DATED AS OF February 5, 1997
DAKOTA MINING CORPORATION
and
MONTREAL TRUST COMPANY OF CANADA,
AS TRUSTEE
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TRUST INDENTURE
PROVIDING FOR THE ISSUE OF UP TO
$25,000,000 AGGREGATE PRINCIPAL AMOUNT OF
7.5% CONVERTIBLE UNSECURED SUBORDINATED DEBENTURES DUE
FEBRUARY 5, 2004
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THIS TRUST INDENTURE made as of the 5th day of February, 0000,
X X X X X X X :
DAKOTA MINING CORPORATION, a corporation governed by the laws of
Canada, having its corporate head office at 000 Xxxxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx, X.X.X., 00000 (the
"Corporation");
- and -
MONTREAL TRUST COMPANY OF CANADA, a trust company governed by
the laws of Canada and having an office in Vancouver, British
Columbia at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx,
X0X 0X0 (the "Trustee");
WHEREAS the Corporation considers it necessary for its corporate
purposes to create and issue Debentures (as defined below) in the
manner provided herein;
WHEREAS the Corporation is duly authorized to create and issue
the Debentures to be issued as provided herein; and
WHEREAS the foregoing recitals are made as representations and
statements of fact by the Corporation and not by the Trustee.
NOW THEREFORE THIS INDENTURE WITNESSETH and it is hereby
covenanted, agreed and declared as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Trust Indenture, unless there is something in the subject
matter or context inconsistent therewith:
(1) "Agency Agreement" means the agency agreement between the Corporation
and the Agents dated the date hereof;
(2) "Agents" means Canaccord Capital Corporation, ScotiaMcLeod Inc. and
Newcrest Capital Inc.;
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(3) "Business Day" means any day, other than Saturday, Sunday or any
statutory holiday in Vancouver, British Columbia, or Toronto, Ontario
or, in respect of any action to be taken in any city, a day when the
principal office of the Trustee in such city is not generally open to
the public for the transaction of business;
(4) "Capital Reorganization" has the meaning ascribed thereto in
subsection 4.3(6);
(5) "Certificate of the Corporation" means a certificate signed in the
name of the Corporation by any one of the President, the Chief
Executive Officer, the Chief Financial Officer, a Vice-President or
the Secretary of the Corporation, and may consist of one or more
instruments so executed;
(6) "Common Share Reorganization" has the meaning ascribed thereto in
subsection 4.3(3);
(7) "Common Shares" means the common shares without par value in the
capital of the Corporation, as such shares exist at the close of
business on the date of execution and delivery of this Indenture;
provided that, in the event of a subdivision, redivision, reduction,
combination or consolidation thereof, or successive such changes,
subdivisions, redivisions, reductions, combinations or consolidations,
or any combination thereof, then, subject to adjustments, if any,
having been made in accordance with section 4.3, "Common Shares" shall
thereafter mean the shares resulting from such change, subdivision,
redivision, reduction, combination or consolidation;
(8) "Conversion Price" has the meaning ascribed thereto in section 4.1;
(9) "Corporation" means Dakota Mining Corporation and includes any
successor corporation which shall have complied with the provisions of
Article Nine;
(10) "Counsel" means a lawyer or firm of lawyers, who may be counsel for
the Corporation, retained by the Trustee or, at the option of the
Trustee, retained by the Corporation and acceptable to the Trustee;
(11) "Current Market Price" of shares of any class on any date means the
weighted average price per share at which such shares have traded:
(a) on The Toronto Stock Exchange; or
(b) if such shares are not listed on The Toronto Stock Exchange, then
(except for purposes of sections 3.2, 3.9 and 3.10) on such stock
exchange on which such shares are listed as may be selected for
that purpose by the Directors; or
(c) if such shares are not listed on any stock exchange, then (except
for purposes of sections 3.2, 3.9 and 3.10) in the
over-the-counter market,
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during a period of 20 consecutive Trading Days ending not more
than five Trading Days before such date, provided that (except
for purposes of sections 3.2, 3.9 and 3.10) if such shares are
not listed on any stock exchange or traded in the
over-the-counter market, the Current Market Price of such shares
shall be determined by the Directors and approved by the Trustee;
and in each such case, the weighted average price shall be
determined by dividing the aggregate sales price of all such
shares sold on The Toronto Stock Exchange (or such other stock
exchange or in the over-the-counter market, as the case may be)
during such period of 20 consecutive Trading Days by the total
number of such shares so sold, as reported by The Toronto Stock
Exchange (or such other stock exchange or as quoted by the most
commonly quoted or carried source of quotations for shares traded
in the over-the-counter market, as the case may be);
(12) "Date of Conversion" has the meaning ascribed thereto in
subsection 4.2(2);
(13) "Debentures" means the 7.5% convertible unsecured subordinated
debentures of the Corporation due February 5, 2004 issued
hereunder whether in definitive or interim form;
(14) "Debentureholders" or "Holders" means the Persons for the time
being entered in the registers mentioned hereinafter as holders
of Debentures;
(15) "Debentureholders' Request" means an instrument signed in one or
more counterparts by the Holders of not less than 25% in
principal amount of the outstanding Debentures requesting the
Trustee to take the action or proceeding specified therein;
(16) "Director" means a director of the Corporation for the time being
and "Directors" means the board of directors of the Corporation
or, if duly constituted and whenever duly empowered, the
executive committee (if any) of the board of directors of the
Corporation for the time being, and reference to action by the
Directors means action by the directors as a board or action by
the executive committee of the board as a committee;
(17) "Dividends Paid in the Ordinary Course" means dividends paid on
the Common Shares in any financial year of the Corporation,
whether in (a) cash, (b) shares of the Corporation, (c) rights,
options or warrants to purchase any shares, property or other
assets of the Corporation, or (d) property or other assets of the
Corporation, in each case to the extent that the amount or value
of such dividends in the aggregate does not exceed the greater
of:
(i) 150% of the aggregate amount or value of dividends paid by
the Corporation on the Common Shares in its immediately
preceding financial year; or
(ii) 100% of the consolidated net income (before extraordinary or
unusual items but after dividends payable on all shares
prior to or on a parity with the Common Shares with respect
to the payment of dividends) of the Corporation for its
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immediately preceding financial year, determined in
accordance with Generally Accepted Accounting Principles;
and for the purpose of the foregoing, where any dividend is
paid (otherwise than in cash), any shares, any rights,
options or warrants to purchase any shares, property or
other assets or any property or other assets so distributed
by way of dividend shall be valued at the fair market value
of such securities, property or other assets, as the case
may be, as determined by the Directors, which determination
shall be conclusive;
(18) "Escrowed Proceeds" has the meaning ascribed thereto in the Special
Warrant Indenture;
(19) "Event of Default" has the meaning ascribed thereto in section 7.1;
(20) "Excluded Securities" has the meaning ascribed thereto in paragraph
5.2(1)(b);
(21) "Extraordinary Resolution" has the respective meanings ascribed
thereto in sections 10.12 and 10.15;
(22) "Generally Accepted Accounting Principles" means the generally
accepted accounting principles from time to time approved by the
Canadian Institute of Chartered Accountants as at the date, as
applicable, on which a calculation has been made, is made or required
to be made hereunder in accordance with Generally Accepted Accounting
Principles;
(23) "Indenture Legislation" has the meaning ascribed thereto in section
12.1;
(24) "Maturity Date" means February 5, 2004;
(25) "Notice of Non-Qualification" means notice in writing from the
Corporation to the Trustee to the effect that the Qualification Date
has not occurred prior to the Qualification Deadline;
(26) "notice of redemption" has the meaning ascribed thereto in section 3.4
hereof;
(27) "Officer's Certificate" means a certificate signed in the name of the
Corporation by any one of the President, the Chief Executive Officer,
the Chief Financial Officer, a Vice-President and the Secretary of the
Corporation, and may consist of one or more instruments so executed;
(28) "Person" means an individual, legal person, corporation, company,
cooperative, partnership, trust, unincorporated association or
governmental body, and pronouns have a similarly extended meaning;
(29) "Qualification Date" means the date on which a receipt is issued for a
final prospectus of the Corporation qualifying for sale the Debentures
and the Common Shares issuable
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upon conversion of the Debentures by the last of the securities
commissions or other securities regulatory authorities in each of the
Qualifying Jurisdictions to issue a receipt for such final prospectus;
(30) "Qualification Deadline" means May 31, 1997 or such later date as may
be determined in a written notice to the Company and the Trustee from
Canaccord Capital Corporation, on behalf of the Agents, in accordance
with the Agency Agreement;
(31) "Qualifying Jurisdictions" means British Columbia, Alberta, Ontario
and Quebec;
(32) "Redemption Price" has the meaning ascribed thereto in section 3.1;
(33) "Rights Offering" and "Rights Period" have the respective meanings
ascribed thereto in subsection 4.3(4);
(34) "Rights Offering Price" has the meaning ascribed thereto in subsection
4.3(7);
(35) "Senior Liabilities" means:
(a) indebtedness of the Corporation (other than indebtedness
evidenced by the Debentures) whether outstanding on the date of
this Indenture or thereafter created, incurred, assumed or
guaranteed, for money borrowed or raised by the Corporation by
whatever means (including, without limitation, by means of
acceptances, debt instruments and finance leases and any
liability evidenced by bonds, debentures, notes or similar
instruments);
(b) indebtedness of the Corporation whether outstanding on the date
of this Indenture or thereafter created, incurred, assumed or
guaranteed by the Corporation in connection with the acquisition
by the Corporation or by others of any assets or services;
(c) any trade debts of the Corporation whether outstanding on the
date of this Indenture or thereafter created, incurred, assumed
or guaranteed by the Corporation; and
(d) renewals, extensions or refundings of any indebtedness referred
to in paragraph (a), (b) or (c) of this definition; unless in any
case it is provided by the terms of the instrument creating or
evidencing such indebtedness or an instrument pursuant to which
such indebtedness is outstanding that such indebtedness does not
rank prior in right of payment to the Debentures but ranks pari
passu with, or subordinate in right of payment to, the
Debentures;
(36) "Special Distribution" has the meaning ascribed thereto in subsection
4.3(5);
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(37) "Special Warrants" means the Special Warrants created and issued
pursuant to the Special Warrant Indenture;
(38) "Special Warrant Indenture" means the special warrant indenture dated
the date hereof between the Corporation and Montreal Trust Company of
Canada, as trustee;
(39) "Successor Corporation" has the meaning ascribed thereto in section
9.1;
(40) "this Indenture", "this Trust Indenture", "hereto", "hereby",
"hereunder", "hereof", "herein" and similar expressions refer to this
indenture and not to any particular Article, section, subsection,
paragraph, subdivision or other portion hereof, and include any and
every supplemental indenture; and "supplemental indenture" and
"Indenture supplemental hereto" include any and every instrument
supplemental or ancillary hereto or in implementation hereof;
(41) "Time of Expiry" has the meaning ascribed thereto in section 4.1;
(42) "Trading Day" means, with respect to any stock exchange or
over-the-counter market, a day on which shares or other securities may
be traded through the facilities of such stock exchange or in such
over-the-counter market;
(43) "Trustee" means Montreal Trust Company of Canada and its successors
for the time being; and
(44) "United States" means the United States of America, its territories
and possessions, any state of the United States, and the District of
Columbia;
(45) "U.S. Person" means a U.S. person as that term is defined in
Regulation S;
(46) "U.S. Securities Act" means the United States Securities Act of 1933,
as amended;
(47) "Written Order of the Corporation", "Written Request of the
Corporation" and "Written Direction of the Corporation" mean,
respectively, an order, a request or a direction signed in the name of
the Corporation by any one of the President, the Chief Executive
Officer, the Chief Financial Officer, a Vice-President the Secretary
of the Corporation, and may consist of one or more instruments so
executed.
Words importing the singular include the plural and vice versa and words
importing the masculine gender include the feminine gender and vice versa.
1.2 Meaning of "outstanding" for Certain Purposes
Every Debenture certified and delivered by the Trustee hereunder shall be deemed
to be outstanding until it shall be cancelled or delivered to the Trustee for
cancellation or conversion, or a new Debenture shall be issued in substitution
therefor under section 2.13, or
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money, securities or other property for the payment or redemption thereof shall
be set aside under Article Three or Eight, provided that:
(1) where a new Debenture has been issued in substitution for a
Debenture which has been mutilated, lost, stolen or destroyed,
only one of such Debentures shall be counted for the purpose
of determining the aggregate principal amount of Debentures
outstanding;
(2) Debentures which have been partially redeemed, purchased or
converted shall be deemed to be outstanding to, but only to,
the extent of the unredeemed, unpurchased or unconverted part
of the principal amount thereof; and
(3) for the purpose of any provision of this Indenture entitling
Holders of outstanding Debentures to vote, sign consents,
requests, requisitions or other instruments, take other action
or to constitute a quorum at any meeting of Holders under this
Indenture, Debentures owned legally by the Corporation shall
be disregarded, except that:
(a) for the purpose of determining whether the Trustee
shall be protected in relying on any such vote,
consent, request, requisition or other instrument or
other action or on the Holders present or represented
at any meeting of Holders only the Debentures of
which the Trustee has notice that they are so owned
shall be so disregarded; and
(b) Debentures so owned which have been pledged in good
faith other than to the Corporation or any of its
affiliates (as such term is defined in the Securities
Act (British Columbia) shall not be so disregarded if
the pledgee shall establish to the satisfaction of
the Trustee the pledgee's right to vote, sign
consents, requests, requisitions or other instruments
or take such other actions in his discretion free
from the control of the Corporation or any of its
affiliates.
1.3 Interpretation Not Affected by Headings, etc. - The division of this
Indenture into --------------------------------------------- Articles,
sections, subsections and paragraphs, the provision of a table of contents
and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this Indenture or of
the Debentures.
1.4 Statute References - Any reference in this Indenture to a statute or other
legislation shall be deemed to be a reference to such legislation, and all
regulations thereunder, as now enacted or as the same may from time to time
be amended, re-enacted or replaced.
1.5 Monetary References - Any reference in this Indenture to currency or
"Dollars", "dollars" or "$" shall be deemed to be a reference to lawful
money of Canada.
1.6 Day Not a Business Day - In the event that any day on or before which any
action is required to be taken or any computation is required to be made
hereunder is not a Business
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Day, then such action or computation shall be required to be taken or made
on or before the requisite time on the first Business Day thereafter.
1.7 Invalidity of Provisions - Each of the provisions contained in this
Indenture or the Debentures is distinct and severable and a declaration of
invalidity or unenforceability of any such provision by a court of
competent jurisdiction shall not affect the validity or enforceability of
any other provision hereof or thereof.
1.8 Governing Law - This Indenture and the Debentures shall be governed by and
construed in accordance with the laws of British Columbia and the laws of
Canada applicable therein and shall be treated in all respects as British
Columbia contracts.
ARTICLE 2
THE DEBENTURES
2.1 Limitation on Issue and Designation - The aggregate principal amount of
Debentures which may be issued and certified hereunder shall consist of and
be limited to $25,000,000 and such Debentures will be designated "7.5%
Convertible Unsecured Subordinated Debentures due February 5, 2004".
2.2 Terms of Debentures
(1) The Debentures shall be dated February 5, 1997 regardless of the date
on which Debentures are issued hereunder, shall mature on the Maturity
Date and shall bear interest (subject to section 2.7) from the date of
issue at the rate of 7.5% per annum (after as well as before maturity,
default and judgment, with interest on amounts in default at the same
rate) payable in arrears in equal semi-annual payments on June 30 and
December 31 of each year. The first date on which interest is payable
is June 30, 1997 and such payment will represent interest accrued from
and including the date of issue of the Debentures.
(2) Interest on the Debentures shall accrue from day to day and shall be
calculated on the basis of the actual number of days elapsed and on
the basis of a year of 365 days or 366 days in a leap year.
(3) Subject to section 3.9, the principal of the Debentures due on
maturity or redemption will be payable, on presentation and surrender
of the Debentures at one of the principal offices of the Trustee in
Vancouver, Toronto or Montreal.
2.3 Form of Debentures
(1) The Debentures shall be issued upon exercise or deemed exercise of the
Special Warrants in accordance with the Special Warrant Indenture only
as fully registered Debentures in denominations of $1,000 and integral
multiples thereof.
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(2) The Debentures and the certificate of the Trustee endorsed thereon
shall be substantially in the form set out in the Schedule to this
Indenture with such appropriate additions, deletions, substitutions
and variations as the Trustee may approve, may, at the election of the
Corporation, be translated into the French language and shall bear
such legends and such distinguishing letters and numbers as the
Trustee may approve and such legends as Counsel may advise are
necessary in order for the Corporation to comply with applicable
securities laws, such approval of the Trustee to be conclusively
evidenced by its certification of the Debentures. In the event of any
contradiction, discrepancy or difference between the English language
version and the French language version, if any, of the text of the
form of Debentures, the English language version of the text will
govern.
(3) The Debentures may be engraved, lithographed or printed (the
expression "printed" including for the purposes hereof both original
typewritten material as well as mimeographed, mechanically,
photographically, photostatically or electronically reproduced,
typewritten or other written material), or partly in one form and
partly in another, as the Corporation may determine.
(4) The Trustee understands and acknowledges that the Debentures have not
been and will not be registered under the U.S. Securities Act. Each
Debenture Certificate originally issued in the United States or to a
U.S. Person, and each Debenture Certificate issued in exchange
therefor or in substitution thereof shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE
ISSUER THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (A) TO THE ISSUER, (B) OUTSIDE THE UNITED
STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE
U.S. SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE
144 THEREUNDER, IF AVAILABLE, AND THE COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR (D) IN COMPLIANCE WITH
CERTAIN OTHER PROCEDURES SATISFACTORY TO THE COMPANY. DELIVERY
OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN
SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK EXCHANGE. A
NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY OF WHICH WILL
CONSTITUTE "GOOD DELIVERY', MAY BE OBTAINED FROM THE TRANSFER
AGENT UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED
DECLARATION, IN A FORM SATISFACTORY TO THE TRANSFER AGENT AND
THE COMPANY, TO THE EFFECT THAT THE SALE OF THE SECURITIES
REPRESENTED HEREBY IS BEING MADE IN
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COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE
U.S. SECURITIES ACT.
provided, however, that if the Debentures are being sold under
paragraph (B) above, the legend may be removed by providing a
declaration to the Trustee as transfer agent for the securities to the
following effect:
The undersigned (A) acknowledges that the sale of the
securities to which this declaration relates is being made in
reliance on Rule 904 of Regulation S under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act")
and (B) certifies that (1) it is not an affiliate (as defined
in Rule 405 under the U.S. Securities Act) of Dakota Mining
Corporation, (2) the offer of such securities was not made to
a person in the United States and either (A) at the time the
buy order was originated, the buyer was outside the United
States, or the seller and any person acting on its behalf
reasonably believe that the buyer was outside the United
States, or (B) the transaction was executed on or through the
facilities of The Toronto Stock Exchange, the Montreal
Exchange, the Vancouver Stock Exchange or the Alberta Stock
Exchange and neither the seller nor any affiliate of the
seller nor any person acting on any of their behalf has
engaged or will engage in any directed selling efforts in the
United States in connection with the offer and sale of such
securities, (4) the sale is bona fide and not for the purpose
of "washing off" the resale restrictions imposed because the
securities are "restricted securities" (as such term is
defined in Rule 144(a)(3) under the U.S. Securities Act), (5)
the seller does not intend to replace the securities and (6)
the contemplated sale is not a transaction, or part of a
series of transactions which, although in technical compliance
with Regulation S, is part of a plan or scheme to evade the
registration provisions of the U.S. Securities Act. Terms used
herein have the meanings given to them by Regulation S.
2.4 Issue of Debentures - Debentures in the aggregate principal amount of
$25,000,000 may forthwith and from time to time be executed by the
Corporation and delivered to the Trustee and shall be certified by the
Trustee and delivered to or to the order of the Corporation pursuant
to a Written Order of the Corporation, without the Trustee receiving
any consideration therefor.
2.5 Execution of Debentures - The Debentures shall be signed (either
manually or reproduced in facsimile) by at least one of the President,
Chief Executive Officer, the Chief Financial Officer, a Vice-President
or the Secretary of the Corporation. A facsimile signature reproduced
upon any of the Debentures shall for all purposes of this Indenture be
deemed to be the signature of the individual whose signature it
purports to be and to have been signed at the time such facsimile
signature is reproduced. In the event that any officer of the
Corporation who shall have signed any of the Debentures shall cease to
be such officer before the Debentures so signed shall have
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been authenticated by the Trustee and delivered or disposed of by the
Corporation, such Debentures nevertheless may be authenticated and
delivered or disposed of as though the Person who signed such
Debentures had not ceased to be such officer of the Corporation; and
any Debenture may be signed on behalf of the Corporation by such Person
as, at the actual date of the execution of such Debenture, shall be the
proper officer of the Corporation, although at the date of such
Debenture or of the execution of this Indenture such Person was not
such officer.
2.6 Certification
(1) No Debenture shall be issued or, if issued, shall be obligatory
or shall entitle the Holder thereof to the benefits of this
Indenture until it has been certified by manual signature by or
on behalf of the Trustee substantially in the form set out in the
Schedule hereto or in some other form approved by the Trustee,
whose approval shall be conclusively evidenced by the
certification thereof. Such certificate on any Debenture shall be
conclusive evidence that such Debenture has been duly issued
hereunder and is a valid obligation of the Corporation and that
the Holder is entitled to the benefits of this Indenture.
(2) The certificate of the Trustee on any Debenture shall not be
construed as a representation or warranty by the Trustee as to
the validity of this Indenture or of the Debentures (except the
due certification thereof and any other warranties implied by
law) and the Trustee shall in no respect be liable or answerable
for the use made of the Debentures or any of them or the proceeds
thereof. The certificate of the Trustee on any Debenture shall,
however, be a representation and warranty by the Trustee that
such Debenture has been duly certified by or on behalf of the
Trustee pursuant to the provisions of this Indenture.
2.7 Concerning Interest
(1) Every Debenture, whether issued originally or in exchange or
substitution for previously issued Debentures, shall bear
interest from and including the date of issue or from and
including the last interest payment date to which interest shall
have been paid or made available for payment on the Debentures,
whichever is later, provided that for the period from the date of
issue of the Debentures to the first interest payment date, the
interest rate will be such that, when the interest for such
period is added to the interest earned on the Escrowed Proceeds
and paid to holders of Special Warrants upon exercise or deemed
exercise of Special Warrants for Debentures under the Special
Warrant Indenture, it is equivalent to 7.5% per annum calculated
from the date of issuance of the Special Warrants.
(2) Interest on such Debenture shall cease to accrue on the earliest
of the Maturity Date or, if such Debenture is called for
redemption, the date fixed for redemption unless, upon due
presentation and surrender thereof for payment on or after the
Maturity Date or the date fixed for redemption, as the case may
be, such payment is improperly withheld or refused or, if such
Debenture is converted, the date stipulated in subsection 4.2(4).
(3) Wherever in this Indenture or the Debentures there is mention, in
any context, of the payment of interest, such mention shall be
deemed to include the payment of interest
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on amounts in default to the extent that, in such context, such
interest is, was or would be payable pursuant to section 2.2, and
the express mention of interest on amounts in default in any of
the provisions hereof shall not be construed as excluding such
interest in those provisions hereof where such express mention is
not made.
2.8 Debentures to Rank Equally - The Debentures may be issued in such
amounts, to such Persons and on such terms not inconsistent with the
provisions of this Indenture as the Directors may determine. Each
Debenture as soon as it is issued shall, subject to the terms hereof,
be equally and rateably entitled to the benefits hereof as if all the
Debentures had been issued and negotiated simultaneously.
2.9 Registration of Debentures
(1) The Corporation shall cause to be kept by and at the principal
office of the Trustee in Vancouver a central register, and by and
at the principal offices of the Trustee in Xxxxxxxxx, Xxxxxxx and
Montreal, or by such other registrar or registrars, if any, as
the Corporation with the approval of the Trustee may designate,
branch registers, in which shall be entered the names and
addresses of the Holders, particulars of the principal amount of
Debentures held by them respectively and the particulars of all
transfers of Debentures and such other particulars of the
Debentures, as may be prescribed by law. No transfer of a
Debenture shall be effective as against the Corporation unless
made on one of the registers upon surrender of such Debenture to
the Trustee or other registrar by the Debentureholder or his
executors, administrators or other legal representatives or his
or their attorney duly appointed by an instrument in form and
execution satisfactory to the Trustee or other registrar and upon
compliance with such requirements as the Trustee or other
registrar may prescribe.
(2) The registers referred to in this section shall at all reasonable
times be open for inspection by the Corporation, the Trustee and
any Debentureholder.
(3) The Holder of a Debenture may at any time and from time to time
have such Debenture transferred at any of the places at which a
register is kept pursuant to the provisions of this section in
accordance with such reasonable regulations as the Trustee may
prescribe.
(4) Neither the Corporation nor the Trustee nor any registrar shall
be required to transfer or exchange any Debentures during the ten
Business Days immediately preceding any interest payment date.
(5) Subject to applicable law, neither the Corporation, nor the
Trustee nor any registrar shall be bound to take notice of or to
see to the execution of any trust, whether express, implied or
constructive, in respect of any Debenture and the Trustee and any
registrar may transfer any Debenture on the direction of the
Holder thereof, whether named as trustee or otherwise, as though
that Person were the beneficial owner thereof.
(6) Except in the case of the central register required to be kept at
Vancouver, British Columbia, the Corporation shall have power at
any time to close any branch register, in which event it shall
transfer the records thereof to another existing register or to a
new
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13
register, and thereafter such Debentures shall be deemed to be
registered on such existing or new register, as the case may be.
In the event that the register in any place is closed and the
records transferred to a register in another place, notice of
such change shall be given to the Holders of the Debentures
registered in the register so closed and the particulars of such
change shall be recorded in the central register required to be
kept in Vancouver, British Columbia.
(7) The Trustee and every registrar shall, when requested to do so by
the Corporation or the Trustee, furnish the Corporation or the
Trustee, as the case may be, with a list of the names and
addresses of the Holders of Debentures showing the principal
amounts and serial numbers of such Debentures held by each
Holder.
2.10 Payment of Principal and Interest in Respect of Debentures
(1) As the interest on Debentures becomes due (except interest
payable on the Maturity Date or on redemption, which may, at the
option of the Corporation, be paid upon presentation of such
Debentures for payment), at least three Business Days prior to
each date on which interest on such Debentures becomes due, the
Corporation shall forward or cause to be forwarded a cheque for
such interest (less any tax required by law to be deducted or
withheld) payable to the order of such Holder and negotiable at
par at each of the places at which interest upon such Debentures
is payable, by ordinary mail, postage prepaid (or in the event of
mail service interruption, by such other means as the Trustee and
the Corporation shall determine to be appropriate) to the Holder
at his last address appearing on the appropriate register
hereinbefore mentioned. The forwarding of such cheque shall
satisfy and discharge the liability for the interest on such
Debentures to the extent of the sum represented thereby (plus the
amount of any tax deducted or withheld as aforesaid) unless such
cheque is not paid on presentation. In the event that such cheque
is not received by the Holder or is lost or destroyed prior to
being cashed, the Corporation (or the Trustee at the request of
the Corporation), upon being furnished with evidence of
non-receipt, loss or destruction and indemnity reasonably
satisfactory to it, shall issue or cause to be issued to such
Holder a replacement cheque for the amount of such cheque.
(2) Subject to section 3.9, where Debentures are registered in more
than one name, the principal and interest from time to time
payable in respect thereof shall be paid by cheque payable to the
order of all such Holders, unless the Corporation has received
written instructions from them to the contrary, and the receipt
of any one of such Holders therefor shall be a valid receipt on
behalf of the Holders with respect thereto and shall discharge
the Trustee, any registrar of Debentures and the Corporation from
their obligations with respect thereto.
2.11 Payment Agreements for Debentures - Notwithstanding anything contained
in this Indenture to the contrary, the Corporation may enter into an
agreement with any Holder or with the Person for whom such Holder is
acting as nominee providing for the payment, without presentation or
surrender of the Debenture or notation of payment thereon, to such
Holder of the principal amount and interest on such Debenture and all
other moneys payable hereunder at a place, and by wire transfer of
funds or in such other manner, other than the
144554\0512933.WP
14
places or the manner specified in this Indenture and in such Debenture
as the places and the manner for such payment. Any payment of the
principal and interest on any such Debenture and other money payable
hereunder at such other place or in such other manner pursuant to such
agreement shall, notwithstanding any other provision of this Indenture
or the Debentures, be valid and binding on the Corporation, the
Trustee and all Holders.
2.12 Ownership of Debentures
(1) The Holder of any Debenture shall be deemed to be the owner
thereof for all purposes of this Indenture and payment of or on
account of the principal of, and interest on, such Debenture
shall be made only to or upon the order in writing of the Holder
thereof and such payment shall be complete satisfaction for the
amounts so paid and discharge to the Trustee, any registrar of
Debentures and the Corporation for the amounts so paid.
(2) The Holder of any Debenture shall be entitled to the principal
and interest evidenced by such Debenture, free from all equities
or rights of compensation, set-off or counterclaim between the
Corporation and any prior Holder thereof and all Persons may act
accordingly. A transferee of a Debenture shall, upon compliance
with all of the requirements for the transfer of Debentures set
out in this Indenture, in the Debenture or established by the
Trustee or the Corporation pursuant thereto and any other
requirements of law with respect to such transfer, be entitled to
be entered on the appropriate register or on any one of the
appropriate registers as the owner of such Debenture, free from
all rights of compensation, set-off or counterclaim between the
Corporation and the transferor or any previous Holder thereof.
2.13 Exchange of Debentures
(1) Debentures of any denomination may be exchanged for Debentures of
any other authorized denomination or denominations of an
equivalent aggregate principal amount. Exchanges of Debentures
may be made at the principal offices of the Trustee in the cities
of Xxxxxxxxx, Xxxxxxx or Montreal and at such other place, if
any, or places as may from time to time be designated by the
Corporation with the approval of the Trustee. Any Debentures
tendered for exchange shall be surrendered to the Trustee and
shall be cancelled. The Corporation shall execute, and the
Trustee shall certify, all Debentures necessary to carry out such
exchanges.
(2) Debentures issued in exchange for Debentures which at the time of
such issue have been selected or called for redemption at a later
date shall be deemed to have been selected or called for
redemption in the same manner as the Debentures for which they
were exchanged and, upon issuance of such Debentures the Trustee
shall note thereon a statement to that effect.
(3) Except as otherwise provided herein, upon any exchange of
Debentures of any denomination for Debentures of any other
authorized denominations and upon any transfer of Debentures, the
Trustee or other registrar of Debentures may charge the Holder or
the transferor such reasonable fee as may be necessary to
discharge any stamp tax, security
144554\0512933.WP
15
transfer tax or other governmental charge required to be paid and
payment of such charges shall be made by the party requesting
such exchange or transfer as a condition precedent thereto.
(4) Notwithstanding the foregoing, no charge (other than for
insurance on any Debentures forwarded by mail) shall be made by
the Trustee, any other registrar of Debentures or the Corporation
for an exchange, registration or transfer of any Debentures
applied for within a period of 45 days from the date hereof.
(5) Neither the Corporation, the Trustee nor any other registrar of
Debentures shall be required to exchange any Debentures on the
day of any selection by the Trustee of any Debentures to be
redeemed or during the ten Business Days following the day of
selection by the Trustee.
2.14 Replacement of Debentures - If any of the Debentures shall become
mutilated or be lost, stolen or destroyed, the Corporation in its
discretion may issue, and thereupon the Trustee shall certify and
deliver, a new Debenture upon surrender and cancellation of the
mutilated Debenture, or, in the case of a lost, stolen or destroyed
Debenture, in lieu of and in substitution for the same, and the
substituted Debenture shall be in a form approved by the Trustee and
the Holder thereof shall be entitled to the benefits of this Indenture
equally with all other Debentures issued or to be issued hereunder. In
case of loss, theft or destruction the applicant for a new Debenture
shall furnish to the Corporation and to the Trustee such evidence of
such loss, theft or destruction as shall be satisfactory to them in
their discretion and shall also furnish an indemnity and surety bond
in amount and form satisfactory to the Corporation and the Trustee in
their discretion. The applicant shall pay reasonable expenses
incidental to the issuance of any such new Debenture.
2.15 Interim Debentures
(1) Pending delivery to the Trustee of definitive Debentures the
Corporation may execute in lieu thereof (but subject to the same
provisions, conditions and limitations as herein set forth), and
the Trustee may certify, interim printed, mimeographed or
typewritten Debentures, in such form and in such denominations as
may be approved by the Trustee and any one of the President, the
Chief Executive Officer, the Chief Financial Officer, a
Vice-President or the Secretary of the Corporation (whose
certification or signature, either manual or in facsimile, as the
case may be, on any such interim Debentures shall be conclusive
evidence of such approval) entitling the Holders thereof to
definitive Debentures in any authorized denominations when the
same are ready for delivery, without expense to such Holders, but
the total amount of interim Debentures so issued shall not exceed
the aggregate principal amount of Debentures authorized to be
issued hereunder. Forthwith after the issuance of any such
interim Debentures the Corporation shall cause to be prepared the
appropriate definitive Debentures for delivery to the Holders of
such interim Debentures.
(2) Interim Debentures which have been duly issued shall, until
exchanged for definitive Debentures, entitle the Holders thereof
to rank for all purposes as Debentureholders and otherwise in
respect of this Indenture to the same extent and in the same
manner as
144554\0512933.WP
16
though such exchange had actually been made. When exchanged for
definitive Debentures such interim Debentures shall forthwith be
cancelled by the Trustee.
ARTICLE 3
REDEMPTION AND PURCHASE FOR CANCELLATION
OF DEBENTURES AND ISSUE OF COMMON SHARES
3.1 Redemption of Debentures - Subject to section 3.2, the Debentures
shall be redeemable prior to maturity, in whole at any time or in part
from time to time, at the option of the Corporation (in the manner
hereinafter provided and in accordance with and subject to the
provisions hereinafter set forth) at a price equal to the principal
amount thereof to be redeemed, together with accrued and unpaid
interest on the principal amount of the Debentures, or part thereof,
so redeemed to but not including the date fixed for redemption (such
price, including accrued and unpaid interest) at which Debentures may
be redeemed being hereinafter referred to as the "Redemption Price").
3.2 Limitation on Redemption - Notwithstanding section 3.1, the Debentures
shall not be redeemable prior to February 4, 2001. From thereafter,
the Debentures shall not be redeemable unless the Corporation shall
have filed with the Trustee, on or before the day that the applicable
notice of redemption of such Debentures is given pursuant to section
3.4, a Certificate of the Corporation certifying that the Current
Market Price of the Common Shares on the date on which such notice of
redemption is given exceeds 125% of the Conversion Price.
3.3 Partial Redemption of Debentures
(1) If less than all the Debentures are to be redeemed, the
Corporation shall in each such case, at least 15 days before the
date upon which notice of redemption is to be given pursuant to
section 3.4, notify the Trustee by Written Direction of the
Corporation of its intention to redeem Debentures and of the
aggregate principal amount of Debentures to be redeemed. If at
the time of giving such notice the Corporation has determined
that it will exercise its right pursuant to section 3.9 to
satisfy its obligation hereunder to pay the aggregate principal
amount payable to the Holders of Debentures on redemption by the
issue to such Holders of Common Shares, the Corporation will, at
the time of notifying the Trustee of its intention to redeem
Debentures as provided in this section, notify the Trustee
regarding such determination, provided that such notification
will be without prejudice to the right of the Corporation to
thereafter determine not to exercise such right. The Debentures
to be redeemed shall be redeemed on a pro rata basis or drawn by
lot or otherwise selected by the Trustee in such manner as the
Trustee, in its discretion, may consider equitable, provided that
if an Event of Default hereunder has occurred and is continuing
on the date of such selection, such selection shall be
proportionate to the principal amount of Debentures held (to the
nearest $1,000). For this purpose, the Trustee may make, and from
time to time amend or vary, regulations with respect to the
manner in which such Debentures may be so selected and
regulations so made shall be valid and binding upon all Holders
of Debentures notwithstanding
144554\0512933.WP
17
the fact that, as a result thereof, one or more of such
Debentures become subject to redemption in part only.
(2) Debentures in denominations in excess of $1,000 may be selected
and called for redemption in part only (such part being $1,000 or
an integral multiple thereof) and, unless the context otherwise
requires, references to Debentures in this Article 3 shall be
deemed to include any such part of the principal amount of
Debentures which shall have been so selected and called for
redemption. The Holder of any Debenture called for redemption in
part only, upon surrender of such Debenture for payment, shall be
entitled to receive, without expense to such Holder, a new
Debenture for the unredeemed part of the Debenture so
surrendered, and the Corporation shall execute and the Trustee
shall certify and deliver, at the expense of the Corporation,
such new Debenture upon receipt of the Debenture so surrendered.
3.4 Notice of Redemption
(1) Notice of intention to redeem any Debentures (a "notice of
redemption") shall be given by or on behalf of the Corporation to
the Holders of the Debentures which are to be redeemed, not more
than 60 days and not less than 30 days prior to the date fixed
for redemption, in the manner provided in Article 11. The notice
of redemption shall, unless all the Debentures then outstanding
are to be redeemed, specify the distinguishing letters and
numbers of the Debentures which are to be redeemed and, if a
Debenture is to be redeemed in part only, shall specify that part
of the principal amount thereof to be redeemed, and shall specify
the redemption date, the Redemption Price and places of payment
and shall state that all interest on the Debentures called for
redemption shall cease from and after such redemption date.
(2) If at the time of giving a notice of redemption referred to in
this section the Corporation has determined that it will exercise
its right pursuant to section 3.9 to satisfy its obligation
hereunder to pay the aggregate principal amount payable to the
Holders of Debentures on redemption by the issue to such Holders
of Common Shares, the Corporation will give the notice to the
Holders of Debentures to be given by the Corporation pursuant to
section 3.9 contemporaneously with the notice of redemption
pursuant to this section (and for greater certainty, the notice
to the Holders of Debentures to be given by the Corporation
pursuant to section 3.9 and the notice of redemption pursuant to
this section may be combined in a single notice).
3.5 Debentures Due on Redemption Dates
(1) Upon notice having been given in accordance with section 3.4, the
Debentures so called for redemption shall thereupon become due
and payable at the Redemption Price and on the redemption date
specified in such notice, in the same manner and with the same
effect as if it were the Maturity Date specified in such
Debentures, notwithstanding anything contained therein or herein
to the contrary, and from and after such redemption date, if (i)
the money necessary to redeem such Debentures, less applicable
withholding tax, if any, shall have been deposited as hereinafter
provided or, if the Corporation has elected pursuant to section
3.9 to satisfy its obligation to pay the aggregate principal
amount of Debentures by the
144554\0512933.WP
18
issue of Common Shares, the Corporation has complied with the
requirements of sections 3.9 and 3.10, and (ii) affidavits or
other proof satisfactory to the Trustee as to the mailing of such
notices shall have been delivered to it, such Debentures shall
not be considered as outstanding hereunder and interest upon such
Debentures shall cease to accrue after such redemption date,
subject to the provisions of section 3.3.
(2) If any question shall arise as to whether notice of redemption or
deposit of the redemption monies has been given or made or as to
whether the Corporation has complied with the requirements of
sections 3.9 and 3.10 as provided above, such question shall be
decided by the Trustee whose decision shall be final and binding
upon all interested parties.
3.6 Deposit of Redemption Moneys - Subject to section 3.9, upon Debentures
having been called for redemption, the Corporation shall deposit with
the Trustee, prior to the redemption date fixed in the relevant notice
of redemption, such sums as may be sufficient to pay the Redemption
Price of the Debentures to be redeemed, together with a sum sufficient
to pay estimated charges and expenses which may be incurred by the
Trustee in connection with such redemption. From the sums so deposited
the Trustee shall pay or cause to be paid to the Holders of the
Debentures called for redemption, upon surrender of such Debentures,
the principal and interest to which they are respectively entitled on
redemption less applicable withholding tax, if any.
3.7 Failure to Surrender Debentures Called for Redemption - If the Holder
of any Debentures called for redemption shall, within 30 days from the
date fixed for redemption, fail to surrender any of such Debentures or
shall not within such time accept payment of the Redemption Price
payable in respect thereof which has been deposited with the Trustee
pursuant to section 3.6 or give such receipt therefor, if any, as the
Trustee may require, such Redemption Price so deposited, if any, shall
be set aside in trust for such Holder, in accordance with section
12.8, and such setting aside shall for all purposes be deemed a
payment to the Debentureholder of the sum so set aside, and to that
extent such Debentures shall thereafter not be considered as
outstanding hereunder and the Debentureholder shall have no right
except to receive payment out of the moneys so paid and deposited,
upon surrender of his Debentures, of the Redemption Price less
applicable withholding tax, if any, of such Debentures, without
interest thereon.
3.8 Surrender of Debentures for Cancellation - If the principal moneys due
upon any Debenture shall become payable by redemption or otherwise
before the Maturity Date, the Person presenting such Debenture for
payment must surrender the same for cancellation, the Corporation
nevertheless paying or causing to be paid the interest accrued and
unpaid thereon (computed on a per diem basis if the date fixed for
payment is not an interest payment date).
3.9 Payment in Common Shares on Redemption of Debentures or Maturity Date
(1) Subject to section 3.10, applicable law and regulatory approvals,
and notwithstanding any other provision of this Indenture, the
Corporation, at its option, on at least 30 days and not more than
60 days notice given in accordance with section 3.11 and Article
11 (which notice, in the case of a redemption, in the
circumstances specified in
144554\0512933.WP
19
subsection 3.4(2), will be given contemporaneously with notice of
such redemption pursuant to section 3.4 as set out in subsection
3.4(2)), may satisfy its obligation hereunder to pay the
aggregate principal amount payable to the Holders of Debentures
on the redemption date or on the Maturity Date by the issue to
such Holders of that number of Common Shares determined by
dividing such aggregate principal amount by 95% of the Current
Market Price of the Common Shares on the redemption date or the
Maturity Date, as the case may be, provided that, in the event
that the Current Market Price of the Common Shares on the
Maturity Date is less than $2.00, the Corporation, at its option,
may satisfy its obligation hereunder to pay the aggregate
principal amount payable to the Holders of Debentures by the
issue to such Holders of that number of Common Shares equal to
the lesser of:
(a) the number determined by dividing such aggregate principal
amount by 95% of the Current Market Price of the Common
Shares on the Maturity Date ; and
(b) the number determined by dividing such aggregate principal
amount by the closing market price of the Common Shares on
The Toronto Stock Exchange on the Maturity Date.
(2) The Corporation may not exercise the right referred to in this
section if an Event of Default hereunder has occurred and is
continuing at the redemption date or on the Maturity Date, as the
case may be.
(3) In the event the Corporation exercises the right referred to in
this section to satisfy its obligation hereunder to pay the
aggregate principal amount payable to the Holders of Debentures
on the redemption date, the Corporation shall not be obliged to
deposit money with the Trustee pursuant to section 3.6, and the
obligation of the Corporation hereunder to pay the Redemption
Price of the Debentures to be redeemed shall be satisfied in the
manner provided in this section and in sections 3.10, 3.11 and
3.12.
(4) The Corporation shall satisfy its obligation hereunder to pay the
aggregate principal amount payable to the Holders of Debentures
on redemption or on the Maturity Date, as the case may be, in
cash, instead of in Common Shares as provided in this section, to
Holders of Debentures not residing in Canada, if any.
3.10 Issue of Common Shares on Redemption of Debentures or Maturity Date
(1) Subject to section 3.9(4), the redemption date or the Maturity
Date, as the case may be, and if otherwise permitted to do so by
law, the Corporation may issue that number of Common Shares
determined under section 3.9, and, in such case, will deliver to
the Trustee the following:
(a) an Officer's Certificate certifying that no Event of Default
hereunder has occurred and is continuing as at the
redemption date or on the Maturity Date, as the case may be;
144554\0512933.WP
20
(b) an Officer's Certificate specifying the Current Market Price
of the Common Shares on the redemption date or the Maturity
Date, as the case may be;
(c) an opinion of counsel that (i) all requirements imposed by
this Indenture or by law in connection with the proposed
issue of Common Shares have been complied with and such
Common Shares may be freely traded, through persons
registered as securities dealers if required under
applicable laws, (ii) upon receipt by the Corporation of the
consideration therefor the Common Shares to be so issued
will be validly issued and will be outstanding as fully paid
and non- assessable shares and (iii) if the Common Shares
are listed on any stock exchange, such stock exchange has
conditionally approved the listing of the Common Shares to
be so issued and any conditions stipulated by such stock
exchange to be fulfilled before the date such Common Shares
are to be so issued, have been completely fulfilled; and
(d) a Written Order of the Corporation authorizing and directing
the Trustee to issue certificates for Common Shares
representing the Common Shares issuable on the redemption
date or the Maturity Date, as the case may be.
(2) The Corporation will deliver to the Trustee the items referred to
in paragraph 3.10(1)(b) and (d) not less than five days prior to
the redemption date or the Maturity Date, as the case may be, or
on such later date as may be acceptable to the Trustee.
(3) If any registration or filing pursuant to any securities laws of
Canada or any province thereof is required to ensure that any
Common Shares issuable on the redemption date or the Maturity
Date, as the case may be, are issued in compliance with all such
laws or to ensure that any such Common Shares, once issued, may
be freely traded, the Corporation covenants that it will take all
such action as may be necessary to make or obtain such
registration or filing, as the case may be, including making an
application for discretionary relief, if advisable.
(4) Subject to section 3.3, the issue by the Corporation of that
number of Common Shares determined under section 3.9 to satisfy
its obligation hereunder to pay the aggregate principal amount
payable to the Holders of Debentures on the redemption date or on
the Maturity Date, shall fully satisfy and discharge the
obligation of the Corporation to pay the principal amount of such
Debentures.
3.11 General Requirements
(1) The notice to the Holders of Debentures to be given by the
Corporation pursuant to section 3.9 must:
(a) state that the Corporation has exercised its option to pay
the aggregate principal amount payable to the Holders of
Debentures on the redemption date or the Maturity Date, as
the case may be, by the issue of Common Shares to the
Holders of Debentures;
144554\0512933.WP
21
(b) state that to receive a certificate for Common Shares on the
redemption date or the Maturity Date, as the case may be,
the Holders of Debentures must surrender their Debentures to
the Trustee at its principal offices in the cities of
Vancouver, Toronto or Montreal;
(c) advise each Holder of Debentures that the Common Shares to
be issued in respect of such Holder's Debenture will be
registered in the name of the Holder unless the Trustee, or
its agent, receives from such Holder, on or before the tenth
Business Day prior to the redemption date or the Maturity
Date, as the case may be, at its principal offices in the
cities of Vancouver, Toronto or Montreal, written notice in
form and execution satisfactory to the Trustee directing the
Corporation to register such Common Shares in the name or
names of another Person or Persons and stating the name or
names (with addresses) of such Person or Persons and, unless
such Holder presents and surrenders such Holder's Debenture
either with the transfer form appearing on or appended to
such Debenture properly completed or together with any other
written transfer in a form satisfactory to the Trustee (in
either case duly executed by the Holder or his executors or
administrators or other legal representatives or his or
their attorney duly appointed by an instrument in writing in
form and executed in a manner satisfactory to the Trustee),
to transfer such Holder's Debenture or the Common Shares to
be issued in respect of such Holder's Debenture to such
Person or Persons, accompanied by payment to the Trustee of
any stamp tax, security transfer tax or other governmental
charge which may be payable by reason thereof; and
(d) advise each Holder that such Holder may, on or after the
redemption date or the Maturity Date, as the case may be,
and on proof of identity satisfactory to the Trustee, upon
presentation and surrender of such Holder's Debenture, take
personal delivery of the share certificates representing
that Holder's Common Shares so issued, at the principal
offices of the Trustee in the cities of Xxxxxxxxx, Xxxxxxx
or Montreal, if the Trustee receives from such Holder at one
of such principal offices, in addition to any other notice
or delivery required by this subsection and on or before the
tenth Business Day prior to the redemption date or the
Maturity Date, as the case may be, written notice in form
and execution satisfactory to the Trustee, stating that such
Holder wishes to take personal delivery of such Common
Shares, and specifying the principal office of the Trustee
at which such delivery is to be made.
(2) On the redemption date or the Maturity Date, as the case may be,
the Corporation will:
(a) cause to be sent to each Holder in respect of which
Debentures have been surrendered in accordance with the
requirements of the notice given pursuant to subsection
3.11(1), at the address of the Holder as shown on the
records of the Corporation, by prepaid ordinary insured mail
(or in the event of mail service interruption by such other
means as the Trustee and the Corporation will
144554\0512933.WP
22
determine to be appropriate), share certificates for Common
Shares issued pursuant to section 3.10 in the name of such
Holder or, if the Trustee has received the written notice
and other documents and any payment contemplated by
paragraph 3.11(1)(c), in the name of such other Person or
Persons as are identified in such written notice; or
(b) make available for personal delivery, on proof of identity
satisfactory to the Trustee, to each Holder who has
delivered a notice to the Trustee in accordance with
paragraph 3.11(1)(d), share certificates for Common Shares
issued pursuant to section 3.10 to such Holder in respect of
which Debentures have been surrendered in accordance with
the requirements of the notice given pursuant to subsection
3.11(1).
(3) On or after the redemption date or the Maturity Date, as the case
may be, the Corporation will deliver share certificates
representing the Common Shares issued pursuant to section 3.10 to
any other registered holder thereof, upon presentation and
surrender of the Debentures in respect of which such Common
Shares were issued.
(4) Each share certificate delivered pursuant to this section 3.11
will be for that number of Common Shares that is the Holder's
proportionate share of the number of Common Shares determined in
accordance with section 3.9.
(5) Interest accrued and unpaid on the Debentures on the redemption
date or the Maturity Date, as the case may be, will be paid to
the Holders of Debentures in the manner contemplated in sections
2.10 or 2.11.
(6) If the Holder of any Debentures, in respect of which the
Corporation has elected pursuant to section 3.9 to satisfy its
obligation to pay the aggregate principal amount of such
Debentures by the issue of Common Shares, shall fail to surrender
any of such Debentures or shall not accept delivery of
certificates representing the Common Shares issuable to such
Holder, such Debentures shall, subject to section 3.3, after the
redemption date or the Maturity Date, as the case may be, not be
considered as outstanding hereunder, and the Debentureholder
shall have no right in respect thereof except to receive
certificates representing the Common Shares issuable to such
Holder upon surrender of such Debentures.
3.12 No Requirement to Issue Fractional Shares
The Corporation shall not be required to issue fractional Common Shares
upon the issue of Common Shares pursuant to section 3.10. If any fractional
interest in a Common Share would, except for the provisions of this section, be
deliverable upon the issue of any Common Shares pursuant to section 3.10, the
Corporation shall, in lieu of delivering any certificate representing such
fractional interest, satisfy such fractional interest by paying to the
registered holder of such Shares an amount in lawful money of Canada equal
(computed to the nearest cent) to an identical fraction of the Current Market
Price of the Common Shares on the redemption date or the Maturity Date, as the
case may be.
144554\0512933.WP
23
3.13 Purchase of Debentures
(1) The Corporation may purchase all at any time or any from time to
time of the Debentures in the open market, by pro rata offer or
invitation for tenders made to all of the Debentureholders, or
otherwise; provided that the price at which the Corporation may
purchase the Debentures shall not, except in the case of a
purchase in the open market or a pro rata offer or invitation to
tender made to Holders of all Debentures then outstanding, exceed
the principal amount of the Debentures so purchased plus accrued
and unpaid interest thereon to the date of purchase plus costs of
purchase.
(2) If upon an invitation for tenders more Debentures are tendered
than the Corporation is prepared to accept at the lowest price
that the Corporation is prepared to accept, the Debentures to be
purchased by the Corporation will be selected by the Trustee by
lot, or in such other manner as the Trustee, in its discretion,
may consider equitable, from the Debentures tendered by each
tendering Debentureholder who tendered at such lowest price. For
the purpose of such selection, the Trustee may make, and from
time to time amend or vary, regulations with respect to the
manner in which such Debentures may be so selected and
regulations so made shall be valid and binding upon all Holders
of Debentures notwithstanding the fact that, as a result thereof,
one or more of such Debentures become subject to purchase in part
only.
(3) The Corporation may not exercise the right referred to in this
section if an Event of Default hereunder has occurred and is
continuing at the date of purchase.
3.14 Cancellation of Debentures - All Debentures redeemed and all
Debentures purchased under this Article 3 shall forthwith be
delivered to the Trustee and shall be cancelled by it and no
Debentures shall be issued in substitution therefor.
3.15 U.S. Legend - The Trustee understands and acknowledges that the
Common Shares have not been and will not be registered under the
U.S. Securities Act. Each Common Share certificate originally
issued in the United States or to a U.S. Person, and each Common
Share Certificate issued in exchange therefor or in substitution
thereof shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH SECURITIES
MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER,
(B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION
S UNDER THE U.S. SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER, IF AVAILABLE, AND THE COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS OR (D) IN COMPLIANCE WITH CERTAIN OTHER PROCEDURES
SATISFACTORY TO
144554\0512933.WP
24
THE COMPANY. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD
DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK EXCHANGE.
A NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE
"GOOD DELIVERY", MAY BE OBTAINED FROM THE TRANSFER AGENT UPON DELIVERY
OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM
SATISFACTORY TO THE TRANSFER AGENT AND THE COMPANY, TO THE EFFECT THAT
THE SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN
COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT.
provided, however, that if the Common Shares are being sold under paragraph (B)
above, the legend may be removed by providing a declaration to the Trustee as
transfer agent for the securities to the following effect:
The undersigned (A) acknowledges that the sale of the securities to
which this declaration relates is being made in reliance on Rule 904 of
Regulation S under the United States Securities Act of 1933, as amended
(the "U.S. Securities Act") and (B) certifies that (1) it is not an
affiliate (as defined in Rule 405 under the U.S. Securities Act) of
Dakota Mining Corporation, (2) the offer of such securities was not
made to a person in the United States and either (A) at the time the
buy order was originated, the buyer was outside the United States, or
the seller and any person acting on its behalf reasonably believe that
the buyer was outside the United States, or (B) the transaction was
executed on or through the facilities of The Toronto Stock Exchange,
the Montreal Exchange, the Vancouver Stock Exchange or the Alberta
Stock Exchange and neither the seller nor any affiliate of the seller
nor any person acting on any of their behalf has engaged or will engage
in any directed selling efforts in the United States in connection with
the offer and sale of such securities, (4) the sale is bona fide and
not for the purpose of "washing off" the resale restrictions imposed
because the securities are "restricted securities" (as such term is
defined in Rule 144(a)(3) under the U.S. Securities Act), (5) the
seller does not intend to replace the securities and (6) the
contemplated sale is not a transaction, or part of a series of
transactions which, although in technical compliance with Regulation S,
is part of a plan or scheme to evade the registration provisions of the
U.S. Securities Act. Terms used herein have the meanings given to them
by Regulation S.
ARTICLE 4
CONVERSION
4.1 Conversion Privilege - Subject to and upon compliance with the
provisions of this Article 4, the Holder of each Debenture shall have
the right, at his option, at any time up to and including the close of
business on the last Business Day immediately preceding the Maturity
Date, or if such Debenture shall have been called for
144554\0512933.WP
25
redemption prior to such date, then up to, but not after, the close of
business on the last Business Day immediately preceding the date fixed
for redemption (such time and date being referred to as the "Time of
Expiry"), to convert such Debenture or any portion of the principal
amount thereof which is $1,000 or an integral multiple of $1,000 into
fully paid and non-assessable Common Shares at the conversion price in
effect on the date hereof of $2.00 (the "Conversion Price") per Common
Share, being a rate of 500 Common Shares for each $1,000 principal
amount of Debentures, subject to adjustment as set forth in sections
4.3 and 4.4.
4.2 Manner of Exercise of Right to Convert
(1) The Holder of a Debenture wishing to convert such Debenture in
whole or in part into Common Shares shall surrender such
Debenture, prior to the Time of Expiry, to the Trustee, at its
principal offices in any of the cities of Vancouver, Toronto or
Montreal with the conversion form appearing thereon or appended
thereto, in either case duly executed by the Holder or his
executors or administrators or other legal representatives or his
or their attorney duly appointed by an instrument in form and
substance satisfactory to the Trustee, irrevocably exercising his
right to convert such Debenture in accordance with the provisions
of this Article 4. Thereupon, subject to subsection 4.3(8), such
Debentureholder or, subject to compliance with all reasonable
requirements of the Trustee (including, if required by the
Trustee, execution and delivery to the Trustee of a form of
transfer satisfactory to the Trustee duly executed by the Holder
or his executors or administrators or other legal representatives
or his or their attorney duly appointed by an instrument in
writing in form and executed in a manner satisfactory to the
Trustee, to transfer such Holder's Debenture or the Common Shares
to be issued on conversion of such Holder's Debenture and payment
of all applicable stamp taxes, security transfer taxes or other
governmental charges), his nominee or assignee, shall be entitled
to be entered in the books of the Corporation as at the Date of
Conversion (or such later date as is specified in subsection
4.2(2)) as the holder of the number of Common Shares into which
such Debenture is convertible in accordance with the provisions
hereof and, as soon as practicable thereafter, the Corporation
shall deliver to such Debentureholder or, subject as aforesaid,
his nominee or assignee, a certificate for such Common Shares
and, if applicable, a cheque for any amount payable under section
4.5.
(2) For the purposes hereof, a Debenture shall be deemed to be
surrendered for conversion on the date (the "Date of Conversion")
on which it is so surrendered in accordance with the provisions
hereof and, in the case of a Debenture so surrendered by mail or
other means of delivery, on the date on which it is received by
the Trustee at one of its offices specified in subsection 4.2(1),
provided that if a Debenture is surrendered for conversion on a
day on which the register of Common Shares is closed, the Person
entitled to receive Common Shares shall become the holder of
record of such Common Shares as at the date on which such
register is next reopened but such Common Shares will be issued
on the basis of the number of Common Shares to which such person
or persons were entitled on the Date of Conversion and provided
that if a Debenture is surrendered for conversion on any interest
payment date or the day of selection by the Trustee of any
Debentures for redemption, or in either case during the ten
preceding Business Days, such Debenture shall be deemed to be
144554\0512933.WP
26
surrendered for conversion on the Business Day immediately
following such interest payment date or date on which Debentures
are selected for redemption.
(3) Any part, being $1,000 or an integral multiple thereof, of a
Debenture of a denomination in excess of $1,000 may be converted
as provided herein and all references in this Indenture to
conversion of Debentures shall be deemed to include conversion of
such parts. The Holder of any Debenture of which part only is
converted shall, upon the exercise of his right of conversion,
surrender such Debenture to the Trustee, and the Trustee shall
cancel the same and shall, without charge, forthwith certify and
deliver to the Holder a new Debenture or Debentures in an
aggregate principal amount equal to the unconverted part of the
principal amount of the Debenture so surrendered.
(4) The Holder of a Debenture surrendered for conversion in
accordance with this section 4.2 shall be entitled to receive
accrued and unpaid interest in respect thereof only for the
period up to the interest payment date, if any, which falls on
the Date of Conversion or, if the Date of Conversion is not an
interest payment date, for the period up to the interest payment
date immediately preceding the Date of Conversion; and there
shall be no payment or adjustment by the Corporation on account
of any interest accrued or accruing on such Debenture from the
date of the latest interest payment date. The Common Shares
issued upon conversion shall rank and bear entitlement only in
respect of dividends declared in favour of holders of record of
Common Shares on and after the Date of Conversion or such later
date as such Holder shall become the holder of record of such
Common Shares pursuant to subsection 4.2(2), from which
applicable date they will for all purposes be and be deemed to be
issued and outstanding as fully paid and non-assessable Common
Shares.
4.3 Adjustment of Conversion Price
(1) The Conversion Price will be subject to adjustment from time to
time in the events and in the manner provided as follows.
(2) Upon the Trustee receiving a Notice of Non-Qualification, then
the Conversion Price will immediately be adjusted to equal $1.82,
being a rate of 550 Common Shares for each $1,000 principal
amount of Debentures.
(3) If and whenever, at any time after the date hereof and prior to
the Time of Expiry, the Corporation:
(a) issues Common Shares (or securities convertible into or
exchangeable for Common Shares) to holders of Common Shares
as or by way of a stock dividend or other distribution
(other than Dividends Paid in the Ordinary Course or
dividends pursuant to any dividend reinvestment plan in
force from time to time or by way of dividends to holders of
Common Shares where such holders may elect to receive such
dividends in the form of Common Shares (or securities
convertible into or exchangeable for Common Shares) instead
of by way of cash Dividends Paid in the Ordinary Course);
144554\0512933.WP
27
(b) makes a distribution to holders of Common Shares on its
outstanding Common Shares payable in Common Shares (or
securities convertible into or exchangeable for Common
Shares) (other than Dividends Paid in the Ordinary Course);
(c) subdivides its outstanding Common Shares into a greater
number of Common Shares; or
(d) consolidates its outstanding Common Shares into a smaller
number of Common Shares, (any of such events in paragraphs
(a), (b), (c) and (d) herein referred to as a "Common Share
Reorganization"), then the Conversion Price will be
adjusted, effective immediately after the effective date or
record date for the occurrence of a Common Share
Reorganization, as the case may be, at which the holders of
Common Shares are determined for the purpose of the Common
Share Reorganization, by multiplying the Conversion Price in
effect immediately prior to such effective date or record
date by a fraction, the numerator of which will be the
number of Common Shares outstanding on such effective date
or record date before giving effect to such Common Share
Reorganization and the denominator of which will be the
number of Common Shares that are or would be outstanding
immediately after such date after giving effect to such
Common Share Reorganization (including, in the case where
securities exchangeable for or convertible into Common
Shares are distributed, the number of Common Shares that
would have been outstanding had all such securities been
exchanged for or converted into Common Shares on such
effective date or record date).
(4) If and whenever, at any time after the date hereof and prior to
the Time of Expiry, the Corporation fixes a record date for the
issue of rights, options or warrants to all or substantially all
of the holders of Common Shares under which such holders are
entitled, during a period expiring not more than 45 days after
the date of such issue (the "Rights Period"), to subscribe for or
purchase Common Shares (or securities convertible into or
exchangeable for Common Shares) at a price per share to the
holder (or at a conversion or exchange price per share during the
Rights Period to the holder in the case of securities convertible
into or exchangeable for Common Shares) of less than 95% of the
Current Market Price for the Common Shares on such record date,
other than rights to receive dividends, in lieu of receiving cash
Dividends Paid in the Ordinary Course, in Common Shares, or
securities convertible into or exchangeable for Common Shares
having a fair market value, as determined by the Directors at the
time such dividend is declared, based upon the Current Market
Price of the Common Shares at such time, that is substantially
equivalent to the amount of such cash dividend (any of such
events herein referred to as a "Rights Offering"), then the
Conversion Price will be adjusted, effective immediately after
the end of the Rights Period, to a price determined by
multiplying the Conversion Price in effect immediately prior to
the end of the Rights Period by a fraction:
(a) the numerator of which will be the aggregate of:
144554\0512933.WP
28
(i) the number of Common Shares outstanding as of the
record date for the Rights Offering; and
(ii) a number determined by dividing (A) either (I) the
product of the number of Common Shares issued or
subscribed for during the Rights Period upon the
exercise of the rights, warrants or options under the
Rights Offering and the price at which such Common
Shares are offered, or, as the case may be, (II) the
product of the exchange or conversion price of such
securities exchangeable for or convertible into Common
Shares and the number of Common Shares for or into
which the securities so offered pursuant to the Rights
Offering could have been exchanged or converted during
the Rights Period, by (B) the Current Market Price of
the Common Shares as of the record date for the Rights
Offering, and
(b) the denominator of which will be the number of Common Shares
outstanding, or the number of Common Shares which would be
outstanding if all the exchangeable or convertible
securities were exchanged for or converted into Common
Shares during the Rights Period, after giving effect to the
Rights Offering and including the number of Common Shares
actually issued or subscribed for during the Rights Period
upon exercise of the rights, warrants or options under the
Rights Offering.
Any Debentureholder who has exercised the right to convert Common Shares in
accordance with this Article 4 during the period beginning immediately after the
record date for a Rights Offering and ending on the last day of the Rights
Period for the Rights Offering will, in addition to the Common Shares to which
that holder would otherwise be entitled upon such conversion, be entitled to
that number of additional Common Shares equal to the result obtained when the
difference, if any, between the Conversion Price in effect immediately prior to
the end of such Rights Period and the Conversion Price, as adjusted for such
Rights Offering pursuant to this subsection, is multiplied by the number of
Common Shares received upon the conversion of the Debentures held by such Holder
during such period, and the resulting product is divided by the Conversion Price
as adjusted for such Rights Offering pursuant to this subsection; provided that
the provisions of section 4.5 will be applicable to any fractional interest in a
Common Share to which such Holder might otherwise be entitled under the
foregoing provisions of this subsection. Such additional Common Shares will be
deemed to have been issued to the Debentureholder immediately following the end
of the Rights Period and a certificate for such additional Common Shares will be
delivered to such Holder within 15 Business Days following the end of the Rights
Period. To the extent that any such rights, options or warrants are not so
exercised on or before the expiry thereof, the Conversion Price will be
readjusted to the Conversion Price which would then be in effect based on the
number of Common Shares (or the securities convertible into or exchangeable for
Common Shares) actually delivered on the exercise of such rights, options or
warrants.
(5) If and whenever, at any time after the date hereof and prior to
the Time of Expiry, the Corporation fixes a record date for the
issue or the distribution to all or
144554\0512933.WP
29
substantially all the holders of Common Shares of (a) securities
of the Corporation, including rights, options or warrants to
acquire securities of the Corporation or any of its cash,
property or assets and including evidences of indebtedness or (b)
any cash, property or other assets, including evidences of
indebtedness, and if such issuance or distribution does not
constitute a Dividend Paid in the Ordinary Course, a Common Share
Reorganization or a Rights Offering (any of such non-excluded
events herein referred to as a "Special Distribution"), the
Conversion Price will be adjusted effective immediately after
such record date to a price determined by multiplying the
Conversion Price in effect on such record date by a fraction:
(i) the numerator of which will be:
(A) the product of the number of Common Shares outstanding
on such record date and the Current Market Price of the
Common Shares on such record date; less
(B) the fair market value, as determined by the Directors
(whose determination will be conclusive), to the
holders of Common Shares of such securities, cash,
property or other assets so issued or distributed in
the Special Distribution; and
(ii) the denominator of which will be the product of the
number of Common Shares outstanding on such record date
and the Current Market Price of the Common Shares on
such record date.
To the extent that any Special Distribution is not so made or to the extent that
any such rights, options or warrants so issued or distributed are not exercised
prior to the expiry thereof, the Conversion Price will be immediately
readjusted, with retroactive effect to the record date, to the Conversion Price
which would then be in effect based upon such securities or property or other
assets as actually distributed.
(6) If and whenever, at any time after the date hereof and prior to
the Maturity Date, there is a reclassification of the Common
Shares at any time outstanding or a change or exchange of the
Common Shares into or for other shares or into or for other
securities or any other capital reorganization (other than a
Common Share Reorganization), or a consolidation, amalgamation,
merger, arrangement or other form of business combination of the
Corporation with or into any other company or other entity (other
than a consolidation, amalgamation, merger, arrangement or
business combination which does not result in any
reclassification of the outstanding Common Shares or a change or
exchange of the Common Shares into or for other shares or into or
for other securities), or a transfer of the undertaking or assets
of the Corporation as an entirety or substantially as an entirety
to another corporation or other entity in which the holders of
Common Shares are entitled to receive shares, other securities or
other property (any of such events herein referred to as a
"Capital Reorganization"), any Holder of Debentures who exercises
the right to convert Debentures into Common Shares pursuant to
Debentures then held after the effective date of such Capital
Reorganization will be entitled to receive, and will accept for
the same aggregate consideration, in lieu of the number of Common
Shares to which such Holder was previously entitled upon
144554\0512933.WP
30
such conversion, the aggregate number of shares, other securities
or other property (including cash) which such holder would have
been entitled to receive as a result of such Capital
Reorganization if, on the effective date thereof, the holder had
been the registered holder of the number of Common Shares to
which such holder was previously entitled upon conversion. The
Corporation will take all steps necessary to ensure that, on a
Capital Reorganization, the Holders of Debentures will receive
the aggregate number of shares, other securities or other
property to which they are entitled as a result of the Capital
Reorganization. Appropriate adjustments will be made as a result
of any such Capital Reorganization in the application of the
provisions set forth in this Article 4 with respect to the rights
and interests thereafter of holders of Debentures, such that the
provisions set forth in this Article 4 will thereafter
correspondingly be made applicable as nearly as may reasonably be
in relation to any shares, other securities or other property
thereafter deliverable upon the conversion of any Debenture. Any
such adjustment, subject to any approval required to be obtained
from any stock exchange on which the Common Shares are listed,
will be made by and set forth in an indenture supplemental hereto
approved by action of the Directors and by the Trustee and
entered into pursuant to the provisions of Article 13 and will
for all purposes be conclusively deemed to be an appropriate
adjustment.
(7) If the purchase price provided for in any rights, options or
warrants (the "Rights Offering Price") referred to in subsections
4.3(4) or (5) is decreased, the Conversion Price will forthwith
be changed so as to decrease the Conversion Price to the
Conversion Price that would have been obtained if the adjustment
to the Conversion Price made under subsection 4.3(4) or (4), as
the case may be, with respect to such rights, options or warrants
had been made on the basis of the Rights Offering Price as so
decreased, provided that the terms of this subsection will not
apply to any decrease in the Rights Offering Price resulting from
terms in any such rights, options or warrants designed to prevent
dilution except to the extent that the resulting decrease in the
Conversion Price under this subsection would be greater than the
decrease, if any, in the Conversion Price to be made under the
terms of this section by virtue of the occurrence of the event
giving rise to such decrease in the Rights Offering Price.
(8) In any case in which this section 4.3 shall require that an
adjustment shall become effective on or immediately after a
record date for or effective date of an event referred to herein,
the Corporation may defer, until the occurrence of such event,
issuing to the Holder of any Debenture converted after such
record date or effective date and before the occurrence of such
event the additional Common Shares issuable upon such conversion
or the additional securities or property to which such Holder is
entitled by reason of the adjustment required by such event;
provided, however, that the Corporation shall deliver to such
Holder an appropriate instrument evidencing such Holder's right
to receive such additional Common Shares, securities or property
upon the occurrence of such event and the right to receive any
distributions made on such additional Common Shares, securities
or property on and after the Date of Conversion or such later
date on which such Holder would, but for the provisions of this
subsection (8), have become the holder of record of such
additional Common Shares, securities or property pursuant to
subsection 4.2(2).
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31
4.4 Adjustment of Conversion Price for Take Over Bid
(1) If and whenever at any time on or before February 5, 2000,
there is a take-over bid for consideration per Common Share
equal to or greater than $1.80 (adjusted appropriately to
give effect to any subdivisions, redivisions, reductions,
combinations or consolidations), then the Conversion Price
will be adjusted effective upon the last Common Share
tendered to the take-over bid having been taken up to be the
aggregate of (i) $1.80 (adjusted as aforesaid); and (ii) the
interest paid plus the interest accrued and unpaid on each
Debenture in the principal amount of $1,000 divided by
either (A) a factor of 500 (as such number may be adjusted
in accordance with the provisions hereof), or (B) in the
case where the Qualification Date has not occurred on or
before the Qualification Deadline, a factor of 550 (as such
number may be adjusted in accordance with the provisions
hereof), in either case subject to a maximum Conversion
Price of $2.00.
(2) For the purposes of subsection 4.4(1), the term "take-over
bid" means an offer to acquire outstanding Common Shares
made to a Person where the shares subject to the offer to
acquire, together with the offeror's shares, constitute in
the aggregate 20% or more of the outstanding Common Shares
on the date of the offer to acquire.
4.5 Rules Regarding Calculation of Adjustment of Conversion Price
For the purposes of sections 4.3 and 4.4:
(1) The adjustments provided for in sections 4.3 and 4.4 are
cumulative and will be computed to the nearest one-tenth of
one cent and will be made successively (without duplication)
whenever an event referred to therein occurs, subject to the
following subsections of this section.
(2) No adjustment in the Conversion Price will be required
unless such adjustment would result in a cumulative change
of at least 1% in the prevailing Conversion Price; provided,
however, that any adjustments which, except for the
provisions of this subsection would otherwise have been
required to be made, will be carried forward and taken into
account in any subsequent adjustment.
(3) No adjustment in the Conversion Price will be required upon
the Shares pursuant to the exercise from time to time of
options under any stock option plan adopted by the
Corporation from time to time.
(4) No adjustment in the Conversion Price will be made in
respect of any event described in section 4.3, other than
the events referred to in paragraphs 4.3(3)(c) and (d), if
Debentureholders are entitled to participate in such event
on the same terms, mutatis mutandis, as if they had
converted their Debentures prior to or on the effective date
or record date of such event. Any such participation will be
subject to the prior consent of each stock exchange on which
the Common Shares are listed.
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32
(5) If at any time a dispute arises with respect to adjustments
provided for in section 4.3, such dispute will be
conclusively determined by the Corporation's auditors, or if
they are unable or unwilling to act, by such other firm of
independent chartered accountants as may be selected by the
Directors and approved by the Trustee and any such
determination will be binding upon the Corporation, the
Trustee, the Debentureholders and shareholders of the
Corporation; such auditors or accountants will be given
access to all necessary records of the Corporation. If any
such determination is made, the Corporation will deliver a
Certificate of the Corporation to the Trustee describing
such determination.
(6) If the Corporation sets a record date to determine the
holders of Common Shares for the purpose of entitling them
to receive any dividend or distribution or sets a record
date to take any other action and thereafter and before the
distribution to such shareholders of any such dividend or
distribution or the taking of any other action, legally
abandons its plan to pay or deliver such dividend or
distribution or take such other action, then no adjustment
in the Conversion Price shall be made.
(7) In the absence of a resolution of the Directors fixing a
record date for a Special Distribution or Rights Offering,
the Corporation will be deemed to have fixed as the record
date therefor the date on which the Special Distribution or
Rights Offering is effected.
(8) For greater certainty, Debentureholders shall have no right
to convert Debentures into any security other than Common
Shares unless an appropriate adjustment is made by and set
forth in an indenture supplemental hereto.
4.6 No Requirement to Issue Fractional Shares - The Corporation shall
not be required to issue fractional Common Shares upon the
conversion of Debentures. If more than one Debenture shall be
surrendered for conversion at one time by the same Holder, the
number of whole Common Shares issuable upon conversion thereof
shall be computed on the basis of the aggregate principal amount
of the Debentures to be converted. If any fractional interest in
a Common Share would, except for the provisions of this section,
be deliverable upon the conversion of any principal amount of
Debentures, the Corporation shall, in lieu of delivering any
certificate of such fractional interest, satisfy such fractional
interest by paying to the Holder of such surrendered Debentures
an amount in lawful money of Canada equal (computed to the
nearest cent) to the appropriate fraction of the Conversion Price
then in effect.
4.7 Corporation to Reserve Shares - The Corporation covenants that it
will at all times reserve and keep available out of its
authorized but unissued Common Shares solely for the purpose of
issue upon conversion of Debentures as provided herein, and
conditionally allot to Holders of Debentures who may exercise
their conversion rights hereunder, such number of Common Shares
as shall then be issuable upon the conversion of all outstanding
Debentures (taking into account the provisions of subsection
4.3(2)) and that all such Common Shares shall be listed for
trading upon their issuance on each stock exchange on which the
Common Shares are then listed for trading. All Common Shares
which shall be so issuable shall be duly and validly issued as
fully paid and non-assessable.
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33
4.8 Corporation to Qualify Shares - If at any time any registration
or filing pursuant to any securities laws of Canada or any
province thereof is required to ensure that any Common Shares
issuable upon the conversion of the Debentures are issued in
compliance with all such laws or to ensure that any such Common
Shares, once issued, are not subject to any restriction as to the
resale thereof, the Corporation covenants that it will take all
such action as may be necessary to make or obtain such
registration or filing, as the case may be.
4.9 Taxes and Charges on Conversion - The Corporation will from time
to time promptly pay or make provision satisfactory to the
Trustee for the payment of all taxes and charges which may be
imposed by the laws of Canada or any province thereof (except
income tax or security transfer tax, if any) which shall be
payable with respect to the issuance or delivery of Common Shares
to the Holders of Debentures upon the exercise of their right of
conversion pursuant to the terms of the Debentures and of this
Indenture.
4.10 Cancellation of Converted Debentures - All Debentures converted
in whole or in part shall be forthwith delivered to and cancelled
by the Trustee and, subject to subsection 4.2(3), no Debenture
shall be issued in substitution therefor.
4.11 Certificate as to Adjustment - The Corporation shall from time to
time, immediately after the occurrence of any event which
requires an adjustment or readjustment as provided in sections
4.3 and 4.4, deliver a Certificate of the Corporation to the
Trustee specifying the nature of the event requiring the same and
the amount of the adjustment or readjustment necessitated thereby
and setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based. Such
Certificate of the Corporation and the amount of the adjustment
specified therein shall, subject to the provisions of subsections
4.3(5), 4.3(8) and 4.5(5), be conclusive and binding on all
interested parties. Except in respect of any subdivision,
revision, reduction, combination or consolidation of the Common
Shares, the Corporation shall forthwith give notice to the
Debentureholders specifying the event requiring such adjustment
or readjustment and the amount thereof, including the resulting
Conversion Price; provided that if the Corporation has given
notice under section 4.12, covering all the relevant facts in
respect of such event, no such notice need be given under this
section 4.11.
4.12 Notice of Special Matters - The Corporation covenants that, so
long as any Debentures remain outstanding, it will, whenever
practicable, give notice to the Trustee and to the
Debentureholders of its intention to fix a record date for any
event referred to in subsections 4.3(3), (4) or (5) (other than
the subdivision, redivision, reduction, combination or
consolidation of Common Shares) or for a cash dividend (other
than a Dividend Paid in the Ordinary Course) which may give rise
to an adjustment in the Conversion Price, and such notice shall
specify the particulars of such event and the record date and the
effective date for such event; provided that the Corporation
shall only be required to specify in such notice such particulars
of such event as shall have been fixed and determined on the date
on which such notice is given. Such notice shall be given not
less than 14 days prior to the applicable record date.
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4.13 Notice of Expiry of Conversion Right - The Corporation covenants
that, so long as any Debentures remain outstanding, it will give
notice to the Trustee and the Debentureholders in the manner
provided in Article 11, not less than 21 days prior to the Time
of Expiry, of the expiry of the right of the Holders of the
Debentures to convert their Debentures.
4.14 Revival of Right to Convert - If the Corporation shall fail to
redeem any Debenture which has been called for redemption upon
due surrender of such Debenture, any right to convert such
Debenture as provided in this Article 4 shall revive and continue
as if such Debenture had not been called for redemption.
4.15 Protection of Trustee - Subject to section 12.3 and 12.4, the
Trustee shall not at any time be under any duty or responsibility
to any Debentureholder to determine whether any facts exist which
may require any adjustment in the Conversion Price, or with
respect to the nature or extent of any such adjustment when made,
or with respect to the method employed in making the same; and
shall not be accountable with respect to the validity or value
(or the kind or amount) of any Common Shares or of any shares or
other securities or other property which may at any time be
issued or delivered upon the conversion of any Debenture; and
shall not be responsible for any failure of the Corporation to
make any cash payment, or to issue, transfer or deliver Common
Shares or share certificates upon the surrender of any Debenture
for the purpose of conversion, or to comply with any of the
covenants contained in this Article 4.
ARTICLE 5
SUBORDINATION OF DEBENTURES
5.1 Agreement to Subordinate
(1) The Corporation covenants and agrees, and each Holder of a
Debenture, by his acceptance thereof, likewise agrees, that
the payment of the principal of and interest on the
Debentures is hereby expressly subordinated, subject and
junior, to the extent and in the manner hereinafter set
forth, in right of payment to the prior payment in full of
all Senior Liabilities.
(2) Nothing contained in this Article 5 is intended to or shall
restrict the Corporation from incurring additional
indebtedness or from mortgaging, pledging or otherwise
charging its undertaking, property or assets to secure any
indebtedness or liability.
5.2 Distribution on Insolvency or Winding-up
(1) Upon any dissolution, winding-up, liquidation,
reorganization or other similar proceedings relative to the
Corporation or its property or assets, resulting from
bankruptcy, insolvency, involuntary reorganization or
receivership proceedings or upon an assignment for the
benefit of creditors or other marshalling of the assets and
liabilities of the Corporation for the benefit of creditors,
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35
(a) the holders of all Senior Liabilities will first be
entitled to receive payment in full of the principal
thereof, premium, if any, and interest due thereon,
before the Debentureholders are entitled to receive any
payment on account of the principal of, premium, if
any, or interest on the Debentures;
(b) any payment by, or distribution of assets of, the
Corporation of any kind or character, whether in cash,
property or securities (other than securities
("Excluded Securities") of the Corporation or any other
corporation provided for by a plan of reorganization or
arrangement the payment of which is subordinate, at
least to the extent provided in this Article 5 with
respect to the Debentures, to the payment of all Senior
Liabilities, provided that (i) the Senior Liabilities
are assumed by the new corporation, if any, resulting
from such reorganization or arrangement and (ii) the
rights of the holders of Senior Liabilities are not
altered adversely by such reorganization or
arrangement), to which the Debentureholders or the
Trustee would be entitled except for the provisions of
this Article 5, will be paid or delivered by the person
making such payment or distribution, whether a trustee
in bankruptcy, a receiver, a receiver- manager, an
assignee for benefit of creditors, a liquidator or
otherwise, directly to the holders of Senior
Liabilities or their representative or representatives
or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior
Liabilities may have been issued, ratably according to
the aggregate amounts remaining unpaid on account of
the Senior Liabilities held or represented by each, to
the extent necessary to make payment in full of all
Senior Liabilities remaining unpaid after giving effect
to any concurrent payment or distribution (or provision
therefor) to the holders of such Senior Liabilities;
(c) subject to section 5.6, if, notwithstanding the
foregoing, any payment by, or distribution of assets
of, the Corporation of any kind or character, whether
in cash, property or securities (other than Excluded
Securities), is received by the Trustee or the
Debentureholders before all Senior Liabilities are paid
in full, such payment or distribution, unless received
by the Trustee or the Debentureholders prior to the
commencement of an event resulting in a payment or
distribution as contemplated in this section and held
under sections 2.10(1), 3.6, 3.7, 3.11(6), 7.7, 7.8,
8.2 or 12.8, will be held in trust for the benefit of,
and will be paid over to the holders of such Senior
Liabilities or their representative or representatives
or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior
Liabilities may have been issued, ratably as aforesaid,
for application to the payment of all Senior
Liabilities remaining unpaid until such Senior
Liabilities have been paid in full, after giving effect
to any concurrent payment or distribution (or provision
therefor) to the holders of such Senior Liabilities;
(d) each holder of Debentures, by his acceptance thereof,
authorizes the Trustee to take such steps as may be
necessary or appropriate to entitle the holder or
holders of Senior Liabilities to receive payment or
distribution from the trustee
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in bankruptcy, receiver, receiver-manager, assignee for
benefit of creditors, or other liquidating agent making such
payment or distribution, all to the extent necessary to
provide for payment of all Senior Liabilities in full, in
money or money's worth, in priority to any payment of the
indebtedness represented by the Debentures as hereinabove
provided; and
(e) whenever the Senior Liabilities shall have been paid in
full, in money or money's worth, the holders of
Debentures shall be entitled to receive payment or
distribution from the trustee in bankruptcy, receiver,
receiver-manager, assignee for the benefit of the
creditors, or other liquidating agent making such
payment or distribution, and further assets available
for purposes of such payment or distribution.
(2) Upon any payment or distribution of assets of the
Corporation referred to in this Article 5, the Trustee and
the holders of the Debentures shall be entitled to rely upon
a certificate of the trustee in bankruptcy, receiver,
receiver-manager, assignee for benefit of creditors or other
liquidating agent making such payment or distribution,
delivered to the Trustee or to the holders of Debentures,
for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior
Liabilities and other indebtedness of the Corporation, the
amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent
thereto or to this Article 5. The Trustee, however, shall
not be deemed to owe any fiduciary duty to the holders of
Senior Liabilities and neither the Trustee nor any Holders
of Debentures shall be liable to any such holders if the
Trustee shall mistakenly pay over or distribute to Holders
of Debentures or the Corporation or any other person, moneys
or assets to which any holders of Senior Liabilities shall
be entitled by virtue of Article 5 of this Indenture or
otherwise.
5.3 Subrogation of Debentures - Subject to the payment in full of all
Senior Liabilities, the Debentureholders shall be subrogated to
the rights of the holders of Senior Liabilities to receive
payments and distributions of assets of the Corporation in
respect of and on account of Senior Liabilities, to the extent of
the application thereto of moneys or other assets which would
have been received by the Debentureholders but for the provisions
of this Article 5, until the principal of and interest on the
Debentures shall be paid in full. No payment or distribution of
assets of the Corporation to the Debentureholders which would be
payable or distributable to the holders of Senior Liabilities
pursuant to this Article 5 shall, as between the Corporation, its
creditors (other than the holders of Senior Liabilities) and the
Debentureholders, be deemed to be a payment by the Corporation to
or on account of the Debentureholders, it being understood that
the provisions of this Article 5 are, and are intended, solely
for the purpose of defining the relative rights of the
Debentureholders, on the one hand, and the holders of the Senior
Liabilities, on the other hand. Nothing contained in this Article
5 or elsewhere in this Indenture or in the Debentures is intended
to or shall impair, as between the Corporation and its creditors
(other than the holders of Senior Liabilities and the
Debentureholders), the obligation of the Corporation, which is
unconditional and absolute, to pay to the Debentureholders the
principal of and interest on the Debentures as and when the same
shall become due and payable in accordance with their terms,
144554\0512933.WP
37
or to affect the relative rights of the Debentureholders and
creditors of the Corporation other than the holders of the Senior
Liabilities, nor shall anything herein or therein prevent the
Trustee or the holder of any Debenture from exercising all
remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article
5, of the holders of Senior Liabilities upon the exercise of any
such remedy.
5.4 No Payment to Debentureholders if Event of Default under the
Senior Liabilities
(1) Nothing contained in this Article 5 or elsewhere in this
Indenture, or in any of the Debentures, shall affect the
obligation of the Corporation to make, or prevent the
Corporation from making, any payment of principal of or
interest on the Debentures, except that the Corporation
shall not, until any payment contemplated pursuant to
section 5.2 has been made (but may do so thereafter, or if
no payment is required thereunder), make any such payment,
other than as contemplated by section 5.2 hereof:
(a) at any time during the pendency of any dissolution,
winding-up or liquidation of the Corporation or
reorganization or other similar proceedings specified
in section 5.2 affecting the affairs of the
Corporation; or
(b) if such payment would be prohibited under subsection
5.4(2); provided that no such dissolution, winding-up
or liquidation or reorganization or other similar
proceedings nor any event of default referred to in
subsection 5.4(2) shall prevent any payment being made
by the Corporation or the Trustee in connection with
the redemption of Debentures with respect to which
notice of redemption shall have been given prior to the
commencement of such dissolution, winding-up or
liquidation or reorganization or other similar
proceedings or the occurrence of such event of default
or in connection with any tenders made pursuant to any
call for tenders for purchase by the Corporation of
Debentures where such call shall have been made prior
to the commencement of such dissolution, winding-up or
liquidation or reorganization or other similar
proceedings or the occurrence of such event of default.
The fact that any such payment is prohibited by this
section 5.4 shall not prevent the failure to make such
payment from being an Event of Default hereunder.
(2) Except as hereinafter otherwise provided in subsections
5.4(3) and (4) and section 5.6, the Corporation shall not
make any payment, and the Trustee shall not be entitled to
demand, institute proceedings for the collection of, or
receive any payment or benefit (including without limitation
by compensation, set-off, combination of accounts or
realization of security or otherwise in any manner
whatsoever) on account of indebtedness represented by the
Debentures (i) in a manner inconsistent with the terms (as
they exist on the date hereof) of this Indenture or of the
Debentures, or (ii) at any time when an event of default, as
defined in any Senior Liabilities or any instrument
evidencing the same and permitting the holders thereof to
accelerate the maturity thereof, has occurred and is
continuing and notice of such event of default has been
given by or on behalf of the holders of Senior Liabilities
to the Corporation and the Trustee, in each case unless and
until the Senior Liabilities have been
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38
paid and satisfied in full or unless and until such event of
default shall have been cured or waived or shall have ceased
to exist.
(3) Nothing contained in this Article 5 or elsewhere in this
Indenture, or in any of the Debentures shall be construed so
as to prevent the Trustee from receiving, retaining and
making any payments on account of Debentures which are made
(i) in a manner that is consistent with the terms of this
Indenture or of the Debentures and (ii) at any time when no
event of default, as defined in any Senior Liabilities or
the instrument creating the same and permitting the holders
thereof to accelerate the maturity thereof, has occurred and
is continuing in respect of which notice has been given by
or on behalf of the holders of Senior Liabilities to the
Corporation and the Trustee.
(4) Nothing contained in this Article 5 or elsewhere in this
Indenture or in any of the Debentures shall be construed so
as to prevent the payment or distribution of Excluded
Securities to the Debentureholders or the payments or
distributions contemplated by paragraph 5.2(1)(c) to be made
to the Debentureholders.
5.5 Authorization of Debentureholders to Trustee to Effect
Subordination - Each Holder of a Debenture, by his
acceptance thereof, authorizes and directs the Trustee on
his behalf to take such action as may be necessary or
appropriate to effect the subordination provided for in this
Article 5 and appoints the Trustee his attorney-in-fact for
any and all such purposes. Upon request of the Corporation,
and upon being furnished with a Certificate of the
Corporation stating that one or more named persons are
holders of Senior Liabilities, or the representative or
representatives of such holders, or the trustee or trustees
under which any instruments evidencing such Senior
Liabilities may have been issued, and specifying the amount
and nature of such Senior Liabilities, the Trustee shall
enter into a written agreement or agreements with the
Corporation and the person or persons named in such
Certificate of the Corporation, providing that such person
or persons are entitled to all the rights and benefits of
this Article 5 as the holder or holders, representative or
representatives, or trustee or trustees of the Senior
Liabilities specified in such Certificate of the Corporation
and in such agreement. Such agreement shall be conclusive
evidence that the indebtedness specified therein is Senior
Liabilities. Nothing herein shall impair the rights of any
holder of Senior Indebtedness who has not entered into such
an agreement.
5.6 Knowledge of Trustee - Notwithstanding the provisions of
this Article 5 or any provisions of this Indenture or of the
Debentures, the Trustee shall not be charged with knowledge
of the existence of any Senior Liabilities or of any default
in the payment thereof or occurrence of an event of default
in respect thereof or of the terms of any instrument
evidencing Senior Liabilities, and the Trustee shall be
entitled to assume that no such event of default has
occurred or that no such facts exist, unless and until the
Trustee shall have received written notice thereof from the
Corporation or from the holder of any Senior Liabilities or
from the representative of any such holder, and, with
respect to any money which may at any time be received by
the Trustee in trust pursuant to any provision of this
Indenture, unless and until such written notice has been
received, nothing in this Indenture shall prevent the
Trustee from applying such money to the purposes for which
the same was so received,
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notwithstanding the occurrence or continuance of such
default or the existence of such facts with respect to such
Senior Liabilities.
5.7 Trustee May Hold Senior Liabilities - The Trustee is
entitled to all the rights set forth in this Article 5 with
respect to any Senior Liabilities at the time held by it, to
the same extent as any other holder of Senior Liabilities,
and nothing in this Indenture deprives the Trustee of any of
its rights as such holder.
5.8 Rights of Holders of Senior Liabilities Not Impaired - No
right of any present or future holder of any Senior
Liabilities to enforce the subordination herein will at any
time or in any way be prejudiced or impaired by any act or
failure to act on the part of the Corporation or by any
non-compliance by the Corporation with the terms, provisions
and covenants of this Indenture, regardless of any knowledge
thereof any such holder may have or be otherwise charged
with.
5.9 Altering the Senior Liabilities - The holders of the Senior
Liabilities have the right to extend, renew, modify or amend
the terms of the Senior Liabilities or any security therefor
and to release, sell or exchange such security and otherwise
to deal freely with the Corporation, all without notice to
or consent of the Debentureholders and without affecting the
liabilities and obligations of the parties to this Indenture
or the Debentureholders.
ARTICLE 6
COVENANTS OF THE CORPORATION
6.1 General Covenants
The Corporation covenants with the Trustee for the benefit of the
Trustee and the Debentureholders as follows:
(1) the Corporation will duly and punctually pay or cause to be
paid to every Debentureholder the principal of and interest
accrued on the Debentures of which he is the Holder
(including, in the case of default, interest on the amount
in default) on the dates, at the places, in the currency,
and in the manner mentioned herein and in the Debentures;
(2) except as herein otherwise expressly provided, the
Corporation will at all times maintain its corporate
existence and at all reasonable times it will furnish or
cause to be furnished to the Trustee or its duly authorized
agent or attorney such information relating to its business
as the Trustee may reasonably require and such books of
account of the Corporation as the Trustee may reasonably
request shall at all reasonable times be open for inspection
by the Trustee or such agent or attorney;
(3) the Corporation will furnish to the Trustee a copy of all
financial statements, whether annual or interim, of the
Corporation and the report, if any, of the
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40
Corporation's auditors thereon and of all annual and other
periodic reports of the Corporation furnished to its
shareholders at the same time as they are furnished to such
shareholders, and the Trustee shall have no obligation to
review or analyse such statements; and
(4) the Corporation will duly and punctually perform and carry
out all of the acts or things to be done by it as provided
in this Indenture.
6.2 Not to Extend Time for Payment of Interest or Principal
(1) The Corporation covenants that, in order to prevent any
accumulation after maturity of unpaid interest or of unpaid
Debentures, the Corporation will not directly or indirectly
extend or assent to the extension of time for payment of any
interest upon any Debentures or of any principal payable in
respect of any Debentures and that it will not directly or
indirectly be or become a party to or approve any such
arrangement by purchasing or funding any interest on the
Debentures or any principal thereof or in any other manner.
(2) If the time for the payment of any interest or principal
shall be so extended, whether or not such extension is by or
with the consent of the Corporation, notwithstanding
anything herein or in the Debentures contained, such
interest or principal shall not be entitled, in case of
default hereunder, to the benefit of this Indenture except
subject to the prior payment in full of the principal of all
the Debentures then outstanding and of all matured interest
on such Debentures the payment of which has not been so
extended.
6.3 To Provide Annual Certificate of Compliance - The Corporation
covenants that, on or before February 4, 1998 and on or before
February 4 in each subsequent year and at any other time if
requested by the Trustee, the Corporation will furnish to the
Trustee a Certificate of the Corporation stating:
(1) that the Corporation has complied with all covenants,
conditions and other requirements contained in this
Indenture, non-compliance with which would, with the giving
of notice or the lapse of time or both, constitute an Event
of Default hereunder or, if such is not the case, specifying
the covenant, condition or other requirement which has not
been complied with and giving particulars of such
non-compliance and the action, if any, the Corporation
proposes to take with respect thereto; and
(2) the Conversion Price then in effect, and, if there has been
any event within the 12 months prior to the date of such
Certificate which requires an adjustment or readjustment of
the Conversion Price as provided in sections 4.3 and 4.4 and
in respect of which a Certificate of the Corporation has not
been delivered as provided in section 4.10, specifying the
nature of the event requiring the same and the amount of the
adjustment or readjustment necessitated thereby and setting
forth in reasonable detail the method of calculation and the
facts on which the calculation is based.
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6.4 To Pay Trustee's Remuneration
(1) The Corporation covenants that it will pay to the Trustee
reasonable remuneration for its services as Trustee and will
pay all costs, charges and expenses (including reasonable
fees and disbursements of its counsel and all other advisors
not regularly in its employ) properly incurred by the
Trustee in connection herewith, on demand by the Trustee,
and also (in addition to any right of indemnity given to the
Trustee by law) will at all times keep indemnified the
Trustee against all liabilities, losses, damages, actions,
proceedings, costs, claims, expenses and demands in respect
of any matter or thing done or omitted by the Trustee (other
than through negligence of the Trustee) in any way relating
to this Indenture.
(2) Any amount due under this section 6.4 and unpaid 30 days
after demand for such payment shall bear interest from the
expiration of such 30 day period at a rate per annum equal
to the prime rate designated from time to time by Canadian
Imperial Bank of Commerce as its prime rate for commercial
loans in Canadian funds at Vancouver. After default all
amounts so payable and the interest thereon shall be payable
out of any funds coming into possession of the Trustee in
priority to any payment of the principal of and interest on
the Debentures.
6.5 Trustee may Perform Covenants - If the Corporation shall fail to
perform any of its covenants contained herein, the Trustee may in
its discretion, but (subject to section 7.2) need not, notify the
Debentureholders of such failure or may itself perform any of
such covenants capable of being performed by it and, if any such
covenant requires the payment of money, it may make such payment
with its own funds, or with money borrowed by it for such
purpose, but shall be under no obligation to do so; and all sums
so paid shall be payable by the Corporation in accordance with
the provisions of section 6.4. No such performance by the Trustee
of any covenant contained herein or payment by the Corporation of
any sums advanced or borrowed by the Trustee pursuant to the
foregoing provisions shall be deemed to relieve the Corporation
from any default hereunder.
ARTICLE 7
DEFAULT AND ENFORCEMENT
7.1 Events of Default - Each of the following events is hereinafter
sometimes referred to ----------------- as an "Event of Default":
(1) if the Corporation makes default in payment of the principal
of any Debenture when the same becomes due under any
provision hereof or of such Debenture; or
(2) if the Corporation makes default in payment of any interest
due on any Debenture and such default shall have continued
for a period of 30 days; or
(3) if a decree or order of a court having jurisdiction in the
premises is entered adjudging the Corporation a bankrupt or
insolvent under the Bankruptcy and Insolvency Act (Canada)
or any other bankruptcy, insolvency or analogous laws, or
issuing sequestration or
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process of execution against, or against any substantial
part of, the property of the Corporation, or appointing a
receiver of the Corporation or any substantial part of its
property, or ordering the winding-up or liquidation of its
affairs unless the Corporation actively and diligently
contests in good faith such decree or order and has such
decree or order stayed on or before 60 days after the issue
of such decree or order by a court; or
(4) if an order is made or a resolution is passed for the
winding-up or liquidation of the Corporation except in the
course of carrying out or pursuant to a transaction in
respect of which the conditions of section 9.1 are duly
observed and performed or if the Corporation institutes
proceedings to be adjudicated a bankrupt or insolvent, or
consents to the institution of bankruptcy or insolvency
proceedings against it under the Bankruptcy and Insolvency
Act (Canada), the Companies' Creditors Arrangement Act
(Canada) or any other bankruptcy, insolvency or analogous
laws, or consents to the filing of any petition therefor or
to the appointment of a receiver of the Corporation or any
substantial part of its property, or makes a general
assignment for the benefit of creditors, or admits in
writing its inability to pay its debts generally as they
become due or takes corporate action in furtherance of any
of the aforesaid purposes; or
(5) if an encumbrancer takes possession of all or substantially
all of the property of the Corporation and such taking of
possession shall have continued for a period of 60 days, or
if any process of execution is levied or enforced upon or
against all or substantially all of the property of the
Corporation and remains unsatisfied for such period as would
permit any such property to be sold thereunder, unless the
Corporation actively and diligently contests in good faith
such process, but in that event the Corporation shall, if
the Trustee so requires, give security which, in the
discretion of the Trustee, is sufficient to pay in full the
amount thereby claimed in case the claim is held to be
valid; or
(6) if the Corporation makes default in observing or performing
any other covenant or condition of this Indenture on its
part to be observed or performed and if such default
continues for a period of 60 days after notice in writing
has been given to the Corporation by the Trustee specifying
such default and requiring the Corporation to rectify the
same, unless the Trustee (having regard to the subject
matter of the default) shall have agreed to a longer period
and, in such event, for the period agreed to by the Trustee.
7.2 Notice of Events of Default
(1) If an Event of Default shall occur and is continuing the
Trustee shall, within 30 days after it becomes aware of the
occurrence of such Event of Default, give notice thereof to
the Debentureholders, provided that, notwithstanding the
foregoing, the Trustee shall not be required to give such
notice if the Trustee in good faith shall have decided that
the withholding of such notice is in the best interests of
the Debentureholders and shall have so advised the
Corporation in writing.
(2) Where notice of the occurrence of an Event of Default has
been given and the Event of Default is thereafter cured,
notice that the Event of Default is no longer continuing
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shall be given by the Trustee to the Debentureholders within
15 days after the Trustee becomes aware that the Event of
Default has been cured.
7.3 Acceleration on Default - If any Event of Default has occurred
and is continuing, the Trustee may in its discretion, and shall
upon receipt, of a Debentureholders' Request, subject to section
7.4, by notice in writing to the Corporation declare the
principal of and interest on the Debentures then outstanding and
any other moneys payable hereunder to be due and payable and the
same shall forthwith become immediately due and payable to the
Trustee, notwithstanding anything contained therein or herein to
the contrary, and the Corporation shall pay forthwith to the
Trustee for the benefit of the Debentureholders the principal of
and accrued and unpaid interest (including interest on amounts in
default) on such Debentures and all other moneys payable
hereunder, together with subsequent interest thereon at the rate
borne by the Debentures from the date of such declaration until
payment is received by the Trustee. Such payment when made shall
be deemed to have been made in discharge of the Corporation's
obligations hereunder and any moneys so received by the Trustee
shall be applied as provided in section 7.7.
7.4 Waiver of Default - If an Event of Default shall have occurred:
-----------------
(1) the Holders of not less than 66 2/3% of the principal amount
of the Debentures then outstanding shall have the power (in
addition to the powers exercisable by Extraordinary
Resolution as hereinafter provided) by instrument signed by
such Holders to instruct the Trustee to waive any Event of
Default hereunder and/or to cancel any declaration made by
the Trustee pursuant to section 7.3 and the Trustee shall
thereupon waive the Event of Default and/or cancel such
declaration upon such terms and conditions as such
Debentureholders shall prescribe; and
(2) the Trustee, so long as it has not become bound to institute
any proceedings hereunder, shall have the power to waive any
Event of Default hereunder, if, in the Trustee's opinion,
the same shall have been cured or adequate satisfaction made
therefor, and in such event to cancel any such declaration
theretofore made by the Trustee in the exercise of its
discretion, upon such terms and conditions as the Trustee
may consider advisable; provided that no delay or omission
of the Trustee or of the Debentureholders to exercise any
right or power accruing upon any Event of Default shall
impair any such right or power or shall be construed to be a
waiver of any such Event of Default or acquiescence therein
and provided further that no act or omission either of the
Trustee or of the Debentureholders shall extend to or be
taken in any manner whatsoever to affect any subsequent
Event of Default hereunder or the rights resulting
therefrom.
7.5 Enforcement by the Trustee - If an Event of Default shall have
occurred, but subject -------------------------- to section 7.4
and to the provisions of any Extraordinary Resolution that may be
passed by the Debentureholders hereinafter provided:
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44
(1) the Trustee may in its discretion proceed to enforce the
rights of the Trustee and of the Debentureholders by any
action, suit, remedy or proceeding authorized or permitted
by this Indenture or by law or equity; and may file such
proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the
Trustee and of the Debentureholders filed in any bankruptcy,
insolvency, winding-up or other judicial proceedings
relating to the Corporation;
(2) no such remedy for the enforcement of the rights of the
Trustee or the Debentureholders shall be exclusive of or
dependent on any other such remedy but any one or more of
such remedies may from time to time be exercised
independently or in combination;
(3) all rights of action hereunder may be enforced by the
Trustee without the possession of any of the Debentures or
the production thereof at the trial or other proceedings
relating thereto; and
(4) upon receipt of a Debentureholders' Request and upon
receiving sufficient funds and being indemnified to its
satisfaction as provided in subsection 12.3(2), the Trustee
shall exercise or take such one or more of such remedies as
the Debentureholders's Request may direct, provided that if
any such Debentureholders' Request directs the Trustee to
take proceedings out of court the Trustee may in its
discretion take judicial proceedings in lieu thereof.
7.6 Debentureholders May Not Xxx
(1) No Holder of any Debenture shall have the right to institute
any action, suit or proceeding or to exercise any other
remedy authorized or permitted by this Indenture or by law
or by equity for the purpose of enforcing payment of
principal or interest owing on any Debenture or for the
execution of any trust or power hereunder, unless:
(a) the Debentureholders, by Extraordinary Resolution,
shall have made a request to the Trustee to take action
hereunder or the Debentureholders' Request referred to
in subsection 7.5(4) shall have been delivered to the
Trustee, and the Trustee shall have been offered a
reasonable opportunity either itself to proceed to
exercise the powers hereinbefore granted or to
institute an action, suit or proceeding in its name for
such purpose;
(b) the Debentureholders or any of them shall have
furnished to the Trustee, when requested by the
Trustee, sufficient funds and an indemnity in
accordance with subsection 12.3(2); and
(c) the Trustee shall have failed to act within a
reasonable time thereafter.
(2) In such event but not otherwise any Debentureholder, acting
on behalf of himself and all other Debentureholders, shall
be entitled to take proceedings in any court of competent
jurisdiction such as the Trustee might have taken under
section 7.5, but in no event shall any Debentureholder or
combination of Debentureholders have any right to take any
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45
other remedy or proceedings; it being understood and
intended that no one or more Holders of Debentures shall
have any right in any manner whatsoever to enforce any right
hereunder or under any Debenture except subject to the
conditions and in the manner herein provided, and that all
powers and trusts hereunder shall be exercised and all
proceedings at law shall be instituted, had and maintained
by the Trustee, except only as herein provided, and in any
event for the equal benefit of all Holders of outstanding
Debentures.
7.7 Application of Moneys - Except as otherwise provided herein, any
moneys arising from any enforcement hereof, whether by the
Trustee or any Holder of a Debenture, shall be held by the
Trustee and applied by it, together with any moneys then or
thereafter in the hands of the Trustee available for the purpose,
as follows:
(1) first, in payment or reimbursement to the Trustee of the
remuneration, expenses, disbursements and advances of the
Trustee earned, incurred or made in the administration or
execution of the trusts hereunder or otherwise in relation
to this Indenture with interest thereon as herein provided;
(2) second, (but subject to section 6.2) in or towards payment
of the principal of all of the Debentures then outstanding
and thereafter in or towards payment of the accrued and
unpaid interest and interest on overdue interest on such
Debentures (or if the Debentureholders, by instrument signed
by the Holders of more than 50% of the principal amount of
the Debentures then outstanding or by Extraordinary
Resolution passed at a meeting of Debentureholders, shall
have directed payments to be made in accordance with any
other order of priority, or without priority as between
principal and interest, then such moneys shall be applied in
accordance with such direction); and
(3) third, the surplus (if any) of such moneys shall be paid to
the Corporation or as it may direct; provided, however, that
no payments shall be made in respect of the principal or
interest on any Debenture held by or for the benefit of the
Corporation (other than any Debenture pledged for value and
in good faith to a Person other than the Corporation, but
only to the extent of such Person's interest therein) except
subject to the prior payment in full of the principal of and
interest on all Debentures which are not so held.
7.8 Distribution of Moneys - Payments to Holders of Debentures
pursuant to ---------------------- subsection 7.7 (2) shall be
made as follows:
(1) at least ten day's notice of every such payment shall be
given in the manner provided in Article Eleven specifying
the date and time when and the place or places where such
payments are to be made and the amount of the payment and
the application thereof as between principal and interest;
(2) payment of any Debenture shall be made upon presentation
thereof at any one of the places specified in such notice
and any such Debenture thereby paid in full shall be
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46
surrendered, otherwise a notation of such payment shall be
endorsed thereon; but the Trustee may in its discretion
dispense with presentation and surrender or endorsement in
any special case upon receipt by it of such indemnity as it
shall consider sufficient;
(3) from and after the date of payment specified in the notice,
interest shall accrue only on the amount owing on each
Debenture after giving credit for the amount of the payment
specified in such notice unless the Debenture in respect of
which such amount is owing is duly presented on or after the
date so specified and payment of such amount is not made;
and
(4) the Trustee shall not be required to make any partial or
interim payment to Debentureholders unless the moneys in its
hands, after reserving therefrom such amount as the Trustee
may think necessary to provide for the payments mentioned in
subsection 7.7 (1), exceed 5% of the aggregate principal
amount of the outstanding Debentures, but it may retain the
moneys so received by it and deal with the same as provided
in section 12.8 until the money or investments representing
the same, with the income derived therefrom, together with
any other moneys for the time being under its control shall
be sufficient for such purpose or until it shall consider it
advisable to apply the same in the manner hereinbefore set
forth.
7.9 Persons Dealing with Trustee - No Person dealing with the Trustee
or any of its agents shall be concerned to enquire whether an
Event of Default has occurred, or whether the powers which the
Trustee is purporting to exercise have become exercisable, or
whether any moneys remain due under this Indenture or on the
Debentures, or to see to the application of any moneys paid to
the Trustee; and in the absence of fraud on the part of such
Person, such dealing shall be deemed to be within the powers
hereby conferred and to be valid and effective accordingly.
7.10 Trustee Appointed Attorney - The Corporation irrevocably appoints
the Trustee to be the attorney of the Corporation in the name and
on behalf of the Corporation to execute any instruments and do
any things which the Corporation ought to execute and do, and has
not executed or done, under the covenants and provisions
contained in this Indenture and generally to use the name of the
Corporation in the exercise of all or any of the powers hereby
conferred on the Trustee with full powers of substitution and
revocation.
7.11 Remedies Cumulative - No remedy herein conferred upon or reserved
to the Trustee or the Holders of Debentures is intended to be
exclusive of any other remedy, but each and every such remedy
shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing by law or by
statute.
7.12 Immunity of Shareholders, Directors and Others - The
Debentureholders and the Trustee waive and release any right,
cause of action or remedy now or hereafter existing in any
jurisdiction against any past, present or future incorporator,
shareholder, director of officer of the Corporation or of any
Successor Corporation for the payment of the principal of or
interest on any of the Debentures or on any covenant, agreement,
representations or warranty by the Corporation contained herein
or in the Debentures except in the case where such individual has
acted fraudulently.
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7.13 Judgment Against the Corporation - In the case of any judicial or
other proceedings to obtain judgment for the principal of or
interest on the Debentures, judgment may be rendered against the
Corporation in favour of the Debentureholders or in favour of the
Trustee, as Trustee for the Debentureholders, for any amount
which may remain due in respect of the Debentures.
ARTICLE 8
SATISFACTION AND DISCHARGE
8.1 Cancellation and Destruction - All matured Debentures shall
forthwith after payment thereof be delivered to the Trustee and
cancelled by it. Subject to trust industry practice, all
Debentures which are cancelled or required to be cancelled under
this or any other provision of this Indenture shall be destroyed
by the Trustee and, if required by the Corporation, the Trustee
shall furnish to it a destruction certificate setting out the
designating numbers and denominations of the Debentures so
destroyed.
8.2 Non-Presentation of Debentures - Subject to section 2.11, if the
Holder of any Debenture shall fail to present the same for
payment on the date on which the principal thereof and/or the
interest thereon or represented thereby becomes payable either at
maturity or on redemption or otherwise or shall not accept
payment on account thereof and give such receipt therefor (if
any) as the Trustee may require:
(1) the Corporation shall be entitled to pay to the Trustee and
direct it to set aside; or
(2) in respect of moneys in the hands of the Trustee which may
or should be applied to the payment of the Debentures, the
Corporation shall be entitled to direct the Trustee to set
aside; or
(3) if the redemption was pursuant to notice given by the
Trustee, the Trustee may itself set aside; the principal
moneys and/or the interest, as the case may be, in trust to
be paid to the Holder of such Debenture upon due
presentation and surrender thereof in accordance with the
provisions of this Indenture; and thereupon the principal
moneys and/or the interest payable on or represented by each
Debenture in respect whereof such moneys have been set aside
shall be deemed to have been paid and thereafter such
Debentures shall not be considered as outstanding hereunder
and the Holders thereof shall thereafter have no right in
respect thereof except that of receiving payment of the
moneys so set aside by the Trustee (without interest
thereon) upon due presentation and surrender thereof,
subject always to the provisions of section 8.3. Any moneys
so set aside may, and, if remaining unclaimed for 60 days
shall be held by the Trustee in a non-interest bearing
account.
8.3 Repayment of Unclaimed Moneys - Any moneys set aside under
section 8.2 and not ----------------------------- claimed by and
paid to Holders of Debentures as provided in section 8.2 within
six years after
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48
the date of such setting aside shall be repaid to the Corporation
by the Trustee on demand and thereupon the Trustee shall be
released from all further liability with respect to such moneys
and thereafter the Holders of the Debentures in respect of which
such moneys were so repaid to the Corporation shall have no
rights in respect thereof except to obtain payment of the moneys
due thereon from the Corporation.
8.4 Discharge - Upon proof being given to the reasonable satisfaction
of the Trustee that all the Debentures and interest (including
interest on amounts in default) thereon have been paid or
satisfied or that, all the outstanding Debentures having matured
or having been duly called for redemption or the Trustee having
been given irrevocable instructions by the Corporation to give
within 90 days notice of redemption of all the outstanding
Debentures, such payment or redemption has been duly provided for
by payment to the Trustee or otherwise, and upon payment of all
costs, charges and expenses properly incurred by the Trustee in
relation to this Indenture and all interest thereon and the
remuneration of the Trustee, or upon provision satisfactory to
the Trustee being made therefor, the Trustee shall, at the
request and at the expense of the Corporation, execute and
deliver to the Corporation such deeds or other instruments as
shall be necessary to evidence the satisfaction and discharge of
this Indenture and to release the Corporation from its covenants
contained herein except those relating to the indemnification of
the Trustee.
ARTICLE 9
SUCCESSOR CORPORATION
9.1 Certain Requirements in Respect of Merger, etc. - The Corporation
shall not enter into any transaction, whether by way of
amalgamation, merger, reconstruction, reorganization,
consolidation, transfer, sale, lease or otherwise whereby all or
substantially all of its undertaking, property and assets would
become the property of any other Person or, in the case of any
such amalgamation, of the continuing corporation resulting
therefrom, but may do so if:
(1) such other Person or continuing corporation is a corporation
(the "Successor Corporation") incorporated under the laws of
Canada or any province thereof;
(2) the Successor Corporation shall perform such acts and
execute, prior to or contemporaneously with the completion
of such transaction, such indenture supplemental hereto and
other instruments (if any) as in the opinion of Counsel are
necessary or advisable to evidence the assumption by the
Successor Corporation of the liability for the due and
punctual payment of all the Debentures and the interest
thereon and all other moneys payable hereunder and the
covenant of such Successor Corporation to pay the same and
its agreement to observe and perform all the covenants and
obligations of the Corporation under this Indenture;
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49
(3) the Debentures will be valid and binding obligations of the
Successor Corporation entitling the Holders, as against the
Successor Corporation, to all of the rights they have under
this Indenture; and
(4) no condition or event shall exist in respect of the
Corporation or the Successor Corporation, either at the time
of such transaction or immediately thereafter after giving
full effect thereto, which constitutes or would, after the
giving of notice or the lapse of time or both, constitute an
Event of Default hereunder.
9.2 Vesting of Powers in Successor - Whenever the conditions of
section 9.1 have been duly ------------------------------
observed and performed, the Trustee shall execute and deliver the
supplemental indenture provided for in Article 13 and thereupon:
(1) the Successor Corporation shall possess and from time to
time may exercise each and every right and power of the
Corporation under this Indenture in the name of the
Corporation or otherwise, and any act or proceeding by any
provision of this Indenture required to be done or performed
by any Directors or officers of the Corporation may be done
and performed with like force and effect by the like
directors or officers of such Successor Corporation; and
(2) if, immediately after giving effect to the relevant
transaction referred to in section 9.1 on a pro forma basis,
the Successor Corporation shall have Consolidated Net Worth
in an amount which is not less than the Consolidated Net
Worth of the Corporation immediately prior to such
transaction, the Corporation shall be released and
discharged from liability under this Indenture and the
Trustee may execute any documents which it may be advised
are necessary or advisable for effecting or evidencing such
release and discharge (for purposes of this clause,
"Consolidated Net Worth" of any Person means the total of
the amounts shown on the balance sheet of such Person and
its consolidated subsidiaries, determined on a consolidated
basis in accordance with generally accepted accounting
principles in Canada, as of the end of the most recent
fiscal quarter of such Person ending at least 60 days prior
to the date of the relevant transaction referred to in
section 9.1, as the share capital plus any retained earnings
of such Person less any accumulated deficit of such Person).
ARTICLE 10
MEETINGS OF DEBENTUREHOLDERS
10.1 Right to Convene Meetings - The Trustee or the Corporation may at any
time and from time to time and the Trustee shall, upon receipt of a
written request of the Corporation or a Debentureholders' Request and
of sufficient funds and upon being indemnified to its reasonable
satisfaction by the Corporation or by the Debentureholders signing
such Debentureholders' Request against the costs which may be incurred
in connection with the calling and holding of such meeting, convene a
meeting of the Debentureholders. If the Trustee fails within 30 days
after receipt of such written request or Debentureholders' Request and
such indemnity to give notice convening a meeting, the Corporation or
such
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50
Debentureholders, as the case may be, may convene such meeting. Every
such meeting shall be held in the City of Vancouver or at such other
place as may be approved by the Trustee.
10.2 Notice of Meetings - Subject to section 10.12, not more than 60 and
not less than 30 days' notice of any meeting shall be given to the
Debentureholders and a copy thereof shall be sent by mail to the
Trustee unless the meeting has been called by it and to the
Corporation unless the meeting has been called by it. Such notice
shall state the time when and the place where the meeting is to be
held and shall state briefly the general nature of the business to be
transacted thereat, but it shall not be necessary for any such notice
to set out the terms of any resolution to be proposed at the meeting
or any of the provisions of this Article Ten.
10.3 Chairman - An individual, who need not be a Debentureholder, nominated
in writing by the Trustee shall be chairman of the meeting and if no
individual is so nominated or if the individual so nominated is unable
or unwilling to act or if the individual so nominated is not present
within 15 minutes from the time fixed for the holding of the meeting,
the Debentureholders present in person or by proxy shall choose an
individual present to be chairman.
10.4 Quorum - At any meeting of the Debentureholders other than a meeting
convened for the purpose of considering a resolution proposed to be
passed as an Extraordinary Resolution, as to which the provisions of
section 10.12 shall be applicable, a quorum shall consist of
Debentureholders present in person or by proxy and representing at
least 50% in principal amount of the outstanding Debentures. If a
quorum of the Debentureholders shall not be present within 30 minutes
from the time fixed for holding any such meeting, the meeting, if
convened by the Debentureholders or pursuant to a Debentureholder's
Request, shall be dissolved; but in any other case the meeting shall
be adjourned to the same day in the next week (unless such day is not
a Business Day, in which case it shall be adjourned to the next
following Business Day) at the same time and place and no notice shall
be required to be given in respect of the adjourned meeting. At the
adjourned meeting the Debentureholders present in person or by proxy
shall form a quorum and may transact the business for which the
meeting was originally convened notwithstanding that they may not
represent 50% of the principal amount of the outstanding Debentures.
10.5 Power to Adjourn - The chairman of any meeting at which a quorum of
the Debentureholders is present may, with the consent of the Holders
of a majority in principal amount of the Debentures present or
represented by proxy thereat, adjourn any such meeting and no notice
of such adjournment need be given except such notice, if any, as the
meeting so adjourned may prescribe.
10.6 Show of Hands - Every question submitted to a meeting shall be decided
in the first place by a majority of the votes given on a show of hands
except that votes on Extraordinary Resolutions shall be given in the
manner hereinafter provided. At such meeting unless a poll is duly
demanded as herein provided, a declaration by the chairman that a
resolution has been carried or carried unanimously or by a particular
majority or lost or not carried by a particular majority shall be
conclusive evidence of the fact. The Chairman of any meeting shall be
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entitled, both on a show of hands and on a poll, to vote with respect
to Debentures held by him or in respect of which he is a proxy.
10.7 Poll - On every Extraordinary Resolution, and on any other question
submitted to a meeting, when directed by the chairman or demanded by
one or more Debentureholders and/or proxies for Debentureholders
holding at least 5% of the principal amount of the Debentures
represented thereat, a poll shall be taken in such manner as the
chairman shall direct. Questions other than Extraordinary Resolutions
shall, if a poll is taken, be decided by the votes of the Holders of a
majority in principal amount of the Debentures represented at the
meeting and voted on the poll.
10.8 Voting - On a show of hands, every Person who is present and entitled
to vote, whether as a Debentureholder or as proxy for one or more
Debentureholders or both, shall have one vote. On a poll each
Debentureholder present in person or represented by a proxy duly
appointed by an instrument in writing shall be entitled to one vote in
respect of each $1,000.00 principal amount of Debentures of which he
shall then be the Holder. A proxy need not be a Debentureholder. In
the case of joint registered Holders of a Debenture, any one of them
present in person or by proxy at the meeting may vote in the absence
of the other or others; but in case more than one of them are present
in person or by proxy, they shall vote together in respect of the
Debentures of which they are joint registered Holders.
10.9 Regulations
(1) The Trustee or the Corporation, with the approval of the Trustee,
may from time to time make and from time to time vary such
regulations as it shall from time to time think fit providing
for:
(a) voting by proxy and the form of the instrument appointing a
proxy (which shall be in writing) and the manner in which
the same shall be executed and for the production of the
authority of any Person signing on behalf of a
Debentureholder;
(b) the deposit of instruments appointing proxies at such place
as the Trustee, the Corporation or the Debentureholders
convening a particular meeting, as the case may be, may in
the notice convening the meeting direct and the time, if
any, before the holding of the meeting or any adjournment
thereof by which the same shall be deposited; and
(c) the deposit of instruments appointing proxies at some
approved place or places other than the place at which a
particular meeting is to be held and enabling particulars of
instruments appointing proxies to be mailed, cabled,
telegraphed, telecopied or sent by telex before the meeting
to the Corporation or to the Trustee at the place where the
same is to be held and for the voting of proxies so
deposited as though the instruments themselves were produced
at the meeting.
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(2) Any regulations so made shall be binding and effective and the
votes given in accordance therewith shall be valid and shall be
counted. Save as such regulations may provide, the only Persons
who shall be recognized at any meeting as the Holders of any
Debentures, or as entitled to vote or be present at the meeting
in respect thereof, shall be Debentureholders and persons whom
Debentureholders have by instrument in writing duly appointed as
their proxies.
10.10Corporation and Trustee May Be Represented - The Corporation and the
Trustee, by their respective officers and directors, and the legal
advisers of the Corporation and the Trustee may attend any meeting of
the Debentureholders, but shall have no vote as such.
10.11Powers Exercisable by Extraordinary Resolution - In addition to the
powers conferred upon them by any other provisions of this Indenture
or by law, a meeting of the Debentureholders shall have the following
powers exercisable from time to time by Extraordinary Resolution:
(1) power to approve any change whatsoever in any of the provisions
of this Indenture or the Debentures and any modification,
abrogation, alteration, compromise or arrangement of the rights
of the Debentureholders and/or the Trustee against the
Corporation or against its undertaking, property and assets or
any part thereof, whether such rights arise under this Indenture
or the Debentures or otherwise;
(2) power to approve any scheme for the reconstruction or
reorganization of the Corporation or for the consolidation,
amalgamation or merger of the Corporation with any other
corporation or entity or for the selling or leasing of the
undertaking, property and assets of the Corporation or any part
thereof, provided that no such approval shall be necessary in
respect of any such transaction if the provisions of Article Nine
shall have been complied with;
(3) power to direct or authorize the Trustee to exercise any power,
right, remedy or authority given to it by this Indenture or the
Debentures in any manner specified in such Extraordinary
Resolution or to refrain from exercising any such power, right,
remedy or authority;
(4) power to waive and direct the Trustee to waive any default or
Event of Default hereunder and/or cancel any declaration made by
the Trustee pursuant to section 7.3 either unconditionally or
upon any conditions specified in such Extraordinary Resolution;
(5) power to restrain any Debentureholder from taking or instituting
any suit, action or proceeding for the purpose of enforcing
payment of the principal or interest of any Debenture, or for the
execution of any trust or power hereunder;
(6) power to direct any Debentureholder who, as such, has brought any
action, suit or proceeding to stay or discontinue or otherwise
deal with the same in the manner directed by such Extraordinary
Resolution upon payment, if the taking of such action, suit or
proceeding shall have been permitted by section 7.6, of the
costs, charges and expenses reasonably and properly incurred by
such Debentureholder in connection therewith;
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(7) power to appoint a committee to consult with the Trustee (and to
remove any committee so appointed) and to delegate to such
committee (subject to such limitations, if any, as may be
prescribed in such Extraordinary Resolution) all or any of the
powers which the Debentureholders may exercise by Extraordinary
Resolution under this section 10.11; the Extraordinary Resolution
making such appointment may provide for payment of the expenses
and disbursements of and compensation to such committee; such
committee shall consist of such number of individuals (who need
not be Debentureholders) as shall be prescribed in the
Extraordinary Resolution appointing it; subject to the
Extraordinary Resolution appointing it, every such committee may
elect its chairman and may make regulations respecting its
quorum, the calling of its meetings, the filling of vacancies
occurring in its number, the manner in which it may act and its
procedure generally and such regulations may provide that the
committee may act at a meeting at which a quorum is present or
may act by resolution signed in one or more counterparts by a
majority of the members thereof or the number of members thereof
necessary to constitute a quorum, whichever is the greater; all
acts of any such committee within the authority delegated to it
shall be binding upon all Debentureholders;
(8) power to agree to any compromise or arrangement with any creditor
or creditors or any class or classes of creditors, whether
secured or otherwise, and with holders of any shares or other
securities of the Corporation;
(9) power to authorize the distribution in specie of any shares,
bonds, debentures or other securities or obligations and/or cash
or other consideration received or the use or disposition of the
whole or any part of such shares, bonds, debentures or other
securities or obligations and/or cash or other consideration in
such manner and for such purpose as may be considered advisable
and specified in such Extraordinary Resolution;
(10) power to approve the exchange of the Debentures for or the
conversion thereof into shares, bonds, debentures or other
securities or obligations of the Corporation or of any company or
other entity formed or to be formed;
(11) power to remove the Trustee from office and to appoint a new
Trustee or Trustees; and
(12) power to amend, alter or repeal any Extraordinary Resolution
previously passed or approved by the Debentureholders or by any
committee appointed pursuant to subsection 10.11(7).
10.12 Meaning of "Extraordinary Resolution"
(1) The expression "Extraordinary Resolution" when used in this
Indenture means, subject as hereinafter provided in this Article
Ten, a resolution proposed to be passed as an Extraordinary
Resolution at a meeting of Debentureholders duly convened for the
purpose and held in accordance with the provisions of this
Article Ten at which the Holders of more than 50% of the
principal amount of the Debentures then outstanding are present
in person or by proxy and passed by the favourable votes of the
Holders of not less than 66 2/3% of the
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xxxxxxxxx xxxxxx xx Xxxxxxxxxx represented at the meeting and
voted on a poll upon such resolution.
(2) If at any such meeting the holders of more than 50% of the
principal amount of the Debentures then outstanding are not
present in person or by proxy within 30 minutes after the time
appointed for the meeting, then the meeting, if convened by the
Debentureholders or pursuant to a Debentureholder's Request,
shall be dissolved; but in any other case it shall be adjourned
to such date, being not less than 21 nor more than 60 days later,
and to such place and time as may be appointed by the chairman.
Not less than ten days' notice shall be given of the time and
place of such adjourned meeting in the manner provided in Article
11. Such notice shall state that at the adjourned meeting the
Debentureholders present in person or by proxy shall form a
quorum, but it shall not be necessary to set forth the purposes
for which the meeting was originally called or any other
particulars. At the adjourned meeting the Debentureholders
present in person or by proxy shall form a quorum and may
transact the business for which the meeting was originally
convened and a resolution proposed at such adjourned meeting and
passed in accordance with subsection 10.12(1) shall be an
Extraordinary Resolution within the meaning of this Indenture,
notwithstanding that the Holders of more than 50% of the
principal amount of the Debentures then outstanding are not
present in person or by proxy at such adjourned meeting.
(3) Votes on an Extraordinary Resolution shall always be given on a
poll and no demand for a poll on an Extraordinary Resolution
shall be necessary.
10.13Powers Cumulative - It is hereby declared and agreed that any one or
more of the powers and/or any combination of the powers in this
Indenture stated to be exercisable by the Debentureholders by
Extraordinary Resolution or otherwise may be exercised from time to
time and the exercise of any one or more of such powers or any
combination of powers from time to time shall not be deemed to exhaust
the right of the Debentureholders to exercise the same or any other
such power or powers or combination of powers thereafter from time to
time.
10.14Minutes - Minutes of all resolutions and proceedings at every meeting
of Debentureholders shall be made and duly entered in books to be
provided for that purpose by the Trustee at the expense of the
Corporation, and any such minutes, if signed by the chairman of the
meeting at which such resolutions were passed or proceedings taken, or
by the chairman of the next succeeding meeting of the
Debentureholders, shall be prima facie evidence of the matters therein
stated and, until the contrary is proved, every such meeting, in
respect of the proceedings of which minutes shall have been made,
shall be deemed to have been duly held and convened, and all
resolutions passed or proceedings taken thereat, to have been duly
passed and taken.
10.15Signed Instruments - Any action which may be taken and any power which
may be exercised by the Debentureholders at a meeting held as
hereinbefore in this Article provided may also be taken and exercised
by the Holders of more than 66 2/3% of the principal amount of the
outstanding Debentures by a signed instrument and the expression
"Extraordinary Resolution" when used in this Indenture shall include
an instrument so signed. Notice of any Extraordinary Resolution passed
in accordance with this section 10.15 shall be given by the
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Trustee to the Holders of Debentures affected thereby within 30 days
of the date on which such Extraordinary Resolution was passed.
10.16Binding Effect of Resolutions - Every resolution and every
Extraordinary Resolution passed in accordance with the provisions of
this Article 10 at a meeting of Debentureholders shall be binding upon
all the Debentureholders, whether present at or absent from such
meeting, and every instrument signed by Debentureholders in accordance
with section 10.15 shall be binding upon all the Debentureholders,
whether signatories thereto or not, and each and every Debentureholder
and the Trustee (subject to the provisions for its indemnity herein
contained) shall be bound to give effect to every such resolution,
Extraordinary Resolution and instrument.
10.17 Evidence of Rights of Debentureholders
(1) Any request, direction, notice, consent or other instrument which
this Indenture may require or permit to be signed or executed by
the Debentureholders may be in any number of concurrent
instruments of similar tenor and may be signed or executed by
such Debentureholders in person or by attorney duly appointed in
writing.
(2) The Trustee may, nevertheless, in its discretion require further
proof in cases where it considers further proof necessary or
desirable or may accept such other proof as it shall consider
proper.
ARTICLE 11
NOTICES
11.1 Notice to the Corporation - Any notice to the Corporation under the
provisions of this Indenture shall be valid and effective if (i)
delivered to, the Corporation at 000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxxxxx, X.X.X., 00000, Attention: President or (ii) sent by
facsimile to (000) 000-0000 and shall be deemed to have been given at
the time of delivery or sending by facsimile, if delivered or sent by
facsimile, provided that any delivery made by facsimile sent on a day
other than a Business Day, or after 2:00 p.m. (Denver, Colorado time)
on a Business Day, shall be deemed to be received on the next
following Business Day, as the case may be. The Corporation may from
time to time notify the Trustee of a change of address of facsimile
number which thereafter, until changed by further notice, shall be the
address or facsimile number of the Corporation for all purposes of
this Indenture.
11.2 Notice to Debentureholders - Except as otherwise expressly provided
herein, all notices to be given hereunder with respect to the
Debentures shall be valid and effective if such notice is delivered
personally or, subject to section 11.4, sent by ordinary mail, postage
prepaid, addressed to the Holders at their addresses appearing in any
of the registers hereinbefore mentioned. If in the case of joint
holders of any Debentures more than one address appears on the
register in respect of the joint holding, such notice shall be
addressed or delivered, as the case may be, only to the first address
so appearing. Any notice so delivered or sent by mail shall be deemed
to have been given on the day upon which it is delivered or mailed, as
the
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case may be. Any accidental error, omission or failure in giving or in
delivering or mailing any such notice or the non-receipt of any such
notice by any Debentureholder or Holders shall not invalidate or
otherwise prejudicially affect any action or proceeding founded
thereon.
11.3 Notice to the Trustee - Any notice to the Trustee under the provisions
of this Indenture shall be valid and effective if (i) delivered to the
Trustee at Montreal Trust Company of Canada, 000 Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0, or (ii) sent by facsimile to
(000) 000-0000 and shall be deemed to have been given at the time of
delivery or sending by facsimile, if delivered or sent by facsimile,
provided that any delivery made by facsimile sent on a day other than
a Business Day, or after 2:00 p.m. (Vancouver time) on a Business Day,
shall be deemed to be received on the next following Business Day, as
the case may be. The Trustee may from time to time notify the
Corporation of a change of address or facsimile number which
thereafter, until changed by further notice, shall be the address or
facsimile number of the Trustee for all purposes of this Indenture.
11.4 Mail Service Interruption - If the Trustee determines that mail
service is or is threatened to be interrupted at the time when the
Trustee or the Corporation is required or elects to give any notice to
the Debentureholders hereunder, the Trustee or the Corporation shall,
notwithstanding the provisions hereof, give such notice at the
Corporation's expense by means of publication in The Globe and Mail,
national edition, or any other English language daily newspaper or
newspapers of general circulation in Canada and in La Presse or in any
other French language daily newspaper of general circulation in the
Province of Quebec, once in each of two successive weeks, and any
notice so published shall be deemed to have been given on the first
date on which the publication takes place.
ARTICLE 12
CONCERNING THE TRUSTEE
12.1 Trust Indenture Legislation
(1) In this Article 12, the term "Indenture Legislation" means the
provisions, if any, of the Canada Business Corporations Act and
any other statute of Canada or a province thereof, and of the
regulations under any such statute, relating to trust indentures
and to the rights, duties and obligations of trustees under trust
indentures and of corporations issuing debt obligations under
trust indentures, to the extent that such provisions are at the
time in force and applicable to this Indenture or the
Corporation.
(2) If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with a mandatory requirement of the
Indenture Legislation, such mandatory requirement shall prevail.
(3) At all times in relation to this Indenture and any action to be
taken hereunder, the Corporation and the Trustee each shall
observe and comply with the Indenture Legislation and the
Corporation, the Trustee and each Debentureholder shall be
entitled to the benefits of the Indenture Legislation.
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12.2 No Conflict of Interest - The Trustee represents to the
Corporation that at the date of the execution and delivery of
this Indenture there exists no material conflict of interest in
the role of the Trustee as a fiduciary hereunder. If at any time
a material conflict of interest exists in the Trustee's role as a
fiduciary hereunder the Trustee shall, within 90 days after
ascertaining that such a material conflict of interest exists,
either eliminate the same or else resign as Trustee hereunder by
giving notice in writing to the Corporation at least 21 days
prior to such resignation and shall thereupon be discharged from
all further duties and liabilities hereunder.
12.3 Rights and Duties of Trustee
(1) In the exercise of the rights and duties prescribed or conferred
by the terms of this Indenture, the Trustee shall act honestly
and in good faith with a view to the best interests of the
Debentureholders and shall exercise that degree of care,
diligence and skill that a reasonably prudent trustee would
exercise in comparable circumstances.
(2) The obligation of the Trustee to commence or continue any act,
action or proceeding for the purpose of enforcing any rights of
the Trustee or the Debentureholders hereunder shall be
conditional upon the Debentureholders furnishing, when required
by notice in writing by the Trustee, sufficient funds to commence
or continue such act, action or proceeding and indemnity
reasonably satisfactory to the Trustee to protect and hold
harmless the Trustee against the costs, charges and expenses and
liabilities to be incurred thereby and any loss and damage it may
suffer by reason thereof. None of the provisions contained in
this Indenture shall require the Trustee to expend or risk its
own funds or otherwise incur financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers unless indemnified and funded as aforesaid.
(3) The Trustee may, before commencing or at any time during the
continuance of any such act, action or proceeding, require the
Debentureholders at whose instance it is acting to deposit with
the Trustee the Debentures held by them, for which Debentures the
Trustee shall issue receipts.
(4) Every provision of this Indenture that by its terms relieves the
Trustee of liability or entitles it to rely upon any evidence
submitted to it is subject to the provisions of Indenture
Legislation, this section 12.3 and section 12.4.
(5) Without limiting any protection or indemnity of the Trustee under
any other provision hereof, or otherwise at law, the Corporation
hereby agrees to indemnify and hold harmless the Trustee from and
against any and all liabilities, losses, damages, penalties,
claims, actions, suits, costs, expenses and disbursements,
including reasonable legal or advisor fees and disbursements, of
whatever kind and nature which may at any time be imposed on ,
incurred by or asserted against the Trustee in connection with
the performance of its duties and obligations hereunder, other
than such liabilities, losses, damages, penalties, claims,
actions, suits, costs, expenses and disbursements arising by
reason of the gross negligence or fraud of the Trustee. This
provision shall survive the resignation or removal of the
Trustee, or the termination of the Indenture. The Trustee shall
not be under any obligation to
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58
prosecute or to defend any action or suit in respect of the
relationship which, in the opinion of its counsel, may involve it
in expense or liability, unless the Company shall, so often as
required, furnish the Trustee with satisfactory indemnity and
funding against such expense or liability.
12.4 Evidence, Experts and Advisers
(1) In addition to the reports, certificates, opinions, statutory
declarations and other evidence required by this Indenture, the
Corporation shall furnish to the Trustee such additional evidence
of compliance with any provisions hereof, and in such form, as
may be prescribed by Indenture Legislation or as the Trustee may
reasonably require by written notice to the Corporation.
(2) In the exercise of its rights, duties and obligations, the
Trustee may, if it is acting in good faith, rely as to the truth
of the statements and the accuracy of the opinions expressed
therein, upon statutory declarations, opinions, reports,
certificates or other evidence referred to in subsection 12.4(1)
provided that the Trustee examines the same and determines that
such evidence complies with the applicable requirements of this
Indenture and of Indenture Legislation.
(3) The Trustee may employ or retain such counsel, auditors,
accountants, appraisers or other experts or advisers, whose
qualifications give authority to any opinion or report made by
them, as it may reasonably require for the purpose of discharging
its duties hereunder and shall not be responsible for any
misconduct on the part of any of them.
12.5 Trustee May Deal in Debentures - Subject to section 12.3, the Trustee may
buy, sell, lend upon and deal in the Debentures or other securities of the
Corporation, either with the Corporation or otherwise, and generally
contract and enter into financial transactions with the Corporation or
otherwise, without being liable to account for any profits made thereby.
12.6 Trustee Not Required to Give Security - The Trustee shall not be required
to give any bond or security in respect of the execution of the trusts and
powers of this Indenture or otherwise in respect of this Indenture.
12.7 Protection of Trustee - By way of supplement to the provisions of any law
for the time being relating to trustees, it is expressly declared and
agreed as follows:
(1) the Trustee shall not be liable for or by reason of any statements of
fact or recitals in this Indenture or in the Debentures (except the
representation contained in section 12.2 and in the certificate of the
Trustee on the Debentures) or required to verify the same, but all
such statements or recitals are and shall be deemed to be made by the
Corporation;
(2) nothing herein contained shall impose any obligation on the Trustee to
see to or to require evidence of the registration or filing (or
renewal thereof) of this Indenture or any instrument ancillary or
supplemental hereto;
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(3) the Trustee shall not be bound to give notice to any Person of the
execution hereof; and
(4) the Trustee shall not incur any liability or responsibility whatever
or be in any way responsible for the consequence of any breach on the
part of the Corporation of any of the covenants herein contained or of
any acts of the agents of the Corporation.
12.8 Investment of Trust Moneys
(1) Unless otherwise provided in this Indenture, any money held by the
Trustee, which may or ought to be invested or which may be on deposit
with the Trustee or which may be in the hands of the Trustee may be
invested and reinvested in the name or under the control of the
Trustee as directed in writing by the Corporation in securities in
which, under the laws of the Province of British Columbia, trustees
are authorized to invest trust money, provided such securities are
expressed to mature within one year after their purchase by the
Trustee. Pending such investment such moneys may be placed by the
Trustee on deposit in a chartered bank in Canada or with its own
deposit department. The Trustee shall allow interest at the current
rate for similar deposits on moneys remaining on deposit with it and,
provided that the Corporation is not in default hereunder, shall
credit the Corporation with interest received on moneys deposited with
other depositaries and on all moneys invested as provided in this
section 12.8.
(2) The Trustee shall be accountable only for reasonable diligence in the
investment of moneys under this section 12.8 and the Trustee shall not
be liable for any loss or losses realized on such investments,
negligence, wilful acts or defaults only excepted.
12.9 Action by Trustee to Protect Interests
(1) The Trustee shall be entitled and empowered, either in its own name or
as trustee of an express trust, or as power of attorney or
attorney-in-fact for the Holders, or in any one or more of such
capacities, to file such proof of debt, amendment of proof of debt,
claim, petition or other document as may be necessary or advisable in
order to have the claim of the Trustee and of the Holders allowed in
any insolvency, bankruptcy, liquidation or other judicial proceedings
relative to the Corporation or its creditors or relative to or
affecting its property. The Trustee is hereby irrevocably appointed
(and the successive respective Holders by taking and holding the same
shall be conclusively deemed to have so appointed the Trustee) the
true and lawful power of attorney or attorney-in-fact of the
respective Holders with authority to make and file in the respective
names of the Holders or on behalf of the Holders as a class, subject
to deduction from any such claims of the amounts of any claims filed
by any of the Holders themselves, any proof of debt, amendment of
proof of debt, claim, petition or other documents in any such
proceedings and to receive payment of any sums becoming distributable
on account thereof, and to execute any such other papers and documents
and to do and perform any and all such acts and things for and on
behalf of such Holders, as may be necessary or advisable in the
opinion of the Trustee, in order to have the respective claims of the
Trustee and of the Holders against the Corporation or its property
allowed in any such
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60
proceeding, and to receive payment of or on account of such claims;
provided, however, that nothing contained in this Indenture shall be
deemed to give to the Trustee, unless so authorized by Extraordinary
Resolution, any right to accept or consent to any plan of
reorganization or otherwise by action of any character in such
proceeding to waive or change in any way any right of any
Debentureholder.
(2) The Trustee shall have the power to institute and maintain all and any
such actions, suits or proceedings as it may consider necessary or
expedient to preserve, protect or enforce its interests and the
interests of the Holders of the Debentures.
(3) Any such suit or proceeding instituted by the Trustee may be brought
in the name of the Trustee as trustee, and any recovery of judgment
shall be for the rateable benefit of the Holders of the Debentures
subject to the provisions of this Indenture. In any proceeding brought
by the Trustee (and also any proceeding in which a declaratory
judgment of a court may be sought as to the interpretation or
construction of any provision of this Indenture, to which the Trustee
shall be a party) the Trustee shall be held to represent all the
Holders, and it shall not be necessary to make any Holders of the
Debentures parties to any such proceeding.
12.10 Replacement of Trustee
(1) The Trustee may resign from the trusts hereunder and thereupon be
discharged from all further duties and liabilities hereunder by giving
to the Corporation 60 days' notice in writing or such shorter notice
as the Corporation may accept as sufficient. The Debentureholders by
Extraordinary Resolution shall have power at any time to remove the
Trustee and to appoint a new trustee hereunder. In the event of the
Trustee resigning or being removed as aforesaid or being dissolved,
becoming bankrupt, going into liquidation or otherwise becoming
incapable of acting hereunder, the Corporation shall forthwith appoint
a new trustee hereunder unless a new trustee has already been
appointed by the Debentureholders; failing such appointment by the
Corporation, the retiring trustee hereunder (at the expense of the
Corporation) or any Debentureholder may apply to the Supreme Court of
British Columbia, on such notice as such Court may direct, for the
appointment of a new trustee hereunder; but any trustee so appointed
by the Corporation or by the Court shall be subject to removal as
aforesaid by the Debentureholders. Any new trustee hereunder appointed
under any provision of this section 12.10 shall be a company
authorized and qualified to carry on the business of a trust company
in the Province of British Columbia and every other jurisdiction where
such authorization or qualification is necessary to enable it to act
as a trustee hereunder, shall certify that it will not have any
material conflict of interest upon becoming trustee hereunder, and
shall accept the trust herein declared and provided for. On any new
appointment the new trustee shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named
herein as Trustee.
(2) Any corporation into which the Trustee may be merged or with which it
may be consolidated or amalgamated, or any corporation resulting from
any merger, consolidation or amalgamation to which the Trustee shall
be a party, shall be the successor Trustee under this Indenture
without the necessity of the execution of any instrument or any
further act, provided
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that such corporation is authorized to carry on the business of a
trust company in the Province of British Columbia and every other
jurisdiction where such authorization or qualification is necessary to
enable it to act as trustee hereunder.
12.11Acceptance - The Trustee accepts its obligations provided for in this
Indenture and agrees to perform the same upon the terms and conditions
herein set forth and as trustee for the various Persons who shall from
time to time be Debentureholders, subject to the terms and conditions
herein set forth.
ARTICLE 13
SUPPLEMENTAL INDENTURES
13.1 Supplemental Indentures - From time to time the Corporation (subject to the
approval of The Toronto Stock Exchange if the Common Shares at such time
are, or at any time in the six months prior thereto were, listed on such
Exchange), when authorized by a resolution of the Directors, may, subject
to the provisions of this Indenture, and the Trustee shall, when required
by this Indenture, execute, acknowledge and deliver by their proper
officers deeds or indentures supplemental hereto, which thereafter shall
form part hereof, for any one or more of the following purposes:
(1) adding to the provisions hereof such additional covenants of the
Corporation, enforcement provisions and other provisions for the
protection of the Holders of the Debentures and/or providing for
events of default in addition to those herein specified;
(2) making such provisions not inconsistent with this Indenture as may be
necessary or desirable with respect to matters or questions arising
hereunder, including the making of any modifications in the form of
the Debentures which do not affect the substance thereof and which, in
the opinion of the Trustee, it may be expedient to make, provided that
the Trustee shall be of the opinion, based on the opinion of Counsel,
that such provisions and modifications will not adversely affect, in
any substantial respect, the interests of the Debentureholders;
(3) evidencing the succession, or successive successions, of other
companies to the Corporation and the covenants of and obligations
assumed by any such successor in accordance with the provisions of
this Indenture;
(4) giving effect to any Extraordinary Resolution passed as provided in
Article 10;
(5) making any modification of any of the provisions of this Indenture or
the Debentures which is of a formal, minor or technical nature;
(6) making any additions to, deletions from or alterations of any of the
provisions of this Indenture (including any of the terms and
conditions of the Debentures)
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(i) which the Corporation may deem necessary or advisable and which,
in the opinion of the Trustee, based on the opinion of Counsel, do not
adversely affect, in any substantial respect, the interests of the
Debentureholders or (ii) which, in the opinion of the Trustee, based
on the opinion of Counsel, are necessary or advisable in order to
incorporate, reflect or comply with Indenture Legislation;
(7) adding to or altering the provisions hereof in respect of the transfer
of Debentures, including provision for the exchange of Debentures of
different denominations, and making any modification in the form of
the Debentures which does not affect the substance thereof and which,
in the opinion of the Trustee, based on the opinion of Counsel, is not
materially prejudicial to the interests of the Debentureholders;
(8) correcting or rectifying any ambiguities, defective provisions, errors
or omissions herein, provided that, in the opinion of the Trustee, the
rights of the Trustee and the Debentureholders are not materially
prejudiced thereby; and
(9) any other purpose not inconsistent with the terms of this Indenture
provided that, in the opinion of the Trustee, based on the opinion of
Counsel, the rights of the Trustee and of the Debentureholders are not
materially prejudiced thereby.
ARTICLE 14
EXECUTION
14.1 Counterparts and Formal Date - This Indenture may be executed in
several counterparts, each of which when so executed shall be deemed
to be an original, and such counterparts together shall constitute one
and the same instrument and notwithstanding their date of execution
shall be deemed to bear date as of the date first above written.
14.2 Language of Indenture - The parties hereto have requested that this
Indenture and all contracts, documents or notices relating thereto be
drafted in the English language; les parties a cet acte ont exige que
cet acte et tout contrat, document ou avis y afferent soit redige en
langue anglaise.
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IN WITNESS WHEREOF, the parties hereto have executed this Indenture as of
the date and as at the place first hereinabove mentioned.
DAKOTA MINING CORPORATION
Per: ________________________________
MONTREAL TRUST COMPANY OF CANADA
Per: ________________________________
Per: ________________________________
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SCHEDULE
The following is the form of fully registered 7.5% Convertible Unsecured
Subordinated Debenture Due February 5, 2004.
DAKOTA MINING CORPORATION
(Continued the Business Corporations Act (Canada))
7.5% Convertible Unsecured Debenture
due February 5, 2004
CUSIP#:
Dakota Mining Corporation (the "Corporation") for value received hereby
acknowledges itself indebted and, subject to the provisions of the Indenture
hereinafter mentioned, promises to pay to: .
-------------------------------------------------------------------------------
on February 4, 2004 or on such earlier date as the principal amount hereof may
become due in accordance with the provisions of the Indenture the principal sum
of: $ -- in lawful money of Canada on presentation and surrender of this
Debenture at one of the principal offices of Montreal Trust Company of Canada
(the "Trustee") in the cities of Xxxxxxxxx, Xxxxxxx and Montreal, and to pay
interest on the principal amount hereof from the date hereof, or from the last
interest payment date to which interest shall have been paid or made available
for payment on the outstanding Debentures, whichever is later, at the rate of
7.5% per annum, in like money at any one of the said places, as selected by the
holder, in arrears in equal semi-annual instalments (less any tax required by
law to be deducted or withheld) on June 30 and December 31 in each year
(commencing June 30, 1997) and should the Corporation at any time make default
in the payment of any principal or interest, to pay interest on the amount in
default at the same rate in like money, at any one of the said places, as
selected by the holder, and half-yearly on the same dates.
Debentures bear interest from and including the date of issue or from
and including the last interest payment date to which interest shall have been
paid or made available for payment on the Debentures, whichever is later,
provided that for the period from the date of issue of this Debenture to the
first interest payment date, the interest rate will be such that, when the
interest for such period is added to the interest earned on certain escrowed
proceeds which has been paid to the holder hereof, it is equivalent to 7.5% per
annum calculated from the date of the Indenture (defined below).
As soon as the interest becomes due, the Corporation (except in the
case of payment at maturity or on redemption, at which payment of interest may
be made upon surrender of this Debenture) shall, at least three business days
prior to each date on which interest becomes due, forward or cause to be
forwarded by ordinary mail, postage prepaid, to the registered holder hereof,
subject to the provisions of the Indenture and in the manner provided therein, a
cheque for such interest (less any tax required by law to be deducted or
withheld). Subject to the provisions of the Indenture, the forwarding of such
cheque shall satisfy and discharge
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all liability for interest on this Debenture to the extent of the sum
represented by such cheque (plus the amount of any tax deducted or withheld).
This Debenture is one of the 7.5% Convertible Unsecured
Subordinated Debentures due February 5, 2004 (the "Debentures") of the
Corporation issued or issuable under the provisions of a trust indenture (the
"Indenture") made as of February 5, 1997 between the Corporation and the
Trustee. The Debentures are limited to an aggregate principal amount of
$25,000,000 in lawful money of Canada. Reference is hereby expressly made to the
Indenture for a description of the terms and conditions upon which the
Debentures are or are to be issued and held and the rights and remedies of the
holders of the Debentures and of the Corporation and of the Trustee, all to the
same effect as if the provisions of the Indenture were herein set forth, to all
of which provisions the holder of this Debenture by acceptance hereof assents.
The Debentures are initially issuable only as fully registered
Debentures in denominations of $1,000 and integral multiples thereof. Upon
compliance with the provisions of the Indenture, Debentures of any denomination
may be exchanged for an equal aggregate principal amount of Debentures in any
other authorized denomination or denominations.
This Debenture is convertible, at the option of the holder
hereof, upon surrender of this Debenture at one of the principal offices of the
Trustee in the cities of Xxxxxxxxx, Xxxxxxx and Montreal, at any time up to and
including the close of business on the last business day immediately preceding
February 5, 2004 or if this Debenture is called for redemption on or prior to
such date, then up to but not after the close of business on the last business
day immediately preceding the date fixed for redemption of the Debenture, into
fully paid and non-assessable common shares ("Common Shares") in the share
capital of the Corporation, as presently constituted (without adjustment for
interest accrued hereon or for dividends on Common Shares issuable upon
conversion) at a conversion price of $2.00 per Common Share, all subject to the
terms and conditions and in the manner set forth in the Indenture. The Indenture
makes provisions for the adjustment of the conversion price in the events
therein specified.
This Debenture may be redeemed at the option of the
Corporation on the terms and conditions and at the redemption price set out in
the Indenture at any time on or after February 4, 2001 and up to and including
maturity, provided that the Corporation duly files with the Trustee on or before
the day that the applicable notice of redemption of this Debenture is given a
certificate of the Corporation certifying that the weighted average price per
share at which the Common Shares have traded on The Toronto Stock Exchange (or
elsewhere in accordance with the Indenture) during the 20 consecutive trading
days ending not more than five trading days before the date on which such notice
of redemption is given exceeds 125% of the conversion price mentioned above.
Unless an Event of Default (as defined in the Indenture) has
occurred and is continuing, the Corporation may, on notice as provided in the
Indenture, at its option, and subject to applicable law and regulatory
approvals, elect to satisfy the obligation to repay the principal amount of this
Debenture on redemption or maturity by the issue and delivery of that
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number of freely tradeable Common Shares determined by dividing the principal
amount hereof by 95% of the weighted average price per share at which the Common
Shares have traded on The Toronto Stock Exchange (or elsewhere in accordance
with the Indenture) during the 20 consecutive trading days ending not more than
five trading days before the date that this Debenture is fixed for redemption or
the date of maturity, as the case may be, provided that, in the event that such
weighted average price on maturity of this Debenture is less than $2.00, the
Corporation, at its option, may satisfy its obligation hereunder to pay the
principal amount payable to the holder hereof by the issue to such holder of
that number of Common Shares of the Corporation equal to the lesser of (a) the
number determined by dividing such principal amount by 95% of such weighted
average price of the Common Shares on maturity and (b) the number determined by
dividing the principal amount by the closing market price of the Common Shares
on The Toronto Stock Exchange on the maturity date hereof.
The indebtedness evidenced by this Debenture and by all other
Debentures now or hereafter certified and delivered under the Indenture is a
direct unsecured obligation of the Corporation and is subordinated and subject
in right of payment, to the extent and in the manner provided in the Indenture,
to the prior payment of all Senior Liabilities (as defined in the Indenture and
which includes trade debts) of the Corporation, whether outstanding at the date
of the Indenture or thereafter created, incurred, assumed or guaranteed.
The principal hereof may become or be declared due and payable
before the stated maturity in the events, in the manner, with the effect and at
the times provided in the Indenture.
The Indenture contains provisions making binding upon all
holders of Debentures outstanding thereunder resolutions passed at meetings of
such holders held in accordance with such provisions and instruments signed by
the holders of a specified majority of Debentures outstanding, which resolutions
or instruments may have the effect of amending the terms of this Debenture or
the Indenture. The Indenture also permits the Corporation and the Trustee to
make additions to, deletions from or alterations of the Indenture without the
consent of the holders of the Debentures for certain purposes, in certain
circumstances and upon certain conditions set out in the Indenture.
This Debenture may only be transferred, upon compliance with
the conditions prescribed in the Indenture, in one of the registers to be kept
in the principal office of the Trustee in each of the cities of Xxxxxxxxx,
Xxxxxxx and Montreal and in such other place or places and/or by such other
registrars (if any) as the Corporation with the approval of the Trustee may
designate, by the registered holder hereof or his executors or administrators or
other legal representatives, or his or their attorney duly appointed by an
instrument in form and execution satisfactory to the Trustee or other registrar,
and upon compliance with such requirements as the Trustee and/or other registrar
may prescribe.
This Debenture shall not become obligatory for any purpose
until it shall have been certified by the Trustee under the Indenture.
144554\0512933.WP
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In witness whereof Dakota Mining Corporation has caused this
Debenture to be signed by the Corporate Secretary of the Corporation as of
February , 1997.
DAKOTA MINING CORPORATION
By:
Corporate Secretary
144554\0512933.WP
TABLE OF CONTENTS
Page
ARTICLE 1 INTERPRETATION
1.1 Definitions...........................................................1
1.2 Meaning of "outstanding" for Certain Purposes .........................6
1.3 Interpretation Not Affected by Headings, etc...........................7
1.4 Statute References ....................................................7
1.5 Monetary References....................................................7
1.6 Day Not a Business Day............................................... 7
1.7 Invalidity of Provisions...............................................8
1.8 Governing Law..........................................................8
ARTICLE 2 THE DEBENTURES
2.1 Limitation on Issue and Designation....................................8
2.2 Terms of Debentures....................................................8
2.3 Form of Debentures.....................................................8
2.4 Issue of Debentures...................................................10
2.5 Execution of Debentures...............................................10
2.6 Certification.........................................................11
2.7 Concerning Interest...................................................11
2.8 Debentures to Rank Equally............................................12
2.9 Registration of Debentures............................................12
2.10 Payment of Principal and Interest in Respect of Debentures...........13
2.11 Payment Agreements for Debentures....................................13
2.12 Ownership of Debentures..............................................14
2.13 Exchange of Debentures...............................................14
2.14 Replacement of Debentures............................................15
2.15 Interim Debentures...................................................15
ARTICLE 3 REDEMPTION AND PURCHASE FOR CANCELLATION
OF DEBENTURES AND ISSUE OF COMMON SHARES
3.1 Redemption of Debentures..............................................16
3.2 Limitation on Redemption..............................................16
3.3 Partial Redemption of Debentures......................................16
3.4 Notice of Redemption..................................................17
3.5 Debentures Due on Redemption Dates....................................17
3.6 Deposit of Redemption Moneys..........................................18
3.7 Failure to Surrender Debentures Called for Redemption.................18
3.8 Surrender of Debentures for Cancellation..............................18
3.9 Payment in Common Shares on Redemption of Debentures or
Maturity Date.............................................................18
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3.10 Issue of Common Shares on Redemption of Debentures or
Maturity Date.............................................................19
3.11 General Requirements.................................................20
3.12 No Requirement to Issue Fractional Shares............................22
3.13 Purchase of Debentures...............................................22
3.14 Cancellation of Debentures...........................................23
3.15 U.S. Legend..........................................................23
ARTICLE 4 CONVERSION
4.1 Conversion Privilege..................................................24
4.2 Manner of Exercise of Right to Convert................................25
4.3 Adjustment of Conversion Price......................................26
4.4 Adjustment of Conversion Price for Take Over Bid......................30
4.5 Rules Regarding Calculation of Adjustment of Conversion Price.........31
4.6 No Requirement to Issue Fractional Shares.............................32
4.7 Corporation to Reserve Shares.........................................32
4.8 Corporation to Qualify Shares.........................................32
4.10 Cancellation of Converted Debentures.................................33
4.11 Certificate as to Adjustment.........................................33
4.12 Notice of Special Matters............................................33
4.13 Notice of Expiry of Conversion Right.................................33
4.14 Revival of Right to Convert..........................................33
4.15 Protection of Trustee................................................33
ARTICLE 5 SUBORDINATION OF DEBENTURES
5.1 Agreement to Subordinate..............................................34
5.2 Distribution on Insolvency or Winding-up..............................34
5.3 Subrogation of Debentures.............................................36
5.4 No Payment to Debentureholders if Event of Default under
the Senior Liabilities....................................................36
5.5 Authorization of Debentureholders to Trustee to Effect
Subordination.............................................................38
5.6 Knowledge of Trustee..................................................38
5.7 Trustee May Hold Senior Liabilities...................................38
5.8 Rights of Holders of Senior Liabilities Not Impaired..................38
5.9 Altering the Senior Liabilities.......................................38
ARTICLE 6 COVENANTS OF THE CORPORATION
6.1 General Covenants.....................................................39
6.2 Not to Extend Time for Payment of Interest or Principal...............39
6.3 To Provide Annual Certificate of Compliance...........................40
6.4 To Pay Trustee's Remuneration.........................................40
6.5 Trustee may Perform Covenants.........................................41
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ARTICLE 7 DEFAULT AND ENFORCEMENT
7.1 Events of Default....................................................41
7.2 Notice of Events of Default..........................................42
7.3 Acceleration on Default..............................................42
7.4 Waiver of Default....................................................42
7.5 Enforcement by the Trustee...........................................43
7.6 Debentureholders May Not Xxx.........................................44
7.7 Application of Moneys................................................44
7.8 Distribution of Moneys...............................................45
7.9 Persons Dealing with Trustee.........................................46
7.10 Trustee Appointed Attorney..........................................46
7.11 Remedies Cumulative.................................................46
7.12 Immunity of Shareholders, Directors and Others......................46
7.13 Judgment Against the Corporation....................................46
ARTICLE 8 SATISFACTION AND DISCHARGE
8.1 Cancellation and Destruction.........................................46
8.2 Non-Presentation of Debentures.......................................47
8.3 Repayment of Unclaimed Moneys........................................47
8.4 Discharge............................................................47
ARTICLE 9 SUCCESSOR CORPORATION
9.1 Certain Requirements in Respect of Merger, etc.......................48
9.2 Vesting of Powers in Successor.......................................48
ARTICLE 10 MEETINGS OF DEBENTUREHOLDERS
10.2 Notice of Meetings..................................................49
10.3 Chairman............................................................49
10.4 Quorum..............................................................49
10.5 Power to Adjourn....................................................50
10.6 Show of Hands.......................................................50
10.7 Poll................................................................50
10.8 Voting..............................................................50
10.9 Regulations.........................................................51
10.10 Corporation and Trustee May Be Represented.........................51
10.11 Powers Exercisable by Extraordinary Resolution.....................51
10.12 Meaning of "Extraordinary Resolution".............................53
10.13 Powers Cumulative..................................................54
10.14 Minutes............................................................54
10.15 Signed Instruments.................................................54
10.16 Binding Effect of Resolutions......................................54
10.17 Evidence of Rights of Debentureholders.............................54
ARTICLE 11 NOTICES
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11.1 Notice to the Corporation...........................................55
11.2 Notice to Debentureholders..........................................55
11.3 Notice to the Trustee...............................................55
11.4 Mail Service Interruption...........................................55
ARTICLE 12 CONCERNING THE TRUSTEE
12.1 Trust Indenture Legislation.........................................56
12.2 No Conflict of Interest.............................................56
12.3 Rights and Duties of Trustee........................................56
12.4 Evidence, Experts and Advisers......................................57
12.5 Trustee May Deal in Debentures......................................58
12.6 Trustee Not Required to Give Security...............................58
12.7 Protection of Trustee...............................................58
12.8 Investment of Trust Moneys..........................................58
12.9 Action by Trustee to Protect Interests..............................59
12.10 Replacement of Trustee.............................................60
12.11 Acceptance.........................................................60
ARTICLE 13 SUPPLEMENTAL INDENTURES
13.1 Supplemental Indentures.............................................60
ARTICLE 14 EXECUTION
14.1 Counterparts and Formal Date........................................62
14.2 Language of Indenture...........................................62
SCHEDULE
The following is the form of fully registered 7.5% Convertible Unsecured
Subordinated Debenture Due February 5, 2004.
DAKOTA MINING CORPORATION
(Continued the Business Corporations Act (Canada))
7.5% Convertible Unsecured Debenture
due February 5, 2004
CUSIP#; ________________
Dakota Mining Corporation (the "Corporation") for value received
hereby acknowledges itself indebted and, subject to the provisions of the
Indenture hereinafter mentioned, promises to pay
to:_________________________________________ on February 4, 2004 or on such
earlier date as the principal amount hereof may become due in accordance with
the provisions of the Indenture the principal sum of:
$__________________________________ in lawful money of Canada on presentation
and surrender of this Debenture at one of the principal offices of Montreal
Trust Company of Canada (the "Trustee") in the cities of Xxxxxxxxx, Xxxxxxx and
Montreal, and to pay interest on the principal amount hereof from the date
hereof, or from the last interest payment date to which interest shall have
been paid or made available for payment on the outstanding Debentures,
whichever is later, at the rate of 7.5% per annum, in like money at any one of
the said places, as selected by the holder, in arrears in equal semi-annual
installments (less any tax required by law to be deducted or withheld) on June
30 and December 31 in each year (commencing June 30, 1997) and should the
Corporation at any time make default in the payment of any principal or
interest, to pay interest on the amount in default at the same rate in like
money, at any one of the said places, as selected by the holder, and half-
yearly on the same dates.
Debentures bear interest from and including the date of issue or from
and including the last interest payment date to which interest shall have been
paid or made available for payment on the Debentures, whichever is later,
provided that for the period from this date of issue of this Debenture to the
first interest payment date, the interest rate will be such that, when the
interest for such period is added to the interest earned on certain escrowed
proceeds which has been paid to the holder hereof, it is equivalent to 7.5% per
annum calculated from the date of the Indenture (defined below).
As soon as the interest becomes due, the Corporation (except in the
case of payment at maturity or on redemption, at which payment of interest may
he made upon surrender of this Debenture) shall, at least three business days
prior to each date on which interest becomes due, forward or cause to be
forwarded by ordinary mail, postage prepaid, to the registered holder hereof,
subject to the provisions of the Indenture and in the manner provided therein,
a cheque for such interest (less any tax required by law to be deducted or
withheld). Subject to the provisions
of the Indenture, the forwarding of such cheque shall satisfy and discharge all
liability for interest
-2-
on this Debenture to the extent of the sum represented by such cheque (plus the
amount of any tax deducted or withheld).
This Debenture is one of the 7.5% Convertible Unsecured Subordinated
Debentures due February 5, 2004 (the "Debentures") of the Corporation issued or
issuable under the provisions of a trust indenture (the "Indenture") made as of
February 5, 1997 between the Corporation and the Trustee. The Debentures are
limited to an aggregate principal amount of $25,000,000 in lawful money of Can-
ada. Reference is hereby expressly made to the Indenture for a description of
the terms and conditions upon which the Debentures are or are to be issued and
held and the rights and remedies of the holders of the Debentures and of the
Corporation and of the Trustee, all to the same effect as if the provisions of
the Indenture were herein set forth, to all of which provisions the holder of
this Debenture by acceptance hereof assents.
The Debentures are initially issuable only as fully registered
Debentures in denominations of $1,000 and integral multiples thereof. Upon
compliance with the provisions of the Indenture, Debentures of any denomination
may be exchanged for an equal aggregate principal amount of Debentures in any
other authorized denomination or denominations.
This Debenture is convertible, at The option of the holder hereof,
upon surrender of this Debenture at one of the principal offices of the Trustee
in the cities of Xxxxxxxxx, Xxxxxxx and Montreal, at any time up to and
including The close of business on the last business day immediately preceding
February 5, 2004 or if this Debenture is called for redemption on or prior to
such date, then up to but not after the close of business on the last business
day immediately preceding the date fixed for redemption of the Debenture, into
fully paid and non-assessable common shares ("Common Shares") in the share
capital of the Corporation, as presently constituted (without adjustment for
interest accrued hereon or for dividends on Common Shares issuable upon
conversion) at a conversion price of $2.00 per Common Share, all subject to the
terms and conditions and in the manner set forth in the Indenture. The
Indenture makes provisions for the adjustment of the conversion price in the
events therein specified.
This Debenture may be redeemed at the option of the Corporation on
the terms and conditions and at the redemption price set out in the Indenture
at any time on or after February 4, 2001 and up to and including maturity.
provided that the Corporation duly files with the Trustee on or before the day
that the applicable notice of redemption of this Debenture is given a
certificate of the Corporation certifying That the weighted average price per
share at which the Common Shares have traded on The Toronto Stock Exchange (or
elsewhere in accordance with the Indenture) during the 20 consecutive trading
days ending not more than five trading days before the date on which such
notice of redemption is given exceeds 125% of the conversion price mentioned
above.
Unless an Event of Default (as defined in the Indenture) has occurred
and is continuing, the Corporation may, on notice as provided in the Indenture,
at its option, and subject to applicable law and regulatory approvals, elect to
satisfy the obligation to repay the principal amount of this Debenture on
redemption 6r maturity by the issue and delivery of that number of freely
tradable Common Shares determined by dividing the principal amount hereof by
95% of the
-3-
weighted average price per share at which the Common Shares have traded on The
Toronto Stock Exchange (or elsewhere in accordance with the Indenture) during
the 20 consecutive trading days ending not more than five trading days before
the date that this Debenture is fixed for redemption or the date of maturity,
as the case may be, provided that, in the event that such weighted average
price on maturity of this Debenture is less than $2.00, the Corporation. at its
option, may satisfy its obligation hereunder to pay the principal amount
payable to the holder hereof by the issue to such holder of that number of
Common Shares of the Corporation equal to the lesser of (a) the number
determined by dividing such principal amount by 95% of such weighted average
price of the Common Shares on maturity and (b) the number determined by
dividing the principal amount by the closing market price of the Common Shares
on The Toronto Stock Exchange on the maturity date hereof.
The indebtedness evidenced by this Debenture and by all other
Debentures now or hereafter certified and delivered under the Indenture is a
direct unsecured obligation of the Corporation and is subordinated and subject
in right of payment, to the extent and in the manner provided in the Indenture,
to the prior payment of all Senior Liabilities (as defined in the Indenture and
which includes trade debts) of the Corporation, whether outstanding at the date
of the Indenture or thereafter created, incurred, assumed or guaranteed
The principal hereof may become or be declared due and payable before
the stated maturity in the events, in the manner, with the effect and at the
times provided in the Indenture.
The Indenture contains provisions making binding upon all holders of
Debentures outstanding thereunder resolutions passed at meetings of such
holders held in accordance with such provisions and instruments signed by the
holders of a specified majority of Debentures outstanding, which resolutions or
instruments may have the effect of amending the terms of this Debenture or the
Indenture. The Indenture also permits the Corporation and the Trustee to make
additions to, deletions from or alterations of the Indenture without the
consent of the holders of the Debentures for certain purposes, in certain
circumstances and upon certain conditions set out in the Indenture.
This Debenture may only be transferred. upon compliance with the
conditions prescribed in the Indenture. in one of the registers to be kept in
the principal office of the Trustee in each of the cities of Vancouver. Toronto
and Montreal and in such other place or places and/or by such other registrars
(if any) as the Corporation with the approval of the Trustee may designate, by
the registered holder hereof or his executors or administrators or other legal
representatives, or his or their attorney duly appointed by an instrument in
form and execution satisfactory to the Trustee or other registrar, and upon
compliance with such requirements as the Trustee and/or other registrar may
prescribe.
This Debenture shall not become obligatory for any purpose until it
shall have been certified by the Trustee under the Indenture.
-4-
In witness whereof Dakota Mining Corporation has caused this
Debenture to be signed by the Corporate Secretary of the Corporation as of
February ______, 1997.
DAKOTA MINING CORPORATION
By:________________________________
Corporate Secretary
