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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of March 28, 2005.
Commission File Number 033-74656-99
WESTERN FOREST PRODUCTS INC.
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(Translation of registrant's name into English)
3rd Floor, 435 Trunk Road, Duncan, British Columbia Canada V9L 2P9
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(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): ____
NOTE: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a
Form 6-K if submitted solely to provide an attached annual report to security
holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): _____
NOTE: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a
Form 6-K if submitted to furnish a report or other document that the registrant
foreign private issuer must furnish and make public under the laws of the
jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- ________.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WESTERN FOREST PRODUCTS INC.
-----------------------------------
(Registrant)
/s/ Paul Ireland
Date as of March 28, 2005 By ------------------------------------
(Signature)*
- ---------------- Paul Ireland
* Print the name and title under Chief Financial Officer
the signature of the signing officer.
PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION
SEC 1815 (11-02) CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE
FORM DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER.
WARRANT INDENTURE
Providing for the Issue of Warrants to Purchase Common Shares
BETWEEN
WESTERN FOREST PRODUCTS INC.
- and -
COMPUTERSHARE TRUST COMPANY OF CANADA
Dated as of July 27, 2004
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND INTERPRETATION.......................................................................... 2
1.1 Definitions..................................................................................... 2
1.2 Interpretation.................................................................................. 8
1.3 Schedules....................................................................................... 8
1.4 Time of the Essence............................................................................. 8
1.5 Applicable Law; Attornment...................................................................... 8
ARTICLE 2
ISSUE OF WARRANTS....................................................................................... 9
2.1 Creation and Issue of Warrants.................................................................. 9
2.2 Terms of Warrants............................................................................... 9
2.3 Form of Warrants................................................................................ 9
2.4 Warrant Certificates............................................................................ 9
2.5 Issue in Substitution for Warrants.............................................................. 9
2.6 Conditions for Replacement of Warrant........................................................... 10
2.7 Exchange of Warrant Certificates................................................................ 10
2.8 Warrants to Rank Pari Passu..................................................................... 10
2.9 Execution of Warrants........................................................................... 10
2.10 Countersignature by the Warrant Trustee......................................................... 11
2.11 Effect of Countersignature...................................................................... 11
2.12 Charges for Exchange............................................................................ 11
2.13 Warrantholder not a Shareholder................................................................. 11
ARTICLE 3
REGISTERS OF WARRANTS................................................................................... 11
3.1 Appointment of Warrant Trustee.................................................................. 11
3.2 Register of Warrants............................................................................ 12
3.3 Registers to Be Open for Inspection............................................................. 12
3.4 No Transfers of Warrants........................................................................ 12
3.5 Ownership of Warrants........................................................................... 12
ARTICLE 4
U.S. HOLDERS............................................................................................ 13
4.1 Escrow.......................................................................................... 13
4.2 Effect of Delivery of Accredited Investor Certificate and DTC Accredited Investor Certificate... 13
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4.3 Refusal of Release from Escrow.................................................................. 14
4.4 U.S. Holder's Warrant Certificate Legend........................................................ 14
4.5 U.S. Holder's Common Share Legend............................................................... 14
ARTICLE 5
EXERCISE OF WARRANTS.................................................................................... 16
5.1 Method of Exercise of Warrants.................................................................. 16
5.2 Effect of Exercise of Warrants.................................................................. 17
5.3 Refusal of Exercise............................................................................. 17
5.4 Completion of Warrant Exercise Form............................................................. 17
5.5 Partial Exercise of Warrants.................................................................... 17
5.6 No Fractional Warrants or Common Shares......................................................... 18
5.7 Expiration of Warrants.......................................................................... 18
5.8 Accounting and Recording........................................................................ 18
5.9 Cancellation of Surrendered Warrant Certificates................................................ 18
5.10 Delivery of Share Certificates and Warrant Certificates......................................... 19
5.11 Payment of Taxes................................................................................ 19
ARTICLE 6
ANTI-DILUTION PROVISIONS................................................................................ 19
6.1 Adjustment in Warrant Rights.................................................................... 19
6.2 Adjustment in Exercise Price.................................................................... 20
6.3 Rules for Adjustment in Warrant Rights and Exercise Price....................................... 21
6.4 Notice of Adjustment in Warrant Rights and Exercise Price....................................... 22
ARTICLE 7
RIGHTS AND COVENANTS.................................................................................... 23
7.1 General Covenants of the Company................................................................ 23
7.2 Warrant Trustee's Remuneration and Expenses..................................................... 24
ARTICLE 8
EARLY TERMINATION EVENTS................................................................................ 24
8.1 Early Termination Events........................................................................ 24
8.2 Termination Based on Current Market Price....................................................... 25
ARTICLE 9
ENFORCEMENT............................................................................................. 25
9.1 Enforcement of Rights of Warrantholders......................................................... 25
9.2 No Prejudice of Rights.......................................................................... 26
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9.3 No Personal Liability........................................................................... 26
ARTICLE 10
MEETINGS OF WARRANTHOLDERS.............................................................................. 26
10.1 Right to Convene Meetings as a Class............................................................ 26
10.2 Place for Holding Meetings...................................................................... 27
10.3 Notice.......................................................................................... 27
10.4 Chair........................................................................................... 27
10.5 Quorum.......................................................................................... 27
10.6 Power to Adjourn................................................................................ 28
10.7 Show of Hands................................................................................... 28
10.8 Poll............................................................................................ 28
10.9 Voting.......................................................................................... 29
10.10 Proxy Need Not Be Warrantholder................................................................. 29
10.11 Regulations..................................................................................... 29
10.12 Company and Warrant Trustee May Be Represented.................................................. 30
10.13 Powers Exercisable by Special Resolution........................................................ 30
10.14 Meaning of "Special Resolution"................................................................. 31
10.15 Powers Cumulative............................................................................... 32
10.16 Minutes......................................................................................... 32
10.17 Binding Effect of Resolutions................................................................... 32
ARTICLE 11
SUPPLEMENTAL AGREEMENTS AND SUCCESSOR COMPANIES......................................................... 32
11.1 Provision for Supplemental Warrant Indentures for Certain Purposes.............................. 32
11.2 Correction of Manifest Errors................................................................... 33
11.3 Successor Companies............................................................................. 33
11.4 Execution of Supplemental Indentures............................................................ 33
11.5 Notice of Supplemental Indenture................................................................ 34
ARTICLE 12
CONCERNING THE WARRANT TRUSTEE.......................................................................... 34
12.1 Legislation..................................................................................... 34
12.2 Rights and Duties of Warrant Trustee............................................................ 34
12.3 Evidence, Experts and Advisers.................................................................. 35
12.4 Securities and Documents Held by Warrant Trustee................................................ 35
12.5 Anti-Money Laundering Legislation; Anti-Terrorist Legislation................................... 35
12.6 Action by Warrant Trustee to Protect Interests.................................................. 36
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12.7 Warrant Trustee Not Required to Give Security................................................... 36
12.8 Protection of Warrant Trustee................................................................... 36
12.9 Replacement of Warrant Trustee.................................................................. 37
12.10 Conflict of Interest............................................................................ 38
12.11 Acceptance of Duties and Covenants.............................................................. 38
12.12 Indemnity....................................................................................... 38
12.13 Survival of Termination......................................................................... 38
ARTICLE 13
GENERAL................................................................................................. 39
13.1 Notice to Company and Warrant Trustee........................................................... 39
13.2 Notice to Warrantholders........................................................................ 39
13.3 Satisfaction and Discharge of Warrant Indenture................................................. 40
13.4 Sole Benefit of Parties and Warrantholders...................................................... 40
13.5 Discretion of Directors......................................................................... 40
13.6 Counterparts and Formal Date.................................................................... 41
THIS WARRANT INDENTURE is dated as of July 27, 2004
B E T W E E N:
WESTERN FOREST PRODUCTS INC., a corporation incorporated under
the laws of Canada
(the "COMPANY")
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COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company formed
under the laws of Canada, with an office in the City of
Vancouver and the City of Toronto
(the "WARRANT TRUSTEE")
RECITALS:
A. On November 7, 2002, the Court (defined below) granted an initial order
under the CCAA (defined below) with respect to the Doman Entities (defined
below), allowing them to continue carrying on their respective businesses
under the protection of a general stay of proceedings pending the filing
of a restructuring plan. This stay of proceedings was extended on a number
of occasions.
B. On April 30, 2004, the Court authorized and directed that the Plan
(defined below) be filed with the Court and circulated to Affected
Creditors (defined below). A meeting of Affected Creditors to consider and
vote on the Plan was convened and held on June 7, 2004 in accordance with
the CCAA and the order of the Court issued on April 30, 2004. The
requisite majority of Affected Creditors approved the Plan at the meeting
of Affected Creditors held on June 7, 2004.
C. The Sanction Order (defined below) was issued on June 11, 2004.
D. In ordering the implementation of the Plan, among other things, the
Sanction Order provides for the issuance of Warrants (defined below) to
Existing Doman Shareholders (defined below).
E. Subject to the terms and conditions of this Warrant Indenture, each
Warrant, upon due exercise and payment of the Exercise Price, will entitle
the holder thereof to receive Warrant Shares (defined below) on the basis
set out in this Warrant Indenture.
F. All things necessary have been done and performed to make the Warrants,
when countersigned by the Warrant Trustee and issued as provided in this
Warrant Indenture, legal, valid and binding obligations of the Company
with the benefits of, and subject to, the terms of this Warrant Indenture.
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G. The statements made in Recitals A through F inclusive are representations
of the Company and not of the Warrant Trustee.
H. The Warrant Trustee has agreed to enter into this Warrant Indenture and to
hold all rights, interests and benefits contained in this Warrant
Indenture for and on behalf of those Persons (defined below) who become
Warrantholders (defined below) pursuant to this Warrant Indenture.
NOW THEREFORE THIS WARRANT INDENTURE WITNESSES that, in
consideration of the premises and the covenants of the parties hereto, the
Company hereby appoints the Warrant Trustee as trustee for the Warrantholders to
hold all rights, interests and benefits specified in this Warrant Indenture for
and on behalf of those Persons who become Warrantholders from time to time
pursuant to this Warrant Indenture, and it is hereby agreed and declared as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Warrant Indenture, unless otherwise specified:
(a) "ACCREDITED INVESTOR" means "accredited investor" within the meaning
of Rule 501(a) of Regulation D under the U.S. Securities Act;
(b) "ACCREDITED INVESTOR CERTIFICATE" means the accredited investor
certificate substantially in the form of the accredited investor
certificate attached hereto as Schedule "D";
(c) "AFFECTED CREDITORS" has the meaning attributed to such term in the
Plan;
(d) "AFFILIATE" has the meaning attributed to such term in the
Securities Act (British Columbia);
(e) "APPLICABLE LAWS" means, in respect of any Person, property,
transaction, event or course of conduct, all applicable laws,
statutes, rules, by-laws and regulations, regulatory policies and
all applicable official directives, orders, judgments and decrees of
Governmental Bodies;
(f) "APPLICABLE SECURITIES LAWS" means, collectively, all securities
acts or similar statutes of the United States and the provinces and
territories of Canada and all regulations and rules under such acts
or statutes, together with applicable published policy statements,
notices, blanket orders or rulings and discretionary orders or
rulings of any securities regulatory authority having jurisdiction
or the Canadian Securities Administrators;
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(g) "BUSINESS DAY" means a day that is not a Saturday, Sunday or a civic
or statutory holiday in the Province of British Columbia or the
Province of Ontario;
(h) "CCAA" means the Companies' Creditors Arrangement Act (Canada);
(i) "CAPITAL REORGANIZATION" has the meaning attributed to such term in
Section 6.1.1;
(j) "COMMON SHARES" means common shares in the capital of the Company;
(k) "COMMON SHARE REORGANIZATION" has the meaning attributed to such
term in Section 6.2.1;
(l) "COURT" means the Supreme Court of British Columbia;
(m) "CURRENT MARKET PRICE" means, on any date, the weighted average
price per Common Share at which Common Shares have traded on the
Exchange during the period of twenty consecutive Trading Days ending
on the fifth Trading Day before such date;
(n) "DIL" means Doman Industries Limited;
(o) "DIVIDEND PAID IN THE ORDINARY COURSE" means a dividend paid on the
Common Shares in any financial year of the Company, whether in (i)
cash, (ii) securities of the Company, including rights, options or
warrants to purchase any securities or property of the Company or
other assets of the Company or (iii) property or other assets of the
Company, in each case, to the extent that the amount or value of
such dividend together with the amount or value of all other such
dividends theretofore paid in such financial year (any such
securities, property or other assets so distributed to be valued at
the fair market value of such securities, property or other assets,
as the case may be, as determined by the board of directors of the
Company, which determination shall be conclusive) does not exceed
the greater of:
(i) 150% of the greater of:
(A) the aggregate amount of dividends paid by the Company on
the Common Shares in the period of twelve consecutive
months ended immediately prior to the first day of such
financial year; and
(B) one-third of the aggregate amount of dividends paid by
the Company on the Common Shares in the period of 36
consecutive months ended immediately prior to the first
day of such financial year; and
(ii) 100% of the consolidated net income of the Company before
extraordinary items (but after dividends payable on all shares
ranking prior to, or on a parity with, the Common Shares, with
respect to the payment of
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dividends) for the period of twelve consecutive months ended
immediately prior to the first day of such financial year,
such consolidated net income, extraordinary items and
dividends to be as shown in the audited consolidated financial
statements of the Company for such period of twelve
consecutive months or, if there are no audited consolidated
financial statements for such period, computed in accordance
with generally accepted accounting principles, consistent with
those applied in the preparation of the most recent audited
consolidated financial statements of the Company;
(p) "DOMAN ENTITIES" has the meaning attributed to such term in the
Plan;
(q) "DTC" means The Depository Trust Company;
(r) "DTC ACCREDITED INVESTOR CERTIFICATE" means the accredited investor
certificate substantially in the form of the DTC accredited investor
certificate attached hereto as Schedule "E";
(s) "DTC PARTICIPANTS" means the participating organizations of DTC;
(t) "DTC U.S. HOLDERS" means, collectively, the DTC Participants who, as
of the close of business in the City of Vancouver on the Plan
Implementation Date, held Class A Common Shares of DIL, Class B
Non-Voting Shares, Series 2 of DIL and/or Class A Preferred Shares,
Series 4 of DIL (whether for their own account or for the account of
beneficial holders), as identified on the security position report
to be provided by DTC to the Warrant Trustee and the Company, and
"DTC U.S. HOLDER" means any one of them;
(u) "EARLY TERMINATION DATE" means the date of occurrence of any Early
Termination Event;
(v) "EARLY TERMINATION EVENT" has the meaning attributed to such term in
Section 8.1;
(w) "EQUITY SHARES" means the common shares and shares of any other
class or series of a corporation which may from time to time be
authorized for issue if, by their terms, such shares confer on the
holders thereof the right to participate in the distribution of
assets upon the voluntary or involuntary liquidation, dissolution or
winding-up of the Company beyond a fixed sum or a fixed sum plus
accrued dividends;
(x) "EXCHANGE" means the Toronto Stock Exchange;
(y) "EXERCISE PRICE" means (i) $16.28 with respect to each Tranche 1
Warrant, (ii) $26.03 with respect to each Tranche 2 Warrant, and
(iii) $33.83 with respect to each Tranche 3 Warrant, as each of the
amounts referred to in (i), (ii) and (iii) may be adjusted from time
to time in accordance with Article 6;
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(z) "EXISTING DOMAN SHAREHOLDERS" means, collectively, the registered
holders, as of the close of business in the City of Vancouver on the
Plan Implementation Date, of (i) Class A Common Shares of DIL, (ii)
Class B Non-Voting Shares, Series 2 of DIL and (iii) Class A
Preferred Shares, Series 4 of DIL;
(aa) "EXPIRY DATE" means July 27, 2009, being the fifth anniversary of
the Plan Implementation Date;
(bb) "GOVERNMENTAL BODY" means any government, parliament, legislature,
or any regulatory authority, agency, commission or board of any
government, parliament or legislature, or any court or (without
limiting the foregoing) any law, regulation or rule-making entity,
having or purporting to have jurisdiction in the relevant
circumstances, or any Person acting or purporting to act under the
authority of any of the foregoing;
(cc) "PERSON" means an individual, a partnership, a limited partnership,
a joint venture, a syndicate, a sole proprietorship, a company or
corporation with or without share capital, an unincorporated
association, a trust, trustee, executor, administrator or other
legal personal representative or a Governmental Body;
(dd) "PLAN" means the plan of compromise and arrangement filed by the
Doman Entities under the CCAA and sanctioned by the Court on June
11, 2004, as such plan of compromise and arrangement may have been
amended, varied or supplemented from time to time in accordance with
its terms;
(ee) "PLAN IMPLEMENTATION DATE" has the meaning attributed to such term
in the Plan;
(ff) "REGISTERED U.S. HOLDERS" means, collectively, the Existing Doman
Shareholders whose addresses, as shown in the share register of DIL,
are in the United States, and "REGISTERED U.S. HOLDER" means any of
them;
(gg) "REGISTERS" has the meaning attributed to such term in Section 3.2;
(hh) "REGULATION S" means Regulation S adopted by the SEC under the U.S.
Securities Act;
(ii) "RULE 904 DECLARATION" means a declaration substantially in the form
of the declaration for legend removal attached hereto as Schedule
"F";
(jj) "SANCTION ORDER" means the order of the Court issued on June 11,
2004 which, among other things, sanctioned the Plan;
(kk) "SEC" means the U.S. Securities and Exchange Commission;
(ll) "SPECIAL DISTRIBUTION" has the meaning attributed to such term in
Section 6.2.2;
(mm) "SPECIAL RESOLUTION" has the meaning attributed in such term in
Section 10.14;
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(nn) "SUBSIDIARY" has the meaning attributed to such term in the
Securities Act (British Columbia);
(oo) "TRADING DAY" means a day on which the Exchange is open for
business;
(pp) "TRANCHE 1 WARRANT" means a Tranche 1 Warrant of the Company,
created and issued pursuant to Section 2.1, entitling the holder
thereof, upon exercise in accordance with the terms and conditions
set out herein, to one Warrant Share and evidenced by a Tranche 1
Warrant Certificate issued and countersigned in accordance with the
provisions hereof;
(qq) "TRANCHE 2 WARRANT" means a Tranche 2 Warrant of the Company,
created and issued pursuant to Section 2.1, entitling the holder
thereof, upon exercise in accordance with the terms and conditions
set out herein, to one Warrant Share and evidenced by a Tranche 2
Warrant Certificate issued and countersigned in accordance with the
provisions hereof;
(rr) "TRANCHE 3 WARRANT" means a Tranche 3 Warrant of the Company,
created and issued pursuant to Section 2.1, entitling the holder
thereof, upon exercise in accordance with the terms and conditions
set out herein, to one Warrant Share and evidenced by a Tranche 3
Warrant Certificate issued and countersigned in accordance with the
provisions hereof;
(ss) "TRANCHE 1 WARRANT CERTIFICATE" means a warrant certificate
representing one or more Tranche 1 Warrants, substantially in the
form of the warrant certificate attached hereto as Schedule "A";
(tt) "TRANCHE 2 WARRANT CERTIFICATE" means a warrant certificate
representing one or more Tranche 2 Warrants, substantially in the
form of the warrant certificate attached hereto as Schedule "B";
(uu) "TRANCHE 3 WARRANT CERTIFICATE" means a warrant certificate
representing one or more Tranche 3 Warrants, substantially in the
form of the warrant certificate attached hereto as Schedule "C";
(vv) "TRANCHE 1 WARRANTHOLDER" means a registered holder of one or more
Tranche 1 Warrants;
(ww) "TRANCHE 2 WARRANTHOLDER" means a registered holder of one or more
Tranche 2 Warrants;
(xx) "TRANCHE 3 WARRANTHOLDER" means a registered holder of one or more
Tranche 3 Warrants;
(yy) "UNITED STATES" means the United States of America and, where the
context permits or requires, includes its possessions and
territories, any state of the United States of America and the
District of Columbia;
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(zz) "U.S. HOLDERS" means, collectively, the DTC U.S. Holders and the
Registered U.S. Holders, and "U.S. HOLDER" means any one of them.
(aaa) "U.S. SECURITIES ACT" means the United States Securities Act of
1933, as amended;
(bbb) "WARRANT" means a Tranche 1 Warrant, a Tranche 2 Warrant or a
Tranche 3 Warrant, and "WARRANTS" means, collectively, Tranche 1
Warrants, Tranche 2 Warrants and Tranche 3 Warrants;
(ccc) "WARRANT CERTIFICATE" means a Tranche 1 Warrant Certificate, a
Tranche 2 Warrant Certificate or a Tranche 3 Warrant Certificate,
and "WARRANT CERTIFICATES" means, collectively, Tranche 1 Warrant
Certificates, Tranche 2 Warrant Certificates and Tranche 3 Warrant
Certificates;
(ddd) "WARRANT EXERCISE FORM" means (i) the form of warrant exercise form
attached to the Tranche 1 Warrant Certificate, in the case of
Tranche 1 Warrants, (ii) the form of warrant exercise form attached
to the Tranche 2 Warrant Certificate, in the case of Tranche 2
Warrants, and (iii) the form of warrant exercise form attached to
the Tranche 3 Warrant Certificate, in the case of Tranche 3
Warrants;
(eee) "WARRANT EXERCISE PERIOD" means the period during which
Warrantholders may exercise their Warrants, being the period
commencing as of the close of business in the City of Vancouver on
the Plan Implementation Date and ending at the earlier of (i) 5:00
p.m. (local time at the place of deposit of Warrant Exercise Forms)
on the Expiry Date and (ii) 5:00 p.m. (local time at the place of
deposit of Warrant Exercise Forms) on the Business Day immediately
preceding any Early Termination Date;
(fff) "WARRANT INDENTURE" means this warrant indenture and all schedules
attached to this warrant indenture; the expressions "HEREOF",
"HEREIN", "HERETO", "HEREUNDER" and "HEREBY" and other similar
expressions refer to this Warrant Indenture as a whole and not to
any particular article, section, schedule or other portion hereof,
and the expressions "ARTICLE" and "SECTION" followed by a number,
and the expression "SCHEDULE" followed by a letter, mean and refer
to the specified article or section of, or schedule to, this Warrant
Indenture, except as otherwise specifically provided herein;
(ggg) "WARRANT SHARES" means Common Shares which a holder of Warrants is
entitled to receive upon exercise of Warrants in accordance with the
terms and conditions set out herein;
(hhh) "WARRANT TRUSTEE" means Computershare Trust Company of Canada or any
successor thereto, including through the operation of Section 12.9;
(iii) "WARRANTHOLDER" means a registered holder of one or more Warrants;
and
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(jjj) "WRITTEN ORDER OF THE COMPANY", "WRITTEN CONSENT OF THE COMPANY" and
"CERTIFICATE OF THE COMPANY" mean, respectively, a written order,
consent and certificate signed in the name of the Company by any one
director or officer of the Company and may consist of one or more
instruments so executed.
1.2 INTERPRETATION
For the purposes of this Warrant Indenture and unless otherwise
provided or unless the context otherwise requires:
1.2.1 words importing the singular include the plural and vice versa, and
words importing the masculine gender include the feminine and neuter
genders;
1.2.2 wherever the words "include", "includes" or "including" are used in
this Warrant Indenture, they shall be deemed to be followed by the words
"without limitation";
1.2.3 the division of this Warrant Indenture into Articles and Sections,
the provision of a table of contents and the insertion of headings are for
convenience of reference only and will not affect the construction or
interpretation of this Warrant Indenture; and
1.2.4 in the event that any day on which the Warrant Exercise Period
expires or on or before which any action is required to be taken under
this Warrant Indenture is not a Business Day, then the Warrant Exercise
Period will expire on, or the action will be required to be taken on or
before, the next succeeding day that is a Business Day.
1.3 SCHEDULES
The following schedules attached hereto, for all purposes hereof,
form integral parts of this Warrant Indenture:
Schedule "A" - Tranche 1 Warrant Certificate
Schedule "B" - Tranche 2 Warrant Certificate
Schedule "C" - Tranche 3 Warrant Certificate
Schedule "D" - Accredited Investor Certificate
Schedule "E" - DTC Accredited Investor Certificate
Schedule "F" - Rule 904 Declaration
1.4 TIME OF THE ESSENCE
Time is of the essence, in all respects, in this Warrant Indenture,
the Warrants and the Warrant Certificates.
1.5 APPLICABLE LAW; ATTORNMENT
This Warrant Indenture, the Warrants and the Warrant Certificates
will be governed by, and construed and enforced in accordance with, the laws of
the Province of British Columbia and the federal laws of Canada applicable
therein. Each of the Company and the Warrant Trustee attorns and submits to the
non-exclusive jurisdiction of the courts of the
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Province of British Columbia in connection with any disputes which may arise
hereunder or under the Warrants or the Warrant Certificates.
ARTICLE 2
ISSUE OF WARRANTS
2.1 CREATION AND ISSUE OF WARRANTS
An aggregate of 569,630 Tranche 1 Warrants, 854,446 Tranche 2
Warrants and 1,424,076 Tranche 3 Warrants are hereby created and authorized for
issuance and will be issued when Warrant Certificates representing them are
executed by the Company, countersigned by or on behalf of the Warrant Trustee
and delivered by the Company in accordance with Section 2.9.
2.2 TERMS OF WARRANTS
Subject to the terms and conditions set out herein, each Tranche 1
Warrant will entitle the holder thereof, upon exercise in accordance with this
Warrant Indenture, to purchase one Warrant Share at any time during the Warrant
Exercise Period at the Exercise Price. Subject to the terms and conditions set
out herein, each Tranche 2 Warrant will entitle the holder thereof, upon
exercise in accordance with this Warrant Indenture, to purchase one Warrant
Share at any time during the Warrant Exercise Period at the Exercise Price.
Subject to the terms and conditions set out herein, each Tranche 3 Warrant will
entitle the holder thereof, upon exercise in accordance with this Warrant
Indenture, to purchase one Warrant Share at any time during the Warrant Exercise
Period at the Exercise Price.
2.3 FORM OF WARRANTS
Tranche 1 Warrants, Tranche 2 Warrants and Tranche 3 Warrants will
be evidenced by Tranche 1 Warrant Certificates, Tranche 2 Warrant Certificates
and Tranche 3 Warrant Certificates, respectively, with such additions,
variations or omissions as may be permitted by the provisions of this Warrant
Indenture or as may be agreed upon from time to time by the Company and the
Warrant Trustee and will be numbered in the manner that the Company, with the
approval of the Warrant Trustee, may prescribe.
2.4 WARRANT CERTIFICATES
Warrant Certificates to be issued and delivered from time to time
under this Warrant Indenture will be executed by the Company and countersigned
by the Warrant Trustee to or upon the written order of the Company, without the
Warrant Trustee receiving any consideration for such certification.
2.5 ISSUE IN SUBSTITUTION FOR WARRANTS
If a Warrant Certificate becomes mutilated or is lost, destroyed or
stolen (the "OLD CERTIFICATE"), the Company, subject to Section 2.6, will issue,
and thereupon the Warrant Trustee will countersign and deliver, a new Warrant
Certificate of like tenor as the Old Certificate in exchange for and in place of
and on surrender and cancellation of the Old
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Certificate, in the case of mutilation, or in lieu of and in substitution for
the Old Certificate, in the case of loss, destruction or theft, and the
substituted Warrant Certificate will entitle the holder thereof to the same
rights and benefits and will bear the same legend or legends as the Old
Certificate.
2.6 CONDITIONS FOR REPLACEMENT OF WARRANT
The applicant for the issue of a new Warrant Certificate pursuant to
Section 2.5 will bear the cost of the issue thereof and, in the case of loss,
destruction or theft of the Old Certificate, will, as a condition precedent to
the issue thereof:
2.6.1 furnish to the Company and the Warrant Trustee such evidence of
ownership and of the loss, destruction or theft of the Old Certificate to
be replaced as is satisfactory to the Company and the Warrant Trustee,
acting reasonably;
2.6.2 if so required, furnish an indemnity and surety bond in amount and
form satisfactory to the Company and to the Warrant Trustee, acting
reasonably; and
2.6.3 pay the reasonable charges of the Company and the Warrant Trustee in
connection therewith.
2.7 EXCHANGE OF WARRANT CERTIFICATES
Prior to the expiry of the Warrant Exercise Period, a Warrantholder
may exchange any Warrant Certificate held by him, by surrendering for
cancellation such Warrant Certificate to the Trustee at its office in the City
of Vancouver or the City of Toronto, for two or more Warrant Certificates
representing, in aggregate, the same number and class of Warrants represented by
the Warrant Certificate surrendered for cancellation.
2.8 WARRANTS TO RANK PARI PASSU
Except as otherwise provided in this Warrant Indenture, each Warrant
will rank pari passu with all other Warrants regardless of the actual date of
issuance of the Warrant Certificate representing such Warrant.
2.9 EXECUTION OF WARRANTS
Warrant Certificates to be issued and delivered from time to time
under this Warrant Indenture will be signed by any one director and/or officer
of the Company. The signature of such director or officer may be mechanically
reproduced, and Warrant Certificates bearing such mechanically reproduced
signatures will be binding upon the Company as if they had been manually signed
by the director or officer. Notwithstanding the fact that any individual whose
manual or mechanically reproduced signature appears on any Warrant Certificate
may no longer, prior to the certification and delivery of such Warrant
Certificate, hold the official capacity in which he signed, any Warrant
Certificate signed as aforesaid will be valid and binding upon the Company when
such Warrant Certificate has been countersigned by or on behalf of the Warrant
Trustee in accordance with Section 2.10.
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2.10 COUNTERSIGNATURE BY THE WARRANT TRUSTEE
No Warrant Certificate will be issued, or, if issued, will be valid
or entitle the holder thereof to the benefit of this Warrant Indenture, until it
has been certified by the Warrant Trustee (pursuant to a written order of the
Company) by being countersigned by or on behalf of the Warrant Trustee, and the
countersignature by or on behalf of the Warrant Trustee upon any Warrant
Certificate will be conclusive evidence as against the Company that such Warrant
Certificate so countersigned has been duly issued under this Warrant Indenture
and is a valid obligation of the Company and that the holder of such Warrant
Certificate is entitled to the benefit of this Warrant Indenture.
2.11 EFFECT OF COUNTERSIGNATURE
The countersignature by or on behalf of the Warrant Trustee on any
Warrant Certificate issued under this Warrant Indenture will not be construed as
a representation or warranty by the Warrant Trustee as to the validity or
enforceability of this Warrant Indenture or the Warrants represented by such
Warrant Certificate, and the Warrant Trustee will, in no respect, be liable or
answerable for the use made of such Warrant Certificate or the consideration
therefor, except as otherwise may be specified in this Warrant Indenture.
However, the countersignature by or on behalf of the Warrant Trustee on a
Warrant Certificate will be a representation and warranty by the Warrant Trustee
that such Warrant Certificate has been duly countersigned by or on behalf of the
Warrant Trustee pursuant to the provisions of this Warrant Indenture.
2.12 CHARGES FOR EXCHANGE
As a condition precedent to any exchange of Warrant Certificates
pursuant to Section 2.7, the Warrant Trustee may require the Warrantholder to
pay a charge sufficient to reimburse the Trustee or the Company for any tax or
other governmental charge required to be paid in connection with such exchange.
2.13 WARRANTHOLDER NOT A SHAREHOLDER
Nothing in this Warrant Indenture or in the ownership of a Warrant
will be construed as conferring on a Warrantholder any right or interest
whatsoever as a shareholder of the Company, including any right to vote at, or
to receive notice of or to attend, any meeting of shareholders of the Company or
any other proceeding of the Company or any right to receive any dividend or
other distribution.
ARTICLE 3
REGISTERS OF WARRANTS
3.1 APPOINTMENT OF WARRANT TRUSTEE
The Company hereby appoints the Warrant Trustee as the registrar and
transfer agent of the Warrants.
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3.2 REGISTER OF WARRANTS
The Warrant Trustee will keep a register at its office in the City
of Vancouver and a register in its office in the City of Toronto (collectively,
the "REGISTERS"), in which will be entered, in alphabetical order, the names and
addresses (including street and number, if any) of the registered holders of
Tranche 1 Warrants, Tranche 2 Warrants and Tranche 3 Warrants and the
particulars of the Tranche 1 Warrants, the Tranche 2 Warrants and the Tranche 3
Warrants held by them, respectively.
3.3 REGISTERS TO BE OPEN FOR INSPECTION
The Registers will be open for inspection, at all reasonable times,
by the Company, the Warrant Trustee or any Warrantholder. From time to time when
requested to do so by the Company or a Warrantholder, the Warrant Trustee will
furnish the Company or the Warrantholder, as the case may be (and, in the case
of the Warrantholder, upon payment by it of a reasonable fee), with a list of
the names and addresses of Warrantholders entered on the Registers and showing
the number and class of Warrants held by each such Warrantholder.
3.4 NO TRANSFERS OF WARRANTS
Warrants will not be assignable or transferable, and any purported
transfer in violation of this Section 3.4 will be invalid. Each Warrant
Certificate will bear a legend in substantially the following form:
THE WARRANTS REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD OR
OTHERWISE TRANSFERRED UNDER ANY CIRCUMSTANCES.
For clarity, however, prior to the expiry of the Warrant Exercise
Period, a Warrantholder (or, if applicable, his executors, administrators or
other legal representatives or his or their attorney appointed by an instrument
in writing, in form and manner reasonably satisfactory to the Warrant Trustee)
may request that one or more Warrants represented by a Warrant Certificate
registered in his name be re-registered in the name of one or more other
Persons, provided that such Warrantholder presents evidence satisfactory to the
Warrant Trustee and the Company that the proposed re-registration of Warrants
would not constitute, or result in, a change in the beneficial ownership of any
of such Warrants. Upon presentation of such evidence and surrender for
cancellation of the Warrant Certificate representing the Warrants requested to
be re-registered, and payment of any applicable taxes and fees, the Warrant
Trustee will issue one or more Warrant Certificates, as the circumstances may
require, in the name or names of the Person or Persons in whose names such
Warrants are requested to be re-registered, and representing in aggregate the
same number of Warrants represented by the Warrant Certificate that had been
surrendered for cancellation for this purpose.
3.5 OWNERSHIP OF WARRANTS
The Company and the Warrant Trustee will be entitled to treat the
registered holder of any Warrant Certificate as the absolute owner of the
Warrants represented thereby for
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all purposes, and the Company and the Warrant Trustee shall not be affected by
any notice or knowledge to the contrary.
ARTICLE 4
U.S. HOLDERS
4.1 ESCROW
Warrant Certificates registered in the name of a U.S. Holder, and
the Warrants represented thereby, will be held in escrow by the Warrant Agent
until such time as such U.S. Holder delivers to the Warrant Trustee, at its
office in the City of Vancouver, during normal business hours on a Business Day,
a fully completed and duly executed Accredited Investor Certificate, in the case
of a Registered U.S. Holder, and one or more fully completed and duly executed
DTC Accredited Investor Certificates, in the case of a DTC U.S. Holder, subject
to, and in accordance with, the provisions of this Article 4. For greater
certainty, a U.S. Holder will have no rights in respect of any Warrant
Certificate held in escrow by the Warrant Trustee pursuant to this Section 4.1,
or the Warrants represented thereby, unless and until such U.S. Holder delivers
to the Warrant Trustee a fully completed and duly executed Accredited Investor
Certificate or DTC Accredited Investor Certificate, as applicable, in accordance
with this Article 4.
4.2 EFFECT OF DELIVERY OF ACCREDITED INVESTOR CERTIFICATE AND DTC ACCREDITED
INVESTOR CERTIFICATE
4.2.1 Subject to Section 4.3, upon delivery of a fully completed and duly
executed Accredited Investor Certificate by a Registered U.S. Holder, the
Warrant Trustee will release from escrow all Warrant Certificates
registered in the name of such Registered U.S. Holder and the Warrants
represented thereby. Unless the Warrant Trustee receives written
instructions to the contrary from such Registered U.S. Holder, the Warrant
Trustee will send such Warrant Certificates by first class mail to the
address of such Registered U.S. Holder, as shown in the Registers.
4.2.2 Subject to Section 4.3, upon delivery of a fully completed and duly
executed DTC Accredited Investor Certificate by a DTC U.S. Holder, the
Warrant Trustee will release from escrow such number of Warrants requested
to be released, as indicated on such fully completed and duly executed DTC
Accredited Investor Certificate, and, unless the Warrant Trustee receives
written instructions to the contrary from such DTC U.S. Holder, the
Warrant Trustee will send a Warrant Certificate representing the released
Warrants by first class mail to the address of such DTC U.S. Holder, as
shown in the Registers. A Warrant Certificate, representing the balance of
the unreleased Warrants, will be registered in the name of such DTC U.S.
Holder, and the Warrant Trustee will hold in escrow such Warrant
Certificate and the Warrants represented thereby.
4.2.3 A DTC U.S. Holder may request the release from escrow of Warrants
pursuant to Section 4.2.2 at any time and from time to time, but no more
frequently than once in any calendar month, for so long as any Warrant
Certificates registered in the name of such DTC U.S. Holder, and the
Warrants represented thereby, remain held in escrow by the
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Warrant Trustee pursuant to Section 4.1. However, the Company reserves the
right to establish and modify, at any time and from time to time, in its
sole discretion, the terms and conditions on which DTC U.S. Holders may
request the release of Warrants from escrow, including the frequency with
which such requests for release may be made and accepted.
4.3 REFUSAL OF RELEASE FROM ESCROW
The Warrant Trustee will advise the Company promptly of the receipt
of Accredited Investor Certificates and DTC Accredited Investor Certificates.
The Company will be entitled, and may direct the Warrant Trustee in writing, to
refuse to allow, recognize or effect any release from escrow of Warrants if such
release from escrow would constitute or result in a violation of any Applicable
Law, including any Applicable Securities Law. The Company may require an opinion
of counsel or other evidence satisfactory to it that any release from escrow of
Warrants would not constitute or result in a violation of any Applicable Law,
including any Applicable Securities Law. Unless the Warrant Trustee is notified
otherwise within two Business Days of delivery to the Company of a copy of an
Accredited Investor Certificate or a DTC Accredited Investor Certificate which
has been delivered to the Warrant Trustee by a U.S. Holder, the Warrant Trustee
may assume that the Company has no objection to the release from escrow of
Warrants proposed in such Accredited Investor Certificate or DTC Accredited
Investor Certificate, as the case may be.
4.4 U.S. HOLDER'S WARRANT CERTIFICATE LEGEND
Each Warrant Certificate registered in the name of a U.S. Holder
will bear a legend in substantially the following form:
THE SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANTS REPRESENTED
HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES
ACT") OR THE SECURITIES LAWS OF ANY STATE IN THE UNITED STATES OR
ANY OTHER JURISDICTION, AND SUCH SECURITIES MAY NOT BE OFFERED OR
SOLD IN THE UNITED STATES UNLESS THEY ARE REGISTERED UNDER THE U.S.
SECURITIES ACT OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENT IS AVAILABLE.
In addition, each Warrant Certificate registered in the name of a
U.S. Holder will bear such other legends as may be required under Applicable
Securities Laws.
4.5 U.S. HOLDER'S COMMON SHARE LEGEND
The Warrant Trustee and the Company acknowledge that the Warrant
Shares issuable to a U.S. Holder, following his delivery to the Warrant Trustee
of a fully completed and duly executed Accredited Investor Certificate in
accordance with Section 4.1 and his valid exercise of Warrants in accordance
with Section 5.1, have not been, and will not be, registered
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under the U.S. Securities Act or qualified under the securities laws of any
state in the United States. Each certificate representing Warrant Shares that is
issued to a U.S. Holder (and, for greater certainty, any certificate or
certificates issued in connection with a transfer of such Warrant Shares) will
bear a legend substantially in the following form until such legend is no longer
required under the relevant Applicable Securities Laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "U.S. SECURITIES ACT") OR THE SECURITIES LAWS OF ANY
STATE IN THE UNITED STATES OR ANY OTHER JURISDICTION. THE SECURITIES
REPRESENTED HEREBY MAY BE OFFERED, SOLD OR PLEDGED IN THE UNITED
STATES, OR OTHERWISE TRANSFERRED TO U.S. PERSONS (AS SUCH TERM IS
DEFINED IN REGULATION S UNDER THE U.S. SECURITIES ACT ("REGULATION
S")), ONLY IF SUCH SECURITIES ARE REGISTERED UNDER THE U.S.
SECURITIES ACT, OR IF THEY ARE BEING OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED (A) TO WESTERN FOREST PRODUCTS INC. (THE
"COMPANY"), (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE
904 OF REGULATION S AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND
REGULATIONS, (C) IN THE UNITED STATES IN ACCORDANCE WITH (1) RULE
144A UNDER THE U.S. SECURITIES ACT ("RULE 144A") TO A PERSON WHOM
THE TRANSFEROR REASONABLY BELIEVES TO BE A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A ("QIB") OR FOR THE ACCOUNT OF
A QIB TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE UPON RULE 144A OR (2) RULE 144 UNDER THE U.S. SECURITIES
ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR (D)
IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S.
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, PROVIDED
THAT, IN THE CASE OF TRANSFERS PURSUANT TO (C)(2) OR (D) ABOVE, A
LEGAL OPINION SATISFACTORY TO THE COMPANY MUST FIRST BE DELIVERED.
IF THE COMPANY IS A "FOREIGN ISSUER" WITHIN THE MEANING OF
REGULATION S AT THE TIME OF TRANSFER, A NEW CERTIFICATE, BEARING NO
LEGEND, MAY BE OBTAINED UPON DELIVERY OF THIS CERTIFICATE AND A DULY
EXECUTED DECLARATION,
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SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT THE TRANSFER OF THE
SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE
904 OF REGULATION S.
Subject to Sections 4.3 and 5.3, if such Warrant Shares are proposed
to be offered or sold or otherwise transferred in accordance with Rule 904 of
Regulation S and the Company is a "foreign issuer" within the meaning of
Regulation S at the time of transfer, the holder of such Warrant Shares may
require the above legend to be removed from the certificate representing such
Warrant Shares by providing to the Company or the registrar and transfer agent
of the Common Shares a duly executed Rule 904 Declaration or such other
declaration satisfactory to the Company.
Subject to Sections 4.3 and 5.3, if such Warrant Shares are proposed
to be offered or sold or otherwise transferred in accordance with Rule 144 under
the U.S. Securities Act, the holder of such Warrant Shares may require the above
legend to be removed from the certificate representing such Warrant Shares by
delivering to the Company an opinion of counsel, of recognized standing
reasonably satisfactory to the Company, in form and substance reasonably
satisfactory to the Company and to the effect that the above legend is no longer
required under the U.S. Securities Act or applicable state securities laws.
ARTICLE 5
EXERCISE OF WARRANTS
5.1 METHOD OF EXERCISE OF WARRANTS
Subject to, and upon compliance with, the provisions of this Article
5, prior to the expiry of the Warrant Exercise Period, a Warrantholder may
exercise the right to purchase Warrant Shares by surrendering his Tranche 1
Warrant Certificate, Tranche 2 Warrant Certificate and/or Tranche 3 Warrant
Certificate, as applicable, to the Warrant Trustee at its office in the City of
Vancouver or the City of Toronto during normal business hours on a Business Day,
together with a fully completed and duly executed Warrant Exercise Form or
Warrant Exercise Forms, and the aggregate Exercise Price applicable. In order to
be duly executed, a Warrant Exercise Form must be executed by the registered
holder of the Warrants being exercised or his executors, administrators or other
legal representatives or his or their attorney appointed by an instrument in
writing, in form and manner reasonably satisfactory to the Warrant Trustee. The
aggregate Exercise Price for Warrant Shares subscribed for upon the exercise of
Warrants will be paid by certified cheque, bank draft or money order payable to,
or to the order of, the Company at par or by any other form of payment that is
acceptable to the Warrant Trustee and the Company. Warrant Certificates will be
deemed to be surrendered, and payment of the aggregate Exercise Price for
Warrant Shares subscribed for upon the exercise of the Warrants represented
thereby will be deemed to be made, only upon actual receipt by the Warrant
Trustee of such Warrant Certificates (together with a fully completed and duly
executed Warrant Exercise Form or Warrant Exercise Forms) and the effective
payment of the aggregate Exercise Price.
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5.2 EFFECT OF EXERCISE OF WARRANTS
Subject to Section 5.3, upon the due exercise of Warrants in
accordance with Section 5.1, the Warrant Shares issuable upon such exercise will
be deemed to have been issued, and the Warrantholder exercising Warrants will be
deemed to have become the holder of such Warrant Shares, provided that, if the
transfer books of the Company are properly closed by law on the date of such
exercise of Warrants, then the Warrant Shares issuable upon such exercise will
be deemed to have been issued, and the Warrantholder exercising Warrants will be
deemed to have become the holder of record of such Warrant Shares on the next
succeeding date on which the transfer books of the Company are re-opened.
Warrant Shares will be registered in the name of the Warrantholder who is
entitled to such Warrant Shares by reason of his valid exercise of Warrants
pursuant to Section 5.1 (provided that, for greater certainty, a U.S. Holder
must be an Accredited Investor in order to exercise Warrants validly and to be
issued the underlying Warrant Shares).
5.3 REFUSAL OF EXERCISE
The Warrant Trustee will advise the Company promptly of all
exercises of Warrants, and the Company will be entitled, and may direct the
Warrant Trustee in writing, to refuse to allow, recognize or effect any exercise
of Warrants if such exercise of Warrants would constitute or result in a
violation of any Applicable Law, including any Applicable Securities Law, or if
the purported exercise does not meet the requirements of this Warrant Indenture.
The Company may require an opinion of counsel or other evidence satisfactory to
it that any proposed exercise of Warrants (including that on behalf of a direct
or indirect beneficial holder of Warrants) would not constitute or result in a
violation of any Applicable Law, including any Applicable Securities Law. Unless
the Warrant Trustee is notified otherwise within two Business Days of delivery
by the Warrant Trustee to the Company of a notice of a proposed exercise of
Warrants, the Warrant Trustee may assume that the Company has no objection to
such proposed exercise of Warrants.
5.4 COMPLETION OF WARRANT EXERCISE FORM
Every Warrant Exercise Form completed and executed by or on behalf
of a Warrantholder desiring to exercise in whole or in part the right to
purchase Warrant Shares conferred by his Tranche 1 Warrants, Tranche 2 Warrants
and/or Tranche 3 Warrants must specify the number of Warrant Shares that such
Warrantholder wishes to purchase (being not more than he is entitled to
purchase).
5.5 PARTIAL EXERCISE OF WARRANTS
The holder of any Warrant Certificate may exercise less than all of
the Warrants represented by such Warrant Certificate and, upon any such partial
exercise, will be entitled to receive, at no extra cost, a Tranche 1 Warrant
Certificate, a Tranche 2 Warrant Certificate or a Tranche 3 Warrant Certificate,
as applicable, executed by the Company and countersigned by the Warrant Trustee
in accordance with Article 2 and representing the number of Tranche 1 Warrants,
Tranche 2 Warrants or Tranche 3 Warrants, as applicable, represented by the
original
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Warrant Certificate which remain unexercised (provided that, for greater
certainty, no Warrant Certificate is required to be issued at or subsequent to
the end of the Warrant Exercise Period).
5.6 NO FRACTIONAL WARRANTS OR COMMON SHARES
A Warrantholder may not exercise a fraction of a Warrant. In
addition, the Company will not be obligated to issue, under any circumstances
following the valid exercise of Warrants, a fractional Warrant Share to which
the Warrantholder exercising such Warrants is entitled. The number of Warrant
Shares which such Warrantholder is entitled to receive will be rounded down to
the next smallest whole number, and, under no circumstances, will cash or other
consideration be paid in lieu of any fractional Warrant Share.
5.7 EXPIRATION OF WARRANTS
No holder of any Warrant or any other Person shall have any rights
under, or by virtue of, such Warrant or this Warrant Indenture to exercise such
Warrant (and thereby purchase any Warrant Shares) subsequent to the expiry of
the Warrant Exercise Period. Upon expiry of the Warrant Exercise Period, all
rights under this Warrant Indenture and under any unexercised Warrants shall
wholly cease and terminate and all of such unexercised Warrants shall be wholly
void and of no value or effect. Upon expiry of the Warrant Exercise Period, all
outstanding Warrant Certificates and the Warrants represented thereby shall be
deemed to have been surrendered.
5.8 ACCOUNTING AND RECORDING
5.8.1 The Warrant Trustee will promptly account to the Company with
respect to all Warrants exercised, in whole or in part, and shall promptly
forward to the Company (or into an account or accounts of the Company with
the bank or trust company designated by the Company for that purpose) all
monies received by the Warrant Trustee on the purchase of Warrant Shares
through the exercise of Warrants. All such monies and any securities or
other instruments from time to time received by the Warrant Trustee shall
be received in trust for, and shall be segregated and kept apart by the
Warrant Trustee from the assets of the Warrant Trustee in trust for, the
Company.
5.8.2 The Warrant Trustee will record the particulars of all Warrants
exercised, which shall include the names and addresses of the Persons who
become holders of Warrant Shares on such exercise, the date of exercise,
the aggregate Exercise Price and the number of Warrant Shares delivered
from the Common Shares reserved for that purpose by the Company. The
Warrant Trustee will provide such particulars in writing to the Company
within five Business Days after each date of exercise.
5.9 CANCELLATION OF SURRENDERED WARRANT CERTIFICATES
All Warrant Certificates representing Warrants exercised as provided
in Section 5.1 will be cancelled and will be held by the Warrant Trustee for a
period of two years following their surrender, at which time, such Warrant
Certificates will be destroyed by the Warrant Trustee, and, if requested by the
Company, the Warrant Trustee will furnish the Company with a certificate as to
the destruction.
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5.10 DELIVERY OF SHARE CERTIFICATES AND WARRANT CERTIFICATES
Subject to Sections 5.3 and 5.11, within the five-Business Day
period following an exercise of Warrants, the Warrant Trustee will cause to be
mailed to the Warrantholder or held for pick-up by him at the office of the
Warrant Trustee in the City of Vancouver or the City of Toronto, as applicable,
in accordance with the instructions indicated in the Warrant Exercise Form
delivered by such Warrantholder, (i) a certificate representing the Warrant
Shares underlying the Warrants exercised and (ii) in the case of a partial
exercise of Warrants, one or more Warrant Certificates representing the then
unexercised Warrants.
5.11 PAYMENT OF TAXES
If any of the Warrant Shares issuable upon the exercise of Warrants
are to be registered in the name of a Person other than the Warrantholder, the
Warrantholder shall pay to the Company, or the Warrant Trustee on behalf of the
Company, all applicable transfer or similar taxes and the Company shall not be
required to issue, register or deliver certificates representing such Warrant
Shares unless or until such Warrantholder shall have paid to the Company or the
Warrant Trustee, on behalf of the Company, the amount of such taxes or shall
have established to the satisfaction of the Company that such taxes have been
paid or that no tax is due.
ARTICLE 6
ANTI-DILUTION PROVISIONS
6.1 ADJUSTMENT IN WARRANT RIGHTS
6.1.1 If, at any time during the Warrant Exercise Period, there is a
reclassification of the issued and outstanding Common Shares or a change
of the Common Shares into other shares or securities or any other capital
reorganization of the Company or a consolidation, merger or amalgamation
of the Company with or into any other corporation (any such event, a
"CAPITAL REORGANIZATION"), a Warrantholder shall be entitled to receive,
and shall accept, for the same aggregate Exercise Price, upon the exercise
of his Warrants at any time after the record date on which the holders of
Common Shares are determined for the purpose of the Capital Reorganization
(the "relevant record date"), in lieu of the number of Warrant Shares to
which he was theretofore entitled upon such exercise, the kind and amount
of shares or other securities of the Company or of the corporation
resulting from the Capital Reorganization that the Warrantholder would
have been entitled to receive as a result of such Capital Reorganization
if, on the relevant record date, he had been the holder of record of the
number of Warrant Shares issuable upon the exercise of the Warrants that
are then being exercised, and such shares or other securities shall be
subject to adjustment thereafter in accordance with provisions which are
the same, or as nearly as may be possible, as those contained in this
Article 6.
6.1.2 If, at any time during the Warrant Exercise Period, any adjustment
in the Exercise Price shall occur as a result of an event referred to in
Section 6.2.1, then the number of Warrant Shares purchasable upon the
subsequent exercise of the Warrants shall be adjusted simultaneously with
the adjustment to the Exercise Price provided for in Section 6.2 by
multiplying the number of Warrant Shares, issuable upon the exercise of
the Warrants
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immediately prior to such adjustment, by a fraction which shall be the
reciprocal of the fraction employed in the adjustment of the Exercise
Price pursuant to Section 6.2.
6.2 ADJUSTMENT IN EXERCISE PRICE
The Exercise Price shall be subject to adjustment from time to time
as follows:
6.2.1 If, at any time during the Warrant Exercise Period, the Company:
6.2.1.1 subdivides the issued and outstanding Common Shares into a
greater number of shares;
6.2.1.2 consolidates the issued and outstanding Common Shares into a
smaller number of shares; or
6.2.1.3 issues Common Shares to the holders of all or substantially
all of its outstanding Common Shares by way of a stock dividend or
other distribution other than a Dividend Paid in the Ordinary
Course;
(any of such events, a "COMMON SHARE REORGANIZATION"), the Exercise Price
shall be adjusted effective immediately after the record date on which the
holders of Common Shares are determined for the purpose of the Common
Share Reorganization (the "relevant record date") by multiplying the
Exercise Price in effect immediately prior to the relevant record date by
a fraction:
(i) the numerator of which shall be the number of Common Shares
issued and outstanding on the relevant record date before
giving effect to the Common Share Reorganization; and
(ii) the denominator of which shall be the number of Common Shares
issued and outstanding on the relevant record date after
giving effect to the Common Share Reorganization.
6.2.2 If, at any time during the Warrant Exercise Period, the Company
fixes a record date (the "relevant record date") for the issue or
distribution to the holders of all or substantially all of its issued and
outstanding Common Shares of:
6.2.2.1 evidences of its indebtedness;
6.2.2.2 assets or property; or
6.2.2.3 rights, options or warrants to subscribe for or purchase any
of the foregoing;
and if such issue or distribution does not constitute a Common Share
Reorganization or a Dividend Paid in the Ordinary Course (any of the
events referred to in Sections 6.2.2.1 to 6.2.2.3 inclusive, a "SPECIAL
DISTRIBUTION"), then the Exercise Price shall be adjusted
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immediately after the relevant record date by multiplying the Exercise
Price in effect on the relevant record date by a fraction:
(i) the numerator of which shall be the difference obtained when
(a) the amount by which the aggregate fair market value of the
rights, options, warrants, evidences of indebtedness or assets
or property, as the case may be, which are distributed in the
Special Distribution, exceeds the fair market value of the
consideration, if any, received therefor by the Company, is
subtracted from (b) the product obtained when the number of
Common Shares issued and outstanding on the relevant record
date is multiplied by the Current Market Price on the relevant
record date; and
(ii) the denominator of which shall be the product obtained when
the number of Common Shares issued and outstanding on the
relevant record date is multiplied by the Current Market Price
on the relevant record date;
provided that no such adjustment shall be made if the result of such
adjustment would be to increase the Exercise Price in effect immediately
before the relevant record date. Any determination of fair market value
shall be made by the board of directors of the Company, and its
determination shall be conclusive. To the extent that any Special
Distribution is not made, the Exercise Price shall be readjusted effective
immediately to the Exercise Price that would then be in effect based upon
the rights, options or warrants, evidences of indebtedness, assets or
property actually distributed.
6.3 RULES FOR ADJUSTMENT IN WARRANT RIGHTS AND EXERCISE PRICE
For the purpose of this Article 6:
6.3.1 The adjustments provided for in this Article 6 are cumulative and
shall be made successively wherever an event referred to in a particular
section of this Article 6 occurs, subject to the following provisions of
this Section 6.3.
6.3.2 No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Exercise Price, and no adjustment shall be made in the number of Warrant
Shares issuable on exercise of Warrants unless it would result in a change
of at least one-hundredth of a Warrant Share; provided, however, that any
adjustments which, by reason of this Section 6.3.2, are not required to be
made shall be carried forward and taken into account in a subsequent
adjustment and so on.
6.3.3 Any Common Shares owned by or held for the account of the Company
shall be deemed not to be issued and outstanding for the purpose of any
computation under Section 6.2.
6.3.4 No adjustment to the Exercise Price shall be made in respect of the
event described in Section 6.2.1.3 if the Warrantholders are entitled to
participate in such event on the same terms and subject to applicable
regulatory approval as though, and to the same
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effect as if, they had exercised their Warrants in full prior to or on the
effective date or record date of such event.
6.3.5 In any case in which this Article 6 requires that an adjustment
become effective immediately after a record date for an event referred to
herein, the Company may defer, until the occurrence of such event, issuing
to Warrantholders who exercise Warrants after such record date and before
the occurrence of such event the additional Warrant Shares issuable upon
such exercise by reason of the adjustment required by such event and
delivering to such Warrantholders any distributions declared with respect
to such additional Warrant Shares after such record date and before such
event; provided, however, that the Company delivers to such Warrantholders
an appropriate instrument evidencing their right to receive such
additional Warrant Shares and such distributions upon the occurrence of
the event requiring such adjustment.
6.3.6 If the Company fixes a record date to determine the holders of
Common Shares entitled to receive any dividend or distribution or fixes a
record date to take any other action and thereafter, but before the
distribution to such holders of Common Shares of any such dividend or
distribution or the taking of such other action, the Company legally
abandons its plan to pay such dividend or distribution or to take such
other action, as the case may be, then no adjustment pursuant to this
Article 6 shall be required by reason of the fixing of such record date.
6.3.7 If the board of directors of the Company does not fix a record date
for a Common Share Reorganization or a Special Distribution, the Company
shall be deemed to have fixed as the record date therefor the close of
business on the day on which the board of directors of the Company
authorizes the Common Share Reorganization or the Special Distribution, as
the case may be.
6.3.8 If, at any time, a question arises with respect to the Exercise
Price or the number of Warrant Shares issuable upon the exercise of
Warrants, such question shall be conclusively determined by the auditors
from time to time of the Company or, if they are unable or unwilling to
act, by such other firm of independent chartered accountants as may be
selected by the Company. Any such determination shall be binding upon the
Warrantholders, the Warrant Trustee, the Company and all shareholders of
the Company.
6.4 NOTICE OF ADJUSTMENT IN WARRANT RIGHTS AND EXERCISE PRICE
6.4.1 At least fourteen days prior to the effective date or record date,
as the case may be, of any event which requires or might require an
adjustment pursuant to this Article 6, the Company (i) will deliver a
certificate of the Company to the Warrant Trustee and (ii) will deliver a
notice to the Warrantholders, in each case, specifying the particulars of
such event and, if determinable, the required adjustment and the
computation of such adjustment. Such certificate of the Company and such
notice need set forth only those particulars that have been determined at
the date of their delivery.
6.4.2 In case any adjustment for which a certificate of the Company or a
notice to the Warrantholders has been given, pursuant to section 6.4.1, is
not then determinable,
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promptly after such adjustment is determinable, the Company (i) will
deliver a certificate of the Company to the Warrant Trustee and (ii) will
deliver a notice to the Warrantholders, in each case, containing a
computation of such adjustment.
ARTICLE 7
RIGHTS AND COVENANTS
7.1 GENERAL COVENANTS OF THE COMPANY
For so long as any Warrants shall remain outstanding, the Company
represents and warrants to, and covenants in favour of, the Warrant Trustee for
the benefit of the Warrant Trustee and the Warrantholders that:
7.1.1 the Company is duly authorized to create and issue the Warrants to
be issued under this Warrant Indenture, and the Tranche 1 Warrant
Certificates, the Tranche 2 Warrant Certificates and the Tranche 3 Warrant
Certificates, when issued and countersigned as provided in this Warrant
Indenture, and the Tranche 1 Warrants, the Tranche 2 Warrants and the
Tranche 3 Warrants represented by them, respectively, will be legal, valid
and binding obligations of the Company;
7.1.2 subject to the provisions of this Warrant Indenture, the Company
will cause the Warrant Shares purchased pursuant to the valid exercise of
Warrants to be duly and validly issued and fully paid and non-assessable;
7.1.3 at all times while any Warrants are outstanding, the Company will
reserve, and there will remain unissued out of its authorized capital, a
number of Common Shares sufficient to enable the Company to meet its
obligation to issue Warrant Shares on the exercise of Warrants outstanding
under this Warrant Indenture from time to time;
7.1.4 following the Plan Implementation Date, the Company will use
commercially reasonable efforts to maintain the listing of Common Shares
on the Exchange, and, for greater certainty, it will not be considered
commercially reasonable to maintain such listing if to do so would hinder
or impede, in any way, any effort on the part of the Company to effect, or
to take any steps in furtherance of, any amalgamation or business
combination (whether by way of a merger, plan of arrangement,
consolidation, share or other security exchange, recapitalization, asset
acquisition or other transaction) involving any one or more of itself or
any of its subsidiaries or affiliates;
7.1.5 following the Plan Implementation Date, the Company will use
commercially reasonable efforts to maintain its status as a reporting
issuer or the equivalent in each of those provinces and territories of
Canada in which it had that status on the Plan Implementation Date, and,
for greater certainty, it will not be considered commercially reasonable
to maintain such status if to do so would hinder or impede, in any way,
any effort on the part of the Company to effect, or to take any steps in
furtherance of, any amalgamation or business combination (whether by way
of a merger, plan of arrangement, consolidation, share or other security
exchange, recapitalization, asset acquisition or other transaction)
involving any one or more of itself or any of its subsidiaries or
affiliates;
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7.1.6 the Company will make all filings, provide all notices and obtain
all consents necessary to be made, provided and obtained, including under
Applicable Laws and Applicable Securities Laws, in connection with the
issuance of Warrants and the exercise thereof, provided that the Company
will not be obligated to deliver or file a prospectus, offering memorandum
or other similar disclosure document in connection therewith or become
subject to any ongoing disclosure or registration requirements solely as a
result of, or in connection with, the issuance of Warrants and the
exercise thereof; and
7.1.7 the Company will do, execute, acknowledge and deliver, or cause to
be done, executed, acknowledged and delivered, all other acts, documents,
deeds and assurances as the Warrant Trustee reasonably may require for
better accomplishing and effecting the objectives and provisions of this
Warrant Indenture.
7.2 WARRANT TRUSTEE'S REMUNERATION AND EXPENSES
The Company will pay to the Warrant Trustee, from time to time, such
reasonable remuneration for its services under this Warrant Indenture as may be
agreed upon by the Company and the Warrant Trustee, and the Company will
reimburse the Warrant Trustee, upon its written request, for all reasonable
expenses, disbursements and advances properly incurred or made by the Warrant
Trustee in the administration or execution of the trusts hereby created and in
the performance of its duties hereunder (including the reasonable compensation
and the disbursements of its counsel and all other advisors and assistants not
regularly in its employ), both before any default under this Warrant Indenture
and thereafter, until all duties of the Warrant Trustee hereunder will be
finally and fully performed, except any such expense, disbursement or advance as
may arise, or have arisen, from the negligence or wilful misconduct of the
Warrant Trustee, any of its employees or agents or its counsel or other advisors
or assistants aforesaid.
ARTICLE 8
EARLY TERMINATION EVENTS
8.1 EARLY TERMINATION EVENTS
For the purposes of this Warrant Indenture, each of the following
events will be an "EARLY TERMINATION EVENT":
8.1.1 the expiry of the notice period specified in any notice delivered
pursuant to Section 8.2.1; and
8.1.2 on or after the first anniversary of the Plan Implementation Date,
the consummation of any amalgamation or similar business combination
(whether by way of a merger, plan of arrangement, consolidation, share or
other security exchange, recapitalization, asset acquisition or other
transaction) involving any one or more of the Company or any of its
subsidiaries or affiliates, which would result in the shareholders of the
Company immediately prior to such consummation owning less than 80% of the
issued and outstanding Equity Shares of the Company or any successor
corporation resulting from
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such consummation or less than 80% of the issued and outstanding equity
interests in any non-corporate entity resulting from such consummation.
The determination of whether any Early Termination Event within the
meaning of Section 8.1.2 has occurred, or will occur, will be made by the board
of directors of the Company, in its sole discretion, acting in good faith. In
the event that the Company becomes aware that an Early Termination Event as
contemplated in Section 8.1.2 is reasonably likely to occur, the Company shall
provide a written notice to the Warrant Trustee and the Warrantholders
describing such Early Termination Event and the anticipated date of its
occurrence. Such written notice shall be delivered as soon as commercially
practicable and, in any event, no later than twenty-one days in advance of the
anticipated date of the occurrence of such Early Termination Event. If the
Company becomes aware that the information contained in such written notice has
become outdated or otherwise misleading since the date of its issuance, the
Company will issue a press release, updating such information, as soon as it
becomes commercially practicable to do so.
8.2 TERMINATION BASED ON CURRENT MARKET PRICE
8.2.1 On any date during the Warrant Exercise Period, if the Current
Market Price is greater than 125% of the Exercise Price, the Company may
deliver a written notice to all Tranche 1 Warrantholders, all Tranche 2
Warrantholders and/or all Tranche 3 Warrantholders, as applicable, and to
the Warrant Trustee, stating that all issued and outstanding Tranche 1
Warrants, Tranche 2 Warrants and/or Tranche 3 Warrants, as applicable,
will expire and shall wholly cease and terminate, and shall be wholly void
and of no value or effect, at 5:00 p.m. (Vancouver time) on the date
specified in the notice, which date shall be no earlier than a date
following the date of delivery of such notice so as to ensure that the
expiry of the Warrant Exercise Period, triggered by the delivery of such
notice, occurs on a day that is at least thirty days following the date of
delivery of such notice.
8.2.2 Any notice to Warrantholders delivered pursuant to Section 8.2.1
will be deemed to be validly given if delivered in accordance with Section
13.2, except that such notice will be deemed to have been received on the
date of delivery or mailing or, if transmitted by fax, at the time of
transmission, provided that such time occurs at or prior to 5:00 p.m.
(Vancouver time), failing which, such notice will be deemed to have been
received on the next succeeding Business Day.
ARTICLE 9
ENFORCEMENT
9.1 ENFORCEMENT OF RIGHTS OF WARRANTHOLDERS
No Warrantholder will have the right to institute any action or
proceeding or to exercise any other remedy authorized by this Warrant Indenture
for the purpose of enforcing any rights on behalf of all Warrantholders or the
execution of any trust or power under this Warrant Indenture unless a
requisition, in writing signed by holders of Warrants sufficient to purchase not
less than 10% of the aggregate number of Warrant Shares which could be purchased
under the
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Warrants then outstanding, requesting the Warrant Trustee to so act, and the
indemnity referred to in Sections 10.13.2 and 12.2.3 have been tendered to the
Warrant Trustee and the Warrant Trustee will have failed to act within a
reasonable amount of time thereafter; in such case, but not otherwise, any
Warrantholder acting on behalf of himself and all other Warrantholders will be
entitled to take proceedings in any court of competent jurisdiction that the
Warrant Trustee might have taken.
9.2 NO PREJUDICE OF RIGHTS
No one or more Warrantholders will have any right in any manner
whatsoever to affect, disturb or prejudice the rights hereby created by his or
their action, or to enforce any right under this Warrant Indenture or under any
Warrant Certificate, except subject to the terms and conditions of, and in the
manner provided in, this Warrant Indenture, and all powers and trusts under this
Warrant Indenture will be exercised, and all proceedings at law will be
instituted, had and maintained, by the Warrant Trustee, except only as provided
in this Warrant Indenture and, in any event, for the equal benefit of all
Warrantholders.
9.3 NO PERSONAL LIABILITY
This Warrant Indenture and the Warrants issued hereunder are solely
corporate obligations, and no personal liability whatsoever will attach to, or
be incurred by, any of the shareholders, officers or directors, past, present or
future, of the Company or any of its subsidiaries, or any successor corporation,
under or by reason of the obligations, covenants or agreements contained in this
Warrant Indenture or in the Warrant Certificates; and any personal liability of
any nature whatsoever at common law, in equity or by reason of statute, and any
right or claim against any such shareholder, officer or director, is hereby
expressly waived as a condition of, and as consideration for, the execution of
this Warrant Indenture and the issue of Warrants hereunder.
ARTICLE 10
MEETINGS OF WARRANTHOLDERS
10.1 RIGHT TO CONVENE MEETINGS AS A CLASS
The Warrant Trustee or the Company, at any time and from time to
time, may convene a meeting of holders of Tranche 1 Warrants, Tranche 2 Warrants
or Tranche 3 Warrants, and the Warrant Trustee will convene such a meeting on
receipt of a requisition in writing signed by the holders of Tranche 1 Warrants,
the holders of Tranche 2 Warrants or the holders of Tranche 3 Warrants, as the
case may be, sufficient to purchase not less than 10% of the aggregate number of
Warrant Shares which could be purchased under the Tranche 1 Warrants, the
Tranche 2 Warrants or the Tranche 3 Warrants, as applicable, then outstanding,
and upon being indemnified and funded to its reasonable satisfaction by the
Company or by the Warrantholders signing the requisition against the costs which
may be incurred in connection with the calling and holding of the meeting. If
the Warrant Trustee fails to convene such a meeting within seven days after
receipt of the requisition and indemnity and funds, the Company or any one of
the holders of Tranche 1 Warrants, Tranche 2 Warrants or Tranche 3 Warrants, as
applicable, may convene the meeting.
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10.2 PLACE FOR HOLDING MEETINGS
Every meeting of holders of Tranche 1 Warrants, holders of
Tranche 2 Warrants or holders of Tranche 3 Warrants, as the case may be, will be
held in the City of Vancouver, British Columbia, or at such other place as the
Warrant Trustee and the Company will determine.
10.3 NOTICE
At least twenty-one days' notice specifying the place, day and hour
of meeting and the general nature of business to be transacted will be given
prior to any meeting of holders of Tranche 1 Warrants, holders of Tranche 2
Warrants or holders of Tranche 3 Warrants, as the case may be, but it will not
be necessary to specify in the notice the terms of any resolution to be proposed
and considered at the meeting. The notice of meeting will be given in the manner
provided in Section 13.2. Notice will be given to the Company unless the meeting
is convened by the Company and to the Warrant Trustee unless the meeting is
convened by the Warrant Trustee. Any accidental omission in any notice of
meeting will not invalidate any resolution passed at the meeting to which such
notice relates.
10.4 CHAIR
An individual, who need not be a holder of Warrants, nominated in
writing by the Warrant Trustee, will chair a meeting of holders of Tranche 1
Warrants, holders of Tranche 2 Warrants or holders of Tranche 3 Warrants, as the
case may be, and if no such individual is nominated or if the individual
nominated is not present within fifteen minutes after the time appointed for
holding the meeting, the holders of Tranche 1 Warrants, the holders of Tranche 2
Warrants or the holders of Tranche 3 Warrants, as the case may be, who are
present will choose another individual present to be chairman of the meeting.
10.5 QUORUM
With respect to the quorum required for a meeting of holders of
Tranche 1 Warrants, holders of Tranche 2 Warrants or holders of Tranche 3
Warrants, as the case may be:
10.5.1 a quorum will consist of two or more holders of Tranche 1 Warrants,
two or more holders of Tranche 2 Warrants or two or more holders of
Tranche 3 Warrants, as the case may be, present in person or by proxy
holding not less than 50% of the aggregate number of Warrant Shares that
could be purchased under the Tranche 1 Warrants, the Tranche 2 Warrants or
the Tranche 3 Warrants, as applicable, then outstanding;
10.5.2 if a quorum is not present within 30 minutes from the time fixed
for the holding of the meeting, if convened by a requisition of holders of
Tranche 1 Warrants, holders of Tranche 2 Warrants or holders of Tranche 3
Warrants, as the case may be, the meeting will be dissolved; but, if
otherwise convened, the meeting will stand adjourned to the next
succeeding week, on the same day of the week (unless that day is not a
Business Day, in which case, the meeting will stand adjourned to the next
succeeding Business Day thereafter) and at the same time and place; and
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10.5.3 at the adjourned meeting, the holders of Tranche 1 Warrants, the
holders of Tranche 2 Warrants or the holders of Tranche 3 Warrants, as the
case may be, who are present in person or by proxy, will form a quorum and
may transact the business for which the original meeting had been
convened, notwithstanding the fact that such Warrantholders may not hold
in aggregate a number of Tranche 1 Warrants, Tranche 2 Warrants or Tranche
3 Warrants, as applicable, sufficient to purchase 50% or more of the
aggregate number of Warrant Shares that could be purchased under the
Tranche 1 Warrants, the Tranche 2 Warrants or the Tranche 3 Warrants, as
applicable, then outstanding.
10.6 POWER TO ADJOURN
The chairman of any meeting of holders of Tranche 1 Warrants,
holders of Tranche 2 Warrants or holders of Tranche 3 Warrants, as the case may
be, at which a quorum is present may adjourn the meeting, with the consent of
the meeting, and no notice of the adjournment need be given except such notice,
if any, as the meeting may prescribe.
10.7 SHOW OF HANDS
Every question submitted to a meeting of holders of Tranche 1
Warrants, holders of Tranche 2 Warrants or holders of Tranche 3 Warrants, as the
case may be, other than a question to be resolved by a Special Resolution, will
be decided in the first place by a majority of the votes given on a show of
hands, and, unless a poll is duly demanded as provided in this Warrant
Indenture, a declaration by the chairman of the meeting that a resolution has
been carried or carried unanimously or by a particular majority, or lost or not
carried by a particular majority, will be conclusive evidence of that fact. In
the case of an equality of votes on a show of hands, the chairman of the meeting
will not have a deciding vote.
10.8 POLL
On every Special Resolution to be passed at a meeting of holders of
Tranche 1 Warrants, holders of Tranche 2 Warrants or holders of Tranche 3
Warrants, as the case may be, and on any other question submitted to a meeting
when directed by the chairman of the meeting or when demanded by any one or more
of the Warrantholders acting in person or by proxy and entitled to acquire in
the aggregate at least 5% of the aggregate number of Warrant Shares that can be
acquired under the Tranche 1 Warrants, the Tranche 2 Warrants or the Tranche 3
Warrants, as applicable, then outstanding, a poll will be taken in the manner as
the chairman of the meeting will direct. Questions other than those to be
resolved by Special Resolution will, if a poll is taken, be decided by the votes
of the holders of Tranche 1 Warrants, Tranche 2 Warrants or Tranche 3 Warrants,
as applicable, sufficient to purchase a majority of the Warrant Shares which
could be purchased under the Tranche 1 Warrants, the Tranche 2 Warrants or the
Tranche 3 Warrants, as applicable, represented at the meeting and voted on the
poll. If, at any meeting, a poll is so demanded as aforesaid on the election of
a chairman of the meeting or on a question of adjournment, it will be taken
forthwith. If, at any meeting, a poll is so demanded on any other question, or a
Special Resolution is to be voted upon, a poll will be taken in such manner, and
either at once or after an adjournment, as the chairman of the meeting directs.
The result of a poll will be deemed to be the decision of the meeting at which
the poll was demanded
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and will be binding on all holders of Tranche 1 Warrants, holders of Tranche 2
Warrants or holders of Tranche 3 Warrants, as the case may be.
10.9 VOTING
On a show of hands, every individual who is present and entitled to
vote, whether as a holder of Tranche 1 Warrants, a holder of Tranche 2 Warrants
or a holder of Tranche 3 Warrants or as proxy for one or more absent holders of
Tranche 1 Warrants, Tranche 2 Warrants or Tranche 3 Warrants, or all three, will
have one vote. On a poll, each holder of Tranche 1 Warrants, Tranche 2 Warrants
or Tranche 3 Warrants, as the case may be, present in person or represented by a
proxy duly appointed by instrument in writing will be entitled to one vote in
respect of each Warrant Share purchasable under the Tranche 1 Warrants, the
Tranche 2 Warrants or the Tranche 3 Warrants, as applicable, of which he is the
holder.
10.10 PROXY NEED NOT BE WARRANTHOLDER
A holder of a proxy need not be a Warrantholder.
10.11 REGULATIONS
The Warrant Trustee, or the Company with the approval of the Warrant
Trustee, may from time to time make or vary such regulations as it thinks fit,
providing for and governing the following:
10.11.1 the issue of voting certificates:
(i) by any bank, trust company or other depositary approved by the
Warrant Trustee, certifying that specified Warrants have been
deposited with it by a named holder and will remain on deposit
until after the meeting;
(ii) by any bank, trust company, insurance company, governmental
department or agency approved by the Warrant Trustee,
certifying that it is the holder of specified Warrants and
will continue to hold the same until after the meeting;
which voting certificates will entitle the holders named therein to be
present and vote at any meeting and at any adjournment thereof or to
appoint a proxy or proxies to represent them and vote for them at any
meeting and at any adjournment thereof, in the same manner and with the
same effect as though the holders named in the voting certificates were
the actual holders of the specified Warrants;
10.11.2 the form of the instrument appointing a proxy (which will be in
writing), the manner in which the same will be executed and the form of
any authority under which a Person executes a proxy on behalf of a
Warrantholder;
10.11.3 the deposit of voting certificates, instruments appointing proxies
or authorities at such place or places as the Warrant Trustee (or the
Company or Warrantholders in case the meeting is convened by the Company
or Warrantholders, as the case may be) may direct in
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the notice convening the meeting and the time (if any) before the holding
of the meeting or adjourned meeting at which the same will be deposited;
10.11.4 the deposit of voting certificates or instruments appointing
proxies at some place or places other than the place at which the meeting
is to be held and for particulars of the voting certificates or
instruments appointing proxies to be faxed or notified by other means of
communication before the meeting to the Company or to the Warrant Trustee
and for the voting of voting certificates and proxies so deposited as if
the voting certificates or the instruments themselves were produced at the
meeting or deposited at any other place required pursuant to Section
10.11.3; and
10.11.5 generally for the calling of meetings of Warrantholders and the
conduct of business thereat.
Any regulations so made will be binding and effective, and votes
given in accordance therewith will be valid and will be counted. Except as the
regulations may provide, the only individuals who will be recognized at any
meeting as holders of Warrants or as entitled to vote or to be present at the
meeting in respect thereof, will be registered Warrantholders and individuals
whom registered Warrantholders have, by instrument in writing, duly appointed as
their proxies.
10.12 COMPANY AND WARRANT TRUSTEE MAY BE REPRESENTED
The Company and the Warrant Trustee by their respective employees,
officers and directors and counsel to the Company and the Warrant Trustee may
attend any meeting of Warrantholders but will not be entitled to vote thereat.
10.13 POWERS EXERCISABLE BY SPECIAL RESOLUTION
A Special Resolution of holders of Tranche 1 Warrants, a Special
Resolution of holders of Tranche 2 Warrants and a Special Resolution of holders
of Tranche 3 Warrants will be required in order to:
10.13.1 subject to Section 11.2, agree to any change to the provisions of
this Warrant Indenture, any supplemental indenture, ancillary instrument
or the Warrant Certificates which may be proposed or agreed to by the
Company and to authorize and direct the Warrant Trustee to concur in and
execute any supplemental indenture or other document effecting any such
change;
10.13.2 require the Warrant Trustee to enforce any of the obligations of
the Company under this Warrant Indenture or any supplemental indenture or
ancillary instrument or to enforce any of the rights of the
Warrantholders, in any manner specified in a Special Resolution, or to
refrain from enforcing any of such obligations or rights, upon the Warrant
Trustee being furnished with an indemnity reasonably satisfactory to the
Warrant Trustee to protect and hold harmless the Warrant Trustee against
the costs, charges, expenses and liabilities to be incurred thereby and
any loss and damage it may suffer by reason thereof;
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10.13.3 remove the Warrant Trustee or its successor or successors in
office and to appoint a new trustee or trustees to take the place of the
trustee or trustees so removed;
10.13.4 waive, and direct the Warrant Trustee to waive, any default on the
part of the Company in complying with any provision of this Warrant
Indenture either unconditionally or upon any conditions specified in the
Special Resolution;
10.13.5 restrain any Warrantholder from taking, instituting or continuing
any suit, action or proceeding against the Company for the enforcement of
any of the obligations of the Company under this Warrant Indenture or any
supplemental indenture or ancillary instrument; and
10.13.6 amend, alter or repeal any Special Resolution previously passed,
consented to or adopted by Warrantholders;
provided, however, that, in the event that a matter requiring approval by
Special Resolution affects, or would affect, holders of one class of
Warrants exclusively without affecting holders of any other class of
Warrants, only a Special Resolution of Warrantholders of the affected
class will be required. In any event, no amendment, modification,
abrogation, alteration, compromise or arrangement of the rights against
the Company held by the Warrantholders or the Warrant Trustee, on behalf
of the Warrantholders, whether such rights arise under this Warrant
Indenture or otherwise, may be effected without the written consent of the
Company, which consent may be unreasonably withheld.
10.14 MEANING OF "SPECIAL RESOLUTION"
10.14.1 The expression "Special Resolution", when used in this Warrant
Indenture, means a resolution proposed at a meeting of holders of Tranche
1 Warrants, holders of Tranche 2 Warrants or holders of Tranche 3
Warrants, as the case may be, duly convened for the purpose of considering
such resolution and held in accordance with this Article 10 and at which
there was a quorum, and which is passed by the affirmative votes of
holders of Tranche 1 Warrants, holders of Tranche 2 Warrants or holders of
Tranche 3 Warrants, as the case may be, who are entitled to acquire not
less than two-thirds of the aggregate number of Warrant Shares that can be
acquired under all of the Tranche 1 Warrants, all of the Tranche 2
Warrants or all of the Tranche 3 Warrants, as applicable, that are
represented at the meeting.
10.14.2 Votes on a Special Resolution will always be given on a poll, and
no demand for a poll on any Special Resolution will be necessary.
10.14.3 All actions that may be taken, and all powers that may be
exercised, by holders of Tranche 1 Warrants, holders of Tranche 2 Warrants
or holders of Tranche 3 Warrants, as the case may be, at a meeting held as
provided above in this Article 10 may also be taken and exercised by
Warrantholders entitled to acquire two-thirds of the aggregate number of
Warrant Shares that can be acquired under all of the then outstanding
Tranche 1 Warrants, Tranche 2 Warrants or Tranche 3 Warrants, as
applicable, by an instrument in writing signed in one or more counterparts
by such Warrantholders in person or by attorney duly
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appointed in writing, and the expression "Special Resolution", when used
in this Warrant Indenture, will include an instrument so signed.
10.15 POWERS CUMULATIVE
Any one or more of the powers or combination of the powers in this
Warrant Indenture exercisable by Warrantholders, by Special 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 such powers from time to time will not
be deemed to exhaust the rights of Warrantholders to exercise the same or any
other power or powers or combination of powers then or thereafter.
10.16 MINUTES
Minutes of all resolutions and proceedings at every meeting of
Warrantholders will be made and duly entered in books to be provided for that
purpose by the Warrant Trustee, at the expense of the Company, and any minutes,
if purporting to be signed by the chairman of the meeting or by the chairman of
the next succeeding meeting of Warrantholders, will be prima facie evidence of
the matters therein stated, and, unless and until the contrary is proven, every
meeting of Warrantholders for which minutes have been made and duly entered in
the aforesaid books, will be deemed to have been duly convened and held, and all
resolutions passed or proceedings taken at such meeting will be deemed to have
been duly passed and taken.
10.17 BINDING EFFECT OF RESOLUTIONS
Every resolution and every Special Resolution duly passed at a duly
convened and held meeting of holders of Tranche 1 Warrants, holders of Tranche 2
Warrants or holders of Tranche 3 Warrants, as the case may be, and any consent
in writing having the effect of a Special Resolution will be binding upon all
the holders of Tranche 1 Warrants, holders of Tranche 2 Warrants or holders of
Tranche 3 Warrants (including their successors and assigns), as applicable,
whether or not present or represented and voting at the meeting or signatories
to the consent, as the case may be, and each of such Warrantholders and the
Warrant Trustee, subject to compliance with the provisions for its indemnity
contained in this Warrant Indenture, will be bound to give effect thereto.
ARTICLE 11
SUPPLEMENTAL AGREEMENTS AND SUCCESSOR COMPANIES
11.1 PROVISION FOR SUPPLEMENTAL WARRANT INDENTURES FOR CERTAIN PURPOSES
From time to time, the Company (when authorized by the directors of
the Company) and the Warrant Trustee may, subject to the provisions of these
presents, and they will, when so directed by these presents, execute and deliver
by their respective proper officers or directors, as the case may be, agreements
supplemental hereto or instruments ancillary hereto, which thereafter will form
part of this Warrant Indenture, for any one or more or all of the following
purposes:
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11.1.1 adding hereto such additional covenants and enforcement provisions
as, in the opinion of the Company, based on the advice of its counsel, are
necessary or advisable and are not prejudicial to the interests of
Warrantholders;
11.1.2 making any modification to the form of any of the Warrant
Certificates which, in the opinion of the Company, based on the advice of
its counsel, does not affect the substance thereof and is allowed under
Applicable Laws;
11.1.3 making any additions to, deletions from or alterations to the
provisions of this Warrant Indenture which, in the opinion of the Company,
based on the advice of its counsel, do not materially and adversely affect
the interests of Warrantholders and are necessary or advisable in order to
incorporate, reflect or comply with any Applicable Laws;
11.1.4 subject to Article 8, evidencing the succession of successor
companies to the Company and the assumption by such successor companies of
the covenants and obligations of the Company; and
11.1.5 for any other purpose not inconsistent with the terms of this
Warrant Indenture, including the correction or rectification of any
ambiguities, defective provisions, errors or omissions in this Warrant
Indenture, provided that, in the opinion of the Company, based on the
advice of its counsel, the rights of the Warrant Trustee or Warrantholders
are, in no way, prejudiced thereby.
11.2 CORRECTION OF MANIFEST ERRORS
The Company and the Warrant Trustee may correct typographical,
clerical and other manifest errors in this Warrant Indenture, provided that such
correction, in the opinion of counsel to the Company, will not prejudice the
rights of the Warrant Trustee or Warrantholders under this Warrant Indenture,
and the Company and the Warrant Trustee may execute and deliver all such
documents as may be necessary to correct such errors.
11.3 SUCCESSOR COMPANIES
Subject to Article 8, in the case of the consolidation, amalgamation
or merger with, or the transfer of the undertaking or assets of the Company as
an entirety, or substantially as an entirety, to, another corporation, the
successor corporation resulting from such consolidation, amalgamation, merger or
transfer will be bound by the provisions of this Warrant Indenture and for the
due and punctual performance and observance of each and every covenant and
obligation contained herein to be performed by the Company, and, if such
successor corporation is not the Company, such successor corporation will
expressly assume those covenants and obligations by supplemental agreement
satisfactory in form and substance to the Warrant Trustee and executed and
delivered to the Warrant Trustee.
11.4 EXECUTION OF SUPPLEMENTAL INDENTURES
In executing and delivering any indentures supplemental hereto or
instruments ancillary hereto, the Warrant Trustee will be entitled to receive,
and will be fully protected in
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relying upon, an opinion of counsel stating that the execution and delivery of
such indentures or instruments is authorized or permitted by this Warrant
Indenture and that all conditions precedent to such execution and delivery have
been satisfied. The Warrant Trustee may, but will not be obligated to, enter
into any supplemental indenture or ancillary instrument which would affect the
Warrant Trustee's own rights, duties, covenants or immunities under this Warrant
Indenture or otherwise.
11.5 NOTICE OF SUPPLEMENTAL INDENTURE
After any supplemental indenture becomes effective, the Company will
provide notice thereof to the Warrantholders.
ARTICLE 12
CONCERNING THE WARRANT TRUSTEE
12.1 LEGISLATION
If and to the extent that any provision of this Warrant Indenture
limits, qualifies or conflicts with a mandatory requirement of Applicable Laws,
such mandatory requirement will prevail. The Company and the Warrant Trustee
agree that each of them, at all times in relation to this Warrant Indenture and
any action to be taken hereunder, will observe and comply with, and be entitled
to the benefits of, Applicable Laws.
12.2 RIGHTS AND DUTIES OF WARRANT TRUSTEE
The rights and duties of the Warrant Trustee are as follows:
12.2.1 In the exercise of the rights, duties and obligations prescribed or
conferred by the terms of this Warrant Indenture, the Warrant Trustee will
act honestly and in good faith with a view to the best interest of the
Warrantholders and will exercise that degree of care, diligence and skill
that a reasonably prudent trustee would exercise in comparable
circumstances.
12.2.2 No provision of this Warrant Indenture will be construed to relieve
the Warrant Trustee from liability for its own negligence, wilful
misconduct or bad faith.
12.2.3 Subject only to Section 12.2.2, the obligation of the Warrant
Trustee to commence or continue any act, action or proceeding for the
purpose of enforcing any rights of the Warrant Trustee or Warrantholders
under this Warrant Indenture will be conditional upon Warrantholders
furnishing, when required by notice in writing by the Warrant Trustee,
sufficient funds to commence or continue such act, action or proceeding
and an indemnity reasonably satisfactory to the Warrant Trustee to protect
and hold harmless the Warrant Trustee against the costs, charges, expenses
and liabilities to be incurred thereby and any loss and damage it may
suffer by reason thereof.
12.2.4 No provision of this Warrant Indenture will require the Warrant
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of
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its duties or in the exercise of any of its rights or powers hereunder
unless it is indemnified and funded as provided in Section 12.2.3.
12.2.5 Before commencing, or at any time during the continuance of, any
such act, action or proceeding, the Warrant Trustee may require the
Warrantholders at whose instance it is acting to deposit with it the
Warrant Certificates held by such Warrantholders, for which Warrant
Certificates, the Warrant Trustee will issue receipts.
12.3 EVIDENCE, EXPERTS AND ADVISERS
12.3.1 In addition to the reports, certificates, opinions and other
evidence required by this Warrant Indenture, as soon as practicable
following written notice to the Company, the Company will furnish to the
Warrant Trustee such additional evidence of compliance with any provision
of this Warrant Indenture, in such form as may be prescribed by Applicable
Laws or as the Warrant Trustee reasonably may require.
12.3.2 In the exercise of any right or duty hereunder, the Warrant
Trustee, if it is acting in good faith, may rely, as to the authority of
the Person signing it and as to the truth of any statement or the accuracy
of any opinion expressed therein, on any statutory declaration, opinion,
report, certificate or other evidence furnished to the Warrant Trustee
pursuant to any provision of this Warrant Indenture or of Applicable Laws
or pursuant to a request of the Warrant Trustee.
12.3.3 Whenever Applicable Laws require that evidence referred to in
Section 12.3.1 be in the form of a statutory declaration, the Warrant
Trustee may accept the statutory declaration in lieu of a certificate of
the Company required pursuant to any provision of this Warrant Indenture.
12.3.4 Any statutory declaration may be made by one or more of the senior
officers of the Company.
12.3.5 The Warrant Trustee, at the expense of the Company, may employ or
retain such counsel, accountants, engineers, appraisers and other experts
or advisers as it reasonably requires for the purpose of discharging its
duties hereunder and may pay reasonable remuneration for all services so
performed by any of them, without taxation of costs of any counsel, and
will not be responsible for any misconduct or negligence on the part of
any of them who has been selected with due care by the Warrant Trustee.
12.4 SECURITIES AND DOCUMENTS HELD BY WARRANT TRUSTEE
Any securities, documents of title or other instruments that, at any
time, may be held by the Warrant Trustee subject to the trusts hereof and the
powers and duties hereunder may be placed in deposit vaults of the Warrant
Trustee.
12.5 ANTI-MONEY LAUNDERING LEGISLATION; ANTI-TERRORIST LEGISLATION
12.5.1 The Company hereby acknowledges and agrees with the Warrant Trustee
that any account to be opened by, or interest to be held by, the Warrant
Trustee in connection with
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this Warrant Indenture or for or to the credit of the Company, upon the
Company's instructions, is not intended to be used by or on behalf of any
third party or that, if such account or interest is intended to be used by
or on behalf of a third party, the Company will complete and execute
forthwith a declaration, in the Warrant Trustee's prescribed form, as to
the particulars of such third party.
12.5.2 The Warrant 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 Warrant Trustee, in its sole judgment,
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. If the Warrant Trustee, in its sole judgment, determines at
any time that its acting under this Warrant Indenture has resulted in its
being in non-compliance with any applicable anti-money laundering or
anti-terrorist legislation, regulation or guideline, then the Warrant
Trustee shall have the right to resign on ten days' written notice to the
Company, provided that (i) the Warrant Trustee's written notice shall
describe fully the circumstances of such non-compliance and (ii) if such
circumstances are rectified to the Warrant Trustee's satisfaction within
such ten-day period, then, at the option of the Company within its sole
discretion, such resignation shall not be effective.
12.6 ACTION BY WARRANT TRUSTEE TO PROTECT INTERESTS
The Warrant Trustee will have power to institute and maintain such
actions and proceedings as it may consider necessary or expedient to preserve or
protect its interests and those of Warrantholders.
12.7 WARRANT TRUSTEE NOT REQUIRED TO GIVE SECURITY
The Warrant Trustee will not be required to give any bond or
security in respect of the execution of the trusts of, and the powers and duties
under, this Warrant Indenture or otherwise in respect of these premises.
12.8 PROTECTION OF WARRANT TRUSTEE
Other than by virtue of, or pursuant to, any Applicable Laws
relating to it:
12.8.1 the Warrant Trustee will not be liable for, or by reason of, any
statements of fact or recitals contained in this Warrant Indenture (except
the representation contained in Section 12.10.1 and the representation by
virtue of the countersignature of the Warrant Trustee on the Warrant
Certificates), and the Warrant Trustee will not be required to verify the
accuracy of the same, but all such statements or recitals are, and will
be, deemed to be made by the Company;
12.8.2 the Warrant Trustee will not be bound to give notice to any Person
or Persons of the execution and delivery of this Warrant Indenture;
12.8.3 the Warrant Trustee will not incur any liability whatsoever, or be
in any way responsible, for the consequence of any breach on the part of
the Company of any
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obligation contained in this Warrant Indenture or for the consequence of
any acts of the directors, officers, employees or agents of the Company;
and
12.8.4 the Warrant Trustee is not accountable with respect to the validity
or value (or the kind or amount) of any Warrant Shares or other property
which may at any time be issued or delivered upon the exercise of the
right of purchase attaching to Warrants.
12.9 REPLACEMENT OF WARRANT TRUSTEE
12.9.1 The Warrant Trustee may resign its trust and be discharged from all
further duties and liabilities under this Warrant Indenture by giving to
the Company and the Warrantholders not less than 30 days' notice in
writing or, if a new Warrant Trustee has been appointed, such shorter
notice as the Company accepts as sufficient.
12.9.2 The Company, at any time, may remove the Warrant Trustee and
appoint a new Warrant Trustee.
12.9.3 If the Warrant Trustee resigns or is removed or is dissolved,
becomes bankrupt, goes into liquidation or otherwise becomes incapable of
acting under this Warrant Indenture, the Company will forthwith appoint a
new Warrant Trustee.
12.9.4 Failing appointment by the Company, the retiring Warrant Trustee or
any Warrantholder may apply to the Court, on such notice as the Court
directs, for the appointment of a new Warrant Trustee.
12.9.5 Any new Warrant Trustee so appointed by the Company or the Court
will be subject to removal as aforesaid by the Company.
12.9.6 Any new Warrant Trustee appointed under any provision of this
Section 12.9 must be a corporation authorized to carry on the business of
a trust company in the Province of British Columbia and, if required by
Applicable Laws, in other provinces and/or territories of Canada.
12.9.7 On its appointment, the new Warrant Trustee will be vested with the
same powers, rights, duties and responsibilities as if it had been
originally named in this Warrant Indenture as the warrant trustee
hereunder, without any further assurance, conveyance, act or deed, but
there will be immediately executed, at the expense of the Company, all
such conveyances or other instruments as, in the opinion of counsel, are
necessary or advisable for the purpose of assuring the powers, rights,
duties and responsibilities to the new Warrant Trustee.
12.9.8 On the appointment of a new Warrant Trustee, the Company will give
prompt notice thereof to the Warrantholders.
12.9.9 A corporation into or with which the Warrant Trustee is merged or
consolidated or amalgamated, or a corporation succeeding to the business
of the Warrant Trustee, will be the successor to the Warrant Trustee under
this Warrant Indenture without any further
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act on its part or on the part of any other Person, provided that such
corporation is eligible for appointment as a new Warrant Trustee under
Section 12.9.6.
12.9.10 A Warrant Certificate certified but not delivered by a predecessor
Warrant Trustee may be delivered by the new or successor Warrant Trustee
in the name of the predecessor Warrant Trustee or successor Warrant
Trustee.
12.10 CONFLICT OF INTEREST
12.10.1 The Warrant Trustee represents to the Company that, at the time of
the execution and delivery of this Warrant Indenture, no material conflict
of interest exists between its role as the Warrant Trustee under this
Warrant Indenture and its role in any other capacity and that, if a
material conflict of interest arises hereafter, it will, within 60 days
after ascertaining that it has a material conflict of interest, either
eliminate the conflict of interest or resign its role as the warrant
trustee under this Warrant Indenture.
12.10.2 Subject to Section 12.10.1 and compliance with Applicable Laws,
the Warrant Trustee, in its personal or any other capacity, may buy, lend
on and deal in securities of the Company and generally may contract and
enter into financial transactions with the Company or any subsidiary of
the Company without being liable to account for any profit made thereby.
12.11 ACCEPTANCE OF DUTIES AND COVENANTS
The Warrant Trustee hereby accepts the duties and covenants in this
Warrant Indenture declared and provided for and agrees to perform them on the
terms and conditions herein set forth.
12.12 INDEMNITY
The Company will indemnify and save harmless the Warrant Trustee,
its successors and assigns and their respective current and former officers,
directors, employees and agents from and against any and all claims, losses
(other than loss of profits), actions, suits, costs, damages and expenses
incurred by the Warrant Trustee (which, for the purpose of the remainder of this
Section 12.12, includes its current officers, directors, employees and agents)
as a result of, or by reason of, any act or omission of the Warrant Trustee in
relation to this Warrant Indenture, other than acts or obligations taken or made
as a result of the negligence, wilful misconduct or bad faith of the Warrant
Trustee.
12.13 SURVIVAL OF TERMINATION
The indemnity of the Warrant Trustee provided for herein shall
survive the termination of this Warrant Indenture and the resignation or removal
of the Warrant Trustee, except in circumstances where the Warrant Trustee has
acted with negligence or wilful misconduct or in bad faith.
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ARTICLE 13
GENERAL
13.1 NOTICE TO COMPANY AND WARRANT TRUSTEE
13.1.1 Unless otherwise expressly provided in this Warrant Indenture, any
notice to be given hereunder to the Company or the Warrant Trustee will be
deemed to be validly given if delivered or if transmitted by fax to the
addresses or all of the fax numbers below:
(i) if to the Company:
Western Forest Products Inc.
435 Trunk Road, 3rd Floor
Duncan, British Columbia
V9L 2P9
Attention: Corporate Secretary
Facsimile: (250) 748-6045 and (604) 665-6292
(ii) if to the Warrant Trustee:
Computershare Trust Company of Canada
510 Burrard Street, 3rd Floor
Vancouver, British Columbia
V6C 3B9
Attention: Manager, Corporate Trust
Facsimile: (604) 661-9403
and any notice given in accordance with the foregoing will be deemed to
have been received on the date of delivery or, if transmitted by fax, at
the time of transmission, provided that such time occurs at or prior to
5:00 p.m. (Vancouver time), failing which, such notice will be deemed to
have been received on the next succeeding Business Day.
13.1.2 The Company or the Warrant Trustee, as the case may be, may from
time to time notify the other in the manner provided in Section 13.1.1 of
a change of address which, from the effective date of the notice and until
changed by like notice, will be the address of the Company or the Warrant
Trustee, as the case may be, for all purposes of this Warrant Indenture.
13.2 NOTICE TO WARRANTHOLDERS
13.2.1 Unless otherwise expressly provided in this Warrant Indenture, any
notice to be given hereunder to Warrantholders will be deemed to be
validly given if the notice is sent by prepaid mail, addressed to the
holder, or delivered by hand or transmitted by fax (or so mailed to
certain holders and so delivered to other holders and so faxed to other
holders) at their respective addresses and fax numbers appearing on the
Registers, and if, in the case of joint holders of any Warrants, more than
one address or fax number appears on the Registers in respect of that
joint holding, the notice will be addressed or delivered, as the
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case may be, only to the first address or fax number, as the case may be,
so appearing. Any notice given in accordance with the foregoing will be
deemed to have been received on the date of delivery or, if mailed, on the
third Business Day following the day of the mailing of the notice or, if
transmitted by fax, at the time of transmission, provided that such time
occurs at or prior to 5:00 p.m. (Vancouver time), failing which, such
notice will be deemed to have been received on the next succeeding
Business Day.
13.2.2 If, by reason of strike, lock-out or other work stoppage, actual or
threatened, involving postal employees, any notice to be given to the
Warrantholders could reasonably be considered unlikely to reach its
destination, the notice may be published or distributed once in the
business sections of the national editions of The Globe and Mail and the
National Post (or, in the event of a disruption in the circulation of both
those newspapers, once in a daily newspaper in the English language
approved by the Warrant Trustee of general circulation in each of the City
of Vancouver and the City of Toronto). Any notice so given will be deemed
to have been given on the day on which it has been published in all of the
cities in which publication was required (or first published in a city if
more than one publication in that city is required). In determining, under
any provision of this Warrant Indenture, the date when notice of any event
must be given, the date of giving notice will be included and the date of
the event will be excluded.
13.3 SATISFACTION AND DISCHARGE OF WARRANT INDENTURE
Upon the termination of the Warrant Exercise Period applicable to
the last Warrant issued and outstanding hereunder, and following the issuance of
all of the Warrant Shares required to be issued hereunder as a consequence of
the exercise of Warrants, this Warrant Indenture will cease to be of further
effect, and, on demand of the Company and at the cost and expense of the Company
and on delivery to the Warrant Trustee of a certificate of the Company stating
that all conditions precedent to the satisfaction and discharge of this Warrant
Indenture have been complied with and on payment to the Warrant Trustee of the
fees and other remuneration payable to the Warrant Trustee, the Warrant Trustee
will execute proper instruments acknowledging satisfaction of and discharging
this Warrant Indenture.
13.4 SOLE BENEFIT OF PARTIES AND WARRANTHOLDERS
Nothing in this Warrant Indenture, expressed or implied, will give
or be construed to give to any Person, other than the parties hereto and the
Warrantholders, any legal or equitable right, remedy or claim under this Warrant
Indenture or under any covenant or provision contained in this Warrant
Indenture, all such covenants and provisions being for the sole benefit of the
parties hereto and the Warrantholders.
13.5 DISCRETION OF DIRECTORS
Any matter provided in this Warrant Indenture to be determined by
the directors of the Company will be determined by them in their sole
discretion, and a determination so made, absent manifest error, will be
conclusive.
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13.6 COUNTERPARTS AND FORMAL DATE
This Warrant Indenture may be executed simultaneously in several
counterparts, each of which, when so executed, will be deemed to be an original,
and the counterparts together will constitute one and the same instrument and,
notwithstanding their date of actual execution, will be deemed to bear the date
as of July 27, 2004.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF the parties hereto have executed this Warrant
Indenture by their proper officers in that behalf.
WESTERN FOREST PRODUCTS INC.
By: _______________________________
Name:
Title:
By: _______________________________
Name:
Title:
COMPUTERSHARE TRUST COMPANY OF
CANADA, AS WARRANT TRUSTEE
By: _______________________________
Name:
Title:
By: _______________________________
Name:
Title:
SCHEDULE "A"
FORM OF TRANCHE 1 WARRANT CERTIFICATE
CUSIP NO. 958211 14 6
THE TRANCHE 1 WARRANTS REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD OR
OTHERWISE TRANSFERRED UNDER ANY CIRCUMSTANCES.
THE TRANCHE 1 WARRANTS REPRESENTED HEREBY WILL BE VOID AND OF NO VALUE UNLESS
EXERCISED BEFORE THE END OF THE WARRANT EXERCISE PERIOD.
TRANCHE 1 WARRANT CERTIFICATE
Warrant Certificate __________________ TRANCHE 1 WARRANTS entitling the
Number ___________ holder to acquire, for every one Tranche 1 Warrant
represented hereby, one common share in the capital of
the Company (a "WARRANT SHARE") (or such other number
of Warrant Shares or other securities resulting from
any adjustment of the rights of the Holder in
accordance with the provisions of the Warrant Indenture
(defined below)).
WESTERN FOREST PRODUCTS INC. (the "COMPANY")
INCORPORATED UNDER THE LAWS OF CANADA
THIS IS TO CERTIFY THAT (hereinafter referred to as the "HOLDER")
is the registered holder of the number of Tranche 1 Warrants set forth above.
Each Tranche 1 Warrant represented hereby entitles the Holder to acquire one
Warrant Share, in the manner and subject to the restrictions set forth herein.
The Tranche 1 Warrants represented by this Tranche 1 Warrant Certificate are
issued under, and pursuant to, the Warrant Indenture (the "WARRANT INDENTURE"),
dated as of July 27, 2004, between the Company and Computershare Trust Company
of Canada (the "WARRANT TRUSTEE"). Reference is hereby made to the Warrant
Indenture and any supplemental indenture and any ancillary instrument for a full
description of the rights of the Holder and the terms and conditions upon which
the Tranche 1 Warrants are issued and held, with the same effect as if the
provisions of the Warrant Indenture and any supplemental indenture and any
ancillary instrument were set forth herein. By acceptance hereof, the Holder
assents to all of the provisions of the Warrant Indenture. In the event of a
conflict or inconsistency between a provision of the Warrant Indenture and a
provision of this Tranche 1 Warrant Certificate, the former will prevail.
Capitalized terms used herein but not defined have the respective meanings
attributed to such terms in the Warrant Indenture.
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The right hereunder to acquire Warrant Shares may be exercised by the Holder
only until the end of the Warrant Exercise Period by surrendering this Tranche 1
Warrant Certificate to the Warrant Trustee at the office of the Warrant Trustee
in the City of Vancouver or the City of Toronto, together with a fully completed
and duly executed Warrant Exercise Form, in the form attached, and remitting a
certified cheque, bank draft or money order in lawful money of Canada, payable
to, or to the order of, the Company at par, in an aggregate amount equal to the
product of the number of Tranche 1 Warrants being exercised and the Exercise
Price (which is Cdn.$16.28 on the date of issue of the Tranche 1 Warrants
represented hereby). Payment of such aggregate amount also may be made in any
other form that is acceptable to the Warrant Trustee and the Company.
This Tranche 1 Warrant Certificate shall be deemed to be surrendered only upon
personal delivery hereof or, if sent by mail, upon actual receipt hereof by the
Warrant Trustee at the office referred to above.
Upon surrender of this Tranche 1 Warrant Certificate in accordance with the
provisions of the Warrant Indenture, the person in whose name the Warrant Shares
issuable upon exercise of the Tranche 1 Warrants represented hereby, are to be
issued shall be deemed, for all purposes (except as may be provided in the
Warrant Indenture), to be the holder of record of such Warrant Shares.
The Warrant Indenture provides for certain adjustments in the Exercise Price,
and in the number and/or class of securities which the Holder is entitled to
receive upon exercise of the Tranche 1 Warrants represented hereby, following
(i) any subdivision, consolidation, reclassification or other change in the
capital of the Company, (ii) the payment by the Company of certain dividends or
distributions and (iii) the occurrence of certain other events specified in the
Warrant Indenture.
The Holder may exercise less than all of the Tranche 1 Warrants represented by
this Tranche 1 Warrant Certificate and, upon any such partial exercise, will be
entitled to receive, at no extra cost, a new certificate representing the number
of Tranche 1 Warrants which were not exercised. The Holder may not exercise a
fraction of a Tranche 1 Warrant, and no fractional Warrant Share, issuable to
the Holder upon exercise of Tranche 1 Warrants represented hereby, will be
issued.
The holding of the Tranche 1 Warrants represented hereby shall not constitute
the Holder a shareholder of the Company or entitle the holder to any right or
interest in respect thereof except as expressly provided in the Warrant
Indenture or this Tranche 1 Warrant Certificate.
THE SECURITIES ISSUABLE UPON EXERCISE OF THE TRANCHE 1 WARRANTS REPRESENTED
HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR THE SECURITIES
LAWS OF ANY STATE IN THE UNITED STATES OR ANY OTHER JURISDICTION, AND SUCH
SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES UNLESS THEY ARE
REGISTERED UNDER THE U.S. SECURITIES ACT OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENT IS AVAILABLE.
-3-
The Holder shall not have any rights under, or by virtue of, the Tranche 1
Warrants represented hereby or the Warrant Indenture subsequent to the end of
the Warrant Exercise Period, being 5:00 p.m. (local time in the place of deposit
of the Warrant Exercise Form) on July 27, 2009, the fifth anniversary of the
Plan Implementation Date, subject to earlier termination in accordance with the
provisions of the Warrant Indenture.
This Tranche 1 Warrant Certificate shall not be valid for any purpose whatsoever
unless and until it has been certified by or on behalf of the Warrant Trustee.
Time shall be of the essence hereof in all respects.
This Tranche 1 Warrant Certificate will be governed by, and construed in
accordance with, the laws of the Province of British Columbia and the federal
laws of Canada applicable therein.
IN WITNESS WHEREOF the Company has caused this Tranche 1 Warrant Certificate to
be signed by its duly authorized officer as of July 27, 2004.
WESTERN FOREST PRODUCTS INC.
By: _______________________________
Authorized Signatory
Countersigned by:
COMPUTERSHARE TRUST COMPANY OF
CANADA, AS WARRANT TRUSTEE
By: _______________________________
Authorized Signatory
WARRANT EXERCISE FORM
TO: COMPUTERSHARE TRUST COMPANY OF CANADA, AS THE WARRANT TRUSTEE
510 BURRARD STREET, 3RD FLOOR
VANCOUVER, BRITISH COLUMBIA
V6C 3B9
- OR -
COMPUTERSHARE TRUST COMPANY OF CANADA, AS THE WARRANT TRUSTEE
100 UNIVERSITY AVENUE, 11TH FLOOR
TORONTO, ONTARIO
M5J 2Y1
AND TO: THE COMPANY
The undersigned Holder hereby:
(a) exercises ______________________ Tranche 1 Warrants to acquire
________________________ Warrant Shares (or, if applicable, such other
class of securities issuable upon exercise of Tranche 1 Warrants as a
result of any adjustment to the rights of the Holder in accordance with
the provisions of the Warrant Indenture), at the aggregate exercise
price of Cdn.$___________ and, in payment of such aggregate exercise
price, encloses a certified cheque, bank draft or money order payable
to, or to the order of, the Company or has effected some other form of
payment confirmed by the Warrant Trustee and the Company as being
acceptable; and
(b) delivers the original copy of the within Tranche 1 Warrant
Certificate.
The undersigned Holder hereby represents, warrants and certifies that
(one of (a), (b) or (c) must be checked):
[ ] (a) he, she or it is not a "U.S. person" (as such term is defined in
Regulation S under the U.S. Securities Act of 1933, as amended (the
"U.S. SECURITIES ACT")), and has not ever been a U.S. person since July
27, 2004, and is not exercising Tranche 1 Warrants on behalf of, or for
the account or benefit of, a U.S. person and did not execute or deliver
this Warrant Exercise Form in the United States, and, upon acquiring
the above-mentioned Warrant Shares (or, if applicable, the other
securities mentioned above) (collectively, the "SECURITIES"), he, she
or it and any person on whose behalf, or for whose account or benefit,
he, she or it is acting will not be a U.S. person and will be located
outside the United States; and the Holder hereby acknowledges, on his,
her or its own behalf and on behalf of any person on whose behalf, or
for whose account or benefit, he, she or it is acting, that (i) the
Securities have not been and will not be registered under the U.S.
Securities Act or qualified under the securities laws of any state in
the United States and that the Securities may not be offered or sold or
otherwise transferred
-5-
in the United States unless they are registered under the U.S.
Securities Act or unless an exemption from such registration
requirement is available and (ii) neither he, she or it nor any person
on whose behalf, or for whose account or benefit, he, she or it is
acting is acquiring the Securities as a transaction, or part of a
series of transactions that, although in technical compliance with
Regulation S under the U.S. Securities Act, is part of a plan or scheme
to evade the registration provisions of the U.S. Securities Act;
- OR -
[ ] (b) on one or more of the following bases (one or more of (i) to (vii)
must be checked, as applicable), he, she or it is an accredited
investor (as such term is defined in Rule 501(a) of Regulation D under
the U.S. Securities Act) and is exercising Tranche 1 Warrants for his,
her or its own account:
[ ] (i) he or she is a natural person (individual) whose own net worth,
taken together with the net worth of his or her spouse, exceeds
U.S.$1,000,000; net worth, for this purpose, means total assets
(including residence, personal property and other assets) in
excess of total liabilities;
[ ] (ii) he or she is a natural person (individual) who had an individual
income in excess of U.S.$200,000 (or joint income with his or
her spouse in excess of U.S.$300,000) in each of the past two
calendar years and who reasonably expects income in excess of
U.S.$200,000 (or joint income with his or her spouse in excess
of U.S.$300,000) in the current calendar year;
[ ] (iii) he or she is a director or executive officer of the Company;
[ ] (iv) it is (i) a corporation, (ii) an organization described in
Section 501(c)(3) of the Internal Revenue Code, (iii) a
Massachusetts or similar business trust or (iv) a partnership,
in each case, not formed for the specific purpose of acquiring
the Tranche 1 Warrants and the underlying Securities and, in
each case, with total assets in excess of U.S.$5,000,000;
[ ] (v) it is (i) a bank or any savings and loan association or other
similar institution acting in its individual or fiduciary
capacity, (ii) a broker or dealer, (iii) an insurance company,
(iv) an investment company or a business development company
under the Investment Company Act of 1940 or a private business
development company under the Investment Advisers Act of 1940,
(v) a Small Business Investment Company licensed by the U.S.
Small Business Administration or (vi) an employee benefit plan
whose investment decision is being made by a plan fiduciary,
which is either a bank, savings and loan association, insurance
company or registered investment adviser, or an employee benefit
plan whose total assets are in excess of U.S.$5,000,000 or a
self-directed employee benefit plan whose investment decisions
are made solely by persons that are
-6-
accredited investors;
[ ] (vi) it is a trust, not formed for the specific purpose of acquiring
the Tranche 1 Warrants and the underlying Securities, with total
assets in excess of U.S.$5,000,000 and whose purchase is
directed by a sophisticated person; or
[ ] (vii) it is an entity as to which all the equity owners are accredited
investors;
- OR -
[ ] (c) he, she or it is exercising Tranche 1 Warrants for one or more
investor accounts (the "INVESTOR ACCOUNTS") for which he, she or it is
acting as a fiduciary or agent and as to which he, she or it exercises
sole investment discretion (and has authority to make, and does make,
the statements contained in this Warrant Exercise Form), with neither a
view to any distribution of the Securities nor any present intention of
offering or selling any of the Securities, and each of the undersigned
Holder and the Investor Accounts, as applicable, is an accredited
investor (as such term is defined in Rule 501(a) of Regulation D under
the U.S. Securities Act) on one or more of the bases enumerated in
(b)(i) to (b)(vii) above.
If the undersigned Holder has checked (b) or (c) above, he, she or it
hereby further represents, warrants and certifies that:
(a) each of he, she or it and the Investor Accounts, if any, has such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the
Securities and is able to bear the economic risk of his, her or its
investment in the Securities and can afford the complete loss of such
investment;
(b) either (1) each of he, she or it and the Investor Accounts, if any, is
not an employee benefit plan (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
which is subject to Title I of ERISA, is not any plan (within the
meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (the "CODE")) which is subject to Section 4975 of the Code and
is not any entity whose underlying assets include "plan assets" by
reason of any such employee benefit plan's or plan's investment in the
entity (each of the foregoing, a "PLAN"), and none of he, she or it or
the Investor Accounts, if any, is acquiring or holding the Securities
or any interest therein on behalf of, or with the assets of, a Plan or
(2) the acquisition, holding and disposition, by each of the
undersigned Holder and the Investor Accounts, if any, of the Securities
or an interest therein is exempt from the prohibited transaction
restrictions of ERISA and the Code pursuant to one or more applicable
statutory or administrative prohibited transaction exemptions; and
-7-
(c) each of he, she or it and the Investor Accounts, if any, is acquiring
the Securities for investment purposes, and not with a view to, or for
resale in connection with, any distribution thereof, and has no present
intention of selling, granting any participation in or otherwise
distributing the Securities in violation of U.S. securities laws.
The certificates representing the Securities (underlying the Tranche 1
Warrants being exercised hereby) to be issued to the undersigned Holder should
be (one of the following must be checked):
[ ] (a) sent by first class mail to the following address:
____________________________________
____________________________________
____________________________________
- OR -
[ ] (b) held for pick-up at the office of the Warrant Trustee in the City of
Vancouver
- OR -
[ ] (c) held for pick-up at the office of the Warrant Trustee in the City of
Toronto.
If less than all of the Tranche 1 Warrants represented by the within
Tranche 1 Warrant Certificate are being exercised, a Tranche 1 Warrant
Certificate representing the Tranche 1 Warrants not being exercised will be
registered in the name of the undersigned Holder and should be (one of the
following must be checked):
[ ] (a) sent by first class mail to the following address:
____________________________________
____________________________________
____________________________________
- OR -
[ ] (b) held for pick-up at the office of the Warrant Trustee in the City of
Vancouver
- OR -
[ ] (c) held for pick-up at the office of the Warrant Trustee in the City of
Toronto.
-8-
DATED the _________ day of _______________ , 2004
__________________________ ___________________________________
Signature Guaranteed Signature of Holder
___________________________________
Print full name and capacity (full
title) if signing in a fiduciary or
representative capacity
___________________________________
___________________________________
___________________________________
Print full address
( )
___________________________________
Telephone number
1. The Holder on this Warrant Exercise Form must be the same person or
entity whose name appears on the face page of the within Tranche 1
Warrant Certificate.
2. If this Warrant Exercise Form is signed by a trustee, executor,
administrator, curator, guardian, attorney, officer of a corporation or
any person acting in a fiduciary or representative capacity, this
Warrant Exercise Form must be accompanied by evidence of authority to
sign that is satisfactory to the Warrant Trustee.
3. The signature on this Warrant Exercise Form must correspond with the
name as written upon the face of the within Tranche 1 Warrant
Certificate, in every particular, without alteration or enlargement, or
any change whatsoever and must be guaranteed by a major Canadian
Schedule 1 chartered bank, a major trust company in Canada or a member
of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP,
MSP). The Guarantor must affix a stamp bearing the actual words
"Signature Guaranteed". In the USA, signature guarantees must be done
by members of a "Medallion Signature Guarantee Program" only. Signature
Guarantees are not accepted from Treasury Branches, Credit Unions or
Caisses Populaires unless they are members of the Stamp Medallion
Program.
SCHEDULE "B"
FORM OF TRANCHE 2 WARRANT CERTIFICATE
CUSIP NO. 958211 15 3
THE TRANCHE 2 WARRANTS REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD OR
OTHERWISE TRANSFERRED UNDER ANY CIRCUMSTANCES.
THE TRANCHE 2 WARRANTS REPRESENTED HEREBY WILL BE VOID AND OF NO VALUE UNLESS
EXERCISED BEFORE THE END OF THE WARRANT EXERCISE PERIOD.
TRANCHE 2 WARRANT CERTIFICATE
Warrant Certificate __________________ TRANCHE 2 WARRANTS entitling the
Number ___________ holder to acquire, for every one Tranche 2 Warrant
represented hereby, one common share in the capital of
the Company (a "WARRANT SHARE") (or such other number
of Warrant Shares or other securities resulting from
any adjustment of the rights of the Holder in
accordance with the provisions of the Warrant Indenture
(defined below)).
WESTERN FOREST PRODUCTS INC. (the "COMPANY")
INCORPORATED UNDER THE LAWS OF CANADA
THIS IS TO CERTIFY THAT _____________________________ (hereinafter referred to
as the "HOLDER") is the registered holder of the number of Tranche 2 Warrants
set forth above. Each Tranche 2 Warrant represented hereby entitles the Holder
to acquire one Warrant Share, in the manner and subject to the restrictions set
forth herein.
The Tranche 2 Warrants represented by this Tranche 2 Warrant Certificate are
issued under, and pursuant to, the Warrant Indenture (the "WARRANT INDENTURE"),
dated as of July 27, 2004, between the Company and Computershare Trust Company
of Canada (the "WARRANT TRUSTEE"). Reference is hereby made to the Warrant
Indenture and any supplemental indenture and any ancillary instrument for a full
description of the rights of the Holder and the terms and conditions upon which
the Tranche 2 Warrants are issued and held, with the same effect as if the
provisions of the Warrant Indenture and any supplemental indenture and any
ancillary instrument were set forth herein. By acceptance hereof, the Holder
assents to all of the provisions of the Warrant Indenture. In the event of a
conflict or inconsistency between a provision of the Warrant Indenture and a
provision of this Tranche 2 Warrant Certificate, the former will prevail.
Capitalized terms used herein but not defined have the respective meanings
attributed to such terms in the Warrant Indenture.
-2-
The right hereunder to acquire Warrant Shares may be exercised by the Holder
only until the end of the Warrant Exercise Period by surrendering this Tranche 2
Warrant Certificate to the Warrant Trustee at the office of the Warrant Trustee
in the City of Vancouver or the City of Toronto, together with a fully completed
and duly executed Warrant Exercise Form, in the form attached, and remitting a
certified cheque, bank draft or money order in lawful money of Canada, payable
to, or to the order of, the Company at par, in an aggregate amount equal to the
product of the number of Tranche 2 Warrants being exercised and the Exercise
Price (which is Cdn.$26.03 on the date of issue of the Tranche 2 Warrants
represented hereby). Payment of such aggregate amount also may be made in any
other form that is acceptable to the Warrant Trustee and the Company.
This Tranche 2 Warrant Certificate shall be deemed to be surrendered only upon
personal delivery hereof or, if sent by mail, upon actual receipt hereof by the
Warrant Trustee at the office referred to above.
Upon surrender of this Tranche 2 Warrant Certificate in accordance with the
provisions of the Warrant Indenture, the person in whose name the Warrant Shares
issuable upon exercise of the Tranche 2 Warrants represented hereby, are to be
issued shall be deemed, for all purposes (except as may be provided in the
Warrant Indenture), to be the holder of record of such Warrant Shares.
The Warrant Indenture provides for certain adjustments in the Exercise Price,
and in the number and/or class of securities which the Holder is entitled to
receive upon exercise of the Tranche 2 Warrants represented hereby, following
(i) any subdivision, consolidation, reclassification or other change in the
capital of the Company, (ii) the payment by the Company of certain dividends or
distributions and (iii) the occurrence of certain other events specified in the
Warrant Indenture.
The Holder may exercise less than all of the Tranche 2 Warrants represented by
this Tranche 2 Warrant Certificate and, upon any such partial exercise, will be
entitled to receive, at no extra cost, a new certificate representing the number
of Tranche 2 Warrants which were not exercised. The Holder may not exercise a
fraction of a Tranche 2 Warrant, and no fractional Warrant Share, issuable to
the Holder upon exercise of Tranche 2 Warrants represented hereby, will be
issued.
The holding of the Tranche 2 Warrants represented hereby shall not constitute
the Holder a shareholder of the Company or entitle the holder to any right or
interest in respect thereof except as expressly provided in the Warrant
Indenture or this Tranche 2 Warrant Certificate.
THE SECURITIES ISSUABLE UPON EXERCISE OF THE TRANCHE 2 WARRANTS REPRESENTED
HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR THE SECURITIES
LAWS OF ANY STATE IN THE UNITED STATES OR ANY OTHER JURISDICTION, AND SUCH
SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES UNLESS THEY ARE
REGISTERED UNDER THE U.S. SECURITIES ACT OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENT IS AVAILABLE.
-3-
The Holder shall not have any rights under, or by virtue of, the Tranche 2
Warrants represented hereby or the Warrant Indenture subsequent to the end of
the Warrant Exercise Period, being 5:00 p.m. (local time in the place of deposit
of the Warrant Exercise Form) on July 27, 2009, the fifth anniversary of the
Plan Implementation Date, subject to earlier termination in accordance with the
provisions of the Warrant Indenture.
This Tranche 2 Warrant Certificate shall not be valid for any purpose whatsoever
unless and until it has been certified by or on behalf of the Warrant Trustee.
Time shall be of the essence hereof in all respects.
This Tranche 2 Warrant Certificate will be governed by, and construed in
accordance with, the laws of the Province of British Columbia and the federal
laws of Canada applicable therein.
IN WITNESS WHEREOF the Company has caused this Tranche 2 Warrant Certificate to
be signed by its duly authorized officer as of July 27, 2004.
WESTERN FOREST PRODUCTS INC.
By: _______________________________
Authorized Signatory
Countersigned by:
COMPUTERSHARE TRUST COMPANY OF
CANADA, AS WARRANT TRUSTEE
By: _______________________________
Authorized Signatory
WARRANT EXERCISE FORM
TO: COMPUTERSHARE TRUST COMPANY OF CANADA, AS THE WARRANT TRUSTEE
510 BURRARD STREET, 3RD FLOOR
VANCOUVER, BRITISH COLUMBIA
V6C 3B9
- OR -
COMPUTERSHARE TRUST COMPANY OF CANADA, AS THE WARRANT TRUSTEE
100 UNIVERSITY AVENUE, 11TH FLOOR
TORONTO, ONTARIO
M5J 2Y1
AND TO: THE COMPANY
The undersigned Holder hereby:
(a) exercises ______________________ Tranche 2 Warrants to acquire
__________________ Warrant Shares (or, if applicable, such other class
of securities issuable upon exercise of Tranche 2 Warrants as a result
of any adjustment to the rights of the Holder in accordance with the
provisions of the Warrant Indenture), at the aggregate exercise price
of Cdn.$___________ and, in payment of such aggregate exercise price,
encloses a certified cheque, bank draft or money order payable to, or
to the order of, the Company or has effected some other form of payment
confirmed by the Warrant Trustee and the Company as being acceptable;
and
(b) delivers the original copy of the within Tranche 2 Warrant
Certificate.
The undersigned Holder hereby represents, warrants and certifies that
(one of (a), (b) or (c) must be checked):
[ ] (a) he, she or it is not a "U.S. person" (as such term is defined in
Regulation S under the U.S. Securities Act of 1933, as amended (the
"U.S. SECURITIES ACT")), and has not ever been a U.S. person since July
27, 2004, and is not exercising Tranche 2 Warrants on behalf of, or for
the account or benefit of, a U.S. person and did not execute or deliver
this Warrant Exercise Form in the United States, and, upon acquiring
the above-mentioned Warrant Shares (or, if applicable, the other
securities mentioned above) (collectively, the "SECURITIES"), he, she
or it and any person on whose behalf, or for whose account or benefit,
he, she or it is acting will not be a U.S. person and will be located
outside the United States; and the Holder hereby acknowledges, on his,
her or its own behalf and on behalf of any person on whose behalf, or
for whose account or benefit, he, she or it is acting, that (i) the
Securities have not been and will not be registered under the U.S.
Securities Act or qualified under the securities laws of any state in
the United States and that the Securities may not be offered or sold or
otherwise transferred
-5-
in the United States unless they are registered under the U.S.
Securities Act or unless an exemption from such registration
requirement is available and (ii) neither he, she or it nor any person
on whose behalf, or for whose account or benefit, he, she or it is
acting is acquiring the Securities as a transaction, or part of a
series of transactions that, although in technical compliance with
Regulation S under the U.S. Securities Act, is part of a plan or scheme
to evade the registration provisions of the U.S. Securities Act;
- OR -
[ ] (b) on one or more of the following bases (one or more of (i) to (vii)
must be checked, as applicable), he, she or it is an accredited
investor (as such term is defined in Rule 501(a) of Regulation D under
the U.S. Securities Act) and is exercising Tranche 2 Warrants for his,
her or its own account:
[ ] (i) he or she is a natural person (individual) whose own net worth,
taken together with the net worth of his or her spouse, exceeds
U.S.$1,000,000; net worth, for this purpose, means total assets
(including residence, personal property and other assets) in
excess of total liabilities;
[ ] (ii) he or she is a natural person (individual) who had an individual
income in excess of U.S.$200,000 (or joint income with his or
her spouse in excess of U.S.$300,000) in each of the past two
calendar years and who reasonably expects income in excess of
U.S.$200,000 (or joint income with his or her spouse in excess
of U.S.$300,000) in the current calendar year;
[ ] (iii) he or she is a director or executive officer of the Company;
[ ] (iv) it is (i) a corporation, (ii) an organization described in
Section 501(c)(3) of the Internal Revenue Code, (iii) a
Massachusetts or similar business trust or (iv) a partnership,
in each case, not formed for the specific purpose of acquiring
the Tranche 2 Warrants and the underlying Securities and, in
each case, with total assets in excess of U.S.$5,000,000;
[ ] (v) it is (i) a bank or any savings and loan association or other
similar institution acting in its individual or fiduciary
capacity, (ii) a broker or dealer, (iii) an insurance company,
(iv) an investment company or a business development company
under the Investment Company Act of 1940 or a private business
development company under the Investment Advisers Act of 1940,
(v) a Small Business Investment Company licensed by the U.S.
Small Business Administration or (vi) an employee benefit plan
whose investment decision is being made by a plan fiduciary,
which is either a bank, savings and loan association, insurance
company or registered investment adviser, or an employee benefit
plan whose total assets are in excess of U.S.$5,000,000 or a
self-directed employee benefit plan whose investment decisions
are made solely by persons that are
-6-
accredited investors;
[ ] (vi) it is a trust, not formed for the specific purpose of acquiring
the Tranche 2 Warrants and the underlying Securities, with total
assets in excess of U.S.$5,000,000 and whose purchase is
directed by a sophisticated person; or
[ ] (vii) it is an entity as to which all the equity owners are accredited
investors;
- OR -
[ ] (c) he, she or it is exercising Tranche 2 Warrants for one or more
investor accounts (the "INVESTOR ACCOUNTS") for which he, she or it is
acting as a fiduciary or agent and as to which he, she or it exercises
sole investment discretion (and has authority to make, and does make,
the statements contained in this Warrant Exercise Form), with neither a
view to any distribution of the Securities nor any present intention of
offering or selling any of the Securities, and each of the undersigned
Holder and the Investor Accounts, as applicable, is an accredited
investor (as such term is defined in Rule 501(a) of Regulation D under
the U.S. Securities Act) on one or more of the bases enumerated in
(b)(i) to (b)(vii) above.
If the undersigned Holder has checked (b) or (c) above, he, she or it
hereby further represents, warrants and certifies that:
[ ] (a) each of he, she or it and the Investor Accounts, if any, has such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the
Securities and is able to bear the economic risk of his, her or its
investment in the Securities and can afford the complete loss of such
investment;
[ ] (b) either (1) each of he, she or it and the Investor Accounts, if any, is
not an employee benefit plan (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
which is subject to Title I of ERISA, is not any plan (within the
meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (the "CODE")) which is subject to Section 4975 of the Code and
is not any entity whose underlying assets include "plan assets" by
reason of any such employee benefit plan's or plan's investment in the
entity (each of the foregoing, a "PLAN"), and none of he, she or it or
the Investor Accounts, if any, is acquiring or holding the Securities
or any interest therein on behalf of, or with the assets of, a Plan or
(2) the acquisition, holding and disposition, by each of the
undersigned Holder and the Investor Accounts, if any, of the Securities
or an interest therein is exempt from the prohibited transaction
restrictions of ERISA and the Code pursuant to one or more applicable
statutory or administrative prohibited transaction exemptions; and
-7-
[ ] (c) each of he, she or it and the Investor Accounts, if any, is acquiring
the Securities for investment purposes, and not with a view to, or for
resale in connection with, any distribution thereof, and has no present
intention of selling, granting any participation in or otherwise
distributing the Securities in violation of U.S. securities laws.
The certificates representing the Securities (underlying the Tranche 2
Warrants being exercised hereby) to be issued to the undersigned Holder should
be (one of the following must be checked):
[ ] (a) sent by first class mail to the following address:
____________________________________
____________________________________
____________________________________
- OR -
[ ] (b) held for pick-up at the office of the Warrant Trustee in the City of
Vancouver
- OR -
[ ] (c) held for pick-up at the office of the Warrant Trustee in the City of
Toronto.
If less than all of the Tranche 2 Warrants represented by the within
Tranche 2 Warrant Certificate are being exercised, a Tranche 2 Warrant
Certificate representing the Tranche 2 Warrants not being exercised will be
registered in the name of the undersigned Holder and should be (one of the
following must be checked):
[ ] (a) sent by first class mail to the following address:
____________________________________
____________________________________
____________________________________
- OR -
[ ] (b) held for pick-up at the office of the Warrant Trustee in the City of
Vancouver
- OR -
[ ] (c) held for pick-up at the office of the Warrant Trustee in the City of
Toronto.
-8-
DATED the _________ day of _______________ , 2004
_____________________________ ___________________________________
Signature Guaranteed Signature of Holder
___________________________________
Print full name and capacity (full
title) if signing in a fiduciary or
representative capacity
___________________________________
___________________________________
___________________________________
Print full address
( )
___________________________________
Telephone number
1. The Holder on this Warrant Exercise Form must be the same person or
entity whose name appears on the face page of the within Tranche 2
Warrant Certificate.
2. If this Warrant Exercise Form is signed by a trustee, executor,
administrator, curator, guardian, attorney, officer of a corporation or
any person acting in a fiduciary or representative capacity, this
Warrant Exercise Form must be accompanied by evidence of authority to
sign that is satisfactory to the Warrant Trustee.
3. The signature on this Warrant Exercise Form must correspond with the
name as written upon the face of the within Tranche 2 Warrant
Certificate, in every particular, without alteration or enlargement, or
any change whatsoever and must be guaranteed by a major Canadian
Schedule 1 chartered bank, a major trust company in Canada or a member
of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP,
MSP). The Guarantor must affix a stamp bearing the actual words
"Signature Guaranteed". In the USA, signature guarantees must be done
by members of a "Medallion Signature Guarantee Program" only. Signature
Guarantees are not accepted from Treasury Branches, Credit Unions or
Caisses Populaires unless they are members of the Stamp Medallion
Program.
SCHEDULE "C"
FORM OF TRANCHE 3 WARRANT CERTIFICATE
CUSIP NO. 958211 16 1
THE TRANCHE 3 WARRANTS REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD OR
OTHERWISE TRANSFERRED UNDER ANY CIRCUMSTANCES.
THE TRANCHE 3 WARRANTS REPRESENTED HEREBY WILL BE VOID AND OF NO VALUE UNLESS
EXERCISED BEFORE THE END OF THE WARRANT EXERCISE PERIOD.
TRANCHE 3 WARRANT CERTIFICATE
Warrant Certificate __________________ TRANCHE 3 WARRANTS entitling the
Number ___________ holder to acquire, for every one Tranche 3 Warrant
represented hereby, one common share in the capital of
the Company (a "WARRANT SHARE") (or such other number
of Warrant Shares or other securities resulting from
any adjustment of the rights of the Holder in
accordance with the provisions of the Warrant Indenture
(defined below)).
WESTERN FOREST PRODUCTS INC. (the "COMPANY")
INCORPORATED UNDER THE LAWS OF CANADA
THIS IS TO CERTIFY THAT _____________________________ (hereinafter referred to
as the "HOLDER") is the registered holder of the number of Tranche 3 Warrants
set forth above. Each Tranche 3 Warrant represented hereby entitles the Holder
to acquire one Warrant Share, in the manner and subject to the restrictions set
forth herein.
The Tranche 3 Warrants represented by this Tranche 3 Warrant Certificate are
issued under, and pursuant to, the Warrant Indenture (the "WARRANT INDENTURE"),
dated as of July 27, 2004, between the Company and Computershare Trust Company
of Canada (the "WARRANT TRUSTEE"). Reference is hereby made to the Warrant
Indenture and any supplemental indenture and any ancillary instrument for a full
description of the rights of the Holder and the terms and conditions upon which
the Tranche 3 Warrants are issued and held, with the same effect as if the
provisions of the Warrant Indenture and any supplemental indenture and any
ancillary instrument were set forth herein. By acceptance hereof, the Holder
assents to all of the provisions of the Warrant Indenture. In the event of a
conflict or inconsistency between a provision of the Warrant Indenture and a
provision of this Tranche 3 Warrant Certificate, the former will prevail.
Capitalized terms used herein but not defined have the respective meanings
attributed to such terms in the Warrant Indenture.
-2-
The right hereunder to acquire Warrant Shares may be exercised by the Holder
only until the end of the Warrant Exercise Period by surrendering this Tranche 3
Warrant Certificate to the Warrant Trustee at the office of the Warrant Trustee
in the City of Vancouver or the City of Toronto, together with a fully completed
and duly executed Warrant Exercise Form, in the form attached, and remitting a
certified cheque, bank draft or money order in lawful money of Canada, payable
to, or to the order of, the Company at par, in an aggregate amount equal to the
product of the number of Tranche 3 Warrants being exercised and the Exercise
Price (which is Cdn.$33.83 on the date of issue of the Tranche 3 Warrants
represented hereby). Payment of such aggregate amount also may be made in any
other form that is acceptable to the Warrant Trustee and the Company.
This Tranche 3 Warrant Certificate shall be deemed to be surrendered only upon
personal delivery hereof or, if sent by mail, upon actual receipt hereof by the
Warrant Trustee at the office referred to above.
Upon surrender of this Tranche 3 Warrant Certificate in accordance with the
provisions of the Warrant Indenture, the person in whose name the Warrant Shares
issuable upon exercise of the Tranche 3 Warrants represented hereby, are to be
issued shall be deemed, for all purposes (except as may be provided in the
Warrant Indenture), to be the holder of record of such Warrant Shares.
The Warrant Indenture provides for certain adjustments in the Exercise Price,
and in the number and/or class of securities which the Holder is entitled to
receive upon exercise of the Tranche 3 Warrants represented hereby, following
(i) any subdivision, consolidation, reclassification or other change in the
capital of the Company, (ii) the payment by the Company of certain dividends or
distributions and (iii) the occurrence of certain other events specified in the
Warrant Indenture.
The Holder may exercise less than all of the Tranche 3 Warrants represented by
this Tranche 3 Warrant Certificate and, upon any such partial exercise, will be
entitled to receive, at no extra cost, a new certificate representing the number
of Tranche 3 Warrants which were not exercised. The Holder may not exercise a
fraction of a Tranche 3 Warrant, and no fractional Warrant Share, issuable to
the Holder upon exercise of Tranche 3 Warrants represented hereby, will be
issued.
The holding of the Tranche 3 Warrants represented hereby shall not constitute
the Holder a shareholder of the Company or entitle the holder to any right or
interest in respect thereof except as expressly provided in the Warrant
Indenture or this Tranche 3 Warrant Certificate.
THE SECURITIES ISSUABLE UPON EXERCISE OF THE TRANCHE 3 WARRANTS REPRESENTED
HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR THE SECURITIES
LAWS OF ANY STATE IN THE UNITED STATES OR ANY OTHER JURISDICTION, AND SUCH
SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES UNLESS THEY ARE
REGISTERED UNDER THE U.S. SECURITIES ACT OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENT IS AVAILABLE.
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The Holder shall not have any rights under, or by virtue of, the Tranche 3
Warrants represented hereby or the Warrant Indenture subsequent to the end of
the Warrant Exercise Period, being 5:00 p.m. (local time in the place of deposit
of the Warrant Exercise Form) on July 27, 2009, the fifth anniversary of the
Plan Implementation Date, subject to earlier termination in accordance with the
provisions of the Warrant Indenture.
This Tranche 3 Warrant Certificate shall not be valid for any purpose whatsoever
unless and until it has been certified by or on behalf of the Warrant Trustee.
Time shall be of the essence hereof in all respects.
This Tranche 3 Warrant Certificate will be governed by, and construed in
accordance with, the laws of the Province of British Columbia and the federal
laws of Canada applicable therein.
IN WITNESS WHEREOF the Company has caused this Tranche 3 Warrant Certificate to
be signed by its duly authorized officer as of July 27, 2004.
WESTERN FOREST PRODUCTS INC.
By: _______________________________
Authorized Signatory
Countersigned by:
COMPUTERSHARE TRUST COMPANY OF
CANADA, AS WARRANT TRUSTEE
By: _______________________________
Authorized Signatory
WARRANT EXERCISE FORM
TO: COMPUTERSHARE TRUST COMPANY OF CANADA, AS THE WARRANT TRUSTEE
510 BURRARD STREET, 3RD FLOOR
VANCOUVER, BRITISH COLUMBIA
V6C 3B9
- OR -
COMPUTERSHARE TRUST COMPANY OF CANADA, AS THE WARRANT TRUSTEE
100 UNIVERSITY AVENUE, 11TH FLOOR
TORONTO, ONTARIO
M5J 2Y1
AND TO: THE COMPANY
The undersigned Holder hereby:
(a) exercises ____________________ Tranche 3 Warrants to acquire
__________________ Warrant Shares (or, if applicable, such other class
of securities issuable upon exercise of Tranche 3 Warrants as a result
of any adjustment to the rights of the Holder in accordance with the
provisions of the Warrant Indenture), at the aggregate exercise price
of Cdn.$___________ and, in payment of such aggregate exercise price,
encloses a certified cheque, bank draft or money order payable to, or
to the order of, the Company or has effected some other form of payment
confirmed by the Warrant Trustee and the Company as being acceptable;
and
(b) delivers the original copy of the within Tranche 3 Warrant
Certificate.
The undersigned Holder hereby represents, warrants and certifies that
(one of (a), (b) or (c) must be checked):
[ ] (a) he, she or it is not a "U.S. person" (as such term is defined in
Regulation S under the U.S. Securities Act of 1933, as amended (the
"U.S. SECURITIES ACT")), and has not ever been a U.S. person since July
27, 2004, and is not exercising Tranche 3 Warrants on behalf of, or for
the account or benefit of, a U.S. person and did not execute or deliver
this Warrant Exercise Form in the United States, and, upon acquiring
the above-mentioned Warrant Shares (or, if applicable, the other
securities mentioned above) (collectively, the "SECURITIES"), he, she
or it and any person on whose behalf, or for whose account or benefit,
he, she or it is acting will not be a U.S. person and will be located
outside the United States; and the Holder hereby acknowledges, on his,
her or its own behalf and on behalf of any person on whose behalf, or
for whose account or benefit, he, she or it is acting, that (i) the
Securities have not been and will not be registered under the U.S.
Securities Act or qualified under the securities laws of any state in
the United States and that the Securities may not be offered or sold or
otherwise transferred
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in the United States unless they are registered under the U.S.
Securities Act or unless an exemption from such registration
requirement is available and (ii) neither he, she or it nor any person
on whose behalf, or for whose account or benefit, he, she or it is
acting is acquiring the Securities as a transaction, or part of a
series of transactions that, although in technical compliance with
Regulation S under the U.S. Securities Act, is part of a plan or scheme
to evade the registration provisions of the U.S. Securities Act; - OR -
[ ] (b) on one or more of the following bases (one or more of (i) to (vii)
must be checked, as applicable), he, she or it is an accredited
investor (as such term is defined in Rule 501(a) of Regulation D under
the U.S. Securities Act) and is exercising Tranche 3 Warrants for his,
her or its own account:
[ ] (i) he or she is a natural person (individual) whose own net
worth, taken together with the net worth of his or her
spouse, exceeds U.S.$1,000,000; net worth, for this
purpose, means total assets (including residence,
personal property and other assets) in excess of total
liabilities;
[ ] (ii) he or she is a natural person (individual) who had an
individual income in excess of U.S.$200,000 (or joint
income with his or her spouse in excess of U.S.$300,000)
in each of the past two calendar years and who
reasonably expects income in excess of U.S.$200,000 (or
joint income with his or her spouse in excess of
U.S.$300,000) in the current calendar year;
[ ] (iii) he or she is a director or executive officer of the
Company;
[ ] (iv) it is (i) a corporation, (ii) an organization described
in Section 501(c)(3) of the Internal Revenue Code, (iii)
a Massachusetts or similar business trust or (iv) a
partnership, in each case, not formed for the specific
purpose of acquiring the Tranche 3 Warrants and the
underlying Securities and, in each case, with total
assets in excess of U.S.$5,000,000;
[ ] (v) it is (i) a bank or any savings and loan association or
other similar institution acting in its individual or
fiduciary capacity, (ii) a broker or dealer, (iii) an
insurance company, (iv) an investment company or a
business development company under the Investment
Company Act of 1940 or a private business development
company under the Investment Advisers Act of 1940, (v) a
Small Business Investment Company licensed by the U.S.
Small Business Administration or (vi) an employee
benefit plan whose investment decision is being made by
a plan fiduciary, which is either a bank, savings and
loan association, insurance company or registered
investment adviser, or an employee benefit plan whose
total assets are in excess of U.S.$5,000,000 or a
self-directed employee benefit plan whose investment
decisions are made solely by persons that are
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accredited investors;
[ ] (vi) it is a trust, not formed for the specific purpose of
acquiring the Tranche 3 Warrants and the underlying
Securities, with total assets in excess of
U.S.$5,000,000 and whose purchase is directed by a
sophisticated person; or
[ ] (vii) it is an entity as to which all the equity owners are
accredited investors;
- OR -
[ ] (c) he, she or it is exercising Tranche 3 Warrants for one or more
investor accounts (the "INVESTOR ACCOUNTS") for which he, she or it is
acting as a fiduciary or agent and as to which he, she or it exercises
sole investment discretion (and has authority to make, and does make,
the statements contained in this Warrant Exercise Form), with neither a
view to any distribution of the Securities nor any present intention of
offering or selling any of the Securities, and each of the undersigned
Holder and the Investor Accounts, as applicable, is an accredited
investor (as such term is defined in Rule 501(a) of Regulation D under
the U.S. Securities Act) on one or more of the bases enumerated in
(b)(i) to (b)(vii) above.
If the undersigned Holder has checked (b) or (c) above, he, she or it
hereby further represents, warrants and certifies that:
(a) each of he, she or it and the Investor Accounts, if any, has such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the
Securities and is able to bear the economic risk of his, her or its
investment in the Securities and can afford the complete loss of such
investment;
(b) either (1) each of he, she or it and the Investor Accounts, if any, is
not an employee benefit plan (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
which is subject to Title I of ERISA, is not any plan (within the
meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (the "CODE")) which is subject to Section 4975 of the Code and
is not any entity whose underlying assets include "plan assets" by
reason of any such employee benefit plan's or plan's investment in the
entity (each of the foregoing, a "PLAN"), and none of he, she or it or
the Investor Accounts, if any, is acquiring or holding the Securities
or any interest therein on behalf of, or with the assets of, a Plan or
(2) the acquisition, holding and disposition, by each of the
undersigned Holder and the Investor Accounts, if any, of the Securities
or an interest therein is exempt from the prohibited transaction
restrictions of ERISA and the Code pursuant to one or more applicable
statutory or administrative prohibited transaction exemptions; and
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(c) each of he, she or it and the Investor Accounts, if any, is acquiring
the Securities for investment purposes, and not with a view to, or for
resale in connection with, any distribution thereof, and has no present
intention of selling, granting any participation in or otherwise
distributing the Securities in violation of U.S. securities laws.
The certificates representing the Securities (underlying the Tranche 3
Warrants being exercised hereby) to be issued to the undersigned Holder should
be (one of the following must be checked):
[ ] (a) sent by first class mail to the following address:
____________________________________
____________________________________
____________________________________
- OR -
[ ] (b) held for pick-up at the office of the Warrant Trustee in the City of
Vancouver
- OR -
[ ] (c) held for pick-up at the office of the Warrant Trustee in the City of
Toronto.
If less than all of the Tranche 3 Warrants represented by the within
Tranche 3 Warrant Certificate are being exercised, a Tranche 3 Warrant
Certificate representing the Tranche 3 Warrants not being exercised will be
registered in the name of the undersigned Holder and should be (one of the
following must be checked):
[ ] (a) sent by first class mail to the following address:
____________________________________
____________________________________
____________________________________
- OR -
[ ] (b) held for pick-up at the office of the Warrant Trustee in the City of
Vancouver
- OR -
[ ] (c) held for pick-up at the office of the Warrant Trustee in the City of
Toronto.
-5-
DATED the _________ day of _______________ , 2004
____________________________ ___________________________________
Signature Guaranteed Signature of Holder
___________________________________
Print full name and capacity (full
title) if signing in a fiduciary or
representative capacity
___________________________________
___________________________________
___________________________________
Print full address
( )
___________________________________
Telephone number
1. The Holder on this Warrant Exercise Form must be the same person or
entity whose name appears on the face page of the within Tranche 3
Warrant Certificate.
2. If this Warrant Exercise Form is signed by a trustee, executor,
administrator, curator, guardian, attorney, officer of a corporation or
any person acting in a fiduciary or representative capacity, this
Warrant Exercise Form must be accompanied by evidence of authority to
sign that is satisfactory to the Warrant Trustee.
3. The signature on this Warrant Exercise Form must correspond with the
name as written upon the face of the within Tranche 3 Warrant
Certificate, in every particular, without alteration or enlargement, or
any change whatsoever and must be guaranteed by a major Canadian
Schedule 1 chartered bank, a major trust company in Canada or a member
of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP,
MSP). The Guarantor must affix a stamp bearing the actual words
"Signature Guaranteed". In the USA, signature guarantees must be done
by members of a "Medallion Signature Guarantee Program" only. Signature
Guarantees are not accepted from Treasury Branches, Credit Unions or
Caisses Populaires unless they are members of the Stamp Medallion
Program.
SCHEDULE "D"
ACCREDITED INVESTOR CERTIFICATE
TO: COMPUTERSHARE TRUST COMPANY OF CANADA, AS THE WARRANT TRUSTEE
510 BURRARD STREET, 3RD FLOOR
VANCOUVER, BRITISH COLUMBIA
V6C 3B9
AND TO: WESTERN FOREST PRODUCTS INC. (THE "COMPANY")
Reference is made to the Warrant Indenture, dated as of July 27, 2004,
between the Company and Computershare Trust Company of Canada, as the Warrant
Trustee, and the Tranche 1 Warrants, the Tranche 2 Warrants and the Tranche 3
Warrants issued thereunder (collectively, the "WARRANTS").
The undersigned hereby represents, warrants and certifies that (one of
(a), (b) or (c) must be checked):***
[ ] (a) on July 27, 2004, he, she or it was not a "U.S. person" (as such term
is defined in Regulation S under the U.S. Securities Act of 1933, as
amended (the "U.S. SECURITIES ACT")) and is not acquiring Warrants on
behalf of, or for the account or benefit of, a U.S. person and did not
execute or deliver this Accredited Investor Certificate in the United
States; and the undersigned hereby acknowledges, on his, her or its own
behalf and on behalf of any person on whose behalf, or for whose
account or benefit, he, she or it is acting, that (i) the Warrants have
not been and will not be registered under the U.S. Securities Act or
qualified under the securities laws of any state in the United States
and that the Warrants, by their terms, may not be offered or sold or
otherwise transferred under any circumstances and (ii) neither he, she
or it nor any person on whose behalf, or for whose account or benefit,
he, she or it is acting is acquiring Warrants as a transaction, or part
of a series of transactions that, although in technical compliance with
Regulation S under the U.S. Securities Act, is part of a plan or scheme
to evade the registration provisions of the U.S. Securities Act; - OR -
[ ] (b) on one or more of the following bases (one or more of (i) to (vii)
must be checked, as applicable), he, she or it was an accredited
investor (as such term is defined in Rule 501(a) of Regulation D under
the U.S. Securities Act) on July 27, 2004 and is acquiring Warrants for
his, her or its own account:
- ----------
*** THIS ACCREDITED INVESTOR CERTIFICATE IS BEING GIVEN AS OF JULY 27, 2004,
AND THE REPRESENTATIONS, WARRANTIES AND CERTIFICATIONS HEREIN CONTAINED
MUST HAVE BEEN TRUE AND CORRECT ON THAT DATE.
-2-
[ ] (i) he or she is a natural person (individual) whose own net worth,
taken together with the net worth of his or her spouse, exceeds
U.S.$1,000,000; net worth, for this purpose, means total assets
(including residence, personal property and other assets) in
excess of total liabilities;
[ ] (ii) he or she is a natural person (individual) who had an individual
income in excess of U.S.$200,000 (or joint income with his or
her spouse in excess of U.S.$300,000) in each of 2002 and 2003
and who reasonably expects income in excess of U.S.$200,000 (or
joint income with his or her spouse in excess of U.S.$300,000)
in 2004;
[ ] (iii) he or she is a director or executive officer of the Company;
[ ] (iv) it is (i) a corporation, (ii) an organization described in
Section 501(c)(3) of the Internal Revenue Code, (iii) a
Massachusetts or similar business trust or (iv) a partnership,
in each case, not formed for the specific purpose of acquiring
Warrants and the underlying securities and, in each case, with
total assets in excess of U.S.$5,000,000;
[ ] (v) it is (i) a bank or any savings and loan association or other
similar institution acting in its individual or fiduciary
capacity, (ii) a broker or dealer, (iii) an insurance company,
(iv) an investment company or a business development company
under the Investment Company Act of 1940 or a private business
development company under the Investment Advisers Act of 1940,
(v) a Small Business Investment Company licensed by the U.S.
Small Business Administration or (vi) an employee benefit plan
whose investment decision is being made by a plan fiduciary,
which is either a bank, savings and loan association, insurance
company or registered investment adviser, or an employee benefit
plan whose total assets are in excess of U.S.$5,000,000 or a
self-directed employee benefit plan whose investment decisions
are made solely by persons that are accredited investors;
[ ] (vi) it is a trust, not formed for the specific purpose of acquiring
Warrants and the underlying securities, with total assets in
excess of U.S.$5,000,000 and whose purchase is directed by a
sophisticated person; or
[ ] (vii) it is an entity as to which all the equity owners are accredited
investors;
- OR -
[ ] (c) he, she or it is acquiring Warrants for one or more investor accounts
(the "INVESTOR ACCOUNTS") for which he, she or it is acting as a
fiduciary or agent and as to which he, she or it exercises sole
investment discretion (and has authority to make, and does make, the
statements contained in this Accredited Investor Certificate), with
neither a view to any distribution of the Warrants nor any present
intention of offering or selling any of the Warrants, and each of the
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undersigned and the Investor Accounts, as applicable, was an accredited
investor (as such term is defined in Rule 501(a) of Regulation D under
the U.S. Securities Act) on July 27, 2004 on one or more of the bases
enumerated in (b)(i) to (b)(vii) above.
If the undersigned has checked (b) or (c) above, he, she or it hereby
further represents, warrants and certifies that:
(a) each of he, she or it and the Investor Accounts, if any, has such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the
Warrants and is able to bear the economic risk of his, her or its
investment in the Warrants and can afford the complete loss of such
investment;
(b) either (1) each of he, she or it and the Investor Accounts, if any, is
not, and was not on July 27, 2004, an employee benefit plan (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) which is subject to Title I of ERISA, is
not any plan (within the meaning of Section 4975(e)(1) of the Internal
Revenue Code of 1986, as amended (the "CODE")) which is subject to
Section 4975 of the Code and is not any entity whose underlying assets
include "plan assets" by reason of any such employee benefit plan's or
plan's investment in the entity (each of the foregoing, a "PLAN"), and
none of he, she or it or the Investor Accounts, if any, is acquiring or
holding Warrants or any interest therein on behalf of, or with the
assets of, a Plan or (2) the acquisition, holding and disposition, by
each of the undersigned and the Investor Accounts, if any, of Warrants
or an interest therein is exempt from the prohibited transaction
restrictions of ERISA and the Code pursuant to one or more applicable
statutory or administrative prohibited transaction exemptions; and
(c) each of he, she or it and the Investor Accounts, if any, is acquiring
the Warrants for investment purposes, and not with a view to, or for
resale in connection with, any distribution thereof, and has no present
intention of selling, granting any participation in or otherwise
distributing the Warrants in violation of U.S. securities laws.
The certificates representing the Warrants to be issued to the
undersigned should be (one of the following must be checked):
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[ ] (a) sent by first class mail to the following address:
____________________________________
____________________________________
____________________________________
- OR -
[ ] (b) held for pick-up at the office of the Warrant Trustee in the City of
Vancouver
- OR -
[ ] (c) held for pick-up at the office of the Warrant Trustee in the City of
Toronto.
DATED the _________ day of _______________ , 200__
___________________________________
Signature
___________________________________
Print full name and capacity (full
title) if signing in a fiduciary or
representative capacity***
___________________________________
___________________________________
___________________________________
Print full address
( )
___________________________________
Telephone number
*** If this Accredited Investor Certificate is signed by a trustee, executor,
administrator, curator, guardian, attorney, officer of a corporation or
any person acting in a fiduciary or representative capacity, this
Accredited Investor Certificate must be accompanied by evidence of
authority to sign that is satisfactory to the Warrant Trustee.
SCHEDULE "E"
DTC ACCREDITED INVESTOR CERTIFICATE
TO: COMPUTERSHARE TRUST COMPANY OF CANADA, AS THE WARRANT TRUSTEE
510 BURRARD STREET, 3RD FLOOR
VANCOUVER, BRITISH COLUMBIA
V6C 3B9
AND TO: WESTERN FOREST PRODUCTS INC.
Reference is made to the warrant indenture (the "WARRANT INDENTURE"),
dated as of July 27, 2004, between Western Forest Products Inc. (the "COMPANY")
and Computershare Trust Company of Canada, as the warrant trustee (the "WARRANT
TRUSTEE"), and the Tranche 1 Warrants, the Tranche 2 Warrants and the Tranche 3
Warrants issued thereunder (collectively, the "WARRANTS"). Capitalized terms
used herein but not defined have the respective meanings attributed to those
terms in the Warrant Indenture. Reference is further made to the Warrant
Certificate or Warrant Certificates registered in the name of the undersigned,
and the __________ (Tranche 1/Tranche 2/Tranche 3) Warrants represented thereby,
being held in escrow by the Warrant Trustee pursuant to Section 4.1 of the
Warrant Indenture.
Pursuant to Section 4.2.2 of the Warrant Indenture, the undersigned
hereby requests the Warrant Trustee to release to the undersigned from escrow
_________ of the (Tranche 1/Tranche 2/Tranche 3) Warrants mentioned immediately
above (the "SUBJECT WARRANTS").
The undersigned hereby represents, warrants and certifies that (one of
(a) or (b) must be checked):***
[ ] (a) on July 27, 2004, each of the beneficial owners of the Subject
Warrants was not a "U.S. person" (as such term is defined in Regulation
S under the U.S. Securities Act of 1933, as amended (the "U.S.
SECURITIES ACT")) and that the undersigned is not acquiring the Subject
Warrants on behalf of, or for the account or benefit of, a U.S. person
and, upon acquiring the Subject Warrants, it and any person on whose
behalf, or for whose account or benefit, it is acting will not be a
U.S. person and will be located outside the United States; and the
undersigned hereby acknowledges, on its own behalf and on behalf of any
person on whose behalf, or for whose account or benefit, it is acting,
that (i) the Subject Warrants have not been and will not be registered
under the U.S. Securities Act or qualified under the securities laws of
any state in the United States and that the Subject Warrants, by their
terms, may not be offered or sold or otherwise transferred under any
circumstances and (ii) neither it nor any person on whose behalf, or
for whose
- ----------
*** THIS ACCREDITED INVESTOR CERTIFICATE IS BEING GIVEN AS OF JULY 27, 2004,
AND THE REPRESENTATIONS, WARRANTIES AND CERTIFICATIONS HEREIN CONTAINED
MUST HAVE BEEN TRUE AND CORRECT ON THAT DATE.
-2-
account or benefit, it is acting is acquiring the Subject Warrants as a
transaction, or part of a series of transactions that, although in
technical compliance with Regulation S under the U.S. Securities Act,
is part of a plan or scheme to evade the registration provisions of the
U.S. Securities Act;
- OR -
[ ] (b) he, she or it is acquiring the Subject Warrants for one or more
investor accounts (the "INVESTOR ACCOUNTS") for which it is acting as a
fiduciary or agent and as to which it exercises sole investment
discretion (and has authority to make, and does make, the statements
contained in this Accredited Investor Certificate), with neither a view
to any distribution of the Subject Warrants nor any present intention
of offering or selling any of the Subject Warrants, and each of the
undersigned and the Investor Accounts, as applicable, was an accredited
investor (as such term is defined in Rule 501(a) of Regulation D under
the U.S. Securities Act) on July 27, 2004 on one or more of the bases
enumerated in (b)(i) to (b)(vii) below:
[ ] (i) he or she is a natural person (individual) whose own net worth,
taken together with the net worth of his or her spouse, exceeds
U.S.$1,000,000; net worth, for this purpose, means total assets
(including residence, personal property and other assets) in
excess of total liabilities;
[ ] (ii) he or she is a natural person (individual) who had an individual
income in excess of U.S.$200,000 (or joint income with his or
her spouse in excess of U.S.$300,000) in each of 2002 and 2003
and who reasonably expects income in excess of U.S.$200,000 (or
joint income with his or her spouse in excess of U.S.$300,000)
in 2004;
[ ] (iii) he or she is a director or executive officer of the Company;
[ ] (iv) it is (i) a corporation, (ii) an organization described in
Section 501(c)(3) of the Internal Revenue Code, (iii) a
Massachusetts or similar business trust or (iv) a partnership,
in each case, not formed for the specific purpose of acquiring
the Subject Warrants and, in each case, with total assets in
excess of U.S.$5,000,000;
[ ] (v) it is (i) a bank or any savings and loan association or other
similar institution acting in its individual or fiduciary
capacity, (ii) a broker or dealer, (iii) an insurance company,
(iv) an investment company or a business development company
under the Investment Company Act of 1940 or a private business
development company under the Investment Advisers Act of 1940,
(v) a Small Business Investment Company licensed by the U.S.
Small Business Administration or (vi) an employee benefit plan
whose investment decision is being made by a plan fiduciary,
which is either a bank, savings and loan association, insurance
company or registered investment adviser, or an employee benefit
plan whose total
-3-
assets are in excess of U.S.$5,000,000 or a self-directed
employee benefit plan whose investment decisions are made solely
by persons that are accredited investors;
[ ] (vi) it is a trust, not formed for the specific purpose of acquiring
the Subject Warrants, with total assets in excess of
U.S.$5,000,000 and whose purchase is directed by a sophisticated
person; or
[ ] (vii) it is an entity as to which all the equity owners are accredited
investors.
If the undersigned has checked (b) above, it hereby further represents,
warrants and certifies that:
(a) each of it and the Investor Accounts has such knowledge and experience
in financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Subject Warrants and is able
to bear the economic risk of its investment in the Subject Warrants and
can afford the complete loss of such investment;
(b) either (1) each of it and the Investor Accounts is not an employee
benefit plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) which is
subject to Title I of ERISA, is not any plan (within the meaning of
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended
(the "CODE")) which is subject to Section 4975 of the Code and is not
any entity whose underlying assets include "plan assets" by reason of
any such employee benefit plan's or plan's investment in the entity
(each of the foregoing, a "PLAN"), and none of it or the Investor
Accounts is acquiring or holding the Subject Warrants or any interest
therein on behalf of, or with the assets of, a Plan or (2) the
acquisition, holding and disposition, by each of the undersigned and
the Investor Accounts of the Subject Warrants or an interest therein is
exempt from the prohibited transaction restrictions of ERISA and the
Code pursuant to one or more applicable statutory or administrative
prohibited transaction exemptions; and
(c) each of it and the Investor Accounts is acquiring the Subject Warrants
for investment purposes, and not with a view to, or for resale in
connection with, any distribution thereof, and has no present intention
of selling, granting any participation in or otherwise distributing the
Subject Warrants in violation of U.S. securities laws.
-4-
The certificates representing the Subject Warrants to be released to
the undersigned should be (one of the following must be checked):
[ ] (a) sent by first class mail to the following address:
____________________________________
____________________________________
____________________________________
- OR -
[ ] (b) held for pick-up at the office of the Warrant Trustee in the City of
Vancouver
- OR -
[ ] (c) held for pick-up at the office of the Warrant Trustee in the City of
Toronto.
DATED the _________ day of _______________ , 200__
___________________________________
Signature of authorized signatory
___________________________________
Print full name and full title of
authorized signatory
___________________________________
Name of Holder (DTC Participant)
___________________________________
Print DTC Participant Number
___________________________________
Print Tax I.D. Number
___________________________________
___________________________________
___________________________________
Print full address
( )
___________________________________
Telephone Number
SCHEDULE "F"
RULE 904 DECLARATION
The undersigned seller hereby:
1. acknowledges that the sale of securities of Western Forest Products
Inc. (the "COMPANY") to which this declaration relates is being made in
reliance on Rule 904 of Regulation S ("REGULATION S") under the United
States Securities Act of 1933, as amended (the "U.S. SECURITIES ACT");
and
2. certifies that:
(a) it is not an affiliate of the Company (as defined in Rule 405
under the U.S. Securities Act),
(b) the offer of the securities was not made to a person in the
United States and either (A) at the time that the buy order was
originated, the buyer was outside the United States or the
undersigned seller and any person acting on its behalf
reasonably believe that the buyer was outside the United States
or (B) the transaction was executed on or through the facilities
of the Toronto Stock Exchange, and neither the undersigned
seller nor any person acting on its behalf knows that the
transaction has been prearranged with a buyer in the United
States,
(c) none of the undersigned seller, any of its affiliates or any
person acting on behalf of any of them has engaged or will
engage in any "directed selling efforts" (as such term is
defined in Regulation S) in the United States in connection with
the offer and sale of the securities;
(d) the sale is bona fide and not for the purpose of "washing off"
the resale restrictions imposed because the securities are
"restricted securities" (as defined in Rule 144(a)(3) under the
Securities Act),
(e) the undersigned seller does not intend to replace the securities
sold in reliance on Rule 904 of Regulation S with fungible
unrestricted securities, and
(f) the contemplated sale is not a transaction, or part of a series
of transactions, which, although in technical compliance with
Regulation S, is part of a plan or scheme to evade the
registration provisions of the U.S. Securities Act.
-2-
DATED the _________ day of _______________ , 2004
___________________________________
Signature
___________________________________
Print full name and capacity (full
title) if signing in a fiduciary or
representative capacity
___________________________________
___________________________________
___________________________________
Print full address
( )
___________________________________
Telephone number
================================================================================
WESTERN FOREST PRODUCTS INC.
$221,000,000
15% SECURED BONDS DUE 2009
INDENTURE
DATED AS OF JULY 27, 2004
-------------------------
THE BANK OF NEW YORK, AS TRUSTEE
================================================================================
TABLE OF CONTENTS
PAGE
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION......................................... 1
Section 1.01 Definitions...................................................................... 1
Section 1.02 Compliance Certificates and Opinions............................................. 15
Section 1.03 Form of Documents Delivered to Trustee........................................... 16
Section 1.04 Actions of Holders; Record Date.................................................. 16
Section 1.05 Notices, Etc., to Trustee, the Company and the Guarantors........................ 18
Section 1.06 Notice to Holders; Waiver........................................................ 19
Section 1.07 Conflict with Trust Indenture Act................................................ 19
Section 1.08 Effect of Headings and Table of Contents......................................... 19
Section 1.09 Successors and Assigns........................................................... 19
Section 1.10 Separability Clause.............................................................. 19
Section 1.11 No Personal Liability of Directors, Officers, Employees and Stockholders......... 20
Section 1.12 Benefits of Indenture............................................................ 20
Section 1.13 Governing Law.................................................................... 20
Section 1.14 Legal Holidays................................................................... 20
Section 1.15 Consent to Service; Jurisdiction................................................. 20
ARTICLE TWO SECURITY FORMS.................................................................................. 21
Section 2.01 Forms Generally.................................................................. 21
Section 2.02 Form of Face of Security......................................................... 21
Section 2.03 Form of Reverse of Security...................................................... 25
Section 2.04 Form of Trustee's Certificate of Authentication.................................. 28
ARTICLE THREE THE SECURITIES................................................................................ 29
Section 3.01 Title and Terms.................................................................. 29
Section 3.02 Denominations.................................................................... 29
Section 3.03 Execution, Authentication, Delivery and Dating................................... 30
Section 3.04 Temporary Securities............................................................. 30
Section 3.05 Transfer......................................................................... 30
Section 3.06 Registration, Registration of Transfer and Exchange.............................. 31
-i-
TABLE OF CONTENTS
(Continued)
PAGE
Section 3.07 Mutilated, Destroyed, Lost and Stolen Securities................................. 32
Section 3.08 Payment of Interest; Interest Rights Preserved................................... 32
Section 3.09 Persons Deemed Owners............................................................ 33
Section 3.10 Cancellation..................................................................... 33
Section 3.11 Computation of Interest.......................................................... 34
Section 3.12 Deferral of Interest............................................................. 34
ARTICLE FOUR SATISFACTION AND DISCHARGE..................................................................... 34
Section 4.01 Satisfaction and Discharge of Indenture.......................................... 34
Section 4.02 Application of Trust Money....................................................... 35
ARTICLE FIVE REMEDIES....................................................................................... 36
Section 5.01 Events of Default................................................................ 36
Section 5.02 Acceleration of Maturity; Rescission and Annulment............................... 38
Section 5.03 Collection of Indebtedness and Suits for Enforcement by Trustee.................. 39
Section 5.04 Trustee May File Proofs of Claim................................................. 40
Section 5.05 Trustee May Enforce Claims Without Possession of Securities...................... 41
Section 5.06 Application of Money Collected................................................... 41
Section 5.07 Limitation on Suits.............................................................. 42
Section 5.08 Unconditional Right of Holders to Receive Principal, Premium and Interest........ 42
Section 5.09 Restoration of Rights and Remedies............................................... 43
Section 5.10 Rights and Remedies Cumulative................................................... 43
Section 5.11 Delay or Omission Not Waiver..................................................... 43
Section 5.12 Control by Holders............................................................... 43
Section 5.13 Waiver of Past Defaults.......................................................... 44
Section 5.14 Undertaking for Costs............................................................ 44
Section 5.15 Waiver of Stay or Extension Laws................................................. 44
ARTICLE SIX THE TRUSTEE..................................................................................... 45
Section 6.01 Certain Duties and Responsibilities.............................................. 45
Section 6.02 Notice of Defaults............................................................... 45
-ii-
TABLE OF CONTENTS
(Continued)
PAGE
Section 6.03 Certain Rights of Trustee........................................................ 46
Section 6.04 Not Responsible for Recitals or Issuance of Securities........................... 47
Section 6.05 May Hold Securities.............................................................. 47
Section 6.06 Money Held in Trust.............................................................. 47
Section 6.07 Compensation and Reimbursement................................................... 47
Section 6.08 Disqualification; Conflicting Interests.......................................... 49
Section 6.09 Corporate Trustee Required; Eligibility.......................................... 49
Section 6.10 Resignation and Removal; Appointment of Successor................................ 49
Section 6.11 Acceptance of Appointment by Successor........................................... 50
Section 6.12 Merger, Conversion, Consolidation or Succession to Business...................... 50
Section 6.13 Preferential Collection of Claims Against the Company............................ 51
Section 6.14 Appointment of Authenticating Agent.............................................. 51
ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND THE COMPANY......................................... 53
Section 7.01 Company to Furnish Trustee Names and Addresses of Holders........................ 53
Section 7.02 Preservation of Information; Communications to Holders........................... 53
Section 7.03 Reports by Trustee............................................................... 53
Section 7.04 Reports by the Company........................................................... 54
ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.......................................... 54
Section 8.01 Company May Consolidate, Etc..................................................... 54
Section 8.02 Successor Substituted............................................................ 55
ARTICLE NINE SUPPLEMENTAL INDENTURES........................................................................ 56
Section 9.01 Supplemental Indentures Without Consent of Holders............................... 56
Section 9.02 Supplemental Indentures with Consent of Holders.................................. 56
Section 9.03 Execution of Supplemental Indentures............................................. 57
Section 9.04 Effect of Supplemental Indentures................................................ 58
Section 9.05 Reference in Securities to Supplemental Indentures............................... 58
ARTICLE TEN COVENANTS....................................................................................... 58
Section 10.01 Payment of Principal, Premium and Interest....................................... 58
-iii-
TABLE OF CONTENTS
(Continued)
PAGE
Section 10.02 Maintenance of Office or Agency.................................................. 58
Section 10.03 Money for Security Payments to Be Held in Trust.................................. 59
Section 10.04 Existence........................................................................ 60
Section 10.05 Maintenance of Properties........................................................ 60
Section 10.06 Payment of Taxes and Other Claims................................................ 60
Section 10.07 Maintenance of Insurance......................................................... 61
Section 10.08 Limitation on Debt............................................................... 61
Section 10.09 Limitation on Restricted Payments................................................ 63
Section 10.10 Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries..................................................................... 63
Section 10.11 Limitation on Liens Securing Certain Debt........................................ 64
Section 10.12 Limitation on Ownership of Capital Stock of Subsidiaries......................... 64
Section 10.13 Transactions with Affiliates..................................................... 64
Section 10.14 Offer to Purchase Upon Change of Control......................................... 65
Section 10.15 Provision of Financial Information............................................... 66
Section 10.16 Additional Amounts for Canadian Taxes............................................ 66
Section 10.17 Statement by Officers as to Default; Compliance Certificates..................... 67
Section 10.18 Stay, Extension and Usury Laws................................................... 68
Section 10.19 Indemnification of Judgment Currency............................................. 68
Section 10.20 Additional Subsidiary Guarantees................................................. 68
Section 10.21 Limitation on Investments........................................................ 68
Section 10.22 Limitation on Sale and Leaseback Transactions.................................... 69
Section 10.23 Rating........................................................................... 69
Section 10.24 Asset Sales, Collateral Loss Events and Certain Other Events..................... 69
ARTICLE ELEVEN REDEMPTION AND PURCHASE OF SECURITIES........................................................ 70
Section 11.01 Optional Redemption.............................................................. 70
Section 11.02 Applicability of Article......................................................... 71
Section 11.03 Election to Redeem; Notice to Trustee............................................ 71
Section 11.04 Selection by Trustee of Securities to Be Redeemed................................ 71
Section 11.05 Notice of Redemption............................................................. 71
-iv-
TABLE OF CONTENTS
(Continued)
PAGE
Section 11.06 Deposit of Redemption Price...................................................... 72
Section 11.07 Securities Payable on Redemption Date............................................ 72
Section 11.08 Securities Redeemed in Part...................................................... 72
Section 11.09 Offer to Purchase by Application of Surplus Proceeds............................. 73
Section 11.10 Purchase Of Securities........................................................... 75
ARTICLE TWELVE GUARANTEES; COLLATERAL AND SECURITY.......................................................... 75
Section 12.01 Guarantee........................................................................ 75
Section 12.02 Limitation of Guarantor Liability................................................ 76
Section 12.03 Execution and Delivery of Subsidiary Guarantee................................... 76
Section 12.04 Guarantors May Consolidate, Etc.................................................. 77
Section 12.05 Release of Guarantor Following Sale of Assets.................................... 77
Section 12.06 Collateral and Security Documents Generally...................................... 77
Section 12.07 Collateral Agent................................................................. 78
Section 12.08 Custody of the Cash Collateral Account........................................... 78
Section 12.09 Recording........................................................................ 78
Section 12.10 Authorization of Actions to Be Taken............................................. 79
Section 12.11 Authorization of Receipt of Funds by the Trustee Under the
Collateral Documents............................................................. 80
Section 12.12 Amendment of Collateral Documents................................................ 80
Section 12.13 Release of Collateral............................................................ 80
Section 12.14 Disposition of Collateral Without Release........................................ 80
Section 12.15 Purchaser Protected.............................................................. 81
Section 12.16 Form and Sufficiency of Release.................................................. 81
Section 12.17 Termination of Security Interest................................................. 82
Section 12.18 Further Assurances............................................................... 82
ARTICLE THIRTEEN CASH COLLATERAL ACCOUNT................................................................... 82
Section 13.01 Cash Collateral Account.......................................................... 82
Section 13.02 Terms of Cash Collateral Account................................................. 83
ARTICLE FOURTEEN LEGAL DEFEASANCE AND COVENANT DEFEASANCE.................................................. 86
Section 14.01 Effect Legal Defeasance or Covenant Defeasance................................... 86
-v-
TABLE OF CONTENTS
(Continued)
PAGE
Section 14.02 Legal Defeasance and Discharge................................................... 86
Section 14.03 Covenant Defeasance.............................................................. 87
Section 14.04 Conditions to Legal or Covenant Defeasance....................................... 87
Section 14.05 Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions................................................... 88
Section 14.06 Repayment to Company............................................................. 89
Section 14.07 Reinstatement.................................................................... 90
Section 14.08 Termination of the Company's Obligation.......................................... 90
EXHIBIT A FORM OF SUPPLEMENTAL INDENTURE
EXHIBIT B FORM OF SUBORDINATION PROVISIONS
-vi-
INDENTURE, dated as of July 27, 2004, between WESTERN FOREST
PRODUCTS INC., a corporation organized and existing under the laws of Canada
(the "Company"), having its principal office at Third Floor, 435 Trunk Road,
Duncan, British Columbia, Canada V9L 2P9 and THE BANK OF NEW YORK, a New York
banking corporation, as Trustee (herein called the "Trustee").
RECITALS
The Company has duly authorized the creation of an issue of its 15%
Secured Bonds due 2009 (the "Securities") of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture.
All things necessary to make the Securities the obligations of the
Company and to make this Indenture a valid agreement of the Company in
accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.01 Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(A) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as
well as the singular;
(B) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein,
have the meanings assigned to them therein;
(C) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with
generally accepted accounting principles (whether or not such
is indicated herein), and, except as otherwise herein
expressly provided, the term "generally accepted accounting
principles" with respect to any computation required or
permitted hereunder shall mean such accounting principles as
are
generally accepted in Canada as consistently applied at the
date of such computation;
(D) unless otherwise specifically set forth herein, all
calculations or determinations of a Person shall be performed
or made on a consolidated basis in accordance with generally
accepted accounting principles;
(E) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other
subdivision;
(F) unless the context otherwise requires, any reference
to a "Clause," an "Article" or a "Section", or to an "Exhibit"
or a "Schedule", refers to a Clause, an Article or Section of,
or to an Exhibit or a Schedule attached to, this Indenture, as
the case may be; and
(G) unless the context otherwise requires, any reference
to a statue, rule or regulation refers to the same (including
any successor statute, rule or regulation thereto) as it may
be amended from time to time.
Certain terms, used principally in Article Six, are defined in that
Article.
"Action", when used with respect to any Holder, has the meaning
specified in Section 1.04.
"Additional Amounts" has the meaning specified in Section 10.16.
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control"
(including the terms "controlling" and "controlled") when used with respect to
any Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; provided, that beneficial ownership of 30% or more of the
voting securities of a Person shall be deemed to be control.
"All or Substantially All" means, with respect to the sale or other
disposition of the properties or assets of a Person, an amount representing
greater than 50% of the book value of all the properties or assets of such
Person, and, with respect to the sale or other disposition of the Capital Stock
of a Person, a number of shares representing greater than 50% of the aggregate
number of shares of such Capital Stock issued and outstanding, computed on a
fully diluted basis, of such Person.
"Asset Sale" means any transfer, sale, lease, conveyance or other
disposition of any portion of the Collateral other than (w) dispositions
permitted pursuant to Section 12.14, (x) any transfer, sale, lease, conveyance
or other disposition of any portion of the Collateral that is machinery,
equipment, furniture, apparatus, tools, implements or other similar property
that is replaced in the ordinary course of business by similar property of at
least equivalent utility to the
2
operations in which it was or is intended to be used, (y) any disposition
arising by virtue of a Condemnation, or (z) transfers, sales, conveyances or
dispositions among any of the Company and the Guarantors that have provided the
Collateral provided that the Lien under the Collateral Documents on any such
Collateral remains in full force and effect without loss of priority or
perfection.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities.
"Board of Directors" means either the board of directors of the
Company or any duly authorized delegate of that board.
"Board Resolution" means a copy of a resolution certified by an
Officer of the Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification, and delivered
to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York,
New York or Toronto, Ontario are authorized or obligated by law or executive
order to close.
"Capital Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of real or personal property of such
Person which is required to be classified and accounted for as a capital lease
or a liability on the face of a balance sheet of such Person in accordance with
generally accepted accounting principles. The stated maturity of such obligation
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty. The principal amount of such obligation
shall be the capitalized amount thereof that would appear on the face of a
balance sheet of such Person in accordance with generally accepted accounting
principles.
"Capital Markets Transaction" means any financing transaction
whereby the Company or any of its Subsidiaries raises capital through a public
offering or private placement of securities, but, for greater certainty, does
not include any Debt permitted to be Incurred pursuant to Sections 10.08(ii),
10.08(iii) and 10.08(viii) or any refinancing thereof under Section 10.08(ix) or
similar loan agreement with a bank or other financial institution that would not
customarily be considered to constitute a security.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether general or
limited, and membership interests, of such Person.
"Cash Collateral Account" means one or more accounts established in
the name of the Collateral Agent, and in the sole dominion and control of the
Collateral Agent acting in accordance with written instructions from the Trustee
or the Company in accordance with this Indenture, into which certain funds are
required to be deposited by or on behalf of the Company under the terms of this
Indenture.
3
"Cash Equivalents" means (i) Canadian or U.S. dollars, (ii)
securities issued or directly and fully guaranteed or insured by the Canadian or
U.S. government or any agency or instrumentality thereof having maturities of
not more than twelve months from the date of acquisition, (iii) certificates of
deposit and Eurodollar time deposits with maturities of twelve months or less
from the date of acquisition, bankers' acceptances with maturities not exceeding
twelve months and overnight bank deposits, in each case with any lender party to
the Credit Facility or with any Canadian or U.S. commercial bank having capital
and surplus in excess of $100 million, (iv) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clauses (ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper rated A-1
or the equivalent thereof by Moody's or S&P and in each case maturing within
twelve months after the date of acquisition, and (vi) shares of money, mutual or
similar funds having assets in excess of $100 million, at least 95% of the
assets of which constitute Cash Equivalents of the types described in clauses
(i)-(v) above.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease or transfer, in one or a series of related transactions, of
All or Substantially All of the Company's assets (on a consolidated basis) to
any Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act), (ii) the adoption of a plan by the Company relating to the liquidation or
dissolution of the Company, or (iii) the acquisition by any Person or group (as
such term is used in Section 13(d)(3) of the Exchange Act) of a direct or
indirect majority in interest (more than 50%) of the voting power of the Voting
Stock of the Company by purchase or by way of merger, amalgamation,
consolidation, wind up or otherwise.
"Change of Control Offer" has the meaning specified in Section
10.14.
"Change of Control Payment" has the meaning specified in Section
10.14.
"Change of Control Payment Date" has the meaning specified in
Section 10.14.
"Collateral" means all property and assets comprising charged
property or collateral under any of the Collateral Documents and all other
property or assets that become subject to a Lien in favor of the Collateral
Agent.
"Collateral Agent" means the agent or agents appointed by the
Company from time to time pursuant to Section 12.07 and initially BNY Trust
Company of Canada.
"Collateral Documents" means all security agreements, pledge
agreements, deeds of trust, mortgages or any other documents executed by any one
or more of the Company and the Guarantors creating a Lien that secures the
Securities or the Subsidiary Guarantees.
"Collateral Loss Event" has the meaning specified in Section
10.24(b).
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
4
"Company Request" or "Company Order" means a written request or
order signed by two Officers of the Company and delivered to the Trustee.
"Condemnation" means any taking of the Collateral or any part
thereof, in or by condemnation, expropriation or similar proceeding, eminent
domain proceedings, seizure or forfeiture, pursuant to any law, general or
special, or by reason of the temporary requisition of the use or occupancy of
the Collateral or any part thereof, by any federal, provincial, municipal or
local government or quasi-governmental agency or authority, including without
limitation any action taken by the Government of Canada or of any province or
territory thereof or by any authority or agency therein whereby any portion of
any of the Company's or any Subsidiary's forest tenures, tree farm or forest
licenses or similar rights included in the Collateral are reduced or taken.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the consolidated shareholders' equity of such Person less the amount of
such shareholders' equity attributable to Redeemable Stock, as determined in
accordance with generally accepted accounting principles.
"Corporate Trust Office" means the principal office of the Trustee
at which at any particular time its corporate trust business shall be
administered, which is, at the date as of which this Indenture is dated, located
at 101 Barclay Street, New York, NY 10286.
"corporation" means a corporation, association, company, joint-stock
company, limited liability company, partnership or business trust.
"Credit Facility" means the Credit Agreement, dated as of July 27,
2004, between the Company and certain of its Affiliates and CIT Business Credit
Canada Inc., as Lender, as amended or restated from time to time, and any
renewal, extension, refinancing, refunding or replacement thereof, in whole or
in part, including with other lenders or agents, regardless of whether any other
portion of the Credit Facility was outstanding or in effect at the time of such
renewal, extension, refinancing, refunding or replacement.
"Debt" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and whether
or not contingent, (i) every obligation of such Person for money borrowed, (ii)
every obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, including obligations Incurred in connection with the
acquisition of property, assets or businesses, (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person, (iv)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business), (v) every Capital Lease
Obligation of such Person, (vi) all Receivables Sales of such Person, together
with any obligation of such Person to pay any discount, interest, fees,
indemnities, penalties, recourse, expenses or other amounts in connection
therewith, (vii) all Redeemable Stock issued by such Person, (viii) if such
Person is a Subsidiary of the Company, all Preferred Stock issued by such
Person, (ix) every obligation to pay rent or other payment amounts of such
Person with respect to any Sale and Leaseback Transaction to which such Person
is a party, (x) every obligation under
5
Interest Rate, Currency or Commodity Price Agreements of such Person and (xi)
every obligation of the type referred to in clauses (i) through (x) of another
Person and all dividends of another Person the payment of which, in either case,
such Person has Guaranteed. The "amount" or "principal amount" of Debt at any
time of determination as used herein represented by (a) any contingent Debt,
shall be the maximum principal amount thereof, (b) any Debt issued at a price
that is less than the principal amount at maturity thereof, shall be the amount
of the liability in respect thereof determined in accordance with generally
accepted accounting principles, (c) any Receivables Sale, shall be the amount of
the principal Investment of the purchaser (other than the Company or a Wholly
Owned Subsidiary of the Company) therein, excluding amounts representative of
yield or interest earned on such Investment, (d) any Redeemable Stock, shall be
the maximum fixed redemption or repurchase price in respect thereof, and (e) any
Preferred Stock, shall be the maximum voluntary or involuntary liquidation
preference plus accrued and unpaid dividends in respect thereof, in each case as
of such time of determination. Notwithstanding the foregoing, any (i) trade
payables arising from the purchase of goods or materials or the provision of
services in the ordinary course of business, (ii) reimbursement obligations with
respect to commercial letters of credit issued in the ordinary course of
business, (iii) liability for federal, state, provincial, local or other Taxes,
or (iv) contingent obligations in respect of customary indemnification or
purchase price adjustment obligations incurred in connection with any sale of
assets shall be deemed not to be "Debt."
"Defaulted Interest" has the meaning specified in Section 3.07.
"Dollars" and "$" means currency of the United States of America,
unless otherwise noted.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as it may
be amended and any successor act thereto.
"Excluded Holder" has the meaning specified in Section 10.16.
"Expiration Date" has the meaning specified in Section 1.04.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing, or having the economic effect of
guaranteeing, any Debt of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, and including, without limitation, any
express obligation of such Person in favor of the holder of such Debt (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Debt, (ii) to purchase property, securities or
services for the purpose of assuring the holder of such Debt of the payment of
such Debt, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Debt (and "Guaranteed" and "Guaranteeing"
shall have meanings correlative to the foregoing); provided, however, that a
Guarantee by any Person shall not include endorsements by such Person for
collection or deposit, in either case, in the ordinary course of
6
business or letters of credit or bankers' acceptances issued by third parties
and reimbursement obligations in respect thereof.
"Guarantor" means (i) all of the Subsidiaries of the Company as of
the date of this Indenture, excluding Pulpco, and (ii) any other Subsidiary that
executes a Guarantee of the obligations of the Company under the Securities and
this Indenture in accordance with the provisions of this Indenture, and their
respective successors and assigns.
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Incur" means, with respect to any Debt or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other obligation
including by acquisition of the obligor of such Debt or the recording, as
required pursuant to generally accepted accounting principles or otherwise, of
any such Debt or other obligation on the balance sheet of such Person (and
"Incurrence", "Incurred", "Incurrable" and "Incurring" shall have meanings
correlative to the foregoing); provided, however, that a change in generally
accepted accounting principles that results in an obligation of such Person that
exists at such time becoming Debt shall not be deemed an Incurrence of such
Debt, and neither the accrual of interest nor the accrual of original issue
discount shall be deemed to be an Incurrence of Debt.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented, amended or restated by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof.
"Intercreditor Agreement" means the Inter-Creditor Agreement, dated
as of July 27, 2004, among the Company, Pulpco, the Trustee and the Lender under
the Credit Facility governing the relative rights and priorities of the parties
with respect to certain of the Collateral.
"Interest Payment Date" means the Stated Maturity of an installment
of interest on the Securities.
"Interest Rate, Currency or Commodity Price Agreement" of any Person
means any forward contract, futures contract, swap, option or other financial
agreement or arrangement (including, without limitation, caps, floors, collars
and similar agreements) relating to, or the value of which is primarily
dependent upon, interest rates, currency exchange rates or commodity prices or
indices (excluding contracts for the purchase or sale of goods in the ordinary
course of business).
"Investment" by any Person means any direct or indirect loan,
advance or other extension of credit or capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) to, or purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities or
evidence of Debt issued by, any other Person (from such Person or from a third
party), but shall not include (i) trade accounts receivable in the ordinary
course of business in accordance with normal trade practices, (ii) any non-cash
consideration received in satisfaction of judgments or claims, (iii) Permitted
Interest Rate, Currency or Commodity Price Agreements, (iv) loans and
7
advances to employees made in the ordinary course of business, (v) the
repurchase of securities of any Person by such Person, (vi) any acquisition of
assets, Capital Stock, or other securities of any Person by such Person for
consideration consisting solely of Capital Stock (other than Redeemable Stock)
of such Person and (vii) prepaid expenses, negotiable instruments held for
collection and lease, utility and workers' compensation, performance and other
similar documents.
"Issuance Date" means July 27, 2004.
"Judgment Currency" has the meaning specified in Section 10.19.
"Lien" means, with respect to any property or assets, any mortgage
or deed of trust, pledge, hypothecation, assignment, Receivables Sale, deposit
arrangement, security interest, lien, charge, encumbrance, preference, trust
(whether actual or deemed by law), priority or other security agreement or
preferential arrangement of any kind or nature whatsoever having the effect of
securing such property or assets (including, without limitation, any conditional
sale or other title retention agreement having substantially the same economic
effect as any of the foregoing).
"Material Subsidiary" means any Subsidiary that beneficially owns
assets having a book value greater than Cdn$2,500,000 or that is otherwise
required to become a Guarantor pursuant to Section 10.20.
"Maturity", when used with respect to any Security, means the date
on which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Proceeds" means the aggregate cash proceeds, Cash Equivalents
and any other assets received by the Company or any of its Subsidiaries in
respect of any Asset Sale, the Pulpco Note, any Softwood Duty Settlement, any
Capital Markets Transaction or any Collateral Loss Event, net of (i) the direct
costs relating to such event (including, without limitation, legal, accounting
and investment banking fees, and sales commissions), (ii) any relocation
expenses incurred as a result thereof, (iii) provisions for Taxes payable within
12 months as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), (iv) any reserve or
adjustment in respect of the sale price of such asset or assets, and (v) any
amounts applied to the repayment of any Debt secured by a Lien on assets that
are the subject of such Asset Sale.
"Notice of Default" has the meaning specified in Section 5.01.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice President of such Person.
8
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, and who shall be reasonably acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Securities; provided that,
if such Securities are to be redeemed, notice of such redemption has
been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 3.07
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than
any such Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Subsidiary or
Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee knows to
be so owned shall be so disregarded. Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Subsidiary or Affiliate of the Company or of such other
obligor.
"pari passu", when used with respect to the ranking of any Debt of
any Person in relation to other Debt of such Person, means that each such Debt
(a) either (i) is not subordinated in right of payment to any other Debt of such
Person or (ii) is subordinate in right of payment to the same Debt of such
Person as is the other and is so subordinate to the same extent and (b) is not
subordinate in right of payment to the other or to any Debt of such Person as to
which the other is not so subordinate.
9
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Permitted Interest Rate, Currency or Commodity Price Agreement" of
any Person means any Interest Rate, Currency or Commodity Price Agreement
entered into with one or more institutions that is designed to protect such
Person against fluctuations in interest rates or currency exchange rates with
respect to Debt Incurred, or in the case of currency or commodity protection
agreements, against currency exchange rate or commodity price fluctuations, and
not for purposes of speculation.
"Permitted Investments" means (a) any Investments in the Company or
in a Subsidiary of the Company; (b) any Investments in Cash Equivalents; (c) any
Investments by the Company or any Subsidiary of the Company in a Person, if as a
result of such Investment (i) such Person becomes a Subsidiary of the Company or
(ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys All or Substantially All of its assets to, or is liquidated
into, the Company or a Subsidiary of the Company; (d) any acquisition of assets
in exchange for Capital Stock of the Company; or (e) any Investments in
securities of trade creditors or customers received in settlement of obligations
that arose in the ordinary course of business pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers.
"Permitted Liens" means (a) Liens created by the Securities, this
Indenture or the Collateral Documents (the "Securities Liens"); (b) Liens
securing Debt permitted under clause (ii) of Section 10.08, including any Liens
securing Guarantees thereof under clause (iv) of Section 10.08; (c) Liens
securing Debt permitted under clause (iii) of Section 10.08; (d) Liens securing
Debt permitted under clause (vii) of Section 10.08 that are pari passu with the
Liens securing the Securities; (e) Liens securing Debt permitted under clause
(viii) of Section 10.08 that are junior in priority to the Securities Liens; (f)
Liens securing Debt permitted under clause (ix) of Section 10.08 provided, that
such Liens do not extend to or cover any assets or property other than the
assets or property which secure the Debt to be refinanced; (g) Liens in favor of
the Company or any Subsidiary that are subordinated to any Liens on the
Collateral in favor of the Collateral Agent; (h) the Lien of any judgment
rendered which is being contested diligently and in good faith by appropriate
proceedings by the Company or any of its Subsidiaries and which does not have a
material adverse effect on the ability of the Company and its Subsidiaries to
operate the subject property; (i) any Lien imposed by law dealing with
materialmen's, mechanics', workmen's, repairmen's, warehousemen's, builders',
landlords', vendors' or carriers' Liens created by law, or deposits or pledges
or other similar Liens imposed by law arising in the ordinary course of business
and with respect to amounts not yet delinquent or being contested in good faith
by an appropriate proceeding; (j) reservations, limitations, provisos and
conditions expressed in any original grants from the Crown which do not
materially adversely impair the use of the subject property by the Company or a
Subsidiary; (k) servitudes, licenses, easements, rights-of-way and rights in the
nature of easements (including, without limiting the generality of the
foregoing, servitudes, licenses, easements, rights-of-ways and rights in the
nature of easements for sidewalks, public ways, sewers, drains, gas, steam and
water mains or electric light and power, or telephone and telegraph conduits,
poles, wires and cable) which do not in the aggregate materially adversely
impair the use of the subject property by the Company or a Subsidiary or with
respect to which the Company or any of its Subsidiaries has made
10
satisfactory arrangements for relocation so that such use will not in the
aggregate be materially and adversely impaired; (l) zoning and building by-laws
and ordinances, municipal by-laws and regulations, and restrictive covenants,
which do not materially adversely interfere with the use of the subject property
by the Company or a Subsidiary; (m) Liens for Taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
concluded; provided, that any reserve or other appropriate provision as shall be
required in conformity with generally accepted accounting principles shall have
been made therefor; and (n) with respect to personal property only, Liens
registered pursuant to the Personal Property Security Act (British Columbia) and
similar legislation in other provinces or jurisdictions exclusively relating to
property and assets subject to equipment leases that are not Capital Lease
Obligations.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.07 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Preferred Stock" of any Person means Capital Stock of such Person
of any class or classes (however designated) that ranks prior, as to the payment
of dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to shares of
Capital Stock of any other class of such Person.
"Pulpco" means Western Pulp Limited, a corporation organized and
existing under the laws of Canada and a Wholly-Owned Subsidiary of the Company.
"Pulpco Note" means the Secured Term Promissory Note of Pulpco,
dated July 27, 2004, in favor of Western Pulp Limited Partnership, in the
aggregate principal amount of Cdn.$110,000,000.
"Purchase Date" has the meaning specified in Section 11.09.
"Purchase Money Debt" of any Person means Debt of such Person
secured by a Lien on real or personal property of such Person which Debt (a)
constitutes all or a part of the purchase price or construction cost of such
property or (b) is Incurred prior to, at the time of or within 270 days after
the acquisition or substantial completion of such property for the purpose of
financing all or any part of the purchase price or construction cost thereof;
provided, however, that (x) the Debt so Incurred does not exceed 100% of the
purchase price or construction cost of such property and reasonable fees and
expenses Incurred in connection therewith, (y) any Lien securing such Debt does
not extend to or cover any property other than such item of property and any
improvements on such item and (z) the purchase price or construction cost for
such property is or should be included in "addition to property, plant and
equipment" in accordance with generally accepted accounting principles.
"Rating Agency" means S&P or Moody's.
11
"Receivables" means receivables, chattel paper, instruments,
documents or intangibles evidencing or relating to the right to payment of
money.
"Receivables Sale" of any Person means any sale of Receivables of
such Person (pursuant to a purchase facility or otherwise), other than in
connection with a disposition of the business operations of such Person relating
thereto or a disposition of defaulted Receivables for purpose of collection and
not as a financing arrangement.
"Redeemable Stock" of any Person means any Capital Stock of such
Person that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) is, or upon the occurrence of an
event or passage of time would be, required to be redeemed or purchased
(pursuant to any sinking fund obligation or otherwise), or at the option of the
holder thereof is redeemable, in each case for cash or securities constituting
Debt, or is convertible into or exchangeable for Debt, in whole or in part, at
any time prior to the final Stated Maturity of the Securities.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture, calculated as set forth in Section 11.01. The amount, if any, by
which the Redemption Price with respect to any Security exceeds the principal
amount thereof shall be considered to be "premium" for all purposes under this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the 15th of June or 15th of December (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
"Reinvestment Reserve" means, at any time, the aggregate amount in
all Officers' Certificates delivered at or prior to such time pursuant to
Section 10.24(d) identified as required by the Company for the purchase of or
investment in Replacement Collateral minus the aggregate of (without
duplication):
(a) any amounts included in such Officers' Certificates that were
delivered more than 12 months prior to such time; and
(b) any amounts released prior to such time from a Cash Collateral
Account pursuant to Section 13.02 to fund the purchase of or
investment in Replacement Collateral; and
(c) any amounts included in such Officers' Certificates in respect
of which the Company has completed the purchase of or
investment in the Replacement Collateral to which such
Officers' Certificate relates.
"Replacement Collateral" means, at any relevant date in connection
with an Asset Sale or Collateral Loss Event, assets, other than existing
Collateral, which will be used or useful in the operations in which the property
or assets disposed of, lost or destroyed were used and which on such date (a)
constitute similar assets to Collateral disposed of, lost or destroyed (and
12
do not constitute Capital Stock of any Person); (b) if not already owned by the
Company or a Subsidiary, are acquired by the Company (or a Subsidiary) at a
purchase price which does not exceed their fair market value; (c) if already
owned by the Company or a Subsidiary, are at least equal to the fair market
value of the Collateral disposed of, lost or destroyed; and (d) are free and
clear of all Liens other than Permitted Liens and in the Opinion of Counsel are
subject to a perfected Lien under the Collateral Documents.
"Responsible Officer", when used with respect to the Trustee, means
any officer within the corporate trust division of the Trustee (or any successor
group of the Trustee) or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restricted Payments" means (a) any dividend or other distribution
(whether in cash or other property, but excluding any dividend or distribution
of shares of Capital Stock of the Company or any of its Subsidiaries) with
respect to any equity interest in or shares of any class of Capital Stock of the
Company or any of its Subsidiaries; or (b) any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any equity interest in or shares of any class of Capital Stock of
the Company or any of its Subsidiaries or any option, warrant or other right to
acquire any such equity interest in or shares of Capital Stock of the Company or
any of its Subsidiaries.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc., and its successors.
"Sale and Leaseback Transaction" of any Person means an agreement
with any lender or investor or to which such lender or investor is a party
providing for the leasing by such Person, for a term of more than 30 months, of
any property or asset of such Person which has been or is being sold or
transferred by such Person more than 270 days after the acquisition thereof or
the completion of construction or commencement of operation thereof to such
lender or investor or to any Person to whom funds have been or are to be
advanced by such lender or investor on the security of such property or asset.
The stated maturity of such arrangement shall be the date of the last payment of
rent or any other amount due under such arrangement prior to the first date on
which such arrangement may be terminated by the lessee without payment of a
penalty.
"Securities" has the meaning specified in the first paragraph of the
recitals to this instrument.
"Securities Act" means the Securities Act of 1933, as it may be
amended and any successor act thereto.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.06.
13
"Softwood Duty Settlement" means any settlement or resolution of the
challenges brought by the Canadian government and various Canadian lumber
companies under the provisions of the North American Free Trade Agreement and
before the World Trade Organization with respect to countervailing and
anti-dumping duties imposed by the U.S. Department of Commerce on softwood
lumber shipments to the United States resulting in a repayment to the Company of
all or any portion of such duties paid prior to such settlement or dispute.
"Special Record Date" for the payment of any Defaulted Interest or
interest deferred under Section 3.12 means a date fixed by the Trustee pursuant
to Section 3.08 or Section 3.12, as applicable.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary Guarantee" means the Guarantee by each Guarantor set
forth under Section 12.01 hereof of the Company's payment obligations under this
Indenture and the Securities, executed pursuant to the provisions of this
Indenture.
"Subsidiary" of any Person means (i) a corporation more than 50% of
the combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof, or (ii) any
other Person (other than a corporation) in which such Person, or one or more
other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority ownership
and power to direct the policies, management and affairs thereof.
"Surplus Proceeds" at any time means the aggregate of all amounts
then held in Cash Collateral Accounts pursuant to Section 10.24 minus (i) an
amount equal to the Working Capital Reserve at such time and (ii) an amount
equal to the Reinvestment Reserve at such time.
"Surplus Proceeds Offer" has the meaning specified in Section 11.09.
"Taxes" has the meaning specified in Section 10.16.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
14
"Voting Stock" of any Person means Capital Stock of such Person
which ordinarily has voting power for the election of directors (or Persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.
"Working Capital Reserve" at any time means a reserve determined by
the Board of Directors in good faith at such time as the cash and Cash
Equivalents, taking into account "Availability" under, and as defined in, the
Credit Facility (i.e., the Working Capital Reserve shall be reduced by the
amount of such Availability), required by the Company to ensure that it has
adequate working capital over the next succeeding four fiscal quarters of the
Company to fund its operations consistent with its business plan, such
determination to be evidenced by a resolution of the Board of Directors filed
with the Trustee accompanied by an Officers' Certificate as to the financial
projections on which such determination is based.
Section 1.02 Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall furnish
to the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an Officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirement set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include (in form
reasonably satisfactory to the Trustee):
(A) a statement that each individual signing such
certificate or opinion has read such covenant or condition and
the definitions herein relating thereto;
(B) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(C) a statement that, in the opinion of each such
individual, he has made such examination or investigation as
is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been complied
with (which, in the case of an Opinion of Counsel and may be
limited to reliance on an Officers' Certificate as to matters
of fact); and
15
(D) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied
with.
Section 1.03 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such eligible and qualified Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or several
documents.
Any certificate or opinion of an Officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such Officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Officer or Officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.04 Actions of Holders; Record Date.
Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of similar
tenor signed by such Holders in person or by an agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee in
accordance with Section 1.05 hereof, and, where it is hereby expressly required,
to the Company. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Action" of the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.01) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The
16
fact and date of the execution of any such instrument or writing, or the
authority of the Person executing the same, may also be proved in any other
manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security
Register.
Any request, demand, authorization, direction, notice, consent,
waiver or other Action of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities, provided that the Company may not set a record date for,
and the provisions of this paragraph shall not apply with respect to, the giving
or making of any notice, declaration, request or direction referred to in the
next paragraph. If not set by the Company prior to the first solicitation of a
Holder made by any Person in respect of any such matter referred to in the
foregoing sentence, the record date for any such matter shall be the 30th day
(or, if later, the date of the most recent list of Holders required to be
provided pursuant to Section 7.01) prior to such first solicitation. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to take
the relevant action, whether or not such Holders remain Holders after such
record date; provided that no such action shall be effective hereunder unless
taken on or prior to the applicable Expiration Date by Holders of the requisite
principal amount of Outstanding Securities on such record date. Nothing in this
paragraph shall be construed to prevent the Company from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Company, at its own expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to be
given to the Trustee in writing and to each Holder of Securities in the manner
set forth in Section 1.06.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 5.02, (iii) any request to institute proceedings referred
to in Section 5.07(B) or (iv) any direction referred to in Section 5.12. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to join
in such notice, declaration, request or direction, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities on such
record date. Nothing in this paragraph shall be construed to prevent the Trustee
from setting a new record date for any action for which a record date has
previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and
17
with no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Trustee, at the Company's expense, shall cause notice of such
record date, the proposed action by Holders and the applicable Expiration Date
to be given to the Company in writing and to each Holder of Securities in the
manner set forth in Section 1.06.
With respect to any record date set pursuant to this Section, the
party hereto which sets such record date may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder of Securities in the manner set forth in Section
1.06, on or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section, the
party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
Section 1.05 Notices, Etc., to Trustee, the Company and the Guarantors.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(A) the Trustee by any Holder or by the Company or any
Guarantor shall be sufficient for every purpose hereunder if
made, given, furnished or filed in writing, delivered in
person or mailed by first-class postage prepaid (registered or
certified, return receipt requested), to or with the Trustee
at its Corporate Trust Office, or at such other address
furnished in writing to the Holders, the Company or any
Guarantor by the Trustee, or, with respect to notices by the
Company or any Guarantor, transmitted by facsimile
transmissions (confirmed by guaranteed overnight courier) to
the following facsimile number: (212) 815-5802 or to any other
facsimile number previously furnished in writing to the
Company by the Trustee, or
(B) the Company or any Guarantor by the Trustee or by
any Holder shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if in writing and
mailed, first-class postage prepaid, to the Company or
Guarantor addressed to the Company at the address of its
principal office specified in the first paragraph of this
18
instrument or at such other address furnished in writing to
the Trustee by the Company or with respect to notices by the
Trustee, transmitted by facsimile transmissions (confirmed by
overnight courier) to the following facsimile number: (250)
748-6045 or to any other facsimile number previously furnished
in writing to the Trustee by the Company.
Section 1.06 Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at his address as it appears in the Security Register,
not later than the latest date (if any), and not earlier than the earliest date
(if any), prescribed for the giving of such notice, with a copy to the Trustee
at the same time mailed or delivered in accordance with Section 1.05(A) hereof.
In any case where notice to Holders is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any particular
Holder shall affect the sufficiency of such notice with respect to other
Holders. Where this Indenture provides for notice 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. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
If by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Section 1.07 Conflict with Trust Indenture Act.
The Company and the Trustee agree to comply with the provisions of
the Trust Indenture Act as though this Indenture, the Company and the Trustee
were governed thereby; provided, however that if any provision of this Indenture
conflicts with, modifies or excludes any provision of the Trust Indenture Act,
such provision shall control.
Section 1.08 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
Section 1.09 Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
19
Section 1.10 Separability Clause.
In case any provision in this Indenture or in the Securities shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 1.11 No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, Officer, employee, incorporator
or stockholder of the Company or any Guarantor, as such, shall have any
liability for any obligations of the Company or such Guarantor under the
Securities, the Guarantees, this Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder by
accepting any Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
Section 1.12 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders of Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
Section 1.13 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 1.14 Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, Change
of Control Payment Date, Purchase Date or Stated Maturity of any Security shall
not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Securities) payment of interest or principal (and premium,
if any) need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date, Redemption Date, Change of Control Payment Date or Purchase Date, or at
the Stated Maturity, provided that no interest shall accrue for the period from
and after such Interest Payment Date, Redemption Date, Change of Control Payment
Date, Purchase Date or Stated Maturity, as the case may be.
Section 1.15 Consent to Service; Jurisdiction.
The Company, the Guarantors and the Trustee agree that any legal
suit, action or proceeding arising out of or relating to this Indenture, and the
Company and the Guarantors agree that any legal suit, action or proceeding
arising out of or relating to the Securities, may be instituted in any federal
or state court in the Borough of Manhattan, The City of New York, New York,
waive any objection which they may now or hereafter have to the laying of the
venue of any such legal suit, action or proceeding, waive any immunity from
jurisdiction or to service of process in respect of any such suit, action or
proceeding, and irrevocably submit to the
20
jurisdiction of any such court in any such suit, action or proceeding. The
Trustee further submits to the non-exclusive jurisdiction of the courts of the
Province of Ontario, Canada in any legal suit, action or proceeding arising out
of or relating to this Indenture; provided, that the rights, duties and
obligations of the Trustee hereunder shall be governed by New York law as
provided herein. The Trustee hereby designates and appoints BNY Trust Company of
Canada, 4 King Street West, Suite 1101, Toronto, Ontario M5H 1B6 as its
authorized agent upon which process may be served in any legal suit, action or
proceeding arising out of or relating to this Indenture which may be instituted
in any federal or state court in the Province of Ontario, Canada and agrees that
service of process upon such agent, and written notice of said service to the
Trustee by the Person serving the same, shall be deemed in every respect
effective service of process upon the Trustee, in any such suit, action or
proceeding. The Company and the Guarantors further submit to the jurisdiction of
the courts of their own corporate domicile in any legal suit, action or
proceeding arising out of or relating to this Indenture or the Securities. The
Company and the Guarantors hereby designate and appoint CT Corporation System,
1633 Broadway, New York, New York 10019 as their authorized agent upon which
process may be served in any legal suit, action or proceeding arising out of or
relating to this Indenture or the Securities which may be instituted in any
federal or state court in the Borough of Manhattan, The City of New York, New
York, and agree that service of process upon such agent, and written notice of
said service to the Company by the Person serving the same, shall be deemed in
every respect effective service of process upon the Company or any Guarantor, as
the case may be, in any such suit, action or proceeding and further designate
their domicile, the domicile of CT Corporation System specified above and any
domicile CT Corporation System may have in the future as its domicile to receive
any notice hereunder (including service of process). If for any reason CT
Corporation System (or any successor agent for this purpose) shall cease to act
as agent for service of process as provided above, the Company will promptly
appoint a successor agent for this purpose reasonably acceptable to the Trustee.
The Company agrees to take any and all actions as may be necessary to maintain
such designation and appointment of such agent in full force and effect.
ARTICLE TWO
SECURITY FORMS
Section 2.01 Forms Generally.
The Securities and the Trustee's certificates of authentication
shall be in substantially the form set forth in this Article, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with any law or rule of any securities exchange or as
may be, consistently herewith, determined by the Officers executing such
Securities, as evidenced by their execution of the Securities.
The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods on steel engraved borders or may
be produced in any other manner, all as determined by the Officers executing
such Securities, as evidenced by their execution of such Securities.
21
Section 2.02 Form of Face of Security.
(a) Securities Legend. To the extent required by applicable law, the
Securities issued under this Indenture will bear a legend substantially in the
following form until such legend is no longer required under the relevant
applicable securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S.
SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE IN THE UNITED STATES OR ANY
OTHER JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY BE OFFERED, SOLD OR
PLEDGED IN THE UNITED STATES, OR OTHERWISE TRANSFERRED TO U.S. PERSONS (AS SUCH
TERM IS DEFINED IN REGULATION S UNDER THE U.S. SECURITIES ACT ("REGULATION S")),
ONLY IF SUCH SECURITIES ARE REGISTERED UNDER THE U.S. SECURITIES ACT, OR IF THEY
ARE BEING OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED (A) TO WESTERN FOREST
PRODUCTS INC. (THE "COMPANY"), (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH
RULE 904 OF REGULATION S AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND
REGULATIONS, (C) IN THE UNITED STATES IN ACCORDANCE WITH (1) RULE 144A UNDER THE
U.S. SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE TRANSFEROR REASONABLY
BELIEVES TO BE A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
("QIB") OR FOR THE ACCOUNT OF A QIB TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE UPON RULE 144A OR (2) RULE 144 UNDER THE U.S. SECURITIES
ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR (D) IN A
TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR
ANY APPLICABLE STATE SECURITIES LAWS, PROVIDED THAT, IN THE CASE OF TRANSFERS
PURSUANT TO (C)(2) OR (D) ABOVE, A LEGAL OPINION SATISFACTORY TO THE COMPANY
MUST FIRST BE DELIVERED. IF THE COMPANY IS A "FOREIGN ISSUER" WITHIN THE MEANING
OF REGULATION S AT THE TIME OF TRANSFER, A NEW CERTIFICATE, BEARING NO LEGEND,
MAY BE OBTAINED UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED
DECLARATION, SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT THE TRANSFER OF THE
SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904 OF
REGULATION S.
Subject to the Company's right to refuse to allow, recognize or
effect any transfer of the Securities that would constitute or result in a
violation of any applicable law, including securities laws, and the Company's
right to require an opinion of counsel or other evidence satisfactory to it that
any proposed transfer of the Securities would not constitute or result in a
violation of any applicable law, including any applicable securities laws, the
foregoing legend may be removed from the Securities in the following
circumstances: (i) if such Securities are proposed to be offered or sold or
otherwise transferred in accordance with Rule 904 of Regulation S and the
Company is a "foreign issuer" within the meaning of Regulation S at the time of
transfer, and the Holder provides to the Company or the Registrar a duly
executed Rule 904 declaration in a form satisfactory to the Company; or (ii) if
such Securities are proposed to
22
be offered or sold or otherwise transferred in accordance with Rule 144 under
the Securities Act, and the holder of such Securities delivers to the Company an
opinion of counsel, of recognized standing reasonably satisfactory to the
Company, in form and substance reasonably satisfactory to the Company and to the
effect that the above legend is no longer required under the Securities Act or
applicable state securities laws.
(b) Tax Legend.
THIS SECURITY WAS ISSUED WITH "ORIGINAL ISSUE DISCOUNT" (AS DEFINED
IN SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED). IF YOU ARE A
UNITED STATES TAXPAYER, YOU MAY CONTACT THE CHIEF FINANCIAL OFFICER OR CORPORATE
SECRETARY OF THE COMPANY AT 3RD FLOOR, 435 TRUNK ROAD, DUNCAN, BRITISH COLUMBIA,
CANADA, V9L 2P9, PHONE: 250 748 3711, WHO WILL PROVIDE YOU WITH ANY REQUIRED
INFORMATION REGARDING THE ORIGINAL ISSUE DISCOUNT.
23
WESTERN FOREST PRODUCTS INC.
15% Secured Bonds due 2009
CUSIP No. [ ]
No. ______________ $________
Western Forest Products Inc., a corporation duly organized and
existing under the laws of Canada (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to ______________, or registered assigns,
the principal sum of ______________________ Dollars (such amount the "principal
amount" of this Security) on July 28, 2009 and to pay interest thereon from July
27, 2004 or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, payable in arrears semi-annually on June 30 and
December 31 in each year, commencing December 31, 2004 at the rate of 15% per
annum, until the principal hereof is paid or made available for payment,
provided that the Company shall be entitled to defer the payment of up to
one-half of the interest payable on any Interest Payment Date in the manner and
subject to the terms and conditions set forth in Section 3.12 of the Indenture,
and provided, further, that any amount of principal of (and premium, if any) and
interest on this Security which is overdue shall bear interest (to the extent
that payment thereof shall be legally enforceable) at the rate of 17% per annum,
from the date such amount is due to the day it is paid or made available for
payment, and such overdue interest shall be payable on demand.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the June 15 or December 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on the relevant Regular Record Date and may either be paid
to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee in accordance
with Section 3.08 of the Indenture, notice whereof shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture. Interest on this Security shall be computed on the basis set forth in
the Indenture.
Payment of the principal of (and premium, if any) and interest on
this Security will be made at the office or agency of the Company in the Borough
of Manhattan, The City of New York, New York, maintained for such purpose and at
any other office or agency maintained by the Company for such purpose, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however, that at
the option of the Company payment of interest may be made by check mailed to the
24
address of the Person entitled thereto as such address shall appear in the
Security Register; provided further that all payments of the principal (and
premium, if any) and interest on Securities, the Holders of which have given
wire transfer instructions to the Company or its agent at least 10 Business Days
prior to the applicable payment date, will be required to be made by wire
transfer of immediately available funds to the accounts specified by such
Holders in such instructions. Notwithstanding the foregoing, the final payment
of principal shall be payable only upon surrender of this Security to the Paying
Agent.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
Dated:
WESTERN FOREST PRODUCTS INC.
By:_____________________________
Section 2.03 Form of Reverse of Security.
This Security is one of a duly authorized issue of Securities of the
Company designated as its 15% Secured Bonds due 2009 (herein called the
"Securities"), limited in aggregate principal amount to $221,000,000, issued on
July 27, 2004, and to be issued under an Indenture, dated as of July 27, 2004
(herein called the "Indenture", which term shall have the meaning assigned to it
in such instrument), among the Company, the Guarantors party thereto, and The
Bank of New York, as Trustee (herein called the "Trustee", which term includes
any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Guarantors, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are, and are to be, authenticated and
delivered.
The Company will pay to each Holder, other than an Excluded Holder,
certain Additional Amounts in the event of the withholding or deduction of
certain Canadian Taxes as described in the Indenture.
The Company may elect to defer payment of up to one-half of interest
payable on any Interest Payment Date, which deferral may continue for up to ten
consecutive semi-annual
25
periods but in any event shall not continue beyond Maturity. All interest so
deferred will bear interest at a rate of 15% and shall be payable on each
Interest Payment Date occurring during the Deferral Period.
The Securities are subject to redemption at the Company's option
upon not less than 30 nor more than 60 days' notice by mail, at any time on or
after July 28, 2005, as a whole or in part, at the election of the Company, at a
Redemption Price equal to a percentage of the principal amount of the Securities
as set forth in the Indenture, together with accrued interest to but excluding
the Redemption Date. In the event of redemption of this Security in part only, a
new Security or Securities for the unredeemed or unpurchased portion hereof will
be issued in the name of the Holder hereof upon the cancellation hereof.
The Indenture provides that, subject to certain conditions, if a
Change of Control occurs, the Company shall be required to make a Change of
Control Offer for all or a specified portion of the Securities. Also, under
Section 11.09 of the Indenture, the Company shall be required to make a Surplus
Proceeds Offer to purchase the Securities as set forth therein.
The Securities do not have the benefit of any sinking fund
obligations.
If an Event of Default shall occur and be continuing, the principal
of all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company, the Guarantors and the rights of the Holders of the Securities under
the Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority in aggregate principal amount of the Securities at the
time Outstanding. The Indenture also contains provisions permitting the Holders
of a majority in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive compliance
by the Company or the Guarantors with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities, the Holders of not less than a majority in principal amount of
Securities at the time Outstanding shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee
and offered the Trustee reasonable indemnity and the Trustee shall not have
received from the Holders of a majority in principal amount of Securities at the
time Outstanding a direction inconsistent with such request and shall have
failed to institute any such proceeding for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to certain
suits described in the Indenture, including
26
any suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein (or, in the case of redemption, on or
after the Redemption Date or, in the case of any purchase of this Security
required to be made pursuant to a Change of Control Offer or Surplus Proceeds
Offer, on the Change of Control Payment Date or the Purchase Date, as the case
may be).
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, New York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
Interest on this Security shall be computed on the basis of a
360-day year of twelve 30-day months. The yearly rate of interest for any period
less than one year to which interest at a stated rate computed on the basis of a
year of 360 days consisting of twelve 30-day months is equivalent is the stated
rate multiplied by a fraction of which (a) the numerator is the product of (i)
the actual number of days in the calendar year in which the first day of the
relevant period falls and (ii) the sum of (A) the product of (x) 30 and (y) the
number of complete months elapsed in the relevant period and (B) the actual
number of days elapsed in any incomplete month in the relevant period, and (b)
the denominator is the product of (i) 360 and (ii) the actual number of days in
the relevant period.
27
All Securities issued under the Indenture rank equally and ratably
without priority or preference. This Security is a direct obligation of the
Company and is guaranteed by the Guarantors, which obligations are secured by
Liens on substantially all of the assets of the Company and the Guarantors. Such
Liens and certain provisions of the Indenture are subject to the terms of the
Intercreditor Agreement.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The Indenture and this Security shall be governed by and construed
in accordance with the laws of the State of New York.
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its entirety
by the Company pursuant to Section 10.14 or Section 11.09 of the Indenture,
check the box:
[ ]
If you want to elect to have only a part of this Security purchased
by the Company pursuant to Section 10.14 or Section 11.09 of the Indenture,
state the amount:
$
Dated: Your Signature: ______________________
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee:____________________________
(Signature must be guaranteed by a member firm of
the New York Stock Exchange or a commercial bank or
trust company)
Section 2.04 Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
as Trustee
By:_____________________________
Authorized Officer
28
ARTICLE THREE
THE SECURITIES
Section 3.01 Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $221,000,000
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section
3.04, 3.05, 3.06, 9.06 or 11.08 or 11.09 or in connection with a Change of
Control Offer or Surplus Proceeds Offer pursuant to Section 10.14 or 11.09.
The Securities shall be known and designated as the "15% Secured
Bonds due 2009" of the Company. Their Stated Maturity shall be July 28, 2009 and
they shall bear interest at the rate of 15% per annum, from July 27, 2004 or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, as the case may be, payable semi-annually in arrears on June
30 and December 31, commencing December 31, 2004, until the principal thereof is
paid or made available for payment, provided that the Company shall be entitled
to defer the payment of up to one-half of the interest payable on any Interest
Payment Date in the manner and subject to the terms and conditions set forth in
Section 3.12, and provided, further, that any amount of principal of (and
premium, if any) and interest on this Security which is overdue shall bear
interest (to the extent that payment thereof shall be legally enforceable) at
the rate of 17% per annum, from the date such amount is due to the day it is
paid or made available for payment, and such overdue interest shall be payable
on demand.
The principal of (and premium, if any) and interest on the
Securities shall be payable at the office or agency of the Company in the
Borough of Manhattan, The City of New York, New York maintained for such purpose
and at any other office or agency maintained by the Company for such purpose;
provided, however, that at the option of the Company payment of interest may be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register; provided further that all
payments of the principal (and premium, if any) and interest on Securities, the
Holders of which have given wire transfer instructions to the Company or its
agent at least 10 Business Days prior to the applicable payment date, will be
required to be made by wire transfer of immediately available funds to the
accounts specified by such Holders in such instructions.
The Securities shall be subject to repurchase by the Company
pursuant to a Change of Control Offer or Surplus Proceeds Offer as provided in
Section 10.14 and 11.09.
The Securities shall be redeemable as provided in Article Eleven.
The Securities shall not have the benefit of any sinking fund
obligation.
Section 3.02 Denominations.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiples thereof.
29
Section 3.03 Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by any one
Officer of the Company whose signature may be manual or facsimile.
Securities bearing the manual or facsimile signature of an
individual who was at any time the proper officer of the Company shall bind the
Company, notwithstanding that such individual has ceased to hold such office at
the time of the authentication and delivery of such Securities or did not hold
such office at the date of such Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as
provided in this Indenture and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder.
Section 3.04 Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon a Company Order, the Trustee shall, authenticate and deliver
temporary Securities, which Securities are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the Officer executing such Securities may determine, as
evidenced by their execution thereof.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to Section
10.02, without charge to the Holder. Upon surrender for cancellation (which
cancellation shall be only by the Trustee) of any one or more temporary
Securities, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Securities of
authorized denominations. Until so exchanged, the temporary Securities shall in
all respects be entitled to the same rights and benefits under this Indenture as
definitive Securities.
Section 3.05 Transfer.
All Securities issued under this Indenture may be transferred, sold
or otherwise disposed of only in accordance with applicable securities laws and
after the Holder proposing to
30
make such transfer provides any certification, document, opinion of counsel or
other information requested by the Company or the Registrar or required by law
to be provided in connection with such transfer, sale or other disposition.
Section 3.06 Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company designated pursuant to Section 10.02 being
herein sometimes collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities and of transfers and exchanges of
Securities. The Trustee is hereby appointed "Security Registrar" for the purpose
of registering Securities and transfers and exchanges of Securities as herein
provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 10.02 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations, of a like aggregate principal
amount and bearing such restrictive legends as may be required by this
Indenture.
At the option of the Holder, and subject to the other provisions of
this Section 3.06, Securities may be exchanged for other Securities of any
authorized denominations, of a like aggregate principal amount and bearing such
restrictive legends as may be required by this Indenture upon surrender of the
Securities to be exchanged at any such office or agency. Whenever any Securities
are so surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and deliver, the Securities which the Holder making the
exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange
of Securities under this Article Three or otherwise shall be the valid
obligations of the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Security Registrar)
be duly endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Sections 3.03, 3.04, 3.05, 3.06, 9.06, 10.15 or 11.08 not
involving any transfer.
The Company and the Trustee shall not be required (i) to issue,
register the transfer of, or exchange any Security during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of Securities selected for redemption
31
under Section 11.04 and ending at the close of business on the day of such
mailing, or (ii) to register the transfer of or exchange any Security so
selected for redemption, in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
Section 3.07 Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by either of them to save
each of them and any agent of either of them completely harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and upon its
written request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay the amount due and payable under such
Security.
Upon the issuance of any new Security under this Section, the
Company and the Trustee (without duplication) may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee and reasonable attorneys' fees) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company evidencing the same Debt as the
mutilated, destroyed, lost or stolen Security, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
Section 3.08 Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
32
Any interest on any Security that is not punctually paid or duly
provided for on any Interest Payment Date, including for greater certainty any
interest that is deferred pursuant to Section 3.12 (herein called "Defaulted
Interest"), shall forthwith cease to be payable to the Person that was the
Holder of such Security on the relevant Regular Record Date by virtue of having
been such Holder on such date. Such Defaulted Interest shall be paid by the
Company to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner: the Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security and the date
of the proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the sole expense of
the Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder at his address as it appears in the Security Register,
not less than 10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor having
been so mailed, such Defaulted Interest shall be paid to the Persons in whose
names the Securities (or their respective Predecessor Securities) are registered
at the close of business on such Special Record Date.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 3.09 Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of (and premium, if
any) and (subject to Section 3.08) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
Section 3.10 Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any Change of Control Offer or
Surplus Proceeds Offer pursuant to Section 10.14, Section 11.09 or Article
Eleven shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee and shall be promptly canceled by it and only by it. The
33
Company may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly canceled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities canceled as provided in this Section,
except as expressly permitted by this Indenture. All canceled Securities held by
the Trustee shall be disposed of as directed by a Company Order.
Section 3.11 Computation of Interest.
(a) Interest on the Securities shall be computed on the basis
of a 360-day year of twelve 30-day months.
(b) The yearly rate of interest for any period less than one
year to which interest at a stated rate computed on the basis of a year of 360
days consisting of twelve 30-day months is equivalent is the stated rate
multiplied by a fraction of which (a) the numerator is the product of (i) the
actual number of days in the calendar year in which the first day of the
relevant period falls and (ii) the sum of (A) the product of (x) 30 and (y) the
number of complete months elapsed in the relevant period and (B) the actual
number of days elapsed in any incomplete month in the relevant period, and (b)
the denominator is the product of (i) 360 and (ii) the actual number of days in
the relevant period.
Section 3.12 Deferral of Interest.
Upon notice to the Trustee, and provided no Event of Default shall
have occurred and be continuing, the Company may, if considered advisable by the
Board of Directors, defer payment of up to one-half of the interest payable on
any Interest Payment Date (including, for greater certainty, one-half of any
interest payable in respect of interest deferred pursuant to this Section 3.12)
without the consent of the Trustee or the Holders; provided, that no such
deferral shall continue for more than 10 consecutive semi-annual periods or in
any event, beyond Maturity (any such period, a "Deferral Period"). All interest
on the Securities deferred pursuant to this Section 3.12 will bear interest at a
rate of 15%, which shall be paid on each Interest Payment Date occurring during
the Deferral Period. The Company may pay the interest deferred pursuant hereto
at any time during the Deferral Period but in any event no later than the
earlier of the last day of such Deferral Period and at Maturity.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 4.01 Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities herein
expressly provided for), and the Trustee, on written demand of and at the sole
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture (including, but not limited to,
Article Twelve hereof), when
(A) either
34
(1) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been mutilated, destroyed, lost or
stolen and which have been replaced or paid as provided in Section 3.07
and (ii) Securities for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 10.03) have been delivered to the Trustee for cancellation; or
(2) all such Securities not theretofore delivered to the
Trustee for cancellation
(a) have become due and payable, or
(b) will become due and payable at their Stated Maturity
within one year, or
(c) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the sole expense, of the
Company,
and the Company, in the case of (a), (b) or (c) above, has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee
for cancellation, for principal (and premium, if any) and interest to the
date of such deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may be
including, without limitation, the payment of all fees and expenses of the
Trustee, its agents and counsel;
(B) the Company has paid or caused to be paid all other
sums payable hereunder by the Company including, without
limitation, the payment of all fees and expenses of the
Trustee, its agents and counsel; and
(C) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been
complied with.
Notwithstanding the satisfaction and discharge of this Indenture pursuant to
this Article Four, the obligations of the Company to the Trustee under Section
6.07 and, if money shall have been deposited with the Trustee pursuant to
subclause (2) of clause (A) of this Section, the obligations of the Trustee
under Section 4.02 and the last paragraph of Section 10.03 shall survive.
Section 4.02 Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.03,
all money deposited with the Trustee pursuant to Section 4.01 shall be held in
trust and applied by it, in
35
accordance with the provisions of the Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal (and premium, if any) and interest for whose
payment such money has been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
Section 5.01 Events of Default.
"Event of Default", wherever used herein, means any one of the
following events:
(A) default in the payment of the principal of (or
premium, if any, on) any Security at its Maturity; or
(B) except as provided in Section 3.12, default in the
payment of any interest upon any Security, including any
interest accrued with respect to deferred interest under
Section 3.12, when it becomes due and payable, and continuance
of such default for a period of 30 days; or
(C) default, on the applicable Change of Control Payment
Date or Purchase Date, in the purchase of Securities required
to be purchased by the Company pursuant to a Change of Control
Offer or Surplus Proceeds Offer described under Section 10.14
or 11.09 as to which a Change of Control Offer or Surplus
Proceeds Offer has been mailed to Holders, or default in
mailing a Change of Control Offer within the period specified
in Section 10.14; or
(D) default in the performance, or breach, of Section
8.01; or
(E) default in the performance, or breach, of any
covenant of the Company in this Indenture (other than a
covenant, a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with), and
continuance of such default or breach for a period of 30 days
after there has been given, by registered or certified mail,
to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in aggregate principal
amount of the Outstanding Securities a written notice
specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or
(F) a default or defaults under the terms of any
instrument evidencing or securing Debt for money borrowed by
the Company or any Subsidiary having an outstanding principal
amount of Cdn.$10 million or more individually or in the
aggregate, whether such Debt now exists or shall hereafter be
created, which default or defaults shall constitute a failure
to pay all or any portion of the principal amount of such Debt
at
36
final Stated Maturity after any applicable grace period which
shall not have been waived or cured, shall have resulted in
such Debt becoming or being declared due and payable prior to
the date on which it would otherwise have become due and
payable, or pursuant to which the holder of such Debt shall be
entitled to exercise remedies or otherwise enforce its rights
against any Collateral; or
(G) a final judgment or final judgments (not subject to
appeal) for the payment of money are entered against the
Company or any Subsidiary in an aggregate amount in excess of
Cdn.$10 million by a court of competent jurisdiction which
judgments remain undischarged or unbonded for a period (during
which execution shall not be effectively stayed) of 45 days
after the right to appeal all such judgments has expired; or
(H) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the
Company or any Subsidiary in an involuntary case or proceeding
under any applicable U.S. Federal or State, Canadian Federal
or Provincial or other applicable bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order
adjudging the Company or any Subsidiary a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or
in respect of the Company or any Subsidiary under any
applicable U.S. Federal or State, Canadian Federal or
Provincial or other applicable law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or any Subsidiary, or ordering
the winding up or liquidation of the affairs of the Company or
any Subsidiary, and the continuance of any such decree or
order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
(I) the commencement by the Company or any Subsidiary of
a voluntary case or proceeding under any applicable U.S.
Federal or State, Canadian Federal or Provincial or other
applicable bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by the
Company or any Subsidiary to the entry of a decree or order
for relief in respect of the Company or such Subsidiary in an
involuntary case or proceeding under any applicable U.S.
Federal or State, Canadian Federal or Provincial or other
applicable bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against the Company or a
Subsidiary, or the filing by the Company or any Subsidiary of
a petition or answer or consent seeking reorganization or
relief under any applicable U.S. Federal or State, Canadian
Federal or Provincial or other applicable law, or the consent
by the Company or any Subsidiary to the filing of such
petition or to the appointment of or taking possession by a
custodian, receiver, liquidator,
37
assignee, trustee, sequestrator or similar official of the
Company or any Subsidiary or of any substantial part of the
property of the Company or any Subsidiary, or the making by
the Company or any Subsidiary of an assignment for the benefit
of creditors, or the admission by the Company or any
Subsidiary in writing of its inability to pay its debts
generally as they become due, or the taking of corporate
action by the Company or any Subsidiary in furtherance of any
such action; or
(J) any Subsidiary Guarantee is held in any judicial
proceeding, which is final and unappealable, to be
unenforceable or invalid or shall cease for any reason to be
in full force and effect, or any Guarantor, or any Person
acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Subsidiary Guarantee; or
(K) any of the Collateral Documents is or becomes
unenforceable against the Company or any of the Guarantors,
and such enforceability continues for 30 days after written
notice from the Trustee or 25% of the Holders of Outstanding
Securities; or
(L) the Company or any Person acting on behalf of the
Company or any Guarantor denies or disaffirms its obligations
under the Collateral Documents or asserts that the Collateral
Documents are not in full force and effect.
The Trustee shall not be charged with knowledge of any Event of
Default unless written notice thereof shall have been give to the Trustee by the
appropriate Persons, including, without limitation, the Company or any Holder or
any agent of any Holder. The Trustee shall, within 45 days after the occurrence
of any Event of Default about which it has received written notice, give to the
Holders notice of such Event of Default; provided that, except in the case of an
Event of Default in the payment of principal of, or interest on (including any
accelerated payment), any Security, including the failure to make payment
pursuant to a Change of Control Offer or Surplus Proceeds Offer, the Trustee
shall be protected in withholding such notice if the Trustee in good faith
determines that the withholding of such notice is in the interest of the
Holders.
Section 5.02 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 5.01(H) or (I)) occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in aggregate principal amount of
the Outstanding Securities may declare the principal of all the Securities to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal (and
premium, if any) and any accrued interest shall become immediately due and
payable. If an Event of Default specified in Section 5.01(H) or (I) occurs, the
principal of (and premium, if any) and any accrued interest on the Securities
then Outstanding shall become immediately due and payable without any
declaration of the Trustee or Action of any Holder.
38
At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter in this Article provided, the Holders of 25% in
aggregate principal amount of the Outstanding Securities, by written notice to
the Company and the Trustee, may rescind and annul such declaration and its
consequences if
(A) the Company has paid or deposited with the Trustee a
sum sufficient to pay:
(1) all overdue interest on all Securities, including any
interest deferred under Section 3.12,
(2) the principal of (and premium, if any, on) any Securities
which have become due otherwise than by such declaration of acceleration
(including any Securities required to have been purchased on the Change of
Control Payment Date or Purchase Date pursuant to a Change of Control
Offer or Surplus Proceeds Offer made by the Company) and, to the extent
that payment of such interest is lawful, any interest and Additional
Amounts thereon at the rate provided therefor in the Securities,
(3) to the extent that payment of such interest is lawful,
interest upon overdue interest, including any deferred interest, at the
rate provided therefor in the Securities, and
(4) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(B) all Events of Default, other than the non-payment of
the principal of (and premium, if any) or interest on the
Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section
5.13.
No such rescission shall affect any subsequent default or impair any right
arising therefrom.
Section 5.03 Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if:
(A) default is made in the payment of any interest on
any Security including any interest deferred under Section
3.12, when such interest becomes due and payable and such
default continues for a period of 30 days, or
(B) default is made in the payment of the principal of
(or premium, if any, on) any Security at the Maturity thereof
or, with respect
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to any Security required to have been purchased pursuant to a
Change of Control Offer or Surplus Proceeds Offer made by the
Company, at the Change of Control Payment Date or Purchase
Date, as the case may be, thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
provided therefor in the Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel and any amounts due the Trustee under
Section 6.07 hereof.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section 5.04 Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company or any
other obligor upon the Securities, or their respective property or their
respective creditors, the Trustee shall be entitled and empowered, by
intervention in such proceeding or otherwise, to take any and all actions
authorized under the Trust Indenture Act in order to have claims of the Holders
and the Trustee allowed in any such proceeding. In particular, the Trustee shall
be authorized to collect, receive and distribute any moneys or other property
payable or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount, due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07. To the extent that the payment of
any such compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section 6.07
hereof out of the estate in any such proceeding, shall be denied for any reason,
payment of the same shall be secured by a Lien on, and shall be paid out of, any
and all distributions, dividends, money,
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securities and other properties which the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
Section 5.05 Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
amounts due the Trustee under Section 6.07 hereof, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
Section 5.06 Application of Money Collected.
Subject to Article Twelve, any money collected by the Trustee
pursuant to this Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money on
account of principal (or premium, if any) or interest, upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts including, without
limitation, the reasonable compensation, expenses, disbursements and
advances due the Trustee, its agents, including the Collateral
Agent, and counsel and any other amounts due the Trustee under
Section 6.07;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities
due the Holders in respect of which or for the benefit of which such
money has been collected, ratably, without preference or priority of
any kind, according to the amounts due and payable on such
Securities for principal (and premium, if any) and interest,
respectively; and
THIRD: To the Company or to such party as a court of competent
jurisdiction shall direct.
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Section 5.07 Limitation on Suits.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy specifically
permitted hereunder, unless
(A) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(B) the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities shall have made
written request to the Trustee to institute proceedings or
pursue remedies in respect of such Event of Default in its own
name as Trustee hereunder;
(C) such Holder or Holders have offered and provided to
the Trustee reasonable indemnity satisfactory to the Trustee
against the costs, expenses and liabilities to be incurred in
compliance with such request;
(D) the Trustee has notified any such Holder or Holders
that it does not intend to institute any such proceeding or
pursue any remedy or for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute
any such proceeding or pursued any remedies; and
(E) no direction which in the Trustee's reasonable
judgment is inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders
of a majority in aggregate principal amount of the Outstanding
Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 5.08 Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 3.08) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date or in the case of a Change of Control Offer or Surplus Proceeds Offer made
by the Company and required to be accepted as to such Security, on the Change of
Control Payment Date or Purchase Date, as the case may be) and to institute suit
for the enforcement of any such payment, and such rights shall not be impaired
or affected without the consent of such Holder.
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Section 5.09 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
Section 5.10 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 3.07, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 5.11 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 5.12 Control by Holders.
The Holders of a majority in aggregate principal amount of the
Outstanding Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee, provided that
(A) the Trustee may refuse to follow any direction which
1. conflicts with any rule of law or with this Indenture, or
2. the Trustee, in its reasonable judgment, determines that it may
be unduly prejudicial to the rights of other Holders of Securities, or may
involve the Trustee in personal liability, or does not have adequate
indemnification against any loss or expense resulting from the compliance
therewith, and
(B) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction.
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Section 5.13 Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities may on behalf of the Holders of all the
Securities, by written notice to the Trustee, waive any past default hereunder
and its consequences, except a default
(A) in the payment of the principal of (or premium, if
any) or interest on any Security (including any Security which
is required to have been purchased pursuant to a Change of
Control Offer or Surplus Proceeds Offer which has been made by
the Company), or
(B) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the
consent of the Holder of each Outstanding Security affected.
Upon any such waiver, such default shall be cured and shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other default or impair any right arising therefrom.
Section 5.14 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided, that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company and provided further
that, subject to a court's discretion, this Section shall not apply to a suit by
the Trustee, and the Company shall not seek such undertaking from any court
against the Trustee.
Section 5.15 Waiver of Stay or Extension Laws.
The Company and each of the Guarantors (to the extent that it may
lawfully do so) covenant that they will not at any time insist upon, or plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay
or extension law wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture and the Company
and each of the Guarantors (to the extent that they may lawfully do so) hereby
expressly waive all benefit or advantage of any such law, and covenant that they
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
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ARTICLE SIX
THE TRUSTEE
Section 6.01 Certain Duties and Responsibilities.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
its own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations
shall be read into this Indenture against the Trustee, and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.12 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section.
Section 6.02 Notice of Defaults.
Except as otherwise provided in Section 5.01, the Trustee shall give
the Holders notice of any default hereunder of which it has knowledge as and to
the extent provided by the Trust Indenture Act; provided, however, that in the
case of any default specified in Section
45
5.01(E), no such notice to Holders shall be given until at least 30 days after
the occurrence of such default (without regard to any Notice of Default). For
the purpose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default.
Except in the case of an Event of Default in payment of principal of
(premium, if any) or interest on any Security, the Trustee may withhold notice
if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders.
Section 6.03 Certain Rights of Trustee.
Subject to the provisions of Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties, without any independent investigation of any fact or matter therein;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel, shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee reasonable security or indemnity satisfactory
to the Trustee against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company, personally or by agent
or attorney upon reasonable advance notice to the Company;
46
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(h) the Trustee shall not be liable for any action it takes or
omits in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
Section 6.04 Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the use
or application by the Company of Securities or the proceeds thereof.
Section 6.05 May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
Sections 6.08 and 6.13, may otherwise deal with the Company and any other
obligor upon the Securities with the same rights it would have if it were not
Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other
agent.
Section 6.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
Section 6.07 Compensation and Reimbursement.
The Company agrees
(A) to pay to the Trustee from time to time such
reasonable compensation for all services rendered by it
hereunder as may be agreed in writing from time to time (which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(B) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the compensation,
expenses and disbursements of its agents, accountants, experts
and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
47
(C) to indemnify the Trustee for, and to hold it
harmless against, any loss, liability or expense (including,
without limitation, reasonable attorneys' fees and expenses)
incurred without negligence or bad faith on its part, arising
out of or in connection with the acceptance or administration
of this trust, including the costs and expenses of defending
itself against any claim or liability (not arising from
negligence or bad faith) in connection with the exercise or
performance of any of its powers or duties under this
Indenture or the Intercreditor Agreement.
The Trustee shall notify the Company promptly upon acquiring
knowledge of any claim for which it is entitled to be indemnified hereunder.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder unless the Company is prejudiced thereby. If the
Company elects to defend the claim, the Company shall be entitled to control the
defense of such claim and the Trustee shall cooperate in such defense. The
Trustee may have separate counsel, and the Company shall pay the reasonable fees
and expenses of such counsel until such time as the Company assumes the defense
of such claim, and thereafter, to the extent that in the Trustee's reasonable
judgment its interests conflict with or differ from those of the Company under
such claim. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 6.07 shall survive
the resignation or removal of the Trustee and/or satisfaction and discharge of
this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on the Securities. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 5.01(H) or (I) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
applicable bankruptcy law.
The Trustee shall be entitled to all rights set forth in this
Section 6.07 (and all payments thereunder) whether acting in its capacity as
Trustee, Security Registrar and/or Paying Agent.
In no event shall the Trustee or the Collateral Agent be liable for
any indirect, special, punitive or consequential loss or damage of any kind
whatsoever, including, but not limited to, lost profits.
In no event shall the Trustee or the Collateral Agent be liable for
any failure or delay in the performance of its obligations hereunder because of
circumstances beyond its control, including, but not limited to, acts of God,
flood, war (whether declared or undeclared), terrorism, fire, riot, embargo,
government action, including any laws, ordinances, regulations, governmental
action or the like which delay, restrict or prohibit the providing of the
services contemplated by this Agreement.
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Section 6.08 Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest within 90 days, apply to the Commission for permission to continue, or
resign, to the extent and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this Indenture.
Section 6.09 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000 and its Corporate
Trust Office in the Borough of Manhattan, The City of New York, New York. If
such Person publishes reports of condition at least annually, pursuant to law or
to the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such Person shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
Section 6.10 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee under
Section 6.11.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee, the Company or the
Holders of at least 10% in principal amount of the Outstanding Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Action of the
Holders of a majority in principal amount of the Outstanding Securities,
delivered to the Trustee and to the Company.
(d) If at anytime:
(A) the Trustee shall fail to comply with Section 6.08
after written request therefor by the Company or by any Holder
who has been a bona fide Holder of a Security for at least six
months, or
(B) the Trustee shall cease to be eligible under and
shall fail to resign after written request therefor by the
Company or by any such Holder, or
(C) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its
49
property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Company by Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by Board Resolution, shall promptly appoint a successor
Trustee. If, within one year after such resignation, removal or incapability, or
the occurrence of such vacancy, a successor Trustee shall be appointed by Action
of the Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 1.06. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
Section 6.11 Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee a written
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on request of
the Company or the successor Trustee, such retiring Trustee shall, upon payment
of all sums owing to the retiring Trustee hereunder and subject to the Lien
provided for in Section 6.07 hereof, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder. Upon
request of any such successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts. Notwithstanding the
replacement of the Trustee pursuant to this Section 6.11, the Company's
obligations under Section 6.07 hereof shall continue for the benefit of the
retiring Trustee.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 6.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or
50
substantially all the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee, or any corporation into which all or substantially all
of its corporate trust business is transferred, may adopt such authentication
and deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
Section 6.13 Preferential Collection of Claims Against the Company.
If and when the Trustee shall be or becomes a creditor of the
Company (or any other obligor upon the Securities), the Trustee shall be subject
to the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
Section 6.14 Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents which
shall be authorized to act on behalf of the Trustee to authenticate Securities
issued upon original issue and upon exchange, registration of transfer, partial
conversion or partial redemption or pursuant to Section 3.07, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be reasonably acceptable to the Company and
shall at all times be a corporation organized and doing business under the laws
of the United States of America, any State thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
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An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be reasonably acceptable to the Company and shall mail written
notice of such appointment by first-class mail, postage prepaid, to all Holders
as their names and addresses appear in the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments from the Company,
subject to the provisions of Section 6.07.
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND THE COMPANY
Section 7.01 Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
Section 7.02 Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 7.01 and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.01 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders
with respect to their rights under this Indenture or under the Securities and
the corresponding rights and duties of the Trustee shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to the names and addresses of Holders made
pursuant to the Trust Indenture Act.
Section 7.03 Reports by Trustee.
(a) The Trustee shall mail or transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be required,
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto.
(b) A copy of each such report shall, at the time of such
mailing or transmission to Holders, be filed by the Trustee with each stock
exchange upon which the Securities are listed, if any, with the Commission and
with the Company. The Company will notify the Trustee when the Securities are
listed on any stock exchange.
53
Section 7.04 Reports by the Company.
The Company shall file with the Trustee and the Commission, and mail
or transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or l5(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.01 Company May Consolidate, Etc. Only on Certain Terms.
The Company may not, in a single transaction or a series of related
transactions, (i) amalgamate, consolidate or merge with or into any other Person
or permit any other Person to amalgamate, consolidate or merge with or into the
Company or (ii) directly or indirectly, transfer, sell, lease or otherwise
dispose of All or Substantially All of its assets, unless:
(A) in a transaction in which the Company amalgamates or
does not survive or in which the Company transfers, sells,
leases or otherwise disposes of All or Substantially All of
its assets, the successor entity to the Company (for purposes
of this Article Eight, a "Successor Entity") shall be a
corporation, shall be organized and validly existing under the
laws of the United States of America, any State thereof, the
District of Columbia, or Canada or any Province or Territory
thereof and shall expressly assume by an indenture
supplemental hereto executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment
of the principal of (and premium, if any) and interest on all
the Securities and the performance of every covenant of this
Indenture on the part of the Company to be performed or
observed;
(B) immediately before and after giving effect to such
transaction on a pro forma basis (including treating any Debt
Incurred by the Company or a Subsidiary as a result of such
transaction as having been Incurred by the Company or such
Subsidiary at the time of such transaction), no Event of
Default, and no event which, after notice or lapse of time, or
both, would constitute an Event of Default, shall have
occurred and be continuing;
(C) except in the case of any such amalgamation,
consolidation or merger of the Company with or into, or any
such transfer, sale, lease or other disposition of assets to,
a Wholly Owned Subsidiary, (A) immediately after giving effect
to such transaction on a pro forma basis (including treating
any Debt Incurred by the Company or a Subsidiary as a result
of such transaction as having been Incurred by the
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Company or such Subsidiary at the time of such transaction),
the Consolidated Net Worth of the Company (or other Successor
Entity to the Company) is equal to or greater than the
Consolidated Net Worth of the Company immediately prior to
such transaction and (B) in the event such transaction occurs
after the Company has caused the rating of the Securities as
required pursuant to Section 10.23, prior to consummating such
transaction, the Company shall have received confirmation from
its Rating Agency that the rating of the Securities will not
be adversely affected by the consummation of such transaction;
(D) if, as a result of any such transaction, property
and assets of the Company would become subject to a Lien which
would not be permitted by Section 10.11, the Company or, if
applicable, the Successor Entity to the Company, as the case
may be, shall take such steps as shall be necessary
effectively to secure the Securities equally and ratably with
(or prior to, as the case may be) Debt secured by such Lien
and, in the event such transaction occurs after the Company
has caused the rating of the Securities as required pursuant
to Section 10.23, the rating of the Securities shall not be
adversely affected by such transaction; and
(E) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that such amalgamation, consolidation, merger, conveyance,
transfer, sale, lease or disposition and, if a supplemental
indenture is required in connection with such transaction,
such supplemental indenture, complies with this Article and
that all conditions precedent herein provided for relating to
such transaction have been complied with, and, with respect to
such Officers' Certificate, setting forth the manner of
determination of the Consolidated Net Worth and the ability to
Incur Debt in accordance with Clause (3) of this Section 8.01,
of the Company or, if applicable, of the relevant Successor
Entity as required pursuant to the foregoing.
Section 8.02 Successor Substituted.
Upon any amalgamation or consolidation of the Company with, or
merger of the Company into, any other Person or any transfer, conveyance, sale,
lease or other disposition of All or Substantially All of the properties and
assets of the Company as an entirety in accordance with Section 8.01, the
Successor Entity shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture with the same effect
as if such successor Person had been named herein as the Company herein, and
thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 9.01 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by
a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(A) to evidence the succession of another Person to the
Company or a Guarantor and the assumption by any such
successor of the covenants of the Company or Guarantor herein
and in the Securities; or
(B) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power
herein conferred upon the Company; or
(C) to secure the Securities pursuant to the
requirements of Section 10.11 or otherwise; or
(D) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other
provision herein, or to make any other provisions with respect
to matters or questions arising under this Indenture which
shall not be inconsistent with the provisions of this
Indenture, provided that such action pursuant to this Clause
(D) could not reasonably be expected to adversely affect the
interests of the Holders in any material respect; or
(E) to evidence and provide for the acceptance and
appointment hereunder of a successor Trustee with respect to
the Securities; or
(F) to allow any Guarantor to execute a supplemental
indenture and/or a Subsidiary Guarantee with respect to the
Securities.
Section 9.02 Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Action of said Holders
delivered to the Company and the Trustee, the Company, when authorized by Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,
56
(A) change the Stated Maturity of the principal of, or
any installment of interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or
any premium payable thereon, or change the place of payment
where, or the coin or currency in which, any Security or any
premium or the interest thereon is payable, or impair the
right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the
case of redemption, on or after the Redemption Date or, in the
case of a Change of Control Offer or Surplus Proceeds Offer
which has been made, on or after the applicable Change of
Control Payment Date or Purchase Date), or
(B) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is
required for any such supplemental indenture, or the consent
of whose Holders is required for any waiver (of compliance
with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this
Indenture, or
(C) modify any of the provisions of this Section,
Section 5.13 or Section 10.18, except to increase any such
percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Security affected thereby, or
(D) following the mailing of a Change of Control Offer
or Surplus Proceeds Offer pursuant to Section 10.14 or Section
11.09, modify the provisions of this Indenture with respect to
such Change of Control Offer or Surplus Proceeds Offer in a
manner adverse to such Holder, or
(E) release any Guarantor from any of its obligations
under its Subsidiary Guarantee or this Indenture, except in
accordance with the terms of this Indenture, or
(F) except pursuant to Sections 12.05 and 12.12,
release, in a single transaction or a series of transactions,
All or Substantially All of the Collateral securing the
Securities.
It shall not be necessary for any Action of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Action shall approve the substance thereof.
Section 9.03 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 6.01) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental
57
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Section 9.04 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 9.05 Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
ARTICLE TEN
COVENANTS
Section 10.01 Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities in accordance with the terms of
the Securities and this Indenture.
Section 10.02 Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City of
New York, New York an office or agency (which may be an officer or agent of the
Trustee or an affiliate of the Trustee) where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the Borough of Manhattan, The City of New
York, New York) where the Securities may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in
58
any manner relieve the Company of its obligation to maintain an office or agency
in the Borough of Manhattan, The City of New York, New York for such purposes.
The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
The Company hereby designates The Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
3.06.
Section 10.03 Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of (and premium, if any) or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Persons entitled thereto a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of (and premium, if any) or interest on
any Securities, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
as provided by the Trust Indenture Act, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will (i) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent if this Indenture were qualified under the
Trust Indenture Act and (ii) in the event and during the continuance of any
default by the Company (or any other obligor upon the Securities) in the making
of any payment in respect of the Securities, upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent as such.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of (and premium,
if any) or interest on any Security and remaining unclaimed for two years after
such principal (and premium, if any) or interest has become due and payable
shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof,
59
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in The City of New
York, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
Section 10.04 Existence.
Subject to Article Eight, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its and its
Subsidiaries' existence, rights (charter and statutory) and franchises;
provided, however, that the Company shall not be required to preserve any such
right or franchise or the corporate, partnership or other existence of any of
its Subsidiaries if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
if the loss thereof could not reasonably be expected to materially adversely
affect the Holders.
Section 10.05 Maintenance of Properties.
The Company will cause all properties used or useful in the conduct
of its business or the business of any Material Subsidiary to be maintained and
kept in good condition, repair and working order (reasonable wear and tear
excepted) and supplied with all necessary equipment and will cause to be made
all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section shall
prevent the Company or any of its Material Subsidiaries from discontinuing the
operation or maintenance of any of such properties if such discontinuance is, as
determined by the Company or Material Subsidiary in good faith, desirable in the
conduct of its business or the business of any Material Subsidiary and not
disadvantageous in any material respect to the Holders.
Section 10.06 Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all material Taxes, assessments and
governmental charges levied or imposed upon the Company or any of its
Subsidiaries or upon the income, profits or property of the Company or any of
its Subsidiaries, and (2) all material lawful claims for labor, materials and
supplies which, if unpaid, might by law become a Lien upon the property of the
Company or any of its Subsidiaries; provided, however, that the Company shall
not be required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate negotiations or proceedings, so
long as such negotiations or proceedings operate to suspend enforcement or
collection thereof.
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Section 10.07 Maintenance of Insurance.
The Company shall, and shall cause its Subsidiaries to, keep at all
times all of their properties which are of an insurable nature insured by any
financially sound and reputable insurance company against liabilities,
casualties, risks and contingencies (including fire, business interruptions and
other risks insured by extended coverage) to the extent that property of similar
character is usually so insured by corporations similarly situated and owning
like properties in accordance with good business practice. On or before 30 days
after the Issuance Date, the Company will obtain endorsements to such policies
naming the Collateral Agent as a loss payee, and containing provisions that such
policies shall not be cancelled without 30 days' prior written notice having
been given by the insurance company to the Collateral Agent.
Section 10.08 Limitation on Debt.
The Company shall not, and shall not permit any of its Subsidiaries
to, Incur any Debt except the following:
(i) Debt represented by the Securities (including the
Subsidiary Guarantees);
(ii) Debt Incurred under the Credit Facility in an aggregate
principal amount not to exceed at any one time outstanding Cdn.$100
million, less the amount of any working capital facility established
by Pulpco;
(iii) Purchase Money Debt or Capital Lease Obligations,
provided that (i) the aggregate amount of such Debt shall not exceed
at any time Cdn.$50,000,000 or (ii) prior to Incurring such Debt,
the Company shall have caused the rating of the Securities as
required pursuant to Section 10.23 and shall have received
confirmation from its Rating Agency that the rating of the
Securities will not be adversely affected by such Incurrence;
(iv) Debt consisting of Guarantees by the Company or any of
its Subsidiaries of Debt of the Company or any of its Subsidiaries
otherwise permitted to be Incurred under this Indenture;
(v) Debt owed by the Company to any of its Subsidiaries or
Debt owed by a Subsidiary to the Company or a Subsidiary; provided,
that (a) any such Debt owing by the Company to a Subsidiary (whether
payable on demand or otherwise) shall be expressly subordinated to
the prior indefeasible payment in full of all obligations under the
Securities and this Indenture and (b) upon either (1) the transfer
or other disposition by such Subsidiary or the Company of any Debt
so permitted to a Person other than the Company or another
Subsidiary or (2) in the case of Debt owed to a Subsidiary, such
Subsidiary ceasing to be a Subsidiary, the provisions of this Clause
(v) shall no longer be applicable to such Debt and such Debt shall
be deemed to have been Incurred at the time of such transfer or
other disposition;
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(vi) Debt Incurred by a Person prior to the time (A) such
Person became a Subsidiary, (B) such Person amalgamated, merged or
consolidated with or into a Subsidiary or (C) another Subsidiary
amalgamated, merged or consolidated with or into such Person (in a
transaction in which such Person became a Subsidiary) which Debt was
not Incurred in anticipation of such transaction and was outstanding
prior to such transaction, provided that prior to Incurring such
Debt, the Company shall have caused the rating of the Securities as
required pursuant to Section 10.23 and shall have received
confirmation from its Rating Agency that the rating of the
Securities will not be adversely affected by such Incurrence;
(vii) Debt consisting of Permitted Interest Rate, Currency or
Commodity Price Agreements;
(viii) Additional Debt of the Company or any of its
Subsidiaries in an aggregate principal amount not to exceed at any
time outstanding $50,000,000; provided, that any such Debt shall be
expressly subordinated to the prior indefeasible payment in full of
all obligations under the Securities and this Indenture on terms and
conditions substantially in the form set forth in Exhibit B; and
(ix) Debt which is exchanged for or the proceeds of which are
used to refinance or refund, or any extension or renewal of, the
Securities or Debt outstanding on the date of this Indenture or
permitted to be Incurred pursuant to this Section 10.08 (a
"refinancing") in an aggregate principal amount not to exceed the
principal amount of the Debt so refinanced plus the amount of any
premium required to be paid in connection with such refinancing
pursuant to the terms of the Debt so refinanced or the amount of any
premium reasonably determined by the Company as necessary to
accomplish such refinancing by means of a tender offer or privately
negotiated purchase, plus the fees and expenses of the Company or
the Subsidiary of the Company, as the case may be, incurred in
connection with such refinancing; provided, however, that Debt the
proceeds of which are used to refinance the Securities or Debt of
the Company which is pari passu with or subordinate in right of
payment to the Securities shall only be permitted if (A) (x) in the
case of any refinancing of Securities or Debt of the Company which
is pari passu to the Securities, the refinancing Debt is Incurred by
the Company and made pari passu to the Securities or subordinated to
the Securities and (y) in the case of any refinancing of Debt of the
Company which is subordinated to the Securities, the refinancing
Debt is Incurred by the Company and constitutes Debt subordinated to
the Securities at least to the same extent as the Debt being
refinanced; and (B) in the case of any refinancing of Preferred
Stock of a Subsidiary, such Preferred Stock may be refinanced only
with Preferred Stock of such Subsidiary or the Company; provided
that the restrictions contained in the agreements governing such
Debt are not on the whole materially more restrictive than those
contained in the agreements governing the Debt being refinanced.
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For purposes of determining compliance with this Section 10.08, in
the event that an item of Debt outstanding or to be Incurred meets the criteria
of more than one of the types of Debt described in the aforementioned Clauses,
the Company, in its sole discretion, may classify such item of Debt and only be
required to include the amount and type of such Debt in one of such Clauses.
Section 10.09 Limitation on Restricted Payments.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, declare or make, or agree to pay or make, any
Restricted Payment (or incur any obligation to do so), except that any
Subsidiary may declare and pay dividends or otherwise make distributions in cash
to the Company or a Guarantor.
Section 10.10 Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any of its
Subsidiaries to (a) pay dividends or make any other distributions to the Company
or any of its Subsidiaries on its Capital Stock or with respect to any other
interest or participation in, or measured by, its profits, (b) pay any Debt owed
to the Company or any of its Subsidiaries, (c) make loans or advances to the
Company or any of its Subsidiaries, (d) transfer any of its properties or assets
to the Company or any of its Subsidiaries, (e) grant Liens on its assets or
properties in favor of the Holders of Securities, or (f) guarantee the
Securities or any renewals or refinancings thereof, except for such encumbrances
or restrictions existing under or by reason of (i) the Credit Facility, (ii)
this Indenture, the Securities and the Collateral Documents, (iii) applicable
law, (iv) any instrument governing Debt or Capital Stock of a Person acquired by
the Company or any of its Subsidiaries as in effect at the time of such
acquisition (except to the extent such Debt was Incurred in connection with such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, (v) customary non-assignment
provisions in leases entered into in the ordinary course of business and
consistent with past practices, (vi) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clauses (d) and (e) above on the property so acquired, (vii)
any agreement for the sale of a Subsidiary of the Company that restricts
distributions by that Subsidiary pending its sale, (viii) any agreement for the
sale of assets that restricts transfers of such assets pending their sale, (ix)
secured Debt otherwise permitted to be Incurred pursuant to the provisions of
Section 10.11 hereof that limits the right of the debtor to dispose of the
assets securing such Debt, (x) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements and other similar
agreements entered into in the ordinary course of business, (xi) restrictions on
cash or other deposits or net worth imposed by customers under contracts entered
into in the ordinary course of business, (xii) Debt permitted by clause (viii)
of Section 10.08, (xiii) Debt permitted by clause (ix) of Section 10.08.
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Section 10.11 Limitation on Liens Securing Certain Debt.
The Company shall not, and shall not permit any of its Subsidiaries
to, Incur or suffer to exist any Lien on or with respect to any property or
assets now owned or hereafter acquired to secure any Debt of the Company or any
Subsidiary other than Permitted Liens.
Section 10.12 Limitation on Ownership of Capital Stock of Subsidiaries.
The Company shall not, and shall not permit any of its Subsidiaries
to issue, transfer, convey or otherwise dispose of any shares of Capital Stock
of a Subsidiary or securities convertible or exchangeable into, or options,
warrants, rights or any other interest with respect to, Capital Stock of a
Subsidiary unless such transaction consists of a sale of all of the Capital
Stock of such Subsidiary owned by the Company and its Subsidiaries.
Section 10.13 Transactions with Affiliates.
The Company shall not, and shall not permit any of its Subsidiaries
to, enter into any transaction (or series of related transactions) with an
Affiliate of the Company (other than the Company or a Material Subsidiary of the
Company), including any Investment, either directly or indirectly, unless such
transaction is on terms no less favorable in all material respects to the
Company or such Subsidiary than those that could be obtained in a comparable
arm's length transaction with an entity that is not an Affiliate. For any such
transaction (or series of related transactions) that involves aggregate
consideration in excess of Cdn.$10 million, either (i) a majority of the
disinterested members of the Board of Directors shall determine that the
transaction satisfies the above criteria and shall evidence such a determination
by a Board Resolution or (ii) the Company shall obtain an opinion from a
nationally recognized expert in the United States or Canada with experience in
appraising the terms and conditions of the type of transaction (or series of
related transactions) for which the opinion is required stating that such
transaction (or series of related transactions) is on terms no less favorable in
all material respects to the Company or such Subsidiary than those that could be
obtained in a comparable arm's-length transaction with an entity that is not an
Affiliate of the Company, which opinion shall be filed with the Trustee. The
foregoing requirements shall not apply to (i) any employment or management
services agreement or benefit plan entered into by the Company or any Subsidiary
in the ordinary course of business, including insurance, indemnification and
reimbursement plans and arrangements for directors, officers and employees,
which have been approved by the Board of Directors or the Compensation Committee
of the Board of Directors of the Company, (ii) any transaction pursuant to
agreements or arrangements in existence on the date of this Indenture, as such
agreements or arrangements may be amended or restated, renewed, extended,
refinanced, refunded or replaced from time to time, provided that such amendment
or restatement, renewal, extension, refinancing, refunding or replacement shall
be on terms and conditions that are not materially less favorable to the Company
or any of its Subsidiaries, which, if determined by a majority of the
disinterested directors of the Board of Directors, shall be conclusive, (iii)
any Restricted Payment that is not prohibited by Section 10.09, (iv) issuances
of Capital Stock by the Company, or issuances of Capital Stock by any Subsidiary
to the Company or another Subsidiary, and (v) directors' fees and other
customary director benefits paid or provided in the ordinary course of business.
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Section 10.14 Offer to Purchase Upon Change of Control.
Upon the occurrence of a Change of Control, the Company shall offer
to purchase all or any part (equal to $1,000 or an integral multiple thereof) of
each Holder's Securities pursuant to the offer described below (the "Change of
Control Offer") at an offer price in cash equal to the then applicable
Redemption Price plus accrued and unpaid interest, if any, to the date of
purchase (the "Change of Control Payment"). Within 10 days following any Change
of Control, the Company shall mail a notice to each Holder stating: (1) that the
Change of Control Offer is being made pursuant to the covenant entitled "Offer
to Purchase Upon Change of Control" and that all Securities tendered will be
accepted for payment; (2) the purchase price and the purchase date, which will
be no earlier than 30 days nor later than 40 days from the date such notice is
mailed (the "Change of Control Payment Date"); (3) that any Securities not
tendered will continue to accrue interest; (4) that, unless the Company defaults
in the payment of the Change of Control Payment, all Securities accepted for
payment pursuant to the Change of Control Offer will cease to accrue interest
after the Change of Control Payment Date; (5) that Holders electing to have any
Securities purchased pursuant to a Change of Control Offer will be required to
surrender the Securities with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Securities completed to the Paying Agent at the
address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date; (6) that Holders will
be entitled to withdraw their election if the Paying Agent receives, not later
than the close of business on the second Business Day preceding the Change of
Control Payment Date, a facsimile transmission or letter setting forth the name
of the Holder, the principal amount of Securities delivered for purchase, and a
statement that such Holder is withdrawing his election to have such Securities
purchased; and (7) that Holders whose Securities are being purchased only in
part will be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered, which unpurchased portion must be equal
to $1,000 in principal amount or an integral multiple thereof. The Company shall
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the purchase of the Securities
resulting from a Change of Control.
On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment Securities or portions thereof tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Securities or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Securities so accepted together with an Officers' Certificate
stating the Securities or portions thereof tendered to the Company. The Paying
Agent shall promptly mail to each Holder of Securities so accepted the Change of
Control Payment for such Securities, and the Trustee shall promptly authenticate
and mail to each Holder new Securities equal in principal amount to any
unpurchased portion of the Securities surrendered, if any; provided, that all
such new Securities shall be in a principal amount of $1,000 or an integral
multiple thereof. The Company shall publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
Except as described in this Section 10.14 with respect to a Change
of Control, no provision of this Indenture permits the Holders of the Securities
to require that the Company
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purchase or redeem the Securities in the event of a takeover, recapitalization
or similar restructuring.
Section 10.15 Provision of Financial Information.
(a) Whether or not required by the rules and regulations of
the Commission, the Company shall file with the Commission (unless the
Commission will not accept such filings) and the Trustee and distribute to the
Holders of the Securities copies of all quarterly and annual reports and other
documents that would be required to be filed with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act, or any successor provision thereto,
in each case, within the time periods specified in the Commission's rules and
regulations; provided, that the Company shall include in respect of each annual
report, annual financial statements including a reconciliation thereof to U.S.
generally accepted accounting principles (as prescribed by item 17 of Form 20-F
in effect on the date hereof).
(b) For so long as any Securities remain Outstanding and if
the Company is not subject to Sections 13(a) and 15(d) of the Exchange Act, the
Company and the Guarantors shall furnish to the Holders and to securities
analysts and prospective investors, upon their request, the information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Section 10.16 Additional Amounts for Canadian Taxes.
All payments made by the Company under or with respect to the
Securities will be made free and clear of, and without withholding or 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 (hereinafter "Taxes"), unless the Company
is required to withhold or deduct Taxes by law or by the interpretation or
administration thereof. If the Company is so required to withhold or deduct any
amount for or on account of Taxes from any payment made under or with respect to
the Securities, the Company will pay such additional amounts ("Additional
Amounts") as may be necessary so that the net amount received by each Holder
(including Additional Amounts) after such withholding or deduction 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 a payment made to a Holder (an "Excluded Holder") (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 acquisition, holding or disposition of
Securities or the receipt of payments thereunder. The Company will also (i) make
such withholding or deduction as may be required by law or by the interpretation
or administration thereof and (ii) remit the full amount deducted or withheld to
the relevant authority in accordance with applicable law. The Company will
furnish to the applicable Holders, within 30 days after the date the payment of
any Taxes is due pursuant to applicable law, certified copies of tax receipts
evidencing such payment by the Company. The Company will indemnify and hold
harmless each Holder (other than an Excluded Holder) of Securities for the
amount of (i) any Taxes so levied or imposed which have not been withheld or
deducted and
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remitted by the Company and which are paid or payable by such Holder as a result
of amounts paid or credited under or with respect to the Securities, (ii) any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto or from the failure to make such withholding, deduction or
remittance on a timely basis, and (iii) any Taxes imposed with respect to any
amount paid or payable under (i) or (ii).
At least 30 days prior to each date on which any payment under or
with respect to the Securities 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' Certificate 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 (other than an Excluded Holder) on the payment
date. Whenever in this Indenture or the Securities there is mentioned, in any
context, the payment of principal (and premium, if any), Redemption Price,
Purchase Price, interest or any other amount payable under or with respect to
any Security, such mention shall be deemed to include mention of the payment of
Additional Amounts provided for in this Section to the extent that, in such
context, Additional Amounts are, were or would be payable in respect thereof
pursuant to the provisions of this Section and express mention of the payment of
Additional Amounts (if applicable) in any provision of this Indenture or the
Securities shall not be construed as excluding Additional Amounts in those
provisions hereof or thereof where such express mention is not made (if
applicable).
The obligations of the Company under this Section 10.16 shall
survive the termination of this Indenture and the payment of all amounts under
or with respect to the Securities.
Section 10.17 Statement by Officers as to Default; Compliance Certificates.
(a) The Company and each Guarantor (to the extent that such
Guarantor is so required under the Trust Indenture Act) shall deliver to the
Trustee, within 120 days after the end of each fiscal year, an Officers'
Certificate stating that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and the Collateral Documents and is not in default in the performance
or observance of any of the terms, provisions and conditions of this Indenture
(or, if an Event of Default shall have occurred, describing all such Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Securities
is prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) The Company shall, so long as any of the Securities are
Outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Event of
67
Default, an Officers' Certificate specifying such Event of Default and what
action the Company is taking or proposes to take with respect thereto.
Section 10.18 Stay, Extension and Usury Laws.
The Company and each of the Guarantors covenants (to the extent that
it may lawfully do so) that it shall not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company and each of the Guarantors (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee or to any one or more of
the Holders, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
Section 10.19 Indemnification of Judgment Currency.
The Company shall indemnify the Trustee and any Holder against any
loss incurred by the Trustee or such Holder, as the case may be, as a result of
any judgment or order being given or made for any amount due under this
Indenture or any Security and being expressed and paid in a currency (the
"Judgment Currency") other than Dollars, and as a result of any variation
between (i) the rate of exchange at which the Dollar amount is converted into
the Judgment Currency for the purpose of such judgment or order and (ii) the
spot rate of exchange in The City of New York at which the Trustee or such
Holder, as the case may be, on the date of payment of such judgment or order is
able to purchase Dollars with the amount of the Judgment Currency actually
received by the Trustee or such Holder. The foregoing indemnity shall constitute
a separate and independent obligation of the Company and shall continue in full
force and effect notwithstanding any such judgment or order as aforesaid. The
term "spot rate of exchange" shall include any premiums and costs of exchange
payable in connection with the purchase of, or conversion into, United States
dollars.
Section 10.20 Additional Subsidiary Guarantees.
If the Company or any of its Material Subsidiaries shall organize,
acquire or otherwise invest in any new Material Subsidiary subsequent to the
date of this Indenture, or if any Subsidiary shall become a Material Subsidiary,
then, within ten (10) days thereof, such transferee or acquired or other
Subsidiary shall become a Guarantor by executing a Supplemental Indenture in the
form attached hereto as Exhibit A and deliver an Opinion of Counsel to the
Trustee to the effect that such Supplemental Indenture has been duly authorized,
executed and delivered by such Subsidiary and constitutes a valid and binding
obligation of such Subsidiary, enforceable against such Subsidiary in accordance
with its terms (subject to customary exceptions). If the aggregate book value of
all assets beneficially owned by Subsidiaries that are not Material Subsidiaries
exceeds Cdn$2,500,000, then, within ten (10) days thereof, one or more of such
Subsidiaries sufficient to cause such aggregate book value to be less than
Cdn$2,500,000 shall become a Guarantor by executing a Supplemental Indenture in
the form attached hereto as Exhibit A and deliver an Opinion of Counsel to the
Trustee to the effect that such Supplemental Indenture has been duly authorized,
executed and delivered by such
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Subsidiary and constitutes a valid and binding obligation of such Subsidiary,
enforceable against such Subsidiary in accordance with its terms (subject to
customary exceptions).
Section 10.21 Limitation on Investments.
The Company shall not, and shall not permit any of its Subsidiaries
to, make any Investment other than (i) Permitted Investments, or (ii)
Investments made as Restricted Payments in compliance with Section 10.09.
Section 10.22 Limitation on Sale and Leaseback Transactions.
The Company shall not, and shall not permit any of its Subsidiaries
to, enter into any Sale and Leaseback Transaction.
Section 10.23 Rating.
On or before December 31, 2005, the Company, at its sole expense,
shall have caused the rating of the Securities by a Rating Agency.
Section 10.24 Asset Sales, Collateral Loss Events and Certain Other Events.
(a) Asset Sales. The Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly complete any Asset Sale
unless:
(i) the Company (or the Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal
to the fair market value of the Collateral that is the subject of
such Asset Sale;
(ii) at least 85% of the consideration therefor received by
the Company or such Subsidiary is in the form of cash or Cash
Equivalents, provided that the amount of (A) any liabilities of the
Company or any such Subsidiary relating to the purchase or lease of
personal property, which liabilities are secured by Permitted Liens
in favor of third parties which have priority over the Securities,
and which liabilities are assumed by the transferee of any such
assets and (B) any notes or other obligations received by the
Company or any such Subsidiary from such transferee that are
immediately converted by the Company or such Subsidiary into cash or
Cash Equivalents (to the extent of such cash or Cash Equivalents
received), shall be deemed to be cash or Cash Equivalents for
purposes of this clause (ii);
(iii) (A) the Net Proceeds received by the Company or such
Subsidiary are free and clear of all Liens other than Permitted
Liens, and (B) the cash and Cash Equivalent portion of all Net
Proceeds from such Asset Sale, and in the case of any Asset Sale by
Pulpco, the cash and Cash Equivalent portion of all Net Proceeds
from such Asset Sale less any amounts then outstanding under the
Pulpco Note, are paid promptly to the Collateral Agent pursuant to
the Collateral Documents and deposited into a Cash Collateral
Account; and
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(iv) the Company takes such other actions, at its sole
expense, as shall be required to permit the Collateral Agent to
release the Collateral being disposed of from the Lien under the
Collateral Documents thereon.
(b) Collateral Loss Events. Upon the occurrence of a
Condemnation or casualty involving an actual or constructive total loss or a
loss of or damage to all or any portion of the Collateral (a "Collateral Loss
Event"), the Net Proceeds therefrom shall be paid promptly to the Collateral
Agent pursuant to the Collateral Documents and deposited into a Cash Collateral
Account.
(c) Other Events. In the event the Company receives proceeds
from the Softwood Duty Settlement, any payments pursuant to the Pulpco Note, or
completes any Capital Markets Transaction, the Net Proceeds thereof shall be
paid promptly to the Collateral Agent pursuant to the Collateral Documents and
deposited into a Cash Collateral Account.
(d) In the event that the Company intends to apply any portion
of the Net Proceeds from an Asset Sale or Collateral Loss Event to purchase or
otherwise invest in Replacement Collateral, within 20 days of such Asset Sale or
Collateral Loss Event, the Company shall deliver an Officers' Certificate
notifying the Trustee of its intention to purchase or invest in Replacement
Collateral and certifying that the assets to be purchased or invested in qualify
as Replacement Collateral hereunder no later than 12 months after the occurrence
of such Asset Sale or Collateral Loss Event and specifying the anticipated
amount of funding required to complete such purchase or investment.
(e) Except to the extent held for the purchase of or
investment in Replacement Collateral under clause (d) of this Section 10.24, in
no event shall the Company be required to maintain in the Cash Collateral
Accounts required by this Indenture amounts that collectively exceed such
amounts as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest on the Outstanding Securities to maturity or, if the Company has
irrevocably elected to redeem all of the Securities, to the date of redemption.
ARTICLE ELEVEN
REDEMPTION AND PURCHASE OF SECURITIES
Section 11.01 Optional Redemption.
The Company may redeem all or any portion of the Securities without
the consent of the Trustee or the Holders, at the following Redemption Prices
(expressed as percentages of principal amount), plus accrued and unpaid interest
on the Securities, to be paid to the Redemption Date, if redeemed during the
12-month period commencing on July 28 of the years set out below:
Year Redemption Price
- ---- ----------------
2005 107.50%
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2006 105.50%
2007 103.50%
2008 101.50%
thereafter 100.00%
Section 11.02 Applicability of Article.
Redemption of Securities, as permitted or required by any provision
of this Indenture, shall be made in accordance with such provision and this
Article.
Section 11.03 Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to
Section 11.01 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company of less than all the Securities, the
Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee in writing of such Redemption Date and of the principal amount of
Securities to be redeemed.
Section 11.04 Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected by the Trustee, from the Outstanding
Securities not previously called for redemption, by such method as the Trustee
shall determine to be fair and equitable and which may provide for the selection
for redemption of portions (equal to $1,000 or any integral multiple thereof) of
the principal amount of Securities of a denomination larger than $1,000.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
Section 11.05 Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed (with a copy to the Trustee,
delivered or mailed to the Corporate Trust Office) at such Holder's address
appearing in the Security Register.
All notices of redemption shall state:
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(A) the Redemption Date,
(B) the Redemption Price,
(C) if less than all the Outstanding Securities are to
be redeemed, the identification (and, in the case of partial
redemption, the principal amounts) of the particular
Securities to be redeemed,
(D) that on the Redemption Date the Redemption Price
will become due and payable upon each such Security to be
redeemed and that interest thereon will cease to accrue on and
after said date, and
(E) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the sole expense of the Company.
Section 11.06 Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 10.03) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
Section 11.07 Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that installments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such at the close of business on the relevant Record Dates according to their
terms and the provisions of Section 3.08.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate provided by the
Security.
Section 11.08 Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at an office or agency of the Company designated for that purpose
pursuant to Section 10.02 (with, if
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the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing), and
the Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Security or Securities, of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
Section 11.09 Offer to Purchase by Application of Surplus Proceeds.
In the event that the Surplus Proceeds held in the Cash Collateral
Account exceed 5% of the principal amount of the Securities Outstanding at such
time, the Company shall within 10 Business Days following the date on which
Surplus Proceeds arise make an offer to purchase (the "Surplus Proceeds Offer")
the maximum principal amount of Securities that may be purchased out of the
Surplus Proceeds (the "Offer Amount"), at an offer price in cash equal to the
then applicable Redemption Price (or, if the purchase is completed during the
one-year period following the Issuance Date, at an offer price equal to 107.5%
of the principal amount of the Securities) plus accrued and unpaid interest, if
any, to the date of purchase.
The Surplus Proceeds Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the Offer Amount or, if less than
the Offer Amount has been tendered, all Securities tendered in response to the
Surplus Proceeds Offer. Payment for any Securities so purchased shall be made in
the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on
or before the related Interest Payment Date, any accrued and unpaid interest
shall be paid to the Person in whose name Securities are registered at the close
of business on such record date, and no additional interest shall be payable to
Holders who tender Securities pursuant to the Surplus Proceeds Offer to the
extent such Securities are purchased on the Purchase Date.
Upon the commencement of a Surplus Proceeds Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders, with
a copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Securities pursuant to the Surplus
Proceeds Offer. The Surplus Proceeds Offer shall be made to all Holders. The
notice, which shall govern the terms of the Surplus Proceeds Offer, shall state:
(a) that the Surplus Proceeds Offer is being made pursuant to this
Section 11.09 and Section 10.24 hereof and the length of time the Surplus
Proceeds Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Securities not tendered or accepted for payment shall
continue to accrete or accrue interest;
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(d) that, unless the Company defaults in making such payment, any
Securities accepted for payment pursuant to the Surplus Proceeds Offer shall
cease to accrete or accrue interest after the Purchase Date;
(e) that Holders electing to have Securities purchased pursuant to a
Surplus Proceeds Offer may only elect to have all of such Securities purchased
and may not elect to have only a portion of such Securities purchased;
(f) that Holders electing to have Securities purchased pursuant to
any Surplus Proceeds Offer shall be required to surrender the Securities, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Securities completed, or transfer by book-entry transfer, to the Company or a
Paying Agent at the address specified in the notice at least three days before
the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company or the Paying Agent, as the case may be, receives, not later than the
expiration of the Offer Period, a facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Securities the Holder
delivered for purchase and a statement that such Holder is withdrawing his
election to have such Securities purchased;
(h) that, if the aggregate principal amount of Securities
surrendered by Holders exceeds the Offer Amount, the Company shall select the
Securities to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Securities in denominations of
$1,000, or integral multiples thereof, shall be purchased); and
(i) that Holders whose Securities were purchased only in part shall
be issued new Securities equal in principal amount to the unpurchased portion of
the Securities surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Securities or portions thereof tendered pursuant to the Surplus
Proceeds Offer, or if less than the Offer Amount has been tendered, all
Securities tendered, and shall deliver to the Trustee an Officers' Certificate
stating that such Securities or portions thereof were accepted for purchase by
the Company in accordance with the terms of this Section 11.09. The Company or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Securities tendered by such Holder
and accepted by the Company for purchase, and the Company, shall promptly issue
new Securities, and the Trustee, upon written request from the Company shall
authenticate and mail or deliver such new Securities to such Holder, in a
principal amount equal to any unpurchased portion of the Securities surrendered.
Any Securities not so accepted shall be promptly mailed or delivered by the
Company to the Holder thereof. The Company shall publicly announce the results
of the Surplus Proceeds Offer on the Purchase Date.
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Notwithstanding the foregoing, in no event shall the Company be
required to use Surplus Proceeds to purchase Securities representing more than
25% of the aggregate principal amount of Securities Outstanding on the Issuance
Date or such higher percentage as may be payable without giving rise to an
obligation to withhold or deduct any amount for or on account of Taxes. If the
aggregate Surplus Proceeds exceeds the amount of Securities that may be
purchased under the preceding sentence (such excess being the "Excess
Proceeds"), then such Excess Proceeds shall be paid to the Holders on July 28,
2009 in the same manner as principal on the Securities is paid and such Excess
Proceeds, upon payment to the Holders, shall reduce the principal amount of the
Securities by the amount of such Excess Proceeds.
Other than as specifically provided in this Section 11.09, any
purchase pursuant to this Section 11.09 shall be made in accordance with the
provisions of Sections 11.02 through 11.08 hereof.
Section 11.10 Purchase Of Securities.
The Company or any of its Subsidiaries shall have the right at any
time and from time to time when an Event of Default hereunder is not continuing
to purchase Securities in the open market (which shall include purchase from or
through an investment dealer, investment bank or firm holding membership in a
stock exchange or the National Association of Securities Dealers, Inc.) or by
tender or by private contract or otherwise, at any price.
ARTICLE TWELVE
GUARANTEES; COLLATERAL AND SECURITY
Section 12.01 Guarantee.
Subject to this Article Twelve, each of the Guarantors hereby
agrees, jointly and severally and unconditionally, to guarantee to each Holder
of Securities authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and enforceability of
this Indenture, the Securities or the obligations of the Company hereunder or
thereunder, that: (a) the principal of and interest on the Securities will be
promptly paid in full when due, whether at Stated Maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of and interest
on the Securities, if any, if lawful, and all other obligations of the Company
to the Holders or the Trustee hereunder or thereunder will be promptly paid in
full or performed, all in accordance with the terms hereof and thereof; and (b)
in case of any extension of time of payment or renewal of any Securities or any
of such other obligations, that same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
Stated Maturity, by acceleration or otherwise. Failing payment when due of any
amount so guaranteed or any performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay the same immediately.
Each Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.
The Guarantors hereby agree that their obligations hereunder shall
be unconditional, irrespective of the validity, regularity or enforceability of
the Securities or this Indenture, the absence of any action to enforce the same,
any waiver or consent by any Holder of
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the Securities with respect to any provisions hereof or thereof, the recovery of
any judgment against the Company, any action to enforce .the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that this
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Securities and this Indenture.
If any Holder or the Trustee is required by any court or otherwise
to return to the Company, the Guarantors or any custodian, trustee, liquidator
or other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Five
hereof for the purposes of this Guarantee, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article Five hereof, such obligations (whether
or not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Guarantee. The Guarantors shall have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders or the Trustee under the Guarantee.
Section 12.02 Limitation of Guarantor Liability.
Each Guarantor, and by its acceptance of Securities, each Holder,
hereby confirms that it is the intention of all such parties that the Guarantee
of such Guarantor and the pledge of its assets not constitute a fraudulent
transfer or conveyance for purposes of bankruptcy law, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act, Fraudulent Conveyance Act
(British Columbia), the Fraudulent Preference Act (British Columbia) or any
similar federal or state law or Canadian federal or provincial law to the extent
applicable to any Guarantee. To effectuate the foregoing intention, the Trustee,
the Holders and the Guarantors hereby irrevocably agree that the obligations of
each Guarantor under its Guarantee and this Article Twelve shall be limited to
the maximum amount as will, after giving effect to such maximum amount and all
other contingent and fixed liabilities of such Guarantor that are relevant under
such laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Article Twelve,
result in the obligations of such Guarantor under its Guarantee not constituting
a fraudulent transfer or conveyance.
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Section 12.03 Execution and Delivery of Subsidiary Guarantee.
The delivery of any Securities by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new Material
Subsidiary subsequent to the date of this Indenture, or any Subsidiary shall
become a Material Subsidiary, as required by Section 10.20 hereof, the Company
shall cause such Material Subsidiary to execute and deliver a Supplemental
Indenture in accordance with Section 10.20 hereof and this Article Twelve and
any Collateral Documents necessary or reasonably requested by the Collateral
Agent to grant the Collateral Agent a valid and enforceable, perfected Lien on
the Collateral described therein, superior to and prior to the rights of all
third Persons and subject to no other Liens, except Permitted Liens and as
otherwise provided herein and therein.
Section 12.04 Guarantors May Consolidate, Etc. On Certain Terms.
Each of the Guarantors may consolidate with, amalgamate with, merge
with, or wind up into (whether or not such Guarantor is the surviving Person)
the Company or another Guarantor without restriction or with or into another
corporation, Person or entity whether or not affiliated with such Guarantor to
the same extent that the Company may amalgamate with, consolidate with, merge
with or into, or transfer All or Substantially All of its assets to any other
Person; provided, however, that, subject to the provisions of Section 12.05, if
such other Person is not the Company or another Guarantor, the Person formed by
or surviving any such amalgamation, consolidation, wind-up or merger must
expressly assume all the obligations of such Guarantor pursuant to a
Supplemental Indenture in the form of Exhibit A hereto.
Section 12.05 Release of Guarantor Following Sale of Assets.
In the event of a sale or other disposition of all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the Capital Stock of any Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of merger, consolidation or
otherwise, of all of the Capital Stock of such Guarantor) or the Person
acquiring the property (in the event of a sale or other disposition of All or
Substantially All of the assets of such Guarantor) will be released and relieved
of any obligations under the Subsidiary Guarantee and Collateral Documents of
such Guarantor.
Any Guarantor not released from its obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of and interest
on the Securities and for the other obligations of any Guarantor under this
Indenture as provided in this Article Twelve.
Section 12.06 Collateral and Security Documents Generally.
As general and continuing collateral security for the due repayment
and satisfaction of all present and future indebtedness, liabilities and
obligations of any kind whatsoever, under, in connection with or relating to
this Indenture, including without limitation, the Securities and any ultimate
unpaid balance thereof, and to secure the due performance of all of the other
present and future obligations of the Company to the Trustee and the Holders
under this Indenture and the
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Securities, the Company and the Guarantors have executed the Collateral
Documents securing the Company's and the Guarantors' obligations under this
Indenture and the relevant Subsidiary Guarantees.
Each Holder, by accepting any Securities, hereby authorizes and
directs the Trustee to enter into the Intercreditor Agreement and to take such
actions as may be necessary or appropriate to effect its powers and duties set
forth therein.
The Company (i) agrees to perform the obligations required to be
performed by it as set forth in the Collateral Documents and to cause the
Guarantors to perform the obligations required to be performed by each of them
as set forth in the Collateral Documents and (ii) shall not, and shall not
permit any of the Guarantors to, take or omit to take any action with respect to
the Collateral that might materially impair or would have the result of
materially impairing, the security interest in the Collateral in favor of the
Collateral Agent.
To the extent any provision of any Collateral Document conflicts
with the provisions of this Indenture, the provisions of this Indenture shall
govern and be controlling.
Each Holder, by accepting any Securities, (i) consents and agrees to
all of the terms and provisions of the Collateral Documents, as the same may be
in effect from time to time or may be amended from time to time in accordance
with the provisions of the Collateral Documents and this Indenture, and
authorizes and directs the Trustee to appoint a Collateral Agent to act as
mortgagee or secured party with respect thereto and (ii) authorizes and directs
the Trustee to enter into intercreditor agreements and to take such actions as
may be necessary or appropriate to effect pari passu treatment of Debt permitted
under clause (vii) of Section 10.08 and the subordination of Debt permitted
under clause (viii) or (ix) of Section 10.08.
Section 12.07 Collateral Agent.
The Company shall, from time to time, appoint one or more Collateral
Agents hereunder. Each of such Collateral Agents may be delegated any one of
more of the duties or rights of the Trustee hereunder or under the Collateral
Documents or which are specified in any Collateral Documents, including, without
limitation, the right to hold any Collateral in the name of or registered to
such Collateral Agent, as agent for the Trustee. Each such Collateral Agent
shall have only such rights and duties as my be specified in an agreement
between the Trustee and such Collateral Agent.
Section 12.08 Custody of the Cash Collateral Account
The Company shall deposit, or shall cause to be deposited, into the
Cash Collateral Account all cash and Cash Equivalents received from Asset Sales,
all Net Proceeds arising out of a Collateral Loss Event, all proceeds received
on account of the Softwood Duty Settlement and all payments received under the
Pulpco Note, excluding any amounts received on account of the disposition of any
collateral granted to the Lender under the Credit Facility. Amounts in the Cash
Collateral Account shall be held by the Trustee or its agent, as the case may
be, as security for the obligations of the Company under this Indenture and the
Collateral Documents until applied in accordance with the terms of this
Indenture; provided, that in no event shall the Company be required to use such
amounts to purchase Securities representing more than 25% of the aggregate
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principal amount of Securities Outstanding on the Issuance Date, as provided in
Section 11.09. Neither receipt by the Trustee or its agent, nor any application
whatsoever by the Trustee or its agent of monies under this paragraph shall
operate as payment or novation of the Company's indebtedness under this
Indenture or as a reduction of the mortgages, pledges and charges created under
any Collateral Document, notwithstanding any law, usage or custom to the
contrary.
Section 12.09 Recording.
The Company will cause, at its own expense, this Indenture, the
Collateral Documents, and all amendments or supplements thereto, to be
registered, recorded and filed and/or re-recorded and/or re-filed and/or renewed
in such manner and in such place or places, if any, as may be required by law in
order fully to preserve and protect the priority and perfection of the Liens
(subject to Permitted Liens) of the Collateral Documents on all parts of the
Collateral and all rights of the Collateral Agent.
The Company shall furnish to the Trustee and the Collateral Agent:
(i) a reliance letter permitting the Trustee and the
Collateral Agent to rely on the opinion of Fasken Martineau DuMoulin
LLP regarding the Collateral and other matters; and
(ii) by September 30 in each year beginning with the year
2005, an Opinion of Counsel, dated as of such date, addressed to the
Trustee and the Collateral Agent, either stating that, in the
opinion of such counsel, which Opinion of Counsel must be rendered
by Fasken Martineau DuMoulin LLP or any other firm independent of
the Company, such action has been taken with respect to the
recording, registering, filing, re-recording, re-registering and
refiling of (x) this Indenture and all supplemental indentures
thereto, (y) the Collateral Documents and all amendments thereto,
and (z) financing statements, continuation statements or other
instruments of further assurances, as is necessary to maintain the
valid and enforceable, perfected Lien of the Collateral Documents
superior to and prior to the rights of all third Persons, and
subject to no other Liens, except Permitted Liens and as otherwise
provided herein and therein, and reciting the details of such action
or referring to prior Opinions of Counsel in which such details are
given, or stating that, in the opinion of such counsel, such action
is not necessary to maintain such Liens, subject to qualifications
and assumptions as are customary for such opinions.
Section 12.10 Authorization of Actions to Be Taken.
If an Event of Default has occurred and is continuing, the Trustee
may take all actions it deems necessary or appropriate in order to collect and
receive any and all amounts payable in respect of the obligations of the Company
hereunder and secured by the Collateral Documents including but not limited to
(i) instructing or otherwise directing the Collateral Agent in accordance with
and to the extent provided in the Collateral Documents in connection with
enforcing or effecting any term or provision of the Collateral Documents, and
(ii) instituting and maintaining such suits and proceedings as it may deem
expedient to prevent any impairment of the
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Collateral by any acts which may be unlawful or in violation of this Indenture
or the Collateral Documents and such suits and proceedings as the Trustee may
deem expedient to preserve or protect its interests and the interests of the
Holders in the Collateral and in the principal, interest, issues, profits,
rents, revenues and other income arising therefrom. At the written direction of
the Holders, the Trustee may, or may direct the Collateral Agent, to enter into
non-disturbance agreements or recognition agreements with respect to any
Collateral in a form satisfactory to the Trustee and the Collateral Agent and on
terms not adverse to the Holders, as set forth in an Officers' Certificate and
Opinions of Counsel as the Trustee and the Collateral Agent may reasonably
request.
Section 12.11 Authorization of Receipt of Funds by the Trustee Under the
Collateral Documents.
The Trustee is authorized to receive any funds for the benefit
of Holders distributed under the Collateral Documents and to make further
distributions of such funds to the Holders according to the provisions of this
Indenture.
Section 12.12 Amendment of Collateral Documents.
Without consent of any Holders, the Trustee may, at the written
request of the Company, direct the Collateral Agent to enter into one or more
amendments to any Collateral Document, in form satisfactory to the Trustee, to
cure any ambiguity, to correct or supplement any provision therein which may be
defective or inconsistent with any other provision therein, or to make any other
provisions with respect to matters or questions arising under such Collateral
Document, which shall be inconsistent with the provisions of such instrument,
provided that such action pursuant to this clause could not reasonably be
expected to, as evidenced by an Opinion of Counsel, which Opinion of Counsel
must be rendered by Fasken Martineau DuMoulin LLP or any other firm independent
of the Company, delivered to the Trustee, adversely affect the interests of the
Holders in any material respect. With the consent of the Holders of not less
than a majority in principal amount of the Outstanding Securities, by Action of
said Holders delivered to the Company and the Trustee, the Trustee may direct
the Collateral Agent to enter into any amendment or amendments to any Collateral
Document for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of such Collateral Document or of modifying
in any manner the rights of the Holders or the Trustee under such Collateral
Document, except for any such modification or amendment that requires the
consent of the Holder of each Outstanding Security hereunder.
Section 12.13 Release of Collateral.
The release of any Collateral from the terms hereof and of any of
the Collateral Documents or the release, in whole or in part, of the Lien
created by any of the Collateral Documents will not be deemed to impair the Lien
described in Section 12.06 in contravention of the provisions of this Indenture
if and to the extent the Collateral or Lien are released pursuant to, and in
accordance with, such Collateral Document or the Intercreditor Agreement and
pursuant to, and in accordance with, the terms hereof. The Company, the Trustee
and each of the Holders acknowledge that a release of any of the Collateral or
any part of the Lien in accordance with the terms of any Collateral Document or
the Intercreditor Agreement and the terms hereof will not be
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deemed for any purpose to be an impairment of the Lien in contravention of the
terms of this Indenture. The provisions of Section 314 of the Trust Indenture
Act shall not apply to the release of any Collateral hereunder
Section 12.14 Disposition of Collateral Without Release.
In addition to and without limiting the provisions of Section 12.13,
but subject always to the terms of the Intercreditor Agreement, at any time and
from time to time, so long as an Event of Default shall not have occurred and be
continuing, the Company and any Guarantor may, free or any Lien existing with
respect thereto and without any release or consent of the Trustee or the
Holders:
(i) sell, dispose of or otherwise use inventory in the
ordinary course of the Company's or such Guarantor's business;
(ii) collect, liquidate or otherwise dispose of Accounts (as
defined in the Collateral Documents) in the ordinary course of the
Company's or such Guarantor's business;
(iii) renegotiate and terminate leasehold interests in
Collateral in the ordinary course of the Company's or such
Guarantor's business; and
(iv) sell or dispose of obsolete or worn out fixtures or
equipment or other tangible personal property which are Collateral
in the ordinary course of the Company's or such Guarantor's
business;
provided that for each six-month period beginning on June 30 and December 31 (a
"Six-Month Period"), the Company and the Guarantors shall have delivered to the
Trustee, within 30 days following the end of such Six-Month Period, an Officers'
Certificate to the effect that all sales of inventory, all collections and other
dispositions of Accounts (as defined in the Collateral Documents) and any other
disposition contemplated by this Section 12.14 by the Company and the Guarantors
during such Six-Month Period were in the ordinary course of the Company's and
the Guarantors' business and that all proceeds therefrom were used by the
Company and the Guarantors in the ordinary course of their business or to make
other cash payments permitted by this Indenture.
Section 12.15 Purchaser Protected.
In no event shall any purchaser in good faith of any property
purported to be released hereunder or under a Collateral Document be bound to
ascertain the authority of the Trustee or Collateral Agent to execute the
release or to inquire as to the satisfaction of any conditions required by the
provisions hereof for the exercise of such authority or to see to the
application of any consideration given by such purchaser or other transferee;
nor shall any purchaser or other transferee of any property or rights
constituting Collateral permitted by this Indenture to be sold be under any
obligation to ascertain or inquire into the authority of the Company to make any
such sale or other transfer.
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Section 12.16 Form and Sufficiency of Release.
In the event that the Company has sold, exchanged, or otherwise
disposed of or proposes to sell, exchange or otherwise dispose of any portion of
the Collateral which under the provisions of this Indenture may be sold,
exchanged or otherwise disposed of by the Company, any Lien with respect thereto
shall be released and if the Company requests the Trustee to furnish a written
disclaimer, release or quitclaim of any interest in such property under any of
the Collateral Documents, the Trustee or the Collateral Agent, if so directed by
the Trustee, shall execute such an instrument promptly after satisfaction of the
conditions set forth herein for delivery of such instrument. Notwithstanding the
preceding sentence, all purchasers and grantees of any property or rights
purporting to be released shall be entitled to rely upon any release executed by
the Trustee or Collateral Agent hereunder as sufficient for the purposes of this
Indenture and as constituting a good and valid release of the property therein
described from the Lien of any Collateral Document.
Section 12.17 Termination of Security Interest.
Upon the payment in full of the principal of (and premium, if any)
and interest on the Securities and payment of all amounts owing to the Trustee
by the terms of this Indenture, the Trustee shall, at the written request of the
Company, deliver a certificate to the Collateral Agent stating that the
Securities have been paid in full and instructing the Collateral Agent in
accordance with the terms of the Collateral Documents to release the Collateral
from the terms of the Collateral Documents and this Indenture.
Section 12.18 Further Assurances.
The Company covenants and agrees that it will, and will cause its
Subsidiaries to, at any time and from time to time at the request of the
Trustee, execute and deliver to the Trustee all deeds and documents and do all
acts and things which the Trustee may reasonably request or which is necessary
or desirable for the purpose of assuring, confirming, mortgaging and pledging to
the Collateral Agent the Collateral and granting to the Trustee, for the benefit
of the Holders, a security interest therein and carrying into effect the
purposes of the Collateral Documents and this Article Twelve and, if an Event of
Default has occurred and is continuing, to permit or facilitate the enforcement
of any Collateral Document or the realization of any Collateral thereunder,
including, without limitation, causing any Material Subsidiary created or
acquired after the date hereof or any Subsidiary that becomes a Material
Subsidiary, in each case, that owns any Collateral to become a Guarantor of the
Securities and a party to the applicable Collateral Document or to execute and
deliver to the Collateral Agent an instrument comparable in scope and effect to
the applicable Collateral Document for the purpose of granting a security
interest in such Collateral.
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ARTICLE THIRTEEN
CASH COLLATERAL ACCOUNT
Section 13.01 Cash Collateral Account.
The Trustee shall, or shall direct each Collateral Agent to,
establish a segregated trust account to be used as the Cash Collateral Account
that is subject to and governed by the applicable laws and applicable
regulations of the appropriate banking or governmental authority as may now or
hereafter be in effect in the province of British Columbia, which account shall
be under the sole dominion and control of the Collateral Agent, acting in
accordance with written instructions from the Trustee or the Company consistent
with this Indenture. The Cash Collateral Account shall be managed by the Trustee
in accordance with the terms of this Indenture and shall be subject to the first
priority, perfected Lien of the Collateral Documents as general and continuing
collateral security for the due repayment and satisfaction of all present and
future indebtedness, liabilities and obligations of any kind whatsoever, under,
in connection with or relating to this Indenture, including, without limitation,
the Securities and any ultimate unpaid balance thereof and to secure the due
performance of all of the other present and future obligations of the Company or
the Guarantors to the Trustee (including obligations under Section 6.07 of this
Indenture) and the Holders. The Cash Collateral Account shall be maintained with
the Collateral Agent in the province of British Columbia, and the Collateral
Agent shall act with respect thereto only in accordance with instructions
received from the Trustee or the Company in accordance with this Indenture.
Section 13.02 Terms of Cash Collateral Account.
(a) Except as otherwise expressly provided herein, the Company
shall have no right under the terms of the Cash Collateral Account, so long as
any Securities are Outstanding or other payments are due under this Indenture or
on any Securities, to withdraw or instruct any Person to withdraw on its behalf
any money from the Cash Collateral Account. Any income received by the Company
or the Collateral Agent with respect to the balance from time to time standing
to the credit of the Cash Collateral Account shall be deposited in the Cash
Collateral Account. All right, title and interest in and to the cash amounts on
deposit from time to time in the Cash Collateral Account, together with any
Investments from time to time made pursuant to this Section 13.02 deposited
therein, shall constitute part of the Collateral hereunder and shall not
constitute payment of the obligations of the Company under this Indenture or any
Collateral Document, or under the Securities, whether in respect of principal,
premium, interest (whether or not accruing after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Company) or otherwise, until applied thereto as
hereinafter provided. In the event that any amount is required to be deposited
in the Cash Collateral Account as aforesaid, the Company shall take such
actions, at its sole expense, as shall be required to ensure that the Collateral
Agent has from the date of such deposit a Lien (subject only to Permitted Liens)
on such deposit under and in accordance with the Collateral Documents for the
benefit of the Trustee and the Holders. All income earned on the Cash Collateral
Account shall be for the account of the Company or applicable Guarantor, as the
case may be, notwithstanding that any such income shall remain subject to the
first priority, perfected Lien of the Collateral Documents.
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(b) Except as otherwise provided in Section 5.06 or subsection
(c) of this Section 13.02, no amount (including interest on amounts on deposit
in the Cash Collateral Account) shall be paid or released to or for the account
of, or withdrawn by or for the account of, the Company or any other Person from
the Cash Collateral Account.
(c) The balance from time to time standing to the credit of
the Cash Collateral Account shall be distributed to the Company (i) as necessary
to fund its operations under the Working Capital Reserve, (ii) to pay any
interest deferred pursuant to Section 3.12, (iii) for the purchase of or
investment in Replacement Collateral pursuant to Section 10.24(d), and (iv) to
fund any Surplus Proceeds Offer made pursuant to Section 11.09. If immediately
available cash on deposit in the Cash Collateral Account is not sufficient to
make any such permitted distribution, the Trustee shall direct the Collateral
Agent to liquidate as promptly as practicable readily marketable Cash
Equivalents as required to obtain sufficient cash to make such distribution and,
notwithstanding any other provision of this Section 13.02, such distribution
shall not be made until such liquidation has taken place. Any request by the
Company to distribute funds from the Cash Collateral Account (a "Funding
Request") shall be in writing, shall specify the amount of such request and the
date on which such funds are required and shall be accompanied by:
(i) An Officers' Certificate, dated not more than 30 days
prior to the date of the application for the withdrawal and payment
of such funds setting forth:
(A) the purpose for which such funds are to be used;
(B) in the case of acquisition of or investment in any
Replacement Collateral,
(I) that there is no outstanding Debt, other than
costs for which payment is being requested, known to the
Company, after due inquiry, for the purchase price or
construction of such Replacement Collateral, or for
labor, wages, materials or supplies in connection with
the making thereof, which, if unpaid, might become the
basis of a vendor's, mechanics', laborers',
materialmen's, statutory or other similar Lien upon any
such Replacement Collateral, which Lien might, in the
opinion of the signers of such Officers' Certificate,
materially impair the security afforded by such
Replacement Collateral;
(II) that the Replacement Collateral is necessary
or desirable in the conduct to the Company's business;
(III) that the Company has title to such
Replacement Collateral that is substantially similar to
its title to the property sold, destroyed, damaged or
taken;
(IV) the purchase price of or cost of investment
in the Replacement Collateral, which shall not exceed
the fair market value of such Replacement Collateral;
and
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(V) that the Company has taken such actions, at
its sole expense, as are required to ensure that the
Collateral Agent has, from the date of such purchase or
investment, a perfected Lien (subject only to Permitted
Liens) on such Replacement Collateral under the
Collateral Documents;
(C) that no Event of Default shall have occurred and be
continuing, and
(D) that the Company has complied with all conditions
precedent herein provided for relating to such withdrawal and
payment; and
(ii) If in connection with the acquisition of any Replacement
Collateral the amount of funds to be expended is Cdn.$1,000,000 or
more, or if any Collateral Document is required to be entered into,
amended or supplemented in accordance with the terms hereof, an
Opinion of Counsel substantially stating:
(A) That the instruments that have been or are therewith
delivered to the Trustee conform to the requirements of this
Indenture or any other Collateral Document, and that all
conditions precedent herein provided for relating to such
withdrawal and payment have been complied with; and
(B) That all the Company's right, title and interest in
and to said Replacement Collateral are then subject to the
Lien of the Collateral Documents.
Upon compliance with the foregoing provisions of this Section, the
Trustee shall pay, on the date indicated in the Funding Request, the amount
indicated in such Funding Request to the Company or as it may otherwise direct.
(d) After the occurrence and during the continuance of an
Event of Default, the Trustee shall direct the Collateral Agent to invest, from
time to time, amounts on deposit in the Cash Collateral Account (i) in Cash
Equivalents, (ii) if such amounts are in U.S. dollars, in Government Securities,
or, (iii) if such amounts are in Canadian dollars, in similar obligations of the
government of Canada, maturing within 30 days from the date of acquisition
thereof, or such longer period (not excluding the expected restoration period or
one year) if the company certifies to the Trustee that the funds are set aside
for restoration in the event of a Collateral Loss Event.
(e) So long as no Event of Default has occurred and is
continuing, the Company shall have the exclusive right to make investment
decisions with respect to amounts on deposit in the Cash Collateral Account,
including the right to cause any amounts held in U.S. dollars to be converted to
Canadian dollars or any amounts held in Canadian dollars to be converted into
U.S. dollars. The Company shall instruct the Collateral Agent as to such
investment decisions in writing. After the occurrence and during the continuance
of an Event of Default, the Trustee shall have the exclusive right to make
investment decisions with respect to
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amounts on deposit in the Cash Collateral Account, as set forth in (d) above but
in no event shall the Trustee be responsible for any loss or diminution in value
of the Cash Collateral Account due to any investment. Such investments described
above shall be held in the name of the Collateral Agent and shall be under the
sole dominion and control of such Collateral Agent subject to the rights of the
Trustee under Article Six and Article Twelve. In order to provide the Collateral
Agent, for the benefit of the Holders, with a perfected security interest
therein, each such investment shall be either:
(i) evidenced by negotiable certificates or instruments, or if
nonnegotiable then issued in the name of the Collateral Agent which
are delivered (together with any appropriate instruments of
transfer) to, and held by, the Collateral Agent or an agent thereof
(which shall not be the Company or any of its Affiliates) in the
province of British Columbia or Ontario; or
(ii) maintained in book-entry form on the records of a Federal
Reserve Bank and registered in the name of the Collateral Agent or
the Trustee, as agent for the Collateral Agent, in a book-entry
securities account maintained with respect to such investment with
the Federal Reserve Bank in the Federal Reserve District in which
the Corporate Trust Office of the Trustee is located.
The Company shall bear the risk of any realized losses incurred on
such investments, and if any such realized loss shall occur on a day when the
Company would not be permitted pursuant to subsection (b) of this Section 13.02
to withdraw monies from the Cash Collateral Account, the Company shall promptly
remit an amount equal to the amount of any such loss to the Collateral Agent for
credit to the Cash Collateral Account.
ARTICLE FOURTEEN
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 14.01 Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, at any time, elect to
have either Section 14.02 or 14.03 hereof be applied to all outstanding
Securities upon compliance with the conditions set forth below in this Article
Fourteen.
Section 14.02 Legal Defeasance and Discharge.
Upon the Company's exercise under Section 14.01 hereof of the option
applicable to this Section 14.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 14.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Securities on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Debt represented by the
outstanding Securities, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 14.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Securities and this Indenture (and the Trustee, on demand
of and at the
86
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following provisions which shall survive until otherwise
terminated or discharged hereunder: (a) the rights of Holders of outstanding
Securities to receive solely from the trust fund described in Section 14.04
hereof, and as more fully set forth in such Section, payments in respect of the
principal of, premium, if any, and interest on such Securities when such
payments are due, (b) the Company's obligations with respect to such Securities
under Articles 2 and 3 and Section 10.02 hereof, (c) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and the Company's obligations in
connection therewith and (d) this Article Fourteen. Subject to compliance with
this Article Fourteen, the Company may exercise its option under this Section
14.02 notwithstanding the prior exercise of its option under Section 14.03
hereof.
Section 14.03 Covenant Defeasance.
Upon the Company's exercise under Section 14.01 hereof of the option
applicable to this Section 14.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 14.04 hereof, be released from its
obligations under the covenants contained in Article 8 and Sections 10.04, 10.08
through 10.11, 10.13, 10.14, 10.20 and 10.22 through 10.24 with respect to the
outstanding Securities on and after the date the conditions set forth in Section
14.04 are satisfied (hereinafter, "Covenant Defeasance"), and the Securities
shall thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Securities shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding
Securities, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 5.01 hereof,
but, except as specified above, the remainder of this Indenture and such
Securities shall be unaffected thereby. In addition, upon the Company's exercise
under Section 14.01 hereof of the option applicable to this Section 14.03
hereof, subject to the satisfaction of the conditions set forth in Section 14.04
hereof, Sections 6.01(E) through 6.01(G) hereof shall not constitute Events of
Default.
Section 14.04 Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 14.02 or 14.03 hereof to the outstanding Securities:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, Cash Equivalents in such amounts as will
be sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest on
the outstanding Securities on the stated date for payment thereof or on the
applicable redemption date, as the case may be, of such principal or installment
of principal, premium or interest on the outstanding Securities;
87
(b) in the case of an election under Section 14.02 hereof, the
Company shall have delivered to the Trustee Opinions of Counsel in the United
States and Canada reasonably acceptable to the Trustee confirming that, on the
basis of (A) a ruling that the Company has received from, or has been published
by, the Internal Revenue Service or the Canada Revenue Agency, as the case may
be, (B) a change in the applicable federal income tax law that has occurred
since the date of this Indenture, or (C) on any other basis, the Holders of the
outstanding Securities will not recognize income, gain or loss for United States
or Canadian, as the case may be, federal income tax purposes as a result of such
Legal Defeasance and will be subject to United States or Canadian, as the case
may be, federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
(c) in the case of an election under Section 14.03 hereof, the
Company shall have delivered to the Trustee Opinions of Counsel in the United
States and Canada reasonably acceptable to the Trustee confirming that the
Holders of the outstanding Securities will not recognize income, gain or loss
for United States or Canadian, as the case may be, federal income tax purposes
as a result of such Covenant Defeasance and will be subject to United States or
Canadian, as the case may be, federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the proceeds
of which will be used to defease the Securities pursuant to this Article
Fourteen concurrently with such incurrence) or insofar as Section 5.01(H) or
5.01(I) hereof is concerned, at any time in the period ending on the 91st day
after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion
of Counsel (which may be subject to customary exceptions) to the effect that on
the 91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company; and
(h) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
88
Section 14.05 Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 14.06 hereof, all Cash Equivalents (including the
proceeds thereof) deposited with the Trustee (or other qualifying trustee,
collectively for purposes of this Section 14.05, the "Trustee") pursuant to
Section 14.04 hereof in respect of the outstanding Securities shall be held in
trust and applied by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become due
thereon in respect of principal, premium, if any, and interest, but such money
need not be segregated from other funds except to the extent required by law.
The Company shall pay, and shall indemnify and hold harmless the
Trustee and each Holder against, any tax, fee or other charge imposed on or
assessed against the Trustee, any Holder, all or any part of the Cash
Equivalents deposited pursuant to Section 14.04 hereof, or any amount applied or
paid out of or as a result of any realization of all or any part of the Cash
Equivalents to the extent such tax, fee or charge is caused by, attributable to
or a result of any action of the Company or Trustee under Section 14.04 hereof,
any payment to or for the account of a Holder under this Section 14.05 or any
other act or omission of the Company or the Trustee under this Article 14;
provided that in the case of any such tax on or in respect of any amount paid or
credited to a particular Holder by the Trustee or any Paying Agent (including
the Company acting as Paying Agent) under the immediately preceding paragraph of
this Section 14.05, the Company shall be liable under this paragraph only to the
extent such tax exceeds the amount of tax for which such Holder would otherwise
have been liable (and for which such Holder would not have been entitled to
indemnification under Section 10.16 hereof) if (x) the relevant Legal Defeasance
or Covenant Defeasance, as the case may be, had not occurred and (y) the amount
paid or credited to such Holder had been paid or credited to the Holder by the
Company directly.
Anything in this Article Fourteen to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any Cash Equivalents held by it as provided in Section
14.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
14.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 14.06 Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Securities and remaining unclaimed for two years after
such principal, and premium, if any, or interest has become due and payable
shall be paid to the Company on its request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Securities shall
thereafter, as a secured creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability
89
of the Company as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in the
New York Times and The Wall Street Journal (national edition), notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
Section 14.07 Reinstatement.
If the Trustee or Paying Agent is unable to apply any Cash
Equivalents in accordance with Section 14.02 or 14.03 hereof, as the case may
be, by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 14.02 or
14.03 hereof until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with Section 14.02 or 14.03 hereof, as the
case may be; provided, however, that, if the Company makes any payment of
principal of, premium, if any, or interest on any Securities following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money held by
the Trustee or Paying Agent
Section 14.08 Termination of the Company's Obligation.
This Indenture shall cease to be of further effect (except that the
Company's obligations under Sections 10.16, 6.07 and 6.10 hereof, and the
Company's, the Trustee's and the Paying Agent's obligations under Section 14.06
hereof shall survive) when all outstanding Securities theretofore authenticated
and issued have been delivered (other than destroyed, lost or stolen Securities
which have been replaced or paid) to the Trustee for cancellation and the
Company has paid all sums payable by the Company hereunder.
90
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
WESTERN FOREST PRODUCTS INC.
By:____________________________
Name:
THE BANK OF NEW YORK, as Trustee
By:____________________________
Name:
Title:
EXHIBIT A
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
___________ 20__, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of WESTERN FOREST PRODUCTS INC. (or its permitted successor), a
corporation organized and existing under the laws of Canada (the "Company"), the
Company, the other Guarantors (as defined in the Indenture referred to herein)
and _________________, as trustee under the indenture referred to below (the
"Trustee").
WITNESSETH
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of July 27, 2004, providing for
the issuance of an aggregate principal amount of $221,000,000 of 15% Secured
Bonds due 2009 (the "Securities");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's obligations under the Securities and the
Indenture on the terms and conditions set forth herein (the "Subsidiary
Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Securities as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees
as follows:
(a) Along with all Guarantors named in the Indenture, to
jointly and severally Guarantee to each Holder of Securities authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of the Indenture, the Securities
or the obligations of the Company hereunder or thereunder, that:
(i) the principal of and interest on the Securities will be
promptly paid in full when due, whether at Stated Maturity, by
acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Securities, if any, if lawful, and
all other obligations of the Company to the Holders or the
A-1
Trustee hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and
(ii) in case of any extension of time of payment or renewal of
any Securities or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at Stated Maturity, by
acceleration or otherwise. Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the
Guarantors (including the Guaranteeing Subsidiary) shall be jointly
and severally obligated to pay the same immediately. Each Guarantor
agrees that this is a guarantee of payment and not a guarantee of
collection.
(b) The obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Securities or
the Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder of the Securities with respect to any provisions hereof or
thereof, the recovery of any judgment against the Company, any action to enforce
the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor.
(c) The following is hereby waived: diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever.
(d) This Subsidiary Guarantee shall not be discharged except
by complete performance of the obligations contained in the Securities, the
Indenture and this Subsidiary Guarantee.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Guarantors, any amount paid by either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article Five of the
Indenture for the purposes of this Subsidiary Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article Five of the Indenture,
such obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Subsidiary Guarantee.
A-2
(h) The Guarantors shall have the right to seek contribution
from any non-paying Guarantor so long as the exercise of such right does not
impair the rights of the Holders or the Trustee under this Subsidiary Guarantee.
(i) The Guaranteeing Subsidiary hereby confirms that it is its
intention that this Subsidiary Guarantee not constitute a fraudulent transfer or
conveyance for purposes of bankruptcy law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act, Fraudulent Conveyance Act (British
Columbia), the Fraudulent Preference Act (British Columbia) or any similar
federal or state law or Canadian federal or provincial law to the extent
applicable to any Guarantee. To effectuate the foregoing intention, the
Guaranteeing Subsidiary hereby irrevocably agrees that its obligations hereunder
and Article Twelve of the Indenture shall be limited to the maximum amount as
will, after giving effect to such maximum amount and all other contingent and
fixed liabilities that are relevant under such laws, and after giving effect to
any collections from, rights to receive contribution from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under Article Twelve of the Indenture, result in the obligations
hereunder not constituting a fraudulent transfer or conveyance.
3. EXECUTION AND DELIVERY. The Guaranteeing Subsidiary agrees that
this Subsidiary Guarantee shall remain in full force and effect notwithstanding
any failure to endorse on each Security a notation of such Subsidiary Guarantee.
4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
Guaranteeing Subsidiary may consolidate with, amalgamate with, merge with, or
wind up into (whether or not such Guaranteeing Subsidiary is the surviving
Person) the Company or another Guarantor without restriction or with or into
another corporation, Person or entity whether or not affiliated with such
Guarantor to the same extent that the Company may amalgamate with, consolidate
with, merge with or into, or transfer All or Substantially All of its assets to
any other Person; provided, however, that, subject to the provisions of Section
12.05 of the Indenture, if such other Person is not the Company or another
Guarantor, the Person formed by or surviving any such amalgamation,
consolidation, wind-up or merger must expressly assume all the obligations of
such Guarantor pursuant to a Supplemental Indenture in the form hereof.
5. RELEASES. In the event of a sale or other disposition of all of
the assets of Guaranteeing Subsidiary by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the Capital Stock of the
Guaranteeing Subsidiary, then the Guaranteeing Subsidiary (in the event of a
sale or other disposition, by way of merger, consolidation or otherwise, of all
of the Capital Stock of Guaranteeing Subsidiary) or the Person acquiring the
property (in the event of a sale or other disposition of All or Substantially
All of the assets of the Guaranteeing Subsidiary) will be released and relieved
of any obligations under this Subsidiary Guarantee.
6. NEW YORK LAW TO GOVERN. THE LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
A-3
7. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
8. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
9. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
A-4
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated:
[GUARANTEEING SUBSIDIARY]
By:_________________________
Name:_______________________
Title:______________________
WESTERN FOREST PRODUCTS INC.
By:______________________________
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By:_________________________________
Name:
Title:
EXHIBIT B
Subordination Provisions
1. Priority. Any subordinated debt shall be expressly subordinated to the
prior indefeasible payment in full in cash of all obligations under the
Securities and the Indenture.
2. Postponement. The Company shall not make any prepayment or repayment
of, or any distribution in respect of or on account of, any principal under the
subordinated debt in cash, in kind or otherwise (excluding with proceeds
received pursuant to any refinancing of such subordinated debt), until the
Securities have been repaid in full. The Company shall not make any payment of
interest in cash under the subordinated debt unless the Company is making
payments of interest in cash, and not in kind, under the Securities and no
interest is then deferred pursuant to Section 3.12 of the Indenture.
3. Maturity. The subordinated debt shall mature at least six months after
the Stated Maturity of the Securities.
4. Payment Blockage Periods. Upon delivery by the Trustee to the Company
and the subordinated lenders of a payment blockage notice following the
occurrence of an Event of Default under the Indenture, unless and until such
Event of Default has been cured or waived (i) in the event of a payment default,
no payment of any kind shall be made by the Company on account of the
subordinated debt and (ii) in the event of a nonpayment default, no payment of
any kind shall be made by the Company on account of the subordinated debt for a
period of 180 days following receipt of the notice. No more than one 180-day
blockage period is permitted in each rolling 365-day period.
5. Enforcement. Upon delivery by the Trustee to the Company and the
subordinated lenders of an enforcement notice after the occurrence of an Event
of Default under the Indenture, none of subordinated lenders shall:
(a) accelerate its debt or otherwise declare any of its debt due and
payable prior to maturity unless the Trustee has declared all of the
Securities due and payable prior to maturity;
(b) enforce any security for its debt by any means;
(c) petition for (or vote in favor of any resolution for) or
indicate or support or take any steps with a view to any winding up,
bankruptcy, insolvency, liquidation, reorganization, moratorium,
administration, dissolution or other analogous proceedings or any
voluntary arrangement or assignment for the benefit of creditors or any
similar proceedings involving the Company; and
(d) bring or support any other legal proceedings against the Company
in respect of its debt,
B-1
until the earlier of (i) 180 days following receipt of the notice, and (ii) the
date upon which a bankruptcy of the Company or similar proceeding has commenced.
B-2
INCENTIVE STOCK OPTION PLAN
OF
WESTERN FOREST PRODUCTS INC.
(EFFECTIVE AS OF JULY 22, 2004)
1. Purpose of the Plan
1.1 The purpose of the Plan is to attract and retain persons of ability to
serve as directors, officers, advisors and employees of, and consultants to, the
Corporation or any of its affiliated entities, to provide an incentive for such
persons in their efforts on behalf of the Corporation or any of its affiliated
entities, and in combination with these goals, to encourage the equity
participation of such persons in the Corporation.
2. Definitions
2.1 For the purposes of the Plan, the following terms have the indicated
meanings set forth below:
(a) "affiliated entity" has the same meaning ascribed to that term
in MI 45-105;
(b) "associate" has the same meaning ascribed to that term in the
OSA;
(c) "Board" means the board of directors of the Corporation;
(d) "Compensation Committee" means the Management Resources and
Compensation Committee of the Board as the same may be
constituted from time to time or such other committee
constituted by the Board from time to time with a mandate that
includes the administration of the Plan and, if none is so
constituted, means the full Board;
(e) "Consultant" means a person, other than an employee, senior
officer or director of the Corporation, that:
(i) is engaged to provide services to the Corporation or
an affiliated entity of the Corporation, other than
services provided in relation to a distribution as
defined under applicable securities laws;
(ii) provides the services under a written contract with
the Corporation or an affiliated entity of the
Corporation; and
(iii) spends or will spend a significant amount of time and
attention on the affairs and business of the
Corporation or an affiliated entity of the
Corporation,
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and includes, for an individual consultant, a company
of which the individual consultant is an employee or
shareholder, and a partnership of which the
individual consultant is an employee or partner;
(f) "Corporation" means Western Forest Products Inc. and any
successor;
(g) "Disability" means a physical or mental incapacity of a nature
that the Board determines prevents or would prevent the
Optionee from satisfactorily performing the material duties of
his or her position with the Corporation or any of its
affiliated entities, as applicable;
(h) "Eligible Person" means a director, senior officer or employee
of the Corporation or of an affiliated entity of the
Corporation or a Consultant;
(i) "Exchange" means any principal exchange (as determined by the
Board in its sole discretion) upon which the Shares are
listed;
(j) "Grant Date" has the meaning ascribed to that term in
Subsection 5.1;
(k) "MI 45-105" means Multilateral Instrument 45-105 - Trades to
Employees, Senior Officers, Directors and Consultants;
(l) "Market Value" of a Share means, on any given day:
(i) where the Share is not listed on an Exchange, the
fair market value of a Share on that day determined
by the Board in its sole discretion; and
(ii) where the Share is listed on an Exchange, the closing
board lot sale price per share of Shares on the
Exchange on the trading day immediately preceding the
relevant date and if there was not a board lot sale
on the Exchange on such date, then the last board lot
sale prior thereto;
(m) "Option" means an option, granted pursuant to Section 5, to
purchase a Share;
(n) "Option Period" in respect of an Option means the period
commencing on the date of grant of such Option and ending on
the date of expiry of such Option;
(o) "Option Price" means the price per Share at which Shares may
be purchased under an Option, as determined pursuant to
Paragraph 5.1(b) and as may be adjusted in accordance with
Section 10;
(p) "Optionee" means an Eligible Person to whom an Option has been
granted;
(q) "OSA" means the Securities Act (Ontario), as amended;
(r) "person" means an individual, corporation, partnership, party,
trust, fund, association and any other organized group of
persons and the personal or other legal representative of a
person to whom the context can apply according to law;
-3-
(s) "Plan" means this Incentive Stock Option Plan as the same may
be amended and/or restated from time to time;
(t) "Securities Regulators" has the meaning ascribed to that term
in Section 11; and
(u) "Share" means, subject to Section 10, a common share, without
nominal or par value, in the capital of the Corporation.
2.2 Unless otherwise indicated, all dollar amounts referred to in this
Option Plan are stated in Canadian funds.
2.3 All section and paragraph references used in this Plan are references
to sections and paragraphs in this Plan.
2.4 As used in this Plan, words importing the masculine gender shall
include the feminine and neuter genders and words importing the singular shall
include the plural and vice versa, unless the context otherwise requires.
3. Administration of the Plan
3.1 The Plan shall be administered by the Board with the assistance of the
Compensation Committee.
3.2 The Compensation Committee shall, on at least an annual basis, make
recommendations to the Board as to the grant of Options.
3.3 Subject to the limitations of the Plan, the Board shall have the
authority:
(a) to grant Options to Eligible Persons;
(b) to determine the terms, limitations, restrictions and
conditions applicable to any Option granted hereunder;
(c) to interpret the Plan and to adopt, amend and rescind such
administrative guidelines and other rules and regulations
relating to the Plan as it shall from time to time deem
advisable; and
(d) to make all other determinations and to take all other actions
in connection with the implementation and administration of
the Plan as it may deem necessary or advisable.
The Board's guidelines, rules, regulations, interpretations and determinations
shall be conclusive and binding upon the Corporation and all other persons.
3.4 The Board may authorize one or more officers of the Corporation to
execute and deliver and to receive documents on behalf of the Corporation.
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4. Shares Subject to the Plan
4.1 The maximum aggregate number of Shares which may be issued pursuant to
the exercise of Options granted under the Plan shall not exceed 2,500,000
Shares, subject to adjustment as provided in Section 10.
4.2 The total number of Shares that may be reserved for issuance to any one
person pursuant to Options shall not exceed 5% of the Shares of the Corporation
outstanding on a non-diluted basis on the Grant Date of the Options.
4.3 Anything in this Plan to the contrary notwithstanding:
(a) the maximum number of Shares that may reserved for issuance
pursuant to Options granted under the Plan to insiders of the
Corporation and their associates, together with the number of
Shares reserved for issuance to such insiders and their
associates under the Corporation's other previously
established or proposed share compensation arrangements, shall
not exceed 10% of the Shares of the Corporation outstanding on
a non-diluted basis at the Grant Date of the Options; and
(b) the maximum number of Shares which may be issued to insiders
of the Corporation and their associates under the Plan within
any one-year period, when taken together with the number of
Shares issued to such insiders and their associates under the
Corporation's other previously established or proposed share
compensation arrangements, shall not exceed 10% of the Shares
of the Corporation outstanding on a non-diluted basis at the
end of such period and, in the case of any one insider and his
associates, shall not exceed 5% of such outstanding Shares.
For the purpose of this Subsection "insider" means an insider as defined in the
OSA but excluding any person within that definition solely by virtue of being a
director or officer of a subsidiary (as defined in the OSA) of the Corporation.
Any entitlement to acquire Common Shares granted pursuant to the Plan or any
other Options prior to the grantee becoming an insider shall be excluded for the
purposes of the limits set out above.
4.4 Options may be granted in respect of authorized and unissued Shares.
Shares in respect of which Options have expired, were cancelled or otherwise
terminated for any reason without having been exercised shall be available for
subsequent Options under the Plan. No fractional Shares may be purchased or
issued under the Plan.
5. Grants of Options
5.1 Subject to the provisions of the Plan, the Board may, in its sole
discretion and from time to time, determine those Eligible Persons to whom
Options will be granted and the date on which such Options are to be granted
(the "Grant Date"). The Board will also determine, in its sole discretion, in
connection with each grant of Options:
(a) the number of Options to be granted;
-5-
(b) the Option Price applicable to each Option, but the Option
Price shall not be less than the Market Value per Share on the
Grant Date;
(c) subject to Subsection 6.3, the Option Period; and
(d) the other terms and conditions (which need not be identical
and which, without limitation, may include non-competition
provisions) applicable to such Options.
6. Eligibility, Vesting and Terms of Options
6.1 Options may be granted to Eligible Persons only.
6.2 Subject to the adjustments provided for in Section 10 hereof, each
Option shall entitle the Optionee to purchase one Share.
6.3 In no event shall the Option Period expire later than 4:30 p.m.
(Vancouver time) on the tenth anniversary of the Grant Date for the applicable
Option.
6.4 Subject to Section 8, an Option that is subject to vesting, may, once
vested, be exercised (in each case to the nearest full Share) at any time during
the Option Period.
6.5 The Board may determine when any Option shall become vested and
exercisable and may determine that the Option shall be vested and exercisable in
installments.
6.6 An Option is personal to the Optionee and is non-assignable and
non-transferrable otherwise than by will or by the laws governing the devolution
of property in the event of death of the Optionee.
7. Option Agreement
7.1 As soon as practicable following the grant of an Option, the
Corporation and the Optionee shall enter into an option agreement substantially
in the form set out in Appendix A, which agreement shall set out the Optionee's
agreement that the Options are subject to the terms and conditions set forth in
the Plan as it may be amended or replaced from time to time, the Grant Date, the
name of the Optionee, the number of Options, the Option Price, the expiry date
of the Option Period, vesting terms and such other terms and conditions as the
Board may deem appropriate.
8. Termination of Employment, Engagement or Directorship
8.1 Except as otherwise determined by the Board, in the event that an
Optionee ceases to be an Eligible Person:
(a) for any reason other than death, retirement, early retirement,
sickness or disability, each of the Options held by the
Optionee shall cease to be exercisable after the date of
termination of the Optionee's position as a director, officer,
employee or consultant (as the case may be);
-6-
(b) as a result of retirement (other than early retirement), all
of the Optionee's vested Options shall continue in force
notwithstanding the termination of the Optionee's position as
a director, officer, employee or consultant (as the case may
be);
(c) by reason only of early retirement as permitted under the
provisions of the Corporation's pension plan or, with the
consent of the committee appointed under the said pension plan
for the administration thereof, at any time for reasons of
sickness or disability as determined by such committee, the
Optionee's vested Options shall continue in force
notwithstanding the termination of the Optionee's position as
a director, officer, employee or consultant (as the case may
be); and
(d) as a result of death, the legal representatives of an Optionee
may exercise the Optionee's vested Options within six months
after the date of the Optionee's death to the extent such
Options were by their terms vested and exercisable as of the
date of the Optionee's death or within the period of six
months following the Optionee's death;
but for greater certainty no Option shall be exercisable after the expiry of the
Option Period applicable thereto.
8.2 The Plan shall not confer upon any Optionee any right with respect to a
continuation of employment or engagement by, or directorship of, the Corporation
or its affiliated entity nor shall it interfere in any way with the right of the
Corporation or its affiliated entity to terminate any Optionee's employment,
engagement or directorship at any time.
8.3 For the purposes of section 8, termination in the case of an employee
(including officers that are also employees) is determined to be the last day of
active employment with the Corporation or its affiliated entity, as the case may
be, regardless of any salary continuance or notice period provided from or to
the Corporation or implied by or otherwise available at law.
8.4 For greater certainty, an Option that was not vested at the time that
the relevant event referred to in this Section 8 occurred, shall not be or
become exercisable and shall be forthwith cancelled.
9. Exercise of Options
9.1 Subject to the provisions of the Plan, Options may be exercised from
time to time by delivery to the Corporation at its registered office of a
written notice of exercise addressed to the Corporate Secretary of the
Corporation specifying the number of Shares with respect to which the Options
are being exercised, together with a certified cheque or bank draft for the
aggregate of the Option Prices to be paid for the Shares to be acquired.
Certificates for such Shares shall be issued and delivered to the Optionee
within a reasonable time following the receipt of such notice and payment.
9.2 No less than 100 Options may be exercised at any one time, except where
a smaller number of vested Options is held by the Optionee, in which case, such
smaller number of Options must be exercised at one time.
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10. Adjustment on Alteration of Share Capital
10.1 In the event of a subdivision, consolidation or reclassification of
outstanding Shares or other capital adjustment, or the payment of a stock
dividend thereon, the number of Shares reserved or authorized to be reserved
under the Plan, the number of Shares receivable on the exercise of an Option and
the Option Price therefor shall be increased or reduced proportionately and such
other adjustments shall be made as may be deemed necessary or equitable by the
Board in its sole discretion to prevent dilution or enlargement and such
adjustment shall be binding for all purposes of the Plan.
10.2 If the Corporation amalgamates, consolidates with or merges with or
into another body corporate, whether by way of amalgamation, statutory
arrangement or otherwise (the right to do so being hereby expressly reserved),
the holder of an Option will, upon exercise thereafter of such Option, be
entitled to receive and compelled to accept, in lieu of Shares, such other
securities, property or cash which the Optionee would have received upon such
amalgamation, consolidation or merger if the Optionee had exercised his or her
Option immediately prior to the effective date of such amalgamation,
consolidation or merger.
10.3 In the event of a change in the Corporation's currently authorized
Shares which is limited to a change in the designation thereof, the shares
resulting from any such change shall be deemed to be Shares within the meaning
of the Plan.
10.4 In the event of any other change affecting the Shares, such adjustment,
if any, shall be made as may be deemed necessary or equitable by the Board to
properly reflect such event and such adjustment shall be binding for all
purposes of the Plan.
10.5 No adjustment provided in this Section 10 shall require the Corporation
to issue a fractional Share and the total adjustment with respect to each Option
shall be limited accordingly.
10.6 If, at any time when an Option granted under the Plan remains
unexercised, an offer to purchase all of the Shares of the Corporation is made
by a third party, the Corporation shall use reasonable efforts to bring such
offer to the attention of the Optionee as soon as practicable and the
Corporation may, at its option, require the acceleration of the time for the
exercise of the Options granted under the Plan and of the time for the
fulfillment of any conditions or restrictions on such exercise and such required
acceleration of time shall be binding for all purposes of the Plan.
10.7 Notwithstanding any other provision herein, if because of a proposed
merger, amalgamation or other corporate arrangement or reorganization, the
exchange or replacement of Shares in the Corporation of those in another company
is imminent, the Board may, as deemed necessary or equitable by the Board in its
sole discretion, determine the manner in which all unexercised option rights
granted under the Plan shall be treated including, for example, requiring the
acceleration of the time for the exercise of such rights by the Optionee and of
the time for the fulfillment of any conditions or restrictions on such exercise.
All determinations of the Board under this paragraph 10.7 shall be final and
binding for all purposes of the Plan.
-8-
11. Regulatory Approval
11.1 Notwithstanding any of the provisions contained in the Plan or any
Option, the Corporation's obligation to grant Options and issue Shares and to
issue and deliver certificates for such securities to an Optionee pursuant to
the exercise of an Option shall be subject to:
(a) compliance with all applicable laws, regulations, rules,
orders of governmental or regulatory authorities in Canada
("Securities Regulators")
(b) compliance with the requirements of the Exchange; and
(c) receipt from the Optionee of such covenants, agreements,
representations and undertakings, including as to future
dealings in such Shares, as the Corporation determines to be
necessary or advisable in order to safeguard against the
violation of the securities laws of any jurisdiction.
11.2 The Corporation shall in no event be obligated to take any action in
order to cause the issuance and delivery of such certificates to comply with any
laws, regulations, rules, orders or requirements.
11.3 If any amendment, modification or termination to the provisions hereof
or any Option granted are required by any Securities Regulators, a stock
exchange or a market as a condition of approval to a distribution to the public
of any Shares or to obtain or maintain a listing or quotation of any Shares, the
Board is authorized to make such amendments and thereupon the Plan and any
outstanding Options (including any option agreement made pursuant hereto) shall
be deemed to be amended accordingly without requiring the consent or agreement
of any Optionee. The Corporation will give notice of any such amendment,
modification or termination to each holder of Options as soon as reasonably
practicable following the same, but failure to provide notice will not
invalidate such amendment, modification or termination.
12. Miscellaneous
12.1 An Optionee entitled to Shares as a result of the exercise of an Option
shall not be deemed for any purpose to be, or to have rights as, a shareholder
of the Corporation by such exercise, except to the extent Shares are issued
therefor and then only from the date such Shares are issued. No adjustment shall
be made for dividends or distributions or other rights for which the record date
is prior to the date such Shares are issued pursuant to the exercise of Options.
12.2 The Corporation may require an Optionee, as a condition of exercise of
an Option, to pay or reimburse any taxes which are required to be withheld in
connection with the exercise of such Option.
13. Effective Date, Amendment and Termination
13.1 The Plan is effective as of July 22, 2004.
13.2 The Board may, subject where required to Securities Regulators and/or
Exchange approval, from time to time amend, suspend or terminate the Plan in
whole or in part.
-9-
13.3 No action by the Board to terminate the Plan pursuant to this Section
13 shall affect any Options granted hereunder prior to such action.
13.4 The Board may amend, modify or terminate any outstanding Option,
including, but not limited to, substituting another award of the same or of a
different type or changing the date of exercise; provided, however that, the
Optionee's consent to such action shall be required unless the Board determines
that the action, when taken with any related action, would not materially and
adversely affect the Optionee or is made pursuant to Sections 10 or 11 hereof.
The Option Price of any outstanding Option granted to an insider may not be
reduced unless disinterested shareholder approval is obtained in accordance with
regulatory requirements.
APPENDIX A
INCENTIVE STOCK OPTION PLAN
OF
WESTERN FOREST PRODUCTS INC.
OPTION AGREEMENT
This Option Agreement is entered into between Western Forrest Products
Inc. (the "Corporation") and the Optionee named below pursuant to the
Corporation's Incentive Stock Option Plan (the "Plan") a copy of which are
attached hereto, and confirms the following:
1. Grant Date: ______________________________________________
2. Optionee: ______________________________________________
3. Number of Options: ______________________________________________
4. Option Price
($ per Share): _$____________________________________________
5. Expiry Date of Option
Period: ______________________________________________
6. Each Option that has vested entitles the Optionee to purchase one
Common Share of the Corporation
7. at any time up to 4:30 p.m. Vancouver time on the expiry date of the
Option Period. The Options vest as follows:
[INSERT VESTING ARRANGEMENTS]
8. This Option Agreement is subject to the following terms and conditions:
[INSERT TERMS AND CONDITIONS SET BY THE BOARD APPLICABLE TO THE
PARTICULAR GRANT]
9. This Option Agreement is subject to the terms and conditions set out in
the Plan, as amended or replaced from time to time. In the case of any
inconsistency between this Option Agreement and the Plan, the Plan
shall govern.
10. Unless otherwise indicated, all defined terms shall have the respective
meanings attributed thereto in the Plan.
-2-
11. By signing this agreement, the Optionee acknowledges that he, she, or
its authorized representative has read and understands the Plan.
IN WITNESS WHEREOF the parties hereto have executed this Option
Agreement as of the _______ day of _____________, _______.
WESTERN FOREST PRODUCTS INC.
__________________________________________________ Per: ______________________
Signature of Optionee Authorized Signatory
Per: ______________________
Authorized Signatory
SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
July 27, 2004, among DOMAN FOREST PRODUCTS LIMITED, DOMAN-WESTERN LUMBER LTD.,
WFP LUMBER SALES LIMITED and WFP QUATSINO NAVIGATION LIMITED (each, a
"Guaranteeing Subsidiary" and collectively, the "Guaranteeing Subsidiaries"),
each, a subsidiary of WESTERN FOREST PRODUCTS INC. (or its permitted successor),
a corporation organized and existing under the laws of Canada (the "Company"),
and THE BANK OF NEW YORK, as trustee under the indenture referred to below (the
"Trustee").
WITNESSETH
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of July 27, 2004, providing for
the issuance of an aggregate principal amount of $221,000,000 of 15% Secured
Bonds due 2009 (the "Securities");
WHEREAS, the Indenture provides that under certain circumstances
each Guaranteeing Subsidiary shall execute and deliver to the Trustee a
supplemental indenture pursuant to which such Guaranteeing Subsidiary shall
unconditionally guarantee all of the Company's obligations under the Securities
and the Indenture on the terms and conditions set forth herein (the "Subsidiary
Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiaries and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Securities as follows:
CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
1. AGREEMENT TO GUARANTEE. Each of the Guaranteeing Subsidiaries
hereby agrees as follows:
(a) Along with all Guarantors named in the Indenture, to
jointly and severally Guarantee to each Holder of Securities authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of the Indenture, the Securities
or the obligations of the Company hereunder or thereunder, that:
(i) the principal of and interest on the Securities will be
promptly paid in full when due, whether at Stated Maturity, by
acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Securities, if any, if lawful, and
all other obligations of the Company to the Holders or the
Trustee hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and
(ii) in case of any extension of time of payment or renewal of
any Securities or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at Stated Maturity, by
acceleration or otherwise. Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the
Guarantors (including such Guaranteeing Subsidiary) shall be jointly
and severally obligated to pay the same immediately. Each Guarantor
agrees that this is a guarantee of payment and not a guarantee of
collection.
(b) The obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Securities or
the Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder of the Securities with respect to any provisions hereof or
thereof, the recovery of any judgment against the Company, any action to enforce
the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor.
(c) The following is hereby waived: diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever.
(d) This Subsidiary Guarantee shall not be discharged except
by complete performance of the obligations contained in the Securities, the
Indenture and this Subsidiary Guarantee.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Guarantors, any amount paid by either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article Five of the
Indenture for the purposes of this Subsidiary Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article Five of the Indenture,
such obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Subsidiary Guarantee.
2
(h) The Guarantors shall have the right to seek contribution
from any non-paying Guarantor so long as the exercise of such right does not
impair the rights of the Holders or the Trustee under this Subsidiary Guarantee.
(i) The Guaranteeing Subsidiary hereby confirms that it is its
intention that this Subsidiary Guarantee not constitute a fraudulent transfer or
conveyance for purposes of bankruptcy law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act, Fraudulent Conveyance Act (British
Columbia), the Fraudulent Preference Act (British Columbia) or any similar
federal or state law or Canadian federal or provincial law to the extent
applicable to any Guarantee. To effectuate the foregoing intention, the
Guaranteeing Subsidiary hereby irrevocably agrees that its obligations hereunder
and Article Twelve of the Indenture shall be limited to the maximum amount as
will, after giving effect to such maximum amount and all other contingent and
fixed liabilities that are relevant under such laws, and after giving effect to
any collections from, rights to receive contribution from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under Article Twelve of the Indenture, result in the obligations
hereunder not constituting a fraudulent transfer or conveyance.
2. EXECUTION AND DELIVERY. Each of the Guaranteeing Subsidiaries
agrees that this Subsidiary Guarantee shall remain in full force and effect
notwithstanding any failure to endorse on each Security a notation of such
Subsidiary Guarantee.
3. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
Any Guaranteeing Subsidiary may consolidate with, amalgamate with, merge with,
or wind up into (whether or not such Guaranteeing Subsidiary is the surviving
Person) the Company or another Guarantor without restriction or with or into
another corporation, Person or entity whether or not affiliated with such
Guarantor to the same extent that the Company may amalgamate with, consolidate
with, merge with or into, or transfer All or Substantially All of its assets to
any other Person; provided, however, that, subject to the provisions of Section
12.05 of the Indenture, if such other Person is not the Company or another
Guarantor, the Person formed by or surviving any such amalgamation,
consolidation, wind-up or merger must expressly assume all the obligations of
such Guarantor pursuant to a Supplemental Indenture in the form hereof.
4. RELEASES. In the event of a sale or other disposition of all of
the assets of any Guaranteeing Subsidiary by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the Capital Stock of such
Guaranteeing Subsidiary, then such Guaranteeing Subsidiary (in the event of a
sale or other disposition, by way of merger, consolidation or otherwise, of all
of the Capital Stock of the Guaranteeing Subsidiary) or the Person acquiring the
property (in the event of a sale or other disposition of All or Substantially
All of the assets of the Guaranteeing Subsidiary) will be released and relieved
of any obligations under this Subsidiary Guarantee.
5. NEW YORK LAW TO GOVERN. THE LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
3
6. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
7. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
8. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
4
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: July 27, 2004
DOMAN FOREST PRODUCTS LIMITED
By: /s/ P. G. Hosier
--------------------------------
Name: P. G. Hosier
-----------------------------
Title: Secretary and Treasurer
----------------------------
DOMAN-WESTERN LUMBER LTD.
By: /s/ P. G. Hosier
--------------------------------
Name: P. G. Hosier
-----------------------------
Title: Secretary
----------------------------
WFP LUMBER SALES LIMITED
By: /s/ P. G. Hosier
--------------------------------
Name: P. G. Hosier
-----------------------------
Title: Corporate Secretary
----------------------------
WFP QUATSINO NAVIGATION LIMITED
By: /s/ P. G. Hosier
--------------------------------
Name: P. G. Hosier
-----------------------------
Title: Corporate Secretary
----------------------------
WESTERN FOREST PRODUCTS INC.
By: /s/ P. G. Hosier
--------------------------------
Name: P. G. Hosier
-----------------------------
Title: Corporate Secretary
----------------------------
THE BANK OF NEW YORK, as Trustee
By: /s/ Miriam Y. Molina
-----------------------------
Name: Miriam Y. Molina
---------------------------
Title: Assistant Vice President
--------------------------
[CANADIAN
FLAG LOGO] Industry Canada Industrie Canada
CERTIFICATE CERTIFICAT
OF AMENDMENT DE MODIFICATION
CANADA BUSINESS LOI CANADIENNE SUR
CORPORATIONS ACT LES SOCIETES PAR ACTIONS
WESTERN FOREST PRODUCTS INC. 420424-7
- ------------------------------------- -------------------------------------
Name of corporation- Corporation number-
Denomination de la societe Numero de la societe
I hereby certify that the articles Je certifie que les statuts de la
of the above-named corporation were societe susmentionnee ont ete
amended: modifies :
a) under section 13 of the Canada [ ] a) en vertu de l'article 13 de la Loi
Business Corporations Act in canadienne sur les societes par
accordance with the attached actions, conformement a l'avis
notice; ci-joint;
b) under section 27 of the Canada [ ] b) en vertu de l'article 27 de la Loi
Business Corporations Act as set canadienne sur les societes par
out in the attached articles of actions, tel qu'il est indique
amendment designating a series dans les clauses modificatrices
of shares; ci-jointes designant une serie
d'actions;
c) under section 179 of the Canada [ ] c) en vertu de l'article 179 de la
Business Corporations Act as set Loi canadienne sur les societes
out in the attached articles of par actions, tel qu'il est
amendment; indique dans les clauses
modificatrices ci-jointes;
d) under section 191 of the Canada [x] d) en verdu de l'article 191 de la
Business Corporations Act as set Loi canadienne sur les societes
out in the attached articles of par actions, tel qu'il est indique
reorganization; dans les clauses de reorganisation
ci-jointes;
R. Shaw JULY 27, 2004 / LE 27 JUILLET 2004
Director - Directeur Date of Amendment -
Date de modification
[CANADA LOGO]
[CANADIAN FLAG] Industry Canada Industrie Canada FORM 14 FORMULAIR 14
ARTICLES OF REORGANIZATION CLAUSES DE REORGANISATION
Canada Business Loi canadienne sur les (SECTION 191) (ARTICLE 191)
Corporations Act societes par actions
-------------------------------------------------------------------------------------------------------------------------------
1 -- Name of corporation - Denomination de la societe 2 -- Corporation No. - N(0)de la societe
WESTERN FOREST PRODUCTS INC. 420424-7
-------------------------------------------------------------------------------------------------------------------------------
3 -- In accordance with the order for reorganization, the Conformement a l'ordonnance de reorganisation, les statuts;
articles of incorporation are amended as follows: constitutifs sont modifies comme suit:
The Articles of the Corporation were not amended by the order for reorganization and remain as attached in Schedule A hereto.
-------------------------------------------------------------------------------------------------------------------------------
Signature Printed Name - Nom en letters moulees 4 - Capacity of - En qualite de 5 - Tel. No. = N(0)de tel.
/s/ P.G. Hosier Philip G. Hosier Corporate Secretary 604 665 6231
-------------------------------------------------------------------------------------------------------------------------------
FOR DEPARTMENTAL USE ONLY - A L'USAGE DU MINISTERE SEULEMENT
-------------------------------------------------------------------------------------------------------------------------------
JUL. 28 2004
-------------------------------------------------------------------------------------------------------------------------------
IC 3409 (2003/06) [GOVT. OF CANADA LOGO]
-------------------------------------------------------------------------------------------------------------------------------
<Table>
<Caption>
[CANADIAN FLAG] Industry Canada Industrie Canada FORM 6 FORMULAIRE 6
NOTICE OF DIRECTORS, LISTE DES ADMINISTRATEURS,
Canada Business Loi canadienne sur les NOTICE OF CHANGE OF AVIS DE CHANGEMENT
Corporations Act societes par actions DIRECTORS OR NOTICE OF DES ADMINISTRATEURS OU AVIS DE
CHANGE OF ADDRESS OF A CHANGEMENT D'ADDRESSE D'UN
PRESENT DIRECTOR DES ADMINISTRATEUR ACTUEL
[SECTIONS 105 AND 113(1)] [ARTICLES 106 ET 113(1)]
- ------------------------------------------------------------------------------------------------------------------------------------
1 -- Name of the Corporation - Denomination de la societe 2 -- Corporation No. - N(o) de la societe
WESTERN FOREST PRODUCTS INC. 420424-7
- ------------------------------------------------------------------------------------------------------------------------------------
3 -- The following persons became directors of this corporation - Les personnes suivantes sont devenues administrateurs de la
presente societe
- ------------------------------------------------------------------------------------------------------------------------------------
Effective Date Residential Address - Adresse domciliaire Resident Canadian - Y/N
Name - Nom Date d'entree en Resident canadien - O/N
vigueur
- ------------------------------------------------------------------------------------------------------------------------------------
James D. Arthurs July 27, 2004 2420 Russet Place, West Vancouver, BC V7V 3B6 Y
Derek Brown July 27, 2004 48 St. Andrews Gardens, Toronto ON M4W 2E1 Y
John B. Newman July 27, 2004 110 Dunvegan Road, Toronto ON M4V 2R1 Y
John MacIntyre July 27, 2004 8 Wanless Crescent, Toronto ON M4N 3B7 Y
John S. Lacey July 27, 2004 18 Concorde Place, PH7, Toronto ON M3C 3T9 Y
Lee Doney July 27, 2004 2267 Allenby Street, Victoria BC V8R 3C4 Y
J. Peter Gordon July 27, 2004 165 Rose Park Drive, Toronto ON M4T 1R6 Y
- ------------------------------------------------------------------------------------------------------------------------------------
4 -- The following persons ceased to be directors of this corporation - Les personnes suivantes ont cesse d'etre administrateurs de
la presente societe
- ------------------------------------------------------------------------------------------------------------------------------------
Name - Nom Effective Date Residential Address - Adresse domcilliaire
Date d'entree en
vigueur
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
5 -- The directors of this corporation now are - Les administrateurs de la presente societe sont maintenant
- ------------------------------------------------------------------------------------------------------------------------------------
Name - Nom Residential Address - Adresse domciliaire Resident Canadian - Y/N
Resident canadien - O/N
- ------------------------------------------------------------------------------------------------------------------------------------
James D. Arthurs 2420 Russet Place, West Vancouver BC V7V 3B6 Y
Jaspaul H. Doman 768 Fraynes Road, RR #1, Mill Bay, BC V0R 2P0 Y
Derek Brown 48 St. Andrews Gardens, Toronto ON M4W 2E1 Y
John B. Newman 110 Dunvegan Road, Toronto, ON M4V 2R1 Y
John MacIntyre 8 Wanless Crescent, Toronto, ON M4N 3B7 Y
John S. Lacey 18 Concorde Place, PH7, Toronto ON M3C 3T9 Y
Lee Doney 2267 Allenby Street, Victoria BC V8R 3C4 Y
J. Peter Gordon 165 Rose Park Drive, Toronto, ON M4T 1R6 Y
- ------------------------------------------------------------------------------------------------------------------------------------
6 -- Change of address of a present director - Changement d'addressee d'un administrateur actuel
- ------------------------------------------------------------------------------------------------------------------------------------
Name - Nom Effective Date Former Residential Address New Residential Address
Date d'entree en Adresse domciliaire precedente Nouvelle addresse residentiel
vigueur
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Signature Printed Name - Nom en letters 7 - Capacity of - En qualite de 8 - Tel. No. = N(o) de tel.
/s/ P.G. Hosier Philip G. Hosier Corporate Secretary 604 665 6231
- ------------------------------------------------------------------------------------------------------------------------------------
FOR DEPARTMENTAL USE ONLY - A L'USAGE DU MINISTERE SEULEMENT
- ------------------------------------------------------------------------------------------------------------------------------------
JUL 28 2004
- ------------------------------------------------------------------------------------------------------------------------------------
IC 3103 (2003/06) (cxm) WF-369 [GOV'T OF CANADA LOGO]
</Table>
IN THE MATTER OF WESTERN
FOREST PRODUCTS INC. AND THE
CANADA BUSINESS CORPORATIONS ACT
TO WIT:
I, LATA CASCIANO, Barrister and Solicitor, of 2100 - 1075 West Georgia Street,
in the City of Vancouver, in the Province of British Columbia, do solemnly
declare:
1. THAT I am a Partner with the firm of Fasken Martineau DuMoulin LLP at 2100
- 1075 West Georgia Street, in the City of Vancouver, in the Province of
British Columbia, who are the solicitors for Western Forest Products Inc.
(the "Corporation"), and as such have knowledge of the matters hereinafter
deposed to.
2. THAT pursuant to the Order issued by the Supreme Court of British Columbia
on June 11, 2004, Rick Doman was to be appointed as a Director of the
Corporation.
3. THAT on May 26, 2004, a Notice of Change of Directors was filed with
Industry Canada confirming the appointment of Jaspaul H. Doman as a
Director of the Corporation on April 30, 2004.
4. THAT to the best of my knowledge, information and belief, the said Jaspaul
H. Doman and Rick Doman are the same person.
5. THAT this Statutory Declaration is made to permit the filing of Articles
of Reorganization and the Court Order dated June 11, 2004 with Industry
Canada.
AND I make this solemn declaration, conscientiously believing it to be true and
knowing that it is of the same force and effect as if made under oath and by
virtue of the CANADA EVIDENCE ACT.
DECLARED BEFORE ME at the City )
of Vancouver, in the Province of )
British Columbia, this 28th day of )
July, 2004 )
)
)
/s/ Lynne M. Charbonneau ) /s/ L. Casciano
- ------------------------------------ ------------------------------------
A Commissioner for taking Affidavits ) LATA CASCIANO
for British Columbia )
[CANADIAN
FLAG LOGO] Industry Canada Industrie Canada
CERTIFICATE CERTIFICAT
OF AMENDMENT DE MODIFICATION
CANADA BUSINESS LOI CANADIENNE SUR
CORPORATIONS ACT LES SOCIETES PAR ACTIONS
WESTERN FOREST PRODUCTS INC. 420424-7
- ------------------------------------- -------------------------------------
Name of corporation- Corporation number-
Denomination de la societe Numero de la societe
I hereby certify that the articles Je certifie que les statuts de la
of the above-named corporation were societe susmentionnee ont ete
amended: modifies :
a) under section 13 of the Canada [ ] a) en vertu de l'article 13 de la Loi
Business Corporations Act in canadienne sur les societes par
accordance with the attached actions, conformement a l'avis
notice; ci-joint;
b) under section 27 of the Canada [ ] b) en vertu de l'article 27 de la Loi
Business Corporations Act as set canadienne sur les societes par
out in the attached articles of actions, tel qu'il est indique
amendment designating a series dans les clauses modificatrices
of shares; ci-jointes designant une serie
d'actions;
c) under section 179 of the Canada [x] c) en vertu de l'article 179 de la
Business Corporations Act as set Loi canadienne sur les societes
out in the attached articles of par actions, tel qu'il est
amendment; indique dans les clauses
modificatrices ci-jointes;
d) under section 191 of the Canada [ ] d) en verdu de l'article 191 de la
Business Corporations Act as set Loi canadienne sur les societes
out in the attached articles of par actions, tel qu'il est indique
reorganization; dans les clauses de reorganisation
ci-jointes;
[illegible signature] JUNE 21, 2004 / LE 21 JUIN 2004
Director - Directeur Date of Amendment -
Date de modification
[CANADA LOGO]
[CANADIAN FLAG] Industry Canada Industrie Canada FORM 4 FORMULE 4
ARTICLES OF AMENDMENT CLAUSES MODIFICATRICES
Canada Business Loi canadienne sur les (SECTION 27 OR 177) (ARTICLE 27 OU 177)
Corporations Act societes par actions
- -------------------------------------------------------------------------------------------------------------------------------
1 - Name of the corporation - Denomination de la societe 2 - Corporation No. - N(o)de la societe
4204247 Canada Inc. 420424-7
- -------------------------------------------------------------------------------------------------------------------------------
3 - The articles of the above named corporation are Les statuts de la societe mentionnee ci-dessus sont
amended as follows: modifies de la facon suivante :
To change the name of the Corporation from 4204247 CANADA INC. to WESTERN FOREST PRODUCTS INC. by deleting paragraph 1 of
the Articles of Incorporation and inserting the following in place thereof:
1. "WESTERN FOREST PRODUCTS INC."
such change of name to be effective upon the date of issuance of the Certificate of Amendment.
- -------------------------------------------------------------------------------------------------------------------------------
Date Signature 7 - Capacity of - En qualite de
June 21, 2004 /s/ J.H. Doman Director
- -------------------------------------------------------------------------------------------------------------------------------
For Departmental Use Only - Printed Name - Nom en letters moulees
A l'usage du ministere seulement
File
Deposee June 22, 2004 J.H. Doman [GOVT. OF CANADA LOGO]
- ---------------------------------------------------------------------------------
IC 3069 (2001/11)
[CANADIAN
FLAG LOGO] Industry Canada Industrie Canada
CERTIFICATE CERTIFICAT
OF INCORPORATION DE CONSTITUTION
CANADA BUSINESS LOI CANADIENNE SUR
CORPORATIONS ACT LES SOCIETES PAR ACTIONS
4204247 CANADA INC. 420424-7
- ------------------------------------- -------------------------------------
Name of corporation- Corporation number-
Denomination de la societe Numero de la societe
I hereby certify that the above- Je certifie que la societe
named corporation, the articles of susmentionnee, dont les statuts
incorporation of which are attached, constitutifs sont joints, a ete
was incorporated under the Canada constituee en societe en vertu de
Business Corporations Act. la Loi canadienne sur les societes
par actions.
[illegible signature] APRIL 27, 2004 / LE 27 AVRIL 2004
Director - Directeur Date of Incorporation -
Date de constitution
[CANADA LOGO]
[CANADIAN FLAG LOGO] Industry Canada Industrie Canada FORM 1 FORMULAIRE 1
ARTICLES OF INCORPORATION STATUS CONSTITUTIFS
Canada Business Loi canadienne sur les (SECTION 6) (ARTICLE 6)
Corporations Act societe par actions
- ------------------------------------------------------------------------------------------------------------------------------------
1 - Name of the corporation Denomination sociale de la societe
4204247 CANADA INC.
- ------------------------------------------------------------------------------------------------------------------------------------
2 - The province or territory in Canada where the registered office La province ou le territoire au Canada ou est situe le siege
is situated social
British Columbia
- ------------------------------------------------------------------------------------------------------------------------------------
3 - The classes and any maximum number of shares that the Categories et le nombre maximal d'actions que la societe est
corporation is authorized to issue autorisee a emettre
The Corporation is authorized to issue an unlimited number of Common shares and an unlimited number of Preferred shares which shall
have attached thereto the rights, privileges, restrictions and conditions set out in the attached Schedule A.
- ------------------------------------------------------------------------------------------------------------------------------------
4 - Restrictions, if any, on share transfers Restrictions sur le transfert des actions, s'il y a lieu
So long as the Corporation is not a "distributing corporation" as defined in the Canada Business Corporations Regulations, the
transfer of shares of the Corporation shall be restricted in that no shareholder shall be entitled to transfer any share or shares
without the approval of the Directors of the Corporation expressed by a resolution passed at a meeting of the Board of Directors or
by an instrument or instruments in writing signed by all of the Directors.
- ------------------------------------------------------------------------------------------------------------------------------------
5 - Number (or minimum and maximum number) of directors Nombre (ou nombre minimal et maximal) d'administrateurs
A minimum of 1 and a maximum 15 unless the Corporation is a "distributing corporation" in which case the minimum shall be 3.
- ------------------------------------------------------------------------------------------------------------------------------------
6 - Restrictions, if any, on the business the corporation may carry Limites imposees a l'activite commerciale de la societe, s'il
on y a lieu
None
- ------------------------------------------------------------------------------------------------------------------------------------
7 - Other provisions, if any Autres dispositions, s'il y a lieu
The Directors may appoint one or more Directors, who shall hold office for a term expiring not later than the close of the next
annual meeting of shareholders, but the total number of Directors so appointed may not exceed one-third of the number of Directors
elected at the previous annual meeting of shareholders.
- ------------------------------------------------------------------------------------------------------------------------------------
8 - Incorporators - Fondateurs
- ------------------------------------------------------------------------------------------------------------------------------------
Address (include postal code) Tel. No. - N de
Name(s) - Nom(s) Adresse (inclure le code postal) Signature tel.
- ------------------------------------------------------------------------------------------------------------------------------------
FMD Service (B.C.) Inc. 2100 - 1075 West Georgia Street
Vancouver, BC V6E 3G2 /s/ Peter Finley (604) 631 4926
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
FOR DEPARTMENTAL USE ONLY - A L'USAGE DU MINISTERE SEULEMENT
- ------------------------------------------------------------------------------------------------------------------------------------
Apr 27 2004
#420424-7
- ------------------------------------------------------------------------------------------------------------------------------------
IC 3419 (2003/06) () [GOVT OF CANADA LOGO]
SCHEDULE A
PART 1
RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS
ATTACHED TO THE COMMON SHARES
1.1 VOTING. The holders of the Common shares shall be entitled to receive
notice of and to attend all meetings of shareholders of the Corporation (other
than a separate meeting of the holders of another class of shares) and shall
have one vote for each Common share held.
1.2 DIVIDENDS. Subject to the rights of the holders of the Preferred shares
with respect to the payment of dividends, the holders of the Common shares shall
be entitled to receive and the Corporation shall pay thereon, as and when
declared by the directors of the Corporation out of the monies of the
Corporation properly available for the payment of dividends, dividends in such
amount and in such form as the directors of the Corporation may from time to
time determine.
1.3 DISSOLUTION. In the event of the dissolution, liquidation or winding-up
of the Corporation or any other distribution of the assets of the Corporation
among its shareholders for the purpose of winding up its affairs, the holders of
the Common shares shall, subject to the rights of the holders of the Preferred
shares, be entitled to receive the remaining property and assets of the
Corporation.
PART 2
RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS
ATTACHED TO THE PREFERRED SHARES
2.1 NON-VOTING. Except as otherwise required by law or hereinafter provided,
the holders of the Preferred shares shall not be entitled to receive notice of
or to attend or to vote at any meeting of shareholders of the Corporation.
2.2 ISSUABLE IN SERIES. The Preferred shares may, at any time or from time
to time, be issued in one or more series, and the directors may, by resolution,
fix the number of Preferred shares in, and determine the designation, rights,
privileges, restrictions and conditions attaching to the Preferred shares of
each series. The directors shall, before the issue of shares of the series,
send, in the form that the Director fixes, articles of amendment to the
Director to designate a series of shares.
2.3 PREFERENCE OVER JUNIOR SHARES. The Preferred shares of each series shall
be entitled to preference over the Common shares with respect to the payment of
dividends and the distribution of assets of the Corporation in the event of the
liquidation, dissolution or winding-up of the Corporation or in the event of any
other distribution of assets of the Corporation among its shareholders for the
purpose of winding-up its affairs; and the Preferred shares of each series may
be given such other preferences not inconsistent with this section over the
Common shares as may be determined in the case of each series authorized to be
issued.
2.4 PARITY WITH PREFERRED SHARES. The Preferred shares of each series shall
rank on a parity with the Preferred shares of every other series with respect to
priority in the payment of dividends and in the distribution of assets of the
Corporation in the event of any liquidation, dissolution or winding-up of the
Corporation or any other distribution of assets of the Corporation among its
shareholders for the purpose of winding-up its affairs.
WESTERN FOREST PRODUCTS INC.
(formerly 4204247 Canada Inc.)
BYLAW NO. 1
A BYLAW RELATING GENERALLY TO THE
CONDUCT OF THE AFFAIRS OF THE CORPORATION
PART 1
INTERPRETATION
1.01 DEFINITIONS
In this bylaw and all other bylaws of the Corporation, unless the context
otherwise specifies or requires:
"Act" means the Canada Business Corporations Act RSC 1985, c. C-44 and
the regulations enacted pursuant to it in each case, as amended from
time to time and every statute or regulation that may be substituted
therefor and, in the case of such substitution, any references in the
bylaws of the Corporation to provisions of the Act shall be read as
references to the substituted provisions therefor in the next statute
or regulation as the case may be;
"articles" means the articles, as that term is defined in the Act, of
the Corporation, as amended or restated from time to time;
"auditor" means the auditor of the Corporation;
"board" or "board of directors" means the board of directors of the
Corporation;
"bylaw" means any bylaw of the Corporation from time to time in force
and effect;
"Corporation" means 4204247 Canada Inc.;
"director" means a director of the Corporation;
"electronic document" means, except in the case of a statutory
declaration or affidavit required under the Act, any form of
representation of information or of concepts fixed in any medium or by
electronic, optical or other similar means and that can be read or
perceived by a person or by any means;
"officer" has the meaning set forth in the Act but reference to any
specific officer is to the individual holding that office of the
Corporation;
"proxyholder" means a person holding a valid proxy for a shareholder;
"shareholder" means a shareholder of the Corporation; and
"voting person" means, in respect of a meeting of shareholders, a
shareholder entitled to vote at that meeting, a duly authorized
representative of a shareholder entitled to vote at that meeting or a
duly authorized proxyholder of a shareholder entitled to vote at that
meeting.
1
Unless otherwise defined herein, all terms that are contained in the bylaws and
that are defined in the Act, shall have the meanings given to such terms in the
Act.
1.02 NUMBER, GENDER AND HEADINGS
Words importing the singular number only shall include the plural and vice-versa
and words importing a specific gender shall include the other gender. The
insertion of headings in the bylaws and the division into Parts, Sections and
other subdivisions are for convenience of reference only, and shall not affect
the interpretation thereof.
1.03 BYLAWS SUBORDINATE TO OTHER DOCUMENTS
The bylaws are subordinate to, and should be read in conjunction with, the Act,
the articles and any unanimous shareholder agreement of the Corporation.
1.04 COMPUTATION OF TIME
The computation of time and any period of days shall be determined in accordance
with the Act and the provisions of the Interpretation Act (Canada) and any
statute that may be substituted for it, as amended from time to time.
PART 2
DIRECTORS
2.01 NOTICE OF MEETING
Any director may call a meeting of the board by giving notice stating the time
and place of the meeting to each of the directors. Except as otherwise required
by the Act, such notice need not specify the purpose of or the business to be
transacted at the meeting. Notices of board meetings shall be given in
accordance with Section 7.01 no less than 24 hours before the time of the
meeting, except that notices sent by mail shall be sent no less than 5 days
before the day of the meeting.
The board may appoint, by resolution, dates, times and places for regular
meetings of the board. A copy of any such resolution shall be given to each
director forthwith after being passed, but no other notice is required for any
such meeting except where the Act requires the purpose of or the business to be
transacted at a meeting to be specified.
2.02 MEETINGS WITHOUT NOTICE
A meeting of the board may be held without notice immediately following the
first or any annual meeting of shareholders.
2.03 PLACE OF MEETING
A meeting of the board may be held at any place within or outside Canada.
2.04 QUORUM FOR BOARD MEETINGS
At any meeting of the board, a quorum for the transaction of business shall be a
majority of the number of directors in office from time to time.
The board shall not transact business at a meeting of directors unless the
minimum number of resident Canadian directors required by the Act is present.
2
2.05 CHAIR OF BOARD MEETINGS
The chair of the board shall preside as chair of all meetings of the board. If
there is no chair of the board or if the chair is not present or is unwilling to
act as chair of a board meeting, then the chair of the Governance Committee of
the Corporation, if present, a director and willing to act, shall preside as
chair of the board meeting. In any other case, the directors present at the
meeting shall choose a director to preside as chair of the meeting.
2.06 VOTES AT BOARD MEETINGS
Questions arising at a meeting of the board shall be decided by a majority of
the votes. In the case of an equality of votes, the chair of the meeting shall
not have a second or casting vote.
2.07 COMMITTEES
Subject to the provisions of the Act and unless otherwise determined by the
board, each committee of the board shall have power to fix its quorum at not
less than the majority of its members, to elect its chair and to regulate its
procedures.
2.08 OFFICERS
Each officer shall hold office during the pleasure of the board. Any officer
may, however, resign at any time by giving notice to the Corporation.
PART 3
MEETINGS OF SHAREHOLDERS
3.01 NOTICE OF SHAREHOLDERS' MEETINGS
The board may call a meeting of shareholders by causing notice of the time,
place and, when required by the Act, purposes of the meeting to be given to each
shareholder entitled to vote at the meeting and registered on the records of the
Corporation on the record date for the purposes of determining shareholders
entitled to receive notice of the meeting, each director and the auditor.
3.02 QUORUM AT MEETINGS OF SHAREHOLDERS
A quorum at meetings of shareholders consists of one or more voting persons
present or deemed to be present and authorized to cast in the aggregate not less
than one-twentieth of the total votes attaching to all shares carrying the right
to vote at that meeting.
3.03 CHAIR OF SHAREHOLDER MEETINGS
The chair of the board shall preside as chair of all meetings of shareholders.
If there is no chair of the board or the chair of the board is not present or is
unwilling to act as chair of a shareholder meeting, then the president of the
Corporation, if present and willing to act, shall preside as chair of the
shareholder meeting. In any other case, the directors present shall choose one
of their number to be the chair of the meeting.
3.04 VOTING
Unless the chair of a meeting of shareholders directs a ballot or a voting
person demands one, each motion shall be voted upon by a show of hands. Each
voting person has one vote in a vote by show of hands. A ballot may be directed
or demanded either before or after a vote by show of hands. If a ballot is
taken, a prior vote by show of hands has no effect. A ballot so directed or
demanded shall be taken in such manner as the chair of the meeting shall direct.
If a ballot is taken, each voting person shall be
3
entitled with respect to each share which he is entitled to vote at the meeting
upon the motion, to one vote or such other number of votes as may be provided by
the articles, and the result of the ballot so taken shall be the decision of the
shareholders upon the said motion. Subject to compliance with the Act, any vote
at a meeting of shareholders may be taken in whole or in part by means of a
telephonic, electronic or other communication facility that the Corporation has
made available for that purpose. Unless a ballot is directed or demanded, an
entry in the minutes of a meeting to the effect that the chair of the meeting
declared a resolution to be carried or defeated is, in the absence of evidence
to the contrary, proof of the fact without proof of the number or proportion of
the votes recorded in favour of or against the resolution.
3.05 SCRUTINEERS
The chair of a meeting of shareholders may appoint for that meeting one or more
scrutineers, who need not be voting persons.
3.06 WHO MAY ATTEND SHAREHOLDERS' MEETING
The only persons entitled to attend a meeting of shareholders are voting
persons, the directors, the auditor and the president, if any, as well as others
permitted by the chair of the meeting.
3.07 ADJOURNMENTS
The chair of the meeting may and shall, if so directed by the meeting, adjourn
the meeting from time to time and from place to place but no business shall be
transacted at the adjourned meeting other than the business left unfinished at
the meeting from which the adjournment took place.
PART 4
SECURITY CERTIFICATES, PAYMENTS
4.01 CERTIFICATES
Security certificates shall be in such form as the board may approve. The
president or the board or a transfer agent or branch transfer agent of the
Corporation authorized to do so by the president or the board may order the
cancellation of any security certificate that has become defaced and the
issuance of a replacement certificate for it when the defaced certificate is
delivered to the Corporation or to a transfer agent or branch transfer agent of
the Corporation.
4.02 CHEQUES
Any amount payable in cash to shareholders (including dividends payable in cash)
may be paid by cheque drawn on any of the Corporation's bankers to the order of
each registered holder of shares of the class or series in respect of which such
amount is to be paid. Cheques may be sent by ordinary mail, postage prepaid, to
each such registered holder at that holder's address as shown in the records of
the Corporation, unless that holder otherwise directs in writing. The mailing of
a cheque as aforesaid shall satisfy and discharge all liability for the
applicable dividend or other payment to the extent of the sum represented by
such cheque plus the amount of any tax which the Corporation is required to and
does withhold, unless such cheque is not paid on due presentation.
4.03 CHEQUES TO JOINT SHAREHOLDERS
Cheques payable to joint shareholders shall be made payable to the order of all
such joint shareholders unless such joint shareholders direct otherwise. Such
cheques may be sent to the joint shareholders at the address appearing on the
records of the Corporation in respect of that joint holding, to the first
address so appearing if there is more than one, or to such other address as
those joint shareholders direct in writing.
4
4.04 NON-RECEIPT OF CHEQUES
The Corporation shall issue a replacement cheque in the same amount to any
person who does not receive a cheque sent as provided in this bylaw, if that
person has satisfied the conditions regarding indemnity, evidence of non-receipt
and title set by the board from time to time, either generally or for that
particular case.
4.05 CURRENCY OF DIVIDENDS
Dividends or other distributions payable in cash may be paid to some
shareholders in Canadian currency and to other shareholders in equivalent
amounts of a currency or currencies other than Canadian currency. The board may
declare dividends or other distributions in any currency or in alternative
currencies and make such provisions as it deems advisable for the payment of
such dividends or other distributions.
4.06 INTEREST; FRACTIONS
No dividend or other distribution shall bear interest against the Corporation.
Where the dividend or other distribution to which a shareholder is entitled
includes a fraction of a cent, such fraction shall be disregarded and such
payment shall be deemed payment in full.
4.07 FRACTIONAL SECURITY OR PROPERTY
If any dividend or other distribution results in any shareholder being entitled
to a fractional part of a security or property, the Corporation may pay such
shareholder in place of that fractional part the cash equivalent thereof as
determined by the board or may carry out the distribution and adjust the rights
of the shareholders on any basis the board considers appropriate.
PART 5
SIGNATORIES, INFORMATION
5.01 SIGNATORIES
Except for documents executed in the usual and ordinary course of the
Corporation's business, which may be signed by any officer or employee of the
Corporation acting within the scope of his or her authority, the following are
the only persons authorized to sign any document on behalf of the Corporation:
(a) any individual appointed by resolution of the board to sign
the specific document, that type of document or documents
generally on behalf of the Corporation; or
(b) any director or any officer appointed to office by the board,
and when so signed such document shall be binding upon the Corporation without
further act or formality. Except as otherwise provided herein, the signature of
any individual authorized to sign on behalf of the Corporation may, if
authorized by resolution of the board or permitted herein, be written, printed,
or otherwise mechanically or electronically reproduced as contemplated by the
Act. Anything so signed shall be as valid as if it had been signed manually,
even if that individual has ceased to hold office when anything so signed is
issued or delivered, until revoked by resolution of the board.
The corporate seal of the Corporation, if any, may be affixed to contracts,
documents and instruments in writing signed as aforesaid or by any officer or
officers, person or persons, appointed as aforesaid by the board of directors
but any such contract, document or instrument is not invalid merely because the
corporate seal, if any, is not affixed thereto.
5
5.02 RESTRICTION ON INFORMATION DISCLOSED
Except as required by the Act or authorized by the board, no shareholder is
entitled by virtue of being a shareholder to disclosure of any information,
document or records respecting the Corporation or its business.
PART 6
PROTECTION AND INDEMNITY
6.01 TRANSACTIONS WITH THE CORPORATION
No director or officer shall be disqualified by reason of being a director or
officer of the Corporation from, or be required to vacate his position as a
director or officer by reason of, holding any other office, employment or other
position with or having any pecuniary interest with respect to the Corporation
or any other body corporate or contracting with or being otherwise in any way
directly or indirectly interested in or concerned with any contract, transaction
or arrangement made or proposed to be made with the Corporation or being a
director or officer or acting in a similar capacity of, or having any interest
in, another party to such contract, transaction or arrangement. No such
contract, transaction or arrangement shall be void or voidable for any such
reason and no director or officer shall be liable to account to the Corporation
or others for any profit arising from any such office, employment or other
position or pecuniary interest or realized in respect of any such contract,
transaction or arrangement, except in all cases as otherwise provided in the
Act.
6.02 LIMITATION OF LIABILITY
Subject to any applicable statutory provisions, no director or officer and no
other individual who acts at the Corporation's request as a director or officer,
or in a similar capacity, of another entity, shall be liable for:
(a) the acts, receipts, neglects or defaults of any other person;
(b) joining in any receipt or other act for conformity;
(c) any loss, damage or expense to the Corporation or other entity
arising from the insufficiency or deficiency of title to any
property acquired by or on behalf of the Corporation or other
entity;
(d) the insufficiency or deficiency of any security in or upon
which any monies of the Corporation or other entity are
invested;
(e) any loss, damage or expense arising from the bankruptcy,
insolvency, act or omission of any person with whom any
monies, securities or other property of the Corporation or
other entity are lodged or deposited;
(f) any loss, damage or expense occasioned by any error of
judgment or oversight; or
(g) any other loss, damage or expense related to the performance
or non-performance of the duties of that individual's office.
6.03 CONTRACTS ON BEHALF OF THE CORPORATION
Subject to the Act, any contract entered into, or action taken or omitted, by or
on behalf of the Corporation shall, if duly approved by a resolution of the
shareholders, be deemed for all purposes to have had the prior authorization of
the shareholders.
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6.04 INDEMNITY OF DIRECTORS AND OFFICERS
Subject to the limitations contained in the Act, but without limiting the right
of the Corporation to indemnify any individual under the Act or otherwise to the
full extent permitted by law, the Corporation:
(a) shall indemnify each director or officer or former director or
officer and each other individual who acts or has acted at the
Corporation's request as a director or officer, or in a
similar capacity, of another entity (and each such
individual's respective heirs and personal representatives),
against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, reasonably
incurred in respect of any civil, criminal, administrative,
investigative or other proceeding in which the individual is
involved because of that association with the Corporation or
other entity, provided:
(i) the individual acted honestly and in good faith with
a view to the best interests of the Corporation or,
as the case may be, to the best interests of the
other entity for which the individual acted as a
director or officer or in a similar capacity at the
Corporation's request; and
(ii) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty,
the individual had reasonable grounds for believing
that the individual's conduct was lawful; and
(b) shall advance monies to a director, officer or other
individual for the costs, charges and expenses of a proceeding
referred to in Section 6.04(a) in accordance with the Act.
Notwithstanding the foregoing, any such indemnity or advance of monies in
respect of an action referred to in Section 6.04(a) by or on behalf of the
Corporation or other entity in respect of which an individual has acted as
director or officer or in a similar capacity at the request of the Corporation
to procure judgment in its favour (i.e. a derivative action) shall be subject to
approval of a court.
6.05 INDEMNITIES NOT LIMITING
The provisions of this Article 6 shall be in addition to and not in substitution
for or limitation of any rights, immunities and protections to which a person is
otherwise entitled.
PART 7
NOTICES
7.01 PROCEDURE FOR GIVING NOTICES
Any notice (which term includes any communication or document) to be given
pursuant to the Act, the articles, the bylaws or otherwise to a shareholder or
other securityholder of the Corporation, director, officer or auditor shall be
sufficiently given if delivered personally to the person to whom it is to be
given or if delivered to the person's address as shown in the records of the
Corporation or mailed to the person at such address by ordinary mail, postage
prepaid, or, if the person consents, provided by electronic document in
accordance with the Act. Notice shall not be sent by mail if there is any
general interruption of postal services in the municipality in which or to which
it is mailed. Any notice delivered shall be deemed to have been received when it
is delivered personally or at the address as aforesaid. Except as otherwise
specified by law or where permitted by contract any such notice mailed or
provided by electronic document as aforesaid shall be deemed to have been
received at the time specified in the Act.
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7.02 NOTICES TO SUCCESSORS IN TITLE
Notice to a shareholder or other securityholder as aforesaid is sufficient
notice to each successor in title to that shareholder or other securityholder
until the name and address of that successor have been entered on the records of
the Corporation.
7.03 NOTICE TO JOINT SECURITYHOLDERS
Notice to one joint securityholder is sufficient notice to all of them. Such
notice shall be addressed to all such joint securityholders and sent to the
address for them shown in the records of the Corporation, or to the first such
address if there is more than one.
7.04 FACSIMILE SIGNATURES ON NOTICES
The signature on any notice or other communication or document to be sent by the
Corporation may be written, printed, stamped, engraved, lithographed or
otherwise mechanically reproduced.
7.05 OMISSION OF NOTICE DOES NOT INVALIDATE ACTIONS
All actions taken at a meeting in respect of which a notice has been given shall
be valid even if:
(a) by accident, notice was not given to any person;
(b) notice was not received by any person; or
(c) there was an error in a notice that did not affect the
substance of the notice.
7.06 WAIVER OF NOTICE
Any person entitled to notice under the Act, the articles or the bylaws may
waive that notice. Waiver, either before or after the event referred to in the
notice, shall cure any defect in giving that notice to such person.
PART 8
BORROWING POWERS
8.01 POWER TO BORROW
In addition to, and without limiting such other powers which the Corporation may
by law possess, the directors of the Corporation may without authorization of
the shareholders:
(a) borrow money upon the credit of the Corporation;
(b) issue, reissue, sell, pledge or hypothecate debt obligations
of the Corporation;
(c) give a guarantee or indemnity on behalf of the Corporation to
secure performance of an obligation of any person; and
(d) mortgage, hypothecate, pledge or otherwise create a security
interest in all or any property of the Corporation, owned or
subsequently acquired, to secure any obligation of the
Corporation.
The words "debt obligation" as used in this paragraph mean a bond,
debenture, note or other evidence of indebtedness or guarantee of the
Corporation, whether secured or unsecured.
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8.02 DELEGATION
The directors may from time to time by resolution delegate the powers conferred
on them by paragraph 8.01 to a director, a committee of directors or an officer
of the Corporation.
8.03 POWERS NOT IN SUBSTITUTION
The powers hereby conferred shall be deemed to be in supplement of and not in
substitution for any powers to borrow money for the purposes of the Corporation
possessed by its directors or officers independently of a borrowing bylaw.
PART 9
MAKE, AMEND OR REPEAL OF BYLAWS
9.01 MAKE, AMEND OR REPEAL BYLAWS
Subject to compliance with the Act, the board may make, amend or repeal one or
more bylaws.
9.02 EFFECT OF AMENDMENT OR REPEAL OF BYLAWS
The amendment or repeal of any bylaw in whole or part shall not in any way
affect the validity of any act done or right, privilege, obligation or liability
acquired or incurred thereunder prior to such amendment or repeal. All
directors, officers and other persons acting under any bylaw amended or repealed
in whole or part shall continue to act as if elected or appointed under the
provisions of this bylaw.
MADE by the Board of Directors as of the 27th day of April, 2004, as amended by
the Board of Directors on November 5, 2004.
/S/ REYNOLD HERT /S/ PHILIP G. HOSIER
- -------------------------------------- -------------------------------
President and Chief Executive Officer Corporate Secretary
CONFIRMED by the Shareholder of the Corporation on the 27th day of April, 2004,
and amendment dated November 5, 2004 confirmed by the Shareholders of the
Corporation on the ________ day of ________________, 2005.
-------------------------------
Corporate Secretary
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