DATED AS OF APRIL __,1999
BENZ ENERGY LTD.
AND
MONTREAL TRUST COMPANY OF CANADA
SECOND SUPPLEMENTAL INDENTURE
THIS SECOND SUPPLEMENTAL TRUST INDENTURE made as of the __ day of April, 1999
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
- and -
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 and the Trustee entered into a Trust Indenture dated
as of March 25, 1998, as supplemented by that certain First Supplemental
Trust Indenture dated as of April 8, 1998 (collectively, the "Trust
Indenture"); and
WHEREAS the Corporation created and issued Debentures as provided under the
terms of the Trust Indenture; and
WHEREAS the Corporation desires to become domesticated in the State of
Delaware and in connection therewith has requested that the Trust Indenture
be amended in anticipation of such migration; and
WHEREAS the Corporation and the Trustee now desire to amend the Trust
Indenture in certain respects to reflect amendments that have been approved
by one or more Extraordinary Resolutions passed by Debentureholders in
accordance with the terms of Article 9 of the Trust Indenture, those
amendments are more fully set forth below; and
WHEREAS the Corporation and the Trustee now desire to amend the Terms and
Conditions of 9% Convertible Debentures, Series 1 issued in accordance with
the terms of the Trust Indenture in certain respects to reflect amendments
that have been approved by the Series 1 Debentureholders pursuant to an
Extraordinary Resolution passed in accordance with the terms of Article 9 of
the Trust Indenture at a meeting held on April ___, 1999, those amendments
are more fully set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this SECOND SUPPLEMENTAL INDENTURE and intending to be legally
bound, the undersigned agree as follows:
1. AMENDMENT TO TRUST INDENTURE. The Trust Indenture shall remain in full
force and effect subject to the following amendments"
1.1 The definition of Affiliate in Article 1.1 of the Trust Indenture is
hereby amended by deleting the phrase "BUSINESS CORPORATIONS ACT
(Yukon)" and inserting therefor the following:
"General Corporation Law of the State of Delaware"
1.2 Article 1.1 of the Trust Indenture is hereby amended by deleting the
definition of "Counsel" and inserting therefor the following:
"COUNSEL" means a barrister or solicitor or attorney or firm of
barristers and solicitors or firm of attorneys retained by the Trustee
or retained by the Corporation and acceptable to the Trustee
1.3 Article 1.1 of the Trust Indenture is hereby amended by deleting the
definition of "Long Term Debt" and inserting therefor the following:
"LONG TERM DEBT" means (i) amounts classified as long term debt as
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 plus (ii) the nominal
amount of any preferred stock issued by the Corporation and its
Subsidiaries;
1.4 Article 1.1 of the Trust Indenture is hereby amended by deleting the
definition of "Taxes" and inserting therefor the following:
"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 or the United
States 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
or the United States;
1.5 The first sentence of Article 4.3(a) of the Trust Indenture is hereby
amended by deleting the phrase "shall be adjusted by multiplying the
Conversion Price then in effect by a fraction the
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numerator of which is the number of Common Shares outstanding
immediately following such event" and inserting therefor the following:
"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 prior to such event and the denominator of
which is the number of Common Shares outstanding immediately following
such event"
1.6 Article 4.3(c) of the Trust Indenture is hereby amended by deleting the
phrase "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" and inserting therefor the following:
"a number of Common Shares equal to the number of additional Common
Shares that the aggregate of the proceeds to be realized from the
issuance of the rights or warrants so offered (or the aggregate
conversion or exchange price of the convertible securities so offered)
would purchase at the then Current Market Price, and of which the
denominator"
1.7 Article 4.4 of the Trust Indenture is hereby amended by deleting the
phrase "lawful money of Canada" and inserting therefor the following:
"Dollars".
1.8 Article 4.6 of the Trust Indenture is hereby deleted and the following
is inserted therefor:
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 or the laws of the United States or any State or other taxing
authority 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.
1.9 Article 4.11 of the Trust Indenture is hereby amended by deleting
paragraph (d) and inserting therefor the following:
(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
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on the principal stock exchange on which the Common Shares are
traded (if the Common Shares are traded on exchanges in Canada
and the United States, then the price from the United States
Exchange shall be used). 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;
1.10 Article 5.9 of the Trust Indenture is hereby deleted and the following
is inserted therefor:
5.9 LONG TERM DEBT AND TANGIBLE ASSETS
For the Corporation's fiscal years ending December 31, 1998 and 1999,
the Corporation will, so long as any Debenture is outstanding, maintain
Tangible Assets equal to or greater than 100% of Long Term Debt at all
times including after redemption of any redeemable preference shares of
the Corporation or any Subsidiary. For each of the Corporation's fiscal
years ending after December 31 1999, 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. For purposes of this Article, the definition of (i)
"Long Term Debt" shall not include obligations related solely to the
sale, purchase or delivery of hydrocarbons in respect of production
payments (whether volumetric or dollar denominated) or net profits
interests conveyed in transfers to third parties; and (ii) "Tangible
Assets" shall not include the value of any hydrocarbons which have been
conveyed as part of such production payment or net profits interest.
1.11 Article 5.10(a) of the Trust Indenture is hereby deleted.
1.12 Article 5.16 of the Trust Indenture is hereby deleted and the following
is inserted therefor:
5.16 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 income tax withholding and
reporting requirements of any taxing authority within Canada or the
United States.
1.13 Article 5.17 of the Trust Indenture is hereby deleted and the following
is inserted therefor:
5.17 MAINTENANCE OF LISTINGS FOR COMMON SHARES AND DEBENTURES
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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. For purposes of this Trust Indenture, a
nationally recognized United States stock exchange shall include the
bulletin board maintained by Nasdaq.
1.14 Article 7.3 of the Trust Indenture is hereby amended by deleting the
phrase "of Canada" and inserting therefor the following:
"of the United States"
1.15 The first grammatical paragraph of Article 8.1 of the Trust Indenture
is hereby deleted and the following is inserted therefor:
The Corporation shall not enter into any transaction, whether by way of
amalgamation, 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:
1.16 Article 8.1 of the Trust Indenture is hereby amended by deleting
paragraph (a) and inserting therefor the following:
(a) such other Person or continuing corporation is a corporation
(the "Successor Corporation") incorporated under the laws of
Canada or any province thereof or any state of the United
States;
1.17 Article 9.1 of the Trust Indenture is hereby amended by deleting the
phrase "Calgary" and inserting therefor the following:
"Houston, Texas".
1.18 Article 10.4 of the Trust Indenture is hereby amended by deleting the
first grammatical paragraph and inserting therefor the following:
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 (i) The Globe and Mall, national edition, or
any other English language daily newspaper or newspapers of general
circulation in Canada and in a French language dally newspaper of
general circulation in the Province of Quebec; and (ii)
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the Houston Chronicle or any successor newspaper, in all cases 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.
1.19 Article 11.8 of the Trust indenture is hereby amended by deleting the
phrase "chartered bank of Canada" and inserting therefor the following:
Bank chartered in the United States and subject to regulation by the
Federal Deposit Insurance Corporation.
2. AMENDMENTS TO THE TERMS AND CONDITIONS OF THE 9% CONVERTIBLE
DEBENTURES, SERIES 1.
Attached hereto as Exhibit A are Amendments to the Terms and Conditions
of 9% Convertible Debentures, Series 1 (the "Series 1 Convertible
Debentures"), which amendments have been approved by the holders of the
Series 1 Convertible Debentures.
3. AMENDMENTS TO THE TERMS AND CONDITIONS OF THE 9% CONVERTIBLE
DEBENTURES, SERIES 2.
Attached hereto as Exhibit B are Amendments to the Terms and Conditions
of 9% Convertible Debentures, Series 2 (the "Series 2 Convertible
Debentures"), which amendments have been approved by the holders of the
Series 2 Convertible Debentures.
4. AMENDMENTS TO THE TERMS AND CONDITIONS OF THE 9% CONVERTIBLE
DEBENTURES, SERIES 3.
Attached hereto as Exhibit C are the Amendments to the Terms and
Conditions of 9% Convertible Debentures, Series 3 (the "Series 3
Convertible Debentures"), which amendments have been approved by the
holders of the Series 3 Convertible Debentures.
5. CONDITIONAL AMENDMENT TO THE TRUST INDENTURE.
The amendments to the Trust Indenture set forth in Article 1 above are
conditioned upon the receipt by the Corporation and Trustee of
appropriate evidence of approval from the Holders of any other Series
of Debentures that is required to approve amendments to the Trust
Indenture. The execution of this Supplement by the Corporation and the
Trustee shall be evidence of the satisfaction of this requirement. The
amendments to the Terms and Conditions of the respective Series to the
Trust Indenture set forth on the Exhibits attached shall become
effective upon appropriate approval of the holders of such Series.
6. COUNTERPARTS AND FORMAL DATE
This Supplemental 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
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bear date as of the ____ day of April, 1999. The execution of this
First Supplemental Indenture has been authorized pursuant to the terms
of an Extraordinary Resolution approved by the Holders of the Series 1
9% Convertible Debentures at a meeting of such Holders on April ___,
1999.
7. GOVERNING LAW
This Supplemental Indenture 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.
8. LANGUAGE OF SUPPLEMENTAL 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 Second
Supplemental Indenture under their respective corporate seals and the hands
of their proper officers duly authorized in that behalf on the date first
hereinabove written.
BENZ ENERGY LTD.
By: /s/ Robert S. Herlin, CFO & SVP
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c/s
MONTREAL TRUST COMPANY OF CANADA
By:
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c/s
By:
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c/s
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