EXHIBIT 2
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HARVEST ENERGY TRUST
__________________________________________
SECOND AMENDED AND RESTATED
TRUST INDENTURE
DATED MAY 4, 2005
__________________________________________
BURNET, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
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TABLE OF CONTENTS
PAGE
ARTICLE 1 INTERPRETATION.......................................................1
1.1 DEFINITIONS..................................................1
1.2 MEANING OF "OUTSTANDING".....................................6
1.3 INCOME TAX ACT...............................................6
1.4 HEADINGS.....................................................7
1.5 CONSTRUCTION OF TERMS........................................7
1.6 REFERENCES TO ACTS PERFORMED BY THE TRUST....................7
ARTICLE 2 DECLARATION OF TRUST.................................................7
2.1 SETTLEMENT OF TRUST..........................................7
2.2 DECLARATION OF TRUST.........................................7
2.3 NAME.........................................................7
2.4 NATURE OF THE TRUST..........................................7
2.5 LEGAL ENTITLEMENTS AND RESTRICTIONS OF UNITHOLDERS...........8
2.6 LIABILITY OF UNITHOLDERS.....................................8
2.7 CONTRACTS OF THE TRUST.......................................8
2.8 HEAD OFFICE OF TRUST.........................................9
ARTICLE 3 ISSUE AND SALE OF TRUST UNITS........................................9
3.1 NATURE AND RANKING OF TRUST UNITS............................9
3.2 AUTHORIZED NUMBER OF TRUST UNITS AND SPECIAL
VOTING UNITS.................................................9
3.3 NO FRACTIONAL TRUST UNITS....................................9
3.4 RE-PURCHASE OF INITIAL TRUST UNITS BY TRUST..................9
3.5 OFFERINGS OF TRUST UNITS AND INDEBTEDNESS....................9
3.6 RANKING OF TRUST UNITS......................................10
3.7 TRUST UNITS FULLY PAID AND NON-ASSESSABLE...................10
3.8 NO CONVERSION, RETRACTION, REDEMPTION OR PRE-
EMPTIVE RIGHTS..............................................10
3.9 CONSOLIDATION OF TRUST UNITS................................10
3.10 SPECIAL VOTING RIGHTS.......................................10
3.11 NON-RESIDENT HOLDERS........................................10
ARTICLE 4 INVESTMENTS OF TRUST FUND...........................................11
4.1 PURPOSE OF THE TRUST........................................11
4.2 PERMITTED INVESTMENTS.......................................11
4.3 OTHER INVESTMENT RESTRICTIONS...............................11
ARTICLE 5 DISTRIBUTIONS.......................................................11
5.1 DETERMINATION OF NET INCOME OF THE TRUST....................11
5.2 NET INCOME OF THE TRUST TO BECOME PAYABLE...................12
5.3 NET REALIZED CAPITAL GAINS TO BECOME PAYABLE................12
5.4 NET INCOME AND NET REALIZED CAPITAL GAINS FOR INCOME
TAX PURPOSES TO BECOME PAYABLE..............................12
5.5 OTHER AMOUNTS...............................................13
5.6 ENFORCEMENT.................................................13
5.7 PAYMENT OF AMOUNTS PAYABLE..................................13
5.8 DISTRIBUTION OF ADDITIONAL TRUST UNITS......................13
5.9 WITHHOLDING TAXES...........................................13
ARTICLE 6 APPOINTMENT, RESIGNATION AND REMOVAL OF TRUSTEE.....................13
6.1 TRUSTEE'S TERM OF OFFICE....................................13
6.2 RESIGNATION OF TRUSTEE......................................14
6.3 REMOVAL OF TRUSTEE..........................................14
6.4 APPOINTMENT OF SUCCESSOR TO TRUSTEE.........................14
6.5 FAILURE TO APPOINT SUCCESSOR................................14
6.6 QUALIFICATIONS OF TRUSTEE...................................15
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ARTICLE 7 CONCERNING THE TRUSTEE..............................................15
7.1 POWERS OF THE TRUSTEE AND THE CORPORATION...................15
7.2 SPECIFIC POWERS AND AUTHORITIES.............................15
7.3 RESTRICTIONS ON THE TRUSTEE'S POWERS........................18
7.4 BANKING.....................................................19
7.5 STANDARD OF CARE............................................19
7.6 FEES AND EXPENSES...........................................19
7.7 LIMITATIONS ON LIABILITY OF TRUSTEE.........................20
7.8 INDEMNIFICATION OF TRUSTEE..................................20
7.9 ENVIRONMENTAL INDEMNITY.....................................20
7.10 APPARENT AUTHORITY..........................................21
7.11 NOTICE TO UNITHOLDERS OF NON-ELIGIBILITY FOR DEFERRED
INCOME PLANS................................................21
7.12 DECLARATION AS TO BENEFICIAL OWNERSHIP......................22
7.13 CONDITIONS PRECEDENT TO TRUSTEE'S OBLIGATIONS TO ACT........22
7.14 SURVIVAL OF INDEMNITIES.....................................22
7.15 TRUSTEE MAY HAVE OTHER INTERESTS............................22
7.16 DOCUMENTS HELD BY TRUSTEE...................................23
ARTICLE 8 DELEGATION OF POWERS................................................23
8.1 THE CORPORATION.............................................23
8.2 OFFERINGS AND OTHER MATTERS.................................23
8.3 EXCLUSIONS FROM DELEGATION..................................23
8.4 POWER OF ATTORNEY...........................................24
8.5 LIABILITY OF TRUSTEE........................................24
ARTICLE 9 AMENDMENT...........................................................24
9.1 AMENDMENT...................................................24
ARTICLE 10 MEETINGS OF UNITHOLDERS............................................25
10.1 ANNUAL AND SPECIAL MEETINGS OF UNITHOLDERS..................25
10.2 NOTICE OF MEETINGS..........................................25
10.3 QUORUM......................................................25
10.4 VOTING RIGHTS OF UNITHOLDERS................................26
10.5 RESOLUTIONS.................................................26
10.6 MEANING OF "SPECIAL RESOLUTION".............................27
10.7 RECORD DATE FOR VOTING......................................27
10.8 BINDING EFFECT OF RESOLUTIONS...............................27
10.9 SOLICITATION OF PROXIES.....................................27
10.10 NO BREACH...................................................28
ARTICLE 11 CERTIFICATES, REGISTRATION AND TRANSFER OF TRUST UNITS.............28
11.1 NATURE OF TRUST UNITS.......................................28
11.2 CERTIFICATES................................................28
11.3 REGISTER OF UNITHOLDERS.....................................28
11.4 TRANSFER OF TRUST UNITS.....................................29
11.5 TRUST UNITS HELD JOINTLY OR IN A FIDUCIARY CAPACITY.........29
11.6 PERFORMANCE OF TRUST........................................29
11.7 LOST CERTIFICATES...........................................30
11.8 DEATH OF A UNITHOLDER.......................................30
11.9 UNCLAIMED INTEREST OR DISTRIBUTION..........................30
11.10 EXCHANGES OF TRUST CERTIFICATES.............................30
11.11 OFFER FOR UNITS.............................................30
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ARTICLE 12 TERMINATION........................................................32
12.1 TERMINATION DATE............................................32
12.2 TERMINATION BY SPECIAL RESOLUTION OF UNITHOLDERS............32
12.3 PROCEDURE UPON TERMINATION..................................33
12.4 POWERS OF THE TRUSTEE UPON TERMINATION......................33
12.5 SALE OF INVESTMENTS.........................................33
12.6 DISTRIBUTION OF PROCEEDS....................................33
12.7 FURTHER NOTICE TO UNITHOLDERS...............................33
12.8 RESPONSIBILITY OF TRUSTEE AFTER SALE AND CONVERSION.........33
ARTICLE 13 SUPPLEMENTAL INDENTURES............................................33
13.1 PROVISION FOR SUPPLEMENTAL INDENTURES.......................33
13.2 PROVISION FOR AMENDED AND RESTATED INDENTURE................34
ARTICLE 14 NOTICES TO UNITHOLDERS.............................................34
14.1 NOTICES.....................................................34
14.2 FAILURE TO GIVE NOTICE......................................34
14.3 JOINT HOLDERS...............................................35
14.4 SERVICE OF NOTICE...........................................35
ARTICLE 15 AUDITORS...........................................................35
15.1 QUALIFICATION OF AUDITORS...................................35
15.2 APPOINTMENT OF AUDITORS.....................................35
15.3 CHANGE OF AUDITORS..........................................35
15.4 FILLING VACANCY.............................................35
15.5 REPORTS OF AUDITORS.........................................35
ARTICLE 16 ACCOUNTS, RECORDS AND FINANCIAL STATEMENTS.........................35
16.1 RECORDS.....................................................35
16.2 QUARTERLY REPORTING TO UNITHOLDERS..........................36
16.3 ANNUAL REPORTING TO UNITHOLDERS.............................36
16.4 INFORMATION AVAILABLE TO UNITHOLDERS........................36
16.5 INCOME TAX: OBLIGATION OF THE TRUSTEE.......................37
16.6 INCOME TAX: DESIGNATIONS....................................37
16.7 INCOME TAX: DEDUCTIONS, ALLOWANCES AND CREDITS..............37
16.8 FISCAL YEAR.................................................37
ARTICLE 17 MISCELLANEOUS......................................................37
17.1 CONTINUED LISTING...........................................37
17.2 SUCCESSORS AND ASSIGNS......................................37
17.3 COUNTERPARTS................................................37
17.4 SEVERABILITY................................................37
17.5 DAY NOT A BUSINESS DAY......................................38
17.6 TIME OF THE ESSENCE.........................................38
17.7 GOVERNING LAW...............................................38
17.8 NOTICES TO TRUSTEE AND THE CORPORATION......................38
17.9 REFERENCES TO AGREEMENTS....................................38
ARTICLE 18 REDEMPTION OF TRUST UNITS..........................................38
18.1 RIGHT OF REDEMPTION.........................................38
18.2 EXERCISE OF REDEMPTION RIGHT................................39
18.3 CALCULATION OF REDEMPTION PRICE BASED ON MARKET PRICE.......39
18.4 CASH PAYMENT OF MARKET REDEMPTION PRICE.....................39
18.5 LIMITATION REGARDING CASH PAYMENT OF MARKET
REDEMPTION PRICE............................................40
18.6 CALCULATION OF REDEMPTION PRICE IN CERTAIN OTHER
CIRCUMSTANCES...............................................40
18.7 CANCELLATION OF CERTIFICATES FOR ALL REDEEMED
TRUST UNITS.................................................41
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HARVEST ENERGY TRUST
SECOND AMENDED AND RESTATED TRUST INDENTURE made the 4th day of
May, 2005.
BETWEEN:
VALIANT TRUST COMPANY, a trust company incorporated
under the laws of Alberta, with offices in the City
of Calgary, in the Province of Alberta (hereinafter
called the "Trustee")
OF THE FIRST PART
and
HARVEST OPERATIONS CORP., a body corporate
incorporated under the laws of Alberta, with offices
in the City of Calgary, in the Province of Alberta
(hereinafter called the "Corporation") and all
persons who after the date hereof become holders of
Trust Units as herein provided
OF THE SECOND PART
WHEREAS the Settlor has paid to the Initial Trustee an amount
of one hundred dollars in lawful money of Canada for the purpose of settling the
Trust;
AND WHEREAS the Trustee has agreed replace the Initial Trustee
and to act as trustee of the Trust in accordance with the provisions hereinafter
set forth;
AND WHEREAS it is intended that the beneficiaries of the Trust
shall be the holders of Trust Units, each of which Trust Units shall rank
equally in all respects with every other Trust Unit;
AND WHEREAS it is intended that the Trust will offer the Trust
Units for sale to members of the public from time to time;
AND WHEREAS it is intended that the Trust shall qualify as a
"unit trust" and as a "mutual fund trust" under the provisions of paragraph
108(2)(b) and subsection 132(6) of the Tax Act;
AND WHEREAS the parties hereto desire to set out the terms and
conditions which shall govern the settlement and the administration of the
Trust;
NOW THEREFORE THIS INDENTURE WITNESSETH that in consideration
of the premises and the mutual and respective covenants and agreements contained
herein, the Trustee declares and covenants and agrees with and in favour of the
holders from time to time of the Trust Units and the Corporation as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Indenture including the recitals and in the Trust
Certificates and schedules hereto, unless the context otherwise requires, the
following words and expressions shall have the following meanings:
(a) "ABCA" means the BUSINESS CORPORATIONS ACT (Alberta) as amended from
time to time, including the regulations promulgated thereunder;
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(b) "AFFILIATE" has the meaning set forth in the SECURITIES ACT (Alberta),
as amended from time to time;
(c) "AGENCY AGREEMENT" means any underwriting, agency or similar agreement
entered into by the Trustee and investment dealers, and such other
persons including the Corporation as may be a party thereto relating to
an Offering;
(d) "AGENT'S FEES" means the amounts so designated in any Agency Agreement;
(e) "ADMINISTRATION AGREEMENT" means the agreement dated September 27, 2002
between the Trustee and the Corporation pursuant to which the
Corporation has agreed to provide certain administrative and advisory
services in connection with the Trust;
(f) "APPRAISED REDEMPTION PRICE" has the meaning set forth in Section 18.6;
(g) "ARTC" means Alberta Royalty Tax Credit within the meaning of the
ALBERTA CORPORATE TAX ACT
(h) "ASSOCIATE" has the meaning set forth in the SECURITIES ACT (Alberta)
as amended from time to time;
(i) "AUDITORS" means KPMG LLP, or such other firm of chartered accountants
as may be appointed as auditor or auditors of the Trust by or in
accordance with Article 15;
(j) "BUSINESS DAY" means a day other than a Saturday, Sunday or holiday in
the City of Calgary in the Province of Alberta;
(k) "CAPITAL FUND" means the cash flow retained by the Trust from cash
otherwise available for distribution which shall be advanced to the
Corporation to finance future acquisitions and development of the
Properties;
(l) "CLOSING" means the completion of the Initial Offering and "DATE OF
CLOSING" means the date on which the Closing occurs;
(m) "COUNSEL" means a law firm (which may be counsel to the Corporation)
reasonably acceptable to the Trustee;
(n) "CORPORATION" means Harvest Operations Corp.;
(o) "CREDIT AGREEMENTS" means the agreements, instruments and documents
evidencing the Credit Facilities;
(p) "CREDIT FACILITIES" means the credit facilities made available to the
Trust or the Corporation (including any assumed by contract, operation
of law or otherwise) from time to time by other persons or made
available to persons wholly-owned, directly or indirectly, by the
Trust, the Corporation or any Affiliate of the Trust or the Corporation
provided the Trust, the Corporation or any Affiliate of the Trust or
the Corporation has guaranteed, provided an indemnity in respect of, or
otherwise become a surety of, directly or indirectly, such credit
facilities and, without limiting the generality of the foregoing,
includes the US $250,000,000 principal amount of 7?% senior notes of
the Corporation due October 15, 2011 unconditionally guaranteed by the
Trust and certain other Affiliates of the Trust;
(q) "DEBT SERVICE CHARGES" means all interest and principal repayments and
other costs, expenses and disbursements relating to the borrowing of
funds by the Trust or the Corporation, or by an Affiliate of the Trust
or the Corporation where the Trust or the Corporation has provided a
guarantee, indemnity or surety for any such indebtedness, including
pursuant to or in respect to the Credit Facilities;
(r) "DEFERRED PURCHASE PRICE OBLIGATION" has the meaning ascribed thereto
in the NPI Agreement;
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(s) "DIRECT ROYALTIES" means royalty interests in petroleum and natural gas
rights acquired by the Trust from time to time, other than the NPI,
including the Initial Direct Royalties to be acquired by the Trust from
the Corporation pursuant to a Direct Royalties Sale Agreement;
(t) "DIRECT ROYALTIES SALE AGREEMENT" means any purchase and sale agreement
between the Trust and the Corporation providing for the purchase by the
Trust from the Corporation of the Direct Royalties including the
amended and restated agreement dated September 27, 2002 in respect of
the purchase of the Initial Direct Royalties;
(u) "DISTRIBUTION RECORD DATE" means the last day of each calendar month or
such other date as may be determined from time to time by the Trustee
upon the recommendation of the board of directors of the Corporation,
except that December 31 shall in all cases be a Distribution Record
Date;
(v) "HARVEST SASK TRUST" means Harvest Sask Energy Trust, a trust formed
under the laws of Alberta;
(w) "INDEMNIFIED PARTIES" has the meaning set forth in Section 7.9;
(x) "INITIAL DIRECT ROYALTIES" means a 99% undivided interest in the
royalty interests forming part of the Initial Properties to be acquired
by the Trust from the Corporation pursuant to a Direct Royalties Sale
Agreement;
(y) "INITIAL OFFERING" means the Offering pursuant to the Prospectus;
(z) "INITIAL PROPERTIES" means the properties and assets to be acquired by
the Corporation from the Vendors pursuant to the Sale Agreement;
(aa) "INITIAL TRUSTEE" means Caribou Capital Corp.;
(bb) "ISSUE EXPENSES" means all expenses of an Offering payable by the Trust
including legal fees, accounting fees and printing expenses and all
other fees and expenses which may be described, whether generally or
specifically, in any Offering Document relating to the particular
Offering, but excluding Underwriter's Fees;
(cc) "LENDER" means the lender or lenders (or any of its or their
Affiliates) providing one or more credit or debt facilities (including
without limitation pursuant to any Credit Facilities), hedging or swap
facilities or any other ancillary facilities to the Trust, the
Corporation or any other Affiliate of the Trust for the ownership and
operation of its assets, business and affairs;
(dd) "MATERIAL CONTRACTS" means this Trust Indenture, the NPI Agreements, a
Direct Royalties Sale Agreement, the Administration Agreement and the
Credit Agreements, each as amended or replaced from time to time, and
any Underwriting Agreement and any loan agreement, credit agreement,
royalty agreement, indenture or other agreement entered into by the
Trust for the purpose of making any Subsequent Investment;
(ee) "NPI" means the rights granted to the Trust under the NPI Agreements to
receive payments on petroleum and natural gas rights held by the
Corporation or Harvest Sask Trust from time to time as more
particularly described in the NPI Agreements;
(ff) "NPI AGREEMENTS" means collectively, (i) the amended and restated net
profit interest agreement regarding the creation and sale of a net
profits interest to the Trust dated October 7, 2004 between the
Corporation and the Trustee, and (ii) the amended and restated net
profit interest agreement regarding the creation and sale of a net
profits interest to the Trust dated October 7, 2004 between Harvest
Sask Trust and the Trustee;
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(gg) "NOTES" means the promissory notes issued by the Corporation in series
pursuant to a note indenture to be redeemed in consideration for a
portion of the NPI having a fair market value equal to such principal
amount on the following terms and conditions:
(i) unsecured and bearing interest at 6% per annum payable monthly
in arrears on the 20th day of the next following month;
(ii) subordinate to all senior indebtedness which includes all
indebtedness for borrowed money or owing in respect of
property purchases on any default in payment of any such
senior indebtedness, and to all trade debt of the Corporation
or any subsidiary of the Corporation or the Trust on any
creditor proceedings such as bankruptcy, liquidation or
insolvency;
(iii) subject to earlier prepayment, being due and payable on the
15th anniversary of the date of issuance;
(iv) in an aggregate principal amount not exceeding $500 million,
and
(v) subject to such other standard terms and conditions as would
be included in a note indenture for promissory notes of this
kind, as may be approved by the board of directors of the
Corporation;
(hh) "OFFERING" means any issuance or offering of Trust Units or any rights,
warrants or other securities to purchase, to convert into or exchange
into Trust Units on a public or private basis in Canada or elsewhere,
including the Initial Offering;
(ii) "OFFERING DOCUMENTS" means any one or more of a prospectus, information
memorandum, private placement memorandum and similar public or private
offering document, including the Prospectus, or any understanding,
commitment or agreement to issue or offer Trust Units;
(jj) "ORDINARY RESOLUTION" means a resolution approved at a meeting of
Unitholders by more than 50% of the votes cast in respect of the
resolution by or on behalf of Unitholders present in person or
represented by proxy at the meeting;
(kk) "OUTSTANDING", in relation to Trust Units, has the meaning attributed
thereto in Section 1.2 hereof;
(ll) "PAYMENT DATE" has the meaning set forth in Section 5.7;
(mm) "PERMITTED INVESTMENTS" means:
(i) loan advances to the Corporation, including loans made in
connection with the Capital Fund;
(ii) interest bearing accounts of certain financial institutions
including Canadian chartered banks and the Trustee; (iii)
obligations issued or guaranteed by the Government of Canada
or any province of Canada or any agency or instrumentality
thereof;
(iv) term deposits, guaranteed investment certificates of deposit
or bankers' acceptances of or guaranteed or accepted by any
Canadian chartered bank or other financial institution
(including the Trustee and any Affiliate of the Trustee) the
short term debt or deposits of which have been rated at least
A or the equivalent by Standard & Poor's Corporation, ▇▇▇▇▇'▇
Investors Service, Inc. or Dominion Bond Rating Service
Limited;
(v) commercial paper rated at least A or the equivalent by
Canadian Bond Rating Service Inc. or Dominion Bond Rating
Service Limited; and
5
(vi) investments in bodies corporate, partnerships or trusts
engaged in the oil and natural gas business;
provided that any investment of the type referred to in Section 4.3
shall not be a Permitted Investment;
(nn) "PERSON" means an individual, partnership, body corporate, association
or trust;
(oo) "PRO RATA SHARE" of any particular amount in respect of a Unitholder at
any time shall be the product obtained by multiplying the number of
Trust Units that are owned by that Unitholder at that time by the
quotient obtained when the particular amount is divided by the total
number of all Trust Units that are issued and outstanding at that time;
(pp) "PROPERTIES" means the working, royalty or other interests of the
Corporation from time to time in any petroleum and natural gas rights,
tangibles and miscellaneous interests, including the Initial Properties
and properties which may be acquired by the Corporation at a future
date and including the Direct Royalties acquired by the Trust from time
to time;
(qq) "PROSPECTUS" means the prospectus for the Initial Offering of Units
which is expected to be dated not later than October 31, 2002;
(rr) "SALE AGREEMENT" means the purchase and sale agreement between the
Corporation and the Vendors providing for the purchase by the
Corporation from the Vendors of the Initial Properties;
(ss) "SETTLED AMOUNT" means the amount of one hundred dollars in lawful
money of Canada paid by the Settlor to the Trustee for the purpose of
settling the Trust;
(tt) "SETTLOR" means Caribou Capital Corp.;
(uu) "SHARES" means the issued and outstanding common shares of the
Corporation as of the date hereof and also means shares of any class
issued by the Corporation thereafter;
(vv) "SPECIAL RESOLUTION" has the meaning attributed thereto in Section 10.6
hereof;
(ww) "SPECIAL VOTING UNITS" shall have the meaning ascribed thereto in
Section 3.10;
(xx) "SUBSEQUENT INVESTMENT" means any of the investments which the Trust
may make pursuant to Subsections 4.1(b), (c) or (f);
(yy) "TAX ACT" has the meaning ascribed thereto in Section 1.3;
(zz) "TRANSFER AGENT" means the Trustee, its successors or assigns, in its
capacity as transfer agent for the Trust Units or such other company as
may from time to time be appointed by the Trustee to act as transfer
agent for the Trust Units together, in either such case, with any
subtransfer agent duly appointed by the transfer agent;
(aaa) "TRUST" means Harvest Energy Trust and refers to the trust relationship
between the Trustee and the Unitholders with respect to the Trust Fund,
upon the terms and conditions set out herein from time to time and, if
the context requires, may also refer to the Trust Fund;
(bbb) "TRUST CERTIFICATE" or "TRUST UNIT CERTIFICATE" means a certificate, in
the form approved by the Trustee, evidencing one or more Trust Units,
issued and certified in accordance with the provisions hereof;
(ccc) "TRUST EXPENSES" means all expenses incurred by the Trustee or any
third party, in each case for the account of the Trust, in connection
with this Indenture, the establishment and ongoing management of the
Trust and the ongoing administration of the Trust Units, including
without limitation those amounts payable to the Trustee under Sections
7.6, 7.7 and 7.8;
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(ddd) "TRUST FUND", at any time, shall mean such of the following monies,
properties and assets that are at such time held by the Trustee on
behalf of the Trust for the purposes of the Trust under this Indenture:
(i) the Settled Amount;
(ii) all funds realized from the issuance of Trust Units;
(iii) any Permitted Investments in which funds may from time to time be
invested;
(iv) all rights in respect of and income generated under the NPI
Agreements, including the NPI;
(v) all rights in respect of and income generated under a Direct
Royalties Sale Agreement;
(vi) any Subsequent Investment;
(vii) any proceeds of disposition of any of the foregoing property
including, without limitation, the Direct Royalties; and
(viii) all income, interest, profit, gains and accretions and
additional assets, rights and benefits of any kind or nature whatsoever
arising directly or indirectly from or in connection with or accruing
to such foregoing property or such proceeds of disposition;
(eee) "TRUST UNIT" means a trust unit of the Trust created, issued and
certified hereunder and for the time being outstanding and entitled to
the benefits hereof;
(fff) "TRUSTEE" means Valiant Trust Company, or its successor or successors
for the time being as trustee hereunder;
(ggg) "UNDERWRITING AGREEMENT" means any underwriting, agency or similar
agreement entered into by the Trustee and investment dealers, and such
other persons including the Corporation as may be a party thereto
relating to an Offering;
(hhh) "UNDERWRITER'S FEES" means the amounts so designated in any
Underwriting Agreement;
(iii) "UNITHOLDERS" means the holders from time to time of one or more Trust
Units;
(jjj) "VENDORS" means Devon Canada and Devon ARL Corporation; and
(kkk) "YEAR" means initially, the period commencing on the date hereof and
ending on December 31, 2002, and thereafter means a calendar year.
1.2 MEANING OF "OUTSTANDING"
Every Trust Unit created, issued, certified and delivered
hereunder shall be deemed to be outstanding until it shall be cancelled or
delivered to the Trustee for cancellation provided that when a new Trust
Certificate has been issued in substitution for a Trust Certificate which has
been lost, stolen or destroyed, only one of such Trust Certificates shall be
counted for the purpose of determining the number of Trust Units outstanding.
1.3 INCOME TAX ACT
In this Indenture, any reference to the Tax Act shall refer to
the INCOME TAX ACT, Revised Statutes of Canada 1985, Chapter 1 (5th Supplement)
and the Income Tax Regulations as amended from time to time applicable with
respect thereto. Any reference herein to a particular provision of the Tax Act
shall include a reference to that provision as it may be renumbered or amended
from time to time. Where there are proposals for amendments to the Tax Act which
have not been enacted into law or proclaimed into force on or before the date on
7
which such proposals are to become effective, the Trustee may take such
proposals into consideration and apply the provisions hereof as if such
proposals had been enacted into law and proclaimed into force.
1.4 HEADINGS
The division of this Indenture into articles and sections,
subsections, clauses, subclauses and paragraphs and the provision of headings is
for convenience of reference only and shall not affect the construction or
interpretation of this Indenture.
1.5 CONSTRUCTION OF TERMS
Words importing the singular number only shall include the
plural, and vice versa, and words importing gender shall include the masculine,
feminine and neuter genders. References in this Indenture to "this Trust
Indenture", "this Indenture", "hereto", "herein", "hereof", "hereby",
"hereunder" and similar expressions shall be deemed to refer to this instrument
and not to any particular Article, Section or portion hereof, and include any
and every instrument supplemental or ancillary hereto or in implementation
hereof.
1.6 REFERENCES TO ACTS PERFORMED BY THE TRUST
Any reference in this Indenture to an act to be performed by
the Trust shall be construed and applied for all purposes as if it referred to
an act to be performed by the Trustee on behalf of the Trust or, to the extent
applicable, by the Corporation on behalf of the Trust.
ARTICLE 2
DECLARATION OF TRUST
2.1 SETTLEMENT OF TRUST
The Settlor has paid the Settled Amount to the Initial Trustee
and the Initial Trustee has accepted the Settled Amount for the purpose of
creating and settling the Trust and the Settlor has been issued one hundred
initial Trust Units in the Trust to the Initial Trustee which have been
transferred to the Trustee.
2.2 DECLARATION OF TRUST
The Trustee hereby agrees to act as Trustee and that it does
and shall hold the Trust Fund in trust for the use and benefit of the
Unitholders, their permitted assigns and personal representatives upon the
trusts and subject to the terms and conditions hereinafter declared and set
forth, such trust to constitute the Trust hereunder.
2.3 NAME
The Trust shall be known and designated as "Harvest Energy
Trust" and, whenever lawful and convenient, the affairs of the Trust shall be
conducted and transacted under that name. If the Trustee determines that the use
of the name "Harvest Energy Trust" is not practicable, legal or convenient, it
may use such other designation or it may adopt such other name for the Trust as
it deems appropriate and the Trust may hold property and conduct its activities
under such other designation or name.
2.4 NATURE OF THE TRUST
The Trust is an open-end unincorporated investment trust,
established for the purposes specified in Section 4.1 hereof. The Trust is not
and is not intended to be, shall not be deemed to be and shall not be treated as
a general partnership, limited partnership, syndicate, association, joint
venture, company, corporation or joint stock company, nor shall the Trustee or
the Unitholders or any of them or any person be, or be deemed to be, treated in
any way whatsoever as liable or responsible hereunder as partners or joint
venturers. The Trustee shall not be, or be deemed to be, an agent of the
Unitholders. The relationship of the Unitholders to the Trustee shall be solely
that of beneficiaries of the Trust and their rights shall be limited to those
conferred upon them by this Trust Indenture.
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2.5 LEGAL ENTITLEMENTS AND RESTRICTIONS OF UNITHOLDERS
(a) The rights of each Unitholder to call for a distribution or division of
assets, monies, funds, income and capital gains held, received or
realized by the Trustee are limited to those contained herein.
(b) Subject to the terms and conditions of this Indenture, no Unitholder or
Unitholders shall be entitled to interfere or give any direction to the
Trustee or the Corporation with respect to the affairs of the Trust or
in connection with the exercise of any powers or authorities conferred
upon the Trustee or the Corporation under this Indenture or the
Material Contracts.
(c) The legal ownership of the assets of the Trust and the right to conduct
the business of the Trust (subject to the limitations contained herein)
are vested exclusively in the Trustee and the Unitholders shall have no
interest therein and they shall have no right to compel or call for any
partition, division, dividend or distribution of the Trust Fund or any
of the assets of the Trust. The Trust Units shall be personal property
and shall confer upon the holders thereof only the interest and rights
specifically set forth in this Indenture. No Unitholder has or is
deemed to have any right of ownership in any of the assets of the
Trust.
2.6 LIABILITY OF UNITHOLDERS
No Unitholder, in its capacity as such, shall incur or be
subject to any liability in contract or in tort or of any other kind whatsoever
to any person in connection with the Trust Fund or the obligations or the
affairs of the Trust or with respect to any act performed by the Trustee or by
any other person pursuant to this Indenture or with respect to any act or
omission of the Trustee or any other person in the performance or exercise, or
purported performance or exercise, of any obligation, power, discretion or
authority conferred upon the Trustee or such other person hereunder or with
respect to any transaction entered into by the Trustee or by any other person
pursuant to this Indenture. No Unitholder shall be liable to indemnify the
Trustee or any such other person with respect to any such liability or
liabilities incurred by the Trustee or by any such other person or persons or
with respect to any taxes payable by the Trust or by the Trustee or by any other
person on behalf of or in connection with the Trust. Notwithstanding the
foregoing, to the extent that any Unitholders are found by a court of competent
jurisdiction to be subject to any such liability, such liability shall be
enforceable only against, and shall be satisfied only out of, the Trust Fund and
the Trust (to the extent of the Trust Fund) is liable to, and shall indemnify
and save harmless any Unitholder against any costs, damages, liabilities,
expenses, charges or losses suffered by any Unitholder from or arising as a
result of such Unitholder not having any such limited liability.
2.7 CONTRACTS OF THE TRUST
Every contract entered into by or on behalf of the Trust,
whether by the Trustee, the Corporation, or otherwise, shall (except as the
Trustee or the Corporation may otherwise expressly agree in writing with respect
to their own personal liability) include a provision substantially to the
following effect:
The parties hereto acknowledge that the [Trustee]
[Corporation] is entering into this agreement solely [in its
capacity as Trustee] [on behalf] of the Trust and the
obligations of the Trust hereunder shall be binding upon the
[Trustee] [Corporation] only in such capacity, provided that
any recourse against the [Trustee] [Corporation] or any
Unitholder in any manner in respect of any indebtedness,
obligation or liability of the [Trustee] [in its capacity as
the Trustee] [Corporation] arising hereunder or arising in
connection herewith or from the matters to which this
agreement relates, if any, including without limitation claims
based on negligence or otherwise tortious behaviour, shall be
limited to, and satisfied only out of, the Trust Fund as
defined in the second amended and restated trust indenture
dated as of May 4, 2005, as amended or amended and restated
from time to time.
The omission of such a provision from any such written instrument shall not
operate to impose personal liability on the Trustee, the Corporation or any
Unitholder.
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2.8 HEAD OFFICE OF TRUST
The head office of the Trust hereby created shall be located
at ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ or at such other
place or places in Canada as the Trustee may from time to time designate.
ARTICLE 3
ISSUE AND SALE OF TRUST UNITS
3.1 NATURE AND RANKING OF TRUST UNITS
(a) The beneficial interests in the Trust shall be divided into interests
of one class, described and designated as Trust Units, which shall be
entitled to the rights and subject to the limitations, restrictions and
conditions set out herein; and the interest of each Unitholder shall be
determined by the number of Trust Units registered in the name of the
Unitholder.
(b) Each Trust Unit shall entitle the holder or holders thereof to one vote
at any meeting of the Unitholders and represents an equal fractional
undivided beneficial interest in any distribution from the Trust
(whether of net income, net realized capital gains or other amounts)
and in any net assets of the Trust in the event of termination or
winding-up of the Trust. All Trust Units outstanding from time to time
shall be entitled to equal shares in any distributions by the Trust
and, in the event of termination or winding-up of the Trust, in the net
assets of the Trust. All Trust Units shall rank among themselves
equally and rateably without discrimination, preference or priority.
3.2 AUTHORIZED NUMBER OF TRUST UNITS AND SPECIAL VOTING UNITS
The aggregate number of Trust Units and Special Voting Units
which are authorized and may be issued hereunder is unlimited.
3.3 NO FRACTIONAL TRUST UNITS
Fractions of Trust Units shall not be issued, except pursuant
to distributions of additional Trust Units to all Unitholders pursuant to
Section 5.8.
3.4 RE-PURCHASE OF INITIAL TRUST UNITS BY TRUST
Immediately after the Closing, the Trust will repurchase the
initial Trust Units from the Trustee, and the Trustee shall sell the initial
Trust Units to the Trust for a purchase price of one hundred dollars and, upon
the completion of such purchase and sale, the initial Trust Units shall be
cancelled and shall no longer be outstanding for any of the purposes of this
Indenture.
3.5 OFFERINGS OF TRUST UNITS AND INDEBTEDNESS
(a) Trust Units, including rights, warrants or other securities to
purchase, to convert into or exchange into Trust Units, may be created,
issued, sold and delivered pursuant to Offering Documents on terms and
conditions and at such time or times as the board of directors the
Corporation may determine.
(b) The board of directors of the Corporation may authorize the creation
and issuance of debentures, notes and other evidences of indebtedness
of the Trust which debentures, notes or other evidences of indebtedness
may be created and issued from time to time on such terms and
conditions, to such persons and for such consideration as the
Corporation may determine.
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3.6 RANKING OF TRUST UNITS
Each Trust Unit represents an equal fractional undivided
beneficial interest in the Trust Fund. All Trust Units outstanding from time to
time shall be entitled to an equal fractional undivided share of any
distributions by the Trust and, in the event of termination of the Trust, in the
net assets of the Trust. All Trust Units shall rank among themselves equally and
rateably without discrimination, preference or priority whatever may be the
actual date or terms of issue thereof.
3.7 TRUST UNITS FULLY PAID AND NON-ASSESSABLE
Trust Units shall be issued only when fully paid in money or
property or past service, provided that property will include a promissory note
or promise to pay given by the allottee. The Unitholders shall not thereafter be
required to make any further contribution to the Trust with respect to such
Trust Units.
3.8 NO CONVERSION, RETRACTION, REDEMPTION OR PRE-EMPTIVE RIGHTS
No person shall be entitled, as a matter of right, to
subscribe for or purchase any Trust Unit. There are no conversion, retraction,
redemption or pre-emptive rights attaching to the Trust Units.
3.9 CONSOLIDATION OF TRUST UNITS
Immediately after any pro rata distribution of additional
Trust Units to all Unitholders pursuant to Sections 5.5 or Section 5.8, the
number of outstanding Trust Units will be consolidated such that each Unitholder
will hold after the consolidation the same number of Trust Units as the
Unitholder held before the distribution of additional Trust Units. In such case,
each Trust Unit Certificate representing a number of Trust Units prior to the
distribution of additional Trust Units is deemed to represent the same number of
Trust Units after the distribution of additional Trust Units and the
consolidation.
3.10 SPECIAL VOTING RIGHTS
In addition to Trust Units, there may be issued special voting
units ("Special Voting Units") entitling the holders thereof to such number of
votes at meetings of Unitholders as may be prescribed by the Board of Directors
of the Corporation in the resolution authorizing the issuance of any such
Special Voting Units. Except for the right to vote at meetings of the
Unitholders, the Special Voting Units shall not confer upon the holders thereof
any other rights; and for greater certainty, the holders of Special Voting Units
shall not be entitled to any distributions of any nature whatsoever from the
Trust or have any beneficial interest in any assets of the trust on termination
of the Trust.
3.11 NON-RESIDENT HOLDERS
It is in the best interest of Unitholders that the Trust
qualify as a "unit trust" and a "mutual fund trust" under the Tax Act.
Accordingly, it is intended that the Trust comply with the requirements under
the Tax Act for "unit trusts" and "mutual fund trusts" at all relevant times
such that the Trust maintain the status of a unit trust and a mutual fund trust
for purposes of the Tax Act. In this regard, the Trust shall, among other
things, take all necessary steps to monitor the ownership of the Trust Units to
carry out such intentions. If at any time the Trust, becomes aware that the
beneficial owners of 49% or more of the Trust Units then outstanding are or may
be Non-Residents or that such a situation is imminent, the Trust, by or through
the Corporation on the Trust's behalf, shall take such action as may be
necessary to carry out the intentions evidenced herein. For the purposes of this
Section, "Non-Residents" means non-residents of Canada within the meaning of the
Tax Act.
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ARTICLE 4
INVESTMENTS OF TRUST FUND
4.1 PURPOSE OF THE TRUST
The Trust is hereby created for the following purposes:
(a) acquiring the NPI and Direct Royalties (including the Initial Direct
Royalties);
(b) making payments to the Corporation pursuant to the Deferred Purchase
Price Obligation under the NPI Agreement;
(c) making loans to the Corporation in connection with the Capital Fund;
(d) acquiring or investing in securities of the Corporation and in the
securities of any other person including without limitation bodies
corporate, partnerships or trusts, and borrowing funds or otherwise
obtaining credit for that purpose;
(e) disposing of any part of the Trust Fund, including, without limitation,
any securities of the Corporation;
(f) temporarily holding cash and investments for the purposes of paying the
expenses and the liabilities of the Trust, making other investments as
contemplated by Section 4.2 hereof, paying amounts payable by the Trust
in connection with the redemption of any Trust Units, and making
distributions to Unitholders; and
(g) undertaking such other business and activities as approved by the
Corporation from time to time;
and to pay the costs, fees and expenses associated with the foregoing
purposes or incidental thereto.
4.2 PERMITTED INVESTMENTS
Any funds within the Trust Fund that are not required to be
invested as provided in Section 4.1 shall be used by the Trust only to acquire
Permitted Investments or as permitted by Section 7.2(f) or Section 7.2(u).
4.3 OTHER INVESTMENT RESTRICTIONS
Notwithstanding anything contained in this Indenture, under no
circumstances shall the Trustee acquire any investment which (a) would result in
the cost amount to the Trust of all "foreign property" (as defined in the Tax
Act) which is held by the Trust to exceed the amount prescribed by Regulation
5000(l) of the regulations to the Tax Act, (b) is a "small business security" as
that term is used in Part L1 of the Regulations to the Tax Act, or (c) would
result in the Trust not being considered either a "unit trust" or a "mutual fund
trust" for purposes of the Tax Act. The Trustee may consult with and receive
direction from the Corporation with respect to any investment to ensure
compliance with this provision.
ARTICLE 5
DISTRIBUTIONS
5.1 DETERMINATION OF NET INCOME OF THE TRUST
In this Article 5, the "Net Income of the Trust" for the
period ending on a Distribution Record Date shall be the amount calculated, for
the period commencing immediately following the preceding Distribution Record
Date (or, for the first Distribution Record Date, the period commencing on the
date hereof) and ending on such Distribution Record Date, on the following
basis:
(a) any amounts received pursuant to the NPI and the Direct Royalties, any
interest or other income from Permitted Investments, ARTC received by
the Trust and other Crown charges that are not deductible by the
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Corporation for income tax purposes and that are reimbursed by the
Trust to the Corporation shall be included in Net Income of the Trust
on an accrual basis and shall accrue from day to day;
(b) dividends on the Shares or any other dividends on securities of the
Corporation shall be included in Net Income of the Trust when received
including dividends deemed to have been received on such Shares or
securities pursuant to the Tax Act; and
(c) all expenses and liabilities of the Trust, including Debt Service
Charges, which are due or accrued and which are chargeable to income
shall be deducted in computing Net Income of the Trust.
Items of income or expense not provided for above or in Section 5.3 shall be
included in such calculation on such basis as may be considered appropriate by
the Trustee upon the recommendation of the Corporation.
5.2 NET INCOME OF THE TRUST TO BECOME PAYABLE
The Trustee may, upon the recommendation of the Corporation,
on or before any Distribution Record Date, declare payable to the Unitholders on
that Distribution Record Date all or any part of the Net Income of the Trust for
the period ending on that Distribution Record Date determined in accordance with
Section 5.1. The share of each Unitholder in the amount so payable shall be the
Pro Rata Share of such Unitholder determined as at that Distribution Record
Date; and subject to Section 5.7, such amount shall be payable on that
Distribution Record Date. Notwithstanding the foregoing, the amount of any Net
Income of the Trust that is determined by the Trustee to be required to be
retained by the Trust in order to pay any tax liability of the Trust shall not
be payable by the Trust to Unitholders.
5.3 NET REALIZED CAPITAL GAINS TO BECOME PAYABLE
The Trustee may, on or before any Distribution Record Date,
declare payable to the Unitholders on that Distribution Record Date all or part
of the net realized capital gains of the Trust to the extent not previously
declared payable. The share of each Unitholder in the amount so payable shall be
the Pro Rata Share of such Unitholder determined as at that Distribution Record
Date; and subject to Section 5.7, such amount shall be payable on that
Distribution Record Date. For the purposes of this Article 5, "net realized
capital gains" of the Trust means the total of all capital gains realized by the
Trust less the total of all capital losses realized by the Trust.
5.4 NET INCOME AND NET REALIZED CAPITAL GAINS FOR INCOME TAX
PURPOSES TO BECOME PAYABLE
On December 31 of each year, an amount equal to the Net Income
of the Trust for such year (excluding net realized capital gains) determined in
accordance with the Tax Act, other than paragraph 82(1)(b) thereof, to the
extent not previously payable pursuant to Section 5.2 on any Distribution Record
Date in the year (including December 31 of that fiscal year) to any Unitholder,
shall be declared payable to Unitholders as at the end of that year. The share
of each Unitholder in the amount so payable shall be the Pro Rata Share of such
Unitholder determined as at the end of such year.
On December 31 of each fiscal year, an amount equal to the net
realized capital gains of the Trust, to the extent not previously payable
pursuant to Section 5.3 on any Distribution Record Date or pursuant to this
paragraph on any prior December 31, shall be declared payable to Unitholders as
at the end of that fiscal year. The share of each Unitholder in the amount so
payable shall be the Pro Rata Share of such Unitholder determined as at the end
of such year.
Any amounts payable pursuant to this Section 5.4 may, at the
option of the Trustee, be paid through a distribution of additional Trust Units
having a value equal to the amount payable. For the purposes of this Section
5.8, the value of the additional Trust Units issued shall be determined using
the closing trading price (or, if there was no trade, the average of the last
bid and the last ask prices) of the Trust Units on December 31 (or, if December
31 is not a Business Day, on the last preceding Business Day) on the principal
stock exchange where the Trust Units are listed or, if no so listed, such other
value as the Trustee shall determine.
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5.5 OTHER AMOUNTS
Any amounts not otherwise payable to Unitholders prior to the
end of a particular fiscal year of the Trust pursuant to the provisions of
Article 5 may be declared by the Trustee, upon the recommendation of the
Corporation, to be payable to Unitholders in the same manner as provided for in
Section 5.2.
5.6 ENFORCEMENT
Each Unitholder shall have the right to enforce payment of any
amount payable to the Unitholder under this Article 5 (or a distribution of
additional Trust Units under Section 5.8, if applicable) at the time the amount
became payable unless a Payment Date is specified under Section 5.7 in respect
of such amount payable, in which case the right to enforce payment shall arise
at the later of the time the amount became payable and the applicable Payment
Date specified under Section 5.7.
5.7 PAYMENT OF AMOUNTS PAYABLE
Amounts payable to Unitholders pursuant to Sections 5.2 and
5.3 may be paid by the Trust on any date (the "Payment Date") specified by the
Trustee as the applicable Distribution Record Date, or a day within 30 days
after the applicable Distribution Record Date and in the same calendar year.
5.8 DISTRIBUTION OF ADDITIONAL TRUST UNITS
Where after the last Distribution Record Date and on or before
the next Distribution Record Date an amount or amounts of cash has or have been
or is or are being paid under Section 18.3 in respect of Trust Units tendered
for redemption, the distribution payable to Unitholders on such next
Distribution Record Date shall include a distribution of additional Trust Units
having a value equal to the aggregate of such amounts, in which case the amount
of cash to be distributed on the distribution shall be reduced by the aggregate
of such amounts. In addition, if on any Distribution Record Date the Trust does
not have cash in an amount sufficient to pay the full distribution to be made on
such Distribution Record Date in cash, the distribution payable to Unitholders
on such Distribution Record Date may, at the option of the Trustee, include a
distribution of additional Trust Units having a value equal to the cash
shortfall, in which case the amount of cash to be distributed on the
distribution shall be reduced by the amount of such cash shortfall. For the
purposes of this Section 5.8, the value of the additional Trust Units to be
issued shall be determined using the closing trading price (or if there was no
trade, the average of the last bid and the last ask prices) of the Trust Units
on the Distribution Record Date (or, if the Distribution Record Date is not a
Business Day, on the last Business Day preceding the Distribution Record Date)
on the principal stock exchange where the Trust Units are listed or, if not so
listed, such other value as the Trustee shall determine.
5.9 WITHHOLDING TAXES
For greater certainty, in the event that withholding taxes are
exigible on any distributions or redemption amounts distributed under this
Indenture, the Trustee shall withhold the withholding taxes required and shall
promptly remit such taxes to the appropriate taxing authority. In the event that
withholding taxes are exigible on any distributions or redemption amounts
distributed under this Indenture and the Trustee is, or was, unable to withhold
taxes from a particular distribution to a Unitholder or has not otherwise
withheld taxes on past distributions to the Unitholder, the Trustee shall be
permitted to withhold amounts from other distributions to satisfy the Trustee's
withholding tax obligations.
ARTICLE 6
APPOINTMENT, RESIGNATION AND REMOVAL OF TRUSTEE
6.1 TRUSTEE'S TERM OF OFFICE
Subject to Sections 6.2 and 6.3, Valiant Trust Company is
hereby appointed as Trustee hereunder for an initial term of office which shall
expire upon the conclusion of the first annual meeting of Unitholders. The
Unitholders shall, at the first annual meeting of the Unitholders, re-appoint,
or appoint a successor to the Trustee,
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and thereafter, the Unitholders shall reappoint or appoint a successor to the
Trustee on each successive annual meeting of Unitholders following the
reappointment or appointment of the successor to the Trustee. Any such
reappointment or appointment shall be made either by an Ordinary Resolution at
such meeting of Unitholders or shall be made in the manner set out in Section
6.4. Notwithstanding the foregoing, if a Trustee is not reappointed at the
meeting of Unitholders held immediately before the term of office of such
Trustee expires and if no successor to such Trustee is appointed at that
meeting, such Trustee shall continue to hold the office of Trustee under this
Indenture until a successor has been appointed under Section 6.4.
6.2 RESIGNATION OF TRUSTEE
The Trustee may resign from the office of trustee hereunder on
giving not less than 60 days' notice in writing to the Corporation; provided
that no such resignation shall be effective until (i) the appointment of, and
acceptance of such appointment by, a new Trustee in the place of the resigning
Trustee has been made in the manner set out in Section 6.4, and (ii) the legal
and valid assumption by the new Trustee of all obligations of the Trustee
related hereto in the same capacities as the resigning Trustee.
6.3 REMOVAL OF TRUSTEE
The Trustee shall be removed by notice in writing delivered by
the Corporation to the Trustee in the event that, at any time, the Trustee shall
no longer satisfy all of the requirements in Section 6.6, or shall be declared
bankrupt or insolvent, or shall enter into liquidation, whether compulsory or
voluntary (and not being merely a voluntary liquidation for the purposes of
amalgamation or reconstruction), or if the assets of the Trustee shall otherwise
become liable to seizure or confiscation by any public or governmental
authority, or if the Trustee shall otherwise become incapable of performing, or
shall fail in any material respect to perform its responsibilities under this
Indenture or as a result of a material increase in the fees charged by the
Trustee. No decision to remove a Trustee under this Section 6.3 shall become
effective until (i) approved by a Special Resolution at a meeting of Unitholders
duly called for that purpose (ii) the appointment of, and acceptance of such
appointment by, a new Trustee under Section 6.4 in the place of the Trustee to
be removed, and (iii) the legal and valid assumption by the new Trustee of all
obligations of the Trustee related hereto in the same capacities as the
resigning Trustee.
6.4 APPOINTMENT OF SUCCESSOR TO TRUSTEE
(a) A successor Trustee to a Trustee which has been removed by a Special
Resolution of Unitholders under Section 6.3, shall be appointed by an
Ordinary Resolution at a meeting of Unitholders duly called for that
purpose, provided the successor meets the requirements of Section 6.6.
(b) Subject to Section 6.6, the Corporation may appoint a successor to any
Trustee which has been removed by a Special Resolution of the
Unitholders under Section 6.3, or which has not been reappointed under
Section 6.1, if the Unitholders fail to do so at such meeting.
(c) Subject to Section 6.6, the Corporation may appoint a successor to any
trustee which has given a notice of resignation under Section 6.2.
No appointment of any successor Trustee shall be effective until such successor
Trustee shall have complied with the provisions of Section 6.2(ii).
6.5 FAILURE TO APPOINT SUCCESSOR
In the event that no successor Trustee to a Trustee who has
delivered a notice of resignation in accordance with Section 6.2, or who has
received notice of removal in accordance with Section 6.3, has accepted an
appointment within 120 days after the receipt by the Corporation of the notice
of resignation, or 60 days after the receipt by the Trustee of the notice of
removal, the Trustee, the Corporation or any Unitholder may apply to a court of
competent jurisdiction for the appointment of a successor to the Trustee. The
appointment of such successor by such court shall not require the approval of
Unitholders.
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6.6 QUALIFICATIONS OF TRUSTEE
The Trustee and any successor to the Trustee or new Trustee
appointed under this Article 6 shall be a corporation incorporated under the
laws of Canada or of a province thereof and shall be a resident of Canada for
the purposes of the Tax Act. Such corporation must at all times when it is the
Trustee be registered under the laws of the Province of Alberta to carry on the
business of a trust company and must have undertaken in writing to discharge all
of the obligations and responsibilities of the Trustee under this Indenture.
ARTICLE 7
CONCERNING THE TRUSTEE
7.1 POWERS OF THE TRUSTEE AND THE CORPORATION
(a) Subject to the terms and conditions of this Indenture, the Trustee may
exercise from time to time in respect of the Trust Fund any and all
rights, powers and privileges that could be exercised by a beneficial
owner thereof except as specifically designated in Subsection (b)
below. The responsibilities of the Trustee hereunder are however
limited to those specific powers granted to it (subject to delegations
to the Corporation) and the Trustee has no obligations to Unitholders
or to the Corporation beyond the obligations specifically set out
herein.
(b) The Corporation shall exercise from time to time any and all rights,
powers and privileges in relation to all matters relating to the
maximization of Unitholder value in the context of a response to an
offer for Trust Units or for all or substantially all of the property
and assets of the Trust or the Corporation or any subsidiary of the
Corporation or the Trust (an "Offer") including (i) any Unitholder
rights protection plan either prior to or during the course of any
Offer; (ii) any defensive action either prior to or during the course
of any Offer; (iii) the preparation of any "Directors' Circular" in
response to any Offer; (iv) consideration on behalf of Unitholders and
recommendations to Unitholders in response to any Offer; (v) any
regulatory or court action in respect of any related matters and (vi)
the carriage of all related and ancillary matters; and the Corporation
accepts such responsibility and agrees that, in respect of such
matters, it shall carry out its functions honestly, in good faith and
in the best interests of the Trust and the Unitholders and, in
connection therewith, shall exercise that degree of care, diligence and
skill that a reasonably prudent person would exercise in comparable
circumstances. The Corporation may, and if directed by the Corporation
in writing, the Trustee shall, execute any agreements on behalf of the
Trust as the Corporation shall have authorized within the scope of the
exercise of any such rights, powers or privileges.
7.2 SPECIFIC POWERS AND AUTHORITIES
Subject only to the express limitations contained in this
Indenture and in addition to any powers and authorities conferred by this
Indenture (including, without limitation, Section 7.1 hereof) or which the
Trustee may have by virtue of any present or future statute or rule of law, the
Trustee, without any action or consent by the Unitholders, shall have the
following powers and authorities which may be exercised by it from time to time
or delegated by it, as herein provided, in its sole judgment and discretion and
in such manner and upon such terms and conditions as it may from time to time
deem proper, provided that the exercise of such powers and authorities does not
adversely affect the status of the Trust as a "unit trust" and a "mutual fund
trust" for the purposes of the Tax Act:
(a) to accept subscriptions for Trust Units received by the Trust and to
issue Trust Units pursuant thereto;
(b) to maintain books and records;
(c) to provide timely reports to Unitholders in accordance with the
provisions hereof;
(d) to effect payment of distributions to Unitholders;
(e) to apply for ARTC;
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(f) to deposit funds of the Trust in interest-bearing accounts in banks,
the Alberta Treasury Branch or trust companies whose short term
obligations constitute Permitted Investments, including those of the
Trustee, the same to be subject to withdrawal on such terms and in such
manner and by such person or persons (including any one or more
officers, agents or representatives) as the Trustee may determine;
(g) to, directly or indirectly, borrow money from or incur indebtedness to
any person and in connection therewith, to guarantee, indemnify or act
as a surety with respect to payment or performance of any indebtedness,
liabilities or obligation of any kind of any person, including, without
limitation, the Corporation and any subsidiary of the Trust (as defined
in the SECURITIES ACT (Alberta)); to enter into any Credit Agreement
and any other obligations on behalf of the Trust; or enter into any
subordination or postponement agreement on behalf of the Trust or any
other person, and to assign, charge, pledge, hypothecate, convey,
transfer, mortgage, subordinate, and grant any security interest,
mortgage or encumbrance over or with respect to all or any of the Trust
Fund or to subordinate or postpone the interests of the Trust in the
Trust Fund to any other person;
(h) to possess and exercise all the rights, powers and privileges
pertaining to the ownership of all or any part of the assets of the
Trust, to the same extent that an individual might, unless otherwise
limited herein, and, without limiting the generality of the foregoing,
to vote or give any consent, request or notice, or waive any notice,
either in person or by proxy or power of attorney, with or without
power of substitution, to one or more persons, which proxies and power
of attorney may be for meetings or action generally or for any
particular meeting or action and may include the exercise of
discretionary power;
(i) where reasonably required, to engage or employ any persons as agents,
representatives, employees or independent contractors (including,
without limitation, investment advisers, registrars, underwriters,
accountants, lawyers, appraisers, brokers or otherwise) in one or more
capacities;
(j) to collect, ▇▇▇ for and receive all sums of money coming due to the
Trust, and to engage in, intervene in, prosecute, join, defend,
compromise, abandon or adjust, by arbitration or otherwise, any
actions, suits, proceedings, disputes, claims, demands or other
litigation relating to the Trust, the assets of the Trust or the
Trust's affairs, to enter into agreements therefor, whether or not any
suit is commenced or claim accrued or asserted and, in advance of any
controversy, to enter into agreements regarding the arbitration,
adjudication or settlement thereof, provided that prior to taking any
such action the Trustee may require from the Corporation a specific
indemnity in relation thereto and funding with respect to the expenses
or costs associated with such action. The Trustee shall in any event be
reimbursed by the Corporation for all costs and expenses incurred in
respect of the matters provided for in this Subsection;
(k) to arrange for insurance contracts and policies insuring the assets of
the Trust against any and all risks and insuring the Trust and/or any
or all of the Trustee or the Unitholders against any and all claims and
liabilities of any nature asserted by any person arising by reason of
any action alleged to have been taken or omitted by the Trust or by the
Trustee or Unitholders;
(l) to cause legal title to any of the assets of the Trust to be held by
and/or in the name of the Trustee, or except as prohibited by law, by
and/or in the name of the Trust, or any other person, on such terms, in
such manner, with such powers in such person as the Trustee may
determine and with or without disclosure that the Trust or the Trustee
is interested therein, provided that should legal title to any of the
assets of the Trust be held by and/or in the name of any person other
than the Trustee or the Trust, the Trustee shall require such person to
execute a trust agreement acknowledging that legal title to such assets
is held in trust for the benefit of the Trust;
(m) to make, execute, acknowledge and deliver any and all deeds, contracts,
waivers, releases or other documents of transfer and any and all other
instruments in writing necessary or proper for the accomplishment of
any of the powers herein granted;
(n) to pay out of the Trust Fund the Trust Expenses;
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(o) except as prohibited by law, to delegate any or all of the management
and administrative powers and duties of the Trustee to the Corporation
or to any one or more agents, representatives, officers, employees,
independent contractors or other persons without liability to the
Trustee except as provided in this Indenture;
(p) to guarantee or become an indemnitor or surety for the obligations,
indebtedness or liabilities of the Corporation or any other Affiliate
of the Trust, including, without limitation, pursuant to any Credit
Agreement or any other debt for borrowed money or obligations resulting
or arising from hedging instruments incurred by the Corporation or any
such Affiliate, as the case may be, and to pledge securities issued by
the Corporation or the Affiliate, as the case may be, or grant security
interests over all or any portion of the Trust Fund, as security for
such guarantee, indemnity or surety provided that such guarantee,
indemnity or surety is incidental to the Trust's direct or indirect
investment in the Corporation or any such Affiliate or the business and
affairs (existing or proposed) of the Corporation or any such
Affiliate, and each such guarantee, indemnity or surety entered into by
the Trustee shall be binding upon, and enforceable in accordance with
its terms against, the Trust;
(q) notwithstanding any limitations contained in this Indenture,
to enter into on behalf of the Trust and observe and perform
its obligations and the obligations of the Trust under any
Credit Agreement or any other agreements with any Lender,
including, without limitation, compliance with any provisions
thereof which may restrict the powers of the Trustee hereunder
or preclude the Trustee from acting in certain circumstances
on resolutions of the Unitholders as might otherwise be
provided for hereunder, and each such agreement entered into
by the Trustee shall be binding upon, and enforceable in
accordance with its terms against, the Trust;
(r) to enter into a subordination or postponement agreement with any Lender
to the Trust, the Corporation or any Affiliate of the Trust pursuant to
which the Trust agrees to subordinate or postpone indebtedness owing to
it or security interests granted to it to indebtedness or security
interests of any such Lender, and which agreement may further provide,
without limitation, that in the event of a default by the Corporation
or any such Affiliate to any of its Lenders, including any such default
in connection with credit or debt facilities, swap or hedging
agreements or any other ancillary facilities, none of the Corporation
or any such Affiliate will make any further payments in respect of such
obligations to the Trust and the Trust will not make any further cash
distributions to Unitholders, and each such subordination or
postponement entered into by the Trustee shall be binding upon, and
enforceable in accordance with its terms against, the Trust;
(s) to do all such other acts and things as are incidental to this Section
7.2, and to exercise all powers which are necessary or useful to carry
on the business of the Trust, to promote any of the purposes for which
the Trust is formed and to carry out the provisions of this Indenture;
(t) to use reasonable efforts to ensure that the Trust complies at all
times with the requirements of Subsections 108(2) and 132(6) of the Tax
Act;
(u) to advance any amount to the Corporation or other Affiliate of the
Trust as a loan, including amounts in the Capital Fund which shall be
advanced to the Corporation to finance future acquisition and
development of the Properties;
(v) to enter into, perform and enforce the Material Contracts;
(w) without limiting any of the provisions hereof, to pay out of the Trust
Fund:
(i) Agent's Fees;
(ii) the purchase price of the NPI and the Direct Royalties, the
Deferred Purchase Price Obligations and amounts in respect of
Permitted Investments and Subsequent Investments; and
(iii) Issue Expenses;
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all as contemplated by the Offering Documents, this Indenture, the NPI
Agreements or the other Material Contracts;
(x) to charge, mortgage, hypothecate and/or pledge on behalf of the Trust
all or any of the currently owned or subsequently acquired monies,
properties and assets comprising the Trust Fund to secure any monies
borrowed, and to execute and deliver a guarantee, indemnity, surety or
other assurance in favour of any Lender for the obligations of the
Corporation or any Affiliate of the Trust or the Corporation and any
security, deposit or offset agreements or arrangements in respect of
any such guarantee, indemnity or surety or assurance and each such
agreement entered into by the Trustee shall be binding upon, and
enforceable in accordance with its terms against, the Trust;
(y) to convey the NPI and/or the Direct Royalties in connection with any
security to or realization by any Lender upon the Properties;
(z) to form any subsidiary of the Trust for the purpose of making any
Subsequent Investment and entering into or amending any unanimous
shareholders agreement or other agreement on such terms as may be
approved by the board of directors of the Corporation;
(aa) to provide indemnities for the directors and officers of any
Affiliates;
(bb) to hold the Notes issued by the Corporation;
(cc) to distribute Notes as provided in Article 18;
(dd) to vote Subsequent Investments held by the Trust which carry voting
rights in such manner as may be approved by the board of directors of
the Corporation;
(ee) to loan monies to the Corporation or any Affiliate of the Trust, to
take security interests with respect to all or any of the assets of the
Corporation or such Affiliate and to allow such debt or security to be
subordinate or postponed to any other debt or security; and
(ff) without limit as to amount, cost, or conditions of reimbursement, to
issue any type of debt securities or convertible debt securities and to
borrow money or incur any other form of indebtedness for the purpose of
carrying out the purposes of the Trust or for other expenses incurred
in connection with the Trust and for such purposes may draw, make,
execute and issue promissory notes and other negotiable and
non-negotiable instruments or securities and evidences of indebtedness,
secure the payment of sums so borrowed or indebtedness incurred and
mortgage, pledge, assign or grant a security interest in any money
owing to the Trust or engage in any other means of financing the Trust.
7.3 RESTRICTIONS ON THE TRUSTEE'S POWERS
Notwithstanding anything contained in this Indenture:
(a) the Trustee shall not vote the Shares with respect to the election of
directors of the Corporation, the appointment of auditors of the
Corporation, or the approval of the Corporation's financial statements
except in accordance with an Ordinary Resolution adopted at an annual
meeting of Unitholders;
(b) the Trustee shall not, after the Date of Closing, vote the Shares to
authorize:
(i) any sale, lease or other disposition of, or any interest in,
all or substantially all of the assets of the Corporation,
except in conjunction with an internal reorganization of the
direct or indirect assets of the Corporation as a result of
which either the Corporation or the Trust has the same, or
substantially similar, interest, whether direct or indirect,
in the assets as the interest, whether direct or indirect,
that it had prior to the reorganization;
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(ii) any statutory amalgamation of the Corporation with any other
corporation, except in conjunction with an internal
reorganization as referred to in paragraph (i) above;
(iii) any statutory arrangement involving the Corporation except in
conjunction with ain internal reorganization as referred to in
paragraph (i) above;
(iv) any amendment to the articles of the Corporation to increase
or decrease the minimum or maximum number of directors; or
(v) any material amendment to the articles of the Corporation to
change the authorized share capital or amend the rights,
privileges, restrictions and conditions attaching to any class
of the Corporation 's Shares in a manner which may be
prejudicial to the Trust;
without the approval of the Unitholders by Special Resolution at a
meeting of Unitholders called for that purpose.
7.4 BANKING
The banking activities of the Trust, or any part thereof,
shall be transacted with such financial institutions (including the Trustee or
an Affiliate thereof) or other persons carrying on a financial services business
as the Trustee may designate, appoint or authorize from time to time and all
such financial services business, or any part thereof, shall be transacted on
the Trust's behalf by such one or more officers of the Trustee and/or other
persons as the Trustee may designate, appoint or authorize from time to time
(who may be officers or employees of the Corporation) including, but without
restricting the generality of the foregoing, the operation of the Trust's
accounts; the making, signing, drawing, accepting, endorsing, negotiating,
lodging, depositing or transferring of any cheques, promissory notes, drafts,
bankers' acceptances, bills of exchange, letters of credit and orders for the
payment of money; the giving of receipts for and orders relating to any property
of the Trust; the execution of any agreement relating to any property of the
Trust; the execution of any agreement relating to any such financial services
business and defining the rights and powers of the parties hereto; and the
authorizing of any officer of such financial institution, or any trustee or
agent thereof to do any act or thing on the Trust's behalf to facilitate such
banking business.
7.5 STANDARD OF CARE
Except as otherwise provided herein, the Trustee shall
exercise its powers and carry out its functions hereunder as Trustee honestly,
in good faith and in the best interests of the Trust and the Unitholders and, in
connection therewith, shall exercise that degree of care, diligence and skill
that a reasonably prudent trustee would exercise in comparable circumstances,
subject to compliance by the Trustee with any agreements contemplated hereby
which may be binding on the Trustee or the Trust. Unless otherwise required by
law, the Trustee shall not be required to give bond, surety or security in any
jurisdiction for the performance of any duties or obligations hereunder. The
Trustee, in its capacity as trustee, shall not be required to devote its entire
time to the business and affairs of the Trust.
7.6 FEES AND EXPENSES
The Trustee shall be paid by the Corporation such fees as may
be agreed upon from time to time by the Corporation and the Trustee and if such
fees are not paid by the Corporation within 30 days after the date of any
invoice in respect thereof, the Trustee shall be entitled to have such fees paid
out of the Trust Fund. As part of the Trust Expenses, the Trustee may pay or
cause to be paid reasonable fees, costs and expenses incurred in connection with
the administration and management of the Trust, including (without limitation)
fees of auditors, lawyers, appraisers and other agents, consultants and
professional advisers employed by or on behalf of the Trust and the cost of
reporting or giving notices to Unitholders. All costs, charges and
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expenses (including any amounts payable to the Trustee under Section 7.8 or 7.9)
properly incurred by the Trustee on behalf of the Trust shall be payable by the
Corporation, and if any such costs, charges and expenses are not paid by the
Corporation within 30 days after the date of any invoice in respect thereof, the
Trustee shall be entitled to have such costs, charges and expenses paid out of
the Trust Fund. The Trustee shall have a lien on the Trust Fund (which shall
have priority over the interests of the Unitholders pursuant hereto) to enforce
payment of the fees, costs, expenses and other amounts payable or reimbursable
by the Trust to the Trustee.
7.7 LIMITATIONS ON LIABILITY OF TRUSTEE
The Trustee, its directors, officers, employees, shareholders
and agents shall not be liable to any Unitholder or any other person, in tort,
contract or otherwise, in connection with any matter pertaining to the Trust or
the Trust Fund, arising from the exercise by the Trustee of any powers,
authorities or discretion conferred under this Indenture, including, without
limitation, any action taken or not taken in good faith in reliance on any
documents that are, PRIMA FACIE, properly executed, any depreciation of, or loss
to, the Trust Fund incurred by reason of the sale of any asset, any inaccuracy
in any evaluation provided by any appropriately qualified person, any reliance
on any such evaluation, any action or failure to act of the Corporation, or any
other person to whom the Trustee has, with the consent of the Corporation,
delegated any of its duties hereunder, or any other action or failure to act
(including failure to compel in any way any former trustee to redress any breach
of trust or any failure by the Corporation to perform its duties under or
delegated to it under this Indenture or any other contract), unless such
liabilities arise out of the gross negligence, wilful default or fraud of the
Trustee or any of its directors, officers, employees, shareholders, or agents.
If the Trustee has retained an appropriate expert or adviser or Counsel with
respect to any matter connected with its duties under this Indenture or any
other contract, the Trustee may act or refuse to act based on the advice of such
expert, adviser or Counsel, and the Trustee shall not be liable for and shall be
fully protected from any loss or liability occasioned by any action or refusal
to act based on the advice of any such expert, adviser or Counsel. In the
exercise of the powers, authorities or discretion conferred upon the Trustee
under this Indenture, the Trustee is and shall be conclusively deemed to be
acting as Trustee of the assets of the Trust and shall not be subject to any
personal liability for any debts, liabilities, obligations, claims, demands,
judgments, costs, charges or expenses against or with respect to the Trust or
the Trust Fund.
7.8 INDEMNIFICATION OF TRUSTEE
The Trust (to the extent of the Trust Fund) is liable to, and
shall indemnify and save harmless the Trustee and each of its directors,
officers, employees, shareholders and agents in respect of:
(a) any liability and all costs, charges and expenses sustained or incurred
in respect of any action, suit or proceeding that is proposed or
commenced against the Trustee or against such directors, officers,
employees, shareholders or agents, as the case may be, for or in
respect of any act, omission or error in respect of the Trust and the
Trustee's execution of all duties and responsibilities and exercise of
all powers and authorities pertaining thereto; and
(b) all other costs, charges, taxes, penalties and interest in respect of
unpaid taxes; and
(c) all other expenses and liabilities sustained or incurred by the Trustee
in respect of the administration or termination of the Trust;
unless any of the foregoing arise out of the gross negligence, wilful default or
fraud of the Trustee or any of its directors, officers, employees, shareholders
or agents, in which case the provisions of this Section 7.8 shall not apply.
7.9 ENVIRONMENTAL INDEMNITY
The Trust (to the extent of the Trust Fund) is liable to, and
shall indemnify and save harmless, the Trustee, its directors, officers,
employees, shareholders and agents, and all of their successors and assigns
(collectively, the "Indemnified Parties") against any loss, expense, claim,
charge, damage, penalty, liability or asserted liability (including strict
liability and costs and expenses of abatement and remediation of spills or
releases of contaminants and liabilities of the Indemnified Parties to third
parties, including governmental agencies, in respect of bodily injuries,
property damage, damage to or impairment of the environment or any other injury
21
or damage and including liabilities of the Indemnified Parties to third parties
for the third parties' foreseeable and unforeseeable consequential damages)
incurred as a result of:
(a) the administration of the Trust created hereby, or
(b) the exercise by the Trustee of any rights or obligations hereunder,
and which result from or relate, directly or indirectly, to
(c) the presence or release or threatened presence or release of any
contaminants, by any means or for any reason, on or in respect of the
Properties, whether or not such presence or release or threatened
presence or release of the contaminants was under the control, care or
management of the Trust or the Corporation, or of a previous owner or
operator of a Property,
(d) any contaminant present on or released from any property adjacent to or
in the proximate area of the Properties,
(e) the breach or alleged breach of any federal, provincial or municipal
environmental law, regulation, bylaw, order, rule or permit by the
Trust or the Corporation or an owner or operator of a Property, or
(f) any misrepresentation or omission of a known fact or condition made by
the Corporation relating to any Property.
For the purpose of this Section 7.9, "liability" shall
include: (i) liability of an Indemnified Party for costs and expenses of
abatement and remediation of spills and releases of contaminants; (ii) liability
of an Indemnified Party to a third party to reimburse the third party for bodily
injuries, property damage and other injuries or damages which the third party
suffers, including (to the extent, if any, that the Indemnified Party is liable
therefor) foreseeable and unforeseeable consequential damages suffered by the
third party; and (iii) liability of the Indemnified Party for damage to or
impairment of the environment.
Notwithstanding the foregoing, the Trust shall not be liable
to indemnify an Indemnified Party against any loss, expense, claim, liability or
asserted liability to the extent resulting from the gross negligence, wilful
default or fraud of the Indemnified Party.
7.10 APPARENT AUTHORITY
No purchaser, transfer agent or other person dealing with the
Trustee or with any officer, employee or agent of the Trustee shall be bound to
make any inquiry concerning the validity of any transaction purporting to be
made by the Trustee or by such officer, employee or agent or make inquiry
concerning, or be liable for, the application of money or property paid, lent or
delivered to or on the order of the Trustee or of such officer, employee or
agent. Any person dealing with the Trustee in respect of any matter pertaining
to the Trust Fund and any right, title or interest therein shall be entitled to
rely on a certificate, statutory declaration or resolution executed or certified
on behalf of the Trustee as to the capacity, power and authority of any officer,
employee or any other person to act for and on behalf and in the name of the
Trust.
7.11 NOTICE TO UNITHOLDERS OF NON-ELIGIBILITY FOR
DEFERRED INCOME PLANS
If the Trustee becomes aware that the Trust Units have ceased
to be eligible investments for registered retirement savings plans, registered
retirement income funds, registered education savings plans and deferred profit
sharing plans (all within the meaning of the Tax Act) or any of such plans, the
Corporation shall give notice to Unitholders at their latest address as shown on
the register of Unitholders that Trust Units have ceased to be eligible
investments for such plans. Notwithstanding the foregoing, the Trustee and the
Corporation shall not be liable to the Trust or to any Unitholder for any costs,
expenses, charges, penalties or taxes imposed upon a Unitholder as a result of
or by virtue of a Trust Unit not being an eligible investment for any such plan,
22
notwithstanding any failure or omission of the Corporation to have given such
notice, provided the Trustee has complied with Section 7.5.
7.12 DECLARATION AS TO BENEFICIAL OWNERSHIP
The Trustee may require any Unitholder, as shown on the
register of Unitholders, to provide a declaration in a form prescribed by the
Corporation as to the beneficial ownership of Trust Units registered in such
Unitholder's name and as to the jurisdiction in which such beneficial owners are
resident.
7.13 CONDITIONS PRECEDENT TO TRUSTEE'S OBLIGATIONS TO ACT
The obligation of the Trustee to call any meeting pursuant to
Article 10 or to commence to wind up the affairs of the Trust pursuant to
Article 12 shall be conditional upon the Unitholders or another person
furnishing, when required by notice in writing by the Trustee, sufficient funds
to commence or continue such act, action or proceeding and indemnity (to the
extent sufficient funds for such purpose are not available in the Trust Fund)
reasonably satisfactory to the Trustee to protect and hold harmless the Trustee
against the costs, charges and expenses and liabilities to be incurred therein
and any loss and damage it may suffer by reason thereof and the obligation of
the Trustee to commence or continue any act, action or proceeding for the
purpose of enforcing the rights of the Trustee and of the Unitholders shall, if
required by notice in writing by the Trustee, be subject to the same conditions
as to funding and indemnity. None of the provisions contained in this Indenture
shall require the Trustee to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers unless indemnified as aforesaid.
7.14 SURVIVAL OF INDEMNITIES
All indemnities, all limitations of liability and all other
provisions for the protection of the Trustee provided for in this Trust
Indenture shall survive the termination of this Indenture under Article 12 and
the removal or resignation of the Trustee under Article 6.
7.15 TRUSTEE MAY HAVE OTHER INTERESTS
Subject to applicable securities laws, and without affecting
or limiting the duties and responsibilities or the limitations and indemnities
provided in this Indenture, the Trustee is hereby expressly permitted to
(a) be an Associate or an Affiliate of a person from or to whom assets of
the Trust have been or are to be purchased or sold;
(b) be, or be an Associate or an Affiliate of, a person with whom the Trust
or the Corporation contracts or deals or which supplies services to the
Trust or the Corporation;
(c) acquire, hold and dispose of, either for its own account or the
accounts of its customers, any assets not constituting part of the
Trust Fund, even if such assets are of a character which could be held
by the Trust, and exercise all rights of an owner of such assets as if
it were not a trustee;
(d) carry on its business as a trust company in the usual course while it
is the Trustee, including the rendering of trustee or other services to
other trusts and other persons for gain; and
(e) derive direct or indirect benefit, profit or advantage from time to
time as a result of dealing with the Trust or the relationships,
matters, contracts, transactions, affiliations or other interests
stated in this Section 7.15 without being liable to the Trust or any
Unitholder for any such direct or indirect benefit, profit or
advantage.
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Subject to applicable laws, none of the relationships, matters, contracts,
transactions, affiliations or other interests permitted above shall be, or shall
be deemed to be or to create, a material conflict of interest with the Trustee's
duties hereunder.
7.16 DOCUMENTS HELD BY TRUSTEE
Any securities, documents of title or other instruments that
may at any time be held by the Trustee subject to the trusts hereof may be
placed in the deposit vaults of the Trustee or of any chartered bank in Canada,
including an Affiliate of the Trustee, or deposited for safekeeping with any
such bank.
ARTICLE 8
DELEGATION OF POWERS
8.1 THE CORPORATION
Except as expressly prohibited by law, the Trustee may grant
or delegate to the Corporation such authority as the Trustee may in its sole
discretion deem necessary or desirable to effect the actual administration of
the duties of the Trustee under this Indenture, without regard to whether such
authority is normally granted or delegated by trustees. The Trustee may grant
broad discretion to the Corporation to administer and manage the day-to-day
operations of the Trust Fund, to act as agent for the Trust Fund, to execute
documents on behalf of the Trust Fund and to make executive decisions which
conform to general policies and general principles set forth herein or
previously established by the Trustee. The Corporation shall have the powers and
duties expressly provided for herein and in any other agreement providing for
the management or administration of the Trust including, without limitation, the
power to retain and instruct such appropriate experts or advisors to perform
those duties and obligations herein which it is not qualified to perform (and
the Corporation shall notify the Trustee of the name of the person or persons
retained or instructed and the terms and conditions thereof).
8.2 OFFERINGS AND OTHER MATTERS
The Trustee hereby delegates to the Corporation (through its
Board of Directors) responsibility for any or all matters relating to: (a) an
Offering including: (i) ensuring compliance with all applicable laws; (ii) the
content of any Offering Documents, the accuracy of the disclosure contained
therein, and the certification thereof; (iii) any subscription agreement or
underwriting or agency agreements providing for the sale of Trust Units or
securities convertible for or exchangeable into Trust Units or rights to Trust
Units; (iv) the adoption of a unitholder rights plan and without limitation
those matters set forth in Section 7.1(b) hereof; (iv) all matters concerning
any Underwriting Agreement providing for the sale of Trust Units or rights to
Trust Units; and (b) the terms of, and amendment from time to time of the
Material Contracts. The Corporation hereby accepts such delegation and agrees
that, in respect of such matters, it shall carry out its functions honestly, in
good faith and in the best interests of the Trust and the Unitholders and, in
connection therewith, shall exercise that degree of care, diligence and skill
that a reasonably prudent Person would exercise in comparable circumstances; the
Corporation, and if directed by the Corporation in writing, the Trustee shall,
execute any agreements on behalf of the Trust as the Corporation shall have
authorized within the scope of any authority delegated to it hereunder.
8.3 EXCLUSIONS FROM DELEGATION
Notwithstanding any other provision of this Indenture,
including without limitation Section 8.1 and Section 8.2, the duties and
obligations of the Trustee shall not be delegated to the Corporation or any
other person in relation to:
(a) without limiting the duties and obligations of the Transfer Agent
hereunder, the transfer and cancellation of certificates representing
Trust Units and the maintenance of registers of Unitholders;
(b) terminating this Indenture in accordance with the provisions hereof;
(c) the amendment to or waiver of the performance or breach of any
provision of this Indenture; or
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(d) the distribution of distributable income of the Trust.
8.4 POWER OF ATTORNEY
Without limiting any of the other provisions of this Article
8, the Trustee hereby delegates to the Corporation from time to time the full
power and authority, and constitutes the Corporation its true and lawful
attorney in fact, to sign on behalf of the Trust all rights plans, prospectuses,
annual information forms, management proxy circulars, other Offering Documents
and any other documents ancillary or similar thereto required to be signed by
the Trust from time to time, including any Agency Agreements, indemnity
agreements (pursuant to which the Trust and not the Trustee provides
indemnities) or documents ancillary or similar thereto.
8.5 LIABILITY OF TRUSTEE
The Trustee shall have no liability or responsibility for any
matters delegated to the Corporation hereunder or under any of the Material
Contracts, and the Trustee, in relying upon the Corporation and in entering into
the Material Contracts, shall be deemed to have complied with its obligations
under Section 7.5 and shall be entitled to the benefit of the indemnities,
limitations of liability and other protection provisions provided for herein.
ARTICLE 9
AMENDMENT
9.1 AMENDMENT
Except as specifically provided otherwise herein, the
provisions of this Indenture and the Administration Agreement, may only be
amended by the Trustee with the consent of the Unitholders by Special
Resolution.
Any of the provisions of this Indenture may be amended by the
Trustee at any time or times, without the consent, approval or ratification of
any of the Unitholders or any other person for the purpose of:
(a) ensuring that the Trust will comply with any applicable laws or
requirements of any governmental agency or authority of Canada or of
any province;
(b) ensuring that the Trust will satisfy the provisions of each of
subsections 108(2) and 132(6) of the Tax Act as from time to time
amended or replaced;
(c) ensuring that such additional protection is provided for the interests
of Unitholders as the Trustee may consider expedient;
(d) removing or curing any conflicts or inconsistencies between the
provisions of this Indenture or any supplemental indenture, any Direct
Royalties Sale Agreement and any other agreement of the Trust or any
Offering Document with respect to the Trust, or any applicable law or
regulation of any jurisdiction, provided that in the opinion of the
Trustee the rights of the Trustee and of the Unitholders are not
prejudiced thereby;
(e) providing for the electronic delivery by the Trust to Unitholders of
documents relating to the Trust (including annual and quarterly
reports, including financial statements, notices of Unitholder meetings
and information circulars and proxy related materials) once applicable
securities laws have been amended to permit such electronic delivery in
place of normal delivery procedures, provided that such amendments to
the Trust Indenture are not contrary to or do not conflict with such
laws;
(f) making such other amendments which in the opinion of the Trustee are
necessary or desirable as a result of changes or proposed changes in
taxation laws or the administration or enforcement thereof;
25
(g) changing the situs of, or the laws governing the Trust which, in the
opinion of the Trustee is desirable in order to provide Unitholders
with the benefit of any, legislation limiting their liability;
(h) curing, correcting or rectifying any ambiguities, defective or
inconsistent provisions, errors, mistakes or omissions, provided that
in the opinion of the Trustee the rights of the Trustee and of the
Unitholders are not prejudiced thereby; and
(i) making any modification in the form of Trust Unit Certificates to
conform with the provisions of this Indenture, or any other
modifications, provided the rights of the Trustee and of the
Unitholders are not prejudiced thereby.
Notwithstanding the foregoing, no amendment shall reduce the percentage of votes
required to be cast at a meeting of the Unitholders for the purpose of amending
this Section 9.1 without the consent of the holders of all of the Trust Units
then outstanding.
ARTICLE 10
MEETINGS OF UNITHOLDERS
10.1 ANNUAL AND SPECIAL MEETINGS OF UNITHOLDERS
Annual meetings of the Unitholders shall be called by the
Trustee, commencing in 2003, on a day, at a time and at a place to be set by the
Corporation. The business transacted at such meetings shall include the
transaction of such business as Unitholders may be entitled to vote upon as
hereinafter provided in this Article 10, or as the Corporation may determine.
Special meetings of the Unitholders may be called at any time by the Corporation
and shall be called by the Corporation upon a written request of Unitholders
holding in the aggregate not less than 20% of the Trust Units then outstanding,
such request specifying the purpose or purposes for which such meeting is to be
called. Meetings of Unitholders shall be held in the City of Calgary, or at such
other place as the Corporation shall designate. The Chairman of any annual or
special meeting shall be a person designated by the Corporation for the purpose
of such meeting except that, on the motion of any Unitholder, any person may be
elected as Chairman by a majority of the votes cast at the meeting instead of
such designated person or in the event that no person shall be designated by the
Corporation.
10.2 NOTICE OF MEETINGS
Notice of all meetings of Unitholders shall be given by
unregistered mail postage prepaid addressed to each Unitholder at his registered
address, mailed at least 21 days and not more than 50 days before the meeting.
Such notice shall set out the time when, and the place where, such meeting is to
be held and shall specify the nature of the business to be transacted at such
meeting in sufficient detail to permit a Unitholder to form a reasoned judgment
thereon, together with the text of any resolution in substantially final form
proposed to be passed. Any adjourned meeting may be held as adjourned without
further notice. The accidental omission to give notice to or the non-receipt of
such notice by the Unitholders shall not invalidate any resolution passed at any
such meeting.
10.3 QUORUM
At any meeting of the Unitholders, subject as hereinafter
provided, a quorum shall consist of two or more persons either present in person
or represented by proxy and representing in the aggregate not less than 5% of
the outstanding Trust Units. If a quorum is not present at the appointed place
on the date for which the meeting is called within one half hour after the time
fixed for the holding of such meeting, the meeting, if convened on the
requisition of Unitholders, shall be dissolved, but in any other case it shall
stand adjourned to such day being not less than fourteen (14) days later and to
such place and time as may be appointed by the Chairman of the meeting. If at
such adjourned meeting a quorum as above defined is not present, the Unitholders
present either personally or by proxy shall form a quorum, and any business may
be brought before or dealt with at such an adjourned meeting which might have
been brought before or dealt with at the original meeting in accordance with the
notice calling the same.
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10.4 VOTING RIGHTS OF UNITHOLDERS
Only Unitholders of record shall be entitled to vote and each
Trust Unit shall entitle the holder or holders of that Trust Unit to one vote at
any meeting of the Unitholders. Every question submitted to a meeting, other
than a Special Resolution, shall, unless a poll vote is demanded, be decided by
a show of hands vote, on which every person present and entitled to vote shall
be entitled to one vote. At any meeting of Unitholders, any holder of Trust
Units entitled to vote thereat may vote by proxy and a proxy need not be a
Unitholder, provided that no proxy shall be voted at any meeting unless it shall
have been placed on file with the Trustee, or with such agent of the Trustee as
the Trustee may direct, for verification prior to the commencement of such
meeting no later than the time for which proxies are to have been received as
set forth in the notice of such meeting. If approved by the Trustee, proxies may
be solicited in the name of the Trustee. When any Trust Unit is held jointly by
several persons, any one of them may vote at any meeting in person or by proxy
in respect of such Trust Unit, but if more than one of them shall be present at
such meeting in person or by proxy, and such joint owners of their proxies so
present disagree as to any vote to be cast, the joint owner present or
represented whose name appears first in the register maintained pursuant to
Section 11.3 shall be entitled to cast such vote.
10.5 RESOLUTIONS
(a) The Trustee shall in accordance with an Ordinary Resolution passed by
the Unitholders: (i) change the Auditors as provided in Section 15.3;
and (ii) elect the directors of the Corporation.
(b) The Trustee shall in accordance with a Special Resolution passed by the
Unitholders:
(i) subject to Section 9.1, amend this Indenture;
(ii) subdivide or consolidate Trust Units;
(iii) sell or agree to sell the property of the Trust Fund as an
entirety or substantially as an entirety;
(iv) resign if removed pursuant to Section 6.3; and
(v) commence to wind-up and wind-up the affairs of the Trust if
requested pursuant to Section 12.2.
Except with respect to the above matters set out in this Section 10.5 and the
matters set forth in Sections 6.3, 6.4 and 12.2 hereof, no action taken by the
Unitholders or resolution of the Unitholders at any meeting shall in any way
bind the Trustee. Notwithstanding the foregoing, the Trust, without the prior
approval of the Unitholders whether by Special Resolution or otherwise, shall be
permitted to sell, assign or otherwise transfer any property of the Trust in
circumstances where any such sale, assignment or transfer is effected between or
among the Trust and any one or more of:
(A) any direct or indirect wholly-owned subsidiary of the
Trust;
(B) any trust, the only beneficiaries of which are the
Trust or any direct or indirect wholly-owned
subsidiary of the Trust;
(C) any partnership, the only partners of which are the
Trust and/or any of the persons referred to in (A) or
(B) above and/or
(D) the Corporation,
provided that in opinion of the board of directors of the Corporation, such
sale, assignment or transfer of property is in the best interests of the Trust.
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10.6 MEANING OF "SPECIAL RESOLUTION"
The expression "Special Resolution" when used in this
Indenture means, subject as hereinafter in this Article provided, a resolution
proposed to be passed as a special resolution at a meeting of Unitholders
(including an adjourned meeting) duly convened for the purpose and held in
accordance with the provisions of this Article at which two or more holders of
at least 10% of the aggregate number of Trust Units then outstanding are present
in person or by proxy and passed by the affirmative votes of the holders of not
less than 66 2/3% of the Trust Units represented at the meeting and voted on a
poll upon such resolution.
If, at any such meeting, the holders of 10% of the aggregate
number of Trust Units outstanding are not present in person or represented by
proxy within 30 minutes after the time appointed for the meeting, then the
meeting, if convened by or on the requisition of Unitholders, shall be
dissolved; but in any other case it shall stand adjourned to such date, being
not less than 21 nor more than 60 days later, and to such place and time as may
be appointed by the chairman. Not less than ten days' prior notice shall be
given of the time and place of such adjourned meeting in the manner provided in
Section 10.2. Such notice shall state that at the adjourned meeting the
Unitholders present in person or represented by proxy shall form a quorum but it
shall not be necessary to set forth the purposes for which the meeting was
originally called or any other particulars. At the adjourned meeting, the
Unitholders present in person or represented by proxy shall form a quorum and
may transact the business for which the meeting was originally convened, and a
resolution proposed at such adjourned meeting and passed by the requisite vote
as provided in this Section 10.6 shall be a Special Resolution within the
meaning of this Indenture, notwithstanding that the holders of less than 10% of
the aggregate number of Units then outstanding are present or represented by
proxy at such adjourned meeting.
Votes on a Special Resolution shall always be given on a poll
and no demand for a poll on a Special Resolution shall be necessary. No Special
Resolution changing or amending any provision hereof relating to or affecting:
(i) the Trustee, including the qualification, powers, authorities, appointment,
removal or resignation thereof; or (ii) the provisions of Articles 9, 10 or 12
shall be effective prior to 60 days from the adoption thereof in accordance with
the provisions hereof or such shorter period as may be approved by Unitholders.
10.7 RECORD DATE FOR VOTING
For the purpose of determining the Unitholders who are
entitled to vote or act at any meeting or any adjournment thereof, the Trustee
may fix a date not more than 50 days and not less than 21 days prior to the date
of any meeting of Unitholders as a record date for the determination of
Unitholders entitled to vote at such meeting or any adjournment thereof, and any
Unitholder who was a Unitholder at the time so fixed shall be entitled to vote
at such meeting or any adjournment thereof even though he has since that time
disposed of his Trust Units, and no Unitholder becoming such after that time
shall be so entitled to vote at such meeting or any adjournment thereof. In the
event that the Trustee does not fix a record date for any meeting of
Unitholders, the record date for such meeting shall be the Business Day
immediately preceding the date upon which notice of the meeting is given as
provided under Section 10.2.
10.8 BINDING EFFECT OF RESOLUTIONS
Every Ordinary Resolution and every Special Resolution passed
in accordance with the provisions of this Indenture at a meeting of Unitholders
shall be binding upon all the Unitholders, whether present at or absent from
such meeting, and each and every Unitholder shall be bound to give effect
accordingly to every such Ordinary Resolution and Special Resolution.
10.9 SOLICITATION OF PROXIES
A Unitholder shall have the right to appoint a proxy to attend
and act for the Unitholder at any meeting of Unitholders. The Trustee shall
solicit proxies from Unitholders in connection with all meetings of Unitholders.
In connection therewith, the Trustee shall comply, as near as may be possible,
with all provisions of the BUSINESS CORPORATIONS ACT (Alberta) and the
requirements of Canadian securities legislation applicable to the solicitation
of proxies.
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10.10 NO BREACH
Notwithstanding any provisions of this Indenture, Unitholders
shall have no power to effect any amendment hereto which would require the
Trustee to take any action or conduct the affairs of the Trust in a manner which
would constitute a breach or default by the Trust or the Trustee under any
agreement binding on or obligation of the Trust or the Trustee.
ARTICLE 11
CERTIFICATES, REGISTRATION AND TRANSFER OF TRUST UNITS
11.1 NATURE OF TRUST UNITS
The nature of a Trust Unit and the relationship of a
Unitholder to the Trustee and the relationship of one Unitholder to another is
as described in Sections 2.4 and Subsection 2.5(c) and the provisions of this
Article 11 shall not in any way alter the nature of Trust Units or the said
relationships of a Unitholder to the Trustee and of one Unitholder to another,
but are intended only to facilitate the issuance of certificates evidencing the
beneficial ownership of Trust Units and the recording of all such transactions
whether by the Trust, securities dealers, stock exchanges, transfer agents,
registrars or other persons.
11.2 CERTIFICATES
(a) The form of certificate representing Trust Units shall be substantially
as set out in the Schedule hereto or such other form as is authorized
from time to time by the Trustee. Each such certificate shall bear an
identifying serial number and shall be certified manually on behalf of
the Trustee. Any additional signature required by the Trustee to appear
on such certificate may be printed, lithographed or otherwise
mechanically reproduced thereon and, in such event, certificates so
signed are as valid as if it had been signed manually. Any certificate
which has one manual signature as hereinbefore provided shall be valid
notwithstanding that one or more of the persons whose signature is
printed, lithographed or mechanically reproduced no longer holds office
at the date of issuance of such certificate. The Trust Certificates may
be engraved, printed or lithographed, or partly in one form and partly
in another, as the Trustee may determine.
(b) Any Trust Unit Certificate validly issued prior to the date hereof in
accordance with the terms of this Indenture in effect at such time
shall validly represent issued and outstanding Trust Units,
notwithstanding that the form of such Trust Unit Certificate may not be
in the form currently required by this Indenture.
11.3 REGISTER OF UNITHOLDERS
A register shall be maintained at the principal corporate
trust office of the Trustee in the City of Calgary by the Trustee or by a
Transfer Agent designated to act on behalf and under the direction of the
Trustee, which register shall contain the names and addresses of the
Unitholders, the respective numbers of Trust Units held by them, the certificate
numbers of the certificates representing such Trust Units and a record of all
transfers thereof. Branch transfer registers shall be maintained at such other
offices of the Trustee or Transfer Agent as the Trustee may from time to time
designate. The Trustee shall designate an office in the City of Toronto at which
a branch register shall be maintained. Except in the case of the registers
required to be maintained at the Cities of Calgary and Toronto, the Trustee
shall have the power at any time to close any register of transfers and in that
event shall transfer the records thereof to another existing register or to a
new register.
Only Unitholders whose certificates are so recorded shall be
entitled to receive distributions or to exercise or enjoy the rights of
Unitholders hereunder. The Trustee shall have the right to treat the person
registered as a Unitholder on the register of the Trust as the owner of such
Trust Units for all purposes, including, without limitation, payment of any
distribution, giving notice to Unitholders and determining the right to attend
and vote at meetings of Unitholders, and the Trustee shall not be bound to
recognize any transfer, pledge or other disposition of a Trust Unit or any
attempt to transfer, pledge or dispose of a Trust Unit, or any beneficial
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interest or equitable or other right or claim with respect thereto, whether or
not the Trustee shall have actual or other notice thereof, until such Trust Unit
shall have been transferred on the register of the Trust as herein provided.
The register and the branch transfer register referred to in
this Section 11.3 shall at all reasonable times be open for inspection by the
Unitholders, the Corporation and the Trustee.
11.4 TRANSFER OF TRUST UNITS
(a) Subject to the provisions of this Article 11, the Trust Units shall be
fully transferable without charge as between persons, but no transfer
of Trust Units shall be effective as against the Trustee or shall be in
any way binding upon the Trustee until the transfer has been recorded
on the register or one of the branch transfer registers maintained by
the Trustee or Transfer Agent. No transfer of a Trust Unit shall be
recognized unless such transfer is of a whole Trust Unit.
(b) Subject to the provisions of this Article 11, Trust Units shall be
transferable on the register or one of the branch transfer registers of
Unitholders of the Trust only by the Unitholders of record thereof or
their executors, administrators or other legal representatives or by
their agents hereunto duly authorized in writing, and only upon
delivery to the Trustee or to the Transfer Agent of the Trust if
appointed, of the certificate therefor, if certificates representing
Trust Units are issued, properly endorsed or accompanied by a duly
executed instrument of transfer and accompanied by all necessary
transfer or other taxes imposed by law, together with such evidence of
the genuineness of such endorsement, execution and authorization and
other matters that may reasonably be required by the Trustee. Upon such
delivery the transfer shall be recorded on the register of Unitholders
and a new Trust Certificate for the residue thereof (if any) shall be
issued to the transferor. Unless the Corporation agrees to assume
liability for the transfer and exchange fees the Unitholder shall be
responsible for such fees and expenses.
(c) Any person becoming entitled to any Trust Units as a consequence of the
death, bankruptcy or incompetence of any Unitholder or otherwise by
operation of law, shall be recorded as the holder of such Trust Units
and shall receive a new Trust Certificate therefor only upon production
of evidence satisfactory to the Trustee thereof and delivery of the
existing Trust Certificate to the Trustee, but until such record is
made the Unitholder of record shall continue to be and be deemed to be
the holder of such Trust Units for all purposes whether or not the
Trustee shall have actual or other notice of such death or other event.
11.5 TRUST UNITS HELD JOINTLY OR IN A FIDUCIARY CAPACITY
The Trustee may treat two or more persons holding any Trust
Units as joint owners of the entire interest therein unless their ownership is
expressly otherwise recorded on the register of the Trust, but no entry shall be
made in the register or on any Trust Certificate that any person is in any other
manner entitled to any future, limited or contingent interest in any Trust
Units; provided, however, that any person recorded as a Unitholder may, subject
to the provisions hereinafter contained, be described in the register or on any
Trust Certificate as a fiduciary of any kind and any customary words may be
added to the description of the holder to identify the nature of such fiduciary
relationship. Where any Trust Certificate is registered in more than one name,
the distributions (if any) in respect thereof may be paid to the order of all
such holders failing written instructions from them to the contrary and such
payment shall be a valid discharge to the Trustee and any Transfer Agent. In the
case of the death of one or more joint holders, the distributions (if any) in
respect of any Trust Units may be paid to the survivor or survivors of such
holders and such payment shall be a valid discharge to the Trustee and any
Transfer Agent.
11.6 PERFORMANCE OF TRUST
The Trustee, the Unitholders and any officer or agent of the
Trustee shall not be bound to be responsible for or otherwise inquire into or
ensure the performance of any trust, express, implied or constructive, or of any
charge, pledge or equity to which any of the Trust Units or any interest therein
are or may be subject, or to ascertain or enquire whether any transfer of any
such Trust Units or interests therein by any such Unitholder or by his personal
representatives is authorized by such trust, charge, pledge or equity, or to
recognize any person as having any interest therein except for the person
recorded as Unitholder.
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11.7 LOST CERTIFICATES
In the event that any Trust Certificate is lost, stolen,
destroyed or mutilated, the Trustee may authorize the issuance of a new Trust
Certificate for the same number of Trust Units in lieu thereof. The Trustee may
in its discretion, before the issuance of such new Trust Certificate, require
the owner of the lost, stolen, destroyed or mutilated Trust Certificate, or the
legal representative of the owner to make an affidavit or statutory declaration
setting forth such facts as to the loss, theft, destruction or mutilation as the
Trustee may deem necessary, to surrender any mutilated Trust Certificate and may
require the applicant to supply to the Trust a "lost certificate bond" or a
similar bond in such reasonable sum as the Trustee may direct indemnifying the
Trustee and its agent for so doing. The Trustee shall have the power to require
from an insurer or insurers a blanket lost security bond or bonds in respect of
the replacement of lost, stolen, destroyed or mutilated Trust Certificates. The
Trustee shall pay all premiums and other funds of money payable for such purpose
out of the Trust Fund with such contribution, if any, by those insured as may be
determined by the Trustee in its sole discretion. If such blanket lost security
bond is required, the Trustee may authorize and direct (upon such terms and
conditions as the Trustee may from time to time impose) any agent to whom the
indemnity of such bond extends to take such action to replace any lost, stolen,
destroyed or mutilated Trust Certificate without further action or approval by
the Trustee.
11.8 DEATH OF A UNITHOLDER
The death of a Unitholder during the continuance of the Trust
shall not terminate the Trust or any of the mutual or respective rights and
obligations created by or arising under this Indenture nor give such
Unitholder's personal representative a right to an accounting or take any action
in court or otherwise against other Unitholders or the Trustee or the Trust
Fund, but shall entitle the personal representatives of the deceased Unitholder
to demand and receive, pursuant to the provisions hereof, a new Trust
Certificate for Trust Units in place of the Trust Certificate held by the
deceased Unitholder, and upon the acceptance thereof such personal
representatives shall succeed to all rights of the deceased Unitholder under
this Indenture.
11.9 UNCLAIMED INTEREST OR DISTRIBUTION
In the event that the Trustee shall hold any amount of
interest or other distributable amount which is unclaimed or which cannot be
paid for any reason, the Trustee shall be under no obligation to invest or
reinvest the same but shall only be obliged to hold the same in a current
non-interest-bearing account pending payment to the person or persons entitled
thereto. The Trustee shall, as and when required by law, and may at any time
prior to such required time, pay all or part of such interest or other
distributable amount so held to the Public Trustee (or other appropriate
Government official or agency) whose receipt shall be a good discharge and
release of the Trustee.
11.10 EXCHANGES OF TRUST CERTIFICATES
Trust Certificates representing any number of Trust Units may
be exchanged without charge for Trust Certificates representing an equivalent
number of Trust Units in the aggregate. Any exchange of Trust Certificates may
be made at the offices of the Trustee or at the offices of any Transfer Agent
where registers are maintained for the Trust Certificates pursuant to the
provisions of this Article 11. Any Trust Certificates tendered for exchange
shall be surrendered to the Trustee or appropriate Transfer Agent and shall be
cancelled. The Corporation shall reimburse the Trustee for all exchange fees
associated with any such exchange.
11.11 OFFER FOR UNITS
(a) In this Section 11.11:
(i) "DISSENTING UNITHOLDER" means a Unitholder who does not accept
an Offer referred to in Subsection (b) and includes any
assignee of the Unit of a Unitholder to whom such an Offer is
made, whether or not such assignee is recognized under this
Indenture;
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(ii) "OFFER" means an offer to acquire outstanding Units where, as
of the date of the offer to acquire, the Units that are
subject to the offer to acquire, together with the Offeror's
Units, constitute in the aggregate 20% or more of all
outstanding Units;
(iii) "OFFER TO ACQUIRE" includes an acceptance of an offer to sell;
(iv) "OFFEROR" means a person, or two or more persons acting
jointly or in concert, who make an Offer to acquire Units;
(v) "OFFEROR'S NOTICE" means the notice described in Subsection
(c); and
(vi) "OFFEROR'S UNITS" means Units beneficially owned, or over
which control or direction is exercised, on the date of an
Offer by the Offeror, any Affiliate or Associate of the
Offeror or any person or company acting jointly or in concert
with the Offeror.
(b) If an Offer for all of the outstanding Units (other than Units held by
or on behalf of the Offeror or an Affiliate or Associate of the
Offeror) is made and
(i) within the time provided in the Offer for its acceptance or
within 45 days after the date the Offer is made, whichever
period is the shorter, the Offer is accepted by Unitholders
representing at least 90% of the outstanding Units, other than
the Offeror's Units;
(ii) the Offeror is bound to take up and pay for, or has taken up
and paid for the Units of the Unitholders who accepted the
Offer; and
(iii) the Offeror complies with Subsections (c) and (e);
the Offeror is entitled to acquire, and the Dissenting Unitholders are
required to sell to the Offeror, the Units held by the Dissenting
Unitholders for the same consideration per Unit payable or paid, as the
case may be, under the Offer.
(c) Where an Offeror is entitled to acquire Units held by Dissenting
Unitholders pursuant to Subsection (b), and the Offeror wishes to
exercise such right, the Offeror shall send by registered mail within
30 days after the date of termination of the Offer a notice (the
"Offeror's Notice") to each Dissenting Unitholder stating that:
(i) Unitholders holding at least 90% of the Units of all
Unitholders, other than Offeror's Units, have accepted the
Offer;
(ii) the Offeror is bound to take up and pay for, or has taken up
and paid for, the Units of the Unitholders who accepted the
Offer;
(iii) Dissenting Unitholders must transfer their respective Units to
the Offeror on the terms on which the Offeror acquired the
Units of the Unitholders who accepted the Offer within 21 days
after the date of the sending of the Offeror's Notice; and
(iv) Dissenting Unitholders must send their respective Unit
Certificate(s) to the Trustee within 21 days after the date of
the sending of the Offeror's Notice.
(d) A Dissenting Unitholder to whom an Offeror's Notice is sent pursuant to
Subsection (c) shall, within 21 days after the sending of the Offeror's
Notice, send his or her Unit Certificate(s) to the Trustee, duly
endorsed for transfer.
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(e) Within 21 days after the Offeror sends an Offeror's Notice pursuant to
Subsection (c), the Offeror shall pay or transfer to the Trustee, or to
such other person as the Trustees may direct, the cash or other
consideration that is payable to Dissenting Unitholders pursuant to
Subsection (b).
(f) The Trustee, or the person directed by the Trustee, shall hold in trust
for the Dissenting Unitholders the cash or other consideration it
receives under Subsection (e). The Trustee, or such person, shall
deposit cash in a separate account in a Canadian chartered bank, and
shall place other consideration in the custody of a Canadian chartered
bank or similar institution for safekeeping.
(g) Within 30 days after the date of the sending of an Offeror's Notice
pursuant to Subsection (c), the Trustee, if the Offeror has complied
with Subsection (e), shall:
(i) do all acts and things and execute and cause to be executed
all instruments as in the Trustee's opinion may be necessary
or desirable to cause the transfer of the Units of the
Dissenting Unitholders to the Offeror;
(ii) send to each Dissenting Unitholder who has complied with
Subsection (d) the consideration to which such Dissenting
Unitholder is entitled under this Section 11.11; and
(iii) send to each Dissenting Unitholder who has not complied with
Subsection (d) a notice stating that:
(A) his or her Units have been transferred to the
Offeror;
(B) the Trustee or some other person designated in such
notice is holding in trust the consideration for such
Units; and
(C) the Trustee, or such other person, will send the
consideration to such Dissenting Unitholder as soon
as practicable after receiving such Dissenting
Unitholder's Unit Certificate(s) or such other
documents as the Trustee, or such other person may
require in lieu thereof,
and the Trustee is hereby appointed the agent and attorney of the
Dissenting Unitholders for the purposes of giving effect to the
foregoing provisions.
(h) An Offeror cannot make an Offer for Units unless, concurrent with the
communication of the Offer to any Unitholder, a copy of the Offer is
provided to the Trust.
ARTICLE 12
TERMINATION
12.1 TERMINATION DATE
Unless the Trust is terminated or extended earlier, the
Trustee shall commence to wind up the affairs of the Trust on December 31, 2099.
12.2 TERMINATION BY SPECIAL RESOLUTION OF UNITHOLDERS
The Unitholders may vote by Special Resolution to terminate
the Trust at any meeting of Unitholders duly called for that purpose, whereupon
the Trustee shall commence to wind up the affairs of the Trust, provided that
such a vote may only be held if requested in writing by the holders of not less
than 20% of the outstanding Trust Units and a quorum of holders of not less than
50% of the outstanding Trust Units are present in person or represented by proxy
at the meeting or any adjournment thereof at which the vote is taken.
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12.3 PROCEDURE UPON TERMINATION
Forthwith upon being required to commence to wind up the
affairs of the Trust, the Trustee shall give notice thereof to the Unitholders,
which notice shall designate the time or times at which Unitholders may
surrender their Trust Units for cancellation and the date at which the register
of the Trust shall be closed.
12.4 POWERS OF THE TRUSTEE UPON TERMINATION
After the date on which the Trustee is required to commence to
wind up the affairs of the Trust, the Trustee shall carry on no activities
except for the purpose of winding up the affairs of the Trust as hereinafter
provided and for these purposes, the Trustee shall continue to be vested with
and may exercise all or any of the powers conferred upon the Trustee under this
Indenture.
12.5 SALE OF INVESTMENTS
After the date referred to in Section 12.4, the Trustee shall
proceed to wind up the affairs of the Trust as soon as may be reasonably
practicable and for such purpose shall, subject to the terms of any agreements
binding on or obligations of the Trust and the Trustee, sell and convert into
money the Direct Royalties and other assets comprising the Trust Fund in one
transaction or in a series of transactions at public or private sale and do all
other acts appropriate to liquidate the Trust Fund, and shall in all respects
act in accordance with the directions, if any, of the Unitholders in respect of
a termination authorized under Section 12.2. Notwithstanding anything herein
contained, in no event shall the Trust be wound up until the Direct Royalties
shall have been disposed of.
12.6 DISTRIBUTION OF PROCEEDS
After paying, retiring or discharging or making provision for
the payment, retirement or discharge of all known liabilities and obligations of
the Trust and providing for indemnity against any other outstanding liabilities
and obligations, the Trustee shall distribute the remaining part of the proceeds
of the sale of the Direct Royalties and other assets together with any cash
forming part of the Trust Fund among the Unitholders in accordance with their
Pro Rata Share.
12.7 FURTHER NOTICE TO UNITHOLDERS
In the event that all of the Unitholders shall not surrender
their Trust Units for cancellation within six (6) months after the time
specified in the notice referred to in Section 12.3, such remaining Trust Units
shall be deemed to be cancelled without prejudice to the rights of the holders
of such Trust Units to receive their Pro Rata Share of the amounts referred to
in Section 12.6 and the Trustee may either take appropriate steps, or appoint an
agent to take appropriate steps, to contact such Unitholders (deducting all
expenses thereby incurred from the amounts to which such Unitholders are
entitled as aforesaid) or, in the discretion of the Trustee, may pay such
amounts into court.
12.8 RESPONSIBILITY OF TRUSTEE AFTER SALE AND CONVERSION
The Trustee shall be under no obligation to invest the
proceeds of any sale of the Direct Royalties or other assets or cash forming
part of the Trust Fund after the date referred to in Section 12.4 and, after
such sale, the sole obligation of the Trustee under this Indenture shall be to
hold such proceeds in trust for distribution under Section 12.6.
ARTICLE 13
SUPPLEMENTAL INDENTURES
13.1 PROVISION FOR SUPPLEMENTAL INDENTURES
From time to time the Trustee and the Corporation may, subject
to the provisions hereof, and it shall, when so directed in accordance with the
provisions hereof, execute and deliver by its proper officers,
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indentures or instruments supplemental hereto, which thereafter shall form part
hereof, for any one or more or all of the following purposes:
(a) giving effect to any amendment as provided in Article 9;
(b) giving effect to any Special Resolution passed as provided in Article
10;
(c) making such provision not inconsistent with this Indenture as may be
necessary or desirable with respect to matters or questions arising
hereunder, provided that such provisions are not, in the opinion of the
Trustee, prejudicial to the interests of the Unitholders;
(d) making any modification in the form of Trust Certificates which does
not materially affect the substance thereof; and
(e) for any other purpose not inconsistent with the terms of this
Indenture, including the correction or rectification of any
ambiguities, defective or inconsistent provisions, errors, mistakes or
omissions herein, provided that in the opinion of the Trustee, the
rights of the Trustee and the Unitholders are not prejudiced thereby;
provided that the Trustee may in its sole discretion decline to enter into any
such supplemental indenture which in its opinion may not afford adequate
protection to the Trustee when the same shall become operative.
Notwithstanding Section 10.5 and the foregoing, on or before
the Date of Closing, the Trustee may execute and deliver such indentures or
instruments supplemental hereto, which may add to or delete or amend, vary or
change any of the provisions hereof, as the Corporation may direct in writing.
13.2 PROVISION FOR AMENDED AND RESTATED INDENTURE
Notwithstanding Section 13.1, following any amendments to this
Indenture, the parties to the Indenture may enter into an amended and restated
version of the Indenture which shall include and give effect to all amendments
to the Indenture in effect at the applicable time.
ARTICLE 14
NOTICES TO UNITHOLDERS
14.1 NOTICES
Any notice required to be given under this Indenture to the
Unitholders shall be given by letter or circular sent through ordinary post
addressed to each registered holder at his last address appearing on the
register; provided that if there is a general discontinuance of postal service
due to strike, lockout or otherwise, such notice may be given by publication
twice in the National Edition of The Globe and Mail or The National Post or any
other newspaper having national circulation in Canada; provided further that if
there is no newspaper having national circulation, then by publishing twice in a
newspaper in each city where the register or a branch transfer register is
maintained. Any notice so given shall be deemed to have been given on the day
following that on which the letter or circular was posted or, in the case of
notice being given by publication, the day following the day of the second
publication in the designated newspaper or newspapers. In proving notice was
posted, it shall be sufficient to prove that such letter or circular was
properly addressed, stamped and posted.
14.2 FAILURE TO GIVE NOTICE
The failure by the Trustee, by accident or omission or
otherwise unintentionally, to give the Unitholders any notice provided for
herein shall not affect the validity or effect of any action referred to in such
notice, and the Trustee shall not be liable to any Unitholder for any such
failure.
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14.3 JOINT HOLDERS
Service of a notice or document on any one of several joint
holders of Trust Units shall be deemed effective service on the other joint
holders.
14.4 SERVICE OF NOTICE
Any notice or document sent by post to or left at the address
of a Unitholder pursuant to this Article shall, notwithstanding the death or
bankruptcy of such Unitholder, and whether or not the Trustee has notice of such
death or bankruptcy, be deemed to have been fully served and such service shall
be deemed sufficient service on all persons interested in the Trust Units
concerned.
ARTICLE 15
AUDITORS
15.1 QUALIFICATION OF AUDITORS
The Auditors shall be an independent recognized firm of
chartered accountants which has an office in Alberta.
15.2 APPOINTMENT OF AUDITORS
The Trustee hereby appoints KPMG LLP, Chartered Accountants,
as the auditors of the Trust, to hold such office until the first annual meeting
of the Unitholders at such remuneration as may be approved by the Trustee from
time to time. The Auditors will be selected at each annual meeting of
Unitholders.
15.3 CHANGE OF AUDITORS
The Auditors may at any time be removed by the Trustee with
the approval of the Unitholders by means of an Ordinary Resolution at a meeting
of Unitholders duly called for that purpose and, upon the resignation or the
removal of Auditors as aforesaid, new auditors may be appointed by the Trustee
with the approval of the Unitholders by means of an Ordinary Resolution at a
meeting duly called for the purpose. A vacancy created by the removal of the
Auditors as aforesaid may be filled at the meeting of Unitholders at which the
Auditors are removed or, if not so filled, may be filled under Section 15.4.
15.4 FILLING VACANCY
In the event that the Auditors resign as auditors of the
Trust, the Trustee shall forthwith fill the vacancy with such new auditors as is
approved by the members of the Board of Directors of the Corporation whom are
independent of the Corporation, and such new auditors shall act as auditors of
the Trust for the unexpired term of the predecessor auditors of the Trust.
15.5 REPORTS OF AUDITORS
The Auditors shall audit the accounts of the Trust at least
once in each year and a report of the Auditors with respect to the annual
financial statements of the Trust shall be provided to each Unitholder as set
out in Section 16.3.
ARTICLE 16
ACCOUNTS, RECORDS AND FINANCIAL STATEMENTS
16.1 RECORDS
The Trustee shall keep such books, records and accounts as are
necessary and appropriate to document the Trust Fund and each transaction of the
Trust. Without limiting the generality of the foregoing, the Trustee will, at
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its principal office in Calgary, Alberta, keep records of all transactions of
the Trust, a list of the Direct Royalties and other assets of the Trust Fund
from time to time and a copy of this Indenture.
16.2 QUARTERLY REPORTING TO UNITHOLDERS
The Trustee will mail to each Unitholder within 60 days after
March 31, June 30 and September 30 in each year, an unaudited quarterly
financial statement of the Trust for the most recent calendar quarter. The
Corporation will review any forecast provided in any Offering Document and, if
necessary, will provide the Trustee with a quarterly update. The Trustee will
mail any such update to Unitholders.
16.3 ANNUAL REPORTING TO UNITHOLDERS
The Trustee will mail:
(a) to each Unitholder, within 140 days after the end of each year, the
audited consolidated financial statements of the Trust for the most
recently completed year together with the report of the Auditors
thereon; and
(b) to each person who received a distribution from the Trust during a
year, within 90 days after the end of such year, the tax reporting
information relating to such year as prescribed by the Tax Act.
16.4 INFORMATION AVAILABLE TO UNITHOLDERS
(a) Each Unitholder shall have the right to obtain, on demand and on
payment of reasonable reproduction costs, from the head office of the
Trust, a copy of this Indenture and any indenture supplemental hereto
or any Material Contract.
(b) Each Unitholder, upon payment of a reasonable fee and upon sending to
the Trustee the affidavit referred to in paragraph (d) below, may upon
application require the Trustee to furnish within 10 days from the
receipt of the affidavit a list (the "basic list") made up to a date
not more than 10 days before the date of receipt of the affidavit
setting out the names of the Unitholders, the number of Trust Units
owned by each Unitholder and the address of each Unitholder as shown on
the records of the Trustee.
(c) A person requiring the Trustee to supply a basic list may, if he states
in the affidavit referred to in paragraph (d) below that he requires
supplemental lists, require the Trustee upon payment of a reasonable
fee to furnish supplemental lists setting out any changes from the
basic list in the names or addresses of the Unitholders and the number
of Trust Units owned by each Unitholder for each business day following
the date the basic list is made up to.
(d) The affidavit referred to in paragraph (b) above shall state:
(i) the name and address of the applicant;
(ii) the name and address for service of the body corporate if the
applicant is a body corporate; and
(iii) that the basic list and any supplemental lists will not be
used except as permitted under paragraph (e) below.
(e) A list of Unitholders obtained under this Section shall not be used by
any person except in connection with:
(i) an effort to influence the voting of Unitholders;
(ii) an offer to acquire Trust Units; or
(iii) any other matter relating to the affairs of the Trust.
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16.5 INCOME TAX: OBLIGATION OF THE TRUSTEE
The Trustee shall discharge all obligations and
responsibilities of the Trustee under the Tax Act or any similar provincial
legislation, and neither the Trust nor the Trustee shall be accountable or
liable to any Unitholder by reason of any act or acts of the Trustee consistent
with any such obligations or responsibilities.
16.6 INCOME TAX: DESIGNATIONS
In the return of its income under Part I of the Tax Act for
each year the Trust shall make such designations to Unitholders with respect to
any amounts distributed or payable to Unitholders in the year including, without
restricting the generality of the foregoing, designations pursuant to subsection
104(29) of the Tax Act and designations with respect to any taxable capital
gains realized and distributed to Unitholders by the Trust in the year, as shall
be permitted under the provisions of the Tax Act and as the Trustee in its sole
discretion shall deem to be appropriate. In the first tax year, in filing a
return of income for the Trust, the Trust shall elect that the Trust be deemed
to be a mutual fund trust for the entire year.
16.7 INCOME TAX: DEDUCTIONS, ALLOWANCES AND CREDITS
The Corporation shall determine the tax deductions, allowances
and credits to be claimed by the Trust in any year, and the Trustee shall claim
such deductions, allowances and credits for the purposes of computing the income
of the Trust and the amount payable by the Trust pursuant to the provisions of
the Tax Act.
16.8 FISCAL YEAR
The fiscal year of the Trust shall end on December 31 of each
year.
ARTICLE 17
MISCELLANEOUS
17.1 CONTINUED LISTING
The Trustee hereby appoints the Corporation as its agent and
the Corporation hereby covenants to the Trustee and agrees that it shall, at the
cost and expense of the Trust, take all steps and actions and do all things that
may be required to obtain and maintain the listing and posting for trading of
the Trust Units on the Toronto Stock Exchange and to maintain its status as a
"reporting issuer" not in default of the securities legislation and regulations
in each of the provinces of Canada as determined necessary by the Corporation or
Counsel.
17.2 SUCCESSORS AND ASSIGNS
The provisions of this Indenture shall enure to the benefit of
and be binding upon the parties and their successors and assigns.
17.3 COUNTERPARTS
This Indenture may be simultaneously executed in several
counterparts, each of which so executed shall be deemed to be an original, and
such counterparts, together, shall constitute but one and the same instrument,
which shall be sufficiently evidenced by any such original counterparts.
17.4 SEVERABILITY
If any provision of this Indenture shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect or render invalid or unenforceable such provision in any other
jurisdiction or any other provision of this Indenture in any jurisdiction.
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17.5 DAY NOT A BUSINESS DAY
In the event that any day on or before which any amount is to
be determined or any action is required to be taken hereunder is not a Business
Day, then such amount shall be determined or such action shall be required to be
taken at or before the requisite time on the next succeeding day that is a
Business Day.
17.6 TIME OF THE ESSENCE
Time shall be of the essence in this Indenture.
17.7 GOVERNING LAW
This Indenture and the Trust Certificates shall be construed
in accordance with the laws of the Province of Alberta and the laws of Canada
applicable therein and shall be treated in all respects as Alberta contracts.
The parties hereby irrevocably submit to the jurisdiction of the Courts of the
Province of Alberta.
17.8 NOTICES TO TRUSTEE AND THE CORPORATION
(a) Any notice to the Trustee under this Indenture shall be valid and
effective if delivered or if given by registered letter, postage
prepaid, addressed to the attention of Valiant Trust Company at ▇▇▇▇▇
▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Attention:
Manager Corporate Trust (Fax (▇▇▇) ▇▇▇-▇▇▇▇), or may be given by
electronic or telecommunications device, and shall be deemed to have
been given on the date of delivery or, if mailed, effective five days
after deposit in the Canadian mail.
(b) Any notice to the Corporation under this Indenture shall be valid and
effective if delivered or if given by registered letter, postage
prepaid, addressed to the Corporation at ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇
▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Attention: Secretary (Fax (403)
693-0070 may be given by electronic or telecommunications device, and
shall be deemed to have been effectively given on the date of delivery
or, if mailed, five days after deposit in the Canadian mail.
(c) The Corporation or the Trustee may from time to time notify the other
in writing of a change of address which thereafter, until changed by
like notice, shall be the address of the Corporation or the Trustee for
all purposes of this Indenture.
(d) If, by reason of a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, any notice to be given
hereunder could reasonably be considered unlikely to reach its
destination, such notice shall be valid and effective only if it is
delivered at the appropriate address provided in this Section, by
cable, telegram, electronic, telecommunications device or other means
of prepaid, transmitted and recorded communication.
17.9 REFERENCES TO AGREEMENTS
Any reference herein to any agreement, contract or obligation
shall refer to such agreement, contract or obligation as the same may be amended
from time to time.
ARTICLE 18
REDEMPTION OF TRUST UNITS
18.1 RIGHT OF REDEMPTION
Each Unitholder shall be entitled to require the Trust to
redeem at any time or from time to time at the demand of the Unitholder all or
any part of the Trust Units registered in the name of the Unitholder at the
prices determined and payable in accordance with the conditions hereinafter
provided.
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18.2 EXERCISE OF REDEMPTION RIGHT
To exercise a Unitholder's right to require redemption under
this Article 18, a duly completed and properly executed notice requiring the
Trust to redeem Trust Units, in a form approved by the Trustee, shall be sent to
the Trust at the head office of the Trust, together with the Trust Unit
Certificate or Trust Unit Certificates representing the Trust Units to be
redeemed. No form or manner of completion or execution shall be sufficient
unless the same is in all respects satisfactory to the Corporation and is
accompanied by any further evidence that the Corporation may reasonably require
with respect to the identity, capacity or authority of the person giving such
notice.
Upon receipt by the Trust of the notice to redeem Trust Units,
the Unitholder shall thereafter cease to have any rights with respect to the
Trust Units tendered for redemption (other than to receive the redemption
payment therefor) including the right to receive any distributions thereon.
Trust Units shall be considered to be tendered for redemption on the date that
the Trust has, to the satisfaction of the Corporation, received the notice,
Trust Unit Certificates and other required documents or evidence as aforesaid.
18.3 CALCULATION OF REDEMPTION PRICE BASED ON MARKET PRICE
Subject to Section 18.6, upon receipt by the Trust of the
notice to redeem Trust Units in accordance with Section 18.2, the holder of the
Trust Units tendered for redemption shall be entitled to receive a price per
Trust Unit (hereinafter called the "Market Redemption Price") equal to the
lesser of:
(a) 90% of the market price of the Trust Units on the principal market on
which the Trust Units are quoted for trading during the 10 day trading
period commencing immediately after the date on which the Trust Units
were tendered to the Trust for redemption; and
(b) the closing market price on the principal market on which the Trust
Units are quoted for trading, on the date that the Trust Units were so
tendered for redemption.
For the purposes of Subsection 18.3(a), the market price shall
be an amount equal to the simple average of the closing price of the Trust Units
for each of the trading days on which there was a closing price; provided that
if the applicable exchange or market does not provide a closing price but only
provides the highest and lowest prices of the Trust Units traded on a particular
day, the market price shall be an amount equal to the simple average of the
average of the highest and lowest prices for each of the trading days on which
there was a trade; and provided further that if there was trading on the
applicable exchange or market for fewer than 5 of the 10 trading days, the
market price shall be the simple average of the following prices established for
each of the 10 trading days; the average of the last bid and last ask prices for
each day on which there was no trading; the closing price of the Trust Units for
each day that there was trading if the exchange or market provides a closing
price; and the average of the highest and lowest prices of the Trust Units for
each day that there was trading, if the market provides only the highest and
lowest prices of Trust Units traded on a particular day.
For the purposes of subsection 18.3(b), the closing market
price shall be: an amount equal to the closing price of the Trust Units if there
was a trade on the date; an amount equal to the average of the highest and
lowest prices of Trust Units if there was trading and the exchange or other
market provides only the highest and lowest prices of Trust Units traded on a
particular day; and the average of the last bid and last ask prices if there was
no trading on the date.
18.4 CASH PAYMENT OF MARKET REDEMPTION PRICE
Subject to Section 18.5, the Market Redemption Price, payable
in respect of the Trust Units tendered for redemption during any calendar month
shall be paid by cheque, drawn on a Canadian chartered bank or a trust company
in lawful money of Canada, payable at par to or to the order of the Unitholder
who exercised the right of redemption on the last day of the calendar month
following the month in which the Trust Units were tendered for redemption.
Payments made by the Trust of the Market Redemption Price are conclusively
deemed to have been made upon the mailing of a cheque in a postage pre-paid
40
envelope addressed to the former Unitholder unless such cheque is dishonoured
upon presentment. Upon such payment, the Trust shall be discharged from all
liability to the former Unitholder in respect of the Trust Units so redeemed.
18.5 LIMITATION REGARDING CASH PAYMENT OF MARKET REDEMPTION PRICE
Section 18.4 shall not be applicable to Trust Units tendered
for redemption by a Unitholder if the total amount payable by the Trust pursuant
to Section 18.4 in respect of such Trust Units and all other Trust Units
tendered for redemption in the same calendar month exceeds $100,000; provided
that the Corporation may, in its sole discretion, waive such limitation in
respect of any calendar month. If this limitation is not so waived for such
`calendar month, the Market Redemption Price payable in respect of the Trust
Units tendered for redemption in such calendar month shall be paid on the last
day of the calendar month following such month as follows:
(a) firstly, by the Trust distributing Notes having an aggregate principal
amount equal to the aggregate Market Redemption Price of the Trust
Units tendered for redemption, and,
(b) secondly, to the extent that the Trust does not hold Notes having a
sufficient principal amount outstanding to effect such payment, by the
Trust issuing its own promissory notes to the Unitholders who exercise
the right of redemption having an aggregate principal amount equal to
any such shortfall, which promissory notes, (herein referred to as
"REDEMPTION NOTES") shall have terms and conditions substantially
identical to those of the Notes.
Upon such distribution of Notes or issuance of Redemption
Notes, the Trust shall be discharged from all liability to the former Unitholder
in respect of the Trust Units so redeemed. For greater certainty, the Trust
shall be entitled to all interest accrued and unpaid on the Notes so distributed
to and including the date upon which such Notes are required to be distributed.
18.6 CALCULATION OF REDEMPTION PRICE IN CERTAIN OTHER CIRCUMSTANCES
Section 18.3 shall not be applicable to Trust Units tendered
for redemption by a Unitholder, if:
(a) at the time the Trust Units are tendered for redemption, the
outstanding Trust Units of the Trust are not listed for trading on the
Toronto Stock Exchange or the TSX Venture Exchange and are not traded
or quoted on any other stock exchange or market which the Corporation
considers in its sole discretion, provides representative fair market
value prices for the Trust Units; or
(b) the normal trading of the outstanding Trust Units of the Trust is
suspended or halted on any stock exchange on which the Trust Units are
listed for trading or, if not so listed, on any market on which the
Trust Units are quoted for trading, on the date that such Trust Units
tendered for redemption were tendered to the Trust for redemption or
for more than five trading days during the 10 day trading period
commencing immediately after the date on which such Trust Units
tendered for redemption were tendered to the Trust for redemption,
and in either such case, such Unitholder shall, instead of the Market Redemption
Price, be entitled to receive a price per Trust Unit (herein referred to as the
"Appraised Redemption Price") equal to 90% of the fair market value thereof as
determined by the Corporation as at the date upon such Trust Units were tendered
for redemption. The Appraised Redemption Price payable in respect of Trust Units
tendered for redemption in any calendar month shall be paid on the last day of
the third calendar month following the month in which such Trust Units were
tendered for redemption, by at the option of the Trust:
(i) cash payment, in which case the provisions of Section 18.4
shall apply MUTATIS MUTANDIS; or
(ii) in the manner provided for in Section 18.5, in which case the
provisions of Section 18.5 shall apply MUTATIS MUTANDIS.
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18.7 CANCELLATION OF CERTIFICATES FOR ALL REDEEMED TRUST UNITS
All certificates representing Trust Units which are redeemed
under this Article 18 shall be cancelled and such Trust Units shall no longer be
outstanding and shall not be reissued.
42
IN WITNESS WHEREOF each of the parties has caused these
presents to be executed by its proper officers duly authorized in its behalf as
of the 4th day of May, 2005.
HARVEST OPERATIONS CORP.
By: (signed) ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
VALIANT TRUST COMPANY
By: /s/
-------------------------
By: /s/
-------------------------
SCHEDULE
To the annexed second amended and restated indenture
dated as of May 4, 2005 and made between
HARVEST OPERATIONS CORP.
and
VALIANT TRUST COMPANY
(Form of Certificate for the Trust
Units in the English Language)
TRUST UNITS
HARVEST ENERGY TRUST
(a trust created under the laws of the Province of Alberta)
No. _______ _______
Trust Units
CUSIP _____________________
THIS CERTIFIES THAT
_____________________________________________ is the
registered holder of _______________ fully paid Trust Units issued by HARVEST
ENERGY TRUST (the "Trust") transferable only on the books of the Trust by the
registered holder hereof in person or by attorney duly authorized upon surrender
of this certificate properly endorsed.
The Trust Units represented by this certificate are issued
upon the terms and subject to the conditions of an amended and restated
indenture (which indenture together with all other instruments supplemental or
ancillary thereto is herein referred to as the "Trust Indenture") dated
September 27, 2002 and made between Harvest Operations Corp. (the "Corporation")
and Valiant Trust Company (the "Trustee") which Trust Indenture is binding upon
all holders of Trust Units and, by acceptance of this certificate, the holder
assents to the terms and conditions of the Trust Indenture. Terms defined in the
Trust Indenture have the same meaning when used herein.
A copy of the Trust Indenture pursuant to which this
certificate and the Trust Units represented hereby are issued may be obtained by
any Unitholder on demand and on payment of reasonable reproduction costs from
the head office of the Trust.
This certificate may only be transferred, upon compliance with
the conditions prescribed in the Trust Indenture, on the register to be kept at
the office of the transfer agent in the City of Calgary and the City of Toronto,
as applicable and at such other place or places, if any, as the Trustee may
designate, by the registered holder thereof or his executors or administrators
or other legal representatives or his or their attorney duly appointed by an
instrument in writing in form and execution satisfactory to the Trustee, and
upon compliance with such reasonable requirements as the Trustee may prescribe.
2
The Trust Indenture contains provisions for the holding of
meetings of Unitholders and rendering resolutions passed at such meetings
binding upon all Unitholders.
The Trust Indenture contains restrictions on the ownership of
Trust Units by non-residents of Canada within the meaning of the INCOME TAX ACT
(Canada) and the Trust shall take all necessary steps to monitor the ownership
of Trust Units to carry out such intentions. If at any time the Trust, becomes
aware that the beneficial owners of 49% or more of the Trust Units then
outstanding are or may be non-residents or that such a situation is imminent,
the Trust, by or through the Corporation on the Trust's behalf, shall take such
action as may be necessary to carry out the intentions evidenced in the
Indenture.
The Trust Indenture provides that no Unitholder shall incur or
be subject to any liability in connection with the Trust Fund or the obligations
or the affairs of the Trust or with respect to any act performed by the Trustee
or by any other person pursuant to the Trust Indenture.
The Trust Indenture provides that Trust Units shall be issued
only when fully paid and the Unitholders shall not thereafter be required to
make any further contribution to the Trust with respect to such Trust Units.
This certificate shall not be valid for any purpose until it
shall have been countersigned and registered by the transfer agent of the Trust.
IN WITNESS WHEREOF the Corporation has caused this certificate
to be signed by its duly authorized officers.
DATED ________________
HARVEST OPERATIONS CORP.
By: /s/
-------------------------------
Authorized Officer
By: /s/
-------------------------------
Authorized Officer
Countersigned and Registered
VALIANT TRUST COMPANY
Transfer Agent and Registrar of
the Trust
By: /s/
-------------------------------
Authorized Officer
TRANSFER FORM
-------------
FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto
________________________________________________________________________________
(please print or typewrite name and address of assignee)
__________ Trust Units of HARVEST ENERGY TRUST represented by this certificate
and hereby irrevocable constitutes and appoints ____________________ Attorney to
transfer the said Trust Units on the registers of the Trust for the said
purpose, with full power of substitution in the premises.
Dated _______________________________ ________________________________
(SIGNATURE OF TRANSFEROR)
The signature of the registered
holder of the within certificate to
the foregoing assignment must be
guaranteed by a chartered bank, by a
trust company or a member firm of the
Toronto Stock Exchange, the Montreal
Exchange, the TSX Venture Exchange, a
national securities exchange in the
United Sates or the National
Association of Securities Dealers,
Inc. who are members of the
Securities Transfer Association
Medallion Program ("STAMP").