FIRST SUPPLEMENTAL TRUST INDENTURE
Exhibit
10.2
FIRST
SUPPLEMENTAL TRUST INDENTURE
This
First Supplemental Trust Indenture is entered into as of the 17th
day of
August, 2007 between:
SIGNET
ENERGY INC.,
a
corporation incorporated under the laws of the Province of Alberta and having
its head office in the City of Calgary, in the Province of Alberta (hereinafter
called "Signet"),
-
and
-
SURGE
GLOBAL ENERGY, INC.,
a
corporation existing under the laws of the State of Delaware (hereinafter called
"Surge
US")
and
VALIANT
TRUST COMPANY,
a trust
company existing under the laws of the Province of Alberta having an office
in
the City of Calgary, in the Province of Alberta (hereinafter called the
"Debenture
Trustee")
WITNESSETH
THAT:
WHEREAS
Signet and Surge US and the Debenture Trustee entered into an trust indenture
(the "Indenture")
dated
November 15, 2005 to provide for the creation and issuance of
debentures;
AND
WHEREAS the Indenture provides that the Debenture Trustee may enter into
indentures supplemental to the Indenture;
AND
WHEREAS The Corporation has entered into a letter of intent dated May 15, 2007
(the "Letter
of Intent")
with
Andora Energy Corporation ("Andora")
and
Pan Orient Energy Corp. relating to the proposed combination of the businesses
of Andora and Signet (the "Business
Combination")
and
Signet and Andora anticipate the execution of an arrangement agreement (the
"Arrangement
Agreement")
setting forth all of the terms and conditions of such business combination
as
contemplated by the Letter of Intent and as further agreed upon by Signet and
Andora;
AND
WHEREAS, in connection with approving the Business Combination, the parties
wish
to amend the terms of the Debentures to provide the Debentureholders with an
opportunity to participate in such Business Combination, to receive earlier
payment of the Principal Sum and Interest in respect of such Debentures or
to
continue to hold such Debentures in accordance with the terms and conditions
of
the Trust Indenture;
AND
WHEREAS the foregoing recitals are made as representations and statements of
fact by Signet and Surge US and not by the Debenture Trustee;
NOW
THEREFORE it is hereby covenanted, agreed and declared as follows:
1
ARTICLE
1
INTERPRETATION
1.1 Definitions
In
this
Amendment (including the recitals and schedules hereto, if any), the following
initially capitalized terms have the meanings set forth below and such meanings
shall supersede, as applicable, the meanings provided thereto in the Trust
Indenture. Initially capitalized terms used herein and not otherwise defined
herein have the meanings ascribed thereto in the Trust Indenture.
| (a) |
"Amendment",
"Amendment
to Trust Indenture",
"hereto",
"herein",
"hereby",
"hereunder",
"hereof"
and similar expressions refer to this Amendment to Trust Indenture
and not
to any particular Article, Section, Subsection, Clause, subdivision
or
other portion hereof;
|
| (b) |
"Andora
Common Shares"
means common shares of Andora;
|
| (c) |
"Conversion
Price"
means the price at which a Common Share may be issued from time to
time
after the Effective Date and prior to the Maturity Date on the conversion
of the Principal Sum of a Debenture pursuant to Section 5.1(e), which
is
currently Cdn. $1.00 per Common Share, subject to adjustments in
accordance with the provisions of Article 8 of the Trust Indenture,
in
which case it shall mean the adjusted price in effect at such
time;
|
| (d) |
"Conversion
Right"
means the right of a Debentureholder to convert the Principal Sum into
Common Shares pursuant to Section 5.1(a) or Section 5.1(e) hereof as
applicable;
|
| (e) |
"Court
Approval"
means the issuance of the final order of the Court of Queen’s Bench of
Alberta approving the arrangement pursuant to the Arrangement
Agreement;
|
| (f) |
| (g) |
"Effective
Time"
means 12:01 a.m. on the Effective Date;
|
| (h) |
"Election
to Convert"
means an election to convert that sets forth the Principal Sum in respect
of which the Conversion Right set forth in Section 5.1(a) is being
exercised, the address of the Debentureholder which is to appear on
the
Share Register of the Corporation and the address where the new Debenture,
if any, representing the unconverted portion of its Debenture may be
sent;
|
| (i) |
"Election
to Receive Payment"
means an election to receive payment in accordance with Section 7.2(a)
that sets forth the Principal Sum in respect of which the right set
forth
in Section 7.2(a) is being exercised, the address of the Debentureholder
which payment is to be sent and the address where the new Debenture,
if
any, representing the unconverted portion of the Debenture is to be
sent;
|
| (j) |
"Modified
Conversion Price"
means the price at which a Common Share may be issued from time to
time
prior to the Effective Date on the conversion of the Principal Sum
of a
Debenture, which is $0.7692307;
|
2
| (k) |
"Shareholder
Approval"
means the approval of not less than 66 ⅔% of the outstanding Common Shares
present in person or by proxy at a duly called and convened meeting
of the
holders of Common Shares; and
|
| (l) |
"Termination
Date"
means, if applicable, the date of public dissemination of a news release
relating to the termination of the Letter of Intent or Arrangement
Agreement or the failure to meet any of the conditions set forth in
the
Letter of Intent or Arrangement Agreement such that the Business
Combination is terminated, abandoned or
aborted.
|
ARTICLE
2
AMENDMENT
TO CONVERSION RIGHT
2.1 Conversion
Right
The
Conversion Right set forth in Section 5.1 of the Trust Indenture is hereby
deleted in its entirety and replaced with the following:
| (a) |
Upon
and subject to the terms and conditions of this Article 5, each
Debentureholder shall have the right, at its option, at any time and
from
time to time prior to 5:00 p.m. (Calgary time) on the Business Day
immediately preceding the Effective Date, to elect to convert, immediately
prior to the Effective Time on the Effective Date, the Principal Sum
of
its Debentures, in whole or in multiples of Cdn. $1,000, into fully
paid
and non-assessable Common Shares at the Modified Conversion Price in
effect on the Conversion Date.
|
| (b) |
The
exercise of the Conversion Right provided in Section 5.1(a) shall be
conditional upon:
|
| (i) |
Shareholder
Approval of the Business Combination;
|
| (ii) |
Court
Approval of the Business Combination; and
|
| (iii) |
satisfaction
(or waiver) of all conditions precedent to completion of the Business
Combination set forth in the Arrangement
Agreement.
|
In
the
event that the Letter of Intent or Arrangement Agreement is terminated for
any
reason or the conditions set forth in this Section 5.1(b) are not satisfied,
the
Election to Convert of the Debentureholder pursuant to Section 5.1(a) shall
be
deemed to be rescinded as of such Termination Date.
| (c) |
If
the Debentureholder elects to convert some or all of the Principal
Sum of
its Debentures into Common Shares pursuant to Section 5.1(a), no cash
payment or other adjustment will be made for accrued interest on the
Principal Sum of the converted Debenture. Instead, accrued interest
will
be deemed paid by the Common Shares (or Andora Common Shares received
in
accordance with the Arrangement Agreement) received by the Debentureholder
on conversion. Delivery to the Debentureholder of the full number of
Common Shares into which the Principal Sum of the Debenture is convertible
(or Andora Common Shares received in accordance with the Arrangement
Agreement) will thus be deemed:
|
| (i) |
to
satisfy the Corporation's obligation to pay the Principal Sum of the
Debenture; and
|
3
| (ii) |
to
satisfy the Corporation's obligation to pay accrued and unpaid Interest
up
to the Conversion Date.
|
| (d) |
Subject
to Section 5.5, a Debentureholder may exercise its Conversion Right
pursuant to Section 5.1(a) by delivering a duly completed Election
to
Convert together with the original Debenture(s) to the Trustee prior
to
5:00 p.m. (Calgary time) on the Business Day immediately preceding
the
Effective Date.
|
| (e) |
Upon
and subject to the terms and conditions of this Article 5, each
Debentureholder shall have the right, at its option, at any time and
from
time to time (i) after 5:00 p.m. (Calgary time) on the Business Day
immediately preceding the Effective Date or (ii) after the Termination
Date and, in each case, prior to the Maturity Date, to convert the
Principal Sum of its Debentures, in whole or in multiples of Cdn. $1,000,
into fully paid and non-assessable Common Shares at the Conversion
Price
in effect on the Conversion Date.
|
| (f) |
If
the Debentureholder elects to convert some or all of the Principal
Sum of
its Debentures into Common Shares pursuant to Section 5.1(e), the
Debentureholder shall receive:
|
| (i) |
Common
Shares; and
|
| (ii) |
cash
in an amount equal to all accrued and unpaid Interest (including overdue
Interest) on the Principal Sum so converted up to the Conversion
Date.
|
| (g) |
Subject
to Section 5.5, a Debentureholder may exercise its Conversion Right
pursuant to Section 5.1(e) by surrendering its Debenture to the Trustee
and giving notice to the Corporation and the Trustee at any time and
from
time to time (i) after 5:00 p.m. (Calgary time) on the Business Day
immediately preceding the Effective Date or (ii) after the Termination
Date and, in each case prior to the Maturity Date, specifying the
following:
|
| (i) |
the
Principal Sum in respect of which the Conversion Right pursuant to
Section
5.1(e) is being exercised;
|
| (ii) |
the
address of the Debentureholder which is to appear on the Share Register
of
the Corporation;
|
| (iii) |
the
address where the new Debenture, if any, representing the unconverted
portion of its Debenture may be sent; and
|
| (iv) |
the
number of Common Shares the Debentureholder is currently the beneficial
owner of.
|
|
(h)
|
Notwithstanding
Section 5.1(a) of the Trust Indenture as amended hereby, if the
Arrangement Agreement so provides, the conversion of Debentures which
a
Debentureholder has elected to convert pursuant to Section 5.1(a)
may
occur at the Effective Time, as part of the arrangement contemplated
by
the Arrangement Agreement and in the order specified therein, provided
that such adjustment of the effective time of the conversion of such
Debentures substantially preserves, and does not impair, in the reasonable
opinion of the board of directors of the Corporation, any material
right,
power or entitlement of the Debentureholders under the Trust Indenture
as
amended hereby.
|
4
2.2 Deemed
Conversion of Exchanged Debentures
Section
5.3 of the Trust Indenture is hereby deleted in its entirety and replaced with
the following:
Upon
the
exercise of the Exchange Right pursuant to Section 6.1(a), Surge US shall,
as
the resultant Debentureholder, be deemed to have exercised its Conversion Right
pursuant to Section 5.1(e).
2.3 Effect
of Exercise of Conversion Right
Section
5.4 of the Trust Indenture is hereby deleted in its entirety and replaced with
the following:
| (a) |
Upon
the exercise of the Conversion Right pursuant to Section 5.1(a), and
subject to Section 5.5, the Common Shares subscribed for shall be deemed
to have been issued and the applicable Debentureholder shall be deemed
to
have become the holder of record of such Common Shares immediately
prior
to the Effective Time on the Effective Date.
|
| (b) |
Within
five Business Days of the Effective Date, the Corporation (or its
successor) shall cause to be delivered to such Debentureholder, as
specified in the Election to Convert, a share certificate for the
appropriate number of Andora Common Shares issuable pursuant to the
Arrangement Agreement, provided that such Debentureholder has surrendered
its Debenture to the Trustee for cancellation, in whole or in part,
as
applicable.
|
| (c) |
Upon
the exercise of the Conversion Right pursuant to Section 5.1(e), and
subject to Section 5.5, the Common Shares subscribed for shall be deemed
to have been issued and the applicable Debentureholder shall be deemed
to
have become the holder of record of such Common Shares on the Conversion
Date unless the transfer registers of the Corporation shall be closed
on
such date (including by application of any Applicable Law), in which
case
the Common Shares subscribed for shall be deemed to have been issued
and
such Debentureholder deemed to have become the holder of record of
such
Common Shares, on the date on which such transfer registers are reopened.
|
| (d) |
Within
five Business Days of the Conversion Date, the Corporation shall cause
to
be delivered to such Debentureholder, as specified in the notice of
conversion delivered pursuant to Section 5.1(e), a share certificate
for
the appropriate number of Common Shares acquired provided that such
Debentureholder has surrendered its Debenture to the Trustee for
cancellation, in whole or in part, as
applicable.
|
2.4 Expiration
of Conversion Right
Section
5.7 of the Trust Indenture is hereby deleted in its entirety and replaced with
the following:
| (a) |
On
the Effective Date, the Conversion Right pursuant to Section 5.1(a)
shall
cease and terminate with respect to any amount of the Principal Sum
which
has not been converted except to the extent that a Debentureholder
has not
received certificates representing Andora Common Shares in accordance
with
Section 5.4(b), in which instance such Debentureholder’s rights hereunder
shall continue until it has received that to which it is entitled
hereunder.
|
| (b) |
On
the Maturity Date, the Conversion Right pursuant to Section 5.1(e)
shall
cease and terminate with respect to any amount of the Principal Sum
which
has not been converted except to the extent that a Debentureholder
has not
received certificates representing Common Shares in accordance with
Section 5.4(d), in which instance such Debentureholder’s rights hereunder
shall continue until it has received that to which it is entitled
hereunder.
|
5
2.5 Early
Repayment of Principal Sum and Interest
Section
7.2 of the Trust Indenture is hereby deleted in its entirety and replaced with
the following:
| (a) |
Upon
and subject to the terms and conditions of this Section 7.2, each
Debentureholder shall have the right, at its option, at any time and
from
time to time prior to 5:00 p.m. (Calgary time) on the Business Day
immediately preceding the Effective Date, to elect to receive, within
15
Business Days from the Effective Date, the Principal Sum of its Debentures
or any part thereof, plus Interest accrued from the last Interest Payment
Date to the Maturity Date.
|
| (b) |
The
exercise of the right to receive payment pursuant to Section 7.2(a)
shall
be conditional upon:
|
| (i) |
Shareholder
Approval of the Business Combination;
|
| (ii) |
Court
Approval of the Business Combination; and
|
| (iii) |
satisfaction
(or waiver) of all conditions precedent to completion of the Business
Combination set forth in the Arrangement
Agreement.
|
Upon
satisfaction of the requirements set forth in this Section 7.2(b), the
Corporation shall make payment to each electing Debentureholder of the Principal
Sum and Interest accrued from the last Interest Payment Date to the Maturity
Date in accordance with their Election to Receive Payment. From and after the
Effective Date, the sole right and remedy of the Debentureholder shall be to
receive payment of Principal and Interest in accordance with Section 7.2. In
the
event that the Letter of Intent or Arrangement Agreement is terminated for
any
reason or the conditions set forth in this Section 7.2(b) are not satisfied,
the
Election to Receive Payment of the Debentureholder pursuant to Section 7.2(a)
shall be deemed to be rescinded as of such Termination Date and all such other
rights and entitlements of the Debentureholder pursuant to the Trust Indenture
shall continue in full force and effect.
| (c) |
A
Debentureholder may exercise its right pursuant to Section 7.2(a) by
delivering a duly completed Election to Receive Payment, together with
the
original Debenture(s) to the Trustee prior to 5:00 p.m. (Calgary time)
on
the Business Day immediately preceding the Effective
Date.
|
2.6 Effect
of Amendment
| (a) |
This
Amendment to the Trust Indenture shall replace and supersede all sections
referred to herein and shall be read with the Trust Indenture as one
and
the same agreement governing the Debentures. The Amendment to Trust
Indenture shall become effective as at and from the time at which an
Extraordinary Resolution of the Debentureholders is passed in accordance
with the Trust Indenture approving the amendments to the Trust Indenture
set forth herein.
|
6
ARTICLE
3
ADDITIONAL
MATTERS
3.1 Confirmation
of Indenture
The
Indenture, as amended and supplemented by this Supplemental Indenture, is in
all
respects confirmed.
3.2 Acceptance
of Trusts
The
Debenture Trustees hereby accepts the trusts in this Supplemental Indenture
declared and provided for and agrees to perform the same upon the terms and
conditions and subject to the provisions set forth in the
Indenture.
3.3 Governing
Law
This
Supplemental Indenture shall be construed in accordance with the laws of the
Province of Alberta and the laws of Canada applicable therein and shall be
treated, in all respects, as an Alberta contract.
3.4 Further
Assurances
The
parties shall, with reasonable diligence, do all such things and provide all
such reasonable assurances as may be required to consummate the transactions
contemplated by this Supplemental Indenture, and each party shall provide such
further documents or instruments required by the other party as may be
reasonably necessary or desirable to effect the purpose of this Supplemental
Indenture and carry out its provisions.
3.5 Counterparts
This
Supplemental Indenture may be executed by the parties in separate counterparts
each of which when so executed and delivered shall be an original, but all
such
counterparts shall together constitute one and the same instrument.
7
IN
WITNESS WHEREOF
the
parties hereto have executed these presents under their respective corporate
seals and hands of their proper officers in that behalf.
|
SIGNET
ENERGY INC.
|
|
|
By:___________________________________
|
|
|
|
|
|
By:___________________________________
|
|
|
VALIANT
TRUST COMPANY
|
|
|
By:___________________________________
|
|
|
By:___________________________________
|
8
