Exhibit 1.1
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NCE STRATEGIC ENERGY MANAGEMENT CORP.
(the "Manager")
- and -
COMPUTERSHARE TRUST COMPANY OF CANADA
(the "Trustee")
NCE STRATEGIC ENERGY FUND
TRUST AGREEMENT
February 14, 2002
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TABLE OF CONTENTS
ARTICLE 1 - INTERPRETATION....................................................2
1.1 Definitions..........................................................2
1.2 Headings ........................................................... 6
1.3 Number and Gender....................................................6
1.4 Currency ............................................................7
1.5 Generally Accepted Accounting Principles.............................7
1.6 Statutes ............................................................7
1.7 References to Articles, etc..........................................7
1.8 Day Not a Business Day...............................................7
1.9 References to Acts Performed by the Fund.............................7
ARTICLE 2 - THE FUND..........................................................8
2.1 Establishment of the Fund............................................8
2.2 Purpose ...........................................................8
2.3 Name of Fund ........................................................8
2.4 Investment Objectives................................................8
2.5 General Investment Restrictions......................................8
2.6 Specific Investment Restrictions.....................................9
2.7 Principal Office....................................................11
ARTICLE 3 - TRUST UNITS AND VALUATION........................................11
3.1 Trust Units .......................................................11
3.2 Rights, Warrants and Options........................................12
3.3 Issue of Trust Units................................................12
3.4 Restriction on Non-Resident Ownership...............................12
3.5 Calculation .......................................................13
3.6 Method of Determining Net Asset Value per Trust Unit................13
3.7 Valuation Rules.....................................................13
3.8 Publication .......................................................14
ARTICLE 4 - UNITHOLDERS AND UNITHOLDER MEETINGS..............................15
4.1 Status of Unitholders...............................................15
4.2 Liability of Unitholders............................................15
4.3 Liability under Contracts...........................................16
4.4 Meetings of Unitholders.............................................16
4.5 Notice of Meetings..................................................16
4.6 Quorum .......................................................17
4.7 Voting Rights of Unitholders........................................17
4.8 Procedural Matters..................................................17
4.9 Binding Effect of Resolutions.......................................18
4.10 Resolution in Lieu of Meeting....................................18
ARTICLE 5 - REDEMPTION OF UNITS AND MARKET PURCHASES.........................18
5.1 Right to Redeem.....................................................18
5.2 Redemption Price and Payment........................................18
5.3 Suspension of Redemption Right......................................19
5.4 Book-Based System Redemptions.......................................19
5.5 Mandatory Market Purchase Program...................................20
5.6 Purchases in the Market.............................................20
5.7 Restrictions on Purchases...........................................20
5.8 Cancellation .......................................................21
ARTICLE 6 - POWERS AND DUTIES OF TRUSTEE.....................................21
6.1 General Powers......................................................21
6.2 Specific Powers and Authorities.....................................21
6.3 Duties of the Trustee...............................................23
6.4 Custodian of Assets.................................................24
6.5 Subscription Proceeds...............................................24
6.6 Dealing with Others and Self........................................24
6.7 Trustee May Sell Assets to Meet Fund Obligations....................25
ARTICLE 7 - POWERS AND DUTIES OF MANAGER.....................................25
7.1 Powers of Manager...................................................25
7.2 Rights and Duties of Manager........................................26
7.3 Successor Manager...................................................26
ARTICLE 8 - FEES, COMPENSATION AND EXPENSES..................................26
8.1 Trustee's Fee.......................................................26
8.2 Manager's Fee.......................................................26
8.3 Expenses ...........................................................26
ARTICLE 9 - LIABILITY AND INDEMNIFICATION OF TRUSTEE.........................27
9.1 Standard of Care....................................................27
9.2 Reliance .......................................................27
9.3 General Disclaimer of Liability.....................................28
9.4 Indemnification of Trustee..........................................28
9.5 Trustee Not Liable for Taxes, etc...................................29
9.6 Trustee May Seek Directions.........................................29
ARTICLE 10 - LIABILITY AND INDEMNIFICATION OF MANAGER AND INVESTMENT
ADVISORS.........................................................29
10.1 Standard of Care.................................................29
10.2 Limitation of Liability..........................................29
10.3 Indemnification of Manager.......................................30
10.4 Manager Not Liable for Taxes, etc................................30
ARTICLE 11 - CHANGE OF TRUSTEE...............................................31
11.1 Resignation of Trustee...........................................31
11.2 Removal of Trustee...............................................31
11.3 Appointment of Successor Trustee.................................31
11.4 Qualifications of Trustee........................................31
11.5 Successor Trustees...............................................32
ARTICLE 12 - BOOK-ENTRY SYSTEM; CERTIFICATES, REGISTRATION AND TRANSFER
OF UNITS.........................................................32
12.1 Book-Entry Certificate...........................................32
12.2 Notice to Clearing Agency........................................33
12.3 Liability....................................................... 33
12.4 Definitive Certificates..........................................33
12.5 Nature of Trust Unit Certificates................................33
12.6 Certificates.....................................................34
12.7 Certificate Fee..................................................34
12.8 Form of Certificates.............................................34
12.9 Register of Unitholders..........................................34
12.10 Transfer Agents and Registrars...................................35
12.11 Blank Certificates...............................................35
12.12 Transfer of Trust Units..........................................35
12.13 Successors in Interest of Unitholders............................36
12.14 Trust Units Held Jointly or in Fiduciary Capacity................36
12.15 Performance of Trusts............................................37
12.16 Lost Certificates................................................37
12.17 Death of Unitholders.............................................37
12.18 Unclaimed Distributions..........................................38
12.19 Notice to Unitholders of Non-Eligibility for Deferred
Income Plans.....................................................38
12.20 Declaration as to Beneficial Owner...............................38
12.21 Rights to Inspect Register.......................................38
ARTICLE 13 - DISTRIBUTIONS...................................................39
13.1 Distributions of Capital Gains and Income........................39
13.2 Additional Distributions.........................................39
13.3 Other Distributions to Unitholders...............................40
13.4 Tax Designations.................................................40
13.5 Payment of Distributions.........................................40
13.6 Additional Distributions, Designations and Determinations
of Amounts for Tax Purposes......................................40
13.7 Enforcement of Payment...........................................40
13.8 Withholding Tax..................................................40
ARTICLE 14 - REPORTS AND EXECUTION OF DOCUMENTS..............................41
14.1 Reports to Unitholders...........................................41
14.2 Material to be Furnished to Manager..............................41
14.3 Execution of Documents...........................................41
14.4 Execution of Documents by Manager and Investment Advisor.........41
ARTICLE 15 - AUDITORS........................................................42
15.1 Qualifications of Auditors.......................................42
15.2 Appointment of Auditors..........................................42
15.3 Reports of Auditors..............................................42
15.4 Access to Records................................................42
15.5 Change of Auditors...............................................42
ARTICLE 16 - AMENDMENTS......................................................42
16.1 Amendments Without Notice to Unitholders.........................42
16.2 Amendments With Notice to Unitholders............................43
16.3 Acts Requiring Unitholder Approval...............................43
16.4 Restatements.....................................................44
ARTICLE 17 - TERMINATION OF THE FUND.........................................45
17.1 Termination Date.................................................45
17.2 Procedure Upon Termination.......................................45
17.3 Sale of Investments..............................................45
17.4 Powers of the Trustee and Manager Upon Termination...............46
17.5 Distribution of Proceeds.........................................46
17.6 Responsibility of Trustee After Sale and Conversion..............46
17.7 Unclaimed Proceeds...............................................46
ARTICLE 18 - GENERAL.........................................................46
18.1 Notice to Unitholders............................................46
18.2 Notice to Trustee and Manager....................................47
18.3 Inspection of Trust Agreement....................................47
18.4 Governing Law....................................................47
18.5 Fiscal Year End..................................................47
18.6 Taxation Year....................................................47
18.7 Effect of Mistakes...............................................48
18.8 Third Persons Not Obligated to Follow Assets.....................48
18.9 Trustee Not Required to Give Security............................48
18.10 Counterparts.....................................................48
18.11 Facsimiles.......................................................48
TRUST AGREEMENT
THIS TRUST AGREEMENT is made this 14th day of February, 2002.
BETWEEN:
NCE STRATEGIC ENERGY MANAGEMENT CORP.,
a corporation incorporated under the laws of Ontario
(hereinafter called the "Manager")
- and -
COMPUTERSHARE TRUST COMPANY OF CANADA, a trust
company incorporated under the laws of Canada
(hereinafter called the "Trustee")
WITNESSES THAT:
WHEREAS the Manager wishes to establish a trust to be called NCE
Strategic Energy Fund (the "Fund") upon the terms and conditions set forth
herein;
AND WHEREAS the Manager has contributed the sum of $10.00 as the
initial Fund Property for the purpose of constituting the
Fund;
AND WHEREAS the Manager in its capacity as settlor of the Fund has
requested that the Trustee act as trustee of the Fund and the Trustee has
agreed to act as the trustee of the Fund upon the terms set out herein;
AND WHEREAS the Manager wishes to retain management of the affairs of
the Fund upon the terms set out herein;
AND WHEREAS the foregoing are made as representations and statements
of fact by the Manager and not by the Trustee;
NOW THEREFORE the Trustee agrees with the Manager and in favour of the
Unitholders from time to time that the Trustee will act as a trustee of the
Fund and hold all Fund Property in trust for the benefit of the Unitholders
from time to time and will invest, dispose of and otherwise deal with Fund
Property upon the trusts and subject to the express provisions of the Trust
Agreement and the Trustee and the Manager covenant and agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 Definitions
In this Trust Agreement, unless there is something in the subject
matter or context inconsistent therewith, the following terms have the
following meanings:
(a) "Additional Distributable Amount" means with respect to any taxation
year of the Fund, the amount, if any, by which the aggregate of the
Net Income and Net Capital Gains, less any Net Capital Gains the tax
on which would be refundable to the Fund under Part I of the Tax Act,
for such taxation year exceed the aggregate distributions otherwise
paid or payable by the Fund for such taxation year;
(b) "Additional Distribution Date" has the meaning ascribed thereto in
Section 13.2;
(c) "Affiliate" means, with respect to any Person, another Person which is
an affiliated entity of such Person within the meaning of Ontario
Securities Commission Rule 45-501;
(d) "Auditors" means the auditors of the Fund appointed pursuant to the
provisions hereof;
(e) "Beneficial Holder" means any person who holds a beneficial interest
in Book-Entry Only Trust Units as shown on the books of CDS or a CDS
Participant;
(f) "Book-Entry Only System" means the record-entry securities transfer
and pledge system known, as of the date hereof, by such name, which is
administered by CDS in accordance with the operating rules and
procedures of the Securities Settlement Services of CDS in force from
time to time, or any successor system which CDS may offer from time to
time;
(g) "Book-Entry Only Trust Units" means Trust Units and any other
securities issued from time to time in accordance with this Trust
Agreement, entitling the beneficial owner to an interest in the
property and assets of the Fund, that are issued in book-entry only
form represented by one or more global unit certificate(s);
(h) "business day" means any day on which the Trustee is open for business
in Toronto, except that for purposes of the definition of "Valuation
Date" and Section 13.2(a), "business day" means any day on which the
Toronto Stock Exchange is open for business;
(i) "CDS" means The Canadian Depository for Securities Limited and
includes any successor corporation or any other depository
subsequently appointed by the Fund as the depository in respect of the
Book-Entry Only Trust Units;
(j) "CDS Participant" means a broker, dealer, bank, other financial
institution or other Person for whom, from time to time, CDS effects
book entries for the Book-Entry Only Trust Units deposited with CDS;
(k) "Early Stage Energy Companies" means Canadian oil and natural gas
exploration, development and/or production issuers and Canadian energy
service issuers, each of which has market capitalization or book
equity value of less than $100 million at the time of the Fund's
investment;
(l) "Established Companies" means Canadian oil and natural gas
exploration, development and/or production issuers and Canadian energy
service issuers, each of whose shares are listed on a Canadian stock
exchange and which has market capitalization of more than $100 million
at the time of the Fund's investment;
(m) "Extraordinary Resolution" means a resolution passed by the
affirmative vote of at least 662/3% of the votes cast at a meeting of
Unitholders called for that purpose at which a quorum of Unitholders
is present in person or by proxy as provided herein;
(n) "Fiscal Year" has the meaning ascribed thereto in Section 18.5;
(o) "Fund" means NCE Strategic Energy Fund, the trust established by this
Trust Agreement;
(p) "Fund Property" means all of the property and assets of the Fund held
in trust by the Trustee pursuant to this Trust Agreement;
(q) "Fund Securities" means Trust Units and any other securities which may
be issued by the Fund;
(r) "High Quality Money Market Instruments" means money market instruments
which are accorded the highest rating category by Canadian Bond Rating
Service ("A-1") or by Dominion Bond Rating Service ("R-1"), banker's
acceptances and debt instruments issued or guaranteed by the
Government of Canada or a province of Canada, all with a term of one
year or less, and interest bearing deposits with Canadian chartered
banks or trust companies;
(s) "including" and "includes" shall be deemed to be followed by the
statement "without limitation" and neither of such terms shall be
construed to limit any word or statement which it follows to the
specific or similar items or matters immediately following it;
(t) "Indemnified Person" has the meaning ascribed thereto in Section 10.3;
(u) "Initial Trust Unit" has the meaning ascribed thereto in Section 3.1;
(v) "Investment Advisor" means a Person engaged by the Manager on behalf
of the Fund to provide investment management services to the Fund;
(w) "Investment Advisory Agreement" means an investment advisory agreement
pursuant to which a person is appointed the Investment Advisor to the
Manager of the Fund;
(x) "Investment Objectives" has the meaning ascribed thereto in Section
2.4;
(y) "Investment Restrictions" means the investment restrictions set out in
Section 2.6;
(z) "Loan Facility" means the loan facility established pursuant to
Section 6.2(g);
(aa) "Manager" means NCE Strategic Energy Management Corp. and its
successors under the terms of this Trust Agreement;
(bb) "Management Agreement" means the management agreement between the
Manager and the Fund relating to the management of the Fund, as it may
be amended or replaced from time to time, including in connection with
the appointment of a successor Manager;
(cc) "Net Asset Value" means the Total Asset Value less the aggregate
amount of the liabilities of the Fund;
(dd) "Net Asset Value per Trust Unit" shall be determined in accordance
with Section 3.6;
(ee) "Net Capital Gains" of the Fund for a taxation year means the amount,
if any, by which:
(i) the capital gains realized by the Fund in the taxation year;
exceeds the aggregate of
(ii) the capital losses incurred by the Fund in the taxation year;
and
(iii) the unapplied capital losses incurred by the Fund in the
preceding taxation years, to the extent that they may be, and
are, applied against capital gains realized by the Fund in
the taxation year.
For this purpose, "capital gains" and "capital losses" shall be
computed in accordance with the provisions of the Tax Act.
(ff) "Net Income" of the Fund for a taxation year means the amount, if any,
by which the income from property of the Fund for such taxation year
less allowable expenses and deductions as determined pursuant to the
provisions of the Tax Act, other than paragraph 82(1)(b) and
subsection 104(6) thereof, without reference to the Fund's "capital
gains" or "capital losses" (as those terms are used in the Tax Act)
for the taxation year, exceeds the unapplied non-capital losses of the
Fund for the purposes of the Tax Act for the preceding taxation years
of the Fund, to the extent that they may be, and are applied against
income of the Fund for such taxation year for the purposes of the Tax
Act.
(gg) "NI 81-102" means National Instrument 81-102 of the Canadian
Securities Administrators (or any successor policy, rule or national
instrument), as it may be amended from time to time;
(hh) "Notice Period" has the meaning ascribed thereto in Section 5.1;
(ii) "OBCA Corporation" shall mean an offering corporation incorporated
under and as defined in the Business Corporations Act (Ontario);
(jj) "Person" means any individual, corporation, limited partnership,
general partnership, joint stock company, joint venture, association,
company, bank, trust company, government, government department or
agency, or other entity or organization whether incorporated or not;
(kk) "Portfolio" means the investments of the Fund;
(ll) "Private Issuer" means an Early Stage Energy Company or a Special
Energy Issuer whose securities are not listed or traded on a Canadian
stock exchange;
(mm) "Public Issuer" means an Early Stage Energy Company, a Special Energy
Issuer or an Established Company, any of whose securities are listed
or traded on a Canadian stock exchange;
(nn) "Redemption Notice" has the meaning ascribed thereto in Section 5.4;
(oo) "Redemption Payment Date" means the tenth business day following the
Redemption Valuation Date;
(pp) "Redemption Valuation Date" means the last business day of March in
each year;
(qq) "Special Energy Issuers" means Canadian energy technology and
alternative energy issuers;
(rr) "Tax Act" means the Income Tax Act (Canada);
(ss) "Taxation Year" has the meaning ascribed thereto in Section 18.6;
(tt) "Termination Date" shall mean March 31, 2007 or such other date as is
ascribed as the meaning of such term in the final prospectus relating
to the initial public offering of Trust Units by the Fund;
(uu) "Termination Event" in respect of the Trustee means any of the
following events:
(i) the Trustee is in material default of its obligations under
this Trust Agreement and such default continues for 30 days
from the date that the relevant party receives notice from
the other party, requiring it to cure such material default;
(ii) the Trustee has been declared bankrupt or insolvent or has
entered into liquidation or winding up, whether compulsory or
voluntary (and not merely a voluntary liquidation for the
purposes of amalgamation or reconstruction);
(iii) the Trustee makes a general assignment for the benefit of its
creditors or otherwise acknowledges its insolvency; or
(iv) the assets of the Trustee have become subject to seizure or
confiscation by any public or governmental authority.
(vv) "Total Asset Value" means the aggregate value of the assets of the
Fund as determined pursuant to Sections 3.5 and 3.7;
(ww) "Transfer Agent" means the registrar and transfer agent of the Trust
Units of the Fund appointed in accordance with the terms hereof;
(xx) "Trust Agreement" means this trust agreement as the same may be
supplemented, amended or restated from time to time hereafter; and
"herein", "hereby", "hereto" and "hereunder" mean respectively in, by,
to and under this Trust Agreement;
(yy) "Trust Unit" has the meaning ascribed thereto in Section 3.1;
(zz) "Trust Unit Certificate" means a certificate, in the form approved by
the Trustee, evidencing one or more Trust Units, issued and certified
in accordance with the provisions hereof;
(aaa) "Trustee" means Computershare Trust Company of Canada as trustee of
the Fund, or such successor trustee of the Fund as may from time to
time be appointed in accordance with the provisions of this Trust
Agreement;
(bbb) "TSE Oil & Gas Producers Index" is the total return index designated
as the "TSE Oil & Gas Producers Index" computed on a total return
basis by the Toronto Stock Exchange, or any index which replaces such
index from time to time;
(ccc) "Unitholder" means a holder of Trust Units;
(ddd) "Valuation Date" means every Wednesday of each week, the last business
day of each fiscal quarter and any other date on which the Manager
elects, in its discretion, to calculate the Net Asset Value per Trust
Unit; and
(eee) "Valuation Time" means 4:15 p.m. (Toronto time) on a day on which the
Net Asset Value per Trust Unit is determined, including a Valuation
Date.
1.2 Headings
The division of this Trust Agreement into Articles and Sections and
the insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Trust Agreement. The Article
and Section headings in this Trust Agreement are not intended to be full or
precise descriptions of the text to which they refer and shall not be
considered part of this Trust Agreement.
1.3 Number and Gender
In this Trust Agreement words in the singular include the plural and
vice versa and words in one gender include all genders.
1.4 Currency
Unless specified otherwise, all statements of or reference to dollar
amounts in this Trust Agreement are to lawful money of Canada.
1.5 Generally Accepted Accounting Principles
All accounting and financial terms used herein, unless specifically
provided to the contrary, shall be interpreted and applied in accordance with
generally accepted accounting principles in Canada.
Where the Canadian Institute of Chartered Accountants includes a
recommendation in its Handbook concerning the treatment of any accounting
matter, such recommendation shall be regarded as the only generally accepted
accounting principle applicable to the circumstances that it covers and
references herein to "generally accepted accounting principles" shall be
interpreted accordingly.
1.6 Statutes
A reference in this Trust Agreement to a statute is to such statute as
it may be amended from time to time, and to any restated or successor
legislation of comparable effect and includes regulations promulgated
thereunder.
1.7 References to Articles, etc.
References in this Trust Agreement to Articles, Sections, subsections,
paragraphs, clauses or other subdivisions are, unless otherwise stated,
references to Articles, Sections, subsections, paragraphs, clauses or other
subdivisions of this Trust Agreement.
1.8 Day Not a Business Day
In the event that any day on which any amount is to be determined or
any action is required to be taken hereunder is not a business day, then such
amount shall be determined and such action shall be required to be taken at or
before the referenced time on the next succeeding day that is a business day.
This Section 1.8 shall not be applicable to Sections 13.1 or 13.2 hereof.
1.9 References to Acts Performed by the Fund
For greater certainty, where any reference is made in this Trust
Agreement to an act to be performed by the Fund, such reference shall be
construed and applied for all purposes as if it referred to an act to be
performed by the Trustee on behalf of the Fund or by some other person duly
authorized to do so by the Trustee pursuant to the provisions hereof.
ARTICLE 2 - THE FUND
2.1 Establishment of the Fund
The Trustee hereby accepts the trusts set out in this Trust Agreement
and agrees to act as trustee of the Fund and to hold as trustee of the Fund all
the Fund Property from time to time upon and subject to the provisions of this
Trust Agreement. The Trustee further agrees to invest, dispose of and otherwise
deal with the Fund Property upon the direction of the Manager and, if
applicable, an Investment Advisor, subject to the provisions of this Trust
Agreement. The Trustee acknowledges receipt of $10.00 from the Manager in its
capacity as settlor of the Fund, which sum constitutes the initial Fund
Property of the Fund.
2.2 Purpose
The Fund is established, and shall be operated and maintained by the
Trustee, for the purpose of achieving the Investment Objectives. For greater
certainty, the Fund shall not invest its funds in real property or earn an
interest therein.
2.3 Name of Fund
The name of the Fund shall be "NCE Strategic Energy Fund" in the
English language and "Fonds d'energie strategique NCE" in the French
language. So far as may be practicable, legal or convenient, the Trustee and
the Manager shall conduct the Fund activities, execute all documents and xxx or
be sued under such name, which name and the word "Fund" wherever used in this
Trust Agreement with respect to an act to be performed by the Fund or to an
obligation of the Fund shall refer to an act to be performed by the Trustee or
an obligation of the Trustee in its capacity as trustee of the Fund and not
personally, and shall not refer to the Unitholders of the Fund or to the
directors, officers, agents or employees of the Trustee. Upon written direction
from the Manager, the Trustee shall change the name of the Fund to such name as
may be determined by the Manager.
2.4 Investment Objectives
The Fund's investment objectives (the "Investment Objectives") are to
provide Unitholders with superior rates of return, principally in the form of
long-term capital appreciation, and a cost-effective method of reducing
investment risk through a diversification strategy focused on investment
opportunities within the Canadian energy sector which the Manager and the
Investment Advisor believe have prospects for high growth in the near to medium
term, subject to the Investment Restrictions. The Investment Objectives of the
Fund are fundamental and may not be changed without the approval of the
Unitholders by Extraordinary Resolution, as hereinafter provided.
2.5 General Investment Restrictions
The Manager and the Investment Advisor, if applicable, shall at all
times in respect of the investment of Fund Property comply with the investment
restrictions and practices:
(a) set forth herein; and
(b) imposed by applicable legislative requirements.
2.6 Specific Investment Restrictions
In investing the Fund Property, the Manager and the Investment
Advisor, if applicable, may not:
(a) invest more than 60% of the Fund's Total Asset Value in securities of
Private Issuers;
(b) acquire 20% or more of any class of voting securities of an issuer
which is a Public Issuer at the date of acquisition;
(c) borrow money in excess of 15% of the Fund's Total Asset Value,
calculated as at the date of the borrowing and as at the end of each
calendar quarter. For these purposes the amount of any margin loan
shall be treated as borrowed money;
(d) purchase or sell commodities, commodity contracts or derivatives;
(e) acquire direct interests in mining, oil and natural gas or similar
ventures, other than through the ownership of securities;
(f) sell securities short;
(g) invest more than 10% of the Fund's Total Asset Value in securities of
Special Energy Issuers;
(h) invest less than 15% of the Fund's Total Asset Value in securities of
Established Companies and High Quality Money Market Instruments;
(i) invest less than 40% of the portion of the Fund's Total Asset Value
which is invested in securities of Public Issuers, in securities
listed on the Toronto Stock Exchange;
(j) invest in any assets other than securities of Public Issuers and
Private Issuers and in High Quality Money Market Instruments;
(k) make any investment that would result in the Fund failing to qualify
as a "unit trust" within the meaning of paragraph 108(2)(b) of the Tax
Act. The current definition of "unit trust" requires, among other
things, that:
(i) at all times at least 80% of the property of the Fund must
consist of a combination of shares; property that, under the
terms or conditions of which or under an agreement, is
convertible into, exchangeable for, or confers a right to
acquire shares; bonds, debentures, mortgages, hypothecary
claims, notes and other similar obligations; marketable
securities; cash; real property situated in Canada and
interests in real property situated in Canada; or rights to
and interests in any rental or royalty computed by reference
to the amount or value of production from a natural
accumulation of petroleum or natural gas in Canada, from an
oil or natural gas well in Canada or from a mineral resource
in Canada;
(ii) not less than 95% of the Fund's income for each year must be
derived from, or from the disposition of, investments
described in (i) above;
(iii) at no time may more than 10% of the Fund's property consist
of bonds, securities or shares in the capital stock of any
one corporation or debtor other than Her Majesty in right of
Canada or a province or a Canadian municipality;
(l) make loans or provide guarantees, except that the Fund may purchase
and hold debt obligations (including bonds, debentures or other
obligations and certificates of deposit, bankers' acceptances and
fixed time deposits) in accordance with the Fund's investment
strategy;
(m) invest in property which may be considered "foreign property", unless,
at the end of each month, the "cost amount" to the Fund of such
"foreign property" (as those terms are defined in the Tax Act) held by
it does not exceed 30% (or such other percentage specified from time
to time for the purposes of Part XI of the Tax Act) of the "cost
amount" of all property held by it;
(n) act as underwriter except to the extent that the Fund may be deemed to
be an underwriter in connection with the sale of securities in its
portfolio;
(o) invest in "mutual funds", as such term is presently defined in the
Securities Act (Ontario);
(p) (i) with the exception of Trust Units, purchase securities from,
sell securities to, or otherwise contract for the acquisition
or disposition of securities with the Investment Advisor or
the Manager or any of their respective affiliates, or any
officer, director or significant shareholder of any of them,
or any issuer in which any officer, director or significant
shareholder of the Investment Advisor or the Manager may have
a material interest (which, for these purposes is beneficial
ownership of more than 10% of the voting securities of such
issuer) unless, with respect to any purchase or sale of
securities any such transaction is effected through normal
market facilities and the purchase price approximates the
prevailing market price or, in the case of a private
transaction, the Fund is making such purchase or sale at
substantially the same time, at a price per security not less
than that paid by, and upon substantially the same terms as
at least one other investor dealing at arm's-length to all of
the entities referred above and investing, in the aggregate,
at least 50% of the amount being invested by the Fund; or
(ii) invest in any issuer which is managed by the Investment
Advisor or the Manager or any of their respective affiliates
unless the Fund is making such investment at substantially
the same time, at a price per security not less than that
paid by, and upon substantially the same terms as at least
one other investor dealing at arm's-length to all of the
entities referred above and investing, in the aggregate, at
least 50% of the amount being invested by the Fund;
(q) enter into agreements to buy shares of a corporation at a price that
may differ from fair market value at the time of acquisition that
could give rise to tax under Part XI of the Tax Act; or
(r) invest in the securities of any non-resident corporation or trust or
other non-resident entity if the Fund would be required to xxxx its
investment in such securities to market in accordance with proposed
section 94.2 of the Tax Act or to include any significant amounts in
income pursuant to proposed section 94.1 of the Tax Act, as set forth
in the proposed amendments to the Tax Act dealing with foreign
investment entities released on August 2, 2001 (or amendments to such
proposals, provisions as enacted into law or successor provisions
thereto).
If a percentage restriction on investment or use of assets set forth
above is adhered to at the time of the transaction, later changes to the market
value of the investment or the Fund's Total Asset Value will not be considered
a violation of the restriction (except for the restrictions in paragraphs (c),
(h), (k), (m) and (r) which must be complied with at all times and which may
necessitate the selling of securities from time to time). If the Fund receives
from an issuer subscription rights to purchase securities of that issuer, and
if the Fund exercises such subscription rights at a time when the Fund's
portfolio holdings of securities of that issuer would otherwise exceed the
limits set forth above, it will not constitute a violation if, prior to receipt
of securities upon exercise of such rights, the Fund has sold at least as many
securities of the same class and value as would result in the restriction being
complied with.
The Trustee shall not be obliged to ensure that the Investment
Restrictions are adhered to.
The Investment Restrictions of the Fund are fundamental and may not be
changed without the approval of the Unitholders by Extraordinary Resolution, as
hereinafter provided (except as provided in Section 16.3(b)).
2.7 Principal Office
The principal office of the Fund shall be in Toronto, Ontario at the
address of the Manager which is 000 Xxxx Xxxxxx Xxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxx, X0X 0X0 or at such other location as shall be designated by the
Trustee.
ARTICLE 3 - TRUST UNITS AND VALUATION
3.1 Trust Units
(a) The beneficial interest in the Fund shall be divided into interests of
one class referred to as "Trust Units". Trust Units shall be issued
only as fully paid and non-assessable. There shall be no limit to the
number of Trust Units that may be issued in the Fund. Each Trust Unit
of the Fund shall rank equally with every other Trust Unit of the Fund
and no Trust Unit of the Fund shall have any preference or priority
over any other Trust Unit of the Fund. Fractional Trust Units may not
be issued.
(b) In addition to the sum of $10.00 contributed by the Manager as the
initial Fund Property for the purpose of constituting the Fund, the
Trustee acknowledges receipt from the Manager of the sum of $10.00 as
the subscription price for one Trust Unit (the "Initial Trust Unit")
and the Initial Trust Unit is hereby issued to the Manager as fully
paid. Upon closing of the initial public offering of Trust Units by
the Fund, the Manager shall sell to the Fund and the Fund shall
purchase from the Manager the Initial Trust Unit for a price of $10.00
and the Initial Trust Unit shall be cancelled.
(c) Each Trust Unit represents an equal undivided beneficial interest in
any distribution from the Fund (whether of Net Income, Net Capital
Gains or other amounts) and in any net assets of the Fund in the event
of termination or winding-up of the Fund. Each Trust Unit outstanding
from time to time shall be entitled to equal shares in (i)
distributions when and as declared, and (ii) the proceeds of
liquidation of the Fund Property in the event of termination or
winding-up of the Fund, after satisfaction of all liabilities of the
Fund, including the liabilities of the Fund to the Manager pursuant to
the Management Agreement. All Units shall rank among themselves
equally and rateably without discrimination, preference or priority.
3.2 Rights, Warrants and Options
The Fund may create and issue rights, warrants and options to
subscribe for additional Trust Units, which rights, warrants or options shall
be exercisable at such subscription prices, at such times and on such terms and
conditions as the Manager shall determine, subject to securities legislation
and stock exchange rules; provided that in the case of rights, warrants or
options issued to existing Unitholders, the net proceeds per Trust Unit issued
pursuant to the exercise thereof may not be less than the most recently
calculated Net Asset Value per Trust Unit (as calculated hereunder) prior to
the issue of such rights, warrants or options.
3.3 Issue of Trust Units
Trust Units may be issued from time to time on such terms and
conditions and for such consideration as the Manager shall determine.
3.4 Restriction on Non-Resident Ownership
At no time may non-residents of Canada be the beneficial owners of a
majority of the Trust Units and the Trustee shall inform the Transfer Agent of
this restriction. The Transfer Agent, at the direction of the Manager, may
require declarations as to the jurisdictions in which beneficial owners of
Trust Units are resident. If the Manager becomes aware, as a result of the
Transfer Agent requiring such declarations as to beneficial ownership or
otherwise, that the beneficial owners of 40% of the Trust Units then
outstanding are, or may be, non-residents or that such a situation is imminent,
the Manager may make a public announcement thereof. If the Manager determines
that a majority of the Trust Units are beneficially held by non-residents, the
Transfer Agent shall send a notice to such non-resident Unitholders, chosen in
inverse order to the order of acquisition or registration or in such manner as
the Manager may consider equitable and practicable, requiring them to sell
their Trust Units or a portion thereof within a specified period of not less
than 30 days. If the Unitholders receiving such notice have not sold the
specified number of Trust Units or provided the Transfer Agent or the Manager
with satisfactory evidence that they are not non-residents within such period,
the Manager may on behalf of such Unitholders sell such Trust Units and, in the
interim, shall direct the Trustee to suspend the voting and distribution rights
attached to such Trust Units. Upon such sale, the affected holders shall cease
to be beneficial holders of Trust Units and their rights shall be limited to
receiving the net proceeds of sale of such Trust Units.
3.5 Calculation
The Manager shall calculate the Total Asset Value, Net Asset Value and
Net Asset Value per Trust Unit of the Fund as of the Valuation Time on each
Valuation Date. The Net Asset Value per Trust Unit calculated as of the
Valuation Time on any Valuation Date shall remain in effect until the Valuation
Time on the next Valuation Date.
3.6 Method of Determining Net Asset Value per Trust Unit
The Net Asset Value per Trust Unit will be calculated on a fully
diluted basis, incorporating the Net Asset Value as of a particular date plus
the exercise value of in-the-money warrants and other rights to acquire Trust
Units and divided by the total number of Trust Units outstanding on that date
plus the number of Trust Units issuable upon the exercise of such warrants and
other rights to acquire Trust Units. The Net Asset Value per Trust Unit will be
calculated in Canadian dollars. Assets for which no published market exists
will be valued at cost, unless a different value is determined in accordance
with the valuation policies described in Section 3.7 as a result of the
occurrence of a specified event or the delivery of financial statements or a
formal valuation.
3.7 Valuation Rules
In calculating the Total Asset Value and the Net Asset Value of the
Fund at any time:
(a) generally, the value of any cash on hand or on deposit, bills, demand
notes, accounts receivable, prepaid expenses, cash received (or
declared to holders of record on a date before the date as of which
the Net Asset Value is being determined and to be received) and
interest accrued and not yet received, shall be deemed to be the full
amount thereof; provided that (i) the value of any security which is a
debt obligation which, at the time of acquisition, had a remaining
term to maturity of one year or less shall be the amount paid to
acquire the obligation plus the amount of any interest accrued on such
obligation since the time of acquisition (for the purposes of the
foregoing, interest accrued will include amortization over the
remaining term to maturity of any discount or premium from the face
value of an obligation at the time of its acquisition); and (ii) if
the Manager has determined, acting reasonably, that any such deposit,
xxxx, demand note or account receivable is not worth the full amount
thereof, the value thereof shall be deemed to be such value as the
Manager determines to be the fair value thereof;
(b) the value of any security which is listed on a stock exchange or
traded on an over-the-counter market will be the last sale price
applicable to a board lot prior to the time of determination of Net
Asset Value or if no such sale price is available at that time, but if
bid and ask quotations are available, at the average of the bid and
the ask price, rather than the quoted sale price;
(c) if a security is interlisted or trades on more than one exchange or
market the Manager shall use the last sale price or quoted or average
price (as described in paragraph (b) above), as the case may be,
reported on the exchange or market determined by the Manager to be the
principal exchange or market for the security;
(d) any value of a security or other asset reported in currency other than
Canadian dollars will be translated into Canadian currency at the
prevailing rate of exchange, as determined by the Manager, at the time
of valuation;
(e) securities which are listed on a stock exchange or traded
over-the-counter and which are subject to a hold period or other
trading restrictions will be valued as described above, with an
appropriate discount as determined by the Manager, acting reasonably;
(f) the value of any security or other asset for which no published market
exists, including securities of Private Issuers, will be determined by
the Manager in accordance with the following:
(i) such securities or other assets will normally be carried at
cost unless:
(A) there is an arm's-length transaction which in the
Manager's reasonable opinion establishes a different
value, or
(B) a material change in the value of an issuer occurs,
including as a result of a write-down of its assets on
its audited balance sheet or the preparation of a
valuation of the issuer or of a substantial portion of
its assets by a qualified independent person,
in which event the value will be increased or decreased, as
appropriate, to the resulting fair value; and
(ii) if there is an arm's-length bona fide enforceable offer to
purchase all or a substantial portion of an issuer's
outstanding securities or its assets, the Fund's securities
will be valued based upon the proposed transaction price; and
(g) the value of any security or asset to which, in the opinion of the
Manager, the above principles cannot be applied (whether because no
price or yield equivalent quotations are available or for any other
reason) shall be the fair value thereof determined in good faith in
such manner as the Manager from time to time adopts.
3.8 Publication
The Fund will make available to the Canadian financial press for
publication on a weekly basis the Net Asset Value per Trust Unit.
ARTICLE 4 - UNITHOLDERS AND UNITHOLDER MEETINGS
4.1 Status of Unitholders
The ownership of all Fund Property is vested exclusively in the
Trustee and the right to conduct the affairs of the Fund is vested exclusively
in the Trustee and the Manager as provided herein, and the Unitholders shall
have no right or interests therein or with respect thereto, other than those
which are expressly provided for herein. Unitholders shall have no right to
call for any partition or division of any portion of the Fund Property; nor
shall they be called upon to share or assume any losses of the Fund or be
liable for any assessment or further payments to the Fund or the Trustee of any
kind by virtue of their ownership of Trust Units, except with respect to the
breach of any term of any subscription agreement or similar document executed
by or on behalf of any Unitholder in respect of their investment in Trust
Units.
The Fund is an investment trust. The Fund is not intended to be, shall
not be deemed to be, and shall not be treated as, a general partnership,
limited partnership, syndicate, association, joint venture, company,
corporation or joint stock company; nor shall the Trustee, the Manager, any
Investment Advisor or the Unitholders or any of them for any purpose be, or be
deemed to be in any way whatsoever, liable or responsible hereunder as partners
or joint venturers. Neither the Trustee nor the Manager nor any Investment
Advisor shall be or be deemed to be an agent of the Unitholders. The
relationship of the Unitholders to the Trustee shall be solely that of
beneficiaries of the Fund, and their rights shall be limited to those conferred
upon them hereby.
4.2 Liability of Unitholders
No Unitholder shall incur or be subject to any liability whatsoever
(whether direct or indirect, absolute or contingent), in tort, contract or
otherwise, to any Person in connection with the Fund Property or the
obligations or affairs of the Fund or with respect to any agreement relating to
the Fund or with respect to any act or omission of the Trustee, the Manager or
any Investment Advisor or any other Person in the performance or exercise, or
purported performance or exercise, of any obligation, power, discretion or
authority conferred upon the Trustee, the Manager or any Investment Advisor or
such other Person whether under this Trust Agreement or otherwise or with
respect to any transaction entered into by the Trustee, the Manager or any
Investment Advisor or by any other Person whether pursuant to this Trust
Agreement or otherwise or in respect of any taxes, levies, imposts or charges
or fines, penalties or interest in respect of any of the foregoing payable by
the Fund or by the Trustee or by any other Person on behalf of or in connection
with the activities or affairs of the Fund or the Fund Property and no
Unitholder shall be liable to indemnify the Trustee or any other Person with
respect to any such liability incurred or with respect to any taxes payable by
the Fund or by the Trustee or any other Person on behalf of or in connection
with the Fund and, to the extent that any such liability of Unitholders may
arise, it shall be enforceable only against, and shall be satisfied only out
of, the Fund Property. Nothing herein shall preclude the Trustee from
exercising any rights granted to it under the Tax Act or any other applicable
taxation legislation to withhold from amounts payable to Unitholders or
otherwise recover from Unitholders any taxes which the Trustee has paid on
behalf of such Unitholders.
Each Unitholder is hereby indemnified and shall be reimbursed out of
the Fund Property in respect of all liabilities, costs, charges and expenses
reasonably incurred or sustained by such Unitholder in connection with the Fund
Property or the obligations or affairs of the Fund by reason only of being or
having been a Unitholder. The rights accruing to a Unitholder under this
Section 4.2 shall not exclude any other right to which such Unitholder may be
lawfully entitled, nor shall anything herein contained restrict the right of
the Fund to indemnify or reimburse a Unitholder in any appropriate situation
even though not specifically provided herein; provided, however, that the Fund
shall have no liability to reimburse Unitholders for taxes assessed against
them by reason of their ownership of Trust Units, nor for any losses suffered
by reason of changes in the value of Trust Units.
4.3 Liability under Contracts
Any written instrument creating an obligation of the Fund (including
the loan documents in respect of any borrowing) shall be conclusively taken to
have been executed or done by the Trustee only in the capacity of Trustee under
this Trust Agreement. Any written instrument creating an obligation of the Fund
shall refer, where applicable, to this Trust Agreement and contain a disavowal
of liability upon and waiver of claim against Unitholders and indicate that the
obligations thereunder are not personally binding upon, nor shall resort be had
to the private property of, the Trustee, the Manager, an Investment Advisor,
any Unitholder, or any director, officer, employee or agent of the Trustee, the
Manager or an Investment Advisor, but the Fund Property or a specific portion
thereof only shall be bound, but the omission of such provision shall not
operate to impose personal liability on the Trustee, the Manager, an Investment
Advisor, any Unitholder, or any of the officers, directors, employees or agents
of the Trustee, the Manager or an Investment Advisor.
4.4 Meetings of Unitholders
Annual meetings of the Unitholders will be held commencing in 2003 on
a day, at a time and, subject to the provisions hereof, at a place to be set by
the Trustee. At each annual meeting, Unitholders will be entitled to appoint
the Auditors and to select two nominees for election as directors of the
Manager. Special meetings of Unitholders may be called at any time by the
Trustee and shall be called by the Trustee upon the written request of
Unitholders holding in the aggregate not less than 20% of the Trust Units then
outstanding, such request specifying the purpose or purposes for which such
meeting is to be called. Meetings of Unitholders shall be held in the City of
Toronto. The Chairman of any meeting shall be a person designated by the
Trustee for the purpose of such meeting except that, on the motion of any
Unitholder, any person may be elected as Chairman by a majority of the votes
cast at the meeting instead of such designated person or if no person shall be
designated by the Trustee.
4.5 Notice of Meetings
Notice of all meetings of Unitholders shall be given by the Manager,
by ordinary mail postage prepaid addressed to each Unitholder at its registered
address, and mailed at least 21 days and not more than 50 days before the
meeting. Such notice shall set out the time when, and the place where, such
meeting is to be held and shall state or be accompanied by a statement of the
nature of the business to be transacted at such meeting in sufficient detail to
permit a Unitholder to form a reasoned judgment thereon. It shall not be
necessary to set out in such notice the text of any resolution proposed to be
passed. Any adjourned meeting may be held as adjourned without further notice.
The accidental omission to give notice or the non-receipt of such notice by all
Unitholders shall not invalidate any resolution passed at any such meeting.
4.6 Quorum
At any meeting of the Unitholders, subject as hereinafter provided, a
quorum shall consist of two or more Unitholders present in person or by proxy
except in the case of business requiring approval by Extraordinary Resolution,
where the quorum shall consist of two or more Unitholders present in person or
by proxy holding not less than 10% of the Trust Units then outstanding. If a
quorum is not present at the appointed place on the date for which the meeting
is called within 30 minutes after the time fixed for the holding of such
meeting, the meeting shall stand adjourned to such day being not less than 14
days later and to such place and time as may be appointed by the Chairman of
the meeting. If at such adjourned meeting a quorum as above defined is not
present, the Unitholders present either personally or by proxy shall form a
quorum, and any business may be brought before or dealt with at such an
adjourned meeting which might have been brought before or dealt with at the
original meeting in accordance with the notice calling the same.
4.7 Voting Rights of Unitholders
Only Unitholders of record shall be entitled to vote and each Trust
Unit shall entitle the holder or holders thereof to one vote at all meetings of
Unitholders called pursuant to this Trust Agreement. Every question is
submitted to a meeting of Unitholders, other than an Extraordinary Resolution,
shall, unless a poll vote is demanded, be decided by a show of hands on which
every person present entitled to vote shall be entitled to one vote and 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. At any meeting of
Unitholders, any holder of Trust Units entitled to vote thereat may vote by
proxy and a proxy holder need not be a Unitholder. The Manager and the Trustee
may solicit proxies from Unitholders in any matter requiring or permitting the
Unitholders' approval or consent. When any Trust Unit is held jointly by
several persons, any one of them may vote at any meeting in person or by proxy
in respect of such Trust Unit, but if more than one of them shall be present at
such meeting in person or by proxy, and such joint owners so present disagree
as to any vote to be cast, such vote shall not be received in respect of such
Unit.
4.8 Procedural Matters
The Trustee may fix a record date or dates for the purpose of
determining Unitholders entitled to notice of any meeting of Unitholders or
determining Unitholders entitled to vote thereat and may establish rules
governing the procedures to be followed in connection with the conduct of such
meeting, including with respect to voting by proxy at the meeting. To the
extent practicable and not contrary to the express provisions hereof, the
provisions of the Business Corporations Act (Ontario) relating to special
meetings of shareholders shall govern the method and manner of giving notice
of, conducting and voting at any meeting of Unitholders and of soliciting and
using proxies in connection therewith, mutatis mutandis.
4.9 Binding Effect of Resolutions
Every resolution passed in accordance with the provisions of this
Trust Agreement at a meeting of Unitholders shall be binding upon all
Unitholders, whether present at or absent from such meeting, and each and every
Unitholder shall be bound to give effect accordingly to every such resolution.
4.10 Resolution in Lieu of Meeting
A resolution signed in writing by all of the Unitholders entitled to
vote on that resolution at a meeting of Unitholders is as valid as if it had
been passed at a meeting of Unitholders.
ARTICLE 5 - REDEMPTION OF UNITS AND MARKET PURCHASES
5.1 Right to Redeem
Subject to Section 5.3, in each year commencing in 2003, Trust Units
may be surrendered during the period from March 1 until 5:00 p.m. (Toronto
time) on the fifth business day prior to March 31 (the "Notice Period") for
redemption to the Transfer Agent. Subject to the provisions hereof, Trust Units
surrendered for redemption by a Unitholder during the Notice Period will be
redeemed on the Redemption Valuation Date and the Unitholder will receive
payment on or before the Redemption Payment Date.
The maximum number of Trust Units that the Fund will be required or
permitted to redeem pursuant to this Section 5.1 each year will be equal to
2.5% of the outstanding Trust Units as at March 1 of such year. In the event
that more than 2.5% of the outstanding Trust Units are surrendered for
redemption in any year, the number of Trust Units to be redeemed will be
reduced on a proportionate basis, based on the total number of Trust Units
surrendered for redemption by all Unitholders.
The redemption right must be exercised by causing written notice to be
given within the Notice Period and in the manner described in Section 5.4. Such
surrender will be irrevocable upon the delivery of notice to CDS through a CDS
Participant, except with respect to those Trust Units which are not paid for by
the Fund on or before the relevant Redemption Payment Date.
5.2 Redemption Price and Payment
Holders of Trust Units tendered for redemption and to be redeemed will
be entitled to receive a redemption price per Trust Unit equal to 95% of the
Net Asset Value per Trust Unit determined as of the Redemption Valuation Date.
Any unpaid distribution payable on or before the Redemption Valuation Date in
respect of Trust Units to be redeemed on such Redemption Valuation Date will
also be paid on the Redemption Payment Date.
The Trustee shall, within ten business days after the Redemption
Valuation Date on which a Unitholder's Trust Units are redeemed, make, or
arrange for the Transfer Agent to make, payment of the redemption price per
Trust Unit in respect of the Trust Units redeemed together with any unpaid
distribution in respect of such Trust Units which became payable on or before
such Redemption Valuation Date less any amount required to be withheld
therefrom under applicable law. Payment shall be made in Canadian funds and may
be made by wire transfer to CDS with instructions concerning delivery to the
CDS Participants or by some other method as the Trustee deems appropriate. Any
payment so made shall, unless a cheque is not honoured on presentation,
discharge the Fund and the Trustee from all liability to the Unitholder in
respect of the amount thereof plus any amount required by law to be withheld,
and the Trust Units so redeemed shall be cancelled and not reissued.
5.3 Suspension of Redemption Right
The Manager may direct the Trustee to suspend the redemption of Trust
Units or payment of any amounts on redemption: (i) during any period when
normal trading is suspended on a stock exchange or other market on which
securities owned by the Fund are listed and traded, if these securities
represent more than 50% of the Total Asset Value of the Fund without allowance
for liabilities and if these securities are not traded on any other exchange
that represents a reasonably practical alternative for the Fund; or (ii) for
any period not exceeding 90 days during which the Manager determines that
conditions exist which render impractical the sale of assets of the Fund or
which impair the ability of the Trustee to determine the value of the assets of
the Fund. The suspension may apply to all requests for redemption received
prior to the suspension but as to which payment has not been made, as well as
to all requests received while the suspension is in effect. All Unitholders
making such requests shall be advised by the Manager of the suspension and that
the redemption will be effected at a price determined on the first business day
following the termination of the suspension. All such Unitholders shall have
and shall be advised that they have the right to withdraw their requests for
redemption. The suspension shall terminate in any event on the first day on
which the condition giving rise to the suspension has ceased to exist, provided
that no other condition under which a suspension is authorized then exists. To
the extent not inconsistent with official rules and regulations promulgated by
any government body having jurisdiction over the Fund, any declaration of
suspension made by the Manager shall be conclusive.
5.4 Book-Based System Redemptions
A Beneficial Holder of Trust Units who desires to exercise redemption
privileges thereunder must do so by causing a CDS Participant to deliver to CDS
(at its office in the City of Toronto) on behalf of the owner a written notice
of the owner's intention to redeem Trust Units. A Beneficial Holder who desires
to redeem Trust Units must provide the CDS Participant with notice (the
"Redemption Notice") of his or her intention to exercise his or her redemption
privilege sufficiently in advance of the relevant notice date so as to permit
the CDS Participant to deliver notice to CDS and so as to permit CDS to deliver
notice to the Transfer Agent by the required time. The Redemption Notice will
be in the form made available from a CDS Participant or the Transfer Agent. Any
expense associated with the preparation and delivery of Redemption Notices will
be for the account of the Beneficial Holder exercising the redemption
privilege.
By causing a CDS Participant to deliver to CDS a notice of the
Beneficial Holder's intention to redeem Trust Units, a Beneficial Holder shall
be deemed to have irrevocably surrendered his or her Trust Units for redemption
and appointed such CDS Participant to act as his or her exclusive settlement
agent with respect to the exercise of the redemption privilege and the receipt
of payment in connection with the settlement of obligations arising from such
exercise. Any Redemption Notice which CDS determines to be incomplete, not in
proper form or not duly executed shall for all purposes be void and of no
effect and the redemption privilege to which it relates shall be considered for
all purposes not to have been exercised thereby. A failure by a CDS Participant
to exercise redemption privileges or to give effect to the settlement thereof
in accordance with the Beneficial Holder's instructions will not give rise to
any obligations or liability on the part of the Fund to the CDS Participant or
to the Beneficial Holder.
5.5 Mandatory Market Purchase Program
If at any time the price at which the Unitholders are then offering
their Trust Units for sale on the principal stock exchange or market on which
the Trust Units are then listed or traded is less than 90% of the most recently
determined Net Asset Value per Trust Unit, then, subject to Section 5.7 and
compliance with any applicable regulatory requirements, the Fund will use its
best efforts to purchase for cancellation any such Trust Units offered in the
market at the then prevailing market price up to a specified maximum percentage
of the outstanding Trust Units in any calendar quarter. The maximum percentage
will be 1.25% in respect of each calendar quarter from the date of the closing
of the initial public offering of Trust Units by the Fund to and including
March 31, 2003; 1.0% in respect of each calendar quarter from April 1, 2003 to
and including March 31, 2004; 0.75% in respect of each calendar quarter from
April 1, 2004 to and including March 31, 2005; 0.50% in respect of each
calendar quarter from April 1, 2005 to and including March 31, 2006; and 0.25%
in respect of each calendar quarter from April 1, 2006 to and including the
Termination Date. The maximum number of Trust Units which may be purchased in
any calendar quarter will be based upon the number of Trust Units outstanding
at the beginning of such calendar quarter.
5.6 Purchases in the Market
Subject to any applicable regulatory requirements and limitations, in
addition to purchases made under Section 5.5, the Fund will have the right (but
not the obligation) at any time, exercisable in its sole discretion, to
purchase outstanding Trust Units in the market at prices not exceeding the most
recently calculated Net Asset Value per Trust Unit.
5.7 Restrictions on Purchases
Purchases will not be effected pursuant to Sections 5.5 or 5.6 if (a)
in the opinion of the Manager such transactions, if consummated, could result
in the marketability of the Trust Units being severely impaired to the
detriment of the Unitholders; (b) in order to finance the purchase, the Fund is
not able to liquidate securities in an orderly manner consistent with the
Fund's Investment Objectives or, alternatively, it is not in the best interest
of the Unitholders to do so; or (c) there is, in the judgment of the Manager:
(i) any material legal action or proceeding instituted or threatened
challenging such transactions or otherwise materially adversely affecting the
Fund, or (ii) there is a suspension of or limitation on prices for trading
securities generally on any exchange on which securities held by the Fund are
traded.
5.8 Cancellation
All Trust Units that have been redeemed or purchased by the Fund will
be cancelled.
ARTICLE 6 - POWERS AND DUTIES OF TRUSTEE
6.1 General Powers
The ownership of all Fund Property and the right to conduct the
affairs of the Fund are vested in the Trustee subject to the provisions hereof
and the Trustee shall have and may exercise without other or further
authorization, all such rights, powers and authorities with respect thereto as
may be necessary or desirable to enable the Trustee to carry out its
responsibilities hereunder.
6.2 Specific Powers and Authorities
The specific powers and authorities enumerated in this Section 6.2 are
in addition to the general powers and authorities granted in Section 6.1 and
otherwise herein or by statute and shall not be construed as limiting such
general powers or authorities or any other specific power or authority
conferred herein on the Trustee, except that with respect to the exercise of
the powers and authorities enumerated below, the Manager is entitled to give
directions to the Trustee with respect to the exercise hereof.
Subject to any specific directions of the Manager, the Trustee shall
have and may exercise, at any time and from time to time, the following powers
and authorities which may be exercised by it in its judgment and discretion and
in such manner and upon such terms and conditions as it may from time to time
deem proper:
(a) to commence, defend, adjust, abandon or settle suits or legal
proceedings in connection with the Fund or the Fund Property and to
represent the Fund in any such suits or legal proceedings, provided
that the Unitholders shall have no power or authority to oblige or
require the Trustee to do so and provided further that the Trustee
shall not be required to take such action unless it has been funded
and indemnified to its satisfaction;
(b) generally to exercise any of the powers of an owner with respect to
securities or other Fund Property held in the Fund;
(c) to exercise any conversion privileges, subscription rights, warrants
or other rights or options available in connection with any securities
or other Fund Property at any time held by the Trustee, and to make
any payments incidental thereto;
(d) to possess and exercise all rights, powers and privileges pertaining
to ownership of all or any part of the assets of the Fund, to the same
extent that an individual might, unless otherwise expressly limited
herein, and, without limiting the generality of the foregoing, to vote
personally, or by general or by limited proxy, any securities or other
Fund Property which may be held by it at any time, and similarly to
exercise personally or by general or by limited power of attorney any
right appurtenant to any securities or other Fund Property held by it
at any time;
(e) to renew or extend or participate in the renewal or extension of any
securities or Fund Property, upon such terms as it may deem advisable;
(f) to make, execute, acknowledge and deliver any and all deeds,
conveyances, contracts, waivers, releases or other documents of
transfer and any and all other instruments in writing that may be
necessary or proper for the accomplishment of any of the powers herein
granted, whether for a term extending beyond the office of the Trustee
or beyond the possible termination of the Fund or for a lesser term;
(g) subject to Section 4.3, to the extent permitted by applicable
policies, rules or waivers of the Canadian securities regulatory
authorities, to
(i) establish a loan facility (the "Loan Facility") to borrow an
amount up to 15% of the Total Asset Value of the Fund,
calculated at the date of borrowing and as at the end of each
calendar quarter;
(ii) borrow money under the Loan Facility for the purposes of
buying additional securities or as a temporary measure to
fund redemptions of Trust Units or to settle transactions
within the Fund; and
(iii) charge, mortgage, hypothecate and/or pledge, free and clear
from any and all trusts, Fund Property, to secure payment of
any money so borrowed;
(h) to enter into and settle foreign exchange transactions on behalf of
the Fund for purposes of:
(i) facilitating settlement of trades of securities or other
property of the Fund; and
(ii) upon written instruction of the Manager, for currency hedging
or other purposes, and any such transaction may be entered
into with such counterparties as the Trustee may choose in
its sole discretion including its Affiliates or related
parties;
(i) to sell, convey, exchange for other securities or other property,
convert, transfer, assign, pledge, encumber or otherwise dispose of
any securities or other property held by it at any time, by any means
considered reasonable by the Trustee, and to receive the consideration
and grant discharges therefor;
(j) to incur and pay out of the property of the Fund any charges or
expenses and disburse any funds of the Fund, which charges, expenses
or disbursements are, in the opinion of the Trustee, necessary or
incidental to or desirable for the carrying out of any of the purposes
of the Fund or conducting the business of the Fund and are properly
payable by the Fund including, without limitation, taxes or other
governmental levies, brokerage commissions, security transfer taxes
and other charges arising from the purchase and sale of securities by
the Fund, accounting and valuation costs, audit and legal fees, the
cost of preparing and submitting financial statements to Unitholders
and the cost of preparing a prospectus and other disclosure documents
and assessments of whatever kind or nature, imposed upon or against
the Trustee in connection with the Fund or the property of the Fund or
upon or against the property of the Fund or any part thereof and for
any of the purposes herein;
(k) to accept subscriptions for Trust Units and to issue Trust Units in
respect thereof;
(l) to maintain books and records for the Fund;
(m) to employ, at the Fund's expense, such counsel, auditors, advisors,
agents or other Persons as the Trustee may deem necessary from time to
time for the purpose of discharging its duties hereunder;
(n) to delegate any of the powers and duties of the Trustee to the Manager
and, with prior authorization of the Manager, to any Investment
Advisor, agents, representatives, officers, employees, independent
contractors or, other Person (including its Affiliates), all without
liability to the Trustee;
(o) to determine upon the direction of the Manager all questions and
matters of doubt which may arise in the course of the administration
of the Fund or distribution of the Fund Property or upon the
dissolution and termination of the Fund in accordance with the terms
and conditions herein to the extent that such matters are not
otherwise dealt with herein; and
(p) to do all other such acts and things as are incidental to the
foregoing, and to exercise all powers which are necessary to carry out
the provisions hereof and the duties of the Trustee prescribed herein.
The exercise of any one or more of the foregoing powers or any combination
thereof in accordance with this Trust Agreement from time to time shall not be
deemed to exhaust the rights of the Trustee to exercise such power or powers or
combination of them thereafter from time to time.
6.3 Duties of the Trustee
In addition to the duties of the Trustee set forth elsewhere herein,
the Trustee shall have the following specific duties with respect to the Fund:
(a) to provide, or cause to be provided, certain day-to-day
administration, including the processing, or arranging for the
processing by the Transfer Agent, of redemptions and subscriptions;
(b) to maintain, or cause to be maintained, accounting and financial
records and to provide, or cause to be provided, bookkeeping and other
accounting services required by the Fund;
(c) to prepare and file, or cause to be prepared and filed, any tax
returns required to be made or filed with any governmental authority;
(d) to provide the Manager with such financial information relating to the
Fund as the Manager may reasonably require in a format as may be
agreed by the Trustee and the Manager from time to time; and
(e) subject to the standard of care and applicable law, to comply with and
implement any instruction or direction given by the Manager or an
Investment Advisor pursuant to this Agreement or an Investment
Advisory Agreement in the exercise of the rights and powers as the
Manager or an Investment Advisor, as the case may be, hereunder or
under the Management Agreement or an Investment Advisory Agreement.
6.4 Custodian of Assets
The Trustee shall be the custodian of the Fund Property. The custodian
may be granted the authority to appoint one or more sub-custodians provided
that such appointment is made in accordance with NI 81-102 and all other
applicable regulatory requirements. The custodian may register the securities
or other Fund Property in its own name or in the names of its nominees, or in
the name of any duly appointed sub-custodian or nominee of a sub-custodian or
authorized depository, or maintain securities in bearer form. The custodian may
be empowered to keep the securities or other Fund Property, wholly or partly,
in its principal office or in any one or more of its branches in any province
of Canada; or at the office of any duly appointed sub-custodian of the Fund
Property; or to hold securities through the facilities of any depository or
clearing agency which is duly authorized to operate a book-based system
(including a transnational book-based system) in the jurisdiction in which such
depository or clearing agency is located; all as the custodian may determine so
long as the securities and other property of the Fund at all times are kept
distinct from its own assets and those of its nominees and any other Person in
the registers and other books of account kept by the custodian. A separate
agreement may be entered into with respect to the duties and obligations of the
Trustee in its capacity as custodian.
6.5 Subscription Proceeds
The Trustee shall receive subscription proceeds in respect of the
initial public offering of Trust Units of the Fund and hold the same in trust
for the subscribers in accordance with a separate agreement to be entered into
with respect thereto.
6.6 Dealing with Others and Self
The Trustee is hereby expressly authorized from time to time in its
sole discretion to appoint, employ, invest in, contract with or deal with any
Person including itself, any of its Affiliates or any Person in which it may be
directly or indirectly interested, whether on its own account or for the
account of another (in a fiduciary capacity or otherwise) and, without limiting
the generality of the foregoing, the Trustee may:
(a) purchase, hold, sell, invest in or otherwise deal with securities or
other property of the same class and nature as may be held by the
Fund, whether on the Trustee's own account or for the account of
another (in a fiduciary capacity or otherwise);
(b) invest in the securities or other property of any Person with which
the Trustee may be directly or indirectly associated, affiliated or
interested; and
(c) use knowledge gained in its capacity as trustee hereunder in other
capacities, provided that such use does not adversely affect the
interests of the Fund, the Manager or the Investment Advisor, and
provided further that the Trustee may not make use of any confidential
information of the Fund, the Manager or the Investment Advisor,
without being liable to account therefor and without being in breach
of any trust established hereunder; provided, however, that
notwithstanding the foregoing, the Trustee shall not utilize for its
own benefit or for the benefit of its Affiliates or any Person other
than the Fund, any information obtained in connection with the
execution of its duties hereunder with respect to the Manager's or
Investment Advisor's executed or proposed transactions or strategies
for the Fund.
6.7 Trustee May Sell Assets to Meet Fund Obligations
Notwithstanding any other provision of this Trust Agreement, the
Trustee may dispose of any Fund Property, on such terms as the Trustee may in
its sole discretion determine, for the purpose of paying any obligations
imposed on the Fund or for repaying any loan authorized hereby. If the Trustee
makes any disposition of Fund Property pursuant to this Section 6.6, the
Trustee shall give prompt notice thereof to the Manager.
ARTICLE 7 - POWERS AND DUTIES OF MANAGER
7.1 Powers of Manager
The Trustee shall appoint or retain the Manager to manage the business
and affairs of the Trust on such terms and conditions as the Trustee shall
determine. Except as otherwise provided herein or as expressly prohibited by
law, the Trustee may grant or delegate to the Manager such authority as the
Trustee may in its sole discretion deem necessary or desirable to effect the
actual administration of the duties of the Trustee under this Trust Agreement,
without regard to whether such authority is normally granted or delegated by
trustees. The Trustee may grant broad discretion to the Manager to, among other
things, administer and manage the day-to-day operations of the Trust, to act as
agent for the Trust, to execute documents on behalf of the Trust and to make
decisions which conform to general policies and general principles set forth
herein or established by the Trustee. The Manager shall have the powers and
duties expressly provided for herein and in the Management Agreement, including
the power to further delegate administration of the Trust (including to an
Investment Advisor), where in the discretion of the Manager, it would be in the
best interests of the Trust and the Unitholders to do so. For greater
certainty, it is hereby confirmed that the Trustee shall have no responsibility
for the investment management of the Fund Property or for any investment
decisions (including responsibility for ensuring compliance with Sections 2.5
and 2.6) save and except for carrying out the instructions given to it pursuant
to the Management Agreement.
7.2 Rights and Duties of Manager
In addition to the rights and duties set forth herein, the Manager
shall have the rights and perform the duties set forth in the Management
Agreement.
7.3 Successor Manager
The appointment of the Manager may be terminated and the Manager may
resign in accordance with the provisions of the Management Agreement. Upon such
resignation or termination, the Trustee shall promptly appoint a successor
manager to carry out the activities of the Manager. The successor manager shall
be the Manager for all purposes of this Trust Agreement and the Manager
covenants and agrees to execute and deliver all such documents as may be
necessary or desirable in connection with such appointment.
ARTICLE 8 - FEES, COMPENSATION AND EXPENSES
8.1 Trustee's Fee
For all of the services provided by the Trustee under this Trust
Agreement, the Trustee shall receive fees which shall be paid from the Fund
Property. The amount of such fees shall be agreed to in writing by the Manager
and the Trustee from time to time. The Trustee shall receive no other
compensation for its services as trustee, custodian or otherwise under this
Trust Agreement, but nothing herein shall prevent the Trustee from receiving
additional compensation in connection with additional services not provided for
herein that may be performed by the Trustee, including services performed for
and dealings with the Fund by the Trustee other than in the capacity of trustee
of the Fund.
8.2 Manager's Fee
The Fund shall pay to the Manager such fees as are payable to the
Manager under the Management Agreement.
8.3 Expenses
Except as otherwise provided herein or in the Management Agreement,
all expenses incurred in the operation and administration of the Fund shall be
paid from the Fund Property, including the following:
(a) fees and expenses payable to the Trustee for acting as trustee;
(b) fees and expenses payable to the custodian of the assets of the Fund;
(c) fees and expenses payable to the Transfer Agent of the Fund;
(d) banking fees and interest with respect to the Loan Facility;
(e) fees and expenses payable to the Auditors and legal advisors of the
Fund;
(f) regulatory filing, stock exchange and licensing fees;
(g) expenses incurred upon termination of the Fund;
(h) all expenses associated with the issue, sale and distribution of Fund
Securities including commissions and out of pocket expenses payable to
the agents or underwriters or others in connection with the offering
of Fund Securities;
(i) commissions, brokerage fees and other fees relating to the
implementation of transactions for the Portfolio;
(j) any taxes payable by the Fund or to which the Fund may be subject;
(k) any expenses of insurance and costs of all suits or legal proceedings
in connection with the Fund or the Fund Property or to protect the
Unitholders, the Trustee, the Manager, any Investment Advisor and the
directors, officers, employees or agents of the Trustee, the Manager
and any Investment Advisor;
(l) any expenses of indemnification of the Trustee, the Unitholders, the
Manager or any Investment Advisor, or their respective directors,
officers, employees or agents to the extent permitted hereunder or
under the Trust Agreement or any Investment Advisory Agreement;
(m) expenses relating to the preparation, printing and mailing of
information, including periodic reports, to Unitholders and holders of
other Fund Securities and relating to meetings of Unitholders and
holders of other Fund Securities; and
(n) legal, accounting and audit fees of the Trustee, custodian, Manager
and any Investment Advisor which are incurred in respect of the Fund's
activities.
ARTICLE 9 - LIABILITY AND INDEMNIFICATION OF TRUSTEE
9.1 Standard of Care
The Trustee shall exercise its powers and discharge its duties
hereunder honestly and in good faith, with a view to the best interests of
Unitholders, and in connection therewith shall exercise the degree of care,
diligence and skill that a reasonably prudent trustee would exercise in
comparable circumstances.
9.2 Reliance
The Trustee may rely and act upon any statement, report or opinion
prepared by, or any advice received from, the Auditors, solicitors or other
professional advisors of the Fund, and, provided the Trustee exercises
reasonable care in selecting such advisors or such advisors are selected by the
Manager, the Trustee shall not be responsible or held liable for any loss or
damage resulting from so relying or acting if the advice was within the area of
professional competence of the Person from whom it was received and the Trustee
acted in good faith in relying thereon.
The Trustee shall in no way be responsible for, nor incur any
liability based on, acting or failing to act pursuant to or in reliance on
instructions of the Manager (if the Manager is not the Trustee) or, if
applicable, an Investment Advisor, so long as the Trustee acted in good faith
in following such instructions and the authority to provide such instructions
was within the scope of the Manager's or, if applicable, an Investment
Advisor's powers hereunder. The Trustee shall in no way be responsible for, nor
incur any liability for, not acting if the Manager or, if applicable, an
Investment Advisor, does not provide instructions and the Manager or, if
applicable, an Investment Advisor, is required hereunder to provide such
instructions.
Subject to Section 9.1, the Trustee may act and rely, and shall be
fully protected in acting and relying upon in good faith, any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, letter, telegram, facsimile transmission or other paper document
believed by it to be genuine and to have been signed, sent or presented by or
on behalf of the proper party or parties.
9.3 General Disclaimer of Liability
The Trustee shall not be liable to the Fund or to any Unitholder for
any loss or damage relating to its carrying out its duties as trustee under
this Trust Agreement, including any loss or diminution in the value of the Fund
Property, except to the extent that the Trustee has failed to meet the standard
of care set forth in Section 9.1 or otherwise failed to comply with its
obligations under this Trust Agreement.
9.4 Indemnification of Trustee
The Trustee, its directors, officers, employees and agents shall be
indemnified and saved harmless out of the Fund Property from and against:
(a) all claims whatsoever (including costs, charges, expenses and
liabilities in connection therewith) brought, commenced or prosecuted
against them for or in respect of any act, deed, matter or thing
whatsoever made, done, acquiesced in or omitted in or about or in
relation to the execution of its duties as Trustee of the Fund; and
(b) all other reasonable costs, charges, expenses and liabilities that it
sustains or incurs in or about or in relation to the affairs of the
Fund,
other than any such claims, costs, charges, expenses and liabilities resulting
from the Trustee's negligence, wilful misconduct or lack of good faith, its
failure to fulfil its obligations hereunder or the failure to meet the standard
of care set forth in Section 9.1.
The Trustee shall not be required to expend or risk its own funds in
fulfilling its obligations hereunder.
9.5 Trustee Not Liable for Taxes, etc.
The Trustee shall not be liable for any taxes, assessments or other
governmental charges levied with respect to the Fund or the Trust Units or upon
the Fund Property or any part thereof, or upon the income thereof or any
interest of any Unitholder therein or thereunder except to the extent the same
is properly payable from the Fund Property. If the Trustee at any time shall
make any disbursements from the Trustee's own property for any such tax,
assessment or other governmental charge which is payable from the Fund
Property, the Trustee shall be entitled to be reimbursed therefor out of the
Fund Property.
9.6 Trustee May Seek Directions
If the Trustee, acting reasonably, shall be uncertain concerning its
duties or rights hereunder or shall have received instructions, directions,
claims or demands which in its opinion are in conflict with any of the
provisions of this Trust Agreement, or if the Trustee shall have requested a
consent, receipt or notice from any party and such consent, receipt or other
notice has not been received, the Trustee, after giving notice of its intention
to do so to the Manager, shall be entitled to seek directions of a court of
competent jurisdiction and it shall have no duty to act in such circumstances
until the issue has resolved.
ARTICLE 10 - LIABILITY AND INDEMNIFICATION
OF MANAGER AND INVESTMENT ADVISORS
10.1 Standard of Care
The Manager shall exercise its powers and discharge its duties
hereunder honestly, in good faith and in the best interests of Unitholders and
in connection therewith shall exercise the degree of care, diligence and skill
that a reasonably prudent manager would exercise in comparable circumstances.
10.2 Limitation of Liability
So long as the Manager has complied with the standard of care set
forth in Section 10.1 and has not otherwise failed to comply with its
obligations under this Trust Agreement, the Manager shall not be liable to the
Trustee, the Fund, any Unitholder, or any other Person for any loss or damage
relating to any matter regarding the Fund, including any loss or diminution in
the value of the Fund Property. The Manager may employ or engage, and rely and
act on information or advice received from, Investment Advisors, dealers,
distributors, brokers, depositories, custodians, electronic data processors,
advisors, lawyers, accountants and others and, provided the Manager exercised
reasonable care in selecting such Persons or such Persons were selected by the
Trustee, shall not be responsible or liable for any loss or damage resulting
from so relying or acting if the advice was within the area of professional
competence of the Person from whom it was received, and the Manager acted in
good faith in relying thereon.
10.3 Indemnification of Manager
The Manager and its officers, directors, employees and agents shall be
indemnified and saved harmless by the Fund out of the Fund Property from and
against:
(a) all claims whatsoever (including costs, charges, expenses and
liabilities in connection therewith) brought, commenced or prosecuted
against them for or in respect of any act, deed, matter or thing
whatsoever made, done, acquiesced in or omitted in or about or in
relation to the execution of the duties of the Manager as herein
provided; and
(b) all other reasonable costs, charges, expenses and liabilities that
they sustain or incur in respect of the affairs of the Fund;
other than any such claims, costs, charges, expenses and liabilities resulting
from wilful misconduct, bad faith, negligence, a breach of the obligations of
the Manager hereunder or the failure by the Manager to meet the standard of
care set forth in Section 10.1.
If any claim contemplated in this Section 10.3 shall be asserted
against a person or company entitled to indemnification hereunder (an
"Indemnified Person") the Indemnified Person shall notify the Trustee as soon
as possible of the nature of such claim and the Trustee shall be entitled (but
not required) to assume the defence of any suit brought to enforce such claim,
provided, however, that the defence shall be through legal counsel acceptable
to the Indemnified Person and that no settlement may be made by the Indemnified
Person without the prior written consent of the Trustee. If the Trustee does
not assume such defence, the Manager may do so. The fees and expenses of legal
counsel (whether the defence is assumed by the Trustee or the Manager) shall be
paid from the Fund Property as provided in this Section 8.3, but shall be
reimbursed to the Fund if the Manager is not entitled to indemnity in respect
thereof pursuant to this Article 10.
The Indemnified Person shall have the right to employ separate counsel
in any proceeding described above and participate in the defence thereof but
the fees and expenses of such counsel shall be at the expense of the
Indemnified Person unless: (i) the employment of such counsel has been
authorized by the Trustee; or (ii) the named parties to any such proceeding
include the Trustee and the Indemnified Person and representation of the
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them, in which event the fees and expenses of such
counsel shall be paid from the Fund Property as provided in this Section 10.3,
but shall be reimbursed to the Fund if the Indemnified Person is not entitled
to indemnity in respect thereof pursuant to this Article 10.
10.4 Manager Not Liable for Taxes, etc.
The Manager shall not be liable for any taxes, assessments or other
governmental charges levied with respect to the Fund or the Trust Units or upon
the Fund Property or any part thereof or upon the income thereof or any
interest of the Trustee or of any Unitholder therein or thereunder. If the
Manager at any time shall make any disbursements for any such tax, assessment
or other governmental charge in respect of the Fund, the Manager shall be
entitled to be reimbursed therefor out of the Fund Property.
ARTICLE 11 - CHANGE OF TRUSTEE
11.1 Resignation of Trustee
The Trustee may resign as trustee of the Fund by giving notice in
writing to Unitholders not less than 60 days prior to the date when such
resignation is to take effect. No such resignation shall be effective until the
appointment of, and acceptance of such appointment by, a new trustee in the
place of the resigning Trustee.
11.2 Removal of Trustee
The Trustee may be removed as trustee of the Fund at any time by
Extraordinary Resolution passed at a meeting of Unitholders called for such
purpose or by the Manager upon the occurrence of a Termination Event in respect
of the Trustee. The removal of the Trustee under this Section 11.2 shall not be
effective until the appointment of, and acceptance of such appointment by, a
new trustee in the place of the Trustee to be removed.
11.3 Appointment of Successor Trustee
If the Trustee resigns or is removed as trustee of the Fund, or the
Trustee becomes incapable of acting, or if for any other reason a vacancy
occurs in the office of Trustee, a successor Trustee may forthwith be appointed
by the Manager to fill such vacancy and, notwithstanding Section 16.3, such
appointment need not be approved by Unitholders unless the Trustee has been
removed by Unitholders in which case the Manager shall forthwith after making
such appointment, call a meeting of Unitholders for such purpose. Forthwith
following such appointment of a successor Trustee, the former Trustee shall
account to the new Trustee for all Fund Property which the former Trustee holds
as trustee, and shall execute and deliver such documents as the new Trustee may
require for the conveyance of any Fund Property held in the Trustee's name.
If the Manager fails to appoint a successor Trustee within 60 days or
such appointment is not approved by the Unitholders as aforesaid and the
Manager fails within 60 days to appoint another successor, the Trustee, the
Manager or any Unitholder may apply to a court of competent jurisdiction for
the appointment of a successor Trustee. The appointment of such successor by
such court shall not require the approval of Unitholders.
11.4 Qualifications of Trustee
The Trustee shall be a corporation incorporated under the laws of
Canada or of a province thereof. Such corporation must at all times when it is
the Trustee or permitted by law to act as a trustee, be registered under the
laws of Ontario to carry on the business of a trust company, and must have
undertaken in writing to discharge all of the obligations and responsibilities
of the Trustee hereunder.
11.5 Successor Trustees
Any successor Trustee, by accepting appointment as such, shall
automatically be bound by the terms hereof as if the successor Trustee had been
an original signatory hereto, provided that such successor Trustee shall not be
responsible or liable for any act or omission of the prior Trustee preceding
its appointment as successor Trustee. Any company into which the Trustee may be
merged or with which it may be consolidated or amalgamated or any company
resulting from any merger, consolidation or amalgamation to which the Trustee
shall be a party, shall be the successor Trustee under this Trust Agreement,
without the execution of any instrument or father act.
ARTICLE 12 - BOOK-ENTRY SYSTEM; CERTIFICATES, REGISTRATION AND
TRANSFER OF UNITS
12.1 Book-Entry Certificate
Unless the Trustee otherwise determines and except for the Initial
Trust Unit, registration of interests in and transfers of the Trust Units will
be made through the Book-Entry Only System. The Trustee shall request that the
Transfer Agent register such Book-Entry Only Trust Units in the name of CDS or
its nominee in such denominations as the Fund may specify. A global Trust Unit
Certificate or Certificates representing such Book-Entry Only Trust Units
registered in the name of CDS or its nominee and authenticated by the Trustee
will be held by CDS. No Beneficial Holder will receive definitive Trust Unit
Certificate(s) representing such Beneficial Holder's interest in the Book-Entry
Only Trust Units except as provided in Section 12.4. Unless and until
definitive Trust Unit Certificates have been issued to the Beneficial Holders
pursuant to Section 12.4:
(a) the Fund and the Trustee may deal with CDS for all purposes (including
the making of distributions on the Book-Entry Only Trust Units) as the
sole holder of the Book-Entry Only Trust Units and the authorized
representative of the Beneficial Holders;
(b) the rights of the Beneficial Holders shall be exercised only through
CDS and shall be limited to those established by law and agreements
between such Beneficial Holders and CDS or CDS Participants;
(c) CDS will make book-entry transfers among CDS Participants and receive
and transmit distributions on the Book-Entry Only Trust Units to such
CDS Participants; and
(d) whenever this Trust Agreement requires or permits actions to be taken
based upon instructions or directions of Unitholders evidencing a
specified percentage of the outstanding Trust Units, CDS 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
CDS Participants and has delivered such instructions to the Trustee.
12.2 Notice to Clearing Agency
Whenever a notice or other communication is required to be provided to
Unitholders, unless and until definitive Trust Unit Certificate(s) have been
issued to Beneficial Holders pursuant to Section 12.4, the Trustee shall
provide all such notices and communications to CDS and CDS shall deliver such
notices and communications to the Beneficial Holders in accordance with the
Securities Act (Ontario) and other applicable securities laws (including
national policies or instruments).
12.3 Liability
Subject to compliance with the provisions of Section 12.1, neither the
Fund nor the Trustee shall have any responsibility or liability for any aspect
of the records relating to or payments made by CDS to or for the benefit of
Beneficial Holders on account of their beneficial interest in any Book-Entry
Only Trust Units.
12.4 Definitive Certificates
If:
(a) CDS advises the Fund that it is no longer willing or able to discharge
properly its responsibilities as depository with respect to the
Book-Entry Only Trust Units and the Fund is unable to locate a
qualified successor; or
(b) the Trustee, upon the recommendation of the Manager, advises CDS in
writing that it has elected to terminate its participation in the
Book-Entry Only System in respect of the Trust Units;
the Trustee shall so notify CDS and request that CDS notify all Beneficial
Holders of the occurrence of any such event and of the availability to
Beneficial Holders of definitive Trust Unit Certificate(s). As soon as is
reasonably practicable thereafter, upon the surrender by CDS to the Trustee of
the global Trust Unit certificate or certificates representing the Book-Entry
Only Trust Units, the Fund shall execute and the Trustee shall certify and
issue through CDS definitive Trust Unit Certificate(s) in a form adopted by the
Trustee and prepared in compliance with all applicable laws to the same extent
as if the Fund were an OBCA Corporation, register such Trust Unit Certificates
in the names of such Persons as CDS may direct and deliver such Trust Unit
Certificates in accordance with the instructions of CDS, all based on
instructions received by CDS from the Beneficial Holders, and cause the names
of such Persons as CDS has instructed to be entered on the register. Neither
the Fund nor the Trustee shall be liable for any delay in delivery of such
instructions. Upon the issuance of definitive Trust Unit Certificate(s), the
Trustee shall recognize the registered holders of the definitive Trust Unit
Certificate(s) as holders of Trust Units.
12.5 Nature of Trust Unit Certificates
The provisions of this Article 12 shall not in any way alter the
nature of the Trust Units or the relationships of a Unitholder to the Trustee
and of one Unitholder to another but are intended only to facilitate the
issuance of certificates evidencing the ownership of Trust Units if desirable
to issue them to Trust Unitholders and the recording of all transactions in
respect of Trust Units and Trust Unit Certificates whether by the Fund,
securities dealers, stock exchanges, Transfer Agents or other persons.
12.6 Certificates
Subject to the provisions of Section 12.1, every Unitholder or his
duly authorized agent is entitled to a Trust Unit Certificate bearing an
identifying serial number in respect of the Trust Units held by him, signed in
the manner hereinafter prescribed, but the Trustee is not bound to issue more
than one Trust Unit Certificate in respect of a Trust Unit or Trust Units held
jointly or in common by two or more Persons and delivery of a Trust Unit
Certificate to one of them shall be sufficient delivery to all.
12.7 Certificate Fee
The Trustee may establish a reasonable fee to be charged for every
Trust Unit Certificate issued, and the fee shall be paid by the Trust.
12.8 Form of Certificates
(a) The Trust Unit Certificate shall be in such form as is from time to
time authorized by the Trustee.
(b) If issued, Trust Unit Certificates are issuable only in fully
registered form.
(c) Each Trust Unit Certificate shall be signed on behalf of the Trustee
and, subject to Section 12.10, the Transfer Agent. The signature of
the Trustee required to appear on the certificate may be printed,
lithographed or otherwise mechanically reproduced thereon and, in such
event, certificates so signed are as valid as if they had been signed
manually.
12.9 Register of Unitholders
A register shall be kept by, or on behalf and under the direction of,
the Trustee, which register shall contain the names and addresses of the
Unitholders, the respective numbers of Trust Units held by them, the
certificate numbers of the Trust Unit Certificates representing such Trust
Units and a record of all transfers and redemptions thereof. Subject to the
provisions of Sections 12.1 to 12.4, only Unitholders whose Trust Units are so
recorded shall be entitled to receive distributions and to exercise or enjoy
the rights of Unitholders hereunder. The Person registered as a Unitholder on
the register of the Fund shall be treated as the owner of such Trust Unit for
all purposes, including without limitation payment of any distribution, giving
notice to Unitholders and determining the right to attend and vote at meetings
of Unitholders. Accordingly, neither the Trustee nor the Manager shall be bound
to recognize any transfer or attempted transfer, pledge or other disposition of
a Trust Unit, or any equitable or other claim with respect thereto, whether or
not the Fund, the Trustee or the Manager shall have actual or other notice
thereof, until such Trust Unit shall have been transferred on the register of
the Fund as herein provided. Notwithstanding the foregoing, in the event Trust
Units are issued as Book-Entry Only Trust Units, the provisions of Sections
12.1 to 12.4 shall apply.
12.10 Transfer Agents and Registrars
In pursuance of its power to engage the services of consultants and
agents, the Trustee may appoint itself or one of its affiliates and/or one or
more chartered banks or banking institutions or trust companies to act as
Transfer Agents for the Trust Units (which may be but need not be the Trustee
or the same chartered bank or banking institution or trust company) and may
provide for the transfer of Trust Units of the Fund in one or more places
within or outside Canada (provided that if such appointments are made there
shall be a transfer agent and registrar within the Province of Ontario). The
Trustee may enter into agency agreements with such Transfer Agents and may pay
their compensation out of the Fund Property. In the event of such appointment,
such Transfer Agents shall keep all necessary registers and other books (which
may be kept on a computer or similar device) for recording original issues and
registering and transferring the Trust Units of the Trust. If the Trustee has
appointed a Transfer Agent, no Trust Unit Certificate shall be valid unless
countersigned by or on behalf of a Transfer Agent. Except as required by this
Trust Agreement, or by the Trustee, such Transfer Agents shall perform those
functions and duties usually performed by Transfer Agents of shares of
corporations having share capital. In the case of an original issue of Trust
Units, any Transfer Agent may rely and act upon the written instruction of the
Trustee without inquiry into the receipt by the Fund of, or the sufficiency of,
the consideration for such original issue.
12.11 Blank Certificates
In accordance with the usual custom of corporations with share capital
which have a transfer agent, signed Trust Unit Certificates in blank may be
deposited by the Trustee with any transfer agent of the Trust, to be used by
the transfer agent in accordance with the authority, conferred upon it as
occasion may require, and in so doing neither the Trustee nor other signatory
of such Trust Unit Certificates shall be responsible for any loss resulting
from such deposit.
12.12 Transfer of Trust Units
(a) Subject to Section 3.4, Trust Units shall be, for all purposes of the
Fund and this Trust Agreement, personal and moveable property, and
shall be transferable at any time and from time to time by endorsement
and delivery of the Trust Unit Certificates in the same manner and
subject to the same provisions and conditions, so near as may be, as
are applicable to transfers of shares of OBCA Corporations. Transfers
shall be recorded on the register of Unitholders and a new Trust Unit
Certificate for the Trust Units so transferred shall be issued to the
transferee, and in case of a transfer of only part of the Trust Units
represented by any Trust Unit Certificate, a new Trust Unit
Certificate for the residue thereof shall be issued to the transferor.
If Trust Units are issued as Book-Entry Only Trust Units, the
provisions of Sections 12.1 to 12.4 apply.
(b) The Trustee shall not impose any restriction on the transfer of Trust
Units except pursuant to Section 3.4 unless such restriction is
necessary, in the opinion of counsel to the Fund: (i) as a condition
of obtaining or maintaining the status of the Fund as a "unit trust"
or "mutual fund trust" under the Tax Act; (ii) in order to comply with
any applicable laws, regulations or other requirements imposed by
regulatory authorities; or (iii) in order to obtain, maintain or renew
any licences, rights, status or powers pursuant to any other
applicable laws, regulations or other requirements imposed by any
stock exchange or other applicable regulatory authorities. If any such
restriction is or becomes necessary, the Trustee shall have the power
to restrict the transfer of Trust Units on the books of the Fund
without liability to Unitholders or others who are thereby restricted
from making a transfer.
(c) The Trustee may require any Unitholder, upon demand from time to time,
to disclose to the Trustee in writing such information with respect to
direct and indirect ownership of Trust Units as the Trustee may deem
necessary to comply with any of the foregoing.
(d) Trust Unit Certificates representing any number of Trust Units may be
exchanged without charge for Trust Unit Certificates representing an
equivalent number of Trust Units in the aggregate. Any exchange of
Trust Unit Certificates may be made at the offices of the Fund or any
Transfer Agent appointed by the Trustee where registers are maintained
for Trust Unit Certificates pursuant to the provisions of this Article
12. Any Trust Unit Certificates tendered for exchange shall be
surrendered to the Trustee or appropriate Transfer Agent and then
shall be cancelled.
12.13 Successors in Interest of Unitholders
Any Person becoming entitled to any Trust Units as a consequence of
the death, bankruptcy or incompetence of any Unitholder, or otherwise by
operation of law, shall be recorded as the holder of such Trust Units and shall
receive a new Trust Unit Certificate (if Trust Unit Certificates are being
issued) therefor upon production of evidence thereof satisfactory to the
Trustee and delivery of the existing Trust Unit Certificate to the Trustee or a
Transfer Agent. Until such record is made, the Unitholder of record shall
continue to be and be deemed to be the holder of such Trust Units for all
purposes, whether or not the Fund, the Trustee, the Manager, or a Transfer
Agent shall have actual or other notice of such death, bankruptcy, incompetence
or other event.
12.14 Trust Units Held Jointly or in Fiduciary Capacity
The Fund may treat two or more Persons holding any Trust Unit as joint
owners of the entire interest therein unless their ownership is expressly
otherwise recorded on the register of the Fund, but no entry shall be made in
the register or on any Trust Unit Certificate that any Person is in any other
manner entitled to any future, limited or contingent interest in any Trust
Unit; provided, however, that any Person recorded as a holder of any Trust Unit
may, subject to the provisions herein contained, be described in the register
or on any certificate as a fiduciary of any kind and any customary words may be
added to the description of the holder to identify the nature of such fiduciary
relationship.
12.15 Performance of Trusts
The Trustee, the Manager, the Unitholders, any Transfer Agent or other
agent of the Fund or the Trustee shall not be bound to see to the performance
of any trust, express, implied or constructive, or of any charge, pledge or
equity to which any of the Trust Units or any interests therein are or may be
subject, or to ascertain or inquire whether any sale or transfer of any such
Trust Units or interests therein by any such Unitholder or his personal
representatives is authorized by such trust, charge, pledge or equity, or to
recognize any Person as having any interest therein, except for the Person
recorded as Unitholder.
12.16 Lost Certificates
In the event that Trust Unit Certificates are issued and any Trust
Unit Certificate is lost, stolen, destroyed or mutilated, the Trustee may
authorize the issuance of a new Trust Unit Certificate for the same number of
Trust Units in lieu thereof. The Trustee may in its discretion, before the
issuance of such new Trust Unit Certificate, require the owner of the lost,
stolen, destroyed or mutilated Trust Unit Certificate, or the legal
representative of the owner, to make such affidavit or statutory declaration
setting forth such facts as to the loss, theft, destruction or mutilation as
the Trustee deems necessary and may require the applicant to supply to the Fund
a "lost certificate" or similar bond in such reasonable amount as the Trustee
directs, indemnifying the Trustee, the Manager and the Transfer Agents for so
doing. The Trustee shall have the power to acquire from an insurer or insurers
a blanket lost security bond or bonds in respect of the replacement of lost,
stolen, destroyed or mutilated Trust Unit Certificates. The Fund shall pay all
premiums and other sums of money payable for such purpose out of the Fund
Property with such contribution, if any, by those insured as may be determined
by the Trustee. If such blanket lost security bond is acquired, the Trustee may
authorize and direct (upon such terms and conditions as the Trustee may from
time to time impose) any Transfer Agent, trustee, paying agent or others to
whom the indemnity of such bond extends to take such action to replace lost,
stolen, destroyed or mutilated Trust Unit Certificates without further action
or approval by the Trustee. The Trustee shall be entitled to charge a
reasonable fee to Unitholders for the replacement of lost Trust Unit
Certificates.
12.17 Death of Unitholders
The death of a Unitholder during the continuance of the Fund shall not
terminate the Fund or any of the mutual or respective rights and obligations
created by or arising under this Trust Agreement or give such Unitholder's
legal representatives a right to an accounting or to take any action in the
courts or otherwise against other Unitholders or the Trustee, the Manager, or
the Fund Property, but shall only entitle the legal representatives of the
deceased Unitholder to demand and receive, pursuant to the provisions of
Section 12.13 hereof, a new Trust Unit Certificate in place of the Trust Unit
Certificate held by the deceased Unitholder, and upon the acceptance thereof
such legal representatives shall succeed to all rights of the deceased
Unitholder under this Trust Agreement.
12.18 Unclaimed Distributions
In the event that the Trustee holds any distributable amounts which
are unclaimed or which cannot be paid for any reason, neither the Trustee nor
its distribution disbursing agent shall be under any obligation to invest or
reinvest the same but shall only be obligated to hold the same in a current or
other non-interest bearing account with a chartered bank or trust company,
pending payment to the Person or Persons entitled thereto. The Trustee shall,
as and when required by law, and may at any time prior to such required time,
pay all or part of the distributable amounts so held to the public trustee (or
other similar government official or agency) whose receipt shall be a good
acquittance and discharge of the obligations of the Trustee.
12.19 Notice to Unitholders of Non-Eligibility for Deferred Income Plans
If the Trustee becomes aware that the Trust Units have ceased to be
qualified investments for registered retirement savings plans, registered
retirement income funds, deferred profit sharing plans and registered education
savings plans (all within the meaning of the Tax Act) or any of such plans, the
Trustee shall give notice to Unitholders at their latest address as shown on
the register of Unitholders that Trust Units have ceased to be qualified
investments for such plans. The Trustee shall not be liable to the Fund or to
any Unitholder for any costs, expenses, charges, penalties or taxes imposed
upon a Unitholder as a result of or by virtue of a Trust Unit not being a
qualified investment for any such plan, notwithstanding any failure or omission
of the Trustee to have given such notice, provided the Trustee has complied
with Section 3.5.
12.20 Declaration as to Beneficial Owner
The Trustee may require any Unitholder as shown on the register of
Unitholders to provide a declaration, in form prescribed by the Trustee, as to
the beneficial owner of Trust Units registered in such Unitholder's name and as
to the jurisdiction in which such beneficial owner is resident.
12.21 Rights to Inspect Register
The register of Unitholders shall be made available, without charge,
for inspection at all reasonable times by the Manager, Unitholders and
creditors of the Fund or their duly authorized representatives. The Manager may
at any time obtain a copy of the register. In addition, Unitholders and
creditors of the Fund may obtain a copy of the information contained in the
register of Unitholders by mail on written request, within a reasonable period
of time from the date of receipt of such request, subject to the Unitholder or
creditor:
(a) agreeing, in writing, that the information contained in the register
will not be used by the Person obtaining the information except in
connection with:
(i) an effort to influence the voting of Unitholders;
(ii) an offer to acquire Trust Units or other Fund Securities; or
(iii) any other matter relating to the affairs of the Fund; and
(b) paying a fee in an amount not exceeding the reasonable cost to the
Fund of providing the information.
ARTICLE 13 - DISTRIBUTIONS
13.1 Distributions of Capital Gains and Income
At least 25% of the Net Capital Gains, if any, arising from any sales
of the Fund's investments during any calendar year and at least 50% of the
Fund's Net Income, if any, earned during any calendar year will be payable by
the Fund effective December 31 of such calendar year to the Unitholders of
record on December 31 of such calendar year. Such amounts payable will be paid
by way of cash distribution on or prior to January 31 of the next year.
13.2 Additional Distributions
(a) On December 31 of each taxation year of the Fund (an "Additional
Distribution Date"), an amount equal to the Additional Distributable
Amount shall be payable to the Unitholders of record as at the close
of business on December 31 of such year and will be paid by way of
distribution on or before January 31 of the next year. Subject to
Section 13.2(c) and compliance with applicable securities laws and the
requirements of other regulatory authorities, such distributions shall
automatically be reinvested in additional Trust Units having a value
equal to the Additional Distributable Amount unless a Unitholder
requests, during the month of November, that the portion of the
Additional Distributable Amount payable to it in respect of the
current year be paid in cash. For the purposes of this Section 13.2,
the value of the additional Trust Units to be issued shall be
determined using the closing trading price (or if there was no trade,
the average of the last bid and the last ask prices) of the Trust
Units on such Additional Distribution Date (or, if such Additional
Distribution Date is not a business day, on the last business day
preceding the Additional Distribution Date) on the principal stock
exchange where the Trust Units are listed or, if not so listed, such
other value as the Trustee shall determine.
(b) Notwithstanding anything herein contained, the Fund shall in no case
be required to issue fractional Trust Units upon such reinvestment. If
any fractional interest in a Trust Unit would otherwise be issuable,
the Trust shall adjust such fractional interest by paying to the
Unitholder an amount in cash equal (to the nearest cent) to the
appropriate fraction of the value of a Trust Unit as determined above.
(c) Distributions payable under Section 13.2(a) to Unitholders who are not
residents of Canada will be paid in cash.
13.3 Other Distributions to Unitholders
The Fund may, also, in the discretion of the Manager, return
additional capital at any time in addition to the distributions contemplated by
Sections 13.1 and 13.2 if it is considers such additional distribution(s)
appropriate.
13.4 Tax Designations
In accordance with and to the extent permitted by the Tax Act, the
Fund, in each year (i) shall make designations in respect of amounts paid or
payable to Unitholders, including designations relating to taxable dividends
received by the Fund in the year on shares of taxable Canadian corporations,
net capital gains realized by the Fund in the year and foreign source income
received by the Fund in the year; and (ii) shall make designations in respect
of amounts that would thereby be deemed to have become payable to Unitholders
under subsection 104(29) of the Tax Act or otherwise.
13.5 Payment of Distributions
All distributions payable to a Unitholder, less any amount required to
be withheld therefrom under applicable law, shall be paid in Canadian funds by
the mailing or delivery of a cheque to CDS, so long as the Trust Units are
registered only in CDS's book-based system, or otherwise to the Unitholder at
his or her last address as shown in the record of Unitholders, or in such other
manner as the Trustee determines. Any payment so made shall, unless a cheque is
not honoured on presentation, discharge the Fund and the Trustee from all
liability to the Unitholder in respect of the amount thereof plus any amount
required by law to be withheld.
13.6 Additional Distributions, Designations and Determinations of Amounts
for Tax Purposes
The Trustee shall, on such date or dates and in such manner as the
Manager directs, make such additional distributions of monies or properties of
the Fund and make such designations, determinations and allocations for tax
purposes of amounts or portions of amounts which it has received, paid,
declared payable or allocated to Unitholders and of expenses incurred by the
Fund and of tax deductions to which the Fund may be entitled as the Manager may
direct.
13.7 Enforcement of Payment
Notwithstanding any other provision of this Article 13, a Unitholder
shall be entitled on a date on which a distribution is payable pursuant to this
Article 13 to enforce payment of the amount payable to and not yet received by
the Unitholder.
13.8 Withholding Tax
The Trustee shall deduct or withhold from distributions payable to any
Unitholders all amounts required by law to be withheld from such distribution.
ARTICLE 14 - REPORTS AND EXECUTION OF DOCUMENTS
14.1 Reports to Unitholders
Within 90 days after the end of each taxation year of the Fund (or
such shorter time as may be required by the Tax Act), the Trustee or, if
applicable, the Transfer Agent shall provide to CDS for delivery to CDS
Participants all forms required under the Tax Act with respect to amounts paid
or payable by the Fund to the Unitholder in the taxation year. In addition, the
Trustee shall send or arrange to have sent by the Transfer Agent to each
Unitholder reports containing such information and at such time as the Manager
may reasonably determine or as may be required under applicable law or policies
of applicable securities regulatory authorities, including unaudited
semi-annual financial statements and audited annual financial statements. No
Unitholder shall be entitled to any other accounting with respect to the Fund
or his holding of Trust Units, except as may be required by applicable laws,
regulations or governmental policies.
14.2 Material to be Furnished to Manager
The Trustee will cause to be furnished to the Manager from time to
time, in addition to any other documents required to be furnished hereunder:
(a) a certificate specifying the Persons, other than the Manager and its
designees, authorized to give approvals, consents or directions on
behalf of the Trustee, including specimen signatures of such Persons;
(b) copies of records maintained by the Trustee and the Transfer Agent;
(c) monthly reports as agreed by the Trustee and Manager from time to
time; and
(d) such other information and documents as the Manager may reasonably
request.
14.3 Execution of Documents
The Trustee shall have authority to sign on behalf of the Fund all
documents and any documents so signed shall be binding upon the Fund without
any further authorization or formality. The Trustee shall have power from time
to time to appoint any Person or Persons on behalf of the Fund, including the
Manager, either to sign documents generally, or to sign specific documents and
any such appointment may be contained in the Management Agreement or elsewhere.
The Trustee hereby appoints and delegates authority to the Manager to sign on
behalf of the Fund all documents as may be necessary or desirable in connection
with the issue, sale and distribution of Fund Securities, including
certificates to be included in prospectuses.
14.4 Execution of Documents by Manager and Investment Advisor
Any approval, consent, direction, order or request required or
permitted by this Trust Agreement to be given or made by the Manager or an
Investment Advisor shall (except where otherwise expressly provided herein) be
sufficiently given or made if expressed in writing signed in the name of the
Manager or such Investment Advisor by one of its duly authorized
representatives, as the same may be designated from time to time by the Manager
or such Investment Advisor in writing. The Manager and any Investment Advisor
shall furnish the Trustee with a certificate specifying the Persons authorized
to give such approvals, consents, directions, orders or requests on behalf of
the Manager or such Investment Advisor, including specimen signatures of
authorized individuals, and shall furnish replacement certificates as necessary
from time to time.
ARTICLE 15 - AUDITORS
15.1 Qualifications of Auditors
The Auditors shall be a firm of chartered accountants qualified to
practise in the Province of Ontario.
15.2 Appointment of Auditors
The Manager hereby appoints Xxxxxx Xxxxxxxx LLP, Chartered
Accountants, as the initial auditors of the Fund, to hold office at such
remuneration as may be agreed upon by the Manager.
15.3 Reports of Auditors
The Auditors shall audit the accounts of the Fund at least once in
each year, shall make a report to the Trustee and the Unitholders on the annual
financial statements of the Fund and fulfil such other responsibilities as they
may properly be called upon to assume.
15.4 Access to Records
The Auditors shall have access to all records relating to the affairs
of the Fund including the relevant records of the Manager, any Investment
Advisor, the Trustee, any custodian and the Transfer Agent.
15.5 Change of Auditors
The Auditors may at any time resign or, with the consent of
Unitholders given by a simple majority vote at a meeting duly called and held
for such purpose, be removed by the Manager. Upon the resignation or the
removal of Auditors as aforesaid, new Auditors shall be appointed by the
Manager and a meeting of Unitholders shall forthwith be called to confirm such
appointment.
ARTICLE 16 - AMENDMENTS
16.1 Amendments Without Notice to Unitholders
This Trust Agreement may be amended, expanded, varied and/or restated
by the Trustee, with the prior written consent of the Manager and without
notice to, or the approval of, the Unitholders in order to
(a) make any change or correction in the Trust Agreement which is of a
typographical nature or is required to cure or correct any ambiguity
or defective or inconsistent provision, clerical omission, mistake or
manifest error contained therein;
(b) ensure compliance with applicable laws, regulations or requirements of
any governmental authority having jurisdiction over the Fund;
(c) maintain the status of the Fund as a "mutual fund trust" and a
"registered investment" for the purposes of the Tax Act; or
(d) provide added protection to Unitholders upon the advice of counsel to
the Fund,
provided that any such amendment does not adversely affect the rights,
privileges or interests of the Unitholders or reduce or restrict any protection
in favour of the Trustee or the Manager or increase their respective
obligations.
This Trust Agreement may also be amended, expanded, varied and/or
restated by the Trustee, with the prior written consent of the Manager and
without notice to, or the approval of, the Unitholders in order to conform the
terms of this Trust Agreement to those set out in the preliminary prospectus
and final prospectus to be filed by the Fund in respect of its initial public
offering of Trust Units.
16.2 Amendments With Notice to Unitholders
Any amendment to this Trust Agreement that does not require approval
of Unitholders may be made by the Manager and the Trustee upon 30 days' written
notice to all Unitholders.
16.3 Acts Requiring Unitholder Approval
None of the following may be effected without the consent of
Unitholders given by Extraordinary Resolution (other than items (e), (f) and
(j) which require approval of a simple majority vote) passed at a meeting duly
called and held for such purpose:
(a) a change in Investment Objectives;
(b) a change in Investment Restrictions, unless such changes are necessary
to ensure compliance with all applicable laws, regulations or other
requirements imposed by applicable regulatory authorities from time to
time;
(c) any change in the basis of calculating fees or other expenses that are
charged to the Fund, including the Management Fee and the Incentive
Fee payable under the Management Agreement, which could result in an
increase in charges to the Fund other than a fee or expense charged by
a person or company that is at arm's length to the Fund;
(d) a change of the Manager, other than a change resulting in an affiliate
of the Manager assuming such position, provided that the Manager may
only be removed in the event that the Manager is in breach of or in
default under the Management Agreement, the Manager becomes bankrupt
or insolvent, a resolution is passed for the winding-up, dissolution
or other liquidation of the Manager or the Manager has been ordered
dissolved or has made a general assignment for the benefit of
creditors;
(e) the termination of the Trustee;
(f) a change of the auditors of the Fund;
(g) a reorganization with, or transfer of assets to, another mutual fund
trust, if
(i) the Fund ceases to continue after the reorganization or
transfer of assets; and
(ii) the transaction results in Unitholders becoming
securityholders in the other mutual fund trust;
(h) a reorganization with, or acquisition of assets of, another mutual
fund trust, if
(i) the Fund continues after the reorganization or acquisition of
assets; and
(ii) the transaction results in the securityholders of the other
mutual fund trust holding more than 50% of the outstanding
Trust Units;
(i) a termination of the Fund prior to the Termination Date;
(j) an extension of the term of the Fund beyond the Termination Date;
(k) an amendment, modification or variation in the provisions or rights
attaching to the Trust Units;
(l) a change in the frequency of calculating the Net Asset Value per Trust
Unit;
(m) an amendment to the Trust Agreement to change the rights of the Fund
and/or the Unitholders to redeem or retract Trust Units; and
(n) the sale of all or substantially all of the assets of the Fund other
than in the ordinary course of business or in connection with the
termination of the Fund.
16.4 Restatements
A restated Trust Agreement may be executed at any time and from time
to time by the parties hereto. No such execution shall be deemed to constitute
a termination and/or resettlement of this Trust Agreement or the Fund created
hereby.
ARTICLE 17 - TERMINATION OF THE FUND
17.1 Termination Date
The Fund will continue until the Termination Date (subject to
extension or early termination as described below) and thereupon it will
terminate and the net assets of the Fund will be distributed to the Unitholders
unless an alternative to termination is approved by the Unitholders as
described below. Prior to the Termination Date, the Manager will, to the extent
practicable, convert the assets of the Fund to cash. The Manager may, in its
discretion and upon not less than 30 days' prior written notice to the
Unitholders, extend the Termination Date by a period of up to 180 days if the
Manager determines that it will be unable to convert all of the Fund's
securities to cash and that it would be in the best interests of the
Unitholders to do so. Should the liquidation of certain securities not be
practicable or should the Manager consider such liquidation not to be
appropriate prior to the Termination Date, such securities will be distributed
to Unitholders in specie rather than in cash, subject to compliance with any
securities or other laws applicable to such distributions.
The Manager has the right to terminate the Fund prior to the
Termination Date upon not less than 90 days' prior written notice to the
Unitholders if the Manager, in its discretion, determines that such termination
is in the best interests of the Fund.
The Manager may present a proposal to Unitholders, not less than six
months nor more than 12 months prior to the Termination Date, providing an
alternative to the termination of the Fund on the Termination Date. Such
liquidity alternative could, among other alternatives, include a proposal that
the Unitholders exchange their Trust Units, on a tax-free roll-over basis, for
securities of an open-ended mutual fund trust managed by the Investment
Advisor. In such event, a meeting of Unitholders to consider such a proposal
would be held at least six months prior to the Termination Date in order to
give the Manager the opportunity to conduct an orderly liquidation of the
assets of the Fund in the event that the Unitholders do not approve the
proposal. In order to be implemented, such proposal would require the approval
of Unitholders by Extraordinary Resolution. Any such proposal may be
conditional on such matters as the Manager considers are appropriate including,
without limitation, obtaining any necessary regulatory approvals.
17.2 Procedure Upon Termination
At least 30 days prior to the Termination Date, the Trustee shall give
notice to Unitholders of the commencement of the winding-up of the Fund and of
the Termination Date. Such notice shall specify the location(s) at which
Unitholders may receive payment due to them under Section 17.5 and, where
applicable, surrender certificates representing their Trust Units for
cancellation.
17.3 Sale of Investments
Prior to the Termination Date, the Trustee and the Manager will
instruct the Investment Advisor to sell and convert to cash, to the extent
possible, the Fund Property immediately before the Termination Date.
Thereafter, the Trustee and the Manager shall proceed to wind-up the affairs of
the Fund as soon as may be reasonably practicable and shall instruct the
Auditors to audit the accounts of the Fund as at the Termination Date.
17.4 Powers of the Trustee and Manager Upon Termination
After the Termination Date, the Trustee, the Manager and the
Investment Advisor shall carry on no activity under this Trust Agreement except
for the purpose of winding up the affairs of the Fund as hereinafter provided
and, for this purpose, the Trustee and the Manager shall continue to be vested
with and may exercise all or any of the powers conferred upon them under this
Trust Agreement and the Investment Advisor shall continue to be vested with and
may exercise all or any of the powers conferred upon it herein or in the
Management Agreement.
17.5 Distribution of Proceeds
After paying, retiring or discharging or making provision for the
payment, retirement or discharge of all known liabilities and obligations of
the Fund and providing for indemnity against any other outstanding liabilities
and obligations (actual and contingent), the Trustee shall distribute as soon
as possible thereafter the remaining Fund Property among the Unitholders on a
pro rata basis against surrender of certificates representing the Trust Units.
17.6 Responsibility of Trustee After Sale and Conversion
The Trustee and the Manager shall be under no obligation to invest the
proceeds of any sale of Fund Property after the Termination Date other than in
an interest bearing account of the Trustee and, after such sale, the sole
obligation of the Trustee and the Manager under this Trust Agreement shall be
to hold such proceeds in trust for distribution under Section 17.5.
17.7 Unclaimed Proceeds
If certificates have been issued to Unitholders and any Unitholders
have not surrendered their Unit certificates at the time of the distribution
pursuant to Section 17.5, the Trustee shall deposit all remaining Fund Property
which is distributable to such Unitholders in an account with a Schedule I
Canadian chartered bank (which may be an Affiliate of the Trustee) to be paid
without interest to or to the order of such Unitholders upon presentation and
surrender to such bank of the certificates representing their Trust Units. Upon
such deposit being made, the Trust Units represented thereby shall be deemed to
be cancelled and this Trust Agreement shall thereupon terminate and the
Trustee, the Manager and Unitholders shall have no further rights or
obligations hereunder.
ARTICLE 18 - GENERAL
18.1 Notice to Unitholders
Any notice, report or other communication required or permitted to be
given to a Unitholder may be effectively given by mailing it to the Unitholder
by ordinary post addressed to it at its address appearing on the register of
Unitholders referred to in Section 12.3 and shall be conclusively deemed to
have been received by the Unitholder on the third business day (excluding each
business day during which there existed any general interruption of postal
services due to strike, lockout or other cause) after it was so mailed,
provided that the accidental failure to give notice to any Unitholder shall not
affect any action taken pursuant to such notice.
18.2 Notice to Trustee and Manager
Any notice, report or other communication required or permitted to be
given to the Trustee or the Manager hereunder shall be in writing and shall be
given to the Trustee at Corporate Trust Services, 000 Xxxxxxxxxx Xxxxxx, 00xx
Xxxxx, Xxxxxxx, Xxxxxxx X0X 0X0 (fax: (000) 000-0000), Attention: Manager,
Client Services or to the Manager at 000 Xxxx Xxxxxx Xxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxx X0X 0X0 (fax: (000) 000-0000), Attention: President (or at such other
address as the party in question shall have specified in the manner herein
provided for the giving of notice) and in all cases delivered by hand (which
includes delivery by commercial overnight courier) or sent by facsimile or
mailed by prepaid post. Any notice, report or other communication so given
shall be conclusively deemed to have been given and received when sent, if sent
by facsimile during normal business hours in Toronto, Ontario (provided a copy
thereof simultaneously is delivered to a commercial overnight courier for
delivery to the recipient), twenty-four hours after the time of delivery to a
commercial overnight courier for delivery to the recipient, if so delivered, or
three business days after mailing, if mailed by prepaid post (excluding each
business day during which there existed any general interruption of postal
services due to strike, lockout or other cause).
18.3 Inspection of Trust Agreement
This Trust Agreement shall be open to inspection by Unitholders and,
upon written request from any Unitholder, the Trustee shall as soon as
reasonably possible furnish such Unitholder with a copy thereof.
18.4 Governing Law
This Trust Agreement and the Fund created hereby shall be governed by
and construed in accordance with the laws of the Province of Ontario and the
responsibilities of the Trustee shall be principally performed from its office
in Toronto unless otherwise agreed by the Manager and the Trustee.
18.5 Fiscal Year End
The fiscal year ("Fiscal Year") of the Fund shall end on December 31
of each year.
18.6 Taxation Year
The taxation year ("Taxation Year") of the Fund shall, from time to
time, be determined by the Manager, subject to the provisions of the Tax Act.
18.7 Effect of Mistakes
No mistakes made, or acts done or omitted to be done, in good faith
and in the exercise of due care in connection with the administration of the
Fund shall be deemed to be a breach of this Trust Agreement if, promptly after
the discovery of the mistake, the Trustee or the Manager, as the case may be,
takes whatever action may be practicable under the circumstances to remedy the
mistake.
18.8 Third Persons Not Obligated to Follow Assets
No Person dealing with the Trustee, the Manager or any Investment
Advisor shall be under any obligation to make any inquiry concerning the
propriety of the action of such Person on behalf of the Fund or be required to
see to the application of any payments made to such Person for the Fund.
18.9 Trustee Not Required to Give Security
The Trustee shall not be required to give any bond or security in
respect of the execution of the trusts and powers under this Trust Agreement.
18.10 Counterparts
This Trust Agreement may be executed in any number of counterparts by
the parties hereto, all of which shall be deemed to be an original and such
counterparts taken together shall constitute one agreement.
18.11 Facsimiles
This Trust Agreement may be executed and delivered by the parties
hereto by facsimile transmission and such facsimile copy, when received, shall
constitute an original hereof. Notwithstanding the foregoing, the parties shall
execute and deliver original copies of this Trust Agreement within a reasonable
period following the execution and delivery of the facsimile copy.
IN WITNESS WHEREOF, this Trust Agreement has been executed by the
proper officers of the parties hereto duly authorized in that regard as of the
date first above written.
NCE STRATEGIC ENERGY MANAGEMENT CORP.
Per: ________________________________
Per: ________________________________
COMPUTERSHARE TRUST COMPANY OF CANADA
Per: ________________________________
Per: ________________________________
