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EXHIBIT 99.4
REPAP ENTERPRISES INC.
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MONTREAL TRUST COMPANY
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TRUST INDENTURE
6% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2005
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Dated as of May 15, 1998
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TABLE OF CONTENTS
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ARTICLE 1
INTERPRETATION
1.1 Definitions.....................................................................................2
1.2 Meaning of "outstanding" for Certain Purposes ................................................11
1.3 Interpretation not Affected by Headings, etc. ................................................12
1.4 Business Day .................................................................................12
1.5 Applicable Law ...............................................................................12
ARTICLE 2
THE DEBENTURES
2.1 Terms and Forms of Debentures..................................................................13
2.2 Issuance of Debentures .......................................................................13
2.3 Debentures to Rank Pari Passu ................................................................14
2.4 Signing of Debentures ........................................................................14
2.5 Certification by Trustee.......................................................................14
2.6 Temporary Debentures...........................................................................14
2.7 Replacement of Debentures......................................................................15
2.8 Computation of Interest........................................................................15
2.9 Repayment Net of Withholding Imposts...........................................................16
ARTICLE 3
REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP
3.1 Registers ....................................................................................17
3.2 Transfers of Debentures ......................................................................18
3.3 Exchange of Debentures.........................................................................19
3.4 Charges for Transfer and Exchange ............................................................19
3.5 Inspection of Registers and Lists of Holders...................................................19
3.6 Closing of Registers .........................................................................20
3.7 Ownership of Debentures........................................................................20
3.8 Legend.........................................................................................21
ARTICLE 4
REDEMPTION AND PURCHASE
4.1 Optional Redemption............................................................................21
4.2 Conditions of Redemption.......................................................................22
4.3 Places of Payment ............................................................................22
4.4 Partial Redemption.............................................................................22
4.5 Notice of Redemption .........................................................................22
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4.6 Payment of Redemption Price ..................................................................23
4.7 Purchase of Debentures .......................................................................23
4.8 Cancellation of Retired Debentures ...........................................................24
4.9 Special Prepayment for Adverse Prepayment Event................................................24
ARTICLE 5
CONVERSION
5.1 Conversion Privilege and Conversion Price......................................................25
5.2 Conversion Procedure...........................................................................25
5.3 No Fractional Shares .........................................................................27
5.4 Legend on Common Shares........................................................................27
5.5 Adjustment of Conversion Privilege.............................................................28
5.6 Adjustment Rules .............................................................................31
5.7 Certificate as to Adjustment .................................................................32
5.8 Notice to Debentureholders ...................................................................32
5.9 Termination and Revival of Right to Convert....................................................33
5.10 Cancellation of Debentures ...................................................................33
5.11 Reservation of Shares ........................................................................33
5.12 Governmental Requirements ....................................................................34
ARTICLE 6
SUBORDINATION
6.1 Agreement to Subordinate .....................................................................34
6.2 Distribution on Dissolution, Winding-Up, Liquidation or Reorganization.........................34
6.3 Subrogation of Debentures ....................................................................36
6.4 Rights of Debentureholders Reserved ...........................................................36
6.5 Authorization to Effect Subordination .........................................................37
ARTICLE 7
COVENANTS OF THE CORPORATION
7.1 General Covenants ............................................................................37
7.2 Trustee's Remuneration, Expenses and Indemnity ...............................................39
7.3 Not to Accumulate Interest ...................................................................39
7.4 Restrictive Covenant .........................................................................40
7.5 Reporting Issuer Status and Stock Exchange Listing.............................................40
7.6 Financial Statements...........................................................................40
7.7 Compliance Certificate.........................................................................40
7.8 Performance of Covenants by Trustee............................................................41
7.9 Indemnity of Corporation.......................................................................41
7.10 Insurance......................................................................................42
7.11 Shareholder Materials..........................................................................42
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7.12 Other Information..............................................................................42
7.13 Restricted Payments ..........................................................................43
7.14 Restrictions on Additional Debt................................................................43
7.15 Management Agreement...........................................................................43
ARTICLE 8
DEFAULT AND ENFORCEMENT
8.1 Events of Default ............................................................................43
8.2 Acceleration on Default ......................................................................46
8.3 Notice of Events of Default ..................................................................46
8.4 Waiver of Default ............................................................................46
8.5 Proceedings by Trustee.........................................................................47
8.6 Suits by Debentureholders ....................................................................48
8.7 Application of Moneys Received by Trustee ....................................................48
8.8 Distribution of Proceeds .....................................................................49
8.9 Curing Certain Events of Default...............................................................50
8.10 Currency Conversion............................................................................50
ARTICLE 9
SATISFACTION AND DISCHARGE
9.1 Cancellation and Destruction .................................................................50
9.2 Non-Presentment of Debentures ................................................................51
9.3 Repayment of Unclaimed Moneys to Corporation .................................................51
9.4 Release from Covenants .......................................................................51
ARTICLE 10
SUCCESSOR CORPORATIONS
10.1 Certain Requirements in Respect of Merger, etc. ..............................................52
10.2 Vesting of Powers in Successor ...............................................................53
ARTICLE 11
MEETINGS OF DEBENTUREHOLDERS
11.1 Right to Convene Meeting .....................................................................53
11.2 Notice .......................................................................................53
11.3 Chairman .....................................................................................54
11.4 Quorum ......................................................................................54
11.5 Power to Adjourn ............................................................................54
11.6 Show of Hands ...............................................................................55
11.7 Poll ........................................................................................55
11.8 Voting ......................................................................................55
11.9 Regulations ..................................................................................55
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11.10 Corporation and Trustee may be Represented ...................................................56
11.11 Powers Exercisable by Extraordinary Resolution ...............................................56
11.12 Meaning of "Extraordinary Resolution"..........................................................58
11.13 Powers Cumulative ............................................................................59
11.14 Minutes ......................................................................................59
11.15 Instruments in Writing .......................................................................59
11.16 Binding Effect of Resolutions ................................................................59
ARTICLE 12
SUPPLEMENTAL INDENTURES
12.1 Execution of Supplemental Indentures ..........................................................60
ARTICLE 13
CONCERNING THE TRUSTEE
13.1 Trust Indenture Legislation....................................................................61
13.2 Rights and Duties of Trustee...................................................................61
13.3 Evidence, Experts and Advisers.................................................................62
13.4 Documents, Moneys, etc., Held by Trustee.......................................................63
13.5 Action by Trustee to Protect Interests .......................................................64
13.6 Trustee not Required to Give Security .......................................................64
13.7 Protection of Trustee ........................................................................64
13.8 Replacement of Trustee .......................................................................65
13.9 Conflict of Interest...........................................................................66
13.10 Acceptance of Trust ..........................................................................66
ARTICLE 14
NOTICES
14.1 Notice to Debentureholders ...................................................................66
14.2 Notice to Trustee..............................................................................67
14.3 Notice to Corporation ........................................................................67
14.4 Mail Service Interruption ....................................................................67
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ARTICLE 15
FORM OF DEBENTURES
15.1 Text of Debentures ...........................................................................68
ARTICLE 16
EXECUTION
16.1 Counterparts and Formal Date .................................................................77
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THIS TRUST INDENTURE made as of May 15, 1998.
B E T W E E N:
REPAP ENTERPRISES INC., incorporated under the laws of Canada,
(herein called the "Corporation")
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MONTREAL TRUST COMPANY, a trust company incorporated under the
laws of Canada, having an office in the City of Montreal in the
Province of Quebec (herein called the "Trustee")
PREAMBLE:
1. The Corporation deems it necessary for its corporate purposes to
create and issue Debentures to be constituted and issued in the manner
hereinafter appearing;
2. The Corporation under the laws relating thereto is duly
authorized to create and issue the Debentures to be issued as herein provided;
3. All things necessary have been done and performed to make the
Debentures, when certified by the Trustee and issued as in this Trust Indenture
provided, valid, binding and legal obligations of the Corporation with the
benefits and subject to the terms of this Trust Indenture; and
4. The foregoing recitals and any statements of fact in this Trust
Indenture or in the Debentures (except the representation contained in Section
13.9(1) and in the certificate of the Trustee on the Debentures) are and shall
be deemed to be made only by the Corporation;
AGREEMENT:
It is hereby agreed and declared as follows:
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ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Trust Indenture, unless there is something in the
subject-matter or context inconsistent therewith:
"ACCREDITED INVESTOR" has the meaning set forth in Regulation D under the 1933
Act;
"ADMINISTRATIVE BODY" means any domestic or foreign, national, federal,
provincial, state, municipal or other local government or regulatory body and
any division, agency, ministry, commission, board or authority or any
quasi-governmental or private body exercising any statutory, regulatory,
expropriation or taxing authority under the authority of any of the foregoing,
and any domestic, foreign or international judicial, quasi-judicial, arbitration
or administrative court, tribunal, commission, board or panel acting under the
authority of any of the foregoing;
"AFFILIATE" means any Person which, directly or indirectly, controls or is
controlled by or under common control with the Corporation and, for purposes of
this definition, "control" means the beneficial ownership, directly or
indirectly, of more than 50% of the Voting Shares of the subject corporation and
"controlling" and controlled" have corresponding meanings;
"AMALGAMATION" means the vertical short form amalgamation of the Corporation and
Repap New Brunswick Inc., a wholly-owned subsidiary of the Corporation, in
compliance with Section 184 of the Canada Business Corporations Act;
"APPLICABLE ENVIRONMENTAL LAWS" means shall mean those Applicable Laws which
pertain to the environment or the release of Hazardous Materials into the
environment, and includes any condition or requirement contained in a permit,
licence, approval, consent or other document issued pursuant to such laws.
"ASSETS OF THE CORPORATION" means any assets of the Corporation of any kind or
character, whether in cash, property, securities or otherwise;
"BUSINESS DAY" means a day which is not a Saturday, Sunday or statutory or civic
holiday at the principal office of the Trustee in Montreal, Quebec;
"CAPITAL REORGANIZATION" has the meaning attributed thereto in Section 5.5;
"CAPITALIZED LEASE OBLIGATION" shall mean, with respect to any Person, any
rental obligation which, under GAAP, would be required to be capitalized on the
books of such Person, taken at the amount thereof accounted for as indebtedness
(net of interest expense) in accordance with such principles, and may include
Sale-Leaseback obligations;
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"CASH DIVIDENDS IN THE ORDINARY COURSE", with respect to shares of any class,
means cash dividends declared on the shares of such class in any financial year
of the Corporation to the extent that such cash dividends, in the aggregate, do
not exceed 100% of the net income (or, if the Corporation then has any
Subsidiary, the Consolidated Net Income), before extraordinary items, of the
Corporation for its immediately preceding financial year;
"CERTIFICATE OF THE CORPORATION", "ORDER OF THE CORPORATION" and "REQUEST OF THE
CORPORATION" means, respectively, a written certificate, order and request
signed in the name of the Corporation by its Chief Executive Officer, President
or a Vice-President or a Director and, in addition, by its secretary or
assistant secretary or controller or another Director, and may consist of one or
more instruments so executed;
"CERTIFIED RESOLUTION" means a copy of a resolution certified by the secretary
or assistant secretary of the Corporation to have been duly passed by the
Directors and to be in full force and effect on the date of such certification;
"CHANGE OF CONTROL" means if any Person acquires, directly or indirectly, alone
or in concert with other Persons, over a period of time or at any one time,
shares in the capital of the Corporation aggregating in excess of 35% of all of
the then issued and outstanding Voting Shares of the Corporation;
"CLOSE OF BUSINESS" means the normal closing time of the principal office in
Montreal, Quebec of the Trustee;
"COMMON SHARES" means Common Shares in the capital of the Corporation as such
shares exist at the Close of Business on the date of execution and delivery of
this Trust Indenture or, upon any subdivision or consolidation of the Common
Shares, the shares resulting therefrom or, upon the occurrence of a Capital
Reorganization, the shares and/or other securities and/or property substituted
for the Common Shares or into which Common Shares are reclassified or changed;
"COMPLIANCE CERTIFICATE" means the certificate of the Corporation substantially
in the form of Schedule B to the Indenture;
"CONTAMINANTS" means those substances, pollutants, wastes and special wastes
which are defined as contaminants, hazardous, toxic, or a threat to public
health or to the Environment under any applicable Environmental Laws, including,
without limitation, any radioactive materials, urea formaldehyde foam
insulation, asbestos or polychlorinated biphenyls (PCB's);
"CONSOLIDATED NET INCOME" means, for any period, the net income or deficit of
the Corporation and its Subsidiaries for such period determined in accordance
with Canadian generally accepted accounting principles on a consolidated basis;
"CONVERSION DATE" has the meaning attributed thereto in Section 5.2;
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"CONVERSION PRICE" means the price per Common Share at which the Debentures
shall from time to time be convertible into Common Shares in accordance with the
provisions of Article Five;
"CONVERSION PRIVILEGE" means the right to convert any Debenture into Common
Shares as provided in Article Five;
"CORPORATION" means Repap Enterprises Inc. and also every Successor Corporation
which shall have complied with the provisions of Article Ten;
"CORPORATION'S AUDITORS" or "AUDITORS OF THE CORPORATION" means an independent
firm of chartered accountants duly appointed as auditors of the Corporation;
"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;
"CREDIT RATING" means the credit rating announced by a Rating Agency of the long
term senior secured indebtedness of Repap New Brunswick Inc. prior to the
Amalgamation and of the Corporation following the Amalgamation;
"CURRENT MARKET PRICE" of the Common Shares on any date means a price per share
equal to the Weighted Average Price at which the Common Shares have traded on
The Toronto Stock Exchange or, if the Common Shares are not then listed on The
Toronto Stock Exchange, on such other stock exchange on which such shares are
listed as may be selected for such purpose by the Directors, during the period
of 10 consecutive Trading Days commencing 13 Trading Days before such date;
"DEBENTUREHOLDERS" or "HOLDERS" means the several Persons for the time being
entered in the registers hereinafter mentioned as holders of Debentures;
"DEBENTURES" means the Debentures of the Corporation issued and certified
hereunder and outstanding from time to time;
"DEBENTUREHOLDERS REQUEST" means an instrument signed in one or more
counterparts by the holders of not less than 25% in principal amount of the
Debentures then outstanding, requesting the Trustee to take some action or
proceeding specified therein;
"DEBT" shall mean, with respect to any Person, without duplication:
(i) all Indebtedness for borrowed money of such Person (including, for
certainty, reimbursement obligations in respect of letters of
credit and bankers' acceptances, obligations of such Person
evidenced by a bond, debenture or similar instrument, and
obligations of such Person in relation to purchase money
agreements, deferred purchase price payments, production payment
transactions, conditional sales agreements, or title retention
agreements),
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(ii) all Capitalized Lease Obligations of such Person, and all
Indebtedness of such Person under Sale-Leasebacks,
(iii) all Indebtedness for borrowed money secured by a Lien on any
property or asset owned or held by such Person, whether or not the
obligations secured thereby shall have been assumed,
(iv) all redemption obligations of such Person in respect of Redeemable
Preferred Shares,
(v) Swaps of such Person, and
(vi) all Guarantees of such Person with respect to obligations of a
type described in the preceding clauses (i) to (v) inclusive;
"DIRECTOR" means a director of the Corporation for the time being, and reference
without more to action by the Directors means action by the directors of the
Corporation as a board or, whenever duly empowered, action by an executive
committee of the board;
"DISTRIBUTION" means any distribution, division or application, partial or
complete, voluntary or involuntary, by operation of law or otherwise, of all or
any part of the Assets of the Corporation upon or in connection with any
dissolution, winding-up, liquidation, arrangement or reorganization of the
Corporation or its property, whether in bankruptcy, insolvency or receivership
proceedings or at execution sale or upon an assignment for the benefit of
creditors or any other marshalling of the assets and liabilities of the
Corporation or otherwise, other than a dissolution, winding-up, liquidation,
arrangement or reorganization of the Corporation with a view towards its
consolidation or merger with another corporation or the sale, transfer or lease
of its property as an entirety or substantially as an entirety, to another
corporation upon the terms and conditions provided in Article Ten, if such other
corporation shall, as part of such consolidation, merger, transfer, sale or
lease, comply with the provisions of Article Ten;
"$" and "USD$" means United States dollars, unless otherwise specified;
"ENVIRONMENT" means all components of the earth, including, without limitation,
all layers of the atmosphere, air, land (including, without limitation, all
underground spaces and cavities and all lands submerged under water), soil,
water (including, without limitation, surface and underground water), organic
and inorganic matter and living organisms, and the interacting natural systems
that include the components referred to in this definition;
"ENVIRONMENTAL LAWS" means any Law relating, in whole or in part, to the
protection or enhancement of the Environment, including, without limitation,
occupational safety, product liability, public health, public safety and
transportation or handling of dangerous goods;
"EVENT OF DEFAULT" has the meaning attributed thereto in Section 8.1;
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"EXTRAORDINARY RESOLUTION" has the meaning attributed thereto in Article 11;
"GAAP" shall mean generally accepted accounting principles in Canada from time
to time approved by the Canadian Institute of Chartered Accountants, or any
successor institute, applicable on the date on which the applicable
determination or calculation is made or required to be made;
"GOVERNMENTAL/JUDICIAL BODY" means:
(a) any government, parliament or legislature or any regulatory or
administrative authority, agency, commission, tribunal or board of any
government and any other law, regulation or rule making entity having
jurisdiction in the relevant circumstances, or any Person acting under the
authority of any of the foregoing, and
(b) any judicial, administrative or arbitral court, authority, tribunal or
commission having jurisdiction in the relevant circumstances.
"GUARANTEE" shall mean, with respect to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, letter of credit, lease, dividend or other obligation of another,
including any such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of which such
Person is otherwise directly or indirectly liable, including any such obligation
in effect guaranteed by such Person through any agreement (contingent or
otherwise) to purchase, repurchase or otherwise acquire such obligation or any
security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), in any such case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected against loss in respect
thereof. The amount of any Guarantee shall be equal to the outstanding principal
amount of the obligation guaranteed or such lesser amount to which the maximum
exposure of the guarantor shall have been specifically limited;
"HAZARDOUS MATERIALS" means shall mean any substance that:
(a) when released to the natural environment is likely to cause, immediately or
at some future time, material harm or degradation to the natural
environment or any risk to human health and without restricting the
generality of the foregoing, includes any pollutant, contaminant, waste or
hazardous waste, or any "dangerous goods", "hazardous chemical", "hazardous
substance" or "hazardous waste" as may be defined by Applicable
Environmental Law for the protection of the natural environment or human
health, or
(b) exhibits characteristics of flammability, corrosivity, reactivity or
toxicity.
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"HOLDERS OF SENIOR INDEBTEDNESS" means the holders of Senior Indebtedness or
their representatives or, in circumstances where the instruments evidencing any
Senior Indebtedness were issued under a trust deed or trust indenture, the
trustee under such trust deed or trust indenture;
"INDEBTEDNESS" shall mean, with respect to any Person, without duplication:
(i) all items (excluding items of contingency reserves or of reserves
for deferred income taxes, investment tax credits and
non-repayable grants) which in accordance with GAAP would be
included in determining total liabilities as shown on the
liability side of a balance sheet of such Person as of the date on
which Indebtedness is to be determined,
(ii) all indebtedness, obligations and liabilities secured by any Lien
on any property or asset owned or held by such Person subject
thereto, whether or not the indebtedness secured thereby shall
have been assumed, and
(iii) all indebtedness, obligations and liabilities of others with
respect to which such Person has become liable by way of a
Guarantee;
"INVESTMENT GRADE RATING" means a rating of BBB- or higher by S&P and Baa3 or
higher by Moody's or the equivalent of such ratings by S&P or Moody's or by any
other Rating Agency selected as provided in the definition of Rating Agency.
"LIEN" shall mean any mortgage, pledge, priority, security interest,
encumbrance, lien (statutory or otherwise) or charge of any kind, including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any Sale-Leaseback or capitalized lease;
"INDENTURE LEGISLATION" has the meaning attributed thereto in Section 13.1;
"LAWS" or "LAW" includes all constitutions, treaties, laws, statutes, codes,
ordinances, orders, decrees, rules, regulations and municipal by-laws, whether
domestic, foreign or international, any judgments, orders, writs, injunctions,
decisions, rulings, decrees and awards of any Administrative Body, and any
policies, voluntary restraints, practices or guidelines of any Administrative
Body, and including, without limitation, any principles of common law and
equity;
"MANAGEMENT AGREEMENT" means the Management Services and Cost Allocation
Agreement between the Corporation and Repap New Brunswick Inc., dated April 15,
1995, including all amendments and restatements thereof;
"MATERIAL ADVERSE EFFECT" means, prior to the Amalgamation, an effect on the
financial condition of the Corporation, or its property, business, operations or
liabilities, which in each case, could reasonably be expected to have a material
adverse effect on the Corporation's ability to perform
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its obligations under the Indenture or the Debentures, and following the
Amalgamation, an effect on the financial condition of the Corporation and its
Subsidiaries taken as a whole, or the property, business, operations or
liabilities of the Corporation and its Subsidiaries taken as a whole, which in
each case, could reasonably be expected to have a material adverse effect on the
Corporation's ability to perform its obligations under the Indenture or the
Debentures;
"PERSON" means an individual, a corporation, a partnership, a trustee or an
unincorporated organization, and pronouns have a similarly extended meaning;
"PREPAYMENT EVENT" means with respect to the Corporation, the Indenture or the
Debentures, the occurrence, after the date of this Indenture, of any amendments
to, or change in the laws, regulations or published tax bulletins, circulars or
rulings of Canada or any political subdivision or taxing authority thereof,
including any change in the administrative practices of any relevant taxing
authority, affecting taxation;
"RATING AGENCY" means Standard & Poor's Corporation ("S&P") and ▇▇▇▇▇'▇
Investors Service, Inc. ("Moody's") or if S&P or Moody's or both shall not issue
a Credit Rating, a nationally recognized statistical rating agency or agencies,
as the case may be, selected by the Corporation and the holders, each acting
reasonably, which shall be substituted for S&P or Moody's or both, as the case
may be;
"RECOGNIZED STOCK EXCHANGE" includes the Toronto Stock Exchange, Montreal
Exchange, New York Stock Exchange, American Stock Exchange and The Nasdaq Stock
Market;
"REDEEMABLE PREFERRED SHARES" shall mean, in respect of any corporation, shares
of the capital stock of such corporation that are entitled to preference or
priority over any other shares of the capital stock of such corporation in
respect of payment of dividends or distribution of assets upon liquidation, and
which are:
(i) redeemable, payable or required to be purchased or otherwise
retired or extinguished, or convertible into Debt of such
Corporation (A) at a fixed or determinable date, whether by
operation of sinking fund or otherwise, (B) at the option of any
Person other than such Corporation, or (C) upon the occurrence of
a condition not solely within the control of such Corporation, or
(ii) convertible into other Redeemable Preferred Shares;
"REDEMPTION DATE", with respect to any Debentures, means the date specified in a
notice of redemption as the date on which such Debentures will be redeemed by
the Corporation;
"REGULATION S" means Regulation S under the 1933 Act;
"REDEMPTION PRICE" has the meaning attributed thereto in Section 4.1;
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"RELEASE" includes releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing or dumping;
"RESTRICTED PAYMENT", with respect to the Corporation, means that the
Corporation has declared or paid any dividend or returned any capital to its
stockholders or partners or authorized or made any other payment or distribution
of property or cash to its shareholders or equity holders as such, or redeemed,
retired, purchased, or otherwise acquired, directly or indirectly, for
consideration, any shares of any class of its capital stock or any of its other
equity interests (or any options, warrants or rights issued by the Corporation
with respect to its capital stock or other equity interests), or set aside any
funds for any of the foregoing purposes, or shall have permitted any of its
Subsidiaries to purchase or otherwise acquire for a consideration any shares of
any class of the capital stock or any other equity interest of the Corporation
(or any options, warrants or rights issued by the Corporation with respect to
its capital stock or other equity interests);
"RIGHTS OFFERING" has the meaning attributed thereto in Section 5.5;
"SALE-LEASEBACK" shall mean an arrangement under which title to any property or
an interest transferred by or on the direction of a person ("X") to another
person which leases or otherwise grants the right to use such property, asset or
interest to X (or nominee of X), whether or not in connection therewith X also
acquires a right or is subject to an obligation to acquire the property, asset
or interest, and regardless of the accounting treatment of such arrangement;
"SENIOR INDEBTEDNESS" means the principal of and redemption premium (if any) and
interest on:
(i) indebtedness of the Corporation (other than indebtedness evidenced
by the Debentures), whether outstanding on the date of this
Indenture or thereafter created, incurred, assumed or guaranteed
by the Corporation, which is for money borrowed by the Corporation
or for money borrowed by others for payment of which the Corporation
is responsible or liable;
(ii) indebtedness of the Corporation, whether outstanding on the date
of this Indenture or thereafter created, incurred, assumed or
guaranteed by the Corporation, in connection with the acquisition
by the Corporation or by others of any business property or other
assets; and
(iii) renewals, extensions or refundings of any indebtedness referred to
in clauses (i) or (ii) of this definition;
unless, in any case, it is provided by the terms of the instrument creating or
evidencing such indebtedness or pursuant to which such indebtedness is
outstanding that such indebtedness is not prior in right of payment to the
Debentures but ranks pari passu with or is subordinated in right of payment to
the Debentures;
"SHARE REORGANIZATION" has the meaning attributed thereto in Section 5.5;
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"SPECIAL DISTRIBUTION" has the meaning attributed thereto in Section 5.5;
"SUBORDINATED INDEBTEDNESS" has the meaning attributed thereto in Section 6.1;
"SUBSIDIARY", in relation to any body corporate, means any corporation of which
Voting Shares carrying more than 50% of the voting rights attached to all
outstanding Voting Shares are owned, directly or indirectly, by or for such body
corporate and/or by or for any corporation in like relation to such body
corporate, and includes any corporation in like relation to a Subsidiary;
"SUCCESSOR CORPORATION" has the meaning attributed thereto in Section 10.1;
"SWAPS" shall mean, with respect to any Person, payment obligations with respect
to interest rate swaps, currency swaps and similar obligations obligating such
Person to make payments, whether periodically or upon the happening of a
contingency. For the purposes of this Indenture, the amount of the obligation
under any Swap shall be the amount determined in respect thereof as of the end
of the then most recently ended fiscal quarter of such Person, based on the
assumption that such Swap had terminated at the end of such fiscal quarter, and
in making such determination, if any agreement relating to such Swap provides
for the netting of amounts payable by and to such Person thereunder or if any
such agreement provides for the simultaneous payment of amounts by and to such
Person, then in each such case, the amount of such obligation shall be the net
amount so determined;
"TRADING DAY", with respect to any stock exchange, means a day on which such
stock exchange is open for business;
"TRUST INDENTURE", "INDENTURE", "HEREIN", "HEREOF" and similar expressions means
or refer to this Indenture and any indenture, deed or instrument supplemental or
ancillary hereto, and the expressions "Article", "Section" and "clause" followed
by a number mean and refer to the specified Article, Section or clause of this
Indenture;
"TRUSTEE" means Montreal Trust Company and its successors for the time being in
the trusts hereby created;
"U.S. PERSON" AND "UNITED STATES" have the meanings ascribed thereto in
Regulation S;
"VOTING SHARES" means shares of capital stock of any class of any body corporate
carrying voting rights under all circumstances, provided, however, that shares
which only carry the right to vote conditionally on the happening of an event
shall not be considered Voting Shares nor shall any shares be deemed to cease to
be Voting Shares solely by reason of a right to vote accruing to shares of
another class by reason of the happening of any such event;
"WEIGHTED AVERAGE PRICE", with respect to any specified shares, means the number
resulting from the division of the aggregate sale price of all such shares sold
or traded on a specified stock exchange during a specified period by the total
number of such shares sold or traded during such
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period; provided however, that if, at any time after the first day of such
period, such shares commence trading on such stock exchange on a basis which
gives effect to a subdivision or consolidation of such shares, the computation
of Weighted Average Price shall give effect to such subdivision or consolidation
throughout the whole such period; and
"1933 ACT" means the United States Securities Act of 1933, as amended.
Words importing the singular number include the plural and vice versa and
words importing gender include the neuter, feminine and masculine genders; and
Any reference in this Indenture to any Act or Section thereof shall be
deemed to be a reference to such Act or Section as amended or re-enacted from
time to time.
1.2 MEANING OF "OUTSTANDING" FOR CERTAIN PURPOSES
Every Debenture certified and delivered by the Trustee hereunder shall be
deemed to be outstanding until it shall be cancelled or delivered to the Trustee
for cancellation or moneys for the payment thereof shall be set aside pursuant
to Article Nine, provided, however, that:
(1) Debentures which have been partially redeemed shall be deemed to be
outstanding to the extent of the unredeemed part of the principal
amount thereof;
(2) if a new Debenture has been issued in substitution for a Debenture
which has been mutilated, lost, stolen or destroyed, only one of them
shall be counted for the purpose of determining the aggregate
principal amount of the Debentures outstanding; and
(3) for the purpose of any provision of this Indenture entitling holders
of Debentures to vote, sign consents, requests or other instruments or
take any other action under this Indenture, Debentures owned legally
or equitably by the Corporation or any Affiliate shall be disregarded
except that:
(a) 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 the Debentures which the Trustee
knows are so owned shall be so disregarded; and
(b) Debentures so owned which have been pledged in good faith other
than to the Corporation or any 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 his
discretion free from the control of the Corporation or such
Affiliate.
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1.3 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this Indenture into Articles and Sections, the provision of
a table of contents and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation hereof.
1.4 BUSINESS DAY
Whenever any provision of this Indenture requires payment or performance to
be made on a day which is not a Business Day, such payment or performance shall
be made on the next succeeding day which is a Business Day.
1.5 APPLICABLE LAW
This Indenture and the Debentures shall be governed by and construed in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein and shall be treated in all respects as an Ontario
contract.
ARTICLE 2
THE DEBENTURES
2.1 TERMS AND FORMS OF DEBENTURES
(1) The aggregate principal amount of Debentures which may be issued
hereunder is limited to USD$45,000,000.
(2) The Debentures shall be designated "6% Convertible Subordinated
Debentures Due 2005"; shall be dated as of their respective dates of
issue; shall bear interest from such dates (subject to Section 2.8) at
the rate of 6% per annum payable (after as well as before maturity and
after as well as before default with interest on overdue interest at
the same rate) half-yearly on January 15 and July 15 in each year,
commencing July 15, 1998; and shall mature on June 30, 2005.
(3) The principal of the Debentures will be made payable in lawful money
of the United States of America against surrender thereof by the
registered holder of the Debenture at the principal office in
Montreal, Quebec of the Trustee.
(4) Debentures shall be issuable as fully registered Debentures in
denominations of USD$1,000 and integral multiples thereof; shall be
substantially in the form set out in Article 15; and shall bear such
distinguishing letters and numbers as the Trustee may approve.
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2.2 ISSUANCE OF DEBENTURES
Debentures in the aggregate principal amount specified in an Order of the
Corporation referred to below may forthwith and from time to time be executed by
the Corporation and certified by or on behalf of the Trustee and delivered by it
upon receipt of the following:
(1) an Order of the Corporation for the certification and delivery of such
Debentures, specifying the principal amount of the Debentures so to be
certified;
(2) an opinion of Counsel to the effect that all legal requirements in
connection with the issue of such Debentures have been complied with;
and
(3) such certificate as the Corporation, pursuant to Section 13.1 is
required to furnish to the Trustee in connection with the issue,
certification and delivery of the Debentures.
2.3 DEBENTURES TO RANK PARI PASSU
All Debentures shall rank pari passu without discrimination, preference or
priority.
2.4 SIGNING OF DEBENTURES
The Debentures shall be signed by the President or the Chief Financial
Officer or any Vice President of the Corporation. The signatures of any such
officers may be mechanically reproduced in facsimile and Debentures bearing such
facsimile signatures shall be binding upon the Corporation as if they had been
manually signed by such officers. Notwithstanding that any of the individuals
whose manual or facsimile signature appears on any Debentures as one of such
officers may no longer hold office at the date of this Indenture or at the date
of such Debenture or at the date of certification and delivery thereof, any
Debenture signed as aforesaid shall be valid and binding upon the Corporation
and entitled to the benefit of this Indenture.
2.5 CERTIFICATION BY TRUSTEE
(1) No Debenture shall be issued or, if issued, shall be obligatory or
entitle the holder to the benefit hereof until it has been certified
by or on behalf of the Trustee substantially in the form of the
certificate set out in Article 15 or in some other form approved by
the Trustee. Such certification by the Trustee upon any Debenture
shall be conclusive evidence as against the Corporation that the
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Debenture so certified has been duly issued hereunder and is a valid
obligation of the Corporation and that the holder is entitled to the
benefit hereof.
(2) The certificate of the Trustee on Debentures 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 of the proceeds thereof.
2.6 TEMPORARY DEBENTURES
(1) Pending the preparation of definitive Debentures, the Corporation may
execute, and upon an Order of the Corporation the Trustee shall
deliver, temporary Debentures which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any denomination,
substantially of the tenor of the definitive Debentures in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers of the Corporation
executing such Debentures may determine, as evidenced by their
execution of such Debentures.
(2) If temporary Debentures are issued, the Corporation will cause
definitive Debentures to be prepared without unreasonable delay. After
the preparation of definitive Debentures, the temporary Debentures
shall be exchangeable for definitive Debentures upon surrender of the
temporary Debentures at the principal office of the Trustee in
Montreal, Quebec, without charge to the holder. Upon surrender for
cancellation of any one or more temporary Debentures, the Corporation
shall execute and the Trustee shall certify and deliver in exchange
therefor a like principal amount of definitive Debentures of
authorized denominations. Until so exchanged the temporary Debentures
shall in all respects be entitled to the same benefits under this
Indenture as definitive Debentures.
2.7 REPLACEMENT OF DEBENTURES
(1) In case any Debenture shall become mutilated or be lost, destroyed or
stolen and in the absence of notice that such Debenture has been
acquired by a good faith purchaser the Corporation shall issue, and
thereupon the Trustee shall certify and deliver, a new Debenture of
like tenor as the one mutilated, lost, destroyed or stolen in exchange
for and upon surrender and cancellation of such mutilated Debenture or
in lieu of and in substitution for such lost, destroyed or stolen
Debenture, and the new Debenture shall be entitled to the benefit
hereof and rank equally in accordance with its terms with all other
Debentures.
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(2) The applicant for the issue of a new Debenture pursuant to this
Section 2.7 shall bear the cost of the issue thereof and in case of
loss, destruction or theft shall, as a condition precedent to the
issue thereof, furnish to the Corporation and to the Trustee such
evidence of ownership and of the loss, destruction or theft of the
Debenture so lost, destroyed or stolen as shall be satisfactory to the
Corporation in its discretion and such applicant shall also furnish
indemnity in amount and form satisfactory to the Corporation in its
discretion, and shall pay the reasonable charges of the Corporation
and the Trustee or other registrar in connection therewith.
2.8 COMPUTATION OF INTEREST
(1) Debentures, whether issued originally or upon exchange or in
substitution for previously issued Debentures, shall bear interest
from their respective dates of issue or from the last interest payment
date to which interest on the Debentures shall have been paid or made
available for payment, whichever shall be the later.
(2) Interest for any period of less than six months shall be computed on
the basis of a year of 365 days.
2.9 REPAYMENT NET OF WITHHOLDING IMPOSTS
(1) All payments by the Corporation under this Indenture or any Debenture,
whether in respect of principal, interest, interest on overdue
interest, fees or any other payment obligations, shall be made in full
without any deduction or withholding on account of taxes or duties of
whatsoever nature imposed or levied by or on behalf of Canada or any
Administrative Body in Canada having power to tax unless the
Corporation is prohibited by Law from doing so, in which event the
Corporation shall:
(a) forthwith pay to the holder of each Debenture such additional
amount so that the net amount received by the holder will equal
the full amount which would have been received by it had no such
deduction or withholding been made;
(b) pay to the relevant taxation or other authorities within the
period for payment permitted by Law the full amount of the
deduction or withholding (including the full amount of any
deduction or withholding from any additional amount paid pursuant
to this Section); and
(c) furnish to the holder of each Debenture promptly, as soon as
available, an official receipt of the relevant taxation or other
authorities involved for all amounts deducted or withheld as
aforesaid.
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(2) If as a result of any payment by the Corporation under this Indenture
or any Debenture, whether in respect of principal, interest, interest
on overdue interest, fees or other payment obligations, any holder of
a Debenture is required to pay tax under Part XIII of the Income Tax
Act (Canada) or any successor provisions in addition to and aside from
the amounts referred to in Section 2.9(1)(b) above which have been
paid by the Corporation, then the Corporation will, upon demand by the
holder of any Debenture, and whether or not such taxes are correctly
or legally asserted, indemnify the holder of each Debenture for the
payment of any such taxes, together with any interest, penalties and
expenses in connection therewith.
(3) If, following any payment made by the Corporation to any holder of
Debentures under Section 2.9(1)(a) above or any indemnity payment made
by the Corporation to any holder of Debentures under Section 2.9(2)
above, such holder shall receive or be granted a refund, credit,
allowance or remission in respect of the taxes or duties resulting in
the payment thereof and such holder is able to readily identify such
refund, credit, allowance or remission as being attributable to such
taxes or duties, such holder shall, to the extent that it can do so
without prejudice to the retention of the amount of such refund,
credit, allowance or remission and without prejudice to the right of
such holder to obtain any other relief or allowance which may be
available to it, reimburse the Corporation with such amount as such
holder, acting reasonably, determines to be the amount of money
attributable to such refund, credit, allowance or remission that may
be paid by such holder to leave it (after such reimbursement) in no
worse position than it would have been in had there been no such
deduction or withholding or payment of tax which resulted in the
payment under Section 2.9(1)(a) or 2.9(2) above.
(4) Notwithstanding Sections 2.9(1)(a) and 2.9(2) above, the Corporation
shall not be required to make any payments to a holder of a Debenture
thereunder on account of any taxes if (i) such holder is liable for
such taxes in respect of such Debentures by reason only of it having
some connection with Canada other than the mere holding of such
Debentures, or (ii) such holder would not be liable for such taxes if
it satisfied any routine procedural statutory requirements or if it
made a routine procedural declaration of eligibility for treaty
benefit or other similar claim for exemption to the relevant tax
authority (in each case which does not adversely affect its other
affairs), but fails to do so after having been informed in writing of
the need to do so by the Corporation (together with complete details
setting forth all requirements and the reasons therefor) within 3
months of such notice, all of which shall be at the expense of the
Corporation. Furthermore, the Corporation shall not be required to
make payments to a holder of Debentures pursuant to Section 2.9(1) or
2.9(2) which are in excess of the amount of the payments which would
be required to be made by it to such holder if such holder were a
resident of the United States of America for the purposes of the
Canada-United States Income Tax Convention.
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ARTICLE 3
REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP
3.1 REGISTERS
The Corporation shall cause to be kept, by and at the principal office of
the Trustee in Montreal, Quebec, a central register, in which shall be entered
all particulars required by law, including the names and latest known addresses
of the holders of Debentures and particulars of the Debentures held by them
respectively, and shall cause to be kept, by and at the principal office of the
Trustee and at such other place or places, if any, and by such other registrar
or registrars, if any, as the Corporation, with the approval of the Trustee, may
designate, a register of exchanges and transfers recording all exchanges and
transfers of Debentures. The registration of any Debenture shall be noted on
such Debenture by the Trustee or other registrar.
3.2 TRANSFERS OF DEBENTURES
(1) No transfer of a Debenture shall be valid unless made on a register of
transfers herein provided for by the registered holder or such
holder's executors, administrators or other legal representatives or
his or their attorney duly appointed by an instrument in writing in
form and execution satisfactory to the Trustee or other registrar upon
compliance with such reasonable requirements as the Trustee or other
registrar may prescribe, nor unless the name of the transferee shall
have been noted on the Debenture by the Trustee or other registrar.
(2) Notwithstanding anything contained in this Indenture, in the
Debentures or in any subscription agreements under which Debentures
were issued and sold, neither the Trustee, relying solely on the
transfer form or such other reasonable requirements as the Corporation
and Trustee may prescribe pursuant to Section 3.2(1) or this Section,
nor the Corporation shall register any transfer of a Debenture unless
the Debenture is transferred (i) in a transaction that occurs outside
the United States in accordance with Rule 903 or 904, as the case may
be, of Regulation S as applicable to Category 3 securities and Rule
905 of Regulation S and all applicable local laws and regulations;
(ii) to a qualified institutional buyer pursuant to the exception from
the 1933 Act provided by Rule 144A thereunder; (iii) pursuant to an
exemption from the 1933 Act provided by Rule 144 thereunder, if
available; (iv) pursuant to a transaction that did not require
registration under the 1933 Act or any applicable United States laws
and regulations governing the offer and sale of securities (in which
case the owner of such Debenture shall provide an opinion of counsel
satisfactory to the Corporation and the Trustee addressed to the
Corporation and the Trustee to the effect that such resale, pledge or
transfer is
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exempt from registration under the 1933 Act); or (v) to the
Corporation; however, upon receipt of such duly executed certificates,
the Trustee will proceed with such registration, subject to such terms
and conditions, including legending the Debentures, as may be required
by law or by the Corporation on advice of Counsel.
(3) Each of the Corporation and the Trustee shall be entitled to rely, and
the transferring holder of the Debentures shall be deemed to have
represented and warranted to each of the Corporation and the Trustee,
upon any transfer being made, that this transfer restriction is being
complied with and that such transfer is in accordance with the 1933
Act or an exemption therefrom and with applicable state securities
laws.
3.3 EXCHANGE OF DEBENTURES
(1) Subject to Section 3.6, Debentures of any denomination may be
exchanged upon reasonable notice for Debentures of the same aggregate
principal amount in any other authorized denomination or
denominations.
(2) Debentures may be exchanged at the principal office of the Trustee in
Montreal, Quebec or at any of the places at which a register is kept
for the Debentures pursuant to the provisions of this Article. Any
Debenture tendered for exchange shall be surrendered to the Trustee.
The Corporation shall execute and the Trustee shall certify all
Debentures necessary to carry out exchanges as aforesaid. All
Debentures surrendered for exchange shall be cancelled.
3.4 CHARGES FOR TRANSFER AND EXCHANGE
Except as provided in Sections 2.6(2) and 4.4, for each Debenture exchanged
or transferred the Trustee may and shall, if required by the Corporation and
subject to any limitation prescribed by law, make a reasonable charge for its
services and for each new Debenture issued, if any, and payment of such charges
and reimbursement of the Trustee or the Corporation for any transfer taxes or
governmental or other charges required to be paid shall be made by the party
requesting such exchange, registration or transfer as a condition precedent
thereto.
3.5 INSPECTION OF REGISTERS AND LISTS OF HOLDERS
(1) The registers provided for in Section 3.1 shall at all reasonable
times be open for inspection by the Corporation, the Trustee (if not
the registrar) or any Debentureholder.
(2) Every registrar, including the Trustee, from time to time, shall:
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(a) at the request of the Corporation or the Trustee, furnish the
Corporation or the Trustee with a list of the names and addresses
of the holders of Debentures entered on the register kept by such
registrar, showing the principal amount of the Debentures held by
each such holder and the aggregate principal amount of the
Debentures; and
(b) at the request of any Debentureholder, furnish such a list to
such holder within 10 days of such request upon receiving from
such holder a reasonable fee therefor and upon fulfilment by such
holder of the conditions prescribed by Indenture Legislation in
that respect.
3.6 CLOSING OF REGISTERS
Neither the Corporation nor the Trustee nor any other registrar shall be
required:
(1) to make transfers or exchanges of any Debentures on any interest
payment day for the Debentures or during the 10 preceding Business
Days; or
(2) to make transfers or exchanges of any Debenture;
(a) on the day of any selection by the Trustee of Debentures to be
redeemed or during the 10 preceding Business Days; or
(b) which has been selected or called for redemption in whole or in
part unless, upon due presentment thereof for redemption, such
Debenture shall not be redeemed.
3.7 OWNERSHIP OF DEBENTURES
(1) Unless otherwise required by law, the Person in whose name any
Debenture is registered shall for all purposes of this Indenture be
and be deemed to be the owner thereof and payment of or on account of
the principal of such Debenture and interest thereon shall be made
only to or upon the order in writing of such registered holder.
(2) Neither the Corporation nor the Trustee or other registrar shall be
bound to take notice of or see to the performance or observance of any
duty to a third Person, whether under a trust, express, implied or
constructive in respect of any Debenture or otherwise, by the
registered holder or any Person whom the Corporation or the Trustee
treats, as permitted or required by law, as the owner or the
registered holder of such Debenture, but shall transfer the same on
the direction of the Person
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so treated or registered as the holder thereof, whether named as
trustee or otherwise, as though that Person were the beneficial owner
thereof.
(3) The registered holder for the time being of any Debenture shall be
entitled to the principal and interest evidenced by such Debenture,
free from all equities or rights of set-off or counterclaim between
the Corporation and the original or any intermediate holder thereof
save in respect of equities of which the Corporation is required to
take notice by statute or by order of a court of competent
jurisdiction, and all Persons may act accordingly and the receipt of
any such holder for any such principal or interest shall be a good
discharge to the Corporation and the Trustee for the same and neither
the Corporation nor the Trustee shall be bound to inquire into the
title of any such holder save as aforesaid.
(4) The Corporation and the Trustee may treat the registered holder of any
Debenture as the owner thereof without actual production of such
Debenture for the purpose of any Debentureholders' Request,
requisition, direction, consent, instrument or other document.
3.8 LEGEND
Except as provided in this Section 3.8, each Debenture (and all Debentures
issued in exchange therefor or in substitution or transfer thereof) shall bear
the legends set forth in the form of the Debenture set out in Article Fifteen,
together with such additional legends as may be required by the Corporation on
advice of Counsel. A new Debenture bearing no U.S. securities law legend may be
obtained from the Trustee upon delivery to the Trustee of the Debenture and an
opinion of counsel satisfactory to the Corporation and the Trustee addressed to
the Corporation and the Trustee to the effect that such Debenture may be freely
resold without restriction under the 1933 Act.
ARTICLE 4
REDEMPTION AND PURCHASE
4.1 OPTIONAL REDEMPTION
The Debentures shall not be redeemable by the Corporation before the third
anniversary of issuance thereof. Subject to Section 4.2, the Corporation shall
have the right at its option, in the manner hereinafter in this Article Four
provided, to redeem on and after the third anniversary of issuance thereof and
prior to the maturity of the Debentures at any time the whole or from time to
time any part of the principal amount of the Debentures upon payment in lawful
money of the United States of the following percentages of the principal amount
thereof:
▇▇
-▇▇-
▇▇
-▇▇-
If redeemed in
the 12 month Percentage
period beginning of principal
July 1, amount
------------------ ----------------
2001 106.00
2002 104.00
2003 102.00
2004 100.00
2005 100.00
in each case, together with unpaid interest accrued thereon to the Redemption
Date, the applicable one of such prices together with such accrued and unpaid
interest constituting the "Redemption Price".
4.2 CONDITIONS OF REDEMPTION
If the Corporation wishes to redeem all or part of the Debentures on a
Redemption Date that is not a date on which interest is payable on the
Debentures as provided for in Section 2.1(2), then in every such case, the
Corporation shall only be entitled to so redeem the Debentures if the Weighted
Average Price of the Common Shares for 20 consecutive days during a period of 45
days prior to the proposed Redemption Date, is equal to or exceeds the
Conversion Price.
4.3 PLACES OF PAYMENT
The Redemption Price of Debentures called for redemption under any
provision hereof shall be payable upon presentment and surrender thereof at any
of the places where the principal of such Debentures is expressed to be payable
and at such other places, if any, as may be specified in the notice of
redemption given under Section 4.5.
4.4 PARTIAL REDEMPTION
(1) If less than all of the Debentures are to be redeemed at any one time,
the Debentures to be redeemed shall be selected by lot by the Trustee
or may be selected on a pro rata basis (to the nearest multiple of
USD$1,000) in accordance with the principal amount of Debentures
registered in the name of each holder or in such other manner as the
Trustee shall deem equitable. Any part, being USD$1,000 or an integral
multiple thereof, of a Debenture of a denomination in excess of
USD$1,000 may be selected and called for redemption as hereinafter
provided and all references in this Indenture to redemption of
Debentures shall be deemed to include redemption of such parts.
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(2) The holder of any Debenture of which part only is redeemed shall, upon
presentment of such Debenture and receipt of the moneys payable to him
by reason of such redemption, surrender such Debenture to the paying
bank for transmission to the Trustee and the Trustee shall cancel the
same and, without charge, shall forthwith certify and deliver to such
holder a new Debenture or Debentures of aggregate principal amount
equal to the unredeemed part of the principal amount of the Debenture
so surrendered.
4.5 NOTICE OF REDEMPTION
Notice of redemption of any Debentures shall be given to the Trustee and
the holders of the Debentures which are to be redeemed, not more than 60 nor
less than 30 days prior to the date fixed for redemption, in the manner provided
in Article 14. Every such notice shall specify the aggregate principal amount of
Debentures called for redemption, the date fixed for redemption, the Redemption
Price and the places of payment and shall state that interest upon the principal
amount of Debentures called for redemption shall cease to be payable from and
after the Redemption Date and that the right to convert the principal of the
Debentures so to be redeemed will terminate and expire at the Close of Business
on the Business Day immediately preceding the Redemption Date. In addition,
unless all the outstanding Debentures are to be redeemed, the notice of
redemption shall also specify:
(a) in the case of a notice mailed to a Debenture holder, the
distinguishing letters and numbers of the Debentures which are to
be redeemed (or of such thereof as are registered in the name of
such Debentureholders);
(b) in the case of a published notice, the distinguishing letters and
numbers of the Debentures which are to be redeemed; and
(c) in all cases, the principal amounts of such Debentures or, if any
such Debenture is to be redeemed in part only, the principal
amount of such part.
4.6 PAYMENT OF REDEMPTION PRICE
Upon notice being given in accordance with Section 4.5, the principal
amount of the Debentures so called for redemption and the principal amount to be
redeemed of the Debentures so called for redemption in part shall be and become
due and payable on the Redemption Date at the Redemption Price, and with the
same effect as if it were the date of maturity specified in such Debentures,
anything therein or herein to the contrary notwithstanding and, from and after
such Redemption Date, interest upon the principal amounts so becoming due and
payable shall cease unless payment of the Redemption Price shall not be made on
presentment for surrender of such Debenture at any of the places specified in
Section 4.2, 4.3 on or after the Redemption Date and prior to the setting aside
of the Redemption Price pursuant to Article Nine.
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4.7 PURCHASE OF DEBENTURES
The Corporation shall have the right at any time and from time to time when
not in default hereunder to purchase Debentures in the market or by tender, or
by private contract at any price not exceeding the principal amount thereof at
the date of purchase, together with unpaid interest accrued thereon to the date
of purchase and costs of purchase. With respect to any purchase by the
Corporation of Debentures pursuant to this Section 4.7, unless otherwise agreed
in writing by all Debentureholders, the principal amount of Debentures so
purchased shall be allocated to all Debentures at the time outstanding in
proportion to the respective outstanding principal amounts of Debentures then
held by each Debentureholder.
4.8 CANCELLATION OF RETIRED DEBENTURES
Subject to the provisions of Section 4.4 as to Debentures redeemed in part,
all Debentures purchased or redeemed in whole or in part under the provisions of
this Article Four shall be forthwith delivered to and cancelled by the Trustee
and no Debentures shall be issued in substitution therefor.
4.9 SPECIAL PREPAYMENT FOR ADVERSE PREPAYMENT EVENT
If, in connection with any payment of interest on the Debentures, the
Corporation shall, as a result of the occurrence of any Prepayment Event, be
required to pay any Additional Amounts pursuant to Section 2.9 (said Section 2.9
being herein called a "TAX PAYMENT PROVISION") in excess of 10% of the aggregate
amount of such interest payment (other than as a result of the making of any
payment by the Corporation, from or through any jurisdiction other than the
United States or Canada), then the Corporation may, at its option, prepay, on a
date which is not less than 30 days and not more than 90 days after the date on
which the Corporation delivers to the holders written notice of the occurrence
of such Prepayment Event in accordance with the notice requirements of Section
14.1 (which notice shall specify that the holders have the right to waive such
prepayment pursuant to this Section 4.9), all, but not less than all, of the
Debentures with respect to which such amounts are required to be paid at 100% of
the principal amount thereof, together with all interest accrued on such
Debentures to the date fixed for prepayment, provided that (i) no prepayment
pursuant to this Section 4.9 shall in any way relieve the Corporation of any
obligation under any Tax Payment Provision with respect to payments under this
Indenture or the Debentures payable prior to or upon the making of such
prepayment and (ii) no Debentures shall be prepaid pursuant to this Section 4.9
if the holder thereof shall, not less than fifteen days prior to the date
specified for prepayment of the Debenture in the notice given by the Corporation
in accordance with the notice requirements of Section 14.1, deliver a notice to
the Corporation (which notice shall be binding on any transferee of such
Debenture), stating that such holder waives any right to payment under such Tax
Payment Provision in respect of the specific event or condition (including with
respect to the continuing or future effects of such specific event or condition
on subsequent payments) that shall have given rise to the Corporation's
prepayment
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right under this Section 4.9 (it being agreed that no such waiver shall
constitute a waiver of any other right to receive a payment under such Tax
Payment Provision in respect of any event or condition other than the specific
event or condition in respect of which such waiver shall have been given) and
that the Corporation shall have all of its rights under this Section 4.9 with
respect to such other event or condition.
ARTICLE 5
CONVERSION
5.1 CONVERSION PRIVILEGE AND CONVERSION PRICE
(1) Subject to and upon compliance with the provisions of this Article
Five, the holder of any Debenture shall have the right, at such
holder's option, at any time prior to the Close of Business on the
Business Day immediately preceding
(a) maturity, or,
(b) if such Debenture shall be called for redemption, the Redemption
Date of such Debenture,
whichever is earlier, to convert such Debenture or any portion (which is an
integral multiple of USD$1,000) of the principal amount thereof into fully paid
non-assessable Common Shares at the Conversion Price.
(2) The Conversion Price at which Debentures shall be convertible into
Common Shares shall be USD$0.35 per share.
5.2 CONVERSION PROCEDURE
(1) In order to exercise the conversion privilege, the holder of any
Debenture to be converted shall, within the time specified in Section
5.1, surrender such Debenture to the Trustee at its principal office
in Montreal, Quebec, accompanied by a written notice (which shall be
irrevocable) in the form of the "Notice of Election to Convert" set
out in Article Fifteen, duly signed by such holder or his executors,
administrators or other legal representative or his or their attorney
duly appointed by an instrument in writing in form and execution
satisfactory to the Trustee, stating:
(a) that such holder elects to convert such Debenture or a specified
portion (which is an integral multiple of USD$1,000) of the
principal amount thereof, and
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(b) the names (with addresses) in which the certificates representing
the Common Shares issuable upon such conversion are to be
registered and, if there is more than one name, the number of
shares to be registered in each of such names.
If any of the Common Shares into which such Debenture is to be converted are to
be issued to a Person or Persons other than the holder of such Debenture, such
notice shall be accompanied by payment to the Trustee of any transfer tax which
may be payable by reason thereof and the signature of the transferor must be
guaranteed. The surrender of such Debenture accompanied by such written notice
shall be deemed to constitute a contract between the holder of such Debenture
and the Corporation whereby:
(i) the holder of such Debenture subscribes for the number of Common
Shares which such holder shall be entitled to receive on such
conversion;
(ii) the holder of such Debenture releases the Corporation from all
liability with respect to such Debenture or the portion of the
principal amount thereof to be converted, as the case may be; and
(iii) the Corporation agrees that the surrender of such Debenture for
conversion constitutes full payment of the subscription price for
the Common Shares issuable upon such conversion.
The date of receipt by the Trustee of such Debenture and such notice is herein
referred to as the "Conversion Date" of such Debenture.
(2) As promptly as practicable after the Conversion Date of a Debenture,
the Corporation shall issue or cause to be issued and deliver or cause
to be delivered to the holder of such Debenture, or on the written
order of such holder, a certificate or certificates in the name or
names of the Person or Persons specified in such notice for the number
of Common Shares deliverable upon the conversion of such Debenture (or
specified portion thereof) and provision shall be made in respect of
any fraction of a share as provided in Section 5.3. Such conversion
shall be deemed to have been effected immediately prior to the Close
of Business on the Conversion Date and, at that time, the rights of
the holder of such Debenture as such holder shall cease and the Person
or Persons in whose name or names any certificate or certificates for
Common Shares shall be delivered upon such conversion shall be deemed
to have become the holder or holders of record of the Common Shares
represented thereby; provided, however, that the surrender of a
Debenture for conversion on any date on which the share transfer
registers for Common Shares shall be closed shall not be effective to
constitute the Person or Persons entitled to receive the Common Shares
upon such conversion as the holder or holders of record of such Common
Shares, but such surrender shall be effective
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to constitute the person or persons entitled to receive such Common
Shares as the holder or holders of record thereof for all purposes at
the Close of Business on the next succeeding day on which such share
transfer registers are open. No payment or adjustment shall be made
upon any conversion on account of any dividends declared and paid on
the Common Shares prior to the date of conversion.
(3) Upon surrender to the Trustee of any Debenture which is to be
converted in part only, the holder thereof shall be entitled to
receive, without expense to such holder, one or more new Debentures
for the unconverted portion of the principal amount of the Debenture
so surrendered.
5.3 NO FRACTIONAL SHARES
Notwithstanding anything herein contained, the Corporation shall in no case
be required to issue fractional Common Shares upon the conversion of any
Debenture. If any fractional interest in a Common Share would, except for the
provisions of this Section 5.3, be deliverable upon the conversion of any
Debenture, the Corporation shall adjust such fractional interest by payment by
cheque to the holder of such surrendered Debenture of an amount equal (to the
nearest cent) to the product of such fractional interest and the Conversion
Price in effect on the Conversion Date of such Debenture.
5.4 LEGEND ON COMMON SHARES
The certificates representing Common Shares issuable upon the conversion of
a Debenture shall bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THE
HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE
CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN
ACCORDANCE WITH RULE 903 OR 904, AS THE CASE MAY BE, OF REGULATION S UNDER
THE 1933 ACT AS APPLICABLE TO CATEGORY 3 SECURITIES AND RULE 905 OF
REGULATION S, (C) TO A QUALIFIED INSTITUTIONAL BUYER PURSUANT TO THE
EXEMPTION FROM THE 1933 ACT PROVIDED BY RULE 144A THEREUNDER, (D) PURSUANT
TO THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT PROVIDED BY RULE 144
THEREUNDER, IF AVAILABLE, OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE 1933 ACT. THE HOLDER HEREOF FURTHER AGREES THAT HEDGING
TRANSACTIONS
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INVOLVING SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH
THE 1933 ACT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD
DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A NEW
CERTIFICATE, BEARING NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD
DELIVERY" MAY BE OBTAINED FROM MONTREAL TRUST COMPANY, AS REGISTRAR AND
TRANSFER AGENT FOR THE CORPORATION, UPON DELIVERY OF THIS CERTIFICATE AND
AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION AND THE TRANSFER
AGENT ADDRESSED TO THE CORPORATION AND THE TRANSFER AGENT TO THE EFFECT
THAT SUCH SECURITIES MAY BE FREELY RESOLD WITHOUT RESTRICTION UNDER THE
1933 ACT."
and all certificates representing Common Shares issued in exchange
therefor or in substitution thereof will bear the same legend;
provided, that the legend may be removed upon delivery to the Transfer
Agent of an opinion of counsel satisfactory to the Corporation and the
transfer agent to the effect that such Common Shares may be freely
resold without restriction under the 1933 Act.
5.5 ADJUSTMENT OF CONVERSION PRIVILEGE
(1) If and whenever the Corporation shall:
(a) subdivide the outstanding Common Shares into a greater number of
shares;
(b) consolidate the outstanding Common Shares into a smaller number
of shares;
(c) issue Common Shares or securities convertible into or
exchangeable for Common Shares as a stock dividend to all or
substantially all the holders of Common Shares; or
(d) make a distribution on the outstanding Common Shares to all or
substantially all the holders of Common Shares payable in Common
Shares or securities convertible into or exchangeable for Common
Shares;
any of such events being herein called a "Share Reorganization", then in each
such case the Conversion Price shall be adjusted, effective immediately after
the record date at which the holders of Common Shares are determined for the
purposes of the Share Reorganization or, if no record date is fixed, the
effective date of the Share Reorganization, by multiplying the Conversion Price
in effect on such record or effective date, as the case may be, by a fraction of
which:
(i) the numerator shall be the number of Common Shares
outstanding on such record or effective date; and
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(ii) the denominator shall be the number of Common Shares
outstanding after giving effect to such Share
Reorganization, including, in the case of a distribution of
securities convertible into or exchangeable for Common
Shares, the number of Common Shares that would have been
outstanding if such securities had been converted into or
exchanged for Common Shares on such record or effective
date.
(2) If and whenever the Corporation shall issue to all or substantially
all the holders of Common Shares, rights, options or warrants under
which such holders are entitled, during a period expiring not more
than 45 days after the record date of such issue, to subscribe for or
purchase Common Shares (or securities convertible into or exchangeable
for Common Shares) at a price per share (or, in the case of securities
convertible into or exchangeable for Common Shares, at an exchange or
conversion price per share at the date of issue of such securities) of
less than 95% of the Current Market Price of the Common Shares on such
record date (any such event being herein called a "Rights Offering"),
then in each such case the Conversion Price shall be adjusted,
effective immediately after the record date at which holders of Common
Shares are determined for the purposes of the Rights Offering, by
multiplying the Conversion Price in effect on such record date by a
fraction of which:
(a) the numerator shall be the sum of:
(i) the number of Common Shares outstanding on such record date;
and
(ii) a number obtained by dividing:
(i) either,
(I) the product of the total number of Common Shares
so offered for subscription or purchase and the
price at which such shares are so offered, or
(II) the product of the maximum number of Common Shares
into or for which the convertible or exchangeable
securities so offered for subscription or purchase
may be converted or exchanged and the conversion
or exchange price of such securities,
as the case may be, by
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(B) the Current Market Price of the Common Shares on such
record date; and
(b) the denominator shall be the sum of:
(i) the number of Common Shares outstanding on such record date;
and
(ii) the number of Common Shares so offered for subscription or
purchase (or, in the case of securities convertible into or
exchangeable for Common Shares, the maximum number of Common
Shares for or into which the securities so offered for
subscription or purchase may be converted or exchanged).
To the extent that such rights, options or warrants are not exercised prior to
the expiry time thereof, the Conversion Price shall be readjusted effective
immediately after such expiry time to the Conversion Price which would then have
been in effect based upon the number of Common Shares (or securities
exchangeable into Common Shares) actually delivered upon the exercise of such
rights, options or warrants.
(3) If and whenever the Corporation shall issue or distribute to all or
substantially all the holders of Common Shares:
(a) shares of the Corporation of any class, other than Common Shares;
(b) rights, options or warrants;
(c) any other assets (excluding cash dividends and equivalent
dividends in shares paid in lieu of Cash Dividends in the
Ordinary Course);
and if such issuance or distribution does not constitute a Share Reorganization
or a Rights Offering (any such event being herein called a "Special
Distribution"), then in each such case the Conversion Price shall be adjusted,
effective immediately after the record date at which the holders of Common
Shares are determined for purposes of the Special Distribution, by multiplying
the Conversion Price in effect on such record date by a fraction of which:
(i) the numerator shall be the difference between:
(i) the product of the number of Common Shares outstanding on
such record date and the Current Market Price of the Common
Shares on such date; and
(ii) the fair market value, as determined by the Directors (whose
determination shall be conclusive), to the holders of Common
Shares
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of the shares, rights, options, warrants, evidences of
indebtedness or other assets issued or distributed in the Special
Distribution (net of any consideration paid therefor by the
holders of Common Shares), and
(ii) the denominator shall be the product of the number of Common
Shares outstanding on such record date and the Current Market
Price of the Common Shares on such date.
(4) If and whenever there shall occur:
1. a reclassification or redesignation of the Common
Shares or any change of the Common Shares into other
shares, otherwise than in a Share Reorganization;
2. a consolidation, merger or amalgamation of the
Corporation with or into another body corporate; or
3. the transfer of all or substantially all of the assets
of the Corporation to another body corporate;
(any such event being herein called a "Capital Reorganization"), then in each
such case the holder of any Debenture who exercises the Conversion Privilege
after the effective date of such Capital Reorganization shall be entitled to
receive and shall accept, upon the exercise of such right, in lieu of the number
of Common Shares to which such holder was theretofore entitled upon exercise of
the Conversion Privilege, the aggregate number of shares or other securities or
property of the Corporation or of the body corporate resulting from such Capital
Reorganization that such holder would have been entitled to receive as a result
of such Capital Reorganization if, on the effective date thereof, such holder
had been the holder of the number of Common Shares to which such holder was
theretofore entitled upon conversion; provided, however, that no such Capital
Reorganization shall be carried into effect unless all necessary steps shall
have been taken so that the holders of Debentures shall thereafter be entitled
to receive such number of shares or other securities of the Corporation or of
the body corporate resulting from such Capital Reorganization, subject to
adjustment thereafter in accordance with provisions the same, as nearly as may
be possible, as those contained in this Section 5.5 and in Section 5.6.
5.6 ADJUSTMENT RULES
The following rules and procedures shall be applicable to adjustments of
the Conversion Privilege made pursuant to Section 5.5:
(a) no adjustment in the Conversion Price shall be required unless
such adjustment would result in a change of at least 1% in the
Conversion Price then in effect, provided, however, that any
adjustments which, but for the
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provisions of this clause 5.6(a), would otherwise have been
required to be made, shall be carried forward and taken into
account in any subsequent adjustment;
(b) no adjustment in the Conversion Price shall be made in respect of
any event described in Section 5.5 (other than an event described
in clauses 5.5(1)(a) or 5.5(1)(b) and in clause 5.5(4)(c)), if
the holders of the Debentures are entitled to participate in such
event on the same terms mutatis mutandis as if they had converted
their Debentures prior to the effective date or record date of
such event. The terms of any such participation shall be subject
to the prior approval of The Toronto Stock Exchange and the
Montreal Exchange; and
(c) no adjustment in the Conversion Price shall be made pursuant to
Section 5.5 in respect of the issue from time to time of Common
Shares to holders of Common Shares who receive substantially
equivalent dividends in Common Shares in lieu of receiving Cash
Dividends in the Ordinary Course.
5.7 CERTIFICATE AS TO ADJUSTMENT
The Corporation shall from time to time immediately after the occurrence of
any event which requires an adjustment in the Conversion Privilege lodge with
the Trustee a Certificate of the Corporation specifying the nature of the event
requiring the adjustment, the amount of the adjustment necessitated thereby, the
Conversion Price after giving effect to such adjustment and setting forth, in
reasonable detail, the method of calculation and the facts upon which such
calculation is based. The Corporation shall forthwith give to the
Debentureholders notice, in the manner provided in Article Fourteen, of such
adjustment, specifying the event requiring such adjustment and the Conversion
Price after giving effect to such adjustment.
5.8 NOTICE TO DEBENTUREHOLDERS
If the Corporation shall fix a record date for:
(a) any Share Reorganization (other than the subdivision of
outstanding Common Shares into a greater number of shares or the
consolidation of outstanding Common Shares into a smaller number
of shares),
(b) any Rights Offering,
(c) any Special Distribution,
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(d) any Capital Reorganization (other than a reclassification or
redesignation of the Common Shares into other shares), or
(e) any cash dividend other than a Cash Dividend in the Ordinary
Course,
the Corporation shall, not less than 14 days prior to such record date or, if no
record date is fixed, prior to the effective date of such event, give to the
Debentureholders, in the manner provided in Article Fourteen, notice of the
particulars of the proposed event to the extent that such particulars have been
determined at the time of giving the notice.
5.9 TERMINATION AND REVIVAL OF RIGHT TO CONVERT
(1) The right to convert any Debenture which is called for redemption
shall terminate and expire at the Close of Business on the Business
Day immediately preceding the Redemption Date of such Debenture,
unless the Corporation shall make default in the payment of the
Redemption Price of such Debenture.
(2) If payment of the Redemption Price of any Debenture called for
redemption is not duly made, the right to convert such Debenture shall
revive and continue until the earlier of payment of such Redemption
Price and the maturity date.
5.10 CANCELLATION OF DEBENTURES
All Debentures surrendered for conversion shall be cancelled by the Trustee
and no Debentures shall be issued in substitution therefor.
5.11 RESERVATION OF SHARES
The Corporation shall at all times while any of the Debentures remain
outstanding reserve and keep available out of its authorized but unissued Common
Shares, for the purpose of effecting the conversion of the Debentures, such
number of Common Shares as shall from time to time be sufficient to effect the
conversion of all Debentures. As a condition precedent to the taking of any
action which would require an adjustment to the Conversion Price, the
Corporation shall take any corporate action which may, in the opinion of
Counsel, be necessary in order that the Corporation shall have unissued and
reserved in its authorized capital, and may validly and legally issue, the
shares to which the Debentureholders are entitled on the full exercise of their
conversion rights in accordance with the provisions hereof.
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5.12 GOVERNMENTAL REQUIREMENTS
If any Common Shares of the Corporation, reserved or to be reserved for the
purpose of conversion of the Debentures hereunder, require qualification with or
approval of any governmental authority under any federal, provincial or state
law before such shares may be validly issued upon conversion, the Corporation
shall take such action as may be necessary to secure such qualification or
approval, as the case may be.
ARTICLE 6
SUBORDINATION
6.1 AGREEMENT TO SUBORDINATE
The indebtedness evidenced by this Indenture and the Debentures, including
the principal thereof and interest thereon (such indebtedness being hereinafter
referred to as "Subordinated Indebtedness") shall be subordinate and junior in
right of payment, in the manner set forth in this Article Six, to the prior
payment in full of the Senior Indebtedness. Each holder of a Debenture, by
acceptance thereof, agrees to and shall be bound by the provisions of this
Article Six.
6.2 DISTRIBUTION ON DISSOLUTION, WINDING-UP, LIQUIDATION OR REORGANIZATION
(1) Upon any Distribution of Assets of the Corporation:
(a) All Senior Indebtedness shall first be paid in full, or such
payment provided for, before any payment is made on account of
the Subordinated Indebtedness and in any such proceedings, any
payment or Distribution of any kind or character, whether in cash
or property or securities, which may be payable or deliverable in
respect of the Subordinated Indebtedness shall be paid or
delivered directly to the holders of Senior Indebtedness for
application and payment thereof, unless and until the Senior
Indebtedness shall have been paid and satisfied in full, or such
payment and satisfaction shall have been provided for; provided,
however, that:
1. if payment or delivery of such cash, property or
securities to holders of Subordinated Indebtedness is
authorized by an order or decree made by a court of
competent jurisdiction in any proceedings under the
Companies Creditors Arrangement Act (Canada) or any
statute in replacement or substitution thereof and
giving effect, and stating in such order or decree that
effect is given, to the subordination of such
Subordinated Indebtedness to the Senior Indebtedness,
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no payment or delivery of such cash, property or
securities payable or deliverable with respect to the
Subordinated Indebtedness need be made to the holders
of the Senior Indebtedness; and
2. no such delivery need be made of securities which are
issued pursuant to voluntary reorganization,
dissolution or liquidation proceedings, or upon any
merger, consolidation, sale, lease, transfer or other
disposal (not prohibited by any indenture, agreement or
other instrument to which the Corporation or any of its
successors then is a party) by the Corporation or any
such successor, and which securities are effectively
made subordinate and junior in right of payment to the
Senior Indebtedness by provisions substantially to the
effect set out in this Article Six.
(b) The Trustee and the holders of Debentures assign to the holders
of Senior Indebtedness, for the purposes and to the extent set
forth in this clause 6.2(1)(b), all their right, title and
interest in and to any payment or Distribution (other than a
payment or Distribution referred to in subclauses (i) and (ii) of
clause 6.2(1)(a)) of Assets of the Corporation of any kind or
character, whether in cash, property or securities, to which they
would be entitled in respect of the Subordinated Indebtedness
except for the provisions of Sections 6.2 and 6.3, and agree to
take such steps as may be necessary or appropriate to entitle the
holders of Senior Indebtedness to receive such payment or
Distribution, ratably according to the aggregate amount remaining
unpaid on the Senior Indebtedness held by each, all to the extent
necessary to provide for the payment or satisfaction of all
Senior Indebtedness in full, after giving effect to any
concurrent payment or Distribution, or provision therefor, to the
holders of Senior Indebtedness, prior to any payment or
Distribution upon the Subordinated Indebtedness; and
(c) If, notwithstanding the provisions of clauses 6.2(1)(a) and (b),
any payment or Distribution (other than a payment or Distribution
referred to in subclauses (i) and (ii) of clause 6.2(1)(a)) of
Assets of the Corporation of any kind or character, whether in
cash, property or securities, shall be received by the Trustee,
by the holders of Debentures or by the Corporation in respect of
the Subordinated Indebtedness before all Senior Indebtedness
shall have been paid in full, such payment or Distribution shall
be held by such party in trust (which such parties hereby declare
and acknowledge) for the benefit of, and shall be paid over or
delivered to, the holders of Senior Indebtedness for application
to the payment of all Senior
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Indebtedness remaining unpaid to the extent necessary to pay all
such Senior Indebtedness after giving effect to any concurrent
payment or Distribution, or provision therefor, to the holders of
Senior Indebtedness.
(2) Upon any Distribution of Assets of the Corporation referred to in this
Article Six, the Trustee and the holders of the Debentures shall be
entitled to rely upon a Certificate of the Corporation, and/or a
certificate of the trustee in bankruptcy, receiver, assignee for the
benefit of creditors or other liquidating agent making such payment or
Distribution, delivered to the Trustee or to the holders of the
Debentures, for the purpose of ascertaining the Persons entitled to
participate in such Distribution, the holders of Senior Indebtedness
and other indebtedness of the Corporation, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and
all other facts pertinent thereto.
6.3 SUBROGATION OF DEBENTURES
Subject to and upon payment in full of the Senior Indebtedness, the holders
of the Debentures shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of Assets of the Corporation
applicable to the Senior Indebtedness to the extent of the prior application
thereof of cash, property or securities of the Corporation which would have been
payable or distributable to the holders of the Debentures but for the provisions
of this Article Six, until the principal of the Debentures and interest thereon
shall be paid in full, and no such payments or distributions of Assets of the
Corporation to the holders of Senior Indebtedness which would have been payable
or distributable to the holders of the Debentures but for the provisions of this
Article Six shall, for the purposes of such subrogation, as between the
Corporation, its creditors other than the holders of Senior Indebtedness, and
the holders of the Debentures be deemed to be a payment or distribution of
Assets of the Corporation to or for the account of the holders of Senior
Indebtedness, it being understood that the provisions of this Article Six are,
and are intended, solely for the purposes of defining the relative rights of the
holders of the Debentures, on the one hand, and of the holders of Senior
Indebtedness, on the other hand.
6.4 RIGHTS OF DEBENTUREHOLDERS RESERVED
Nothing contained herein or in the Debentures is intended to or shall
impair, as between the Corporation, its creditors other than the holders of
Senior Indebtedness, and the holders of the Debentures, the obligation of the
Corporation, which is absolute and unconditional, to pay to the holders of the
Debentures the indebtedness represented thereby, including the principal thereof
and interest thereon, as and when the same shall become due and payable in
accordance with their terms, or affect the relative rights of the holders of the
Debentures and creditors of the Corporation other than the holders of Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or the
holders of any Debenture from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under
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this Article Six of the holders of Senior Indebtedness in respect of Assets of
the Corporation received upon the exercise of such remedy.
6.5 AUTHORIZATION TO EFFECT SUBORDINATION
Each holder of a Debenture, by his acceptance thereof, authorizes and
directs the Trustee on behalf of such holder to take such action as may be
necessary or appropriate to effectuate the subordination provided for in this
Article Six and appoints the Trustee attorney-in-fact of such holder for any and
all such purposes. Upon the Request of the Corporation, and upon being furnished
with a Certificate of the Corporation stating that one or more named persons are
holders of Senior Indebtedness and specifying the amount and nature of such
Senior Indebtedness, the Trustee, from time to time, for and on behalf of the
holders of the Debentures, shall execute and deliver deeds of subordination in
favour of the Person or Persons named in such Certificate of the Corporation
providing that such Person or Persons are entitled to all the rights and
benefits of this Article Six as the holder or holders of Senior Indebtedness.
Such deeds shall be conclusive evidence that the indebtedness specified therein
is Senior Indebtedness. An executed counterpart of each such deed shall be
delivered by the Trustee to the Corporation and another such counterpart shall
be retained by the Trustee. Nothing contained in this Section 6.5 shall impair
the rights of any holders of Senior Indebtedness in whose favour such a deed of
subordination has not been executed and delivered.
ARTICLE 7
COVENANTS OF THE CORPORATION
7.1 GENERAL COVENANTS
The Corporation covenants with the Trustee that so long as any Debentures
remain outstanding:
(a) It will well, duly and punctually pay or cause to be paid to
every holder of every Debenture the principal thereof and the
interest accrued thereon (including, in case of default, interest
on the amount in default) at the dates and places, in the
currency and in the manner mentioned herein and in the
Debentures. As interest becomes due on each Debenture (except at
maturity or on redemption when interest may, at the option of the
Corporation, be paid upon surrender of such Debenture), the
Corporation, either directly or through the Trustee, shall send
no later than five Business Days prior to each date upon which
such interest is due by prepaid ordinary mail a cheque for such
interest (less any tax required to be withheld therefrom, if any)
payable to the order of the registered holder of such Debenture
and addressed to him at his last address appearing on the
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register, unless such holder otherwise directs. In the case of
joint holders, the cheque shall, unless such joint holders
otherwise direct, be made payable to the order of all of such
joint holders and, if more than one address appears on the
register in respect of such joint holding, the cheque shall be
mailed to the first address so appearing, unless otherwise
directed in writing by such holder or by all of such joint
holders. The mailing of such cheque shall, to the extent of the
sum represented thereby plus the amount, if any, of any tax
withheld as aforesaid and remitted to the appropriate tax
authorities, satisfy and discharge the liability for interest on
such Debenture, unless such cheque be not paid at par on
presentment at one of the places where such interest is by the
terms of such Debenture, made payable. In the event of
non-receipt of any cheque for interest by the person to whom it
is so sent, the Corporation will issue to such Person a
replacement cheque for a like amount upon being furnished with
such evidence of non-receipt as it shall reasonably require and
upon being indemnified to its satisfaction. Notwithstanding the
foregoing, if the Corporation is prevented by circumstances
beyond its control (including, without limitation, any
interruption in mail service) from making payment of any interest
due on each Debenture in the manner provided above, the
Corporation may make payment of such interest or make such
interest available for payment in any other manner acceptable to
the Trustee with the same effect as though payment had been made
in the manner provided above;
(b) Except as herein otherwise provided, it will at all times
maintain its corporate existence; it will carry on and conduct
its business and will cause the business of any Subsidiaries it
may have to be carried on and conducted in a proper, efficient
and businesslike manner and in accordance with good business
practice; it will keep and cause any such Subsidiaries to keep
proper books of account; and it will file with the Trustee and
cause the Trustee to forward to the Debentureholders in a timely
manner copies of all documents and other material of the
Corporation furnished to its shareholders after the date hereof;
notwithstanding the foregoing, nothing herein shall restrict the
Corporation from amalgamating or otherwise merging with its
Subsidiary corporation Repap New Brunswick, Inc. provided that no
Event of Default has occurred and is then subsisting and no Event
of Default shall occur as a result of such amalgamation or
merger;
(c) It will comply in all material respects with all laws and
regulations applicable to it and all policies and guidelines of
any regulatory body having jurisdiction over it with respect to
the Corporation generally, its business, the Assets of the
Corporation and the performance of its obligations hereunder,
including, without limitation, the payment of all taxes,
assessments and governmental charges;
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7.2 TRUSTEE'S REMUNERATION, EXPENSES AND INDEMNITY
The Corporation covenants that it will pay to the Trustee from time to time
reasonable remuneration for its services hereunder and will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in the administration or execution of the trusts
created hereby (including the reasonable compensation and the disbursements of
its counsel and all other advisers and assistants not regularly in its employ),
both before any default hereunder and thereafter until all duties of the Trustee
under such trusts shall be finally and fully performed, except any such expense,
disbursement or advance as may arise from its gross negligence or bad faith.
Subject to Section 13.2(1), the Corporation shall be liable for and shall
indemnify and hold harmless the Trustee, its officers, directors, employees,
beneficiaries and shareholders from and against any and all liabilities, losses,
costs, claims, actions, expenses or demands (collectively, the "Liabilities")
which may be brought against or incurred by the Trustee, its officers,
directors, employees, beneficiaries and shareholders arising, directly or
indirectly, from any act or omission by the Trustee in the performance of its
duties and obligations hereunder except for the Liabilities which result from
the gross negligence, wilful misconduct or bad faith of the Trustee. After
default all amounts so payable and the interest thereon shall be payable out of
any funds coming into the possession of the Trustee in priority to the principal
of and interest on the Debentures. It is understood and agreed that this
indemnification shall survive the termination or discharge of this Trust
Indenture or the resignation of the Trustee.
7.3 NOT TO ACCUMULATE INTEREST
In order to prevent any accumulation after maturity of interest, the
Corporation covenants with the Trustee that it will not, except with the
approval of the Debentureholders expressed by Extraordinary Resolution, directly
or indirectly extend or assent to the extension of time for payment of any
interest payable hereunder or be a party to or approve any such arrangement by
purchasing or funding any interest or in any other manner. In case the time for
payment of any such interest shall be so extended, whether for a definite period
or otherwise, such interest shall not be entitled in case of default hereunder
to the benefit of these presents except subject to the prior payment in full of
the principal of all Debentures and of all interest on Debentures, the payment
of which has not been so extended, and of all other moneys payable hereunder.
7.4 RESTRICTIVE COVENANT
Subject to Section 7.13, the Corporation shall not:
(a) declare or pay any dividend (other than a dividend payable in
shares of the Corporation) on any share of the Corporation; or
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(b) redeem or purchase or make any capital distribution with respect
to any share of the Corporation;
at any time when the Corporation is in arrears in the payment of any principal
of or interest on any of the Debentures.
7.5 REPORTING ISSUER STATUS AND STOCK EXCHANGE LISTING
The Corporation covenants to use all reasonable efforts for so long as any
Debentures remain issued and outstanding to maintain the listing of the Common
Shares into which the Debentures are convertible on The Toronto Stock Exchange
and the Montreal Exchange and to maintain its status as a reporting issuer not
in default of any requirements of the securities legislation of the provinces of
Canada in which the Corporation is a reporting issuer at the date of this
Indenture, and the Corporation covenants and agrees to provide not less than
thirty (30) days prior written notice to the Trustee and to the registered
holders of the Debentures in the manner provided in Article Fourteen of any
decision taken by the Corporation to de-list its Common Shares from the
aforementioned exchanges or change its status as a reporting issuer not in
default under the aforementioned legislation.
7.6 FINANCIAL STATEMENTS
The Corporation will deliver to the Trustee (who will upon receipt
forthwith deliver to each Debentureholder) within 120 days after the end of each
fiscal year of the Corporation, audited consolidated financial statements of the
Corporation for such fiscal year.
7.7 COMPLIANCE CERTIFICATE
The Corporation will deliver to the Trustee (who will upon receipt
forthwith deliver to each Debentureholder) together with the financial
statements referred to in Section 7.6 and at any time the Trustee may reasonably
request, a Compliance Certificate of the Corporation.
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7.8 PERFORMANCE OF COVENANTS BY TRUSTEE
If the Corporation shall fail to perform any of its covenants contained in
this Indenture, the Trustee may itself perform any of such covenants capable of
being performed by it, but shall be under no obligation to do so. All sums
expended or advanced by the Trustee for such purpose shall be repayable as
provided in Section 7.2. No such performance or advance by the Trustee shall be
deemed to relieve the Corporation of any default hereunder.
7.9 INDEMNITY OF CORPORATION
The Corporation shall indemnify and hold the Trustee harmless against any
and all losses, costs, expenses, liabilities, actions, suits, claims or damages
of any and every kind sustained, paid or incurred by it as a result of any
environmental claims, liabilities or obligations of any and every nature
whatsoever relating to or affecting the Corporation or its Subsidiaries or the
property of any of them ("their property"), or the property of others where the
Corporation or any Subsidiary could have any liability in respect thereof under
Applicable Environmental Laws, or personal injury or death, including in respect
of:
(1) any environmental harm or damage to or impairment of their property
(or any other Person's property) caused by the presence or release of
any Hazardous Materials on their property, or by the Corporation or
any Subsidiary;
(2) any decrease or loss in value of their property (or any other Person's
property) occasioned by non-compliance with Applicable Environmental
Laws;
(3) the imposition or assertion of any Lien including any expenses
collectable as taxes affecting their property under Applicable
Environmental Laws by any Governmental/Judicial Body;
(4) any claim asserted or order issued by a Governmental/Judicial Body
against a holder of a Debenture or an agent of any of them in respect
of any matter referred to in Sections 7.9(1), 7.9(2) or 7.9(3), or for
any clean-up, restoration, reclamation or other securing or remedial
action in respect of their property (or any other Person's property);
or
(5) any non-compliance with any provision herein relating to environmental
matters.
Without limiting the generality of the foregoing, the indemnities in this
Section 7.9 shall extend to:
(a) reasonable legal fees on a solicitor and his own client basis,
including the reasonable costs of defending and/or counterclaiming or
claiming over against third parties in respect of any action or
matters; and
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(b) any amounts payable arising out of a settlement of any action entered
into between the Trustee, acting reasonably, and any Person with the
consent of the Corporation (which consent will not be unreasonably
withheld);
but shall not extend to any claim, liability or obligation to the extent that
the same relates to a decrease in the value of Debentures or the same arises
solely due to the gross negligence or wilful misconduct of the holder claiming
indemnification.
These indemnities shall extend to the officers, directors, employees,
shareholders, agents and assignees of the Trustee, and the Corporation will hold
the benefit of these indemnities in trust for such indemnified parties to the
extent necessary to give effect hereto. The provisions of and undertakings and
indemnification set out in this Section 7.9 shall survive the payment and
satisfaction of the Debentures including any termination of the other provisions
of this Agreement.
7.10 INSURANCE
The Corporation shall maintain or cause to be maintained adequate insurance
in respect of its property and the property of its subsidiaries in accordance
with prudent industry standards, and shall provide the Trustee with copies of
all insurance policies relating thereto if so requested.
7.11 SHAREHOLDER MATERIALS
The Corporation shall provide to the Trustee and Debentureholders on a
timely basis all reports, notices, proxies and other materials sent by the
Corporation to shareholders of the Corporation.
7.12 OTHER INFORMATION
The Corporation shall provide to the Trustee and the Debentureholders such
other documentation and information concerning the Corporation and its
Subsidiaries as the Trustee may request acting reasonably.
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7.13 RESTRICTED PAYMENTS
Prior to the Amalgamation, the Corporation will not authorize, declare, pay
or make, or permit any of its Subsidiaries to authorize, declare, pay or make,
any Restricted Payments (other than Restricted Payments made by a Subsidiary to
the Corporation or a wholly-owned Subsidiary of the Corporation).
7.14 RESTRICTIONS ON ADDITIONAL DEBT
Except for the issuance of Debentures pursuant to this Indenture, the
Corporation shall not, prior to the Amalgamation, incur any Debt after the date
of this Indenture, provided that:
(i) in the event the Amalgamation occurs, any Debt of Repap New
Brunswick, Inc., immediately prior to the Amalgamation shall not
be considered additional Debt of the Corporation for the purposes
of this Section 7.14, 7.15; and
(ii) the extension, renewal or refinancing of any Debt of either the
Corporation on the date hereof or of Repap New Brunswick, Inc.
immediately prior to the Amalgamation shall not be considered
additional Debt of the Corporation for purposes of this Section
7.14, 7.15 provided that the principal amount of any such Debt
does not increase from its original amount less any amount which
has been repaid at the time of such extension, renewal or
refinancing.
7.15 MANAGEMENT AGREEMENT
Other than solely as a result of the Amalgamation, the Corporation shall
not amend or terminate the Management Agreement or waive any of its rights and
remedies thereunder including the forgiveness of any payment obligation to the
Corporation thereunder without the prior written consent of the
Debentureholders, such consent not to be unreasonably withheld.
ARTICLE 8
DEFAULT AND ENFORCEMENT
8.1 EVENTS OF DEFAULT
Each of the following events is herein sometimes called an "Event of
Default":
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(a) if the Corporation shall make default in payment of the principal
of any Debenture when the same becomes due under any provision
hereof or of such Debenture;
(b) if the Corporation shall make default in payment of any interest
due on any Debenture and such default continues for a period of 5
days;
(c) if the Corporation shall make default in the observance of the
covenant in Section 7.4;
(d) if the Corporation shall neglect to carry out or observe any
other covenant herein contained on its part to be observed or
performed and, after notice in writing has been given by the
Trustee to the Corporation specifying such default and requiring
the Corporation to put an end to the same, the Corporation shall
fail to make good such default within a period of 30 days, unless
the Trustee (having regard to the subject matter of the neglect
or non-observance) shall have agreed to a longer period, and in
such event, within the period agreed to by the Trustee;
(e) if the Corporation shall make default under any term or provision
of any agreement evidencing indebtedness for borrowed money
(other than the Debentures) and as a result of such default the
lender of such indebtedness shall have accelerated the repayment
of indebtedness which exceeds in the aggregate USD $5,000,000, or
if the Corporation shall fail to honour its guarantee of the
indebtedness of any other Person, of if the Corporation shall
fail to repay on demand any of its indebtedness for borrowed
money which exceeds in the aggregate USD $5,000,000 that is
repayable on demand;
(f) if an order shall be made or an effective resolution passed for
the winding-up, liquidation or dissolution of the Corporation,
except in the course of carrying out or pursuant to a transaction
which is permitted by Section 10.1;
(g) if the Corporation shall make a general assignment for the
benefit of its creditors or a proposal under the Bankruptcy and
Insolvency Act (Canada), or shall be declared bankrupt, or if a
custodian or a sequestrator or a receiver and manager or any
other Person with similar powers shall be appointed in respect of
the Corporation or of the property of the Corporation or any part
thereof which, in the opinion of the Trustee, is a substantial
part thereof;
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(h) if an encumbrancer shall take possession of the property of the
Corporation or any part thereof which has an aggregate value in
excess of USD $5,000,000, or if a distress or execution or any
similar process shall be levied or enforced thereagainst and
remain unsatisfied for such period as would permit such property
or such part thereof to be sold thereunder; or
(i) if a Change of Control occurs, provided that a Change of Control
shall be deemed not to occur unless and until the Credit Rating
shall, on or within 90 days after the date of the occurrence of
such Change of Control (which period shall be extended so long as
the Credit Rating is under publicly announced consideration for
possible downgrade by either Rating Agency), be less than the
Credit Rating on the date (the "Rating Date") which is 90 days
before the date of the occurrence of such Change of Control;
provided further, however, that, if on the Rating Date the Credit
Rating is an Investment Grade Rating given by both Rating
Agencies, a Change of Control shall be deemed not to occur unless
and until the Credit Rating shall, on or within 90 days after the
date of the occurrence of such Change of Control (which period
shall be extended so long as the Credit Rating is under publicly
announced consideration for possible downgrade by either Rating
Agency), be less than an Investment Grade Rating; or
(j) if the Corporation fails to maintain the listing of the Common
Shares into which the Debentures are convertible on The Toronto
Stock Exchange and the Montreal Exchange and to maintain its
status as a reporting issuer not in default of any requirements
of the securities legislation of the provinces of Canada in which
the Corporation is a reporting issuer at the date of this
Indenture (a "Delisting") provided that a Delisting shall be
deemed not to occur unless and until the Credit Rating shall, on
or within 90 days after the date of the occurrence of such
Delisting (which period shall be extended so long as the Credit
Rating is under publicly announced consideration for possible
downgrade by either Rating Agency) be less than the Credit Rating
on the date (the "Rating Date") which is 90 days before the date
of the occurrence of such Delisting; provided further, however,
that, if on the Rating Date, the Credit Rating is an Investment
Grade Rating given by both Rating Agencies, a Delisting shall be
deemed not to occur unless and until the Credit Rating shall, on
or within 90 days after the date of the occurrence of such
Delisting (which period shall be extended so long as the Credit
Rating is under publicly announced consideration for possible
downgrade by either Rating Agency) be less than an Investment
Grade Rating.
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8.2 ACCELERATION ON DEFAULT
In case any Event of Default has occurred and is continuing, the Trustee
may in its discretion and shall, upon receipt of a Debentureholders' Request,
subject to the provisions of Section 8.4, declare the principal of and interest
on the Debentures and all other moneys payable hereunder to be due and payable
and the same shall forthwith become immediately due and payable to the Trustee
on demand, anything therein or herein to the contrary notwithstanding, and the
Corporation shall on such demand forthwith pay to the Trustee for the benefit of
the Debentureholders the principal of and unpaid interest accrued on and
interest on amounts in default under the Debentures and all other moneys payable
hereunder together with subsequent interest thereon at the rate borne by the
Debentures from the date of such declaration until payment is received by the
Trustee, such subsequent interest to be payable at the times and places and in
the moneys mentioned in and according to the tenor of the Debentures. Such
payment when made shall be deemed to have been made in discharge of the
Corporation's obligations hereunder and any moneys so received by the Trustee
shall be applied as herein provided.
8.3 NOTICE OF EVENTS OF DEFAULT
The Corporation will promptly notify the Trustee in writing upon becoming
aware of the occurrence of any Event of Default hereunder and will in such
notice distinctly specify the Event of Default that has occurred. If an Event of
Default shall occur and be continuing the Trustee shall within 30 days after it
becomes aware of the occurrence of such Event of Default, give notice of such
Event of Default to the Debentureholders in the manner provided in Section 13.1,
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.
8.4 WAIVER OF DEFAULT
In case any Event of Default has occurred otherwise than by default in
payment of any principal moneys at maturity:
(a) the holders of more than 50% of the principal amount of the
Debentures shall have power (in addition to and subject to the
powers exercisable by Extraordinary Resolution) by requisition in
writing to instruct the Trustee to waive the default and/or to
annul any declaration made by the Trustee pursuant to Section 8.2
and the Trustee shall thereupon waive the default and/or annul
such declaration upon such terms and conditions as such
Debentureholders shall prescribe; and
(b) the Trustee, so long as it has not become bound to institute any
proceedings hereunder, shall have power to waive the default if,
in the Trustee's
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opinion, the same shall have been cured or adequate satisfaction
made therefor, and in such event to annul any such declaration
theretofore made by the Trustee in the exercise of its
discretion, upon such terms and conditions as the Trustee may
deem advisable;
provided, however, that no act or omission either of the Trustee or of the
Debentureholders in the premises shall extend to or be taken in any manner
whatsoever to affect any subsequent default or the rights resulting therefrom.
8.5 PROCEEDINGS BY TRUSTEE
(1) Whenever any Event of Default has occurred, but subject to the
provisions of Section 8.4 and to the provisions of any Extraordinary
Resolution:
(a) the Trustee, in the exercise of its discretion, may proceed to
enforce the rights of the Trustee and the Debentureholders by any
action, suit, remedy or proceeding authorized or permitted by law
or by equity and may file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have
the claims of the Trustee and of the Debentureholders lodged in
any bankruptcy, winding-up or other judicial proceedings relative
to the Corporation; and
(b) upon receipt of a Debentureholders' Request and upon receiving
sufficient funds and being indemnified to its satisfaction as
provided in Section 13.2, the Trustee shall exercise or take such
one or more of the said remedies as the Debentureholders' Request
may direct or, if such Debentureholders' Request contains no
direction, as the Trustee may deem expedient.
(2) No such remedy for the enforcement of the rights of the Trustee or of
the Debentureholders shall be exclusive of or dependent on any other
such remedy but any one or more of such remedies may from time to time
be exercised independently or in combination.
(3) Upon the exercising or taking by the Trustee of any of such remedies,
whether or not a declaration and demand have been made pursuant to
Section 8.2, the principal of and interest on the Debentures and all
other moneys payable under Section 8.2 shall forthwith become due and
payable to the Trustee as though such a declaration and a demand
therefor had actually been made.
(4) All rights of action hereunder may be enforced by the Trustee without
the possession of any of the Debentures or the production thereof on
the trial or other proceedings relative thereto.
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(5) No delay or omission of the Trustee or of the Debentureholders to
exercise any remedy referred to in Section 8.5(1) shall impair any
such remedy or shall be construed to be a waiver of any default
hereunder or acquiescence therein.
8.6 SUITS BY DEBENTUREHOLDERS
No holder of any Debenture shall have the right to institute any action or
proceeding or to exercise any other remedy authorized by this Indenture for the
purpose of enforcing any right on behalf of the Debentureholders or for the
execution of any trust or power hereunder or for the appointment of a liquidator
or receiver or for a receiving order under the Bankruptcy Act or to have the
Corporation wound up or to file or prove a claim in any liquidation or
bankruptcy proceedings, unless the Debentureholders' Request, funds and
indemnity referred to in Section 8.5 have been tendered to the Trustee and the
Trustee shall have failed to act within a reasonable time thereafter; in such
case, but not otherwise, any Debentureholder acting on behalf of himself and all
other Debentureholders shall be entitled to take proceedings in any court of
competent jurisdiction such as the Trustee might have taken under Section 8.5;
it being understood and intended that no one or more holders of Debentures shall
have any right in any manner whatsoever to affect, disturb or prejudice the
rights hereby created by his or their action or to enforce any right hereunder
or under any Debenture, except subject to the conditions and in the manner
herein provided, and that all powers and trusts hereunder shall be exercised and
all proceedings at law shall be instituted, had and maintained by the Trustee,
except only as herein provided, and in any event for the equal benefit of all
holders of Debentures.
8.7 APPLICATION OF MONEYS RECEIVED BY TRUSTEE
Except as herein otherwise provided, the moneys arising from any
enforcement hereof shall be held by the Trustee and by it applied, together with
any other moneys then or thereafter in the hands of the Trustee available for
the purpose, as follows:
(a) firstly, in payment or reimbursement to the Trustee of the
remuneration, expenses, disbursements and advances of the Trustee
earned, incurred or made in the administration or execution of
the trusts hereunder or otherwise in relation to this Indenture,
with interest thereon as herein provided;
(b) secondly, but subject to Section 7.3, in payment of the principal
of and unpaid interest accrued on the Debentures (less any tax
required to be withheld therefrom), in that order of priority
unless otherwise directed by Extraordinary Resolution and, in
that case, in such order of priority as between principal and
interest as may be directed by such Extraordinary Resolution; and
(c) the surplus, if any, of such moneys shall be paid to the
Corporation or its assigns unless otherwise required by law;
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provided, however, that no payment shall be made pursuant to the foregoing
clause (b) in respect of the principal of or interest on any Debenture held,
directly or indirectly by or for the benefit of the Corporation or any of its
Subsidiaries or Affiliates (other than any Debenture pledged for value and in
good faith to a Person other than the Corporation or any of its Subsidiaries or
Affiliates, but only to the extent of such Person's interest therein) except
subject to the prior payment in full of the principal of and interest on the
Debentures which are not so held.
8.8 DISTRIBUTION OF PROCEEDS
Payments to holders of Debentures pursuant to clause 8.7(b) shall be made
as follows:
(a) at least 15 days' notice of every such payment shall be given in
the manner provided in Article Fourteen specifying the time when
and the place or places where the Debentures are to be presented
and the amount of the payment and the application thereof as
between principal and interest;
(b) payment of any Debenture shall be made upon presentment thereof
at any one of the places specified in such notice and any such
Debenture thereby paid in full shall be surrendered, otherwise a
memorandum of such payment shall be endorsed thereon; but the
Trustee may in its discretion dispense with presentment and
surrender or endorsement in any special case upon such indemnity
being given as it shall deem sufficient;
(c) from and after the date of payment specified in the notice,
interest shall accrue only on the amount owing on each Debenture
after giving credit for the amount of the payment specified in
such notice unless such Debenture be duly presented on or after
the date so specified and payment of such amount be not made;
(d) the Trustee shall not be required to make any interim payment to
Debentureholders unless the moneys in its hands, after reserving
therefrom such amount as the Trustee may think necessary to
provide for the payments mentioned in clause 8.7(a), exceed 5% of
the principal amount of the Debentures.
8.9 CURING CERTAIN EVENTS OF DEFAULT
If an Event of Default described in Section 8.1(i) or in Section 8.1(j) has
occurred and is continuing, the Corporation may cure such Event of Default by
offering to redeem, on a date which is not less than 30 days and not more than
90 days after the date on which the Corporation delivers to the holders written
notice (a "Default Event Notice") of the occurrence of such Event of Default in
accordance with Section 14.1, the Debentures at a price equal to 101.00% of the
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entire principal amount of the Debentures then outstanding, together with
interest accrued on such principal amount to the date fixed for prepayment.
8.10 CURRENCY CONVERSION
Where an amount in the Indenture is denominated in U.S. dollars or Cdn.
dollars as the case may be, (the "First Currency") and for purposes of
determining compliance with the provisions of the Indenture it is necessary to
convert U.S. dollars into Cdn. dollars or vice versa (the "Other Currency"),
then the equivalent amount of the First Currency shall be that amount of the
First Currency which would be required to purchase such amount of the Other
Currency at the Bank of Canada noon (Montreal local time) rate for such
currencies on such date of determination (as quoted or published from time to
time by the Bank of Canada) or, if such date of determination is not a Business
Day, on the Business Day immediately preceding such date of determination, or of
such other rate as may be agreed upon by the Corporation and the
Debentureholders each acting reasonably.
ARTICLE 9
SATISFACTION AND DISCHARGE
9.1 CANCELLATION AND DESTRUCTION
All matured Debentures shall, forthwith after payment, be cancelled and
delivered to the Trustee. All Debentures cancelled or required to be cancelled
under this or any other provision of this Indenture may, subject to applicable
law, be destroyed by or under the direction of the Trustee by cremation or
otherwise (in the presence of a representative of the Corporation, if the
Corporation shall so require) and the Trustee shall prepare and retain a
certificate of such destruction and deliver a duplicate thereof to the
Corporation.
9.2 NON-PRESENTMENT OF DEBENTURES
In case the holder of any Debenture shall fail to present the same for
payment on the date on which the principal thereof and/or the interest thereon
becomes payable either at maturity, on redemption or otherwise, the Corporation
shall be entitled:
(a) 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 or redemption of the Debentures,
to direct the Trustee to set aside,
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the principal moneys and/or the interest, as the case may be, in trust to be
paid to the holder of such Debenture upon due presentment 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 in
respect whereof such moneys have been set aside shall be deemed to have been
paid and the holder 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 on such moneys) upon due presentment and surrender thereof,
subject always to the provisions of Section 9.3.
9.3 REPAYMENT OF UNCLAIMED MONEYS TO CORPORATION
Any moneys set aside under Section 9.2 in respect of any Debenture and not
claimed by and paid to the holders of such Debenture, as provided in Section
9.2, within six years after the date of such setting aside shall be repaid to
the Corporation by the Trustee on demand, and thereupon the Trustee shall be
released from all further liability with respect to such moneys, and thereafter
such holder shall have no rights in respect of such Debenture except to obtain
payment of such moneys (without interest thereon) from the Corporation, subject
to any applicable period of prescription provided by law.
9.4 RELEASE FROM COVENANTS
Upon proof being given to the reasonable satisfaction of the Trustee that
the principal of all Debentures and interest (including interest on amounts in
default) thereon and other moneys payable hereunder have been paid or satisfied
or that, all the Debentures having matured or having been duly called for
redemption, or the Trustee having been given irrevocable instructions by the
Corporation to publish within 90 days notice of redemption of all the
Debentures, 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
these presents and all interest thereon and the remuneration of the Trustee, 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
release the Corporation from its covenants herein contained except those
relating to the indemnification of the Trustee.
ARTICLE 10
SUCCESSOR CORPORATIONS
10.1 CERTAIN REQUIREMENTS IN RESPECT OF MERGER, ETC.
The Corporation shall not enter into any transaction (whether by way of
reorganization, reconstruction, consolidation, amalgamation, merger, transfer,
sale, lease or otherwise) whereby
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all or substantially all of its undertaking, property and assets would become
the property of any other Person or, in the case of amalgamation, of the
continuing corporation resulting therefrom unless:
(a) such other Person is a body corporate (herein called a "Successor
Corporation") incorporated under the laws of Canada or any
province thereof;
(b) the Successor Corporation shall execute, prior to or
contemporaneously with the consummation of such transaction, such
instruments 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 liability for the due
and punctual payment of the Debentures and the interest thereon
and all other moneys payable hereunder and the covenant of the
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
(d) no condition or event shall exist in respect of the Successor
Corporation at the time of such transaction and after giving full
effect thereto which would constitute an Event of Default.
10.2 VESTING OF POWERS IN SUCCESSOR
Whenever the conditions of Section 10.1 have been duly observed and
performed, the Successor Corporation shall succeed to and be substituted for the
Corporation with the same effect as if the Successor Corporation had been named
herein as the party of the first part, and 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 required by any provision of this Indenture 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 the
Successor Corporation.
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ARTICLE 11
MEETINGS OF DEBENTUREHOLDERS
11.1 RIGHT TO CONVENE MEETING
The Trustee may at any time and from time to time and shall, on receipt of
a Request of the Corporation or a Debentureholder's Request and upon receiving
sufficient funds and being indemnified to its reasonable satisfaction by the
Corporation or by the Debentureholders signing such Debentureholders' Request,
as the case may be, against the costs which may be incurred in connection with
the calling and holding of such meeting, convene a meeting of the
Debentureholders. In the event of the Trustee failing within 30 days after
receipt of such request, funds and indemnity to give notice convening such
meeting, the Corporation or such Debentureholders, as the case may be, may
convene such meeting. Every such meeting shall be held in the city of Toronto or
at such other place as may be approved or determined by the Trustee.
11.2 NOTICE
At least 21 days' notice of any meeting shall be given to the
Debentureholders in the manner provided in Article 14 and a copy thereof shall
be sent by mail, subject to Section 14.4, 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 and it shall not be necessary for any such notice to set out
the terms of any resolution to be proposed or any of the provisions of this
Article Eleven.
11.3 CHAIRMAN
Some individual, who need not be a Debentureholder, nominated in writing by
the Trustee shall be chairman of the meeting and if no individual is so
nominated, or if the individual so nominated is not present within 15 minutes
from the time fixed for the holding of the meeting, the Debentureholders present
in person or by proxy shall choose some individual present to be chairman.
11.4 QUORUM
Subject to the provisions of Section 11.1:
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(a) at any meeting of Debentureholders, a quorum shall consist of
Debentureholders present in person or by proxy and representing
at least 25% in principal amount of the Debentures;
(b) if a quorum of the Debentureholders shall not be present within
30 minutes from the time fixed for holding the meeting, such
meeting, if convened by the Debentureholders or on a
Debentureholders' Request, shall be dissolved; but if otherwise
convened, the meeting shall stand adjourned without notice to the
same day in the next week (unless such day is not a Business Day
in which case it shall stand adjourned to the next following
Business Day thereafter) at the same time and place, unless the
chairman shall appoint some other place, day and/or time of which
not less than seven days' notice shall be given in the manner
provided in Article 14; and
(c) at the adjourned meeting, the Debentureholders present in person
or by proxy shall constitute a quorum and may transact the
business for which the meeting was originally convened
notwithstanding that they may not represent 25% in principal
amount of the Debentures.
11.5 POWER TO ADJOURN
The chairman of any meeting at which a quorum of the Debentureholders is
present may, with the consent of holders of a majority in principal amount of
the Debentures 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.
11.6 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
any such meeting, unless a poll is duly demanded as herein provided, a
declaration by the chairman that a resolution has been carried or carried
unanimously or by a particular majority or lost or not carried by a particular
majority shall be conclusive evidence of the fact.
11.7 POLL
On every Extraordinary Resolution, and on any other question submitted to a
meeting when demanded after a vote by show of hands by the Chairman or by any
Debentureholders acting in person or by proxy, a poll shall be taken in such
manner as the chairman shall direct. Questions other than Extraordinary
Resolutions shall, if a poll be taken, be decided by the votes
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of the holders of a majority in principal amount of the Debentures represented
at the meeting and voted on the poll.
11.8 VOTING
On a show of hands, every person who is present and entitled to vote,
whether as a Debentureholder or as proxy for one or more absent Debentureholders
or both, shall have one vote. On a poll, each Debentureholder present in person
or represented by a proxy duly appointed by instrument in writing shall be
entitled to one vote in respect of each USD$1,000 principal amount of Debentures
of which he shall then be the holder. A proxy need not be a Debentureholder.
Joint registered holders of a Debenture shall vote together in respect of
Debentures of which they are joint registered holders and may be represented in
person or by proxy by any one of them.
11.9 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:
(a) for the deposit of instruments appointing proxies at such place
as the Trustee, the Corporation or the Debentureholders convening
the meeting, as the case may be, may in the notice convening the
meeting direct; and
(b) for the deposit of instruments appointing proxies at some
approved place or places other than the place at which the
meeting is to be held and enabling particulars of such
instruments appointing proxies to be mailed, cabled or sent by
any other means of recorded communication 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 the registered holders of Debentures and
persons whom registered holders of Debentures have by instrument in writing duly
appointed as their proxies.
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11.10 CORPORATION AND TRUSTEE MAY BE REPRESENTED
The Corporation and the Trustee, by their respective officers and
directors, and the legal advisers of the Corporation, the Trustee and
Debentureholders may attend any meeting of the Debentureholders, but shall have
no vote as such.
11.11 POWERS EXERCISABLE BY EXTRAORDINARY RESOLUTION
In addition to all other powers conferred upon them by Section 13.8 or any
other provisions of this Indenture or by law, a meeting of the Debentureholders
shall have the following powers, any one or combination of which may be
exercised from time to time by Extraordinary Resolution:
(a) power to agree to 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;
(b) 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;
(c) power to waive and direct the Trustee to waive any default on the
part of the Corporation in complying with any provision of this
Indenture or the Debentures and/or to annul and to direct the
Trustee to annul any declaration made by the Trustee pursuant to
Section 8.2, either unconditionally or upon any conditions
specified in such Extraordinary Resolution;
(d) power to restrain any Debentureholders from taking, instituting
or maintaining any suit, action or proceeding for the payment of
principal or interest or for the execution of any trust or power
hereunder or for the appointment of a liquidator or a receiver or
a receiver and manager or a trustee in bankruptcy or to have the
Corporation wound up or for any other remedy thereunder;
(e) power to direct any holder of a Debenture who, as such, has
instituted any such suit, action or proceeding to stay or
otherwise discontinue or otherwise deal with the same upon
payment, if the taking of such suit, action or proceeding shall
have been permitted by Section 8.6, of the costs, charges and
expenses reasonably and properly incurred by such holder in
connection therewith;
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(f) power to sanction the exchange of Debentures for or the
conversion of Debentures into shares, bonds, debentures, notes or
any other securities or obligations of the Corporation or any
other body corporate;
(g) power to assent to any modification of or change in or omission
from the provisions contained herein which shall be agreed to by
the Corporation and to authorize the Trustee to concur in and
execute any deed or instrument supplemental hereto embodying such
modification, change or omission;
(h) power to repeal, modify or amend any Extraordinary Resolution
previously passed by the Debentureholders; and
(i) power to appoint and remove a committee to consult with the
Trustee and to delegate to such committee (subject to such
limitations, if any, as may be prescribed in the Extraordinary
Resolution) all or any of the powers which the Debentureholders
could exercise by Extraordinary Resolution under the foregoing
clauses (b), (c) and (d). 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 persons as shall be
prescribed in the Extraordinary Resolution appointing it, and the
members need not themselves be Debentureholders. Subject to the
Extraordinary resolution appointing it, every such committee may
elect its chairman and may make regulations respecting its
quorum, the calling 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 resolutions signed 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.
11.12 MEANING OF "EXTRAORDINARY RESOLUTION"
(1) The expression "Extraordinary Resolution" means, subject as
hereinafter in this Section 11.12 and in Section 11.15 provided, a
resolution at a meeting of Debentureholders duly convened for the
purpose and held in accordance with the provisions of this Article
Eleven at which the holders of more than 50% in principal amount of
the Debentures 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.
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(2) If at any such meeting the holders of more than 50% in principal
amount of the Debentures are not present in person or by proxy within
30 minutes after the time appointed for the meeting, then the
meeting, if convened by Debentureholders or on a Debentureholders'
Request, shall be dissolved; but if otherwise convened, the meeting
shall stand adjourned to such date, being not less than 14 nor more
than 60 days later, and to such place and time as may be appointed by
the chairman. Not less than seven days notice shall be given of the
time and place of such adjourned meeting in the manner provided in
Article 14. Such notice shall state that at the adjourned meeting the
Debentureholders present in person or by proxy shall constitute a
quorum but it shall not be necessary to set forth the purposes for
which the meeting was originally called or any such particulars. At
the adjourned meeting the Debentureholders present in person or by
proxy shall constitute a quorum and may transact the business for
which the meeting was originally convened and a resolution proposed
at such adjourned meeting and passed by the requisite vote as
provided in Section 11.12(1) shall be an Extraordinary Resolution
within the meaning of this Indenture, notwithstanding that the
holders of more than 50% in principal amount of the Debentures are
not present in person or by proxy at such adjourned meeting.
(3) Votes on an Extraordinary Resolution shall always be taken by a poll
and no demand for a poll on an Extraordinary Resolution shall be
necessary.
11.13 POWERS CUMULATIVE
It is hereby declared and agreed that any one or more of the powers and/or
combination of the powers in this Indenture stated to be exercisable by the
Debentureholders 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 to exercise such powers or powers or combination of
powers thereafter from time to time.
11.14 MINUTES
Minutes of all resolutions and proceedings at every meeting of the
Debentureholders shall be made and duly entered in books to be from time to time
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, 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 thereat
or proceedings had, to have been duly passed and had.
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11.15 INSTRUMENTS IN WRITING
All action which may be taken and all powers which may be exercised by the
Debentureholders at a meeting held as hereinbefore in this Article 11 provided
may also be taken and exercised by the holders of 66 2/3% of the principal
amount of all the Debentures by an instrument in writing signed in one or more
counterparts and the expression 'Extraordinary Resolution' when used in this
Indenture shall include an instrument so signed.
11.16 BINDING EFFECT OF RESOLUTIONS
Every resolution and every Extraordinary Resolution passed in accordance
with the provisions of this Article Eleven at a meeting of Debentureholders
shall be binding upon all the Debentureholders, whether present at or absent
from such meeting, and every instrument in writing signed by Debentureholders in
accordance with Section 11.15 shall be binding upon the Debentureholders,
whether signatories thereto or not, and each and every Debentureholder and the
Trustee (subject to the provisions for its indemnity herein contained) shall be
bound to give effect accordingly to every such resolution, Extraordinary
Resolution and instrument in writing.
ARTICLE 12
SUPPLEMENTAL INDENTURES
12.1 EXECUTION OF SUPPLEMENTAL INDENTURES
From time to time the Corporation (when authorized by a resolution of its
Directors and with the prior approval of The Toronto Stock Exchange and The
Montreal Exchange) and the Trustee may, subject to the provisions of these
presents, and they shall, when so directed by these presents, execute and
deliver by their proper officers, indentures or other instruments supplemental
hereto, which thereafter shall form part hereof, for any one or more of the
following purposes:
(a) evidencing the succession of Successor Corporations to the
Corporation and the covenants of and obligations assumed by such
successor Corporations in accordance with the provisions of
Article 10;
(b) giving effect to any Extraordinary Resolution;
(c) adding to or altering the provisions hereof in respect of the
registration and transfer of Debentures, making provision for the
issue of Debentures in forms or denominations other than those
herein provided for and for the exchange of Debentures of
different forms and denominations or making
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any modification in the forms of the Debentures which does not
affect the substance thereof;
(d) making any additions to, deletions from or alterations of the
provisions of this Indenture or the Debentures which, in the
opinion of Counsel, are necessary or advisable in order to
incorporate, reflect or comply with applicable law;
(e) the correction or rectification of any ambiguity, defective
provision, error or omission herein, provided that, in the
opinion of the Trustee, the rights of the Trustee or of the
Debentureholders are not prejudiced thereby; and
(f) any other purposes not inconsistent with the provisions of this
Indenture, provided that, in the opinion of the Trustee, the
rights of the Trustee and of the Debentureholders are not
prejudiced thereby.
ARTICLE 13
CONCERNING THE TRUSTEE
13.1 TRUST INDENTURE LEGISLATION
(1) In this Article 13, the term "Indenture Legislation" means the
provisions, if any, of the Canada Business Corporations Act and, to
the extent that such provisions are at the time in force and
applicable to this Indenture, any other statute of Canada or a
province thereof, and the respective regulations thereunder relating
to trust indentures and/or to the rights, duties and obligations of
trustees under trust indentures and of corporations issuing debt
obligations under trust indentures.
(2) 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.
(3) The Corporation and the Trustee agree that each will at all times in
relation to this Indenture and any action to be taken hereunder
observe and comply with and be entitled to the benefits of Indenture
Legislation, including the requirement that the Corporation deliver a
statutory declaration or certificate pursuant to Section 87 of the
Canadian Business Corporations Act.
13.2 RIGHTS AND DUTIES OF TRUSTEE
(1) In exercising the powers and discharging the duties conferred by the
terms of this Indenture, the Trustee shall act honestly and in good
faith with a view to the best
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interests of the Debentureholders and exercise the care, diligence and
skill of a reasonably prudent trustee.
(2) The Trustee shall not be required to take notice or be deemed to have
notice or actual knowledge of any matter hereunder, including an Event
of Default, unless the Trustee shall have received from the
Corporation or a Debentureholder written notice distinctly stating the
matter in respect of which the Trustee should have notice or actual
knowledge and in the absence of such notice, the Trustee may for all
purposes of this Trust Indenture, conclusively assume that the
Corporation is not in default hereunder and that no Event of Default
has occurred.
(3) 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 expenses and
liabilities to be incurred thereby and any loss and damage it may
suffer by reason thereof except such as may arise from its negligence
or bad faith. 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.
(4) The Trustee may, before commencing or at any time during the
continuance of any act, action or proceeding referred to in Section
13.2(3), 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.
(5) 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, of this Section 13.2 and of Section 13.3.
13.3 EVIDENCE, EXPERTS AND ADVISERS
(1) In addition to the reports, certificates, opinions and other evidence
required by this Indenture, the Corporation shall furnish to the
Trustee such additional evidence of compliance with any provision
hereof, and in such form, as may be prescribed by Indenture
Legislation or as the Trustee may reasonably require by written notice
to the Corporation.
(2) In the exercise of its rights and duties, 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
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therein, upon statutory declarations, opinions, reports, certificates
or other evidence furnished to the Trustee pursuant to any provision
hereof or of Indenture Legislation or pursuant to a request of the
Trustee, provided that such evidence complies with Indenture
Legislation and that the Trustee examines the same and determines that
such evidence complies with the applicable requirements of this
Indenture.
(3) Whenever Indenture Legislation requires that evidence referred to in
Section 13.3(1) be in the form of a statutory declaration, the Trustee
may accept such statutory declaration in lieu of a Certificate of the
Corporation required by any provision hereof. Any such statutory
declaration may be made by one or more of the president,
vice-presidents, secretary, controller or treasurer of the
Corporation.
(4) Proof of the execution of an instrument in writing, including a
Debentureholders' Request, by any Debentureholder may be made by the
certificate of a notary public, or other officer with similar powers,
that the person signing such instrument acknowledged to such notary
the execution thereof, or by an affidavit of a witness to such
execution or in any other manner which the Trustee may consider
adequate.
(5) The Trustee may employ or retain such counsel, accountants, engineers,
appraisers or other experts or advisers as it may reasonably require
for the purpose of discharging its duties hereunder and may pay
reasonable remuneration for all services so performed by any of them
for which it shall be reimbursed by the Corporation under Section 7.2,
without taxation of costs of any counsel, and shall not be responsible
for any misconduct on the part of any of them. The Trustee may act and
shall be protected in acting in good faith on the opinion or advice of
or information obtained from any counsel, accountant, appraiser or
other expert or adviser, whether retained or employed by the
Corporation or by the Trustee, in relation to any matter arising in
the administration of the trusts hereof.
(6) Any opinion of Counsel may be based, insofar as it relates to factual
matters, upon information with respect to such matters which is in the
possession of the Corporation, upon the certificate or opinion or
representation or any officer of the Corporation unless such Counsel
knows that the certificate or opinion or representation with respect
to the matters upon which Counsel's opinion may be based are erroneous
or, in the exercise of reasonable care, should have known that the
same were erroneous.
13.4 DOCUMENTS, MONEYS, ETC., HELD BY TRUSTEE
(1) Any securities, documents of title or other instruments that may at
any time be held by the Trustee subject to the trusts hereof may be
placed in the deposit vaults of the
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Trustee or of any Canadian chartered bank (including an Affiliate of
the Trustee) or deposited for safekeeping with any such bank.
(2) Unless herein otherwise expressly provided, any moneys held by the
Trustee hereunder, pending the application or withdrawal thereof under
any provision of this Indenture, may and shall at the written
direction of the Corporation be deposited in the name of the Trustee,
at the rate of interest (if any) then current on similar deposits, in
any Canadian chartered bank or trust company (including the Trustee or
an Affiliate of the Trustee) having a shareholders' equity according
to its most recently published audited annual statement of assets and
liabilities of at least CDN$250,000,000 (a "Qualified Institution")
or, upon the written direction of the Corporation, may be (i)
deposited in the deposit department of the Trustee or any other loan
or trust company authorized to accept deposits under the laws of
Canada or any province thereof, or (ii) invested in securities issued
or guaranteed by the Government of Canada or any province thereof or
in obligations, maturing not more than one year from the date of
investment of any Qualified Institution. The Trustee shall not be
subject to any liability whatsoever in respect of any loss or
diminution in value incurred as a result of complying with the
Corporation's written direction to invest in securities pursuant to
this Section 13.4(2)(ii).
(3) Unless an Event of Default shall have occurred and be continuing, all
interests or other income received by the Trustee in respect of
deposits and investments made pursuant to this Section 13.4 shall
belong to the Corporation.
(4) The Trustee, for the purpose of immediately applying the proceeds of
any investment made pursuant to this Section 13.4 to the redemption or
purchase of Debentures, may and shall at the written direction of the
Corporation sell the same at the best prices obtainable in the opinion
of the Trustee. The Corporation shall reimburse the Trustee for any
loss realized on any such sale. Unless an Event of Default shall have
occurred and be continuing, any profit realized by the Trustee upon
any such sale shall belong to the Corporation.
13.5 ACTION BY TRUSTEE TO PROTECT INTERESTS
The Trustee shall have power to institute and to maintain such actions and
proceedings as it may consider necessary or expedient to preserve, protect or
enforce its interest and the interests of the holders of Debentures.
13.6 TRUSTEE NOT REQUIRED TO GIVE SECURITY
The Trustee shall not be required to give any bond or security in respect
of the execution of the trusts and powers of this Indenture or otherwise in
respect of the premises.
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13.7 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 (except the representation contained in Section 13.9
or 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 of
the execution hereof;
(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 or servants of the
Corporation; and
(e) the Trustee, in its personal capacity or any other capacity, and
any Affiliate of the Trustee, may buy, sell, lend upon, become a
pledgee of and deal in the Debentures and generally contract and
enter into financial transactions with the Corporation without
being liable to account for any profits made thereby.
13.8 REPLACEMENT OF TRUSTEE
The Trustee may resign its trust and be discharged from all further duties
and liabilities hereunder by giving to the Corporation not less than 60 days'
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. In the event of the
Trustee resigning or being removed as aforesaid or being dissolved, becoming
bankrupt, going into liquidation or otherwise becoming incapable of acting
hereunder, the Corporation shall forthwith appoint a new Trustee unless a new
Trustee has already been appointed by the Debentureholders; failing such
appointment by the Corporation, the retiring Trustee or any Debentureholder may
apply to the Court of Queen's Bench of Ontario, on such notice as such Court may
direct, for the appointment of a new Trustee; but any new Trustee so appointed
by the Corporation or by the Court shall be subject to removal as aforesaid by
the
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Debentureholders. Any new Trustee appointed under any provision of this Section
13.8 shall be a corporation authorized to carry on the business of a trust
corporation in the Province of Ontario and, if required by the Indenture
Legislation of any other province, in such other province. On any such
appointment, the new Trustee shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named herein as Trustee
without any further assurance, conveyance, act or deed, but there shall be
immediately executed, at the expense of the Corporation, all such conveyances or
other instruments as, in the opinion of Counsel, may be necessary or advisable
for the purpose of assuring the same to the new Trustee. At the request of the
Corporation or the new Trustee, the retiring Trustee, upon payment of the
amounts, if any, due to it pursuant to Section 7.2, shall duly assign, transfer
and deliver to the new Trustee all property and money held and all records kept
by the retiring Trustee hereunder or in connection herewith.
13.9 CONFLICT OF INTEREST
(1) The Trustee represents to the Corporation that at the time of the
execution and delivery hereof no material conflict of interest exists
in the Trustee's role as a fiduciary hereunder and any other role of
the Trustee and agrees that in the event of a material conflict of
interest arising hereafter it will, within 60 days after ascertaining
that it has such material conflict of interest, either eliminate the
same or resign its trust hereunder.
(2) Subject to Section 13.1, the Trustee, in its personal or any other
capacity, may buy, lend upon and deal in securities of the Corporation
and generally may contract and enter into financing transactions with
the Corporation or any Subsidiary it may have from time to time
without being liable to account for any profit made thereby.
13.10 ACCEPTANCE OF TRUST
The Party of the Second Part hereby accepts the trusts in this Indenture
declared and provided for and agrees to perform the same upon the terms and
conditions herein set forth.
ARTICLE 14
NOTICES
14.1 NOTICE TO DEBENTUREHOLDERS
Unless herein otherwise expressly provided, any notice to be given
hereunder to Debentureholders shall be deemed to be validly given to the holders
of Debentures if such notice
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is sent by ordinary surface or air mail, postage prepaid, addressed to such
holders at their respective addresses appearing on the central register
mentioned in Article Three; and, if in the case of joint holders of any
Debenture more than one address appear in the central register in respect of
such joint holding, such notice shall be addressed only to the first address so
appearing, provided, however, that if any notice so given would be unlikely to
reach the Debentureholders to whom it is addressed in the ordinary course of
post by reason of an interruption in mail service, whether at the place of
dispatch or receipt or both, the Corporation shall give such notice by
publication once (twice in the case of a notice of a meeting of
Debentureholders) in the City of Toronto and New York City; each such
publication to be made in a daily newspaper of general national circulation in
the English language and approved by the Trustee. Any notice so given by mail
shall be deemed to have been given on the day of mailing. Any notice so given by
publication shall be deemed to have been given on the day on which publication
shall have been effected at least once in the newspaper in which publication was
required. In determining under any provision hereof the date when notice of any
meeting, redemption or other event must be given, the date of giving the notice
shall be included and the date of the meeting, redemption or other event shall
be excluded. Accidental error or omission in giving notice or accidental failure
to mail notice to any one or more Debentureholders shall not invalidate any
action or proceeding founded thereon.
14.2 NOTICE TO TRUSTEE
Any notice to the Trustee under any provision of this Indenture shall be
valid and effective if delivered on a Business Day to the Manager, Client
Servicing of the Trustee at its principal office in Montreal, Quebec ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇, or if sent by registered mail,
postage prepaid, addressed to the Trustee at its office at Montreal, Quebec,
Attention: Manager, Client Servicing, or if sent by fax to (▇▇▇) ▇▇▇-▇▇▇▇.
Notice by mail shall be deemed to have been effectively given seven days after
it was sent and notice by fax shall be deemed to have been effectively given on
the Business Day next following the day it was sent.
14.3 NOTICE TO CORPORATION
Any notice to the Corporation under any provision of this Indenture shall
be valid and effective if delivered to an officer of the Corporation or is sent
by registered mail, postage prepaid, addressed to the Corporation at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇, Attention: President, or if sent
by fax to (▇▇▇) ▇▇▇-▇▇▇▇. Notice by mail shall be deemed to have been
effectively given seven days after it was sent and notice by fax shall be deemed
to have been effectively given on the Business Day next following the day it was
sent. The Corporation may from time to time notify the Trustee of a change in
address of the Corporation for all purposes of this Indenture.
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14.4 MAIL SERVICE INTERRUPTION
If by reason of any interruption of mail service, actual or threatened, any
notice to be given to the Trustee or to the Corporation would reasonably be
unlikely to reach its destination by the time notice by mail would have been
deemed to have been given pursuant to Section 14.2 or 14.3, such notice shall be
valid and effective only if delivered on a Business Day to an officer of the
party to which it is addressed or if sent to such party, at the appropriate
address in accordance with Section 14.2 or 14.3, as the case may be, by fax.
ARTICLE 15
FORM OF DEBENTURES
15.1 TEXT OF DEBENTURES
The text of the Debentures, including the legend pursuant to Section 3.8,
the Trustee's certificate, the registration panel and the notice of election
shall be substantially as follows:
THE SECURITIES REPRESENTED BY THIS DEBENTURE AND ANY COMMON SHARES ISSUED
ON CONVERSION THEREOF MAY NOT BE RESOLD IN CANADA OR TO PURCHASERS RESIDENT
IN CANADA UNTIL 90 DAYS AFTER THE DATE OF ISSUE.
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THE
HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE
CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN
ACCORDANCE WITH RULE 903 OR 904, AS THE CASE MAY BE, OF REGULATION S UNDER
THE 1933 ACT, AS APPLICABLE TO CATEGORY 3 SECURITIES AND RULE 905 OF
REGULATION S, (C) TO A QUALIFIED INSTITUTIONAL BUYER PURSUANT TO THE
EXEMPTION FROM THE 1933 ACT PROVIDED BY RULE 144A THEREUNDER, (D) PURSUANT
TO THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT PROVIDED BY RULE 144
THEREUNDER, IF AVAILABLE, OR (E) PURSUANT TO A TRANSACTION THAT DID NOT
REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE UNITED STATES
LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES (IN WHICH
CASE THE OWNER OF SUCH DEBENTURE SHALL PROVIDE AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION AND THE TRUSTEE ADDRESSED TO THE
CORPORATION AND THE TRUSTEE TO THE EFFECT THAT SUCH RESALE, PLEDGE OR
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE 1933 ACT). THE HOLDER HEREOF
FURTHER AGREES THAT HEDGING TRANSACTIONS INVOLVING SUCH
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SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.
DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN
SETTLEMENT ON STOCK EXCHANGES IN CANADA. A NEW CERTIFICATE, BEARING NO
LEGEND, MAY BE OBTAINED FROM MONTREAL TRUST COMPANY UPON DELIVERY OF THIS
CERTIFICATE AND AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION AND
THE TRUSTEE ADDRESSED TO THE CORPORATION AND THE TRUSTEE TO THE EFFECT THAT
SUCH SECURITIES MAY BE FREELY RESOLD WITHOUT RESTRICTION UNDER THE 1933
ACT."
No: USD$
REPAP ENTERPRISES INC.
(INCORPORATED UNDER THE LAWS OF CANADA)
6% CONVERTIBLE SUBORDINATED DEBENTURE
DUE JUNE 30, 2005
Repap Enterprises Inc. (hereinafter called the "Corporation") for
value received hereby acknowledges itself indebted and promises to pay to the
registered holder hereof on June 30, 2005, or on such earlier date as the
principal hereof becomes payable in accordance with the provisions of the
Indenture hereinafter mentioned, the sum of __ DOLLARS in lawful money of the
United States of America on presentment and surrender of this Debenture at the
principal office in Montreal of the Trustee (as hereinafter defined) and, in the
meantime, to pay interest thereon from the date hereof or from the last interest
payment date to which interest has been paid or made available for payment on
the Debentures, whichever is later, at the rate of six per cent (6%) per annum
in like money, at the same places on July 15, 1998 and thereafter half-yearly on
January 15 and July 15 in each year (unless this Debenture shall have been
previously redeemed in accordance with the provisions of the Indenture); and
should the Corporation at any time make default in the payment of any principal
or interest, to pay interest on the amount in default at the same rate, in like
money, at the same places and half-yearly on the same dates. As interest becomes
due on this Debenture (except at maturity or on redemption when interest may, at
the option of the Corporation, be paid upon surrender of this Debenture), the
Corporation, either directly or through the Trustee, shall send by prepaid
ordinary mail a cheque for such interest (less any tax required to be withheld
therefrom) payable to the then registered holder of this Debenture and addressed
to such holder at his last address appearing on the central register or, in the
case of joint registered holders, payable to all such joint holders and
addressed to all of them at the last address appearing upon the central register
of that one of such joint holders whose name stands first on the central
register as one of such joint holders, unless otherwise directed in writing by
such holder or by all of such joint holders. Without prejudice to any other
amounts due and payable under the Indenture, the forwarding of such cheque shall
satisfy and discharge the liability for interest on this Debenture to the extent
of the sum represented thereby, plus the amount of any
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tax withheld as aforesaid and remitted to the appropriate tax authorities,
unless such cheque be not paid at par on presentation at any of the places of
payment above-mentioned.
This Debenture is one of the Debentures designated 6% Convertible
Subordinated Debentures (herein called the "Debentures") issued or to be issued
under a Trust Indenture (herein called the "Indenture") made between the
Corporation and Montreal Trust Company, as Trustee, (herein called the
"Trustee") and dated as of May 15, 1998 which Indenture and all instruments
supplemental thereto are referred to for a description of the terms and
conditions upon which the Debentures are issued and held and the rights of the
holders of the Debentures and of the Corporation and of the Trustee, all to the
same effect as if the provisions of the Indenture and all instruments
supplemental thereto were herein set forth, to all of which the holder, by
acceptance hereof, assents. The aggregate principal amount of Debentures which
may be issued under the Indenture is limited to USD$45,000,000 in lawful money
of the United States of America and Debentures to the said aggregate principal
amount have been authorized for immediate issue. This Debenture and all other
Debentures certified and issued under the Indenture rank pari passu. The
Debentures are direct obligations of the Corporation and are not secured by
mortgage or other charge.
This Debenture is convertible, in whole or in part, at the option of
the holder, at any time prior to the close of business on the earlier of the
Business Day immediately preceding June 30, 2005 or, if this Debenture shall be
called for redemption, the Business Day immediately preceding the date fixed for
its redemption, into fully paid and non-assessable Common Shares of the
Corporation (without adjustment for interest accrued hereon or for any dividends
on the Common Shares issuable upon conversion) at the price of USD$0.35 per
share, subject to and upon the terms provided in the Indenture, which contains
provisions for adjustment of the conversion privilege in the events and in the
manner therein specified.
The indebtedness evidenced by the Debentures is subordinate and junior
in right of payment, to the extent and in the manner provided in the Indenture,
to the prior payment of all Senior Indebtedness (as defined in the Indenture) of
the Corporation whether outstanding at the date hereof or hereafter created,
assumed, incurred or guaranteed.
The Debentures will not be redeemed before the third anniversary of
the issuance thereof. On and after that date and before maturity, the Debentures
are subject to redemption upon the terms set forth in the Indenture, at the
option of the Corporation, at the principal amount thereof, plus unpaid interest
accrued to the date fixed for redemption plus any additional amounts to the
extent required under the terms of the Indenture.
This Debenture, if for a principal amount in excess of USD$1,000, is
subject to redemption in part (being USD$1,000 or a multiple thereof) all as
more fully provided in the Indenture.
In case an Event of Default, as defined in the Indenture, has occurred
and is continuing the principal of all Debentures then outstanding under the
Indenture may be declared
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due and payable upon the conditions and in the manner and with the effects
provided in the Indenture.
The Indenture contains provisions for the holding of meetings of
Debentureholders and for binding all Debentureholders by resolutions passed at
such meetings by the holders of not less than a specified percentage of the
principal amount of the Debentures represented and voted or by instruments in
writing signed by the holders of not less than a specified percentage of the
principal amount of the Debentures.
Upon presentation at the principal office of the Trustee in Montreal,
Quebec, subject to the provisions of the Indenture and upon compliance with the
reasonable requirements of the Trustee: (a) Debentures of any denomination may
be exchanged for denominations of the same aggregate principal amount and (b)
Debentures may be transferred by the registered holder thereof or his executors,
administrators or other legal representatives or his or their attorney duly
appointed in writing but no such transfer of a Debenture shall be valid as
against the Corporation unless it has been duly noted on one of the registers
maintained for that purpose.
The Debentures represented hereby and the Common Shares issuable upon
conversion of such Debentures have not been registered under the 1933 Act or the
securities laws of any state of the United States. As a result, in addition to
other restrictions on transfer hereunder or applicable law or under the
Indenture, the Debentures and the Common Shares may not be sold, transferred, or
delivered unless such securities are registered under the 1933 Act and the
securities laws of any state in which the transferee holder is resident or
unless an exemption from such registration requirement is available and the
additional requirements for such transfer set forth in the Indenture and this
Debenture are satisfied.
The Common Shares issuable upon the conversion of a Debenture (and all
Common Shares issued in exchange therefor or in substitution or transfer
thereof) shall bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THE
HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE
CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN
ACCORDANCE WITH RULE 903 OR 904, AS THE CASE MAY BE, OF REGULATION S UNDER
THE 1933 ACT AS APPLICABLE TO CATEGORY 3 SECURITIES AND RULE 905 OF
REGULATION S, (C) TO A QUALIFIED INSTITUTIONAL BUYER PURSUANT TO THE
EXEMPTION FROM THE 1933 ACT PROVIDED BY RULE 144A THEREUNDER, (D) PURSUANT
TO THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT PROVIDED BY RULE 144
THEREUNDER, IF AVAILABLE, OR (E) PURSUANT TO AN EFFECTIVE
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REGISTRATION STATEMENT UNDER THE 1933 ACT. THE HOLDER HEREOF FURTHER AGREES
THAT HEDGING TRANSACTIONS INVOLVING SUCH SECURITIES MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE 1933 ACT. DELIVERY OF THIS CERTIFICATE MAY
NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK
EXCHANGES IN CANADA. A NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY OF
WHICH WILL CONSTITUTE "GOOD DELIVERY" MAY BE OBTAINED FROM MONTREAL TRUST
COMPANY, AS REGISTRAR AND TRANSFER AGENT FOR THE CORPORATION, UPON DELIVERY
OF THIS CERTIFICATE AND AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION AND THE TRANSFER AGENT ADDRESSED TO THE CORPORATION AND THE
TRANSFER AGENT TO THE EFFECT THAT SUCH SECURITIES MAY BE FREELY RESOLD
WITHOUT RESTRICTION UNDER THE 1933 ACT."
and all certificates representing Common Shares issued in exchange therefor or
in substitution thereof will bear the same legend; provided, that the legend may
be removed upon delivery to the transfer agent of an opinion of counsel
satisfactory to the Corporation and the transfer agent to the effect that such
Common Shares may be freely resold without restriction under the 1933 Act.
This Debenture shall not become obligatory for any purpose until it
shall have been certified by or on behalf of the Trustee for the time being
under the Indenture.
IN WITNESS WHEREOF Repap Enterprises Inc. has caused this Debenture to
be signed by its duly authorized officers as of May 15, 1998.
REPAP ENTERPRISES INC.
By:
--------------------------------
By:
--------------------------------
(FORM OF TRUSTEE'S CERTIFICATE)
TRUSTEE'S CERTIFICATE
This Debenture is one of the 6% Convertible Subordinated Debentures
referred to in the Indenture within mentioned.
MONTREAL TRUST COMPANY, as Trustee
By:
--------------------------------
Authorized Officer
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REGISTRATION PANEL
(FOR USE OF TRUSTEE OR REGISTRAR)
========================================== ==================================== ====================================
Place of Registry and
Date of Registry Name of Registered Owner Signature of Registrar
========================================== ==================================== ====================================
------------------------------------------ ------------------------------------ ------------------------------------
------------------------------------------ ------------------------------------ ------------------------------------
------------------------------------------ ------------------------------------ ------------------------------------
------------------------------------------ ------------------------------------ ------------------------------------
------------------------------------------ ------------------------------------ ------------------------------------
------------------------------------------ ------------------------------------ ------------------------------------
------------------------------------------ ------------------------------------ ------------------------------------
------------------------------------------ ------------------------------------ ------------------------------------
========================================== ==================================== ====================================
Note to Debentureholders: In order to transfer this Debenture it must be
delivered to Montreal Trust Company. Certain transfers may also be subject to
additional restrictions as set forth in the Debenture, the Indenture or under
applicable law.
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(FORM OF NOTICE OF ELECTION)
NOTICE OF ELECTION TO CONVERT
Principal amount to be converted
(in multiples of USD$1,000) ........USD$
The undersigned holder of the within Debenture elects to convert the
above noted principal amount of such Debenture into Common Shares of Repap
Enterprises Inc. in accordance with the provisions of the within mentioned
Indenture and hereby directs that the certificate for such shares be registered
as follows:
======================================= ================================================= =========================
Number of
Name in Full Address Shares
======================================= ================================================= =========================
--------------------------------------- ------------------------------------------------- -------------------------
--------------------------------------- ------------------------------------------------- -------------------------
--------------------------------------- ------------------------------------------------- -------------------------
--------------------------------------- ------------------------------------------------- -------------------------
--------------------------------------- ------------------------------------------------- -------------------------
======================================= ================================================= =========================
The undersigned hereby represents and warrants to the Corporation as
follows (check one):
[ ] (i) the undersigned is not a U.S. person and the Debenture is being
converted outside the United States in accordance with Rule 903 or
904, as the case may be, of Regulation S under the 1933 Act, as
applicable to Category 3 Securities and Rule 905 of Regulation S;
[ ] (ii) the undersigned is a U.S. person or the Debenture is being
converted within the United States or on behalf of or for the
account or benefit of a U.S. person and the undersigned (a) is the
original holder of the Debenture and executed a letter regarding
non-distribution of the Debentures in the United States in
connection with the initial subscription thereof, a copy of which
letter is being delivered concurrently herewith or (b) is a valid
transferee and has previously delivered to the Corporation and to
the Trustee, or is delivering concurrently herewith, a purchaser's
letter containing representations, warranties and agreements
substantially similar to those contained in the original U.S.
subscription agreement; or
[ ] (iii) the undersigned is providing a written opinion of counsel or other
evidence satisfactory to the Corporation and the Trustee that the
acquisition of Common Shares by such person is in compliance with
applicable United States federal and state securities laws.
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"United States" and "U.S. person" are as defined by Regulation S under
the United States Securities Act of 1933, as amended.
Dated:
--------------
Guarantee of Signature:
-----------------------------------
(Print name of Debentureholder)
----------------------------- -----------------------------------
(Signature of Debentureholder)
If shares are to be issued in the name of a person other than the
Debentureholder, the signature of the Debentureholder must be guaranteed by a
Canadian chartered bank or trust company or a brokerage firm which is a member
of a recognized stock exchange in Canada.
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ARTICLE 16
EXECUTION
16.1 COUNTERPARTS AND FORMAL DATE
This Indenture may be executed in several counterparts, each of which so
executed shall be deemed to be an original, and such counterparts together and
by facsimile shall constitute one and the same instrument and notwithstanding
their date of execution shall be deemed to bear date as of May 15, 1998.
IN WITNESS WHEREOF the parties hereto have executed these presents
under their respective corporate seals and the hands of their proper officers in
that behalf.
REPAP ENTERPRISES INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief
Executive Officer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary
MONTREAL TRUST COMPANY
By: /s/ GUY L'ESPERANCE
--------------------------------
Name: Guy L'Esperance
Title: Manager, Client Servicing
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Trust Officer
82
SCHEDULE A
REPAP ENTERPRISES INC.
FORM OF COMPLIANCE CERTIFICATE
TO: MONTREAL TRUST COMPANY, as Trustee
Re: Trust Indenture made effective __, 1998 between Repap Enterprises Inc. and
Montreal Trust Company, (the "Indenture").
This Certificate is delivered to the Trustee pursuant to Section __ of the
Indenture. Unless otherwise indicated, capitalized terms defined in the
Indenture have the same meanings when used herein.
I am the duly appointed [INSERT NAME OF OFFICE] of the Corporation and
hereby certify in such capacity for and on behalf of the Corporation, and not in
my personal capacity without assuming any personal liability whatsoever that
except as otherwise set forth in the attached exhibit:
1. There has not occurred any Material Adverse Effect.
2. All terms, covenants and conditions of the Indenture and the ancillary
documents thereto are being complied with.
3. No Event of Default has occurred other than those that have been expressly
disclosed, in writing, to and waived by the Trustee.
The undersigned officer acknowledges that the Trustee and the
Debentureholders are relying on this Certificate.
Dated at __, __ this ________________ day of __________, 199__.
Per:
-------------------------------
Name:
Title: