------------------------------
) Authorized Signing Officer
) (c.s)
)
3
SCHEDULE "A"
DESCRIPTION OF LANDS AND PREMISES
This is Schedule "A" to a debenture between PCI CHEMICALS CANADA INC. as
corporation, and UNITED STATES TRUST COMPANY OF NEW YORK, as lender, which
debenture is dated October 30, 1997.
--------------------------------------------------------------------------------
FIRSTLY
All that certain lot, piece or parcel of land situate in the Town of Dalhousie
in the County of Restigouche, Province of New Brunswick, bounded and described
as follows:-
BEGINNING at a point on the Southerly shore of Restigouche Harbour,
said point being located North thirty degrees forty-four minutes thirty seconds
East (N30 degrees 44'30"E) a distance of ten (10) feet from a survey monument;
Thence South thirty degrees forty-four minutes thirty seconds West (S30 degrees
44'30"W) a distance of one hundred ninety and seven tenths (190.7) feet to a
survey monument, said survey monument being distant thirty-three (33) feet from
the centre line of the Dalhousie Branch, Canadian National Railways; and being
on the Northeasterly limits of the Dalhousie Branch of the Canadian National
Railways; Thence Northwesterly along the Northeasterly limits of the Dalhousie
Branch of the Canadian National Railways a distance of one hundred forty-seven
and four tenths (147.4) feet to a point; Thence northeasterly a distance of
seventeen (17) feet to a point, said point being distant fifty (50) feet from
the centre line of the Dalhousie Branch of the Canadian National Railways;
Thence Northwesterly and Westerly along the Northeasterly and Northerly limits
of the Dalhousie Branch of the Canadian National Railways, a distance of two
thousand seven hundred thirty-five and eight tenths (2735.8) feet to a survey
monument, said survey monument being at the Southeast corner of property now in
the possession of one Xxxxx Xxxxxxx; Thence North eighteen degrees East (N18
degrees E) along the Xxxxx Xxxxxxx Xxxxxxxx property line a distance of four
hundred (400) feet to the shore of Restigouche Harbour; Thence Northeasterly,
Easterly, Southeasterly and Southerly along the shore of Restigouche Harbour to
the Point of beginning. Comprising: (a) the part of the land sold by the P.Q.
Lumber Company to Canadian International Paper Company by deed dated March 23,
1927, and registered in the Registry Office for the County of Restigouche as
No. 23892 in Book 03, pages 194 to 200, and subsequently sold by Canadian
International Paper Company to New Brunswick International Paper Company by
deed dated January 8, 1931, and registered in the Registry Office for the
County of Restigouche as No. 27099 in Book No. Y3, pages 46 to 48, described in
the above mentioned deed in paragraph one, and (b) part of the land sold by
Dalhousie Lumber Company Limited to New Brunswick International Paper Company
by deed dated October 15, 1928, and registered in the Registry Office for the
County of Restigouche as No. 25868 in Book U-3, pages 360 to 371 and described
in sub-paragraph two of paragraph 19 in Schedule "A" thereto. The whole as
shown outlined in red on the plan sheets 1 and 2 of Plan A-1019 prepared by
Xxxx X. Xxxxxxxx and Associates dated 25th October, 1961, attached as Appendix
A1 and A2 to a Deed dated 24th April, 1963, by New Brunswick International
Paper Company to the Grantor and registered in the Registry Office for the
County of Restigouche as No. 59950 in Book W6 pages 211 to 213. SUBJECT
HOWEVER to the rights, privileges and easements reserved by New Brunswick
International Paper Company for itself and its successors and assigns and which
are appurtenant to the lands hereby conveyed under the provisions of the Deed
hereinabove mentioned and registered in the Registry Office for the County of
Restigouche as No. 59950 in Book W6, pages 211 to 213. SUBJECT ALSO to an
easement for an electric power transmission line granted to The New Brunswick
Electric Power Commission by agreement dated 3rd July, 1963. The parcel of
land hereinabove described was
4
2
conveyed to Canadian Industries Limited by Xxxx recorded in the office of the
Registrar of Deeds in and for the County of Restigouche under No. 59950, Book
W-6.
SECONDLY
ALL AND SINGULAR that certain lot, piece or parcel of land situate, lying and
being in the Town of Dalhousie, County of Restigouche and Province of New
Brunswick, being more particularly bounded and described as follows:-
"BEGINNING at the intersection of the Westerly side line of the Roman
Catholic Cemetery, said Westerly side line also being the Westerly side line of
Lot No. 775, as shown on the Dalhousie Land Co. Ltd. Plan duly recorded in the
Record Office for the County of Restigouche, with the Northerly side line of
Victoria Street (so-called); thence North sixty-one degrees thirty minutes
thirty-seven seconds West (N 61 degrees 30' 37" W) along the Northerly side
line of Victoria Street a distance of five hundred eighty-nine and five tenths
(589.5) feet to the point of curvature of a curve or radius of one thousand two
hundred fifty-eight and ninety-five hundredths (1258.95) feet; thence Westerly
along the arc of the above mentioned curve of radius of one thousand two
hundred fifty-eight and ninety-five hundredths (1258.95) feet a distance of
three hundred sixty-seven and six hundredths (367.06) feet to the point of
curvature of the aforesaid curve; thence North seventy-eight degrees twelve
minutes fifty-six seconds west (N78 degrees 12' 56" W) continuing along the
Northerly limits of Victoria Street a distance of three hundred seventy-five
and two tenths (375.2) feet to the point of curvature of a curve of radius of
one thousand five hundred thirty-four and fifty-eight hundredths (1534.58)
feet; thence Westerly along the arc of the above mentioned curve of radius of
one thousand five hundred thirty-four and fifty-eight hundredths (1534.58)
feet, a distance of three hundred eighty-nine and fifty-three hundredths
(389.53) feet to the point of curvature of the aforesaid curve; thence North
sixty-three degrees forty minutes eighteen seconds West (N 63 degrees 40' 18"
W) continuing along the Northerly limits of Victoria Street, a distance of
fifty-eight and six hundred seventy-six thousandths (58.676) feet to an iron
pipe, said iron pipe being the Southeast corner of the property now in the
possession of one Xxxxx Xxxxxxx; thence North twenty-seven degrees three
minutes fifty-one seconds East (N 27 degrees 03' 51" E) along the Easterly side
line of the property of aforesaid Xxxxx Xxxxxxx, and property now in the
possession of E.D.A. Motels Ltd., a distance of one hundred thirty-four (134)
feet to an iron pipe, said iron pipe being on the Southerly limits of the
Dalhousie Branch of the Canadian National Railway; thence South seventy-one
degrees East (S 71 degrees E) along the Southerly limits of the Dalhousie
branch of the Canadian National Railway, a distance of one thousand three
hundred twenty-six and nine tenths (1326.9) feet to a point, said point being
the point of change of width of the Dalhousie Branch of the Canadian National
Railway; thence South nineteen degrees West (S 19 degrees W) a distance of one
hundred and ten (110) feet to a point; thence South seventy-one degrees East (S
71 degrees E) along the Southerly limits of the Dalhousie Branch of the
Canadian National Railway a distance of three hundred (300) feet to a point,
said point being the point of change of width of the Dalhousie Branch of the
Canadian National Railway; thence North nineteen degrees East (N 19 degrees E)
a distance of one hundred and ten (110) feet to a point; thence South
seventy-one degrees East (S 71 degrees E) along the Southerly limits of the
Dalhousie Branch of the Canadian National Railway, a distance of fifty and two
tenths (50.2) feet to the point of curvature of a curve of irregular radius;
thence South sixty-eight degrees eighteen minutes thirty seconds East (S 68
degrees 18' 30" E) along the chord of an arc of the aforesaid curve of
irregular radius, a distance of one hundred and seventy-two hundredths (100.72)
feet to a survey marker, said survey marker being the Northwest corner of the
Roman Catholic Cemetery property; thence South twenty-seven degrees fifty-seven
minutes thirty-two seconds West (S 27 degrees 58' 32" W) along the Westerly
sideline of the Roman Catholic Cemetery property, a distance of one hundred
ninety-five and five tenths (195.5) feet to a survey marker, said survey marker
being
5
3
the point of beginning. The whole of the above described property containing
three and fifty-six hundredths (3.56) acres." SAVE AND EXCEPTING from the
above described property an area of 3,600 square feet of land sold to and
occupied by the New Brunswick Electric Power Commission by Deed dated 3rd July,
1963. The lands above described are composed of parcels conveyed to Canadian
Industries Limited by Deeds recorded in the office of the Registrar of Deeds in
and for the County of Restigouche under Nos. 59,000, 59,333, 59,330 59,336 and
59,337 respectively. Subject, however, to an easement for an electric power
transmission line granted to The New Brunswick Electric Power Commission by
agreement dated July 3, 1963. Subject also to a right-of-way to and from the
above described property conveyed to The New Brunswick Electric Power
Commission as described in Deed No. 60793.
THIRDLY
ALL AND SINGULAR that certain lot, piece or parcel of land and premises,
situate, lying and being in the Town of Dalhousie in the County of Restigouche
and Province of New Brunswick, more particularly bounded and described as
follows:
BEGINNING at a point in the southerly sideline of Victoria Street
where the westerly sideline of the eastern half of Grant Number 80 intersects
the same; thence southerly along the said grant line to a point 200 feet
distant from the said southerly sideline of Victoria Street, being measured at
right angles to Victoria Street; thence by the magnet of the year 1962, being
parallel to and 200 feet southerly from the said Victoria Street southerly
sideline, a scaled distance of 53.5 feet; thence N 69 degrees 08' W, being
parallel to and 200 feet southerly from the said Victoria Street southerly
sideline, a distance of 338.5 feet; thence N 71 degrees 08'W, being parallel to
and 200 feet southerly from the said southerly sideline of Victoria Street, a
distance of 93.8 feet; thence N 71 degrees 46'W, being parallel to and 200 feet
southerly from the said southerly sideline of Victoria street, a distance of
57.7 feet; thence at right angles N 18 degrees 14'E, a distance of 200 feet to
the said southerly sideline of Victoria Street; thence at right angles S 71
degrees 46'E, being along the said Victoria Street sideline, a distance of 60.5
feet; thence S 71 degrees 08'E, being along the said Victoria Street sideline,
a distance of 98.3 feet; thence S 69 degrees 08'E, also being along the said
Victoria Street sideline, a scaled distance of 325.7 feet to the place of
beginning. CONTAINING 2.36 acres more or less. The same being shown on a Plan
of survey dated the 21st day of September, A.D., 1962, prepared by X.X. Xxxxx,
N.B.L.S., and filed in the Office of the Registrar of Deeds in and for the
County of Restigouche as Plan No. 851, and being the lands conveyed to Canadian
Industries Limited by Deed recorded in the office of the Registrar of Deeds in
and for the County of Restigouche under No. 59751, Book W-6.
FOURTHLY
ALL AND SINGULAR that certain lot, piece or parcel of land situate, lying and
being in the Town of Dalhousie, County of Restigouche and Province of New
Brunswick, being more particularly bounded and described as follows:-
"BEGINNING at a point in the westerly sideline of Grant Number 3
granted to Xxxxx Xxxxx, said point being 50.7 feet, measured along the said
grant line S 17 degrees 26'W, by the magnet of the year 1962, from the
southerly sideline of Victoria Street or from the northwesterly corner of Lot
Number 700 of the Xxxxxxxxxx Subdivision; thence continuing along the said
Grant line S 17 degrees 26W, a distance of 152.1 feet; thence N 63 degrees
04'W, being parallel to and 200 feet southerly from the said Victoria Street
sideline, a distance of 709.3 feet; thence N 79 degrees 45'W, being parallel to
and 200 feet southerly from the said Victoria Street southerly sideline, a
6
4
distance of 734.9 feet; thence N 66 degrees 00'W, being parallel to and 200
feet southerly from the said Victoria Street southerly sideline, a scaled
distance of 380.0 feet or to the easterly sideline of the westerly half of
Grant Number 80, said point being 200 feet distant from the said southerly
sideline of Victoria Street and being measured at right angles to the said
Victoria Street southerly sideline; thence in a northerly direction, being
along the said easterly sideline of the westerly half of Grant number 80 to the
said Victoria Street southerly sideline; thence S 69 degrees 08'E, a scaled
distance of 20.0 feet, thence S 66 degrees 00'E, a distance of 415.0 feet also
along the said Victoria Street sideline; being along the said Victoria Street
sideline; thence S 79 degrees 45'E, continuing along the said Victoria Street
Sideline, a distance of 740.2 feet; thence S 63 degrees 04'E and continuing
along the said Victoria Street sideline, a distance of 630.0 feet or to the
northwesterly corner of the lot of land now owned by Xxxxxxx Xxxxxx; thence S
17 degrees 26'W being along the westerly sideline of the said Xxxxxxx Xxxxxx
property or to the rear of the same, a distance of 50.7 feet; thence S 63
degrees 04'E, being along the southerly sideline of the said Sabean property, a
distance of 75 feet to the place of beginning. CONTAINING 8.80 acres more or
less. EXCEPTING therefrom a roadway as a right-of-way twenty (20) feet wide
extending from the southerly sideline of Victoria Street the centerline being
ninety feet N 63 degrees 04'W, measured along the said highway sideline from
the northwesterly corner of the lot now belonging to Xxxxxxx Xxxxxx, this
right-of-way containing 0.15 acres more or less. Subject, however, to an
easement for an electric power transmission line granted to Saint Xxxx River
Power Company by agreement dated July 4, 1929. Subject also to two easements
for an electric power transmission line granted to The New Brunswick Electric
Power Commission by agreements dated December 2, 1962 and March 16, 1963.
Subject also to an easement for one anchor with guys attached granted to The
New Brunswick Telephone Company, Ltd. by agreement dated May 6, 1952. The
lands above described are composed of parcels conveyed to Canadian Industries
Limited by Deeds registered in the office of the Registrar of Deeds in and for
the County of Restigouche as No. 59750 and 60079. The same being shown on a
Plan of Survey dated 21st September A.D., 1962, prepared by X.X. Xxxxx,
N.B.L.S. and filed in the office of the Registrar of Deeds in and for the
County of Restigouche as Plan No. 851.
FIFTHLY
ALL that certain lot, piece or parcel of land and premises situate, lying and
being in the Town of Dalhousie, in the County of Restigouche and Province of
New Brunswick, bounded and described as follows:
"BOUNDED on the North by the Restigouche River, on the East by
property of New Brunswick International Paper Company (old P. Q. Mill
property), on the South by the Canadian National Railway right-of-way and on
the West by the Xxxxxxxxx Xxxx Estate property."
Being part and parcel of those lands and premises conveyed to Xxxxx
Xxxxxxx by Indenture of Deed dated the 4th day of April 1953, and duly
registered in the Restigouche County Registry Office on the 7th day of April
1953, in Book 0-5, at page 546 and bearing official number 45593.
Being same lands and premises conveyed to THE TRUSTEES OF THE ST. XXXX
PRESBYTERIAN CHURCH by Xxxxx X. Xxxxxxx, by Xxxx dated the 8th day of June
1989, and duly registered in the Restigouche County Registry Office on the 9th
day of June 1989, in Book 484, at page 456, as document number 144765.
7
5
SIXTHLY
ALL AND SINGULAR that certain lot, piece or parcel of land and premises,
situate, lying and being in the Parish of Dalhousie, County of Restigouche and
Province of New Brunswick, more particularly bounded and described as follows
to wit:
Beginning at a point on the east side of the Xxxxx Xxxxxxx Road said
point of beginning being situate at the point of intersection of the Southern
boundary of a certain service access road (situate at the Northern limit of Lot
A and B in Block 50, Parish of Dalhousie) with the division line between Lot A
and B aforementioned; thence running in a southerly direction following the
division line between Lot A and B presently marked by distinct blazes on trees
and the remains of an old rail fence, one thousand six hundred and ninety-seven
(1697) feet to a point; thence turning approximately eighty-nine (89) degrees
east and running in an Easterly direction five hundred and thirty (530) feet
more or less to a point on the Eastern boundary of the Grantor's property;
thence turning at about right angles and running in a Northerly direction
following the Eastern boundary of the Grantors property marked by the remains
of an old wire fence one thousand six hundred and ninety-seven (1697) feet more
or less to the Southern boundary of the aforementioned service access road;
thence turning and running in a Westerly direction following the southern
boundary of the access road four hundred and ninety-seven (497) feet more or
less to a point being the point at the place of beginning. The entire lot
herein described containing twenty (20) acres more or less and being part of a
lot of land conveyed to the Grantor herein by his brother Xxxxxx Xxxxxxxxx by
deed dated April 15, 1943, registered April 15, 1943 as number 34124 in Book P
- 4 at pages 291 - 292 of the records in and for the County of Restigouche.
Reserving, however, to Xxxxxxx Xxxxxxxxx and Xxx Xxxxxxxxx, their
heirs and assigns a right-of-way approximately fifteen (15) feet in width
situate immediately East of the division line between the Western half of lot
'B' in Block 50, Parish of Dalhousie and lot 'A' also in Block 50, Parish of
Dalhousie which right-of-way shall lead from the aforementioned access road to
the rear of the Grantor's lot.
8
SCHEDULE "C"
COVENANTS AND CONDITIONS
This is Schedule "C" to a debenture between PCI CHEMICALS CANADA INC. as
corporation, and UNITED STATES TRUST COMPANY OF NEW YORK, as lender, which
debenture is dated October 30, 1997.
--------------------------------------------------------------------------------
In consideration of the foregoing and the sum of One Dollar ($1.00)
now paid to the corporation by the lender (receipt and sufficiency whereof is
hereby acknowledged), and to secure the due payment of the principal sum and
interest and all monies from time to time owing upon the security of this
debenture and the performance of the obligations of the corporation herein
contained, the corporation covenants and agrees with the lender, and represents
and warrants to the lender, as hereinbefore and hereinafter set forth.
DEFINITIONS
1. "ACM" has the meaning ascribed thereto in paragraph 12(x).
"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 lender; Additional
Undertakings are addressed directly to the lender and name the lender 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 lender at the time such guarantee is delivered, given to
the lender, 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 lender 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.
"ADDITIONAL UNDERTAKING LETTER OF CREDIT" means a clean, irrevocable,
unconditional letter of credit in favour of the lender and entitling the lender
to draw thereon in the City of New York issued by a bank satisfactory to the
lender, 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 lender 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" means Bank of America National Trust and
Savings Association, as administrative agent, together with any successors
thereto in such capacity.
9
2
"ALTERATION" has the meaning ascribed thereto in paragraph 12(v).
"ARCHITECT'S CERTIFICATE" has the meaning ascribed thereto in
paragraph 12(u)(iv)(cc).
"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 New Brunswick 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 subparagraph (c) of
Schedule "F".
"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 subparagraph (b) of
Schedule "F".
"CORPORATION" means PCI Chemicals Canada Inc./Produits Chimiques PCI
Canada Inc. and its successors and assigns.
"DESTRUCTION" has the meaning ascribed thereto in paragraph 12(u)(i).
"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,
10
3
incineration, burial, advertising, display or handling of Hazardous Substances.
"EQUIPMENT" has the meaning ascribed thereto in subparagraph (c)(ii)
of Schedule "F".
"EVENT OF DEFAULT" has the meaning ascribed thereto in paragraph 13.
"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.
"INDENTURE" means that certain Indenture, dated the date hereof, among
the corporation, Pioneer Americas Acquisition Corp. and the other Guarantors
named therein, and the Trustee.
"INSURANCE PROCEEDS" has the meaning ascribed thereto in paragraph
12(u)(i).
"INTERCREDITOR AGREEMENT" means that certain Intercreditor and
Collateral Agency Agreement, dated the date hereof, among the corporation, the
Trustee, the Administrative Agent and the lender.
"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 subparagraph
(b) of Schedule "F".
11
4
"LEASEHOLD PROPERTY CONTRACTS" has the meaning ascribed thereto in
subparagraph (b) of Schedule "F".
"LENDER" means United States Trust Company of New York, as collateral
agent, together with any successors thereto in such capacity.
"LENDERS" means the various financial institutions as are, or may from
time to time become, parties to the Term Loan Agreement.
"LICENSES" has the meaning ascribed thereto in subparagraph (a) of
Schedule "F".
"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 as a whole.
"MONEY" OR "MONEYS" means those certain proceeds set forth in
paragraphs 12 (u)(i) and 12(u)(ii).
"NEGOTIABLE COLLATERAL" has the meaning ascribed thereto in clause
(c)(v) of Schedule "F".
"NET AWARD" has the meaning ascribed thereto in paragraph 12(u)(ii).
"NOTEHOLDERS" means the holders of Notes issued pursuant to the
Indenture.
"NOTES" means notes issued by the corporation pursuant to the
Indenture.
"OBLIGATIONS" has the meaning ascribed thereto in paragraph 8 of this
Schedule "C".
"PAI" means Pioneer Americas, Inc.
"PAAC" means Pioneer Americas Acquisition Corp.
"PPSA" means the Personal Property Security Act (New Brunswick).
"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 subdivision thereof or a government
agency.
12
5
"PLANT" or "PLANTS" means the Real Property and the Buildings,
collectively.
"PLANS AND SPECIFICATIONS" has the meaning ascribed thereto in
paragraph 12(u)(iv)(aa).
"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 subparagraph (a)
of Schedule "F".
"REAL PROPERTY CONTRACTS" has the meaning ascribed thereto in
subparagraph (a) of Schedule "F".
"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, xxxxx, 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.
"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 paragraph
12(u)(iii).
"RESTORATION ELECTION NOTICE" has the meaning ascribed thereto in
paragraph 12(u)(iii).
"SECURITY INTEREST" has the meaning ascribed thereto in paragraph 8 of
this Schedule "C".
"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 lender 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 lender 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 lender 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 the meaning ascribed thereto in paragraph 12(u)(ii).
13
6
"TERM LOAN AGREEMENT" means the term loan agreement, dated as of
October 30, 1997 (as amended, supplemented, amended and restated or otherwise
modified from time to time) among Pioneer Americas, Inc., Pioneer Americas
Acquisition Corp., as the parent guarantor, the Lenders, 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.
"TRUSTEE" means United States Trust Company of New York, together with
any successor(s) thereto in such capacity pursuant to the Indenture.
PPSA DEFINITIONS
2. 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.
INTERPRETATION
3. 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 schedules, paragraphs and
clauses and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this Debenture; and
(c) the word "including" shall mean "including without limitation"
and "includes" shall mean "includes without limitation".
SEVERABILITY
4. 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.
STATUTES, ETC.
5. 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.
GOVERNING LAW
6. This Debenture shall be governed by, and interpreted in
accordance with, the Laws of the Province of New Brunswick 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 New Brunswick with respect to any
matter arising under or related to this Debenture.
14
7
SCHEDULES
7. 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
OBLIGATIONS SECURED
8. (a) The mortgages, hypothecs, charges, subleases, pledges,
transfers, assignments and security interests granted hereby (collectively, the
"Security Interest") secure payment to the lender, 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 hereunder pursuant
hereto or arising from dealings between the lender, the Trustee, the
Noteholders, the Administrative Agent, the Lenders or any of them and the
corporation or from any other dealings or proceedings by which the lender, 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 subparagraph 8(b) of this Schedule "C",
the "Obligations").
(b) All expenses, costs and charges incurred by or on behalf of
the lender, 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.
ATTACHMENT
9. (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 lender, 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
lender in order that the Security Interest shall attach to any personal
property subsequently acquired by the corporation or not adequately described
herein.
15
8
SCOPE OF SECURITY INTEREST
10. (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 lender and shall assign such agreement, right, license or permit
to the lender or as the lender 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 lender, use its best 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, but the
corporation shall stand possessed of any such reversion in trust to assign and
dispose thereof as the lender may direct.
(c) Neither the lender, 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 lender, 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 lender, 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.
CORPORATION'S DEALINGS WITH COLLATERAL
11. 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 lender, to any location owned or leased by a subsidiary of the corporation
or PAI.
REPRESENTATIONS AND COVENANTS OF THE CORPORATION
12. The corporation hereby represents and covenants to the lender
that:
(a) 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.
16
9
(b) EXECUTION AND DELIVERY. The execution and delivery of this
Debenture have been duly authorized by all necessary corporate action.
(c) 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.
(d) 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.
(e) 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.
(f) PLACE OF BUSINESS. The corporation's registered office is
located in the City of Saint Xxxx, 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 lender at least thirty (30) days
prior to the effective date of such change.
(g) 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
lender in writing thereof and defend against such adverse claim to the extent
necessary to preserve the lender's rights and benefits hereunder, subject to
Permitted Liens, and the corporation further agrees that the lender 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 lender 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.
(h) 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.
17
10
(i) 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 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.
(j) 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.
(k) 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.
(l) 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.
(m) 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.
(n) PAYMENT OF TAXES, INSURANCE PREMIUMS, ASSESSMENTS; COMPLIANCE
WITH LAWS AND INSURANCE REQUIREMENTS.
(i) Unless contested in accordance with the provisions of
paragraph 12(n)(v) 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.
(ii) During the continuance of an Event of Default, the
corporation shall deposit with the lender, 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 paragraph 12(n)(i) and amounts
18
11
reasonably estimated by the corporation to be
necessary to maintain the insurance coverages
contemplated in paragraph 12(p) 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 which such Event of Default occurred.
Such amounts shall be held by the lender 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 lender 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 lender's judgment, be insufficient
(when added to the installments anticipated to be
paid thereafter) to discharge any of such obligations
when due, the corporation shall, immediately upon
demand, deposit with the lender such additional
amounts as may be requested by the lender. Nothing
contained in this paragraph 12(n) shall affect any
right or remedy of the lender 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 lender 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 paragraph
12(n)(i). All sums held pursuant to this paragraph
12(n) shall form part of the Collateral. During the
continuance of any Event of Default, the lender may
apply all or any part of the sums held pursuant to
this paragraph 12(n) to payment and performance of
the Obligations in accordance with the provisions of
the Intercreditor Agreement. The corporation shall
redeposit with the lender 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.
(iii) Unless contested in accordance with the provisions of
paragraph 12(n)(v), 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.
(iv) 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 paragraph 12(n)(v), the corporation
shall comply promptly with, or cause
19
12
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
lender's rights or benefits hereunder, without the
prior written consent of the lender.
(v) The corporation may at its own expense contest the
amount or applicability of any of the obligations
described in 12(n)(i), 12(n)(iii) and 12(n)(iv) 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:
aa) any such contest shall be conducted in good
faith by appropriate legal proceedings
promptly instituted and diligently conducted;
and
bb) 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 lender a sum sufficient to pay and
discharge such obligation and the lender's
estimate of all interest and penalties
related thereto.
Notwithstanding the foregoing provisions of
this paragraph 12(n)(v):
cc) no contest of any such obligations may be
pursued by the corporation if such contest
would expose the lender, 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
lender in respect of any civil liability for
failure to comply with such obligations; and
dd) if at any time payment or performance of any
obligation contested by the corporation
pursuant to this paragraph 12(n)(v) 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.
20
13
(vi) 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 defence 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.
(vii) 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 paragraph 12(n)(i) or
12(n)(vi), furnish a copy of such notice to the
lender. 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 paragraph 12(n)(iii) or
12(n)(iv), furnish a copy of such notice to the
lender, if such failure would have a Material Adverse
Effect.
(o) 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 lender,
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 lender such amount or amounts as may be
necessary from time to time to pay such tax.
(p) REQUIRED INSURANCE POLICIES.
(i) 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:
(aa) 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;
21
14
(bb) Comprehensive general liability insurance
against claims for bodily injury, death or
property damage occurring on, in or about 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 lender 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;
(cc) 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 configuration
to the Plant and the Equipment and located in
the locality where the Plant is located;
(dd) 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;
(ee) 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;
(ff) To the extent not otherwise covered by the
insurance required under paragraphs
12(p)(i)(aa) and 12(p)(i)(bb), during the
performance of any Alterations, renovations,
repairs, restorations or construction, broad
form Builders Risk Insurance on an all- risk
completed value basis; and
(gg) 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.
(ii) The corporation may maintain the coverages required
by this paragraph 12(p) 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 paragraph 12(p) and
22
15
contain specific coverage allocations in respect of
each of the Plants determined in accordance with the
provisions of this paragraph 12(p). All insurance
policies in respect of the coverages required by
paragraphs 12(p)(i)(aa), 12(p)(i)(dd), 12(p)(i)(ff)
and, if applicable, 12(p)(i)(gg) shall be in amounts
at least sufficient to prevent coinsurance liability
and all losses thereunder shall be payable to the
lender, 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 New Brunswick, or any
equivalent thereof, and each such policy shall, to
the extent obtainable at commercially reasonable
costs,
(aa) 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
(bb) 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 lender or any other named insured or
loss payee, (II) the occupation or use of the
Plant or the Equipment for purposes more
hazardous than permitted by the terms of the
policy, (III) any foreclosure or other
proceeding or notice of sale relating to the
Plant or the Equipment, or (IV) any change in
the title to or ownership or possession of
the Plant or the Equipment; provided,
however, that (with respect to items
contemplated in clauses (III) and (IV) above)
any notice requirements of the applicable
policies are satisfied. All insurance
policies in respect of the coverages required
by paragraphs 12(p)(i)(bb), 12(p)(i)(ee) and,
if applicable, 12(p)(i)(gg) shall name the
lender as an additional insured.
(iii) Each policy of insurance required under this
paragraph 12(p) shall provide that:
(aa) notices of any failure by the corporation to
pay any insurance premium in respect thereof,
be furnished to the lender contemporaneously
with any such notice given to the
corporation; and
(bb) it may not be cancelled or otherwise
terminated without at least twenty (20) days'
prior written notice to the lender and shall
permit the lender 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 lender upon receipt by the
corporation. Settlement of any claim under
any of the insurance policies referred to in
this paragraph 12(p) (other than the
insurance contemplated in paragraph
12(p)(i)(cc)) which in the corporation's
reasonable judgment involves loss of
23
16
$1,000,000 in lawful currency of the United
States or more, shall require the prior
approval of the lender (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.
(iv) At least fifteen (15) days prior to the expiration of
any insurance policy required by this paragraph
12(p), the corporation shall deliver to the lender
evidence that such policy or policies shall be
renewed or extended and the corporation shall deliver
promptly to the lender 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.
(v) The corporation shall not purchase additional
policies in respect of the insurance coverages
required to be maintained under this paragraph 12(p),
unless the lender is included thereon as an
additional named insured and, if applicable, with
loss payable to the lender under an endorsement
containing the provisions described in paragraph
12(p)(ii) and the policy evidencing such insurance
otherwise complies with the requirements of paragraph
12(p)(ii). The corporation immediately shall notify
the lender whenever any such separate insurance
policy is obtained and promptly shall deliver to the
lender the policy or certificate evidencing such
insurance.
(q) INSPECTION. The corporation shall permit the lender, 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
lender.
(r) 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:
(i) 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
(ii) 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 lender. 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
lender.
(s) LEASES.
(i) All of the Leases are valid and effective in
accordance with their respective terms, except that
the enforcement thereof may be subject to:
24
17
(aa) bankruptcy, insolvency, reorganization,
moratorium or other similar Laws affecting or
relating to enforcement of creditors' rights
generally; and
(bb) 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.
(ii) The corporation shall mange and operate the
Collateral or cause the Collateral to be managed and
operated in a reasonably prudent manner and, except
as otherwise permitted under paragraph 12(t), 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.
(iii) The corporation shall not:
(aa) receive or collect, or permit the receipt or
collection of, any rental or other payments
under any Lease more than one (1) month in
advance of the respective period in respect
of which they are to accrue, except that (i)
in connection with the execution and delivery
of any Lease or of any amendment to any
Lease, rental payments thereunder may be
collected and received in advance in an
amount not in excess of one (1) month's rent
and (ii) the corporation may receive and
collect escalation and other charges in
accordance with the terms of each Lease;
(bb) assign transfer, mortgage or grant a security
interest in (other than to the lender
hereunder or as otherwise permitted under
paragraph 12(t) 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;
(cc) 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
lender under this Debenture;
(II) such Lease has been mortgaged or
charged by the corporation, as
landlord thereunder, to the lender
under this Debenture;
25
18
(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 lender or any purchaser upon any
foreclosure hereunder in respect of
any portion of a Plant, and the
lender 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 lender 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
(dd) 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:
(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
lender 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
26
19
the amount which would have then been
payable under the terminated or
assigned Lease.
(iv) 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 lender 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
lender.
(t) TRANSFER RESTRICTIONS. Except as otherwise permitted by the
Intercreditor Agreement, the corporation shall not, without the prior written
consent of the lender, 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
lender to be held in the Collateral Account (as defined in the Intercreditor
Agreement) and disbursed pursuant to the Intercreditor Agreement.
(u) DESTRUCTION; EXPROPRIATION.
(i) 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 lender 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 lender 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
lender pursuant to this section, less the amount of
any expenses incurred in litigating, arbitrating,
compromising or settling any claim arising out of
such Destruction (the "INSURANCE PROCEEDS"), shall
constitute Moneys and be applied in accordance with
the provisions of paragraphs 12(u)(iii) , 12(u)(iv)
and (12(u)(v).
(ii) 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 lender upon receiving notice of such Taking or
commencement of proceeding therefor. The lender may
(but shall not be obligated to) participate in any
proceedings or negotiations which might result in any
Taking. The lender may be represented by counsel
satisfactory to it at
27
20
the expense of the corporation. The corporation
shall deliver or cause to be delivered to the lender
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 lender, and hereby irrevocably
authorizes and empowers the lender, 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 lender 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 lender
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 lender, 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
paragraphs 12(u)(iii), 12(u)(iv) and 12(u)(v).
(iii) 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 lender within twenty (20) business
days after the date that the lender 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 lender does not
receive a Restoration Election Notice within such
twenty (20) business day period, the lender shall
deal with such Insurance Proceeds or Net Award in
accordance with the provisions of the Intercreditor
Agreement.
(iv) In the event a Restoration is to be performed under
this paragraph 12(u)(iv), the lender shall not
release any part of the Net Award or the Insurance
Proceeds except in accordance with the provisions of
paragraph 12(u)(iii) and the corporation shall, prior
to commencing any work to
28
21
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 lender:
(aa) complete plans and specifications (the "PLANS
AND SPECIFICATIONS") for the Restoration;
(bb) an officers' certificate stating that all
permits and approvals required by Law to
commence work in connection with the
Restoration have been obtained;
(cc) a certificate (an "ARCHITECT'S CERTIFICATE")
of an independent, reputable architect or
engineer acceptable to the lender and
licensed in the Province of New Brunswick (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
(dd) 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 lender for
application toward the cost of such
Restoration.
Upon receipt by the lender of each of the items
required pursuant to paragraphs 12(u)(iv)(aa) through
12(u)(iv)(dd) above, the lender shall acknowledge
receipt of the Plans and Specifications. Promptly
upon such acknowledgement of receipt by the lender,
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.
(v) In the event the corporation performs a Restoration
of any of the Plants and Equipment as provided in
paragraph 12(u)(iv), the lender shall apply any
Insurance Proceeds or Net Award held by the lender 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
lender to the payment of the Obligations, in
accordance with Article 6 of the Intercreditor
29
22
Agreement. Notwithstanding anything to the contrary
herein, if a Destruction or Taking of all or
substantially all of the Collateral 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.
(v) 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 lender 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 paragraph 12(n)(v).
(w) HAZARDOUS MATERIAL.
(i) 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.
(ii) 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.
(iii) The corporation shall (or shall cause other parties
obligated to do so under or in accordance with
contracts with or indemnity to the corporation):
(aa) take all commercially reasonable actions to
comply with any and all applicable present
and future Environmental Laws relating to the
Plants;
(bb) 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;
30
23
(cc) take all commercially reasonable actions to
not Release any Hazardous Materials on, under
or from the Collateral in violation of any
Environmental Law;
(dd) 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
(ee) 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 lender, 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
lender may (upon receipt of an indemnity
satisfactory to the lender), 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 lender
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 lender 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 lender,
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 lender,
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 any time that the
lender is exercising its remedies under this
Debenture, the lender shall have the right
(upon receipt of an indemnity satisfactory to
the lender), 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 lender is exercising
under this Debenture by persons or firms
appointed by the lender, and the lender 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 lender, 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 lender,
31
24
Administrative Agent, Trustee, Xxxxxxx 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 lender,
Administrative Agent, Trustee, Lenders and
Noteholders being deemed an "owner" or
"operator" under applicable Environmental
Law.
(iv) The corporation may at its own expense contest the
amount or applicability of any of the obligations
described in the first sentence of paragraph
12(w)(iii) by appropriate legal proceedings,
prosecution of which operates to prevent the
enforcement thereof; provided, however, that:
(aa) any such contest shall be conducted in good
faith by appropriate legal proceedings
promptly instituted and diligently conducted;
and
(bb) 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 lender a sum sufficient to pay and
discharge such obligation and the lender's
estimate of all interest and penalties
related thereto. Notwithstanding the
foregoing provisions of this paragraph
12(w)(iv), no contest of any such obligations
may be pursued by the corporation if such
contest would expose the lender, 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 lender for any
civil liability for failure to comply with
such obligations.
(x) 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 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' sole
cost and expense. If the corporation shall fail so to comply with such Laws,
the lender may (upon receipt of an indemnity satisfactory to the lender) 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 lender 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 lender 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
lender to exercise any rights under such access. The corporation shall
indemnify and hold each of the lender, Administrative Agent, Trustee, Lenders
and Noteholders harmless from and against all loss, cost, damage and expense
that any of the lender, Administrative Agent, Trustee, Lenders and Noteholders
may sustain as a result of the presence of any ACM and any removal thereof in
32
25
compliance with any applicable Environmental Law.
(y) 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 lender 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.
(z) NO CLAIMS AGAINST THE LENDER. Nothing contained in this
Debenture shall constitute any consent or request by the lender, 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 lender 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.
(aa) 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
paragraph 12(r).
DEFAULT
13. 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 lender without the 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.
REMEDIES
14. Whenever the Security Interest has become enforceable, the
lender 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 lender 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 lender 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
33
26
business or as security for loans or advances to enable the lender 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 replacements thereof
and improvements and additions thereto as the lender 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 lender 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 lender 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
lender considers necessary or desirable for the exercise of any and all of the
remedies of the lender provided for herein, including the powers to make any
arrangement or compromise on behalf and in the name of the corporation which
the lender 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 lender 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 lender considers necessary or desirable for the exercise of any of
the rights, powers and remedies of the lender provided for herein, all of which
borrowings, advances and obligations together with interest thereon shall, at
the discretion of the lender, 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 lender 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 lender;
(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, including without limitation the powers conferred upon a mortgagee
under the Property Act (New Brunswick), and exercise all rights and remedies of
a secured party under the PPSA.
REMEDIES CUMULATIVE AND WAIVER
15. The rights and remedies hereunder of the lender 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
lender 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
34
27
be a waiver thereof or to alter, affect or prejudice any other right or remedy
or other rights or remedies to which the lender may be lawfully entitled, for
such default or breach. The lender 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 lender may have with respect to this Debenture or
any other security or at law, in equity or otherwise. No delay or omission by
the lender 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 lender 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 lender 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
lender hereunder as a result of any other default or breach hereunder. No
consent or waiver by the lender shall be effective unless made in writing and
signed by an authorized officer of the lender.
CONCERNING THE RECEIVER
16. (a) Any Receiver appointed by the lender shall be vested with the
rights and remedies which could have been exercised by the lender 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 lender.
(b) Any Receiver appointed by the lender shall act as agent for
the lender 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 lender as the
lender 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
lender may at its 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 lender 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 lender, 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.
APPOINTMENT OF ATTORNEY
17. The corporation hereby irrevocably appoints the lender (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 and 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 act, failure to act
or any other matter or thing in connection therewith, except for its own gross
negligence or wilful misconduct.
35
28
DEALING WITH THE COLLATERAL AND THE SECURITY INTEREST
18. (a) The lender shall not be obliged to exhaust its recourse
against the corporation or any other Person or Persons or against any other
security the lender may hold in respect of the Obligations before realizing
upon or otherwise dealing with the Collateral in such manner as the lender may
consider desirable.
(b) The lender 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 lender may see fit without prejudice to the Obligations or
the rights of the lender in respect of the Collateral.
(c) The lender 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 lender 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.
STANDARDS OF SALE
19. Without prejudice to the ability of the lender to dispose of
the Collateral in any manner which is commercially reasonable, the corporation
acknowledges that a disposition of Collateral by the lender 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 lender, 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 lender, in its sole discretion, may
deem advantageous; and
(e) the lender may establish an upset or reserve bid or price in
respect of the Collateral.
DEALINGS BY THIRD PARTIES
20. No person dealing with any of the lender 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 lender or
its agent is purporting to exercise have been exercisable; (iii) to determine
whether any money remains due to the lender 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 lender with the
Collateral; or (vi) to see to the application of any money paid to the lender.
The Security Interest is in addition to and not in substitution for any
security now held or hereafter acquired by the lender as security for the
Obligations.
36
29
CORPORATION LIABLE FOR THE DEFICIENCY
21. In the case of any judicial or other steps or proceedings to
enforce the Security Interest, and without limiting any right of the lender to
obtain judgment for any greater amount, the corporation shall remain liable to
the lender 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.
NOTICE OF SALE
22. Unless required by applicable Law, neither the lender nor any
Receiver appointed by it 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.
PAYMENT OF PRIOR CLAIMS
23. If the lender 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 lender in connection
therewith (including legal fees on a solicitor and client basis) shall be
payable by the corporation on demand.
NOTICE
24. 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.
RELEASES
25. Subject to the provisions of the Term Loan Agreement and the
Indenture, the lender may in its discretion, from time to time, release any
part of the Collateral or any other security held by the lender 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 lender shall not be accountable to the corporation for any
moneys except those actually received by the lender.
EXPENSES
26. The corporation shall pay to the lender on demand all of the
costs, charges and expenses of the lender (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 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
37
30
upon all or any part of the Collateral or carrying on all or any part of the
corporation's business relating to the Collateral.
DISCHARGE OF DEBENTURE
27. 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 lender, the Administrative Agent and the Trustee shall execute and deliver
to the corporation such releases and discharges as the corporation may
reasonably require.
NO MERGER OF ESTATES
28. There shall not be deemed to be any merger of this Debenture,
nor of the rights and interests of the lender hereunder, with the estate in the
Real Property or with the reversion or rights and interests of the corporation
or the lender 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 lender under any
instrument affecting the Collateral, by an appropriate instrument, so declare
and provide.
NO OBLIGATION TO ADVANCE
29. Neither the issue nor delivery of this Debenture shall
obligate the lender, 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.
PERFECTION OF SECURITY
30. The corporation shall register, file or record all financing
statements and other documents in all offices where, in the opinion of the
lender, such registration, filing or recording is necessary or desirable to
preserve, perfect or otherwise protect the Security Interest and the priority
thereof. The lender 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 lender the security interest intended to
be created by this Debenture, except that in no event shall the lender require
that any such amendment be effected if the result thereof would be to grant to
the lender greater rights than are otherwise contemplated herein.
ASSIGNMENTS AND PARTICIPATIONS
31. The lender 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 of, without regard to any set-off,
counterclaim or equities between the corporation and the lender. None of the
rights or obligations hereunder of the corporation may be assigned without the
prior written consent of the lender, except in accordance with the provisions
of the Intercreditor Agreement.
38
31
ENUREMENT
32. This Debenture shall enure to the benefit of the lender, 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.
TIME OF ESSENCE
33. Time shall be of the essence of this Debenture with respect to
the obligations of the corporation hereunder.
AMENDMENTS
34. This Debenture may be amended only by written agreement of the
corporation and the lender.
FURTHER ASSURANCES
35. 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 lender may reasonably require for
protecting the Collateral or perfecting the Security Interest and for
exercising all powers, authorities and discretions hereby conferred upon the
lender 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 lender may require for facilitating the sale of the
Collateral in connection with any realization thereof.
JUDGMENT CURRENCY
36. If, for the purposes of obtaining judgment in any court, it is
necessary to convert any sum due, or owing to the lender 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 lender 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 lender shall, notwithstanding any
judgment in any Other Currency, be discharged only to the extent that on the
Business Day following receipt by the lender of any such sum adjudged to be so
due or owing in such Other Currency, the lender 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 lender in the Original Currency, the corporation
shall, as a separate obligation and notwithstanding any such judgment,
indemnify the lender 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 lender in the Original Currency, the lender shall remit such excess to the
corporation.
COPY RECEIVED
37. The corporation acknowledges receipt of a copy of this
Debenture.
39
32
NEW BRUNSWICK FORM
38. This debenture, which is in the form prescribed by the
Standard Forms of Conveyances Act, S.N.B. 1981 c.S-12.2, has been executed by
the corporation for the purposes of registration in the Province of New
Brunswick pursuant to the Registry Act, R.S.N.B. 1973 c.R-6 of a debenture (the
"Non-Standard Form Debenture") in the principal amount of U.S. $500,000,000
executed prior to or contemporaneously herewith by the corporation and issued
to the lender. This debenture and the Non-Standard Form Debenture constitute,
and are to be read as, one instrument.
EFFECTIVE DATE
39. Notwithstanding the actual date of execution hereof, this
Debenture shall be effective from and shall be deemed to be dated as of October
30, 1997.
40
SCHEDULE "F"
This is Schedule "F" to a debenture between PCI CHEMICALS CANADA INC. as
corporation, and UNITED STATES TRUST COMPANY OF NEW YORK, as lender, which
debenture is dated November , 1997.
--------------------------------------------------------------------------------
(a) Subject to paragraph 10 of Schedule "C" hereof, the
corporation hereby: (i) grants, mortgages, hypothecates and charges to and in
favour of the lender, 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 lender by way of a specific assignment and transfer and
grants to the lender 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 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 paragraph 10 of Schedule "C" hereof, the
corporation hereby grants, assigns, mortgages, hypothecates and charges to and
in favour of the lender, 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 paragraph 10 of Schedule "C" hereof, the
corporation hereby mortgages, hypothecates and charges to and in favour of the
lender, as and by way of a fixed and specific mortgage, hypothec and charge,
pledges to and in favour of the lender, assigns and transfers to and in favour
of the lender as and by way of specific transfer and assignment, and grants to
and in favour of the lender 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 subparagraphs (a) and (b) of this
Schedule "F", 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");
41
2
(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
Borrower (Canadian) Security Agreement dated of even date
herewith made by the corporation in favour of the lender (the
"Security Agreement")) of the corporation;
(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 Schedule "F";
(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 Schedule
"F", 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 lender, 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 lender, the corporation shall use
its best commercial efforts to obtain any consent required.
42
3
(d) In addition, the corporation hereby charges to and in favour
of the lender, 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 herein contained).
