EXHIBIT 99.2
________________________________________
NOTE INDENTURE
CONVERTIBLE NOTES
Made as of August 27, 2003
Between
CRYSTALLEX INTERNATIONAL CORPORATION
and
CIBC MELLON TRUST COMPANY
________________________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
TABLE OF CONTENTS
RECITALS.......................................................................1
Section 1 - INTERPRETATION.....................................................1
1.1 Definitions................................................1
1.2 Meaning of "outstanding" for Certain Purposes..............3
1.3 Interpretation not Affected by Heading, etc................4
1.4 Statute References.........................................4
1.5 Currency...................................................4
1.6 Day Not a Business Day.....................................4
1.7 Invalidity of Provisions...................................4
1.8 Governing Law..............................................4
1.9 Conflicts..................................................4
1.10 Per Annum Calculations.....................................4
Section 2 - THE NOTES..........................................................5
2.1 Limitation on Issue and Designation........................5
2.2 Terms of Notes.............................................5
2.3 Form of Notes..............................................5
2.4 Issue of Notes.............................................6
2.5 Execution of Notes.........................................6
2.6 Certification..............................................6
2.7 Concerning Interest........................................6
2.8 Notes to Rank Equally......................................6
2.9 Registration and Transfer of Notes.........................6
2.10 Payment of Principal and Interest in Respect of Notes......7
2.11 Ownership of Notes.........................................9
2.12 Exchange of Notes..........................................9
2.13 Replacement of Notes.......................................9
Section 3 - REDEMPTION OF NOTES...............................................10
3.1 Redemption of Notes.......................................10
3.2 Partial Redemption of Notes...............................10
3.3 Notice of Redemption......................................10
3.4 Notes Due on Redemption Dates.............................11
3.5 Deposit of Redemption Monies..............................11
3.6 Failure to Surrender Notes Called for Redemption..........11
3.7 Surrender of Notes for Cancellation.......................11
3.8 Cancellation of Notes.....................................12
Section 4 - CONVERSION........................................................12
4.1 Conversion Privilege......................................12
4.2 Manner of Exercise of Right to Convert....................12
4.3 Adjustment of Conversion Price............................13
4.4 Other Adjustment of Conversion Price......................14
4.5 No Requirement to Issue Fractional Shares.................14
4.6 Corporation to Reserve Shares; Limitations on Conversion..14
4.7 Corporation to Qualify Shares.............................15
4.8 Taxes and Charges on Conversion...........................16
4.9 Cancellation of Converted Notes...........................16
4.10 Certificate as to Adjustment..............................16
4.11 Notice of Special Matters.................................16
4.12 Notice of Expiry of Conversion Right......................16
4.13 Revival of Right to Convert...............................16
4.14 Protection of Trustee.....................................17
Section 5 - COVENANTS OF THE CORPORATION......................................17
5.1 General Covenants.........................................17
5.2 Not to Extend Time for Payment of Interest or Principal...18
5.3 To Provide Certificate of Compliance......................18
5.4 Continued Listing.........................................18
(i)
5.5 To Pay Trustee's Remuneration.............................18
5.6 Trustee May Perform Covenants.............................19
5.7 Request for Trust Indenture...............................19
5.8 Covenant to Notify Trustee of Change of Name..............19
5.9 Covenant to Provide Information...........................19
Section 6 - DEFAULT AND ENFORCEMENT...........................................20
6.1 Events of Default.........................................20
6.2 Notice of Events of Default...............................23
6.3 Acceleration on Default...................................23
6.4 Waiver of Default.........................................24
6.5 Enforcement by the Trustee................................24
6.6 Noteholders May Not ▇▇▇...................................24
6.7 Application of Moneys.....................................25
6.8 Distribution of Moneys....................................26
6.9 Persons Dealing with Trustee..............................26
6.10 Trustee Appointed Attorney................................26
6.11 Remedies Cumulative.......................................26
6.12 Immunity of Shareholders, Directors and Others............27
6.13 Judgment Against the Corporation..........................27
Section 7 - SATISFACTION AND DISCHARGE........................................27
7.1 Cancellation..............................................27
7.2 Non-Presentation of Notes.................................27
7.3 Repayment of Unclaimed Moneys.............................27
7.4 Discharge.................................................28
Section 8 - SUCCESSOR CORPORATIONS............................................28
8.1 Certain Requirements in Respect of Merger, etc............28
8.2 Vesting of Powers in Successor............................29
Section 9 - MEETINGS OF NOTEHOLDERS...........................................29
9.1 Right to Convene Meetings.................................29
9.2 Notice of Meetings........................................29
9.3 Chairman..................................................29
9.4 Quorum....................................................29
9.5 Power to Adjourn..........................................29
9.6 Show of Hands.............................................30
9.7 Poll......................................................30
9.8 Voting....................................................30
9.9 Regulations...............................................30
9.10 Corporation and Trustee May Be Represented................31
9.11 Powers Exercisable by Extraordinary Resolution............31
9.12 Meaning of "Extraordinary Resolution".....................32
9.13 Powers Cumulative.........................................33
9.14 Minutes...................................................33
9.15 Signed Instruments........................................33
9.16 Binding Effect of Resolutions.............................33
9.17 Evidence of Rights of Noteholders.........................33
Section 10 - NOTICES..........................................................34
10.1 Notice to the Corporation.................................34
10.2 Notice to Noteholders.....................................34
10.3 Notice to the Trustee.....................................34
10.4 Mail Service Interruption.................................34
Section 11 - CONCERNING THE TRUSTEE...........................................34
11.1 Trust Indenture Legislation...............................34
11.2 No Conflict of Interest...................................35
11.3 Rights and Duties of Trustee..............................35
11.4 Evidence Experts and Advisers.............................35
11.5 Trustee May Deal in Notes.................................36
11.6 Trustee Not required to Give Security.....................36
(ii)
11.7 Protection of Trustee.....................................36
11.8 Investment of Trust Moneys................................37
11.9 Action by Trustee to Protect Interests....................37
11.10 Replacement of Trustee....................................37
11.11 Acceptance of Trusts......................................38
Section 12 - SUPPLEMENTAL INDENTURES..........................................38
12.1 Supplemental Indentures...................................38
Section 13 - STOCK EXCHANGE APPROVAL..........................................39
13.1 Stock Exchange Approval...................................39
Section 14 - JURISDICTION, SERVICES AND JUDGMENT CURRENCY.....................39
14.1 Consent to Jurisdiction and Service of Process............39
14.2 Conversion of Currency....................................39
Section 15 - EXECUTION........................................................40
15.1 Counterparts and Formal Date..............................40
Schedule A (Form of Convertible Note, Issuable in Series)
(iii)
NOTE INDENTURE
This Note Indenture made as of August 27, 2003 between
CRYSTALLEX INTERNATIONAL CORPORATION, a
corporation incorporated under the laws of
Canada and having its registered office in
the City of Toronto in the Province of
Ontario
(hereinafter called the "CORPORATION")
and
CIBC MELLON TRUST COMPANY, a trust company
incorporated under the laws of Canada and
having offices in the City of Vancouver in
the Province of British Columbia
(hereinafter called the "TRUSTEE")
RECITALS
A. The Corporation considers it necessary for its corporate purposes to create
and issue the Notes in the manner provided herein for the purposes of a line of
credit financing.
B. The Corporation is duly authorized to create and issue the Notes to be issued
as provided herein.
C. All necessary resolutions of the directors of the Corporation have been duly
passed and confirmed and other proceedings taken to make the Notes, when
certified by the Trustee and issued as provided in this Trust Indenture, valid,
binding and legal obligations of the Corporation with the benefits and subject
to the terms of this Trust Indenture and to make this Trust Indenture a valid
and binding indenture in accordance with its terms.
D. The foregoing recitals are made as representations and statements of fact by
the Corporation and not by the Trustee.
FOR VALUE RECEIVED, the parties agree as follows:
SECTION 1 - INTERPRETATION
1.1 DEFINITIONS
In this Trust Indenture, unless there is something in the subject
matter or context inconsistent therewith:
(1) AMEX means the American Stock Exchange, Inc.
(2) BLOOMBERG means the information provider network operated by Bloomberg L.P.
or any substitute therefor.
(3) BUSINESS DAY means any day, other than Saturday, Sunday or any statutory or
civic holiday in the City of Toronto or in the State of New York.
(4) CERTIFICATE OF THE CORPORATION means a certificate signed in the name of the
Corporation by the President and Chief Executive Officer, the Chief Financial
Officer and Secretary or any Vice President of the Corporation, and may consist
of one or more instruments so executed.
(5) COMMON SHARES means the 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 Indenture; provided that, in the event of any adjustments, having been
made in accordance with subsection 4.3, "Common Shares" shall thereafter mean
the shares resulting from such adjustment.
- 2 -
(6) CONVERSION PRICE means the dollar amount for which each Common Share may be
issued from time to time upon the conversion of Notes in accordance with section
4.
(7) CORPORATION means the party of the first part and every successor
corporation to or of the party of the first part which shall have complied with
the provisions of section 8.
(8) COUNSEL means a barrister or solicitor or firm of barristers and solicitors
retained by the Trustee, who may be counsel to the Corporation, or retained by
the Corporation and acceptable to the Trustee.
(9) CURRENT MARKET PRICE at any date means the average of the volume weighted
average sales prices per share for the Common Shares for the five consecutive
trading days immediately preceding such date on the AMEX, each as reported on
Bloomberg, or, if the Common Shares are not listed thereon, on another stock
exchange on which the shares are listed which has the greatest volume of trades
or, if the Common Shares are not listed on any stock exchange, then on the
over-the-counter market on which it trades which has the greatest volume of
trading; and for the purpose of this definition, the volume weighted average
price shall be determined by dividing the aggregate sale price of all Common
Shares sold during such period of five consecutive trading days on such
exchanges or market, as the case may be, by the total number of Common Shares so
sold during such period.
(10) DATE OF CONVERSION has the meaning attributed to such term in paragraph
4.2(3).
(11) DIRECTOR means a director of the Corporation for the time being and
"Directors" means the board of directors of the Corporation or, whenever duly
empowered, a committee of the board of directors of the Corporation, and
reference to action by the Directors means action by the board of directors or
action by such a committee of the board of directors as a committee.
(12) EFFECTIVE DATE means the date hereof.
(13) EVENT OF DEFAULT has the meaning attributed to such term in subsection 6.1.
(14) EXTRAORDINARY RESOLUTION has the meaning attributed to such term in
subsections 9.12 and 9.15.
(15) GENERALLY ACCEPTED ACCOUNTING PRINCIPLES means the generally accepted
accounting principles from time to time approved by the Canadian Institute of
Chartered Accountants, or any successor institute, as at the date on which such
calculation is made or required to be made in accordance with generally accepted
accounting principles and, where the character or amount of any asset or
liability or item of revenue or expense is required to be determined, or any
consolidation or other accounting computation is required to be made for the
purpose of this Indenture, such determination or calculation shall, to the
extent applicable and except as otherwise specified herein or as otherwise
agreed in writing by the parties, be made in accordance with generally accepted
accounting principles applied on a consistent basis.
(16) INDENTURE LEGISLATION has the meaning attributed to such term in subsection
11.1.
(17) ISSUE DATE means the dates upon which Notes are issued hereunder.
(18) MATURITY DATE means August 27, 2005.
(19) NOTEHOLDER or HOLDERS means the Persons for the time being entered in the
registers hereinafter mentioned as holders of Notes.
(20) NOTEHOLDERS' REQUEST means an instrument signed in one or more counterparts
by the Holders of not less than 25% in principal amount of the outstanding Notes
requesting the Trustee to take the action or proceeding specified therein.
(21) NOTES means the Convertible Notes due August o, 2005.
(22) PERSON means any individual, partnership, limited partnership, joint
venture, syndicate, sole proprietorship, company or corporation with or without
share capital, unincorporated
- 3 -
association, trust, trustee, executor, administrator or other legal personal
representative, government or governmental authority or entity, however
designated or constituted.
(23) REDEMPTION PRICE has the meaning attributed to such term in subsection 3.1.
(24) REGISTRATION STATEMENT means the resale registration statement to be filed
by the Corporation with the SEC registering in the United States of America the
resale of the Common Shares underlying the Notes and the Common Shares issuable
upon exercise of the common share purchase warrants under the Warrant Indenture.
(25) SEC means the Securities and Exchange Commission of the United States.
(26) SERIES or SERIES OF NOTES means all of the Notes issued on a particular
Issue Date.
(27) SUBSIDIARY has the meaning attributed to such term in the Canada Business
Corporations Act.
(28) SUCCESSOR CORPORATION has the meaning attributed to such term in paragraph
8.1(a).
(29) THIS INDENTURE, THIS TRUST INDENTURE, HERETO, HEREBY, HEREUNDER, HEREOF,
HEREIN and similar expressions refer to this indenture and not to any particular
section, subsection, paragraph, subsection, subdivision or other portion hereof,
and include any and every supplemental indenture; and "supplemental indenture"
and "indenture supplemental hereto" include any and every instrument
supplemental or ancillary hereto or in implement hereof.
(30) TIME OF EXPIRY has the meaning attributed to such term in subsection 4.1.
(31) TRUSTEE means the party of the second part and its successors for the time
being in the trusts hereby created.
(32) TSX means the Toronto Stock Exchange.
(33) U.S. PERSON means a U.S. Person as that term is defined in Regulation S of
the U.S. Securities Act.
(34) U.S. SECURITIES ACT means the United States Securities Act of 1933, as
amended.
(35) WARRANT INDENTURE means the agreement dated the date hereof between the
Corporation and CIBC Mellon Trust Company under which common share purchase
warrants are created and governed.
(36) WARRANTS means the common share purchase warrants issuable and governed by
the Warrant Indenture.
(37) WRITTEN ORDER OF THE CORPORATION, WRITTEN REQUEST OF THE CORPORATION and
WRITTEN DIRECTION OF THE CORPORATION mean, respectively, an order, a request or
a direction signed in the name by the Corporation by the President and Chief
Executive Officer, Chief Financial Officer and Secretary or any Vice President
of the Corporation, and may consist of one or more instruments so executed.
Words importing the singular include the plural and vice versa and words
importing the masculine gender include the feminine gender and vice versa.
1.2 MEANING OF "OUTSTANDING" FOR CERTAIN PURPOSES
Every Note 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 a new Note shall be issued in substitution therefor under
subsection 2.13, or moneys for the payment thereof shall be set aside under
section 7, provided that:
(a) where a new Note has been issued in substitution for a Note
which has been lost, stolen or destroyed, only one of such Notes
shall be counted for the purpose of determining the aggregate
principal amount of Notes outstanding;
- 4 -
(b) Notes which have been partially redeemed, purchased or converted
shall be deemed to be outstanding only to the extent of the
unredeemed, unpurchased or unconverted part of the principal
amount thereof;
(c) for the purpose of any provision of this Indenture entitling
Holders of outstanding Notes to vote, sign consents, requests or
other instruments or take other action under this Indenture,
Notes owned legally or equitably by the Corporation or any
Subsidiary of the Corporation shall be disregarded, except that:
(i) for the purpose of determining whether the Trustee shall
be protected in relying on any such vote, consent,
request or other instrument or other action, only the
Notes of which the Trustee has written notice.
(ii) Notes so owned which have been pledged in good faith
other than to the Corporation or a Subsidiary of the
Corporation shall not be so disregarded if the pledgee
shall establish, to the satisfaction of the Trustee, the
pledgee's right to vote such Notes in his discretion free
from the control of the Corporation or the Subsidiary of
the Corporation.
1.3 INTERPRETATION NOT AFFECTED BY HEADING, ETC.
The division of this Indenture into sections, subsections and
paragraphs, the provision of a table of contents and the insertion of headings
are for convenience of reference only and shall not affect the construction or
interpretation of this Indenture.
1.4 STATUTE REFERENCES
Any reference in this Indenture to a statute shall be deemed to be a
reference to such statute as amended, re-enacted or replaced from time to time.
1.5 CURRENCY
Any reference in this Indenture to "Dollars", "dollars" or "$" shall be
deemed to be a reference to lawful money of the United States of America.
1.6 DAY NOT A BUSINESS DAY
In the event that any day on or before which any action is required to
be taken hereunder is not a Business Day, then such action shall be required to
be taken on or before the requisite time on the first Business Day thereafter.
1.7 INVALIDITY OF PROVISIONS
Each of the provisions contained in this Indenture or the Notes is
distinct and severable and a declaration of invalidity or unenforceability of
any such provision by a court of competent jurisdiction shall not affect the
validity or enforceability of any other provision hereof or thereof.
1.8 GOVERNING LAW
This Indenture and the Notes shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein and shall be treated in all respects as Ontario contracts.
1.9 CONFLICTS
In the event of any conflict between the terms of this Indenture and
the terms of any Note certificates issued hereunder, the terms of this Indenture
shall prevail.
1.10 PER ANNUM CALCULATIONS
Unless otherwise stated, wherever reference is made in this Indenture
to a rate of interest "per annum" or a similar expression is used, the interest
shall be calculated using the nominal rate method, and not the effective rate
method, of calculation and on the basis of a year of 360
- 5 -
days within 12 months of 30 days each. For purposes of disclosure under the
Interest Act (Canada), whenever interest to be paid hereunder is to be
calculated on the basis of a year of 360 days, the yearly rate of interest to
which the rate determined pursuant to such calculation is equivalent is the rate
so determined multiplied by the actual number of days in the calendar year in
which the same is to be ascertained and divided by 360.
SECTION 2 - THE NOTES
2.1 LIMITATION ON ISSUE AND DESIGNATION
The aggregate principal amount of Notes which may be issued and
certified hereunder shall be limited to $3,000,000 in lawful money of the United
States of America and such Notes are hereby designated "CONVERTIBLE NOTES DUE
AUGUST 27, 2005".
2.2 TERMS OF NOTES
(1) The Notes shall mature and become due and payable on the Maturity Date. The
Notes shall bear interest (subject to subsection 2.7), at the rate of 4% per
annum only upon the occurrence of, and during the continuance of, an Event of
Default. Interest on the Notes shall accrue from the date of occurrence of an
Event of Default and shall be payable in arrears in equal quarterly instalments
on the last day of March, June, September and December of each year during the
continuance of an Event of Default.
(2) The principal amount of the Notes due on maturity or redemption will be made
payable in lawful money of the United States of America against surrender
thereof by the respective Holders thereof at the principal office of the Trustee
in Vancouver, British Columbia.
2.3 FORM OF NOTES
(1) The Notes shall be issued only as fully registered Notes in denominations of
$1,000.00 and integral multiples thereof.
(2) The Notes and the certificate of the Trustee endorsed thereon shall be in
the English language and shall be substantially in the form set out in Schedule
A to this Indenture with such appropriate additions, deletions, substitutions
and variations and legends as the Trustee may approve and shall bear such
distinguishing letters and numbers as the Trustee may approve, such approval of
the Trustee to be conclusively evidenced by its certification of the Notes.
(3) The Notes may be engraved, printed or lithographed, or partly in one form
and partly in another, as the Corporation may determine.
(4) The Note certificates will bear restrictive legends, so long as appropriate,
substantially similar to the following:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT") OR APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
THESE SECURITIES MAY NOT BE CONVERTED [BY OR ON BEHALF OF A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE ACT)] [INCLUDE ONLY FOR
REGULATION S NOTEHOLDERS] UNLESS SUCH CONVERSION IS REGISTERED UNDER
THE ACT OR IS MADE PURSUANT TO AN APPLICABLE EXEMPTION FROM
REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE
SECURITIES SHALL NOT TRADE THE SECURITIES IN CANADA BEFORE DECEMBER 28,
2003.
- 6 -
2.4 ISSUE OF NOTES
Notes in the aggregate principal amount of $3,000,000 in lawful money
of the United States of America may forthwith and from time to time be executed
by the Corporation and delivered to the Trustee and shall be certified by the
Trustee and delivered to or to the order of the Corporation pursuant to a
Written Order of the Corporation, without the Trustee receiving any
consideration therefor.
2.5 EXECUTION OF NOTES
The Notes shall be signed (either manually or by facsimile signature)
by (i) the President and Chief Executive Officer and (ii) any Vice-President or
the Chief Financial Officer and Secretary of the Corporation. A facsimile
signature upon any of the Notes shall for all purposes of this Indenture be
deemed to be the signature of the individual whose signature it purports to be
and to have been signed at the time such facsimile signature is reproduced.
Notwithstanding that any individual whose signature (either manual or in
facsimile) may appear on any Note is not at the date of this Indenture or at the
date of such Note or at the date of the certifying and delivery thereof, the
President and Chief Financial Officer, a Vice-President or the Chief Financial
Officer and Secretary, as the case may be, of the Corporation, any Note signed
as aforesaid shall be valid and binding upon the Corporation and entitled to the
benefits of this Indenture.
2.6 CERTIFICATION
(1) No Note shall be issued or, if issued, shall be obligatory or shall entitle
the Holder thereof to the benefits of this Indenture, until it has been
certified by manual signature by or on behalf of the Trustee substantially in
the form set out in Schedule A hereto or in some other form approved by the
Trustee, whose approval shall be conclusively evidenced by the certification
thereof. Such certificate on any Note shall be conclusive evidence that such
Note is duly issued and is a valid and binding obligation of the Corporation and
is entitled to the benefits hereof.
(2) The certificate of the Trustee signed on any Note shall not be construed as
a representation or warranty by the Trustee as to the validity of this Indenture
or of the Note (except the due certification thereof) or as to the performance
by the Corporation of its obligations under this Indenture and the Trustee shall
in no respect be liable or answerable for the use made of the Notes or any of
them or the proceeds thereof.
2.7 CONCERNING INTEREST
(1) If, interest is payable due to an Event of Default, such interest shall
cease to accrue from the day prior to the earliest of: (i) the Maturity Date; or
(ii) if such Note is called for redemption, the date fixed for redemption; or
(iii) if such Note is converted, the Date of Conversion, unless, in the case of
(i) or (ii), as the case may be, upon due presentation and surrender thereof for
payment on or after the Maturity Date or the date fixed for redemption, as the
case may be, any payment due to the Investor is improperly withheld or refused.
2.8 NOTES TO RANK EQUALLY
The Notes may be issued in such amounts, to such Persons, on such terms
not inconsistent with the provisions of this Indenture as the Directors may
determine. Each Note as soon as issued or negotiated shall, subject to the terms
hereof, be equally and rateably entitled to the benefits hereof as if all the
Notes had been issued and negotiated simultaneously.
2.9 REGISTRATION AND TRANSFER OF NOTES
(1) The Corporation shall cause to be kept by and at the principal office of the
Trustee in the City of Vancouver a central register, and in such other place or
places, by the Trustee or by such other registrar or registrars, if any, as the
Corporation with the approval of the Trustee may designate, branch registers in
which shall be entered the names and latest known addresses of the Holders of
Notes and the other particulars, as prescribed by law, of the Notes held by them
respectively and of all transfers of Notes. Such registration shall be noted on
the Notes by the Trustee or other registrar. No transfer of a registered Note
shall be effective as against the Corporation unless made on one of the
appropriate registers by the Noteholder or the
- 7 -
Noteholder's executors or administrators or other legal representatives or their
attorney duly appointed by an instrument in form and execution satisfactory to
the Trustee and upon due completion of the form of transfer attached to the Note
certificate and compliance with such requirements as the Trustee or other
registrar may prescribe, and unless such transfer shall have been duly noted on
the Note by the Trustee or other registrar. For the purposes of this section
2.9, the Trustee shall be the registrar and transfer agent for the Notes until
notified by the Corporation otherwise.
(2) The registers referred to in this subsection 2.9 shall at all reasonable
times during business hours on a Business Day be open for inspection by the
Corporation, the Trustee and any Noteholder.
(3) The Notes are not transferable without the prior written consent of the
Corporation. Subject to the foregoing, a Noteholder may at any time and from
time to time have such Note transferred at any of the places at which a register
is kept pursuant to the provisions of this section in accordance with such
reasonable regulations as the Trustee may prescribe. A Noteholder may at any
time and from time to time have the registration of such Note transferred from
the register in which the registration thereof appears to another register
maintained in another place authorized for that purpose under the provisions of
this Indenture upon payment of a reasonable fee to be fixed by the Trustee.
(4) Neither the Corporation nor the Trustee nor any registrar shall be required
(i) to transfer or exchange any Notes during a period of ten Business Days
immediately preceding any interest payment date; or (ii) to transfer or exchange
any Notes on the date of any selection by the Trustee of any Notes to be
redeemed or during the ten preceding Business Days or thereafter until after the
mailing of any written notice of redemption; or (iii) to transfer or exchange
any Notes selected or called for redemption in whole or in part thereof.
(5) None of the Trustee, any registrar for any of the Notes or the Corporation
shall be charged with written notice of or be bound to see to the execution of
any trust, whether express, implied or constructive, in respect of any Note and
may transfer any Note on the direction of the Holder thereof, whether named as
trustee or otherwise, as though that Person were the beneficial owner thereof.
(6) Except in the case of the central register required to be kept at the City
of Vancouver, the Corporation shall have power at any time to close any branch
register and in that event it shall transfer the records thereof to another
existing register or to a new register and thereafter such Notes shall be deemed
to be registered on such existing or new register, as the case may be. In the
event that the register in any place is closed and the records transferred to a
register in another place, written notice of such change shall be given to the
Holders of the Notes registered in the register so closed and the particulars of
such change shall be recorded in the central register required to be kept in the
City of Vancouver.
(7) Every registrar shall, when requested to do so by the Corporation or the
Trustee, furnish the Corporation or the Trustee, as the case may be, with a list
of the names and addresses of the Noteholders showing the principal amounts and
serial numbers of Notes held by each such Holder.
2.10 PAYMENT OF PRINCIPAL AND INTEREST IN RESPECT OF NOTES
(1) If, due to the occurrence of an Event of Default, interest on Notes becomes
due (except interest payable on the Maturity Date, conversion or on redemption
which may be paid upon presentation of such Notes for payment), the Corporation,
at least three days prior to each date on which interest on such Notes becomes
due, shall forward or cause to be forwarded by first class mail, postage prepaid
(or in the event of mail service interruption by such other means as the Trustee
and the Corporation shall determine to be appropriate), to the Holder for the
time being at the Holder's address appearing on the appropriate register
hereinbefore mentioned a cheque for such interest (less any tax required by law
to be deducted) payable to the order of such Holder and negotiable at par at
each of the places at which interest upon such Notes is payable. The forwarding
of such cheque shall satisfy and discharge the liability for the interest on
such Notes to the extent of the sum represented thereby (plus the amount of any
tax deducted as aforesaid)
- 8 -
unless such cheque is not paid on presentation and such non-payment is at the
fault of the Corporation or the Trustee. In the event of the non-receipt of such
cheque by the Holder or the loss or destruction thereof, the Corporation, upon
the Corporation and the Trustee being furnished with evidence of such
non-receipt, loss or destruction and indemnity reasonably satisfactory to them,
shall issue or cause to be issued to such Holder a replacement cheque for the
amount of such cheque not received.
(2) Notwithstanding paragraph 2.10(1) or anything else contained in this
Indenture or the Notes to the contrary, the Corporation shall, if so directed by
the Holder of a Note at least five Business Days prior to such payment, pay to
such Holder the principal of, and interest, if any, on, such Note and all other
money payable hereunder by wire or electronic transfer of funds, such transfer
to the Holder to be sent no later than 11:00 a.m. (Vancouver time) on such due
date and no presentment of any Note shall be necessary in connection with such
payments. The Corporation shall provide the Trustee with copies of all
electronic fund transfers together with confirmation of principal of and
interest represented by such electronic funds transfer and the Trustee shall
have the right to confirm receipt of such transfers with the Noteholders from
time to time.
(3) Where Notes are registered in more than one name, the principal and
interest, if any, from time to time payable in respect thereof shall be paid to
the order of the Holder whose name appears first in the registers of the
Corporation referred to in paragraph 2.10(1) unless the Trustee has received
written instructions from the Holders in whose names the Notes are registered to
the contrary. The forwarding of such cheque in paragraph 2.10(1) or delivery of
such wire transfer in paragraph 2.10(2) to such Holder therefor shall be a
complete discharge to the Trustee, any registrar of Notes and the Corporation.
(4) The Corporation will pay to any holder such additional amounts as may be
necessary in order that every net payment of principal and interest, if any, on
such Note, after deduction or withholding for or on account of any tax,
assessment or other governmental charge imposed by Canada or any political
subdivision or taxing authority thereof or therein, upon or as a result of such
payment, will not be less than the amount provided for in such Note to be then
due and payable, including such additional amounts so as to hold such holder
harmless on an after-tax basis from such deductions or withholdings and any
taxes, assessments or governmental charges payable by reason of the additional
amounts payable pursuant to this sentence (all such additional amounts being
hereinafter referred to as "ADDITIONAL AMOUNTS"); provided, however, that the
foregoing shall not apply to any tax, assessment or other governmental charge
which is required to be deducted or withheld by reason of such holder carrying
on or being deemed to carry on a business in Canada or having, or being deemed
to have, a place of business or permanent establishment in Canada (except to the
extent that the purchase or holding (other than in Canada) of any of the Notes
may at any time be deemed to constitute the carrying on of business or the
maintenance of a permanent establishment in Canada). If the Corporation has made
a payment in respect of Additional Amounts to or for the account of any holders
pursuant to this paragraph (4) and such holder thereafter is entitled to the
benefit of any tax credit, refund or deduction from income in calculating its
income tax payable (a "CREDIT") in any jurisdiction as a result of the
withholding by the Corporation which gave rise to the payment of such Additional
Amount (and such tax credit, refund or reduction from income is clearly
attributable to such payment), such holder shall use all reasonable commercial
efforts to secure the benefit of such Credit and upon realizing the benefit of
such Credit promptly pay to the Corporation an amount equal to the portion of
such benefit that is clearly attributable to such Credit, provided that any
subsequent loss of such Credit or any portion thereof shall be promptly
reimbursed by the Corporation upon written request and further provided that the
Corporation shall reimburse the holder for all reasonable expenses incurred in
seeking to obtain the benefit of such Credit. References in this Indenture to
payments of principal and interest on, the Notes shall be deemed also to refer
to any Additional Amounts which may be payable hereunder.
(5) Notwithstanding the foregoing, the Corporation may elect to satisfy its
obligations under this subsection 2.10 by issuing to the holder, at the times
contemplated hereby, that number of Common Shares equal to the amount of
interest required to be paid divided by the Current Market Price and forthwith
delivering certificates therefor to the holder.
- 9 -
2.11 OWNERSHIP OF NOTES
(1) The Person in whose name any Note shall be registered shall be deemed to be
the owner thereof for all purposes of this Indenture and payment of or on
account of the principal of, and interest on, such Note shall be made only to or
upon the order in writing of the Holder thereof and such payment shall be a
complete discharge to the Trustee, any registrar of Notes, the Corporation and
any paying agent for the amounts so paid.
(2) The Holder for the time being of any Note shall be entitled to the principal
and interest evidenced by such Note, free from all equities or rights of set-off
or counterclaim between the Corporation and the original or any intermediate
Holder thereof (except any equities of which the Corporation is required to take
written notice by law or by order of a court of competent jurisdiction) and all
Persons may act accordingly and a transferee of a Note shall, after the
appropriate form of transfer is lodged with the Trustee or other registrar of
Notes and upon compliance with all other conditions relating thereto required by
this Indenture or by any conditions contained in such Note or by law, be
entitled to be entered on the appropriate register or on any one of the
appropriate registers as the owner of such Note free from all equities or rights
of set-off or counterclaim between the Corporation and the transferor or any
previous Holder thereof, save in respect of equities of which the Corporation is
required to take written notice by law or by order of a court of competent
jurisdiction.
2.12 EXCHANGE OF NOTES
(1) Notes of any denomination may be exchanged for Notes of any other authorized
denomination or denominations, any such exchange to be for Notes of an
equivalent aggregate principal amount, except as set out in paragraph (3) below,
at the expense of the Company. Exchanges of Notes may be made at the principal
offices of the Trustee in the City of Vancouver. Any Notes tendered for exchange
shall be surrendered to the Trustee and shall be cancelled. The Corporation
shall execute, and the Trustee shall certify, all Notes necessary to carry out
such exchanges.
(2) Notes issued in exchange for Notes which at the time of such issue have been
selected or called for redemption at a later date shall be deemed to have been
selected or called for redemption in the same manner and shall have noted
thereon a statement to that effect.
(3) Except as otherwise provided herein, upon any exchange of Notes of any
denomination for Notes of any other authorized denominations and upon any
transfer of Notes, the Trustee or other registrar of Notes may make a sufficient
charge to reimburse it for any stamp tax, security transfer tax or other
governmental charge required to be paid, and in addition a reasonable charge for
its services for each Note exchanged or transferred, and payment of such charges
shall be made by the party requesting such exchange or transfer as a condition
precedent thereto.
(4) Neither the Corporation, the Trustee nor any other registrar of Notes shall
be required to exchange any Notes on the day of any selection by the Trustee of
any Notes to be redeemed or during the ten preceding Business Days.
2.13 REPLACEMENT OF NOTES
If any of the Notes shall become mutilated or be lost, stolen or
destroyed and in the absence of written notice that such Notes have been
acquired by a good faith purchaser within the meaning of the Business
Corporations Act (Ontario), the Corporation in its discretion may issue, and
thereupon the Trustee shall certify and deliver, a new Note upon surrender and
cancellation of the mutilated Note, or, in the case of a lost, stolen or
destroyed Note, in lieu of and in substitution for the same, and the substituted
Note shall be in a form approved by the Trustee and shall be entitled to the
benefits of this Indenture equally with all other Notes issued or to be issued
hereunder. In case of loss, theft or destruction, the applicant for a
substituted Note shall furnish to the Corporation and to the Trustee such
evidence of such loss, theft or destruction as shall be satisfactory to them in
their discretion and shall also furnish an indemnity in amount and form
satisfactory to them in their discretion. The applicant shall pay all expenses
incidental to the issuance of any such new Note.
- 10 -
SECTION 3 - REDEMPTION OF NOTES
3.1 REDEMPTION OF NOTES
(1) The Notes shall be redeemable prior to maturity, in whole at any time or in
part from time to time at the option of the Corporation (in the manner
hereinafter provided and in accordance with and subject to the provisions
hereinafter set forth) subject to paragraph 3.1(3) at a price equal to the
greater of (x) 120% of all the principal amount of the Notes to be redeemed or
(y) (i) the number of Common Shares into which the Notes are then convertible,
times (ii) the average closing bid price on AMEX of the Common Shares for the
five trading days immediately prior to the date upon which the written notice of
redemption is given, plus (iii) accrued and unpaid interest on the principal
amount of the Notes to be redeemed up to but excluding the date fixed for
redemption (the "REDEMPTION PRICE").
(2) At its option, a Holder of a Note may cause the Corporation to redeem the
Note in whole or in part prior to maturity by delivery of written notice to the
Corporation and the Trustee (in the manner hereinafter provided and in
accordance with and subject to the provisions hereinafter set forth) upon the
occurrence of any Event of Default set out in paragraphs 6.1(h), (i), (j), (k),
(l), (m), (o) or (p) at the Redemption Price provided that, in the case of an
Event of Default set out in paragraph 6.1(m), such Event of Default continues
for not less than 10 days following written notice thereof to the Corporation.
(3) The Redemption Price as required under paragraphs 3.1(1) and (2) shall be
calculated by and provided to the Trustee and the Holders by or on behalf of the
Corporation.
3.2 PARTIAL REDEMPTION OF NOTES
(1) If less than all the Notes are to be redeemed, the Corporation shall in each
such case, at least ten Business Days before the date upon which written notice
of redemption is to be given, notify the Trustee by Written Direction of the
Corporation of its intention to redeem Notes and of the aggregate principal
amount of Notes to be redeemed. The Notes to be redeemed shall be selected on a
pro rata basis.
(2) Notes in denominations in excess of $1,000.00 may be selected and called for
redemption in part only (such part being $1,000.00 or an integral multiple
thereof) and, unless the context otherwise requires, references to Notes in this
section 3 shall be deemed to include any such part of the principal amount of
Notes which shall have been so selected and called for redemption. The Holder of
any Note called for redemption in part only, upon surrender of such Note for
payment, shall be entitled to receive, without expense to such Holder, a new
Note for the unredeemed part of the Note so surrendered, and the Corporation
shall execute and the Trustee shall certify and deliver, at the expense of the
Corporation, such new Note upon receipt from the paying agent of the Note so
surrendered.
3.3 NOTICE OF REDEMPTION
Written notice of intention to redeem any Notes shall be given by or on
behalf of the Corporation to the Holders of the Notes in the case of redemption
under paragraph 3.1(1) and by or on behalf of the Holder of Notes to the
Corporation in the case of redemption under paragraph 3.1(2), indicating which
are to be redeemed, on the date ten Business Days prior to the date fixed for
redemption, in the manner provided in section 10. The written notice of
redemption shall, unless all the Notes then outstanding are to be redeemed,
specify the distinguishing letters and numbers of the Notes which are to be
redeemed and, if a Note is to be redeemed in part only, shall specify that part
of the principal amount thereof to be redeemed, and shall specify the redemption
date (which shall be ten Business Days following the date of the written
notice), and shall state that all interest on the Notes called for redemption
shall cease from and after such redemption date. In the case of redemption by
the Corporation, the written notice shall also state the Redemption Price and
places of payment.
- 11 -
3.4 NOTES DUE ON REDEMPTION DATES
(1) Upon written notice having been given as aforesaid, the Notes so called for
redemption shall thereupon become due and payable at the Redemption Price and on
the redemption date specified in such written notice, in the same manner and
with the same effect as if it were the Maturity Date, notwithstanding anything
contained therein or herein to the contrary, and from and after such redemption
date, if the moneys necessary to redeem such Notes shall have been deposited as
hereinafter provided and affidavits or other proof satisfactory to the Trustee
as to the mailing of such written notices shall have been delivered to it, such
Notes shall not be considered as outstanding hereunder and interest upon such
Notes shall cease to accrue after such date.
(2) If any question shall arise as to whether written notice of redemption or
deposit of the redemption moneys has been given or made as provided above, such
question shall be decided by the Trustee whose decision shall be final and
binding upon all parties in interest.
3.5 DEPOSIT OF REDEMPTION MONIES
(1) Upon Notes having been called for redemption, the Corporation shall deposit
with the Trustee, on or before the redemption date fixed in the relevant written
notice of redemption, such sums as may be sufficient to pay the Redemption Price
of the Notes to be redeemed, together with the estimated charges and expenses to
be incurred in connection with such redemption. From the sums so deposited, the
Trustee shall pay or cause to be paid to the Holders of the Notes called for
redemption, upon surrender of such Notes, the principal and interest to which
they are respectively entitled on redemption.
(2) In the case of Holders of the Notes called for redemption surrendered on or
before the redemption date as fixed in the applicable written notice, the
Trustee shall pay or cause to be paid to such Holders the Redemption Price not
later than the redemption date as fixed in the applicable written notice.
(3) In the event the Corporation fails to make available to the Trustee full
payment of the Redemption Price not later than the redemption date as fixed in
the applicable written notice, the Corporation shall have no further right to
redeem any of the then outstanding Notes under sub3.1(1), unless prior written
approval of such a redemption is authorized by the Holders of Notes.
(4) Any moneys deposited under this section 3.5 and not claimed by and paid to
Holders of Notes within six years after the date of such setting aside shall,
subject to applicable law, 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 the Holders of the Notes in respect
of which such moneys were so repaid to the Corporation shall have no rights in
respect thereof except to obtain payment of such moneys without interest thereon
from the Corporation.
3.6 FAILURE TO SURRENDER NOTES CALLED FOR REDEMPTION
If the Holder of any Notes called for redemption shall, within 30 days
from the date fixed for redemption, fail to surrender any of such Notes or shall
not within such time accept payment of the Redemption Price payable in respect
thereof or give such receipt therefor, if any, as the Trustee may require, such
Redemption Price shall be set aside in trust for such Holder, in accordance with
section 11.8, and such setting aside shall for all purposes be deemed a payment
to the Noteholder of the sum so set aside, and to that extent such Notes shall
thereafter not be considered as outstanding hereunder and the Noteholder shall
have no right except to receive payment out of the moneys so paid and deposited,
upon surrender of such Holder's Notes, of the Redemption Price of such Notes
without interest thereon.
3.7 SURRENDER OF NOTES FOR CANCELLATION
If the principal moneys due upon any Note shall become payable by
redemption before the Maturity Date, the Person presenting such Note for payment
must surrender the same for cancellation, the Corporation nevertheless paying or
causing to be paid the interest accrued and
- 12 -
unpaid thereon (computed on a per diem basis if the date fixed for payment is
not an interest payment date).
3.8 CANCELLATION OF NOTES
All Notes redeemed under this section 3 shall forthwith be delivered to
the Trustee and shall be cancelled by it and no Notes shall be issued in
substitution therefor.
SECTION 4 - CONVERSION
4.1 CONVERSION PRIVILEGE
(1) Subject to any restrictions imposed by the TSX or AMEX and further subject
to and upon compliance with the provisions of this section 4, the Holder of each
Note shall have the right, at such Holder's option, at any time before the close
of business on the last Business Day immediately preceding the earlier of the
date fixed for redemption or the Maturity Date (such time and date being
referred to as the "TIME OF EXPIRY") to convert such Note or any portion of the
principal amount thereof which is $1,000.00 or an integral multiple of
$1,000.00, into fully paid and non-assessable Common Shares at the Conversion
Price in effect as at the date the written notice of conversion is given.
(2) The Conversion Price applicable to the conversion of any of the Notes shall
be equal to 95% of the Current Market Price of the Common Shares as at the close
of business on the Business Day immediately prior to the date the written notice
of conversion is given.
(3) The term "close of business" used in this section 4, in respect of any
Business Day, shall mean the time at which trading in securities on the AMEX
ceases.
(4) A written notice of conversion issued subsequent to the issue of a written
notice of redemption under paragraph 3.1(1) applicable to the Notes referred to
in such written notice of conversion will not be honoured by the Corporation
except in the event the Corporation fails to make available the full Redemption
Price as required for such redemption under paragraph 3.5(3) and upon occurrence
of such event, the Corporation shall honour such a written notice of conversion
as of the date of such written notice of conversion.
4.2 MANNER OF EXERCISE OF RIGHT TO CONVERT
(1) The Holder of a Note wishing to convert such Note in whole or in part into
Common Shares shall surrender such Note prior to the Time of Expiry or, if by
facsimile transmission, deliver such facsimile transmission prior to the Time of
Expiry and surrender such original Note within three Business Days thereafter,
to the Trustee at its principal offices in the City of Vancouver, together with
the conversion form on the back of such Note or any other written notice in form
and substance satisfactory to the Trustee, in either case duly executed by the
Holder or the Holder's executors or administrators or other legal
representatives or their attorney duly appointed by an instrument in writing and
in form and substance satisfactory to the Trustee, exercising the Holder's right
to convert such Note in accordance with the provisions of this section 4 and
further together with documentation to satisfy the restrictive legend on the
Note Certificate. Written notice shall also be provided to the Corporation by
delivering to it a copy of such documentation. Thereupon such Noteholder or,
subject to payment of all applicable stamp taxes, security transfer taxes or
other governmental charges and compliance with all reasonable requirements of
the Trustee, such Noteholder's nominee or assignee shall be entitled to be
entered in the books of the Corporation as at the Date of Conversion (as defined
in paragraph 4.2(3) below) (or such later date as is specified in paragraph
4.2(3)) as the holder of the number of Common Shares into which such Note is
convertible in accordance with the provisions hereof and, as soon as practicable
thereafter, the Corporation shall deliver to such Noteholder or, subject as
aforesaid, his nominee or assignee, a certificate for such Common Shares and, if
applicable, a cheque for any amount payable under subsection 4.5.
(2) If the Holder wishes to convert by facsimile transmission, the Holder shall
deliver by facsimile transmission to the Trustee the duly completed and executed
conversion form, together with a copy of the Note, each in such form as required
as if surrendered directly to the Trustee
- 13 -
and upon delivery of such facsimile transmission such Holder shall forthwith
thereafter surrender the Note and the conversion form by delivering such
documents to the Trustee and provided such documents are received by the Trustee
within three Business Days of the date of the facsimile transmission, the date
of the facsimile transmission shall be deemed to be the date on which the Note
is surrendered for conversion. The Trustee shall not be required to deliver a
certificate for Common Shares against a conversion by facsimile transmission
until the original documentation is received by the Trustee.
(3) For the purposes hereof, a Note shall be deemed to be surrendered for
conversion on the date (the "DATE OF CONVERSION") on which it is so surrendered
by delivery, mail or facsimile in accordance with the provisions hereof and, in
the case of a Note so surrendered by mail or other means of delivery, on the
date on which it is received by the Trustee at one of its offices specified in
paragraph 4.2(1), provided that if a Note is surrendered for conversion on a day
on which the register of Common Shares is closed, the Person entitled to receive
Common Shares shall become the holder of record of such Common Shares as at the
date on which such register is next reopened and provided that if a Note is
surrendered for conversion on any interest payment date or the day of selection
by the Trustee of any Notes for redemption, or in either case during the ten
preceding Business Days, such Note shall be deemed to be surrendered for
conversion on the Business Day immediately following such interest payment date
or date on which Notes are selected for redemption.
(4) Any part, being $1,000.00 or an integral multiple thereof, of a Note of a
denomination in excess of $1,000.00 may be converted as provided herein and all
references in this Indenture to conversion of Notes shall be deemed to include
conversion of such parts. The Holder of any Note of which part only is converted
shall, upon the exercise of such Holder's right of conversion, surrender such
Note to the Trustee, and the Trustee shall cancel the same and shall, without
charge to the Holder, forthwith certify and deliver to the Holder a new Note or
Notes in an aggregate principal amount equal to the unconverted part of the
principal amount of the Note so surrendered.
(5) The Holder of a Note surrendered for conversion in accordance with this
subsection 4.2 shall be entitled to receive accrued and unpaid interest in
respect thereof to the Date of Conversion. The Common Shares issued upon
conversion shall rank only in respect of dividends declared in favour of holders
of record of Common Shares on and after the Date of Conversion or such later
date as such Holder shall become the holder of record of such Common Shares
pursuant to paragraph 4.2(2), from which applicable date they will for all
purposes be and be deemed to be issued and outstanding as fully paid and
non-assessable Common Shares.
4.3 ADJUSTMENT OF CONVERSION PRICE
(1) If and whenever at any time after the date hereof and prior to the last
Maturity Date of the Series of Notes then outstanding, there is a
reclassification of the Common Shares at any time outstanding or change of the
Common Shares into other shares or into other securities, or amalgamation,
arrangement, merger or other form of business combination of the Corporation
with or into any other corporation or other entity (other than an amalgamation,
arrangement, merger or other form of business combination which does not result
in any reclassification of the outstanding Common Shares or a change of the
Common Shares into other shares), or a sale, lease, exchange or transfer of the
undertaking or assets of the Corporation as an entirety or substantially as an
entirety to another corporation or other entity in which the holders of Common
Shares are entitled to receive shares, other securities or other property (any
of such events being called a "CAPITAL REORGANIZATION"), any Holder of Notes who
exercises the right to convert Notes into Common Shares pursuant to Notes then
held after the effective date of such Capital Reorganization will be entitled to
receive, and will accept for the same aggregate consideration in lieu of the
number of Common Shares to which such Holder was previously entitled upon such
conversion, the aggregate number of shares, other securities or other property
which such Holder would have been entitled to receive as a result of such
Capital Reorganization if, on the effective date thereof, the Holder had been
the registered holder of the number of Common Shares to which such Holder was
previously entitled upon conversion.
(2) In any case in which this subsection 4.3 shall require that an adjustment
shall become effective immediately after a record date for an event referred to
herein, the Corporation may
- 14 -
defer, until the occurrence of such event, issuing to the Holder of any Note
converted after such record date and before the occurrence of such event the
additional Common Shares issuable upon such conversion by reason of the
adjustment required by such event; provided, however, that the Corporation shall
deliver to such Holder an appropriate instrument evidencing such Holder's right
to receive such additional Common Shares upon the occurrence of such event and
the right to receive any distributions made on such additional Common Shares
declared in favour of holders of record of Common Shares on and after the Date
of Conversion or such later date on which such Holder would, but for the
provisions of this paragraph 4.3(2), have become the holder of record of such
additional Common Shares pursuant to paragraph 4.2(3).
4.4 OTHER ADJUSTMENT OF CONVERSION PRICE
If the Corporation shall take any action affecting the Common Shares
which results in a Holder of Notes being unable, for any period of time, to
exercise conversion privileges that it would otherwise be permitted to exercise
due to requirements necessary to ensure that the Notes will be and will remain
exempt from Canadian withholding tax, which in the opinion of the Directors
would have a material adverse effect upon the rights of Noteholders, the
Conversion Price shall be adjusted in such manner and at such time, or such
other adjustment to the conversion privilege shall be made, as the Directors
determine to be equitable in the circumstances, subject to the prior written
consent of the TSX and the AMEX. Failure of the Directors to take any such
action shall be conclusive evidence that the Directors have determined that it
is equitable to make no adjustment in the circumstances.
4.5 NO REQUIREMENT TO ISSUE FRACTIONAL SHARES
The Corporation shall not be required to issue fractional Common Shares
upon the conversion of Notes. If more than one Note shall be surrendered for
conversion at one time by the same Holder, the number of whole Common Shares
issuable upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Notes to be converted. If any fractional interest in a
Common Share would, except for the provisions of this section, be deliverable
upon the conversion of any principal amount of Notes, the Corporation may, at
its option, in lieu of delivering any certificate of such fractional interest,
satisfy such fractional interest by paying to the Holder of such surrendered
Notes an amount in lawful money of the United States of America equal (computed
to the nearest cent) to such fractional interest multiplied by the Current
Market Price of the Common Shares on the Business Day preceding the Date of
Conversion provided it is not less than $5.00.
4.6 CORPORATION TO RESERVE SHARES; LIMITATIONS ON CONVERSION
(1) Subject to paragraph 4.6(2), the Corporation covenants that it will at all
times reserve and keep available out of its authorized Common Shares (if the
number thereof is or becomes limited) solely for the purpose of issue upon
conversion of Notes as provided herein, and allot for issue to Noteholders who
may exercise their conversion rights hereunder, such number of Common Shares as
shall then be issuable upon the conversion of all outstanding Notes. All Common
Shares which shall be so issuable shall be duly and validly issued as fully paid
and non-assessable.
(2) The conversion and exercise rights of the Holders set forth herein and in
the Warrant Indenture shall be limited, solely to the extent required, from time
to time, such that in no instance shall the maximum number of Common Shares
which the Holders (singularly, together with any persons who in the
determination of such Holders, together with such Holders, constitute a group
determined in accordance with Rule 13d-5 of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT")) may receive, in respect of any conversion of
the Notes, or exercise of the Warrants, exceed, at any one time, an amount equal
to the remainder of (i) 4.99% of the then issued and outstanding Common Shares
following such conversion or exercise minus (ii) the number of Common Shares
then owned by the Holders (but exclusive of any Common Shares deemed
beneficially owned due to ownership of the Warrants) (the foregoing being herein
referred to as the "LIMITATION ON CONVERSION"); provided, however, that if ten
Business Days have elapsed since the occurrence of an Event of Default and the
Company shall not have cured such Event of Default, the provisions of this
paragraph 4.6(2) shall be null and void from and after the tenth Business Day
following the date of such Event of Default. The
- 15 -
Corporation shall, promptly upon its receipt of a conversion notice tendered by
a Holder (or its sole designee), and upon its receipt of a written notice of
exercise under the terms of the Warrants notify such Holder by facsimile of the
number of Common Shares outstanding on such date and the number of Common Shares
which would be issuable to such Holder if the conversion requested in such
conversion notice or exercise requested in such exercise notice were effected in
full, whereupon, notwithstanding anything to the contrary set forth in this
Indenture and/or a Note certificate, such Holder may within one trading day of
its receipt of the Corporation written notice required by this section by
facsimile revoke such conversion or exercise to the extent (in whole or in part)
that it determines that such conversion or exercise would result in such Holder
owning Common Shares in excess of the Limitation on Conversion.
(3) If, at any time, the aggregate Common Shares issuable upon conversion of the
Notes and exercise of the Warrants under the Warrant Indenture exceeds the
Conversion Limit (as hereafter defined) then in effect, (i) the Corporation
shall deliver written notice to such effect to the Holders and the Trustee
("CORPORATION NOTICE") and (ii) the Corporation shall, at its option, within 90
days of the Corporation Notice (I) obtain approval of the Corporation's
shareholders (or an appropriate waiver from the AMEX and/or the TSX as is
necessary) of the issuance of Common Shares in excess of the Conversion Limit in
a quantity reasonably acceptable to the Holders and in all events sufficient to
honour conversion in full of the Notes and exercise in full of the Warrants or
(II) redeem the Notes in excess of the Conversion Limit in accordance with
paragraph 3.1(3). Without limiting the generality of the foregoing, if on the
Date of Conversion applicable to any conversion of Notes or exercise of the
Warrants, the Conversion Price (or exercise price, in the case of the Warrants)
then in effect is such that the aggregate number of Common Shares that would
then be issuable upon conversion of the entire outstanding Notes and Warrants
together with any Common Shares previously issued upon conversion or exercise
thereof or in payment of interest in accordance herewith in Common Shares, would
equal or exceed the Conversion Limit (as defined below) and the Company has not
previously obtained Shareholder Approval (as defined below), then the Company
shall issue to the converting Holder the Conversion Limit and, with respect to
any Common Shares that would be issuable to such Holder in respect of the
conversion notice or exercise notice at issue in excess of the Conversion Limit,
the Corporation shall have the option to (I) redeem the Notes in accordance with
paragraph 3.1(3) or (II) as promptly as possible, but in no event later than 90
days after such Date of Conversion, convene a meeting of the shareholders and
obtain the Shareholder Approval. If the Corporation fails for any reason to pay
the Redemption Price pursuant to this subsection within seven days after the
date or fails to deliver good funds to the Trustee for such purpose, the
Corporation will pay to the converting Holder interest on such repayment price
at a rate of 4% per annum accruing from the Date of Conversion plus any accrued
but unpaid interest thereon. If the Corporation shall have elected to obtain
Shareholder Approval and such approval is not obtained by the Corporation within
90 days, then the Corporation shall repay the principal amount of the Notes in
excess of the Conversion Limit as set forth above and, in such case the interest
contemplated by the immediately preceding sentence shall be deemed to accrue
from the Date of Conversion. "Shareholder Approval" means the approval of the
Company's shareholders that is required by and is obtained in accordance with
the AMEX Company Guide and the Exchange Act and the rules of the TSX.
(4) As used herein, "Conversion Limit" shall mean the lesser of (a) twenty
percent of the then issued and outstanding Common Shares as of the date of
determination required by the AMEX Company Guide (or such other limit then
imposed upon the Corporation by the AMEX), or such greater number of Common
Shares as the shareholders of the Corporation may have previously approved, and
(b) the limit then imposed upon the Corporation by the TSX.
(5) Subject to the foregoing limitations, each Holder shall, at its option, have
the sole right to determine whether to exercise the right of conversion for the
Notes. The Corporation shall honour each written notice of conversion in the
order received.
4.7 CORPORATION TO QUALIFY SHARES
If at any time any order, ruling, registration, written notice or
filing pursuant to any securities laws of the United States or any state thereof
is required to ensure that any Common Shares issuable upon the conversion of the
Notes are issued in compliance with all such laws or to ensure that any such
Common Shares, once issued, are not subject to any general restriction as
- 16 -
to the resale thereof in the United States, the Corporation covenants that it
will take all such action as may be necessary to make or obtain such order,
ruling, registration or filing, or give such written notice as the case may be.
For greater certainty the Corporation shall have no obligation to ensure that
the Common Shares, once issued, are not subject to any general restrictions with
respect to the resale thereof in Canada.
4.8 TAXES AND CHARGES ON CONVERSION
The Corporation will from time to time promptly pay or make provision
satisfactory to the Trustee for the payment of all taxes and charges which may
be imposed by the laws of Canada or the United States or any province or state
thereof, as applicable, (except income tax or security transfer tax, if any)
which shall be payable with respect to the issuance or delivery of Common Shares
to the Holders of Notes upon the exercise of their right of conversion pursuant
to the terms of the Notes and of this Indenture.
4.9 CANCELLATION OF CONVERTED NOTES
All Notes converted in whole or in part shall be forthwith delivered to
and cancelled by the Trustee and, subject to paragraph 4.2(4), no Notes shall be
issued in substitution therefor.
4.10 CERTIFICATE AS TO ADJUSTMENT
The Corporation shall from time to time, immediately after the
occurrence of any event which requires an adjustment or readjustment as provided
in subsection 4.3 or 4.4, deliver a Certificate of the Corporation to the
Trustee specifying the nature of the event requiring the same and the amount of
the adjustment or readjustment necessitated thereby and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based, and the Trustee shall be entitled to act and rely upon
such Certificate. Such Certificate of the Corporation and the amount of the
adjustment specified therein shall, subject to the provisions of paragraph
4.3(2), be conclusive and binding on all parties in interest. Until such
Certificate of the Corporation is received by the Trustee, the Trustee may act
and be protected in acting on the presumption that no adjustment has been made
or is required. Except in respect of any subdivision, redivision, reduction,
combination or consolidation of the Common Shares, the Corporation shall
forthwith give written notice to the Noteholders specifying the event requiring
such adjustment or readjustment and the amount thereof, including the resulting
Conversion Price; provided that if the Corporation has given written notice
under subsection 4.11 covering all the relevant facts in respect of such event,
no such written notice need be given under this subsection 4.10.
4.11 NOTICE OF SPECIAL MATTERS
The Corporation covenants that, so long as any Notes remain
outstanding, it will give written notice to the Trustee and to the Noteholders
of its intention to fix a record date for any event referred to in paragraph
4.3(1) and such written notice shall specify the particulars of such event and
the record date and the effective date for such event; provided that the
Corporation shall only be required to specify in such written notice such
particulars of such event as shall have been fixed and determined on the date on
which such written notice is given. Such written notice shall be given not less
than 14 days prior to the applicable record date in the case of an event
referred to in paragraph 4.3(1).
4.12 NOTICE OF EXPIRY OF CONVERSION RIGHT
The Corporation covenants that, so long as any Notes remain
outstanding, it will give written notice to the Trustee and the Noteholders in
the manner provided in section 10, not less than 21 days prior to the Time of
Expiry, of the expiry of the right of the Holders of the Notes to convert their
Notes.
4.13 REVIVAL OF RIGHT TO CONVERT
If the Corporation shall fail to redeem any Note which has been called
for redemption pursuant to paragraph 3.1(1) any right to convert such Note as
provided in this section 4 shall revive and continue as if such Note had not
been called for redemption.
- 17 -
4.14 PROTECTION OF TRUSTEE
The Trustee shall not at any time be under any duty or responsibility
to any Noteholder to determine whether any facts exist which may require any
adjustment in a Conversion Price, or with respect to the nature or extent of any
such adjustment when made, or with respect to the method employed in making the
same; and shall not be accountable with respect to the validity or value (or the
kind or amount) of any Common Shares or of any shares or other securities or
other property which may at any time be issued or delivered upon the conversion
of any Note; and the Trustee, except to the extent that there has been a failure
by the Trustee or its employees or agents to act honestly and in good faith or
where the Trustee or its employees or agents have acted negligently or in wilful
disregard of their obligations hereunder or shall not have complied with
subsection 11.3, shall not be responsible for any failure of the Corporation to
make any cash payment or to issue, transfer or deliver Common Shares or share
certificates upon the surrender of any Note for the purpose of conversion, or to
comply with any of the covenants contained in this section 4.
SECTION 5 - COVENANTS OF THE CORPORATION
5.1 GENERAL COVENANTS
(1) The Corporation covenants with the Trustee for the benefit of the Trustee
and the Noteholders as follows:
(a) the Corporation will duly and punctually pay or cause to be paid
to every Noteholder the principal of and interest accrued on
such Noteholder's Notes (in the event that interest is payable
due to the occurrence of an Event of Default) on the dates, at
the places, in the money and in the manner mentioned herein and
in the Notes;
(b) except as herein otherwise expressly provided, the Corporation
will at all times maintain its corporate existence, will keep
proper books of account in accordance with generally accepted
accounting practices and at all reasonable times it will furnish
or cause to be furnished to the Trustee or its duly authorized
agent or attorney such information relating to its business as
the Trustee may reasonably require and such books of account
shall at all reasonable times be open for inspection by the
Trustee or such agent or attorney;
(c) the Corporation will continue, and will cause each of its
subsidiaries to continue, to engage in business of the same
general type as now conducted by the Corporation and its
Subsidiaries, and will preserve, renew and keep in full force
and effect its respective corporate existence and their
respective material rights, privileges and franchises necessary
or desirable in the normal conduct of business;
(d) the Corporation and each of its Subsidiaries will not, in a
single transaction or a series of related transactions, (i)
consolidate with or merge with or into any other person, or (ii)
permit any other person to consolidate with or merge into it,
unless (x) either (A) the Corporation shall be the survivor of
such merger or consolidation or (B) the surviving person shall
expressly assume by supplemental agreement all of the
obligations of the Corporation under the Subscription Agreement,
this Indenture and the Warrant Indenture; (y) if the Corporation
is not the surviving entity, such surviving entity's common
shares shall be listed on either The New York Stock Exchange,
AMEX, Nasdaq National Market or TSX and (z) the Corporation has
delivered to the Holders an officers' certificate and opinion of
counsel, each stating that such consolidation, merger or
transfer complies with this Indenture, that the surviving person
agrees to be bound thereby and that all conditions precedent in
this Indenture relating to such transaction have been satisfied;
(e) the Corporation will furnish to the Trustee a copy of all
financial statements, whether annual or interim, of the
Corporation and the report, if any, of the
- 18 -
Corporation's auditors thereon and of all annual and other
periodic reports of the Corporation furnished to its
shareholders at the same time as they are furnished to such
shareholders. No obligation shall rest with the Trustee to
analyze such statements or evaluate the performance of the
Corporation in any manner whatsoever; and
(2) the Corporation will duly and punctually perform and carry out all of the
covenants and acts or things to be done by it as provided in this Indenture.
5.2 NOT TO EXTEND TIME FOR PAYMENT OF INTEREST OR PRINCIPAL
(1) The Corporation covenants that, in order to prevent any accumulation after
maturity of unpaid interest or of unpaid Notes, the Corporation will not
directly or indirectly extend or assent to the extension of time for payment of
any interest upon any Notes or of any principal payable in respect of any Notes
and that it will not directly or indirectly be or become a party to or approve
any such arrangement by purchasing or funding any interest on the Notes or any
principal thereof or in any other manner and that the Corporation will deliver
to the Trustee all Notes when paid as evidence of such payment.
(2) If the time for the payment of any interest or principal shall be so
extended, whether or not such extension is by or with the consent of the
Corporation, notwithstanding anything herein or in the Notes contained, such
interest or principal shall not be entitled, in case of default hereunder, to
the benefit of this Indenture except subject to the prior payment in full of the
principal, of all the Notes then outstanding and of all matured interest on such
Notes the payment of which has not been so extended.
5.3 TO PROVIDE CERTIFICATE OF COMPLIANCE
The Corporation covenants that, on or before August 27, 2004 and at any
other time if requested by the Trustee, the Corporation will furnish to the
Trustee a Certificate of the Corporation stating that the Corporation has
complied with all covenants, conditions and other requirements contained in this
Indenture, noncompliance with which would, with the giving of written notice or
the lapse of time or both, constitute an Event of Default hereunder or, if such
is not the case, specifying the covenant, condition or other requirement which
has not been complied with and giving particulars of such noncompliance and the
action, if any, the Corporation proposes to take with respect thereto.
5.4 CONTINUED LISTING
The Corporation shall take all reasonable steps and actions and do all
such acts and things as may be required to maintain the listing and posting for
trading of the Common Shares on the AMEX and to maintain its status as a
"Reporting Issuer", or the equivalent thereof, not in default of the
requirements of the applicable securities legislation of Ontario and the United
States of America.
5.5 TO PAY TRUSTEE'S REMUNERATION
(1) The Corporation covenants that it will pay to the Trustee reasonable
remuneration for its services as Trustee and will pay all costs, charges and
expenses properly incurred by the Trustee in connection with the trusts hereof,
on demand by the Trustee, and also (in addition to any right of indemnity given
to the Trustee by law) will at all times keep indemnified the Trustee against
all liabilities, losses, damages, actions, proceedings, costs, claims, expenses
and demands in respect of any matter or thing done or omitted by the Trustee
(other than through negligence of the Trustee) in any way relating to this
Indenture. This provision will survive the termination or discharge of this
Indenture and the resignation or replacement of the Trustee.
(2) Any amount due under paragraph 5.5(1) and unpaid 30 days after demand for
such payment shall bear interest from the expiration of such 30 day period at a
rate per annum as determined by the Trustee from time to time. After default all
amounts so payable and the interest thereon shall be payable out of any funds
coming into possession of the Trustee in priority to any payment of the
principal of and interest on the Notes.
- 19 -
5.6 TRUSTEE MAY PERFORM COVENANTS
If the Corporation shall fail to perform any of its covenants contained
herein, the Trustee may in its discretion, but (subject to subsection 6.2) need
not, notify the Noteholders of such failure or may itself perform any of such
covenants capable of being performed by it and, if any such covenant requires
the payment of money, it may make such payment with its own funds, or with money
borrowed by it for such purpose, but shall be under no obligation to do so; and
all sums so paid shall be payable by the Corporation in accordance with the
provisions of paragraph 5.5(1). No such performance by the Trustee of any
covenant contained herein or payment by the Corporation of any sums advanced or
borrowed by the Trustee pursuant to the foregoing provisions shall be deemed to
relieve the Corporation from any default hereunder or its continuing obligations
hereunder.
5.7 REQUEST FOR TRUST INDENTURE
The Corporation shall, within three Business Days of a written request
by the Trustee, furnish to the Trustee, or to such other Person as the Trustee
may direct, a true copy of this Trust Indenture.
5.8 COVENANT TO NOTIFY TRUSTEE OF CHANGE OF NAME
The Corporation shall not change its name or amalgamate with another
corporation under a different name without giving at least ten Business Days'
prior written notice to the Trustee of the new name and the date upon which such
change of name or amalgamation is to take effect and, within five Business Days
of the change of name or amalgamation, the Corporation shall provide the Trustee
with:
(a) a notarial or certified copy of the articles of amendment or
articles of amalgamation effecting the change of name; and
(b) an opinion from legal counsel satisfactory to the Trustee as to
the correct name of the Corporation and confirming that all
appropriate registrations, filings or recordings have been made
to ensure the continued validity and enforceability of this
Indenture and the Notes.
5.9 COVENANT TO PROVIDE INFORMATION
(1) The Corporation will deliver to each Holder of the Convertible Notes:
(a) as soon as available and in any event not later than five
Business Days following the date of filing with the SEC, a
consolidated balance sheet of the Corporation as of the end of
such fiscal year and the related consolidated statements of
income and cash flows and shareholders' equity for such fiscal
year, setting forth in each case in comparative form the figures
for the previous fiscal year, all reported on in a manner
acceptable to the SEC by independent public accountants of
nationally recognized standing;
(b) as soon as available and in any event, not later than five
Business Days following the date of filing with the SEC, a
consolidated balance sheet of the Corporation as of the end of
such quarter and the related consolidated statements of income
and cash flows and shareholders' equity for such quarter and for
the portion of the Corporation's fiscal year ended at the end of
such quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding
portion of the Corporation's previous fiscal year, all certified
(subject to footnote presentation and normal year-end
adjustments) as to fairness of presentation, Generally Accepted
Accounting Principles and consistency by an officer of the
Corporation (the requirements of clause (a) above and this
clause (b) may be satisfied by delivering to each Holder copies
of the Corporation's Form 20-F and Form 10Q (or equivalent
thereof), as applicable, under a cover letter from an officer of
the Corporation addressing the matters required by such
clauses);
- 20 -
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a
certificate from the Corporation signed by an officer stating
that no Event of Default has occurred and is continuing, or, if
as of the date of such delivery an Event of Default shall have
occurred and is continuing, a certificate from the Corporation
setting forth the details of such Event of Default and the
action which the Corporation is taking or proposes to take with
respect thereto;
(d) within two days after any officer of the Corporation obtains
knowledge of an Event of Default, a certificate of an officer of
the Corporation setting forth the details thereof and the action
which the Corporation is taking or proposes to take with respect
thereto;
(e) promptly upon the mailing thereof to the shareholders of the
Corporation generally, copies of all financial statements,
reports and proxy statements so mailed and any other document
generally distributed to shareholders;
(f) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and reports on Forms
20-F, 10Q (or equivalent thereof) and 8-K (or their equivalents)
which the Corporation has filed with the SEC;
(g) promptly following the commencement thereof, notice and a
description in reasonable detail of any litigation or proceeding
to which the Corporation is a party in which the amount involved
is $50,000 or more and not covered by insurance or in which
injunctive or similar relief is sought;
(h) promptly following the occurrence thereof, written notice and a
description in reasonable detail of any material adverse change,
or development involving a prospective material adverse change,
in the business, operations, property, condition (financial or
otherwise) or prospects of the Corporation, taken as a whole;
and
(i) from time to time such additional information regarding the
financial position or business of the Corporation such as the
Holders may reasonably request.
(2) To the extent the Corporation is required under subsection 5.9(1) to inform
a Holder of a material fact or material change with respect to the Corporation
before such material fact or material change has been generally disclosed, such
information need not be disclosed to such Holder unless, prior to such
disclosure, the Holder agrees in writing to hold such information strictly
confidential and not trade in securities of the Corporation until such material
fact or material change has been generally disclosed by the Corporation.
SECTION 6 - DEFAULT AND ENFORCEMENT
6.1 EVENTS OF DEFAULT
Each of the following events is hereinafter sometimes referred to as an
"Event of Default":
(a) if the Corporation makes default in payment of the principal of
any Note when the same becomes due under any provision hereof or
of such Note;
(b) if the Corporation makes default in observing or performing any
other covenant or condition of this Indenture on its part to be
observed or performed and if such default continues for a period
of 30 Business Days after notice in writing has been given to
the Corporation by the Trustee specifying such default and
requiring the Corporation to rectify the same, unless the
Trustee (having regard to the subject matter of the default)
shall have agreed to a longer period and, in such event, for the
period agreed to by the Trustee;
- 21 -
(c) if the Corporation makes default in observing or performing any
covenant or condition of the Warrant Indenture on its part to be
observed or performed and if such default continues for a period
of 30 Business Days after notice in writing has been given to
the Corporation by the Warrant Agent (as defined in the Warrant
Indenture) specifying such default and requiring the Corporation
to rectify the same, unless the Trustee (having regard to the
subject matter of the default) shall have agreed to a longer
period and, in such event, for the period agreed to by the
Trustee;
(d) if a decree or order of a court having jurisdiction in the
premises is entered adjudging the Corporation or a material
subsidiary of the Corporation a bankrupt or insolvent under the
Bankruptcy and Insolvency Act (Canada) or any other bankruptcy,
insolvency or analogous laws, or issuing sequestration or
process of execution against, or against any substantial part
of, the property of, the Corporation or a material subsidiary of
the Corporation, or appointing a receiver, trustee in
bankruptcy, liquidator, receiver manager, or any other officer
with similar powers, of the Corporation or a material subsidiary
of the Corporation, or any substantial part of the Corporation's
property or that of a material subsidiary of the Corporation, or
ordering the winding-up or liquidation of the Corporations'
affairs or the affairs of a material Subsidiary of the
Corporation, and any such decree or order continues unstayed and
in effect for a period of 30 Business Days;
(e) if a resolution is passed for the winding-up or liquidation of
the Corporation or a material Subsidiary of the Corporation
(except in the course of carrying out or pursuant to a
transaction in respect of which the conditions of subsection 8.1
are duly observed and performed) or if the Corporation or a
material Subsidiary of the Corporation institutes proceedings to
be adjudicated a bankrupt or insolvent, or consents to the
institution of bankruptcy or insolvency proceedings against it
under the Bankruptcy and Insolvency Act (Canada) or any other
bankruptcy, insolvency or analogous laws, or consents to the
filing of any such petition or to the appointment of a receiver
of the Corporation or a material Subsidiary of the Corporation
or any substantial part of the Corporation's property or the
property of a material Subsidiary of the Corporation, or makes a
general assignment for the benefit of creditors, or admits in
writing its inability to pay its debts generally as they become
due or takes corporate action in furtherance of any of the
aforesaid purposes, or if the Corporation or a material
Subsidiary of the Corporation shall propose a compromise,
arrangement or reorganization under the Companies' Creditors
Arrangements Act (Canada) or any similar legislation or any
jurisdiction providing for the reorganization or winding-up of
corporations or business entities or providing for an agreement,
composition, extension or adjustment with its creditors;
(f) if an encumbrancer takes possession of, or appoints a receiver
in respect of, all or substantially all of the property of the
Corporation or the property of a material Subsidiary of the
Corporation, or if any process or execution is levied or
enforced upon or against all or substantially all of the
property of the Corporation or the property of a material
Subsidiary of the Corporation and remains unsatisfied for such
period as would permit any such property to be sold thereunder,
unless the Corporation or the Subsidiary, as the case may be,
actively and diligently contests in good faith such process, but
in either event the Corporation shall, if the Trustee so
requires, give security which, in the discretion of the Trustee,
is sufficient to pay in full the amount thereby claimed in case
the claim is held to be valid;
(g) the Corporation shall fail to file with the SEC a registration
statement within 30 days following the Effective Date or a
request for acceleration within five days of the date that the
Corporation is notified by the SEC that a Registration Statement
will not be reviewed, and such failure shall remain uncured for
five days after the Corporation receives written notice of such
failure;
(h) the Corporation shall fail to use its best efforts to take all
actions necessary to cause the Registration Statement to be
declared and remain effective by the SEC
- 22 -
within 120 days after the Effective Date (such actions including
amending or supplementing the prospectus);
(i) a Registration Statement is filed with and declared effective by
the SEC but thereafter ceases to be effective at any time at
which there are Notes outstanding hereunder and the Corporation
shall fail within 10 Business Days thereafter (i) to file a
subsequent Registration Statement with the SEC and (ii) to use
its best efforts to cause such Registration Statement to be
declared effective by the SEC;
(j) the Corporation shall fail to maintain a reserve of duly
allotted and authorized Common Shares that is at least equal to
the number of Common Shares which would be issuable upon
conversion in full of the full number of Notes outstanding
hereunder and all outstanding Warrants, and such failure shall
remain uncured for fifteen days after the first date on which
such reserve is no longer maintained;
(k) the Corporation shall fail to take all steps necessary to cause
the Common Shares (including the Common Shares issuable upon
conversion of Notes hereunder) to be listed on the AMEX within
120 days after the Effective Date (or, if earlier, on or prior
to the date on which the Registration Statement is declared
effective by the SEC) or the Corporation shall fail to take all
steps necessary to thereafter to maintain such listing on the
AMEX, and such failure shall remain uncured for fifteen days
after such failure;
(l) the Corporation shall fail to issue Common Shares to the Holders
upon exercise by the Holders of their conversion rights
hereunder or shall fail to transfer or to cause the Trustee to
transfer any certificate for Common Shares issued to the Holders
upon conversion of the Notes as and when required by this
Indenture, or shall fail to remove any restrictive legend (or to
withdraw any stop transfer instructions in respect thereof) on
any certificate or any Common Shares issued to the Holders of
Notes upon conversion of the Notes as and when required by this
Indenture;
(m) the Corporation or any of its Subsidiaries shall commence a
voluntary case under the United States Bankruptcy Code as now or
hereafter in effect or any successor thereto (the "BANKRUPTCY
CODE"); or an involuntary case is commenced against the
Corporation under the Bankruptcy Code and the petition is not
controverted within 30 days, or is not dismissed within 60 days,
after commencement of such involuntary case; or a "custodian"
(as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or any substantial part of the property of the
Corporation or the Corporation commences any other proceeding
under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or
similar law of any jurisdiction whether now or hereafter in
effect relating to the Corporation or there is commenced against
the Corporation any such proceeding which remains undismissed
for a period of 60 days; or the Corporation is adjudicated
insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or the
Corporation suffers any appointment of any custodian or the like
for it or any substantial part of its property which continues
undischarged or unstayed for a period of 60 days; or the
Corporation makes a general assignment for the benefit of
creditors; or the Corporation shall call a meeting of its
creditors with a view to arranging a composition or adjustment
of its debts; or the Corporation shall by any act or failure to
act indicate its consent to, approval of or acquiescence in any
of the foregoing; or any corporate or other action is taken by
the Corporation for the purpose of effecting any of the
foregoing;
(n) the trading in the Common Shares shall have been suspended by
the SEC or the AMEX (except for any suspension of trading of
limited duration solely to permit dissemination of material
information regarding the Corporation and except if, at the time
there is any suspension on the AMEX, the Common Shares are then
listed and approved for trading on either the New York Stock
Exchange; the
- 23 -
Nasdaq SmallCap Market, or the Nasdaq National Market within two
trading days thereof);
(o) the Corporation shall have its Common Shares delisted from the
AMEX for at least 15 consecutive trading days and is unable to
obtain a listing on either the New York Stock Exchange, the
Nasdaq SmallCap Market or the Nasdaq National Market within such
15 trading days; or
(p) if an event of default as defined in any indenture or instrument
evidencing, or under which, any indebtedness for borrowed money
of the Corporation is outstanding shall happen and be
continuing, and such indebtedness shall have been accelerated so
that not less than $1,000,000 of the same shall be or have
become due and payable prior to the date on which the same would
otherwise become due and payable and such acceleration shall not
be stayed, rescinded or annulled within 10 days after written
notice thereof shall have been given to the Trustee by the
Corporation or to the Corporation by the Trustee or if the
Corporation shall fail, within 10 days after the maturity or
extended maturity of any such indebtedness or acceleration, to
pay or refund the same; provided, however, that if such event of
default under such indenture or instrument shall be remedied or
cured by the Corporation or be waived by the holders of such
indebtedness before any judgment or decree for the payment of
the money due shall have been obtained or entered, then the
Event of Default hereunder by reason thereof shall be deemed
likewise to have been thereupon remedied, cured or waived
without further action upon the part of the Trustee; or
(q) the entry of any judgments against the Corporation aggregating
more than $1,000,000.
6.2 NOTICE OF EVENTS OF DEFAULT
(1) If an Event of Default shall occur and is continuing the Trustee shall,
within 15 days after it becomes aware of the occurrence of such Event of
Default, give written notice thereof to the Noteholders, provided that,
notwithstanding the foregoing, the Trustee shall not be required to give such
written notice if the Trustee in good faith shall have decided that the
withholding of such written notice is in the best interests of the Noteholders
and shall have so advised the Corporation in writing.
(2) Where written notice of the occurrence of an Event of Default has been given
and the Event of Default is thereafter cured, in the event written notice was
given to Noteholders under paragraph 6.2(1), written notice that the Event of
Default is no longer continuing shall be given by the Trustee to the Noteholders
within 15 days after the Trustee becomes aware that the Event of Default has
been cured.
6.3 ACCELERATION ON DEFAULT
If any Event of Default has occurred and is continuing, the Trustee may
in its discretion, and shall upon receipt of a Noteholders' Request, subject to
subsection 6.4 and paragraph 9.11(d), by written notice in writing to the
Corporation declare the principal of and interest on the Notes then outstanding
and any other moneys payable hereunder to be due and payable and the same shall
forthwith become immediately due and payable to the Trustee, notwithstanding
anything contained therein or herein to the contrary, and the Corporation shall
pay forthwith to the Trustee for the benefit of the Noteholders the principal of
and accrued and unpaid interest (including interest on amounts in default) on
such Notes and all other moneys payable hereunder, together with subsequent
interest thereon at the rate borne by the Notes from the date of such
declaration until payment is received by the Trustee. 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 provided
in subsection 6.7.
- 24 -
6.4 WAIVER OF DEFAULT
If an Event of Default shall have occurred the Holders of more than
66-2/3% of the principal amount of the Notes then outstanding shall have the
power (in addition to the powers exercisable by Extraordinary Resolution as
hereinafter provided) by instrument signed by such Holders to instruct the
Trustee to waive any Event of Default hereunder and/or to cancel any declaration
made by the Trustee pursuant to subsection 6.3 and the Trustee shall thereupon
waive the Event of Default and/or cancel such declaration upon such terms and
conditions as such Noteholders shall prescribe; provided that no delay or
omission of the Trustee or of the Noteholders to exercise any right or power
accruing upon any Event of Default shall impair any such right or power or shall
be construed to be a waiver of any such Event of Default or acquiescence therein
and provided further that no act or omission either of the Trustee or of the
Noteholders shall extend to or be taken in any manner whatsoever to affect any
subsequent Event of Default hereunder or the rights resulting therefrom.
6.5 ENFORCEMENT BY THE TRUSTEE
If an Event of Default shall have occurred, but subject to subsection
6.4 and to the provisions of any Extraordinary Resolution that may be passed by
the Noteholders as provided:
(a) subject to subsection 11.3(2), the Trustee may in its discretion
proceed to enforce the rights of the Trustee and of the
Noteholders by any action, suit, remedy or proceeding authorized
or permitted by this Indenture or by law or 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 Noteholders filed in any bankruptcy,
insolvency, winding-up or other judicial proceedings relating to
the Corporation;
(b) no such remedy for the enforcement of the rights of the Trustee
or the Noteholders 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;
(c) all rights of action hereunder may be enforced by the Trustee
without the possession of any of the Notes or the production
thereof on the trial or other proceedings relating thereto; and
(d) upon receipt of a Noteholders' Request and upon receiving
sufficient funds and being indemnified to its satisfaction as
provided in paragraph 11.3(3), the Trustee shall exercise or
take such one or more of such remedies as the Noteholders'
Request may direct, provided that if any such Noteholders'
Request directs the Trustee to take proceedings out of court the
Trustee may in its discretion take judicial proceedings in lieu
thereof.
6.6 NOTEHOLDERS MAY NOT ▇▇▇
(1) No Holder of any Note shall have the right to institute any action, suit or
proceeding or to exercise any other remedy authorized or permitted by this
Indenture or by law or by equity for the purpose of enforcing any rights
pursuant to this Indenture, unless:
(a) such Holder shall previously have given to the Trustee, or
vice-versa, written notice of the occurrence of an Event of
Default;
(b) the Noteholders, by Extraordinary Resolution, shall have made a
request to the Trustee to take action hereunder or the
Noteholders' Request referred to in paragraph 6.5(d) shall have
been delivered to the Trustee, and the Trustee shall have been
offered a reasonable opportunity either itself to proceed to
exercise the powers hereinbefore granted or to institute an
action, suit or proceeding in its name for such purpose;
- 25 -
(c) the Noteholders or any of them shall have furnished to the
Trustee, when requested by the Trustee, sufficient funds and an
indemnity in accordance with paragraph 11.3(2); and
(d) the Trustee shall have failed to act within a reasonable time
thereafter.
(2) In such event but not otherwise, any Noteholder, acting on such Noteholder's
behalf and all other Noteholders, shall be entitled to take proceedings in any
court of competent jurisdiction such as the Trustee might have taken under
subsection 6.5, but in no event shall any Noteholder or combination of
Noteholders have any right to take any other remedy or proceedings out of court;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatsoever to enforce any right hereunder or under any
Note 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
outstanding Notes.
6.7 APPLICATION OF MONEYS
(1) Except as otherwise provided herein, any moneys arising from any enforcement
hereof, whether by the Trustee or any Holder of a Note, shall be held by the
Trustee and applied by it, together with any moneys then or thereafter in the
hands of the Trustee available for the purpose, as follows:
(a) first, 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 (from
which the Trustee shall reimburse the Noteholders for any funds
furnished pursuant to clause 6.6(1)(c));
(b) second (but subject to subsection 5.2), in or towards payment of
the principal of all of the Notes then outstanding and
thereafter in or towards payment of the accrued and unpaid
interest and interest on overdue interest on such Notes (or if
the Noteholders, by instrument signed by the Holders of more
than 50% of the principal amount of the Notes then outstanding
or by Extraordinary Resolution passed at a meeting of
Noteholders, shall have directed payments to be made in
accordance with any other order of priority, or without priority
as between principal and interest, then such moneys shall be
applied in accordance with such direction); and
(c) third, the surplus (if any) of such moneys shall be paid to the
Corporation or as it may direct;
provided, however, that no payments shall be made in respect of the principal or
interest on any Note held by or for the benefit of the Corporation or any of its
Subsidiaries (other than any Note pledged for value and in good faith to a
Person other than the Corporation or any of its Subsidiaries, 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 all Notes (including interest on
overdue interest) which are not so held.
(2) For the purpose of disregarding any Notes owned legally or beneficially by
the Corporation or any of its Subsidiaries as required by paragraph 6.7(1), the
Corporation shall provide to the Trustee, from time to time and forthwith upon
the Trustee's written request, a certificate of the Corporation setting forth as
at the date of such certificate:
(a) the names (other than the name of the Corporation) of the
registered holders of Notes which, to the knowledge of the
Corporation, are owned by or held for the account of the
Corporation or any of its Subsidiaries; and
(b) a list of the Notes owned legally and beneficially by the
Corporation or any of its Subsidiaries;
- 26 -
and the Trustee shall be entitled to rely on such certificate for all purposes.
6.8 DISTRIBUTION OF MONEYS
Payments to Holders of Notes pursuant to clause 6.7(1)(b) shall be made
as follows:
(a) at least 21 days' written notice of every such payment shall be
given in the manner provided in section 10 specifying the date
and time when and the place or places where such payments are to
be made and the amount of the payment and the application
thereof as between principal and interest;
(b) payment of any Note shall be made upon presentation thereof at
any one of the places specified in such written notice and any
such Note thereby paid in full shall be surrendered, otherwise a
notation of such payment shall be endorsed thereon; but the
Trustee may in its discretion dispense with presentation and
surrender or endorsement in any special case upon receipt by it
of such indemnity as it shall consider sufficient;
(c) from and after the date of payment specified in the written
notice, interest shall accrue only on the amount owing on each
Note after giving credit for the amount of the payment specified
in such written notice unless the Note in respect of which such
amount is owing is duly presented on or after the date so
specified and payment of such amount is not made through the
fault of the Corporation; and
(d) the Trustee shall not be required to make any partial or interim
payment to Noteholders 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
6.7(1)(a), exceed five percent of the aggregate principal amount
of the outstanding Notes, but it may retain the moneys so
received by it and deal with the same as provided in subsection
11.8 until the money or investments representing the same, with
the income derived therefrom, together with any other moneys for
the time being under its control, shall be sufficient for such
purpose or until it shall consider it advisable to apply the
same in the manner hereinbefore set forth.
6.9 PERSONS DEALING WITH TRUSTEE
No Person dealing with the Trustee or any of its agents shall be
required to enquire whether an Event of Default has occurred, or whether the
powers which the Trustee is purporting to exercise have become exercisable, or
whether any moneys remain due under this Indenture or on the Notes, or to see to
the application of any moneys paid to the Trustee; and in the absence of fraud
on the part of such Person, such dealing shall be deemed to be within the powers
hereby conferred and to be valid and effective accordingly.
6.10 TRUSTEE APPOINTED ATTORNEY
The Corporation irrevocably appoints the Trustee to be the attorney of
the Corporation in the name and on behalf of the Corporation to execute any
instruments and do any things which the Corporation ought to execute and do, and
has not executed or done, under the covenants and provisions contained in this
Indenture and generally to use the name of the Corporation in the exercise of
all or any of the powers hereby conferred on the Trustee with full powers of
substitution and revocation.
6.11 REMEDIES CUMULATIVE
No remedy herein conferred upon or reserved to the Trustee or the
Holders of Notes is intended to be exclusive of any other remedy, but each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing by law or by statute.
- 27 -
6.12 IMMUNITY OF SHAREHOLDERS, DIRECTORS AND OTHERS
The Noteholders and the Trustee waive and release any right, cause of
action or remedy now or hereafter existing in any jurisdiction against any past,
present or future incorporator, shareholder, director or officer of the
Corporation, of any Subsidiary, or of any Successor Corporation for the payment
of the principal of or interest on any of the Notes or on any covenant,
agreement, representations or warranty by the Corporation contained herein or in
the Notes.
6.13 JUDGMENT AGAINST THE CORPORATION
In the case of any judicial or other proceedings to obtain judgment for
the principal of or interest on the Notes, judgment may be rendered against the
Corporation in favour of the Noteholders or in favour of the Trustee, as Trustee
for the Noteholders, for any amount which may remain due in respect of the
Notes.
SECTION 7 - SATISFACTION AND DISCHARGE
7.1 CANCELLATION
All matured Notes shall forthwith after payment thereof be delivered to
the Trustee and cancelled by it. The Trustee shall furnish to the Corporation,
if requested in writing, a cancellation certificate setting out the designating
numbers and denominations of the Notes so cancelled.
7.2 NON-PRESENTATION OF NOTES
If the Holder of any Note shall fail to present the same for payment on
the date on which the principal thereof and/or the interest thereon or
represented thereby becomes payable either at maturity or on redemption or shall
not accept payment on account thereof and give such receipt therefor (if any) as
the Trustee may require:
(a) the Corporation shall be entitled to pay to the Trustee and
direct it to set aside;
(b) in respect of moneys in the hands of the Trustee which may or
should be applied to the payment of the Notes, the Corporation
shall be entitled to direct the Trustee to set aside; or
(c) if the redemption was pursuant to written notice given by the
Trustee, the Trustee may itself set aside;
the principal moneys and/or the interest, as the case may be, in trust to be
paid to the Holder of such Note upon due presentation and surrender thereof in
accordance with the provisions of this Indenture; and thereupon the principal
moneys and/or the interest payable on or represented by each Note in respect
whereof such moneys have been set aside shall be deemed to have been paid and
thereafter such Notes shall not be considered as outstanding hereunder and the
Holders thereof shall thereafter have no right in respect thereof except that of
receiving payment of the moneys so set aside by the Trustee (without interest
thereon) upon due presentation and surrender thereof, subject always to the
provisions of subsection 7.3. Any moneys so set aside may, and, if remaining
unclaimed for 60 days shall, be invested by the Trustee in accordance with
subsection 11.8.
7.3 REPAYMENT OF UNCLAIMED MONEYS
Any moneys set aside under subsection 7.2 and not claimed by and paid
to Holders of Notes within six years after the date of such setting aside shall,
subject to applicable law, 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 the Holders of the Notes in respect
of which such moneys were so repaid to the Corporation shall have no rights in
respect thereof except to obtain payment of such moneys without interest thereon
from the Corporation.
- 28 -
7.4 DISCHARGE
Upon proof being given to the reasonable satisfaction of the Trustee
that all the Notes and interest (including interest on amounts in default)
thereon have been paid or satisfied or that, all the outstanding Notes having
matured or having been duly called for redemption or the Trustee having been
given irrevocable instructions by the Corporation to give within 90 days'
written notice of redemption of all the outstanding Notes, such payment for
redemption has been duly provided for by payment to the Trustee or otherwise,
and upon payment of all costs, charges and expenses properly incurred by the
Trustee in relation to this Indenture and all interest thereon and the
remuneration of the Trustee, or upon provision satisfactory to the Trustee being
made therefor, the Trustee shall, at the request and at the expense of the
Corporation, execute and deliver to the Corporation such deeds or other
instruments as shall be necessary to evidence the satisfaction and discharge of
this Indenture and to release the Corporation from its covenants contained
herein except those relating to the indemnification of the Trustee.
SECTION 8 - SUCCESSOR CORPORATIONS
8.1 CERTAIN REQUIREMENTS IN RESPECT OF MERGER, ETC.
The Corporation shall not enter into any transaction, whether by way of
amalgamation (except a vertical short-form amalgamation with one or more of its
wholly-owned Subsidiaries pursuant to the Canada Business Corporations Act),
merger, reconstruction, reorganization, consolidation, transfer, sale, lease or
otherwise, whereby all or substantially all of its undertaking, property and
assets would become the property of any other Person or, in the case of any such
amalgamation, of the continuing corporation resulting therefrom, but may do so
if:
(a) such other Person or continuing corporation is a corporation
(the "SUCCESSOR CORPORATION") incorporated:
(i) under the laws of Canada or any province thereof; or
(ii) in the United States, Australia, New Zealand or any
country in the European Union as of the date hereof,
provided that in the opinion of the Trustee, acting
reasonably, the Noteholders are not economically
disadvantaged in any material respect (including as a
result of the imposition of withholding tax on any
payments to be made hereunder) as a result of the
transaction (including without limitation as a result of
the fact that the continuing corporation is incorporated
in a jurisdiction outside Canada). For the purposes of
rendering its opinion under this clause 8.1(a)(ii), the
Trustee shall be entitled to hire such experts or
advisors as it deems necessary and to rely upon the
advice of such experts and advisors in supporting its
opinion. The Trustee shall be protected in acting in good
faith in reliance on such advice;
(b) the Successor Corporation shall execute, prior to or
contemporaneously with the completion of such transaction, such
indenture supplemental hereto and other instruments (if any) as
in the opinion of Counsel are necessary or advisable to evidence
the assumption by the Successor Corporation of the liability for
the due and punctual payment of all the Notes and the interest
thereon and all other moneys payable hereunder and the covenant
of such Successor Corporation to pay the same and its agreement
to observe and perform all the covenants and obligations of the
Corporation under this Indenture;
(c) such transaction will, to the satisfaction of the Trustee,
acting reasonably, be upon such terms as substantially to
preserve and not impair in any material respect the rights and
powers of the Trustee or of the Noteholders hereunder; and
(d) no condition or event shall exist in respect of the Corporation
or the Successor Corporation, either at the time of such
transaction or immediately thereafter after giving full effect
thereto, which constitutes or would, after the giving of written
notice or the lapse of time or both, constitute an Event of
Default hereunder.
- 29 -
8.2 VESTING OF POWERS IN SUCCESSOR
Whenever the conditions of subsection 8.1 have been duly observed and
performed, the Trustee shall execute and deliver the supplemental indenture
provided for in section 12 and thereupon the Successor Corporation shall possess
and from time to time may exercise each and every right and power of the
Corporation under this Indenture in the name of the Corporation or otherwise,
and any act or proceeding by any provision of this Indenture required to be done
or performed by any Directors or officers of the Corporation may be done and
performed with like force and effect by the like directors or officers of such
Successor Corporation.
SECTION 9 - MEETINGS OF NOTEHOLDERS
9.1 RIGHT TO CONVENE MEETINGS
The Trustee may at any time and from time to time and shall, on receipt
of a written request of the Corporation or a Noteholders' Request and receiving
sufficient funds and upon being indemnified to its reasonable satisfaction by
the Corporation or by the Noteholders signing such Noteholders' Request against
the costs which may be incurred in connection with the calling and holding of
such meeting, convene a meeting of the Noteholders. If the Trustee fails within
30 days after receipt of such written request or Noteholders' Request and such
funding and indemnity to give written notice convening a meeting, the
Corporation or such Noteholders, as the case may be, may convene such meeting.
Every such meeting shall be held in the City of Vancouver or at such other place
as may be approved or determined by the Trustee.
9.2 NOTICE OF MEETINGS
Subject to subsection 9.12, not more than 60 and not less than 21 days'
written notice of any meeting shall be given to the Noteholders and a copy
thereof shall be sent by mail to the Trustee unless the meeting has been called
by it and to the Corporation unless the meeting has been called by it. Such
written notice shall state the time when and the place where the meeting is to
be held and shall state briefly the general nature of the business to be
transacted thereat, but it shall not be necessary for any such written notice to
set out the terms of any resolution to be proposed at the meeting or any of the
provisions of this section 9.
9.3 CHAIRMAN
An individual, who need not be a Noteholder, 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 unable or unwilling to act or if
the individual so nominated is not present within 15 minutes from the time fixed
for the holding of the meeting, the Noteholders present in person or by proxy
shall choose an individual present to be chairman.
9.4 QUORUM
At any meeting of the Noteholders other than a meeting convened for the
purpose of considering a resolution proposed to be passed as an Extraordinary
Resolution, as to which the provisions of subsection 9.12 shall be applicable, a
quorum shall consist of Noteholders present in person or by proxy and
representing at least 15% in principal amount of the outstanding Notes. If a
quorum of the Noteholders shall not be present within 30 minutes from the time
fixed for holding any such meeting, the meeting, if convened by the Noteholders
or pursuant to a Noteholder's Request, shall be dissolved; but in any other case
the meeting shall be adjourned to the same day in the next week (unless such day
is not a Business Day, in which case it shall be adjourned to the next following
Business Day) at the same time and place. At the adjourned meeting the
Noteholders present in person or by proxy shall form a quorum and may transact
the business for which the meeting was originally convened notwithstanding that
they may not represent 15% of the principal amount of the outstanding Notes.
9.5 POWER TO ADJOURN
The chairman of any meeting at which a quorum of the Noteholders is
present may, with the consent of the Holders of a majority in principal amount
of the Notes represented thereat,
- 30 -
adjourn any such meeting and no written notice of such adjournment need be given
except such written notice, if any, as the meeting may prescribe.
9.6 SHOW OF HANDS
Every question submitted to a meeting shall be decided in the first
place by a majority of the votes given on a show of hands except that votes on
Extraordinary Resolutions shall be given in the manner provided in subsection
9.7. At such meeting, unless a poll is duly demanded as herein provided, a
declaration by the chairman that a resolution has been carried or carried
unanimously or by a particular majority or lost or not carried by a particular
majority shall be conclusive evidence of the fact.
9.7 POLL
On every Extraordinary Resolution, and on any other question submitted
to a meeting, when demanded by the chairman or by one or more Noteholders and/or
proxies for Noteholders holding at least 5% of the principal amount of the Notes
represented thereat, a poll shall be taken in such manner as the chairman shall
direct. Questions other than Extraordinary Resolutions shall, if a poll is
taken, be decided by the votes of the holders of a majority in principal amount
of the Notes represented at the meeting and voted on the poll.
9.8 VOTING
On a show of hands every Person who is present and entitled to vote,
whether as a Noteholder or as proxy, shall have one vote. On a poll each
Noteholder present in person or represented by a duly appointed proxy shall be
entitled to one vote in respect of each $1,000.00 principal amount of Notes of
which he shall then be the Holder. A proxy need not be a Noteholder. In the case
of joint registered Holders of a Note, any one of them present in person or by
proxy at the meeting may vote in the absence of the other or others; but in case
more than one of them are present in person or by proxy, they shall vote
together in respect of the Notes of which they are joint registered Holders.
9.9 REGULATIONS
(1) The Trustee or the Corporation, with the approval of the Trustee, may from
time to time make and from time to time vary such regulations as it shall from
time to time think fit providing for:
(a) voting by proxy and the form of the instrument appointing a
proxy (which shall be in writing) and the manner in which the
same shall be executed and for the production of the authority
of any Person signing on behalf of a Noteholder;
(b) the deposit of instruments appointing proxies at such place as
the Trustee, the Corporation or the Noteholders convening a
particular meeting, as the case may be, may in the written
notice convening the meeting direct and the time, if any, before
the holding of the meeting or any adjournment thereof by which
the same shall be deposited; and
(c) the deposit of instruments appointing proxies at some approved
place or places other than the place at which a particular
meeting is to be held and enabling particulars of instruments
appointing proxies to be mailed or telecopied before the meeting
to the Corporation or to the Trustee at the place where the same
is to be held and for the voting of proxies so deposited as
though the instruments themselves were produced at the meeting.
(2) 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
of the Holders of any Notes, or as entitled to vote or be present at the meeting
in respect thereof, shall be Noteholders and persons whom Noteholders have duly
appointed as their proxies.
- 31 -
9.10 CORPORATION AND TRUSTEE MAY BE REPRESENTED
The Corporation and the Trustee, by their respective officers,
employees and directors, and the legal advisers of the Corporation and the
Trustee may attend any meeting of the Noteholders, but shall have no vote as
such unless such person is also a Noteholder.
9.11 POWERS EXERCISABLE BY EXTRAORDINARY RESOLUTION
In addition to the powers conferred upon them by any other provisions
of this Indenture or by law, a meeting of the Noteholders shall have the
following powers exercisable from time to time by Extraordinary Resolution and
subject to the prior consent of the TSX:
(a) power to approve any change whatsoever in any of the provisions
of this Indenture or the Notes and any modification, abrogation,
alteration, compromise or arrangement of the rights of the
Noteholders 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
Notes or otherwise, provided that in the event such
modification, alteration or alternative arrangement may impinge
upon or change the duties of the Trustee, such power may only be
exercised with the consent of the Trustee;
(b) power to approve any scheme for the reconstruction or
reorganization of the Corporation or for the consolidation,
amalgamation or merger of the Corporation with any other
corporation or for the selling or leasing of the undertaking,
property and assets of the Corporation or any part thereof,
provided that no such approval shall be necessary in respect of
any such transaction if the provisions of section 8 shall have
been complied with;
(c) power to direct or authorize the Trustee to exercise any power,
right, remedy or authority given to it by this Indenture or the
Notes in any manner specified in such Extraordinary Resolution
or to refrain from exercising any such power, right, remedy or
authority;
(d) power to waive and direct the Trustee to waive any default or
Event of Default hereunder and/or cancel any declaration made by
the Trustee pursuant to subsection 6.3 either unconditionally or
upon any conditions specified in such Extraordinary Resolution;
(e) power to restrain any Noteholder from taking or instituting any
suit, action or proceeding for the purpose of enforcing payment
of the principal or interest of any Note, or for the execution
of any trust or power hereunder;
(f) power to direct any Noteholder who, as such, has brought any
action, suit or proceeding to stay or discontinue or otherwise
deal with the same in the manner directed by such Extraordinary
Resolution upon payment, if the taking of such action, suit or
proceeding shall have been permitted by subsection 6.6, of the
costs, charges and expenses reasonably and properly incurred by
such Noteholder in connection therewith;
(g) power to appoint a committee to consult with the Trustee (and to
remove any committee so appointed) and to delegate to such
committee (subject to such limitations, if any, as may be
prescribed in such Extraordinary Resolution) all or any of the
powers which the Noteholders may exercise by Extraordinary
Resolution under this subsection 9.11; the Extraordinary
Resolution making such appointment may provide for payment of
the expenses and disbursements of and compensation to such
committee; such committee shall consist of such number of
individuals (who need not be Noteholders) as shall be prescribed
in the Extraordinary Resolution appointing it; subject to the
Extraordinary Resolution appointing it, every such committee may
elect its chairman and may make regulations respecting its
quorum, the calling of its meetings, the filling of vacancies
occurring in its number, the manner in which it may act and its
- 32 -
procedure generally and such regulations may provide that the
committee may act at a meeting at which a quorum is present or
may act by resolution signed in one or more counterparts by a
majority of the members thereof or the number of members thereof
necessary to constitute a quorum, whichever is the greater; all
acts of any such committee within the authority delegated to it
shall be binding upon all Noteholders;
(h) power to agree to any compromise or arrangement with any
creditor or creditors or any class or classes of creditors,
whether secured or otherwise, and with holders of any shares or
other securities of the Corporation;
(i) power to authorize the distribution in specie of any shares,
bonds, debentures or other securities or obligations and/or cash
or other consideration received by the Trustee on behalf of
Noteholders or the use or disposition of the whole or any part
of such shares, bonds, debentures or other securities or
obligations and/or cash or other consideration in such manner
and for such purpose as may be considered advisable and
specified in such Extraordinary Resolution;
(j) power to approve the exchange of the Notes for or the conversion
thereof into shares, bonds, debentures or other securities or
obligations of the Corporation or of any corporation formed or
to be formed;
(k) power to remove the Trustee from office and to appoint a new
Trustee or Trustees; and
(l) power to amend, alter or repeal any Extraordinary Resolution
previously passed or approved by the Noteholders or by any
committee appointed pursuant to paragraph 9.11(g).
9.12 MEANING OF "EXTRAORDINARY RESOLUTION"
(1) The expression "Extraordinary Resolution" when used in this Indenture means,
subject as hereinafter provided in this section 9, a resolution proposed to be
passed as an Extraordinary Resolution at a meeting of Noteholders duly convened
for the purpose and held in accordance with the provisions of this section 9 at
which the Holders of more than 25% of the principal amount of the Notes then
outstanding are present in person or by proxy and passed by the favourable votes
of the holders of not less than 66-2/3% of the principal amount of Notes
represented at the meeting and voted on a poll upon such resolution.
(2) If at any such meeting the holders of more than 25% of the principal amount
of the Notes then outstanding are not present in person or by proxy within 30
minutes after the time appointed for the meeting, then the meeting, if convened
by the Noteholders or pursuant to a Noteholder's Request, shall be dissolved;
but in any other case it shall be adjourned to such date, being not less than 21
nor more than 60 days later, and to such place and time as may be appointed by
the chairman. Not less than ten days' written notice shall be given of the time
and place of such adjourned meeting in the manner provided in section 10. Such
written notice shall state that at the adjourned meeting the Noteholders present
in person or by proxy shall form a quorum, but it shall not be necessary to set
forth the purposes for which the meeting was originally called or any other
particulars. At the adjourned meeting the Noteholders present in person or by
proxy shall form a quorum and may transact the business for which the meeting
was originally convened and a resolution proposed at such adjourned meeting and
passed in accordance with paragraph 9.12(1) shall be an Extraordinary Resolution
within the meaning of this Indenture, notwithstanding that the holders of more
than 25% of the principal amount of the Notes then outstanding are not present
in person or by proxy at such adjourned meeting.
(3) Votes on an Extraordinary Resolution shall always be given on a poll and no
demand for a poll on an Extraordinary Resolution shall be necessary.
- 33 -
9.13 POWERS CUMULATIVE
It is hereby declared and agreed that any one or more of the powers
and/or any combination of the powers in this Indenture stated to be exercisable
by the Noteholders by Extraordinary Resolution or otherwise may be exercised
from time to time and the exercise of any one or more of such powers or any
combination of powers from time to time shall not be deemed to exhaust the right
of the Noteholders to exercise the same or any other such power or powers or
combination of powers thereafter from time to time.
9.14 MINUTES
Minutes of all resolutions and proceedings at every meeting of
Noteholders shall be made and duly entered in books to be provided for that
purpose by the Trustee at the expense of the Corporation, and any such minutes,
if signed by the chairman of the meeting at which such resolutions were passed
or proceedings had, or by the chairman of the next succeeding meeting of the
Noteholders, shall be prima facie evidence of the matters therein stated and,
until the contrary is proved, every such meeting, in respect of the proceedings
of which minutes shall have been made, shall be deemed to have been duly held
and convened, and all resolutions passed or proceedings had thereat, to have
been duly passed and had.
9.15 SIGNED INSTRUMENTS
Any action which may be taken and any power which may be exercised by
the Noteholders at a meeting held as hereinbefore in this section 9 provided may
also be taken and exercised by the Holders of not less than 66-2/3% of the
principal amount of the outstanding Notes by a signed instrument and the
expression "Extraordinary Resolution" when used in this Indenture shall include
an instrument so signed. Written notice of any Extraordinary Resolution passed
in accordance with this subsection 9.15 shall be given by the Trustee to the
Holders of Notes within 30 days of the date on which such Extraordinary
Resolution was passed.
9.16 BINDING EFFECT OF RESOLUTIONS
Every resolution and every Extraordinary Resolution passed in
accordance with the provisions of this section 9 at a meeting of Noteholders
shall be binding upon all the Noteholders, whether present at or absent from
such meeting, and every instrument signed by Noteholders in accordance with
subsection 9.15 shall be binding upon all the Noteholders, whether signatories
thereto or not, and each and every Noteholder and the Trustee (subject to the
provisions for its indemnity herein contained) shall be bound to give effect to
every such resolution, Extraordinary Resolution and instrument.
9.17 EVIDENCE OF RIGHTS OF NOTEHOLDERS
(1) Any request, direction, written notice, consent or other instrument which
this Indenture may require or permit to be signed or executed by the Noteholders
may be in any number of concurrent instruments of similar tenor and may be
signed or executed by such Noteholders in person or by attorney duly appointed
in writing. Proof of the execution of any such request, direction, written
notice, consent or other instrument or of a writing appointing any such attorney
shall be sufficient for any purpose of this Indenture if made in the following
manner, namely, the fact and date of the execution by any Person of such
request, direction, written notice, consent or other instrument or writing may
be proved by the certificate of any notary public, or other officer authorized
to take acknowledgments of deeds to be recorded at the place where such
certificate is made, that the Person signing such request, direction, written
notice, consent or other instrument or writing acknowledged to him the execution
thereof, or by an affidavit of a witness of such execution or in any other
manner which the Trustee may consider adequate.
(2) The Trustee may, nevertheless, in its discretion require further proof in
cases where it considers further proof necessary or desirable or may accept such
other proof as it shall consider proper.
- 34 -
SECTION 10 - NOTICES
10.1 NOTICE TO THE CORPORATION
Any notice to the Corporation under the provisions of this Indenture
shall be valid and effective if delivered personally by courier or by facsimile
transmission to, or, subject to section 10.4, if given by first class mail,
postage prepaid, addressed to, the Corporation at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Facsimile No.: 416.203.0099, Attention:
Chief Executive Officer with a copy (which shall not constitute notice) to
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇, Facsimile No.: 416.865.7048, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and shall be
deemed to have been given on the date of delivery or on the third Business Day
after such letter has been mailed, as the case may be. The Corporation may from
time to time notify the Trustee of a change in address which thereafter, until
changed by further notice, shall be the address of the Corporation for all
purposes of this Indenture.
10.2 NOTICE TO NOTEHOLDERS
Except as otherwise expressly provided herein, all notices to be given
hereunder with respect to the Notes shall be valid and effective if such notice
is delivered personally, by courier or, subject to section 10.4, sent by first
class mail, postage prepaid, addressed to such Holders at their post office
addresses appearing in any of the registers hereinbefore mentioned and in each
case with copies (which shall not constitute notice) delivered to Global Capital
Advisors, LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇, Facsimile: (340)
719-3974. Any notice so delivered or sent by mail shall be deemed to have been
given on the day upon which it is delivered or mailed, as the case may be. Any
accidental error, omission or failure in giving or in delivering or mailing any
such notice or the non-receipt of any such notice by any Noteholder or Holders
shall not invalidate or otherwise prejudicially affect any action or proceeding
founded thereon.
10.3 NOTICE TO THE TRUSTEE
Any notice to the Trustee under the provisions of this Indenture shall
be valid and effective if delivered personally, by courier or by facsimile
transmission to, or, subject to section 10.4, if given by first class mail,
postage prepaid, addressed to, the Trustee at CIBC Mellon Trust Company, CIBC
Mellon Trust Company, Suite 1600, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Facsimile No.: 604.688.4301, Attention: Manager Corporate
Trust, and shall be deemed to have been given on the date of delivery or on the
third Business Day after such letter has been mailed, as the case may be. The
Trustee may from time to time notify the Corporation of a change in address
which thereafter, until changed by further notice, shall be the address of the
Trustee for all purposes of this Indenture.
10.4 MAIL SERVICE INTERRUPTION
If by reason of any actual or threatened interruption of mail service
due to strike, lock-out or otherwise, any notice to be given to the Trustee, the
Holders or to the Corporation would be unlikely to reach its destination in a
timely manner, such notice shall be valid and effective only if delivered
personally, by courier or facsimile transmission in accordance with subsections
10.1, 10.2 or 10.3, as the case may be.
SECTION 11 - CONCERNING THE TRUSTEE
11.1 TRUST INDENTURE LEGISLATION
(1) In this section 11, the term "Indenture Legislation" means the provisions,
if any, of the Canada Business Corporations Act, and any other statute of Canada
or a province thereof, and of the regulations under any such statute, relating
to trust indentures and to the rights, duties and obligations of trustees under
trust indentures and of corporations issuing debt obligations under trust
indentures, to the extent that such provisions are at the time in force and
applicable to this Indenture or the Corporation.
- 35 -
(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) At all times in relation to this Indenture and any action to be taken
hereunder, the Corporation and the Trustee each shall observe and comply with
Indenture Legislation and the Corporation, the Trustee and each Noteholder shall
be entitled to the benefits of Indenture Legislation.
11.2 NO CONFLICT OF INTEREST
The Trustee represents to the Corporation that at the date of the
execution and delivery of this Indenture the Trustee is not aware of any
material conflict of interest in the role of the Trustee as a fiduciary
hereunder. If at any time a material conflict of interest exists in the
Trustee's role as a fiduciary hereunder the Trustee shall, within 90 days after
ascertaining that such a material conflict of interest exists, either eliminate
the same or else resign from the trusts hereunder in accordance with subsection
11.10. If any such material conflict of interest exists or hereafter shall
exist, the validity and enforceability of this Indenture and the Notes shall not
be affected in any manner whatsoever by reason thereof.
11.3 RIGHTS AND DUTIES OF TRUSTEE
(1) In the exercise of the rights and duties prescribed or conferred by the
terms of this Indenture, the Trustee shall exercise that degree of care,
diligence and skill that a reasonably prudent trustee would exercise in
comparable circumstances.
(2) 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
Noteholders hereunder shall be conditional upon the Noteholders furnishing, when
required by notice in writing by the Trustee, sufficient funds to commence or
continue such act, action or proceeding and indemnity reasonably satisfactory to
the Trustee to protect and hold harmless the Trustee against the costs, charges
and expenses and liabilities to be incurred thereby and any loss and damage it
may suffer by reason thereof. None of the provisions contained in this Indenture
shall require the Trustee to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers unless indemnified as aforesaid.
(3) The Trustee may, before commencing or at any time during the continuance of
any such act, action or proceeding, require the Noteholders at whose instance it
is acting to deposit with the Trustee the Notes held by them, for which Notes
the Trustee shall issue receipts.
(4) Every provision of this Indenture that by its terms relieves the Trustee of
liability or entitles it to act and rely upon any evidence submitted to it is
subject to the provisions of Indenture Legislation, this subsection 11.3 and
subsection 11.4.
11.4 EVIDENCE EXPERTS AND ADVISERS
(1) In addition to the reports, certificates, opinions, statutory declarations
and other evidence required by this Indenture, the Corporation shall furnish to
the Trustee such additional evidence of compliance with any provisions hereof,
and in such form, as may be prescribed by Indenture Legislation or as the
Trustee may reasonably require by written notice to the Corporation.
(2) The Trustee shall be protected in acting and relying upon any written
notice, request, waiver, consent, certificate, receipt, statutory declaration,
opinion, report or other paper or document furnished to it, not only as to its
due execution and the validity and the effectiveness of its provisions, but also
as to the truth, acceptability and accuracy of any information therein contained
which it in good faith believes to be genuine and what it purports to be.
(3) The Trustee may employ or retain such counsel, which may be counsel to the
Corporation, auditors, accountants, appraisers or other experts or advisors
whose qualifications give authority to any opinion or report made by them, as it
may reasonably require for the purpose of determining and discharging its duties
hereunder and shall not be responsible for any misconduct on the part of any of
them. The Trustee may pay reasonable remuneration to any
- 36 -
such counsel, auditors, accountants, appraisers or other experts or advisors and
the Corporation shall reimburse the Trustee for such costs in accordance with
subsection 5.5.
11.5 TRUSTEE MAY DEAL IN NOTES
Subject to subsection 11.3, the Trustee may buy, sell, lend upon and
deal in the Notes or other securities of the Corporation, either with the
Corporation or otherwise, and generally contract and enter into financial
transactions with the Corporation or otherwise, without being liable to account
for any profits made thereby.
11.6 TRUSTEE NOT REQUIRED TO GIVE 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 this Indenture. The Trustee and any person related to the Trustee
will not be appointed a receiver or receiver and manager or liquidator of all or
any part of the assets or undertaking of the Corporation.
11.7 PROTECTION OF TRUSTEE
By way of supplement to the provisions of any law for the time being
relating to trustees, it is expressly declared and agreed as follows:
(a) the Trustee and its directors, officers and employees will at
all times be indemnified and saved harmless by the Corporation
from and against all claims, demands, losses, actions, causes of
action, costs, charges, expenses, damages and liabilities
whatsoever arising in connection with this Indenture, including,
without limitation, those arising out of or related to actions
taken or omitted to be taken by the Trustee contemplated hereby,
legal fees and disbursements on a solicitor and client basis and
costs and expenses incurred in connection with the enforcement
of this indemnity, which the Trustee may suffer or incur,
whether at law or in equity, in any way caused by or arising,
directly or indirectly, in respect of any act, deed, matter or
thing whatsoever made, done, acquiesced in or omitted in or
about or in relation to the execution of its duties as Trustee
and including any deed, matter or thing in relation to the
registration, perfection, release or discharge of security. The
foregoing provisions of this subsection do not apply to the
extent that in any circumstances there has been a failure by the
Trustee or its employees to act honestly and in good faith or
where the Trustee or its employees have acted negligently or in
wilful disregard of their obligations hereunder or shall not
have complied with paragraph 11.3(1). This indemnity shall
survive the termination of this agreement or the resignation or
termination of the Trustee;
(b) the Trustee shall not be liable for or by reason of any
statements of fact or recitals in this Indenture or in the Notes
(except the representation contained in subsection 11.2 and in
the certificate of the Trustee on the Notes) or required to
verify the same, but all such statements or recitals are and
shall be deemed to be made by the Corporation;
(c) 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;
(d) the Trustee shall not be bound to give written notice to any
Person of the execution hereof;
(e) the Trustee shall not incur any liability or responsibility
whatever or be in any way responsible for the consequence of any
breach on the part of the Corporation of any of the covenants
herein contained or of any acts of the agents of the
Corporation;
(f) notwithstanding any other provisions of this Indenture, the
Trustee shall have no obligation to transfer any Notes unless
provided with such documents as it deems satisfactory, acting
reasonably;
- 37 -
(g) the Trustee shall incur no liability with regard to the delivery
or non-delivery of any certificate, whether delivered by hand,
mail or other means; and
(h) the Trustee shall disburse moneys according to this Indenture
only to the extent that moneys have been deposited with it. The
Trustee shall incur no liability for moneys deposited otherwise
than with the Trustee.
11.8 INVESTMENT OF TRUST MONEYS
(1) The Trustee may retain any cash balance held in connection with this
Indenture and may, but need not, hold the same in its deposit department or the
deposit department of one of its Affiliates; but the Trustee and its Affiliates
shall not be liable to account for any profit to the Corporation or any other
person or entity other than at a rate, if any, established from time to time by
the Trustee or its Affiliates.
(2) Upon receipt of a direction from the Corporation, the Trustee shall invest
any moneys held by it in Authorized Investments in its name in accordance with
such direction. Any direction from the Corporation to the Trustee shall be in
writing and shall be provided to the Trustee no later than 9:00 a.m. E.S.T. on
the day on which the investment is to be made. Any such direction received by
the Trustee after 9:00 a.m. E.S.T. or received on a non-business day, shall be
deemed to have been given prior to 9:00 a.m. E.S.T. next business day. For the
purpose hereof, "Authorized Investments" means short term interest bearing or
discount debt obligations issued or guaranteed by the Government of Canada or a
Province or a Canadian chartered bank (which may include an Affiliate or related
party of the Trustee) provided that such obligation is rated at least R1
(middle) by DBRS Inc. or an equivalent rating service. In the event that the
Trustee does not receive a direction or only a partial direction, the Trustee
may hold cash balances constituting part or all of the escrow fund and may, but
need not, invest same in its deposit department or the deposit department of one
of its Affiliates; but the Trustee and its Affiliates shall not be liable to
account for any profit to any parties to this Indenture or to any person or
entity other than at a rate, if any, established from time to time by the
Trustee or one of its Affiliates.
(3) For the purposes of this subsection 11.8, "Affiliate" means affiliated
companies within the meaning of the Business Corporations Act (Ontario)
("OBCA"); and includes Canadian Imperial Bank of Commerce, CIBC Mellon Global
Securities Company and Mellon Bank, N.A. and each of their affiliates within the
meaning of the OBCA.
11.9 ACTION BY TRUSTEE TO PROTECT INTERESTS
The Trustee shall have the power to institute and maintain all and any
such actions, suits or proceedings and to take any other action as it may
consider necessary or expedient to preserve, protect or enforce its interests
and the interests of the holders of the Notes.
11.10 REPLACEMENT OF TRUSTEE
(1) The Trustee may resign from the trusts hereunder and thereupon be discharged
from all further duties and liabilities hereunder by giving to the Corporation
60 days' notice in writing or such shorter written notice as the Corporation may
accept as sufficient. The Noteholders by Extraordinary Resolution shall have
power at any time to remove the Trustee and to appoint a new trustee hereunder.
In the event of the Trustee resigning or being removed as aforesaid or being
dissolved, becoming bankrupt, going into liquidation or otherwise becoming
incapable of acting hereunder, the Corporation shall forthwith appoint a new
trustee hereunder unless a new trustee has already been appointed by the
Noteholders; failing such appointment by the Corporation, the retiring trustee
hereunder (at the expense of the Corporation) or any Noteholder may apply to a
Judge of the Ontario Court of Justice (General Division), on such written notice
as such Judge may direct, at the Corporation's expense, for the appointment of a
new trustee hereunder; but any trustee so appointed by the Corporation or by the
Court shall be subject to removal as aforesaid by the Noteholders. Any new
trustee hereunder appointed under any provision of this subsection 11.10 shall
be a corporation authorized and qualified to carry on the business of a trust
company in the Province of Ontario and every other jurisdiction where such
authorization or qualification is necessary to enable it the act as a trustee
hereunder, shall certify
- 38 -
that it will not have any material conflict of interest upon becoming trustee
hereunder, and shall accept the trust herein declared and provided for. On any
new appointment the new trustee shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named herein as
Trustee.
(2) Any corporation into which the Trustee may be merged or with which it may be
consolidated or amalgamated, or any corporation resulting from any merger,
consolidation or amalgamation to which the Trustee shall be a party, shall be
the successor Trustee under this Indenture without the necessity of the
execution of any instrument or any further act.
11.11 ACCEPTANCE OF TRUSTS
The Trustee accepts the trusts and the appointment as trustee and
transfer agent and registrar of the Notes in this Indenture declared and
provided for and agrees to perform the same upon the terms and conditions herein
set forth and in trust for the various Persons who shall from time to time be
Noteholders, subject to the terms and conditions herein set forth.
SECTION 12 - SUPPLEMENTAL INDENTURES
12.1 SUPPLEMENTAL INDENTURES
From time to time the Trustee and, when authorized by a resolution of
the Directors, the Corporation may and they shall, when required by this
Indenture, execute, acknowledge and deliver, by their proper officers, deeds or
indentures supplemental hereto, which thereafter shall form part hereof, for any
one or more of the following purposes:
(a) adding to the provisions hereof such additional covenants of the
Corporation, enforcement provisions and other provisions for the
protection of the Holders of the Notes and/or providing for
events of default in addition to those herein specified;
(b) making such provisions not inconsistent with this Indenture as
may be necessary or desirable with respect to matters or
questions arising hereunder, including the making of any
modifications in the form of the Notes which do not affect the
substance thereof and which, in the opinion of the Trustee, may
be expedient to make, provided that the Trustee shall be of the
opinion, relying on the opinion of Counsel, that such provisions
and modifications will not be materially prejudicial to the
interests of the Noteholders;
(c) evidencing the succession, or successive successions, of other
corporations to the Corporation and the covenants of and
obligations assumed by any such successor in accordance with the
provisions of this Indenture;
(d) giving effect to any Extraordinary Resolution passed as provided
in section 9;
(e) making any additions to, deletions from or alterations of the
provisions of this Indenture (including any of the terms and
conditions of the Notes) which, in the opinion of the Trustee,
relying on the opinion of Counsel, are not materially
prejudicial to the interests of the Noteholders and which are
necessary or advisable in order to incorporate, reflect or
comply with Indenture Legislation;
(f) adding to or altering the provisions hereof in respect of the
transfer of Notes, including provision for the exchange of Notes
of different denominations, and making any modification in the
form of the Notes which does not affect the substance thereof
and which, in the opinion of the Trustee, relying on the opinion
of Counsel, is not materially prejudicial to the interests of
the Noteholders;
(g) correcting or rectifying any ambiguities, defective provisions,
errors or omissions herein, provided that, in the opinion of the
Trustee, relying on the opinion of Counsel, the rights of the
Trustee and the Noteholders are in no way materially prejudiced
thereby; and
- 39 -
(h) any other purpose not inconsistent with the terms of this
Indenture provided that, in the opinion of the Trustee, relying
on the opinion of Counsel, the rights of the Trustee and the
Noteholders are in no way materially prejudiced thereby.
SECTION 13 - STOCK EXCHANGE APPROVAL
13.1 STOCK EXCHANGE APPROVAL
No amendment to the terms of this Indenture by supplement or otherwise
shall be made without the prior written consent of the TSX and the AMEX.
SECTION 14 - JURISDICTION, SERVICES AND JUDGMENT CURRENCY
14.1 CONSENT TO JURISDICTION AND SERVICE OF PROCESS
The Corporation agrees that any legal suit, action or proceeding
brought by any party to enforce any rights under or with respect to this
Indenture or the Notes may be instituted in any state or federal court in New
York City and waives to the fullest extent permitted by law any objection which
it may now or hereafter have to the laying of venue of any such suit, action or
proceeding and irrevocably submits to the non-exclusive jurisdiction of any such
court in any such suit, action or proceeding. The Corporation hereby irrevocably
designates and appoints Prentice Hall Corporate Service ("PH") as the
Corporation's authorized agents to receive and forward on its behalf service of
any and all process which may be served in any such suit, action or proceeding
in any such court and agrees that service of process upon PH (or any successor)
at its office at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (or such other
address in the Borough of Manhattan, New York City, as the Corporation may
designate by written notice to the Trustee) and written notice of such service
to the Corporation marked or delivered to PH at its address set forth herein
shall be deemed in every respect effective service of process upon the
Corporation in any such suit, action or proceeding and shall be taken and held
to be valid personal service upon the Corporation. Nothing in this subsection
14.1 shall affect the right of any party hereto to serve process in any manner
permitted by law or limit the right of any party hereto to bring proceedings
against the Corporation in the courts of any jurisdiction or jurisdictions. The
Corporation further agrees to take any and all action, including the execution
and filing of any and all such documents and instruments as may be necessary to
continue such designation and appointment of PH in full force and effect so long
as this Indenture or any of the Notes shall be outstanding. To the extent that
the Corporation has or hereafter may acquire any immunity from jurisdiction of
any court or from any legal process (whether through service of written notice,
attachment prior to judgment, attachment in aid of execution, executor or
otherwise) with respect to itself or its property, the Corporation hereby
irrevocably waives such immunity in respect of its obligations under this
Indenture and the Notes, to the extent permitted by law. The Corporation
covenants to forthwith make all appropriate arrangements to appoint PH for the
purposes of the foregoing. If the Corporation and PH are unable to agree on
terms for the appointment of PH in such capacity within 30 days, the Corporation
shall forthwith make arrangements for the appointment of another agent
reasonably acceptable to the Holders for such purposes.
14.2 CONVERSION OF CURRENCY
(1) The Corporation shall indemnify the Holders against, and the Holders shall
have an additional legal claim for, any loss or damage which, consequent upon
any judgment being obtained or enforced in respect of the non-payment by the
Corporation of any amount due under or pursuant to this Indenture arises from
any variation in rates of exchange between United States dollars and the
currency in which judgment is obtained or enforced between the date such amount
became due (or the date of the said judgment being obtained as the case may be)
and the date of actual payment of such amount. The indemnity contained in this
subsection 14.2 shall apply irrespective of any indulgence granted to the
Corporation from time to time and shall continue in full force and effect
notwithstanding any payment by or on behalf of the Corporation and any amount
due from the Corporation under this subsection 14.2 will be due as a separate
payment and shall not be affected by any judgment being obtained for any other
sums due under or in respect of this Indenture.
- 40 -
(2) The term "rate(s) of exchange" shall mean the rate, quoted at noon for
transactions in excess of $1,000,000, at which the Holder is able or would have
been able on the relevant date to purchase at ▇▇▇▇▇▇ Guaranty Trust Company of
New York at its main branch in New York City, United States dollars with the
judgment currency other than United States dollars referred to in subsection (1)
above and includes any premiums and costs of exchange payable.
SECTION 15 - EXECUTION
15.1 COUNTERPARTS AND FORMAL DATE
This Indenture may be executed in several counterparts, each of which
when so executed shall be deemed to be an original, and such counterparts
together shall constitute one and the same instrument and notwithstanding their
date of execution shall be deemed to bear date as of the 27th day of August,
2003.
- SIGNATURE PAGE TO FOLLOW -
- 41 -
The parties have executed this Indenture.
CRYSTALLEX INTERNATIONAL CORPORATION
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
CIBC MELLON TRUST COMPANY
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Account Manager
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Associate Manager
SCHEDULE A
(FORM OF CONVERTIBLE NOTE, ISSUABLE IN SERIES)
U.S.$3,000,000
No. _____
CRYSTALLEX INTERNATIONAL CORPORATION
(Incorporated under the laws of Canada)
CONVERTIBLE NOTE
DUE AUGUST 27, 2005
CRYSTALLEX INTERNATIONAL CORPORATION (the "CORPORATION") for value
received hereby acknowledges itself indebted and promises to pay the registered
holder, on August 27, 2005, or on such earlier date as the principal amount
hereof may become due in accordance with the provisions of the Trust Indenture
(as defined below), on presentation and surrender of this Note, at the principal
office of CIBC Mellon Trust Company in Vancouver (or such other paying agent as
may be designated by the Corporation), at the holder's option, the sum of U.S.
3,000,000 Dollars (U.S.$3,000,000) in lawful money of the United States of
America, and to pay interest on the principal amount hereof at the rate of 4.0%
per annum only upon the occurrence of, and during the continuance of, an Event
of Default (as such term is defined in the Trust Indenture) at any of the said
places, at the holder's option, in like money quarterly in arrears on March 31,
June 30, September 30 and December 31 in each year (the "INTEREST PAYMENT
DATES"), provided that if any Interest Payment Date would otherwise fall on a
day which is not a Business Day (as such term is defined in the Trust
Indenture), it shall be postponed to the next following Business Day. Subject to
the foregoing, as interest on this Note, if any, becomes due (except in the case
of payment at maturity or on redemption at which time payment of interest will
be made upon surrender of this Note) the Corporation shall either (i) forward or
cause to be forwarded by first class mail, postage prepaid or other prepaid
method of delivery as is acceptable under the Trust Indenture, to the registered
address of the registered holder of this Note for the time being, or in the case
of joint holders, to the registered address of the one whose name appears first
in the registers referred to below, at least three days prior to each date on
which interest becomes due, a cheque for such interest, payable to the order of
such holder or holders and negotiable at par at any of the places at which
interest upon this Note is payable or (ii) if so directed by a holder in
accordance with the Trust Indenture, by wire or electronic funds transfer to or
to the direction of the holder. The forwarding of such cheque or wire or
electronic funds transfer, as the case may be, shall satisfy and discharge the
liability for interest on this Note to the extent of the sum represented thereby
(plus the amount of any tax deducted or withheld as aforesaid) unless, in the
case of a payment by cheque, such cheque is not paid on presentation at any of
the places of payment above mentioned and such non-payment is at the fault of
the Corporation.
This Note is one of an authorized issue of Notes designated Convertible
Notes due August 27, 2005 (herein called the "NOTES") issued under a trust
indenture (the "TRUST INDENTURE") dated as of August 27, 2003, and made between
the Corporation and CIBC Mellon Trust Company (the "TRUSTEE"), as trustee.
REFERENCE IS HEREBY EXPRESSLY MADE TO THE TRUST INDENTURE FOR A STATEMENT AND
DESCRIPTION OF THE TERMS AND CONDITIONS UPON WHICH THE NOTES ISSUED THEREUNDER
MAY BE ISSUED AND HELD, AND THE RIGHTS AND REMEDIES OF THE HOLDERS OF THE NOTES
AND OF THE CORPORATION AND OF THE TRUSTEE IN RESPECT THEREOF, ALL TO THE SAME
EFFECT AS IF THE PROVISIONS OF THE TRUST INDENTURE WERE HEREIN SET FORTH, TO ALL
OF WHICH THE HOLDER HEREOF BY ACCEPTANCE HEREOF ASSENTS.
The Notes comprise and are limited to U.S. $3,000,000 aggregate
principal amount in lawful money of the United States of America and are
issuable as fully registered Notes in the denominations of $1,000 and integral
multiples thereof. Upon compliance with the Trust
Indenture, this Note may be exchanged for an equal aggregate principal amount of
Notes in any other authorized denomination or denominations. The Notes are
direct obligations of the Corporation and are not secured by mortgage or other
charge.
Subject to any limitations imposed by The Toronto Stock Exchange (the
"TSX") or the American Stock Exchange, Inc. (the "AMEX") and the restrictions in
the Note Indenture, this Note is convertible, at the option of the holder
hereof, upon surrender of this Note, with the conversion form attached hereto
duly completed or accompanied by any other written notice satisfactory to the
Trustee, in either case duly executed by such holder, at the offices of the
Trustee in Vancouver (or if by facsimile transmission, to the Trustee with
original documents to the Trustee within three business days thereafter) prior
to the close of business on the business day immediately preceding the date
fixed for redemption of this Note or August 27, 2005, whichever is earlier,
provided written notice is also sent to the Corporation by delivering to it a
copy of such documents, into fully paid and non-assessable common shares
("COMMON SHARES") of the Corporation as presently constituted at the Conversion
Price (as defined in the Trust Indenture), all subject to the terms and
conditions and in the manner set forth in the Trust Indenture. The Trust
Indenture makes provision for the adjustment of the Conversion Price in the
events therein specified.
The Corporation will not issue fractional Common Shares upon the
conversion of a Note but, in lieu thereof, will make an equivalent cash payment
for such fractional amount, provided it is not less than $5.00.
This Note may be redeemed at the option of the Corporation and at the
option of the Holder under certain circumstances on the terms and conditions and
at the redemption prices as set out in the Trust Indenture.
This Note, if for a principal amount in excess of $1,000, is subject to
redemption in part (being $1,000 or an integral multiple thereof), all as more
fully provided in the Trust Indenture.
The Trust Indenture contains provisions for the holding of meetings of
the holders of Notes and rendering resolutions passed at such meetings and
instruments in writing signed by the holders of a specified percentage of the
principal amount of the Notes outstanding binding upon all holders of Notes.
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT") OR APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
THESE SECURITIES MAY NOT BE CONVERTED [BY OR ON BEHALF OF A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE ACT)] [INCLUDE ONLY FOR
REGULATION S NOTEHOLDERS] UNLESS SUCH CONVERSION IS REGISTERED UNDER
THE ACT OR IS MADE PURSUANT TO AN APPLICABLE EXEMPTION FROM
REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE
SECURITIES SHALL NOT TRADE THIS SECURITIES IN CANADA BEFORE DECEMBER
28, 2003.
This Note may only be transferred upon prior written consent of the
Corporation and upon compliance with the conditions prescribed in the Trust
Indenture, on the register to be kept at the principal stock transfer offices of
the Trustee in the City of Vancouver, or at any other place at which a register
is kept, by the registered holder hereof or the registered holder's executors or
administrators or other legal representatives or such person's attorney duly
appointed by an instrument in writing in form satisfactory to the Trustee, and
upon due completion of the transfer form on the reverse side hereof and
compliance with such reasonable
A - 2
requirements as the Trustee or other registrar may prescribe, and such transfer
shall be duly noted hereon by the Trustee or other registrar.
The Trust Indenture is and this Note shall be governed by and construed
in accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
This Note shall not become obligatory for any purpose until this Note
shall have been certified by or on behalf of the Trustee for the time being
under the Trust Indenture.
- SIGNATURE PAGE TO FOLLOW -
IN WITNESS WHEREOF this Note has been duly executed.
DATED as of August 27, 2003.
CRYSTALLEX INTERNATIONAL CORPORATION
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: President
A - 3
TRUSTEE'S CERTIFICATE
This Note is one of the Convertible Notes due August 27, 2005 referred
to in the Trust Indenture within mentioned.
CIBC MELLON TRUST COMPANY,
TRUSTEE
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------
Certifying Signatory
(Form of Registration Panel)
(NO WRITING HEREON EXCEPT BY THE TRUSTEE OR OTHER REGISTRAR)
=================================================================================================
PLACE OF REGISTRATION AND SIGNATURE OF
DATE OF REGISTRATION IN WHOSE NAME REGISTERED TRUSTEE OR OTHER REGISTRAR
=================================================================================================
August 27, 2003 GCA Strategic Investment Fund /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Limited
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
=================================================================================================
CONVERSION FORM
TO: CRYSTALLEX INTERNATIONAL CORPORATION
AND TO: CIBC MELLON TRUST COMPANY, TRUSTEE
The undersigned registered holder of the within Note due August 27,
2005 hereby irrevocably elects to convert said Note (or $.... principal amount
thereof) into Common Shares of Crystallex International Corporation in
accordance with the terms of the Trust Indenture referred to in said Note and
directs that the Common Shares issuable and deliverable upon the conversion be
issued and delivered to, and registered in the name of, the person or persons
indicated below.
Name(s) in Full Address(es) Number(s) of Common
Shares
----------------------- ------------------------------ -------------------
----------------------- ------------------------------ -------------------
----------------------- ------------------------------ -------------------
DATED this ____ day of ____________
) -----------------------------------------
Witness ) Signature of Registered Holder
)
)
------------------------ ) -----------------------------------------
) Name of Registered Holder
------------------------
G Check to convert accrued and unpaid interest as well. If not checked, interest
will not be converted.
*If less than the full principal amount of the within Note is to be converted,
indicate in the space provided above the principal amount (which must be $1,000
or an integral multiple thereof) to be converted.
NOTE: If Common Shares are to be issued in the name of a person other than the
registered holder, the signature must be guaranteed.
TRANSFER
FOR VALUE RECEIVED, the undersigned hereby assign(s) and transfer(s) unto ______
______________________________ the within Note (or $ ______________ principal
amount thereof), together with the principal thereof and all accrued interest
thereon, hereby irrevocably constituting and appointing attorney to transfer the
Note on the books of the Corporation referred to within with full power of
substitution in the premises.
DATED this ________ day of _______________
------------------------------------------- ------------------------------
Witness Signature of Transferor
Signature of Transferor must be guaranteed
------------------------------
Name of Transferor
NOTE: The signature must be guaranteed. The transfer must be consented to in
writing by Crystallex.