-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CAV+LFcKvP9AsDpxJCnWw0gkNPoWJjKG0vK/4xtBGpcKrK0fHpoe34uPYZ+VWxWj sxTffBYdqB2zJQ46E4MN4w== 0000950133-96-001247.txt : 19960726 0000950133-96-001247.hdr.sgml : 19960726 ACCESSION NUMBER: 0000950133-96-001247 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19960725 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH AMERICAN VACCINE INC CENTRAL INDEX KEY: 0000856573 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-08851 FILM NUMBER: 96599021 BUSINESS ADDRESS: STREET 1: 12103 INDIAN CREEK CT CITY: BELTSVILLE STATE: MD ZIP: 20705 BUSINESS PHONE: 3014706100 S-3 1 NORTH AMERICAN VACCINE, INC. FORM S-3. 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 25, 1996 REGISTRATION NO. 333-[ ] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------ NORTH AMERICAN VACCINE, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) CANADA NONE (STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NUMBER) ORGANIZATION)
12103 INDIAN CREEK COURT BELTSVILLE, MARYLAND 20705 (301) 470-6100 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ------------------ DANIEL J. ABDUN-NABI, ESQ. GENERAL COUNSEL NORTH AMERICAN VACCINE, INC. 12103 INDIAN CREEK COURT BELTSVILLE, MARYLAND 20705 (301) 470-6100 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) COPIES OF CORRESPONDENCE TO: THOMAS F. COONEY, III, ESQ. SIMON M. NADLER, ESQ. KIRKPATRICK & LOCKHART LLP 1800 MASSACHUSETTS AVENUE, N.W. SECOND FLOOR WASHINGTON, D.C. 20036-1800 ------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. ------------------ If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box: / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than the securities offered only in connection with dividend or interest reinvestment plans, check the following box. /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / ------------------ CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- PROPOSED PROPOSED AMOUNT MAXIMUM MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(3) OFFERING PRICE(3) FEE(1) - ----------------------------------------------------------------------------------------------------------------------- 6.50% Convertible Subordinated Notes....................... $86,250,000 100% $86,250,000 $29,739 - ----------------------------------------------------------------------------------------------------------------------- Common stock, no par value(3).............................. (2) -- -- -- - ----------------------------------------------------------------------------------------------------------------------- Total...................................................... $86,250,000 100% $86,250,000 $29,739 - ----------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of computing the registration fee in accordance with Rule 457(c) of the Securities Act. (2) Such indeterminate number of shares of North American Vaccine, Inc. common stock, no par value, as may be issuable upon conversion of the Convertible Subordinated Notes registered hereunder, including such shares as may be issuable pursuant to anti-dilution adjustments. (3) Exclusive of accrued interest and distributions, if any. ---------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION -- DATED JULY 25, 1996 PROSPECTUS U.S.$86,250,000 6.50% CONVERTIBLE SUBORDINATED NOTES DUE MAY 1, 2003 This Prospectus relates to the offering for resale of the 6.50% Convertible Subordinated Notes (the "Notes") issued under an Indenture, dated May 7, 1996, between North American Vaccine, Inc. (the "Company") and Marine Midland Bank, as Trustee (the "Trustee"), and the shares of common stock, no par value ("Common Shares"), of the Company issuable upon conversion of the Notes. The Notes were issued and sold (the "Original Offering") on May 7, 1996 (the "Original Offering Date") to the Underwriters (as defined and were simultaneously sold by the Underwriters, in transactions exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), in the United States to persons reasonably believed by the Underwriters to be qualified institutional buyers as defined in Rule 144A under the Securities Act, to a limited number of institutional investors that are accredited investors within the meaning of Rule 501(a) under the Securities Act and outside the United States to non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act. The Notes and the Common Shares issuable upon conversion of the Notes (the "Offered Securities") may be offered and sold from time to time by the holders named herein or by their transferees, pledgees, donees or their successors (collectively, the "Selling Holders") pursuant to this Prospectus. The Offered Securities may be sold by the Selling Holders from time to time directly to purchasers or through agents, underwriters or dealers. See "Plan of Distribution" and "Selling Holders." If required, the names of any such agents or underwriters involved in the sale of the Offered Securities and the applicable agent's commission, dealer's purchase price or underwriter's discount, if any, will be set forth in an accompanying supplement to this Prospectus (the "Prospectus Supplement"). The Selling Holders will receive all of the net proceeds from the sale of the Offered Securities and will pay all underwriting discounts and selling commissions, if any, applicable to any such sale. The Company is responsible for payment of all other expenses incident to the offer and sale of the Offered Securities. The Selling Holders and any broker-dealers, agents or underwriters that participate in the distribution of the Offered Securities may be deemed to be "Underwriters" within the meaning of the Securities Act, and any commission received by them and any profit on the resale of the Offered Securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. See "Plan of Distribution" for a description of indemnification arrangements. The Notes will be convertible into Common Shares at any time on or after August 6, 1996 and prior to the close of business on the maturity date, unless previously redeemed or repurchased, at a conversion price of $24.858 per share (equivalent to a conversion rate of 40.2293 shares per $1,000 principal amount of Notes), subject to adjustment in certain events. On July 24, 1996, the last reported sale price of the Common Shares, which are listed on the American Stock Exchange ("AMEX") under the symbol "NVX," was $16 1/8 per share. Interest on the Notes is payable on May 1 and November 1 of each year, commencing on November 1, 1996. Principal and interest payments will be made without any deduction for withholding taxes, except to the extent described under "Description of Notes -- Payment of Additional Amounts". The Notes are redeemable (a) in the event of certain developments involving withholding taxes (as described under "Description of Notes -- Redemption -- Redemption for Taxation Reasons"), at a redemption price of 100% of the principal amount of the Notes to be redeemed, plus accrued interest to the redemption date, and (b) at the option of the Company, on or after May 1, 1999, in whole or in part, at the redemption prices set forth herein, plus accrued interest to the redemption date. See "Description of Notes -- Redemption -- Optional Redemption." The Notes are not entitled to any sinking fund. The Notes will mature on May 1, 2003. In the event of a Change in Control (as defined), each holder of Notes ("Holder") may require the Company to repurchase its Notes, in whole or in part, for cash or, at the Company's option, for Common Shares (valued at 95% of the average closing prices for the five trading days immediately preceding the second trading day prior to the repurchase date), at a repurchase price of 100% of the principal amount of Notes to be repurchased, plus accrued interest to the repurchase date. The Notes are unsecured obligations subordinated in right of payment to all existing and future Senior Indebtedness (as defined) of the Company and are effectively subordinated in right of payment to all indebtedness and other liabilities of the Company's subsidiaries. As of March 31, 1996, the Company had no outstanding consolidated Senior Indebtedness. The Indenture will not restrict the Company or its subsidiaries from incurring additional Senior Indebtedness or other indebtedness. See "Description of Notes -- Subordination." PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER THE CAPTION "RISK FACTORS" COMMENCING ON PAGE 5. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS IS , 1996. 3 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information may be inspected and copied at the following public reference facilities maintained by the Commission: Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; Suite 1300, Seven World Trade Center, New York, New York 10048; and The Citicorp Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661. Copies of such material may also be obtained from the Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of prescribed rates. In addition, reports, proxy statements and other information concerning the Company may be inspected and copied at the offices of the American Stock Exchange, Inc., 86 Trinity Place, New York, New York 10006. This Prospectus constitutes a part of a registration statement on Form S-3 (together with all amendments and exhibits, the "Registration Statement") filed by the Company with the Commission under the Securities Act with respect to the Offered Securities. This Prospectus omits certain of the information contained in the Registration Statement, and reference is hereby made to the Registration Statement for further information with respect to the Company and the Offered Securities. Although statements concerning and summaries of certain documents are included herein, reference is made to the copy of such document filed as an exhibit to the Registration Statement or otherwise filed with the Commission. These documents may be inspected without charge at the office of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies may be obtained at fees and charges prescribed by the Commission. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission (File No. 1-10451) are hereby incorporated by reference in this Prospectus: (i) the Company's Annual Report on Form 10-K for the year ended December 31, 1995; (ii) the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996; and (iii) the Company's Proxy Statement for its Annual Meeting of Shareholders, dated May 1, 1996. All reports and any definitive proxy or information statements filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Offered Securities shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated herein by reference, or contained in this Prospectus, shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom this Prospectus is delivered, upon the written or oral request of such person, a copy of any or all documents incorporated herein by reference, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into such documents). Requests for such documents should be directed to Daniel J. Abdun-Nabi, Esq., General Counsel, North American Vaccine, Inc., 12103 Indian Creek Court, Beltsville, Maryland 20705, (301) 470-6100. 2 4 THE COMPANY Introduction. The Company is engaged in the research, development and production of vaccines for the prevention of infectious diseases in children and adults. The Company's first product is a patented, novel monocomponent acellular pertussis (whooping cough) vaccine that the Company believes will significantly reduce the incidence of adverse reactions associated with current "whole-cell" pertussis vaccines. The Company's acellular pertussis ("aP") vaccine has been combined with diphtheria and tetanus toxoids for use in a combination diphtheria-tetanus-acellular pertussis ("DTaP") vaccine for all primary and booster pediatric doses. Regulatory approval to market this DTaP vaccine in Sweden was granted in February 1996 and the Company filed an application with the United States Food and Drug Administration ("FDA") in September 1995 seeking approval to market its DTaP vaccine in the United States for all primary and booster doses. In addition, the Company has 15 other vaccines in various stages of development, including three combination vaccines using its DTaP vaccine as an "anchor," as well as nine conjugate vaccines for the prevention of various bacterial diseases in children and adults. Vaccination against infectious disease is a primary component of pediatric, and an increasingly important element of adult, health care programs throughout the world. For example, in the United States, seven pediatric vaccines, including vaccines for the prevention of diphtheria, tetanus, pertussis and polio, are generally required by state immunization programs. According to recent data from the United States Centers for Disease Control and Prevention ("CDC"), over 22 million doses of combination diphtheria, tetanus and pertussis vaccines were sold in the United States during 1993. The Company believes that a market of at least comparable size exists outside the United States. In the adult market, vaccinations, particularly of older persons, could lower the 50,000 to 70,000 deaths annually in the United States from influenza, pneumonia and hepatitis B infections. The United States Department of Health and Human Services has estimated that the costs to society of these diseases and other diseases for which vaccines currently exist exceed $10 billion each year. As a result, health care providers, including managed care organizations, have increasingly recognized that immunization of adults is a cost effective method for preventing the incidence of disease and infection. DTaP Vaccine. Vaccination against diphtheria, tetanus and pertussis is mandated by most states for all children with primary doses administered at the ages of two, four and six months and with booster doses administered at between 12 to 18 months of age and immediately prior to entering grade school. The Company believes that DTaP vaccines will replace the "whole cell" DTP vaccines currently marketed. The "whole cell" pertussis component of these DTP vaccines is generally believed to be the leading cause of the adverse reactions associated with the existing vaccines, which range from minor rashes to fevers to convulsions and collapse. In the 1970s and 1980s, negative publicity regarding the side effects of "whole cell" pertussis vaccines led to decreased rates of acceptance for the vaccine in Japan and certain European countries, and to the suspension of its use in Sweden in 1979. Unlike "whole-cell" and other acellular pertussis vaccines, the Company's aP vaccine consists solely of pertussis toxin that has been purified and chemically inactivated (a "toxoid"). Clinical studies have shown that the Company's toxoid induces immunity with fewer serious adverse reactions than currently used "whole cell" pertussis vaccines. The Company holds exclusive licenses under United States and foreign patents on the aP toxoid and the method of its manufacture. Combination Vaccines. The Company is developing combination vaccines by combining the DTaP vaccine as an "anchor" with additional pediatric vaccines that may be administered in a single injection. The Company believes that, in many instances, these combination vaccines may replace stand-alone vaccines because combination vaccines will reduce the number of required injections, lower treatment costs and improve compliance with standard vaccination schedules. The Company's first combination vaccine, DTaP-IPV, combines an enhanced, inactivated polio vaccine ("IPV") with the Company's DTaP vaccine. An application was filed in Denmark in October 1995 seeking regulatory approval to market the DTaP-IPV vaccine for all primary and booster doses for 3 5 infants and children. In the United States, the Advisory Committee on Immunization Practices ("ACIP") is drafting a proposal to recommend the utilization of IPV for one or more of the five doses administered in the standard polio vaccination schedule. Upon issuance of such recommendation, the Company intends to pursue regulatory approval in the United States for its DTaP-IPV vaccine. The Company also is developing a DTaP-HIB vaccine that combines the Company's DTaP vaccine with a vaccine against meningitis caused by Haemophilus influenzae type b bacteria ("HIB"), as well as a DTaP-IPV-HIB vaccine. Currently, there are no combination vaccines using a DTaP vaccine licensed for marketing in the United States. Conjugate Vaccines. The Company, using patented and proprietary technologies, is developing several conjugate vaccines for prevention of diseases in children and adults. Conjugate vaccines are formed by chemically linking (i.e., conjugating) polysaccharides to a protein. This procedure has been shown to enhance the immunogenic properties of the polysaccharides, particularly in infants. Conjugate vaccines are useful in preventing several serious diseases, including meningitis, pneumonia and strep throat. Vaccines are not currently available for the prevention of several of these diseases. A Phase I clinical trial has been conducted for a vaccine against group B streptococcal infections utilizing patented technologies held by the Company. The Company has received regulatory approval in the United Kingdom to commence a Phase I clinical trial in adults for its meningococcal C conjugate vaccine. Collaborations. To further develop and expand its technologies in pediatric and adult vaccines, the Company has established several relationships, including licenses and collaborations with pharmaceutical companies, universities and government agencies. Some of these institutions have provided funding for clinical trials and research, and conducted joint development projects with the Company. For example, the Company has entered into agreements with Pasteur-Merieux Serums et Vaccins, a wholly owned subsidiary of Rhone-Poulenc, which operates in North America through its subsidiary Connaught Laboratories ("Pasteur Merieux-Connaught"), to jointly develop the Company's new conjugate vaccine against meningococcus B infection, for immunization of all adults, adolescents and infants. Additionally, the Company is collaborating with the National Institutes of Health in the development of its Group B streptococcal and adult pertussis vaccines. Business Strategies. The objective of the Company is to become a leading manufacturer of state-of-the-art vaccines for the prevention of infectious diseases in children and adults. In pursuing this objective, the Company focuses on developing and securing patented and proprietary vaccine technologies. In addition, the Company seeks to minimize the development time and costs for its products by: (i) licensing technologies that, in preclinical studies or clinical trials, have demonstrated prospects for becoming successful vaccine candidates; (ii) collaborating with government and academic institutions to jointly develop new vaccines and sponsor clinical trials; and (iii) pursuing collaborations with pharmaceutical and vaccine manufacturers, where appropriate, to maximize the value of the Company's products and technologies. The Company intends to market its DTaP vaccine directly to United States and certain foreign governments through established purchasing programs. In the United States, federal and state governments currently purchase more than 50% of pediatric vaccines. In addition, the Company intends to develop a focused sales force to target large managed care organizations in the United States. The Company will also seek distribution, joint venture and similar arrangements with third parties to sell its products to the private health care market in the United States and in areas of the world where local partners are critical to market penetration. The Company also intends to focus on the development and commercialization of vaccines for the prevention of diseases and infections in adults, for which demand is anticipated to increase in light of the trend towards managed care and the established cost-effectiveness of vaccines. 4 6 RISK FACTORS In addition to the other information included in this Prospectus, the following risk factors should be carefully considered in evaluating an investment in the Offered Securities. This Prospectus contains certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which involve risks and uncertainties. The Company's actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in this section. Dependence Upon Approval and Commercialization of DTaP Vaccine. The Company has generated only limited revenue from the sale of its DTaP vaccine. Prior to commercial introduction, the Company's DTaP vaccine must be approved by the FDA for sales in the United States and by similar authorities for sales in other countries. The DTaP vaccine was approved for sale in Sweden in February 1996 and is currently being considered for approval for sale in the United States by the FDA. There can be no assurance as to when or whether the Company will receive such approval, or that any such approval will not be subject to additional testing requirements. The commercial introduction of the Company's DTaP vaccine will require the Company to manufacture and produce large quantities of vaccine in its manufacturing facility, which was modified for increased production in 1995. The Company has limited experience manufacturing commercial quantities of vaccines and operating its manufacturing facility. Accordingly, there can be no assurance that the production process will not fail or become subject to substantial disruptions. To successfully introduce and commercialize its DTaP vaccine, the Company will be required to implement successfully its sales and marketing strategy that will enable it to, among other things, participate in established purchasing programs of the federal and state governments, establish an identity and reputation for the Company and its products, and create an awareness among pediatricians of the safety and efficacy of the vaccine. There can be no assurance that the Company will successfully implement its sales and marketing strategy. In attempting to do so, the Company will encounter intense competition from other vaccine producers. There can be no assurance that the Company will produce a commercially viable product, attain sufficient market share, or distinguish its vaccine product from that of its competitors. Additionally, successful commercialization of the DTaP vaccine depends upon whether the ACIP and the American Academy of Pediatrics issue a nationwide recommendation for preferred use of acellular pertussis vaccines in infants and children. There can be no assurance such a recommendation will be issued. Currently, the Company's prospects for becoming profitable, and its ability to pay principal and interest on the Notes when due, are substantially dependent upon the successful commercialization of the DTaP vaccine, as well as the successful development and commercialization of additional combination vaccines in which the DTaP vaccine is used as an "anchor." There can be no assurance that the Company will be able to successfully market its DTaP vaccine or other related combination vaccines at levels sufficient to generate necessary profits. To the extent that the Company is unable to generate commercial sales of its DTaP vaccine, the Company will be required to use a portion of the proceeds from the Notes to pay interest on the Notes. If the Company is unable to generate sufficient cash flow from sales of its products to repay the Notes, the Company will be required to refinance the Notes at maturity or upon redemption. There can be no assurance that such financing will be available on commercially reasonable terms. Dependence on Suppliers. While the Company produces the pertussis component of the DTaP vaccine, it has purchased, and intends to continue to purchase, its requirements of the diphtheria and tetanus toxoids and enhanced IPV from Statens Seruminstitut, an enterprise owned by the Danish government ("SSI"). There can be no assurances that SSI will be able to meet the Company's requirements or that SSI will not experience difficulties in obtaining necessary regulatory approvals or disruptions in its production of diphtheria and tetanus toxoids and IPV. Certain of the Company's production processes require raw materials from sole sources or materials that are difficult for suppliers to produce and certify for the Company's specifications. The 5 7 Company also may experience temporary or permanent shortages of critical raw materials necessary for continued production of its vaccines. Any shortage of these materials could delay production efforts, adversely impact production costs and yields, or necessitate the use of substitute materials, any of which could have a significant adverse impact on the Company's operations. In addition, the Company has contracted with third parties for the sterile fill, labelling, and packaging of its vaccine products until the Company obtains its own facilities to perform these operations. Failure of any such contractor to meet the Company's requirements may involve costly delays and significant expense, and would require additional regulatory approval as the Company seeks alternative arrangements. Changes in Government Purchasing Policies. Children in the United States receive immunizations from public providers, such as local health departments, as well as from private providers. Immunizations provided by public providers are generally paid for through federal and state government funding under public health programs. These programs are intended to reduce barriers to immunization and to improve immunization rates by providing free vaccine to qualifying low- income and uninsured infants and children. Government purchases historically have been at prices substantially below those offered to the private sector and presently account for more than 50% of the vaccine doses distributed in the United States. There are a number of legislative initiatives being considered in Congress that, if adopted, could significantly modify government vaccine programs by, among other things, restricting the federal government's purchasing authority or substantially reducing the funding available for government vaccine purchases. The Company is unable to predict which legislative initiative, if any, will ultimately be enacted or the effect any such initiative may ultimately have on the Company's business or results of future operations. In addition, proposals for health care reform may be considered in the future by federal and state governments and some of these proposals, if adopted, may limit prices charged by pharmaceutical and vaccine manufacturers for their product. No Assurance of Effective Marketing. The Company has little experience in marketing its products. The Company is in the process of implementing its marketing and sales plans for its products; however, there can be no assurances that the size and make-up of this organization or the Company's current marketing and sales strategies will be sufficient for the successful commercialization of its products. The factors affecting successful commercial launch of the Company's vaccines in the United States include, among others: establishing an identity and reputation for the Company and its products; creating an awareness among pediatricians of the safety and efficacy of the Company's vaccines; distinguishing the Company's products from those of its competitors; whether the ACIP and the American Academy of Pediatrics issue a nationwide recommendation for preferred use of acellular pertussis vaccines in infants and children; and establishing effective distribution channels. Further, SSI holds exclusive marketing and distribution rights to certain Company products in Scandinavia, the Netherlands, the Baltic States, Iceland, Poland and Russia ("SSI's Territory"). There can be no assurance that SSI will be able to distribute and market those products successfully within its territory. There also can be no assurance that the Company will be successful in negotiating and executing marketing and/or distribution agreements with any other third parties covering any products or that any other third party will be able to market the Company's products successfully. Uncertainties Related to Clinical Trials. Before obtaining regulatory approval for the commercial sale of any products under development, the Company must demonstrate through pre-clinical studies and clinical trials that these products are safe and effective. The results from pre-clinical studies and early clinical trials may not be predictive of results obtained in large-scale clinical trials. There can be no assurance that large-scale clinical trials for any of the Company's products will demonstrate safety and efficacy, be sufficient to support application for regulatory approval, or lead to marketable products. A number of companies in the biotechnology industry have suffered significant setbacks in advanced clinical trials even after achieving promising results in earlier trials. 6 8 Need for Regulatory Approvals. The Company's vaccine products, product development activities and manufacturing facilities and processes are subject to extensive and rigorous regulation by the FDA and by comparable agencies in foreign countries. The Company has not commercialized any products or received product approval from the FDA, and only one approval has been received from a regulatory authority outside of the United States. The Company's vaccine products are subject to rigorous preclinical and clinical testing requirements, and approval processes by the FDA and similar authorities in other countries. Approval of the Company's products for commercial introduction in the U.S. currently requires both a license for each product and a license for each production facility. The process of obtaining licenses can be costly and time consuming, and there can be no assurance that the licenses will be granted, or that FDA review will not involve delays that would adversely affect the Company's ability to market products. There also can be no assurance that any of the products under development by the Company will demonstrate the safety or efficacy profiles necessary for regulatory approval, or that the Company's products under development or its production facility will receive the requisite regulatory approvals and licenses in a timely fashion or at all. There also can be no assurances that the FDA will not require the Company to conduct additional testing to assess the safety and/or efficacy of the Company's vaccines. Even if the necessary licenses are obtained from the FDA, there may be limitations on product use and the FDA can withdraw approvals at any time upon the occurrence of unforeseen problems. The FDA can also limit or prevent the manufacture or distribution of the Company's products and require a recall of such products. The FDA regulations depend heavily on administrative and scientific interpretation and advisory committee determinations, and there can be no assurance that future interpretations by the FDA or other regulatory bodies, with possible prospective and retroactive effect, will not adversely affect the Company. In addition, the FDA and various state agencies inspect the Company and its facilities from time to time to determine whether the Company is in compliance with regulations, including manufacturing, testing, recordkeeping, quality control and labelling practices. A determination that the Company is in material violation of such regulations could have a material adverse effect on the Company. Manufacturing and Scale-up. The production of vaccines is a highly complex, biological process involving many steps, commencing from seed culture through final production. The production process could fail at any point resulting in the failure and continued inability to meet production requirements. No assurance can be given that the Company will be successful in establishing and maintaining the commercial production of its vaccines or that it will be capable of producing a competitively priced product. Patent Protection and Proprietary Information. The vaccine industry traditionally has placed considerable importance on obtaining and maintaining patent and trade secret protection for significant new technologies, products and processes. The Company believes that such protection will be an important factor in its success and may require the expenditure of substantial resources. Many companies, universities and research institutions have applied for and/or obtained patents for vaccine products and technologies that may be competitive or inconsistent with those held by or licensed to the Company. No assurance can be given as to the degree and range of protection any patents will afford the Company, that additional patents will be issued to the Company, or as to the extent to which the Company will be successful in avoiding any patents granted to others. Further, there can be no assurance that others have not or will not independently develop or otherwise properly gain access to technology or information that is substantially similar to that which is unpatented yet considered proprietary by the Company. The Company also may desire or be required to obtain licenses from others in order to develop, produce and market commercially viable products effectively. Failure to obtain those licenses could have a significant adverse effect on the Company's ability to commercialize its vaccine products. There can be no assurance that such licenses will be obtainable on commercially reasonable terms, if at all, that the patents underlying such licenses will be valid and enforceable or that the proprietary nature of the unpatented technology underlying such licenses will remain proprietary. There has been, and the Company believes that there may be in the future, significant litigation in the industry regarding patent and 7 9 other intellectual property rights. If the Company becomes involved in such litigation, it could consume substantial resources. Competition and Technological Change. Competition in the vaccine industry is intense. Competitors of the Company both in the United States and internationally include major pharmaceutical and chemical companies, specialized biotechnology firms, universities and other research institutions. Many of these competitors are actively developing competing vaccines. For example, there are two DTaP vaccines licensed for use in the United States for booster doses, and several competitors are currently seeking FDA regulatory approval for DTaP vaccines for both primary and booster doses. In addition, several competitors' DTaP vaccines have been licensed for sale outside of the United States. Many of these competitors have substantially greater resources, more extensive experience in conducting clinical testing and obtaining regulatory approvals for their products, greater operating experience, larger research and development and marketing staffs, and greater production capabilities than those of the Company. In addition, the vaccine industry is subject to significant technological change. There can be no assurance that the Company's competitors will not succeed in designing around the Company's patents, developing technologies and products that are as or more effective than any that have been or are being developed by the Company, or developing technologies and products that would render the Company's technology and products obsolete and noncompetitive. Product Liability; Limited Insurance. The testing and marketing of vaccine products entail an inherent risk of product liability. Although the Company has limited product liability insurance coverage, it may seek additional insurance coverage as it commences commercialization of its products. There can be no assurance that adequate additional insurance coverage will be available at acceptable cost, if at all, or that a product liability claim would not materially adversely affect the business or financial condition of the Company. To the extent the Company is not covered by insurance, the Company faces potential liability that could be substantial in the event of claims. Lack of Profitability. The Company's accumulated deficit, as of March 31, 1996, was approximately $41.8, and the Company presently has limited revenues. The Company expects to incur additional losses until such time as the Company makes significant commercial sales of its DTaP product. The Company's ability to achieve and maintain profitability is dependent upon its ability to develop products that are effective and commercially viable, to continue to obtain regulatory approvals for production and sale of its products, and to produce and market its products successfully. There can be no assurance that the Company will become profitable. Absence of Trading Market for the Notes. The Notes were issued in May 1996 to a small number of institutional investors and non-U.S. persons. The Registration Statement of which this Prospectus forms a part is filed pursuant to the Registration Rights Agreement, which does not obligate the Company to keep the Registration Statement effective after the third anniversary of the date of the Original Offering or, if earlier, the date when all the Notes and the Common Shares issuable on conversion thereof covered by the Registration Statement have been sold pursuant to the Registration Statement. The Company does not intend to apply for listing of the Notes on any securities exchange or to seek approval for quotation through any automated quotation system. Accordingly, there can be no assurance as to the development or liquidity of any market for the Notes. Availability of Capital. It is anticipated that the Company will continue to expend significant amounts of capital to fund its operations and capital expenditures. The Company plans to finance its cash requirements from: its current funds, including the proceeds of the sale of the Notes in the Original Offering; the sale of additional investment securities; revenues from product sales and collaborative agreements; the exercise of expiring stock options; the sale of debt and/or equity securities; mortgage financing; leases; and fees and payments from license, collaboration and/or distribution agreements. There can be no assurance that the Company will be able to satisfy its funding requirements through these alternatives. 8 10 Dependence on Attracting and Retaining Qualified Personnel. The Company's success in developing marketable products and achieving a competitive position will depend, in part, on its ability to attract and retain qualified personnel. Competition for such personnel is intense, and no assurance can be given that the Company will be able to continue to attract or retain such personnel. The loss of key personnel could adversely affect the Company. Dividends and Taxation. The Company has never paid cash dividends on its Common Shares. The Company currently intends to retain earnings, if any, to finance the growth and development of its business and does not anticipate paying cash dividends in the foreseeable future. Moreover, any profits earned by the U.S. subsidiary of the Company, American Vaccine Corporation ("American Vaccine"), will not be distributable directly to the Company's shareholders. Instead, American Vaccine must declare and pay a dividend to the Company, and the Company in turn must declare a dividend to its shareholders. This will subject each dividend to a withholding tax. Impact of Becoming a Passive Foreign Investment Company. If more than a certain percentage of the Company's assets or income become passive, the Company will be classified for U.S. tax purposes as a passive foreign investment company ("PFIC"), and a U.S. taxpayer may be subject to an additional federal income tax on receiving certain dividends from the Company or selling Common Shares. See "Certain Income Tax Considerations." Ranking; Subordination. The Notes are unsecured general obligations of the Company and subordinated to the prior payment in full of all existing and future Senior Indebtedness of the Company. The Notes are effectively subordinated in right of payment to all indebtedness and other liabilities of the Company's subsidiaries. See "Description of Notes -- Subordination." As of March 31, 1996, the Company had no outstanding consolidated Senior Indebtedness. There are no restrictions in the Indenture on the creation of additional Senior Indebtedness (or any other indebtedness), including any indebtedness ranking senior to the Notes but junior to other indebtedness of the Company or on the incurrence of additional liabilities by subsidiaries of the Company. No payment on account of principal of, premium, if any, Additional Amounts, if any, or interest on, or redemption or repurchase of, the Notes may be made by the Company if there is a default in the payment of principal, premium, if any, or interest (including a default under any repurchase or redemption obligation) or other amounts with respect to any Senior Indebtedness or if any other event of default with respect to any Senior Indebtedness, permitting the holders thereof to accelerate the maturity thereof, shall have occurred and shall not have been cured or waived or shall not have ceased to exist after written notice to the Company and the Trustee by any holder of Senior Indebtedness. Upon any acceleration of the principal due on the Notes or payment or distribution of assets of the Company to creditors upon any dissolution, winding up, liquidation or reorganization, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all principal, premium, if any, and interest or other amounts due on all Senior Indebtedness must be paid in full before the Holders of the Notes are entitled to receive any payment. By reason of such subordination, in the event of insolvency, creditors of the Company who are holders of Senior Indebtedness may recover more, ratably, than the Holders of the Notes, and such subordination may result in a reduction or elimination of payments to the Holders of the Notes. See "Description of Notes -- Subordination." Voting Control by Principal Shareholders. The principal shareholders of the Company, BioChem and Dr. Phillip Frost, either directly or through affiliates, are parties to a Shareholders' Agreement requiring, among other things, that the Common Shares covered by the agreement be voted together for the election of directors. As of March 31, 1996, these principal shareholders beneficially owned approximately 18,972,101 shares of the Company's outstanding Common Shares, which represents approximately 54.8% of the Company's outstanding Common Shares. 9 11 Volatility of Stock Price. The market prices for securities of many biotechnology and pharmaceutical companies, including the Company, have been highly volatile. Many factors have historically had, and are expected to continue to have, a significant impact on the Company's business and on the market price of the Notes and the Common Shares into which the Notes are convertible, including: announcements by the Company and others regarding the results of regulatory approval filings, clinical trials or other testing; technological innovations or new commercial products by the Company or its competitors; government regulations; developments concerning proprietary rights; public concern as to safety of vaccine and pharmaceutical products; and economic or other external factors. Shares Eligible for Future Sale. Sales of substantial amounts of Common Shares in the public market following the sale of the Offered Securities by the Selling Holders could have an adverse effect on the price of the Company's Common Shares and the Notes. To the extent that either of the two principal shareholder groups determines to sell a substantial number of their Common Shares, such sales could significantly increase the volatility of the market price of the Common Shares. In addition, one of the principal shareholders holds certain registration rights concerning Common Shares that it owns. The Company's officers and directors, and certain other investors, have agreed that, until after July 30, 1996, they will not, subject to certain conditions, sell or otherwise dispose of Common Shares or securities exchangeable or convertible into Common Shares. USE OF PROCEEDS The Company will receive no proceeds from the sale, if any, by the Selling Holders of the Notes and Common Shares. DETERMINATION OF OFFERING PRICE The Notes and Common Shares offered hereby, or which may be offered hereby, will be offered at fixed prices, at prevailing market prices at the time of such sale, at varying prices determined at the time of sale or at negotiated prices. 10 12 DESCRIPTION OF NOTES The Notes were issued under an Indenture, dated as of May 7, 1996 (the "Indenture"), between the Company and Marine Midland Bank, as Trustee, copies of which are available for inspection at the Corporate Trust Office of the Trustee in the Borough of Manhattan, The City of New York, and at the offices of the Paying Agent. Wherever particular defined terms of the Indenture (including the Notes and the various forms thereof) are referred to, such defined terms are incorporated herein by reference (the Notes and various terms relating to the Notes being referred to in the Indenture as "Securities"). References in this section to the "Company" are solely to North American Vaccine, Inc. and not its subsidiaries. The following summaries of certain provisions of the Indenture do not purport to be complete and are subject to, and are qualified in their entirety by reference to, the detailed provisions of the Notes and the Indenture, including the definitions therein of certain terms. References to interest and any other amounts payable in respect of the Notes shall include any Additional Amounts payable in respect thereof. GENERAL The Notes are unsecured subordinated obligations of the Company, are limited to $86,250,000 aggregate principal amount, and mature on May 1, 2003. The Notes bear interest at the rate of 6.50% per annum from May 7, 1996, payable semiannually on May 1 and November 1 of each year, commencing on November 1, 1996. Interest payable per $1,000 principal amount of Notes for the period from May 7, 1996 to November 1, 1996 will be $31.4167. The Notes are convertible into Common Shares initially at the conversion price of $24.858 per share, subject to adjustment upon the occurrence of certain events described under "-- Conversion Rights," at any time after August 6, 1996, and prior to the close of business on the maturity date, unless previously redeemed or repurchased. The Notes are redeemable (a) at the option of the Company, in the event of certain developments involving United States and Canadian withholding taxes as described below under "-- Redemption -- Redemption for Taxation Reasons," at a redemption price of 100% of the principal amount of the Notes to be redeemed, plus accrued interest to the redemption date and (b) at the option of the Company, on or after May 1, 1999, in whole or in part, at the redemption prices set forth below under "-- Redemption -- Optional Redemption," plus accrued interest at the redemption date. The Notes are unsecured obligations of the Company and are subordinated in right of payment to all existing and future Senior Indebtedness (as defined below) of the Company and are effectively subordinated in right of payment to all indebtedness and other liabilities of the Company's subsidiaries. Neither the Notes nor the Indenture limits or restricts the amount of or the terms and conditions of other indebtedness which may be incurred or issued by the Company or its subsidiaries or contains any financial or similar covenants of, or restrictions on, the Company. FORM AND DENOMINATION Except as provided below, Notes are represented by one or more global Notes in definitive, fully registered form without interest coupons (collectively, the "Global Notes") and have been deposited with the Trustee as custodian for The Depository Trust Corporation ("DTC") and registered in the name of a nominee of DTC. Except in the circumstances described below under "-- Global Notes," owners of beneficial interests in Global Notes will not be entitled to receive physical delivery of certificated Notes. The Notes are not issuable in bearer form. Notes initially purchased by Institutional Accredited Investors were issued only in certificated form. 11 13 The Notes will be issued only in fully registered form, without exception. Notes are available in denominations of $1,000 and integral multiples thereof. No service charge will be made for any registration of transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any tax or other government charge payable in connection therewith. The Company initially appointed the Trustee at its corporate trust office as paying agent, transfer agent, registrar and conversion agent for the Notes. In such capacities, the Trustee is responsible for, among other things, (i) maintaining a record of the aggregate holdings of Notes represented by the Global Notes and accepting Notes for exchange and registration of transfer, (ii) ensuring that payments of principal, premium, if any, and interest in respect of the Global Notes received by the Trustee from the Company are duly paid to DTC or its nominees, (iii) transmitting to the Company any notices from Holders, (iv) accepting conversion notices and related documents, and transmitting the relevant items to the Company and (v) delivering certificates for Common Shares issued in conversion of the Notes. The Company will cause each transfer agent to act as a registrar and will cause to be kept at the office of each transfer agent a register in which, subject to such reasonable regulations as it may prescribe, the Company will provide for the registration of the Notes and registration of transfers of the Notes. The Company may vary or terminate the appointment of any paying agent, transfer agent or conversion agent, or appoint additional or other such agents or approve any change in the office through which any such agent acts, provided that there shall at all times be a paying agent, a transfer agent and a conversion agent in the Borough of Manhattan, The City of New York, New York. The Company will cause notice of any resignation, termination or appointment of the Trustee or any paying agent, transfer agent or conversion agent, and of any change in the office through which any such agent will act, to be provided to Holders of the Notes. GLOBAL NOTES The following description of the operations and procedures of DTC, Euroclear and CEDEL are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them from time to time. The Company takes no responsibility for these operations and procedures and urges investors to contact the system or their participants directly to discuss these matters. Upon the issuance of the Global Notes, DTC credited, on its internal system, the respective principal amount of the individual beneficial interests represented by such Global Notes to the accounts with DTC ("participants") or persons who hold interests through participants. Ownership of beneficial interests in the Global Notes are shown on, and the transfer of that ownership is effected only through, records maintained by DTC or its nominee (with respect to interests of participants) and the records of participants (with respect to interests of persons other than participants). AS LONG AS DTC, OR ITS NOMINEE, IS THE REGISTERED HOLDER OF A GLOBAL NOTE, DTC OR SUCH NOMINEE, AS THE CASE MAY BE, WILL BE CONSIDERED THE SOLE OWNER AND HOLDER OF THE NOTES REPRESENTED BY SUCH GLOBAL NOTE FOR ALL PURPOSES UNDER THE INDENTURE AND THE NOTES. Unless DTC notifies the Company that it is unwilling or unable to continue as depository for a Global Note, or ceases to be a "Clearing Agency" registered under the Exchange Act, or announces an intention permanently to cease business or does in fact do so, or an Event of Default has occurred and is continuing with respect to a Global Note, owners of beneficial interests in a Global Note will not be entitled to have any portions of such Global Note registered in their names, will not receive or be entitled to receive physical delivery of Global Notes in definitive form and will not be considered the owners or Holders of the Global Note (or any Notes represented thereby) under the Indenture or the Notes. In addition, no beneficial owner of an interest in a Global Note will be able to transfer that interest except in accordance with DTC's applicable procedures (in addition to those under the Indenture referred to herein and, if applicable, those of Euroclear and CEDEL). In the event that 12 14 owners of beneficial interests in a Global Note become entitled to receive Notes in definitive form, such Notes will be issued only in registered form in denominations of U.S.$1,000 and integral multiples thereof. Investors may hold their interests in the Global Notes, through CEDEL or Euroclear, if they are participants in such systems, or indirectly through organizations which are participants in such systems. After the expiration of the Restricted Period (but not earlier), investors may also hold such interests through organizations other than CEDEL and Euroclear that are participants in the DTC system. CEDEL and Euroclear will hold interests in the Global Notes, on behalf of their participants through customers' securities accounts in their respective names on the books of their respective depositaries, which, in turn, will hold such interests in the Global Notes, in customer's securities accounts in the depositaries' names on the books of DTC. Investors may hold their interests in the Global Notes, directly through DTC, if they are participants in such system, or indirectly through organizations (including Euroclear and CEDEL) which are participants in such system. All interests in a Global Note, including those held through Euroclear or CEDEL, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear and CEDEL may also be subject to the procedures and requirements of such system. Payments of the principal of, premium, if any, and interest on Global Notes will be made to DTC or its nominee as the registered owner thereof. Neither the Company, the Trustee nor any of their respective agents will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Subject to the following considerations, beneficial interests in the Global Notes will trade in DTC's Same-Day Funds Settlement System, and secondary market trading activity in such interests will therefore settle in immediately available funds. The Company expects that DTC or its nominee, upon receipt of any payment of principal or interest in respect of a Global Note representing any Notes held by DTC or its nominee, will immediately credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Notes for such Notes as shown on the records of DTC or its nominee. The Company also expects that payments by participants to owners of beneficial interests in such Global Notes held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in "street name." Such payments will be the responsibility of such participants. Transfers between participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same-day funds. Transfers between participants in Euroclear and CEDEL will be effected in the ordinary way in accordance with their respective rules and operating procedures. Subject to compliance with the transfer restrictions applicable to the Global Notes described above, cross-market transfers between DTC participants, on the one hand, and Euroclear or CEDEL participants, on the other hand, will be effected in DTC in accordance with DTC's rules on behalf of Euroclear or CEDEL, as the case may be, by its respective depositary; however, such cross-market transactions will require delivery of instructions to Euroclear or CEDEL, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or CEDEL, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Note in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and CEDEL participants may not deliver instructions directly to the depositaries for Euroclear or CEDEL. Because of time zone differences, the securities account of a Euroclear or CEDEL participant purchasing an interest in a Global Note from a DTC participant will be credited, and any such crediting will be reported to the relevant Euroclear or CEDEL participant, during the securities 13 15 settlement processing day (which must be a business day for Euroclear and CEDEL) immediately following the DTC settlement date. Cash received on Euroclear or CEDEL as a result of sales of interests in a Global Note by or through a Euroclear or CEDEL participant to a DTC participant will be received with value on the DTC settlement date but will be available in the relevant Euroclear or CEDEL cash account only as of the business day for Euroclear or CEDEL following the DTC settlement date. DTC has advised the Company that it will take any action permitted to be taken by a Holder of Notes (including the presentation of Notes for exchange as described below) only at the direction of one or more participants to whose account with DTC interests in the Global Notes are credited and only in respect of such portion of the aggregate principal amount of the Notes as to which such participant or participants has or have given such direction. However, if there is an Event of Default (as defined below) under the Notes, DTC reserves the right to exchange the Global Notes for legended Notes in certificated form, and to distribute such Notes to its participants. DTC has advised the Company as follows: DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code, as amended, and a "Clearing Agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical transfer and delivery of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other organizations. Indirect access to the DTC system is available to other entitles such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly ("indirect participants"). Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures in order to facilitate transfers of beneficial ownership interests in the Global Notes among participants of DTC, Euroclear and CEDEL, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. None of the Company, the Trustee nor any of their respective agents will have any responsibility for the performance by DTC, Euroclear and CEDEL, their participants or indirect participants of their respective obligations under the rules and procedures governing their operations, including maintaining, supervising or reviewing the records relating to, or payments made on account of, beneficial ownership interests in Global Notes. CERTIFICATED NOTES If DTC is at any time unwilling or unable to continue as a depositary for the reasons set forth above under "-- Global Notes," or, in the case of a Global Note held for an account of Euroclear or CEDEL, Euroclear or CEDEL (as the case may be) is closed for business for 14 continuous days or announces an intention to cease or permanently ceases business, the Company will issue certificates for the Notes in definitive, fully registered, non-global form without interest coupons in exchange for the Global Notes. In addition, upon request, the Company will issue certificates for Notes in definitive, fully registered, non-global form, without interest coupons, in exchange for beneficial interests of like principal amount in any Global Note, but only upon at least 60 days' prior written notice given to the Trustee in accordance with DTC's customary procedures. Upon receipt of such notice from the Trustee, the Company will cause the requested certificates to be prepared for delivery. In all cases, certificates for Notes delivered in exchange for any Global Note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by DTC. The Holder of a Note in non-global form may transfer such Note, subject to compliance with the provisions of such legend, by surrendering it at the office or agency maintained by the Company for 14 16 such purpose of the Borough of Manhattan, The City of New York, which initially is the office of the Trustee. Notwithstanding any statement herein, the Company and the Trustee reserve the right to impose such transfer, certification, exchange or other requirements, and to require such restrictive legends on certificates evidencing Notes, as they may determine are necessary to ensure compliance with the securities laws of the United States and the states therein and any other applicable laws, to ensure that the registration statement or amendment covering the Notes or the Common Shares is declared effective by the SEC or as DTC, Euroclear or CEDEL may require. CONVERSION RIGHTS The Holder of any Note has the right, at the Holder's option, to convert any portion of the principal amount of a Note that is an integral multiple of $1,000 into Common Shares at any time after August 6, 1996 and prior to the close of business on the maturity date, unless previously redeemed or repurchased, at a conversion price of $24.858 per share (subject to adjustment as described below). The right to convert a Note called for redemption or delivered for repurchase will terminate at the close of business on the Redemption Date for such Note or the Repurchase Date, as the case may be. The right of conversion attaching to any Note may be exercised by the Holder by delivering the Note at the specified office of a Conversion Agent (see "-- Payment and Conversion"), accompanied by a duly signed and completed notice of conversion. Alternatively, if such Note is represented by a Global Note, conversion may be effected by order given to the Trustee in accordance with the applicable procedures of DTC then in effect. The conversion date will be the date on which the Note and the duly signed and completed notice of conversion are so delivered. As promptly as practicable on or after the conversion date, the Company will issue and deliver to the Trustee a certificate or certificates for the number of full Common Shares issuable upon conversion, together with payment in lieu of any fraction of a Common Share; such certificate will be sent by the Trustee to the appropriate Conversion Agent for delivery to the Holder. Such Common Shares issuable upon conversion of the Notes will be fully paid and nonassessable and will rank pari passu with the other Common Shares of the Company outstanding from time to time. Any Note surrendered for conversion during the period after the close of business on any Regular Record Date to the opening of business on the next succeeding Interest Payment Date (except Notes called for redemption on a Redemption Date or to be repurchased on a Repurchase Date during such period) must be accompanied by payment of an amount equal to the interest payable on such Interest Payment Date on the principal amount of Notes being surrendered for conversion. In the case of any Note which has been converted after any Regular Record Date but before the next Interest Payment Date, interest which is payable on such Interest Payment Date shall be payable on such Interest Payment Date notwithstanding such conversion, and such interest shall be paid to the Holder of such Note on such Regular Record Date. Holders that surrender Notes for conversion on a date that is not an Interest Payment Date will not receive any interest for the period from the Interest Payment Date next preceding the date of conversion to the date of conversion or for any later period, even if the Notes are surrendered after a notice of redemption (except for the payment of interest on Notes called for redemption on a Redemption Date or to be repurchased on a Repurchase Date between a Regular Record Date and the Interest Payment Date to which it relates). No other payment or adjustment for interest, or for any dividends in respect of Common Shares, will be made upon conversion. Holders of Common Shares issued upon conversion will not be entitled to receive any dividends payable to holders of Common Shares as of any record time before the close of business on the conversion date. No fractional shares will be issued upon conversion but, in lieu thereof, an appropriate amount will be paid in cash by the Company based on the Market Price (as defined) of Common Shares at the close of business on the day of conversion. A Holder delivering a Note for conversion will not be required to pay any taxes or duties in respect of the issue or delivery of Common Shares on conversion but will be required to pay any tax 15 17 or duty which may be payable in respect of any transfer involved in the issue or delivery of the Common Shares in a name other than that of the Holder of the Note. Certificates representing Common Shares will not be issued or delivered unless all taxes and duties, if any, payable by the Holder have been paid. The conversion price is subject to adjustment in certain events, including, without duplication: (a) dividends (and other distributions) paid in any class of common shares of the Company, (b) the issuance of rights, options or warrants to all holders of any class of common shares of the Company entitling them to subscribe for or purchase any class of common shares of the Company at less than the then current market price (determined as of the record date for stockholders entitled to receive such rights, option or warrants) of such common shares, (c) subdivisions, combinations and reclassification of any class of common shares, (d) distributions to all holders of any class of common shares of evidences of indebtedness of the Company, shares of capital shares, cash or assets (including securities, but excluding those dividends, rights, options, warrants and distributions referred to above, dividends and distributions paid exclusively in cash and consolidations, amalgamations, arrangements and mergers to which the next succeeding paragraph applies), (e) distributions consisting exclusively of cash (excluding any cash portion of distributions referred to in (d) above, or cash distributed upon a consolidation, amalgamation, arrangement or merger to which the next succeeding paragraph applies) to all holders of any class of common shares in an aggregate amount that, combined together with (i) other such all-cash distributions made within the preceding 12 months in respect of which no adjustment has been made and (ii) any cash and the fair market value of other consideration payable in respect of any tender offer (of the type described in (f) below) by the Company or any of its subsidiaries for any class of common shares of the Company concluded within the preceding 12 months in respect of which no adjustment has been made, exceeds 12.5% of the Company's market capitalization (for this purpose being the product of the current market price per share of the applicable common shares on the record date for such distribution times the number of shares of all classes of common shares outstanding) on such date, and (f) payments to holders of any class of common shares of the Company in respect of a tender or exchange offer (other than an odd-lot offer) by the Company or any subsidiary of the Company for common shares at a price in excess of 110% of the current market price per share of such common shares on the trading day next succeeding the last date tenders or exchanges may be made pursuant to such tender or exchange offer. The Company reserves the right to make such reductions in the conversion price in addition to those required in the foregoing provisions as it considers to be advisable in order that any event treated for federal income tax purposes as a dividend of stock or stock rights will not be taxable to the recipients. No adjustment of the conversion price will be required to be made until the cumulative adjustments amount to 1.0% or more of the conversion price. In case of any consolidation, amalgamation, arrangement or merger of the Company with or into another Person or any merger of another Person into the Company (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of the Common Shares), or in case of any sale or transfer of all or substantially all of the assets of the Company, each Note then outstanding will, without the consent of the Holder of any Note, become convertible only into the kind and the amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer by a holder of the number of Common Shares into which such Note was convertible immediately prior thereto (assuming such holder of Common Shares failed to exercise any rights of election and that such Note was then convertible) but subject to all requirements necessary to ensure that the Notes are not subject to Canadian withholding tax as a result thereof. If at any time the Company makes a distribution of property to its stockholders which would be taxable to such stockholders as a dividend for U.S. federal income tax purposes (e.g., distributions of evidences of indebtedness or assets of the Company, but generally not stock dividends on Common Shares or rights to subscribe for Common Shares) and, pursuant to the anti-dilution 16 18 provisions of the Indenture, the number of shares into which Notes are convertible is increased, such increase may be deemed for U.S. federal income tax purposes to be the payment of a taxable dividend to Holders of Notes. See "Certain Income Tax Considerations -- U.S. Federal Income Tax Considerations -- U.S. Holders -- Adjustment of Conversion Price." SUBORDINATION The payment of the principal of, premium, if any, and interest on, and the redemption or repurchase of, the Notes is subordinated in right of payment to the extent set forth in the Indenture to the prior payment in full of the principal of, premium, if any, interest and other amounts in respect of all Senior Indebtedness of the Company. The Company had no Senior Indebtedness at March 31, 1996. Senior Indebtedness includes: (i) the principal, premium, if any, interest and other amounts in respect of (A) indebtedness of such obligor for money borrowed and (B) indebtedness evidenced by securities, debentures, bonds or other similar instruments issued by such obligor, (ii) all capital lease obligations of such obligor, (iii) all obligations of such obligor issued or assumed as the deferred purchase price of property, all conditional sale obligations of such obligor and all obligations of such obligor under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business), (iv) all obligations of such obligor for the reimbursement on any letter of credit, bankers acceptance, security purchase facility or similar credit transaction, (v) all obligations of the type referred to in clauses (i) through (iv) above of other persons for the payment of which such obligor is responsible or liable as obligor, guarantor or otherwise and (vi) all obligations of the type referred to in clauses (i) through (v) above of other persons secured by any lien on any property or asset of such obligor (whether or not such obligation is assumed by such obligor), except for any such indebtedness or other obligation that is by its terms subordinated to or pari passu with the Notes. Such Senior Indebtedness shall continue to be Senior Indebtedness and be entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any term of such Senior Indebtedness. No payment on account of principal of, premium, if any, or interest on, or redemption or repurchase of, the Notes may be made by the Company if there is a default in the payment of principal, premium, if any, or interest (including a default under any repurchase or redemption obligation) or other amounts with respect to any Senior Indebtedness or if any other event of default with respect to any Senior Indebtedness, permitting the holders thereof to accelerate the maturity thereof, shall have occurred and shall not have been cured or waived or shall not have ceased to exist after written notice to the Company and the Trustee by any holder of Senior Indebtedness. Upon any acceleration of the principal due on the Notes or payment or distribution of assets of the Company to creditors upon any dissolution, winding up, liquidation or reorganization, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all principal, premium, if any, and interest or other amounts due on all Senior Indebtedness must be paid in full before the Holders of the Notes are entitled to receive any payment. By reason of such subordination, in the event of insolvency, creditors of the Company who are holders of Senior Indebtedness may recover more, ratably, than the Holders of the Notes, and such subordination may result in a reduction or elimination of payments to the Holders of the Notes. In addition, the Notes are structurally subordinated to all indebtedness and other liabilities (including trade payables and lease obligations) of the Company's subsidiaries, as any right of the Company to receive any assets of its subsidiaries upon their liquidation or reorganization (and the consequent right of the Holders of the Notes to participate in those assets) will be effectively subordinated to the claims of that subsidiary's creditors (including trade creditors), except to the extent that the Company itself is recognized as a creditor of such subsidiary, in which case the claims of the Company would still be subordinate to any security interest in the assets of such subsidiary and any indebtedness of such subsidiary senior to that held by the Company. As of March 31, 1996, there was no outstanding indebtedness of subsidiaries of the Company (excluding intercompany indebtedness). 17 19 The Indenture does not limit the Company's ability to incur Senior Indebtedness or any other indebtedness. REDEMPTION Optional Redemption Subject to the discussion under "-- Redemption for Taxation Reasons" below, the Notes may not be redeemed at the option of the Company prior to May 1, 1999. The Notes may be redeemed, in whole or in part, at the option of the Company on or after May 1, 1999, at the redemption prices specified below, upon not less than 30 nor more than 60 days' prior notice as provided under "-- Notices" below. The redemption prices (expressed as a percentage of principal amount) are as follows for the 12-month period beginning on May 1 of the following years:
REDEMPTION YEAR PRICE ------ ---------- 1999............................................. 103.714 2000............................................. 102.786 2001............................................. 101.857 2002............................................. 100.929
and thereafter at a Redemption Price equal to 100% of the principal amount, in each case together with accrued interest to the date of redemption. Redemption for Taxation Reasons If the Company has or will become obligated to pay Additional Amounts (as described below under "-- Payment of Additional Amounts") as a result of any change in, or amendment to, the laws (including any regulations or rulings promulgated thereunder) of the United States or Canada or any political subdivision or taxing authority thereof or therein affecting taxation, or any change in, or amendment to, the application or official interpretation of such laws, regulations or rulings (any such change or amendment being herein referred to as a "Tax Law Change"), and such obligation cannot be avoided by the Company taking reasonable measures available to it, the "Tax Affected Notes" (as defined in the following sentence) may be redeemed, at the option of the Company, in whole but not in part. With respect to any Tax Law Change, a Tax Affected Note means any Note upon which the Company has become obligated to pay Additional Amounts. Such redemption shall be upon not less than 30 nor more than 60 days' prior notice as provided under "-- Notices" below, at a redemption price equal to 100% of the principal amount of the Notes, plus accrued interest to the redemption date and any Additional Amounts then payable; provided, however, that (1) no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Company would be obligated to pay any such Additional Amounts were a payment in respect of the Notes then due and (2) at the time such notice of redemption is given, the obligation to pay such Additional Amounts remains in effect. Prior to the publication of any notice of redemption pursuant to this paragraph, the Company shall deliver to the Trustee (a) a certificate stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Company so to redeem have occurred and (b) an opinion of independent counsel of recognized standing, to the effect that the Company has or will become obligated to pay such Additional Amounts as a result of a Tax Law Change. PAYMENT AND CONVERSION The principal of Notes is payable in U.S. dollars, against surrender thereof at the Corporate Trust Office of the Trustee in the Borough of Manhattan, The City of New York, or, subject to any applicable laws and regulations, at the office of any Paying Agent, by dollar check drawn on, or by transfer to a dollar account (such transfer to be made only to Holders of an aggregate principal 18 20 amount of Registered Notes in excess of $2,000,000) maintained by the Holder with, a bank in New York City. Payment of any installment of interest on Notes will be made to the Person in whose name such Notes (or any predecessor Note) is registered at the close of business on the April 15 or October 15 (whether or not a Business Day) immediately preceding the relevant Interest Payment Date (a "Regular Record Date"). Payments of such interest will be made by a dollar check drawn on a bank in New York City mailed to the Holder at such Holder's registered address or, upon application by the Holder thereof to the Trustee not later than the applicable Regular Record Date, by transfer to a dollar account (such transfer to be made only to Holders of an aggregate principal amount of Registered Notes in excess of $2,000,000) maintained by the Holder with a bank in New York City. No transfer to a dollar account will be made unless the trustee has received written wire instructions not less than 15 days prior to the relevant payment date. Any payment on the Notes due on any day which is not a Business Day need not be made on such day, but may be made on the succeeding Business Day with the same force and effect as if made on such due date, and no interest shall accrue on such payment for the period from and after such date. "Business Day," when used with respect to any place of payment, place or conversion or any other place, as the case may be, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in such place of payment, place of conversion or other place, as the case may be, are authorized or obligated by law or executive order to close; provided, however, that a day on which banking institutions in New York, New York or London, England are authorized or obligated by law or executive order to close shall not be a Business Day for certain purposes. Notes may be surrendered for conversion at the Corporate Trust Office of the Trustee in the Borough of Manhattan, The City of New York. Notes surrendered for conversion must be accompanied by appropriate notices and any payments in respect of interest or taxes, as applicable, as described above under "-- Conversion Rights." The Company has initially appointed the Trustee as Paying Agent and Conversion Agent. The Company may at any time terminate the appointment of any Paying Agent or Conversion Agent and appoint additional or other Paying Agents and Conversion Agents, provided that until the Notes have been delivered to the Trustee for cancellation, or moneys sufficient to pay the principal of, premium, if any, and interest on the Notes have been made available for payment and either paid or returned to the Company as provided in the Indenture, it will maintain an office or agency in the Borough of Manhattan, The City of New York for surrender of Notes for conversion (but only in the circumstances described in the second sentence of the immediately preceding paragraph). Notice of any such termination or appointment and of any change in the office through which any Paying Agent or Conversion Agent will act will be given in accordance with "-- Notices" below. Interest payable on Notes on any redemption date or repurchase date that is an Interest Payment Date will be paid to the Holders of record as of the immediately preceding Regular Record Date. All moneys deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of principal of, premium, if any, or interest on any Notes which remain unclaimed at the end of two years after such payment has become due and payable will be repaid to the Company, and the Holder of such Note will thereafter look only to the Company for payment thereof. PAYMENT OF ADDITIONAL AMOUNTS The Company will pay to the Holder of any Note who is a non-resident of Canada (within the meaning of the Income Tax Act (Canada)) such additional amounts ("Canadian Additional Amounts") as may be necessary in order that every net payment of the principal of, premium, if any, and interest on such Note (including payment on redemption or repurchase), after deduction or withholding for or on account of any present or future tax, assessment or governmental charge imposed upon or as a result of such payment by the Government of Canada or of any province or 19 21 territory thereof or by any authority or agency thereof or therein ("Taxing Jurisdiction") ("Canadian Taxes"), will not be less than the amount provided for in such Note to be then due and payable; provided, that no Canadian Additional Amounts will be payable with respect to a payment or credit made to a Holder of, or on behalf of an owner of a beneficial interest in, any Note (collectively, a "Canadian Excluded Holder") (i) with whom the Company does not deal at arm's length (within the meaning of the Income Tax Act (Canada)) at the time of making such payment or credit, or (ii) which is subject to Canadian Taxes by reason of its being connected with Canada or any province or territory thereof (including, without limitation, by reason of such person being a resident or being deemed to be a resident of Canada (within the meaning of the Income Tax Act (Canada)) or carrying on business or being deemed to carry on business (within the meaning of such Act) in Canada whether in or through a permanent establishment or fixed base in Canada or otherwise) otherwise than by the mere holding of the Note or the receipt of payments or credits thereunder or (iii) which could obtain an exemption from, or reduction in, the applicable Canadian Tax by satisfying reporting or certification requirements imposed by the relevant Taxing Jurisdiction and which fails to do so. The Company will also pay to the Holder of any Note who is a United States Alien (as defined below) such additional amounts ("U.S. Additional Amounts," and together with the Canadian Additional Amounts, "Additional Amounts") as may be necessary in order that every net payment of the principal of, premium, if any, and interest on such Note, after deduction or withholding for or on account of any present or future tax, assessment or governmental charge imposed upon or as a result of such payment by the United States or any political subdivision or taxing authority thereof or therein ("U.S. Taxes," and together with Canadian Taxes, "Taxes"), will not be less than the amount provided for in such Note to be then due and payable; provided, however, that the foregoing obligation to pay U.S. Additional Amounts will not apply with respect to: (a) any U.S. Tax that would not have been so imposed but for (i) the existence of any present or former connection between such Holder (or between a fiduciary, settlor, beneficiary, member, shareholder of or possessor of a power over such Holder, if such Holder is an estate, a trust, a partnership or a corporation) and the United States or any political subdivision or taxing authority thereof or therein, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident of the United States or treated as a resident thereof, or being or having been engaged in a trade or business or present therein, or having or having had a permanent establishment therein, or (ii) such Holder's present or former status as a personal holding company, a foreign personal holding company with respect to the United States, or a foreign private foundation or foreign tax exempt entity for U.S. tax purposes, or a corporation which accumulates earnings to avoid U.S. federal income tax; (b) any U.S. Tax that would not have been so imposed but for the presentation by the Holder of such Note for payment on a date more than 15 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later; (c) any U.S. Tax that is an estate, inheritance, gift, sales, transfer, personal property or similar tax, assessment or governmental charge; (d) any U.S. Tax that would not have been imposed but for the failure to comply with any certification, identification or other reporting requirements concerning the nationality, residence, identity or connection with the United States of the Holder or beneficial owner of such Note, if compliance is required by statute or by regulation of the United States as a precondition to relief or exemption from such tax, assessment or other governmental charge; (e) any U.S. Tax that is payable otherwise than by deduction or withholding from payments of principal of, premium, if any, or interest on such Note; 20 22 (f) any U.S. Tax imposed on a Holder that actually or constructively owns 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote or that is a controlled foreign corporation related to the Company through stock ownership; (g) any U.S. Tax required to be withheld by any Paying Agent from any payment of the principal of, premium, if any, or interest on any Note, if such payment can be made without such withholding by any other Paying Agent in Western Europe; (h) any U.S. Tax imposed on a Holder that is a partnership or a fiduciary or other than the sole beneficial owner of such payment, but only to the extent that any beneficial owner or member of the partnership or beneficiary or settlor with respect to the fiduciary would not have been entitled to the payment of U.S. Additional Amounts had the beneficial owner, member, beneficiary or settlor directly been the Holder of such Note; or (i) any combination of items (a), (b), (c), (d), (e), (f), (g) and (h). (The Holder of any Note with respect to which any of the listed U.S. Taxes becomes payable is referred to herein as a "U.S. Excluded Holder," and U.S. Excluded Holders, together with Canadian Excluded Holders, are referred to herein as "Excluded Holders.") The Company will make any deduction or withholding, and remit the full amount deducted or withheld to the relevant authority, in accordance with applicable law. The Company will furnish the Holders of the Notes, within 30 days after the date the payment of any Taxes is due pursuant to applicable law, certified copies of tax receipts evidencing such payment by the Company. The Company will indemnify and hold harmless each Holder of the Notes (other than an Excluded Holder) and upon written request reimburse such Holder for the amount of (i) any Taxes levied or imposed and paid by such Holder, or owner of a beneficial interest in the Note(s) held by such Holder, as a result of payments made with respect to the Notes, (ii) any liability (including penalties, interest and expenses) arising from or with respect to Taxes, and (iii) any Taxes imposed with respect to payment of Additional Amounts or any reimbursement pursuant to this sentence. Notwithstanding the foregoing, the Company shall not be obligated to pay Additional Amounts in respect of payments becoming due on the Notes more than 15 days after the redemption date for a redemption described under "-- Redemption -- Redemption for Taxation Reasons," except to the extent that the Company's obligations to pay such Additional Amounts does not arise from the Tax Law Change that resulted in such redemption. For purposes of this Prospectus, a "United States Alien" is any person who, for U.S. federal income tax purposes, is a foreign corporation, a nonresident alien individual, a nonresident alien fiduciary of a foreign estate or trust, or a foreign partnership one or more of the members of which is, for U.S. federal income tax purposes, a foreign corporation, a nonresident alien individual or a nonresident alien fiduciary of a foreign estate or trust. At least 30 days prior to each date on which any payment under or with respect to the Notes is due and payable, if the Company will be obligated to pay Additional Amounts with respect to such payments, the Company will deliver to the Trustee an Officers' Certificate stating the fact that such Additional Amounts will be payable, the amounts so payable and will set forth such other information necessary to enable the Trustee to pay such Additional Amounts to Holders or owners of a beneficial interest in the Notes, as the case may be, on the payment date. CHANGE IN CONTROL The occurrence of a Change in Control will constitute an Event of Default, provided that if the Company offers to purchase (and, to the extent such offer is accepted, purchases) all or any part (in integral multiples of $1,000) of each Holder's Notes pursuant to an offer as described below (a "Change in Control Offer") at a purchase price equal to 100% of the principal amount thereof, plus, accrued and unpaid interest, if any, to the Change in Control Payment Date (the "Repurchase 21 23 Price"), from and after the Company offering to purchase (and, to the extent such offer is accepted, purchasing) such Event of Default shall be cured. The Company may, at its option, in lieu of paying the Repurchase Price in cash, pay the Repurchase Price in Common Shares valued at 95% of the average of the reported last sale price of the Common Shares (the "Market Price") for the five trading days immediately preceding the second trading day preceding the Repurchase Date; provided that payment may not be made in Common Shares unless such shares are listed on a U.S. national securities exchange or traded on the Nasdaq Stock Market at the time of payment. Within 15 days following an Event of Default caused by a Change in Control which the Company desires to cure, the Company will mail a notice to each Holder of Notes stating: (a) that a Change in Control has occurred and that such Holder has the right to require the Company to purchase all or a portion of such Holder's Notes at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the Change in Control Payment Date (as defined below); (b) whether the Company is exercising its option, in lieu of paying the Repurchase Price in cash, to pay the Repurchase Price in Common Shares as provided in the preceding paragraph; (c) the circumstances and relevant facts regarding such Change in Control (including information with respect to income, cash flow and capitalization after giving effect to such Change in Control); (d) the purchase date specified by the Company (which shall be not earlier than 30 days or later than 60 days from the date of such notice, if mailed) (the "Change in Control Payment Date"); and (e) the instructions determined by the Company consistent with the Indenture that a Holder of Notes must follow in order to have its Notes purchased. Holders of Notes will have the right to have their Notes purchased by the Company if such Notes are tendered for purchase at any time beginning on the date such notice is mailed and ending at the close of business on the fifth business day prior to the applicable Change in Control Payment Date. As used herein, a "Change in Control" means (i) an event or series of events by which any Person or other entity or Group of Persons shall, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases, merger, consolidation or otherwise have become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 50% or more of the total voting power of all shares of capital stock of the Company entitled to vote generally in the election of directors; (ii) any consolidation of the Company with, or merger of the Company into, any other Person, any merger of another Person into the Company; or (iii) any direct or indirect, sale, lease, exchange or other transfer of all or substantially all of the assets of the Company to any Person or Group of Persons; provided, however, that a Change in Control shall not be deemed to have occurred if either (a) the closing price per share of the Common Shares for any five trading days within the period of 10 consecutive trading days ending immediately after the later of the Change in Control or the public announcement of the Change in Control (in the case of a Change in Control under clause (i) above) or the period of ten consecutive trading days ending immediately before the Change in Control (in the case of a Change in Control under clause (ii) or (iii) above) shall equal or exceed 105% of the Conversion Price of the Notes in effect on each such trading day, or (b) all of the consideration (excluding cash payments for fractional shares) in a transaction or transactions constituting the Change in Control described in clause (ii) above consists of shares of common stock traded on a national securities exchange or quoted on the Nasdaq Stock Market and as a result of such transaction or transactions the Notes become convertible solely into such common stock. Rule 13e-4 under the Exchange Act requires the dissemination of certain information to security holders in the event of an issuer tender offer and may apply in the event that the repurchase option becomes available to Holders of the Notes. The Company will comply with this rule to the extent applicable at that time. 22 24 The foregoing provisions would not necessarily afford Holders of the Notes protection in the event of highly leveraged or other transactions involving the Company that may adversely affect Holders. CONSOLIDATIONS, AMALGAMATIONS, MERGERS AND SALES OF ASSETS BY THE COMPANY The Company may not consolidate, amalgamate, enter into an arrangement or merge with or into any Person or permit any other Person to consolidate, amalgamate, enter into an arrangement or merge into the Company, or transfer, sell, convey or lease or otherwise dispose of all or substantially all of its assets (whether in one transaction or a series of related transactions) to, any Person, if such transaction or series of transactions, in the aggregate, would result in a sale, assignment, transfer, lease or other disposition of all or substantially all of the properties and assets of the Company or of the Company and its Subsidiaries on a consolidated basis to any other Person, unless (a) the Company shall be the continuing Person or the Person (if other than the Company) formed by such consolidation, amalgamation or merger, or to which the sale, lease, transfer or conveyance shall have been made, is a corporation organized and existing under the laws of (i) the United States, any State thereof or the District of Columbia or (ii) the federal laws of Canada or any province thereof, (b) the successor or transferee (if other than the Company) assumes, by supplemental indenture, all of the obligations of the Company under the Notes and the Indenture and assumes all of the Company's obligations under the Purchase Agreement and the Registration Rights Agreement, (c) immediately prior to and after giving effect to such transaction, no Event of Default or Default shall have occurred and be continuing and (d) the interest, principal, premium, if any, and other amounts paid or credited in respect of the Notes will not be subject to Canadian withholding tax as a result of such consolidation, amalgamation, arrangement or merger, sale, assignment, transfer, lease or other disposition and the Company shall have delivered to the Trustee an Opinion of Counsel of Canadian counsel to that effect. EVENTS OF DEFAULT The following are Events of Default under the Indenture: (a) failure to pay principal of or premium, if any, on any Note when due, whether or not such payment is prohibited by the subordination provisions of the Indenture; (b) failure to pay any interest on any Note or coupon when due, continuing for 30 days, whether or not such payment is prohibited by the subordination provision of the Indenture; (c) failure to observe or perform any covenant, condition or agreement to be observed or performed pursuant to the "Additional Amounts," "Amalgamations, Mergers and Sales of Assets by the Company" and "Change in Control" covenants; (d) failure to perform any other covenant of the Company in the Indenture, continuing for 60 days after written notice to the Company by the Trustee or Holders of at least 25% of the aggregate principal amount of the Notes outstanding; (e) a default by the Company or any Subsidiary (i) in the payment of any principal of or interest on any Indebtedness, the principal amount of which, individually or in the aggregate, exceeds U.S.$10,000,000, when due after giving effect to any applicable grace periods (whether such Indebtedness exists on the date of issuance of the Notes or is thereafter created) or (ii) on any Indebtedness, the principal amount of which, individually or in the aggregate, exceeds U.S.$10,000,000, which default or defaults in the case of this clause (ii) shall have resulted in such Indebtedness becoming due and payable prior to the date on which it would otherwise have become due and payable; (f) failure by the Company or any of its Subsidiaries to pay final judgments or orders aggregating in excess of U.S.$10,000,000, and either (i) the commencement by any creditor of any enforcement proceeding upon any such judgment or orders or (ii) such judgment or order remaining unstayed for 45 days; (g) certain events of bankruptcy, insolvency or reorganization of the Company or any of its Subsidiaries; and (h) the occurrence of a Change in Control; provided, that such an Event of Default will be cured after a Change in Control Offer is made and all Notes properly tendered for purchase pursuant to such Change in Control Offer are accepted for payment and such payment provided in the Change of Control Offer is made. 23 25 Subject to the provisions of the Indenture relating to the duties of the Trustee in case an Event of Default shall occur and be continuing, the Trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable indemnity. Subject to such provisions for the indemnification of the Trustee, the Holders of a majority in aggregate principal amount of the outstanding Notes ("Outstanding Notes") will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. If an Event of Default shall occur and be continuing, either the Trustee or the Holders of at least 25% in principal amount of the Outstanding Notes may accelerate the maturity of all Notes; provided, however, that after such acceleration, but before a judgment or decree based on acceleration, the Holders of a majority in aggregate principal amount of Outstanding Notes may, under certain circumstances, rescind and annul such acceleration, if all Events of Default, other than the nonpayment of accelerated principal, have been cured or waived as provided in the Indenture. For information as to waiver of defaults, see "-- Meetings, Modification and Waiver." No Holder of any Note has any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default and the Holders of at least 25% in aggregate principal amount of the Outstanding Notes shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as Trustee, and the Trustee shall not have received from the Holders of a majority in aggregate principal amount of the Outstanding Notes a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days. However, such limitations do not apply to a suit instituted by a Holder of a Note for the enforcement of payment of the principal of, premium, if any, or interest on such Note on or after the respective due dates expressed in such Note or of the right to convert such Note in accordance with the Indenture. The Company is required to furnish to the Trustee annually a statement as to the performance by the Company of certain of its obligations under the Indenture and as to any default in such performance. MEETINGS, MODIFICATION AND WAIVER The Indenture contains provision for convening meetings of the Holders of Notes to consider matters affecting their interests. Modifications and amendments of the Indenture may be made, and certain past defaults by the Company may be waived, either (i) with the written consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time Outstanding or (ii) by the adoption of a resolution, at a meeting of Holders of the Notes at which a quorum is present, by the Holders of at least 66 2/3% in aggregate principal amount of the Notes represented at such meeting. However, no such modification or amendment may, without the consent of the Holder of each Outstanding Note affected thereby, (a) change the Stated Maturity of the principal of, or any installment of interest on, any Note, (b) reduce the principal amount of, or the premium, if any, or interest on, any Note, (c) reduce the amount payable upon a redemption or mandatory repurchase, (d) modify the provisions with respect to the repurchase rights of the Holders in a manner adverse to the Holders, (e) change the obligation of the Company to pay Additional Amounts described above in a manner adverse to the Holders, (f) change the place or currency of payment of principal of, premium, if any, or interest on, any Note, (g) impair the right to institute suit for the enforcement of any payment on or with respect to any Note, (h) modify the obligation of the Company to maintain an office or agency in New York City, (i) adversely affect the right to convert Notes, (j) modify the subordination provisions in a manner adverse to the Holders of the Notes, (k) reduce the above-stated percentage of Outstanding Notes necessary to modify or amend the Indenture, (l) reduce the percentage of aggregate principal amount of Outstanding Notes necessary for waiver of compliance 24 26 with certain provisions of the Indenture or for waiver of certain defaults, (m) reduce the percentage in aggregate principal amount of Outstanding Notes required for the adoption of a resolution or the quorum required at any meeting of Holders of Notes at which a resolution is adopted or (n) modify the obligation of the Company to deliver information required under Rule 144A to permit resales of Notes and Common Shares issuable upon conversion thereof in the event the Company ceases to be subject to certain reporting requirements under the United States securities laws. The quorum at any meeting called to adopt a resolution will be persons holding or representing a majority in aggregate principal amount of the Notes at the time Outstanding and, at any reconvened meeting adjourned for lack of a quorum, 25% of such aggregate principal amount. The Holders of a majority in aggregate principal amount of the Outstanding Notes may waive compliance by the Company with certain restrictive provisions of the Indenture by written consent. The Holders of a majority in aggregate principal amount of the outstanding Notes also may waive any past default under the Indenture, except a default in the payment of principal, premium, if any, or interest, by written consent. TRANSFER AND EXCHANGE The Company has initially appointed the Trustee as security registrar and transfer agent, acting through its Corporate Trust Offices in New York City. The Company reserves the right to vary or terminate the appointment of the security registrar or of any transfer agent or to appoint additional or other transfer agents or to approve any change in the office through which any security registrar or any transfer agent acts. In the event of a redemption of less than all of the Notes for any of the reasons set forth above under "-- Redemption," the Company will not be required (a) to register the transfer or exchange of Restricted Notes for a period of 15 days immediately preceding the date notice is given identifying the serial numbers of the Notes called for such redemption or (b) to register the transfer of or exchange any Note, or portion thereof, called for redemption. NOTICES Notices to Holders of Notes will be given by mail to the addresses of such Holders as they appear in the Security Register. Such notices will be deemed to have been given on the date of such mailing. Notice of a redemption of Notes will be given at least once not less than 30 nor more than 60 days prior to the Redemption Date (which notice shall be published in accordance with the procedures described above) and will specify the Redemption Date. REPLACEMENT OF NOTES Notes that become mutilated, destroyed, stolen or lost will be replaced by the Company at the expense of the Holder upon delivery to the Trustee of the mutilated Notes or evidence of the loss, theft or destruction thereof satisfactory to the Company and the Trustee. In the case of a lost, stolen or destroyed Note, indemnity satisfactory to the Trustee and the Company may be required at the expense of the Holder of such Note before a replacement Note will be issued. PAYMENT OF STAMP AND OTHER TAXES The Company will pay all stamp and other duties, if any, which may be imposed by Canada, the United States or the United Kingdom or any political subdivision thereof or taxing authority thereof or therein with respect to the resale of the Notes. Except as described under "-- Payment of Additional Amounts," the Company will not be required to make any payment with respect to any other tax, assessment or governmental charge imposed by any government or any political subdivision thereof or taxing authority thereof or therein. 25 27 GOVERNING LAW The Indenture and the Notes will be governed by and construed in accordance with the laws of the State of New York, United States of America. The Company will submit to the jurisdiction of any federal or state court in New York City, Borough of Manhattan, for purpose of all legal actions and proceedings instituted in connection with the Notes and the Indenture. The Company has appointed CT Corporation, New York, New York as its authorized agent upon which process may be served in any such action. THE TRUSTEE In case an Event of Default shall occur (and shall not be cured), the Trustee will be required to use the degree of care of a prudent person in the conduct of his own affairs in the exercise of its powers. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any of the Holders of Notes, unless they shall have offered to the Trustee reasonable security or indemnity. CERTAIN INCOME TAX CONSIDERATIONS U.S. FEDERAL INCOME TAX CONSIDERATIONS The following discussion is a general summary of the material U.S. federal income tax considerations relevant to the acquisition, ownership, disposition and conversion of the Notes by purchasers of Notes from Selling Holders. This summary is based on provisions of the U.S. Internal Revenue Code of 1986, as amended ("Code"), existing and proposed U.S. Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as in effect as of the date of this Prospectus and all of which are subject to change (possibly with retroactive effect) and to differing interpretations. This summary deals only with purchasers who directly or beneficially hold the Notes (and Common Shares received upon conversion of the Notes) as capital assets. Furthermore, this summary does not discuss all aspects of U.S. federal income taxation that may be applicable to purchasers in light of their particular circumstances or to purchasers subject to special treatment under U.S. federal income tax law (including, for example, life insurance companies, dealers in securities, financial institutions, tax-exempt organizations, persons having a functional currency other than the U.S. dollar and owners of 10% or more of the voting shares of the Company). No advance tax ruling has been sought or obtained from the Internal Revenue Service regarding the tax consequences of the sale of Notes or Common Shares issuable upon conversion thereof by Selling Holders or purchasers of Notes therefrom or any of the matters described below. Prospective purchasers of Notes should consult their own tax advisors with regard to the application of the U.S. federal income tax law to their particular situations, as well as any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction. As used herein, the term "U.S. Holder" means a beneficial owner of a Note that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision thereof, (iii) an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source or (iv) certain former citizens of the United States whose income and gain on the Notes will be subject to U.S. taxation. As used herein, the term "U.S. Alien Holder" means a beneficial owner of a Note that is not a U.S. Holder. U.S. HOLDERS Payments of Interest. Stated interest payable on the Notes generally will be included in the gross income of a U.S. Holder as ordinary interest income at the time accrued or received, in accordance with such U.S. Holder's method of accounting for U.S. federal income tax purposes. The Company anticipates that a portion of such interest will be treated as income from U.S. sources 26 28 and that the balance will constitute foreign source "passive income" (or, in the case of certain holders, "financial services income") for U.S. foreign tax credit purposes. Disposition of the Notes. A U.S. Holder's initial tax basis in a Note generally will equal the cost of the Note. Upon the sale, exchange or retirement of a Note, a U.S. Holder generally will recognize capital gain or loss equal to the difference between the amount realized on the sale, exchange or retirement and such holder's adjusted tax basis in the Note (with certain exceptions to capital gain characterization for Notes acquired at a market discount). Such capital gain or loss will be long-term capital gain or loss if the Note was held for more than one year at the time of the sale, exchange or retirement. The deduction of capital losses is subject to limitations for U.S. federal income tax purposes. Conversion into Common Shares. In general, no gain or loss will be recognized for U.S. federal income tax purposes upon a conversion of Notes into Common Shares. However, cash paid in lieu of a fractional Common Share will result in taxable gain (or loss) to the extent that the amount of such cash exceeds (or is exceeded by) the portion of the adjusted tax basis of the Note allocable to such fractional share. The initial tax basis of Common Shares received on conversion of the Notes will equal the adjusted tax basis of the converted Notes on the date of conversion, reduced by the portion of such adjusted tax basis allocated to any fractional Common Share considered to be exchanged for cash. The holding period for Common Shares received on conversion will include the period during which the converted Notes were held. Adjustment of Conversion Price. The conversion ratio of the Notes is subject to adjustment under certain circumstances. Section 305 of the Code, and the U.S. Treasury regulations issued thereunder, may treat U.S. Holders of the Notes as having received a constructive distribution, resulting in ordinary income to the extent of the Company's current and accumulated earnings and profits (as determined for U.S. federal income tax purposes) ("E&P"), if, and to the extent that, certain adjustments of the conversion ratio increase the proportionate interest of a U.S. Holder of the Notes in the fully diluted share ownership of the Company, whether or not such U.S. Holder exercises the conversion privilege. Moreover, if there is not a full adjustment of the conversion ratio of the Notes to reflect a stock dividend or other event that increases the proportionate interest of holders of outstanding Common Shares in the assets or E&P of the Company, then such increase in the proportionate interest of holders of the Common Shares generally will be treated as a taxable distribution to such holders with respect to their Common Shares to the extent of the Company's E&P. Distributions on Common Shares. The amount of a distribution on the Common Shares will be measured by the amount of cash, and the fair market value of any property, distributed. For U.S. federal income tax purposes, the gross amount of a distribution with respect to Common Shares will include the amount of any Canadian federal income tax withheld. In general, distributions paid by the Company with respect to the Common Shares will be taxed to a U.S. Holder as ordinary income to the extent that such distributions do not exceed the Company's E&P. The amount of a distribution which exceeds the Company's E&P will be treated first as a non-taxable return of capital to the extent of the U.S. Holder's tax basis in the Common Shares and thereafter as taxable capital gain. Corporate holders generally will not be allowed a deduction for dividends received in respect of distributions on Common Shares. The Company anticipates that a portion of such distributions will be treated as income from U.S. sources and that the balance will constitute foreign source "passive income" (or, in the case of certain holders, "financial services income") for U.S. foreign tax credit purposes. Dividends paid by the Company in Canadian dollars will be included in the income of U.S. Holders in a U.S. dollar amount based upon the exchange rate between U.S. and Canadian dollars in effect on the date of receipt. A U.S. Holder will have tax basis in such Canadian dollars for U.S. federal income tax purposes equal to their U.S. dollar value on the date of receipt. Any subsequent 27 29 gain or loss in respect of such Canadian dollars arising from exchange rate fluctuations will be ordinary income or loss. Foreign Tax Credit. Subject to the limitations set forth in the Code, as modified by the United States-Canada income tax treaty, U.S. Holders may elect to claim a foreign tax credit against their U.S. federal income tax liability for Canadian income tax withheld from dividends received in respect of Common Shares. The rules relating to the determination of the foreign tax credit are complex, and prospective purchasers should consult their own tax advisors to determine whether and to what extent they would be entitled to such credit. U.S. Holders that do not elect to claim a foreign tax credit may instead claim a deduction for Canadian income tax withheld. Disposition of Common Shares. Upon the sale or other disposition of Common Shares, a U.S. Holder generally will recognize capital gain or loss equal to the difference between the amount realized on the sale and such holder's tax basis in the Common Shares. Gain or loss upon the disposition of the Common Shares will be long-term if, at the time of the disposition, the Common Shares have been held for more than one year. In the case of Common Shares acquired upon conversion of a Note, the holding period for such Common Shares will include the period during which the converted Note was held. The deduction of capital losses is subject to limitations for U.S. federal income tax purposes. Controlled Foreign Corporation Status. U.S. Holders owning (directly, indirectly or by attribution) stock representing 10% or more of the total voting power of a "controlled foreign corporation" ("CFC") are required to include in gross income their pro rata shares of certain items of income derived by the CFC (including, in certain circumstances, income invested in U.S. property or passive assets) whether or not such amounts actually are distributed, and such holders also are subject to special rules with respect to gain realized upon the disposition of CFC stock and the foreign tax credit. A foreign corporation is a CFC if more than 50% of its stock (by vote or value) is owned (directly, indirectly or by attribution) by U.S. Holders who each own (directly, indirectly or by attribution) 10% or more of the total combined voting power of its shares. To the best of the Company's knowledge, it presently is not a CFC. Passive Foreign Investment Company Status. Special U.S. federal income tax rules apply to U.S. persons owning shares of a PFIC. A foreign corporation will be considered a PFIC for any taxable year in which 75% or more of its gross income consists of certain types of passive income or 50% or more of the average value of its assets are considered "passive assets" (generally assets that generate passive income). Based upon an analysis of its financial position, the Company believes that it presently is not a PFIC for U.S. federal income tax purposes. If the Company were a CFC, however, it is possible that the Company could also be treated as a PFIC due to special rules for the determination of PFIC status in the case of CFCs. While the Company intends to continue to manage its business so as to avoid PFIC status, to the extent consistent with its other business goals, no assurances can be made that the business plans of the Company will not change in a manner that affects its PFIC determination. If the Company were classified as a PFIC, a U.S. Holder could be subject to increased tax liability (possibly including an interest charge) upon the sale or other disposition of Common Shares or upon the receipt of certain "excess distributions," unless such U.S. Holder elected to be taxed currently on its pro rata portion of the Company's income (including capital gains), whether or not such income was distributed in the form of dividends or otherwise. In the event that the Company becomes aware that it may be a PFIC for any taxable year, it will promptly notify the Holders of such determination. Backup Withholding. A U.S. Holder may be subject to backup withholding at a rate of 31% with respect to payments of principal, premium and interest on the Notes and distributions on Common Shares and also with respect to the proceeds from a disposition of Notes and Common Shares. In general, backup withholding will apply only if a U.S. Holder fails to comply with certain identification procedures or fails to properly report payments of interest and dividends. Backup withholding will not apply with respect to payments made to certain exempt recipients, such as corporations and 28 30 tax-exempt organizations. Backup withholding is not an additional tax and may be claimed as a credit against the U.S. federal income tax liability of a U.S. Holder, provided that the required information is furnished to the Internal Revenue Service. U.S. ALIEN HOLDERS Under present U.S. federal income and estate tax law, and subject to the discussion below concerning backup withholding: (a) payments of principal of and interest on the Notes by the Company or any paying agent to a beneficial owner of a Note that is a U.S. Alien Holder will not be subject to U.S. federal withholding tax, provided that, in the case of interest, (i) such holder does not own, actually or constructively, 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote, (ii) such holder is not, for U.S. federal income tax purposes, a CFC related, directly or indirectly, to the Company through stock ownership, (iii) such holder is not a bank receiving interest described in Section 881(c)(3)(A) of the Code, and (iv) the certification requirements under Section 871(h) or Section 881(c) of the Code and Treasury regulations thereunder (summarized below) are met; (b) a U.S. Alien Holder of a Note will not be subject to U.S. federal income tax on gain realized on the sale, exchange or other disposition of such Note, unless (i) such holder is an individual who is present in the United States for 183 days or more in the taxable year of sale, exchange or other disposition, and certain conditions are met, or (ii) such gain is effectively connected with the conduct by such holder of a trade or business within the United States; and (c) a Note held by an individual who is not a citizen or resident of the United States at the time of his death will not be subject to U.S. federal estate tax as a result of such individual's death, provided that, at the time of such individual's death, the individual does not own, actually or constructively, 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote and payments with respect to such Note would not have been effectively connected with the conduct by such individual of a trade or business within the United States. Sections 871(h) and 881(c) of the Code and Treasury regulations thereunder require that, in order to obtain the exemption from withholding tax described in paragraph (a) above, either (i) the beneficial owner of a Note must certify, under penalties of perjury, to the Company or paying agent, as the case may be, that such owner is a U.S. Alien Holder and must provide such owner's name and address, and U.S. taxpayer identification number, if any, or (ii) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "Financial Institution") and holds a Note on behalf of the beneficial owner thereof must certify, under penalties of perjury, to the Company or paying agent, as the case may be, that such certificate has been received from the beneficial owner by it or by a Financial Institution between it and the beneficial owner and must furnish the payor with a copy thereof. A certificate described in this paragraph is effective only with respect to payments of interest made to the certifying U.S. Alien Holder after issuance of the certificate in the calendar year of its issuance and the two immediately succeeding calendar years. Under temporary Treasury regulations, such requirement will be fulfilled if the beneficial owner of a Note certifies on Internal Revenue Service Form W-8, under penalties of perjury, to the effect that it is a U.S. Alien Holder and provides its name and address, and any Financial Institution holding a Note on behalf of the beneficial owner files a statement with the withholding agent to the effect that it has received such a statement from the beneficial owner (and furnishes the withholding agent with a copy thereof). If a U.S. Alien Holder of a Note is engaged in a trade or business within the United States, and if interest on the Note, or gain realized on the sale, exchange or other disposition of the Note, is effectively connected with the conduct of such trade or business, the U.S. Alien Holder, although exempt from U.S. withholding tax, will generally be subject to regular U.S. income tax on such 29 31 interest or gain in the same manner as if it were a U.S. Holder. In lieu of the certificate described in the preceding paragraph, such a holder will be required to provide to the Company a properly executed Internal Revenue Service Form 4224 in order to claim an exemption from withholding tax. In addition, if such U.S. Alien Holder is a foreign corporation, it may be subject to a "branch profits" tax equal to 30% (or such lower rate provided by an applicable treaty) of its effectively connected E&P for the taxable year, subject to certain adjustments. For purposes of the branch profits tax, interest on and any gain recognized on the sale, exchange or other disposition of a Note will be included in the E&P of such U.S. Alien Holder if such interest or gain is effectively connected with the conduct by the U.S. Alien Holder of a trade or business within the United States. Dividends paid (or deemed paid) on Common Shares held by a U.S. Alien Holder generally will not be subject to withholding of U.S. federal income tax to the extent such dividends are paid out of E&P for a taxable year for which the Company is subject to the branch profits tax and generally will not be subject to U.S. federal income tax unless the dividends are effectively connected with the conduct by the U.S. Alien Holder of a trade or business within the United States. A U.S. Alien Holder will not be subject to U.S. federal income tax on gain realized on the sale, exchange or redemption of Common Shares (including the receipt of cash in lieu of fractional shares upon conversion of a Note into Common Shares), unless (i) such U.S. Alien Holder is an individual who is present in the United States for 183 days or more in the taxable year of such sale, exchange or redemption, and certain conditions are met, or (ii) such gain is effectively connected with the conduct by such holder of a trade or business within the United States. Except with respect to such a receipt of cash in lieu of fractional shares, no U.S. federal income tax will be imposed upon the conversion of a Note into Common Shares. In the case of a U.S. Alien Holder, under current Treasury regulations, backup withholding (as described above under "-- Backup Withholding") will not apply to payments made by the Company or any paying agent thereof on a Note or distributions on Common Shares if such holder has provided the required certification under penalties of perjury that it is not a U.S. Holder (as defined above) or has otherwise established an exemption, provided in each case that the Company or such paying agent, as the case may be, does not have actual knowledge that the payee is a U.S. Holder. CANADIAN FEDERAL INCOME TAX CONSIDERATIONS The following is a summary of the principal Canadian federal income tax considerations of acquiring, holding and disposing of the Notes and any Common Shares issued upon conversion of the Notes in accordance with their terms generally applicable under the Income Tax Act (Canada) (the "Tax Act") to a purchaser of Notes from a Selling Holder who, for the purposes of the Tax Act and at all relevant times, is not, and is not deemed to be, resident in Canada, deals at arm's length with the Company, is not affiliated with the Company within the meaning of proposed amendments to the Tax Act released by the Department of Finance on June 20, 1996, holds the Notes and Common Shares as capital property, does not hold or use and is not deemed or determined to hold or use the Notes and Common Shares in connection with the carrying on of a business in Canada and is not otherwise required by or for the purposes of the laws of Canada to include an amount in respect of any such securities in computing income from carrying on a business in Canada and, in the case of a person that carries on an insurance business in Canada, establishes that the Notes and Common Shares are not effectively connected with such insurance business carried on in Canada. This summary does not apply to purchasers of Notes who are financial institutions within the meaning of Section 142.2 of the Tax Act. This summary is based on the current provisions of the Tax Act and the Regulations thereunder (the "Tax Regulations") in force as of the date hereof, Company counsel's understanding of the current administrative and assessing policies of Revenue Canada, Customs, Excise & Taxation ("Revenue Canada"), and all specific proposals (the "Tax Proposals") to amend the Tax Act and Tax Regulations announced by the Minister of Finance (Canada) (the "Finance Minister") prior to the date hereof and on the assumption that the Common Shares will at all relevant times be listed on 30 32 a prescribed stock exchange for purposes of the Tax Act (which currently includes the American Stock Exchange). This description is not exhaustive of all possible Canadian federal income tax consequences and, except for the Tax Proposals, does not take into account or anticipate any changes in law, whether by legislative, governmental or judicial action, and does not take into account provincial or foreign tax consequences which may differ significantly from those discussed herein. With respect to the Tax Proposals, no assurances can be given that the Tax Proposals will be enacted in the form proposed or at all. THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IT IS NOT INTENDED TO BE, NOR SHOULD IT BE CONSTRUCTED TO BE, LEGAL OR TAX ADVICE TO ANY HOLDER OF THE NOTES AND NO REPRESENTATION WITH RESPECT TO CANADIAN FEDERAL INCOME TAX CONSIDERATIONS TO ANY HOLDER OF NOTES IS MADE HEREIN. ACCORDINGLY, PROSPECTIVE PURCHASERS OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THEIR PARTICULAR CIRCUMSTANCES. FOREIGN CURRENCY TRANSLATION ISSUES Generally all amounts relevant to the computation of income under the Tax Act which are payable, paid, receivable, received or expressed in a foreign currency must be translated into Canadian dollars using an appropriate exchange rate. A holder's cost and proceeds of disposition of a Note or Common Share must be translated into Canadian dollars at the date of acquisition and at the date of disposition, respectively. Interest on Notes will generally be translated into Canadian dollars at the date on which such interest is paid or credited. Dividends paid on Common Shares will generally be translated into Canadian dollars at the date on which such dividends are paid. INTEREST ON NOTES No Canadian withholding tax will be payable on interest, or any portion of any early redemption bonus or premium deemed to be interest, paid or credited by the Company to a Holder of Notes. DIVIDENDS ON COMMON SHARES Canadian withholding tax at a rate of 25% (subject to reduction under the provisions of any relevant tax treaty) will be payable on dividends paid or credited to a Holder of Common Shares. Under the Canada-United States Income Tax Convention, 1980 (the "Convention"), the withholding tax rate applicable in respect of a beneficial owner of dividends that is a resident of the United States for purposes of the Convention, is generally reduced to 15% or, if the Holder is a corporation that beneficially owns at least 10% of the voting shares of the Company, to 6% for dividends paid or credited in 1996 and to 5% for dividends paid or credited thereafter. CAPITAL GAINS AND LOSSES Upon a disposition or deemed disposition of Notes (including on a redemption) or Common Shares, a capital gain (or loss) will generally be realized by a Holder to the extent that the proceeds of disposition, less reasonable costs of disposition, exceed (or are exceeded by) the adjusted cost base of the Notes or Common Shares, as the case may be, to such Holder thereof. Interest accrued on a Note, and any portion of any early redemption bonus or premium deemed to be interest, paid to a Holder of a Note will be excluded from a Holder's proceeds of disposition of the Note. Three quarters of any capital gain (a "taxable capital gain") is included in computing income for purposes of the Tax Act and three quarters of any capital loss is deductible only against taxable capital gain in accordance with detailed provisions of the Tax Act in that regard. Capital gain or loss realized by a Holder on the disposition of the Notes or Common Shares will not be subject to Canadian tax or deductible for Canadian tax purposes as the case may be unless the Notes or Common Shares are taxable Canadian property (as defined in the Tax Act). Notes and Common Shares will generally not be taxable Canadian property to a Holder unless such Holder and/or persons with whom such Holder did not deal at arm's length, at any time within the five year 31 33 period preceding the disposition, owned or had an option to acquire 25% or more of the issued shares of any class or series of shares of the Company. For this purpose, Revenue Canada takes the position that a Holder and persons with whom such Holder does not deal at arm's length within the meaning of the Tax Act will be considered to own any Common Shares which such Holder or such person is entitled to acquire on conversion of a Note or otherwise. Even if the Notes or Common Shares are taxable Canadian property, any capital gain realized on their disposition may be exempt from Canadian tax by reason of the provisions of a relevant tax treaty. CONVERSION OF NOTES The conversion of the principal amount of the Notes to Common Shares at the option of a Holder will be deemed not to be a disposition of the Notes and accordingly will not give rise to any capital gain or capital loss. The cost amount to a Holder of Common Shares received on the conversion will, subject to the averaging rules, be deemed to be equal to the Holder's adjusted cost base of the Notes immediately before the conversion. A Holder of Notes who receives cash not exceeding $200, in lieu of a fractional share, will have the option of recognizing the capital gain or capital loss arising on the disposition of the fractional share in computing the Holder's income for the taxation year in which the conversion occurs, or alternatively, of reducing the adjusted cost base of the Common Shares received at the time of the conversion by the amount of cash received by the Holder. THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION AND IS NOT TAX ADVICE. ACCORDINGLY, EACH PROSPECTIVE HOLDER OF NOTES SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF AN INVESTMENT IN THE NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY U.S., CANADIAN, STATE, LOCAL OR OTHER INCOME TAX LAWS AND ANY RECENT OR PROSPECTIVE CHANGES IN APPLICABLE TAX LAWS. DESCRIPTION OF CAPITAL STOCK GENERAL The Company is a Canadian corporation subject to the Canada Business Corporations Act ("CBCA"). The rights of shareholders in the Company are as provided under the CBCA, other applicable law and the Company's Articles of Incorporation and Bylaws. The Company's authorized capital stock consists of an unlimited number of shares of Common Shares, no par value, and an unlimited number of Preferred Shares issuable in series. At April 30, 1996, 30,546,495 shares of Common Shares were outstanding and 2,000,000 Series A Preferred Stock were outstanding. COMMON SHARES Each holder of Common Shares is entitled to one vote for each share held of record on each matter submitted to a vote of shareholders. Cumulative voting in the election of directors is not permitted. As a result, the holders of more than 50% of the outstanding shares have the power to elect all directors. The quorum required at a shareholders' meeting for consideration of any matter is ten percent or more of the shares entitled to vote on that matter, represented in person or by proxy. If a quorum is present, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on the matter is required for shareholder approval. Subject to the rights of any holders of Preferred Shares, the holders of Common Shares are entitled to receive dividends when, as and if declared by the Board of Directors out of funds legally available therefor and, in the event of a liquidation, dissolution or winding up of the Company, to share ratably in all assets remaining after the payment of liabilities. There are no preemptive or other subscription rights, conversion rights, or redemption or sinking fund provisions with respect to 32 34 Common Shares. All of the Common Shares outstanding, and those issued upon conversion of the Notes in accordance with the terms of the Notes will be, as of the date therefore will be legally issued, fully paid and non-assessable. PREFERRED SHARES The Board of Directors has the authority to issue an unlimited number of Preferred Shares in one or more series. The broad discretion granted to the Board of Directors to establish the terms and conditions with respect to the Preferred Shares may result in an anti-takeover effect. The only series of Preferred Shares consists of 2,000,000 shares and has been designated as the Series A Preferred Shares. Each Series A Preferred Share is convertible, at the option of the holder thereof, into two Common Shares at any time. A holder of Series A Preferred Shares will be entitled to receive dividends out of any funds legally available therefor, payable in an amount per share equal to the amount such holder would have received if such Series A Preferred Shares had been converted into Common Shares on the record date. Dividends will only be paid when declared by the Board of Directors. The holders of Series A Preferred Shares will not accrue any rights by reason of the Board's failure to declare dividends. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the holder of each Series A Preferred Share will be entitled to receive a preferential amount of Can. $2.50 per share, plus the amount of any declared but as yet unpaid dividends to the date fixed for payment of such amount, before any amounts are paid to the holders of Common Shares. After the payment or the setting apart for payment to the holders of Series A Preferred Shares of the preferential amounts payable to them as described above, the holders of Series A Preferred Shares and the holders of Common Shares will be entitled to receive, ratably share for share without distinction as to class or series, all of the remaining assets of the Company. The Series A Preferred Shares are non-voting, except as otherwise required by law. SELLING HOLDERS The Notes were originally issued by the Company and sold by Goldman Sachs International and UBS Securities LLC (the "Underwriters"), in transactions exempt from the registration requirements of the Securities Act, to persons reasonably believed by such Underwriters to be "qualified institutional buyers" (as defined in Rule 144A under the Securities Act), to a limited number of institutional investors that are accredited investors within the meaning of Rule 501(a) of the Securities Act, or outside the United States to non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act. The Selling Holders may from time to time offer and sell pursuant to this Prospectus any or all of the Notes and Common Shares issued upon conversion of the Notes. The term Selling Holder includes the holders listed below and the beneficial owners of the Notes and their transferees, pledgees, donees or other successors. The following table sets forth information with respect to the Selling Holders and the respective aggregate principal amount of Notes beneficially owned by each Selling Holder that may be offered pursuant to this Prospectus. Such information has been obtained from the Selling Holders and the Trustee. [ ] maintains ongoing business relationships with and in connection therewith provides investment banking and investment advisory services for which it receives customary fees. 33 35
AGGREGATE PRINCIPAL AMOUNT OF NOTES ------------------- 1. *..................................................................... * 2. *..................................................................... * 3. *..................................................................... * 4. *..................................................................... * 5. *..................................................................... * 6. *..................................................................... * 7. Any other holder of Offered Securities or future transferee from any such holder............................................................ * Total.................................................................... * -----
- --------------- * To be provided by amendment. None of the Selling Holders has, or within the past three years has had, any position, office or other material relationship with the Company or its affiliates. Because the Selling Holders may, pursuant to this Prospectus, offer all or some portion of the Notes or the Common Shares issuable upon conversion of the Notes, no estimate can be given as to the principal amount of the Notes or the number of Common Shares issuable upon conversion of the Notes that will be held by the Selling Holders upon termination of any such sales. In addition, the Selling Holders identified above may have sold, transferred or otherwise disposed of all or a portion of their Notes, since the date on which they provided the information regarding their holdings of Notes, in transactions exempt from the registration requirements of the Securities Act. PLAN OF DISTRIBUTION The Offered Securities may be sold from time to time to purchasers directly by the Selling Holders. Alternatively, the Selling Holders may from time to time offer the Offered Securities to or through underwriters, broker/dealers or agents, who may receive compensation in the form of underwriting discounts, concessions or commissions from the Selling Holders or the purchasers of such securities for whom they may act as agents. The Selling Holders and any underwriters, broker/dealers or agents that participate in the distribution of Offered Securities may be deemed to be "underwriters" within the meaning of the Securities Act and any profit on the sale of such securities and any discounts, commissions, concessions or other compensation received by any such underwriter, broker/dealer or agent may be deemed to be underwriting discounts and commissions under the Securities Act. The Offered Securities may be sold from time to time in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale or at negotiated prices. The sale of the Offered Securities may be effected in transactions (which may involve crosses or block transactions) (i) on any national securities exchange or quotation service on which the Offered Securities may be listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii) in transactions otherwise than on such exchanges or in the over-the-counter market or (iv) through the writing of options. At the time a particular offering of the Offered Securities is made, a Prospectus Supplement, if required, will be distributed which will set forth the aggregate amount and type of Offered Securities being offered and the terms of the offering, including the name or names of any underwriters, broker/dealers or agents, any discounts, commissions and other terms constituting compensation from the Selling Holders and any discounts, commissions or concessions allowed or reallowed or paid to broker/dealers. To comply with the securities laws of certain jurisdictions, if applicable, the Offered Securities will be offered or sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain jurisdictions the Offered Securities may not be offered or sold unless they have 34 36 been registered or qualified for sale in such jurisdictions or an exemption from registration or qualification is available and is complied with. The Selling Holders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, which provisions may limit the timing of purchases and sales of any of the Offered Securities by the Selling Holders. The foregoing may affect the marketability of such securities. Pursuant to the Registration Rights Agreement, all expenses of the registration of the Offered Securities will be paid by the Company, including without limitation, Commission filing fees and expenses of compliance with state securities or "blue sky" laws; provided, however, that the Selling Holders will pay all underwriting discounts and selling commissions, if any. The Selling Holders will be indemnified by the Company against certain civil liabilities, including certain liabilities under the Securities Act, or will be entitled to contribution in connection therewith. The Company will be indemnified by the Selling Holders severally against certain civil liabilities, including certain liabilities under the Securities Act, or will be entitled to contribution in connection therewith. LEGAL OPINIONS The validity of the Common Shares issuable upon conversion of the Notes and certain Canadian income taxation matters have been passed upon for the Company by Blake, Cassels & Graydon, Toronto, Ontario, and the validity of the Notes has been passed upon for the Company by Kirkpatrick & Lockhart LLP, Washington, D.C. INDEPENDENT PUBLIC ACCOUNTANTS The consolidated financial statements incorporated by reference in this Prospectus have been audited by Arthur Andersen LLP, independent public accountants, as of December 31, 1995 and 1994, and for the three years ended December 31, 1995, upon the authority of said firm as experts in giving said reports. ENFORCEABILITY OF CIVIL LIABILITIES AGAINST FOREIGN PERSONS The enforcement by purchasers of civil liabilities under the federal securities laws of the United States may be adversely affected by the fact that the Company is a Canadian corporation, many of its directors and one of its principal shareholders are residents of Canada, and a portion of the Company's assets and all or a substantial portion of the assets of such other persons are located outside the United States. As a result, it may be difficult for purchasers to effect service of process within the United States upon such persons or to realize against them in the United States upon judgements of courts of the United States predicated upon civil liabilities under securities laws of the United States. Blake, Cassels & Graydon, Canadian counsel for the Company, has advised it that there is doubt as to the enforceability in Canada against the Company or its directors or shareholders who are not residents of the United States in original actions or in actions for enforcement of judgments of United States courts of liabilities predicated upon federal securities laws of the United States. In addition, it may be more difficult under Canadian law than under United States law for a shareholder to maintain a class action or derivative law suit; moreover, compensation of attorneys on a contingency fee basis currently is prohibited in Ontario and limited in certain other provinces in Canada. 35 37 - ------------------------------------------------------ - ------------------------------------------------------ NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF ITS AGENTS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE. ------------------ TABLE OF CONTENTS
PAGE ---- Available Information................. 2 Incorporation of Certain Documents by Reference........................... 2 The Company........................... 3 Risk Factors.......................... 5 Use of Proceeds....................... 10 Determination of Offering Price....... 10 Description of Notes.................. 11 Certain Income Tax Considerations..... 26 Description of Capital Stock.......... 32 Selling Holders....................... 33 Plan of Distribution.................. 34 Legal Opinions........................ 35 Independent Public Accountants........ 35 Enforceability of Civil Liabilities Against Foreign Persons............. 35
- ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ $86,250,000 NORTH AMERICAN VACCINE, INC. 6.50% CONVERTIBLE SUBORDINATED NOTES DUE MAY 1, 2003 ------------------ PROSPECTUS ------------------ DATED , 1996 - ------------------------------------------------------ - ------------------------------------------------------ 38 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the estimated expenses in connection with the offering contemplated by this Registration Statement: SEC Registration Fee..................................... $ 30,000 American Stock Exchange Listing Fee...................... 18,000 Blue Sky Fees and Expenses............................... * Printing and Engraving Costs............................. 70,000 Accounting Fees and Expenses............................. 106,000 Legal Fees and Expenses.................................. 216,000 Transfer Agent and Registrar's Fees...................... 17,000 Miscellaneous............................................ 43,000 --------- Total..................................... $ * =========
- --------------- * To be provided by amendment. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Bylaws of the Company provide that officers and directors shall be indemnified against expenses and liabilities incurred by such directors and officers in respect of their duties as directors and officers of the Company, to the extent permitted by the Canada Business Corporations Act. Section 124 of the Canada Business Corporations Act provides that, except in respect of an action by or on behalf of the corporation or body corporate to procure a judgment in its favour, a corporation may indemnify a director or officer of the corporation, a former director or officer of the corporation, or a person who acts or acted at the corporation's request as a director or officer of a body corporate of which the corporation is or was a shareholder or creditor (the "Indemnitee"), and his heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him in respect of any civil, criminal or administrative action or proceeding to which he is made a party by reason of being or having been a director or officer of such corporation or body corporate, if (i) he acted honestly and in good faith with a view to the best interests of the corporation; and (ii) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, he had reasonable grounds for believing that his conduct was lawful. A corporation may also, with the approval of a court, indemnify an Indemnitee in respect of an action by or on behalf of the corporation or body corporate to procure a judgment in its favour, to which he is made a party by reason of being or having been a director or an officer of the corporation or body corporate, against all costs, charges and expenses reasonably incurred by him in connection with such action if he fulfills the conditions set out in (i) and (ii) above. An Indemnitee is entitled to indemnity from the corporation in respect of all costs, charges and expenses reasonably incurred by him in connection with the defense of any civil, criminal or administrative action or proceeding to which he is made a party by reason of being or having been a director or officer of the corporation or body corporate, if the person seeking indemnity was substantially successful on the merits in his defence of the action or proceeding, and fulfills the conditions set out in paragraphs (i) and (ii) above. An Indemnitee (provided such person meets the conditions set out in paragraphs (i) and (ii) above) may apply to a court for an order approving an indemnity under the Canada Business Corporations Act and the court may so order and make any further order it thinks fit. Any applicant II-1 39 to a court shall give the Director under the Canada Business Corporations Act notice of the application and the Director is entitled to appear and be heard in person or by counsel. On such an application, the court may also order notice be given to any interested person and such person is entitled to appear and be heard in person or by counsel. The Company has entered into Indemnity Agreements with certain directors and officers of the Company (each a "Person") pursuant to which the Company is obligated to maintain directors and officers insurance and to indemnify each Person to the extent permitted by applicable law. The Indemnity Agreements also establish procedures to be followed by a Person for claims for indemnification under the Company's by-laws, including the advancement by the Company of all costs and expenses incurred by a Person in connection with the defense of any claim or any action brought by the Person to establish or enforce a right to indemnification under the Indemnity Agreement. ITEM 16. EXHIBITS
EXHIBIT NO. DESCRIPTION - ------- -------------------------------------------------------------------------------------- 4.1 Articles of Incorporation of the Company, as amended(1)(3) 4.2 Restated Bylaws of the Company(2) 4.3 Indenture dated as of May 7, 1996 between the Company and Marine Midland Bank, as Trustee, relating to the Company's 6.50% Convertible Subordinated Notes due May 1, 2003 4.4 Specimen Certificates for the Company Common Shares(1) 4.6 Registration Rights Agreement dated as of May 7, 1996 between the Company and Goldman, Sachs & Co. and UBS Securities LLC, as initial purchasers 5.1 Opinion Regarding Legality* 12 Statement Regarding Computation of Ratio of Earnings to Fixed Charges 23.1 Consent of Independent Public Accountants 23.2 Consent of Counsel -- Blake, Cassels & Graydon (included in Exhibit 5.1)* 23.3 Consent of Counsel -- Kirkpatrick & Lockhart LLP (included in Exhibit 5.1)* 24.1 Power of Attorney (included on signature page) 25.1 Form T-1 Statement of Eligibility and Qualification of Trustee 99.1 Amended and Restated Agreement dated June 20, 1994 among the Company, BioChem, IVAX Corporation, D&N Holding Company, Frost-Nevada, Limited Partnership and Phillip Frost, M.D.(4) 99.2 Form of Indemnity Agreement between the Company and certain Indemnitees, with schedule of Indemnitees(4) 99.3 List of Persons Who Have Executed Indemnity Agreements with the Company
- --------------- * To be provided by amendment. (1) This exhibit is incorporated herein by this reference to the corresponding exhibit in the Company's Form S-4 Registration Statement (File No. 33-31512) filed with the Securities and Exchange Commission and declared effective on January 24, 1990. (2) This exhibit is incorporated herein by this reference to the corresponding exhibit in the Company's Form 10-Q Quarterly Report for the Quarter Ended June 30, 1990. (3) This exhibit is incorporated herein by this reference to the corresponding exhibit in the Company's Form 10-K Annual Report for the Year Ended December 31, 1991. (4) This exhibit is incorporated herein by this reference to the corresponding exhibit in the Company's Amendment No. 2 to Form S-3 Registration Statement (File No. 33-78002) filed with the Securities and Exchange Commission and withdrawn from registration on November 23, 1994, as modified by Exhibit 99.3 hereto. II-2 40 ITEM 17. UNDERTAKINGS (1) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. (2) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) The undersigned registrant hereby undertakes to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (a) to include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (b) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement, and (c) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (4) For the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) The undersigned registrant hereby undertakes to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-3 41 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED IN THE CITY OF BELTSVILLE, STATE OF MARYLAND ON THIS 25TH DAY OF JULY, 1996. NORTH AMERICAN VACCINE, INC. By: /s/ Sharon Mates ----------------------------------- Sharon Mates, Ph.D. President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Sharon Mates or Neil W. Flanzraich his/her true and lawful attorney-in-fact and agent, for him/her, with full power of substitution and resubstitution, for him/her and in his/her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all interests and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his/her substitute or substitutes may lawfully do or cause to be done by virtue hereof. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS FORM S-3 REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURES TITLE DATE - ------------------------------------------ ---------------------------------- -------------- PRINCIPAL EXECUTIVE OFFICER: /s/ Sharon Mates President July 25, 1996 - ----------------------------------------- Sharon Mates, Ph.D. PRINCIPAL FINANCIAL OFFICER AND PRINCIPAL ACCOUNTING OFFICER: /s/ Lawrence J. Hineline Vice President--Finance July 25, 1996 - ------------------------------------------ Lawrence J. Hineline A MAJORITY OF THE BOARD OF DIRECTORS: /s/ Francesco Bellini Director July 25, 1996 - ------------------------------------------ Francesco Bellini, Ph.D. /s/ Alain Cousineau Director July 25, 1996 - ------------------------------------------ Alain Cousineau /s/ Jonathan Deitcher Director July 25, 1996 - ------------------------------------------ Jonathan Deitcher
II-4 42
SIGNATURES TITLE DATE - ------------------------------------------ ---------------------------------- -------------- /s/ Denis Dionne Director June 18, 1996 - ------------------------------------------ Denis Dionne /s/ Neil W. Flanzraich Director July 25, 1996 - ------------------------------------------ Neil W. Flanzraich /s/ Phillip Frost Director July 25, 1996 - ------------------------------------------ Phillip Frost, M.D. /s/ Rondi R. Grey Director June 18, 1996 - ------------------------------------------ Rondi R. Grey /s/ Lyle Kasprick Director July 25, 1996 - ------------------------------------------ Lyle Kasprick /s/ Francois Legault Director June 18, 1996 - ------------------------------------------ Francois Legault /s/ Sharon Mates Director July 25, 1996 - ------------------------------------------ Sharon Mates, Ph.D. /s/ Richard C. Pfenniger, Jr. Director July 25, 1996 - ------------------------------------------ Richard C. Pfenniger, Jr.
II-5 43 EXHIBIT INDEX
EXHIBIT NO. ITEM PAGE NO. - ----------- ------------------------------------------------------------------------ -------- 4.1 Articles of Incorporation of the Company, as amended(1)(3).............. 4.2 Restated Bylaws of the Company(2)....................................... 4.3 Indenture dated as of May 7, 1996 between the Company and Marine Midland Bank, as Trustee, relating to the Company's 6.50% Convertible Subordinated Notes due May 1, 2003...................................... 4.4 Specimen Certificates for the Company Common Shares(1).................. 4.6 Registration Rights Agreement dated as of May 7, 1996 between the Company and Goldman, Sachs & Co. and UBS Securities LLC, as initial purchasers.............................................................. 5.1 Opinion Regarding Legality*............................................. 12 Statement Regarding Computation of Ratio of Earnings to Fixed Charges... 23.1 Consent of Independent Public Accountants............................... 23.2 Consent of Counsel -- Blake, Cassels & Graydon (included in Exhibit 5.1)*................................................................... 23.3 Consent of Counsel -- Kirkpatrick & Lockhart LLP (included in Exhibit 5.1)*................................................................... 24.1 Power of Attorney (included on signature page).......................... 25.1 Form T-1 Statement of Eligibility and Qualification of Trustee.......... 99.1 Amended and Restated Agreement dated June 20, 1994 among the Company, BioChem, IVAX Corporation, D&N Holding Company, Frost-Nevada, Limited Partnership and Phillip Frost, M.D.(4).................................. 99.2 Form of Indemnity Agreement between the Company and certain Indemnitees, with schedule of Indemnitees(4)......................................... 99.3 List of Persons Who Have Executed Indemnity Agreements with the Company.................................................................
- --------------- * To be provided by amendment. (1) This exhibit is incorporated herein by this reference to the corresponding exhibit in the Company's Form S-4 Registration Statement (File No. 33-31512) filed with the Securities and Exchange Commission and declared effective on January 24, 1990. (2) This exhibit is incorporated herein by this reference to the corresponding exhibit in the Company's Form 10-Q Quarterly Report for the Quarter Ended June 30, 1990. (3) This exhibit is incorporated herein by this reference to the corresponding exhibit in the Company's Form 10-K Annual Report for the Year Ended December 31, 1991. (4) This exhibit is incorporated herein by this reference to the corresponding exhibit in the Company's Amendment No. 2 to Form S-3 Registration Statement (File No. 33-78002) filed with the Securities and Exchange Commission and withdrawn from registration on November 23, 1994, as modified by Exhibit 99.3 hereto. EX-4.3 2 INDENTURE. 1 EXHIBIT 4.3 NORTH AMERICAN VACCINE, INC. ISSUER TO MARINE MIDLAND BANK TRUSTEE =============== INDENTURE Dated as of May 7, 1996 =============== U.S.$86,250,000 6.50% Convertible Subordinated Notes Due May 1, 2003 2 TABLE OF CONTENTS -----------------
Page ---- RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.2. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . 10 SECTION 1.3. Form of Documents Delivered to the Trustee . . . . . . . . . . . . . . . 11 SECTION 1.4. Acts of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 1.5. Notices, Etc., to Trustee and Company . . . . . . . . . . . . . . . . . . 13 SECTION 1.6. Notice to Holders of Securities; Waiver . . . . . . . . . . . . . . . . . 14 SECTION 1.7. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . 14 SECTION 1.8. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . 14 SECTION 1.9. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 SECTION 1.10. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . 14 SECTION 1.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 1.12. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 1.13. Consent to Jurisdiction and Service of Process . . . . . . . . . . . . . 15 SECTION 1.14. Conversion of Currency . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 1.15. Currency Equivalent . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 1.16. Interest Act (Canada) . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 1.17. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . 18
This Table of Contents shall not, for any purpose, be deemed to be a part of the Indenture. - -------------------------------------------------------------------------------- - i - 3 ARTICLE TWO SECURITY FORMS
Page ---- SECTION 2.1. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 2.2. Forms of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 2.3. Form of Conversion Notice . . . . . . . . . . . . . . . . . . . . . . . . 42 SECTION 2.4. Legend on Restricted Securities . . . . . . . . . . . . . . . . . . . . . 42 SECTION 2.5 Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . 42 ARTICLE THREE THE SECURITIES SECTION 3.1. Title and Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 SECTION 3.2. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 SECTION 3.3. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . 43 SECTION 3.4. Global Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 SECTION 3.5. Registration, Registration of Transfer and Exchange; Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 3.6. Mutilated, Destroyed, Lost or Stolen Securities . . . . . . . . . . . . . 52 SECTION 3.7. Payment of Interest, Interest Rights Preserved . . . . . . . . . . . . . 53 SECTION 3.8. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 3.9. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 3.10. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 3.11. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 3.12. Notification of Withholding . . . . . . . . . . . . . . . . . . . . . . 55
This Table of Contents shall not, for any purpose, be deemed to be a part of the Indenture. - -------------------------------------------------------------------------------- - ii - 4 ARTICLE FOUR SATISFACTION AND DISCHARGE
Page ---- SECTION 4.1. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . 56 SECTION 4.2. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . 57 ARTICLE FIVE REMEDIES SECTION 5.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 SECTION 5.2. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . 60 SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 SECTION 5.4. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . 61 SECTION 5.5. Trustee May Enforce Claims Without Possession of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 SECTION 5.6. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . 63 SECTION 5.7. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest and to Convert . . . . . . . . . . . . . . . . . . . 64 SECTION 5.9. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . 64 SECTION 5.10. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . 64 SECTION 5.11. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . 64 SECTION 5.12. Control by Holders of Securities . . . . . . . . . . . . . . . . . . . . 65 SECTION 5.13. Waiver of Past Defaul . . . . . . . . . . . . . . . . . . . . . . . . . 65 SECTION 5.14. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . 65 SECTION 5.15. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . 66
This Table of Contents shall not, for any purpose, be deemed to be a part of the Indenture. - -------------------------------------------------------------------------------- - iii - 5 ARTICLE SIX THE TRUSTEE
Page ---- SECTION 6.1. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . 66 SECTION 6.2. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 SECTION 6.3. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . 68 SECTION 6.4. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 SECTION 6.5. May Hold Securities, Act as Trustee Under Other Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 SECTION 6.6. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 SECTION 6.7. Compensation and Reimbursemen . . . . . . . . . . . . . . . . . . . . . . 70 SECTION 6.8. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . 70 SECTION 6.9. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . 71 SECTION 6.10. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . 72 SECTION 6.11. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 SECTION 6.12. Authenticating Agents . . . . . . . . . . . . . . . . . . . . . . . . . 73 SECTION 6.13 Trust Indenture Legislation . . . . . . . . . . . . . . . . . . . . . . . 74 ARTICLE SEVEN AMALGAMATION, CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 7.1. Company May Amalgamate, Consolidate, Etc., Only on Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 SECTION 7.2. Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . 76
This Table of Contents shall not, for any purpose, be deemed to be a part of the Indenture. - -------------------------------------------------------------------------------- - iv - 6 ARTICLE EIGHT SUPPLEMENTAL INDENTURES
Page ---- SECTION 8.1. Supplemental Indentures Without Consent of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 SECTION 8.2. Supplemental Indentures with Consent of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 SECTION 8.3. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . 78 SECTION 8.4. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . 79 SECTION 8.5. Reference in Securities to Supplemental Indentures . . . . . . . . . . . 79 SECTION 8.6. Notice of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . 79 ARTICLE NINE MEETINGS OF HOLDERS OF SECURITIES SECTION 9.1. Purposes for Which Meetings May Be Called . . . . . . . . . . . . . . . . 79 SECTION 9.2. Call, Notice and Place of Meetings . . . . . . . . . . . . . . . . . . . 79 SECTION 9.3. Persons Entitled to Vote at Meetings . . . . . . . . . . . . . . . . . . 80 SECTION 9.4. Quorum; Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 SECTION 9.5. Determination of Voting Rights; Conduct and Adjournmet of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 SECTION 9.6. Counting Votes and Recording Action of Meetings . . . . . . . . . . . . . 82 ARTICLE TEN COVENANTS SECTION 10.1. Payment of Principal, Premium and Interest . . . . . . . . . . . . . . . 82 SECTION 10.2. Maintenance of Offices or Agencies . . . . . . . . . . . . . . . . . . . 83 SECTION 10.3. Money for Security Payments To Be Held in Trust . . . . . . . . . . . . 83
This Table of Contents shall not, for any purpose, be deemed to be a part of the Indenture. - -------------------------------------------------------------------------------- - v - 7
Page ---- SECTION 10.4. Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 SECTION 10.5. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 SECTION 10.6. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . 85 SECTION 10.7. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . 86 SECTION 10.8. Registration and Listing . . . . . . . . . . . . . . . . . . . . . . . . 86 SECTION 10.9. Statement by Officers as to Default . . . . . . . . . . . . . . . . . . 86 SECTION 10.10. Delivery of Certain Informatio . . . . . . . . . . . . . . . . . . . . 87 SECTION 10.11. Reporting Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 SECTION 10.12. Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 88 SECTION 10.13. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . 89 ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 11. 1. Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 89 SECTION 11.2. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . 89 SECTION 11.3. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . 89 SECTION 11.4. Selection by Trustee of Securities to Be Redeemed . . . . . . . . . . . 90 SECTION 11.5. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 90 SECTION 11.6. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . 91 SECTION 11.7. Securities Payable on Redemption Dat . . . . . . . . . . . . . . . . . . 92 SECTION 11.8. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . 92
This Table of Contents shall not, for any purpose, be deemed to be a part of the Indenture. - -------------------------------------------------------------------------------- - vi - 8 ARTICLE TWELVE CONVERSION OF SECURITIES
Page ---- SECTION 12.1. Conversion Privilege and Conversion Price . . . . . . . . . . . . . . . 92 SECTION 12.2. Exercise of Conversion Privilege . . . . . . . . . . . . . . . . . . . . 93 SECTION 12.3. Fractions of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 94 SECTION 12.4. Adjustment of Conversion Price . . . . . . . . . . . . . . . . . . . . . 95 SECTION 12.5. Notice of Adjustments of Conversion Price . . . . . . . . . . . . . . . 99 SECTION 12.6. Notice of Certain Corporate Action . . . . . . . . . . . . . . . . . . . 100 SECTION 12.7. Company to Reserve Common Shares . . . . . . . . . . . . . . . . . . . 101 SECTION 12.8. Taxes on Conversions . . . . . . . . . . . . . . . . . . . . . . . . . 101 SECTION 12.9. Covenant as to Common Shares . . . . . . . . . . . . . . . . . . . . . 101 SECTION 12.10. Cancellation of Converted Securities . . . . . . . . . . . . . . . . . 101 SECTION 12.11. Provision in Case of Amalgamation, Consolidation, Merger or Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . 102 SECTION 12.12. Responsibility of Trustee for Conversion Provision . . . . . . . . . . 103 ARTICLE THIRTEEN SUBORDINATION OF SECURITIES SECTION 13.1. Securities Subordinated to Senior Indebtedness . . . . . . . . . . . . . 104 SECTION 13.2. No Payments in Certain Circumstances; Payment Over of Proceeds Upon Dissolution, Etc . . . . . . . . . . . . . . . . . . . 104 SECTION 13.3. Notice to Trustee of Specified Events; Reliance on Certificate of Liquidating Agent . . . . . . . . . . . . . . . . . . . . 106 SECTION 13.4. Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . 107
This Table of Contents shall not, for any purpose, be deemed to be a part of the Indenture. - -------------------------------------------------------------------------------- - vii - 9
Page ---- SECTION 13.5. Trustee Not Charged with Knowledge of Prohibition . . . . . . . . . . . 107 SECTION 13.6. Reliance on Judicial Order or Certificate of Liquidating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 SECTION 13.7. Trustee Not Fiduciary for Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 SECTION 13.8. Rights of Trustee as Holder of Senior Indebtedness; Preservation Of Trustee's Rights . . . . . . . . . . . . . . . . . . . . 108 SECTION 13.9. Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . 109 SECTION 13.10. Certain Conversions Deemed Payment . . . . . . . . . . . . . . . . . . . 109 ARTICLE FOURTEEN REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER UPON A CHANGE IN CONTROL SECTION 14.1. Right to Require Repurchase . . . . . . . . . . . . . . . . . . . . . . 109 SECTION 14.2. Notices; Method of Exercising Repurchase Right, Etc . . . . . . . . . . 110 SECTION 14.3. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 114 ARTICLE FIFTEEN HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 15.1. Company to Furnish Trustee Names and Addresses of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 SECTION 15.2. Preservation of Information . . . . . . . . . . . . . . . . . . . . . . 115
This Table of Contents shall not, for any purpose, be deemed to be a part of the Indenture. - -------------------------------------------------------------------------------- - viii - 10 INDENTURE, dated as of May 7, 1996, between NORTH AMERICAN VACCINE, INC., a corporation duly organized and existing under the laws of Canada, having its principal office at 12103 Indian Creek Court, Beltsville, Maryland (herein called the "Company"), and MARINE MIDLAND BANK, a New York banking corporation and trust company, as Trustee hereunder (herein called the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the creation of an issue of its 6.50% Convertible Subordinated Notes due May 1, 2003 (herein called the "Securities") of substantially the tenor and amount hereinafter set forth, and to provide therefor the Company has duly authorized the execution and delivery of this Indenture. All things necessary to make the Securities, when the Securities are executed by the Company and authenticated and delivered hereunder, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. Further, all things necessary to duly authorize the issuance of the Common Shares of the Company issuable upon the conversion of the Securities, and to duly reserve for issuance the number of Common Shares issuable upon such conversion, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.1. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation; and 11 (3) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. "Act", when used with respect to any Holder of a Security, has the meaning specified in Section 1.4. "Additional Amounts" has the meaning specified in Section 2.2. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control", when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent Member" means any member of, or participant in, the Depositary. "Applicable Procedures" has the meaning in Section 3.5(c). "Authenticating Agent" means any Person authorized pursuant to Section 6.12 to act on behalf of the Trustee to authenticate Securities. "Board of Directors" means either the board of directors of the Company or any committee of that board empowered to act for it with respect to this Indenture. "Board Resolution" means a resolution duly adopted by the Board of Directors, a copy of which, certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, shall have been delivered to the Trustee. "Business Day", when used with respect to any Place of Payment, Place of Conversion or any other place, as the case may be, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in such Place of Payment, Place of Conversion or other place, as the case may be, are authorized or obligated by law or executive order to close; provided, however, that a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close shall not be a Business Day for purposes of Section 13.5; provided, further, that a day on which banking institutions in New York, New York or London, England are authorized or obligated by law or executive order to close shall not be a Business Day for purposes of Sections 10.1, 10.3 or 11.6. "Canadian Additional Amounts" has the meaning specified in Section 2.2. "Canadian Excluded Holder" has the meaning specified in Section 2.2. - 2 - 12 "Canadian Taxes" has the meaning specified in Section 2.2. "Cedel" has the meaning specified in Section 2.1. "Change in Control" has the meaning specified in Section 14.3. "Closing Price Per Share" means, with respect to a class of Common Stock of the Company, for any day, the reported last sales price regular way per share of such class or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices regular way, in either case (i) on Nasdaq or, if such class of Common Stock is not quoted on Nasdaq, on the principal (as determined by the Company's Board of Directors) United States national securities exchange on which such class of Common Stock is quoted, listed or admitted to trading or (ii) if not quoted on Nasdaq or listed or admitted to trading on any United States national securities exchange, the average of the closing bid and asked prices in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the Company for that purpose or (iii) if not so available in either manner set forth in (i) or (ii), as otherwise determined in good faith by the Board of Directors. "Commission" means the United States Securities and Exchange Commission. "Common Shares" means the Common Shares, with no par value, of the Company authorized at the date of this instrument as originally executed. Subject to the provisions of Section 12.11, shares issuable upon conversion of Securities shall include only Common Shares or shares of any class or classes of Common Stock resulting from any classification or reclassification thereof; provided, however, that if at any time as a result of such classification or reclassification there shall be more than one such resulting class, the shares so issuable upon conversion of Securities shall include shares of all such classes, and the number of shares of each such class then so issuable shall be in the same proportion which the total number of shares of such class resulting from all such reclassification bears to the total number of shares of all such classes resulting from all such reclassification. "Common Stock" means the Company's Common Shares, with no par value, together with any other class of capital stock of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not subject to redemption by the Company. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, any Vice Chairman of the Board, its Chief Executive Officer, its President or any Senior Vice President, and by its Corporate Controller, - 3 - 13 Treasurer, an Assistant Treasurer, its Secretary or any Assistant Secretary, and delivered to the Trustee. "Constituent Person" has the meaning specified in Section 12.11. "Conversion Agent" means any Person authorized by the Company to convert Securities in accordance with Article Twelve. The Company has initially appointed the Trustee as its Conversion Agent in the Borough of Manhattan, The City of New York, and Midland Bank plc as its Conversion Agent in London, England. "Conversion Price" has the meaning specified in Section 12.1. "Corporate Trust Office" means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered (which at the date of this Indenture is located at 140 Broadway, 12th Floor, New York, New York 10005. "Corporation" means a corporation, company, including, without limitation, a limited liability company, association, joint-stock company or business trust. "Defaulted Interest" has the meaning specified in Section 3.7. "Definitive Security" means any Security (other than a Global Security). "Definitive Restricted Security" has the meaning specified in Section 2.1. "Depositary" means, with respect to any Securities issued in whole or in part in the form of one or more Global Securities, the clearing agency that is registered under the Exchange Act and designated to act as Depositary for such Securities, as contemplated by Section 3.4, or any successor clearing agency registered under the Exchange Act as contemplated by Section 3.4. "Determination Notice" has the meaning specified in Section 2.2(a). "Distribution Date" has the meaning specified in Section 12.4(4). "Dollar" or "U.S.$" means a dollar or other equivalent unit in such coin or currency of the United States as at the time shall be legal tender for the payment of public and private debts. "Euroclear" has the meaning specified in Section 2.1. "Event of Default" has the meaning specified in Section 5.1. "Exchange Act" means the United States Securities Exchange Act of 1934, as amended from time at time. - 4 - 14 "Exchange Date" means the date 40 days after the latest of the commencement of the offering of the Securities, the original issue date of the Securities or the issue date with respect to any additional Securities issued to cover over-allotments. "Excluded Holder" has the meaning specified in Section 2.2. "Global Security" means any of the Restricted Global Security, the Regulation S Global Security and the Unrestricted Global Security and registered in the Security Register in the name of a Depositary or a nominee thereof. "Holder", when used with respect to any Security, means the Person in whose name the Security is registered in the Security Register. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof. "Institutional Accredited Investor" means an institution that is an "accredited investor" as defined under Rule 501(a)(1), (2), (3) or (7) of the Securities Act. "Interest Payment Date" means the Stated Maturity of an installment of interest on the Securities. "Maturity", when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption, exercise of the repurchase right set forth in Article Fourteen or otherwise. "Nasdaq" means the Nasdaq National Market System. "Non-electing Share" has the meaning specified in Section 12.11. "Officers' Certificate" means a certificate signed by the Chairman of the Board, any Vice Chairman of the Board, the Chief Executive Officer, the President or any Senior Vice President and by the Corporate Controller, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for, or an employee of, the Company and who shall be reasonably acceptable to the Trustee. "Outstanding", when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: - 5 - 15 (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities for the payment or redemption of which money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities, provided that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and (iii) Securities which have been paid pursuant to Section 3.6 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Securities are present at a meeting of Holders of Securities for quorum purposes or have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such determination as to the presence of a quorum or upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obliger. "Paying Agents" means any Person authorized by the Company to pay the principal of or interest on any Securities on behalf of the Company and, except as otherwise specifically set forth herein, such term shall include the Company if it shall act as its own Paying Agent. The Company has initially appointed the Trustee as its Paying Agent in the Borough of Manhattan, The City of New York and Midland Bank plc, located at Mariner House, Pepys Street, London EC3N 4DA, England as its Paying Agent in London, England. "Person" means any individual, corporation, partnership, joint venture, trust, estate, unincorporated organization or government or any agency or political subdivision thereof. "Place of Conversion" has the meaning specified in Section 3.1. "Place of Payment" has the meaning specified in Section 3.1. - 6 - 16 "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.6 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Record Date" means any Regular Record Date or Special Record Date. "Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Reference Date" has the meaning specified in Section 12.4(4). "Registration Rights Agreement" has the meaning specified in Section 10.12. "Regular Record Date" for interest payable in respect of any Security on any Interest Payment Date means the April 15 or October 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. "Regulation S" means Regulation S under the Securities Act (including any successor regulation thereto), as it may be deemed from time to time. "Regulation S Global Security" has the meaning specified in Section 2.1. "Repurchase Date" has the meaning specified in Section 14.1. "Repurchase Price" has the meaning specified in Section 14.1. "Responsible Officer", when used with respect to the Trustee, means any officer within the Corporate Trust Office of the Trustee including without limitation any vice president, assistant vice president, assistant treasurer, assistant secretary, corporate trust officer, assistant corporate trust officer or other employee of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge and familiarity with the particular subject. "Restricted Global Security" has the meaning specified in Section 2.1. "Restricted Period" has the meaning specified in Section 2.1. "Restricted Security" has the meaning specified in Section 2.4. - 7 - 17 "Rule 144" means Rule 144 under the Securities Act (including any successor rule thereto), as it may be amended from time to time. "Rule 144A" means Rule 144A under the Securities Act (including any successor rule thereto), as it may be amended from time to time. "Rule 144A Information" has the meaning specified in Section 10.10. "Securities" has the meaning ascribed to it in the first paragraph under the caption "Recitals of the Company". "Securities Act" means the United States Securities Act of 1933, as amended from time to time. "Security" means any Security (including any Global Security) issued in substantially the form set forth in Section 2.2 and registered in the Security Register. "Security Register" and "Security Registrar" have the respective meanings specified in Section 3.5. "Senior Indebtedness" has the meaning specified in Section 13.1. "Shelf Registration Statement" has the meaning specified in Section 10.12. "Significant Subsidiary" means any Subsidiary that would be a significant subsidiary as defined under the Regulation S-X under the Securities Act and Exchange Act. "Special Interest" has the meaning specified in Section 2.2. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Company pursuant to Section 3.7. "Stated Maturity" when used with respect to any Security or any installment of interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of interest is due and payable. "Subsidiary" means a corporation more than 50% of the outstanding Voting Stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. "Tax Affected Security" means any Security that, on or before the 30th day after the date on which the Company publishes a notice of redemption pursuant to the third paragraph of the reverse of the Security in Section 2.2 hereof, is delivered to the Trustee together with a written statement from or on behalf of the beneficial owner of such Security to the effect that such - 8 - 18 beneficial owner has or will become entitled to receive Additional Amounts as a result of such Tax Law Change. "Tax Law Change" means any change in, or amendment to, the laws (including any regulations or rulings promulgated thereunder) of the United States or Canada or any political subdivision or taxing authority thereof or therein affecting taxation, or any change in, or amendment to, the application or official interpretation of such laws, regulations or rulings. "Taxes" has the meaning specified in Section 2.2. "Trading Days" of a class of Common Stock means (i) if such class of Common Stock is listed on any United States national securities exchange, days on which such national securities exchange is open for business; (ii) if such class of Common Stock is quoted on a system of automated dissemination of quotations of securities prices, days on which trades may be effected through such system; or (iii) if such class of Common Stock is not listed for trading on any United States national securities exchange or quoted on any system of automated dissemination of quotation of securities prices, days on which such class of Common Stock is traded regular way in the over-the-counter market and for which a closing bid and a closing asked price for such class of Common Stock are available. "Transfer Agent" has the meaning specified in Section 2.2. The Company has initially appointed the Trustee as its Transfer Agent in the Borough of Manhattan, The City of New York and Midland Bank plc as its Transfer Agent in London, England. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "United States" means the United States of America (including the States and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction (its "possessions" including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands). "U.S. Additional Amounts" has the meaning specified in Section 2.2. "U.S. Excluded Holder" has the meaning in Section 2.2. "U.S. Taxes" has the meaning specified in Section 2.2. - 9 - 19 "United States person" has the meaning specified in Section 2.2. "Unrestricted Global Security" means a Global Security which is not a Restricted Security. "Vice President", when used with respect to the Company, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". "Voting Power" of any Person means the aggregate number of votes of all classes of Capital Stock of such Person which ordinarily has voting power for the election of the Board of Directors or their equivalents of such Person. "Voting Stock" means stock or other similar interests in the corporation which ordinarily has or have voting power for the election of directors, or persons performing similar functions, whether at all times or only so long as no senior class of stock or other interests has or have such voting power by reason of any contingency. "Western Europe" means Austria, Belgium, Denmark, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. SECTION 1.2. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee or the Paying Agent in London to take any action under any provision of this Indenture or as required by indenture legislation, the Company shall furnish to the Trustee or the Paying Agent in London, as the case may be, an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished, and except in connection with the initial authentication of the Securities. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (including certificates provided for in Section 10.9) shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; - 10 - 20 (3) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 1.3. Form of Documents Delivered to the Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which such certificate or opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 1.4. Acts of Holders of Securities. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by Holders of Securities may be embodied in and evidenced by (1) one or more instruments of substantially similar tenor signed by such Holders in person or by an agent or proxy duly appointed in writing by such Holders or (2) the record of Holders of Securities voting in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders of Securities duly called and held in accordance with the provisions of Article Nine. Such action shall become effective when such instrument or instruments or record is delivered to the Trustee and, where it is hereby expressly required, to the Company. The Trustee shall promptly deliver to the Company copies of all such instruments and records delivered to the Trustee. Such instrument or instruments and record (and the action embodied therein and evidenced thereby) are herein sometimes referred - 11 - 21 to as the "Act" of the Holders of Securities signing such instrument or instruments and so voting at such meeting. Proof of execution of any such instrument or of a writing appointing any such agent or proxy, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and (subject to Section 6.1) conclusive in favor of the Trustee and the Company if made in the manner provided in this Section. The record of any meeting of Holders of Securities shall be proved in the manner provided in Section 9.6. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgements of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. (c) The principal amount and serial number of any Security held by any Person, and the date of his holding the same, shall be proved by the Security Register. (d) The Paying Agent in London may in any instance require further proof with respect to any of the matters referred to in this Section 1.4. (e) The fact and date of execution of any such instrument or writing and the authority of the Person executing the same may also be proved in any other manner which the Trustee or the Paying Agent in London deems sufficient; and the Trustee or the Paying Agent in London may in any instance require further proof with respect to any of the matters referred to in this Section 1.4. (f) Any request, demand, authorization, direction, notice, consent, election, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. (g) The provisions of this Section 1.4 are subject to the provisions of Section 9.5. SECTION 1.5. Notices, Etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent, election, waiver or Act of Holders of Securities or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee or the Paying Agent in London by any Holder of Securities or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee and received at its Corporate Trust Office, - 12 - 22 Attention: Corporate Trust Services--North American Vaccine, Inc., or to or with the Paying Agent in London and received at Mariner House Pepys Street, London EC3N 4DA, England, Attention: Midland Securities Services, or (2) the Company by the Trustee or by any Holder of Securities shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing, mailed, first-class postage prepaid, or telecopied and confirmed by mail, first-class postage prepaid, or delivered by hand or overnight courier, addressed to the Company at 12103 Indian Creek Court, Beltsville, Maryland, 20705, Attention: Daniel J. Abdun-Nabi, or at any other address previously furnished in writing to the Trustee by the Company. Any request, demand, authorization, direction, notice, consent, election or waiver required or permitted under this Indenture shall be in the English language, except that any published notice may be in an official language of the country of publication. SECTION 1.6. Notice to Holders of Securities; Waiver. Except as otherwise expressly provided herein, where this Indenture provides for notice to Holders of Securities of any event, such notice shall be sufficiently given to Holders of Securities if in writing and mailed, first-class postage prepaid, to each Holder of a Security affected by such event, at the address of such Holder as it appears in the Security Register, not earlier than the earliest date and not later than the latest date prescribed for the giving of such notice. Such notice shall be deemed to have been given when such notice is mailed. Neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder of a Security shall affect the sufficiency of such notice with respect to other Holders of Securities. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification to Holders of Securities as shall be made with the approval of the Trustee, which approval shall not be unreasonably withheld, shall constitute a sufficient notification to such Holders for every purpose hereunder. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders of Securities shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 1.7. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. - 13 - 23 SECTION 1.8. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 1.9. Separability Clause. In case any provision in this Indenture or the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 1.10. Benefits of Indenture. Except as provided in the next sentence, nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns hereunder and the Holders of Securities, any benefit or legal or equitable right, remedy or claim under this Indenture. The provisions of Article Thirteen are intended to be for the benefit of, and shall be enforceable directly by, the holders of Senior Indebtedness. SECTION 1.11. Governing Law. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE UNITED STATES OF AMERICA, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. SECTION 1.12. Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Repurchase Date or Stated Maturity of any Security or the last day on which a Holder of a Security has a right to convert his Security shall not be a Business Day at a Place of Payment or Place of Conversion, as the case may be, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest or principal and premium, if any, or delivery for conversion of such Security need not be made at such Place of Payment or Place of Conversion, as the case may be, on or by such day, but may be made on or by the next succeeding Business Day at such Place of Payment or Place of Conversion, as the case may be, with the same force and effect as if made on the Interest Payment Date, Redemption Date or Repurchase Date, or at the Stated Maturity or by such last day for conversion; provided, however, that in the case that payment is made on such succeeding Business Day, no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date, Redemption Date, Repurchase Date, Stated Maturity or last day for conversion, as the case may be. SECTION 1.13. Consent to Jurisdiction and Service of Process. - 14 - 24 The Company agrees that any legal suit, action or proceeding brought by any party to enforce any rights under or with respect to this Indenture or the Securities may be instituted in any state or federal court in the City of New York, State of New York, and waives to the fullest extent permitted by law any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding and irrevocably submits to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding. The Company hereby irrevocably designates and appoints CT Corporation System ("CT") as the Company's authorized agent to receive and forward on its behalf service of any and all process which may be served in any such suit, action or proceeding in any such court and agrees that service of process upon CT (or any successor) at its office at 1633 Broadway, New York, New York 10019 (or such other address in the Borough of Manhattan, the City of New York, as the Company may designate by written notice to the Trustee) and written notice of said service to the Company mailed or delivered to The CT Corporation System, 1633 Broadway, New York, New York 10019 shall be deemed in every respect effective service of process upon the Company in any such suit, action or proceeding and shall be taken and held to be valid personal service upon the Company. Said designation and appointment shall be irrevocable. Nothing in this Section 1.13 shall affect the right of any party hereto or any Holder to serve process in any manner permitted by law or limit the right of any party hereto to bring proceedings against the Company in the courts of any jurisdiction or jurisdictions. The Company further agrees to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of CT in full force and effect so long as this Indenture or any of the Securities shall be outstanding. To the extent that the Company has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the Company hereby irrevocably waives such immunity in respect of its obligations under this Indenture and the Securities, to the extent permitted by law. SECTION 1.14. Conversion of Currency. (a) The Company covenants and agrees that the following provisions shall apply to conversion of currency in the case of the Securities and this Indenture: (i) If for the purpose of obtaining judgment in, or enforcing the judgment of, any court in any country, it becomes necessary to convert into any other currency (the "judgment currency") an amount due in United States dollars, then the conversion shall be made at the rate of exchange prevailing on the Business Day before the date on which the judgment is given or the order of enforcement is made, as the case may be (unless a court shall otherwise determine). (ii) If there is a change in the rate of exchange prevailing between the Business Day before the day on which the judgment is given or an order of enforcement is made, as the case may be (or such other date as a court shall determine), and the date of receipt of the amount due, to the extent permitted by applicable law, the Company will pay - 15 - 25 additional (or, as the case may be, such lesser) amount, if any, as may be necessary so that the amount paid in the judgment currency when converted at the rate of exchange prevailing on the date of receipt will produce the amount in United States dollars originally due. (b) In the event of the winding-up of the Company at any time while any amount or damages owing under the Securities and this Indenture, or any judgment or order rendered in respect thereof, shall remain outstanding, the Company shall indemnify and hold the Holders and the Trustee harmless against any deficiency arising or resulting from any variation in rates of exchange between (1) the date as of which the equivalent of the amount in United States dollars due or contingently due under the Securities and this Indenture (other than under this subsection (b)) is calculated for the purposes of such winding-up and (2) the final date for the filing of proofs of claim in such winding-up. For the purposes of this subsection (b), the final date for the filing of proofs of claim in the winding up of the Company shall be the date fixed by the liquidator or otherwise in accordance with the relevant provisions of applicable law as being the latest practicable date as at which liabilities of the Company may be ascertained for such winding-up prior to payment by the liquidator or otherwise in respect thereto. (c) The obligations contained in subsections (a)(ii) and (b) of this Section 1.14 shall constitute separate and independent obligations of the Company from its other obligations under the Securities and this Indenture, shall give rise to separate and independent causes of action against the Company, shall apply irrespective of any waiver or extension granted by any Holder or the Trustee or either of them from time to time and shall continue in full force and effect notwithstanding any judgment or order or the filing of any proof of claim in the winding-up of the Company for a liquidated sum in respect of amounts due hereunder (other than under subsection (b) above) or under any such judgment or order. Any such deficiency as aforesaid shall be deemed to constitute a loss suffered by the Holders or the Trustee, as the case may be, and no proof or evidence of any actual loss shall be required by the Company or the liquidator or otherwise or any of them. In the case of subsection (b) above, the amount of such deficiency shall not be deemed to be reduced by any variation in rates of exchange occurring between the said final date and the date of any liquidating distribution. (d) The term "rate(s) of exchange" shall mean the rate, quoted at noon for transactions in excess of U.S. $1,000,000, at which the Holder or the Trustee, as the case may be, is able or would have been able on the relevant date to purchase at United States dollars with the judgment currency other than United States dollars referred to in subsections (a) and (b) above and includes any premiums and costs of exchange payable. SECTION 1.15. Currency Equivalent. Except as provided in Section 1.14, for purposes of the construction of the terms of this Indenture or of the Securities, in the event that any amount is stated herein in the currency of one nation (the "First Currency"), as of any date such amount shall also be deemed to represent the amount in the currency of any other relevant nation (the "Other Currency") - 16 - 26 which is required to purchase such amount in the First Currency at the spot buying rate for the purchase of the First Currency with the Other Currency used by The Toronto-Dominion Bank at its main branch in Toronto as of approximately 12:00 noon (Toronto time) on the date of determination. SECTION 1.16. Interest Act (Canada). For purposes of the Interest Act (Canada), where in this Indenture and the Securities, a rate of interest is to be calculated on the basis of a year of 360 days, the yearly rate of interest to which the 360 day rate is equivalent is such rate multiplied by the number of days in the year for which such calculation is made and divided by 360. SECTION 1.17. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. Until such time as this Indenture shall be qualified under the Trust Indenture Act, this Indenture, the Company and the Trustee shall be deemed for all purposes hereof to be subject to and governed by the Trust Indenture Act to the same extent as would be the case if this Indenture were so qualified on the date hereof. ARTICLE TWO SECURITY FORMS SECTION 2.1. Forms Generally. The Securities shall be in substantially the forms set forth in this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange, or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution thereof. The Trustee's certificates of authentication shall be in substantially the form set forth in Section 2.5. - 17 - 27 Conversion notices shall be in substantially the form set forth in the Annexes to the Indenture. Securities that are Restricted Securities shall bear the legend required by Section 2.4. The Securities shall be issued in the form of one or more Global Securities and Definitive Securities in certificated form in accordance with Section 3.4. The Depositary for such Global Securities shall initially be The Depository Trust Company ("DTC"). A Global Security may be printed, lithographed, typewritten, mimeographed or otherwise produced, as determined by the officers of the Company executing such Security, as evidenced by their execution thereof. The Definitive Securities shall be printed, lithographed, typewritten, mimeographed, or engraved or otherwise produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution thereof. The format and spacing of the text of a Security may be varied to facilitate such production. Securities offered and sold in their initial distribution in reliance on Regulation S shall be initially issued in the form of one or more Global Securities in definitive, fully registered form substantially in the form of the Regulation S Global Security set forth in Section 2.2, with such applicable legends as are provided for in Section 2.2, except as otherwise permitted herein. Such Global Securities shall be registered in the name of a nominee of DTC and deposited with the Trustee, at its New York office, as custodian for the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided, for credit to the respective accounts at the Depositary of the depositories for Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euroclear System ("Euroclear"), and Cedel Bank, societe anonyme ("CEDEL"). Until such time as the Restricted Period shall have terminated, such Global Securities shall be referred to herein as the "Regulation S Global Security." After such time as the Restricted Period shall have terminated, such Global Security shall be referred to herein as the "Unrestricted Global Security." The aggregate principal amount of the Regulation S Global Security or the Unrestricted Global Security may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary, in connection with a corresponding decrease or increase in the aggregate principal amount of the Restricted Global Security, as hereinafter provided. As used herein, the term "Restricted Period" means the period of 40 consecutive days beginning on and including the first day after the later of (i) the day that Goldman, Sachs & Co., advises the Company and the Trustee of the day on which the Securities are first offered to persons other than distributors (as defined in Regulation S) in reliance on Regulation S and (ii) the latest date of original issue of any Security. The Regulation S Global Security, the Unrestricted Global Security and all other Securities that are not Restricted Securities shall collectively he referred to herein as the "Unrestricted Securities." Securities offered and sold in their initial distribution in reliance on Rule 144A shall be issued in the form of one or more Global Securities (collectively, the "Restricted Global - 18 - 28 Security") in definitive, fully registered form substantially in the form of the Restricted Global Security set forth in Section 2.2, with such applicable legends as are provided for in Section 2.2, except as otherwise permitted herein. Such Restricted Global Security shall be registered in the name of the Depositary or its nominee and deposited with the Trustee, at its New York office, as custodian for the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Restricted Global Security may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary in connection with a corresponding decrease or increase in the aggregate principal amount of the Regulation S Global Security or the Unrestricted Global Security as hereinafter provided. Securities offered and sold in their initial distribution in reliance on transaction exempt from registration under the Securities Act to an institutional investor that is an "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act ("Institutional Accredited Investor") shall be issued in definitive, fully registered form each a "Definitive Restricted Security", substantially in the form of the Definitive Restricted Security set forth in Section 2.2 with such applicable legends as are provided for in Section 2.2, except as otherwise permitted herein. - 19 - 29 SECTION 2.2. Forms of Securities. Forms of Securities: [FORM OF FACE] THE FOLLOWING LEGEND (THE "RULE 144A LEGEND") SHALL APPEAR ON THE FACE OF EACH DEFINITIVE RESTRICTED SECURITY OR OTHER RESTRICTED SECURITY OTHER THAN ANY GLOBAL SECURITY: THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY AND ANY COMMON SHARES ISSUABLE UPON ITS CONVERSION MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THIS SECURITY MAY ONLY BE SOLD IN ACCORDANCE WITH THE INDENTURE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF NORTH AMERICAN VACCINE, INC. (THE "COMPANY") THAT (A) THIS SECURITY AND ANY COMMON SHARES ISSUABLE UPON ITS CONVERSION MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) IN AN OFFSHORE TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (III) IN THE CASE OF ANY PURCHASER OTHER THAN A PURCHASER WHO HAS OTHERWISE AGREED WITH THE COMPANY TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a) UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS THEREOF, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER JURISDICTIONS OF THE UNITED STATES, AND THAT (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY OR SUCH - 20 - 30 COMMON SHARES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN CLAUSE (A) ABOVE. THIS SECURITY, ANY COMMON SHARES ISSUABLE UPON ITS CONVERSION AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON AND PROCEDURES FOR RESALES AND OTHER TRANSFERS OF THIS SECURITY AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS SECURITY AND ANY SUCH SHARES SHALL BE DEEMED BY THE ACCEPTANCE OF THIS SECURITY AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT. THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH RESTRICTED GLOBAL SECURITY: THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY (OR ITS PREDECESSOR) WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND SUCH SECURITIES AND ANY COMMON SHARES ISSUABLE UPON THEIR CONVERSION MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. SUCH SECURITIES MAY ONLY BE SOLD IN ACCORDANCE WITH THE INDENTURE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE. EACH PURCHASER OF ANY BENEFICIAL INTEREST IN THE SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF SUCH BENEFICIAL INTEREST IN THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY (INCLUDING ANY PARTICIPANT IN THE DEPOSITARY HOLDING THE GLOBAL SECURITY THAT IS SHOWN AS HOLDING SUCH AN INTEREST ON THE RECORDS OF SUCH DEPOSITARY AND EACH BENEFICIAL OWNER THAT HOLDS THROUGH ANY SUCH PARTICIPANT) AGREES FOR THE BENEFIT OF NORTH AMERICAN VACCINE, INC. (THE "COMPANY") THAT (A) ANY BENEFICIAL INTEREST IN THE SECURITIES OR ANY COMMON SHARES ISSUABLE UPON THEIR CONVERSION MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) IN AN OFFSHORE - 21 - 31 TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (III) IN THE CASE OF ANY BENEFICIAL OWNER OTHER THAN A BENEFICIAL OWNER WHO HAS OTHERWISE AGREED WITH THE COMPANY, TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501 (A) UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS THEREOF, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE l44 THEREUNDER (IF AVAILABLE), OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER JURISDICTIONS OF THE UNITED STATES, AND THAT (B) THE BENEFICIAL OWNER WILL, AND EACH SUBSEQUENT BENEFICIAL OWNER OF THE SECURITIES OR ANY COMMON SHARES ISSUABLE UPON THEIR CONVERSION IS REQUIRED TO, NOTIFY ANY PURCHASER OF ANY BENEFICIAL INTEREST IN THE SECURITIES AND SUCH COMMON SHARES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN CLAUSE (A) ABOVE. THIS SECURITY, ANY COMMON SHARES ISSUABLE UPON ITS CONVERSION AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON AND PROCEDURES FOR RESALES AND OTHER TRANSFERS OF THIS SECURITY AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS SECURITY AND ANY SUCH SHARES, REPRESENTING THE INTERESTS HELD BY EACH BENEFICIAL OWNER HEREOF AND THEREOF, SHALL BE DEEMED BY THE ACCEPTANCE OF THIS SECURITY AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT. THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN - 22 - 32 EXCHANGE FOR THIS SECURITY IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE INDENTURE, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH REGULATION S GLOBAL SECURITY AND UNRESTRICTED GLOBAL SECURITY: THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY (OR ITS PREDECESSOR) WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON UNLESS SUCH SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN THEM IN REGULATION S UNDER THE SECURITIES ACT. - 23 - 33 NORTH AMERICAN VACCINE, INC. 6.50% CONVERTIBLE SUBORDINATED NOTE DUE MAY 1, 2003 No.__________U.S.$__________ [IF A REGULATION S GLOBAL SECURITY OR AN UNRESTRICTED GLOBAL SECURITY CUSIP No. U65777AA9 ] [IF A RESTRICTED GLOBAL SECURITY-CUSIP NO. 657201AA7 ] [IF A DEFINITIVE RESTRICTED SECURITY-CUSIP NO. 657201AB5 ] [ISIN No. US657201AA77 ] NORTH AMERICAN VACCINE, INC., a corporation duly organized and existing under the laws of Canada (herein called the "Company", which term includes any successor Person under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to ____________________, or registered assigns, the principal sum of ____________________ United States Dollars [(which amount may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian of the Depositary, in accordance with the rules and procedures of the Depositary; provided, however, that such amount may not exceed U.S. $86,250,000 )]* on May 1, 2003 and to pay interest thereon, from May 7, 1996, or from the most recent Interest Payment Date (as defined below) to which interest has been paid or duly provided for, semi-annually in arrears on May 1 and November 1 in each year (each, an "Interest Payment Date"), commencing November 1, 1996, at the rate of 6.50% per annum (together with any Additional Amounts and Special Interest the Company may be required to pay), until the principal hereof is due, and at the rate of 6.50% per annum on any overdue principal and premium, if any, and, to the extent permitted by law, on any overdue interest. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the April 15 or October 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for ("Defaulted Interest") will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Company, notice whereof shall be given to Holders of Securities not less than 10 days prior to such Special Record Date, or be paid at any - ------------------------- * This language shall appear on each Global Security. - 24 - 34 time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. Payments of principal shall be made upon the surrender of this Security at the option of the Holder at the Corporate Trust Office of the Trustee, or at such other office or agency of the Company as may be designated by it for such purpose in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts or at such other offices or agencies as the Company may designate, by United States Dollar check drawn on, or transfer to a United States Dollar account (such a transfer to be made only to a Holder of an aggregate principal amount of Securities in excess of U.S. $2,000,000, and only if such Holder shall have furnished wire instructions in writing to the Trustee no later than 15 days prior to the relevant payment date) maintained by the payee with a bank in the Borough of Manhattan, The City of New York. Payment of interest on this Security may be made by United States Dollar check drawn on a bank in the Borough of Manhattan, The City of New York mailed to the address of the Person entitled thereto as such address shall appear in the Security Register, or, upon written application by the Holder to the Security Registrar setting forth wire instructions not later than the relevant Record Date, by transfer to a United States Dollar account (such a transfer to be made only to a Holder of an aggregate principal amount of Securities in excess of U.S. $2,000,000 and only if such Holder shall have furnished wire instructions in writing to the Trustee no later than 15 days prior to the relevant payment date) maintained by the payee with a bank in the Borough of Manhattan, The City of New York. The Company will pay to the Holder of this Security who is a non-resident of Canada (within the meaning of the Income Tax Act (Canada)) such additional amounts ("Canadian Additional Amounts") as may be necessary in order that every net payment of the principal of, premium, if any, and interest on this Security (including payment on redemption or repurchase), after deduction or withholding for or on account of any present or future tax, assessment or governmental charge imposed upon or as a result of such payment by the Government of Canada or of any province or territory thereof or by any authority or agency thereof or therein ("Taxing Jurisdiction") ("Canadian Taxes"), will not be less than the amount provided for in this Security to be then due and payable; provided, that no Canadian Additional Amounts will be payable with respect to a payment or credit made to a Holder of, or on behalf of an owner of a beneficial interest in, this Security (collectively, a "Canadian Excluded Holder") (i) with whom the Company does not deal at arms' length (within the meaning of the Income Tax Act (Canada)) at the time of making such payment or credit, or (ii) which is subject to Canadian Taxes by reason of its being connected with Canada or any province or territory thereof (including, without limitation, by reason of such person being a resident or being deemed to be a resident of Canada (within the meaning of the Income Tax Act (Canada)) or carrying on business or being deemed to carry on business (within the meaning of such act) in Canada whether in or through a permanent establishment or fixed base in Canada or otherwise) otherwise than by the mere holding of this Security or the receipt of payments or credits thereunder or (iii) which could obtain an exemption from, or reduction in, the applicable Canadian Tax by satisfying - 25 - 35 reporting or certification requirements imposed by the relevant Taxing Jurisdiction and which fails to do so. The Company will also pay to the Holder of this Security who is a United States Alien (as defined below) such additional amounts ("U.S. Additional Amounts," and together with the Canadian Additional Amounts, "Additional Amounts") as may be necessary in order that every net payment of the principal of, premium, if any, and interest on this Security, after deduction or withholding for or on account of any present or future tax, assessment or governmental charge imposed upon or as a result of such payment by the United States or any political subdivision or taxing authority thereof or therein ("U.S. Taxes," and together with Canadian Taxes, "Taxes"), will not be less than the amount provided for in this Security to be then due and payable; provided, however, that the foregoing obligation to pay U.S. Additional Amounts will not apply with respect to: (a) any U.S. Tax that would not have been so imposed but for (i) the existence of any present or former connection between such Holder (or between a fiduciary, settlor, beneficiary, member, shareholder of or possessor of a power over such Holder, if such Holder is an estate, a trust, a partnership or a corporation) and the United States or any political subdivision or taxing authority thereof or therein, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident of the United States or treated as a resident thereof, or being or having been engaged in a trade or business or present therein, or having or having had a permanent establishment therein, or (ii) such Holder's present or former status as a personal holding company, a foreign personal holding company with respect to the United States, or a foreign private foundation or foreign tax exempt entity for U.S. tax purposes, or a corporation which accumulates earnings to avoid U.S. federal Income tax; (b) any U.S. Tax that would not have been so imposed but for the presentation by the Holder of this Security for payment on a date more than 15 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later; (c) any U.S. Tax that is an estate, inheritance, gift, sales, transfer, personal property or similar tax, assessment or governmental charge; (d) any U.S. Tax that would not have been imposed but for the failure to comply with any certification, identification or other reporting requirements concerning the nationality, residence, identity or connection with the United States of the Holder or beneficial owner of this Security, if compliance is required by statute or by regulation of the United States as a precondition to relief or exemption from such U.S. Tax; (e) any U.S. Tax that is payable otherwise than by deduction or withholding from payment of principal of, premium, if any, or interest on this Security; - 26 - 36 (f) any U.S. Tax imposed on a Holder that actually or constructively owns 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote or that is a controlled foreign corporation related to the Company through stock ownership; (g) any U.S. Tax required to be withheld by any Paying Agent from any payment of the principal of, premium, if any, or interest on any Security, if such payment can be made without such withholding by any other Paying Agent in Western Europe; (h) any U.S. Tax imposed on a Holder that is a partnership or a fiduciary or other than the sole beneficial owner of such payment, but only to the extent that any beneficial owner or member of the partnership or beneficiary or settlor with respect to the fiduciary would not have been entitled to the payment of U.S. Additional Amounts had the beneficial owner, member, beneficiary or settlor directly been the Holder of this Security; or (i) any combination of items (a), (b), (c), (d), (e), (f), (g) and (h). (The Holder of this Security with respect to which any of the listed U.S. Taxes becomes payable is referred to herein as a "U.S. Excluded Holder," and U.S. Excluded Holders, together with Canadian Excluded Holders, as "Excluded Holders.") The Company will make any deduction or withholding, and remit the full amount deducted or withheld to the relevant authority, in accordance with applicable law. The Company will furnish the Holders of the Securities, within 30 days after the date the payment of any Taxes is due pursuant to applicable law, certified copies of tax receipts evidencing such payment by the Company. The Company will indemnify and hold harmless each Holder of, or owner of a beneficial interest in, the Securities (other than an Excluded Holder) and upon written request reimburse such Holder, or owner of a beneficial interest, for the amount of (i) any Taxes levied or imposed and paid by such Holder, or owner of a beneficial interest, as a result of payments made with respect to the Securities, (ii) any liability (including penalties, interest and expenses) arising from or with respect to Taxes, and (iii) any Taxes imposed with respect to payment of Additional Amounts or any reimbursement pursuant to this sentence. Notwithstanding the foregoing, the Company shall not be obligated to pay Additional Amounts in respect of payments becoming due on the Securities more than 15 days after the redemption date for a redemption described under "Redemption for Taxation Reasons," except to the extent that the Company's obligations to pay such Additional Amounts does not arise from the Tax Law Change that resulted in such redemption. For purposes of this Security, a "United States Alien" is any person who, for U.S. federal income tax - 27 - 37 purposes, is a foreign corporation, a nonresident alien individual, a nonresident alien fiduciary of a foreign estate or trust, or a foreign partnership one or more of the members of which is, for U.S. federal income tax purposes, a foreign corporation, a nonresident alien individual or a nonresident alien fiduciary of a foreign estate or trust. At least 30 days prior to each date on which any payment under or with respect to the Securities is due and payable, if the Company will be obligated to pay Additional Amounts with respect to such payments, the Company will deliver to the Trustee an Officers' Certificate stating the fact that such Additional Amounts will be payable, the amounts so payable and will set forth such other information necessary to enable the Trustee to pay such Additional Amounts to Holders or owners of a beneficial interest in the Securities, as the case may be, on the payment date. Except as specifically provided herein and in the Indenture, the Company shall not be required to make any payment with respect to any governmental charge imposed by any government or any political subdivision or taxing authority thereof or therein. Whenever in this Security there is a reference, in any context, to the payment of the principal of, premium, if any, or interest on, or in respect of, any Security such mention shall be deemed to include mention of the payment of Additional Amounts payable as described in the second preceding paragraph to the extent that, in such context, Additional Amounts are, were or would be payable in respect of such Security and express mention of the payment of Additional Amounts (if applicable) in any provisions of this Security shall not be construed as excluding Additional Amounts in those provisions of this Security where such express mention is not made. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof or an Authenticating Agent by the manual signature of one of their respective authorized signatories, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. - 28 - 38 IN WITNESS WHEREOF, the Company has caused this Security to be duly executed under its corporate seal. Dated: NORTH AMERICAN VACCINE, INC. [Corporate Seal] By: --------------------- Name: Title: Attest: - --------------------------- Name: Title: - 29 - 39 [FORM OF REVERSE] This Security is one of a duly authorized issue of securities of the Company designated as its "6.50% Convertible Subordinated Notes due May 1, 2003" (herein called the "Securities"), limited in aggregate principal amount to U.S. $86,250,000, issued and to be issued under an Indenture, dated as of May 7, 1996 (herein called the "Indenture"), between the Company and Marine Midland Bank, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the holders of Senior Indebtedness and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. The Securities are issuable only in fully registered form, without coupons, in the denomination of U.S. $1,000 and integral multiples of U.S. $1,000 in excess thereof. In the case of Securities initially sold to Institutional Accredited Investors, the Securities will be issued in minimum denominations of $250,000 and integral multiples of $1,000 in excess thereof, but on subsequent transfers made in accordance with applicable transfer restrictions, will be available in denominations of $1,000 and integral multiples thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities of any authorized denominations as requested by the Holder surrendering the same upon surrender of the Security or Securities to be exchanged, at the Corporate Trust Office of the Trustee or at such other office or agency of the Company as may be designated by it for such purpose in the Borough of Manhattan, The City of New York or at such other offices or agencies as the Company may designate (each a "Transfer Agent"). The Transfer Agent will then forward such surrendered Securities (together with any payment surrendered therewith) to the Trustee who in turn will issue the new Securities. No sinking fund is provided for the Securities. The Securities are subject to redemption at the option of the Company at any time on or after May 1, 1999, in whole or in part, upon not less than 30 nor more than 60 days' notice to the Holders prior to the Redemption Date at the following Redemption Prices (expressed as percentages of the principal amount) for the twelve-month period beginning on May 1 of the following years:
Year Redemption Price ---- ---------------- 1999 103.714 % 2000 102.786 % 2001 101.857 % 2002 100.929 %
and thereafter at a Redemption Price equal to 100% of the principal amount, together, in each case, with accrued interest to the Redemption Date. - 30 - 40 Securities are also redeemable, in whole but not in part, under the circumstances described in the next succeeding paragraph, at a Redemption Price equal to 100% of the principal amount thereof plus interest accrued to the Redemption Date and any Additional Amount: provided, however, that interest installments on Securities whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture. If as a result of a Tax Law Change, the Company has or will become obligated to pay to the Holder of any Security Additional Amounts, as described in the second and third paragraphs of the face of this Security, and such obligation cannot be avoided by the Company taking reasonable measures available to it, then the Company may, at its option, redeem the Tax Affected Securities as a whole, but not in part, upon not less than 30 nor more than 60 days' notice to the Holders prior to the Redemption Date, at a Redemption Price equal to 100% of the principal amount plus interest accrued to the Redemption Date, and any Additional Amounts then payable; provided, that (i) no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Company would be obligated to pay any such Additional Amounts were a payment in respect of the Tax Affected Securities then due and (ii) at the time such notice of redemption is given, such obligation to pay such Additional Amounts remains in effect. Prior to the publication of any notice of redemption pursuant to this paragraph, the Company shall deliver to the Trustee (a) an Officers' Certificate stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Company so to redeem have occurred and (b) an Opinion of Counsel selected by the Company to the effect that the Company has or will become obligated to pay such Additional Amounts as a result of such Tax Law Change. The Company's right to redeem the Tax Affected Securities shall continue as long as the Company is obligated to pay such Additional Amounts, notwithstanding that the Company shall have made payments of Additional Amounts specified in such second paragraph. In the event of a redemption of the Securities, the Company will not be required (a) to register the transfer or exchange of Securities for a period of 15 days immediately preceding the date notice is given identifying the serial numbers of the Securities called for such redemption, or (b) to register the transfer or exchange of any Security, or portion thereof, called for redemption. Notice to the Holders will be given at least twice not less than 30 nor more than 60 days prior to the Redemption Date as provided in the Indenture. In any case where the due date for the payment of the principal of, premium, if any, or interest, including Additional Amounts and Special Interest, on any Security or the last day on which a Holder of a Security has a right to convert his Security shall be, at any Place of Payment or Place of Conversion, as the case may be, a day on which banking institutions at such Place of Payment or Place of Conversion are authorized or obligated by law or executive order to close, then payment of principal, premium, if any, or interest, including Additional Amounts - 31 - 41 and Special Interest, or delivery for conversion of such Security need not be made on or by such date at such place but may be made on or by the next succeeding day at such place which is not a day on which banking institutions are authorized or obligated by law or executive order to close, with the same force and effect as if made on the date for such payment or the date fixed for redemption or repurchase, or by such last day for conversion, and no interest shall accrue on the amount so payable for the period after such date. Subject to and upon compliance with the provisions of the Indenture, the Holder of this Security is entitled at his option, at any time after 90 days following the latest of the commencement of the offering of the Securities, the original issue date of the Securities and the issue date with respect to any additional Securities issued to cover over-allotments, and on or before the close of business on May 1, 2003, or in case this Security or a portion hereof is called for redemption or the Holder hereof has exercised his right to require the Company to repurchase this Security or such portion hereof, then in respect of this Security until and including, but (unless the Company defaults in making the payment due upon redemption or repurchase, as the case may be) not after, the close of business on the Redemption Date or the Repurchase Date, as the case may be, to convert this Security (or any portion of the principal amount hereof that is an integral multiple of U.S. $1,000) into fully paid and nonassessable Common Shares of the Company at an initial Conversion Price of U.S. $24.858 for each Common Share (or at the current adjusted Conversion Price if an adjustment has been made as provided in the Indenture) by surrender of this Security, duly endorsed or assigned to the Company or in blank and, in case such surrender shall be made during the period from the close of business of any Regular Record Date next preceding any Interest Payment Date to the opening of business on such Interest Payment Date ("Interest Period") (except Securities called for redemption on a Redemption Date or to be repurchased on a Repurchase Date during, in each case, such Interest Period), also accompanied by payment in New York Clearing House or other funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount of this Security then being converted, and also the conversion notice hereon duly executed, to the Company at the Corporate Trust Office of the Trustee, or at such other office or agency of the Company, subject to any laws or regulations applicable thereto and subject to the right of the Company to terminate the appointment of any Conversion Agent (as defined below) as may be designated by it for such purpose in the Borough of Manhattan, The City of New York, or at such other offices or agencies as the Company may designate (each a "Conversion Agent"). Subject to the aforesaid requirement for payment and, in the case of a conversion after the Regular Record Date next preceding any Interest Payment Date and on or before such Interest Payment Date, to the right of the Holder of this Security (or any Predecessor Security) of record at such Regular Record Date to receive an installment of interest, no cash payment or adjustment is to be made on conversion, if the date of conversion is not an Interest Payment Date, for interest accrued hereon from the Interest Payment Date next preceding the date of conversion, or for dividends on the Common Shares issued on conversion hereof. The Company shall thereafter deliver to the Holder the fixed number of Common Shares (together with any cash adjustment, as provided in the Indenture) into which this Security is convertible and such delivery will be deemed to satisfy the Company's obligation to pay the principal amount of this Security. No fractions of shares or - 32 - 42 scrip representing fractions of shares will be issued on conversion, but instead of any fractional interest (calculated to the nearest 1/100th of a share) the Company shall pay a cash adjustment as provided in the Indenture. The Conversion Price is subject to adjustment as provided in the Indenture. In addition, the Indenture provides that in case of certain amalgamations, consolidations or mergers to which the Company is a party or the transfer of all or substantially all of the property and assets of the Company, the Indenture shall be amended, without the consent of any Holders of Securities, so that this Security, if then Outstanding, will be convertible thereafter, during the period this Security shall be convertible as specified above, only into the kind and amount of securities, cash and other property receivable upon such amalgamation, consolidation, merger or transfer by a holder of the number of Common Shares of the Company into which this Security could have been converted immediately prior to such amalgamation, consolidation, merger, sale or transfer, but subject to all requirements necessary to ensure that the Securities will not be subject to Canadian withholding tax as a result thereof, and assuming such holder of Common Shares is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be, or an Affiliate thereof and, failed to exercise any rights of election as to the kind or amount of securities, cash or other property receivable upon such consolidation, merger, sale or transfer and further assuming, if such consolidation, amalgamation, arrangement, merger, conveyance, transfer, sale or lease occurs prior to the later of 60 days following the latest of (i) May 7, 1996 and (ii) the latest date of original issue of any Security, that the Security was convertible at the time of such occurrence at the Conversion Price specified above as adjusted from the issue date of such Security to such time as provided in the Indenture, subject to any requirements necessary to ensure that the Securities will be and will remain exempt from Canadian withholding tax including, without limitation, the requirement in effect on the date hereof that a Holder of Securities shall not be entitled to receive shares, other securities or property, other than securities that are "prescribed securities" as defined in Regulation 6208 to the Income Tax Act (Canada), in the event that any such amalgamation, consolidation, merger or transfer occurs in or prior to five years after the date of original issue of the Securities. Notwithstanding any provision to the contrary if such amalgamation, consolidation, merger, or transfer occurs on or prior to 5 years from the date which is the latest date of original issuance of a Security issued hereunder, a holder of a Security shall not be entitled in any circumstances to convert such Security into any securities, cash or other property (the "Substituted Properties") unless such Substituted Properties are "prescribed securities" with respect to the Security for purposes of clause 212(1)(b)(vii)(E) of the Income Tax Act (Canada). No adjustment in the Conversion Price will be made until such adjustment would require an increase or decrease of at least one percent of such price, provided that any adjustment that would otherwise be made will be carried forward and taken into account in the computation of any subsequent adjustment. Subject to certain limitations in the Indenture, at any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act or exempt from such requirements pursuant to Rule 12g3-2(b) under the Exchange Act, upon the request of a Holder of a Restricted Security or the holder of Common Shares issued upon conversion thereof, the Company will promptly furnish or cause to be furnished Rule 144A Information (as defined below) to such Holder of - 33 - 43 Restricted Securities or such holder of Common Shares issued upon conversion of Restricted Securities, or to a prospective purchaser of any such security designated by any such Holder or holder, as the case may be, to the extent required to permit compliance by such Holder or holder with Rule 144A under the Securities Act in connection with the resale of any such security. "Rule 144A Information" shall be such information as is specified pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto). The Holder of this Security and the Common Shares of the Company issuable upon conversion thereof is entitled to the benefits of a Registration Rights Agreement, dated as of May 1, 1996, between the Company and Goldman, Sachs & Co. and UBS Securities LLC (the "Registration Rights Agreement"). Pursuant to the Registration Rights Agreement, the Company has agreed for the benefit of the Holders from time to time of the Securities and the Common Shares issuable upon conversion thereof that it will, at its expense, (a) within 90 days after the date of issuance of the Securities, file a shelf registration statement (the "Shelf Registration Statement") with the Commission with respect to resales of the Securities and the Common Shares issuable upon conversion thereof, (b) within 180 days after the date of issuance of the Securities, use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective by the Commission and (c) use its reasonable best efforts to maintain such Shelf Registration Statement continuously effective under the Securities Act, as amended, until the third anniversary of the date of the effectiveness of the Shelf Registration Statement or such other date as is provided in the Registration Rights Agreement. If (i) on or prior to 90 days following the date of original issuance of the Securities, a Shelf Registration Statement has not been filed with the Commission, or (ii) on or prior to the 180th day following the date of original issuance of the Securities, such Shelf Registration Statement is not declared effective (each, a "Registration Default"), special interest ("Special Interest") will accrue on this Security from and including the day following such Registration Default to but excluding the day on which such Registration Default has been cured. Special Interest will be paid semi-annually in arrears, with the first semi annual payment due on the first interest payment date in respect of the Securities following the date on which such Special Interest begin to accrue, and will accrue at a rate per annum equal to an additional onequarter of one percent (0.25%) of the principal amount of the Securities to and including the 90th day following such Registration Default and at a rate per annum equal to one-half of one percent (0.50%) thereof from and after the 91st day following such Registration Default. In the event that the Shelf Registration Statement ceases to be effective prior to the third anniversary of the initial effective date of the Shelf Registration Statement or such other date as is provided in the Registration Rights Agreement for a period in excess of 60 days, whether or not consecutive, during any 12-month period, then the interest rate borne by the Securities shall increase by an additional one-half of one percent (0.50%) per annum on the 61st day of the applicable 12-month period such Shelf Registration Statement ceases to be effective to but excluding the day on which the Shelf Registration Statement again becomes effective. Whenever in this Security there is a reference, in any context, to the payment of the principal of, premium, if any, or interest on, or in respect of, any Security such mention shall - 34 - 44 be deemed to include mention of the payment of Special Interest payable as described in the preceding paragraph to the extent that, in such context, Special Interest is, was or would be payable in respect of such Security and express mention of the payment of Special Interest (if applicable) in any provisions of this Security shall not be construed as excluding Special Interest in those provisions of this Security where such express mention is not made. The Holder of this Security, by its acceptance thereof, agrees to be bound by the terms of the Registration Rights Agreement relating to the Securities and the Common Shares issuable upon conversion thereof. If a Change in Control occurs, the Holder of this Security shall have the right, in accordance with the provisions of the Indenture, to require the Company to repurchase this Security (or any portion of the principal amount hereof that is an integral multiple of $1,000) for cash at a Repurchase Price equal to 100% of the principal amount thereof plus interest accrued to the Repurchase Date. At the option of the Company, the Repurchase Price may be paid in cash or, as provided in the Indenture, by delivery of Common Shares having a fair market value equal to the Repurchase Price; provided that payment may not be made in Common Shares unless at the time of payment such stock is listed on a national securities exchange or quoted on Nasdaq. For purposes of this paragraph, the fair market value of Common Shares shall be determined by the Company and shall be equal to 95% of the average of the Closing Prices Per Share for the five consecutive Trading Days immediately preceding the second Trading Day immediately preceding the Repurchase Date. Whenever in this Security there is a reference, in any context, to the principal of any Security as of any time, such reference shall be deemed to include reference to the Repurchase Price payable in respect of such Security to the extent that such Repurchase Price is, was or would be so payable at such time, and express mention of the Repurchase Price in any provision of this Security shall not be construed as excluding the Repurchase Price in those provisions of this Security when such express mention is not made. [The following paragraph shall appear in each Security that is not a Global Security: In the event of redemption, repurchase or conversion of this Security in part only, a new Security or Securities for the unredeemed, unrepurchased or unconverted portion hereof will be issued in the name of the Holder hereof.] [The following paragraph shall appear in each Global Security: In the event of a deposit or withdrawal of an interest in this Security, including an exchange, transfer, redemption, repurchase or conversion of this Security in part only, the Trustee, as custodian of the Depositary, shall make an adjustment on its records to reflect such deposit or withdrawal in accordance with the rules and procedures of the Depositary.] The indebtedness evidenced by this Security is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of all - 35 - 45 Senior Indebtedness of the Company, and this Security is issued subject to such provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his attorney-in-fact for any and all such purposes. If an Event of Default, other than an Event of Default arising by reason of a Change of Control, shall occur and be continuing, the principal of all the Securities, together with accrued interest to the date of declaration, may be declared due and payable in the manner and with the effect provided in the Indenture. Upon payment (i) of the amount of principal so declared due and payable, together with accrued interest to the date of declaration, and (ii) of interest on any overdue principal and overdue interest, all of the Company's obligations in respect of the payment of the principal of and interest on the Securities shall terminate; provided, that in the event of an Event of Default arising by reason of a Change of Control such Event of Default will be cured after a Change of Control offer is made and all Securities properly tendered for purchase pursuant to such Change of Control offer are accepted for payment and such payment is made. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities under the Indenture at any time by the Company and the Trustee with either (a) the written consent of the Holders of a majority in principal amount of the Securities at the time Outstanding, or (b) by the adoption of a resolution, at a meeting of Holders of the Outstanding Securities at which a quorum is present, by the Holders of 66-2/3% in principal amount of the Outstanding Securities represented and entitled to vote at such meeting. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security or such other Security. As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default, the Holders of at least 25% in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of the Securities Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal - 36 - 46 hereof, premium, if any, or interest hereon (including any Additional Amounts and Special Interest) on or after the respective due dates expressed herein or for the enforcement of the right to convert this Security as provided in the Indenture. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, premium, if any, and interest on (including Additional Amounts and Special Interest, as described herein) this Security at the times, places and rate, and in the coin, currency, or in the securities herein prescribed or to convert this Security as provided in the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of Securities is registrable on the Security Register upon surrender of a Security for registration of transfer (a) at the Corporate Trust Office of the Trustee or at such other office or agency of the Company as may be designated by it for such purpose in the Borough of Manhattan, The City of New York, or (b) subject to any laws or regulations applicable thereto and to the right of the Company to terminate the appointment of any Transfer Agent, at the offices of the Transfer Agents described herein or at such other offices or agencies as the Company may designate, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder thereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees by the Registrar. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to recover any tax or other governmental charge payable in connection therewith. Prior to due presentation of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered, as the owner thereof for all purposes, whether or not such Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. - 37 - 47 ELECTION OF HOLDER TO REQUIRE REPURCHASE 1. Pursuant to Section 14.1 of the Indenture, the undersigned hereby elects to have this Security repurchased by the Company. 2. The undersigned hereby directs the Trustee or the Company to pay it or ________________________ an amount in cash or, at the Company's election, Common Shares valued as set forth in the Indenture, equal to 100% of the principal amount hereof, plus interest accrued to the Repurchase Date, as provided in the Indenture. 3. a. Principal amount to be repurchased (must be U.S. $1,000 and integral multiples thereof): b. Certificate Number(s): __________________________ and CUSIP Number(s): ____________________________ 4. a. Remaining principal amount following such repurchase: _______________________ b. Name of the Person in which the remaining principal amount is to be registered:_____________________________________ 5. If payment of the Repurchase Price is to be made by the Company in Common Shares, name(s) and addresses in which the certificate(s) for Common Shares shall be issued: ------------------------------------------------------------ (name) ------------------------------------------------------------ ------------------------------------------------------------ Dated: --------------------- --------------------------- Signature --------------------------- Signature Guaranteed - 38 - 48 Principal amount to be repurchased: ______________ Remaining principal amount following such repurchase: _____________ NOTICE: The signature to the foregoing Election must correspond to the Name as written upon the face of this Security in every particular, without alteration or any change whatsoever. - 39 - 49 [GLOBAL SECURITIES] SCHEDULE OF EXCHANGES
Principal Amount Remaining Principal Exchanged to or from Amount of this Global Regulation S Global Securities, Security Following Notation Made Date Unrestricted Global Securities, Such Exchange (after on Behalf of Made or Definitive Securities increase or decrease) Security Registrar ---- ------------------------------- --------------------- ------------------ - --------- ------------ ------------- ---------- - --------- ------------ ------------- ---------- - --------- ------------ ------------- ---------- - --------- ------------ ------------- ---------- - --------- ------------ ------------- ---------- - --------- ------------ ------------- ---------- - --------- ------------ ------------- ---------- - --------- ------------ ------------ ---------- - --------- ------------ ------------- ---------- - --------- ------------ ------------- ---------- - --------- ------------ ------------- ---------- - --------- ------------ ------------- ---------- - --------- ------------ ------------- ---------- - --------- ------------ ------------- ---------- - --------- ------------ ------------- ---------- - --------- ------------ ------------- ----------
- 40 - 50 SECTION 2.3. Form of Conversion Notice. The Forms of Conversion Notice are attached as Annexes A-1 and A-2 hereto. SECTION 2.4. Legend on Restricted Securities. During the period prior to the time the Securities may be resold without registration pursuant to Rule 144(k) under the Securities Act (the expiration of which time the Company shall certify in an Officers' Certificate and an Opinion of Counsel), any Security originally issued otherwise than in reliance on Regulation S, including any Security issued in exchange therefor or in lieu thereof, shall be referred to herein as a "Restricted Security" and shall be subject to the restrictions on transfer provided in the legends set forth on the face of the form of Restricted Security other than any Global Security in Section 2.2 or the form of Restricted Global Security in Section 2.2, as appropriate; provided, however, that the term "Restricted Security" shall not include any Securities as to which restrictions have been terminated in accordance with Section 3.5. All Restricted Securities shall bear the applicable legends set forth on the face of the form of Security in Section 2.2. Except as provided in Section 3.5, the Trustee shall not issue any unlegended Security until it has received an Officers' Certificate and Opinion of Counsel from the Company directing it to do so. SECTION 2.5 Form of Trustee's Certificate of Authentication. This is one of the Securities referred to in the within-mentioned Indenture. Dated: MARINE MIDLAND BANK, as Trustee By ----------------------- Authorized Signatory ARTICLE THREE THE SECURITIES SECTION 3.1. Title and Terms. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is limited to U.S. $86,250,000, except for Securities authenticated and delivered in exchange for, or in lieu of, other Securities pursuant to this Indenture. The Securities shall be known and designated as the "6.50% Convertible Subordinated Notes due May 1, 2003" of the Company. Their Stated Maturity shall be May 1, 2003 and they shall bear interest on their principal amount from May 7, 1996, payable semi-annually in arrears - 41 - 51 on May 1 and November 1 in each year, commencing November 1, 1996, at the rate of 6.50% per annum (together with any Additional Amounts and Special Interest the Company may be required to pay) until the principal thereof is due and at the rate of 6.50% per annum on any overdue principal and, to the extent permitted by law, on any overdue interest; provided, however, that payments shall only be made on Business Days as provided in Section 1.12. The principal of, premium, if any, and interest on the Securities shall be payable as provided in the forms of Securities set forth in Sections 2.2 (any city in which any Paying Agent is located being herein called a "Place of Payment"). The Securities shall be redeemable at the option of the Company at any time on or after 60 days following the latest of the commencement of the offering of the Securities, the original issue date of the Securities and the issue date with respect to any additional Securities issued to cover over-allotments, in whole or in part, and at the Company's option or otherwise in the event of certain developments, including developments with respect to changes in Taxes, as provided in Article Eleven and in the forms of Securities set forth in Section 2.2. The Securities shall be convertible as provided in Article Twelve (any city in which any Conversion Agent is located being herein called a "Place of Conversion"). The Securities shall be subordinated in right of payment to Senior Indebtedness of the Company as provided in Article Thirteen. The Securities shall be subject to repurchase by the Company at the option of the Holders as provided in Article Fourteen. SECTION 3.2. Denominations. The Securities shall be issuable as registered Securities in the denomination of U.S. $1,000 and integral multiples of U.S. $1,000 in excess thereof. In the case of Securities initially sold to Institutional Accredited Investors, the Securities will be issued in minimum denominations of U.S. $250,000 and integral multiples of U.S. $1,000 in excess thereof, but on subsequent transfers, will be available in denominations of U.S. $1,000 and integral multiples thereof. SECTION 3.3. Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by its Chairman of the Board, one of its Vice Chairmen of the Board, its Chief Executive Officer, its President or one of its Senior Vice Presidents, under a facsimile of its corporate seal reproduced thereon attested by its Secretary or one of its Assistant Secretaries. Any such signature may be manual or facsimile. Securities bearing the manual or facsimile signature of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such - 42 - 52 individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee or to its order for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee or an Authenticating Agent in accordance with such Company Order shall authenticate and make available for delivery such Securities as in this Indenture provided and not otherwise. In connection with any Company Order for authentication, an Officers' Certificate and Opinion of Counsel pursuant to Section 1.2 shall not be required. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee or an Authenticating Agent by manual signature of an authorized signatory, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. SECTION 3.4. Global Securities. The Securities shall be issued initially in the form of a Restricted Global Security or a Regulation S Global Security (or, if the initial purchasers are Institutional Accredited Investors, Definitive Restricted Securities). The Depositary or its nominee shall be the Holder of the Global Securities, and owners of beneficial interests in the Securities represented by the Global Securities shall hold such interests pursuant to the procedures and practices of the Depositary. Any such owner's beneficial ownership of any such Securities will be shown only on, and the transfer of such ownership interest shall be effected only through, records maintained by the Depositary or its nominee. Transfer of interests in the Global Securities shall be subject to the provisions of Section 3.5. Investors may hold their interests in the Regulation S Global Security through CEDEL or Euroclear, if they are participants in such systems, or indirectly through organizations which are participants in such systems. After the expiration of the Restricted Period (but not earlier), investors may also hold such interests through organizations other than CEDEL and Euroclear that are participants in the Depositary's system. CEDEL and Euroclear will hold interests in the Regulation S Global Security on behalf of their participants through customers' securities accounts in their respective names on the books of their respective depositaries, which, in turn, will hold such interests in the Regulation S Global Security in customer's securities accounts in the depositaries' names on the books of the Depositary. All interests in a Global Security, including those held through Euroclear or CEDEL, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear and CEDEL will be subject to the procedures and requirements of such system. - 43 - 53 Unless the Depository notifies the Company that it is unwilling or unable to continue as depository for a Global Security or ceases to be a "Clearing Agency" registered under the Exchange Act or announces an intention permanently to cease business or does in fact do so, and a successor Depositary is not appointed by the Company within 90 days of such notice, or in the case of a Global Security held for an account of Euroclear or CEDEL, Euroclear or CEDEL (as the case may be) is closed for business for 14 continuous days or announces an intention to cease, or permanently ceases, business, owners of beneficial interests in a Global Security will not be entitled to have any portions of such Global Security registered in their names, will not receive or be entitled to receive physical delivery of Securities in definitive form and will not be considered the owners or holders of the Global Security. Any Global Security exchanged upon the occurrence of an event described in the preceding sentence shall be so exchanged in whole and not in part. Any Security issued in exchange for a Global Security or any portion thereof shall be a Global Security, provided that any such Security so issued that is registered in the name of a Person other than the Depositary or a nominee thereat shall not be a Global Security. In addition, upon request, the Company will issue certificates for Securities in definitive, fully registered, non-global form in exchange for beneficial interests of like principal amount in any Global Note, but only upon at least 60 days' prior written notice given to the Trustee in accordance with the Depositary's customary procedures. Securities issued in exchange for a Global Security or any portion thereof pursuant to the preceding paragraph above shall be issued in definitive, fully registered form shall have an aggregate principal amount equal to that of such Global Security or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear any legends required hereunder. Any Global Security to be exchanged in whole shall be surrendered by the Depositary to the Trustee, as Security Registrar. With regard to any Global Security to be exchanged in part, either such Global Security shall be so surrendered for exchange or, if the Trustee is acting as custodian for the Depositary or its nominee with respect to such Global Security, the principal amount thereof shall be reduced, by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the records of the Trustee. Upon any such surrender or adjustment, the Trustee shall authenticate and deliver the Security issuable on such exchange to or upon the order of the Depositary or an authorized representative thereof. In the event of the occurrence of any of the events specified in the preceding paragraph, the Company will promptly make available to the Trustee a reasonable supply of certificated Securities in definitive form. Except as otherwise set forth in the Indenture or a Global Security, owners of beneficial interests in the Securities evidenced by a Global Security will not be entitled to any rights under the Indenture with respect to such Global Security, and the Depositary or its nominee may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the owner and Holder of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any such agent from giving effect to any written certification, proxy or other authorization furnished by the Depositary or its nominee or impair, as between the Depositary or its nominee and such owners of beneficial interests, the - 44 - 54 operation of customary practices governing the exercise of the rights of the Depositary or its nominee as Holder of any Security. Initially, any and all Global Securities issued hereunder shall be issued to the Depositary, registered in the name of Cede & Co., as the nominee of the Depositary, and deposited with the Trustee, as custodian for Cede & Co. SECTION 3.5. Registration, Registration of Transfer and Exchange; Restrictions on Transfer. (a) The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency of the Company designated pursuant to Section 10.2 being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Securities and transfers and exchanges of Securities as herein provided. Upon surrender for registration of transfer of any Security at an office or agency of the Company designated pursuant to Section 10.2 for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Indenture (including Section 2.4). At the option of the Holder, and subject to the other provisions of this Section 3.5, Securities may be exchanged for other Securities of any authorized denomination and of a like aggregate principal amount, upon surrender of the Securities to be exchanged at any such office or agency. Whenever any Securities are so surrendered for exchange, and subject to the other provisions of this Section 3.5, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Security Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and subject to the other provisions of this Section 3.5, entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or - 45 - 55 exchange of Securities, other than exchanges pursuant to Section 11.8, 12.2 or 14.2(e) (other than where the Common Shares are to be issued or delivered in a name other than that of the Holder of the Security) not involving any transfer and other than any stamp and other duties, if any, which may be imposed in connection with any such transfer or exchange by Canada, the United States or the United Kingdom or any political subdivision thereof or therein, which shall be paid by the Company. In the event of a redemption of the Securities in part, neither the Company nor the Securities Registrar will be required to register the transfer of or exchange any Security, or portion thereof, called for redemption. (b) Beneficial ownership of every Security shall be subject to the restrictions on transfer provided in the legends required to be set forth on the face of each Security pursuant to Section 2.4, unless such restrictions on transfer shall be waived by the written consent of the Company, or terminated in accordance with this Section 3.5(b) or Section 3.5(c). The Holder of each Security, by such Holder's acceptance thereof, agrees to be bound by such restrictions on transfer. The restrictions imposed by this Section 3.5 and Section 2.4 upon the transferability of any particular Security shall cease and terminate upon delivery by the Company to the Trustee of an Officers' Certificate and Opinion of Counsel stating that such Security has been sold pursuant to an effective registration statement under the Securities Act or transferred in compliance with Rule 144 under the Securities Act (or any successor provision thereto). Any Restricted Security as to which the Company has delivered to the Trustee an Officers' Certificate and Opinion of Counsel that such restrictions on transfer shall have expired in accordance with their terms or shall have terminated may, upon surrender of such Restricted Security for exchange to the Security Registrar or any Transfer Agent in accordance with the provisions of this Section 3.5 be exchanged for a new Security, of like tenor and aggregate principal amount, which shall not bear the restrictive legends required by Section 2.4. The Company shall inform the Trustee in writing of the effective date of any registration statement registering the Securities under the Securities Act. The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the aforementioned registration statement. As used in the preceding two paragraphs of this Section 3.5, the term "transfer" encompasses any sale, pledge, transfer or other disposition of any Restricted Security. (c) Notwithstanding any other provisions of this Indenture or the Securities, transfers of a Global Security, in whole or in part, transfers and exchanges of interests therein of the kinds described in Clauses (2), (3), (4), (5) and (6) below and exchanges of interests in Global Securities or of other Securities as described in Clause (7) below, shall be made only in accordance with this Section 3.5(c), and all transfers of an interest in the Regulation S Global Security shall comply with Section 3.5(c)(8) below. Transfers and exchanges subject to this Section 3.5 shall also be subject to the other provisions of this Indenture that are not inconsistent with this Section 3.5. - 46 - 56 (1) A Global Security may not be transferred, in whole or in part, to any Person other than the Depositary or a nominee thereof, and no such transfer to any such other Person may be registered; provided that this Clause (1) shall not prohibit any transfer of a Security that is issued in exchange for a Global Security but is not itself a Global Security. No transfer of a Security to any Person shall be effective under this Indenture or the Securities unless and until such Security has been registered in the name of such Person. Nothing in this Section 3.5(c)(1) shall prohibit or render ineffective any transfer of a beneficial interest in a Global Security effected in accordance with the other provisions of this Section 3.5(c). (2) Restricted GLOBAL SECURITY TO REGULATION S GLOBAL SECURITY. If the holder of a beneficial interest in the Restricted Global Security wishes at any time to transfer such interest to a Person who wishes to take delivery thereof in the form of a beneficial interest in the Regulation S Global Security, such transfer may be effected, subject to the rules and procedures of the Depositary, Euroclear and CEDEL, in each case to the extent applicable (the "Applicable Procedures"), only in accordance with the provisions of this Section 3.5(c)(2). Upon receipt by the Trustee, as Security Registrar, at its office in The City of New York of (A) a written order given by the Depositary or its authorized representative directing the Trustee to credit or cause to be credited to a specified Agent Member's account a beneficial interest in the Regulation S Global Security in a principal amount equal to that of the beneficial interest in the Restricted Global Security to be so transferred, (B) a written order given by the Depositary or its authorized representative containing information regarding the account of the Agent Member (and the Euroclear or CEDEL account, as the case may be) to be credited with, and the account of the Agent Member to be debited for, such beneficial interest and (C) a certificate in substantially the form set forth in Annex B-1 given by the holder of such beneficial interest, the Trustee, as Security Registrar, shall instruct the Depositary to reduce the principal amount of the Restricted Global Security, and to increase the principal amount of the Regulation S Global Security, by the principal amount of the beneficial interest in the Restricted Global Security to be so transferred, and to credit or cause to be credited to the account of the Person specified in such instructions (which shall be the Agent Member for Euroclear or CEDEL or both, as the case may be) a beneficial interest in the Regulation S Global Security having a principal amount equal to the amount by which the principal amount of the Restricted Global Security was reduced upon such transfer. (3) RESTRICTED SECURITY TO UNRESTRICTED GLOBAL SECURITY AFTER THREE YEARS. If the holder of a beneficial interest in a Restricted Security wishes at any time after three years from the latest of May 7, 1996 or the date of original issue of any Security or the resale of any Security by an affiliate of the Company to (i) transfer such interest to a Person who wishes to take delivery thereof in the form of a beneficial interest in the Unrestricted Global Security or (ii) exchange such interest for a beneficial interest in an Unrestricted Global Security, such transfer may be effected, subject to the Applicable Procedures, only in accordance with this Section 3.5(c)(3). Upon receipt by the Trustee, as Security Registrar, at its office in The City of New York of (A) in the case of a transfer or - 47 - 57 exchange of an interest in the Restricted Global Security, an order given by the Depositary or its authorized representative directing the Trustee to credit or cause to be credited to a specified Agent Member's account a beneficial interest in the Unrestricted Global Security in a principal amount equal to that of the beneficial interest in the Restricted Global Security to be so transferred, (B) in the case of a transfer or exchange of an interest in the Restricted Global Security, an order given by the Depositary or its authorized representative containing information regarding the account of the Agent Member (and, if applicable, the Euroclear or CEDEL account, as the case may be) to be credited with, and the account of the Agent Member to be debited for, such beneficial interest and (C) a certificate in substantially the form set forth in Annex C-2 given by the holder of such beneficial interest, the Trustee, as Security Registrar, shall (x) in the case of a transfer or exchange of an interest in the Restricted Global Security, instruct the Depositary to reduce the principal amount of the Restricted Global Security, and to increase the principal amount of the Unrestricted Global Security, by the principal amount of the beneficial interest in the Restricted Global Security to be so transferred, and to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Unrestricted Global Security having a principal amount equal to the amount by which the principal amount of the Restricted Global Security was reduced upon such transfer, or (y) in the case of transfer or exchange of a Definitive Restricted Security, cancel such Definitive Restricted Security and increase the principal amount of the Unrestricted Global Security accordingly. (4) REGULATION S GLOBAL SECURITY OR UNRESTRICTED GLOBAL SECURITY TO RESTRICTED GLOBAL SECURITY. If the holder of a beneficial interest in the Regulation S Global Security or the Unrestricted Global Security wishes at any time to transfer such interest to a Person who wishes to take delivery thereof in the form of a beneficial interest in the Restricted Global Security, such transfer may be effected, subject to the Applicable Procedures, only in accordance with this Section 3.4(c)(4). Upon receipt by the Trustee, as Security Registrar, at its office in The City of New York of (A) a written order given by the Depositary or its authorized representative directing the Trustee to credit or cause to be credited to a specified Agent Member's account a beneficial interest in the Restricted Global Security in a principal amount equal to that of the beneficial interest in the Regulation S Global Security or the Unrestricted Global Security to be so transferred, (B) a written order given by the Depositary or its authorized representative containing information regarding the account of the Agent Member to be credited with, and the account of the Agent Member (and, if applicable, the Euroclear or CEDEL account, as the case may be) to be debited for, such beneficial interest and (C) with respect to a transfer of a beneficial interest in the Regulation S Global Security (but not the Unrestricted Global Security), a certificate in substantially the form set forth in Annex B-3 given by the holder of such beneficial interest, the Trustee, as Security Registrar, shall instruct the Depositary to reduce the principal amount of the Regulation S Global Security or Unrestricted Global Security, as the case may be, and to increase the principal amount of the Restricted Global Security, by the principal amount of the beneficial interest in the Regulation S Global Security or Unrestricted Global Security to - 48 - 58 be so transferred, and to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Restricted Global Security having a principal amount equal to the amount by which the principal amount of the Regulation S Global Security or Unrestricted Global Security, as the case may be, was reduced upon such transfer. (5) EXCHANGES OF RESTRICTED GLOBAL SECURITY FOR UNRESTRICTED GLOBAL SECURITY. If the holder of a beneficial interest in the Restricted Global Security wishes at any time to exchange such interest for a beneficial interest in the Unrestricted Global Security, such exchange may be effected, subject to the Applicable Procedures, only in accordance with the provisions of this Section 3.5(c)(5). Upon receipt by the Trustee, as Security Registrar, at its office in The City of New York of (A) a written order given by the Depositary or its authorized representative directing the Trustee to credit or cause to be credited to a specified Agent Member's account a beneficial interest in the Unrestricted Global Security in a principal amount equal to that of the beneficial interest in the Restricted Global Security to be so exchanged, (B) a written order given by the Depositary or its authorized representative containing information regarding the account of the Agent Member (and the Euroclear or CEDEL account, as the case may be) to be credited with, and the account of the Agent Member to be debited for, such beneficial interest and (C) a certificate in substantially the form set forth in Annex C-1, given by the holder of such beneficial interest, the Trustee, as Security Registrar, shall instruct the Depositary to reduce the principal amount of the Restricted Global Security, and to increase the principal amount of the Unrestricted Global Security by the principal amount of the beneficial interest in the Restricted Global Security to be so exchanged, and to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Unrestricted Global Security having a principal amount equal to the amount by which the principal amount of the Restricted Global Security was reduced upon such exchange. (6) EXCHANGES OF DEFINITIVE RESTRICTED SECURITIES (ISSUED IN THE INITIAL DISTRIBUTION TO INSTITUTIONAL ACCREDITED INVESTORS) FOR RESTRICTED GLOBAL SECURITY, REGULATION S GLOBAL OR UNRESTRICTED GLOBAL SECURITY. If the holder of a Definitive Restricted Security wishes at any time to exchange such interest for a beneficial interest in the Restricted Global Security, Regulation S Global Security, or the Unrestricted Global Security, such exchange may be effected, subject to the Applicable Procedures, only in accordance with the provisions of this Section 3.5(c)(6). Upon receipt by the Trustee, as Security Registrar, at its office in The City of New York of (A) such Restricted Securities as provided in Section 3.5(a) and written instructions satisfactory to the Trustee directing the Trustee to credit or cause to be credited to a specified Agent Member's account a beneficial interest in the Restricted Global Security, Regulation S Global Security or the Unrestricted Global Security, as the case may be, in a principal amount equal to that of the beneficial interest in the Definitive Restricted Security to be so exchanged, (B) a written order given by the Depositary or its authorized representative containing information regarding the account of the Agent Member (and the Euroclear or CEDEL - 49 - 59 account, as the case may be) to be credited with, and the account of the Agent Member to be debited for, such beneficial interest and (C) a certificate in substantially the form set forth in Annex B-2, given by the holder of such Definitive Restricted Security interest, the Trustee, as Security Registrar, shall cancel such Definitive Restricted Security (and issue a new Definitive Restricted Security in respect of any untransferred portion thereof) and instruct the Depositary to increase the principal amount of the Restricted Global Security, Regulation S Global Security or the Unrestricted Global Security, as the case may be, by the principal amount of the beneficial interest in the Definitive Restricted Security to be so exchanged, and to credit or cause to be credited to the account of the Person specified in such instructions (which shall be the Agent Member for Euroclear or CEDEL or both, as the case may be, if an interest in the Regulation S Global Security is being credited) a beneficial interest in the Regulation S Global Security or the Unrestricted Global Security or the Restricted Global Security, as the case may be, having a principal amount equal to the amount by which the principal amount of the Definitive Restricted Security was exchanged. (7) OTHER EXCHANGES. In the event that a Global Security or any portion thereof is exchanged for Securities other than Global Securities, such other Securities may in turn be exchanged (on transfer or otherwise) for Securities that are not Global Securities or for beneficial interests in a Global Security (if any is then outstanding) only in accordance with such procedures, which shall be substantially consistent with the provisions of Clauses (1) through (6) above and (8) below (including the certification requirements intended to insure that transfers and exchanges of beneficial interests in a Global Security comply with Rule 144A, Rule 144 or Regulation S, as the case may be) and any Applicable Procedures, as may be from time to time adopted by the Company and the Trustee. (8) INTERESTS IN REGULATION S GLOBAL SECURITY TO BE HELD THROUGH EUROCLEAR OR CEDEL. Until the termination of the Restricted Period, interests in the Regulation S Global Security may be held only through Agent Members acting for and on behalf of Euroclear and CEDEL, provided that this Clause (8) shall not prohibit any transfer in accordance with Section 3.5(c)(4) hereof. (d) Neither the Trustee, the Paying Agent in London nor any of their agents shall (1) have any duty to monitor compliance with or with respect to any Canadian, U.S. federal or state or other securities or tax laws or (2) have any duty to obtain documentation on any transfers or exchanges other than as specifically required hereunder. SECTION 3.6. Mutilated, Destroyed, Lost or Stolen Securities. If any mutilated Security is surrendered to the Trustee or to a Transfer Agent outside the United States, the Company shall execute, the Trustee or an Authenticating Agent shall authenticate and the Trustee or Transfer Agent shall deliver in exchange therefor a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. - 50 - 60 If there be delivered to the Company and either to the Trustee or to a Transfer Agent outside the United States: (1) evidence to their satisfaction of the destruction, loss or theft of any Security, and (2) such security or indemnity as may be satisfactory to the Company and the Trustee and such Transfer Agent to save each of them and any agent of either of them harmless, then, in the absence of actual notice to the Company, the Trustee or the Transfer Agent that such Security has been acquired by a bona fide purchaser, the Company shall execute, the Trustee or an Authenticating Agent shall authenticate and the Trustee or Transfer Agent shall deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion, but subject to any conversion rights, may instead, of issuing a new Security, pay such Security upon satisfaction of the conditions set forth in the preceding paragraph. Upon the issuance of any new Security under this Section 3.6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto (other than any stamp and other duties, if any, which may be imposed in connection therewith by Canada, the United States or the United Kingdom or any political subdivision thereof or therein, which shall be paid by the Company) and any other expenses (including the fees and expenses of the Trustee, the Paying Agent in London and the Transfer Agent) connected therewith. Every new Security issued pursuant to this Section 3.6 in lieu of any mutilated, destroyed, lost or stolen Security shall evidence the original contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and such new Security shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section 3.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies of any Holder with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 3.7. Payment of Interest, Interest Rights Preserved. Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one - 51 - 61 or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security, the date of the proposed payment and the Special Record Date, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. The Special Record Date for the payment of such Defaulted Interest shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Securities at such Holder's address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section and Section 3.5, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. - 52 - 62 In the case of any Security which is converted after any Regular Record Date and on or prior to the next succeeding Interest Payment Date (other than any Security whose Maturity is prior to such Interest Payment Date), interest whose Stated Maturity is on such Interest Payment Date shall be payable on such Interest Payment Date notwithstanding such conversion, and such interest (whether or not punctually paid or duly provided for) shall be paid to the Person in whose name such Security (or one or more Predecessor Securities) is registered at the close of business on such Regular Record Date. Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Security which is converted, interest whose Stated Maturity is after the date of conversion of such Security shall not be payable. SECTION 3.8. Persons Deemed Owners. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of, premium, if any, and (subject to Section 3.7) interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. SECTION 3.9. Cancellation. All Securities surrendered for payment, redemption, repurchase, registration of transfer or exchange or conversion shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee. All Securities so delivered to the Trustee shall be canceled promptly by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section 3.9. The Trustee shall destroy all canceled Securities in accordance with applicable law and its customary practices in effect from time to time. SECTION 3.10. Computation of Interest. Interest on the Securities shall be computed on the basis of a 360-day year of twelve 30-day months. SECTION 3.11. CUSIP and ISIN Numbers. The Company in issuing Securities shall use "CUSIP" numbers (if then generally in use) in addition to serial numbers and "ISIN" numbers (if generally in use); if so, the Trustee shall use such "CUSIP" and "ISIN" numbers in addition to serial numbers in notices of redemption and repurchase as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such CUSIP and ISIN numbers either as printed on the Securities or as contained in any notice of a redemption or repurchase and that reliance may be placed only on the serial or other identification numbers printed on the Securities, and - 53 - 63 any such redemption or repurchase shall not be affected by any defect in or omission of such CUSIP or ISIN numbers. SECTION 3.12. Notification of Withholding. The Company shall notify the Trustee in writing of the necessity, if any, to withhold any amounts from payments to Holders (and the amount of any such withholding) arising from the delivery by a Holder of any certificate. ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 4.1. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request cease to be of further effect (except as to any surviving rights of conversion, or registration of transfer or exchange, or replacement of Securities herein expressly provided for and any right to receive Additional Amounts and Special Interest as provided in the forms of Securities set forth in Section 2.2 and the Company's obligations to the Trustee pursuant to Section 6.7), and the Trustee, at the expense of the Company, shall execute proper instruments in form and substance satisfactory to the Trustee acknowledging satisfaction and discharge of this Indenture, when (l) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.6, and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.3) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee or the Paying Agent in London or its agent for cancellation (other than Securities referred to in clauses (i) and (ii) of clause (1)(A) above) (i) have become due and payable, or (ii) will have become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of clause (i) or (ii) - 54 - 64 above, has deposited or caused to be deposited with the Trustee as trust funds (immediately available to the Holders in the case of clause (i)) in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal, premium, if any, and interest (including any applicable Additional Amounts and Special Interest) to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.7, the obligations of the Company to any Authenticating Agent under Section 6.12, the obligation of the Company to pay Additional Amounts and, if money shall have been deposited with the Trustee pursuant to clause (1)(B) of this Section 4.1, the obligations of the Trustee under Section 4.2 and the last paragraph of Section 10.3 shall survive. Funds held in trust pursuant to this Section 4.1 are not subject to the provisions of Article Thirteen. SECTION 4.2. Application of Trust Money. Subject to the provisions of the last paragraph of Section 10.3, all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent), to the Persons entitled thereto, of the principal, premium, if any, and interest for whose payment such money has been deposited with the Trustee. All moneys deposited with the Trustee pursuant to Section 4.1 (and held by it or any Paying Agent) for the payment of Securities subsequently converted shall be returned to the Company upon Company Request. - 55 - 65 ARTICLE FIVE REMEDIES SECTION 5.1. Events of Default. "Event of Default", wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be occasioned by the provisions of Article Thirteen or be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest (including any Additional Amounts or Special Interest) upon any Security when it becomes due and payable, and continuance of such default for a period of 30 days; or (2) default in the payment of the principal of or premium, if any, on any Security whether at its Maturity upon redemption, repurchase, or otherwise; or (3) failure to observe or perform any covenant, condition or agreement on the part of the Company to be observed or performed pursuant to Sections 7.1 and 10.4 and Article Fourteen hereof; or (4) default in the performance, or breach, of any other covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in the performance or breach of which is specifically dealt with elsewhere in this Section), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (5) default by the Company or any Subsidiary (i) in the payment of any principal of or interest on any Indebtedness, the principal amount of which, individually or in the aggregate, exceeds U.S. $10,000,000, when due after giving effect to any applicable grace periods (whether such Indebtedness exists as of the Issue Date or is thereafter created) or (ii) on any Indebtedness, the principal amount of which, individually or in the aggregate, exceeds U.S. $10,000,000, which default or defaults in the case of clause (ii) shall have resulted in such Indebtedness becoming due and payable prior to the date on which it would otherwise have become due and payable; or (6) failure by the Company or any of its Subsidiaries to pay a final judgment or final judgments or a final order or final orders entered by a court or courts of competent jurisdiction, which judgments or orders in the aggregate exceed U.S. $10,000,000, and - 56 - 66 either (i) the commencement by any creditor of any enforcement proceeding upon any such judgment or order or (ii) such judgment or order remaining unstayed for 45 days; or (7) (A) a court of competent jurisdiction shall enter a decree or order for relief in respect of the Company, or any of its Significant Subsidiaries in any involuntary case under any Bankruptcy Law or any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable federal or state law; (B) a decree or order of a court of competent jurisdiction for the appointment of a receiver, liquidator, sequestrator, trustee, Custodian or other officer having similar powers over the Company or any of its Significant Subsidiaries, or over all of or a substantial part of its or their respective properties, shall have been entered; or the involuntary appointment of an interim receiver, trustee or other Custodian of the Company or any of its Significant Subsidiaries for all or a substantial part of its or their respective properties; or the issuance of a warrant of attachment, execution or similar process against any substantial part of the property of the Company or any of its Significant Subsidiaries and the continuance of any such events in subpart (B) for 45 days unless stayed or discharged; or (8) the Company or any of its Significant Subsidiaries (A) shall have an order for relief entered with respect to it or commences a voluntary case under any Bankruptcy Law or any applicable bankruptcy, insolvency or other similar law now or hereafter in effect; (B) shall consent to the entry of an order for relief in an involuntary case, or to the conversion to an involuntary case, under any such law; (C) shall consent to the appointment of or taking possession by a receiver, trustee or other Custodian for all or a substantial part of its property; (D) shall have made a general assignment for the benefit of creditors of a substantial part of its or their assets; (E) shall admit in writing of its inability to pay its debts as such debts become due; or (F) the Board of Directors of the Company (or any committee thereof) adopts any resolution which has not been rescinded or otherwise authorizes or approves any of the foregoing; or (9) any order, judgment or decree shall be entered against the Company decreeing the dissolution or liquidation of the Company and such order, judgment or decree shall remain undischarged or unstayed for a period in excess of 30 days; or (10) the occurrence of a Change of Control; provided, that such Event of Default will be cured after a Change of Control Offer is made and all Securities properly tendered for purchase pursuant to such Change of Control Offer are accepted for payment and such payment provided in the Change of Control Offer is made, as described in Article Fourteen. The term "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors or the Bankruptcy Act (Canada), the Companies Creditor Arrangement Act (Canada) or any other Canadian federal or provincial law or the law of any - 57 - 67 other jurisdiction relating to the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law. SECTION 5.2. Acceleration of Maturity; Rescission and Annulment. If an Event of Default, other than an Event of Default set out in subsection 5.1 (10), occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities may declare the principal of all the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such principal and all accrued interest thereon shall become immediately due and payable. At any time after such declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article Five provided, the Holders of a majority in principal amount of the Outstanding Securities, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue interest on all Securities, (B) the principal of and premium, if any, on any Securities which have become due otherwise than by such declaration of acceleration and any interest thereon at the rate borne by the Securities, (C) to the extent that payment of such interest is lawful, interest upon overdue interest at a rate of 6.50% per annum, and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default, other than the nonpayment of the principal of, and any interest on, Securities which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 5.13. No rescission or annulment referred to above shall affect any subsequent default or impair any right consequent thereon. SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if - 58 - 68 (1) default is made in the payment of any interest (including any Additional Amounts and Special Interest) on any Security when it becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of or premium, if any, on any Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and interest (including any Additional Amounts and Special Interest) and interest on any overdue principal and premium, if any, and on any overdue interest (including any Additional Amounts and Special Interest), at a rate of 6.50% per annum, to the extent permissible by applicable law, and in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated. If an Event of Default, other than an Event of Default set out in subsection 5.1(10), occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 5.4. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or the creditors of either, the Trustee (irrespective of whether the principal of, and any interest on, the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (1) to file and prove a claim for the whole amount of principal, premium, if any, and interest owing and unpaid in respect of the Securities and take such other actions, including participating as a member, voting or otherwise, of any official committee of - 59 - 69 creditors appointed in such matter, and to file such other papers or documents, in each of the foregoing cases, as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders of Securities allowed in such judicial proceeding, and (2) to collect and receive any moneys or other property payable or deliverable on any such claim and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder of Securities to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders of Securities, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 6.7. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder of a Security any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder of a Security in any such proceeding; provided, however, that the Trustee may, on behalf of such Holders, vote for the election of a trustee in bankruptcy or similar official. SECTION 5.5. Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which judgment has been recovered. SECTION 5.6. Application of Money Collected. Subject to Article Thirteen, any money collected by the Trustee pursuant to this Article Five shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal, premium, if any, or interest, upon presentation of the Securities, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 6.7; - 60 - 70 SECOND: To the payment of the amounts then due and unpaid for principal, premium, if any, or interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal, premium, if any, and interest, respectively; and THIRD: Any remaining amounts shall be repaid to the Company. SECTION 5.7. Limitation on Suits. No Holder of any Security shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (2) the Holders of not less than 25% in principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders. SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest and to Convert. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of, premium, if any, and (subject to Section 3.7) interest on such Security (or, in the case of - 61 - 71 redemption or repurchase, on the Redemption Date or Repurchase Date, as the case may be), and to convert such Security in accordance with Article Twelve, and to institute suit for the enforcement of any such payment and right to convert, and such rights shall not be impaired without the consent of such Holder. SECTION 5.9. Restoration of Rights and Remedies. If the Trustee or any Holder of a Security has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders of Securities shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and such Holders shall continue as though no such proceeding had been instituted. SECTION 5.10. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Securities is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 5.11. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or any acquiescence therein. Every right and remedy given by this Article Five or by law to the Trustee or to the Holders of Securities may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or (subject to the limitations contained in this Indenture) by the Holders of Securities, as the case may be. SECTION 5.12. Control by Holders of Securities. The Holders of a majority in principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that (1) such direction shall not be in conflict with any rule of law or with this Indenture, and - 62 - 72 (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. SECTION 5.13. Waiver of Past Defaults. The Holders, either (a) through the written consent of not less than a majority in aggregate principal amount of the Outstanding Securities, or (b) by the adoption of a resolution, at a meeting of Holders of the Outstanding Securities at which a quorum is present, by the Holders of at least 66-2/3% in principal amount of the Outstanding Securities represented at such meeting, may on behalf of the Holders of all the Securities waive any past default hereunder and its consequences, except a default (1) in the payment of the principal of, premium, if any, or interest on any Security, or (2) in respect of a covenant or provision hereof which under Article Eight cannot be modified or amended without the consent of the Holder of each Outstanding Security affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 5.14. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.14 shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities, or to any suit instituted by any Holder of any Security for the enforcement of the payment of the principal of, premium, if any, or interest on any Security on or after the respective Stated Maturity or Maturities expressed in such Security (or, in the case of redemption or repurchase, on or after the Redemption Date or Repurchase Date, as the case may be) or for the enforcement of the right to convert any Security in accordance with Article Twelve. SECTION 5.15. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent - 63 - 73 that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE SIX THE TRUSTEE SECTION 6.1. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture, but not to verify the contents thereof. (b) In case an Event of Default has occurred and is continuing of which a responsible officer of the Trustee has actual knowledge, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) this paragraph (c) shall not be construed to limit the effect of paragraph (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority - 64 - 74 in principal amount of the Outstanding Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; and (4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. SECTION 6.2. Notice of Defaults. Within 90 days after the occurrence of any default hereunder as to which the Trustee has received written notice, the Trustee shall give to all Holders of Securities, in the manner provided in Section 1.6, notice of such default, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of, premium, if any, or interest on any Security, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders; and provided, further, that in the case of any default of the character specified in Section 5.1(10), no such notice to Holders of Securities shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default. SECTION 6.3. Certain Rights of Trustee. Subject to the provisions of Section 6.1: (1) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officers' Certificate, other certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (2) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors shall be sufficiently evidenced by a Board Resolution; - 65 - 75 (3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (4) the Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of Securities pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (8) the permissive right of the Trustee to take or refrain from taking any actions enumerated in this Indenture shall not be construed as a duty and the Trustee shall not be answerable in such actions other than for its own negligence or willful misconduct; and (9) the Trustee shall not be liable for any action taken, suffered or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by the Indenture. SECTION 6.4. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities (except the Trustee's certificates of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture, of the Securities or of the Common Shares issuable upon the - 66 - 76 conversion of the Securities. The Trustee shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. SECTION 6.5. May Hold Securities, Act as Trustee Under Other Indentures. The Trustee, any Authenticating Agent, any Paying Agent, any Conversion Agent or any other agent of the Company or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Conversion Agent or such other agent. The Trustee may become and act as trustee under other indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding in the same manner as if it were not Trustee hereunder. SECTION 6.6. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. SECTION 6.7. Compensation and Reimbursement. The Company agrees (1) to pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee (and its directors, officers, employees and agents) for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs, expenses and reasonable attorneys' fees of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. - 67 - 77 When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.1(5) or Section 5.1(6), the expenses (including the reasonable charges of its counsel) and the compensation for the services are intended to constitute expenses of the administration under any applicable Federal or state bankruptcy, insolvency or other similar law. The provisions of this Section shall survive the termination of this Indenture or the earlier resignation or removal of the Trustee. SECTION 6.8. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America, any State thereof, or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least U.S. $50,000,000, subject to supervision or examination by federal or state authority, in good standing and having an established place of business in the Borough of Manhattan, The City of New York. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article and a successor shall be appointed pursuant to Section 6.9. SECTION 6.9. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 6.10. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 6.10 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Outstanding Securities, delivered to the Trustee and the Company. If the instrument of acceptance by a successor Trustee required by Section 6.10 shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal, the removed Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. - 68 - 78 (d) If at any time: (1) the Trustee shall cease to be eligible under Section 6.8 and shall fail to resign after written request therefor by the Company or by any Holder of a Security who has been a bona fide Holder of a Security for at least six months, or (2) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case (i) the Company by a Board Resolution may remove the Trustee, or (ii) subject to Section 5.14, any Holder of a Security who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee and shall comply with the applicable requirements of this Section and Section 6.10. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 6.10, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders of Securities and accepted appointment in the manner required by this Section and Section 6.10, any Holder of a Security who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to all Holders of Securities in the manner provided in Section 1.6. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. SECTION 6.10. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or - 69 - 79 the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be eligible under this Article. SECTION 6.11. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise eligible under this Article without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 6.12. Authenticating Agents. The Trustee may, with the consent of the Company, appoint an additional Authenticating Agent or Agents acceptable to the Company with respect to the Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon exchange or substitution pursuant to this Indenture. Securities authenticated by an Authenticating Agent shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder, and every reference in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be subject to acceptance by the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof, the District of Columbia, or England and Wales, authorized under such laws to act as Authenticating Agent and subject to supervision or examination by government or other fiscal authority. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.12 such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section 6.12. - 70 - 80 Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section 6.12, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.12, the Trustee may appoint a successor Authenticating Agent which shall be subject to acceptance by the Company. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section 6.12. The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 6.12. If an Authenticating Agent is appointed with respect to the Securities pursuant to this Section 6.12, the Securities may have endorsed thereon, in addition to or in lieu of the Trustee's certification of authentication, an alternative certificate of authentication in the following form: This is one of the Securities referred to in the within-mentioned Indenture. Dated: MARINE MIDLAND BANK as Trustee By [Authenticating Agent], as Authenticating Agent By ---------------------- Authorized Signatory SECTION 6.13. Trust Indenture Legislation. In this Indenture, the expression "indenture legislation" means the provisions, if any, of the Canada Business Corporations Act, as amended or re-enacted, and any other statute of Canada, and of any regulations under such statute, relating to trust indentures and to the rights, duties and obligations of trustees under trust indentures and of corporations issuing debt - 71 - 81 obligations under trust indentures, to the extent that such provisions are at the time in force and applicable to this Indenture or the Company. The Company and the Trustee agree that each will at all times in relation to this Indenture and in relation to any action to be taken hereunder observe and comply with and be entitled to the benefits of indenture legislation. If and to the extent that, any provision of this Indenture limits, qualifies or conflicts with any mandatory requirement of indenture legislation, such mandatory requirement shall prevail. ARTICLE SEVEN AMALGAMATION, CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 7.1. Company May Amalgamate, Consolidate, Etc., Only on Certain Terms. The Company may not consolidate, amalgamate, enter into an arrangement or merge with or into any Person or permit any other Person to consolidate, amalgamate, enter into an arrangement or merge with or into the Company (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one transaction or a series of related transactions to any Person, if such transaction or series of transactions, in the aggregate, would result in a sale, assignment, transfer, lease or other disposition of all or substantially all of the properties and assets of the Company or of the Company and its Subsidiaries on a consolidated basis to any other Person, unless, at the time and giving effect thereto: (1) the Company is the surviving corporation or the Person formed by or surviving any such consolidation, amalgamation, arrangement or merger (if other than the Company), or to which such sale, transfer, lease, conveyance or other disposition shall have been made, is a corporation organized and existing under the laws of (i) the United States, any state thereof or the District of Columbia or (ii) the federal laws of Canada or any province thereof; (2) the Person formed by or surviving any such consolidation, amalgamation, arrangement or merger (if other than the Company), or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made, assumes by supplemental indenture in a form and substance satisfactory to the Trustee all the obligations of the Company under the Securities and this Indenture and such Person assumes the obligations of the Company under the Registration Rights Agreement; (3) immediately prior to and after giving effect to such transaction, no default hereunder or Event of Default shall have occurred and be continuing; (4) the interest, principal, premium, if any, and other amounts paid or credited in respect of the Securities will not be subject to Canadian Taxes as a result of such consolidation, amalgamation, arrangement, merger, sale assignment, transfer, lease, - 72 - 82 conveyance or other disposition, and the Company shall have delivered to the Trustee an Opinion of Canadian Counsel to that effect. The Company shall deliver to the Trustee and each Holder prior to the consummation of the proposed transaction an Officers' Certificate to the foregoing effect and an Opinion of Counsel stating that the proposed transaction and such supplemental indenture comply with this Indenture, each in form and substance satisfactory to the Trustee. SECTION 7.2. Successor Substituted. Upon any amalgamation or consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of all or substantially all the properties and assets of the Company in accordance with Section 7.1, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities. ARTICLE EIGHT SUPPLEMENTAL INDENTURES SECTION 8.1. Supplemental Indentures Without Consent of Holders of Securities. Without the consent of any Holders of Securities, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto for any of the following purposes: (1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants and obligations of the Company herein and in the Securities as permitted by this Indenture; or (2) to add to the covenants of the Company for the benefit of the Holders of Securities, or to surrender any right or power herein conferred upon the Company; or (3) to secure the Securities; or (4) to make provision with respect to the conversion rights of Holders of Securities pursuant to Section 12.11; or (5) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein or which is otherwise defective, or - 73 - 83 to make any other provisions with respect to matters or questions arising under this Indenture as the Company and the Trustee may deem necessary or desirable, provided, such action pursuant to this clause (5) shall not adversely affect the interests of the Holders of Securities; or (6) to make any changes or modifications to this Indenture necessary in connection with the registration of any Securities under the Securities Act as contemplated by Section 10.12, provided, such action pursuant to this clause (6) shall not adversely affect the interests of the Holders of Securities; or (7) to comply with the requirements of the Trust Indenture Act or the rules and regulations of the Commission thereunder in order to affect or maintain the qualification of this Indenture under the Trust Indenture Act, as contemplated by this Indenture or otherwise. Upon Company Request, accompanied by a Board Resolution authorizing the execution of any such supplemental indenture, and subject to and upon receipt by the Trustee of the documents described in Section 8.3 hereof, the Trustee shall join with the Company in the execution of any supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations which may be therein contained. SECTION 8.2. Supplemental Indentures with Consent of Holders of Securities. With either (a) the written consent of the Holders of not less than a majority in principal amount of the Outstanding Securities, by the Act of said Holders delivered to the Company and the Trustee, or (b) by the adoption of a resolution, at a meeting of Holders of the Outstanding Securities at which a quorum is present, by the Holders of 66-2/3% in principal amount of the Outstanding Securities represented at such meeting, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities under this Indenture; provided, however, that no such supplemental indenture shall, without the consent or affirmative vote of the Holder of each Outstanding Security affected thereby, (1) change the Stated Maturity of the principal of, or any installment of interest on, any Security, or reduce the principal amount or the rate of interest payable thereon or any premium payable upon redemption or mandatory repurchase thereof, or change the obligation of the Company to pay Additional Amounts, or change the coin, currency or security in which any Security or the interest or any premium thereon or any other amount in respect thereof is payable, or impair the right to institute suit for the enforcement of any payment in respect of any Security on or after the Stated Maturity thereof (or, in the case of redemption or any repurchase, on or after the Redemption Date or Repurchase Date, as the case may be) or, except as permitted by Section 12.11, adversely affect the right to convert any Security as provided in Article Twelve, or - 74 - 84 modify the provisions of this Indenture with respect to the subordination of the Securities in a manner adverse to the Holders of Securities, or (2) reduce the requirements of Section 9.4 for quorum or voting, or reduce the percentage in principal amount of the Outstanding Securities the consent of whose Holders is required for any such supplemental indenture or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or (3) modify the obligation of the Company to maintain an office or agency in the Borough of Manhattan, The City of New York, or (4) modify any of the provisions of this Section or Section 5.13 or 10.13, except to increase any percentage contained herein or therein or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; or (5) modify the provisions of Article Fourteen in a manner adverse to the Holders; or (6) modify any of the provisions of Section 10.10, 10.11 or 10.12. It shall not be necessary for any Act of Holders of Securities under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 8.3. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Sections 6.1 and 6.3) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that such supplemental indenture has been duly authorized, executed and delivered by the Company and constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 8.4. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder appertaining thereto shall be bound thereby. - 75 - 85 SECTION 8.5. Reference in Securities to Supplemental Indentures. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Company and the Trustee, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities. SECTION 8.6. Notice of Supplemental Indentures. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of Section 8.2, the Company shall give notice to all Holders of Securities of such fact, setting forth in general terms the substance of such supplemental indenture, in the manner provided in Section 1.6. Any failure of the Company to give such notice, or any defect therein, shall not in any way impair or affect the validity of any such supplemental indenture. ARTICLE NINE MEETINGS OF HOLDERS OF SECURITIES SECTION 9.1. Purposes for Which Meetings May Be Called. A meeting of Holders of Securities may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be made, given or taken by Holders of Securities. SECTION 9.2. Call, Notice and Place of Meetings. (a) The Trustee may at any time call a meeting of Holders of Securities for any purpose specified in Section 9.1, to be held at such time and at such place in the Borough of Manhattan, The City of New York, or in the City of London, England, as the Trustee shall determine. Notice of every meeting of Holders of Securities, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 1.6, not less than 21 nor more than 180 days prior to the date fixed for the meeting. (b) In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 25% in principal amount of the Outstanding Securities shall have requested the Trustee to call a meeting of the Holders of Securities for any purpose specified in Section 9.1, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the - 76 - 86 Trustee shall not have made the first publication of the notice of such meeting within 21 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Securities in the amount specified, as the case may be, may determine the time and the place in the Borough of Manhattan, The City of New York, or in the City of London, England,for such meeting and may call such meeting for such purposes by giving notice thereof as provided in paragraph (a) of this Section. SECTION 9.3. Persons Entitled to Vote at Meetings. To be entitled to vote at any meeting of Holders of Securities, a Person shall be (a) a Holder of one or more Outstanding Securities, or (b) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Securities by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 9.4. Quorum; Action. The Persons entitled to vote a majority in principal amount of the Outstanding Securities shall constitute a quorum. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Securities, be dissolved. In any other cases the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting (subject to repeated applications of this sentence). Notice of the reconvening of any adjourned meeting shall be given as provided in Section 9.2(a), except that such notice need be given only once not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage of the principal amount of the Outstanding Securities which shall constitute a quorum. Subject to the foregoing, at the reconvening of any meeting adjourned for a lack of a quorum, the Persons entitled to vote 25% in principal amount of the Outstanding Securities at the time shall constitute a quorum for the taking of any action set forth in the notice of the original meeting. At a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid, any resolution and all matters (except as limited by the proviso to Section 8.2) shall be effectively passed and decided if passed or decided by the Persons entitled to vote not less than 66-2/3% in principal amount of Outstanding Securities represented and entitled to vote at such meeting. - 77 - 87 Any resolution passed or decisions taken at any meeting of Holders of Securities duly held in accordance with this Section shall be binding on all the Holders of Securities, whether or not present or represented at the meeting. The Trustee shall, in the name and at the expense of the Company, notify all the Holders of Securities of any such resolutions or decisions pursuant to Section 1.6. SECTION 9.5. Determination of Voting Rights; Conduct and Adjournment of Meetings. (a) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Securities in regard to proof of the holding of Securities and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Securities and the appointment of any proxy shall be proved in the manners specified therefor in Section 1.4. (b) The Trustee shall, by an instrument in writing, appoint a temporary chairman (which may be the Trustees) of the meeting, unless the meeting shall have been called by the Company or by Holders of Securities as provided in Section 9.2(b), in which case the Company or the Holders of Securities calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in principal amount of the Outstanding Securities represented at the meeting. (c) At any meeting, each Holder of a Security or proxy shall be entitled to one vote for each U.S.$1,000 principal amount of Securities held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Security or proxy. (d) Any meeting of Holders of Securities duly called pursuant to Section 9.2 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in principal amount of the Outstanding Securities represented at the meeting, and the meeting may be held as so adjourned without further notice. SECTION 9.6. Counting Votes and Recording Action of Meetings. The vote upon any resolution submitted to any meeting of Holders of Securities shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities or of their representatives by proxy and the principal amounts at Stated Maturity and serial numbers of the Outstanding Securities held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for - 78 - 88 or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record, at least in duplicate, of the proceedings of each meeting of Holders of Securities shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 9.2 and, if applicable, Section 9.4. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the Company and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. ARTICLE TEN COVENANTS SECTION 10.1. Payment of Principal, Premium and Interest. The Company covenants and agrees that it will duly and punctually pay the principal of and premium, if any, and interest on the Securities in accordance with the terms of the Securities and this Indenture. The Company will deposit or cause to be deposited with the Trustee, one Business Day prior to the Stated Maturity of any Security or one Business Day prior to the due date for any installment of interest, all payments so due, which payments shall be in immediately available funds on the date of such Stated Maturity or due date, as the case may be. SECTION 10.2. Maintenance of Offices or Agencies. The Company hereby appoints (a) the Corporate Trust Office of the Trustee as its agent in the Borough of Manhattan, The City of New York, where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange, where Securities may be surrendered for conversion, and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served, and (b) (i) the office of Midland Bank plc, Mariner House, Pepys Street, London EC3N 4DA, England, as its agents outside of the United States where, subject to any applicable laws or regulations, Securities may be surrendered for payment, where Securities may be surrendered for registration of transfer or exchange, and where Securities may be surrendered for conversion. The Company may at any time and from time to time vary or terminate the appointment of any such agent or appoint any additional agents for any or all of such purposes; provided, however, that until all of the Securities have been delivered to the Trustee for cancellation, or moneys sufficient to pay the principal of, premium, if any, and interest on the Securities have been made available for payment and either paid or returned to the Company pursuant to the - 79 - 89 provisions of Section 10.3, the Company will maintain (1) in the Borough of Manhattan, The City of New York, an office or agency where Securities may be presented or surrendered for payment and conversion, where Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served, and (2) subject to any laws or regulations applicable thereto, in London, an office or agency where Securities may be presented and surrendered for payment and where Securities may be presented for registration of transfer or exchange or conversion. If at any time the Company shall fail to maintain any such required office or agency, or shall fail to furnish the Trustee with the address thereof, presentations and surrenders may be made and notices and demands may be served on the Corporate Trust Office of the Trustee. SECTION 10.3. Money for Security Payments To Be Held in Trust. If the Company shall act as its own Paying Agent, it will, on or before each due date of the principal of, premium, if any, or interest on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal, premium, if any, or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and the Company will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents, it will, one Business Day prior to each due date of the principal of, premium, if any, or interest on any Securities, deposit with the Trustee a sum sufficient to pay the principal, premium, if any, or interest so becoming due, such sum to be held for the benefit of the Persons entitled to such principal, premium, if any, or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of any failure so to act. The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (1) hold all sums held by it for the payment of the principal of, premium, if any, or interest on Securities for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment of principal, premium, if any, or interest; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held by such Paying Agent. - 80 - 90 The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Security and remaining unclaimed for two years after such principal, premium, if any, or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security thereto shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease. SECTION 10.4. Additional Amounts. The Company will pay to the Holder of any Security Additional Amounts as provided in the form of Security set forth in Section 2.2. Whenever in this Indenture there is mentioned, in any context, the payment of the principal of, premium, if any, or interest on, or in respect of, any Security, such mention shall be deemed to include mention of the payment of Additional Amounts provided for in this Section to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to the provisions of this Section and express mention of the payment of Additional Amounts in any provisions hereof shall not be construed as excluding Additional Amounts in those provisions hereof where such express mention is not made. At least 10 days prior to the first Interest Payment Date or an earlier Redemption Date or Repurchase Date (and at least 10 days prior to each date of payment of principal, premium, if any, or interest thereafter if there has been any change with respect to the matters set forth in the below-mentioned Officers' Certificate), the Company will furnish the Trustee and the Company's Paying Agents in London, England, and in the Borough of Manhattan, The City of New York, if other than the Trustee, with an Officers' Certificate instructing the Trustee and such Paying Agents whether such payment of principal of, premium, if any, or interest on the Securities shall be made to Holders of Securities without withholding for or on account of any tax, assessment or other governmental charge described in the second paragraph of the face of the forms of Securities set forth in Section 2.2. If any such withholding shall be required, then such Officers' Certificate shall specify by country the amount, if any, required to be withheld on such payments to such Holders of Securities and the Company will pay to the Trustee or the Paying Agent in London the Additional Amounts required by this Section to be paid in the event of any such withholding. The Company covenants to indemnify the Trustee and any Paying Agent for, and to hold them harmless against, any loss, liability or expense arising out of or in - 81 - 91 connection with actions taken or omitted by any of them in reliance on any Officers' Certificate furnished pursuant to this Section, except to the extent such loss, liability or expense is attributable to the Trustee's negligence or bad faith. SECTION 10.5. Existence. Subject to Article Seven, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders. SECTION 10.6. Maintenance of Properties. The Company will cause all properties used or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the operation or maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Holders. SECTION 10.7. Payment of Taxes and Other Claims. The Company will pay or discharge, or cause to be paid or discharged, before the same may become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary, (2) all claims for labor, materials and supplies which, if unpaid, might by law become a lien or charge upon the property of the Company or any Subsidiary, and (3) all stamps and other duties, if any, which may be imposed by Canada, the United States or the United Kingdom or any political subdivision thereof or therein in connection with the issuance, transfer, exchange or conversion of any Securities or with respect to this Indenture; provided, however, that, in the case of clauses (1) and (2), the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 10.8. Listing. The Company will use its reasonable best efforts to cause the Common Shares required to be issued and delivered upon conversion of Securities, prior to such issuance or delivery, to - 82 - 92 be quoted on the American Stock Exchange or, if the Common Shares are not then listed on the American Stock Exchange, cause to be listed the Common Shares on a United States national securities exchange on which Common Shares are listed or to be quoted on the Nasdaq National Market at the time of such delivery. SECTION 10.9. Statement by Officers as to Default. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers' Certificate stating that in the course of performance by the signers of their duties as such officers of the Company they would normally obtain knowledge of whether any default exists in the performance and observance of any of the terms, provisions and conditions of this Indenture and whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture. Such Officers' Certificate shall further state, as to each such officer signing such Officers' Certificate, to the best of the knowledge of such officer, as of the date of such Officers' Certificate, (a) whether any such default exists, (b) whether the Company during the preceding fiscal year kept, observed, performed and fulfilled each and every covenant and obligation of the Company under this Indenture and (c) whether there was any default in the performance and observance of any of the terms, provisions, or conditions of this Indenture during such preceding fiscal year. If the officers signing the Officers' Certificate know of such a default, whether then existing or occurring during such preceding fiscal year, the Officers' Certificate shall describe such default and its status with particularity. The Company shall also promptly notify the Trustee if the Company's fiscal year is changed so that the end thereof is on any date other than the then current fiscal year end date. The Company will deliver to the Trustee, forthwith upon becoming aware of any default in the performance or observance of any covenant, agreement or condition contained in this Indenture, or any Event of Default, an Officers' Certificate specifying with particularity such default or Event of Default and further stating what action the Company has taken, is taking or proposes to take with respect thereto. Any notice required to be given under this Section 10.9 shall be delivered to the Trustee at its Corporate Trust Office. SECTION 10.10. Delivery of Certain Information. At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act or exempt from such requirements pursuant to Rule 12g3-2(b) under the Exchange Act, upon the request of a Holder of a Restricted Security or the holder of Common Shares issued upon conversion thereof, the Company will promptly furnish or cause to be furnished Rule 144A Information (as defined below) to such Holder of Restricted Securities or such holder of Common Shares issued upon conversion of Restricted Securities, or to a prospective purchaser of any such security designated by any such Holder or holder, as the case may be, to the extent required to permit compliance by such Holder or holder with Rule 144A under the Securities Act (or any successor provision thereto) in connection with the resale of any such security; - 83 - 93 provided, however, that the Company shall not be required to furnish such information in connection with any request made on or after the date which is three years from the later of (i) the date such a security (or any such predecessor security) was last acquired from the Company or (ii) the date such a security (or any such predecessor security) was last acquired from an "affiliate" of the Company within the meaning of Rule 144 under the Securities Act (or any successor provision thereto). "Rule 144A Information" shall be such information as is specified pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto). SECTION 10.11. Reporting Issuer. The Company will continue to be a "reporting issuer" for purposes of Rule 903 under the Securities Act until the Restricted Period has expired. SECTION 10.12. Registration Rights. The holders of the Securities and the Common Shares issuable upon conversion thereof are entitled to the benefits of a Registration Rights Agreement, dated as of May 1, 1996, between the Company and Goldman, Sachs & Co. and UBS Securities LLC (the "Registration Rights Agreement"). Pursuant to the Registration Rights Agreement, the Company has agreed for the benefit of the holders from time to time of the Securities and the Common Shares issuable upon conversion thereof that it will, at its expense, (i) within 90 days after the date of issuance of the Securities, file a shelf registration statement (the "Shelf Registration Statement") with the Commission with respect to resales of the Securities and the Common Shares issuable upon conversion thereof, (ii) within 180 days after the date of issuance of the Securities, use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective by the Commission and (iii) use its reasonable best efforts to maintain such Shelf Registration Statement continuously effective under the Securities Act until the third annual anniversary of the date of the effectiveness of the Shelf Registration Statement or such other date as is provided in the Registration Rights Agreement. If (i) on or prior to 90 days following the date of original issuance of the Securities, a Shelf Registration Statement has not been filed with the Commission, or (ii) on or prior to the 180th day following the date of issuance of the Securities, such Shelf Registration Statement is not declared effective (each, a "Registration Default"), additional interest ("Special Interest") will accrue on the Securities from and including the day following such Registration Default to but excluding the day on which such Registration Default has been cured. Special Interest will be paid semi-annually in arrears, with the first semi-annually payment due on the first Interest Payment Date in respect of the Securities following the date on which such Special Interest begins to accrue, and will accrue at a rate per annum equal to an additional one-quarter of one percent (0.25%) of the principal amount of the Securities to and including the 90th day following such Registration Default and at a rate per annum equal to one-half of one percent (0.50%) thereof from and after the 91st day following such Registration Default. In the event that the Shelf Registration Statement ceases to be effective prior to the third annual anniversary of the initial effective date of the Shelf Registration Statement or such other date as is provided in the - 84 - 94 Registration Rights Agreement for a period in excess of 60 days, whether or not consecutive, during any 12-month period, then the interest rate borne by the Securities shall increase by an additional one-half of one percent (0.50%) per annum on the 61st day of the applicable 12-month period such Shelf Registration Statement ceases to be effective to but excluding the day on which the Shelf Registration Statement again becomes effective. Whenever in this Indenture there is mentioned, in any context, the payment of the principal of, premium, if any, or interest on, or in respect of, any Security, such mention shall be deemed to include mention of the payment of Special Interest provided for in this Section to the extent that, in such context, Special Interest is, was or would be payable in respect thereof pursuant to the provisions of this Section and express mention of the payment of Special Interest (if applicable) in any provisions hereof shall not be construed as excluding Special Interest in those provisions hereof where such express mention is not made. In the event of any amendment to or modification of, the Registration Rights Agreement, the Company shall promptly provide the Trustee with a copy of such amendment or modification. SECTION 10.13. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any covenant or conditions set forth in Sections 10.5 to 10.7, inclusive (other than a covenant or condition which under Article Eight cannot be modified or amended without the consent of the Holder of each Outstanding Security affected), if before the time for such compliance the Holders shall, through the written consent of, or the adoption of a resolution at a meeting of Holders of the Outstanding Securities at which a quorum is present by, not less than a majority in principal amount of the Outstanding Securities, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee or any Paying or Conversion Agent in respect of any such covenant or condition shall remain in full force and effect. ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 11.1. Right of Redemption. The Securities may be redeemed in accordance with the provisions of the forms of Securities set forth in Section 2.2. SECTION 11.2. Applicability of Article. - 85 - 95 Redemption of Securities at the election of the Company or otherwise, as permitted or required by any provision of the Securities or this Indenture, shall be made in accordance with such provision and this Article Eleven. SECTION 11.3. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company of any of the Securities, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such Redemption Date. If the Securities are to be redeemed pursuant to an election of the Company which is subject to a condition specified in the forms of Securities set forth in Section 2.2, the Company shall furnish the Trustee with an Officers' Certificate stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Company so to redeem have occurred. SECTION 11.4. Selection by Trustee of Securities to Be Redeemed. If less than all the Securities are to be redeemed (other than pursuant to the third paragraph on the reverse of the form of Security in Section 2.2), the particular Securities to be redeemed shall be selected by the Trustee within two Business Days after it receives the notice described in 11.3, from the Outstanding Securities not previously called for redemption, on a pro rata basis or by such method as the Trustee may deem appropriate. Partial redemption must be in an amount not less than U.S.$1,000,000 principal amount of Securities. If any Security selected for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Security so selected, the converted portion of such Security shall be deemed (so far as may be) to be the portion selected for redemption. Securities which have been converted during a selection of Securities to be redeemed may be treated by the Trustee as Outstanding for the purpose of such selection. The Trustee shall promptly notify the Company and each Security Registrar in writing of the securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. SECTION 11.5. Notice of Redemption. - 86 - 96 Notice of redemption shall be given in the manner provided in Section 1.6 to the Holders of Securities to be redeemed not less than 30 nor more than 60 days prior to the Redemption Date, and such notice shall be irrevocable. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, (3) if less than all Outstanding Securities are to be redeemed, the aggregate principal amount of Securities to be redeemed and the aggregate principal amount of Securities which will be outstanding after such partial redemption, (4) that on the Redemption Date the Redemption Price, and accrued interest, if any, will become due and payable upon each such Security to be redeemed, and that interest thereon shall cease to accrue on and after said date, (5) the Conversion Price, the date on which the right to convert the Securities to be redeemed will terminate and the places where such Securities may be surrendered for conversion, and (6) the place or places where such Securities are to be surrendered for payment of the Redemption Price and accrued interest, if any. In case of a partial redemption, the first notice given shall specify the last date on which exchanges or transfers of Securities may be made pursuant to Section 3.5 and shall specify the serial and CUSIP numbers (if any), ISIN number (if any) and the portions thereof called for redemption. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's written request, by the Trustee in the name of and at the expense of the Company. Notice of redemption of Securities to be redeemed at the election of the Company received by the Trustee shall be given by the Trustee to each Paying Agent in the name of and at the expense of the Company. SECTION 11.6. Deposit of Redemption Price. Not less than one Business Day prior to any Redemption Date, the Company shall deposit with the Trustee or with the Paying Agent in London if so directed by the Trustee (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.3) an amount of money (which shall be in immediately available funds on such Redemption Date) sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities which are to be redeemed on that - 87 - 97 date other than any Securities called for redemption on that date which have been converted prior to the date of such deposit. If any Security called for redemption is converted, any money deposited with the Trustee or with a Paying Agent or so segregated and held in trust for the redemption of such Security shall (subject to any right of the Holder of such Security, if a Security, or any Predecessor Security to receive interest as provided in the last paragraph of Section 3.7) be paid to the Company on Company Request or, if then held by the Company, shall be discharged from such trust. SECTION 11.7. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall default in the payment of the Redemption Price, including accrued interest) such Securities shall cease to bear interest. Upon surrender of any Security for redemption in accordance with said notice, maturing after the Redemption Date, such Security shall be paid by the Company at the Redemption Price together with accrued and unpaid interest to the Redemption Date; provided, however, that installments of interest on Securities whose Stated Maturity is on or, prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such on the relevant Record Date according to their terms and the provisions of Section 3.7. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal amount of, premium, if any, and, to the extent permitted by applicable law, accrued interest on such Security shall, until paid, bear interest from the Redemption Date at a rate of 6.50% per annum and such Security shall remain convertible into Common Shares until the principal of such Security (or portion thereof, as the case may be) shall have been paid or duly provided for. SECTION 11.8. Securities Redeemed in Part. Any Security which is to be redeemed only in part shall be surrendered at an office or agency of the Company designated for that purpose pursuant to Section 10.2 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. - 88 - 98 ARTICLE TWELVE CONVERSION OF SECURITIES SECTION 12.1. Conversion Privilege and Conversion Price. Subject to and upon compliance with the provisions of this Article, at the option of the Holder thereof, any Security may be converted into fully paid and nonassessable shares (calculated as to each conversion to the nearest 1/100th of a share) of Common Shares of the Company at the Conversion Price, determined as hereinafter provided, in effect at the time of conversion. Such conversion right shall commence on the latest of the commencement of the Sale of the Securities, the original issue date of the Securities and the issue date with respect to any additional Securities issued to cover overallotments and expire at the close of business on May 1, 2003, subject, in the case of the conversion of any Global Security, to any applicable book-entry procedures of the Depositary therefor. In case a Security or portion thereof is called for redemption or is delivered for repurchase, such conversion right in respect of the Security or portion so called shall expire at the close of business on the Redemption Date or the Repurchase Date (as defined in Article Fourteen), as the case may be, unless the Company defaults in making the payment due upon redemption or repurchase, as the case may be. The price at which shares of Common Shares shall be delivered upon conversion (herein called the "Conversion Price") shall be initially U.S.$24.858 per Common Share. The Conversion Price shall be adjusted in certain instances as provided in this Article Twelve. SECTION 12.2. Exercise of Conversion Privilege. In order to exercise the conversion privilege, the Holder of any Security to be converted shall surrender such Security, duly endorsed or assigned to the Company or in blank (in the case of any Definitive Security), at any office or agency of the Company maintained for that purpose pursuant to Section 10.2, accompanied by a duly signed conversion notice substantially in the form set forth in Annex A-1 or A-2 stating that the Holder elects to convert such Security or, if less than the entire principal amount thereof is to be converted, the portion thereof to be converted. Each Security surrendered for conversion (in whole or in part) during the period from the close of business on any Regular Record Date to the opening of business on the next succeeding Interest Payment Date (except Securities called for redemption on a Redemption Date or to be repurchased on a Repurchase Date during, in each case, such period) shall be accompanied by payment in New York Clearing House funds or other funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount of such Security (or part thereof, as the case may be) being surrendered for conversion. The interest so payable on such Interest Payment Date in respect of such Security (or portion thereof, as the case may be) surrendered for conversion shall be paid to the Holder of such Security as of such Regular Record Date. Interest payable in respect of any Security surrendered for conversion on or after an Interest Payment Date shall be paid to the Holder of such Security as of the next preceding Regular Record Date, notwithstanding the exercise of the - 89 - 99 right of conversion. Except as provided in this paragraph and subject to the last paragraph of Section 3.7, no cash payment or adjustment shall be made upon any conversion on account of, if the date of conversion is not an Interest Payment Date, any interest accrued from the Interest Payment Date next preceding the conversion date, in respect of any Security (or part thereof, as the case may be) surrendered for conversion, or on account of any dividends on the Common Shares issued upon conversion. The Company's delivery to the Holder of the number of Common Shares (and cash in lieu of fractions thereof, as provided in this Indenture) into which a Security is convertible will be deemed to satisfy the Company's obligation to pay the principal amount of the Security. Securities shall be deemed to have been converted immediately prior to the close of business on the day of surrender of such Securities for conversion in accordance with the foregoing provisions, and at such time the rights of the Holders of such Securities as Holders shall cease, and the Person or Persons entitled to receive the Common Shares issuable upon conversion shall be treated for all purposes as the record holder or holders of such Common Shares at such time. As promptly as practicable on or after the conversion date, the Company shall issue and deliver to the Trustee, for delivery to the Holders, a certificate or certificates for the number of full Common Shares issuable upon conversion, together with payment in lieu of any fraction of a share, as provided in Section 12.3. All Common Shares delivered upon such conversion of Restricted Securities shall bear restrictive legends substantially in the form of the legends required to be set forth on the Restricted Securities pursuant to Section 2.4 and shall be subject to the restrictions on transfer provided in such legends. Neither the Trustee nor any agent maintained for the purpose of such conversion shall have any responsibility for the inclusion or content of any such restrictive legends on such Common Shares; provided, however, that the Trustee or any agent maintained for the purpose of such conversion shall have provided, to the Company or to the Company's transfer agent for such Common Shares, prior to or concurrently with a request to the Company to deliver such Common Shares, written notice that the Securities delivered for conversion are Restricted Securities. In the case of any Security which is converted in part only, upon such conversion the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities of authorized denominations in an aggregate principal amount equal to the unconverted portion of the principal amount of such Security. A Security may be converted in part, but only if the principal amount of such Security to be converted is any integral multiple of U.S.$1,000. SECTION 12.3. Fractions of Shares. No fractional Common Shares shall be issued upon conversion of any Securities. If more than one Security shall be surrendered for conversion at one time by the same Holder, the number of full shares which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Securities (or specified portions thereof) so - 90 - 100 surrendered. Instead of any fractional share which would otherwise be issuable upon conversion of any Securities (or specified portions thereof), the Company shall calculate and pay a cash adjustment in respect of such fraction (calculated to the nearest 1/100th of a share) in an amount equal to the same fraction of the current market price per share of Common Shares (calculated in accordance with Section 12.4(8) below) at the close of business on the day of conversion. SECTION 12.4. Adjustment of Conversion Price. The Conversion Price shall be subject to adjustments from time to time as follows: (1) In case the Company shall pay or make a dividend or other distribution on any class of capital stock of the Company payable in Common Stock, the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be reduced by multiplying such Conversion Price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this paragraph (1), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Company will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company. (2) In case the Company shall issue rights, options or warrants to all holders of any class of Common Stock entitling them to subscribe for or purchase shares of any class of Common Stock at a price per share less than the current market price per share (determined as provided in paragraph (8) of this Section) of such class of Common Stock on the date fixed for the determination of shareholders entitled to receive such rights, options or warrants, the Conversion Price in effect at the opening of business on the day following the date fixed for such determination shall be reduced by multiplying such Conversion Price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such current market price and the denominator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so offered for subscription or purchase, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this paragraph (2), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Company will not issue any rights, options or warrants in respect of shares of Common Stock held in the treasury of the Company. - 91 - 101 (3) In case outstanding shares of any class of Common Stock shall be subdivided into a greater number of shares of such class of Common Stock, and, conversely, in case outstanding shares of any class of Common Stock shall each be combined into a smaller number of shares of such class of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be adjusted by the Company so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the effectiveness of the Conversion Price adjustment contemplated by this subparagraph (3) by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately prior to such subdivision or combination and the denominator shall be the number of shares of Common Stock outstanding immediately after giving effect to such subdivision or combination, such adjustment to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. (4) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness, shares of any class of capital stock, cash or other assets or property (including securities, but excluding (i) any rights, options or warrants referred to in paragraph (2) of this Section, (ii) any dividend or distribution paid exclusively in cash, (iii) any dividend or distribution referred to in paragraph (1) of this Section and (iv) any amalgamation, consolidation or merger to which Section 12.11 applies), the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution by a fraction of which (i) the numerator shall be the current market price per share (determined as provided in paragraph (8) of this Section) of the Common Shares on the third Trading Day prior to the date fixed for such determination (the "Reference Date") less the then fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution filed with the Trustee) on the Reference Date of the portion of the assets, shares or evidences of indebtedness so distributed applicable to one Common Share and the denominator shall be the current market price per Common Share on the Reference Date, such adjustment to become effective immediately prior to the opening of business on the day following the Reference Date. If the Board of Directors determines the fair market value of any distribution for purposes of this subparagraph (4) by reference to the actual or when issued trading market for any securities comprising such distribution, it must in doing so consider the prices in such market over the same period used in computing 12.5% of the average of the current market prices per share of Common Share pursuant to this subparagraph (4). For purposes of this subparagraph (4), any dividend or distribution that includes Common Shares or rights or warrants to subscribe for or purchase shares of Common Shares shall be deemed instead to be (1) a dividend or distribution of the evidences of indebtedness, shares of capital stock, cash or assets other than such shares of Common Shares or such rights or warrants (making any Conversion Price reduction required by this subparagraph (4)) immediately followed by (2) a dividend or distribution of Common Shares or such rights or warrants (making any further Conversion Price reduction required by subparagraph (1) or (2)), except (x) the Reference Date of such dividend or distribution as defined in this subparagraph (4) shall be substituted in place of the phrases (a) "the date fixed - 92 - 102 for the determination of stockholders entitled to receive such dividend or other distribution" and (b) "the date fixed for such determination" within the meaning of subparagraphs (1) and (2), respectively, of this Section 12.4 and (y) any shares of Common Shares included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of subparagraph (1) of this Section 12.4. (5) In case the Company shall, by dividend or otherwise, distribute to all holders of any class of its Common Stock cash (excluding any cash that is distributed upon a merger or consolidation to which Section 12.11 applies or as part of a distribution referred to in paragraph (4) of this Section) in an aggregate amount that, combined together with (I) the aggregate amount of any other cash distributions to all holders of any class of its Common Stock made exclusively in cash within the 12 months preceding the date of payment of such distribution and in respect of which no adjustment pursuant to this paragraph (5) has been made and (II) the aggregate of any cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) of consideration payable in respect of any tender offer by the Company or any of its subsidiaries for all or any portion of any class of the Common Stock concluded within the 12 months preceding the date of payment of such distribution and in respect of which no adjustment pursuant to paragraph (6) of this Section has been made, exceeds 12.5% of the product of the current market price per Common Share on the date for the determination of holders of Common Shares entitled to receive such distribution times the number of shares of all classes of Common Stock outstanding on such date, then, and in each such case, immediately after the close of business on such date for determination, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on the date fixed for determination of the stockholders entitled to receive such distribution by a fraction (i) the numerator of which shall be equal to the current market price per share (determined as provided in paragraph (8) of this Section) of the Common Shares on the date fixed for such determination less an amount equal to the quotient of (x) the excess of such combined amount over such 12.5% and (y) the number of shares of all classes of Common Stock outstanding on such date for determination and (ii) the denominator of which shall be equal to the current market price per share (determined as provided in paragraph (8) of this Section) of the Common Shares on such date for determination. (6) In case a tender or exchange offer (other than an odd-lot offer) made by the Company or any Subsidiary for all or any portion of any class of Common Stock shall expire and such tender or exchange offer shall involve the payment by the Company or such Subsidiary of consideration per share of such class of Common Stock having a fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) at the last time (the "Expiration Time") tenders or exchanges may be made pursuant to such tender or exchange offer (as it shall have been amended) that exceeds 110% of the current market price per share (determined as provided in paragraph (8) of this Section) of such class of Common Stock as of the Trading Day next succeeding the Expiration Time, the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the effectiveness - 93 - 103 of the Conversion Price reduction contemplated by this subparagraph (6) by a fraction of which the numerator shall be the sum of the products of the number of shares of each class of Common Stock outstanding (including any tendered or exchanged shares) at the Expiration Time multiplied by the respective current market price per share (determined as provided in paragraph (8) of this Section) of each such class of Common Stock on the Trading Day next succeeding the Expiration Time and the denominator shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "'Purchased Shares") and (y) the sum of the products of the number of shares of each class of Common Stock outstanding (less any Purchased Shares) at the Expiration Time and the respective current market price per share (determined as provided in paragraph (8) of this Section) of each such class of Common Stock on the Trading Day next succeeding the Expiration Time, such reduction to become effective immediately prior to the opening of business on the day following the Expiration Time. (7) The reclassification of any class of Common Stock into securities including other than Common Stock (other than any reclassification upon a amalgamation, consolidation or merger to which Section 12.11 applies) shall be deemed to involve (a) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be "the date fixed for the determination of stockholders entitled to receive such distribution" and "the date fixed for such determination" within the meaning of paragraph (4) of this Section), and (b) a subdivision or combination, as the case may be, of the number of shares of such class of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be "the day upon which such subdivision becomes effective" or "the day upon which such combination becomes effective", as the case may be, and "the day upon which such subdivision or combination becomes effective" within the meaning of paragraph (3) of this Section). (8) For the purpose of any computation under paragraphs (2), (4), (5) or (6) of this Section 12.4, the current market price per share of a class of Common Stock on any date shall be calculated by the Company and be deemed to be the average of the daily Closing Prices Per Share of such class for the five consecutive Trading Days selected by the Company commencing not more than 10 Trading Days before, and ending not later than, the earlier of the day in question and the day before the "ex" date with respect to the issuance or distribution requiring such computation. For purposes of this paragraph, the term "'ex' date", when used with respect to any issuance or distribution, means the first date on which such class of Common Stock trades regular way in the applicable securities market or on the applicable securities exchange without the right to receive such issuance or distribution (9) No adjustment in the Conversion Price shall be required unless such adjustment (plus any adjustments not previously made by reason of this paragraph (9)) would require an increase - 94 - 104 or decrease of at least one percent in such price; provided, however, that any adjustments which by reason of this paragraph (9) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Article shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. (10) The Company may make such reductions in the Conversion Price, for the remaining term of the Securities or any shorter term, in addition to those required by paragraphs (1), (2), (3), (4), (5) and (6) of this Section 12.4, as it considers to be advisable in order to avoid or diminish any income tax to any holders of Common Shares resulting from any dividend or distribution of stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes. SECTION 12.5. Notice of Adjustments of Conversion Price. Whenever the Conversion Price is adjusted as herein provided: (1) the Company shall compute the adjusted Conversion Price in accordance with Section 12.4 and shall prepare a certificate signed by the Treasurer of the Company setting forth the adjusted Conversion Price and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall promptly be filed with the Trustee and with each Conversion Agent; and (2) a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall forthwith be required, and as soon as practicable after it is required, such notice shall be provided by the Company to all Holders in accordance with Section 1.6. Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to any such certificate or the information and calculations contained therein, except to exhibit the same to any Holder of Securities desiring inspection thereof at its office during normal business hours. SECTION 12.6. Notice of Certain Corporate Action. In case: (a) the Company shall declare a dividend (or any other distribution) on any class of its Common Stock payable (i) otherwise than exclusively in cash or (ii) exclusively in cash in an amount that would require any adjustment pursuant to Section 12.4; or (b) the Company shall authorize the granting to the holders of any class of its Common Stock of rights, options or warrants to subscribe for or purchase any shares of capital stock of any class or of any other rights; or - 95 - 105 (c) of any reclassification of any class of Common Stock of the Company (other than a subdivision or combination of its outstanding shares of Common Stock), or of any amalgamation, consolidation or merger to which the Company is a party and for which approval of any stockholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company; or (d) of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or (e) the Company or any Subsidiary shall commence a tender offer for all or a portion of any class of the Company's outstanding shares of Common Stock (or shall amend any such tender offer); then the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of Securities pursuant to Section 10.2, and shall cause to be provided to all Holders in accordance with Section 1.6, at least 20 days (or 10 days in any case specified in clause (a) or (b) above) prior to the applicable record, expiration or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, rights, options or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, rights, options or warrants are to be determined, (y) the date on which the right to make tenders under such tender offer expires or (z) the date on which such reclassification, consolidation, merger, share exchange, conveyance, transfer, sale, lease, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, share exchange, conveyance, transfer, sale, lease, dissolution, liquidation or winding up. If at the time the Trustee shall not be the conversion agent, a copy of such notice and any notice referred to in the following paragraph shall also forthwith be filed by the Company with the Trustee. SECTION 12.7. Company to Reserve Common Shares. The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Shares, for the purpose of effecting the conversion of Securities, the full number of Common Shares then issuable upon the conversion of all Outstanding Securities. SECTION 12.8. Taxes on Conversions. The Company will pay any and all transfer taxes and duties that may be payable in respect of the issue or delivery of Common Shares on conversion of Securities pursuant hereto. The Company shall not, however, be required to pay any tax or duty which may be payable in respect of any transfer involved in the issue and delivery of Common Shares in a name other than that of the Holder of the Security or Securities to be converted, and no such issue or - 96 - 106 delivery shall be made unless and until the Person requesting such issue has paid to the Company the amount of any such tax or duty, or has established to the satisfaction of the Company that such tax or duty has been paid. Such taxes payable shall not include any income, capital taxes payable by a Holder by reason of such conversion in any jurisdiction, with which such Holder has a connection other than by reason of acquiring or converting the Securities. SECTION 12.9. Covenant as to Common Shares. The Company agrees that all Common Shares which may be delivered upon conversion of Securities, upon such delivery, will have been duly authorized and validly issued and will be fully paid and nonassessable and, except as provided in Section 12.8, the Company will pay all taxes, liens and charges with respect to the issue thereof. Such taxes payable shall not include any income, capital taxes payable by a Holder by reason of such conversion in any jurisdiction, with which such Holder has a connection other than by reason of acquiring or converting the Securities. SECTION 12.10. Cancellation of Converted Securities. All Securities delivered for conversion shall be delivered to the Trustee or the Paying Agent in London or its agent to be canceled by or at the direction of the Trustee, which shall dispose of the same as provided in Section 3.9. SECTION 12.11. Provision in Case of Amalgamation, Consolidation, Merger or Sale of Assets. (1) Subject to the provisions of subsection 12.11(2), in case of any amalgamation or consolidation of the Company with, or merger of the Company into, any other Person, any merger of another Person into the Company (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding Common Shares of the Company) or any sale or transfer of all or substantially all of the assets of the Company, the Person formed by such consolidation or resulting from such merger or which acquires such assets, as the case may be, shall execute and deliver to the Trustee a supplemental indenture providing that the Holder of each Security then Outstanding shall have the right thereafter, during the period such Security shall be convertible as specified in Section 12.1, to convert such Security only into the kind and amount of securities, cash and other property receivable upon such amalgamation, consolidation, merger, sale or transfer by a holder of the number of Common Shares of the Company into which such Security might have been converted immediately prior to such amalgamation, consolidation, merger, sale or transfer, and assuming such holder of Common Shares of the Company (i) is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be ("Constituent Person"), or an Affiliate of a Constituent Person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer is not the same for each Common Share of the - 97 - 107 Company held immediately prior to such consolidation, merger, sale or transfer by others than a Constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised ("Non-electing Share"), then for the purpose of this Section 12.11 the kind and amount of securities, cash and other property receivable upon such amalgamation, consolidation, merger, sale or transfer by the holders of each Non-electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of the Non-electing Shares), and further assuming, if such consolidation, amalgamation, arrangement, merger, conveyance, transfer, sale or lease occurs prior to the later of 60 days following the latest of (i) May 7, 1996 and (ii) the latest date of original issue of any Security, that the Security was convertible at the time of such occurrence at the Conversion Price specified in Section 12.1 as adjusted from the issue date of such Security to such time as provided in this Article Twelve subject to any requirements necessary to ensure that the Securities will be and will remain exempt from Canadian withholding tax including, without limitation, the requirement in effect on the date hereof that a Holder of Securities shall not be entitled to receive shares, other securities or property, other than securities that are "prescribed securities" as defined in Regulation 6208 to the Income Tax Act (Canada), in the event that any such amalgamation, consolidation, merger or transfer occurs in or prior to five years after the date of original issue of the Securities. Such supplemental indenture shall provide for adjustments which, for events subsequent to the effective date of such supplemental indenture, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article. The above provisions of this Section 12.11 shall similarly apply to successive consolidations, mergers, sales or transfers. Notice of the execution of such a supplemental indenture shall be given by the Company to the Holder of each Security as provided in Section 1.6 promptly upon such execution. (2) Notwithstanding any provisions of this Article Twelve to the contrary, if any amalgamation, consolidation, merger, sale or transfer should occur on or prior to five years from the date of issue of the last Security to be issued hereunder, a holder of a Security shall not be entitled in any circumstances to convert such Security into any securities, cash or other property (the "Substituted Properties") unless such Substituted Properties are "prescribed securities" with respect to such Security for purposes of clause 212(1)(b)(vii)(E) of the Income Tax Act (Canada). Neither the Trustee, any Paying Agent nor any Conversion Agent shall be under any responsibility to determine correctness of any provisions contained in any such supplemental indenture relating either to the kind or amount of shares of stock or other securities or property or cash receivable by Holders of Securities upon the conversion of their Securities after any such consolidation, merger, conveyance, transfer, sale or lease or to any such adjustment, but may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, an Opinion of Counsel with respect thereto, which the Company shall cause to be furnished to the Trustee upon request. - 98 - 108 SECTION 12.12 Responsibility of Trustee for Conversion Provisions The Trustee, subject to the provisions of Section 6.1, and any Conversion Agent shall not at any time be under any duty or responsibility to any Holder of Securities to determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed herein or in any supplemental indenture provided to be employed, in making the same, or whether a supplemental indenture need be entered into. Neither the Trustee, subject to the provisions of Section 6.1, nor any Conversion Agent shall be accountable with respect to the validity or value (or the kind or amount) of any Common Stock, or of any other securities or property or cash, which may at any time be issued or delivered upon the conversion of any Security; and it or they do not make any representation with respect thereto. Neither the Trustee, subject to the provisions of Section 6.1, and any Conversion Agent shall be responsible for any failure of the Company to make or calculate any cash payment or to issue, transfer or deliver any shares of Common Stock or share certificates or other securities or property or cash upon the surrender of any Security for the purpose of conversion; and the Trustee, subject to the provisions of Section 6.1, and any Conversion Agent shall not be responsible for any failure of the Company to comply with any of the covenants of the Company contained in this Article. ARTICLE THIRTEEN SUBORDINATION OF SECURITIES SECTION 13.1. Securities Subordinated to Senior Indebtedness. All Securities issued under this Indenture shall be issued subject to the following provisions and each Holder of any Security whether upon original issue or upon transfer or assignment thereof accepts and agrees to be bound by such provisions. All Securities issued hereunder shall, to the extent and in the manner hereinafter set forth, be subordinated and subject in right of payment to the prior payment in full of all Senior Indebtedness. "Senior Indebtedness" means (i) the principal, premium, if any, and interest in respect of (A) indebtedness of the Company for money borrowed and (B) indebtedness evidenced by securities, debentures, bonds or other similar instruments issued by the Company, (ii) all capital lease obligations of the Company, (iii) all obligations of the Company issued or assumed as the deferred purchase price of property, all conditional sale obligations of the Company and all obligations of the Company under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business), (iv) all obligations of the Company for the reimbursement on any letter of credit, bankers acceptance, security purchase facility or similar credit transaction, (v) all obligations of the type referred to in clauses (i) through (iv) above of other persons for the payment of which the Company is responsible or liable as obligor, guarantor or otherwise, and (vi) all obligations of the type referred to in clauses (i) through (v) above of other persons secured by any lien on any property or assets of the Company (whether - 99 - 109 or not such obligation is assumed by the Company), except for any such indebtedness or other obligation that is by its terms subordinated to or pari passu with the Securities. SECTION 13.2. No Payments in Certain Circumstances; Payment Over of Proceeds Upon Dissolution, Etc. No payment on account of principal of, premium, if any, or interest on, or redemption or repurchase of, the Securities shall be made if, at the time of such payment or immediately after giving effect thereto: (i) there shall exist a default in the payment of principal of, premium, if any, sinking funds or interest (including a default under any purchase or redemption obligations) with respect to any Senior Indebtedness, or (ii) there shall have occurred an event of default (other than a default in the payment of principal, premium, if any, sinking funds or interest) with respect to any Senior Indebtedness, as defined therein or in the instrument under which the same is outstanding, permitting the holders thereof to accelerate the maturity thereof and written notice of such occurrence shall have been given to the Company and to the Trustee under this Indenture by the holder or holders of such Senior Indebtedness and such event of default shall not have been cured or waived or shall not have ceased to exist after written notice to the Company and the Trustee by any holder of Senior Indebtedness. Notwithstanding the foregoing, the Company may make, and the Trustee may receive and shall apply, any payment in respect of the Securities ( for principal, premium, if any, or interest or repurchase) if such payment was made prior to the occurrence of any of the contingencies specified in clauses (i) and (ii) above. Upon (i) any acceleration of the principal amount due on the Securities or (ii) any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding up or total or partial liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all principal of, premium, if any, sinking fund and interest due or to become due upon all Senior Indebtedness shall first be paid in full, or payment thereof provided for in money or money's worth in accordance with its terms, before any payment is made on account of the principal of, premium, if any, or interest on, or repurchase of, the indebtedness evidenced by the Securities, and upon any such dissolution or winding up or liquidation or reorganization any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Securities or the Trustee under this Indenture would be entitled, except for the provisions hereof, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders of the Securities or by the Trustee under this Indenture if received by them or it, as the case may be, directly to the holders of Senior Indebtedness (pro rata to each such holder on the basis of the respective amounts of Senior Indebtedness held by such holder) or their representatives, to the extent necessary to pay all Senior Indebtedness in full, in money or money's worth, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness, before any payment or distribution is made to the Holders of the Securities or to the Trustee under this Indenture. - 100 - 110 In the event that, contrary to the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, shall be received by the Trustee or the Holders of the Securities before all Senior Indebtedness is paid in full or provision made for such payment, in accordance with its terms, such payment or distribution shall be paid over or delivered to, the holders of such Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any of such Senior Indebtedness have been issued, as their respective interests may appear, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all such Senior Indebtedness in full in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness. Subject to the payment in full of all Senior Indebtedness, the Holders of the Securities (together with the holders of any other indebtedness of the Company which is subordinated in right of payment to the payment in full of all Senior Indebtedness, which is not subordinated in right of payment to the Securities and which by its terms grants such right of subrogation to the holders thereof) shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of assets of the Company made on the Senior Indebtedness until the principal of, premium, if any, and interest on, or repurchase of, the Securities shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to the holders of Senior Indebtedness of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article, and no payment over pursuant to the provisions of this Article to the holders of Senior Indebtedness by the Holders of the Securities or the Trustee, shall, as between the Company, its creditors other than the holders of Senior Indebtedness, and the Holders of Securities, be deemed to be a payment by the Company to the holders of or on account of Senior Indebtedness, it being understood that the provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities, on the one hand, and the holders of Senior Indebtedness, on the other hand. SECTION 13.3. Notice to Trustee of Specified Events; Reliance on Certificate of Liquidating Agent. The Company shall give prompt written notice to the Trustee of any insolvency or bankruptcy proceeding in respect of the Company, of any proceedings for voluntary liquidation, dissolution or other winding up of the Company (whether or not involving insolvency or bankruptcy), of the declaration of any Security as due and payable before its expressed maturity, and of any event which pursuant to Section 13.2 would prevent payment by the Company on account of the principal, premium, if any, or interest on, or repurchase of, the Securities. The Trustee, subject to the provisions of Section 6.1, shall be entitled to assume that no such event has occurred unless the Company, or a holder of Senior Indebtedness, or any trustee therefor, has given such notice. - 101 - 111 Upon any distribution of assets of the Company or payment by or on behalf of the Company referred to in this Article, the Trustee and the Holders of the Securities shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 13.2 are pending, and the Trustee, subject to the provisions of Section 6.1, and the Holders of the Securities shall be entitled to rely upon a certificate of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders of the Securities for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. In the event that the Trustee determines, in good faith, that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, as to the extent to which such Person is entitled to participate in such payment or distribution, and as to other facts pertinent to the rights of such Person under this Article, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 13.4. Trustee to Effectuate Subordination. The Holder of each Security by his acceptance thereof authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination as provided in this Article and appoints the Trustee as attorney-in-fact for any and all such purposes. SECTION 13.5. Trustee Not Charged with Knowledge of Prohibition. Notwithstanding the provisions of this Article or any other provision of this Indenture, but subject to the provisions of Section 6.1 as between the Holders of Securities and the Trustee, neither the Trustee nor any Paying Agent shall be charged with knowledge of any facts which would prohibit the making of any payment of moneys to or by the Trustee or any such Paying Agent, unless and until the Trustee or such Paying Agent shall have received written notice thereof at its Corporate Trust Office from the Company or any holder of Senior Indebtedness or the trustee or representative of any holder of such Senior Indebtedness on his behalf; and, prior to the receipt of any such written notice, the Trustee and any such Paying Agent shall be entitled to assume that no such facts exist. If the Trustee or Paying Agent, as the case may be, shall not have received, at least three Business Days prior to the date upon which by the terms hereof any such moneys may become payable for any purpose (including, without limitation, the payment of the principal of, premium, if any, or the interest on any Security) with respect to such moneys, the notice provided for in this Section, then, anything herein contained to the contrary notwithstanding, the Trustee and such Paying Agent, as the case may be, shall have full power and authority to receive such moneys and to apply the same to the purpose for which they - 102 - 112 were received and shall not be affected by any notice to the contrary which may be received by it within three Business Days prior to such date. Subject to the provisions of Section 6.1, the Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee therefor) to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 13.6. Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of the Company referred to in this Article, the Trustee, subject to the provisions of Section 6.1, and the Holders of the Securities shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution, winding up or similar case or proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent, or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. SECTION 13.7. Trustee Not Fiduciary for Holders of Senior Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article or otherwise. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants or obligations as are specifically set forth in this Article and no implied covenants or obligations with respect to holders of Senior Indebtedness shall be read into this Indenture against the Trustee. SECTION 13.8. Rights of Trustee as Holder of Senior Indebtedness; Preservation Of - 103 - 113 Trustee's Rights. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. Nothing in this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.7. SECTION 13.9. Article Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however, that Section 13.5, 13.6 and 13.7 shall not apply to the Company or any Affiliate of the Company if it or such Affiliate acts as Paying Agent. SECTION 13.10. Certain Conversions Deemed Payment. For the purposes of this Article only, (1) the issuance and delivery of junior securities upon conversion of Securities in accordance with Article Twelve or upon the repurchase of Securities in accordance with Article Fourteen shall not be deemed to constitute a payment or distribution on account of the principal of or premium or interest on Securities or on account of the purchase or other acquisition of Securities, and (2) the payment, issuance or delivery of cash, property or securities (other than junior securities) upon conversion of a Security shall be deemed to constitute payment on account of the principal of such Security. For the purposes of this Section, the term "junior securities" means Common Stock and any other cash, property or securities into which the Securities are convertible pursuant to Article Twelve. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall impair, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Securities, the right, which is absolute and unconditional, of the Holder of any Security to convert such Security in accordance with Article Twelve or to exchange such Security for Common Stock in accordance with Article Fourteen if the Company elects to satisfy the obligations under Article Fourteen by delivery of Common Stock. - 104 - 114 ARTICLE FOURTEEN REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER UPON A CHANGE IN CONTROL SECTION 14.1. Right to Require Repurchase. In the event that a Change in Control (as hereinafter defined) shall occur, then each Holder shall have the right, at the Holder's option, to require the Company to repurchase, and upon the exercise of such right the Company shall repurchase, all of such Holder's Securities, or any portion of the principal amount thereof that is equal to U.S.$1,000 or any integral multiple of U.S.$1,000 in excess thereof (provided that no single Security may be repurchased in part unless the portion of the principal amount of such Security to be Outstanding after such repurchase is equal to U.S.$1,000 or integral multiples of U.S.$1,000 in excess thereof), on the date (the "Repurchase Date") that is 45 days after the date of the Company Notice (as defined in Section 14.2) at a purchase price equal to 100% of the principal amount of the Securities to be repurchased (the "Repurchase Price") plus interest accrued to the Repurchase Date; provided, however, that installments of interest on Securities whose Stated Maturity is on or prior to the Repurchase Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such on the relevant Record Date according to their terms and the provisions of Section 3.7. Such right to require the repurchase of the Securities shall not continue after a discharge of the Company from its obligations with respect to the Securities in accordance with Article Four, unless a Change in Control shall have occurred prior to such discharge. At the option of the Company, the Repurchase Price may be paid in cash or, except as otherwise provided in Section 14.2(j), by delivery of shares of Common Shares having a fair market value equal to the Repurchase Price; provided that payment may not be made in Common Shares unless at the time of payment such stock is listed on a national securities exchange or quoted on Nasdaq. For purposes of this Section, the fair market value of Common Shares shall be determined by the Company and shall be equal to 95% of the average of the Closing Prices Per Share for the five consecutive Trading Days ending on and including the third Trading Day immediately preceding the Repurchase Date. Whenever in this Indenture (including Sections 2.2, 3.1, 5.1(2) and 5.8) there is a reference, in any context, to the principal of any Security as of any time, such reference shall be deemed to include reference to the Repurchase Price payable in respect of such Security to the extent that such Repurchase Price is, was or would be so payable at such time, and express mention of the Repurchase Price in any provision of this Indenture shall not be construed as excluding the Repurchase Price in those provisions of this Indenture when such express mention is not made. SECTION 14.2. Notices; Method of Exercising Repurchase Right, Etc. (a) Unless the Company shall have theretofore called for redemption all of the Outstanding Securities, on or before the 30th day after the occurrence of a Change in Control, the Company or, at the request and expense of the Company, the Trustee, shall give to all Holders of Securities, in the manner provided in Section 1.6, notice (the "Company Notice") - 105 - 115 of the occurrence of the Change in Control and of the repurchase right set forth herein arising as a result thereof. The Company shall also deliver a copy of such notice of a repurchase right to the Trustee. Each notice of a repurchase right shall state: (1) the Repurchase Date, (2) the date by which the repurchase right must be exercised, (3) the Repurchase Price, (4) a description of the procedure which a Holder must follow to exercise a repurchase right, and the place or places where such Securities, are to be surrendered for payment of the Repurchase Price and accrued interest, if any, (5) that on the Repurchase Date the Repurchase Price, and accrued interest, if any, will become due and payable upon each such Security designated by the Holder to be repurchased, and that interest thereon shall cease to accrue on and after said date, (6) the Conversion Price then in effect, the date on which the right to convert the principal amount of the Securities to be repurchased will terminate and the place or places where such Securities, may be surrendered for conversion, and (7) the place or places that the certificate required by Section 2.2 shall be delivered, and the form of such certificate In addition, at least two Business Days preceding the Repurchase Date, the Company shall give to all Holders of the Securities, in the manner provided in Section 1.6, notice specifying whether the Repurchase Price will be payable in cash or Common Shares and shall deliver a copy of such notice to the Trustee. No failure of the Company to give the foregoing notices or defect therein shall limit any Holder's right to exercise a repurchase right or affect the validity of the proceedings for the repurchase of Securities. If any of the foregoing provisions or other provisions of this Article are inconsistent with applicable law, such law shall govern. (b) To exercise a repurchase right, a Holder shall deliver to the Trustee or any Paying Agent on or before the 30th day after the date of the Company Notice (i) written notice of the Holder's exercise of such right, which notice shall set forth the name of the Holder, the principal amount of the Securities to be repurchased (and, if any Security is to repurchased in part, the serial number thereof, the portion of the principal amount thereof to be repurchased and the - 106 - 116 name of the Person in which the portion thereof to remain Outstanding after such repurchase is to be registered) and a statement that an election to exercise the repurchase right is being made thereby, and, in the event that the Repurchase Price shall be paid in Common Shares, the name or names (with addresses) in which the certificate or certificates for shares of Common Shares shall be issued, and (ii) the Securities with respect to which the repurchase right is being exercised, if any, appertaining thereto maturing after the Repurchase Date. Such written notice shall be irrevocable, except that the right of the Holder to convert the Securities with respect to which the repurchase right is being exercised shall continue until the close of business on the second Trading Day preceding the Repurchase Date. (c) In the event a repurchase right shall be exercised in accordance with the terms hereof, the Company shall pay or cause to be paid to the Trustee or the Paying Agent in London the Repurchase Price in cash or Common Shares, as provided above, for payment to the Holder on the Repurchase Date or, if Common Shares are to be paid, as promptly after the Repurchase Date as practicable, together with accrued and unpaid interest to the Repurchase Date payable with respect to the Securities as to which the purchase right has been exercised; provided, however, that installments of interest that mature on or prior to the Repurchase Date shall be payable in cash to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Regular Record Date. (d) If any Security (or portion thereof) surrendered for repurchase shall not be so paid on the Repurchase Date, the principal amount of such Security (or portion thereof, as the case may be) shall, until paid, bear interest to the extent permitted by applicable law from the Repurchase Date at the rate of 6.50% per annum, and each Security shall remain convertible into Common Shares until the principal of such Security (or portion thereof, as the case may be) shall have been paid or duly provided for. (e) Any Security which is to be repurchased only in part shall be surrendered to the Trustee (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Security without service charge, a new Security or Securities, containing identical terms and conditions, each in an authorized denomination in aggregate principal amount equal to and in exchange for the unrepurchased portion of the principal of the Security so surrendered. (f) Any issuance of Common Shares in respect of the Repurchase Price shall be deemed to have been effected immediately prior to the close of business on the Repurchase Date and the Person or Persons in whose name or names any certificate or certificates for Common Shares shall be issuable upon such repurchase shall be deemed to have become on the Repurchase Date the holder or holders of record of the shares represented thereby; provided, however, that any surrender for repurchase on a date when the stock transfer books of the Company shall be closed shall constitute the Person or Persons in whose name or names the certificate or certificates for such shares are to be issued as the recordholder or holders thereof for all purposes at the - 107 - 117 opening of business on the next succeeding day on which such stock transfer books are open. No payment or adjustment shall be made for dividends or distributions on any Common Shares issued upon repurchase of any Security declared prior to the Repurchase Date. (g) No fractions of shares shall be issued upon repurchase of Securities. If more than one Security shall be repurchased from the same Holder and the Repurchase Price shall be payable in Common Shares, the number of full shares which shall be issuable upon such repurchase shall be computed on the basis of the aggregate principal amount of the Securities so repurchased. Instead of any fractional share of Common Shares which would otherwise be issuable on the repurchase of any Security or Securities, the Company will deliver to the applicable Holder its check for the current market value of such fractional share. The current market value of a fraction of a share is determined by multiplying the current market price of a full share by the fraction, and rounding the result to the nearest cent. For purposes of this Section, the current market price of a Common Share is the Closing Price Per Share of the Common Share on the last Trading Day prior to the Repurchase Date. (h) Any issuance and delivery of certificates for Common Share on repurchase of Securities shall be made without charge to the Holder of Securities being repurchased for such certificates or for any transfer tax or duty in respect of the issuance or delivery of such certificates or the securities represented thereby; provided, however, that the Company shall not be required to pay any transfer tax or duty which may be payable in respect of (i) income of the Holder or (ii) any transfer involved in the issuance or delivery of certificates for shares of Common Shares in a name other than that of the Holder of the Securities being repurchased, and no such issuance or delivery shall be made unless and until the Person requesting such issuance or delivery has paid to the Company the amount of any such tax or duty or has established, to the satisfaction of the Company, that such tax or duty has been paid. (i) If any Common Shares to be issued upon repurchase of Securities hereunder require registration with or approval of any governmental authority under any federal or state law before such shares may be validly issued or delivered upon repurchase, the Company covenants that it will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be; provided, however, that nothing in this Section shall be deemed to affect in any way the obligations of the Company to repurchase Securities as provided in this Article and if such registration is not completed or does not become effective or such approval is not obtained prior to the Repurchase Date, the Repurchase Price shall be paid in cash. (j) The Company covenants that all Common Shares which may be issued upon repurchase of Securities will upon issue be duly and validly issued and fully paid and non-assessable. - 108 - 118 SECTION 14.3. Certain Definitions. For purposes of this Article Fourteen, (a) the term "beneficial owner" shall be determined in accordance with Rule 13d-3, as in effect on the date of the original execution of this Indenture, promulgated by the Commission pursuant to the Exchange Act; (b) a "Change in Control" shall be deemed to have occurred at the time, after the original issuance of the Securities, of: an event or series of events by which any Person or other entity or Group of Persons shall, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases, merger, consolidation or otherwise (collectively, "Control Acquisitions") have become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 50% or more of the total voting power of all shares of capital stock the Company entitled to vote generally in the election of directors; (ii) any consolidation or otherwise of the Company with, or merger of the Company into, any other Person, any merger of another Person into the Company, or any sales or transfer of all or substantially all of the assets of the Company to another Person; or (iii) the direct or indirect, sale, lease, exchange or other transfer of all or substantially all of the assets of the Company to any Person or Group of Persons; provided, however, that a Change in Control shall not be deemed to have occurred if either (x) the Closing Price Per Share on any five Trading Days within the period of 10 consecutive Trading Days ending immediately after the later of the date of the Change in Control or the date of the public announcement of the Change in Control (in the case of a Change in Control under Clause (i) above) or the period of 10 consecutive Trading Days ending immediately prior to the date of the Change in Control (in the case of a Change in Control under Clause (ii) and (iii) above) shall equal or exceed 105% of the Conversion Price in effect on such trading day or (y) all the consideration (excluding cash payments for fractional shares) to be paid for the Common Shares in a transaction or transactions constituting the Change in Control as described in Clause (ii) above consists of shares of common stock traded on a United States national securities exchange or quoted on Nasdaq National Market System and as a result of such transaction or transactions the Securities become convertible solely into such common stock, and such common stock is a "prescribed security" with respect to the Securities for purposes of clause 212(1)(b)(vii)(E) of the Income Tax Act (Canada); (c) In this Article Fourteen, the term "Person" or "Group of Persons" shall include any syndicate or group which would be deemed to be a "person" under Section 13(d)(3) of the Exchange Act, as in effect on the date of the original execution of this Indenture. - 109 - 119 ARTICLE FIFTEEN HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 15.1. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee: (a) semi-annually, not more than 15 days after the Regular Record Date, a list, in such form as the Trustee mayreasonably require, of the names and addresses of the Holders of Securities as of such Regular Record Date, and (b) at such other times as the Trustee may reasonably request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; excluding from any such list names and addresses received by the Trustee in its capacity as Security Registrar. SECTION 15.2. Preservation of Information. The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 15.1 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it pursuant to Section 15.1 upon receipt of a new list so furnished. - ------------------------------ This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. - 110 - 120 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. NORTH AMERICAN VACCINE, INC. (Seal) By /s/ Sharon Mates -------------------------- Name: Sharon Mates, Ph.D. Title: President Attest: /s/ Daniel J. Abdun-Nabi - --------------------------- Name: Daniel J. Abdun-Nabi Title: Secretary MARINE MIDLAND BANK, AS TRUSTEE (Seal) By /s/ Richard G. Pittius -------------------------- Name: Richard Pittius Title: Vice President Attest: /s/ Frank J. Godino - -------------------------- Name: Frank J. Godino Title: Corporate Trust Officer - 111 - 121 WASHINGTON, ) DISTRICT OF ): SS.: COLUMBIA ) On the 7th day of May, 1996, before me personally came Sharon Mates, to me known, who, being by me duly sworn, did depose and say that she is Sharon Mates NORTH AMERICAN VACCINE, INC., one of the corporations described in and which executed the foregoing instrument; that she knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that she signed her name thereto by like authority. /s/ Judith E. Snyder Notary Public - 112 - 122 STATE OF NEW YORK ) ):ss.: COUNTY OF NEW YORK ) On the 7th day of May, 1996, before me personally came Richard G. Pittius, to me known, who, being by me duly sworn, did depose and say that he is Richard G. Pittius of Marine Midland Bank, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed pursuant to the bylaws of said corporation; and that he signed his name thereto by like authority. /s/ Marcia A. Markowski Notary Public - 113 - 123 ANNEX A-1 FORM OF CONVERSION NOTICE - - UNRESTRICTED SECURITIES - ------------------------ as Conversion Agent [Address] Re: North American Vaccine, Inc. 6.50% Convertible Subordinated Notes Due May 1, 2003 (the "Securities") Reference is hereby made to the Indenture, dated as of May 7, 1996 (the "Indenture"), between North American Vaccine, Inc. (the "Company"), as Issuer, and Marine Midland Bank, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to the Unrestricted Securities specified below, which are registered in the name of the undersigned (the "Holder"). The Holder hereby irrevocably exercises its right to convert such Securities, or the portion thereof, if any, specified below, into Common Shares and, as specified below, directs that such Shares, together with any check in payment for a fractional share and any Security representing any unconverted principal amount, be issued and delivered in book- entry form through the facilities of the Depositary, for credit to the account(s) of the Person(s)] [in certificated form to the Registered owner(s)] indicated below. The Holder acknowledges and agrees that no Common Shares will be delivered upon conversion of the specified Securities during the Restricted Period unless the beneficial owner(s) is not a U.S. Person (as defined in Regulation S). In addition, no Common Shares will be delivered on conversion until any amount payable by the Holder on account of interest is paid, any certificates evidencing specified Securities not held in book-entry form are duly endorsed or assigned to the Company or in blank and surrendered and any taxes or other charges or documents required in connection with a transfer on conversion, and any other required items, are delivered to the Conversion Agent. The Holder acknowledges and agrees that, notwithstanding this request for conversion, the Company and the Trustee may require that the Common Shares delivered on conversion of the specified Securities be delivered in certificated form subject to a restrictive legend. A-1-114 124 Conversion of the specified Securities is subject to the requirements established by the Company and the Trustee pursuant to the Indenture, as well as to the procedures of the Depositary if such Securities are held or to be held in book-entry form, all as in effect from time to time. The specified Securities will be deemed to have been converted immediately prior to the close of business on the day of surrender of the specified Securities for conversion and on which all other required items have been delivered to the Conversion Agent as provided above and, upon such conversion, shall cease to accrue interest or be outstanding. Prior to such conversion, the Holder will have no rights in the Conversion Securities. Please provide the information requested below, as applicable. 1. PLEASE SPECIFY THE SECURITIES HELD AND THE PORTION THEREOF TO BE CONVERTED ; Principal amount held: U.S. $_____________ CUSIP number(s): __________________ Depositary (DTC) account where held: ______________ Principal amount being converted (if less than all): U.S. $_____________ All Securities to be converted will be converted into Common Shares and (together with any unconverted Securities) will be delivered in book-entry form to the DTC account specified in Item 2 below. 2. Please specify the type, number and form of securities to be delivered on conversion and the name(s) of the account holder(s) or registered owner(s), by checking the appropriate boxes and providing the information requested: n Book Entry Number of Common Shares: __________________ Depositary Account: __________________ n Certificates Number of Common Shares: __________________ Registered Owner: __________________ n Unconverted Book-Entry Principal Amount: U.S. $ __________________ * Depositary Account: __________________ n Unconverted Securities (Only in Instances Defined by the Indenture) Principal Amount: U.S. $ __________________ * Registered Owner: __________________ A-1-115 125 - ---------------------- * Aggregate principal amount of each certificate must equal U.S. $1,000 or any integral multiple thereof. A-1-116 126 Please sign and date this notice in the space provided below. DATE: -------------------- Name of Holder ---------------------- Signature(s) of Holder Title(s): (If the Holder is a corporation, partnership or fiduciary, the title of the Person signing on behalf of the Holder must be stated.) Signature(s) must be guaranteed by a commercial bank or trust company or a member firm of a U.S. national securities exchange or a member of the National Association of Securities Dealers, Inc. if Common Shares or unconverted Securities are to be delivered other than to and in the name of the registered owner. - ---------------------- Signature Guarantee A-1-117 127 ANNEX A-2 FORM OF CONVERSION NOTICE -- RESTRICTED SECURITIES - ------------------------ as Conversion Agent [Address] Re: North American Vaccine, Inc. 6.50% Convertible Subordinated Notes Due May 1, 2003 (the "Securities") Reference is hereby made to the Indenture, dated as of May 7, 1996 (the "Indenture"), between North American Vaccine, Inc. (the "Company"), as Issuer, and Marine Midland Bank, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to the Restricted Securities specified below, which are registered in the name of the undersigned (the "Holder"). The Holder hereby irrevocably exercises its right to convert such Securities, or the portion thereof, if any, specified below, into Common Shares and, except to the extent specified or required as described below, directs that Restricted Common Shares, together with any check in payment for a fractional share and any Security representing any unconverted principal amount, be issued and delivered [in book-entry form through the facilities of the Depositary, to the account(s) of the Person(s)] [ in certificated form to the Registered Owner (s)] indicated below. No Common Shares will be delivered upon conversion until any amount payable by the Holder on account of interest is paid, any certificates evidencing specified Securities not held in book-entry form are duly endorsed or assigned to the Company or in blank and surrendered and any taxes or other charges or documents required in connection with a transfer on conversion, and any other required items, are delivered to the Conversion Agent. The Holder acknowledges and agrees that, notwithstanding this request for conversion, the Company may require that the Common Shares delivered on conversion of the specified Securities be delivered in certificated form subject to a restrictive legend, or that additional certificates be delivered on behalf of the relevant beneficial owner(s). Any Holder requesting Common Shares or unconverted Securities in book-entry form acknowledges and warrants for the benefit of the Company that such Holder and any beneficial owner(s) of such Securities are Qualified Institutional Buyers (as defined in Rule 144A). A-2-118 128 Conversion of the specified Securities is subject to the requirements established by the Company pursuant to the Indenture, as well as to the procedures of the Depositary if such Securities are held or to be held in book-entry form, all as in effect from time to time. The specified Securities will be deemed to have been converted immediately prior to the close of business on the day of surrender of the specified securities for conversion and on which all other required items have been delivered to the Conversion Agent as provided above and, upon such conversion, shall cease to accrue interest or be outstanding. Prior to such conversion, the Holder will have no rights in the Conversion Securities. Please provide the information required below, as applicable: 1. PLEASE SPECIFY THE SECURITIES HELD AND THE PORTION THEREOF TO BE CONVERTED; Principal amount held: U.S. $__________________________________ CUSIP number(s):________________________________________________ Depositary (DTC) account where held:____________________________ Principal amount being converted (if less than all): U.S. $_______________________ 2. Please specify the type, number and form of securities to be delivered on conversion and the name(s) of the account holder(s) or registered owner(s), by checking the appropriate boxes and providing the information requested: n Book Entry * Number of Common Shares:_______________________ Depositary Account: ___________________________ n Unconverted Book Entry* Principal Amount: U.S.$_______________________ Depositary Account:____________________________ - -------------- A-2-119 129 * Only Qualified Institutional Buyers may receive Common Shares in book-entry form. Others must receive certificates, each in an amount of at least U.S. $1,000. n Unconverted Certificates Principal Amount: U.S.$________________________ Registered Owner:_______________________________ n Certificates Number of Common Shares: _______________________ Registered Owner:_______________________________ 3. Please specify whether the beneficial owner (s) are: n A Qualified Institutional Buyer, as defined in Rule 144A. n An institution that is an "accredited investor," as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, that is not a Qualified Institutional Buyer. Not a "U. S. person" (as defined in Regulations S). DATE: -------------------- Name of Holder --------------------- Signature(s) of Holder (If the Holder is a corporation, partnership or fiduciary, the title of the Person signing on behalf of the Holder must be stated.) Signature(s) must be guaranteed by a commercial bank or trust company or a member firm of a U.S. national securities exchange or a member of the National Association of Securities Dealers, Inc. if Common Shares are to be delivered, or unconverted Securities are to be issued, other than to and in the name of the registered owner. A-2-120 130 - ------------------- Signature Guarantee (End of Certificate) A-2-121 131 ANNEX B-1 FORM OF TRANSFER CERTIFICATE -- RESTRICTED GLOBAL SECURITY TO REGULATION S GLOBAL SECURITY Marine Midland Bank 140 Broadway, 12th Floor New York, NY 10005-1180 Attention: Corporate Trust Department Re: North American Vaccine, Inc. 6.50% Convertible Subordinated Notes Due May 1, 2003 Reference is hereby made to the Indenture, dated as of May 7, 1996 (the "Indenture"), between North American Vaccine, Inc., as Issuer, and Marine Midland Bank, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to U.S. $_____________ aggregate principal amount of Securities which are evidenced by the Restricted Global Security (CUSIP No. 657201AA7) and held with the Depositary in the name of [insert name of transferor] (the "Transferor"). The Transferor has requested a transfer of such beneficial interest in the Securities to a Person who will take delivery thereof in the form of an equal aggregate principal amount of Securities evidenced by the Regulation S Global Security (CUSIP No. U65777AA9), which amount, immediately after such transfer, is to be held with the Depositary through Euroclear or CEDEL or both. In connection with such request and in respect of such Securities, the Transferor does hereby certify that such transfer has been effected pursuant to and in accordance with Rule 904 under the United States Securities Act of 1933, as amended (the "Securities Act"), and accordingly the Transferor does hereby further certify that: (1) the offer of the Securities was not made to a person in the United States; (2) either: (A) at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed that the transferee was outside the United States, or B-1-122 132 (B) the transaction was executed in, on, or through the facilities of a designated offshore securities market and neither the Transferor nor any person acting on its behalf knows that the transaction was pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in contravention of the requirements of 904(b) of Regulation S, as applicable; (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and (5) upon completion of the transaction, the beneficial interest being transferred as described above was held with the Depositary through Euroclear or CEDEL or both. This certificate and the statements contained herein are made for the benefit of the Company and the Initial Purchasers. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act. Dated: [Insert Name of Transferor] By: ----------------------- Name: Title: (If the registered owner is a corporation, partnership or fiduciary, the title of the Person signing on behalf of such registered owner must be stated.) B-1-123 133 ANNEX B-2 FORM OF TRANSFER CERTIFICATE -- DEFINITIVE RESTRICTED SECURITIES TO RESTRICTED GLOBAL SECURITY, REGULATION S GLOBAL SECURITY OR UNRESTRICTED GLOBAL SECURITY Marine Midland Bank 140 Broadway, 12th Floor New York, NY 10005-1180 Attention: Corporate Trust Department Re: North American Vaccine, Inc. 6.50% Convertible Subordinated Notes Due May 1, 2003 Reference is hereby made to the Indenture, dated as of May 7, 1996 (the "Indenture"), between North American Vaccine, Inc., as Issuer, and Marine Midland Bank, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to U.S. $_____________ aggregate principal amount of Securities which are evidenced by a Definitive Restricted Security (No. ________ in the name of ___________) [insert name of transferor] (the "Transferor"). The Transferor has requested a transfer of such interest in the Securities to a Person that will take delivery thereof in the form of an equal aggregate principal amount of Securities evidenced by the [Unrestricted Global Security] [Regulation S Global Security] [(CUSIP No. U65777AA9)]. Restricted Global Security (CUSIP No. 657201AA7).] In connection with such request and in respect of such Securities, the Transferor does hereby certify that: such transfer has been effected pursuant to and in accordance with Rule 904, Rule 144 or Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act") and accordingly the Transferor does hereby further certify that: (1) if the transfer has been effected pursuant to Rule 904: (A) the offer of the Securities was not made to a person in the United States; (B) either: B-2-124 134 (i) at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed that the transferee was outside the United States, or (ii) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the Transferor nor any person acting on its behalf knows that the transaction was prearranged with a buyer in the United States; (C) no directed selling efforts have been made in contravention of the requirements of 904(b) of Regulation S, as applicable; and (D) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; [and (E) if the transfer is made to the Regulation S Global Security: the transferee will take delivery in book-entry form to be held with the Depositary only through Euroclear or CEDEL or both;] (2) if the transfer has been effected pursuant to Rule 144, the Securities have been transferred in a transaction permitted by Rule 144; or (3) if the transfer has been effected pursuant to Rule 144A, the Securities have been transferred to a Qualified Institutional Buyer. This certificate and the statements contained herein are made for the benefit of the Company and the Initial Purchasers. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act. Dated: [Insert Name of Transferor] By: ----------------------- Name: Title: (If the registered owner is a corporation, partnership or fiduciary, the title of the Person signing on behalf of such registered owner must be stated.) B-2-125 135 ANNEX B-3 FORM OF TRANSFER CERTIFICATE -- REGULATION S GLOBAL SECURITY TO RESTRICTED GLOBAL SECURITY Marine Midland Bank 140 Broadway, 12th Floor New York, NY 10005-1180 Attention: Corporate Trust Department Re: North American Vaccine, Inc. 6.50% Convertible Subordinated Notes Due May 1, 2003 (the "Securities") Reference is hereby made to the Indenture, dated as of May 7, 1996 (the "Indenture"), between North American Vaccine, Inc., as Issuer, and Marine Midland Bank, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to U.S. $____________ aggregate principal amount of Securities which are evidenced by the Regulation S Global Security (CUSIP No. U65777AA9) and held with the U.S. Depository through Euroclear or CEDEL or both in the name of (insert name of transferor] (the "Transferor"). The Transferor has requested a transfer of such beneficial interest in the Securities to a Person that will take delivery thereof in the form of an equal principal amount of Securities evidenced by the Restricted Global Security (CUSIP No. 657201AA7). In connection with such request and in respect of such Securities, the Transferor does hereby certify that such transfer has been effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended, and accordingly the Transferor does hereby further certify that the Securities are being transferred to a person that the Transferor reasonably believes is purchasing the Securities for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A, in each case in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the United States. This certificate and the statements contained herein are made for the benefit of the Company and the Initial Purchasers. Dated: [Insert Name of Transferor] By: ------------------------ Name: Title: (If the registered owner is a corporation, partnership or fiduciary, the title of the Person B-3-126 136 signing on behalf of such registered owner must be stated.) B-3-127 137 ANNEX C-1 FORM OF TRANSFER CERTIFICATE -- RESTRICTED GLOBAL SECURITY TO UNRESTRICTED SECURITY Marine Midland Bank 140 Broadway, 12th Floor New York, NY 10005-1180 Attention: Corporate Trust Department Re: North American Vaccine, Inc. 6.50% Convertible Subordinated Notes Due May 1, 2003 (the "Securities") Reference is hereby made to the Indenture, dated as of May 7, 1996 (the "Indenture") between North American Vaccine, Inc., as Issuer, and Marine Midland Bank, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to U.S. $____________ aggregate principal amount of Securities which are evidenced by the Restricted Global Security (CUSIP No. _____________) and held with the Depositary in the name of ______________ [insert name of transferor] (the "Transferor"). The Transferor has requested a transfer of such beneficial interest in the Securities to a person who will take delivery in the form of an equal aggregate principal amount of Securities evidenced by the Unrestricted Global Security (CUSIP No. _________). In connection with such request and in respect of such Securities, the Transferor does hereby certify that such transfer has been effected pursuant to and in accordance with Rule 904 or Rule 144 under the United States Securities Act of 1933, as amended (the "Securities Act"), and accordingly the Transferor does hereby further certify that: (1) if the transfer has been effected pursuant to Rule 904, the offer of the Securities was not made to a person in the United States; (A) either: (i) at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed that the transferee was outside the United States, or (ii) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the Transferor nor any person C-1-128 138 acting on its behalf knows that the transaction was pre-arranged with a buyer in the United States; (B) no directed selling efforts have been made in contravention of the requirements of 904(b) of Regulation S, as applicable; (C) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; or (2) if the transfer has been effected pursuant to Rule 144, the Securities have been transferred in a transaction permitted by Rule 144 under the Securities Act. This certificate and the statements contained herein are made for the benefit of the Company and the Initial Purchasers. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act. Dated: [Insert Name of Beneficial Owner] By: ------------------------------ Name: Title: (If the registered owner is a corporation, partnership or fiduciary, the title of the Person signing on behalf of such registered owner must be stated.) C-1-129 139 ANNEX C-2 FORM OF TRANSFER CERTIFICATE -- TRANSFER OR EXCHANGE AFTER THREE YEARS Marine Midland Bank 140 Broadway, 12th Floor New York, NY 10005-1180 Attention: Corporate Trust Department Re: North American Vaccine, Inc. 6.50% Convertible Subordinated Notes Due May 1, 2003 (the "Securities") Reference is hereby made to the Indenture, dated as of May 7, 1996 (the "Indenture") between North American Vaccine, Inc., as Issuer, and Marine Midland Bank, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. [For transfers: This letter relates to U.S.$__________________________ aggregate principal amount of Securities that are evidenced by a [Restricted Global Security (CUSIP No._____________________) and held with the Depositary in the name of [insert name of beneficial owner] [a Restricted Security that is a Definitive Security (CUSIP No._________________________ ) registered in the name of _______________________________________ ] [and held for the benefit of ___________________________________ ] (the "Transferor"). The Transferor has requested that its beneficial interest in such Securities be transferred to a Person that will take delivery thereof in the form of an equal aggregate principal amount of Securities evidenced by the Unrestricted Global Security (CUSIP No.________________________________) In connection with such request and in respect of such Securities, the Transferor does hereby certify that upon such transfer, (a) a period of at least three years will have elapsed since (i) May 7, 1996 or (ii) the resale of such Securities by an "affiliate" of the Company (as defined in Rule 144 under the Securities Act), (b) the Transferor during the three months preceding the date of such transfer was not an "affiliate" of the Company, and it was not acting on behalf of such an affiliate and (c) such Person to whom such transfer is being made is not an "affiliate" of the Company.] [For exchanges: This letter relates to U.S. $__________________________ aggregate principal amount of Securities that are evidenced by a [Restricted Security (CUSIP No.______________________) and held with the Depositary in the name of _____________________________ _________________________________________________________________________ [insert name of beneficial owner] [a Restricted Security that is a Definitive Security (CUSIP No.___________________________) that is registered in the name of __________________ and held for C-1-130 140 the benefit of ______________________] (the "Beneficial Owner"). The Beneficial Owner has requested that its beneficial interest in such Securities be exchanged for a beneficial interest in an equal aggregate principal amount of [Securities evidenced by the Unrestricted Global Security] [Unrestricted Securities] (CUSIP No. _________________). In connection with such request and in respect of such Securities, the Beneficial Owner does hereby certify that, upon such exchange, (a) it will be the beneficial owner of such Securities, (b) a period of at least three years will have elapsed since (i) May 7, 1996 or (ii) the resale of such Securities by an "affiliate" of the Company and (c) the Beneficial Owner will not be, and during the three months preceding the date of such exchange will not have been, an "affiliate" of the Company (as defined in Rule 144 under the Securities Act), and it is not acting on behalf of such an affiliate.] This certificate and the statements contained herein are made for the benefit of the Company and the Initial Purchasers. Dated: [Insert Name of Beneficial Owner] By: ---------------------------- Name: Title: (If the registered owner is a corporation, partnership or fiduciary, the title of the Person signing on behalf of such registered owner must be stated.) C-2-131 EX-4.6 3 REGISTRATION RIGHTS AGREEMENT. 1 EXHIBIT 4.6 NORTH AMERICAN VACCINE, INC. 6.50% CONVERTIBLE SUBORDINATED NOTES DUE MAY 1, 2003 REGISTRATION RIGHTS AGREEMENT May 1, 1996 Goldman, Sachs & Co. UBS Securities LLC c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Ladies and Gentlemen: North American Vaccine, Inc., a Canadian corporation (the "Company"), proposes to issue and sell to Goldman, Sachs & Co. and UBS Securities LLC (the "Initial Purchasers") upon the terms set forth in a purchase agreement dated May 1, 1996 (the "Purchase Agreement") between the Initial Purchasers and the Company, its 6.50% Convertible Subordinated Notes Due May 1, 2003 (the "Securities"). As an inducement to the Initial Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to the obligations of the Initial Purchasers thereunder, the Company agrees with the Initial Purchasers, (i) for the benefit of the Initial Purchasers and (ii) for the benefit of the holders from time to time of the Securities and the Common Stock, no par value per share (the "Stock"), of the Company initially issuable upon conversion of the Securities (collectively, the "Registrable Securities"), including the Initial Purchasers (each of the foregoing a "Holder" and, together, the "Holders"), as follows: 1. DEFINITIONS. Capitalized terms used herein without definition shall have their respective meanings set forth in or pursuant to the Purchase Agreement or the Offering Circular, dated May 1, 1996, in respect of the Securities. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "Act" or "Securities Act" means the United States Securities Act of 1933, as amended. "Affiliate" of any specified person means any other person which, directly or indirectly, is in control of, is controlled by, or is under common control with such specified person. For purposes of this definition, control of a person means the power, direct or indirect, to direct or cause the direction of the management and -1- 2 policies of such person whether by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Commission" means the United States Securities and Exchange Commission. "DTC" means The Depository Trust Company. "Effectiveness Period" has the meaning set forth in Section 2(b) hereof. "Exchange Act" means the United States Securities Exchange Act of 1934, as amended. "Managing Underwriters" means the investment banker or investment bankers and manager or managers that shall administer an underwritten offering, if any, as set forth in Section 6 hereof. "Person" shall mean an individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof. "Prospectus" means the prospectus included in any Shelf Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities. "Shelf Registration" means a registration effected pursuant to Section 2 hereof. "Shelf Registration Statement" means a shelf registration statement of the Company pursuant to the provisions of Section 2 hereof filed with the Commission which covers some or all of the Registrable Securities, as applicable, on an appropriate form under Rule 415 under the Act, or any similar rule that may be adopted by the Commission, amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Underwriter" means any underwriter of Registrable Securities in connection with an offering thereof under a Shelf Registration Statement. 2. SHELF REGISTRATION. (a) The Company shall, within 90 days following the date of original issuance (the "Issue Date") of the Securities, file with the Commission a Shelf Registration Statement relating to the offer and sale of the Registrable Securities by the Holders from time to time in accordance with the methods of -2- 3 distribution elected by such Holders and set forth in such Shelf Registration Statement and, thereafter, shall use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective under the Act within 180 calendar days after the date of filing of such Shelf Registration Statement; provided, however, that no Holder shall be entitled to have the Registrable Securities held by it covered by such Shelf Registration unless such Holder is in compliance with Section 3(m) hereof. (b) The Company shall use its reasonable best efforts: (i) To keep the Shelf Registration Statement continuously effective in order to permit the Prospectus forming part thereof to be usable by Holders for a period of three years from the date the Shelf Registration Statement is declared effective or such shorter period that will terminate upon the earliest of the following: (A) when all the Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement, (B) when all shares of Stock issued upon conversion of any such Securities that had not been sold pursuant to the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement and (C) when, in the written opinion of independent counsel to the Company, all outstanding Registrable Securities held by Persons that are not Affiliates of the Company may be resold without registration under the Act pursuant to Rule 144(k) under the Act or any successor or analogous provision thereto (in any such case, such period being called the "Effectiveness Period"); and (ii) After the effectiveness of the Shelf Registration Statement, promptly upon the request of any Holder, to take any action reasonably necessary to register the sale of any Registrable Securities of such Holder and to identify such Holder as a selling securityholder. The Company shall be deemed not to have used its reasonable best efforts to cause such Registration Statement to be declared effective or to keep the Shelf Registration Statement effective during the Effectiveness Period if the Company voluntarily takes any action that would result in Holders of Registrable Securities covered thereby not being able to offer and sell any such Registrable Securities during that period, unless (x) such action is required by applicable law, rule or regulation or action of the Commission, or (y) the Shelf Registration Statement would require the Company to disclose a material financing, acquisition or other corporate transaction or development, and the Board of Directors shall have determined in good faith that such disclosure is not in the best interests of the Company and its stockholders, and, in the case of clause (x) above, the Company thereafter promptly complies with the requirements of paragraph 3(i) below. 3. REGISTRATION PROCEDURES. In connection with any Shelf Registration Statement, the following provisions shall apply: -3- 4 (a) The Company shall furnish to the Initial Purchasers, prior to the filing thereof with the Commission, a copy of any Shelf Registration Statement, and each amendment thereof and each amendment or supplement, if any, to the Prospectus included therein and shall use its reasonable best efforts to reflect in each such document, when so filed with the Commission, such comments as the Initial Purchasers reasonably may propose. (b) The Company shall take such action as may be necessary so that (i) any Shelf Registration Statement and any amendment thereto and any Prospectus forming part thereof and any amendment or supplement thereto (and each report or other document incorporated therein by reference in each case) complies in all material respects with the Securities Act and the Exchange Act and the respective rules and regulations thereunder, (ii) any Shelf Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any Prospectus forming part of any Shelf Registration Statement, and any amendment or supplement to such Prospectus, does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading. (c) (1) The Company shall advise the Initial Purchasers and, in the case of clause (i), the Holders and, if requested by the Initial Purchasers or any such Holder, confirm such advice in writing: (i) when a Shelf Registration Statement and any amendment thereto has been filed with the Commission and when the Shelf Registration Statement or any post-effective amendment thereto has become effective; and (ii) of any request by the Commission for amendments or supplements to the Shelf Registration Statement or the Prospectus included therein or for additional information. (2) The Company shall advise the Initial Purchasers and the Holders and, if requested by the Initial Purchasers or any such Holder, confirm such advice in writing of: (i) the issuance by the Commission of any stop order suspending effectiveness of the Shelf Registration Statement or the initiation of any proceedings for that purpose; -4- 5 (ii) the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities included therein for sale in any jurisdiction or the initiation of any proceeding for such purpose; and (iii) the happening of any event that requires the making of any changes in the Shelf Registration Statement or the Prospectus so that, as of such date, the Shelf Registration Statement and the Prospectus do not contain an untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading (which advice shall be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made). (d) The Company shall use its reasonable best efforts to prevent the issuance, and if issued to obtain the withdrawal, of any order suspending the effectiveness of any Shelf Registration Statement at the earliest possible time. (e) The Company shall, during the Effectiveness Period, furnish to each Holder of Registrable Securities included within the coverage of any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all reports, other documents and exhibits (including those incorporated by reference). (f) The Company shall, during the Effectiveness Period, deliver to each Holder of Registrable Securities included within the coverage of any Shelf Registration Statement, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request; and the Company consents (except during the continuance of any event described in Section 3(c)(2)(i) or (iii)) to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of Registrable Securities in connection with the offering and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto during the Shelf Registration Period. (g) Prior to any offering of Registrable Securities pursuant to any Shelf Registration Statement, the Company shall use its reasonable best efforts to register or qualify or cooperate with the Holders of Registrable Securities included therein and their respective counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions as any such Holders reasonably request in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Registrable Securities covered by such Shelf Registration Statement: provided, however, that in no event shall the Company be obligated to (i) -5- 6 qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to so qualify but for this Section 3(g) or (ii) file any general consent to service of process in any jurisdiction where it is not as of the date hereof then so subject. (h) Unless any Registrable Securities shall be in book-entry only form, the Company shall cooperate with the Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold pursuant to any Shelf Registration Statement free of any restrictive legends and in such permitted denominations and registered in such names as Holders may request in connection with the sale of Registrable Securities pursuant to such Shelf Registration Statement. (i) Upon the occurrence of any event contemplated by paragraphs 2(b)(x) or 3(c)(2)(iii) above, the Company shall promptly prepare a post-effective amendment to any Shelf Registration Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. If the Company notifies the Holders of the occurrence of any event contemplated by paragraphs 2(b)(x) or 3(c)(2)(iii) above, the Holders shall suspend the use of the Prospectus until the requisite changes to the Prospectus have been made. (j) Not later than the effective date of any Shelf Registration Statement hereunder, the Company shall provide a CUSIP number for the Securities registered under such Shelf Registration Statement. (k) The Company shall use its reasonable best efforts to comply with all applicable rules and regulations of the Commission and shall make generally available to their security holders or otherwise provide in accordance with Section 11(a) of the Securities Act as soon as practicable after the effective date of the applicable Shelf Registration Statement an earnings statement satisfying the provisions of Section 11(a) of the Securities Act. (l) The Company shall cause the Indenture and the Securities to be qualified under the Trust Indenture Act in a timely manner. (m) The Company may require each Holder of Registrable Securities to be sold pursuant to any Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of such Registrable Securities as may be required by applicable law or regulation for inclusion in such Shelf Registration Statement and may require each Holder to execute an acknowledgment that such -6- 7 Holder agrees to be bound by the terms of this Agreement, and the Company may exclude from such registration the Registrable Securities of any Holder that fails to furnish such information or acknowledgment within a reasonable time after receiving such request. (n) The Company shall, if requested, promptly include or incorporate in a Prospectus supplement or post-effective amendment to a Shelf Registration Statement, such information as the Managing Underwriters reasonably agree should be included therein and to which the Company does not reasonably object and shall make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after they are notified of the matters to be included or incorporated in such Prospectus supplement or post-effective amendment. (o) The Company shall enter into such customary agreements (including underwriting agreements in customary form) to take all other appropriate actions in order to expedite or facilitate the registration or the disposition of the Registrable Securities, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures substantially identical to those set forth in Section 5 (or such other provisions and procedures acceptable to the Managing Underwriters, if any) with respect to all parties to be indemnified pursuant to Section 5. (p) The Company shall: (i) cause the Company's officers, directors and employees to make reasonably available for inspection all relevant information reasonably requested by such Holders or any such underwriter, attorney, accountant or agent in connection with any such Shelf Registration Statement, in each case, as is customary for similar due diligence examinations; provided, however, that any information that is designated in writing by the Company, in good faith, as confidential at the time of delivery of such information shall be kept confidential by such Holders or any such underwriter, attorney, accountant or agent, unless such disclosure is made in connection with a court proceeding or required by law, or such information becomes available to the public generally or through a third party without an accompanying obligation of confidentiality and the Company may require that such Holders or any such underwriter, attorney, accountant and agent execute a confidentiality agreement with respect to such information; and provided further that the foregoing inspection and information gathering shall, to the greatest extent possible, be coordinated on behalf of the Holders and the other parties entitled thereto by one counsel designated by and on behalf of such Holders and other parties; (ii) make such representations and warranties to the Holders of Registrable Securities registered thereunder and the underwriters, if any, in -7- 8 form, substance and scope as are customarily made by the Company to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement; (iii) obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the Managing Underwriters, if any) addressed to each selling Holder and the underwriters, if any, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters (it being agreed that the matters to be covered by such opinion or written statement by such counsel delivered in connection with such opinions shall include in customary form, as of the date of the opinion and as of the effective date of the Shelf Registration Statement or most recent post-effective amendment thereto, as the case may be, the absence from such Shelf Registration Statement and the prospectus included therein, as then amended or supplemented, including the documents incorporated by reference therein, of an untrue statement of material fact or the omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading; (iv) obtain "cold comfort" letters and updates thereof from the independent public accountants of the Company (and, if necessary, any other independent public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Shelf Registration Statement), addressed to each such Holder of Registrable Securities registered thereunder and the underwriters, if any, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with primary underwritten offerings; (v) deliver such documents and certificates as may be reasonably requested by any such Holders and the Managing Underwriters, if any, including those to evidence compliance with Section 3(i) and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 3(p) shall be performed at each closing under any underwritten offering to the extent required thereunder. (q) The Company will use its reasonable best efforts to cause the Stock issuable upon conversion thereof to be listed for quotation on the American Stock -8- 9 Exchange, the New York Stock Exchange or the Nasdaq National Market on or prior to the effective date of any Shelf Registration Statement hereunder. (r) In the event that any broker-dealer registered under the Exchange Act shall underwrite any Registrable Securities or participate as a member of an underwriting syndicate or selling group or "assist in the distribution" (within the meaning of the Rules of Fair Practice and the By-Laws of the National Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder of such Registrable Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company shall assist such broker-dealer in complying with the requirements of such Rules and By-Laws, including, without limitation, by (A) if such Rules or By-Laws, including Schedule E thereto, shall so require, engaging a "qualified independent underwriter" (as defined in Schedule E) to participate in the preparation of the Shelf Registration Statement relating to such Registrable Securities and to exercise usual standards of due diligence in respect thereto, (B) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 5 hereof and (C) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Rules of Fair Practice of the NASD. (s) The Company shall use its reasonable best efforts to take all other steps necessary to effect the registration, offering and sale of the Registrable Securities covered by the Shelf Registration Statement contemplated hereby. 4. REGISTRATION EXPENSES. Except as otherwise provided in Section 6, the Company shall bear all fees and expenses incurred in connection with the performance of its obligations under Sections 2 and 3 hereof and shall bear or reimburse the Holders for the reasonable fees and disbursements of one firm of counsel designated by the Company and reasonably acceptable to the Holders of a majority of the Registrable Securities covered by the Shelf Registration Statement to act as counsel therefor in connection with an underwritten public offering. 5. INDEMNIFICATION AND CONTRIBUTION. (a) In connection with any Shelf Registration Statement, the Company shall indemnify and hold harmless the Initial Purchasers, each Holder, each underwriter who participates in an offering of Registrable Securities, each person, if any, who controls any of such parties within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and each of their respective directors, officers, employees, trustees and agents, as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, including any amounts paid in settlement of any investigation, litigation, proceeding or claim, joint or several, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any Shelf Registration Statement (or -9- 10 any amendment thereto) covering Registrable Securities, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that the Company shall not be liable under this clause (i) for any settlement of any action effected without its written consent, which consent shall not be unreasonably withheld; and (ii) against any and all expenses whatsoever, as incurred (including reasonable fees and disbursements of counsel chosen by the Holders, such Holder or any underwriter (except to the extent otherwise expressly provided in Section 5(c) hereof)), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any court or governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) of this Section 5(a); provided that this indemnity shall not apply to any loss, liability, claim, damage or expense to the extent arising out of an untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by the Initial Purchasers, such Holder or any underwriter in writing expressly for use in the Shelf Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto). Any amounts advanced by the Company to an indemnified party pursuant to this Section 5 as a result of such losses shall be returned to the Company if it shall be finally determined by such a court in a judgment not subject to appeal or final review that such indemnified party was not entitled to indemnification by the Company. (b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, the Initial Purchasers, each underwriter who participates in an offering of Registrable Securities and the other selling Holders and each of their respective directors, officers including each officer of the Company who signed the Shelf Registration Statement), employees, trustees and agents and each Person, if any, who controls the Company, the Initial Purchasers, any underwriter or any other selling Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all loss, liability, claim, damage and expense whatsoever described in the indemnity contained in Section 5(a)(i) and (ii) hereof, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Shelf Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such selling Holder expressly for use in the Shelf Registration Statement (for any -10- 11 amendment thereto) or any Prospectus (or any amendment or supplement thereto); provided, however, that, no such Holder shall be liable for any claims hereunder in excess of the amount of proceeds received by such Holder from the sale of Registrable Securities pursuant to the Shelf Registration Statement. (c) Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against the indemnified party in respect of which indemnity may be sought hereunder, enclosing a copy of all papers served on such indemnified party, but failure to so notify an indemnifying party shall not relieve it of any liability which it may have to the indemnified party under such subsection if such failure does not materially prejudice the indemnifying party in the defense of any such action, and shall not relieve such indemnifying party from any liability which it may have other than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of any such action. If an indemnifying party so elects within a reasonable time after receipt of such notice, such indemnifying party, separately or jointly with any other indemnifying party, may assume the defense of such action with counsel chosen by it and approved by the indemnified party or parties defendant in such action, provided that if any such indemnified party reasonably determines that there may be legal defenses available to such indemnified party which are different from or in addition to those available to such indemnifying party or that representation of such indemnifying party and any indemnified party by the same counsel would present a conflict of interest, then such indemnifying party or parties shall not be entitled to assume such defense. If an indemnifying party is not entitled to assume the defense of such action as a result of the proviso to the preceding sentence, counsel for such indemnifying party shall be entitled to conduct the defense of such indemnifying party and counsel for such indemnified party or parties shall be entitled to conduct the defense of such indemnified party or parties. If an indemnifying party assumes the defense of an action in accordance with and as permitted by the provisions of this paragraph, such indemnifying party shall not be liable for any fees and expenses of counsel for the indemnified parties incurred thereafter in connection with such action. In no event shall the indemnifying party or parties be liable for the fees and expenses of more than one counsel (in addition to any one local counsel) separate from the indemnifying parties' own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. (d) In order to provide for just and equitable contribution in circumstances in which the indemnity provision agreement provided for in this Section 5 is for any reason held to be unavailable to the indemnified parties although applicable in accordance with its terms, the Company, the Initial Purchasers and the Holders shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Company, the Initial Purchasers and the Holders, as incurred; provided that no Person guilty of fraudulent -11- 12 misrepresentation (within the meaning of Section 11 (f) of the Securities Act) shall be entitled to contribution from any Person that was not guilty of such fraudulent misrepresentation. As between the Company, the Initial Purchasers and the Holders, such parties shall contribute to such aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity agreement in such proportion as shall be appropriate to reflect the relative fault of the Company, on the one hand, and the Initial Purchasers and the Holders, on the other hand, with respect to the statements or omissions which resulted in such loss, liability, claim, damage or expense, or action in respect thereof, as well as any other relevant equitable considerations. The relative fault of the Company, on the one hand, and of the Initial Purchasers and the Holders, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or by or on behalf of the Initial Purchasers or the Holders, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Initial Purchasers and the Holders of the Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 5 were to be determined by pro rata allocation or by any other method of allocation that does not take into account the relevant equitable considerations. For purposes of this Section 5(d), each director, officer, employee, trustee, agent and Person, if any, who controls the Initial Purchasers or a Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Initial Purchasers or such Holder, and each director, officer, employee, trustee and agent of the Company, and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company. No party shall be liable for contribution with respect to any action, suit, proceeding or claim settled without its written consent. 6. UNDERWRITTEN OFFERING. The Holders of Registrable Securities covered by the Shelf Registration Statement who desire to do so may sell such Registrable Securities in an underwritten offering. In any such underwritten offering, the investment banker or bankers and manager or managers that will administer the offering will be selected by, and the underwriting arrangements with respect thereto will be approved by the Holders of a majority of the Registrable Securities to be included in such offering; provided, however, that (i) such investment bankers and managers and their counsel and underwriting arrangements must be reasonably satisfactory to the Company and (ii) the Company shall not be obligated to arrange for more than one underwritten offering during the Effectiveness Period. No Holder may participate in any underwritten offering contemplated hereby unless such Holder (a) agrees to sell such Holder's Registrable Securities in accordance with any approved underwriting arrangements, (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other -12- 13 documents required under the terms of such approved underwriting arrangements and (c) at least 40% of the outstanding Registrable Securities are included in such underwritten offering. The Holders participating in any underwritten offering shall be responsible for any expenses customarily borne by selling securityholders, including underwriting discounts and commissions and fees and expenses of counsel to the selling securityholders and shall reimburse the Company for the fees and disbursements of its counsel, its independent public accountants and any printing expenses incurred in connection with such underwritten offerings. Notwithstanding the foregoing or the provisions of Section 3(n) hereof, upon receipt of a request from the Managing Underwriter to prepare and file an amendment or supplement to the Shelf Registration Statement and Prospectus in connection with an underwritten offering, the Company may delay the filing of any such amendment or supplement for up to 90 days if the Company in good faith has a valid business reason for such delay. 7. MISCELLANEOUS. (a) OTHER REGISTRATION RIGHTS. The Company may grant registration rights that would permit any Person that is a third party the right to piggy-back on any Shelf Registration Statement, provided that if the Managing Underwriter, if any, of such offering delivers an opinion to the selling Holders that the total amount of securities which they and the holders of such piggyback rights intend to include in any Shelf Registration Statement is so large as to materially adversely affect the success of such offering (including the price at which such securities can be sold), then only the amount, the number or kind of securities to be offered for the account of holders of such piggy-back rights will be reduced to the extent necessary to reduce the total amount of securities to be included in such offering to the amount, number or kind recommended by the Managing Underwriter prior to any reduction in the amount of Registrable Securities to be included. (b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the provisions of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the written consent of the Company and the Initial Purchasers is obtained. (c) NOTICES. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier, or air courier guaranteeing overnight delivery: (1) if to a Holder, at the most current address given by such Holder to the Company in accordance with the provisions of this Section 7(c); (2) if to the Initial Purchasers, initially at the address set forth in the Purchase Agreement; and -13- 14 (3) if to the Company, initially at its address set forth in the Purchase Agreement. All such notices and communications shall be deemed to have been duly given when received. The Initial Purchasers or the Company by notice to the other may designate additional or different addresses for subsequent notices or communications. (d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties and the Holders, including, without the need for an express assignment or any consent by the Company thereto, subsequent Holders of Registrable Securities. The Company hereby agrees to extend the benefits of this Agreement to any Holder of Registrable Securities and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto. (e) COUNTERPARTS. This agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement . (f) HEADINGS. The headings in this agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) GOVERNING LAW. This agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any provisions relating to conflicts of laws. (h) SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. Please confirm that the foregoing correctly sets forth the agreement between the Company and you. Very truly yours, NORTH AMERICAN VACCINE, INC. -14- 15 By: /s/ Sharon Mates ------------------------------- Name: Sharon Mates, Ph.D. Title: President The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written. Goldman, Sachs & Co. UBS Securities LLC By /s/ Goldman, Sachs & Co. --------------------------- (Goldman, Sachs & Co.) Name: Marcus Colwell Title: Vice President -15- EX-12 4 COMPUTATION OF RATIO. 1 EXHIBIT 12 North American Vaccine, Inc. Computation of Ratio of Earnings to Fixed Charges
1991 1992 1993 1994 1995 3/31/96 --------------------------------------------------------------------------------------- FIXED CHARGES: Interest and debt expense $ 304,400 $ 5,000 $ - $ - $ 1,380 $ 1,422 Interest factor of rental expense 112,667 127,333 137,667 247,333 270,667 68,333 Preferred stock dividend of majority owned subsidiary - - - - - - --------------------------------------------------------------------------------------- Total fixed charges for ratio $ 416,667 $ 132,333 $ 137,667 $ 247,333 $ 272,047 $ 69,755 EARNINGS: Net Loss (5,759,000) (10,724,000) (12,128,000) (3,927,000) (4,986,000) (2,515,000) Total fixed charges for ratio 416,667 132,333 137,667 247,333 272,047 69,755 --------------------------------------------------------------------------------------- Total earnings before fixed charges $ (5,342,333) $(10,591,667) $(11,900,333) $(3,679,667) $(4,713,953) $(2,445,245) RATIO OF EARNINGS TO FIXED CHARGES Deficiency Deficiency Deficiency Deficiency Deficiency Deficiency Deficiency of earnings to $ (5,759,000) $(10,724,000) $(12,128,000) $(3,927,000) $(4,986,000) $(2,515,000) fixed charges
Note disclosure: In computing the deficiency of available earnings to fixed charges, earnings consist of income before income taxes and fixed charges. Fixed charges include interest and related amortization of discount and premium on long-term borrowings, interest on short-term borrowings and the implicit interest component of the rental cost of the Company's various office facilities. For all periods presented, earnings were insufficient to cover fixed charges. EX-23.1 5 CONSENT OF ACCOUNTANTS. 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our report dated February 9, 1996 included in North American Vaccine, Inc.'s Form 10-K for the year ended December 31, 1995 and to all references to our Firm included in or made a part of this registration statement filed on Form S-3. /s/ ARTHUR ANDERSEN LLP ----------------------- ARTHUR ANDERSEN LLP Washington, D.C., July 24, 1996 EX-25.1 6 MARINE MIDLAND BANK FORM T-1. 1 EXHIBIT 25.1 CONFORMED COPY SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ----------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ----------- MARINE MIDLAND BANK (Exact name of trustee as specified in its charter) New York 16-1057879 (Jurisdiction of incorporation (I.R.S. Employer or organization if not a U.S. Identification No.) national bank) 140 Broadway, New York, N.Y. 10005-1180 (212) 658-1000 (Zip Code) (Address of principal executive offices) Eric Parets Senior Vice President Marine Midland Bank 140 Broadway New York, New York 10005-1180 Tel: (212) 658-6560 (Name, address and telephone number of agent for service) NORTH AMERICAN VACCINE, INC. (Exact name of obligor as specified in its charter) Canada None (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 12103 Indian Creek Court Beltsville, Maryland 20705 (301) 470-6100 (Zip Code) (Address of principal executive offices) 6.50% CONVERTIBLE SUBORDINATED NOTES (Title of Indenture Securities) 2 General Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervisory authority to which it is subject. State of New York Banking Department. Federal Deposit Insurance Corporation, Washington, D.C. Board of Governors of the Federal Reserve System, Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None 3 Item 16. List of Exhibits.
Exhibit - ------- T1A(i) * - Copy of the Organization Certificate of Marine Midland Bank. T1A(ii) * - Certificate of the State of New York Banking Department dated December 31, 1993 as to the authority of Marine Midland Bank to commence business. T1A(iii) - Not applicable. T1A(iv) * - Copy of the existing By-Laws of Marine Midland Bank as adopted on January 20, 1994. T1A(v) - Not applicable. T1A(vi) * - Consent of Marine Midland Bank required by Section 321(b) of the Trust Indenture Act of 1939. T1A(vii) - Copy of the latest report of condition of the trustee (March 31, 1996), published pursuant to law or the requirement of its supervisory or examining authority. T1A(viii) - Not applicable. T1A(ix) - Not applicable.
* Exhibits previously filed with the Securities and Exchange Commission with Registration No. 33-53693 and incorporated herein by reference thereto. 4 SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, Marine Midland Bank, a banking corporation and trust company organized under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York on the 22nd day of July 1996. MARINE MIDLAND BANK By: /s/ Frank J. Godino ------------------------------------ Frank J. Godino Corporate Trust Officer 5 EXHIBIT T1A (vii) Board of Governors of the Federal Reserve System OMB Number: 7100-0036 Federal Deposit Insurance Corporation OMB Number: 3064-0052 Office of the Comptroller of the Currency OMB Number: 1557-0081 FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires March 31, 1999 - ----------------------------------------------------------------------------------------------------------------------------------- / 1 / This financial information has not been reviewed, or confirmed for accuracy or relevance, by the Federal Reserve System. Please refer to page i, Table of Contents, for the required disclosure of estimated burden. - -----------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031 REPORT AT THE CLOSE OF BUSINESS MARCH 31, 1996 (950630) ------------ (RCRI 9999) This report is required by law; 12 U.S.C. Section 324 (State This report form is to be filed by banks with branches and member banks); 12 U.S.C. Section 1817 (State nonmember consolidated subsidiaries in U.S. territories and possessions, banks); and 12 U.S.C. Section 161 (National banks). Edge or Agreement subsidiaries, foreign branches, consoli-dated foreign subsidiaries, or International Banking Facilities. - ----------------------------------------------------------------------------------------------------------------------------------- NOTE: The Reports of Condition and Income must be signed by The Reports of Condition and Income are to be prepared in an authorized officer and the Report of Condition must be accordance with Federal regulatory authority instructions. attested to by not less than two directors (trustees) for NOTE: These instructions may in some cases differ from State nonmember banks and three directors for State member generally accepted accounting principles. and National Banks. I, Gerald A. Ronning, Executive VP & Controller We, the undersigned directors (trustees), attest to the -------------------------------------------- correctness of this Report of Condition (including the Name and Title of Officer Authorized to Sign Report supporting schedules) and declare that it has been examined by us and to the best of our knowledge and belief has been of the named bank do hereby declare that these Reports of prepared in conformance with the instructions issued by the Condition and Income (including the supporting schedules) appropriate Federal regulatory authority and is true and have been prepared in conformance with the instructions correct. issued by the appropriate Federal regulatory authority and are true to the best of my knowledge and believe. /s/ Henry J. Nowak ------------------------------------- Director (Trustee) /s/ Bernard J. Kennedy ------------------------------------- Director (Trustee) /s/ Gerald A. Ronning /s/ James H. Cleave ---------------------------------- ------------------------------------- Signature of Officer Authorized to Sign Report Director (Trustee) - ----------------------------------------------------------------------------------------------------------------------------------- 4/25/96 ---------------------------- Date of Signature FOR BANKS SUBMITTING HARD COPY REPORT FORMS: STATE MEMBER BANK: Return the original and one copy to the NATIONAL BANKS: Return the original only in the special return appropriate Federal Reserve District Bank. address envelope provided. If express mail is used in lieu of the special return address envelope, return the original only STATE NONMEMBER BANKS: Return the original only in the to the FDIC, c/o Quality Data Systems, 2127 Espey Court, Suite special return address envelope provided. If express mail is 204, Crofton, MD 21114. - ----------------------------------------------------------------------------------------------------------------------------------- used in lieu of the special return address envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127 Espey Court, Suite 204, Crofton, MD 21114. FDIC Certificate Number / 0 / 0 / 5 / 8 / 9 / -------------------- (RCRI 9030)
6 NOTICE This form is intended to assist institutions with state publication requirements. It has not been approved by any state banking authorities. Refer to your appropriate state banking authorities for your state publication requirements. REPORT OF CONDITION Consolidating domestic and foreign subsidiaries of the Marine Midland Bank of Buffalo Name of Bank City in the state of New York, at the close of business March 31, 1996
ASSETS Thousands of dollars Cash and balances due from depository institutions: Noninterest-bearing balances currency and coin.................................... $1,344,915 Interest-bearing balances ........................... 1,536,664 Held-to-maturity securities.......................... 0 Available-for-sale securities........................ 3,338,156 Federal Funds sold and securities purchased under agreements to resell in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: Federal funds sold................................... 439,200 Securities purchased under agreements to resell................................. 323,578 Loans and lease financing receivables: Loans and leases net of unearned income............................... 13,404,283 LESS: Allowance for loan and lease losses............................... 470,421 LESS: Allocated transfer risk reserve 0 Loans and lease, net of unearned income, allowance, and reserve....................... 12,933,862 Trading assets....................................... 818,882 Premises and fixed assets (including capitalized leases).................................. 177,937 Other real estate owned................................. 4,004 Investments in unconsolidated subsidiaries and associated companies................... 0 Customers' liability to this bank on acceptances outstanding................................. 24,688 Intangible assets....................................... 60,829 Other assets............................................ 436,079 Total assets............................................ 21,438,794
7 LIABILITIES Deposits: In domestic offices.................................. 13,972,231 Noninterest-bearing.................. 3,227,485 Interest-bearing..................... 10,744,746 In foreign offices, Edge, and Agreement subsidiaries, and IBFs.................................. 2,915,229 Noninterest-bearing.................. 0 Interest-bearing..................... 2,915,229 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and its Edge and Agreement subsidiaries, and in IBFs: Federal funds purchased.............................. 759,940 Securities sold under agreements to repurchase........................................... 809,703 Demand notes issued to the U.S. Treasury 111,294 Trading Liabilities...................................... 323,875 Other borrowed money: With original maturity of one year or less.............................................. 83,438 With original maturity of more than one year............................................. 0 Mortgage indebtedness and obligations under capitalized leases................................ 34,696 Bank's liability on acceptances executed and outstanding................................ 24,688 Subordinated notes and debentures....................... 225,000 Other liabilities....................................... 467,094 Total liabilities....................................... 19,727,188 Limited-life preferred stock and related surplus......................................... 0 EQUITY CAPITAL Perpetual preferred stock and related surplus................................................. 0 Common Stock............................................ 185,000 Surplus................................................. 1,633,098 Undivided profits and capital reserves.................. (115,039) Net unrealized holding gains (losses) on available-for-sale securities........................ 8,547 Cumulative foreign currency translation adjustments............................................. 0 Total equity capital.................................... 1,711,606 Total liabilities, limited-life preferred stock, and equity capital..................... 21,438,794
EX-99.3 7 LIST OF PERSONS. 1 EXHIBIT 99.3 Exhibit 99.3 -- List of Persons Who Have Executed Indemnity Agreements with the Company The Company and certain directors and officers of the Company listed below (each an "Indemnitee") have executed Indemnity Agreements in the form set forth in Exhibit 99.2. These agreements are substantially identical, and have been executed by the following individuals:
1/ Indemnitee Date of Execution - ---------- ----------------- Sharon Mates, Ph.D. Arthur Y. Elliott, Ph.D. . . . . . . . . . . . . . . . . . . . . . . . March 7, 1994 Daniel J. Abdun-Nabi Edward Arcuri, Ph.D. . . . . . . . . . . . . . . . . . . . . . . . . . January 3, 1995 Wayne Morges, Ph.D. . . . . . . . . . . . . . . . . . . . . . . . . . June 8, 1994 Joseph Y. Tai, Ph.D. Stephen N. Keith, M.S., M.S.P.H. . . . . . . . . . . . . . . . . . . . August 21, 1995 Lawrence J. Hineline Neil W. Flanzraich Francesco Bellini, Ph.D. Phillip Frost, M.D. Alain Cousineau Jonathan Deitcher Denis Dionne Rondi R. Grey. . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 21, 1995 Lyle Kasprick Richard C. Pfenniger, Jr. Lawrence Wilson
- ---------------------- 1/ Unless indicated otherwise, all Indemnity Agreements were executed on April 16, 1993. -----END PRIVACY-ENHANCED MESSAGE-----