DATED AS OF APRIL 20,1999
BENZ ENERGY LTD.
AND
MONTREAL TRUST COMPANY OF CANADA
TRUSTEE
FIRST SUPPLEMENTAL NOTE INDENTURE
THIS FIRST SUPPLEMENTAL NOTE INDENTURE made as of the 20th 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 Note Indenture dated
as of April 8,1998 (the "Note Indenture"); and
WHEREAS the Corporation created and issued Notes as provided under the terms
of the Note Indenture; and
WHEREAS the Corporation desires to become domesticated in the State of
Delaware and in connection therewith has requested that the Note Indenture be
amended in anticipation of such migration; and
WHEREAS the Corporation and the Trustee now desire to amend the Note
Indenture in certain respects to reflect amendments that have been approved
by one or more Extraordinary Resolutions passed by Noteholders in accordance
with the terms of Article 9 of the Note 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 Special Notes, Series A issued in accordance with the terms of
the Note Indenture in certain respects to reflect amendments that have been
approved by the Series A Noteholders pursuant to an Extraordinary Resolution
passed in accordance with the terms of Article 9 of the Trust Indenture,
those amendments are more fully set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this FIRST SUPPLEMENTAL NOTE INDENTURE and intending to be
legally bound, the undersigned agree as follows:
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1. AMENDMENT TO NOTE INDENTURE. The Note 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 Note 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 Note 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 Note 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 Note 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 in 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 Article 5.9 of the Note 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 Note is outstanding, maintain
Tangible Assets equal to or greater than 100% of Long Term
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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 Note 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.
1.6 Article 5.10(a) of the Note Indenture is hereby deleted.
1.7 Article 5.16 of the Note 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 Noteholder 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.
1.8 Article 5.17 of the Note Indenture is hereby deleted and the following
is inserted therefor:
5.17 MAINTENANCE OF LISTING FOR COMMON SHARES AND NOTES
While any Note remains outstanding, the Corporation will maintain a
listing for its common shares on a nationally recognized stock exchange
in Canada or the United States. For purposes of this Note Indenture, a
nationally recognized United States stock exchange shall include the
bulletin board maintained by Nasdaq.
1.9 Article 7.3 of the Note Indenture is hereby amended by deleting the
phrase "of Canada" and inserting therefor the following:
"of the United States".
1.10 The first grammatical paragraph of Article 8.1 of the Note Indenture is
hereby deleted and the following in inserted therefor:
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The Corporation shall not enter into any transaction, whether by way of
amalgamation, merger, reconstruction, re-organization, 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:
1.11 Article 8.1 of the Note 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;
1.12 Article 9.1 of the Note Indenture is hereby amended by deleting the
phrase "Calgary" and inserting therefor the following:
"Houston, Texas".
1.13 Article 10.4 of the Note 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 Notes hereunder, the Trustee
shall, notwithstanding the provisions hereof, give such notice by means
of publication in (i) The Globe and Mail, national edition, or any
other English language daily newspaper or newspapers of general
circulation in Canada; and (ii) in 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.
1.14 Article 11.8 of the Note 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".
1.15 The Note Indenture is hereby amended by adding the following provision:
"9.19 AMENDMENTS TO TRUST INDENTURE
If this Indenture or the Notes are changed, modified or amended as
permitted in the Indenture, Noteholders shall be deemed to have
approved and consented to, and shall be bound by, any
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corresponding changes, modifications or amendments made to the Trust
Indenture and the Convertible Debentures to which the Notes are
exchangeable into provided such corresponding changes, modifications or
amendments are substantially equivalent to the changes made to this
Indenture and the Notes, with the same effect as if the Noteholders had
exchanged their Notes for Convertible Debentures and approved such
changes, modifications or amendments in their capacity as
Debentureholders under the Trust Indenture."
2. CONDITIONAL AMENDMENT TO THE NOTE INDENTURE.
The amendments to the Note 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 Notes 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.
3. 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 bear
date as of the 20th day of April, 1999. The execution of this First
Supplemental Note Indenture has been authorized pursuant to the terms
of an Extraordinary Resolution approved by the Holders of the Special
Notes, Series A.
4. 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.
5. 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.
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IN WITNESS WHEREOF the parties hereto have executed this First
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
-------------------------------------
Robert S. Herlin, SVP c/s
-------------------------------------
MONTREAL TRUST COMPANY OF CANADA
By:
-------------------------------------
c/s
By:
-------------------------------------
c/s
EXHIBIT B
AMENDMENTS TO THE TERMS AND CONDITIONS OF THE 9% CONVERTIBLE DEBENTURES,
SERIES 2
The Terms and Conditions of 9% Convertible Debentures, Series 2 (the
"Series 2 Convertible Debentures") are hereby amended as follows.
1. Article 9(a) of Schedule B to the Trust Indenture (which Article is on
page B-3 of the Trust Indenture) is hereby amended by deleting the
price "Cdn.$1.70" and inserting therefor the price "Cdn.$1.40".
2. Article 10 of Schedule B to the Trust Indenture (which Article is on
page B-3 of the Trust Indenture) is hereby amended by deleting the
phrase "in Canada on which the Common Shares are traded" and inserting
therefor the following:
"on which the Common Shares are traded or if not available, then the
price as quoted on a national or regional quotation service such as the
NASDAQ National Market System or other similar quotation service
maintained by the National Quotation Bureau or any successor thereto".
3. The Transfer Form of Schedule B to the Trust Indenture (which Transfer
Form is on page B-7 of the Trust Indenture) is hereby amended by
deleting the phrase "Special Notes, Series A" and inserting therefor
the following:
"Convertible Debentures, Series 2".
4. The Transfer Form of Schedule B to the Trust Indenture (which Transfer
Form is on page B-7 of the Trust Indenture) is hereby amended by
deleting the phrase "Signature of Special Noteholder" and inserting
therefor the following:
"Signature of Debentureholder".
5. The first grammatical paragraph of Article 9 of the Terms and
Conditions of the Series 2 Convertible Debentures (which Article is on
page B-11 of the Trust Indenture) is hereby amended by deleting the
price "Cdn.$1.70" and inserting therefor the price "Cdn.$1.40".
6. The last grammatical paragraph of Article 9 of the Terms and Conditions
of the Series 2 Convertible Debentures (which Article is on page B-12
of the Trust Indenture) is hereby amended by deleting the phrase "in
Canada on which the Common Shares are traded" and inserting therefor
the following:
"on which the Common Shares are traded or if not available, then the
price as quoted on a national or regional quotation service such as the
NASDAQ National Market System or other similar quotation service
maintained by the National Quotation Bureau or any successor thereto".
1
7. Article 10 of the Terms and Conditions of the Series 2 Convertible
Debentures (which Article is on page B-12 of the Trust Indenture) is
hereby amended by deleting the phrase "in Canada on which the Common
Shares are traded" and inserting therefor the following:
"on which the Common Shares are traded or if not available, then the
price as quoted on a national or regional quotation service such as the
NASDAQ National Market System or other similar quotation service
maintained by the National Quotation Bureau or any successor thereto".
8. Article 16(a) of the Terms and Conditions of the Series 2 Convertible
Debentures (which Article is on page B-15 of the Trust Indenture) is
hereby deleted and the following is inserted therefor:
For the Issuer's fiscal years ending December 31,1998 and 1999, the
Issuer will, so tong as any Convertible 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 Issuer or any Subsidiary. For each of the
Issuer's fiscal years ending after December 31, 1999, the Issuer will,
so long as any Convertible 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
Issuer or any Subsidiary. This ratio shall be calculated no later than
the 135th day 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. For purposes of this provision, 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.
9. Article 16(b)(i) of the Terms and Conditions of the Series 2
Convertible Debentures (which Article is on page B-15 of the Trust
Indenture) is hereby deleted.
The Amendments set forth in this Exhibit B to the Terms and Conditions
of the 9% Convertible Debentures, Series 2 have been accepted and
agreed to by Benz Energy Ltd. effective as of April 20,1999.
BENZ ENERGY LTD.
By:
/s/ Robert S. Herlin
-----------------------------------
Robert S. Herlin, SVP
2
EXHIBIT C
Amendments to the Terms and Conditions of the 9% Convertible Debentures,
Series 3
The Terms and Conditions of 9% Convertible Debentures, Series 3 (the
"Series 3 Convertible Debentures") are hereby amended as follows:
1. Article 9(a) of Schedule C to the Trust Indenture (which Article is on
page C-2 of the Trust Indenture) is hereby amended by deleting the price
"Cdn.$1.70" and inserting therefor the price "Cdn.$1.40".
2. Article 10 of Schedule C to the Trust Indenture (which Article is on
page C-3 of the Trust Indenture) is hereby amended by deleting the
phrase "in Canada on which the Common Shares are traded" and inserting
therefor the following:
"on which the Common Shares are traded or if not available, then the
price as quoted on a national or regional quotation service such as the
NASDAQ National Market System or other similar quotation service
maintained by the National Quotation Bureau or any successor thereto".
3. The Transfer Form of Schedule C to the Trust Indenture (which Transfer
Form is on page C-7 of the Trust Indenture) is hereby amended by
deleting the phrase "Special Notes, Series A" and inserting the following:
"Convertible Debentures, Series 3"
4. The Transfer Form of Schedule C to the Trust Indenture (which Transfer
Form is on page C-7 of the Trust Indenture) is hereby amended by
deleting the phrase "TRANSFER OF SPECIAL WARRANTS".
5. The Transfer Form of Schedule C to the Trust Indenture (which Transfer
Form is on page C-7 of the Trust Indenture) is hereby amended by deleting
the phrase "Signature of Special Noteholder" and inserting therefor the
following:
"Signature of Debentureholder".
6. The first grammatical paragraph of Article 9 of the Terms and Conditions
of the Series 3 Convertible Debentures (which Article is on page C-11 of
the Trust Indenture) is hereby amended by deleting the price "Cdn.$1.70"
and inserting therefor the price "Cdn.$1.40".
7. The last grammatical paragraph of Article 9 of the Terms and Conditions
of the Series 3 Convertible Debentures (which Article is on page C-12 of
the Trust Indenture) is hereby amended by deleting the phrase "in Canada
on which the Common Shares are traded" and inserting therefor the
following:
"on which the Common Shares are traded or if not available, then the
price as quoted on a national or regional quotation service such as the
NASDAQ National Market System or other similar quotation service
maintained by the National Quotation Bureau or any successor thereto".
8. Article 10 of the Terms and Conditions of the Series 3 Convertible
Debentures (which Article is on page C-12 of the Trust Indenture) is
hereby amended by deleting the phrase "in Canada on which the Common
Shares are traded" and inserting therefor the following:
3
"on which the Common Shares are traded or if not available, then the
price as quoted on a national or regional quotation service such as the
NASDAQ National Market System or other similar quotation service
maintained by the National Quotation Bureau or any successor thereto".
9. The second, third, and fifth grammatical paragraphs of Article 15 of the
Terms and Conditions of the Series 3 Convertible Debentures (which
Article is on page C-15 of the Trust Indenture) are hereby amended by
deleting the references to "Canada" in each paragraph and inserting
therefor the phrase "Canada or the United States".
10. Article 16(a) of the Terms and Conditions of the Series 3 Convertible
Debentures (which Article in on page C-16 of the Trust Indenture) is
hereby deleted and the following is inserted therefor:
For the Issuer's fiscal years ending December 31, 1998 and 1999, the
Issuer will, so long as any Convertible 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 Issuer or any Subsidiary. For each of the Issuer's fiscal
years ending after December 31, 1999, the Issuer will, so long as any
Convertible 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 Issuer or any
Subsidiary. This ratio shall be calculated no later than the 135th day
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. For purposes
of this provision, 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.
11. Article 16(b)(i) of the Terms and Conditions of the Series 3 Convertible
Debentures (which Article is on page C-16 of the Trust Indenture) is
hereby deleted.
The Amendments set forth in this Exhibit C to the Terms and Conditions of
the 9% Convertible Debentures, Series 3 have been accepted and agreed to by
Benz Energy Ltd. effective as of April 20, 1999.
BENZ ENERGY LTD.
By: /s/ Robert S. Herlin
------------------------------------
Robert S. Herlin, SVP
4