EXHIBIT 3.1
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HARVEST ENERGY TRUST
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FOURTH AMENDED AND RESTATED
TRUST INDENTURE
DATED JANUARY 1, 2008
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BURNET, DUCKWORTH & PALMER LLP
TABLE OF CONTENTS
PAGE
ARTICLE 1 INTERPRETATION.....................................................1
1.1 Definitions........................................................1
1.2 Meaning of "Outstanding"...........................................7
1.3 Income Tax Act.....................................................7
1.4 Headings...........................................................7
1.5 Construction of Terms..............................................7
1.6 References to Acts Performed by the Trust..........................7
ARTICLE 2 DECLARATION OF TRUST...............................................7
2.1 Settlement of Trust................................................7
2.2 Declaration of Trust...............................................7
2.3 Name...............................................................8
2.4 Nature of the Trust................................................8
2.5 Legal Entitlements and Restrictions of Unitholders.................8
2.6 Liability of Unitholders...........................................8
2.7 Contracts of the Trust.............................................9
2.8 Head Office of Trust...............................................9
ARTICLE 3 ISSUE AND SALE OF TRUST UNITS......................................9
3.1 Nature and Ranking of Trust Units..................................9
3.2 Authorized Number of Trust Units..................................10
3.3 No Fractional Trust Units.........................................10
3.4 Re-purchase of Initial Trust Units by Trust.......................10
3.5 Offerings of Trust Units and Indebtedness.........................10
3.6 Ranking of Trust Units............................................10
3.7 Trust Units Fully Paid and Non-assessable.........................10
3.8 No Conversion, Retraction, Redemption or Pre-emptive Rights.......10
3.9 Consolidation of Trust Units......................................10
3.10 Special Voting Rights.............................................11
3.11 Non-resident Holders..............................................11
ARTICLE 4 INVESTMENTS OF TRUST FUND.........................................11
4.1 Purpose of the Trust..............................................11
4.2 Permitted Investments.............................................12
4.3 Other Investment Restrictions.....................................12
ARTICLE 5 DISTRIBUTIONS.....................................................12
5.1 Determination of Net Income of the Trust..........................12
5.2 Net Income of the Trust to Become Payable.........................12
5.3 Net Realized Capital Gains to Become Payable......................13
5.4 Net Income and Net Realized Capital Gains for Income Tax
Purposes to Become Payable........................................13
5.5 Other Amounts.....................................................13
5.6 Enforcement.......................................................13
5.7 Payment of Amounts Payable........................................13
5.8 Distribution of Additional Trust Units............................13
5.9 Withholding Taxes.................................................14
ARTICLE 6 APPOINTMENT, RESIGNATION AND REMOVAL OF TRUSTEE...................14
6.1 Trustee's Term of Office..........................................14
6.2 Resignation of Trustee............................................14
6.3 Removal of Trustee................................................14
6.4 Appointment of Successor to Trustee...............................15
6.5 Failure to Appoint Successor......................................15
6.6 Qualifications of Trustee.........................................15
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TABLE OF CONTENTS
(continued)
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ARTICLE 7 CONCERNING THE TRUSTEE............................................15
7.1 Powers of the Trustee and the Corporation.........................15
7.2 Specific Powers and Authorities...................................16
7.3 Restrictions On the Trustee's Powers..............................19
7.4 Banking...........................................................19
7.5 Standard of Care..................................................20
7.6 Fees and Expenses.................................................20
7.7 Limitations On Liability of Trustee...............................20
7.8 Indemnification of Trustee........................................21
7.9 Environmental Indemnity...........................................21
7.10 Apparent Authority................................................22
7.11 Notice to Unitholders of Non-eligibility for Deferred
Income Plans......................................................22
7.12 Declaration as to Beneficial Ownership............................22
7.13 Conditions Precedent to Trustee's Obligations to Act..............22
7.14 Survival of Indemnities...........................................22
7.15 Trustee May Have Other Interests..................................23
7.16 Documents Held by Trustee.........................................23
ARTICLE 8 DELEGATION OF POWERS..............................................23
8.1 The Corporation...................................................23
8.2 Offerings and Other Matters.......................................23
8.3 Exclusions From Delegation........................................24
8.4 Power of Attorney.................................................24
8.5 Liability of Trustee..............................................24
ARTICLE 9 AMENDMENT.........................................................25
9.1 Amendment.........................................................25
ARTICLE 10 MEETINGS OF UNITHOLDERS..........................................26
10.1 Annual and Special Meetings of Unitholders........................26
10.2 Notice of Meetings................................................26
10.3 Quorum............................................................26
10.4 Voting Rights of Unitholders......................................26
10.5 Resolutions.......................................................27
10.6 Meaning of "Special Resolution"...................................27
10.7 Record Date for Voting............................................28
10.8 Binding Effect of Resolutions.....................................28
10.9 Solicitation of Proxies...........................................28
10.10 No Breach.........................................................28
ARTICLE 11 CERTIFICATES, REGISTRATION AND TRANSFER OF TRUST UNITS...........28
11.1 Nature of Trust Units.............................................28
11.2 Certificates......................................................29
11.3 Register of Unitholders...........................................29
11.4 Transfer of Trust Units...........................................30
11.5 Trust Units Held Jointly or in a Fiduciary Capacity...............30
11.6 Performance of Trust..............................................30
11.7 Lost Certificates.................................................31
11.8 Death of a Unitholder.............................................31
11.9 Unclaimed Interest or Distribution................................31
11.10 Exchanges of Trust Certificates...................................31
11.11 Offer for Units...................................................31
ARTICLE 12 TERMINATION......................................................33
12.1 Termination Date..................................................33
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TABLE OF CONTENTS
(continued)
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12.2 Termination by Special Resolution of Unitholders..................33
12.3 Procedure Upon Termination........................................34
12.4 Powers of the Trustee Upon Termination............................34
12.5 Sale of Investments...............................................34
12.6 Distribution of Proceeds..........................................34
12.7 Further Notice to Unitholders.....................................34
12.8 Responsibility of Trustee After Sale and Conversion...............34
ARTICLE 13 SUPPLEMENTAL INDENTURES..........................................35
13.1 Provision for Supplemental Indentures.............................35
13.2 Provision for Amended and Restated Indenture......................35
ARTICLE 14 NOTICES TO UNITHOLDERS...........................................35
14.1 Notices...........................................................35
14.2 Failure to Give Notice............................................36
14.3 Joint Holders.....................................................36
14.4 Service of Notice.................................................36
ARTICLE 15 AUDITORS.........................................................36
15.1 Qualification of Auditors.........................................36
15.2 Appointment of Auditors...........................................36
15.3 Change of Auditors................................................36
15.4 Filling Vacancy...................................................36
15.5 Reports of Auditors...............................................36
ARTICLE 16 ACCOUNTS, RECORDS AND FINANCIAL STATEMENTS.......................37
16.1 Records...........................................................37
16.2 Quarterly Reporting to Unitholders................................37
16.3 Annual Reporting to Unitholders...................................37
16.4 Information Available to Unitholders..............................37
16.5 Income Tax: Obligation of the Trustee.............................38
16.6 Income Tax: Designations..........................................38
16.7 Income Tax: Deductions, Allowances and Credits....................38
16.8 Fiscal Year.......................................................38
ARTICLE 17 MISCELLANEOUS....................................................38
17.1 Continued Listing.................................................38
17.2 Successors and Assigns............................................38
17.3 Counterparts......................................................38
17.4 Severability......................................................39
17.5 Day Not a Business Day............................................39
17.6 Time of the Essence...............................................39
17.7 Governing Law.....................................................39
17.8 Notices to Trustee and the Corporation............................39
17.9 References to Agreements..........................................39
ARTICLE 18 REDEMPTION OF TRUST UNITS........................................40
18.1 Right of Redemption...............................................40
18.2 Exercise of Redemption Right......................................40
18.3 Calculation of Redemption Price Based On Market Price.............40
18.4 Cash Payment of Market Redemption Price...........................41
18.5 Limitation Regarding Cash Payment of Market Redemption Price......41
18.6 Calculation of Redemption Price in Certain Other Circumstances....41
18.7 Cancellation of Redeemed Trust Units..............................42
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HARVEST ENERGY TRUST
FOURTH AMENDED AND RESTATED TRUST INDENTURE made the 1st day of
January, 2008.
BETWEEN:
VALIANT TRUST COMPANY, a trust company incorporated under
the laws of Alberta, with offices in the City of Calgary,
in the Province of Alberta (hereinafter called the
"Trustee")
OF THE FIRST PART
and
HARVEST OPERATIONS CORP., a body corporate incorporated
under the laws of Alberta, with offices in the City of
Calgary, in the Province of Alberta (hereinafter called the
"Corporation") and all persons who after the date hereof
become holders of Trust Units as herein provided
OF THE SECOND PART
WHEREAS the Settlor has paid to the Initial Trustee an amount of one
hundred dollars in lawful money of Canada for the purpose of settling the
Trust;
AND WHEREAS the Trustee has agreed replace the Initial Trustee and to
act as trustee of the Trust in accordance with the provisions hereinafter set
forth;
AND WHEREAS it is intended that the beneficiaries of the Trust shall
be the holders of Trust Units, each of which Trust Units shall rank equally in
all respects with every other Trust Unit;
AND WHEREAS it is intended that the Trust will offer the Trust Units
for sale to members of the public from time to time;
AND WHEREAS it is intended that the Trust shall qualify as a "unit
trust" and as a "mutual fund trust" under the provisions of paragraph 108(2)(b)
and subsection 132(6) of the Tax Act;
AND WHEREAS the parties hereto desire to set out the terms and
conditions which shall govern the settlement and the administration of the
Trust;
NOW THEREFORE THIS INDENTURE WITNESSETH that in consideration of the
premises and the mutual and respective covenants and agreements contained
herein, the Trustee declares and covenants and agrees with and in favour of the
holders from time to time of the Trust Units and the Corporation as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Indenture including the recitals and in the Trust Certificates
and schedules hereto, unless the context otherwise requires, the following
words and expressions shall have the following meanings:
(a) "ABCA" means the BUSINESS CORPORATIONS ACT (Alberta) as amended from
time to time, including the regulations promulgated thereunder;
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(b) "AFFILIATE" has the meaning set forth in the SECURITIES ACT (Alberta),
as amended from time to time;
(c) "AGENCY AGREEMENT" means any underwriting, agency or similar agreement
entered into by the Trustee and investment dealers, and such other
persons including the Corporation as may be a party thereto relating to
an Offering;
(d) "AGENT'S FEES" means the amounts so designated in any Agency Agreement;
(e) "ADMINISTRATION AGREEMENT" means the agreement dated September 27, 2002
between the Trustee and the Corporation pursuant to which the
Corporation has agreed to provide certain administrative and advisory
services in connection with the Trust;
(f) "APPRAISED REDEMPTION PRICE" has the meaning set forth in Section 18.6;
(g) "ARTC" means Alberta Royalty Tax Credit within the meaning of the
ALBERTA CORPORATE TAX ACT
(h) "ASSOCIATE" has the meaning set forth in the SECURITIES ACT (Alberta) as
amended from time to time;
(i) "AUDITORS" means KPMG LLP, or such other firm of chartered accountants
as may be appointed as auditor or auditors of the Trust by or in
accordance with Article 15;
(j) "BUSINESS DAY" means a day other than a Saturday, Sunday or holiday in
the City of Calgary in the Province of Alberta;
(k) "CAPITAL FUND" means the cash flow retained by the Trust from cash
otherwise available for distribution which shall be advanced to the
Corporation to finance future acquisitions and development of the
Properties;
(l) "CLOSING" means the completion of the Initial Offering and "DATE OF
CLOSING" means the date on which the Closing occurs;
(m) "COUNSEL" means a law firm (which may be counsel to the Corporation)
reasonably acceptable to the Trustee;
(n) "CORPORATION" means Harvest Operations Corp.;
(o) "CREDIT AGREEMENTS" means the agreements, instruments and documents
evidencing the Credit Facilities;
(p) "CREDIT FACILITIES" means the credit facilities made available to the
Trust or the Corporation (including any assumed by contract, operation
of law or otherwise) from time to time by other persons or made
available to persons wholly-owned, directly or indirectly, by the Trust,
the Corporation or any Affiliate of the Trust or the Corporation
provided the Trust, the Corporation or any Affiliate of the Trust or the
Corporation has guaranteed, provided an indemnity in respect of, or
otherwise become a surety of, directly or indirectly, such credit
facilities and, without limiting the generality of the foregoing,
includes the US $250,000,000 principal amount of 7?% senior notes of the
Corporation due October 15, 2011 unconditionally guaranteed by the Trust
and certain other Affiliates of the Trust;
(q) "DEBT SERVICE CHARGES" means all interest and principal repayments and
other costs, expenses and disbursements relating to the borrowing of
funds by the Trust or the Corporation, or by an Affiliate of the Trust
or the Corporation where the Trust or the Corporation has provided a
guarantee, indemnity or surety for any such indebtedness, including
pursuant to or in respect to the Credit Facilities;
(r) "DEFERRED PURCHASE PRICE OBLIGATION" has the meaning ascribed thereto in
the NPI Agreement;
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(s) "DIRECT ROYALTIES" means royalty interests in petroleum and natural gas
rights acquired by the Trust from time to time, other than the NPI,
including the Initial Direct Royalties to be acquired by the Trust from
the Corporation pursuant to a Direct Royalties Sale Agreement;
(t) "DIRECT ROYALTIES SALE AGREEMENT" means any purchase and sale agreement
between the Trust and the Corporation providing for the purchase by the
Trust from the Corporation of the Direct Royalties including the amended
and restated agreement dated September 27, 2002 in respect of the
purchase of the Initial Direct Royalties;
(u) "DISTRIBUTION RECORD DATE" means the last day of each calendar month or
such other date as may be determined from time to time by the Trustee
upon the recommendation of the board of directors of the Corporation,
except that December 31 shall in all cases be a Distribution Record
Date;
(v) "HARVEST SASK TRUST" means Harvest Sask Energy Trust, a trust formed
under the laws of Alberta;
(w) "INDEMNIFIED PARTIES" has the meaning set forth in Section 7.9;
(x) "INITIAL DIRECT ROYALTIES" means a 99% undivided interest in the royalty
interests forming part of the Initial Properties to be acquired by the
Trust from the Corporation pursuant to a Direct Royalties Sale
Agreement;
(y) "INITIAL OFFERING" means the Offering pursuant to the Prospectus;
(z) "INITIAL PROPERTIES" means the properties and assets to be acquired by
the Corporation from the Vendors pursuant to the Sale Agreement;
(aa) "INITIAL TRUSTEE" means Caribou Capital Corp.;
(bb) "ISSUE EXPENSES" means all expenses of an Offering payable by the Trust
including legal fees, accounting fees and printing expenses and all
other fees and expenses which may be described, whether generally or
specifically, in any Offering Document relating to the particular
Offering, but excluding Underwriter's Fees;
(cc) "LENDER" means the lender or lenders (or any of its or their Affiliates)
providing one or more credit or debt facilities (including without
limitation pursuant to any Credit Facilities), hedging or swap
facilities or any other ancillary facilities to the Trust, the
Corporation or any other Affiliate of the Trust for the ownership and
operation of its assets, business and affairs;
(dd) "MATERIAL CONTRACTS" means this Trust Indenture, the NPI Agreements, a
Direct Royalties Sale Agreement, the Administration Agreement and the
Credit Agreements, each as amended or replaced from time to time, and
any Underwriting Agreement and any loan agreement, credit agreement,
royalty agreement, indenture or other agreement entered into by the
Trust for the purpose of making any Subsequent Investment;
(ee) "NPI" means the rights granted to the Trust under the NPI Agreements to
receive payments on petroleum and natural gas rights held by the
Corporation or Harvest Sask Trust from time to time as more particularly
described in the NPI Agreements;
(ff) "NPI AGREEMENTS" means collectively, (i) the amended and restated net
profit interest agreement regarding the creation and sale of a net
profits interest to the Trust dated October 7, 2004 between the
Corporation and the Trustee, and (ii) the amended and restated net
profit interest agreement regarding the creation and sale of a net
profits interest to the Trust dated October 7, 2004 between Harvest Sask
Trust and the Trustee;
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(gg) "NOTES" means the promissory notes issued by the Corporation in series
pursuant to a note indenture to be redeemed in consideration for a
portion of the NPI having a fair market value equal to such principal
amount on the following terms and conditions:
(i) unsecured and bearing interest at 6% per annum payable monthly in
arrears on the 20th day of the next following month;
(ii) subordinate to all senior indebtedness which includes all
indebtedness for borrowed money or owing in respect of property
purchases on any default in payment of any such senior
indebtedness, and to all trade debt of the Corporation or any
subsidiary of the Corporation or the Trust on any creditor
proceedings such as bankruptcy, liquidation or insolvency;
(iii) subject to earlier prepayment, being due and payable on the 15th
anniversary of the date of issuance;
(iv) in an aggregate principal amount not exceeding $500 million, and
(v) subject to such other standard terms and conditions as would be
included in a note indenture for promissory notes of this kind, as
may be approved by the board of directors of the Corporation;
(hh) "OFFERING" means any issuance or offering of Trust Units or any rights,
warrants or other securities to purchase, to convert into or exchange
into Trust Units on a public or private basis in Canada or elsewhere,
including the Initial Offering;
(ii) "OFFERING DOCUMENTS" means any one or more of a prospectus, information
memorandum, private placement memorandum and similar public or private
offering document, including the Prospectus, or any understanding,
commitment or agreement to issue or offer Trust Units;
(jj) "ORDINARY RESOLUTION" means a resolution approved at a meeting of
Unitholders by more than 50% of the votes cast in respect of the
resolution by or on behalf of Unitholders present in person or
represented by proxy at the meeting;
(kk) "ORDINARY TRUST UNITS" means the ordinary Trust Units of the Trust,
created, issued and certified hereunder and for the time being
outstanding and entitled to the benefits hereof;
(ll) "OUTSTANDING", in relation to Trust Units, has the meaning attributed
thereto in Section 1.2 hereof;
(mm) "PAYMENT DATE" has the meaning set forth in Section 5.7;
(nn) "PERMITTED INVESTMENTS" means:
(i) loan advances to the Corporation, including loans made in
connection with the Capital Fund;
(ii) interest bearing accounts of certain financial institutions
including Canadian chartered banks and the Trustee;
(iii) obligations issued or guaranteed by the Government of Canada or
any province of Canada or any agency or instrumentality thereof;
(iv) term deposits, guaranteed investment certificates of deposit or
bankers' acceptances of or guaranteed or accepted by any Canadian
chartered bank or other financial institution (including the
Trustee and any Affiliate of the Trustee) the short term debt or
deposits of which have been rated at least A or the equivalent by
Standard & Poor's Corporation, Moody's Investors Service, Inc. or
Dominion Bond Rating Service Limited;
5
(v) commercial paper rated at least A or the equivalent by Canadian
Bond Rating Service Inc. or Dominion Bond Rating Service Limited;
and
(vi) investments in bodies corporate, partnerships or trusts engaged in
the oil and natural gas business;
provided that any investment of the type referred to in Section 4.3
shall not be a Permitted Investment;
(oo) "PERSON" means an individual, partnership, body corporate, association
or trust;
(pp) "PLAN OF ARRANGEMENT" means the plan of arrangement under Section 193 of
the ABCA substantially in the form set out in Schedule A to the
arrangement agreement dated December 23, 2005 among the Trust, the
Corporation, Viking Energy Royalty Trust and Viking Holdings Inc., as
amended or supplemented from time to time;
(qq) "PRO RATA SHARE" of any particular amount in respect of a Unitholder at
any time shall be the product obtained by multiplying the number of
Trust Units that are owned by that Unitholder at that time by the
quotient obtained when the particular amount is divided by the total
number of all Trust Units that are issued and outstanding at that time;
(rr) "PROPERTIES" means the working, royalty or other interests of the
Corporation from time to time in any petroleum and natural gas rights,
tangibles and miscellaneous interests, including the Initial Properties
and properties which may be acquired by the Corporation at a future date
and including the Direct Royalties acquired by the Trust from time to
time;
(ss) "PROSPECTUS" means the prospectus for the Initial Offering of Units
which is expected to be dated not later than October 31, 2002;
(tt) "SALE AGREEMENT" means the purchase and sale agreement between the
Corporation and the Vendors providing for the purchase by the
Corporation from the Vendors of the Initial Properties;
(uu) "SETTLED AMOUNT" means the amount of one hundred dollars in lawful money
of Canada paid by the Settlor to the Trustee for the purpose of settling
the Trust;
(vv) "SETTLOR" means Caribou Capital Corp.;
(ww) "SHARES" means the issued and outstanding common shares of the
Corporation as of the date hereof and also means shares of any class
issued by the Corporation thereafter;
(xx) "SPECIAL RESOLUTION" has the meaning attributed thereto in Section 10.6
hereof;
(yy) "SPECIAL TRUST UNITS" means the special Trust Units of the Trust,
created, issued and certified hereunder and for the time being
outstanding and entitled to the benefits hereof;
(zz) "SPECIAL VOTING UNITS" shall have the meaning ascribed thereto in
Section 3.10;
(aaa) "SUBSEQUENT INVESTMENT" means any of the investments which the Trust may
make pursuant to Subsections 4.1(b), (c) or (f);
(bbb) "TAX ACT" has the meaning ascribed thereto in Section 1.3;
(ccc) "TRANSFER AGENT" means the Trustee, its successors or assigns, in its
capacity as transfer agent for the Trust Units or such other company as
may from time to time be appointed by the Trustee to act as transfer
agent for the Trust Units together, in either such case, with any
subtransfer agent duly appointed by the transfer agent;
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(ddd) "TRUST" means Harvest Energy Trust and refers to the trust relationship
between the Trustee and the Unitholders with respect to the Trust Fund,
upon the terms and conditions set out herein from time to time and, if
the context requires, may also refer to the Trust Fund;
(eee) "TRUST CERTIFICATE" or "TRUST UNIT CERTIFICATE" means a certificate, in
the form approved by the Trustee, evidencing one or more Trust Units,
issued and certified in accordance with the provisions hereof;
(fff) "TRUST EXPENSES" means all expenses incurred by the Trustee or any third
party, in each case for the account of the Trust, in connection with
this Indenture, the establishment and ongoing management of the Trust
and the ongoing administration of the Trust Units, including without
limitation those amounts payable to the Trustee under Sections 7.6, 7.7
and 7.8;
(ggg) "TRUST FUND", at any time, shall mean such of the following monies,
properties and assets that are at such time held by the Trustee on
behalf of the Trust for the purposes of the Trust under this Indenture:
(i) the Settled Amount;
(ii) all funds realized from the issuance of Trust Units;
(iii) any Permitted Investments in which funds may from time to time be
invested;
(iv) all rights in respect of and income generated under the NPI
Agreements, including the NPI;
(v) all rights in respect of and income generated under a Direct
Royalties Sale Agreement;
(vi) any Subsequent Investment;
(vii) any proceeds of disposition of any of the foregoing property
including, without limitation, the Direct Royalties; and
(viii) all income, interest, profit, gains and accretions and additional
assets, rights and benefits of any kind or nature whatsoever
arising directly or indirectly from or in connection with or
accruing to such foregoing property or such proceeds of
disposition;
(hhh) "TRUST UNIT" means a trust unit of the Trust created, issued and
certified hereunder and for the time being outstanding and entitled to
the benefits hereof, including the Ordinary Trust Units and the Special
Trust Units provided that the term "Trust Unit" shall not include the
Special Voting Units except as specifically provided herein;
(iii) "TRUSTEE" means Valiant Trust Company, or its successor or successors
for the time being as trustee hereunder;
(jjj) "UNDERWRITING AGREEMENT" means any underwriting, agency or similar
agreement entered into by the Trustee and investment dealers, and such
other persons including the Corporation as may be a party thereto
relating to an Offering;
(kkk) "UNDERWRITER'S FEES" means the amounts so designated in any Underwriting
Agreement;
(lll) "UNITHOLDERS" means the holders from time to time of one or more Trust
Units;
(mmm) "VENDORS" means Devon Canada and Devon ARL Corporation; and
(nnn) "YEAR" means initially, the period commencing on the date hereof and
ending on December 31, 2002, and thereafter means a calendar year.
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1.2 MEANING OF "OUTSTANDING"
Every Trust Unit created, issued, and, if represented by a Trust
Certificate, certified and delivered hereunder shall be deemed to be
outstanding until it shall be cancelled or, if represented by a Trust
Certificate, delivered to the Trustee for cancellation provided that when a new
Trust Certificate has been issued in substitution for a Trust Certificate which
has been lost, stolen or destroyed, only one of such Trust Certificates shall
be counted for the purpose of determining the number of Trust Units
outstanding.
1.3 INCOME TAX ACT
In this Indenture, any reference to the Tax Act shall refer to the
INCOME TAX ACT, Revised Statutes of Canada 1985, Chapter 1 (5th Supplement) and
the Income Tax Regulations as amended from time to time applicable with respect
thereto. Any reference herein to a particular provision of the Tax Act shall
include a reference to that provision as it may be renumbered or amended from
time to time. Where there are proposals for amendments to the Tax Act which
have not been enacted into law or proclaimed into force on or before the date
on which such proposals are to become effective, the Trustee may take such
proposals into consideration and apply the provisions hereof as if such
proposals had been enacted into law and proclaimed into force.
1.4 HEADINGS
The division of this Indenture into articles and sections,
subsections, clauses, subclauses and paragraphs and the provision of headings
is for convenience of reference only and shall not affect the construction or
interpretation of this Indenture.
1.5 CONSTRUCTION OF TERMS
Words importing the singular number only shall include the plural, and
vice versa, and words importing gender shall include the masculine, feminine
and neuter genders. References in this Indenture to "this Trust Indenture",
"this Indenture", "hereto", "herein", "hereof", "hereby", "hereunder" and
similar expressions shall be deemed to refer to this instrument and not to any
particular Article, Section or portion hereof, and include any and every
instrument supplemental or ancillary hereto or in implementation hereof.
1.6 REFERENCES TO ACTS PERFORMED BY THE TRUST
Any reference in this Indenture to an act to be performed by the Trust
shall be construed and applied for all purposes as if it referred to an act to
be performed by the Trustee on behalf of the Trust or, to the extent
applicable, by the Corporation on behalf of the Trust.
ARTICLE 2
DECLARATION OF TRUST
2.1 SETTLEMENT OF TRUST
The Settlor has paid the Settled Amount to the Initial Trustee and the
Initial Trustee has accepted the Settled Amount for the purpose of creating and
settling the Trust and the Settlor has been issued one hundred initial Trust
Units in the Trust to the Initial Trustee which have been transferred to the
Trustee.
2.2 DECLARATION OF TRUST
The Trustee hereby agrees to act as Trustee and that it does and shall
hold the Trust Fund in trust for the use and benefit of the Unitholders, their
permitted assigns and personal representatives upon the trusts and subject to
the terms and conditions hereinafter declared and set forth, such trust to
constitute the Trust hereunder.
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2.3 NAME
The Trust shall be known and designated as "Harvest Energy Trust" and,
whenever lawful and convenient, the affairs of the Trust shall be conducted and
transacted under that name. If the Trustee determines that the use of the name
"Harvest Energy Trust" is not practicable, legal or convenient, it may use such
other designation or it may adopt such other name for the Trust as it deems
appropriate and the Trust may hold property and conduct its activities under
such other designation or name.
2.4 NATURE OF THE TRUST
The Trust is an open-end unincorporated investment trust, established
for the purposes specified in Section 4.1 hereof. The Trust is not and is not
intended to be, shall not be deemed to be and shall not be treated as a general
partnership, limited partnership, syndicate, association, joint venture,
company, corporation or joint stock company, nor shall the Trustee or the
Unitholders or any of them or any person be, or be deemed to be, treated in any
way whatsoever as liable or responsible hereunder as partners or joint
venturers. The Trustee shall not be, or be deemed to be, an agent of the
Unitholders. The relationship of the Unitholders to the Trustee shall be solely
that of beneficiaries of the Trust and their rights shall be limited to those
conferred upon them by this Trust Indenture.
2.5 LEGAL ENTITLEMENTS AND RESTRICTIONS OF UNITHOLDERS
(a) The rights of each Unitholder to call for a distribution or division of
assets, monies, funds, income and capital gains held, received or
realized by the Trustee are limited to those contained herein.
(b) Subject to the terms and conditions of this Indenture, no Unitholder or
Unitholders shall be entitled to interfere or give any direction to the
Trustee or the Corporation with respect to the affairs of the Trust or
in connection with the exercise of any powers or authorities conferred
upon the Trustee or the Corporation under this Indenture or the Material
Contracts.
(c) The legal ownership of the assets of the Trust and the right to conduct
the business of the Trust (subject to the limitations contained herein)
are vested exclusively in the Trustee and the Unitholders shall have no
interest therein and they shall have no right to compel or call for any
partition, division, dividend or distribution of the Trust Fund or any
of the assets of the Trust. The Trust Units shall be personal property
and shall confer upon the holders thereof only the interest and rights
specifically set forth in this Indenture. No Unitholder has or is deemed
to have any right of ownership in any of the assets of the Trust.
2.6 LIABILITY OF UNITHOLDERS
No Unitholder, in its capacity as such, shall incur or be subject to
any liability in contract or in tort or of any other kind whatsoever to any
person in connection with the Trust Fund or the obligations or the affairs of
the Trust or with respect to any act performed by the Trustee or by any other
person pursuant to this Indenture or with respect to any act or omission of the
Trustee or any other person in the performance or exercise, or purported
performance or exercise, of any obligation, power, discretion or authority
conferred upon the Trustee or such other person hereunder or with respect to
any transaction entered into by the Trustee or by any other person pursuant to
this Indenture. No Unitholder shall be liable to indemnify the Trustee or any
such other person with respect to any such liability or liabilities incurred by
the Trustee or by any such other person or persons or with respect to any taxes
payable by the Trust or by the Trustee or by any other person on behalf of or
in connection with the Trust. Notwithstanding the foregoing, to the extent that
any Unitholders are found by a court of competent jurisdiction to be subject to
any such liability, such liability shall be enforceable only against, and shall
be satisfied only out of, the Trust Fund and the Trust (to the extent of the
Trust Fund) is liable to, and shall indemnify and save harmless any Unitholder
against any costs, damages, liabilities, expenses, charges or losses suffered
by any Unitholder from or arising as a result of such Unitholder not having any
such limited liability.
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2.7 CONTRACTS OF THE TRUST
Every contract entered into by or on behalf of the Trust, whether by
the Trustee, the Corporation, or otherwise, shall (except as the Trustee or the
Corporation may otherwise expressly agree in writing with respect to their own
personal liability) include a provision substantially to the following effect:
The parties hereto acknowledge that the [Trustee] [Corporation] is
entering into this agreement solely [in its capacity as Trustee] [on
behalf] of the Trust and the obligations of the Trust hereunder shall
be binding upon the [Trustee] [Corporation] only in such capacity,
provided that any recourse against the [Trustee] [Corporation] or any
Unitholder in any manner in respect of any indebtedness, obligation or
liability of the [Trustee] [in its capacity as the Trustee]
[Corporation] arising hereunder or arising in connection herewith or
from the matters to which this agreement relates, if any, including
without limitation claims based on negligence or otherwise tortious
behaviour, shall be limited to, and satisfied only out of, the Trust
Fund as defined in the third amended and restated trust indenture
dated as of February 3, 2006, as amended or amended and restated from
time to time.
The omission of such a provision from any such written instrument shall not
operate to impose personal liability on the Trustee, the Corporation or any
Unitholder.
2.8 HEAD OFFICE OF TRUST
The head office of the Trust hereby created shall be located at Suite
2400, 500 - 4th Avenue S.W., Calgary, Alberta, T2P 2V6 or at such other place
or places in Canada as the Trustee may from time to time designate.
ARTICLE 3
ISSUE AND SALE OF TRUST UNITS
3.1 NATURE AND RANKING OF TRUST UNITS
(a) The beneficial interests in the Trust shall be divided into two classes
of Trust Units, described and designated as Ordinary Trust Units and
Special Trust Units, which shall be entitled to the rights and subject
to the limitations, restrictions and conditions set out herein; and the
interest of each Unitholder shall be determined by the number of
Ordinary Trust Units or Special Trust Units registered in the name of
the Unitholder.
(b) Each Ordinary Trust Unit shall entitle the holder or holders thereof to
one vote at any meeting of the Unitholders and each Special Trust Unit
shall entitle the holder or holders thereof to three-sixteenths of one
vote at any meeting of the Unitholders. Each Trust Unit represents an
equal fractional undivided beneficial interest in any distribution from
the Trust (whether of net income, net realized capital gains or other
amounts) and in any net assets of the Trust in the event of termination
or winding-up of the Trust. All Trust Units outstanding from time to
time shall be entitled to equal shares in any distributions by the Trust
and, in the event of termination or winding-up of the Trust, in the net
assets of the Trust. All Trust Units shall rank among themselves equally
and rateably without discrimination, preference or priority.
(c) All Trust Units of the Trust issued and outstanding prior to the date
hereof are and shall be deemed to be Ordinary Trust Units and unless
otherwise designated as Special Trust Units, all Trust Units issued
after the date hereof shall be deemed to be Ordinary Trust Units.
(d) In accordance with and at such time as Subsection 3.1(s) of the Plan of
Arrangement is deemed to occur in accordance with the terms of the Plan
of Arrangement, the number of outstanding Trust Units held by such
Unitholders shall be consolidated such that each Unitholder will hold
after such consolidation the same number of Trust Units as the
Unitholder held before such distribution of additional Trust Units; and
each certificate representing a number of Trust Units before such
distribution of additional Trust Units is deemed to represent the same
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number of Trust Units after such distribution of additional Trust Units
and consolidation. The Corporation will provide written notice to the
Trustee as soon as reasonably practicable after such consolidation has
taken effect.
3.2 AUTHORIZED NUMBER OF TRUST UNITS
The aggregate number of Ordinary Trust Units, Special Trust Units and
Special Voting Units that are authorized and may be issued hereunder is
unlimited.
3.3 NO FRACTIONAL TRUST UNITS
Fractions of Trust Units shall not be issued, except pursuant to
distributions of additional Trust Units to all Unitholders pursuant to Section
5.8.
3.4 RE-PURCHASE OF INITIAL TRUST UNITS BY TRUST
Immediately after the Closing, the Trust will repurchase the initial
Trust Units from the Trustee, and the Trustee shall sell the initial Trust
Units to the Trust for a purchase price of one hundred dollars and, upon the
completion of such purchase and sale, the initial Trust Units shall be
cancelled and shall no longer be outstanding for any of the purposes of this
Indenture.
3.5 OFFERINGS OF TRUST UNITS AND INDEBTEDNESS
(a) Trust Units, including rights, warrants or other securities to purchase,
to convert into or exchange into Trust Units, may be created, issued,
sold and delivered pursuant to Offering Documents on terms and
conditions and at such time or times as the board of directors the
Corporation may determine.
(b) The board of directors of the Corporation may authorize the creation and
issuance of debentures, notes and other evidences of indebtedness of the
Trust which debentures, notes or other evidences of indebtedness may be
created and issued from time to time on such terms and conditions, to
such persons and for such consideration as the Corporation may
determine.
3.6 RANKING OF TRUST UNITS
Each Trust Unit represents an equal fractional undivided beneficial
interest in the Trust Fund. All Trust Units outstanding from time to time shall
be entitled to an equal fractional undivided share of any distributions by the
Trust and, in the event of termination of the Trust, in the net assets of the
Trust. All Trust Units shall rank among themselves equally and rateably without
discrimination, preference or priority whatever may be the actual date or terms
of issue thereof.
3.7 TRUST UNITS FULLY PAID AND NON-ASSESSABLE
Trust Units shall be issued only when fully paid in money or property
or past service, provided that property will include a promissory note or
promise to pay given by the allottee. The Unitholders shall not thereafter be
required to make any further contribution to the Trust with respect to such
Trust Units.
3.8 NO CONVERSION, RETRACTION, REDEMPTION OR PRE-EMPTIVE RIGHTS
No person shall be entitled, as a matter of right, to subscribe for or
purchase any Trust Unit. There are no conversion, retraction, redemption or
pre-emptive rights attaching to the Trust Units.
3.9 CONSOLIDATION OF TRUST UNITS
Immediately after any pro rata distribution of additional Trust Units
to all Unitholders pursuant to Sections 5.5 or Section 5.8, the number of
outstanding Trust Units will be consolidated such that each Unitholder will
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hold after the consolidation the same number of Trust Units as the Unitholder
held before the distribution of additional Trust Units. In such case, if
applicable, each Trust Unit Certificate representing a number of Trust Units
prior to the distribution of additional Trust Units is deemed to represent the
same number of Trust Units after the distribution of additional Trust Units and
the consolidation.
3.10 SPECIAL VOTING RIGHTS
In addition to Trust Units, there may be issued special voting units
("Special Voting Units") entitling the holders thereof to such number of votes
at meetings of Unitholders as may be prescribed by the Board of Directors of
the Corporation in the resolution authorizing the issuance of any such Special
Voting Units. Except for the right to vote at meetings of the Unitholders, the
Special Voting Units shall not confer upon the holders thereof any other
rights; and for greater certainty, the holders of Special Voting Units shall
not be entitled to any distributions of any nature whatsoever from the Trust or
have any beneficial interest in any assets of the trust on termination of the
Trust.
3.11 NON-RESIDENT HOLDERS
It is in the best interest of Unitholders that the Trust qualify as a
"unit trust" and a "mutual fund trust" under the Tax Act. Accordingly, it is
intended that the Trust comply with the requirements under the Tax Act for
"unit trusts" and "mutual fund trusts" at all relevant times such that the
Trust maintain the status of a unit trust and a mutual fund trust for purposes
of the Tax Act. In this regard, the Trust shall, among other things, take all
necessary steps to monitor the ownership of the Trust Units to carry out such
intentions. If at any time the Trust, becomes aware that the beneficial owners
of 49% or more of the Trust Units then outstanding are or may be Non-Residents
or that such a situation is imminent, the Trust, by or through the Corporation
on the Trust's behalf, shall take such action as may be necessary to carry out
the intentions evidenced herein. For the purposes of this Section,
"Non-Residents" means non-residents of Canada within the meaning of the Tax
Act.
ARTICLE 4
INVESTMENTS OF TRUST FUND
4.1 PURPOSE OF THE TRUST
The Trust is hereby created for the following purposes:
(a) acquiring the NPI and Direct Royalties (including the Initial Direct
Royalties);
(b) making payments to the Corporation pursuant to the Deferred Purchase
Price Obligation under the NPI Agreement;
(c) making loans to the Corporation in connection with the Capital Fund;
(d) acquiring or investing in securities of the Corporation and in the
securities of any other person including without limitation bodies
corporate, partnerships or trusts, and borrowing funds or otherwise
obtaining credit for that purpose;
(e) disposing of any part of the Trust Fund, including, without limitation,
any securities of the Corporation;
(f) temporarily holding cash and investments for the purposes of paying the
expenses and the liabilities of the Trust, making other investments as
contemplated by Section 4.2 hereof, paying amounts payable by the Trust
in connection with the redemption of any Trust Units, and making
distributions to Unitholders; and
(g) undertaking such other business and activities as approved by the
Corporation from time to time;
and to pay the costs, fees and expenses associated with the foregoing
purposes or incidental thereto.
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4.2 PERMITTED INVESTMENTS
Any funds within the Trust Fund that are not required to be invested
as provided in Section 4.1 shall be used by the Trust only to acquire Permitted
Investments or as permitted by Section 7.2(f) or Section 7.2(u).
4.3 OTHER INVESTMENT RESTRICTIONS
Notwithstanding anything contained in this Indenture, under no
circumstances shall the Trustee acquire any investment which (a) would result
in the cost amount to the Trust of all "foreign property" (as defined in the
Tax Act) which is held by the Trust to exceed the amount prescribed by
Regulation 5000(l) of the regulations to the Tax Act, (b) is a "small business
security" as that term is used in Part L1 of the Regulations to the Tax Act, or
(c) would result in the Trust not being considered either a "unit trust" or a
"mutual fund trust" for purposes of the Tax Act. The Trustee may consult with
and receive direction from the Corporation with respect to any investment to
ensure compliance with this provision.
ARTICLE 5
DISTRIBUTIONS
5.1 DETERMINATION OF NET INCOME OF THE TRUST
In this Article 5, the "Net Income of the Trust" for the period ending
on a Distribution Record Date shall be the amount calculated, for the period
commencing immediately following the preceding Distribution Record Date (or,
for the first Distribution Record Date, the period commencing on the date
hereof) and ending on such Distribution Record Date, on the following basis:
(a) any amounts received pursuant to the NPI and the Direct Royalties, any
interest or other income from Permitted Investments, ARTC received by
the Trust and other Crown charges that are not deductible by the
Corporation for income tax purposes and that are reimbursed by the Trust
to the Corporation shall be included in Net Income of the Trust on an
accrual basis and shall accrue from day to day;
(b) dividends on the Shares or any other dividends on securities of the
Corporation shall be included in Net Income of the Trust when received
including dividends deemed to have been received on such Shares or
securities pursuant to the Tax Act; and
(c) all expenses and liabilities of the Trust, including Debt Service
Charges, which are due or accrued and which are chargeable to income
shall be deducted in computing Net Income of the Trust.
Items of income or expense not provided for above or in Section 5.3 shall be
included in such calculation on such basis as may be considered appropriate by
the Trustee upon the recommendation of the Corporation.
5.2 NET INCOME OF THE TRUST TO BECOME PAYABLE
The Trustee may, upon the recommendation of the Corporation, on or
before any Distribution Record Date, declare payable to the Unitholders on that
Distribution Record Date all or any part of the Net Income of the Trust for the
period ending on that Distribution Record Date determined in accordance with
Section 5.1. The share of each Unitholder in the amount so payable shall be the
Pro Rata Share of such Unitholder determined as at that Distribution Record
Date; and subject to Section 5.7, such amount shall be payable on that
Distribution Record Date. Notwithstanding the foregoing, the amount of any Net
Income of the Trust that is determined by the Trustee to be required to be
retained by the Trust in order to pay any tax liability of the Trust shall not
be payable by the Trust to Unitholders. Notwithstanding the foregoing, holders
of Special Trust Units on any particular Distribution Record Date shall be
entitled to a preferential distribution equal to $0.02 for each Special Trust
Unit, or such lesser amount where the Net Income declared to be payable by the
Trustee would not be sufficient to pay such amount, and the Pro Rata Share
payable to Unitholders shall be determined after such preferential
distribution.
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5.3 NET REALIZED CAPITAL GAINS TO BECOME PAYABLE
The Trustee may, on or before any Distribution Record Date, declare
payable to the Unitholders on that Distribution Record Date all or part of the
net realized capital gains of the Trust to the extent not previously declared
payable. The share of each Unitholder in the amount so payable shall be the Pro
Rata Share of such Unitholder determined as at that Distribution Record Date;
and subject to Section 5.7, such amount shall be payable on that Distribution
Record Date. For the purposes of this Article 5, "net realized capital gains"
of the Trust means the total of all capital gains realized by the Trust less
the total of all capital losses realized by the Trust.
5.4 NET INCOME AND NET REALIZED CAPITAL GAINS FOR INCOME TAX PURPOSES TO
BECOME PAYABLE
On December 31 of each year, an amount equal to the Net Income of the
Trust for such year (excluding net realized capital gains) determined in
accordance with the Tax Act, other than paragraph 82(1)(b) thereof, to the
extent not previously payable pursuant to Section 5.2 on any Distribution
Record Date in the year (including December 31 of that fiscal year) to any
Unitholder, shall be declared payable to Unitholders as at the end of that
year. The share of each Unitholder in the amount so payable shall be the Pro
Rata Share of such Unitholder determined as at the end of such year.
On December 31 of each fiscal year, an amount equal to the net
realized capital gains of the Trust, to the extent not previously payable
pursuant to Section 5.3 on any Distribution Record Date or pursuant to this
paragraph on any prior December 31, shall be declared payable to Unitholders as
at the end of that fiscal year. The share of each Unitholder in the amount so
payable shall be the Pro Rata Share of such Unitholder determined as at the end
of such year.
Any amounts payable pursuant to this Section 5.4 may, at the option of
the Trustee, be paid through a distribution of additional Trust Units having a
value equal to the amount payable. For the purposes of this Section 5.8, the
value of the additional Trust Units issued shall be determined using the
closing trading price (or, if there was no trade, the average of the last bid
and the last ask prices) of the Trust Units on December 31 (or, if December 31
is not a Business Day, on the last preceding Business Day) on the principal
stock exchange where the Trust Units are listed or, if no so listed, such other
value as the Trustee shall determine.
5.5 OTHER AMOUNTS
Any amounts not otherwise payable to Unitholders prior to the end of a
particular fiscal year of the Trust pursuant to the provisions of Article 5 may
be declared by the Trustee, upon the recommendation of the Corporation, to be
payable to Unitholders in the same manner as provided for in Section 5.2.
5.6 ENFORCEMENT
Each Unitholder shall have the right to enforce payment of any amount
payable to the Unitholder under this Article 5 (or a distribution of additional
Trust Units under Section 5.8, if applicable) at the time the amount became
payable unless a Payment Date is specified under Section 5.7 in respect of such
amount payable, in which case the right to enforce payment shall arise at the
later of the time the amount became payable and the applicable Payment Date
specified under Section 5.7.
5.7 PAYMENT OF AMOUNTS PAYABLE
Amounts payable to Unitholders pursuant to Sections 5.2 and 5.3 may be
paid by the Trust on any date (the "Payment Date") specified by the Trustee as
the applicable Distribution Record Date, or a day within 30 days after the
applicable Distribution Record Date and in the same calendar year.
5.8 DISTRIBUTION OF ADDITIONAL TRUST UNITS
Where after the last Distribution Record Date and on or before the
next Distribution Record Date an amount or amounts of cash has or have been or
is or are being paid under Section 18.3 in respect of Trust Units tendered for
14
redemption, the distribution payable to Unitholders on such next Distribution
Record Date shall include a distribution of additional Trust Units having a
value equal to the aggregate of such amounts, in which case the amount of cash
to be distributed on the distribution shall be reduced by the aggregate of such
amounts. In addition, if on any Distribution Record Date the Trust does not
have cash in an amount sufficient to pay the full distribution to be made on
such Distribution Record Date in cash, the distribution payable to Unitholders
on such Distribution Record Date may, at the option of the Trustee, include a
distribution of additional Trust Units having a value equal to the cash
shortfall, in which case the amount of cash to be distributed on the
distribution shall be reduced by the amount of such cash shortfall. For the
purposes of this Section 5.8, the value of the additional Trust Units to be
issued shall be determined using the closing trading price (or if there was no
trade, the average of the last bid and the last ask prices) of the Trust Units
on the Distribution Record Date (or, if the Distribution Record Date is not a
Business Day, on the last Business Day preceding the Distribution Record Date)
on the principal stock exchange where the Trust Units are listed or, if not so
listed, such other value as the Trustee shall determine.
5.9 WITHHOLDING TAXES
For greater certainty, in the event that withholding taxes are
exigible on any distributions or redemption amounts distributed under this
Indenture, the Trustee shall withhold the withholding taxes required and shall
promptly remit such taxes to the appropriate taxing authority. In the event
that withholding taxes are exigible on any distributions or redemption amounts
distributed under this Indenture and the Trustee is, or was, unable to withhold
taxes from a particular distribution to a Unitholder or has not otherwise
withheld taxes on past distributions to the Unitholder, the Trustee shall be
permitted to withhold amounts from other distributions to satisfy the Trustee's
withholding tax obligations.
ARTICLE 6
APPOINTMENT, RESIGNATION AND REMOVAL OF TRUSTEE
6.1 TRUSTEE'S TERM OF OFFICE
Subject to Sections 6.2 and 6.3, Valiant Trust Company is hereby
appointed as Trustee hereunder for an initial term of office which shall expire
upon the conclusion of the first annual meeting of Unitholders. The Unitholders
shall, at the first annual meeting of the Unitholders, re-appoint, or appoint a
successor to the Trustee, and thereafter, the Unitholders shall reappoint or
appoint a successor to the Trustee on each successive annual meeting of
Unitholders following the reappointment or appointment of the successor to the
Trustee. Any such reappointment or appointment shall be made either by an
Ordinary Resolution at such meeting of Unitholders or shall be made in the
manner set out in Section 6.4. Notwithstanding the foregoing, if a Trustee is
not reappointed at the meeting of Unitholders held immediately before the term
of office of such Trustee expires and if no successor to such Trustee is
appointed at that meeting, such Trustee shall continue to hold the office of
Trustee under this Indenture until a successor has been appointed under Section
6.4.
6.2 RESIGNATION OF TRUSTEE
The Trustee may resign from the office of trustee hereunder on giving
not less than 60 days' notice in writing to the Corporation; provided that no
such resignation shall be effective until (i) the appointment of, and
acceptance of such appointment by, a new Trustee in the place of the resigning
Trustee has been made in the manner set out in Section 6.4, and (ii) the legal
and valid assumption by the new Trustee of all obligations of the Trustee
related hereto in the same capacities as the resigning Trustee.
6.3 REMOVAL OF TRUSTEE
The Trustee shall be removed by notice in writing delivered by the
Corporation to the Trustee in the event that, at any time, the Trustee shall no
longer satisfy all of the requirements in Section 6.6, or shall be declared
bankrupt or insolvent, or shall enter into liquidation, whether compulsory or
voluntary (and not being merely a voluntary liquidation for the purposes of
amalgamation or reconstruction), or if the assets of the Trustee shall
otherwise become liable to seizure or confiscation by any public or
governmental authority, or if the Trustee shall otherwise become incapable of
performing, or shall fail in any material respect to perform its
responsibilities under this Indenture or as a result of a material increase in
15
the fees charged by the Trustee. No decision to remove a Trustee under this
Section 6.3 shall become effective until (i) approved by a Special Resolution
at a meeting of Unitholders duly called for that purpose (ii) the appointment
of, and acceptance of such appointment by, a new Trustee under Section 6.4 in
the place of the Trustee to be removed, and (iii) the legal and valid
assumption by the new Trustee of all obligations of the Trustee related hereto
in the same capacities as the resigning Trustee.
6.4 APPOINTMENT OF SUCCESSOR TO TRUSTEE
(a) A successor Trustee to a Trustee which has been removed by a Special
Resolution of Unitholders under Section 6.3, shall be appointed by an
Ordinary Resolution at a meeting of Unitholders duly called for that
purpose, provided the successor meets the requirements of Section 6.6.
(b) Subject to Section 6.6, the Corporation may appoint a successor to any
Trustee which has been removed by a Special Resolution of the
Unitholders under Section 6.3, or which has not been reappointed under
Section 6.1, if the Unitholders fail to do so at such meeting.
(c) Subject to Section 6.6, the Corporation may appoint a successor to any
trustee which has given a notice of resignation under Section 6.2.
No appointment of any successor Trustee shall be effective until such successor
Trustee shall have complied with the provisions of Section 6.2(ii).
6.5 FAILURE TO APPOINT SUCCESSOR
In the event that no successor Trustee to a Trustee who has delivered
a notice of resignation in accordance with Section 6.2, or who has received
notice of removal in accordance with Section 6.3, has accepted an appointment
within 120 days after the receipt by the Corporation of the notice of
resignation, or 60 days after the receipt by the Trustee of the notice of
removal, the Trustee, the Corporation or any Unitholder may apply to a court of
competent jurisdiction for the appointment of a successor to the Trustee. The
appointment of such successor by such court shall not require the approval of
Unitholders.
6.6 QUALIFICATIONS OF TRUSTEE
The Trustee and any successor to the Trustee or new Trustee appointed
under this Article 6 shall be a corporation incorporated under the laws of
Canada or of a province thereof and shall be a resident of Canada for the
purposes of the Tax Act. Such corporation must at all times when it is the
Trustee be registered under the laws of the Province of Alberta to carry on the
business of a trust company and must have undertaken in writing to discharge
all of the obligations and responsibilities of the Trustee under this
Indenture.
ARTICLE 7
CONCERNING THE TRUSTEE
7.1 POWERS OF THE TRUSTEE AND THE CORPORATION
(a) Subject to the terms and conditions of this Indenture, the Trustee may
exercise from time to time in respect of the Trust Fund any and all
rights, powers and privileges that could be exercised by a beneficial
owner thereof except as specifically designated in Subsection (b) below.
The responsibilities of the Trustee hereunder are however limited to
those specific powers granted to it (subject to delegations to the
Corporation) and the Trustee has no obligations to Unitholders or to the
Corporation beyond the obligations specifically set out herein.
(b) The Corporation shall exercise from time to time any and all rights,
powers and privileges in relation to all matters relating to the
maximization of Unitholder value in the context of a response to an
offer for Trust Units or for all or substantially all of the property
and assets of the Trust or the Corporation or any subsidiary of the
Corporation or the Trust (an "Offer") including (i) any Unitholder
rights protection plan either prior to or during the course of any
16
Offer; (ii) any defensive action either prior to or during the course of
any Offer; (iii) the preparation of any "Directors' Circular" in
response to any Offer; (iv) consideration on behalf of Unitholders and
recommendations to Unitholders in response to any Offer; (v) any
regulatory or court action in respect of any related matters and (vi)
the carriage of all related and ancillary matters; and the Corporation
accepts such responsibility and agrees that, in respect of such matters,
it shall carry out its functions honestly, in good faith and in the best
interests of the Trust and the Unitholders and, in connection therewith,
shall exercise that degree of care, diligence and skill that a
reasonably prudent person would exercise in comparable circumstances.
The Corporation may, and if directed by the Corporation in writing, the
Trustee shall, execute any agreements on behalf of the Trust as the
Corporation shall have authorized within the scope of the exercise of
any such rights, powers or privileges.
7.2 SPECIFIC POWERS AND AUTHORITIES
Subject only to the express limitations contained in this Indenture
and in addition to any powers and authorities conferred by this Indenture
(including, without limitation, Section 7.1 hereof) or which the Trustee may
have by virtue of any present or future statute or rule of law, the Trustee,
without any action or consent by the Unitholders, shall have the following
powers and authorities which may be exercised by it from time to time or
delegated by it, as herein provided, in its sole judgment and discretion and in
such manner and upon such terms and conditions as it may from time to time deem
proper, provided that the exercise of such powers and authorities does not
adversely affect the status of the Trust as a "unit trust" and a "mutual fund
trust" for the purposes of the Tax Act:
(a) to accept subscriptions for Trust Units received by the Trust and to
issue Trust Units pursuant thereto;
(b) to maintain books and records;
(c) to provide timely reports to Unitholders in accordance with the
provisions hereof;
(d) to effect payment of distributions to Unitholders;
(e) to apply for ARTC;
(f) to deposit funds of the Trust in interest-bearing accounts in banks, the
Alberta Treasury Branch or trust companies whose short term obligations
constitute Permitted Investments, including those of the Trustee, the
same to be subject to withdrawal on such terms and in such manner and by
such person or persons (including any one or more officers, agents or
representatives) as the Trustee may determine;
(g) to, directly or indirectly, borrow money from or incur indebtedness to
any person and in connection therewith, to guarantee, indemnify or act
as a surety with respect to payment or performance of any indebtedness,
liabilities or obligation of any kind of any person, including, without
limitation, the Corporation and any subsidiary of the Trust (as defined
in the SECURITIES ACT (Alberta)); to enter into any Credit Agreement and
any other obligations on behalf of the Trust; or enter into any
subordination or postponement agreement on behalf of the Trust or any
other person, and to assign, charge, pledge, hypothecate, convey,
transfer, mortgage, subordinate, and grant any security interest,
mortgage or encumbrance over or with respect to all or any of the Trust
Fund or to subordinate or postpone the interests of the Trust in the
Trust Fund to any other person;
(h) to possess and exercise all the rights, powers and privileges pertaining
to the ownership of all or any part of the assets of the Trust, to the
same extent that an individual might, unless otherwise limited herein,
and, without limiting the generality of the foregoing, to vote or give
any consent, request or notice, or waive any notice, either in person or
by proxy or power of attorney, with or without power of substitution, to
one or more persons, which proxies and power of attorney may be for
meetings or action generally or for any particular meeting or action and
may include the exercise of discretionary power;
17
(i) where reasonably required, to engage or employ any persons as agents,
representatives, employees or independent contractors (including,
without limitation, investment advisers, registrars, underwriters,
accountants, lawyers, appraisers, brokers or otherwise) in one or more
capacities;
(j) to collect, sue for and receive all sums of money coming due to the
Trust, and to engage in, intervene in, prosecute, join, defend,
compromise, abandon or adjust, by arbitration or otherwise, any actions,
suits, proceedings, disputes, claims, demands or other litigation
relating to the Trust, the assets of the Trust or the Trust's affairs,
to enter into agreements therefor, whether or not any suit is commenced
or claim accrued or asserted and, in advance of any controversy, to
enter into agreements regarding the arbitration, adjudication or
settlement thereof, provided that prior to taking any such action the
Trustee may require from the Corporation a specific indemnity in
relation thereto and funding with respect to the expenses or costs
associated with such action. The Trustee shall in any event be
reimbursed by the Corporation for all costs and expenses incurred in
respect of the matters provided for in this Subsection;
(k) to arrange for insurance contracts and policies insuring the assets of
the Trust against any and all risks and insuring the Trust and/or any or
all of the Trustee or the Unitholders against any and all claims and
liabilities of any nature asserted by any person arising by reason of
any action alleged to have been taken or omitted by the Trust or by the
Trustee or Unitholders;
(l) to cause legal title to any of the assets of the Trust to be held by
and/or in the name of the Trustee, or except as prohibited by law, by
and/or in the name of the Trust, or any other person, on such terms, in
such manner, with such powers in such person as the Trustee may
determine and with or without disclosure that the Trust or the Trustee
is interested therein, provided that should legal title to any of the
assets of the Trust be held by and/or in the name of any person other
than the Trustee or the Trust, the Trustee shall require such person to
execute a trust agreement acknowledging that legal title to such assets
is held in trust for the benefit of the Trust;
(m) to make, execute, acknowledge and deliver any and all deeds, contracts,
waivers, releases or other documents of transfer and any and all other
instruments in writing necessary or proper for the accomplishment of any
of the powers herein granted;
(n) to pay out of the Trust Fund the Trust Expenses;
(o) except as prohibited by law, to delegate any or all of the management
and administrative powers and duties of the Trustee to the Corporation
or to any one or more agents, representatives, officers, employees,
independent contractors or other persons without liability to the
Trustee except as provided in this Indenture;
(p) to guarantee or become an indemnitor or surety for the obligations,
indebtedness or liabilities of the Corporation or any other Affiliate of
the Trust, including, without limitation, pursuant to any Credit
Agreement or any other debt for borrowed money or obligations resulting
or arising from hedging instruments incurred by the Corporation or any
such Affiliate, as the case may be, and to pledge securities issued by
the Corporation or the Affiliate, as the case may be, or grant security
interests over all or any portion of the Trust Fund, as security for
such guarantee, indemnity or surety provided that such guarantee,
indemnity or surety is incidental to the Trust's direct or indirect
investment in the Corporation or any such Affiliate or the business and
affairs (existing or proposed) of the Corporation or any such Affiliate,
and each such guarantee, indemnity or surety entered into by the Trustee
shall be binding upon, and enforceable in accordance with its terms
against, the Trust;
(q) notwithstanding any limitations contained in this Indenture, to enter
into on behalf of the Trust and observe and perform its obligations and
the obligations of the Trust under any Credit Agreement or any other
agreements with any Lender, including, without limitation, compliance
with any provisions thereof which may restrict the powers of the Trustee
hereunder or preclude the Trustee from acting in certain circumstances
on resolutions of the Unitholders as might otherwise be provided for
hereunder, and each such agreement entered into by the Trustee shall be
binding upon, and enforceable in accordance with its terms against, the
Trust;
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(r) to enter into a subordination or postponement agreement with any Lender
to the Trust, the Corporation or any Affiliate of the Trust pursuant to
which the Trust agrees to subordinate or postpone indebtedness owing to
it or security interests granted to it to indebtedness or security
interests of any such Lender, and which agreement may further provide,
without limitation, that in the event of a default by the Corporation or
any such Affiliate to any of its Lenders, including any such default in
connection with credit or debt facilities, swap or hedging agreements or
any other ancillary facilities, none of the Corporation or any such
Affiliate will make any further payments in respect of such obligations
to the Trust and the Trust will not make any further cash distributions
to Unitholders, and each such subordination or postponement entered into
by the Trustee shall be binding upon, and enforceable in accordance with
its terms against, the Trust;
(s) to do all such other acts and things as are incidental to this Section
7.2, and to exercise all powers which are necessary or useful to carry
on the business of the Trust, to promote any of the purposes for which
the Trust is formed and to carry out the provisions of this Indenture;
(t) to use reasonable efforts to ensure that the Trust complies at all times
with the requirements of Subsections 108(2) and 132(6) of the Tax Act;
(u) to advance any amount to the Corporation or other Affiliate of the Trust
as a loan, including amounts in the Capital Fund which shall be advanced
to the Corporation to finance future acquisition and development of the
Properties;
(v) to enter into, perform and enforce the Material Contracts;
(w) without limiting any of the provisions hereof, to pay out of the Trust
Fund:
(i) Agent's Fees;
(ii) the purchase price of the NPI and the Direct Royalties, the
Deferred Purchase Price Obligations and amounts in respect of
Permitted Investments and Subsequent Investments; and
(iii) Issue Expenses;
all as contemplated by the Offering Documents, this Indenture, the NPI
Agreements or the other Material Contracts;
(x) to charge, mortgage, hypothecate and/or pledge on behalf of the Trust
all or any of the currently owned or subsequently acquired monies,
properties and assets comprising the Trust Fund to secure any monies
borrowed, and to execute and deliver a guarantee, indemnity, surety or
other assurance in favour of any Lender for the obligations of the
Corporation or any Affiliate of the Trust or the Corporation and any
security, deposit or offset agreements or arrangements in respect of any
such guarantee, indemnity or surety or assurance and each such agreement
entered into by the Trustee shall be binding upon, and enforceable in
accordance with its terms against, the Trust;
(y) to convey the NPI and/or the Direct Royalties in connection with any
security to or realization by any Lender upon the Properties;
(z) to form any subsidiary of the Trust for the purpose of making any
Subsequent Investment and entering into or amending any unanimous
shareholders agreement or other agreement on such terms as may be
approved by the board of directors of the Corporation;
(aa) to provide indemnities for the directors and officers of any Affiliates;
(bb) to hold the Notes issued by the Corporation;
(cc) to distribute Notes as provided in Article 18;
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(dd) to vote Subsequent Investments held by the Trust which carry voting
rights in such manner as may be approved by the board of directors of
the Corporation;
(ee) to loan monies to the Corporation or any Affiliate of the Trust, to take
security interests with respect to all or any of the assets of the
Corporation or such Affiliate and to allow such debt or security to be
subordinate or postponed to any other debt or security; and
(ff) without limit as to amount, cost, or conditions of reimbursement, to
issue any type of debt securities or convertible debt securities and to
borrow money or incur any other form of indebtedness for the purpose of
carrying out the purposes of the Trust or for other expenses incurred in
connection with the Trust and for such purposes may draw, make, execute
and issue promissory notes and other negotiable and non-negotiable
instruments or securities and evidences of indebtedness, secure the
payment of sums so borrowed or indebtedness incurred and mortgage,
pledge, assign or grant a security interest in any money owing to the
Trust or engage in any other means of financing the Trust.
7.3 RESTRICTIONS ON THE TRUSTEE'S POWERS
Notwithstanding anything contained in this Indenture:
(a) the Trustee shall not vote the Shares with respect to the election of
directors of the Corporation, the appointment of auditors of the
Corporation, or the approval of the Corporation's financial statements
except in accordance with an Ordinary Resolution adopted at an annual
meeting of Unitholders;
(b) the Trustee shall not, after the Date of Closing, vote the Shares to
authorize:
(i) any sale, lease or other disposition of, or any interest in, all
or substantially all of the assets of the Corporation, except in
conjunction with an internal reorganization of the direct or
indirect assets of the Corporation as a result of which either the
Corporation or the Trust has the same, or substantially similar,
interest, whether direct or indirect, in the assets as the
interest, whether direct or indirect, that it had prior to the
reorganization;
(ii) any statutory amalgamation of the Corporation with any other
corporation, except in conjunction with an internal reorganization
as referred to in paragraph (i) above;
(iii) any statutory arrangement involving the Corporation except in
conjunction with ain internal reorganization as referred to in
paragraph (i) above;
(iv) any amendment to the articles of the Corporation to increase or
decrease the minimum or maximum number of directors; or
(v) any material amendment to the articles of the Corporation to
change the authorized share capital or amend the rights,
privileges, restrictions and conditions attaching to any class of
the Corporation 's Shares in a manner which may be prejudicial to
the Trust;
without the approval of the Unitholders by Special Resolution at a
meeting of Unitholders called for that purpose.
7.4 BANKING
The banking activities of the Trust, or any part thereof, shall be
transacted with such financial institutions (including the Trustee or an
Affiliate thereof) or other persons carrying on a financial services business
as the Trustee may designate, appoint or authorize from time to time and all
such financial services business, or any part thereof, shall be transacted on
the Trust's behalf by such one or more officers of the Trustee and/or other
persons as the Trustee may designate, appoint or authorize from time to time
(who may be officers or employees of the Corporation) including, but without
restricting the generality of the foregoing, the operation of the Trust's
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accounts; the making, signing, drawing, accepting, endorsing, negotiating,
lodging, depositing or transferring of any cheques, promissory notes, drafts,
bankers' acceptances, bills of exchange, letters of credit and orders for the
payment of money; the giving of receipts for and orders relating to any
property of the Trust; the execution of any agreement relating to any property
of the Trust; the execution of any agreement relating to any such financial
services business and defining the rights and powers of the parties hereto; and
the authorizing of any officer of such financial institution, or any trustee or
agent thereof to do any act or thing on the Trust's behalf to facilitate such
banking business.
7.5 STANDARD OF CARE
Except as otherwise provided herein, the Trustee shall exercise its
powers and carry out its functions hereunder as Trustee honestly, in good faith
and in the best interests of the Trust and the Unitholders and, in connection
therewith, shall exercise that degree of care, diligence and skill that a
reasonably prudent trustee would exercise in comparable circumstances, subject
to compliance by the Trustee with any agreements contemplated hereby which may
be binding on the Trustee or the Trust. Unless otherwise required by law, the
Trustee shall not be required to give bond, surety or security in any
jurisdiction for the performance of any duties or obligations hereunder. The
Trustee, in its capacity as trustee, shall not be required to devote its entire
time to the business and affairs of the Trust.
7.6 FEES AND EXPENSES
The Trustee shall be paid by the Corporation such fees as may be
agreed upon from time to time by the Corporation and the Trustee and if such
fees are not paid by the Corporation within 30 days after the date of any
invoice in respect thereof, the Trustee shall be entitled to have such fees
paid out of the Trust Fund. As part of the Trust Expenses, the Trustee may pay
or cause to be paid reasonable fees, costs and expenses incurred in connection
with the administration and management of the Trust, including (without
limitation) fees of auditors, lawyers, appraisers and other agents, consultants
and professional advisers employed by or on behalf of the Trust and the cost of
reporting or giving notices to Unitholders. All costs, charges and expenses
(including any amounts payable to the Trustee under Section 7.8 or 7.9)
properly incurred by the Trustee on behalf of the Trust shall be payable by the
Corporation, and if any such costs, charges and expenses are not paid by the
Corporation within 30 days after the date of any invoice in respect thereof,
the Trustee shall be entitled to have such costs, charges and expenses paid out
of the Trust Fund. The Trustee shall have a lien on the Trust Fund (which shall
have priority over the interests of the Unitholders pursuant hereto) to enforce
payment of the fees, costs, expenses and other amounts payable or reimbursable
by the Trust to the Trustee.
7.7 LIMITATIONS ON LIABILITY OF TRUSTEE
The Trustee, its directors, officers, employees, shareholders and
agents shall not be liable to any Unitholder or any other person, in tort,
contract or otherwise, in connection with any matter pertaining to the Trust or
the Trust Fund, arising from the exercise by the Trustee of any powers,
authorities or discretion conferred under this Indenture, including, without
limitation, any action taken or not taken in good faith in reliance on any
documents that are, PRIMA FACIE, properly executed, any depreciation of, or
loss to, the Trust Fund incurred by reason of the sale of any asset, any
inaccuracy in any evaluation provided by any appropriately qualified person,
any reliance on any such evaluation, any action or failure to act of the
Corporation, or any other person to whom the Trustee has, with the consent of
the Corporation, delegated any of its duties hereunder, or any other action or
failure to act (including failure to compel in any way any former trustee to
redress any breach of trust or any failure by the Corporation to perform its
duties under or delegated to it under this Indenture or any other contract),
unless such liabilities arise out of the gross negligence, wilful default or
fraud of the Trustee or any of its directors, officers, employees,
shareholders, or agents. If the Trustee has retained an appropriate expert or
adviser or Counsel with respect to any matter connected with its duties under
this Indenture or any other contract, the Trustee may act or refuse to act
based on the advice of such expert, adviser or Counsel, and the Trustee shall
not be liable for and shall be fully protected from any loss or liability
occasioned by any action or refusal to act based on the advice of any such
expert, adviser or Counsel. In the exercise of the powers, authorities or
discretion conferred upon the Trustee under this Indenture, the Trustee is and
shall be conclusively deemed to be acting as Trustee of the assets of the Trust
and shall not be subject to any personal liability for any debts, liabilities,
obligations, claims, demands, judgments, costs, charges or expenses against or
with respect to the Trust or the Trust Fund.
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7.8 INDEMNIFICATION OF TRUSTEE
The Trust (to the extent of the Trust Fund) is liable to, and shall
indemnify and save harmless the Trustee and each of its directors, officers,
employees, shareholders and agents in respect of:
(a) any liability and all costs, charges and expenses sustained or incurred
in respect of any action, suit or proceeding that is proposed or
commenced against the Trustee or against such directors, officers,
employees, shareholders or agents, as the case may be, for or in respect
of any act, omission or error in respect of the Trust and the Trustee's
execution of all duties and responsibilities and exercise of all powers
and authorities pertaining thereto; and
(b) all other costs, charges, taxes, penalties and interest in respect of
unpaid taxes; and
(c) all other expenses and liabilities sustained or incurred by the Trustee
in respect of the administration or termination of the Trust;
unless any of the foregoing arise out of the gross negligence, wilful default
or fraud of the Trustee or any of its directors, officers, employees,
shareholders or agents, in which case the provisions of this Section 7.8 shall
not apply.
7.9 ENVIRONMENTAL INDEMNITY
The Trust (to the extent of the Trust Fund) is liable to, and shall
indemnify and save harmless, the Trustee, its directors, officers, employees,
shareholders and agents, and all of their successors and assigns (collectively,
the "Indemnified Parties") against any loss, expense, claim, charge, damage,
penalty, liability or asserted liability (including strict liability and costs
and expenses of abatement and remediation of spills or releases of contaminants
and liabilities of the Indemnified Parties to third parties, including
governmental agencies, in respect of bodily injuries, property damage, damage
to or impairment of the environment or any other injury or damage and including
liabilities of the Indemnified Parties to third parties for the third parties'
foreseeable and unforeseeable consequential damages) incurred as a result of:
(a) the administration of the Trust created hereby, or
(b) the exercise by the Trustee of any rights or obligations hereunder,
and which result from or relate, directly or indirectly, to
(c) the presence or release or threatened presence or release of any
contaminants, by any means or for any reason, on or in respect of the
Properties, whether or not such presence or release or threatened
presence or release of the contaminants was under the control, care or
management of the Trust or the Corporation, or of a previous owner or
operator of a Property,
(d) any contaminant present on or released from any property adjacent to or
in the proximate area of the Properties,
(e) the breach or alleged breach of any federal, provincial or municipal
environmental law, regulation, bylaw, order, rule or permit by the Trust
or the Corporation or an owner or operator of a Property, or
(f) any misrepresentation or omission of a known fact or condition made by
the Corporation relating to any Property.
For the purpose of this Section 7.9, "liability" shall include: (i)
liability of an Indemnified Party for costs and expenses of abatement and
remediation of spills and releases of contaminants; (ii) liability of an
Indemnified Party to a third party to reimburse the third party for bodily
injuries, property damage and other injuries or damages which the third party
suffers, including (to the extent, if any, that the Indemnified Party is liable
22
therefor) foreseeable and unforeseeable consequential damages suffered by the
third party; and (iii) liability of the Indemnified Party for damage to or
impairment of the environment.
Notwithstanding the foregoing, the Trust shall not be liable to
indemnify an Indemnified Party against any loss, expense, claim, liability or
asserted liability to the extent resulting from the gross negligence, wilful
default or fraud of the Indemnified Party.
7.10 APPARENT AUTHORITY
No purchaser, transfer agent or other person dealing with the Trustee
or with any officer, employee or agent of the Trustee shall be bound to make
any inquiry concerning the validity of any transaction purporting to be made by
the Trustee or by such officer, employee or agent or make inquiry concerning,
or be liable for, the application of money or property paid, lent or delivered
to or on the order of the Trustee or of such officer, employee or agent. Any
person dealing with the Trustee in respect of any matter pertaining to the
Trust Fund and any right, title or interest therein shall be entitled to rely
on a certificate, statutory declaration or resolution executed or certified on
behalf of the Trustee as to the capacity, power and authority of any officer,
employee or any other person to act for and on behalf and in the name of the
Trust.
7.11 NOTICE TO UNITHOLDERS OF NON-ELIGIBILITY FOR DEFERRED INCOME PLANS
If the Trustee becomes aware that the Trust Units have ceased to be
eligible investments for registered retirement savings plans, registered
retirement income funds, registered education savings plans and deferred profit
sharing plans (all within the meaning of the Tax Act) or any of such plans, the
Corporation shall give notice to Unitholders at their latest address as shown
on the register of Unitholders that Trust Units have ceased to be eligible
investments for such plans. Notwithstanding the foregoing, the Trustee and the
Corporation shall not be liable to the Trust or to any Unitholder for any
costs, expenses, charges, penalties or taxes imposed upon a Unitholder as a
result of or by virtue of a Trust Unit not being an eligible investment for any
such plan, notwithstanding any failure or omission of the Corporation to have
given such notice, provided the Trustee has complied with Section 7.5.
7.12 DECLARATION AS TO BENEFICIAL OWNERSHIP
The Trustee may require any Unitholder, as shown on the register of
Unitholders, to provide a declaration in a form prescribed by the Corporation
as to the beneficial ownership of Trust Units registered in such Unitholder's
name and as to the jurisdiction in which such beneficial owners are resident.
7.13 CONDITIONS PRECEDENT TO TRUSTEE'S OBLIGATIONS TO ACT
The obligation of the Trustee to call any meeting pursuant to Article
10 or to commence to wind up the affairs of the Trust pursuant to Article 12
shall be conditional upon the Unitholders or another person furnishing, when
required by notice in writing by the Trustee, sufficient funds to commence or
continue such act, action or proceeding and indemnity (to the extent sufficient
funds for such purpose are not available in the Trust Fund) reasonably
satisfactory to the Trustee to protect and hold harmless the Trustee against
the costs, charges and expenses and liabilities to be incurred therein and any
loss and damage it may suffer by reason thereof and the obligation of the
Trustee to commence or continue any act, action or proceeding for the purpose
of enforcing the rights of the Trustee and of the Unitholders shall, if
required by notice in writing by the Trustee, be subject to the same conditions
as to funding and indemnity. None of the provisions contained in this Indenture
shall require the Trustee to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers unless indemnified as aforesaid.
7.14 SURVIVAL OF INDEMNITIES
All indemnities, all limitations of liability and all other provisions
for the protection of the Trustee provided for in this Trust Indenture shall
survive the termination of this Indenture under Article 12 and the removal or
resignation of the Trustee under Article 6.
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7.15 TRUSTEE MAY HAVE OTHER INTERESTS
Subject to applicable securities laws, and without affecting or
limiting the duties and responsibilities or the limitations and indemnities
provided in this Indenture, the Trustee is hereby expressly permitted to
(a) be an Associate or an Affiliate of a person from or to whom assets of
the Trust have been or are to be purchased or sold;
(b) be, or be an Associate or an Affiliate of, a person with whom the Trust
or the Corporation contracts or deals or which supplies services to the
Trust or the Corporation;
(c) acquire, hold and dispose of, either for its own account or the accounts
of its customers, any assets not constituting part of the Trust Fund,
even if such assets are of a character which could be held by the Trust,
and exercise all rights of an owner of such assets as if it were not a
trustee;
(d) carry on its business as a trust company in the usual course while it is
the Trustee, including the rendering of trustee or other services to
other trusts and other persons for gain; and
(e) derive direct or indirect benefit, profit or advantage from time to time
as a result of dealing with the Trust or the relationships, matters,
contracts, transactions, affiliations or other interests stated in this
Section 7.15 without being liable to the Trust or any Unitholder for any
such direct or indirect benefit, profit or advantage.
Subject to applicable laws, none of the relationships, matters, contracts,
transactions, affiliations or other interests permitted above shall be, or
shall be deemed to be or to create, a material conflict of interest with the
Trustee's duties hereunder.
7.16 DOCUMENTS HELD BY TRUSTEE
Any securities, documents of title or other instruments that may at
any time be held by the Trustee subject to the trusts hereof may be placed in
the deposit vaults of the Trustee or of any chartered bank in Canada, including
an Affiliate of the Trustee, or deposited for safekeeping with any such bank.
ARTICLE 8
DELEGATION OF POWERS
8.1 THE CORPORATION
Except as expressly prohibited by law, the Trustee may grant or
delegate to the Corporation such authority as the Trustee may in its sole
discretion deem necessary or desirable to effect the actual administration of
the duties of the Trustee under this Indenture, without regard to whether such
authority is normally granted or delegated by trustees. The Trustee may grant
broad discretion to the Corporation to administer and manage the day-to-day
operations of the Trust Fund, to act as agent for the Trust Fund, to execute
documents on behalf of the Trust Fund and to make executive decisions which
conform to general policies and general principles set forth herein or
previously established by the Trustee. The Corporation shall have the powers
and duties expressly provided for herein and in any other agreement providing
for the management or administration of the Trust including, without
limitation, the power to retain and instruct such appropriate experts or
advisors to perform those duties and obligations herein which it is not
qualified to perform (and the Corporation shall notify the Trustee of the name
of the person or persons retained or instructed and the terms and conditions
thereof).
8.2 OFFERINGS AND OTHER MATTERS
The Trustee hereby delegates to the Corporation (through its Board of
Directors) responsibility for any or all matters relating to:
24
(a) an Offering including:
(i) ensuring compliance with all applicable laws;
(ii) the content of any Offering Documents, the accuracy of the
disclosure contained therein, and the certification thereof;
(iii) any subscription agreement or underwriting or agency agreements
providing for the sale of Trust Units or securities convertible
for or exchangeable into Trust Units or rights to Trust Units;
(iv) the adoption of a unitholder rights plan and without limitation
those matters set forth in Section 7.1(b) hereof;
(v) all matters concerning any Underwriting Agreement providing for
the sale of Trust Units or rights to Trust Units; and
(b) the terms of, and amendment from time to time of the Material Contracts.
The Corporation hereby accepts such delegation and agrees that, in
respect of such matters, it shall carry out its functions honestly, in good
faith and in the best interests of the Trust and the Unitholders and, in
connection therewith, shall exercise that degree of care, diligence and skill
that a reasonably prudent Person would exercise in comparable circumstances;
the Corporation, and if directed by the Corporation in writing, the Trustee
shall, execute any agreements on behalf of the Trust as the Corporation shall
have authorized within the scope of any authority delegated to it hereunder.
8.3 EXCLUSIONS FROM DELEGATION
Notwithstanding any other provision of this Indenture, including
without limitation Section 8.1 and Section 8.2, the duties and obligations of
the Trustee shall not be delegated to the Corporation or any other person in
relation to:
(a) without limiting the duties and obligations of the Transfer Agent
hereunder, the transfer of and cancellation of certificates representing
Trust Units and the maintenance of registers of Unitholders;
(b) terminating this Indenture in accordance with the provisions hereof;
(c) the amendment to or waiver of the performance or breach of any provision
of this Indenture; or
(d) the distribution of distributable income of the Trust.
8.4 POWER OF ATTORNEY
Without limiting any of the other provisions of this Article 8, the
Trustee hereby delegates to the Corporation from time to time the full power
and authority, and constitutes the Corporation its true and lawful attorney in
fact, to sign on behalf of the Trust all rights plans, prospectuses, annual
information forms, management proxy circulars, other Offering Documents and any
other documents ancillary or similar thereto required to be signed by the Trust
from time to time, including any Agency Agreements, indemnity agreements
(pursuant to which the Trust and not the Trustee provides indemnities) or
documents ancillary or similar thereto.
8.5 LIABILITY OF TRUSTEE
The Trustee shall have no liability or responsibility for any matters
delegated to the Corporation hereunder or under any of the Material Contracts,
and the Trustee, in relying upon the Corporation and in entering into the
Material Contracts, shall be deemed to have complied with its obligations under
Section 7.5 and shall be entitled to the benefit of the indemnities,
limitations of liability and other protection provisions provided for herein.
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ARTICLE 9
AMENDMENT
9.1 AMENDMENT
Except as specifically provided otherwise herein, the provisions of
this Indenture and the Administration Agreement, may only be amended by the
Trustee with the consent of the Unitholders by Special Resolution.
Any of the provisions of this Indenture may be amended by the Trustee
at any time or times, without the consent, approval or ratification of any of
the Unitholders or any other person for the purpose of:
(a) ensuring that the Trust will comply with any applicable laws or
requirements of any governmental agency or authority of Canada or of any
province;
(b) ensuring that the Trust will satisfy the provisions of each of
subsections 108(2) and 132(6) of the Tax Act as from time to time
amended or replaced;
(c) ensuring that such additional protection is provided for the interests
of Unitholders as the Trustee may consider expedient;
(d) removing or curing any conflicts or inconsistencies between the
provisions of this Indenture or any supplemental indenture, any Direct
Royalties Sale Agreement and any other agreement of the Trust or any
Offering Document with respect to the Trust, or any applicable law or
regulation of any jurisdiction, provided that in the opinion of the
Trustee the rights of the Trustee and of the Unitholders are not
prejudiced thereby;
(e) providing for the electronic delivery by the Trust to Unitholders of
documents relating to the Trust (including annual and quarterly reports,
including financial statements, notices of Unitholder meetings and
information circulars and proxy related materials) once applicable
securities laws have been amended to permit such electronic delivery in
place of normal delivery procedures, provided that such amendments to
the Trust Indenture are not contrary to or do not conflict with such
laws;
(f) making such other amendments which in the opinion of the Trustee are
necessary or desirable as a result of changes or proposed changes in
taxation laws or the administration or enforcement thereof;
(g) changing the situs of, or the laws governing the Trust which, in the
opinion of the Trustee is desirable in order to provide Unitholders with
the benefit of any, legislation limiting their liability;
(h) curing, correcting or rectifying any ambiguities, defective or
inconsistent provisions, errors, mistakes or omissions, provided that in
the opinion of the Trustee the rights of the Trustee and of the
Unitholders are not prejudiced thereby; and
(i) making any modification in the form of Trust Unit Certificates to
conform with the provisions of this Indenture, or any other
modifications, provided the rights of the Trustee and of the Unitholders
are not prejudiced thereby.
Notwithstanding the foregoing, no amendment shall reduce the percentage of
votes required to be cast at a meeting of the Unitholders for the purpose of
amending this Section 9.1 without the consent of the holders of all of the
Trust Units then outstanding.
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ARTICLE 10
MEETINGS OF UNITHOLDERS
10.1 ANNUAL AND SPECIAL MEETINGS OF UNITHOLDERS
Annual meetings of the Unitholders shall be called by the Trustee,
commencing in 2003, on a day, at a time and at a place to be set by the
Corporation. The business transacted at such meetings shall include the
transaction of such business as Unitholders may be entitled to vote upon as
hereinafter provided in this Article 10, or as the Corporation may determine.
Special meetings of the Unitholders may be called at any time by the
Corporation and shall be called by the Corporation upon a written request of
Unitholders holding in the aggregate not less than 20% of the Trust Units then
outstanding, such request specifying the purpose or purposes for which such
meeting is to be called. Meetings of Unitholders shall be held in the City of
Calgary, or at such other place as the Corporation shall designate. The
Chairman of any annual or special meeting shall be a person designated by the
Corporation for the purpose of such meeting except that, on the motion of any
Unitholder, any person may be elected as Chairman by a majority of the votes
cast at the meeting instead of such designated person or in the event that no
person shall be designated by the Corporation.
10.2 NOTICE OF MEETINGS
Notice of all meetings of Unitholders shall be given by unregistered
mail postage prepaid addressed to each Unitholder at his registered address,
mailed at least 21 days and not more than 50 days before the meeting. Such
notice shall set out the time when, and the place where, such meeting is to be
held and shall specify the nature of the business to be transacted at such
meeting in sufficient detail to permit a Unitholder to form a reasoned judgment
thereon, together with the text of any resolution in substantially final form
proposed to be passed. Any adjourned meeting may be held as adjourned without
further notice. The accidental omission to give notice to or the non-receipt of
such notice by the Unitholders shall not invalidate any resolution passed at
any such meeting.
10.3 QUORUM
At any meeting of the Unitholders, subject as hereinafter provided, a
quorum shall consist of two or more persons either present in person or
represented by proxy and representing in the aggregate not less than 5% of the
outstanding Trust Units. If a quorum is not present at the appointed place on
the date for which the meeting is called within one half hour after the time
fixed for the holding of such meeting, the meeting, if convened on the
requisition of Unitholders, shall be dissolved, but in any other case it shall
stand adjourned to such day being not less than fourteen (14) days later and to
such place and time as may be appointed by the Chairman of the meeting. If at
such adjourned meeting a quorum as above defined is not present, the
Unitholders present either personally or by proxy shall form a quorum, and any
business may be brought before or dealt with at such an adjourned meeting which
might have been brought before or dealt with at the original meeting in
accordance with the notice calling the same.
10.4 VOTING RIGHTS OF UNITHOLDERS
Only Unitholders of record shall be entitled to vote and each Trust
Unit shall entitle the holder or holders of that Trust Unit to that number of
votes at any meeting of the Unitholders set forth in Section 3.1. Every
question submitted to a meeting, other than a Special Resolution, shall, unless
a poll vote is demanded, be decided by a show of hands vote, on which every
person present and entitled to vote shall be entitled to one vote. At any
meeting of Unitholders, any holder of Trust Units entitled to vote thereat may
vote by proxy and a proxy need not be a Unitholder, provided that no proxy
shall be voted at any meeting unless it shall have been placed on file with the
Trustee, or with such agent of the Trustee as the Trustee may direct, for
verification prior to the commencement of such meeting no later than the time
for which proxies are to have been received as set forth in the notice of such
meeting. If approved by the Trustee, proxies may be solicited in the name of
the Trustee. When any Trust Unit is held jointly by several persons, any one of
them may vote at any meeting in person or by proxy in respect of such Trust
Unit, but if more than one of them shall be present at such meeting in person
or by proxy, and such joint owners of their proxies so present disagree as to
any vote to be cast, the joint owner present or represented whose name appears
first in the register maintained pursuant to Section 11.3 shall be entitled to
cast such vote.
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10.5 RESOLUTIONS
(a) The Trustee shall in accordance with an Ordinary Resolution passed by
the Unitholders: (i) change the Auditors as provided in Section 15.3;
and (ii) elect the directors of the Corporation.
(b) The Trustee shall in accordance with a Special Resolution passed by the
Unitholders:
(i) subject to Section 9.1, amend this Indenture;
(ii) subdivide or consolidate Trust Units;
(iii) sell or agree to sell the property of the Trust Fund as an
entirety or substantially as an entirety;
(iv) resign if removed pursuant to Section 6.3; and
(v) commence to wind-up and wind-up the affairs of the Trust if
requested pursuant to Section 12.2.
Except with respect to the above matters set out in this Section 10.5 and the
matters set forth in Sections 6.3, 6.4 and 12.2 hereof, no action taken by the
Unitholders or resolution of the Unitholders at any meeting shall in any way
bind the Trustee. Notwithstanding the foregoing, the Trust, without the prior
approval of the Unitholders whether by Special Resolution or otherwise, shall
be permitted to sell, assign or otherwise transfer any property of the Trust in
circumstances where any such sale, assignment or transfer is effected between
or among the Trust and any one or more of:
(A) any direct or indirect wholly-owned subsidiary of the
Trust;
(B) any trust, the only beneficiaries of which are the Trust or
any direct or indirect wholly-owned subsidiary of the
Trust;
(C) any partnership, the only partners of which are the Trust
and/or any of the persons referred to in (A) or (B) above
and/or
(D) the Corporation,
provided that in opinion of the board of directors of the Corporation, such
sale, assignment or transfer of property is in the best interests of the Trust.
10.6 MEANING OF "SPECIAL RESOLUTION"
The expression "Special Resolution" when used in this Indenture means,
subject as hereinafter in this Article provided, a resolution proposed to be
passed as a special resolution at a meeting of Unitholders (including an
adjourned meeting) duly convened for the purpose and held in accordance with
the provisions of this Article at which two or more holders of at least 10% of
the aggregate number of Trust Units then outstanding are present in person or
by proxy and passed by the affirmative votes of the holders of not less than 66
2/3% of the Trust Units represented at the meeting and voted on a poll upon
such resolution.
If, at any such meeting, the holders of 10% of the aggregate number of
Trust Units outstanding are not present in person or represented by proxy
within 30 minutes after the time appointed for the meeting, then the meeting,
if convened by or on the requisition of Unitholders, shall be dissolved; but in
any other case it shall stand adjourned to such date, being not less than 21
nor more than 60 days later, and to such place and time as may be appointed by
the chairman. Not less than ten days' prior notice shall be given of the time
and place of such adjourned meeting in the manner provided in Section 10.2.
Such notice shall state that at the adjourned meeting the Unitholders present
in person or represented by proxy shall form a quorum but it shall not be
necessary to set forth the purposes for which the meeting was originally called
or any other particulars. At the adjourned meeting, the Unitholders present in
person or represented by proxy shall form a quorum and may transact the
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business for which the meeting was originally convened, and a resolution
proposed at such adjourned meeting and passed by the requisite vote as provided
in this Section 10.6 shall be a Special Resolution within the meaning of this
Indenture, notwithstanding that the holders of less than 10% of the aggregate
number of Units then outstanding are present or represented by proxy at such
adjourned meeting.
Votes on a Special Resolution shall always be given on a poll and no
demand for a poll on a Special Resolution shall be necessary. No Special
Resolution changing or amending any provision hereof relating to or affecting:
(i) the Trustee, including the qualification, powers, authorities, appointment,
removal or resignation thereof; or (ii) the provisions of Articles 9, 10 or 12
shall be effective prior to 60 days from the adoption thereof in accordance
with the provisions hereof or such shorter period as may be approved by
Unitholders.
10.7 RECORD DATE FOR VOTING
For the purpose of determining the Unitholders who are entitled to
vote or act at any meeting or any adjournment thereof, the Trustee may fix a
date not more than 50 days and not less than 21 days prior to the date of any
meeting of Unitholders as a record date for the determination of Unitholders
entitled to vote at such meeting or any adjournment thereof, and any Unitholder
who was a Unitholder at the time so fixed shall be entitled to vote at such
meeting or any adjournment thereof even though he has since that time disposed
of his Trust Units, and no Unitholder becoming such after that time shall be so
entitled to vote at such meeting or any adjournment thereof. In the event that
the Trustee does not fix a record date for any meeting of Unitholders, the
record date for such meeting shall be the Business Day immediately preceding
the date upon which notice of the meeting is given as provided under Section
10.2.
10.8 BINDING EFFECT OF RESOLUTIONS
Every Ordinary Resolution and every Special Resolution passed in
accordance with the provisions of this Indenture at a meeting of Unitholders
shall be binding upon all the Unitholders, whether present at or absent from
such meeting, and each and every Unitholder shall be bound to give effect
accordingly to every such Ordinary Resolution and Special Resolution.
10.9 SOLICITATION OF PROXIES
A Unitholder shall have the right to appoint a proxy to attend and act
for the Unitholder at any meeting of Unitholders. The Trustee shall solicit
proxies from Unitholders in connection with all meetings of Unitholders. In
connection therewith, the Trustee shall comply, as near as may be possible,
with all provisions of the BUSINESS CORPORATIONS ACT (Alberta) and the
requirements of Canadian securities legislation applicable to the solicitation
of proxies.
10.10 NO BREACH
Notwithstanding any provisions of this Indenture, Unitholders shall
have no power to effect any amendment hereto which would require the Trustee to
take any action or conduct the affairs of the Trust in a manner which would
constitute a breach or default by the Trust or the Trustee under any agreement
binding on or obligation of the Trust or the Trustee.
ARTICLE 11
CERTIFICATES, REGISTRATION AND TRANSFER OF TRUST UNITS
11.1 NATURE OF TRUST UNITS
The nature of a Trust Unit and the relationship of a Unitholder to the
Trustee and the relationship of one Unitholder to another is as described in
Sections 2.4 and Subsection 2.5(c) and the provisions of this Article 11 shall
not in any way alter the nature of Trust Units or the said relationships of a
Unitholder to the Trustee and of one Unitholder to another, but are intended
only to facilitate, as applicable, the issuance of certificates or entry on the
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register of Unitholders evidencing the beneficial ownership of Trust Units and
the recording of all such transactions whether by the Trust, securities
dealers, stock exchanges, transfer agents, registrars or other persons.
11.2 CERTIFICATES
(a) Trust Units shall be:
(i) represented by certificates; or
(ii) uncertificated Trust Units evidenced by a book-entry system
maintained by the Trustee or by a Transfer Agent designated to act
on behalf and under the direction of the Trustee; or
(iii) a combination of (i) and (ii) above.
(b) If Trust Units are represented by certificates, the form of certificate
representing Trust Units shall be substantially as set out in the
Schedule hereto or such other form as is authorized from time to time by
the Trustee. Each such certificate shall bear an identifying serial
number and shall be certified manually on behalf of the Trustee. Any
additional signature required by the Trustee to appear on such
certificate may be printed, lithographed or otherwise mechanically
reproduced thereon and, in such event, certificates so signed are as
valid as if it had been signed manually. Any certificate which has one
manual signature as hereinbefore provided shall be valid notwithstanding
that one or more of the persons whose signature is printed, lithographed
or mechanically reproduced no longer holds office at the date of
issuance of such certificate. The Trust Certificates may be engraved,
printed or lithographed, or partly in one form and partly in another, as
the Trustee may determine.
(c) Any Trust Unit Certificate validly issued prior to the date hereof in
accordance with the terms of this Indenture in effect at such time shall
validly represent issued and outstanding Trust Units, notwithstanding
that the form of such Trust Unit Certificate may not be in the form
currently required by this Indenture.
11.3 REGISTER OF UNITHOLDERS
A register shall be maintained at the principal corporate trust office
of the Trustee in the City of Calgary by the Trustee or by a Transfer Agent
designated to act on behalf and under the direction of the Trustee, which
register shall contain the names and addresses of the Unitholders, the
respective numbers of Trust Units held by them, if applicable, the certificate
numbers of the certificates representing such Trust Units and a record of all
transfers thereof. Branch transfer registers shall be maintained at such other
offices of the Trustee or Transfer Agent as the Trustee may from time to time
designate. The Trustee shall designate an office in the City of Toronto at
which a branch register shall be maintained. Except in the case of the
registers required to be maintained at the Cities of Calgary and Toronto, the
Trustee shall have the power at any time to close any register of transfers and
in that event shall transfer the records thereof to another existing register
or to a new register.
Only Unitholders whose Trust Units are so recorded shall be entitled
to receive distributions or to exercise or enjoy the rights of Unitholders
hereunder. The Trustee shall have the right to treat the person registered as a
Unitholder on the register of the Trust as the owner of such Trust Units for
all purposes, including, without limitation, payment of any distribution,
giving notice to Unitholders and determining the right to attend and vote at
meetings of Unitholders, and the Trustee shall not be bound to recognize any
transfer, pledge or other disposition of a Trust Unit or any attempt to
transfer, pledge or dispose of a Trust Unit, or any beneficial interest or
equitable or other right or claim with respect thereto, whether or not the
Trustee shall have actual or other notice thereof, until such Trust Unit shall
have been transferred on the register of the Trust as herein provided.
The register and the branch transfer register referred to in this
Section 11.3 shall at all reasonable times be open for inspection by the
Unitholders, the Corporation and the Trustee.
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11.4 TRANSFER OF TRUST UNITS
(a) Subject to the provisions of this Article 11, the Trust Units shall be
fully transferable without charge as between persons, but no transfer of
Trust Units shall be effective as against the Trustee or shall be in any
way binding upon the Trustee until the transfer has been recorded on the
register or one of the branch transfer registers maintained by the
Trustee or Transfer Agent. No transfer of a Trust Unit shall be
recognized unless such transfer is of a whole Trust Unit.
(b) Subject to the provisions of this Article 11, Trust Units shall be
transferable on the register or one of the branch transfer registers of
Unitholders of the Trust only by the Unitholders of record thereof or
their executors, administrators or other legal representatives or by
their agents hereunto duly authorized in writing, and only upon delivery
to the Trustee or to the Transfer Agent of the Trust if appointed, of
the certificate therefor if a certificate representing the Trust Units
has been issued, properly endorsed or accompanied by a duly executed
instrument of transfer or a duly executed instrument of transfer if a
certificate representing the Trust Units has not been issued, in either
case accompanied by all necessary transfer or other taxes imposed by
law, together with such evidence of the genuineness of such endorsement,
execution and authorization and other matters that may reasonably be
required by the Trustee. Upon such delivery the transfer shall be
recorded on the register of Unitholders and, if applicable a new Trust
Certificate for the residue thereof (if any) shall be issued to the
transferor. Unless the Corporation agrees to assume liability for the
transfer and exchange fees the Unitholder shall be responsible for such
fees and expenses.
(c) Any person becoming entitled to any Trust Units as a consequence of the
death, bankruptcy or incompetence of any Unitholder or otherwise by
operation of law, shall be recorded as the holder of such Trust Units
and, if applicable, shall receive a new Trust Certificate therefor only
upon production of evidence satisfactory to the Trustee thereof and, if
applicable, delivery of the existing Trust Certificate to the Trustee,
but until such record is made the Unitholder of record shall continue to
be and be deemed to be the holder of such Trust Units for all purposes
whether or not the Trustee shall have actual or other notice of such
death or other event.
11.5 TRUST UNITS HELD JOINTLY OR IN A FIDUCIARY CAPACITY
The Trustee may treat two or more persons holding any Trust Units as
joint owners of the entire interest therein unless their ownership is expressly
otherwise recorded on the register of the Trust, but no entry shall be made in
the register or on any Trust Certificate that any person is in any other manner
entitled to any future, limited or contingent interest in any Trust Units;
provided, however, that any person recorded as a Unitholder may, subject to the
provisions hereinafter contained, be described in the register or on any Trust
Certificate as a fiduciary of any kind and any customary words may be added to
the description of the holder to identify the nature of such fiduciary
relationship. Where any Trust Unit is registered in more than one name, the
distributions (if any) in respect thereof may be paid to the order of all such
holders failing written instructions from them to the contrary and such payment
shall be a valid discharge to the Trustee and any Transfer Agent. In the case
of the death of one or more joint holders, the distributions (if any) in
respect of any Trust Units may be paid to the survivor or survivors of such
holders and such payment shall be a valid discharge to the Trustee and any
Transfer Agent.
11.6 PERFORMANCE OF TRUST
The Trustee, the Unitholders and any officer or agent of the Trustee
shall not be bound to be responsible for or otherwise inquire into or ensure
the performance of any trust, express, implied or constructive, or of any
charge, pledge or equity to which any of the Trust Units or any interest
therein are or may be subject, or to ascertain or enquire whether any transfer
of any such Trust Units or interests therein by any such Unitholder or by his
personal representatives is authorized by such trust, charge, pledge or equity,
or to recognize any person as having any interest therein except for the person
recorded as Unitholder.
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11.7 LOST CERTIFICATES
In the event that any Trust Certificate is lost, stolen, destroyed or
mutilated, the Trustee may authorize the issuance of a new Trust Certificate
for the same number of Trust Units in lieu thereof. The Trustee may in its
discretion, before the issuance of such new Trust Certificate, require the
owner of the lost, stolen, destroyed or mutilated Trust Certificate, or the
legal representative of the owner to make an affidavit or statutory declaration
setting forth such facts as to the loss, theft, destruction or mutilation as
the Trustee may deem necessary, to surrender any mutilated Trust Certificate
and may require the applicant to supply to the Trust a "lost certificate bond"
or a similar bond in such reasonable sum as the Trustee may direct indemnifying
the Trustee and its agent for so doing. The Trustee shall have the power to
require from an insurer or insurers a blanket lost security bond or bonds in
respect of the replacement of lost, stolen, destroyed or mutilated Trust
Certificates. The Trustee shall pay all premiums and other funds of money
payable for such purpose out of the Trust Fund with such contribution, if any,
by those insured as may be determined by the Trustee in its sole discretion. If
such blanket lost security bond is required, the Trustee may authorize and
direct (upon such terms and conditions as the Trustee may from time to time
impose) any agent to whom the indemnity of such bond extends to take such
action to replace any lost, stolen, destroyed or mutilated Trust Certificate
without further action or approval by the Trustee.
11.8 DEATH OF A UNITHOLDER
The death of a Unitholder during the continuance of the Trust shall
not terminate the Trust or any of the mutual or respective rights and
obligations created by or arising under this Indenture nor give such
Unitholder's personal representative a right to an accounting or take any
action in court or otherwise against other Unitholders or the Trustee or the
Trust Fund, but shall entitle the personal representatives of the deceased
Unitholder to demand and receive, pursuant to the provisions hereof, a new
Trust Certificate for Trust Units in place of the Trust Certificate, if any,
held by the deceased Unitholder, and upon the acceptance thereof such personal
representatives shall succeed to all rights of the deceased Unitholder under
this Indenture.
11.9 UNCLAIMED INTEREST OR DISTRIBUTION
In the event that the Trustee shall hold any amount of interest or
other distributable amount which is unclaimed or which cannot be paid for any
reason, the Trustee shall be under no obligation to invest or reinvest the same
but shall only be obliged to hold the same in a current non-interest-bearing
account pending payment to the person or persons entitled thereto. The Trustee
shall, as and when required by law, and may at any time prior to such required
time, pay all or part of such interest or other distributable amount so held to
the Public Trustee (or other appropriate Government official or agency) whose
receipt shall be a good discharge and release of the Trustee.
11.10 EXCHANGES OF TRUST CERTIFICATES
Trust Certificates representing any number of Trust Units may be
exchanged without charge for Trust Certificates representing an equivalent
number of Trust Units in the aggregate. Any exchange of Trust Certificates may
be made at the offices of the Trustee or at the offices of any Transfer Agent
where registers are maintained for the Trust Certificates pursuant to the
provisions of this Article 11. Any Trust Certificates tendered for exchange
shall be surrendered to the Trustee or appropriate Transfer Agent and shall be
cancelled. The Corporation shall reimburse the Trustee for all exchange fees
associated with any such exchange.
11.11 OFFER FOR UNITS
(a) In this Section 11.11:
(i) "DISSENTING UNITHOLDER" means a Unitholder who does not accept an
Offer referred to in Subsection (b) and includes any assignee of
the Unit of a Unitholder to whom such an Offer is made, whether or
not such assignee is recognized under this Indenture;
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(ii) "OFFER" means an offer to acquire outstanding Units where, as of
the date of the offer to acquire, the Units that are subject to
the offer to acquire, together with the Offeror's Units,
constitute in the aggregate 20% or more of all outstanding Units;
(iii) "OFFER TO ACQUIRE" includes an acceptance of an offer to sell;
(iv) "OFFEROR" means a person, or two or more persons acting jointly or
in concert, who make an Offer to acquire Units;
(v) "OFFEROR'S NOTICE" means the notice described in Subsection (c);
and
(vi) "OFFEROR'S UNITS" means Units beneficially owned, or over which
control or direction is exercised, on the date of an Offer by the
Offeror, any Affiliate or Associate of the Offeror or any person
or company acting jointly or in concert with the Offeror.
(b) If an Offer for all of the outstanding Units (other than Units held by
or on behalf of the Offeror or an Affiliate or Associate of the Offeror)
is made and
(i) within the time provided in the Offer for its acceptance or within
45 days after the date the Offer is made, whichever period is the
shorter, the Offer is accepted by Unitholders representing at
least 90% of the outstanding Units, other than the Offeror's
Units;
(ii) the Offeror is bound to take up and pay for, or has taken up and
paid for the Units of the Unitholders who accepted the Offer; and
(iii) the Offeror complies with Subsections (c) and (e);
the Offeror is entitled to acquire, and the Dissenting Unitholders
are required to sell to the Offeror, the Units held by the
Dissenting Unitholders for the same consideration per Unit payable
or paid, as the case may be, under the Offer.
(c) Where an Offeror is entitled to acquire Units held by Dissenting
Unitholders pursuant to Subsection (b), and the Offeror wishes to
exercise such right, the Offeror shall send by registered mail within 30
days after the date of termination of the Offer a notice (the "Offeror's
Notice") to each Dissenting Unitholder stating that:
(i) Unitholders holding at least 90% of the Units of all Unitholders,
other than Offeror's Units, have accepted the Offer;
(ii) the Offeror is bound to take up and pay for, or has taken up and
paid for, the Units of the Unitholders who accepted the Offer;
(iii) Dissenting Unitholders must transfer their respective Units to the
Offeror on the terms on which the Offeror acquired the Units of
the Unitholders who accepted the Offer within 21 days after the
date of the sending of the Offeror's Notice; and
(iv) Dissenting Unitholders must send their respective Trust Unit
Certificate(s), if any, to the Trustee within 21 days after the
date of the sending of the Offeror's Notice.
(d) A Dissenting Unitholder to whom an Offeror's Notice is sent pursuant to
Subsection (c) shall, within 21 days after the sending of the Offeror's
Notice, send to the Trustee his or her Trust Unit Certificate(s), duly
endorsed for transfer if a certificate representing the Trust Units has
been issued, or send to the Trustee a duly executed instrument of
transfer if a certificate representing the Trust Units has not been
issued.
(e) Within 21 days after the Offeror sends an Offeror's Notice pursuant to
Subsection (c), the Offeror shall pay or transfer to the Trustee, or to
such other person as the Trustees may direct, the cash or other
consideration that is payable to Dissenting Unitholders pursuant to
Subsection (b).
(f) The Trustee, or the person directed by the Trustee, shall hold in trust
for the Dissenting Unitholders the cash or other consideration it
receives under Subsection (e). The Trustee, or such person, shall
deposit cash in a separate account in a Canadian chartered bank, and
shall place other consideration in the custody of a Canadian chartered
bank or similar institution for safekeeping.
(g) Within 30 days after the date of the sending of an Offeror's Notice
pursuant to Subsection (c), the Trustee, if the Offeror has complied
with Subsection (e), shall:
(i) do all acts and things and execute and cause to be executed all
instruments as in the Trustee's opinion may be necessary or
desirable to cause the transfer of the Units of the Dissenting
Unitholders to the Offeror;
(ii) send to each Dissenting Unitholder who has complied with
Subsection (d) the consideration to which such Dissenting
Unitholder is entitled under this Section 11.11; and
(iii) send to each Dissenting Unitholder who has not complied with
Subsection (d) a notice stating that:
(A) his or her Units have been transferred to the Offeror;
(B) the Trustee or some other person designated in such notice is
holding in trust the consideration for such Units; and
(C) the Trustee, or such other person, will send the consideration
to such Dissenting Unitholder as soon as practicable after
receiving such Dissenting Unitholder's Unit Certificate(s) or
such other documents as the Trustee, or such other person may
require in lieu thereof,
and the Trustee is hereby appointed the agent and attorney of the
Dissenting Unitholders for the purposes of giving effect to the
foregoing provisions.
(h) An Offeror cannot make an Offer for Units unless, concurrent with the
communication of the Offer to any Unitholder, a copy of the Offer is
provided to the Trust.
ARTICLE 12
TERMINATION
12.1 TERMINATION DATE
Unless the Trust is terminated or extended earlier, the Trustee shall
commence to wind up the affairs of the Trust on December 31, 2099.
12.2 TERMINATION BY SPECIAL RESOLUTION OF UNITHOLDERS
The Unitholders may vote by Special Resolution to terminate the Trust
at any meeting of Unitholders duly called for that purpose, whereupon the
Trustee shall commence to wind up the affairs of the Trust, provided that such
a vote may only be held if requested in writing by the holders of not less than
20% of the outstanding Trust Units and a quorum of holders of not less than 50%
of the outstanding Trust Units are present in person or represented by proxy at
the meeting or any adjournment thereof at which the vote is taken.
12.3 PROCEDURE UPON TERMINATION
Forthwith upon being required to commence to wind up the affairs of
the Trust, the Trustee shall give notice thereof to the Unitholders, which
notice shall designate the time or times at which Unitholders may surrender
their Trust Units for cancellation and the date at which the register of the
Trust shall be closed.
12.4 POWERS OF THE TRUSTEE UPON TERMINATION
After the date on which the Trustee is required to commence to wind up
the affairs of the Trust, the Trustee shall carry on no activities except for
the purpose of winding up the affairs of the Trust as hereinafter provided and
for these purposes, the Trustee shall continue to be vested with and may
exercise all or any of the powers conferred upon the Trustee under this
Indenture.
12.5 SALE OF INVESTMENTS
After the date referred to in Section 12.4, the Trustee shall proceed
to wind up the affairs of the Trust as soon as may be reasonably practicable
and for such purpose shall, subject to the terms of any agreements binding on
or obligations of the Trust and the Trustee, sell and convert into money the
Direct Royalties and other assets comprising the Trust Fund in one transaction
or in a series of transactions at public or private sale and do all other acts
appropriate to liquidate the Trust Fund, and shall in all respects act in
accordance with the directions, if any, of the Unitholders in respect of a
termination authorized under Section 12.2. Notwithstanding anything herein
contained, in no event shall the Trust be wound up until the Direct Royalties
shall have been disposed of.
12.6 DISTRIBUTION OF PROCEEDS
After paying, retiring or discharging or making provision for the
payment, retirement or discharge of all known liabilities and obligations of
the Trust and providing for indemnity against any other outstanding liabilities
and obligations, the Trustee shall distribute the remaining part of the
proceeds of the sale of the Direct Royalties and other assets together with any
cash forming part of the Trust Fund among the Unitholders in accordance with
their Pro Rata Share. Notwithstanding the foregoing, holders of Special Trust
Units shall be entitled to a preferential distribution equal to $1.00 for each
Special Trust Unit, or such lesser amount where the residual assets of the
Trust would not be sufficient to pay such amount, and the Pro Rata Share
payable to Unitholders shall be determined after such preferential
distribution.
12.7 FURTHER NOTICE TO UNITHOLDERS
In the event that all of the Unitholders shall not surrender their
Trust Units for cancellation within six (6) months after the time specified in
the notice referred to in Section 12.3, such remaining Trust Units shall be
deemed to be cancelled without prejudice to the rights of the holders of such
Trust Units to receive their Pro Rata Share of the amounts referred to in
Section 12.6 and the Trustee may either take appropriate steps, or appoint an
agent to take appropriate steps, to contact such Unitholders (deducting all
expenses thereby incurred from the amounts to which such Unitholders are
entitled as aforesaid) or, in the discretion of the Trustee, may pay such
amounts into court.
12.8 RESPONSIBILITY OF TRUSTEE AFTER SALE AND CONVERSION
The Trustee shall be under no obligation to invest the proceeds of any
sale of the Direct Royalties or other assets or cash forming part of the Trust
Fund after the date referred to in Section 12.4 and, after such sale, the sole
obligation of the Trustee under this Indenture shall be to hold such proceeds
in trust for distribution under Section 12.6.
ARTICLE 13
SUPPLEMENTAL INDENTURES
13.1 PROVISION FOR SUPPLEMENTAL INDENTURES
From time to time the Trustee and the Corporation may, subject to the
provisions hereof, and it shall, when so directed in accordance with the
provisions hereof, execute and deliver by its proper officers, indentures or
instruments supplemental hereto, which thereafter shall form part hereof, for
any one or more or all of the following purposes:
(a) giving effect to any amendment as provided in Article 9;
(b) giving effect to any Special Resolution passed as provided in Article
10;
(c) making such provision not inconsistent with this Indenture as may be
necessary or desirable with respect to matters or questions arising
hereunder, provided that such provisions are not, in the opinion of the
Trustee, prejudicial to the interests of the Unitholders;
(d) making any modification in the form of Trust Certificates which does
not materially affect the substance thereof; and
(e) for any other purpose not inconsistent with the terms of this
Indenture, including the correction or rectification of any
ambiguities, defective or inconsistent provisions, errors, mistakes or
omissions herein, provided that in the opinion of the Trustee, the
rights of the Trustee and the Unitholders are not prejudiced thereby;
provided that the Trustee may in its sole discretion decline to enter into any
such supplemental indenture which in its opinion may not afford adequate
protection to the Trustee when the same shall become operative.
Notwithstanding Section 10.5 and the foregoing, on or before the Date
of Closing, the Trustee may execute and deliver such indentures or instruments
supplemental hereto, which may add to or delete or amend, vary or change any of
the provisions hereof, as the Corporation may direct in writing.
13.2 PROVISION FOR AMENDED AND RESTATED INDENTURE
Notwithstanding Section 13.1, following any amendments to this
Indenture, the parties to the Indenture may enter into an amended and restated
version of the Indenture which shall include and give effect to all amendments
to the Indenture in effect at the applicable time.
ARTICLE 14
NOTICES TO UNITHOLDERS
14.1 NOTICES
Any notice required to be given under this Indenture to the
Unitholders shall be given by letter or circular sent through ordinary post
addressed to each registered holder at his last address appearing on the
register; provided that if there is a general discontinuance of postal service
due to strike, lockout or otherwise, such notice may be given by publication
twice in the National Edition of The Globe and Mail or The National Post or any
other newspaper having national circulation in Canada; provided further that if
there is no newspaper having national circulation, then by publishing twice in
a newspaper in each city where the register or a branch transfer register is
maintained. Any notice so given shall be deemed to have been given on the day
following that on which the letter or circular was posted or, in the case of
notice being given by publication, the day following the day of the second
publication in the designated newspaper or newspapers. In proving notice was
posted, it shall be sufficient to prove that such letter or circular was
properly addressed, stamped and posted.
14.2 FAILURE TO GIVE NOTICE
The failure by the Trustee, by accident or omission or otherwise
unintentionally, to give the Unitholders any notice provided for herein shall
not affect the validity or effect of any action referred to in such notice, and
the Trustee shall not be liable to any Unitholder for any such failure.
14.3 JOINT HOLDERS
Service of a notice or document on any one of several joint holders of
Trust Units shall be deemed effective service on the other joint holders.
14.4 SERVICE OF NOTICE
Any notice or document sent by post to or left at the address of a
Unitholder pursuant to this Article shall, notwithstanding the death or
bankruptcy of such Unitholder, and whether or not the Trustee has notice of
such death or bankruptcy, be deemed to have been fully served and such service
shall be deemed sufficient service on all persons interested in the Trust Units
concerned.
ARTICLE 15
AUDITORS
15.1 QUALIFICATION OF AUDITORS
The Auditors shall be an independent recognized firm of chartered
accountants which has an office in Alberta.
15.2 APPOINTMENT OF AUDITORS
The Trustee hereby appoints KPMG LLP, Chartered Accountants, as the
auditors of the Trust, to hold such office until the first annual meeting of
the Unitholders at such remuneration as may be approved by the Trustee from
time to time. The Auditors will be selected at each annual meeting of
Unitholders.
15.3 CHANGE OF AUDITORS
The Auditors may at any time be removed by the Trustee with the
approval of the Unitholders by means of an Ordinary Resolution at a meeting of
Unitholders duly called for that purpose and, upon the resignation or the
removal of Auditors as aforesaid, new auditors may be appointed by the Trustee
with the approval of the Unitholders by means of an Ordinary Resolution at a
meeting duly called for the purpose. A vacancy created by the removal of the
Auditors as aforesaid may be filled at the meeting of Unitholders at which the
Auditors are removed or, if not so filled, may be filled under Section 15.4.
15.4 FILLING VACANCY
In the event that the Auditors resign as auditors of the Trust, the
Trustee shall forthwith fill the vacancy with such new auditors as is approved
by the members of the Board of Directors of the Corporation whom are
independent of the Corporation, and such new auditors shall act as auditors of
the Trust for the unexpired term of the predecessor auditors of the Trust.
15.5 REPORTS OF AUDITORS
The Auditors shall audit the accounts of the Trust at least once in
each year and a report of the Auditors with respect to the annual financial
statements of the Trust shall be provided to each Unitholder as set out in
Section 16.3.
ARTICLE 16
ACCOUNTS, RECORDS AND FINANCIAL STATEMENTS
16.1 RECORDS
The Trustee shall keep such books, records and accounts as are
necessary and appropriate to document the Trust Fund and each transaction of
the Trust. Without limiting the generality of the foregoing, the Trustee will,
at its principal office in Calgary, Alberta, keep records of all transactions
of the Trust, a list of the Direct Royalties and other assets of the Trust Fund
from time to time and a copy of this Indenture.
16.2 QUARTERLY REPORTING TO UNITHOLDERS
The Trustee will mail to each Unitholder within 60 days after March
31, June 30 and September 30 in each year, an unaudited quarterly financial
statement of the Trust for the most recent calendar quarter. The Corporation
will review any forecast provided in any Offering Document and, if necessary,
will provide the Trustee with a quarterly update. The Trustee will mail any
such update to Unitholders.
16.3 ANNUAL REPORTING TO UNITHOLDERS
The Trustee will mail:
(a) to each Unitholder, within 140 days after the end of each year, the
audited consolidated financial statements of the Trust for the most
recently completed year together with the report of the Auditors
thereon; and
(b) to each person who received a distribution from the Trust during a
year, within 90 days after the end of such year, the tax reporting
information relating to such year as prescribed by the Tax Act.
16.4 INFORMATION AVAILABLE TO UNITHOLDERS
(a) Each Unitholder shall have the right to obtain, on demand and on
payment of reasonable reproduction costs, from the head office of the
Trust, a copy of this Indenture and any indenture supplemental hereto
or any Material Contract.
(b) Each Unitholder, upon payment of a reasonable fee and upon sending to
the Trustee the affidavit referred to in paragraph (d) below, may upon
application require the Trustee to furnish within 10 days from the
receipt of the affidavit a list (the "basic list") made up to a date
not more than 10 days before the date of receipt of the affidavit
setting out the names of the Unitholders, the number of Trust Units
owned by each Unitholder and the address of each Unitholder as shown
on the records of the Trustee.
(c) A person requiring the Trustee to supply a basic list may, if he
states in the affidavit referred to in paragraph (d) below that he
requires supplemental lists, require the Trustee upon payment of a
reasonable fee to furnish supplemental lists setting out any changes
from the basic list in the names or addresses of the Unitholders and
the number of Trust Units owned by each Unitholder for each business
day following the date the basic list is made up to.
(d) The affidavit referred to in paragraph (b) above shall state:
(i) the name and address of the applicant;
(ii) the name and address for service of the body corporate if the
applicant is a body corporate; and
(iii) that the basic list and any supplemental lists will not be used
except as permitted under paragraph (e) below.
(e) A list of Unitholders obtained under this Section shall not be used by
any person except in connection with:
(i) an effort to influence the voting of Unitholders;
(ii) an offer to acquire Trust Units; or
(iii) any other matter relating to the affairs of the Trust.
16.5 INCOME TAX: OBLIGATION OF THE TRUSTEE
The Trustee shall discharge all obligations and responsibilities of
the Trustee under the Tax Act or any similar provincial legislation, and
neither the Trust nor the Trustee shall be accountable or liable to any
Unitholder by reason of any act or acts of the Trustee consistent with any such
obligations or responsibilities.
16.6 INCOME TAX: DESIGNATIONS
In the return of its income under Part I of the Tax Act for each year
the Trust shall make such designations to Unitholders with respect to any
amounts distributed or payable to Unitholders in the year including, without
restricting the generality of the foregoing, designations pursuant to
subsection 104(29) of the Tax Act and designations with respect to any taxable
capital gains realized and distributed to Unitholders by the Trust in the year,
as shall be permitted under the provisions of the Tax Act and as the Trustee in
its sole discretion shall deem to be appropriate. In the first tax year, in
filing a return of income for the Trust, the Trust shall elect that the Trust
be deemed to be a mutual fund trust for the entire year.
16.7 INCOME TAX: DEDUCTIONS, ALLOWANCES AND CREDITS
The Corporation shall determine the tax deductions, allowances and
credits to be claimed by the Trust in any year, and the Trustee shall claim
such deductions, allowances and credits for the purposes of computing the
income of the Trust and the amount payable by the Trust pursuant to the
provisions of the Tax Act.
16.8 FISCAL YEAR
The fiscal year of the Trust shall end on December 31 of each year.
ARTICLE 17
MISCELLANEOUS
17.1 CONTINUED LISTING
The Trustee hereby appoints the Corporation as its agent and the
Corporation hereby covenants to the Trustee and agrees that it shall, at the
cost and expense of the Trust, take all steps and actions and do all things
that may be required to obtain and maintain the listing and posting for trading
of the Trust Units on the Toronto Stock Exchange and to maintain its status as
a "reporting issuer" not in default of the securities legislation and
regulations in each of the provinces of Canada as determined necessary by the
Corporation or Counsel.
17.2 SUCCESSORS AND ASSIGNS
The provisions of this Indenture shall enure to the benefit of and be
binding upon the parties and their successors and assigns.
17.3 COUNTERPARTS
This Indenture may be simultaneously executed in several counterparts,
each of which so executed shall be deemed to be an original, and such
counterparts, together, shall constitute but one and the same instrument, which
shall be sufficiently evidenced by any such original counterparts.
17.4 SEVERABILITY
If any provision of this Indenture shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect or render invalid or unenforceable such provision in any other
jurisdiction or any other provision of this Indenture in any jurisdiction.
17.5 DAY NOT A BUSINESS DAY
In the event that any day on or before which any amount is to be
determined or any action is required to be taken hereunder is not a Business
Day, then such amount shall be determined or such action shall be required to
be taken at or before the requisite time on the next succeeding day that is a
Business Day.
17.6 TIME OF THE ESSENCE
Time shall be of the essence in this Indenture.
17.7 GOVERNING LAW
This Indenture and the Trust Certificates shall be construed in
accordance with the laws of the Province of Alberta and the laws of Canada
applicable therein and shall be treated in all respects as Alberta contracts.
The parties hereby irrevocably submit to the jurisdiction of the Courts of the
Province of Alberta.
17.8 NOTICES TO TRUSTEE AND THE CORPORATION
(a) Any notice to the Trustee under this Indenture shall be valid and
effective if delivered or if given by registered letter, postage
prepaid, addressed to the attention of Valiant Trust Company at Suite
510, 550 - 6th Avenue S.W., Calgary, Alberta, T2P 0S2, Attention:
Manager Corporate Trust (Fax (403) 233-2857), or may be given by
electronic or telecommunications device, and shall be deemed to have
been given on the date of delivery or, if mailed, effective five days
after deposit in the Canadian mail.
(b) Any notice to the Corporation under this Indenture shall be valid and
effective if delivered or if given by registered letter, postage
prepaid, addressed to the Corporation at Suite 1800, 500 - 4th Avenue
S.W., Calgary, Alberta, T2P 2V6, Attention: Secretary (Fax (403)
693-0070 may be given by electronic or telecommunications device, and
shall be deemed to have been effectively given on the date of delivery
or, if mailed, five days after deposit in the Canadian mail.
(c) The Corporation or the Trustee may from time to time notify the other
in writing of a change of address which thereafter, until changed by
like notice, shall be the address of the Corporation or the Trustee for
all purposes of this Indenture.
(d) If, by reason of a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, any notice to be given
hereunder could reasonably be considered unlikely to reach its
destination, such notice shall be valid and effective only if it is
delivered at the appropriate address provided in this Section, by
cable, telegram, electronic, telecommunications device or other means
of prepaid, transmitted and recorded communication.
17.9 REFERENCES TO AGREEMENTS
Any reference herein to any agreement, contract or obligation shall
refer to such agreement, contract or obligation as the same may be amended from
time to time.
ARTICLE 18
REDEMPTION OF TRUST UNITS
18.1 RIGHT OF REDEMPTION
Each Unitholder shall be entitled to require the Trust to redeem at
any time or from time to time at the demand of the Unitholder all or any part
of the Trust Units registered in the name of the Unitholder at the prices
determined and payable in accordance with the conditions hereinafter provided.
18.2 EXERCISE OF REDEMPTION RIGHT
To exercise a Unitholder's right to require redemption under this
Article 18, a duly completed and properly executed notice requiring the Trust
to redeem Trust Units, in a form approved by the Trustee, shall be sent to the
Trust at the head office of the Trust, together with, if applicable, the Trust
Unit Certificate or Trust Unit Certificates representing the Trust Units to be
redeemed. No form or manner of completion or execution shall be sufficient
unless the same is in all respects satisfactory to the Corporation and is
accompanied by any further evidence that the Corporation may reasonably require
with respect to the identity, capacity or authority of the person giving such
notice.
Upon receipt by the Trust of the notice to redeem Trust Units, the
Unitholder shall thereafter cease to have any rights with respect to the Trust
Units tendered for redemption (other than to receive the redemption payment
therefor) including the right to receive any distributions thereon. Trust Units
shall be considered to be tendered for redemption on the date that the Trust
has, to the satisfaction of the Corporation, received the notice, Trust Unit
Certificates, if applicable, and other required documents or evidence as
aforesaid.
18.3 CALCULATION OF REDEMPTION PRICE BASED ON MARKET PRICE
Subject to Section 18.6, upon receipt by the Trust of the notice to
redeem Trust Units in accordance with Section 18.2, the holder of the Trust
Units tendered for redemption shall be entitled to receive a price per Trust
Unit (hereinafter called the "Market Redemption Price") equal to the lesser of:
(a) 90% of the market price of the Trust Units on the principal market on
which the Trust Units are quoted for trading during the 10 day trading
period commencing immediately after the date on which the Trust Units
were tendered to the Trust for redemption; and
(b) the closing market price on the principal market on which the Trust
Units are quoted for trading, on the date that the Trust Units were so
tendered for redemption.
For the purposes of Subsection 18.3(a), the market price shall be an
amount equal to the simple average of the closing price of the Trust Units for
each of the trading days on which there was a closing price; provided that if
the applicable exchange or market does not provide a closing price but only
provides the highest and lowest prices of the Trust Units traded on a
particular day, the market price shall be an amount equal to the simple average
of the average of the highest and lowest prices for each of the trading days on
which there was a trade; and provided further that if there was trading on the
applicable exchange or market for fewer than 5 of the 10 trading days, the
market price shall be the simple average of the following prices established
for each of the 10 trading days; the average of the last bid and last ask
prices for each day on which there was no trading; the closing price of the
Trust Units for each day that there was trading if the exchange or market
provides a closing price; and the average of the highest and lowest prices of
the Trust Units for each day that there was trading, if the market provides
only the highest and lowest prices of Trust Units traded on a particular day.
For the purposes of subsection 18.3(b), the closing market price shall
be: an amount equal to the closing price of the Trust Units if there was a
trade on the date; an amount equal to the average of the highest and lowest
prices of Trust Units if there was trading and the exchange or other market
provides only the highest and lowest prices of Trust Units traded on a
particular day; and the average of the last bid and last ask prices if there
was no trading on the date.
18.4 CASH PAYMENT OF MARKET REDEMPTION PRICE
Subject to Section 18.5, the Market Redemption Price, payable in
respect of the Trust Units tendered for redemption during any calendar month
shall be paid by cheque, drawn on a Canadian chartered bank or a trust company
in lawful money of Canada, payable at par to or to the order of the Unitholder
who exercised the right of redemption on the last day of the calendar month
following the month in which the Trust Units were tendered for redemption.
Payments made by the Trust of the Market Redemption Price are conclusively
deemed to have been made upon the mailing of a cheque in a postage pre-paid
envelope addressed to the former Unitholder unless such cheque is dishonoured
upon presentment. Upon such payment, the Trust shall be discharged from all
liability to the former Unitholder in respect of the Trust Units so redeemed.
18.5 LIMITATION REGARDING CASH PAYMENT OF MARKET REDEMPTION PRICE
Section 18.4 shall not be applicable to Trust Units tendered for
redemption by a Unitholder if the total amount payable by the Trust pursuant to
Section 18.4 in respect of such Trust Units and all other Trust Units tendered
for redemption in the same calendar month exceeds $100,000; provided that the
Corporation may, in its sole discretion, waive such limitation in respect of
any calendar month. If this limitation is not so waived for such calendar
month, the Market Redemption Price payable in respect of the Trust Units
tendered for redemption in such calendar month shall be paid on the last day of
the calendar month following such month as follows:
(a) firstly, by the Trust distributing Notes having an aggregate principal
amount equal to the aggregate Market Redemption Price of the Trust
Units tendered for redemption, and,
(b) secondly, to the extent that the Trust does not hold Notes having a
sufficient principal amount outstanding to effect such payment, by the
Trust issuing its own promissory notes to the Unitholders who exercise
the right of redemption having an aggregate principal amount equal to
any such shortfall, which promissory notes, (herein referred to as
"Redemption Notes") shall have terms and conditions substantially
identical to those of the Notes.
Upon such distribution of Notes or issuance of Redemption Notes, the
Trust shall be discharged from all liability to the former Unitholder in
respect of the Trust Units so redeemed. For greater certainty, the Trust shall
be entitled to all interest accrued and unpaid on the Notes so distributed to
and including the date upon which such Notes are required to be distributed.
18.6 CALCULATION OF REDEMPTION PRICE IN CERTAIN OTHER CIRCUMSTANCES
Section 18.3 shall not be applicable to Trust Units tendered for
redemption by a Unitholder, if:
(a) at the time the Trust Units are tendered for redemption, the
outstanding Trust Units of the Trust are not listed for trading on the
Toronto Stock Exchange or the TSX Venture Exchange and are not traded
or quoted on any other stock exchange or market which the Corporation
considers in its sole discretion, provides representative fair market
value prices for the Trust Units; or
(b) the normal trading of the outstanding Trust Units of the Trust is
suspended or halted on any stock exchange on which the Trust Units are
listed for trading or, if not so listed, on any market on which the
Trust Units are quoted for trading, on the date that such Trust Units
tendered for redemption were tendered to the Trust for redemption or
for more than five trading days during the 10 day trading period
commencing immediately after the date on which such Trust Units
tendered for redemption were tendered to the Trust for redemption,
and in either such case, such Unitholder shall, instead of the Market Redemption
Price, be entitled to receive a price per Trust Unit (herein referred to as the
"Appraised Redemption Price") equal to 90% of the fair market value thereof as
determined by the Corporation as at the date upon such Trust Units were tendered
for redemption. The Appraised Redemption Price payable in respect of Trust Units
tendered for redemption in any calendar month shall be paid on the last day of
the third calendar month following the month in which such Trust Units were
tendered for redemption, by at the option of the Trust:
(i) cash payment, in which case the provisions of Section 18.4 shall
apply MUTATIS MUTANDIS; or
(ii) in the manner provided for in Section 18.5, in which case the
provisions of Section 18.5 shall apply MUTATIS MUTANDIS.
18.7 CANCELLATION OF REDEEMED TRUST UNITS
All Trust Units which are redeemed under this Article 18 shall be
cancelled (as shall all certificates, if any, representing such Trust Units
which are redeemed) and such Trust Units shall no longer be outstanding and
shall not be reissued.
IN WITNESS WHEREOF each of the parties has caused these presents to be
executed by its proper officers duly authorized in its behalf as of the 1st day
of January, 2008.
HARVEST OPERATIONS CORP.
By:______________________________________
VALIANT TRUST COMPANY
By:______________________________________
By:______________________________________
SCHEDULE A
To the annexed fourth
amended and restated
indenture dated as of
January 1, 2008 and
made between
HARVEST OPERATIONS CORP.
and
VALIANT TRUST COMPANY
(Form of Certificate for the Ordinary Trust
Units in the English Language)
ORDINARY TRUST UNITS
HARVEST ENERGY TRUST
(a trust created under the laws of the Province of Alberta)
No. _____ ___________
Ordinary Trust Units
CUSIP _______________
THIS CERTIFIES THAT
_____________________________________________ is the registered holder
of _______________ fully paid Ordinary Trust Units issued by HARVEST ENERGY
TRUST (the "Trust") transferable only on the books of the Trust by the
registered holder hereof in person or by attorney duly authorized upon
surrender of this certificate properly endorsed.
The Ordinary Trust Units represented by this certificate are issued
upon the terms and subject to the conditions of a fourth amended and restated
indenture (which indenture together with all other instruments supplemental or
ancillary thereto is herein referred to as the "Trust Indenture") dated January
1, 2008, as amended and/or amended and restated and made between Harvest
Operations Corp. (the "Corporation") and Valiant Trust Company (the "Trustee")
which Trust Indenture is binding upon all holders of Trust Units and, by
acceptance of this certificate, the holder assents to the terms and conditions
of the Trust Indenture. Terms defined in the Trust Indenture have the same
meaning when used herein.
A copy of the Trust Indenture pursuant to which this certificate and
the Ordinary Trust Units represented hereby are issued may be obtained by any
Unitholder on demand and on payment of reasonable reproduction costs from the
head office of the Trust.
This certificate may only be transferred, upon compliance with the
conditions prescribed in the Trust Indenture, on the register to be kept at the
office of the transfer agent in the City of Calgary and the City of Toronto, as
applicable and at such other place or places, if any, as the Trustee may
designate, by the registered holder thereof or his executors or administrators
or other legal representatives or his or their attorney duly appointed by an
instrument in writing in form and execution satisfactory to the Trustee, and
upon compliance with such reasonable requirements as the Trustee may prescribe.
The Trust Indenture contains provisions for the holding of meetings of
Unitholders and rendering resolutions passed at such meetings binding upon all
Unitholders.
The Trust Indenture contains restrictions on the ownership of Ordinary
Trust Units by non-residents of Canada within the meaning of the INCOME TAX ACT
(Canada) and the Trust shall take all necessary steps to monitor the ownership
of Ordinary Trust Units to carry out such intentions. If at any time the Trust,
becomes aware that the beneficial owners of 49% or more of the Ordinary Trust
Units then outstanding are or may be non-residents or that such a situation is
imminent, the Trust, by or through the Corporation on the Trust's behalf, shall
take such action as may be necessary to carry out the intentions evidenced in
the Indenture.
The Trust Indenture provides that no Unitholder shall incur or be
subject to any liability in connection with the Trust Fund or the obligations
or the affairs of the Trust or with respect to any act performed by the Trustee
or by any other person pursuant to the Trust Indenture.
The Trust Indenture provides that Ordinary Trust Units shall be issued
only when fully paid and the Unitholders shall not thereafter be required to
make any further contribution to the Trust with respect to such Ordinary Trust
Units.
This certificate shall not be valid for any purpose until it shall
have been countersigned and registered by the transfer agent of the Trust.
IN WITNESS WHEREOF the Corporation has caused this certificate to be
signed by its duly authorized officers.
DATED
HARVEST OPERATIONS CORP.
By:______________________________________
Authorized Officer
By:______________________________________
Authorized Officer
Countersigned and Registered
VALIANT TRUST COMPANY
Transfer Agent and Registrar of the Trust
By:______________________________________
Authorized Officer
TRANSFER FORM
FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto
________________________________________________________________________________
(please print or typewrite name and address of assignee)
__________ Ordinary Trust Units of HARVEST ENERGY TRUST represented by this
certificate and hereby irrevocable constitutes and appoints
____________________ Attorney to transfer the said Ordinary Trust Units on the
registers of the Trust for the said purpose, with full power of substitution in
the premises.
Dated _______________________________ ___________________________________
(SIGNATURE OF TRANSFEROR)
_____________________________________
The signature of the registered
holder of the within certificate to
the foregoing assignment must be
guaranteed by a chartered bank, by a
trust company or a member firm of
the Toronto Stock Exchange, the
Montreal Exchange, the TSX Venture
Exchange, a national securities
exchange in the United Sates or the
National Association of Securities
Dealers, Inc. who are members of the
Securities Transfer Association
Medallion Program ("STAMP").
SCHEDULE B
To the annexed fourth amended and restated indenture dated as of January 1 2008
and made between
HARVEST OPERATIONS CORP.
and
VALIANT TRUST COMPANY
(Form of Certificate for the Special Trust
Units in the English Language)
SPECIAL TRUST UNITS
HARVEST ENERGY TRUST
(a trust created under the laws of the Province of Alberta)
No._____ __________
Special Trust Units
CUSIP _______________________
THIS CERTIFIES THAT
_____________________________________________ is the registered holder
of _______________ fully paid Special Trust Units issued by HARVEST ENERGY
TRUST (the "Trust") transferable only on the books of the Trust by the
registered holder hereof in person or by attorney duly authorized upon
surrender of this certificate properly endorsed.
The Special Trust Units represented by this certificate are issued
upon the terms and subject to the conditions of a fourth amended and restated
indenture (which indenture together with all other instruments supplemental or
ancillary thereto is herein referred to as the "Trust Indenture") dated January
1, 2008, as amended and/or amended and restated and made between Harvest
Operations Corp. (the "Corporation") and Valiant Trust Company (the "Trustee")
which Trust Indenture is binding upon all holders of Trust Units and, by
acceptance of this certificate, the holder assents to the terms and conditions
of the Trust Indenture. Terms defined in the Trust Indenture have the same
meaning when used herein.
A copy of the Trust Indenture pursuant to which this certificate and
the Special Trust Units represented hereby are issued may be obtained by any
Unitholder on demand and on payment of reasonable reproduction costs from the
head office of the Trust.
This certificate may only be transferred, upon compliance with the
conditions prescribed in the Trust Indenture, on the register to be kept at the
office of the transfer agent in the City of Calgary and the City of Toronto, as
applicable and at such other place or places, if any, as the Trustee may
designate, by the registered holder thereof or his executors or administrators
or other legal representatives or his or their attorney duly appointed by an
instrument in writing in form and execution satisfactory to the Trustee, and
upon compliance with such reasonable requirements as the Trustee may prescribe.
The Trust Indenture contains provisions for the holding of meetings of
Unitholders and rendering resolutions passed at such meetings binding upon all
Unitholders.
The Trust Indenture contains restrictions on the ownership of Special
Trust Units by non-residents of Canada within the meaning of the INCOME TAX ACT
(Canada) and the Trust shall take all necessary steps to monitor the ownership
of Special Trust Units to carry out such intentions. If at any time the Trust,
becomes aware that the beneficial owners of 49% or more of the Special Trust
Units then outstanding are or may be non-residents or that such a situation is
imminent, the Trust, by or through the Corporation on the Trust's behalf, shall
take such action as may be necessary to carry out the intentions evidenced in
the Indenture.
The Trust Indenture provides that no Unitholder shall incur or be
subject to any liability in connection with the Trust Fund or the obligations
or the affairs of the Trust or with respect to any act performed by the Trustee
or by any other person pursuant to the Trust Indenture.
The Trust Indenture provides that Special Trust Units shall be issued
only when fully paid and the Unitholders shall not thereafter be required to
make any further contribution to the Trust with respect to such Special Trust
Units.
This certificate shall not be valid for any purpose until it shall
have been countersigned and registered by the transfer agent of the Trust.
IN WITNESS WHEREOF the Corporation has caused this certificate to be
signed by its duly authorized officers.
DATED_________
HARVEST OPERATIONS CORP.
By:________________________________________
Authorized Officer
By:________________________________________
Authorized Officer
Countersigned and Registered
VALIANT TRUST COMPANY
Transfer Agent and Registrar of the Trust
By:________________________________________
Authorized Officer
TRANSFER FORM
FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto
________________________________________________________________________________
(please print or typewrite name and address of assignee)
__________ Special Trust Units of HARVEST ENERGY TRUST represented by this
certificate and hereby irrevocable constitutes and appoints
____________________ Attorney to transfer the said Special Trust Units on the
registers of the Trust for the said purpose, with full power of substitution in
the premises.
Dated _______________________________ ________________________________________
(SIGNATURE OF TRANSFEROR)
_____________________________________
The signature of the registered
holder of the within certificate to
the foregoing assignment must be
guaranteed by a chartered bank, by a
trust company or a member firm of
the Toronto Stock Exchange, the
Montreal Exchange, the TSX Venture
Exchange, a national securities
exchange in the United Sates or the
National Association of Securities
Dealers, Inc. who are members of the
Securities Transfer Association
Medallion Program ("STAMP").