EXHIBIT 3
---------
TRUST INDENTURE
DATED AS OF THE 29 DAY OF JANUARY, 2004
AMONG
HARVEST ENERGY TRUST
AND
HARVEST OPERATIONS CORP.
AND
VALIANT TRUST COMPANY
PROVIDING FOR THE ISSUE OF DEBENTURES
TABLE OF CONTENTS
PAGE
ARTICLE 1 INTERPRETATION.......................................................1
1.1 DEFINITIONS...........................................................1
1.2 MEANING OF "OUTSTANDING"..............................................6
1.3 INTERPRETATION........................................................7
1.4 HEADINGS, ETC.........................................................7
1.5 DAY NOT A BUSINESS DAY................................................7
1.6 APPLICABLE LAW........................................................7
1.7 MONETARY REFERENCES...................................................7
1.8 INVALIDITY, ETC.......................................................7
1.9 LANGUAGE..............................................................8
1.10 SUCCESSORS AND ASSIGNS................................................8
1.11 BENEFITS OF INDENTURE.................................................8
1.12 REFERENCES TO ACTS OF THE TRUST.......................................8
ARTICLE 2 THE DEBENTURES.......................................................8
2.1 LIMIT OF DEBENTURES...................................................8
2.2 TERMS OF DEBENTURES OF ANY SERIES.....................................8
2.3 FORM OF DEBENTURES....................................................9
2.4 FORM AND TERMS OF INITIAL DEBENTURES.................................10
2.5 CERTIFICATION AND DELIVERY OF ADDITIONAL DEBENTURES..................13
2.6 ISSUE OF GLOBAL DEBENTURES...........................................14
2.7 EXECUTION OF DEBENTURES..............................................15
2.8 CERTIFICATION........................................................15
2.9 INTERIM DEBENTURES OR CERTIFICATES...................................15
2.10 MUTILATION, LOSS, THEFT OR DESTRUCTION...............................16
2.11 CONCERNING INTEREST..................................................16
2.12 DEBENTURES TO RANK PARI PASSU........................................16
2.13 PAYMENTS OF AMOUNTS DUE ON MATURITY..................................16
2.14 U.S. LEGEND ON THE DEBENTURES........................................17
2.15 PAYMENT OF INTEREST..................................................18
ARTICLE 3 REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP......................18
3.1 FULLY REGISTERED DEBENTURES..........................................18
3.2 GLOBAL DEBENTURES....................................................19
3.3 TRANSFEREE ENTITLED TO REGISTRATION..................................20
3.4 NO NOTICE OF TRUSTS..................................................20
3.5 REGISTERS OPEN FOR INSPECTION........................................20
3.6 EXCHANGES OF DEBENTURES..............................................21
3.7 CLOSING OF REGISTERS.................................................21
3.8 CHARGES FOR REGISTRATION, TRANSFER AND EXCHANGE......................21
3.9 OWNERSHIP OF DEBENTURES..............................................22
ARTICLE 4 REDEMPTION AND PURCHASE OF DEBENTURES...............................22
4.1 APPLICABILITY OF ARTICLE.............................................22
4.2 PARTIAL REDEMPTION...................................................23
4.3 NOTICE OF REDEMPTION.................................................23
4.4 DEBENTURES DUE ON REDEMPTION DATES...................................24
4.5 DEPOSIT OF REDEMPTION MONIES OR TRUST UNITS..........................24
4.6 RIGHT TO REPAY REDEMPTION PRICE IN TRUST UNITS.......................24
4.7 FAILURE TO SURRENDER DEBENTURES CALLED FOR REDEMPTION................26
4.8 CANCELLATION OF DEBENTURES REDEEMED..................................27
4.9 PURCHASE OF DEBENTURES BY THE TRUST..................................27
4.10 RIGHT TO REPAY PRINCIPAL AMOUNT IN TRUST UNITS.......................27
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ARTICLE 5 SUBORDINATION OF DEBENTURES.........................................29
5.1 APPLICABILITY OF ARTICLE.............................................29
5.2 ORDER OF PAYMENT.....................................................30
5.3 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS..............31
5.4 OBLIGATION TO PAY NOT IMPAIRED.......................................31
5.5 NO PAYMENT IF SENIOR INDEBTEDNESS IN DEFAULT.........................31
5.6 PAYMENT ON DEBENTURES PERMITTED......................................32
5.7 CONFIRMATION OF SUBORDINATION........................................32
5.8 KNOWLEDGE OF DEBENTURE TRUSTEE.......................................32
5.9 DEBENTURE TRUSTEE MAY HOLD SENIOR INDEBTEDNESS.......................32
5.10 RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT IMPAIRED................32
5.11 ALTERING THE SENIOR INDEBTEDNESS.....................................32
5.12 ADDITIONAL INDEBTEDNESS..............................................33
5.13 RIGHT OF DEBENTUREHOLDER TO CONVERT NOT IMPAIRED.....................33
5.14 INVALIDATED PAYMENTS.................................................33
5.15 CONTESTING SECURITY..................................................33
ARTICLE 6 CONVERSION OF DEBENTURES............................................33
6.1 APPLICABILITY OF ARTICLE.............................................33
6.2 NOTICE OF EXPIRY OF CONVERSION PRIVILEGE.............................33
6.3 REVIVAL OF RIGHT TO CONVERT..........................................33
6.4 MANNER OF EXERCISE OF RIGHT TO CONVERT...............................34
6.5 ADJUSTMENT OF CONVERSION PRICE.......................................35
6.6 NO REQUIREMENT TO ISSUE FRACTIONAL TRUST UNITS.......................37
6.7 TRUST TO RESERVE TRUST UNITS.........................................37
6.8 CANCELLATION OF CONVERTED DEBENTURES.................................38
6.9 CERTIFICATE AS TO ADJUSTMENT.........................................38
6.10 NOTICE OF SPECIAL MATTERS............................................38
6.11 PROTECTION OF DEBENTURE TRUSTEE......................................38
6.12 U.S. LEGEND ON TRUST UNITS...........................................38
ARTICLE 7 COVENANTS OF THE TRUST..............................................39
7.1 TO PAY PRINCIPAL, PREMIUM (IF ANY) AND INTEREST......................39
7.2 TO PAY DEBENTURE TRUSTEE'S REMUNERATION..............................39
7.3 TO GIVE NOTICE OF DEFAULT............................................39
7.4 PRESERVATION OF EXISTENCE, ETC.......................................39
7.5 KEEPING OF BOOKS.....................................................39
7.6 ANNUAL CERTIFICATE OF COMPLIANCE.....................................39
7.7 NO DISTRIBUTIONS ON TRUST UNITS IF EVENT OF DEFAULT..................40
7.8 LIMITATION ON ADDITIONAL DEBENTURES..................................40
7.9 PERFORMANCE OF COVENANTS BY DEBENTURE TRUSTEE........................40
ARTICLE 8 DEFAULT.............................................................40
8.1 EVENTS OF DEFAULT....................................................40
8.2 NOTICE OF EVENTS OF DEFAULT..........................................41
8.3 WAIVER OF DEFAULT....................................................42
8.4 ENFORCEMENT BY THE DEBENTURE TRUSTEE.................................42
8.5 NO SUITS BY DEBENTUREHOLDERS.........................................43
8.6 APPLICATION OF MONIES BY DEBENTURE TRUSTEE...........................43
8.7 NOTICE OF PAYMENT BY DEBENTURE TRUSTEE...............................44
8.8 DEBENTURE TRUSTEE MAY DEMAND PRODUCTION OF DEBENTURES................44
8.9 REMEDIES CUMULATIVE..................................................44
8.10 JUDGMENT AGAINST THE TRUST...........................................44
8.11 IMMUNITY OF DEBENTURE TRUSTEE AND OTHERS.............................45
ARTICLE 9 SATISFACTION AND DISCHARGE..........................................45
9.1 CANCELLATION AND DESTRUCTION.........................................45
9.2 NON-PRESENTATION OF DEBENTURES.......................................45
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9.3 REPAYMENT OF UNCLAIMED MONIES OR TRUST UNITS.........................45
9.4 DISCHARGE............................................................46
9.5 SATISFACTION.........................................................46
9.6 CONTINUANCE OF RIGHTS, DUTIES AND OBLIGATIONS........................47
ARTICLE 10 TRUST UNIT INTEREST PAYMENT ELECTION...............................48
10.1 TRUST UNIT INTEREST PAYMENT ELECTION.................................48
ARTICLE 11 SUCCESSORS.........................................................50
11.1 RESTRICTIONS ON AMALGAMATION, MERGER AND SALE OF CERTAIN ASSETS, ETC.50
11.2 VESTING OF POWERS IN SUCCESSOR.......................................50
ARTICLE 12 COMPULSORY ACQUISITION.............................................50
12.1 DEFINITIONS..........................................................50
12.2 OFFER FOR DEBENTURES.................................................51
12.3 OFFEROR'S NOTICE TO DISSENTING SHAREHOLDERS..........................51
12.4 DELIVERY OF DEBENTURE CERTIFICATES...................................52
12.5 PAYMENT OF CONSIDERATION TO DEBENTURE TRUSTEE........................52
12.6 CONSIDERATION TO BE HELD IN TRUST....................................52
12.7 COMPLETION OF TRANSFER OF DEBENTURES TO OFFEROR......................52
12.8 COMMUNICATION OF OFFER TO TRUST......................................52
ARTICLE 13 MEETINGS OF DEBENTUREHOLDERS.......................................53
13.1 RIGHT TO CONVENE MEETING.............................................53
13.2 NOTICE OF MEETINGS...................................................53
13.3 CHAIRMAN.............................................................54
13.4 QUORUM...............................................................54
13.5 POWER TO ADJOURN.....................................................54
13.6 SHOW OF HANDS........................................................55
13.7 POLL.................................................................55
13.8 VOTING...............................................................55
13.9 PROXIES..............................................................55
13.10 PERSONS ENTITLED TO ATTEND MEETINGS..................................56
13.11 POWERS EXERCISABLE BY EXTRAORDINARY RESOLUTION.......................56
13.12 MEANING OF "EXTRAORDINARY RESOLUTION"................................57
13.13 POWERS CUMULATIVE....................................................58
13.14 MINUTES..............................................................58
13.15 INSTRUMENTS IN WRITING...............................................58
13.16 BINDING EFFECT OF RESOLUTIONS........................................58
13.17 EVIDENCE OF RIGHTS OF DEBENTUREHOLDERS...............................59
13.18 CONCERNING SERIAL MEETINGS...........................................59
ARTICLE 14 NOTICES............................................................59
14.1 NOTICE TO TRUST......................................................59
14.2 NOTICE TO DEBENTUREHOLDERS...........................................59
14.3 NOTICE TO DEBENTURE TRUSTEE..........................................60
14.4 MAIL SERVICE INTERRUPTION............................................60
ARTICLE 15 CONCERNING THE DEBENTURE TRUSTEE...................................60
15.1 NO CONFLICT OF INTEREST..............................................60
15.2 REPLACEMENT OF DEBENTURE TRUSTEE.....................................60
15.3 DUTIES OF DEBENTURE TRUSTEE..........................................61
15.4 RELIANCE UPON DECLARATIONS, OPINIONS, ETC............................61
15.5 EVIDENCE AND AUTHORITY TO DEBENTURE TRUSTEE, OPINIONS, ETC...........61
15.6 OFFICER'S CERTIFICATES EVIDENCE......................................62
15.7 EXPERTS, ADVISERS AND AGENTS.........................................62
15.8 DEBENTURE TRUSTEE MAY DEAL IN DEBENTURES.............................62
15.9 INVESTMENT OF MONIES HELD BY DEBENTURE TRUSTEE.......................62
15.10 DEBENTURE TRUSTEE NOT ORDINARILY BOUND...............................63
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15.11 DEBENTURE TRUSTEE NOT REQUIRED TO GIVE SECURITY......................63
15.12 DEBENTURE TRUSTEE NOT BOUND TO ACT ON TRUST'S REQUEST................63
15.13 CONDITIONS PRECEDENT TO DEBENTURE TRUSTEE'S OBLIGATIONS
TO ACT HEREUNDER...................................................63
15.14 AUTHORITY TO CARRY ON BUSINESS.......................................64
15.15 COMPENSATION AND INDEMNITY...........................................64
15.16 ACCEPTANCE OF TRUST..................................................64
ARTICLE 16 SUPPLEMENTAL INDENTURES............................................64
16.1 SUPPLEMENTAL INDENTURES..............................................64
ARTICLE 17 EXECUTION AND FORMAL DATE..........................................65
17.1 EXECUTION............................................................65
17.2 CONTRACTS OF THE TRUST...............................................65
17.3 FORMAL DATE..........................................................66
SCHEDULES
Schedule A - Form of Debenture
Schedule B - Form of Redemption Notice
Schedule C - Form of Maturity Notice
Schedule D - Form of Notice of Conversion
Schedule E - Form of Declaration for Removal of Legend
THIS INDENTURE made as of the 29th day of January, 2004.
AMONG:
HARVEST ENERGY TRUST, an open ended unincorporated trust
governed under the laws of the Province of Alberta and having
its head office in the City of Calgary, in the Province of
Alberta (hereinafter called the "TRUST")
AND
HARVEST OPERATIONS CORP., a corporation existing under the
laws of the Province of Alberta and having its head office in
the City of Calgary, in the Province of Alberta (hereinafter
called "HOC" or the "CORPORATION")
AND
VALIANT TRUST COMPANY, a trust company incorporated under the
laws of Alberta having an office in the City of Calgary, in
the Province of Alberta (hereinafter called the "DEBENTURE
TRUSTEE")
WHEREAS the Trust deems it necessary for its investment
purposes to create and issue the Debentures in the manner hereinafter appearing;
AND WHEREAS the Trust is duly authorized to create and issue
the Debentures to be issued as herein provided;
AND WHEREAS HOC is duly authorized to sign instruments on
behalf of the Trust;
AND WHEREAS, when certified by the Debenture Trustee and
issued as in this Indenture provided, all necessary steps in relation to the
Trust have been duly enacted, passed and/or confirmed and other proceedings
taken and conditions complied with to make the creation and issue of the
Debentures proposed to be issued hereunder legal, valid and binding on the Trust
in accordance with the laws relating to the Trust;
AND WHEREAS the foregoing recitals are made as representations
and statements of fact by the Trust and not by the Debenture Trustee;
NOW THEREFORE it is hereby covenanted, agreed and declared as
follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Indenture and in the Debentures, unless there is
something in the subject matter or context inconsistent therewith, the
expressions following shall have the following meanings, namely:
(a) "THIS INDENTURE", "THIS TRUST INDENTURE", "HERETO", "HEREIN", "HEREBY",
"HEREUNDER", "HEREOF" and similar expressions refer to this Indenture
and not to any particular Article, Section, subsection, clause,
subdivision or other portion hereof and include any and every
instrument supplemental or ancillary hereto;
(b) "ADDITIONAL DEBENTURES" means Debentures of any one or more series,
other than the first series of Debentures being the Initial Debentures,
issued under this Indenture;
(c) "APPLICABLE SECURITIES LEGISLATION" means applicable securities laws
(including rules, regulations, policies and instruments) in each of the
Provinces of Canada;
(d) "BENEFICIAL HOLDER" means any person who holds a beneficial interest in
a Global Debenture as shown on the books of the Depository or a
Depository Participant;
(e) "BORROWED MONEY" means, in respect of the Trust or any Subsidiary of
the Trust, all of such Person's indebtedness, obligations and
liabilities in respect of:
(i) borrowed money;
(ii) bonds, debentures, notes or other similar instruments;
(iii) commercial paper, banker's acceptances, letters of credit,
debt instruments, bank debt and financial leases, including
reimbursement obligations in respect of any of the foregoing;
and
(iv) guarantees, indemnities and other assurances (including
agreements to be liable on a joint and several basis) in
respect of Borrowed Money (as hereinbefore defined).
(f) "BUSINESS DAY" means any day other than a Saturday, Sunday or any other
day that the Debenture Trustee in Calgary, Alberta is not generally
open for business;
(g) "CHANGE OF CONTROL" means the acquisition by any Person, or group of
Persons acting jointly or in concert, of voting control or direction of
an aggregate of 66 2/3% or more of the outstanding Trust Units of the
Trust and securities convertible into or carrying the right to acquire
Trust Units but shall not include a merger, reorganization, combination
or other similar transaction if the previous holders of Trust Units and
securities convertible or carrying the right to acquire Trust Units
hold at least 50% of the voting control or direction in such merged,
reorganized, combined or other continuing entity;
(h) "CONVERSION PRICE" means the dollar amount for which each Trust Unit
may be issued from time to time upon the conversion of Debentures or
any series of Debentures which are by their terms convertible in
accordance with the provisions of Article 6;
(i) "COUNSEL" means a barrister or solicitor or firm of barristers or
solicitors retained or employed by the Debenture Trustee or retained or
employed by the Trust and acceptable to the Debenture Trustee;
(j) "CURRENT MARKET PRICE" means the weighted average price per unit for
Trust Units for 20 consecutive trading days ending on the fifth trading
day preceding the date of determination on the Toronto Stock Exchange
(or, if the Trust Units are not listed thereon, on such stock exchange
on which the Trust Units are listed as may be selected for such purpose
by the trustee and approved by the Debenture Trustee, or if the Trust
Units are not listed on any stock exchange, then on the
over-the-counter market). The weighted average price shall be
determined by dividing the aggregate sale price of all Trust Units sold
on the said exchange or market, as the case may be, during the said 20
consecutive trading days by the total number of Trust Units so sold;
(k) "DATE OF CONVERSION" has the meaning ascribed thereto in Section
6.4(b);
(l) "DEBENTUREHOLDERS" or "HOLDERS" means the Persons for the time being
entered in the register for Debentures as registered holders of
Debentures payable to a named payee or any transferees of such Persons
by endorsement or delivery;
(m) "DEBENTURES" means the debentures, notes or other evidences of
indebtedness of the Trust issued and certified hereunder, or deemed to
be issued and certified hereunder, including, without limitation, the
Initial Debentures, and for the time being outstanding, whether in
definitive or interim form;
(n) "DEPOSITORY" means, with respect to the Debentures of any series
issuable or issued in the form of one or more Global Debentures, the
person designated as depository by the Trust pursuant to Section 3.2
until a successor depository shall have become such pursuant to the
applicable provisions of this Indenture, and
thereafter "Depository" shall mean each person who is then a depository
hereunder, and if at any time there is more than one such person,
"Depository" as used with respect to the Debentures of any series shall
mean each depository with respect to the Global Debentures of such
series;
(o) "DEPOSITORY PARTICIPANT" means a broker, dealer, bank, other financial
institution or other person for whom from time to time, a Depository
effects book entry for a Global Debenture deposited with the
Depository;
(p) "EVENT OF DEFAULT" has the meaning ascribed thereto in Section 8.1;
(q) "EXTRAORDINARY RESOLUTION" has the meaning ascribed thereto in Section
13.12;
(r) "FREELY TRADEABLE" means, in respect of trust units of capital of any
class of any trust or shares of capital of any class of any
corporation, trust units or shares, as the case may be, which: (i) are
issuable without the necessity of filing a prospectus or any other
similar offering document (other than such prospectus or similar
offering document that has already been filed) under Applicable
Securities Legislation and such issue does not constitute a
distribution (other than a distribution already qualified by prospectus
or similar offering document) under Applicable Securities Legislation;
and (ii) can be traded by the holder thereof without any restriction
under Applicable Securities Legislation, such as hold periods, except
in the case of a distribution by a control person;
(s) "FULLY REGISTERED DEBENTURES" means Debentures registered as to both
principal and interest;
(t) "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means generally accepted
accounting principles from time to time approved by the Canadian
Institute of Chartered Accountants;
(u) "GLOBAL DEBENTURE" means a Debenture that is issued to and registered
in the name of the Depository, or its nominee, pursuant to Section 2.6
for purposes of being held by or on behalf of the Depository as
custodian for participants in the Depository's book-entry only
registration system;
(v) "GOVERNMENT OBLIGATIONS" means securities issued or guaranteed by the
Government of Canada or any province thereof;
(w) "INITIAL DEBENTURES" means the Debentures designated as "9.00%
Convertible Unsecured Subordinated Debentures" and described in Section
2.4;
(x) "INTEREST OBLIGATION" means the obligation of the Trust to pay interest
on the Debentures, as and when the same becomes due;
(y) "INTEREST PAYMENT DATE" means a date specified in a Debenture as the
date on which an instalment of interest on such Debenture shall become
due and payable;
(z) "LEGENDED DEBENTURES" means Debentures bearing the legend provided for
in Section 2.14;
(aa) "MATURITY ACCOUNT" means an account or accounts required to be
established by the Trust (and which shall be maintained by and subject
to the control of the Debenture Trustee) for each series of Debentures
pursuant to and in accordance with this Indenture;
(bb) "MATURITY DATE" has the meaning ascribed thereto in Section 4.10(a).
(cc) "MATURITY NOTICE" has the meaning attributed thereto in Section 2.4(f);
(dd) "OFFERING" means the public offering by short form prospectus dated
January 21, 2004 of $60,000,000 in aggregate principal amount of
Initial Debentures;
(ee) "OFFICER'S CERTIFICATE" means a certificate of the Trust signed by any
one authorized officer or director of HOC, on behalf of the Trust, in
his or her capacity as an officer or director of HOC, as the case may
be, and not in his or her personal capacity;
(ff) "PERIODIC OFFERING" means an offering of Debentures of a series from
time to time, the specific terms of which Debentures, including,
without limitation, the rate or rates of interest, if any, thereon, the
stated maturity or maturities thereof and the redemption provisions, if
any, with respect thereto, are to be determined by the Trust upon the
issuance of such Debentures from time to time;
(gg) "PERSON" includes an individual, corporation, company, partnership,
joint venture, association, trust, trustee, unincorporated organization
or government or any agency or political subdivision thereof;
(hh) "REDEMPTION DATE" has the meaning attributed thereto in Section 4.3;
(ii) "REDEMPTION NOTICE" has the meaning attributed thereto in Section 4.3;
(jj) "REDEMPTION PRICE" means, in respect of a Debenture, the amount,
excluding interest, payable on the Redemption Date fixed for such
Debenture, which amount may be payable by the issuance of Freely
Tradeable Trust Units as provided for in Section 4.6;
(kk) "REGULATION S" means Regulation S adopted by the United States
Securities and Exchange Commission under the 1933 Act;
(ll) "SENIOR CREDITOR" means a holder or holders of Senior Indebtedness and
includes any representative or representatives or trustee or trustees
of any such holder or holders;
(mm) "SENIOR INDEBTEDNESS" shall mean all indebtedness, liabilities and
obligations of the Trust, whether outstanding on the date of this
Indenture or thereafter created, incurred or assumed, or for which it
is liable in respect of any guarantee, indemnity, suretyship or joint
and several liability:
(i) in respect of Borrowed Money (other than the Initial
Debentures) of the Trust or any Subsidiary of the Trust;
(ii) in connection with the acquisition by the Trust or any
Subsidiary of the Trust of any businesses, properties or other
assets;
(iii) in connection with any agreement or instrument entered into by
the Trust or any Subsidiary of the Trust for the purposes of
mitigating or eliminating exposure to fluctuations in prices
of commodities, rates of exchange of one currency for another,
interest rates or similar matters;
(iv) to any trade creditors of the Trust or any Subsidiary of the
Trust; and
(v) renewals, extensions, restructurings, refinancings and
refundings of any such indebtedness, liabilities or
obligations;
unless in each case it is provided by the terms of the instrument
creating or evidencing such indebtedness, liabilities or obligations
that such indebtedness, liabilities or obligations are PARI PASSU with
or subordinate in right of payment to the Debentures (which for greater
certainty includes the Initial Debentures);
(nn) "SENIOR SECURITY" means all mortgages, liens, pledges, charges (whether
fixed or floating), security interests or other encumbrances of any
kind, contingent or absolute, held by or on behalf of any Senior
Creditor and in any manner securing any Senior Indebtedness;
(oo) "SUBSIDIARY" has the meaning ascribed thereto in the SECURITIES ACT
(Alberta), and for the purposes hereof, "SUBSIDIARY OF THE TRUST"
includes Harvest Sask Energy Trust;
(pp) "TIME OF EXPIRY" means the time of expiry of certain rights with
respect to the conversion of Debentures under Article 6 which is to be
set forth separately in the form and terms for each series of
Debentures which by their terms are to be convertible;
(qq) "TOTAL MARKET CAPITALIZATION" means the total principal amount of all
issued and outstanding debentures of the Trust which are convertible at
the option of the holder into Trust Units on the relevant date plus the
amount obtained by multiplying the number of issued and outstanding
Trust Units and any outstanding exchangeable equity interests in the
Trust (other than the Initial Debentures or other subordinated
convertible debt) by the Current Market Price of such Trust Units on
the relevant date;
(rr) "TRADING DAY" means, with respect to the Toronto Stock Exchange or
other market for securities, any day on which such exchange or market
is open for trading or quotation;
(ss) "TRUST" means Harvest Energy Trust and includes any successor to or of
the Trust which shall have complied with the provisions of Article 11;
(tt) "TRUST UNITS" means trust units in the Trust, as such trust units are
constituted on the date of execution and delivery of this Indenture;
provided that in the event of a change or a subdivision, revision,
reduction, combination or consolidation thereof, any reclassification,
capital reorganization, consolidation, amalgamation, arrangement,
merger, sale or conveyance or liquidation, dissolution or winding-up,
or such successive changes, subdivisions, redivisions, reductions,
combinations or consolidations, reclassifications, capital
reorganizations, consolidations, amalgamations, arrangements, mergers,
sales or conveyances or liquidations, dissolutions or windings-up,
then, subject to adjustments, if any, having been made in accordance
with the provisions of Section 6.5, "Trust Units" shall mean the units
or other securities or property resulting from such change,
subdivision, redivision, reduction, combination or consolidation,
reclassification, capital reorganization, consolidation, amalgamation,
arrangement, merger, sale or conveyance or liquidation, dissolution or
winding-up;
(uu) "TRUST UNIT BID REQUEST" means a request for bids to purchase Trust
Units (to be issued by the Trust on the Trust Unit Delivery Date) made
by the Debenture Trustee in accordance with the Trust Unit Interest
Payment Election Notice and which shall make the acceptance of any bid
conditional upon the acceptance of sufficient bids to result in
aggregate proceeds from such issue and sale of Trust Units which,
together with the cash payments by the Trust in lieu of fractional
Trust Units, if any, equal the Interest Obligation;
(vv) "TRUST UNIT DELIVERY DATE" means a date, not more than 90 days and not
less than one Business Day prior to the applicable Interest Payment
Date, upon which Trust Units are issued by the Trust and delivered to
the Debenture Trustee for sale pursuant to Trust Unit Purchase
Agreements;
(ww) "TRUST UNIT INTEREST PAYMENT ELECTION" means an election to satisfy an
Interest Obligation on the applicable Interest Payment Date in the
manner described in the Trust Unit Interest Payment Election Notice;
(xx) "TRUST UNIT INTEREST PAYMENT ELECTION AMOUNT" means the sum of the
amount of the aggregate proceeds resulting from the sale of Trust Units
on the Trust Unit Delivery Date pursuant to acceptable bids obtained
pursuant to the Trust Unit Bid Requests, together with any amount paid
by the Trust in respect of fractional Trust Units pursuant to Section
10.1(g), that is equal to the aggregate amount of the Interest
Obligation in respect of which the Trust Unit Interest Payment Election
Notice was delivered;
(yy) "TRUST UNIT INTEREST PAYMENT ELECTION NOTICE" means a written notice
made by the Trust to the Debenture Trustee specifying:
(i) the Interest Obligation to which the election relates;
(ii) the Trust Unit Interest Payment Election Amount;
(iii) the investment banks, brokers or dealers through which the
Debenture Trustee shall seek bids to purchase the Trust Units
and the conditions of such bids, which may include the minimum
number of Trust Units, minimum price per Trust Unit, timing
for closing for bids and such other matters as the Trust may
specify; and
(iv) that the Debenture Trustee shall accept through the investment
banks, brokers or dealers selected by the Trust only those
bids which comply with such notice;
(zz) "TRUST UNIT PROCEEDS INVESTMENT" has the meaning attributed thereto in
Section 10.1(h);
(aaa) "TRUST UNIT PURCHASE AGREEMENT" means an agreement in customary form
among the Trust, the Debenture Trustee and the Persons making
acceptable bids pursuant to a Trust Unit Bid Request, which complies
with all applicable laws, including the Applicable Securities
Legislation and the rules and regulations of any stock exchange on
which the Debentures or Trust Units are then listed;
(bbb) "TRUSTEE" means the trustee of the Trust for the time being and
reference to action "by the trustee" means action by the trustee of the
Trust;
(ccc) "TRUST'S AUDITORS" or "AUDITORS OF THE TRUST" means an independent firm
of chartered accountants duly appointed as auditors of the Trust;
(ddd) "UNIT REDEMPTION RIGHT" has the meaning attributed thereto in Section
4.6(a);
(eee) "UNIT REPAYMENT RIGHT" has the meaning attributed thereto in Section
4.10(a);
(fff) "UNITED STATES" means the United States of America, its territories and
possessions, any state of the United States and the District of
Columbia;
(ggg) "WRITTEN DIRECTION OF THE TRUST" means an instrument in writing signed
by any one officer or trustee of the Trust; and
(hhh) "1933 ACT" means the United States Securities Act of 1933, as amended.
1.2 MEANING OF "OUTSTANDING"
Every Debenture certified and delivered by the Debenture
Trustee hereunder shall be deemed to be outstanding until it is cancelled,
converted or redeemed or delivered to the Debenture Trustee for cancellation,
conversion or redemption or monies and/or Trust Units, as the case may be, for
the payment thereof shall have been set aside under Section 9.2, provided that:
(a) Debentures which have been partially redeemed, purchased or converted
shall be deemed to be outstanding only to the extent of the unredeemed,
unpurchased or unconverted part of the principal amount thereof;
(b) when a new Debenture has been issued in substitution for a Debenture
which has been lost, stolen or destroyed, only one of such Debentures
shall be counted for the purpose of determining the aggregate principal
amount of Debentures outstanding; and
(c) for the purposes of any provision of this Indenture entitling holders
of outstanding Debentures to vote, sign consents, requisitions or other
instruments or take any other action under this Indenture, or to
constitute a quorum of any meeting of Debentureholders, Debentures
owned directly or indirectly, legally or equitably, by the Trust shall
be disregarded except that:
(i) for the purpose of determining whether the Debenture Trustee
shall be protected in relying on any such vote, consent,
acquisition or other instrument or action, or on the holders
of Debentures
present or represented at any meeting of Debentureholders,
only the Debentures which the Debenture Trustee knows are so
owned shall be so disregarded; and
(ii) Debentures so owned which have been pledged in good faith
other than to the Trust shall not be so disregarded if the
pledgee shall establish to the satisfaction of the Debenture
Trustee the pledgee's right to vote such Debentures, sign
consents, requisitions or other instruments or take such other
actions in his discretion free from the control of the Trust
or a Subsidiary of the Trust.
1.3 INTERPRETATION
In this Indenture:
(a) words importing the singular number or masculine gender shall include
the plural number or the feminine or neuter genders, and vice versa;
(b) all references to Articles and Schedules refer, unless otherwise
specified, to articles of and schedules to this Indenture;
(c) all references to Sections refer, unless otherwise specified, to
sections, subsections or clauses of this Indenture; and
(d) words and terms denoting inclusiveness (such as "include" or "includes"
or "including"), whether or not so stated, are not limited by and do
not imply limitation of their context or the words or phrases which
precede or succeed them.
1.4 HEADINGS, ETC.
The division of this Indenture into Articles and Sections, the
provision of a Table of Contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Indenture or of the Debentures.
1.5 DAY NOT A BUSINESS DAY
In the event that any day on or before which any action
required to be taken hereunder is not a Business Day, then such action shall be
required to be taken on or before the requisite time on the next succeeding day
that is a Business Day.
1.6 APPLICABLE LAW
This Indenture and the Debentures 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.
1.7 MONETARY REFERENCES
Whenever any amounts of money are referred to herein, such
amounts shall be deemed to be in lawful money of Canada unless otherwise
expressed.
1.8 INVALIDITY, ETC.
Any provision hereof which is prohibited or unenforceable
shall be ineffective only to the extent of such prohibition or unenforceability,
without invalidating the remaining provisions hereof.
1.9 LANGUAGE
Each of the parties hereto hereby acknowledges that it has
consented to and requested that this Indenture and all documents relating
thereto, including, without limiting the generality of the foregoing, the form
of Debenture attached hereto as SCHEDULE A, be drawn up in the English language
only.
1.10 SUCCESSORS AND ASSIGNS
All covenants and agreements in this Indenture by the Trust
shall bind its successors and assigns, whether expressed or not.
1.11 BENEFITS OF INDENTURE
Nothing in this Indenture or in the Debentures, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, any paying agent, the holders of Debentures, the Senior
Creditors (to the extent provided in Article 5 only) the trustee and (to the
extent provided in Sections 17.2 and 8.11) the holders of Trust Units, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
1.12 REFERENCES TO ACTS OF THE TRUST
For greater certainty, where any reference is made in this
Indenture, or in any other instrument executed pursuant hereto or contemplated
hereby to which the Trust is party, to an act to be performed by, an obligation
or liability of, an asset or right of, or a covenant by, the Trust, such
reference shall be construed and applied for all purposes as if it referred to
an act to be performed by, an obligation or liability of, or a covenant by, the
trustee or a party to whom the trustee has delegated the authority to perform
such act.
ARTICLE 2
THE DEBENTURES
2.1 LIMIT OF DEBENTURES
The aggregate principal amount of Debentures authorized to be
issued under this Indenture is unlimited, but Debentures may be issued only upon
and subject to the conditions and limitations herein set forth.
2.2 TERMS OF DEBENTURES OF ANY SERIES
The Debentures may be issued in one or more series. There
shall be established herein or in or pursuant to one or more indentures
supplemental hereto, prior to the initial issuance of Debentures of any
particular series:
(a) the designation of the Debentures of the series (which need not include
the term "Debentures"), which shall distinguish the Debentures of the
series from the Debentures of all other series;
(b) any limit upon the aggregate principal amount of the Debentures of the
series that may be certified and delivered under this Indenture (except
for Debentures certified and delivered upon registration of, transfer
of, amendment of, or in exchange for, or in lieu of, other Debentures
of the series pursuant to Sections 2.9, 2.10, 3.2, 3.3 and 3.6);
(c) the date or dates on which the principal of the Debentures of the
series is payable;
(d) the rate or rates at which the Debentures of the series shall bear
interest, if any, the date or dates from which such interest shall
accrue, on which such interest shall be payable and on which a record,
if any, shall be taken for the determination of holders to whom such
interest shall be payable and/or the method or methods by which such
rate or rates or date or dates shall be determined;
(e) the place or places where the principal of and any interest on
Debentures of the series shall be payable or where any Debentures of
the series may be surrendered for registration of transfer or exchange;
(f) the right, if any, of the Trust to redeem Debentures of the series, in
whole or in part, at its option and the period or periods within which,
the price or prices at which and any terms and conditions upon which,
Debentures of the series may be so redeemed, pursuant to any sinking
fund or otherwise;
(g) the obligation, if any, of the Trust to redeem, purchase or repay
Debentures of the series pursuant to any mandatory redemption, sinking
fund or analogous provisions or at the option of a holder thereof and
the price or prices at which, the period or periods within which, the
date or dates on which, and any terms and conditions upon which,
Debentures of the series shall be redeemed, purchased or repaid, in
whole or in part, pursuant to such obligations;
(h) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Debentures of the series shall be
issuable;
(i) subject to the provisions of this Indenture, any trustee, Depositories,
authenticating or paying agents, transfer agents or registrars or any
other agents with respect to the Debentures of the series;
(j) any other events of default or covenants with respect to the Debentures
of the series;
(k) whether and under what circumstances the Debentures of the series will
be convertible into or exchangeable for securities of any Person;
(l) the form and terms of the Debentures of the series;
(m) if applicable, that the Debentures of the series shall be issuable in
whole or in part as one or more Global Debentures and, in such case,
the Depository or Depositories for such Global Debentures in whose name
the Global Debentures will be registered, and any circumstances other
than or in addition to those set forth in Section 2.9 or 3.2 or those
applicable with respect to any specific series of Debentures, as the
case may be, in which any such Global Debenture may be exchanged for
Fully Registered Debentures, or transferred to and registered in the
name of a person other than the Depository for such Global Debentures
or a nominee thereof;
(n) if other than Canadian currency, the currency in which the Debentures
of the series are issuable; and
(o) any other terms of the Debentures of the series (which terms shall not
be inconsistent with the provisions of this Indenture).
All Debentures of any one series shall be substantially
identical, except as may otherwise be established herein or by or pursuant to a
resolution of the directors of HOC, on behalf of the Trust, Officer's
Certificate or in an indenture supplemental hereto. All Debentures of any one
series need not be issued at the same time and may be issued from time to time,
including pursuant to a Periodic Offering, consistent with the terms of this
Indenture, if so provided herein, by or pursuant to such resolution of the
directors of HOC, on behalf of the Trust, Officer's Certificate or in an
indenture supplemental hereto.
2.3 FORM OF DEBENTURES
Except in respect of the Initial Debentures, the form of which
is provided for herein, the Debentures of each series shall be substantially in
such form or forms (not inconsistent with this Indenture) as shall be
established herein or by or pursuant to one or more resolutions of the directors
of HOC, on behalf of the Trust (as set forth in a resolution of the directors of
HOC, on behalf of the Trust or to the extent established pursuant to, rather
than set forth in, a resolution of the directors of HOC, on behalf of the Trust,
in an Officer's Certificate detailing such establishment) or in one or more
indentures supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture and may have imprinted
or otherwise reproduced thereon such legend or legends or endorsements, not
inconsistent with the provisions of this Indenture, as may be required to comply
with any law or with any rules or regulations pursuant thereto or with any rules
or regulations of any securities exchange or securities regulatory authority or
to conform to general usage, all as may be determined by the trustee executing
such Debentures, as conclusively evidenced by their execution of such
Debentures.
2.4 FORM AND TERMS OF INITIAL DEBENTURES
(a) The first series of Debentures (the "INITIAL DEBENTURES") authorized
for issue immediately is limited to an aggregate principal amount of
$60,000,000 and shall be designated as "9.00% Convertible Unsecured
Subordinated Debentures".
(b) The Initial Debentures shall be dated as of the date of closing of the
Offering, shall mature on May 31, 2009 and shall bear interest from the
date of issue at the rate of 9.00% per annum, payable in arrears in
equal (with the exception of the first interest payment which will
include interest from January 29, 2004 as set forth below) semi-annual
payments on November 30 and May 31 in each year, the first such payment
to fall due on May 31, 2004 and the last such payment (representing
interest payable from the last Interest Payment Date to, but excluding,
the Maturity Date of the Initial Debentures) to fall due on May 31,
2009, payable after as well as before maturity and after as well as
before default, with interest on amounts in default at the same rate,
compounded semi-annually. The first interest payment will include
interest accrued from January 29, 2004 to, but excluding May 31, 2004,
which will be equal to $30.33 per $1,000 principal amount of the
Initial Debentures.
(c) The Initial Debentures will be redeemable in accordance with the terms
of Article 4, provided that the Initial Debentures will not be
redeemable on or before May 31, 2007, except in the event of the
satisfaction of certain conditions after a Change of Control has
occurred as outlined herein. Subsequent to May 31, 2007 and on or prior
to May 31, 2008, the Initial Debentures may be redeemed at the option
of the Trust in whole or in part from time to time on notice as
provided for in Section 4.3 at a Redemption Price of $1,050 per $1,000
principal amount of Debentures and, in addition thereto, at the time of
redemption, the Trust shall pay to the holder accrued and unpaid
interest. After May 31, 2008 and prior to maturity, the Initial
Debentures may be redeemed at the option of the Trust in whole or in
part from time to time on notice as provided for in Section 4.3 hereof
at a Redemption Price of $1,025 per $1,000 principal amount of
Debentures and, in addition thereto, at the time of redemption, the
Trust shall pay to the holder accrued and unpaid interest. The
Redemption Notice for the Initial Debentures shall be in the form of
SCHEDULE B. In connection with the redemption of the Initial
Debentures, the Trust may, at its option and subject to the provisions
of Section 4.6 and subject to regulatory approval, elect to satisfy its
obligation to pay all or a portion of the aggregate Redemption Price of
the Initial Debentures to be redeemed by issuing and delivering to the
holders of such Initial Debentures, such number of Freely Tradeable
Trust Units as is obtained by dividing the Redemption Price by 95% of
the Current Market Price in effect on the Redemption Date. Interest
accrued and unpaid on the Debentures on the Redemption Date will be
paid to holders of Debentures, in cash, in the manner contemplated in
Section 4.5. If the Trust elects to exercise such option, it shall so
specify and provide details in the Redemption Notice.
(d) The Initial Debentures will be subordinated to the Senior Indebtedness
of the Trust in accordance with the provisions of Article 5.
(e) Upon and subject to the provisions and conditions of Article 6, the
holder of each Initial Debenture shall have the right at such holder's
option, at any time when the register of the Debenture Trustee is open,
prior to the close of business on the earlier of May 31, 2009 and the
last Business Day immediately preceding any date specified by the Trust
for a redemption of the Initial Debentures by notice to the holders of
Initial Debentures in accordance with Sections 2.4(c) and 4.3 (each of
which will be a "TIME OF EXPIRY" for the purposes of Article 6 in
respect of the Initial Debentures), to convert any part, which is
$1,000 or an integral multiple thereof, of the principal amount of such
Debenture in a denomination in excess of $1,000 into Trust Units at the
Conversion Price in effect on the Date of Conversion. To the extent a
redemption is a redemption in part only of the Initial Debentures, such
right to convert, if not exercised prior to the
applicable Time of Expiry, shall survive as to any Initial Debentures
not redeemed or converted and be applicable to the next succeeding Time
of Expiry.
The Conversion Price in effect on the date hereof for each Trust Unit
to be issued upon the conversion of Initial Debentures shall be equal
to $14.00 such that approximately 71.4286 Trust Units shall be issued
for each $1,000 principal amount of Initial Debentures so converted. No
adjustment in the number of Trust Units to be issued upon conversion
will be made for distributions on Trust Units issuable upon conversion
or for interest accrued on the Initial Debentures which are surrendered
for conversion. However, holders converting their Initial Debentures
will receive, in addition to the applicable number of Trust Units, a
cash payment in satisfaction of any accrued and unpaid interest in
respect of the Initial Debentures surrendered for conversion up to but
excluding the Date of Conversion in accordance with Section 6.4(e). The
Conversion Price applicable to and the Trust Units, securities or other
property receivable on the conversion of the Initial Debentures is
subject to adjustment pursuant to the provisions of Section 6.5.
Notwithstanding any other provisions of this Indenture, if a Debenture
is surrendered for conversion on an Interest Payment Date or during the
five preceding Business Days, the person or persons entitled to receive
Trust Units in respect of the Debenture so surrendered for conversion
shall not become the holder or holders of record of such Trust Units
until the Business Day following such Interest Payment Date.
(f) On maturity of the Initial Debentures, the Trust may, at its option and
subject to the provisions of Section 4.10 and subject to regulatory
approval, elect to satisfy its obligation to pay all or a portion of
the aggregate principal amount of the Initial Debentures due on
maturity by issuing and delivering to such holders of Initial
Debentures Freely Tradeable Trust Units pursuant to the provisions of
Section 4.10. If the Trust elects to exercise such option, it shall
deliver a maturity notice (the "MATURITY NOTICE") to the holders of the
Initial Debentures in the form of SCHEDULE C and provide the necessary
details.
(g) The Initial Debentures shall be issued in denominations of $1,000 and
integral multiples of $1,000. Each Initial Debenture and the
certificate of the Debenture Trustee endorsed thereon shall be issued
in substantially the form set out in SCHEDULE A, with such insertions,
omissions, substitutions or other variations as shall be required or
permitted by this Indenture, and may have imprinted or otherwise
reproduced thereon such legend or legends or endorsements, not
inconsistent with the provisions of this Indenture, as may be required
to comply with any law or with any rules or regulations pursuant
thereto or with any rules or regulations of any securities exchange or
securities regulatory authority or to conform with general usage, all
as may be determined by the directors of HOC (on behalf of the Trust)
executing such Initial Debenture in accordance with Section 2.7 hereof,
as conclusively evidenced by their execution of an Initial Debenture.
Each Initial Debenture shall additionally bear such distinguishing
letters and numbers as the Debenture Trustee shall approve.
Notwithstanding the foregoing, an Initial Debenture may be in such
other form or forms as may, from time to time, be, approved by a
resolution of the directors of HOC, on behalf of the Trust or as
specified in an Officer's Certificate. The Initial Debentures may be
engraved, lithographed, printed, mimeographed or typewritten or partly
in one form and partly in another.
The Initial Debentures shall be issued as Global Debentures and the
Global Debentures shall be registered in the name of the Depositary
which, as of the date hereof, shall be The Canadian Depositary for
Securities Limited (or any nominee of the Depositary). No beneficial
holder will receive definitive certificates representing their interest
in Debentures except as provided in Section 3.2. A Global Debenture may
be exchanged for Debentures in registered form that are not Global
Debentures, or transferred to and registered in the name of a person
other than the Depository for such Global Debentures or a nominee
thereof as provided in Section 3.2.
(h) Upon and subject to the provisions and conditions of Article 10, the
Trust may elect, from time to time, to satisfy its Interest Obligation
on the Initial Debentures on any Interest Payment Date by delivering
Trust Units to the Debenture Trustee.
(i) Within 30 days following the occurrence of a Change of Control, and
subject to the provisions and conditions of this Section 2.4(i), the
Trust shall be obligated to offer to purchase the Initial Debentures.
The terms and conditions of such obligation are set forth below:
(i) Within 30 days following the occurrence of a Change of
Control, the Trust shall deliver to the Debenture Trustee, and
the Debenture Trustee shall promptly deliver to the holders of
the Initial Debentures a notice stating that there has been a
Change of Control and specifying the circumstances surrounding
such event (a "CHANGE OF CONTROL NOTICE") together with an
offer in writing (the "OFFER") to purchase all then
outstanding Initial Debentures made in accordance with the
requirements of Applicable Securities Legislation at a price
equal to 101% of the principal amount thereof (the "OFFER
PRICE") plus accrued and unpaid interest, if any, on such
Initial Debentures up to, but excluding, the date of
acquisition by the Trust or a related party of such Debentures
(collectively, the "TOTAL OFFER PRICE") which Offer shall,
unless otherwise provided under Applicable Securities
Legislation, be open for acceptance thereof for a period of
not less than 35 days and not more than 60 days and shall
provide for payment to all Debentureholders who accept the
Offer not later than the 60th day after the making of the
Offer.
(ii) If 90% or more in aggregate principal amount of Initial
Debentures outstanding on the date the Trust provides the
Change of Control Notice and the Offer to holders of the
Initial Debentures have been tendered for purchase pursuant to
the Offer on the expiration thereof, the Trust has the right
and obligation upon written notice provided to the Debenture
Trustee within 10 days following the expiration of the Offer,
to redeem and shall redeem all the Initial Debentures
remaining outstanding on the expiration of the Offer at the
Total Offer Price (the "90% REDEMPTION RIGHT").
(iii) Upon receipt of notice that the Trust has exercised or is
exercising the 90% Redemption Right and is acquiring the
remaining Initial Debentures, the Debenture Trustee shall
promptly provide written notice to each Debentureholder that
did not previously accept the Offer that:
(A) the Trust has exercised the 90% Redemption Right and
is purchasing all outstanding Initial Debentures
effective on the expiry of the Offer at the Total
Offer Price, and shall include a calculation of the
amount payable to such holder as payment of the Total
Offer Price;
(B) each such holder must transfer their Initial
Debentures to the Debenture Trustee on the same terms
as those holders that accepted the Offer and must
send their respective Initial Debentures, duly
endorsed for transfer, to the Debenture Trustee
within 10 days after the sending of such notice; and
(C) the rights of such holder under the terms of the
Initial Debentures and this Indenture cease effective
as of the date of expiry of the Offer provided the
Trust has, on or before the time of notifying the
Debenture Trustee of the exercise of the 90%
Redemption Right, paid the Total Offer Price to, or
to the order of, the Debenture Trustee and thereafter
the Initial Debentures shall not be considered to be
outstanding and the holder shall not have any right
except to receive such holder's Total Offer Price
upon surrender and delivery of such holder's Initial
Debentures in accordance with the Indenture.
(iv) The Trust shall, on or before 11:00 a.m., (Calgary time), on
the Business Day immediately prior to the expiry of the Offer,
deposit with the Debenture Trustee or any paying agent to the
order of the Debenture Trustee, such sums of money as may be
sufficient to pay the Total Offer Price of the Initial
Debentures to be purchased or redeemed by the Trust on the
expiry of the Offer, provided the Trust may elect to satisfy
this requirement by providing the Debenture Trustee with a
cheque for such amounts required under this Section 2.4(i)(iv)
post-dated to the date of expiry of the Offer. The Trust shall
also deposit with the Debenture Trustee a sum of money
sufficient to pay any charges or expenses which may be
incurred by the Debenture Trustee in connection with such
purchase and/or redemption, as the case may be. Every such
deposit shall be irrevocable. From the sums so deposited, the
Debenture Trustee shall pay or cause to be paid to the holders
of such Initial Debentures, the Total Offer Price to which
they are entitled on the Trust's purchase or redemption.
(v) In the event that one or more of such Initial Debentures being
purchased in accordance with this Section 2.4(i) becomes
subject to purchase in part only, upon surrender of such
Initial Debentures for payment of the Total Offer Price, the
Trust shall execute and the Debenture Trustee shall certify
and deliver without charge to the holder thereof or upon the
holder's order, one or more new Initial Debentures for the
portion of the principal amount of the Initial Debentures not
purchased.
(vi) Initial Debentures for which holders have accepted the Offer
and Initial Debentures which the Trust has elected to redeem
in accordance with this Section 2.4(i) shall become due and
payable at the Total Offer Price on the date of expiry of the
Offer, in the same manner and with the same effect as if it
were the date of maturity specified in such Initial
Debentures, anything therein or herein to the contrary
notwithstanding, and from and after such date of expiry of the
Offer, if the money necessary to purchase or redeem the
Initial Debentures shall have been deposited as provided in
this Section 2.4(i) and affidavits or other proofs
satisfactory to the Debenture Trustee as to the publication
and/or mailing of such notices shall have been lodged with it,
interest on the Initial Debentures shall cease. If any
question shall arise as to whether any notice has been given
as above provided and such deposit made, such question shall
be decided by the Debenture Trustee whose decision shall be
final and binding upon all parties in interest.
(vii) In case the holder of any Initial Debenture to be purchased or
redeemed in accordance with this Section 2.4(i) shall fail on
or before the date of expiry of the Offer so to surrender such
holder's Initial Debenture or shall not within such time
accept payment of the monies payable, or give such receipt
therefor, if any, as the Debenture Trustee may require, such
monies may be set aside in trust, either in the deposit
department of the Debenture Trustee or in a chartered bank,
and such setting aside shall for all purposes be deemed a
payment to the Debentureholder of the sum so set aside and the
Debentureholder shall have no other right except to receive
payment of the monies so paid and deposited, upon surrender
and delivery up of such holder's Initial Debenture. In the
event that any money required to be deposited hereunder with
the Debenture Trustee or any depository or paying agent on
account of principal, premium, if any, or interest, if any, on
Initial Debentures issued hereunder shall remain so deposited
for a period of six years from the date of expiry of the
Offer, then such monies, together with any accumulated
interest thereon, shall at the end of such period be paid over
or delivered over by the Debenture Trustee or such depository
or paying agent to the Trust and the Debenture Trustee shall
not be responsible to Debentureholders for any amounts owing
to them. Notwithstanding the foregoing, the Debenture Trustee
will pay any remaining funds deposited hereunder prior to the
expiry of six years after the date of expiry of the Offer to
the Trust upon receipt from the Trust, or one of its
Subsidiaries, of an uncontested letter of credit from a
Canadian chartered bank in an amount equal to or in excess of
the amount of the remaining funds. If the remaining funds are
paid to the Trust prior to the expiry of six years after the
date of expiry of the Offer, the Trust shall reimburse the
Debenture Trustee for any amounts required to be paid by the
Debenture Trustee to a holder of a Debenture pursuant to the
Offer after the date of such payment of the remaining funds to
the Trust but prior to six years after the date of expiry of
the Offer.
(viii) Subject to the provisions above related to Initial Debentures
purchased in part, all Initial Debentures redeemed and paid
under this Section 2.4(i) shall forthwith be delivered to the
Debenture Trustee and cancelled and no Initial Debentures
shall be issued in substitution therefor.
(j) The Debenture Trustee shall be provided with the documents and
instruments referred to in Sections 2.5(b), (c) and (d) with respect to
the Initial Debentures prior to the issuance of the Initial Debentures.
2.5 CERTIFICATION AND DELIVERY OF ADDITIONAL DEBENTURES
Subject to Section 7.8, the Trust may from time to time
request the Debenture Trustee to certify and deliver Additional Debentures of
any series by delivering to the Debenture Trustee the documents referred to
below in this Section 2.5 whereupon the Debenture Trustee shall certify such
Debentures and cause the same to be delivered in accordance with the Written
Direction of the Trust referred to below or pursuant to such procedures
acceptable to the Debenture Trustee as may be specified from time to time by a
Written Direction of the Trust. The maturity date, issue date, interest rate (if
any) and any other terms of the Debentures of such series shall be set forth in
or determined by or pursuant to such Written Direction of the Trust and
procedures. In certifying such Debentures, the Debenture Trustee shall be
entitled to receive and shall be fully protected in relying upon, unless and
until such documents have been superseded or revoked:
(a) an Officer's Certificate and/or executed supplemental indenture by or
pursuant to which the form and terms of such Additional Debentures were
established;
(b) a Written Direction of the Trust requesting certification and delivery
of such Additional Debentures and setting forth delivery instructions,
provided that, with respect to Debentures of a series subject to a
Periodic Offering:
(i) such Written Direction of the Trust may be delivered by the
Trust to the Debenture Trustee prior to the delivery to the
Debenture Trustee of such Additional Debentures of such series
for certification and delivery;
(ii) the Debenture Trustee shall certify and deliver Additional
Debentures of such series for original issue from time to
time, in an aggregate principal amount not exceeding the
aggregate principal amount, if any, established for such
series, pursuant to a Written Direction of the Trust or
pursuant to procedures acceptable to the Debenture Trustee as
may be specified from time to time by a Written Direction of
the Trust;
(iii) the maturity date or dates, issue date or dates, interest rate
or rates (if any) and any other terms of Additional Debentures
of such series shall be determined by an executed supplemental
indenture or by Written Direction of the Trust or pursuant to
such procedures; and
(iv) if provided for in such procedures, such Written Direction of
the Trust may authorize certification and delivery pursuant to
oral or electronic instructions from the Trust which oral or
electronic instructions shall be promptly confirmed in
writing;
(c) an opinion of Counsel, in form and substance satisfactory to the
Debenture Trustee, acting reasonably, to the effect that all
requirements imposed by this Indenture or by law in connection with the
proposed issue of Additional Debentures have been complied with,
subject to the delivery of certain documents or instruments specified
in such opinion; and
(d) an Officer's Certificate certifying that the Trust is not in default
under this Indenture, that the terms and conditions for the
certification and delivery of Additional Debentures (including those
set forth in Section 15.5), have been complied with subject to the
delivery of any documents or instruments specified in such Officer's
Certificate and that no Event of Default exists or will exist upon such
certification and delivery.
2.6 ISSUE OF GLOBAL DEBENTURES
(a) The Trust may specify that the Debentures of a series are to be issued
in whole or in part as one or more Global Debentures registered in the
name of a Depository, or its nominee, designated by the Trust in the
Written Direction of the Trust delivered to the Debenture Trustee at
the time of issue of such Debentures, and in such event the Trust shall
execute and the Debenture Trustee shall certify and deliver one or more
Global Debentures that shall:
(i) represent an aggregate amount equal to the principal amount of
the outstanding Debentures of such series to be represented by
one or more Global Debentures;
(ii) be delivered by the Debenture Trustee to such Depository or
pursuant to such Depository's instructions; and
(iii) bear a legend substantially to the following effect:
"This Debenture is a Global Debenture within the meaning of
the Indenture herein referred to and is registered in the name
of a Depository or a nominee thereof. This Debenture may not
be transferred to or exchanged for Debentures registered in
the name of any person other than the Depository or a nominee
thereof and no such transfer may be registered except in the
limited circumstances described in the Indenture. Every
Debenture authenticated and delivered upon registration of,
transfer of, or in exchange for, or in lieu of, this Debenture
shall be a Global Debenture subject to the foregoing, except
in such limited circumstances described in the Indenture."
(b) Each Depository designated for a Global Debenture must, at the time of
its designation and at all times while it serves as such Depository, be
a clearing agency registered or designated under the securities
legislation of the jurisdiction where the Depository has its principal
offices.
2.7 EXECUTION OF DEBENTURES
All Debentures shall be signed (either manually or by
facsimile signature) by any one authorized director or officer of HOC, on behalf
of the Trust, holding office at the time of signing. A facsimile signature upon
a Debenture shall for all purposes of this Indenture be deemed to be the
signature of the person whose signature it purports to be. Notwithstanding that
any person whose signature, either manual or in facsimile, appears on a
Debenture as a director or officer may no longer hold such office at the date of
the Debenture or at the date of the certification and delivery thereof, such
Debenture shall be valid and binding upon the Trust and entitled to the benefits
of this Indenture.
2.8 CERTIFICATION
No Debenture shall be issued or, if issued, shall be
obligatory or shall entitle the holder to the benefits of this Indenture, until
it has been manually certified by or on behalf of the Debenture Trustee
substantially in the form set out in this Indenture, in the relevant
supplemental indenture, or in some other form approved by the Debenture Trustee.
Such certification on any Debenture shall be conclusive evidence that such
Debenture is duly issued, is a valid obligation of the Trust and the holder is
entitled to the benefits hereof.
The certificate of the Debenture Trustee signed on the
Debentures, or interim Debentures hereinafter mentioned, shall not be construed
as a representation or warranty by the Debenture Trustee as to the validity of
this Indenture or of the Debentures or interim Debentures or as to the issuance
of the Debentures or interim Debentures and the Debenture Trustee shall in no
respect be liable or answerable for the use made of the Debentures or interim
Debentures or any of them or the proceeds thereof. The certificate of the
Debenture Trustee signed on the Debentures or interim Debentures shall, however,
be a representation and warranty by the Debenture Trustee that the Debentures or
interim Debentures have been duly certified by or on behalf of the Debenture
Trustee pursuant to the provisions of this Indenture.
2.9 INTERIM DEBENTURES OR CERTIFICATES
Pending the delivery of definitive Debentures of any series to
the Debenture Trustee, the Trust may issue and the Debenture Trustee certify in
lieu thereof interim Debentures in such forms and in such denominations and
signed in such manner as provided herein, entitling the holders thereof to
definitive Debentures of the series when the same are ready for delivery; or the
Trust may execute and the Debenture Trustee certify a temporary Debenture for
the whole principal amount of Debentures of the series then authorized to be
issued hereunder and deliver the same to the Debenture Trustee and thereupon the
Debenture Trustee may issue its own interim certificates in such form and in
such amounts, not exceeding in the aggregate the principal amount of the
temporary Debenture so delivered to it, as HOC, on behalf of the Trust, and the
Debenture Trustee may approve entitling the holders thereof to definitive
Debentures of the series when the same are ready for delivery; and, when so
issued and certified, such interim or temporary Debentures or interim
certificates shall, for all purposes but
without duplication, rank in respect of this Indenture equally with Debentures
duly issued hereunder and, pending the exchange thereof for definitive
Debentures, the holders of the interim or temporary Debentures or interim
certificates shall be deemed without duplication to be Debentureholders and
entitled to the benefit of this Indenture to the same extent and in the same
manner as though the said exchange had actually been made. Forthwith after the
Trust shall have delivered the definitive Debentures to the Debenture Trustee,
the Debenture Trustee shall cancel such temporary Debentures, if any, and shall
call in for exchange all interim Debentures or certificates that shall have been
issued and forthwith after such exchange shall cancel the same. No charge shall
be made by the Trust or the Debenture Trustee to the holders of such interim or
temporary Debentures or interim certificates for the exchange thereof. All
interest paid upon interim or temporary Debentures or interim certificates shall
be noted thereon as a condition precedent to such payment unless paid by cheque
to the registered holders thereof.
2.10 MUTILATION, LOSS, THEFT OR DESTRUCTION
In case any of the Debentures issued hereunder shall become
mutilated or be lost, stolen or destroyed, the Trust, in its discretion, may
issue, and thereupon the Debenture Trustee shall certify and deliver, a new
Debenture upon surrender and cancellation of the mutilated Debenture, or in the
case of a lost, stolen or destroyed Debenture, in lieu of and in substitution
for the same, and the substituted Debenture shall be in a form approved by the
Debenture Trustee and shall be entitled to the benefits of this Indenture and
rank equally in accordance with its terms with all other Debentures issued or to
be issued hereunder. In case of loss, theft or destruction the applicant for a
substituted Debenture shall furnish to the Trust and to the Debenture Trustee
such evidence of the loss, theft or destruction of the Debenture as shall be
satisfactory to them in their discretion and shall also furnish an indemnity
satisfactory to them in their discretion. The applicant shall pay all reasonable
expenses incidental to the issuance of any substituted Debenture.
2.11 CONCERNING INTEREST
(a) All Debentures issued hereunder, whether originally or upon exchange or
in substitution for previously issued Debentures which are interest
bearing, shall bear interest (i) from and including their issue date,
or (ii) from and including the last Interest Payment Date to which
interest shall have been paid or made available for payment on the
outstanding Debentures of that series, whichever shall be the later,
or, in respect of Debentures subject to a Periodic Offering, from and
including their issue date or from and including the last Interest
Payment Date to which interest shall have been paid or made available
for payment on such Debentures, in all cases, to and excluding the next
Interest Payment Date;
(b) Unless otherwise specifically provided in the terms of the Debentures
of any series, interest for any period of less than six months shall be
computed on the basis of a year of 365 days. Subject to Section 2.4(b)
in respect of the method for calculating the amount of interest to be
paid on the Initial Debentures on the first Interest Payment Date in
respect thereof, with respect to any series of Debentures, whenever
interest is computed on a basis of a year (the "DEEMED YEAR") which
contains fewer days than the actual number of days in the calendar year
of calculation, such rate of interest shall be expressed as a yearly
rate for purposes of the INTEREST ACT (Canada) by multiplying such rate
of interest by the actual number of days in the calendar year of
calculation and dividing it by the number of days in the deemed year.
2.12 DEBENTURES TO RANK PARI PASSU
The Debentures will be direct unsecured obligations of the
Trust. Each Debenture of the same series of Debentures will rank PARI PASSU with
each other Debenture of the same series (regardless of their actual date or
terms of issue) and, subject to statutory preferred exceptions, with all other
present and future subordinated and unsecured indebtedness of the Trust except
for sinking fund provisions (if any) applicable to different series of
Debentures or other similar types of obligations of the Trust.
2.13 PAYMENTS OF AMOUNTS DUE ON MATURITY
Except as may otherwise be provided herein or in any
supplemental indenture in respect of any series of Debentures and subject to
Section 4.10, payments of amounts due upon maturity of the Debentures will be
made in the following manner. The Trust will establish and maintain with the
Debenture Trustee a Maturity Account for each series of Debentures. Each such
Maturity Account shall be maintained by and be subject to the control of the
Debenture Trustee for the purposes of this Indenture. On or before 11:00 a.m.,
(Calgary time) on the Business Day immediately prior to each Maturity Date for
Debentures outstanding from time to time under this Indenture, the Trust will
deliver to the Debenture Trustee a cheque for deposit in the applicable Maturity
Account in an amount sufficient to pay the cash amount payable in respect of
such Debentures (including the principal amount together with any accrued and
unpaid interest thereon less any tax required by law to be deducted), provided
the Trust may elect to satisfy this requirement by providing the Debenture
Trustee with a cheque for such amounts required under this Section 2.13
post-dated to the applicable Maturity Date. The Debenture Trustee, on behalf of
the Trust, will pay to each holder entitled to receive payment the principal
amount of and premium (if any) and accrued and unpaid interest on the Debenture,
upon surrender of the Debenture at any branch of the Debenture Trustee
designated for such purpose from time to time by the Trust and the Debenture
Trustee. The delivery of such funds to the Debenture Trustee for deposit to the
applicable Maturity Account will satisfy and discharge the liability of the
Trust for the Debentures to which the delivery of funds relates to the extent of
the amount delivered (plus the amount of any tax deducted as aforesaid) and such
Debentures will thereafter to that extent not be considered as outstanding under
this Indenture and such holder will have no other right in regard thereto other
than to receive out of the money so delivered or made available the amount to
which it is entitled.
2.14 U.S. LEGEND ON THE DEBENTURES
(a) The Debentures and the Trust Units issuable upon conversion thereof
have not been and will not be registered under the ▇▇▇▇ ▇▇▇. All
Debentures and the Trust Units issuable upon conversion thereof issued
and sold in the United States in reliance on Rule 144A under the 1933
Act, as well as all Debentures and the Trust Units issuable upon
conversion thereof issued in exchange for or in substitution of the
foregoing securities, shall bear, unless otherwise directed by the
Trust, the following legend (the "U.S. LEGEND"):
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE TRUST THAT SUCH SECURITIES
MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE TRUST,
(B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION
S UNDER THE SECURITIES ACT, OR (C) WITHIN THE UNITED STATES IN
ACCORDANCE WITH (1) RULE 144A UNDER THE SECURITIES ACT OR (2) RULE 144
UNDER THE SECURITIES ACT, IF AVAILABLE. DELIVERY OF THIS CERTIFICATE
MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON
STOCK EXCHANGES IN CANADA. PROVIDED THAT THE TRUST IS A "FOREIGN
ISSUER" WITHIN THE MEANING OF REGULATIONS S, A NEW CERTIFICATE, BEARING
NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD DELIVERY" MAY BE
OBTAINED FROM VALIANT TRUST COMPANY UPON DELIVERY OF THIS CERTIFICATE
AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO VALIANT
TRUST COMPANY AND THE TRUST, TO THE EFFECT THAT THE SALE OF THE
SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904
OF REGULATION S UNDER THE SECURITIES ACT."
provided, that if the Debentures are being sold under clause (B) above,
and provided that the Trust is a "foreign issuer" within the meaning of
Regulation S under the 1933 Act at the time of sale, the U.S. Legend
may be removed by providing a declaration to the Debenture Trustee as
set forth in SCHEDULE E hereto (or as the Trust may prescribe from time
to time); and provided, further, that, if any such securities are being
sold under clause (C)(2) above, the U.S. Legend may be removed by
delivery to the Debenture Trustee of an opinion of counsel, of
recognized standing reasonably satisfactory to the Trust, that the U.S.
Legend is no longer required under applicable requirements of the 1933
Act or state securities laws. Provided that the Debenture Trustee
obtains confirmation from the Trust that such counsel is satisfactory
to it, the Debenture Trustee shall be entitled to rely on such opinion
of counsel without further inquiry.
(b) Prior to the issuance of the Debentures, the Trust shall notify the
Debenture Trustee, in writing, concerning which Debentures are to bear
the U.S. Legend. The Debenture Trustee will thereafter maintain a list
of all registered holders from time to time of Legended Debentures.
2.15 PAYMENT OF INTEREST
The following provisions shall apply to Debentures, except as
otherwise provided in Section 2.4(b) or specified in a resolution of the
directors of HOC, on behalf of the Trust, an Officer's Certificate or a
supplemental indenture relating to a particular series of Additional Debentures:
(a) As interest becomes due on each Debenture (except on conversion or on
redemption, when interest may at the option of the Trust be paid upon
surrender of such Debenture) the Trust, either directly or through the
Debenture Trustee or any agent of the Debenture Trustee, shall send or
forward by prepaid ordinary mail, electronic transfer of funds or such
other means as may be agreed to by the Debenture Trustee, payment of
such interest (less any tax required to be withheld therefrom) to the
order of the registered holder of such Debenture appearing on the
registers maintained by the Debenture Trustee at the close of business
on the fifth Business Day prior to the applicable Interest Payment Date
and addressed to the holder at the holder's last address appearing on
the register, unless such holder otherwise directs. If payment is made
by cheque, such cheque shall be forwarded at least three days prior to
each date on which interest becomes due and if payment is made by other
means (such as electronic transfer of funds, provided the Debenture
Trustee must receive confirmation of receipt of funds prior to being
able to wire funds to holders), such payment shall be made in a manner
whereby the holder receives credit for such payment on the date such
interest on such Debenture becomes due. The mailing of such cheque or
the making of such payment by other means shall, to the extent of the
sum represented thereby, plus the amount of any tax withheld as
aforesaid, satisfy and discharge all liability for interest on such
Debenture, unless in the case of payment by cheque, such cheque is not
paid at par on presentation. In the event of non-receipt of any cheque
for or other payment of interest by the person to whom it is so sent as
aforesaid, the Trust will issue to such person a replacement cheque or
other payment for a like amount upon being furnished with such evidence
of non-receipt as it shall reasonably require and upon being
indemnified to its satisfaction. Notwithstanding the foregoing, if the
Trust is prevented by circumstances beyond its control (including,
without limitation, any interruption in mail service) from making
payment of any interest due on each Debenture in the manner provided
above, the Trust may make payment of such interest or make such
interest available for payment in any other manner acceptable to the
Debenture Trustee with the same effect as though payment had been made
in the manner provided above.
(b) Notwithstanding Section 2.15(a), if a series of Debentures is
represented by a Global Debenture, then all payments of interest on the
Global Debenture shall be made by electronic funds transfer or cheque
made payable to the Depository or its nominee for subsequent payment to
Beneficial Holders of interests in that Global Debenture, unless the
Trust and the Depository otherwise agree. None of the Trust, the
Debenture Trustee or any agent of the Debenture Trustee for any
Debenture issued as a Global Debenture will be liable or responsible to
any person for any aspect of the records related to or payments made on
account of beneficial interests in any Global Debenture or for
maintaining, reviewing, or supervising any records relating to such
beneficial interests.
ARTICLE 3
REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP
3.1 FULLY REGISTERED DEBENTURES
(a) With respect to each series of Debentures issuable as Fully Registered
Debentures, the Trust shall cause to be kept by and at the principal
office of the Debenture Trustee in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ and by the Debenture Trustee or such other registrar as the
Trust, with the approval of the Debenture Trustee, may appoint at such
other place or places, if any, as may be specified in the Debentures of
such series or as the Trust may designate with the approval of the
Debenture Trustee, a register in which shall be entered the names and
addresses of the holders of Fully Registered Debentures and particulars
of the Debentures held by them respectively and of all transfers of
Fully Registered Debentures. Such registration
shall be noted on the Debentures by the Debenture Trustee or other
registrar unless a new Debenture shall be issued upon such transfer.
(b) No transfer of a Fully Registered Debenture shall be valid unless made
on such register referred to in Section 3.1(a) by the registered holder
or such holder's executors, administrators or other legal
representatives or an attorney duly appointed by an instrument in
writing in form and execution satisfactory to the Debenture Trustee or
other registrar upon surrender of the Debentures together with a duly
executed form of transfer acceptable to the Debenture Trustee and upon
compliance with such other reasonable requirements as the Debenture
Trustee or other registrar may prescribe, nor unless the name of the
transferee shall have been noted on the Debenture by the Debenture
Trustee or other registrar.
3.2 GLOBAL DEBENTURES
(a) With respect to each series of Debentures issuable in whole or in part
as one or more Global Debentures, the Trust shall cause to be kept by
and at the principal offices of the Debenture Trustee in ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and by the Debenture Trustee or such other
registrar as the Trust, with the approval of the Debenture Trustee, may
appoint at such other place or places, if any, as the Trust may
designate with the approval of the Debenture Trustee, a register in
which shall be entered the name and address of the holder of each such
Global Debenture (being the Depository, or its nominee, for such Global
Debenture) as holder thereof and particulars of the Global Debenture
held by it, and of all transfers thereof. If any Debentures of such
series are at any time not Global Debentures, the provisions of Section
3.1 shall govern with respect to registrations and transfers of such
Debentures.
(b) Notwithstanding any other provision of this Indenture, a Global
Debenture may not be transferred by the registered holder thereof and
accordingly, no definitive certificates shall be issued to Beneficial
Holders except in the following circumstances or as otherwise specified
in a resolution of the trustee, a resolution of the directors of HOC on
behalf of the Trust, Officer's Certificate or supplemental indenture
relating to a particular series of Additional Debentures:
(i) Global Debentures may be transferred by a Depository to a
nominee of such Depository or by a nominee of a Depository to
such Depository or to another nominee of such Depository or by
a Depository or its nominee to a successor Depository or its
nominee;
(ii) Global Debentures may be transferred at any time after the
Depository for such Global Debentures (i) has notified the
Debenture Trustee, or the Trust has notified the Debenture
Trustee, that it is unwilling or unable to continue as
Depository for such Global Debentures, or (ii) ceases to be
eligible to be a Depository under Section 2.6(b), provided
that at the time of such transfer the Trust has not appointed
a successor Depository for such Global Debentures;
(iii) Global Debentures may be transferred at any time after the
Trust has determined, in its sole discretion, to terminate the
book-entry only registration system in respect of such Global
Debentures and has communicated such determination to the
Debenture Trustee in writing;
(iv) Global Debentures may be transferred at any time after the
Debenture Trustee has determined that an Event of Default has
occurred and is continuing with respect to the Debentures of
the series issued as a Global Debenture, provided that
Beneficial Holders representing, in the aggregate, not less
than 25% of the aggregate principal amount of the Debentures
of such series advise the Depository in writing, through the
Depositary Participants, that the continuation of the
book-entry only registration system for such series of
Debentures is no longer in their best interest and also
provided that at the time of such transfer the Debenture
Trustee has not waived the Event of Default pursuant to
Section 8.3;
(v) Global Debentures may be transferred if required by applicable
law; or
(vi) Global Debentures may be transferred if the book-entry only
registration system ceases to exist.
(c) With respect to the Global Debentures, unless and until definitive
certificates have been issued to Beneficial Holders pursuant to
subsection 3.2(b):
(i) the Trust and the Debenture Trustee may deal with the
Depository for all purposes (including paying interest on the
Debentures) as the sole holder of such series of Debentures
and the authorized representative of the Beneficial Holders;
(ii) the rights of the Beneficial Holders shall be exercised only
through the Depository and shall be limited to those
established by law and agreements between such Beneficial
Holders and the Depository or the Depository Participants;
(iii) the Depository will make book entry transfers among the
Depository Participants; and
(iv) whenever this Trust Indenture requires or permits actions to
be taken based upon instructions or directions of
Debentureholders evidencing a specified percentage of the
outstanding Debentures, the Depository shall be deemed to be
counted in that percentage only to the extent that it has
received instructions to such effect from the Beneficial
Holders or the Depository Participants, and has delivered such
instructions to the Debenture Trustee.
(d) Whenever a notice or other communication is required to be provided to
Debentureholders, unless and until definitive certificate(s) have been
issued to Beneficial Holders pursuant to this Section 3.2, the
Debenture Trustee shall provide all such notices and communications to
the Depository and the Depository shall deliver such notices and
communications to such Beneficial Holders in accordance with Applicable
Securities Legislation. Upon the termination of the book-entry only
registration system on the occurrence of one of the conditions
specified in Section 3.2(b) with respect to a series of Debentures
issued hereunder, the Debenture Trustee shall notify all applicable
Beneficial Holders, through the Depository, of the availability of
definitive Debenture certificates. Upon surrender by the Depository of
the certificate(s) representing the Global Debentures and receipt of
new registration instructions from the Depository, the Debenture
Trustee shall deliver the definitive Debenture certificates for such
Debentures to the holders thereof in accordance with the new
registration instructions and thereafter, the registration and transfer
of such Debentures will be governed by Section 3.1 and the remaining
Sections of this Article 3.
3.3 TRANSFEREE ENTITLED TO REGISTRATION
The transferee of a Debenture shall be entitled, after the
appropriate form of transfer is lodged with the Debenture Trustee or other
registrar and upon compliance with all other conditions in that behalf required
by this Indenture or by law, to be entered on the register as the owner of such
Debenture free from all equities or rights of set-off or counterclaim between
the Trust and the transferor or any previous holder of such Debenture, save in
respect of equities of which the Trust is required to take notice by statute or
by order of a court of competent jurisdiction.
3.4 NO NOTICE OF TRUSTS
Neither the Trust nor the Debenture Trustee nor any registrar
shall be bound to take notice of or see to the execution of any trust (other
than that created by this Indenture) whether express, implied or constructive,
in respect of any Debenture, and may transfer the same on the direction of the
person registered as the holder thereof, whether named as trustee or otherwise,
as though that person were the beneficial owner thereof.
3.5 REGISTERS OPEN FOR INSPECTION
The registers referred to in Sections 3.1 and 3.2 shall at all
reasonable times be open for inspection by the Trust, the Debenture Trustee or
any Debentureholder. Every registrar, including the Debenture Trustee, shall
from time to time when requested so to do by the Trust or by the Debenture
Trustee, in writing, furnish the Trust or the Debenture Trustee, as the case may
be, with a list of names and addresses of holders of registered Debentures
entered on the register kept by them and showing the principal amount and serial
numbers of the Debentures held by each such holder, provided the Debenture
Trustee shall be entitled to charge a reasonable fee to provide such a list.
3.6 EXCHANGES OF DEBENTURES
(a) Subject to Section 3.7, Debentures in any authorized form or
denomination, other than Global Debentures, may be exchanged for
Debentures in any other authorized form or denomination, of the same
series and date of maturity, bearing the same interest rate and of the
same aggregate principal amount as the Debentures so exchanged.
(b) In respect of exchanges of Debentures permitted by Section 3.6(a),
Debentures of any series may be exchanged only at the principal office
of the Debenture Trustee in the cities of Calgary, Alberta and Toronto,
Ontario or at such other place or places, if any, as may be specified
in the Debentures of such series and at such other place or places as
may from time to time be designated by the Trust with the approval of
the Debenture Trustee. Any Debentures tendered for exchange shall be
surrendered to the Debenture Trustee. The Trust shall execute and the
Debenture Trustee shall certify all Debentures necessary to carry out
exchanges as aforesaid. All Debentures surrendered for exchange shall
be cancelled.
(c) Debentures issued in exchange for Debentures which at the time of such
issue have been selected or called for redemption at a later date shall
be deemed to have been selected or called for redemption in the same
manner and shall have noted thereon a statement to that effect.
3.7 CLOSING OF REGISTERS
(a) Neither the Trust nor the Debenture Trustee nor any registrar shall be
required to:
(i) make transfers or exchanges of, or convert any Fully
Registered Debentures on any Interest Payment Date for such
Debentures or during the five preceding Business Days;
(ii) make transfers or exchanges of, or convert any Debentures on
the day of any selection by the Debenture Trustee of
Debentures to be redeemed or during the five preceding
Business Days; or
(iii) make exchanges of any Debentures which will have been selected
or called for redemption unless upon due presentation thereof
for redemption such Debentures shall not be redeemed.
(b) Subject to any restriction herein provided, the Trust with the approval
of the Debenture Trustee may at any time close any register for any
series of Debentures, other than those kept at the principal offices of
the Debenture Trustee in Calgary, Alberta and Toronto, Ontario, and
transfer the registration of any Debentures registered thereon to
another register (which may be an existing register) and thereafter
such Debentures shall be deemed to be registered on such other
register. Notice of such transfer shall be given to the holders of such
Debentures.
3.8 CHARGES FOR REGISTRATION, TRANSFER AND EXCHANGE
For each Debenture exchanged, registered, transferred or
discharged from registration, the Debenture Trustee or other registrar, except
as otherwise herein provided, may make a reasonable charge for its services and
in addition may charge a reasonable sum for each new Debenture issued (such
amounts to be agreed upon from time to time by the Debenture Trustee and the
Trust), and payment of such charges and reimbursement of the Debenture Trustee
or other registrar for any stamp taxes or governmental or other charges required
to be paid shall be made by the party requesting such exchange, registration,
transfer or discharge from registration as a condition precedent thereto.
Notwithstanding the foregoing provisions, no charge shall be made to a
Debentureholder hereunder:
(a) for any exchange, registration, transfer or discharge from registration
of any Debenture applied for within a period of two months from the
date of the first delivery of Debentures of that series or, with
respect to
Debentures subject to a Periodic Offering, within a period of two
months from the date of delivery of any such Debenture;
(b) for any exchange of any interim or temporary Debenture or interim
certificate that has been issued under Section 2.9 for a definitive
Debenture;
(c) for any exchange of a Global Debenture as contemplated in Section 3.2;
or
(d) for any exchange of any Debenture resulting from a partial redemption
under Section 4.2.
3.9 OWNERSHIP OF DEBENTURES
(a) Unless otherwise required by law, the person in whose name any
registered Debenture is registered shall for all the purposes of this
Indenture be and be deemed to be the owner thereof and payment of or on
account of the principal of and premium, if any, on such Debenture and
interest thereon shall be made to such registered holder.
(b) The registered holder for the time being of any registered Debenture
shall be entitled to the principal, premium, if any, and/or interest
evidenced by such instruments, respectively, free from all equities or
rights of set-off or counterclaim between the Trust and the original or
any intermediate holder thereof and all persons may act accordingly and
the receipt of any such registered holder for any such principal,
premium or interest shall be a good discharge to the Trust and/or the
Debenture Trustee for the same and neither the Trust nor the Debenture
Trustee shall be bound to inquire into the title of any such registered
holder.
(c) Where Debentures are registered in more than one name, the principal,
premium, if any, and interest from time to time payable in respect
thereof may be paid to the order of all such holders, failing written
instructions from them to the contrary, and the receipt of any one of
such holders therefor shall be a valid discharge, to the Debenture
Trustee, any registrar and to the Trust.
(d) In the case of the death of one or more joint holders of any Debenture
the principal, premium, if any, and interest from time to time payable
thereon may be paid to the order of the survivor or survivors of such
registered holders and the receipt of any such survivor or survivors
therefor shall be a valid discharge to the Debenture Trustee and any
registrar and to the Trust.
ARTICLE 4
REDEMPTION AND PURCHASE OF DEBENTURES
4.1 APPLICABILITY OF ARTICLE
Subject to regulatory approval, Section 2.4(c) and Article 5,
the Trust shall have the right at its option to redeem, either in whole at any
time or in part from time to time before maturity, either by payment of money,
by issuance of Freely Tradeable Trust Units as provided in Section 4.6 or any
combination thereof, any Debentures issued hereunder of any series which by
their terms are made so redeemable (subject, however, to any applicable
restriction on the redemption of Debentures of such series) at such rate or
rates of premium, if any, and on such date or dates and in accordance with such
other provisions as shall have been determined at the time of issue of such
Debentures and as shall have been expressed in this Indenture, in the
Debentures, in an Officer's Certificate, or in a supplemental indenture
authorizing or providing for the issue thereof, or in the case of Additional
Debentures issued pursuant to a Periodic Offering, in the Written Direction of
the Trust requesting the certification and delivery thereof.
Subject to regulatory approval and Article 5, the Trust shall
also have the right at its option to repay, either in whole or in part, on
maturity, either by payment of money in accordance with Section 2.13, by
issuance of Freely Tradeable Trust Units as provided in Section 4.10 or any
combination thereof, any Debentures issued hereunder of any series which by
their terms are made so repayable on maturity (subject however, to any
applicable restriction on the repayment of the principal amount of the
Debentures of such series) at such rate or rates
of premium, if any, and on such date or dates and in accordance with such other
provisions as shall have been determined at the time of issue of such Debenture
and shall have been expressed in this Indenture, in the Debentures, in an
Officer's Certificate, or in a supplemental indenture authorizing or providing
for the issue thereof, or in the case of Additional Debentures issued pursuant
to a Periodic Offering, in the Written Direction of the Trust requesting the
certification and delivery thereof.
4.2 PARTIAL REDEMPTION
If less than all the Debentures of any series for the time
being outstanding are at any time to be redeemed, or if a portion of the
Debentures being redeemed are being redeemed for cash and a portion of such
Debentures are being redeemed by the payment of Freely Tradeable Trust Units
pursuant to Section 4.6, the Debentures to be so redeemed shall be selected by
the Debenture Trustee on a pro rata basis to the nearest multiple of $1,000 in
accordance with the principal amount of the Debentures registered in the name of
each holder or in such other manner as the Debenture Trustee deems equitable,
subject to the approval of the Toronto Stock Exchange, as may be required from
time to time. Unless otherwise specifically provided in the terms of any series
of Debentures, no Debenture shall be redeemed in part unless the principal
amount redeemed is $1,000 or a multiple thereof. For this purpose, the Debenture
Trustee may make, and from time to time vary, regulations with respect to the
manner in which such Debentures may be drawn for redemption in part or for
redemption in cash and regulations so made shall be valid and binding upon all
holders of such Debentures notwithstanding the fact that as a result thereof one
or more of such Debentures may become subject to redemption in part only or for
cash only. In the event that one or more of such Debentures becomes subject to
redemption in part only, upon surrender of any such Debentures for payment of
the Redemption Price, together with interest accrued to but excluding the
Redemption Date, the Trust shall execute and the Debenture Trustee shall certify
and deliver without charge to the holder thereof or upon the holder's order one
or more new Debentures for the unredeemed part of the principal amount of the
Debenture or Debentures so surrendered or, with respect to a Global Debenture,
the Depository shall make notations on the Global Debenture of the principal
amount thereof so redeemed. Unless the context otherwise requires, the terms
"Debenture" or "Debentures" as used in this Article 4 shall be deemed to mean or
include any part of the principal amount of any Debenture which in accordance
with the foregoing provisions has become subject to redemption.
4.3 NOTICE OF REDEMPTION
Notice of redemption (the "REDEMPTION NOTICE") of any series
of Debentures shall be given to the holders of the Debentures so to be redeemed
not more than 60 days nor less than 30 days prior to the date fixed for
redemption (the "REDEMPTION DATE") in the manner provided in Section 14.2. Every
such notice shall specify the aggregate principal amount of Debentures called
for redemption, the Redemption Date, the Redemption Price and the places of
payment and shall state that interest upon the principal amount of Debentures
called for redemption shall cease to be payable from and after the Redemption
Date. In addition, unless all the outstanding Debentures are to be redeemed, the
Redemption Notice shall specify:
(a) the distinguishing letters and numbers of the registered Debentures
which are to be redeemed (or of such thereof as are registered in the
name of such Debentureholder);
(b) in the case of a published notice, the distinguishing letters and
numbers of the Debentures which are to be redeemed or, if such
Debentures are selected by terminal digit or other similar system, such
particulars as may be sufficient to identify the Debentures so
selected;
(c) in the case of a Global Debenture, that the redemption will take place
in such manner as may be agreed upon by the Depository, the Debenture
Trustee and the Trust; and
(d) in all cases, the principal amounts of such Debentures or, if any such
Debenture is to be redeemed in part only, the principal amount of such
part.
In the event that all Debentures to be redeemed are registered Debentures,
publication shall not be required.
4.4 DEBENTURES DUE ON REDEMPTION DATES
Notice having been given as aforesaid, all the Debentures so
called for redemption shall thereupon be and become due and payable at the
Redemption Price, together with accrued interest to but excluding the Redemption
Date, on the Redemption Date specified in such notice, in the same manner and
with the same effect as if it were the date of maturity specified in such
Debentures, anything therein or herein to the contrary notwithstanding, and from
and after such Redemption Date, if the monies necessary to redeem, or the Trust
Units to be issued to redeem, such Debentures shall have been deposited as
provided in Section 4.5 and affidavits or other proof satisfactory to the
Debenture Trustee as to the publication and/or mailing of such notices shall
have been lodged with it, interest upon the Debentures shall cease. If any
question shall arise as to whether any notice has been given as above provided
and such deposit made, such question shall be decided by the Debenture Trustee
whose decision shall be final and binding upon all parties in interest.
4.5 DEPOSIT OF REDEMPTION MONIES OR TRUST UNITS
Redemption of Debentures shall be provided for by the Trust
depositing with the Debenture Trustee or any paying agent to the order of the
Debenture Trustee, on or before 11:00 a.m. Calgary Time on the Business Day
immediately prior to the Redemption Date specified in such notice, such sums of
money, or certificates representing such Trust Units, or both as the case may
be, as may be sufficient to pay the Redemption Price of the Debentures so called
for redemption, plus accrued and unpaid interest thereon up to but excluding the
Redemption Date, provided the Trust may elect to satisfy this requirement by
providing the Debenture Trustee with a cheque for such amounts required under
this Section 4.5 post-dated to the Redemption Date. The Trust shall also deposit
with the Debenture Trustee a sum of money sufficient to pay any charges or
expenses which may be incurred by the Debenture Trustee in connection with such
redemption. Every such deposit shall be irrevocable. From the sums so deposited,
or certificates so deposited, or both, the Debenture Trustee shall pay or cause
to be paid, or issue or cause to be issued, to the holders of such Debentures so
called for redemption, upon surrender of such Debentures, the principal, premium
(if any) and interest (if any) to which they are respectively entitled on
redemption.
4.6 RIGHT TO REPAY REDEMPTION PRICE IN TRUST UNITS
(a) Subject to the other provisions of this Section 4.6, the Trust may, at
its option, in exchange for or in lieu of paying the Redemption Price
in money, elect to satisfy its obligation to pay all or any portion of
the Redemption Price by issuing and delivering to holders on the
Redemption Date that number of Freely Tradeable Trust Units obtained by
dividing the Redemption Price by 95% of the then Current Market Price
of the Trust Units on the Redemption Date (the "UNIT REDEMPTION
RIGHT").
(b) The Trust shall exercise the Unit Redemption Right by so specifying in
the Redemption Notice and shall also specify in such notice the
aggregate principal amount of Debentures in respect of which it is
exercising the Unit Redemption Right.
(c) The Trust's right to exercise the Unit Redemption Right shall be
conditional upon the following conditions being met on the Business Day
preceding the Redemption Date:
(i) the issuance of the Trust Units on the exercise of the Unit
Redemption Right shall be made in accordance with Applicable
Securities Legislation and such Trust Units shall be issued as
Freely Tradeable Trust Units;
(ii) the listing of such additional Freely Tradeable Trust Units on
each stock exchange on which the Trust Units are then listed;
(iii) the Trust being a reporting issuer in good standing under
Applicable Securities Legislation where the distribution of
such Freely Tradeable Trust Units occurs;
(iv) no Event of Default shall have occurred and be continuing;
(v) the receipt by the Debenture Trustee of an Officer's
Certificate stating that conditions (i), (ii), (iii) and (iv)
above have been satisfied and setting forth the number of
Trust Units to be delivered for each $1,000 principal amount
of Debentures and the Current Market Price of the Trust Units
on the Redemption Date; and
(vi) the receipt by the Debenture Trustee of an opinion of Counsel
to the effect that such Trust Units have been duly authorized
and, when issued and delivered pursuant to the terms of this
Indenture in payment of the Redemption Price, will be validly
issued as fully paid and non-assessable, that conditions (i)
and (ii) above have been satisfied and that, relying
exclusively on certificates of good standing issued by the
relevant securities authorities, condition (iii) above is
satisfied, except that the opinion in respect of condition
(iii) need not be expressed with respect to those provinces
where certificates are not issued.
If the foregoing conditions are not satisfied prior to the close of
business on the Business Day preceding the Redemption Date, the Trust
shall pay the Redemption Price in cash in accordance with Section 4.5
unless the Debentureholder waives the conditions which are not
satisfied.
(d) In the event that the Trust duly exercises its Unit Redemption Right,
the Trust shall on or before 11:00 a.m. (Calgary time) on the
Redemption Date, deliver to the Debenture Trustee, for delivery to and
on account of the holders, certificates representing the Freely
Tradeable Trust Units to which such holders are anticipated to be
entitled and upon presentation and surrender of the Debentures for
payment on the Redemption Date, at any place where a register is
maintained pursuant to Article 3 or any other place specified in the
Redemption Notice, the Debenture Trustee shall distribute such
certificates to such holders.
(e) No fractional Freely Tradeable Trust Units shall be delivered upon the
exercise of the Unit Redemption Right but, in lieu thereof, the Trust
shall pay to the Debenture Trustee for the account of the holders, at
the time contemplated in Section 4.6(d), the cash equivalent thereof
determined on the basis of the Current Market Price of the Trust Units
on the Redemption Date (less any tax required to be deducted, if any).
(f) A holder shall be treated as the unitholder of record of the Freely
Tradeable Trust Units issued on due exercise by the Trust of its Unit
Redemption Right effective immediately after the close of business on
the Redemption Date, and shall be entitled to all substitutions
therefor, all income earned thereon or accretions thereto and all
dividends or distributions (including unit dividends and dividends or
distributions in kind) thereon and arising thereafter, and in the event
that the Debenture Trustee receives the same, it shall hold the same in
trust for the benefit of such holder.
(g) The Trust shall at all times reserve and keep available out of its
authorized Trust Units (if the number thereof is or becomes limited),
solely for the purpose of issue and delivery upon the exercise of the
Trust's Unit Redemption Right as provided herein, and shall issue to
Debentureholders to whom Freely Tradeable Trust Units will be issued
pursuant to exercise of the Unit Redemption Right, such number of
Freely Tradeable Trust Units as shall be issuable in such event. All
Freely Tradeable Trust Units which shall be so issuable shall be duly
and validly issued as fully paid and non-assessable.
(h) The Trust shall comply with all Applicable Securities Legislation
regulating the issue and delivery of Freely Tradeable Trust Units upon
exercise of the Unit Redemption Right and shall cause to be listed and
posted for trading such Trust Units on each stock exchange on which the
Trust Units are then listed.
(i) The Trust shall from time to time promptly pay, or make provision
satisfactory to the Debenture Trustee for the payment of, all taxes and
charges which may be imposed by the laws of Canada or any province
thereof (except income tax, withholding tax or security transfer tax,
if any) which shall be payable with respect to the issuance or delivery
of Freely Tradeable Trust Units to holders upon exercise of the Unit
Redemption Right pursuant to the terms of the Debentures and of this
Indenture.
(j) If the Trust elects to satisfy its obligation to pay all or any portion
of the Redemption Price by issuing Freely Tradeable Trust Units in
accordance with this Section 4.6 and if the Redemption Price (or any
portion thereof) to which a holder is entitled is subject to
withholding taxes and the amount of the cash payment of the Redemption
Price, if any, is insufficient to satisfy such withholding taxes, the
Debenture Trustee, on the written direction of the Trust but for the
account of the holder, shall sell, through the investment banks,
brokers or dealers selected by the Trust, out of the Freely Tradeable
Trust Units issued by the Trust for this purpose, such number of Freely
Tradeable Trust Units that together with the cash payment of the
Redemption Price, if any, is sufficient to yield net proceeds (after
payment of all costs) to cover the amount of taxes required to be
withheld, and shall remit same on behalf of the Trust to the proper tax
authorities within the period of time prescribed for this purpose under
applicable laws.
(k) Each certificate representing Freely Tradeable Trust Units issued in
payment of the Redemption Price of Debentures bearing the U.S. Legend
set forth in Section 2.14, as well as all certificates issued in
exchange for or in substitution of the foregoing securities, shall bear
the U.S. Legend set forth in Section 2.14; provided that if the Freely
Tradeable Trust Units are being sold outside the United States in
accordance with Rule 904 of Regulation S, and provided that the Trust
is a "foreign issuer" within the meaning of Regulation S at the time of
sale, the U.S. Legend may be removed by providing a declaration to the
Debenture Trustee, as registrar and transfer agent for the Trust Units,
as set forth in SCHEDULE E hereto (or as the Trust or the Debenture
Trustee may prescribe from time to time); and provided further that, if
any such securities are being sold within the United States in
accordance with Rule 144 under the 1933 Act, the U.S. Legend may be
removed by delivery to the Debenture Trustee, as registrar and transfer
agent for the Trust Units, of an opinion of Counsel, of recognized
standing reasonably satisfactory to the Trust, that the U.S. Legend is
no longer required under applicable requirements of the 1933 Act or
state securities laws. Provided that the Debenture Trustee obtains
confirmation from the Trust that such Counsel is satisfactory to it, it
shall be entitled to rely on such opinion of Counsel without further
inquiry.
(l) Interest accrued and unpaid on the Debentures on the Redemption Date
will be paid to holders of Debentures, in cash, in the manner
contemplated in Section 4.5.
4.7 FAILURE TO SURRENDER DEBENTURES CALLED FOR REDEMPTION
In case the holder of any Debenture so called for redemption
shall fail on or before the Redemption Date so to surrender such holder's
Debenture, or shall not within such time accept payment of the redemption monies
payable, or take delivery of certificates representing such Trust Units issuable
in respect thereof, or give such receipt therefor, if any, as the Debenture
Trustee may require, such redemption monies may be set aside in trust, or such
certificates may be held in trust without interest, either in the deposit
department of the Debenture Trustee or in a chartered bank, and such setting
aside shall for all purposes be deemed a payment to the Debentureholder of the
sum or Trust Units so set aside and, to that extent, the Debenture shall
thereafter not be considered as outstanding hereunder and the Debentureholder
shall have no other right except to receive payment out of the monies so paid
and deposited, or take delivery of the certificates so deposited, or both, upon
surrender and delivery up of such holder's Debenture of the Redemption Price, as
the case may be, of such Debenture plus any accrued but unpaid interest thereon
to but excluding the Redemption Date. In the event that any money, or
certificates for Trust Units, required to be deposited hereunder with the
Debenture Trustee or any depository or paying agent on account of principal,
premium, if any, or interest, if any, on Debentures issued hereunder shall
remain so deposited for a period of six years from the Redemption Date, then
such monies or certificates for Trust Units, together with any accumulated
interest thereon or any distribution paid thereon, shall at the end of such
period be paid over or delivered over by the Debenture Trustee or such
depository or paying agent to the Trust on its demand, and thereupon the
Debenture Trustee shall not be responsible to Debentureholders for any amounts
owing to them and subject to applicable law, thereafter the holder of a
Debenture in respect of which such money was so repaid to the Trust shall have
no rights in respect thereof except to obtain payment of the money or
certificates due from the Trust, subject to any limitation period provided by
the laws of Alberta. Notwithstanding the foregoing, the Debenture Trustee will
pay any remaining funds prior to the expiry of six years after the Redemption
Date to the Trust upon receipt from the Trust, or one of its Subsidiaries, of an
unconditional letter of credit from a Canadian chartered bank in an amount equal
to or in excess of the amount of the remaining funds. If the remaining funds are
paid to the Trust prior to the expiry of six years after the Redemption Date,
the Trust shall reimburse the Debenture Trustee for any amounts required to be
paid by the Debenture Trustee to a holder of a Debenture pursuant to the
redemption after the date of such payment of the remaining funds to the Trust
but prior to six years after the redemption.
4.8 CANCELLATION OF DEBENTURES REDEEMED
Subject to the provisions of Sections 4.2 and 4.9 as to
Debentures redeemed or purchased in part, all Debentures redeemed and paid under
this Article 4 shall forthwith be delivered to the Debenture Trustee and
cancelled and no Debentures shall be issued in substitution therefor.
4.9 PURCHASE OF DEBENTURES BY THE TRUST
Unless otherwise specifically provided with respect to a
particular series of Debentures, the Trust may, if it is not at the time in
default hereunder, at any time and from time to time, purchase Debentures in the
market (which shall include purchases from or through an investment dealer or a
firm holding membership on a recognized stock exchange) or by tender or by
contract, at any price. All Debentures so purchased may, at the option of the
Trust, be delivered to the Debenture Trustee and shall be cancelled and no
Debentures shall be issued in substitution therefor.
If, upon an invitation for tenders, more Debentures are
tendered at the same lowest price that the Trust is prepared to accept, the
Debentures to be purchased by the Trust shall be selected by the Debenture
Trustee on a PRO RATA basis or in such other manner consented to by the Toronto
Stock Exchange which the Debenture Trustee considers appropriate, from the
Debentures tendered by each tendering Debentureholder who tendered at such
lowest price. For this purpose the Debenture Trustee may make, and from time to
time amend, regulations with respect to the manner in which Debentures may be so
selected, and regulations so made shall be valid and binding upon all
Debentureholders, notwithstanding the fact that as a result thereof one or more
of such Debentures become subject to purchase in part only. The holder of a
Debenture of which a part only is purchased, upon surrender of such Debenture
for payment, shall be entitled to receive, without expense to such holder, one
or more new Debentures for the unpurchased part so surrendered, and the
Debenture Trustee shall certify and deliver such new Debenture or Debentures
upon receipt of the Debenture so surrendered or, with respect to a Global
Debenture, the Depository shall make notations on the Global Debenture of the
principal amount thereof so purchased.
4.10 RIGHT TO REPAY PRINCIPAL AMOUNT IN TRUST UNITS
(a) Subject to the other provisions of this Section 4.10, the Trust may, at
its option, in exchange for or in lieu of paying the Redemption Price
in money, elect to satisfy its obligation to repay all or any portion
of the principal amount of the Debentures outstanding by issuing and
delivering to holders on the maturity of such Debentures (the "MATURITY
DATE") that number of Freely Tradeable Trust Units obtained by dividing
the principal amount of the Debentures by 95% of the then Current
Market Price of the Trust Units (the "UNIT REPAYMENT RIGHT").
(b) The Trust shall exercise the Unit Repayment Right by so specifying in
the Maturity Notice, which shall be delivered to the Debenture Trustee
and the holders of Debentures not more than 60 days and not less than
40 days prior to the Maturity Date.
(c) The Trust's right to exercise the Unit Repayment Right shall be
conditional upon the following conditions being met on the Business Day
preceding the Maturity Date:
(i) the issuance of the Trust Units on the exercise of the Unit
Repayment Right shall be made in accordance with Applicable
Securities Legislation and such Trust Units shall be issued as
Freely Tradeable Trust Units;
(ii) the listing of such additional Freely Tradeable Trust Units on
each stock exchange on which the Trust Units are then listed;
(iii) the Trust being a reporting issuer in good standing under
Applicable Securities Legislation where the distribution of
such Freely Tradeable Trust Units occurs;
(iv) no Event of Default shall have occurred and be continuing;
(v) the receipt by the Debenture Trustee of an Officer's
Certificate stating that conditions (i), (ii), (iii) and (iv)
above have been satisfied and setting forth the number of
Trust Units to be delivered for each $1,000 principal amount
of Debentures and the Current Market Price of the Trust Units
on the Maturity Date; and
(vi) the receipt by the Debenture Trustee of an opinion of Counsel
to the effect that such Trust Units have been duly authorized
and, when issued and delivered pursuant to the terms of this
Indenture in payment of the principal amount of the Debentures
outstanding will be validly issued as fully paid and
non-assessable, that conditions (i) and (ii) above have been
satisfied and that, relying exclusively on certificates of
good standing issued by the relevant securities authorities,
condition (iii) above is satisfied, except that the opinion in
respect of condition (iii) need not be expressed with respect
to those provinces where certificates are not issued.
If the foregoing conditions are not satisfied prior to the close of
business on the Business Day preceding the Maturity Date, the Trust
shall pay the principal amount of the Debentures outstanding in cash in
accordance with Section 2.13, unless the Debentureholder waives the
conditions which are not satisfied.
(d) In the event that the Trust duly exercises its Unit Repayment Right,
the Trust shall on or before 11:00 a.m. (Calgary time) on the Maturity
Date, deliver to the Debenture Trustee, the certificates representing
the Freely Tradeable Trust Units to which such holders are anticipated
to be entitled, and upon presentation and surrender of the Debentures
for payment on the Maturity Date, at any place where a register is
maintained pursuant to Article 3 or any other place specified in the
Maturity Notice the Debenture Trustee shall distribute such
certificates to such holders. The Trust shall also deposit with the
Debenture Trustee a sum of money sufficient to pay any charges or
expenses which may be incurred by the Debenture Trustee in connection
with the Unit Repayment Right. Every such deposit shall be irrevocable.
From the certificates so deposited in addition to amounts payable by
the Debenture Trustee pursuant to Section 2.13, the Debenture Trustee
shall pay or cause to be paid, to the holders of such Debentures, upon
surrender of such Debentures, the principal amount of and premium (if
any) on the Debentures to which they are respectively entitled on
maturity and deliver to such holders the certificates to which such
holders are entitled. The delivery of such certificates to the
Debenture Trustee will satisfy and discharge the liability of the Trust
for the Debentures to which the delivery of certificates relates to the
extent of the amount delivered (plus the amount of any certificates
sold to pay applicable taxes in accordance with this Section 4.10) and
such Debentures will thereafter to that extent not be considered as
outstanding under this Indenture and such holder will have no other
right in regard thereto other than to receive out of the certificates
so delivered, the certificate(s) to which it is entitled.
(e) No fractional Freely Tradeable Trust Units shall be delivered upon the
exercise of the Unit Repayment Right but, in lieu thereof, the Trust
shall pay to the Debenture Trustee for the account of the holders, at
the time contemplated in Section 4.10(d), the cash equivalent thereof
determined on the basis of the Current Market Price of the Trust Units
on the Maturity Date (less any tax required to be deducted, if any).
(f) A holder shall be treated as the unitholder of record of the Freely
Tradeable Trust Units issued on due exercise by the Trust of its Unit
Repayment Right effective immediately after the close of business on
the Maturity Date, and shall be entitled to all substitutions therefor,
all income earned thereon or accretions thereto and all dividends or
distributions (including unit dividends and dividends or distributions
in kind) thereon and arising thereafter, and in the event that the
Debenture Trustee receives the same, it shall hold the same in trust
for the benefit of such holder.
(g) The Trust shall at all times reserve and keep available out of its
authorized Trust Units (if the number thereof is or becomes limited),
solely for the purpose of issue and delivery upon the exercise of the
Trust's Unit Repayment Right as provided herein, and shall issue to
Debentureholders to whom Freely Tradeable Trust Units will be issued
pursuant to exercise of the Unit Repayment Right, such number of Freely
Tradeable Trust Units as shall be issuable in such event. All Freely
Tradeable Trust Units which shall be so issuable shall be duly and
validly issued as fully paid and non-assessable.
(h) The Trust shall comply with all Applicable Securities Legislation
regulating the issue and delivery of Freely Tradeable Trust Units upon
exercise of the Unit Repayment Right and shall cause to be listed and
posted for trading such Freely Tradeable Trust Units on each stock
exchange on which the Trust Units are then listed.
(i) The Trust shall from time to time promptly pay, or make provision
satisfactory to the Debenture Trustee for the payment of, all taxes and
charges which may be imposed by the laws of Canada or any province
thereof (except income tax, withholding tax or security transfer tax,
if any) which shall be payable with respect to the issuance or delivery
of Freely Tradeable Trust Units to holders upon exercise of the Unit
Repayment Right pursuant to the terms of the Debentures and of this
Indenture.
(j) If the Trust elects to satisfy its obligation to pay all or any portion
of the principal amount of Debentures due on maturity by issuing Freely
Tradeable Trust Units in accordance with this Section 4.10 and if the
principal amount (or any portion thereof) to which a holder is entitled
is subject to withholding taxes and the amount of the cash payment of
the principal amount due on maturity, if any, is insufficient to
satisfy such withholding taxes, the Debenture Trustee, on the written
direction of the Trust but for the account of the holder, shall sell,
through the investment banks, brokers or dealers selected by the Trust,
out of the Freely Tradeable Trust Units issued by the Trust for this
purpose, such number of Freely Tradeable Trust Units that together with
the cash component of the principal amount due on maturity is
sufficient to yield net proceeds (after payment of all costs) to cover
the amount of taxes required to be withheld, and shall remit same on
behalf of the Trust to the proper tax authorities within the period of
time prescribed for this purpose under applicable laws.
(k) Each certificate representing Freely Tradeable Trust Units issued in
payment of the principal amount of Debentures bearing the U.S. Legend
set forth in Section 2.14, as well as all certificates issued in
exchange for or in substitution of the foregoing securities, shall bear
the U.S. Legend set forth in Section 2.14; provided that if the Freely
Tradeable Trust Units are being sold outside the United States in
accordance with Rule 904 of Regulation S, and provided that the Trust
is a "foreign issuer" within the meaning of Regulation S at the time of
sale, the U.S. Legend may be removed by providing a declaration to the
Debenture Trustee, as registrar and transfer agent for the Trust Units,
as set forth in SCHEDULE E hereto (or as the Trust or the Debenture
Trustee may prescribe from time to time); and provided further that, if
any such securities are being sold within the United States in
accordance with Rule 144 under the 1933 Act, the U.S. Legend may be
removed by delivery to the Debenture Trustee, as registrar and transfer
agent for the Trust Units, of an opinion of Counsel, of recognized
standing reasonably satisfactory to the Trust, that the U.S. Legend is
no longer required under applicable requirements of the 1933 Act or
state securities laws. Provided that the Debenture Trustee obtains
confirmation from the Trust that such Counsel is satisfactory to it, it
shall be entitled to rely on such opinion of Counsel without further
inquiry.
(l) Interest accrued and unpaid on the Debentures on the Maturity Date will
be paid to holders of Debentures, in cash, in the manner contemplated
in Section 2.15.
ARTICLE 5
SUBORDINATION OF DEBENTURES
5.1 APPLICABILITY OF ARTICLE
The indebtedness, liabilities and obligations of the Trust
hereunder (except as provided in Section 15.15) or under the Debentures, whether
on account of principal, interest or otherwise, but excluding the issuance of
Trust Units or other securities upon any conversion pursuant to Article 6, upon
any redemption pursuant to Article 4, or at maturity pursuant to Article 4
(collectively the "DEBENTURE LIABILITIES"), are subordinated and postponed and
subject in right of payment, to the extent and in the manner hereinafter set
forth in the following sections of this Article 5, to the full and final payment
of all Senior Indebtedness, and each holder of any such Debenture by his
acceptance thereof agrees to and shall be bound by the provisions of this
Article 5.
5.2 ORDER OF PAYMENT
In the event of any dissolution, winding-up, liquidation,
bankruptcy, insolvency, receivership, creditor enforcement or realization or
other similar proceedings relating to the Trust or any of its property or assets
(whether voluntary or involuntary, partial or complete) or any other marshalling
of the assets and liabilities of the Trust or any sale of all or substantially
all of the assets of the Trust:
(a) all Senior Indebtedness shall first be paid in full, or provision made
for such payment, before any payment is made on account of Debenture
Liabilities;
(b) any payment or distribution of assets of the Trust, whether in cash,
property or securities, to which the holders of the Debentures or the
Debenture Trustee on behalf of such holders would be entitled except
for the provisions of this Article 5, shall be paid or delivered by the
trustee in bankruptcy, receiver, assignee for the benefit of creditors,
or other liquidating agent making such payment or distribution,
directly to the holders of Senior Indebtedness or their representative
or representatives, or to the trustee or trustees under any indenture
pursuant to which any instruments evidencing any of such Senior
Indebtedness may have been issued, to the extent necessary to pay all
Senior Indebtedness in full after giving effect to any concurrent
payment or distribution, or provision therefor, to the holders of such
Senior Indebtedness; and
(c) the Senior Creditors or a receiver or a receiver-manager of the Trust
or of all or part of its assets or any other enforcement agent may
sell, mortgage, or otherwise dispose of the Trust assets in whole or in
part, free and clear of all Debenture Liabilities and without the
approval of the Debentureholders or the Debenture Trustee or any
requirement to account to the Debenture Trustee or the
Debentureholders.
The rights and priority of the Senior Indebtedness and the
subordination pursuant hereto shall not be affected by :
(i) the time, sequence or order of creating, granting, executing,
delivering of, or registering, perfecting or failing to
register or perfect any security notice, caveat, financing
statement or other notice in respect of the Senior Security;
(ii) the time or order of the attachment, perfection or
crystallization of any security constituted by the Senior
Security;
(iii) the taking of any collection, enforcement or realization
proceedings pursuant to the Senior Security;
(iv) the date of obtaining of any judgment or order of any
bankruptcy court or any court administering bankruptcy,
insolvency or similar proceedings as to the entitlement of the
Senior Creditors, or any of them or the Debentureholders or
other Trustee or any of them to any money or property of the
Trust;
(v) the failure to exercise any power or remedy reserved to the
Senior Creditors under the Senior Security or to insist upon a
strict compliance with any terms thereof;
(vi) whether any Senior Security is now perfected, hereafter ceases
to be perfected, is avoidable by any trustee in bankruptcy or
like official or is otherwise set aside, invalidated or
lapses;
(vii) the date of giving or failing to give notice to or making
demand upon the Trust or HOC; or
(viii) any other matter whatsoever.
5.3 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS
Subject to the prior payment in full of all Senior
Indebtedness, the holders of the Debentures shall be subrogated to the rights of
the holders of Senior Indebtedness to receive payments or distributions of
assets of the Trust to the extent of the application thereto of such payments or
other assets which would have been received by the holders of the Debentures but
for the provisions hereof until the principal of and interest on the Debentures
shall be paid in full, and no such payments or distributions to the holders of
the Debentures of cash, property or securities, which otherwise would be payable
or distributable to the holders of the Senior Indebtedness, shall, as between
the Trust, its creditors other than the holders of Senior Indebtedness, and the
holders of Debentures, be deemed to be a payment by the Trust to the holders of
the Senior Indebtedness or on account of the Senior Indebtedness, it being
understood that the provisions of this Article 5 are and are intended solely for
the purpose of defining the relative rights of the holders of the Debentures, on
the one hand, and the holders of Senior Indebtedness, on the other hand.
The Debenture Trustee, for itself and on behalf of each of the
Debentureholders, hereby waives any and all rights to require a Senior Creditor
to pursue or exhaust any rights or remedies with respect to the Trust or any
property and assets subject to the Senior Security or in any other manner to
require the marshalling of property, assets or security in connection with the
exercise by the Senior Creditors of any rights, remedies or recourses available
to them.
5.4 OBLIGATION TO PAY NOT IMPAIRED
Nothing contained in this Article 5 or elsewhere in this
Indenture or in the Debentures is intended to or shall impair, as between the
Trust, its creditors other than the holders of Senior Indebtedness, and the
holders of the Debentures, the obligation of the Trust, which is absolute and
unconditional, to pay to the holders of the Debentures the principal of and
interest on the Debentures, as and when the same shall become due and payable in
accordance with their terms, or affect the relative rights of the holders of the
Debentures and creditors of the Trust other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Debenture Trustee
or the holder of any Debenture from exercising all remedies otherwise permitted
by applicable law upon default under this Indenture, subject to the rights, if
any, under this Article 5 of the holders of Senior Indebtedness.
5.5 NO PAYMENT IF SENIOR INDEBTEDNESS IN DEFAULT
Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise, or any other enforcement of any Senior Indebtedness,
then, except as provided in Section 5.8, all such Senior Indebtedness shall
first be paid in full, or shall first have been duly provided for, before any
payment is made on account of the Debenture Liabilities.
In case of default with respect to any Senior Indebtedness
permitting a Senior Creditor to demand payment or accelerate the maturity
thereof, unless and until such default shall have been cured or waived or shall
have ceased to exist, no payment (by purchase of Debentures or otherwise) shall
be made by the Trust (except as provided in Section 5.8) with respect to the
Debenture Liabilities and neither the Debenture Trustee nor the holders of
Debentures shall be entitled to demand, institute proceedings for the collection
of (which shall, for certainty include proceedings related to an adjudication or
declaration as to the insolvency or bankruptcy of the Trust and other similar
creditor proceedings), or receive any payment or benefit (including without
limitation by set-off, combination of accounts or realization of security or
otherwise in any manner whatsoever) on account of the Debentures after the
happening of such a default (except as provided in SECTION 5.8), and unless and
until such default shall have been cured or waived or shall have ceased to
exist, such payments shall be held in trust for the benefit of, and, if and when
such Senior Indebtedness shall have become due and payable, shall be paid over
to, the holders of the Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture under which
any instruments evidencing an amount of the Senior Indebtedness remaining unpaid
until all such Senior Indebtedness shall have been, paid in full, after giving
effect to any concurrent payment or distribution to the holders of such Senior
Indebtedness.
The fact that any payment hereunder is prohibited by this
Section 5.5 shall not prevent the failure to make such payment from being an
Event of Default hereunder.
5.6 PAYMENT ON DEBENTURES PERMITTED
Nothing contained in this Article 5 or elsewhere in this
Indenture, or in any of the Debentures, shall affect the obligation of the Trust
to make, or prevent the Trust from making, at any time except as prohibited by
Section 5.5, any payment of principal of or interest on the Debentures. The fact
that any such payment is prohibited by Section 5.5 shall not prevent the failure
to make such payment from being an Event of Default hereunder. Nothing contained
in this Article 5 or elsewhere in this Indenture, or in any of the Debentures,
shall prevent the conversion of the Debentures or, except as prohibited by
Section 5.5, the application by the Debenture Trustee of any monies deposited
with the Debenture Trustee hereunder for the purpose, to the payment of or on
account of the Debenture Liabilities.
5.7 CONFIRMATION OF SUBORDINATION
Each holder of Debentures by his acceptance thereof authorizes
and directs the Debenture Trustee on his behalf to take such action as may be
necessary or appropriate to effect the subordination as provided in this Article
5 and appoints the Debenture Trustee his attorney-in-fact for any and all such
purposes. Upon request of the Trust, and upon being furnished an Officer's
Certificate stating that one or more named persons are Senior Creditors and
specifying the amount and nature of the Senior Indebtedness of such Senior
Creditor, the Debenture Trustee shall enter into a written agreement or
agreements with the Trust and the person or persons named in such Officer's
Certificate providing that such person or persons are entitled to all the rights
and benefits of this Article 5 as a Senior Creditor. Such agreement shall be
conclusive evidence that the indebtedness specified therein is Senior
Indebtedness, however, nothing herein shall impair the rights of any Senior
Creditor who has not entered into such an agreement.
5.8 KNOWLEDGE OF DEBENTURE TRUSTEE
Notwithstanding the provisions of this Article 5 or any
provision in this Indenture or in the Debentures contained, neither the trustee
nor the Debenture Trustee will be charged with knowledge of any Senior
Indebtedness or of any default in the payment thereof, or of the existence of
any Event of Default or any other fact that would prohibit the making of any
payment of monies to or by the Debenture Trustee, or the taking of any other
action by the Debenture Trustee or the trustee, unless and until it has received
written notice thereof from the Trust, any Debentureholder or any Senior
Creditor.
5.9 DEBENTURE TRUSTEE MAY HOLD SENIOR INDEBTEDNESS
The trustee and the Debenture Trustee are each entitled to all
the rights set forth in this Article 5 with respect to any Senior Indebtedness
at the time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture deprives it of any of its rights as
such holder.
5.10 RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT IMPAIRED
No right of any present or future holder of any Senior
Indebtedness to enforce the subordination herein will at any time or in any way
be prejudiced or impaired by any act or failure to act on the part of the Trust
or by any non-compliance by the Trust with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof which any such holder may
have or be otherwise charged with.
5.11 ALTERING THE SENIOR INDEBTEDNESS
The holders of the Senior Indebtedness have the right to
extend, renew, modify or amend the terms of the Senior Indebtedness or any
security therefor and to release, sell or exchange such security and otherwise
to deal freely with the Trust, all without notice to or consent of the
Debentureholders or the Debenture Trustee and without affecting the liabilities
and obligations of the parties to this Indenture or the Debentureholders or the
Debenture Trustee.
5.12 ADDITIONAL INDEBTEDNESS
This Indenture does not restrict the Trust from incurring
additional indebtedness for Borrowed Money or otherwise or mortgaging, pledging
or charging its properties to secure any indebtedness.
5.13 RIGHT OF DEBENTUREHOLDER TO CONVERT NOT IMPAIRED
The subordination of the Debentures to the Senior Indebtedness
and the provisions of this Article 5 do not impair in any way the right of a
Debentureholder to convert its Debentures pursuant to Article 6.
5.14 INVALIDATED PAYMENTS
In the event that any of the Senior Indebtedness shall be paid
in full and subsequently, for whatever reason, such formerly paid or satisfied
Senior Indebtedness becomes unpaid or unsatisfied, the terms and conditions of
this Article 5 shall be reinstated and the provisions of this Article shall
again be operative until all Senior Indebtedness is repaid in full, provided
that such reinstatement shall not give the Senior Creditors any rights or
recourses against the Debenture Trustee or the Debentureholders for amounts paid
to the Debentureholders subsequent to such payment or satisfaction in full and
prior to such reinstatement.
5.15 CONTESTING SECURITY
The Debenture Trustee, for itself and on behalf of the
Debentureholders, agrees that it shall not contest or bring into question the
validity, perfection or enforceability of any of the Senior Indebtedness, Senior
Security, or the relative priority of the Senior Security.
ARTICLE 6
CONVERSION OF DEBENTURES
6.1 APPLICABILITY OF ARTICLE
Any Debentures issued hereunder of any series which by their
terms are convertible (subject, however, to any applicable restriction of the
conversion of Debentures of such series) will be convertible into Trust Units or
other securities, at such conversion rate or rates, and on such date or dates
and in accordance with such other provisions as shall have been determined at
the time of issue of such Debentures and shall have been expressed in this
Indenture (including Sections 2.4(e) and 3.7 hereof), in such Debentures, in an
Officer's Certificate, or in a supplemental indenture authorizing or providing
for the issue thereof.
Such right of conversion shall extend only to the maximum
number of whole Trust Units into which the aggregate principal amount of the
Debenture or Debentures surrendered for conversion at any one time by the holder
thereof may be converted. Fractional interests in Trust Units shall be adjusted
for in the manner provided in Section 6.6.
6.2 NOTICE OF EXPIRY OF CONVERSION PRIVILEGE
Notice of any expiry of any of the conversion privileges of
the Debentures shall be given by or on behalf of the Trust, not more than 60
days and not less than 30 days prior to each Time of Expiry, in the manner
provided in Section 14.2.
6.3 REVIVAL OF RIGHT TO CONVERT
If the redemption of any Debenture called for redemption by
the Trust is not made or the payment of the purchase price of any Debenture
which has been tendered in acceptance of an offer by the Trust to purchase
Debentures for cancellation is not made, in the case of a redemption upon due
surrender of such Debenture or in the case of a purchase on the date on which
such purchase is required to be made, as the case may be, then, provided the
last Time of Expiry has not passed, the right to convert such Debentures shall
revive and continue as if such Debenture had not been called for redemption or
tendered in acceptance of the Trust's offer, respectively.
6.4 MANNER OF EXERCISE OF RIGHT TO CONVERT
(a) The holder of a Debenture desiring to convert such Debenture in whole
or in part into Trust Units shall surrender such Debenture to the
Debenture Trustee at either of its principal offices in either Calgary,
Alberta or Toronto, Ontario together with the conversion notice in the
form attached hereto as SCHEDULE D or any other written notice in a
form satisfactory to the Debenture Trustee, in either case duly
executed by the holder or his executors or administrators or other
legal representatives or his or their attorney duly appointed by an
instrument in writing in form and executed in a manner satisfactory to
the Debenture Trustee, exercising his right to convert such Debenture
in accordance with the provisions of this Article; provided that with
respect to a Global Debenture, the obligation to surrender a Debenture
to the Debenture Trustee shall be satisfied if the Debenture Trustee
makes notation on the Global Debenture of the principal amount thereof
so converted and the Debenture Trustee is provided with all other
documentation which it may request. Thereupon such Debentureholder or,
subject to payment of all applicable stamp or security transfer taxes
or other governmental charges and compliance with all reasonable
requirements of the Debenture Trustee, his nominee(s) or assignee(s)
shall be entitled to be entered in the books of the Trust as at the
Date of Conversion (or such later date as is specified in Section
6.4(b)) as the holder of the number of Trust Units into which such
Debenture is convertible in accordance with the provisions of this
Article and, as soon as practicable thereafter, the Trust shall deliver
to such Debentureholder or, subject as aforesaid, his nominee(s) or
assignee(s), a certificate or certificates for such Trust Units and
make or cause to be made any payment of interest to which such holder
is entitled in accordance with Section 6.4(e) hereof.
(b) For the purposes of this Article, a Debenture shall be deemed to be
surrendered for conversion on the date (the "DATE OF CONVERSION") on
which it is so surrendered when the register of the Debenture Trustee
is open and in accordance with the provisions of this Article or, in
the case of a Global Debenture which the Debenture Trustee received
notice of and all necessary documentation in respect of the exercise of
the conversion rights and, in the case of a Debenture so surrendered by
post or other means of transmission, on the date on which it is
received by the Debenture Trustee at one of its offices specified in
Section 6.4(a); provided that if a Debenture is surrendered for
conversion on a day on which the register of Trust Units is closed, the
person or persons entitled to receive Trust Units shall become the
holder or holders of record of such Trust Units as at the date on which
such register is next reopened.
(c) Any part, being $1,000 or an integral multiple thereof, of a Debenture
in a denomination in excess of $1,000 may be converted as provided in
this Article and all references in this Indenture to conversion of
Debentures shall be deemed to include conversion of such part.
(d) The holder of a Debenture of which only a part is converted shall, upon
the exercise of his or her right of conversion surrender such Debenture
to the Debenture Trustee in accordance with Section 6.4(a), and the
Debenture Trustee shall cancel the same and shall without charge
forthwith certify and deliver to the holder a new Debenture or
Debentures in an aggregate principal amount equal to the unconverted
part of the principal amount of the Debenture so surrendered or, with
respect to a Global Debenture, the Depositary shall make notations on
the Global Debenture of the principal amount thereof so converted.
(e) The holder of a Debenture surrendered for conversion in accordance with
this Section 6.4 shall be entitled (subject to any applicable
restriction on the right to receive interest on conversion of
Debentures of any series) to receive accrued and unpaid interest in
respect thereof up to but excluding the Date of Conversion and the
Trust Units issued upon such conversion shall rank only in respect of
distributions or dividends declared in favour of unitholders of record
on and after the Date of Conversion or such later date as such holder
shall become the holder of record of such Trust Units pursuant to
Section 6.4(b), from which applicable date they will for all purposes
be and be deemed to be issued and outstanding as fully paid and
non-assessable Trust Units.
6.5 ADJUSTMENT OF CONVERSION PRICE
The Conversion Price in effect at any date shall be subject to
adjustment from time to time as set forth below.
(a) If and whenever at any time prior to a Time of Expiry the Trust shall
(i) subdivide or redivide the outstanding Trust Units into a greater
number of units, (ii) reduce, combine or consolidate the outstanding
Trust Units into a smaller number of units, or (iii) issue Trust Units
to the holders of all or substantially all of the outstanding Trust
Units by way of a dividend or distribution (other than the issue of
Trust Units to holders of Trust Units who have elected to receive
dividends or distributions in the form of Trust Units in lieu of cash
dividends or cash distributions paid in the ordinary course on the
Trust Units), the Conversion Price in effect on the effective date of
such subdivision, redivision, reduction, combination or consolidation
or on the record date for such issue of Trust Units by way of a
dividend or distribution, as the case may be, shall in the case of any
of the events referred to in (i) and (iii) above be decreased in
proportion to the number of outstanding Trust Units resulting from such
subdivision, redivision or dividend, or shall, in the case of any of
the events referred to in (ii) above, be increased in proportion to the
number of outstanding Trust Units resulting from such reduction,
combination or consolidation. Such adjustment shall be made
successively whenever any event referred to in this Section 6.5(a)
shall occur. Any such issue of Trust Units by way of a dividend or
distribution shall be deemed to have been made on the record date for
the dividend or distribution for the purpose of calculating the number
of outstanding Trust Units under subsections (b) and (c) of this
Section 6.5.
(b) If and whenever at any time prior to a Time of Expiry the Trust shall
fix a record date for the issuance of options, rights or warrants to
all or substantially all the holders of its outstanding Trust Units
entitling them, for a period expiring not more than 45 days after such
record date, to subscribe for or purchase Trust Units (or securities
convertible into Trust Units) at a price per unit (or having a
conversion or exchange price per unit) less than 95% of the Current
Market Price of a Trust Unit on such record date, the Conversion Price
shall be adjusted immediately after such record date so that it shall
equal the price determined by multiplying the Conversion Price in
effect on such record date by a fraction, of which the numerator shall
be the total number of Trust Units outstanding on such record date plus
a number of Trust Units equal to the number arrived at by dividing the
aggregate price of the total number of additional Trust Units offered
for subscription or purchase (or the aggregate conversion or exchange
price of the convertible securities so offered) by such Current Market
Price per Trust Unit, and of which the denominator shall be the total
number of Trust Units outstanding on such record date plus the total
number of additional Trust Units offered for subscription or purchase
(or into which the convertible securities so offered are convertible).
Such adjustment shall be made successively whenever such a record date
is fixed. To the extent that any such options, rights or warrants are
not so issued or any such options, rights or warrants are not exercised
prior to the expiration thereof, the Conversion Price shall be
re-adjusted to the Conversion Price which would then be in effect if
such record date had not been fixed or to the Conversion Price which
would then be in effect based on the number of Trust Units (or
securities convertible into Trust Units) actually issued upon the
exercise of such options, rights or warrants were included in such
fraction, as the case may be.
(c) If and whenever at any time prior to a Time of Expiry the Trust shall
fix a record date for the making of a distribution to all or
substantially all the holders of its outstanding Trust Units of (i)
units of any class other than Trust Units and other than units
distributed to holders of Trust Units who have elected to receive
dividends or distributions in the form of such units in lieu of
dividends or distributions paid in the ordinary course, (ii) rights,
options or warrants (excluding rights, options or warrants entitling
the holders thereof for a period of not more than 45 days to subscribe
for or purchase Trust Units or securities convertible into Trust
Units), (iii) evidences of its indebtedness, or (iv) assets (excluding
dividends or distributions paid in the ordinary course) then, in each
such case, the Conversion Price shall be adjusted immediately after
such record date so that it shall equal the price determined by
multiplying the Conversion Price in effect on such record date by a
fraction, of which the numerator shall be the total number of Trust
Units outstanding on such record date multiplied by the Current Market
Price per Trust Unit on such record date, less the fair market value
(as determined by the directors of HOC, on behalf of the Trust, with
the approval of the Debenture Trustee, which determination shall be
conclusive) of such units or rights, options or warrants or evidences
of indebtedness or assets so distributed, and of which the denominator
shall be the total number
of Trust Units outstanding on such record date multiplied by such
Current Market Price per Trust Unit. Such adjustment shall be made
successively whenever such a record date is fixed. To the extent that
such distribution is not so made, the Conversion Price shall be
re-adjusted to the Conversion Price which would then be in effect if
such record date had not been fixed or to the Conversion Price which
would then be in effect based upon such units or rights, options or
warrants or evidences of indebtedness or assets actually distributed,
as the case may be. In clause (iv) of this subsection (c) the term
"dividends or distributions paid in the ordinary course" shall include
the value of any securities or other property or assets distributed in
lieu of cash dividends or distributions paid in the ordinary course at
the option of unitholders.
(d) If and whenever at any time prior to a Time of Expiry, there is a
reclassification of the Trust Units or a capital reorganization of the
Trust, other than as described in Section 6.5(a), or a consolidation,
amalgamation, arrangement or merger of the Trust with or into any other
Person or other entity; or a sale or conveyance of the property and
assets of the Trust as an entirety or substantially as an entirety to
any other Person or other entity or a liquidation, dissolution or
winding-up of the Trust, any holder of a Debenture who has not
exercised its right of conversion prior to the effective date of such
reclassification, capital reorganization, consolidation, amalgamation,
arrangement or merger, sale or conveyance or liquidation, dissolution
or winding-up, upon the exercise of such right thereafter, shall be
entitled to receive and shall accept, in lieu of the number of Trust
Units then sought to be acquired by it, the number of trust units,
shares or other securities or property of the Trust or of the Person or
other entity resulting from such merger, amalgamation or consolidation,
or to which such sale or conveyance may be made or which holders of
Trust Units receive pursuant to such liquidation, dissolution or
winding-up, as the case may be, that such holder of a Debenture would
have been entitled to receive on such reclassification, capital
reorganization, consolidation, amalgamation, arrangement or merger,
sale or conveyance or liquidation, dissolution or winding-up, if, on
the record date or the effective date thereof, as the case may be, the
holder had been the registered holder of the number of Trust Units
sought to be acquired by it and to which it was entitled to acquire
upon the exercise of the conversion right. If determined appropriate by
the directors of HOC, on behalf of the Trust, to give effect to or to
evidence the provisions of this Section 6.5(d), the Trust, its
successor, or such purchasing Person or other entity, as the case may
be, shall, prior to or contemporaneously with any such
reclassification, capital reorganization, consolidation, amalgamation,
arrangement, merger, sale or conveyance or liquidation, dissolution or
winding-up, enter into an indenture which shall provide, to the extent
possible, for the application of the provisions set forth in this
Indenture with respect to the rights and interests thereafter of the
holder of Debentures to the end that the provisions set forth in this
Indenture shall thereafter correspondingly be made applicable, as
nearly as may reasonably be, with respect to any trust units, shares or
other securities or property to which a holder of Debentures is
entitled on the exercise of its conversion rights thereafter. Any
indenture entered into between the Trust and the Debenture Trustee
pursuant to the provisions of this Section 6.5(d) shall be a
supplemental indenture entered into pursuant to the provisions of
Article 16. Any indenture entered into between the Trust, any successor
to the Trust or such purchasing Person or other entity and the
Debenture Trustee shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided in
this Section 6.5(d) and which shall apply to successive
reclassifications, capital reorganizations, amalgamations,
consolidations, mergers, sales or conveyances.
(e) In any case in which this Section 6.5 shall require that an adjustment
shall become effective immediately after a record date for an event
referred to herein, the Trust may defer, until the occurrence of such
event, issuing to the holder of any Debenture converted after such
record date and before the occurrence of such event the additional
Trust Units issuable upon such conversion by reason of the adjustment
required by such event before giving effect to such adjustment;
provided, however, that the Trust shall deliver to such holder an
appropriate instrument evidencing such holder's right to receive such
additional Trust Units upon the occurrence of the event requiring such
adjustment and the right to receive any distributions made on such
additional Trust Units declared in favour of holders of record of Trust
Units on and after the Date of Conversion or such later date as such
holder would, but for the provisions of this Section 6.5(e), have
become the holder of record of such additional Trust Units pursuant to
Section 6.4(b).
(f) The adjustments provided for in this Section 6.5 are cumulative and
shall apply to successive subdivisions, redivisions, reductions,
combinations, consolidations, distributions, issues or other events
resulting in any adjustment under the provisions of this Section,
provided that, notwithstanding any other provision of this
Section, no adjustment of the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in
the Conversion Price then in effect; provided however, that any
adjustments which by reason of this Section 6.5(f) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment.
(g) For the purpose of calculating the number of Trust Units outstanding,
Trust Units owned by or for the benefit of the Trust shall not be
counted.
(h) In the event of any question arising with respect to the adjustments
provided in this Section 6.5, such question shall be conclusively
determined by a firm of nationally recognized chartered accountants
appointed by the Trust and acceptable to the Debenture Trustee (who may
be the auditors of the Trust); such accountants shall have access to
all necessary records of the Trust and such determination shall be
binding upon the Trust, the Debenture Trustee, and the
Debentureholders.
(i) In case the Trust shall take any action affecting the Trust Units other
than action described in this Section 6.5, which in the opinion of the
directors of HOC, on behalf of the Trust, would materially affect the
rights of Debentureholders, the Conversion Price shall be adjusted in
such manner and at such time, by action of the directors of HOC, on
behalf of the Trust, subject to the prior written consent of the
Toronto Stock Exchange or such other exchange on which the Debentures
are then listed, as the directors of HOC, on behalf of the Trust, in
their sole discretion may determine to be equitable in the
circumstances. Failure of the directors to make such an adjustment
shall be conclusive evidence that they have determined that it is
equitable to make no adjustment in the circumstances.
(j) Subject to the prior written consent of the Toronto Stock Exchange or
such other exchange on which the Debentures are then listed, no
adjustment in the Conversion Price shall be made in respect of any
event described in Sections 6.5(a), 6.5(b) or 6.5(c) other than the
events described in 6.5(a)(i) or 6.5(a)(ii) if the holders of the
Debentures are entitled to participate in such event on the same terms
MUTATIS MUTANDIS as if they had converted their Debentures prior to the
effective date or record date, as the case may be, of such event.
(k) Except as stated above in this Section 6.5, no adjustment will be made
in the Conversion Price for any Debentures as a result of the issuance
of Trust Units at less than the Current Market Price for such Trust
Units on the date of issuance or the then applicable Conversion Price.
6.6 NO REQUIREMENT TO ISSUE FRACTIONAL TRUST UNITS
The Trust shall not be required to issue fractional Trust
Units upon the conversion of Debentures pursuant to this Article. If more than
one Debenture shall be surrendered for conversion at one time by the same
holder, the number of whole Trust Units issuable upon conversion thereof shall
be computed on the basis of the aggregate principal amount of such Debentures to
be converted. If any fractional interest in a Trust Unit would, except for the
provisions of this Section, be deliverable upon the conversion of any principal
amount of Debentures, the Trust shall, in lieu of delivering any certificate
representing such fractional interest, make a cash payment to the holder of such
Debenture of an amount equal to the fractional interest which would have been
issuable multiplied by the Current Market Price.
6.7 TRUST TO RESERVE TRUST UNITS
The Trust covenants with the Debenture Trustee that it will at
all times reserve and keep available out of its authorized Trust Units, solely
for the purpose of issue upon conversion of Debentures as in this Article
provided, and conditionally allot to Debentureholders who may exercise their
conversion rights hereunder, such number of Trust Units as shall then be
issuable upon the conversion of all outstanding Debentures. The Trust covenants
with the Debenture Trustee that all Trust Units which shall be so issuable shall
be duly and validly issued as fully-paid and non-assessable.
6.8 CANCELLATION OF CONVERTED DEBENTURES
Subject to the provisions of Section 6.4 as to Debentures
converted in part, all Debentures converted in whole or in part under the
provisions of this Article shall be forthwith delivered to and cancelled by the
Debenture Trustee and no Debenture shall be issued in substitution therefor.
6.9 CERTIFICATE AS TO ADJUSTMENT
The Trust shall from time to time immediately after the
occurrence of any event which requires an adjustment or readjustment as provided
in Section 6.5, deliver an Officer's Certificate to the Debenture Trustee
specifying the nature of the event requiring the same and the amount of the
adjustment necessitated thereby and setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based, which
certificate and the amount of the adjustment specified therein shall be verified
by an opinion of a firm of nationally recognized chartered accountants appointed
by the Trust and acceptable to the Debenture Trustee (who may be the auditors of
the Trust) and shall be conclusive and binding on all parties in interest. When
so approved, the Trust shall, except in respect of any subdivision, redivision,
reduction, combination or consolidation of the Trust Units, forthwith give
notice to the Debentureholders in the manner provided in Section 14.2 specifying
the event requiring such adjustment or readjustment and the results thereof,
including the resulting Conversion Price; provided that, if the Trust has given
notice under this Section 6.9 covering all the relevant facts in respect of such
event and if the Debenture Trustee approves, no such notice need be given under
this Section 6.9.
6.10 NOTICE OF SPECIAL MATTERS
The Trust covenants with the Debenture Trustee that so long as
any Debenture remains outstanding, it will give notice to the Debenture Trustee,
and to the Debentureholders in the manner provided in Section 14.2, of its
intention to fix a record date for any event referred to in Section 6.5(a), (b)
or (c) (other than the subdivision, redivision, reduction, combination or
consolidation of its Trust Units) which may give rise to an adjustment in the
Conversion Price, and, in each case, such notice shall specify the particulars
of such event and the record date and the effective date for such event;
provided that the Trust shall only be required to specify in such notice such
particulars of such event as shall have been fixed and determined on the date on
which such notice is given. Such notice shall be given not less than fourteen
(14) days in each case prior to such applicable record date.
6.11 PROTECTION OF DEBENTURE TRUSTEE
Subject to Section 15.3, the Debenture Trustee:
(a) shall not at any time be under any duty or responsibility to any
Debentureholder to determine whether any facts exist which may require
any adjustment in the Conversion Price, or with respect to the nature
or extent of any such adjustment when made, or with respect to the
method employed in making the same;
(b) shall not be accountable with respect to the validity or value (or the
kind or amount) of any Trust Units or of any units, shares or other
securities or property which may at any time be issued or delivered
upon the conversion of any Debenture; and
(c) shall not be responsible for any failure of the Trust to make any cash
payment or to issue, transfer or deliver Trust Units, units or share
certificates upon the surrender of any Debenture for the purpose of
conversion, or to comply with any of the covenants contained in this
Article.
6.12 U.S. LEGEND ON TRUST UNITS
Each certificate representing Trust Units issued upon
conversion of Debentures pursuant to this Article 6 bearing the U.S. Legend set
forth in Section 2.14, as well as all certificates issued in exchange for or in
substitution of the foregoing securities, shall also bear the U.S. Legend set
forth in Section 2.14; provided that if the Trust Units are being sold outside
the United States in accordance with Rule 904 of Regulation S, and provided that
the Trust is a "foreign issuer" within the meaning of Regulation S at the time
of sale, the U.S. Legend may be
removed by providing a declaration to the Debenture Trustee, as registrar and
transfer agent for the Trust Units, as set forth in SCHEDULE E hereto (or as the
Trust may prescribe from time to time); and provided further that, if any such
securities are being sold within the United States in accordance with Rule 144
under the 1933 Act, the U.S. Legend may be removed by delivery to the Debenture
Trustee, as registrar and transfer agent for the Trust Units, of an opinion of
counsel, of recognized standing reasonably satisfactory to the Trust, that the
U.S. Legend is no longer required under applicable requirements of the 1933 Act
or state securities laws. Provided that the Debenture Trustee obtains
confirmation from the Trust that such counsel is satisfactory to it, it shall be
entitled to rely on such opinion of counsel without further inquiry.
ARTICLE 7
COVENANTS OF THE TRUST
The Trust hereby covenants and agrees with the Debenture
Trustee for the benefit of the Debenture Trustee and the Debentureholders, that
so long as any Debentures remain outstanding:
7.1 TO PAY PRINCIPAL, PREMIUM (IF ANY) AND INTEREST
The Trust will duly and punctually pay or cause to be paid to
every Debentureholder the principal of, premium (if any) and interest accrued on
the Debentures of which it is the holder on the dates, at the places and in the
manner mentioned herein and in the Debentures.
7.2 TO PAY DEBENTURE TRUSTEE'S REMUNERATION
The Trust will pay the Debenture Trustee reasonable
remuneration for its services as Debenture Trustee hereunder and will repay to
the Debenture Trustee on demand all monies which shall have been paid by the
Debenture Trustee in connection with the execution of the trusts hereby created
and such monies including the Debenture Trustee's remuneration, shall be payable
out of any funds coming into the possession of the Debenture Trustee in priority
to payment of any principal of the Debentures or interest thereon. Such
remuneration shall continue to be payable until the trusts hereof be finally
wound up and whether or not the trusts of this Indenture shall be in the course
of administration by or under the direction of a court of competent
jurisdiction.
7.3 TO GIVE NOTICE OF DEFAULT
The Trust shall notify the Debenture Trustee immediately upon
obtaining knowledge of any Event of Default hereunder.
7.4 PRESERVATION OF EXISTENCE, ETC.
Subject to the express provisions hereof, the Trust will carry
on and conduct its activities, and cause its Subsidiaries to carry on and
conduct their businesses, in a proper, efficient and business-like manner and in
accordance with good business practices; and, subject to the express provisions
hereof, it will do or cause to be done all things necessary to preserve and keep
in full force and effect its and its Subsidiaries respective existences and
rights.
7.5 KEEPING OF BOOKS
The Trust will keep or cause to be kept proper books of record
and account, in which full and correct entries shall be made of all financial
transactions and the assets and business of the Trust in accordance with
generally accepted accounting principles.
7.6 ANNUAL CERTIFICATE OF COMPLIANCE
The Trust shall deliver to the Debenture Trustee, within 120
days after the end of each calendar year, an Officer's Certificate as to the
knowledge of such officer of HOC who executes the Officer's Certificate of the
Trust's compliance with all conditions and covenants in this Indenture
certifying that after reasonable
investigation and inquiry, the Trust has complied with all covenants, conditions
or other requirements contained in this Indenture, the non-compliance with which
could, with the giving of notice, lapse of time or otherwise, constitute an
Event of Default hereunder, or if such is not the case, setting forth with
reasonable particulars the circumstances of any failure to comply and steps
taken or proposed to be taken to eliminate such circumstances and remedy such
Event of Default, as the case may be.
7.7 NO DISTRIBUTIONS ON TRUST UNITS IF EVENT OF DEFAULT
The Trust shall not declare or make any distribution to the
holders of its issued and outstanding Trust Units after the occurrence of an
Event of Default unless and until such default shall have been cured or waived
or shall have ceased to exist.
In addition, the Trust shall not declare any distribution to
the holders of its issued and outstanding Trust Units if at the time the
directors of HOC or a committee thereof resolves to make the said declaration,
the Trust has actual knowledge that the paying of said distribution on the
applicable distribution payment date will result in an Event of Default.
Notwithstanding the provisions of this Article 7 or any
provision in this Indenture or in the Debentures contained, the trustee will not
be charged with knowledge of any Event of Default, or of the existence of any
fact or circumstance that would constitute an Event of Default, unless and until
the trustee has received written notice thereof from the Trust, any
Debentureholder or HOC.
7.8 LIMITATION ON ADDITIONAL DEBENTURES
The Trust shall not issue additional debentures which are
convertible at the option of the holder into Trust Units ("CONVERTIBLE
DEBENTURES") of equal ranking to the Initial Debentures if the principal amount
of all issued and outstanding convertible debentures of the Trust would exceed
25% of the Total Market Capitalization of the Trust immediately after the
issuance of such additional convertible debentures.
7.9 PERFORMANCE OF COVENANTS BY DEBENTURE TRUSTEE
If the Trust shall fail to perform any of its covenants
contained in this Indenture, the Debenture Trustee may notify the
Debentureholders of such failure on the part of the Trust or may itself perform
any of the covenants capable of being performed by it, but shall be under no
obligation to do so or to notify the Debentureholders. All sums so expended or
advanced by the Debenture Trustee shall be repayable as provided in Section 7.2.
No such performance, expenditure or advance by the Debenture Trustee shall be
deemed to relieve the Trust of any default hereunder.
ARTICLE 8
DEFAULT
8.1 EVENTS OF DEFAULT
Each of the following events constitutes while the same is
continuing, and is herein sometimes referred to as, an "EVENT OF DEFAULT":
(a) failure for 10 days to pay interest on the Debentures when due;
(b) failure to pay principal or premium, if any, on the Debentures when due
whether at maturity, upon redemption, by declaration or otherwise;
(c) default in the observance or performance of any material covenant or
condition of the Indenture by the Trust for a period of 30 days after
notice in writing has been given by the Debenture Trustee to the Trust
specifying such default and requiring the Trust to remedy such default;
(d) if a decree or order of a court having jurisdiction is entered
adjudging the Trust a bankrupt or insolvent under the BANKRUPTCY AND
INSOLVENCY ACT (Canada) or any other bankruptcy, insolvency or
analogous laws, or issuing sequestration or process of execution
against, or against any substantial part of, the property of the Trust,
or appointing a receiver of, or of any substantial part of, the
property of the Trust or ordering the winding-up or liquidation of its
affairs, and any such decree or order continues unstayed and in effect
for a period of 60 days;
(e) if the Trust institutes proceedings to be adjudicated a bankrupt or
insolvent, or consents to the institution of bankruptcy or insolvency
proceedings against it under the BANKRUPTCY AND INSOLVENCY ACT (Canada)
for such bankruptcy or insolvency or any other bankruptcy, insolvency
or analogous laws, or consents to the filing of any such petition or to
the appointment of a receiver of, or of any substantial part of, the
property of the Trust or makes a general assignment for the benefit of
creditors, or admits in writing its inability to pay its debts
generally as they become due;
(f) if a resolution is passed for the winding-up or liquidation of the
Trust except in the course of carrying out or pursuant to a transaction
in respect of which the conditions of Section 11.1 are duly observed
and performed; or
(g) if, after the date of this Indenture, any proceedings with respect to
the Trust are taken with respect to a compromise or arrangement, with
respect to creditors of the Trust generally, under the applicable
legislation of any jurisdiction.
If such an event shall occur and be continuing the Debenture Trustee may, in its
discretion, and shall, upon receipt of a request in writing signed by the
holders of not less than 25% in principal amount of the Debentures then
outstanding, subject to the provisions of Section 8.3, by notice in writing to
the Trust declare the principal of and interest on all Debentures then
outstanding and all other monies outstanding hereunder to be due and payable and
the same shall forthwith become immediately due and payable to the Debenture
Trustee, and the Trust shall forthwith pay to the Debenture Trustee for the
benefit of the Debentureholders such principal, accrued and unpaid interest and
interest on amounts in default on such Debenture (and, where such a declaration
is based upon a voluntary winding-up or liquidation of the Trust, the premium,
if any, on the Debentures then outstanding which would have been payable upon
the redemption thereof by the Trust on the date of such declaration) and all
other monies outstanding hereunder, together with subsequent interest at the
rate borne by the Debentures on such principal, interest and such other monies
from the date of such declaration until payment is received by the Debenture
Trustee, such subsequent interest to be payable at the times and places and in
the monies mentioned in and according to the tenor of the Debentures. Such
payment when made shall be deemed to have been made in discharge of the Trust's
obligations hereunder and any monies so received by the Debenture Trustee shall
be applied in the manner provided in Section 8.6.
For greater certainty, for the purposes of this Section 8.1, a
series of Debentures shall be in default in respect of an Event of Default if
such Event of Default relates to a default in the payment of principal, premium,
if any, or interest on the Debentures of such series in which case references to
Debentures in this Section 8.1 shall refer to Debentures of that particular
series.
For the purposes of this Article 8, where the Event of Default
refers to an Event of Default with respect to a particular series of Debentures
as described in this Section 8.1, then this Article 8 shall apply MUTATIS
MUTANDIS to the Debentures of such series and references in this Article 8 to
the Debentures shall mean Debentures of the particular series and references to
the Debentureholders shall refer to the Debentureholders of the particular
series, as applicable.
8.2 NOTICE OF EVENTS OF DEFAULT
If an Event of Default shall occur and be continuing the
Debenture Trustee shall, within 30 days after it receives written notice of the
occurrence of such Event of Default, give notice of such Event of Default to the
Debentureholders in the manner provided in Section 13.2, provided that
notwithstanding the foregoing, unless the Debenture Trustee shall have been
requested to do so by the holders of at least 25% of the principal amount of the
Debentures then outstanding, the Debenture Trustee shall not be required to give
such notice if the Debenture
Trustee in good faith shall have determined that the withholding of such notice
is in the best interests of the Debentureholders and shall have so advised the
Trust in writing.
8.3 WAIVER OF DEFAULT
Upon the happening of any Event of Default hereunder:
(a) the holders of the Debentures shall have the power (in addition to the
powers exercisable by Extraordinary Resolution as hereinafter provided)
by requisition in writing by the holders of more than 50% of the
principal amount of Debentures then outstanding, to instruct the
Debenture Trustee to waive any Event of Default and to cancel any
declaration made by the Debenture Trustee pursuant to Section 8.1 and
the Debenture Trustee shall thereupon waive the Event of Default and
cancel such declaration, or either, upon such terms and conditions as
shall be prescribed in such requisition; provided that notwithstanding
the foregoing if the Event of Default has occurred by reason of the
non-observance or non-performance by the Trust of any covenant
applicable only to one or more series of Debentures, then the holders
of more than 50% of the principal amount of the outstanding Debentures
of that series shall be entitled to exercise the foregoing power and
the Debenture Trustee shall so act and it shall not be necessary to
obtain a waiver from the holders of any other series of Debentures; and
(b) the Debenture Trustee, so long as it has not become bound to declare
the principal and interest on the Debentures then outstanding to be due
and payable, or to obtain or enforce payment of the same, shall have
power to waive any Event of Default if, in the Debenture Trustee's
opinion, the same shall have been cured or adequate satisfaction made
therefor, and in such event to cancel any such declaration theretofore
made by the Debenture Trustee in the exercise of its discretion, upon
such terms and conditions as the Debenture Trustee may deem advisable.
No such act or omission either of the Debenture Trustee or of
the Debentureholders shall extend to or be taken in any manner whatsoever to
affect any subsequent Event of Default or the rights resulting therefrom.
8.4 ENFORCEMENT BY THE DEBENTURE TRUSTEE
Subject to the provisions of Section 8.3 and to the provisions
of any Extraordinary Resolution that may be passed by the Debentureholders, if
the Trust shall fail to pay to the Debenture Trustee, forthwith after the same
shall have been declared to be due and payable under Section 8.1, the principal
of and premium (if any) and interest on all Debentures then outstanding,
together with any other amounts due hereunder, the Debenture Trustee may in its
discretion and shall upon receipt of a request in writing signed by the holders
of not less than 25% in principal amount of the Debentures then outstanding and
upon being funded and indemnified to its reasonable satisfaction against all
costs, expenses and liabilities to be incurred, proceed in its name as trustee
hereunder to obtain or enforce payment of such principal of and premium (if any)
and interest on all the Debentures then outstanding together with any other
amounts due hereunder by such proceedings authorized by this Indenture or by law
or equity as the Debenture Trustee in such request shall have been directed to
take, or if such request contains no such direction, or if the Debenture Trustee
shall act without such request, then by such proceedings authorized by this
Indenture or by suit at law or in equity as the Debenture Trustee shall deem
expedient.
The Debenture Trustee shall be entitled and empowered, either
in its own name or as Debenture Trustee of an express trust, or as
attorney-in-fact for the holders of the Debentures, or in any one or more of
such capacities, to file such proof of debt, amendment of proof of debt, claim,
petition or other document as may be necessary or advisable in order to have the
claims of the Debenture Trustee and of the holders of the Debentures allowed in
any insolvency, bankruptcy, liquidation or other judicial proceedings relative
to the Trust or its creditors or relative to or affecting its property. The
Debenture Trustee is hereby irrevocably appointed (and the successive respective
holders of the Debentures by taking and holding the same shall be conclusively
deemed to have so appointed the Debenture Trustee) the true and lawful
attorney-in-fact of the respective holders of the Debentures with authority to
make and file in the respective names of the holders of the Debentures or on
behalf of the holders of the Debentures as a class, subject to deduction from
any such claims of the amounts of any claims filed by any of the holders of the
Debentures themselves, any proof of debt, amendment of proof of debt, claim,
petition or other document in any such proceedings and to receive payment of any
sums becoming distributable on account thereof,
and to execute any such other papers and documents and to do and perform any and
all such acts and things for and on behalf of such holders of the Debentures, as
may be necessary or advisable in the opinion of the Debenture Trustee, in order
to have the respective claims of the Debenture Trustee and of the holders of the
Debentures against the Trust or its property allowed in any such proceeding, and
to receive payment of or on account of such claims; provided, however, that
subject to Section 8.3, nothing contained in this Indenture shall be deemed to
give to the Debenture Trustee, unless so authorized by Extraordinary Resolution,
any right to accept or consent to any plan of reorganization or otherwise by
action of any character in such proceeding to waive or change in any way any
right of any Debentureholder.
The Debenture Trustee shall also have the power at any time
and from time to time to institute and to maintain such suits and proceedings as
it may be advised shall be necessary or advisable to preserve and protect its
interests and the interests of the Debentureholders.
All rights of action hereunder may be enforced by the
Debenture Trustee without the possession of any of the Debentures or the
production thereof on the trial or other proceedings relating thereto. Any such
suit or proceeding instituted by the Debenture Trustee shall be brought in the
name of the Debenture Trustee as trustee of an express trust, and any recovery
of judgment shall be for the rateable benefit of the holders of the Debentures
subject to the provisions of this Indenture. In any proceeding brought by the
Debenture Trustee (and also any proceeding in which a declaratory judgment of a
court may be sought as to the interpretation or construction of any provision of
this Indenture, to which the Debenture Trustee shall be a party) the Debenture
Trustee shall be held to represent all the holders of the Debentures, and it
shall not be necessary to make any holders of the Debentures parties to any such
proceeding.
8.5 NO SUITS BY DEBENTUREHOLDERS
No holder of any Debenture shall have any right to institute
any action, suit or proceeding at law or in equity for the purpose of enforcing
payment of the principal of or interest on the Debentures or for the execution
of any trust or power hereunder or for the appointment of a liquidator or
receiver or for a receiving order under the BANKRUPTCY AND INSOLVENCY ACT
(Canada) or to have the Trust wound up or to file or prove a claim in any
liquidation or bankruptcy proceeding or for any other remedy hereunder, unless:
(a) such holder shall previously have given to the Debenture Trustee written
notice of the happening of an Event of Default hereunder; and (b) the
Debentureholders by Extraordinary Resolution or by written instrument signed by
the holders of at least 25% in principal amount of the Debentures then
outstanding shall have made a request to the Debenture Trustee and the Debenture
Trustee shall have been afforded reasonable opportunity either itself to proceed
to exercise the powers hereinbefore granted or to institute an action, suit or
proceeding in its name for such purpose; and (c) the Debentureholders or any of
them shall have furnished to the Debenture Trustee, when so requested by the
Debenture Trustee, sufficient funds and security and indemnity satisfactory to
it against the costs, expenses and liabilities to be incurred therein or
thereby; and (d) the Debenture Trustee shall have failed to act within a
reasonable time after such notification, request and offer of indemnity and such
notification, request and offer of indemnity are hereby declared in every such
case, at the option of the Debenture Trustee, to be conditions precedent to any
such proceeding or for any other remedy hereunder by or on behalf of the holder
of any Debentures.
8.6 APPLICATION OF MONIES BY DEBENTURE TRUSTEE
(a) Except as herein otherwise expressly provided, any monies
received by the Debenture Trustee from the Trust pursuant to
the foregoing provisions of this Article 8, or as a result of
legal or other proceedings or from any trustee in bankruptcy
or liquidator of the Trust, shall be applied, together with
any other monies in the hands of the Debenture Trustee
available for such purpose, as follows:
(i) first, in payment or in reimbursement to the Debenture Trustee
of its compensation, costs, charges, expenses, borrowings,
advances or other monies furnished or provided by or at the
instance of the Debenture Trustee in or about the execution of
its trusts under, or otherwise in relation to, this Indenture,
with interest thereon as herein provided;
(ii) second, but subject as hereinafter in this Section 8.6
provided, in payment, rateably and proportionately to the
holders of Debentures, of the principal of and premium (if
any) and accrued
and unpaid interest and interest on amounts in default on the
Debentures which shall then be outstanding in the priority of
principal first and then premium and then accrued and unpaid
interest and interest on amounts in default unless otherwise
directed by Extraordinary Resolution and in that case in such
order or priority as between principal, premium (if any) and
interest as may be directed by such resolution; and
(iii) third, in payment of the surplus, if any, of such monies to
the Trust or its assigns;
provided, however, that no payment shall be made pursuant to clause
(ii) above in respect of the principal, premium or interest on any
Debenture held, directly or indirectly, by or for the benefit of the
Trust or any Subsidiary (other than any Debenture pledged for value and
in good faith to a person other than the Trust or any Subsidiary but
only to the extent of such person's interest therein) except subject to
the prior payment in full of the principal, premium (if any) and
interest (if any) on all Debentures which are not so held.
(b) The Debenture Trustee shall not be bound to apply or make any partial
or interim payment of any monies coming into its hands if the amount so
received by it, after reserving thereout such amount as the Debenture
Trustee may think necessary to provide for the payments mentioned in
Section 8.6(a), is insufficient to make a distribution of at least 2%
of the aggregate principal amount of the outstanding Debentures, but it
may retain the money so received by it and invest or deposit the same
as provided in Section 15.9 until the money or the investments
representing the same, with the income derived therefrom, together with
any other monies for the time being under its control shall be
sufficient for the said purpose or until it shall consider it advisable
to apply the same in the manner hereinbefore set forth. The foregoing
shall, however, not apply to a final payment in distribution hereunder.
8.7 NOTICE OF PAYMENT BY DEBENTURE TRUSTEE
Not less than 15 days notice shall be given in the manner
provided in Section 14.2 by the Debenture Trustee to the Debentureholders of any
payment to be made under this Article 8. Such notice shall state the time when
and place where such payment is to be made and also the liability under this
Indenture to which it is to be applied. After the day so fixed, unless payment
shall have been duly demanded and have been refused, the Debentureholders will
be entitled to interest only on the balance (if any) of the principal monies,
premium (if any) and interest due (if any) to them, respectively, on the
Debentures, after deduction of the respective amounts payable in respect thereof
on the day so fixed.
8.8 DEBENTURE TRUSTEE MAY DEMAND PRODUCTION OF DEBENTURES
The Debenture Trustee shall have the right to demand
production of the Debentures in respect of which any payment of principal,
interest or premium required by this Article 8 is made and may cause to be
endorsed on the same a memorandum of the amount so paid and the date of payment,
but the Debenture Trustee may, in its discretion, dispense with such production
and endorsement, upon such indemnity being given to it and to the Trust as the
Debenture Trustee shall deem sufficient.
8.9 REMEDIES CUMULATIVE
No remedy herein conferred upon or reserved to the Debenture
Trustee, or upon or to the holders of Debentures is intended to be exclusive of
any other remedy, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or now existing or
hereafter to exist by law or by statute.
8.10 JUDGMENT AGAINST THE TRUST
The Trust covenants and agrees with the Debenture Trustee
that, in case of any judicial or other proceedings to enforce the rights of the
Debentureholders, judgment may be rendered against it in favour of the
Debentureholders or in favour of the Debenture Trustee, as trustee for the
Debentureholders, for any amount which
may remain due in respect of the Debentures and premium (if any) and the
interest thereon and any other monies owing hereunder.
8.11 IMMUNITY OF DEBENTURE TRUSTEE AND OTHERS
The Debentureholders and the Debenture Trustee hereby waive
and release any right, cause of action or remedy now or hereafter existing in
any jurisdiction against any past, present or future officer or director of HOC,
any trustee or manager of the Trust or holder of trust units of the Trust or of
any successor thereto, for the payment of the principal of or premium or
interest on any of the Debentures or on any covenant, agreement, representation
or warranty by the Trust contained herein or in the Debentures.
ARTICLE 9
SATISFACTION AND DISCHARGE
9.1 CANCELLATION AND DESTRUCTION
All Debentures shall forthwith after payment thereof be
delivered to the Debenture Trustee and cancelled by it. All Debentures cancelled
or required to be cancelled under this or any other provision of this Indenture
shall be destroyed by the Debenture Trustee and, if required by the Trust, the
Debenture Trustee shall furnish to it a destruction certificate setting out the
designating numbers of the Debentures so destroyed.
9.2 NON-PRESENTATION OF DEBENTURES
In case the holder of any Debenture shall fail to present the
same for payment on the date on which the principal, premium (if any) or the
interest thereon or represented thereby becomes payable either at maturity or
otherwise or shall not accept payment on account thereof and give such receipt
therefor, if any, as the Debenture Trustee may require:
(a) the Trust shall be entitled to pay or deliver to the Debenture Trustee
and direct it to set aside; or
(b) in respect of monies or Trust Units in the hands of the Debenture
Trustee which may or should be applied to the payment of the
Debentures, the Trust shall be entitled to direct the Debenture Trustee
to set aside; or
(c) if the redemption was pursuant to notice given by the Debenture
Trustee, the Debenture Trustee may itself set aside;
the principal, premium (if any) or the interest, as the case may be, in trust to
be paid to the holder of such Debenture upon due presentation or surrender
thereof in accordance with the provisions of this Indenture; and thereupon the
principal, premium (if any) or the interest payable on or represented by each
Debenture in respect whereof such monies or Trust Units, if applicable, have
been set aside shall be deemed to have been paid and the holder thereof shall
thereafter have no right in respect thereof except that of receiving delivery
and payment of the monies or Trust Units, if applicable, so set aside by the
Debenture Trustee upon due presentation and surrender thereof, subject always to
the provisions of Section 9.3.
9.3 REPAYMENT OF UNCLAIMED MONIES OR TRUST UNITS
Subject to applicable law, any monies or Trust Units, if
applicable, set aside under Section 9.2 and not claimed by and paid to holders
of Debentures as provided in Section 9.2 within six years after the date of such
setting aside shall be repaid and delivered to the Trust by the Debenture
Trustee and thereupon the Debenture Trustee shall be released from all further
liability with respect to such monies or Trust Units, if applicable, and
thereafter the holders of the Debentures in respect of which such monies or
Trust Units, if applicable, were so repaid to the Trust shall have no rights in
respect thereof except to obtain payment and delivery of the monies or Trust
Units, if applicable, from the Trust subject to any limitation provided by the
laws of the Province of Alberta. Notwithstanding the foregoing, the Debenture
Trustee will pay any remaining funds prior to the expiry of six years after the
setting aside described in Section 9.2 to the Trust upon receipt from the Trust,
or one of its Subsidiaries, of
an uncontested letter of credit from a Canadian chartered bank in an amount
equal to or in excess of the amount of the remaining funds. If the remaining
funds are paid to the Trust prior to the expiry of six years after such setting
aside, the Trust shall reimburse the Debenture Trustee for any amounts so set
aside which are required to be paid by the Debenture Trustee to a holder of a
Debenture after the date of such payment of the remaining funds to the Trust but
prior to six years after such setting aside.
9.4 DISCHARGE
The Debenture Trustee shall at the written request of the
Trust release and discharge this Indenture and execute and deliver such
instruments as it shall be advised by Counsel are requisite for that purpose and
to release the Trust from its covenants herein contained (other than the
provisions relating to the indemnification of the Debenture Trustee), upon proof
being given to the reasonable satisfaction of the Debenture Trustee that the
principal and premium (if any) of and interest (including interest on amounts in
default, if any), on all the Debentures and all other monies payable hereunder
have been paid or satisfied or that all the Debentures having matured or having
been duly called for redemption, payment of the principal of and interest
(including interest on amounts in default, if any) on such Debentures and of all
other monies payable hereunder has been duly and effectually provided for in
accordance with the provisions hereof.
9.5 SATISFACTION
(a) The Trust shall be deemed to have fully paid, satisfied and discharged
all of the outstanding Debentures, or all of the outstanding Debentures
of any series, and the Debenture Trustee, at the expense of the Trust,
shall execute and deliver proper instruments acknowledging the full
payment, satisfaction and discharge of such Debentures, when, with
respect to all of the outstanding Debentures or all of the outstanding
Debentures of any series, as applicable, either:
(i) the Trust has deposited or caused to be deposited with the
Debenture Trustee as trust funds or property in trust for the
purpose of making payment on such Debentures, an amount in
money or Trust Units, if applicable, sufficient to pay,
satisfy and discharge the entire amount of principal, premium,
if any, and interest, if any, to maturity or any repayment
date or Redemption Dates, as the case may be, of such
Debentures; or
(ii) the Trust has deposited or caused to be deposited with the
Debenture Trustee as property in trust for the purpose of
making payment on such Debentures:
(A) if the Debentures are issued in Canadian dollars,
such amount in Canadian dollars of direct obligations
of, or obligations the principal and interest of
which are guaranteed by, the Government of Canada, or
in Trust Units, if applicable; or
(B) if the Debentures are issued in a currency or
currency unit other than Canadian dollars, cash in
the currency or currency unit in which the Debentures
are payable and/or such amount in such currency or
currency unit of direct obligations of, or
obligations the principal and interest of which are
guaranteed by, the Government of Canada or the
government that issued the currency or currency unit
in which the Debentures are payable, or in Trust
Units, if applicable;
as will, together with the income to accrue thereon and
reinvestment thereof, be sufficient to pay and discharge the
entire amount of principal and accrued and unpaid interest to
maturity or any repayment date, as the case may be, of all
such Debentures;
and in either event:
(iii) the Trust has paid, caused to be paid or made provisions to
the satisfaction of the Debenture Trustee for the payment of
all other sums payable with respect to all of such Debentures
(together
with all applicable expenses of the Debenture Trustee in
connection with the payment of such Debentures); and
(iv) the Trust has delivered to the Debenture Trustee an Officer's
Certificate stating that all conditions precedent herein
provided relating to the payment, satisfaction and discharge
of all such Debentures have been complied with.
Any deposits with the Debenture Trustee referred to in this Section 9.5
shall be irrevocable, subject to Section 9.6, and shall be made under
the terms of an escrow and/or trust agreement in form and substance
satisfactory to the Debenture Trustee and which provides for the due
and punctual payment of the principal of, and interest and premium, if
any, on the Debentures being satisfied.
(b) Upon the satisfaction of the conditions set forth in this Section 9.5
with respect to all the outstanding Debentures, or all the outstanding
Debentures of any series, as applicable, the terms and conditions of
the Debentures, or the terms and conditions of the outstanding
Debentures of such series, as applicable, including the terms and
conditions with respect thereto set forth in this Indenture (other than
those contained in Articles 2 and 4 and the provisions of Article 1
pertaining to the foregoing provisions) shall no longer be binding upon
or applicable to the Trust.
(c) Any funds or obligations deposited with the Debenture Trustee pursuant
to this Section 9.5 shall be denominated in the currency or
denomination of the Debentures in respect of which such deposit is
made.
(d) If the Debenture Trustee is unable to apply any money or securities in
accordance with this Section 9.5 by reason of any legal proceeding or
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Trust's
obligations under this Indenture and the affected Debentures shall be
revived and reinstated as though no money or securities had been
deposited pursuant to this Section 9.5 until such time as the Debenture
Trustee is permitted to apply all such money or securities in
accordance with this Section 9.5, provided that if the Trust has made
any payment in respect of principal, premium or interest on Debentures
or, as applicable, other amounts because of the reinstatement of its
obligations, the Trust shall be subrogated to the rights of the holders
of such Debentures to receive such payment from the money or securities
held by the Debenture Trustee.
9.6 CONTINUANCE OF RIGHTS, DUTIES AND OBLIGATIONS
(a) Where trust funds or trust property have been deposited pursuant to
Section 9.5, the holders of Debentures and the Trust shall continue to
have and be subject to their respective rights, duties and obligations
under Articles 2 and 4.
(b) In the event that, after the deposit of trust funds or trust property
pursuant to Section 9.5 in respect of a series of Debentures (the
"DEFEASED DEBENTURES"), any holder of any of the Defeased Debentures
from time to time converts its Debentures to Trust Units or other
securities of the Trust in accordance with Subsection 2.4(e) (in
respect of Initial Debentures or the comparable provision of any other
series of Debentures), Article 6 or any other provision of this
Indenture, the Debenture Trustee shall upon receipt of a Written
Direction of the Trust return to the Trust from time the proportionate
amount of the trust funds or other trust property deposited with the
Debenture Trustee pursuant to Section 9.5 in respect of the Defeased
Debentures which is applicable to the Defeased Debentures so converted
(which amount shall be based on the applicable principal amount of the
Defeased Debentures being converted in relation to the aggregate
outstanding principal amount of all the Defeased Debentures).
(c) In the event that, after the deposit of trust funds or trust property
pursuant to Section 9.5, the Trust is required to make an Offer to
purchase any outstanding Debentures pursuant to Subsection 2.4(i) (in
respect of Initial Debentures or the comparable provision of any other
series of Debentures), in relation to Initial Debentures or to make an
offer to purchase Debentures pursuant to any other similar provisions
relating to any other series of Debentures, the Trust shall be entitled
to use any trust money or trust property deposited with the Debenture
Trustee pursuant to Section 9.5 for the purpose of paying to any
holders of Defeased
Debentures who have accepted any such offer of the Trust the Total
Offer Price payable to such holders in respect of such Offer in respect
of Initial Debentures (or the total offer price payable in respect of
an offer relating to any other series of Debentures). Upon receipt of a
Written Direction from the Trust, the Debenture Trustee shall be
entitled to pay to such holder from such trust money or trust property
deposited with the Debenture Trustee pursuant to Section 9.5 in respect
of the Defeased Debentures which is applicable to the Defeased
Debentures held by such holders who have accepted any such offer to the
Trust (which amount shall be based on the applicable principal amount
of the Defeased Debentures held by accepting offerees in relation to
the aggregate outstanding principal amount of all the Defeased
Debentures).
ARTICLE 10
TRUST UNIT INTEREST PAYMENT ELECTION
10.1 TRUST UNIT INTEREST PAYMENT ELECTION
(a) Provided that the Trust is not in default under this Indenture and that
all applicable regulatory approvals have been obtained (including any
required approval of any stock exchange on which the Debentures or
Trust Units are then listed), the Trust shall have the right, from time
to time, to make a Trust Unit Interest Payment Election in respect of
any Interest Obligation by delivering a Trust Unit Interest Payment
Election Notice to the Debenture Trustee no later than the date
required by applicable law or the rules of any stock exchange on which
the Debentures or Trust Units are then listed.
(b) Upon receipt of a Trust Unit Interest Payment Election Notice, the
Debenture Trustee shall, in accordance with this Article 10 and such
Trust Unit Interest Payment Election Notice, deliver Trust Unit Bid
Requests to the investment banks, brokers or dealers identified by the
Trust, in its absolute discretion, in the Trust Unit Interest Payment
Election Notice. In connection with the Trust Unit Interest Payment
Election, the Debenture Trustee shall have the power to: (i) accept
delivery of the Trust Units from the Trust and process the Trust Units
in accordance with the Trust Unit Interest Payment Election Notice;
(ii) accept bids with respect to, and consummate sales of, such Trust
Units, each as the Trust shall direct in its absolute discretion
through the investment banks, brokers or dealers identified by the
Trust in the Trust Unit Interest Payment Election Notice; (iii) invest
the proceeds of such sales on the direction of the Trust in Government
Obligations which mature prior to an applicable Interest Payment Date
and use such proceeds to pay the Interest Obligation in respect of
which the Trust Unit Interest Payment Election was made; and (iv)
perform any other action necessarily incidental thereto as directed by
the Trust in its absolute discretion. The Trust Unit Interest Payment
Election Notice shall direct the Debenture Trustee to solicit and
accept only, and each Trust Unit Bid Request shall provide that the
acceptance of any bid is conditional on the acceptance of, sufficient
bids to result in aggregate proceeds from such issue and sale of Trust
Units which, together with the cash payments by the Trust in lieu of
fractional Trust Units, if any, equal the Interest Obligation on the
Trust Unit Delivery Date.
(c) The Trust Unit Interest Payment Election Notice shall provide for, and
all bids shall be subject to, the right of the Trust, by delivering
written notice to the Debenture Trustee at any time prior to the
consummation of such delivery and sale of the Trust Units on the Trust
Unit Delivery Date, to withdraw the Trust Unit Interest Payment
Election (which shall have the effect of withdrawing each related Trust
Unit Bid Request), whereupon the Trust shall be obliged to pay in cash
the Interest Obligation in respect of which the Trust Unit Interest
Payment Election Notice has been delivered.
(d) Any sale of Trust Units pursuant to this Article 10 may be made to one
or more Persons whose bids are solicited, but all such sales with
respect to a particular Trust Unit Interest Payment Election shall take
place concurrently on the Trust Unit Delivery Date.
(e) The amount received by a holder of a Debenture in respect of the
Interest Obligation or the entitlement thereto will not be affected by
whether or not the Trust elects to satisfy the Interest Obligation
pursuant to a Trust Unit Interest Payment Election.
(f) The Debenture Trustee shall inform the Trust promptly following receipt
of any bid or bids for Trust Units solicited pursuant to the Trust Unit
Bid Requests. The Debenture Trustee shall accept such bid or bids as
the Trust, in its absolute discretion, shall direct by Written
Direction of the Trust, provided that the aggregate proceeds of all
sales of Trust Units resulting from the acceptance of such bids,
together with the amount of any cash payment by the Trust in lieu of
any fractional Trust Units, on the Trust Unit Delivery Date, must be
equal to the related Trust Unit Interest Payment Election Amount in
connection with any bids so accepted, the Trust, the Debenture Trustee
(if required by the Trust in its absolute discretion) and the
applicable bidders shall, not later than the Trust Unit Delivery Date,
enter into Trust Unit Purchase Agreements and shall comply with all
Applicable Securities Legislation, including the securities rules and
regulations of any stock exchange on which the Debentures or Trust
Units are then listed. The Trust shall pay all fees and expenses in
connection with the Trust Unit Purchase Agreements including the fees
and commissions charged by the investment banks, brokers and dealers
and the fees of the Debenture Trustee.
(g) Provided that: (i) all conditions specified in each Trust Unit Purchase
Agreement to the closing of all sales thereunder have been satisfied,
other than the delivery of the Trust Units to be sold thereunder
against payment of the purchase price thereof; and (ii) the purchasers
under each Trust Unit Purchase Agreement shall be ready, willing and
able to perform thereunder, in each case on the Trust Unit Delivery
Date, the Trust shall, on the Trust Unit Delivery Date, deliver to the
Debenture Trustee the Trust Units to be sold on such date, an amount in
cash equal to the value of any fractional Trust Units and an Officer's
Certificate to the effect that all conditions precedent to such sales,
including those set forth in this Indenture and in each Trust Unit
Purchase Agreement, have been satisfied. Upon such deliveries, the
Debenture Trustee shall consummate such sales on such Trust Unit
Delivery Date by the delivery of the Trust Units to such purchasers
against payment to the Debenture Trustee in immediately available funds
of the purchase price therefor in an aggregate amount equal to the
Trust Unit Interest Payment Election Amount (less any amount
attributable to any fractional Trust Units), whereupon the sole right
of a holder of Debentures to receive such holder's portion of the Trust
Unit Interest Payment Election Amount will be to receive same from the
Debenture Trustee out of the proceeds of such sales of Trust Units plus
any amount received by the Debenture Trustee from the Trust
attributable to any fractional Trust Units in full satisfaction of the
Interest Obligation and the holder will have no further recourse to the
Trust in respect of the Interest Obligation.
(h) The Debenture Trustee shall, on the Trust Unit Delivery Date, use the
sale proceeds of the Trust Units (together with any cash received from
the Trust in lieu of any fractional Trust Units) to purchase, on the
direction of the Trust in writing, Government Obligations which mature
prior to the applicable Interest Payment Date and which the Debenture
Trustee is required to hold until maturity (the "TRUST UNIT PROCEEDS
INVESTMENT") and shall, on such date, deposit the balance, if any, of
such sale proceeds in an account established by the Trust (and which
shall be maintained by and subject to the control of the Debenture
Trustee) (the "INTEREST ACCOUNT") for such Debentures. The Debenture
Trustee shall hold such Trust Unit Proceeds Investment (but not income
earned thereon) under its exclusive control in an irrevocable trust for
the benefit of the holders of the Debentures. At least one Business Day
prior to the Interest Payment Date, the Debenture Trustee shall deposit
amounts from the proceeds of the Trust Unit Proceeds Investment in the
Interest Account to bring the balance of the Interest Account to the
Trust Unit Interest Payment Election Amount. On the Interest Payment
Date, the Debenture Trustee shall pay the funds held in the Interest
Account to the holders of record of the Debentures on the Interest
Payment Date (less any tax required to be deducted, if any) and,
provided that there is no Event of Default, shall remit amounts, if
any, in respect of income earned on the Trust Unit Proceeds Investment
or otherwise in excess of the Trust Unit Interest Payment Election
Amount to the Trust.
(i) Neither the making of a Trust Unit Payment Election nor the
consummation of sales of Trust Units on a Trust Unit Delivery Date
shall (i) result in the holders of the Debentures not being entitled to
receive on the applicable Interest Payment Date cash in an aggregate
amount equal to the Interest Obligation payable on such date or (ii)
entitle such holders to receive any Trust Units in satisfaction of such
Interest Obligation.
(j) No fractional Trust Units will be issued in satisfaction of interest
but in lieu thereof the Trust will satisfy such fractional interest by
a cash payment equal to the market price of such fractional interest
(less any tax required to be deducted, if any).
ARTICLE 11
SUCCESSORS
11.1 RESTRICTIONS ON AMALGAMATION, MERGER AND SALE OF CERTAIN ASSETS, ETC.
Subject to the provisions of Article 12, the Trust shall not
enter into any transaction or series of transactions whereby all or
substantially all of its undertaking, property or assets would become the
property of any other Person (herein called a "SUCCESSOR") whether by way of
reorganization, consolidation, amalgamation, arrangement, merger, transfer, sale
or otherwise, unless:
(a) prior to or contemporaneously with the consummation of such transaction
the Trust and the Successor shall have executed such instruments and
done such things as, in the opinion of Counsel, are necessary or
advisable to establish that upon the consummation of such transaction:
(i) the Successor will have assumed all the covenants and
obligations of the Trust under this Indenture in respect of
the Debentures;
(ii) the Debentures will be valid and binding obligations of the
Successor entitling the holders thereof, as against the
Successor, to all the rights of Debentureholders under this
Indenture; and
(iii) in the case of an entity organized otherwise than under the
laws of the Province of Alberta, shall attorn to the
jurisdiction of the courts of the Province of Alberta;
(b) such transaction, in the opinion of Counsel, shall be on such terms as
to substantially preserve and not impair any of the rights and powers
of the Debenture Trustee or of the Debentureholders hereunder; and
(c) no condition or event shall exist as to the Trust (at the time of such
transaction) or the Successor (immediately after such transaction) and
after giving full effect thereto or immediately after the Successor
shall become liable to pay the principal monies, premium, if any,
interest and other monies due or which may become due hereunder, which
constitutes or would constitute an Event of Default hereunder.
11.2 VESTING OF POWERS IN SUCCESSOR
Whenever the conditions of Section 11.1 shall have been duly
observed and performed, any Successor formed by or resulting from such
transaction shall succeed to, and be substituted for, and may exercise every
right and power of the Trust under this Indenture with the same effect as though
the Successor had been named as the Trust herein and thereafter, except in the
case of a lease or other similar disposition of property to the Successor, the
Trust shall be relieved of all obligations and covenants under this Indenture
and the Debentures forthwith upon the Trust delivering to the Debenture Trustee
an opinion of Counsel to the effect that the transaction shall not result in any
material adverse tax consequences to the Trust or the Successor. The Debenture
Trustee will, at the expense of the Successor, execute any documents which it
may be advised by Counsel are necessary or advisable for effecting or evidencing
such release and discharge.
ARTICLE 12
COMPULSORY ACQUISITION
12.1 DEFINITIONS
In this Article:
(a) "AFFILIATE" and "ASSOCIATE" shall have their respective meanings set
forth in the SECURITIES ACT (Alberta);
(b) "DISSENTING DEBENTUREHOLDERS" means a Debentureholder who does not
accept an Offer referred to in Section 12.2 and includes any assignee
of the Debenture of a Debentureholder to whom such an Offer is made,
whether or not such assignee is recognized under this Indenture;
(c) "OFFER" means an offer to acquire outstanding Debentures which is a
take-over bid for Debentures within the meaning set forth in the
SECURITIES ACT (Alberta), where, as of the date of the offer to
acquire, the Debentures that are subject to the offer to acquire,
together with the Offeror's Debentures, constitute in the aggregate 20%
or more of the outstanding principal amount of the Debentures;
(d) "OFFER TO ACQUIRE" includes an acceptance of an offer to sell;
(e) "OFFEROR" means a person, or two or more persons acting jointly or in
concert, who make an Offer to acquire Debentures;
(f) "OFFEROR'S NOTICE" means the notice described in Section 12.3; and
(g) "OFFEROR'S DEBENTURES" means Debentures 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.
12.2 OFFER FOR DEBENTURES
If an Offer for all of the outstanding Debentures (other than
Debentures held by or on behalf of the Offeror or an Affiliate or Associate of
the Offeror) is made and:
(a) 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 Debentureholders representing at least 90% of
the outstanding principal amount of the Debentures, other than the
Offeror's Debentures;
(b) the Offeror is bound to take up and pay for, or has taken up and paid
for the Debentures of the Debentureholders who accepted the Offer; and
(c) the Offeror complies with Sections 12.3 and 12.5;
the Offeror is entitled to acquire, and the Dissenting Debentureholders are
required to sell to the Offeror, the Debentures held by the Dissenting
Debentureholder for the same consideration per Debenture payable or paid, as the
case may be, under the Offer.
12.3 OFFEROR'S NOTICE TO DISSENTING SHAREHOLDERS
Where an Offeror is entitled to acquire Debentures held by
Dissenting Debentureholders pursuant to Section 12.2 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 Debentureholder stating that:
(a) Debentureholders holding at least 90% of the principal amount of all
outstanding Debentures, other than Offeror's Debentures, have accepted
the Offer;
(b) the Offeror is bound to take up and pay for, or has taken up and paid
for, the Debentures of the Debentureholders who accepted the Offer;
(c) Dissenting Debentureholders must transfer their respective Debentures
to the Offeror on the terms on which the Offeror acquired the
Debentures of the Debentureholders who accepted the Offer within 21
days after the date of the sending of the Offeror's Notice; and
(d) Dissenting Debentureholders must send their respective Debenture
certificate(s) to the Debenture Trustee within 21 days after the date
of the sending of the Offeror's Notice.
12.4 DELIVERY OF DEBENTURE CERTIFICATES
A Dissenting Debentureholder to whom an Offeror's Notice is
sent pursuant to Section 12.3 shall, within 21 days after the sending of the
Offeror's Notice, send his or her Debenture certificates(s) to the Debenture
Trustee duly endorsed for transfer.
12.5 PAYMENT OF CONSIDERATION TO DEBENTURE TRUSTEE
Within 21 days after the Offeror sends an Offeror's Notice
pursuant to Section 12.3, the Offeror shall pay or transfer to the Debenture
Trustee, or to such other person as the Debenture Trustee may direct, the cash
or other consideration that is payable to Dissenting Debentureholders pursuant
to Section 12.2. The acquisition by the Offeror of all Debentures held by all
Dissenting Debentureholders shall be effective as of the time of such payment or
transfer.
12.6 CONSIDERATION TO BE HELD IN TRUST
The Debenture Trustee, or the person directed by the Debenture
Trustee, shall hold in trust for the Dissenting Debentureholders the cash or
other consideration they or it receives under Section 12.5. The Debenture
Trustee, or such persons, shall deposit cash in a separate account in a Canadian
chartered bank, or other body corporate, any of whose deposits are insured by
the Canada Deposit Insurance Corporation, and shall place other consideration in
the custody of a Canadian chartered bank or such other body corporate.
12.7 COMPLETION OF TRANSFER OF DEBENTURES TO OFFEROR
Within 30 days after the date of the sending of an Offeror's
Notice pursuant to Section 12.3, the Debenture Trustee, if the Offeror has
complied with Section 12.5, shall:
(a) do all acts and things and execute and cause to be executed all
instruments as in the Debenture Trustee's opinion may be necessary or
desirable to cause the transfer of the Debentures of the Dissenting
Debentureholders to the Offeror;
(b) send to each Dissenting Debentureholder who has complied with Section
12.4 the consideration to which such Dissenting Debentureholder is
entitled under this Article 12; and
(c) send to each Dissenting Debentureholder who has not complied with
Section 12.4 a notice stating that:
(i) his or her Debentures have been transferred to the Offeror;
(ii) the Debenture Trustee or some other person designated in such
notice are holding in trust the consideration for such
Debentures; and
(iii) the Debenture Trustee, or such other person, will send the
consideration to such Dissenting Debentureholder as soon as
possible after receiving such Dissenting Debentureholder's
Debenture certificate(s) or such other documents as the
Debenture Trustee or such other person may require in lieu
thereof;
and the Debenture Trustee is hereby appointed the agent and attorney of
the Dissenting Debentureholders for the purposes of giving effect to
the foregoing provisions.
12.8 COMMUNICATION OF OFFER TO TRUST
An Offeror cannot make an Offer for Debentures unless,
concurrent with the communication of the Offer to any Debentureholder, a copy of
the Offer is provided to the Trust.
ARTICLE 13
MEETINGS OF DEBENTUREHOLDERS
13.1 RIGHT TO CONVENE MEETING
The Debenture Trustee or the Trust may at any time and from
time to time, and the Debenture Trustee shall, on receipt of a written request
of the Trust or a written request signed by the holders of not less than 25% of
the principal amount of the Debentures then outstanding and upon receiving
funding and being indemnified to its reasonable satisfaction by the Trust or by
the Debentureholders signing such request against the costs which may be
incurred in connection with the calling and holding of such meeting, convene a
meeting of the Debentureholders. In the event of the Debenture Trustee failing,
within 30 days after receipt of any such request and such funding of indemnity,
to give notice convening a meeting, the Trust or such Debentureholders, as the
case may be, may convene such meeting. Every such meeting shall be held in the
City of Calgary or at such other place as may be approved or determined by the
Debenture Trustee.
13.2 NOTICE OF MEETINGS
(a) At least 21 days notice of any meeting shall be given to the
Debentureholders in the manner provided in Section 14.2 and a copy of
such notice shall be sent by post to the Debenture Trustee, unless the
meeting has been called by it. Such notice shall state the time when
and the place where the meeting is to be held and shall state briefly
the general nature of the business to be transacted thereat and it
shall not be necessary for any such notice to set out the terms of any
resolution to be proposed or any of the provisions of this Article. The
accidental omission to give notice of a meeting to any holder of
Debentures shall not invalidate any resolution passed at any such
meeting. A holder may waive notice of a meeting either before or after
the meeting.
(b) If the business to be transacted at any meeting by Extraordinary
Resolution or otherwise, or any action to be taken or power exercised
by instrument in writing under Section 13.15, especially affects the
rights of holders of Debentures of one or more series in a manner or to
an extent differing in any material way from that in or to which the
rights of holders of Debentures of any other series are affected
(determined as provided in Sections 13.2(c) and (d)), then:
(i) a reference to such fact, indicating each series of Debentures
in the opinion of the Debenture Trustee so especially affected
(hereinafter referred to as the "ESPECIALLY AFFECTED SERIES")
shall be made in the notice of such meeting, and in any such
case the meeting shall be and be deemed to be and is herein
referred to as a "SERIAL MEETING"; and
(ii) the holders of Debentures of an especially affected series
shall not be bound by any action taken at a Serial Meeting or
by instrument in writing under Section 13.15 unless in
addition to compliance with the other provisions of this
Article 13:
(A) at such Serial Meeting: (I) there are
Debentureholders present in person or by proxy and
representing at least 25% in principal amount of the
Debentures then outstanding of such series, subject
to the provisions of this Article 13 as to quorum at
adjourned meetings; and (II) the resolution is passed
by the affirmative vote of the holders of more than
50% (or in the case of an Extraordinary Resolution
not less than 66 2/3%) of the principal amount of the
Debentures of such series then outstanding voted on
the resolution; or
(B) in the case of action taken or power exercised by
instrument in writing under Section 13.15, such
instrument is signed in one or more counterparts by
the holders of not less than 66 2/3% in principal
amount of the Debentures of such series then
outstanding.
(c) Subject to Section 13.2(d), the determination as to whether any
business to be transacted at a meeting of Debentureholders, or any
action to be taken or power to be exercised by instrument in writing
under Section 13.15, especially affects the rights of the
Debentureholders of one or more series in a manner or to
an extent differing in any material way from that in or to which it
affects the rights of Debentureholders of any other series (and is
therefore an especially affected series) shall be determined by an
opinion of Counsel, which shall be binding on all Debentureholders, the
Debenture Trustee and the Trust for all purposes hereof.
(d) A proposal:
(i) to extend the maturity of Debentures of any particular series
or to reduce the principal amount thereof, the rate of
interest or redemption premium thereon or to impair any
conversion right thereof;
(ii) to modify or terminate any covenant or agreement which by its
terms is effective only so long as Debentures of a particular
series are outstanding; or
(iii) to reduce with respect to Debentureholders of any particular
series any percentage stated in this Section 13.2 or Sections
13.4, 13.12 and 13.15;
shall be deemed to especially affect the rights of the Debentureholders
of such series in a manner differing in a material way from that in
which it affects the rights of holders of Debentures of any other
series, whether or not a similar extension, reduction, modification or
termination is proposed with respect to Debentures of any or all other
series.
13.3 CHAIRMAN
Some person, who need not be a Debentureholder, nominated in
writing by the Debenture Trustee shall be chairman of the meeting and if no
person is so nominated, or if the person so nominated is not present within 15
minutes from the time fixed for the holding of the meeting, a majority of the
Debentureholders present in person or by proxy shall choose some person present
to be chairman.
13.4 QUORUM
Subject to the provisions of Section 13.12, at any meeting of
the Debentureholders a quorum shall consist of Debentureholders present in
person or by proxy and representing at least 25% in principal amount of the
outstanding Debentures and, if the meeting is a Serial Meeting, at least 25% of
the Debentures then outstanding of each especially affected series. If a quorum
of the Debentureholders shall not be present within 30 minutes from the time
fixed for holding any meeting, the meeting, if summoned by the Debentureholders
or pursuant to a request of the Debentureholders, shall be dissolved, but in any
other case the meeting shall be adjourned to the same day in the next week
(unless such day is not a Business Day in which case it shall be adjourned to
the next following Business Day thereafter) at the same time and place and no
notice shall be required to be given in respect of such adjourned meeting. At
the adjourned meeting, the Debentureholders present in person or by proxy shall,
subject to the provisions of Section 13.12, constitute a quorum and may transact
the business for which the meeting was originally convened notwithstanding that
they may not represent 25% of the principal amount of the outstanding Debentures
or of the Debentures then outstanding of each especially affected series. Any
business may be brought before or dealt with at an adjourned meeting which might
have been brought before or dealt with at the original meeting in accordance
with the notice calling the same. No business shall be transacted at any meeting
unless the required quorum be present at the commencement of business.
13.5 POWER TO ADJOURN
The chairman of any meeting at which a quorum of the
Debentureholders is present may, with the consent of the holders of a majority
in principal amount of the Debentures represented thereat, adjourn any such
meeting and no notice of such adjournment need be given except such notice, if
any, as the meeting may prescribe.
13.6 SHOW OF HANDS
Every question submitted to a meeting shall, subject to
Section 13.7, be decided in the first place by a majority of the votes given on
a show of hands except that votes on Extraordinary Resolutions shall be given in
the manner hereinafter provided. At any such meeting, unless a poll is duly
demanded as herein provided, a declaration by the chairman that a resolution has
been carried or carried unanimously or by a particular majority or lost or not
carried by a particular majority shall be conclusive evidence of the fact. The
chairman of any meeting shall be entitled, both on a show of hands and on a
poll, to vote in respect of the Debentures, if any, held by him.
13.7 POLL
On every Extraordinary Resolution, and on any other question
submitted to a meeting when demanded by the chairman or by one or more
Debentureholders or proxies for Debentureholders, a poll shall be taken in such
manner and either at once or after an adjournment as the chairman shall direct.
Questions other than Extraordinary Resolutions shall, if a poll be taken, be
decided by the votes of the holders of a majority in principal amount of the
Debentures and of each especially affected series, if applicable, represented at
the meeting and voted on the poll.
13.8 VOTING
On a show of hands every person who is present and entitled to
vote, whether as a Debentureholder or as proxy for one or more Debentureholders
or both, shall have one vote. On a poll each Debentureholder present in person
or represented by a proxy duly appointed by an instrument in writing shall be
entitled to one vote in respect of each $1,000 principal amount of Debentures of
which he shall then be the holder. In the case of any Debenture denominated in a
currency or currency unit other than Canadian dollars, the principal amount
thereof for these purposes shall be computed in Canadian dollars on the basis of
the conversion of the principal amount thereof at the applicable spot buying
rate of exchange for such other currency or currency unit as reported by the
Bank of Canada at the close of business on the Business Day next preceding the
meeting. Any fractional amounts resulting from such conversion shall be rounded
to the nearest $100. A proxy need not be a Debentureholder. In the case of joint
holders of a Debenture, any one of them present in person or by proxy at the
meeting may vote in the absence of the other or others but in case more than one
of them be present in person or by proxy, they shall vote together in respect of
the Debentures of which they are joint holders.
13.9 PROXIES
A Debentureholder may be present and vote at any meeting of
Debentureholders by an authorized representative. The Trust (in case it convenes
the meeting) or the Debenture Trustee (in any other case) for the purpose of
enabling the Debentureholders to be present and vote at any meeting without
producing their Debentures, and of enabling them to be present and vote at any
such meeting by proxy and of lodging instruments appointing such proxies at some
place other than the place where the meeting is to be held, may from time to
time make and vary such regulations as it shall think fit providing for and
governing any or all of the following matters:
(a) the form of the instrument appointing a proxy, which shall be in
writing, and the manner in which the same shall be executed and the
production of the authority of any person signing on behalf of a
Debentureholder;
(b) the deposit of instruments appointing proxies at such place as the
Debenture Trustee, the Trust or the Debentureholder convening the
meeting, as the case may be, may, in the notice convening the meeting,
direct and the time, if any, before the holding of the meeting or any
adjournment thereof by which the same must be deposited; and
(c) the deposit of instruments appointing proxies at some approved place or
places other than the place at which the meeting is to be held and
enabling particulars of such instruments appointing proxies to be
mailed, faxed, or sent by other electronic means before the meeting to
the Trust or to the Debenture Trustee at the place where the same is to
be held and for the voting of proxies so deposited as though the
instruments themselves were produced at the meeting.
Any regulations so made shall be binding and effective and the votes given in
accordance therewith shall be valid and shall be counted. Save as such
regulations may provide, the only persons who shall be recognized at any meeting
as the holders of any Debentures, or as entitled to vote or be present at the
meeting in respect thereof, shall be Debentureholders and persons whom
Debentureholders have by instrument in writing duly appointed as their proxies.
13.10 PERSONS ENTITLED TO ATTEND MEETINGS
The Trust and the Debenture Trustee, by their respective
officers and directors, the Auditors of the Trust and the legal advisers of the
Trust, the Debenture Trustee or any Debentureholder may attend any meeting of
the Debentureholders, but shall have no vote as such.
13.11 POWERS EXERCISABLE BY EXTRAORDINARY RESOLUTION
In addition to the powers conferred upon them by any other
provisions of this Indenture or by law, a meeting of the Debentureholders shall
have the following powers exercisable from time to time by Extraordinary
Resolution, subject in the case of the matters in paragraphs (a), (b), (c), (d)
and (l) to receipt of the prior approval of the Toronto Stock Exchange (if
applicable) or such other exchange on which the Debentures are then listed:
(a) power to authorize the Debenture Trustee to grant extensions of time
for payment of any principal, premium or interest on the Debentures,
whether or not the principal, premium, or interest, the payment of
which is extended, is at the time due or overdue;
(b) power to sanction any modification, abrogation, alteration, compromise
or arrangement of the rights of the Debentureholders or the Debenture
Trustee against the Trust, or against its property, whether such rights
arise under this Indenture or the Debentures or otherwise;
(c) power to assent to any modification of or change in or addition to or
omission from the provisions contained in this Indenture or any
Debenture which shall be agreed to by the Trust and to authorize the
Debenture Trustee to concur in and execute any indenture supplemental
hereto embodying any modification, change, addition or omission;
(d) power to sanction any scheme for the reconstruction, reorganization or
recapitalization of the Trust or for the consolidation, amalgamation or
merger of the Trust with any other Person or for the sale, leasing,
transfer or other disposition of all or substantially all of the
undertaking, property and assets of the Trust or any part thereof,
provided that no such sanction shall be necessary in respect of any
such transaction if the provisions of Section 11.1 shall have been
complied with;
(e) power to direct or authorize the Debenture Trustee to exercise any
power, right, remedy or authority given to it by this Indenture in any
manner specified in any such Extraordinary Resolution or to refrain
from exercising any such power, right, remedy or authority;
(f) power to waive, and direct the Debenture Trustee to waive, any default
hereunder and/or cancel any declaration made by the Debenture Trustee
pursuant to Section 8.1 either unconditionally or upon any condition
specified in such Extraordinary Resolution;
(g) power to restrain any Debentureholder from taking or instituting any
suit, action or proceeding for the purpose of enforcing payment of the
principal, premium or interest on the Debentures, or for the execution
of any trust or power hereunder;
(h) power to direct any Debentureholder who, as such, has brought any
action, suit or proceeding to stay or discontinue or otherwise deal
with the same upon payment, if the taking of such suit, action or
proceeding shall have been permitted by Section 8.5, of the costs,
charges and expenses reasonably and properly incurred by such
Debentureholder in connection therewith;
(i) power to assent to any compromise or arrangement with any creditor or
creditors or any class or classes of creditors, whether secured or
otherwise, and with holders of any units or other securities of the
Trust;
(j) power to appoint a committee with power and authority (subject to such
limitations, if any, as may be prescribed in the resolution) to
exercise, and to direct the Debenture Trustee to exercise, on behalf of
the Debentureholders, such of the powers of the Debentureholders as are
exercisable by Extraordinary Resolution or other resolution as shall be
included in the resolution appointing the committee. The resolution
making such appointment may provide for payment of the expenses and
disbursements of and compensation to such committee. Such committee
shall consist of such number of persons as shall be prescribed in the
resolution appointing it and the members need not be themselves
Debentureholders. Every such committee may elect its chairman and may
make regulations respecting its quorum, the calling of its meetings,
the filling of vacancies occurring in its number and its procedure
generally. Such regulations may provide that the committee may act at a
meeting at which a quorum is present or may act by minutes signed by
the number of members thereof necessary to constitute a quorum. All
acts of any such committee within the authority delegated to it shall
be binding upon all Debentureholders. Neither the committee nor any
member thereof shall be liable for any loss arising from or in
connection with any action taken or omitted to be taken by them in good
faith;
(k) power to remove the Debenture Trustee from office and to appoint a new
Debenture Trustee or Debenture Trustees provided that no such removal
shall be effective unless and until a new Debenture Trustee or
Debenture Trustees shall have become bound by this Indenture;
(l) power to sanction the exchange of the Debentures for or the conversion
thereof into units, bonds, debentures or other securities or
obligations of the Trust or of any other Person formed or to be formed;
(m) power to authorize the distribution in specie of any shares or
securities received pursuant to a transaction authorized under the
provisions of Section 13.11(l); and
(n) power to amend, alter or repeal any Extraordinary Resolution previously
passed or sanctioned by the Debentureholders or by any committee
appointed pursuant to Section 13.11(j).
Notwithstanding the foregoing provisions of this Section
13.11, none of such provisions shall in any manner allow or permit any
amendment, modification, abrogation or addition to the provisions of Article 5
which could reasonably be expected to detrimentally affect the rights, remedies
or recourse of, or the priority of, any of the Senior Creditors.
13.12 MEANING OF "EXTRAORDINARY RESOLUTION"
(a) The expression "EXTRAORDINARY RESOLUTION" when used in this Indenture
means, subject as hereinafter in this Article provided, a resolution
proposed to be passed as an Extraordinary Resolution at a meeting of
Debentureholders (including an adjourned meeting) duly convened for the
purpose and held in accordance with the provisions of this Article at
which the holders of not less than 25% of the principal amount of the
Debentures then outstanding, and if the meeting is a Serial Meeting, at
which holders of not less than 25% of the principal amount of the
Debentures then outstanding of each especially affected series, are
present in person or by proxy and passed by the favourable votes of the
holders of not less than 66 2/3% of the principal amount of the
Debentures, and if the meeting is a Serial Meeting by the affirmative
vote of the holders of not less than 66 2/3% of each especially
affected series, in each case present or represented by proxy at the
meeting and voted upon on a poll on such resolution.
(b) If, at any such meeting, the holders of not less than 25% of the
principal amount of the Debentures then outstanding and, if the meeting
is a Serial Meeting, 25% of the principal amount of the Debentures then
outstanding of each especially affected series, in each case are not
present in person or by proxy within 30 minutes after the time
appointed for the meeting, then the meeting, if convened by or on the
requisition of Debentureholders, shall be dissolved but in any other
case it shall stand adjourned to such date, being not less than 14 nor
more than 60 days later, and to such place and time as may be appointed
by the chairman.
Not less than 10 days notice shall be given of the time and place of
such adjourned meeting in the manner provided in Section 14.2. Such
notice shall state that at the adjourned meeting the Debentureholders
present in person or by proxy shall form a quorum. At the adjourned
meeting the Debentureholders present in person or by proxy shall form a
quorum and may transact the business for which the meeting was
originally convened and a resolution proposed at such adjourned meeting
and passed thereat by the affirmative vote of holders of not less than
66 2/3% of the principal amount of the Debentures and, if the meeting
is a Serial Meeting, by the affirmative vote of the holders of not less
than 66 2/3% of the principal amount of the Debentures of each
especially affected series, in each case present or represented by
proxy at the meeting and voted upon on a poll shall be an Extraordinary
Resolution within the meaning of this Indenture, notwithstanding that
the holders of not less than 25% in principal amount of the Debentures
then outstanding, and if the meeting is a Serial Meeting, holders of
not less than 25% of the principal amount of the Debentures then
outstanding of each especially affected series, are not present in
person or by proxy at such adjourned meeting.
(c) Votes on an Extraordinary Resolution shall always be given on a poll
and no demand for a poll on an Extraordinary Resolution shall be
necessary.
13.13 POWERS CUMULATIVE
Any one or more of the powers in this Indenture stated to be
exercisable by the Debentureholders by Extraordinary Resolution or otherwise may
be exercised from time to time and the exercise of any one or more of such
powers from time to time shall not be deemed to exhaust the rights of the
Debentureholders to exercise the same or any other such power or powers
thereafter from time to time.
13.14 MINUTES
Minutes of all resolutions and proceedings at every meeting as
aforesaid shall be made and duly entered in books to be from time to time
provided for that purpose by the Debenture Trustee at the expense of the Trust,
and any such minutes as aforesaid, if signed by the chairman of the meeting at
which such resolutions were passed or proceedings had, or by the chairman of the
next succeeding meeting of the Debentureholders, shall be PRIMA FACIE evidence
of the matters therein stated and, until the contrary is proved, every such
meeting, in respect of the proceedings of which minutes shall have been made,
shall be deemed to have been duly held and convened, and all resolutions passed
thereat or proceedings taken thereat to have been duly passed and taken.
13.15 INSTRUMENTS IN WRITING
All actions which may be taken and all powers that may be
exercised by the Debentureholders at a meeting held as hereinbefore in this
Article provided may also be taken and exercised by the holders of 66 2/3% of
the principal amount of all the outstanding Debentures and, if the meeting at
which such actions might be taken would be a Serial Meeting, by the holders of
66 2/3% of the principal amount of the Debentures then outstanding of each
especially affected series, by an instrument in writing signed in one or more
counterparts and the expression "EXTRAORDINARY RESOLUTION" when used in this
Indenture shall include an instrument so signed.
13.16 BINDING EFFECT OF RESOLUTIONS
Every resolution and every Extraordinary Resolution passed in
accordance with the provisions of this Article at a meeting of Debentureholders
shall be binding upon all the Debentureholders, whether present at or absent
from such meeting, and every instrument in writing signed by Debentureholders in
accordance with Section 13.15 shall be binding upon all the Debentureholders,
whether signatories thereto or not, and each and every Debentureholder and the
Debenture Trustee (subject to the provisions for its indemnity herein contained)
shall be bound to give effect accordingly to every such resolution,
Extraordinary Resolution and instrument in writing.
13.17 EVIDENCE OF RIGHTS OF DEBENTUREHOLDERS
(a) Any request, direction, notice, consent or other instrument which this
Indenture may require or permit to be signed or executed by the
Debentureholders may be in any number of concurrent instruments of
similar tenor signed or executed by such Debentureholders.
(b) The Debenture Trustee may, in its discretion, require proof of
execution in cases where it deems proof desirable and may accept such
proof as it shall consider proper.
13.18 CONCERNING SERIAL MEETINGS
If in the opinion of Counsel any business to be transacted at
any meeting, or any action to be taken or power to be exercised by instrument in
writing under Section 13.15, does not adversely affect the rights of the holders
of Debentures of one or more series, the provisions of this Article 13 shall
apply as if the Debentures of such series were not outstanding and no notice of
any such meeting need be given to the holders of Debentures of such series.
Without limiting the generality of the foregoing, a proposal to modify or
terminate any covenant or agreement which is effective only so long as
Debentures of a particular series are outstanding shall be deemed not to
adversely affect the rights of the holders of Debentures of any other series.
ARTICLE 14
NOTICES
14.1 NOTICE TO TRUST
Any notice to the Trust under the provisions of this Indenture
shall be valid and effective if delivered to the Trust c/o HOC at: ▇▇▇▇▇ ▇▇▇▇,
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, Attention: President, and a
copy delivered to Burnet, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, 1400, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, or if given by registered
letter, postage prepaid, to such offices and so addressed and if mailed, shall
be deemed to have been effectively given three days following the mailing
thereof. The Trust may from time to time notify the Debenture Trustee in writing
of a change of address which thereafter, until changed by like notice, shall be
the address of the Trust for all purposes of this Indenture.
14.2 NOTICE TO DEBENTUREHOLDERS
All notices to be given hereunder with respect to the
Debentures shall be deemed to be validly given to the holders thereof if sent by
first class mail, postage prepaid, by letter or circular addressed to such
holders at their post office addresses appearing in any of the registers
hereinbefore mentioned and shall be deemed to have been effectively given three
days following the day of mailing. Accidental error or omission in giving notice
or accidental failure to mail notice to any Debentureholder or the inability of
the Trust to give or mail any notice due to anything beyond the reasonable
control of the Trust shall not invalidate any action or proceeding founded
thereon.
If any notice given in accordance with the foregoing paragraph
would be unlikely to reach the Debentureholders to whom it is addressed in the
ordinary course of post by reason of an interruption in mail service, whether at
the place of dispatch or receipt or both, the Trust shall give such notice by
publication at least once in the cities of Calgary and Toronto (or in such of
those cities as, in the opinion of the Debenture Trustee, is sufficient in the
particular circumstances), each such publication to be made in a daily newspaper
of general circulation in the designated city.
Any notice given to Debentureholders by publication shall be
deemed to have been given on the day on which publication shall have been
effected at least once in each of the newspapers in which publication was
required.
All notices with respect to any Debenture may be given to
whichever one of the holders thereof (if more than one) is named first in the
registers hereinbefore mentioned, and any notice so given shall be sufficient
notice to all holders of any persons interested in such Debenture.
14.3 NOTICE TO DEBENTURE TRUSTEE
Any notice to the Debenture Trustee under the provisions of
this Indenture shall be valid and effective if delivered to the Debenture
Trustee at its principal office in the City of Calgary, at ▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇
▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, President, or if
given by registered letter, postage prepaid, to such office and so addressed
and, if mailed, shall be deemed to have been effectively given three days
following the mailing thereof.
14.4 MAIL SERVICE INTERRUPTION
If by reason of any interruption of mail service, actual or
threatened, any notice to be given to the Debenture Trustee would reasonably be
unlikely to reach its destination by the time notice by mail is deemed to have
been given pursuant to Section 14.3, such notice shall be valid and effective
only if delivered at the appropriate address in accordance with Section 14.3.
ARTICLE 15
CONCERNING THE DEBENTURE TRUSTEE
15.1 NO CONFLICT OF INTEREST
The Debenture Trustee represents to the Trust that at the date
of execution and delivery by it of this Indenture there exists no material
conflict of interest in the role of the Debenture Trustee as a fiduciary
hereunder but if, notwithstanding the provisions of this Section 15.1, such a
material conflict of interest exists, or hereafter arises, the validity and
enforceability of this Indenture, and the Debentures issued hereunder, shall not
be affected in any manner whatsoever by reason only that such material conflict
of interest exists or arises but the Debenture Trustee shall, within 30 days
after ascertaining that it has a material conflict of interest, either eliminate
such material conflict of interest or resign in the manner and with the effect
specified in Section 15.2.
15.2 REPLACEMENT OF DEBENTURE TRUSTEE
The Debenture Trustee may resign its trust and be discharged
from all further duties and liabilities hereunder by giving to the Trust 90 days
notice in writing or such shorter notice as the Trust may accept as sufficient.
If at any time a material conflict of interest exists in the Debenture Trustee's
role as a fiduciary hereunder the Debenture Trustee shall, within 30 days after
ascertaining that such a material conflict of interest exists, either eliminate
such material conflict of interest or resign in the manner and with the effect
specified in this Section 15.2. The validity and enforceability of this
Indenture and of the Debentures issued hereunder shall not be affected in any
manner whatsoever by reason only that such a material conflict of interest
exists. In the event of the Debenture Trustee resigning or being removed or
being dissolved, becoming bankrupt, going into liquidation or otherwise becoming
incapable of acting hereunder, the Trust shall forthwith appoint a new Debenture
Trustee unless a new Debenture Trustee has already been appointed by the
Debentureholders. Failing such appointment by the Trust, the retiring Debenture
Trustee or any Debentureholder may apply to a Judge of the Court of Queen's
Bench of Alberta, on such notice as such Judge may direct at the Trust's
expense, for the appointment of a new Debenture Trustee but any new Debenture
Trustee so appointed by the Trust or by the Court shall be subject to removal as
aforesaid by the Debentureholders and the appointment of such new Debenture
Trustee shall be effective only upon such new Debenture Trustee becoming bound
by this Indenture. Any new Debenture Trustee appointed under any provision of
this Section 15.2 shall be a corporation authorized to carry on the business of
a trust company in all of the Provinces of Canada. On any new appointment the
new Debenture Trustee shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as Debenture Trustee.
Any company into which the Debenture Trustee may be merged or,
with or to which it may be consolidated, amalgamated or sold, or any company
resulting from any merger, consolidation, sale or amalgamation to which the
Debenture Trustee shall be a party, shall be the successor trustee under this
Indenture without the execution of any instrument or any further act.
Nevertheless, upon the written request of the successor Debenture Trustee or of
the Trust, the Debenture Trustee ceasing to act shall execute and deliver an
instrument assigning and transferring to such successor Debenture Trustee, upon
the trusts herein expressed, all the rights, powers and trusts
of the Debenture Trustee so ceasing to act, and shall duly assign, transfer and
deliver all property and money held by such Debenture Trustee to the successor
Debenture Trustee so appointed in its place. Should any deed, conveyance or
instrument in writing from the Trust be required by any new Debenture Trustee
for more fully and certainly vesting in and confirming to it such estates,
properties, rights, powers and trusts, then any and all such deeds, conveyances
and instruments in writing shall on request of said new Debenture Trustee, be
made, executed, acknowledged and delivered by the Trust.
15.3 DUTIES OF DEBENTURE TRUSTEE
In the exercise of the rights, duties and obligations
prescribed or conferred by the terms of this Indenture, the Debenture Trustee
shall act honestly and in good faith and exercise that degree of care, diligence
and skill that a reasonably prudent trustee would exercise in comparable
circumstances.
15.4 RELIANCE UPON DECLARATIONS, OPINIONS, ETC.
In the exercise of its rights, duties and obligations
hereunder the Debenture Trustee may, if acting in good faith, rely, as to the
truth of the statements and accuracy of the opinions expressed therein, upon
statutory declarations, opinions, reports or certificates furnished pursuant to
any covenant, condition or requirement of this Indenture or required by the
Debenture Trustee to be furnished to it in the exercise of its rights and duties
hereunder, if the Debenture Trustee examines such statutory declarations,
opinions, reports or certificates and determines that they comply with Section
15.5, if applicable, and with any other applicable requirements of this
Indenture. The Debenture Trustee may nevertheless, in its discretion, require
further proof in cases where it deems further proof desirable. Without
restricting the foregoing, the Debenture Trustee may rely on an opinion of
Counsel satisfactory to the Debenture Trustee notwithstanding that it is
delivered by a solicitor or firm which acts as solicitors for the Trust.
15.5 EVIDENCE AND AUTHORITY TO DEBENTURE TRUSTEE, OPINIONS, ETC.
The Trust shall furnish to the Debenture Trustee evidence of
compliance with the conditions precedent provided for in this Indenture relating
to any action or step required or permitted to be taken by the Trust or the
Debenture Trustee under this Indenture or as a result of any obligation imposed
under this Indenture, including without limitation, the certification and
delivery of Debentures hereunder, the satisfaction and discharge of this
Indenture and the taking of any other action to be taken by the Debenture
Trustee at the request of or on the application of the Trust, forthwith if and
when (a) such evidence is required by any other Section of this Indenture to be
furnished to the Debenture Trustee in accordance with the terms of this Section
15.5, or (b) the Debenture Trustee, in the exercise of its rights and duties
under this Indenture, gives the Trust written notice requiring it to furnish
such evidence in relation to any particular action or obligation specified in
such notice.
Such evidence shall consist of:
(a) a certificate made by any one officer or director of HOC, on behalf of
the Trust, stating that any such condition precedent has been complied
with in accordance with the terms of this Indenture;
(b) in the case of a condition precedent compliance with which is, by the
terms of this Indenture, made subject to review or examination by a
solicitor, an opinion of Counsel that such condition precedent has been
complied with in accordance with the terms of this Indenture; and
(c) in the case of any such condition precedent compliance with which is
subject to review or examination by auditors or accountants, an opinion
or report of the Auditors of the Trust whom the Debenture Trustee for
such purposes hereby approves, that such condition precedent has been
complied with in accordance with the terms of this Indenture.
Whenever such evidence relates to a matter other than the
certificates and delivery of Debentures and the satisfaction and discharge of
this Indenture, and except as otherwise specifically provided herein, such
evidence may consist of a report or opinion of any solicitor, auditor,
accountant, engineer or appraiser or any other person whose qualifications give
authority to a statement made by him, provided that if such report or opinion is
furnished by a trustee, officer or employer of the Trust it shall be in the form
of a statutory declaration. Such evidence shall be, so far as appropriate, in
accordance with the immediately preceding paragraph of this Section.
Each statutory declaration, certificate, opinion or report
with respect to compliance with a condition precedent provided for in the
Indenture shall include (a) a statement by the person giving the evidence that
he has read and is familiar with those provisions of this Indenture relating to
the condition precedent in question, (b) a brief statement of the nature and
scope of the examination or investigation upon which the statements or opinions
contained in such evidence are based, (c) a statement that, in the belief of the
person giving such evidence, he has made such examination or investigation as is
necessary to enable him to make the statements or give the opinions contained or
expressed therein, and (d) a statement whether in the opinion of such person the
conditions precedent in question have been complied with or satisfied.
The Trust shall furnish to the Debenture Trustee at any time
if the Debenture Trustee reasonably so requires, its certificate that the Trust
has complied with all covenants, conditions or other requirements contained in
this Indenture, the non-compliance with which would, with the giving of notice
or the lapse of time, or both, or otherwise, constitute an Event of Default, or
if such is not the case, specifying the covenant, condition or other requirement
which has not been complied with and giving particulars of such non-compliance.
The Trust shall, whenever the Debenture Trustee so requires, furnish the
Debenture Trustee with evidence by way of statutory declaration, opinion, report
or certificate as specified by the Debenture Trustee as to any action or step
required or permitted to be taken by the Trust or as a result of any obligation
imposed by this Indenture.
15.6 OFFICER'S CERTIFICATES EVIDENCE
Except as otherwise specifically provided or prescribed by
this Indenture, whenever in the administration of the provisions of this
Indenture the Debenture Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or omitting any action
hereunder, the Debenture Trustee, if acting in good faith, may rely upon an
Officer's Certificate.
15.7 EXPERTS, ADVISERS AND AGENTS
The Debenture Trustee may:
(a) employ or retain and act and rely on the opinion or advice of or
information obtained from any solicitor, auditor, valuer, engineer,
surveyor, appraiser or other expert, whether obtained by the Debenture
Trustee or by the Trust, or otherwise, and shall not be liable for
acting, or refusing to act, in good faith on any such opinion or advice
and may pay proper and reasonable compensation for all such legal and
other advice or assistance as aforesaid; and
(b) employ such agents and other assistants as it may reasonably require
for the proper discharge of its duties hereunder, and may pay
reasonable remuneration for all services performed for it (and shall be
entitled to receive reasonable remuneration for all services performed
by it) in the discharge of the trusts hereof and compensation for all
disbursements, costs and expenses made or incurred by it in the
discharge of its duties hereunder and in the management of the trusts
hereof and any solicitors employed or consulted by the Debenture
Trustee may, but need not be, solicitors for the Trust.
15.8 DEBENTURE TRUSTEE MAY DEAL IN DEBENTURES
Subject to Sections 15.1 and 15.3, the Debenture Trustee may,
in its personal or other capacity, buy, sell, lend upon and deal in the
Debentures and generally contract and enter into financial transactions with the
Trust or otherwise, without being liable to account for any profits made
thereby.
15.9 INVESTMENT OF MONIES HELD BY DEBENTURE TRUSTEE
Unless otherwise provided in this Indenture, any monies held
by the Debenture Trustee, which, under the trusts of this Indenture, may or
ought to be invested or which may be on deposit with the Debenture
Trustee or which may be in the hands of the Debenture Trustee, may be invested
and reinvested in the name or under the control of the Debenture Trustee in
securities in which, under the laws of the Province of Alberta, trustees are
authorized to invest trust monies, provided that such securities are expressed
to mature within two years or such shorter period selected to facilitate any
payments expected to be made under this Indenture, after their purchase by the
Debenture Trustee, and unless and until the Debenture Trustee shall have
declared the principal of and interest on the Debentures to be due and payable,
the Debenture Trustee shall so invest such monies at the written direction of
the Trust given in a reasonably timely manner. Pending the investment of any
monies as hereinbefore provided, such monies may be deposited in the name of the
Debenture Trustee in any chartered bank of Canada or, with the consent of the
Trust, in the deposit department of the Debenture Trustee or any other loan or
trust company authorized to accept deposits under the laws of Canada or any
Province thereof at the rate of interest, if any, then current on similar
deposits.
Unless and until the Debenture Trustee shall have declared the
principal of and interest on the Debentures to be due and payable, the Debenture
Trustee shall pay over to the Trust all interest received by the Debenture
Trustee in respect of any investments or deposits made pursuant to the
provisions of this Section.
15.10 DEBENTURE TRUSTEE NOT ORDINARILY BOUND
Except as provided in Section 8.2 and as otherwise
specifically provided herein, the Debenture Trustee shall not, subject to
Section 15.3, be bound to give notice to any person of the execution hereof, nor
to do, observe or perform or see to the observance or performance by the Trust
of any of the obligations herein imposed upon the Trust or of the covenants on
the part of the Trust herein contained, nor in any way to supervise or interfere
with the conduct of the Trust's business, unless the Debenture Trustee shall
have been required to do so in writing by the holders of not less than 25% of
the aggregate principal amount of the Debentures then outstanding or by any
Extraordinary Resolution of the Debentureholders passed in accordance with the
provisions contained in Article 13, and then only after it shall have been
funded and indemnified to its satisfaction against all actions, proceedings,
claims and demands to which it may render itself liable and all costs, charges,
damages and expenses which it may incur by so doing.
15.11 DEBENTURE TRUSTEE NOT REQUIRED TO GIVE SECURITY
The Debenture Trustee shall not be required to give any bond
or security in respect of the execution of the trusts and powers of this
Indenture or otherwise in respect of the premises.
15.12 DEBENTURE TRUSTEE NOT BOUND TO ACT ON TRUST'S REQUEST
Except as in this Indenture otherwise specifically provided,
the Debenture Trustee shall not be bound to act in accordance with any direction
or request of the Trust or of the trustee until a duly authenticated copy of the
instrument or resolution containing such direction or request shall have been
delivered to the Debenture Trustee, and the Debenture Trustee shall be empowered
to act upon any such copy purporting to be authenticated and believed by the
Debenture Trustee to be genuine.
15.13 CONDITIONS PRECEDENT TO DEBENTURE TRUSTEE'S OBLIGATIONS TO ACT HEREUNDER
The obligation of the Debenture Trustee to commence or
continue any act, action or proceeding for the purpose of enforcing the rights
of the Debenture Trustee and of the Debentureholders hereunder shall be
conditional upon the Debentureholders furnishing when required by notice in
writing by the Debenture Trustee, sufficient funds to commence or continue such
act, action or proceeding and indemnity reasonably satisfactory to the Debenture
Trustee to protect and hold harmless the Debenture Trustee against the costs,
charges and expenses and liabilities to be incurred thereby and any loss and
damage it may suffer by reason thereof.
None of the provisions contained in this Indenture shall
require the Debenture 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.
The Debenture Trustee may, before commencing or at any time
during the continuance of any such act, action or proceeding require the
Debentureholders at whose instance it is acting to deposit with the Debenture
Trustee the Debentures held by them for which Debentures the Debenture Trustee
shall issue receipts.
15.14 AUTHORITY TO CARRY ON BUSINESS
The Debenture Trustee represents to the Trust that at the date
of execution and delivery by it of this Indenture it is authorized to carry on
the business of a trust company in the Province of Alberta but if,
notwithstanding the provisions of this Section 15.14, it ceases to be so
authorized to carry on business, the validity and enforceability of this
Indenture and the securities issued hereunder shall not be affected in any
manner whatsoever by reason only of such event but the Debenture Trustee shall,
within 90 days after ceasing to be authorized to carry on the business of trust
company in the Province of Alberta, either become so authorized or resign in the
manner and with the effect specified in Section 15.2.
15.15 COMPENSATION AND INDEMNITY
(a) The Trust shall pay to the Debenture Trustee from time to time
compensation for its services hereunder as agreed separately by the
Trust and the Debenture Trustee, and shall pay or reimburse the
Debenture Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Debenture Trustee in
the administration or execution of its duties under this Indenture
(including the reasonable and documented compensation and disbursements
of its Counsel and all other advisers and assistants not regularly in
its employ), both before any default hereunder and thereafter until all
duties of the Debenture Trustee under this Indenture shall be finally
and fully performed. The Debenture Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust.
(b) The Trust hereby indemnifies and saves harmless the Debenture Trustee
and its directors, officers and employees from and against any and all
loss, damages, charges, expenses, claims, demands, actions or liability
whatsoever which may be brought against the Debenture Trustee or which
it may suffer or incur as a result of or arising out of the performance
of its duties and obligations hereunder save only in the event of the
negligent failure to act, or the wilful misconduct or bad faith of the
Debenture Trustee. This indemnity will survive the termination or
discharge of this Indenture and the resignation or removal of the
Debenture Trustee. The Debenture Trustee shall notify the Trust
promptly of any claim for which it may seek indemnity. The Trust shall
defend the claim and the Debenture Trustee shall co-operate in the
defence. The Debenture Trustee may have separate counsel and the Trust
shall pay the reasonable fees and expenses of such Counsel. The Trust
need not pay for any settlement made without its consent, which consent
must not be unreasonably withheld. This indemnity shall survive the
resignation or removal of the Debenture Trustee or the discharge of
this Indenture.
(c) The Trust need not reimburse any expense or indemnify against any loss
or liability incurred by the Debenture Trustee through negligence or
bad faith or breach of the Debenture Trustee's duties hereunder.
15.16 ACCEPTANCE OF TRUST
The Debenture Trustee hereby accepts the trusts in this
Indenture declared and provided for and agrees to perform the same upon the
terms and conditions herein set forth and to hold all rights, privileges and
benefits conferred hereby and by law in trust for the various persons who shall
from time to time be Debentureholders, subject to all the terms and conditions
herein set forth.
ARTICLE 16
SUPPLEMENTAL INDENTURES
16.1 SUPPLEMENTAL INDENTURES
From time to time the Debenture Trustee and, when authorized
by a resolution of the directors of HOC, on behalf of the Trust, the Trust, may,
and they shall when required by this Indenture, execute, acknowledge
and deliver by their proper officers deeds or indentures supplemental hereto
which thereafter shall form part hereof, for any one or more of the following
purposes:
(a) providing for the issuance of Additional Debentures under this
Indenture;
(b) adding to the covenants of the Trust herein contained for the
protection of the Debentureholders, or of the Debentures of any series,
or providing for events of default, in addition to those herein
specified;
(c) making such provisions not inconsistent with this Indenture as may be
necessary or desirable with respect to matters or questions arising
hereunder, including the making of any modifications in the form of the
Debentures which do not affect the substance thereof and which in the
opinion of the Debenture Trustee relying on an opinion of Counsel will
not be prejudicial to the interests of the Debentureholders;
(d) evidencing the succession, or successive successions, of others to the
Trust and the covenants of and obligations assumed by any such
successor in accordance with the provisions of this Indenture;
(e) giving effect to any Extraordinary Resolution passed as provided in
Article 13; and
(f) for any other purpose not inconsistent with the terms of this
Indenture.
Unless the supplemental indenture requires the consent or
concurrence of Debentureholders or the holders of a particular series of
Debentures, as the case may be, by Extraordinary Resolution, the consent or
concurrence of Debentureholders or the holders of a particular series of
Debentures, as the case may be, shall not be required in connection with the
execution, acknowledgement or delivery of a supplemental indenture. The Trust
and the Debenture Trustee may amend any of the provisions of this Indenture
related to matters of United States law or the issuance of Debentures into the
United States in order to ensure that such issuances can be made in accordance
with applicable law in the United States without the consent or approval of the
Debentureholders. Further, the Trust and the Debenture Trustee may without the
consent or concurrence of the Debentureholders or the holders of a particular
series of Debentures, as the case may be, by supplemental indenture or
otherwise, make any changes or corrections in this Indenture which it shall have
been advised by Counsel are required for the purpose of curing or correcting any
ambiguity or defective or inconsistent provisions or clerical omissions or
mistakes or manifest errors contained herein or in any indenture supplemental
hereto or any Written Direction of the Trust provided for the issue of
Debentures, providing that in the opinion of the Debenture Trustee (relying upon
an opinion of Counsel) the rights of the Debentureholders are in no way
prejudiced thereby.
ARTICLE 17
EXECUTION AND FORMAL DATE
17.1 EXECUTION
This Indenture may be simultaneously executed in several
counterparts, each of which when so executed shall be deemed to be an original
and such counterparts together shall constitute one and the same instrument.
17.2 CONTRACTS OF THE TRUST
The parties hereby acknowledge that in addition to entering
into this Indenture on its own behalf, HOC is entering into this Indenture on
behalf of the Trust and the obligations of the Trust hereunder shall not be
personally binding upon HOC or any of the registered or beneficial unitholders
of the Trust, or any annuitant under a plan of which a unitholder of the Trust
acts as trustee or carrier, and resort shall not be had to, nor shall recourse
or satisfaction be sought from, any of such persons or the private property of
any such persons. Any recourse against the Trust or any of the aforementioned
persons 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 Indenture 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 between the Debenture Trustee and HOC dated November
27, 2002, as amended from time to time.
17.3 FORMAL DATE
For the purpose of convenience this Indenture may be referred
to as bearing the formal date of January 29, 2004 irrespective of the actual
date of execution hereof.
IN WITNESS whereof the parties hereto have executed these
presents under their respective corporate seals and the hands of their proper
officers in that behalf.
HARVEST ENERGY TRUST, by Harvest
Operations Corp.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
HARVEST OPERATIONS CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
VALIANT TRUST COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE "A"
TO THE TRUST INDENTURE AMONG
HARVEST ENERGY TRUST, HARVEST OPERATIONS CORP. AND
VALIANT TRUST COMPANY
FORM OF DEBENTURE
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SCHEDULE "A"
THIS DEBENTURE IS A GLOBAL DEBENTURE WITHIN THE MEANING OF THE INDENTURE HEREIN
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF.
THIS DEBENTURE MAY NOT BE TRANSFERRED TO OR EXCHANGED FOR DEBENTURES REGISTERED
IN THE NAME OF ANY PERSON OTHER THAN THE DEPOSITORY OR A NOMINEE THEREOF AND NO
SUCH TRANSFER MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE. EVERY DEBENTURE AUTHENTICATED AND DELIVERED UPON REGISTRATION OF,
TRANSFER OF, OR IN EXCHANGE FOR, OR IN LIEU OF, THIS DEBENTURE SHALL BE A GLOBAL
DEBENTURE SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
UNLESS THIS DEBENTURE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
CANADIAN DEPOSITORY FOR SECURITIES LIMITED ("CDS") TO HARVEST ENERGY TRUST OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY DEBENTURE
ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS & CO., OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS, (AND ANY
PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF CDS) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE AS THE REGISTERED
HOLDER HEREOF, CDS & CO. HAS AN INTEREST HEREIN.
CUSIP ▇▇▇▇▇▇▇▇▇
NO. ______ [__]
HARVEST ENERGY TRUST
(A TRUST GOVERNED BY THE LAWS OF ALBERTA)
9.00% CONVERTIBLE UNSECURED SUBORDINATED DEBENTURE
DUE MAY 31, 2009
HARVEST ENERGY TRUST (the "TRUST") for value received hereby
acknowledges itself indebted and, subject to the provisions of the trust
indenture (the "INDENTURE") dated as of January 29, 2004 among the Trust,
Harvest Operations Corp. and Valiant Trust Company (the "DEBENTURE TRUSTEE"),
promises to pay to the registered holder hereof on May 31, 2009 (the "MATURITY
DATE") or on such earlier date as the principal amount hereof may become due in
accordance with the provisions of the Indenture the principal sum of Sixty
Million Dollars ($60,000,000) in lawful money of Canada on presentation and
surrender of this Initial Debenture at the main branch of the Debenture Trustee
in Calgary, Alberta or Toronto, Ontario in accordance with the terms of the
Indenture and, subject as hereinafter provided, to pay interest on the principal
amount hereof from the date hereof, or from the last Interest Payment Date to
which interest shall have been paid or made available for payment hereon,
whichever is later, at the rate of 9.00% per annum, in like money, in arrears in
equal (with the exception of the first interest payment which will include
interest from January 29, 2004 as set forth below) semi-annual instalments (less
any tax required by law to be deducted) on May 31 and November 30 in each year
commencing on May 31, 2004 and the last payment (representing interest payable
from the last Interest Payment Date to, but excluding, the Maturity Date) to
fall due on the Maturity Date and, should the Trust at any time make default in
the payment of any principal or interest, to pay interest on the amount in
default at the same rate, in like money and on the same dates. For certainty,
the first interest payment will include interest accrued from January 29, 2004
to, but excluding May 31, 2004, which will be equal to $30.33 for each $1,000
principal amount of the Initial Debentures.
Interest hereon shall be payable by cheque mailed by prepaid
ordinary mail or by electronic transfer of funds to the registered holder hereof
and, subject to the provisions of the Indenture, the mailing of such cheque
shall, to the extent of the sum represented thereby (plus the amount of any tax
withheld), satisfy and discharge all liability for interest on this Initial
Debenture.
This Debenture is one of the 9.00% Convertible Unsecured
Subordinated Debentures (referred to herein as the "Initial Debenture") of the
Trust issued or issuable in one or more series under the provisions of the
Indenture. The Initial Debentures authorized for issue immediately are limited
to an aggregate principal amount of $60,000,000 in lawful money of Canada.
Reference is hereby expressly made to the Indenture for a description of the
terms and conditions upon which the Initial Debentures are or are to be issued
and held and the rights and remedies of the holders of the Initial Debentures
and of the Trust and of the Debenture Trustee, all to the same effect
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as if the provisions of the Indenture were herein set forth to all of which
provisions the holder of this Initial Debenture by acceptance hereof assents.
The Initial Debentures are issuable only in denominations of
$1,000 and integral multiples thereof. Upon compliance with the provisions of
the Indenture, Debentures of any denomination may be exchanged for an equal
aggregate principal amount of Debentures in any other authorized denomination or
denominations.
The whole, or if this Initial Debenture is a denomination in
excess of $1,000, any part which is $1,000 or an integral multiple thereof, of
the principal of this Initial Debenture is convertible, at the option of the
holder hereof, upon surrender of this Initial Debenture at the principal office
of the Debenture Trustee in Calgary, Alberta or through its sub-agent, Equity
Transfer Services Inc., in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, at any time prior to the close of
business on the Maturity Date or, if this Initial Debenture is called for
redemption on or prior to such date, then, to the extent so called for
redemption, up to but not after the close of business on the last Business Day
immediately preceding the date specified for redemption of this Initial
Debenture, into Trust Units (without adjustment for interest accrued hereon or
for dividends or distributions on Trust Units issuable upon conversion) at a
conversion price of $14.00 (the "CONVERSION PRICE") per Trust Unit, being a rate
of approximately 71.4286 Trust Units for each $1,000 principal amount of Initial
Debentures, all subject to the terms and conditions and in the manner set forth
in the Indenture. No Debentures may be converted during the five Business Days
preceding and including November 30 and May 31 in each year, commencing May 31,
2004, as the registers of the Debenture Trustee will be closed during such
periods. The Indenture makes provision for the adjustment of the Conversion
Price in the events therein specified. No fractional Trust Units will be issued
on any conversion but in lieu thereof, the Trust will satisfy such fractional
interest by a cash payment equal to the market price of such fractional interest
determined in accordance with the Indenture. Holders converting their Debentures
will receive accrued and unpaid interest thereon. If a Debenture is surrendered
for conversion on an Interest Payment Date or during the five preceding Business
Days, the person or persons entitled to receive Trust Units in respect of the
Debenture so surrendered for conversion shall not become the holder or holders
of record of such Trust Units until the Business Day following such Interest
Payment Date.
This Initial Debenture may be redeemed at the option of the
Trust on the terms and conditions set out in the Indenture at the redemption
price therein and herein set out provided that this Initial Debenture is not
redeemable on or before May 31, 2007, except in the event of the satisfaction of
certain conditions after a Change of Control has occurred. After May 31, 2007
and on or prior to May 31, 2008, the Initial Debentures are redeemable at the
option of the Trust at a price equal to $1,050 per $1,000 principal amount of
Debentures and, in addition thereto, at the time of redemption, the Trust shall
pay to the holder accrued and unpaid interest and otherwise on the terms and
conditions described in the Indenture. After May 31, 2008 and prior to maturity,
the Initial Debentures are redeemable at the option of the Trust at a price
equal to $1,025 per $1,000 principal amount of Debentures and, in addition
thereto, at the time of redemption, the Trust shall pay to the holder accrued
and unpaid interest and otherwise on the terms and conditions described in the
Indenture. The Trust may, on notice as provided in the Indenture, at its option
and subject to any applicable regulatory approval, elect to satisfy its
obligation to pay all or any portion of the applicable Redemption Price by the
issue of that number of Trust Units obtained by dividing the applicable
Redemption Price by 95% of the weighted average trading price of the Trust Units
on the Toronto Stock Exchange for the 20 consecutive trading days ending on the
fifth trading day preceding the Redemption Date.
Upon the occurrence of a Change of Control of the Trust, the
Trust is required to make an offer to purchase all of the Initial Debentures at
a price equal to 101% of the principal amount of such Initial Debentures plus
accrued and unpaid interest (if any) up to, but excluding, the date the Initial
Debentures are so repurchased (the "OFFER"). If 90% or more of the principal
amount of all Debentures outstanding on the date the Trust provides notice of a
Change of Control to the Debenture Trustee have been tendered for purchase
pursuant to the Offer, the Trust has the right to redeem and shall redeem all
the remaining outstanding Initial Debentures on the same date and at the same
price.
If an Offer is made for Initial Debentures, and 90% or more of
the principal amount of all the Initial Debentures (other than Initial
Debentures held at the date of the Offer by or on behalf of the Offeror,
Associates or Affiliates of the Offeror or anyone acting jointly or in concert
with the Offeror) are taken up and paid for by the Offeror, the Offeror will be
entitled to acquire the Initial Debentures of those holders who did not accept
the Offer on the same terms as the Offeror acquired the first 90% of the
principal amount of the Initial Debentures.
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The Trust may, on notice as provided in the Indenture, at its
option and subject to any applicable regulatory approval, elect to satisfy the
obligation to repay all or any portion of the principal amount of this Initial
Debenture due on the Maturity Date by the issue of that number of Freely
Tradeable Trust Units obtained by dividing the principal amount of this Initial
Debenture to be paid for in Trust Units pursuant to the exercise by the Trust of
the Unit Repayment Right by 95% of the weighted average trading price of the
Trust Units on the Toronto Stock Exchange for the 20 consecutive trading days
ending on the fifth trading day preceding the Maturity Date.
The indebtedness evidenced by this Initial Debenture, and by
all other Initial Debentures now or hereafter certified and delivered under the
Indenture, is a direct unsecured obligation of the Trust, and is subordinated in
right of payment, to the extent and in the manner provided in the Indenture, to
the prior payment of all Senior Indebtedness (including any indebtedness to
trade creditors), whether outstanding at the date of the Indenture or thereafter
created, incurred, assumed or guaranteed.
The principal hereof may become or be declared due and payable
before the stated maturity in the events, in the manner, with the effect and at
the times provided in the Indenture.
The Indenture contains provisions making binding upon all
holders of Debentures outstanding thereunder (or in certain circumstances
specific series of Debentures) resolutions passed at meetings of such holders
held in accordance with such provisions and instruments signed by the holders of
a specified majority of Debentures outstanding (or specific series), which
resolutions or instruments may have the effect of amending the terms of this
Initial Debenture or the Indenture.
The Indenture contains provisions disclaiming any personal
liability on the part of holders of Trust Units, officers and directors of
Harvest Operations Corp. or the trustee, manager and other agents of the Trust
in respect of any obligation or claim arising out of the Indenture or this
Debenture.
This Initial Debenture may only be transferred, upon
compliance with the conditions prescribed in the Indenture, in one of the
registers to be kept at the principal office of the Debenture Trustee in
Calgary, Alberta or Toronto, Ontario and in such other place or places and/or by
such other registrars (if any) as the Trust with the approval of the Debenture
Trustee may designate. No transfer of this Initial Debenture shall be valid
unless made on the register by the registered holder hereof or his executors or
administrators or other legal representatives, or his or their attorney duly
appointed by an instrument in form and substance satisfactory to the Debenture
Trustee or other registrar, and upon compliance with such reasonable
requirements as the Debenture Trustee and/or other registrar may prescribe and
upon surrender of this Initial Debenture for cancellation. Thereupon a new
Initial Debenture or Initial Debentures in the same aggregate principal amount
shall be issued to the transferee in exchange hereof.
This Initial Debenture shall not become obligatory for any
purpose until it shall have been certified by the Debenture Trustee under the
Indenture.
Capitalized words or expressions used in this Initial
Debenture shall, unless otherwise defined herein, have the meaning ascribed
thereto in the Indenture.
IN WITNESS WHEREOF HARVEST ENERGY TRUST has caused this
Debenture to be signed by its authorized representatives as of the 29th day of
January, 2004.
HARVEST ENERGY TRUST, by Harvest
Operations Corp.
By:
-------------------------------
A-4
(FORM OF DEBENTURE TRUSTEE'S CERTIFICATE)
This Initial Debenture is one of the 9.00% Convertible
Unsecured Subordinated Debentures due May 31, 2009 referred to in the Indenture
within mentioned.
VALIANT TRUST COMPANY
By: __________________________
(Authorized Officer)
(FORM OF REGISTRATION PANEL)
(No writing hereon except by Debenture Trustee or other registrar)
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DATE OF REGISTRATION IN WHOSE NAME REGISTERED SIGNATURE OF DEBENTURE TRUSTEE OR REGISTRAR
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A-5
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto __________________________________, whose address and social
insurance number, if applicable, are set forth below, this Initial Debenture (or
$______________ principal amount hereof*) of HARVEST ENERGY TRUST standing in
the name(s) of the undersigned in the register maintained by the Trust with
respect to such Initial Debenture and does hereby irrevocably authorize and
direct the Debenture Trustee to transfer such Initial Debenture in such
register, with full power of substitution in the premises.
Dated:__________________________________________________________________________
Address of Transferee:__________________________________________________________
(Street Address, City, Province and Postal Code)
Social Insurance Number of Transferee, if applicable:___________________________
*If less than the full principal amount of the within Initial Debenture is to be
transferred, indicate in the space provided the principal amount (which must be
$1,000 or an integral multiple thereof, unless you hold an Initial Debenture in
a non-integral multiple of 1,000 by reason of your having exercised your right
to exchange upon the making of an Offer, in which case such Initial Debenture is
transferable only in its entirety) to be transferred.
1. The signature(s) to this assignment must correspond with the name(s) as
written upon the face of this Initial Debenture in every particular
without alteration or any change whatsoever. The signature(s) must be
guaranteed by a Canadian chartered bank or trust company or by a member
of an acceptable Medallion Guarantee Program. Notarized or witnessed
signatures are not acceptable as guaranteed signatures. The Guarantor
must affix a stamp bearing the actual words: "SIGNATURE GUARANTEED".
2. The registered holder of this Initial Debenture is responsible for the
payment of any documentary, stamp or other transfer taxes that may be
payable in respect of the transfer of this Debenture.
Signature of Guarantor:
_________________________________ ___________________________________________
Authorized Officer Signature of transferring registered holder
_________________________________
Name of Institution
A-6
EXHIBIT "1"
TO CDS GLOBAL DEBENTURE
HARVEST ENERGY TRUST
9.00% CONVERTIBLE UNSECURED SUBORDINATED DEBENTURES
DUE MAY 31, 2009
Initial Principal Amount: $60,000,000 CUSIP: ▇▇▇▇▇▇▇▇▇
Authorization: ________________________
ADJUSTMENTS
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DATE AMOUNT OF INCREASE AMOUNT OF DECREASE NEW PRINCIPAL AMOUNT AUTHORIZATION
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B-1
SCHEDULE "B"
TO THE TRUST INDENTURE AMONG
HARVEST ENERGY TRUST, HARVEST OPERATIONS CORP. AND
VALIANT TRUST COMPANY
FORM OF REDEMPTION NOTICE
B-1
SCHEDULE "B"
FORM OF REDEMPTION NOTICE
HARVEST ENERGY TRUST
9.00% CONVERTIBLE UNSECURED SUBORDINATED DEBENTURES
REDEMPTION NOTICE
To: Holders of 9.00% Convertible Unsecured Subordinated Debentures (the
"DEBENTURES") of Harvest Energy Trust (the "TRUST")
Note: All capitalized terms used herein have the meaning ascribed thereto in
the Indenture mentioned below, unless otherwise indicated.
Notice is hereby given pursuant to Section 4.3 of the trust
indenture (the "INDENTURE") dated as of January 29, 2004 among the Trust,
Harvest Operations Corp. and Valiant Trust Company (the "DEBENTURE Trustee"),
that the aggregate principal amount of $______ of the $________ of Debentures
outstanding will be redeemed as of o (the "REDEMPTION DATE"), upon payment of a
redemption amount of $o for each $1,000 principal amount of Debentures, being
equal to the aggregate of (i) $o (the "REDEMPTION PRICE"), and (ii) all accrued
and unpaid interest hereon to but excluding the Redemption Date (collectively,
the "TOTAL REDEMPTION PRICE").
The Total Redemption Price will be payable upon presentation
and surrender of the Debentures called for redemption at the following corporate
trust office:
VALIANT TRUST COMPANY
▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
The interest upon the principal amount of Debentures called
for redemption shall cease to be payable from and after the Redemption Date,
unless payment of the Total Redemption Price shall not be made on presentation
for surrender of such Debentures at the above-mentioned corporate trust office
on or after the Redemption Date or prior to the setting aside of the Total
Redemption Price pursuant to the Indenture.
[PURSUANT TO SECTION 4.6 OF THE INDENTURE, THE TRUST HEREBY
IRREVOCABLY ELECTS TO SATISFY ITS OBLIGATION TO PAY $___ OF THE REDEMPTION PRICE
PAYABLE TO HOLDERS OF DEBENTURES IN ACCORDANCE WITH THIS NOTICE BY ISSUING AND
DELIVERING TO THE HOLDERS THAT NUMBER OF FREELY TRADEABLE TRUST UNITS OBTAINED
BY DIVIDING THE REDEMPTION PRICE BY 95% OF THE THEN CURRENT MARKET PRICE OF THE
TRUST UNITS.]
No fractional Trust Units shall be delivered upon the exercise
by the Trust of the above-mentioned redemption right but, in lieu thereof, the
Trust shall pay the cash equivalent thereof determined on the basis of the
Current Market Price of Trust Units on the Redemption Date (less any tax
required to be deducted, if any).
In this connection, upon presentation and surrender of the
Debentures for payment on the Redemption Date, the Trust shall, on the
Redemption Date, make the delivery to the Debenture Trustee, at the
above-mentioned corporate trust office, for delivery to and on account of the
holders, of certificates representing the Freely Tradeable Trust Units to which
holders are entitled together with the cash equivalent in lieu of fractional
Trust Units, cash for all accrued and unpaid interest up to, but excluding, the
Redemption Date, and, if only a portion of the Debentures are to be redeemed by
issuing Freely Tradeable Trust Units, cash representing the balance of the
Redemption Price.
DATED:
HARVEST ENERGY TRUST,
by Harvest Operations Corp.
___________________________________
(Authorized Director or Officer of
Harvest Operations Corp.)
C-1
SCHEDULE "C"
TO THE TRUST INDENTURE AMONG
HARVEST ENERGY TRUST, HARVEST OPERATIONS CORP. AND
VALIANT TRUST COMPANY
FORM OF MATURITY NOTICE
C-1
SCHEDULE "C"
FORM OF MATURITY NOTICE
HARVEST ENERGY TRUST
9.00% CONVERTIBLE UNSECURED SUBORDINATED DEBENTURES
MATURITY NOTICE
To: Holders of 9.00% Convertible Unsecured Subordinated Debentures (the
"DEBENTURES") of Harvest Energy Trust (the "TRUST")
Note: All capitalized terms used herein have the meaning ascribed thereto in
the Indenture mentioned below, unless otherwise indicated.
Notice is hereby given pursuant to Section 4.10(b) of the
trust indenture (the "INDENTURE") dated as of January 29, 2004 among the Trust,
Harvest Operations Corp. and Valiant Trust Company, as trustee (the "DEBENTURE
TRUSTEE"), that the Debentures are due and payable as of May 31, 2009 (the
"MATURITY DATE") and the Trust elects to satisfy its obligation to pay to
holders of Debentures the principal amount of all of the Debentures outstanding
on the Maturity Date by issuing and delivering to the holders that number of
Freely Tradeable Trust Units equal to the number obtained by dividing such
principal amount of the Debentures by 95% of the Current Market Price of Trust
Units on the Maturity Date.
No fractional Trust Units shall be delivered on exercise by
the Trust of the above mentioned repayment right but, in lieu thereof, the Trust
shall pay the cash equivalent thereof determined on the basis of the Current
Market Price of Trust Units on the Maturity Date (less any tax required to be
deducted, if any).
In this connection, upon presentation and surrender of the
Debentures for payment on the Maturity Date, the Trust shall, on the Maturity
Date, make delivery to the Debenture Trustee, at its principal corporate trust
office in Calgary, Alberta, for delivery to and on account of the holders, of
certificates representing the Freely Tradeable Trust Units to which holders are
entitled together with the cash equivalent in lieu of fractional Trust Units,
cash for all accrued and unpaid interest up to, but excluding, the Maturity Date
and if only a portion of the Debentures are to be repaid by issuing Freely
Tradeable Trust Units, cash representing the balance of the principal amount and
premium (if any) due on the Maturity Date.
DATED:
HARVEST ENERGY TRUST,
by Harvest Operations Corp.
___________________________________
(Authorized Director or Officer of
Harvest Operations Corp.)
D-1
SCHEDULE "D"
TO THE TRUST INDENTURE AMONG
HARVEST ENERGY TRUST, HARVEST OPERATIONS CORP. AND
VALIANT TRUST COMPANY
FORM OF NOTICE OF CONVERSION
D-1
SCHEDULE "D"
FORM OF NOTICE OF CONVERSION
CONVERSION NOTICE
TO: HARVEST ENERGY TRUST
Note: All capitalized terms used herein have the meaning ascribed thereto in
the Indenture mentioned below, unless otherwise indicated.
The undersigned registered holder of 9.00% Convertible
Unsecured Subordinated Debentures bearing Certificate No. o irrevocably elects
to convert such Debentures (or $o principal amount thereof*) in accordance with
the terms of the Indenture referred to in such Debentures and tenders herewith
the Debentures, and, if applicable, directs that the Trust Units of Harvest
Energy Trust issuable upon a conversion be issued and delivered to the person
indicated below. (If Trust Units are to be issued in the name of a person other
than the holder, all requisite transfer taxes must be tendered by the
undersigned).
Dated: ________________________ ________________________________________
(Signature of Registered Holder)
* If less than the full principal amount of the Debentures, indicate in
the space provided the principal amount (which must be $1,000 or
integral multiples thereof).
NOTE: If Trust Units are to be issued in the name of a person other than
the holder, the signature must be guaranteed by a chartered bank, a
trust company or by a member of an acceptable Medallion Guarantee
Program. The Guarantor must affix a stamp bearing the actual words:
"SIGNATURE GUARANTEED".
(Print name in which Trust Units are to be issued, delivered and registered)
Name:_______________________________________
____________________________________________
(Address)
____________________________________________
(City, Province and Postal Code)
Name of guarantor:_______________________________________
Authorized signature: ___________________________________
E-1
SCHEDULE "E"
TO THE TRUST INDENTURE AMONG
HARVEST ENERGY TRUST, HARVEST OPERATIONS CORP. AND
VALIANT TRUST COMPANY
FORM OF DECLARATION FOR REMOVAL OF LEGEND
E-1
SCHEDULE "E"
FORM OF DECLARATION FOR REMOVAL OF LEGEND
TO: Valiant Trust Company, as trustee and registrar of the 9.00%
Convertible Unsecured Subordinated Debentures and Trust Units of
Harvest Energy Trust
The undersigned (a) acknowledges that the sale of the
securities of Harvest Energy Trust (the "TRUST") to which this declaration
relates is being made in reliance on Rule 904 of Regulation S under the UNITED
STATES SECURITIES ACT OF 1933, as amended (the "1933 ACT") and (b) certifies
that (1) it is not an affiliate of the Trust (as defined in Rule 405 under the
1933 Act), (2) the offer of such securities was not made to a person in the
United States, and either (A) at the time the buy order was originated, the
buyer was outside the United States, or the seller and any person acting on its
behalf reasonably believe that the buyer was outside the United States, or (B)
the transaction was executed on or through the facilities of the Toronto Stock
Exchange and neither the seller nor any person acting on its behalf knows that
the transaction has been prearranged with a buyer in the United States, (3)
neither the seller nor any affiliate of the seller nor any person acting on any
of their behalf has engaged or will engage in any directed selling efforts in
the United States in connection with the offer and sale of such securities, (4)
the sale is bona fide and not for the purpose of "washing off" the resale
restrictions imposed because the securities are "restricted securities" (as such
term is defined in Rule 144(a)(3) under the 1933 Act), (5) the seller does not
intend to replace the securities sold in reliance on Rule 904 of the 1933 Act
with fungible unrestricted securities, and (6) the contemplated sale is not a
transaction, or part of a series of transactions which, although in technical
compliance with Regulation S, is part of a plan or scheme to evade the
registration provisions of the 1933 Act. Terms used herein have the meanings
given to them by Regulation S.
Dated:_____________________ By: _____________________________
Name: ___________________________
Title: __________________________
