<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 8, 1998
REGISTRATION NO. 333-41221
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PCI CHEMICALS CANADA INC.
(Exact name of registrant as specified in its charter)
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NEW BRUNSWICK, CANADA 2812 NOT APPLICABLE
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
630 WEST RENE-LEVESQUE BOULEVARD, MONTREAL, QUEBEC, H3B 1S6, (514) 397-6100
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
PIONEER AMERICAS ACQUISITION CORP. DELAWARE 06-1420850
PIONEER AMERICAS, INC. DELAWARE 76-0280373
PIONEER CHLOR ALKALI COMPANY, INC. DELAWARE 51-0302028
IMPERIAL WEST CHEMICAL CO. NEVADA 95-2375683
ALL-PURE CHEMICAL CO. CALIFORNIA 94-2314942
BLACK MOUNTAIN POWER COMPANY TEXAS 76-0291143
ALL-PURE CHEMICAL NORTHWEST, INC. WASHINGTON 94-2714064
PIONEER CHLOR ALKALI INTERNATIONAL, INC. BARBADOS 98-0118164
G.O.W. CORPORATION NEVADA 88-0336831
PIONEER (EAST), INC. DELAWARE 51-0375981
T.C. HOLDINGS, INC. NEW MEXICO 86-0311265
T.C. PRODUCTS, INC. WASHINGTON 91-1536884
PCI CAROLINA, INC. DELAWARE 76-0549506
PIONEER LICENSING, INC. DELAWARE 52-2058031
(Exact name of registrants as (State or other jurisdiction of (I.R.S. Employer
specified in their charters) incorporation or organization) Identification No.)
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4300 NATIONSBANK CENTER, 700 LOUISIANA STREET, HOUSTON, TEXAS 77002, (713)
225-3831
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
---------------
KENT R. STEPHENSON, ESQ.
PIONEER AMERICAS ACQUISITION CORP.
4300 NATIONSBANK CENTER
700 LOUISIANA STREET
HOUSTON, TEXAS 77002
(713) 225-3831
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
with a copy to:
CORNELIUS T. FINNEGAN III, ESQ.
WILLKIE FARR & GALLAGHER
ONE CITICORP CENTER
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022
(212) 821-8000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
---------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
PCI Canada is a wholly-owned subsidiary of PAAC. PAAC, which is a Delaware
corporation, is empowered by the Delaware General Corporation Law, subject to
the procedures and limitations stated therein, to indemnify any person against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with any
threatened, pending or completed action, suit or proceeding in which such person
is made a party by reason of his being or having been a director, officer,
employee or agent of PAAC. The statute provides that indemnification pursuant to
its provisions is not exclusive of other rights of indemnification to which a
person may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors, or otherwise. The Certificate of Incorporation and
by-laws of PAAC provide for indemnification of the directors and officers of
such entities to the full extent permitted by the Delaware General Corporation
Law.
PAAC maintains an insurance policy providing for indemnification of its
officers, directors and certain other persons against liabilities and expenses
incurred by any of them in certain stated proceedings and under certain stated
conditions.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
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*2.1 -- Asset Purchase Agreement, dated as of September 22, 1997,
by and among PCI Canada, PCI Carolina, Pioneer, ICI, ICI
Canada and ICI Americas (incorporated by reference to
Exhibit 2 to the Company's Report on Form 10-Q, for the
quarter ended September 30, 1997).
*2.2 -- First Amendment to Asset Purchase Agreement, dated as of
October 31, 1997, among PCI Canada, PCI Carolina,
Pioneer, ICI, ICI Canada and ICI Americas (incorporated
by reference to Exhibit 2(b) to the Company's Current
Report on Form 8-K, dated November 5, 1997).
*3.1 -- Certificate of Incorporation of PCI Canada.
*3.2 -- By-laws of PCI Canada.
*3.3 -- Certificate of Incorporation of PAAC (incorporated by
reference to Exhibit 3.1 to the Company's Registration
Statement on Form S-4 (File No. 33-98828) declared
effective by the Commission on December 22, 1995).
*3.4 -- By-laws of PAAC (incorporated by reference to Exhibit 3.2
to the Company's Registration Statement on Form S-4 (File
No. 33-98828) declared effective by the Commission on
December 22, 1995).
*3.5 -- Certificate of Incorporation of PAI (incorporated by
reference to Exhibit 3.3 to the Company's Registration
Statement on Form S-4 (File No. 33-98828) declared
effective by the Commission on December 22, 1995).
*3.6 -- By-laws of PAI (incorporated by reference to Exhibit 3.4
to the Company's Registration Statement on Form S-4 (File
No. 33-98828) declared effective by the Commission on
December 22, 1995).
*3.7 -- Certificate of Incorporation of PCAC (incorporated by
reference to Exhibit 3.5 to the Company's Registration
Statement on Form S-4 (File No. 33-98828) declared
effective by the Commission on December 22, 1995).
*3.8 -- By-laws of PCAC (Incorporated by reference to Exhibit 3.6
to the Company's Registration Statement on Form S-4 (File
No. 33-98828) declared effective by the Commission on
December 22, 1995).
*3.9 -- Certificate of Incorporation of Imperial West
(incorporated by reference to Exhibit 3.7 to the
Company's Registration Statement on Form S-4 (File No.
33-98828) declared effective by the Commission on
December 22, 1995).
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*3.10 -- By-laws of Imperial West (incorporated by reference to
Exhibit 3.8 to the Company's Registration Statement on
Form S-4 (File No. 33-98828) declared effective by the
Commission on December 22, 1995).
*3.11 -- Certificate of Incorporation of All-Pure (incorporated by
reference to Exhibit 3.9 to the Company's Registration
Statement on Form S-4 (File No. 33-98828) declared
effective by the Commission on December 22, 1995).
*3.12 -- By-laws of All-Pure (incorporated by reference to Exhibit
3.10 to the Company's Registration Statement on Form S-4
(File No. 33-98828) declared effective by the Commission
on December 22, 1995).
*3.13 -- Certificate of Incorporation of Black Mountain Power
Company (incorporated by reference to Exhibit 3.11 to the
Company's Registration Statement on Form S-4 (File No.
33-98828) declared effective by the Commission on
December 22, 1995).
*3.14 -- By-laws of Black Mountain Power Company (incorporated by
reference to Exhibit 3.12 to the Company's Registration
Statement on Form S-4 (File No. 33-98828) declared
effective by the Commission on December 22, 1995).
*3.15 -- Certificate of Incorporation of All-Pure Chemical
Northwest, Inc. (incorporated by reference to Exhibit
3.13 to the Company's Registration Statement on Form S-4
(File No. 33-98828) declared effective by the Commission
on December 22, 1995).
*3.16 -- By-laws of All-Pure Chemical Northwest, Inc.
(incorporated by reference to Exhibit 3.14 to the
Company's Registration Statement on Form S-4 (File No.
33-98828) declared effective by the Commission on
December 22, 1995).
*3.17 -- Certificate of Incorporation of Pioneer Chlor Alkali
International, Inc. (incorporated by reference to Exhibit
3.15 to the Company's Registration Statement on Form S-4
(File No. 33-98828) declared effective by the Commission
on December 22, 1995).
*3.18 -- By-laws of Pioneer Chlor Alkali International, Inc.
(incorporated by reference to Exhibit 3.16 to the
Company's Registration Statement on Form S-4 (File No.
33-98828) declared effective by the Commission on
December 22, 1995).
*3.19 -- Certificate of Incorporation of G.O.W. Corporation
(incorporated by reference to Exhibit 3.17 to the
Company's Registration Statement on Form S-4 (File No.
33-98828) declared effective by the Commission on
December 22, 1995).
*3.20 -- By-laws of G.O.W. Corporation (incorporated by reference
to Exhibit 3.18 to the Company's Registration Statement
on Form S-4 (File No. 33-98828) declared effective by the
Commission on December 22, 1995).
*3.21 -- Certificate of Incorporation of Pioneer (East), Inc.
(incorporated by reference to Exhibit 3.19 to the
Company's Registration Statement on Form S-4 (File No.
333-30683) declared effective by the Commission on
October 17, 1997).
*3.22 -- By-laws of Pioneer (East), Inc. (incorporated by
reference to Exhibit 3.20 to the Company's Registration
Statement on Form S-4 (File No. 333-30683) declared
effective by the Commission on October 17, 1997).
*3.23 -- Certificate of Incorporation of T.C. Holdings, Inc.
(incorporated by reference to Exhibit 3.21 to the
Company's Registration Statement on Form S-4 (File No.
333-30683) declared effective by the Commission on
October 17, 1997).
*3.24 -- By-laws of T.C. Holdings, Inc. (incorporated by reference
to Exhibit 3.22 to the Company's Registration Statement
on Form S-4 (File No. 333-30683) declared effective by
the Commission on October 17, 1997).
*3.25 -- Certificate of Incorporation of T.C. Products, Inc.
(incorporated by reference to Exhibit 3.23 to the
Company's Registration Statement on Form S-4 (File No.
333-30683) declared effective by the Commission on
October 17, 1997).
*3.26 -- By-laws of T.C. Products, Inc. (incorporated by reference
to Exhibit 3.24 to the Company's Registration Statement
on Form S-4 (File No. 333-30683) declared effective by
the Commission on October 17, 1997).
*3.27 -- Certificate of Incorporation of PCI Carolina, Inc.
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*3.28 -- By-laws of PCI Carolina, Inc.
*3.29 -- Certificate of Incorporation of Pioneer Licensing, Inc.
*3.30 -- By-laws of Pioneer Licensing, Inc.
*4.1 -- Indenture, dated as of October 30, 1997, by and among PCI
Canada, the Guarantors and United States Trust Company of
New York, as Trustee, relating to $175,000,000 principal
amount of 9 1/4% Series A Senior Notes due 2007,
including form of Note and Guarantees.
4.2 -- Deed of Hypothec, dated as of October 30, 1997, by PCI
Canada in favor of United States Trust Company of New
York, as Collateral Agent.
4.3 -- Affiliate Security Agreement, dated as of October 30,
1997, among PCI Carolina, Inc., Pioneer Licensing, Inc.
and United States Trust Company of New York, as
Collateral Agent.
4.4 -- Debenture (New Brunswick), dated October 30, 1997, by PCI
Canada in favor of United States Trust Company of New
York, as Collateral Agent.
4.5(a) -- Demand Debenture (Ontario), dated as of October 30, 1997,
by PCI Canada in favor of United States Trust Company of
New York, as Collateral Agent.
4.5(b) -- Demand Debenture (Nova Scotia), dated October 30, 1997,
issued by PCI Canada in favor of United States Trust
Company of New York, as Collateral Agent.
4.6(a) -- Debenture Pledge Agreement (Ontario), dated October 30,
1997, by PCI Canada in favor of United States Trust
Company of New York, as Collateral Agent.
4.6(b) -- Debenture Pledge Agreement (Nova Scotia), dated October
30, 1997, by PCI Canada in favor of United States Trust
Company of New York, as Collateral Agent.
4.6(c) -- Debenture Pledge Agreement (New Brunswick), dated October
30, 1997, by PCI Canada in favor of United States Trust
Company of New York, as Collateral Agent.
4.7 -- Subsidiary Security Agreement, dated as of October 30,
1997, by PCI Canada in favor of United States Trust
Company of New York, as Collateral Agent.
*4.8(a) -- Term Loan Agreement, dated as of October 30, 1997, among
PAI, PAAC, Various Financial Institutions, as Lenders,
DLJ Capital Funding, Inc. as the Syndication Agent,
Salomon Brothers Holding Company Inc, as the
Documentation Agent, Bank of America National Trust and
Savings Association, as the Administrative Agent and
United States Trust Company of New York, as Collateral
Agent.
*4.8(b) -- Affiliate Guaranty, dated as of October 30, 1997, among
the Affiliate Guarantors named therein.
*4.9 -- Consent and Amendment No. 1, dated November 5, 1997, to
Loan and Security Agreement, dated June 17, 1997, among
PAAC, Bank of America National Trust and Savings
Association, as Agent and Lender and the other Lenders
Party thereto.
*4.10 -- Intercreditor and Collateral Agency Agreement, dated as
of October 30, 1997 by and among United States Trust
Company of New York, as Trustee and Collateral Agent,
Bank of America National Trust and Savings Association,
as Agent, PCI Canada, PAAC and PAI.
*4.11 -- Exchange and Registration Rights Agreement, dated as of
October 30, 1997, by and among PCI Canada, the Guarantors
and the Initial Purchasers.
5.1 -- Opinion of Willkie Farr & Gallagher.
5.2 -- Opinion of Kent R. Stephenson, Esq.
5.3 -- Opinion of Stewart McKelvey Stirling Scales, St. John,
New Brunswick.
8.1 -- Opinion of Willkie Farr & Gallagher with respect to
certain tax matters.
8.2 -- Opinion of Stikeman, Elliot, Montreal, Quebec with
respect to certain tax matters.
*10.1 -- Contingent Payment Agreement, dated as of April 20, 1995,
by and among Pioneer (formerly, GEV corporation), PAAC
and the Sellers defined therein (incorporated by
reference to Exhibit 10.2 to the Current Report on Form
8-K of Pioneer, dated April 20, 1995).
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*10.2 -- Tax Sharing Agreement, dated as of April 20, 1995, by and
among Pioneer, PAAC and the Subsidiary Guarantors defined
therein (incorporated by reference to Exhibit 10.3 to the
Company's Registration Statement on Form S-4 (File No.
33-98828) declared effective by the Commission on
December 22, 1995).
*10.3 -- Pioneer Companies, Inc. 1995 Stock Incentive Plan
(incorporated by reference to Exhibit 10.4 to the
Company's Registration Statement on Form S-4 (File No.
33-98828) declared effective by the Commission on
December 22, 1995).
*10.4 -- Pioneer Companies, Inc. Key Executive Stock Grant Plan
(incorporated by reference to Exhibit 10.2 to the
Quarterly Report on Form 10-Q of Pioneer for the
quarterly period ended June 30, 1996).
*10.5 -- Pioneer Chlor Alkali Company, Inc. Supplemental
Retirement Plan (incorporated by reference to Exhibit
10.5 to the Annual Report on Form 10-K of Pioneer for the
fiscal year ended December 31, 1995).
*10.6 -- Employment Agreement, dated as of April 20, 1995, between
Pioneer and Richard C. Kellogg, Jr. (incorporated by
reference to Exhibit 10.1 to the Quarterly Report on Form
10-Q of Pioneer for the quarterly period ended June 30,
1995).
*10.7 -- Employment Agreement, dated April 20, 1995, between
Pioneer Americas, Inc. and James E. Glattly (incorporated
by reference to Exhibit 10.8 to Pioneer's Annual Report
on Form 10-K for the year ended December 31, 1995).
*10.8 -- Employment Agreement, dated April 20, 1995, between
Pioneer Americas, Inc. and Verrill M. Norwood, Jr.
(incorporated by reference to Exhibit 10.9 to Pioneer's
Annual Report on Form 10-K for the year ended December
31, 1995).
*10.9 -- Executive Employment Agreement, dated January 4, 1997,
between Pioneer Companies, Inc. and Michael J. Ferris
(incorporated by reference to Exhibit 10.10 to the Annual
Report on Form 10-K of the Company for the fiscal year
ended December 31, 1996).
*10.10 -- Stock Purchase Agreement, dated January 4, 1997, between
Pioneer Companies, Inc. and Michael J. Ferris
(incorporated by reference to Exhibit 10.11 to the Annual
Report on Form 10-K of the Company for the fiscal year
ended December 31, 1996).
*10.11 -- Non-Qualified Stock Option Agreement, dated May 15, 1997,
between Pioneer Companies, Inc. and Andrew M. Bursky.
*10.12 -- Noncompetition Agreement, dated as of October 31, 1997,
between ICI, ICI Canada, ICI Americas, PCI Canada and PCI
Carolina.
*12.1 -- Statement Regarding Computation of Ratio of Earnings to
Fixed Charges.
*16.1 -- Letter from Ernst & Young LLP regarding change in
independent accountants (incorporated by reference to
Exhibit 16.1 to the Company's Registration Statement on
Form S-4 (File No. 33-98828) declared effective by the
Commission on December 22, 1995).
*21.1 -- Subsidiaries of the Registrants.
*23.1 -- Independent Auditors' Consent of Deloitte & Touche LLP.
*23.2 -- Independent Auditors' Consent of Ernst & Young LLP.
*23.3 -- Independent Auditors' Consent of Piercy, Bowler, Taylor &
Kern.
*23.4 -- Independent Public Accountants' Consent of Arthur
Andersen LLP.
*23.5 -- Independent Auditor's Consent of KPMG.
23.6 -- Consents of Willkie Farr & Gallagher (included in their
opinions filed as Exhibits 5.1 and 8.1).
23.7 -- Consent of Kent R. Stephenson, Esq. (included in his
opinion filed as Exhibit 5.2).
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23.8 -- Consent of Stewart McKelvey Stirling Scales, St. John,
New Brunswick (included in their opinion filed as Exhibit
5.3).
23.9 -- Consent of Stikeman, Elliot, Montreal, Quebec (included
in their opinion filed as Exhibit 8.2).
*24.1 -- Powers of Attorney (included in the signature pages
hereto).
*25.1 -- Statement on Form T-1 of Eligibility of Trustee.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
99.3 -- Form of Letter to Clients.
99.4 -- Form of Letter to Nominees.
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* Previously filed.
(b) Financial Statement Schedules:
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS.
All other schedules have been omitted because they are not applicable or
not required or the required information is included in the financial statements
or notes thereto.
ITEM 22. UNDERTAKINGS.
The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of PAAC's annual
report pursuant to section 13(a) or section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of Registrants
pursuant to the provisions, described under Item 20 above, or otherwise, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrants of expenses incurred or paid by a director, officer or controlling
person of the Registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrants will, unless in
the opinion of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by them is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or 497(h) under
the Securities Act shall be deemed to be part of this registration statement as
of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of
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receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 8th day of January, 1998.
PCI CHEMICALS CANADA INC.
By: /s/ KENT R. STEPHENSON
----------------------------------
Name: Kent R. Stephenson
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
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SIGNATURE TITLE DATE
--------- ----- ----
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* President and Director (principal January 8, 1998
- --------------------------------------------------- executive officer)
Norman E. Thogersen
/s/ PHILIP J. ABLOVE Vice President, Chief Financial January 8, 1998
- --------------------------------------------------- Officer and Director (principal
Philip J. Ablove financial officer)
* Vice President and Controller January 8, 1998
- --------------------------------------------------- (principal accounting officer)
Pierre Prud'homme
* Chairman of the Board January 8, 1998
- ---------------------------------------------------
Michael J. Ferris
* Director January 8, 1998
- ---------------------------------------------------
Raymond E. Boucher
* Director January 8, 1998
- ---------------------------------------------------
G.P. Donnini
* By: /s/ KENT R. STEPHENSON
-------------------------------------------
Kent R. Stephenson
Attorney-in-fact
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<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 8th day of January, 1998.
PIONEER AMERICAS ACQUISITION CORP.
By: /s/ PHILIP J. ABLOVE
----------------------------------
Name: Philip J. Ablove
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
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SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* President, Chief Executive Officer January 8, 1998
- ----------------------------------------------------- and Director (principal executive
Michael J. Ferris officer)
/s/ PHILIP J. ABLOVE Vice President, Chief Financial January 8, 1998
- ----------------------------------------------------- Officer and Director (principal
Philip J. Ablove financial officer)
* Controller (principal accounting January 8, 1998
- ----------------------------------------------------- officer)
John R. Beaver
* Director January 8, 1998
- -----------------------------------------------------
William R. Berkley
* Director January 8, 1998
- -----------------------------------------------------
Andrew M. Bursky
* Director January 8, 1998
- -----------------------------------------------------
Donald J. Donahue
* Director January 8, 1998
- -----------------------------------------------------
Richard C. Kellogg, Jr.
* Director January 8, 1998
- -----------------------------------------------------
Paul J. Kienholz
* Director January 8, 1998
- -----------------------------------------------------
Jack H. Nusbaum
* Director January 8, 1998
- -----------------------------------------------------
Thomas H. Schnitzius
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* By: /s/ PHILIP J. ABLOVE
-------------------------------
Philip J. Ablove
Attorney-in-fact
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 8th day of January, 1998.
PIONEER AMERICAS, INC.
By: /s/ KENT R. STEPHENSON
----------------------------------
Name: Kent R. Stephenson
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
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SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board and President January 8, 1998
- --------------------------------------------------- (principal executive officer)
Michael J. Ferris
/s/ PHILIP J. ABLOVE Vice President, Chief Financial January 8, 1998
- --------------------------------------------------- Officer, Treasurer and Director
Philip J. Ablove (principal financial officer)
* Controller (principal accounting January 8, 1998
- --------------------------------------------------- officer)
John R. Beaver
* Director January 8, 1998
- ---------------------------------------------------
William L. Mahone
* By: /s/ KENT R. STEPHENSON
-------------------------------------------
Kent R. Stephenson
Attorney-in-fact
</TABLE>
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<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 8th day of January, 1998.
PIONEER CHLOR ALKALI COMPANY, INC.
By: /s/ KENT R. STEPHENSON
----------------------------------
Name: Kent R. Stephenson
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
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<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* President and Director (principal January 8, 1998
- --------------------------------------------------- executive officer)
James E. Glattly
/s/ PHILIP J. ABLOVE Vice President and Chief Financial January 8, 1998
- --------------------------------------------------- Officer and Director (principal
Philip J. Ablove financial officer)
* Controller (principal accounting January 8, 1998
- --------------------------------------------------- officer)
John R. Beaver
* Chairman of the Board January 8, 1998
- ---------------------------------------------------
Michael J. Ferris
* Director January 8, 1998
- ---------------------------------------------------
William L. Mahone
* By: /s/ KENT R. STEPHENSON
-------------------------------------------
Kent R. Stephenson
Attorney-in-fact
</TABLE>
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<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 8th day of January, 1998.
IMPERIAL WEST CHEMICAL CO.
By: /s/ KENT R. STEPHENSON
----------------------------------
Name: Kent R. Stephenson
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* President and Director (principal January 8, 1998
- --------------------------------------------------- executive officer)
James M. Wingard
/s/ PHILIP J. ABLOVE Vice President and Chief Financial January 8, 1998
- --------------------------------------------------- Officer and Director (principal
Philip J. Ablove financial officer)
* Controller (principal accounting January 8, 1998
- --------------------------------------------------- officer)
John R. Beaver
* Chairman of the Board January 8, 1998
- ---------------------------------------------------
Michael J. Ferris
* Director January 8, 1998
- ---------------------------------------------------
William L. Mahone
* By: /s/ KENT R. STEPHENSON
-------------------------------------------
Kent R. Stephenson
Attorney-in-fact
</TABLE>
II-11
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 8th day of January, 1998.
ALL-PURE CHEMICAL CO.
By: /s/ KENT R. STEPHENSON
----------------------------------
Name: Kent R. Stephenson
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* President and Director (principal January 8, 1998
- --------------------------------------------------- executive officer)
Ronald E. Ciora
/s/ PHILIP J. ABLOVE Vice President and Chief Financial January 8, 1998
- --------------------------------------------------- Officer and Director (principal
Philip J. Ablove financial officer)
* Controller (principal accounting January 8, 1998
- --------------------------------------------------- officer)
John R. Beaver
* Chairman of the Board January 8, 1998
- ---------------------------------------------------
Michael J. Ferris
* Director January 8, 1998
- ---------------------------------------------------
William L. Mahone
* By: /s/ KENT R. STEPHENSON
-------------------------------------------
Kent R. Stephenson
Attorney-in-fact
</TABLE>
II-12
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 8th day of January, 1998.
BLACK MOUNTAIN POWER COMPANY
By: /s/ KENT R. STEPHENSON
----------------------------------
Name: Kent R. Stephenson
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* President and Director (principal January 8, 1998
- --------------------------------------------------- executive officer)
Terry K. Graves
/s/ PHILIP J. ABLOVE Vice President and Chief Financial January 8, 1998
- --------------------------------------------------- Officer and Director (principal
Philip J. Ablove financial officer)
* Controller (principal accounting January 8, 1998
- --------------------------------------------------- officer)
John R. Beaver
* Chairman of the Board January 8, 1998
- ---------------------------------------------------
Michael J. Ferris
* Director January 8, 1998
- ---------------------------------------------------
James E. Glattly
* By: /s/ KENT R. STEPHENSON
-------------------------------------------
Kent R. Stephenson
Attorney-in-fact
</TABLE>
II-13
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 8th day of January, 1998.
ALL-PURE CHEMICAL NORTHWEST, INC.
By: /s/ KENT R. STEPHENSON
----------------------------------
Name: Kent R. Stephenson
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* President and Director (principal January 8, 1998
- --------------------------------------------------- executive officer)
Ronald E. Ciora
/s/ PHILIP J. ABLOVE Vice President and Chief Financial January 8, 1998
- --------------------------------------------------- Officer and Director (principal
Philip J. Ablove financial officer)
* Controller (principal accounting January 8, 1998
- --------------------------------------------------- officer)
John R. Beaver
* Chairman of the Board January 8, 1998
- ---------------------------------------------------
Michael J. Ferris
* By: /s/ KENT R. STEPHENSON
-------------------------------------------
Kent R. Stephenson
Attorney-in-fact
</TABLE>
II-14
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 8th day of January, 1998.
PIONEER CHLOR ALKALI INTERNATIONAL, INC.
By: /s/ KENT R. STEPHENSON
----------------------------------------
Name: Kent R. Stephenson
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board (principal January 8, 1998
- --------------------------------------------------- executive officer)
Michael J. Ferris
/s/ PHILIP J. ABLOVE Vice President (principal financial January 8, 1998
- --------------------------------------------------- officer)
Philip J. Ablove
* Controller (principal accounting January 8, 1998
- --------------------------------------------------- officer)
John R. Beaver
* Director January 8, 1998
- ---------------------------------------------------
David F. Callaghan
* Director January 8, 1998
- ---------------------------------------------------
James A. Fields
* Director January 8, 1998
- ---------------------------------------------------
David A. Leslie
* By: /s/ KENT R. STEPHENSON
-------------------------------------------
Kent R. Stephenson
Attorney-in-fact
</TABLE>
II-15
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 8th day of January, 1998.
G. O. W. CORPORATION
By: /s/ KENT R. STEPHENSON
----------------------------------
Name: Kent R. Stephenson
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
<->Y
* President and Director (principal January 8, 1998
- --------------------------------------------------- executive officer)
Terry K. Graves
/s/ PHILIP J. ABLOVE Vice President and Chief Financial January 8, 1998
- --------------------------------------------------- Officer (principal financial
Philip J. Ablove officer)
* Controller (principal accounting January 8, 1998
- --------------------------------------------------- officer)
John R. Beaver
* By: /s/ KENT R. STEPHENSON
-------------------------------------------
Kent R. Stephenson
Attorney-in-fact
</TABLE>
II-16
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 8th day of January, 1998.
PIONEER (EAST), INC.
By: /s/ KENT R. STEPHENSON
----------------------------------
Name: Kent R. Stephenson
Title: President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENT R. STEPHENSON President, Secretary and Chairman of January 8, 1998
- --------------------------------------------------- the Board (principal executive
Kent R. Stephenson officer)
* Treasurer and Director (principal January 8, 1998
- --------------------------------------------------- financial and accounting officer)
Robert C. Williams
* Director January 8, 1998
- ---------------------------------------------------
Victoria L. Garrett
* By: /s/ KENT R. STEPHENSON
-------------------------------------------
Kent R. Stephenson
Attorney-in-fact
</TABLE>
II-17
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 8th day of January, 1998.
T.C. HOLDINGS, INC.
By: /s/ KENT R. STEPHENSON
----------------------------------
Name: Kent R. Stephenson
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* President and Director (principal January 8, 1998
- --------------------------------------------------- executive officer)
Ronald E. Ciora
/s/ PHILIP J. ABLOVE Vice President and Chief Financial January 8, 1998
- --------------------------------------------------- Officer and Director (principal
Philip J. Ablove financial officer)
* Controller (principal accounting January 8, 1998
- --------------------------------------------------- officer)
John R. Beaver
* Chairman of the Board January 8, 1998
- ---------------------------------------------------
Michael J. Ferris
* Director January 8, 1998
- ---------------------------------------------------
William L. Mahone
* By: /s/ KENT R. STEPHENSON
-------------------------------------------
Kent R. Stephenson
Attorney-in-fact
</TABLE>
II-18
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 8th day of January, 1998.
T.C. PRODUCTS, INC.
By: /s/ KENT R. STEPHENSON
----------------------------------
Name: Kent R. Stephenson
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* President and Director (principal January 8, 1998
- --------------------------------------------------- executive officer)
Ronald E. Ciora
/s/ PHILIP J. ABLOVE Vice President and Chief Financial January 8, 1998
- --------------------------------------------------- Officer and Director (principal
Philip J. Ablove financial officer)
* Controller (principal accounting January 8, 1998
- --------------------------------------------------- officer)
John R. Beaver
* Chairman of the Board January 8, 1998
- ---------------------------------------------------
Michael J. Ferris
* Director January 8, 1998
- ---------------------------------------------------
William L. Mahone
* By: /s/ KENT R. STEPHENSON
-------------------------------------------
Kent R. Stephenson
Attorney-in-fact
</TABLE>
II-19
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 8th day of January, 1998.
PCI CAROLINA, INC.
By: /s/ KENT R. STEPHENSON
----------------------------------
Name: Kent R. Stephenson
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* President and Director January 8, 1998
- --------------------------------------------------- (principal executive officer)
Norman E. Thogersen
/s/ PHILIP J. ABLOVE Vice President, Chief Financial January 8, 1998
- --------------------------------------------------- Officer and Director
Philip J. Ablove (principle financial and accounting
Officer)
* Chairman of the Board January 8, 1998
- ---------------------------------------------------
Michael J. Ferris
* Director January 8, 1998
- ---------------------------------------------------
G. P. Donnini
* By: /s/ KENT R. STEPHENSON
-------------------------------------------
Kent R. Stephenson
Attorney-in-fact
</TABLE>
II-20
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 8th day of January, 1998.
PIONEER LICENSING, INC.
By: /s/ KENT R. STEPHENSON
----------------------------------
Name: Kent R. Stephenson
Title: President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENT R. STEPHENSON President, Secretary and Chairman of January 8, 1998
- --------------------------------------------------- the Board (principal executive
Kent R. Stephenson officer)
* Treasurer and Director (principal January 8, 1998
- --------------------------------------------------- financial and accounting officer)
Robert C. Williams
* Director January 8, 1998
- ---------------------------------------------------
Victoria L. Garrett
* By: /s/ KENT R. STEPHENSON
-------------------------------------------
Kent R. Stephenson
Attorney-in-fact
</TABLE>
II-21
<PAGE> 23
SCHEDULE II
PIONEER AMERICAS ACQUISITION CORP.
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSE ADDITIONS DEDUCTIONS PERIOD
----------- ---------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1996:
Allowance for doubtful accounts....... $1,424 $ -- $ -- $(113)(A) $1,311
Year Ended December 31, 1995:
Allowance for doubtful accounts....... -- 138 1,416(B) (130)(A) 1,424
</TABLE>
- ---------------
(A) Uncollectible accounts written off, net of recoveries.
(B) Allowance balance established on April 20, 1995 in connection with the
acquisition of Pioneer Americas, Inc.
PIONEER AMERICAS, INC.
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSE ADDITIONS DEDUCTIONS PERIOD
----------- ---------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Period from January 1, 1995 through April
20, 1995:
Allowance for doubtful accounts....... $2,038 $ 47 $ -- $(169)(A) $1,916
Year ended December 31, 1994:
Allowance for doubtful accounts....... 521 1,235 300(B) (18)(A) 2,038
</TABLE>
- ---------------
(A) Uncollectible accounts written off, net of recoveries.
(B) Allowance balance established in May 1994 in connection with the acquisition
of GPS.
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
*2.1 -- Asset Purchase Agreement, dated as of September 22, 1997,
by and among PCI Canada, PCI Carolina, Pioneer, ICI, ICI
Canada and ICI Americas (incorporated by reference to
Exhibit 2 to the Company's Report on Form 10-Q, for the
quarter ended September 30, 1997).
*2.2 -- First Amendment to Asset Purchase Agreement, dated as of
October 31, 1997, among PCI Canada, PCI Carolina,
Pioneer, ICI, ICI Canada and ICI Americas (incorporated
by reference to Exhibit 2(b) to the Company's Current
Report on Form 8-K, dated November 5, 1997).
*3.1 -- Certificate of Incorporation of PCI Canada.
*3.2 -- By-laws of PCI Canada.
*3.3 -- Certificate of Incorporation of PAAC (incorporated by
reference to Exhibit 3.1 to the Company's Registration
Statement on Form S-4 (File No. 33-98828) declared
effective by the Commission on December 22, 1995).
*3.4 -- By-laws of PAAC (incorporated by reference to Exhibit 3.2
to the Company's Registration Statement on Form S-4 (File
No. 33-98828) declared effective by the Commission on
December 22, 1995).
*3.5 -- Certificate of Incorporation of PAI (incorporated by
reference to Exhibit 3.3 to the Company's Registration
Statement on Form S-4 (File No. 33-98828) declared
effective by the Commission on December 22, 1995).
*3.6 -- By-laws of PAI (incorporated by reference to Exhibit 3.4
to the Company's Registration Statement on Form S-4 (File
No. 33-98828) declared effective by the Commission on
December 22, 1995).
*3.7 -- Certificate of Incorporation of PCAC (incorporated by
reference to Exhibit 3.5 to the Company's Registration
Statement on Form S-4 (File No. 33-98828) declared
effective by the Commission on December 22, 1995).
*3.8 -- By-laws of PCAC (Incorporated by reference to Exhibit 3.6
to the Company's Registration Statement on Form S-4 (File
No. 33-98828) declared effective by the Commission on
December 22, 1995).
*3.9 -- Certificate of Incorporation of Imperial West
(incorporated by reference to Exhibit 3.7 to the
Company's Registration Statement on Form S-4 (File No.
33-98828) declared effective by the Commission on
December 22, 1995).
*3.10 -- By-laws of Imperial West (incorporated by reference to
Exhibit 3.8 to the Company's Registration Statement on
Form S-4 (File No. 33-98828) declared effective by the
Commission on December 22, 1995).
*3.11 -- Certificate of Incorporation of All-Pure (incorporated by
reference to Exhibit 3.9 to the Company's Registration
Statement on Form S-4 (File No. 33-98828) declared
effective by the Commission on December 22, 1995).
*3.12 -- By-laws of All-Pure (incorporated by reference to Exhibit
3.10 to the Company's Registration Statement on Form S-4
(File No. 33-98828) declared effective by the Commission
on December 22, 1995).
*3.13 -- Certificate of Incorporation of Black Mountain Power
Company (incorporated by reference to Exhibit 3.11 to the
Company's Registration Statement on Form S-4 (File No.
33-98828) declared effective by the Commission on
December 22, 1995).
*3.14 -- By-laws of Black Mountain Power Company (incorporated by
reference to Exhibit 3.12 to the Company's Registration
Statement on Form S-4 (File No. 33-98828) declared
effective by the Commission on December 22, 1995).
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
*3.15 -- Certificate of Incorporation of All-Pure Chemical
Northwest, Inc. (incorporated by reference to Exhibit
3.13 to the Company's Registration Statement on Form S-4
(File No. 33-98828) declared effective by the Commission
on December 22, 1995).
*3.16 -- By-laws of All-Pure Chemical Northwest, Inc.
(incorporated by reference to Exhibit 3.14 to the
Company's Registration Statement on Form S-4 (File No.
33-98828) declared effective by the Commission on
December 22, 1995).
*3.17 -- Certificate of Incorporation of Pioneer Chlor Alkali
International, Inc. (incorporated by reference to Exhibit
3.15 to the Company's Registration Statement on Form S-4
(File No. 33-98828) declared effective by the Commission
on December 22, 1995).
*3.18 -- By-laws of Pioneer Chlor Alkali International, Inc.
(incorporated by reference to Exhibit 3.16 to the
Company's Registration Statement on Form S-4 (File No.
33-98828) declared effective by the Commission on
December 22, 1995).
*3.19 -- Certificate of Incorporation of G.O.W. Corporation
(incorporated by reference to Exhibit 3.17 to the
Company's Registration Statement on Form S-4 (File No.
33-98828) declared effective by the Commission on
December 22, 1995).
*3.20 -- By-laws of G.O.W. Corporation (incorporated by reference
to Exhibit 3.18 to the Company's Registration Statement
on Form S-4 (File No. 33-98828) declared effective by the
Commission on December 22, 1995).
*3.21 -- Certificate of Incorporation of Pioneer (East), Inc.
(incorporated by reference to Exhibit 3.19 to the
Company's Registration Statement on Form S-4 (File No.
333-30683) declared effective by the Commission on
October 17, 1997).
*3.22 -- By-laws of Pioneer (East), Inc. (incorporated by
reference to Exhibit 3.20 to the Company's Registration
Statement on Form S-4 (File No. 333-30683) declared
effective by the Commission on October 17, 1997).
*3.23 -- Certificate of Incorporation of T.C. Holdings, Inc.
(incorporated by reference to Exhibit 3.21 to the
Company's Registration Statement on Form S-4 (File No.
333-30683) declared effective by the Commission on
October 17, 1997).
*3.24 -- By-laws of T.C. Holdings, Inc. (incorporated by reference
to Exhibit 3.22 to the Company's Registration Statement
on Form S-4 (File No. 333-30683) declared effective by
the Commission on October 17, 1997).
*3.25 -- Certificate of Incorporation of T.C. Products, Inc.
(incorporated by reference to Exhibit 3.23 to the
Company's Registration Statement on Form S-4 (File No.
333-30683) declared effective by the Commission on
October 17, 1997).
*3.26 -- By-laws of T.C. Products, Inc. (incorporated by reference
to Exhibit 3.24 to the Company's Registration Statement
on Form S-4 (File No. 333-30683) declared effective by
the Commission on October 17, 1997).
*3.27 -- Certificate of Incorporation of PCI Carolina, Inc.
*3.28 -- By-laws of PCI Carolina, Inc.
*3.29 -- Certificate of Incorporation of Pioneer Licensing, Inc.
*3.30 -- By-laws of Pioneer Licensing, Inc.
*4.1 -- Indenture, dated as of October 30, 1997, by and among PCI
Canada, the Guarantors and United States Trust Company of
New York, as Trustee, relating to $175,000,000 principal
amount of 9 1/4% Series A Senior Notes due 2007,
including form of Note and Guarantees.
4.2 -- Deed of Hypothec, dated as of October 30, 1997, by PCI
Canada in favor of United States Trust Company of New
York, as Collateral Agent.
</TABLE>
<PAGE> 26
<TABLE>
<C> <S>
4.3 -- Affiliate Security Agreement, dated as of October 30, 1997, among PCI Carolina, Inc.,
Pioneer Licensing, Inc. and United States Trust Company of New York, as Collateral
Agent.
4.4 -- Debenture (New Brunswick), dated October 30, 1997, by PCI Canada in favor of United
States Trust Company of New York, as Collateral Agent.
4.5(a) -- Demand Debenture (Ontario), dated as of October 30, 1997, by PCI Canada in favor of
United States Trust Company of New York, as Collateral Agent.
4.5(b) -- Demand Debenture (Nova Scotia), dated October 30, 1997, issued by PCI Canada in favor
of United States Trust Company of New York, as Collateral Agent.
4.6(a) -- Debenture Pledge Agreement (Ontario), dated October 30, 1997, by PCI Canada in favor of
United States Trust Company of New York, as Collateral Agent.
4.6(b) -- Debenture Pledge Agreement (Nova Scotia), dated October 30, 1997, by PCI Canada in
favor of United States Trust Company of New York, as Collateral Agent.
4.6(c) -- Debenture Pledge Agreement (New Brunswick), dated October 30, 1997, by PCI Canada in
favor of United States Trust Company of New York, as Collateral Agent.
4.7 -- Subsidiary Security Agreement, dated as of October 30, 1997, by PCI Canada in favor of
United States Trust Company of New York, as Collateral Agent.
*4.8(a) -- Term Loan Agreement, dated as of October 30, 1997, among PAI, PAAC, Various Financial
Institutions, as Lenders, DLJ Capital Funding, Inc. as the Syndication Agent, Salomon
Brothers Holding Company Inc, as the Documentation Agent, Bank of America National
Trust and Savings Association, as the Administrative Agent and United States Trust
Company of New York, as Collateral Agent.
*4.8(b) -- Affiliate Guaranty, dated as of October 30, 1997, among the Affiliate Guarantors named
therein.
*4.9 -- Consent and Amendment No. 1, dated November 5, 1997, to Loan and Security Agreement,
dated June 17, 1997, among PAAC, Bank of America National Trust and Savings
Association, as Agent and Lender and the other Lenders Party thereto.
*4.10 -- Intercreditor and Collateral Agency Agreement, dated as of October 30, 1997 by and
among United States Trust Company of New York, as Trustee and Collateral Agent, Bank of
America National Trust and Savings Association, as Agent, PCI Canada, PAAC and PAI.
*4.11 -- Exchange and Registration Rights Agreement, dated as of October 30, 1997, by and among
PCI Canada, the Guarantors and the Initial Purchasers.
5.1 -- Opinion of Willkie Farr & Gallagher.
5.2 -- Opinion of Kent R. Stephenson, Esq.
5.3 -- Opinion of Stewart McKelvey Stirling Scales, St. John, New Brunswick.
8.1 -- Opinion of Willkie Farr & Gallagher with respect to certain tax matters.
8.2 -- Opinion of Stikeman, Elliot, Montreal, Quebec with respect to certain tax matters.
*10.1 -- Contingent Payment Agreement, dated as of April 20, 1995, by and among Pioneer
(formerly, GEV corporation), PAAC and the Sellers defined therein (incorporated by
reference to Exhibit 10.2 to the Current Report on Form 8-K of Pioneer, dated April 20,
1995).
*10.2 -- Tax Sharing Agreement, dated as of April 20, 1995, by and among Pioneer, PAAC and the
Subsidiary Guarantors defined therein (incorporated by reference to Exhibit 10.3 to the
Company's Registration Statement on Form S-4 (File No. 33-98828) declared effective by
the Commission on December 22, 1995).
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
*10.3 -- Pioneer Companies, Inc. 1995 Stock Incentive Plan
(incorporated by reference to Exhibit 10.4 to the
Company's Registration Statement on Form S-4 (File No.
33-98828) declared effective by the Commission on
December 22, 1995).
*10.4 -- Pioneer Companies, Inc. Key Executive Stock Grant Plan
(incorporated by reference to Exhibit 10.2 to the
Quarterly Report on Form 10-Q of Pioneer for the
quarterly period ended June 30, 1996).
*10.5 -- Pioneer Chlor Alkali Company, Inc. Supplemental
Retirement Plan (incorporated by reference to Exhibit
10.5 to the Annual Report on Form 10-K of Pioneer for the
fiscal year ended December 31, 1995).
*10.6 -- Employment Agreement, dated as of April 20, 1995, between
Pioneer and Richard C. Kellogg, Jr. (incorporated by
reference to Exhibit 10.1 to the Quarterly Report on Form
10-Q of Pioneer for the quarterly period ended June 30,
1995).
*10.7 -- Employment Agreement, dated April 20, 1995, between
Pioneer Americas, Inc. and James E. Glattly (incorporated
by reference to Exhibit 10.8 to Pioneer's Annual Report
on Form 10-K for the year ended December 31, 1995).
*10.8 -- Employment Agreement, dated April 20, 1995, between
Pioneer Americas, Inc. and Verrill M. Norwood, Jr.
(incorporated by reference to Exhibit 10.9 to Pioneer's
Annual Report on Form 10-K for the year ended December
31, 1995).
*10.9 -- Executive Employment Agreement, dated January 4, 1997,
between Pioneer Companies, Inc. and Michael J. Ferris
(incorporated by reference to Exhibit 10.10 to the Annual
Report on Form 10-K of the Company for the fiscal year
ended December 31, 1996).
*10.10 -- Stock Purchase Agreement, dated January 4, 1997, between
Pioneer Companies, Inc. and Michael J. Ferris
(incorporated by reference to Exhibit 10.11 to the Annual
Report on Form 10-K of the Company for the fiscal year
ended December 31, 1996).
*10.11 -- Non-Qualified Stock Option Agreement, dated May 15, 1997,
between Pioneer Companies, Inc. and Andrew M. Bursky.
*10.12 -- Noncompetition Agreement, dated as of October 31, 1997,
between ICI, ICI Canada, ICI Americas, PCI Canada and PCI
Carolina.
*12.1 -- Statement Regarding Computation of Ratio of Earnings to
Fixed Charges.
*16.1 -- Letter from Ernst & Young LLP regarding change in
independent accountants (incorporated by reference to
Exhibit 16.1 to the Company's Registration Statement on
Form S-4 (File No. 33-98828) declared effective by the
Commission on December 22, 1995).
*21.1 -- Subsidiaries of the Registrants.
*23.1 -- Independent Auditors' Consent of Deloitte & Touche LLP.
*23.2 -- Independent Auditors' Consent of Ernst & Young LLP.
*23.3 -- Independent Auditors' Consent of Piercy, Bowler, Taylor &
Kern.
*23.4 -- Independent Public Accountants' Consent of Arthur
Andersen LLP.
*23.5 -- Independent Auditor's Consent of KPMG.
23.6 -- Consents of Willkie Farr & Gallagher (included in their
opinions filed as Exhibits 5.1 and 8.1).
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
23.7 -- Consent of Kent R. Stephenson, Esq. (included in his
opinion filed as Exhibit 5.2).
23.8 -- Consent of Stewart McKelvey Stirling Scales, St. John,
New Brunswick (included in their opinion filed as Exhibit
5.3).
23.9 -- Consent of Stikeman, Elliot, Montreal, Quebec (included
in their opinion filed as Exhibit 8.2).
*24.1 -- Powers of Attorney (included in the signature pages
hereto).
*25.1 -- Statement on Form T-1 of Eligibility of Trustee.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
99.3 -- Form of Letter to Clients.
99.4 -- Form of Letter to Nominees.
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
EXHIBIT 4.2
DEED OF HYPOTHEC
ON the Thirtieth (30th) day of October, Nineteen hundred and ninety-seven
(1997),
BEFORE Me Kevin Leonard, the undersigned Notary for the Province of Quebec,
practising in the City of Montreal
APPEARED: PCI CHEMICALS CANADA INC./PRODUITS CHIMIQUES PCI CANADA INC., a
corporation duly incorporated pursuant to the New Brunswick Business
Corporations Act (New Brunswick), having its registered office at 44 Chipman
Hill, Suite 1000, in the City of Saint John, Province of New Brunswick, E2L
4S6, herein acting and represented by Robert C. Williams, its representative,
hereunto duly authorized in virtue of a resolution of the board of directors of
the said corporation duly adopted on the Twenty-ninth (29th) day of October,
Nineteen hundred and ninety-seven (1997), a certified copy of which remains
hereto annexed after having been acknowledged true and signed for
identification by the said representative in the presence of the undersigned
Notary (hereinafter referred to as the "GRANTOR");
PARTY OF THE FIRST PART
AND: UNITED STATES TRUST COMPANY OF NEW YORK, a New York banking corporation,
having a place of business at 114 West 47th Street, in the City of New York,
State of New York, USA, 10036-1532, herein acting and represented by Rita Lc de
Santis, duly authorized as she so declares, hereinacting for its own account
and for the account of, and as holder of an irrevocable power of attorney of,
the Trustee, the Administrative Agent, the Noteholders and the Lenders
(hereinafter referred to as the "COLLATERAL AGENT").
PARTY OF THE SECOND PART
WHICH PARTIES HAVE DECLARED AND AGREED, IN THE PRESENCE OF THE UNDERSIGNED
NOTARY, AS FOLLOWS:
<PAGE> 2
-2-
1. DEFINITIONS: The following words or expressions, wherever
used in this Deed, shall have the following meanings:
1.1 "ACCESSORIES" means any interest, interest on
interest, indebtedness resulting from exchange rate fluctuations, legal fees,
charges, costs of realization, expenses, insurance premiums, Taxes and sums
incurred by the Collateral Agent, acting for its own account or for the account
of the Trustee, the Administrative Agent, the Noteholders or the Lenders to
protect, preserve or enforce its rights under this Deed and the security herein
created;
1.2 "ACCOUNTS RECEIVABLE" means the universality
consisting of all the right, title and interest which the Grantor has from time
to time in and to any and all present and future accounts and any other right
of Grantor to payment for goods sold or leased or for services rendered,
whether or not evidenced by an instrument or chattel paper and whether or not
yet earned by performance;
1.3 "ACM has the meaning ascribed thereto in section
7.24;
1.4 "ADDITIONAL UNDERTAKING" means (i) cash or cash
equivalents or (ii) a Surety Bond, an Additional Undertaking Guarantee or an
Additional Undertaking Letter of Credit which is provided by a Person, whose
long-term unsecured debt is rated at least "AA" (or equivalent) by a nationally
recognized statistical rating agency and is otherwise satisfactory to the
Collateral Agent; Additional Undertakings are addressed directly to the
Collateral Agent and name the Collateral Agent as the beneficiary thereof and
the party entitled to make claims thereunder;
1.5 "ADDITIONAL UNDERTAKING GUARANTEE" means the
unconditional guarantee of payment of any corporation or partnership organized
and existing under the laws of the United States of America or any State or the
District of Columbia or Canada or province thereof that has a long-term
unsecured debt rating satisfactory to the Collateral Agent at the time such
guarantee is delivered, given to the Collateral Agent, accompanied by an
opinion of counsel to such guarantor to the effect that such guarantee has been
duly authorized, executed and delivered by such guarantor and constitutes the
legal, valid and binding obligation of such guarantor enforceable against such
guarantor by the
<PAGE> 3
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Collateral Agent in accordance with its terms, subject to customary exceptions
at the time for opinions for such instruments, together with an opinion of
counsel to the effect that, taking into account the purpose under this Deed of
Hypothec for which such guarantee will be given, such guarantee and
accompanying opinion are responsive to the requirements of this Deed of
Hypothec;
1.6 "ADDITIONAL UNDERTAKING LETTER OF CREDIT" means a
clean, irrevocable, unconditional letter of credit in favour of the Collateral
Agent and entitling the Collateral Agent to draw thereon in the City of New
York issued by a bank satisfactory to the Collateral Agent, accompanied by an
opinion of counsel to such bank to the effect that such letter of credit has
been duly authorized, executed and delivered by such bank and constitutes the
legal, valid and binding obligation of such bank enforceable against such bank
by the Collateral Agent in accordance with its terms subject to customary
exceptions at the time for opinions for such instruments, together with an
opinion of counsel to the effect that, taking into account the purpose under
this Deed of Hypothec for which such letter of credit will be given, such
letter of credit and accompanying opinion are responsive to the requirements of
this Deed of Hypothec;
1.7 "ADMINISTRATIVE AGENT" means Bank of America National
Trust and Savings Association, and includes each other Person as shall have
subsequently been appointed as the successor Administrative Agent pursuant to
the Term Loan Agreement;
1.8 "ALTERATION" has the meaning ascribed thereto in
section 7.22;
1.9 "ARCHITECT'S CERTIFICATE" has the meaning ascribed
thereto in section 7.21.4.3;
1.10 "BOND" means the Bond of even date herewith issued by
PAI to and in favour of the Collateral Agent, in the principal amount of One
Hundred and Forty Million Dollars ($140,000,000) in lawful currency of Canada,
together with all renewals thereof, substitutions thereafter and supplements
thereto;
<PAGE> 4
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1.11 "BOND PLEDGE AGREEMENT" means the Bond Pledge
Agreement of even date between PAI and the Collateral Agent, as same may be
amended, supplemented or restated from time to time;
1.12 "BUILDINGS" means the universality consisting of all
the right, title and interest which the Grantor has from time to time in and to
(i) any and all present and future structures and works of a permanent nature
located, from time to time in, on or upon the Lands, including, without
limitation, all buildings, structures, facilities, accessories, appurtenances
and other improvements (including present and future parking areas) located
from time to time in, on or upon the Lands, (ii) any and all present and future
movable property which is deemed by Law to be immovable for purposes of
hypothecation located or incorporated from time to time therein, thereon or
thereupon, and (iii) any and all alterations, reconstructions, additions or
expansions to and all repairs or replacements of any such property during the
term of this Deed;
1.13 "CERTIFICATE OF LOCATION" means the certificate of
location prepared by Mr. Gaston Lemay, Quebec Land Surveyor, dated October 14,
1997, bearing his minute number 2812 (his file number 4-14614-C-1);
1.14 "CLAIMS" means the universality consisting of all the
right, title and interest which the Grantor has from time to time, directly or
indirectly, in and to any and all present and future claims in respect of the
Immovable Property, the Leases, the Licenses, the Contracts, the Equipment, the
Securities and the Intellectual Property, including, without limitation, solely
to the extent they relate to the Immovable Property, the Leases, the Licenses,
the Contracts, the Equipment, the Securities and the Intellectual Property: (a)
all accounts, accounts receivable, book accounts, book debts, debts, claims,
customer accounts, bank accounts, rentals, revenues, income, loans receivable,
choses in action, judgments, proceeds of sale, bills of exchange, notes,
negotiable instruments, letters of credit or guarantees, promissory notes,
rebates, refunds, amounts owing by or claimable from the Crown, state or
government (or any departments, agents or agencies thereof), warehouse
receipts, bills of lading and any other amounts or demands of every nature and
kind howsoever arising, whether or not secured, which are now or become
hereafter due or owing to the Grantor; (b) all security present or future
including all legal or conventional hypothecs, held from
<PAGE> 5
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time to time by the Grantor; (c) the benefit of all guarantees and indemnities
for the performance of the obligations of any party to which the Grantor is or
may become entitled; (d) all indemnities, insurance proceeds and expropriation
proceeds received, which may be received or to which the Grantor is or may
become entitled, the hypothecation of which would not result in an immovable
hypothec; (e) the benefit of any contractor's, manufacturer's and supplier's
warranties which relate to the Equipment: (f) all proceeds of sale, lease or
other disposition of any part or parts of the Hypothecated Property; and (g)
all Rents, the hypothecation of which would not result in an immovable
hypothec; provided that, for greater certainty, Immovable Claims are excluded
from "Claims" and further provided that all Accounts Receivable, Contract
Rights and General Intangibles are also excluded;
1.15 "CLOSING DATE" has the meaning ascribed thereto in
the Purchase Agreement;
1.16 "COLLATERAL AGENT" means the Party of the Second Part
and its successors and permitted assigns;
1.17 "COLLATERAL ACCOUNT" has the meaning ascribed thereto
in the Intercreditor and Collateral Agency Agreement;
1.18 "COLLATERAL PROCEEDS" has the meaning ascribed
thereto in the Indenture;
1.19 "CONTRACT RIGHT" means the universality consisting of
all right, title and interest which the Grantor has from time to time in and to
any payment under any contract (now existing or hereafter arising) for the sale
or lease of goods or the rendering of services, which right is not yet earned
by performance;
1.20 "CONTRACTS" means the universality consisting of all
the right, title and interest which the Grantor has from time to time in and to
(a) any and all present and future contracts, leases, options, subcontracts,
agreements, service agreements, warranties, purchase orders, construction
contracts, subscriber contracts, customer service agreements, management
agreements, rights of way, servitudes, transmission capacity agreements, public
utility contracts and other agreements, the whole as they relate to Immovable
Property to which the Grantor is or may become entitled, or any part or parts
thereof and all
<PAGE> 6
- 6 -
extensions, amendments, renewals or substitutions thereof or therefore which
may hereafter be affected or entered into and all benefits, power, and
advantage of the Grantor, and (b) any and all licences, permits, approvals,
certificates and agreements with or from the Crown, state or government (or any
departments, agents or agencies thereof) relating directly or indirectly to the
Immovable Property or the Movable Property, (c) any and all existing or future
agreements of purchase and sale, options to purchase or mortgage, loan or other
financing commitment affecting the Hypothecated Property or any part or parts
thereof (but excluding all proceeds and other moneys now due and payable or
hereafter to become due and payable thereunder which, for certainty, constitute
Claims) and all benefits, power and advantage of the Grantor to be derived
therefrom, and the benefit of all covenants, obligations, agreements,
representations, warranties and undertakings in favour of the Grantor relating
to the Immovable Property or the Movable Property; provided that, for greater
certainty, Leases and Contract Rights are excluded from "CONTRACTS";
1.21 "DEED" means collectively this Deed of Hypothec, all
of the Schedules hereto, and every deed amending, supplementing or implementing
the same; "this Deed", "these presents", "hereto", "herein", "hereof",
"hereby", "hereunder", and any similar expressions refer to this Deed and not
to any particular Article or other portion thereof;
1.22 "DESTRUCTION" has the meaning ascribed thereto in
section 7.21.1;
1.23 "ENVIRONMENT" means all components of the earth,
including, without limitation, air (and all layers of the atmosphere), land
(and all surface and subsurface soil, underground spaces and cavities and all
land submerged under water) and water (and all surface and underground water),
organic and inorganic matter and living organisms, and the interacting natural
systems that include components referred to above in this definition of
"Environment";
1.24 "ENVIRONMENTAL LAWS" means all applicable Laws
relating to the Environment, Hazardous Substances, pollution or protection of
the Environment, including Laws relating to: (i) on site or off-site
contamination; (ii) chemical substances or products; (iii) Releases of
pollutants, contaminants, chemicals or other industrial, toxic or radioactive
substances or Hazardous Substances into the Environment;
<PAGE> 7
- 7 -
and (iv) the manufacture, processing, distribution, use, treatment, storage,
transport, packaging, labelling, sale, recycling, disposal, destruction,
incineration, burial, advertising, display or handling of Hazardous Substances;
1.25 "EQUIPMENT" means the universality consisting of all
the right, title and interest which the Grantor has from time to time in and to
any and all present and future equipment now owned or hereafter acquired by the
Grantor including, without limitation, all plants, facilities, machinery,
tools, equipment, computer equipment, software, office furniture, furnishings,
motor vehicles, towers, antennas, distribution systems and all components
thereof, hardware, cables, fibre optic cables, switches, amplifiers, associated
devices and rolling stock as well as any and all movable equipment used in
connection with the operation, security, maintenance, management, cleaning,
landscaping, snow removal, repairs and improvements to the Lands or the
Buildings; and all accessories, additions, attachments, improvements,
substitutions and replacements therefor and all accessories related thereto and
all licenses and other rights and all records, files, software, charts, plans,
drawings, specifications, manuals and documents relating thereto;
1.26 "ESTIMATE" has the meaning ascribed thereto in
section 7.21.4.3;
1.27 "EVENT OF DEFAULT" has the meaning ascribed thereto
in Article 8;
1.28 "EXCLUDED PROPERTY" means (i) the Accounts Receivable,
(ii) the Inventory, (iii) the General Intangibles, (iv) the Contract Rights,
(v) any and all balances, credits, deposits (general or special, time or demand,
provisional or final), accounts or monies of or in the name of the Grantor now
or hereafter with the agent, any lender or any participant under the Grantor's
working capital loan facility and any and all property of every kind or
description of or in the name of the Grantor now or hereafter, for any reason
or purpose whatsoever, in the possession or control of, or in transit to, or
standing to the Grantor's credit on the books of, such agent, any agent or
bailee for such agent, any such lender, or any such participant, (vi) to the
extent related to the property described in clauses (i) through (v) above, all
books, correspondence, credit files, records, invoices and other papers and
documents, including without limitation, to the extent so related, all
<PAGE> 8
- 8 -
tapes, cards, computer runs, computer programs and other papers and documents
in the possession or control of the Grantor or any computer bureau from time to
time acting for the Grantor, and, to the extent so related, all rights in, to
and under all policies of insurance, including claims of rights to payments
thereunder and proceeds therefrom, including business interruption insurance
and any credit insurance, and (vii) all products and proceeds (including but
not limited to any Accounts Receivable or other proceeds arising from the sale
or other disposition of any property described above, any returns of Inventory
sold by the Grantor, and the proceeds of any insurance covering any of the
property described above) of any of the foregoing;
1.29 "GENERAL INTANGIBLES" means the universality
consisting of all of the right, title and interest which the Grantor has from
time to time in and to all present and future incorporeal property, to the
extent that any of the foregoing arises out of or relates to Accounts
Receivable or Inventory, including without limitation, all right, title and
interest of the Grantor in and to: (i) all tax refunds and tax refund claims;
(ii) registered and unregistered patents, service marks, copyrights and
applications for any of the foregoing; and (iii) all trade secrets and other
confidential information relating to the business of the Grantor, in each case
to the extent that any of the foregoing arises out of or relates to Accounts
Receivable or Inventory;
1.30 "GOVERNMENTAL AUTHORITY" means the country, state,
province, county, city and political subdivisions in which any Person or such
Person's property is located or which exercises valid jurisdiction over any
such Person or such Person's property, and any court, agency, department,
commission, board, bureau or instrumentality of any of them including monetary
authorities which exercise valid jurisdiction over any such Person or such
Person's property; unless otherwise specified, all references to "Governmental
Authority" herein means a Governmental Authority having jurisdiction over,
where applicable, the Grantor;
1.31 "GOVERNMENTAL REQUIREMENT" means any law, statute,
code, ordinance, order, determination, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license, authorization or other
directive or requirement, including, without limitation, Environmental Laws,
energy regulations and occupational safety and health standards or controls, of
any Governmental Authority;
<PAGE> 9
- 9 -
1.32 "GRANTOR" means the Party of the First Part and its
successors and permitted assigns;
1.33 "HAZARDOUS SUBSTANCE" means any Substance which is or
is deemed to be, alone or in any combination, hazardous, hazardous waste,
toxic, a pollutant, a deleterious substance, a contaminant or a source of
pollution or contamination under any applicable Environmental Laws;
1.34 "HYPOTHEC OBLIGATIONS" means all of the obligations,
liabilities and indebtedness of the Grantor to the Collateral Agent, the
Administrative Agent, the Trustee, the Lenders and the Noteholders, or any one
of them, from time to time, whether present or future, direct or indirect,
absolute or contingent, liquidated or unliquidated, as principal or surety,
alone or with others (including principal, interest, interest on interest,
accessories, and all other expenses incurred from time to time by the
Collateral Agent, the Administrative Agent, the Trustee, the Lenders or the
Noteholders for the protection of their rights, or in pursuance of their
recourses hereunder or at Law) under or in respect of or arising from this
Deed, as same may be amended, restated or supplemented from time to time;
1.35 "HYPOTHECATED PROPERTY" means the universality
comprising all of the Grantor's property, rights, interests and assets, movable
and immovable, corporeal and incorporeal, both present and future, of
whatsoever nature or kind and wheresoever situate, including, without
limitation, the Immovable Property and the Movable Property, but excluding the
Excluded Property.
1.36 "IMMOVABLE CLAIMS" means the universality consisting
of all the right, title and interest which the Grantor has from time to time in
and to any and all present and future immovable claims directly or indirectly
held or enjoyed by the Grantor including, without limitation, all Rents which
may be received or to which the Grantor is or may become entitled in connection
with the Leases, the hypothecation of which would result in an immovable
hypothec, and all immovable insurance proceeds;
1.37 "IMMOVABLE PROPERTY" means collectively the Lands,
the Buildings, the Immovable Claims and all other present and future immovable
property, assets or rights of the Grantor;
<PAGE> 10
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1.38 "INDENTURE" means the Indenture of even date among
the Grantor, as issuer, Pioneer Americas Acquisition Corp, PAI, certain other
guarantors thereunder, the Trustee, as trustee for the Noteholders, and the
Collateral Agent, as same may be amended, supplemented or restated from time to
time;
1.39 "INDENTURE OBLIGATIONS" means all of the obligations,
liabilities and indebtedness of the Grantor to the Collateral Agent, the
Trustee and the Noteholders, or any one of them, from time to time, whether
present or future, direct or indirect, absolute or contingent, liquidated or
unliquidated, as principal or as surety, alone or with others (including
principal, interest, interest on interest, accessories, and all other expenses
incurred from time to time by the Collateral Agent, the Trustee or the
Noteholders for the protection of their rights, or in pursuance of their
recourses hereunder or at Law) under or in respect of or arising from:
1.39.1 the Indenture; and
1.39.2 the Notes;
or any one or more of the aforesaid as the same may be amended, restated or
supplemented from time to time;
1.40 "INSURANCE PROCEEDS" has the meaning ascribed thereto
in section 7.21.1;
1.41 "INTELLECTUAL PROPERTY" means the universality
consisting of any and all present and future goodwill of the Grantor, and the
present and future right, title and interest of the Grantor in and to any and
all patents and patents pending, registered and unregistered trademarks, trade
or brand names, service marks, copyrights, industrial designs, formulae,
processes, trade secrets or inventions, licenses, permits and all other
intellectual property; provided however, that General Intangibles are excluded
from Intellectual Property;
1.42 "INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT" means
the Intercreditor and Collateral Agency Agreement of even date herewith, among
the Trustee, the Collateral Agent, Pioneer Americas Acquisition Corp., PAI, the
Grantor and Bank of America National Trust and Savings Association, as
administrative agent and as agent under a
<PAGE> 11
- 11 -
certain revolving credit facility, as same may be amended, supplemented or
restated from time to time;
1.43 "INVENTORY" means the universality consisting of all
the right, title and interest which the Grantor has from time to time in and to
any and all present and future movable inventory, goods, wares and merchandise,
property in stock, raw materials, components, work in process, goods in
transit, new and unused production, packing and shipping materials, and any
other movable property directly or indirectly kept by or on behalf of the
Grantor for sale, lease, processing, manufacture, transformation, packing,
shipping, advertising, selling or furnishing of goods and services and all
goods the sale or other disposition of which has given rise to an Account
Receivable or Contract Right which are returned to and/or repossessed and/or
stopped in transit by, or at any time hereafter, are in the possession or under
the control of the Grantor or of any of its affiliates or of the agent or any
lender under the Grantor's working capital loan facility, or any agent or
bailee of any of them, and all documents of title or other documents
representing same; provided however, that material used in connection with the
operation, security, maintenance, management, cleaning, landscaping, snow
removal, repairs and improvements to the Lands or Buildings are excluded from
Inventory;
1.44 "LANDS" means all right, title, and interest of the
Grantor in and to all present and future immovable property, including without
limitation, the Lands described in the First Schedule hereto;
1.45 "LAWS" means all statutes, codes, ordinances,
decrees, rules, regulations, municipal by-laws, judicial or arbitral or
administrative or ministerial or departmental or regulatory judgments, orders,
decisions, rulings or awards, policies and guidelines which are binding (or, if
not binding, the observance of which are in accordance with the practice of the
relevant industry in the jurisdiction concerned), or any provisions of the
foregoing, including general principles of common and civil law and equity,
binding on (or, if not binding, the observance of which are in accordance with
the practice of the relevant industry in the jurisdiction concerned) the Person
referred to in the context in which such word is used; and "LAW" means any one
of such Laws;
<PAGE> 12
- 12 -
1.46 "LEASES" means the universality consisting of all
right, title and interest which the Grantor has from time to time in and to any
and all present and future leases, offers to lease and other agreements to
lease of the whole or any part of Lands or Buildings and any and all present or
future agreements and licences whereby the Grantor gives any other Person the
right to use or occupy the whole or any part of the Lands or Buildings, in each
case for the time being in effect, and all revisions, alterations,
modifications, amendments, extensions, renewals, replacements or substitutions
thereof or therefor which may hereafter be effected or entered into but does
not include registered servitudes, rights of superficies, or rights in the
nature of a servitude, or a right of superficies;
1.47 "LENDERS" has the meaning ascribed thereto in the
Term Loan Agreement;
1.48 "LICENSES" means all franchises, licenses,
authorizations, approvals, permits and operating rights of the Grantor;
1.49 "LIEN" means, with respect to any property of any
Person, any charge, mortgage, prior claims, pledge, hypothec, security
interest, security under the Bank Act (Canada), lien, conditional sales (or
other title retention agreement or lease in the nature hereof, lease (where
such Person is the lessee of such property), servitudes, assignment, adverse
claims, defect of title, restriction, trust, right of set-off or other
encumbrance of any kind in respect of such property, whether or not filed,
recorded or otherwise perfected under applicable law;
1.50 "MATERIAL ADVERSE EFFECT" means, as to any Person,
asset or property, a material adverse effect on the business, assets,
properties, condition (financial or other), operations or results of operations
of such Person, asset or property, which effect is not adequately and
effectively insured or indemnified against by a financially sound insurance
company, and excepting effects arising solely out of general national economic
conditions and/or effects arising solely out of matters affecting the industry
in which such Person, asset or property conducts business a whole;
1.51 "MONEY" or "MONEYS" means those certain proceeds set
forth in sections 7.21.1 and 7.21.2;
<PAGE> 13
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1.52 "MOVABLE PROPERTY" means collectively the Claims, the
Contracts, the Equipment, the Intellectual Property, the Leases (other than
Rent payable thereunder), the Licenses, the Securities and all movable
property, assets or rights, present and future, corporeal and incorporeal of
the Grantor, including (i) cash on hand and in bank or other deposit accounts
and certificates of deposit and other deposit instruments; and (ii) immovable
property located or incorporated in, on, at or upon the Lands and the Buildings
which is deemed by Law to be movable for purposes of hypothecation; provided
however, that Excluded Property is excluded from Movable Property;
1.53 "NET AWARD" has the meaning ascribed thereto in
section 7.21.2;
1.54 "NOTEHOLDERS" means the Persons in whose names the
Notes are registered at any time in the Security Register, as such term is
defined in the Indenture;
1.55 "NOTES" has the meaning ascribed to "Securities"
under the Indenture;
1.56 "OBLIGATIONS" means the Indenture Obligations, the
Term Loan Obligations and the Hypothec Obligations, collectively;
1.57 "PAI" means Pioneer Americas, Inc. and its successors
and assigns;
1.58 "PARTIES" means, collectively, the Grantor and the
Collateral Agent;
1.59 "PERMIT" or "PERMITS" has the meaning ascribed
thereto in section 7.14.4;
1.60 "PERMITTED LIENS" has the meaning ascribed thereto in
the Term Loan Agreement;
1.61 "PERSON" or "PERSONS" means a corporation, a legal
person, a legal entity, an association, a partnership, an organization, a
business, an individual, a government or political subdivision thereof or a
government agency;
<PAGE> 14
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1.62 "PLANS AND SPECIFICATIONS" has the meaning ascribed
thereto in section 7.21.4.1;
1.63 "PLANT" means the Lands and the Building,
collectively;
1.64 "PURCHASE AGREEMENT" means the Asset Purchase
Agreement dated as of the 22nd day of September, 1997 between the Grantor, ICI
Canada Inc., PCI Carolina Inc., Pioneer Companies, Inc., ICI Americas Inc. and
Imperial Chemical Industries PLC, as same may be amended from time to time;
1.65 "RATE OF INTEREST" means the rate of interest of
twenty-five percent (25%) per annum;
1.66 "RECEIVER" means any agent appointed by the
Collateral Agent or a court of competent jurisdiction to possess and administer
all or any of the Hypothecated Property after the security has become
enforceable;
1.67 "RELEASE" when used as a verb includes release,
spill, leak, emit, deposit, discharge, leach, migrate, dump, issue, empty,
place, seep, exhaust, abandon, bury, incinerate or dispose into the Environment
and "RELEASE" when used as a noun has a correlative meaning;
1.68 "RENTS" means all the right, title and interest the
Grantor has from time to time in and to (i) any and all rent, income, revenues
and profits and other amounts payable or derived from the Leases or securing
obligations thereunder; and (ii) any and all indemnities and insurance proceeds
received, which may be received or to which the Grantor is or may become
entitled in connection with the Rents;
1.69 "RESTORATION" has the meaning ascribed thereto in
section 7.21.3;
1.70 "RESTORATION ELECTION NOTICE" has the meaning
ascribed thereto in section 7.21.3;
1.71 "SECURITIES" means all shares, stocks, warrants,
bonds, debentures, debenture stock, stock options and other securities
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now or hereafter held, owned or acquired by or on behalf of the Grantor,
together with all renewals thereof, substitutions therefor, accretions thereto
and all rights, claims and proceeds in respect thereof and including, without
limitation, any such securities of the Grantor which are now or hereafter held
by or delivered to the Grantor and all rights, title and interest in any of the
foregoing which the Grantor now or at any time in the future has or may have;
1.72 "SUBSTANCE" means any substance, waste, liquid,
gaseous or solid matter, fuel, micro-organism, sound, vibration, ray, heat,
odour, radiation, energy vector, plasma, and organic or inorganic matter;
1.73 "SURETY BOND" means a clean irrevocable surety bond
or credit insurance policy in favour of the Collateral Agent issued by an
insurance company the claims paying ability rating of which at the time such
surety bond or credit insurance policy is delivered is satisfactory to the
Collateral Agent, accompanied by an opinion of counsel to such insurance
company to the effect that such surety bond or credit insurance policy has been
duly authorized, executed and delivered by such insurance company and
constitutes the legal, valid and binding obligation of such insurance company
enforceable against such insurance company by the Collateral Agent in
accordance with its terms subject to customary exceptions at the time for
opinions for such instruments, together with an opinion of counsel to the
effect that, taking into account the purpose under this Deed of Hypothec for
which such surety bond will be given, such surety bond and accompanying
opinions are responsive to the requirements of this Deed of Hypothec;
1.74 "TAKING" has the meaning ascribed thereto in section
7.21.2;
1.75 "TAXES" means all taxes, surtaxes, rates or
assessments, general or special, municipal, regional or for school or
ecclesiastic purposes, which now are or may hereafter be imposed, charged or
levied upon any of the Hypothecated Property (or any portion thereof, or upon
any property, asset or right comprised therein); and
1.76 "TERM LOAN AGREEMENT" means the Term Loan Agreement
of even date herewith, among PAI, as borrower, Pioneer Americas Acquisition
Corp., as the parent guarantor, the Lenders, DLJ Capital Funding Inc, as the
syndication agent for the Lenders, Salomon
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Brothers Holding Company Inc, as the documentation agent for the Lenders, the
Administrative Agent, as administrative agent for the Lenders and the
Collateral Agent, as the same may be amended, supplemented or restated from
time to time;
1.77 "TERM LOAN OBLIGATIONS" means all of the obligations,
liabilities and indebtedness of PAI to the Collateral Agent, the Administrative
Agent and the Lenders, or any one of them, from time to time, whether present
or future, direct or indirect, absolute or contingent, liquidated or
unliquidated, as principal or as surety, alone or with others (including
principal, interest, interest on interest, accessories and all other expenses
incurred from time to time by the Collateral Agent, the Administrative Agent or
the Lenders, for the protection of their rights, or in pursuance of their
recourses hereunder or at Law) under or in respect of or arising from:
1.77.1 the Bond;
1.77.2 the Bond Pledge Agreement;
1.77.3 the Term Notes; and
1.77.4 the Term Loan Agreement;
or any one or more of the aforesaid as the same may be amended, restated or
supplemented from time to time, whether or not the Grantor (if not a party
thereto) shall have consented thereto;
1.78 "TERM NOTES" has the meaning ascribed thereto in the
Term Loan Agreement;
1.79 "TRANSFER" has the meaning ascribed thereto in
section 7.20;
1.80 "TRUSTEE" means United States Trust Company of New
York, and includes each other Person as shall have subsequently been appointed
as the successor Trustee pursuant to the Indenture.
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2. CHARGING PROVISIONS:
2.1 HYPOTHEC: As continuing and collateral security for
the due and punctual payment, performance and fulfilment of the Obligations and
Accessories, the Grantor does hereby hypothecate in favour of the Collateral
Agent, the Hypothecated Property for the sum of THREE HUNDRED AND EIGHTY-FIVE
MILLION DOLLARS ($385,000,000) in lawful money of Canada with interest thereon
at the Rate of Interest, calculated daily and payable monthly in arrears, from
the date hereof and before and after demand, default and judgment.
2.2 ADDITIONAL HYPOTHEC: As additional security for the
due and punctual payment, performance and fulfilment of the Accessories,
including without limitation the payment of interest on interest, legal fees,
costs of realization, expenses incurred by the Collateral Agent in connection
with the preservation and maintenance of the hypothecs hereby created and of
the Hypothecated Property or otherwise in connection with the Obligations and
Accessories, the Grantor does hereby further hypothecate, with effect as of and
from this date, the Hypothecated Property in favour of the Collateral Agent,
for an additional sum of SEVENTY-SEVEN MILLION DOLLARS ($77,000,000) in lawful
money of Canada with interest thereon at the Rate of Interest calculated daily
and payable monthly, in arrears, from the date hereof and before and after
demand, default and judgment; the hypothecs created by the Grantor in favour of
the Collateral Agent, pursuant to this Deed being for the aggregate sum of FOUR
HUNDRED AND SIXTY-TWO MILLION DOLLARS ($462,000,000) in lawful money of Canada.
2.3 NO FLOATING HYPOTHEC: The hypothecs granted
hereunder do not constitute and shall not constitute nor be construed as
floating hypothecs within the meaning of Article 2715 of the Civil Code of
Quebec.
2.4 CONTINUING VALIDITY: The full amount of the
foregoing hypothecs shall be and remain continuing collateral security in
favour of the Collateral Agent for the full payment or fulfilment of the
Obligations and Accessories, if any, and such hypothecs shall be and remain in
full force and effect notwithstanding the repayment and reduction or fulfilment
at any time and from time to time of the Obligations and Accessories, if any,
or any part thereof or the fact that at any time and from time to time there
may be no Obligations and Accessories, if any, owing by the Grantor or PAI, as
the case may be,
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the whole until all Obligations and Accessories, if any, at any time and from
time to time existing shall have been entirely repaid, fulfilled and released
to the reasonable satisfaction of the Collateral Agent, and such hypothecs
shall not be reduced unless and until a document evidencing the discharge is
executed by the Collateral Agent and is delivered in which it shall be
expressly stated that the amounts therein referred to are in reduction of the
hypothecs hereby created and until the hypothecs herein created are released
and discharged to the extent therein stated.
2.5 NO REDUCTION: No payment made by the Grantor or by
any Person on its behalf to the Collateral Agent shall in any way operate to
extinguish the hypothecs created herein or as a reduction of said hypothecs
hereby created, or effect novation, save only as and when such payment is
expressly applied by the Collateral Agent in reduction of the said hypothecs by
means of a document evidencing the discharge executed by the Collateral Agent,
pursuant to Article 2.4 hereof.
2.6 REQUIRED CONSENTS: Notwithstanding any other
provision of this Deed, the hypothecs granted by the Grantor shall not extend
or apply to any Contracts, or rights or interests arising thereunder or subject
thereto, as to which the grants, creation or making of a hypothec would
constitute a violation or a breach of a validly enforceable restriction
thereon.
2.7 NO NOVATION: Nothing herein shall affect, novate,
terminate or supersede any covenants and obligations of the Grantor under the
Bond.
2.8 FURTHER ASSURANCES: The Grantor will at its own
expense do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered all such further acts, deeds, assignments,
registrations, publications and assurances (including instruments supplemental
or ancillary hereto) as the Collateral Agent may from time to time reasonably
request to perfect its security on the Hypothecated Property, including,
without limitation, specifically hypothecating in favour of the Collateral
Agent the right, title and interest of the Grantor in all property and assets
subject to, or intended to be subject to, the charges of this Deed which the
Grantor will hereafter acquire.
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3. PAST, PRESENT OR FUTURE ADVANCES: The security hereby
constituted shall have effect whether or not the Obligations thereby secured
shall have been incurred before or after or upon the date of the execution of
this Deed.
4. POSSESSION BY GRANTOR: Until the security hereby constituted
shall become enforceable, the Grantor shall, subject always to the provisions
of this Deed, peaceably and quietly have, hold, use, occupy, possess and enjoy
the Hypothecated Property and manage and operate the same for its own use and
benefit.
5. COLLECTION OF CLAIMS AND RENTS:
5.1 AUTHORIZATION TO COLLECT: The Collateral Agent
hereby expressly authorizes the Grantor to manage and collect the Claims and
the Rents as and when they become due. If an Event of Default has occurred and
is continuing, the Collateral Agent shall have the right to serve upon the
Grantor and the debtors under such Claims and Rents a notice withdrawing such
authorization, whereupon the Collateral Agent shall, subject to applicable Law,
immediately have the right to collect all such Claims and Rents.
5.2 COLLECTION: In the event that the Grantor receives
payment of any Claims or Rents after an Event of Default has occurred and is
continuing, whether or not the Collateral Agent shall have served upon the
Grantor and the debtors under such Claims and Rents such notice withdrawing the
authorization granted to the Grantor to collect the Claims and the Rents, the
Grantor shall receive payment of the Claims and the Rents as mandatary or
depositary of the Collateral Agent and the Grantor hereby undertakes to pay
forthwith to the Collateral Agent all Claims and Rents so received.
5.3 STATEMENTS OF CLAIMS: Following the occurrence and
continuation of an Event of Default, should the Collateral Agent serve such a
notice withdrawing the authorization granted to the Grantor to collect all
Claims and Rents as provided herein, the Grantor hereby agrees that all
statements provided by the Collateral Agent to the Grantor with respect to the
Claims and Rents received and their application by the Collateral Agent, shall
be prima facie conclusive and binding unless manifestly wrong or incorrect.
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5.4 NO REQUIREMENT TO ENFORCE: The Collateral Agent
shall have no obligation to exercise any rights in respect of any Claims or
Rents nor to enforce or to see to payment of the same, whether by legal action
or otherwise. The Collateral Agent shall not be liable for any loss or damage
resulting from any decision on the part of the Collateral Agent not to
exercise, to exercise only in part or to delay or suspend the exercise or any
failure or delay by the Collateral Agent in exercising any of its rights under
this Article 5, Article 10 or any other provision of this Deed or under the
Bond.
5.5 DEALINGS BY COLLATERAL AGENT: The Collateral Agent
may give acquittances for any sums it collects and may, but shall not be
obligated to, realize any of the claims, grant extensions, grant releases,
accept compositions, renounce and generally deal with the Claims or Rents, and
any guarantees or security therefor, and take any action to preserve, protect
or secure such Claims or Rents, at such times and in such manner as it deems
advisable in its sole discretion, without notice to or the consent of the
Grantor, and without incurring any liability therefor.
5.6 IRREGULAR PAYMENTS: The Collateral Agent shall have
no obligation to inform the Grantor of any irregularity in the payment of the
Claims and Rents.
5.7 APPLICATION: Any amounts collected by the Collateral
Agent on account of Claims or Rents may, at the Collateral Agent's option,
either be deposited by the Collateral Agent in a bank account in the name of
the Grantor, subject to such conditions as the Collateral Agent may determine
to be necessary or appropriate in the circumstances (in which event, for
certainty, such proceeds shall form part of the Hypothecated Property and be
subject to the hypothecs herein created) or applied towards payment of any part
or parts of the Obligations and Accessories as the Collateral Agent, in
accordance with the provisions of the Intercreditor and Collateral Agency
Agreement, the Indenture or the Term Loan Agreement in respect of application
of payments, acting reasonably, shall decide.
6. NO ASSUMPTION OF OBLIGATIONS: The Collateral Agent does not,
in exercising any of its rights and recourses under this Deed or at Law, in any
way personally assume the obligations of the
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Grantor. The Grantor will remain liable under the Contracts and the Leases to
observe and perform all the conditions and obligations to be observed and
performed by the Grantor thereunder.
7. REPRESENTATIONS AND COVENANTS OF THE GRANTOR:
The Grantor hereby represents and covenants to the Collateral
Agent that:
7.1 CORPORATE POWER AND AUTHORITY: The Grantor has the
full corporate power and authority to enter into this Deed and to grant the
hypothecs herein created without obtaining the waiver, consent or approval of
any lessor, sublessor, Governmental Authority or entity or other party
whomsoever and whatsoever which has not been obtained except in the case of
certain environmental permits and approvals which, by their terms, are not
transferable or cannot be transferred without the prior approval of the issuing
agency.
7.2 EXECUTION AND DELIVERY: The execution and delivery
of this Deed have been duly authorized by all necessary corporate action.
7.3 BINDING OBLIGATION: This Deed, when duly executed
and delivered, will be a legal, valid and binding obligation of the Grantor
enforceable against it in accordance with its terms; provided that such
enforcement may be limited by bankruptcy, insolvency, reorganization or similar
Laws affecting creditors' rights generally.
7.4 GOOD TITLE: The Grantor has good and marketable title
to the Hypothecated Property. The Buildings upon the Land are all within the
boundary lines of the Lands except as may be set forth in the Certificate of
Location, and there are no encroachments thereon that would materially impair
the use thereof. The Hypothecated Property is free and clear of any and all
Liens or encumbrances of any nature or kind except for the Permitted Liens.
7.5 ALL PERMITS: The Grantor has all necessary permits,
franchises, licenses, rights-of-way, servitudes or other rights or authority
needed in connection with the operation and maintenance of the
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Plant, except where the failure to have the same would not have a Material
Adverse Effect; all of the Contracts are presently in full force and effect and
no default has occurred or exists thereunder, except where such default would
not individually or in the aggregate have a Material Adverse Effect; except for
Permitted Liens, the Grantor's grant of the hypothecs in the Hypothecated
Property in the manner herein provided does not result in the creation or
imposition of any other Lien or security interest, adverse claim or option upon
any of the Hypothecated Property.
7.6 PLACE OF BUSINESS: The Grantor's registered office
is located in the City of Saint John, New Brunswick. The Grantor will not
change its name, identity or corporate structure or its registered office or
chief place of business without notifying the Collateral Agent at least thirty
(30) days prior to the effective date of such change.
7.7 DEFENCE OF TITLE: The Grantor will warrant and
defend title to the Hypothecated Property, subject to Permitted Liens, against
the claims and demands of all other Persons whomsoever and will maintain and
preserve the hypothecs created hereby so long as any of the Obligations secured
hereby remain outstanding. Should an adverse claim be made against the title
to any material part of the Hypothecated Property, the Grantor agrees it will
immediately notify the Collateral Agent in writing thereof and defend against
such adverse claim to the extent necessary to preserve the Collateral Agent's
rights and benefits hereunder, subject to Permitted Liens, and the Grantor
further agrees that the Collateral Agent may take such other reasonable action
as it deem advisable to protect and preserve its interests in the Hypothecated
Property, and in such event the Grantor will indemnify the Collateral Agent
against any and all costs, reasonable attorney's fees and other expenses which
it may incur in defending against any such adverse claim. Such obligations
shall be payable on demand and shall bear interest from the date of demand
therefor until paid at the Rate of Interest. Any proceeds of any policy of
title insurance maintained by the Grantor with respect to the Hypothecated
Property shall, for the purposes of this Deed of Hypothec, be paid and applied
in the same manner as Insurance Proceeds.
7.8 FIRST-RANKING HYPOTHEC: This Deed of Hypothec is, and
always will be maintained as first-ranking hypothec upon the Hypothecated
Property, subject to the Permitted Liens, and the Grantor will not create or
suffer to be created or permit to exist any Lien,
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security interest or charge prior or junior to or on parity with the hypothecs
created under this Deed of Hypothec upon the Hypothecated Property or any part
thereof or upon the rents, issues, revenues, profits or other income therefrom,
except for the Permitted Liens.
7.9 MAINTENANCE OF HYPOTHECATED PROPERTY: The Grantor
will, at its own expense, do or cause to be done all things necessary to
preserve and keep in full repair, working order and efficiency, reasonable wear
and tear excepted, all of the Hypothecated Property, including, without
limitation, all Equipment and, from time to time, will make all the needful and
proper repairs, renewals and replacements so that at all times the state and
condition of the Hypothecated Property will be fully preserved and maintained,
unless the failure to repair, renew or replace would not materially interfere
with the present use or operation of the Hypothecated Property.
7.10 PERFORMANCE OF CONTRACTS: The Grantor will promptly
pay and discharge all rentals, or other payments and will perform or cause to
be performed each and every act, matter or thing required by, each and all of
the contracts, instruments or agreements executed in connection with or
incident to the ownership and operation of the Plant and being a portion of the
Hypothecated Property and will do all other things necessary to keep unimpaired
the Grantor's rights with respect thereto and to prevent any forfeiture thereof
or default thereunder, unless such forfeiture or default shall not individually
or in the aggregate have a Material Adverse Effect. The Grantor will operate
the facilities comprising the Plant in a good and workmanlike manner and in
accordance with the practices of the industry and in compliance in all material
respects with all Governmental Requirements affecting ownership and operation
of such facilities, including without limitation, Environmental Laws.
7.11 NAME OF GRANTOR: The Grantor does not do business
with respect to the Hypothecated Property under any name other than PCI
Chemicals Canada Inc./Produits Chimiques PCI Canada Inc.
7.12 OPERATION BY THIRD PARTIES: To the extent any of the
Hypothecated Property is operated by a party or parties other than the Grantor,
the Grantor's covenants as expressed hereunder are modified to require that the
Grantor use its best efforts (including without limitation the reasonable
exercise of all rights and remedies as are
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available to the Grantor) to obtain compliance with such covenants by the
operator or operators of the Hypothecated Property.
7.13 COMPLIANCE WITH LAWS: The Plant complies in all
material respects with all local zoning, land use, setback and other
development, use and occupancy requirements of Governmental Authorities except
for possible nonconforming uses or violations which do not and will not
materially interfere with the present use, operation or maintenance thereof as
now used, operated or maintained.
7.14 PAYMENT OF TAXES, INSURANCE PREMIUMS, ASSESSMENTS;
COMPLIANCE WITH LAWS AND INSURANCE REQUIREMENTS:
7.14.1 Unless contested in accordance with the provisions
of section 7.14.5 hereof, the Grantor shall pay and discharge or cause to be
paid and discharged, from time to time when the same shall become due, all real
estate and other taxes, special assessments, levies, permits, inspection and
license fees, all premiums for insurance, all water and sewer rents and
charges, and all other public charges imposed upon or assessed against the
Hypothecated Property or any part thereof or upon the revenues, rents, issues,
income and profits of the Hypothecated Property, including, without limitation,
those arising in respect of the occupancy, use or possession thereof.
7.14.2 During the continuance of an Event of Default, the
Grantor shall deposit with the Collateral Agent, on the first day of each
month, an amount reasonably estimated by the Grantor to be equal to one-
twelfth (1/12th) of the annual taxes, assessments and other items required to
be discharged by the Grantor under section 7.14.1 and amounts reasonably
estimated by the Grantor to be necessary to maintain the insurance coverages
contemplated in section 7.16 below, which estimates shall not be less than
one-twelfth (1/12th) of the annual taxes, assessments, insurance premiums and
other items required to be discharged by the Grantor during the year
immediately preceding the year during which such Event of Default occurred.
Such amounts shall be held by the Collateral Agent without interest to the
Grantor and applied to the payment of each obligation in respect of which such
amounts were deposited, in such order or priority as the Collateral Agent shall
determine, on or before the date on which such obligation would become
delinquent. If at any time the amounts so deposited by the
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Grantor shall, in the Collateral Agent's judgment, be insufficient (when added
to the instalments anticipated to be paid thereafter) to discharge any of such
obligations when due, the Grantor shall, immediately upon demand, deposit with
the Collateral Agent such additional amounts as may be requested by the
Collateral Agent. Nothing contained in this section 7.14 shall affect any
right or remedy of the Collateral Agent under any provision of this Deed of
Hypothec or of any statute or rule of Law to pay any such amount from its own
funds (provided, however, that the Collateral Agent shall not in any event be
obligated to pay any of such amounts from its own funds) and to add the amount
so paid, together with interest at the Rate of Interest, to the obligations, or
relieve the Grantor of its obligations to make or provide for the payment of
the annual taxes, assessments and other charges required to be discharged by
the Grantor under section 7.14.1. All sums held pursuant to this section 7.14
shall form part of the Hypothecated Property. During the continuance of any
Event of Default, the Collateral Agent may apply all or any part of the sums
held pursuant to this section 7.14 to payment and performance of the
Obligations in accordance with the provisions of the Intercreditor and
Collateral Agency Agreement. The Grantor shall redeposit with the Collateral
Agent an amount equal to all amounts so applied as a condition to the cure, if
any, of such Event of Default, in addition to fulfilment of any other required
conditions.
7.14.3 Unless contested in accordance with the provisions
of section 7.14.5, the Grantor shall timely pay (or obtain a bond in the amount
of) all lawful claims and demands of mechanics, materialmen, labourers,
warehousemen, employees, suppliers, government agencies administering worker's
compensation insurance, old age pensions and social security benefits and all
other claims, judgments, demands or amounts of any nature which, if unpaid or
not bonded, could result in or permit the creation of a Lien (other than a
Permitted Lien) on the Hypothecated Property or any part thereof or the Rents
arising therefrom, or which might result in forfeiture of all or any part of
the Hypothecated Property.
7.14.4 The Grantor shall maintain, or cause to be
maintained, in full force and effect, all permits, certificates, authorizations,
consents, approvals, registrations, filings, licenses, franchises or other
instruments now or hereafter required by any Governmental Authority to operate
or use and occupy the Immovable Property and the Equipment for its intended uses
(collectively, the
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"PERMITS"; each, a "PERMIT"), unless the failure to maintain such Permits would
not individually or in the aggregate have a Material Adverse Effect. Unless
contested in accordance with the provisions of section 7.14.5, the Grantor
shall comply promptly with, or cause prompt compliance with, all requirements
set forth in the Permits and all Governmental Requirements applicable to all or
any part of the Hypothecated Property or the condition, use or occupancy of all
or any part thereof or any recorded deed of restriction, declaration, covenant
running with the land or otherwise, now or hereafter in force unless the
compliance therewith would not individually or in the aggregate have a Material
Adverse Effect. The Grantor shall not initiate or consent to any change in the
zoning, subdivision or any other use classification of the Lands, if such
action could have a material adverse effect on the hypothecs granted under of
this Deed of Hypothec or materially impair the present use and operation of the
Hypothecated Property or materially impair the Collateral Agent's rights or
benefits hereunder, without the prior written consent of the Collateral Agent.
7.14.5 The Grantor may at its own expense contest the
amount or applicability of any of the obligations described in sections 7.14.1,
7.14.3 and 7.14.4 by appropriate legal proceedings, prosecution of which
operates to prevent the collection or enforcement thereof or the sale or
forfeiture of the Hypothecated Property or any part thereof to satisfy such
obligations; provided, however, that:
7.14.5.1 any such contest shall be conducted in good
faith by appropriate legal proceedings promptly instituted and diligently
conducted; and
7.14.5.2 in connection with such contest, the Grantor
shall have made provision for the payment or performance of such contested
obligation on the Grantor's books if and to the extent required by generally
accepted accounting principles then utilized by the Grantor in the preparation
of its financial statements, or shall have deposited with the Collateral Agent
a sum sufficient to pay and discharge such obligation and the Collateral
Agent's estimate of all interest and penalties related thereto.
Notwithstanding the foregoing provisions of this section 7.14.5:
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7.14.5.3 no contest of any such obligations may be
pursued by the Grantor if such contest would expose the Collateral Agent, or
any of the Administrative Agent, the Trustee, the Noteholders or the Lenders to
any possible criminal liability or, unless the Grantor shall have furnished an
Additional Undertaking therefor satisfactory to the Collateral Agent in respect
of any civil liability for failure to comply with such obligations; and
7.14.5.4 if at any time payment or performance of any
obligation contested by the Grantor pursuant to this section 7.14.5 shall
become necessary to prevent the delivery of a tax or similar deed conveying the
Hypothecated Property or any portion thereof because of nonpayment or
nonperformance, the Grantor shall pay or perform the same in sufficient time to
prevent the delivery of such tax or similar deed.
7.14.6 The Grantor shall, not in its use and
occupancy, of the Plant or the Equipment (including, without limitation, in the
making of any Alteration) take any action that would cause the termination,
revocation or denial of any insurance coverage required to be maintained under
this Deed of Hypothec or, that pursuant to written notice from any applicable
insurer, would be the basis for a defense to any claim under any insurance
policy maintained in respect of the Plant or the Equipment and the Grantor
shall otherwise comply in all material respects with the requirements of any
insurer that issues a policy of insurance in respect of the Plant or the
Equipment.
7.14.7 The Grantor shall, promptly upon receipt of
any written notice regarding any failure by the Grantor to pay or discharge any
of the obligations described in section 7.14.1 or 7.14.6, furnish a copy of
such notice to the Collateral Agent. The Grantor shall, promptly upon receipt
of any written notice regarding any failure by the Grantor to pay or discharge
any of the obligations described in section 7.14.3 or 7.14.4, furnish a copy of
such notice to the Collateral Agent, if such failure would have a Material
Adverse Effect.
7.15 CERTAIN TAX LAW CHANGES: In the event of the
passage after the date of this Deed of Hypothec of any Law deducting from the
value of immovable property, for the purpose of taxation, amounts in respect of
any Lien thereon or changing in any way the Laws for the taxation of deeds of
hypothec or debts secured by deeds of
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hypothec for federal, provincial, municipal or local purposes or the manner of
the collection of any such taxes, and imposing a new tax, either directly or
indirectly, on this Deed of Hypothec or the interest of any of the Collateral
Agent, the Administrative Agent, the Trustee, the Lenders and the Noteholders
in any Hypothecated Property (other than income, franchise or similar taxes
imposed on such Person), or in the event that any regulation or regulatory
amendment becoming effective after the date hereof imposes any federal or
provincial or municipal or local tax on interest income received with respect
to any Obligation, the Grantor shall promptly pay the Collateral Agent such
amount or amounts as may be necessary from time to time to pay such tax.
7.16 REQUIRED INSURANCE POLICIES:
7.16.1 The Grantor shall maintain, or cause to be
maintained, as of and from the Closing Date, in full force and effect the
following insurance coverages in respect of the Plant and the Equipment:
7.16.1.1 Physical hazard insurance on an "all risk"
basis covering hazards commonly covered by fire and extended coverage,
lightning, civil commotion, hail, riot, strike, water damage, sprinkler
leakage, collapse and malicious mischief, in an amount equal to the full
replacement cost of the Buildings and all Equipment, with such deductibles as
would be maintained by a prudent operator of property similar in use and
configuration to the Plant and located in the locality where the Plant is
located. "Full replacement cost" means the cost of construction to replace the
Buildings and the Equipment, exclusive of depreciation, excavation, foundation
and footings, as determined from time to time by a proper officer of the
Grantor in consultation with its insurance company or insurance agent, as
appropriate;
7.16.1.2 Comprehensive general liability insurance
against claims for bodily injury, death or property damage occurring on, in or
about the Plant and any adjoining streets, sidewalks and passageways and
covering any and all claims, including, without limitation, all legal
liability, subject to customary exclusions, to the extent insurable, imposed
upon the Collateral Agent or any of the Administrative Agent, Trustee, Lenders
or Noteholders, and all court costs and attorneys' fees, arising out of or
connected with the possession, use, leasing, operation or condition of the
Plant, with policy limits and deductibles in such amounts as would be
maintained by a prudent operator of property similar in use
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and configuration to the Plant and located in the locality where the Plant is
located;
7.16.1.3 Comprehensive boiler and machinery insurance
to cover sudden and accidental breakdown, including but not limited to,
explosion of any boilers and machinery located on the Plant or comprising any
Equipment, with policy limits and deductibles in such amounts as would be
maintained by a prudent operator of property similar in use and configuration
to the Plant and the Equipment and located in the locality where the Plant is
located;
7.16.1.4 Comprehensive automobile liability insurance
policy against claims for bodily injury, death and property damage covering all
owned, leased, non-owned and hired motor vehicles, including loading and
unloading in such amounts as would be maintained by a prudent operator of
property similar in use and configuration to the Plant and the Equipment and
located in the locality where the Plant is located;
7.16.1.5 Business interruption insurance on an annual
basis in amounts not less than the projected gross profit of the Plant during
the applicable twelve-month period but in no event less than the amount
necessary to pay the fixed charges and other expenses of owning, operating and
maintaining the Hypothecated Property for the same period;
7.16.1.6 To the extent not otherwise covered by the
insurance required under sections 7.16.1.1 and 7.16.1.2, during the performance
of any Alterations, renovations, repairs, restorations or construction, broad
form Builders Risk Insurance on an all-risk completed value basis; and
7.16.1.7 Such other insurance, against such risks and
with policy limits and deductibles in such amounts as would be maintained by a
prudent operator of property similar in use and configuration to the Plant and
located in the locality in which the Plant is located.
7.16.2 The Grantor may maintain the coverages
required by this section 7.16 under blanket policies covering the Plant and
other locations owned or operated by the Grantor if the terms of such blanket
policies otherwise comply with the provisions of this section 7.16 and contain
specific coverage allocations in respect of the Plant determined in accordance
with the provisions of this section 7.16. All insurance
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policies in respect of the coverages required by sections 7.16.1.1, 7.16.1.4,
7.16.1.6 and, if applicable, 7.16.1.7 shall be in amounts at least sufficient
to prevent coinsurance liability and all losses thereunder shall be payable to
the Collateral Agent, as loss payee, subject to the terms of the Intercreditor
and Collateral Agency Agreement, pursuant to a standard Canadian Insurance
Bureau standard mortgagee clause for use in the Province of Quebec, or any
equivalent thereof, and each such policy shall, to the extent obtainable at
commercially reasonable costs,
7.16.2.1 include effective waivers (whether under the
terms of such policy or otherwise) by the insurer of all claims for insurance
premiums against all loss payees and named insureds other than the Grantor and
all rights of subrogation against any named insured, and
7.16.2.2 provide that any losses thereunder shall be
payable notwithstanding (i) any act, failure to act, negligence of, or
violation or breach of warranties, declarations or conditions contained in such
policy by the Grantor or the Collateral Agent or any other named insured or
loss payee, (ii) the occupation or use of the Plant or the Equipment for
purposes more hazardous than permitted by the terms of the policy, (iii) any
foreclosure or other proceeding or notice of sale relating to the Plant or the
Equipment, or (iv) any change in the title to or ownership or possession of the
Plant or the Equipment; provided, however, that (with respect to items
contemplated in clauses (iii) and (iv) above) any notice requirements of the
applicable policies are satisfied. All insurance policies in respect of the
coverages required by sections 7.16.1.2, 7.16.1.5 and, if applicable, 7.16.1.7
shall name the Collateral Agent as an additional insured.
7.16.3 Each policy of insurance required under this
section 7.16 shall provide that:
7.16.3.1 notices of any failure by the Grantor to pay
any insurance premium in respect thereof, be furnished to the Collateral Agent
contemporaneously with any such notice given to the Grantor and
7.16.3.2 it may not be cancelled or otherwise
terminated without at least twenty (20) days' prior written notice to the
Collateral Agent and shall permit the Collateral Agent to pay any premium
therefor within twenty (20) days after receipt of any notice stating that such
premium has not been paid when due. The policy or policies of such
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insurance or certificates of insurance evidencing the required coverages and
all renewals or extensions thereof shall be delivered to the Collateral Agent
upon receipt by the Grantor. Settlement of any claim under any of the
insurance policies referred to in this section 7.16 (other than the insurance
contemplated in section 7.16.1.3 which in the Grantor's reasonable judgment
involves loss of $1,000,000 in lawful currency of the United States or more,
shall require the prior approval of the Collateral Agent (acting pursuant to
the provisions of the Intercreditor and Collateral Agency Agreement) and the
Grantor shall use its best efforts to cause each such insurance policy to
contain a provision to such effect.
7.16.4 At least fifteen (15) days prior to the
expiration of any insurance policy required by this section 7.16, the Grantor
shall deliver to the Collateral Agent evidence that such policy or policies
shall be renewed or extended and the Grantor shall deliver promptly to the
Collateral Agent after receipt thereof the policy or policies renewing or
extending such expiring policy or renewal or extension certificates or other
evidence of renewal or extension, together with a receipt showing payment of
the premium thereof.
7.16.5 The Grantor shall not purchase additional
policies in respect of the insurance coverages required to be maintained under
this section 7.16, unless the Collateral Agent is included thereon as an
additional named insured and, if applicable, with loss payable to the
Collateral Agent under an endorsement containing the provisions described in
section 7.16.2 and the policy evidencing such insurance otherwise complies with
the requirements of section 7.16.2. The Grantor immediately shall notify the
Collateral Agent whenever any such separate insurance policy is obtained and
promptly shall deliver to the Collateral Agent the policy or certificate
evidencing such insurance.
7.17 INSPECTION: The Grantor shall permit the
Collateral Agent, by its agents, accountants and attorneys, to visit and
inspect the Hypothecated Property upon reasonable prior notice at such times as
may be reasonably requested by the Collateral Agent.
7.18 THE GRANTOR TO MAINTAIN IMPROVEMENTS: The
Grantor shall not commit any waste on the Plant or with respect to any
Equipment or make any change in the use of the Plant or any Equipment. The
Grantor represents and warrants that:
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7.18.1 to the Grantor's knowledge, the Plant is
served by all electric, gas, sewer, water facilities and any other utilities
required or necessary for the current use thereof and any easements or
servitudes necessary to the furnishing of such utility service by the Grantor
have been obtained and duly recorded, and
7.18.2 the Grantor has access to the Plant from
public roads sufficient to allow the Grantor and its tenants and invitees to
conduct its and their businesses at the Plant as it is currently conducted.
The Grantor shall not materially alter the occupancy or use of the Plant
without the prior written consent of the Collateral Agent. Except as otherwise
permitted by the Intercreditor and Collateral Agency Agreement, no Buildings
comprising a portion of the Plant may be demolished nor shall any Equipment be
removed without the prior written consent of the Collateral Agent.
7.19 LEASES:
7.19.1 All of the Leases are valid and effective in
accordance with their respective terms, except that the enforcement thereof may
be subject to:
7.19.1.1 bankruptcy, insolvency, reorganization,
moratorium or other similar Laws affecting or relating to enforcement of
creditors' rights generally, and
7.19.1.2 general equitable principles.
To the Grantor's knowledge, the Grantor is not in material breach of or in
default (and to the Grantor's knowledge, no event has occurred which with due
notice or lapse of time or both, may constitute such a material breach or
default) under any Lease, and no party to any Lease has given the Grantor
written notice of or made a claim with respect to any breach or default, the
consequences of which, individually or in the aggregate, would have a Material
Adverse Effect on the Grantor.
7.19.2 The Grantor shall manage and operate the
Hypothecated Property or cause the Hypothecated Property to be managed and
operated in a reasonably prudent manner and, except as otherwise permitted
under section 7.20, will not enter into any Lease (or any amendment or
modification thereof) or other agreement subsequent
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to the date hereof with any Person which, in the reasonable judgment of the
Grantor, individually or in the aggregate, would have a Material Adverse Effect
on the value of the property subject thereto.
7.19.3 The Grantor shall not:
7.19.3.1 receive or collect, or permit the receipt or
collection of, any rental or other payments under any Lease more than one (1)
month in advance of the respective period in respect of which they are to
accrue, except that (i) in connection with the execution and delivery of any
Lease or of any amendment to any Lease, rental payments thereunder may be
collected and received in advance in an amount not in excess of one (1) month's
rent and (ii) the Grantor may receive and collect escalation and other charges
in accordance with the terms of each Lease;
7.19.3.2 assign, transfer or hypothecate (other than
to the Collateral Agent hereunder or as otherwise permitted under section 7.20
of this Deed of Hypothec) any rental or other payment under any Lease whether
then due or to accrue in the future, the interest of the Grantor as lessor
under any Lease or the Rents, issues, revenues, profits or other income of the
Hypothecated Property;
7.19.3.3 enter into any Lease after the date hereof
that does not contain terms to the effect as follows:
(i) such Lease and the rights of the tenant thereunder shall
be subject and subordinate to the rights of the Collateral
Agent under this Deed of Hypothec;
(ii) such Lease has been hypothecated by the Grantor, as
landlord thereunder, to the Collateral Agent under this Deed
of Hypothec;
(iii) in the case of any hypothecary recourse hereunder, the
rights and remedies of the tenant in respect of any
obligations of any successor landlord thereunder shall be
limited to the equity interest of such successor landlord in
the Plant and any successor landlord shall not (a) be liable
for any act, omission or default of any prior landlord under
the Lease or (b) be required to make or complete any tenant
improvements or
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capital improvements or repair, restore, rebuild or replace
the demised premises or any part thereof in the event of
damage, casualty or condemnation or (c) be required to pay any
amounts to tenant arising under the Lease prior to such
successor landlord taking possession;
(iv) the tenant's obligation to pay rent and any additional
rent shall not be subject to any abatement, deduction,
counterclaim or setoff as against the Collateral Agent or any
purchaser upon the exercise hereunder of any hypothecary
recourse in respect of any portion of the Plant, and the
Collateral Agent or such purchaser will not be bound by any
advance payments of rent in excess of one month or any
security deposits unless such security was actually received;
and
(v) the tenant agrees to attorn, at the option of the
Collateral Agent or any purchaser of the Plant, to the
successor owner upon the exercise hereunder of any hypothecary
recourse in respect of the Plant or the giving or granting of
a deed in lieu thereof; and
7.19.3.4 terminate or permit the termination of any
Lease of space, accept surrender of all or any portion of the space demised
under any Lease prior to the end of the term thereof or accept assignment of
any Lease to the Grantor which, in the reasonable judgment of the Grantor,
individually or in the aggregate, would have a Material Adverse Effect or
materially impair the hypothecs created under this Deed of Hypothec unless:
(i) the tenant under such Lease has not paid the equivalent
of two months' rent and the Grantor has made reasonable
efforts to collect such rent; or
(ii) the Grantor shall deliver to the Collateral Agent an
officer's certificate to the effect that the Grantor has
entered into a new Lease (or Leases) for the space covered by
the terminated or assigned Lease with a term (or terms) which
expire(s) no earlier than the date on which the terminated or
assigned Lease was to expire (excluding renewal options), and
with a tenant (or tenants) having a creditworthiness (as
reasonably determined by the Grantor) sufficient to pay the
rent and other charges due
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under the new Lease (or Leases), and the tenant(s) shall have
commenced paying rent, including, without limitation, all
operating expenses and other amounts payable under the new
Lease (or Leases), without any abatement or concession, in an
amount at least equal to the amount which would have then been
payable under the terminated or assigned Lease.
7.19.4 The Grantor timely shall perform and observe
all the terms, covenants and conditions required to be performed and observed
by the Grantor under each Lease and will not engage in any conduct in respect
of any Lease which would have individually or in the aggregate a Material
Adverse Effect or materially impair the hypothecs created under this Deed of
Hypothec. The Grantor promptly shall notify the Collateral Agent of the
receipt of any notice from any lessee under any Lease claiming that the Grantor
is in material default in the performance or observance of any of the terms,
covenants or conditions thereof to be performed or observed by the Grantor and
will cause a copy of each such notice to be delivered promptly to the
Collateral Agent.
7.20 TRANSFER RESTRICTIONS: Except as otherwise
permitted by the Intercreditor and Collateral Agency Agreement, the Grantor
shall not, without the prior written consent of the Collateral Agent, further
mortgage, encumber, hypothecate, sell, convey or assign all or any part of the
Hypothecated Property or suffer any of the foregoing to occur by operation of
Law or otherwise (each a "TRANSFER"); provided, however, the Grantor may so
encumber the Hypothecated Property to the extent such encumbrances are of the
kind listed in clause (d) of the definition of "Permitted Liens". Any proceeds
of such permitted Transfer shall be deemed Collateral Proceeds and are hereby
assigned and shall be paid to the Collateral Agent to be held in the Collateral
Account and disbursed pursuant to the Intercreditor and Collateral Agency
Agreement.
7.21 DESTRUCTION; CONDEMNATION:
7.21.1 If there shall occur any damage to, or loss
or destruction of, the Buildings and Equipment, or any part of any thereof
(each, a "DESTRUCTION"), the Grantor shall promptly send to the Collateral
Agent a notice setting forth the nature and extent of such Destruction. The
proceeds of any insurance payable in respect of any such Destruction are hereby
assigned and shall be paid to the Collateral Agent to be held
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in the Collateral Account; provided, however, that so long as no Event of
Default shall have occurred and be continuing, if such proceeds are in an
amount less than $1,000,000 in lawful currency of the United States, such
proceeds shall be paid directly to the Grantor. All insurance proceeds paid to
the Collateral Agent pursuant to this section, less the amount of any expenses
incurred in litigating, arbitrating, compromising or settling any claim arising
out of such Destruction (the "INSURANCE PROCEEDS"), shall constitute Moneys and
be applied in accordance with the provisions of sections 7.21.3, 7.21.4 and
7.21.5.
7.21.2 If there shall occur any taking of the
Hypothecated Property or any part thereof, in or by condemnation or other
eminent domain proceedings pursuant to any Law, general or special, or by
reason of the temporary requisition of the use or occupancy of the Hypothecated
Property or any part thereof, by any Governmental Authority, civil or military
(each, a "TAKING"), the Grantor immediately shall notify the Collateral Agent
upon receiving notice of such Taking or commencement of proceedings therefor.
The Collateral Agent may (but shall not be obligated to) participate in any
proceedings or negotiations which might result in any Taking. The Collateral
Agent may be represented by counsel satisfactory to it at the expense of the
Grantor. The Grantor shall deliver or cause to be delivered to the Collateral
Agent all instruments requested by it to permit such participation. The
Grantor shall in good faith and with due diligence file and prosecute what
would otherwise be the Grantor's claim for any such award or payment and cause
the same to be collected and paid over to the Collateral Agent, and hereby
irrevocably authorizes and empowers the Collateral Agent, in the name of the
Grantor as its true and lawful attorney-in-fact or otherwise, during the
continuance of an Event of Default to collect and to receipt for any such award
or payment, and, in the event the Grantor fails so to act, to file and
prosecute such claim. The Grantor shall pay all costs, fees and expenses
incurred by the Collateral Agent in connection with any Taking and seeking and
obtaining any award or payment on account thereof. Any proceeds, award or
payment in respect of any Taking are hereby assigned and shall be paid to the
Collateral Agent to be held in the Collateral Account; provided, however, that
so long as no Event of Default shall have occurred and be continuing, if such
proceeds are in an amount less than $1,000,000 in lawful currency of the United
States, such proceeds shall be paid directly to the Grantor. The Grantor shall
take all steps necessary to notify the condemning authority of such assignment.
Such proceeds, award or payment paid to the Collateral
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Agent, less the amount of any expenses incurred in litigating, arbitrating,
compromising or settling any claim arising out of such Taking ("NET AWARD"),
shall constitute Moneys and be applied in accordance with the provisions of
sections 7.21.3, 7.21.4 and 7.21.5.
7.21.3 So long as no Event of Default shall have
occurred and be continuing, the Grantor shall have the right, at the Grantor's
option, to perform a restoration (a "RESTORATION") of the affected portions of
the Plant and the Equipment. In the event the Grantor elects to perform a
Restoration, the Grantor shall give written notice ("RESTORATION ELECTION
NOTICE") of such election to the Collateral Agent within twenty (20) business
days after the date that the Collateral Agent receives the applicable Insurance
Proceeds or Net Award, as the case may be. The Grantor shall, within twenty
(20) business days following the date of delivery of a Restoration Election
Notice, commence and diligently continue to perform the Restoration of that
portion or portions of the Plant and Equipment subject to such Destruction or
affected by such Taking so that, upon the completion of the Restoration, the
Hypothecated Property shall be in the same condition and shall be of at least
equal utility for its intended purposes as the Hypothecated Property was
immediately prior to such Destruction or Taking. The Grantor shall so complete
such Restoration with its own funds to the extent that the amount of any Net
Award or Insurance Proceeds is insufficient for such purpose. In the event the
Collateral Agent does not receive a Restoration Election Notice within such
twenty (20) business day period, the Collateral Agent shall deal with such
Insurance Proceeds or Net Award in accordance with the provisions of the
Intercreditor and Collateral Agency Agreement.
7.21.4 In the event a Restoration is to be performed
under this section 7.21.4, the Collateral Agent shall not release any part of
the Net Award or the Insurance Proceeds except in accordance with the
provisions of section 7.21.5 and the Grantor shall, prior to commencing any
work to effect a Restoration of the Plant and the Equipment, promptly (but in
no event later than one-hundred twenty (120) days following any Destruction or
Taking) furnish to the Collateral Agent:
7.21.4.1 complete plans and specifications (the "PLANS
AND SPECIFICATIONS") for the Restoration;
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7.21.4.2 an officers' certificate stating that all
permits and approvals required by Law to commence work in connection with the
Restoration have been obtained;
7.21.4.3 a certificate (an "ARCHITECT'S CERTIFICATE")
of an independent, reputable architect or engineer acceptable to the Collateral
Agent and licensed in the Province of Quebec (i) stating that the Plans and
Specifications have been reviewed and approved by the signatory thereto, (ii)
containing such signatory's estimate (an "ESTIMATE") of the costs of completing
the Restoration, and (iii) upon completion of such Restoration in accordance
with the Plans and Specifications, the utility of the Plant and the Equipment
will be equal to or greater than the utility thereof immediately prior to the
Destruction or Taking relating to such Restoration; and
7.21.4.4 if the Estimate exceeds the Insurance
Proceeds or the Net Award, as the case may be, by $5,000,000 in lawful currency
of the United States or more, an Additional Undertaking in an amount equal to
not less than the Estimate less the amount of the Insurance Proceeds or the Net
Award, as the case may be, then held by the Collateral Agent for application
toward the cost of such Restoration.
Upon receipt by the Collateral Agent of each of the items
required pursuant to sections 7.21.4.1 through 7.21.4.4 above, the Collateral
Agent shall acknowledge receipt of the Plans and Specifications. Promptly upon
such acknowledgment of receipt by the Collateral Agent, the Grantor shall
commence and diligently continue to perform the Restoration substantially in
accordance with such Plans and Specifications and in material compliance with
all Governmental Requirements, free and clear of all Liens except Permitted
Liens. The Grantor shall so complete such Restoration with its own funds to
the extent that the amount of any Net Award or Insurance Proceeds is
insufficient for such purpose.
7.21.5 In the event the Grantor performs a
Restoration of the Plant and Equipment as provided in section 7.21.4, the
Collateral Agent shall apply any Insurance Proceeds or Net Award held by the
Collateral Agent on account of the Destruction or Taking to the payment of the
cost of performing such Restoration pursuant to the relevant provisions of the
Intercreditor and Collateral Agency Agreement. In the event there shall be any
surplus after application of the Net Award or the
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Insurance Proceeds to Restoration of the Plant and the Equipment, such surplus
shall become Net Proceeds, as defined in the Indenture for application in
accordance thereunder; provided, however, that if an Event of Default shall
have occurred and be continuing, such surplus shall be applied by the
Collateral Agent to the payment of the Obligations, in accordance with Article
6 of the Intercreditor and Collateral Agency Agreement. Notwithstanding
anything to the contrary herein, if a Destruction or Taking of all or
substantially all of the Hypothecated Property occurs on a date which is less
than 12 months prior to Maturity, as such term is defined in the Indenture, all
Insurance Proceeds and Net Awards shall be applied to the permanent repayment
or prepayment of any Secured Obligations then outstanding in accordance with
the Intercreditor and Collateral Agency Agreement.
7.22 ALTERATIONS: The Grantor shall not make any
material structural addition, modification or change (each, an "ALTERATION")
to the Plant or the Equipment which would materially diminish the utility of
the Hypothecated Property or impair the hypothecs under this Deed of Hypothec.
Whether or not the Collateral Agent has consented to the making of any
Alteration, the Grantor shall (i) complete each Alteration promptly, in a good
and workmanlike manner and in material compliance with all applicable local
Laws, and (ii) pay when due all claims for labour performed and materials
furnished in connection with such Alteration, unless contested in accordance
with the provisions of section 7.14.5.
7.23 HAZARDOUS MATERIAL:
7.23.1 Except with respect to those matters which
would not reasonably be expected to have a Material Adverse Effect, to the best
knowledge of the Grantor, the Grantor holds all Permits required to permit the
Grantor to conduct its business in the manner now conducted and none of the
Grantor's operations are being conducted in a manner that violates in any
material respect the terms and conditions under which any such Permit was
granted, including without limitation, under any Environmental Laws, except
those permits that are expected to be transferred in the ordinary course after
the date hereof; to the best of the knowledge of the Grantor all such Permits
are valid and in full force and effect; and to the knowledge of the Grantor, no
suspension, cancellation, revocation or termination of any such Permit is
threatened.
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7.23.2 Except as set forth in the Term Loan
Agreement, there are no material claims, actions, suits, proceedings or
investigations pending or to the knowledge of the Grantor, threatened, before
any Governmental Authority or before any arbitrator brought by or against the
Grantor or with respect to any of the Hypothecated Property the basis of which
is any Environmental Law.
7.23.3 The Grantor shall (or shall cause other
parties obligated to do so under or in accordance with contract or indemnity to
the Grantor):
7.23.3.1 take all commercially reasonable actions to
comply with any and all applicable present and future Environmental Laws
relating to the Plant;
7.23.3.2 pay in a timely fashion the cost of any
removal, response measure or corrective action relating to any Hazardous
Materials required by any Environmental Law or any order, regulation, consent
decree or similar agreement or instrument and keep the Hypothecated Property
free of any Lien imposed pursuant to any Environmental Law;
7.23.3.3 take all commercially reasonable actions to
not Release any Hazardous Materials on, under or from the Hypothecated Property
in violation of any Environmental Law;
7.23.3.4 apply any insurance proceeds or other sums
received by it in respect of the removal of any Hazardous Material or any other
corrective action relating to any Hazardous Material to such removal or
corrective action; and
7.23.3.5 not take, or fail to take any action required
under any Environmental Laws or in connection with any Hazardous Materials that
could reasonably be expected to result in the incurrence of any obligation or
liability of any of the Collateral Agent, Administrative Agent, Trustee,
Lenders or Noteholders. During the continuance of an Event of Default, in the
event the Grantor fails to comply with the covenants in the preceding sentence,
the Collateral Agent may (upon receipt of an indemnity satisfactory to the
Collateral Agent), in addition to any other remedies set forth herein, but
shall not be obligated to, as mandatary for and at the Grantor's sole cost and
expense cause to be taken, any
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remediation, removal, response or corrective action relating to Hazardous
Materials that is required by Environmental Law and is not being done or
contested by the Grantor. Any costs or expenses incurred by the Collateral
Agent for such purpose shall be immediately due and payable by the Grantor and
shall bear interest at the Rate of Interest. The Grantor shall provide to the
Collateral Agent and its agents and employees access to the Hypothecated
Property to take any action required by Environmental Laws, or in connection
with any Hazardous Materials, that could be expected to result in the
incurrence of any obligation or liability of any of the Collateral Agent,
Administrative Agent, Trustee, Lenders or Noteholders, if the Grantor fails to
do so and such action or removal is required under any Environmental Laws as
provided above. Upon written request by the Collateral Agent, which shall
include a reasonably specific statement of the basis thereof (which shall be
specific to the condition of the Hypothecated Property and the alleged
violation of Environmental Law) and which shall be made not more frequently
than once in any twelve-month period or at any time that the Collateral Agent
is exercising its remedies under this Deed of Hypothec, the Collateral Agent
shall have the right (upon receipt of an indemnity satisfactory to the
Collateral Agent), but shall not be obligated, at the sole cost and expense of
the Grantor, to conduct an environmental audit or review of the Hypothecated
Property relating to the specific items as required in writing or relating to
the remedy that the Collateral Agent is exercising under this Deed of Hypothec
by persons or firms appointed by the Collateral Agent, and the Grantor shall
cooperate in all reasonable respects in the conduct of such environmental audit
or review, including, without limitation, by providing reasonable access to the
Hypothecated Property and to all records relating thereto. The Grantor shall
indemnify and hold each of the Collateral Agent, Administrative Agent, Trustee,
Lenders and Noteholders harmless from and against all loss, cost, damage or
expense (including, without limitation, attorneys' fees) that any of the
Collateral Agent, Administrative Agent, Trustee, Lenders and Noteholders may
sustain by reason of the assertion against such party of any claim relating to
such Hazardous Materials or actions taken with respect thereto as authorized
hereunder. Nothing contained herein shall result in any of the Collateral
Agent, Administrative Agent, Trustee, Lenders and Noteholders being deemed an
"owner" or "operator" under applicable Environmental Law.
7.23.4 The Grantor may at its own expense contest
the amount or applicability of any of the obligations described in the first
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sentence of section 7.23.3 by appropriate legal proceedings, prosecution of
which operates to prevent the enforcement thereof; provided, however, that:
7.23.4.1 any such contest shall be conducted in good
faith by appropriate legal proceedings promptly instituted and diligently
conducted and
7.23.4.2 in connection with such contest, the Grantor
shall have made provision for the payment or performance of such contested
obligation on the Grantor's books if and to the extent required by generally
accepted accounting principles then utilized by the Grantor in the preparation
of its financial statements, or shall have deposited with the Collateral Agent
a sum sufficient to pay and discharge such obligation and the Collateral
Agent's estimate of all interest and penalties related thereto.
Notwithstanding the foregoing provisions of this section 7.23.4, no contest of
any such obligations may be pursued by the Grantor if such contest would expose
the Collateral Agent, or any of the Administrative Agent, Trustee, Lenders or
Noteholders to any possible criminal liability or, unless the Grantor shall
have furnished an Additional Undertaking therefor satisfactory to the
Collateral Agent or for any civil liability for failure to comply with such
obligations.
7.24 ASBESTOS: The Grantor shall not install nor
permit to be installed in the Hypothecated Property friable asbestos or any
asbestos-containing material (collectively, "ACM") except in compliance with
all applicable Environmental Laws respecting such material. With respect to
any ACM currently present in the Hypothecated Property, except with respect to
matters which would not have a Material Adverse Effect, the Grantor shall
comply with all Laws applicable to ACM located on the Plant, all at the
Grantor's sole cost and expense. If the Grantor shall fail so to comply with
such Laws, the Collateral Agent may (upon receipt of an indemnity satisfactory
to the Collateral Agent) during the continuance of an Event of Default, but
shall not be obligated to, in addition to any other remedies set forth herein,
take those steps reasonably necessary to comply with applicable Laws. Any
costs or expenses incurred by the Collateral Agent for such purpose shall be
immediately due and payable by the Grantor and bear interest at the Rate of
Interest. The Grantor shall provide to the Collateral Agent and its agents and
employees reasonable access to the Hypothecated Property upon reasonable prior
notice to remove such ACM if the Grantor fails to do so and removal is required
under any Environmental Law as provided
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for above; provided, however, that nothing contained herein shall obligate the
Collateral Agent to exercise any rights under such access. The Grantor shall
indemnify and hold each of the Collateral Agent, Administrative Agent, Trustee,
Lenders and Noteholders harmless from and against all loss, cost, damage and
expense that any of the Collateral Agent, Administrative Agent, Trustee,
Lenders and Noteholders may sustain as a result of the presence of any ACM and
any removal thereof in compliance with any applicable Environmental Law.
7.25 BOOKS AND RECORDS; REPORTS: The Grantor
shall keep proper books of record and account, which shall accurately represent
the financial condition of the Grantor and the business affairs of the Grantor
relating to the Hypothecated Property. The Collateral Agent and its authorized
representatives shall have the right, from time to time, upon reasonable prior
notice to examine the books and records of the Grantor relating to the
operation of the Hypothecated Property at the office of the Grantor.
7.26 NO CLAIMS AGAINST THE COLLATERAL AGENT:
Nothing contained in this Deed of Hypothec shall constitute any consent or
request by the Collateral Agent, express or implied, for the performance of any
labour or services or the furnishing of any materials or other property in
respect of the Plant or any part thereof, nor as giving the Grantor any right,
power or authority to contract for or permit the performance of any labour or
services or the furnishing of any materials or other property in such fashion
as would permit the making of any claim against the Collateral Agent in respect
thereof or any claim that any Lien based on the performance of such labour or
services or the furnishing of any such materials or other property is ranked in
priority to the hypothecs under this Deed of Hypothec.
7.27 UTILITY SERVICES: The Grantor shall pay, or
cause to be paid, when due all charges for all public or private utility
services, all public or private rail and highway services, all public or
private communication services, all sprinkler systems, and all protective
services, any other services of whatever kind or nature at any time rendered to
or in connection with the Plant or any part thereof, shall comply in all
material respects with all contracts relating to any such services, and shall
do all other things reasonably required for the maintenance and continuance of
all such services to the extent required to fulfil the obligations set forth in
section 7.18.
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8. DEFAULT:
8.1 EVENTS OF DEFAULT: Each and every one of the
following events shall constitute an Event of Default under this Deed:
8.1.1 an Event of Default as defined in the Term
Loan Agreement;
8.1.2 an Event of Default as defined in the
Indenture; or
8.1.3 if any representation or warranty of the
Grantor made hereunder is or shall be incorrect when made in any material
respect;
8.1.4 if the Grantor shall default in the due
performance and observance of any of the Hypothec Obligations;
8.1.5 the publication of any prior notice of the
exercise of a hypothecary recourse, or a notice of crystallization as required
by the Civil Code of Quebec with respect to the Hypothecated Property or any
part thereof, unless same is being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted, and provided there is
no immediate danger that such Hypothecated Property be taken in payment, be
taken for purposes of administration or be sold.
9. EFFECTS OF DEFAULT:
9.1 RIGHTS UPON DEFAULT: Upon the occurrence of
an Event of Default, the security hereby constituted shall become enforceable
and the Collateral Agent shall, in addition to any of its other rights,
forthwith be entitled to exercise any and all of the rights provided for in
this Deed and in Chapter V of Title III of Book VI of the Civil Code of Quebec
and in the Code of Civil Procedure of Quebec. In exercising any of the rights
and recourses available hereunder or at Law, the Collateral Agent may, at its
option, in respect of all or any part of the Hypothecated Property, exercise
such rights and recourses as are available hereunder or at Law, as it chooses
to exercise, without prejudicing the Collateral Agent's other rights and
recourses available in respect of all or part of the other Hypothecated
Property. Furthermore, the Collateral Agent may exercise any of its rights and
recourses in
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respect of all or any part of the Hypothecated Property, simultaneously or
successively. The Collateral Agent shall be entitled to acquire all or any
part of the Hypothecated Property, when permitted by Law.
9.2 PERFORMANCE: The Collateral Agent shall be
entitled, in its discretion, to perform on behalf of the Grantor any of the
Grantor's obligations hereunder, should there be an Event of Default which has
occurred and is continuing with respect thereto. In addition, the Collateral
Agent shall be entitled to do such things and make such reasonable expenditures
as it considers appropriate to enforce, preserve and protect its rights and
interests hereunder and the security constituted hereby.
9.3 NO WAIVER: Any action taken by or on behalf
of the Collateral Agent to remedy any Event of Default shall not constitute a
waiver of such default, nor be deemed to have relieved the Grantor therefrom.
Failure of the Collateral Agent to insist upon strict performance of any
covenants of this Deed or to exercise any right or option hereunder shall not
be construed as a waiver or relinquishment for the future of any such covenant,
right or option.
9.4 RIGHTS CUMULATIVE: The acceptance by the
Collateral Agent following the occurrence of any Event of Default or the
exercise by the Collateral Agent of any right or recourse hereunder or under
any other agreement between the Grantor and the Collateral Agent shall not
preclude the Collateral Agent from exercising any other right or recourse, all
rights and recourses of the Collateral Agent being cumulative and not
alternative.
9.5 SURRENDER: If the Collateral Agent gives the
Grantor a prior notice of its intention to exercise a hypothecary right, the
Grantor shall, and shall cause any other Person in possession of the
Hypothecated Property, to immediately voluntarily surrender same to the
Collateral Agent.
10. POSSESSION FOR PURPOSES OF ADMINISTRATION:
10.1 COLLATERAL AGENT'S RIGHTS: In addition to
the rights available to the Collateral Agent under the Bond and the rights and
recourses upon default described in Article 9 hereof, in the event that the
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Collateral Agent exercises the hypothecary right to take possession for
purposes of administration, the Collateral Agent shall have, in addition to the
rights and powers provided by Law as administrator entrusted with full
administration of the property of others, the rights and powers contained in
this Article 10.
10.2 ADMINISTRATION: The Collateral Agent shall
have the right, after having fulfilled all formalities provided for at Law for
the exercise of its hypothecary right of taking possession for purposes of
administration, to enter into and take possession of, through its officers,
representatives, Receivers or other lawful attorney, all or any part of each of
the Hypothecated Property, with full power of a Person entrusted with full
administration of the property of others including the full power to administer
all or any part of each of the Hypothecated Property, with the full power to
(i) manage, operate, repair, alter, preserve, maintain or extend all or any
part of the Hypothecated Property, including, without limitation, the full
power to make any improvements or additions to the Hypothecated Property, or
any part thereof, as the Collateral Agent shall deem desirable or necessary
(provided that the Collateral Agent shall not be under any obligation to take
any action of any nature in connection with the Hypothecated Property or any
part thereof) and in connection therewith the power to enter into any contracts
or other agreements in respect of all or any part of the Hypothecated Property
in the name of and for the account of the Grantor, the Grantor expressly
authorizing the Collateral Agent to execute any and all such contracts or
agreements for, in the name of and on behalf of the Grantor, and the power to
cancel any contracts entered into by the Grantor or by the Collateral Agent on
its behalf and the power to renew any such contracts, in each case for such
term and subject to such provisions as the Collateral Agent shall deem
advisable or expedient, and (ii) the power to exercise all rights of the
Grantor in connection with the Hypothecated Property, including without
limitation, all rights and recourses available to the Grantor in connection
with any contracts or agreements relating to the Hypothecated Property, the
full power to institute proceedings against any Person in connection therewith
and generally the full right, power and authority to carry on the business of
the Grantor in connection with the Hypothecated Property in the place and stead
of the Grantor. Furthermore, the Collateral Agent may, at its option, advance
its own moneys (and any such advance shall bear interest at the Rate of
Interest) for the payment of Taxes, wages and other charges or hypothecs, costs
or expenses ranking in priority to the Obligations or the security hereof and
other current operating expenses
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incurred before or after such taking of possession, or for any other purpose
which the Collateral Agent deems necessary or advisable, but the Collateral
Agent shall not in any event be obliged to advance any such moneys and shall
have no liability to the Grantor or any other Person in the event that it shall
elect not to do so. Moneys so advanced shall be repaid by the Grantor on
demand and until repaid, shall bear interest at the Rate of Interest and be
secured by the hypothecs constituted hereby. The Collateral Agent may borrow
money in connection with the business and affairs of the Grantor in connection
with the Hypothecated Property, in the name of and on behalf of the Grantor,
and may, in the name of and on behalf of the Grantor, grant security over all
or any part of the Hypothecated Property to secure the repayment of such money
or any other obligations undertaken by the Collateral Agent pursuant hereto in
connection with the Hypothecated Property.
10.3 SURRENDER: If the Collateral Agent exercises
its hypothecary right of taking possession for the purpose of administration,
the Grantor hereby binds and obliges itself to yield up possession of and
surrender the Hypothecated Property to the Collateral Agent on demand and
agrees to put no obstacles and not to hinder the rights and recourses of the
Collateral Agent, but to facilitate by all legal means, the actions of the
Collateral Agent hereunder and not to interfere with the powers hereby granted
to the Collateral Agent pursuant to this Deed and at Law.
10.4 DOCUMENTS: If an Event of Default occurs and
is continuing, the Grantor shall forthwith by and through its officers and
directors execute such documents and transfers as may be necessary to place the
Collateral Agent in legal possession of any or all of the Hypothecated Property
in order to transfer the control of the administration to the Collateral Agent
and thereupon all the powers, functions, rights and privileges of each and
every of the directors and officers of the Grantor shall cease and determine
with respect to such Hypothecated Property unless specifically continued in
writing by the Collateral Agent for specific purposes.
11. SALE BY COLLATERAL AGENT:
11.1 SALE: The Grantor agrees that with respect
to any sale by the Collateral Agent of all or any part of the Hypothecated
Property in the exercise of the Collateral Agent's rights hereunder or at
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Law upon the occurrence of an Event of Default which is continuing, it will be
commercially reasonable to sell all or any part of the Hypothecated Property:
11.1.1 together or separately;
11.1.2 by auction or by call for tenders by
advertising such sale or call for tenders once in a local daily newspaper of
the Collateral Agent's choice at least seven (7) days prior to such sale or
close of call for tenders;
11.1.3 by sale by agreement after receipt by the
Collateral Agent of a bona fide offer from at least one prospective purchaser,
who may include a Person related to or affiliated with the Collateral Agent or
customers of the Collateral Agent; and
11.1.4 by any combination of the foregoing;
and any such sale may be on such terms as to credit or otherwise and as to
upset price or reserve bid or price as the Collateral Agent in its sole
discretion may deem advantageous, and the Grantor agrees that the price
received at any such sale shall constitute a commercially reasonable price.
11.2 OTHER SALES: The foregoing shall not
preclude the Collateral Agent from agreeing to sell, or making any sale in any
other manner not prohibited by Law nor shall it be interpreted to mean that
only a sale made in conformity with the foregoing is commercially reasonable or
that only the price received at a sale made in conformity with the foregoing
shall constitute a commercially reasonable price.
11.3 TIMING OF SALE: The Collateral Agent may at
its entire discretion, determine the appropriate moment for such sale to be
conducted and the Grantor acknowledges and agrees that such determination by
the Collateral Agent will not constitute unnecessary delay.
12. APPLICATION OF MONEYS: All amounts collected by the
Collateral Agent (or collected by the Grantor as agent for the Collateral
Agent) in enforcing the rights under this Deed and all sums received by
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the Collateral Agent arising from the possession and administration of or from
the sale or other realization (except by way of taking in payment) of all or
any part of the Hypothecated Property, including Claims and Immovable Claims,
shall be applied by the Collateral Agent, to the extent permitted by applicable
Law, in accordance with the provisions of the Intercreditor and Collateral
Agency Agreement, the Term Loan Agreement or the Indenture in respect of the
application of moneys.
13. APPLICATION NOT PAYMENT: Notwithstanding any Law, agreement,
usage or custom to the contrary, including Article 2743 of the Civil Code of
Quebec, receipt by the Collateral Agent (or by the Grantor as agent for the
Collateral Agent) of any Claims, Rents or Immovable Claims shall not operate as
payment of any Obligations unless the Collateral Agent expressly applies the
amounts so received in reduction of such Obligations in accordance with this
Deed and to the extent only of such application.
14. APPOINTED ATTORNEY OF THE GRANTOR: The Grantor hereby
irrevocably nominates, constitutes and appoints the Collateral Agent and any
Person further designated by the Collateral Agent, upon the occurrence of an
Event of Default which is continuing, to be the lawful attorney-in-fact and
mandatary of the Grantor for and in the name and on behalf of the Grantor to
execute and do any deeds, documents, transfers, demands, conveyances,
assignments, assurances, consents and things which the Grantor ought to sign,
execute or do hereunder and to commence, continue and defend any proceedings
authorized to be taken hereunder and generally to use the name of the Grantor
in the exercise of all or any of the powers hereby conferred on the Collateral
Agent and any agent appointed hereunder.
15. REMEDIES CUMULATIVE: No remedy, right or recourse of the
Collateral Agent conferred or reserved hereunder is intended to be exclusive of
any other remedy, right or recourse under this Deed, under any other security
or at Law, but each and every such remedy shall be cumulative, and shall be in
addition to every other remedy, right or recourse given hereunder or now
existing or hereafter to exist by contract or by Law. The exercise by the
Collateral Agent of any right, remedy or recourse available to it pursuant to
this Deed or at Law shall not
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preclude the Collateral Agent from exercising any other right, remedy or
recourse at any time or from time to time.
16. JUDGMENT FOR AMOUNTS REMAINING DUE: In the case of any
judicial or other proceedings to enforce the security hereby constituted, and
without limiting any right of the Collateral Agent to obtain judgment for any
greater amount, judgment may be rendered against the Grantor in favour of the
Collateral Agent for any amount which may remain due in respect of the
Obligations after the application to the payment thereof of the proceeds of any
sale of all or part of each of the Hypothecated Property or any or all of them
or any additional security therefor.
17. PAYMENTS TO THIRD PARTIES: If the Collateral Agent is at any
time or from time to time required to make a payment pursuant to this Deed, any
such payment or payments, and all costs of the Collateral Agent (including
legal costs and legal fees) shall be at once payable by the Grantor and shall
bear interest at the Rate of Interest, and the repayment thereof to the
Collateral Agent shall be secured hereby.
18. OTHER PROVISIONS CONCERNING THE
COLLATERAL AGENT: By way of supplement to the provisions of
any applicable Laws and without limiting any provisions of this Deed dealing
with the same subject matters, the Grantor agrees that upon the occurrence of
an Event of Default which is continuing:
18.1 The Collateral Agent and any agent or
Receiver appointed by it shall, as regards all the powers, authorities and
discretions vested in them have absolute and uncontrolled discretion as to the
exercise thereof, whether in relation to the manner or as to the mode and time
for the exercise thereof;
18.2 Neither the Collateral Agent nor any agent or
Receiver appointed by it shall be responsible or liable, otherwise than for any
debts contracted by them, for damages to persons or property, or for salaries
or non-fulfilment of contracts during any period during which the Collateral
Agent or such agent or Receiver shall manage the Hypothecated Property or any
part thereof upon or after entry as herein
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provided and the Collateral Agent shall not be bound to do, observe or perform
or to see to the observance or performance by the Grantor of any of the
Grantor's obligations pursuant to this Deed or to other Persons, nor in any
other way to supervise or intervene in the conduct of the Grantor's operation
of any of the Hypothecated Property (or any portion thereof or any asset or
right comprised therein);
18.3 In the event of any sale in accordance with
the provisions of this Deed, whether by the Collateral Agent, by any agent or
Receiver or under judicial proceedings, the Grantor shall execute and deliver
to the purchaser on demand any instrument or assurance reasonably necessary to
confirm to the purchaser the title of the property so sold and, in the case of
any such sale, the Collateral Agent is hereby irrevocably authorized by the
Grantor to execute on its behalf any such confirmatory instrument or assurance;
18.4 No Person dealing with the Collateral Agent
or its agents or any Receiver shall be concerned to inquire whether the powers
which the Collateral Agent or such agents or Receiver are purporting to
exercise have become exercisable, or whether any money remains due on the
security of this Deed, or as to the necessity or expediency of the stipulations
and conditions subject to which any sale shall be made, or otherwise as to the
propriety or regularity of any sale or of any other dealing by the Collateral
Agent or such agents or Receiver with the Hypothecated Property or to see to
the application of any money paid to the Collateral Agent or such agents or
Receiver. In the absence of fraud on the part of such Person, such dealings
shall be deemed, insofar as regards the safety and protection of such Person,
to be within the powers hereby conferred and to be valid and effectual
accordingly;
18.5 Subject to applicable Laws, no delay or
omission of the Collateral Agent to exercise any right or power accruing upon
any Event of Default shall impair such right or power, or shall be construed to
be a waiver of any such Event of Default or an acquiescence therein and every
power and remedy given hereby to the Collateral Agent may be exercised by it
from time to time and as often as may be deemed expedient by it.
18.6 The Collateral Agent may invest any Person
with the powers vested in the Collateral Agent pursuant to this Deed or at Law,
or appoint any Person to perform the powers vested in the Collateral
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Agent pursuant to this Deed and at Law for and on behalf of the Grantor, in
which case the following provisions shall apply:
18.6.1 every such Person shall be the irrevocable
mandatary of the Grantor for the collection of all Claims or other sums falling
due in respect of all or any part of each of the Hypothecated Property or any
or all of them;
18.6.2 every such Person shall have the power to
carry on the enterprise of the Grantor, in whole or in part, with respect to
all or any part of each of the Hypothecated Property or any or all of them, and
may, in the discretion of the Collateral Agent, be vested with all or any of
the powers and discretion of the Collateral Agent hereunder;
18.6.3 the Collateral Agent may from time to time
determine the reasonable remuneration of every such Person who shall be
entitled to deduct the same out of the receipts from any part of each of the
Hypothecated Property or any or all of them or the proceeds therefrom;
18.6.4 every such Person shall, as concerns the
responsibility for his acts or omissions, be deemed the agent, or mandatary, or
attorney of, or employed or engaged by the Grantor and in no event an agent or
employee of the Collateral Agent;
18.6.5 the engagement or appointment of every such
Person by the Collateral Agent shall not create any liability on the part of
the Collateral Agent to such Person in any respect and such engagement,
appointment or delegation or anything which may be done by any such Person or
the removal of any Person or the termination of any such appointment or
engagement shall not have the effect of creating any liability of any nature
whatsoever of any such Person towards the Collateral Agent;
18.6.6 every such Person shall from time to time
have the power to operate, in accordance with normal practice, all or any part
of each of the Hypothecated Property or any or all of them, cancel any
contracts and renew from time to time any or all of the contracts, for such
term and subject to such provisions as such Person may deem advisable or
expedient including exercising all rights and recourses available to the
Grantor and in so doing every such Person shall act as
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the attorney, or mandatary, or agent of the Grantor and shall have the
authority to execute, whether or not under seal, any contract in the name of
and on behalf of the Grantor and the Grantor undertakes to and does hereby
ratify and confirm whatever any such Person may do;
18.6.7 every such Person shall have full power to
manage, operate, repair, alter, complete, preserve, maintain or extend all or
any part of each of the Hypothecated Property or any or all of them in the name
of the Grantor for the purpose of securing the payment of the Obligations,
including taking all such steps as the Collateral Agent may consider necessary
or desirable for the purposes of completing all or any part of each of the
Hypothecated Property or any or all of them, or any improvements or additions
thereto as the Collateral Agent may determine and for such purposes to enter
into all such contracts and undertake all such obligations as the Collateral
Agent may determine, and obtain security therefor upon the Hypothecated
Property; provided that the Collateral Agent shall not be under any obligation
to complete any Buildings or any additions or improvements thereto.
19. POWER TO INSTITUTE SUITS: The Collateral Agent shall have
power to institute and maintain such suits and proceedings as it may be deemed
necessary or expedient to prevent any impairment of the security hereunder by
any acts of the Grantor, or of others, in violation of this Deed or unlawful,
or as the Collateral Agent may deem necessary or expedient to preserve and to
protect its interests in respect of all or any part of the Hypothecated
Property.
20. OTHER SECURITY: In the event that the Collateral Agent for
its own account and for the account of the Trustee, the Administrative Agent,
the Noteholders and the Lenders, or any Noteholder or Lender holds any security
on account of the Obligations, or any part thereof, in addition to the
hypothecs constituted hereunder, no single or partial exercise by the
Collateral Agent for its own account or for the account of the Trustee, the
Administrative Agent, the Noteholders or the Lenders, or by the Noteholders or
the Lenders (or any of them), of any of their respective remedies under this
Deed or under any such additional security shall preclude any other and further
exercise of any other right, power or remedy pursuant to this Deed or pursuant
to any of such additional security. The Collateral Agent for its own
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account and for the account of the Trustee, the Administrative Agent, the
Noteholders and the Lenders, shall at all times have the right to proceed
against all or any portion of each of the Hypothecated Properties or such
additional security in such order and in such manner as it shall in its
discretion deem fit without waiving any rights which the Collateral Agent for
its own account and for the account of the Trustee, the Administrative Agent,
the Noteholders and the Lenders, may have pursuant to this Deed, any such
additional security, or in Law or in equity or otherwise. Without limiting the
generality of the foregoing, the Grantor hereby acknowledges and agrees that
the hypothecs granted hereunder are given in addition to and not in
substitution for any other security given by the Grantor or PAI in connection
with the Obligations.
21. DISCHARGE: After the Obligations and the Accessories have
been paid in full, the Collateral Agent shall, at the written request and
expense of the Grantor, cancel and discharge the charges of this Deed, relating
to the Hypothecated Property or otherwise, and execute and deliver to the
Grantor such deeds or other instruments as shall be requisite to effect the
cancellation of the publication hereof.
The registrar of any registration division in which any
properties affected by this Deed are situate shall discharge and cancel the
publication of any hypothec constituted hereby upon the publication of any
acquittance, discharge, release, main-levee or document to that effect signed
by the Collateral Agent, without being obliged to see that any of the
conditions of this Deed or the Bond have been fulfilled.
22. COMMUNICATIONS: All communications provided for or permitted
hereunder shall be given and any demand to any of the Parties shall be made in
accordance with the notice provisions of the Intercreditor and Collateral
Agency Agreement.
23. SCHEDULES
23.1 FIRST SCHEDULE: This is the First Schedule
referred to in this Deed:
An immovable property composed of the following:
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FACTORY:
An immovable property known and designated as being composed
of the following lots:
a) resubdivision ONE of subdivision ONE of original lot
EIGHT HUNDRED AND SEVENTY-NINE (879-1-1) of the
Official Cadastre of the Parish of
Saint-Edouard-de-Gentilly, Registration Division of
Nicolet;
b) subdivision SEVENTEEN of original lot EIGHT HUNDRED
AND SEVENTY-NINE (879-17) of the Official Cadastre of
the Parish of Saint-Edouard-de-Gentilly, Registration
Division of Nicolet;
c) subdivision THIRTY-FOUR of original lot SEVEN HUNDRED
AND EIGHT (708-34) of the Official Cadastre of the
Parish of Notre-Dame-de-la-Nativite-de-Becancour,
Registration Division of Nicolet;
d) subdivision ONE HUNDRED AND EIGHTEEN of original lot
SEVEN HUNDRED AND EIGHT (708-118) of the Official
Cadastre of the Parish of
Notre-Dame-de-la-Nativite-de-Becancour, Registration
Division of Nicolet;
With all the buildings, constructions and accessories thereon
erected, including the building bearing civic number 675
Alphonse Deshaies Boulevard, Town of Becancour, Province of
Quebec, G0X 1B0.
As the said immovable property now subsists, with all its
rights, members and appurtenances, without exception or
reserve of any kind.
With and subject to all active and passive, apparent or non
apparent servitudes attached thereto.
The said immovable property is shown on a plan prepared by Mr.
Gaston Lemay, Quebec Land Surveyor, dated October 14,
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1997, bearing his minute number 2812 (his file number
4-14614-C-1).
WASTE BURYING SITE:
A waste burying site known and designated as being composed of
the following lots, namely:
a) Subdivision ONE of original lot TWO HUNDRED AND
THIRTY-THREE (233-1) of the Official Cadastre of the
Parish of Notre-Dame-de-la-Nativite-de-Becancour,
Registration Division of Nicolet;
b) Subdivision ONE of original lot TWO HUNDRED AND
THIRTY-FIVE (235-1) of the Official Cadastre of the
Parish of Notre-Dame-de-la-Nativite-de-Becancour,
Registration Division of Nicolet;
c) Subdivision ONE of original lot TWO HUNDRED AND
SEVENTY-EIGHT (278-1) of the Official Cadastre of the
Parish of Notre-Dame-de-la-Nativite-de-Becancour,
Registration Division of Nicolet;
d) Original lot SEVEN HUNDRED AND TWENTY-EIGHT (728) of
the Official Cadastre of the Parish of
Notre-Dame-de-la-Nativite-de-Becancour, Registration
Division of Nicolet.
With all the buildings, constructions and accessories thereon
erected, including the building bearing civic number 6005 Du
Chemin de Fer Street, Town of Becancour, Province of Quebec,
GOX 1B0.
As the said immovable property now subsists, with all its
rights, members and appurtenances, without exception or
reserve of any kind.
With and subject to all active and passive, apparent or non
apparent servitudes attached thereto.
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The said immovable property is shown on a plan prepared by Mr.
Gaston Lemay, Quebec Land Surveyor, dated October 14, 1997,
bearing his minute number 2811 (his file number 4-14614-C-2).
VACANT LAND:
An emplacement being a vacant land situated in the Town of
Becancour, known and designated as being composed of the
following lots, namely:
a) Subdivision ONE of original lot TWO HUNDRED AND FORTY
(240-1) of the Official Cadastre of the Parish of
Notre-Dame-de-la-Nativite-de-Becancour, Registration
Division of Nicolet; and
b) Subdivision TWO of original lot TWO HUNDRED AND
FORTY-ONE (241-2) of the Official Cadastre of the
Parish of Notre-Dame-de-la-Nativite-de-Becancour,
Registration Division of Nicolet;
As the said immovable property now subsists, with all its
rights, members and appurtenances, without exception or
reserve of any kind.
With and subject to all active and passive, apparent or non
apparent servitudes attached thereto.
The said immovable property is shown on a plan prepared by Mr.
Gaston Lemay, Quebec Land Surveyor, dated October 14, 1997,
bearing his minute number 2810 (his file number 4-14614-C-3).
24. INTERPRETATION AND MISCELLANEOUS
24.1 CURRENCY: All dollar amounts expressed
herein are expressed as being lawful money of Canada except as otherwise
specifically expressed herein.
<PAGE> 58
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24.2 HEADINGS: The headings of all the Articles
hereof are inserted for convenience of reference only and shall not affect the
construction or interpretation of this Deed.
24.3 GOVERNING LAW: This Deed shall be deemed to
be made under and governed by the Laws of the Province of Quebec and the rights
and obligations of the Parties contemplated hereunder shall be interpreted in
accordance with the Laws of the Province of Quebec. The Grantor hereby
irrevocably attorns to the jurisdiction of the Courts of Quebec.
24.4 INTERPRETATION: All references in this Deed
to designated "Articles", "sections" and other subdivisions or Schedules are to
the designated Articles, sections and other subdivisions or Schedules of or
attached to this Deed.
24.5 GENDER: The singular of any term includes
the plural, and vice versa; the use of any term is generally applicable to any
gender and where applicable, a body corporate; the word "or" is not exclusive;
and the word "including" is not limiting (whether or not non limiting language,
such as "without limitation" or "but not limited to" or words of similar
import, is used with reference thereto).
24.6 TIME OF ESSENCE: Time is in all respects of
the essence of this Deed. In addition to any other circumstances where the
Grantor has been put in default by operation of Law, the occurrence of an Event
of Default as provided hereunder shall constitute the Grantor in default
without any further requirement of notification or demand (other than as
specifically contemplated hereunder).
24.7 SEVERABILITY: If any covenant or condition
in this Deed or any provision or part thereof shall be invalid or void for any
reason, it shall be severed from the remainder of the provisions hereof and
such remainder shall remain in full force and effect notwithstanding such
severance.
24.8 SUCCESSOR: This Deed shall enure to the
benefit of and be binding upon the Grantor, the Collateral Agent and their
respective successors and assigns.
<PAGE> 59
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24.9 ASSIGNMENT: The Collateral Agent, and any
assignee of the Collateral Agent, may at any time, and from time to time,
assign in whole or in part, their right, title and interest under this Deed,
including, without limitation, the security created hereunder.
24.10 CONFLICT: If any term, condition or
provision of this Deed is inconsistent or in conflict with any term, condition
or provision of the Term Loan Agreement or the Indenture, as the case may be,
the relevant term, condition or provision of the Term Loan Agreement or the
Indenture, as the case may be, shall govern and prevail and this Deed shall be
deemed to be amended to the extent necessary to eliminate such conflict or
inconsistency save and except in respect of the provisions of this Deed which
relate to the creation and enforcement of the hypothecs hereby constituted,
which provisions shall govern and prevail over the provisions of the Term Loan
Agreement or the Indenture, as the case may be.
24.11 LANGUAGE: The Parties have required that
this Deed and all related documents be in English; les parties ont exige que
cet acte ainsi que tous documents s'y rapportant soient rediges en anglais.
WHEREOF ACT, done and passed at the City of Montreal on the date
aforesaid, and remains of record in the office of the undersigned Notary under
his minute number Two thousand nine hundred and fifty-four (2,954).
The representatives of the parties declared to the Notary to
have taken cognizance of the present deed and to have exempted him from
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reading same, following which the representatives of the parties signed in the
presence of the Notary and as follows:
PCI CHEMICALS CANADA INC./
PRODUITS CHIMIQUES PCI CANADA
INC.
Per: /s/ Robert C. Williams
-------------------------
UNITED STATES TRUST COMPANY OF
NEW YORK
Per: /s/ Rita De Santis
-------------------------
-----------------------------
Kevin Leonard, Notary
<PAGE> 1
EXHIBIT 4.3
AFFILIATE SECURITY AGREEMENT
This AFFILIATE SECURITY AGREEMENT (as amended, supplemented, amended
and restated or otherwise modified from time to time, this "Security
Agreement"), dated as of October 30, 1997, is made by each Affiliate (as
defined in the Term Loan Agreement referred to below) of the Borrower (as
defined below) a signatory hereto (each, individually, a "Grantor", and
collectively, the "Grantors"), in favor of UNITED STATES TRUST COMPANY OF NEW
YORK, as collateral agent (together with any successor(s) thereto in such
capacity, the "Collateral Agent") under the Intercreditor Agreement (as defined
below) for each of the Secured Parties (as defined below).
W I T N E S S E T H :
WHEREAS, pursuant to a Term Loan Agreement, dated as of the date
hereof (as amended, supplemented, amended and restated or otherwise modified
from time to time, the "Term Loan Agreement"), among Pioneer Americas, Inc., a
corporation organized under the laws of Delaware (the "Borrower"), the Parent
Guarantor named therein, the various financial institutions as are, or may from
time to time become, parties thereto (each, individually, a "Term Loan Lender",
and collectively, the "Term Loan Lenders"), DLJ Capital Funding, Inc., as
Syndication Agent for the Term Loan Lenders, Salomon Brothers Holding Company
Inc, as Documentation Agent for the Term Loan Lenders, Bank of America National
Trust and Savings Association, as Administrative Agent for the Term Loan
Lenders (the Syndication Agent, the Documentation Agent and the Administrative
Agent are hereinafter collectively referred to as the "Term Loan Agents"), and
the Collateral Agent, the Term Loan Lenders have extended Term Loan Commitments
to make Term Loans to the Borrower, which Term Loans will be evidenced by notes
(as amended, supplemented, amended and restated, or otherwise modified from
time to time, including all notes issued in exchange or substitution therefor,
the "Term Loan Notes") in an aggregate principal amount of $100,000,000;
WHEREAS, pursuant to that certain Indenture, dated as of the date
hereof (as amended, supplemented, amended and restated, or otherwise modified
from time to time, the "Senior Secured Note Indenture"), among PCI Chemicals
Canada Inc., a corporation organized under the laws of the Province of New
Brunswick ("PCICC"), the Affiliate Guarantors (as defined therein) and United
States Trust Company of New York, as trustee (in such capacity, the "Trustee")
for the holders of the Notes (as defined therein) (the "Holders"), PCICC will
issue its 9 1/4% Senior Secured Notes due 2007 (as amended, supplemented,
amended and restated, or otherwise modified from time to time, including all
notes issued in exchange or substitution therefor upon the registration of such
notes pursuant to the Securities Act of 1933 or otherwise, the "Senior Secured
Notes") in an aggregate principal amount of $175,000,000;
<PAGE> 2
WHEREAS, as a condition precedent to the purchase of Senior Secured
Notes by the Initial Purchasers (as defined in the Senior Secured Note
Indenture) and the making of the Term Loans under the Term Loan Agreement, each
Grantor is required to execute and deliver this Security Agreement;
WHEREAS, each Grantor is an Affiliate of the Borrower;
WHEREAS, each Grantor has duly authorized the execution, delivery and
performance of this Security Agreement; and
WHEREAS, it is in the best interests of each Grantor to execute this
Security Agreement inasmuch as such Grantor will derive substantial direct and
indirect benefits from the Term Loans made to the Borrower by the Term Loan
Lenders pursuant to the Term Loan Agreement and the purchase of the Senior
Secured Notes by the Initial Purchasers pursuant to the Senior Secured Note
Indenture;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce (i) the
Initial Purchasers to purchase the Senior Secured Notes pursuant to the Senior
Secured Note Indenture and (ii) the Term Loan Lenders to make Term Loans to the
Borrower pursuant to the Term Loan Agreement, each Grantor agrees, for the
benefit of each Secured Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Security Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Borrower" is defined in the first recital.
"Collateral" is defined in Section 2.1.
"Collateral Account" is defined in Section 4.1.2(b).
"Collateral Agent" is defined in the preamble.
"Computer Hardware and Software Collateral" means:
(a) all computer and other electronic data processing
hardware, integrated computer systems, central processing units,
memory units, display terminals, printers,
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<PAGE> 3
features, computer elements, card readers, tape drives, hard and soft
disk drives, cables, electrical supply hardware, generators, power
equalizers, accessories and all peripheral devices and other related
computer hardware;
(b) all software programs (including both source code, object
code and all related applications and data files), whether now owned,
licensed or leased or hereafter acquired by any Grantor, designed for
use on the computers and electronic data processing hardware described
in clause (a) above;
(c) all firmware associated therewith;
(d) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such hardware,
software and firmware described in the preceding clauses (a) through
(c); and
(e) all rights with respect to all of the foregoing,
including any and all copyrights, licenses, options, warranties,
service contracts, program services, test rights, maintenance rights,
support rights, improvement rights, renewal rights and
indemnifications and any substitutions, replacements, additions or
model conversions of any of the foregoing.
"Contracts" is defined in clause (b) of Section 2.1.
"Copyright Collateral" means all copyrights (including all copyrights
for semi-conductor chip product mask works) of each Grantor, whether statutory
or common law, registered or unregistered, now or hereafter in force throughout
the world including all of such Grantor's right, title and interest in and to
all copyrights registered in the United States Copyright Office or anywhere
else in the world and also including the copyrights referred to in Item A of
Schedule IV attached hereto, and all applications for registration thereof,
whether pending or in preparation, all copyright licenses, including each
copyright license referred to in Item B of Schedule IV attached hereto, the
right to sue for past, present and future infringements of any thereof, all
rights corresponding thereto throughout the world, all extensions and renewals
of any thereof and all proceeds of the foregoing, including licenses,
royalties, income, payments, claims, damages and proceeds of suit.
"Equipment" is defined in clause (a) of Section 2.1.
"Grantor" and "Grantors" are defined in the preamble.
"Holders" is defined in the second recital.
"Intellectual Property Collateral" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral, the Trademark Collateral and
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the Trade Secrets Collateral (except to the extent any of the foregoing arises
out of or relates to any inventory or accounts receivable).
"Intercreditor Agreement" means the Intercreditor and Collateral
Agency Agreement, dated as of October 30, 1997, among the Borrower, PCI
Chemicals Canada Inc., PCI Carolina, Inc., Pioneer Licensing, Inc., the
Trustee, the Administrative Agent and the Collateral Agent, as amended,
supplemented, amended and restated or otherwise modified from time to time.
"Patent Collateral" means:
(a) all letters patent and applications for letters patent
throughout the world, including all patent applications in preparation
for filing anywhere in the world and including each patent and patent
application referred to in Item A of Schedule II attached hereto;
(b) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the items described in clause (a);
(c) all patent licenses, including each patent license
referred to in Item B of Schedule II attached hereto; and
(d) all proceeds of, and rights associated with, the
foregoing (including license royalties and proceeds of infringement
suits), the right to sue third parties for past, present or future
infringements of any patent or patent application, including any
patent or patent application referred to in Item A of Schedule
II attached hereto, and for breach or enforcement of any patent
license, including any patent license referred to in Item B of
Schedule II attached hereto, and all rights corresponding thereto
throughout the world.
"PCICC" is defined in the second recital.
"Related Contracts" is defined in clause (b) of Section 2.1.
"Secured Obligations" is defined in Section 2.2.
"Secured Parties" means the Collateral Agent, the Trustee, the
Holders, the Term Loan Agents, the Term Loan Lenders and any holder of a Term
Loan Note.
"Security Agreement" is defined in the preamble.
"Senior Secured Note Indenture" is defined in the second recital.
"Senior Secured Notes" is defined in the second recital.
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"Term Loan Agreement" is defined in the first recital.
"Term Loan Lender" and "Term Loan Lenders" are defined in the first
recital.
"Term Loan Notes" is defined in the first recital.
"Trademark Collateral" means:
(a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, service marks,
certification marks, collective marks, logos, and general intangibles
of a like nature (all of the foregoing items in this clause (a) being
collectively called a "Trademark"), now existing anywhere in the world
or hereafter adopted or acquired, all registrations and recordings
thereof and all applications in connection therewith, whether pending
or in preparation for filing, including registrations, recordings and
applications in the United States Patent and Trademark Office or in
any office or agency of the United States of America or any State
thereof or any foreign country, including those referred to in Item A
of Schedule III attached hereto;
(b) all Trademark licenses, including each Trademark license
referred to in Item B of Schedule III attached hereto;
(c) all extensions or renewals of any of the items described
in clauses (a) and (b);
(d) all of the goodwill of the business connected with the
use of, and symbolized by the items described in, clauses (a) and (b);
and
(e) all proceeds of, and rights associated with, the
foregoing, including any claim by any Grantor against third parties
for past, present or future infringement or dilution of any Trademark,
Trademark registration or Trademark license, including any Trademark,
Trademark registration or Trademark license referred to in Item A and
Item B of Schedule III attached hereto, or for any injury to the
goodwill associated with the use of any such Trademark or for breach
or enforcement of any Trademark license.
"Trade Secrets Collateral" means all confidential or proprietary
information and all know-how obtained by or used in or contemplated at any time
for use in the business of any Grantor (all of the foregoing being collectively
called a "Trade Secret"), whether or not such Trade Secret has been reduced to
a writing or other tangible form, including all documents and things embodying,
incorporating or referring in any way to such Trade Secret, all Trade Secret
licenses, including each Trade Secret license referred to in Schedule V
attached hereto, and including the right to sue for and to enjoin and to
collect damages for the actual or threatened misappropriation of any Trade
Secret and for the breach or enforcement of any such Trade Secret license.
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<PAGE> 6
"Trustee" is defined in the second recital.
"U.C.C." means the Uniform Commercial Code, as in effect from time to
time in the State of New York.
SECTION 1.2. Intercreditor Agreement Definitions. Unless otherwise
defined herein or the context otherwise requires, terms used in this Security
Agreement, including its preamble and recitals, have the meanings provided in
the Intercreditor Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or
in the Intercreditor Agreement or the context otherwise requires, terms for
which meanings are provided in the U.C.C. are used in this Security Agreement,
including its preamble and recitals, with such meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. Grant of Security. Each Grantor hereby assigns and
pledges to the Collateral Agent, for the ratable benefit of each of the Secured
Parties, and hereby grants to the Collateral Agent, for the ratable benefit of
each of the Secured Parties, a security interest in all of the following,
whether now or hereafter existing or acquired by such Grantor (the
"Collateral"):
(a) all pipelines, valves, pipes, pumps and equipment in all
of its forms of such Grantor, wherever located, including all parts
thereof and all accessions, additions, attachments, improvements,
substitutions and replacements thereto and therefor and all
accessories related thereto (any and all of the foregoing being the
"Equipment");
(b) all contracts, contract rights, chattel paper, documents,
instruments, and general intangibles (excluding any of the foregoing
arising out of or relating to inventory or accounts receivable but
including tax refunds) of such Grantor, whether or not arising out of
or in connection with the sale or lease of goods or the rendering of
services, and all rights of such Grantor 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 (any
and all such contracts, contract rights, chattel paper, documents,
instruments, and general intangibles being the "Contracts", and any
and all such security agreements, guaranties, leases and other
contracts being the "Related Contracts");
(c) all Intellectual Property Collateral of such Grantor;
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<PAGE> 7
(d) all books, records, writings, data bases, information and
other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the
foregoing in this Section 2.1;
(e) all of such Grantor's other property and rights of every
kind and description and interests therein (other than inventory,
accounts receivable or any other property or rights arising out of or
relating to any inventory or accounts receivable); and
(f) all products, offspring, rents, issues, profits, returns,
income and proceeds of and from any and all of the foregoing
Collateral (including proceeds which constitute property of the types
described in clauses (a), (b), (c), (d) and (e), proceeds deposited
from time to time in the Collateral Account and in any lock boxes of
such Grantor, and, to the extent not otherwise included, all payments
under insurance (whether or not the Collateral Agent is the 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 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 favor of a
third party on such grant, unless and until any required consents shall have
been obtained. Each Grantor shall, upon the request of the Collateral Agent,
use its best commercial efforts to obtain any such required consent.
SECTION 2.2. Security for Obligations. This Security Agreement
secures the payment of (i) all Term Loan Obligations, whether for principal,
interest, costs, fees, expenses or otherwise, (ii) all Indenture Obligations,
whether for principal, interest, costs, fees, expenses or otherwise and (iii)
all obligations of each Grantor and each other Obligor now or hereafter
existing under this Security Agreement, each Collateral Document and each other
Loan Document (as such term is defined in the Term Loan Agreement) to which
such Grantor or such other Obligor is or may become a party (all such
obligations of the Borrower and such Grantor or such other Obligor listed in
items (i) through (iii) above being the "Secured Obligations").
SECTION 2.3. Continuing Security Interest; Transfer of Term Loan
Notes. This Security Agreement shall create a continuing security interest in
the Collateral and shall
(a) remain in full force and effect until payment in full in
cash of all Secured Obligations, the termination of all Term Loan
Commitments, and the termination of all obligations under the
Intercreditor Agreement,
(b) be binding upon each Grantor, its successors, transferees
and assigns, and
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(c) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of the Collateral Agent and
each other Secured Party.
Without limiting the generality of the foregoing clause (c), any Term Loan
Lender may assign or otherwise transfer (in whole or in part) any Term Loan
Note or Term Loan held by it to any other Person or entity, and such other
Person or entity shall thereupon become vested with all the rights and benefits
in respect thereof granted to such Term Loan Lender under any Collateral
Document or any Loan Document (including this Security Agreement) or otherwise,
subject, however, to any contrary provisions in such assignment or transfer,
and to the provisions of Section 11.11 and Article X of the Term Loan
Agreement. Upon the payment in full in cash of all Secured Obligations, the
termination of all Term Loan Commitments, and the termination of all
obligations under the Intercreditor Agreement, the security interest granted
herein shall terminate and all rights to the Collateral shall revert to such
Grantor. Upon any such termination, the Collateral Agent will, at such
Grantor's sole expense, execute and deliver to such Grantor such documents as
such Grantor shall reasonably request to evidence such termination. Upon any
sale or other transfer of Collateral permitted by the terms of the
Intercreditor Agreement, the security interest created hereunder in such
Collateral (but not in the proceeds thereof) shall be deemed to be
automatically released and the Collateral Agent will, at such Grantor's sole
expense, execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence such release.
SECTION 2.4. Grantor Remains Liable. Anything herein to the contrary
notwithstanding
(a) each Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein,
and shall perform all of its duties and obligations under such
contracts and agreements,
(b) the exercise by the Collateral Agent of any of its rights
hereunder shall not release any Grantor from any of its duties or
obligations under any such contracts or agreements included in the
Collateral, and
(c) neither the Collateral Agent nor any other Secured Party
shall have any obligation or liability under any such contracts or
agreements included in the Collateral by reason of this Security
Agreement, nor shall the Collateral Agent or any other Secured Party
be obligated to perform any of the obligations or duties of any
Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
SECTION 2.5. Security Interest Absolute. All rights of the
Collateral Agent and the security interests granted to the Collateral Agent
hereunder, and all obligations of each Grantor hereunder, shall be absolute and
unconditional, irrespective of
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(a) any lack of validity or enforceability of the
Intercreditor Agreement, the Senior Secured Note Indenture, the Term
Loan Agreement, any Term Loan Note, any Senior Secured Note, any
Collateral Document or any other Loan Document;
(b) the failure of any Secured Party
(i) to assert any claim or demand or to enforce any
right or remedy against the Borrower, any other Obligor or any
other Person under the provisions of the Intercreditor
Agreement, the Senior Secured Note Indenture, the Term Loan
Agreement, any Term Loan Note, any Senior Secured Note, any
Collateral Document or any other Loan Document or otherwise,
or
(ii) to exercise any right or remedy against any
other guarantor of, or collateral securing, any Secured
Obligations;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations or any
other extension, compromise or renewal of any Secured Obligations;
(d) any reduction, limitation, impairment or termination of
any Secured Obligations for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject
to (and each Grantor hereby waives any right to or claim of) any
defense or setoff, counterclaim, recoupment or termination whatsoever
by reason of the invalidity, illegality, nongenuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence
affecting, any Secured Obligations or otherwise;
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
the Intercreditor Agreement, the Senior Secured Note Indenture, the
Term Loan Agreement, any Term Loan Note, any Senior Secured Note, any
Collateral Document, or any other Loan Document;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral (including the Collateral), or any
amendment to or waiver or release of or addition to or consent to
departure from any guaranty, for any of the Secured Obligations; or
(g) any other circumstances which might otherwise constitute
a defense available to, or a legal or equitable discharge of, the
Borrower, any other Obligor, any surety or any guarantor.
SECTION 2.6. Postponement of Subrogation, etc. Each Grantor hereby
agrees that it will not exercise any rights which it may acquire by reason of
any payment made hereunder, whether by way of subrogation, reimbursement or
otherwise, until the prior payment in full in
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cash of all Secured Obligations, the termination of all Term Loan Commitments
and the termination of all obligations under the Intercreditor Agreement. Any
amount paid to any Grantor on account of any payment made hereunder prior to
the payment in full in cash of all Secured Obligations shall be held in trust
for the benefit of the Secured Parties and shall immediately be paid to the
Collateral Agent for the account of the Secured Parties and credited and
applied against the Secured Obligations, whether matured or unmatured, in
accordance with the terms of the Intercreditor Agreement; provided, however,
that if
(a) such Grantor has made payment to the Secured Parties of
all or any part of the Secured Obligations, and
(b) all Secured Obligations have been paid in full in cash,
all Term Loan Commitments have been terminated and all obligations
under the Intercreditor Agreement,
each Secured Party agrees that, at the requesting Grantor's request, the
Secured Parties will execute and deliver to such Grantor appropriate documents
(without recourse and without representation or warranty) necessary to evidence
the transfer by subrogation to such Grantor of an interest in the Secured
Obligations resulting from such payment by such Grantor. In furtherance of the
foregoing, for so long as any Secured Obligations, Term Loan Commitments or any
obligations under either the Senior Secured Note Indenture or the Intercreditor
Agreement remain outstanding, each Grantor shall refrain from taking any action
or commencing any proceeding against the Borrower or any other Person (or its
successors or assigns, whether in connection with a bankruptcy proceeding or
otherwise) to recover any amounts in respect of payments made under this
Security Agreement to any Secured Party.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. Each Grantor represents
and warrants to each Secured Party (a) as to all matters contained in Article
VI of the Term Loan Agreement insofar as the representations and warranties
contained therein are applicable to such Grantor and its properties, each such
representation and warranty set forth in such Article (insofar as applicable as
aforesaid) and all other terms of the Term Loan Agreement to which reference is
made therein, together with all related definitions and ancillary provisions,
being hereby incorporated into this Security Agreement by reference as though
specifically set forth in this Section and (b) insofar as the representations
and warranties contained herein are applicable to such Grantor and its
properties, as set forth in this Section.
SECTION 3.1.1. Location of Collateral, etc. All of the Equipment of
such Grantor is located at the places specified in Item A of Schedule I hereto.
None of the Equipment has, within
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the four months preceding the date of this Security Agreement, been located at
any place other than the places specified in Item A of Schedule I hereto except
as set forth in a footnote thereto. All of the lock boxes of the Grantor are
located at the places specified in Item B of Schedule I hereto. The place(s)
of business and chief executive office of such Grantor and the office(s) where
such Grantor keeps its records concerning the Contracts, and all originals of
all chattel paper which evidence Contracts, are located at the address set
forth in Item C of Schedule I hereto. Such Grantor has no trade names other
than those set forth in Item D of Schedule I hereto. During the four months
preceding the date hereof, such Grantor has not been known by any legal name
different from the one set forth on the signature page hereto, nor has such
Grantor been the subject of any amalgamation, merger or other corporate
reorganization, except as set forth in Item E of Schedule I hereto. All
Contracts evidenced by a promissory note or other instrument, negotiable
document or chattel paper have been duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to the Collateral Agent and delivered and pledged to the
Collateral Agent pursuant to Section 4.1.7. Such Grantor is not a party to any
Federal, state or local government contract except as set forth in Item F of
Schedule I hereto.
SECTION 3.1.2. Ownership, No Liens, etc. Such Grantor owns its
Collateral free and clear of any Lien, security interest, charge or encumbrance
except for the security interest created by this Security Agreement and except
(a) as permitted under Section 7.2.2 of the Term Loan Agreement or (b) for any
Permitted Liens (as defined in the Senior Secured Note Indenture). No
effective financing statement or other instrument similar in effect covering
all or any part of the Collateral is on file in any recording office, except
such as may have been filed in favor of the Collateral Agent relating to this
Security Agreement or as have been filed in connection with Liens permitted
pursuant to the Intercreditor Agreement.
SECTION 3.1.3. Possession and Control. Such Grantor has exclusive
possession and control (subject only to (a) Liens permitted under Section 7.2.2
of the Term Loan Agreement or (b) Permitted Liens (as defined in the Senior
Secured Note Indenture) of its Equipment.
SECTION 3.1.4. Negotiable Documents, Instruments and Chattel Paper.
Subject to the proviso to clause (b) of Section 4.1.7, such Grantor has,
contemporaneously herewith, delivered to the Collateral Agent possession of all
originals of all negotiable documents, instruments and chattel paper currently
owned or held by such Grantor (duly endorsed in blank, if requested by the
Collateral Agent).
SECTION 3.1.5. Intellectual Property Collateral. With respect to any
Intellectual Property Collateral the loss, impairment or infringement of which
might have a Material Adverse Effect:
(a) such Intellectual Property Collateral is subsisting and
has not been adjudged invalid or unenforceable, in whole or in part;
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(b) such Intellectual Property Collateral is valid and
enforceable;
(c) such Grantor has made all necessary filings and
recordations to protect its interest in such Intellectual Property
Collateral, including recordations of all of its interests in the
Patent Collateral and Trademark Collateral in the United States Patent
and Trademark Office and in corresponding offices throughout the world
and its claims to the Copyright Collateral in the United States
Copyright Office and in corresponding offices throughout the world;
(d) such Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to such Intellectual
Property Collateral and no claim has been made that the use of such
Intellectual Property Collateral does or may violate the asserted
rights of any third party; and
(e) such Grantor has performed and will continue to perform
all acts and has paid and will continue to pay all required fees and
taxes to maintain each and every item of Intellectual Property
Collateral in full force and effect throughout the world, as
applicable.
Such Grantor owns directly or is entitled to use by license or otherwise, all
patents, Trademarks, Trade Secrets, copyrights, mask works, licenses,
technology, know-how, processes and rights with respect to any of the foregoing
used in, necessary for or of importance to the conduct of such Grantor's
business.
SECTION 3.1.6. Validity, etc. This Security Agreement creates a
valid first priority security interest in the Collateral, securing the payment
of the Secured Obligations, and all filings and other actions necessary or
desirable to perfect and protect such security interest have been duly taken.
SECTION 3.1.7. Authorization, Approval, etc. Except as have been
obtained or made and are in full force and effect, no authorization, approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body is required either
(a) for the grant by such Grantor of the security interest
granted hereby or for the execution, delivery and performance of this
Security Agreement by such Grantor, or
(b) for the perfection of or the exercise by the Collateral
Agent of its rights and remedies hereunder.
SECTION 3.1.8. Compliance with Laws. Such Grantor is in compliance
with the requirements of all applicable laws (including the provisions of the
Fair Labor Standards Act), rules, regulations and orders of every governmental
authority, the non-compliance with which
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would be reasonably likely to have a Material Adverse Effect or materially
adversely affect the value of the Collateral or the worth of the Collateral as
collateral security.
ARTICLE IV
COVENANTS
SECTION 4.1. Certain Covenants. Each Grantor covenants and agrees
that, so long as any portion of the Secured Obligations shall remain unpaid,
any Term Loan Lender shall have any outstanding Term Loan Commitment, or any
obligations under the Intercreditor Agreement shall remain outstanding, such
Grantor will, unless the Collateral Agent (with the consent of the Term Loan
Lenders and the Holders as specified in the Intercreditor Agreement) shall
otherwise consent in writing, perform, comply with and be bound by (a) all of
the agreements, covenants and obligations contained in Article VII of the Term
Loan Agreement and in Article Ten of the Senior Secured Note Indenture which
are applicable to such Grantor or its properties, each such agreement, covenant
and obligation contained in each such Article and all other terms of each of
the Term Loan Agreement and the Senior Secured Note Indenture to which
reference is made herein, together with all related definitions and ancillary
provisions, being hereby incorporated into this Security Agreement by reference
as though specifically set forth in this Section and (b) the obligations set
forth in this Section.
SECTION 4.1.1. As to Equipment. Such Grantor hereby agrees that it
shall
(a) keep all the Equipment at the places therefor specified
in Section 3.1.1 or, upon 30 days' prior written notice to the
Collateral Agent, at such other places in a jurisdiction where all
representations and warranties set forth in Article III (including
Section 3.1.6) shall be true and correct, and all action required
pursuant to the first sentence of Section 4.1.7 shall have been taken
with respect to the Equipment;
(b) cause the Equipment to be maintained and preserved in the
same condition, repair and working order as when new, ordinary wear
and tear excepted, and in accordance with any manufacturer's manual;
and forthwith, or in the case of any loss or damage to any of the
Equipment, as quickly as practicable after the occurrence thereof,
make or cause to be made all repairs, replacements, and other
improvements in connection therewith which are necessary or desirable
to such end; and promptly furnish to the Collateral Agent a statement
respecting any loss or damage to any of the Equipment; and
(c) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against,
the Equipment, except to the extent the validity thereof is
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being contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP have been set aside.
SECTION 4.1.2. As to Contracts. (a) Such Grantor shall keep its
place(s) of business and chief executive office and the office(s) where it
keeps its records concerning the Contracts, and all originals of all chattel
paper which evidences Contracts, located at the address(es) set forth in Item D
of Schedule I hereto, or, upon 30 days' prior written notice to the Collateral
Agent, at such other locations in a jurisdiction where all actions required by
the first sentence of Section 4.1.7 shall have been taken with respect to the
Contracts; not change its name except upon 30 days' prior written notice to the
Collateral Agent; hold and preserve such records and chattel paper; and permit
representatives of the Collateral Agent at any time during normal business
hours to inspect and make abstracts from such records and chattel paper.
(b) Upon written notice by the Collateral Agent to such Grantor
pursuant to this Section 4.1.2(b), all proceeds of Collateral received by such
Grantor shall be delivered in kind to the Collateral Agent for deposit to a
deposit account (the "Collateral Account") of such Grantor maintained with the
Collateral Agent, and such Grantor shall not commingle any such proceeds, and
shall hold separate and apart from all other property, all such proceeds in
express trust for the benefit of the Collateral Agent until delivery thereof
is made to the Collateral Agent. The Collateral Agent will not give the notice
referred to in the preceding sentence unless there shall have occurred and be
continuing a Default of the nature set forth in Section 8.1.9 of the Term Loan
Agreement, a Default of the nature set forth in Clause 10 or 11 of Section 501
of the Senior Secured Note Indenture or an Event of Default.
(c) The Collateral Agent shall have the right to apply any amount in
the Collateral Account to the payment of any Secured Obligations which are due
and payable or payable upon demand, or to the payment of any Secured
Obligations at any time that an Event of Default shall exist.
SECTION 4.1.3. As to Collateral.
(a) Until the occurrence and continuance of a Default of the
nature set forth in Section 8.1.9 of the Term Loan Agreement, a
Default of the nature set forth in Clause 10 or 11 of Section 501 of
the Senior Secured Note Indenture or an Event of Default, and such
time as the Collateral Agent shall notify such Grantor of the
revocation of such power and authority, such Grantor (i) may use and
consume, in the ordinary course of its business (except as otherwise
permitted under the Intercreditor Agreement), any raw materials, work
in process or materials normally held by such Grantor for such
purpose, (ii) will, at its own expense, endeavor to collect, as and
when due, all amounts due with respect to any of the Collateral,
including the taking of such action with respect to such collection as
the Collateral Agent may reasonably request following the occurrence
of a Default of the nature set forth in Section 8.1.9 of the Term Loan
Agreement, a Default of the nature set forth in Clause 10 or 11 of
Section 501 of the Senior Secured Note
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Indenture or an Event of Default or, in the absence of such request,
as such Grantor may deem advisable, and (iii) may grant, in the
ordinary course of business (except as otherwise permitted under the
Intercreditor Agreement), to any party obligated on any of the
Collateral, any rebate, refund or allowance to which such party may be
lawfully entitled, and may accept, in connection therewith, the return
of goods, the sale or lease of which shall have given rise to such
Collateral. The Collateral Agent, however, may, at any time following
a Default of the nature set forth in Section 8.1.9 of the Term Loan
Agreement, a Default of the nature set forth in Clause 10 or 11 of
Section 501 of the Senior Secured Note Indenture or an Event of
Default, whether before or after any revocation of such power and
authority or the maturity of any of the Secured Obligations, notify
any parties obligated on any of the Collateral to make payment to the
Collateral Agent of any amounts due or to become due thereunder and
enforce collection of any of the Collateral by suit or otherwise and
surrender, release, or exchange all or any part thereof, or compromise
or extend or renew for any period (whether or not longer than the
original period) any indebtedness thereunder or evidenced thereby.
Upon request of the Collateral Agent following a Default of the nature
set forth in Section 8.1.9 of the Term Loan Agreement, a Default of
the nature set forth in Clause 10 or 11 of Section 501 of the Senior
Secured Note Indenture or an Event of Default, such Grantor will, at
its own expense, notify any parties obligated on any of the Collateral
to make payment to the Collateral Agent of any amounts due or to
become due thereunder.
(b) The Collateral Agent is authorized to endorse, in the
name of such Grantor, any item, howsoever received by the Collateral
Agent, representing any payment on or other proceeds of any of the
Collateral.
SECTION 4.1.4. As to Intellectual Property Collateral. Each Grantor
covenants and agrees to comply with the following provisions as such provisions
relate to any Intellectual Property Collateral of such Grantor that:
(a) such Grantor shall not, unless such Grantor shall either
(i) reasonably and in good faith determine (and notice of such
determination shall have been delivered to the Collateral Agent) that
any of the Patent Collateral is of negligible economic value to such
Grantor, or (ii) have a valid business purpose to do otherwise, do any
act, or omit to do any act, whereby any of the Patent Collateral may
lapse or become abandoned or dedicated to the public or unenforceable
except upon expiration at the end of the unrenewable term of
registration thereof.
(b) such Grantor shall not, and such Grantor shall not permit
any of its licensees to, unless such Grantor shall either (i)
reasonably and in good faith determine (and notice of such
determination shall have been delivered to the Collateral Agent) that
any of the Trademark Collateral is of negligible economic value to
such Grantor, or (ii) have a valid business purpose to do otherwise,
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(i) fail to continue to use any of the Trademark
Collateral in order to maintain all of the Trademark
Collateral in full force free from any claim of abandonment
for non-use,
(ii) fail to maintain as in the past the quality of
products and services offered under all of the Trademark
Collateral,
(iii) fail to employ all of the Trademark Collateral
registered with any Federal or state or foreign authority with
an appropriate notice of such registration,
(iv) adopt or use any other Trademark for a period
of sixty days which is confusingly similar or a colorable
imitation of any of the Trademark Collateral unless such
Trademark becomes a part of the Trademark Collateral,
(v) use any of the Trademark Collateral registered
with any Federal or state or foreign authority for a period of
sixty days except for the uses for which registration or
application for registration of all of the Trademark
Collateral has been made unless a registration or application
for registration for such use is made with such Federal or
state or foreign authority, and
(vi) do or permit any act or knowingly omit to do
any act whereby any of the Trademark Collateral may lapse or
become invalid or unenforceable.
(c) such Grantor shall not, unless such Grantor shall either
(i) reasonably and in good faith determine (and
notice of such determination shall have been delivered to the
Collateral Agent) that any of the Copyright Collateral or any
of the Trade Secrets Collateral is of negligible economic
value to such Grantor, or
(ii) have a valid business purpose to do otherwise,
do or permit any act or knowingly omit to do any act whereby
any of the Copyright Collateral or any of the Trade Secrets
Collateral may lapse or become invalid or unenforceable or
placed in the public domain except upon expiration of the end
of an unrenewable term of a registration thereof.
(d) such Grantor shall notify the Collateral Agent
immediately if it knows, or has reason to know, that any application
or registration relating to any material item of the Intellectual
Property Collateral may become abandoned or dedicated to the public or
placed in the public domain or invalid or unenforceable, or of any
adverse determination or development (including the institution of, or
any such determination or development in, any proceeding in the United
States Patent and Trademark Office, the United States
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Copyright Office or any foreign counterpart thereof or any court)
regarding such Grantor's ownership of any of the Intellectual Property
Collateral, its right to register the same or to keep and maintain and
enforce the same.
(e) in no event shall such Grantor or any of its agents,
employees, designees or licensees file an application for the
registration of any Intellectual Property Collateral with the United
States Patent and Trademark Office, the United States Copyright Office
or any similar office or agency in any other country or any political
subdivision thereof, unless it promptly informs the Collateral Agent,
and upon request of the Collateral Agent, executes and delivers any
and all agreements, instruments, documents and papers as the
Collateral Agent may reasonably request to evidence the Collateral
Agent's security interest in such Intellectual Property Collateral and
the goodwill and general intangibles of such Grantor relating thereto
or represented thereby.
(f) such Grantor shall take all necessary steps, including in
any proceeding before the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, to maintain
and pursue any application (and to obtain the relevant registration)
filed with respect to, and to maintain any registration of, the
Intellectual Property Collateral, including the filing of applications
for renewal, affidavits of use, affidavits of incontestability and
opposition, interference and cancellation proceedings and the payment
of fees and taxes (except to the extent that dedication, abandonment
or invalidation is permitted under the foregoing clauses (a), (b) and
(c)).
(g) such Grantor shall, contemporaneously herewith, execute
and deliver to the Collateral Agent a Patent Security Agreement, a
Trademark Security Agreement and a Copyright Security Agreement in the
forms of Exhibit A, Exhibit B and Exhibit C hereto, respectively, and
shall execute and deliver to the Collateral Agent any other document
required to acknowledge or register or perfect the Collateral Agent's
interest in any part of the Intellectual Property Collateral.
SECTION 4.1.5. Insurance. Such Grantor will maintain or cause to be
maintained with responsible insurance companies insurance with respect to its
business and properties (including the Equipment) against such casualties and
contingencies and of such types and in such amounts as is required pursuant to
each of the Term Loan Agreement and the Senior Secured Note Indenture, and
will, upon the request of the Collateral Agent, furnish a certificate of a
reputable insurance broker setting forth the nature and extent of all insurance
maintained by such Grantor in accordance with this Section. Without limiting
the foregoing, such Grantor further agrees as follows:
(a) Each policy for property insurance shall show the
Collateral Agent as loss payee.
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(b) Each policy for liability insurance shall show the
Collateral Agent as an additional insured.
(c) Each insurance policy shall provide that at least 30
days' prior written notice of cancellation or of lapse shall be given
to the Collateral Agent by the insured.
(d) Such Grantor shall, if so requested by the Collateral
Agent, deliver to the Collateral Agent a copy of each insurance
policy.
(e) All payments in respect of property insurance shall be
deposited to the Collateral Account and if there shall be no
Collateral Account shall be paid to such Grantor.
SECTION 4.1.6. Transfers and Other Liens. Such Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral, except as permitted by the
Intercreditor Agreement; or
(b) create or suffer to exist any Lien or other charge or
encumbrance upon or with respect to any of the Collateral to secure
Indebtedness of any Person or entity, except for the security interest
created by this Security Agreement and except as permitted by the
Intercreditor Agreement.
SECTION 4.1.7. Further Assurances, etc. Such Grantor agrees that,
from time to time at its own expense, it will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Collateral Agent may request, in order to
perfect, preserve and protect any security interest granted or purported to be
granted hereby or to enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, such Grantor will
(a) mark conspicuously each chattel paper included in the
Contracts and each Related Contract and, at the request of the
Collateral Agent, each of its records pertaining to the Collateral
with a legend, in form and substance satisfactory to the Collateral
Agent, indicating that such document, chattel paper, Related Contract
or Collateral is subject to the security interest granted hereby;
(b) if any Contract shall be evidenced by a promissory note
or other instrument, negotiable document or chattel paper, deliver and
pledge to the Collateral Agent hereunder such promissory note,
instrument, negotiable document or chattel paper duly endorsed and
accompanied by duly executed instruments of transfer or assignment,
all in form and substance satisfactory to the Collateral Agent;
provided, however, that unless there shall have occurred and be
continuing a Default of the nature set forth in
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Section 8.1.9 of the Term Loan Agreement, a Default of the nature set
forth in Clause 10 or 11 of Section 501 of the Senior Secured Note
Indenture or an Event of Default,
(i) no such promissory note, instrument, negotiable
document or chattel paper that has a fair market value less
than $500,000, individually, or
(ii) such promissory notes, instruments, negotiable
documents or chattel paper that collectively have a fair
market value in the aggregate less than $1,000,000,
shall be required to be delivered unless otherwise required pursuant
to the Term Loan Agreement, any other Loan Document (as such term is
defined in the Term Loan Agreement), the Senior Secured Indenture or
any other Collateral Document;
(c) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or
notices (including any assignment of claim form under or pursuant to
the federal assignment of claims statute, 31 U.S.C. Section 3726, any
successor or amended version thereof or any regulation promulgated
under or pursuant to any version thereof), as may be necessary or
desirable, or as the Collateral Agent may request, in order to perfect
and preserve the security interests and other rights granted or
purported to be granted to the Collateral Agent hereby; and
(d) furnish to the Collateral Agent, from time to time at the
Collateral Agent's request, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Collateral Agent may reasonably
request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest hereunder,
such Grantor hereby authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all
or any part of the Collateral without the signature of such Grantor where
permitted by law. A carbon, photographic or other reproduction of this
Security Agreement or any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement where permitted by
law.
ARTICLE V
THE COLLATERAL AGENT
SECTION 5.1. Collateral Agent Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints the Collateral Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor
and in the name of such Grantor or otherwise, from time to time in the
Collateral Agent's discretion, following the occurrence and continuation of a
Default of the nature set forth in Section 8.1.9 of the Term Loan Agreement, a
Default
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of the nature set forth in Clause 10 or 11 of Section 501 of the Senior Secured
Note Indenture or an Event of Default, to take any action and to execute any
instrument which the Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Security Agreement, including:
(a) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause
(a) above;
(c) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce
the rights of the Collateral Agent with respect to any of the
Collateral; and
(d) to perform the affirmative obligations of such Grantor
hereunder (including all obligations of such Grantor pursuant to
Section 4.1.7).
Such Grantor hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with an
interest.
SECTION 5.2. Collateral Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Collateral Agent may itself
perform, or cause performance of, such agreement, and the expenses of the
Collateral Agent incurred in connection therewith shall be payable by such
Grantor pursuant to Section 6.2.
SECTION 5.3. Collateral Agent Has No Duty. In addition to, and not
in limitation of, Section 2.4, the powers conferred on the Collateral Agent
hereunder are solely to protect its interest (on behalf of the Secured Parties)
in the Collateral and shall not impose any duty on it to exercise any such
powers. Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining
to any Collateral.
SECTION 5.4. Reasonable Care. The Collateral Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
of the Collateral, if it takes such action for that purpose as any Grantor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the Collateral
Agent to comply with any such request at any time shall not in itself be deemed
a failure to exercise reasonable care.
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ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the U.C.C. (whether or not the U.C.C.
applies to the affected Collateral) and also may
(i) require each Grantor to, and such Grantor hereby
agrees that it will, at its expense and upon request of the
Collateral Agent forthwith, assemble all or part of the
Collateral as directed by the Collateral Agent and make it
available to the Collateral Agent at a place to be designated
by the Collateral Agent which is reasonably convenient to both
parties, and
(ii) without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Collateral Agent's
offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent
may deem commercially reasonable. Each Grantor agrees that,
to the extent notice of sale shall be required by law, at
least ten days' prior notice to such Grantor of the time and
place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification.
The Collateral Agent shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given.
The Collateral Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned.
(b) All cash proceeds received by the Collateral Agent in
respect of any sale of, collection from, or other realization upon all
or any part of the Collateral may, in the discretion of the Collateral
Agent, be held by the Collateral Agent as collateral for, and/or then
or at any time thereafter applied (after payment of any amounts
payable to the Collateral Agent pursuant to Section 6.2) in whole or
in part by the Collateral Agent for the ratable benefit of the Secured
Parties against, all or any part of the Secured Obligations in such
order as the Collateral Agent shall elect. Any surplus of such cash
or cash proceeds held by the Collateral Agent and remaining after
payment in full in cash of all the Secured Obligations shall be paid
over to the applicable Grantor or to whomsoever may be lawfully
entitled to receive such surplus.
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SECTION 6.2. Indemnity and Expenses.
(a) Each Grantor jointly and severally agrees to indemnify
the Collateral Agent from and against any and all claims, losses and
liabilities arising out of or resulting from this Security Agreement
(including enforcement of this Security Agreement), except claims,
losses or liabilities resulting from the Collateral Agent's gross
negligence or wilful misconduct.
(b) Each Grantor will upon demand pay to the Collateral Agent
the amount of any and all reasonable expenses, including the
reasonable fees and disbursements of its counsel and of any experts
and agents, which the Collateral Agent may incur in connection with
(i) the administration of this Security Agreement,
(ii) the custody, preservation, use or operation of,
or, after the occurrence and during the continuance of an
Event of Default, the sale of, collection from, or other
realization upon, any of the Collateral, and
(iii) the exercise or enforcement of any of the
rights of the Collateral Agent or the Secured Parties
hereunder, or (iv) the failure by any Grantor to perform or
observe any of the provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Collateral Document. This Security Agreement is a
Collateral Document executed pursuant to the Intercreditor Agreement and shall
(unless otherwise expressly indicated herein) be construed, administered and
applied in accordance with the terms and provisions of the Intercreditor
Agreement.
SECTION 7.2. Amendments; etc. No amendment to or waiver of any
provision of this Security Agreement nor consent to any departure by any
Grantor herefrom, shall in any event be effective unless the same shall be in
writing and signed by the Collateral Agent (on behalf of the Secured Parties),
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 7.3. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing or by facsimile and,
if to any Grantor, addressed, delivered or transmitted to such Grantor in care
of the Borrower at the address or facsimile number of the Borrower specified in
the Intercreditor Agreement, if to the Collateral Agent, addressed,
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delivered or transmitted to it at the address or facsimile number of the
Collateral Agent specified in the Intercreditor Agreement. Any notice, if
mailed and properly addressed with postage prepaid or if properly addressed and
sent by pre-paid courier service, shall be deemed given when received; any
notice, if transmitted by facsimile, shall be deemed given which transmitted
(and electronic confirmation of receipt thereof has been received).
SECTION 7.4. Section Captions. Section captions used in this
Security Agreement are for convenience of reference only, and shall not affect
the construction of this Security Agreement.
SECTION 7.5. Severability. Wherever possible each provision of this
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Security Agreement.
SECTION 7.6. Counterparts. This Security Agreement may be executed
by the parties hereto in several counterparts, each of which shall be deemed an
original and all of which shall constitute together but one and the same
agreement.
SECTION 7.7. Governing Law, Entire Agreement, etc. THIS SECURITY
AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION
OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. THIS SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS
CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO
THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS,
WRITTEN OR ORAL, WITH RESPECT THERETO.
-23-
<PAGE> 24
IN WITNESS WHEREOF, each Grantor has caused this Security Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
PCI CAROLINA, INC., a Delaware
corporation
By /s/ KENT R. STEPHENSON
----------------------------------
Name: Kent R. Stephenson
Title: Vice President
PIONEER LICENSING, INC., a Delaware
corporation
By /s/ KENT R. STEPHENSON
----------------------------------
Name: Kent R. Stephenson
Title: Vice President
UNITED STATES TRUST COMPANY OF
NEW YORK, as Collateral Agent
By /s/ PATRICIA STERMER
----------------------------------
Name: Patricia Stermer
Title: Assistant Vice President
<PAGE> 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 John, 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".
<PAGE> 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/ DARRYL STEPHENSON
) ------------------------------
) Authorized Signing Officer
) (c.s)
)
<PAGE> 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 Helen Wallace; Thence North eighteen degrees East (N18
degrees E) along the Helen Wallace Easterly 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
Alan C. Crandall 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
<PAGE> 4
2
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. 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 David Poirier; 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 David Poirier, 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
<PAGE> 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 F.C. Woods,
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 Perry Scott, 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 Montgomery 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
<PAGE> 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 Charles Sabean; thence S
17 degrees 26'W being along the westerly sideline of the said Charles Sabean
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 Charles Sabean, 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 John 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 F.C. Woods,
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 Alexander Cook Estate property."
Being part and parcel of those lands and premises conveyed to James
Wallace 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. JOHN
PRESBYTERIAN CHURCH by Helen M. Wallace, by Deed 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.
<PAGE> 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 Blair Malcolm 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 Octave Phillippe 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 Lazarre Phillippe and May Phillippe, 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.
<PAGE> 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.
<PAGE> 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,
<PAGE> 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".
<PAGE> 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.
<PAGE> 12
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"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, leach, migrate, dump, issue, empty place, seep, exhaust, abandon,
bury, incinerate or dispose into the Environment and "RELEASE" when used as a
noun has a correlative meaning.
"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).
<PAGE> 13
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"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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 16
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(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 John, New Brunswick. The corporation will not
change its name, identity or corporate structure or its registered office or
chief place of business without notifying the 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.
<PAGE> 17
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(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
<PAGE> 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
<PAGE> 19
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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.
<PAGE> 20
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(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;
<PAGE> 21
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(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
<PAGE> 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
<PAGE> 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:
<PAGE> 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;
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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;
<PAGE> 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,
<PAGE> 31
24
Administrative Agent, Trustee, Lenders and
Noteholders may sustain by reason of the
assertion against such party of any claim
relating to such Hazardous Materials or
actions taken with respect thereto as
authorized hereunder. Nothing contained
herein shall result in any of the 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
<PAGE> 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
<PAGE> 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
<PAGE> 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.
<PAGE> 35
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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.
<PAGE> 36
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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
<PAGE> 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.
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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.
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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.
<PAGE> 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");
<PAGE> 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.
<PAGE> 42
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(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).
<PAGE> 1
EXHIBIT 4.5(a)
DEMAND DEBENTURE (ONTARIO)
U.S. $500,000,000 Date: October 30, 1997
This debenture (as amended, supplemented, amended and restated or
otherwise modified from time to time, this "Debenture"), dated as of October
30, 1997, is made by PCI Chemicals Canada Inc., a New Brunswick corporation
(the "Corporation"), in favour of United States Trust Company of New York, as
collateral agent (together with any successors thereto in such capacity, the
"Collateral Agent") for its own benefit and the benefit of the Administrative
Agent (as defined below) and of the Lenders (as defined below), and the Trustee
(as defined below) and of the holders (the "Noteholders") of Notes (as defined
below), pursuant to that certain Intercreditor and Collateral Agency Agreement
(the "Intercreditor Agreement") dated the date hereof among the Corporation,
the Trustee, the Administrative Agent, the Collateral Agent, Pioneer Americas,
Inc. ("PAI") and Pioneer Americas Acquisition Corp. ("PAAC").
W I T N E S S E T H:
WHEREAS pursuant to a term loan agreement dated as of October 30,
1997 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Term Loan Agreement"), among PAI, PAAC, as the parent
guarantor, the various financial institutions as are, or may from time to time
become, parties thereto (each individually a "Lender" and collectively the
"Lenders"), the Collateral Agent, Bank of America National Trust and Savings
Association, as administrative agent (together with any successor(s) thereto in
such capacity, the "Administrative Agent"), DLJ Capital Funding, Inc., as the
Syndication Agent for the Lenders and Salomon Brothers Holding Company Inc., as
the Documentation Agent for the Lenders, the Lenders have extended commitments
to make Term Loans (as defined therein) to PAI;
AND WHEREAS the Corporation has executed a guarantee (the
"Guarantee") dated the date hereof in favour of the Administrative Agent, for
its own benefit and the benefit of each of the Lenders, of the obligations of
PAI under the Term Loan Agreement;
AND WHEREAS the Corporation has issued notes ("Notes") pursuant
to that certain Indenture (the "Indenture") dated the date hereof among the
Corporation, PAAC and the other Guarantors named therein, and United States
Trust Company of New York (together with any successor(s) thereto in such
capacity, the "Trustee");
AND WHEREAS the Corporation has duly authorized the execution,
delivery and performance of this Debenture;
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NOW THEREFORE in consideration of the foregoing and for such
other good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged), the Corporation hereby covenants and agrees as follows:
ARTICLE 1
PROMISE TO PAY
1.1 PROMISE TO PAY. The Corporation, for value received, hereby
acknowledges itself indebted and promises to pay to or to the order of the
Collateral Agent, at such address or addresses as the Collateral Agent may
designate at any time and from time to time by notice in writing to the
Corporation, ON DEMAND, the maximum principal amount of five hundred million
dollars ($500,000,000) in lawful money of the United States of America, and to
pay interest on the principal amount outstanding under or in connection with
the Obligations from time to time and on all other amounts owing hereunder to
the date of payment in accordance with terms and provisions hereof at a rate of
twenty-five (25%) percent per annum; such interest to be calculated daily, not
in advance and to be payable in like money on demand, both before and after
maturity and default, with interest on overdue interest at the same rate.
ARTICLE 2
INTERPRETATION
2.1 DEFINITIONS.
"ACM" has the meaning ascribed thereto in section 4.24.
"ADDITIONAL UNDERTAKING" means (i) cash or cash equivalents or (ii) a
Surety Bond, an Additional Undertaking Guarantee or an Additional
Undertaking Letter of Credit which is provided by a Person, whose long-
term unsecured debt is rated at least "AA" (or equivalent) by a
nationally recognized statistical rating agency and is otherwise
satisfactory to the Collateral Agent; Additional Undertakings are
addressed directly to the Collateral Agent and name the Collateral Agent
as the beneficiary thereof and the party entitled to make claims
thereunder.
"ADDITIONAL UNDERTAKING GUARANTEE" means the unconditional guarantee of
payment of any corporation or partnership organized and existing under
the laws of the United States of America or any State or the District of
Columbia or Canada or province thereof that has a long-term unsecured
debt rating satisfactory to the Collateral Agent at the time such
guarantee is delivered, given to the Collateral Agent, accompanied by an
opinion of counsel to such guarantor to the effect that such guarantee
has been duly authorized, executed and delivered by such guarantor and
constitutes the legal, valid and binding obligation of such guarantor
enforceable against such guarantor by the Collateral Agent in accordance
with its terms, subject to customary exceptions at the time for opinions
for such instruments, together with an opinion of counsel to the effect
that, taking into account the purpose under this Debenture for which
such guarantee will be given, such guarantee and accompanying opinion
are responsive to the requirements of this Debenture.
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"ADDITIONAL UNDERTAKING LETTER OF CREDIT" means a clean, irrevocable,
unconditional letter of credit in favour of the Collateral Agent and
entitling the Collateral Agent to draw thereon in the City of New York
issued by a bank satisfactory to the Collateral Agent, accompanied by an
opinion of counsel to such bank to the effect that such letter of credit
has been duly authorized, executed and delivered by such bank and
constitutes the legal, valid and binding obligation of such bank
enforceable against such bank by the Collateral Agent in accordance with
its terms subject to customary exceptions at the time for opinions for
such instruments, together with an opinion of counsel to the effect
that, taking into account the purpose under this Debenture for which
such letter of credit will be given, such letter of credit and
accompanying opinion are responsive to the requirements of this
Debenture.
"ADMINISTRATIVE AGENT" has the meaning ascribed to it in the first
recital.
"ALTERATION" has the meaning ascribed thereto in section 4.22.
"ARCHITECT'S CERTIFICATE" has the meaning ascribed thereto in section
4.21(d)(iii).
"BUILDINGS" means all of the right, title and interest which the
Corporation has from time to time in and to (i) any and all present and
future structures and works of a permanent nature located, from time to
time in, on or upon the Real Property, including, without limitation,
all buildings, structures, facilities, accessories, appurtenances and
other improvements (including present and future parking areas) located
from time to time in, on or upon the Real Property and (ii) any and all
alterations, reconstructions, additions or expansions to and all repairs
or replacements of any such property during the term of this Debenture.
"BUSINESS DAY" means any day other than a Saturday or a Sunday and any
day on which banks situated in the Province of Ontario are authorized or
obligated to be closed.
"CLOSING DATE" has the meaning ascribed thereto in the Purchase
Agreement.
"COLLATERAL" has the meaning ascribed thereto in Section 3.1(c).
"COLLATERAL AGENT" has the meaning ascribed thereto in the preamble to
this Debenture.
"COLLATERAL ACCOUNT" has the meaning ascribed thereto in the
Intercreditor Agreement.
"COLLATERAL PROCEEDS" has the meaning ascribed thereto in the Indenture.
"CONTRACTS" has the meaning ascribed thereto in Section 3.1(b).
"CORPORATION" means PCI Chemicals Canada Inc./Produits Chimiques PCI
Canada Inc. and its successors and assigns.
"DESTRUCTION" has the meaning ascribed thereto in section 4.21(a).
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"EXCLUDED ASSETS" means (a) the inventory of the Corporation, including
goods held for sale or lease, goods furnished or to be furnished to
third parties under contracts of lease, consignment or service, goods
which are raw materials or work in process, goods used in or procured
for packing and materials used or consumed in the business of the
Corporation, (b) accounts due or accruing due and all records entered or
recorded by any system of mechanical or electronic data processing or
any other information storage device, agreements, books, accounts,
invoices, letters, documents and papers recording evidencing or relating
thereto, and (c) all contracts, contract rights, chattel paper,
documents, instruments, and general intangibles arising from or relating
to any of the foregoing.
"ENVIRONMENT" means all components of the earth, including, without
limitation, air (and all layers of the atmosphere), land (and all
surface and subsurface soil, underground spaces and cavities and all
land submerged under water) and water (and all surface and underground
water), organic and inorganic matter and living organisms, and the
interacting natural systems that include components referred to above in
this definition of "Environment".
"ENVIRONMENTAL LAWS" means all applicable Laws relating to the
Environment, Hazardous Substances, pollution or protection of the
Environment, including Laws relating to: (i) on site or off-site
contamination; (ii) chemical substances or products; (iii) Releases of
pollutants, contaminants, chemicals or other industrial, toxic or
radioactive substances or Hazardous Substances into the Environment; and
(iv) the manufacture, processing, distribution, use, treatment, storage,
transport, packaging, labelling, sale, recycling, disposal, destruction,
incineration, burial, advertising, display or handling of Hazardous
Substances.
"EQUIPMENT" has the meaning ascribed thereto in section 3.1(c).
"EVENT OF DEFAULT" has the meaning ascribed thereto in section 5.1.
"GOVERNMENTAL ENTITY" means any: (i) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, commission, board, bureau,
agency or instrumentality, domestic or foreign; (ii) any subdivision,
agent, commission, board, or authority of any of the foregoing; or (iii)
any quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any of the
foregoing.
"GOVERNMENTAL REQUIREMENT" means any law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other
directive or requirement, including, without limitation, Environmental
Laws, energy regulations and occupational safety and health standards or
controls, of any Governmental Entity.
"HAZARDOUS SUBSTANCE" means any Substance which is or is deemed to be,
alone or in any combination, hazardous, hazardous waste, toxic, a
pollutant, a deleterious substance, a contaminant or a source of
pollution or contamination under any applicable Environmental Laws.
<PAGE> 5
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"INDENTURE" has the meaning ascribed thereto in the third recital
hereof.
"INSURANCE PROCEEDS" has the meaning ascribed thereto in section
4.21(a).
"INTERCREDITOR AGREEMENT" has the meaning ascribed thereto in the
preamble.
"LAWS" means all statutes, codes, ordinances, decrees, rules,
regulations, municipal by-laws, judicial or arbitral or administrative
or ministerial or departmental or regulatory judgments, orders,
decisions, rulings or awards, policies, guidelines, or any provisions of
the foregoing, including general principles of common and civil law and
equity, binding on or affecting the Person referred to in the context in
which such word is used; and "LAW" means any one of such Laws.
"LEASES" means all of the right, title and interest which the
Corporation has from time to time in and to any and all present and
future leases, offers to lease and other agreements to lease of the
whole or any part of the Real Property, Leasehold Property or Buildings
and any and all present or future agreements and licences whereby the
Corporation gives any other Person the right to use or occupy the whole
or any part of the Real Property or Buildings, in each case for the time
being in effect, and all revisions, alterations, modifications,
amendments, extensions, renewals, replacements or substitutions thereof
or therefor which may hereafter be effected or entered into but does not
include registered servitudes, rights of superficies, or rights in the
nature of a servitude, or a right of superficies.
"LEASEHOLD PROPERTY" has the meaning ascribed thereto in Section 3.1(b).
"LEASEHOLD PROPERTY CONTRACTS" has the meaning ascribed thereto in
Section 3.1(b).
"LENDERS" has the meaning ascribed thereto in the first recital hereof.
"LICENSES" has the meaning ascribed thereto in Section 3.1(a).
"LIEN" means, with respect to any property of any Person, any charge,
mortgage, prior claims, pledge, hypothec, security interest, security
under the Bank Act (Canada), lien, conditional sales (or other title
retention agreement or lease in the nature hereof), lease (where such
Person is the lessee of such property), servitudes, assignment, adverse
claims, defect of title, restriction, trust, right of set-off or other
encumbrance of any kind in respect of such property, whether or not
filed, recorded or otherwise perfected under applicable law.
"MATERIAL ADVERSE EFFECT" means, as to any Person, asset or property, a
material adverse effect on the business, assets, properties, condition
(financial or other), operations or results of operations of such
Person, asset or property, which effect is not adequately and
effectively insured or indemnified against by a financially sound
insurance company, and excepting effects arising solely out of general
national economic conditions and/or effects arising solely out of
matters affecting the industry in which such Person, asset or property
conducts business a whole.
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"MONEY" or "MONEYS" means those certain proceeds set forth in sections
4.21(a) and 4.21(b).
"NEGOTIABLE COLLATERAL" has the meaning ascribed thereto in Section
3.1(c)(v).
"NET AWARD" has the meaning ascribed thereto in section 4.21(b).
"NOTEHOLDERS" has the meaning ascribed thereto in the preamble.
"NOTES" has the meaning ascribed thereto in the third recital hereof.
"OBLIGATIONS" has the meaning ascribed thereto in Section 3.2(a).
"PAI" means Pioneer Americas, Inc.
"PAAC" means Pioneer Americas Acquisition Corp.
"PPSA" means the Personal Property Security Act (Ontario).
"PERMITTED LIENS" has the meaning ascribed thereto in the Term Loan
Agreement.
"PERSON" OR "PERSONS" means a corporation, a legal person, a legal
entity, an association, a partnership, an organization, a business, an
individual, a government or political subsdivision thereof or a
government agency.
"PLANT" or "PLANTS" means the Real Property and the Buildings,
collectively.
"PLANS AND SPECIFICATIONS" has the meaning ascribed thereto in section
4.21(d)(i).
"PURCHASE AGREEMENT" means the Asset Purchase Agreement dated as of the
22nd day of September, 1997 between the Corporation, ICI Canada Inc.,
PCI Carolina Inc., Pioneer Companies Inc., ICI Americas Inc. and
Imperial Chemical Industries PLC, as same may be amended from time to
time.
"RATE OF INTEREST" means the rate of interest of twenty-five percent
(25%) per annum.
"REAL PROPERTY" has the meaning ascribed thereto in Section 3.1(a).
"REAL PROPERTY CONTRACTS" has the meaning ascribed thereto in Section
3.1(a).
"RECEIVER" means any of a receiver, manager, receiver-manager and
receiver and manager.
"RELEASE" when used as a verb includes, spill, leak, emit, deposit,
discharge, leach, migrate, dump, issue, empty place, seep, exhaust,
abandon, bury, incinerate or dispose into the Environment and "RELEASE"
when used as a noun has a correlative meaning.
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"RENTS" means all the right, title and interest the Corporation has from
time to time in and to (i) any and all rent, income, revenues and
profits and other amounts payable or derived from the Leases or securing
obligations thereunder; and (ii) any and all indemnities and insurance
proceeds received, which may be received or to which the Corporation is
or may become entitled in connection with the Rents.
"RESTORATION" has the meaning ascribed thereto in section 4.21(c).
"RESTORATION ELECTION NOTICE" has the meaning ascribed thereto in
section 4.21(c).
"SECURITY INTEREST" has the meaning ascribed thereto in Section 3.2(a).
"SUBSTANCE" means any substance, waste, liquid, gaseous or solid matter,
fuel, micro-organism, sound, vibration, ray, heat, odour, radiation,
energy vector, plasma and organic or inorganic matter.
"SURETY BOND" means a clean irrevocable surety bond or credit insurance
policy in favour of the Collateral Agent issued by an insurance company
the claims paying ability rating of which at the time such surety bond
or credit insurance policy is delivered is satisfactory to the
Collateral Agent, accompanied by an opinion of counsel to such insurance
company to the effect that such surety bond or credit insurance policy
has been duly authorized, executed and delivered by such insurance
company and constitutes the legal, valid and binding obligation of such
insurance company enforceable against such insurance company by the
Collateral Agent in accordance with its terms subject to customary
exceptions at the time for opinions for such instruments, together with
an opinion of counsel to the effect that, taking into account the
purpose under this Debenture for which such surety bond will be given,
such surety bond and accompanying opinions are responsive to the
requirements of this Debenture;
"TAKING" has meaning ascribed thereto in section 4.21(b).
"TERM LOAN AGREEMENT" has the meaning ascribed thereto in the first
recital hereof.
2.2 PPSA DEFINITIONS. Unless otherwise defined herein or the context
otherwise requires, terms for which meanings are provided in the PPSA are used
in this Debenture, including its preamble and recitals, with such meanings.
2.3 INTERPRETATION. This Debenture shall be interpreted in
accordance with the following:
(a) words denoting the singular include the plural and vice versa and
words denoting any gender include all genders;
(b) the division of this Debenture into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Debenture; and
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(c) the word "including" shall mean "including without limitation"
and "includes" shall mean "includes without limitation".
2.4 SEVERABILITY. If any provision of this Debenture is or becomes
illegal, invalid or unenforceable, such provision shall be severed from this
Debenture and be ineffective to the extent of such illegality, invalidity or
unenforceability. The remaining provisions hereof shall be unaffected by such
provision and shall continue to be valid and enforceable.
2.5 STATUTES, ETC.. Unless otherwise specified herein all references
to statutes or regulations are to be treated as references to the same as
amended, consolidated, revised or re-enacted from time to time, or to any
successor or replacement statutes or regulations.
2.6 GOVERNING LAW. This Debenture shall be governed by, and
interpreted in accordance with, the Laws of the Province of Ontario 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 Ontario with respect to any
matter arising under or related to this Debenture.
2.7 SCHEDULES. The following schedule attached hereto shall, for all
purposes hereof, be incorporated in and form an integral part of this
Debenture:
Schedule "A" Real Property
ARTICLE 3
SECURITY
3.1 GRANT OF SECURITY.
(a) Subject to Section 3.4 hereof, the Corporation hereby: (i)
grants, mortgages, hypothecates and charges to and in favour of the Collateral
Agent, as and by way of a first fixed and specific mortgage, hypothec and
charge, all right, title and interest of the Corporation in and to all real
property now owned or hereafter acquired by the Corporation, including the real
property described in Schedule "A" hereto, including all buildings, erections
and improvements of every kind thereon from time to time and fixtures forming a
part thereof (collectively, the "Real Property"); and (ii) assigns and
transfers to the Collateral Agent by way of a specific assignment and transfer
and grants to the Collateral Agent a security interest in: (A) all Leases, all
income, revenues and profits derived from Leases and all rents and other sums
payable to the Corporation pursuant to the terms of any Leases and all
benefits, advantages and powers to be derived under such Leases, with full
power and authority to demand, sue for, recover, receive and give receipts for
all Rents and all other monies payable thereunder and otherwise to enforce the
rights of the Corporation thereunder; (B) all licenses, permits, approvals,
certificates and agreements with or from any Governmental Entity relating
directly or indirectly to the ownership, use, development, operation and
maintenance of the Real Property or the alteration or renovation or
construction of improvements on the Real Property, whether heretofore or
hereafter issued or executed (collectively, the "Licenses"); and (C) all
options, contracts, subcontracts, agreements, service agreements, warranties
and purchase orders which have heretofore been or will hereafter be
<PAGE> 9
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executed by or on behalf of the Corporation or which have been assigned to the
Corporation, in connection with the use, development, operation and maintenance
of the Real Property or the construction of improvements on the Real Property
(collectively, the "Real Property Contracts").
(b) Subject to Section 3.4 hereof, the Corporation hereby grants,
assigns, mortgages, hypothecates and charges to and in favour of the Collateral
Agent as and by way of a fixed and specific mortgage, hypothec and charge and
sublease, all right, title and interest of the Corporation in all real property
now or hereafter leased by the Corporation, including all buildings, erections
and improvements of every kind thereon from time to time and fixtures forming a
part thereof (collectively, the "Leasehold Property") and all Leases relating
to such Leasehold Property (collectively, the "Leasehold Property Contracts"
and, together with the Real Property Contracts, the "Contracts").
(c) Subject to Section 3.4 hereof, the Corporation hereby mortgages,
hypothecates and charges to and in favour of the Collateral Agent as and by way
of a fixed and specific mortgage, hypothec and charge, pledges to and in favour
of the Collateral Agent, assigns and transfers to and in favour of the
Collateral Agent as and by way of specific transfer and assignment, and grants
to and in favour of the Collateral Agent a security interest in all of the
Corporation's right, title and interest in and to all of the following personal
property and undertaking of the Corporation now owned or hereafter acquired
(collectively, and together with the property described in Sections 3.1(a) and
3.1(b), the "Collateral", and all references thereto herein including any part
thereof):
(i) all equipment in all of its forms of the Corporation, wherever
located, including all parts thereof and all accessions,
additions, attachments, improvements, substitutions and
replacements thereto and therefor and all accessories related
thereto ("Equipment");
(ii) all contracts, contract rights, chattel paper, documents,
instruments, and general intangibles (excluding: (a) tax refunds
as they may arise from or relate solely to the sale of inventory
including, without limitation, excise, retail sales and goods and
services taxes; and (b) excluding any of the foregoing as it may
arise from or relate to inventory or accounts receivables) of the
Corporation (including without limitation the asset purchase
agreement made as of September 22, 1997 between the Corporation,
PCI Carolina Inc., Pioneer Companies, Inc., ICI Canada Inc., ICI
Americas Inc. and Imperial Chemical Industries PLC as same may be
amended from time to time, and all of the rights and benefits of
the Corporation thereunder), whether or not arising out of or in
connection with the sale or lease of goods, and all rights of the
Corporation now or hereafter existing in and to all security
agreements, guaranties, leases and other contracts securing or
otherwise relating to any such contracts, contract rights,
chattel paper, documents, instruments, and general intangibles;
(iii) all Intellectual Property Collateral (as defined in the
Subsidiary (Canadian) Security Agreement dated of even date
herewith made by the Corporation in favour of the Collateral
Agent (the "Security Agreement")) of the Corporation;
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(iv) all books, records, writings, data bases, information and other
property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the
foregoing in this Section 3.1;
(v) all of the Corporation's other property and rights of every kind
and description and interests therein, including without
limitation, all shares, stock, warrants, deeds, debentures,
debenture stock and all other documents which constitute evidence
of a share, participation or other interest of the Corporation in
property or in an enterprise or which constitutes evidence of an
obligation of the issuer thereof (excluding any Capital Stock (as
defined in the Term Loan Agreement) which is required to be
pledged under the Existing Term Loan Agreement or the Existing
Senior Secured Note Indenture (in each case as defined in the
Term Loan Agreement) until such time as the obligations pursuant
to or under such agreements have been paid in full)
(collectively, the "Negotiable Collateral"); and
(vi) all products, offspring, rents, issues, profits, returns, income
and proceeds of and from any and all of the foregoing Collateral
(including without limitation proceeds which constitute property
of the types described in this Section 3.1, proceeds deposited
from time to time in the Collateral Account (as defined in the
Security Agreement) and in any lock boxes of the Corporation in
respect of the foregoing, and, to the extent not otherwise
included, all payments under insurance (whether or not the
Collateral Agent, the Trustee or the Administrative Agent is a
loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect
to any of the foregoing Collateral).
Notwithstanding the foregoing, "Collateral" shall not include the Excluded
Assets and any general intangibles or other rights arising under any contracts,
instruments, licenses or other documents as to which the grant of a security
interest would constitute a violation of a valid and enforceable restriction in
favour of a third party on such grant, unless and until any required consents
shall have been obtained. Upon the request of the Collateral Agent, the
Corporation shall use its best commercial efforts to obtain any consent
required.
(d) In addition, the Corporation hereby charges to and in favour of
the Collateral Agent as and by way of a floating charge, all Collateral, both
present and future, and every interest therein which the Corporation now has or
hereafter acquires (other than property and assets hereby effectively assigned
or subjected to a specific mortgage, hypothec and charge, and subject to the
exceptions hereinafter contained).
3.2 OBLIGATIONS SECURED.
(a) The mortgages, hypothecs, charges, subleases, pledges, transfers,
assignments and security interests granted hereby (collectively, the "Security
Interest") secure payment to the Collateral Agent, the Trustee, the
Noteholders, the Administrative Agent, the Lenders or any of them of the
principal amount hereof, interest thereon and all debts, liabilities and
obligations, present or future, direct or indirect, absolute or contingent,
matured or not, and all other amounts from time to time owing
<PAGE> 11
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hereunder pursuant hereto or arising from dealings between the Collateral
Agent, the Trustee, the Noteholder, the Administrative Agent, the Lenders or
any of them and the Corporation or from any other dealings or proceedings by
which the Collateral Agent, the Trustee, the Noteholders, the Administrative
Agent, the Lenders or any of them may be or become in any manner whatever a
creditor of the Corporation, and wherever incurred and performance and
satisfaction by the Corporation of all its obligations hereunder and
thereunder, (collectively, and together with the expenses, costs and charges
set out in Section 3.2(b), the "Obligations").
(b) All expenses, costs and charges incurred by or on behalf of the
Collateral Agent, the Trustee, the Noteholders, the Administrative Agent or the
Lenders, or any of them, in connection with this Debenture, the Security
Interest or the realization of the Collateral, including, after the occurrence
and during the continuance of a Default (as defined therein) of the nature set
forth in Section 8.1.9 of the Term Loan Agreement or a Default (as defined
therein) of the nature set forth in Section 501(10) of the Indenture, or an
Event of Default (as defined in the Term Loan Agreement or the Indenture, as
the case may be), all legal fees, court costs, Receiver's remuneration and
other expenses of taking possession of, repairing, protecting, insuring,
preparing for disposition, realizing, collecting, selling, transferring,
delivering or obtaining payment of the Collateral shall be added to and form a
part of the Obligations.
3.3 ATTACHMENT.
(a) The Corporation hereby acknowledges and agrees that: (i) value
has been given; (ii) the Corporation has rights in the Collateral (other than
Collateral acquired after the date hereof); and (iii) the Corporation has not
agreed with any of the Collateral Agent, the Trustee, the Noteholders, the
Administrative Agent or the Lenders to postpone the time for attachment of the
Security Interest which shall attach upon the execution of this Debenture and,
in the case of Collateral acquired after the date hereof, when the Corporation
has rights therein.
(b) The Corporation hereby agrees to execute and deliver at its own
cost and expense from time to time amendments to this Debenture or the
schedules hereto or additional security or schedules as may be required by the
Collateral Agent in order that the Security Interest shall attach to any
personal property subsequently acquired by the Corporation or not adequately
described herein.
3.4 SCOPE OF SECURITY INTEREST.
(a) To the extent that the creation of the Security Interest would
constitute a breach or permit the acceleration of any agreement, lease, right,
license or permit to which the Corporation is a party, the Security Interest
shall not attach thereto but the Corporation shall hold its interest therein in
trust for the Collateral Agent and shall assign such agreement, right, license
or permit to the Collateral Agent or as the Collateral Agent may direct,
forthwith upon obtaining the consent of the other party thereto and the
Corporation hereby agrees that it shall, upon the request of the Collateral
Agent, use its best commercial efforts to obtain any consent required to permit
any such agreement, lease, right, license or permit to be subject to the
Security Interest.
(b) The Security Interest shall not extend or apply to the last day
of any term reserved by any lease, verbal or written, or any agreement
therefor, now held or hereafter acquired by the Corporation,
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but the Corporation shall stand possessed of any such reversion in trust to
assign and dispose thereof as the Collateral Agent may direct.
(c) Neither the Collateral Agent, the Trustee, the Noteholders, the
Administrative Agent nor the Lenders will be deemed in any manner to have
assumed any obligation of the Corporation under any of the Licenses or
Contracts nor shall the Collateral Agent, the Trustee, the Noteholders, the
Administrative Agent or the Lenders be liable to any Governmental Entity by
reason of any default by any Person under the Licenses or Contracts. The
Corporation agrees to indemnify and hold each of the Collateral Agent, the
Trustee, the Noteholders, the Administrative Agent and the Lenders harmless of
and from any and all liability, loss or damage which such persons incur by
reason of any claim or demand against it based on its alleged assumption of the
Corporation's duty and obligation to perform and discharge the terms, covenants
and agreements in the Licenses and Contracts.
(d) The Security Interest shall not extend or apply to Excluded
Assets.
3.5 CORPORATION'S DEALINGS WITH COLLATERAL. Except as permitted by
the Term Loan Agreement and the Indenture, the Corporation shall not:
(a) sell, exchange, lease, release or abandon or otherwise dispose of
or otherwise deal with the Collateral; or
(b) move or transfer the Collateral or any part thereof to a location
other than those specified in Schedule A, or, upon 30 days notice to the
Collateral Agent, to any location owned or leased by a subsidiary of the
Corporation or PAI.
ARTICLE 4
REPRESENTATIONS AND COVENANTS OF THE CORPORATION
The Corporation hereby represents and covenants to the Collateral
Agent that:
4.1 CORPORATE POWER AND AUTHORITY. The Corporation has the full
corporate power and authority to enter into this Debenture and to grant the
Security Interest without obtaining the waiver, consent or approval of any
lessor, sublessor, Governmental Entity or entity or other party whomsoever and
whatsoever which has not been obtained except in the case of certain
environmental permits and approvals which, by their terms, are not transferable
or cannot be transferred without the prior approval of the issuing agency.
4.2 EXECUTION AND DELIVERY. The execution and delivery of this
Debenture have been duly authorized by all necessary corporate action.
4.3 BINDING OBLIGATION. This Debenture, when duly executed and
delivered, will be a legal, valid and binding obligation of the Corporation
enforceable against it in accordance with its terms; provided that such
enforcement may be limited by bankruptcy, insolvency, reorganization or similar
Laws affecting creditors' rights generally.
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4.4 GOOD TITLE. The Corporation has good and marketable title to the
Collateral. The Buildings upon the Real Property are all within the boundary
lines of the Real Property and there are no encroachments thereon that would
materially impair the use thereof. The Collateral is free and clear of any and
all Liens or encumbrances of any nature or kind except for the Permitted Liens.
4.5 ALL PERMITS. The Corporation has all necessary permits,
franchises, licenses, rights-of-way, servitudes or other rights or authority
needed in connection with the operation and maintenance of the Plants, except
where the failure to have the same would not have a Material Adverse Effect;
all of the Contracts are presently in full force and effect and no default has
occurred or exists thereunder, except where such default would not individually
or in the aggregate have a Material Adverse Effect; except for Permitted Liens,
the Corporation's grant of the Security Interest in the manner herein provided
does not result in the creation or imposition of any other Lien or security
interest, adverse claim or option upon any of the Collateral.
4.6 PLACE OF BUSINESS. The Corporation's registered office is
located in the City of Saint John, New Brunswick. The Corporation will not
change its name, identity or corporate structure or its registered office or
chief place of business without notifying the Collateral Agent at least thirty
(30) days prior to the effective date of such change.
4.7 DEFENCE OF TITLE. The Corporation will warrant and defend title
to the Collateral, subject to Permitted Liens, against the claims and demands
of all other Persons whomsoever and will maintain and preserve the Security
Interest so long as any of the Obligations secured hereby remain outstanding.
Should an adverse claim be made against the title to any material part of the
Collateral, the Corporation agrees it will immediately notify the Collateral
Agent in writing thereof and defend against such adverse claim to the extent
necessary to preserve the Collateral Agent's rights and benefits hereunder,
subject to Permitted Liens, and the Corporation further agrees that the
Collateral Agent may take such other reasonable action as it deems advisable to
protect and preserve its interests in the Collateral, and in such event the
Corporation will indemnify the Collateral Agent against any and all costs,
reasonable attorney's fees and other expenses which it may incur in defending
against any such adverse claim. Such obligations shall be payable on demand
and shall bear interest from the date of demand therefor until paid at the Rate
of Interest. Any proceeds of any policy of title insurance maintained by the
Corporation with respect to the Collateral shall, for the purposes of this
Debenture, be paid and applied in the same manner as Insurance Proceeds.
4.8 FIRST-RANKING SECURITY INTEREST. This Debenture is, and always
will be maintained as first-ranking Security Interest upon the Collateral,
subject to the Permitted Liens, and the Corporation will not create or suffer
to be created or permit to exist any Lien, security interest or charge prior or
junior to or on parity with the Security Interest upon the Collateral or any
part thereof or upon the rents, issues, revenues, profits or other income
therefrom, except for the Permitted Liens.
4.9 MAINTENANCE OF COLLATERAL. The Corporation will, at its own
expense, do or cause to be done all things necessary to preserve and keep in
full repair, working order and efficiency, reasonable wear and tear excepted,
all of the Collateral, including, without limitation, all Equipment and, from
time to time, will make all the needful and proper repairs, renewals and
replacements so that at all times the
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state and condition of the Collateral will be fully preserved and maintained,
unless the failure to repair, renew or replace would not materially interfere
with the present use or operation of the Collateral.
4.10 PERFORMANCE OF CONTRACTS. The Corporation will promptly pay and
discharge all rentals, or other payments and will perform or cause to be
performed each and every act, matter or thing required by, each and all of the
contracts, instruments or agreements executed in connection with or incident to
the ownership and operation of the Plants and being a portion of the Collateral
and will do all other things necessary to keep unimpaired the Corporation's
rights with respect thereto and to prevent any forfeiture thereof or default
thereunder, unless such forfeiture or default shall not individually or in the
aggregate have a Material Adverse Effect. The Corporation will operate the
facilities comprising the Plants in a good and workmanlike manner and in
accordance with the practices of the industry and in compliance in all material
respects with all Governmental Requirements affecting ownership and operation
of such facilities, including without limitation, Environmental Laws.
4.11 NAME OF CORPORATION. The Corporation does not do business with
respect to the Collateral under any name other than PCI Chemicals Canada
Inc./Produits Chimiques PCI Canada Inc.
4.12 OPERATION BY THIRD PARTIES. To the extent any of the Collateral
is operated by a party or parties other than the Corporation, the Corporation's
covenants as expressed hereunder are modified to require that the Corporation
use its best efforts (including without limitation the reasonable exercise of
all rights and remedies as are available to the Corporation) to obtain
compliance with such covenants by the operator or operators of the Collateral.
4.13 COMPLIANCE WITH LAWS. The Plants comply in all material respects
with all local land use requirements of Governmental Entities except for
possible nonconforming uses or violations which do not and will not materially
interfere with the present use, operation or maintenance thereof as now used,
operated or maintained.
4.14 PAYMENT OF TAXES, INSURANCE PREMIUMS, ASSESSMENTS; COMPLIANCE WITH LAWS
AND INSURANCE REQUIREMENTS.
(a) Unless contested in accordance with the provisions of section
4.14(e) hereof, the Corporation shall pay and discharge or cause to be paid and
discharged, from time to time when the same shall become due, all real estate
and other taxes, special assessments, levies, permits, inspection and license
fees, all premiums for insurance, all water and sewer rents and charges, and
all other public charges imposed upon or assessed against the Collateral or any
part thereof or upon the revenues, rents, issues, income and profits of the
Collateral, including, without limitation, those arising in respect of the
occupancy, use or possession thereof.
(b) During the continuance of an Event of Default, the Corporation
shall deposit with the Collateral Agent, on the first day of each month, an
amount reasonably estimated by the Corporation to be equal to one-twelfth
(1/12th) of the annual taxes, assessments and other items required to be
discharged by the Corporation under section 4.14(a) and amounts reasonably
estimated by the Corporation to be necessary to maintain the insurance
coverages contemplated in section 4.16 below, which estimates shall not be less
than one-twelfth (1/12th) of the annual taxes, assessments, insurance premiums
and other items required to be discharged by the Corporation during the year
immediately preceding the year during
<PAGE> 15
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which such Event of Default occurred. Such amounts shall be held by the
Collateral Agent without interest to the Corporation and applied to the payment
of each obligation in respect of which such amounts were deposited, in such
order or priority as the Collateral Agent shall determine, on or before the
date on which such obligation would become delinquent. If at any time the
amounts so deposited by the Corporation shall, in the Collateral Agent's
judgment, be insufficient (when added to the instalments anticipated to be paid
thereafter) to discharge any of such obligations when due, the Corporation
shall, immediately upon demand, deposit with the Collateral Agent such
additional amounts as may be requested by the Collateral Agent. Nothing
contained in this section 4.14 shall affect any right or remedy of the
Collateral Agent under any provision of this Debenture or of any statute or
rule of Law to pay any such amount from its own funds (provided, however, that
the Collateral Agent shall not in any event be obligated to pay any of such
amounts from its own funds) and to add the amount so paid, together with
interest at the Rate of Interest, to the obligations, or relieve the
Corporation of its obligations to make or provide for the payment of the annual
taxes, assessments and other charges required to be discharged by the
Corporation under section 4.14(a). All sums held pursuant to this section 4.14
shall form part of the Collateral. During the continuance of any Event of
Default, the Collateral Agent may apply all or any part of the sums held
pursuant to this section 4.14 to payment and performance of the Obligations in
accordance with the provisions of the Intercreditor Agreement. The Corporation
shall redeposit with the Collateral Agent an amount equal to all amounts so
applied as a condition to the cure, if any, of such Event of Default, in
addition to fulfilment of any other required conditions.
(c) Unless contested in accordance with the provisions of section
4.14(e), the Corporation shall timely pay (or obtain a bond in the amount of)
all lawful claims and demands of mechanics, materialmen, labourers,
warehousemen, employees, suppliers, government agencies administering worker's
compensation insurance, old age pensions and social security benefits and all
other claims, judgments, demands or amounts of any nature which, if unpaid or
not bonded, could result in or permit the creation of a Lien (other than a
Permitted Lien) on the Collateral or any part thereof or the Rents arising
therefrom, or which might result in forfeiture of all or any part of the
Collateral.
(d) The Corporation shall maintain, or cause to be maintained, in
full force and effect, all permits, certificates, authorizations, consents,
approvals, registrations, filings, licenses, franchises or other instruments
now or hereafter required by any Governmental Entity to operate or use and
occupy the Plants and the Equipment for its intended uses (collectively, the
"PERMITS"; each, a "PERMIT"), unless the failure to maintain such Permits would
not individually or in the aggregate have a Material Adverse Effect. Unless
contested in accordance with the provisions of section 4.14(e), the Corporation
shall comply promptly with, or cause prompt compliance with, all requirements
set forth in the Permits and all Governmental Requirements applicable to all or
any part of the Collateral or the condition, use or occupancy of all or any
part thereof or any recorded deed of restriction, declaration, covenant running
with the land or otherwise, now or hereafter in force unless the compliance
therewith would not individually or in the aggregate have a Material Adverse
Effect. The Corporation shall not initiate or consent to any change in the
zoning, subdivision or any other use classification of the Real Property, if
such action could have a material adverse effect on the Security Interest or
materially impair the present use and operation of the Collateral or materially
impair the Collateral Agent's rights or benefits hereunder, without the prior
written consent of the Collateral Agent.
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(e) The Corporation may at its own expense contest the amount or
applicability of any of the obligations described in sections 4.14(a), 4.14(c)
and 4.14(d) by appropriate legal proceedings, prosecution of which operates to
prevent the collection or enforcement thereof or the sale or forfeiture of the
Collateral or any part thereof to satisfy such obligations; provided, however,
that:
(i) any such contest shall be conducted in good faith by appropriate
legal proceedings promptly instituted and diligently conducted;
and
(ii) in connection with such contest, the Corporation shall have made
provision for the payment or performance of such contested
obligation on the Corporation's books if and to the extent
required by generally accepted accounting principles then
utilized by the Corporation in the preparation of its financial
statements, or shall have deposited with the Collateral Agent a
sum sufficient to pay and discharge such obligation and the
Collateral Agent's estimate of all interest and penalties related
thereto.
Notwithstanding the foregoing provisions of this section 4.14(e):
(iii) no contest of any such obligations may be pursued by the
Corporation if such contest would expose the Collateral Agent, or
any of the Administrative Agent, the Trustee, the Noteholders or
the Lenders to any possible criminal liability or, unless the
Corporation shall have furnished an Additional Undertaking
therefor satisfactory to the Collateral Agent in respect of any
civil liability for failure to comply with such obligations; and
(iv) if at any time payment or performance of any obligation contested
by the Corporation pursuant to this section 4.14(e) shall become
necessary to prevent the delivery of a tax or similar deed
conveying the Collateral or any portion thereof because of
nonpayment or nonperformance, the Corporation shall pay or
perform the same in sufficient time to prevent the delivery of
such tax or similar deed.
(f) The Corporation shall not in its use and occupancy of the Plants
or the Equipment (including, without limitation, in the making of any
Alteration) take any action that would cause the termination, revocation or
denial of any insurance coverage required to be maintained under this Debenture
or, that pursuant to written notice from any applicable insurer, would be the
basis for a defense to any claim under any insurance policy maintained in
respect of any of the Plants or the Equipment and the Corporation shall
otherwise comply in all material respects with the requirements of any insurer
that issues a policy of insurance in respect of any of the Plants or the
Equipment.
(g) The Corporation shall, promptly upon receipt of any written
notice regarding any failure by the Corporation to pay or discharge any of the
obligations described in section 4.14(a) or 4.14(f), furnish a copy of such
notice to the Collateral Agent. The Corporation shall, promptly upon receipt
of any written notice regarding any failure by the Corporation to pay or
discharge any of the obligations described in section 4.14(c) or 4.14(d),
furnish a copy of such notice to the Collateral Agent, if such failure would
have a Material Adverse Effect.
<PAGE> 17
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4.15 CERTAIN TAX LAW CHANGES. In the event of the passage after the
date of this Debenture of any Law deducting from the value of real property,
for the purpose of taxation, amounts in respect of any Lien thereon or changing
in any way the Laws for the taxation of debentures or debts secured by
debentures for federal, provincial, municipal or local purposes or the manner
of the collection of any such taxes, and imposing a new tax, either directly or
indirectly, on this Debenture or the interest of any of the Collateral Agent,
the Administrative Agent, the Trustee, the Lenders and the Noteholders in any
Collateral (other than income, franchise or similar taxes imposed on such
Person), or in the event that any regulation or regulatory amendment becoming
effective after the date hereof imposes any federal or provincial or municipal
or local tax on interest income received with respect to any Obligation, the
Corporation shall promptly pay the Collateral Agent such amount or amounts as
may be necessary from time to time to pay such tax.
4.16 REQUIRED INSURANCE POLICIES.
(a) The Corporation shall maintain, or cause to be maintained, as of
and from the Closing Date, in full force and effect the following insurance
coverages in respect of the Plants and the Equipment:
(i) Physical hazard insurance on an "all risk" basis covering hazards
commonly covered by fire and extended coverage, lightning, civil
commotion, hail, riot, strike, water damage, sprinkler leakage,
collapse and malicious mischief, in an amount equal to the full
replacement cost of the Buildings and all Equipment, with such
deductibles as would be maintained by a prudent operator of
property similar in use and configuration to the Plant and
located in the locality where such Plant is located. "Full
replacement cost" means the cost of construction to replace the
Buildings and the Equipment, exclusive of depreciation,
excavation, foundation and footings, as determined from time to
time by a proper officer of the Corporation in consultation with
its insurance company or insurance agent, as appropriate;
(ii) Comprehensive general liability insurance against claims for
bodily injury, death or property damage occurring on, in or about
the any of the Plants and any adjoining streets, sidewalks and
passageways and covering any and all claims, including, without
limitation, all legal liability, subject to customary exclusions,
to the extent insurable, imposed upon the Collateral Agent or any
of the Administrative Agent, Trustee, Lenders or Noteholders, and
all court costs and attorneys' fees, arising out of or connected
with the possession, use, leasing, operation or condition of the
Plants, with policy limits and deductibles in such amounts as
would be maintained by a prudent operator of property similar in
use and configuration to the Plant and located in the locality
where the Plant is located;
(iii) Comprehensive boiler and machinery insurance to cover sudden and
accidental breakdown, including but not limited to, explosion of
any boilers and machinery located on the Plants or comprising any
Equipment, with policy limits and deductibles in such amounts as
would be maintained by a prudent operator of property similar in
use and
<PAGE> 18
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configuration to the Plant and the Equipment and located in the
locality where the Plant is located;
(iv) Comprehensive automobile liability insurance policy against
claims for bodily injury, death and property damage covering all
owned, leased, non-owned and hired motor vehicles, including
loading and unloading in such amounts as would be maintained by a
prudent operator of property similar in use and configuration to
the Plant and the Equipment and located in the locality where the
Plant is located;
(v) Business interruption insurance on an annual basis in amounts not
less than the projected gross profit of each of the Plants during
the applicable twelve-month period but in no event less than the
amount necessary to pay the fixed charges and other expenses of
owning, operating and maintaining the Collateral for the same
period;
(vi) To the extent not otherwise covered by the insurance required
under sections 4.16(a)(i) and (4.16)(a)(ii), during the
performance of any Alterations, renovations, repairs,
restorations or construction, broad form Builders Risk Insurance
on an all-risk completed value basis; and
(vii) Such other insurance, against such risks and with policy limits
and deductibles in such amounts as would be maintained by a
prudent operator of property similar in use and configuration to
the Plants and located in the localities in which the Plants are
located.
(b) The Corporation may maintain the coverages required by this
section 4.16 under blanket policies covering the Plants and other locations
owned or operated by the Corporation if the terms of such blanket policies
otherwise comply with the provisions of this section 4.16 and contain specific
coverage allocations in respect of each of the Plants determined in accordance
with the provisions of this section 4.16. All insurance policies in respect of
the coverages required by sections 4.16(a)(i), 4.16(a)(iv), 4.16(a)(vi) and, if
applicable, 4.16(a)(vii) shall be in amounts at least sufficient to prevent
coinsurance liability and all losses thereunder shall be payable to the
Collateral Agent, as loss payee, subject to the terms of the Intercreditor
Agreement, pursuant to a standard Canadian Insurance Bureau standard mortgagee
clause for use in the Province of Ontario, or any equivalent thereof, and each
such policy shall, to the extent obtainable at commercially reasonable costs,
(i) include effective waivers (whether under the terms of such policy
or otherwise) by the insurer of all claims for insurance premiums
against all loss payees and named insureds other than the
Corporation and all rights of subrogation against any named
insured, and
(ii) provide that any losses thereunder shall be payable
notwithstanding (I) any act, failure to act, negligence of, or
violation or breach of warranties, declarations or conditions
contained in such policy by the Corporation or the Collateral
Agent or any other named insured or loss payee, (II) the
occupation or use of the Plant or the Equipment for purposes more
hazardous than permitted by the terms of the policy, (III) any
foreclosure or other proceeding or notice of sale relating to the
Plant or the Equipment, or (IV) any change in the title to or
ownership or possession of the Plant or the Equipment; provided,
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however, that (with respect to items contemplated in clauses
(III) and (IV) above) any notice requirements of the applicable
policies are satisfied. All insurance policies in respect of the
coverages required by sections 4.16(a)(ii), 4.16(a)(v) and, if
applicable, 4.16(a)(vii) shall name the Collateral Agent as an
additional insured.
(c) Each policy of insurance required under this section 4.16 shall
provide that:
(i) notices of any failure by the Corporation to pay any insurance
premium in respect thereof, be furnished to the Collateral Agent
contemporaneously with any such notice given to the Corporation
and
(ii) it may not be cancelled or otherwise terminated without at least
twenty (20) days' prior written notice to the Collateral Agent
and shall permit the Collateral Agent to pay any premium therefor
within twenty (20) days after receipt of any notice stating that
such premium has not been paid when due. The policy or policies
of such insurance or certificates of insurance evidencing the
required coverages and all renewals or extensions thereof shall
be delivered to the Collateral Agent upon receipt by the
Corporation. Settlement of any claim under any of the insurance
policies referred to in this section 4.16 (other than the
insurance contemplated in section 4.16(a)(iii) which in the
Corporation's reasonable judgment involves loss of $1,000,000 in
lawful currency of the United States or more, shall require the
prior approval of the Collateral Agent (acting pursuant to the
provisions of the Intercreditor Agreement) and the Corporation
shall use its best efforts to cause each such insurance policy to
contain a provision to such effect.
(d) At least fifteen (15) days prior to the expiration of any
insurance policy required by this section 4.16, the Corporation shall deliver
to the Collateral Agent evidence that such policy or policies shall be renewed
or extended and the Corporation shall deliver promptly to the Collateral Agent
after receipt thereof the policy or policies renewing or extending such
expiring policy or renewal or extension certificates or other evidence of
renewal or extension, together with a receipt showing payment of the premium
thereof.
(e) The Corporation shall not purchase additional policies in respect
of the insurance coverages required to be maintained under this section 4.16,
unless the Collateral Agent is included thereon as an additional named insured
and, if applicable, with loss payable to the Collateral Agent under an
endorsement containing the provisions described in section 4.16(b) and the
policy evidencing such insurance otherwise complies with the requirements of
section 4.16(b). The Corporation immediately shall notify the Collateral Agent
whenever any such separate insurance policy is obtained and promptly shall
deliver to the Collateral Agent the policy or certificate evidencing such
insurance.
4.17 INSPECTION. The Corporation shall permit the Collateral Agent,
by its agents, accountants and attorneys, to visit and inspect the Collateral
upon reasonable prior notice at such times as may be reasonably requested by
the Collateral Agent.
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4.18 THE CORPORATION TO MAINTAIN IMPROVEMENTS. The Corporation shall
not commit any waste on the Plants or with respect to any Equipment or make any
change in the use of the Plant or any Equipment. The Corporation represents
and warrants that:
(a) to the Corporation's knowledge, the Plants are served by all
electric, gas, sewer, water facilities and any other utilities required or
necessary for the current use thereof and any easements or servitudes necessary
to the furnishing of such utility service by the Corporation have been obtained
and duly recorded, and
(b) the Corporation has access to the Plants from public roads
sufficient to allow the Corporation and its tenants and invitees to conduct its
and their businesses at the Plants as they are currently conducted. The
Corporation shall not materially alter the occupancy or use of the Plant
without the prior written consent of the Collateral Agent. Except as otherwise
permitted by the Intercreditor Agreement, no Buildings comprising a portion of
any of the Plants may be demolished nor shall any Equipment be removed without
the prior written consent of the Collateral Agent.
4.19 LEASES.
(a) All of the Leases are valid and effective in accordance with
their respective terms, except that the enforcement thereof may be subject to:
(i) bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting or relating to enforcement of creditors'
rights generally, and
(ii) general equitable principles.
To the Corporation's knowledge, the Corporation is not in material breach of or
in default (and to the Corporation's knowledge, no event has occurred which
with due notice or lapse of time or both, may constitute such a material breach
or default) under any Lease, and no party to any Lease has given the
Corporation written notice of or made a claim with respect to any breach or
default, the consequences of which, individually or in the aggregate, would
have a Material Adverse Effect on the Corporation.
(b) The Corporation shall manage and operate the Collateral or cause
the Collateral to be managed and operated in a reasonably prudent manner and,
except as otherwise permitted under section 4.20, will not enter into any Lease
(or any amendment or modification thereof) or other agreement subsequent to the
date hereof with any Person which, in the reasonable judgment of the
Corporation, individually or in the aggregate, would have a Material Adverse
Effect on the value of the property subject thereto.
(c) The Corporation shall not:
(i) receive or collect, or permit the receipt or collection of, any
rental or other payments under any Lease more than one (1) month
in advance of the respective period in respect of which they are
to accrue, except that (i) in connection with the execution and
delivery of any Lease or of any amendment to any Lease, rental
payments thereunder may be
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collected and received in advance in an amount not in excess of
one (1) month's rent and (ii) the Corporation may receive and
collect escalation and other charges in accordance with the terms
of each Lease;
(ii) assign, transfer, mortgage or grant a security interest in (other
than to the Collateral Agent hereunder or as otherwise permitted
under section 4.20 of this Debenture) any rental or other payment
under any Lease whether then due or to accrue in the future, the
interest of the Corporation as lessor under any Lease or the
Rents, issues, revenues, profits or other income of the
Collateral;
(iii) enter into any Lease after the date hereof that does not contain
terms to the effect as follows:
(I) such Lease and the rights of the tenant thereunder shall
be subject and subordinate to the rights of the Collateral
Agent under this Debenture;
(II) such Lease has been mortgaged or charged by the
Corporation, as landlord thereunder, to the Collateral
Agent under this Debenture;
(III) in the case of any foreclosure, the rights and remedies of
the tenant in respect of any obligations of any successor
landlord thereunder shall be limited to the equity
interest of such successor landlord in the Plant and any
successor landlord shall not (a) be liable for any act,
omission or default of any prior landlord under the Lease
or (b) be required to make or complete any tenant
improvements or capital improvements or repair, restore,
rebuild or replace the demised premises or any part
thereof in the event of damage, casualty or condemnation
or (c) be required to pay any amounts to tenant arising
under the Lease prior to such successor landlord taking
possession;
(IV) the tenant's obligation to pay rent and any additional
rent shall not be subject to any abatement, deduction,
counterclaim or setoff as against the Collateral Agent or
any purchaser upon any foreclosure hereunder in respect of
any portion of a Plant, and the Collateral Agent or such
purchaser will not be bound by any advance payments of
rent in excess of one month or any security deposits
unless such security was actually received; and
(V) the tenant agrees to attorn, at the option of the
Collateral Agent or any purchaser of a Plant, to the
successor owner upon any foreclosure hereunder in respect
of a Plant or the giving or granting of a deed in lieu
thereof; and
(iv) terminate or permit the termination of any Lease of space, accept
surrender of all or any portion of the space demised under any
Lease prior to the end of the term thereof or accept assignment
of any Lease to the Corporation which, in the reasonable judgment
of the Corporation, individually or in the aggregate, would have
a Material Adverse Effect or materially impair the Security
Interest unless:
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(I) the tenant under such Lease has not paid the equivalent of
two months' rent and the Corporation has made reasonable
efforts to collect such rent; or
(II) the Corporation shall deliver to the Collateral Agent an
officer's certificate to the effect that the Corporation
has entered into a new Lease (or Leases) for the space
covered by the terminated or assigned Lease with a term
(or terms) which expire(s) no earlier than the date on
which the terminated or assigned Lease was to expire
(excluding renewal options), and with a tenant (or
tenants) having a creditworthiness (as reasonably
determined by the Corporation) sufficient to pay the rent
and other charges due under the new Lease (or Leases), and
the tenant(s) shall have commenced paying rent, including,
without limitation, all operating expenses and other
amounts payable under the new Lease (or Leases), without
any abatement or concession, in an amount at least equal
to the amount which would have then been payable under the
terminated or assigned Lease.
(d) The Corporation timely shall perform and observe all the terms,
covenants and conditions required to be performed and observed by the
Corporation under each Lease and will not engage in any conduct in respect of
any Lease which would have individually or in the aggregate a Material Adverse
Effect or materially impair the Security Interest. The Corporation promptly
shall notify the Collateral Agent of the receipt of any notice from any lessee
under any Lease claiming that the Corporation is in material default in the
performance or observance of any of the terms, covenants or conditions thereof
to be performed or observed by the Corporation and will cause a copy of each
such notice to be delivered promptly to the Collateral Agent.
4.20 TRANSFER RESTRICTIONS. Except as otherwise permitted by the
Intercreditor Agreement, the Corporation shall not, without the prior written
consent of the Collateral Agent, further mortgage, encumber, hypothecate, sell,
convey or assign all or any part of the Collateral or suffer any of the
foregoing to occur by operation of Law or otherwise (each a "TRANSFER");
provided, however, the Corporation may so encumber the Collateral to the extent
such encumbrances are of the kind listed in clause (d) of the definition of
"Permitted Liens". Any proceeds of such permitted Transfer shall be deemed
Collateral Proceeds (as defined in the Indenture) and are hereby assigned and
shall be paid to the Collateral Agent to be held in the Collateral Account (as
defined in the Intercreditor Agreement) and disbursed pursuant to the
Intercreditor Agreement.
4.21 DESTRUCTION; EXPROPRIATION.
(a) If there shall occur any damage to, or loss or destruction of,
the Buildings and Equipment, or any part of any thereof (each, a
"DESTRUCTION"), the Corporation shall promptly send to the Collateral Agent a
notice setting forth the nature and extent of such Destruction. The proceeds
of any insurance payable in respect of any such Destruction are hereby assigned
and shall be paid to the Collateral Agent to be held in the Collateral Account;
provided, however, that so long as no Event of Default shall have occurred and
be continuing, if such proceeds are in an amount less than $1,000,000 in lawful
currency of the United States, such proceeds shall be paid directly to the
Corporation. All insurance proceeds paid to the Collateral Agent pursuant to
this section, less the amount of any expenses incurred in litigating,
arbitrating, compromising or settling any claim arising out of such Destruction
(the
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"INSURANCE PROCEEDS"), shall constitute Moneys and be applied in accordance
with the provisions of sections 4.21(c), 4.21(d) and 4.21(e).
(b) If there shall occur any taking of the Collateral or any part
thereof, in or by expropriation proceedings pursuant to any Law, general or
special, or by reason of the temporary requisition of the use or occupancy of
the Collateral or any part thereof, by any Governmental Entity, civil or
military (each, a "TAKING"), the Corporation immediately shall notify the
Collateral Agent upon receiving notice of such Taking or commencement of
proceedings therefor. The Collateral Agent may (but shall not be obligated to)
participate in any proceedings or negotiations which might result in any
Taking. The Collateral Agent may be represented by counsel satisfactory to it
at the expense of the Corporation. The Corporation shall deliver or cause to
be delivered to the Collateral Agent all instruments requested by it to permit
such participation. The Corporation shall in good faith and with due diligence
file and prosecute what would otherwise be the Corporation's claim for any such
award or payment and cause the same to be collected and paid over to the
Collateral Agent, and hereby irrevocably authorizes and empowers the Collateral
Agent, in the name of the Corporation as its true and lawful attorney-in-fact
or otherwise, during the continuance of an Event of Default to collect and to
receipt for any such award or payment, and, in the event the Corporation fails
so to act, to file and prosecute such claim. The Corporation shall pay all
costs, fees and expenses incurred by the Collateral Agent in connection with
any Taking and seeking and obtaining any award or payment on account thereof.
Any proceeds, award or payment in respect of any Taking are hereby assigned and
shall be paid to the Collateral Agent to be held in the Collateral Account;
provided, however, that so long as no Event of Default shall have occurred and
be continuing, if such proceeds are in an amount less than $1,000,000 in lawful
currency of the United States, such proceeds shall be paid directly to the
Corporation. The Corporation shall take all steps necessary to notify the
condemning authority of such assignment. Such proceeds, award or payment paid
to the Collateral Agent, less the amount of any expenses incurred in
litigating, arbitrating, compromising or settling any claim arising out of such
Taking ("NET AWARD"), shall constitute Moneys and be applied in accordance with
the provisions of sections 4.21(c), 4.21(d) and 4.21(e).
(c) So long as no Event of Default shall have occurred and be
continuing, the Corporation shall have the right, at the Corporation's option,
to perform a restoration (a "RESTORATION") of the affected portions of the
Plant and the Equipment. In the event the Corporation elects to perform a
Restoration, the Corporation shall give written notice ("RESTORATION ELECTION
NOTICE") of such election to the Collateral Agent within twenty (20) business
days after the date that the Collateral Agent receives the applicable Insurance
Proceeds or Net Award, as the case may be. The Corporation shall, within
twenty (20) business days following the date of delivery of a Restoration
Election Notice, commence and diligently continue to perform the Restoration of
that portion or portions of the Plant and Equipment subject to such Destruction
or affected by such Taking so that, upon the completion of the Restoration, the
Collateral shall be in the same condition and shall be of at least equal
utility for its intended purposes as the Collateral was immediately prior to
such Destruction or Taking. The Corporation shall so complete such Restoration
with its own funds to the extent that the amount of any Net Award or Insurance
Proceeds is insufficient for such purpose. In the event the Collateral Agent
does not receive a Restoration Election Notice within such twenty (20) business
day period, the Collateral Agent shall deal with such Insurance Proceeds or Net
Award in accordance with the provisions of the Intercreditor Agreement.
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(d) In the event a Restoration is to be performed under this section
4.21(d), the Collateral Agent shall not release any part of the Net Award or
the Insurance Proceeds except in accordance with the provisions of section
4.21(e) and the Corporation shall, prior to commencing any work to effect a
Restoration of the Plant and the Equipment, promptly (but in no event later
than one-hundred twenty (120) days following any Destruction or Taking) furnish
to the Collateral Agent:
(i) complete plans and specifications (the "PLANS AND
SPECIFICATIONS") for the Restoration;
(ii) an officers' certificate stating that all permits and approvals
required by Law to commence work in connection with the
Restoration have been obtained;
(iii) a certificate (an "ARCHITECT'S CERTIFICATE") of an independent,
reputable architect or engineer acceptable to the Collateral
Agent and licensed in the Province of Ontario (i) stating that
the Plans and Specifications have been reviewed and approved by
the signatory thereto, (ii) containing such signatory's estimate
(an "ESTIMATE") of the costs of completing the Restoration, and
(iii) upon completion of such Restoration in accordance with the
Plans and Specifications, the utility of the Plant and the
Equipment will be equal to or greater than the utility thereof
immediately prior to the Destruction or Taking relating to such
Restoration; and
(iv) if the Estimate exceeds the Insurance Proceeds or the Net Award,
as the case may be, by $5,000,000 in lawful currency of the
United States or more, an Additional Undertaking in an amount
equal to not less than the Estimate less the amount of the
Insurance Proceeds or the Net Award, as the case may be, then
held by the Collateral Agent for application toward the cost of
such Restoration.
Upon receipt by the Collateral Agent of each of the items
required pursuant to sections 4.21(d)(i) through 4.21(d)(iv) above, the
Collateral Agent shall acknowledge receipt of the Plans and Specifications.
Promptly upon such acknowledgment of receipt by the Collateral Agent, the
Corporation shall commence and diligently continue to perform the Restoration
substantially in accordance with such Plans and Specifications and in material
compliance with all Governmental Requirements, free and clear of all Liens
except Permitted Liens. The Corporation shall so complete such Restoration
with its own funds to the extent that the amount of any Net Award or Insurance
Proceeds is insufficient for such purpose.
(e) In the event the Corporation performs a Restoration of any of the
Plants and Equipment as provided in section 4.21(d), the Collateral Agent shall
apply any Insurance Proceeds or Net Award held by the Collateral Agent on
account of the Destruction or Taking to the payment of the cost of performing
such Restoration pursuant to the relevant provisions of the Intercreditor
Agreement. In the event there shall be any surplus after application of the
Net Award or the Insurance Proceeds to Restoration of the Plants and the
Equipment, such surplus shall become Net Proceeds, as defined in the Indenture
for application in accordance thereunder; provided, however, that if an Event
of Default shall have occurred and be continuing, such surplus shall be applied
by the Collateral Agent to the payment of the Obligations, in accordance with
Article 6 of the Intercreditor Agreement. Notwithstanding anything to the
contrary herein, if a Destruction or Taking of all or substantially all of the
Collateral
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occurs on a date which is less than 12 months prior to Maturity, as such term
is defined in the Indenture, all Insurance Proceeds and Net Awards shall be
applied to the permanent repayment or prepayment of any Secured Obligations
then outstanding in accordance with the Intercreditor Agreement.
4.22 ALTERATIONS. The Corporation shall not make any material
structural addition, modification or change (each, an "ALTERATION") to any
Plant or the Equipment which would materially diminish the utility of the
Collateral or impair the Security Interest. Whether or not the Collateral
Agent has consented to the making of any Alteration, the Corporation shall (i)
complete each Alteration promptly, in a good and workmanlike manner and in
material compliance with all applicable local Laws, and (ii) pay when due all
claims for labour performed and materials furnished in connection with such
Alteration, unless contested in accordance with the provisions of section
4.14(e).
4.23 HAZARDOUS MATERIAL
(a) Except with respect to those matters which would not reasonably
be expected to have a Material Adverse Effect, to the best knowledge of the
Corporation, the Corporation holds all Permits required to permit the
Corporation to conduct its business in the manner now conducted and none of the
Corporation's operations are being conducted in a manner that violates in any
material respect the terms and conditions under which any such Permit was
granted, including without limitation, under any Environmental Laws, except
those permits that are expected to be transferred in the ordinary course after
the date hereof; to the best of the knowledge of the Corporation all such
Permits are valid and in full force and effect; and to the knowledge of the
Corporation, no suspension, cancellation, revocation or termination of any such
Permit is threatened.
(b) Except as set forth in the Term Loan Agreement, there are no
material claims, actions, suits, proceedings or investigations pending or to
the knowledge of the Corporation, threatened, before any Governmental Entity or
before any arbitrator brought by or against the Corporation or with respect to
any of the Collateral the basis of which is any Environmental Law.
(c) The Corporation shall (or shall cause other parties obligated to
do so under or in accordance with contracts with or indemnity to the
Corporation):
(i) take all commercially reasonable actions to comply with any and
all applicable present and future Environmental Laws relating to
the Plants;
(ii) pay in a timely fashion the cost of any removal, response measure
or corrective action relating to any Hazardous Materials required
by any Environmental Law or any order, regulation, consent decree
or similar agreement or instrument and keep the Collateral free
of any Lien imposed pursuant to any Environmental Law;
(iii) take all commercially reasonable actions to not Release any
Hazardous Materials on, under or from the Collateral in violation
of any Environmental Law;
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(iv) apply any insurance proceeds or other sums received by it in
respect of the removal of any Hazardous Material or any other
corrective action relating to any Hazardous Material to such
removal or corrective action; and
(v) not take, or fail to take any action required under any
Environmental Laws or in connection with any Hazardous Materials
that could reasonably be expected to result in the incurrence of
any obligation or liability of any of the Collateral Agent,
Administrative Agent, Trustee, Lenders or Noteholders. During
the continuance of an Event of Default, in the event the
Corporation fails to comply with the covenants in the preceding
sentence, the Collateral Agent may (upon receipt of an indemnity
satisfactory to the Collateral Agent), in addition to any other
remedies set forth herein, but shall not be obligated to, as
mandatary for and at the Corporation's sole cost and expense
cause to be taken, any remediation, removal, response or
corrective action relating to Hazardous Materials that is
required by Environmental Law and is not being done or contested
by the Corporation. Any costs or expenses incurred by the
Collateral Agent for such purpose shall be immediately due and
payable by the Corporation and shall bear interest at the Rate of
Interest. The Corporation shall provide to the Collateral Agent
and its agents and employees access to the Collateral to take any
action required by Environmental Laws, or in connection with any
Hazardous Materials, that could be expected to result in the
incurrence of any obligation or liability of any of the
Collateral Agent, Administrative Agent, Trustee, Lenders or
Noteholders, if the Corporation fails to do so and such action or
removal is required under any Environmental Laws as provided
above. Upon written request by the Collateral Agent, which shall
include a reasonably specific statement of the basis thereof
(which shall be specific to the condition of the Collateral and
the alleged violation of Environmental Law) and which shall be
made not more frequently than once in any twelve-month period or
at any time that the Collateral Agent is exercising its remedies
under this Debenture, the Collateral Agent shall have the right
(upon receipt of an indemnity satisfactory to the Collateral
Agent), but shall not be obligated, at the sole cost and expense
of the Corporation, to conduct an environmental audit or review
of the Collateral relating to the specific items as required in
writing or relating to the remedy that the Collateral Agent is
exercising under this Debenture by persons or firms appointed by
the Collateral Agent, and the Corporation shall cooperate in all
reasonable respects in the conduct of such environmental audit or
review, including, without limitation, by providing reasonable
access to the Collateral and to all records relating thereto.
The Corporation shall indemnify and hold each of the Collateral
Agent, Administrative Agent, Trustee, Lenders and Noteholders
harmless from and against all loss, cost, damage or expense
(including, without limitation, attorneys' fees) that any of the
Collateral Agent, Administrative Agent, Trustee, Lenders and
Noteholders may sustain by reason of the assertion against such
party of any claim relating to such Hazardous Materials or
actions taken with respect thereto as authorized hereunder.
Nothing contained herein shall result in any of the Collateral
Agent, Administrative Agent, Trustee, Lenders and Noteholders
being deemed an "owner" or "operator" under applicable
Environmental Law.
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(d) The Corporation may at its own expense contest the amount or
applicability of any of the obligations described in the first sentence of
section 4.23(c) by appropriate legal proceedings, prosecution of which operates
to prevent the enforcement thereof; provided, however, that:
(i) any such contest shall be conducted in good faith by appropriate
legal proceedings promptly instituted and diligently conducted
and
(ii) in connection with such contest, the Corporation shall have made
provision for the payment or performance of such contested
obligation on the Corporation's books if and to the extent
required by generally accepted accounting principles then
utilized by the Corporation in the preparation of its financial
statements, or shall have deposited with the Collateral Agent a
sum sufficient to pay and discharge such obligation and the
Collateral Agent's estimate of all interest and penalties related
thereto. Notwithstanding the foregoing provisions of this
section 4.23(d), no contest of any such obligations may be
pursued by the Corporation if such contest would expose the
Collateral Agent, or any of the Administrative Agent, Trustee,
Lenders or Noteholders to any possible criminal liability or,
unless the Corporation shall have furnished an Additional
Undertaking therefor satisfactory to the Collateral Agent or for
any civil liability for failure to comply with such obligations.
4.24 ASBESTOS. The Corporation shall not install nor permit to be
installed in the Collateral friable asbestos or any asbestos-containing
material (collectively, "ACM") except in compliance with all applicable
Environmental Laws respecting such material. With respect to any ACM currently
present in the Collateral, except with respect to matters which would not have
a Material Adverse Effect, the Corporation shall comply with all Laws
applicable to ACM located on any of the Plants, all at the Corporation's sole
cost and expense. If the Corporation shall fail so to comply with such Laws,
the Collateral Agent may (upon receipt of an indemnity satisfactory to the
Collateral Agent) during the continuance of an Event of Default, but shall not
be obligated to, in addition to any other remedies set forth herein, take those
steps reasonably necessary to comply with applicable Laws. Any costs or
expenses incurred by the Collateral Agent for such purpose shall be immediately
due and payable by the Corporation and bear interest at the Rate of Interest.
The Corporation shall provide to the Collateral Agent and its agents and
employees reasonable access to the Collateral upon reasonable prior notice to
remove such ACM if the Corporation fails to do so and removal is required under
any Environmental Law as provided for above; provided, however, that nothing
contained herein shall obligate the Collateral Agent to exercise any rights
under such access. The Corporation shall indemnify and hold each of the
Collateral Agent, Administrative Agent, Trustee, Lenders and Noteholders
harmless from and against all loss, cost, damage and expense that any of the
Collateral Agent, Administrative Agent, Trustee, Lenders and Noteholders may
sustain as a result of the presence of any ACM and any removal thereof in
compliance with any applicable Environmental Law.
4.25 BOOKS AND RECORDS; REPORTS. The Corporation shall keep proper
books of record and account, which shall accurately represent the financial
condition of the Corporation and the business affairs of the Corporation
relating to the Collateral. The Collateral Agent and its authorized
representatives shall have the right, from time to time, upon reasonable prior
notice to examine the books and records of the Corporation relating to the
operation of the Collateral at the office of the Corporation.
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4.26 NO CLAIMS AGAINST THE COLLATERAL AGENT. Nothing contained in
this Debenture shall constitute any consent or request by the Collateral Agent,
express or implied, for the performance of any labour or services or the
furnishing of any materials or other property in respect of the Plant or any
part thereof, nor as giving the Corporation any right, power or authority to
contract for or permit the performance of any labour or services or the
furnishing of any materials or other property in such fashion as would permit
the making of any claim against the Collateral Agent in respect thereof or any
claim that any Lien based on the performance of such labour or services or the
furnishing of any such materials or other property is ranked in priority to the
Security Interest.
4.27 UTILITY SERVICES. The Corporation shall pay, or cause to be
paid, when due all charges for all public or private utility services, all
public or private rail and highway services, all public or private
communication services, all sprinkler systems, and all protective services, any
other services of whatever kind or nature at any time rendered to or in
connection with the Plants or any part thereof, shall comply in all material
respects with all contracts relating to any such services, and shall do all
other things reasonably required for the maintenance and continuance of all
such services to the extent required to fulfil the obligations set forth in
section 4.18.
ARTICLE 5
DEFAULT AND ENFORCEMENT
5.1 DEFAULT. The Security Interest shall become enforceable against
the Corporation if and only if and when the Corporation shall fail to pay,
perform or satisfy any of the Obligations when due and payable or required to
be performed or satisfied, as the case may be, but not otherwise (each such
failure is an "Event of Default"). Upon the occurrence of an Event of Default,
the Obligations shall immediately become due and payable by the Corporation to
the Collateral Agent without necessity of any further act or formality and,
thereafter, the Corporation shall not be entitled to sell, assign, transfer,
exchange, lease or otherwise dispose of or deal with all or any part of the
Collateral.
5.2 REMEDIES. Whenever the Security Interest has become enforceable,
the Collateral Agent may in its discretion:
(a) take possession of all or any part of the Collateral with power
to exclude the Corporation and its officers, employees and agents therefrom;
(b) take all such steps as the Collateral Agent may consider
necessary or desirable for the purposes of preserving, maintaining and
completing all or any part of the Collateral and making such replacements
thereof and improvements and additions thereto as the Collateral Agent may
consider expedient;
(c) carry on all or any part of the business of the Corporation
relating to the Collateral and use all or any part of the Collateral directly
in carrying on the Corporation's business or as security for loans or advances
to enable the Collateral Agent to carry on the Corporation's business or
otherwise;
(d) receive the rents, incomes and profits of any kind whatsoever
from the Collateral and pay therefrom: (i) any expenses of preserving,
maintaining and completing the Collateral, of making such
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replacements thereof and improvements and additions thereto as the Collateral
Agent may consider expedient and of carrying on all or any part of the
Corporation's business relating to the Collateral; and (ii) any charges against
the Collateral ranking in priority to or pari passu with the Security Interest
or the payment of which may be necessary or desirable to preserve or protect
all or any part of the Collateral or the interest of the Collateral Agent
therein;
(e) lease all or any part of the Collateral and renew from time to
time all or any of the Leases on such terms and conditions as the Collateral
Agent may determine;
(f) with or without taking possession, take any action or proceedings
to enforce the performance of any covenant contained in any of the Leases;
(g) enjoy and exercise all the powers of the Corporation as the
Collateral Agent considers necessary or desirable for the exercise of any and
all of the remedies of the Collateral Agent provided for herein, including the
powers to make any arrangement or compromise on behalf and in the name of the
Corporation which the Collateral Agent considers expedient, to purchase on
credit and borrow money on behalf and in the name of the Corporation and to
advance moneys to the Corporation, all at such rates of interest as the
Collateral Agent may consider reasonable, and to enter into contracts and
undertake obligations on behalf of and in the name of the Corporation for any
and all of the foregoing purposes or which the Collateral Agent considers
necessary or desirable for the exercise of any of the rights, powers and
remedies of the Collateral Agent provided for herein, all of which borrowings,
advances and obligations together with interest thereon shall, at the
discretion of the Collateral Agent, be entitled to the security hereof in
priority to the payment of the Obligations;
(h) sell or otherwise dispose of all or any part of the Collateral;
(i) apply to a court for the appointment of a Receiver to take
possession of all or such part of the Collateral as the Collateral Agent shall
designate, with such duties, powers and obligations as the court making the
appointment shall confer;
(j) appoint a Receiver of all or any part of the Collateral by
instrument in writing executed by the Collateral Agent;
(k) institute proceedings in any court of competent jurisdiction for
sale or foreclosure of the Collateral; and
(l) take any steps or proceedings of any kind permitted by applicable
Law or in equity or otherwise to enforce payment of the Obligations or
performance of any other covenant or obligation of the Corporation contained
herein, and exercise all rights and remedies of a secured party under the PPSA.
5.3 REMEDIES CUMULATIVE AND WAIVER. The rights and remedies
hereunder of the Collateral Agent are cumulative and are in addition to and not
in substitution for any other rights and remedies provided by law or by equity.
Any single or partial exercise by the Collateral Agent of any right or remedy
in respect of a default or breach of any term, covenant or condition contained
herein shall not be deemed to be a waiver thereof or to alter, affect or
prejudice any other right or remedy or other rights
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or remedies to which the Collateral Agent may be lawfully entitled, for such
default or breach. The Collateral Agent shall at all times have the right to
proceed against all or any portion of the Collateral or any other security in
such order and in such manner as it shall determine without waiving any rights,
powers or remedies which the Collateral Agent may have with respect to this
Debenture or any other security or at law, in equity or otherwise. No delay or
omission by the Collateral Agent in exercising any right, power or remedy
hereunder or otherwise shall operate as a waiver thereof or of any other right,
power or remedy. Any waiver by the Collateral Agent of the strict observance,
performance or compliance with any term, covenant, condition or agreement
herein contained and any indulgence granted, either expressly or by course of
conduct, by the Collateral Agent shall be effective only in the specific
instance and for the purpose of which it was given and shall be deemed not to
be a waiver of any rights and remedies of the Collateral Agent hereunder as a
result of any other default or breach hereunder. No consent or waiver by the
Collateral Agent shall be effective unless made in writing and signed by an
authorized officer of the Collateral Agent.
5.4 CONCERNING THE RECEIVER.
(a) Any Receiver appointed by the Collateral Agent shall be vested
with the rights and remedies which could have been exercised by the Collateral
Agent in respect of the Corporation or the Collateral and such other powers and
discretions as are granted in the instrument of appointment and any instrument
or instruments supplemental thereto. The identity of the Receiver, any
replacement thereof and any remuneration thereof shall be within the sole and
unfettered discretion of the Collateral Agent.
(b) Any Receiver appointed by the Collateral Agent shall act as agent
for the Collateral Agent for the purposes of taking possession of the
Collateral, but otherwise and for all other purposes (except as provided below)
as agent for the Corporation. The Receiver may sell, lease, or otherwise
dispose of the Collateral as agent for the Corporation or as agent for the
Collateral Agent as the Collateral Agent may determine in its discretion. The
Receiver shall apply all monies from time to time received by the Receiver in
such order or priority, as the Collateral Agent may at their option direct. If
there shall be a deficiency, the Corporation shall remain liable for such
deficiency and shall pay the amount of such deficiency to the Collateral Agent
forthwith. The balance of proceeds realized in respect of the Collateral, if
any, remaining after repayment in full of the Obligations shall be paid to the
Corporation or such other Person or Persons entitled thereto by applicable Law.
The Corporation agrees to ratify and confirm all actions of the Receiver acting
as agent for the Corporation, and to release and indemnify the Receiver in
respect of all such actions.
(c) The Collateral Agent, in appointing or refraining from appointing
any Receiver, shall not incur liability to the Receiver, the Corporation or
otherwise and shall not be responsible for any misconduct or negligence of such
Receiver.
5.5 APPOINTMENT OF ATTORNEY. The Corporation hereby irrevocably
appoints the Collateral Agent (and any of its officers) as attorney of the
Corporation with full power of substitution to exercise, at any time when the
Security Interest shall have become enforceable, in the name of and on behalf
of the Corporation any of the Corporation's right, title and interest in and to
the Collateral (including the right of disposal, execution, endorsement,
delivery and transfer of all or any part of the Collateral). All acts of any
such attorney are hereby ratified and approved, and such attorney shall not be
liable for any
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act, failure to act or any other matter or thing in connection therewith,
except for its own gross negligence or wilful misconduct.
5.6 DEALING WITH THE COLLATERAL AND THE SECURITY INTEREST.
(a) The Collateral Agent shall not be obliged to exhaust its recourse
against the Corporation or any other Person or Persons or against any other
security the Collateral Agent may hold in respect of the Obligations before
realizing upon or otherwise dealing with the Collateral in such manner as the
Collateral Agent may consider desirable.
(b) The Collateral Agent may grant extensions or other indulgences,
take and give up securities, accept compositions, grant releases and discharges
and otherwise deal with the Corporation and with other parties, sureties or
securities as the Collateral Agent may see fit without prejudice to the
Obligations or the rights of the Collateral Agent in respect of the Collateral.
(c) The Collateral Agent shall not be: (i) liable or accountable for
any failure to collect, realize or obtain payment in respect of the Collateral;
(ii) bound to institute proceedings for the purpose of collecting, enforcing,
realizing or obtaining payment of the Collateral or for the purpose of
preserving any rights of the Collateral Agent, the Corporation or any other
Person in respect thereof; (iii) responsible for any loss occasioned by any
sale or other dealing with the Collateral or by the retention of or failure to
sell or otherwise deal therewith; or (iv) bound to protect the Collateral from
depreciating in value or becoming worthless.
5.7 STANDARDS OF SALE. Without prejudice to the ability of the
Collateral Agent to dispose of the Collateral in any manner which is
commercially reasonable, the Corporation acknowledges that a disposition of
Collateral by the Collateral Agent which takes place substantially in
accordance with the following provisions shall be deemed to be commercially
reasonable:
(a) Collateral may be disposed of in whole or in part;
(b) Collateral may be disposed of by public auction, public tender or
private contract, with or without advertising and without any other formality;
(c) any purchaser or lessee of such Collateral may be a customer of
the Collateral Agent, provided that such transaction is bona fide;
(d) a disposition of Collateral may be on such terms and conditions
as to credit or otherwise as the Collateral Agent, in its sole discretion, may
deem advantageous; and
(e) the Collateral Agent may establish an upset or reserve bid or
price in respect of the Collateral.
5.8 DEALINGS BY THIRD PARTIES. No Person dealing with any of the
Collateral Agent or its agent or a Receiver shall be required: (i) to
determine whether the Security Interest has become enforceable; (ii) to
determine whether the powers which the Collateral Agent or its agent is
purporting
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to exercise have been exercisable; (iii) to determine whether any money remains
due to the Collateral Agent by the Corporation; (iv) to determine the necessity
or expediency of the stipulations and conditions subject to which any sale or
lease shall be made; (v) to determine the propriety or regularity of any sale
or any other dealing by the Collateral Agent with the Collateral; or (vi) to
see to the application of any money paid to the Collateral Agent. The Security
Interest is in addition to and not in substitution for any security now held or
hereafter acquired by the Collateral Agent as security for the Obligations.
5.9 CORPORATION LIABLE FOR THE DEFICIENCY. In the case of any
judicial or other steps or proceedings to enforce the Security Interest, and
without limiting any right of the Collateral Agent to obtain judgment for any
greater amount, the Corporation shall remain liable to the Collateral Agent for
any amount which may remain due in respect of the Obligations after application
to the payment thereof of the proceeds of any sale, lease or other disposition
of the Collateral or any part thereof.
5.10 NOTICE OF SALE. Unless required by applicable Law, neither the
Collateral Agent nor any Receiver appointed by them shall be required to give
the Corporation any notice of any sale, lease or other disposition of the
Collateral or any part thereof or the date after which any private disposition
of Collateral or any part thereof is to be made.
5.11 PAYMENT OF PRIOR CLAIMS. If the Collateral Agent is at any time
or from time to time required to make a payment to defeat or honour the
priority or possible priority of any Liens on or in respect of all or any part
of the Collateral, any such payment or payments, and the costs, charges and
expenses of the Collateral Agent in connection therewith (including legal fees
on a solicitor and client basis) shall be payable by the Corporation on demand.
ARTICLE 6
GENERAL
6.1 NOTICE. Any and all demands, notices or other communications to
be made or given pursuant to this Debenture shall be given and received in the
manner and at the addresses specified in Section 11.2 of the Intercreditor
Agreement.
6.2 RELEASES. Subject to the provisions of the Term Loan Agreement
and the Indenture, the Collateral Agent may in its discretion, from time to
time, release any part of the Collateral or any other security held by the
Collateral Agent either with or without any sufficient consideration therefor,
without responsibility therefor and without thereby releasing any other part of
the Collateral or any other security or any Person from the security created by
this Debenture or from any of the covenants herein contained. Each and every
portion into which the Collateral is or may hereafter be divided does and shall
stay charged with the Obligations. No Person shall have the right to require
the Obligations to be apportioned and the Collateral Agent shall not be
accountable to the Corporation for any moneys except those actually received by
the Collateral Agent.
6.3 EXPENSES. The Corporation shall pay to the Collateral Agent on
demand all of the costs, charges and expenses of the Collateral Agent
(including legal fees on a solicitor and client basis and Receiver's fees) in
connection with the preparation, registration or amendment of this Debenture,
the perfection or preservation of the Security Interest, the enforcement by any
means of any provision hereof
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or, after the occurrence of and during the continuance of a Default (as defined
therein) of the nature set forth in Section 8.1.9 of the Term Loan Agreement or
a Default (as defined therein) of the nature set forth in Section 501(10) of
the Indenture, or an Event of Default (as defined in the Term Loan Agreement or
the Indenture, as the case may be) the exercise of any rights, powers or
remedies hereunder, including all such costs, charges and expenses in
connection with taking possession, maintaining, completing, preserving,
protecting, collecting or realizing upon all or any part of the Collateral or
carrying on all or any part of the Corporation's business relating to the
Collateral.
6.4 DISCHARGE OF DEBENTURE. The Security Interest shall be released
and discharged upon full and complete payment, performance and satisfaction of
all of the Obligations and at the request and sole cost and expense of the
Corporation. The Collateral Agent, the Administrative Agent and the Trustee
shall execute and deliver to the Corporation such releases and discharges as
the Corporation may reasonably require.
6.5 NO MERGER OF ESTATES. There shall not be deemed to be any merger
of this Debenture, nor of the rights and interests of the Collateral Agent
hereunder, with the estate in the Real Property or with the reversion or rights
and interests of the Corporation or the Collateral Agent under any instrument
affecting the Collateral by reason only of the fact that the same Person may
own or acquire, directly or indirectly, two or more estates, rights or
interests in the Collateral until all Persons having any interest under this
Debenture, the estate in the Real Property or the reversion or rights and
interests of the Corporation or the Collateral Agent under any instrument
affecting the Collateral, by an appropriate instrument, so declare and provide.
6.6 NO OBLIGATION TO ADVANCE. Neither the issue nor delivery of this
Debenture shall obligate the Collateral Agent, the Trustee, any Noteholder, the
Administrative Agent or any Lender to advance any funds, or otherwise make or
continue to make any credit available, to the Corporation.
6.7 EXCLUSION OF IMPLIED COVENANTS. The implied covenants deemed to
be included in a charge under subsection 7(1) of the Land Registration Reform
Act (Ontario) shall be and are hereby expressly excluded from the terms of this
Debenture.
6.8 PERFECTION OF SECURITY. The Corporation shall register, file or
record all financing statements and other documents in all offices where, in
the opinion of the Collateral Agent, such registration, filing or recording is
necessary or desirable to preserve, perfect or otherwise protect the Security
Interest and the priority thereof. The Collateral Agent shall have the right
to require that the form of this Debenture or any part thereof be amended to
reflect any changes in applicable Law whether arising as a result of statutory
amendments, court decisions or otherwise, in order to confer upon the
Collateral Agent the security interest intended to be created by this
Debenture, except that in no event shall the Collateral Agent require that any
such amendment be effected if the result thereof would be to grant to the
Collateral Agent greater rights than are otherwise contemplated herein.
6.9 ASSIGNMENTS AND PARTICIPATIONS. The Collateral Agent may sell,
assign, transfer or otherwise dispose of all or any of the Obligations in
accordance with the provisions governing the Obligations and, in such event,
each and every immediate and successive assignee, transferee or holder of all
or any of the Obligations, shall have, in respect of the rights or obligations
sold, assigned,
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transferred or otherwise disposed of, the full benefit hereof to the same
extent as if it were an original party to the Obligations or the part thereof
so sold, assigned, transferred or otherwise disposed. None of the rights or
obligations hereunder of the Corporation may be assigned without the prior
written consent of the Collateral Agent, except in accordance with the
provisions of the Intercreditor Agreement.
6.10 ENUREMENT. This Debenture shall enure to the benefit of the
Collateral Agent, the Trustee, the Noteholders, the Administrative Agent and
the Lenders, their respective successors and assigns and be binding upon the
Corporation and its successors and permitted assigns.
6.11 TIME OF ESSENCE. Time shall be of the essence of this Debenture
with respect to the obligations of the Corporation hereunder.
6.12 AMENDMENTS. This Debenture may be amended only by written
agreement of the Corporation and the Collateral Agent.
6.13 FURTHER ASSURANCES. The Corporation shall from time to time,
whether before or after the Security Interest shall have become enforceable, at
its sole cost and expense, do all such acts and things and execute and deliver
all such deeds, transfers, assignments and instruments as the Collateral Agent
may reasonably require for protecting the Collateral or perfecting the Security
Interest and for exercising all powers, authorities and discretions hereby
conferred upon the Collateral Agent, and the Corporation shall, from time to
time after the Security Interest has become enforceable, at its sole cost and
expense, do all such acts and things and execute and deliver all such deeds,
transfers, assignments and instruments as the Collateral Agent may require for
facilitating the sale of the Collateral in connection with any realization
thereof.
6.14 JUDGMENT CURRENCY. If, for the purposes of obtaining judgment in
any court, it is necessary to convert any sum due, or owing to the Collateral
Agent in any currency (the "Original Currency") into another currency (the
"Other Currency"), the Corporation hereby agrees, to the fullest extent that it
may effectively do so, that the rate of exchange used shall be that at which,
in accordance with normal banking procedures, the Collateral Agent could
purchase the Original Currency with the Other Currency on the Business Day
preceding that on which the final judgment is granted. The Obligations of the
Corporation in respect of any sum due in the Original Currency from it to the
Collateral Agent shall, notwithstanding any judgment in any Other Currency, be
discharged only to the extent that on the Business Day following receipt by the
Collateral Agent of any such sum adjudged to be so due or owing in such Other
Currency, the Collateral Agent may in accordance with normal banking procedures
purchase the Original Currency with such Other Currency. If the amount of the
Original Currency so purchased is less than the sum originally due or owing to
the Collateral Agent in the Original Currency, the Corporation shall, as a
separate obligation and notwithstanding any such judgment, indemnify the
Collateral Agent for the benefit of the Trustee, on its own account and on
account of each Noteholder, and the Administrative Agent, on its own account
and on account of each of the Lenders, against such loss, and if the amount of
the Original Currency so purchased exceeds the sum originally due or owing to
the Collateral Agent in the Original Currency, the Collateral Agent shall remit
such excess to the Corporation.
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6.15 COPY RECEIVED. The Corporation acknowledges receipt of a copy of
this Debenture.
IN WITNESS WHEREOF the Corporation has executed this Debenture on the
date first above written.
PCI CHEMICALS CANADA INC.
Per: /s/ KENT R. STEPHENSON
----------------------
Authorized Signing
Officer
c/s
<PAGE> 1
EXHIBIT 4.5(b)
DEMAND DEBENTURE (NOVA SCOTIA)
U.S. $500,000,000 Date: October 30, 1997
This debenture (as amended, supplemented, amended and restated
or otherwise modified from time to time, this "Debenture"), dated as of October
30, 1997, is made by PCI Chemicals Canada Inc., a New Brunswick corporation
(the "Corporation"), in favour of United States Trust Company of New York, as
collateral agent (together with any successors thereto in such capacity, the
"Collateral Agent") for its own benefit and the benefit of the Administrative
Agent (as defined below) and of the Lenders (as defined below), and the Trustee
(as defined below) and of the holders (the "Noteholders") of Notes (as defined
below), pursuant to that certain Intercreditor and Collateral Agency Agreement
(the "Intercreditor Agreement") dated the date hereof among the Corporation,
the Trustee, the Administrative Agent, the Collateral Agent, Pioneer Americas,
Inc. ("PAI") and Pioneer Americas Acquisition Corp. ("PAAC").
W I T N E S S E T H:
WHEREAS pursuant to a term loan agreement dated as of October
30, 1997 (as amended, supplemented, amended and restated or otherwise modified
from time to time, the "Term Loan Agreement"), among PAI, PAAC, as the parent
guarantor, the various financial institutions as are, or may from time to time
become, parties thereto (each individually a "Lender" and collectively the
"Lenders"), the Collateral Agent, Bank of America National Trust and Savings
Association, as administrative agent (together with any successor(s) thereto in
such capacity, the "Administrative Agent"), DLJ Capital Funding, Inc., as the
Syndication Agent for the Lenders and Salomon Brothers Holding Company Inc., as
the Documentation Agent for the Lenders, the Lenders have extended commitments
to make Term Loans (as defined therein) to PAI;
AND WHEREAS the Corporation has executed a guarantee (the
"Guarantee") dated the date hereof in favour of the Administrative Agent, for
its own benefit and the benefit of each of the Lenders, of the obligations of
PAI under the Term Loan Agreement;
AND WHEREAS the Corporation has issued notes ("Notes")
pursuant to that certain Indenture (the "Indenture") dated the date hereof
among the Corporation, PAAC and the other Guarantors named therein, and United
States Trust Company of New York (together with any successor(s) thereto in
such capacity, the "Trustee");
AND WHEREAS the Corporation has duly authorized the execution,
delivery and performance of this Debenture;
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NOW THEREFORE in consideration of the foregoing and for such
other good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged), the Corporation hereby covenants and agrees as follows:
ARTICLE 1
PROMISE TO PAY
1.1 PROMISE TO PAY. The Corporation, for value received, hereby
acknowledges itself indebted and promises to pay to or to the order of the
Collateral Agent, at such address or addresses as the Collateral Agent may
designate at any time and from time to time by notice in writing to the
Corporation, ON DEMAND, the maximum principal amount of five hundred million
dollars ($500,000,000) in lawful money of the United States of America, and to
pay interest on the principal amount outstanding under or in connection with
the Obligations from time to time and on all other amounts owing hereunder to
the date of payment in accordance with terms and provisions hereof at a rate of
twenty-five (25%) percent per annum; such interest to be calculated daily, not
in advance and to be payable in like money on demand, both before and after
maturity and default, with interest on overdue interest at the same rate.
ARTICLE 2
INTERPRETATION
2.1 DEFINITIONS.
"ACM" has the meaning ascribed thereto in section 4.24.
"ADDITIONAL UNDERTAKING" means (i) cash or cash equivalents or (ii) a
Surety Bond, an Additional Undertaking Guarantee or an Additional
Undertaking Letter of Credit which is provided by a Person, whose
long-term unsecured debt is rated at least "AA" (or equivalent) by a
nationally recognized statistical rating agency and is otherwise
satisfactory to the Collateral Agent; Additional Undertakings are
addressed directly to the Collateral Agent and name the Collateral
Agent as the beneficiary thereof and the party entitled to make claims
thereunder.
"ADDITIONAL UNDERTAKING GUARANTEE" means the unconditional guarantee
of payment of any corporation or partnership organized and existing
under the laws of the United States of America or any State or the
District of Columbia or Canada or province thereof that has a
long-term unsecured debt rating satisfactory to the Collateral Agent
at the time such guarantee is delivered, given to the Collateral
Agent, accompanied by an opinion of counsel to such guarantor to the
effect that such guarantee has been duly authorized, executed and
delivered by such guarantor and constitutes the legal, valid and
binding obligation of such guarantor enforceable against such
guarantor by the Collateral Agent in accordance with its terms,
subject to customary exceptions at the time for opinions for such
instruments, together with an opinion of counsel to the effect that,
taking into account the purpose under this Debenture for which such
guarantee will be given, such guarantee and accompanying opinion are
responsive to the requirements of this Debenture.
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"ADDITIONAL UNDERTAKING LETTER OF CREDIT" means a clean, irrevocable,
unconditional letter of credit in favour of the Collateral Agent and
entitling the Collateral Agent to draw thereon in the City of New York
issued by a bank satisfactory to the Collateral Agent, accompanied by
an opinion of counsel to such bank to the effect that such letter of
credit has been duly authorized, executed and delivered by such bank
and constitutes the legal, valid and binding obligation of such bank
enforceable against such bank by the Collateral Agent in accordance
with its terms subject to customary exceptions at the time for
opinions for such instruments, together with an opinion of counsel to
the effect that, taking into account the purpose under this Debenture
for which such letter of credit will be given, such letter of credit
and accompanying opinion are responsive to the requirements of this
Debenture.
"ADMINISTRATIVE AGENT" has the meaning ascribed to it in the first
recital.
"ALTERATION" has the meaning ascribed thereto in section 4.22.
"ARCHITECT'S CERTIFICATE" has the meaning ascribed thereto in section
4.21(d)(iii).
"BUILDINGS" means all of the right, title and interest which the
Corporation has from time to time in and to (i) any and all present
and future structures and works of a permanent nature located, from
time to time in, on or upon the Real Property, including, without
limitation, all buildings, structures, facilities, accessories,
appurtenances and other improvements (including present and future
parking areas) located from time to time in, on or upon the Real
Property and (ii) any and all alterations, reconstructions, additions
or expansions to and all repairs or replacements of any such property
during the term of this Debenture.
"BUSINESS DAY" means any day other than a Saturday or a Sunday and any
day on which banks situated in the Province of Nova Scotia are
authorized or obligated to be closed.
"CLOSING DATE" has the meaning ascribed thereto in the Purchase
Agreement.
"COLLATERAL" has the meaning ascribed thereto in Section 3.1(c).
"COLLATERAL AGENT" has the meaning ascribed thereto in the preamble to
this Debenture.
"COLLATERAL ACCOUNT" has the meaning ascribed thereto in the
Intercreditor Agreement.
"COLLATERAL PROCEEDS" has the meaning ascribed thereto in the
Indenture.
"CONTRACTS" has the meaning ascribed thereto in Section 3.1(b).
"CORPORATION" means PCI Chemicals Canada Inc./Produits Chimiques PCI
Canada Inc. and its successors and assigns.
"DESTRUCTION" has the meaning ascribed thereto in section 4.21(a).
<PAGE> 4
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"EXCLUDED ASSETS" means (a) the inventory of the Corporation,
including goods held for sale or lease, goods furnished or to be
furnished to third parties under contracts of lease, consignment or
service, goods which are raw materials or work in process, goods used
in or procured for packing and materials used or consumed in the
business of the Corporation, (b) accounts due or accruing due and all
records entered or recorded by any system of mechanical or electronic
data processing or any other information storage device, agreements,
books, accounts, invoices, letters, documents and papers recording
evidencing or relating thereto, and (c) all contracts, contract
rights, chattel paper, documents, instruments, and general intangibles
arising from or relating to any of the foregoing.
"ENVIRONMENT" means all components of the earth, including, without
limitation, air (and all layers of the atmosphere), land (and all
surface and subsurface soil, underground spaces and cavities and all
land submerged under water) and water (and all surface and underground
water), organic and inorganic matter and living organisms, and the
interacting natural systems that include components referred to above
in this definition of "Environment".
"ENVIRONMENTAL LAWS" means all applicable Laws relating to the
Environment, Hazardous Substances, pollution or protection of the
Environment, including Laws relating to: (i) on site or off-site
contamination; (ii) chemical substances or products; (iii) Releases of
pollutants, contaminants, chemicals or other industrial, toxic or
radioactive substances or Hazardous Substances into the Environment;
and (iv) the manufacture, processing, distribution, use, treatment,
storage, transport, packaging, labelling, sale, recycling, disposal,
destruction, incineration, burial, advertising, display or handling of
Hazardous Substances.
"EQUIPMENT" has the meaning ascribed thereto in section 3.1(c).
"EVENT OF DEFAULT" has the meaning ascribed thereto in section 5.1.
"GOVERNMENTAL ENTITY" means any: (i) multinational, federal,
provincial, state, regional, municipal, local or other government,
governmental or public department, central bank, court, commission,
board, bureau, agency or instrumentality, domestic or foreign; (ii)
any subdivision, agent, commission, board, or authority of any of the
foregoing; or (iii) any quasi-governmental or private body exercising
any regulatory, expropriation or taxing authority under or for the
account of any of the foregoing.
"GOVERNMENTAL REQUIREMENT" means any law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other
directive or requirement, including, without limitation, Environmental
Laws, energy regulations and occupational safety and health standards
or controls, of any Governmental Entity.
"HAZARDOUS SUBSTANCE" means any Substance which is or is deemed to be,
alone or in any combination, hazardous, hazardous waste, toxic, a
pollutant, a deleterious substance, a contaminant or a source of
pollution or contamination under any applicable Environmental Laws.
<PAGE> 5
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"INDENTURE" has the meaning ascribed thereto in the third recital
hereof.
"INSURANCE PROCEEDS" has the meaning ascribed thereto in section
4.21(a).
"INTERCREDITOR AGREEMENT" has the meaning ascribed thereto in the
preamble.
"LAWS" means all statutes, codes, ordinances, decrees, rules,
regulations, municipal by-laws, judicial or arbitral or administrative
or ministerial or departmental or regulatory judgments, orders,
decisions, rulings or awards, policies, guidelines, or any provisions
of the foregoing, including general principles of common and civil law
and equity, binding on or affecting the Person referred to in the
context in which such word is used; and "LAW" means any one of such
Laws.
"LEASES" means all of the right, title and interest which the
Corporation has from time to time in and to any and all present and
future leases, offers to lease and other agreements to lease of the
whole or any part of the Real Property, Leasehold Property or
Buildings and any and all present or future agreements and licences
whereby the Corporation gives any other Person the right to use or
occupy the whole or any part of the Real Property or Buildings, in
each case for the time being in effect, and all revisions,
alterations, modifications, amendments, extensions, renewals,
replacements or substitutions thereof or therefor which may hereafter
be effected or entered into but does not include registered
servitudes, rights of superficies, or rights in the nature of a
servitude, or a right of superficies.
"LEASEHOLD PROPERTY" has the meaning ascribed thereto in Section
3.1(b).
"LEASEHOLD PROPERTY CONTRACTS" has the meaning ascribed thereto in
Section 3.1(b).
"LENDERS" has the meaning ascribed thereto in the first recital
hereof.
"LICENSES" has the meaning ascribed thereto in Section 3.1(a).
"LIEN" means, with respect to any property of any Person, any charge,
mortgage, prior claims, pledge, hypothec, security interest, security
under the Bank Act (Canada), lien, conditional sales (or other title
retention agreement or lease in the nature hereof), lease (where such
Person is the lessee of such property), servitudes, assignment,
adverse claims, defect of title, restriction, trust, right of set-off
or other encumbrance of any kind in respect of such property, whether
or not filed, recorded or otherwise perfected under applicable law.
"MATERIAL ADVERSE EFFECT" means, as to any Person, asset or property,
a material adverse effect on the business, assets, properties,
condition (financial or other), operations or results of operations of
such Person, asset or property, which effect is not adequately and
effectively insured or indemnified against by a financially sound
insurance company, and excepting effects arising solely out of general
national economic conditions and/or effects arising solely out of
matters affecting the industry in which such Person, asset or property
conducts business a whole.
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"MONEY" or "MONEYS" means those certain proceeds set forth in sections
4.21(a) and 4.21(b).
"NEGOTIABLE COLLATERAL" has the meaning ascribed thereto in Section
3.1(c)(v).
"NET AWARD" has the meaning ascribed thereto in section 4.21(b).
"NOTEHOLDERS" has the meaning ascribed thereto in the preamble.
"NOTES" has the meaning ascribed thereto in the third recital hereof.
"OBLIGATIONS" has the meaning ascribed thereto in Section 3.2(a).
"PAI" means Pioneer Americas, Inc.
"PAAC" means Pioneer Americas Acquisition Corp.
"PPSA" means the Personal Property Security Act (Nova Scotia).
"PERMITTED LIENS" has the meaning ascribed thereto in the Term Loan
Agreement.
"PERSON" OR "PERSONS" means a corporation, a legal person, a legal
entity, an association, a partnership, an organization, a business, an
individual, a government or political subsdivision thereof or a
government agency.
"PLANT" or "PLANTS" means the Real Property and the Buildings,
collectively.
"PLANS AND SPECIFICATIONS" has the meaning ascribed thereto in section
4.21(d)(i).
"PURCHASE AGREEMENT" means the Asset Purchase Agreement dated as of
the 22nd day of September, 1997 between the Corporation, ICI Canada
Inc., PCI Carolina Inc., Pioneer Companies Inc., ICI Americas Inc. and
Imperial Chemical Industries PLC, as same may be amended from time to
time.
"RATE OF INTEREST" means the rate of interest of twenty-five percent
(25%) per annum.
"REAL PROPERTY" has the meaning ascribed thereto in Section 3.1(a).
"REAL PROPERTY CONTRACTS" has the meaning ascribed thereto in Section
3.1(a).
"RECEIVER" means any of a receiver, manager, receiver-manager and
receiver and manager.
"RELEASE" when used as a verb includes, spill, leak, emit, deposit,
discharge, leach, migrate, dump, issue, empty place, seep, exhaust,
abandon, bury, incinerate or dispose into the Environment and
"RELEASE" when used as a noun has a correlative meaning.
<PAGE> 7
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"RENTS" means all the right, title and interest the Corporation has
from time to time in and to (i) any and all rent, income, revenues and
profits and other amounts payable or derived from the Leases or
securing obligations thereunder; and (ii) any and all indemnities and
insurance proceeds received, which may be received or to which the
Corporation is or may become entitled in connection with the Rents.
"RESTORATION" has the meaning ascribed thereto in section 4.21(c).
"RESTORATION ELECTION NOTICE" has the meaning ascribed thereto in
section 4.21(c).
"SECURITY INTEREST" has the meaning ascribed thereto in Section
3.2(a).
"SUBSTANCE" means any substance, waste, liquid, gaseous or solid
matter, fuel, micro-organism, sound, vibration, ray, heat, odour,
radiation, energy vector, plasma and organic or inorganic matter.
"SURETY BOND" means a clean irrevocable surety bond or credit
insurance policy in favour of the Collateral Agent issued by an
insurance company the claims paying ability rating of which at the
time such surety bond or credit insurance policy is delivered is
satisfactory to the Collateral Agent, accompanied by an opinion of
counsel to such insurance company to the effect that such surety bond
or credit insurance policy has been duly authorized, executed and
delivered by such insurance company and constitutes the legal, valid
and binding obligation of such insurance company enforceable against
such insurance company by the Collateral Agent in accordance with its
terms subject to customary exceptions at the time for opinions for
such instruments, together with an opinion of counsel to the effect
that, taking into account the purpose under this Debenture for which
such surety bond will be given, such surety bond and accompanying
opinions are responsive to the requirements of this Debenture;
"TAKING" has meaning ascribed thereto in section 4.21(b).
"TERM LOAN AGREEMENT" has the meaning ascribed thereto in the first
recital hereof.
2.2 PPSA DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the PPSA
are used in this Debenture, including its preamble and recitals, with such
meanings.
2.3 INTERPRETATION. This Debenture shall be interpreted in
accordance with the following:
(a) words denoting the singular include the plural and vice versa
and words denoting any gender include all genders;
(b) the division of this Debenture into Articles and Sections and
the insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Debenture; and
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(c) the word "including" shall mean "including without limitation"
and "includes" shall mean "includes without limitation".
2.4 SEVERABILITY. If any provision of this Debenture is or
becomes illegal, invalid or unenforceable, such provision shall be severed from
this Debenture and be ineffective to the extent of such illegality, invalidity
or unenforceability. The remaining provisions hereof shall be unaffected by
such provision and shall continue to be valid and enforceable.
2.5 STATUTES, ETC.. Unless otherwise specified herein all
references to statutes or regulations are to be treated as references to the
same as amended, consolidated, revised or re-enacted from time to time, or to
any successor or replacement statutes or regulations.
2.6 GOVERNING LAW. This Debenture shall be governed by, and
interpreted in accordance with, the Laws of the Province of Nova Scotia and the
Laws of Canada applicable therein, without giving effect to any conflicts of
laws rules thereof. The Corporation hereby irrevocably attorns and submits to
the non-exclusive jurisdiction of the courts of Nova Scotia with respect to any
matter arising under or related to this Debenture.
2.7 SCHEDULES. The following schedule attached hereto shall, for
all purposes hereof, be incorporated in and form an integral part of this
Debenture:
Schedule "A" Real Property
ARTICLE 3
SECURITY
3.1 GRANT OF SECURITY.
(a) Subject to Section 3.4 hereof, the Corporation hereby: (i)
grants, mortgages, hypothecates and charges to and in favour of the Collateral
Agent, as and by way of a first fixed and specific mortgage, hypothec and
charge, all right, title and interest of the Corporation in and to all real
property now owned or hereafter acquired by the Corporation, including the real
property described in Schedule "A" hereto, including all buildings, erections
and improvements of every kind thereon from time to time and fixtures forming a
part thereof (collectively, the "Real Property"); and (ii) assigns and
transfers to the Collateral Agent by way of a specific assignment and transfer
and grants to the Collateral Agent a security interest in: (A) all Leases, all
income, revenues and profits derived from Leases and all rents and other sums
payable to the Corporation pursuant to the terms of any Leases and all
benefits, advantages and powers to be derived under such Leases, with full
power and authority to demand, sue for, recover, receive and give receipts for
all Rents and all other monies payable thereunder and otherwise to enforce the
rights of the Corporation thereunder; (B) all licenses, permits, approvals,
certificates and agreements with or from any Governmental Entity relating
directly or indirectly to the ownership, use, development, operation and
maintenance of the Real Property or the alteration or renovation or
construction of improvements on the Real Property, whether heretofore or
hereafter issued or executed (collectively, the "Licenses"); and (C) all
options, contracts, subcontracts, agreements, service agreements, warranties
and purchase orders which have heretofore been or will hereafter be
<PAGE> 9
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executed by or on behalf of the Corporation or which have been assigned to the
Corporation, in connection with the use, development, operation and maintenance
of the Real Property or the construction of improvements on the Real Property
(collectively, the "Real Property Contracts").
(b) Subject to Section 3.4 hereof, the Corporation hereby grants,
assigns, mortgages, hypothecates and charges to and in favour of the Collateral
Agent as and by way of a fixed and specific mortgage, hypothec and charge and
sublease, all right, title and interest of the Corporation in all real property
now or hereafter leased by the Corporation, including all buildings, erections
and improvements of every kind thereon from time to time and fixtures forming a
part thereof (collectively, the "Leasehold Property") and all Leases relating
to such Leasehold Property (collectively, the "Leasehold Property Contracts"
and, together with the Real Property Contracts, the "Contracts").
(c) Subject to Section 3.4 hereof, the Corporation hereby
mortgages, hypothecates and charges to and in favour of the Collateral Agent as
and by way of a fixed and specific mortgage, hypothec and charge, pledges to
and in favour of the Collateral Agent, assigns and transfers to and in favour
of the Collateral Agent as and by way of specific transfer and assignment, and
grants to and in favour of the Collateral Agent a security interest in all of
the Corporation's right, title and interest in and to all of the following
personal property and undertaking of the Corporation now owned or hereafter
acquired (collectively, and together with the property described in Sections
3.1(a) and 3.1(b), the "Collateral", and all references thereto herein
including any part thereof):
(i) all equipment in all of its forms of the Corporation, wherever
located, including all parts thereof and all accessions,
additions, attachments, improvements, substitutions and
replacements thereto and therefor and all accessories related
thereto ("Equipment");
(ii) all contracts, contract rights, chattel paper, documents,
instruments, and general intangibles (excluding: (a) tax
refunds as they may arise from or relate solely to the sale of
inventory including, without limitation, excise, retail sales
and goods and services taxes; and (b) excluding any of the
foregoing as it may arise from or relate to inventory or
accounts receivables) of the Corporation (including without
limitation the asset purchase agreement made as of September
22, 1997 between the Corporation, PCI Carolina Inc., Pioneer
Companies, Inc., ICI Canada Inc., ICI Americas Inc. and
Imperial Chemical Industries PLC as same may be amended from
time to time, and all of the rights and benefits of the
Corporation thereunder), whether or not arising out of or in
connection with the sale or lease of goods, and all rights of
the Corporation now or hereafter existing in and to all
security agreements, guaranties, leases and other contracts
securing or otherwise relating to any such contracts, contract
rights, chattel paper, documents, instruments, and general
intangibles;
(iii) all Intellectual Property Collateral (as defined in the
Subsidiary (Canadian) Security Agreement dated of even date
herewith made by the Corporation in favour of the Collateral
Agent (the "Security Agreement")) of the Corporation;
<PAGE> 10
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(iv) all books, records, writings, data bases, information and
other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of
the foregoing in this Section 3.1;
(v) all of the Corporation's other property and rights of every
kind and description and interests therein, including without
limitation, all shares, stock, warrants, deeds, debentures,
debenture stock and all other documents which constitute
evidence of a share, participation or other interest of the
Corporation in property or in an enterprise or which
constitutes evidence of an obligation of the issuer thereof
(excluding any Capital Stock (as defined in the Term Loan
Agreement) which is required to be pledged under the Existing
Term Loan Agreement or the Existing Senior Secured Note
Indenture (in each case as defined in the Term Loan Agreement)
until such time as the obligations pursuant to or under such
agreements have been paid in full) (collectively, the
"Negotiable Collateral"); and
(vi) all products, offspring, rents, issues, profits, returns,
income and proceeds of and from any and all of the foregoing
Collateral (including without limitation proceeds which
constitute property of the types described in this Section
3.1, proceeds deposited from time to time in the Collateral
Account (as defined in the Security Agreement) and in any lock
boxes of the Corporation in respect of the foregoing, and, to
the extent not otherwise included, all payments under
insurance (whether or not the Collateral Agent, the Trustee or
the Administrative Agent is a loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing
Collateral).
Notwithstanding the foregoing, "Collateral" shall not include the Excluded
Assets and any general intangibles or other rights arising under any contracts,
instruments, licenses or other documents as to which the grant of a security
interest would constitute a violation of a valid and enforceable restriction in
favour of a third party on such grant, unless and until any required consents
shall have been obtained. Upon the request of the Collateral Agent, the
Corporation shall use its best commercial efforts to obtain any consent
required.
(d) In addition, the Corporation hereby charges to and in favour
of the Collateral Agent as and by way of a floating charge, all Collateral,
both present and future, and every interest therein which the Corporation now
has or hereafter acquires (other than property and assets hereby effectively
assigned or subjected to a specific mortgage, hypothec and charge, and subject
to the exceptions hereinafter contained).
3.2 OBLIGATIONS SECURED.
(a) The mortgages, hypothecs, charges, subleases, pledges,
transfers, assignments and security interests granted hereby (collectively, the
"Security Interest") secure payment to the Collateral Agent, the Trustee, the
Noteholders, the Administrative Agent, the Lenders or any of them of the
principal amount hereof, interest thereon and all debts, liabilities and
obligations, present or future, direct or indirect, absolute or contingent,
matured or not, and all other amounts from time to time owing
<PAGE> 11
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hereunder pursuant hereto or arising from dealings between the Collateral
Agent, the Trustee, the Noteholder, the Administrative Agent, the Lenders or
any of them and the Corporation or from any other dealings or proceedings by
which the Collateral Agent, the Trustee, the Noteholders, the Administrative
Agent, the Lenders or any of them may be or become in any manner whatever a
creditor of the Corporation, and wherever incurred and performance and
satisfaction by the Corporation of all its obligations hereunder and
thereunder, (collectively, and together with the expenses, costs and charges
set out in Section 3.2(b), the "Obligations").
(b) All expenses, costs and charges incurred by or on behalf of
the Collateral Agent, the Trustee, the Noteholders, the Administrative Agent or
the Lenders, or any of them, in connection with this Debenture, the Security
Interest or the realization of the Collateral, including, after the occurrence
and during the continuance of a Default (as defined therein) of the nature set
forth in Section 8.1.9 of the Term Loan Agreement or a Default (as defined
therein) of the nature set forth in Section 501(10) of the Indenture, or an
Event of Default (as defined in the Term Loan Agreement or the Indenture, as
the case may be), all legal fees, court costs, Receiver's remuneration and
other expenses of taking possession of, repairing, protecting, insuring,
preparing for disposition, realizing, collecting, selling, transferring,
delivering or obtaining payment of the Collateral shall be added to and form a
part of the Obligations.
3.3 ATTACHMENT.
(a) The Corporation hereby acknowledges and agrees that: (i)
value has been given; (ii) the Corporation has rights in the Collateral (other
than Collateral acquired after the date hereof); and (iii) the Corporation has
not agreed with any of the Collateral Agent, the Trustee, the Noteholders, the
Administrative Agent or the Lenders to postpone the time for attachment of the
Security Interest which shall attach upon the execution of this Debenture and,
in the case of Collateral acquired after the date hereof, when the Corporation
has rights therein.
(b) The Corporation hereby agrees to execute and deliver at its
own cost and expense from time to time amendments to this Debenture or the
schedules hereto or additional security or schedules as may be required by the
Collateral Agent in order that the Security Interest shall attach to any
personal property subsequently acquired by the Corporation or not adequately
described herein.
3.4 SCOPE OF SECURITY INTEREST.
(a) To the extent that the creation of the Security Interest would
constitute a breach or permit the acceleration of any agreement, lease, right,
license or permit to which the Corporation is a party, the Security Interest
shall not attach thereto but the Corporation shall hold its interest therein in
trust for the Collateral Agent and shall assign such agreement, right, license
or permit to the Collateral Agent or as the Collateral Agent may direct,
forthwith upon obtaining the consent of the other party thereto and the
Corporation hereby agrees that it shall, upon the request of the Collateral
Agent, use its best commercial efforts to obtain any consent required to permit
any such agreement, lease, right, license or permit to be subject to the
Security Interest.
(b) The Security Interest shall not extend or apply to the last
day of any term reserved by any lease, verbal or written, or any agreement
therefor, now held or hereafter acquired by the Corporation,
<PAGE> 12
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but the Corporation shall stand possessed of any such reversion in trust to
assign and dispose thereof as the Collateral Agent may direct.
(c) Neither the Collateral Agent, the Trustee, the Noteholders,
the Administrative Agent nor the Lenders will be deemed in any manner to have
assumed any obligation of the Corporation under any of the Licenses or
Contracts nor shall the Collateral Agent, the Trustee, the Noteholders, the
Administrative Agent or the Lenders be liable to any Governmental Entity by
reason of any default by any Person under the Licenses or Contracts. The
Corporation agrees to indemnify and hold each of the Collateral Agent, the
Trustee, the Noteholders, the Administrative Agent and the Lenders harmless of
and from any and all liability, loss or damage which such persons incur by
reason of any claim or demand against it based on its alleged assumption of the
Corporation's duty and obligation to perform and discharge the terms, covenants
and agreements in the Licenses and Contracts.
(d) The Security Interest shall not extend or apply to Excluded
Assets.
3.5 CORPORATION'S DEALINGS WITH COLLATERAL. Except as permitted
by the Term Loan Agreement and the Indenture, the Corporation shall not:
(a) sell, exchange, lease, release or abandon or otherwise dispose
of or otherwise deal with the Collateral; or
(b) move or transfer the Collateral or any part thereof to a
location other than those specified in Schedule A, or, upon 30 days notice to
the Collateral Agent, to any location owned or leased by a subsidiary of the
Corporation or PAI.
ARTICLE 4
REPRESENTATIONS AND COVENANTS OF THE CORPORATION
The Corporation hereby represents and covenants to the
Collateral Agent that:
4.1 CORPORATE POWER AND AUTHORITY. The Corporation has the full
corporate power and authority to enter into this Debenture and to grant the
Security Interest without obtaining the waiver, consent or approval of any
lessor, sublessor, Governmental Entity or entity or other party whomsoever and
whatsoever which has not been obtained except in the case of certain
environmental permits and approvals which, by their terms, are not transferable
or cannot be transferred without the prior approval of the issuing agency.
4.2 EXECUTION AND DELIVERY. The execution and delivery of this
Debenture have been duly authorized by all necessary corporate action.
4.3 BINDING OBLIGATION. This Debenture, when duly executed and
delivered, will be a legal, valid and binding obligation of the Corporation
enforceable against it in accordance with its terms; provided that such
enforcement may be limited by bankruptcy, insolvency, reorganization or similar
Laws affecting creditors' rights generally.
<PAGE> 13
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4.4 GOOD TITLE. The Corporation has good and marketable title to
the Collateral. The Buildings upon the Real Property are all within the
boundary lines of the Real Property and there are no encroachments thereon that
would materially impair the use thereof. The Collateral is free and clear of
any and all Liens or encumbrances of any nature or kind except for the
Permitted Liens.
4.5 ALL PERMITS. The Corporation has all necessary permits,
franchises, licenses, rights-of-way, servitudes or other rights or authority
needed in connection with the operation and maintenance of the Plants, except
where the failure to have the same would not have a Material Adverse Effect;
all of the Contracts are presently in full force and effect and no default has
occurred or exists thereunder, except where such default would not individually
or in the aggregate have a Material Adverse Effect; except for Permitted Liens,
the Corporation's grant of the Security Interest in the manner herein provided
does not result in the creation or imposition of any other Lien or security
interest, adverse claim or option upon any of the Collateral.
4.6 PLACE OF BUSINESS. The Corporation's registered office is
located in the City of Saint John, New Brunswick. The Corporation will not
change its name, identity or corporate structure or its registered office or
chief place of business without notifying the Collateral Agent at least thirty
(30) days prior to the effective date of such change.
4.7 DEFENCE OF TITLE. The Corporation will warrant and defend
title to the Collateral, subject to Permitted Liens, against the claims and
demands of all other Persons whomsoever and will maintain and preserve the
Security Interest so long as any of the Obligations secured hereby remain
outstanding. Should an adverse claim be made against the title to any material
part of the Collateral, the Corporation agrees it will immediately notify the
Collateral Agent in writing thereof and defend against such adverse claim to
the extent necessary to preserve the Collateral Agent's rights and benefits
hereunder, subject to Permitted Liens, and the Corporation further agrees that
the Collateral Agent may take such other reasonable action as it deems
advisable to protect and preserve its interests in the Collateral, and in such
event the Corporation will indemnify the Collateral Agent against any and all
costs, reasonable attorney's fees and other expenses which it may incur in
defending against any such adverse claim. Such obligations shall be payable on
demand and shall bear interest from the date of demand therefor until paid at
the Rate of Interest. Any proceeds of any policy of title insurance maintained
by the Corporation with respect to the Collateral shall, for the purposes of
this Debenture, be paid and applied in the same manner as Insurance Proceeds.
4.8 FIRST-RANKING SECURITY INTEREST. This Debenture is, and
always will be maintained as first-ranking Security Interest upon the
Collateral, subject to the Permitted Liens, and the Corporation will not create
or suffer to be created or permit to exist any Lien, security interest or
charge prior or junior to or on parity with the Security Interest upon the
Collateral or any part thereof or upon the rents, issues, revenues, profits or
other income therefrom, except for the Permitted Liens.
4.9 MAINTENANCE OF COLLATERAL. The Corporation will, at its own
expense, do or cause to be done all things necessary to preserve and keep in
full repair, working order and efficiency, reasonable wear and tear excepted,
all of the Collateral, including, without limitation, all Equipment and, from
time to time, will make all the needful and proper repairs, renewals and
replacements so that at all times the
<PAGE> 14
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state and condition of the Collateral will be fully preserved and maintained,
unless the failure to repair, renew or replace would not materially interfere
with the present use or operation of the Collateral.
4.10 PERFORMANCE OF CONTRACTS. The Corporation will promptly pay
and discharge all rentals, or other payments and will perform or cause to be
performed each and every act, matter or thing required by, each and all of the
contracts, instruments or agreements executed in connection with or incident to
the ownership and operation of the Plants and being a portion of the Collateral
and will do all other things necessary to keep unimpaired the Corporation's
rights with respect thereto and to prevent any forfeiture thereof or default
thereunder, unless such forfeiture or default shall not individually or in the
aggregate have a Material Adverse Effect. The Corporation will operate the
facilities comprising the Plants in a good and workmanlike manner and in
accordance with the practices of the industry and in compliance in all material
respects with all Governmental Requirements affecting ownership and operation
of such facilities, including without limitation, Environmental Laws.
4.11 NAME OF CORPORATION. The Corporation does not do business
with respect to the Collateral under any name other than PCI Chemicals Canada
Inc./Produits Chimiques PCI Canada Inc.
4.12 OPERATION BY THIRD PARTIES. To the extent any of the
Collateral is operated by a party or parties other than the Corporation, the
Corporation's covenants as expressed hereunder are modified to require that the
Corporation use its best efforts (including without limitation the reasonable
exercise of all rights and remedies as are available to the Corporation) to
obtain compliance with such covenants by the operator or operators of the
Collateral.
4.13 COMPLIANCE WITH LAWS. The Plants comply in all material
respects with all local land use requirements of Governmental Entities except
for possible nonconforming uses or violations which do not and will not
materially interfere with the present use, operation or maintenance thereof as
now used, operated or maintained.
4.14 PAYMENT OF TAXES, INSURANCE PREMIUMS, ASSESSMENTS; COMPLIANCE WITH
LAWS AND INSURANCE REQUIREMENTS.
(a) Unless contested in accordance with the provisions of section
4.14(e) hereof, the Corporation shall pay and discharge or cause to be paid and
discharged, from time to time when the same shall become due, all real estate
and other taxes, special assessments, levies, permits, inspection and license
fees, all premiums for insurance, all water and sewer rents and charges, and
all other public charges imposed upon or assessed against the Collateral or any
part thereof or upon the revenues, rents, issues, income and profits of the
Collateral, including, without limitation, those arising in respect of the
occupancy, use or possession thereof.
(b) During the continuance of an Event of Default, the Corporation
shall deposit with the Collateral Agent, on the first day of each month, an
amount reasonably estimated by the Corporation to be equal to one-twelfth
(1/12th) of the annual taxes, assessments and other items required to be
discharged by the Corporation under section 4.14(a) and amounts reasonably
estimated by the Corporation to be necessary to maintain the insurance
coverages contemplated in section 4.16 below, which estimates shall not be less
than one-twelfth (1/12th) of the annual taxes, assessments, insurance premiums
and other items required to be discharged by the Corporation during the year
immediately preceding the year during
<PAGE> 15
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which such Event of Default occurred. Such amounts shall be held by the
Collateral Agent without interest to the Corporation and applied to the payment
of each obligation in respect of which such amounts were deposited, in such
order or priority as the Collateral Agent shall determine, on or before the
date on which such obligation would become delinquent. If at any time the
amounts so deposited by the Corporation shall, in the Collateral Agent's
judgment, be insufficient (when added to the instalments anticipated to be paid
thereafter) to discharge any of such obligations when due, the Corporation
shall, immediately upon demand, deposit with the Collateral Agent such
additional amounts as may be requested by the Collateral Agent. Nothing
contained in this section 4.14 shall affect any right or remedy of the
Collateral Agent under any provision of this Debenture or of any statute or
rule of Law to pay any such amount from its own funds (provided, however, that
the Collateral Agent shall not in any event be obligated to pay any of such
amounts from its own funds) and to add the amount so paid, together with
interest at the Rate of Interest, to the obligations, or relieve the
Corporation of its obligations to make or provide for the payment of the annual
taxes, assessments and other charges required to be discharged by the
Corporation under section 4.14(a). All sums held pursuant to this section 4.14
shall form part of the Collateral. During the continuance of any Event of
Default, the Collateral Agent may apply all or any part of the sums held
pursuant to this section 4.14 to payment and performance of the Obligations in
accordance with the provisions of the Intercreditor Agreement. The Corporation
shall redeposit with the Collateral Agent an amount equal to all amounts so
applied as a condition to the cure, if any, of such Event of Default, in
addition to fulfilment of any other required conditions.
(c) Unless contested in accordance with the provisions of section
4.14(e), the Corporation shall timely pay (or obtain a bond in the amount of)
all lawful claims and demands of mechanics, materialmen, labourers,
warehousemen, employees, suppliers, government agencies administering worker's
compensation insurance, old age pensions and social security benefits and all
other claims, judgments, demands or amounts of any nature which, if unpaid or
not bonded, could result in or permit the creation of a Lien (other than a
Permitted Lien) on the Collateral or any part thereof or the Rents arising
therefrom, or which might result in forfeiture of all or any part of the
Collateral.
(d) The Corporation shall maintain, or cause to be maintained, in
full force and effect, all permits, certificates, authorizations, consents,
approvals, registrations, filings, licenses, franchises or other instruments
now or hereafter required by any Governmental Entity to operate or use and
occupy the Plants and the Equipment for its intended uses (collectively, the
"PERMITS"; each, a "PERMIT"), unless the failure to maintain such Permits would
not individually or in the aggregate have a Material Adverse Effect. Unless
contested in accordance with the provisions of section 4.14(e), the Corporation
shall comply promptly with, or cause prompt compliance with, all requirements
set forth in the Permits and all Governmental Requirements applicable to all or
any part of the Collateral or the condition, use or occupancy of all or any
part thereof or any recorded deed of restriction, declaration, covenant running
with the land or otherwise, now or hereafter in force unless the compliance
therewith would not individually or in the aggregate have a Material Adverse
Effect. The Corporation shall not initiate or consent to any change in the
zoning, subdivision or any other use classification of the Real Property, if
such action could have a material adverse effect on the Security Interest or
materially impair the present use and operation of the Collateral or materially
impair the Collateral Agent's rights or benefits hereunder, without the prior
written consent of the Collateral Agent.
<PAGE> 16
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(e) The Corporation may at its own expense contest the amount or
applicability of any of the obligations described in sections 4.14(a), 4.14(c)
and 4.14(d) by appropriate legal proceedings, prosecution of which operates to
prevent the collection or enforcement thereof or the sale or forfeiture of the
Collateral or any part thereof to satisfy such obligations; provided, however,
that:
(i) any such contest shall be conducted in good faith by
appropriate legal proceedings promptly instituted and
diligently conducted; and
(ii) in connection with such contest, the Corporation shall have
made provision for the payment or performance of such
contested obligation on the Corporation's books if and to the
extent required by generally accepted accounting principles
then utilized by the Corporation in the preparation of its
financial statements, or shall have deposited with the
Collateral Agent a sum sufficient to pay and discharge such
obligation and the Collateral Agent's estimate of all interest
and penalties related thereto.
Notwithstanding the foregoing provisions of this section
4.14(e):
(iii) no contest of any such obligations may be pursued by the
Corporation if such contest would expose the Collateral Agent,
or any of the Administrative Agent, the Trustee, the
Noteholders or the Lenders to any possible criminal liability
or, unless the Corporation shall have furnished an Additional
Undertaking therefor satisfactory to the Collateral Agent in
respect of any civil liability for failure to comply with such
obligations; and
(iv) if at any time payment or performance of any obligation
contested by the Corporation pursuant to this section 4.14(e)
shall become necessary to prevent the delivery of a tax or
similar deed conveying the Collateral or any portion thereof
because of nonpayment or nonperformance, the Corporation shall
pay or perform the same in sufficient time to prevent the
delivery of such tax or similar deed.
(f) The Corporation shall not in its use and occupancy of the
Plants or the Equipment (including, without limitation, in the making of any
Alteration) take any action that would cause the termination, revocation or
denial of any insurance coverage required to be maintained under this Debenture
or, that pursuant to written notice from any applicable insurer, would be the
basis for a defense to any claim under any insurance policy maintained in
respect of any of the Plants or the Equipment and the Corporation shall
otherwise comply in all material respects with the requirements of any insurer
that issues a policy of insurance in respect of any of the Plants or the
Equipment.
(g) The Corporation shall, promptly upon receipt of any written
notice regarding any failure by the Corporation to pay or discharge any of the
obligations described in section 4.14(a) or 4.14(f), furnish a copy of such
notice to the Collateral Agent. The Corporation shall, promptly upon receipt
of any written notice regarding any failure by the Corporation to pay or
discharge any of the obligations described in section 4.14(c) or 4.14(d),
furnish a copy of such notice to the Collateral Agent, if such failure would
have a Material Adverse Effect.
<PAGE> 17
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4.15 CERTAIN TAX LAW CHANGES. In the event of the passage after
the date of this Debenture of any Law deducting from the value of real
property, for the purpose of taxation, amounts in respect of any Lien thereon
or changing in any way the Laws for the taxation of debentures or debts secured
by debentures for federal, provincial, municipal or local purposes or the
manner of the collection of any such taxes, and imposing a new tax, either
directly or indirectly, on this Debenture or the interest of any of the
Collateral Agent, the Administrative Agent, the Trustee, the Lenders and the
Noteholders in any Collateral (other than income, franchise or similar taxes
imposed on such Person), or in the event that any regulation or regulatory
amendment becoming effective after the date hereof imposes any federal or
provincial or municipal or local tax on interest income received with respect
to any Obligation, the Corporation shall promptly pay the Collateral Agent such
amount or amounts as may be necessary from time to time to pay such tax.
4.16 REQUIRED INSURANCE POLICIES.
(a) The Corporation shall maintain, or cause to be maintained, as
of and from the Closing Date, in full force and effect the following insurance
coverages in respect of the Plants and the Equipment:
(i) Physical hazard insurance on an "all risk" basis covering
hazards commonly covered by fire and extended coverage,
lightning, civil commotion, hail, riot, strike, water damage,
sprinkler leakage, collapse and malicious mischief, in an
amount equal to the full replacement cost of the Buildings and
all Equipment, with such deductibles as would be maintained by
a prudent operator of property similar in use and
configuration to the Plant and located in the locality where
such Plant is located. "Full replacement cost" means the cost
of construction to replace the Buildings and the Equipment,
exclusive of depreciation, excavation, foundation and
footings, as determined from time to time by a proper officer
of the Corporation in consultation with its insurance company
or insurance agent, as appropriate;
(ii) Comprehensive general liability insurance against claims for
bodily injury, death or property damage occurring on, in or
about the any of the Plants and any adjoining streets,
sidewalks and passageways and covering any and all claims,
including, without limitation, all legal liability, subject to
customary exclusions, to the extent insurable, imposed upon
the Collateral Agent or any of the Administrative Agent,
Trustee, Lenders or Noteholders, and all court costs and
attorneys' fees, arising out of or connected with the
possession, use, leasing, operation or condition of the
Plants, with policy limits and deductibles in such amounts as
would be maintained by a prudent operator of property similar
in use and configuration to the Plant and located in the
locality where the Plant is located;
(iii) Comprehensive boiler and machinery insurance to cover sudden
and accidental breakdown, including but not limited to,
explosion of any boilers and machinery located on the Plants
or comprising any Equipment, with policy limits and
deductibles in such amounts as would be maintained by a
prudent operator of property similar in use and
<PAGE> 18
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configuration to the Plant and the Equipment and located in
the locality where the Plant is located;
(iv) Comprehensive automobile liability insurance policy against
claims for bodily injury, death and property damage covering
all owned, leased, non-owned and hired motor vehicles,
including loading and unloading in such amounts as would be
maintained by a prudent operator of property similar in use
and configuration to the Plant and the Equipment and located
in the locality where the Plant is located;
(v) Business interruption insurance on an annual basis in amounts
not less than the projected gross profit of each of the Plants
during the applicable twelve-month period but in no event less
than the amount necessary to pay the fixed charges and other
expenses of owning, operating and maintaining the Collateral
for the same period;
(vi) To the extent not otherwise covered by the insurance required
under sections 4.16(a)(i) and (4.16)(a)(ii), during the
performance of any Alterations, renovations, repairs,
restorations or construction, broad form Builders Risk
Insurance on an all-risk completed value basis; and
(vii) Such other insurance, against such risks and with policy
limits and deductibles in such amounts as would be maintained
by a prudent operator of property similar in use and
configuration to the Plants and located in the localities in
which the Plants are located.
(b) The Corporation may maintain the coverages required by this
section 4.16 under blanket policies covering the Plants and other locations
owned or operated by the Corporation if the terms of such blanket policies
otherwise comply with the provisions of this section 4.16 and contain specific
coverage allocations in respect of each of the Plants determined in accordance
with the provisions of this section 4.16. All insurance policies in respect of
the coverages required by sections 4.16(a)(i), 4.16(a)(iv), 4.16(a)(vi) and, if
applicable, 4.16(a)(vii) shall be in amounts at least sufficient to prevent
coinsurance liability and all losses thereunder shall be payable to the
Collateral Agent, as loss payee, subject to the terms of the Intercreditor
Agreement, pursuant to a standard Canadian Insurance Bureau standard mortgagee
clause for use in the Province of Nova Scotia, or any equivalent thereof, and
each such policy shall, to the extent obtainable at commercially reasonable
costs,
(i) include effective waivers (whether under the terms of such
policy or otherwise) by the insurer of all claims for
insurance premiums against all loss payees and named insureds
other than the Corporation and all rights of subrogation
against any named insured, and
(ii) provide that any losses thereunder shall be payable
notwithstanding (I) any act, failure to act, negligence of, or
violation or breach of warranties, declarations or conditions
contained in such policy by the Corporation or the Collateral
Agent or any other named insured or loss payee, (II) the
occupation or use of the Plant or the Equipment for purposes
more hazardous than permitted by the terms of the policy,
(III) any foreclosure or other proceeding or notice of sale
relating to the Plant or the Equipment, or (IV) any change in
the title to or ownership or possession of the Plant or the
Equipment; provided,
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however, that (with respect to items contemplated in clauses
(III) and (IV) above) any notice requirements of the
applicable policies are satisfied. All insurance policies in
respect of the coverages required by sections 4.16(a)(ii),
4.16(a)(v) and, if applicable, 4.16(a)(vii) shall name the
Collateral Agent as an additional insured.
(c) Each policy of insurance required under this section 4.16
shall provide that:
(i) notices of any failure by the Corporation to pay any insurance
premium in respect thereof, be furnished to the Collateral
Agent contemporaneously with any such notice given to the
Corporation and
(ii) it may not be cancelled or otherwise terminated without at
least twenty (20) days' prior written notice to the Collateral
Agent and shall permit the Collateral Agent to pay any premium
therefor within twenty (20) days after receipt of any notice
stating that such premium has not been paid when due. The
policy or policies of such insurance or certificates of
insurance evidencing the required coverages and all renewals
or extensions thereof shall be delivered to the Collateral
Agent upon receipt by the Corporation. Settlement of any
claim under any of the insurance policies referred to in this
section 4.16 (other than the insurance contemplated in section
4.16(a)(iii) which in the Corporation's reasonable judgment
involves loss of $1,000,000 in lawful currency of the United
States or more, shall require the prior approval of the
Collateral Agent (acting pursuant to the provisions of the
Intercreditor Agreement) and the Corporation shall use its
best efforts to cause each such insurance policy to contain a
provision to such effect.
(d) At least fifteen (15) days prior to the expiration of any
insurance policy required by this section 4.16, the Corporation shall deliver
to the Collateral Agent evidence that such policy or policies shall be renewed
or extended and the Corporation shall deliver promptly to the Collateral Agent
after receipt thereof the policy or policies renewing or extending such
expiring policy or renewal or extension certificates or other evidence of
renewal or extension, together with a receipt showing payment of the premium
thereof.
(e) The Corporation shall not purchase additional policies in
respect of the insurance coverages required to be maintained under this section
4.16, unless the Collateral Agent is included thereon as an additional named
insured and, if applicable, with loss payable to the Collateral Agent under an
endorsement containing the provisions described in section 4.16(b) and the
policy evidencing such insurance otherwise complies with the requirements of
section 4.16(b). The Corporation immediately shall notify the Collateral Agent
whenever any such separate insurance policy is obtained and promptly shall
deliver to the Collateral Agent the policy or certificate evidencing such
insurance.
4.17 INSPECTION. The Corporation shall permit the Collateral
Agent, by its agents, accountants and attorneys, to visit and inspect the
Collateral upon reasonable prior notice at such times as may be reasonably
requested by the Collateral Agent.
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4.18 THE CORPORATION TO MAINTAIN IMPROVEMENTS. The Corporation
shall not commit any waste on the Plants or with respect to any Equipment or
make any change in the use of the Plant or any Equipment. The Corporation
represents and warrants that:
(a) to the Corporation's knowledge, the Plants are served by all
electric, gas, sewer, water facilities and any other utilities required or
necessary for the current use thereof and any easements or servitudes necessary
to the furnishing of such utility service by the Corporation have been obtained
and duly recorded, and
(b) the Corporation has access to the Plants from public roads
sufficient to allow the Corporation and its tenants and invitees to conduct its
and their businesses at the Plants as they are currently conducted. The
Corporation shall not materially alter the occupancy or use of the Plant
without the prior written consent of the Collateral Agent. Except as otherwise
permitted by the Intercreditor Agreement, no Buildings comprising a portion of
any of the Plants may be demolished nor shall any Equipment be removed without
the prior written consent of the Collateral Agent.
4.19 LEASES.
(a) All of the Leases are valid and effective in accordance with
their respective terms, except that the enforcement thereof may be subject to:
(i) bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting or relating to enforcement of
creditors' rights generally, and
(ii) general equitable principles.
To the Corporation's knowledge, the Corporation is not in material breach of or
in default (and to the Corporation's knowledge, no event has occurred which
with due notice or lapse of time or both, may constitute such a material breach
or default) under any Lease, and no party to any Lease has given the
Corporation written notice of or made a claim with respect to any breach or
default, the consequences of which, individually or in the aggregate, would
have a Material Adverse Effect on the Corporation.
(b) The Corporation shall manage and operate the Collateral or
cause the Collateral to be managed and operated in a reasonably prudent manner
and, except as otherwise permitted under section 4.20, will not enter into any
Lease (or any amendment or modification thereof) or other agreement subsequent
to the date hereof with any Person which, in the reasonable judgment of the
Corporation, individually or in the aggregate, would have a Material Adverse
Effect on the value of the property subject thereto.
(c) The Corporation shall not:
(i) receive or collect, or permit the receipt or collection of,
any rental or other payments under any Lease more than one (1)
month in advance of the respective period in respect of which
they are to accrue, except that (i) in connection with the
execution and delivery of any Lease or of any amendment to any
Lease, rental payments thereunder may be
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collected and received in advance in an amount not in excess
of one (1) month's rent and (ii) the Corporation may receive
and collect escalation and other charges in accordance with
the terms of each Lease;
(ii) assign, transfer, mortgage or grant a security interest in
(other than to the Collateral Agent hereunder or as otherwise
permitted under section 4.20 of this Debenture) any rental or
other payment under any Lease whether then due or to accrue in
the future, the interest of the Corporation as lessor under
any Lease or the Rents, issues, revenues, profits or other
income of the Collateral;
(iii) enter into any Lease after the date hereof that does not
contain terms to the effect as follows:
(I) such Lease and the rights of the tenant thereunder
shall be subject and subordinate to the rights of the
Collateral Agent under this Debenture;
(II) such Lease has been mortgaged or charged by the
Corporation, as landlord thereunder, to the
Collateral Agent under this Debenture;
(III) in the case of any foreclosure, the rights and
remedies of the tenant in respect of any obligations
of any successor landlord thereunder shall be limited
to the equity interest of such successor landlord in
the Plant and any successor landlord shall not (a) be
liable for any act, omission or default of any prior
landlord under the Lease or (b) be required to make
or complete any tenant improvements or capital
improvements or repair, restore, rebuild or replace
the demised premises or any part thereof in the event
of damage, casualty or condemnation or (c) be
required to pay any amounts to tenant arising under
the Lease prior to such successor landlord taking
possession;
(IV) the tenant's obligation to pay rent and any
additional rent shall not be subject to any
abatement, deduction, counterclaim or setoff as
against the Collateral Agent or any purchaser upon
any foreclosure hereunder in respect of any portion
of a Plant, and the Collateral Agent or such
purchaser will not be bound by any advance payments
of rent in excess of one month or any security
deposits unless such security was actually received;
and
(V) the tenant agrees to attorn, at the option of the
Collateral Agent or any purchaser of a Plant, to the
successor owner upon any foreclosure hereunder in
respect of a Plant or the giving or granting of a
deed in lieu thereof; and
(iv) terminate or permit the termination of any Lease of space,
accept surrender of all or any portion of the space demised
under any Lease prior to the end of the term thereof or accept
assignment of any Lease to the Corporation which, in the
reasonable judgment of the Corporation, individually or in the
aggregate, would have a Material Adverse Effect or materially
impair the Security Interest unless:
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(I) the tenant under such Lease has not paid the
equivalent of two months' rent and the Corporation
has made reasonable efforts to collect such rent; or
(II) the Corporation shall deliver to the Collateral Agent
an officer's certificate to the effect that the
Corporation has entered into a new Lease (or Leases)
for the space covered by the terminated or assigned
Lease with a term (or terms) which expire(s) no
earlier than the date on which the terminated or
assigned Lease was to expire (excluding renewal
options), and with a tenant (or tenants) having a
creditworthiness (as reasonably determined by the
Corporation) sufficient to pay the rent and other
charges due under the new Lease (or Leases), and the
tenant(s) shall have commenced paying rent,
including, without limitation, all operating expenses
and other amounts payable under the new Lease (or
Leases), without any abatement or concession, in an
amount at least equal to the amount which would have
then been payable under the terminated or assigned
Lease.
(d) The Corporation timely shall perform and observe all the
terms, covenants and conditions required to be performed and observed by the
Corporation under each Lease and will not engage in any conduct in respect of
any Lease which would have individually or in the aggregate a Material Adverse
Effect or materially impair the Security Interest. The Corporation promptly
shall notify the Collateral Agent of the receipt of any notice from any lessee
under any Lease claiming that the Corporation is in material default in the
performance or observance of any of the terms, covenants or conditions thereof
to be performed or observed by the Corporation and will cause a copy of each
such notice to be delivered promptly to the Collateral Agent.
4.20 TRANSFER RESTRICTIONS. Except as otherwise permitted by the
Intercreditor Agreement, the Corporation shall not, without the prior written
consent of the Collateral Agent, further mortgage, encumber, hypothecate, sell,
convey or assign all or any part of the Collateral or suffer any of the
foregoing to occur by operation of Law or otherwise (each a "TRANSFER");
provided, however, the Corporation may so encumber the Collateral to the extent
such encumbrances are of the kind listed in clause (d) of the definition of
"Permitted Liens". Any proceeds of such permitted Transfer shall be deemed
Collateral Proceeds (as defined in the Indenture) and are hereby assigned and
shall be paid to the Collateral Agent to be held in the Collateral Account (as
defined in the Intercreditor Agreement) and disbursed pursuant to the
Intercreditor Agreement.
4.21 DESTRUCTION; EXPROPRIATION.
(a) If there shall occur any damage to, or loss or destruction of,
the Buildings and Equipment, or any part of any thereof (each, a
"DESTRUCTION"), the Corporation shall promptly send to the Collateral Agent a
notice setting forth the nature and extent of such Destruction. The proceeds
of any insurance payable in respect of any such Destruction are hereby assigned
and shall be paid to the Collateral Agent to be held in the Collateral Account;
provided, however, that so long as no Event of Default shall have occurred and
be continuing, if such proceeds are in an amount less than $1,000,000 in lawful
currency of the United States, such proceeds shall be paid directly to the
Corporation. All insurance proceeds paid to the Collateral Agent pursuant to
this section, less the amount of any expenses incurred in litigating,
arbitrating, compromising or settling any claim arising out of such Destruction
(the
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"INSURANCE PROCEEDS"), shall constitute Moneys and be applied in accordance
with the provisions of sections 4.21(c), 4.21(d) and 4.21(e).
(b) If there shall occur any taking of the Collateral or any part
thereof, in or by expropriation proceedings pursuant to any Law, general or
special, or by reason of the temporary requisition of the use or occupancy of
the Collateral or any part thereof, by any Governmental Entity, civil or
military (each, a "TAKING"), the Corporation immediately shall notify the
Collateral Agent upon receiving notice of such Taking or commencement of
proceedings therefor. The Collateral Agent may (but shall not be obligated to)
participate in any proceedings or negotiations which might result in any
Taking. The Collateral Agent may be represented by counsel satisfactory to it
at the expense of the Corporation. The Corporation shall deliver or cause to
be delivered to the Collateral Agent all instruments requested by it to permit
such participation. The Corporation shall in good faith and with due diligence
file and prosecute what would otherwise be the Corporation's claim for any such
award or payment and cause the same to be collected and paid over to the
Collateral Agent, and hereby irrevocably authorizes and empowers the Collateral
Agent, in the name of the Corporation as its true and lawful attorney-in-fact
or otherwise, during the continuance of an Event of Default to collect and to
receipt for any such award or payment, and, in the event the Corporation fails
so to act, to file and prosecute such claim. The Corporation shall pay all
costs, fees and expenses incurred by the Collateral Agent in connection with
any Taking and seeking and obtaining any award or payment on account thereof.
Any proceeds, award or payment in respect of any Taking are hereby assigned and
shall be paid to the Collateral Agent to be held in the Collateral Account;
provided, however, that so long as no Event of Default shall have occurred and
be continuing, if such proceeds are in an amount less than $1,000,000 in lawful
currency of the United States, such proceeds shall be paid directly to the
Corporation. The Corporation shall take all steps necessary to notify the
condemning authority of such assignment. Such proceeds, award or payment paid
to the Collateral Agent, less the amount of any expenses incurred in
litigating, arbitrating, compromising or settling any claim arising out of such
Taking ("NET AWARD"), shall constitute Moneys and be applied in accordance with
the provisions of sections 4.21(c), 4.21(d) and 4.21(e).
(c) So long as no Event of Default shall have occurred and be
continuing, the Corporation shall have the right, at the Corporation's option,
to perform a restoration (a "RESTORATION") of the affected portions of the
Plant and the Equipment. In the event the Corporation elects to perform a
Restoration, the Corporation shall give written notice ("RESTORATION ELECTION
NOTICE") of such election to the Collateral Agent within twenty (20) business
days after the date that the Collateral Agent receives the applicable Insurance
Proceeds or Net Award, as the case may be. The Corporation shall, within
twenty (20) business days following the date of delivery of a Restoration
Election Notice, commence and diligently continue to perform the Restoration of
that portion or portions of the Plant and Equipment subject to such Destruction
or affected by such Taking so that, upon the completion of the Restoration, the
Collateral shall be in the same condition and shall be of at least equal
utility for its intended purposes as the Collateral was immediately prior to
such Destruction or Taking. The Corporation shall so complete such Restoration
with its own funds to the extent that the amount of any Net Award or Insurance
Proceeds is insufficient for such purpose. In the event the Collateral Agent
does not receive a Restoration Election Notice within such twenty (20) business
day period, the Collateral Agent shall deal with such Insurance Proceeds or Net
Award in accordance with the provisions of the Intercreditor Agreement.
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(d) In the event a Restoration is to be performed under this
section 4.21(d), the Collateral Agent shall not release any part of the Net
Award or the Insurance Proceeds except in accordance with the provisions of
section 4.21(e) and the Corporation shall, prior to commencing any work to
effect a Restoration of the Plant and the Equipment, promptly (but in no event
later than one-hundred twenty (120) days following any Destruction or Taking)
furnish to the Collateral Agent:
(i) complete plans and specifications (the "PLANS AND
SPECIFICATIONS") for the Restoration;
(ii) an officers' certificate stating that all permits and
approvals required by Law to commence work in connection with
the Restoration have been obtained;
(iii) a certificate (an "ARCHITECT'S CERTIFICATE") of an
independent, reputable architect or engineer acceptable to the
Collateral Agent and licensed in the Province of Nova Scotia
(i) stating that the Plans and Specifications have been
reviewed and approved by the signatory thereto, (ii)
containing such signatory's estimate (an "ESTIMATE") of the
costs of completing the Restoration, and (iii) upon completion
of such Restoration in accordance with the Plans and
Specifications, the utility of the Plant and the Equipment
will be equal to or greater than the utility thereof
immediately prior to the Destruction or Taking relating to
such Restoration; and
(iv) if the Estimate exceeds the Insurance Proceeds or the Net
Award, as the case may be, by $5,000,000 in lawful currency of
the United States or more, an Additional Undertaking in an
amount equal to not less than the Estimate less the amount of
the Insurance Proceeds or the Net Award, as the case may be,
then held by the Collateral Agent for application toward the
cost of such Restoration.
Upon receipt by the Collateral Agent of each of the items
required pursuant to sections 4.21(d)(i) through 4.21(d)(iv) above, the
Collateral Agent shall acknowledge receipt of the Plans and Specifications.
Promptly upon such acknowledgment of receipt by the Collateral Agent, the
Corporation shall commence and diligently continue to perform the Restoration
substantially in accordance with such Plans and Specifications and in material
compliance with all Governmental Requirements, free and clear of all Liens
except Permitted Liens. The Corporation shall so complete such Restoration
with its own funds to the extent that the amount of any Net Award or Insurance
Proceeds is insufficient for such purpose.
(e) In the event the Corporation performs a Restoration of any of
the Plants and Equipment as provided in section 4.21(d), the Collateral Agent
shall apply any Insurance Proceeds or Net Award held by the Collateral Agent on
account of the Destruction or Taking to the payment of the cost of performing
such Restoration pursuant to the relevant provisions of the Intercreditor
Agreement. In the event there shall be any surplus after application of the
Net Award or the Insurance Proceeds to Restoration of the Plants and the
Equipment, such surplus shall become Net Proceeds, as defined in the Indenture
for application in accordance thereunder; provided, however, that if an Event
of Default shall have occurred and be continuing, such surplus shall be applied
by the Collateral Agent to the payment of the Obligations, in accordance with
Article 6 of the Intercreditor Agreement. Notwithstanding anything to the
contrary herein, if a Destruction or Taking of all or substantially all of the
Collateral
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occurs on a date which is less than 12 months prior to Maturity, as such term
is defined in the Indenture, all Insurance Proceeds and Net Awards shall be
applied to the permanent repayment or prepayment of any Secured Obligations
then outstanding in accordance with the Intercreditor Agreement.
4.22 ALTERATIONS. The Corporation shall not make any material
structural addition, modification or change (each, an "ALTERATION") to any
Plant or the Equipment which would materially diminish the utility of the
Collateral or impair the Security Interest. Whether or not the Collateral
Agent has consented to the making of any Alteration, the Corporation shall (i)
complete each Alteration promptly, in a good and workmanlike manner and in
material compliance with all applicable local Laws, and (ii) pay when due all
claims for labour performed and materials furnished in connection with such
Alteration, unless contested in accordance with the provisions of section
4.14(e).
4.23 HAZARDOUS MATERIAL
(a) Except with respect to those matters which would not
reasonably be expected to have a Material Adverse Effect, to the best knowledge
of the Corporation, the Corporation holds all Permits required to permit the
Corporation to conduct its business in the manner now conducted and none of the
Corporation's operations are being conducted in a manner that violates in any
material respect the terms and conditions under which any such Permit was
granted, including without limitation, under any Environmental Laws, except
those permits that are expected to be transferred in the ordinary course after
the date hereof; to the best of the knowledge of the Corporation all such
Permits are valid and in full force and effect; and to the knowledge of the
Corporation, no suspension, cancellation, revocation or termination of any such
Permit is threatened.
(b) Except as set forth in the Term Loan Agreement, there are no
material claims, actions, suits, proceedings or investigations pending or to
the knowledge of the Corporation, threatened, before any Governmental Entity or
before any arbitrator brought by or against the Corporation or with respect to
any of the Collateral the basis of which is any Environmental Law.
(c) The Corporation shall (or shall cause other parties obligated
to do so under or in accordance with contracts with or indemnity to the
Corporation):
(i) take all commercially reasonable actions to comply with any
and all applicable present and future Environmental Laws
relating to the Plants;
(ii) pay in a timely fashion the cost of any removal, response
measure or corrective action relating to any Hazardous
Materials required by any Environmental Law or any order,
regulation, consent decree or similar agreement or instrument
and keep the Collateral free of any Lien imposed pursuant to
any Environmental Law;
(iii) take all commercially reasonable actions to not Release any
Hazardous Materials on, under or from the Collateral in
violation of any Environmental Law;
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(iv) apply any insurance proceeds or other sums received by it in
respect of the removal of any Hazardous Material or any other
corrective action relating to any Hazardous Material to such
removal or corrective action; and
(v) not take, or fail to take any action required under any
Environmental Laws or in connection with any Hazardous
Materials that could reasonably be expected to result in the
incurrence of any obligation or liability of any of the
Collateral Agent, Administrative Agent, Trustee, Lenders or
Noteholders. During the continuance of an Event of Default,
in the event the Corporation fails to comply with the
covenants in the preceding sentence, the Collateral Agent may
(upon receipt of an indemnity satisfactory to the Collateral
Agent), in addition to any other remedies set forth herein,
but shall not be obligated to, as mandatary for and at the
Corporation's sole cost and expense cause to be taken, any
remediation, removal, response or corrective action relating
to Hazardous Materials that is required by Environmental Law
and is not being done or contested by the Corporation. Any
costs or expenses incurred by the Collateral Agent for such
purpose shall be immediately due and payable by the
Corporation and shall bear interest at the Rate of Interest.
The Corporation shall provide to the Collateral Agent and its
agents and employees access to the Collateral to take any
action required by Environmental Laws, or in connection with
any Hazardous Materials, that could be expected to result in
the incurrence of any obligation or liability of any of the
Collateral Agent, Administrative Agent, Trustee, Lenders or
Noteholders, if the Corporation fails to do so and such action
or removal is required under any Environmental Laws as
provided above. Upon written request by the Collateral Agent,
which shall include a reasonably specific statement of the
basis thereof (which shall be specific to the condition of the
Collateral and the alleged violation of Environmental Law) and
which shall be made not more frequently than once in any
twelve-month period or at any time that the Collateral Agent
is exercising its remedies under this Debenture, the
Collateral Agent shall have the right (upon receipt of an
indemnity satisfactory to the Collateral Agent), but shall not
be obligated, at the sole cost and expense of the Corporation,
to conduct an environmental audit or review of the Collateral
relating to the specific items as required in writing or
relating to the remedy that the Collateral Agent is exercising
under this Debenture by persons or firms appointed by the
Collateral Agent, and the Corporation shall cooperate in all
reasonable respects in the conduct of such environmental audit
or review, including, without limitation, by providing
reasonable access to the Collateral and to all records
relating thereto. The Corporation shall indemnify and hold
each of the Collateral Agent, Administrative Agent, Trustee,
Lenders and Noteholders harmless from and against all loss,
cost, damage or expense (including, without limitation,
attorneys' fees) that any of the Collateral Agent,
Administrative Agent, Trustee, Lenders and Noteholders may
sustain by reason of the assertion against such party of any
claim relating to such Hazardous Materials or actions taken
with respect thereto as authorized hereunder. Nothing
contained herein shall result in any of the Collateral Agent,
Administrative Agent, Trustee, Lenders and Noteholders being
deemed an "owner" or "operator" under applicable Environmental
Law.
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(d) The Corporation may at its own expense contest the amount or
applicability of any of the obligations described in the first sentence of
section 4.23(c) by appropriate legal proceedings, prosecution of which operates
to prevent the enforcement thereof; provided, however, that:
(i) any such contest shall be conducted in good faith by
appropriate legal proceedings promptly instituted and
diligently conducted and
(ii) in connection with such contest, the Corporation shall have
made provision for the payment or performance of such
contested obligation on the Corporation's books if and to the
extent required by generally accepted accounting principles
then utilized by the Corporation in the preparation of its
financial statements, or shall have deposited with the
Collateral Agent a sum sufficient to pay and discharge such
obligation and the Collateral Agent's estimate of all interest
and penalties related thereto. Notwithstanding the foregoing
provisions of this section 4.23(d), no contest of any such
obligations may be pursued by the Corporation if such contest
would expose the Collateral Agent, or any of the
Administrative Agent, Trustee, Lenders or Noteholders to any
possible criminal liability or, unless the Corporation shall
have furnished an Additional Undertaking therefor satisfactory
to the Collateral Agent or for any civil liability for failure
to comply with such obligations.
4.24 ASBESTOS. The Corporation shall not install nor permit to be
installed in the Collateral friable asbestos or any asbestos-containing
material (collectively, "ACM") except in compliance with all applicable
Environmental Laws respecting such material. With respect to any ACM currently
present in the Collateral, except with respect to matters which would not have
a Material Adverse Effect, the Corporation shall comply with all Laws
applicable to ACM located on any of the Plants, all at the Corporation's sole
cost and expense. If the Corporation shall fail so to comply with such Laws,
the Collateral Agent may (upon receipt of an indemnity satisfactory to the
Collateral Agent) during the continuance of an Event of Default, but shall not
be obligated to, in addition to any other remedies set forth herein, take those
steps reasonably necessary to comply with applicable Laws. Any costs or
expenses incurred by the Collateral Agent for such purpose shall be immediately
due and payable by the Corporation and bear interest at the Rate of Interest.
The Corporation shall provide to the Collateral Agent and its agents and
employees reasonable access to the Collateral upon reasonable prior notice to
remove such ACM if the Corporation fails to do so and removal is required under
any Environmental Law as provided for above; provided, however, that nothing
contained herein shall obligate the Collateral Agent to exercise any rights
under such access. The Corporation shall indemnify and hold each of the
Collateral Agent, Administrative Agent, Trustee, Lenders and Noteholders
harmless from and against all loss, cost, damage and expense that any of the
Collateral Agent, Administrative Agent, Trustee, Lenders and Noteholders may
sustain as a result of the presence of any ACM and any removal thereof in
compliance with any applicable Environmental Law.
4.25 BOOKS AND RECORDS; REPORTS. The Corporation shall keep proper
books of record and account, which shall accurately represent the financial
condition of the Corporation and the business affairs of the Corporation
relating to the Collateral. The Collateral Agent and its authorized
representatives shall have the right, from time to time, upon reasonable prior
notice to examine the books and records of the Corporation relating to the
operation of the Collateral at the office of the Corporation.
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4.26 NO CLAIMS AGAINST THE COLLATERAL AGENT. Nothing contained in
this Debenture shall constitute any consent or request by the Collateral Agent,
express or implied, for the performance of any labour or services or the
furnishing of any materials or other property in respect of the Plant or any
part thereof, nor as giving the Corporation any right, power or authority to
contract for or permit the performance of any labour or services or the
furnishing of any materials or other property in such fashion as would permit
the making of any claim against the Collateral Agent in respect thereof or any
claim that any Lien based on the performance of such labour or services or the
furnishing of any such materials or other property is ranked in priority to the
Security Interest.
4.27 UTILITY SERVICES. The Corporation shall pay, or cause to be
paid, when due all charges for all public or private utility services, all
public or private rail and highway services, all public or private
communication services, all sprinkler systems, and all protective services, any
other services of whatever kind or nature at any time rendered to or in
connection with the Plants or any part thereof, shall comply in all material
respects with all contracts relating to any such services, and shall do all
other things reasonably required for the maintenance and continuance of all
such services to the extent required to fulfil the obligations set forth in
section 4.18.
ARTICLE 5
DEFAULT AND ENFORCEMENT
5.1 DEFAULT. The Security Interest shall become enforceable
against the Corporation if and only if and when the Corporation shall fail to
pay, perform or satisfy any of the Obligations when due and payable or required
to be performed or satisfied, as the case may be, but not otherwise (each such
failure is an "Event of Default"). Upon the occurrence of an Event of Default,
the Obligations shall immediately become due and payable by the Corporation to
the Collateral Agent without necessity of any further act or formality and,
thereafter, the Corporation shall not be entitled to sell, assign, transfer,
exchange, lease or otherwise dispose of or deal with all or any part of the
Collateral.
5.2 REMEDIES. Whenever the Security Interest has become
enforceable, the Collateral Agent may in its discretion:
(a) take possession of all or any part of the Collateral with
power to exclude the Corporation and its officers, employees and agents
therefrom;
(b) take all such steps as the Collateral Agent may consider
necessary or desirable for the purposes of preserving, maintaining and
completing all or any part of the Collateral and making such replacements
thereof and improvements and additions thereto as the Collateral Agent may
consider expedient;
(c) carry on all or any part of the business of the Corporation
relating to the Collateral and use all or any part of the Collateral directly
in carrying on the Corporation's business or as security for loans or advances
to enable the Collateral Agent to carry on the Corporation's business or
otherwise;
(d) receive the rents, incomes and profits of any kind whatsoever
from the Collateral and pay therefrom: (i) any expenses of preserving,
maintaining and completing the Collateral, of making such
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replacements thereof and improvements and additions thereto as the Collateral
Agent may consider expedient and of carrying on all or any part of the
Corporation's business relating to the Collateral; and (ii) any charges against
the Collateral ranking in priority to or pari passu with the Security Interest
or the payment of which may be necessary or desirable to preserve or protect
all or any part of the Collateral or the interest of the Collateral Agent
therein;
(e) lease all or any part of the Collateral and renew from time to
time all or any of the Leases on such terms and conditions as the Collateral
Agent may determine;
(f) with or without taking possession, take any action or
proceedings to enforce the performance of any covenant contained in any of the
Leases;
(g) enjoy and exercise all the powers of the Corporation as the
Collateral Agent considers necessary or desirable for the exercise of any and
all of the remedies of the Collateral Agent provided for herein, including the
powers to make any arrangement or compromise on behalf and in the name of the
Corporation which the Collateral Agent considers expedient, to purchase on
credit and borrow money on behalf and in the name of the Corporation and to
advance moneys to the Corporation, all at such rates of interest as the
Collateral Agent may consider reasonable, and to enter into contracts and
undertake obligations on behalf of and in the name of the Corporation for any
and all of the foregoing purposes or which the Collateral Agent considers
necessary or desirable for the exercise of any of the rights, powers and
remedies of the Collateral Agent provided for herein, all of which borrowings,
advances and obligations together with interest thereon shall, at the
discretion of the Collateral Agent, be entitled to the security hereof in
priority to the payment of the Obligations;
(h) sell or otherwise dispose of all or any part of the
Collateral;
(i) apply to a court for the appointment of a Receiver to take
possession of all or such part of the Collateral as the Collateral Agent shall
designate, with such duties, powers and obligations as the court making the
appointment shall confer;
(j) appoint a Receiver of all or any part of the Collateral by
instrument in writing executed by the Collateral Agent;
(k) institute proceedings in any court of competent jurisdiction
for sale or foreclosure of the Collateral; and
(l) take any steps or proceedings of any kind permitted by
applicable Law or in equity or otherwise to enforce payment of the Obligations
or performance of any other covenant or obligation of the Corporation contained
herein, and exercise all rights and remedies of a secured party under the PPSA.
5.3 REMEDIES CUMULATIVE AND WAIVER. The rights and remedies
hereunder of the Collateral Agent are cumulative and are in addition to and not
in substitution for any other rights and remedies provided by law or by equity.
Any single or partial exercise by the Collateral Agent of any right or remedy
in respect of a default or breach of any term, covenant or condition contained
herein shall not be deemed to be a waiver thereof or to alter, affect or
prejudice any other right or remedy or other rights
<PAGE> 30
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or remedies to which the Collateral Agent may be lawfully entitled, for such
default or breach. The Collateral Agent shall at all times have the right to
proceed against all or any portion of the Collateral or any other security in
such order and in such manner as it shall determine without waiving any rights,
powers or remedies which the Collateral Agent may have with respect to this
Debenture or any other security or at law, in equity or otherwise. No delay or
omission by the Collateral Agent in exercising any right, power or remedy
hereunder or otherwise shall operate as a waiver thereof or of any other right,
power or remedy. Any waiver by the Collateral Agent of the strict observance,
performance or compliance with any term, covenant, condition or agreement
herein contained and any indulgence granted, either expressly or by course of
conduct, by the Collateral Agent shall be effective only in the specific
instance and for the purpose of which it was given and shall be deemed not to
be a waiver of any rights and remedies of the Collateral Agent hereunder as a
result of any other default or breach hereunder. No consent or waiver by the
Collateral Agent shall be effective unless made in writing and signed by an
authorized officer of the Collateral Agent.
5.4 CONCERNING THE RECEIVER.
(a) Any Receiver appointed by the Collateral Agent shall be vested
with the rights and remedies which could have been exercised by the Collateral
Agent in respect of the Corporation or the Collateral and such other powers and
discretions as are granted in the instrument of appointment and any instrument
or instruments supplemental thereto. The identity of the Receiver, any
replacement thereof and any remuneration thereof shall be within the sole and
unfettered discretion of the Collateral Agent.
(b) Any Receiver appointed by the Collateral Agent shall act as
agent for the Collateral Agent for the purposes of taking possession of the
Collateral, but otherwise and for all other purposes (except as provided below)
as agent for the Corporation. The Receiver may sell, lease, or otherwise
dispose of the Collateral as agent for the Corporation or as agent for the
Collateral Agent as the Collateral Agent may determine in its discretion. The
Receiver shall apply all monies from time to time received by the Receiver in
such order or priority, as the Collateral Agent may at their option direct. If
there shall be a deficiency, the Corporation shall remain liable for such
deficiency and shall pay the amount of such deficiency to the Collateral Agent
forthwith. The balance of proceeds realized in respect of the Collateral, if
any, remaining after repayment in full of the Obligations shall be paid to the
Corporation or such other Person or Persons entitled thereto by applicable Law.
The Corporation agrees to ratify and confirm all actions of the Receiver acting
as agent for the Corporation, and to release and indemnify the Receiver in
respect of all such actions.
(c) The Collateral Agent, in appointing or refraining from
appointing any Receiver, shall not incur liability to the Receiver, the
Corporation or otherwise and shall not be responsible for any misconduct or
negligence of such Receiver.
5.5 APPOINTMENT OF ATTORNEY. The Corporation hereby irrevocably
appoints the Collateral Agent (and any of its officers) as attorney of the
Corporation with full power of substitution to exercise, at any time when the
Security Interest shall have become enforceable, in the name of and on behalf
of the Corporation any of the Corporation's right, title and interest in and to
the Collateral (including the right of disposal, execution, endorsement,
delivery and transfer of all or any part of the Collateral). All acts of any
such attorney are hereby ratified and approved, and such attorney shall not be
liable for any
<PAGE> 31
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act, failure to act or any other matter or thing in connection therewith,
except for its own gross negligence or wilful misconduct.
5.6 DEALING WITH THE COLLATERAL AND THE SECURITY INTEREST.
(a) The Collateral Agent shall not be obliged to exhaust its
recourse against the Corporation or any other Person or Persons or against any
other security the Collateral Agent may hold in respect of the Obligations
before realizing upon or otherwise dealing with the Collateral in such manner
as the Collateral Agent may consider desirable.
(b) The Collateral Agent may grant extensions or other
indulgences, take and give up securities, accept compositions, grant releases
and discharges and otherwise deal with the Corporation and with other parties,
sureties or securities as the Collateral Agent may see fit without prejudice to
the Obligations or the rights of the Collateral Agent in respect of the
Collateral.
(c) The Collateral Agent shall not be: (i) liable or accountable
for any failure to collect, realize or obtain payment in respect of the
Collateral; (ii) bound to institute proceedings for the purpose of collecting,
enforcing, realizing or obtaining payment of the Collateral or for the purpose
of preserving any rights of the Collateral Agent, the Corporation or any other
Person in respect thereof; (iii) responsible for any loss occasioned by any
sale or other dealing with the Collateral or by the retention of or failure to
sell or otherwise deal therewith; or (iv) bound to protect the Collateral from
depreciating in value or becoming worthless.
5.7 STANDARDS OF SALE. Without prejudice to the ability of the
Collateral Agent to dispose of the Collateral in any manner which is
commercially reasonable, the Corporation acknowledges that a disposition of
Collateral by the Collateral Agent which takes place substantially in
accordance with the following provisions shall be deemed to be commercially
reasonable:
(a) Collateral may be disposed of in whole or in part;
(b) Collateral may be disposed of by public auction, public tender
or private contract, with or without advertising and without any other
formality;
(c) any purchaser or lessee of such Collateral may be a customer
of the Collateral Agent, provided that such transaction is bona fide;
(d) a disposition of Collateral may be on such terms and
conditions as to credit or otherwise as the Collateral Agent, in its sole
discretion, may deem advantageous; and
(e) the Collateral Agent may establish an upset or reserve bid or
price in respect of the Collateral.
5.8 DEALINGS BY THIRD PARTIES. No Person dealing with any of the
Collateral Agent or its agent or a Receiver shall be required: (i) to
determine whether the Security Interest has become enforceable; (ii) to
determine whether the powers which the Collateral Agent or its agent is
purporting
<PAGE> 32
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to exercise have been exercisable; (iii) to determine whether any money remains
due to the Collateral Agent by the Corporation; (iv) to determine the necessity
or expediency of the stipulations and conditions subject to which any sale or
lease shall be made; (v) to determine the propriety or regularity of any sale
or any other dealing by the Collateral Agent with the Collateral; or (vi) to
see to the application of any money paid to the Collateral Agent. The Security
Interest is in addition to and not in substitution for any security now held or
hereafter acquired by the Collateral Agent as security for the Obligations.
5.9 CORPORATION LIABLE FOR THE DEFICIENCY. In the case of any
judicial or other steps or proceedings to enforce the Security Interest, and
without limiting any right of the Collateral Agent to obtain judgment for any
greater amount, the Corporation shall remain liable to the Collateral Agent for
any amount which may remain due in respect of the Obligations after application
to the payment thereof of the proceeds of any sale, lease or other disposition
of the Collateral or any part thereof.
5.10 NOTICE OF SALE. Unless required by applicable Law, neither
the Collateral Agent nor any Receiver appointed by them shall be required to
give the Corporation any notice of any sale, lease or other disposition of the
Collateral or any part thereof or the date after which any private disposition
of Collateral or any part thereof is to be made.
5.11 PAYMENT OF PRIOR CLAIMS. If the Collateral Agent is at any
time or from time to time required to make a payment to defeat or honour the
priority or possible priority of any Liens on or in respect of all or any part
of the Collateral, any such payment or payments, and the costs, charges and
expenses of the Collateral Agent in connection therewith (including legal fees
on a solicitor and client basis) shall be payable by the Corporation on demand.
ARTICLE 6
GENERAL
6.1 NOTICE. Any and all demands, notices or other communications
to be made or given pursuant to this Debenture shall be given and received in
the manner and at the addresses specified in Section 11.2 of the Intercreditor
Agreement.
6.2 RELEASES. Subject to the provisions of the Term Loan
Agreement and the Indenture, the Collateral Agent may in its discretion, from
time to time, release any part of the Collateral or any other security held by
the Collateral Agent either with or without any sufficient consideration
therefor, without responsibility therefor and without thereby releasing any
other part of the Collateral or any other security or any Person from the
security created by this Debenture or from any of the covenants herein
contained. Each and every portion into which the Collateral is or may
hereafter be divided does and shall stay charged with the Obligations. No
Person shall have the right to require the Obligations to be apportioned and
the Collateral Agent shall not be accountable to the Corporation for any moneys
except those actually received by the Collateral Agent.
6.3 EXPENSES. The Corporation shall pay to the Collateral Agent
on demand all of the costs, charges and expenses of the Collateral Agent
(including legal fees on a solicitor and client basis and Receiver's fees) in
connection with the preparation, registration or amendment of this Debenture,
the perfection or preservation of the Security Interest, the enforcement by any
means of any provision hereof
<PAGE> 33
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or, after the occurrence of and during the continuance of a Default (as defined
therein) of the nature set forth in Section 8.1.9 of the Term Loan Agreement or
a Default (as defined therein) of the nature set forth in Section 501(10) of
the Indenture, or an Event of Default (as defined in the Term Loan Agreement or
the Indenture, as the case may be) the exercise of any rights, powers or
remedies hereunder, including all such costs, charges and expenses in
connection with taking possession, maintaining, completing, preserving,
protecting, collecting or realizing upon all or any part of the Collateral or
carrying on all or any part of the Corporation's business relating to the
Collateral.
6.4 DISCHARGE OF DEBENTURE. The Security Interest shall be
released and discharged upon full and complete payment, performance and
satisfaction of all of the Obligations and at the request and sole cost and
expense of the Corporation. The Collateral Agent, the Administrative Agent and
the Trustee shall execute and deliver to the Corporation such releases and
discharges as the Corporation may reasonably require.
6.5 NO MERGER OF ESTATES. There shall not be deemed to be any
merger of this Debenture, nor of the rights and interests of the Collateral
Agent hereunder, with the estate in the Real Property or with the reversion or
rights and interests of the Corporation or the Collateral Agent under any
instrument affecting the Collateral by reason only of the fact that the same
Person may own or acquire, directly or indirectly, two or more estates, rights
or interests in the Collateral until all Persons having any interest under this
Debenture, the estate in the Real Property or the reversion or rights and
interests of the Corporation or the Collateral Agent under any instrument
affecting the Collateral, by an appropriate instrument, so declare and provide.
6.6 NO OBLIGATION TO ADVANCE. Neither the issue nor delivery of
this Debenture shall obligate the Collateral Agent, the Trustee, any
Noteholder, the Administrative Agent or any Lender to advance any funds, or
otherwise make or continue to make any credit available, to the Corporation.
6.7 [THIS SECTION HAS BEEN INTENTIONALLY DELETED.]
6.8 PERFECTION OF SECURITY. The Corporation shall register, file
or record all financing statements and other documents in all offices where, in
the opinion of the Collateral Agent, such registration, filing or recording is
necessary or desirable to preserve, perfect or otherwise protect the Security
Interest and the priority thereof. The Collateral Agent shall have the right
to require that the form of this Debenture or any part thereof be amended to
reflect any changes in applicable Law whether arising as a result of statutory
amendments, court decisions or otherwise, in order to confer upon the
Collateral Agent the security interest intended to be created by this
Debenture, except that in no event shall the Collateral Agent require that any
such amendment be effected if the result thereof would be to grant to the
Collateral Agent greater rights than are otherwise contemplated herein.
6.9 ASSIGNMENTS AND PARTICIPATIONS. The Collateral Agent may
sell, assign, transfer or otherwise dispose of all or any of the Obligations in
accordance with the provisions governing the Obligations and, in such event,
each and every immediate and successive assignee, transferee or holder of all
or any of the Obligations, shall have, in respect of the rights or obligations
sold, assigned, transferred or otherwise disposed of, the full benefit hereof
to the same extent as if it were an original party to the Obligations or the
part thereof so sold, assigned, transferred or otherwise disposed. None
<PAGE> 34
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of the rights or obligations hereunder of the Corporation may be assigned
without the prior written consent of the Collateral Agent, except in accordance
with the provisions of the Intercreditor Agreement.
6.10 ENUREMENT. This Debenture shall enure to the benefit of the
Collateral Agent, the Trustee, the Noteholders, the Administrative Agent and
the Lenders, their respective successors and assigns and be binding upon the
Corporation and its successors and permitted assigns.
6.11 TIME OF ESSENCE. Time shall be of the essence of this
Debenture with respect to the obligations of the Corporation hereunder.
6.12 AMENDMENTS. This Debenture may be amended only by written
agreement of the Corporation and the Collateral Agent.
6.13 FURTHER ASSURANCES. The Corporation shall from time to time,
whether before or after the Security Interest shall have become enforceable, at
its sole cost and expense, do all such acts and things and execute and deliver
all such deeds, transfers, assignments and instruments as the Collateral Agent
may reasonably require for protecting the Collateral or perfecting the Security
Interest and for exercising all powers, authorities and discretions hereby
conferred upon the Collateral Agent, and the Corporation shall, from time to
time after the Security Interest has become enforceable, at its sole cost and
expense, do all such acts and things and execute and deliver all such deeds,
transfers, assignments and instruments as the Collateral Agent may require for
facilitating the sale of the Collateral in connection with any realization
thereof.
6.14 JUDGMENT CURRENCY. If, for the purposes of obtaining judgment
in any court, it is necessary to convert any sum due, or owing to the
Collateral Agent in any currency (the "Original Currency") into another
currency (the "Other Currency"), the Corporation hereby agrees, to the fullest
extent that it may effectively do so, that the rate of exchange used shall be
that at which, in accordance with normal banking procedures, the Collateral
Agent could purchase the Original Currency with the Other Currency on the
Business Day preceding that on which the final judgment is granted. The
Obligations of the Corporation in respect of any sum due in the Original
Currency from it to the Collateral Agent shall, notwithstanding any judgment in
any Other Currency, be discharged only to the extent that on the Business Day
following receipt by the Collateral Agent of any such sum adjudged to be so due
or owing in such Other Currency, the Collateral Agent may in accordance with
normal banking procedures purchase the Original Currency with such Other
Currency. If the amount of the Original Currency so purchased is less than the
sum originally due or owing to the Collateral Agent in the Original Currency,
the Corporation shall, as a separate obligation and notwithstanding any such
judgment, indemnify the Collateral Agent for the benefit of the Trustee, on its
own account and on account of each Noteholder, and the Administrative Agent, on
its own account and on account of each of the Lenders, against such loss, and
if the amount of the Original Currency so purchased exceeds the sum originally
due or owing to the Collateral Agent in the Original Currency, the Collateral
Agent shall remit such excess to the Corporation.
<PAGE> 35
6.15 COPY RECEIVED. The Corporation acknowledges receipt of a copy
of this Debenture.
IN WITNESS WHEREOF the Corporation has executed this Debenture on the
date first above written.
PCI CHEMICALS CANADA INC.
Per: /s/ KENT R. STEPHENSON
-----------------------------------
Authorized Signing Officer
c/s
<PAGE> 1
EXHIBIT 4.6(a)
DEBENTURE PLEDGE AGREEMENT
THIS AGREEMENT is made the 30th day of October, 1997.
BY: PCI CHEMICALS CANADA INC.
(the "Corporation")
IN FAVOUR OF: UNITED STATES TRUST COMPANY OF NEW
YORK, as collateral agent for its own
benefit and the benefit of the Trustee
and each of the Noteholders, and the
Administrative Agent and each of the
Lenders
(in such capacity, the "Collateral
Agent")
WHEREAS the Corporation is or will become indebted, liable and
obligated to the Collateral Agent, the Trustee, the Noteholders, the
Administrative Agent and the Lenders;
AND WHEREAS the Corporation has agreed to execute and deliver this
Agreement to and in favour of the Collateral Agent as continuing collateral
security for the due, prompt and complete payment, performance and
satisfaction of all Obligations (as defined below).
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the
foregoing and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the Corporation hereby covenants
and agrees as follows:
ARTICLE 1
INTERPRETATION
1.1 INTERPRETATION. This Agreement 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 Agreement into Articles and Sections and
the insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this
<PAGE> 2
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Agreement; and
(c) the word "including" shall mean "including without limitation"
and "includes" shall mean "includes without limitation".
1.2 DEBENTURE DEFINITIONS. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Debenture (as hereinafter defined).
1.3 SEVERABILITY. If any provision of this Agreement is, or becomes,
illegal, invalid or unenforceable, such provision shall be severed from this
Agreement 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.
1.4 GOVERNING LAW. This Agreement shall be governed by, and interpreted
in accordance with, the Laws of the Province of Ontario and the Laws of Canada
applicable therein, without giving effect to any conflicts of law rules
thereof. The Corporation hereby irrevocably attorns and submits to the
non-exclusive jurisdiction of the courts of Ontario with respect to any matter
arising under or relating to this Agreement.
ARTICLE 2
PLEDGE OF DEBENTURE
2.1 PLEDGE OF DEBENTURE. The Corporation hereby pledges to and deposits
with the Collateral Agent the Demand Debenture (Ontario) of even date herewith
issued by the Corporation to and in favour of the Collateral Agent, in the
principal amount of $500,000,000 in lawful money of the United States of
America, together with all renewals thereof, substitutions thereafter and
supplements thereto (the "Debenture"), as well as interest thereon and proceeds
thereof, to be held by the Collateral Agent in accordance with the provisions
hereof as continuing security for the due, prompt and complete payment,
performance and satisfaction of all of the Obligations.
<PAGE> 3
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2.2 OBLIGATIONS SECURED.
(a) The pledge granted by this Agreement (the "Pledge") shall be
continuing collateral security for the due, prompt and complete payment,
performance and satisfaction by the Corporation of all indebtedness,
liabilities and obligations, present or future, direct or indirect, absolute or
contingent, matured or unmatured, at any time due or accruing due, owing by the
Corporation to the Collateral Agent, the Administrative Agent and the Lenders
pursuant to the Guarantee, and to the Collateral Agent, the Trustee and the
Noteholders pursuant to the Indenture, and any ultimate unpaid balance thereof,
respectively, and in any currency, and whether incurred prior to, at the time
of or subsequent to the execution hereof (collectively, and together with the
expenses, costs and charges set out in Section 2.2(b), the "Obligations").
(b) All expenses, costs and charges incurred by or on behalf of
the Collateral Agent, the Trustee, the Noteholders, the Administrative Agent or
the Lenders, or any of them, in connection with this Debenture, the Security
Interest or the realization of the Collateral, including, after the occurrence
and during the continuance of a Default (as defined therein) of the nature set
forth in Section 8.1.9 of the Term Loan Agreement or a Default (as defined
therein) of the nature set forth in Section 501(10) of the Indenture, or an
Event of Default (as defined in the Term Loan Agreement or the Indenture, as
the case may be), all legal fees, court costs, Receiver's remuneration and
other expenses of taking possession of, repairing, protecting, insuring,
preparing for disposition, realizing, collecting, selling, transferring,
delivering or obtaining payment of the Collateral shall be added to and form a
part of the Obligations.
ARTICLE 3
DEFAULT AND ENFORCEMENT
3.1 DEFAULT. The Pledge shall be and 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 (including pursuant to any
acceleration thereof in accordance with the provisions governing the
Obligations) but not otherwise.
<PAGE> 4
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3.2 REALIZATION UPON DEFAULT. Whenever the Pledge has become enforceable,
the Collateral Agent may at any time realize upon or otherwise dispose of the
Debenture by sale, transfer and/or delivery and/or exercise and/or enforce any
and all rights and remedies of a holder of the Debenture as if the Collateral
Agent was the absolute owner thereof, without notice to or control by the
Corporation (except as may be required by applicable Law) and any such remedy
may be exercised separately or in combination and shall be in addition to and
not in substitution for any rights the Collateral Agent may have, however
created.
3.3 APPLICATION OF PROCEEDS. All proceeds of the Debenture shall be
applied by the Collateral Agent may choose in accordance with the provisions
governing the Obligations, without prejudice to any claim on the Corporation
for any deficiency.
3.4 SATISFACTION OF OBLIGATIONS. Payment of the Obligations from time to
time shall be deemed to be payment of the principal and interest from time to
time due under the Debenture. Upon satisfaction in full of the Obligations,
the Collateral Agent shall, at the request and expense of the Corporation,
deliver the Debenture to the Corporation for cancellation or assign the
Debenture (without recourse to the Lenders) to such other person or entity as
the Corporation may direct.
3.5 DEALING WITH THE DEBENTURE.
(a) The Collateral Agent shall not be obliged to exhaust its
recourse against the Corporation or any other person or persons or against any
other security the Collateral Agent may hold in respect of the Obligations
before realizing upon or otherwise dealing with the Debenture in such manner as
the Collateral Agent may consider desirable.
(b) The Collateral Agent may grant extensions or other
indulgences, take and give up securities, accept compositions, grant releases
and discharges and otherwise deal with the Corporation and with other parties,
sureties or securities as the Collateral Agent may see fit without prejudice to
the Obligations or the rights of the Collateral Agent in respect of the
Debenture.
(c) The Collateral Agent shall not be: (i) liable or accountable
for any failure to collect,
<PAGE> 5
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realize or obtain payment in respect of the Debenture; (ii) bound to institute
proceedings for the purpose of collecting, enforcing, realizing or obtaining
payment of the Debenture or for the purpose of preserving any rights of the
Collateral Agent, the Corporation or any other parties in respect thereof;
(iii) responsible for any loss occasioned by any sale or other dealing with the
Debenture or by the retention of or failure to sell or otherwise deal
therewith; or (iv) bound to protect the Debenture from depreciating in value or
becoming worthless.
ARTICLE 4
MISCELLANEOUS
4.1 NOTICES. Any and all demands, notices or other communications to be
made or given pursuant to this Agreement shall be given and received in the
manner and at the addresses set forth in Section [11.2] of the Intercreditor
Agreement.
4.2 DISCHARGE. The Pledge shall be released and discharged upon the full
and complete payment, performance and satisfaction of all of the Obligations
and at the request and sole cost and expense of the Corporation. The
Collateral Agent shall execute and deliver to the Corporation such releases and
discharges as the Corporation may reasonably require.
4.3 WAIVER. No failure on the part of the Collateral Agent to exercise,
and no delay in exercising, any right under this Agreement shall operate as a
waiver of such right; nor shall any single or partial exercise of any right
under this Agreement preclude any other or further exercise thereof or the
exercise of any other right; nor shall any waiver of one provision be deemed to
constitute a waiver of any other provision (whether or not similar). No waiver
of any of the provisions of this Agreement shall be effective unless it is in
writing duly executed by the waiving party or parties.
4.4 NON-MERGER. The Debenture shall not operate by way of merger of any
of the Obligations and no judgment recovered by the Collateral Agent, or any of
them, shall operate by way of merger of or in any way affect the security of
the Debenture which is in addition to and not in substitution for any other
security now or hereafter held by the Collateral Agent, or any of them, in
respect of the Obligations.
<PAGE> 6
- 6 -
4.5 ASSIGNMENTS AND PARTICIPATIONS. The Collateral Agent may sell,
assign, transfer or otherwise dispose of all or any of the Obligations in
accordance with the provisions governing the Obligations and, in such event,
each and every immediate and successive assignee, transferee or holder of all
or any of the Obligations shall have, in respect of the Obligations sold,
assigned, transferred or otherwise disposed of, the full benefit hereof to the
same extent as if it were an original party to the Obligations or the part
thereof so sold, assigned, transferred or otherwise disposed. None of the
rights or obligations hereunder of the Corporation may be assigned without the
prior written consent of the Collateral Agent, except in accordance with the
provisions of the Intercreditor Agreement.
4.6 ENUREMENT. This Agreement shall enure to the benefit of the
Collateral Agent, the Trustee, the Noteholders, the Administrative Agent, the
Lenders and their respective successors and assigns and be binding upon the
Corporation and its successors and permitted assigns.
4.7 CONFLICTS. Notwithstanding any provision of the Debenture, interest
thereunder shall accrue and be payable in accordance with the terms governing
the Obligations and the principal thereof and interest payable thereunder shall
represent liabilities of the Corporation only to the extent of the Obligations.
To the extent of any conflict or inconsistency between the terms of this
Agreement and the Debenture, this Agreement shall prevail. Notwithstanding the
foregoing, if there exists any right or remedy of any of the Collateral Agent
set out in the Debenture which is not set out or provided for herein, such
additional right or remedy shall not constitute a conflict or inconsistency.
4.8 TIME OF THE ESSENCE. Time shall be of the essence of this Agreement.
4.9 FURTHER ASSURANCES. The Corporation shall from time to time, whether
before or after the Collateral Agent shall become entitled to realize upon or
otherwise dispose of the Debenture, at the sole cost and expense of the
Corporation, do all such acts and things and execute and deliver all such
deeds, transfers, assignments and instruments as the Collateral Agent may
reasonably require for perfecting the security constituted by the Debenture or
exercising all powers, authorities and discretions hereby conferred upon the
Collateral Agent and the Corporation shall from time to time after the
Collateral Agent shall have become entitled to realize upon or otherwise
dispose of the Debenture, at the sole cost
<PAGE> 7
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and expense of the Corporation, do all such acts and things and execute and
deliver all such deeds, transfers, assignments and instruments as the
Collateral Agent may require for facilitating the sale of the Debenture in
connection with any realization thereof.
4.10 AMENDMENT. This Agreement may be amended only by written agreement of
the Corporation and the Collateral Agent.
4.11 JUDGMENT CURRENCY. If, for the purposes of obtaining judgment in any
court, it is necessary to convert any sum due, or owing to the Collateral Agent
in any currency (the "Original Currency") into another currency (the "Other
Currency"), the Corporation hereby agrees, to the fullest extent that it may
effectively do so, that the rate of exchange used shall be that at which, in
accordance with normal banking procedures, the Collateral Agent could purchase
the Original Currency with the Other Currency on the Business Day preceding
that on which the final judgment is granted. The Obligations of the
Corporation in respect of any sum due in the Original Currency from it to the
Collateral Agent shall, notwithstanding any judgment in any Other Currency, be
discharged only to the extent that on the Business Day following receipt by the
Collateral Agent of any such sum adjudged to be so due or owing in such Other
Currency, the Collateral Agent may in accordance with normal banking procedures
purchase the Original Currency with such Other Currency. If the amount of the
Original Currency so purchased is less than the sum originally due or owing to
the Collateral Agent in the Original Currency, the Corporation shall, as a
separate obligation and notwithstanding any such judgment, indemnify the
Collateral Agent for the benefit of the Trustee, on its own account and on
account of each Noteholder, and the Administrative Agent, on its own account
and on account of each of the Lenders, against such loss, and if the amount of
the Original Currency so purchased exceeds the sum originally due or owing to
the Collateral Agent in the Original Currency, the Collateral Agent shall remit
such excess to the Corporation.
[CONTINUED ON PAGE 8]
<PAGE> 8
4.12 COPY RECEIVED. The Corporation acknowledges receipt of a copy of this
Agreement.
IN WITNESS WHEREOF the Corporation has executed this Agreement on the
date first above written.
PCI CHEMICALS CANADA INC.
Per:/s/ KENT R. STEPHENSON
-----------------------------------
(Authorized Signing Officer)
<PAGE> 1
EXHIBIT 4.6(b)
DEBENTURE PLEDGE AGREEMENT
THIS AGREEMENT is made the 30th day of October, 1997.
BY: PCI CHEMICALS CANADA INC.
(the "Corporation")
IN FAVOUR OF: UNITED STATES TRUST COMPANY OF NEW YORK, as
collateral agent for its own benefit and the benefit of
the Trustee and each of the Noteholders, and the
Administrative Agent and each of the Lenders
(in such capacity, the "Collateral Agent")
WHEREAS the Corporation is or will become indebted, liable and
obligated to the Collateral Agent, the Trustee, the Noteholders, the
Administrative Agent and the Lenders;
AND WHEREAS the Corporation has agreed to execute and deliver this
Agreement to and in favour of the Collateral Agent as continuing collateral
security for the due, prompt and complete payment, performance and
satisfaction of all Obligations (as defined below).
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the
foregoing and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the Corporation hereby covenants
and agrees as follows:
ARTICLE 1
INTERPRETATION
1.1 INTERPRETATION. This Agreement 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 Agreement into Articles and Sections and
the insertion of headings
<PAGE> 2
- 2 -
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement; and
(c) the word "including" shall mean "including without limitation"
and "includes" shall mean "includes without limitation".
1.2 DEBENTURE DEFINITIONS. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Debenture (as hereinafter defined).
1.3 SEVERABILITY. If any provision of this Agreement is, or becomes,
illegal, invalid or unenforceable, such provision shall be severed from this
Agreement 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.
1.4 GOVERNING LAW. This Agreement shall be governed by, and interpreted
in accordance with, the Laws of the Province of Nova Scotia and the Laws of
Canada applicable therein, without giving effect to any conflicts of law rules
thereof. The Corporation hereby irrevocably attorns and submits to the
non-exclusive jurisdiction of the courts of Nova Scotia with respect to any
matter arising under or relating to this Agreement.
ARTICLE 2
PLEDGE OF DEBENTURE
2.1 PLEDGE OF DEBENTURE. The Corporation hereby pledges to and deposits
with the Collateral Agent the Demand Debenture (Nova Scotia) of even date
herewith issued by the Corporation to and in favour of the Collateral Agent, in
the principal amount of $500,000,000 in lawful money of the United States of
America, together with all renewals thereof, substitutions thereafter and
supplements thereto (the "Debenture"), as well as interest thereon and proceeds
thereof, to be held by the Collateral Agent in accordance with the provisions
hereof as continuing security for the due, prompt and complete payment,
performance and satisfaction of all of the Obligations.
<PAGE> 3
- 3 -
2.2 OBLIGATIONS SECURED.
(a) The pledge granted by this Agreement (the "Pledge") shall be
continuing collateral security for the due, prompt and complete payment,
performance and satisfaction by the Corporation of all indebtedness,
liabilities and obligations, present or future, direct or indirect, absolute or
contingent, matured or unmatured, at any time due or accruing due, owing by the
Corporation to the Collateral Agent, the Administrative Agent and the Lenders
pursuant to the Guarantee, and to the Collateral Agent, the Trustee and the
Noteholders pursuant to the Indenture, and any ultimate unpaid balance thereof,
respectively, and in any currency, and whether incurred prior to, at the time
of or subsequent to the execution hereof (collectively, and together with the
expenses, costs and charges set out in Section 2.2(b), the "Obligations").
(b) All expenses, costs and charges incurred by or on behalf of
the Collateral Agent, the Trustee, the Noteholders, the Administrative Agent or
the Lenders, or any of them, in connection with this Debenture, the Security
Interest or the realization of the Collateral, including, after the occurrence
and during the continuance of a Default (as defined therein) of the nature set
forth in Section 8.1.9 of the Term Loan Agreement or a Default (as defined
therein) of the nature set forth in Section 501(10) of the Indenture, or an
Event of Default (as defined in the Term Loan Agreement or the Indenture, as
the case may be), all legal fees, court costs, Receiver's remuneration and
other expenses of taking possession of, repairing, protecting, insuring,
preparing for disposition, realizing, collecting, selling, transferring,
delivering or obtaining payment of the Collateral shall be added to and form a
part of the Obligations.
ARTICLE 3
DEFAULT AND ENFORCEMENT
3.1 DEFAULT. The Pledge shall be and 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 (including pursuant to any
acceleration thereof in accordance with the provisions governing the
Obligations) but not otherwise.
<PAGE> 4
- 4 -
3.2 REALIZATION UPON DEFAULT. Whenever the Pledge has become enforceable,
the Collateral Agent may at any time realize upon or otherwise dispose of the
Debenture by sale, transfer and/or delivery and/or exercise and/or enforce any
and all rights and remedies of a holder of the Debenture as if the Collateral
Agent was the absolute owner thereof, without notice to or control by the
Corporation (except as may be required by applicable Law) and any such remedy
may be exercised separately or in combination and shall be in addition to and
not in substitution for any rights the Collateral Agent may have, however
created.
3.3 APPLICATION OF PROCEEDS. All proceeds of the Debenture shall be
applied by the Collateral Agent may choose in accordance with the provisions
governing the Obligations, without prejudice to any claim on the Corporation
for any deficiency.
3.4 SATISFACTION OF OBLIGATIONS. Payment of the Obligations from time to
time shall be deemed to be payment of the principal and interest from time to
time due under the Debenture. Upon satisfaction in full of the Obligations,
the Collateral Agent shall, at the request and expense of the Corporation,
deliver the Debenture to the Corporation for cancellation or assign the
Debenture (without recourse to the Lenders) to such other person or entity as
the Corporation may direct.
3.5 DEALING WITH THE DEBENTURE.
(a) The Collateral Agent shall not be obliged to exhaust its
recourse against the Corporation or any other person or persons or against any
other security the Collateral Agent may hold in respect of the Obligations
before realizing upon or otherwise dealing with the Debenture in such manner as
the Collateral Agent may consider desirable.
(b) The Collateral Agent may grant extensions or other
indulgences, take and give up securities, accept compositions, grant releases
and discharges and otherwise deal with the Corporation and with other parties,
sureties or securities as the Collateral Agent may see fit without prejudice to
the Obligations or the rights of the Collateral Agent in respect of the
Debenture.
<PAGE> 5
- 5 -
(c) The Collateral Agent shall not be: (i) liable or accountable
for any failure to collect, realize or obtain payment in respect of the
Debenture; (ii) bound to institute proceedings for the purpose of collecting,
enforcing, realizing or obtaining payment of the Debenture or for the purpose
of preserving any rights of the Collateral Agent, the Corporation or any other
parties in respect thereof; (iii) responsible for any loss occasioned by any
sale or other dealing with the Debenture or by the retention of or failure to
sell or otherwise deal therewith; or (iv) bound to protect the Debenture from
depreciating in value or becoming worthless.
ARTICLE 4
MISCELLANEOUS
4.1 NOTICES. Any and all demands, notices or other communications to be
made or given pursuant to this Agreement shall be given and received in the
manner and at the addresses set forth in Section [11.2] of the Intercreditor
Agreement.
4.2 DISCHARGE. The Pledge shall be released and discharged upon the full
and complete payment, performance and satisfaction of all of the Obligations
and at the request and sole cost and expense of the Corporation. The
Collateral Agent shall execute and deliver to the Corporation such releases and
discharges as the Corporation may reasonably require.
4.3 WAIVER. No failure on the part of the Collateral Agent to exercise,
and no delay in exercising, any right under this Agreement shall operate as a
waiver of such right; nor shall any single or partial exercise of any right
under this Agreement preclude any other or further exercise thereof or the
exercise of any other right; nor shall any waiver of one provision be deemed to
constitute a waiver of any other provision (whether or not similar). No waiver
of any of the provisions of this Agreement shall be effective unless it is in
writing duly executed by the waiving party or parties.
4.4 NON-MERGER. The Debenture shall not operate by way of merger of any
of the Obligations and no judgment recovered by the Collateral Agent, or any of
them, shall operate by way of merger of or in any way affect the security of
the Debenture which is in addition to and not in substitution for any other
security now or hereafter held by the Collateral Agent, or any of them, in
respect of the Obligations.
<PAGE> 6
- 6 -
4.5 ASSIGNMENTS AND PARTICIPATIONS. The Collateral Agent may sell,
assign, transfer or otherwise dispose of all or any of the Obligations in
accordance with the provisions governing the Obligations and, in such event,
each and every immediate and successive assignee, transferee or holder of all
or any of the Obligations shall have, in respect of the Obligations sold,
assigned, transferred or otherwise disposed of, the full benefit hereof to the
same extent as if it were an original party to the Obligations or the part
thereof so sold, assigned, transferred or otherwise disposed. None of the
rights or obligations hereunder of the Corporation may be assigned without the
prior written consent of the Collateral Agent, except in accordance with the
provisions of the Intercreditor Agreement.
4.6 ENUREMENT. This Agreement shall enure to the benefit of the
Collateral Agent, the Trustee, the Noteholders, the Administrative Agent, the
Lenders and their respective successors and assigns and be binding upon the
Corporation and its successors and permitted assigns.
4.7 CONFLICTS. Notwithstanding any provision of the Debenture, interest
thereunder shall accrue and be payable in accordance with the terms governing
the Obligations and the principal thereof and interest payable thereunder shall
represent liabilities of the Corporation only to the extent of the Obligations.
To the extent of any conflict or inconsistency between the terms of this
Agreement and the Debenture, this Agreement shall prevail. Notwithstanding the
foregoing, if there exists any right or remedy of any of the Collateral Agent
set out in the Debenture which is not set out or provided for herein, such
additional right or remedy shall not constitute a conflict or inconsistency.
4.8 TIME OF THE ESSENCE. Time shall be of the essence of this Agreement.
4.9 FURTHER ASSURANCES. The Corporation shall from time to time, whether
before or after the Collateral Agent shall become entitled to realize upon or
otherwise dispose of the Debenture, at the sole cost and expense of the
Corporation, do all such acts and things and execute and deliver all such
deeds, transfers, assignments and instruments as the Collateral Agent may
reasonably require for perfecting the security constituted by the Debenture or
exercising all powers, authorities and discretions hereby conferred upon the
Collateral Agent and the Corporation shall from time to time after the
Collateral Agent shall have become entitled to realize upon or otherwise
dispose of the Debenture, at the sole cost
<PAGE> 7
- 7 -
and expense of the Corporation, do all such acts and things and execute and
deliver all such deeds, transfers, assignments and instruments as the
Collateral Agent may require for facilitating the sale of the Debenture in
connection with any realization thereof.
4.10 AMENDMENT. This Agreement may be amended only by written agreement of
the Corporation and the Collateral Agent.
4.11 JUDGMENT CURRENCY. If, for the purposes of obtaining judgment in any
court, it is necessary to convert any sum due, or owing to the Collateral Agent
in any currency (the "Original Currency") into another currency (the "Other
Currency"), the Corporation hereby agrees, to the fullest extent that it may
effectively do so, that the rate of exchange used shall be that at which, in
accordance with normal banking procedures, the Collateral Agent could purchase
the Original Currency with the Other Currency on the Business Day preceding
that on which the final judgment is granted. The Obligations of the
Corporation in respect of any sum due in the Original Currency from it to the
Collateral Agent shall, notwithstanding any judgment in any Other Currency, be
discharged only to the extent that on the Business Day following receipt by the
Collateral Agent of any such sum adjudged to be so due or owing in such Other
Currency, the Collateral Agent may in accordance with normal banking procedures
purchase the Original Currency with such Other Currency. If the amount of the
Original Currency so purchased is less than the sum originally due or owing to
the Collateral Agent in the Original Currency, the Corporation shall, as a
separate obligation and notwithstanding any such judgment, indemnify the
Collateral Agent for the benefit of the Trustee, on its own account and on
account of each Noteholder, and the Administrative Agent, on its own account
and on account of each of the Lenders, against such loss, and if the amount of
the Original Currency so purchased exceeds the sum originally due or owing to
the Collateral Agent in the Original Currency, the Collateral Agent shall remit
such excess to the Corporation.
[CONTINUED ON PAGE 8]
<PAGE> 8
4.12 COPY RECEIVED. The Corporation acknowledges receipt of a copy of this
Agreement.
IN WITNESS WHEREOF the Corporation has executed this Agreement on the
date first above written.
PCI CHEMICALS CANADA INC.
Per: /s/ PHILIP J. ALBOVE
--------------------------------
(Authorized Signing Officer)
<PAGE> 1
EXHIBIT 4.6(c)
DEBENTURE PLEDGE AGREEMENT
THIS AGREEMENT is made the 30th day of October, 1997.
BY: PCI CHEMICALS CANADA INC.
(the "Corporation")
IN FAVOUR OF: UNITED STATES TRUST COMPANY OF NEW YORK, as collateral
agent for its own benefit and the benefit of the
Trustee and each of the Noteholders, and the
Administrative Agent and each of the Lenders
(in such capacity, the "Collateral Agent")
WHEREAS the Corporation is or will become indebted, liable and
obligated to the Collateral Agent, the Trustee, the Noteholders, the
Administrative Agent and the Lenders;
AND WHEREAS the Corporation has agreed to execute and deliver this
Agreement to and in favour of the Collateral Agent as continuing collateral
security for the due, prompt and complete payment, performance and
satisfaction of all Obligations (as defined below).
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the
foregoing and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the Corporation hereby covenants
and agrees as follows:
ARTICLE 1
INTERPRETATION
1.1 INTERPRETATION. This Agreement 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;
<PAGE> 2
- 2 -
(b) the division of this Agreement into Articles and Sections and
the insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement; and
(c) the word "including" shall mean "including without limitation"
and "includes" shall mean "includes without limitation".
1.2 DEBENTURE DEFINITIONS. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Debenture (as hereinafter defined).
1.3 SEVERABILITY. If any provision of this Agreement is, or becomes,
illegal, invalid or unenforceable, such provision shall be severed from this
Agreement 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.
1.4 GOVERNING LAW. This Agreement 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 law 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 relating to this Agreement.
ARTICLE 2
PLEDGE OF DEBENTURE
2.1 PLEDGE OF DEBENTURE. The Corporation hereby pledges to and deposits
with the Collateral Agent the Demand Debenture (New Brunswick) of even date
herewith issued by the Corporation to and in favour of the Collateral Agent, in
the principal amount of $500,000,000 in lawful money of the United States of
America, together with all renewals thereof, substitutions thereafter and
supplements thereto (the "Debenture"), as well as interest thereon and proceeds
thereof, to be held by the Collateral Agent in accordance with the provisions
hereof as continuing security for the due, prompt and complete payment,
<PAGE> 3
- 3 -
performance and satisfaction of all of the Obligations.
2.2 OBLIGATIONS SECURED.
(a) The pledge granted by this Agreement (the "Pledge") shall be
continuing collateral security for the due, prompt and complete payment,
performance and satisfaction by the Corporation of all indebtedness,
liabilities and obligations, present or future, direct or indirect, absolute or
contingent, matured or unmatured, at any time due or accruing due, owing by the
Corporation to the Collateral Agent, the Administrative Agent and the Lenders
pursuant to the Guarantee, and to the Collateral Agent, the Trustee and the
Noteholders pursuant to the Indenture, and any ultimate unpaid balance thereof,
respectively, and in any currency, and whether incurred prior to, at the time
of or subsequent to the execution hereof (collectively, and together with the
expenses, costs and charges set out in Section 2.2(b), the "Obligations").
(b) All expenses, costs and charges incurred by or on behalf of
the Collateral Agent, the Trustee, the Noteholders, the Administrative Agent or
the Lenders, or any of them, in connection with this Debenture, the Security
Interest or the realization of the Collateral, including, after the occurrence
and during the continuance of a Default (as defined therein) of the nature set
forth in Section 8.1.9 of the Term Loan Agreement or a Default (as defined
therein) of the nature set forth in Section 501(10) of the Indenture, or an
Event of Default (as defined in the Term Loan Agreement or the Indenture, as
the case may be), all legal fees, court costs, Receiver's remuneration and
other expenses of taking possession of, repairing, protecting, insuring,
preparing for disposition, realizing, collecting, selling, transferring,
delivering or obtaining payment of the Collateral shall be added to and form a
part of the Obligations.
ARTICLE 3
DEFAULT AND ENFORCEMENT
3.1 DEFAULT. The Pledge shall be and 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 (including pursuant to any
acceleration thereof in accordance with the provisions governing the
Obligations) but not otherwise.
<PAGE> 4
- 4 -
3.2 REALIZATION UPON DEFAULT. Whenever the Pledge has become enforceable,
the Collateral Agent may at any time realize upon or otherwise dispose of the
Debenture by sale, transfer and/or delivery and/or exercise and/or enforce any
and all rights and remedies of a holder of the Debenture as if the Collateral
Agent was the absolute owner thereof, without notice to or control by the
Corporation (except as may be required by applicable Law) and any such remedy
may be exercised separately or in combination and shall be in addition to and
not in substitution for any rights the Collateral Agent may have, however
created.
3.3 APPLICATION OF PROCEEDS. All proceeds of the Debenture shall be
applied by the Collateral Agent may choose in accordance with the provisions
governing the Obligations, without prejudice to any claim on the Corporation
for any deficiency.
3.4 SATISFACTION OF OBLIGATIONS. Payment of the Obligations from time to
time shall be deemed to be payment of the principal and interest from time to
time due under the Debenture. Upon satisfaction in full of the Obligations,
the Collateral Agent shall, at the request and expense of the Corporation,
deliver the Debenture to the Corporation for cancellation or assign the
Debenture (without recourse to the Lenders) to such other person or entity as
the Corporation may direct.
3.5 DEALING WITH THE DEBENTURE.
(a) The Collateral Agent shall not be obliged to exhaust its
recourse against the Corporation or any other person or persons or against any
other security the Collateral Agent may hold in respect of the Obligations
before realizing upon or otherwise dealing with the Debenture in such manner as
the Collateral Agent may consider desirable.
(b) The Collateral Agent may grant extensions or other
indulgences, take and give up securities, accept compositions, grant releases
and discharges and otherwise deal with the Corporation and with other parties,
sureties or securities as the Collateral Agent may see fit without prejudice to
the Obligations or the rights of the Collateral Agent in respect of the
Debenture.
<PAGE> 5
- 5 -
(c) The Collateral Agent shall not be: (i) liable or accountable
for any failure to collect, realize or obtain payment in respect of the
Debenture; (ii) bound to institute proceedings for the purpose of collecting,
enforcing, realizing or obtaining payment of the Debenture or for the purpose
of preserving any rights of the Collateral Agent, the Corporation or any other
parties in respect thereof; (iii) responsible for any loss occasioned by any
sale or other dealing with the Debenture or by the retention of or failure to
sell or otherwise deal therewith; or (iv) bound to protect the Debenture from
depreciating in value or becoming worthless.
ARTICLE 4
MISCELLANEOUS
4.1 NOTICES. Any and all demands, notices or other communications to be
made or given pursuant to this Agreement shall be given and received in the
manner and at the addresses set forth in Section [11.2] of the Intercreditor
Agreement.
4.2 DISCHARGE. The Pledge shall be released and discharged upon the full
and complete payment, performance and satisfaction of all of the Obligations
and at the request and sole cost and expense of the Corporation. The
Collateral Agent shall execute and deliver to the Corporation such releases and
discharges as the Corporation may reasonably require.
4.3 WAIVER. No failure on the part of the Collateral Agent to exercise,
and no delay in exercising, any right under this Agreement shall operate as a
waiver of such right; nor shall any single or partial exercise of any right
under this Agreement preclude any other or further exercise thereof or the
exercise of any other right; nor shall any waiver of one provision be deemed to
constitute a waiver of any other provision (whether or not similar). No waiver
of any of the provisions of this Agreement shall be effective unless it is in
writing duly executed by the waiving party or parties.
4.4 NON-MERGER. The Debenture shall not operate by way of merger of any
of the Obligations and no judgment recovered by the Collateral Agent, or any of
them, shall operate by way of merger of or in any way affect the security of
the Debenture which is in addition to and not in substitution for any other
security now or hereafter held by the Collateral Agent, or any of them, in
respect of the Obligations.
<PAGE> 6
- 6 -
4.5 ASSIGNMENTS AND PARTICIPATIONS. The Collateral Agent may sell,
assign, transfer or otherwise dispose of all or any of the Obligations in
accordance with the provisions governing the Obligations and, in such event,
each and every immediate and successive assignee, transferee or holder of all
or any of the Obligations shall have, in respect of the Obligations sold,
assigned, transferred or otherwise disposed of, the full benefit hereof to the
same extent as if it were an original party to the Obligations or the part
thereof so sold, assigned, transferred or otherwise disposed. None of the
rights or obligations hereunder of the Corporation may be assigned without the
prior written consent of the Collateral Agent, except in accordance with the
provisions of the Intercreditor Agreement.
4.6 ENUREMENT. This Agreement shall enure to the benefit of the
Collateral Agent, the Trustee, the Noteholders, the Administrative Agent, the
Lenders and their respective successors and assigns and be binding upon the
Corporation and its successors and permitted assigns.
4.7 CONFLICTS. Notwithstanding any provision of the Debenture, interest
thereunder shall accrue and be payable in accordance with the terms governing
the Obligations and the principal thereof and interest payable thereunder shall
represent liabilities of the Corporation only to the extent of the Obligations.
To the extent of any conflict or inconsistency between the terms of this
Agreement and the Debenture, this Agreement shall prevail. Notwithstanding the
foregoing, if there exists any right or remedy of any of the Collateral Agent
set out in the Debenture which is not set out or provided for herein, such
additional right or remedy shall not constitute a conflict or inconsistency.
4.8 TIME OF THE ESSENCE. Time shall be of the essence of this Agreement.
4.9 FURTHER ASSURANCES. The Corporation shall from time to time, whether
before or after the Collateral Agent shall become entitled to realize upon or
otherwise dispose of the Debenture, at the sole cost and expense of the
Corporation, do all such acts and things and execute and deliver all such
deeds, transfers, assignments and instruments as the Collateral Agent may
reasonably require for perfecting the security constituted by the Debenture or
exercising all powers, authorities and discretions hereby conferred upon the
Collateral Agent and the Corporation shall from time to time after the
Collateral Agent shall have become entitled to realize upon or otherwise
dispose of the Debenture, at the sole cost
<PAGE> 7
- 7 -
and expense of the Corporation, do all such acts and things and execute and
deliver all such deeds, transfers, assignments and instruments as the
Collateral Agent may require for facilitating the sale of the Debenture in
connection with any realization thereof.
4.10 AMENDMENT. This Agreement may be amended only by written agreement of
the Corporation and the Collateral Agent.
4.11 JUDGMENT CURRENCY. If, for the purposes of obtaining judgment in any
court, it is necessary to convert any sum due, or owing to the Collateral Agent
in any currency (the "Original Currency") into another currency (the "Other
Currency"), the Corporation hereby agrees, to the fullest extent that it may
effectively do so, that the rate of exchange used shall be that at which, in
accordance with normal banking procedures, the Collateral Agent could purchase
the Original Currency with the Other Currency on the Business Day preceding
that on which the final judgment is granted. The Obligations of the
Corporation in respect of any sum due in the Original Currency from it to the
Collateral Agent shall, notwithstanding any judgment in any Other Currency, be
discharged only to the extent that on the Business Day following receipt by the
Collateral Agent of any such sum adjudged to be so due or owing in such Other
Currency, the Collateral Agent may in accordance with normal banking procedures
purchase the Original Currency with such Other Currency. If the amount of the
Original Currency so purchased is less than the sum originally due or owing to
the Collateral Agent in the Original Currency, the Corporation shall, as a
separate obligation and notwithstanding any such judgment, indemnify the
Collateral Agent for the benefit of the Trustee, on its own account and on
account of each Noteholder, and the Administrative Agent, on its own account
and on account of each of the Lenders, against such loss, and if the amount of
the Original Currency so purchased exceeds the sum originally due or owing to
the Collateral Agent in the Original Currency, the Collateral Agent shall remit
such excess to the Corporation.
[CONTINUED ON PAGE 8]
<PAGE> 8
4.12 COPY RECEIVED. The Corporation acknowledges receipt of a copy of this
Agreement.
IN WITNESS WHEREOF the Corporation has executed this Agreement on the
date first above written.
PCI CHEMICALS CANADA INC.
Per: /s/ KENT R. STEPHENSON
------------------------------------
(Authorized Signing Officer)
<PAGE> 1
EXHIBIT 4.7
SUBSIDIARY SECURITY AGREEMENT
This SUBSIDIARY SECURITY AGREEMENT (as amended, supplemented, amended
and restated or otherwise modified from time to time, this "Security
Agreement"), dated as of October 30, 1997, is made by PCI Chemicals Canada
Inc./Produits Chimiques PCI Canada Inc., a corporation organized under the laws
of the Province of New Brunswick (the "Grantor") in favor of UNITED STATES
TRUST COMPANY OF NEW YORK, as collateral agent (together with any successor(s)
thereto in such capacity, the "Collateral Agent") under the Intercreditor
Agreement (as defined below) for each of the Secured Parties (as defined
below).
W I T N E S S E T H:
WHEREAS, pursuant to a Term Loan Agreement, dated as of the date
hereof (as amended, supplemented, amended and restated or otherwise modified
from time to time, the "Term Loan Agreement"), among Pioneer Americas, Inc., a
corporation organized under the laws of Delaware (the "Borrower"), the Parent
Guarantor named therein, the various financial institutions as are, or may from
time to time become, parties thereto (each, individually, a "Term Loan Lender",
and collectively, the "Term Loan Lenders"), the Collateral Agent, DLJ Capital
Funding, Inc., as Syndication Agent for the Term Loan Lenders, Salomon Brothers
Holding Company Inc, as Documentation Agent for the Term Loan Lenders, Bank of
America National Trust and Savings Association, as Administrative Agent for the
Term Loan Lenders and United States Trust Company of New York, as Collateral
Agent for the Term Loan Lenders (the Syndication Agent, the Documentation
Agent, the Administrative Agent and the Collateral Agent are hereinafter
collectively referred to as the "Term Loan Agents"), the Term Loan Lenders have
extended Term Loan Commitments to make Term Loans to the Borrower, which Term
Loans will be evidenced by notes (as amended, supplemented, amended and
restated, or otherwise modified from time to time, including all notes issued
in exchange or substitution therefor, the "Term Loan Notes") in an aggregate
principal amount of up to U.S.$100,000,000;
WHEREAS, pursuant to that certain Indenture, dated as of the date
hereof (as amended, supplemented, amended and restated, or otherwise modified
from time to time, the "Senior Secured Note Indenture"), among the Grantor, the
Affiliate Guarantors (as defined therein) and United States Trust Company of
New York, as trustee (in such capacity, the "Trustee") for the holders of the
Notes (as defined therein) (the "Holders"), the Grantor will issue its 9 1/4%
Senior Secured Notes due 2007 (as amended, supplemented, amended and restated,
or otherwise modified from time to time, including all notes issued in exchange
or substitution therefor upon the registration of such notes pursuant to the
United States' Securities Act of 1933 or otherwise, the "Senior Secured Notes")
in an aggregate principal amount of U.S.$175,000,000;
WHEREAS, as a condition precedent to the making of the Term Loans
under the Term Loan Agreement the Grantor has given a guarantee (the
"Guarantee") of the obligations of the Borrower under the Term Loan Agreement;
<PAGE> 2
WHEREAS, as a condition precedent to the purchase of Senior Secured
Notes by the Initial Purchasers (as defined in the Senior Secured Note
Indenture) and the making of the Term Loans under the Term Loan Agreement, the
Grantor is required to execute and deliver this Security Agreement as
collateral security therefor;
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Security Agreement; and
WHEREAS, it is in the best interests of the Grantor to execute this
Security Agreement inasmuch as the Grantor will derive substantial direct and
indirect benefits from the Term Loans made to the Borrower by the Term Loan
Lenders pursuant to the Term Loan Agreement and the purchase of the Senior
Secured Notes by the Initial Purchasers pursuant to the Senior Secured Note
Indenture;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce (i) the
Initial Purchasers to purchase the Senior Secured Notes pursuant to the Senior
Secured Note Indenture and (ii) the Term Loan Lenders to make Term Loans to the
Borrower pursuant to the Term Loan Agreement, the Grantor agrees, for the
benefit of each Secured Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. CERTAIN TERMS. The following terms (whether or not
underscored) when used in this Security Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"BORROWER" is defined in the first recital.
"COLLATERAL" is defined in Section 2.1.
"COLLATERAL ACCOUNT" is defined in Section 4.1.2(b).
"COLLATERAL AGENT" is defined in the preamble.
"COMPUTER HARDWARE AND SOFTWARE COLLATERAL" means:
(a) all computer and other electronic data processing
hardware, integrated computer systems, central processing units,
memory units, display terminals, printers, features, computer
elements, card readers, tape drives, hard and soft disk drives,
cables, electrical supply hardware, generators, power equalizers,
accessories and all peripheral devices and other related computer
hardware;
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<PAGE> 3
(b) all software programs (including both source code,
object code and all related applications and data files), whether now
owned, licensed or leased or hereafter acquired by the Grantor,
designed for use on the computers and electronic data processing
hardware described in clause (a) above;
(c) all firmware associated therewith;
(d) all documentation (including flow charts, logic
diagrams, manuals, guides and specifications) with respect to such
hardware, software and firmware described in the preceding clauses (a)
through (c); and
(e) all rights with respect to all of the foregoing,
including any and all copyrights, licenses, options, warranties,
service contracts, program services, test rights, maintenance rights,
support rights, improvement rights, renewal rights and
indemnifications and any substitutions, replacements, additions or
model conversions of any of the foregoing.
"CONTRACTS" is defined in clause (b) of Section 2.1.
"COPYRIGHT COLLATERAL" means all copyrights (including all copyrights
for semi-conductor chip product mask works) of the Grantor, whether statutory
or common law, registered or unregistered, now or hereafter in force throughout
the world including all of the Grantor's right, title and interest in and to
all copyrights registered in the United States Copyright Office or anywhere
else in the world and also including the copyrights referred to in Item A of
Schedule IV attached hereto, and all applications for registration thereof,
whether pending or in preparation, all copyright licenses, including each
copyright license referred to in Item B of Schedule IV attached hereto, the
right to sue for past, present and future infringements of any thereof, all
rights corresponding thereto throughout the world, all extensions and renewals
of any thereof and all proceeds of the foregoing, including licenses,
royalties, income, payments, claims, damages and proceeds of suit.
"EXCLUDED ASSETS" means (a) the inventory of the Grantor, 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 Grantor, (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.
"EQUIPMENT" is defined in clause (a) of Section 2.1.
"GRANTOR" is defined in the preamble.
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<PAGE> 4
"GUARANTEE" is defined in the third recital.
"HOLDERS" is defined in the second recital.
"INTELLECTUAL PROPERTY COLLATERAL" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral, the Trademark Collateral and the Trade Secrets Collateral (except
to the extent any of the foregoing arises out of or relates to any inventory or
accounts receivable).
"INTERCREDITOR AGREEMENT" means the Intercreditor and Collateral
Agency Agreement, dated as of October 30, 1997, among the Borrower, the
Grantor, PCI Carolina Inc., Pioneer Licensing Inc., the Trustee, the
Administrative Agent and the Collateral Agent, as amended, supplemented,
amended and restated or otherwise modified from time to time.
"PATENT COLLATERAL" means:
(a) all letters patent and applications for letters
patent throughout the world, including all patent applications in
preparation for filing anywhere in the world and including each patent
and patent application referred to in Item A of Schedule II attached
hereto;
(b) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the items described in clause (a);
(c) all patent licenses, including each patent license
referred to in Item B of Schedule II attached hereto; and
(d) all proceeds of, and rights associated with, the
foregoing (including license royalties and proceeds of infringement
suits), the right to sue third parties for past, present or future
infringements of any patent or patent application, including any
patent or patent application referred to in Item A of Schedule II
attached hereto, and for breach or enforcement of any patent license,
including any patent license referred to in Item B of Schedule II
attached hereto, and all rights corresponding thereto throughout the
world.
"PPSA" means the Personal Property Security Act (New Brunswick), as
same may be amended from time to time.
"RELATED CONTRACTS" is defined in clause (b) of Section 2.1.
"SECURED OBLIGATIONS" is defined in Section 2.2.
"SECURED PARTIES" means the Collateral Agent, the Trustee, the
Holders, the Term Loan Agents, the Term Loan Lenders and any holder of a Term
Loan Note.
"SECURITY AGREEMENT" is defined in the preamble.
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<PAGE> 5
"SENIOR SECURED NOTE INDENTURE" is defined in the second recital.
"SENIOR SECURED NOTES" is defined in the second recital.
"TERM LOAN AGREEMENT" is defined in the first recital.
"TERM LOAN LENDER" and "TERM LOAN LENDERS" are defined in the first
recital.
"TERM LOAN NOTES" is defined in the first recital.
"TRADEMARK COLLATERAL" means:
(a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, service marks,
certification marks, collective marks, logos, and general intangibles
of a like nature (all of the foregoing items in this clause (a) being
collectively called a "Trademark"), now existing anywhere in the world
or hereafter adopted or acquired, all registrations and recordings
thereof and all applications in connection therewith, whether pending
or in preparation for filing, including registrations, recordings and
applications in the United States Patent and Trademark Office or in
any office or agency of the United States of America or any State
thereof or any foreign country, including those referred to in Item A
of Schedule III attached hereto;
(b) all Trademark licenses, including each Trademark
license referred to in Item B of Schedule III attached hereto;
(c) all extensions or renewals of any of the items
described in clauses (a) and (b);
(d) all of the goodwill of the business connected with
the use of, and symbolized by the items described in, clauses (a) and
(b); and
(e) all proceeds of, and rights associated with, the
foregoing, including any claim by the Grantor against third parties
for past, present or future infringement or dilution of any Trademark,
Trademark registration or Trademark license, including any Trademark,
Trademark registration or Trademark license referred to in Item A and
Item B of Schedule III attached hereto, or for any injury to the
goodwill associated with the use of any such Trademark or for breach
or enforcement of any Trademark license.
"TRADE SECRETS COLLATERAL" means all confidential or proprietary
information and all know-how obtained by or used in or contemplated at any time
for use in the business of the Grantor (all of the foregoing being collectively
called a "Trade Secret"), whether or not such Trade Secret has been reduced to
a writing or other tangible form, including all documents and things embodying,
incorporating or referring in any way to such Trade Secret, all Trade Secret
licenses, including each Trade Secret license referred to in Schedule V
attached hereto, and including the right to sue for and to enjoin and to
collect damages for the actual or threatened
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<PAGE> 6
misappropriation of any Trade Secret and for the breach or enforcement of any
such Trade Secret license.
"TRUSTEE" is defined in the second recital.
SECTION 1.2. INTERCREDITOR AGREEMENT DEFINITIONS. Unless otherwise
defined herein or the context otherwise requires, terms used in this Security
Agreement, including its preamble and recitals, have the meanings provided in
the Intercreditor Agreement.
SECTION 1.3. PPSA DEFINITIONS. Unless otherwise defined herein or in
the Intercreditor Agreement or the context otherwise requires, terms for which
meanings are provided in the PPSA are used in this Security Agreement,
including its preamble and recitals, with such meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. GRANT OF SECURITY. The Grantor hereby assigns and
pledges to the Collateral Agent, for the ratable benefit of each of the Secured
Parties, and hereby grants to the Collateral Agent, for the ratable benefit of
each of the Secured Parties, a security interest in all of the following,
whether now or hereafter existing or acquired by the Grantor (the
"Collateral"):
(a) all pipelines, valves, pipes, pumps and equipment in
all of its forms of the Grantor, wherever located, including all parts
thereof and all accessions, additions, attachments, improvements,
substitutions and replacements thereto and therefor and all
accessories related thereto (any and all of the foregoing being the
"Equipment");
(b) 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) any of the foregoing as it may arise
from or relate to inventory or accounts receivable) of the Grantor,
whether or not arising out of or in connection with the sale or lease
of goods or the rendering of services, and all rights of the Grantor
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 (any and all such contracts,
contract rights, chattel paper, documents, instruments, and general
intangibles being the "Contracts", and any and all such security
agreements, guaranties, leases and other contracts being the "Related
Contracts");
(c) all Intellectual Property Collateral of the Grantor;
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<PAGE> 7
(d) all books, records, writings, data bases, information
and other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the
foregoing in this Section 2.1;
(e) all of the Grantor's other personal property and
rights of every kind and description and interests therein (other than
the Excluded Assets and 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); and
(f) all products, offspring, rents, issues, profits,
returns, income and proceeds of and from any and all of the foregoing
Collateral (including proceeds which constitute property of the types
described in clauses (a), (b), (c), (d) and (e), proceeds deposited
from time to time in the Collateral Account and in any lock boxes of
the Grantor, and, to the extent not otherwise included, all payments
under insurance (whether or not the Collateral Agent is the 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
favor of a third party on such grant, unless and until any required consents
shall have been obtained. The Grantor shall, upon the request of the
Collateral Agent, use its best commercial efforts to obtain any such required
consent.
SECTION 2.2. SECURITY FOR OBLIGATIONS. This Security Agreement
secures the due, prompt and complete payment, performance and satisfaction by
the Grantor of all indebtedness, liabilities and obligations, present or
future, direct or indirect, absolute or contingent, matured or unmatured, at
any time due or accruing due, owing by the Grantor to the Collateral Agent, the
Administrative Agent and the Term Loan Lenders pursuant to the Guarantee, and
to the Collateral Agent, the Trustee and the Holders pursuant to the Senior
Secured Note Indenture, and any ultimate unpaid balance thereof, respectively,
and in any currency, and whether incurred prior to, at the time of or
subsequent to the execution hereof (collectively, and together with the
expenses, costs and charges set out herein, the "Secured Obligations").
SECTION 2.3. CONTINUING SECURITY INTEREST; TRANSFER OF TERM LOAN
NOTES. This Security Agreement shall create a continuing security interest in
the Collateral and shall
(a) remain in full force and effect until the full and
complete payment, performance and satisfaction of all of the Secured
Obligations,
(b) be binding upon the Grantor, its successors,
transferees and assigns, and
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<PAGE> 8
(c) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of the Collateral Agent and
each other Secured Party.
Without limiting the generality of the foregoing clause (c), any Term Loan
Lender may assign or otherwise transfer (in whole or in part) any Term Loan
Note or Term Loan held by it to any other Person or entity, and such other
Person or entity shall thereupon become vested with all the rights and benefits
in respect thereof granted to such Term Loan Lender under any Collateral
Document or any Loan Document (including this Security Agreement) or otherwise,
subject, however, to any contrary provisions in such assignment or transfer,
and to the provisions of Section 11.11 and Article X of the Term Loan
Agreement. Upon the full and complete payment, performance and satisfaction of
all of the Secured Obligations, the security interest granted herein shall
terminate and all rights to the Collateral shall revert to the Grantor. Upon
any such termination, the Collateral Agent will, at the Grantor's sole expense,
execute and deliver to the Grantor such documents as the Grantor shall
reasonably request to evidence such termination. Upon any sale or other
transfer of Collateral permitted by the terms of the Intercreditor Agreement,
the security interest created hereunder in such Collateral (but not in the
proceeds thereof) shall be deemed to be automatically released and the
Collateral Agent will, at the Grantor's sole expense, execute and deliver to
the Grantor such documents as the Grantor shall reasonably request to evidence
such release.
SECTION 2.4. GRANTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding
(a) the Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein,
and shall perform all of its duties and obligations under such
contracts and agreements,
(b) the exercise by the Collateral Agent of any of its rights
hereunder shall not release the Grantor from any of its duties or
obligations under any such contracts or agreements included in the
Collateral, and
(c) neither the Collateral Agent nor any other Secured Party
shall have any obligation or liability under any such contracts or
agreements included in the Collateral by reason of this Security
Agreement, nor shall the Collateral Agent or any other Secured Party
be obligated to perform any of the obligations or duties of the
Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
SECTION 2.5. SECURITY INTEREST ABSOLUTE. All rights of the
Collateral Agent and the security interests granted to the Collateral Agent
hereunder, and all obligations of the Grantor hereunder, shall be absolute and
unconditional, irrespective of
(a) any lack of validity or enforceability of the
Intercreditor Agreement, the Senior Secured Note Indenture, the Term
Loan Agreement, any Term Loan Note, any Senior Secured Note, any
Collateral Document or any other Loan Document;
(b) the failure of any Secured Party
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<PAGE> 9
(i) to assert any claim or demand or to enforce
any right or remedy against the Borrower or any other Person
under the provisions of the Intercreditor Agreement, the
Senior Secured Note Indenture, the Term Loan Agreement, any
Term Loan Note, any Senior Secured Note, any Collateral
Document or any other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any
other guarantor of, or collateral securing, any Secured
Obligations;
(c) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Secured Obligations or
any other extension, compromise or renewal of any Secured Obligations;
(d) any reduction, limitation, impairment or termination
of any Secured Obligations for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be
subject to (and the Grantor hereby waives any right to or claim of)
any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or
occurrence affecting, any Secured Obligations or otherwise;
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
the Intercreditor Agreement, the Senior Secured Note Indenture, the
Term Loan Agreement, any Term Loan Note, any Senior Secured Note, any
Collateral Document, or any other Loan Document;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral (including the Collateral), or any
amendment to or waiver or release of or addition to or consent to
departure from any guaranty, for any of the Secured Obligations; or
(g) any other circumstances which might otherwise
constitute a defense available to, or a legal or equitable discharge
of, the Borrower, any surety or any guarantor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES. The Grantor represents
and warrants to each Secured Party (a) as to all matters contained in Article
VI of the Term Loan Agreement insofar as the representations and warranties
contained therein are applicable to the Grantor and its properties, each such
representation and warranty set forth in such Article (insofar as applicable as
aforesaid) and all other terms of the Term Loan Agreement to which reference is
made therein, together with all related definitions and ancillary provisions,
being hereby
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<PAGE> 10
incorporated into this Security Agreement by reference as though specifically
set forth in this Section and (b) insofar as the representations and warranties
contained herein are applicable to the Grantor and its properties, as set forth
in this Section.
SECTION 3.1.1. LOCATION OF COLLATERAL, ETC. All of the Equipment of
the Grantor is located at the places specified in Item A of Schedule I hereto.
All of the lock boxes of the Grantor are located at the places specified in
Item B of Schedule I hereto. The place(s) of business and chief executive
office of the Grantor and the office(s) where the Grantor keeps its records
concerning the Contracts, and all originals of all chattel paper which evidence
Contracts, are located at the address set forth in Item C of Schedule I hereto.
The Grantor has no trade names. The Grantor has not been known by any legal
name different from the one set forth on the signature page hereto, nor has the
Grantor been the subject of any amalgamation, merger or other corporate
reorganization. All Contracts evidenced by a promissory note or other
instrument, negotiable document or chattel paper have been duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Collateral Agent and delivered and pledged to
the Collateral Agent pursuant to Section 4.1.7. The Grantor is not a party to
any federal, state, provincial, municipal or local government contract except
as set forth in Item F of Schedule I hereto.
SECTION 3.1.2. OWNERSHIP, NO LIENS, ETC. The Grantor owns its
Collateral free and clear of any Lien, security interest, charge or encumbrance
except for the security interest created by this Security Agreement and except
(a) as permitted under Section 7.2.2 of the Term Loan Agreement or (b) for any
Permitted Liens (as defined in the Senior Secured Note Indenture). No
effective financing statement or other instrument similar in effect covering
all or any part of the Collateral is on file in any recording office, except
such as may have been filed in favor of the Collateral Agent relating to this
Security Agreement or as have been filed in connection with Liens permitted
pursuant to the Intercreditor Agreement.
SECTION 3.1.3. POSSESSION AND CONTROL. The Grantor has exclusive
possession and control (subject only to (a) Liens permitted under Section 7.2.2
of the Term Loan Agreement or (b) Permitted Liens (as defined in the Senior
Secured Note Indenture) of its Equipment.
SECTION 3.1.4. NEGOTIABLE DOCUMENTS, INSTRUMENTS AND CHATTEL PAPER.
Subject to the proviso to clause (a) of Section 4.1.7, the Grantor has,
contemporaneously herewith, delivered to the Collateral Agent possession of all
originals of all negotiable documents, instruments and chattel paper currently
owned or held by the Grantor (duly endorsed in blank, if requested by the
Collateral Agent).
SECTION 3.1.5. INTELLECTUAL PROPERTY COLLATERAL. With respect to any
Intellectual Property Collateral the loss, impairment or infringement of which
might have a Material Adverse Effect:
(a) such Intellectual Property Collateral is subsisting
and has not been adjudged invalid or unenforceable, in whole or in
part;
(b) such Intellectual Property Collateral is valid and
enforceable;
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<PAGE> 11
(c) the Grantor has made all necessary filings and
recordations to protect its interest in such Intellectual Property
Collateral, including recordations of all of its interests in the
Patent Collateral and Trademark Collateral in the United States Patent
and Trademark Office and in corresponding offices throughout the world
and its claims to the Copyright Collateral in the United States
Copyright Office and in corresponding offices throughout the world;
(d) the Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to such Intellectual
Property Collateral and no claim has been made that the use of such
Intellectual Property Collateral does or may violate the asserted
rights of any third party; and
(e) the Grantor has performed and will continue to
perform all acts and has paid and will continue to pay all required
fees and taxes to maintain each and every item of Intellectual
Property Collateral in full force and effect throughout the world, as
applicable.
The Grantor owns directly or is entitled to use by license or otherwise, all
patents, Trademarks, Trade Secrets, copyrights, mask works, licenses,
technology, know-how, processes and rights with respect to any of the foregoing
used in, necessary for or of importance to the conduct of the Grantor's
business except (a) as permitted under Section 7.2.2 of the Term Loan Agreement
or (b) for any Permitted Liens (as defined in the Senior Secured Note
Indenture).
SECTION 3.1.6. VALIDITY, ETC. Except (a) as permitted under Section
7.2.2 of the Term Loan Agreement or (b) for any Permitted Liens (as defined in
the Senior Secured Note Indenture), this Security Agreement creates a valid
first priority security interest in the Collateral, securing the payment of the
Secured Obligations, and all filings and other actions necessary or desirable
to perfect and protect such security interest have been duly taken.
SECTION 3.1.7. AUTHORIZATION, APPROVAL, ETC. Except as have been
obtained or made and are in full force and effect, no authorization, approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body is required either
(a) for the grant by the Grantor of the security interest
granted hereby or for the execution, delivery and performance of this
Security Agreement by the Grantor, or
(b) for the perfection of or the exercise by the
Collateral Agent of its rights and remedies hereunder.
SECTION 3.1.8. COMPLIANCE WITH LAWS. The Grantor is in compliance
with the requirements of all applicable laws, rules, regulations and orders of
every governmental authority, the non-compliance with which would be reasonably
likely to have a Material Adverse Effect or materially adversely affect the
value of the Collateral or the worth of the Collateral as collateral security.
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<PAGE> 12
ARTICLE IV
COVENANTS
SECTION 4.1. CERTAIN COVENANTS. The Grantor covenants and agrees
that, so long as any portion of the Secured Obligations shall remain unpaid,
any Term Loan Lender shall have any outstanding Term Loan Commitment, or any
obligations under the Intercreditor Agreement shall remain outstanding, the
Grantor will, unless the Collateral Agent (with the consent of the Term Loan
Lenders and the Holders as specified in the Intercreditor Agreement) shall
otherwise consent in writing, perform, comply with and be bound by (a) all of
the agreements, covenants and obligations contained in Article VII of the Term
Loan Agreement and in Article Ten of the Senior Secured Note Indenture which
are applicable to the Grantor or its properties, each such agreement, covenant
and obligation contained in each such Article and all other terms of each of
the Term Loan Agreement and the Senior Secured Note Indenture to which
reference is made herein, together with all related definitions and ancillary
provisions, being hereby incorporated into this Security Agreement by reference
as though specifically set forth in this Section and (b) the obligations set
forth in this Section.
SECTION 4.1.1. AS TO EQUIPMENT. The Grantor hereby agrees that it shall
(a) keep all the Equipment at the places therefor
specified in Section 3.1.1 or, upon 30 days' prior written notice to
the Collateral Agent, at such other places in a jurisdiction where all
representations and warranties set forth in Article III (including
Section 3.1.6) shall be true and correct, and all action required
pursuant to the first sentence of Section 4.1.7 shall have been taken
with respect to the Equipment;
(b) cause the Equipment to be maintained and preserved in
the same condition, repair and working order as when new, ordinary
wear and tear excepted, and in accordance with any manufacturer's
manual; and forthwith, or in the case of any loss or damage to any of
the Equipment, as quickly as practicable after the occurrence thereof,
make or cause to be made all repairs, replacements, and other
improvements in connection therewith which are necessary or desirable
to such end; and promptly furnish to the Collateral Agent a statement
respecting any loss or damage to any of the Equipment; and
(c) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against,
the Equipment, except to the extent the validity thereof is being
contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP have been set aside.
SECTION 4.1.2. AS TO CONTRACTS.
(a) The Grantor shall keep its place(s) of business and
chief executive office and the office(s) where it keeps its records
concerning the Contracts, and all originals of all chattel paper which
evidences Contracts, located at the address(es) set forth in Item
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<PAGE> 13
D of Schedule I hereto, or, upon 30 days' prior written notice to the
Collateral Agent, at such other locations in a jurisdiction where all
actions required by the first sentence of Section 4.1.7 shall have
been taken with respect to the Contracts; not change its name except
upon 30 days' prior written notice to the Collateral Agent; hold and
preserve such records and chattel paper; and permit representatives of
the Collateral Agent at any time during normal business hours to
inspect and make abstracts from such records and chattel paper.
(b) Upon written notice by the Collateral Agent to the
Grantor pursuant to this Section 4.1.2(b), all proceeds of Collateral
received by the Grantor shall be delivered in kind to the Collateral
Agent for deposit to a deposit account (the "Collateral Account") of
the Grantor maintained with the Collateral Agent, and the Grantor
shall not commingle any such proceeds, and shall hold separate and
apart from all other property, all such proceeds in express trust for
the benefit of the Collateral Agent until delivery thereof is made to
the Collateral Agent. The Collateral Agent will not give the notice
referred to in the preceding sentence unless there shall have occurred
and be continuing a Default of the nature set forth in Section 8.1.9
of the Term Loan Agreement, a Default of the nature set forth in
Clause 10 or 11 of Section 501 of the Senior Secured Note Indenture or
an Event of Default.
(c) The Collateral Agent shall have the right to apply
any amount in the Collateral Account to the payment of any Secured
Obligations which are due and payable or payable upon demand, or to
the payment of any Secured Obligations at any time that an Event of
Default shall exist.
SECTION 4.1.3. AS TO COLLATERAL.
(a) Until the occurrence and continuance of a Default of
the nature set forth in Section 8.1.9 of the Term Loan Agreement, a
Default of the nature set forth in Clause 10 or 11 of Section 501 of
the Senior Secured Note Indenture or an Event of Default, and such
time as the Collateral Agent shall notify the Grantor of the
revocation of such power and authority, the Grantor (i) may use and
consume, in the ordinary course of its business (except as otherwise
permitted under the Intercreditor Agreement), any raw materials, work
in process or materials normally held by the Grantor for such purpose,
(ii) will, at its own expense, endeavour to collect, as and when due,
all amounts due with respect to any of the Collateral, including the
taking of such action with respect to such collection as the
Collateral Agent may reasonably request following the occurrence of a
Default of the nature set forth in Section 8.1.9 of the Term Loan
Agreement, a Default of the nature set forth in Clause 10 or 11 of
Section 501 of the Senior Secured Note Indenture or an Event of
Default or, in the absence of such request, as the Grantor may deem
advisable,(iii) may grant, in the ordinary course of business (except
as otherwise permitted under the Intercreditor Agreement), to any
party obligated on any of the Collateral, any rebate, refund or
allowance to which such party may be lawfully entitled, and may
accept, in connection therewith, the return of goods, the sale or
lease of which shall have given rise to such Collateral, and (iv) may
commercially exploit the Intellectual Property Collateral, defend it,
enforce its rights in it against third parties and
- 13 -
<PAGE> 14
be entitled to receive any damages with respect to any infringement of
it. The Collateral Agent, however, may, at any time following a
Default of the nature set forth in Section 8.1.9 of the Term Loan
Agreement, a Default of the nature set forth in Clause 10 or 11 of
Section 501 of the Senior Secured Note Indenture or an Event of
Default, whether before or after any revocation of such power and
authority or the maturity of any of the Secured Obligations, notify
any parties obligated on any of the Collateral to make payment to the
Collateral Agent of any amounts due or to become due thereunder and
enforce collection of any of the Collateral by suit or otherwise and
surrender, release, or exchange all or any part thereof, or compromise
or extend or renew for any period (whether or not longer than the
original period) any indebtedness thereunder or evidenced thereby.
Upon request of the Collateral Agent following a Default of the nature
set forth in Section 8.1.9 of the Term Loan Agreement, a Default of
the nature set forth in Clause 10 or 11 of Section 501 of the Senior
Secured Note Indenture or an Event of Default, the Grantor will, at
its own expense, notify any parties obligated on any of the Collateral
to make payment to the Collateral Agent of any amounts due or to
become due thereunder.
(b) The Collateral Agent is authorized to endorse, in the
name of the Grantor, any item, howsoever received by the Collateral
Agent, representing any payment on or other proceeds of any of the
Collateral.
SECTION 4.1.4. AS TO INTELLECTUAL PROPERTY COLLATERAL. The Grantor
covenants and agrees to comply with the following provisions as such provisions
relate to any Intellectual Property Collateral of the Grantor that:
(a) the Grantor shall not, unless the Grantor shall
either (i) reasonably and in good faith determine (and notice of such
determination shall have been delivered to the Collateral Agent) that
any of the Patent Collateral is of negligible economic value to the
Grantor, or (ii) have a valid business purpose to do otherwise, do any
act, or omit to do any act, whereby any of the Patent Collateral may
lapse or become abandoned or dedicated to the public or unenforceable.
(b) the Grantor shall not, and the Grantor shall not
permit any of its licensees to, unless the Grantor shall either (i)
reasonably and in good faith determine (and notice of such
determination shall have been delivered to the Collateral Agent) that
any of the Trademark Collateral is of negligible economic value to the
Grantor, or (ii) have a valid business purpose to do otherwise,
(i) fail to continue to use any of the Trademark
Collateral in order to maintain all of the Trademark
Collateral in full force free from any claim of abandonment
for non-use,
(ii) fail to maintain as in the past the quality
of products and services offered under all of the Trademark
Collateral,
- 14 -
<PAGE> 15
(iii) fail to employ all of the Trademark
Collateral registered with any federal, state, provincial,
municipal, local or foreign authority with an appropriate
notice of such registration,
(iv) adopt or use any other Trademark which is
confusingly similar or a colourable imitation of any of the
Trademark Collateral,
(v) use any of the Trademark Collateral registered
with any federal, state, provincial, municipal, local or
foreign authority except for the uses for which registration
or application for registration of all of the Trademark
Collateral has been made, and
(vi) do or permit any act or knowingly omit to do
any act whereby any of the Trademark Collateral may lapse or
become invalid or unenforceable.
(c) the Grantor shall not, unless the Grantor shall
either
(i) reasonably and in good faith determine (and
notice of such determination shall have been delivered to the
Collateral Agent) that any of the Copyright Collateral or any
of the Trade Secrets Collateral is of negligible economic
value to the Grantor, or
(ii) have a valid business purpose to do
otherwise, do or permit any act or knowingly omit to do any
act whereby any of the Copyright Collateral or any of the
Trade Secrets Collateral may lapse or become invalid or
unenforceable or placed in the public domain except upon
expiration of the end of an unrenewable term of a registration
thereof.
(d) the Grantor shall notify the Collateral Agent
immediately if it knows, or has reason to know, that any application
or registration relating to any material item of the Intellectual
Property Collateral may become abandoned or dedicated to the public or
placed in the public domain or invalid or unenforceable, or of any
adverse determination or development (including the institution of, or
any such determination or development in, any proceeding in the United
States Patent and Trademark Office, the United States Copyright Office
or any foreign counterpart thereof or any court) regarding the
Grantor's ownership of any of the Intellectual Property Collateral,
its right to register the same or to keep and maintain and enforce the
same.
(e) in no event shall the Grantor or any of its agents,
employees, designees or licensees file an application for the
registration of any Intellectual Property Collateral with the United
States Patent and Trademark Office, the United States Copyright Office
or any similar office or agency in any other country or any political
subdivision thereof, unless it promptly informs the Collateral Agent,
and upon request of the Collateral Agent, executes and delivers any
and all agreements, instruments, documents and papers as the
Collateral Agent may reasonably request to evidence the Collateral
Agent's
- 15 -
<PAGE> 16
security interest in such Intellectual Property Collateral and the
goodwill and general intangibles of the Grantor relating thereto or
represented thereby.
(f) the Grantor shall take all necessary steps, including
in any proceeding before the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or
agency in any other country or any political subdivision thereof, to
maintain and pursue any application (and to obtain the relevant
registration) filed with respect to, and to maintain any registration
of, the Intellectual Property Collateral, including the filing of
applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings and the payment of fees and taxes (except to the extent
that dedication, abandonment or invalidation is permitted under the
foregoing clauses (a), (b) and (c)).
(g) the Grantor shall, if requested by the Collateral
Agent, execute and deliver to the Collateral Agent a Patent Security
Agreement, a Trademark Security Agreement and a Copyright Security
Agreement in the forms of Exhibit A, Exhibit B and Exhibit C hereto,
respectively, and shall execute and deliver to the Collateral Agent
any other document required to acknowledge or register or perfect the
Collateral Agent's interest in any part of the Intellectual Property
Collateral.
SECTION 4.1.5. INSURANCE. The Grantor will maintain or cause to be
maintained with responsible insurance companies insurance with respect to its
business and properties (including the Equipment) against such casualties and
contingencies and of such types and in such amounts as is required pursuant to
each of the Term Loan Agreement and the Senior Secured Note Indenture, and
will, upon the request of the Collateral Agent, furnish a certificate of a
reputable insurance broker setting forth the nature and extent of all insurance
maintained by the Grantor in accordance with this Section. Without limiting
the foregoing, the Grantor further agrees as follows:
(a) Each policy for property insurance shall show the
Collateral Agent as loss payee.
(b) Each policy for liability insurance shall show the
Collateral Agent as an additional insured.
(c) Each insurance policy shall provide that at least 30
days' prior written notice of cancellation or of lapse shall be given
to the Collateral Agent by the insured.
(d) The Grantor shall, if so requested by the Collateral
Agent, deliver to the Collateral Agent a copy of each insurance
policy.
(e) All payments in respect of property insurance shall
be deposited to the Collateral Account and if there shall be no
Collateral Account shall be paid to the Grantor.
- 16 -
<PAGE> 17
SECTION 4.1.6. TRANSFERS AND OTHER LIENS. The Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral, except as permitted by the
Intercreditor Agreement; or
(b) create or suffer to exist any Lien or other charge or
encumbrance upon or with respect to any of the Collateral to secure
Indebtedness of any Person or entity, except for the security interest
created by this Security Agreement and except as permitted by the
Intercreditor Agreement.
SECTION 4.1.7. FURTHER ASSURANCES, ETC. The Grantor agrees that,
from time to time at its own expense, it will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Collateral Agent may request, in order to
perfect, preserve and protect any security interest granted or purported to be
granted hereby or to enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, the Grantor will
(a) if any Contract shall be evidenced by a promissory
note or other instrument, negotiable document or chattel paper,
deliver and pledge to the Collateral Agent hereunder such promissory
note, instrument, negotiable document or chattel paper duly endorsed
and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Collateral
Agent; provided, however, that unless there shall have occurred and be
continuing a Default of the nature set forth in Section 8.1.9 of the
Term Loan Agreement, a Default in the nature set forth in Clause 10 or
11 of Section 501 of the Senior Secured Note Indenture or an Event of
Default,
(i) no such promissory note, instrument,
negotiable document or chattel paper that has
a fair market value of less than $500,000
individually, or
(ii) such promissory notes, instruments,
negotiable documents or chattel paper that
collectively have a fair market value in the
aggregate of less than $1,000,000,
shall be required to be delivered unless otherwise required pursuant
to the Term Loan Agreement, any other Loan Document (as such term is
defined in the Term Loan Agreement) the Senior Secured Indenture or
any other Collateral Document;
(b) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or
notices (including any assignment of claim form under or pursuant to
the PPSA, any successor or amended version thereof or any regulation
promulgated under or pursuant to any version thereof), as may be
necessary or desirable, or as the Collateral Agent may request, in
order to perfect and preserve the security interests and other rights
granted or purported to be granted to the Collateral Agent hereby; and
- 17 -
<PAGE> 18
(c) furnish to the Collateral Agent, from time to time at
the Collateral Agent's request, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Collateral Agent may reasonably
request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest hereunder,
the Grantor hereby authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all
or any part of the Collateral without the signature of the Grantor where
permitted by law. A carbon, photographic or other reproduction of this
Security Agreement or any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement where permitted by
law.
ARTICLE V
THE COLLATERAL AGENT
SECTION 5.1. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. The
Grantor hereby irrevocably appoints the Collateral Agent the Grantor's
attorney-in-fact, with full authority in the place and stead of the Grantor and
in the name of the Grantor or otherwise, from time to time in the Collateral
Agent's discretion, following the occurrence and continuation of a Default of
the nature set forth in Section 8.1.9 of the Term Loan Agreement, a Default of
the nature set forth in Clause 10 or 11 of Section 501 of the Senior Secured
Note Indenture or an Event of Default, to take any action and to execute any
instrument which the Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Security Agreement, including:
(a) to ask, demand, collect, sue for, recover,
compromise, receive and give acquittance and receipts for moneys due
and to become due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause
(a) above;
(c) to file any claims or take any action or institute
any proceedings which the Collateral Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Collateral Agent with respect to any of the
Collateral; and
(d) to perform the affirmative obligations of the Grantor
hereunder (including all obligations of the Grantor pursuant to
Section 4.1.7).
The Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. COLLATERAL AGENT MAY PERFORM. If the Grantor fails to
perform any agreement contained herein, the Collateral Agent may itself
perform, or cause performance of,
- 18 -
<PAGE> 19
such agreement, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by the Grantor pursuant to Section 6.2.
SECTION 5.3. COLLATERAL AGENT HAS NO DUTY. In addition to, and not
in limitation of, Section 2.4, the powers conferred on the Collateral Agent
hereunder are solely to protect its interest (on behalf of the Secured Parties)
in the Collateral and shall not impose any duty on it to exercise any such
powers. Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining
to any Collateral.
SECTION 5.4. REASONABLE CARE. The Collateral Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
of the Collateral, if it takes such action for that purpose as the Grantor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the Collateral
Agent to comply with any such request at any time shall not in itself be deemed
a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. CERTAIN REMEDIES. If any Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the PPSA (whether or not the PPSA
applies to the affected Collateral) and also may
(i) require the Grantor to, and the Grantor
hereby agrees that it will, at its expense and upon request of
the Collateral Agent forthwith, assemble all or part of the
Collateral as directed by the Collateral Agent and make it
available to the Collateral Agent at a place to be designated
by the Collateral Agent which is reasonably convenient to both
parties, and
(ii) without notice except as specified below,
sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any of the Collateral Agent's
offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent
may deem commercially reasonable. The Grantor agrees that, to
the extent notice of sale shall be required by law, at least
ten days' prior notice to the Grantor of the time and place of
any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The
Collateral Agent shall not be obligated to make any
- 19 -
<PAGE> 20
sale of Collateral regardless of notice of sale having been
given. The Collateral Agent may adjourn any public or private
sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(b) All cash proceeds received by the Collateral Agent in
respect of any sale of, collection from, or other realization upon all
or any part of the Collateral may, in the discretion of the Collateral
Agent, be held by the Collateral Agent as collateral for, and/or then
or at any time thereafter applied (after payment of any amounts
payable to the Collateral Agent pursuant to Section 6.2) in whole or
in part by the Collateral Agent for the ratable benefit of the Secured
Parties against, all or any part of the Secured Obligations in such
order as the Collateral Agent shall elect. Any surplus of such cash
or cash proceeds held by the Collateral Agent and remaining after
payment in full in cash of all the Secured Obligations shall be paid
over to the Grantor or to whomsoever may be lawfully entitled to
receive such surplus.
SECTION 6.2. INDEMNITY AND EXPENSES.
(a) The Grantor agrees to indemnify the Collateral Agent
from and against any and all claims, losses and liabilities arising
out of or resulting from this Security Agreement (including
enforcement of this Security Agreement), except claims, losses or
liabilities resulting from the Collateral Agent's gross negligence or
wilful misconduct.
(b) The Grantor will upon demand pay to the Collateral
Agent the amount of any and all reasonable expenses, including the
reasonable fees and disbursements of its counsel and of any experts
and agents, which the Collateral Agent may incur in connection with
(i) the administration of this Security
Agreement,
(ii) the custody, preservation, use or operation
of, or, after the occurrence and during the continuance of an
Event of Default, the sale of, collection from, or other
realization upon, any of the Collateral, and
(iii) the exercise or enforcement of any of the
rights of the Collateral Agent or the Secured Parties
hereunder, or (iv) the failure by the Grantor to perform or
observe any of the provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. COLLATERAL DOCUMENT. This Security Agreement is a
Collateral Document executed pursuant to the Intercreditor Agreement and shall
(unless otherwise expressly indicated herein) be construed, administered and
applied in accordance with the terms and provisions of the Intercreditor
Agreement.
- 20 -
<PAGE> 21
SECTION 7.2. AMENDMENTS; ETC. No amendment to or waiver of any
provision of this Security Agreement nor consent to any departure by the
Grantor herefrom, shall in any event be effective unless the same shall be in
writing and signed by the Collateral Agent (on behalf of the Secured Parties),
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 7.3. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing or by facsimile and,
if to the Grantor, addressed, delivered or transmitted to the Grantor in care
of the Borrower at the address or facsimile number of the Borrower specified in
the Intercreditor Agreement, if to the Collateral Agent, addressed, delivered
or transmitted to it at the address or facsimile number of the Collateral Agent
specified in the Intercreditor Agreement. Any notice, if mailed and properly
addressed with postage prepaid or if properly addressed and sent by pre-paid
courier service, shall be deemed given when received; any notice, if
transmitted by facsimile, shall be deemed given which transmitted (and
electronic confirmation of receipt thereof has been received).
SECTION 7.4. SECTION CAPTIONS. Section captions used in this
Security Agreement are for convenience of reference only, and shall not affect
the construction of this Security Agreement.
SECTION 7.5. SEVERABILITY. Wherever possible each provision of this
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Security Agreement.
SECTION 7.6. COUNTERPARTS. This Security Agreement may be executed
by the parties hereto in several counterparts, each of which shall be deemed an
original and all of which shall constitute together but one and the same
agreement.
SECTION 7.7. GOVERNING LAW, ENTIRE AGREEMENT, ETC. THIS SECURITY
AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS
OF THE PROVINCE OF NEW BRUNSWICK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE PROVINCE OF NEW BRUNSWICK. THIS SECURITY AGREEMENT AND THE
OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES
HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY
PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
- 21 -
<PAGE> 22
IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
PCI CHEMICALS CANADA INC./PRODUITS
CHIMIQUES PCI CANADA INC., a New
Brunswick corporation
By: /s/ KENT R. STEPHENSON
------------------------------
Name: Kent R. Stephenson
Title: Vice President
UNITED STATES TRUST COMPANY OF NEW
YORK, as Collateral Agent
By: /s/ PATRICIA STERMER
------------------------------
Name: Patricia Stermer
Title: Assistant Vice President
<PAGE> 23
SCHEDULE I
TO SUBSIDIARY
SECURITY AGREEMENT
ITEM A. LOCATION OF EQUIPMENT
DESCRIPTION LOCATION
The Equipment of the Grantor is located at the
following address:
1. 300 Brookdale Avenue
Cornwall, Ontario
2. 2101 Hadwen Road
Mississauga, Ontario
L5K 2L3
3. Dalhousie, New Brunswick
4. Point Tupper, Nova Scotia
ITEM B. LOCATION OF LOCK BOXES
Nil
<TABLE>
<CAPTION>
Contact
----------------------------------
Bank Name and Address Account Number Person
--------------------- -------------- ------
<S> <C> <C>
1. Nil
2.
3.
</TABLE>
ITEM C. PLACE(S) OF BUSINESS AND CHIEF EXECUTIVE OFFICE
1. PCI Chemicals Canada Inc.
630 Rene-Levesque West
31st Floor
Montreal, Quebec
H3B 1S6
<PAGE> 24
2. 675 Alphonse-Deshaies Boulevard
Town of Becancourt
Quebec, Quebec
G0X 1B0
3. 300 Brookdale Avenue
Cornwall, Ontario
4. 2101 Hadwen Road
Mississauga, Ontario
L5K 2L3
5. Dalhousie, New Brunswick
ITEM D. TRADE NAMES
Nil
ITEM E. MERGER OR OTHER CORPORATE REORGANIZATION
Nil
ITEM F. GOVERNMENT CONTRACTS
1. Purchase Order with City of Windsor November 26, 1996
Public Works Department
2. Energy Supply Agreement between New April 1, 1996
Brunswick Power Corp. and ICI Canada Inc.
3. Energy Supply Agreement with Cornwall January 26, 1993
Street Railway Light and Power Co. Ltd.
- 2 -
<PAGE> 1
Exhibit 5.1
January 8, 1998
PCI Chemicals Canada Inc.
c/o Pioneer Americas Acquisition Corp.
4300 NationsBank Center
700 Louisiana Street
Houston, Texas 77002
Re: Registration Statement on Form S-4
(File No. 333-41221)
Ladies and Gentlemen:
We are counsel to PCI Chemicals Canada Inc., a New Brunswick, Canada corporation
(the "Company" and, together with Pioneer Americas Acquisition Corp., a Delaware
corporation ("PAAC") and the other subsidiaries of PAAC, the "Issuers"), and
have acted as such in connection with various legal matters relating to the
filing of a Registration Statement on Form S-4 (File No. 333-41221) (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), covering up to $175,000,000 in aggregate principal amount of
9-1/4% Series B Senior Secured Notes due 2007 (the "Exchange Notes") offered in
exchange for up to $175,000,000 in aggregate principal amount of outstanding
9-1/4% Series A Senior Secured Notes due 2007 originally issued and sold in
reliance upon an exemption from registration under the Securities Act (the
"Original Notes"). The Original Notes were issued under, and the Exchange Notes
are to be issued under, an Indenture, dated as of October 30, 1997 (the
"Indenture"), by and among the Issuers and the United States Trust Company of
New York, as trustee. The exchange will be made pursuant to an exchange offer
(the "Exchange Offer") contemplated by the Registration Statement. Capitalized
terms used but not otherwise defined herein shall have the meanings assigned to
them in the Registration Statement.
In so acting, we have examined copies of such records of the Issuers and such
other certificates and documents as we have deemed relevant and necessary for
the opinions hereinafter set forth. In such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity to authentic originals of all documents
submitted to us as certified or reproduced copies. We have also assumed the
legal capacity of all persons executing such documents and the truth and
correctness of any representations or warranties therein contained. As to
various
<PAGE> 2
PCI Chemicals Canada Inc.
January 8, 1998
Page 2
questions of fact material to such opinions, we have relied upon certificates of
officers of the Issuers and of public officials.
Based upon the foregoing, we are of the opinion that:
1. PAAC, Pioneer Americas, Inc., Pioneer Chlor Alkali Company, Inc., Pioneer
(East), Inc., PCI Carolina, Inc. and Pioneer Licensing, Inc. are duly
formed and validly existing under the laws of the State of Delaware.
2. The execution and delivery of the Indenture has been duly authorized by the
Issuers, and the Indenture constitutes a legal, valid and binding
obligation of the Issuers, enforceable against the Issuers in accordance
with the terms thereof, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance and other
similar laws affecting the enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law).
3. The Exchange Notes have been duly authorized and, when duly executed by the
proper officers of the Company, duly authenticated by the Trustee and
issued by the Company in accordance with the terms of the Indenture and the
Exchange Offer, will constitute legal, valid and binding obligations of the
Company, will be entitled to the benefits of the Indenture and will be
enforceable against the Company in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance and other similar laws affecting the
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
4. The Guarantees have been duly authorized and, when the Exchange Notes have
been duly executed and authenticated, and the Guarantees have been duly
executed, in accordance with the terms of the Indenture, and the Exchange
Notes have been delivered to the holders as described in the Prospectus,
the Guarantees will constitute legal, valid and binding obligations of the
Guarantors, will be entitled to the benefits of the Indenture and will be
enforceable against the Guarantors in accordance with their terms, except
as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance and other similar laws affecting the
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
<PAGE> 3
PCI Chemicals Canada Inc.
January 8, 1998
Page 3
This opinion is limited to the laws of the State of New York, the General
Corporation Law of the State of Delaware and the federal laws of the United
States of the type typically applicable to transactions contemplated by the
Exchange Offer, and we do not express any opinion with respect to the laws of
any other country, state or jurisdiction. In rendering our opinions expressed in
paragraphs 2, 3 and 4 above, we have relied on the opinions of Stewart McKelvey
Stirling Scales, Canadian counsel, and Kent R. Stephenson, Esq., Vice President,
General Counsel and Secretary of the Company, in each case addressed to you and
of even date herewith, to the extent our opinions relate to due authorization,
execution and delivery by corporations not incorporated in the State of
Delaware.
This opinion letter is limited to the matters stated herein and no opinion is
implied or may be inferred beyond the matters expressly stated.
This letter speaks only as of the date hereof and is limited to present
statutes, regulations and administrative and judicial interpretations. We
undertake no responsibility to update or supplement this letter after the date
hereof.
We consent to being named in the Registration Statement and related Prospectus
as counsel who are passing upon the legality of the Exchange Notes and the
Guarantees and to the reference to our name under the caption "Legal Matters" in
such Prospectus. We also consent to your filing copies of this opinion as an
exhibit to the Registration Statement or any amendment thereto.
Very truly yours,
/s/ Willkie Farr & Gallagher
<PAGE> 1
Exhibit 5.2
January 8, 1998
PCI Chemicals Canada Inc.
c/o Pioneer Americas Acquisition Corp.
4300 NationsBank Center
700 Louisiana Street
Houston, Texas 77002
Re: Registration Statement on Form S-4
(File No. 333-41221)
Ladies and Gentlemen:
I am Vice President and Secretary of PCI Chemicals Canada Inc., a New Brunswick,
Canada corporation (the "Company" and, together with Pioneer Americas
Acquisition Corp., a Delaware corporation ("PAAC") and the other subsidiaries of
PAAC, the "Issuers") and have acted as counsel to the Issuers in connection with
various legal matters relating to the filing of a Registration Statement on Form
S-4 (File No. 333-41221) (the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"), covering up to $175,000,000 in
aggregate principal amount of 9-1/4% Series B Senior Secured Notes due 2007 (the
"Exchange Notes") offered in exchange for up to $175,000,000 in aggregate
principal amount of 9-1/4% Series A Senior Secured Notes due 2007 in reliance
upon an exemption from registration under the Securities Act (the "Original
Notes"). The Original Notes were issued under, and the Exchange Notes are to be
issued under, an Indenture, dated as of October 30, 1997, by and among the
Issuers and the United States Trust Company of New York, as trustee. The
exchange will be made pursuant to an exchange offer (the "Exchange Offer")
contemplated by the Registration Statement. Capitalized terms used but not
otherwise defined herein shall have the meanings assigned to them in the
Registration Statement.
In so acting, I have examined copies of such records of the Issuers and such
other certificates and documents as I have deemed relevant and necessary for the
opinions hereinafter set forth. In such examination, I have assumed the
genuineness of all signatures, the authenticity of all documents submitted to me
as originals and the conformity to authentic originals of all documents
submitted to me as
<PAGE> 2
PCI Chemicals Canada Inc.
January 8, 1998
Page 2
certified or reproduced copies. I have also assumed the legal capacity of all
persons executing such documents and the truth and correctness of any
representations or warranties therein contained. As to various questions of fact
material to such opinions, I have relied upon certificates of officers of the
Issuers and of public officials.
Based upon the foregoing, I am of the opinion that:
1. Imperial West Chemical Co., All-Pure Chemical Co., Black Mountain Power
Company, All-Pure Chemical Northwest, Inc., Pioneer Chlor Alkali
International, Inc., G.O.W. Corporation, T.C. Holdings, Inc. and T.C.
Products, Inc. (collectively, the "Non-Delaware Subsidiaries") are duly
formed and validly existing under the laws of their respective
jurisdictions of incorporation.
2. The Indenture has been duly authorized, executed and delivered by each of
the Non-Delaware Subsidiaries. Each of the Exchange Notes and the
Guarantees have been duly authorized by each of the Non-Delaware
Subsidiaries.
This opinion letter is limited to the matters stated herein and no opinion is
implied or may be inferred beyond the matters expressly stated. This opinion
letter may be relied upon by Willkie Farr & Gallagher in connection with the
Exchange Offer.
This letter speaks only as of the date hereof and is limited to present
statutes, regulations and administrative and judicial interpretations. I
undertake no responsibility to update or supplement this letter after the date
hereof.
I consent to your filing copies of this opinion as an exhibit to the
Registration Statement or any amendment thereto.
Sincerely,
/s/ Kent R. Stephenson
Kent R. Stephenson
Vice President and
Secretary
<PAGE> 1
Exhibit 5.3
January 8, 1998
PCI Chemicals Canada Inc.
c/o Pioneer Americas Acquisition Corp.
4300 NationsBank Center
700 Louisiana Street
Houston, Texas 77002
Re: Registration Statement on Form S-4
(File No. 333-41221)
Ladies and Gentlemen:
We are counsel to PCI Chemicals Canada Inc., a New Brunswick, Canada
corporation (the "Company" and, together with Pioneer Americas Acquisition
Corp., a Delaware corporation ("PAAC") and the other subsidiaries of PAAC, the
"Issuers"), and have acted as such in connection with various legal matters
relating to the filing of a Registration Statement on Form S-4 (File No.
333-41221) (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), covering up to $175,000,000 in aggregate
principal amount of 9-1/4% Series B Senior Secured Notes due 2007 (the
"Exchange Notes") offered in exchange for up to $175,000,000 in aggregate
principal amount of outstanding 9-1/4% Series A Senior Secured Notes due 2007
originally issued and sold in reliance upon an exemption from registration
under the Securities Act (the "Original Notes"). The Original Notes were issued
under, and the Exchange Notes are to be issued under, an Indenture, dated as of
October 30, 1997 (the "Indenture"), by and among the Issuers and the United
States Trust Company of New York, as trustee. The exchange will be made
pursuant to an exchange offer (the "Exchange Offer") contemplated by the
Registration Statement.
In so acting, we have examined copies of such records of the Issuers and such
other certificates and documents as we have deemed relevant and necessary for
the opinions hereinafter set forth. In such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to
us as originals and the conformity to authentic originals of all documents
submitted to us as certified or reproduced copies. We have also assumed the
legal capacity of all persons executing such documents and the truth and
correctness of any representations or warranties therein contained.
<PAGE> 2
PCI Chemicals Canada Inc.
January 8, 1998
Page 2
We have relied upon certificates of officers of the Issuers and of public
officials with respect to the accuracy of all factual matters contained therein,
all of the contents of which we have assumed continue to be accurate as of the
date of this opinion letter.
Based upon the foregoing, we are of the opinion that:
1. The Company is duly formed and validly existing under the laws of the
province of New Brunswick, Canada.
2. The Indenture has been duly authorized, executed and delivered by the
Company.
3. The Exchange Notes have been duly authorized by the Company.
This opinion is limited to the laws of the Province of New Brunswick, Canada of
the type typically applicable to transactions contemplated by the Exchange
Offer, and we do not express any opinion with respect to the laws of any other
country, state or jurisdiction.
This opinion letter is limited to the matters stated herein and no opinion is
implied or may be inferred beyond the matters expressly stated. This opinion
letter may be relied upon by Willkie Farr & Gallagher in connection with the
Exchange Offer.
This letter speaks only as of the date hereof and is limited to present
statutes, regulations and administrative and judicial interpretations. We
undertake no responsibility to update or supplement this letter after the date
hereof.
We consent to being named in the Registration Statement and related Prospectus
as counsel who are passing upon the legality of the Exchange Notes and the
Guarantees and to the reference to our name under the caption "Legal Matters"
in such Prospectus. We also consent to your filing copies of this opinion as an
exhibit to the Registration Statement or any amendment thereto.
Very truly yours,
/s/ Stewart McKelvey Stirling Scales
<PAGE> 1
Exhibit 8.1
January 8, 1998
PCI Chemicals Canada Inc.
c/o Pioneer Americas Acquisition Corp.
4300 NationsBank Center
700 Louisiana Street
Houston, Texas 77002
Re: Registration Statement on Form S-4
(File No. 333-41221)
Ladies and Gentlemen:
We have acted as counsel to PCI Chemicals Canada Inc., a New Brunswick, Canada
corporation (the "Company" and, together with Pioneer Americas Acquisition
Corp., a Delaware corporation ("PAAC") and the other subsidiaries of PAAC, the
"Issuers"), in connection with the filing of a Registration Statement on Form
S-4 (File No. 333-41221) (the "Registration Statement") under the Securities
Act of 1933, as amended (the "Securities Act"), covering up to $175,000,000 in
aggregate principal amount of 9-1/4% Series B Senior Secured Notes due 2007
(the "Exchange Notes") offered in exchange for up to $175,000,000 in aggregate
principal amount of outstanding 9-1/4% Series A Senior Secured Notes due 2007
originally issued and sold in reliance upon an exemption from registration
under the Securities Act (the "Original Notes"). In that connection, we have
prepared the sections entitled "The Exchange Offer -- Federal Income Tax
Consequences" and "Certain Tax Consequences -- United States" contained in the
Registration Statement.
Our opinion is based on the provisions of the Internal Revenue Code of 1986, as
amended, regulations under such Code, judicial authority and current
administrative rulings and practice, all as of the date of this letter, and all
of which may change at any time.
Based on the foregoing, it is our opinion that:
(i) the exchange of Original Notes for Exchange Notes by holders will
not be a taxable exchange for United States federal income tax purposes, and
holders should not recognize any taxable gain or loss or any interest income as
a result of such exchange; and
<PAGE> 2
PCI Chemicals Canada Inc.
January 8, 1998
Page 2
(ii) the section entitled "Certain Tax Consequences -- United States,"
while not purporting to discuss all tax matters relating to the Original Notes
or the Exchange Notes, sets forth the material United States federal income tax
consequences with respect thereto.
In addition, we hereby confirm our opinion set forth in the first paragraph of
"Certain Tax Consequences -- United States" in the Registration Statement.
We hereby consent to the use of this opinion as Exhibit 8.1 to the Registration
Statement and related Prospectus filed with the Securities and Exchange
Commission and to the reference to us under the caption "Legal Matters"
therein.
Very truly yours,
/s/ Willkie Farr & Gallagher
<PAGE> 1
Exhibit 8.2
January 8, 1998
PCI Chemicals Canada Inc.
c/o Pioneer Americas Acquisition Corp.
4300 NationsBank Center
700 Louisiana Street
Houston, Texas 77002
Re: Registration Statement on Form S-4
(File No. 333-41221)
We have acted as counsel to PCI Chemicals Canada Inc., a corporation
incorporated under the laws of New Brunswick (the "Company" and, together with
Pioneer Americas Acquisition Corp., a Delaware corporation ("PAAC") and the
other subsidiaries of PAAC, the "Issuers"), in connection with the filing of a
Registration Statement on Form S-4 (File No. 333-41221) (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
covering up to $175,000,000 in aggregate principal amount of 9-1/4% Series B
Senior Secured Notes due 2007 (the "Exchange Notes") offered in exchange for up
to $175,000,000 in aggregate principal amount of outstanding 9-1/4% Series A
Senior Secured Notes due 2007 originally issued and sold in reliance upon an
exemption from registration under the Securities Act (the "Original Notes"). In
that connection, we have prepared the section entitled "Certain Tax Consequences
- -- Canada" contained in the Registration Statement.
Our opinion is based on the provisions of the Income Tax Act (Canada) (the
"Act"), the regulations thereunder, specific proposals to amend the Act,
judicial authority and counsel's understanding of the current administrative
practice of Revenue Canada, all as of the date of this letter, and all of which
may change at any time.
Based on the foregoing, it is our opinion that:
(i) The section entitled "Certain Tax Consequences -- Canada", while
not purporting to discuss all tax matters relating to the Original Notes or the
Exchange Notes, sets forth the principal Canadian federal income tax
consequences with respect to holders to whom the summary is addressed. In
addition, the exchange of Original Notes for Exchange Notes by such holders will
not be a taxable exchange for Canadian federal income tax purposes, and holders
should not recognize any taxable gain or loss or any interest income as a result
of such exchange.
<PAGE> 2
PCI Chemicals Canada Inc.
January 8, 1998
Page 2
We hereby consent to the use of this opinion as Exhibit 8.2 to the Registration
Statement and related Prospectus filed with the Securities and Exchange
Commission and to the reference to us under the caption "Legal Matters"
therein.
Yours very truly,
/s/ Stikeman Elliott, a general partnership
<PAGE> 1
EXHIBIT 99.1
PCI CHEMICALS CANADA INC.
630 WEST RENE-LEVESQUE BOULEVARD
MONTREAL, QUEBEC H3B 1S6
LETTER OF TRANSMITTAL
FOR 9 1/4% SERIES A SENIOR SECURED NOTES DUE 2007
EXCHANGE AGENT:
UNITED STATES TRUST COMPANY OF NEW YORK
By Facsimile:
(212) 780-0592
Attention: Customer Service
Confirm by telephone:
(800) 548-6565
By Registered or Certified Mail:
United States Trust Company of New York
P.O. Box 844 Cooper Station
New York, New York 10276
By Hand:
United States Trust Company of New York
111 Broadway
New York, New York 10006
Attention: Corporate Trust Operations
By Overnight Courier:
United States Trust Company of New York
770 Broadway
New York, New York 10003
Attention: Corporate Trust Operations
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME, ON
, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., EASTERN STANDARD TIME, ON THE EXPIRATION DATE.
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus dated January ,
1998 (the "Prospectus") of PCI Chemicals Canada Inc., a New Brunswick, Canada
corporation (the "Company" and, together with Pioneer Americas Acquisition
Corp., a Delaware corporation ("PAAC") and the other subsidiaries of PAAC, the
"Issuers") and this Letter of Transmittal for 9 1/4% Series A Senior Secured
Notes due 2007 which may be amended from time to time (this "Letter"), which
together constitute the Issuers' offer (the "Exchange Offer") to exchange, for
each $1,000 in principal amount of its outstanding 9 1/4% Series A Senior
Secured Notes due 2007 issued and sold in a transaction exempt from registration
under the Securities Act of 1933, as amended (the "Original Notes"), $1,000 in
principal amount of 9 1/4% Series B Senior Secured Notes due 2007 (the "Exchange
Notes").
The undersigned has completed, executed and delivered this Letter to
indicate the action he or she desires to take with respect to the Exchange
Offer.
All holders of Original Notes who wish to tender their Original Notes must,
prior to the Expiration Date: (1) complete, sign, date and mail or otherwise
deliver this Letter to the Exchange Agent, in person or to the address set forth
above; and (2) tender his or her Original Notes or, if a tender of Original
Notes is to be made by book-entry transfer to the account maintained by the
Exchange Agent at The Depository Trust Company (the "Book-Entry Transfer
Facility"), confirm such book-entry transfer (a "Book-Entry Confirmation"), in
each case in accordance with the procedures for tendering described in the
Instructions to this Letter. Holders of Original Notes whose certificates are
not immediately available, or who are unable to deliver their certificates or
Book-Entry Confirmation and all other documents required by this Letter to be
delivered to the Exchange Agent on or prior to the Expiration Date, must tender
their Original Notes according to the guaranteed delivery procedures set forth
under the caption "The Exchange Offer -- How to Tender" in the Prospectus. (See
Instruction 1).
The Instructions included with this Letter must be followed in their
entirety. Questions and requests for assistance or for additional copies of the
Prospectus or this Letter may be directed to the Exchange Agent, at the address
listed above, or Kent R. Stephenson, Esq., General Counsel and Secretary of
PAAC, at (713) 225-3831, PCI Chemicals Canada Inc., c/o Pioneer Americas
Acquisition Corp., 4300 NationsBank Center, 700 Louisiana Street, Houston, TX
77002.
<PAGE> 2
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL, INCLUDING
THE INSTRUCTIONS TO THIS LETTER, CAREFULLY
BEFORE CHECKING ANY BOX BELOW
Capitalized terms used in this Letter and not defined herein shall have the
respective meanings ascribed to them in the Prospectus.
List in Box 1 below the Original Notes of which you are the holder. If the
space provided in Box 1 is inadequate, list the certificate numbers and
principal amount of Original Notes on a separate signed schedule and affix that
schedule to this Letter.
BOX 1
TO BE COMPLETED BY ALL TENDERING HOLDERS
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE PRINCIPAL AMOUNT OF ORIGINAL
(PLEASE FILL IN IF BLANK) NUMBER(S)(1) OF ORIGINAL NOTES NOTES TENDERED(2)
- ------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
TOTALS
- ------------------------------------------------------------------------------------------------------------------------------
* Need not be completed if Original Notes are being tendered by book-entry transfer.
** Unless otherwise indicated, the entire principal amount of Original Notes represented by a certificate or Book-Entry
Confirmation delivered to the Exchange Agent will be deemed to have been tendered.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned tenders to the Issuers the principal amount of Original Notes
indicated above. Subject to, and effective upon, the acceptance for exchange of
the Original Notes tendered with this Letter, the undersigned exchanges, assigns
and transfers to, or upon the order of, the Issuers all right, title and
interest in and to the Original Notes tendered.
The undersigned constitutes and appoints the Exchange Agent as his or her
agent and attorney-in-fact (with full knowledge that the Exchange Agent also
acts as the agent of the Issuers) with respect to the tendered Original Notes,
with full power of substitution, to: (a) deliver certificates for such Original
Notes; (b) deliver Original Notes and all accompanying evidence of transfer and
authenticity to or upon the order of the Issuers upon receipt by the Exchange
Agent, as the undersigned's agent, of the Exchange Notes to which the
undersigned is entitled upon the acceptance by the Issuers of the Original Notes
tendered under the Exchange Offer; and (c) receive all benefits and otherwise
exercise all rights of beneficial ownership of the Original Notes, all in
accordance with the terms of the Exchange Offer. The power of attorney granted
in this paragraph shall be deemed irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he or she has full
power and authority to tender, exchange, assign and transfer the Original Notes
tendered hereby and that the Issuers will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim. The undersigned will, upon request, execute
and deliver any additional documents deemed by the Issuers to be necessary or
desirable to complete the assignment and transfer of the Original Notes
tendered.
The undersigned agrees that acceptance of any tendered Original Notes by
the Issuers and the issuance of Exchange Notes in exchange therefor shall
constitute performance in full by the Issuers of their obligations under the
Registration Rights Agreement (as defined in the Prospectus) and that, upon the
issuance of the Exchange Notes, the Issuers will have no further obligations or
liabilities thereunder (except in certain limited circumstances). By tendering
Original Notes, the undersigned certifies (a) that it is not an "affiliate" of
the Issuers within the meaning of Rule 405 under the Securities Act, that it is
not a broker-dealer that owns Original Notes acquired directly from the Issuers
or an affiliate of the Issuers, that it is acquiring the Exchange Notes in the
ordinary course of the undersigned's business and that the undersigned has no
arrangement with any person to participate in the distribution of the Exchange
Notes or (b) that it is an "affiliate" (as so defined) of the Issuers or of the
initial purchasers in the original offering of the Original Notes, and that it
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable to it.
The undersigned acknowledges that, if it is a broker-dealer that will
receive Exchange Notes for its own account, it will deliver a prospectus in
connection with any resale of such Exchange Notes. By so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
The undersigned understands that the Issuers may accept the undersigned's
tender by delivering written notice of acceptance to the Exchange Agent, at
which time the undersigned's right to withdraw such tender will terminate.
All authority conferred or agreed to be conferred by this Letter shall
survive the death or incapacity of the undersigned, and every obligation of the
undersigned under this Letter shall be binding upon the undersigned's heirs,
personal representatives, successors and assigns. Tenders may be withdrawn only
in accordance with the procedures set forth in the Instructions contained in
this Letter.
Unless otherwise indicated under "Special Delivery Instructions" below, the
Exchange Agent will deliver Exchange Notes (and, if applicable, a certificate
for any Original Notes not tendered but represented by a certificate also
encompassing Original Notes which are tendered) to the undersigned at the
address set forth in Box 1.
The undersigned acknowledges that the Exchange Offer is subject to the more
detailed terms set forth in the Prospectus and, in case of any conflict between
the terms of the Prospectus and this Letter, the Prospectus shall prevail.
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
-----------------------------------------------------------------------------
Account Number:
-----------------------------------------------------------------------------
Transaction Code Number:
-----------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):
-----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
--------------------------------------------------------------
Window Ticket Number (if available):
-----------------------------------------------------------------------------
Name of Institution which Guaranteed Delivery:
-------------------------------------------------------------------
3
<PAGE> 4
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
BOX 2
PLEASE SIGN HERE
WHETHER OR NOT ORIGINAL NOTES ARE BEING
PHYSICALLY TENDERED HEREBY
X
- --------------------------------------------------------------------------------
- ---------------------------
X
- --------------------------------------------------------------------------------
- ---------------------------
Signature(s) of Owner(s) or Authorized Signatory Date
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
This box must be signed by registered holder(s) of Original Notes as their
name(s) appear(s) on certificate(s) for Original Notes, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Letter. If signature is by a trustee, executor,
administrator, guardian, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title below.
(See Instruction 3)
Name(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Capacity
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
(Include Zip Code)
Signature(s) Guaranteed by an Eligible Institution:
- ----------------------------------------------------------------
(If required by Instruction 3) (Authorized Signature)
- --------------------------------------------------------------------------------
(Title)
- --------------------------------------------------------------------------------
(Name of Firm)
4
<PAGE> 5
BOX 3
- --------------------------------------------------------------------------------
TO BE COMPLETED BY ALL TENDERING HOLDERS
- --------------------------------------------------------------------------------
PAYOR'S NAME: UNITED STATES TRUST COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX SOCIAL SECURITY NUMBER
FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING
DEPARTMENT OF THE BELOW. OR --------------------------------------------
TREASURY INTERNAL EMPLOYER IDENTIFICATION NUMBER
REVENUE SERVICE ---------------------------------------------------------------------------------------------
PART 2 -- CHECK THE BOX IF YOU ARE NOT SUBJECT TO BACK-UP WITHHOLDING UNDER THE PROVISIONS
PAYOR'S REQUEST OF SECTION 2406(A)(1)(C) OF THE INTERNAL REVENUE CODE BECAUSE (1) YOU HAVE NOT BEEN NOTIFIED
FOR TAXPAYER THAT YOU ARE SUBJECT TO BACK-UP WITHHOLDING AS A RESULT OF FAILURE TO REPORT ALL INTEREST OR
IDENTIFICATION DIVIDENDS OR (2) THE INTERNAL REVENUE SERVICE HAS NOTIFIED YOU THAT YOU ARE NO LONGER SUBJECT
NUMBER (TIN) TO BACK-UP WITHHOLDING. [ ]
---------------------------------------------------------------------------------------------
CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT PART 3 --
THE INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND CHECK IF
COMPLETE. AWAITING TIN [ ]
SIGNATURE --------------------------------------- DATE -------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
-----------------------------------------------------------------------------
BOX 4
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Original Notes in a principal amount
not exchanged, or Exchange Notes, are to be issued in the name of someone other
than the person whose signature appears in Box 2, or if Original Notes delivered
by book-entry transfer which are not accepted for exchange are to be returned by
credit to an account maintained at the Book-Entry Transfer Facility other than
the account indicated above.
Issue and deliver:
(check appropriate boxes)
[ ] Original Notes not tendered
[ ] Exchange Notes, to:
Name -------------------------------------------------
(Please Print)
Address ----------------------------------------------
Please complete the Substitute Form W-9 at Box 3
Tax I.D. or Social Security Number: ------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
BOX 5
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Original Notes in a principal
amount not exchanged, or Exchange Notes, are to be sent to someone other
than the person whose signature appears in Box 2 or to an address other
than that shown in Box 1.
Deliver:
(check appropriate boxes)
[ ] Original Notes not tendered
[ ] Exchange Notes, to:
Name --------------------------------------------------
(Please Print)
Address -----------------------------------------------
- -------------------------------------------------------
5
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER AND CERTIFICATES. Certificates for Original
Notes or a Book-Entry Confirmation, as the case may be, as well as a properly
completed and duly executed copy of this Letter and any other documents required
by this Letter, must be received by the Exchange Agent at one of its addresses
set forth herein on or before the Expiration Date. The method of delivery of
this Letter, certificates for Original Notes or a Book-Entry Confirmation, as
the case may be, and any other required documents is at the election and risk of
the tendering holder, but except as otherwise provided below, the delivery will
be deemed made when actually received by the Exchange Agent. If delivery is by
mail, the use of registered mail with return receipt requested, properly
insured, is suggested.
Holders whose Original Notes are not immediately available or who cannot
deliver their Original Notes or a Book-Entry Confirmation, as the case may be,
and all other required documents to the Exchange Agent on or before the
Expiration Date may tender their Original Notes pursuant to the guaranteed
delivery procedures set forth in the Prospectus. Pursuant to such procedure: (i)
tender must be made by or through an Eligible Institution (as defined in the
Prospectus under the caption "The Exchange Offer"); (ii) prior to the Expiration
Date, the Exchange Agent must have received from the Eligible Institution a
properly completed and duly executed Notice of Guaranteed Delivery (by telegram,
telex, facsimile transmission, mail or hand delivery) (x) setting forth the name
and address of the holder, the description of the Original Notes and the
principal amount of Original Notes tendered, (y) stating that the tender is
being made thereby and (z) guaranteeing that, within five New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery, this Letter together with the certificates representing the Original
Notes or a Book-Entry Confirmation, as the case may be, and any other documents
required by this Letter will be deposited by the Eligible Institution with the
Exchange Agent; and (iii) the certificates for all tendered Original Notes or a
Book-Entry Confirmation, as the case may be, as well as all other documents
required by this Letter, must be received by the Exchange Agent within five New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in the Prospectus under the caption "The
Exchange Offer -- How to Tender."
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Original Notes will be
determined by the Issuers, whose determination will be final and binding. The
Issuers reserve the absolute right to reject any or all tenders that are not in
proper form or the acceptance of which, in the opinion of the Issuers' counsel,
would be unlawful. The Issuers also reserve the right to waive any
irregularities or conditions of tender as to particular Original Notes. All
tendering holders, by execution of this Letter, waive any right to receive
notice of acceptance of their Original Notes.
Neither the Issuers, the Exchange Agent nor any other person shall be
obligated to give notice of defects or irregularities in any tender, nor shall
any of them incur any liability for failure to give any such notice.
2. PARTIAL TENDERS; WITHDRAWALS. If less than the entire principal amount
of any Senior Note evidenced by a submitted certificate or by a Book-Entry
Confirmation is tendered, the tendering holder must fill in the principal amount
tendered in the fourth column of Box 1 above. All of the Original Notes
represented by a certificate or by a Book-Entry Confirmation delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
A certificate for Original Notes not tendered will be sent to the holder, unless
otherwise provided in Box 5, as soon as practicable after the Expiration Date,
in the event that less than the entire principal amount of Original Notes
represented by a submitted certificate is tendered (or, in the case of Original
Notes tendered by book-entry transfer, such non-exchanged Original Notes will be
credited to an account maintained by the holder with the Book-Entry Transfer
Facility).
If not yet accepted, a tender pursuant to the Exchange Offer may be
withdrawn prior to 5:00 p.m., Eastern Standard time, on the Expiration Date. To
be effective with respect to the tender of Original Notes, a notice of
withdrawal must: (i) be received by the Exchange Agent before the Company
notifies the Exchange Agent that it has accepted the tender of Original Notes
pursuant to the Exchange Offer; (ii) specify the name of the person who tendered
the Original Notes; (iii) contain a description of the Original Notes to be
withdrawn, the certificate numbers shown on the particular certificates
evidencing such Original Notes and the principal amount of Original Notes
represented by such certificates; and (iv) be signed by the holder in the same
manner as the original signature on this Letter (including any required
signature guarantee).
3. SIGNATURES ON THIS LETTER; ASSIGNMENTS; GUARANTEE OF SIGNATURES. If this
Letter is signed by the holder(s) of Original Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the
certificate(s) for such Original Notes, without alteration, enlargement or any
change whatsoever.
If any of the Original Notes tendered hereby are owned by two or more joint
owners, all owners must sign this Letter. If any tendered Original Notes are
held in different names on several certificates, it will be necessary to
complete, sign and submit as many separate copies of this Letter as there are
names in which certificates are held.
If this Letter is signed by the holder of record and (i) the entire
principal amount of the holder's Original Notes are tendered; and/or (ii)
untendered Original Notes, if any, are to be issued to the holder of record,
then the holder of record need not endorse any certificates for tendered
Original Notes, nor provide a separate bond power. If any other case, the holder
of record must transmit a separate bond power with this Letter.
If this Letter or any certificate or assignment is signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and proper evidence satisfactory to the
Issuer of their authority to so act must be submitted, unless waived by the
Issuers.
6
<PAGE> 7
Signatures on this Letter must be guaranteed by an Eligible Institution,
unless Original Notes are tendered: (i) by a holder who has not completed the
Box entitled "Special Issuance Instructions" or "Special Delivery Instructions"
on this Letter; or (ii) for the account of an Eligible Institution. In the event
that the signatures in this Letter or a notice of withdrawal, as the case may
be, are required to be guaranteed, such guarantees must be by an eligible
guarantor institution which is a member of The Securities Transfer Agents
Medallion Program (STAMP), The New York Stock Exchanges Medallion Signature
Program (MSP) or The Stock Exchanges Medallion Program (SEMP) (collectively,
"Eligible Institutions"). If Original Notes are registered in the name of a
person other than the signer of this Letter, the Original Notes surrendered for
exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Issuers, in their sole discretion, duly executed by the registered holder with
the signature thereon guaranteed by an Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders should
indicate, in Box 4 or 5, as applicable, the name and address to which the
Exchange Notes or certificates for Original Notes not exchanged are to be issued
or sent, if different from the name and address of the person signing this
Letter. In the case of issuance in a different name, the tax identification
number of the person named must also be indicated. Holders tendering Original
Notes by book-entry transfer may request that Original Notes not exchanged be
credited to such account maintained at the Book-Entry Transfer Facility as such
holder may designate.
5. TAX IDENTIFICATION NUMBER. Federal income tax law requires that a holder
whose tendered Original Notes are accepted for exchange must provide the
Exchange Agent (as payor) with his or her correct taxpayer identification number
("TIN"), which, in the case of a holder who is an individual, is his or her
social security number. If the Exchange Agent is not provided with the correct
TIN, the holder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, delivery to the holder of the Exchange Notes pursuant to
the Exchange Offer may be subject to back-up withholding. (If withholding
results in overpayment of taxes, a refund may be obtained.) Exempt holders
(including, among others, all corporations and certain foreign individuals) are
not subject to these back-up withholding and reporting requirements. See the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.
Under federal income tax laws, payments that may be made by the Issuers on
account of Exchange Notes issued pursuant to the Exchange Offer may be subject
to back-up withholding at a rate of 31%. In order to prevent back-up
withholding, each tendering holder must provide his or her correct TIN by
completing the "Substitute Form W-9" referred to above, certifying that the TIN
provided is correct (or that the holder is awaiting a TIN) and that: (i) the
holder has not been notified by the Internal Revenue Service that he or she is
subject to back-up withholding as a result of failure to report all interest or
dividends; or (ii) the Internal Revenue Service has notified the holder that he
or she is no longer subject to back-up withholding; or (iii) certify in
accordance with the Guidelines that such holder is exempt from back-up
withholding. If the Original Notes are in more than one name or are not in the
name of the actual owner, consult the enclosed Guidelines for information on
which TIN to report.
6. TRANSFER TAXES. The Issuers will pay all transfer taxes, if any,
applicable to the transfer of Original Notes to it or its order pursuant to the
Exchange Offer. If, however, the Exchange Notes or certificates for Original
Notes not exchanged are to be delivered to, or are to be issued in the name of,
any person other than the record holder, or if tendered certificates are
recorded in the name of any person other than the person signing this Letter, or
if a transfer tax is imposed by any reason other than the transfer of Original
Notes to the Company or its order pursuant to the Exchange Offer, then the
amount of such transfer taxes (whether imposed on the record holder or any other
person) will be payable by the tendering holder. If satisfactory evidence of
payment of taxes or exemption from taxes is not submitted with this Letter, the
amount of transfer taxes will be billed directly to the tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter.
7. WAIVER OF CONDITIONS. The Issuers reserve the absolute right to amend or
waive any of the specified conditions in the Exchange Offer in the case of any
Original Notes tendered.
8. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES. Any holder whose
certificates for Original Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above, for further
instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus or this Letter, may be directed to the Exchange Agent.
IMPORTANT: This Letter (together with certificates representing tendered
Original Notes or a Book-Entry Confirmation and all other required documents)
must be received by the Exchange Agent on or before the Expiration Date (as
defined in the Prospectus).
7
<PAGE> 1
EXHIBIT 99.2
PCI CHEMICALS CANADA INC.
EXCHANGE OFFER
TO HOLDERS OF ITS
9 1/4% SERIES A SENIOR SECURED NOTES DUE 2007
NOTICE OF GUARANTEED DELIVERY
As set forth in the Prospectus dated January , 1998 (the "Prospectus") of
PCI Chemicals Canada Inc. (the "Company" and, together with Pioneer Americas
Acquisition Corporation ("PAAC") and the other subsidiaries of PAAC, the
"Issuers") under "The Exchange Offer -- How to Tender" and in the Letter of
Transmittal (the "Letter of Transmittal") relating to the offer (the "Exchange
Offer") by the Issuers to exchange up to $175,000,000 in principal amount of its
9 1/4% Series A Senior Secured Notes due 2007 issued and sold in a transaction
exempt from registration under the Securities Act of 1933, as amended (the
"Original Notes"), for $175,000,000 in principal amount of its 9 1/4% Series B
Senior Secured Notes due 2007 (the "Exchange Notes"), this form or one
substantially equivalent hereto must be used to accept the Exchange Offer of the
Issuers if: (i) certificates for the Original Notes are not immediately
available; or (ii) time will not permit all required documents to reach the
Exchange Agent (as defined below) on or prior to the Expiration Date (as defined
in the Prospectus) of the Exchange Offer. Such form may be delivered by hand or
transmitted by telegram, telex, facsimile transmission or letter to the Exchange
Agent.
TO: UNITED STATES TRUST COMPANY OF NEW YORK (the "Exchange Agent")
By Facsimile:
(212) 780-0592
Attention: Customer Service
Confirm by telephone:
(800) 548-6565
By Registered or Certified Mail:
United States Trust Company of New York
P.O. Box 844 Cooper Station
New York, New York 10276
By Hand:
United States Trust Company of New York
111 Broadway
New York, New York 10006
Attention: Corporate Trust Operations
By Overnight Courier:
United States Trust Company of New York
770 Broadway
New York, New York 10003
Attention: Corporate Trust Operations
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE OR TRANSMITTAL OF THIS INSTRUMENT TO
A FACSIMILE OR TELEX NUMBER OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to the Issuers, upon the terms and
conditions set forth in the Prospectus and the Letter of Transmittal (which
together constitute the "Exchange Offer"), receipt of which are hereby
acknowledged, the principal amount of Original Notes set forth below pursuant to
the guaranteed delivery procedure described in the Prospectus and the Letter of
Transmittal.
<TABLE>
<S> <C>
SIGN HERE
Principal Amount of Original Notes
Tendered ------------------------------------------- Signature(s) ---------------------------------------
-----------------------------------------------------
Certificate Nos. Please Print the Following Information
(if available)
---------------------------------------
Name(s) -------------------------------------------
-----------------------------------------------------
Total Principal Amount Address --------------------------------------------
Represented by Original Notes
Certificate(s)
----------------------------------------
-----------------------------------------------------
Area Code and Tel. No(s). ------------------------
-----------------------------------------------------
Account Number ----------------------------------
Dated: ------------------ , 1998
</TABLE>
2
<PAGE> 3
GUARANTEE
The undersigned, a member of a recognized signature guarantee medallion
program within the meaning of Rule 17A(d)-15 under the Securities Exchange Act
of 1934, as amended, hereby guarantees that delivery to the Exchange Agent of
certificates tendered hereby, in proper form for transfer, or delivery of such
certificates pursuant to the procedure for book-entry transfer, in either case
with delivery of a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other required documents, is being made within
five trading days after the date of execution of a Notice of Guaranteed Delivery
of the above-named person.
- --------------------------------------------------------------------------------
Name of Firm
- --------------------------------------------------------------------------------
Authorized Signature
- --------------------------------------------------------------------------------
Number and Street or P.O. Box
- --------------------------------------------------------------------------------
City State Zip Code
- --------------------------------------------------------------------------------
Area Code and Tel. No.
Dated: , 1998
3
<PAGE> 1
EXHIBIT 99.3
PCI CHEMICALS CANADA INC.
OFFER TO EXCHANGE
UP TO $175,000,000 IN PRINCIPAL AMOUNT OF
9 1/4% SERIES A SENIOR SECURED NOTES DUE 2007 ISSUED AND
SOLD IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED
FOR
$175,000,000 IN PRINCIPAL AMOUNT OF
9 1/4% SERIES B SENIOR SECURED NOTES DUE 2007
To Our Clients:
Enclosed for your consideration is a Prospectus dated January , 1998 (as
the same may be amended or supplemented from time to time, the "Prospectus") and
a form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by PCI Chemicals Canada Inc. (the "Company" and,
together with Pioneer Americas Acquisition Corporation ("PAAC") and the other
subsidiaries of PAAC, the "Issuers") to exchange up to $175,000,000 in principal
amount of its 9 1/4% Series A Senior Secured Notes due 2007 issued and sold in a
transaction exempt from registration under the Securities Act of 1933, as
amended (the "Original Notes"), for $175,000,000 in principal amount of its
9 1/4% Series B Senior Secured Notes due 2007 (the "Exchange Notes").
The material is being forwarded to you as the beneficial owner of Original
Notes carried by us for your account or benefit but not registered in your name.
A tender of any Original Notes may be made only by us as the registered holder
and pursuant to your instructions. Therefore, the Issuers urge beneficial owners
of Original Notes registered in the name of a broker, dealer, commercial bank,
trust company or other nominee to contact such registered holder promptly if
they wish to tender Original Notes in the Exchange Offer.
Accordingly, we request instructions as to whether you wish us to tender
any or all Original Notes, pursuant to the terms and conditions set forth in the
Prospectus and Letter of Transmittal. We urge you to read carefully the
Prospectus and Letter of Transmittal before instructing us to tender your
Original Notes.
Your instructions to us should be forwarded as promptly as possible in
order to permit us to tender Original Notes on your behalf in accordance with
the provisions of the Exchange Offer. The Exchange Offer will expire at 5:00
p.m., Eastern Standard Time, on , , 1998, unless extended
(the "Expiration Date"). Original Notes tendered pursuant to the Exchange Offer
may be withdrawn, subject to the procedures described in the Prospectus, at any
time prior to the Expiration Date.
If you wish to have us tender any or all of your Original Notes held by us
for your account or benefit, please so instruct us by completing, executing and
returning to us the instruction form that appears below. The accompanying Letter
of Transmittal is furnished to you for informational purposes only and may not
be used by you to tender Original Notes held by us and registered in our name
for your account or benefit.
<PAGE> 2
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer of Pioneer Americas
Acquisition Corp.
THIS WILL INSTRUCT YOU TO TENDER THE PRINCIPAL AMOUNT OF ORIGINAL NOTES
INDICATED BELOW HELD BY YOU FOR THE ACCOUNT OR BENEFIT OF THE UNDERSIGNED,
PURSUANT TO THE TERMS OF AND CONDITIONS SET FORTH IN THE PROSPECTUS AND THE
LETTER OF TRANSMITTAL.
Box 1 [ ] Please tender my Original Notes held by you for my account or
benefit. I have identified on a signed schedule attached hereto the
principal mount of Original Notes to be tendered if I wish to tender
less than all of my Original Notes.
Box 2 [ ] Please do not tender any Original Notes held by you for my account
or benefit.
Date: , 1998
----------------------------------------
----------------------------------------
Signature(s)
----------------------------------------
----------------------------------------
Please print name(s) here
Unless a specific contrary instruction is given in a signed Schedule attached
hereto, your signature(s) hereon shall constitute an instruction to us to tender
all of your Original Notes.
2
<PAGE> 1
EXHIBIT 99.4
PCI CHEMICALS CANADA INC.
OFFER TO EXCHANGE
UP TO $175,000,000 IN PRINCIPAL AMOUNT OF
9 1/4% SERIES A SENIOR SECURED NOTES DUE 2007 ISSUED
AND SOLD IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED
FOR
$175,000,000 IN PRINCIPAL AMOUNT OF
9 1/4% SERIES B SENIOR SECURED NOTES DUE 2007
To Securities Dealers, Commercial Banks
Trust Companies and Other Nominees:
Enclosed for your consideration is a Prospectus dated January , 1998 (as
the same may be amended or supplemented from time to time, the "Prospectus") and
a form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by PCI Chemicals Canada Inc. (the "Company" and,
together with Pioneer Americas Acquisition Corporation ("PAAC") and the other
subsidiaries of PAAC, the "Issuers") to exchange up to $175,000,000 in principal
amount of its 9 1/4% Series A Senior Secured Notes due 2007 issued and sold in a
transaction exempt from registration under the Securities Act of 1933, as
amended (the "Original Notes"), for $175,000,000 in principal amount of its
9 1/4% Series B Senior Secured Notes due 2007 (the "Exchange Notes").
We are asking you to contact your clients for whom you hold Original Notes
registered in your name or in the name of your nominee. In addition, we ask you
to contact your clients who, to your knowledge, hold Original Notes registered
in their own name. The Issuers will not pay any fees or commissions to any
broker, dealer or other person in connection with the solicitation of tenders
pursuant to the Exchange Offer. You will, however, be reimbursed by the Issuers
for customary mailing and handling expenses incurred by you in forwarding any of
the enclosed materials to your clients. The Issuers will pay all transfer taxes,
if any, applicable to the tender of Original Notes to it or its order, except as
otherwise provided in the Prospectus and the Letter of Transmittal.
Enclosed are copies of the following documents:
1. The Prospectus;
2. A Letter of Transmittal for your use in connection with the tender of
Original Notes and for the Information of your clients;
3. A form of letter that may be sent to your clients for whose accounts you
hold Original Notes registered in your name or the name of your nominee,
with space provided for obtaining the clients' instructions with regard
to the Exchange Offer;
4. A form of Notice of Guaranteed Delivery; and
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Your prompt action is requested. The Exchange Offer will expire at 5:00
p.m., Eastern Standard Time,
on , , 1998, unless extended (the "Expiration Date").
Original Notes tendered pursuant to the Exchange Offer may be withdrawn, subject
to the procedures described in the Prospectus, at any time prior to the
Expiration Date.
<PAGE> 2
To tender Original Notes, certificates for Original Notes or a Book-Entry
Confirmation, a duly executed and properly completed Letter of Transmittal or a
facsimile thereof, and any other required documents, must be received by the
Exchange Agent as provided in the Prospectus and the Letter of Transmittal.
Additional copies of the enclosed material may be obtained from United
States Trust Company of New York, the Exchange Agent, by calling (800) 548-6565.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE ISSUERS OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO
THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS AND
THE LETTER OF TRANSMITTAL.
2
