EXHIBIT 10.3
CERTICOM CORP.
and
COMPUTERSHARE TRUST COMPANY OF CANADA
as Trustee
________________________________
TRUST INDENTURE
________________________________
7.25% Convertible Notes
Dated as of August 30, 2001
THIS CONVERTIBLE NOTE INDENTURE is made as of August 30, 2001.
BETWEEN:
CERTICOM CORP., a corporation continued under the laws
of the Yukon Territory and having an office in the City
of Toronto, in the Province of Ontario (hereinafter
referred to as the "Corporation")
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COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company
organized under the laws of Canada and having an office
in the City of Toronto, in the Province of Ontario
(hereinafter referred to as the "Trustee")
WHEREAS the Corporation is proposing to issue Convertible Notes in the
manner herein set forth;
AND WHEREAS each Convertible Note shall entitle the holder thereof to
acquire an aggregate principal amount of Convertible Debentures equal to the
aggregate principal amount represented by such Convertible Note, at no
additional cost and upon the terms and conditions herein set forth;
AND WHEREAS the Corporation represents to the Trustee that all necessary
resolutions of the Corporation have been duly enacted, passed or confirmed and
all other proceedings taken and conditions complied with to authorize the
execution and delivery of this Indenture and the execution and issue of the
Convertible Notes and to make the same legal and valid and binding on the
Corporation in accordance with the laws applicable to the Corporation;
AND WHEREAS the Trustee has agreed to act as trustee for the Convertible
Noteholders on the terms and conditions herein set forth;
AND WHEREAS all acts and deeds necessary have been done and performed to
make the Convertible Notes, when certified by the Trustee and issued as provided
for in this Indenture, legal and valid and binding upon the Corporation with the
benefits and subject to the terms of this Indenture;
AND WHEREAS the foregoing recitals are made as representations and
statements of fact by the Corporation and not by the Trustee.
NOW THEREFORE, THIS INDENTURE WITNESSETH that for good and valuable
consideration mutually given and received, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
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ARTICLE 1 - INTERPRETATION
1.1 Definitions
In this Indenture, including the recitals and schedules hereto, and in all
indentures supplemental hereto, the following words and terms shall have the
indicated meanings:
(a) "Affiliate" has the meaning ascribed to such term in the Business
Corporations Act (Ontario);
(b) "Applicable Legislation" means the provisions of the Business
Corporations Act (Ontario), as from time to time amended, and any
other statute of Canada or a province thereof, and the regulations and
rules under any such named or other statute, relating to trust
indentures or to the rights, duties and obligations of trustees and of
corporations under trust indentures, to the extent that such
provisions are at the time in force and applicable to this Indenture;
(c) "Applicable Securities Law" means, collectively, the applicable
securities laws of each of the Qualifying Jurisdictions and the
respective regulations and rules made thereunder together with all
applicable published policy statements, blanket orders and rulings of
the Securities Commissions and all discretionary orders or rulings, if
any, of the Securities Commissions made in connection with the
transactions contemplated hereunder;
(d) "Business Day" means a day other than a Saturday, Sunday or statutory
holiday in Toronto, Ontario;
(e) "Change of Control" means the occurrence of (i) a Person, including
the Person's Affiliates and Associates, becoming the beneficial owner
of directly or indirectly, or, exercising control or direction over,
Common Shares carrying in excess of 50.1% of the total voting rights
attached to the Common Shares; or (ii) the Corporation consolidating
or amalgamating with, or merging with or into, another Person or
selling, assigning, conveying, transferring, leasing or otherwise
disposing of all or substantially all of its assets to any Person, or
any Person consolidating or amalgamating with, or merging with or
into, the Corporation, in any such event pursuant to a transaction in
which any of the outstanding Common Shares are converted into or
exchanged for cash, securities or other property, other than any such
transaction in which the outstanding Common Shares are converted into
or exchanged for, or the assets of the Corporation are exchanged for,
voting securities or securities exchangeable at the option of the
holder into voting securities of the surviving or transferee Person
constituting a majority of such voting securities (giving effect to
such issuance and the exercise of any rights to exchange such
securities into voting securities);
(f) "Common Shares" means common shares in the capital of the Corporation;
(g) "Contingent Obligation" shall mean, as to any Person, any obligation,
whether secured or unsecured, of such Person guaranteeing or
indemnifying, or in effect
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guaranteeing or indemnifying, for any indebtedness, leases, dividends,
letters of credit or other monetary obligations (the "primary
obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including any obligation of
such Person as an account party in respect of a letter of credit or
letter of guarantee issued to assure payment by the primary obligor of
any such primary obligation and any obligation of such Person, whether
or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to
advance or supply funds for the purchase or payment of any such
primary obligation or to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency
of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the obligee under any
such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) otherwise to assure or hold
harmless the obligee under such primary obligation against loss in
respect of such primary obligation; provided, however, that the term
Contingent Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business;
(h) "Convertible Debentures" means the debentures of the Corporation
issuable under the Trust Indenture to holders of the Convertible
Notes;
(i) "Convertible Note Agency" means the principal office of the Trustee in
the City of Toronto or such other place as may be designated in
accordance with subsection 3.1(c);
(j) "Convertible Note Certificate" means a certificate issued pursuant to
this Indenture, in substantially the form set forth in Schedule "A",
issued on or after the Effective Date to evidence Convertible Notes;
(k) "Convertible Noteholders" or "holders" without reference to
Convertible Notes or Common Shares, means the Persons who, on and
after the Effective Date, are registered owners of Convertible Notes;
(l) "Convertible Noteholders' Request" means an instrument signed in one
or more counterparts by Convertible Noteholders representing in the
aggregate not less than 25% of the aggregate principal amount of all
Convertible Notes then unexercised and outstanding, requesting the
Trustee to take or refrain from taking some action or proceeding
specified therein;
(m) "Convertible Notes" means the convertible notes issued and certified
hereunder and for the time being outstanding and entitling the holder
to acquire Convertible Debentures in accordance with the terms and
conditions hereof;
(n) "Counsel" means a barrister or solicitor or a firm of barristers and
solicitors retained by the Trustee or retained by the Corporation and
acceptable to the Trustee;
(o) "Debt" shall mean, at any time:
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(a) all items which would then be classified as a liability on a
consolidated balance sheet of the Corporation or in the notes
thereto; and
(b) to the extent not otherwise included as Debt pursuant to the
provisions of paragraph (a) of this definition, without
duplication, any item which is
(i) an obligation of the Corporation or any of its
Subsidiaries in respect of borrowed money or for the
deferred purchase price of property or services or an
obligation of the Corporation which is evidenced by a note,
bond, debenture or other similar instrument,
(ii) a transfer with recourse or with an obligation to
repurchase, to the extent of the liability of the
Corporation or any of its Subsidiaries with respect thereto,
(iii) an obligation secured by any Lien on any property of
the Corporation or any of its Subsidiaries to the extent
attributable to its respective interest in such property,
even though it has not assumed or become liable for the
payment thereof,
(iv) an obligation of the Corporation or any of its
Subsidiaries arising in connection with an acceptance
facility or letter of credit or letter of guarantee issued
by or for the account of the Corporation or any of its
Subsidiaries, or
(v) a Contingent Obligation of the Corporation or any of its
Subsidiaries to the extent that the primary obligation so
guaranteed is not otherwise classified as a liability on the
consolidated balance sheet of the Corporation,
provided, however, that there shall not be included for the
purpose of this definition any item which is on account of
(w) issued share capital or surplus, (x) reserves for
deferred income taxes or general contingencies, (y) minority
interests in Subsidiaries, or (z) trade debt;
(p) "director" means a director of the Corporation for the time being and,
unless otherwise specified herein, reference to action "by the
directors" means action by the directors of the Corporation as a board
or, whenever duly empowered, action by any committee of such board;
(q) "Effective Date" means August 30, 2001;
(r) "Escrow Agent" means Computershare Trust Company of Canada;
(s) "Escrow Agreement" means the escrow and custodial agreement dated as
of August 30, 2001 among the Corporation, the Underwriter and the
Escrow Agent;
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(t) "Escrow Direction" means a direction substantially in the form
attached hereto as Schedule "B";
(u) "Event of Default" means any event specified in Section 6.1, continued
for a period of time, if any, therein designated;
(v) "Exercise Date" means, with respect to any Convertible Note, the date
on which the Convertible Note is exercised in accordance with Section
3.1 or Section 3.7, as applicable;
(w) "Exercise Form" means the exercise form attached to or applicable to a
Convertible Note;
(x) "Expiry Date" means the earlier of:
(i) the date which is five Business Days following the date on
which the Receipt is issued; and
(ii) August 30, 2002;
(y) "Extraordinary Resolution" has the meaning Set forth in Section 7.11;
(z) "Final Prospectus" means the final short form prospectus of the
Corporation qualifying the distribution, in the Qualifying
Jurisdictions, of the Convertible Debentures to the holders of
Convertible Notes upon exercise of the Convertible Notes;
(aa) "Lien" means any lien, encumbrance, mortgage, pledge, charge, security
interest or other encumbrance;
(bb) "NASDAQ" means the Nasdaq National Market;
(cc) "Permitted Secured Debt" means, with respect to the Corporation or any
of its Subsidiaries:
(i) indebtedness (other than trade debt) created, incurred, assumed
or guaranteed, for moneys borrowed or raised by whatever means
(including, without limitation, by means of commercial paper, bankers'
acceptances, debt instruments, bank debt and financial leases, and any
liability evidenced by bonds, debentures, notes or similar
instruments);
(ii) indebtedness created, incurred, assumed or guaranteed after the
date of this Indenture to finance the cost of the acquisition by the
Corporation or any of its Subsidiaries of any assets or services;
(iii) any guarantee of any indebtedness of a type described in clause
(i) or (ii); and
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(iv) renewals, extensions or refunds of any indebtedness or
guarantee referred to in clauses (i), (ii) or (iii);
provided that, in each case, such indebtedness or guarantee is secured
by a Lien and such Lien has been created or granted for bona fide
purposes of the Corporation or any of its Subsidiaries and not for the
purpose of avoiding the Corporation's obligations under section
5.2(q);
(dd) "Person" means an individual, body corporate, partnership, trust,
trustee, executor, administrator, legal representative or any
unincorporated organization;
(ee) "Preliminary Prospectus" means the preliminary short form prospectus
of the Corporation qualifying the distribution, in the Qualifying
Jurisdictions, of the Convertible Debentures to holders of Convertible
Notes upon the exercise of Convertible Notes;
(ff) "Qualifying Jurisdictions" means, collectively, the provinces of
Ontario and Quebec;
(gg) "Receipt" means collectively the receipts required to be issued by
each of the Securities Commissions for the Final Prospectus;
(hh) "Receipt Deadline" means 4:00 p.m. (Toronto time) on September 29,
2001 or such later date as agreed to in writing by the Corporation and
the Underwriter;
(ii) "Securities Commissions" means the securities commission or regulatory
authority in each of the Qualifying Jurisdictions;
(jj) "Shareholder" means a holder of record of one or more Common Shares;
(kk) "Subscription Funds" means the aggregate amount of the funds paid or
consideration provided by purchasers of the Convertible Notes for such
Convertible Notes;
(ll) "Subsidiary" has the meaning attributed thereto in the Business
Corporations Act (Ontario);
(mm) "Successor Corporation" has the meaning ascribed thereto in Section
8.2;
(nn) "this Indenture", "herein", "hereby", "hereof" and similar expressions
mean and refer to this Indenture and any indenture, deed or instrument
supplemental hereto; and the expressions "Article", "Section",
"subsection" and "paragraph" followed by a number, letter or both mean
and refer to the specified article, section, subsection or paragraph
of this Indenture;
(oo) "Time of Expiry" means 5:00 p.m. (Toronto time) on the Expiry Date;
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(pp) "trade debt" means all unsecured debt of the Corporation incurred in
connection with the purchase of goods or services in the ordinary
course of business;
(qq) "Trust Indenture" means the convertible debenture trust indenture
dated as of August 30, 2001 between the Corporation and the Trustee
providing for the issuance of $13,500,000 aggregate principal amount
of Convertible Debentures;
(rr) "Trustee" means Computershare Trust Company of Canada or its
successors from time to time in the trust hereby created;
(ss) "TSE" means The Toronto Stock Exchange;
(tt) "Underwriter" means Yorkton Securities Inc.; and
(uu) "written request of the Corporation" and "certificate of the
Corporation" mean, respectively, a written order, request, consent and
certificate signed in the name of the Corporation by its President or
a Vice-President; and may consist of one or more instruments so
executed.
1.2 Gender and Number
Unless herein otherwise expressly provided or unless the context otherwise
requires, words importing the singular include the plural and vice versa and
words importing gender include all genders.
1.3 Interpretation not Affected by-Headings, etc.
The division of this Indenture into Articles and Sections; the provision of
a table of contents and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Indenture or any provision hereof.
1.4 Day not a Business Day
In the event that any day on which any action is required to be taken under
this Indenture is not a Business Day, then such action shall be required to be
taken at or before the requisite time on the next succeeding day that is a
Business Day.
1.5 Time of the Essence
Time shall be of the essence of this Indenture.
1.6 Currency
Except as otherwise specified herein, all dollar amounts herein are
expressed in lawful money of Canada.
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1.7 Meaning of "Outstanding"
Every Convertible Note represented by a Convertible Note Certificate
countersigned and delivered by the Trustee hereunder shall be deemed to be
outstanding until it shall be cancelled or exercised pursuant to Article 3,
provided that where a new Convertible Note Certificate has been issued pursuant
to Section 2.11 hereof to replace one which has been mutilated, lost, destroyed
or stolen, the Convertible Notes represented by only one of such Convertible
Note Certificates shall be counted for the purpose of determining the aggregate
number of Convertible Notes outstanding.
1.8 Severability
In the event that any provision hereof shall be determined to be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remainder of such provision and any other provision hereof
shall not be affected or impaired thereby.
1.9 English Language Only
The parties to this Indenture hereby agree and request that this
Indenture, and any documents related hereto, including without limitation the
Convertible Note Certificates, be drafted only in the English language.
1.10 Schedules
The following schedules are appended to this Indenture and are
incorporated as fully as though contained in the body of this Indenture.
Schedule "A" - Form of Convertible Note Certificate
Schedule "B" - Escrow Direction
Schedule "C" - Redemption Election Notice
1.11 Date of Issue of Receipt
The Receipt shall conclusively be deemed to be issued on the date
appearing on such Receipt as the Receipt's date.
1.12 Beneficiaries
This Indenture is entered into by the Trustee for the benefit of all such
Persons who subscribe for and purchase Convertible Notes and each of them shall,
upon such subscription and purchase, be entered in the register as Convertible
Noteholders. The Trustee hereby declares that it holds all rights, interest and
benefits to be derived therefrom for and on behalf of all such Persons in
accordance with the terms and restrictions contained herein.
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ARTICLE 2 - ISSUE OF CONVERTIBLE NOTES
2.1 Issue of Convertible Notes
The aggregate principal amount of Convertible Notes authorized for issue
hereunder is limited to $13,500,000. The Corporation shall not have the right to
prepay the Convertible Notes. Notwithstanding anything to the contrary contained
in this Indenture, this Section 2.1 shall not be amended so as to increase the
aggregate principal amount of Convertible Notes that may be created and
authorized for issue hereunder without the approval of the Convertible
Noteholders by Extraordinary Resolution.
2.2 Subscription Funds
Upon issuance of the Convertible Notes all Subscription Funds shall be
paid to the Escrow Agent in accordance with the terms of the Escrow Agreement.
Upon the earlier of (i) receipt by the Escrow Agent of an Escrow Direction, and
(ii) the Time of Expiry, the Subscription Funds, together with interest thereon,
shall be paid by the Escrow Agent to the Trustee or the Corporation, as
applicable in accordance with the provisions of Section 4.1.
2.3 Exercise of Convertible Notes
Each Convertible Note shall entitle the holder thereof, upon exercise, to
acquire an aggregate principal amount of Convertible Debentures equal to the
aggregate principal amount of such Convertible Note, at any time until the Time
of Expiry at no additional cost to the holder.
2.4 Interest
(a) Each Convertible Note shall bear interest on the principal amount
thereof from the Effective Date or the date of issue, whichever is
later, at the rate of 7.25% per annum, after as well as before
default, with interest on overdue interest at the same rate. Interest
shall be based on a 365 or 366 day year, as the case may be, and
shall be calculated semi-annually not in advance from the Effective
Date or the date of issue of a Convertible Note, whichever is later,
or from the last interest payment date to which interest has been
paid or made available for payment on the Convertible Notes,
whichever is later, and shall be paid in like money semi-annually on
February 28 and August 30, commencing on February 28, 2002 (unless a
Convertible Note shall have been previously exercised as duly
provided for).
(b) In the event of exercise of a Convertible Note all accrued and unpaid
interest on a Convertible Note shall be paid on then first date for
the payment of interest following the exercise of such Convertible
Note provided for under the terms of the Convertible Debenture into
which such Convertible Note is exercised to the Person to whom
interest on such Convertible Debenture is payable on such date, and
such Person shall be entitled to the interest accrued hereunder on
the same basis as if such interest had accrued on such Convertible
Debenture and was payable on such interest payment date.
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2.5 Payment
(a) As the interest on the Convertible Notes becomes due (except interest
payable at maturity which may be paid upon presentation and surrender
of such Convertible Notes for payment), the Corporation, either
directly or indirectly through the Trustee, shall forward or cause to
be forwarded by prepaid ordinary mail at least three (3) Business
Days prior to the interest payment date, to the holder for the time
being, or, in the case of joint holders, to one of such joint holders
(failing written instructions to the contrary from all of such joint
holders), at his address appearing on the register, a cheque for such
interest (less any tax required to be deducted), payable to or to the
order of such holder or holders and negotiable at par. The forwarding
of such cheque shall satisfy and discharge the liability for the
interest upon the Convertible Notes to the extent of the sums
represented thereby (plus the amount of any tax deducted as
aforesaid) unless such cheque is not paid on presentation; provided
that in the event of the non-receipt of such cheque by such
registered holder or the loss or destruction thereof, the
Corporation, upon being furnished with reasonable evidence of such
non-receipt, loss or destruction and indemnity reasonably
satisfactory to it, shall issue or cause to be issued to such
registered holder a replacement cheque for the amount of such cheque.
(b) The holder for the time being of any Convertible Note shall be
entitled to the principal moneys and interest evidenced by such
Convertible Notes, free from all equities or rights of set-off or
counterclaim between the Corporation and the original or any
intermediate holder thereof and all Persons may act accordingly.
2.6 Convertible Noteholder not a Shareholder
Nothing in this Indenture nor in the holding of a Convertible Note or
Convertible Note Certificate or otherwise, shall, in itself, confer, or be
construed as conferring upon a Convertible Noteholder any right or interest
whatsoever as a Shareholder or as any other shareholder of the Corporation,
including, but not limited to, the right to vote at, to receive notice of, or to
attend meetings of shareholders or any other proceedings of the Corporation, or
the right to receive dividends and other distributions.
2.7 Convertible Notes to Rank Pari Passu
All Convertible Notes and Convertible Debentures shall rank pari passu,
whatever may be the actual date of issue thereof.
2.8 Form and Denomination of Convertible Notes
The Convertible Note Certificates (including all replacements issued in
accordance with this Indenture) shall be substantially in the form set out in
Schedule "A" hereto, shall be dated on or after the Effective Date, shall bear
such distinguishing letters and numbers as the Corporation may, with the
approval of the Trustee, prescribe, shall be issuable only in fully registered
form and only in integral multiples of $1,000.
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2.9 Signing of Convertible Note Certificates
The Convertible Note Certificates shall be signed by any one (1) director
or officer of the Corporation. The signatures of any such director or officer
may be mechanically reproduced by way of photocopy or facsimile and Convertible
Note Certificates bearing such photocopy or facsimile signatures shall be
binding upon the Corporation as if they had been manually signed by such
director or officer. Notwithstanding that any Person whose manual or facsimile
signature appears on any Convertible Note Certificate as a director or officer
may no longer hold office at the date of such Convertible Note Certificate or at
the date of certification or delivery thereof, any Convertible Note Certificate
signed as aforesaid shall, subject to Section 2.10, be valid and binding upon
the Corporation and the holder thereof shall be entitled to the benefits of this
Indenture.
2.10 Certification by the Trustee
(a) The Trustee shall certify Convertible Note Certificates upon the
written direction of the Corporation. No Convertible Note Certificate
shall be issued or, if issued, shall be valid for any purpose or
entitle the holder to the benefit of this Indenture until it has been
certified by manual signature by or on behalf of the Trustee
substantially in the form of the certificate set out in Schedule "A"
and such certification by the Trustee upon any Convertible Note
Certificate shall be conclusive evidence as against the Corporation
that the Convertible Note Certificate so certified has been duly
issued hereunder and that the holder is entitled to the benefits of
this Indenture.
(b) The certification of the Trustee on a Convertible Note Certificate
issued hereunder shall not be construed as a representation or
warranty by the Trustee as to the validity of this Indenture or the
Convertible Note Certificate (except the due certification thereof)
and the Trustee shall in no respect be liable or answerable for the
use made of the Convertible Note Certificate or any of them or of the
consideration therefor except as otherwise specified herein.
2.11 Issue in Substitution for Convertible Note Certificates Lost, etc.
(a) If any Convertible Note Certificate becomes mutilated or is lost,
destroyed or stolen, the Corporation, subject to applicable law,
shall issue and thereupon the Trustee shall certify and deliver, a
new Convertible Note Certificate of like tenor as the one mutilated,
lost, destroyed or stolen in exchange for and in place of and upon
cancellation of such mutilated Convertible Note Certificate, or in
lieu of and in substitution for such lost, destroyed or stolen
Convertible Note Certificate, and the substituted Convertible Note
Certificate shall be in a form approved by the Trustee and the
Convertible Notes evidenced thereby shall be entitled to the benefits
hereof and shall rank equally, in accordance with their terms, with
all other Convertible Notes issued or to be issued hereunder.
(b) The applicant for the issue of a new Convertible Note Certificate
pursuant to this Section 2.11 shall bear the cost of the issue
thereof and in case of loss, destruction
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or theft shall, as a condition precedent to the issue thereof,
furnish to the Corporation and to the Trustee such evidence of
ownership and of the loss, destruction or theft of the Convertible
Note Certificate so lost, destroyed or stolen as shall be
satisfactory to the Corporation and to the Trustee, in their sole
discretion, and such applicant may also be required to furnish an
indemnity or security in amount and form satisfactory to the
Corporation and the Trustee, in their sole discretion, and shall pay
the reasonable charges of the Corporation and the Trustee in
connection therewith.
2.12 Exchange of Convertible Note Certificates
(a) Any one or more Convertible Note Certificates representing any amount
of Convertible Notes may, upon compliance with the reasonable
requirements of the Trustee, be exchanged for one or more other
Convertible Note Certificates in authorized denominations
representing the same aggregate principal amount of Convertible Notes
as represented by the Convertible Note Certificate or Convertible
Note Certificates so exchanged.
(b) Convertible Note Certificates may be exchanged only at the
Convertible Note Agency or at any other place that is designated by
the Corporation, with the approval of the Trustee. Any Convertible
Note Certificate tendered for exchange shall be cancelled and
surrendered to the Trustee.
2.13 Registration and Transfer
The Corporation shall, at all times while any Convertible Notes are
outstanding, cause the Trustee to maintain a register in which will be entered
the names, latest known addresses of the Convertible Noteholders and if
available, facsimile numbers of the holders and particulars of the Convertible
Notes held by them, and a register of transfers in which shall be entered the
particulars of all transfers of Convertible Notes, such registers to be kept by
and at the Convertible Note Agency.
The Convertible Notes may only be transferred on the register kept at the
principal office of the Trustee in the City of Toronto by the holder or its
legal representatives or its attorney duly appointed by an instrument in writing
in form and execution satisfactory to the Trustee only upon surrendering to the
Trustee the Convertible Note Certificates representing the Convertible Notes to
be transferred and upon compliance with:
(a) the conditions herein;
(b) such reasonable requirements as the Trustee may prescribe (including
evidence of compliance with item (c) of this Section 2.13 in such
form as is satisfactory to the Trustee acting reasonably);
(c) all applicable securities legislation and requirements of regulatory
authorities; and
(d) payment of the applicable transfer fee as per section 2.14;
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and such transfer shall be duly noted in such register by the Trustee. Upon
compliance with such requirements, the Trustee shall issue to the transferee a
Convertible Note Certificate representing the Convertible Notes transferred.
2.14 Charges for Exchange or Transfer
Except as otherwise herein provided, the Trustee may charge to a holder
requesting an exchange of a Convertible Note Certificate a reasonable sum for
each new Convertible Note Certificate issued in exchange for an existing
Convertible Note Certificate and payment of such charges and reimbursement of
the Trustee or the Corporation for any and all transfer, stamp or similar taxes
or other governmental charges required to be paid shall be made by the holder
requesting such transfer or exchange as a condition precedent to such transfer
or exchange.
2.15 Cancellation of Surrendered Convertible Notes
All Convertible Note Certificates surrendered or purchased pursuant to
Sections 2.11, 2.12, 2.13, 3.1, 3.7, 4.1 or 5.1 shall be returned to the Trustee
for cancellation and, after the expiry of any period of retention prescribed by
law, destroyed by the Trustee. Upon request by the Corporation, the Trustee
shall furnish to the Corporation a destruction certificate identifying the
Convertible Note Certificates so destroyed, the number of Convertible Notes
evidenced thereby, the number of Convertible Debentures, if any, issued pursuant
to the exercise of such Convertible Notes and the details of any Convertible
Note Certificates issued in substitution or exchange for such Convertible Note
Certificates destroyed.
2.16 Persons Entitled to Payment
(a) The Corporation and Trustee will deem and treat the Person in whose
name any Convertible Note is registered as the absolute owner thereof
for all purposes of this Indenture and payment of or on account of
principal or interest on such Convertible Note shall be made only to
or to the order in writing of such holder, and neither the
Corporation nor the Trustee shall be affected by any notice to the
contrary, except where the Corporation or the Trustee is required to
take notice by statutes or by order of a court of competent
jurisdiction, and such payment shall be a good and sufficient
discharge to the Corporation and the Trustee for all amounts so paid.
(b) The holder for the time being of any Convertible Note shall be
entitled to the principal and interest evidenced by such Convertible
Note, free from all equities or rights of set-off or counterclaim,
between the Corporation and the original or any intermediate holder
thereof and all Persons may act accordingly, and a transferee of a
Convertible Note shall, after the appropriate form of transfer is
lodged with the Trustee and upon compliance with all other conditions
in that behalf required by this Indenture or by any conditions
contained in such Convertible Note, be entitled to the principal and
interest evidenced by such Convertible Note free from all equities or
rights of set-off or counterclaim between the Corporation and his or
her transferor or any previous holder thereof,
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save in respect of equities of which the Corporation is required to
take notice by statute or by order of a court of competent
jurisdiction.
(c) In the case of the death of one or more joint holders, principal or
interest on any Convertible Note registered in their names may be
paid to the survivor of such holders whose receipt therefor shall
constitute a valid discharge to the Corporation and the Trustee.
2.17 U. S. Legend
(a) The Convertible Notes have not been and will not be registered under
the U.S. Securities Act and may not be sold or otherwise transferred
except pursuant to sales or other transfers that satisfy the
requirements of Rule 904 of Regulation S under the U.S. Securities
Act. Each Convertible Note certificate originally issued in the
United States or to, or for the account of, a U.S. Person, and each
Convertible Note Certificate issued in exchange therefor or in
substitution thereof (each a "Restricted Convertible Note") shall
bear the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES
ACT") OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING
SUCH SECURITIES, AGREES FOR THE BENEFIT OF CERTICOM CORP. THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO
CERTICOM CORP., (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904
OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) PURSUANT TO THE
EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE
144 THEREUNDER, IF AVAILABLE, OR (D) IN COMPLIANCE WITH CERTAIN OTHER
PROCEDURES SATISFACTORY TO CERTICOM CORP. DELIVERY OF THIS CERTIFICATE MAY
NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK
EXCHANGES IN CANADA. A NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY OF
WHICH WILL CONSTITUTE "GOOD DELIVERY" MAY BE OBTAINED FROM COMPUTERSHARE
TRUST COMPANY OF CANADA. UPON DELIVERY OF THIS CERTIFICATE AND A DULY
EXECUTED DECLARATION, IN A FORM SATISFACTORY TO COMPUTERSHARE TRUST
COMPANY OF CANADA AND THE CORPORATION TO THE EFFECT THAT THE SALE OF THE
SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904 OF
REGULATION S UNDER THE U.S. SECURITIES ACT;"
provided, that if the Securities are being sold in compliance with the
requirements of Rule 904 of Regulation S under the U.S. Securities Act and in
compliance with Canadian local laws and regulations, the legend may be removed
by providing a declaration to Computershare Trust Company of Canada, as
registrar and transfer agent for the Securities, to the following effect (or as
the Corporation may prescribe from time to time):
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The undersigned (A) acknowledges that the sale of the Securities to which
this declaration relates is being made in reliance on Rule 904 of
Regulation S under the United States Securities Act of 1933, as amended
(the "U.S. Securities Act"), and (B) certifies that (1) it is not an
"affiliate" (as defined in Rule 405 under the U.S. Securities Act) of
Certicom Corp., (2) the offer of such Securities was not made to a person
in the United States and either (a) at the time the buy order was
originated, the buyer was outside the United States, or the seller and any
person acting on its behalf reasonably believed that the buyer was outside
the United States or (b) the transaction was executed on or through the
facilities of The Toronto Stock Exchange and neither the seller nor any
person acting on its behalf knows that the transaction has been prearranged
with a buyer in the United States and (3) neither the seller nor any person
acting on its behalf engaged in any directed selling efforts in connection
with the offer and sale of such Securities. Terms used herein have the
meanings given to them by Regulation S;
provided, further, that, if any such Securities are being sold pursuant to Rule
144 of the U.S. Securities Act, the legend may be removed by delivery to
Computershare Trust Company of Canada of an opinion of counsel, of recognized
standing reasonably satisfactory to the Corporation, to the effect that such
legend is no longer required under applicable requirements of the U.S.
Securities Act or state securities laws.
(b) Notwithstanding any other provisions of this Indenture, in processing
and registering transfers of Convertible Notes, no duty or
responsibility whatsoever shall rest upon the Trustee to determine the
compliance by any transferor or transferee with the terms of the
legend contained in subsection 2.17(a), or with the relevant
securities laws or regulations, including, without limitation,
Regulation S and the Trustee shall be entitled to assume that all
transfers are legal and proper.
ARTICLE 3 - EXERCISE OF CONVERTIBLE NOTES
3.1 Exercise of Convertible Notes
(a) Subject to Section 3.4, the holder of any Convertible Note may
exercise the right conferred on such holder to acquire Convertible
Debentures by surrendering, prior to the Time of Expiry, at the
Convertible Note Agency the Convertible Notes Certificate representing
such Convertible Note with a duly completed and executed Exercise
Form.
A Convertible Note Certificate with the duly completed and executed
Exercise Form referred to in this subsection 3.1(a) shall be deemed to
be surrendered only upon personal delivery thereof or, if sent by mail
or other means of transmission, upon actual receipt thereof at, in
each case, the Convertible Note Agency.
(b) Any Exercise Form referred to in subsection 3.1(a) shall be signed by
the Convertible Noteholder and shall specify:
(i) the aggregate principal amount of Convertible Debentures which
the holder wishes to acquire (being not more than that amount
which the
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holder is entitled to acquire pursuant to the Convertible Note
Certificate(s) surrendered);
(ii) the Person or Persons in whose name or names such Convertible
Debentures are to be issued;
(iii) the address or addresses of such Persons;
(iv) the aggregate principal amount of Convertible Debentures to be
issued to each such Person if more than one Person is so
specified; and
(v) social insurance number, if applicable.
If any of the Convertible Debentures subscribed for are to be issued
to a Person or Persons other than the Convertible Noteholder, the
Convertible Noteholder shall pay to the Corporation, or the Trustee on
behalf of the Corporation, all applicable transfer or similar taxes
and the Corporation shall not be required to issue or deliver
certificates evidencing Convertible Debentures unless or until such
Convertible Noteholder shall have paid to the Corporation, or the
Trustee on behalf of the Corporation, the amount of such tax or shall
have established to the satisfaction of the Corporation that such tax
has been paid or that no tax is due.
(c) In connection with the exchange or transfer of Convertible Note
Certificates and the exercise of Convertible Notes, the Corporation
hereby appoints the principal office of the Trustee in the City of
Toronto as the agency at which Convertible Note Certificates may be
surrendered for exchange or transfer or at which Convertible Notes may
be exercised. The Corporation may from time to time designate
alternate or additional places as the Convertible Note Agency and
shall give notice to the Trustee of any change of the Convertible Note
Agency.
3.2 Effect of Exercise of Convertible Notes
(a) Upon the exercise of Convertible Notes pursuant to Section 3.1 or
Section 3.7, and subject to Section 3.3 the aggregate principal amount
of Convertible Debentures into which Convertible Notes are exercised
shall be deemed to have been issued and the Person or Persons to whom
such Convertible Debentures are to be issued shall be deemed to have
become the holder or holders of record of such aggregate principal
amount of Convertible Debentures on the Exercise Date or, if the
transfer registers of the Corporation shall be closed on such date, on
the date on which such transfer registers are reopened.
(b) Subject to Section 3.7, within five Business Days after the Exercise
Date with respect to a Convertible Note, the Corporation shall cause
to be mailed or delivered to the Person or Persons in whose name or
names the Convertible Debentures are to be issued, in such aggregate
principal amount or number as specified in the applicable Exercise
Form, at the address specified in such Exercise Form or, if so
specified in such Exercise Form, delivered at the Convertible Note
Agency where the applicable Convertible Note Certificate was
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surrendered, a certificate or certificates for the appropriate
aggregate principal amount of Convertible Debentures into which such
Convertible Note is exercised.
3.3 Partial Exercise of Convertible Notes; Fractions
(a) The holder of any Convertible Notes may acquire an aggregate principal
amount of Convertible Debentures less than the aggregate principal
amount which the holder is entitled to acquire pursuant to any
surrendered Convertible Note Certificate for exercise. In the event of
any exercise of an aggregate principal amount of Convertible Notes
less than the aggregate principal amount into which a Convertible Note
is exercisable the holder of the Convertible Notes upon such exercise
shall, in addition, be entitled to receive, without charge therefor, a
new Convertible Note Certificate in respect of the balance of the
principal amount of Convertible Notes represented by the unexercised
portion of the surrendered Convertible Note Certificate.
(b) Notwithstanding anything herein contained, the Corporation shall not
be required, upon the exercise of any Convertible Notes, to issue
Convertible Debentures in denominations of less than $1,000 and
multiples thereof or to distribute certificates which evidence
Convertible Debentures other than in $1,000 denominations and
multiples thereof.
3.4 Exercise by Certain Persons Restricted
The Convertible Notes may not be exercised by any Person resident in a
jurisdiction which is not a Qualifying Jurisdiction unless the distribution of
Convertible Debentures to such Person can be lawfully made without the
Corporation being required to qualify such distribution in any manner under
applicable law.
3.5 Reliance By Trustee
The Trustee shall have no obligation to ensure or verify compliance with
any Applicable Legislation or regulatory requirements on the issue, exercise or
transfer of any Convertible Notes or any underlying Convertible Debentures or
Common Shares or other securities issuable upon the exercise of any Convertible
Notes. The Trustee shall be entitled to process all proffered transfers and
exercises of Convertible Notes upon the presumption that such transfers or
exercises are permissible pursuant to all Applicable Legislation and regulatory
requirements and the terms of the Indenture and the related Convertible Note
Certificates, provided that transfers and exercises of Convertible Notes, or the
underlying Convertible Debentures or Common Shares or other securities issuable
upon the exercise of any Convertible Notes, bearing the U.S. Legend may only be
processed by the Trustee upon written instruction of the Corporation to the
Trustee, which instruction may be based, in the Corporation's discretion, upon
certificates, opinions and other documentation of the holders of such
Convertible Notes or underlying Convertible Debentures or Common Shares. The
Trustee may assume for the purposes of this Indenture that the address on the
register of Convertible Noteholders of any Convertible Notes is the Convertible
Noteholder's actual address and is also determinative of the Convertible
Noteholder's residency and that the address of any transferee to whom any
Convertible Notes or
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underlying Convertible Debentures or Common Shares or other securities issuable
upon the exercise of any Convertible Notes are to be registered, as shown on the
transfer document, is the transferee's actual address and is also determinative
of the transferee's residency.
3.6 Expiration of Convertible Notes
(a) Subject to Section 3.7, immediately after the Time of Expiry, all
rights to acquire Convertible Debentures under any Convertible Note in
respect of which such right shall not have been exercised shall cease
and terminate, and, subject to Section 3.7, such Convertible Note
shall be void and of no further force or effect.
(b) If for any reason, the exercise of Convertible Notes in accordance
with the terms hereof is prohibited by law or does not take place as
contemplated herein (including by order of any securities regulatory
authority or court of competent jurisdiction) such Convertible Notes
shall, notwithstanding anything to the contrary herein contained,
remain valid and outstanding, and shall continue to bear interest at
the rate herein provided and shall be due and payable in full on the
sixth Business Day following the Expiry Date provided the Convertible
Notes are then outstanding.
3.7 Accounting and Recording
(a) Any securities or other instruments, from time to time received by the
Trustee shall be received in trust for, and shall be segregated and
kept apart by the Trustee in trust for, the Corporation.
(b) The Trustee shall record the particulars of Convertible Notes
exercised, which particulars shall include the names and addresses of
the Persons who become holders of Convertible Debentures on the
exercise thereof and the Exercise Date, if any, in respect thereof.
The Trustee shall provide such particulars in writing to the
Corporation within five Business Days of any request by the
Corporation therefor.
3.8 Automatic Exercise
Any Convertible Notes which are not exercised prior to the Expiry Time
shall be deemed to be exercised by the holders thereof immediately prior to the
Expiry Time to convert Convertible Notes into Convertible Debentures without any
further action on behalf of such holder. Following such exercise, such
Convertible Notes shall be cancelled and of no further force and effect other
than evidence of entitlement to receive the Convertible Debentures resulting
from the conversion of Convertible Notes upon the automatic exercise of any
Convertible Notes, which shall be issued upon the surrender of the related
Convertible Note Certificate accompanied with the duly completed and executed
Exercise Form, either by personal delivery thereof to the Trustee at the
Convertible Note Agency or at any other place or places that may be designated
by the Corporation with the approval of the Trustee, or, if sent by mail upon
actual receipt thereof by the Trustee at the Convertible Note Agency. Within two
Business Days of the Expiry Date, the Corporation shall notify holders of the
Convertible Notes that have
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not exercised such Convertible Notes prior to the Time of Expiry that such
Convertible Notes have been automatically exercised and converted.
3.9 Securities Restrictions
Notwithstanding anything herein contained, Convertible Debentures will only
be issued upon exercise of any Convertible Note in compliance with the
securities laws of any applicable jurisdiction, and without limiting the
generality of the foregoing, in the event that the Convertible Notes are
exercised pursuant to Section 3.1 prior to the issuance of a Receipt, the
certificates representing the Convertible Debentures thereby issued, or any
Common Shares into which the Convertible Debentures are converted, will bear
such legend as may, in the opinion of counsel to the Corporation, be necessary
in order to avoid a violation of any securities laws of any province in Canada
or to comply with the requirements of any stock exchange on which the Common
Shares are listed, provided that if, at any time, in the opinion of counsel to
the Corporation, such legends are no longer necessary in order to avoid a
violation of any such laws, or the holder of any such legended certificate, at
the holders expense, provides the Corporation with evidence satisfactory in form
and substance to the Corporation (which may include an opinion of counsel
satisfactory to the Corporation, acting reasonably) to the effect that such
holder is entitled to sell or otherwise transfer such Convertible Debentures or
Common Shares in a transaction in which such legends are not required, such
legended certificate may thereafter be surrendered to the Corporation in
exchange for a certificate which does not bear such legend.
ARTICLE 4 - REDEMPTION
4.1 Redemption
(a) If the Corporation has not obtained a Receipt on or before the Receipt
Deadline, then:
(i) each Convertible Noteholder will be entitled to elect (the
"Redemption Election") to cause the Corporation to redeem all,
but not less than all, the Convertible Notes held by such
Convertible Noteholder at a price (the "Redemption Price") per
Convertible Note equal to the principal amount thereof,
together with accrued and unpaid interest on the principal
amount of the Convertible Note so redeemed to but not including
the date fixed for redemption (the "Redemption Date"), which
date shall not be less than 15 Business Days after the date of
receipt or deemed receipt of a Redemption Election Notice (as
defined herein) by the Convertible Noteholders;
(ii) the Redemption Election may be exercised by delivery to the
Corporation of a notice of exercise (a "Redemption Election
Notice") substantially in the form attached hereto as Schedule
"C" prior to 5:00 p.m. (Toronto time) on the third Business Day
immediately preceding the Redemption Date by the Convertible
Noteholders;
(iii) notwithstanding Section 4.1(a)(i), in the event that
Convertible Noteholders representing in the aggregate more than
50% of the aggregate
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principal amount of the Convertible Notes outstanding on
September 28, 2001 elect to cause the Corporation to redeem the
Convertible Notes held by such Convertible Noteholders, all
outstanding Convertible Notes shall be redeemed (a "Mandatory
Redemption") by the Corporation on the Redemption Date at a price
per Convertible Note equal to the Redemption Price;
(iv) the Corporation shall, on or before October 2, 2001, deliver or
cause to be delivered to each Convertible Noteholder and the
Trustee a notice stating (A) that a Receipt was not obtained by
the Corporation prior to the Receipt Deadline, (b) that each
Convertible Noteholder has the rights set forth in, and shall be
subject to the provisions of, Sections 4.1(a)(i), (ii) and (iii),
as applicable, and (C) the Redemption Date, and including a
Redemption Election Notice in the form attached hereto as
Schedule "C".
(v) if the Corporation is required to redeem any Convertible Notes
pursuant to this Section 4.1, the Corporation shall deliver to
the Escrow Agent, not later than 5:00 p.m. (Toronto time) on the
second Business Day immediately preceding the Redemption Date, an
Escrow Direction;
(vi) the Corporation shall redeem, on the Redemption Date, (A) in the
event of a Mandatory Redemption, all of the outstanding
Convertible Notes, or (B) such aggregate principal amount of
Convertible Notes as shall be specified in duly completed
Redemption Election Notices delivered to the Corporation pursuant
to Section 4.1(a)(ii), as applicable, at a price per Convertible
Note equal to the Redemption Price; and
(vii) except in the case of a Mandatory Redemption, the Escrow Agent
shall pay or cause to be paid to the Corporation that portion of
the Subscription Funds, including interest thereon, not required
to pay the Redemption Price of any Convertible Notes redeemed on
the Redemption pursuant to a Redemption Election.
(b) Upon compliance by the Corporation with the provisions of Section
4.1(a)(v), all of the outstanding Convertible Notes so called for
redemption shall thereupon become due and payable at the Redemption
Price on the Redemption Date and from and after the Redemption Date
such Convertible Notes shall not be considered as outstanding hereunder
and interest on such Convertible Notes shall cease.
(c) From the sums deposited with the Trustee by the Escrow Agent pursuant
to the Escrow Direction, the Trustee shall deliver, pay or cause to be
delivered and paid to the holders of Convertible Notes so redeemed,
upon surrender of such Convertible Notes, the moneys to which the
Convertible Noteholders are respectively entitled on redemption.
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(d) If the Trustee determines that the sums deposited with the
Trustee by the Escrow Agent will not be sufficient to allow the
Trustee to pay the Redemption Price with respect to Convertible
Notes to be redeemed in accordance with this Section 4.1, the
Trustee shall give notice of such determination to the
Corporation and the Corporation shall, within three Business Days
of the date upon which such notice is received, pay to the
Trustee such amount as shall be sufficient, together with the
sums deposited with the Trustee by the Escrow Agent, to allow the
Trustee to pay the Redemption Price with respect to Convertible
Notes to be redeemed in accordance with this Section 4.1.
ARTICLE 5 - RIGHTS OF THE CORPORATION AND COVENANTS. REPRESENTATIONS AND
WARRANTIES
5.1 Optional Purchases by the Corporation
The Corporation may from time to time purchase with the consent of the
Convertible Noteholder, by private contract or otherwise any of the Convertible
Notes. Any such purchases shall be offered to all Convertible Noteholders on a
pro rata basis. Any such purchase shall be made at the lowest price or prices at
which, in the opinion of the directors, such Convertible Notes are then
obtainable from such Convertible Noteholder, plus reasonable costs of purchase,
and may be made in such manner, from such Persons and on such other terms as the
Corporation may determine. Any Convertible Note Certificates representing the
Convertible Notes purchased pursuant to this Section 5. 1 shall forthwith be
delivered to and cancelled by the Trustee. No Convertible Notes shall be issued
in replacement thereof.
5.2 General Covenants of the Corporation
The Corporation covenants and agrees with the Trustee that so long as
any Convertible Notes remain outstanding:
(a) it shall duly and punctually pay or cause to be paid to every
Convertible Noteholder the principal of and interest on each of
the Convertible Notes (including, in the case of default,
interest on the amount in default) at the places, at the
respective times and in the manner provided herein and in the
Convertible Notes;
(b) except as herein otherwise expressly provided, the Corporation
will at all times maintain its corporate existence and will keep
proper books of account in accordance with generally accepted
accounting practices. Upon written notice from the Trustee
stating that it has reasonable grounds to believe that an Event
of Default has occurred or may occur, the Corporation will
furnish or cause to be furnished to the Trustee or its duly
authorized agent or attorney such information relating to its
business as the Trustee may reasonably require and the books of
account will be made available for inspection by the Trustee or
such agent or attorney;
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(c) the Corporation will furnish to the Trustee a copy of all
financial statements, whether annual or interim, of the
Corporation and the report, if any, of the Corporation's auditors
thereon and of all annual and other periodic reports of the
Corporation furnished to its shareholders at the same time as
they are furnished to such shareholders. No obligation shall rest
with the Trustee to analyze such statements or evaluate the
performance of the Corporation in any manner whatsoever;
(d) the Corporation will reserve and there will remain created and
unissued a sufficient aggregate principal amount of Convertible
Debentures to satisfy its obligations upon the exercise of
Convertible Notes and it will reserve and authorize the issuance
of a sufficient number of Common Shares for the purpose of
enabling it to satisfy its obligations to issue Common Shares in
accordance with the terms of the Convertible Debentures issued
upon the exercise of the Convertible Notes;
(e) the Corporation will cause the Convertible Debentures and
certificates representing the Convertible Debentures from time to
time issued pursuant to the exercise of the Convertible Notes to
be duly issued and delivered in accordance with the Convertible
Notes and the terms hereof;
(f) the Corporation will cause the Common Shares and the certificates
representing the Common Shares from time to time issued in
accordance with the terms of the Convertible Debentures to be
duly issued and delivered in accordance with the Convertible
Debentures and the terms of the Trust Indenture;
(g) all Common Shares issued in accordance with the terms of the
Convertible Debentures shall be fully paid and non-assessable;
(h) the Corporation will use its commercially reasonable efforts to
obtain a Receipt, as soon as reasonably possible, from the
Securities Commissions for the Final Prospectus so that the
resale of such Convertible Debentures and Common Shares issuable
in accordance with the terms of the Convertible Debentures will
not generally be subject to the prospectus requirements or any
"hold period" under Applicable Securities Law in the Qualifying
Jurisdictions;
(i) generally, the Corporation will duly and punctually perform and
carry out all of the acts or things to be done by it as provided
in this Indenture;
(j) the Corporation shall not, directly or indirectly, declare or pay
any dividends on account of any shares or any class of its shares
now or hereafter outstanding or redeem, retire, defease, purchase
or otherwise acquire any shares of any class of capital stock (or
set aside or otherwise deposit or invest any sums for any of the
foregoing purposes) or apply or set apart any sum, or make any
other distribution (by reduction of capital or otherwise) in
respect of any such shares or agree to do any of the foregoing;
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(k) in order to prevent any accumulation after maturity of unpaid
interest on, or of unpaid principal amount of, any Convertible
Note, the Corporation will not directly or indirectly extend or
assent to the extension of time for payment of any interest upon
any Convertible Note or of any principal amount payable in
respect of any Convertible Note and that it will not directly or
indirectly be or become a party to or approve any such
arrangement by purchasing or funding any interest on the
Convertible Notes or any principal amount thereof or in any other
manner and that the Corporation will deliver to the Trustee all
Convertible Notes when paid as evidence of such payment;
(l) if the time for the payment of any interest or principal amount
shall be so extended, whether or not such extension is by or with
the consent of the Corporation, notwithstanding anything herein
or in the Convertible Notes contained, such interest or principal
amount shall not be entitled, in case of default hereunder, to
the benefit of this Indenture except subject to the prior payment
in full of the principal amount of all the Convertible Notes then
outstanding and of all matured interest on such Convertible Notes
the payment of which has not been so extended;
(m) on or before August 30, 2002 and on or before August 30 in each
subsequent year and at any other reasonable time if requested by
the Trustee, the Corporation will furnish to the Trustee a
Certificate of the Corporation stating that the Corporation has
complied with all covenants, conditions and other requirements
contained in this Indenture, non-compliance with which would
constitute an Event of Default hereunder or, if such is not the
case, specifying the covenant, condition or other requirement
which has not been complied with and giving particulars of such
non-compliance and the action, if any, the Corporation proposes
to take with respect thereto;
(n) the Corporation will take all commercially reasonable steps and
actions and do all such acts and things as may be required to:
(i) as long as it meets the minimum listing requirements of such
institutions, maintain the listing and posting for trading, on
the TSE, of the Common Shares or, in the event of a Change of
Control, on the TSE, NASDAQ or the New York Stock Exchange the
securities for which the Common Shares were exchanged or
converted in connection with the Change of Control, and (ii)
maintain its status as a reporting issuer not in default of the
requirements of applicable securities legislation of the
provinces of Canada or have outstanding securities registered
under the Securities Exchange Act of 1934, as amended, or, in the
event of a Change of Control, maintain the status of the Person,
or such Person's Affiliate, whose securities were exchanged or
converted for Common Shares in connection with such Change of
Control as a reporting issuer not in default of the requirements
of applicable securities legislation in the Province of Ontario
or have securities outstanding registered under the Securities
Exchange Act of 1934, as amended;
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(o) the Corporation shall, within three Business Days of a written
request by the Trustee, furnish to the Trustee, or to such other
Person as the Trustee may direct, a true copy of this Indenture;
(p) the Corporation shall not change its name or amalgamate with
another corporation under a different name without giving at
least ten days' prior notice to the Trustee of the new name and
the date upon which such change of name or amalgamation is to
take effect and, within five Business Days of the change of name
or amalgamation, the Corporation shall provide the Trustee with:
(i) a notarial or certified copy of the articles of amendment
or articles of amalgamation effecting the change of name;
and
(ii) an opinion from legal counsel satisfactory to the Trustee
as to the correct name of the Corporation and confirming
that all appropriate registrations, filings or recordings
have been made to ensure the continued validity and
enforceability of this Indenture and the Convertible
Notes;
(q) the Corporation represents and warrants to the Trustee that there
is no (i) Permitted Secured Debt or (ii) Debt ranking senior to,
or pari passu, with the Debentures outstanding or in effect on
the date of this Indenture, except such Permitted Secured Debt as
has been incurred to finance the cost of acquisition by the
Corporation or any of its Subsidiaries of any assets or services
in the ordinary course of their respective businesses. The
Corporation will not, and will not permit any of its Subsidiaries
to, create, incur, assume, suffer, permit to exist or guarantee,
directly or indirectly, any Debt that ranks senior to, or pari
passu, with the Debentures other than Permitted Secured Debt.
Nothing in this section 5.2(q) will prevent or be deemed to
prevent the Corporation or any of its Subsidiaries from creating,
incurring, assuming, suffering, permitting to exist or
guaranteeing trade debt;
(r) the Corporation shall promptly notify the Trustee in writing of
the details of the occurrence of any Event of Default; and
(s) if the closing price of the Common Shares on NASDAQ is less than
U.S. $1.00 for any period of 10 consecutive trading days, the
Corporation will consider calling a special meeting of its
shareholders for the purpose of approving a consolidation of the
Common Shares on such terms as the directors of the Corporation
may approve.
5.3 Trustee's Remuneration and Expenses
(a) The Corporation covenants that it will pay to the Trustee
reasonable remuneration for its services as Trustee and will pay
all costs, charges and expenses (including reasonable fees and
disbursements of its Counsel and all other advisors not regularly
in its employ) properly incurred by the Trustee in connection
with the trusts hereof, on demand by the Trustee and also (in
addition to any right of indemnity given to the Trustee by law)
will at all times keep indemnified the
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Trustee against all liabilities, losses, damages, actions,
proceedings, costs, claims, expenses and demands in respect of
any matter or thing done or omitted by the Trustee (other than
through the gross negligence of or misconduct by the Trustee) in
any way relating to this Indenture. The said remuneration shall
continue to be payable until the trusts hereof be finally wound
up and whether or not the trusts of this Indenture shall be in
the course of administration by or under the direction of the
court.
(b) Any amount due under this Section 5.3 and unpaid 30 days after
demand for such payment shall bear interest from the expiration
of such 30 day period at a rate per annum equal to the rate
generally charged by the Corporate Trust Department of the
Trustee from time to time on overdue accounts. After default all
amounts so payable and the interest thereon shall be payable out
of any funds coming into possession of the Trustee in priority to
any payment of the principal amount of, or any interest on, the
Convertible Notes.
5.4 Securities Qualification Requirements
(a) Following the Effective Date, the Corporation shall, as soon as
reasonably possible, file with the Securities Commissions the
Preliminary Prospectus and all such other documents as may be
required under Applicable Securities Law with the Securities
Commissions and use its commercially reasonable efforts to obtain
all required receipts therefor from the Securities Commissions.
(b) The Corporation shall, after satisfaction of any comments with
respect to the Preliminary Prospectus by the Securities
Commissions, file the Final Prospectus and all such other
documents as may be required under Applicable Securities Law with
the Securities Commissions, and undertakes to use its
commercially reasonable efforts to obtain a Receipt therefor from
the Securities Commissions as soon as reasonably possible but in
any event by the Receipt Deadline and to take all other
commercially reasonable steps as may be necessary to qualify the
distribution in the Qualifying Jurisdictions of the Convertible
Debentures and Common Shares issuable in accordance with the
terms of the Convertible Debentures, provided that the
Corporation shall not be obligated to file the Final Prospectus
on or after August 30, 2002.
(c) The Corporation shall send written notice to each holder of
Convertible Notes and the Trustee advising of the issuance of a
Receipt by the Securities Commissions together with a copy of the
Final Prospectus. Such notice shall be hand delivered or mailed
to each holder of the Convertible Notes at the address of each
such holder appearing in the register of the Convertible Notes
maintained pursuant to this Indenture within five Business Days
after the date on which a Receipt was issued by the Securities
Commissions.
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5.5 Performance of Covenants by Trustee
If the Corporation shall fail to perform any of its covenants contained
in this Indenture, the Trustee may notify the Convertible Noteholders of such
failure on the part of the Corporation or may itself perform any of the
covenants capable of being performed by it but, subject to Section 9.2, shall be
under no obligation to perform said covenants or to notify the Convertible
Noteholders of such performance by it. All sums reasonably expended or advanced
by the Trustee in so doing shall be repayable as provided in Section 5.3. No
such performance, expenditure or advance by the Trustee shall relieve the
Corporation of any default hereunder or of its continuing obligations under the
covenants herein contained.
ARTICLE 6 - ENFORCEMENT
6.1 Events of Default
If any of the Events of Default listed below in this Section 6.1 shall
occur and be continuing:
(a) the Corporation shall default in payment of the principal on any
Convertible Note when the same becomes due under any provision
hereof or of the Convertible Notes; or
(b) the Corporation shall default in payment of any interest due on
any Convertible Notes when the same becomes due under any
provision hereof or of the Convertible Notes and any such default
continues for a period of five days; or
(c) the Corporation shall default in the performance, or breach, of
any covenant or agreement of the Corporation in this Indenture or
the Convertible Notes, continued for a period of 30 days after
there has been given notice, by registered or certified mail, to
the Corporation by the Trustee or by Holders of not less than 25%
of the principal amount of Convertible Notes then outstanding
specifying such default or breach and requiring it to be
remedied, unless the Trustee (having regard to the subject matter
of the default) shall have agreed to a longer period and, in such
event, for the period agreed to by the Trustee; or
(d) the institution by the Corporation of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it,
or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable federal, provincial
or state law relating to bankruptcy, insolvency, reorganization
or relief of debtors, or the consent by it to the filing of any
such petition or to the appointment under any such law of a
receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Corporation or of substantially all of
its property, or the making by it of a general assignment for the
benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due; or
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(e) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Corporation a bankrupt or insolvent,
or approving as properly filed a petition seeking reorganization,
arrangement or adjustment of or in respect of the Corporation
under any applicable law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or appointing under any such
law a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Corporation or of substantially
all of its property, or ordering pursuant to any such law the
winding-up or liquidation of its affairs, and the continuance of
any such decree, petition, appointment or order unstayed and in
effect for a period of 90 consecutive days; or
(f) if an encumbrancer takes possession of, or appoints a receiver in
respect of, all or substantially all of the property of the
Corporation, or if any process or execution is levied or enforced
upon or gains all or substantially all of the property of the
Corporation and remains unsatisfied for such period as would
permit any such property to be sold thereunder, unless the
Corporation actively and diligently contests in good faith such
process, but in that event the Corporation shall, if the Trustee
so requires, give security which, in the discretion of the
Trustee, is sufficient to pay in full the amount thereby claimed
in case the claim is held to be valid;
then, in each and every such event, if such event is continuing, subject to
Section 6.3 and Section 7.10(d), the Trustee may in its discretion and shall,
upon receipt of a Convertible Noteholders' Request, declare the principal of,
and interest on, all Convertible Notes then outstanding and all other moneys
outstanding hereunder to be due and payable, and the same shall forthwith become
immediately due and payable to the Trustee, anything therein or herein to the
contrary notwithstanding, and the Corporation shall forthwith pay to the Trustee
for the benefit of the Convertible Noteholders the amount of the principal of,
and interest then accrued on, all of the Convertible Notes then outstanding and
all other moneys outstanding hereunder, together with interest thereon, at the
rate of interest borne by the Convertible Notes from the date of the said
declaration until payment is received by the Trustee and such payment when made
shall be deemed to have been made on such Convertible Notes and shall be applied
as provided in Section 6.5.
6.2 Notice of Events of Default
If an Event of Default shall occur and be continuing the Trustee shall,
as soon as reasonably possible but in any event within 15 days after it becomes
aware of the occurrence of such Event of Default, give notice of such Event of
Default, to the Convertible Noteholders in the manner provided in Article 10;
provided that, notwithstanding the foregoing, unless the Trustee shall have been
requested to do so pursuant to a Convertible Noteholders' Request, the Trustee
shall not be required to give such notice, if the Trustee, in good faith,
reasonably believes that it is in the best interests of the Convertible
Noteholders to withhold such notice and shall have so informed the Corporation
in writing.
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6.3 Waiver of Default
Upon the happening of any Event of Default, except default in payment
of principal, and in addition to the powers exercisable by the Convertible
Noteholders by Extraordinary Resolution, the holders of not less than 51% in
principal amount of all the Convertible Notes which shall then be outstanding
shall have power, by an instrument or instruments in writing or by affirmative
votes of such holders at a meeting duly convened and held as hereinafter
provided, to cancel any declaration made by the Trustee pursuant to Section 6.1
or to require the Trustee to waive the default, or both, and such declaration
shall thereupon be cancelled or the Trustee shall thereupon waive the default,
in either case, upon such terms and conditions as such holders shall prescribe.
So long as it has not become bound as provided in this Article 6 to declare the
principal of and interest on all the Convertible Notes then outstanding to be
due and payable, or to obtain and enforce payment of the same, the Trustee shall
have the power to waive any default arising hereunder if, in the reasonable
opinion of the Trustee, acting in good faith, the same shall have been cured, or
adequate satisfaction made therefor, upon such terms and conditions as the
Trustee may deem advisable. Provided always that no act or omission either of
the Trustee or of the Convertible Noteholders in the premises shall extend to or
be taken in any manner whatsoever to affect any subsequent default or the rights
resulting therefrom.
6.4 Right of Trustee to Enforce Payment
(a) Subject to the provisions of Section 6.3, if the Corporation
shall fail to pay to the Trustee, on demand, the principal of and
interest on all Convertible Notes then outstanding which shall
have been declared by the Trustee to be due and payable pursuant
to Section 6.1, together with any other amounts due hereunder,
the Trustee may in its discretion and shall upon receipt of a
Convertible Noteholders' Request and upon being funded and
indemnified to its reasonable satisfaction against all costs,
expenses and liabilities to be incurred, proceed in its name as
Trustee hereunder to obtain or enforce payment of the said
principal of and interest on all the Convertible Notes then
outstanding together with any other amounts due hereunder, by any
remedy provided by law either by legal proceedings or otherwise.
(b) The Trustee shall be entitled and empowered, either in its own
name or as trustee of an express trust, or as attorney-in-fact
for the holders of the Convertible Notes, or in any one or more
of such capacities, to file such proof of debt, amendment of
proof of debt, claim, petition or other document as may be
necessary or advisable in order to have the claims of the Trustee
and of the holders of the Convertible Notes allowed in any
insolvency, bankruptcy, liquidation or other judicial proceedings
relative to the Corporation or its creditors or relative to or
affecting its property. The Trustee is hereby irrevocably
appointed (and the successive respective holders of the
Convertible Notes by taking and holding the same shall be
conclusively deemed to have so appointed the Trustee) the true
and lawful attorney-in-fact of the respective holders of the
Convertible Notes with authority to make or file in the
respective names of the holders of the Convertible Notes or on
behalf of the holders of the Convertible Notes as a class,
subject to deduction from any such claims of the amounts of any
claims filed by any of the holders of
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the Convertible Notes themselves, any proof of debt, amendment of proof
of debt, claim, petition or other document in any proceedings and to
receive payment of any sums becoming distributable on account thereof,
and to execute any such other papers and documents and to do and perform
any and all such acts and things for and on behalf of such holders of
the Convertible Notes, as may be necessary or advisable in the opinion
of the Trustee, in order to have the respective claims of the Trustee
and of the holders of the Convertible Notes against the Corporation or
its property allowed in any such proceeding, and to receive payment of
or on account of such claims; provided, however, that nothing contained
in this Indenture shall be deemed to give to the Trustee, unless so
authorized by Extraordinary Resolution, any right to accept or consent
to any plan of reorganization or otherwise by action of any character in
such proceeding to waive or change in any way any right of any
Convertible Noteholder.
(c) Any such suit or proceeding instituted by the Trustee shall be
brought in the name of the Trustee as trustee of an express
trust, and any recovery of judgment shall be for the rateable
benefit of the holders of the Convertible Notes subject to the
provisions of this Indenture. In any proceeding brought by the
Trustee (and also any proceeding in which a declaratory judgment
of a court may be sought as to the interpretation or construction
of any provision of this Indenture, to which the Trustee shall be
a party) the Trustee shall be held to represent all the holders
of the Convertible Notes, and it shall not be necessary to make
any holders of the Convertible Notes parties to any such
proceeding.
6.5 Application of Moneys
(a) Except as herein otherwise expressly provided, any moneys
received by the Trustee from the Corporation pursuant to the
foregoing Sections of this Article 6, or as a result of legal or
other proceedings or from any trustee in bankruptcy or liquidator
of the Corporation, shall be applied, together with any other
moneys in the hands of the Trustee available for such purposes,
as follows:
FIRST: to the payment and reimbursement to the Trustee of the
amounts contemplated by Section 5.3, including, without
limitation, compensation, costs, charges, expenses,
borrowings, advances, or other moneys furnished or
provided by or at the instance of the Trustee in or
about the execution of its trust or otherwise in
relation to this Indenture, with interest thereon as
herein provided;
SECOND: subject to Section 5.4 and as hereinafter in this
Section 6.5 provided, in payment rateably and
proportionately of the principal of and accrued and
unpaid interest and interest on amounts in default on
the Convertible Notes which shall then be outstanding
in the priority of principal first and then accrued and
unpaid interest and interest on amounts in default,
unless otherwise directed by Extraordinary Resolution
and, in that case, in such order of priority
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as between principal and interest as may be directed by
such resolution; and
THIRD: the surplus (if any) of such moneys shall be paid to the
Corporation or its assigns;
provided, however, that no payment shall be made in respect of the principal of
or interest on any Convertible Note held, directly or indirectly, by or for the
benefit of the Corporation or any Subsidiary (other than any Convertible Note
pledged for value and in good faith to a Person other than the Corporation or
any Subsidiary but only to the extent of such Person's interest therein) except
subject to the prior payment in full of the principal of, and premium, if any,
and interest of all Convertible Notes which are not so held.
(b) Provided always that the Trustee shall not be bound to apply or
make any partial or interim payment of any moneys coming into its
hands pursuant to the foregoing Sections of this Article 6 if the
amount so received by it is insufficient to make a distribution
of at least 2% of the principal amount of the outstanding
Convertible Notes but it may retain the money so received by it
and deposit the same in its deposit department or in a chartered
bank in Canada to its credit at such rate of interest as is then
current on similar deposits or invest the same as provided in
Section 12.10 of the Trust Indenture until the moneys or the
investments representing the same, with the income derived
therefrom together with any other moneys for the time being under
its control shall be sufficient for the said purpose or until it
shall consider it advisable to apply the same in the manner above
set forth.
6.6 Notice of Payment by Trustee
Not less than 21 days' notice shall be given by the Trustee to the
Convertible Noteholders of any payment to be made under this Article 6 to the
Convertible Noteholders. Such notice shall state the time when and the place
where such payment is to be made, and the amount of the payment and the
application thereof as between principal and interest. After the day so fixed,
unless payment shall have been duly demanded and have been refused, the
Convertible Noteholders will be entitled to interest only on the balance (if
any) of the principal moneys and interest due to them, respectively, on the
Convertible Notes, after deduction of the respective amounts payable in respect
thereof on the day so fixed.
6.7 Trustee May Demand Production of Convertible Notes
The Trustee shall have the right to demand production of the
Convertible Notes in respect of which any payment of principal or interest
required by this Article 6 is made and may cause to be endorsed on the same
memorandum of the amount so paid and the date of payment, but the Trustee may,
in its discretion, dispense with such production and endorsement in any special
case, upon such indemnity being given to it and to the Corporation as the
Trustee shall deem sufficient.
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6.8 Trustee Appointed Attorney
The Corporation hereby irrevocably appoints the Trustee to be the
attorney of the Corporation for and in the name and on behalf of the Corporation
to execute any instruments and to do any acts and things which the Corporation
ought to sign, execute and do hereunder and generally to use the name of the
Corporation in the exercise of all or any of the powers hereby conferred on the
Trustee, with full powers of substitution and revocation.
6.9 Suits by Convertible Noteholders
No Convertible Noteholder shall have the right to institute any action,
suit or proceeding, judicial or otherwise, with respect to this Indenture or for
the appointment of a receiver or trustee, or for any other remedy authorized or
permitted by this Indenture or by law or by equity hereunder, unless:
(a) such Convertible Noteholder has previously given written notice
to the Trustee, or vice versa, of a continuing Event of Default;
(b) the Trustee shall have received a Convertible Noteholders'
Request requesting the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee
hereunder and the Trustee shall have been offered a reasonable
opportunity either itself to proceed to exercise the powers
hereinbefore granted or to institute an action, suit or
proceeding in its name for such purpose;
(c) the Convertible Noteholder or Convertible Noteholders executing
such Convertible Noteholders' Request have provided to the
Trustee sufficient funds and/or indemnity against the costs,
expenses and liabilities to be incurred in compliance with such
request in accordance with subsection 9.2(b);
(d) the Trustee, for 60 days after its receipt of such notice,
Convertible Noteholders' Request and provision of funds and/or
indemnity, has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Convertible
Noteholders of a majority or more in principal amount of the
outstanding Convertible Notes.
In such event but not otherwise any Convertible Noteholder. acting on
behalf of himself and all other Convertible Noteholders, shall be entitled to
take proceedings in any court of competent jurisdiction such as the Trustee
might have taken under Section 6.4, but in no event shall any Convertible
Noteholder or combination of Convertible Noteholders have any right to take any
other remedy or proceedings out of court; it being understood and intended that
no one or more Convertible Noteholders shall have any right in any manner
whatever by virtue of, or by availing of, any provision of this Indenture to
affect, disturb or prejudice the rights of any other Convertible Noteholders, or
to obtain or to seek to obtain priority or preference over any other Convertible
Noteholders or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and rateable benefit of all the Convertible
Noteholders.
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6.10 Immunity of Shareholders, etc.
The Trustee and, by the acceptance of the Convertible Note Certificates
and as part of the consideration for the issue of the Convertible Notes, the
Convertible Noteholders, hereby waive and release any right, cause of action or
remedy now or hereafter existing in any jurisdiction against any incorporator or
any past, present or future shareholder, director, officer, employee or agent of
the Corporation or any Successor Corporation on any covenant, agreement,
representation or warranty by the Corporation contained in this Indenture or in
the Convertible Note Certificates.
6.11 Limitation of Liability
The obligations hereunder are not personally binding upon, nor shall
resort hereunder be had to, the private property of any of the past, present or
future directors or shareholders of the Corporation or any Successor Corporation
or any of the past, present or future officers, employees or agents of the
Corporation or any Successor Corporation, but only the property of the
Corporation or any Successor Corporation shall be bound in respect hereof.
6.12 Remedies Cumulative
No remedy herein conferred upon or reserved to the Trustee, or upon or
to the Convertible Noteholders, is intended to be exclusive of any other remedy,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now existing or hereafter to exist by law
or by statute.
ARTICLE 7 - MEETINGS OF CONVERTIBLE NOTEHOLDERS
7.1 Right to Convene Meetings
The Trustee may at any time and from time to time, and shall on receipt
of a written request of the Corporation or of a Convertible Noteholders' Request
and upon being indemnified to its reasonable satisfaction by the Corporation or
by the Convertible Noteholders signing such Convertible Noteholders' Request
against the cost which may be incurred in connection with the calling and
holding of such meeting, call and hold a meeting of the Convertible Noteholders.
In the event of the Trustee failing to so call a meeting within 15 days after
receipt of such written request of the Corporation or such Convertible
Noteholders' Request and indemnity given as aforesaid, the Corporation or such
Convertible Noteholders who signed such Convertible Noteholders' Request, as the
case may be, may call and hold such meeting. Every such meeting shall be held in
the City of Toronto or at such other place as may be approved by the Trustee and
the Corporation
7.2 Notice
At least 21 days' prior notice of any meeting of Convertible
Noteholders shall be given to the Convertible Noteholders entitled to attend
such meeting in the manner provided for in Section 10.2 and a copy of such
notice shall be sent by mail to the Trustee (unless the meeting has been called
by the Trustee) and to the Corporation (unless the meeting has been called by
the
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Corporation). Such notice shall state the time when and the place where the
meeting is to be held, shall state briefly the general nature of the business to
be transacted thereat and shall contain such information as is reasonably
necessary to enable the Convertible Noteholders to make a reasoned decision on
the matter, but it shall not be necessary for any such notice to set out the
terms of any resolution to be proposed or any of the provisions of this Article
7. The notice convening any such meeting may be signed by an appropriate officer
of the Trustee or by the Corporation or by the holder or holders convening the
meeting.
7.3 Chairman
An individual (who need not be a Convertible Noteholder) designated in
writing by the Trustee shall be chairman of the meeting and if no individual is
so designated, or if the individual so designated is not present within 30
minutes from the time fixed for the holding of the meeting, the Convertible
Noteholders present in Person or by proxy shall choose some individual present
to act as chairman.
7.4 Quorum
Subject to the provisions of Section 7.11, at any meeting of the
Convertible Noteholders a quorum shall consist of Convertible Noteholders
present in Person or by proxy and holding Convertible Notes having an aggregate
principal amount of at least 25 % of the aggregate principal amount of the then
outstanding Convertible Notes, provided that at least two Persons entitled to
vote thereat are personally present. If a quorum of the Convertible Noteholders
shall not be present within 30 minutes from the time fixed for holding any
meeting, the meeting, if summoned by Convertible Noteholders or on a Convertible
Noteholders' Request, shall be dissolved; but in any other case the meeting
shall be adjourned to the same day in the next week (unless such day is not a
Business Day, in which case it shall be adjourned to the next following Business
Day) at the same time and place and no notice of the adjournment need be given.
Any business may be brought before or dealt with at an adjourned meeting which
might have been dealt with at the original meeting in accordance with the notice
calling the same. No business shall be transacted at any meeting unless a quorum
be present at the commencement of business. At the adjourned meeting the
Convertible Noteholders present in Person or by proxy shall form a quorum and
may transact the business for which the meeting was originally convened,
notwithstanding that they do not hold Convertible Notes in an aggregate
principal amount of at least 25% of the aggregate principal amount of then
outstanding Convertible Notes.
7.5 Power to Adjourn
The chairman of any meeting at which a quorum of the Convertible
Noteholders is present may, with the consent of the meeting, adjourn any such
meeting, and no notice of such adjournment need be given except such notice, if
any, as the meeting may prescribe.
7.6 Show of Hands
Every question submitted to a meeting shall be decided in the first
place by a majority of the votes given on a show of hands except that votes on
an Extraordinary Resolution shall be given in the manner hereinafter provided.
At any such meeting, unless a poll is duly demanded as herein provided, a
declaration by the chairman that a resolution has been carried or carried
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unanimously or by a particular majority or lost or not carried by a particular
majority shall be conclusive evidence of the fact.
7.7 Poll and Voting
(a) On every Extraordinary Resolution, and on any other question
submitted to a meeting and after a vote by show of hands when
demanded by the chairman or by one or more of the Convertible
Noteholders acting in Person or by proxy and holding Convertible
Notes in the aggregate principal amount of at least 5% of the
aggregate principal amount of all the Convertible Notes then
outstanding, a poll shall be taken in such manner as the chairman
shall direct. Questions other than those required to be determined
by Extraordinary Resolution shall be decided by a majority of the
votes cast on the poll.
(b) On a show of hands, every Person who is present and entitled to
vote, whether as a Convertible Noteholder or as proxy for one or
more absent Convertible Noteholders, or both, shall have one vote.
On a poll, each Convertible Noteholder present in Person or
represented by a proxy duly appointed by instrument in writing
shall be entitled to one vote in respect of each $1,000 principal
amount of Convertible Note or Convertible Notes then held or
represented by such holder or Person. A proxy need not be a
Convertible Noteholder. The chairman of any meeting shall be
entitled, both on a show of hands and on a poll, to vote in
respect of the Convertible Notes, if any, held or represented by
him or her.
7.8 Regulations
The Trustee, or the Corporation with the approval of the Trustee, may
from time to time make and from time to time vary such regulations as it shall
think fit for:
(a) the setting of the record date for a meeting for the purpose of
determining Convertible Noteholders entitled to receive notice of
and to vote at the meeting;
(b) the issue of voting certificates by any bank, trust company or
other depositary satisfactory to the Trustee stating that the
Convertible Note Certificates specified therein have been
deposited with it by a named Person and will remain on deposit
until after the meeting, which voting certificate shall entitle
the Persons named therein to be present and vote at any such
meeting and at any adjournment thereof or to appoint a proxy or
proxies to represent them and vote for them at any such meeting
and at any adjournment thereof in the same manner and with the
same effect as though the Persons so named in such voting
certificates were the actual holders of the Convertible Note
Certificates specified therein;
(c) the deposit of voting certificates and instruments appointing
proxies at such place and time as the Trustee, the Corporation or
the Convertible Noteholders convening the meeting, as the case may
be, may in the notice convening the meeting direct;
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(d) the deposit of voting certificates and instruments appointing
proxies at some approved place or places other than the place at
which the meeting is to be held and enabling particulars of such
instruments appointing proxies to be mailed or telecopied before
the meeting to the Corporation or to the Trustee at the place
where the same is to be held and for the voting of proxies so
deposited as though the instruments themselves were produced at
the meeting;
(e) the form of the instrument of proxy; and
(f) generally for the calling of meetings of Convertible Noteholders
and the conduct of business thereat.
Any regulations so made shall be binding and effective and the votes given in
accordance therewith shall be valid and shall be counted. Save as such
regulations may provide, the only Persons who shall be recognized at any meeting
as a Convertible Noteholder, or be entitled to vote or be present at the meeting
in respect thereof (subject to Section 7.9), shall be Convertible Noteholders or
their counsel, or proxies of Convertible Noteholders.
7.9 Corporation and Trustee May be Represented
The Corporation and the Trustee, by their respective directors and
officers, the counsel for the Corporation and the Counsel for the Trustee may
attend any meeting of the Convertible Noteholders, but shall not be entitled to
vote thereat, whether in respect of any Convertible Notes held by them or
otherwise.
7.10 Powers Exercisable by Extraordinary Resolution
In addition to all other powers conferred upon them by any other
provisions of this Indenture or by law, the Convertible Noteholders at a meeting
shall, subject to the provisions of Section 7.11, have the power, exercisable
from time to time by Extraordinary Resolution:
(a) to agree to any modification, abrogation, alteration, compromise
or arrangement of the rights of Convertible Noteholders or the
Trustee in its capacity as trustee hereunder or on behalf of the
Convertible Noteholders whether such rights arise under this
Indenture or the Convertible Note Certificates or otherwise and
to authorize the Trustee to concur in and execute any indenture
supplemental hereto in connection therewith;
(b) to amend, alter or repeal any "Extraordinary Resolution"
previously passed or sanctioned by the Convertible Noteholders;
(c) to direct or to authorize the Trustee to enforce any of the
covenants on the part of the Corporation contained in this
Indenture or the Convertible Note Certificates or to enforce any
of the rights of the Convertible Noteholders in any manner
specified in such Extraordinary Resolution or to refrain from
enforcing any such covenant or right;
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(d) to waive, and to direct the Trustee to waive, any default on the
part of the Corporation in complying with any provisions of this
Indenture or the Convertible Note Certificates either
unconditionally or upon any conditions specified in such
Extraordinary Resolution;
(e) to restrain any Convertible Noteholder from taking or instituting
any suit, action or proceeding against the Corporation for the
enforcement of any of the covenants on the part of the
Corporation in this Indenture or the Convertible Note
Certificates or to enforce any of the rights of the Convertible
Noteholders;
(f) to direct any Convertible Noteholder who, as such, has brought
any suit, action or proceeding to stay or to discontinue or
otherwise to deal with the same upon payment of the costs,
charges and expenses reasonably and properly incurred by such
Convertible Noteholder in connection therewith;
(g) to assent to any change in or omission from the provisions
contained in the Convertible Note Certificates and this Indenture
or any ancillary or supplemental instrument which may be agreed
to by the Corporation, and to authorize the Trustee to concur in
and execute any ancillary or supplemental indenture embodying the
change or omission;
(h) to remove the Trustee and to appoint a successor Trustee in the
manner specified in Section 9.7 hereof;
(i) to appoint a committee with power and authority to exercise, and
to direct the Trustee to exercise, on behalf of the Convertible
Noteholders, such powers of the holders as are exercisable by
Extraordinary Resolution; and
(j) to assent to any compromise or arrangement with any creditor or
creditors or any class or classes of creditors, whether secured
or otherwise, and with holders of any shares or other securities
of the Corporation;
7.11 Meaning of Extraordinary Resolution
(a) The expression "Extraordinary Resolution" when used in this
Indenture means, subject as hereinafter provided in this Section
7.11 and in Section 7.14, a resolution proposed at a meeting of
Convertible Noteholders duly convened for that purpose and held
in accordance with the provisions of this Article 7 at which
there are present in Person or by proxy Convertible Noteholders
holding Convertible Notes in an aggregate principal amount equal
to at least 25% of the aggregate principal amount of all the then
outstanding Convertible Notes and passed by the affirmative votes
of Convertible Noteholders holding Convertible Notes in an
aggregate principal amount equal to not less than 66 "% of the
aggregate principal amount of all the then outstanding
Convertible Notes represented at the meeting and voted on the
poll upon such resolution.
(b) If, at the meeting at which an Extraordinary Resolution is to be
considered, Convertible Noteholders holding Convertible Notes in
an aggregate principal
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amount equal to at least 25% of the aggregate principal amount of
all the then outstanding Convertible Notes are not present in
Person or by proxy within 30 minutes after the time appointed for
the meeting, then the meeting, if convened by Convertible
Noteholders or on a Convertible Noteholders' Request, shall be
dissolved; but in any other case it shall stand adjourned to such
day, being not less than 15 or 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 for in Section
10.2. Such notice shall state that at the adjourned meeting the
Convertible Noteholders present in Person or by proxy shall form
a quorum but it shall not be necessary to set forth the purposes
for which the meeting was originally called or any other
particulars. At the adjourned meeting the Convertible Noteholders
present in Person or by proxy shall form a quorum and may
transact the business for which the meeting was originally
convened and a resolution proposed at such adjourned meeting and
passed by the requisite vote as provided in subsection 7.11(a)
shall be an Extraordinary Resolution within the meaning of this
Indenture notwithstanding that Convertible Noteholders holding
Convertible Notes in an aggregate principal amount equal to at
least 25% of the aggregate principal amount of all the then
outstanding Convertible Notes are not present in Person or by
proxy at such adjourned meeting.
(c) Votes on an Extraordinary Resolution shall always be given on a
poll and no demand for a poll on an Extraordinary Resolution
shall be necessary.
7.12 Powers Cumulative
Any one or more of the powers or any combination of the powers in this
Indenture stated to be exercisable by the Convertible Noteholders by
Extraordinary Resolution or otherwise may be exercised from time to time and the
exercise of any one or more of such powers or any combination of powers from
time to time shall not be deemed to exhaust the right of the Convertible
Noteholders to exercise such power or powers or combination of powers then or
thereafter from time to time.
7.13 Minutes
Minutes of all resolutions and proceedings at every meeting of
Convertible Noteholders shall be made and duly entered in books to be provided
from time to time for that purpose by the Trustee at the expense of the
Corporation, and any such minutes as aforesaid, if signed by the chairman or the
secretary of the meeting at which such resolutions were passed or proceedings
had shall be prima facie evidence of the matters therein stated and, until the
contrary is proved, every such meeting in respect of the proceedings of which
minutes shall have been made shall be deemed to have been duly convened and
held, and all resolutions passed thereat or proceedings taken shall be deemed to
have been duly passed and taken.
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7.14 Instruments in Writing
All actions which may be taken and all powers that may be exercised by
the Convertible Noteholders at a meeting held as provided in this Article 7 may
also be taken and exercised by Convertible Noteholders holding Convertible Notes
in an aggregate principal amount equal to at least 66 2/3% of the aggregate
principal amount of all the then outstanding Convertible Notes by an instrument
in writing signed in one or more counterparts by such Convertible Noteholders in
Person or by attorney duly appointed in writing, and the expression
"Extraordinary Resolution" when used in this Indenture shall include an
instrument so signed.
7.15 Binding Effect of Resolutions
Every resolution and every Extraordinary Resolution passed in
accordance with the provisions of this Article 7 at a meeting of Convertible
Noteholders shall be binding upon all the Convertible Noteholders, whether
present at or absent from such meeting, and every instrument in writing signed
by Convertible Noteholders in accordance with Section 7.14 shall be binding upon
all the Convertible Noteholders, whether signatories thereto or not, and each
and every Convertible Noteholder and the Trustee (subject to the provisions for
indemnity herein contained) shall be bound to give effect accordingly to every
such resolution and instrument in writing.
7.16 Holdings by Corporation Disregarded
In determining whether Convertible Noteholders holding Convertible Note
Certificates evidencing the required principal amount of Convertible Notes then
outstanding are present at a meeting of Convertible Noteholders for the purpose
of determining a quorum or have concurred in any consent, waiver, Extraordinary
Resolution, Convertible Noteholders' Request or other action under this
Indenture, Convertible Notes owned legally or beneficially by the Corporation or
any Subsidiary of the Corporation shall be disregarded in accordance with the
provisions of Section 10.8.
ARTICLE 8 - SUPPLEMENTAL INDENTURES
8.1 Provision for Supplemental Indentures for Certain Purposes
From time to time the Corporation (when authorized by action of the
directors) and the Trustee may, subject to the provisions hereof, and they
shall, when so directed in accordance with the provisions hereof, execute and
deliver by their 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) adding to the provisions hereof such additional covenants and
enforcement provisions as, in the opinion of Counsel, are
necessary or advisable in the premises, provided that the same
are not in the opinion of the Trustee prejudicial to the
interests of the Convertible Noteholders;
(b) giving effect to any Extraordinary Resolution passed as provided
in Article 7;
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(c) making such provisions 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 rights or
interests of any of the Convertible Noteholders;
(d) adding to or altering the provisions hereof in respect of the
transfer of Convertible Notes, making provision for the exchange
of Convertible Note Certificates and making any modification in
the form of the Convertible Note Certificates which does not
affect the substance thereof;
(e) modifying any of the provisions of this Indenture, including
relieving the Corporation from any of the obligations, conditions
or restrictions herein contained, provided that such modification
or relief shall be or become operative or effective only if, in
the opinion of the Trustee relying on the advice of Counsel, such
modification or relief in no way prejudices any of the rights of
the Convertible Noteholders or of the Trustee, and provided
further 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;
(f) 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 of the Convertible
Noteholders are in no way prejudiced thereby; and
(g) to evidence the assumption by any Successor Corporation of the
obligations under this Indenture as provided in Section 8.2
hereof.
8.2 Successor Corporations
In the case of the consolidation, amalgamation, merger or transfer of
the undertaking or assets of the Corporation as an entirety or substantially as
an entirety to another Corporation ("Successor Corporation"), the Successor
Corporation resulting from such consolidation, amalgamation, merger or transfer
(if not the Corporation) shall expressly assume, by supplemental indenture
satisfactory in form to the Trustee and executed and delivered to the Trustee,
the due and punctual performance and observance of each and every covenant and
condition of this Indenture to be performed and observed by the Corporation.
ARTICLE 9 - CONCERNING THE TRUSTEE
9.1 Trust Indenture Legislation
(a) If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with a mandatory requirement of Applicable
Legislation, such mandatory requirement shall prevail.
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(b) The Corporation and the Trustee agree that each will, at all
times in relation to this Indenture and any action to be taken
hereunder, observe and comply with and be entitled to the
benefits of Applicable Legislation.
9.2 Rights and Duties of Trustee
(a) In the exercise of the rights and duties prescribed or conferred
by the terms of this Indenture, the Trustee shall act honestly
and in good faith with a view to the best interests of the
Convertible Noteholders and shall exercise that degree of care,
diligence and skill that a reasonably prudent trustee would
exercise in comparable circumstances. No provision of this
Indenture shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct or bad faith.
(b) The obligation of the Trustee to commence or continue any act,
action or proceeding for the purpose of enforcing any rights of
the Trustee or the Convertible Noteholders hereunder shall be
conditional upon the Convertible Noteholders furnishing, when
required by notice by the Trustee, sufficient funds to commence
or to continue such act, action or proceeding and an indemnity
reasonably satisfactory to the Trustee to protect and to hold
harmless the Trustee against the costs, charges and expenses and
liabilities to be incurred thereby and any loss and damage it may
suffer by reason thereof. None of the provisions contained in
this Indenture shall require the Trustee to expend or to risk its
own funds or otherwise to 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.
(c) The Trustee may, before commencing or at any time during the
continuance of any such act, action or proceeding, require the
Convertible Noteholders, at whose instance it is acting to
deposit with the Trustee the Convertible Notes held by them, for
which Convertible Notes the Trustee shall issue receipts.
(d) Every provision of this Indenture that by its terms relieves the
Trustee of liability or entitles it to rely upon any evidence
submitted to it is subject to the provisions of Applicable
Legislation, of this Section 9.2 and of Section 9.3.
9.3 Evidence, Experts and Advisers
(a) In addition to the reports, certificates, opinions and other
evidence required by this Indenture, the Corporation shall
furnish to the Trustee such additional evidence of compliance
with any provision hereof, and in such form, as may be prescribed
by Applicable Legislation or as the Trustee may reasonably
require by written notice to the Corporation.
(b) In the exercise of its rights and duties hereunder, the Trustee
may, if it is acting in good faith, rely as to the truth of the
statements and the accuracy of the opinions expressed in
statutory declarations, opinions, reports, written requests,
consents, or orders of the Corporation, certificates of the
Corporation or other evidence
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furnished to the Trustee pursuant to a request of the Trustee,
provided that such evidence complies with Applicable Legislation
and that the Trustee complies with Applicable Legislation and
that the Trustee examines the same and determines that such
evidence complies with the applicable requirements of this
Indenture.
(c) Whenever it is provided in this Indenture or under Applicable
Legislation that the Corporation shall deposit with the Trustee
resolutions, certificates, reports, opinions, requests, orders or
other documents, it is intended that the truth, accuracy and good
faith on the effective date thereof and the facts and opinions
stated in all such documents so deposited shall, in each and
every such case, be conditions precedent to the right of the
Corporation to have the Trustee take the action to be based
thereon.
(d) Proof of the execution of an instrument in writing, including a
Convertible Noteholders' Request, by any Convertible Noteholder
may be made by the certificate of a notary public, or other
officer with similar powers, that the Person signing such
instrument acknowledged to it the execution thereof, or by an
affidavit of a witness to such execution or in any other manner
which the Trustee may consider adequate.
(e) The Trustee may employ or retain such Counsel, accountants,
appraisers or other experts or advisers as it may reasonably
require for the purpose of determining and discharging its duties
hereunder and may pay reasonable remuneration for all services so
performed by any of them, without taxation of costs of any
Counsel, and shall not be responsible for any misconduct or
negligence on the part of any such experts or advisers who have
been appointed with due care by the Trustee. The Corporation
shall pay or reimburse the Trustee for any reasonable
remuneration, expenses, disbursements and advances of such
Counsel, accountant, appraiser or other expert or advisor.
(f) The Trustee may act and rely and shall be protected in acting and
relying in good faith on the opinion or advice of or information
obtained from any counsel, accountant or other expert or advisor,
whether retained or employed by the Corporation or by the
Trustee, in relation to any matter arising in the administration
of the trusts hereof.
9.4 Actions by Trustee to Protect Interest
The Trustee shall have power to institute and to maintain such actions
and proceedings as it may consider necessary or expedient to preserve, protect
or enforce its interests and the interests of the Convertible Noteholders.
9.5 Trustee Not Required to Give Security
The Trustee shall not be required to give any bond or security in
respect of the execution of the trusts and powers of this Indenture or otherwise
in respect of the premises.
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9.6 Protection of Trustee
Except as provided in Section 9.2, by way of supplement to the
provisions of any law for the time being relating to trustees it is expressly
declared and agreed as follows:
(a) the Trustee shall not be liable for or by reason of any
statements of fact or recitals in this Indenture or in the
Convertible Note Certificates (except the representation
contained in Section 9.8 or in the certificate of the Trustee on
the Convertible Note Certificates) or be required to verify the
same, but all such statements or recitals are and shall be deemed
to be made by the Corporation;
(b) nothing herein contained shall impose any obligation on the
Trustee to see to or to require evidence of the registration or
filing (or renewal thereof) of this Indenture or any instrument
ancillary or supplemental hereto;
(c) the Trustee shall not incur any liability or responsibility
whatsoever, or be in any way responsible for the consequence of
any breach on the part of the Corporation of any of the covenants
herein contained or of any acts of any directors, officers,
employees, agents or servants of the Corporation; and
(d) the Corporation hereby indemnifies and saves harmless the Trustee
and its officers, directors and employees from and against any
and all liabilities, losses, costs, actions, or demands
whatsoever which may be brought against the Trustee or which it
may suffer or incur as a result of or arising out of the
performance of its duties and obligations under this Indenture,
save only in the event of the negligent action, the negligent
failure to act or the wilful misconduct or bad faith of the
Trustee. It is understood and agreed that this indemnification
shall survive the termination or discharge of this Indenture or
the resignation or removal of the Trustee.
9.7 Replacement of Trustee; Successor by Merger
(a) The Trustee may resign its trust and be discharged from all
further duties and liabilities hereunder, subject to this Section
9.7, by giving to the Corporation not less than 30 days prior
notice in writing or such shorter prior notice as the Corporation
may accept as sufficient. The Convertible Noteholders by
Extraordinary Resolution shall have power at any time to remove
the existing Trustee and to appoint a new trustee. In the event
of the Trustee resigning or being removed as aforesaid or being
dissolved, becoming bankrupt, going into liquidation or otherwise
becoming incapable of acting hereunder, the Corporation shall
forthwith appoint a new trustee unless a new trustee has already
been appointed by the Convertible Noteholders; failing such
appointment by the Corporation, the retiring Trustee at the
Corporation's expense or any Convertible Noteholder may apply to
a justice of the Ontario Superior Court of Justice on such notice
as such justice may direct, for the appointment of a new trustee;
but any new trustee so appointed by the Corporation or by the
Court shall be subject to removal as aforesaid by the Convertible
Noteholders. Any new trustee appointed
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under any provision of this Section 9.7 shall be a corporation
authorized to carry on the business of a trust company in the
Qualifying Jurisdictions and, if required by the Applicable
Legislation for any other provinces, in such other provinces. On
any such appointment the new trustee shall be vested with the
same powers, rights, duties and responsibilities as if it had
been originally named herein as trustee under this Indenture.
(b) Upon the appointment of a successor trustee, the Corporation
shall promptly notify the Convertible Noteholders thereof in the
manner provided for in Section 10.2 hereof.
(c) Any corporation into or with which the Trustee may be merged or
consolidated or amalgamated, or any corporation resulting
therefrom to which the Trustee shall be a party, or any
corporation succeeding to the trust business of the Trustee shall
be the successor to the Trustee hereunder without any further act
on its part or any of the parties hereto, provided that such
corporation would he eligible for appointment as a successor
trustee under subsection 9.7(a).
(d) Any Convertible Note Certificates certified but not delivered by
a predecessor trustee may be certified and delivered by the
successor trustee in the name of the predecessor or successor
trustee.
9.8 Conflict of Interest
(a) The Trustee represents to the Corporation that at the time of
execution and delivery hereof no material conflict of interest
exists between its role as a trustee hereunder and its role in
any other capacity and agrees that in the event of a material
conflict of interest arising hereafter it will, within 90 days
after ascertaining that it has such material conflict of
interest, either eliminate the same or assign its trust hereunder
to a successor trustee approved by the Corporation and meeting
the requirements set forth in subsection 9.7(a). Notwithstanding
the foregoing provisions of this subsection 9.8(a), if any such
material conflict of interest exists or hereafter shall exist,
the validity and enforceability of this Indenture and the
Convertible Note Certificate shall not be affected in any manner
whatsoever by reason thereof.
(b) Subject to subsection 9.8(a), the Trustee, in its personal or any
other capacity, may buy, lend upon and deal in securities of the
Corporation and generally may contract and enter into financial
transactions with the Corporation or any Subsidiary of the
Corporation without being liable to account for any profit made
thereby.
9.9 Acceptance of Trust
The Trustee hereby accepts the trusts in this Indenture declared and
provided for and agrees to perform the same upon the terms and conditions herein
set forth.
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9.10 Trustee Not to be Appointed Receiver
The Trustee and any Person related to the Trustee shall not be
appointed a receiver, a receiver and manager or liquidator of all or any part of
the assets or undertaking of the Corporation.
ARTICLE 10 - GENERAL
10.1 Notice to the Corporation and the Trustee
(a) Unless herein otherwise expressly provided, any notice to be
given hereunder to the Corporation or to the Trustee shall be
deemed to be validly given if delivered, sent by registered
letter, postage prepaid or telecopied:
If to the Corporation:
Certicom Corp
25801 Industrial Blvd.
Hayward, California 94545 U.S.A.
Telecopy: (510) 780-5401
Attention: President
If to the Trustee:
Computershare Trust Company of Canada
100 University Avenue
11th Floor
Toronto, Ontario
M5J 2Y1
Telecopy: (416) 981-9777
Attention: Manager, Corporate Trust Department
and any such notice delivered in accordance with the foregoing
shall be deemed to have been received on the date of delivery or,
if mailed, on the third Business Day following the date of the
postmark on such notice or, if telecopied, on the next Business
Day following the date of transmission provided that its contents
are transmitted and received completely and accurately.
(b) The Corporation or the Trustee, as the case may be, may from time
to time notify the other in the manner provided in this Section
10.1 of a change of address which, from the effective date of
such notice and until changed by like notice, shall be the
address of the Corporation or the Trustee, as the case may be,
for all
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purposes of this Indenture. A copy of any notice of change of
address given pursuant to this subsection 10.1(b) shall be
sent to the Convertible Note Agency, and shall be available
for inspection by Convertible Noteholders during normal
business hours.
(c) If, by reason of a strike, lockout or other work stoppage,
actual or threatened, involving postal employees, any notice
to be given to the Trustee or to the Corporation hereunder
could reasonably be considered unlikely to reach its
destination, such notice shall be valid and effective only if
it is delivered or sent by telecopy or other means of prepaid,
transmitted and recorded communication.
10.2 Notice to Convertible Noteholders
(a) Any notice to the Convertible Noteholders under the provisions
of this Indenture shall be valid and effective if delivered or
sent by ordinary mail addressed to such holders at their post
office addresses appearing on the register of holders
maintained by the Trustee and shall be deemed to have been
effectively given on the date of delivery or, if mailed, on
the third Business Day following the date of the postmark on
such notice.
(b) If, by reason of a strike, lockout or other work stoppage,
actual or threatened, involving postal employees, any notice
to be given to the Convertible Noteholders hereunder could
reasonably be considered unlikely to reach its destination,
such notice shall be valid and effective only if it is
delivered or is published twice in the Report on Business
section of the Globe and Mail newspaper.
10.3 Ownership of Convertible Notes
The Corporation and the Trustee may deem and treat the registered owner
of any Convertible Notes as the absolute owner thereof for all purposes, and the
Corporation and the Trustee shall not be affected by any notice or knowledge to
the contrary except where the Corporation or the Trustee is required to take
such notice by statute or by order of a court of competent jurisdiction. A
Convertible Noteholder shall be entitled to the rights evidenced by the
Convertible Notes held by such holder free from all equities or rights of set
off or counterclaim between the Corporation and the original or any intermediate
holder of the Convertible Notes and all Persons may act accordingly. The receipt
by any such Convertible Noteholder of the Convertible Debentures which may be
acquired pursuant to the exercise of Convertible Notes held by such holder,
shall be a good discharge to the Corporation and the Trustee for the same and
neither the Corporation nor the Trustee shall be bound to inquire into the title
of any such holder except where the Corporation or the Trustee is required to
take such notice by statute or by order of a court of competent jurisdiction.
10.4 Evidence of Ownership
(a) Upon receipt of a certificate of any bank, trust company or
other depositary satisfactory to the Trustee stating that the
Convertible Note Certificates specified therein have been
deposited by a named Person with such bank, trust company or
other depositary and will remain so deposited until the expiry
of the period
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specified therein, the Corporation and the Trustee may treat
the Person so named as the owner thereof, and such certificate
as sufficient evidence of the ownership by such Person of the
Convertible Notes represented thereby during such period, for
the purpose of any requisition, direction, consent, instrument
or other document to be made, signed or given by the holder of
the Convertible Note Certificate so deposited.
(b) The Corporation and the Trustee may accept as sufficient
evidence of the fact and date of the signing of any
requisition, direction, consent, instrument or other document
by any Person, by (i) the signature of any officer of any
bank, trust company, or other depositary satisfactory to the
Trustee as witness of such execution, (ii) the certificate of
any notary public or other officer authorized to take
acknowledgments of deeds to be recorded at the place where
such certificate is made that the Person signing acknowledged
to him the execution thereof, (iii) a satisfactory statutory
declaration of a witness of such execution, or (iv) any other
documentation satisfactory to the Corporation and the Trustee.
10.5 Counterparts
This Indenture may be executed in several counterparts, each of which
when so executed shall be deemed to be an original and such counterparts
together shall constitute one and the same instrument and notwithstanding their
date of execution they shall be deemed to be dated as of the date hereof.
10.6 Satisfaction and Discharge of Indenture
Upon the earlier of:
(a) the date by which there shall have been delivered to the
Trustee for exercise or destruction all Convertible Note
Certificates theretofore certified hereunder; and
(b) the Time of Expiry;
and if all certificates representing Convertible Debentures required to be
issued in compliance with the provisions hereof have been issued and delivered
hereunder in accordance with such provisions this Indenture shall cease to be of
further effect and the Trustee, on demand of and at the cost and expense of the
Corporation and upon delivery to the Trustee of a certificate of the Corporation
stating that all conditions precedent to the satisfaction and discharge of this
Indenture have been complied with, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture. Notwithstanding the
foregoing, the indemnities provided to the Trustee by the Corporation hereunder
shall remain in full force and effect and survive the termination of this
Indenture.
10.7 Provisions of Indenture and Convertible Notes for the Sole Benefit of
Parties and Convertible Noteholders
Nothing in this Indenture or in the Convertible Note Certificates,
expressed or implied shall give or be construed to give to any Person other than
the parties hereto and the Convertible
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Noteholders, as the case may be, any legal or equitable right, remedy or claim
under this Indenture, or under any covenant or provision herein or therein
contained, all such covenants and provisions being for the sole benefit of the
parties hereto and the Convertible Noteholders.
10.8 Convertible Notes Owned by the Corporation or its Subsidiaries -
Certificate to be Provided
For the purpose of disregarding any Convertible Notes owned legally or
beneficially by the Corporation or any Subsidiary of the Corporation as
contemplated in Section 7.16, the Corporation shall, upon the request of the
Trustee, provide to the Trustee, from time to time, a certificate of the
Corporation setting forth at the date of such certificate:
(a) the names (other than the name of the Corporation) of the
registered holders of Convertible Notes which, to the
knowledge of the Corporation, are owned by or held for the
account of the Corporation or any Subsidiary of the
Corporation; and
(b) the number of Convertible Notes owned by or held for the
account of the Corporation or any Subsidiary of the
Corporation;
and the Trustee, in making the computations in Section 7.16, shall be entitled
to rely on such certificate without any additional evidence.
10.9 Further Assurances
The parties hereto and each of them do hereby covenant and agree to do
such things and execute such further documents, agreements and assurances as may
be necessary or advisable from time to time in order to carry out the terms and
conditions of this Indenture in accordance with their true intent.
10.10 Unenforceable Terms
If any term, covenant or condition of this Indenture, or the
applicability thereof to any party or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Indenture or application of
such term, covenant or condition to a party or circumstance other than those to
which it is held invalid or unenforceable shall not be affected thereby and each
remaining term, covenant or condition of this Indenture shall be valid and shall
be enforceable to the fullest extent permitted by law.
10.11 Governing Law
This Indenture shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein.
Each of the parties irrevocably attorns to the exclusive jurisdiction of the
courts of the Province of Ontario with respect to all matters arising out of
this Indenture and the transactions contemplated herein.
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10.12 Enurement
This Indenture shall benefit and bind the parties to it and their
respective successors and assigns.
IN WITNESS WHEREOF the parties hereto have executed this Indenture
under the hands of their proper offices in that behalf on the day and year first
above written.
CERTICOM CORP. COMPUTERSHARE TRUST
COMPANY OF CANADA
Per: ____________________________ Per: _______________________________
Per: ____________________________ Per: _______________________________
THIS IS SCHEDULE "A" to the Convertible Note Indenture made as
of August 30, 2001 between Certicom Corp. and Computershare
Trust Company of Canada
CONVERTIBLE NOTE CERTIFICATE
CERTICOM CORP.
(Continued under the laws of the Yukon Territory)
CONVERTIBLE NOTE
CERTIFICATE NO._________
------------------------------------
aggregate principal amount of
CONVERTIBLE NOTES entitling the
holder to acquire an aggregate
principal amount of Convertible
Debentures equal to the aggregate
principal amount of the Convertible
Notes represented hereby.
THE CONVERTIBLE NOTES REPRESENTED BY THIS CONVERTIBLE NOTE CERTIFICATE ARE
SUBJECT TO STATUTORY RESALE RESTRICTIONS UNDER THE APPLICABLE SECURITIES
LEGISLATION OF THE PROVINCE IN WHICH YOU RESIDE. IN THE EVENT THAT THE
CORPORATION IS UNABLE TO OBTAIN A RECEIPT FOR THE (FINAL) PROSPECTUS FROM THE
SECURITIES REGULATORY AUTHORITY OF THE PROVINCE IN WHICH YOU RESIDE, OR THAT THE
CONVERTIBLE NOTES ARE EXERCISED PRIOR TO THE ISSUANCE OF SUCH RECEIPT, THE
CONVERTIBLE DEBENTURES ISSUABLE ON EXERCISE OF THE CONVERTIBLE NOTES AND THE
COMMON SHARES ISSUABLE IN ACCORDANCE WITH THE TERMS OF THE CONVERTIBLE
DEBENTURES MAY BE SUBJECT TO STATUTORY RESALE RESTRICTIONS UNDER THE APPLICABLE
SECURITIES LEGISLATION OF THAT PROVINCE. A LEGEND TO THIS EFFECT MAY BE PLACED
ON CERTIFICATES EVIDENCING SUCH CONVERTIBLE DEBENTURES AND COMMON SHARES UNTIL
SUCH STATUTORY RESALE RESTRICTIONS ARE NO LONGER APPLICABLE IN THE SOLE
DISCRETION OF THE CORPORATION. YOU ARE ADVISED TO CONSULT YOUR OWN LEGAL
ADVISORS IN THIS REGARD.
THIS IS TO CERTIFY THAT FOR VALUE RECEIVED
________________________________________________________________________________
(Name)
(hereinafter referred to as the "holder") is entitled to acquire in the manner
and subject to the terms hereof and of the Indenture (as hereinafter defined),
at any time and from time to time until 5:00 p.m. (Toronto time) (the "Time of
Expiry") on the date (the "Expiry Date") which is five Business Days following
the earlier of: (a) the date on which all required receipts for the Final
Prospectus are issued by the Securities Commissions relating to the distribution
of Convertible Debentures to the holders of Convertible Notes upon the exercise
of Convertible Notes; and (b)
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August 30, 2002, Convertible Debentures due August 30, 2004 (the "Convertible
Debentures") of Certicom Corp. (the "Corporation"), issued under the Convertible
Debenture Trust Indenture made as of August 30, 2001 between the Corporation and
the Trustee, in an aggregate principal amount equal to the aggregate principal
amount of the Convertible Notes represented hereby exercised by the holder, for
each integral multiple of $1,000 of principal amount of Convertible Notes
represented hereby exercised by the holder.
Upon issuance of the Convertible Notes represented hereby the aggregate
amount of funds paid for such Convertible Notes shall be paid to the Escrow
Agent.
The right to acquire Convertible Debentures may only be exercised by
the holder within the time set forth above by:
(a) duly completing and executing the Exercise Form attached hereto;
and
(b) surrendering this Convertible Note Certificate to the Trustee at
the principal office of the Trustee in the City of Toronto.
This Convertible Note Certificate shall be deemed to be surrendered
only upon personal delivery hereof to, or, if sent by mail or other means of
transmission, upon actual receipt hereof by, the Trustee at the office referred
to above.
Upon due completion and execution of the Exercise Form and the
surrender of this Convertible Note Certificate in accordance with the terms and
conditions of the Indenture, the Person(s) in whose name the Convertible
Debentures issuable upon exercise of the Convertible Notes represented hereby
are to be issued shall be deemed for all purposes (except as provided in the
Indenture) to be the holder or holders of record of such Convertible Debentures
on the Exercise Date, and the Corporation has covenanted that it will (subject
to the provisions of the Indenture) cause certificates representing such
Convertible Debentures to be mailed or delivered to the Person or Persons at the
address or addresses specified in the Exercise Form within five Business Days.
The registered holder of the Convertible Notes represented hereby may
acquire any lesser principal amount of Convertible Debentures than the aggregate
principal amount of the Convertible Notes represented by this Convertible Note
Certificate. In such event, the holder shall be entitled to receive a new
Convertible Note Certificate for the unexercised portion of the Convertible
Notes represented hereby. Convertible Debentures will only be issued in
denominations of $1,000 and multiples thereof.
At the Time of Expiry on the Expiry Date, the Convertible Notes
represented hereby shall be deemed to have been exercised immediately prior to
the Time of Expiry (unless the Convertible Notes represented hereby have been
previously exercised) to convert such Convertible Notes into Convertible
Debentures and the certificates representing such Convertible Debentures will be
issued to the holder of this Convertible Note Certificate upon surrender to the
Trustee at the principal office of the Trustee in the City of Toronto and
thereupon the Convertible Notes represented hereby be deemed to be cancelled and
of no further force and effect. On the second Business Day following the Expiry
Date, the Corporation shall notify
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holders of the Convertible Notes that if they have not exercised such
Convertible Notes prior to the Time of Expiry that such Convertible Notes have
been deemed to be exercised.
The Convertible Notes represented by this certificate are issued under
and pursuant to a Convertible Note Trust Indenture (hereinafter referred to as
the "Indenture") made as of August 30, 2001 between the Corporation and the
Trustee. Reference is made to the Indenture and any instruments supplemental
thereto for a full description of the rights of the holder of this Convertible
Note Certificate and the terms and conditions upon which the Convertible Notes
are, or are to be, issued and held, with the same effect as if the provisions of
the Indenture and all instruments supplemental thereto were herein set forth. By
acceptance hereof, the holder assents to all provisions of the Indenture.
Capitalized terms used herein have the same meaning as in the Indenture, unless
otherwise defined herein. To the extent the terms and conditions set forth in
this Convertible Note Certificate conflict with the terms and conditions of the
Indenture, the Indenture shall prevail. The Corporation will furnish to the
holder of this Convertible Note Certificate, upon request and without charge, a
copy of the Indenture.
The Convertible Notes represented hereby shall bear interest from the
Effective Date or the date of issue, whichever is later, at the rate of 7.25%
per annum, after as well as before default, with interest on overdue interest at
the same rate. Interest shall be based on a 365 or 366 day year, as the case may
be, and shall be calculated semi-annually not in advance from the Effective Date
or the date of issue of the Convertible Notes, whichever is later, or from the
last interest payment date to which interest has been paid or made available for
payment on the Convertible Notes, whichever is later, and shall be paid in like
money semi-annually on February 28 and August 30, commencing on February 28,
2002, unless this Convertible Note shall have been previously exercised as duly
provided for.
As the interest on the Convertible Notes becomes due (except interest
payable at maturity which may be paid upon presentation and surrender of such
Convertible Notes for payment), the Corporation, either directly or indirectly
through the Trustee, shall forward or cause to be forwarded by prepaid ordinary
mail at least three (3) Business Days prior to the interest payment date, to the
holder for the time being, or, in the case of joint holders, to one of such
joint holders (failing written instructions to the contrary from all of such
joint holders), at the holder's address appearing on the register, a cheque for
such interest (less any tax required to be deducted), payable to or to the order
of such holder or holders and negotiable at par. The forwarding of such cheque
shall satisfy and discharge the liability for the interest upon the Convertible
Notes to the extent of the sums represented thereby (plus the amount of any tax
deducted as aforesaid) unless such cheque is not paid on presentation; provided
that in the event of the non-receipt of such cheque by such registered holder or
the loss or destruction thereof, the Corporation, upon being furnished with
reasonable evidence of such non-receipt, loss or destruction and indemnity
reasonably satisfactory to it, shall issue or cause to be issued to such
registered holder a replacement cheque for the amount of such cheque.
If for any reason, the exercise of Convertible Notes in accordance with
the terms hereof is prohibited by law or does not take place as contemplated in
the Indenture (including by order of any securities regulatory authority or
court of competent jurisdiction) such Convertible Notes shall, notwithstanding
anything to the contrary herein contained, remain valid and outstanding,
-4-
and shall continue to accrue interest at the rate herein provided and shall be
due and payable in full on the sixth Business Day following the Expiry Date.
The registered holder of this Convertible Note Certificate may, at any
time prior to the Time of Expiry, upon surrender hereof to the Trustee at its
principal office in the City of Toronto, exchange this Convertible Note
Certificate for other Convertible Note Certificates entitling the holder to
acquire, in the aggregate, the same aggregate principal amount of Convertible
Debentures as may be acquired on exercise of the Convertible Notes represented
by this Certificate.
The holding of the Convertible Notes evidenced by this Convertible Note
Certificate shall not entitle the holder to any right or interest in respect of
the Corporation except as expressly provided in the Indenture and in this
Convertible Note Certificate.
The Indenture provides that all holders of Convertible Notes shall be
bound by any resolution passed at a meeting of the holders held in accordance
with the provisions of the Indenture and resolutions signed by the holders of
Convertible Notes of 66"% of the principal amount of all then outstanding
Convertible Notes.
Subject to the Corporation's right to purchase the Convertible Notes
under the Indenture and to any restriction under applicable law or policy of any
applicable regulatory body, the Convertible Notes evidenced by this Convertible
Note Certificate may be transferred on the register kept at the principal
offices of the Trustee in the City of Toronto by the registered holder hereof or
its legal representatives or its attorney duly appointed by an instrument in
writing in form and execution satisfactory to the Trustee, only upon compliance
with the conditions prescribed in the Indenture and upon compliance with such
reasonable requirements as the Trustee may prescribe.
This Convertible Note Certificate shall not be valid for any purpose
whatever unless and until it has been certified by or on behalf of the Trustee.
-5-
IN WITNESS WHEREOF the Corporation has caused this Convertible Note
Certificate to be signed by its duly authorized officer as of the 30th day of
August, 2001.
CERTICOM CORP.
Per: ___________________________
President
Per: ___________________________
Certified by:
COMPUTERSHARE TRUST
COMPANY OF CANADA,
as Trustee
Per: _________________________________
TRANSFER OF CONVERTIBLE NOTES
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
$__________________________ principal amount of Convertible Notes of Certicom
Corp. registered in the name of the undersigned on the records of Certicom Corp.
maintained by Computershare Trust Company of Canada represented by the
Convertible Note Certificate attached hereto, together with any rights of action
for rescission or otherwise available to the undersigned, and irrevocably
appoints __________________________ the attorney of the undersigned to transfer
the said securities on the books or register with full power of substitution.
DATED ____________________________
__________________________________ ____________________________________
Signature Medallion Guaranteed (Signature of Convertible Noteholder)
Instructions:
1. Signature of the Convertible Noteholder must be the signature of the Person
appearing on the face of this Convertible Note Certificate.
2. If the Transfer Form is signed by a trustee, executor, administrator,
curator, guardian, attorney, officer of a corporation or any Person acting
in a fiduciary or representative capacity, the certificate must be
accompanied by evidence of authority to sign satisfactory to the Trustee
and the Corporation.
3. The signature on the Transfer Form must be signature guaranteed by a
Canadian chartered bank or a major Canadian trust company or by a medallion
signature guarantee from a member of a recognized Medallion Signature
Guarantee Program.
4. Convertible Notes shall only be transferable in accordance with applicable
laws. The transfer of Convertible Notes to a purchaser not resident in the
Qualifying Jurisdictions (as defined in the Indenture under which the
Convertible Notes represented by the Convertible Note Certificate have been
issued) may result in the Convertible Debentures obtained upon the exercise
of the Convertible Notes and the Common Shares obtained in accordance with
the terms of the Convertible Debentures (whether after or before obtaining
receipts for a final prospectus relating to the distribution of Convertible
Debentures upon exercise of Convertible Notes in such Qualifying
Jurisdictions) not being freely tradeable in the jurisdiction of the
purchaser.
EXERCISE FORM
TO: ______________________________________________________________________
AND TO: ______________________________________________________________________
The undersigned hereby exercises the right to acquire $___________________
principal amount of Convertible Debentures of Certicom Corp. in accordance with
and subject to the provisions of the Indenture referred to in the accompanying
Convertible Note Certificate.
THE SENIOR CONVERTIBLE UNSECURED SUBORDINATED DEBENTURES ARE TO BE ISSUED AS
FOLLOWS:
Name: _________________________________
(Print Clearly)
Address in Full: _________________________________
_________________________________
Social Insurance Number: _________________________________
Aggregate Number of Convertible Debentures: _________________________________
Note: If further nominees intended, please attach (and initial) schedule giving
these nominees.
DATED: _____________________________
______________________________________ _____________________________________
Signature Medallion Guaranteed Signature of Convertible Noteholder
______________________________________ Address in Full
Print Name in Full
_____________________________________
THIS IS SCHEDULE "B" to the Convertible Note Indenture made
as of August 30, 2001 between Certicom Corp. and Computershare
Trust Company of Canada
ESCROW DIRECTION
TO: Computershare Trust Company of Canada (the "Escrow Agent")
Reference is made to the Escrow and Custodial Agreement dated as of August
30, 2001 (the "Escrow Agreement") between Certicom Corp. (the "Corporation"),
Computershare Trust Company of Canada, as escrow agent, and Yorkton Securities
Inc. and to the Convertible Notes Trust Indenture dated as of August 30, 2001
(the "Indenture") between the Corporation and Computershare Trust Company of
Canada. Capitalized terms used, but not otherwise defined, herein shall have the
meanings given to them in the Indenture.
The Corporation hereby represents and warrants that (i) it did not obtain a
Receipt prior to the Receipt Deadline, and (ii) pursuant to Redemption Election
Notices delivered to the Corporation in accordance with the terms of the
Indenture, the Corporation shall redeem, on the Redemption Date, [all/$.
aggregate principal amount] of the Convertible Notes at a price per Convertible
Note equal to the Redemption Price.
The Corporation hereby irrevocably authorizes and directs the Escrow Agent
to deliver or cause to be paid to the Trustee the sum of $_____________ from the
Subscription Funds and to pay the balance of the Subscription Funds, if any, to
the Corporation.
DATED: ______________________.
CERTICOM CORP.
Per: _______________________
Name:
Title:
THIS IS SCHEDULE "C" to the Convertible Note Indenture made
as of August 30, 2001 between Certicom Corp. and Computershare
Trust Company of Canada
REDEMPTION ELECTION NOTICE
TO: Certicom Corp.
AND TO: Computershare Trust Company of Canada
Reference is made to the Convertible Notes Trust Indenture dated as of
August 30, 2001 (the "Indenture") between Certicom Corp. (the "Company") and
Computershare Trust Company of Canada. Capitalized terms used, but not otherwise
defined, herein shall have the meanings given to them in the Indenture.
The undersigned hereby exercises the right to require the Corporation to
redeem, on the Redemption Date, all, but not less than all, of the Convertible
Notes registered in the name of the undersigned.
The undersigned acknowledges and agrees that, in the event that Convertible
Noteholders representing in the aggregate more than 50% of the aggregate
principal amount of the Convertible Notes outstanding on September 28, 2001
elect to cause the Corporation to redeem the Convertible Notes held by such
Convertible Noteholders, the Convertible Notes held by the undersigned shall be
redeemed by the Corporation on the Redemption Date at a price per Convertible
Note equal to the Redemption Price.
DATED: ___________________________.
_______________________________________ _____________________________________
Signature Medallion Guaranteed Signature of Convertible Noteholder
_______________________________________ Address in Full
Print Name in Full
_____________________________________
_____________________________________