Exhibit 7.1
PAN AMERICAN SILVER CORP.
- AND -
COMPUTERSHARE TRUST COMPANY OF CANADA
TRUST INDENTURE
5.25% CONVERTIBLE UNSECURED SENIOR SUBORDINATED DEBENTURES
DUE 2009
DATED AS OF JULY 30, 2003
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TABLE OF CONTENTS
ARTICLE 1 INTERPRETATION..................................................................................... 1
1.1 Definitions.......................................................................................... 1
1.2 Number, gender and entities.......................................................................... 7
1.3 Meaning of "Outstanding"............................................................................. 7
1.4 Headings, Etc........................................................................................ 8
1.5 Applicable Law....................................................................................... 8
1.6 Monetary References.................................................................................. 8
1.7 Calculation of Dates................................................................................. 8
1.8 Schedules............................................................................................ 8
ARTICLE 2 THE DEBENTURES..................................................................................... 9
2.1 Issue of Debentures.................................................................................. 9
2.2 Terms of Debentures.................................................................................. 9
2.3 Forms and Signature of Debentures.................................................................... 9
2.4 Issue of Debentures.................................................................................. 10
2.5 Interest Obligations................................................................................. 10
2.6 Certificate as to Interest Payable................................................................... 10
2.7 Payment of Interest in Cash.......................................................................... 11
2.8 Interest Election Notice............................................................................. 12
2.9 Company to Indemnify Trustee and Debenture Holders................................................... 14
2.10 Entitlements Preserved............................................................................... 14
2.11 Creation and Issue of Additional Debentures.......................................................... 14
2.12 Certification........................................................................................ 15
2.13 Registration of Debentures........................................................................... 15
2.14 Mutilation, loss, theft or destruction of Debentures................................................. 16
2.15 Exchanges of Debentures.............................................................................. 16
2.16 Place of Payment..................................................................................... 17
2.17 Partnership not created.............................................................................. 17
2.18 Issue of Global Debentures........................................................................... 17
2.19 Payment of Additional Amounts........................................................................ 19
ARTICLE 3 REDEMPTION AND PURCHASE FOR CANCELLATION OF DEBENTURES............................................. 20
3.1 Redemption of Debentures............................................................................. 20
3.2 Redemption for Changes in Canadian Tax Law........................................................... 21
3.3 Partial Redemption of Debentures..................................................................... 21
3.4 Redemption Notice.................................................................................... 21
3.5 Debentures Due on Redemption Dates................................................................... 22
3.6 Deposit of Redemption Moneys......................................................................... 22
3.7 Surrender of Debentures for Cancellation............................................................. 22
3.8 Purchase of Debentures............................................................................... 22
3.9 Redemption of Debentures on Maturity Date............................................................ 23
3.10 Optional Repayment upon Redemption or Maturity....................................................... 23
3.11 No Other Redemption of Debentures.................................................................... 24
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ARTICLE 4 CONVERSION......................................................................................... 24
4.1 Conversion Privilege and Conversion Price............................................................ 24
4.2 Conversion Procedure................................................................................. 24
4.3 No Fractional Shares................................................................................. 25
4.4 Adjustment of the Conversion Price................................................................... 25
4.5 Certificate as to Adjustment......................................................................... 29
4.6 Voluntary Decrease................................................................................... 29
4.7 Notice to Debenture Holders of Certain Events........................................................ 29
4.8 Right of Conversion Ceases on Redemption............................................................. 30
4.9 Reclassifications, Reorganizations, Etc.............................................................. 30
4.10 Overriding Limitation on Conversion Right............................................................ 31
4.11 Cancellation of Debentures........................................................................... 31
ARTICLE 5 CHANGE OF CONTROL.................................................................................. 31
5.1 Change of Control Offer.............................................................................. 31
5.2 Change of Control.................................................................................... 32
5.3 Change of Control Redemption Notice.................................................................. 33
5.4 Effect of Change of Control Redemption Notice........................................................ 34
5.5 Third Party May Satisfy.............................................................................. 35
5.6 90% Redemption Right................................................................................. 35
5.7 Deposit of Total Offer Price......................................................................... 36
5.8 Redemption in Part................................................................................... 36
5.9 Debentures Due on Expiry of Offer.................................................................... 36
5.10 Covenant to Comply with Securities Laws Upon Redemption of Debentures................................ 36
5.11 Cancellation of Debentures........................................................................... 36
ARTICLE 6 SUBORDINATION OF DEBENTURES........................................................................ 37
6.1 Subordination of Debentures.......................................................................... 37
6.2 Definition........................................................................................... 37
6.3 Effect of Dissolution, Winding-up, Liquidation or Reorganization..................................... 37
6.4 Subrogation of Debentures............................................................................ 38
6.5 No Payment to Debenture Holders if Senior Indebtedness Due or in Default............................. 38
6.6 Payment of Debentures Permitted...................................................................... 39
6.7 Subordination Not to be Impaired..................................................................... 40
6.8 Authorization of Debenture Holders to Trustee to Effect Subordination................................ 40
6.9 Survival............................................................................................. 40
6.10 Further Assurances................................................................................... 41
ARTICLE 7 COVENANTS OF THE COMPANY........................................................................... 41
7.1 To Pay Principal and Interest........................................................................ 41
7.2 To Carry on Business................................................................................. 41
7.3 To Maintain Reservation of Common Shares............................................................. 41
7.4 To Qualify Common Shares and Maintain a Listing...................................................... 41
7.5 To Pay Trustee's Remuneration........................................................................ 41
7.6 Not to Extend Time for Payment of Interest or Principal.............................................. 42
7.7 Audit................................................................................................ 42
7.8 Trustee May Perform Covenants........................................................................ 42
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7.9 Certificates of no Default........................................................................... 42
7.10 Further Assurances................................................................................... 42
7.11 Trustee Indemnification.............................................................................. 42
7.12 Reports.............................................................................................. 43
7.13 Future Issuances of Debt............................................................................. 43
7.14 Restrictions on Dividends............................................................................ 43
7.15 Conversion of Currency............................................................................... 43
ARTICLE 8 DEFAULT............................................................................................ 44
8.1 Acceleration of Maturity............................................................................. 44
8.2 Notice of Events of Default.......................................................................... 47
8.3 Waiver of Default.................................................................................... 47
8.4 Enforcement by the Trustee........................................................................... 47
8.5 Suits by Debenture Holders........................................................................... 48
8.6 Application of Moneys by Trustee..................................................................... 49
8.7 Distribution of Proceeds............................................................................. 49
8.8 Remedies Cumulative.................................................................................. 50
8.9 Judgment Against the Company......................................................................... 50
8.10 Immunity of Shareholders............................................................................. 50
8.11 Trustee Appointed Attorney........................................................................... 50
ARTICLE 9 SATISFACTION AND DISCHARGE......................................................................... 50
9.1 Cancellation and Destruction......................................................................... 50
9.2 Non-Presentation of Debentures....................................................................... 50
9.3 Repayment of Unclaimed Moneys........................................................................ 51
9.4 Discharge............................................................................................ 51
ARTICLE 10 SUCCESSOR CORPORATIONS............................................................................ 51
10.1 Certain Requirements................................................................................. 51
10.2 Vesting of Powers in Successor....................................................................... 52
ARTICLE 11 MEETINGS OF DEBENTURE HOLDERS..................................................................... 52
11.1 Right to Convene Meeting............................................................................. 52
11.2 Notice of Meetings................................................................................... 52
11.3 Chairman............................................................................................. 52
11.4 Quorum............................................................................................... 53
11.5 Power to Adjourn..................................................................................... 53
11.6 Show of Hands........................................................................................ 53
11.7 Poll................................................................................................. 53
11.8 Voting............................................................................................... 53
11.9 Regulations.......................................................................................... 53
11.10 Company and Trustee May be Represented............................................................... 54
11.11 Powers Exercisable by Extraordinary Resolution....................................................... 54
11.12 Meaning of "Extraordinary Resolution"................................................................ 56
11.13 Powers Cumulative.................................................................................... 57
11.14 Minutes.............................................................................................. 57
11.15 Instruments in Writing............................................................................... 57
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11.16 Binding Effect of Resolutions........................................................................ 57
11.17 Evidence of Rights of Debenture Holders.............................................................. 57
ARTICLE 12 NOTICES........................................................................................... 57
12.1 Notice to Company.................................................................................... 57
12.2 Notice to Debenture Holders.......................................................................... 58
12.3 Notice to Trustee.................................................................................... 58
12.4 Receipt of Notices................................................................................... 58
12.5 Mail Service Interruption............................................................................ 58
12.6 Waiver of Notice..................................................................................... 59
ARTICLE 13 CONCERNING THE TRUSTEE............................................................................ 59
13.1 Trust Indenture Legislation.......................................................................... 59
13.2 No Conflict of Interest.............................................................................. 59
13.3 Replacement of Trustee............................................................................... 59
13.4 Experts, Advisers and Agents......................................................................... 60
13.5 Trustee May Deal in Debentures....................................................................... 60
13.6 Investment of Moneys Held by Trustee................................................................. 60
13.7 Trustee Not Ordinarily Bound......................................................................... 60
13.8 Trustee Not Required to Give Security................................................................ 61
13.9 Acceptance of Trust.................................................................................. 61
13.10 Protection of the Trustee............................................................................ 61
13.11 Trustee Standard of Care............................................................................. 61
13.12 Third Party Interests................................................................................ 62
13.13 Trustee Not Bound to Act............................................................................. 62
ARTICLE 14 SUPPLEMENTAL INDENTURES........................................................................... 62
14.1 Supplemental Indentures.............................................................................. 62
ARTICLE 15 EVIDENCE OF OWNERSHIP............................................................................. 63
15.1 Evidence of Ownership................................................................................ 63
ARTICLE 16 EXECUTION AND FORMAL DATE......................................................................... 64
16.1 Counterpart Execution................................................................................ 64
16.2 Formal Date.......................................................................................... 64
SCHEDULE A Specimen Debenture Certificate................................................................... A-1
SCHEDULE B Redemption Notice................................................................................ B-1
SCHEDULE C Form of Maturity Notice.......................................................................... C-1
SCHEDULE D Form of Notice of Conversion..................................................................... D-1
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THIS INDENTURE is made as of July 30, 2003.
BETWEEN:
PAN AMERICAN SILVER CORP., a company incorporated under the
laws of the Province of British Columbia and having its head
office at 1500 - 625 Howe Street, Vancouver, British
Columbia, V6C 2T6
(hereinafter referred to as the "COMPANY")
AND:
COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company
incorporated under the laws of Canada and having an office
at 510 Burrard Street, Vancouver, British Columbia, V6C 3B9
(hereinafter referred to as the "TRUSTEE")
WHEREAS the Company wishes to raise money for its corporate purposes
and to do so wishes to create and issue the Debentures pursuant to this
indenture;
AND WHEREAS the Company, under the laws relating thereto, is duly
authorized to create and issue the Debentures to be issued as herein provided;
AND WHEREAS when certified by the Trustee and issued as in this
indenture provided, all necessary resolutions of the directors of the Company
have been duly passed and other proceedings taken and conditions complied with
to make the creation and issue of the Debentures proposed to be issued hereunder
legal, valid and effective;
AND WHEREAS the foregoing recitals are made as representations and
statements of fact by the Company and not by the Trustee;
THIS INDENTURE WITNESSES THAT in consideration of the mutual covenants
and agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by each of the parties
hereto, the parties hereto covenant, agree and declare as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS. Where used herein or in the Debentures or any amendments or
supplemental indentures hereto, except where the context otherwise requires, the
following terms shall have the following meanings:
1.1.1 "ADDITIONAL DEBENTURES" means any Debentures issued hereunder other than
the Debentures issued on the date hereof;
1.1.2 "AFFILIATE" means, with respect to any specified person, any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this definition,
"CONTROL" when used with respect to any specified person means
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the power to direct or cause the direction of the management and policies of
such person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "CONTROLLING" and
"CONTROLLED" have similar meanings;
1.1.3 "AGGREGATE MARKET CAPITALIZATION" means, at any date, the amount equal to
the product of the Current Market Price as of the trading day immediately
preceding such date and the number of Common Shares outstanding on such date;
1.1.4 "ASSOCIATE" means, with respect to any specified person (1) any
corporation or organization (other than such person or a majority-owned
subsidiary of such person) of which such person is an officer or partner or is,
directly or indirectly, the beneficial owner of 10 percent or more of any class
of equity securities, (2) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee or
in a similar fiduciary capacity, and (3) any relative or spouse of such person,
or any relative of such spouse, who has the same home as such person or who is a
director or officer of such person or any of its parents or subsidiaries;
1.1.5 "BANKRUPTCY LAW" means Title 11, United States Code or any similar United
States federal or state law for the relief of debtors, or the Bankruptcy and
Insolvency Act (Canada) or any other Canadian federal or provincial or foreign
law relating to bankruptcy, insolvency, winding up, liquidation, reorganization
or relief of debtors;
1.1.6 "BANKRUPTCY ORDER" means any court order made in a proceeding pursuant to
or within the meaning of any Bankruptcy Law, containing an adjudication of
bankruptcy or insolvency, or providing for liquidation, winding up, dissolution
or reorganization, or appointing a Custodian of a debtor or of all or any
substantial part of a debtor's property, or providing indebtedness or other
relief of a debtor;
1.1.7 "BENEFICIAL HOLDER" means any person who holds a beneficial interest in a
Global Debenture as shown on the books of the Depository or a Depository
Participant;
1.1.8 "BUSINESS DAY" means any day other than Saturday, Sunday or a statutory
holiday in the Province of British Columbia;
1.1.9 "CAPITAL STOCK" means, for any corporation, any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) the capital issued by such corporation;
1.1.10 "CASH, PROPERTY OR SECURITIES" for the purposes of Article 6 has the
meaning ascribed thereto in section 6.2 hereof;
1.1.11 a "CHANGE OF CONTROL" shall be deemed to have occurred at such time as
any of the following events shall occur:
(a) there is a report filed on Schedule 13D, 14D-1 or 14D-1F (or
any successor schedule, form or report) pursuant to the 1934
Act disclosing that any person, including its Associates and
Affiliates (as the term "PERSON" is used in section 13(d)(3)
or section 14(d)(2) of the 1934 Act or any successor provision
to either of the foregoing), other than the Company, a
Subsidiary or any employee benefit plan of either the Company
or a Subsidiary, has become the beneficial owner (as the term
"BENEFICIAL OWNER" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the 1934 Act)
of Voting Shares representing more than 66 2/3 percent of the
total voting power attached to all Voting Shares of the
Company then outstanding; provided, however, that a person
shall not be deemed to be the
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beneficial owner of, or to own beneficially, (A) any
securities tendered pursuant to a tender or exchange offer
made by or on behalf of such person or any of such person's
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange thereunder, or (B) any
securities if such beneficial ownership (1) arises solely as a
result of a revocable proxy delivered in response to a proxy
or consent solicitation made pursuant to applicable law, and
(2) is not also then reportable on Schedule 13D (or any
successor schedule) under the 1934 Act;
(b) there is a report filed with any securities commission or
securities regulatory authority in Canada, disclosing that any
offeror (as the term "OFFEROR" is defined in section 89(1) of
the Securities Act for the purposes of section 101 of the
Securities Act, or any successor provision to either of the
foregoing), other than the Company, a Subsidiary or any
employee benefit plan of either the Company or a Subsidiary,
has acquired beneficial ownership (within the meaning of the
Securities Act) of, or the power to exercise control or
direction over, or securities convertible into, any voting or
equity shares of the Company, that together with such
offeror's securities (as the term "OFFEROR'S SECURITIES" is
defined in section 89(1) of the Securities Act or any
successor provision thereto in relation to the voting or
equity shares of the Company) would constitute Voting Shares
of the Company representing more than 66 2/3 percent of the
total voting power attached to all Voting Shares of the
Company then outstanding; or
(c) there is consummated any amalgamation, consolidation,
statutory arrangement (involving a business combination) or
merger of the Company (i) in which the Company is not the
continuing or surviving corporation or (ii) pursuant to which
any Voting Shares of the Company would be reclassified,
changed or converted into or exchanged for cash, securities or
other property, other than (in each case) an amalgamation,
consolidation, statutory arrangement or merger of the Company
in which either (a) the holders of the Voting Shares of the
Company immediately prior to the amalgamation, consolidation,
statutory arrangement or merger have, directly or indirectly,
more than 66 2/3 percent of the Voting Shares of the
continuing or surviving corporation immediately after such
transaction or (b)(i) upon such amalgamation, consolidation,
statutory arrangement or merger, a majority of the directors
on the board of directors of the continuing or surviving
corporation are persons who were directors on the board of
directors of the Company immediately before the signing of the
agreement governing such amalgamation, consolidation,
statutory arrangement or merger (the "CONTINUING DIRECTORS"),
and no agreement is in place providing for the removal,
resignation or other replacement of such Continuing Directors
and (ii) immediately after such amalgamation, consolidation,
statutory arrangement or merger, no Person or Group (as
defined in Rule 13d-5 of the 1934 Act) holds, directly or
indirectly, more than 35 percent of the Voting Shares of the
continuing or surviving corporation;
1.1.12 "CHANGE OF CONTROL DATE" means the date a Change of Control has occurred;
1.1.13 "CLOSE OF BUSINESS" means the normal closing hour of the local office of
the Trustee on the relevant business day;
1.1.14 "COMMON SHARES" means, subject to the provisions of section 4.8, common
shares without par value in the capital of the Company;
1.1.15 "COMPANY" means Pan American Silver Corp. and includes any successor
corporation to or of Pan American Silver Corp. which shall have complied with
the provisions of Article 10;
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1.1.16 "COMPANY'S AUDITORS" or "AUDITORS OF THE COMPANY" means an independent
firm of chartered accountants duly appointed as auditors of the Company;
1.1.17 "CONVERSION DATE" has the meaning ascribed thereto in subsection 4.2.2;
1.1.18 "CONVERSION PRICE" means, subject to any adjustment as provided for in
section 4.4 hereof, the price per Common Share at which the Debentures shall
from time to time be convertible into Common Shares in accordance with the
provisions of Article 4, being $9.57 as at the date hereof;
1.1.19 "CONVERSION RATE" means the rate at which the Debentures may be converted
into Common Shares pursuant to the terms hereof and is equal to the principal
amount of the Debentures divided by the Conversion Price which, subject to any
adjustment as provided for in section 4.4 hereof, is equal to approximately
104.4932 Common Shares per each $1,000 principal amount Debenture as at the date
hereof;
1.1.20 "COUNSEL" means a barrister or solicitor or firm of barristers or
solicitors retained by the Trustee or retained or employed by the Company and
acceptable to the Trustee;
1.1.21 "CURRENT MARKET PRICE" means the weighted average trading price (or, if
no trades occur on any relevant particular day, the mean between the closing bid
and asked quotations on such day) of the Common Shares on the Nasdaq National
Market during a period of 20 consecutive trading days ending on the fifth
trading day prior to the relevant Interest Payment Date, Conversion Date,
Redemption Date, Maturity Date, the date upon which any relevant computation
pursuant to section 4.4.1 hereof is to be made, or any other date upon which the
Current Market Price must be calculated, as the case may be, or if the Common
Shares are not listed on the Nasdaq National Market on the date the
determination is to be made, on such stock exchange on which the greatest volume
of Common Shares are traded during such preceding 20 consecutive trading day
period (with the weighted average trading price being converted into U.S.
dollars based on the Bank of Canada noon exchange rate as reported for
conversion of Canadian dollars into U.S. dollars on that date in the case of a
stock exchange in Canada) or, if the Common Shares are not listed on any stock
exchange, a price determined by the directors and approved by the Trustee;
1.1.22 "CUSTODIAN" means any receiver, interim receiver, receiver and manager,
trustee, assignee, liquidator, sequestrator or similar official under any
Bankruptcy Law or any other person with like powers;
1.1.23 "DEBENTURE HOLDERS" or "HOLDERS" means the persons for the time being
entered in the registers hereinafter mentioned as holders of Debentures;
1.1.24 "DEBENTURE INDEBTEDNESS" means, from time to time, all indebtedness,
liabilities and obligations, present or future, direct or indirect, of the
Company to the Debenture holders or the Trustee on behalf of the Debenture
holders, as the case may be, under the Debentures, including principal,
interest, fees, expenses and other amounts owing under the Debentures;
1.1.25 "DEBENTURES" means the 5.25% convertible unsecured senior subordinated
debentures of the Company issued and certified hereunder and for the time being
outstanding and, provided there is nothing in the context inconsistent
therewith, shall include Additional Debentures;
1.1.26 "DEPOSITORY" means, with respect to the Debentures, the Person designated
as depository by the Company pursuant to section 2.18 until a successor
depository shall have become designated such pursuant to the applicable
provisions of this indenture, and thereafter "DEPOSITORY" shall mean each person
who is then a depository hereunder, and if at any time there is more than one
such person "DEPOSITORY" as used with respect to the Debentures shall mean each
Depository with respect to the Global Debentures;
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1.1.27 "DEPOSITORY PARTICIPANT" means a broker, dealer, bank, or other financial
institution or other Person for whom, from time to time, a Depository effects
book entry for a Global Debenture deposited with the Depository;
1.1.28 "DIRECTOR" means a director of the Company for the time being and
"DIRECTORS" or "BOARD OF DIRECTORS" means the board of directors of the Company
or, whenever duly empowered, the executive or other committee of the board of
directors of the Company, for the time being, and reference without more to
action by the directors means action by the directors of the Company as a board
or action by the said executive or other committee as a committee;
1.1.29 "EVENT OF DEFAULT" has the meaning ascribed thereto in section 8.1
hereof;
1.1.30 "EXTRAORDINARY RESOLUTION" has the meaning ascribed thereto in section
11.12 hereof;
1.1.31 "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means generally accepted
accounting principles from time to time approved by the Canadian Institute of
Chartered Accountants;
1.1.32 "GLOBAL DEBENTURE" means a Debenture that is issued to and registered in
the name of the Depository, or its nominee, pursuant to section 2.18 for
purposes of being held by or on behalf of the Depository as custodian for
Depository Participants;
1.1.33 "GOVERNMENT OBLIGATIONS" means interest bearing or discount debt
obligations having a term of not more than 90 days issued or guaranteed by the
Government of Canada or a Province of Canada, the United States Government or a
Canadian chartered bank, provided that each such bank obligation is rated at
least R1 (middle) by DBRS Inc. or an equivalent rating by Canadian Bond Rating
Service;
1.1.34 "GREENSHOE OPTION" has the meaning ascribed thereto in section 2.11.1
hereof;
1.1.35 "INTEREST AMOUNT" has the meaning ascribed thereto in section 2.6 hereof;
1.1.36 "INTEREST CALCULATION DATE" means the date twelve business days preceding
the relevant Interest Payment Date;
1.1.37 "INTEREST PAYMENT DATE" means each of January 31 and July 31 in each
year, beginning January 31, 2004, provided that, if any Interest Payment Date
falls on a day which is not a business day, the payment of any interest
otherwise payable on such Interest Payment Date shall be deferred to the next
business day;
1.1.38 "INTEREST ELECTION NOTICE" has the meaning ascribed thereto in section
2.8 hereof;
1.1.39 "INTEREST PERIOD" has the meaning ascribed thereto in section 2.5 hereof;
1.1.40 "INTEREST RATE" means the rate of interest, applicable both before and
after an event of default hereunder, per annum at which the Debentures will bear
interest during each Interest Period or portion thereof, equal to 5.25%;
1.1.41 "INTEREST RECORD DATE" means, with respect to any Interest Payment Date,
the close of business on January 15 and July 15, as the case may be, in respect
of the next preceding such Interest Payment Date, whether or not such day is a
business day;
1.1.42 "MATURITY DATE" means July 31, 2009;
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1.1.43 "OFFICERS' CERTIFICATE" means a certificate signed by any two of the
following officers of the Company: Chairman of the Board; President; Chief
Executive Officer; any Executive Vice-President; Secretary; or Treasurer;
1.1.44 "PERSON" means any individual, corporation, company, partnership,
joint-stock company, association, joint venture, trust, unincorporated
association, government or governmental authority;
1.1.45 "REDEMPTION DATE" has the meaning ascribed thereto in section 3.4 hereof;
1.1.46 "REDEMPTION NOTICE" has the meaning ascribed thereto in section 3.4
hereof;
1.1.47 "REDEMPTION PRICE" means in respect of a Debenture, the principal amount
thereof, plus accrued but unpaid interest thereon to but excluding the
Redemption Date;
1.1.48 "SECURITIES ACT" means the Securities Act, R.S.O. 1990, c.S.5, as amended
from time to time, and the rules and regulations made thereunder, also as
amended from time to time, or any federal or Ontario statute enacted in
substitution therefor;
1.1.49 "SENIOR INDEBTEDNESS" means (1) all indebtedness secured by a lien or
other encumbrance; (2) all other indebtedness including, monetary obligations
under credit facilities, with any bank, insurance company, investment funds,
credit union or other financial institution; (3) any interest rate agreement or
currency agreement; (4) indebtedness specifically incurred for the development
of a particular mineral property with or without recourse to the Company; (5)
all obligations to reimburse any bank or other person in respect of amounts paid
under letters of credit, acceptances or other similar instruments; (6) all trade
and other accounts payable for goods, materials or services purchased in the
ordinary course of business; and (7) all other indebtedness of the Company
unless, in the case of any particular indebtedness, the instrument creating or
evidencing the same expressly provides that such indebtedness shall not be
senior in right of payment to the Debentures; but shall not include (A) any
indebtedness to the extent incurred in violation of any covenant under this
indenture; (B) any liability for foreign, federal, provincial or local taxes,
subject to applicable law; (C) indebtedness that is subordinate or junior in
right of payment to the Debentures; (D) any indebtedness to any employee,
officer or director of the Company or any of its Subsidiaries, subject to
applicable law; and (E) the Debentures;
1.1.50 "SENIOR INDEBTEDNESS DOCUMENTS" has the meaning ascribed thereto in
section 6.7 hereof;
1.1.51 "SHARE DELIVERY DATE" means the date no more than 90 days and not less
than one business day prior to an Interest Payment Date upon which Common Shares
are delivered by the Company for purchase pursuant to an Interest Election
Notice;
1.1.52 "SHARE ELECTION AMOUNT" means an amount of aggregate proceeds, based on
the bids obtained pursuant to subsection 2.8.2 hereof, arising from the sale of
Common Shares on a Share Delivery Date equal to the Interest Amount payable
pursuant to the Interest Payment Election on such date, less any amount
attributable to any fractional Common Share;
1.1.53 "SIGNIFICANT SUBSIDIARY" means any of the Company's "significant
subsidiaries" as that term is defined in Rule 1-02 of Regulation S-X under the
U.S. Securities Act of 1933, as amended, or any group of two or more
subsidiaries that, taken as a whole, would constitute a "significant subsidiary"
of the Company;
1.1.54 "SUBSIDIARY" means any corporation of which the Company at the time owns
or controls, directly or indirectly, Capital Stock having voting power under
ordinary circumstances to elect a majority of
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the board of directors of such corporation (irrespective of whether or not at
the time shares of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency);
1.1.55 "THIS INDENTURE", "HERETO", "HEREIN", "HEREBY", "HEREUNDER", "HEREOF",
and similar expressions refer to this instrument and not to any particular
Article, section, subsection, or other portion hereof, and include any and every
instrument supplemental or ancillary hereto or required to implement this
instrument and the form of Debenture;
1.1.56 "TIA" means the Trust Indenture Act of 1939, as amended or re-enacted
from time to time;
1.1.57 "TRADING DAY" means, with respect to the Nasdaq National Market or other
market or stock exchange for securities on which the Common Shares are listed or
quoted, any day on which such market or exchange is open for trading or
quotation;
1.1.58 "TRUST INDENTURE LEGISLATION" means, at any time, (i) the provisions of
the Company Act (British Columbia) and the regulations thereunder as amended or
re-enacted from time to time, (ii) the provisions of any other applicable
statute of Canada or any province thereof and (iii) the TIA and regulations
thereunder, but only to the extent applicable under Rule 4d-9 under the TIA, in
each case, relating to trust indentures and to the rights, duties, and
obligations of the Trustee under trust indentures and of corporations issuing
debt obligations under trust indentures to the extent that such provisions are
at such time in force and applicable to this indenture;
1.1.59 "TRUSTEE" means the Computershare Trust Company of Canada or its
successor or successors appointed from time to time as trustee hereunder;
1.1.60 "UNITED STATES" means the United States of America, its territories and
possessions, any state of the United States and the District of Columbia;
1.1.61 "VOTING SHARES" means, for any corporations, any Capital Stock having
voting power under ordinary circumstances to vote in the election of directors
of such corporation; and
1.1.62 "1934 ACT" means the United States Securities Exchange Act of 1934, as
amended.
1.2 NUMBER, GENDER AND ENTITIES. Words importing the singular number only shall
include the plural and vice versa and words importing the masculine gender shall
include the feminine gender and words importing individuals shall include firms
and corporations and vice versa.
1.3 MEANING OF "OUTSTANDING". Every Debenture certified and delivered by the
Trustee hereunder shall be deemed to be outstanding until it shall be cancelled,
converted, purchased or redeemed or delivered to the Trustee for cancellation,
conversion, acquisition or redemption or moneys and/or Common Shares, as the
case may be, for the payment thereof shall be set aside under Article 9,
provided that:
(a) Debentures which have been partially redeemed, purchased or
converted shall be deemed to be outstanding only to the extent
of the unredeemed, unpurchased or unconverted part of the
principal amount thereof;
(b) where a new Debenture has been issued in substitution for a
Debenture which has been lost, stolen or destroyed, only one
of such Debentures shall be counted for the purpose of
determining the aggregate principal amount of Debentures
outstanding;
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(c) for the purpose of any provisions of this indenture entitling
holders of outstanding Debentures to vote, sign consents,
requisitions or other instruments or take any other action
under this indenture, or to constitute a quorum of any meeting
of Debenture holders, Debentures owned directly or indirectly,
legally or equitably by the Company or by any Subsidiary,
Associate or Affiliate shall be disregarded except that:
(i) for the purpose of determining whether the Trustee
shall be protected in relying on any such vote,
consent, requisition or other instrument or action,
or the holders of Debentures present or represented
at any meeting of Debenture holders, only the
Debentures which the Trustee knows are so owned shall
be so disregarded; and
(ii) Debentures so owned which have been pledged in good
faith other than to the Company or any Subsidiary,
Associate or Affiliate shall not be so disregarded if
the pledgee shall establish to the satisfaction of
the Trustee the pledgee's right to vote such
Debentures in his or her discretion free from the
control of the Company or any Subsidiary, Associate
or Affiliate.
1.4 HEADINGS, ETC. The division of this indenture into Articles and sections,
the provision of an index and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation hereof.
1.5 APPLICABLE LAW. This indenture and the Debentures shall be governed by and
construed and enforced in accordance with the laws of the province of British
Columbia including, without limitation, the Company Act, R.S.B.C. 1996, c.62, as
amended from time to time or any British Columbia statute enacted in
substitution therefor and the laws of Canada applicable therein and shall be
treated in all respects as British Columbia contracts.
1.6 MONETARY REFERENCES. Whenever any amounts of money are referred to herein,
such amounts shall be deemed to be in lawful money of the United States of
America unless otherwise expressed.
1.7 CALCULATION OF DATES. Unless otherwise provided, any time period required to
be calculated under this indenture shall exclude the date of the relevant event
or notice and include the last day of the period being calculated.
1.8 SCHEDULES. The following schedules are hereby incorporated in, and form a
part of, this indenture:
Schedule A: Specimen Debenture Certificate
Schedule B: Form of Redemption Notice
Schedule C: Form of Maturity Notice
Schedule D: Form of Notice of Conversion
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ARTICLE 2
THE DEBENTURES
2.1 ISSUE OF DEBENTURES. The aggregate principal amount of the Debentures which
may be authorized hereunder is limited to an aggregate principal amount of
$75,000,000 plus, in the event of exercise of the Greenshoe Option as
contemplated in section 2.11 hereof, up to a further aggregate principal amount
of $11,250,000. The Debentures may be issued only upon and subject to the
further conditions and limitations herein set forth. All Debentures now or
hereafter certified and issued under this indenture shall, subject to the terms
of this indenture, be equally and rateably entitled to the benefit hereof,
whatever may be the actual dates or terms of issue of the same.
2.2 TERMS OF DEBENTURES. The Debentures shall be designated as "5.25%
Convertible Unsecured Senior Subordinated Debentures". The Debentures shall be
dated as of July 30, 2003, shall mature on the Maturity Date and shall bear
interest (subject to the provisions of section 2.5), both before and after an
event of default hereunder, from July 30, 2003 at the Interest Rate, with all
accrued but unpaid interest payable in cash on the Interest Payment Dates.
2.2.1 Subject to sections 2.8 and 3.10, the principal of the Debentures and
interest thereon shall be payable in lawful money of the United States of
America by the Company to the Trustee on behalf of the Debenture holders and
subsequently by the Trustee to the Debenture holders at their registered
address.
2.3 FORMS AND SIGNATURE OF DEBENTURES.
2.3.1 The Debentures shall be issued as fully registered Debentures in
denominations of $1,000 or integral multiples thereof and the certificate of the
Trustee endorsed thereon shall be substantially in the form set forth in the
Schedule A hereto, with such insertions, omissions, substitutions or other
variations as shall be required or permitted by this indenture, and may have
imprinted or otherwise mechanically reproduced thereon such legend or legends or
endorsements, not inconsistent with the provisions of this indenture, as may be
required to comply with any law or with any rules or regulations pursuant
thereto or with any rules or regulations of any securities exchange or
securities regulatory authority or to conform with general usage, all as may be
determined by the directors or officers of the Company executing such Debenture
in accordance with subsection 2.3.3 hereof, as conclusively evidenced by their
execution of a Debenture. Notwithstanding the foregoing, a Debenture may be in
such other form or forms as may, from time to time, be approved by a resolution
of the directors or as specified in an Officers' Certificate. The Debentures
shall in addition bear such distinguishing letters and numbers as the Trustee
may approve.
2.3.2 The Debentures may be engraved or lithographed or may be partly in one
form and partly in the other, as the Company may determine.
2.3.3 The Debentures shall be signed on behalf of the Company (either manually
or by facsimile signature) by any two of the Chairman of the Board, the
President, the Chief Executive Officer, any Executive Vice-President, the
Secretary or the Treasurer of the Company holding office at the time of signing.
A facsimile signature upon any of the Debentures shall for all purposes of this
indenture be deemed to be the signature of the person whose signature it
purports to be and to have been signed at the time such facsimile signature is
reproduced and notwithstanding that any such person whose signature, either
manual or in facsimile, may appear on the Debentures is not at the date of this
indenture or at the date of execution of the Debentures or at the date of the
certifying and delivery thereof, the Chairman of the Board, the President, the
Chief Executive Officer, any Executive Vice-President, the Secretary or the
Treasurer of the Company, as the case may be, such Debentures shall be valid and
binding upon the Company and entitled to the benefits of this indenture.
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2.3.4 The Debentures shall initially be issued as Global Debentures and the
Depository for the Debentures shall initially be The Canadian Depository for
Securities Limited. The Global Debentures shall be registered in the name of The
Canadian Depository for Securities Limited (or any nominee of the Depository).
No beneficial holder will receive definitive certificates representing their
interest in Debentures except as provided in section 2.18. A Global Debenture
may be exchanged for Debentures in registered form that are not Global
Debentures, or transferred to and registered in the name of a person other than
the Depository for such Global Debentures or a nominee thereof as provided in
section 2.18.
2.4 ISSUE OF DEBENTURES. Debentures in the aggregate principal amount of
$75,000,000 in lawful money of the United States of America are hereby created
and shall forthwith be executed by the Company and delivered to the Trustee.
Upon receipt by the Trustee of an opinion of Counsel that all conditions
precedent provided for herein in respect of the issuance of the Debentures have
been met, the said $75,000,000 principal amount of Debentures shall be certified
by the Trustee and delivered to, or to the order of, the Debenture holders
pursuant to a written direction contained in an Officers' Certificate, without
the Trustee receiving any consideration therefor.
2.5 INTEREST OBLIGATIONS. Each Debenture, whether issued originally or in
exchange for another Debenture, shall bear and the Company shall pay interest
semi-annually both before and after an event of default hereunder, at the
Interest Rate from and including the date of its issuance or from and including
the last Interest Payment Date on which interest shall have been paid or made
available for payment on the outstanding Debentures, whichever shall be the
later, to, but excluding the earliest of:
(a) the next following Interest Payment Date on which interest is
paid;
(b) the Maturity Date;
(c) if called for redemption, the date fixed for redemption in the
Redemption Notice unless, upon due presentation, payment of
the principal amount of any Debenture is improperly withheld
or refused;
(d) if surrendered for conversion, the Conversion Date, unless,
upon due surrender, payment of the amounts properly due upon
conversion is improperly withheld or refused; or
(e) if presented for redemption or purchase in accordance with
Article 5, the date upon which such redemption or acquisition
is effected,
as the case may be (the "INTEREST PERIOD"); provided, however, that if any
Debentures are validly surrendered for conversion, redemption or purchase on a
date other than an Interest Payment Date, the interest payable on such
Debentures shall be the interest that would be otherwise payable (subject always
to the calculation of the appropriate Interest Period) on the next Interest
Payment Date and provided, however, that if any Debentures are surrendered for
conversion in accordance with Article 4, interest shall cease to accrue from the
Interest Payment Date next preceding the Conversion Date except as otherwise
provided in Article 4.
2.6 CERTIFICATE AS TO INTEREST PAYABLE. On each Interest Calculation Date the
Trustee shall calculate the amount of interest payable in respect of each $1,000
principal amount of the outstanding Debentures for the relevant Interest Period
(the "INTEREST AMOUNT"). The Interest Amount per $1,000 principal amount of
Debentures shall be calculated by multiplying the Interest Rate by $1,000,
dividing the product so obtained by 365 days and multiplying the quotient by the
actual number of days in the said Interest Period. Interest shall be calculated
on the basis of a 365-day year.
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2.7 PAYMENT OF INTEREST IN CASH.
2.7.1 The person in whose name any Debentures shall be registered shall be
deemed the owner thereof for all purposes of this indenture and payment of or on
account of the principal and interest on such Debentures shall be made by the
Company to the Trustee (on behalf of the Debenture holders, in aggregate) and by
the Trustee to the Debenture holder only to or upon the order in writing of such
Debenture holders and such payment shall be a good and sufficient discharge to
the Company, the Trustee, any Debenture registrar and any paying agent for the
amounts so paid.
2.7.2 Subject to section 2.8, as the interest on the Debentures becomes due
(except interest payable at maturity or on redemption, conversion or purchase
which shall be paid upon presentation and surrender of the Debentures for
payment) the Company, no later than 8:00 a.m. (Toronto time) on each Interest
Payment Date, shall deliver sufficient funds by way of money order, certified
cheque, bank draft or wire transfer to the Trustee to enable it to forward or
cause to be forwarded by prepaid post, to the holder in whose name any Debenture
is registered at the close of business on the Interest Record Date with respect
to such Interest Payment Date, at his or her last address appearing on the
appropriate register hereinafter mentioned, or in the case of joint holders, to
any (or all) holder(s) whose name appear(s) on such register, on the Interest
Payment Date (or the first business day thereafter if the Interest Payment Date
is not a business day) a cheque for such interest (less any withholding or other
tax required by law to be deducted) payable to the order of such holder or
holders and negotiable at par at any branch in Canada or the United States of
such bank or banks as may be acceptable to the Trustee in its absolute
discretion. The forwarding of such funds by the Company to the Trustee and the
subsequent delivery of such funds by the Trustee to the Debenture holders by
cheque shall satisfy and discharge the liability for the interest on the
Debentures to the extent of the sums represented thereby, plus the amount of any
withholding or other tax deducted as aforesaid, unless such cheque is not paid
at par on presentation; provided that in the event of the non-receipt of such
cheque by the Debenture holder, or the loss or destruction thereof, the Trustee
on being furnished with reasonable evidence of such non-receipt, loss or
destruction and indemnity reasonably satisfactory to it shall issue to such
Debenture holder a replacement cheque for the amount of such cheque.
Notwithstanding the foregoing, if the Company is prevented by circumstances
beyond its control (including, without limitation, any interruption in mail
service) from making payment of any interest due on each Debenture in the manner
provided above, the Company may make payment of such interest or make such
interest available for payment in any other manner acceptable to the Trustee
with the same effect as though payment had been made in the manner provided
above.
2.7.3 The holder for the time being of any Debenture shall be entitled to the
principal moneys and interest on the Debenture, free from all equities or rights
of set-off or counterclaim between the Company and the original or any
intermediate holder thereof and all persons may act accordingly and a transferee
of a Debenture shall, after the appropriate form of transfer is lodged with the
Trustee or other registrar and upon compliance with all other conditions in that
behalf required by this indenture or by any conditions contained in such
Debenture or by law, be entitled to be entered on the appropriate register or on
any one of the appropriate registers as the owner of such Debenture free from
all equities or rights of set-off or counterclaim between the Company and his or
her transferor or any previous holder thereof, save in respect of equities of
which the Company is required to take notice by statute or by order of a court
of competent jurisdiction.
2.7.4 Where Debentures are registered in more than one name the principal and
interest from time to time payable in respect thereof may be paid by cheque
payable to the order of any or all of such holders, failing written instructions
from them to the contrary, and such payment shall be a valid discharge to the
Company, the Trustee and any registrar and any paying agent.
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2.7.5 Notwithstanding paragraph 2.7.2, where Debentures are represented by a
Global Debenture, then all payments of interest on the Global Debentures shall
be made by electronic funds transferred or cheque to the Depository or its
nominee for subsequent payment to Beneficial Holders of interests in that Global
Debenture, unless the Company and the Depository otherwise agree. Should the
Company cause the Trustee to make such payment to the Depository, the Company
shall fund the Trustee in respect of such Interest Amount by wire transfer of
funds no later than 8:00 a.m. (Toronto time) on the relevant Interest Payment
Date. Should the Company instead elect to make such payment directly to the
Depository, the Company must confirm such payment forthwith by delivery of an
Officers' Certificate to the Trustee attesting to such payment. None of the
Company, the Trustee or any agent of the Trustee for any Debenture issued as a
Global Debenture will be liable or responsible to any person for any aspects of
the records related to or payments made on account of beneficial interests in
any Global Debenture or for maintaining, reviewing or supervising any records
relating to such beneficial interests.
2.8 INTEREST ELECTION NOTICE.
2.8.1 The Company may elect to pay any or all of the Interest Amount payable on
any Interest Payment Date by the application of the proceeds of sale of Common
Shares in accordance herewith (the "INTEREST PAYMENT ELECTION"). The Company may
make such election, unless an event of default has occurred and is continuing,
by providing to the Trustee, a written notice (an "INTEREST ELECTION NOTICE") no
later than the earlier of (i) the date required by applicable law or the rules
of any stock exchange on which the Debentures are then listed; or (ii) 15 days
prior to the applicable Interest Payment Date to which the Interest Election
Notice relates. The Interest Election Notice shall specify:
(a) the Interest Amount to which the election relates and the
Interest Payment Date;
(b) the amount of the payment due to the Debenture holders on the
Interest Payment Date that the Company proposes to satisfy by
the application of the proceeds of sale of Common Shares;
(c) the specific Persons from whom the Trustee shall request bids
to purchase the Common Shares and the parameters of such bids,
which may include minimum number of Common Shares, minimum
price per Common Share, timing of settlement for trades
resulting from such bids and such other matters as the Company
may specify;
(d) that the Trustee shall accept only those bids which comply
with such notice; and
(e) that such notice has been delivered to the Trustee by the time
required by this subsection 2.8.1.
In connection with the Interest Payment Election, the Trustee shall have the
power on behalf of the Company to (i) accept bids with respect to Common Shares
on behalf of the Company as the Company shall direct in its absolute discretion;
(ii) accept delivery of Common Shares from the Company required to consummate
sales contemplated by bids so accepted (and consummate such sales as the Company
shall direct in its sole discretion), plus cash in an amount equal to the value
of any fractional Common Share; (iii) at the direction of the Company and
subject to subsections 2.8.3 and 13.6.1, invest the proceeds of such sales
(together with any cash received from the Company in respect of any fractional
Common Share) in Government Obligations specified by the Company which mature
prior to the applicable Interest Payment Date and in accordance with subsection
2.8.3, and use the proceeds from the Government Obligations to pay such Interest
Amount on the Interest Payment Date; and (iv) perform any other action
necessarily incidental thereto.
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2.8.2 Upon receipt of an Interest Election Notice, the Trustee shall, in
accordance with the Interest Election Notice, deliver requests for bids on terms
determined by the Company for the sale of Common Shares to investment banks,
brokers or dealers selected by the Company in the Interest Election Notice:
provided that the acceptance of any bid shall be conditional on the acceptance
of sufficient bids to allow for the payment of such portion of the Interest
Amount that the Company intends to pay by way of sale of Common Shares. The
Interest Election Notice shall provide for, and all such bids shall be subject
to, the right of the Company, by delivering written notice to the Trustee at any
time prior to the consummation of the delivery and sale of the Common Shares on
the Share Delivery Date, to withdraw the Interest Payment Election (which shall
have the effect of withdrawing the request for bids delivered by the Trustee to
the investment banks, brokers or dealers), whereupon the Company shall be
obligated to pay in cash the Interest Amount on such Interest Payment Date,
provided that any such Interest Payment Election so withdrawn shall not relieve
the Company from delivering Common Shares to any purchaser whose bid to the
Trustee was accepted by the Trustee prior to the withdrawal of the Interest
Payment Election by the Company. Any sale of Common Shares pursuant to this
section may be made to one or more Persons whose bids are solicited, but all
such sales with respect to a particular Interest Payment Election shall take
place concurrently on the Share Delivery Date.
2.8.3 The Trustee shall inform the Company promptly following receipt of any bid
or bids for Common Shares. The Trustee shall accept such bid or bids as the
Company, in its absolute discretion, shall direct, provided that the aggregate
proceeds net of brokerage commissions or other fees of all such sales on the
Share Delivery Date must at least equal the Share Election Amount. In connection
with any bids so accepted, the Company, the Trustee and the applicable bidders
shall, not later than the Share Delivery Date, enter into a share purchase
agreement in customary form and shall comply with all applicable laws, including
the securities laws of the United States and Canada (including those of any
province), the rules and regulations of any stock exchange on which the Common
Shares are then listed and the rules and regulations of any jurisdiction in
which the Common Shares may be offered for sale. The Company shall pay all
reasonable fees and expenses of the Trustee in connection with the share
purchase agreement. The Debenture holders shall not be required to pay any fees
or expenses in connection with the share purchase agreement.
2.8.4 Provided that (i) all conditions specified in each share purchase
agreement to the closing of all sales thereunder have been satisfied, other than
the delivery of the Common Shares to be sold thereunder pursuant to the Interest
Payment Election, and (ii) the purchasers under the share purchase agreements
shall be ready, willing and able to perform thereunder, in each case on the
Share Delivery Date, the Company shall deliver to the Trustee the Common Shares
to be sold on such date, cash in an amount equal to the value of any fractional
Common Shares and an Officers' Certificate and an opinion of Counsel to the
effect that all conditions precedent to such sales, including those set forth in
this indenture and in each share purchase agreement, have been satisfied. Upon
such deliveries, the Trustee shall, on such Share Delivery Date, deliver Common
Shares to such purchasers against payment to the Trustee in immediately
available funds of the purchase price therefor in an aggregate net amount equal
to the Share Election Amount.
2.8.5 The Trustee shall use the sale proceeds of the Common Shares (together
with any cash received from the Company in respect of any fractional Common
Share) to purchase, to the extent the Trustee is able to do so, Governmental
Obligations specified by the Company, which mature prior to the applicable
Interest Payment Date and which the Trustee is required to hold until maturity.
The Trustee shall hold such Government Obligations under its exclusive control
and shall hold such investments (but not income earned thereon) in an
irrevocable trust securing payments for the benefit of the Debenture holders. On
the Interest Payment Date, the Trustee shall apply the funds to payment of the
Interest Amount to the Debenture holders of record on the applicable record date
and shall remit any amount in excess of the Interest Amount to the Company.
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2.9 COMPANY TO INDEMNIFY TRUSTEE AND DEBENTURE HOLDERS. The Company shall
indemnify and hold harmless the Trustee and (on an after-tax basis) the
Debenture holders and any person who controls any Debenture holder within the
meaning of any applicable securities laws, from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred by any such person in connection with
defending or investigating any such action or claim) caused by or arising in
connection with any Interest Payment Election or any withdrawal thereof, except
for any income taxes payable by such persons as a result of the inclusion in the
computation of their income (or in amounts paid or credited for the purposes of
Part XIII of the Income Tax Act (Canada) to such persons who are Excluded
Holders) of the Share Election Amount or sales proceeds in respect of Common
Shares, and except in each case for any losses, claims, damages or liabilities
caused by any such person's fraud, negligence or wilful misconduct.
2.10 ENTITLEMENTS PRESERVED. Neither the Company delivering an Interest Election
Notice nor the consummation of nor the failure to consummate sales of Common
Shares will (i) result in the holders of the Debentures not being entitled to
receive on the applicable Interest Payment Date cash in an aggregate amount
equal to the Interest Amount payable on such Interest Payment Date; or (ii)
entitle such holder to receive any Common Shares in satisfaction of the
Company's obligations to pay such Interest or cash in an aggregate amount
greater than the amount to which such Holders are otherwise entitled. For
greater certainty, nothing in sections 2.8, 2.9 and 2.10 shall relieve the
Company from paying the Interest Amount due on the Debentures to the extent the
net proceeds from the sale of the Common Shares pursuant to an Interest Election
Notice are less than such Interest Amount.
2.11 CREATION AND ISSUE OF ADDITIONAL DEBENTURES.
2.11.1 The directors may from time to time authorize the creation of Additional
Debentures hereunder as are necessary to satisfy the option granted by the
Company to the underwriters of the Debentures to purchase up to an aggregate
principal amount of $11,250,000 Additional Debentures for a period of thirty
days from the date hereof (the "GREENSHOE OPTION"). Additional Debentures shall
be subject to the terms and conditions of this Trust Indenture in all respects
except the date of issue and the purchase price thereof which shall be
determined by the Company at the time of issue of the Additional Debentures and,
in the case of the purchase price, shall include interest accrued from and
including July 30, 2003.
2.11.2 Before the issue of any Additional Debentures, the Company shall execute
and deliver to the Trustee a certified resolution of the directors authorizing
the same.
2.11.3 When Additional Debentures shall have been authorized as aforesaid, such
Additional Debentures may from time to time be executed by the Company and
delivered to the Trustee and, subject to subsection 2.11.4 and section 2.1,
shall be certified by or on behalf of the Trustee and delivered by the Trustee
to or upon the written order of the Company upon receipt by the Trustee of the
following:
(a) an Officers' Certificate that the Company is not in default in
the performance of any of its covenants herein contained and
that it has complied with all the requirements of this
indenture in connection with the issue of the Additional
Debentures for which certification is requested;
(b) a written request of the Company contained in an Officers'
Certificate for the certification and delivery of such
Additional Debentures; and
- 14 -
(c) an opinion of Counsel that all conditions precedent provided
for herein in connection with the proposed issue of Additional
Debentures have been complied with, subject to delivery of
certain documents or instruments specified in such opinion.
2.11.4 No Additional Debentures shall be certified or delivered hereunder if, to
the knowledge of the Trustee, an event of default referred to in section 8.1
shall have occurred and be continuing.
2.12 CERTIFICATION.
2.12.1 No Debenture shall be issued or, if issued, shall be obligatory, or shall
entitle the holder to the benefits of this indenture, until it has been
certified by or on behalf of the Trustee substantially in the form set out in
the Schedule A hereto or in some other form approved by the Trustee. Such signed
certificate on any Debenture shall be conclusive evidence that such Debenture is
duly issued, is a valid obligation of the Company and the holder is entitled to
the benefits hereof.
2.12.2 The certificate of the Trustee signed on the Debentures shall not be
construed as a representation or warranty by the Trustee as to the validity of
this indenture or of the Debentures or their issuance and the Trustee shall in
no respect be liable or answerable for the use made of such Debentures or any of
them or the proceeds thereof. The certificate of the Trustee signed on the said
Debentures shall however be a representation and warranty by the Trustee that
said Debentures have been duly certified by or on behalf of the Trustee pursuant
to the provisions of this indenture.
2.13 REGISTRATION OF DEBENTURES.
2.13.1 The Company shall cause to be kept by and at the principal office of the
Trustee in the City of Vancouver a central register, and by and at the principal
office of the Trustee in the city of Toronto and in such other place or places
and by the Trustee or by such other registrar or registrars, if any, as the
Company with the approval of the Trustee may designate, branch registers in
which shall be entered the names and latest known addresses of the Debenture
holders and the other particulars prescribed by law of the fully registered
Debentures held by them respectively and of all transfers of fully registered
Debentures. Such registration shall be noted on the Debentures by the Trustee or
other registrar. No transfer of a fully registered Debenture shall be effective
as against the Company unless made on one of the appropriate registers by the
registered holder or his, her or their executors or administrators or other
legal representatives or his, her or their attorney duly appointed by an
instrument in writing in form and execution satisfactory to the Trustee, upon
compliance with such requirements as the Trustee and/or other registrar may
prescribe, and unless such transfer shall have been duly noted on such Debenture
by the Trustee or other registrar.
2.13.2 The registers referred to in this section 2.13 shall at all reasonable
times be open for inspection by the Company, by the Trustee and by any Debenture
holder.
2.13.3 The holder of a Debenture may at any time and from time to time have such
Debenture transferred at any of the places at which a register is kept pursuant
to the provisions of this section 2.13 and in accordance with such reasonable
regulations as the Trustee may prescribe.
2.13.4 The holder of a Debenture may at any time and from time to time have the
registration of such Debenture transferred from the register in which the
registration thereof appears to another register maintained in another place
authorized for that purpose under the provisions of this indenture upon payment
of a reasonable fee to be fixed by the Trustee.
2.13.5 The register maintained by the Trustee pursuant to the terms hereof shall
be conclusive proof of the ownership of the Debentures and the Company, the
Trustee, any Debenture register and any
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paying agent or any of them shall not be charged with notice of or be bound to
see to the execution of any trust, whether express, implied or constructive, in
respect of any Debenture and may transfer any Debenture on the direction of the
holder thereof, whether named as trustee or otherwise, as though that person
were the beneficial owner thereof.
2.13.6 Except in the case of the central register required to be kept at the
City of Vancouver, the Company shall have power at any time to close any branch
register upon which the registration of any Debentures appears and in that event
it shall transfer the records thereof to another existing register or to a new
register and thereafter such Debentures shall be deemed to be registered on such
existing or new register as the case may be. In the event that the register in
any place is closed and the records transferred to a register kept in another
place, notice of such change shall be given, in the manner provided in section
12.2, to the holders of the Debentures registered in the register so closed and
in addition the particulars of such change shall be recorded in the central
register required to be kept in the City of Vancouver.
2.13.7 Every registrar shall, when requested so to do by the Company or the
Trustee, furnish the Company or the Trustee, as the case may be, with a list of
the names and addresses of the holders of Debentures showing the principal
amounts and serial numbers of such Debentures held by each holder.
2.14 MUTILATION, LOSS, THEFT OR DESTRUCTION OF DEBENTURES. In case any of the
Debentures shall become mutilated or be lost, stolen or destroyed, the Company,
in its discretion, may issue, and thereupon the Trustee shall certify and
deliver a new Debenture upon surrender and cancellation of the mutilated
Debenture, or in the case of a lost, stolen or destroyed Debenture, in lieu of
and in substitution for the same, and the substituted Debenture shall be in a
form approved by the Trustee and shall be entitled to the benefits of this
indenture equally with all other Debentures without preference or priority one
over another. In case of loss, theft or destruction the applicant for a
substituted Debenture shall furnish to the Company and to the Trustee such
evidence of such loss, theft or destruction as shall be satisfactory to them in
their discretion and shall also furnish an indemnity and surety bond
satisfactory to them in their discretion and shall pay all expenses incidental
to the issuance of such substituted Debenture.
2.15 EXCHANGES OF DEBENTURES.
2.15.1 Debentures of any denomination may be exchanged for Debentures of any
other authorized denomination or denominations, any such exchange to be for
Debentures of an equal aggregate principal amount.
2.15.2 Exchanges of Debentures may be made at the offices of the Trustee or at
the offices of any other registrar or registrars where registers are maintained
for the Debentures pursuant to the provisions of section 2.13. Any Debentures
tendered for exchange shall be surrendered to the Trustee or appropriate
registrar and shall be cancelled.
2.15.3 Debentures issued in exchange for Debentures which at the time of such
issue have been selected or called for redemption at a later date shall be
deemed to have been selected or called for redemption in the same manner and
shall have noted thereon a statement to that effect.
2.15.4 Except as herein otherwise provided, in every case of exchange of
Debentures of any denomination for other Debentures and for any transfer of
Debentures, the Trustee or other registrar may make a sufficient charge to
reimburse it for any stamp tax or other governmental charge required to be paid,
and in addition a reasonable charge for its services for each Debenture
exchanged or transferred and a reasonable charge for every Debenture issued upon
such exchange or transfer, and payment of the said charges shall be made by the
party requesting such exchange or transfer as a condition precedent thereto.
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2.15.5 Notwithstanding the foregoing provisions, no charge shall be made to a
Debenture holder hereunder for any exchange or transfer of any Debenture applied
for within a period of two months from the date hereof, provided that the
Debentures surrendered for exchange shall not have been issued as a result of
any previous exchange other than an exchange pursuant to this subsection or
sections 3.3 or 4.2.
2.15.6 Notwithstanding the provisions of sections 2.13 and 2.18, neither the
Company nor the Trustee nor any registrar shall be required to:
(a) transfer or exchange any Debentures during the periods
commencing on any Interest Record Date and ending on the next
following Interest Payment Date;
(b) transfer or exchange any Debentures on the day of any
selection by the Company or the Trustee of any Debentures to
be redeemed in accordance with Article 3 or redeemed in
accordance with Article 5 during the fifteen days next
preceding any such date; or
(c) transfer or exchange any Debentures on the date of any
selection by the Company or the Trustee of any Debentures to
be converted or during the fifteen days next preceding any
such date.
2.16 PLACE OF PAYMENT. Except as herein otherwise provided, all sums which may
at any time become payable, whether at maturity, upon conversion or on a
declaration or on redemption or otherwise, on account of any Debenture or any
interest, shall be payable at any of the places at which the principal of and
interest on such Debenture are payable.
2.17 PARTNERSHIP NOT CREATED. Each of the Company and the Trustee, on its own
behalf and on behalf of the Debenture holders, expressly disclaims any intention
to create a partnership or joint venture. Nothing in this indenture will
constitute the parties or either of them partners or joint venturers nor, except
as may be expressly provided in this indenture, constitute any one of them the
agent or agents of the other.
2.18 ISSUE OF GLOBAL DEBENTURES.
2.18.1 The Company may specify that the Debentures are to be issued in whole or
in part as one or more Global Debentures registered in the name of a Depository,
or its nominee, designated by the Company in writing to the Trustee at the time
of issue of such Debentures, which shall initially be The Canadian Depository
for Securities Limited, and in such event the Company shall execute and the
Trustee shall certify and deliver one or more Global Debentures that shall:
(a) represent an aggregate amount equal to the principal amount of
the outstanding Debentures to be represented by one or more
Global Debentures;
(b) be delivered by the Trustee to such Depository or pursuant to
such Depository's instructions; and
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(c) bear a legend substantially to the following effect:
"This Debenture is a Global Debenture within the
meaning of the indenture herein referred to and is
registered in the name of a Depository or a nominee
thereof. This Debenture may not be transferred to or
exchanged for Debentures registered in the name of
any Person, other than the Depository or a nominee
thereof and no such transfer may be registered except
in the limited circumstances described in the
indenture. Every Debenture authenticated and
delivered upon registration of, transfer of, or in
exchange for, or in lieu of, this Debenture shall be
a Global Debenture subject to the foregoing, except
in such limited circumstances described in the
indenture."
2.18.2 Each Depository designated for a Global Debenture must, at the time of
its designation and at all times while it serves as such Depository, be a
clearing agency registered or designated under the securities legislation of the
jurisdiction where the Depository has its principal offices.
2.18.3 The Company shall cause to be kept by and at the principal offices of the
Trustee in Vancouver, British Columbia and Toronto, Ontario and by the Trustee
or such other registrar as the Company, with the approval of the Trustee, may
appoint at such other place or places, if any, as the Company may designate with
the approval of the Trustee, a register in which shall be entered the name and
address of the holder of each such Global Debenture (being the Depository, or
its nominee, for such Global Debenture) as holder thereof and particulars of the
Global Debenture held by it, and of all transfers thereof. If the Debentures are
at any time not Global Debentures, the provisions of section 2.13 shall govern
with respect to registrations and transfers of such Debentures.
2.18.4 Notwithstanding any other provision of this Indenture, a Global Debenture
may not be transferred by the registered holder thereof and accordingly, no
definitive fully registered certificates shall be issued to Beneficial Holders
except in the following circumstances or as otherwise specified in a resolution
of the directors of the Company, Officers' Certificate or supplemental indenture
relating to the Debentures:
(a) Global Debentures may be transferred by a Depository to a
nominee of such Depository or by a nominee of a Depository to
such Depository or to another nominee of such Depository or by
a Depository or its nominee to a successor Depository or its
nominee;
(b) Global Debentures may be transferred at any time after the
Depository for such Global Debentures (i) has notified the
Trustee, or the Company has notified the Trustee, that it is
unwilling or unable to continue as Depository for such Global
Debentures, or (ii) ceases to be eligible to be a Depository
under subsection 2.18.2, provided that at the time of such
transfer the Company has not appointed a successor Depository
for such Global Debentures;
(c) Global Debentures may be transferred at any time after the
Company has determined, in its sole discretion, to terminate
the book-entry only registration system in respect of such
Global Debentures and has communicated such determination to
the Trustee in writing;
(d) Global Debentures may be transferred at any time after the
Trustee has determined that an event of default has occurred
and is continuing with respect to the Debentures issued as a
Global Debenture, provided that Beneficial Holders
representing, in the aggregate, not less than 25% of the
aggregate principal amount of the Debentures advise the
Depository
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in writing, through the Depository Participants, that the
continuation of the book-entry only registration system for
such Debentures is no longer in their best interest and also
provided that at the time of such transfer the Trustee has not
waived the event of default pursuant to section 8.3;
(e) Global Debentures may be transferred if required by applicable
law; or
(f) Global Debentures may be transferred if the book-entry only
registration system ceases to exist.
2.18.5 With respect to the Global Debentures, unless and until fully registered
definitive certificates have been issued to Beneficial Holders pursuant to
subsection 2.18.4:
(a) the Company and the Trustee may deal with the Depository for
all purposes (including paying interest on the Debentures) as
the sole holder of such series of Debentures and the
authorized representative of the Beneficial Holders;
(b) the rights of the Beneficial Holders shall be exercised only
through the Depository and shall be limited to those
established by law and agreements between such Beneficial
Holders and the Depository or the Depository Participants;
(c) the Depository will make book entry transfers among the
Depository Participants; and
(d) whenever this indenture requires or permits actions to be
taken based upon instructions or directions of Debenture
holders evidencing a specified percentage of the outstanding
Debentures, the Depository shall be deemed to be counted in
that percentage only to the extent that it has received
instructions to such effect from the Beneficial Holders or the
Depository Participants, and has delivered such instructions
to the Trustee.
2.18.6 Whenever a notice or other communication is required to be provided to
Debenture holders, unless and until definitive fully registered certificate(s)
have been issued to Beneficial Holders pursuant to subsection 2.18.4, the
Trustee shall provide all such notices and communications to the Depository and
the Depository shall deliver such notices and communications to such Beneficial
Holders in accordance with applicable securities laws. Upon the termination of
the book-entry only registration system on the occurrence of one of the
conditions specified in subsection 2.18.4 with respect to Debentures issued
hereunder, the Trustee shall notify all applicable Beneficial Holders, through
the Depository, of the availability of definitive Debenture certificates. Upon
surrender by the Depository of the certificate(s) representing the Global
Debentures and receipt of new registration instructions from the Depository, the
Trustee shall deliver the definitive Debenture certificates for such Debentures
to the holders thereof in accordance with the new registration instructions and
thereafter, the registration and transfer of such Debentures will be governed by
section 2.13 and the remaining sections of this Article 2.
2.19 PAYMENT OF ADDITIONAL AMOUNTS.
2.19.1 All payments made by the Company under or with respect to the Debentures
shall be made free and clear of and without deduction for or on account of any
present or future tax, duty, levy, impost, assessment or other governmental
charge imposed or levied by or on behalf of the Government of Canada or of any
province or territory thereof or by any authority or agency therein or thereof
having power to tax ("TAXES"), unless the Company is required to withhold or
deduct Taxes by law or by the interpretation or administration thereof by the
relevant government authority or agency. If the Company is so required to
withhold or deduct any amount for or on account of Taxes from any payment made
under
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or with respect to the Debentures as described above, the Company will pay as
additional interest such additional amounts ("ADDITIONAL AMOUNTS") as may be
necessary so that every net payment of any amounts due under the Debentures
(including Additional Amounts) after withholding or deduction for or on account
of any such Taxes will not be less than the amount the holder would have
received if such Taxes had not been withheld or deducted; provided that no
Additional Amounts will be payable with respect to the payment made to a holder
(an "EXCLUDED HOLDER") in respect of the beneficial owner thereof (i) with which
the Company does not deal at arm's length (within the meaning of the Income Tax
Act (Canada)) at the time of making such payment or (ii) which is subject to
such Taxes by reason of its being connected with Canada or any province or
territory thereof otherwise than by the mere holding of the Debentures or the
receipt of payment thereunder, or (iii) which fails to comply with any
administrative requirements necessary as a precondition to exemption from
Canadian withholding taxes. The Company will also make such withholding or
deduction and remit the full amount deducted or withheld to the relevant
authority in accordance with applicable law. The Company will furnish to the
Trustee on behalf of the holders of the Debentures, within 30 days after the
date the payment of any Taxes is due pursuant to applicable law, certified
copies of tax receipts or other satisfactory evidence of any such payment by the
Company. The Company will indemnify and hold harmless each holder (other than an
Excluded Holder) for the amount of (i) any Taxes so levied or imposed which have
not been withheld or deducted and remitted by the Company and which have been
paid by such holder as a result of payments made under or with respect to the
Debentures, (ii) any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto or from the failure to make such
payment, and (iii) any Taxes imposed with respect to any reimbursement under (i)
or (ii), but excluding any such Taxes on such holder's net income.
2.19.2 At least 30 days prior to each date on which any payment on the
Debentures is due and payable, if the Company will be obligated to pay
Additional Amounts with respect to such payment, the Company will deliver to the
Trustee an Officers' Certificates stating the fact that such Additional Amounts
will be payable and the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional Amounts to
holders on the payment date. Whenever in this indenture there is mention, in any
context, of the payment of principal, Redemption Price, interest or any other
amount payable under or with respect to any Debenture, such mention shall be
deemed to include mention of the payment of Additional Amounts provided for in
this section 2.19 to the extent that, in such context, such Additional Amounts
are, were or would be payable in respect thereof pursuant to the provisions of
this section 2.19 and express mention of the payment of Additional Amounts (if
applicable) in any provisions hereof shall not be construed as excluding
Additional Amounts in those provisions hereof where such express mention is not
made (as applicable).
2.19.3 The obligations of the Company under this section 2.19 shall survive the
termination of this indenture and the payments of all amounts under or with
respect to the Debentures.
ARTICLE 3
REDEMPTION AND PURCHASE FOR
CANCELLATION OF DEBENTURES
3.1 REDEMPTION OF DEBENTURES.
3.1.1 Subject to subsection 3.1.2, the Company shall have the right, at its
option, to redeem the Debentures either in whole at any time or in part from
time to time before the Maturity Date and in accordance with the provisions
hereof.
3.1.2 The Debentures shall not be redeemable by the Company at any time before
July 31, 2006, except in the event of the satisfaction of certain conditions
after a Change of Control has occurred as
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outlined herein or to the extent described in section 3.2. The Debentures shall
be redeemable on or after July 31, 2006 and prior to the Maturity Date in whole
at any time or in part from time to time at the option of the Company at a price
equal to the principal amount thereof to be redeemed, together with accrued and
unpaid interest thereon to but excluding the date fixed for redemption provided
that the Company shall have filed with the Trustee on the date that a Redemption
Notice is first delivered an Officers' Certificate certifying that the Current
Market Price at the date of the Redemption Notice was not less than 125% of the
Conversion Price.
3.2 REDEMPTION FOR CHANGES IN CANADIAN TAX LAW. In addition to the right of the
Company to redeem Debentures under sections 3.1 and 5.2, the Company shall have
the right, at its option, to redeem all but not part of the Debentures at any
time for cash upon notice as provided for in section 3.4 at the Redemption Price
in the event that the Company has become or would become obligated to pay, on
the next date on which any amount would be payable under or with respect to the
Debentures, any Additional Amounts as a result of:
(a) any change in, or amendment to (including any announced
prospective change), the laws (or any regulations promulgated
thereunder) of Canada (or any political subdivision or taxing
authority thereof or therein); or
(b) any change in, or amendment to, any interpretation or
application of such laws or regulations by any legislative
body, court, governmental agency or regulatory authority
(including the enactment of any legislation and the
publication of any judicial decision or regulatory
dissemination);
in either case, which amendment or changes enacted, promulgated, issued or
announced, or which interpretation is issued or announced, or which action is
taken, on or after July 30, 2003 provided that the Company, in its reasonable
business judgment, determines that the obligation to pay such Additional Amounts
cannot be avoided by the use of reasonable measures available to the Company
(not including the substitution of the obligor under the Debentures).
3.3 PARTIAL REDEMPTION OF DEBENTURES. In case less than all of the outstanding
Debentures are to be redeemed, the Company shall in each such case, at least ten
business days before the date upon which the Redemption Notice is required to be
given, notify the Trustee in writing of its intention to redeem Debentures and
of the aggregate principal amount of Debentures so to be redeemed. The
Debentures so to be redeemed may be selected on a pro rata basis (to the nearest
multiple of $1,000) in accordance with the principal amount of Debentures
registered in the name of each holder, by lot by the Trustee, or by such other
method that complies with the requirements of the Toronto Stock Exchange, or any
other stock exchange on which the Debentures are listed or quoted and that the
Trustee may deem equitable. For this purpose the Trustee may make regulations
with regard to the manner in which such Debentures may be so selected and
regulations so made shall be valid and binding upon all Debenture holders.
Debentures of denominations in excess of $1,000 may be selected and called for
redemption in part only (such part being $1,000 or an integral multiple thereof)
and, unless the context otherwise requires, references to Debentures in this
Article 3 shall be deemed to include any such part of the principal amount of
Debentures which shall have been so selected and called for redemption. The
holder of any Debenture called for redemption in part only, upon surrender of
such Debenture for payment as required by section 3.7, shall be entitled to
receive, without expense to such holder, one or more new Debentures for the
unredeemed part of the Debenture so surrendered, and the Trustee shall certify
and deliver such new Debenture or Debentures upon receipt from the paying agent
of the Debentures so surrendered.
3.4 REDEMPTION NOTICE. Notice of intention to redeem any Debentures (a
"REDEMPTION NOTICE") prior to the maturity thereof shall be given by or on
behalf of the Company to the holders of the
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Debentures which are to be redeemed, not more than 60 days and, subject to
subsection 3.10.2, not less than 30 days prior to the date to be fixed for
redemption (a "REDEMPTION DATE"), in the manner provided in section 12.2. The
Redemption Notice shall be substantially in the form set out in Schedule B
hereto. Every Redemption Notice shall, unless all of the Debentures then
outstanding are to be redeemed, state the designated numbers of the Debentures
so called for redemption and, in case the Debentures are to be redeemed in part
only, that part of the principal amount thereof so to be redeemed. Any
Redemption Notice shall specify the Redemption Date, the Redemption Price,
whether the Redemption Price will be paid in cash or in Common Shares in
accordance with section 3.10 hereof, the place of payment, shall state that all
interest thereon shall cease as of and after such Redemption Date, and shall
state that the right to convert the principal of the Debentures so to be
redeemed will terminate and expire at the close of business on the business day
immediately prior to the Redemption Date, unless the Company shall make default
in the payment of the Redemption Price of such Debenture.
3.5 DEBENTURES DUE ON REDEMPTION DATES.
3.5.1 Upon the provision of a Redemption Notice, all the Debentures so called
for redemption shall thereupon be and become due and payable at the Redemption
Price on the Redemption Date in the same manner and with the same effect as if
it were the Maturity Date, anything therein or herein to the contrary
notwithstanding, and from and after the Redemption Date, if the moneys necessary
to redeem such Debentures shall have been deposited as hereinafter provided and
affidavits or other proof satisfactory to the Trustee as to the mailing of such
notices shall have been lodged with it, such Debentures shall not be considered
as outstanding hereunder and interest upon such Debentures shall cease.
3.5.2 In case any question shall arise as to whether any notice has been given
as above provided and any such deposit made, such question shall be decided by
the Trustee whose decision shall be final and binding upon all parties in
interest.
3.6 DEPOSIT OF REDEMPTION MONEYS. Upon Debentures having been called for
redemption as hereinbefore provided, the Company shall deposit with the Trustee
or with any paying agent to the order of the Trustee, on or before the
Redemption Date fixed in the Redemption Notice, such sums as may be sufficient
to pay the Redemption Price of the Debentures so to be redeemed. From the sums
so deposited the Trustee shall pay or cause to be paid to the holders of such
Debentures so called for redemption, upon surrender of such Debentures, the
principal and interest to which they are entitled on redemption.
3.7 SURRENDER OF DEBENTURES FOR CANCELLATION. If the principal moneys due upon
any Debenture shall become payable by redemption or otherwise before the
Maturity Date, the registered holder presenting such Debenture for payment must
surrender the same for cancellation and the Company shall pay or cause to be
paid the principal of and interest accrued and unpaid thereon. All Debentures so
surrendered for cancellation shall forthwith be delivered to the Trustee and
shall be cancelled by it and, subject to section 3.3, no Debentures shall be
issued in substitution therefor.
3.8 PURCHASE OF DEBENTURES. At any time no event of default shall have occurred
and is continuing hereunder, the Company may purchase all or any of the
Debentures in the market (which shall include purchase from or through an
investment dealer or a firm holding membership on a recognized stock exchange)
or by tender or by private contract; provided that in the event that such an
offer is not made to all or substantially all of the Debenture holders, the
price at which any Debenture may be purchased may not exceed 105% of the then
current market price of the Debentures calculated in the same manner, mutatis
mutandis, as the Current Market Price of the Common Shares together with an
amount equal to accrued and unpaid interest thereon and costs of such purchase.
All Debentures so purchased shall forthwith be delivered to the Trustee and
shall be cancelled by it and no Debentures shall be reissued in substitution
therefor.
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3.9 REDEMPTION OF DEBENTURES ON MATURITY DATE. Subject to section 3.10, and on
the Maturity Date, the Company shall pay to the Trustee on behalf of the
Debenture holders an amount in cash equal to the principal amount of the
Debentures then outstanding plus interest accrued and unpaid thereon to but
excluding the Maturity Date. The Trustee shall pay such amount to the registered
Debenture holders presenting such Debentures for payment and the provisions of
sections 9.2 and 9.3 shall be applicable thereto.
3.10 OPTIONAL REPAYMENT UPON REDEMPTION OR MATURITY.
3.10.1 Subject to the provisions hereof, and except in the case of a redemption
pursuant to section 3.2 in which case the Redemption Price may only be paid in
cash, on any Redemption Date or the Maturity Date the Company, at its option,
may elect to satisfy all or any portion of its obligations to pay the
outstanding principal amount of the Debentures by issuing and delivering to the
Trustee on or prior to 8:30 a.m. (local time) on behalf of the holders of such
Debentures to be redeemed, that number of fully paid, non-assessable Common
Shares obtained by dividing the principal amount of Debentures to be redeemed by
95% of the then Current Market Price (provided the Company also delivers an
Officers' Certificate attesting to the then Current Market Price), and together
with the payment in cash of accrued and unpaid interest and any entitlement in
respect of fractional shares in accordance with section 4.3 and the terms
hereof, such payment shall be in full satisfaction of the principal amount
together with accrued and unpaid interest of the Debentures to be redeemed.
3.10.2 The Company shall not redeem any Debenture nor repay any principal or
interest by means of issuing, or by the application of proceeds from the sale
of, Common Shares pursuant to subsection 3.10.1, section 2.8 or Article 5 at any
time unless:
(a) no event of default is continuing hereunder and the Company
has delivered an Officers' Certificate to this effect to the
Trustee;
(b) the Common Shares are listed on either The Toronto Stock
Exchange or the Nasdaq National Market or any other stock
exchange in Canada or the United States;
(c) the Company has provided written notice to the Trustee and the
Debenture holders not more than 60 and not less than 30 days
prior to the Redemption Date or Maturity Date, as the case may
be, of its intention to redeem the Debentures by issuing and
delivering Common Shares;
(d) all applicable securities regulatory authorities' approvals in
connection with such issuance of Common Shares have been
obtained, if required, at the Company's expense that allow
such Common Shares to be immediately traded free of hold
periods or other re-sale restrictions under the applicable
securities laws where the Common Shares are distributed; and
(e) the Trustee shall have received, on behalf of the Debenture
holders, an opinion from Counsel, at the Company's expense,
that all conditions precedent provided for in this indenture
in connection with the proposed issuance and delivery of such
Common Shares have been complied with.
3.10.3 All costs associated with the issuance and delivery of Common Shares
pursuant to section 3.10.1 shall be borne exclusively by the Company.
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3.11 NO OTHER REDEMPTION OF DEBENTURES. Subject to Article 5, the Company shall
not, except as herein provided, redeem any Debentures.
ARTICLE 4
CONVERSION
4.1 CONVERSION PRIVILEGE AND CONVERSION PRICE. Subject to and upon compliance
with the provisions of this Article 4, any Debenture or any portion of the
principal amount thereof which is $1,000 or an integral multiple of $1,000 may,
at the option of the holder thereof, at any time up to, but not after, the close
of business on the last business day immediately prior to the earlier of any
date fixed for redemption and the Maturity Date, be converted into fully paid
and non-assessable Common Shares at the Conversion Rate.
4.2 CONVERSION PROCEDURE.
4.2.1 In order to exercise the conversion privilege, the holder of any Debenture
to be converted shall surrender such Debenture to the Trustee at the Trustee's
principal office in one of the cities of Toronto, or Vancouver, accompanied by
written notice substantially in the form of Schedule D hereto (which shall be
irrevocable) and the appropriate transfer documents, as required, signed by such
holder, in form and execution satisfactory to the Trustee, stating that he
elects to convert such Debenture or a stated portion of the principal amount
thereof constituting an integral multiple of $1,000 to Common Shares. Such
notice shall also state the name or names (with addresses) in which the
certificate or certificates for Common Shares which shall be issuable on such
conversion shall be issued. If any of the Common Shares to be issued hereunder
are to be issued to a person or persons other than the holder of such Debenture
such request shall be accompanied by payment to the Trustee of any tax which may
be payable by reason of the transfer. The surrender of such Debenture
accompanied by such written notice shall be deemed to constitute a contract
between the holder of such Debenture and the Company whereby:
(a) the holder of such Debenture subscribes for the number of
Common Shares which he or she shall be entitled to receive on
such conversion;
(b) the holder of such Debenture releases the Company from all
liability thereon or from all liability with respect to that
portion of the principal amount thereof to be converted, as
the case may be, including all liability for the principal
amount and accrued and unpaid interest payable to the
Conversion Date of such Debentures to be converted; and
(c) the Company agrees that the surrender of such Debenture for
conversion constitutes full payment of the subscription price
for the Common Shares issuable upon such conversion.
4.2.2 Within five business days of surrender of any Debentures to be converted,
the Company shall issue or cause to be issued and deliver or cause to be
delivered to the holder whose Debenture is so surrendered, or on his or her
written order, a certificate or certificates in the name or names of the person
or persons specified in such notice for the number of Common Shares deliverable
upon the conversion of such Debenture (or specified portion thereof) together
with cash in respect of any fraction of a share as provided in section 4.3 and
for any accrued and unpaid interest, if any, up to the Conversion Date as
provided in section 2.5 and subsection 4.2.6. Such conversion shall be deemed to
have been effected immediately prior to the close of business on the date (the
"CONVERSION DATE") such Debentures were surrendered for conversion and at such
time the rights of the holder of such Debenture as such holder shall cease and
the person or persons in whose name or names any certificate or certificates for
Common Shares shall be deliverable upon such conversion shall be deemed to have
become on such date the holder or holders of record of the Common Shares
represented thereby; provided, however, that no such surrender on any date
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when the share transfer registers for Common Shares of the Company shall be
closed shall be effective until the close of business on the next succeeding day
on which such share transfer registers are open and such conversion shall be at
the Conversion Price in effect at the close of business on such next succeeding
day.
4.2.3 Upon surrender to the Trustee of any Debenture which is to be converted in
part only, the holder thereof shall be entitled to receive, without expense to
such holder, one or more new Debentures for the unconverted portion of the
principal amount of the Debenture so surrendered.
4.2.4 Where applicable, a holder may surrender a Debenture for conversion by
means of book entry delivery in accordance with paragraph 10 of the Debenture
and the regulations of the applicable book entry facility.
4.2.5 A holder that has delivered to the Trustee a Change of Control Redemption
Notice in accordance with section 5.3 may not convert the Debentures to which
such notice relates unless such notice is withdrawn in accordance with
subsection 5.3.4.
4.2.6 No accrued and unpaid interest from the Interest Payment Date next
preceding the Conversion Date shall be payable upon a conversion, except if a
Debenture is called for redemption in accordance with Article 3 or in the case
of a Change of Control as provided in Article 5, in which case the holder will
be entitled to accrued and unpaid interest in cash up to but excluding the
Conversion Date as contemplated in section 2.5.
4.3 NO FRACTIONAL SHARES. Notwithstanding anything herein contained, the Company
shall in no case be required to issue fractional Common Shares upon the
conversion of any Debenture or pursuant to section 3.10. If any fractional
interest in a Common Share would, except for the provisions of this section 4.3,
be deliverable upon the conversion of any Debenture or pursuant to section 3.10,
the Company shall adjust such fractional interest by paying in cash to the
holder of such surrendered Debenture or the Trustee or the holder entitled to
receive Common Shares pursuant to this section or section 3.10 an amount equal
(to the nearest cent) to the value thereof on the basis of the Current Market
Price of Common Shares on the Conversion Date, Redemption Date or Maturity Date,
as the case may be.
4.4 ADJUSTMENT OF THE CONVERSION PRICE.
4.4.1 The Conversion Price shall be subject to adjustment from time to time as
follows:
(a) If and whenever at any time the outstanding Common Shares of
the Company shall be subdivided, redivided or changed into a
greater or reduced or consolidated into a lesser number of
shares or reclassified into different shares, any holder of
Debentures who has not exercised his or her right of
conversion prior to the effective date of such subdivision,
redivision, change, consolidation, reduction or
reclassification shall be entitled to receive and shall
accept, upon the exercise of such right at any time on such
effective date or thereafter, in lieu of the number of Common
Shares to which he or she was theretofore entitled upon
conversion at the Conversion Price, the aggregate number of
shares of the Company that such Debenture holder would have
been entitled to receive as a result of such subdivision,
redivision, change, consolidation or reclassification if, on
the effective date thereof, he or she had been the registered
holder of the number of Common Shares to which he or she was
theretofore entitled upon conversion.
(b) In case the Company shall fix a record date for the issuance
of additional Common Shares (or securities convertible into
Common Shares) to the holders of any of its outstanding Common
Shares by way of a stock dividend or other distribution, other
than a stock
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dividend to holders of Common Shares who exercise an option to
receive any ordinary course equivalent dividends in Common
Shares in lieu of receiving cash dividends, the Conversion
Price shall be adjusted immediately after the record date for
such stock dividend or other distribution by multiplying the
Conversion Price in effect on such record date by a fraction
of which the numerator shall be the total number of Common
Shares outstanding on the record date and of which the
denominator shall be the total number of Common Shares
outstanding on the record date plus the number of additional
Common Shares which shall result from the stock dividend or
other distribution (assuming for this purpose that all Common
Shares issuable upon the exercise of the conversion rights of
the securities convertible into Common Shares have been
issued). Any dividend or distribution on the Common Shares of
the Company in Common Shares shall be deemed to have been
issued on or immediately prior to the record date for such
dividend or distribution for the purpose of calculating the
number of outstanding Common Shares under subsections (c),
(d), (e) and (f) below.
(c) In case the Company shall fix a record date for the making of
a distribution to all holders of its Common Shares:
(i) of shares in the capital of the Company of any class
(other than the Common Shares);
(ii) of evidences of its indebtedness;
(iii) of assets (excluding cash dividends or distributions,
and dividends or distributions referred to in
subsection (b) above and stock dividends to holders
of Common Shares who exercise an option to receive in
the ordinary course equivalent dividends in Common
Shares in lieu of receiving cash dividends); or
(iv) of options, rights or warrants (excluding those
referred to in subsection (d) below),
then in each such case the Conversion Price shall be adjusted
immediately after such record date so that it shall equal the
price determined by multiplying the Conversion Price in effect
on such record date by a fraction, of which the numerator
shall be the Aggregate Market Capitalization on such record
date (not including any Common Shares issued, or issuable upon
exercise of any option, right or warrant, pursuant to such
dividend) less the fair market value (as determined by the
board of directors, whose determination shall be conclusive)
of said shares or evidences of indebtedness or assets or
options, rights or warrants so distributed, and of which the
denominator shall be the Aggregate Market Capitalization
immediately after such record date. Common Shares owned by or
held for the account of the Company shall be deemed not to be
outstanding for the purpose of any such computation. Such
adjustment shall be made successively as of any such record
date. To the extent that such distribution is not so made, the
Conversion Price shall be readjusted to the Conversion Price
which would then be in effect based upon the said shares or
evidences of indebtedness or assets or options, rights or
warrants actually distributed.
(d) In case the Company shall fix a record date for the issuance
of options, rights or warrants to all holders of its Common
Shares entitling them to subscribe for or purchase Common
Shares (or securities convertible or exchangeable into Common
Shares) within 45 days of such record date at a price per
share (or having a conversion or exchange price per share)
less than 95% of the Current Market Price of a Common Share on
such record date, the
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Conversion Price shall be adjusted immediately after the
expiry of such 45-day period so that it shall equal the price
determined by multiplying the Conversion Price in effect on
the expiry of such 45-day period by a fraction, of which the
numerator shall be the total number of Common Shares
outstanding on the expiry of such 45-day period (not including
any Common Shares outstanding as a result of such issuance)
plus a number of Common Shares equal to the number arrived at
by dividing the aggregate price of the total number of
additional Common Shares so offered (or the aggregate
conversion or exchange price of the convertible or
exchangeable securities so offered) by such Current Market
Price per Common Share and of which the denominator shall be
the total number of Common Shares outstanding on the expiry of
such 45-day period plus the total number of additional Common
Shares offered for subscription or purchase (or into which the
convertible or exchangeable securities so offered are
convertible or exchangeable, as the case may be). Common
Shares owned by or held for the account of the Company shall
be deemed not to be outstanding for the purpose of any such
computation. Such adjustment shall be made successively as of
any such record date. To the extent that such options, rights
or warrants are not so issued or such options, rights or
warrants are not exercised prior to the expiration thereof,
the Conversion Price shall be readjusted to the Conversion
Price which would then be in effect based upon the number of
Common Shares (or securities convertible or exchangeable into
Common Shares) actually delivered upon the exercise of such
options, rights or warrants.
(e) In case the Company shall pay or make a dividend or other
distribution on its Common Shares exclusively in cash and the
aggregate of:
(i) such dividend or other distribution paid exclusively
in cash; and
(ii) other all cash dividends or other distributions made
by the Company to all holders of the Common Shares
within the preceding 12 months which did not trigger
an adjustment to the Conversion Price,
exceeds 1% of the Company's Aggregate Market Capitalization
(such excess hereinafter the "EXCESS DISTRIBUTION") on the
record date in respect of the last such cash dividend or other
distribution, the Conversion Price shall be adjusted so that
the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to such record
date by a fraction, of which the denominator shall be the
Aggregate Market Capitalization on such record date and of
which the numerator shall be such Aggregate Market
Capitalization minus the amount of the Excess Distribution.
Such adjustment shall become effective immediately prior to
the opening of business on the day following such record date.
In the event the amount of the Excess Distribution is equal to
or greater than the Aggregate Market Capitalization on the
record date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each holder of Debentures
shall have the right to receive upon conversion the amount of
cash such holder would have received had such holder converted
such Debentures to Common Shares immediately prior to the
record date (less 1% of the Current Market Price multiplied by
such number Common Shares). In the event that such dividend or
distribution is not so paid or made, the Conversion Price
shall be readjusted to be the Conversion Price which would
then be in effect if such dividend or other distribution had
not been declared.
(f) In case an issuer bid or a tender or exchange offer (other
than an odd-lot offer) made by the Company or a Subsidiary for
all or any portion of the Common Shares shall expire and such
issuer bid or tender or exchange offer shall involve payment
by the Company or a
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Subsidiary of cash or other consideration (based on the
acceptance of all Common Shares validly tendered or exchanged
and not withdrawn up to any maximum specified in the terms of
the issuer bid or tender or exchange offer, such shares, up to
such maximum, the "PURCHASED SHARES") having a fair market
value (as determined in good faith by the board of directors,
whose determination shall be conclusive, binding and described
in a resolution of the board of directors) at the time (the
"EXPIRATION TIME") tenders or exchanges may be made pursuant
to such issuer bid or tender or exchange offer (as amended),
together with:
(i) any cash and the fair market value of other
consideration (as determined in good faith by the
board of directors, whose determination shall be
binding, conclusive and described in a resolution of
the board of directors) payable in respect of an
issuer bid or a tender or exchange offer by the
Company or a Subsidiary for Common Shares concluded
within the preceding twelve months which did not
trigger an adjustment to the Conversion Price, and
(ii) the aggregate amount of any all-cash dividends or
other distributions made by the Company to all
holders of Common Shares made within the twelve
months preceding such issuer bid or tender or
exchange offer which did not trigger an adjustment to
the Conversion Price,
exceeds 5% of the Aggregate Market Capitalization (such excess
hereinafter the "EXCESS BID CONSIDERATION") on the trading day
next succeeding the Expiration Time (the "NEXT TRADING Day"),
the Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion Price
in effect immediately prior to the opening of business on the
Next Trading Day by a fraction, of which the denominator shall
be the Aggregate Market Capitalization on the Next Trading Day
and of which the numerator shall be Aggregate Market
Capitalization on the Next Trading Day minus the amount of the
Excess Bid Consideration. Such adjustment shall become
effective immediately prior to the opening of business on the
Next Trading Day. In the event that no shares are validly
accepted in such issuer bid or tender or exchange offer, the
Conversion Price shall be readjusted to be the Conversion
Price which would then be in effect if such record date had
not been fixed.
(g) No adjustments of the Conversion Price shall be made pursuant
to subsections (b), (c), (d), (e) or (f) above if the holders
of Debentures are permitted (subject to satisfying all
regulatory requirements, including without limitation those of
the Toronto Stock Exchange and such other exchanges upon which
the Common Shares are listed at such time) to participate in
such dividend or distribution on the Common Shares of the
Company in cash equivalent, Common Shares or in the issue of
such options, rights, warrants or such distribution, as the
case may be, as though and to the same effect as if they had
converted their Debentures into Common Shares prior to the
record date for such dividend or distribution or the issue of
such options, rights or warrants or such distribution, as the
case may be.
(h) In any case in which this Article shall require that an
adjustment shall become effective immediately after a record
date for an event, the Company may defer until the occurrence
of such event (i) issuing to the holder of any Debenture
converted after such record date and before the occurrence of
such event the additional Common Shares issuable upon such
conversion by reason of the adjustment required by such event
over and above the Common Shares issuable upon such conversion
before giving effect to such adjustment and (ii) paying to
such holder cash in lieu of any fractional interest to which
he or she is entitled
- 28 -
pursuant to section 4.3; provided, however, that the Company
shall deliver to such holder an appropriate instrument
evidencing such holder's rights to receive such additional
Common Shares and such cash, upon the occurrence of the event
requiring such adjustment.
(i) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at
least one percent in such price; provided, however, that any
adjustments which by reason of this subsection (i) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment.
4.5 CERTIFICATE AS TO ADJUSTMENT. The Company shall from time to time
immediately after the occurrence of any event which requires an adjustment in
the Conversion Price as above provided, deliver an Officers' Certificate to the
Trustee specifying the nature of the event requiring the adjustment and the
amount of the adjustment thereby necessitated and setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based, which certificate and the amount of the adjustment therein specified
shall be verified by an opinion of the Company's Auditors and, when approved by
the Trustee, be conclusive and binding on all parties in interest. The Company
shall forthwith give notice, in the manner specified in section 12.3, of such
adjustment to the Trustee, which notice shall specify the Conversion Price after
such adjustment and the event requiring such adjustment and the Trustee,
forthwith upon receipt of such notice, shall deliver such notice to the
Debenture holders in the manner specified in section 12.2.
4.6 VOLUNTARY DECREASE. The Company from time to time may decrease the
Conversion Price (subject to applicable law and the receipt of all regulatory
approvals, including the consent of the Toronto Stock Exchange) by any amount
and for any period of time if the board of directors has determined in good
faith (to be evidenced by a resolution of the board of directors) that such
decrease is in the Company's best interests; provided that such period is not
less than 20 business days. Whenever the Conversion Price is decreased, the
Company shall file with the Trustee a notice of the decrease, and the Trustee
shall mail such notice to Debenture holders, at the Company's expense. The
Company shall file the notice at least 15 days before the date the decreased
Conversion Price becomes effective. A voluntary decrease of the Conversion Price
does not change or adjust the Conversion Price otherwise in effect for the
purposes of section 4.4.
4.7 NOTICE TO DEBENTURE HOLDERS OF CERTAIN EVENTS. In the event that:
(a) the Company shall declare on its Common Shares any cash
dividend per share which when added to the sum of the last
four cash dividends per share paid on its Common Shares would
exceed the sum of the last four cash dividends per share by
more than 50%;
(b) the Company shall declare on its Common Shares any dividend
payable in shares of the Company (other than a stock dividend
to the holders of Common Shares who exercise an option to
receive in the ordinary course equivalent dividends in Common
Shares in lieu of receiving cash dividends) or make any other
distribution on its Common Shares (other than a cash
dividend);
(c) the Company shall offer for subscription pro rata to all the
holders of its Common Shares any additional shares of any
class of securities convertible into or exchangeable for
Common Shares or shall issue any other options, rights or
warrants to all of such holders;
(d) there shall be a reclassification or change of the Common
Shares of the nature referred to in section 4.9 or an
amalgamation, merger, plan of arrangement or other
reorganization of the
- 29 -
Company with or into any other corporation or a sale, transfer
or other disposition of all or substantially all of the assets
of the Company;
(e) the Company shall take any action that would require an
adjustment to the Conversion Price pursuant to section 4.4; or
(f) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
then, in each such case, the Company shall give notice, in the manner
specified in section 12.3, to the Trustee and the Trustee shall give
same notice to each Debenture holder in the manner specified in section
12.2, of the action which has occurred or the action proposed to be
taken, as the case may be, and the date on which (i) the books of the
Company shall close or a record shall be taken for such dividend,
distribution, subscription rights or other options, rights or warrants,
or (ii) such reclassification, change, amalgamation, merger, sale,
transfer or other disposition, dissolution, liquidation or winding-up
shall take place, as the case may be provided that the Company shall
only be required to specify in such notice such particulars of such
action as shall have been fixed and determined at the date on which
such notice is given. Such notice shall also specify the date as of
which the holders of Common Shares of record shall participate in such
dividend, distribution, subscription rights or other options, rights or
warrants, or shall be entitled to exchange their Common Shares for
securities or other property deliverable upon such reclassification,
change, amalgamation, merger, sale, transfer or other disposition,
dissolution, liquidation or winding-up as the case may be. Such written
notice shall be given, with respect to the actions described in
subsections (a) through (e) above, not less than 21 days prior to the
record date or the date on which the Company's transfer books are to be
closed with respect thereto.
4.8 RIGHT OF CONVERSION CEASES ON REDEMPTION. The right of the holder of
Debentures to convert any Debenture called for redemption pursuant to the
provisions hereof shall terminate and expire at the close of business on the
business day immediately prior to the Redemption Date, unless the Company shall
make default in the payment of the Redemption Price of such Debenture.
4.9 RECLASSIFICATIONS, REORGANIZATIONS, ETC. In case of any reclassification or
change of the Common Shares (other than a change as a result of a subdivision or
consolidation), or in case of any amalgamation of the Company with, merger of
the Company into, plan of arrangement or other reorganization with any other
corporation (other than an amalgamation, merger, plan of arrangement or other
reorganization in which the Company is the continuing corporation and which does
not result in any reclassification or change, other than as aforesaid, of the
Common Shares), or in case of any sale, transfer or other disposition of all or
substantially all of the assets of the Company, the Company or the corporation
formed by such amalgamation or the corporation into which the Company shall have
been merged or the corporation which shall have acquired such assets, as the
case may be, shall execute and deliver to the Trustee a supplemental indenture
providing that the holder of each Debenture then outstanding shall have the
right thereafter (until the expiration of the conversion right of such
Debenture) to convert such Debenture into the kind and amount of shares and
other securities and property receivable upon such reclassification, change,
amalgamation, merger, sale, transfer or other disposition by a holder of the
number of Common Shares into which such Debenture might have been converted at
the Conversion Price immediately prior to such reclassification, change,
amalgamation, merger, sale, transfer or other disposition. Such supplemental
indenture shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article. The above
provisions of this section shall similarly apply to successive
reclassifications, changes, amalgamations, mergers, sales, transfers or other
dispositions.
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4.10 OVERRIDING LIMITATION ON CONVERSION RIGHT. Notwithstanding the provisions
of sections 4.4 and 4.9, if any of the events referred to in such sections occur
prior to July 30, 2008:
(a) and, as a result of which, holders of Common Shares would be
entitled to receive any stock, other securities or other
property or assets (including cash) other than securities
prescribed for purposes of section 212(1)(b)(vii)(E) of the
Income Tax Act (Canada) ("PRESCRIBED SECURITIES") with respect
to or in exchange for such Common Shares (other than any such
event (a "CASH-OUT TRANSACTION") in which all or substantially
all of the Common Shares are exchanged for (x) cash or (y)
securities which are redeemable for cash within 60 days of
their issue or (z) any combination of (x) and (y)) then the
Company or the successor, as the case may be, shall execute
with the Trustee a supplemental indenture providing that in
respect of any Debentures surrendered for conversion following
such event and prior to July 30, 2008, the Debentures shall be
convertible into the Prescribed Securities of a type specified
by the board of directors and identified in the supplemental
indenture referred to in clause (c) below and the Conversion
Price shall be adjusted so that the kind and amount of
Prescribed Securities into which each Debenture is convertible
immediately following such event shall be equivalent in value
(as determined by the board of directors whose determination
shall be conclusive and binding) to the value of the property
a holder of the Debenture would have been entitled to receive
had the holder converted the Debenture to Common Shares
immediately prior to such event and, in the circumstances
contemplated by this section 4.10, no holder shall have the
right upon the surrender of Debentures for conversion prior to
July 30, 2008 to the property which holders of Common Shares
shall be entitled to receive as a result of such event;
(b) if the event is a Cash-Out Transaction, then without any
further act or formality, the Debentures shall cease to be
convertible from the effective time of the Cash-Out
Transaction. Nothing in this section 4.10 shall limit the
right of a holder of a Debenture to surrender the Debenture
for conversion pursuant to the terms of this indenture prior
to the effective time of a Cash-Out Transaction or to tender
the Debenture to a Change of Control Notice pursuant to the
terms of this indenture; and
(c) where paragraph 4.10(a) applies, the Trustee and the Company
shall, subject to subsection 14.1.1, execute a supplemental
indenture modifying the provisions of this indenture relating
to the conversion rights applicable to the Debentures
following such event, including without limitation, the
applicable provisions of this Article and the definition of
Common Shares and such other related definitions set forth
herein as determined in good faith by the Company (which
determination shall be conclusive and binding), and to make
such provisions apply in the event of a subsequent event
similar to the event described above to the Prescribed
Securities and the issuer thereof if different from the
Company and the Common Shares (in lieu of the Company and
Common Shares).
4.11 CANCELLATION OF DEBENTURES. All Debentures surrendered for conversion shall
be cancelled by the Trustee and, subject to section 4.2, no Debentures shall be
issued in substitution therefor.
ARTICLE 5
CHANGE OF CONTROL
5.1 CHANGE OF CONTROL OFFER. Within 35 days following the occurrence of a Change
of Control, and subject to the provisions and conditions of this Article 5, the
Company shall be obligated to offer to redeem for cash all the then outstanding
Debentures at a price equal to the sum of:
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(a) 101% of the principal amount thereof (the "OFFER PRICE") plus
accrued and unpaid interest, if any, on such Debentures up to,
but excluding, the date of redemption of such Debentures by
the Company or an Affiliate of the Company; and
(b) in the event the Change of Control occurs on or before July
31, 2006, the present value of any additional amount of
interest which would have accrued and been paid on the
Debentures if the Debentures were outstanding until July 31,
2006;
(collectively, the "TOTAL OFFER PRICE") which Offer shall, unless otherwise
provided under applicable securities laws, be open for acceptance thereof for a
period of not less than 35 days and not more than 60 days and shall provide for
payment to all Debenture holders who accept the Offer not later than the 60th
day after the making of the Offer. The present value of the amount of interest
that would have accrued and been paid on the Debentures will be computed using a
discount rate equal to the US Treasury Yield. The "US TREASURY YIELD" means the
yield to maturity (as published by the Federal Reserve, or any other publicly
available source for such market data, at the time of computation) of US
Treasury securities with a constant maturity equal to the then remaining term to
July 31, 2006, provided, however, that if the then remaining term to July 31,
2006 is not equal to the constant maturity of a US Treasury security for which a
yield to maturity is available, the US Treasury Yield shall be obtained by
linear interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of US Treasury securities for which such yields are given,
except that if the then remaining term to July 31, 2006 is less than one year,
the weekly average yield on US Treasury securities adjusted to a constant
maturity of one year shall be used.
5.2 CHANGE OF CONTROL.
5.2.1 Within 35 days following the occurrence of a Change of Control, the
Company shall deliver to the Trustee, in the manner provided in section 12.3,
and the Trustee shall promptly deliver to the holders of the Debentures, in the
manner provided in section 12.2, a notice stating that there has been a Change
of Control and specifying the circumstances surrounding such event (a "CHANGE OF
CONTROL NOTICE") together with an offer in writing (the "OFFER") to redeem for
cash or Common Shares (in accordance with the provisions of section 3.10,
mutatis mutandis) at the Total Offer Price all the then outstanding Debentures
made in accordance with the requirements of applicable securities laws.
5.2.2 Upon receipt of the Offer, the Trustee shall mail a copy of the Offer to
each holder (and to beneficial owners known to the Trustee to the extent
required by applicable law). The Trustee shall be under no obligation to
ascertain the occurrence of a Change of Control or to give notice with respect
thereto other than as provided above upon receipt of an Offer from the Company.
The Trustee may conclusively assume, in the absence of receipt of an Offer from
the Company, that no Change of Control has occurred.
5.2.3 The Offer shall include a form of Change of Control Redemption Notice
(defined below) to be completed by the holder and shall state:
(a) the date such Change of Control is deemed to have occurred and
briefly the events causing a Change of Control;
(b) that the Offer is being made pursuant to this section 5.2 and
that all Debentures properly tendered for redemption pursuant
to the Offer will be accepted for payment;
(c) the last date by which the Change of Control Redemption Notice
pursuant to this section 5.2 must be given;
(d) the date of expiry of the Offer;
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(e) the Total Offer Price on a per Debenture basis and what
portion thereof, if any, shall be paid in Common Shares;
(f) that Debentures in respect of which a Change of Control
Redemption Notice has been given by the holder may be
converted into Common Shares at any time prior to the close of
business on the expiry of the Offer only if the applicable
Change of Control Redemption Notice has been withdrawn in
accordance with the terms of this indenture;
(g) the procedures for withdrawing a Change of Control Redemption
Notice;
(h) that Debentures must be surrendered to the Trustee, or a
specified paying agent at the office of the Trustee, or the
specified paying agent in order to collect payment or the
procedures to be followed in accordance with book entry
delivery, if applicable;
(i) that the Total Offer Price for any Debenture as to which a
Change of Control Redemption Notice has been duly given and
not withdrawn will be paid on the business day following the
expiry of the Offer or, if such Debenture is not surrendered
on the expiry of the Offer, as promptly as practicable after
surrender of such Debenture;
(j) the procedures the holder must follow to accept the Offer;
(k) briefly, the conversion rights of the Debentures;
(l) the Conversion Price and any adjustments thereto; and
(m) that holders who want to convert Debentures must satisfy the
requirements set forth in paragraph 10 of the Debentures.
5.3 CHANGE OF CONTROL REDEMPTION NOTICE.
5.3.1 A holder may accept an Offer by delivering to the Trustee, or a specified
paying agent at the office of the Trustee or the specified paying agent, a
written notice (a "CHANGE OF CONTROL REDEMPTION NOTICE") at any time prior to
the close of business on the expiry of the Offer stating: that such holder
elects to have a Debenture tendered for redemption pursuant to the Offer; the
principal amount of the Debenture that the holder elects to have redeemed by the
Company, which amount must be $1,000 or an integral multiple thereof, and the
certificate numbers of the Debentures to be delivered by such holder for
redemption by the Company; and that such Debenture shall be redeemed on the
expiry date of the Offer pursuant to the terms and conditions specified in this
indenture and in paragraph 9 of the Debentures.
5.3.2 The delivery of such Debenture (together with all necessary endorsements)
to the Trustee or a specified paying agent at the office of the Trustee or the
specified paying agent prior to, on or after the expiry date of the Offer shall
be a condition to the receipt by the holder of the Total Offer Price therefor;
provided that such Total Offer Price shall be so paid pursuant to this section
5.3 only if the Debenture so delivered to the Trustee or to a specified paying
agent shall conform in all respects to the description thereof set forth in the
related Change of Control Redemption Notice.
5.3.3 The Company shall redeem from the holder thereof, pursuant to this section
5.3, a portion of a Debenture if the principal amount of such portion is $1,000
or an integral multiple of $1,000. Provisions of this indenture that apply to
the redemption of all of a Debenture also apply to the redemption of a portion
of such Debenture. Any redemption by the Company contemplated pursuant to
- 33 -
the provisions of this section 5.3 shall be consummated by the delivery of the
consideration to be received by the holder on the business day following the
date of expiry of the Offer or, if such Debenture is not surrendered on the date
of expiry of the Offer, as promptly as practicable after the surrender of the
Debenture by the holder to the Trustee or a specified paying agent in the manner
required by this section 5.3.
5.3.4 Notwithstanding anything herein to the contrary, any holder delivering to
the Trustee or a specified paying agent at the office of the Trustee or the
specified paying agent the Change of Control Redemption Notice contemplated in
this section 5.3 shall have the right to withdraw such Change of Control
Redemption Notice at any time prior to the close of business on the date of
expiry of the Offer by delivery of a written notice of withdrawal to the Trustee
or a specified paying agent in accordance with section 5.4. The Trustee shall
promptly notify the Company of the receipt by the former of any Change of
Control Redemption Notice or written notice of withdrawal thereof.
5.4 EFFECT OF CHANGE OF CONTROL REDEMPTION NOTICE.
5.4.1 Upon receipt by the Company of the Change of Control Redemption Notice
specified in section 5.3, the holder of the Debenture in respect of which such
Change of Control Redemption Notice was given shall (unless such Change of
Control Redemption Notice is withdrawn as specified in subsections 5.4.2 or
5.4.3) thereafter be entitled to receive solely the Total Offer Price (whether
in cash, Common Shares or a combination of the foregoing as offered by the
Company) with respect to such Debenture, plus, if such amount is not paid when
due, interest on the overdue amount. Such Total Offer Price shall be paid to
such holder (a) on the business day following the date of expiry of the Offer
with respect to such Debenture (provided the conditions in section 5.2 have been
satisfied) or (b) if such Debenture is not surrendered on the date of expiry of
the Offer, as promptly as practicable after such Debenture is surrendered to the
Trustee or a specified paying agent at the office of the Trustee or the
specified paying agent by the holder thereof in the manner required by section
5.2. Debentures in respect of which a Change of Control Redemption Notice has
been given by the holder thereof may not be converted into Common Shares on or
after the date of the delivery of such Change of Control Redemption Notice
unless such Change of Control Redemption Notice has first been validly withdrawn
as specified in subsection 5.4.3.
5.4.2 If on the business day following the date of expiry of the Offer the
Trustee or any specified paying agent holds money and/or Common Shares
sufficient to pay the Total Offer Price for a Debenture in respect of which a
Change of Control Redemption Notice has been delivered as specified in section
5.2, then after the date of expiry of the Offer such Debenture shall cease to be
outstanding, interest on such Debenture shall cease to accrue and the principal
amount of the Debenture and the amount of accrued and unpaid interest thereon
to, but excluding the date of expiry of the Offer, will be fully satisfied
whether or not such Debenture is delivered to the Trustee or the specified
paying agent, and all other rights of the holder shall terminate (other than the
right to receive the Total Offer Price in accordance with this section 5.4).
5.4.3 A Change of Control Redemption Notice may be withdrawn before or after
delivery by the holder to the Trustee or a specified paying agent at the office
of the Trustee or the specified paying agent of the Debenture to which such
Change of Control Redemption Notice relates, by means of a written notice of
withdrawal delivered by the holder to the Trustee or the specified paying agent
at the office of the Trustee or the specified paying agent to which the related
Change of Control Redemption Notice was delivered at any time prior the close of
business on the date of expiry of the Offer specifying, as applicable:
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(a) the certificate number of the Debenture in respect of which
such notice of withdrawal is being submitted;
(b) the principal amount of the Debenture (which shall be $1,000
or an integral multiple thereof) with respect to which such
notice of withdrawal is being submitted; and
(c) the principal amount, if any, of such Debenture (which shall
be $1,000 or an integral multiple thereof) that remains
subject to the original Change of Control Redemption Notice
and that has been or will be delivered for redemption by the
Company.
5.4.4 There shall be no redemption of any Debentures pursuant to section 5.1 if
there has occurred (prior to, on or after, as the case may be, the giving by the
holders of such Debentures of the required Change of Control Redemption Notice)
and is continuing an event of default. The Trustee or the specified paying agent
will promptly return to the respective holders thereof any Debentures (i) with
respect to which a Change of Control Redemption Notice has been withdrawn in
compliance with this indenture, or (ii) held by it during the continuance of an
event of default.
5.5 THIRD PARTY MAY SATISFY.
The obligations of the Company arising upon a Change of Control will be
satisfied if a third party makes and consummates an Offer in the manner and at
the times and otherwise in compliance with this Article 5 provided that the
payment obligations of the Company hereunder may only be satisfied by Common
Shares of the Company, cash or a combination of the foregoing.
5.6 90% REDEMPTION RIGHT.
5.6.1 If 90% or more in aggregate principal amount of Debentures outstanding on
the date the Company provides the Change of Control Notice and Offer to holders
of the Debentures have been tendered for redemption pursuant to the Offer on the
expiration thereof, the Company has the right and obligation upon written notice
provided to the Trustee in the manner provided in section 12.3 within 10 days
following the expiration of the Offer, to redeem and shall redeem all the
Debentures remaining outstanding on the expiration of the Offer at the Total
Offer Price (the "90% REDEMPTION RIGHT").
5.6.2 Upon receipt of notice that the Company has exercised or is exercising the
90% Redemption Right and is acquiring the remaining Debentures, the Trustee
shall promptly provide written notice in the manner provided in section 12.2 to
each Debenture holder that did not previously accept the Offer that:
(a) the Company has exercised the 90% Redemption Right and is
redeeming all outstanding Debentures effective on the expiry
of the Offer at the Total Offer Price, and shall include a
calculation of the amount and type of consideration payable to
such holder as payment of the Total Offer Price;
(b) each such holder must transfer their Debentures to the Trustee
on the same terms as those holders that accepted the Offer and
must send their respective Debentures, duly endorsed for
transfer, to the Trustee within 10 days after the sending of
such notice; and
(c) the rights of such holder under the terms of the Debentures
and this Indenture cease effective as of the date of expiry of
the Offer provided the Company has, on or before the time of
notifying the Trustee of the exercise of the 90% Redemption
Right, paid or deposited the Total Offer Price to, or to the
order of, the Trustee and thereafter the
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Debentures shall not be considered to be outstanding and the
holder shall not have any right except to receive such
holder's Total Offer Price upon surrender and delivery of such
holder's Debentures in accordance with the Indenture.
5.7 DEPOSIT OF TOTAL OFFER PRICE. The Company shall, on or before the business
day immediately prior to the expiry of the Offer, deposit with the Trustee or
any paying agent to the order of the Trustee, such cash and/or Common Shares as
may be sufficient to pay the Total Offer Price of the Debentures to be redeemed
by the Company on the expiry of the Offer. From the consideration so deposited,
the Trustee shall pay or transfer or cause to be paid or transferred to the
registered holders of such Debentures, upon surrender of such Debentures, the
Total Offer Price to which they are entitled on the Company's redemption and the
provisions of sections 9.2 and 9.3 shall be applicable thereto, mutatis
mutandis.
5.8 REDEMPTION IN PART. In the event that one or more of such Debentures being
redeemed in accordance with this Article 5 becomes subject to redemption in part
only, upon surrender of such Debentures for payment of the Total Offer Price,
the Company shall execute and the Trustee shall certify and deliver without
charge to the holder thereof or upon the holder's order one or more new
Debentures for the portion of the principal amount of the Debentures not
redeemed upon receipt of the Debentures so surrendered.
5.9 DEBENTURES DUE ON EXPIRY OF OFFER.
5.9.1 Debentures for which holders have accepted the Offer and Debentures which
the Company has elected to redeem in accordance with this Article 5 shall become
due and payable at the Total Offer Price on the date of expiry of the Offer, in
the same manner and with the same effect as if it were the Maturity Date,
anything therein or herein to the contrary notwithstanding, and from and after
such date of expiry of the Offer, if the moneys and/or Common Shares necessary
to redeem the Debentures shall have been deposited as provided in this Article 5
and affidavits or other proof satisfactory to the Trustee as to the publication
and/or mailing of such notices shall have been lodged with it, such Debentures
shall not be considered as outstanding hereunder and interest upon such
Debentures shall cease.
5.9.2 In case any question shall arise as to whether any notice has been given
as above provided and any such deposit made, such question shall be decided by
the Trustee whose decision shall be final and binding upon all parties in
interest.
5.10 COVENANT TO COMPLY WITH SECURITIES LAWS UPON REDEMPTION OF DEBENTURES. In
connection with any Offer to redeem Debentures under section 5.1 hereof
(provided that such offer constitutes an "issuer tender offer" for purposes of
Rule 13e-4 (which term, as used herein, included any successor provision
thereto) under the 1934 Act at the time of such offer or purchase) the Company
shall (i) comply with Rule 13e-4 under the 1934 Act, if applicable, and (ii)
file the related Schedule 13E-4 or 13E-4F (or any successor schedule, form or
report) under the 1934 Act, if required. In addition, the Company shall
otherwise comply with all applicable Canadian and United States federal,
provincial and state securities laws so as to permit the rights and obligations
under sections 5.1, 5.2 and 5.3 to be exercised to the greatest extent
practicable in the time and in the manner specified in sections 5.1, 5.2 and
5.3.
5.11 CANCELLATION OF DEBENTURES. Subject to the provisions above related to
Debentures purchased in part, all Debentures redeemed and paid under this
Article 5 shall forthwith be delivered to the Trustee and be cancelled and no
Debentures shall be issued in substitution therefor.
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ARTICLE 6
SUBORDINATION OF DEBENTURES
6.1 SUBORDINATION OF DEBENTURES. The Debenture Indebtedness shall for all
purposes be, and shall at all times remain, inferior, junior and subordinate to
the Senior Indebtedness and shall rank at least pari passu with all other
present or future unsecured indebtedness of the Company. By the acceptance of a
Debenture, each Debenture holder agrees that the Debenture Indebtedness is
hereby expressly postponed and subordinated to the extent and in the manner
hereinafter set forth in right of payment to the prior payment of the Senior
Indebtedness, except to the extent that payments are permitted pursuant to
section 6.6.
6.2 DEFINITION. For purposes of this Article, the words "CASH, PROPERTY OR
SECURITIES" shall be deemed not to include shares of the Company as reorganized
or readjusted, or securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment the payment of which is
subordinated at least to the extent provided in this Article with respect to the
Debentures to the payment of all Senior Indebtedness which may at the time be
outstanding, provided that the Senior Indebtedness is assumed by the new
corporation, if any, resulting from any such reorganization or readjustment and
provided further that the rights of the holders of the Senior Indebtedness are
not, without the consent of such holders, altered by such reorganization or
readjustment.
6.3 EFFECT OF DISSOLUTION, WINDING-UP, LIQUIDATION OR REORGANIZATION.
6.3.1 In the event of any insolvency, bankruptcy, liquidation, reorganization or
other similar proceedings, or any receivership proceedings in connection
therewith, relative to the Company and in the event of any proceedings for
involuntary liquidation, dissolution or other winding-up of the Company, whether
or not involving insolvency or bankruptcy proceedings, then all Senior
Indebtedness shall first be paid in full in cash before any payment of or on
account of any Debenture Indebtedness is made by the Company.
6.3.2 Upon any distribution of assets of the Company on any dissolution,
winding-up, liquidation, bankruptcy, insolvency or receivership (or other
marshalling of assets of the Company equivalent thereto) of the Company:
(a) the holders of all Senior Indebtedness shall be entitled to
receive payment in full of the Senior Indebtedness before the
Debenture holders (or the Trustee on behalf of the Debenture
holders) are entitled to receive any payment in respect of the
Debenture Indebtedness; and
(b) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to
which the Debenture holders (or the Trustee on behalf of the
Debenture holders) would be entitled, except for the
provisions of this Article, shall be paid by the person making
such payment or distribution (whether a trustee in bankruptcy,
a receiver or receiver-manager or liquidating trustee or
otherwise) directly to the holders of Senior Indebtedness or
their representative or representatives or to the trustee or
trustees under any indenture under which any instruments
evidencing any such Senior Indebtedness may have been issued,
as their respective interest may appear, to the extent
necessary to pay in full in cash all Senior Indebtedness
remaining unpaid after giving effect to any concurrent payment
or distribution to the holders of such Senior Indebtedness.
6.3.3 In the event that any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, contemplated by
this section 6.3 shall be received by the
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Trustee or the Debenture holders on account of the Debenture Indebtedness before
all Senior Indebtedness is paid in full in cash, such payment or distribution
shall be received and held in trust for the benefit of and shall be paid over to
the holders of such Senior Indebtedness or their representative or
representatives or to the trustee or trustees under the relevant Senior
Indebtedness Documents, may have been issued, as their respective interests may
appear, forthwith for application to the payment of all Senior Indebtedness
remaining unpaid until all such Senior Indebtedness shall have been paid in full
after giving effect to any concurrent payment or distribution to the holders of
such Senior Indebtedness.
6.3.4 Upon any distribution of assets of the Company referred to in this
Article, the Trustee and the Debenture holders shall be entitled to rely upon a
certificate of the liquidation trustee or agent or other person making any
distribution to the Trustee or to the holders of the Debentures for the purpose
of ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon, the amount paid or distributed thereon and
all other facts pertinent thereto or to this Article; provided, however, that if
no such liquidation trustee has been appointed or such liquidation trustee has
not issued such a certificate, the Trustee, the Debenture holders or both of
them may pay any such funds received by them into court without attracting any
liability whatsoever for such actions.
6.4 SUBROGATION OF DEBENTURES. Subject to the payment in full of all Senior
Indebtedness, the rights of the Trustee and Debenture holders shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of assets of the Company applicable to the Senior
Indebtedness, to the extent of the application thereto of moneys or other assets
which would have been received by the holders of Debentures but for the
provisions of this Article, until the Debentures shall be paid in full and no
such payment or distribution, as between the Company, its creditors other than
the holders of Senior Indebtedness, and the Debenture holders, shall be deemed
to be a payment by the Company to or for the account of the holders of Senior
Indebtedness, it being understood that the provisions of this Article are, and
are intended, solely for the purpose of defining the relative rights of the
holders of the Debentures, on the one hand, and the holders of the Senior
Indebtedness, on the other hand. Nothing contained in this Article or elsewhere
in this Trust Indenture or in the Debentures is intended to or shall impair, as
between the Company and its creditors (other than the holders of Senior
Indebtedness and the Debenture holders), the obligation of the Company, which is
unconditional and absolute, to pay to the holders of the Debentures the
Debenture Indebtedness as and when the same shall become due and payable in
accordance with their terms, or to affect the relative rights of the holders of
the Debentures and creditors of the Company other than the holders of Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or any
Debenture holder from exercising all remedies otherwise permitted by applicable
law upon default under this Trust Indenture, subject to the rights, if any,
under this Article, of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
6.5 NO PAYMENT TO DEBENTURE HOLDERS IF SENIOR INDEBTEDNESS DUE OR IN DEFAULT.
6.5.1 Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise, then (except as hereinafter in subsections 6.6.1(b)
and 6.6.2 otherwise provided) all such matured Senior Indebtedness shall first
be paid in full, or provisions for such payment shall first have been made,
before any payment on account of the Debenture Indebtedness is made.
6.5.2 Upon the happening of an event of default with respect to any Senior
Indebtedness, as defined therein or in the relevant Senior Indebtedness
Documents, under which the holders have accelerated the maturity thereof, then,
unless and until such event of default shall have been cured or waived or shall
have ceased to exist, and except as otherwise provided in subsections 6.6.1(b)
and 6.6.2, no payment (by purchase of Debentures or otherwise) shall be made by
the Company with respect to the Debenture
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Indebtedness. In the event that, notwithstanding the foregoing, the Company
shall make any payment on the Debenture Indebtedness then, except as hereinafter
in subsections 6.6.1(b) and 6.6.2 otherwise provided, unless and until such
event of default shall have been cured or waived or shall have ceased to exist,
such payments shall be held in trust for the benefit of, and, if and when such
Senior Indebtedness shall have, become due and payable, shall be paid over to,
the holders of the Senior Indebtedness or their representative or
representatives or to the trustee or trustees under the relevant Senior
Indebtedness Documents, as their respective interest may appear, for application
to the payment of all Senior Indebtedness remaining unpaid until all such Senior
Indebtedness shall have been paid in full, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness.
6.5.3 The fact that any payment hereunder is prohibited by this section shall
not prevent the failure to make such payment from being an event of default or
default hereunder.
6.6 PAYMENT OF DEBENTURES PERMITTED.
6.6.1 Nothing contained in this Trust Indenture, or in any of the Debentures,
shall
(a) prevent the Company, at any time, except under the conditions
described in section 6.5 hereof or during the pendency of any
such dissolution, winding-up, liquidation, reorganization,
bankruptcy, insolvency, receivership or other marshalling of
assets as referred to in subsection 6.3.1, from making
payments at any time on the Debenture Indebtedness; or
(b) upon the maturity or acceleration of any Senior Indebtedness
or the happening of an event of default or the existence of
facts described in subsections 6.5.1 or 6.5.2, prevent any
payment being made by the Company or the Trustee in connection
with the redemption of Debentures with respect to which a
Redemption Notice shall have been given pursuant to Article 3
hereof prior to the Trustee receiving a notice (as
contemplated in subsection 6.6.2) of such maturity,
acceleration or event of default or existence of facts
described in subsection 6.5.2.
6.6.2 Unless and until written notice shall be given to the Trustee by or on
behalf of any holder of any Senior Indebtedness notifying the Trustee of the
maturity or acceleration of such Senior Indebtedness or the happening of an
event of default with respect to such Senior Indebtedness permitting the holders
of such Senior Indebtedness to accelerate the maturity thereof, the Trustee and
the Debenture holders shall be entitled to assume, with respect to any moneys
which may be received by the Trustee or the Debenture holders from time to time
pursuant to this Trust Indenture, that the provisions of section 6.5 do not
apply, and nothing in this Trust Indenture shall prevent the Trustee or the
Debenture holders from applying such moneys to the purposes for which the same
were so received, notwithstanding the occurrence or continuance of an event of
default with respect to such Senior Indebtedness.
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6.7 SUBORDINATION NOT TO BE IMPAIRED. No right of any present or future holder
of any Senior Indebtedness of the Company to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any non-compliance by the Company with the
terms, provisions and covenants of this Trust Indenture, regardless of any
knowledge thereof which any such holder may have or be otherwise charged with.
Without limiting the generality of the foregoing, all agreements and obligations
of the Company, Trustee and Debenture holders under this Article 6 shall remain
in full force and effect irrespective of:
(a) any lack of validity or enforceability of any document or
instrument providing for the issue or payment of, guarantee
of, or security arrangement concerning, the Senior
Indebtedness, or any other agreement or instrument relating
thereto (the "SENIOR INDEBTEDNESS DOCUMENTS");
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Senior Indebtedness or
any other amendment or waiver of or any consent to any
departure from the Senior Indebtedness Documents, including
without limitation any increase in the obligations of the
Company thereunder resulting from the extension of additional
credit to the Company or any of its affiliates or subsidiaries
or otherwise;
(c) any taking, exchange, release or non-perfection of any
security, or any taking, release or amendment or waiver of or
consent to departure from any guarantee, for all or any of the
Senior Indebtedness;
(d) any manner of application of collateral, or proceeds thereof,
to all or any of the Senior Indebtedness or any manner of sale
or other disposition of any security or any other assets of
the Company or other persons;
(e) any change, restructuring, or termination of the corporate
structure or existence of the Company or other persons; or
(f) any other circumstance which might otherwise constitute a
defence available to, or a discharge of, the Company.
The terms of this Article 6 shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the Senior Indebtedness is
rescinded or must otherwise be returned by a holder of Senior Indebtedness upon
the insolvency, bankruptcy or reorganization of the Company or otherwise, all as
though such payment had not been made.
6.8 AUTHORIZATION OF DEBENTURE HOLDERS TO TRUSTEE TO EFFECT SUBORDINATION. Each
holder of Debentures by his acceptance thereof authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article and appoints the
Trustee his attorney-in-fact for any and all such purposes.
6.9 SURVIVAL. The terms of this Article 6 shall survive until all of the Senior
Indebtedness is paid and satisfied in full.
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6.10 FURTHER ASSURANCES. The Trustee shall execute and deliver to a holder of
Senior Indebtedness such further documents and do such further things as may
reasonably be requested by such holders of Senior Indebtedness to give effect to
the terms and conditions hereof.
ARTICLE 7
COVENANTS OF THE COMPANY
The Company hereby covenants and agrees with the Trustee for the benefit of the
Trustee and the Debenture holders as follows:
7.1 TO PAY PRINCIPAL AND INTEREST. That the Company will duly and punctually pay
or cause to be paid to every Debenture holder or to the Trustee on behalf of
every Debenture holder the principal of and interest accrued on the Debentures
of which he or she is the holder on the dates, at the places, in the moneys, and
in the manner mentioned herein and in the Debentures.
7.2 TO CARRY ON BUSINESS. That, subject to the express provisions hereof, the
Company will carry on and conduct its business in a proper and efficient manner,
and at all reasonable times it will furnish or cause to be furnished to the
Trustee or its duly authorized agent or attorney such information relating to
its business as the Trustee may reasonably require; and, subject to the express
provisions hereof, it will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence.
7.3 TO MAINTAIN RESERVATION OF COMMON SHARES. That, as long as any Debentures
are outstanding hereunder, the Company shall maintain and not revoke the
reservation of the Common Shares to be issued upon any potential conversion of
the Debentures.
7.4 TO QUALIFY COMMON SHARES AND MAINTAIN A LISTING. That the Company will do or
cause to be done all things necessary to ensure that the Common Shares issued
pursuant to sections 2.8, 3.10 or 4.1 are:
(a) qualified to be offered and sold to the public in the
provinces of Alberta, British Columbia, Manitoba and Ontario
and in the United States by or through such persons and in
such manner as may be prescribed under the applicable
legislation of such province or state in effect at the time
such Common Shares are so issued; and
(b) listed on the Toronto Stock Exchange and/or the Nasdaq
National Market.
7.5 TO PAY TRUSTEE'S REMUNERATION. That the Company will pay the Trustee
reasonable remuneration for its services as Trustee hereunder (including
reimbursement for distributions which include legal services) and will repay to
the Trustee on demand all moneys which shall have been paid by the Trustee in
and about the execution of the trusts hereby created with interest at such
reasonable rate as shall have been agreed to by the Trustee from time to time,
from the date of expenditure until repayment, with a reasonable rate of interest
to be charged by the Trustee on any overdue accounts of the Company, and such
moneys and the interest thereon, including the Trustee's remuneration, shall be
payable out of any funds coming into the possession of the Trustee in priority
to the payment of any principal or interest on any of the Debentures. The said
remuneration shall continue to be payable until the trusts hereof are finally
wound up and whether or not the trusts of this indenture shall be in course of
administration by or under the direction of the court.
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7.6 NOT TO EXTEND TIME FOR PAYMENT OF INTEREST OR PRINCIPAL.
7.6.1 That, in order to prevent any accumulation after maturity of unpaid
interest or of any principal payable in respect of any Debentures, the Company
will not directly or indirectly extend or assent to the extension of time for
payment of any interest upon any Debentures or of any principal payable in
respect of any Debentures and that it will not directly or indirectly be or
become a party to or approve any such arrangement by funding any interest on
said Debentures or any principal thereof or in any other manner; and that the
Company shall and will deliver to the Trustee all Debentures when paid as
evidence of such payment.
7.6.2 In case the time for the payment of any such interest or principal shall
be extended, whether or not such extension be by or with the consent of the
Company, notwithstanding anything herein or in the Debentures contained, such
interest and/or principal shall not be entitled in case of default hereunder to
the benefits of this indenture except subject to the prior payment in full of
the principal of all, the Debentures and of all interest of such Debentures the
payment of which has not been so extended.
7.7 AUDIT. That the Company will annually within 140 days (or such longer period
as the Trustee in its discretion may consent to) after the end of its fiscal
year end furnish to the Trustee a copy of the consolidated financial statements
and of the report of the Company's Auditors thereon which are furnished to the
shareholders of the Company; provided, however, that the Trustee has no
obligation to review, analyze or disseminate said information.
7.8 TRUSTEE MAY PERFORM COVENANTS. That if the Company shall fail to perform any
covenant on its part herein contained, the Trustee may in its discretion, but
(subject to section 8.2) need not, notify the Debenture holders of such failure
or it may perform any of said covenants capable of being performed by it and, if
any such covenant requires the payment or expenditure of money, it may make such
payment or expenditure with its own funds, or with money borrowed by or advanced
to it for such purpose, but shall be under no obligation so to do; and all sums
so expended or advanced shall be repayable by the Company in the manner provided
in section 7.5, but no such performance or payment shall be deemed to relieve
the Company from any default hereunder.
7.9 CERTIFICATES OF NO DEFAULT. That the Company will, contemporaneously with
the delivery of the financial statements pursuant to section 7.7 and at any
other time if requested by the Trustee, deliver to the Trustee an Officers'
Certificate stating that the Company has complied with all covenants, conditions
or other requirements contained in this indenture the non-compliance with which
would, with the giving of notice or the lapse of time, or both, or otherwise,
constitute an event of default under this indenture, or if such is not the case,
specifying the covenant, condition or other requirement which has not been
complied with and giving particulars of such non-compliance.
7.10 FURTHER ASSURANCES. The Company shall provide an Officers' Certificate
setting out the Interest Amount and shall execute any further assurance setting
out its obligations hereunder from time to time and upon the Trustee's
reasonable request.
7.11 TRUSTEE INDEMNIFICATION. The Trustee, its directors, officers, employees
and agents (the "INDEMNIFIED PARTIES") will at all times be indemnified and
saved harmless by the Company from and against all claims, demands, losses,
actions, causes of action, suits, proceedings, costs, charges, expenses,
assessments, judgements, damages and liabilities whatsoever arising in
connection with this indenture, including, without limitation, those arising out
of or related to actions taken or omitted to be taken by the Indemnified Parties
contemplated hereby, expert consultation and legal fees and disbursements on a
solicitor and client basis and costs and expenses incurred in connection with
the enforcement of this indemnity, which the Indemnified Parties, or any of
them, may suffer or incur, whether at law or in equity, in any way
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caused by or arising, directly or indirectly, in respect of any act, deed,
matter or thing whatsoever made, done, acquiesced in or omitted in or about or
in relation to the execution of the Trustee's duties and including any deed,
matter or thing in relation to the registration, perfection, release or
discharge of security or any other services that the Trustee may provide in
connection with or in any way relating to this indenture. The foregoing
provisions of this section do not apply to the extent that in any circumstances
there has been negligence, fraud or wilful misconduct of the Indemnified Parties
or there has been a failure by the Indemnified Parties to act honestly and in
good faith to discharge the Trustee's obligations under section 13.11. The
Company agrees that its liability hereunder shall be absolute and unconditional
regardless of the correctness of any representations of any third parties and
regardless of any liability of third parties to the Indemnified Parties, and
shall accrue and become enforceable without prior demand or any other precedent
action or proceeding. This indemnity will survive the termination or discharge
of this indenture and the resignation or removal of the Trustee.
7.12 REPORTS. The Company shall furnish to the Trustee and provide Debenture
holders and the Depository, within 15 days after the Company files the same with
the Ontario Securities Commission and the United States Securities and Exchange
Commission (provided that multiple copies of the same or a substantially similar
document need not be filed), copies of its annual financial statements and the
information, documents and other reports that the Company is required to both
(a) file with the Ontario Securities Commission or the United States Securities
and Exchange Commission (excluding those filed on a confidential basis until
required to be publicly disclosed) and (b) mail to the holders of Common Shares;
or, if the Company is not required to file any such material with the Ontario
Securities Commission or the United States Securities and Exchange Commission,
the Company shall continue to file with the Ontario Securities Commission and
the United States Securities and Exchange Commission, as applicable and furnish
to the Trustee and furnish to the holders of Debentures without cost (i) within
140 days after the end of the Company's last fiscal year, audited annual
financial statements and (ii) within 60 days after the end of the first three
quarters of the Company's fiscal year, interim financial statements which shall
contain such information required to be provided in quarterly reports by
applicable securities regulatory authorities in Canada to securityholders of a
company listed on the Toronto Stock Exchange, whether or not the Company has any
of its securities so listed. Each such report shall be prepared in accordance
with the disclosure requirements of such applicable securities regulatory
authorities in Canada and generally accepted accounting principles of Canada or
the United States.
7.13 FUTURE ISSUANCES OF DEBT. For so long as any of the Debentures are issued
and outstanding, the Company will not itself issue or permit any of its
Subsidiaries to issue by public offering or private placement (whether under a
prospectus or registration statement or pursuant to an exemption from the
requirements therefor) any unsecured bonds, debentures, notes or other similar
instruments or securities unless such indebtedness is by its terms subordinate
in right of payment to the Debentures.
7.14 RESTRICTIONS ON DIVIDENDS. For so long as Debentures are issued and
outstanding, the Company will not declare or pay cash dividends on the Common
Shares in an aggregate amount per Common Share, during any calendar year, in
excess of one percent of the Current Market Price of the Common Shares
calculated as of the last trading day of the preceding calendar year.
7.15 CONVERSION OF CURRENCY. The Company covenants and agrees that the
provisions set out in this section 7.15 shall apply to conversion of currency in
the case of the Debentures and this indenture:
7.15.1 (a) If for the purpose of obtaining judgment in, or enforcing the
judgment of, any court in any country, it becomes necessary to
convert into any other currency (the "JUDGMENT CURRENCY") an
amount due in U.S. dollars, then the conversion shall be made
at the rate of exchange prevailing on the business day before
the day on which the judgment is given or
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the order of enforcement is made, as the case may be (unless a
court shall otherwise determine).
(b) If there is a change in the rate of exchange prevailing
between the business day before the day on which the judgment
is given or an order of endorsement is made, as the case may
be (or such other date as a court shall determine), and the
date of receipt of the amount due, the Company will pay such
additional (or, as the case may be, such lesser) amount, if
any, as may be necessary so that the amount paid in the
judgment currency when converted at the rate of exchange
prevailing on the date of receipt will produce the amount in
U.S. dollars originally due.
7.15.2 In the event of the winding-up of the Company at any time while any
amount or damages owing under the Debentures and this indenture, or any judgment
or order rendered in respect thereof, shall remain outstanding, the Company
shall indemnify and hold the holders of Debentures and the Trustee harmless
against any deficiency arising or resulting from any variation in rates of
exchange between (1) the date as of which the equivalent of the amount in U.S.
dollars due or contingently due under the Debentures and this indenture (other
than under this subsection 7.15.2) is calculated for the purposes of such
winding-up and (2) the final date for the filing of proofs of claim in such
winding-up. For the purpose of this subsection 7.15.2 the final date for the
filing of proofs of claim in the winding-up of the Company shall be the date
fixed by the liquidator or otherwise in accordance with the relevant provisions
of applicable law as being the latest practicable date as at which liabilities
of the Company may be ascertained for such winding-up prior to payment by the
liquidator or otherwise in respect thereto.
7.15.3 The obligations contained in subsections 7.15.1 and 7.15.2 shall
constitute separate and independent obligations of the Company from its other
obligations under the Debentures and this indenture, shall give rise to separate
and independent causes of action against the Company, shall apply irrespective
of any waiver or extension granted by any holder of Debentures or the Trustee
from time to time and shall continue in full force and effect notwithstanding
any judgment or order or the filing of any proof of claim in the winding-up of
the Company for a liquidated sum in respect of amounts due hereunder (other than
under subsection 7.15.2 above) or under any such judgment or order. Any such
deficiency as aforesaid shall be deemed to constitute a loss suffered by the
holders of Debentures or the Trustee, as the case may be, and no proof or
evidence of any actual loss shall be required by the Company or its liquidator.
In the case of subsection 7.15.2 above, the amount of such deficiency shall not
be deemed to be reduced by any variation in rates of exchange occurring between
the said final date and the date of any liquidating distribution.
7.15.4 The term "RATE(S) OF EXCHANGE" shall mean the rate of exchange quoted by
the Bank of Canada at 12:00 noon (Toronto time) for purchase of U.S. dollars
with the judgment currency other than U.S. dollars referred to in subsections
7.15.1 and 7.15.2 above and includes any premiums and costs of exchange payable.
ARTICLE 8
DEFAULT
8.1 ACCELERATION OF MATURITY. Upon the happening of any one or more of the
following events (each herein sometimes referred to as an "EVENT OF DEFAULT")
namely:
(a) if the Company makes default in payment of the principal of
any Debenture when the same becomes due under any provision
hereof or of the Debentures and such default continues for a
period of five business days;
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(b) if the Company makes default in payment of any interest due on
any Debenture and any such default continues for a period of
15 business days;
(c) the Company or any Significant Subsidiary pursuant to or under
or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the entry of a Bankruptcy Order in an
involuntary case or proceeding or the commencement
of any case against it;
(iii) consents to the appointment of a Custodian of it or
for any substantial part of its property;
(iv) makes a general assignment for the benefit of its
creditors or files a proposal or other scheme of
arrangement involving the rescheduling or composition
of its indebtedness;
(v) files a petition in bankruptcy or answer or consent
seeking reorganization or relief; or
(vi) consents to the filing of such petition or the
appointment of or taking possession by a Custodian;
(d) a court of competent jurisdiction in any involuntary case or
proceeding enters a Bankruptcy Order against the Company or
any Significant Subsidiary, and such Bankruptcy Order remains
unstayed and in effect for 15 consecutive days;
(e) a Custodian shall be appointed out of court with respect to
the Company or any Significant Subsidiary, or with respect to
all or any substantial part of the property of the Company or
any Significant Subsidiary, or any encumbrancer shall take
possession of all or any substantial part of the property of
the Company or any Significant Subsidiary;
(f) the failure by the Company to pay when due at maturity or upon
a default, event of default or similar condition under any
bond, note, debenture or other evidence of indebtedness for
money borrowed by the Company or any of its Subsidiaries
having an aggregate outstanding principal amount in excess of
$10,000,000, not including any amounts the Company may owe
under reimbursement or similar obligations to banks, sureties
or other entities that have issued letters of credit, surety
bonds, performance bonds or other guarantees to the extent any
demands made under any such reimbursement or similar
obligation relate to a draw under the related letter of credit
or other instrument, which draw is being contested in good
faith by the Company through appropriate proceedings, which
default shall have resulted in that indebtedness being
accelerated without that indebtedness being discharged or that
acceleration having been rescinded or annulled within five
business days after the Company's receipt of the Notice of
Default from the Trustee or receipt by the Company and the
Trustee of the Notice of Default from the holders of not less
than 25% in aggregate principal amount of the Debentures then
outstanding, unless that default has been cured or waived
within 30 days; provided, however, that if such default under
such agreement or instrument is remedied or cured by the
Company or waived by the holders of such indebtedness, then
the event of default hereunder by reason thereof shall be
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deemed likewise to have been thereupon remedied, cured or
waived without further action upon the part of the Trustee or
any Debenture holders;
(g) if the Company elects to satisfy obligations to Debenture
holders hereunder by issuing and delivering Common Shares to
the Trustee for sale by it and the Company fails to deliver a
sufficient number of Common Shares to the Trustee which, upon
the sale of such Common Shares, would permit the Trustee to
deliver to Debenture holders the full amount of the interest
otherwise due in cash;
(h) if the Company shall neglect to observe or perform any other
material covenant or condition herein contained on its part to
be observed or performed and, after notice in writing has been
given by the Trustee to the Company specifying such default,
requiring the Company to put an end to the same and stating
that such notice is a "NOTICE OF DEFAULT" hereunder (which
said notice may be given by the Trustee, in its discretion,
and shall be given by the Trustee upon receipt of a request in
writing signed by the holders of not less than 25% in
principal amount of the Debentures then outstanding), the
Company shall fail to make good such default within a period
of 30 days, unless the Trustee (having regard to the subject
matter of the default) shall have agreed to a longer period,
and in such event, within the period agreed to by the Trustee;
(i) if the Company fails to redeem any Debenture pursuant to the
terms hereof when obligated to do so;
(j) if the Company fails to make an Offer or pay the Offer Price
pursuant to the terms hereof when obligated to do so pursuant
to Article 5; or
(k) if the Company fails to deliver Common Shares together with
cash in lieu of fractional shares, when those Common Shares
and/or cash are required to be delivered following the
conversion of a Debenture in accordance with the provisions
hereof and such default continues for a period of ten days,
then in each and every such event the Trustee may in its discretion and shall
upon receipt of a requisition in writing signed by the holders of not less than
50% in principal amount of the Debentures then outstanding, subject to the
provisions of section 8.3, by notice in writing to the Company declare the
principal of and interest on all Debentures then outstanding which would have
been payable if the Company had redeemed the Debentures on the date of such
declaration and all other moneys outstanding hereunder to be due and payable and
the same shall forthwith become immediately due and payable to the Trustee,
anything therein or herein to the contrary notwithstanding, and the Company
shall forthwith pay to the Trustee for the benefit of the Debenture holders the
principal of, and accrued and unpaid interest and interest on amounts in default
on such Debentures hereunder, together with interest on such principal and
interest at the Interest Rate, if any, from the date of the said declaration
until payment in full is received by the Trustee. Such payment when made shall
be deemed to have been made in discharge of the Company's obligations hereunder
and any moneys so received by the Trustee shall be applied in the manner
provided in section 8.6. Notwithstanding the foregoing, upon the occurrence of
an event of default pursuant to clauses (c), (d) or (e) above, the principal of
or any interest on all Debentures then outstanding shall forthwith become due
and payable without any further action by the Trustee or any holder.
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8.2 NOTICE OF EVENTS OF DEFAULT.
8.2.1 If an event of default described in subsections 8.1(c), (d), (e), (f),
(h), (i) or (j) shall occur and be continuing, the Company shall, within five
business days of becoming aware of such occurrence, given notice of such
occurrence to the Trustee in the manner provided in section 12.3.
8.2.2 If an event of default shall occur and be continuing the Trustee shall,
within 30 days after it becomes aware of the occurrence of such event of
default, unless cured or waived in accordance with section 8.3, give notice of
such event of default to the Debenture holders in the manner provided in section
12.2, provided that, notwithstanding the foregoing, and except in connection
with an event of default pursuant to subsections 8.1(c), (d) or (e), the Trustee
shall not be required to give such notice if the Trustee in good faith shall
have decided that the withholding of such notice is in the best interests of the
Debenture holders and shall have so advised the Company in writing.
8.3 WAIVER OF DEFAULT. Upon the happening of any event of default hereunder:
(a) the holders of Debentures then outstanding shall have power
exercisable by extraordinary resolution to instruct the
Trustee to waive any default hereunder other than a default
under sections 8.1(a), (b) or (k), or a default in respect of
a provision that under section 11.11.2 cannot be amended
without the consent of each holder of Debentures, or a default
under Article 4, and/or to cancel any declaration made by the
Trustee pursuant to section 8.1 and the Trustee shall
thereupon waive the default and/or cancel such declaration
upon such terms and conditions as shall be prescribed in such
requisition; and
(b) the Trustee, so long as it has not become bound to declare the
principal of and interest on the Debentures then outstanding
to be due and payable or to obtain or enforce payment of the
same, shall have power to waive any default hereunder if, in
the Trustee's opinion, the same shall have been cured or
adequate satisfaction made therefor, and in such event to
cancel any such declaration theretofore made by the Trustee in
the exercise of its discretion, upon such terms and conditions
as to the Trustee may seem advisable,
provided that no act or omission either of the Trustee or of the Debenture
holders in the premises shall extend to or be taken in any manner whatsoever to
affect any subsequent default hereunder or the rights resulting therefrom.
8.4 ENFORCEMENT BY THE TRUSTEE.
8.4.1 Subject to the provisions of section 8.3 and to the provisions of any
extraordinary resolution that may be passed by the Debenture holders, in case
the Company shall fail to pay to the Trustee, forthwith after the same shall
have been declared to be due and payable under section 8.1, the principal of and
interest on all Debentures then outstanding, together with any other amounts due
hereunder, the Trustee may in its discretion and shall upon receipt of a request
in writing signed by the holders of not less than 50% in principal amount of the
Debentures then outstanding and upon being indemnified and funded (or reasonable
provisions having been made for such funding) to its reasonable satisfaction
against all costs, expenses and liabilities to be incurred, proceed in its name
as Trustee hereunder to obtain or enforce payment of the said principal of and
interest on all the Debentures then outstanding together with any other amounts
due hereunder by such proceedings authorized by this indenture or by law or
equity as the Trustee in such request shall have been directed to take, or if
such request contains no such direction, or if the Trustee shall act without
such request, then by such proceedings authorized by this indenture or by suit
at law or in equity as the Trustee shall deem necessary or expedient.
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8.4.2 The Trustee shall be entitled and empowered, either in its own name or as
trustee of an express trust, or as attorney-in-fact for the holders of the
Debentures, or in any one or more of such capacities, to file such proof of
debt, amendment of proof of debt, claim, petition or other document as may be
necessary or advisable in order to have the claim of the Trustee and of the
holders of the Debentures allowed in any insolvency, bankruptcy, liquidation or
other judicial proceedings relative to the Company or its creditors or relative
to or affecting its property. The Trustee is hereby irrevocably appointed (and
the successive respective holders of the Debentures by taking and holding the
same shall be conclusively deemed to have so appointed the Trustee) the true and
lawful attorney-in-fact of the respective holders of the Debentures with
authority to make and file in the respective names of the holders of the
Debentures or on behalf of the holders of the Debentures as a class, subject to
deduction from any such claims of the amounts of any claims filed by any of the
holders of the Debentures themselves, any proof of debt, amendment of proof of
debt, claim, petition or other document in any such proceedings and to receive
payment of any sums becoming distributable on account thereof, and to execute
any such other papers and documents and to do and perform any and all such acts
and things for and on behalf of such holders of the Debentures, as may be
necessary or advisable in the opinion of the Trustee, in order to have the
respective claims of the Trustee and of the holders of the Debentures against
the Company or its property allowed in any such proceeding, and to receive
payment of or on account of such claims; provided, however, that nothing
contained in this indenture shall be deemed to give to the Trustee, unless so
authorized by extraordinary resolution, any right to accept or consent to any
plan of reorganization or otherwise by action of any character in such
proceeding to waive or change in any way any right of any Debenture holder.
8.4.3 The Trustee shall also have the power at any time and from time to time to
institute and to maintain such suits and proceedings as it may be advised shall
be necessary or advisable to preserve and protect its interests and the
interests of the Debenture holders.
8.4.4 All rights of action hereunder may be enforced by the Trustee without the
possession of any of the Debentures or the production thereof on the trial or
other proceedings relative thereto. Any such suit or proceeding instituted by
the Trustee may be brought in the name of the Trustee as trustee of an express
trust, and any recovery of judgment shall be for the rateable benefit of the
holders of the Debentures subject to the provisions of this indenture. In any
proceeding brought by the Trustee (and also any proceeding in which a
declaratory judgment of a court may be sought as to the interpretation or
construction of any provision of this indenture, to which the Trustee shall be a
party) the Trustee shall be held to represent all the holders of the Debentures,
and it shall not be necessary to make any holders of the Debentures parties to
any such proceeding.
8.5 SUITS BY DEBENTURE HOLDERS. No holder of any Debenture shall have any right
to institute any action, suit or proceeding at law or in equity for the purpose
of enforcing payment of the principal of or interest on the Debentures or for
the execution of any trust or power hereunder or for the appointment of a
liquidator or receiver or for a receiving order under the Bankruptcy and
Insolvency Act (Canada) or to have the Company wound up or to file or prove a
claim in any liquidation or bankruptcy proceeding or for any other remedy
hereunder, unless:
(a) such holder shall previously have given to the Trustee written
notice of the happening of an event of default hereunder;
(b) the holders of at least 25% of the principal amount of the
Debentures then outstanding shall have made a request in
writing to the Trustee and the Trustee shall have been
afforded reasonable opportunity to proceed to exercise the
powers hereinbefore granted or to institute an action, suit or
proceeding in its name for such purpose;
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(c) the Debenture holders or any of them shall have furnished to
the Trustee, when so requested by the Trustee, sufficient
funds and security and indemnity satisfactory to it against
the costs, expenses and liabilities to be incurred therein or
thereby; and
(d) the Trustee shall have failed to act within 45 days after such
notification, request and offer of indemnity and such
notification, request and offer of indemnity are hereby
declared in every such case, at the option of the Trustee, to
be conditions precedent to any such proceeding or for any such
proceeding or any other remedy hereunder or by or on behalf of
the holder of any Debentures.
8.6 APPLICATION OF MONEYS BY TRUSTEE. Except as herein otherwise expressly
provided, any moneys received by the Trustee from the Company pursuant to the
foregoing provisions of this Article 8, or as a result of legal or other
proceedings or from any trustee in bankruptcy or liquidator of the Company,
shall be applied, together with any other moneys in the hands of the Trustee
available for such purposes, as follows:
(a) first, in payment or in reimbursement to the Trustee of its
compensation, costs, charges, expenses, borrowings, advances
or other moneys furnished or provided by or at the instance of
the Trustee in or about the execution of its trusts under, or
otherwise in relation to, this indenture, with interest
thereon as herein provided;
(b) second, but subject to the provisions of Article 6 and as
hereinafter in this section 8.6 provided, in payment of the
principal of and accrued and unpaid interest and interest on
amounts in default on the Debentures which shall then be
outstanding in the priority of principal first and then
accrued and unpaid interest and interest on amounts in default
unless otherwise directed by extraordinary resolution and in
that case in such order or priority as between principal and
interest as may be directed by such resolution; and
(c) third, in payment of the surplus, if any, of such moneys to
the Company or its assigns,
provided, however, that no payment shall be made pursuant to paragraph 8.6(b) in
respect of the principal or interest of any Debenture held, directly or
indirectly, by or for the benefit of the Company or any Principal Subsidiary,
Associate or Affiliate (other than any Debenture pledged for value and in good
faith to a person other than the Company or any Principal Subsidiary, Associate
or Affiliate but only to the extent of such person's interest therein) except
subject to the prior payment in full of the principal of and interest on, all
Debentures which are not so held.
8.7 DISTRIBUTION OF PROCEEDS. Payments to holders of Debentures pursuant to
paragraph 8.6(b) shall be made as follows:
(a) at least 10 business days' notice of every such payment shall
be given in the manner provided in section 12.2 specifying the
time when and the place or places where the Debentures are to
be presented and the amount of the payment and the application
thereof as between principal and interest;
(b) payment of any Debenture shall be made upon presentation
thereof at any one of the places specified in such notice and
any such Debenture thereby paid in full shall be surrendered,
otherwise a memorandum of such payment shall be endorsed
thereon; but the Trustee may in its discretion dispense with
presentation and surrender or endorsement in any special case
upon such indemnity being given as it shall deem sufficient;
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(c) from and after the date of payment specified in the notice,
interest shall accrue only on the amount owing on each
Debenture after giving credit for the amount of the payment
specified in such notice unless the Debenture in respect of
which such amount is owing be duly presented on or after the
date so specified and payment of such amount be not made; and
(d) the Trustee shall not be required to make any interim payment
to Debenture holders unless the moneys in its hands, after
reserving therefrom such amount as the Trustee may think
necessary to provide for the payments mentioned in paragraph
8.6(a), exceed 2% of the principal amount of the Debentures
then outstanding.
8.8 REMEDIES CUMULATIVE. No remedy herein conferred upon or reserved to the
Trustee, or upon or to the holders of Debentures, is intended to be exclusive of
any other remedy, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or now existing or
hereafter to exist by law or by statute.
8.9 JUDGMENT AGAINST THE COMPANY. The Company covenants and agrees with the
Trustee that, in case of any judicial or other proceedings to enforce the rights
of the Debenture holders, judgment may be rendered against it in favour of the
Debenture holders or in favour of the Trustee, as Trustee for the Debenture
holders, for any amount which may remain due in respect of the Debentures and
the interest thereon.
8.10 IMMUNITY OF SHAREHOLDERS. The Debenture holders and the Trustee hereby
waive and release any right, cause of action or remedy now or hereafter existing
in any jurisdiction against any past, present or future incorporator,
shareholder, director or officer of the Company or of any successor corporation
for the payment of the principal of or interest on any of the Debentures or on
any covenant, agreement, representation or warranty by the Company herein or in
the Debentures contained, save and except only recourse with respect to damages
resulting from fraud.
8.11 TRUSTEE APPOINTED ATTORNEY. The Company hereby irrevocably appoints the
Trustee to be the attorney of the Company in the name and on behalf of the
Company to execute any instruments and do any acts and things which the Company
ought to execute and do, and has not executed or done, under the covenants and
provisions contained in this indenture and generally to use the name of the
Company in the exercise of all or any of the powers hereby conferred on the
Trustee, with full powers of substitution and revocation.
ARTICLE 9
SATISFACTION AND DISCHARGE
9.1 CANCELLATION AND DESTRUCTION. Debentures shall forthwith after payment
thereof be delivered to the Trustee and cancelled by it. All Debentures
cancelled or required to be cancelled under this or any other provision of this
indenture shall be destroyed by the Trustee and if required by the Company the
Trustee shall furnish to it a destruction certificate in respect of the
Debentures so destroyed.
9.2 NON-PRESENTATION OF DEBENTURES. In case the holder of any Debenture shall
fail to present the same for payment or for conversion, as the case may be, on
the date on which the principal thereof and/or the interest thereon or
represented thereby becomes payable, either on the Maturity Date or otherwise,
or shall not accept payment on account thereof and give such receipt therefor,
if any, as the Trustee may require:
(a) the Company shall be entitled to pay or deliver to the Trustee
and direct it to set aside; or
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(b) in respect of moneys in the hands of the Trustee which may or
should be applied to the payment of the Debentures, the
Company shall be entitled to direct the Trustee to set aside;
or
(c) if the redemption was pursuant to notice given by the Trustee,
the Trustee may itself set aside,
the principal moneys and/or the interest, as the case may be, in trust to be
paid to the holder of such Debenture upon due presentation or surrender thereof
in accordance with the provisions of this indenture; and thereupon the principal
moneys and/or the interest payable on or represented by each Debenture in
respect whereof such moneys have been set aside shall be deemed to have been
paid, no further interest shall accrue thereon for the benefit of the holder and
the holder thereof shall thereafter have no right in respect thereof except that
of receiving payment of the moneys so set aside by the Trustee upon due
presentation and surrender thereof, subject always to the provisions of section
9.3.
9.3 REPAYMENT OF UNCLAIMED MONEYS. Subject to applicable law, any moneys set
aside under section 9.2 and not claimed by and paid to holders of Debentures as
provided in section 9.2 within six years after the date of such setting aside
shall be repaid to the Company by the Trustee on demand and thereupon the
Trustee shall be released from all further liability with respect to such moneys
and thereafter the holders of the Debentures in respect of which such moneys
were so repaid to the Company shall have no rights in respect thereof except to
obtain payment of the moneys due thereon from the Company. After return to the
Company, holders entitled to the money or securities must look to the Company
for payment as general creditors unless an applicable abandoned property law
designates another person.
9.4 DISCHARGE. The Trustee shall at the request of the Company release and
discharge this indenture and execute and deliver such instruments as it shall be
advised by Counsel are requisite for that purpose and to release the Company
from its covenants herein contained (other than the provisions relating to the
indemnification of the Trustee), upon proof being given to the reasonable
satisfaction of the Trustee that the principal of and interest (including
interest on amounts in default, if any) on all the Debentures and all other
moneys payable hereunder have been paid or satisfied or that all the Debentures
having matured or having been duly called for redemption, payment of the
principal of and interest (including interest on amounts in default, if any) on
such Debentures and of all moneys payable hereunder has been duly and
effectually provided for in accordance with the provisions hereof.
ARTICLE 10
SUCCESSOR CORPORATIONS
10.1 CERTAIN REQUIREMENTS. The Company shall not, directly or indirectly, sell,
transfer, assign, lease or otherwise dispose of all or substantially all of its
property and assets as an entirety to any other Person and shall not amalgamate,
consolidate or merge with or into any other Person (any such other Person being
herein referred to as a "SUCCESSOR CORPORATION") unless:
(a) the successor corporation shall execute, prior to or
contemporaneously with the consummation of any such
transaction, an indenture supplemental hereto together with
such other instruments as are, in the opinion of Counsel,
necessary or advisable to evidence the assumption by the
successor corporation of the due and punctual payment of all
the Debentures and the interest thereon and all other moneys
payable hereunder and the covenant of the successor
corporation to pay the same and its agreement to observe and
perform all the covenants and obligations of the Company under
this indenture;
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(b) such transaction shall, in the opinion of Counsel, be upon
such terms as substantially to preserve and not impair any of
the rights and powers of the Trustee or of the Debenture
holders hereunder;
(c) such transaction shall not, in the opinion of Counsel, result
in the successor corporation being required to make any
deduction or withholding of taxes from any payments in respect
of the Debentures for which Additional Amounts would be
required to be paid pursuant to section 2.19;
(d) no condition or event shall exist as to the Company or the
successor corporation either at the time of or immediately
after the consummation of any such transaction and after
giving full effect thereto or immediately after the successor
corporation complying with the provisions of clause (a) above
which constitutes or would constitute an event of default
hereunder; and
(e) an Officers' Certificate and an opinion of Counsel, each
stating that the amalgamation, merger, consolidation,
transfer, assignment or lease complies with the provisions of
this indenture, have been delivered by the Company to the
Trustee.
10.2 VESTING OF POWERS IN SUCCESSOR. Whenever the conditions of section 10.1
have been duly observed and performed the successor corporation shall possess
and from time to time may exercise each and every right and power of the Company
under this indenture in the name of the Company or otherwise and any act or
proceeding by any provision of this indenture required to be done or performed
by any directors or officers of the Company may be done and performed with like
force and effect by the directors or officers of such successor corporation.
ARTICLE 11
MEETINGS OF DEBENTURE HOLDERS
11.1 RIGHT TO CONVENE MEETING. The Trustee may at any time and from time to time
and shall on receipt of a written request of the Company or a written request
signed by the holders of not less than 25% in principal amount of the Debentures
then outstanding and upon being indemnified to its reasonable satisfaction by
the Company or by the Debenture holders signing such request against the costs
which may be incurred in connection with the calling and holding of such
meeting, convene a meeting of the Debenture holders. In the event of the Trustee
failing within 30 days after receipt of any such request and such indemnity to
give notice convening a meeting, the Company or such Debenture holders, as the
case may be, may convene such meeting. Every such meeting shall be held in the
City of Vancouver, British Columbia or at such other place as may be approved or
determined by the Trustee.
11.2 NOTICE OF MEETINGS. Subject to section 11.17, at least 21 days notice of
any meeting shall be given to the Debenture holders in the manner provided in
section 12.2 and a copy thereof shall be sent by mail to the Trustee and to the
Company. Such notice shall state the time when and the place where the meeting
is to be held and shall state briefly the general nature of the business to be
transacted thereat and it shall not be necessary for any such notice to set out
the terms of any resolution to be proposed or any of the provisions of this
Article.
11.3 CHAIRMAN. Some person, who need not be a Debenture holder, nominated in
writing by the Trustee shall be the chairman of the meeting and if no person is
so nominated, or if the person so nominated is not present within 15 minutes
from the time fixed for the holding of the meeting, the Debenture holders
present in person or by proxy shall choose some person present to be chairman.
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11.4 QUORUM. Subject to the provisions of sections 11.12 and 11.17, at any
meeting of the Debenture holders a quorum shall consist of Debenture holders
present in person or by proxy and representing at least 25% in principal amount
of the outstanding Debentures. If a quorum of the Debenture holders shall not be
present within 30 minutes from the time fixed for holding any meeting, the
meeting, if summoned by the Debenture holders or pursuant to a request of the
Debenture holders, shall be dissolved; but in any other case the meeting shall
be adjourned to the same day in the next week (unless such day is not a business
day in which case it shall be adjourned to the next following business day
thereafter) at the same time and place and no notice shall be required to be
given in respect of such adjourned meeting. At the adjourned meeting the
Debenture holders present in person or by proxy shall form a quorum and may
transact the business for which the meeting was originally convened
notwithstanding that they may not represent 25% of the principal amount of the
outstanding Debentures.
11.5 POWER TO ADJOURN. The chairman of any meeting at which a quorum of the
Debenture holders is present may with the consent of the holders of a majority
in principal amount of the Debentures represented thereat adjourn any such
meeting and no notice of such adjournment need be given except such notice, if
any, as the meeting may prescribe.
11.6 SHOW OF HANDS. Every question submitted to a meeting shall be decided in
the first place by a majority of the votes given on a show of hands except that
votes on extraordinary resolutions shall be given in the manner hereinafter
provided. At any such meeting, unless a poll is duly demanded as herein
provided, a declaration by the chairman that a resolution has been carried or
carried unanimously or by a particular majority or lost or not carried by a
particular majority shall be conclusive evidence of the fact.
11.7 POLL. On every extraordinary resolution, and on any other question
submitted to a meeting when demanded by the chairman or by one or more Debenture
holders and/or proxies for Debenture holders holding at least $10,000 principal
amount of Debentures, a poll shall be taken in such manner and either at once or
after an adjournment, as the chairman shall direct. Questions other than
extraordinary resolutions shall, if a poll be taken, be decided by the votes of
the holders of a majority in principal amount of the Debentures represented at
the meeting and voted on the poll.
11.8 VOTING. On a show of hands every person who is present and entitled to
vote, whether as a Debenture holder or as proxy for one or more Debenture
holders or both, shall have one vote. On a poll each Debenture holder present in
person or represented by a proxy (which proxy need not be a Debenture holder)
duly appointed by an instrument in writing shall be entitled to one vote in
respect of each $1,000 principal amount of Debentures of which he shall then be
the holder or in the case of joint holders of a Debenture, any one of them
present in person or by proxy at the meeting may vote in the absence of the
other or others, but in case more than one of them be present in person or by
proxy, they shall vote together in respect of the Debentures of which they are
joint holders.
11.9 REGULATIONS.
11.9.1 The Trustee, or the Company with the approval of the Trustee, may from
time to time make and from time to time vary such regulations as it shall from
time to time think fit providing for and governing:
(a) the voting by proxy by Debenture holders and form of
instrument appointing proxies where authorized under such
regulations and the manner in which the same shall be
executed, and for the production of the authority of any
person signing on behalf of the giver of such proxy;
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(b) the deposit of instruments appointing proxies at such place as
the Trustee, the Company or the Debenture holders convening
the meeting, as the case may be, may, in the notice convening
the meeting, direct the time, if any, before the holding of
the meeting or any adjournment thereof by which the same shall
be deposited; and
(c) the deposit of instruments appointing proxies at some approved
place or places other than the place at which the meeting is
to be held and enabling particulars of such instruments
appointing proxies to be mailed, cabled, telegraphed,
telecopied or sent by telex before the meeting to the Company
or to the Trustee at the place where the same is to be held
and for the voting of proxies so deposited as though the
instruments themselves were produced at the meeting.
11.9.2 Any regulation made in accordance with this section 11.9 shall be binding
and effective and the votes given in accordance therewith shall be valid and
shall be counted. Save as such regulations may provide, the only persons who
shall be recognized at any meeting as the holders of any Debentures, or as
entitled to vote or be present at the meeting in respect thereof, shall be
Debenture holders and persons whom Debenture holders have by instrument in
writing duly appointed as their proxies.
11.10 COMPANY AND TRUSTEE MAY BE REPRESENTED. The Company and the Trustee, by
their respective officers and directors, the Auditors of the Company, and the
legal advisers of the Company and the Trustee, may attend any meeting of the
Debenture holders and of any committee appointed pursuant to paragraph 11.1(g),
but shall have no vote as such.
11.11 POWERS EXERCISABLE BY EXTRAORDINARY RESOLUTION.
11.11.1 In addition to the powers conferred upon them by section 8.3 or any
other provisions of this indenture or by law, but subject to subsection 11.11.2
and section 11.17, a meeting of the Debenture holders shall have the following
powers exercisable from time to time by extraordinary resolution subject, in the
case of the matters in paragraphs 11.11.1(a), (b), (c) and (i), to receipt of
the prior approval of the Toronto Stock Exchange (if applicable) or such other
exchange on which the Debentures are then listed:
(a) power to sanction any modification, abrogation, alteration,
compromise or arrangement of the rights of the Debenture
holders and/or the Trustee against the Company, or against its
property, whether such rights arise under this indenture or
the Debentures or otherwise;
(b) power to assent to any modification of or change in or
addition to or omission from the provisions contained in this
indenture which shall be agreed to by the Company and to
authorize the Trustee to concur in and execute any indenture
supplemental hereto embodying any modification, change,
addition or omission;
(c) power to sanction any scheme for the reconstruction,
reorganization or recapitalization of the Company or for the
consolidation, amalgamation or merger of the Company with any
other Person or for the sale, leasing, transfer or other
disposition of the undertaking, property and assets of the
Company or any part thereof, provided that no such sanction
shall be necessary in respect of any such transaction if the
provisions of section 10.1 shall have been complied with;
(d) power to direct or authorize the Trustee to exercise any
power, right, remedy or authority given to it by this
indenture in any manner specified in any such extraordinary
resolution or to refrain from exercising any such power,
right, remedy or authority;
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(e) power to waive and direct the Trustee to waive any default
hereunder and/or cancel any declaration made by the Trustee
pursuant to section 8.1 either unconditionally or upon any
condition specified in such extraordinary resolution;
(f) power to assent to any compromise or arrangement with any
creditor or creditors or any class or classes of creditors,
whether secured or otherwise, and with holders of any shares
or other securities of the Company;
(g) power to appoint a committee with power and authority subject
to such limitations, if any, as may be prescribed in the
resolution to exercise, and to direct the Trustee to exercise,
on behalf of the Debenture holders, such of the powers of the
Debenture holders as are exercisable by extraordinary or other
resolution as shall be included in the resolution appointing
the committee. The resolution making such appointment may
provide for payment of the expenses and disbursements of and
compensation of such committee. Such committee shall consist
of such number of persons as shall be prescribed in the
resolution appointing it and the members need not be
themselves Debenture holders. Every such committee may elect
its chairman and may make regulations respecting its quorum,
the calling of its meetings, the filling of vacancies
occurring in its number and its procedure generally. Such
regulations may provide that the committee may act at a
meeting at which a quorum is present or may act by minutes
signed by the number of members thereof necessary to
constitute a quorum. All acts of any such committee within the
authority delegated to it shall be binding upon all Debenture
holders. Neither the committee nor any member thereof shall be
liable for any loss arising from or in connection with any
action taken or omitted to be taken by them in good faith;
(h) power to remove the Trustee from office and to appoint a new
Trustee or Trustees to take the place of the Trustee so
removed provided that no such removal shall be effective
unless and until a new Trustee or Trustees shall have become
bound by this indenture;
(i) power to sanction the exchange of the Debentures for or the
conversion thereof into shares, bonds, debentures or other
obligations of the Company or of any other Person formed or to
be formed;
(j) power to authorize the distribution in specie of any shares or
securities received pursuant to a transaction authorized under
the provisions of paragraph 11.11.1(i); and
(k) power to amend, alter or repeal any extraordinary resolution
previously passed or sanctioned by the Debenture holders or by
any committee appointed pursuant to paragraph 11.11.1(g).
Notwithstanding the foregoing provisions of this subsection 11.11.1, none of
such provisions shall in any manner allow or permit any amendment, modification,
abrogation or addition to the provisions of Article 6 which could reasonably be
expected to detrimentally affect the rights, remedies or recourse of the
priority of the holders of any Senior Indebtedness.
11.11.2 Notwithstanding subsection 11.11.1, without the consent of each
Debenture holder affected, an amendment, modification or supplement to this
indenture or the Debentures may not:
(a) reduce the threshold amount of Debentures whose holders must
consent to any amendment or waiver under this indenture or
modify the provisions relating to such amendment or waiver;
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(b) reduce the Interest Rate or extend the time for payment of
interest on any Debentures;
(c) reduce the principal amount of any Debenture or extend the
Maturity Date of any Debenture;
(d) reduce the Redemption Price, Total Offer Price, Additional
Amounts or Conversion Price (except, with respect to the
Conversion Price, as otherwise permitted by this indenture) of
any Debenture or extend the date on which the Redemption
Price, Total Offer Price or Additional Amounts of any
Debenture is payable;
(e) make any Debenture payable in money or securities other than
that stated in the Debenture;
(f) make any change in section 8.3 or this subsection 11.11.2,
except to increase any percentage set forth therein;
(g) make any change that adversely affects the right of any holder
to convert any Debenture or to receive any Additional Amounts
(except as such right is otherwise limited by this indenture);
(h) make any change that affects in a manner adverse to the
interest of the holders, the obligation of the Company to make
an Offer or to pay the Total Offer Price when due as
contemplated in Article 5;
(i) impair the right to institute suit for the enforcement of any
payment with respect to, or conversion of, the Debentures; or
(j) make any change that would result in the Company being
required to make any deduction or withholding from payments
made in respect of the Debentures.
It shall not be necessary for the consent of the holders under this subsection
11.11.2 to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
11.12 MEANING OF "EXTRAORDINARY RESOLUTION".
11.12.1 The expression "EXTRAORDINARY RESOLUTION" when used in this indenture
means, subject as hereinafter in this Article provided, a resolution proposed to
be passed as an extraordinary resolution at a meeting of Debenture holders duly
convened for the purpose and held in accordance with the provisions of this
Article at which the holders of at least 25% in principal amount of the
Debentures then outstanding are present in person or by proxy and passed by the
favourable votes of the holders of not less then 66 2/3% of the principal amount
of Debentures represented at the meeting and voted on a poll upon such
resolution.
11.12.2 Subject to section 11.17, if, at any meeting convened to consider an
extraordinary resolution, the holders of 25% in principal amount of the
Debentures outstanding are not present in person or by proxy within 30 minutes
after the time appointed for the meeting, then the meeting, if convened by or on
the requisition of Debenture holders, shall be dissolved; but in any other case
it shall stand adjourned to such date, being not less than 14 nor more than 60
days later, and to such place and time as may be appointed by the chairman. Not
less than ten days notice shall be given of the time and place of such adjourned
meeting in the manner provided in section 12.2. Such notice shall state that at
the adjourned meeting the Debenture holders present in person or by proxy shall
form a quorum but it shall not be necessary to set forth the purposes for which
the meeting was originally called or any other particulars. At the adjourned
meeting the Debenture holders present in person or by proxy shall form a quorum
and may transact the business for which the meeting was originally convened and
a resolution proposed at such
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adjourned meeting and passed by the requisite vote as provided in subsection
11.12.1 shall be an extraordinary resolution within the meaning of this
indenture, notwithstanding that the holders of 25% in principal amount of the
Debentures then outstanding are not present in person or by proxy at such
adjourned meeting.
11.12.3 Votes on an extraordinary resolution shall always be given on a poll and
no demand for a poll on an extraordinary resolution shall be necessary.
11.13 POWERS CUMULATIVE. It is hereby declared and agreed that any one or more
of the powers and/or any combination of the powers in this indenture stated to
be exercisable by the Debenture holders by extraordinary resolution or otherwise
may be exercised from time to time and the exercise of any one or more of such
powers or any combination of powers from time to time shall not be deemed to
exhaust the rights of the Debenture holders to exercise the same or any other
such power or combination of powers thereafter from time to time.
11.14 MINUTES. Minutes of all resolutions and proceedings at every meeting as
aforesaid shall be made and duly entered in books to be from time to time
provided for that purpose by the Trustee at the expense of the Company, and any
such minutes as aforesaid, if signed by the chairman of the meeting at which
such resolutions were passed or proceedings had, or by the chairman of the next
succeeding meeting of the Debenture holders, shall be prima facie evidence of
the matters therein stated and, until the contrary is proved, every such meeting
in respect of the proceedings of which minutes shall have been made shall be
deemed to have been duly held and convened, and all resolutions passed thereat
or proceedings had thereat, to have been duly passed and had.
11.15 INSTRUMENTS IN WRITING. Subject to section 11.17, all actions which may be
taken and all powers that may be exercised by the Debenture holders at a meeting
held as hereinbefore in this Article provided may also be taken and exercised by
the holders of 66 2/3% of the principal amount of all the outstanding Debentures
by an instrument in writing signed in one or more counterparts and the
expression "EXTRAORDINARY RESOLUTION" when used in this indenture shall include
an instrument so signed.
11.16 BINDING EFFECT OF RESOLUTIONS. Every resolution and every extraordinary
resolution passed in accordance with the provisions of this Article at a meeting
of Debenture holders shall be binding upon all the Debenture holders, whether
present at or absent from such meeting, and every instrument in writing signed
by Debenture holders in accordance with section 11.15 shall be binding upon all
the Debenture holders, whether signatories thereto or not, and each and every
Debenture holder and the Trustee (subject to the provisions for its indemnity
herein contained) shall be bound to give effect accordingly to every such
resolution, extraordinary resolution and instrument in writing.
11.17 EVIDENCE OF RIGHTS OF DEBENTURE HOLDERS. Any request, direction, notice,
consent or other instrument which this indenture may require or permit to be
signed or executed by the Debenture holders may be in any number of concurrent
instruments of similar tenor signed or executed by such Debenture holders and
the Trustee may, in its discretion, require proof of execution in cases where it
deems proof desirable and may accept such proof as it shall consider proper.
ARTICLE 12
NOTICES
12.1 NOTICE TO COMPANY. Any notice to the Company under the provisions of this
indenture shall be valid and effective if:
(a) delivered;
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(b) subject to section 12.5, sent by registered letter, postage
prepaid; or
(c) facsimiled and confirmed by first class mail, postage prepaid,
to the Company addressed to it at 1500 - 625 Howe Street, Vancouver, British
Columbia V6C 2T6, facsimile (604) 684-1175, Attention: The Secretary and a copy
delivered to Borden Ladner Gervais, LLP 1200 - 200 Burrard Street, Vancouver,
British Columbia V7X 1T2, facsimile (604) 687-1415, Attention: Fred R. Pletcher.
The Company may from time to time notify the Trustee in writing of a change of
address which thereafter, until changed by like notice, shall be the address of
the Company for all purposes of this indenture.
12.2 NOTICE TO DEBENTURE HOLDERS.
12.2.1 All notices to be given hereunder with respect to the Debentures shall be
deemed to be validly given to the Debenture holders if sent by ordinary mail,
postage prepaid, by letter or circular, facsimile, or other recorded means of
communication addressed to such holders at their post office addresses or
address of any recorded means of communications device appearing in any of the
registers hereinbefore mentioned and shall be deemed to have been effectively
given five business days following the day of mailing or on the date sent by
facsimile, as the case may be. Accidental error or omission in giving notice or
accidental failure to mail notice to any Debenture holder shall not invalidate
any action or proceeding founded thereon.
12.2.2 All notices with respect to any Debenture may be given to any one of the
holders thereof (if more than one) who is named in the registers hereinbefore
mentioned, and any notice so given shall be sufficient notice to all holders of
and/or persons interested in such Debenture.
12.3 NOTICE TO TRUSTEE. Any notice to the Trustee under the provisions of this
indenture shall be valid and effective if:
(a) delivered;
(b) subject to section 12.5, sent by registered letter, postage
prepaid; or
(c) facsimiled and confirmed by first class mail, postage prepaid,
to the Trustee addressed to it at Computershare Trust Company of Canada at 510
Burrard Street, Vancouver, British Columbia, V6C 3B9, facsimile (604) 685-4079,
Attention: Corporate Trust Department. The Trustee may from time to time notify
the Company in writing of a change of address which thereafter, until changed by
like notice, shall be the address of the Trustee for all purposes of this
indenture.
12.4 RECEIPT OF NOTICES. Any notice given to the Company or the Trustee in the
manner set out in sections 12.1 or 12.3, as the case may be, shall be deemed to
have been effectively given:
(a) if delivered, on the date so delivered;
(b) if sent by facsimile, on the date such facsimile is sent; or
(c) if mailed, subject to section 12.5, on the date five business
days after the date of mailing.
12.5 MAIL SERVICE INTERRUPTION. If by reason of any interruption of mail
service, actual or threatened, any notice to be given to the Trustee or to the
Company would reasonably be unlikely to reach
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its destination in the ordinary course of mail, such notice shall be valid and
effective only if delivered to the party to which it is addressed or if sent to
such party, at the appropriate address in accordance with section 12.1 or 12.3,
as the case may be, by facsimile or other means of prepaid transmitted or
recorded communication.
12.6 WAIVER OF NOTICE. Where this indenture provides for notice to any person in
any manner, such notice may be waived in writing by the person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice.
ARTICLE 13
CONCERNING THE TRUSTEE
13.1 TRUST INDENTURE LEGISLATION.
13.1.1 This indenture is subject to the provisions of the Trust Indenture
Legislation and shall, to the extent applicable, be governed by such provisions.
Without limiting the foregoing, the Trustee and the Company each agree to comply
with all provisions of the Trust Indenture Legislation applicable to or binding
upon each of them in connection with this indenture.
13.1.2 If and to the extent that any provision of this indenture limits,
qualifies or conflicts with any mandatory requirement of indenture legislation,
such mandatory requirement shall prevail.
13.2 NO CONFLICT OF INTEREST. The Trustee represents to the Company that at the
date of the execution and delivery of this indenture there exists no material
conflict of interest in the role of the Trustee as a fiduciary hereunder.
13.3 REPLACEMENT OF TRUSTEE.
13.3.1 The Trustee may resign its trusts and be discharged from all further
duties and liabilities hereunder by giving to the Company 90 days notice in
writing or such shorter notice as the Company may accept as sufficient at any
time a material conflict of interest exists in the Trustee's role as a fiduciary
hereunder. The Trustee shall, within 90 days after ascertaining that such a
material conflict of interest exists, either eliminate such material conflict of
interest or resign in the manner and with the effect specified in this section.
In the event of the Trustee resigning or being removed as provided in section
11.11 or subsection 13.3.3 or being dissolved, becoming bankrupt, going into
liquidation or otherwise becoming incapable of acting hereunder, the Company
shall forthwith appoint a new Trustee unless a new Trustee has already been
appointed by the Debenture holders; failing such appointment by the Company, the
retiring Trustee or any Debenture holder may apply to a Judge of the Supreme
Court of British Columbia, on such notice as such Judge may direct, for the
appointment of a new Trustee but any new Trustee so appointed by the Company or
by the Court shall be subject to removal as aforesaid by the Debenture holders.
Any new Trustee appointed under any provision of this section shall be a company
authorized to carry on the business of a trust company in the province of
British Columbia and upon any new appointment the new Trustee shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named herein as Trustee.
13.3.2 Any company into which the Trustee may be merged or with which it may be
consolidated or amalgamated or any corporation resulting from any merger,
consolidation or amalgamation to which the Trustee shall be a party, shall be
the successor Trustee under this indenture without the execution of any
instrument or any further act.
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13.3.3 Subject to subsection 13.3.1, the Company may, in its absolute
discretion, remove the Trustee and discharge the Trustee from all further duties
hereunder by giving the Trustee 30 days' notice in writing or such shorter
notice as the Trustee may accept as sufficient at any time.
13.4 EXPERTS, ADVISERS AND AGENTS. The Trustee may:
(a) act on the opinion or advice of or information obtained from
any solicitor, auditor, valuer, engineer, surveyor, or other
expert, whether obtained by the Trustee or by the Company, or
otherwise, and may employ such assistants as may be necessary
to the proper discharge of its duties and may pay proper and
reasonable compensation for all such legal and other advice or
assistance as aforesaid; and
(b) employ such agents and other assistants as it may reasonably
require for the proper discharge of its duties hereunder, and
may pay reasonable remuneration for all services performed for
it (and shall be entitled to receive reasonable remuneration
for all services performed by it) in the discharge of the
trusts hereof and compensation for all disbursements, costs
and expenses made or incurred by it in the discharge of its
duties hereunder and in the management of the trusts hereof.
Any solicitors employed or consulted by the Trustee may, but
need not be, solicitors for the Company.
13.5 TRUSTEE MAY DEAL IN DEBENTURES. Subject to section 13.2 the Trustee may
buy, sell, lend upon and deal in the Debentures and generally contract and enter
into financial transactions with the Company or otherwise, without being liable
to account for any profits made thereby.
13.6 INVESTMENT OF MONEYS HELD BY TRUSTEE.
13.6.1 Unless otherwise provided in this indenture, any moneys held by the
Trustee which under the trusts of this indenture may or ought to be invested or
which may be on deposit with the Trustee or which may be in the hands of the
Trustee shall be invested and reinvested in the name or under the control of the
Trustee in securities in which, under the laws of the Province of British
Columbia, trustees are authorized to invest trust moneys, provided that such
securities are expressed to mature within two years or such shorter period
selected to facilitate any payments expected to be made under this indenture,
after their purchase by the Trustee, and unless and until the Trustee shall have
declared the principal of and interest on the Debentures to be due and payable,
the Trustee shall so invest such moneys at the written request of the Company.
13.6.2 Pending the investment of any moneys as hereinbefore provided, such
moneys may be deposited in the name of the Trustee in any chartered bank of
Canada or, with the consent of the Company, in the deposit department of the
Trustee or any other loan or trust company authorized to accept deposits under
the laws of Canada, or any province thereof at the rate of interest then current
on similar deposits.
13.6.3 Unless and until the Trustee shall have declared the principal of and
interest on the Debentures to be due and payable the Trustee shall pay over to
the Company all interest received by the Trustee (other than pursuant to section
9.3) in respect of any investment or deposits made pursuant to the provisions of
this section 13.6.
13.7 TRUSTEE NOT ORDINARILY BOUND. Except as provided in subsections 8.1 (a) and
8.2 and as otherwise specifically provided herein, the Trustee shall not,
subject to the provisions of indenture legislation, be bound to give notice to
any person of the execution hereof, nor to do, observe or perform or see to the
observance or performance by the Company of any of the obligations herein
imposed upon the Company or of the covenants on the part of the Company herein
contained, nor in any way to supervise or
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interfere with the conduct of the Company's business, unless the Trustee shall
have been required to do so in writing by the holders of not less than 25% of
the aggregate principal amount of the Debentures then outstanding or by any
extraordinary resolution of the Debenture holders passed in accordance with the
provisions contained in Article 11, and then only after it shall have been
indemnified and funded (or provision having been made for such funding which are
satisfactory to the Trustee) to its satisfaction against all actions,
proceedings, claims and demands to which it may render itself liable and all
costs, charges, damages and expenses which it may incur by so doing.
13.8 TRUSTEE NOT REQUIRED TO GIVE SECURITY. The Trustee shall not be required to
give any bond or security in respect of the execution of the trusts and powers
of this indenture or otherwise in respect of the premises.
13.9 ACCEPTANCE OF TRUST. The Trustee hereby accepts the trusts in this
indenture declared and provided for and agrees to perform the same upon the
terms and conditions herein set forth and to hold all rights, privileges and
benefits conferred hereby and in law in trust for the various persons who shall
from time to time be Debenture holders, subject to all the terms and conditions
herein set forth.
13.10 PROTECTION OF THE TRUSTEE. The Trustee:
(a) shall not at any time be under any duty or responsibility to
any Debenture holder to determine whether any facts exist
which may require any adjustment contemplated by subsection
4.4.1, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed
in making the same;
(b) shall not be accountable with respect to the validity or value
(or the kind or amount) of any shares or other securities or
property which may at any time be issued or delivered upon the
exercise of the rights attaching to any Debenture;
(c) shall not be responsible for any failure of the Company to
make any cash payment or to issue, transfer or deliver Common
Shares or certificates for the same, if any, pursuant to the
terms of this Indenture;
(d) shall not incur any liability or responsibility whatever or be
in any way responsible for the consequence of any breach on
the part of the Company of any of the representations,
warranties or covenants herein contained or of any acts of the
agents or servants of the Company;
(e) shall not incur any liability or responsibility whatever or be
in any way responsible for the consequences of any act of
negligence or fraud of its agents so long as such agents were
employed in good faith;
(f) shall not incur any liability or responsibility whatever or be
in any way responsible for any moneys deposited with any
person other than the Trustee; and
(g) shall not incur any liability or responsibility whatever or be
in any way responsible for the consequences of accepting a
document as genuine without further inquiry, provided such
document is accepted in good faith.
13.11 TRUSTEE STANDARD OF CARE. In the exercise of its rights, duties and
obligations prescribed or conferred by the terms of this indenture, the Trustee
shall act honestly and in good faith and shall exercise that degree of care,
diligence and skill that a reasonably prudent trustee would exercise in
comparable
-61-
circumstances and the Trustee shall be bound to the standard of care required of
it under Trust Indenture Legislation.
13.12 THIRD PARTY INTERESTS. The Company hereby represents to the Trustee that
any account to be opened by, or interest to held by, the Trustee in connection
with this indenture for or to the credit of the Company, either: (i) is not
intended to be used by or on behalf of any third party; or (ii) is intended to
be used by or on behalf of a third party, in which case the Company agrees to
complete and execute forthwith a declaration in the Trustee's prescribed form as
to the particulars of such third party.
13.13 TRUSTEE NOT BOUND TO ACT. The Trustee shall retain the right not to act
and shall not be liable for refusing to act if, due to a lack of information or
for any other reason whatsoever, the Trustee, in its sole judgement, determines
that such act might cause it to be in non-compliance with any applicable
anti-money laundering or anti-terrorist legislation, regulation or guideline.
Further, should the Trustee, in its sole judgement, determine at any time that
its acting under this indenture has resulted in its being in non-compliance with
any applicable anti-money laundering or anti-terrorist legislation, regulation
or guideline, then it shall have the right to resign on 10 days written notice
to the Company provided: (i) that the Trustee's written notice shall describe
the circumstances of such non-compliance; and (ii) that if such circumstances
are rectified to the Trustee's satisfaction within such 10 day period, then such
resignation shall not be effective.
ARTICLE 14
SUPPLEMENTAL INDENTURES
14.1 SUPPLEMENTAL INDENTURES.
14.1.1 Notwithstanding any other provision contained herein, from time to time
the Trustee and, when authorized by a resolution of its directors, the Company,
may and, when required by this indenture, they shall execute, acknowledge and
deliver, by their proper officers, deeds or indentures supplemental hereto,
which thereafter shall form part hereof, for any one or more of the following
purposes:
(a) adding to the covenants of the Company herein contained for
the protection of the Debenture holders and/or providing for
events of default in addition to those herein specified;
(b) making such provision not inconsistent with this indenture as
may be necessary or desirable with respect to matters or
questions arising hereunder, including the making of any
modifications in the form of the Debentures which do not
affect the substance thereof and which, in the opinion of the
Trustee upon advice from Counsel, it may be expedient to make,
provided that the Trustee shall be of the opinion that such
provisions and modifications will not be prejudicial to the
interests of the Debenture holders;
(c) evidencing the succession, or successive successions, of other
corporations to the Company and the covenants of and
obligations assumed by any such successor in accordance with
the provisions of this indenture;
(d) giving effect to a modification of the conversion rights
applicable to the Debentures as contemplated in section 4.10
provided that the Trustee shall have received an opinion of
Counsel that all conditions precedent to the execution of such
supplemental indenture have been complied with;
(e) giving effect to any extraordinary resolution passed as
provided in Article 11;
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(f) making any change to comply with any exemption from
qualification under the TIA, or to comply with Canadian
federal or provincial legislation relating to trust
indentures;
(g) surrendering any right, power or option conferred by this
indenture on the Company; and
(h) for any other purpose not inconsistent with the terms of this
indenture.
14.1.2 The Trustee may also, without the consent or concurrence of the Debenture
holders, by supplemental indenture or otherwise, concur with the Company in
making any changes or corrections in this indenture which:
(a) in the good faith opinion of the board of the directors of the
Company do not materially adversely affect the rights of any
holder of Debentures, as evidenced by a resolution of the
board of directors contained in an Officers' Certificate
provided to the Trustee; and
(b) it shall have been advised by Counsel are required for the
purpose of curing or correcting any ambiguity or defective or
inconsistent provision or clerical omission or mistake or
manifest error contained herein or in any deed or indenture
supplemental or ancillary hereto, provided that in the opinion
of the Trustee upon advice from Counsel the rights of the
Trustee are in no way prejudiced thereby.
ARTICLE 15
EVIDENCE OF OWNERSHIP
15.1 EVIDENCE OF OWNERSHIP. The Company and the Trustee may treat the holder of
any Debenture as the owner thereof without actual production of such Debenture
for the purpose of any request, requisition, direction, consent, instrument or
other document as aforesaid.
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ARTICLE 16
EXECUTION AND FORMAL DATE
16.1 COUNTERPART EXECUTION. This indenture may be simultaneously executed in
several counterparts, each of which when so executed shall be deemed to be an
original and such counterparts together shall constitute one and the same
instrument.
16.2 FORMAL DATE. This indenture may be referred to as bearing the formal date
of July 30, 2003 irrespective of the actual date of execution hereof.
IN WITNESS WHEREOF the parties hereto have executed these presents
under their respective corporate seals and the hands of their proper officers in
that behalf.
PAN AMERICAN SILVER CORP.
Per:
----------------------------------------------
Name:
Title:
Per:
----------------------------------------------
Name:
Title:
COMPUTERSHARE TRUST COMPANY OF CANADA
Per:
----------------------------------------------
Name:
Title:
Per:
----------------------------------------------
Name:
Title:
-64-
SCHEDULE A
Specimen Debenture Certificate
A-1
[FORM OF FACE OF DEBENTURE]
PAN AMERICAN SILVER CORP.
5.25% CONVERTIBLE UNSECURED SENIOR SUBORDINATED DEBENTURE
[IF GLOBAL DEBENTURE, INSERT FOLLOWING LEGEND: "THIS DEBENTURE IS A GLOBAL
DEBENTURE WITHIN THE MEANING OF THE INDENTURE HEREIN REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS DEBENTURE MAY
NOT BE TRANSFERRED TO OR EXCHANGED FOR DEBENTURES REGISTERED IN THE NAME OF ANY
PERSON OTHER THAN THE DEPOSITORY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
EVERY DEBENTURE AUTHENTICATED AND DELIVERED UPON REGISTRATION OF, TRANSFER OF,
OR IN EXCHANGE FOR, OR IN LIEU OF, THIS DEBENTURE SHALL BE A GLOBAL DEBENTURE
SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE."]
[IF ISSUED TO THE CANADIAN DEPOSITORY FOR SECURITIES LIMITED, INSERT THE
FOLLOWING LEGEND: "UNLESS THIS DEBENTURE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE CANADIAN DEPOSITORY FOR SECURITIES LIMITED ("CDS") TO PAN
AMERICAN SILVER CORP. OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY DEBENTURE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME
OF CDS & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED HOLDER HEREOF, CDS & CO., HAS AN INTEREST HEREIN."
-1-
No.: 1
Issue Date: July -, 2003
Principal Amount: U.S. $-
CUSIP #: 697900AA6
PAN AMERICAN SILVER CORP., a company duly organized and
subsisting under the laws of British Columbia, Canada (herein referred to as the
"Company"), for value received, hereby promises to pay to ____________________
or registered assigns, the Principal Amount of ________ United States Dollars on
July 31, 2009.
This Debenture shall bear interest and the interest shall
accrue and be calculated in the manner and shall be paid as specified on the
reverse of this Debenture. This Debenture is subject to redemption and
conversion as specified on the reverse of this Debenture. All capitalized terms
used herein without definition shall have the respective meanings assigned
thereto in the indenture referred to on the reverse of this Debenture.
Additional provisions of this Debenture are set forth on the
reverse of this Debenture, which additional provisions shall for all purposes
have the same effect as if set forth at this place.
PAN AMERICAN SILVER CORP.
By:
-------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
Computershare Trust Company of Canada, as Trustee, certifies that this Debenture
is a Debenture referred to in the within-mentioned indenture.
COMPUTERSHARE TRUST COMPANY OF CANADA
By:
-----------------------------------
Authorized Signatory
-2-
(FORM OF REGISTRATION PANEL)
(No writing hereon except by Trustee or other registrar)
DATE OF REGISTRATION IN WHOSE NAME REGISTERED SIGNATURE OF TRUSTEE OR REGISTRAR
- ---------------------------------------- -------------------------------------- --------------------------------------
- ---------------------------------------- -------------------------------------- --------------------------------------
- ---------------------------------------- -------------------------------------- --------------------------------------
- ---------------------------------------- -------------------------------------- --------------------------------------
- ---------------------------------------- -------------------------------------- --------------------------------------
-3-
[FORM OF REVERSE OF DEBENTURE]
5.25% CONVERTIBLE UNSECURED SENIOR SUBORDINATED DEBENTURE
1. Interest
(a) The Company shall pay interest on each Debenture in arrears in
semi-annual instalments on January 31 and July 31 of each year (the "Interest
Payment Dates") commencing on January 31, 2004 at the rate of 5.25% per annum
computed on the basis of a 365 day year. Subject to the terms and conditions of
the indenture hereinafter referred to, interest shall accrue from and including
the most recent date to which interest has been paid or made available for
payment or, if no interest has been paid or made available for payment, from and
including July 30, 2003. The interest so payable on any January 31 or July 31
will, subject to certain exceptions provided in the indenture, be paid to the
person in whose name this Debenture is registered at the close of business on
January 15 or July 15, as the case may be, next preceding such January 31 or
July 31 whether or not such January 15 or July 15 is a business day. Interest
shall cease to accrue on (and excluding) the earlier of (i) the Maturity Date;
(ii) any Conversion Date, Redemption Date or other date on which interest shall
cease to accrue in accordance with sections 2.5 and 4.2.6 of the indenture.
(b) If the principal amount hereof or any portion of the principal
amount hereof is not paid when due (whether upon acceleration pursuant to
section 8.1 of the indenture, upon the Redemption Date pursuant to paragraph 6
hereof or on the business day following the expiry of an Offer pursuant to
paragraph 9 hereof or upon the Maturity Date) or if interest is not paid when
due upon the Interest Payment Dates provided for in section 1(a) hereof, or if
Common Shares (or cash in lieu of fractional shares) are not delivered when due
upon the conversion of this Debenture or, if Additional Amounts are not paid
when due, then in each such case the Company shall pay interest on the overdue
amount at the rate of 5.25% per annum, which interest (to the extent payment of
such interest shall be legally enforceable) shall accrue from the date such
overdue amount was due to, but excluding, the date payment of such amount,
including interest thereon, has been made or duly provided for.
The Company will pay to the registered holder of this Debenture such
Additional Amounts as may become payable under section 2.19 of the indenture.
2. Method of Payment
Subject to the terms and conditions of the indenture and
certain exceptions contained therein, the Company will make payments or, if the
Company is permitted to do so under the indenture and so elects in connection
with a payment on a Redemption Date or the Maturity Date, the Company shall
issue Common Shares, in respect of the Debentures to the persons who are
registered holders of Debentures at the close of business on the business day
preceding the Redemption Date or Maturity Date, or at the close of business on
the Conversion Date or the date of expiry of an Offer. Holders must surrender
Debentures to the Trustee to collect payments in respect of the Debentures,
other than payments of interest only or Additional Amounts. The Company will pay
cash amounts in United States dollars and may make such cash payments by cheque
or electronic transfer of funds. Interest will be payable at the office of the
Trustee, except that, at the option of the Company, payment of interest may be
made by electronic transfer of funds or by cheque mailed first-class mail to the
address of the person entitled thereto at such address as shall appear in the
principal register for the Debentures.
-4-
Pursuant to section 2.8 of the indenture, the Company may
elect to pay interest hereon by delivering Common Shares to the Trustee, which
the Trustee is obligated to sell and use the proceeds to satisfy the Interest
Amount payable.
3. Registrar
Initially, Computershare Trust Company of Canada (the
"Trustee") will act as registrar. The Company may appoint and change any paying
agent, conversion agent, registrar or co-registrar upon notice to the Trustee
and the Debenture holders. The Company or any Subsidiary or Affiliate of the
Company may act as registrar or co-registrar. If there is an inconsistency
between the terms of this Debenture and the terms set out in the indenture, the
terms of the indenture will govern. The indenture is incorporated by reference
in this Debenture.
4. Indenture
The Company issued the Debentures under an indenture dated as
of July 30, 2003 (the "indenture") between the Company and the Trustee.
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the indenture. If there is an inconsistency between the terms of this
Debenture and the terms set out in the Indenture, the terms of the Indenture
will govern. The Indenture is incorporated by reference in this Debenture.
5. Subordination
The indebtedness evidenced by this Debenture is subordinated
in right of payment, to the extent and in the manner provided in the indenture,
to the prior payment in full of all Senior Indebtedness whether outstanding at
the date of the indenture or thereafter created, incurred, assumed or
guaranteed.
6. Redemption at the Option of the Company
At any time on or after July 31, 2006, the Company may, at its
option, redeem the Debentures in whole at any time or in part from time to time,
provided that the then Current Market Price is not less than 125% of the
Conversion Price, at a redemption price equal to 100% of the principal amount
thereof plus accrued and unpaid interest thereon to but excluding the Redemption
Date (the "Redemption Price").
In addition, the Debentures are redeemable, in whole but not
in part, at the option of the Company for cash in United States dollars at any
time upon not less than 30 days' nor more than 60 days' notice at the Redemption
Price in the event that the Company has become or would become obligated to pay,
on the next date on which any amount would be payable under or with respect to
the Debentures, any Additional Amounts in accordance with section 3.2 of the
indenture as a result of any change in, or amendment to, the laws (or any
regulations promulgated hereunder) of Canada (or any political subdivision or
taxing authority thereof or therein) or any change in, or amendment to, any
official position regarding the application or interpretation of such laws or
regulations, which change or amendment is announced or becomes effective on or
after July 30, 2003; provided that the Company determines, in its reasonable
business judgment, that the obligation to pay such Additional Amounts cannot be
avoided by the use of reasonable measures available to the Company (not
including substitution of the obligor under the Debentures).
If fewer than all the Debentures are to be redeemed, the
Debentures will be redeemed in principal amounts of U.S.$1,000 or integral
multiples of U.S.$1,000 pro rata or by another method that complies with the
requirements of any exchange on which the Debentures are listed or quoted and
that the Trustee shall deem equitable.
-5-
7. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the Redemption Date to each holder of Debentures to be
redeemed to the holder's registered address. If a combination of cash and Common
Shares (if the Company elects to issue Common Shares as full or partial payment)
sufficient to satisfy the Redemption Price of all Debentures (or portions
thereof) to be redeemed on the Redemption Date are deposited with the Trustee
prior to or on the Redemption Date, on and after such Redemption Date, interest
shall cease to accrue on such Debentures or portions thereof. Debentures in
denominations larger than U.S.$1,000 principal amount may be redeemed in part
but only in integral multiples of U.S.$1,000 principal amount.
8. Share Payment Option
The Company may at its option and subject to receiving all
applicable regulatory approvals, unless an event of default has occurred and is
continuing and except in the case of a redemption under section 3.2 of the
indenture, elect to satisfy its obligations to pay all or a specified percentage
of the outstanding principal amounts of Debentures upon redemption or maturity
by issuing and delivering to the Debenture holder, for each U.S.$1,000 principal
amount of Debentures, that number of fully paid and non-assessable and freely
tradeable Common Shares obtained by dividing such principal amount by 95% of the
Current Market Price of the Debentures on the applicable Redemption Date or
Maturity Date, as the case may be, in accordance with section 3.10 of the
indenture. No fractional Common Shares will be issued to the holders of
Debentures, however in lieu thereof, the Company shall pay to the Trustee on
account of the Debenture holders the cash equivalent thereof determined on the
basis of the Current Market Price on the Redemption Date or Maturity Date, as
the case may be.
To exercise this option, the Company must, in the case of a
redemption of Debentures, so state in the applicable Redemption Notice, or in
the case of payment at maturity, provide the appropriate notice as described in
the indenture.
9. Change of Control
In the event of any Change of Control of the Company, the
Company must, within 35 days after the occurrence of the Change of Control, make
an offer to all Debenture holders to redeem (an "Offer") all outstanding
Debentures properly tendered pursuant to such Offer, that is open for acceptance
for a period of not less than 35 days and not more than 60 days and shall
provide for payment to all Debenture holders who accept the Offer no later than
the 60th day after making the Offer of cash or Common Shares or any combination
of the foregoing having an aggregate value equal to the sum of: (i) 101% of the
aggregate principal amount of the Debentures plus accrued and unpaid interest
thereon up to but excluding the date of redemption of such Debentures by the
Company or an Affiliate of the Company; and (ii) in the event the Change of
Control occurs on or before July 31, 2006, the present value of any additional
amount of interest (calculated as provided in the indenture) which would have
accrued and been paid on the Debentures had such Debentures been outstanding
until July 31, 2006 (collectively, the "Total Offer Price"). Common Shares
issued as payment hereunder shall be issued in accordance with paragraph 8
hereof and section 3.10 of the indenture.
If on the business day following the expiry date of the Offer
the Trustee holds sufficient cash and/or Common Shares to pay the Total Offer
Price of all Debentures or portions thereof in respect of which a Change of
Control Redemption Notice has been delivered as specified in section 5.3 of the
indenture, then after the expiry date of the Offer such Debenture shall cease to
be outstanding. Interest on such Debenture shall cease to accrue and the
principal amount of the Debenture and the amount of
-6-
accrued and unpaid interest thereon to, but excluding the expiry date of the
Offer, will be fully satisfied and all other rights of the Debenture holder
shall terminate (other than the right to receive the Total Offer Price upon
surrender of such Debenture).
Holders have the right to withdraw any Change of Control
Redemption Notice by delivering to the Trustee a written notice of withdrawal in
accordance with the terms and provisions of the indenture.
10. Conversion
Subject to the next succeeding sentence, a holder of a
Debenture may convert it into Common Shares at any time prior to the close of
business on the Maturity Date in accordance with the indenture, provided that if
the Debenture is called for redemption, the holder is entitled to convert it at
any time before the close of business on the last business day prior to the
Redemption Date. A Debenture in respect of which a holder has delivered a Change
of Control Redemption Notice accepting an Offer may be converted only if such
Change of Control Redemption Notice is withdrawn in accordance with the terms of
the indenture.
The initial Conversion Rate is approximately 104.4932 Common
Shares per U.S.$1,000 principal amount of Debentures, reflecting an initial
Conversion Price of U.S.$9.57. The Conversion Price is subject to adjustment
upon the occurrence of certain events described in the indenture, including the
events described below. The Company will deliver cash in lieu of any fractional
Common Share.
Subject to the indenture, to convert a Debenture, a holder
must (1) complete and manually sign a conversion notice in the form attached as
Schedule D to the indenture and deliver such notice to the Trustee or, if
applicable, complete and deliver to The Canadian Depository for Securities
Limited ("CDS", which term includes any successor thereto) the appropriate
instruction form for conversion pursuant to CDS's book entry conversion program,
(2) surrender the Debenture to the Trustee by physical or book entry delivery
(which is not necessary in the case of conversion pursuant to CDS's book entry
conversion program), (3) furnish appropriate endorsements and transfer documents
if required by the Trustee or the Company and (4) pay any transfer or similar
tax, if required. Book entry delivery of a Debenture to the Trustee may be made
by any financial institution that is a participant in CDS; conversion through
CDS's book entry conversion program is available for any Debenture that is held
in an account maintained at CDS by any such participant.
No accrued and unpaid interest from the Interest Payment Date
next preceding the Conversion Date will be paid on Debentures that are converted
except if a Debenture is converted in response to a call for redemption in
accordance with Article 3 of the indenture or in response to an Offer made upon
the occurrence of a Change of Control as provided in Article 5 of the indenture.
A Debenture holder may elect to convert a portion of a
Debenture if the principal amount of such portion is U.S.$1,000 or an integral
multiple of U.S.$1,000. No payment or adjustment will be made for dividends or
other distributions on the Common Shares except as provided in the indenture.
The Conversion Price will be adjusted for: (i) dividends or
distributions on Common Shares payable in Common Shares of the Company; (ii)
subdivisions or combinations of Common Shares; (iii) certain issuances by
reclassification of Common Shares into any other shares of the Company; (iv)
distributions to all holders of Common Shares of rights, warrants or options
entitling them, for a period not exceeding 45 days, to subscribe for Common
Shares at less than the Current Market Price per Common Share; (v) distributions
on Common Shares of evidences of indebtedness, capital stock, cash
-7-
or assets (including Debentures but excluding Common Share distributions covered
above, those rights, warrants, dividends and distributions referred to above,
dividends and distributions paid exclusively in cash and certain distributions
upon mergers or consolidations resulting in reclassification, conversion,
exchange or cancellation of common shares); (vi) dividends and other
distributions on Common Shares paid exclusively in cash, if the aggregate amount
of such dividends and other distributions, when taken together with other
all-cash distributions made within the preceding 12 months not triggering a
conversion rate adjustment, exceeds 1% of Aggregate Market Capitalization on the
date of the payment of the dividends and other distributions; or (vii) payment
to holders of Common Shares in respect of an issuer bid or a tender or exchange
offer, other than an odd-lot offer, by the Company or a Subsidiary for Common
Shares as of the trading day next succeeding the last date tenders or exchanges
may be made pursuant to an issuer bid or a tender or exchange offer by the
Company or one of the Company's Subsidiaries, which involves an aggregate
consideration that, together with any cash and the fair market value of other
consideration payable in respect of an issuer bid or any tender or exchange
offer by the Company or one of the Company's Subsidiaries for the Common Shares
concluded within the preceding 12 months not triggering a conversion rate
adjustment, and the aggregate amount of any all-cash distributions to all
holders of the Company's common shares made within the preceding 12 months not
triggering a conversion rate adjustment exceeds 5% of Aggregate Market
Capitalization on the Next Trading Day. However, no adjustment will be made if
Debenture holders will participate in the transactions on a basis that the board
of directors of the Company determines is fair and appropriate. Subject to
regulatory consent, the Company from time to time may voluntarily decrease the
Conversion Price.
If the Company is a party to a consolidation, amalgamation,
merger or binding share exchange, a transfer of distributions or certain other
transactions described in the indenture, the right to convert a Debenture may be
changed into a right to convert it into securities, property or assets
(including cash) of the Company or another person.
11. Denominations; Transfer; Exchange
The Debentures are issued in denominations of U.S.$1,000 and
integral multiples thereof and may be issued as Global Debentures. A holder may
transfer or exchange Debentures in accordance with the indenture and, where the
Debentures have been issued as Global Debentures, in accordance with the
book-entry system. The Trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the indenture. The Trustee need not
transfer or exchange any Debentures selected for redemption (except, in the case
of a Debenture to be redeemed in part, the portion of the Debenture not to be
redeemed) or any Debentures in respect of which a Change of Control Redemption
Notice has been given and not withdrawn (except, in the case of a Debenture to
be purchased in part, the portion of the Debenture not to be purchased), any
Debentures for a period of 15 days before a selection of Debentures to be
redeemed or any Debentures that the Company may have acquired in any manner
whatsoever.
12. Persons Deemed Owners
The registered holder of this Debenture may be treated as the
owner of this Debenture for all purposes.
13. Unclaimed Money or Securities
Subject to applicable law, the Trustee shall return to the
Company upon written request any money or securities held by the Trustee for the
payment of any amount with respect to the Debentures
-8-
that remains unclaimed for six years after the date upon which payment became
due. After return to the Company, holders entitled to the money or securities
must look to the Company for payment as general creditors unless an applicable
abandoned property law designates another person.
14. Amendments; Waiver
Subject to certain exceptions set forth in the indenture, the
indenture or the Debentures may be amended by extraordinary resolution of the
Debenture holders. Without the consent of any Debenture holder, the Company and
the Trustee may amend the indenture or the Debentures: to cure any ambiguity,
defect or inconsistency provided, however that such amendment does not adversely
affect the rights of any holder; to provide for the succession of another person
to the Company, or successive successions, and the assumption by the successor
person of the covenants, agreements and obligations of the Company, in
compliance with, or otherwise to comply with, Article 10 or section 4.9 of the
indenture; to make any change that does not adversely affect the rights of any
Debenture holder; to add to the covenants or obligations of the Company under
the indenture or to surrender any right, power or option conferred in the
indenture upon the Company; or to comply with any requirement under the Trust
Indenture Legislation.
15. Defaults and Remedies
Under the indenture, events of default include (i) a default
in the payment of interest in cash when due on the Debenture and the continuance
of such default for 15 business days; (ii) default in the payment of the
principal amount, Redemption Price (in cash or Common Shares) or Total Offer
Price on any Debenture when the same becomes due and payable, whether at
maturity of such Debenture, upon redemption or otherwise and such default
continues for five business days; (iii) failure by the Company to comply with
any material term, covenant or other agreements in the Debentures or the
indenture and such failure continues for 30 days after receipt by the Company of
a Notice of Default; (iv) failure to deliver Common Shares (or cash in lieu of
fractional shares) in accordance with the terms of the indenture when such
Common Shares (or cash in lieu of fractional shares) are required to be
delivered upon conversion of a Debenture and such failure is not remedied for a
period of 10 days; (v) failure by the Company to make an Offer as required under
Article 5 of the indenture; (vi) default by the Company under the terms of any
agreement or instrument evidencing or under which the Company or a Subsidiary
has at the date of the indenture or thereafter outstanding any indebtedness for
borrowed money and such indebtedness shall be accelerated so that the same shall
be or become due and payable prior to the date on which the same would otherwise
become due and payable and the aggregate amount thereof so accelerated exceeds
U.S.$10 million and such acceleration is not rescinded or annulled within five
business days after written notice thereof to the Company from the Trustee or to
the Company and the Trustee from the holders of at least 25% in aggregate
principal amount of the Debentures then outstanding in accordance with the
indenture unless that default has been cured or waived within 30 days; provided
however, that, if such default under such agreement or instrument is remedied or
cured by the Company or a Subsidiary or waived by the holders of such
indebtedness, then the event of default under the indenture by reason thereof
shall be deemed likewise to have been thereupon remedied, cured or waived
without further action upon the part of the Trustee or any of such holders; and
(vii) certain events of bankruptcy or insolvency by the Company or a Significant
Subsidiary. If an event of default occurs and is continuing, the Trustee, or the
holders of at least 50% in aggregate principal amount of the Debentures at the
time outstanding, by notice in writing to the Company (and to the Trustee if
given by the holders) may declare all the Debentures to be due and payable
immediately. Certain events of bankruptcy or insolvency are events of default
which will result in the Debentures becoming due and payable immediately upon
the occurrence of such events of default.
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Debenture holders may not enforce the indenture or the
Debentures except as provided in the indenture. The Trustee may refuse to
enforce the indenture of the Debentures unless it receives reasonable indemnity
or security. Subject to certain limitations, holders of a majority in aggregate
principal amount of the Debentures at the time outstanding may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Debenture holders notice of any continuing event of default in certain
circumstances if it determines that withholding notice is in the Debenture
holders' interests.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Trust Indenture
Legislation, a Trustee, in its individual or any other capacity, may become the
owner or pledgee of Debentures and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not a Trustee.
17. No Recourse Against Others
A director, officer, employee or shareholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Debentures or the indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Debenture, each
Debenture holder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Debentures.
18. Authentication
This Debenture shall not be valid until an authorized
signatory of the Trustee manually signs the Trustee's certificate of
authentication on the other side of this Debenture.
19. Governing Law
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE PROVINCE OF BRITISH COLUMBIA, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE PROVINCE OF BRITISH COLUMBIA.
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FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
__________________________, whose address and social insurance number, if
applicable, are set forth below, this Debenture (or U.S.$_______________________
principal amount hereof*) of PAN AMERICAN SILVER CORP. standing in the name(s)
of the undersigned in the register maintained by the Company with respect to
such Debenture and does hereby irrevocably authorize and direct the Trustee to
transfer such Debenture in such register, with full power of substitution in the
premises.
Dated:
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Address of Transferee:
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(Street Address, City, Province and Postal Code)
Social Insurance Number of Transferee, if applicable:
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*If less than the full principal amount of the within Debenture is to be
transferred, indicate in the space provided the principal amount (which must be
U.S.$1,000 or an integral multiple thereof, unless you hold a Debenture in a
non-integral multiple of U.S.$1,000 by reason of your having exercised your
right to exchange upon the making of an Offer, in which case such Debenture is
transferable only in its entirety) to be transferred.
1. The signature(s) to this assignment must correspond with the name(s) as
written upon the face of this Debenture in every particular without
alteration or any change whatsoever. The signature(s) must be
guaranteed by a Canadian chartered bank or trust company or by a member
of an acceptable Medallion Guarantee Program. Notarized or witnessed
signatures are not acceptable as guaranteed signatures. The Guarantor
must affix a stamp bearing the actual words: "SIGNATURE GUARANTEED".
2. The registered holder of this Debenture is responsible for the payment
of any documentary, stamp or other transfer taxes that may be payable
in respect of the transfer of this Debenture.
Signature of Guarantor:
- ----------------------------- -------------------------------------------
Authorized Officer Signature of transferring registered holder
- -----------------------------
Name of Institution
[IF CDS GLOBAL DEBENTURE, INSERT FOLLOWING]
EXHIBIT "1"
TO CDS GLOBAL DEBENTURE
PAN AMERICAN SILVER CORP.
5.25% CONVERTIBLE UNSECURED SENIOR SUBORDINATED DEBENTURE
Initial Principal Amount: U.S.$- CUSIP: 697900AA6
Authorization:
-----------------------------
ADJUSTMENTS
DATE AMOUNT OF INCREASE AMOUNT OF DECREASE NEW PRINCIPAL AMOUNT AUTHORIZATION
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SCHEDULE B
REDEMPTION NOTICE
PAN AMERICAN SILVER CORP.
5.25% CONVERTIBLE UNSECURED SENIOR SUBORDINATED DEBENTURES
REDEMPTION NOTICE
To: Holders of 5.25% Convertible Unsecured Senior Subordinated Debentures
(the "DEBENTURES") of Pan American Silver Corp. (the "COMPANY")
Note: All capitalized terms used herein have the meaning ascribed thereto in
the indenture mentioned below, unless otherwise indicated and all
references to $ shall be to lawful money of the United States of
America, unless otherwise indicated.
Notice is hereby given pursuant to section 3.4 of the trust
indenture (the "INDENTURE") dated as of July 30, 2003 between the Company, and
Computershare Trust Company of Canada (the "TRUSTEE"), that the aggregate
principal amount of $- of the $- of Debentures outstanding will be redeemed as
of - (the "REDEMPTION DATE"), upon payment of a redemption amount of $- for each
$1,000 principal amount of Debentures, being equal to the aggregate of (i) $-
(the "REDEMPTION PRICE"), and (ii) all accrued and unpaid interest hereon to but
excluding the Redemption Date (collectively, the "TOTAL REDEMPTION PRICE").
The Total Redemption Price will be payable upon presentation
and surrender of the Debentures called for redemption at the following corporate
trust office:
COMPUTERSHARE TRUST COMPANY OF CANADA
[VANCOUVER ADDRESS]
The interest upon the principal amount of Debentures called
for redemption shall cease to be payable from and after the Redemption Date,
unless payment of the Total Redemption Price shall not be made on presentation
for surrender of such Debentures at the above-mentioned corporate trust office
on or after the Redemption Date or prior to the setting aside of the Total
Redemption Price pursuant to the Indenture.
Pursuant to subsection 3.10.1 of the indenture, the Company
hereby irrevocably elects to satisfy its obligation to pay to the holders of
Debentures $- of the Redemption Price payable to holders of Debentures in
accordance with this notice by issuing and delivering to the holders that number
of Common Shares obtained by dividing the Redemption Price by 95% of the then
Current Market Price of the Common Shares along with payment in cash of accrued
and unpaid interest, if any, up to the Redemption Date.
No fractional Common Shares shall be delivered upon the
exercise by the Company of the above-mentioned redemption right but, in lieu
thereof, the Company shall pay the cash equivalent thereof determined on the
basis of the Current Market Price of Common Shares on the Redemption Date (less
any tax required to be deducted, if any).
In this connection, upon presentation and surrender of the
Debentures for payment on the Redemption Date, the Company shall, on the
Redemption Date, make the delivery to the Trustee, at the above-mentioned
corporate trust office, for delivery to and on account of the holders, of
certificates representing the Common Shares to which holders are entitled
together with the cash equivalent in lieu of
B-1
fractional Common Shares, cash for all accrued and unpaid interest up to, but
excluding, the Redemption Date, and, if only a portion of the Debentures are to
be redeemed by issuing Common Shares, cash representing the balance of the Total
Redemption Price.
DATED:
PAN AMERICAN SILVER CORP.
- -----------------------------------
(Authorized Signatory)
B-2
SCHEDULE C
FORM OF MATURITY NOTICE
PAN AMERICAN SILVER CORP.
5.25% CONVERTIBLE UNSECURED SENIOR SUBORDINATED DEBENTURES
MATURITY NOTICE
To: Holders of 5.25% Convertible Unsecured Senior Subordinated Debentures
(the "DEBENTURES") of Pan American Silver Corp. (the "COMPANY")
Note: All capitalized terms used herein have the meaning ascribed thereto in
the indenture mentioned below, unless otherwise indicated and all
references to $ shall be to lawful money of the United States of
America, unless otherwise indicated.
Notice is hereby given pursuant to subsection 3.10.1 of the
trust indenture (the "INDENTURE") dated as of July 30, 2003 between the Company,
and Computershare Trust Company of Canada, as trustee (the "TRUSTEE"), that the
Debentures are due and payable as of July 31, 2009 (the "MATURITY DATE") and the
Company elects to satisfy its obligation to pay to holders of Debentures $- of
the principal amount of all of the Debentures outstanding on the Maturity Date
by issuing and delivering to the holders that number of Common Shares equal to
the number obtained by dividing such principal amount of $- of the Debentures by
95% of the Current Market Price of Common Shares on the Maturity Date along with
payment of all accrued and unpaid interest thereon to but excluding the Maturity
Date.
No fractional Common Shares shall be delivered on exercise by
the Company of the above mentioned repayment right but, in lieu thereof, the
Company shall pay the cash equivalent thereof determined on the basis of the
Current Market Price of Common Shares on the Maturity Date (less any tax
required to be deducted, if any).
In this connection, upon presentation and surrender of the
Debentures for payment on the Maturity Date, the Company shall, on the Maturity
Date, make delivery to the Trustee, at its principal corporate trust office in
Vancouver, British Columbia, for delivery to and on account of the holders, of
certificates representing the Common Shares to which holders are entitled
together with the cash equivalent in lieu of fractional Common Shares, cash for
all accrued and unpaid interest up to, but excluding, the Maturity Date and if
only a portion of the Debentures are to be repaid by issuing Common Shares, cash
representing the balance of the principal amount due on the Maturity Date.
DATED:
PAN AMERICAN SILVER CORP.
- -----------------------------------
(Authorized Signatory)
C-1
SCHEDULE D
FORM OF NOTICE OF CONVERSION
CONVERSION NOTICE
To: PAN AMERICAN SILVER CORP.
c/o Computershare Trust Company of Canada
510 Burrard Street
Vancouver, British Columbia, V6C 3B9
Note: All capitalized terms used herein have the meaning ascribed thereto in
the indenture mentioned below, unless otherwise indicated and all
references to $ shall be to lawful money of the United States of
America, unless otherwise indicated.
The undersigned registered holder of 5.25% Convertible
Unsecured Senior Subordinated Debentures bearing Certificate No.- irrevocably
elects to convert such Debentures (or $* principal amount thereof*) in
accordance with the terms of the indenture referred to in such Debentures and
tenders herewith the Debentures, and, if applicable, directs that the Common
Shares of Pan American Silver Corp. issuable upon a conversion be issued and
delivered to the person indicated below. (If Common Shares are to be issued in
the name of a person other than the holder, all requisite transfer taxes must be
tendered by the undersigned).
Dated:
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(Signature of Registered Holder)
* If less than the full principal amount of the Debentures, indicate in
the space provided the principal amount (which must be $1,000 or
integral multiples thereof).
NOTE: If Common Shares are to be issued in the name of a person other than
the holder, the signature must be guaranteed by a Canadian chartered
bank or trust company or by a member of an acceptable Medallion
Guarantee Program. The Guarantor must affix a stamp bearing the actual
words: "SIGNATURE GUARANTEED".
(Print name in which Common Shares are to be issued, delivered and registered)
Name:
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(Address)
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(City, Province and Postal Code)
Name of guarantor:
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Authorized signature:
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D-1