EXHIBIT 1
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BAYTEX ENERGY TRUST
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AMENDED AND RESTATED TRUST INDENTURE
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BURNET, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
TABLE OF CONTENTS
PAGE
ARTICLE 1 INTERPRETATION......................................................1
1.1 Definitions......................................................1
1.2 Meaning of "Outstanding".........................................6
1.3 Income Tax Act...................................................6
1.4 Headings.........................................................7
1.5 Construction of Terms............................................7
1.6 References to Acts Performed by the Trust........................7
ARTICLE 2 DECLARATION OF TRUST................................................7
2.1 Settlement of Trust..............................................7
2.2 Declaration of Trust.............................................7
2.3 Name.............................................................7
2.4 Nature of the Trust..............................................7
2.5 Legal Entitlements and Restrictions of Unitholders...............8
2.6 Liability of Unitholders.........................................8
2.7 Contracts of the Trust...........................................8
2.8 Head Office of Trust.............................................9
ARTICLE 3 ISSUE AND SALE OF TRUST UNITS.......................................9
3.1 Nature and Ranking of Trust Units................................9
3.2 Authorized Number of Trust Units.................................9
3.3 No Fractional Trust Units........................................9
3.4 Re-purchase of Initial Trust Units by Trust......................9
3.5 Offerings of Trust Units and Indebtedness........................9
3.6 Ranking of Trust Units..........................................10
3.7 Trust Units Fully Paid and Non-assessable.......................10
3.8 No Conversion, Retraction, Redemption or Pre-emptive Rights.....10
3.9 Consolidation of Trust Units....................................10
3.10 Non-resident Ownership Constraint...............................10
3.11 Special Voting Units............................................11
ARTICLE 4 INVESTMENTS OF TRUST FUND..........................................11
4.1 Purpose of the Trust............................................11
4.2 Permitted Investments...........................................12
4.3 Other Investment Restrictions...................................12
ARTICLE 5 DISTRIBUTIONS......................................................12
5.1 Determination of Distributable Cash of the Trust................12
5.2 Distributable Cash of the Trust to Become Payable...............13
5.3 Computation of Income and Net Realized Capital Gains............13
5.4 Net Realized Capital Gains to Become Payable....................13
5.5 Net Income and Net Realized Capital Gains for Income
Tax Purposes to Become Payable..................................14
5.6 Other Amounts...................................................14
5.7 Enforcement.....................................................14
5.8 Payment of Amounts Payable......................................15
5.9 Distribution of Additional Trust Units..........................15
5.10 Withholding Taxes...............................................15
ARTICLE 6 APPOINTMENT, RESIGNATION AND REMOVAL OF TRUSTEE....................15
6.1 Trustee's Term of Office........................................15
6.2 Resignation of Trustee..........................................15
6.3 Removal of Trustee..............................................16
6.4 Appointment of Successor to Trustee.............................16
6.5 Failure to Appoint Successor....................................16
6.6 Qualifications of Trustee.......................................16
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE 7 CONCERNING THE TRUSTEE.............................................17
7.1 Powers of the Trustee and the Corporation.......................17
7.2 Specific Powers and Authorities.................................17
7.3 Restrictions On the Trustee's Powers............................20
7.4 Banking.........................................................21
7.5 Standard of Care................................................21
7.6 Fees and Expenses...............................................21
7.7 Limitations On Liability of Trustee.............................22
7.8 Indemnification of Trustee......................................22
7.9 Environmental Indemnity.........................................22
7.10 Apparent Authority..............................................23
7.11 Notice to Unitholders of Non-eligibility for Deferred
Income Plans....................................................23
7.12 Declaration as to Beneficial Ownership..........................24
7.13 Conditions Precedent to Trustee's Obligations to Act............24
7.14 Survival of Indemnities.........................................24
7.15 Trustee May Have Other Interests................................24
7.16 Documents Held by Trustee.......................................25
ARTICLE 8 DELEGATION OF POWERS...............................................25
8.1 General Delegation to the Corporation...........................25
8.2 Significant Matters Delegation..................................25
8.3 Acceptance of Delegation........................................25
8.4 Power of Attorney...............................................25
8.5 Liability of Trustee............................................26
ARTICLE 9 AMENDMENT..........................................................26
9.1 Amendment.......................................................26
ARTICLE 10 MEETINGS OF UNITHOLDERS...........................................27
10.1 Annual and Special Meetings of Unitholders......................27
10.2 Notice of Meetings..............................................27
10.3 Quorum..........................................................27
10.4 Voting Rights of Unitholders....................................27
10.5 Resolutions.....................................................28
10.6 Meaning of "Special Resolution".................................28
10.7 Record Date for Voting..........................................29
10.8 Binding Effect of Resolutions...................................29
10.9 Solicitation of Proxies.........................................29
10.10 No Breach.......................................................29
ARTICLE 11 CERTIFICATES, REGISTRATION AND TRANSFER OF TRUST UNITS............29
11.1 Nature of Trust Units...........................................29
11.2 Certificates....................................................29
11.3 Register of Unitholders.........................................30
11.4 Transfer of Trust Units.........................................30
11.5 Trust Units Held Jointly or in a Fiduciary Capacity.............31
11.6 Performance of Trust............................................31
11.7 Lost Certificates...............................................31
11.8 Death of a Unitholder...........................................31
11.9 Unclaimed Interest or Distribution..............................32
11.10 Exchanges of Trust Certificates.................................32
11.11 Offer for Units.................................................32
ARTICLE 12 TERMINATION.......................................................34
12.1 Termination Date................................................34
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TABLE OF CONTENTS
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12.2 Termination by Special Resolution of Unitholders................34
12.3 Procedure Upon Termination......................................34
12.4 Powers of the Trustee Upon Termination..........................34
12.5 Sale of Investments.............................................34
12.6 Distribution of Proceeds........................................34
12.7 Further Notice to Unitholders...................................35
12.8 Responsibility of Trustee After Sale and Conversion.............35
ARTICLE 13 SUPPLEMENTAL INDENTURES...........................................35
13.1 Provision for Supplemental Indentures...........................35
13.2 Provision for Amended and Restated Indenture....................35
ARTICLE 14 NOTICES TO UNITHOLDERS............................................36
14.1 Notices.........................................................36
14.2 Failure to Give Notice..........................................36
14.3 Joint Holders...................................................36
14.4 Service of Notice...............................................36
ARTICLE 15 AUDITORS..........................................................36
15.1 Qualification of Auditors.......................................36
15.2 Appointment of Auditors.........................................36
15.3 Change of Auditors..............................................36
15.4 Filling Vacancy.................................................37
15.5 Reports of Auditors.............................................37
ARTICLE 16 ACCOUNTS, RECORDS AND FINANCIAL STATEMENTS........................37
16.1 Records.........................................................37
16.2 Quarterly Reporting to Unitholders..............................37
16.3 Annual Reporting to Unitholders.................................37
16.4 Information Available to Unitholders............................37
16.5 Income Tax: Obligation of the Trustee...........................38
16.6 Income Tax: Designations........................................38
16.7 Income Tax: Deductions, Allowances and Credits..................38
16.8 Fiscal Year.....................................................38
ARTICLE 17 MISCELLANEOUS.....................................................39
17.1 Continued Listing...............................................39
17.2 Successors and Assigns..........................................39
17.3 Counterparts....................................................39
17.4 Severability....................................................39
17.5 Day Not a Business Day..........................................39
17.6 Time of the Essence.............................................39
17.7 Governing Law...................................................39
17.8 Notices to Trustee and the Corporation..........................39
17.9 References to Agreements........................................40
ARTICLE 18 REDEMPTION OF TRUST UNITS.........................................40
18.1 Right of Redemption.............................................40
18.2 Exercise of Redemption Right....................................40
18.3 Calculation of Redemption Price Based On Market Price...........40
18.4 Cash Payment of Market Redemption Price.........................41
18.5 Limitation Regarding Cash Payment of Market Redemption Price....41
18.6 Calculation of Redemption Price in Certain Other Circumstances..42
18.7 Cancellation of Certificates for All Redeemed Trust Units.......42
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AMENDED AND RESTATED TRUST INDENTURE dated as of the 2nd day of
September, 2003.
BETWEEN:
VALIANT TRUST COMPANY, a trust company incorporated under
the laws of the Province of Alberta, with offices in the
City of Calgary, in the Province of Alberta (hereinafter
called the "TRUSTEE")
OF THE FIRST PART
and
BAYTEX ENERGY LTD., a body corporate amalgamated under the
laws of Alberta, with offices in the City of Calgary, in the
Province of Alberta (hereinafter called the "CORPORATION"),
and all persons who after the date hereof become holders of
Trust Units as herein provided
OF THE SECOND PART
WHEREAS the Settlor has paid to the Trustee an amount of two hundred
dollars in lawful money of Canada for the purpose of settling the Trust;
AND WHEREAS it is intended that the beneficiaries of the Trust shall
be the holders of Trust Units, each of which Trust Units shall rank equally in
all respects with every other Trust Unit;
AND WHEREAS it is intended that the Trust will offer the Trust Units
for sale to members of the public from time to time;
AND WHEREAS it is intended that the Trust shall qualify as a "unit
trust" and as a "mutual fund trust" under the provisions of paragraph
108(2)(a) and subsection 132(6) of the Tax Act;
AND WHEREAS the parties hereto desire to set out the terms and
conditions which shall govern the settlement and the administration of the
Trust;
NOW THEREFORE THIS INDENTURE WITNESSETH that in consideration of the
premises and the mutual and respective covenants and agreements contained
herein, the Trustee declares and covenants and agrees with and in favour of
the holders from time to time of the Trust Units and the Corporation as
follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Indenture, including the recitals, and in the Trust
Certificates and schedules hereto, unless the context otherwise requires, the
following words and expressions shall have the following meanings:
(a) "ABCA" means the BUSINESS CORPORATIONS ACT (Alberta) as amended from
time to time, including the regulations promulgated thereunder;
(b) "ACQUISITIONCO" means Baytex Acquisition Corp., a corporation
incorporated under the ABCA by the Trust for the purposes of giving
effect to the Plan of Arrangement and the Trust Reorganization;
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(c) "ADMINISTRATION AGREEMENT" means the agreement dated effective on or
about July 24, 2003 between the Trustee and the Corporation pursuant
to which the Corporation has agreed to provide certain administrative
and advisory services in connection with the Trust;
(d) "ADMINISTRATOR" or "MANAGER" has the meaning set forth in Section
8.1.
(e) "AFFILIATE" has the meaning set forth in the SECURITIES ACT
(Alberta), as amended from time to time;
(f) "AGENCY AGREEMENT" means any underwriting, agency or similar
agreement entered into by the Trustee and investment dealers, and
such other persons, including the Corporation, as may be a party
thereto relating to an Offering;
(g) "AGENT'S FEES" means the amounts so designated in any Agency
Agreement;
(h) "APPRAISED REDEMPTION PRICE" has the meaning set forth in Section
18.6;
(i) "ARTC" means Alberta Royalty Tax Credit within the meaning of the
ALBERTA CORPORATE TAX ACT;
(j) "ASSOCIATE" has the meaning set forth in the SECURITIES ACT (Alberta)
as amended from time to time;
(k) "AUDITORS" means Deloitte & Touche LLP, or such other firm of
chartered accountants as may be appointed as auditor or auditors of
the Trust by or in accordance with Article 15;
(l) "BUSINESS DAY" means a day other than a Saturday, Sunday or holiday
in the City of Calgary in the Province of Alberta;
(m) "CAPITAL FUND" means the cash flow retained by the Trust from cash
otherwise available for distribution which shall be advanced to the
Corporation, as the case may be, to finance future acquisitions and
development of the Properties;
(n) "CLOSING" means the completion of the Trust Reorganization and "DATE
OF CLOSING" means the date on which the Closing occurs;
(o) "CORPORATION" means Baytex Energy Ltd., a corporation incorporated
under the ABCA, and the corporation continuing after the amalgamation
of AcquisitionCo and Baytex Energy Ltd.;
(p) "COUNSEL" means a law firm (which may be counsel to the Corporation)
reasonably acceptable to the Trustee;
(q) "CREDIT AGREEMENT" means any credit agreement between a Lender and
the Corporation, or any similar agreement which supplements or
replaces a Credit Agreement between the Corporation and a Lender;
(r) "DEBT SERVICE CHARGES" means all interest and principal repayments
and other costs, expenses and disbursements relating to the borrowing
of funds by the Trust and the Corporation which are attributable to
the Properties;
(s) "DIRECT ROYALTIES" means royalty interests in petroleum and natural
gas rights acquired by the Trust from time to time;
(t) "DIRECT ROYALTIES SALE AGREEMENT" means any purchase and sale
agreement between the Trust and the Corporation or a subsidiary of
the Corporation, as the case may be, providing for the purchase by
the Trust from the Corporation, or a subsidiary of the Corporation of
the Direct Royalties;
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(u) "DISTRIBUTION RECORD DATE" means the last day of each calendar month
or such other date as may be determined from time to time by the
Trustee upon the recommendation of the board of directors of the
Corporation, except that December 31 shall in all cases be a
Distribution Record Date;
(v) "EXCHANGEABLE SHARE AGREEMENTS" means the support agreement and
voting and exchange trust agreement to be entered into by the Trust,
the Corporation and ExchangeCo with respect to the issuance of
Exchangeable Shares in connection with the Trust Reorganization;
(w) "EXCHANGECO" means Baytex ExchangeCo Ltd., a corporation incorporated
under the ABCA;
(x) "INDEMNIFIED PARTIES" has the meaning set forth in Section 7.9;
(y) "ISSUE EXPENSES" means all expenses of an Offering payable by the
Trust including legal fees, accounting fees and printing expenses and
all other fees and expenses which may be described, whether generally
or specifically, in any Offering Document relating to the particular
Offering, but excluding Underwriter's Fees;
(z) "LENDER" means the lender or lenders (or any of its or their
Affiliates) providing one or more credit or debt facilities, hedging
or swap facilities or any other ancillary facilities to the Trust,
the Corporation or any other Affiliate of the Trust for the ownership
and operation of its assets, business and affairs;
(aa) "MATERIAL CONTRACTS" means this Trust Indenture, a Direct Royalties
Sale Agreement, the Administration Agreement, the Exchangeable Share
Agreements, the NPI Agreement, any Credit Agreement, each as amended
or replaced from time to time, and any Underwriting Agreement and any
loan agreement, credit agreement, royalty agreement, indenture or
other agreement entered into by the Trust for the purpose of making
any Subsequent Investment;
(bb) "NPI" means the right of the Trust to receive a net profits interest
from the Corporation pursuant to the NPI Agreement;
(cc) "NPI AGREEMENT" means the agreement granting the NPI to be entered
into between the Trust and the Corporation pursuant to the Plan of
Arrangement and the Trust Reorganization, as such agreement may be
amended or supplemented from time to time;
(dd) "NOTES" means the promissory notes to be issued by the Corporation to
the Trust pursuant to a note indenture as part of the Trust
Reorganization, which notes shall be issued on the following terms
and conditions:
(i) unsecured and bearing interest at 12% per annum payable
monthly in arrears on the 10th day of the next following
month;
(ii) subordinate to all senior indebtedness, which includes all
indebtedness for borrowed money or owing in respect of
property purchases or any default in payment of any such
senior indebtedness, and to all trade debt of the
Corporation or any subsidiary of the Corporation or the
Trust on any creditor proceedings such as bankruptcy,
liquidation or insolvency;
(iii) subject to earlier prepayment, being due and payable on
September 1, 2033;
(iv) in an aggregate principal amount not exceeding $1.5 billion;
and
(v) subject to such other standard terms and conditions as would
be included in a note indenture for promissory notes of this
kind, as may be approved by the board of directors of the
Corporation;
(ee) "OFFERING" means any issuance or offering of Trust Units or any
rights, warrants or other securities to purchase, to convert into or
exchange into Trust Units on a public or private basis in Canada or
elsewhere;
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(ff) "OFFERING DOCUMENTS" means any one or more of a prospectus,
information memorandum, private placement memorandum and similar
public or private offering document, or any understanding, commitment
or agreement to issue or offer Trust Units, including the Information
Circular of the Corporation to be prepared in connection with the
Plan of Arrangement and the Trust Reorganization;
(gg) "ORDINARY RESOLUTION" means a resolution approved at a meeting of
Unitholders by more than 50% of the votes cast in respect of the
resolution by or on behalf of Unitholders present in person or
represented by proxy at the meeting;
(hh) "OUTSTANDING", in relation to Trust Units, has the meaning attributed
thereto in Section 1.2 hereof;
(ii) "PAYMENT DATE" has the meaning set forth in Section 5.8;
(jj) "PERMITTED INVESTMENTS" means:
(i) loan advances to the Corporation, as the case may be,
including loans made in connection with the Capital Fund;
(ii) interest bearing accounts of certain financial institutions,
including Canadian chartered banks and the Trustee;
(iii) obligations issued or guaranteed by the Government of Canada
or any province of Canada or any agency or instrumentality
thereof;
(iv) term deposits, guaranteed investment certificates of deposit
or bankers' acceptances of or guaranteed or accepted by any
Canadian chartered bank or other financial institution
(including the Trustee and any Affiliate of the Trustee),
the short term debt or deposits of which have been rated at
least A by Standard & Poor's Corporation, or the equivalent
by ▇▇▇▇▇'▇ Investors Service, Inc. or Dominion Bond Rating
Service Limited;
(v) commercial paper rated at least A by Standard & Poor's
Corporation, or the equivalent by Canadian Bond Rating
Service Inc. or Dominion Bond Rating Service Limited; and
(vi) investments in bodies corporate, partnerships or trusts
engaged in the oil and natural gas business, including
Shares;
provided that any investment of the type referred to in Section 4.3
shall not be a Permitted Investment;
(kk) "PERSON" means an individual, partnership, body corporate,
association or trust;
(ll) "PLAN OF ARRANGEMENT" means the plan of arrangement setting forth the
terms and conditions on which the Corporation, the Trust, Crew Energy
Inc., AcquisitionCo., Baytex ExchangeCo Ltd., Baytex Resources Ltd.
and Baytex Exploration Ltd. propose to complete an arrangement under
section 193 of the ABCA in order to effect the Trust Reorganization;
(mm) "PRO RATA SHARE" of any particular amount in respect of a Unitholder
at any time shall be the amount obtained by dividing the number of
Trust Units that are owned by that Unitholder at that time by the
total number of all Trust Units that are issued and outstanding at
that time;
(nn) "PROPERTIES" means the working, royalty or other interests of the
Corporation from time to time in any petroleum and natural gas
rights, tangibles and miscellaneous interests, including the
properties in which the Corporation have an interest as at the date
hereof, and properties which may be acquired by the Corporation at a
future date, and including the Direct Royalties acquired by the Trust
from time to time;
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(oo) "REDEMPTION NOTES" means promissory notes issued in series, or
otherwise, by the Trust pursuant to a note indenture and issued to
redeeming Unitholders in principal amounts equal to the Market
Redemption Price or Appraised Redemption Price of the Trust Units to
be redeemed and having the following terms and conditions:
(i) unsecured and bearing interest from and including the issue
date of each such note at a market rate determined at the
time of issuance, based on the advice of an independent
financial advisor, by the board of directors of the
Corporation and payable monthly in arrears (with interest
after as well as before maturity, default and judgment, and
interest on overdue interest at such rate);
(ii) subordinated and postponed to all senior indebtedness and
which may be subject to specific subordination and
postponement agreements to be entered into by the Trustee
pursuant to the note indenture with holders of senior
indebtedness;
(iii) subject to earlier prepayment, being due and payable on the
fifth anniversary of the date of issuance; and
(iv) subject to such other standard terms and conditions as would
be included in a note indenture for promissory notes of this
kind, as may be approved by the Corporation;
(pp) "SETTLED AMOUNT" means the amount of two hundred dollars in lawful
money of Canada paid by the Settlor to the Trustee for the purpose of
settling the Trust;
(qq) "SETTLOR" means the Corporation;
(rr) "SHARES" means the issued and outstanding common shares of the
Corporation as of the date hereof and also means shares of any class
issued by the Corporation thereafter;
(ss) "SPECIAL VOTING UNIT" has the meaning ascribed thereto in Section
3.11;
(tt) "SPECIAL RESOLUTION" has the meaning attributed thereto in Section
10.6 hereof;
(uu) "SUBSEQUENT INVESTMENT" means any of the investments which the Trust
may make pursuant to Subsection 4.1 (b - f);
(vv) "TAX ACT" has the meaning ascribed thereto in Section 1.3;
(ww) "TRANSFER AGENT" means the Trustee, its successors or assigns, in its
capacity as transfer agent for the Trust Units, or such other company
as may from time to time be appointed by the Trustee to act as
transfer agent for the Trust Units together, in either such case,
with any subtransfer agent duly appointed by the transfer agent;
(xx) "TRUST" means Baytex Energy Trust and refers to the trust
relationship between the Trustee and the Unitholders with respect to
the Trust Fund, upon the terms and conditions set out herein from
time to time and, if the context requires, may also refer to the
Trust Fund;
(yy) "TRUST CERTIFICATE" or "TRUST UNIT CERTIFICATE" means a certificate,
in the form approved by the Trustee, evidencing one or more Trust
Units, issued and certified in accordance with the provisions hereof;
(zz) "TRUST EXPENSES" means all expenses incurred by the Trustee or any
third party, in each case for the account of the Trust, in connection
with this Indenture, the establishment and ongoing management of the
Trust and the ongoing administration of the Trust Units, including
without limitation those amounts payable to the Trustee under
Sections 7.6, 7.8 and 7.9;
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(aaa) "TRUST FUND", at any time, shall mean such of the following monies,
properties and assets that are at such time held by the Trustee on
behalf of the Trust for the purposes of the Trust under this
Indenture:
(i) the Settled Amount;
(ii) all funds realized from the issuance of Trust Units;
(iii) any Permitted Investments in which funds may from time to
time be invested;
(iv) all rights in respect of and income generated under a Direct
Royalties Sale Agreement;
(v) any Subsequent Investment;
(vi) any proceeds of disposition of any of the foregoing property
including, without limitation, the Direct Royalties; and
(vii) all income, interest, profit, gains and accretions and
additional assets, rights and benefits of any kind or nature
whatsoever arising directly or indirectly from or in
connection with or accruing to such foregoing property or
such proceeds of disposition;
(bbb) "TRUST REORGANIZATION" means the series of transactions resulting in
the Trust owning all of the issued and outstanding securities of the
Corporation, the particulars of which are set forth in the
Information Circular of the Corporation prepared with respect to the
Plan of Arrangement;
(ccc) "TRUST UNIT" means a trust unit of the Trust created, issued and
certified hereunder and for the time being outstanding and entitled
to the benefits hereof;
(ddd) "TRUSTEE" means Valiant Trust Company, or its successor or successors
for the time being as trustee hereunder;
(eee) "UNDERWRITING AGREEMENT" means any underwriting, agency or similar
agreement entered into by the Trustee and investment dealers, and
such other persons, including the Corporation, as may be a party
thereto relating to an Offering;
(fff) "UNDERWRITER'S FEES" means the amounts so designated in any
Underwriting Agreement;
(ggg) "UNITHOLDERS" means the holders from time to time of one or more
Trust Units; and
(hhh) "YEAR" means initially, the period commencing on the date hereof and
ending on December 31, 2003, and thereafter means a calendar year.
1.2 MEANING OF "OUTSTANDING"
Every Trust Unit created, issued, certified and delivered hereunder
shall be deemed to be outstanding until it shall be cancelled or delivered to
the Trustee for cancellation, provided that when a new Trust Certificate has
been issued in substitution for a Trust Certificate which has been lost,
stolen or destroyed, only one of such Trust Certificates shall be counted for
the purpose of determining the number of Trust Units outstanding.
1.3 INCOME TAX ACT
In this Indenture, any reference to the Tax Act shall refer to the
INCOME TAX ACT, Revised Statutes of Canada 1985, Chapter 1 (5th Supplement)
and the Income Tax Regulations as amended from time to time applicable with
respect thereto. Any reference herein to a particular provision of the Tax Act
shall include a reference to that provision as it may be renumbered or amended
from time to time. Where there are proposals for amendments to the Tax Act
which have not been enacted into law or proclaimed into force on or before the
date on
7
which such proposals are to become effective, the Trustee may take such
proposals into consideration and apply the provisions hereof as if such
proposals had been enacted into law and proclaimed into force.
1.4 HEADINGS
The division of this Indenture into articles and sections,
subsections, clauses, subclauses and paragraphs and the provision of headings
is for convenience of reference only and shall not affect the construction or
interpretation of this Indenture.
1.5 CONSTRUCTION OF TERMS
Words importing the singular number only shall include the plural,
and vice versa, and words importing gender shall include the masculine,
feminine and neuter genders. References in this Indenture to "this Trust
Indenture", "this Indenture", "hereto", "herein", "hereof", "hereby",
"hereunder" and similar expressions shall be deemed to refer to this
instrument and not to any particular Article, Section or portion hereof, and
include any and every instrument supplemental or ancillary hereto or in
implementation hereof.
1.6 REFERENCES TO ACTS PERFORMED BY THE TRUST
Any reference in this Indenture to an act to be performed by the
Trust shall be construed and applied for all purposes as if it referred to an
act to be performed by the Trustee on behalf of the Trust or, to the extent
applicable, by the Corporation on behalf of the Trust.
ARTICLE 2
DECLARATION OF TRUST
2.1 SETTLEMENT OF TRUST
The Settlor has paid the Settled Amount to the Trustee and the
Trustee has accepted the Settled Amount for the purpose of creating and
settling the Trust and the Settlor has been issued twenty initial Trust Units
in the Trust.
2.2 DECLARATION OF TRUST
The Trustee hereby agrees to act as Trustee and that it does and
shall hold the Trust Fund in trust for the use and benefit of the Unitholders,
their permitted assigns and personal representatives upon the trusts and
subject to the terms and conditions hereinafter declared and set forth, such
trust to constitute the Trust hereunder.
2.3 NAME
The Trust shall be known and designated as "Baytex Energy Trust" and,
whenever lawful and convenient, the affairs of the Trust shall be conducted
and transacted under that name. If the Trustee determines that the use of the
name "Baytex Energy Trust" is not practicable, legal or convenient, it may use
such other designation or it may adopt such other name for the Trust as it
deems appropriate and the Trust may hold property and conduct its activities
under such other designation or name.
2.4 NATURE OF THE TRUST
The Trust is an open-end unincorporated investment trust, established
for the purposes specified in Section 4.1 hereof. The Trust is not and is not
intended to be, shall not be deemed to be and shall not be treated as a
general partnership, limited partnership, syndicate, association, joint
venture, company, corporation or joint stock company, nor shall the Trustee or
the Unitholders or any of them or any person be, or be deemed to be, treated
in any way whatsoever as liable or responsible hereunder as partners or joint
venturers. The Trustee shall not be, or be deemed to be, an agent of the
Unitholders. The relationship of the Unitholders to the Trustee shall be
solely that of beneficiaries of the Trust and their rights shall be limited to
those conferred upon them by this Indenture.
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2.5 LEGAL ENTITLEMENTS AND RESTRICTIONS OF UNITHOLDERS
(a) The rights of each Unitholder to call for a distribution or division
of assets, monies, funds, income and capital gains held, received or
realized by the Trustee are limited to those contained herein.
(b) Subject to the terms and conditions of this Indenture, no Unitholder
or Unitholders shall be entitled to interfere or give any direction
to the Trustee or the Corporation with respect to the affairs of the
Trust or in connection with the exercise of any powers or authorities
conferred upon the Trustee or the Corporation under this Indenture or
the Material Contracts.
(c) The legal ownership of the assets of the Trust and the right to
conduct the business of the Trust (subject to the limitations
contained herein) are vested exclusively in the Trustee and the
Unitholders shall have no interest therein and they shall have no
right to compel or call for any partition, division, dividend or
distribution of the Trust Fund or any of the assets of the Trust. The
Trust Units shall be personal property and shall confer upon the
holders thereof only the interest and rights specifically set forth
in this Indenture. No Unitholder has or is deemed to have any right
of ownership in any of the assets of the Trust.
2.6 LIABILITY OF UNITHOLDERS
No Unitholder, in its capacity as such, shall incur or be subject to
any liability in contract or in tort or of any other kind whatsoever to any
person in connection with the Trust Fund or the obligations or the affairs of
the Trust or with respect to any act performed by the Trustee or by any other
person pursuant to this Indenture or with respect to any act or omission of
the Trustee or any other person in the performance or exercise, or purported
performance or exercise, of any obligation, power, discretion or authority
conferred upon the Trustee or such other person hereunder or with respect to
any transaction entered into by the Trustee or by any other person pursuant to
this Indenture. No Unitholder shall be liable to indemnify the Trustee or any
such other person with respect to any such liability or liabilities incurred
by the Trustee or by any such other person or persons or with respect to any
taxes payable by the Trust or by the Trustee or by any other person on behalf
of or in connection with the Trust. Notwithstanding the foregoing, to the
extent that any Unitholders are found by a court of competent jurisdiction to
be subject to any such liability, such liability shall be enforceable only
against, and shall be satisfied only out of, the Trust Fund and the Trust (to
the extent of the Trust Fund) is liable to, and shall indemnify and save
harmless any Unitholder against any costs, damages, liabilities, expenses,
charges or losses suffered by any Unitholder from or arising as a result of
such Unitholder not having any such limited liability.
2.7 CONTRACTS OF THE TRUST
Every contract entered into by or on behalf of the Trust, whether by
the Trustee, the Corporation, or otherwise, shall (except as the Trustee or
the Corporation may otherwise expressly agree in writing with respect to their
own personal liability) include a provision substantially to the following
effect:
The parties hereto acknowledge that the [Trustee] [Corporation] is
entering into this agreement solely [in its capacity as Trustee] [on
behalf] of the Trust and the obligations of the Trust hereunder shall
not be personally binding upon the [Trustee] [Corporation] or any of
the Unitholders of the Trust and that any recourse against the Trust
or any Unitholder in any manner in respect of any indebtedness,
obligation or liability of the Trust arising hereunder or arising in
connection herewith or from the matters to which this agreement
relates, if any, including without limitation claims based on
negligence or otherwise tortious behaviour, shall be limited to, and
satisfied only out of, the Trust Fund as defined in the amended and
restated trust indenture dated as of September 2, 2003, as amended
from time to time.
The omission of such a provision from any such written instrument shall not
operate to impose personal liability on the Trustee, the Corporation or any
Unitholder.
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2.8 HEAD OFFICE OF TRUST
The head office of the Trust hereby created shall be located at ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ or at such other place or
places in Canada as the Trustee may from time to time designate.
ARTICLE 3
ISSUE AND SALE OF TRUST UNITS
3.1 NATURE AND RANKING OF TRUST UNITS
(a) The beneficial interests in the Trust shall be divided into interests
of one class, described and designated as Trust Units, which shall be
entitled to the rights and subject to the limitations, restrictions
and conditions set out herein; and the interest of each Unitholder
shall be determined by the number of Trust Units registered in the
name of the Unitholder.
(b) Subject to Section 3.11, each Trust Unit shall entitle the holder or
holders thereof to one vote at any meeting of the Unitholders and
represents an equal fractional undivided beneficial interest in any
distribution from the Trust (whether of Distributable Cash of the
Trust, Net Realized Capital Gains (as defined herein) or other
amounts) and in any net assets of the Trust in the event of
termination or winding-up of the Trust. All Trust Units outstanding
from time to time shall be entitled to equal shares in any
distributions by the Trust and, in the event of termination or
winding-up of the Trust, in the net assets of the Trust. All Trust
Units shall rank among themselves equally and rateably without
discrimination, preference or priority.
3.2 AUTHORIZED NUMBER OF TRUST UNITS
The aggregate number of Trust Units and Special Voting Units which
are authorized and may be issued hereunder is unlimited.
3.3 NO FRACTIONAL TRUST UNITS
Fractions of Trust Units shall not be issued, except pursuant to
distributions of additional Trust Units to all Unitholders pursuant to Section
5.9.
3.4 RE-PURCHASE OF INITIAL TRUST UNITS BY TRUST
Immediately after the Closing, the Trust will repurchase the initial
Trust Units from the Settlor, and the Settlor shall sell the initial Trust
Units to the Trust for a purchase price of two hundred dollars and, upon the
completion of such purchase and sale, the initial Trust Units shall be
cancelled and shall no longer be outstanding for any of the purposes of this
Indenture.
3.5 OFFERINGS OF TRUST UNITS AND INDEBTEDNESS
(a) Trust Units, including rights, warrants, special warrants or other
securities to purchase, to convert into or exchange into Trust Units,
may be created, issued, sold and delivered pursuant to Offering
Documents or otherwise, as the case may be, on terms and conditions
and at such time or times as the board of directors the Corporation
may determine.
(b) The board of directors of the Corporation may authorize the creation
and issuance of debentures, notes and other evidences of indebtedness
of the Trust which debentures, notes or other evidences of
indebtedness may be created and issued from time to time on such
terms and conditions, to such persons and for such consideration as
the Corporation may determine.
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3.6 RANKING OF TRUST UNITS
Each Trust Unit represents an equal fractional undivided beneficial
interest in the Trust Fund. All Trust Units outstanding from time to time
shall be entitled to an equal fractional undivided share of any distributions
by the Trust and, in the event of termination of the Trust, in the net assets
of the Trust. All Trust Units shall rank among themselves equally and rateably
without discrimination, preference or priority regardless of the actual date
or terms of issue thereof.
3.7 TRUST UNITS FULLY PAID AND NON-ASSESSABLE
Trust Units shall be issued only when fully paid in money or property
or past service, provided that property will include a promissory note or
promise to pay given by the allottee. The Unitholders shall not thereafter be
required to make any further contribution to the Trust with respect to such
Trust Units.
3.8 NO CONVERSION, RETRACTION, REDEMPTION OR PRE-EMPTIVE RIGHTS
No person shall be entitled, as a matter of right, to subscribe for
or purchase any Trust Unit. Except as set forth in Article 18, there are no
conversion, retraction, redemption or pre-emptive rights attaching to the
Trust Units.
3.9 CONSOLIDATION OF TRUST UNITS
Immediately after any pro rata distribution of additional Trust Units
to all Unitholders pursuant to Section 5.5 or Section 5.9, the number of
outstanding Trust Units will be consolidated such that each Unitholder will
hold after the consolidation the same number of Trust Units as the Unitholder
held before the distribution of additional Trust Units. In such case, each
Trust Unit Certificate representing a number of Trust Units prior to the
distribution of additional Trust Units is deemed to represent the same number
of Trust Units after the distribution of additional Trust Units and the
consolidation. Such consolidation shall not constitute a redemption or
cancellation of the Trust Units so consolidated and a Unitholder whose Trust
Units are consolidated shall not receive, and shall not be entitled to
receive, any proceeds of disposition in respect thereof.
3.10 NON-RESIDENT OWNERSHIP CONSTRAINT
(a) At no time may non-residents of Canada (within the meaning of the Tax
Act) be the beneficial owners of more than 49 percent of the Trust
Units then outstanding and the Trustee shall inform the Transfer
Agent of this restriction. The Trustee or Transfer Agent may require
declarations as to the jurisdictions in which beneficial owners of
Trust Units are resident. If the Transfer Agent or the Corporation
becomes aware that the beneficial owners of 49 percent or more of the
Trust Units then outstanding are, or may be, non-residents or that
such a situation is imminent, the Transfer Agent or the Corporation
(as applicable) will advise the Trustee and the Trustee may, or upon
receiving a direction from the Trustee the Transfer Agent may, make a
public announcement thereof and neither the Trustee nor the Transfer
Agent shall accept a subscription for Trust Units from or issue or
register a transfer of Trust Units to a person unless the person
provides a declaration, in form and content satisfactory to the
Trustee or the Transfer Agent, that the person is not a non-resident
of Canada. If, notwithstanding the foregoing, the Trustee or Transfer
Agent determines that 49 percent or more of the Trust Units are held
by non-residents, the Trustee may, or the Transfer Agent may upon
receiving a direction from the Trustee and suitable indemnity from
the Trust, send a notice to non-resident holders of Trust Units, as
applicable, chosen in inverse order to the order of acquisition or
registration or in such other manner as the Trustee or Transfer Agent
(as the case may be) may consider equitable and practicable,
requiring such non-resident holders to sell their Trust Units or a
specified portion thereof within a specified period of not less than
60 days. If the Unitholders receiving such notice have not sold the
specified number of Trust Units or provided the Trustee with
satisfactory evidence that they are not non-residents of Canada
within such period, the Trustee (or the Transfer Agent on the
direction of the Trustee) may on behalf of such Unitholders sell such
Trust Units and, in the interim, shall suspend the voting and
distribution rights attached to such Trust Units. Upon such sale the
Unitholders thereby affected shall cease to be holders of the
relevant Trust Units and their rights shall be
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limited to receiving the net proceeds of sale of such Trust Units
upon surrender of the certificates representing such Trust Units.
Notwithstanding the foregoing, the Trustee, upon direction of the
Corporation, may take such action as is deemed necessary to ensure
compliance with the Tax Act.
(b) No liability shall accrue to the Trust or the Trustee if the Trust
Units of non-resident Unitholders are sold at a loss to such
Unitholder. Unless and until the Trustee shall have been required to
do so under the terms hereof, the Trustee shall not be bound to do or
take any proceeding or action with respect to this Section 3.10 by
virtue of the powers conferred on it hereby. The Trustee shall not be
deemed to have notice of any violation of this Section 3.10 unless
and until it has been given written notice of such violation (which
notice may be given by the Corporation) and shall act only as
required by this Trust Indenture once an indemnity is provided. The
Trustee shall not be required to actively monitor the foreign
holdings of the Trust unless requested to do so in writing by the
Corporation. It is acknowledged that the Trustee cannot monitor the
non-resident holders of the Trust Units if the Trust Units are
registered in the name of CDS. The Trustee shall not be liable for
any violation of the non-resident ownership restriction which may
occur during the term of the Trust.
3.11 SPECIAL VOTING UNITS
In addition to the Trust Units, there may be issued Special Voting
Units entitling the holders thereof to such number of votes at meetings of
Unitholders as may be prescribed by the Board of Directors of the Corporation
in the resolution authorizing the issuance of any such Special Voting Units.
Except for the right to vote at meetings of the Unitholders, the Special
Voting Units shall not confer upon the holders thereof any other rights; and
for greater certainty, the holders of Special Voting Units shall not be
entitled to any distributions of any nature whatsoever from the Trust or have
any beneficial interest in any assets of the trust on termination of the
Trust.
ARTICLE 4
INVESTMENTS OF TRUST FUND
4.1 PURPOSE OF THE TRUST
The Trust is hereby created for the following purposes:
(a) to participate in the Plan of Arrangement and the Trust
Reorganization including, without limitation, acquiring the NPI;
(b) investing in securities of AcquisitionCo, ExchangeCo or any other
subsidiary of the Trust and acquiring the Shares and the Notes
pursuant to the Trust Reorganization, which investments shall be for
the purpose of funding the acquisition, development, exploitation and
disposition of all types of petroleum and natural gas and energy
related assets, including without limitation, facilities of any kind,
oil sands interests, electricity or power generating assets and
pipeline, gathering, processing and transportation assets
(hereinafter referred to as "ENERGY ASSETS") and whether effected by
AcquisitionCo or any other subsidiary of the Trust through an
acquisition of assets or an acquisition of shares or other form of
ownership interest in any entity the substantial majority of the
assets of which are comprised of like assets;
(c) acquiring or investing in the securities of any other entity,
including without limitation bodies corporate, partnerships or
trusts, and borrowing funds or otherwise obtaining credit, including
the granting guarantees, for that purpose, for the purpose of
directly or indirectly acquiring Energy Assets;
(d) acquiring Direct Royalties;
(e) making loans or other advances to the Corporation in connection with
the Capital Fund;
(f) acquiring royalties in respect of Canadian resource properties as
defined in the Tax Act and making any deferred royalty purchase
payments which may be required with respect to such royalties;
provided
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however that in no event shall the Trust invest in any royalties
which constitute an interest in land or a covenant running with the
properties with respect to which such royalties relate;
(g) disposing of any part of the Trust Fund, including, without
limitation, any securities of the Corporation;
(h) temporarily holding cash and investments for the purposes of paying
the expenses and the liabilities of the Trust, making other
investments as contemplated by Section 4.2 hereof, paying amounts
payable by the Trust in connection with the redemption of any Trust
Units, and making distributions to Unitholders; and
(i) paying costs, fees and expenses associated with the foregoing
purposes or incidental thereto; and
(j) engaging in all activities ancillary or incidental to any of those
activities set forth in paragraphs 4.1(a) through 4.1(i), inclusive.
4.2 PERMITTED INVESTMENTS
Any funds within the Trust Fund that are not required to be invested
as provided in Section 4.1 shall be used by the Trust only to acquire
Permitted Investments or as permitted by Section 7.2(f) or Section 7.2(u).
4.3 OTHER INVESTMENT RESTRICTIONS
Notwithstanding anything contained in this Indenture, under no
circumstances shall the Trustee acquire any investment which (a) is "foreign
property" under any provision of the Tax Act if said purchase or other
transaction would cause the Trust Units themselves to be "foreign property"
under the Tax Act, or (b) would result in the Trust not being considered
either a "unit trust" or a "mutual fund trust" for purposes of the Tax Act.
The Trustee may consult with and receive direction from the Corporation with
respect to any investment to ensure compliance with this provision.
ARTICLE 5
DISTRIBUTIONS
5.1 DETERMINATION OF DISTRIBUTABLE CASH OF THE TRUST
In this Article 5, the "DISTRIBUTABLE CASH OF THE TRUST" for the
period ending on a Distribution Record Date shall be the amount calculated,
for the period commencing immediately following the preceding Distribution
Record Date (or, for the first Distribution Record Date, the period commencing
on the date hereof) and ending on such Distribution Record Date, on the
following basis:
(a) any amounts received or reasonably anticipated to be received before
the Payment Date pursuant to the Direct Royalties, any interest or
other income from Permitted Investments, and ARTC received by the
Trust shall be included in Distributable Cash of the Trust;
(b) any dividends, distributions or interest or principal repayments on
securities of the Corporation shall be included in Distributable Cash
of the Trust when received, or reasonably anticipated to be received
before the Payment Date;
(c) all other income received or reasonably anticipated to be received
before the Payment Date by the Trust since the immediately preceding
Distribution Record Date from investments of the Trust Fund; and
(d) all expenses and liabilities of the Trust which have been incurred or
may reasonably be anticipated to be incurred and any other amounts
required by law or hereunder to be deducted, withheld or paid with
respect to the Trust (including taxes) shall be deducted in computing
Distributable Cash of the Trust, including the following:
(i) Debt Service Charges;
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(ii) non-deductible Crown royalties that have been reimbursed by
the Trust pursuant to any royalty agreement;
(iii) the aggregate of all cash amounts paid in respect of the
redemption of Trust Units during such period of time; and
(iv) any amount, in addition to those amounts set forth above,
which the Corporation or the Trustee may reasonably consider
to be necessary to provide for the payment of any
liabilities which have been or will be incurred by the
Trust, including any tax liability of the Trust.
Items of income or expense not provided for above or in Section 5.4 shall be
included in such calculation on such basis as may be considered appropriate by
the Trustee upon the recommendation of the Corporation.
5.2 DISTRIBUTABLE CASH OF THE TRUST TO BECOME PAYABLE
The Trustee may, upon the recommendation of the Corporation, on or
before any Distribution Record Date, declare payable to the Unitholders on
that Distribution Record Date all or any part of the Distributable Cash of the
Trust for the period ending on that Distribution Record Date determined in
accordance with Section 5.1. The share of each Unitholder in the amount so
payable shall be the Pro Rata Share of such Unitholder determined as at that
Distribution Record Date; and subject to Section 5.8, such amount shall be
payable on that Distribution Record Date. Notwithstanding the foregoing, the
amount of any Distributable Cash of the Trust that is determined by the
Trustee to be required to be retained by the Trust in order to pay any tax
liability of the Trust shall not be payable by the Trust to Unitholders.
5.3 COMPUTATION OF INCOME AND NET REALIZED CAPITAL GAINS
(a) The income of the Trust (the "NET INCOME") for any taxation year of
the Trust shall be the income for such year computed in accordance
with the provisions of the Tax Act, other than paragraphs 82(1)(b)
and subsection 104(6) thereof, regarding the calculation of income
for the purposes of determining the "taxable income" of the Trust;
provided, however, the capital gains and capital losses shall be
excluded from the computation of Net Income.
(b) The net realized capital gains of the Trust (the "NET REALIZED
CAPITAL GAINS") for any taxation year of the Trust shall be
determined as the amount, if any, by which the aggregate of the
capital gains of the Trust realized in such year exceeds (i) the
aggregate of the capital losses of the Trust realized in such year,
and (ii) each amount determined by the Corporation in respect of any
such net capital loss for a prior taxation year which the Trust is
permitted by the Tax Act to deduct in computing the taxable income of
the Trust for such year.
(c) Notwithstanding subsections 5.3(a) and (b), Net Income and Net
Realized Capital Gains shall not include any income ("REDEMPTION
INCOME") or capital gains ("REDEMPTION GAINS"), respectively, which
are realized by the Trust, in accordance with the Tax Act, on a
distribution of Trust property to a Unitholder pursuant to an IN
SPECIE redemption of the Unitholder's Trust Units under section 18.5.
5.4 NET REALIZED CAPITAL GAINS TO BECOME PAYABLE
In addition to the distributions which are made payable to
Unitholders pursuant to section 5.2, the Trustee may, in its sole discretion,
in respect of a distribution period, declare a distribution to be payable, to
holders of Trust Units of record as at the close of business on the
Distribution Record Date for such distribution period, out of Net Income, Net
Realized Capital Gains, the capital of the Trust or otherwise, in any year, in
such amount or amounts, and on such dates as the Trustee may determine.
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5.5 NET INCOME AND NET REALIZED CAPITAL GAINS FOR INCOME TAX PURPOSES TO
BECOME PAYABLE
So as to ensure the allocation and distribution, to holders of Trust
Units, of all of the Net Income, Net Realized Capital Gains and any other
applicable amounts so that the Trust will not have any liability for tax under
the Tax Act in any year, the amount, if any, by which the Net Income and Net
Realized Capital Gains exceed the aggregate of:
(a) such part of the taxable capital gains of the Trust for the calendar
year required to be retained by the Trust to maximize its capital
gains refund for such year, unless any administrator has given
written notice to the Trustee that this clause is not to apply to the
Trust for that year by the end of the year; and
(b) any amount that became payable or was deemed to become payable by the
Trustee during the calendar year to Unitholders on the Trust Units
(other than amounts that became payable to Unitholders on the
redemption of their Trust Units);
shall, without any further actions on the part of the Trustee, be payable to
holders of Trust Units of record as of the close of business on the last
Distribution Record Date in such year. The share of each Unitholder in the
amount so payable shall be the Pro Rata Share of such Unitholder determined as
at the end of such year.
In addition to the distributions which are made payable to
Unitholders otherwise hereunder, the Trust shall allocate any Redemption
Income and Redemption Gains realized by the Trust in connection with the
redemption of Trust Units of a particular Unitholder pursuant to Article 18,
to that Unitholder, so that an amount equal to such Redemption Income and
Redemption Gains shall be allocated to and shall be treated as an amount paid
to the redeeming Unitholder. In addition, one-half (or any other proportion
that may be provided for from time to time under section 38 of the Tax Act) of
such Redemption Gains shall be designated as taxable capital gains of that
Unitholder under subsection 104(22) of the Tax Act, and any portion of the
Redemption Income and Redemption Gains in respect of that Unitholder as may be
income from a source in a country other than Canada, within the meaning of
subsection 104(22) of the Tax Act, shall be designated as that Unitholder's
income from that source in accordance with that subsection.
Distributions or amounts payable to Unitholders pursuant to this
Article 5 shall be deemed to be distributions of Net Income, Net Realized
Capital Gains, trust capital or other items in such amounts as the Trustee
shall, in its discretion, determine. For greater certainty, it is hereby
declared that any distribution of Net Realized Capital Gains shall include the
non-taxable portion of the capital gains of the Trust which are comprised in
such distribution.
Any amounts payable pursuant to this Section 5.5 may, at the option
of the Trustee, be paid through a distribution of additional Trust Units
having a value equal to the amount payable. For the purposes of this Section
5.5, the value of the additional Trust Units issued shall be determined using
the closing trading price (or, if there was no trade, the average of the last
bid and the last ask prices) of the Trust Units on December 31 (or, if
December 31 is not a Business Day, on the last preceding Business Day) on the
principal stock exchange where the Trust Units are listed or, if no so listed,
such other value as the Trustee shall determine.
5.6 OTHER AMOUNTS
Any amounts not otherwise payable to Unitholders prior to the end of
a particular fiscal year of the Trust pursuant to the provisions of Article 5
may be declared by the Trustee, upon the recommendation of the Corporation, to
be payable to Unitholders in the same manner as provided for in Section 5.2.
5.7 ENFORCEMENT
Each Unitholder shall have the right to enforce payment of any amount
payable to the Unitholder under this Article 5 (or a distribution of
additional Trust Units under Section 5.9, if applicable) at the time the
amount became payable. Absent a demand from a Unitholder to enforce payment,
such amount shall be paid to Unitholders on the Payment Date specified in
Section 5.8.
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5.8 PAYMENT OF AMOUNTS PAYABLE
Amounts payable to Unitholders pursuant to Sections 5.2 and 5.4 may
be paid by the Trust on any date (the "PAYMENT DATE") specified by the Trustee
as the applicable Distribution Record Date, or a day within 30 days after the
applicable Distribution Record Date and in the same calendar year.
5.9 DISTRIBUTION OF ADDITIONAL TRUST UNITS
Where after the last Distribution Record Date and on or before the
next Distribution Record Date an amount or amounts of cash has or have been or
is or are being paid under Section 18.3 in respect of Trust Units tendered for
redemption, the distribution payable to Unitholders on such next Distribution
Record Date shall include a distribution of additional Trust Units having a
value equal to the aggregate of such amounts, in which case the amount of cash
to be distributed on the distribution shall be reduced by the aggregate of
such amounts. In addition, if on any Distribution Record Date the Trust does
not have cash in an amount sufficient to pay the full distribution to be made
on such Distribution Record Date in cash, the distribution payable to
Unitholders on such Distribution Record Date may, at the option of the
Trustee, include a distribution of additional Trust Units having a value equal
to the cash shortfall, in which case the amount of cash to be distributed on
the distribution shall be reduced by the amount of such cash shortfall. For
the purposes of this Section 5.9, the value of the additional Trust Units to
be issued shall be determined using the closing trading price (or if there was
no trade, the average of the last bid and the last ask prices) of the Trust
Units on the Distribution Record Date (or, if the Distribution Record Date is
not a Business Day, on the last Business Day preceding the Distribution Record
Date) on the principal stock exchange where the Trust Units are listed or, if
not so listed, such other value as the Trustee shall determine.
5.10 WITHHOLDING TAXES
For greater certainty, in the event that withholding taxes are
exigible on any distributions or redemption amounts distributed under this
Indenture, the Trustee shall withhold the withholding taxes required and shall
promptly remit such taxes to the appropriate taxing authority. In the event
that withholding taxes are exigible on any distributions or redemption amounts
distributed under this Indenture and the Trustee is, or was, unable to
withhold taxes from a particular distribution to a Unitholder or has not
otherwise withheld taxes on past distributions to the Unitholder, the Trustee
shall be permitted to withhold amounts from other distributions to satisfy the
Trustee's withholding tax obligations.
ARTICLE 6
APPOINTMENT, RESIGNATION AND REMOVAL OF TRUSTEE
6.1 TRUSTEE'S TERM OF OFFICE
Subject to Sections 6.2 and 6.3, Valiant Trust Company is hereby
appointed as Trustee hereunder for an initial term of office which shall
expire upon the conclusion of the third annual meeting of Unitholders. The
Unitholders shall, at the third annual meeting of the Unitholders, reappoint,
or appoint a successor to the Trustee, and thereafter, the Unitholders shall
reappoint or appoint a successor to the Trustee at the annual meeting of
Unitholders three years following the reappointment or appointment of the
successor to the Trustee. Any such reappointment or appointment shall be made
either by an Ordinary Resolution at such meeting of Unitholders or shall be
made in the manner set out in Section 6.4. Notwithstanding the foregoing, if a
Trustee is not reappointed at the meeting of Unitholders held immediately
before the term of office of such Trustee expires and if no successor to such
Trustee is appointed at that meeting, such Trustee shall continue to hold the
office of Trustee under this Indenture until a successor has been appointed
under Section 6.4.
6.2 RESIGNATION OF TRUSTEE
The Trustee may resign from the office of trustee hereunder on giving
not less than 60 days' notice in writing to the Corporation; provided that no
such resignation shall be effective until (i) the appointment of, and
acceptance of such appointment by, a new Trustee in the place of the resigning
Trustee has been made in the manner
16
set out in Section 6.4, and (ii) the legal and valid assumption by the new
Trustee of all obligations of the Trustee related hereto in the same
capacities as the resigning Trustee.
6.3 REMOVAL OF TRUSTEE
The Trustee shall be removed by notice in writing delivered by the
Corporation to the Trustee in the event that, at any time, the Trustee shall
no longer satisfy all of the requirements in Section 6.6, or shall be declared
bankrupt or insolvent, or shall enter into liquidation, whether compulsory or
voluntary (and not being merely a voluntary liquidation for the purposes of
amalgamation or reconstruction), or if the assets of the Trustee shall
otherwise become liable to seizure or confiscation by any public or
governmental authority, or if the Trustee shall otherwise become incapable of
performing, or shall fail in any material respect to perform its
responsibilities under this Indenture or as a result of a material increase in
the fees charged by the Trustee. No decision to remove a Trustee under this
Section 6.3 shall become effective until (i) approved by a Special Resolution
at a meeting of Unitholders duly called for that purpose, (ii) the appointment
of, and acceptance of such appointment by, a new Trustee under Section 6.4 in
the place of the Trustee to be removed, and (iii) the legal and valid
assumption by the new Trustee of all obligations of the Trustee related hereto
in the same capacities as the resigning Trustee.
6.4 APPOINTMENT OF SUCCESSOR TO TRUSTEE
(a) A successor Trustee to a Trustee which has been removed by a Special
Resolution of Unitholders under Section 6.3, shall be appointed by an
Ordinary Resolution at a meeting of Unitholders duly called for that
purpose, provided the successor meets the requirements of Section
6.6.
(b) Subject to Section 6.6, the Corporation may appoint a successor to
any Trustee which has been removed by a Special Resolution of the
Unitholders under Section 6.3, or which has not been reappointed
under Section 6.1, if the Unitholders fail to do so at such meeting.
(c) Subject to Section 6.6, the Corporation may appoint a successor to
any trustee which has given a notice of resignation under Section
6.2.
No appointment of any successor Trustee shall be effective until such
successor Trustee shall have complied with the provisions of Section 6.2(ii).
6.5 FAILURE TO APPOINT SUCCESSOR
In the event that no successor Trustee to a Trustee who has delivered
a notice of resignation in accordance with Section 6.2, or who has received
notice of removal in accordance with Section 6.3, has accepted an appointment
within 120 days after the receipt by the Corporation of the notice of
resignation, or 60 days after the receipt by the Trustee of the notice of
removal, the Trustee, the Corporation or any Unitholder may apply to a court
of competent jurisdiction for the appointment of a successor to the Trustee.
The appointment of such successor by such court shall not require the approval
of Unitholders.
6.6 QUALIFICATIONS OF TRUSTEE
The Trustee and any successor to the Trustee or new Trustee appointed
under this Article 6 shall be a corporation incorporated under the laws of
Canada or of a province thereof and shall be a resident of Canada for the
purposes of the Tax Act. Such corporation must at all times when it is the
Trustee be registered under the laws of the Province of Alberta to carry on
the business of a trust company and must have undertaken in writing to
discharge all of the obligations and responsibilities of the Trustee under
this Indenture.
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ARTICLE 7
CONCERNING THE TRUSTEE
7.1 POWERS OF THE TRUSTEE AND THE CORPORATION
(a) Subject to the terms and conditions of this Indenture or other
contracts or obligations of the Trustee or the Trust, the Trustee may
exercise from time to time in respect of the Trust Fund any and all
rights, powers and privileges that could be exercised by a beneficial
owner thereof except as specifically designated in Subsection (b)
below. The responsibilities of the Trustee hereunder are however
limited to those specific powers granted to it (subject to
delegations to the Corporation) and the Trustee has no obligations to
Unitholders or to the Corporation beyond the obligations specifically
set out herein.
(b) The Corporation shall exercise from time to time any and all rights,
powers and privileges in relation to all matters relating to:
(i) the maximization of Unitholder value in the context of a
response to an offer for Trust Units or for all or
substantially all of the property and assets of the Trust or
the Corporation or any subsidiary of the Corporation or the
Trust (an "OFFER") including: (A) any Unitholder rights
protection plan either prior to or during the course of any
Offer; (B) any defensive action either prior to or during
the course of any Offer; (C) the preparation of any
"Directors' Circular" in response to any Offer; (D)
consideration on behalf of Unitholders and recommendations
to Unitholders in response to any Offer; (E) any regulatory
or court action in respect of any related matters; and (F)
the carriage of all related and ancillary matters; and
(ii) the Plan of Arrangement and the Trust Reorganization,
including any and all matters relating to the incorporation
and organization of AcquisitionCo;
and the Corporation accepts such responsibility and agrees that, in
respect of such matters, it shall carry out its functions honestly,
in good faith and in the best interests of the Trust and the
Unitholders and, in connection therewith, shall exercise that degree
of care, diligence and skill that a reasonably prudent person would
exercise in comparable circumstances. The Corporation may, and if
directed by the Corporation in writing, the Trustee shall, execute
any agreements on behalf of the Trust as the Corporation shall have
authorized within the scope of the exercise of any such rights,
powers or privileges.
7.2 SPECIFIC POWERS AND AUTHORITIES
Subject only to the express limitations contained in this Indenture
or other contracts or obligations of the Trustee or the Trust, and in addition
to any powers and authorities conferred by this Indenture (including, without
limitation, Section 7.1 hereof) or which the Trustee may have by virtue of any
present or future statute or rule of law, the Trustee, without any action or
consent by the Unitholders, shall have the following powers and authorities
which may be exercised by it from time to time or delegated by it, as herein
provided, in its sole judgment and discretion and in such manner and upon such
terms and conditions as it may from time to time deem proper, provided that
the exercise of such powers and authorities does not adversely affect the
status of the Trust as a "unit trust" and a "mutual fund trust" for the
purposes of the Tax Act:
(a) to accept subscriptions for Trust Units received by the Trust and to
issue Trust Units pursuant thereto;
(b) to maintain books and records;
(c) to provide timely reports to Unitholders in accordance with the
provisions hereof;
(d) to effect payment of distributions to Unitholders;
(e) to apply for ARTC;
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(f) to deposit funds of the Trust in interest-bearing accounts in banks,
the Alberta Treasury Branch or trust companies whose short term
obligations constitute Permitted Investments, including those of the
Trustee, the same to be subject to withdrawal on such terms and in
such manner and by such person or persons (including any one or more
officers, agents or representatives) as the Trustee may determine;
(g) to, directly or indirectly, borrow money from or incur indebtedness
to any person and in connection therewith, to guarantee, indemnify or
act as a surety with respect to payment or performance of any
indebtedness, liabilities or obligation of any kind of any person,
including, without limitation, the Corporation and any subsidiary of
the Trust (as defined in the SECURITIES ACT (Alberta)); to enter into
any other obligations on behalf of the Trust; or enter into any
subordination agreement on behalf of the Trust or any other person,
and to assign, charge, pledge, hypothecate, convey, transfer,
mortgage, subordinate, and grant any security interest, mortgage or
encumbrance over or with respect to all or any of the Trust Fund or
to subordinate the interests of the Trust in the Trust Fund to any
other person;
(h) to possess and exercise all the rights, powers and privileges
pertaining to the ownership of all or any part of the assets of the
Trust, to the same extent that an individual might, unless otherwise
limited herein, and, without limiting the generality of the
foregoing, to vote or give any consent, request or notice, or waive
any notice, either in person or by proxy or power of attorney, with
or without power of substitution, to one or more persons, which
proxies and power of attorney may be for meetings or action generally
or for any particular meeting or action and may include the exercise
of discretionary power;
(i) where reasonably required, to engage or employ any persons as agents,
representatives, employees administrator, consultants or independent
contractors (including, without limitation, investment advisers,
registrars, underwriters, accountants, lawyers, appraisers, brokers
or otherwise) in one or more capacities;
(j) to collect, ▇▇▇ for and receive all sums of money coming due to the
Trust, and to engage in, intervene in, prosecute, join, defend,
compromise, abandon or adjust, by arbitration or otherwise, any
actions, suits, proceedings, disputes, claims, demands or other
litigation relating to the Trust, the assets of the Trust or the
Trust's affairs, to enter into agreements therefor, whether or not
any suit is commenced or claim accrued or asserted and, in advance of
any controversy, to enter into agreements regarding the arbitration,
adjudication or settlement thereof, provided that prior to taking any
such action the Trustee may require from the Corporation a specific
indemnity in relation thereto and funding with respect to the
expenses or costs associated with such action. The Trustee shall in
any event be reimbursed by the Corporation for all costs and expenses
incurred in respect of the matters provided for in this Subsection;
(k) to arrange for insurance contracts and policies insuring the assets
of the Trust against any and all risks and insuring the Trust and/or
any or all of the Trustee or the Unitholders against any and all
claims and liabilities of any nature asserted by any person arising
by reason of any action alleged to have been taken or omitted by the
Trust or by the Trustee or Unitholders;
(l) to cause legal title to any of the assets of the Trust to be held by
and/or in the name of the Trustee, or except as prohibited by law, by
and/or in the name of the Trust, or any other person, on such terms,
in such manner, with such powers in such person as the Trustee may
determine and with or without disclosure that the Trust or the
Trustee is interested therein, provided that should legal title to
any of the assets of the Trust be held by and/or in the name of any
person other than the Trustee or the Trust, the Trustee shall require
such person to execute a trust agreement acknowledging that legal
title to such assets is held in trust for the benefit of the Trust;
(m) to make, execute, acknowledge and deliver any and all deeds,
contracts, waivers, releases or other documents of transfer and any
and all other instruments in writing necessary or proper for the
accomplishment of any of the powers herein granted;
(n) to pay out of the Trust Fund the Trust Expenses;
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(o) except as prohibited by law, to delegate any or all of the management
and administrative powers and duties of the Trustee to the
Corporation or to any one or more agents, representatives, officers,
employees, independent contractors or other persons without liability
to the Trustee except as provided in this Indenture;
(p) to guarantee the obligations of the Corporation or any other
Affiliate of the Trust pursuant to any debt for borrowed money or
obligations resulting or arising from hedging instruments incurred by
the Corporation or any such Affiliate, as the case may be, and
pledging securities issued by the Corporation or the Affiliate, as
the case may be, as security for such guarantee provided that such
guarantee is incidental to the Trust's direct or indirect investment
in the Corporation or any such Affiliate or the business and affairs
(existing or proposed) of the Corporation or any such Affiliate, and
each such guarantee entered into by the Trustee shall be binding
upon, and enforceable in accordance with its terms against, the
Trust;
(q) notwithstanding any limitations contained in this Indenture or any
other contracts or obligations of the Trustee or the Trust and the
introductory proviso to this Section 7.2, to enter into on behalf of
the Trust and observe and perform its obligations and the obligations
of the Trust under any agreements with any Lender, including, without
limitation, compliance with any provisions thereof which may restrict
the powers of the Trustee hereunder or preclude the Trustee from
acting in certain circumstances on resolutions of the Unitholders as
might otherwise be provided for hereunder, and each such agreement
entered into by the Trustee shall be binding upon, and enforceable in
accordance with its terms against, the Trust;
(r) to enter into a subordination agreement with any Lender to the
Corporation or any Affiliate of the Trust pursuant to which the Trust
agrees to subordinate its right to receive income (or any other
obligations of the Corporation or any Affiliate to the Trust) to the
right of any such Lender to be paid obligations owing to it by the
Corporation or any Affiliate of the Trust, and which agreement may
further provide, without limitation, that in the event of a default
by the Corporation or any such Affiliate to any of its Lenders,
including any such default in connection with credit or debt
facilities, swap or hedging agreements or any other ancillary
facilities, none of the Corporation or any such Affiliate will make
any further payments in respect of such obligations to the Trust and
the Trust will not make any further cash distributions to
Unitholders, and each such subordination entered into by the Trustee
shall be binding upon, and enforceable in accordance with its terms
against, the Trust;
(s) to do all such other acts and things as are incidental to this
Section 7.2, and to exercise all powers which are necessary or useful
to carry on the business of the Trust, to promote any of the purposes
for which the Trust is formed and to carry out the provisions of this
Indenture;
(t) to use reasonable efforts to ensure that the Trust complies at all
times with the requirements of Subsections 108(2) and 132(6) of the
Tax Act;
(u) to advance any amount to the Corporation or any other Affiliate of
the Trust as a loan, including amounts in the Capital Fund which may
be advanced to the Corporation to finance future acquisition and
development of the Properties;
(v) to enter into, perform and enforce the Material Contracts;
(w) without limiting any of the provisions hereof, to pay out of the
Trust Fund:
(i) Agent's Fees and Underwriter's Fees;
(ii) the purchase price of Direct Royalties and amounts in
respect of Permitted Investments and Subsequent Investments;
(iii) Issue Expenses; and
(iv) all expenses incurred in connection with the Plan of
Arrangement and the Trust Reorganization;
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all as contemplated by the Offering Documents, this Indenture, or the
other Material Contracts;
(x) to charge, mortgage, hypothecate and/or pledge on behalf of the Trust
all or any of the currently owned or subsequently acquired monies,
properties and assets comprising the Trust Fund to secure any monies
borrowed, and to execute and deliver a guarantee or other assurance
in favour of any Lender for the obligations of the Corporation, or
any Affiliate of the Trust, the Corporation and any security, deposit
or offset agreements or arrangements in respect of any such guarantee
or assurance and each such agreement entered into by the Trustee
shall be binding upon, and enforceable in accordance with its terms
against, the Trust;
(y) to convey the Direct Royalties in connection with any security to or
realization by any Lender upon the Properties;
(z) to form any subsidiary of the Trust for the purpose of making any
Subsequent Investment and entering into or amending any unanimous
shareholders agreement or other agreement on such terms as may be
approved by the board of directors of the Corporation;
(aa) to provide indemnities for the directors and officers of any
Affiliates;
(bb) to hold the Notes issued by the Corporation;
(cc) to distribute Notes as provided in Article 18;
(dd) to vote Subsequent Investments held by the Trust which carry voting
rights in such manner as may be approved by the board of directors of
the Corporation; and
(ee) without limit as to amount, cost, or conditions of reimbursement, to
issue any type of debt securities or convertible debt securities and
to borrow money or incur any other form of indebtedness for the
purpose of carrying out the purposes of the Trust or for other
expenses incurred in connection with the Trust and for such purposes
may draw, make, execute and issue promissory notes and other
negotiable and non-negotiable instruments or securities and evidences
of indebtedness, secure the payment of sums so borrowed or
indebtedness incurred and mortgage, pledge, assign or grant a
security interest in any money owing to the Trust or engage in any
other means of financing the Trust.
7.3 RESTRICTIONS ON THE TRUSTEE'S POWERS
Notwithstanding anything contained in this Indenture:
(a) the Trustee shall not vote, or cause to be voted, as the case may be,
the Shares with respect to: the election of directors of the
Corporation, or the appointment of auditors of the Corporation; or,
the approval of the financial statements of the Corporation (if
required by applicable legislation); except in accordance with an
Ordinary Resolution adopted at an annual meeting of Unitholders;
(b) the Trustee shall not, after the Date of Closing, vote, or cause to
be voted, as the case may be, the Shares to authorize:
(i) any sale, lease or other disposition of, or any interest in,
all or substantially all of the assets of the Corporation,
except in conjunction with an internal reorganization of the
direct or indirect assets of the Corporation as a result of
which either the Corporation or the Trust has the same, or
substantially similar, interest, whether direct or indirect,
in the assets as the interest, whether direct or indirect,
that it had prior to the reorganization;
(ii) any statutory amalgamation of the Corporation with any other
corporation or any amalgamation, merger or other
transaction, as the case may be, of the Corporation with any
other entity, except in conjunction with an internal
reorganization as referred to in paragraph (i) above;
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(iii) any statutory arrangement involving the Corporation, except
in conjunction with an internal reorganization as referred
to in paragraph (i) above;
(iv) any amendment to the articles of the Corporation to increase
or decrease the minimum or maximum number of directors; or
(v) any material amendment to the articles of the Corporation to
change the authorized share capital or amend the rights,
privileges, restrictions and conditions attaching to any
class of the Corporation's Shares in a manner which may be
prejudicial to the Trust other than the creation of
additional classes of Exchangeable Shares;
without the approval of the Unitholders by Special Resolution at a
meeting of Unitholders called for that purpose.
7.4 BANKING
The banking activities of the Trust, or any part thereof, shall be
transacted with such financial institution (including the Trustee or an
Affiliate thereof) or other person carrying on a financial services business
as the Trustee may designate, appoint or authorize from time to time and all
such financial services business, or any part thereof, shall be transacted on
the Trust's behalf by such one or more officers of the Trustee and/or other
persons as the Trustee may designate, appoint or authorize from time to time
(who may be officers or employees of the Corporation) including, but without
restricting the generality of the foregoing, the operation of the Trust's
accounts; the making, signing, drawing, accepting, endorsing, negotiating,
lodging, depositing or transferring of any cheques, promissory notes, drafts,
bankers' acceptances, bills of exchange, letters of credit and orders for the
payment of money; the giving of receipts for and orders relating to any
property of the Trust; the execution of any agreement relating to any property
of the Trust; the execution of any agreement relating to any such financial
services business and defining the rights and powers of the parties hereto;
and the authorizing of any officer of such financial institution, or any
trustee or agent thereof to do any act or thing on the Trust's behalf to
facilitate such banking business.
7.5 STANDARD OF CARE
Except as otherwise provided herein, the Trustee shall exercise its
powers and carry out its functions hereunder as Trustee honestly, in good
faith and in the best interests of the Trust and the Unitholders and, in
connection therewith, shall exercise that degree of care, diligence and skill
that a reasonably prudent trustee would exercise in comparable circumstances,
subject to compliance by the Trustee with any agreements contemplated hereby
which may be binding on the Trustee or the Trust. Unless otherwise required by
law, the Trustee shall not be required to give bond, surety or security in any
jurisdiction for the performance of any duties or obligations hereunder. The
Trustee, in its capacity as trustee, shall not be required to devote its
entire time to the business and affairs of the Trust.
7.6 FEES AND EXPENSES
The Trustee shall be paid by the Corporation such fees as may be
agreed upon from time to time by the Corporation and the Trustee and if such
fees are not paid by the Corporation within 30 days after the date of any
invoice in respect thereof, the Trustee shall be entitled to have such fees
paid out of the Trust Fund. As part of the Trust Expenses, the Trustee may pay
or cause to be paid reasonable fees, costs and expenses incurred in connection
with the administration and management of the Trust, including (without
limitation) fees of auditors, lawyers, appraisers and other agents,
consultants and professional advisers employed by or on behalf of the Trust
and the cost of reporting or giving notices to Unitholders. All costs, charges
and expenses (including any amounts payable to the Trustee under Section 7.8
or 7.9) properly incurred by the Trustee on behalf of the Trust shall be
payable by the Corporation, and if any such costs, charges and expenses are
not paid by the Corporation within 30 days after the date of any invoice in
respect thereof, the Trustee shall be entitled to have such costs, charges and
expenses paid out of the Trust Fund. The Trustee shall have a lien on the
Trust Fund (which shall have priority over
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the interests of the Unitholders pursuant hereto) to enforce payment of the
fees, costs, expenses and other amounts payable or reimbursable by the Trust
to the Trustee.
7.7 LIMITATIONS ON LIABILITY OF TRUSTEE
The Trustee, its directors, officers, employees, shareholders and
agents shall not be liable to any Unitholder or any other person, in tort,
contract or otherwise, in connection with any matter pertaining to the Trust
or the Trust Fund, arising from the exercise by the Trustee of any powers,
authorities or discretion conferred under this Indenture, including, without
limitation, any action taken or not taken in good faith in reliance on any
documents that are, PRIMA FACIE, properly executed, any depreciation of, or
loss to, the Trust Fund incurred by reason of the sale of any asset, any
inaccuracy in any evaluation provided by any appropriately qualified person,
any reliance on any such evaluation, any action or failure to act of the
Corporation, or any other person to whom the Trustee has, with the consent of
the Corporation, delegated any of its duties hereunder, or any other action or
failure to act (including failure to compel in any way any former trustee to
redress any breach of trust or any failure by the Corporation to perform its
duties under or delegated to it under this Indenture or any other contract),
unless such liabilities arise out of the negligence, wilful default or fraud
of the Trustee or any of its directors, officers, employees, shareholders, or
agents. If the Trustee has retained an appropriate expert or adviser or
Counsel with respect to any matter connected with its duties under this
Indenture or any other contract, the Trustee may act or refuse to act based on
the advice of such expert, adviser or Counsel, and the Trustee shall not be
liable for and shall be fully protected from any loss or liability occasioned
by any action or refusal to act based on the advice of any such expert,
adviser or Counsel. In the exercise of the powers, authorities or discretion
conferred upon the Trustee under this Indenture, the Trustee is and shall be
conclusively deemed to be acting as Trustee of the assets of the Trust and
shall not be subject to any personal liability for any debts, liabilities,
obligations, claims, demands, judgments, costs, charges or expenses against or
with respect to the Trust or the Trust Fund.
7.8 INDEMNIFICATION OF TRUSTEE
The Trust (to the extent of the Trust Fund) is liable to,
and shall indemnify and save harmless the Trustee and each of its directors,
officers, employees, shareholders and agents in respect of:
(a) any liability and all costs, charges and expenses sustained or
incurred in respect of any action, suit or proceeding that is
proposed or commenced against the Trustee or against such directors,
officers, employees, shareholders or agents, as the case may be, for
or in respect of any act, omission or error in respect of the Trust
and the Trustee's execution of all duties and responsibilities and
exercise of all powers and authorities pertaining thereto; and
(b) all other costs, charges, taxes, penalties and interest in respect of
unpaid taxes; and
(c) all other expenses and liabilities sustained or incurred by the
Trustee in respect of the administration or termination of the Trust;
unless any of the foregoing arise out of the negligence, wilful default or
fraud of the Trustee or any of its directors, officers, employees,
shareholders or agents, in which case the provisions of this Section 7.8 shall
not apply.
7.9 ENVIRONMENTAL INDEMNITY
The Trust (to the extent of the Trust Fund) is liable to, and shall
indemnify and save harmless, the Trustee, its directors, officers, employees,
shareholders and agents, and all of their successors and assigns
(collectively, the "INDEMNIFIED PARTIES") against any loss, expense, claim,
charge, damage, penalty, liability or asserted liability (including strict
liability and costs and expenses of abatement and remediation of spills or
releases of contaminants and liabilities of the Indemnified Parties to third
parties, including governmental agencies, in respect of bodily injuries,
property damage, damage to or impairment of the environment or any other
injury or damage and including liabilities of the Indemnified Parties to third
parties for the third parties' foreseeable and unforeseeable consequential
damages) incurred as a result of:
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(a) the administration of the Trust created hereby; or
(b) the exercise by the Trustee of any rights or obligations hereunder;
and which result from or relate, directly or indirectly, to;
(c) the presence or release or threatened presence or release of any
contaminants, by any means or for any reason, on or in respect of the
Properties, whether or not such presence or release or threatened
presence or release of the contaminants was under the control, care
or management of the Trust, the Corporation, or of a previous owner
or operator of a Property;
(d) any contaminant present on or released from any property adjacent to
or in the proximate area of the Properties;
(e) the breach or alleged breach of any federal, provincial or municipal
environmental law, regulation, bylaw, order, rule or permit by the
Trust, the Corporation or an owner or operator of a Property; or
(f) any misrepresentation or omission of a known fact or condition made
by the Corporation relating to any Property.
For the purpose of this Section 7.9, "liability" shall include: (i)
liability of an Indemnified Party for costs and expenses of abatement and
remediation of spills and releases of contaminants; (ii) liability of an
Indemnified Party to a third party to reimburse the third party for bodily
injuries, property damage and other injuries or damages which the third party
suffers, including (to the extent, if any, that the Indemnified Party is
liable therefor) foreseeable and unforeseeable consequential damages suffered
by the third party; and (iii) liability of the Indemnified Party for damage to
or impairment of the environment.
Notwithstanding the foregoing, the Trust shall not be liable to
indemnify an Indemnified Party against any loss, expense, claim, liability or
asserted liability to the extent resulting from the negligence, wilful default
or fraud of the Indemnified Party.
7.10 APPARENT AUTHORITY
No purchaser, transfer agent or other person dealing with the Trustee
or with any officer, employee or agent of the Trustee shall be bound to make
any inquiry concerning the validity of any transaction purporting to be made
by the Trustee or by such officer, employee or agent or make inquiry
concerning, or be liable for, the application of money or property paid, lent
or delivered to or on the order of the Trustee or of such officer, employee or
agent. Any person dealing with the Trustee in respect of any matter pertaining
to the Trust Fund and any right, title or interest therein shall be entitled
to rely on a certificate, statutory declaration or resolution executed or
certified on behalf of the Trustee as to the capacity, power and authority of
any officer, employee or any other person to act for and on behalf and in the
name of the Trust.
7.11 NOTICE TO UNITHOLDERS OF NON-ELIGIBILITY FOR DEFERRED INCOME PLANS
If the Trustee becomes aware that the Trust Units have ceased to be
eligible investments for registered retirement savings plans, registered
retirement income funds, registered education savings plans and deferred
profit sharing plans (all within the meaning of the Tax Act) or any of such
plans, the Corporation shall give notice to Unitholders at their latest
address as shown on the register of Unitholders that Trust Units have ceased
to be eligible investments for such plans. Notwithstanding the foregoing, the
Trustee and the Corporation shall not be liable to the Trust or to any
Unitholder for any costs, expenses, charges, penalties or taxes imposed upon a
Unitholder as a result of or by virtue of a Trust Unit not being an eligible
investment for any such plan, notwithstanding any failure or omission of the
Corporation to have given such notice, provided the Trustee has complied with
Section 7.5.
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7.12 DECLARATION AS TO BENEFICIAL OWNERSHIP
The Trustee may require any Unitholder, as shown on the register of
Unitholders, to provide a declaration in a form prescribed by the Corporation
as to the beneficial ownership of Trust Units registered in such Unitholder's
name and as to the jurisdiction in which such beneficial owners are resident.
7.13 CONDITIONS PRECEDENT TO TRUSTEE'S OBLIGATIONS TO ACT
The obligation of the Trustee to call any meeting pursuant to Article
10 or to commence to wind up the affairs of the Trust pursuant to Article 12
shall be conditional upon the Unitholders or another person furnishing, when
required by notice in writing by the Trustee, sufficient funds to commence or
continue such act, action or proceeding and indemnity (to the extent
sufficient funds for such purpose are not available in the Trust Fund)
reasonably satisfactory to the Trustee to protect and hold harmless the
Trustee against the costs, charges and expenses and liabilities to be incurred
therein and any loss and damage it may suffer by reason thereof and the
obligation of the Trustee to commence or continue any act, action or
proceeding for the purpose of enforcing the rights of the Trustee and of the
Unitholders shall, if required by notice in writing by the Trustee, be subject
to the same conditions as to funding and indemnity. 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.
7.14 SURVIVAL OF INDEMNITIES
All indemnities, all limitations of liability and all other
provisions for the protection of the Trustee provided for in this Indenture
shall survive the termination of this Indenture under Article 12 and the
removal or resignation of the Trustee under Article 6.
7.15 TRUSTEE MAY HAVE OTHER INTERESTS
Subject to applicable securities laws, and without affecting or
limiting the duties and responsibilities or the limitations and indemnities
provided in this Indenture, the Trustee is hereby expressly permitted to:
(a) be an Associate or an Affiliate of a person from or to whom assets of
the Trust have been or are to be purchased or sold;
(b) be, or be an Associate or an Affiliate of, a person with whom the
Trust or the Corporation contracts or deals or which supplies
services to the Trust or the Corporation;
(c) acquire, hold and dispose of, either for its own account or the
accounts of its customers, any assets not constituting part of the
Trust Fund, even if such assets are of a character which could be
held by the Trust, and exercise all rights of an owner of such assets
as if it were not a trustee;
(d) carry on its business as a trust company in the usual course while it
is the Trustee, including the rendering of trustee or other services
to other trusts and other persons for gain; and
(e) derive direct or indirect benefit, profit or advantage from time to
time as a result of dealing with the Trust or the relationships,
matters, contracts, transactions, affiliations or other interests
stated in this Section 7.15 without being liable to the Trust or any
Unitholder for any such direct or indirect benefit, profit or
advantage.
Subject to applicable laws, none of the relationships, matters, contracts,
transactions, affiliations or other interests permitted above shall be, or
shall be deemed to be or to create, a material conflict of interest with the
Trustee's duties hereunder.
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7.16 DOCUMENTS HELD BY TRUSTEE
Any securities, documents of title or other instruments that may at
any time be held by the Trustee subject to the trusts hereof may be placed in
the deposit vaults of the Trustee or of any chartered bank in Canada,
including an Affiliate of the Trustee, or deposited for safekeeping with any
such bank.
ARTICLE 8
DELEGATION OF POWERS
8.1 GENERAL DELEGATION TO THE CORPORATION
Except as expressly prohibited by law, the Trustee may grant or
delegate to the Corporation such authority as the Trustee may in its sole
discretion deem necessary or desirable to effect the actual administration of
the duties of the Trustee under this Indenture, without regard to whether such
authority is normally granted or delegated by trustees. The Trustee may grant
broad discretion to the Corporation to administer and manage the day-to-day
operations of the Trust Fund, to act as agent for the Trust Fund, to execute
documents on behalf of the Trust Fund and to make executive decisions which
conform to general policies and general principles set forth herein or
previously established by the Trustee. The Corporation shall have the powers
and duties expressly provided for herein and in any other agreement providing
for the management or administration of the Trust (including the
Administration Agreement) including, without limitation, the power to retain
and instruct such appropriate experts or advisors to perform those duties and
obligations herein which it is not qualified to perform (and the Corporation
shall notify the Trustee of the name of the person or persons retained or
instructed and the terms and conditions thereof). Upon the closing of the
Arrangement or such other time as is directed by the Trustee, the Trustee
shall enter into an Administration Agreement with the Corporation. The
Corporation, in its capacity as administrator and manager of the Trust, may be
referred to hereunder or in any other document or agreement executed by it in
such capacity as either the "ADMINISTRATOR" or the "MANAGER".
8.2 SIGNIFICANT MATTERS DELEGATION
The Trustee hereby delegates to the Corporation responsibility for
any or all matters relating to the following: (i) an Offering; (ii) ensuring
compliance with all applicable laws, including in relation to an Offering;
(iii) all matters relating to the content of any Offering Documents, the
accuracy of the disclosure contained therein, and the certification thereof;
(iv) all matters concerning the terms of, and amendment from time to time of
the Material Contracts; (v) all matters concerning any subscription agreement
or Underwriting Agreement or Agency Agreement providing for the sale or issue
of Trust Units or securities convertible for or exchangeable into Trust Units
or rights to Trust Units; (v) all matters relating to the redemption of Trust
Units; (vi) all matters relating to the voting rights on any investments in
the Trust Fund or any Subsequent Investments; (vii) all matters relating to
the specific powers and authorities set forth in Section 7.2(g), 7.2(p),
7.2(r) and Section 7.4; (viii) all matters relating to the Plan of Arrangement
and the Trust Reorganization; and (ix) the adoption of a Unitholder rights
plan and without limitation those matters set forth in Section 7.1(b) hereof.
8.3 ACCEPTANCE OF DELEGATION
The Corporation accepts the delegations in this Article 8 and agrees
that, in respect of such matters, it shall carry out its functions honestly,
in good faith and in the best interests of the Trust and the Unitholders and,
in connection therewith, shall exercise that degree of care, diligence and
skill that a reasonably prudent person would exercise in comparable
circumstances. The Corporation may, and if directed by the Corporation in
writing the Trustee shall, execute any agreements on behalf of the Trust as
the Corporation shall have authorized within the scope of any authority
delegated to it hereunder.
8.4 POWER OF ATTORNEY
Without limiting any of the other provisions of this Article 8, the
Trustee hereby delegates to the Corporation from time to time the full power
and authority, and constitutes the Corporation its true and lawful attorney in
fact, to sign on behalf of the Trust:
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(a) all rights plans, prospectuses, annual information forms, management
proxy circulars, other Offering Documents and any other documents
ancillary or similar thereto required to be signed by the Trust from
time to time, including any Agency Agreements, indemnity agreements
(pursuant to which the Trust and not the Trustee provides
indemnities) or documents ancillary or similar thereto; and
(b) any and all agreements relating to the Plan of Arrangement and the
Trust Reorganization and any document ancillary or similar thereto
required to be signed by the Trust from time to time, including all
documents relating to the incorporation and organization of
AcquisitionCo.
8.5 LIABILITY OF TRUSTEE
The Trustee shall have no liability or responsibility for any matters
delegated to the Corporation hereunder or under any of the Material Contracts,
and the Trustee, in relying upon the Corporation and in entering into the
Material Contracts, shall be deemed to have complied with its obligations
under Section 7.5 and shall be entitled to the benefit of the indemnities,
limitations of liability and other protection provisions provided for herein.
ARTICLE 9
AMENDMENT
9.1 AMENDMENT
Except as specifically provided otherwise herein, the provisions of
this Indenture and the Administration Agreement, may only be amended by the
Trustee with the consent of the Unitholders by Special Resolution.
Any of the provisions of this Indenture may be amended by the Trustee
at any time or times, without the consent, approval or ratification of any of
the Unitholders or any other person for the purpose of:
(a) ensuring that the Trust will comply with any applicable laws or
requirements of any governmental agency or authority of Canada or of
any province;
(b) ensuring that the Trust will satisfy the provisions of each of
subsections 108(2) and 132(6) of the Tax Act as from time to time
amended or replaced;
(c) ensuring that such additional protection is provided for the
interests of Unitholders as the Trustee may consider expedient;
(d) removing or curing any conflicts or inconsistencies between the
provisions of this Indenture or any supplemental indenture, any
Direct Royalties Sale Agreement and any other agreement of the Trust
or any Offering Document with respect to the Trust, or any applicable
law or regulation of any jurisdiction, provided that in the opinion
of the Trustee the rights of the Trustee and of the Unitholders are
not prejudiced thereby;
(e) providing for the electronic delivery by the Trust to Unitholders of
documents relating to the Trust (including annual and quarterly
reports, including financial statements, notices of Unitholder
meetings and information circulars and proxy related materials) at
such time as applicable securities laws have been amended to permit
such electronic delivery in place of normal delivery procedures,
provided that such amendments to the Indenture are not contrary to or
do not conflict with such laws;
(f) curing, correcting or rectifying any ambiguities, defective or
inconsistent provisions, errors, mistakes or omissions, provided that
in the opinion of the Trustee the rights of the Trustee and of the
Unitholders are not prejudiced thereby; and
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(g) making any modification in the form of Trust Unit Certificates to
conform with the provisions of this Indenture, or any other
modifications, provided the rights of the Trustee and of the
Unitholders are not prejudiced thereby.
Notwithstanding the foregoing, no amendment shall reduce the percentage of
votes required to be cast at a meeting of the Unitholders for the purpose of
amending this Section 9.1 without the consent of the holders of all of the
Trust Units then outstanding.
ARTICLE 10
MEETINGS OF UNITHOLDERS
10.1 ANNUAL AND SPECIAL MEETINGS OF UNITHOLDERS
Annual meetings of the Unitholders shall be called by the Trustee,
commencing in 2004, on a day, at a time and at a place to be set by the
Corporation. The business transacted at such meetings shall include the
transaction of such business as Unitholders may be entitled to vote upon as
hereinafter provided in this Article 10, or as the Corporation may determine.
Special meetings of the Unitholders may be called at any time by the
Corporation and shall be called by the Corporation upon a written request of
Unitholders holding in the aggregate not less than 20% of the Trust Units then
outstanding, such request specifying the purpose or purposes for which such
meeting is to be called. Meetings of Unitholders shall be held in the City of
Calgary, or at such other place as the Corporation shall designate. The
Chairman of any annual or special meeting shall be a person designated by the
Corporation for the purpose of such meeting except that, on the motion of any
Unitholder, any person may be elected as Chairman by a majority of the votes
cast at the meeting instead of such designated person or in the event that no
person shall be designated by the Corporation.
10.2 NOTICE OF MEETINGS
Notice of all meetings of Unitholders shall be given by unregistered
mail postage prepaid addressed to each Unitholder at his registered address,
mailed at least 21 days and not more than 50 days before the meeting. Such
notice shall set out the time when, and the place where, such meeting is to be
held and shall specify the nature of the business to be transacted at such
meeting in sufficient detail to permit a Unitholder to form a reasoned
judgment thereon, together with the text of any resolution in substantially
final form proposed to be passed. Any adjourned meeting may be held as
adjourned without further notice. The accidental omission to give notice to or
the non-receipt of such notice by the Unitholders shall not invalidate any
resolution passed at any such meeting.
10.3 QUORUM
At any meeting of the Unitholders, subject as hereinafter provided, a
quorum shall consist of two or more persons either present in person or
represented by proxy and representing in the aggregate not less than 5% of the
outstanding Trust Units. If a quorum is not present at the appointed place on
the date for which the meeting is called within one half hour after the time
fixed for the holding of such meeting, the meeting, if convened on the
requisition of Unitholders, shall be dissolved, but in any other case it shall
stand adjourned to such day being not less than fourteen (14) days later and
to such place and time as may be appointed by the Chairman of the meeting. If
at such adjourned meeting a quorum as above defined is not present, the
Unitholders present either personally or by proxy shall form a quorum, and any
business may be brought before or dealt with at such an adjourned meeting
which might have been brought before or dealt with at the original meeting in
accordance with the notice calling the same.
10.4 VOTING RIGHTS OF UNITHOLDERS
Only Unitholders of record shall be entitled to vote and each Trust
Unit shall entitle the holder or holders of that Trust Unit to one vote at any
meeting of the Unitholders. Every question submitted to a meeting, other than
a Special Resolution, shall, unless a poll vote is demanded, be decided by a
show of hands vote, on which every person present and entitled to vote shall
be entitled to one vote. At any meeting of Unitholders, any holder of Trust
Units entitled to vote thereat may vote by proxy and a proxy need not be a
Unitholder, provided that no proxy
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shall be voted at any meeting unless it shall have been placed on file with
the Trustee, or with such agent of the Trustee as the Trustee may direct, for
verification prior to the commencement of such meeting no later than the time
for which proxies are to have been received as set forth in the notice of such
meeting. If approved by the Trustee, proxies may be solicited in the name of
the Trustee. When any Trust Unit is held jointly by several persons, any one
of them may vote at any meeting in person or by proxy in respect of such Trust
Unit, but if more than one of them shall be present at such meeting in person
or by proxy, and such joint owners of their proxies so present disagree as to
any vote to be cast, the joint owner present or represented whose name appears
first in the register maintained pursuant to Section 11.3 shall be entitled to
cast such vote.
10.5 RESOLUTIONS
(a) The Trustee shall in accordance with an Ordinary Resolution passed by
the Unitholders: (i) change the Auditors as provided in Section 15.3;
and (ii) elect the directors of the Corporation.
(b) The Trustee shall in accordance with a Special Resolution passed by
the Unitholders:
(i) subject to Section 9.1, amend this Indenture;
(ii) subdivide or consolidate Trust Units;
(iii) sell or agree to sell the property of the Trust Fund as an
entirety or substantially as an entirety;
(iv) resign if removed pursuant to Section 6.3; and
(v) commence to wind-up and wind-up the affairs of the Trust if
requested pursuant to Section 12.2.
Except with respect to the above matters set out in this Section 10.5 and the
matters set forth in Sections 6.3, 6.4 and 12.2 hereof, no action taken by the
Unitholders or resolution of the Unitholders at any meeting shall in any way
bind the Trustee.
10.6 MEANING OF "SPECIAL RESOLUTION"
The expression "Special Resolution" when used in this Indenture
means, subject as hereinafter in this Article provided, a resolution proposed
to be passed as a special resolution at a meeting of Unitholders (including an
adjourned meeting) duly convened for the purpose and held in accordance with
the provisions of this Article at which two or more holders of at least 10% of
the aggregate number of Trust Units then outstanding are present in person or
by proxy and passed by the affirmative votes of the holders of not less than
66 2/3% of the Trust Units represented at the meeting and voted on a poll upon
such resolution.
If, at any such meeting, the holders of 10% of the aggregate number
of Trust Units outstanding are not present in person or represented by proxy
within 30 minutes after the time appointed for the meeting, then the meeting,
if convened by or on the requisition of Unitholders, shall be dissolved; but
in any other case it shall stand 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' prior notice shall be given of the
time and place of such adjourned meeting in the manner provided in Section
10.2. Such notice shall state that at the adjourned meeting the Unitholders
present in person or represented 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 Unitholders
present in person or represented 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 by the requisite vote as
provided in this Section 10.6 shall be a Special Resolution within the meaning
of this Indenture, notwithstanding that the holders of less than 10% of the
aggregate number of Trust Units then outstanding are present or represented by
proxy at such adjourned meeting.
Votes on a Special Resolution shall always be given on a poll and no
demand for a poll on a Special Resolution shall be necessary. No Special
Resolution changing or amending any provision hereof relating to
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or affecting: (i) the Trustee, including the qualification, powers,
authorities, appointment, removal or resignation thereof; or (ii) the
provisions of Articles 9, 10 or 12 shall be effective prior to 60 days from
the adoption thereof in accordance with the provisions hereof or such shorter
period as may be approved by Unitholders.
10.7 RECORD DATE FOR VOTING
For the purpose of determining the Unitholders who are entitled to
vote or act at any meeting or any adjournment thereof, the Trustee may fix a
date not more than 50 days and not less than 21 days prior to the date of any
meeting of Unitholders as a record date for the determination of Unitholders
entitled to vote at such meeting or any adjournment thereof, and any
Unitholder who was a Unitholder at the time so fixed shall be entitled to vote
at such meeting or any adjournment thereof even though he has since that time
disposed of his Trust Units, and no Unitholder becoming such after that time
shall be so entitled to vote at such meeting or any adjournment thereof. In
the event that the Trustee does not fix a record date for any meeting of
Unitholders, the record date for such meeting shall be the Business Day
immediately preceding the date upon which notice of the meeting is given as
provided under Section 10.2.
10.8 BINDING EFFECT OF RESOLUTIONS
Every Ordinary Resolution and every Special Resolution passed in
accordance with the provisions of this Indenture at a meeting of Unitholders
shall be binding upon all the Unitholders, whether present at or absent from
such meeting, and each and every Unitholder shall be bound to give effect
accordingly to every such Ordinary Resolution and Special Resolution.
10.9 SOLICITATION OF PROXIES
A Unitholder shall have the right to appoint a proxy to attend and
act for the Unitholder at any meeting of Unitholders. The Trustee shall
solicit proxies from Unitholders in connection with all meetings of
Unitholders. In connection therewith, the Trustee shall comply, as near as may
be possible, with all provisions of the ABCA and the requirements of Canadian
securities legislation applicable to the solicitation of proxies.
10.10 NO BREACH
Notwithstanding any provisions of this Indenture, Unitholders shall
have no power to effect any amendment hereto which would require the Trustee
to take any action or conduct the affairs of the Trust in a manner which would
constitute a breach or default by the Trust or the Trustee under any agreement
binding on or obligation of the Trust or the Trustee.
ARTICLE 11
CERTIFICATES, REGISTRATION AND TRANSFER OF TRUST UNITS
11.1 NATURE OF TRUST UNITS
The nature of a Trust Unit and the relationship of a Unitholder to
the Trustee and the relationship of one Unitholder to another is as described
in Sections 2.4 and Subsection 2.5(c) and the provisions of this Article 11
shall not in any way alter the nature of Trust Units or the said relationships
of a Unitholder to the Trustee and of one Unitholder to another, but are
intended only to facilitate the issuance of certificates evidencing the
beneficial ownership of Trust Units and the recording of all such transactions
whether by the Trust, securities dealers, stock exchanges, transfer agents,
registrars or other persons.
11.2 CERTIFICATES
(a) The form of certificate representing Trust Units shall be
substantially as set out in the Schedule hereto or such other form as
is authorized from time to time by the Trustee. Each such certificate
shall bear an identifying serial number and shall be certified
manually on behalf of the Trustee. Any additional signature required
by the Trustee to appear on such certificate may be printed,
lithographed or otherwise
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mechanically reproduced thereon and, in such event, certificates so
signed are as valid as if it had been signed manually. Any
certificate which has one manual signature as hereinbefore provided
shall be valid notwithstanding that one or more of the persons whose
signature is printed, lithographed or mechanically reproduced no
longer holds office at the date of issuance of such certificate. The
Trust Certificates may be engraved, printed or lithographed, or
partly in one form and partly in another, as the Trustee may
determine.
(b) Any Trust Unit Certificate validly issued prior to the date hereof in
accordance with the terms of this Indenture in effect at such time
shall validly represent issued and outstanding Trust Units,
notwithstanding that the form of such Trust Unit Certificate may not
be in the form currently required by this Indenture.
11.3 REGISTER OF UNITHOLDERS
A register shall be maintained at the principal corporate trust
office of the Trustee in the City of Calgary by the Trustee or by a Transfer
Agent designated to act on behalf and under the direction of the Trustee,
which register shall contain the names and addresses of the Unitholders, the
respective numbers of Trust Units held by them, the certificate numbers of the
certificates representing such Trust Units and a record of all transfers
thereof. Branch transfer registers shall be maintained at such other offices
of the Trustee or Transfer Agent as the Trustee may from time to time
designate. The Trustee shall designate an office in the City of Toronto at
which a branch register shall be maintained. Except in the case of the
registers required to be maintained at the Cities of Calgary and Toronto, the
Trustee shall have the power at any time to close any register of transfers
and in that event shall transfer the records thereof to another existing
register or to a new register.
Only Unitholders whose certificates are so recorded shall be entitled
to receive distributions or to exercise or enjoy the rights of Unitholders
hereunder. The Trustee shall have the right to treat the person registered as
a Unitholder on the register of the Trust as the owner of such Trust Units for
all purposes, including, without limitation, payment of any distribution,
giving notice to Unitholders and determining the right to attend and vote at
meetings of Unitholders, and the Trustee shall not be bound to recognize any
transfer, pledge or other disposition of a Trust Unit or any attempt to
transfer, pledge or dispose of a Trust Unit, or any beneficial interest or
equitable or other right or claim with respect thereto, whether or not the
Trustee shall have actual or other notice thereof, until such Trust Unit shall
have been transferred on the register of the Trust as herein provided.
The register and the branch transfer register referred to in this
Section 11.3 shall at all reasonable times be open for inspection by the
Unitholders, the Corporation and the Trustee.
11.4 TRANSFER OF TRUST UNITS
(a) Subject to the provisions of this Article 11, the Trust Units shall
be fully transferable without charge as between persons, but no
transfer of Trust Units shall be effective as against the Trustee or
shall be in any way binding upon the Trustee until the transfer has
been recorded on the register or one of the branch transfer registers
maintained by the Trustee or Transfer Agent. No transfer of a Trust
Unit shall be recognized unless such transfer is of a whole Trust
Unit.
(b) Subject to the provisions of this Article 11, Trust Units shall be
transferable on the register or one of the branch transfer registers
of Unitholders of the Trust only by the Unitholders of record thereof
or their executors, administrators or other legal representatives or
by their agents hereunto duly authorized in writing, and only upon
delivery to the Trustee or to the Transfer Agent of the Trust if
appointed, of the certificate therefor, if certificates representing
Trust Units are issued, properly endorsed or accompanied by a duly
executed instrument of transfer and accompanied by all necessary
transfer or other taxes imposed by law, together with such evidence
of the genuineness of such endorsement, execution and authorization
and other matters that may reasonably be required by the Trustee.
Upon such delivery the transfer shall be recorded on the register of
Unitholders and a new Trust Certificate for the residue thereof (if
any) shall be issued to the transferor. Unless the Corporation agrees
to assume liability for the transfer and exchange fees the Unitholder
shall be responsible for such fees and expenses.
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(c) Any person becoming entitled to any Trust Units as a consequence of
the death, bankruptcy or incompetence of any Unitholder or otherwise
by operation of law, shall be recorded as the holder of such Trust
Units and shall receive a new Trust Certificate therefor only upon
production of evidence satisfactory to the Trustee thereof and
delivery of the existing Trust Certificate to the Trustee, but until
such record is made the Unitholder of record shall continue to be and
be deemed to be the holder of such Trust Units for all purposes
whether or not the Trustee shall have actual or other notice of such
death or other event.
11.5 TRUST UNITS HELD JOINTLY OR IN A FIDUCIARY CAPACITY
The Trustee may treat two or more persons holding any Trust Units as
joint owners of the entire interest therein unless their ownership is
expressly otherwise recorded on the register of the Trust, but no entry shall
be made in the register or on any Trust Certificate that any person is in any
other manner entitled to any future, limited or contingent interest in any
Trust Units; provided, however, that any person recorded as a Unitholder may,
subject to the provisions hereinafter contained, be described in the register
or on any Trust Certificate as a fiduciary of any kind and any customary words
may be added to the description of the holder to identify the nature of such
fiduciary relationship. Where any Trust Certificate is registered in more than
one name, the distributions (if any) in respect thereof may be paid to the
order of all such holders failing written instructions from them to the
contrary and such payment shall be a valid discharge to the Trustee and any
Transfer Agent. In the case of the death of one or more joint holders, the
distributions (if any) in respect of any Trust Units may be paid to the
survivor or survivors of such holders and such payment shall be a valid
discharge to the Trustee and any Transfer Agent.
11.6 PERFORMANCE OF TRUST
The Trustee, the Unitholders and any officer or agent of the Trustee
shall not be bound to be responsible for or otherwise inquire into or ensure
the performance of any trust, express, implied or constructive, or of any
charge, pledge or equity to which any of the Trust Units or any interest
therein are or may be subject, or to ascertain or enquire whether any transfer
of any such Trust Units or interests therein by any such Unitholder or by his
personal representatives is authorized by such trust, charge, pledge or
equity, or to recognize any person as having any interest therein except for
the person recorded as a Unitholder.
11.7 LOST CERTIFICATES
In the event that any Trust Certificate is lost, stolen, destroyed or
mutilated, the Trustee may authorize the issuance of a new Trust Certificate
for the same number of Trust Units in lieu thereof. The Trustee may in its
discretion, before the issuance of such new Trust Certificate, require the
owner of the lost, stolen, destroyed or mutilated Trust Certificate, or the
legal representative of the owner to make an affidavit or statutory
declaration setting forth such facts as to the loss, theft, destruction or
mutilation as the Trustee may deem necessary, to surrender any mutilated Trust
Certificate and may require the applicant to supply to the Trust a "lost
certificate bond" or a similar bond in such reasonable sum as the Trustee may
direct indemnifying the Trustee and its agent for so doing. The Trustee shall
have the power to require from an insurer or insurers a blanket lost security
bond or bonds in respect of the replacement of lost, stolen, destroyed or
mutilated Trust Certificates. The Trustee shall pay all premiums and other
funds of money payable for such purpose out of the Trust Fund with such
contribution, if any, by those insured as may be determined by the Trustee in
its sole discretion. If such blanket lost security bond is required, the
Trustee may authorize and direct (upon such terms and conditions as the
Trustee may from time to time impose) any agent to whom the indemnity of such
bond extends to take such action to replace any lost, stolen, destroyed or
mutilated Trust Certificate without further action or approval by the Trustee.
11.8 DEATH OF A UNITHOLDER
The death of a Unitholder during the continuance of the Trust shall
not terminate the Trust or any of the mutual or respective rights and
obligations created by or arising under this Indenture nor give such
Unitholder's personal representative a right to an accounting or take any
action in court or otherwise against other Unitholders or the Trustee or the
Trust Fund, but shall entitle the personal representatives of the deceased
Unitholder to demand and receive, pursuant to the provisions hereof, a new
Trust Certificate for Trust Units in place of the Trust Certificate held by
the deceased Unitholder, and upon the acceptance thereof such personal
representatives shall succeed to all rights of the deceased Unitholder under
this Indenture.
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11.9 UNCLAIMED INTEREST OR DISTRIBUTION
In the event that the Trustee shall hold any amount of interest or
other distributable amount which is unclaimed or which cannot be paid for any
reason, the Trustee shall be under no obligation to invest or reinvest the
same but shall only be obliged to hold the same in a current
non-interest-bearing account pending payment to the person or persons entitled
thereto. The Trustee shall, as and when required by law, and may at any time
prior to such required time, pay all or part of such interest or other
distributable amount so held to the Public Trustee (or other appropriate
Government official or agency) whose receipt shall be a good discharge and
release of the Trustee.
11.10 EXCHANGES OF TRUST CERTIFICATES
Trust Certificates representing any number of Trust Units may be
exchanged without charge for Trust Certificates representing an equivalent
number of Trust Units in the aggregate. Any exchange of Trust Certificates may
be made at the offices of the Trustee or at the offices of any Transfer Agent
where registers are maintained for the Trust Certificates pursuant to the
provisions of this Article 11. Any Trust Certificates tendered for exchange
shall be surrendered to the Trustee or appropriate Transfer Agent and shall be
cancelled. The Corporation shall reimburse the Trustee for all exchange fees
associated with any such exchange.
11.11 OFFER FOR UNITS
(a) In this Section 11.11:
(i) "DISSENTING UNITHOLDER" means a Unitholder who does not
accept an Offer referred to in Subsection (b) and includes
any assignee of the Trust Unit of a Unitholder to whom such
an Offer is made, whether or not such assignee is recognized
under this Indenture;
(ii) "OFFER" means an offer to acquire outstanding Trust Units
where, as of the date of the offer to acquire, the Trust
Units that are subject to the offer to acquire, together
with the Offeror's Units, constitute in the aggregate 20% or
more of all outstanding Trust Units;
(iii) "OFFER TO ACQUIRE" includes an acceptance of an offer to
sell;
(iv) "OFFEROR" means a person, or two or more persons acting
jointly or in concert, who make an Offer to acquire Trust
Units;
(v) "OFFEROR'S NOTICE" means the notice described in Subsection
(c); and
(vi) "OFFEROR'S UNITS" means Trust Units beneficially owned, or
over which control or direction is exercised, on the date of
an Offer by the Offeror, any Affiliate or Associate of the
Offeror or any person or company acting jointly or in
concert with the Offeror.
(b) If an Offer for all of the outstanding Trust Units (other than Trust
Units held by or on behalf of the Offeror or an Affiliate or
Associate of the Offeror) is made and:
(i) within the time provided in the Offer for its acceptance or
within 45 days after the date the Offer is made, whichever
period is the shorter, the Offer is accepted by Unitholders
representing at least 90% of the outstanding Trust Units,
other than the Offeror's Units;
(ii) the Offeror is bound to take up and pay for, or has taken up
and paid for the Trust Units of the Unitholders who accepted
the Offer; and
(iii) the Offeror complies with Subsections (c) and (e);
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the Offeror is entitled to acquire, and the Dissenting Unitholders
are required to sell to the Offeror, the Trust Units held by the
Dissenting Unitholders for the same consideration per Trust Unit
payable or paid, as the case may be, under the Offer.
(c) Where an Offeror is entitled to acquire Trust Units held by
Dissenting Unitholders pursuant to Subsection (b), and the Offeror
wishes to exercise such right, the Offeror shall send by registered
mail within 30 days after the date of termination of the Offer a
notice (the "OFFEROR'S NOTICE") to each Dissenting Unitholder stating
that:
(i) Unitholders holding at least 90% of the Trust Units of all
Unitholders, other than Offeror's Units, have accepted the
Offer;
(ii) the Offeror is bound to take up and pay for, or has taken up
and paid for, the Trust Units of the Unitholders who
accepted the Offer;
(iii) Dissenting Unitholders must transfer their respective Trust
Units to the Offeror on the terms on which the Offeror
acquired the Trust Units of the Unitholders who accepted the
Offer within 21 days after the date of the sending of the
Offeror's Notice; and
(iv) Dissenting Unitholders must send their respective Trust Unit
Certificate(s) to the Trustee within 21 days after the date
of the sending of the Offeror's Notice.
(d) A Dissenting Unitholder to whom an Offeror's Notice is sent pursuant
to Subsection (c) shall, within 21 days after the sending of the
Offeror's Notice, send his or her Trust Unit Certificate(s) to the
Trustee, duly endorsed for transfer.
(e) Within 21 days after the Offeror sends an Offeror's Notice pursuant
to Subsection (c), the Offeror shall pay or transfer to the Trustee,
or to such other person as the Trustees may direct, the cash or other
consideration that is payable to Dissenting Unitholders pursuant to
Subsection (b).
(f) The Trustee, or the person directed by the Trustee, shall hold in
trust for the Dissenting Unitholders the cash or other consideration
it receives under Subsection (e). The Trustee, or such person, shall
deposit cash in a separate account in a Canadian chartered bank, and
shall place other consideration in the custody of a Canadian
chartered bank or similar institution for safekeeping.
(g) Within 30 days after the date of the sending of an Offeror's Notice
pursuant to Subsection (c), the Trustee, if the Offeror has complied
with Subsection (e), shall:
(i) do all acts and things and execute and cause to be executed
all instruments as in the Trustee's opinion may be necessary
or desirable to cause the transfer of the Trust Units of the
Dissenting Unitholders to the Offeror;
(ii) send to each Dissenting Unitholder who has complied with
Subsection (d) the consideration to which such Dissenting
Unitholder is entitled under this Section 11.11; and
(iii) send to each Dissenting Unitholder who has not complied with
Subsection (d) a notice stating that:
(A) his or her Trust Units have been transferred to the
Offeror;
(B) the Trustee or some other person designated in such
notice is holding in trust the consideration for
such Trust Units; and
(C) the Trustee, or such other person, will send the
consideration to such Dissenting Unitholder as soon
as practicable after receiving such Dissenting
Unitholder's Trust Unit
34
Certificate(s) or such other documents as the
Trustee, or such other person may require in lieu
thereof;
and the Trustee is hereby appointed the agent and attorney of the
Dissenting Unitholders for the purposes of giving effect to the
foregoing provisions.
(h) An Offeror cannot make an Offer for Trust Units unless, concurrent
with the communication of the Offer to any Unitholder, a copy of the
Offer is provided to the Trust.
ARTICLE 12
TERMINATION
12.1 TERMINATION DATE
Unless the Trust is terminated or extended earlier, the Trustee shall
commence to wind up the affairs of the Trust on December 31, 2099.
12.2 TERMINATION BY SPECIAL RESOLUTION OF UNITHOLDERS
The Unitholders may vote by Special Resolution to terminate the Trust
at any meeting of Unitholders duly called for that purpose, whereupon the
Trustee shall commence to wind up the affairs of the Trust, provided that such
a vote may only be held if requested in writing by the holders of not less
than 20% of the outstanding Trust Units and a quorum of holders of not less
than 50% of the outstanding Trust Units are present in person or represented
by proxy at the meeting or any adjournment thereof at which the vote is taken.
12.3 PROCEDURE UPON TERMINATION
Forthwith upon being required to commence to wind up the affairs of
the Trust, the Trustee shall give notice thereof to the Unitholders, which
notice shall designate the time or times at which Unitholders may surrender
their Trust Units for cancellation and the date at which the register of the
Trust shall be closed.
12.4 POWERS OF THE TRUSTEE UPON TERMINATION
After the date on which the Trustee is required to commence to wind
up the affairs of the Trust, the Trustee shall carry on no activities except
for the purpose of winding up the affairs of the Trust as hereinafter provided
and for these purposes, the Trustee shall continue to be vested with and may
exercise all or any of the powers conferred upon the Trustee under this
Indenture.
12.5 SALE OF INVESTMENTS
After the date referred to in Section 12.4, the Trustee shall proceed
to wind up the affairs of the Trust as soon as may be reasonably practicable
and for such purpose shall, subject to the terms of any agreements binding on
or obligations of the Trust and the Trustee, sell and convert into money the
Direct Royalties and other assets comprising the Trust Fund in one transaction
or in a series of transactions at public or private sale and do all other acts
appropriate to liquidate the Trust Fund, and shall in all respects act in
accordance with the directions, if any, of the Unitholders in respect of a
termination authorized under Section 12.2. Notwithstanding anything herein
contained, in no event shall the Trust be wound up until any Direct Royalties
shall have been disposed of.
12.6 DISTRIBUTION OF PROCEEDS
After paying, retiring or discharging or making provision for the
payment, retirement or discharge of all known liabilities and obligations of
the Trust and providing for indemnity against any other outstanding
liabilities and obligations, the Trustee shall distribute the remaining part
of the proceeds of the sale of the Direct Royalties and other assets together
with any cash forming part of the Trust Fund among the Unitholders in
accordance with their Pro Rata Share.
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12.7 FURTHER NOTICE TO UNITHOLDERS
In the event that all of the Unitholders shall not surrender their
Trust Units for cancellation within six (6) months after the time specified in
the notice referred to in Section 12.3, such remaining Trust Units shall be
deemed to be cancelled without prejudice to the rights of the holders of such
Trust Units to receive their Pro Rata Share of the amounts referred to in
Section 12.6 and the Trustee may either take appropriate steps, or appoint an
agent to take appropriate steps, to contact such Unitholders (deducting all
expenses thereby incurred from the amounts to which such Unitholders are
entitled as aforesaid) or, in the discretion of the Trustee, may pay such
amounts into court.
12.8 RESPONSIBILITY OF TRUSTEE AFTER SALE AND CONVERSION
The Trustee shall be under no obligation to invest the proceeds of
any sale of the Direct Royalties or other assets or cash forming part of the
Trust Fund after the date referred to in Section 12.4 and, after such sale,
the sole obligation of the Trustee under this Indenture shall be to hold such
proceeds in trust for distribution under Section 12.6.
ARTICLE 13
SUPPLEMENTAL INDENTURES
13.1 PROVISION FOR SUPPLEMENTAL INDENTURES
From time to time the Trustee and the Corporation may, subject to the
provisions hereof, and it shall, when so directed in accordance with the
provisions hereof, execute and deliver by its proper officers, indentures or
instruments supplemental hereto, which thereafter shall form part hereof, for
any one or more or all of the following purposes:
(a) giving effect to any amendment as provided in Article 9;
(b) giving effect to any Special Resolution passed as provided in Article
10;
(c) making such provision not inconsistent with this Indenture as may be
necessary or desirable with respect to matters or questions arising
hereunder, provided that such provisions are not, in the opinion of
the Trustee, prejudicial to the interests of the Unitholders;
(d) making any modification in the form of Trust Certificates which does
not materially affect the substance thereof; and
(e) for any other purpose not inconsistent with the terms of this
Indenture, including the correction or rectification of any
ambiguities, defective or inconsistent provisions, errors, mistakes
or omissions herein, provided that in the opinion of the Trustee, the
rights of the Trustee and the Unitholders are not prejudiced thereby;
provided that the Trustee may in its sole discretion decline to enter into any
such supplemental indenture which in its opinion may not afford adequate
protection to the Trustee when the same shall become operative.
Notwithstanding Section 10.5 and the foregoing, on or before
the Date of Closing, the Trustee may execute and deliver such indentures or
instruments supplemental hereto, which may add to or delete or amend, vary or
change any of the provisions hereof, as the Corporation may direct in writing.
13.2 PROVISION FOR AMENDED AND RESTATED INDENTURE
Notwithstanding Section 13.1, following any amendments to this
Indenture, the parties to the Indenture may enter into an amended and restated
version of the Indenture which shall include and give effect to all amendments
to the Indenture in effect at the applicable time.
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ARTICLE 14
NOTICES TO UNITHOLDERS
14.1 NOTICES
Any notice required to be given under this Indenture to the
Unitholders shall be given by letter or circular sent through ordinary post
addressed to each registered holder at his last address appearing on the
register; provided that if there is a general discontinuance of postal service
due to strike, lockout or otherwise, such notice may be given by publication
twice in the National Edition of The Globe and Mail or The National Post or
any other newspaper having national circulation in Canada; provided further
that if there is no newspaper having national circulation, then by publishing
twice in a newspaper in each city where the register or a branch transfer
register is maintained. Any notice so given shall be deemed to have been given
on the day following that on which the letter or circular was posted or, in
the case of notice being given by publication, the day following the day of
the second publication in the designated newspaper or newspapers. In proving
notice was posted, it shall be sufficient to prove that such letter or
circular was properly addressed, stamped and posted.
14.2 FAILURE TO GIVE NOTICE
The failure by the Trustee, by accident or omission or otherwise
unintentionally, to give the Unitholders any notice provided for herein shall
not affect the validity or effect of any action referred to in such notice,
and the Trustee shall not be liable to any Unitholder for any such failure.
14.3 JOINT HOLDERS
Service of a notice or document on any one of several joint holders
of Trust Units shall be deemed effective service on the other joint holders.
14.4 SERVICE OF NOTICE
Any notice or document sent by post to or left at the address of a
Unitholder pursuant to this Article shall, notwithstanding the death or
bankruptcy of such Unitholder, and whether or not the Trustee has notice of
such death or bankruptcy, be deemed to have been fully served and such service
shall be deemed sufficient service on all persons interested in the Trust
Units concerned.
ARTICLE 15
AUDITORS
15.1 QUALIFICATION OF AUDITORS
The Auditors shall be an independent recognized firm of chartered
accountants which has an office in Alberta.
15.2 APPOINTMENT OF AUDITORS
The Trustee hereby appoints KPMG LLP, Chartered Accountants, as the
auditors of the Trust, to hold such office until the first annual meeting of
the Unitholders at such remuneration as may be approved by the Trustee from
time to time. The Auditors will be selected at each annual meeting of
Unitholders.
15.3 CHANGE OF AUDITORS
The Auditors may at any time be removed by the Trustee with the
approval of the Unitholders by means of an Ordinary Resolution at a meeting of
Unitholders duly called for that purpose and, upon the resignation or the
removal of Auditors as aforesaid, new auditors may be appointed by the Trustee
with the approval of the Unitholders by means of an Ordinary Resolution at a
meeting duly called for the purpose. A vacancy created by
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the removal of the Auditors as aforesaid may be filled at the meeting of
Unitholders at which the Auditors are removed or, if not so filled, may be
filled under Section 15.4.
15.4 FILLING VACANCY
In the event that the Auditors resign as auditors of the Trust, the
Trustee shall forthwith fill the vacancy with such new auditors as is approved
by the members of the Board of Directors of the Corporation whom are
independent of the Corporation, and such new auditors shall act as auditors of
the Trust for the unexpired term of the predecessor auditors of the Trust.
15.5 REPORTS OF AUDITORS
The Auditors shall audit the accounts of the Trust at least once in
each year and a report of the Auditors with respect to the annual financial
statements of the Trust shall be provided to each Unitholder as set out in
Section 16.3.
ARTICLE 16
ACCOUNTS, RECORDS AND FINANCIAL STATEMENTS
16.1 RECORDS
The Trustee shall keep such books, records and accounts as are
necessary and appropriate to document the Trust Fund and each transaction of
the Trust. Without limiting the generality of the foregoing, the Trustee will,
at its principal office in Calgary, Alberta, keep records of all transactions
of the Trust, a list of the Direct Royalties and other assets of the Trust
Fund from time to time and a copy of this Indenture.
16.2 QUARTERLY REPORTING TO UNITHOLDERS
Subject to compliance with all applicable laws, the Trustee will mail
to each Unitholder within 60 days after March 31, June 30 and September 30 in
each year, an unaudited quarterly financial statement of the Trust for the
most recent calendar quarter. The Corporation will review any forecast
provided in any Offering Document and, if necessary, will provide the Trustee
with a quarterly update. The Trustee will mail any such update to Unitholders.
16.3 ANNUAL REPORTING TO UNITHOLDERS
Subject to compliance with all applicable laws, the Trustee will
mail:
(a) to each Unitholder, within 140 days after the end of each year, the
audited consolidated financial statements of the Trust for the most
recently completed year together with the report of the Auditors
thereon; and
(b) to each person who received a distribution from the Trust during a
year, within 90 days after the end of such year, the tax reporting
information relating to such year as prescribed by the Tax Act.
16.4 INFORMATION AVAILABLE TO UNITHOLDERS
(a) Each Unitholder shall have the right to obtain, on demand and on
payment of reasonable reproduction costs, from the head office of the
Trust, a copy of this Indenture and any indenture supplemental hereto
or any Material Contract.
(b) Each Unitholder, upon payment of a reasonable fee and upon sending to
the Trustee the affidavit referred to in paragraph (d) below, may
upon application require the Trustee to furnish within 10 days from
the receipt of the affidavit a list (the "BASIC LIST") made up to a
date not more than 10 days before the date of receipt of the
affidavit setting out the names of the Unitholders, the number of
Trust Units owned by each Unitholder and the address of each
Unitholder as shown on the records of the Trustee.
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(c) A person requiring the Trustee to supply a basic list may, if he
states in the affidavit referred to in paragraph (d) below that he
requires supplemental lists, require the Trustee upon payment of a
reasonable fee to furnish supplemental lists setting out any changes
from the basic list in the names or addresses of the Unitholders and
the number of Trust Units owned by each Unitholder for each business
day following the date the basic list is made up to.
(d) The affidavit referred to in paragraph (b) above shall state:
(i) the name and address of the applicant;
(ii) the name and address for service of the body corporate if
the applicant is a body corporate; and
(iii) that the basic list and any supplemental lists will not be
used except as permitted under paragraph (e) below.
(e) A list of Unitholders obtained under this Section shall not be used
by any person except in connection with:
(i) an effort to influence the voting of Unitholders;
(ii) an offer to acquire Trust Units; or
(iii) any other matter relating to the affairs of the Trust.
16.5 INCOME TAX: OBLIGATION OF THE TRUSTEE
The Trustee shall discharge all obligations and responsibilities of
the Trustee under the Tax Act or any similar provincial legislation, and
neither the Trust nor the Trustee shall be accountable or liable to any
Unitholder by reason of any act or acts of the Trustee consistent with any
such obligations or responsibilities.
16.6 INCOME TAX: DESIGNATIONS
In the return of its income under Part I of the Tax Act for each year
the Trust shall make such designations to Unitholders with respect to any
amounts distributed or payable to Unitholders in the year including, without
restricting the generality of the foregoing, designations pursuant to
subsection 104(29) of the Tax Act and designations with respect to any taxable
capital gains realized and distributed to Unitholders by the Trust in the
year, as shall be permitted under the provisions of the Tax Act and as the
Trustee in its sole discretion shall deem to be appropriate. In the first tax
year, in filing a return of income for the Trust, the Trust shall elect that
the Trust be deemed to be a mutual fund trust for the entire year.
16.7 INCOME TAX: DEDUCTIONS, ALLOWANCES AND CREDITS
The Corporation shall determine the tax deductions, allowances and
credits to be claimed by the Trust in any year, and the Trustee shall claim
such deductions, allowances and credits for the purposes of computing the
income of the Trust and the amount payable by the Trust pursuant to the
provisions of the Tax Act.
16.8 FISCAL YEAR
The fiscal year of the Trust shall end on December 31 of each year.
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ARTICLE 17
MISCELLANEOUS
17.1 CONTINUED LISTING
The Trustee hereby appoints the Corporation as its agent and the
Corporation hereby covenants to the Trustee and agrees that it shall, at the
cost and expense of the Trust, take all steps and actions and do all things
that may be required to obtain and maintain the listing and posting for
trading of the Trust Units on the Toronto Stock Exchange and to maintain its
status as a "reporting issuer" not in default of the securities legislation
and regulations in each of the provinces of Canada as determined necessary by
the Corporation or Counsel.
17.2 SUCCESSORS AND ASSIGNS
The provisions of this Indenture shall enure to the benefit of and be
binding upon the parties and their successors and assigns.
17.3 COUNTERPARTS
This Indenture may be simultaneously executed in several
counterparts, each of which so executed shall be deemed to be an original, and
such counterparts, together, shall constitute but one and the same instrument,
which shall be sufficiently evidenced by any such original counterparts.
17.4 SEVERABILITY
If any provision of this Indenture shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect or render invalid or unenforceable such provision in any other
jurisdiction or any other provision of this Indenture in any jurisdiction.
17.5 DAY NOT A BUSINESS DAY
In the event that any day on or before which any amount is to be
determined or any action is required to be taken hereunder is not a Business
Day, then such amount shall be determined or such action shall be required to
be taken at or before the requisite time on the next succeeding day that is a
Business Day.
17.6 TIME OF THE ESSENCE
Time shall be of the essence in this Indenture.
17.7 GOVERNING LAW
This Indenture and the Trust Certificates shall be construed in
accordance with the laws of the Province of Alberta and the laws of Canada
applicable therein and shall be treated in all respects as Alberta contracts.
The parties hereby irrevocably submit to the jurisdiction of the Courts of the
Province of Alberta.
17.8 NOTICES TO TRUSTEE AND THE CORPORATION
(a) Any notice to the Trustee under this Indenture shall be valid and
effective if delivered or if given by registered letter, postage
prepaid, addressed to the attention of Valiant Trust Company at ▇▇▇,
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Attention: Manager,
Corporate Trust (Fax (▇▇▇) ▇▇▇-▇▇▇▇), or may be given by electronic
or telecommunications device, and shall be deemed to have been given
on the date of delivery or, if mailed, effective five days after
deposit in the Canadian mail.
(b) Any notice to the Corporation under this Indenture shall be valid and
effective if delivered or if given by registered letter, postage
prepaid, addressed to the Corporation at ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇
▇.▇.,
▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Attention: President (Fax (▇▇▇) ▇▇▇-▇▇▇▇)
may be given by electronic or telecommunications device, and shall be
deemed to have been effectively given on the date of delivery or, if
mailed, five days after deposit in the Canadian mail.
(c) The Corporation or the Trustee may from time to time notify the other
in writing of a change of address which thereafter, until changed by
like notice, shall be the address of the Corporation or the Trustee
for all purposes of this Indenture.
(d) If, by reason of a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, any notice to be given
hereunder could reasonably be considered unlikely to reach its
destination, such notice shall be valid and effective only if it is
delivered at the appropriate address provided in this Section, by
cable, telegram, electronic, telecommunications device or other means
of prepaid, transmitted and recorded communication.
17.9 REFERENCES TO AGREEMENTS
Any reference herein to any agreement, contract or obligation shall
refer to such agreement, contract or obligation as the same may be amended
from time to time.
ARTICLE 18
REDEMPTION OF TRUST UNITS
18.1 RIGHT OF REDEMPTION
Each Unitholder shall be entitled to require the Trust to redeem at
any time or from time to time at the demand of the Unitholder all or any part
of the Trust Units registered in the name of the Unitholder at the prices
determined and payable in accordance with the conditions hereinafter provided.
18.2 EXERCISE OF REDEMPTION RIGHT
To exercise a Unitholder's right to require redemption under this
Article 18, a duly completed and properly executed notice requiring the Trust
to redeem Trust Units, in a form approved by the Trustee, shall be sent to the
Trust at the head office of the Trust, together with the Trust Unit
Certificate or Trust Unit Certificates representing the Trust Units to be
redeemed. No form or manner of completion or execution shall be sufficient
unless the same is in all respects satisfactory to the Corporation and is
accompanied by any further evidence that the Corporation may reasonably
require with respect to the identity, capacity or authority of the person
giving such notice.
Upon receipt by the Trust of the notice to redeem Trust Units, the
Unitholder shall thereafter cease to have any rights with respect to the Trust
Units tendered for redemption (other than to receive the redemption payment
therefor) including the right to receive any distributions thereon. Trust
Units shall be considered to be tendered for redemption on the date that the
Trust has, to the satisfaction of the Corporation, received the notice, Trust
Unit Certificates and other required documents or evidence as aforesaid.
18.3 CALCULATION OF REDEMPTION PRICE BASED ON MARKET PRICE
Subject to Section 18.6, upon receipt by the Trust of the notice to
redeem Trust Units in accordance with Section 18.2, the holder of the Trust
Units tendered for redemption shall be entitled to receive a price per Trust
Unit (hereinafter called the "MARKET REDEMPTION PRICE") equal to the lesser
of:
(a) 90% of the market price of the Trust Units on the principal market on
which the Trust Units are quoted for trading during the 10 day
trading period commencing immediately after the date on which the
Trust Units were tendered to the Trust for redemption; and
41
(b) the closing market price on the principal market on which the Trust
Units are quoted for trading, on the date that the Trust Units were
so tendered for redemption.
For the purposes of Subsection 18.3(a), the market price shall be an
amount equal to the simple average of the closing price of the Trust Units for
each of the trading days on which there was a closing price; provided that if
the applicable exchange or market does not provide a closing price but only
provides the highest and lowest prices of the Trust Units traded on a
particular day, the market price shall be an amount equal to the simple
average of the average of the highest and lowest prices for each of the
trading days on which there was a trade; and provided further that if there
was trading on the applicable exchange or market for fewer than 5 of the 10
trading days, the market price shall be the simple average of the following
prices established for each of the 10 trading days; the average of the last
bid and last ask prices for each day on which there was no trading; the
closing price of the Trust Units for each day that there was trading if the
exchange or market provides a closing price; and the average of the highest
and lowest prices of the Trust Units for each day that there was trading, if
the market provides only the highest and lowest prices of Trust Units traded
on a particular day.
For the purposes of subsection 18.3(b), the closing market price
shall be: an amount equal to the closing price of the Trust Units if there was
a trade on the date; an amount equal to the average of the highest and lowest
prices of Trust Units if there was trading and the exchange or other market
provides only the highest and lowest prices of Trust Units traded on a
particular day; and the average of the last bid and last ask prices if there
was no trading on the date.
18.4 CASH PAYMENT OF MARKET REDEMPTION PRICE
Subject to Section 18.5, the Market Redemption Price, payable in
respect of the Trust Units tendered for redemption during any calendar month
shall be paid by cheque, drawn on a Canadian chartered bank or a trust company
in lawful money of Canada, payable at par to or to the order of the Unitholder
who exercised the right of redemption on the last day of the calendar month
following the month in which the Trust Units were tendered for redemption.
Payments made by the Trust of the Market Redemption Price are conclusively
deemed to have been made upon the mailing of a cheque in a postage pre-paid
envelope addressed to the former Unitholder unless such cheque is dishonoured
upon presentment. Upon such payment, the Trust shall be discharged from all
liability to the former Unitholder in respect of the Trust Units so redeemed.
18.5 LIMITATION REGARDING CASH PAYMENT OF MARKET REDEMPTION PRICE
Section 18.4 shall not be applicable to Trust Units tendered for
redemption by a Unitholder if the total amount payable by the Trust pursuant
to Section 18.4 in respect of such Trust Units and all other Trust Units
tendered for redemption in the same calendar month exceeds $250,000; provided
that the Corporation may, in its sole discretion, waive such limitation in
respect of any calendar month. If this limitation is not so waived for such
calendar month, the Market Redemption Price payable in respect of the Trust
Units tendered for redemption in such calendar month shall be paid on the last
day of the calendar month following such month as follows:
(a) firstly, by the Trust distributing Notes, or such other series of
promissory notes of the Corporation ("OTHER NOTES") as the
Corporation may issue to the Trust in payment of the Notes, having an
aggregate principal amount equal to the aggregate Market Redemption
Price of the Trust Units tendered for redemption; and,
(b) secondly, to the extent that the Trust does not hold Notes and/or
Other Notes having a sufficient principal amount outstanding to
effect such payment, by the Trust issuing Redemption Notes to the
Unitholders who exercise the right of redemption having an aggregate
principal amount equal to any such shortfall, which Redemption Notes
shall have terms and conditions substantially identical to those of
the Notes and/or Other Notes.
Upon such distribution of Notes and/or Other Notes or issuance of
Redemption Notes, the Trust shall be discharged from all liability to the
former Unitholder in respect of the Trust Units so redeemed. For greater
42
certainty, the Trust shall be entitled to all interest accrued and unpaid on
the Notes and/or Other Notes so distributed to and including the date upon
which such Notes and/or Other Notes are required to be distributed.
18.6 CALCULATION OF REDEMPTION PRICE IN CERTAIN OTHER CIRCUMSTANCES
Section 18.3 shall not be applicable to Trust Units tendered for
redemption by a Unitholder, if:
(a) at the time the Trust Units are tendered for redemption, the
outstanding Trust Units of the Trust are not listed for trading on
the Toronto Stock Exchange or the TSX Venture Exchange and are not
traded or quoted on any other stock exchange or market which the
Corporation considers in its sole discretion, provides representative
fair market value prices for the Trust Units; or
(b) the normal trading of the outstanding Trust Units of the Trust is
suspended or halted on any stock exchange on which the Trust Units
are listed for trading or, if not so listed, on any market on which
the Trust Units are quoted for trading, on the date that such Trust
Units tendered for redemption were tendered to the Trust for
redemption or for more than five trading days during the 10 day
trading period commencing immediately after the date on which such
Trust Units tendered for redemption were tendered to the Trust for
redemption;
and in either such case, such Unitholder shall, instead of the Market
Redemption Price, be entitled to receive a price per Trust Unit (herein
referred to as the "APPRAISED REDEMPTION PRICE") equal to 90% of the fair
market value thereof as determined by the Corporation as at the date upon such
Trust Units were tendered for redemption. The Appraised Redemption Price
payable in respect of Trust Units tendered for redemption in any calendar
month shall be paid on the last day of the third calendar month following the
month in which such Trust Units were tendered for redemption, by at the option
of the Trust:
(i) cash payment, in which case the provisions of Section 18.4
shall apply MUTATIS MUTANDIS; or
(ii) in the manner provided for in Section 18.5, in which case
the provisions of Section 18.5 shall apply MUTATIS MUTANDIS.
18.7 CANCELLATION OF CERTIFICATES FOR ALL REDEEMED TRUST UNITS
All certificates representing Trust Units which are redeemed under
this Article 18 shall be cancelled and such Trust Units shall no longer be
outstanding and shall not be reissued.
IN WITNESS WHEREOF each of the parties has caused these
presents to be executed by its proper officers duly authorized on its behalf
as of the 2nd day of September, 2003.
BAYTEX ENERGY LTD.
By:___________________________________
VALIANT TRUST COMPANY
By:___________________________________
By:___________________________________
SCHEDULE
To the annexed amended and restated trust indenture dated as of September 2,
2003 and made between
BAYTEX ENERGY LTD.
and
VALIANT TRUST COMPANY
(Form of Certificate for the Trust
Units in the English Language)
TRUST UNITS
BAYTEX ENERGY TRUST
(a trust created under the laws of the Province of Alberta)
No. __________
______________ Trust Units CUSIP ______________________________
THIS CERTIFIES THAT
_____________________________________________ is the registered
holder of _______________ fully paid Trust Units issued by BAYTEX ENERGY TRUST
(the "TRUST") transferable only on the books of the Trust by the registered
holder hereof in person or by attorney duly authorized upon surrender of this
certificate properly endorsed.
The Trust Units represented by this certificate are issued upon the
terms and subject to the conditions of an amended and restated trust indenture
(which indenture together with all other instruments supplemental or ancillary
thereto is herein referred to as the "TRUST INDENTURE") dated as of September
2, 2003 and made between Baytex Energy Ltd. (the "CORPORATION"), as settlor,
and Valiant Trust Company (the "TRUSTEE"), as amended and restated from time
to time, which Trust Indenture is binding upon all holders of Trust Units and,
by acceptance of this certificate, the holder assents to the terms and
conditions of the Trust Indenture. Terms defined in the Trust Indenture have
the same meaning when used herein.
A copy of the Trust Indenture pursuant to which this certificate and
the Trust Units represented hereby are issued may be obtained by any
Unitholder on demand and on payment of reasonable reproduction costs from the
head office of the Trust.
This certificate may only be transferred, upon compliance with the
conditions prescribed in the Trust Indenture, on the register to be kept at
the office of the transfer agent in the City of Calgary and the City of
Toronto, as applicable, and at such other place or places, if any, as the
Trustee may designate, by the registered holder thereof or his executors or
administrators or other legal representatives or his or their attorney duly
appointed by an instrument in writing in form and execution satisfactory to
the Trustee, and upon compliance with such reasonable requirements as the
Trustee may prescribe.
The Trust Indenture contains provisions for the holding of meetings
of Unitholders and rendering resolutions passed at such meetings binding upon
all Unitholders.
2
At no time may non-residents of Canada (within the meaning of the Tax
Act) be the beneficial owners of more than 49 percent of the Trust Units then
outstanding. The Trustee or Transfer Agent may require declarations as to the
jurisdictions in which beneficial owners of Trust Units are resident. If the
Transfer Agent or the Corporation becomes aware that the beneficial owners of
49 percent or more of the Trust Units then outstanding are, or may be,
non-residents or that such a situation is imminent, the Transfer Agent or the
Corporation (as applicable) will advise the Trustee and the Trustee may, or
upon receiving a direction from the Trustee the Transfer Agent may, make a
public announcement thereof and neither the Trustee nor the Transfer Agent
shall accept a subscription for Trust Units from or issue or register a
transfer of Trust Units to a person unless the person provides a declaration,
in form and content satisfactory to the Trustee or the Transfer Agent, that
the person is not a non-resident of Canada. If, notwithstanding the foregoing,
the Trustee or Transfer Agent determines that 49 percent or more of the Trust
Units are held by non-residents, the Trustee may, or the Transfer Agent may
upon receiving a direction from the Trustee and suitable indemnity from the
Trust, send a notice to non-resident holders of Trust Units, as applicable,
chosen in inverse order to the order of acquisition or registration or in such
other manner as the Trustee or Transfer Agent (as the case may be) may
consider equitable and practicable, requiring such non-resident holders to
sell their Trust Units or a specified portion thereof within a specified
period of not less than 60 days. If the Unitholders receiving such notice have
not sold the specified number of Trust Units or provided the Trustee with
satisfactory evidence that they are not non-residents of Canada within such
period, the Trustee (or the Transfer Agent on the direction of the Trustee)
may on behalf of such Unitholders sell such Trust Units and, in the interim,
shall suspend the voting and distribution rights attached to such Trust Units.
Upon such sale the Unitholders thereby affected shall cease to be holders of
Trust Units and their rights shall be limited to receiving the net proceeds of
sale of such Trust Units. No liability shall accrue to the Trust or the
Trustee if the Trust Units of non-resident Unitholders are sold at a loss to
such Unitholder. Notwithstanding the foregoing, the Trustee, upon direction of
the Corporation, may take such action as is deemed necessary to ensure
compliance with the Tax Act.
The Trust Indenture provides that no Unitholder shall incur or be
subject to any liability in connection with the Trust Fund or the obligations
or the affairs of the Trust or with respect to any act performed by the
Trustee or by any other person pursuant to the Trust Indenture.
The Trust Indenture provides that Trust Units shall be issued only
when fully paid and the Unitholders shall not thereafter be required to make
any further contribution to the Trust with respect to such Trust Units.
This certificate shall not be valid for any purpose until it shall
have been countersigned and registered by the transfer agent of the Trust.
3
IN WITNESS WHEREOF the Corporation has caused this
certificate to be signed by its duly authorized officers.
DATED ___________ BAYTEX ENERGY TRUST,
by its attorney,
Baytex Energy Ltd.
By:_____________________________
Authorized Officer
By:_____________________________
Authorized Officer
Countersigned and Registered
VALIANT TRUST COMPANY
Transfer Agent and Registrar of the Trust
By:_____________________________
Authorized Officer
TRANSFER FORM
FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto
_____________________________________________________________________________
(please print or typewrite name and address of assignee)
__________ Trust Units of BAYTEX ENERGY TRUST represented by this certificate
and hereby irrevocable constitutes and appoints ____________________ Attorney
to transfer the said Trust Units on the registers of the Trust for the said
purpose, with full power of substitution in the premises.
Dated ____________________________ ________________________________________
(SIGNATURE OF TRANSFEROR)
__________________________________
The signature of the registered
holder of the within certificate
to the foregoing assignment must
be guaranteed by a chartered bank,
by a trust company or a member
firm of the Toronto Stock
Exchange, the Montreal Exchange,
the TSX Venture Exchange, a
national securities exchange in
the United Sates or the National
Association of Securities Dealers,
Inc. who are members of the
Securities Transfer Association
Medallion Program.