EXHIBIT 3.5
DATED AS OF MARCH 25, 1998
BENZ ENERGY LTD.
AND
MONTREAL TRUST COMPANY OF CANADA
TRUSTEE
TRUST INDENTURE
PROVIDING FOR THE ISSUE OF DEBENTURES IN SERIES
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TABLE OF CONTENTS
PAGE NO.
ARTICLE 1
INTERPRETATION...........................................................................................1
1.1 Definitions.....................................................................................1
1.2 Meaning of "outstanding" for Certain Purposes...................................................7
1.3 Interpretation Not Affected By Headings, etc....................................................7
1.4 Statute References..............................................................................7
1.5 Monetary Reference..............................................................................7
1.6 Day Not a Business Day..........................................................................7
1.7 Invalidity of Provisions........................................................................7
1.8 Governing Law...................................................................................8
ARTICLE 2
THE DEBENTURES...........................................................................................8
2.1 No Fixed Limitation.............................................................................8
2.2 Issuance in Series..............................................................................8
2.3 Issuance of Convertible Debentures Series 1.....................................................9
2.4 Form of Debentures..............................................................................9
2.5 Execution of Debentures.........................................................................9
2.6 Certification..................................................................................10
2.7 Concerning Interest............................................................................10
2.8 Debentures to Rank Equally.....................................................................10
2.9 Registration of Debentures.....................................................................10
2.10 Payment of Principal and Interest in Respect of Registered Debentures..........................11
2.11 Payment of Principal and Interest in Respect of Bearer Debentures..............................12
2.12 Ownership of Registered Debentures.............................................................12
2.13 Negotiability and Ownership of Bearer Debentures and Coupons...................................13
2.14 Exchange Of Debentures.........................................................................13
2.15 Replacement of Debentures and Coupons..........................................................14
2.16 Interim Debentures.............................................................................14
2.17 Option of Holder as to Place of Payment........................................................15
2.18 Payment Agreements for Debentures..............................................................15
ARTICLE 3
REDEMPTION AND PURCHASE FOR CANCELLATION OF THE DEBENTURES..............................................15
3.1 General........................................................................................15
3.2 Notice of Redemption...........................................................................15
3.3 Debentures Due On Redemption Dates.............................................................15
3.4 Deposit of Redemption Monies...................................................................16
3.5 Cancellation and Destruction of Debentures and Coupons.........................................16
3.6 Surrender of Debentures for Cancellation.......................................................16
3.7 Purchase of Debentures for Cancellation........................................................16
ARTICLE 4
CONVERSION OF THE CONVERTIBLE DEBENTURES................................................................17
4.1 Conversion Privileges and Conversion Prices....................................................17
4.2 Revival of Right To Convert....................................................................17
4.3 Adjustment of Conversion Price.................................................................17
4.4 No Requirement To Issue Fractional Shares......................................................20
4.5 Corporation To Reserve Shares..................................................................20
4.6 Taxes and Charges on Conversion................................................................20
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4.7 Cancellation of Converted Debentures...........................................................21
4.8 Certificate as to Adjustment...................................................................21
4.9 Notice of Special Matters......................................................................21
4.10 Protection of Trustee..........................................................................21
4.11 Definitions....................................................................................21
ARTICLE 5
COVENANTS OF THE CORPORATION............................................................................22
5.1 Payment of Principal, Premium, if any, and Interest............................................22
5.2 Maintenance of Corporate Existence.............................................................23
5.3 Financial Statements...........................................................................23
5.4 Trustee Remuneration...........................................................................23
5.5 Maintenance of Office or Agency................................................................23
5.6 Money for Debentures Payments to Be Held in Trust..............................................24
5.7 Statement as to Compliance.....................................................................25
5.8 Additional Amounts.............................................................................26
5.9 Long Term Debt and Tangible Assets.............................................................26
5.10 Limitation upon Credit Facility and Repayments.................................................27
5.11 Waiver of Certain Covenants....................................................................27
5.12 Payment of Taxes and Other Claims..............................................................27
5.13 Maintenance of Properties......................................................................27
5.14 Insurance......................................................................................27
5.15 Restrictions on Charter Amendments.............................................................28
5.16 Canadian Withholding and Reporting Requirements................................................28
5.17 Maintenance of Listings for Common Shares and Debentures.......................................28
5.18 Trustee May Perform Covenants..................................................................28
ARTICLE 6
REMEDIES................................................................................................28
6.1 Events of Default..............................................................................28
6.2 Notice of Events of Default....................................................................30
6.3 Acceleration of Maturity; Rescission and Annulment.............................................30
6.4 Collection Of Indebtedness and Suits for Enforcement by Trustee................................31
6.5 Trustee May File Proofs of Claim...............................................................32
6.6 Trustee May Enforce Claims Without Possession of Debentures....................................32
6.7 Application of Money Collected.................................................................32
6.8 Limitation on Suits............................................................................33
6.9 Restoration of Rights and Remedies.............................................................34
6.10 Rights and Remedies Cumulative.................................................................34
6.11 Delay or Omission Not Waiver...................................................................34
6.12 Control by Holders.............................................................................34
6.13 Waiver of Past Defaults........................................................................34
6.14 Waiver of Stay or Extension....................................................................35
ARTICLE 7
SATISFACTION AND DISCHARGE..............................................................................35
7.1 Cancellation and Destruction...................................................................35
7.2 Non-Presentation of Debentures and Coupons.....................................................35
7.3 Defeasance.....................................................................................36
7.4 Trustee Unable to Apply Money or Debentures....................................................36
7.5 Discharge......................................................................................37
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ARTICLE 8
SUCCESSOR CORPORATIONS..................................................................................37
8.1 Certain Requirements in Respect of Merger etc..................................................37
8.2 Vesting of Powers in Successor.................................................................38
ARTICLE 9
MEETINGS OF DEBENTUREHOLDERS............................................................................38
9.1 Right to Convene Meetings......................................................................38
9.2 Notice of Meetings.............................................................................38
9.3 Chairman.......................................................................................38
9.4 Quorum.........................................................................................39
9.5 Power to Adjourn...............................................................................39
9.6 Show of Hands..................................................................................39
9.7 Poll...........................................................................................39
9.8 Voting.........................................................................................39
9.9 Regulations....................................................................................40
9.10 Corporation and Trustee May Be Represented.....................................................41
9.11 Powers Exercisable by Extraordinary Resolution.................................................41
9.12 Meaning of "Extraordinary Resolution"..........................................................43
9.13 Powers Cumulative..............................................................................43
9.14 Minutes........................................................................................44
9.15 Signed Instruments.............................................................................44
9.16 Binding Effect of Resolutions..................................................................44
9.17 Serial Meeting.................................................................................44
9.18 Evidence of Rights of Debentureholders.........................................................45
ARTICLE 10
NOTICES.................................................................................................46
10.1 Notice to the Corporation......................................................................46
10.2 Notice to Debentureholders.....................................................................46
10.3 Notice to the Trustee..........................................................................46
10.4 Mail Service Interruption......................................................................46
ARTICLE 11
CONCERNING THE TRUSTEE..................................................................................47
11.1 Trust Indenture Legislation....................................................................47
11.2 No Conflict of Interest........................................................................47
11.3 Rights and Duties of Trustee...................................................................47
11.4 Evidence, Experts and Advisers.................................................................48
11.5 Trustee May Deal in Debentures.................................................................48
11.6 Trustee Not Required to Give...................................................................48
11.7 Protection of Trustee..........................................................................48
11.8 Investment of Trust Moneys.....................................................................49
11.9 Action by Trustee to Protect Interests.........................................................49
11.10 Replacement of Trustee.........................................................................49
11.11 Acceptance of Trusts...........................................................................50
11.12 Indemnification of Trustee.....................................................................50
ARTICLE 12
SUPPLEMENTAL INDENTURES.................................................................................50
12.1 Supplemental Indentures........................................................................50
12.2 Supplemental Indentures with Consent of Holders................................................51
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ARTICLE 13
EXECUTION...............................................................................................52
13.1 Counterparts and Formal Date...................................................................52
13.2 Language of Indenture..........................................................................52
SCHEDULE A
CONVERTIBLE DEBENTURES SERIES 1........................................................................A-1
TERMS AND CONDITIONS OF THE CONVERTIBLE DEBENTURES....................................................A-21
THIS TRUST INDENTURE made as of the 25th day of March, 1998
BETWEEN:
BENZ ENERGY LTD., a corporation continued under the laws
of the Yukon Territories having its registered office in
the City of Whitehorse in the Yukon Territories
(hereinafter called the "Corporation")
OF THE FIRST PART
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MONTREAL TRUST COMPANY OF CANADA, a trust company incorporated
under the laws of Canada and having an office in the City of
Calgary in the Province of Alberta
(hereinafter called the "Trustee")
OF THE SECOND PART
WHEREAS the Corporation considers it necessary for its corporate purposes to
create and issue Debentures in the manner provided herein; and
WHEREAS the Corporation is duly authorized to create and issue Debentures to
be issued as provided herein; and
WHEREAS all necessary resolutions of the directors of the Corporation have
been duly passed and confirmed and other proceedings taken to make this Trust
Indenture a valid and binding indenture in accordance with its terms; 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 and it is hereby covenanted, agreed
and declared as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Trust Indenture, unless there is something in the subject matter or
context inconsistent therewith:
"AFFILIATE" has the meaning ascribed thereto in the BUSINESS
CORPORATIONS ACT (Yukon);
"AUTHORIZED NEWSPAPER" means a newspaper, in the English language or
in an official language of the country of publication, customarily
published on each Business Day, whether or not published on Saturdays,
Sundays, or holidays, and of general circulation in each place in
connection with which the term is used or in the financial community
of each such place. Where successive publications are required to be
made in Authorized Newspapers, the successive publications may be made
in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any Business Day;
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"BANK ONE CREDIT FACILITY" means Texstar Petroleum, Inc.'s line of
credit with Bank One, Texas, N.A. in effect at the date hereof and
as it may be increased, decreased, supplanted or amended from time
to time hereafter;
"BEARER DEBENTURES" means Debentures issued hereunder payable to
bearer with Coupons attached;
"BUSINESS DAY" means any day, other than Saturday, Sunday or any
statutory holiday in both the city of Toronto and any other relevant
place or places where any action is required or permitted to be
performed hereunder provided that, with respect to any particular
series of Debentures, "Business Day" shall have the meaning specified
in the terms and conditions attached to such Debentures if one is so
specified;
"CAPITALIZED LEASE OBLIGATION" means the amount of the liability under
any capital lease that, in accordance with Generally Accepted
Accounting Principles, is required to be capitalized and reflected as
a liability on the balance sheet of the relevant Person;
"CERTIFICATE OF THE CORPORATION" means a certificate signed in the name
of the Corporation by the Chairman, the President or a Vice President
and by the Secretary, the Treasurer, an Assistant Secretary or an
Assistant Treasurer or Controller of the Corporation, and may consist
of one or more instruments so executed;
"COMMON DEPOSITORY" means any common depositary appointed in respect
of any series of Debentures, including any nominee of or successor
thereto;
"CONVERSION AGENT" means any Person (including the Corporation acting
as Conversion Agent) authorized by the Corporation to act on behalf of
the Corporation in the conversion of any Debentures into other
securities;
"CONVERTIBLE DEBENTURES" means the Convertible Debentures Series 1 and
such other Debentures as are designated Convertible Debentures in the
terms and conditions attached to such Debentures pursuant to this
Indenture;
"CONVERTIBLE DEBENTURES SERIES 1" means the Convertible Debentures
Series 1 issued hereunder and in accordance with Schedule "A";
"CORPORATION" includes any successor corporation to or of the party
of the first part which shall have complied with the provisions of
Article 8;
"COUNSEL" means a barrister or solicitor or firm of barristers and
solicitors retained by the Trustee or retained by the Corporation
and acceptable to the Trustee;
"COUPONS" means the interest coupons attached or appertaining to
Bearer Debentures;
"DEBENTURES" means debentures issued hereunder, including the
Convertible Debentures Series 1;
"DEBENTUREHOLDERS" or "HOLDERS" means, with respect to Registered
Debentures, the Persons for the time being entered in the registers
hereinafter mentioned as holders thereof and, with respect to Bearer
Debentures, means the Persons who are the possessors of such
Debentures;
"DEBENTUREHOLDERS' REQUEST" means an instrument signed in one or more
counterparts by the Holders of not less than 25% in principal amount of
the outstanding Debentures requesting the Trustee to take the action or
proceeding specified therein;
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"DEBT" of any Person means and includes all present and future
obligations of such Person, which shall include all obligations
(i) which in accordance with Generally Accepted Accounting
Principles shall be classified upon a balance sheet of such Person
as liabilities of such Person, (ii) for borrowed money, (iii) which
have been incurred in connection with the acquisition of Property
(including, without limitation, all obligations of such Person
evidenced by any debenture, bond, note, commercial paper or other
similar security, but excluding, in any case, obligations arising
from the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection), (iv) secured by
any Lien existing on Property owned by such Person, even though such
Person has not assumed or become liable for the payment of such
obligations, (v) created or arising under any conditional sale or
other title retention agreement with respect to Property acquired by
such Person, notwithstanding the fact that the rights and remedies
of the seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of such Property, (vi)
which are Capitalized Lease Obligations, (vii) for all Guaranties,
whether or not reflected in the balance sheet of such Person and
(viii) all reimbursement and other payment obligations (whether
contingent, matured or otherwise) of such Person in respect of any
acceptance or documentary credit. Notwithstanding the foregoing,
Debt shall not include (i) Debt incidental to the operation of the
business of the Person in the ordinary course and in the aggregate
not material to the business and operations of the Person, and (ii)
Debt represented by purchase, rental or lease obligations not to
exceed $1,000,000 in any period of 12 months for any Person and its
Subsidiaries;
"DIRECTOR" means a director of the Corporation for the time being and
"Directors" means the board of directors of the Corporation or,
whenever duly empowered, the executive committee (if any) of the board
of directors of the Corporation for the time being, and reference to
action by the Directors means action by the directors as a board or
action by the executive committee of the board as a committee;
"ENCAP CREDIT FACILITY" means Texstar Petroleum, Inc.'s credit facility
with EnCap Energy Capital Fund III, LP in effect at the date hereof and
as it may be increased, decreased, supplanted or amended from time to
time hereafter;
"EVENT OF DEFAULT" has the meaning attributed to such term in
section 6.1;
"EXTRAORDINARY RESOLUTION" has the meaning attributed to such term
in sections 9.12 and 9.15;
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means generally accepted
accounting principles in Canada or the United States, as applicable,
from time to time as applied by the Corporation and its Subsidiaries
in preparation of its financial statements;
"GLOBAL DEBENTURE" means any global debenture representing any series
of Debentures which has been duly executed by the Corporation,
authenticated or certified by the Trustee or its agent, and deposited
with a Common Depository;
"GUARANTY" means all obligations of any Person (other than endorsements
in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect
guaranteeing any Debt, dividend or other obligation, of any other
Person (the "primary obligor") in any manner, whether directly or
indirectly, including without limitation all obligations incurred
through an agreement, contingent or otherwise, by such Person: (i) to
purchase such Debt or obligation or any Property or assets constituting
security therefor, or (ii) to advance or supply funds (1) for the
purchase or payment of such Debt or obligation, or (2) to enable the
recipient of such funds to maintain certain financial conditions (e.g.
agreed amount of working capital) under loan or similar documents, or
(iii) to lease Property or to purchase securities or other Property or
services primarily for the purpose of assuring the owner of such Debt
or obligation of the ability of the primary obligor to make payment of
the Debt or obligation, or (iv) otherwise to assure the owner of the
Debt or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations
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made under this Indenture, a Guaranty in respect of any Debt shall be
deemed to be Debt equal to the principal amount and accrued interest of
such Debt which has been guaranteed, and a Guaranty in respect of any
other obligation or liability or any dividend shall be deemed to be
Debt equal to the maximum aggregate amount of such obligation,
liability or dividend.
"HYDROCARBON INTERESTS" means all rights, titles, interests and
estates in and to oil and gas leases, oil, gas and mineral leases,
oil and gas concession agreements, production sharing agreements,
association contracts and similar agreements, or other liquid or
gaseous hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and production
payment interests, or which may arise under operating agreements,
unit agreements or other contract rights, including any reserved or
residual interests of whatever nature and without regard to whether
such rights cover or exist with respect to lands located within or
without the United States.
"HYDROCARBONS" means oil, gas, casing head gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous
hydrocarbons and all products refined therefrom and all other minerals.
"INDENTURE LEGISLATION" has the meaning attributed to such term in
section 11.1;
"INDEPENDENT RESERVE REPORT" means one or more independent reservoir
engineering reports or other independent third party valuations of the
Corporation's and its Subsidiaries' Oil and Gas Properties or any
portion thereof which are presented to the Trustee by the Corporation
which are used in determining the Tangible Assets, each of which
reports shall be dated as of the end of the Corporation's most recent
fiscal year or as of a later date, at the Corporation's option;
"INTEREST PAYMENT DATE" when used with respect to any Debenture, means
the Stated Maturity of an instalment of interest on such Debenture;
"LIEN" means any mortgage, charge, pledge, lien, security interest or
encumbrance of any kind whatsoever, including any interest in Property
securing an obligation owed to, or a claim by, a Person other than the
owner of the Property, whether such interest is based on the common
law, statute or contract, and including but not limited to the security
interest lien arising from a mortgage, encumbrance, pledge, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purposes of this Indenture, the Corporation
or its Subsidiary shall be deemed to be the owner of any Property which
it has acquired or holds subject to a conditional sale agreement,
financing lease or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for
security purposes;
"LONG TERM DEBT" has the meaning specified in the Corporation's and
its Subsidiaries' audited financial statements or their audited
consolidated financial statements, as the case may be, and shall
include any amounts outstanding under the Bank One Credit Facility
and the EnCap Credit Facility;
"MARKETABLE SECURITIES" means any security of any Person listed,
admitted to trading or quoted on any nationally recognized stock
exchange or quotation system in Canada or the United States, or any
other market or quotation system approved by the Trustee;
"MATERIAL SUBSIDIARY" means a Subsidiary of a Person which as of the
last audited consolidated financial statements of the Person
constituted more than 15% of the consolidated assets of the Person or
15% of the consolidated revenue of the Person for the 12 months then
ended;
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"MATURITY" when used with respect to any Debenture, means the date on
which the principal of such Debenture or an instalment of principal
becomes due and payable as therein or herein provided, whether at
the Stated Maturity or by declaration of acceleration, notice of
redemption, notice of option to elect repayment or otherwise;
"OIL AND GAS PROPERTIES" means Hydrocarbon Interests; any Properties
now or hereafter pooled or unitized with Hydrocarbon Interests; all
presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including
without limitation all units created under orders, regulations and
rules of any governmental body or agency having jurisdiction) which may
affect all or any portion of the Hydrocarbon Interests; all operating
agreements, contracts and other agreements which relate to any of the
Hydrocarbon Interests or the production, sale, purchase, exchange or
processing of Hydrocarbons from or attributable to such Hydrocarbon
Interests; all Hydrocarbons in and under and which may be produced and
saved or attributable to the Hydrocarbon Interests, the lands covered
thereby and all oil in tanks and all rents, issues, profits, proceeds,
products, revenues and other income from or attributable to the
Hydrocarbon Interests; all tenements, hereditaments, appurtenances and
Properties in anywise appertaining, belonging, affixed or incidental to
the Hydrocarbon Interests, Properties, rights, titles, interests and
estates described or referred to above, including any and all Property,
real or personal, now owned or hereafter acquired and situated upon,
used, held for use or useful in connection with the operating, working
or development of any of such Hydrocarbon Interests (excluding drilling
rigs, automotive equipment or other personal property which may be on
such premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil wells, gas wells,
injection wells or other wells, buildings, structures, fuel separators,
liquid extraction plants, plant compressors, pumps, pumping units,
field gathering systems, tanks and tank batteries, fixtures, valves,
fittings, machinery and parts, engines, boilers, meters, apparatus,
equipment, appliances, tools, implements, cables, wires, towers,
casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacement,
accessions and attachments to any and all of the foregoing;
"PAYING AGENT" means any Person (including the Corporation acting as
Paying Agent) authorized by the Corporation to pay the principal of
(or premium, if any) or interest on any Debentures on behalf of the
Corporation;
"PERSON" means any individual, partnership, limited partnership, joint
venture, syndicate, sole proprietorship, company or corporation with
or without share capital, unincorporated association, trust, trustee,
executor, administrator or other legal personal representative,
government or governmental authority or entity, however designated or
constituted;
"PLACE OF PAYMENT" means, when used with respect to the Debentures
of or within any series, the place or places where the principal of
(and premium, if any), and interest on such Debentures are payable as
specified, as contemplated by sections 2.2 and 5.5;
"PROPERTY" or "PROPERTIES" means any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or intangible,
and including any Oil and Gas Property;
"REGISTERED DEBENTURES" means Debentures issued hereunder payable as to
principal and interest to the person in whose name such Debentures are
registered;
"STATED MATURITY" when used with respect to any Debenture or any
instalment of principal thereof or interest thereon, means the date
specified in such Debenture or a Coupon representing such instalment of
interest as the fixed date on which the principal of such Debenture or
such instalment of principal or interest is due and payable;
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"SUBSIDIARY" means any corporation more than 50% of the outstanding
voting shares of which are owned, directly or indirectly, by the
Corporation or by one or more Subsidiaries, or by the Corporation and
one or more Subsidiaries. The term "voting shares" means shares having
general voting power under ordinary circumstances to elect at least a
majority of the board of directors (irrespective of whether or not
shares of any other class or classes shall have or might have voting
power by reason of the happening of any contingency);
"SUCCESSOR CORPORATION" has the meaning attributed to such term in
section 8.1;
"TANGIBLE ASSETS" means at any time the aggregate of:
(i) the present value of the estimated future net revenue
(discounted at 10% per annum) of crude oil, natural
gas and natural gas liquids, which geological and
engineering data demonstrate according to engineering
standards to be recoverable in future years from
known reservoirs under existing or anticipated
economic and operating conditions in the United
States or in territories or regions controlled by
the United States, including any United States
territorial waters, all as set forth in any
Independent Reserve Report;
(ii) cash held by the Corporation or its Subsidiaries;
(iii) the fair market value of Marketable Securities held
by the Corporation or its Subsidiaries; and
(iv) the net book value of Oil and Gas Properties that do
not constitute Proved Reserves, other assets, and
equipment of the Corporation and its Subsidiaries as
if the Corporation were following the full cost
method of property accounting beginning January 1997;
"TAXES" means all taxes of any kind or nature whatsoever including,
without limitation, all federal, provincial, municipal and local taxes,
income taxes, capital taxes, levies, imposts, stamp taxes, royalties,
duties, charges to tax, value added taxes, commodity taxes, goods and
services taxes, excise taxes, business taxes, property taxes and
withholding taxes charged, levied, collected, withheld or assessed by
any relevant authority within any jurisdiction in Canada having power
to tax together with any penalties, fines, additions to tax and
interest thereon and any instalments in respect thereof and, for
greater certainty, does not include taxes charged, levied, collected,
withheld or assessed by an authority outside Canada;
"THIS INDENTURE" , "THIS TRUST INDENTURE", "HERETO", "HEREBY",
"HEREUNDER", "HEREOF", "HEREIN" and similar expressions refer to this
Indenture and not to any particular Article, section, subsection,
paragraph, clause, subdivision or other portion hereto and include any
and every schedule and supplemental indenture; and "supplemental
indenture" and "indenture supplemental hereto" include any and every
instrument supplemental or ancillary hereto or in implement hereof;
"TRUSTEE" means the party of the second part and its successors for
the time being in the trusts hereby created; and
"WRITTEN ORDER OF THE CORPORATION" and "WRITTEN REQUEST OF THE
CORPORATION" mean, respectively, an order or a request signed in the
name of the Corporation by the Chairman, the President or a
Vice-President and by the Secretary, the Treasurer, an Assistant
Secretary or an Assistant Treasurer or Controller of the Corporation,
and may consist of one or more instruments so executed.
Words importing the singular include the plural and vice versa and words
importing the masculine gender include the feminine gender and vice versa.
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1.2 MEANING OF "OUTSTANDING" FOR CERTAIN PURPOSES
Every Debenture certified and delivered by or on behalf of the Trustee hereunder
shall be deemed to be outstanding until it shall be cancelled or delivered to
the Trustee for cancellation, or a new Debenture shall be issued in substitution
therefor under section 2.14 or 2.15, or moneys for the payment thereof shall be
set aside under Article 6, provided that:
(a) where a new Debenture has been issued in substitution for a
Debenture which has been lost, stolen or destroyed, only one
of such Debentures shall be counted for the purpose of
determining the aggregate principal amount of Debentures
outstanding;
(b) for the purposes of any provision of this Indenture entitling
Holders of outstanding Debentures to vote, sign consents,
requests or other instruments or take other action under this
Indenture, Debentures owned directly or indirectly, legally or
equitably, by the Corporation, any Subsidiary or any Affiliate
shall be disregarded, except that:
(i) for the purpose of determining whether the Trustee shall
be protected in relying on any such vote, consent, request
or other instrument or other action, only Debentures of
which the Trustee has notice that they are so owned shall
be so disregarded; and
(ii) Debentures so owned which have been pledged in good faith
other than to the Corporation, a Subsidiary or an Affiliate
shall not be so disregarded if the pledgee shall establish
to the satisfaction of the Trustee the pledgee's right to
vote such Debentures in the pledgee's discretion free from
the control of the Corporation, a Subsidiary or an Affiliate.
1.3 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this Indenture into Articles, sections, subsections and
paragraphs, 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.
1.4 STATUTE REFERENCES
Unless the context otherwise requires, any reference in this Indenture to a
statute shall be deemed to be a reference to such statute as amended, re-enacted
or replaced from time to time.
1.5 MONETARY REFERENCE
Unless the context otherwise requires, any reference in this Indenture to
"Dollars", "dollars" or the sign shall be deemed to be a reference to lawful
money of the United States.
1.6 DAY NOT A BUSINESS DAY
In the event that any day on or before which any action is required to be taken
hereunder is not a Business Day, then such action shall be required to be taken
on or before the requisite time on the first Business Day thereafter.
1.7 INVALIDITY OF PROVISIONS
Each of the provisions contained in this Indenture or the Debentures is distinct
and severable and a declaration of invalidity or unenforceability of any such
provision by a court of competent jurisdiction shall not affect the validity or
enforceability of any other provision hereof or thereof.
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1.8 GOVERNING LAW
This Indenture and the Debentures shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein and shall be treated in all respects as Ontario contracts.
ARTICLE 2
THE DEBENTURES
2.1 NO FIXED LIMITATION
The aggregate principal amount of Debentures which may be issued under this
Indenture is unlimited but Debentures may be issued hereunder only upon the
terms and subject to the conditions herein provided.
2.2 ISSUANCE IN SERIES
The Debentures may be issued in one or more series, subject to compliance
with the provisions and conditions hereinafter set forth. Subject to the
provisions hereof, the Debentures of each such series shall bear such date or
dates, and mature on such date or dates, shall bear interest at such rate or
rates, may be issued in such denominations, may be issued in global or
definitive form, may be issued in bearer or registered form, may be
redeemable before maturity in such manner and subject to payment of such
premium, or without premium, may be payable as to principal, interest and
premium, if any (calculated in such manner or with reference to such index,
formula or other method), at such place or places and in such currency or
currencies, may provide for such sinking fund, if any, may contain such
provisions for the interchange or transfer of Debentures of different
denominations and forms, may have attached thereto and/or issued therewith
warrants entitling the Holders to subscribe for or purchase shares or other
securities of the Corporation upon such terms, may give the Holders thereof
the right to convert the same into shares or other securities of the
Corporation upon such terms and may contain such other provisions, not
inconsistent with the provisions of this Indenture, as may be determined by
resolution of the Directors passed at or prior to the time of issue thereof
and expressed in an indenture supplemental hereto providing for the issuance
of the Debentures of such series and (to such extent as the Directors may
deem appropriate) in the Debentures of such series. At the option of the
Corporation the maximum principal amount of Debentures of any series may be
limited, such limitation to be expressed in the supplemental indenture
providing for the issuance of the Debentures of such series and/or in the
Debentures of such series.
Whenever any series of Debentures has been authorized they may be from time to
time executed by the Corporation and delivered to the Trustee, and shall be
certified by the Trustee or its designated agent and delivered by the Trustee or
its designated agent to or to the order of the Corporation upon receipt by the
Trustee of:
(a) a certified resolution of the Directors authorizing issuance and
requesting certification and delivery of a specified principal
amount of Debentures of such subsequent series;
(b) a Written Order of the Corporation for the certification and
delivery of such Debentures specifying the principal amount of
the Debentures so to be certified and delivered;
(c) an opinion of Counsel in favour of the Trustee to the effect that
all legal requirements in connection with the issue of such
Debentures have been complied with;
(d) a Certificate of the Corporation that, so far as is known to the
persons signing the same, it is not in default in the performance
of any of its covenants herein contained and that it has complied
with the requirements of this Indenture in connection with the
issue of the Debentures; and
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(e) such Certificate of the Corporation, if any, as may be required
by any provision hereof or of Indenture Legislation in connection
with the issue, certification and delivery of the Debentures.
2.3 ISSUANCE OF CONVERTIBLE DEBENTURES SERIES 1
Notwithstanding that a supplemental indenture will provide for the issuance of
the Debentures in series pursuant to section 2.2 above, the following series of
Convertible Debentures in the aggregate principal amount of up to US$30,000,000
is hereby created and the terms and conditions attached to such Convertible
Debentures are provided for in the designated Schedule hereto:
Convertible Debentures Series 1 - Schedule A
2.4 FORM OF DEBENTURES
The Debentures of any series may be of different denominations and forms
(either Bearer Debentures or Registered Debentures or both), may be issued in
global or definitive form and may contain such variations of tenor and
effect, not inconsistent with the provisions of this Indenture, as are
incidental to such differences of denomination and form including variations
in the provisions for the exchange of Debentures of different denominations
or forms and in the provisions for the registration or transfer of Debentures
and any series of Debentures may consist of Debentures having different dates
of issue, different dates of maturity, different rates of interest and/or
different redemption prices, if any, and/or different sinking fund
provisions, if any, and/or partly of Debentures carrying the benefit of a
sinking fund and partly of Debentures with no sinking fund provided therefor.
All series of Debentures which may at any time be issued hereunder and the
Coupons, if any, appertaining thereto and the certificate of the Trustee
endorsed on such Debentures may be in such form or forms as the Directors
shall by resolution determine at the time of the first issue of any series or
part of a series of such Debentures and as shall be approved by the Trustee
whose approval shall be conclusively evidenced by the certification thereof.
The Debentures of any series may be engraved, lithographed, printed,
mimeographed or typewritten, or partly in one form and partly in another, as
the Corporation may determine; provided that if the Debentures of any series
are issued in mimeographed or typewritten form, the Corporation, on demand of
any Holder or Holders thereof, shall make available within a reasonable time
after such demand, without expense to such Holder or Holders, engraved,
lithographed or printed Debentures in exchange therefor.
2.5 EXECUTION OF DEBENTURES
The Debentures shall be signed (either manually or by facsimile signature) by
any one of the Chairman, the President, Vice President, the Secretary, the
Treasurer, an Assistant Secretary or an Assistant Treasurer or Controller of
the Corporation. A facsimile signature upon any of the Debentures shall for
all purposes of this Indenture be deemed to be the signature of the
individual whose signature it purports to be and to have been signed at the
time such facsimile signature is reproduced. Notwithstanding that any
individual whose signature (either manual or in facsimile) may appear on the
Debentures is not, at the date of this Indenture or at the date of the
Debentures or at the date of the certifying and delivery thereof the
Chairman, the President, a Vice President, the Secretary, the Treasurer, an
Assistant Secretary or an Assistant Treasurer or Controller, as the case may
be, of the Corporation, such Debentures shall be valid and binding upon the
Corporation and entitled to the benefits of this Indenture.
2.6 CERTIFICATION
No Debenture shall be issued or, if issued, shall be obligatory or shall
entitle the Holder thereof to the benefits of this Indenture until it has
been certified by or on behalf of the Trustee substantially in the form
approved by the Trustee, whose approval shall be conclusively evidenced by
the certification thereof. Such certificate on any Debenture shall be
conclusive evidence that such Debenture is duly issued and is a valid
obligation of the Corporation.
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The certificate of the Trustee on any Debenture shall not be construed as a
representation or warranty by the Trustee as to the validity of this
Indenture or of the Debentures (except the due certification thereof) and the
Trustee shall in no respect be liable or answerable for the use made of the
Debentures or any of them or the proceeds thereof.
2.7 CONCERNING INTEREST
(a) Any Coupons which have matured at the date of delivery by the
Trustee of any Bearer Debenture shall be detached from the same
and cancelled before delivery, unless such Bearer Debenture is
being issued in exchange or in substitution for another Bearer
Debenture and such matured Coupons represent unpaid interest to
which the Holder of such exchanged or substituted Debenture is
entitled.
(b) Every Registered Debenture of any series issued prior to the
first Interest Payment Date for such series in exchange or
substitution for, or upon the transfer of, the whole or any
part of one or more other Debentures of the same series,
bearing the same rate of interest and having the same Interest
Payment Dates and Stated Maturity, shall be dated as of the
date from which interest is payable on such other Debenture or
Debentures and every Registered Debenture issued after the
first Interest Payment Date for such series in exchange or
substitution for, or upon the transfer of, the whole or any
part of one or more other Debentures of the same series bearing
the same rate of interest and having the same Interest Payment
Dates and Stated Maturity, shall be dated as of the Interest
Payment Date next preceding the date of certification thereof
to which interest has been paid on the Debentures of such
series, unless the date of certification is an Interest Payment
Date to which interest has been paid, in which case it shall be
dated as of the date of certification. Every Registered
Debenture shall bear interest from its date. Nevertheless in
the case of any Registered Debenture issued originally, or upon
exchange, substitution, transfer or otherwise, if the dating of
such Debenture as of the actual date of certification would
result in the Holder either losing or gaining interest, the
Trustee shall date such Debenture such date, other than the
actual date of certification, as will prevent any such loss or
gain, and such Debenture shall bear interest in accordance with
the foregoing provisions of this section 2.7.
2.8 DEBENTURES TO RANK EQUALLY
The Debentures may be issued in such amounts, to such Persons, on such terms not
inconsistent with the provisions of this Indenture, and either at par or at a
discount or at a premium as the Directors may determine. The Debentures shall be
direct obligations of the Corporation, shall rank pari passu without
discrimination, preference or priority with one another and with other unsecured
and unsubordinated indebtedness for borrowed money of the Corporation. Each
Debenture as soon as issued shall, subject to the terms hereof, be equally and
rateably entitled to the benefits hereof as if all the Debentures had been
issued and negotiated simultaneously.
2.9 REGISTRATION OF DEBENTURES
(a) The Corporation shall cause to be kept by and at the principal
office of the Trustee in the City of Calgary a central
register, and by and at the principal office of the Trustee in
each of the cities of Vancouver, Calgary and Toronto and in
such other place or places by the Trustee or by such other
registrar or registrars, if any, as the Corporation with the
approval of the Trustee may designate, branch registers in
which shall be entered the names and latest known addresses of
the Holders of Registered Debentures and the other particulars,
as prescribed by law, of the Debentures held by them
respectively and of all transfers of Registered Debentures.
Such registration shall be noted on the Debentures by the
Trustee or other registrar. No transfer of a Registered
Debenture shall be effective as against the Corporation unless
made on one of the appropriate registers by the Holder of such
Registered Debenture or his executors or administrators or
other legal representatives or his or their attorney duly
appointed by an instrument in form and execution satisfactory
to the Trustee
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and upon compliance with such requirements as the Trustee or
other registrar may prescribe, and unless such transfer shall
have been duly noted on such Debenture by the Trustee or other
registrar.
(b) The registers referred to in this section shall at all
reasonable times be open for inspection by the Corporation, the
Trustee and any Debentureholder.
(c) The Holder of a Registered Debenture may at any time and from
time to time have such Debenture transferred at any of the
places at which a register is kept pursuant to the provisions
of this section in accordance with such reasonable regulations
as the Trustee may prescribe. The Holder of a Registered
Debenture may at any time and from time to time have the
registration of such Debenture transferred from the register in
which the registration thereof appears to another register
maintained in another place authorized for that purpose under
the provisions of this Indenture upon payment of a reasonable
fee to be fixed by the Trustee.
(d) Neither the Corporation nor the Trustee nor any registrar shall
be required to transfer or exchange any Registered Debentures
on any Interest Payment Date or during the 15 Business Days
immediately preceding any Interest Payment Date.
(e) None of the Trustee, any registrar for any of the Registered
Debentures and the Corporation shall be charged with notice of
or be bound to see to the execution of any trust, whether
express, implied or constructive, in respect of any Registered
Debenture and may transfer any Registered Debenture on the
direction of the Holder thereof, whether named as trustee or
otherwise, as though that Person were the beneficial owner
thereof.
(f) Except in the case of the central register required to be kept
at the city of Calgary, the Corporation shall have power at any
time to close any branch register and in that event it shall
transfer the records thereof to another existing register or to
a new register and thereafter such Debentures shall be deemed
to be registered on such existing or new register, as the case
may be. In the event that the register in any place is closed
and the records transferred to a register in another place,
notice of such change shall be given to the Holders of the
Registered Debentures registered in the register so closed and
the particulars of such change shall be recorded in the central
register required to be kept in the city of Calgary.
(g) Every registrar shall, when requested to do so by the
Corporation or the Trustee, furnish the Corporation or the
Trustee, as the case may be, with a list of the names and
addresses of the Holders of Registered Debentures showing the
principal amounts and serial numbers of such Debentures held by
each Holder.
2.10 PAYMENT OF PRINCIPAL AND INTEREST IN RESPECT OF REGISTERED DEBENTURES
(a) As the interest on Registered Debentures of any series becomes
due (except interest payable at Maturity which may be paid upon
presentation and surrender of such Debentures for payment), the
Corporation, at least three days prior to each date on which
interest on such Debentures becomes due, shall forward or cause
to be forwarded by first class mail, postage prepaid, (or in
the event of mail service interruption by such other means as
the Trustee and the Corporation shall determine to be
appropriate) to the Holder for the time being at his address
appearing on the appropriate register hereinbefore mentioned a
cheque for such interest (less any tax required by law to be
deducted) payable to the order of such Holder and negotiable at
par at each of the places at which interest upon such
Registered Debentures is payable. The forwarding of such cheque
shall satisfy and discharge the liability for the interest on
such Registered Debentures to the extent of the sum represented
thereby (plus the amount of any tax deducted as aforesaid)
unless such cheque is not paid on presentation. In the event of
the non-receipt of such cheque by the Holder or the loss or
destruction
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thereof, the Corporation, upon being furnished with evidence of
such non-receipt, loss or destruction and an indemnity
reasonably satisfactory to it, shall issue or cause to be
issued to such Holder a replacement cheque for the amount of
such cheque.
(b) Where Registered Debentures are registered in more than one
name, the principal and interest from time to time payable in
respect thereof shall be paid by cheque payable to the order of
all such Holders, unless the Corporation has received written
instructions from them to the contrary, and the receipt of any
one of such Holders therefor shall be a valid discharge to the
Trustee, any registrar of Debentures and the Corporation.
2.11 PAYMENT OF PRINCIPAL AND INTEREST IN RESPECT OF BEARER DEBENTURES
(a) Interest payments in respect of Bearer Debentures of any series
shall be made (less any tax required by law to be deducted)
against presentation and surrender of the appropriate Coupons
at the place or places specified with respect to such series.
(b) Any payment of principal in respect of a Bearer Debenture shall
be made against presentation and surrender of such Bearer
Debenture, together with all unmatured Coupons (if any)
appertaining thereto, failing which the amount of the missing
unmatured Coupons will be deducted from the principal amount
due for payment, at the place or places specified with respect
to such series. Amounts of principal so deducted will be paid
against surrender of the relevant missing Coupons within a
period of six years from the date upon which such amount would
otherwise have been payable.
(c) Interest payable in respect of any interest payment which is in
default shall be paid to the Holder of the Coupon representing
such interest payment and interest payable in respect of any
other amount in default shall be paid to the Holder of the
Bearer Debenture in respect of which such payment is due.
2.12 OWNERSHIP OF REGISTERED DEBENTURES
(a) The Person in whose name any Registered Debenture shall be
registered shall be deemed to be the owner thereof for all
purposes of this Indenture and payment of or on account of the
principal of and interest on such Registered Debenture shall be
made only to or upon the order in writing of the Holder thereof
and such payment shall be a complete discharge to the Trustee,
any registrar of Debentures, the Corporation and any Paying
Agent for the amounts so paid.
(b) The Holder for the time being of any Registered Debenture shall
be entitled to the principal, interest and premium, if any,
evidenced by such Registered Debenture, free from all equities
or rights of set-off or counterclaim between the Corporation
and the original or any intermediate Holder thereof (except any
equities of which the Corporation is required to take notice by
law) and all Persons may act accordingly and a transferee of a
Registered Debenture shall, after the appropriate form of
transfer is lodged with the Trustee or other registrar of
Debentures and upon compliance with all other conditions in
that behalf required by this Indenture or by any conditions
contained in such Registered Debenture or by law, be entitled
to be entered on the appropriate register or on any one of the
appropriate registers as the owner of such Registered Debenture
free from all equities or rights of set-off or counterclaim
between the Corporation and his transferor or any previous
Holder thereof, save in respect of equities of which the
Corporation is required to take notice by law.
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2.13 NEGOTIABILITY AND OWNERSHIP OF BEARER DEBENTURES AND COUPONS
(a) Bearer Debentures and Coupons shall be negotiable and title
thereto shall pass by delivery.
(b) Except as may be ordered by a court of competent jurisdiction
or as required by law, the Corporation and the Trustee may deem
and treat the bearer of any Bearer Debenture or Coupon as the
absolute owner thereof for all purposes and none of the
Corporation, the Trustee or any Paying Agent shall be affected
by any notice to the contrary.
(c) The Holder of any Bearer Debenture and the bearer of any Coupon
shall be entitled to the principal, interest or premium, if
any, evidenced by such instrument free from all equities or
rights of set-off or counterclaim between the Corporation and
the original or any intermediate or subsequent Holder or bearer
thereof (except any equities of which the Corporation is
required to take notice of by law) and all persons may act
accordingly and the receipt of any such Holder or bearer for
any such principal or interest shall be a complete discharge to
the Corporation and the Trustee for the same and none of the
Corporation, the Trustee or any Paying Agent shall be bound to
inquire into the title of any such Holder or bearer.
2.14 EXCHANGE OF DEBENTURES
(a) Bearer Debentures may be exchanged for Registered Debentures
and Registered Debentures may be exchanged for Bearer
Debentures (provided, in either case, that such Debentures are
issuable), and Debentures of any denomination may be exchanged
for Debentures of any other authorized denomination or
denominations, any such exchange to be for Debentures of an
equivalent aggregate principal amount of Debentures of the same
series, carrying the same rate of interest and having the same
Stated Maturity and the same redemption and sinking fund
provisions, if any. Exchanges of Debentures may be made at the
principal offices of the Trustee in the cities of Vancouver,
Calgary and Toronto. Any Debentures tendered for exchange shall
be surrendered to the Trustee and shall be cancelled. The
Corporation shall execute, and the Trustee shall certify, all
Debentures necessary to carry out such exchanges.
(b) Except as otherwise provided herein, upon any exchange of
Bearer Debentures for Registered Debentures or Registered
Debentures for Bearer Debentures or Debentures of any
denomination for Debentures of any other authorized
denominations and upon any transfer of Registered Debentures,
the Trustee or other registrar of Debentures may make a
sufficient charge to reimburse it for any stamp tax, security
transfer tax or other governmental charge required to be paid,
and in addition a reasonable charge for its services for each
Debenture exchanged or transferred, and payment of such charges
shall be made by the party requesting such exchange or transfer
as a condition precedent thereto.
(c) Notwithstanding the foregoing, no charge (other than for
insurance on any Debentures forwarded by mail) shall be made by
the Trustee, any registrar of Debentures or the Corporation (i)
for any exchange, registration or transfer of any Debenture
applied for within a period of 30 days from the date hereof; or
(ii) for any exchange, after such period, of Debentures for
Debentures in lesser denominations, provided that the
Debentures surrendered for exchange shall not have been issued
as a result of any previous exchange, other than an exchange
pursuant to clause (i) of this subsection or section 3.7.
(d) Bearer Debentures surrendered for exchange shall be accompanied
by all unmatured Coupons appertaining thereto and Bearer
Debentures issued on an exchange shall have detached therefrom
and cancelled all Coupons appertaining thereto which have
matured and in respect of which the interest has been paid.
Each Debenture delivered under this Indenture in exchange for
or in lieu of
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any other Debenture shall carry the rights to principal and
interest accrued and unpaid, and to accrue, which were carried
by such other Debenture.
(e) Neither the Corporation, the Trustee nor any other registrar of
Debentures shall be required to make exchanges of Debentures on
any Interest Payment Date or during the 15 Business Days
immediately preceding any Interest Payment Date.
2.15 REPLACEMENT OF DEBENTURES AND COUPONS
If any of the Debentures or Coupons shall become mutilated or be lost, stolen or
destroyed and in the absence of notice that such Debentures have been acquired
by a bona fide purchaser within the meaning of the BUSINESS CORPORATIONS ACT
(Yukon), the Corporation in its discretion may issue, and thereupon the Trustee
shall certify and deliver, a new Debenture or Coupon upon surrender and
cancellation of the mutilated Debenture or Coupon, or, in the case of a lost,
stolen or destroyed Debenture or Coupon, in lieu of and in substitution for the
same, and the substituted Debenture or Coupon shall be in a form approved by the
Trustee and shall be entitled to the benefits of this Indenture equally with all
other Debentures or Coupons issued or to be issued hereunder. Each Debenture
delivered under this Indenture in exchange for or in lieu of any other Debenture
shall carry the rights to principal and interest accrued and unpaid, and to
accrue, which were carried by such other Debenture. In case of loss, theft or
destruction the applicant for a new Debenture or Coupon shall furnish to the
Corporation and to the Trustee such evidence of such loss, theft or destruction
as shall be satisfactory to them in their discretion and shall also furnish an
indemnity in amount and form satisfactory to them in their discretion. The
applicant shall pay all expenses incidental to the issuance of any such new
Debenture or Coupon.
2.16 INTERIM DEBENTURES
Pending delivery to the Trustee of definitive Debentures of any series or
part of a series, the Corporation may execute in lieu thereof (but subject to
the same provisions, conditions and limitations), and the Trustee may
certify, interim printed, mimeographed or typewritten Debentures, in such
form and in such denominations as may be approved by the Trustee and the
Chairman, the President or a Vice President of the Corporation (whose
certification or signature, either manual or in facsimile, as the case may
be, on any such interim Debentures shall be conclusive evidence of such
approval) entitling the Holders thereof to definitive Debentures of such
series or part of a series in any authorized denominations when the same are
ready for delivery, without expense to such Holders, but the total amount of
interim Debentures of any series or part of a series so issued shall not
exceed the aggregate principal amount of Debentures of such series or part of
a series for the time being authorized. Forthwith after the issuance of any
such interim Debentures the Corporation shall cause to be prepared the
appropriate definitive Debentures for delivery to the Holders of such interim
Debentures.
Interim Debentures which have been duly issued shall, until exchanged for
definitive Debentures, entitle the Holders thereof to rank for all purposes
as Debentureholders and otherwise in respect of this Indenture to the same
extent and in the same manner as though such exchange had actually been made.
When exchanged for definitive Debentures such interim Debentures shall
forthwith be cancelled by the Trustee. Any interest paid upon interim
Debentures shall be noted thereon by the Paying Agent at the time of payment
unless paid by cheque to the Holders thereof.
2.17 OPTION OF HOLDER AS TO PLACE OF PAYMENT
Except as otherwise provided herein, all sums which may at any time become
payable, whether at Maturity or on a declaration by the Trustee pursuant to
section 6.3 or on redemption or otherwise, on account of any Debenture or
Coupon or any principal, interest or premium shall be payable at the option
of the Holder or the bearer thereof at any of the places at which the
principal of and interest or premium (if any) on such Debenture or Coupon are
payable.
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2.18 PAYMENT AGREEMENTS FOR DEBENTURES
Notwithstanding anything contained herein, the Corporation may enter into an
agreement with the Holder of a Registered Debenture or with the Person for
whom such Holder is acting as nominee providing for the payment to such
Holder of the principal of and interest or premium (if any) on such Debenture
at a place or places other than the place or places specified herein or any
supplemental indenture and in such Debenture as the place or places for such
payment. Any payment of the principal of and interest or premium (if any) on
any such Registered Debenture at such other place or places pursuant to such
agreement shall, notwithstanding any other provision of this Indenture or any
supplemental indenture, be valid and binding on the Corporation, the Trustee
and the Holders of Debentures.
ARTICLE 3
REDEMPTION AND PURCHASE FOR CANCELLATION OF THE DEBENTURES
3.1 GENERAL
The Corporation, when not in default hereunder, shall have the right at its
option to redeem, either in whole at any time or in part from time to time
before Maturity, Debentures issued hereunder of any series or part of a
series which by their terms are made so redeemable at such rate or rates of
premium, if any, and at such date or dates and on such terms and conditions
as shall have been determined at the time of the issue of such Debentures and
as shall be expressed in this Indenture and/or in the Debentures and/or in
the supplemental indenture authorizing or providing for the issue thereof.
"Premium" as used in this Article 3 with reference to any Debenture shall
mean the excess of the then applicable redemption price of such Debenture
(excluding interest) over the principal amount of such Debenture.
3.2 NOTICE OF REDEMPTION
Notice of intention to redeem any Debenture shall be given by or on behalf of
the Corporation to the Holders of the Debenture which are to be redeemed, not
more than 60 days nor less than 30 days prior to the date fixed for
redemption, in the manner provided in section 10.2. Every notice of
redemption shall designate the series and Stated Maturity of the Debentures
so called for redemption, and unless all of the Debentures or all of the
Debentures of a series or all of the Debentures of one Stated Maturity so
designated for the time being outstanding are to be redeemed, state the
designating numbers of the Debentures so called for redemption and in case a
Debenture is to be redeemed in part only that part of the principal amount
thereof so to be redeemed, and shall specify the redemption date, the
redemption price and the place or places of payment and shall state that all
interest thereon shall cease from and after the said date.
3.3 DEBENTURES DUE ON REDEMPTION DATES
Notice having been given as aforesaid, all the Debentures so called for
redemption shall thereupon become due and payable at the redemption price, on
the redemption date specified in such notice, at any of the places where the
principal of such Debentures is expressed to be payable in the same manner
and with the same effect as if it were the Stated Maturity specified in such
Debentures respectively, anything therein or herein to the contrary
notwithstanding, and from and after such redemption date, if the moneys
necessary to redeem such Debentures shall have been deposited as provided in
section 3.4 and the Trustee shall have been furnished with affidavits or
other proof satisfactory to it as to the publication and/or mailing of such
notices, interest on the said Debentures shall cease and Coupons for interest
to accrue after such redemption date on said Debentures shall become and be
void.
In case any question shall arise whether any notice has been given as above
provided and such deposit made, such question shall be decided by the Trustee
whose decision shall be final and binding upon all parties in interest.
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3.4 DEPOSIT OF REDEMPTION MONIES
Such redemption shall be provided for by the Corporation irrevocably
depositing with the Trustee or any Paying Agent to the order of the Trustee
in trust for the Holders of the Debentures called for redemption, before the
redemption date specified in such notice, such sums as may be sufficient to
pay the redemption price of such Debentures including accrued interest and
premium, if any, on the Debentures so called for redemption to the date fixed
for redemption. The Corporation shall also deposit with the Trustee if
required by it a sum sufficient to pay any charges or expenses which may be
incurred by the Trustee in connection with such redemption. From the sums so
deposited the Trustee shall pay or cause to be paid to the Holders of such
Debentures so called for redemption, upon surrender of such Debentures with
all unmatured Coupons, if any, appertaining thereto (or without such
surrender if the registered Holder of the Debentures to be redeemed or the
person for whom such registered Holder is acting as nominee has entered into
an agreement with the Corporation to that effect) the principal, interest and
premium, if any, to which they are respectively entitled on redemption.
Provided that in the case of Bearer Debentures the accrued interest as
represented by Coupons matured prior to, or on, the redemption date shall
continue to be payable (but without interest thereon, unless the Corporation
shall make default in the payment thereof upon demand) to the respective
bearers of such Coupons upon presentation and surrender thereof.
3.5 CANCELLATION AND DESTRUCTION OF DEBENTURES AND COUPONS
All Debentures surrendered for cancellation upon any redemption under this
Article, together with the unmatured Coupons, if any, thereto appertaining,
shall forthwith be delivered to the Trustee and shall be cancelled by it and
no Debentures shall be issued in substitution therefor.
All Debentures and Coupons which shall have been delivered to and cancelled
by the Trustee shall be destroyed by the Trustee and if required by the
Corporation the Trustee shall furnish to it a destruction certificate setting
out the designating numbers and denominations of the Debentures so destroyed.
3.6 SURRENDER OF DEBENTURES FOR CANCELLATION
If the principal moneys of Debentures issued hereunder shall become payable
by redemption or otherwise before the Stated Maturity thereof, the person
presenting such Debenture for payment must surrender the same for
cancellation together with all unmatured Coupons, if any, appertaining
thereto, the Corporation nevertheless paying the interest accrued and unpaid
thereon if the date fixed for payment be not an Interest Payment Date.
3.7 PURCHASE OF DEBENTURES FOR CANCELLATION
At any time when the Corporation is not in default hereunder it may purchase
all or any of the Debentures in the market (which shall include purchase from
or through an investment dealer or a firm holding membership on a recognized
stock exchange) or by invitation for tenders or by private contract and, in
each case, at any price. All Debentures so purchased, together with the
unmatured Coupons (if any) appertaining thereto, shall forthwith be delivered
to the Trustee and shall be cancelled by it and, except as hereinafter
provided, no Debentures shall be issued in substitution therefor.
If and upon an invitation for tenders, more Debentures are tendered at the
same lowest price that the Corporation is prepared to accept, the Debentures
to be purchased by the Corporation shall be selected by the Trustee by lot,
or in such other manner as the Trustee may consider equitable, from the
Debentures tendered by each Debentureholder who tendered at such lowest
price. For this purpose the Trustee may make, and from time to time amend,
regulations with respect to the manner in which Debentures may be so selected
and regulations so made shall be valid and binding upon all Debentureholders,
notwithstanding the fact that, as a result thereof, one or more of such
Debentures become subject to purchase in part only. The Holder of any
Debenture of which a part only is purchased, upon surrender of such Debenture
for payment, shall be entitled to receive, without expense to such Holder,
one or more new Debentures for
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the unpurchased part so surrendered and the Trustee shall certify and deliver
such new Debenture or Debentures upon receipt of the Debenture so surrendered.
ARTICLE 4
CONVERSION OF THE CONVERTIBLE DEBENTURES
4.1 CONVERSION PRIVILEGES AND CONVERSION PRICES
The Holders of any Debentures shall have the right, at the holder's option,
to convert such Debentures into Common Shares at such times, at such rates
and on such terms and conditions as shall have been determined at the time of
the issue of such Debentures and as shall be expressed in this Indenture
and/or in the Debentures and/or in the supplemental indenture authorizing or
providing for the issue thereof.
Such right of conversion shall extend only to the maximum number of whole
Common Shares into which the aggregate principal amount of the Convertible
Debenture surrendered for conversion at any one time by the holder thereof
may be converted in accordance with the foregoing provisions of this
subsection and Article 4 hereof. Fractional interests in Common Shares shall
be adjusted for in the manner provided in section 4.4.
4.2 REVIVAL OF RIGHT TO CONVERT
If payment of the purchase price or the redemption price of any Convertible
Debenture which has been tendered in acceptance of an offer by the
Corporation to purchase Convertible Debentures for cancellation or called for
redemption is not made, in the case of a purchase on the date on which such
purchase is required to be made or, in the case of a redemption on the date
when the due surrender of a Convertible Debenture is required to be made, the
right to convert such Convertible Debenture shall revive and continue as if
such Convertible Debenture had not been tendered in acceptance of the
Corporation's offer or called for redemption as the case may be.
4.3 ADJUSTMENT OF CONVERSION PRICE
The Conversion Price for any Convertible Debenture in effect at any date
shall be subject to adjustment from time to time as follows:
(a) If and whenever at any time prior to the Time of Expiry
specified for the series of Convertible Debentures the
Corporation shall (i) subdivide or redivide the outstanding
Common Shares into a greater number of shares, (ii) reduce,
combine or consolidate the outstanding Common Shares into a
smaller number of shares, or (iii) issue Common Shares or other
securities convertible into or exchangeable for Common Shares
to the holders of all or substantially all of the outstanding
Common Shares by way of a stock dividend (other than the issue
of Common Shares to holders of Common Shares pursuant to their
exercise of options to receive dividends in the form of Common
Shares in lieu of dividends paid in the ordinary course on the
Common Shares), the Conversion Price in effect on the effective
date of such subdivision, redivision, reduction, combination or
consolidation or on the record date for such issue of Common
Shares by way of a stock dividend, as the case may be, shall be
adjusted by multiplying the Conversion Price then in effect by
a fraction the numerator of which is the number of Common
Shares outstanding immediately following such event. Such
adjustment shall be made successively whenever any event
referred to in this subsection (a) shall occur; any such issue
of Common Shares by way of a stock dividend shall be deemed to
have been made on the record date for the stock dividend for
the purpose of calculating the number of outstanding Common
Shares under subsections (c) and (d) of this section 4.3.
(b) If and whenever at any time prior to the Time of Expiry
specified for the series of the Convertible Debentures the
outstanding Common Shares are reclassified into different
shares any holder of a Convertible Debenture who has not
exercised his right of conversion prior to the effective date of
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such reclassification shall be entitled to receive and shall
accept, upon the exercise of such right or upon his being
required to do so at anytime on or thereafter, in lieu of the
number of Common Shares to which he was theretofore entitled
upon conversion, the aggregate number of shares of the
Corporation that such holder would have been entitled to
receive as a result of such reclassification if, on the
effective date thereof, he had been then registered holder of
the number of Common Shares to which he was theretofore
entitled upon conversion, subject to adjustment thereafter in
accordance with provisions the same, as nearly as may be
possible, as contained in this section 4.3 and in section 4.4.
(c) If and whenever at any time prior to the Time of Expiry
specified for the series of Convertible Debentures the
Corporation shall fix a record date for the issuance of rights
or warrants to all or substantially all the holders of its
outstanding Common Shares entitling them, for a period expiring
not more than 45 days after such record date, to subscribe for
or purchase Common Shares (or securities exchangeable for or
convertible into Common Shares) at a price per share (or having
a conversion or exchange price per share) less than 95% of the
then Current Market Price of a Common Shares on such record
date, the Conversion Price shall be adjusted immediately after
such record date so that it shall equal the price determined by
multiplying the Conversion Price in effect on such record date
by a fraction, of which the numerator shall be the total number
of Common Shares outstanding on such record date plus a number
of Common Shares equal to the number of additional Common
Shares offered for subscription or purchase (or the aggregate
conversion or exchange price of the convertible securities so
offered) by such Current Market Price per Common Shares, and of
which the denominator shall be the total number of Common
Shares outstanding on such record date plus the total number of
additional Common Shares offered for subscription or purchase
(or into which the convertible securities so offered are
convertible); any Common Shares owned by or held for the
account of the Corporation shall be deemed not to be
outstanding for the purposes of any such computation; such
adjustment shall be made successively whenever such a record
date is fixed; to the extent that any such rights or warrants
are not so issued or any such rights or warrants are not
exercised prior to the expiration thereof, the Conversion Price
shall be readjusted to the Conversion Price which would then be
in effect if such record date had not been fixed or to the
Conversion Price which would then be in effect based upon the
number of Common Shares (or securities convertible into Common
Shares) actually issued upon the exercise of such rights or
warrants, as the case may be, provided that this subsection (c)
of section 4.3 will not apply to adjust the Conversion Price if
each holder of a Convertible Debenture is permitted to
participate in the receipt and exercise of such rights or
warrants as though such holder had converted the whole of his
Convertible Debenture in accordance with this Article 4 prior
to such record date.
(d) If and whenever at any time prior to the Time of Expiry
specified for the series of Convertible Debentures the
Corporation shall fix a record date for the making of a
distribution to all or substantially all the holders of its
outstanding Common Shares of (i) shares of any class other than
Common Shares and other than shares distributed to holders of
Common Shares pursuant to their exercise of options to receive
dividends in the form of such shares in lieu of dividends paid
in the ordinary course on the Common Shares and other than
shares issued upon any subdivision of Common Shares referred to
in subsection (a) of this section 4.3 or (ii) rights, options,
or warrants (other than those referred to above) or of
evidences of indebtedness or of assets (excluding cash
dividends paid in the ordinary course) then, in each such case,
the Conversion Price shall be adjusted immediately after such
record date so that it shall equal the price determined by
multiplying the Conversion Price in effect on such record date
by a fraction, of which the numerator shall be the total number
of Common Shares outstanding on such record date multiplied by
the Current Market Price for such Shares, less the fair market
value (as determined by the board of directors with the
approval of the Trustee, which determination shall be
conclusive) of such shares or rights, options or warrants or
evidence of indebtedness or assets so distributed, and of which
the denominator shall be the total number of Common Shares
outstanding on such record date multiplied by such Current
Market Price
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per Common Share; any Common Shares owned by or held for the
account of the Corporation shall be deemed not to be
outstanding for the purpose of any such computation; such
adjustment shall be made successively whenever such a record
date is fixed; to the extent that such Distribution is not so
made, the Conversion Price shall be readjusted to the
Conversion Price which would then be in effect if such record
date had not been fixed or the Conversion Rate which would then
be in effect based upon such shares or rights or warrants or
evidences of indebtedness or assets actually distributed, as
the case may be; in this subsection (d) the term "dividends
paid in the ordinary course" shall include the value of any
securities or other property or assets distributed in lieu of
cash dividends paid in the ordinary course at the option of the
shareholders, provided that this subsection (d) of section 4.3
will not apply to adjust the Conversion Price if each holder of
a Convertible Debenture is permitted to participate in such
Distribution as though such holder had converted the whole of
his Convertible Debenture in accordance with this Article 4
prior to such record date.
(e) In case of any reclassification of, or any other material
change in, the outstanding Common Shares of the Corporation
other than a subdivision, redivision, reduction, combination or
consolidation, the Conversion Price shall be adjusted in such
manner as the board of directors, with the approval of the
Trustee, determines to be appropriate on a basis consistent
with this section 4.3.
(f) If and whenever at any time prior to the Time of Expiry
specified for the series of Convertible Debentures, there is a
capital reorganization of the Corporation not covered by the
foregoing provisions of this section 4.3 or a consolidation or
merger or amalgamation of the Corporation with or into any
other company including by way of a sale whereby all or
substantially all of the Corporation's undertaking and assets
would become the property of any other company, and holder of a
Convertible Debenture who has not exercised his right of
conversion prior to the effective date of such reorganization,
consolidation, merger, amalgamation or sale, shall be entitled
to receive and shall accept, upon the exercise of such right at
any time on such effective date or thereafter, in lieu of the
number of Common Shares to which he was theretofore entitled
upon conversion, the aggregate number of shares or other
securities or property of the Corporation or of the company
resulting from the consolidation, merger or amalgamation or to
which such sale may be made, as the case may be, that such
holder would have been entitled to receive as a result of such
capital reorganization, consolidation, merger, amalgamation or
sale if, on the effective date thereof, he had been the
registered holder of the number of Common Shares to which he
was theretofore entitled upon conversion, subject to adjustment
thereafter in accordance with provisions the same, as nearly as
may be possible, as contained in this section 4.3 and in
section 4.4.
(g) In any case in which this section 4.3 shall require that an
adjustment shall become effective immediately after the record
date for an event referred to herein, the Corporation may defer
until the occurrence of such event, issuing to the holder of
any Convertible Debenture converted after such record date and
before the occurrence of such event the additional Common
Shares issuable upon such conversion by reason of the
adjustment required by such event before giving effect to such
adjustment; provided, however, that the Corporation shall
deliver to such holder an appropriate instrument evidencing
such holder's right to receive such additional Common Shares
upon the occurrence of the event requiring such adjustment and
the right to receive any distributions made on such additional
Common Shares declared in favour of holders of record of Common
Shares on and after the Date of Conversion or such later date
as such holder would, but for the provisions of this subsection
(g), have become the holder of record of such additional Common
Shares.
(h) The adjustments provided for in this section 4.3 and in section
4.4 are cumulative and shall apply, without duplication, to
successive subdivisions, redivisions, reductions, combinations,
consolidations, distributions, issues or other events resulting
in any adjustment under the provisions of this section,
provided that, notwithstanding any other provision of this
section, no adjustment of the Conversion
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Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Conversion Price
then in effect; provided however, that any adjustment which by
reason of this subsection (h) are not required to be made shall
be carried forward and taken into account in any subsequent
adjustment.
(i) In the event of any question arising with respect to the
adjustments provided in this section 4.3, such question shall
be conclusively determined by a firm of chartered accountants
appointed by the Corporation and acceptable to the Trustee (who
may be the auditors of the Corporation); such accountants shall
have access to all necessary records of the Corporation and
such determination shall be binding upon the Corporation, the
Trustee and the Debentureholders.
4.4 NO REQUIREMENT TO ISSUE FRACTIONAL SHARES
The Corporation shall not be required to issue fractional Common Shares upon the
conversion of Convertible Debentures pursuant to this Article. If more than one
Convertible Debenture shall be surrendered for conversion at one time by the
same holder, the number of whole Common Shares issuable upon conversion thereof
shall be computed on the basis of the aggregate principal amount of such
Convertible Debentures to be converted. If any fractional interest in a Common
Share would, except for the provisions of this section, be deliverable upon the
conversion of any principal amount of Convertible Debentures the Corporation
shall, in lieu of delivering any certificate of such fractional interest,
satisfy such fractional interest by paying to the holder of such surrendered
Convertible Debenture an amount in lawful money of Canada equal (computed to the
nearest cent) to the appropriate fraction of the value (being the last reported
sale price or, if none, the mean between the closing bid and ask quotations on
The Vancouver Stock Exchange, on such stock exchange on which the Common Shares
are listed, as may be selected for such purpose by the Directors of, if the
Common Shares are not listed on any stock exchange, a value determined by the
Directors and approved by the Trustee) of a Common Share on the business day
next preceding the Date of Conversion.
4.5 CORPORATION TO RESERVE SHARES
The Corporation covenants with the Trustee that it will at all times reserve and
keep available out of its authorized Common Shares, solely for the purpose of
issue upon conversion of Convertible Debentures as in this Article provided, and
conditionally allot to Debentureholders who may exercise their conversion rights
hereunder, such number of Common Shares as shall then be issuable upon the
conversion of all outstanding Convertible Debentures. The Corporation covenants
with the Trustee that all Common Shares which shall be so issuable shall be duly
and validly issued as fully-paid and non-assessable.
4.6 TAXES AND CHARGES ON CONVERSION
The Corporation will from time to time promptly pay or make provision
satisfactory to the Trustee for the payment of any and all taxes and charges
which may be imposed by the laws of Canada or any province thereof (except
income tax, withholding tax, security transfer tax, if any, or taxes or levies
which are in substance of the same nature as any of the foregoing) which shall
be payable with respect to the issuance and/or delivery to the holders of
Convertible Debentures, upon the exercise of their right to conversion, of
Common Shares of the Corporation pursuant to the terms of the Convertible
Debentures and of this Indenture.
4.7 CANCELLATION OF CONVERTED DEBENTURES
All Convertible Debentures converted in whole or in part under the provisions of
this Article shall be forthwith delivered to and cancelled by the Trustee and,
subject to the provisions of any particular Debentures, no Debenture shall be
issued in substitution therefor.
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4.8 CERTIFICATE AS TO ADJUSTMENT
The Corporation shall from time to time immediately after the occurrence of any
event which requires an adjustment or readjustment as provided in section 4.3,
deliver an Officers' Certificate to the Trustee and, where specified with
respect to any series of Convertible Debentures, each Paying Agent and
Conversion Agent specifying the nature of the event requiring the same and the
amount of the adjustment necessitated thereby and setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based, which certificate and the amount of the adjustment specified therein
shall be verified by an opinion of a firm of chartered accountants appointed by
the Corporation and acceptable to the Trustee (who may be the auditors of the
Corporation) and, when approved by the Trustee, shall be conclusive and binding
on all parties in interest. When so approved, the Corporation shall, except in
respect of any subdivision, redivision, reduction, combination or consolidation
of the Common Shares, forthwith give notice to the holders of Convertible
Debentures in the manner provided in section 10.2 specifying the event requiring
such adjustment or readjustment and the results thereof, including the resulting
Conversion Price of the series of Convertible Debentures of which the holder is
registered; provided that, if the Corporation has given notice under section 4.9
covering all the relevant facts in respect of such event, no such notice need be
given under this section 4.8.
4.9 NOTICE OF SPECIAL MATTERS
The Corporation covenants with the Trustee that so long as any Convertible
Debenture remains outstanding, it will give notice in the manner provided in
section 10.3 to the Trustee, and to the holders of Convertible Debentures of its
intention to fix a record date or an effective date for any event referred to in
subsections (a), (b), (c), (d) or (f) of section 4.3 (other than the
subdivision, redivision, reduction, combination or consolidation of its Common
Shares) which may give rise to an adjustment in the Conversion Price, and, in
each case, such notice shall specify the particular of such event; provided that
the Corporation shall only be required to specify in such notice such
particulars of such event as shall have been fixed and determined on the date on
which such notice is given. Such notice shall be given not less than 10 days in
each case prior to such applicable record date or effective date.
4.10 PROTECTION OF TRUSTEE
Subject to section 11.7, the Trustee (i) shall not at any time be under any duty
or responsibility to any holder of a Convertible Debenture to determine whether
any facts exist which may require any adjustment in the Conversion Price, or
with respect to the nature or extent of any such adjustment when made, or with
respect to the method employed in making the same; (ii) shall not be accountable
with respect to the validity or value (or kind or amount) of any Common Shares
or of any shares or other securities or property which may at any time be issued
or delivered upon the conversion of any Convertible Debenture; or (iii) shall
not be responsible for any failure of the Corporation to make any cash payment
or to issue, transfer or deliver Common Shares or share certificates upon the
surrender of any Convertible Debenture for the purpose of conversion, or to
comply with any of the covenants contained in this Article.
4.11 DEFINITIONS
In this Article 4 and in the Convertible Debentures, unless there is something
in the subject matter or context inconsistent therewith, the expressions
following shall have the following meanings, namely:
(a) "COMMON SHARES" means the common shares of the Corporation as
constituted on the date hereof; provided that, in the event of
a subdivision, redivision, reduction, combination or
consolidation thereof, or successive such subdivisions,
redivisions, reductions, combinations or consolidations, then,
subject to adjustments, if any, having been made in accordance
with section 4.3, "COMMON SHARES" shall thereafter mean the
shares resulting from such subdivisions, redivisions,
reductions, combinations or consolidations;
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(b) "CONVERTIBLE DEBENTURE" means any Debentures in respect of
which the terms and conditions as expressed in this Indenture
and/or in the Debentures and/or in the supplemental indenture
authorizing or providing for the issue thereof provide for the
conversion thereof into Common Shares;
(c) "CONVERSION PRICE" means the dollar amount for which each
Common Share may be issued from time to time upon conversion of
Convertible Debentures in accordance with the provisions of
Article 4 provided that in the event the Conversion Price is
denominated in a currency other than that in which the
principal amount of the Convertible Debenture is denominated,
the Conversion Price shall be that amount of the currency in
which the principal amount of the Convertible Debentures is
denominated based upon the exchange rate specified in the terms
and conditions of the Convertible Debentures;
(d) "CURRENT MARKET PRICE" per Common Share on any date shall be
the weighted average price per Common Share for 20 consecutive
trading days commencing not more than 30 trading days and
ending not less than five trading days before such date on the
principal stock exchange in Canada on which the Common Shares
are traded. The weighted average price shall be determined by
dividing the aggregate sale price of all Common Shares sold on
the said exchange, as the case may be, during the said 20
consecutive trading days by the total number of Common Shares
so sold;
(e) "DISTRIBUTION" means:
(i) any payment or distribution to the holders of Common Shares
of the Corporation or any of them by way of dividend in cash
or in specie; and
(ii) any payment or distribution to the holders of Common Shares
of the Corporation or any of them by way of purchase,
redemption, reduction or any other payment of or in respect
of capital unless made out of the proceeds of an issue of
shares by the Corporation made concurrently with or prior
to such purchase, redemption, reduction or payment; and
(f) "DIVIDENDS PAID IN THE ORDINARY COURSE" means cash dividends
declared payable on the Common Shares in any fiscal year of the
Corporation to the extent that such cash dividends do not
exceed, in the aggregate, 100% of the aggregate consolidated
net income of the Corporation, before extraordinary items, for
its immediately preceding fiscal year as determined by the
auditors of the Corporation in accordance with generally
accepted accounting principles.
ARTICLE 5
COVENANTS OF THE CORPORATION
5.1 PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST
The Corporation covenants and agrees for the benefit of the Debentureholders and
the holders of any Coupons of each series of Debentures that it will duly and
punctually pay the principal of (and premium, if any) and interest on the
Debentures of that series in accordance with the terms of the Debentures, any
Coupons appertaining thereto and this Indenture. Unless otherwise specified as
contemplated by section 2.2 with respect to any series of Debentures, any
interest due on Bearer Debentures on or before Maturity shall be payable only
upon presentation and surrender of the several Coupons for such interest
instalments as are evidenced thereby as they severally mature.
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5.2 MAINTENANCE OF CORPORATE EXISTENCE
Except as herein otherwise expressly provided, the Corporation will at all times
maintain, preserve and keep in full force and effect its corporate existence,
rights (charter and statutory) and franchises and the Corporation will carry on
and conduct or will cause to be carried on and conducted its business and the
business of its Subsidiaries in a proper and efficient manner and will keep or
cause to be kept proper books of account and make or cause to be made therein
true and accurate entries of all its dealings and transactions in relation to
its business and the business of its Subsidiaries, as the case may be, all in
accordance with Generally Accepted Accounting Principles, and at all reasonable
times it will furnish or cause to be furnished to the Trustee or its duly
authorized agent or attorney such information relating to its business and that
of its Subsidiaries as the Trustee may reasonable require and such books of
account shall at all reasonable times be open for inspection by the Trustee or
such agent or attorney.
5.3 FINANCIAL STATEMENTS
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 regular periodic
reports of the Corporation furnished to its shareholders at the same time as
they are furnished to such shareholders. The Corporation will cause the
consolidated financial statements of the Corporation and its Subsidiaries to
be prepared in accordance with Generally Accepted Accounting Principles.
5.4 TRUSTEE REMUNERATION
That the Corporation will pay the Trustee reasonable remuneration for its
services as Trustee hereunder and will repay to the Trustee on demand all moneys
which shall have been paid by the Trustee in and about the execution of the
trusts hereby created with interest at 6% per annum from 30 days after the date
of the invoice from the Trustee to the Corporation in respect of such
expenditure until repayment, and such moneys and the interest thereon, including
the Trustee's remuneration, shall be payable out of any funds coming into the
possession of the Trustee in priority to any of the Debentures or interest
thereon. 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.
5.5 MAINTENANCE OF OFFICE OR AGENCY
If the Debentures of a series are issuable only as Registered Debentures, the
Corporation will maintain in each Place of Payment for such Debentures an office
or agency where Debentures of that series may be presented or surrendered for
payment, where Debentures of that series may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Corporation in
respect of the Debentures of that series and this Indenture may be served.
If Debentures of a series are issuable as Bearer Debentures, the Corporation
will maintain:
(a) in the city of Calgary, an office or agency where any
Registered Debentures of that series may be presented or
surrendered for payment, where any Registered Debentures of
that series may be surrendered for registration of transfer,
where Debentures of that series may be surrendered for
exchange, where notices and demands to or upon the Corporation
in respect of the Debentures of that series and this Indenture
may be served and where Bearer Debentures of that series and
related Coupons may be presented or surrendered for payment in
the circumstances described in the following paragraph (and not
otherwise);
(b) subject to any laws or regulations applicable thereto, in a
Place of Payment for that series which is located outside
Canada, an office or agency where Debentures of that series and
related Coupons may be presented or surrendered for payment;
provided, however, that, if the Debentures of that series
- 24 -
are listed on any stock exchange located outside Canada and
such stock exchange shall so require, the Corporation will
maintain a Paying Agent for the Debentures of that series in
any required city located outside Canada so long as the
Debentures of that series are listed on such exchange; and
(c) subject to any laws or regulations applicable thereto, in a
Place of Payment for that series located outside Canada, an
office or agency where any Registered Debentures of that series
may be surrendered for registration of transfer, where
Debentures of that series may be surrendered for exchange and
where notices and demands to or upon the Corporation in respect
of the Debentures of that series and this Indenture may be
served. The Corporation will give prompt written notice to the
Trustee of the location, and any change in the location, of
such office or agency. If at any time the Corporation shall
fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or
served at the principal office of the Trustee in the city of
Calgary, except that Bearer Debentures of that series and the
related Coupons may be presented and surrendered for payment at
the offices specified in the Debenture, and the Corporation
hereby appoints the same as its agent to receive such
respective presentations, surrenders, notices and demands.
The Corporation may also from time to time designate one or more other offices
or agencies where the Debentures of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Corporation of its obligation to maintain an office or
agency in accordance with the requirements set forth above for Debentures of any
series for such purposes. The Corporation will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency. Unless otherwise specified with respect to
any Debentures as contemplated by section 2.2 with respect to a series of
Debentures, the Corporation hereby designates as a Place of Payment for each
series of Debentures the principal office of the Trustee in the city of Calgary,
and initially appoints the Trustee at its principal office as Paying Agent in
such city and as its agent to receive all such presentations, surrenders,
notices and demands.
5.6 MONEY FOR DEBENTURES PAYMENTS TO BE HELD IN TRUST
If the Corporation shall at any time act as its own Paying Agent with respect to
any series of Debentures and any related Coupons, it will, on or before each due
date of the principal of (and premium, if any) or interest on any of the
Debentures of that series, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum in the currency in which the Debentures of such
series are payable (except as otherwise specified pursuant to section 2.2 for
the Debentures of such series) sufficient to pay the principal (and premium, if
any) or interest so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure to so act.
Whenever the Corporation shall have one or more Paying Agents for any series of
Debentures and any related Coupons, it will, prior to or on each due date of the
principal of (and premium, if any) or interest on any Debentures of that series,
deposit with a Paying Agent a sum (in the currency described in the preceding
paragraph) sufficient to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Corporation will promptly notify the Trustee of its action
or failure to so act.
The Corporation will cause each Paying Agent (other than the Trustee) for any
series of Debentures to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of
(and premium, if any) and interest on securities of such series
(where such sums have been paid to it by the Corporation or by
any other
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obligor on the Debentures) in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Corporation (or
any other obligor upon the securities of such series) in the
making of any payment of principal of (or premium, if any) or
interest on the Debentures of such series; and
(c) at any time during the continuance of such default, upon the
written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Corporation may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Written
Order of the Corporation direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Corporation or such Paying Agent, such sum to be held by
the Trustee upon the same trusts as those upon which sums were held by the
Corporation or such Paying Agent; and, upon such payment by any Paying Agent to
the Trustee, such Paying Agent shall be released from all further liability with
respect to such sums.
Except as provided in the Debentures of any series, any money deposited with the
Trustee or any Paying Agent, or then held by the Corporation, in trust for the
payment of the principal of (and premium, if any) or interest on any Debenture
of any series and remaining unclaimed for two years after such principal (and
premium, if any) or interest have become due and payable shall be paid to the
Corporation on Written Request of the Corporation, or (if then held by the
Corporation) shall be discharged from such trust; and the Holder of such
Debenture shall thereafter, as an unsecured general creditor, look only to the
Corporation for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Corporation as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Corporation cause to be published once, in an Authorized
Newspaper, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Corporation.
5.7 STATEMENT AS TO COMPLIANCE
The Corporation covenants that, on or before December 31, 1998, and on or before
December 31 in each subsequent year and at any other time if requested by the
Trustee, the Corporation will furnish to the Trustee a Certificate of the
Corporation stating that the Corporation has performed its obligations under and
complied with all covenants, conditions and other requirements contained in this
Indenture, non-compliance with which would, with the giving of notice or the
lapse of time or both, 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. If the
officer signing the Certificate of the Corporation knows of such an Event of
Default, whether then existing or occurring during such preceding fiscal year,
the Certificate of the Corporation shall describe such Event of Default and its
status with particularity. The Corporation shall also promptly notify the
Trustee if the Company's fiscal year is changed so that the end thereof is on
any date other than the then current fiscal year end date. For purposes of this
section, such compliance shall be determined without regard to any period of
grace granted by the Trustee or requirement of notice under this Indenture. The
Corporation will deliver to the Trustee, forthwith upon becoming aware of any
default in the performance or observance of any covenant, agreement or condition
contained in this Indenture, or any Event of Default, a Certificate of the
Corporation specifying with particularity such Event of Default and further
stating what action the Corporation has taken or is taking or proposes to take
with respect thereto.
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5.8 ADDITIONAL AMOUNTS
If any Debentures of a series provide for the payment of additional amounts to
any Holder in respect of any tax, assessment or governmental charge ("Additional
Amounts"), the Corporation will pay to the Holder of any Debenture of such
series or any Coupon appertaining thereto such Additional Amounts as may be
specified as contemplated by section 2.2. Whenever in this Indenture there is
mentioned, in any context, the payment of the principal of or any premium or
interest on, or in respect of, any Debenture of a series or payment of any
related Coupon or the net proceeds received on the sale or exchange of any
Debenture of a series, such mention shall be deemed to include mention of the
payment of Additional Amounts provided for by the terms of such series
established pursuant to section 2.2 to the extent that, in such context,
Additional Amounts are, were or would be payable in respect thereof pursuant to
such terms and express mention of the payment of Additional Amounts (if
applicable) in any provisions hereof shall not be construed as excluding
Additional Amounts in those provisions hereof where such express mention is not
made.
Except as otherwise specified as contemplated by section 2.2, if the Debentures
of a series provide for the payment of Additional Amounts, at least 10 days
prior to the first Interest Payment Date with respect to that series of
Debentures (or if the Debentures of that series will not bear interest prior to
Maturity, the first day on which a payment of principal and any premium is
made), and at least 10 days prior to each date of payment of principal and any
premium or interest if there has been any change with respect to the matters set
forth in the below-mentioned Certificate of the Corporation, the Corporation
will furnish the Trustee and the Corporation's principal Paying Agent or Paying
Agents, if other than the Trustee, with a Certificate of the Corporation
instructing the Trustee and such Paying Agent or Paying Agents whether such
payment of principal of and any premium of interest on the Debentures of that
series shall be made to the Holders of Debentures of that series or any related
Coupons without withholding for or on account of any tax, assessment or other
governmental charge described in the Debentures of the series. If any such
withholding shall be required, then such Certificate of the Corporation shall
specify by country the amount, if any, required to be withheld on such payments
to such Holders of Debentures of that series or related Coupons and the
Corporation will pay to the Trustee or such Paying Agent the Additional Amounts
required by the terms of such Debentures. In the event that the Trustee or any
Paying Agent, as the case may be, shall not so receive the above-mentioned
certificate, then the Trustee or such Paying Agent shall be entitled to (i)
assume that no such withholding or deduction is required with respect to any
payment of principal or interest with respect to any Debentures of a series or
related Coupons until it shall have received a certificate advising otherwise
and (ii) to make all payments of principal and interest with respect to the
Debentures of a series or related Coupons without withholding or deductions
until otherwise advised. The Corporation covenants to indemnify the Trustee and
any Paying Agent for, and to hold them harmless against, any loss, liability or
expense reasonably incurred without negligence or bad faith on their part
arising out of or in connection with actions taken or omitted by any of them in
reliance on any Certificate of the Corporation furnished pursuant to this
section.
5.9 LONG TERM DEBT AND TANGIBLE ASSETS
The Corporation will, so long as any Debenture is outstanding, maintain Tangible
Assets equal to or greater than 140% of Long Term Debt at all times including
after redemption of any redeemable preference shares of the Corporation or any
Subsidiary. This ratio shall be calculated no later than the 135th day following
the end of each of the Corporation's fiscal years, and shall be based upon the
Corporation's annual audited financial statements (as adjusted for Tangible
Assets) and the Independent Reserve Reports.
5.10 LIMITATION UPON CREDIT FACILITY AND REPAYMENTS
The Corporation will not:
(a) have outstanding more than US$12,000,000 under the EnCap
Credit Facility for the period commencing 30 days from the
date hereof; and
(b) use any of the net proceeds from the issuance of the
Convertible Debentures Series 1 to reduce the Corporation's
existing indebtedness; provided, however, that the Corporation
may use net proceeds
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in an amount not to exceed US$6,000,000 to reduce the EnCap
Credit Facility to an amount outstanding of not less than
US$12,000,000.
5.11 WAIVER OF CERTAIN COVENANTS
The Corporation may omit in any particular instances to comply with any term,
provision or condition set forth in section 5.10, if the Holders of Debentures
outstanding, by Extraordinary Resolution, waive such compliance in such
instances with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Corporation and the duties of the Trustee in respect of any such term,
provision or condition shall remain in full force and effect.
5.12 PAYMENT OF TAXES AND OTHER CLAIMS
The Corporation will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (a) all taxes, assessments and governmental
charges levied or imposed upon the Corporation or any Subsidiary or upon the
income, profits or property of the Corporation or any Subsidiary and (b) all
lawful claims for labour, materials and supplies which, if unpaid, might by law
become a Lien upon the property of the Corporation or any Subsidiary; PROVIDED,
HOWEVER, that the Corporation shall not be required to pay or discharge or cause
to be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
5.13 MAINTENANCE OF PROPERTIES
The Corporation will cause all properties owned by the Corporation or any
Subsidiary or used or held for use in the conduct of its business or the
business of any Subsidiary to be maintained and kept in good condition, repair
and working order (ordinary wear and tear excepted) and supplied with all
necessary equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Corporation may be necessary so that the business carried on in connection
therewith may be conducted at all times; PROVIDED, HOWEVER, that nothing in this
section shall prevent the Corporation from discontinuing the maintenance of any
of such properties if such discontinuance is, in the judgment of the
Corporation, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect to the
Debentureholders.
5.14 INSURANCE
The Corporation will at all times keep all of the Corporation's and its
Subsidiaries' properties which are of an insurable nature insured with insurers,
believed by the Corporation to be responsible, against loss or damage to the
extent that property of similar character is usually so insured by corporations
similarly situated and owning like properties in similar geographic areas in
which the Corporation or each such Subsidiary operates; provided that such
insurance is generally available at commercially reasonable rates, and provided
further that the Corporation or such Subsidiary may self-insure directly or
through captive insurers or insurance cooperatives, to the extent that the
Corporation determines that such practice is consistent with prudent business
practices. Such insurance shall be in such amount, on such terms, in such forms
and for such periods as are customary for similarly situated Persons in the
Corporation's industry or in insurance markets available to the Corporation.
5.15 RESTRICTIONS ON CHARTER AMENDMENTS
The Corporation will not amend its Memorandum and Articles of Association except
as required by law or except to the extent that such amendment would not have a
material adverse effect on (a) the ability of the Corporation to perform its
obligations under this Indenture or the Debentures or (b) the rights of the
Debenture Holders, except that neither (i) increases in the number of common
shares and issuance thereof with related securities, nor (ii) designations of
preferred stock of the Company, modifications of the terms of such designations
and issuance thereof with related
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securities, nor (iii) modification or expansion of the indemnity provisions
provided by the Corporation to its directors and officers, nor (iv) change of
the Corporation's registered agent shall be deemed an amendment hereunder.
5.16 CANADIAN WITHHOLDING AND REPORTING REQUIREMENTS
To the extent permitted by law, the Corporation will provide to the Trustee, the
Paying Agent or to any Debenture Holder such statements, certificates or other
documentation concerning the organization or operations of the Corporation as
may be reasonably necessary to establish any exceptions or exemptions from
Canadian federal income tax withholding and reporting requirements.
5.17 MAINTENANCE OF LISTINGS FOR COMMON SHARES AND DEBENTURES
While any Convertible Debenture remains outstanding, the Corporation will
maintain a listing for its common shares on a nationally recognized stock
exchange in Canada or the United States and, while any Convertible Debenture
Series 1 is outstanding, will use its best efforts to maintain a listing for the
Convertible Debentures Series 1 on the Luxembourg Stock Exchange or such
alternative stock exchange as the Trustee may approve.
5.18 TRUSTEE MAY PERFORM COVENANTS
If the Corporation shall fail to perform any of its covenants contained herein,
the Trustee may in its discretion, but (subject to section 6.3) need not, notify
the Debentureholders of such failure or may itself perform any of such covenants
capable of being performed by it and, if any such covenant requires the payment
of money, it may make such payment with its own funds, or with money borrowed by
it for such purpose, but shall be under no obligation to perform such covenants
or to make any such payments with its own funds or with money borrowed by it;
and all sums so paid shall be payable by the Corporation in accordance with the
provisions of section 5.4. No such performance by the Trustee of any covenant
contained herein or payment by the Corporation of any sums advanced or borrowed
by the Trustee pursuant to the foregoing provisions shall be deemed to relieve
the Corporation from any default hereunder.
ARTICLE 6
REMEDIES
6.1 EVENTS OF DEFAULT
"Event of Default", wherever used herein with respect to Debentures of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of and administrative or governmental body):
(a) default in the payment of any interest upon any Debenture of
that series, or any related Coupon, when such interest or
Coupon becomes due and payable, and continuance of such
default for a period of 7 days; or
(b) default in the payment of the principal of (or premium, if
any, on) any Debenture of that series as and when it shall
become due and payable at its Maturity, upon redemption, by
declaration or otherwise; or
(c) default in the performance, or breach, of any covenant or
warranty of the Corporation in this Indenture (other than a
covenant or warranty a default in performance of which or
breach of which is elsewhere in this section specifically
dealt with or which has expressly been included in this
Indenture solely for the benefit of one or more series of
Debentures other than that series), and continuance of such
default or breach for a period of 60 days after there has been
given, by registered
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or certified mail, to the Corporation by the Trustee or to the
Corporation and the Trustee by the Holders of at least 25% in
principal amount of all outstanding Debentures a written
notice specifying such default or breach and requiring it to
be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(d) the entry of a decree or order by a court having jurisdiction
in the premises adjudging the Corporation or any Material
Subsidiary a bankrupt or insolvent under any bankruptcy,
insolvency or analogous laws or appointing a receiver,
liquidator, assignee, trustee, sequestrator, rehabilitator (or
other similar official) of the Corporation or any Material
Subsidiary or of any substantial part of their respective
properties, or ordering the winding up or liquidation of their
respective affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 90 consecutive
days; or
(e) the institution by the Corporation or any Material Subsidiary
of proceedings to be adjudicated a bankrupt or insolvent, or
the consent by it to the institution of bankruptcy or
insolvency proceedings against it under any bankruptcy,
insolvency or analogous laws, or the consent by it to the
filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator,
rehabilitator (or other similar official) of the Corporation
or any Material Subsidiary or of any substantial part of their
respective properties, or the making by the Corporation or any
Material Subsidiary of an assignment for the benefit of
creditors, or the admission by the Corporation or any Material
Subsidiary in writing of its inability to pay its debts
generally as they become due; or
(f) if (i) any other Debt of the Corporation or any Material
Subsidiary becomes due and payable prior to its Stated
Maturity by reason of an event of default (howsoever defined)
or (ii) any such Debt of the Corporation or any Material
Subsidiary is not paid when due or, as the case may be, within
any applicable grace period or (iii) the Corporation or any
Material Subsidiary fails to pay when due (or, as the case may
be, within any applicable grace period) any amount payable by
it under any present or future guarantee for, or indemnity in
respect of, any Indebtedness of any Person or (iv) any
security given by the Corporation or any Material Subsidiary
for any Indebtedness of any Person or any guarantee or
indemnity of Debt of any Person by the Corporation or any
Material Subsidiary becomes enforceable by reason of default
in relation thereto and steps are taken to enforce such
security save in any such case where there is a bona fide
dispute as to whether the relevant Debt or any such guarantee
or indemnity as aforesaid shall be due and payable (following
any applicable grace period), PROVIDED that in each such case
the Debt exceeds in the aggregate US$1,500,000 and in each
such case such event continues unremedied for a period of 30
calendar days (or such longer period as the Trustee may in its
sole discretion consent to in writing upon receipt of written
notice from the Company); or
(g) if there is any final judgment or judgments for the payment of
money exceeding in the aggregate U.S.$1,5000,000 outstanding
against the Corporation or any Material Subsidiary which has
been outstanding for more than 60 calendar days from the date
of its entry and shall not have otherwise been discharged in
full or stayed by appeal, bond or otherwise; or
(h) if the Issuer or any Material Subsidiary shall generally fail
to pay its Debts as such Debts come due (except Debts which
the Issuer or such Material Subsidiary, as the case may be,
may contest in good faith generally) or shall be declared or
adjudicated by a competent court to be insolvent or bankrupt,
shall consent to an entry of an order of relief against it in
an involuntary bankruptcy case, shall enter into any
assignment or other similar arrangement for the benefit of its
creditors or shall consent to the appointment of a custodian
(including, without limitation, a receiver, liquidator or
trustee); or
(i) if a warranty, representation, or other statement made by or
on behalf of the Issuer contained in this Indenture, the
Debentures or any certificate or other agreement furnished in
compliance with such
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documents is false in any material respect when made and
(except where the Trustee shall have certified to the Issuer
that it considers such falsity to be incapable of remedy, in
which case no such notice or continuation as is hereinafter
mentioned will be required) such falsity continues for a
period of 30 calendar days (or such longer period as the
Trustee may in its absolute discretion permit) next following
the service by the Trustee on the Issuer of notice requiring
the same to be remedied; or
(j) any other Event of Default provided with respect to Debentures
of that series.
6.2 NOTICE OF EVENTS OF DEFAULT
The Corporation shall, within 30 days after it becomes aware that an Event of
Default has occurred, notify the Trustee of the occurrence of such Event of
Default and upon receipt of such notice and if the Event of Default is
continuing the Trustee shall, within 30 days after it becomes aware of the
occurrence of such Event of Default, give notice thereof to the
Debentureholders, provided that, notwithstanding the foregoing, the Trustee
shall not be required to give such notice if the Trustee in good faith shall
have decided that the withholding of such notice is in the best interests of the
Debentureholders and shall have so advised the Corporation in writing. Where
notice of the occurrence of an Event of Default has been given and the Event of
Default is thereafter cured, notice that the Event of Default is no longer
continuing shall be given by the Trustee to the Debentureholders within 30 days
after the Trustee becomes aware that the Event of Default has been cured.
6.3 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT
If an Event of Default described in clause (a), (b) or (j) of section 6.1 with
respect to Debentures of any series at the time outstanding occurs and is
continuing, then in every such case the Trustee or the Holders of not less than
25% in principal amount of the outstanding Debentures of that series may declare
the principal amount of all the Debentures of that series to be due and payable
immediately, by a notice in writing to the Corporation (and to the Trustee if
given by Holders), and upon any such declaration such principal amount (or
specified portion thereof) shall become immediately due and payable. If an Event
of Default described in clause (c), (d), (e), (f), (g), (h) or (i) of section
6.1 occurs and is continuing, then in every such case the Trustee or the Holders
of not less than 25% in principal amount of all the Debentures then outstanding
may declare the principal amount of all the outstanding Debentures to be due and
payable immediately, by a notice in writing to the Corporation (and to the
Trustee if given by the Holders) and upon any such declaration such principal
amount (or specified portion thereof) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to Debentures
of any series (or of all series, as the case may be) has been made and before a
judgment or decree for payment of the money due has been obtained by the Trustee
as hereinafter in this Article provided, the Holders of the outstanding
Debentures of that series (or of all series, as the case may be), by
Extraordinary Resolution, may rescind and annul such declaration and its
consequences if:
(a) the Corporation has paid or deposited with the Trustee a sum
sufficient to pay in the currency in which the Debentures of
such series are payable (except as otherwise specified
pursuant to section 2.2 for the Debentures of such series):
(i) all overdue interest on all outstanding Debentures of
that series (or of all series, as the case may be)
and any related Coupons,
(ii) all unpaid principal of (and premium, if any, on) any
outstanding Debentures of that series (or of all
series, as the case may be) which has become due
otherwise than by such declaration of acceleration,
and interest on such unpaid principal at the rate or
rates prescribed therefor in such Debentures,
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(iii) interest upon overdue interest at the rate or rates
prescribed therefor in such Debentures, and
(iv) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents
and counsel and any sales, value-added or goods and
services tax thereon; and
(b) all Events of Default with respect to Debentures of that
series (or of all series, as the case may be), other than the
non-payment of amounts of principal of (or premium, if any) or
interest on Debentures of that series (or of all series, as
the case may be) which have become due solely by such
declaration of acceleration, have been cured or waived as
provided in section 6.14.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
6.4 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE
The Corporation covenants that if:
(a) default is made in the payment of any instalment of interest
on any Debenture and any related Coupon when such interest
becomes due and payable and such default continues for a
period of 30 days or
(b) default is made in the payment of the principal of (or
premium, if any, on) any Debenture at the Maturity thereof,
then the Corporation will, upon demand of the Trustee, pay to the Trustee for
the benefit of the Holders of such Debentures and Coupons the whole amount then
due and payable on such Debentures and Coupons for principal (and premium, if
any) and interest on any overdue principal (and premium, if any) and on any
overdue interest, at the rate or rates prescribed therefor in such Debentures,
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Corporation fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Corporation or any other obligor upon such Debentures and collect
the moneys adjudged or decreed to be payable in the manner provided by law out
of the property of the Corporation or any other obligor upon such Debentures,
wherever situated.
If an Event of Default with respect to Debentures of any series (or of all
series, as the case may be) occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders of Debentures of such series (or of all series, as the case may be) by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
6.5 TRUSTEE MAY FILE PROOFS OF CLAIM
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustments, composition or other
judicial proceeding relative to the Corporation or any other obligor upon the
Debentures or the property of the Corporation or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Debentures
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Corporation for the payment
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of overdue principal, premium, if any or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal
(and premium, if any) and interest owing and unpaid in respect
of the Debentures and to file such other papers or documents
as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and any sales, value added or
goods and services tax thereon) and of the Holders allowed in
such judicial proceedings; and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claim and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under section 5.4.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Debentures
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
6.6 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF DEBENTURES
All rights of action and claims under this Indenture or the Debentures or
Coupons may be prosecuted and enforced by the Trustee without the possession of
any of the Debentures or Coupons or the production thereof in any proceedings
relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel and
any sales, value-added or goods and services tax thereon, be for the rateable
benefit of the Holders of the Debentures and Coupons in respect of which such
judgement has been recovered.
6.7 APPLICATION OF MONEY COLLECTED
Any money collected by the Trustee pursuant to this Article shall be applied in
the following order, at the date or dates fixed by the Trustee and, in case of
the distribution of such money on account of principal (or premium, if any, on)
or interest, upon presentation of the Debentures or Coupons, or both, as the
case may be, and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under
section 5.4;
Second: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on
the Debentures and Coupons in respect of which or for
the benefit of which such money has been collected,
rateably, without preference or priority of any kind,
according to the amounts due and payable on such
Debentures and Coupons for principal (and premium, if
any) and interest, respectively; and
Third: The balance, if any, to the Person or Persons
entitled thereto.
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6.8 LIMITATION ON SUITS
No Holder of any Debenture of any series or any related Coupons shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the
Debentures of that series;
(b) the Holders of not less than 25% in principal amount of the
outstanding Debentures of that series in the case of any Event
of Default described in clause (a), (b) or (j) of section 6.1,
or, in the case of any Event of Default described in clause
(c), (d), (e), (f), (g), (h) or (i) of section 6.1, the
Holders of not less than 25% in principal amount of all
outstanding Debentures, shall have made written request to the
Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any
such proceeding, and
(e) no direction inconsistent with such written request has been
given, by Extraordinary Resolution, to the Trustee during such
60 day period by the Holders of the outstanding Debentures of
that series in the case of any Event of Default described in
clause (a), (b) or (j) of section 6.1, or, in the case of any
Event of Default described in clause (c), (d), (e), (f), (g),
(h) or (i) of section 6.1, by the Holders of all outstanding
Debentures;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Debentures of the same series, in the case of any Event of Default
described in clause (a), (b) or (j) of section 6.1 or of Holders of all
Debentures in the case of an Event of Default described in clause (c), (d), (e),
(f), (g), (h) or (i) of section 6.1, or to obtain or to seek to obtain priority
or preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and rateable
benefit of all Holders of Debentures of the same series, in the case of any
Event of Default described in clause (a), (b) or (j) of section 6.1, or of
Holders of all Debentures in the case of any Event of Default described in
clause (c), (d), (e), (f), (g), (h) or (i) of section 6.1.
6.9 RESTORATION OF RIGHTS AND REMEDIES
If the Trustee or any Holder has instituted any proceeding to enforce any right
or remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceeding, the Corporation, the Trustee and the Holders of Debentures and
Coupons shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
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6.10 RIGHTS AND REMEDIES CUMULATIVE
No right or remedy herein conferred upon or reserved to the Trustee or to the
Holders of Debentures or Coupons is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in additional to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
6.11 DELAY OR OMISSION NOT WAIVER
No delay or omission of the Trustee or of any Holder of any Debentures or
Coupons to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this
Indenture or by law to the Trustee or to the Holders may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
6.12 CONTROL BY HOLDERS
With respect to the Debentures of any series, the Holders of the outstanding
Debentures of such series shall have the right, by Extraordinary Resolution, to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee relating to or arising under clause (a), (b) or (j) of section 6.1, and,
with respect to all Debentures, the Holders of all outstanding Debentures shall
have the right to direct, by Extraordinary Resolution, the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, or exercising any trust
or power conferred on the Trustee, not relating to or arising under clause (a),
(b) or (j) of section 6.1, provided that in each case:
(a) such direction shall not be in conflict with any rule of law
or with this Indenture,
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(c) the Trustee need not take any action which might involve it in
personal liability or be unjustly prejudicial to the Holders
of Debentures of such series not consenting.
6.13 WAIVER OF PAST DEFAULTS
Subject to section 6.3, the Holders of the outstanding Debentures of any series
may on behalf of the Holders of all the Debentures of such series, by
Extraordinary Resolution, waive any past default described in clause (a), (b) or
(j) of section 6.1 (or, in the case of a default described in clause (c), (d),
(e), (f), (g), (h) or (i) of section 6.1, the Holders of all outstanding
Debentures may, by Extraordinary Resolution, waive any such past default), and
its consequences, except a default:
(a) in respect of the payment of the principal of (or premium, if
any) or interest of any Debenture or any related Coupon, or
(b) in respect of a covenant or provision hereof which under
Article 12 cannot be modified or amended without the consent
of the Holder of each outstanding Debenture of such series
affected.
Upon any such waiver, any such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
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6.14 WAIVER OF STAY OR EXTENSION
The Corporation covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Corporation (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE 7
SATISFACTION AND DISCHARGE
7.1 CANCELLATION AND DESTRUCTION
All matured Debentures and Coupons shall forthwith after payment thereof be
delivered to the Trustee and cancelled by it. All Debentures and Coupons which
are cancelled or required to be cancelled under this or any other provision of
this Indenture shall be destroyed by the Trustee and, if required by the
Corporation, the Trustee shall furnish to the Corporation a destruction
certificate setting out the designating numbers and denominations of the
Debentures and Coupons so destroyed.
7.2 NON-PRESENTATION OF DEBENTURES AND COUPONS
If the Holder of any Debenture or Coupon shall fail to present the same for
payment on the date on which the principal thereof and/or the interest thereon
or represented thereby becomes payable either at Maturity or otherwise or shall
not accept payment on account thereof and give such receipt therefor (if any) as
the Trustee may require:
(a) the Corporation shall be entitled to pay to the Trustee and
direct it to set aside; or
(b) in respect of moneys in the hands of the Trustee which may or
should be applied to the payment of the Debentures, the
Corporation shall be entitled to direct the Trustee to set
aside;
the principal moneys and/or the interest, as the case may be, in trust to be
paid to the Holder of such Debenture or Coupon upon due presentation and
surrender thereof in accordance with the provisions of this Indenture; and
thereupon the principal moneys and/or the interest payable on or represented by
each Debenture and each Coupon in respect whereof such moneys have been set
aside shall be deemed to have been paid and thereafter such Debentures and
Coupons shall not be considered as outstanding hereunder and the Holders thereof
shall thereafter have no right in respect thereof except that of receiving
payment of the moneys so set aside by the Trustee (without interest thereon)
upon due presentation and surrender thereof, subject always to the provisions of
section 5.6 as they relate to the repayment of unclaimed moneys. Any moneys so
set aside may, and, if remaining unclaimed for 60 days shall, be invested by the
Trustee in accordance with section 11.8.
7.3 DEFEASANCE
The Trustee shall, at the request and at the expense of the Corporation, execute
and deliver to the Corporation such deeds or other instruments as shall be
necessary to release the Corporation, subject to section 7.4, from its covenants
contained herein except those relating to the indemnification of the Trustee and
to the maintenance of an office or agency for the Debentures as contemplated by
sections 5.4 and 5.5 upon:
(a) proof being given to the reasonable satisfaction of the
Trustee that the Corporation has deposited funds or made
provision for payment of the expenses of the Trustee, for
payment of all principal and interest and other amounts due or
to become due on the Debentures (including amounts due or to
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become due with respect to any series of Debentures as a
result of a provision contemplated by section 2.2) and for the
payment of Taxes arising with respect to such deposited funds
or other provision for payment (collectively, the "Payments")
pursuant to the terms of an irrevocable trust agreement in
form and substance satisfactory to the Trustee; and
(b) delivery by the Corporation to the Trustee of an opinion of
Counsel, which opinion shall be satisfactory to the Trustee in
its sole discretion, that the Debentureholders will not be
subject to any Taxes as a result of the Corporation's exercise
of this defeasance option and that they will be subject to
Taxes, including those in respect of income (including taxable
capital gains), in the same amount, in the same manner and at
the same time or times as would have been the case if such
option had not been exercised.
The Corporation shall be deemed to have made such due provision for payment if,
and only if, it has deposited or caused to be deposited with the Trustee under
the terms of the irrevocable trust agreement, and solely for the benefit of the
Debentureholders for the purpose stated therein, cash or securities issued or
guaranteed by the Government of Canada which will be sufficient, in the opinion
of an independent chartered accountant or investment dealer acceptable to the
Trustee, to provide for the Payments.
The Trustee shall hold in trust, all monies or securities deposited with it
pursuant to this section 7.3, and shall apply the deposited monies and the money
from such securities in accordance with this Indenture to the payment of
principal of, interest and premium, if any, on the Debentures.
7.4 TRUSTEE UNABLE TO APPLY MONEY OR DEBENTURES
If the Trustee is unable to apply any money or securities in accordance with
section 7.3 by reason of any legal proceeding or by reason of any order or
judgment of any Court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Corporation's obligations under this
Indenture and the Debentures shall be revived and reinstated as though no
deposit of money or securities had occurred pursuant to section 7.3 until such
time as the Trustee is permitted to apply all such money or securities in
accordance with section 7.3; provided that if the Corporation has made any
principal or interest payments or paid any premium, if any, on the Debentures
because of the reinstatement of its obligations, the Corporation shall be
subrogated to the rights of the Debentureholders of such Debentures to receive
such payment from the money or securities held by the Trustee. Notwithstanding
the foregoing, upon proof being given to the reasonable satisfaction of the
Trustee that all the Debentures of a particular series and the premium, if any,
thereon, and interest (including interest on amounts in default) thereon and
other moneys payable in respect thereof have been paid or satisfied or that, all
the outstanding Debentures of a particular series having matured or having been
duly called for redemption, or the Trustee having been given irrevocable
instructions by the Corporation to publish within ninety (90) days notice of
redemption of all the outstanding Debentures of a particular series, such
payment and/or redemption has been duly and effectually provided for by payment
to the Trustee or otherwise, and upon payment of all costs, charges and expenses
properly incurred by the Trustee in relation to the supplemental indenture
providing for the issue of such series of Debentures and all interest thereon,
or upon provision satisfactory to the Trustee being made therefor, the Trustee
shall at the request and at the expense of the Corporation, execute and deliver
to the Corporation such deeds or other instruments as shall be requisite to
evidence the satisfaction and discharge of the supplemental indenture providing
for the issue of such series of Debentures and to release the Corporation from
the covenants therein contained.
7.5 DISCHARGE
Upon proof being given to the reasonable satisfaction of the Trustee that all
the Debentures and interest (including interest on amounts in default) thereon
have been paid or satisfied or that, all the outstanding Debentures having
matured, such payment has been duly provided for by payment to the Trustee or
otherwise, and upon payment of all costs, charges and expenses properly incurred
by the Trustee in relation to this Indenture and all interest thereon and the
remuneration of the Trustee, or upon provision satisfactory to the Trustee being
made therefor, the Trustee shall,
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at the request and at the expense of the Corporation, execute and deliver to the
Corporation such deeds or other instruments as shall be necessary to evidence
the satisfaction and discharge of this Indenture and to release the Corporation
from its covenants contained herein except those relating to the indemnification
of the Trustee.
ARTICLE 8
SUCCESSOR CORPORATIONS
8.1 CERTAIN REQUIREMENTS IN RESPECT OF MERGER ETC.
The Corporation shall not enter into any transaction, whether by way of
amalgamation (except a vertical short-form amalgamation with one or more of its
wholly-owned Subsidiaries pursuant to the BUSINESS CORPORATIONS ACT (Yukon)),
merger, reconstruction, reorganization, consolidation, transfer, sale, lease or
otherwise, whereby all or substantially all of its undertaking, property and
assets would become the property of any other Person or, in the case of any such
amalgamation, of the continuing corporation resulting therefrom, but may do so
if:
(a) such other Person or continuing corporation is a corporation
(the "Successor Corporation") incorporated under the laws of
Canada or any province thereof;
(b) the Successor Corporation shall execute, prior to or
contemporaneously with the completion of such transaction,
such indenture supplemental hereto and other instruments (if
any) as are satisfactory to the Trustee and in the opinion of
Counsel are necessary or advisable to evidence the assumption
by the Successor Corporation of the liability for the due and
punctual payment of all the Debentures and the interest
thereon and all other moneys payable thereunder and the
covenant of such Successor Corporation to pay the same and its
agreement to observe and perform all the covenants and
obligations of the Corporation under this Indenture;
(c) such transaction shall, to the satisfaction of the Trustee and
in the opinion of Counsel, be upon such terms as substantially
to preserve and not to impair any of the rights and powers of
the Trustee or of the Debentureholders hereunder and upon such
terms as are not in any way prejudicial to the interests of
the Debentureholders; and
(d) no condition or event shall exist in respect of the
Corporation or the Successor Corporation, either at the time
of such transaction or immediately thereafter after giving
full effect thereto, which constitutes or would, after the
giving of notice or the lapse of time or both, constitute an
Event of Default hereunder.
8.2 VESTING OF POWERS IN SUCCESSOR
Whenever the conditions of section 8.1 have been duly observed and performed,
the Trustee shall execute and deliver the supplemental indenture provided for in
Article 12 and thereupon:
(a) the Successor Corporation shall possess and from time to time
may exercise each and every right and power of the Corporation
under this Indenture in the name of the Corporation or
otherwise, and any act or proceeding by any provision of this
Indenture required to be done or performed by any Directors or
officers of the Corporation may be done and performed with
like force and effect by the like directors or officers of
such Successor Corporation; and
(b) the Corporation shall be released and discharged from
liability under this Indenture and the Trustee may execute any
documents which it may be advised are necessary or advisable
for effecting or evidencing such release and discharge.
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ARTICLE 9
MEETINGS OF DEBENTUREHOLDERS
9.1 RIGHT TO CONVENE MEETINGS
The Trustee may at any time and from time to time and shall, (i) on receipt of a
Written Request of the Corporation or a written request signed by the Holders of
not less than 25% in principal amount of the Debentures of any series then
outstanding and upon being indemnified to its reasonable satisfaction by the
Corporation or by the Holders of the Debentures of such series signing such
request against the costs which may be incurred in connection with the calling
and holding of such meeting, convene a meeting of the Holders of the Debentures
of such series and, (ii) on receipt of a Written Request of the Corporation or a
Debentureholders' Request and upon being indemnified to its reasonable
satisfaction by the Corporation or by the Debentureholders against the costs
which may be incurred in connection with the calling and holding of such
meeting, convene a meeting of the Debentureholders. If the Trustee fails within
30 days after receipt of such written request and such indemnity to give notice
convening a meeting, the Corporation, such Debentureholders or the Holders of
the Debentures of such series, as the case may be, may convene such meeting.
Every such meeting shall be held in the city of Calgary or at such other place
as may be approved or determined by the Trustee.
9.2 NOTICE OF MEETINGS
At least 21 days' notice of any meeting of Debentureholders or the Holders of
the Debentures of a series shall be given to the Debentureholders or the Holders
of the Debentures of such series, as the case may be, in accordance with section
10.2 and a copy thereof shall be sent by mail to the Trustee unless the meeting
has been called by it and to the Corporation unless the meeting has been called
by it. Such notice shall state the time when and the place where the meeting is
to be held and shall state briefly the general nature of the business to be
transacted thereat, but it shall not be necessary for any such notice to set out
the terms of any resolution to be proposed at the meeting or any of the
provisions of this Article.
9.3 CHAIRMAN
An individual, who need not be a Debentureholder or a Holder of the Debentures
of such series, as the case may be, nominated in writing by the Trustee shall be
chairman of the meeting and if no individual is so nominated or the individual
so nominated is unable or unwilling to act or if the individual so nominated is
not present within 15 minutes from the time fixed for the holding of the
meeting, the Debentureholders or the Holders of the Debentures of such series,
as the case may be, present in person or by proxy shall choose an individual
present to be chairman.
9.4 QUORUM
At any meeting of the Debentureholders or the Holders of any series of
Debentures, as the case may be, other than a meeting convened for the purpose of
considering a resolution proposed to be passed as an Extraordinary Resolution,
as to which the provisions of section 9.11 shall be applicable, a quorum shall
consist of Holders present in person or by proxy and representing at least 25%
in principal amount of the outstanding Debentures or Debentures of such series,
as the case may be. If a quorum of the Debentureholders or the Holders of
Debentures of such series, as the case may be, shall not be present within 30
minutes from the time fixed for holding any such meeting, the meeting, if
convened by the Debentureholders or the Holders of Debentures of such series or
pursuant to a Debentureholder's Request or the request of the Holders of the
Debentures of a series, 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. At the adjourned meeting the Debentureholders
or the Holders of Debentures of such series, as the case may be, present in
person or by proxy shall form a quorum and may transact the business for which
the meeting was originally convened notwithstanding that they may not represent
25% of the principal amount of the outstanding Debentures or Debentures of such
series.
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9.5 POWER TO ADJOURN
The chairman of any meeting at which a quorum of the Debentureholders or the
Holders of Debentures of a series, as the case may be, is present may, with the
consent of the Holders of a majority in principal amount of the Debentures or
the Debentures of such series, as the case may be, represented thereat, adjourn
any such meeting and no notice of such adjournment need be given except such
notice, if any, as the meeting may prescribe.
9.6 SHOW OF HANDS
Every question submitted to a meeting shall be decided in the first place by a
majority of the votes given on a show of hands except that votes on
Extraordinary Resolutions shall be given in the manner hereinafter provided. At
such meeting, unless a poll is duly demanded as herein provided, a declaration
by the chairman that a resolution has been carried or carried unanimously or by
a particular majority or lost or not carried by a particular majority shall be
conclusive evidence of the fact.
9.7 POLL
On every Extraordinary Resolution, and on any other question submitted to a
meeting, when demanded by the chairman or by a Holder and/or proxies for Holders
holding at least 5% of the principal amount of the Debentures or the Debentures
of a series, as the case may be, represented thereat, a poll shall be taken in
such manner and either at once or after an adjournment as the chairman shall
direct. Questions other than Extraordinary Resolutions shall, if a poll is
taken, be decided by the votes of the Holders of a majority in principal amount
of the Debentures or the Debentures of such series, as the case may be,
represented at the meeting and voted on the poll.
9.8 VOTING
On a show of hands every Person who is present and entitled to vote, whether as
a Holder or as proxy, shall have one vote. On a poll each Holder present in
person or represented by a duly appointed proxy at the meeting of
Debentureholders or the Holders of the Debentures of a series shall be entitled
to one vote in respect of each $1,000 principal amount of Debentures or
Debentures of such series, as the case may be, of which he shall then be the
Holder. A proxy need not be a Holder of Debentures of any series. In the case of
joint registered Holders of a Debenture, any one of them present in person or by
proxy at the meeting may vote in the absence of the other or others; but in case
more than one of them are present in person or by proxy, they shall vote
together in respect of the Debentures of which they are joint registered
Holders.
9.9 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 from time
to time think fit providing for:
(a) voting by proxy and the form of the instrument appointing a
proxy (which shall be in writing) and the manner in which the
same shall be executed and for the production of the authority
of any Person signing on behalf of a Holder;
(b) the issue of voting certificates:
(i) by any bank, trust company or other depositary
approved by the Trustee certifying that specified
Bearer Debentures have been deposited with it by a
named Person and will remain on deposit until after
the meeting of Debentureholders or Holders of
Debentures of a series, as the case may be, specified
therein;
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(ii) by any bank, trust company, insurance company,
governmental department or agency approved by the
Trustee certifying that it is the Holder of specified
Bearer Debentures and will continue to hold the same
until after the meeting of Debentureholders or
Holders of Debentures of a series, as the case may
be, specified therein;
which voting certificates 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 at 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
bearers of the Bearer Debentures specified therein;
(c) the deposit of voting certificates and/or instruments
appointing proxies at such place as the Trustee, the
Corporation or the Debentureholders or the Holders of the
Debentures of a series, convening a particular meeting, as the
case may be, may in the notice convening the meeting direct
and the time, if any, before the holding of the meeting or any
adjournment thereof by which the same shall be deposited; and
(d) the deposit of voting certificates and/or instruments
appointing proxies at some approved place or places other than
the place at which a particular meeting is to be held and
enabling particulars of such voting certificates and/or
instruments appointing proxies to be mailed, cabled,
telegraphed, telecopied or sent by telex 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.
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 the Holders of any Debentures, or as entitled to vote or be present at the
meeting in respect thereof, shall be persons who produce Bearer Debentures or
voting certificates at the meeting and Holders of Registered Debentures and
persons whom Holders of Registered Debentures or voting certificates have duly
appointed as their proxies.
9.10 CORPORATION AND TRUSTEE MAY BE REPRESENTED
The Corporation and the Trustee, by their respective officers and directors, and
the legal advisers of the Corporation and the Trustee may attend any meeting of
the Debentureholders or the Holders of Debentures of any series, as the case may
be, but shall have no vote as such.
9.11 POWERS EXERCISABLE BY EXTRAORDINARY RESOLUTION
In addition to the powers conferred upon them by any other provisions of this
Indenture or by law, a meeting of the Debentureholders or a meeting of the
Holders of Debentures of any series, as the case may be, shall have the
following powers exercisable from time to time by Extraordinary Resolution:
(a) in the case of a meeting of Debentureholders, subject to the
requirement to obtain the consent of the Holder of each
outstanding Debenture affected thereby where so required in
section 12.2, power to approve any change whatsoever in any of
the provisions of this Indenture or the Debentures and any
modification, abrogation, alteration, compromise or
arrangement of the rights of the Debentureholders and/or the
Trustee against the Corporation or against its undertaking,
property and assets or any part thereof, whether such rights
arise under this Indenture or the Debentures or otherwise and,
in the case of a meeting of the Holders of Debentures of such
series, subject to the requirement to obtain the consent of
the Holder of each outstanding Debenture affected thereby
where so required in section 12.2, power to approve any change
whatsoever in any of the provisions of this Indenture
specifically affecting such series of Debentures or the
Debentures of such series and
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any modification, abrogation, alteration, compromise or
arrangement of the rights of the Holders of such series of
Debentures and/or the Trustee against the Corporation or
against its undertaking, property and assets or any part
thereof, whether such rights arise under this Indenture or the
Debentures of such series or otherwise;
(b) in the case of a meeting of Debentureholders, power to approve
any scheme for the reconstruction or reorganization of the
Corporation or for the consolidation, amalgamation or merger
of the Corporation with any other corporation or for the
selling or leasing of the undertaking, property and assets of
the Corporation or any part thereof (where such approval is
required), provided that no such approval shall be necessary
in respect of any such transaction if the provisions of
Article 8 shall have been complied with;
(c) in the case of a meeting of Debentureholders, power to direct
or authorize the Trustee to exercise any power, right, remedy
or authority given to it by this Indenture or the Debentures
in any manner specified in such Extraordinary Resolution or to
refrain from exercising any such power, right, remedy or
authority or, in the case of a meeting of the Holders of
Debentures of such series, power to direct or authorize the
Trustee to exercise any power, right, remedy or authority
given to it in respect of the Debentures of such series by
this Indenture or the Debentures of such series in any manner
specified in such Extraordinary Resolution or to refrain from
exercising any such power, right, remedy or authority;
(d) in the case of a meeting of Debentureholders, power to waive
and direct the Trustee to waive any default or Event of
Default hereunder provided with respect to all outstanding
Debentures and/or cancel any declaration made by the Trustee
pursuant to section 6.3 either unconditionally or upon any
conditions specified in such Extraordinary Resolution or, in
the case of a meeting of the Holders of Debentures of such
series, power to waive and direct the Trustee to waive any
default or Event of Default hereunder (or in any supplemental
indenture hereto creating such series) provided with respect
to Debentures of such series and/or cancel any declaration
made by the Trustee pursuant to section 6.3 either
unconditionally or upon any conditions specified in such
Extraordinary Resolution;
(e) power to direct any Debentureholder or Holder of Debentures of
such series, as the case may be, who, as such, has brought any
action, suit or proceeding to stay or discontinue or otherwise
deal with the same in the manner directed by such
Extraordinary Resolution upon payment, if the taking of such
action, suit or proceeding shall have been permitted by
section 6.8, of the costs, charges and expenses reasonably and
properly incurred by such Debentureholder or Holder of
Debentures of such series, as the case may be, in connection
therewith;
(f) power to restrain any Debentureholder or Holder of Debentures
of such series, as the case may be, from taking or instituting
any suit, action or proceeding for the purpose of enforcing
payment of the principal or interest of any Debenture or
Debenture of such series, as the case may be, or for the
execution of any trust or power hereunder or for any other
remedy hereunder;
(g) power to appoint a committee to consult with the Trustee (and
to remove any committee so appointed) and to delegate to such
committee (subject to such limitations, if any, as may be
prescribed in such Extraordinary Resolution) all or any of the
powers which the Debentureholders or the Holders of the
Debentures of such series, as the case may be, may exercise by
Extraordinary Resolution under this section 9.11; the
Extraordinary Resolution making such appointment may provide
for payment of the expenses and disbursements of and
compensation to such committee; such committee shall consist
of such number of individuals (who need not be
Debentureholders or the Holders of the Debentures of such
series or any series) as shall be prescribed in the
Extraordinary Resolution appointing it; subject to the
Extraordinary Resolution appointing it, every such committee
may elect its chairman and may make regulations respecting its
quorum, the calling
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of its meetings, the filling of vacancies occurring in its
number, the manner in which it may act and its procedure
generally and such regulations may provide that the committee
may act at a meeting at which a quorum is present or may act
by resolution signed in one or more counterparts by a majority
of the members thereof or the number of members thereof
necessary to constitute a quorum, whichever is the greater;
all acts of any such committee within the authority delegated
to it shall be binding upon all Debentureholders or the
Holders of the Debentures of such series, as the case may be;
(h) power to agree 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;
(i) power to authorize the distribution in specie of any shares,
bonds, debentures or other securities or obligations and/or
cash or other consideration received or the use or disposition
of the whole or any part of such shares, bonds, debentures or
other securities or obligations and/or cash or other
consideration in such manner and for such purpose as may be
considered advisable and specified in such Extraordinary
Resolution;
(j) power to approve the exchange of the Debentures or the
Debentures of such series, as the case may be, for or the
conversion thereof into shares, bonds, debentures or other
securities or obligations of the Corporation or of any
corporation formed or to be formed;
(k) in the case of a meeting of Debentureholders, power to remove
the Trustee from office and to appoint a new Trustee or
Trustees; and
(l) power to amend, alter or repeal any Extraordinary Resolution
previously passed or approved by the Debentureholders or the
Holders of the Debentures of such series, as the case may be,
or by any committee appointed pursuant to subsection 9.11(g).
9.12 MEANING OF "EXTRAORDINARY RESOLUTION"
(a) The expression "Extraordinary Resolution" when used in this
Indenture means, in respect of a meeting of Debentureholders,
subject as hereinafter provided in this Article 9, a
resolution proposed to be passed as an Extraordinary
Resolution at the meeting of Debentureholders duly convened
for the purpose and held in accordance with the provisions of
this Article 9 at which the Holders of more than 25% of the
principal amount of the Debentures then outstanding are
present in person or by proxy and passed by the favourable
votes of the Holders of not less than 66 2/3% of the principal
amount of Debentures represented at the meeting and voted on a
poll upon such resolution and, in respect of a meeting of the
Holders of Debentures of any series, a resolution proposed to
be passed as an Extraordinary Resolution at the meeting of the
Holders of Debentures of such series duly convened for the
purpose and held in accordance with the provisions of this
Article 9 at which the Holders of more than 25% of the
principal amount of the Debentures of such series then
outstanding are present in person or by proxy and passed by
the favourable votes of the Holders of not less than 66 2/3%
of the principal amount of the Debentures of such series
represented at the meeting and voted on a poll upon such
resolution.
(b) If at any meeting of the Holders of all outstanding Debentures
the Holders of more than 25% of the principal amount of the
Debentures then outstanding, or at a meeting of the Holders of
Debentures of any series the Holders of more than 25% of the
principal amount of the Debentures of such series then
outstanding, are not present in person or by proxy within 30
minutes after the time appointed for the meeting, then the
meeting, if convened by the Debentureholders or the Holders of
Debentures of such series or pursuant to a Debentureholder's
Request or a written request signed by the Holders
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of not less than 25% in principal amount of the Debentures of
such series, as the case may be, shall be dissolved; but in
any other case it shall be adjourned to such date, being not
less than 21 nor more than 60 days later, and to such place
and time as may be appointed by the chairman. Not less than 10
days' notice shall be given of the time and place of such
adjourned meeting in the manner provided in Article 9. Such
notice shall state that at the adjourned meeting the
Debentureholders or the Holders of Debentures of such series,
as the case may be, 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
Debentureholders or the Holders of the Debentures of such
series, as the case may be, 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 in accordance with
subsection 9.12(a) shall be an Extraordinary Resolution within
the meaning of this Indenture, notwithstanding that the
Holders of more than 25% of the principal amount of the
Debentures then outstanding or the Debentures of such series
then outstanding, as the case may be, 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.
9.13 POWERS CUMULATIVE
It is hereby declared and agreed that any one or more of the powers and/or any
combination of the powers in this Indenture stated to be exercisable by the
Debentureholders or the Holders of Debentures of any series 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 Debentureholders or the Holders
of the Debentures of such series, as the case may be, to exercise the same or
any other such power or powers or combination of powers thereafter from time to
time.
9.14 MINUTES
Minutes of all resolutions and proceedings at every meeting of Debentureholders
or the Holders of Debentures of any series, as the case may be, shall be made
and duly entered in books to be provided for that purpose by the Trustee at the
expense of the Corporation, and any such minutes, if signed by the chairman of
the meeting at which such resolutions were passed or proceedings had, or by the
chairman of the next succeeding meeting of the Debentureholders or the Holders
of Debentures of such series, as the case may be, shall be prima facie evidence
of the matters therein stated and, until the contrary is proved, every such
meeting, in respect of the proceedings of which minutes shall have been made,
shall be deemed to have been duly held and convened, and all resolutions passed
or proceedings had thereat, to have been duly passed and had.
9.15 SIGNED INSTRUMENTS
Any action which may be taken and any power which may be exercised by the
Debentureholders or the Holders of Debentures of any series, as the case may be,
under this Indenture may also be taken and exercised, in respect of an action
which may be taken or power which may be exercised by the Holders of not less
than 66 2/3% of the principal amount of the outstanding Debentures and, in
respect of an action which may be taken or power which may be exercised by the
Holders of Debentures of a series, by the Holders of not less than 66 2/3% of
the principal amount of the outstanding Debentures of such series by signed
instrument and the expression "Extraordinary Resolution" when used in this
Indenture shall include an instrument so signed. Notice of any Extraordinary
Resolution passed in accordance with this section 9.15 shall be given by the
Trustee to the Holders of Debentures or the Holders of Debentures of the series
affected thereby, as the case may be, within 30 days of the date on which such
Extraordinary Resolution was passed.
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9.16 BINDING EFFECT OF RESOLUTIONS
Every resolution and every Extraordinary Resolution passed in accordance with
the provisions of this Article 9 at a meeting of Debentureholders or Holders of
the Debentures of any series, as the case may be, shall be binding upon all the
Debentureholders or the Holders of Debentures of such series, as the case may
be, whether present at or absent from such meeting, and every instrument signed
by the Debentureholders or the Holders of the Debentures of any series, as the
case may be, in accordance with section 9.15 shall be binding upon all the
Debentureholders; or the Holders of the Debentures of such series, as the case
may be, whether signatories thereto or not, and each and every Debentureholder
or Holder of Debentures of such series, as the case may be, and the Trustee
(subject to the provisions for its indemnity herein contained) shall be bound to
give effect to every such resolution, Extraordinary Resolution and instrument.
9.17 SERIAL MEETING
(a) In addition to the power to convene a meeting of the Holders
of the Debentures of any series as provided in section 9.1, if
in the opinion of the Trustee any business to be transacted at
a meeting of Debentureholders, or any action to be taken or
power to be exercised by instrument in writing under section
9.15, especially affects the rights of the Holders of
Debentures of one or more series in a manner or to an extent
differing from that in which it affects the rights of the
Holders of Debentures of any other series, then:
(i) reference to such fact, indicating each series so
especially affected, shall be made in the notice of
such meeting and the meeting shall be and is herein
called a "serial meeting";
(ii) the Holders of Debentures of a series so especially
affected shall not be bound by any action taken or
power exercised at a serial meeting unless in
addition to the other provisions of this Article:
(A) there are present in person or by proxy at
the said meeting Holders of at least 25% in
principal amount of the outstanding
Debentures of such series, subject to the
provisions of this Article as to adjourned
meetings; and
(B) the resolution is passed by the favourable
votes of the Holders of at least a majority
(or in the case of an Extraordinary
Resolution not less than 66 2/3%), of the
principal amount of Debentures of such
series voted on the resolution;
(iii) the Holders, of Debentures of a series so especially
affected shall not be bound by any action taken or
power exercised by instrument in writing by the
Debentureholders under section 9.15 unless in
addition to the other provisions of this Article such
instrument is signed in one or more counterparts by
the Holders of 66 2/3% of the principal amount of the
outstanding Debentures of such series.
(b) Notwithstanding anything herein contained (but subject to the
provisions of any indenture, deed or instrument supplemental
or ancillary hereto), any covenant or other provision
contained herein or in any indenture supplemental hereto which
is expressed to be effective only so long as any Debentures of
a particular series remain outstanding may be modified by the
required resolution or consent of the Holders of the
Debentures of such series in the same manner as if the
Debentures of such series were the only Debentures outstanding
hereunder.
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9.18 EVIDENCE OF RIGHTS OF DEBENTUREHOLDERS
Any request, direction, notice, consent or other instrument which this Indenture
may require or permit to be signed or executed by the Debentureholders or the
Holders of Debentures of any series, as the case may be, may be in any number of
concurrent instruments of similar tenor and may be signed or executed by such
Debentureholders or Holders of Debentures of such series, as the case may be, in
person or by attorney duly appointed in writing. Proof of the execution of any
such request, direction, notice, consent or other instrument or of a writing
appointing any such attorney or (subject to the provisions of section 9.9 with
regard to voting at meetings of Debentureholders or Holders of any series of
Debentures) of the holding by any Person of Debentures or Coupons shall be
sufficient for any purpose of this Indenture if made in the following manner:
(a) the fact and date of the execution by any Person of such
request, direction, notice, consent or other instrument or
writing may be proved by the certificate of any notary public,
or other officer authorized to take acknowledgements of deeds
to be recorded at the place where, such certificate is made,
that the Person signing such request, direction, notice,
consent or other instrument or writing acknowledged to him the
execution thereof, or by an affidavit of a witness of such
execution or in any other manner which the Trustee may
consider adequate; and
(b) the fact of the holding by any Person executing such request,
direction, notice, consent or other instrument or writing of
Bearer Debentures and the amounts, designations and numbers
thereof and the date of his holding the same may be proved by
deposit of such Bearer Debentures with the Trustee or by a
certificate executed by any bank, trust company or other
depositary satisfactory to the Trustee certifying that on the
date therein mentioned such Person had on deposit with such
depositary the Bearer Debentures described in such certificate
and that, if applicable, such Bearer Debentures will remain so
deposited until the expiration of the time specified in such
certificate.
The Trustee may, nevertheless, in its discretion require further proof in cases
where it considers further proof necessary or desirable or may accept such other
proof as it shall consider proper.
ARTICLE 10
NOTICES
10.1 NOTICE TO THE CORPORATION
Any notice to the Corporation under the provisions of this Indenture shall be
valid and effective if delivered personally to, or, subject to section 10.4, if
given by registered mail, postage prepaid, addressed to, the Corporation at 1000
Louisiana, Suite 1500, Houston, Texas, 77002, Attention: Secretary and shall be
deemed to have been given on the date of delivery or on the third Business Day
after such letter has been mailed, as the case may be. The Corporation may from
time to time notify the Trustee of a change in address which thereafter, until
changed by further notice, shall be the address of the Corporation for all
purposes of this Indenture.
10.2 NOTICE TO DEBENTUREHOLDERS
Except as otherwise expressly provided herein, all notices to be given hereunder
with respect to the Debentures shall be valid and effective if, in the case of
Registered Debentures, such notice is delivered personally or is sent by first
class mail, postage prepaid, addressed to the Holders of the Registered
Debentures at their post office addresses appearing in any of the registers
hereinbefore mentioned, and, in the case of Bearer Debentures, such notice is
published in one or more daily newspapers of general circulation published in
the English language in the respective cities in which the Corporation is for
the time being required to maintain a register for the Debentures and in a daily
newspaper or newspapers published in such other place or places (if any) and in
such other language or languages (if any) as the Corporation or the Trustee may
determine or as may be specified in the terms and conditions relating to such
series
- 46 -
of Debentures, once in each of two successive weeks. Any notice so delivered,
sent by mail or published shall be deemed to have been given on the day upon
which it is delivered, mailed or the latest date on which the first publication
in each of such cities takes place, as the case may be. Any accidental error,
omission or failure in giving or in delivering, mailing or publishing any such
notice or the non-receipt of any such notice by any Debentureholders or Holders
shall not invalidate or otherwise prejudicially affect any action or proceeding
founded thereon.
10.3 NOTICE TO THE TRUSTEE
Any notice to the Trustee under the provisions of this Indenture shall be valid
and effective if delivered personally to, or, subject to section 10.4, if given
by registered mail, postage prepaid, addressed to, the Trustee at Montreal Trust
Corporate Services, 710, 530 - 8th Avenue SW, Calgary, Alberta, T2P 3S8,
Attention: Manager, Corporate Trust Department and shall be deemed to have been
given on the date of delivery or on the third Business Day after such letter has
been posted, as the case may be. The Trustee may from time to time notify the
Corporation of a change in address which thereafter, until changed by further
notice, shall be the address of the Trustee for all purposes of this Indenture.
10.4 MAIL SERVICE INTERRUPTION
If the Trustee determines that mail service is or is threatened to be
interrupted at the time when the Trustee is required or elects to give any
notice to the Holder of Registered Debentures hereunder, the Trustee shall,
notwithstanding the provisions hereof, give such notice by means of publication
in The Globe and Mail, national edition, or any other English language daily
newspaper or newspapers of general circulation in Canada and in a French
language daily newspaper of general circulation in the Province of Quebec, once
in each of two successive weeks, and any notice so published shall be deemed to
have been given on the latest date on which the first publication takes place.
If, by reason of any actual or threatened interruption of mail service due to
strike, lock-out or otherwise, any notice to be given to the Trustee or to the
Corporation would be unlikely to reach its destination in a timely manner, such
notice shall be valid and effective only if delivered personally in accordance
with sections 10.1 or 10.3, as the case may be.
ARTICLE 11
CONCERNING THE TRUSTEE
11.1 TRUST INDENTURE LEGISLATION
(a) In this Article 11, the term "Indenture Legislation" means the
provisions, if any, of the BUSINESS CORPORATIONS ACT (Canada),
the BUSINESS CORPORATIONS ACT (Yukon) and the BUSINESS
CORPORATIONS ACT (Ontario), and any other statute of Canada or
a province thereof, and of the regulations under any such
statute, relating to trust indentures and to the rights,
duties and obligations of trustees under trust indentures and
of corporations issuing debt obligations under trust
indentures, to the extent that such provisions are at the time
in force and applicable to this Indenture or the Corporation;
(b) If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with a mandatory requirement of
Indenture Legislation, such mandatory requirement shall
prevail; and
(c) At all times in relation to this Indenture and any action to
be taken hereunder, the Corporation and the Trustee each shall
observe and comply with Indenture Legislation and the
Corporation, the Trustee and each Debentureholder shall be
entitled to the benefits of Indenture Legislation.
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11.2 NO CONFLICT OF INTEREST
The Trustee represents to the Corporation that at the date of the execution and
delivery of this Indenture there exists no material conflict of interest in the
role of the Trustee as a fiduciary hereunder. If at any time a material conflict
of interest exists in the Trustee's role as a fiduciary hereunder the Trustee
shall, within 90 days after ascertaining that such a material conflict of
interest exists, either eliminate the same or else resign from the trusts
hereunder by giving notice in writing to the Corporation at least 21 days prior
to such resignation and shall thereupon be discharged from all further duties
and liabilities hereunder.
11.3 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
exercise that degree of care, diligence and skill that a
reasonably prudent trustee would exercise in comparable
circumstances;
(b) Subject only to subsection 11.3(a), 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
Debentureholders hereunder shall be conditional upon the
Debentureholders furnishing, when required by notice in
writing by the Trustee, sufficient funds to commence or
continue such act, action or proceeding and indemnity
reasonably satisfactory to the Trustee to protect and 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 risk its own funds or otherwise incur financial
liability in the performance of any of its duties or in the
exercise of any of its rights or powers unless indemnified as
aforesaid;
(c) The Trustee may, before commencing or at any time during the
continuance of any such act, action or proceeding, require the
Debentureholders at whose instance it is acting to deposit
with the Trustee the Debentures held by them, for which
Debentures the Trustee shall issue receipts; and
(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
Indenture Legislation, this section 11.3 and section 11.4.
11.4 EVIDENCE, EXPERTS AND ADVISERS
(a) In addition to the reports, certificates, opinions, statutory
declarations and other evidence required by this Indenture,
the Corporation shall furnish to the Trustee such additional
evidence of compliance with any provisions hereof, and in such
form, as may be prescribed by Indenture Legislation or as the
Trustee may reasonably require by written notice to the
Corporation;
(b) In the exercise of its rights, duties and obligations, 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 therein, upon statutory declarations, opinions,
reports, certificates or other evidence referred to in
subsection 11.4(a) provided that the Trustee examines the same
and determines that such evidence complies with the applicable
requirements of this Indenture and of Indenture Legislation;
and
(c) The Trustee may employ or retain such counsel, auditors,
accountants, appraisers or other experts or advisers, whose
qualifications give authority to any opinion or report made by
them, as it may reasonably require for the purpose of
discharging its duties hereunder and shall not be responsible
for any misconduct on the part of any of them.
- 48 -
11.5 TRUSTEE MAY DEAL IN DEBENTURES
Subject to section 11.3, the Trustee may buy, sell, lend upon and deal in the
Debentures or other securities of the Corporation, either with the Corporation
or otherwise, and generally contract and enter into financial transactions with
the Corporation or otherwise, without being liable to account for any profits
made thereby.
11.6 TRUSTEE NOT REQUIRED TO GIVE
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
this Indenture.
11.7 PROTECTION OF TRUSTEE
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
Debentures or Coupons (except the representation contained in
section 11.2 and in the certificate of the Trustee on the
Debentures) or 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 be bound to give notice to any Person or
Persons of the execution hereof; and
(d) the Trustee shall not incur any liability or responsibility
whatever or be in any way responsible for the consequence of
any breach on the part of the Corporation of any of the
covenants herein contained or of any acts of the agents of the
Corporation.
11.8 INVESTMENT OF TRUST MONEYS
Unless otherwise provided in this Indenture, any moneys held by the Trustee,
which under the trusts of this Indenture may or ought to be invested or which
may be on deposit with the Trustee or which may be in the hands of the Trustee,
may be invested and reinvested in the name or under the control of the Trustee
in any of the debt securities in which trustees are by the laws of the Province
of Ontario authorized to invest at the time of investment maturing not later
than one year from such time. Pending such investment such moneys may be placed
by the Trustee on deposit in a chartered bank in Canada or with its own deposit
department. The Trustee shall allow interest at the current rate for similar
deposits on moneys remaining on deposit with it and, provided that the
Corporation is not in default hereunder, shall credit the Corporation with
interest received on moneys deposited with other depositories and on all moneys
invested as provided in this section 11.8.
The Trustee shall be accountable only for reasonable diligence in the investment
of moneys under this section 11.8 and the Trustee shall not be liable for any
loss or losses realized on such investments, negligence, wilful acts or defaults
only excepted.
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11.9 ACTION BY TRUSTEE TO PROTECT INTERESTS
The Trustee shall have the power to institute and maintain all and any such
actions, suits or proceedings as it may consider necessary or expedient to
preserve, protect or enforce its interests and the interests of the Holders of
the Debentures.
11.10 REPLACEMENT OF TRUSTEE
The Trustee may resign from the trusts hereunder and thereupon be discharged
from all further duties and liabilities hereunder by giving to the Corporation
three months' notice in writing or such shorter notice as the Corporation may
accept as sufficient. The Debentureholders by Extraordinary Resolution shall
have power at any time to remove the Trustee and to appoint a new trustee
hereunder. 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 hereunder unless a new trustee has already been appointed by the
Debentureholders; failing such appointment by the Corporation, the retiring
trustee hereunder or any Debentureholder may apply to a Judge of the Ontario
High Court, on such notice as such Judge may direct, for the appointment of a
new trustee hereunder; but any trustee so appointed by the Corporation or by the
Court shall be subject to removal as aforesaid by the Debentureholders. Any new
trustee hereunder appointed under any provision of this section 11.10 shall be a
corporation authorized and qualified to carry on the business of a trust company
in the Province of Ontario and every other jurisdiction where such authorization
or qualification is necessary to enable it to act as a trustee hereunder and
shall certify that it will not have any material conflict of interest upon
becoming trustee hereunder. On any new appointment the new trustee shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as Trustee.
Any corporation into which the Trustee may be merged or with which it may be
consolidated or amalgamated, or any corporation resulting from any merger,
consolidation or amalgamation to which the Trustee shall be a party, shall be
the successor Trustee under this Indenture without the necessity of the
execution of any instrument or any further act.
11.11 ACCEPTANCE OF TRUSTS
The Trustee accepts the trusts in this Indenture declared and provided for and
agrees to perform the same upon the terms and conditions herein set forth and in
trust for the various Persons who shall from time to time be Debentureholders,
subject to the terms and conditions herein set forth.
11.12 INDEMNIFICATION OF TRUSTEE
Except for its gross negligence or wilful misconduct: (a) the Trustee shall not
be liable for any act done or step taken or omitted by it in good faith, or for
any mistake of fact or law; and (b) the Company agrees to indemnify and save
harmless the Trustee from and against all claims, demands, action, suits or
other proceedings by whomsoever made, prosecuted or brought and from all loss,
costs, damages and expenses in any manner based upon, occasioned by or
attributable to any act of the Trustee in the execution of its duties hereunder.
It is understood and agreed that this indemnification shall survive the
termination of this Indenture.
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ARTICLE 12
SUPPLEMENTAL INDENTURES
12.1 SUPPLEMENTAL INDENTURES
From time to time the Trustee and, when authorized by a resolution of the
Directors, the Corporation may and they shall, when required by this Indenture,
execute, acknowledge and deliver by their proper officers deeds or indentures
supplemental hereto, which thereafter shall form part hereof, for any one or
more of the following purposes:
(a) establishing the terms of any series of Debentures and the
forms and denominations in which they may be issued as
provided in Article 2;
(b) adding to the provisions hereof such additional covenants of
the Corporation, enforcement provisions and other provisions
for the protection of the Holders of the Debentures and/or
providing for events of default in addition to those herein
specified;
(c) making such provisions not inconsistent with this Indenture as
may be necessary or desirable with respect to matters or
questions arising hereunder, including the making of any
modifications in the form of the Debentures and/or Coupons
which do not affect the substance thereof and which, in the
opinion of the Trustee, it may be expedient to make, provided
that the Trustee shall be of the opinion that such provisions
and modifications will not be prejudicial to the interests of
the Debentureholders;
(d) providing for the issue as permitted hereby, of Debentures of
any one or more series on or after the date of this Indenture;
(e) evidencing the succession, or successive successions, of other
corporations to the Corporation and the covenants of and
obligations assumed by any such successor in accordance with
the provisions of this Indenture;
(f) giving effect to any Extraordinary Resolution passed as
provided in Article 9;
(g) making any modification of any of the provisions of this
Indenture or the Debentures which is of a formal, minor or
technical nature;
(h) making any additions to, deletions from or alterations of the
provisions of this Indenture (including any of the terms and
conditions of the Debentures) which, in the opinion of the
Trustee, are not materially prejudicial to the interests of
the Debentureholders and which are necessary or advisable in
order to incorporate, reflect or comply with Indenture
Legislation;
(i) adding to or altering the provisions hereof in respect of the
transfer of Debentures, including provision for the exchange
of Debentures of different denominations, and making any
modification in the form of the Debentures which does not
affect the substance thereof and which, in the opinion of the
Trustee, is not materially prejudicial to the interests of the
Debentureholders;
(j) correcting or rectifying any ambiguities, defective
provisions, errors or omissions herein, provided that, in the
opinion of the Trustee, the rights of the Trustee and the
Debentureholders are in no way prejudiced thereby; and
(k) any other purpose not inconsistent with the terms of this
Indenture provided that, in the opinion of the Trustee, the
rights of the Trustee and of the Debentureholders are in no
way prejudiced thereby.
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12.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS
With the consent of the Holders of the outstanding Debentures affected by such
supplemental indenture, given by Extraordinary Resolution, the Corporation, when
authorized by or pursuant to a resolution of the Directors, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Debentures under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
outstanding Debenture affected thereby:
(a) change the Stated Maturity of the principal of, or any
instalment of interest on, any Debenture, or reduce the
principal amount thereof or the rate of interest thereon or
any premium payable upon the redemption thereof, or change any
obligation of the Corporation to pay Additional Amounts
contemplated by section 5.8 (except as contemplated by section
8.1(b) and permitted by section 12.1), or adversely affect any
right of repayment at the option of any Holder of any
Debenture or change any Place of Payment where, or the
currency in which, any Debenture or any premium or the
interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption or
repayment at the option of the Holder, on or after the
redemption date or repayment date, as the case may be), or
(b) reduce the percentage in principal amount of the outstanding
Debentures of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent
of whose Holders is required for any waiver of compliance with
certain provisions of this Indenture or certain defaults
hereunder and their consequences provided for in this
Indenture, or reduce the requirements of section 9.4 for
quorum or voting, or
(c) modify any of the provisions of this section, section 5.11 or
section 6.13, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot
be modified or waived without the consent of the Holder of
each outstanding Debenture affected thereby.
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A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Debentures, or which modifies the
rights of the Holders of Debentures of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Debentures of any other series.
It shall not be necessary for any consent of Holders under this section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such action shall approve the substance thereof.
ARTICLE 13
EXECUTION
13.1 COUNTERPARTS AND FORMAL DATE
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 shall be deemed to bear date as of the 25th day of March, 1998.
13.2 LANGUAGE OF INDENTURE
The parties hereto have requested that this document be drafted in the English
language.
Les parties ont demande que le present document soit redige en langue anglaise.
IN WITNESS WHEREOF the parties hereto have executed this Indenture under their
respective corporate seals and the hands of their proper officers duly
authorized in that behalf.
BENZ ENERGY LTD.
By: /s/ ROBERT S. HERLIN, CHIEF FINANCIAL OFFICER
-----------------------------------------------------
c/s
By: XXX
-----------------------------------------------------
MONTREAL TRUST COMPANY OF CANADA
By: XXX
-----------------------------------------------------
c/s
By: /s/ MAUREEN BERGOS
-----------------------------------------------------
SCHEDULE A
CONVERTIBLE DEBENTURES SERIES 1
to the foregoing Indenture made as of March 25, 1998 between Benz Energy Ltd.
and Montreal Trust Company of Canada, as Trustee.
1. MATURITY, INTEREST, CURRENCY OF DENOMINATION. The first series of
Debentures to be issued, certified and delivered hereunder (the
"Convertible Debentures Series 1") shall have the rights, conditions,
limitations and privileges in this Schedule set forth, shall be
denominated in U.S. dollars, shall consist of and be limited to US
$30,000,000 in principal amount of Debentures and shall be designated
as Convertible Debentures Series 1, shall mature on March 31, 2003 (the
"Maturity Date") and shall bear interest at 9% per annum from their
date, payable in lawful money of the United States after as well as
before maturity, default and judgment, with interest on amounts in
default at the same rate, semi-annually in arrears on March 31 and
September 30, in each year, the first of such payments to be made on
September 30, 1998.
2. INTEREST ACCRUED. The Convertible Debentures Series 1 shall cease to
bear interest (i) from their date of redemption unless, upon due
presentation, payment of the principal in respect of the Convertible
Debenture Series 1 is improperly withheld or refused or unless a
default is otherwise made in respect of such payment, in which event
interest shall continue to accrue as provided in the Indenture, or (ii)
where the right to convert the Convertible Debentures Series 1 shall
have been exercised in accordance with the provisions of the Indenture;
or (iii) respectively, from the interest payment date last proceeding
the day of conversion of the Convertible Debentures Series 1 or, if the
Convertible Debentures Series 1 are converted prior to the first
interest payment date, from the date of issue.
3. INTEREST FOR LESS THAN ONE YEAR. When interest is required to be
calculated in respect of a period of less than a full year, it shall be
calculated on the basis of the actual number of calendar days in such
year and the number of days elapsed.
4. PAYMENT OF PRINCIPAL, INTEREST.
(a) Payment of principal in respect of each Convertible Debenture
Series 1 shall only be made against presentation and surrender
(or, in the case of part payment only, endorsement) of the
relevant Convertible Debenture Series 1 at the specified
office of any of the Paying Agents. Payments of interest due
on the Convertible Debentures Series 1 on an interest payment
date shall only be made against presentation and surrender
(or, in the case of part payment only, endorsement) of the
relevant Coupons at the specified office of any of the Paying
Agents. All payments of principal or interest shall be made in
U.S. dollars. Such payments will be made by transfer to a U.S.
dollar account maintained by the payee with a bank outside of
the United States or by a U.S. dollar cheque mailed to an
address, or delivered, outside the United States, subject in
all cases to any fiscal or other local laws or regulations
applicable thereto.
(b) If, at any time, payments in U.S. dollars cannot, in the
opinion of the Issuer or of the Paying Agents, be so made,
payments will be made in U.S. dollars in such other manner as
may be approved by the Issuer and the Paying Agents, subject
as aforesaid in paragraph (a) above. In the event that payment
cannot be made as provided in paragraph (a) above, notice of
the alternative manner of payment will be given to the
Debentureholders in accordance with Condition 12 below.
(c) If the due date for payment of any amount of principal or
interest in respect of a Convertible Debenture Series 1 is not
at any place of payment a business day, then the holder
thereof will not be entitled to payment at the relevant place
of payment of the amount due until the next following business
day at the relevant place of payment and will not be entitled
to any further interest or other payment in respect of any
such delay. In this paragraph, "business day" means any day on
which
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banks are open for business in Toronto, London, New York and
the relevant place of payment or (in the case of payment by
transfer to a U.S. dollar account as referred to in paragraph
(a) above) on which dealings in foreign currencies may be
carried on in each of Toronto, London, New York and such place
of payment.
5. PAYMENT ON REDEMPTION. Each Convertible Debenture Series 1 must be
presented for redemption together with all unmatured Coupons relating
to such Convertible Debenture Series 1, failing which the full amount
of any missing unmatured Coupon (or, in the case of payment not being
made in full, that proportion of the full amount of the missing
unmatured Coupons which the amounts so paid bears to the total amount
due) will be deducted from the amount due for payment. Each amount so
deducted shall be paid in the manner mentioned above against
presentation and surrender (or, in the case of part payment only,
endorsement) of such missing Coupon at any time before the expiry of
six years after the date of redemption of the Convertible Debenture
Series 1 or, if later, five years after the date on which such Coupon
would have become due, but not thereafter.
6. UNCLAIMED AMOUNTS. All monies paid by the Corporation to the
Principal Paying Agent for the payment of principal or interest on
any Convertible Debenture Series 1 which remain unclaimed at the end
of two years after the principal on such Convertible Debenture
Series 1 will have become due and payable shall be repaid to the
Corporation and the holder of such Convertible Debenture Series 1 or
any Coupon appertaining thereto or thereafter shall have only the
rights of a creditor of the Corporation as described in the
Indenture or such rights as may be otherwise prescribed by
applicable law.
7. ROUNDING AMOUNTS. When making payments to holders of Convertible
Debentures Series 1 or holders of Coupons, fractions of US $0.01 shall
be rounded down to the nearest whole cent.
8. FORM AND DENOMINATIONS OF DEBENTURES. The Convertible Debentures Series
1 will initially be issued in temporary global form (the "Global
Debenture") and thereafter in bearer form in denominations of
U.S.$5,000, U.S.$10,000 and U.S.$50,000, serially numbered, with
coupons attached (at the date of issue) for payment of interest (the
"Coupons") and will be transferable by delivery.
a. Each Global Debenture shall bear the following legend on the
face thereof:
THIS DEBENTURE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, CONVERTED OR OTHERWISE DISPOSED OF IN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY "U.S.
PERSON" (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT)
UNLESS THIS DEBENTURE HAS BEEN REGISTERED UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS OR
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS ARE
AVAILABLE.
THIS DEBENTURE HAS NOT BEEN QUALIFIED FOR DISTRIBUTION IN
CANADA AND THIS DEBENTURE MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, CONVERTED OR OTHERWISE DISPOSED OF IN
CANADA OR TO OR FOR THE BENEFIT OF ANY RESIDENT OF CANADA
EXCEPT IN COMPLIANCE WITH THE PROSPECTUS AND REGISTRATION
REQUIREMENTS THEREIN OR AVAILABLE EXEMPTIONS THEREFROM.
b. The Global Debenture initially shall be delivered to the
Common Depository and shall bear the legend set forth in (a)
above. Members of, or participants in, Euroclear and Cedel
Bank ("Agent Members") shall have no rights under this
Indenture with respect to any Global Debenture held on their
behalf by the Common Depository, or under the Global
Debenture, and the Common Depository may be treated by the
Issuer, the Trustee and any agent of the Issuer or the Trustee
as the absolute
A-3
owner of such Global Debenture for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent
the Issuer, the Trustee or any agent of the Issuer or the
Trustee, from giving effect to any written certification,
proxy or other authorization furnished by the Common
Depository or shall impair, as between the Common Depository
and the Agent Members, the operation of customary practices
governing the exercise of the rights of a Debentureholder.
c. Transfers of the Global Debenture shall be limited to
transfers of such Global Debenture in whole, but not in part,
to the Common Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global
Debenture may be transferred in accordance with the rules and
procedures of Euroclear or Cedel Bank and this section.
Beneficial owners will receive definitive Debentures in
exchange for their beneficial interests in the Global
Debenture upon request in accordance with the procedures of
Euroclear or Cedel Bank. Definitive Debentures shall be
transferred to all beneficial owners in exchange for their
beneficial interests in the Global Debenture if (i) the Common
Depository notifies the Issuer that it is unwilling or unable
to continue as Common Depository for the Global Debenture and
a successor depository is not appointed by the Issuer within
90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Trustee has received a
request from the Common Depository.
d. In connection with any transfer of beneficial interest in the
Global Debenture to beneficial owners pursuant to subsection
(c) of this section, the Common Depository shall reflect on
its books and records the date and cancellation of the Global
Debenture, and the Issuer shall execute, and the Trustee or
its agent shall authenticate and deliver, one or more
definitive Debentures in an amount equal to the principal
amount of the beneficial interest in the Global Debenture to
be transferred.
e. Any definitive Debenture delivered in exchange for an interest
in the Global Debenture pursuant to subsection (c) or
subsection (d) of this section shall bear the applicable
legend regarding transfer restrictions applicable to the
definitive Debenture set forth in the terms and conditions
relating to the relevant series of Debentures.
f. The Holder of the Global Debenture may grant proxies and
otherwise authorize any person, including Agent Members and
persons that may hold interests through Agent Members, to take
any action which a Debentureholder is entitled to take under
this Indenture or the Debentures.
g. Any definitive Debenture delivered in exchange for an interest
in the Global Debenture pursuant to subsection (c) or (d) of
this section will prior to delivery to the Debentureholder
have all matured Coupons as of such delivery date, which are
attached to such definitive Debenture, cancelled and voided by
the Trustee or its agent.
h. Each definitive Debenture shall bear the following legend on
the face thereof:
NEITHER THE CONVERTIBLE DEBENTURES NOR THE COMMON
SHARES ISSUABLE UPON CONVERSION OF THE CONVERTIBLE
DEBENTURES HAVE BEEN OR WILL BE REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND NEITHER THE CONVERTIBLE
DEBENTURES NOR THE COMMON SHARES MAY BE OFFERED,
SOLD, TRANSFERRED, PLEDGED, CONVERTED OR OTHERWISE
DISPOSED OF IN THE UNITED STATES OR TO A U.S.
RESIDENT UNLESS SUCH CONVERTIBLE DEBENTURES OR COMMON
SHARES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH LAWS ARE AVAILABLE.
A-4
NEITHER THE CONVERTIBLE DEBENTURES NOR THE COMMON
SHARES ISSUABLE UPON CONVERSION OF THE CONVERTIBLE
DEBENTURES HAVE BEEN QUALIFIED FOR DISTRIBUTION IN
CANADA AND NEITHER THE CONVERTIBLE DEBENTURES NOR THE
COMMON SHARES MAY BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, CONVERTED OR OTHERWISE DISPOSED OF IN CANADA
OR TO OR FOR THE BENEFIT OF ANY RESIDENT OF CANADA
EXCEPT IN COMPLIANCE WITH THE PROSPECTUS AND
REGISTRATION REQUIREMENTS THEREIN OR AVAILABLE
EXEMPTIONS THEREFROM.
9. CONVERSION:
a. The Convertible Debentures Series 1 shall be convertible at
the option of the holder into Common Shares, at any time prior
to the close of business on March 27, 2003 (the "Time of
Expiry"), at a conversion price of Cdn. $1.70 per Common
Share, subject to adjustment in accordance with the Indenture
and subsection (h) hereof (the "Conversion Price").
Notwithstanding the foregoing, if a Convertible Debenture
Series 1 is called for redemption by the Corporation (as
discussed below), the right of the holder to convert the
Convertible Debenture Series 1 shall expire at the close of
business on the second business day immediately prior to the
date of redemption.
b. If the holder of Convertible Debentures Series 1 elects to
convert the Convertible Debentures Series 1 prior to the date
of the third semi-annual coupon with respect thereto, the
holder shall receive on such conversion a premium on the
number of Common Shares to be issued on such conversion
determined based upon the aggregate principal amount of
Convertible Debentures Series 1 to be converted by multiplying
.05 by the number of Common Shares to be so issued and
rounding down to the nearest whole number.
c. The holder of a Convertible Debenture Series 1 desiring to
convert such Convertible Debenture Series 1 in whole or in
part into Common Shares shall surrender such Convertible
Debenture Series 1 to the specified office of any of the
Conversion Agents, together with the Conversion Form on the
back of such Convertible Debenture Series 1 or any other
written notice in a form satisfactory to the Conversion Agent,
in either case duly executed by the holder or his executors or
administrators or other legal representatives or his or their
attorney duly appointed by an instrument in writing in form
and executed in a manner satisfactory to the Conversion Agent,
exercising his right to convert such Convertible Debenture
Series 1 in accordance with the provisions of the Indenture
and any agency agreement thereunder. Thereupon such
Debentureholder and/or, subject to payment of all applicable
stamp or security transfer taxes or other governmental charges
and compliance with all reasonable requirements of the Trustee
or the Conversion Agent, his nominee(s) or assignee(s) shall
be entitled to be entered in the books of the Corporation as
at the Date of Conversion (or such later date as is specified
in Subsection 9(d)) as the holder of the number of Common
Shares into which such Convertible Debenture Series 1 is
convertible in accordance with the provisions thereafter, the
Corporation shall deliver to such Debentureholder and/or,
subject as aforesaid, his nominee(s) or assignee(s), a
certificate or certificates for such Common Shares and, if
applicable, a cheque for any amount payable under Section 4.4
of the Indenture.
d. For the purposes of this Schedule, a Convertible Debenture
Series 1 shall be deemed to be surrendered for conversion on
the date (herein called "Date of Conversion") on which it is
so surrendered in accordance with the provisions hereof and,
in the case of a Convertible Debenture Series 1 so surrendered
by post or other means of transmission, on the date on which
it is received at the specified office of any of the
Conversion Agents; provided that if a Convertible Debenture
Series 1 is surrendered for conversion on a day on which the
register of Common Shares is closed,
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the Person or Persons entitled to receive Common Shares shall
become the holder or holders of record of such Common Shares
as at the date on which such registers are next reopened.
e. Any part, being US $5,000 or an integral multiple thereof, of
a Convertible Debenture Series 1 of a denomination in excess
of US $5,000 may be converted as provided in this Schedule and
all references in this Schedule and in the Indenture to
conversion of Convertible Debenture Series 1 shall be deemed
to include conversion of such parts.
f. The holder of any Convertible Debenture Series 1 of which part
only is converted shall, upon the exercise of his right of
conversion, surrender the said Convertible Debenture Series 1
to the Trustee or its agent, and the Trustee or its agent
shall cancel the same and definitive Convertible Debentures
Series 1 for the unconverted principal balance, in
denominations of U.S. $5,000, U.S. $10,000 and U.S. $50,000,
as applicable, with unmatured Coupons attached, will be
available at the offices of the Paying and Conversion Agents.
g. The holder of a Convertible Debenture Series 1 surrendered for
conversion in accordance with this Schedule shall be entitled
to receive accrued and unpaid interest in respect thereof up
to the interest payment date on or next preceding the Date of
Conversion of such Convertible Debenture Series 1, but there
shall be no payment or adjustment by the Corporation on
account of any interest accrued or accruing on such
Convertible Debenture Series 1 from the latest interest
payment date, and the Common Shares issued upon such
conversion shall rank only in respect of dividends declared in
favour of shareholders of record on and after the Date of
Conversion or such later date as such holder shall become the
holder of record of such Common Shares pursuant to Subsection
(d) of this Section 9, from which applicable date they will
for all purposes be and be deemed to be issued and outstanding
as fully paid and non-assessable Common Shares.
h. The Conversion Price otherwise applicable hereunder shall be
converted to U.S. dollars based upon the Exchange Rate as of
the last day in the calendar quarter preceding the Date of
Conversion, where "Exchange Rate" means, on any date, for any
conversion of U.S. dollars into Canadian dollars, or VICE
VERSA, the applicable spot buying rate for Canadian dollars or
United States dollars, as the case may be, quoted by The Bank
of Nova Scotia at approximately noon (Toronto, Canada time) on
such date if it is a business day or on the immediately
preceding business day if such date is not a business day.
i. Any Officers' Certificate required by the Indenture after the
occurrence of any event which requires an adjustment or
readjustment as provided in section 4.3 of the Indenture shall
be delivered to each of the Paying and Conversion Agents
substantially concurrently with its delivery to the Trustee.
10. REQUIRED CONVERSION. The Corporation may, at any time after September
30, 1999 and prior to the Maturity Date, by notice in writing given to
the holders thereof, require that all outstanding Convertible
Debentures Series 1 be converted into Common Shares if the weighted
average trading price of the Common Shares on the principal stock
exchange in Canada on which the Common Shares are traded during a 20
consecutive trading day period ending not more than five days prior to
the giving of such notice is not less than 140% of the Conversion Price
then in effect.
11. REDEMPTION. The Convertible Debentures Series 1 shall be redeemable, in
whole or in part, at the option of the Corporation at any time after
March 31, 2002 and prior to maturity at the principal amount thereof to
be redeemed, together with accrued and unpaid interest.
12. NOTICES. In addition to notice to the holders of Convertible Debentures
Series 1 as provided in Section 10.2 of the Indenture, all notices to
holders of Convertible Debentures Series 1 shall be published in the
Financial
A-6
Times, or such other leading daily financial newspaper with general
circulation in Europe as the Trustee may approve, and a daily leading
newspaper with general circulation in Luxembourg, which is expected to
be the Luxembourg Wort, for so long as the Convertible Debentures
Series 1 are listed on the Luxembourg Stock Exchange.
13. AGENTS. The Company shall have the right, subject to the prior approval
of the Trustee, at any time to vary or terminate the appointment of any
Paying Agent, Conversion Agent or Replacement Agent and to appoint
additional or other Paying Agents, Conversion Agents or Replacement
Agents, provided that, for so long as the Convertible Debentures Series
1 are listed on the Luxembourg Stock Exchange, it will at all times
maintain at least one Paying Agent, one Conversion Agent and one
Replacement Agent in Luxembourg and one Paying Agent and one Conversion
Agent having a specified office in one other European city approved by
the Trustee. Notice of any termination or appointment and of any
changes in specified offices will be given to the holders of the
Convertible Debentures Series 1 promptly in accordance with the terms
hereof and of the Indenture.
14. CERTIFICATES. The global and definitive Convertible Debentures Series 1
and the authentication by the Principal Paying Agent to be endorsed on
the Convertible Debentures Series 1 shall respectively be substantially
in the forms set out in Exhibits 1A and 1B hereto with such appropriate
insertions, omissions, substitutions and variations as may be approved
or permitted under the terms of the Indenture and/or as the Trustee may
approve.
15. In this Schedule A:
"BUSINESS DAY" means (except where otherwise specifically provided) any
day other than a Saturday and Sunday, which is a day on which banking
institutions in Luxembourg, Toronto, London and New York are not
authorized or obligated by law, regulation or executive order to close;
"CEDEL BANK" means Cedel Bank, societe anonyme;
"COMMON DEPOSITORY" means the common depository appointed by Morgan
Guaranty Trust Company of New York, Brussels office, as operator of the
Euroclear System, and Cedel Bank, societe anonyme, which shall
initially be Midland Bank plc, including the nominees and successors of
any Common Depository;
"CONVERSION AGENT" means Midland Bank plc, Kredietbank S.A.
Luxembourgeoise or Swiss Bank Corporation, or such other Person as the
Company may appoint in addition to or in replacement thereof;
"EUROCLEAR" means the Euroclear System;
"MATERIAL SUBSIDIARY" means a Subsidiary of a Person which as of the
last audited consolidated financial statements of the Person
constituted more than 15% of the consolidated assets of the Person or
15% of the consolidated revenue of the Person for the 12 months then
ended;
"PAYING AGENT" means Midland Bank plc, Kredietbank S.A.
Luxembourgeoise or Swiss Bank Corporation, or such other Person as the
Company may appoint in addition to or in replacement thereof;
"PRINCIPAL PAYING AGENT" means Midland Bank plc, or such other Person
as the Company may appoint in addition to or in replacement thereof;
and
"REPLACEMENT AGENT" means Kredietbank S.A. Luxembourgeoise, or such
other Person as the Company may appoint in addition to or in
replacement thereof.
A-7
- -------------------------------------------------------------------------------
EXHIBIT 1A
FORM OF TEMPORARY GLOBAL CONVERTIBLE DEBENTURE
- -------------------------------------------------------------------------------
BENZ ENERGY LTD.
TEMPORARY GLOBAL CONVERTIBLE DEBENTURE
U.S. $30,000,000
9% CONVERTIBLE DEBENTURE, SERIES 1 DUE MARCH 31, 2003
This temporary Global Convertible Debenture is issued in respect of the U.S.
$30,000,000 9% Convertible Debentures, Series 1 due March 31, 2003 (the
"Convertible Debentures") of Benz Energy Ltd. (the "Issuer"). The Convertible
Debentures are issued subject to and with the benefits of a trust indenture as
of March 25, 1998 (the "Indenture") between the Issuer and Montreal Trust
Company of Canada (the "Trustee"), as trustee, and a paying and conversion
agency agreement made as of March 25, 1998 (the "Agency Agreement") among the
Issuer, the Trustee, Midland Bank plc (the "Principal Paying Agent") and
Kredietbank S.A. Luxembourgeoise and Swiss Bank Corporation (each a "Paying
Agent").
1. PROMISE TO PAY
Subject as provided in this temporary Global Convertible Debenture, the
Issuer, for value received, promises to pay the bearer upon
presentation and surrender of this temporary Global Convertible
Debenture the sum of U.S. $30,000,000 (Thirty million United States
dollars) or such lesser sum as is equal to the principal amount of the
Convertible Debentures represented by this temporary Global Convertible
Debenture on March 31, 2003 or on such earlier date as the principal of
this temporary Global Convertible Debenture may become due and to pay
interest on the principal sum for the time being outstanding at the
rate of 9% from March 25, 1998 payable in lawful money of the United
States, after as well as before maturity, default and judgement, with
interest on amounts in default at the same rate, semi-annually in
arrears on March 31 and September 30, in each year, the first such
payment to be made on September 30, 1998, together with any other
amounts as may be payable, all subject to and under the Terms and
Conditions set out in the definitive Convertible Debentures (the "Terms
and Conditions").
2. EXCHANGE FOR DEFINITIVE CONVERTIBLE DEBENTURES AND PURCHASES
Subject to the Exchange Agent (as defined below) having received a
certificate from Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System ("Euroclear") or Cedel
Bank, societe annoyme ("Cedel Bank") substantially in the form of the
certificate attached as Attachment I, this temporary Global Convertible
Debenture may be exchanged for duly executed definitive Convertible
Debentures without charge and the Principal Paying Agent or such other
person as the Principal Paying Agent may direct (the "Exchange Agent")
shall deliver, in full exchange for this temporary Global Convertible
Debenture, an aggregate principal amount of duly executed definitive
Convertible Debentures with Coupons attached equal to the principal
amount of this Global Convertible Debenture submitted for exchange.
Any person who would, but for the provisions of this temporary Global
Convertible Debenture, the Indenture and the Agency Agreement,
otherwise be entitled to receive a definitive Convertible Debenture
shall not be
A-8
entitled to a definitive Convertible Debenture unless and until such
person shall have delivered or caused to be delivered to Euroclear or
Cedel Bank a certificate in substantially the form of the certificate
attached as Attachment II (copies of which form of certificate will be
available at the offices of Euroclear in Brussels and Cedel Bank in
Luxembourg).
The definitive Convertible Debentures to be issued on exchange will be
in bearer form in the denominations of U.S. $5,000, $10,000 and
$50,000, each with interest Coupons attached.
Subject as provided below, definitive Convertible Debentures will only
be issuable after the date (the "Exchange Date") which is 90 days after
the date of issue of the Global Convertible Debenture; provided
however, that in the event of the occurrence of an event of default in
respect of the Convertible Debentures before the Exchange Date, the
Issuer will procure that definitive Convertible Debentures will be
issued in respect of this temporary Global Convertible Debenture within
seven days of the occurrence of the event of default as if the eighth
day were the Exchange Date.
Upon receipt of instructions from Euroclear or Cedel Bank that,
following the purchase by or on behalf of the Issuer of a part of this
temporary Global Convertible Debenture, part is to be cancelled, the
portion of the principal amount of this temporary Global Convertible
Debenture to be so cancelled shall be endorsed by or on behalf of the
Principal Paying Agent on Part I of the Schedule to this temporary
Global Convertible Debenture, whereupon the principal amount of this
temporary Global Convertible Debenture shall be reduced for all
purposes by the amount so exchanged or cancelled and endorsed.
3. BENEFITS
Until the entire principal amount of this temporary Global Convertible
Debenture has been extinguished in exchange for definitive Convertible
Debentures, this temporary Convertible Debenture shall in all respects
be entitled to the same benefits as the definitive Convertible
Debentures for which it may be exchanged.
4. PAYMENTS
Payments in respect of Convertible Debentures for the time being
represented by this temporary Global Convertible Debenture shall be
made to the bearer only upon presentation by Euroclear or, as the case
may be, Cedel Bank, to the Principal Paying Agent as its specified
office of a certificate, substantially in the form of the certificate
attached as Attachment I, to the effect that Euroclear or, as the case
may be, Cedel Bank, has received a certificate substantially in the
form of the certificate attached as Attachment II.
Upon any payment in respect of the Convertible Debentures represented
by this temporary Global Convertible Debenture the amount so paid shall
be endorsed by or on behalf of the Principal Paying Agent on Part II of
the Schedule to this temporary Global Convertible Debenture. In the
case of any payment of principal, the principal amount of this
temporary Global Convertible Debenture shall reduced for all purposes
by the amount so paid and the remaining principal of this temporary
Global Convertible Debenture shall be endorsed by or on behalf of the
Principal Paying Agent on Part II of the Schedule to this temporary
Global Debenture.
5. AUTHENTICATION
This temporary Global Convertible Debenture shall not become valid or
enforceable for any purpose unless and until it has been authenticated
by or on behalf of the Principal Paying Agent.
A-9
6. GOVERNING LAW
This temporary Global Convertible Debenture is governed by, and shall
be construed in accordance with, the laws of the Province of Ontario,
Canada.
IN WITNESS whereof this temporary Global Convertible Debenture has been manually
executed on behalf of the Issuer.
BENZ ENERGY LTD.
By:
-----------------------------------
Dated March 25, 1998
CERTIFICATE OF AUTHENTICATION
This is the temporary Global Convertible Debenture described in the Agency
Agreement referred to above.
By or on behalf of Midland Bank plc
as Principal Paying Agent (without recourse, warranty or
liability)
By:
-----------------------------------
A-10
ATTACHMENT I
BENZ ENERGY LTD.
U.S.$30,000,000
9% CONVERTIBLE DEBENTURE, SERIES 1 DUE MARCH 31, 2003
(THE "SECURITIES")
This is to certify that, based solely on certifications we have received in
writing, by tested telex or by electronic transmission from member
organizations appearing in our records as persons being entitled to a portion
of the principal amount set forth below (our "Members Organizations")
substantially to the effect set forth in the Agency Agreement, as of the date
hereof, U.S. $- principal amount of the Securities: (i) is owned by persons
that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of
which is subject to United States Federal income taxation regardless of its
source ("United States persons"), (ii) is owned by United States persons that
(a) are foreign branches of United States financial institutions (as defined
in U.S. Treasury Regulations Section 1.165-12(c)(l)(v) ("financial
institutions") purchasing for their own account or for resale, or (b)
acquired the Securities through foreign branches of United States financial
institutions and who hold the Securities through such United States financial
institutions on the date hereof (and in either case (a) or (b), each such
United States financial institution has agreed, on its own behalf or through
its agent, that we may advise the Issuer or the Issuer's agent that it will
comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the
Internal revenue Code of 1986, as amended, and the regulations thereunder),
or (iii) is owned by United States or foreign financial institutions for
purposes of resale during the restricted period (as defined in U.S. Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)); to the further effect that
United States or foreign financial institutions described in clause (iii)
above (whether or not also described in clause (i) or (ii)) have certified
that they have not acquired the Securities for purposes of resale directly or
indirectly to a United States person or to a person within the United States
or its possessions; and lastly to the effect that such principal amount of
the Securities is owned by persons that are not residents of or in Canada.
If the Securities are of the category contemplated in Section 230.903(c)(3)
or Regulation S under the Securities Act of 1933, as amended (the "Act") then
this is also to certify with respect to such principal amount of Securities
set forth above that, except as set forth below, we have received in writing,
by tested telex or by electronic transmission, from our Member Organizations
entitled to a portion of such principal amount, certifications with respect
to such portion, substantially to the effect set forth in the Agency
Agreement.
We further certify (i) that we are not making available herewith for exchange
(or, if relevant, exercise of any rights or collection of any interest) any
portion of the temporary global Security excepted in such certifications and
(ii) that as of the date hereof we have not received any notification from
any of our Member Organizations to the effect that the statements made by
such Member Organizations with respect to any portion of the part submitted
herewith for exchange (or, if relevant, exercise of any rights or collection
of any interest) are no longer true and cannot be relied upon as at the date
hereof.
We understand that this certificate is required in connection with certain
tax laws and, if applicable, certain securities laws of the United States and
Canada. In connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certification is or
would be relevant, we irrevocably authorize you to produce this certification
to any interested party in such proceedings.
DATED this
A-11
[Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear
System] [Cedel Bank, societe anonyme]
By:
------------------------------------
Authorized Signatory
* To be dated no earlier than (i) the payment date or (ii) the Exchange
Date (where the certificate relates to the exchange of the temporary
Global Convertible Debenture for an interest in the definitive Global
Convertible Debenture).
A-12
ATTACHMENT II
BENZ ENERGY LTD.
U.S.$30,000,000
9%, CONVERTIBLE DEBENTURE, SERIES 1 DUE MARCH 31, 2003
(THE "SECURITIES")
This is to certify that as of the date hereof, and except as set forth below,
the Securities held by you for our account (i) are owned by person(s) that
are not citizens or residents of the United States, domestic partnerships,
domestic corporations or any estate or trust the income of which is subject
to United states Federal income taxation regardless of its source ("United
States person(s)"), (ii) are owned by United States person(s) that (a) are
foreign branches of United States financial institutions (as defined in U.S.
Treasury Regulations Section 1.165-12(c)(1)(v)) ("financial institutions")
purchasing for their own account or for resale, or (b) acquired the
Securities through foreign branches of United States financial institutions
and who hold the Securities through such United States financial institutions
on the date hereof (and in either case (a) or (b), each such United States
financial institution hereby agrees, on its own behalf or through its agent,
that you may advise the Issuer or the Issuer's agent that it will comply with
the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue
Code of 1986, as amended, and the regulations thereunder), or (iii) are owned
by United States or foreign financial institution(s) for purposes of resale
during the restricted periods (as defined in U.S. Treasury Regulations
Section 1.163-5(c)(2)(i)(D)(7), and in addition if the owner of the
Securities is a United States or foreign financial institution described in
clause (i) or (ii) this is to further certify that such financial institution
has not acquired the Securities for the purposes of resale directly or
indirectly to a United States person or to a person within the United States
or its possessions; and lastly to the effect that such principal amount of
the Securities is owned by persons that are not residents of or in Canada.
If the Securities are of the category contemplated in Section 230.903(c)(3)
of Regulation S under the Securities Act of 1933, as amended (the "Act") then
this is also to certify that, except as set forth below (i) in the case of
debt securities, the Securities are beneficially owned by (a) non-U.S.
person(s) or (b) U.S. person(s) who purchased the Securities in transactions
which did not require registration under the Act; or (ii) in the case of
equity securities, the Securities are owned by (x) non-U.S. person(s) and
such person(s) are not acquiring the Securities for the account or benefit of
U.S. person(s) or (y) U.S. person(s) who purchased the Securities in a
transaction which did not require registration under the Act. If this
certification is being delivered in connection with the exercise of warrant
pursuant to Section 230.902(m) of Regulation S under the Act, then this is
further to certify that, except as set forth below, the Securities are being
exercised by and on behalf of non-U.S. person(s). As used in this paragraph
the term "U.S. person" has the meaning given to it by Regulation S under the
Act.
As used herein, "United States" means the United States of America including
the States and District of Columbia); and its "possessions" include Puerto
Rico, the U.S. Virgin Islands, Guam, America Samoa, Wake Island and the
Northern Mariana Islands.
We undertake to advise you promptly by tested telex, on or prior to the date
on which you intend to submit your certification relating to the Securities
held by you for our account in accordance with your documented procedures if
any applicable statement herein is not correct on such date, and in the
absence of any such modification it may be assumed that this certification
applies as of such date.
This certification excepts and does not relate to U.S.$- of such interest in
the above Securities in respect of which we are not able to certify and as to
which we understand exchange and delivery of definitive Securities (or, if
relevant, exercise of any rights or collection of any interest) cannot be
made until we do so certify.
A-13
We understand that this certification is required in connection with certain
tax laws and, if applicable, certain securities laws of the United States and
Canada. In connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certification is or
would be relevant, we irrevocably authorize you to produce this certification
to any interested party in such proceedings.
DATED this
By:
-----------------------------------
Qualified Account Holder
* To be dated no earlier than the fifteenth day before (a) the payment
date or (b) the Exchange Date (where the certificate relates to the
exchange of the temporary Global Convertible Debentures for definitive
Convertible Debentures).
A-14
SCHEDULE TO THE TEMPORARY GLOBAL CONVERTIBLE DEBENTURE
PART I
EXCHANGES FOR DEFINITIVE CONVERTIBLE DEBENTURES
AND CANCELLATION
The following cancellations of a part of the aggregate principal amount of
this temporary Global Convertible Debenture have been made:
Date of cancellation Part of the Remaining Notation made by
aggregate principal principal amount of or on behalf of the
amount the Principal Principal Paying
of this Global Paying Agent Agent
Convertible
Debenture
cancelled
U.S.$ U.S.$
- --------------------- --------------------- -------------------- ----------------
- --------------------- --------------------- -------------------- ----------------
- --------------------- --------------------- -------------------- ----------------
- --------------------- --------------------- -------------------- ----------------
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- --------------------- --------------------- -------------------- ----------------
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- --------------------- --------------------- -------------------- ----------------
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A-15
PART II
PAYMENTS
The following payments in respect of the Convertible Debentures represented
by this temporary Global Convertible Debenture have been made:
Date of payment Amount of Interest Amount of Remaining Notation made by
principal paid Principal amount of or on behalf of the
this Global Principal Paying
Convertible Agent
Debenture
following payment
U.S.$ U.S.$ U.S.$
- --------------------- ------------------- --------------------- -------------------- ----------------
- --------------------- ------------------- --------------------- -------------------- ----------------
- --------------------- ------------------- --------------------- -------------------- ----------------
- --------------------- ------------------- --------------------- -------------------- ----------------
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A-16
- -------------------------------------------------------------------------------
EXHIBIT 1B
FACE OF CONVERTIBLE DEBENTURE SERIES 1
- -------------------------------------------------------------------------------
Denomination US $-
ISIN XS0085723723
Certificate No. -
- -------------------------------------------------------------------------------
BENZ ENERGY LTD.
US$30,000,000
9% Convertible Debentures, Series 1 due March 31, 2003
Benz Energy Ltd. (the "Issuer") for value received, hereby promises to pay to
the bearer on March 31, 2003 or on such earlier date as the principal sum
hereunder mentioned may become repayable in accordance with the terms and
conditions endorsed hereon the principal sum of
[FIVE THOUSAND UNITED STATES DOLLARS (U.S.$5,000)/TEN THOUSAND UNITED STATES
DOLLARS (U.S.$10,000)/FIFTY THOUSAND UNITED STATES DOLLARS (U.S.$50,000)]
together with interest thereon at the rate of 9% per annum from March 25,
1998, payable in lawful money of the United States, after as well as before
maturity, default and judgement with interest on amounts in default at the
same rate, semi-annually in arrears on March 31 and September 30 in each
year, the first such payment to be made on September 30, 1998. This
Convertible Debenture is issued subject to and with the benefits of a trust
indenture made March 25, 1998 (the "Indenture") between the Issuer and
Montreal Trust Company of Canada (the "Trustee"), as trustee, a paying and
conversion agency agreement made as of March 25, 1998 (the "Agency
Agreement") among the Issuer, the Trustee, Midland Bank plc (the "Principal
Paying Agent") and Kredietbank S.A. Luxembourgeoise and Swiss Bank
Corporation (each a "Paying Agent") and the Terms and Conditions endorsed
hereon.
Neither this Convertible Debenture Series 1 nor any of the Coupons
appertaining hereto shall become valid or enforceable for any purpose unless
and until this Convertible Debenture has been authenticated by or on behalf
of the Principal Paying Agent.
IN WITNESS WHEREOF the Issuer has caused this Convertible Debenture Series 1
and the coupons appertaining thereto to be executed by the facsimile
signature of the President of the Issuer.
BENZ ENERGY LTD.
By:
-------------------------------
President
A-17
Dated 25 March, 1998
Issued in -
CERTIFICATE OF AUTHENTICATION
This is one of the Convertible Debentures Series 1 described in the Indenture
referred to above.
By or on behalf of Midland Bank plc
(without recourse, warranty or liability)
By:
-------------------------------
Authorized Signatory
A-18
- --------------------------------------------------------------------------------
COUPON
(On face)
BENZ ENERGY LTD.
US $30,000,000
9% Convertible Debentures, Series 1 due March 31, 2003
This Coupon is payable to bearer, subject to the terms Coupon for
and conditions endorsed on the Convertible Debenture US[233.01/$466.02/$2,330.13]
Series 1 to which this Coupon relates. [$225.00/$450.00/$2,250.00]
Due on [MARCH 31/SEPTEMBER 30]
By:
--------------------------
President
- --------------------------------------------------------------------------------
Denomination US $-
ISIN XS0085723723
Certificate No. -
- --------------------------------------------------------------------------------
A-19
- --------------------------------------------------------------------------------
(On Reverse)
CONVERSION FORM
TO: BENZ ENERGY LTD.
MONTREAL TRUST COMPANY OF CANADA
MIDLAND BANK plc
The undersigned holder of the within Convertible Debenture hereby irrevocably
elects to convert such Convertible Debenture in respect of US $
principal amount thereof to Common Shares of Benz Energy Ltd. in accordance with
the terms of the Indenture referred to in the Convertible Debenture and directs
that the Common Shares issuable and deliverable upon the conversion be issued
and delivered to the person indicated below.
* If less than the full principal amount of the within Debenture is to be
converted, indicate in the space provided the principal amount (which
must be US $5,000 or integral multiples thereof) to be converted.
Dated:
------------------------------ ------------------------------
SIGNATURE OF HOLDER
Name:
------------------------------
------------------------------
(Address)
A-20
- --------------------------------------------------------------------------------
(On Reverse)
TRUSTEE
Montreal Trust Company of Canada 710,
530 - 8th Avenue S.W.
Calgary, Alberta
T2P 3S8
PRINCIPAL PAYING AGENT AND PRINCIPAL CONVERSION AGENT
Midland Bank plc
Mariner House
Pepys Street
London EC3N 4DA
PAYING AGENTS AND CONVERSION AGENTS
Midland Bank plc Kredietbank S.A. Luxembourgeoise Swiss Bank Corporation
Mariner House 43 Boulevard Royal P.O. Box 8010
Pepys Street L - 2955 Luxembourg Zurich
London EC3N 4DA Switerland
REPLACEMENT AGENT
Kredietbank S.A. Luxembourgeoise
43 Boulevard Royal
L - 2955 Luxembourg
and/or such other or further Trustee, Principal Paying Agent, Principal
Conversion Agent, Paying Agents, Conversion Agents and Replacement Agent and/or
specified offices as may from time to time be appointed by the Issuer.
A-21
TERMS AND CONDITIONS OF THE CONVERTIBLE DEBENTURES
This Convertible Debentures Series 1 is one of the securities of Benz Energy
Ltd. (the "Issuer") issued or issuable in one or more series pursuant to an
indenture made March 25, 1998 (the "Indenture") between the Issuer and Montreal
Trust Company of Canada (the "Trustee"), and which includes the form of the
Convertible Debentures Series 1 and of the interest coupons appertaining to the
Convertible Debentures Series 1 (the "Coupons"). The statements in these Terms
and Conditions include summaries of, and are subject to, the detailed provisions
of and definitions in the Indenture. All capitalized terms used and not
otherwise defined herein shall have the respective meanings set forth in the
Indenture. Copies of the Indenture and of a paying and conversion agency
agreement dated March 25, 1998 (the "Agency Agreement") made between the Issuer,
the Trustee, Midland Bank plc, as principal paying, conversion and
authenticating agent (the "Principal Paying Agent," "Principal Conversion Agent"
and "Authenticating Agent," respectively, which expressions shall include any
successors) and Kredietbank S.A. Luxembourgeoise and Swiss Bank Corporation, as
paying and conversion agents (together with the Principal Paying Agent, the
"Paying Agents" and together with the Principal Conversion Agent, the
"Conversion Agents," respectively, which expression shall include any additional
or successor paying agents or conversion agents, as the case may be) are
available for inspection during normal business hours by the holders of the
Convertible Debentures Series 1 (the "Debentureholders") and the holders of the
Coupons appertaining thereto (the "Couponholders"), at the specified office of
the Trustee, and at the specified office of each of the Paying Agents. The
Debentureholders and Couponholders will be deemed to have notice of, and will be
deemed to have taken such Convertible Debentures Series 1 and Coupons subject
to, all of the provisions of the Indenture and the Agency Agreement.
1. FORM, DENOMINATION AND TITLE
(a) The definitive Convertible Debentures Series 1 are issued in
bearer form, serially numbered, with Coupons attached, in
denominations of U.S.$5,000, U.S.$10,000 and U.S.$50,000.
(b) Title to the Convertible Debentures Series 1 and Coupons
passes by delivery. The Issuer, the Trustee and any Paying
Agents may deem and treat any Debentureholder or Couponholder
as the absolute owner thereof (whether or not such Convertible
Debentures or Coupon shall be overdue and notwithstanding any
notation of ownership or writing thereon or any notice of any
previous loss or theft thereof) for the purpose of making
payments in relation thereto and for all other purposes.
2. STATUS
The Convertible Debentures Series 1 are direct, unconditional, unsecured and
unsubordinated obligations of the Issuer and rank and will at all times rank
PARI PASSU amongst themselves and with all other series of Convertible
Debentures issued under the Indenture and at least PARI PASSU with all other
unsecured obligations (other than in respect of statutorily preferred creditors)
of the Issuer from time to time outstanding.
3. MATURITY, INTEREST AND CURRENCY OF DENOMINATION
The Convertible Debentures shall mature on March 31, 2003 (the "Maturity Date")
and shall bear interest at 9% per annum from their date of issue, payable in
lawful money of the United States after as well as before maturity, default and
judgment, with interest on amounts in default at the same rate, semi-annually in
arrears on March 31 and September 30, in each year, the first of such payments
to be made on September 30, 1998. Interest in respect of a period of less than
one year will be calculated on the basis of the actual number of calendar days
in such year and the number of days elapsed. The first interest payment on
September 30, 1998, will be in respect of the period from (and including) March
25, 1998 to (but excluding) September 30, 1998, in amount equal to U.S.$466.02
per U.S.$10,000 of principal amount of Convertible Debentures.
A-22
4. INTEREST ACCRUED
The Convertible Debentures Series 1 shall cease to bear interest (i) from their
date of redemption unless, upon due presentation, payment of the principal in
respect of the Convertible Debentures Series 1 is improperly withheld or refused
or unless a default is otherwise made in respect of such payment, in which event
interest shall continue to accrue as provided in the Indenture, or (ii) where
the right to convert the Convertible Debentures Series 1 shall have been
exercised in accordance with the provisions of the Indenture; or (iii)
respectively, from the interest payment date last proceeding the day of
conversion of the Convertible Debentures Series 1, or if the Convertible
Debentures Series 1 are converted prior to the first interest payment date, from
the date of issue.
5. PAYMENT OF PRINCIPAL, INTEREST
(a) Payment of principal in respect of each Convertible Debenture
Series 1 shall only be made against presentation and surrender
(or, in the case of part payment only, endorsement) of the
relevant Convertible Debentures Series 1 at the specified
office of any of the Paying Agents. Payments of interest due
on the Convertible Debentures Series 1 on an interest payment
date shall only be made against presentation and surrender
(or, in the case of part payment only, endorsement) of the
relevant Coupons at the specified office of any of the Paying
Agents. All payments of principal or interest shall be made in
U.S. dollars. Such payments will be made by transfer to a U.S.
dollar account maintained by the payee with a bank outside of
the United States or by a U.S. dollar cheque mailed to an
address, or delivered, outside the United States, subject in
all cases to any fiscal or other local laws or regulations
applicable thereto.
(b) If, at any time, payments in U.S. dollars cannot, in the
opinion of the Issuer or of the Paying Agents, be so made,
payments will be made in U.S. dollars in such other manner as
may be approved by the Issuer and the Paying Agents, subject
as aforesaid in paragraph (a) above. In the event that payment
cannot be made as provided in paragraph (a) above, notice of
the alternative manner of payment will be given to the
Debentureholders in accordance with Condition 15 below.
(c) If the due date for payment of any amount of principal or
interest in respect of a Convertible Debenture Series 1 is not
at any place of payment a business day, then the holder
thereof will not be entitled to payment at the relevant place
of payment of the amount due until the next following business
day at the relevant place of payment and will not be entitled
to any further interest or other payment in respect of any
such delay. In this paragraph, "business day" means any day on
which banks are open for business in Toronto, London, New York
and the relevant place of payment or (in the case of payment
by transfer to a U.S. dollar account as referred to in
paragraph (a) above) on which dealings in foreign currencies
may be carried on in each of Toronto, London, New York and
such place of payment.
6. REDEMPTION, PURCHASE AND CANCELLATION
Unless previously redeemed, purchased, exercised or cancelled, the Convertible
Debentures Series 1 will be redeemed at their principal amount on March 31,
2003. Each Convertible Debenture Series 1 must be presented for redemption
together with all unmatured Coupons relating to such Convertible Debentures
Series 1, failing which the full amount of any missing unmatured Coupon (or, in
the case of payment not being made in full, that proportion of the full amount
of the missing unmatured Coupons which the amounts so paid bears to the total
amount due) will be deducted from the amount due for payment. Each amount so
deducted shall be paid in the manner mentioned above against presentation and
surrender (or, in the case of part payment only, endorsement) of such missing
Coupon at any time before the expiry of six years after the date of redemption
of the Convertible Debenture Series 1 or, if later, five years after the date on
which such Coupon would have become due, but not thereafter.
A-23
Provided that no Event of Default has occurred and is continuing, the Issuer may
at any time purchase all or any of the Convertible Debentures Series 1 at any
price in the open market, by invitation for tenders or by private contract.
Convertible Debentures Series 1 so purchased shall be delivered to the Trustee
and cancelled by it and may not be reissued or re-sold, and except as otherwise
provided in the Indenture, no Convertible Debentures Series 1 shall be issued in
substitution therefor.
7. UNCLAIMED AMOUNTS
All monies paid by the Issuer to the Principal Paying Agent for the payment of
principal or interest on any Convertible Debenture Series 1 which remain
unclaimed at the end of two years after the principal on such Convertible
Debenture Series 1 will have become due and payable shall be repaid to the
Issuer and the holder of such Convertible Debenture Series 1 or any Coupon
appertaining thereto or thereafter shall have only the rights of a creditor of
the Issuer as described in the Indenture or such rights as may be otherwise
prescribed by applicable law.
8. ROUNDING AMOUNTS
When making payments to holders of Convertible Debentures Series 1 or holders of
Coupons, fractions of US$0.01 shall be rounded down to the nearest whole cent.
9. CONVERSION
The Convertible Debentures Series 1 are convertible at the option of the holder
into common shares of the Issuer, as constituted on the date of issue, (the
"Common Shares"), at any time prior to the close of business on March 27, 2003,
at a conversion price of Cdn.$1.70 per Common Share, subject to adjustment in
accordance with the Indenture (the "Conversion Price"). Notwithstanding the
foregoing, if a Convertible Debenture Series 1 is called for redemption by the
Issuer, the right of the holder to convert the Convertible Debenture Series 1
shall expire at the close of business on the second business day immediately
prior to the date of redemption.
The Conversion Price otherwise applicable hereunder shall be converted to U.S.
dollars based upon the Exchange Rate as of the last day in the calendar quarter
preceding the date of conversion, where "Exchange Rate" means, on any date, for
any conversion of U.S. dollars into Canadian dollars, or VICE VERSA, the
applicable spot buying rate for Canadian dollars or United States dollars, as
the case may be, quoted by The Bank of Nova Scotia at approximately noon
(Toronto, Canada time) on such date if it is a business day or on the
immediately preceding business day if such date is not a business day.
If the holder of Convertible Debentures Series 1 elects to convert the
Convertible Debentures Series 1 prior to the date of the third semi-annual
coupon with respect thereto, the holder shall receive on such conversion a
premium on the number of Common Shares to be issued on such conversion
determined based upon the aggregate principal amount of Convertible Debentures
Series 1 to be converted by multiplying .05 by the number of Common Shares to be
so issued and rounding down to the nearest whole number.
The holder of a Convertible Debenture Series 1 desiring to convert such
Convertible Debenture Series 1 in whole or in part into Common Shares shall
surrender such Convertible Debenture Series 1 to the specified office of any of
the Conversion Agents, together with the Conversion Form on the back of such
Convertible Debenture Series 1 or any other written notice in a form
satisfactory to the Conversion Agent, in either case duly executed by the holder
or his executors or administrators or other legal representatives or his or
their attorney duly appointed by an instrument in writing in form and executed
in a manner satisfactory to the Conversion Agent, exercising his right to
convert such Convertible Debenture Series 1 in accordance with the Indenture and
the Agency Agreement.
Any part, being US$5,000 or an integral multiple thereof, of a Convertible
Debenture Series 1 of a denomination in excess of US$5,000 may be converted.
Certificates for Common Shares issued on conversion will be delivered by mail
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free of charge (but uninsured and at the risk of the person entitled thereto)
within 14 days of the date of conversion. If only a part of the Convertible
Debentures Series 1 held by a holder is converted, after the Convertible
Debentures cease to be represented by a Global Debenture, definitive Convertible
Debentures Series 1 for the unconverted principal balance, in denominations of
U.S.$5,000, U.S.$10,000 and U.S.$50,000, as applicable, with unmatured Coupons
attached, will be available at the offices of the Paying and Conversion Agents
(including the Paying and Conversion Agent in Luxembourg).
The Indenture provides for the adjustment of the Conversion Price upon the
following events:
(a) The subdivision or consolidation of the outstanding Common
Shares;
(b) the issue of any Common Shares to holders of Common Shares by
way of stock dividends, other than an issue of Common Shares
to holders of Common Shares who have elected to receive
dividends in shares in lieu of receiving cash dividends paid
in the ordinary course;
(c) the issue of rights, options or warrants to all or
substantially all of the holders of Common Shares entitling
them to acquire Common Shares or securities convertible into
Common Shares (unless the rights, options or warrants are
exercisable within a period of 45 days from their issue at a
price equal to or greater than 95% of the Current Market Price
of the Common Shares); and
(d) the distribution to all or substantially all of the holders of
Common Shares of any other class or of rights, options or
warrants (other than those referred to above) or of evidences
of indebtedness or of assets (excluding cash dividends paid in
the ordinary course).
There will be no adjustment of the Conversion Price in respect of any event
described in (b), (c) or (d) above if the holders of the Convertible Debentures
are allowed to participate as though they had converted their Convertible
Debentures prior to the applicable record date or effective date.
The Issuer will give at least ten days notice to holders of Convertible
Debentures of the record date for any of the above events other than a
subdivision or consolidation of the Common Share. Except as stated above, no
adjustment will be made in the Conversion Price as a result of the issuance of
Common Shares at less than the then Current Market Price or Conversion Price.
The Current Market Price per Common Share at any date shall be the weighted
average price per share for Common Shares for 20 consecutive trading days
commencing not more than 30 trading days and ending not less than five trading
days before such date on the principal stock exchange in Canada on which the
Common Shares are traded. The weighted average price shall be determined by
dividing the aggregate sale price of all Common Shares so sold. The Issuer will
not be required to make adjustments in the Conversion Price unless the
cumulative effect of such adjustments would change the Conversion Price then in
effect by at least 1%. Any adjustment not so made will be carried forward and
taken into account in any subsequent adjustment.
The Indenture requires the Issuer to deliver an officers' certificate specifying
the nature of the event requiring any adjustment or readjustment as specified
above and the adjustment necessitated thereby. Such officers' certificate will
be available at the specified offices of any of the Paying or Conversion Agents.
10. REQUIRED CONVERSION
The Issuer may, at any time after September 30, 1999 and prior to maturity, by
notice in writing given to the holders thereof, require that all outstanding
Convertible Debentures Series 1 be converted into Common Shares if the weighted
average trading price of the Common Shares on the principal stock exchange in
Canada on which the Common Shares are traded during a 20 consecutive trading day
period ending not more than five days prior to the giving of such notice is not
less than 140% of the Conversion Price then in effect.
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11. REDEMPTION
The Convertible Debentures Series 1 are redeemable, in whole or in part, at the
option of the Issuer at any time after March 31, 2002 and prior to maturity at
100% of the principal amount thereof to be redeemed, together with accrued and
unpaid interest. At the Maturity Date, 100% of the principal amount of the
Convertible Debentures Series 1 will be repaid together with accrued and unpaid
interest.
12. MEETINGS OF DEBENTUREHOLDERS AND MODIFICATION
The Indenture contains provisions for convening meetings of the Debentureholders
to consider any matter affecting their interests, including the modification by
Extraordinary Resolution of these Terms and Conditions or the provisions of the
Indenture.
The Indenture provides that modifications and alterations thereto and to the
Convertible Debentures issued thereunder may be made if authorized by an
Extraordinary Resolution. Such a resolution must be passed by the affirmative
vote of the holders of not less than 66 2/3% of the principal amount of the
Debentures (or in the case of a serial meeting, where the rights of the
holders of Debentures of one or more series are affected differently than the
rights of the holders of any other series, of the principal amount of the
Debentures of the series so affected) issued under the Indenture represented
at a meeting at which holders of more than 25% of the principal amount of the
Debentures (or Debentures of a particular series, in the case of a serial
meeting) then outstanding are present in person or by proxy; provided,
however, that if a meeting or serial meeting is adjourned because not more
than 25% of the principal amount of such Debentures is present in person or
by proxy then at the adjourned meeting an extraordinary resolution may be
passed by the affirmative vote of the holders of not less than 66 2/3% of the
principal amount of the Debentures represented at the meeting or serial
meeting, as the case may be. The term Extraordinary Resolution shall also
include an instrument signed by the holders of not less than 66 2/3% of the
outstanding Debentures or the Debentures of a particular series, as the case
may be. An Extraordinary Resolution passed at any meeting of the
Debentureholders will be binding on all Debentureholders, whether or not they
are present at the meeting, and on all the Couponholders.
The Indenture also permits the Issuer and the Trustee, without the consent of
holders of Convertible Debentures, to enter into indentures supplemental to the
Indenture for certain purposes, including without limitation (i) making
provisions not inconsistent with the Indenture as may be necessary of desirable
with respect to matters or questions arising under the Indenture which do not
affect the substance thereof and which in the opinion of the Trustee, it may be
expedient to make, provided that the Trustee shall be of the opinion that such
provisions and modifications will not be prejudicial to the interests of the
Debentureholders, (ii) providing for the issue, as permitted by the Indenture,
of Debentures of any one or more series, (iii) making any modification of any of
the provisions of the Indenture or the Convertible Debentures which is of a
formal, minor or technical nature, (iv) making any additions to, deletions from
or alteration of the provisions of the Indenture which, in the opinion of the
Trustee, are not materially prejudicial to the interests of the Debentureholders
and which are necessary or advisable in order to incorporate, reflect or comply
with legislation applicable to indentures, (v) correcting or rectifying any
ambiguities, defective provisions, errors or omissions in the Indenture,
provided that, in the opinion of the Trustee, the rights of the Trustee and the
Debentureholders are in no way prejudiced thereby and (vi) any other purpose not
inconsistent with the terms of the Indenture provided that, in the opinion of
the Trustee, the rights of the Trustee and of the Debentureholders are in no way
prejudiced thereby.
13. EVENTS OF DEFAULT
If an Event of Default described in clause (a) or (b) below with respect to
Debentures of any series at the time outstanding occurs and is continuing, then
in every such case the Trustee or the Holders of not less than 25% in principal
amount of the outstanding Debentures of that series may declare the principal
amount of all the Debentures of that series to be due and payable immediately,
by a notice in writing to the Issuer (and to the Trustee if given by Holders),
and upon any such declaration such principal amount (or specified portion
thereof) shall become immediately
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due and payable. If an Event of Default described in clause (c), (d), (e), (f),
(g), (h) or (i) below occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% in principal amount of all the
Debentures then outstanding may declare the principal amount of all the
outstanding Debentures to be due and payable immediately, by a notice in writing
to the Issuer (and to the Trustee if given by the Holders) and upon any such
declaration such principal amount (or specified portion thereof) shall become
immediately due and payable.
"Event of Default" means any one of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of and administrative or governmental
body):
(a) default in the payment of any interest upon any Debenture, or
any related Coupon, when such interest or Coupon becomes due
and payable, and continuance of such default for a period of 7
days; or
(b) default in the payment of the principal of (or premium, if
any, on) any Debenture, as and when it shall become due and
payable at its Maturity, upon redemption, by declaration or
otherwise; or
(c) default in the performance, or breach, of any covenant or
warranty of the Issuer in the Indenture (other than a covenant
or warranty a default in performance of which or breach of
which is elsewhere in this section specifically dealt with or
which has expressly been included in the Indenture solely for
the benefit of one or more series of Debentures other than
that series), and continuance of such default or breach for a
period of 30 days after there has been given, by registered or
certified mail, to the Issuer by the Trustee or to the Issuer
and the Trustee by the Holders of at least 25% in principal
amount of all outstanding Debentures a written notice
specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or
(d) the entry of a decree or order by a court having jurisdiction
in the premises adjudging the Issuer or any Material
Subsidiary a bankrupt or insolvent under any bankruptcy,
insolvency or analogous laws or appointing a receiver,
liquidator, assignee, trustee, sequestrator, rehabilitator (or
other similar official) of the Issuer or any Material
Subsidiary or of any substantial part of their respective
properties, or ordering the winding up or liquidation of their
respective affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 90 consecutive
days; or
(e) the institution by the Issuer or any Material Subsidiary of
proceedings to be adjudicated a bankrupt or insolvent, or the
consent by it to the institution of bankruptcy or insolvency
proceedings against it under any bankruptcy, insolvency or
analogous laws, or the consent by it to the filing of any such
petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, rehabilitator (or other
similar official) of the Issuer or any Material Subsidiary or
of any substantial part of their respective properties, or the
making by the Issuer or any Material Subsidiary of an
assignment for the benefit of creditors, or the admission by
the Issuer or any Material Subsidiary in writing of its
inability to pay its debts generally as they become due; or
(f) if (i) any other Debt of the Issuer or any Material Subsidiary
becomes due and payable prior to its Stated Maturity by reason
of an event of default (howsoever defined) or (ii) any such
Debt of the Issuer or any Material Subsidiary is not paid when
due or, as the case may be, within any applicable grace period
or (iii) the Issuer or any Material Subsidiary fails to pay
when due (or, as the case may be, within any applicable grace
period) any amount payable by it under any present or future
guarantee for, or indemnity in respect of, any Indebtedness of
any Person or (iv) any security given by the Issuer or any
Material Subsidiary for any Indebtedness of any Person or any
guarantee or indemnity of Debt of any Person by the Issuer or
any Material Subsidiary becomes enforceable by reason of
default in relation thereto and steps are taken to enforce
such security save in any such case where there is a bona fide
dispute as to whether the relevant Debt or any such guarantee
or indemnity
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as aforesaid shall be due and payable (following any
applicable grace period), PROVIDED that in each such case the
Debt exceeds in the aggregate U.S.$1,500,000 and in each such
case such event continues unremedied for a period of 30
calendar days (or such longer period as the Trustee may in its
sole discretion consent to in writing upon receipt of written
notice from the Issuer); or
(g) if there is any final judgment or judgments for the payment of
money exceeding in the aggregate U.S.$1,500,000 outstanding
against the Issuer or any Material Subsidiary which has been
outstanding for more than 60 calendar days from the date of
its entry and shall not have otherwise been discharged in full
or stayed by appeal, bond or otherwise; or
(h) if the Issuer or any Material Subsidiary shall generally fail
to pay its Debts as such Debts come due (except Debts which
the Issuer or such Material Subsidiary, as the case may be,
may contest in good faith generally) or shall be declared or
adjudicated by a competent court to be insolvent or bankrupt,
shall consent to an entry of an order of relief against it in
an involuntary bankruptcy case, shall enter into any
assignment or other similar arrangement for the benefit of its
creditors or shall consent to the appointment of a custodian
(including, without limitation, a receiver, liquidator or
trustee); or
(i) if a warranty, representation, or other statement made by or
on behalf of the Issuer contained in the Indenture, the
Debentures or any certificate or other agreement furnished in
compliance with such documents is false in any material
respect when made and (except where the Trustee shall have
certified to the Issuer that it considers such falsity to be
incapable of remedy, in which case no such notice or
continuation as is hereinafter mentioned will be required)
such falsity continues for a period of 30 calendar days (or
such longer period as the Trustee may in its absolute
discretion permit) next following the service by the Trustee
on the Issuer of notice requiring the same to be remedied.
14. REPLACEMENT OF CONVERTIBLE DEBENTURES SERIES 1 AND COUPONS
If any Convertible Debenture or Coupon shall at any time become mutilated,
defaced, destroyed, stolen or lost, it may be replaced at the cost of the
claimant at the specified office of the Replacement Agent or the Trustee upon
provision of such evidence, indemnity, security or otherwise as the Issuer
determines satisfactory. Mutilated or defaced Convertible Debentures Series 1 or
Coupons must be surrendered before replacements will be issued.
15. NOTICES
In addition to notice to the holders of Convertible Debentures Series 1 as
provided in the Indenture, all notices to holders of Convertible Debentures
Series 1 shall be published in the Financial Times, or such other leading daily
financial newspaper with general circulation in Europe as the Trustee may
approve, and a daily leading newspaper with general circulation in Luxembourg,
which is expected to be the Luxembourg Wort, for so long as the Convertible
Debenture Series 1 are listed on the Luxembourg Stock Exchange.
16. TAXATION
Payments of interest on the Convertible Debentures will be made subject to the
deduction of applicable Canadian withholding tax.
The Issuer will, subject to certain exceptions and limitations set forth below,
pay, as additional interest, such additional amounts (the "Additional Amounts")
to the holder of any Convertible Debenture as may be necessary in order that
every net payment of the principal or interest on such Convertible Debenture,
after withholding for or on account of any present or future tax, duty,
assessment or governmental charge imposed or levied upon or as a result of such
payment by or on behalf of Canada (or any political subdivision, authority or
agency thereof or therein having the power to tax) (collectively, "Taxes"), will
not be less than the amount such holder would have received if such Taxes
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had not been withheld, provided that no Additional Amounts will be payable with
respect to a payment which is subject to such Taxes by reason of such holder
being connected with Canada (or any political subdivision thereof) otherwise
than by the mere holding of the Convertible Debenture or the receipt of payments
made under or with respect to the Convertible Debenture.
In addition, the Issuer will indemnify and hold harmless each holder of a
Convertible Debenture (subject to the exclusion set forth above) and will, upon
written request of each holder (subject to the exclusion set forth above), and
provided that reasonable supporting documentation is provided, reimburse each
other holder for the amount of any Taxes levied or imposed by Canada and paid by
the holder as a result of payments made under or with respect to the Convertible
Debentures. Any payment made pursuant to this paragraph shall be considered an
Additional Amount.
If, at any time, either of the Trustee and the Principal Paying Agent is
required by law to make any deduction or withholding from any sum payable by it
hereunder (or if thereafter there is any change in the rates at which or the
manner in which such deductions or withholdings are calculated), the Issuer
shall promptly notify the Trustee and the Principal Paying Agent and shall
deliver to the Trustee and the Principal Paying Agent, within thirty days after
it has made such payment to the applicable authority, an original receipt (or a
certified copy thereof) issued by such authority evidencing the payment to such
authority of all amounts so required to be deducted or withheld in respect of
each Convertible Debenture.
If the Issuer becomes generally subject at any time to any taxing jurisdiction
other than or in addition to Canada, references in these Conditions to Canada
shall be read and construed as reference to Canada and/or to such other
jurisdiction.
Any reference in these Conditions to interest in respect of the Convertible
Debentures shall be deemed also to refer to any Additional Amounts which may be
payable under this Condition.
17. CERTAIN COVENANTS
(a) The Issuer will, so long as the Convertible Debentures are
outstanding, maintain Tangible Assets equal to or greater than
140% of Long Term Debt at all times including after redemption
of any redeemable preference shares of the Issuer or any
Subsidiary. This ratio shall be calculated no later than 135
days following the end of each of the Issuer's fiscal years,
and shall be based upon the Issuer's annual audited financial
statements, as adjusted for Tangible Assets, and the
Independent Reserve Reports.
(b) The Issuer and its Subsidiaries will not:
(i) have outstanding more than U.S.$12,000,000 under the
EnCap Credit Facility for the period commencing 30
days from the date hereof; and
(ii) use any of the net proceeds from the issuance of the
Convertible Debentures Series 1 to reduce the
Issuer's or its Subsidiaries' existing indebtedness;
provided, however that the Issuer may use net
proceeds in an amount not to exceed U.S.$6,000,000 to
reduce the amount outstanding under the EnCap Credit
Facility to an amount not less than U.S.$12,000,000.
18. INDEMNIFICATION OF THE TRUSTEE
The Indenture contains provisions for the indemnification of the Trustee and for
its relief from responsibility, including provisions relieving it from taking
action unless indemnified to its satisfaction.
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19. AGENTS
The Issuer shall have the right, subject to the prior approval of the Trustee,
at any time to vary or terminate the appointment of any Paying Agent, Conversion
Agent or Replacement Agent and to appoint additional or other Paying Agents,
Conversion Agents or Replacement Agents, provided that, for so long as the
Convertible Debentures Series 1 are listed on the Luxembourg Stock Exchange, it
will at all times maintain at least one Paying Agent, one Conversion Agent and
one Replacement Agent in Luxembourg and one Paying Agent and one Conversion
Agent having a specified office in one other European city approved by the
Trustee. Notice of any termination or appointment and of any changes in
specified offices will be given to the holders of the Convertible Debentures
Series 1 promptly in accordance with the terms hereof and of the Indenture.
20. GOVERNING LAW AND JURISDICTION
The Indenture and the Convertible Debentures Series 1 are governed by, and shall
be construed in accordance with, the laws of the Province of Ontario and the
laws of Canada applicable thereto.
TRUSTEE
Montreal Trust Company of Canada 710,
530 - 8th Avenue S.W.
Calgary, Alberta
T2P 3S8
LISTING AGENT
Kredietbank S.A. Luxembourgeoise
43 Boulevard Royal
L-2955 Luxembourg
COMMON DEPOSITORY AND
PRINCIPAL PAYING AND CONVERSION AGENT
Midland Bank plc
Mariner House
Pepys Street
London EC3N 4DA
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PAYING AGENTS AND CONVERSION AGENTS
Midland Bank plc Kredietbank S.A. Luxembourgeoise Swiss Bank Corporation
Mariner House 43 Boulevard Royal P.O. Box 8010
Pepys Street L - 2955 Luxembourg Zurich
London EC3N 4DA Switerland
REPLACEMENT AGENT
Kredietbank S.A. Luxembourgeoise
43 Boulevard Royal
L - 2955 Luxembourg