Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Proposed issue of DPS. The issue of establishing financial difficulty was dealt with in 964033 which expired XXXXXXXXXX. There have been no significant changes in this regard. While the taxpayer has a very complex financial structure and the wording of the various agreements is more complicated than appears necessary the main new issue was whether a small portion of a dividend could be waived by a Schedule I Bank owning such DPS and not cause us to conclude that subsection 56(2) would apply to the holders of the DPS. The reason for the waiver for a portion of the dividend (included in the dividend formula) is that we have been advised that non-Schedule I Banks owning such shares have a higher cost of capital than a Schedule I Bank and would otherwise require a slightly higher rate of return. This may have been accomplished by issuing different classes of DPS shares (with different rates) but since at the time the identity (or quantity of DPS to be held) of all non-Schedule I Bank third party DPS purchasers was not known it was more expedient to do it this fashion.
Position:
DPS ruling provided - subsection 56(2) will not be applied.
Reasons:
While there are arguments in favor of subsection 56(2) being applicable the amount of the benefit that would be conferred on the holders of the DPS that are Schedule I Banks would appear, if any, to be negligible. Accordingly, the arguments in favour of subsection 56(2) not applying represent the better view in this case.
XXXXXXXXXX 972932
XXXXXXXXXX
Attention: XXXXXXXXXX
XXXXXXXXXX, 1997
Dear Sirs:
Re: XXXXXXXXXX
This is in reply to your letter dated XXXXXXXXXX, and your subsequent correspondence requesting an advance income tax ruling on behalf of the above noted taxpayers. You have advised that to the best of your knowledge, and that of all the taxpayers involved, none of the issues raised in this letter are being considered by any Tax Service Office ("TSO") and/or Taxation Centre in connection with any tax return already filed by the taxpayers, nor are any of these issues under objection or appeal.
Unless otherwise indicated, all statutory references herein are to provisions of the Income Tax Act (Canada), R.S.C. 1985 (5th Suppl.) c.1, as amended from time to time and consolidated to the date of this letter (herein referred to as the "Act") and unless otherwise expressly stated:
(a)"taxable Canadian corporation" has the meaning assigned by subsection 89(1);
(b)"public corporation" has the meaning assigned by subsection 89(1);
(c)"Canadian-controlled private corporation" has the meaning assigned by subsection 125(7);
(d)"specified financial institution" has the meaning assigned by subsection 248(1);
(e)"arm's length" has the meaning assigned by section 251;
(f)"non-resident" has the meaning assigned by subsection 248(1); and
(g)"distress preferred shares" are shares which are described in paragraph (e) of the definition of "term preferred share" in subsection 248(1);
(h)any reference to an amount of money is expressed in Canadian dollars.
Our understanding of the facts, proposed transactions and purpose of the proposed transactions is set out as follows:
FACTS
1. (a) XXXXXXXXXX. It is a taxable Canadian corporation and a specified financial institution. XXXXXXXXXX Revenue Canada account number is XXXXXXXXXX and it deals with the XXXXXXXXXX TSO.
(b) XXXXXXXXXX. It is a taxable Canadian corporation and a specified financial institution. XXXXXXXXXX Revenue Canada account number is XXXXXXXXXX and it deals with the XXXXXXXXXX TSO.
(c) XXXXXXXXXX. It is a taxable Canadian corporation and a specified financial institution. XXXXXXXXXX Revenue Canada account number is XXXXXXXXXX and it deals with the XXXXXXXXXX TSO.
(d) XXXXXXXXXX. It is a taxable Canadian corporation and a specified financial institution. XXXXXXXXXX Revenue Canada account number is XXXXXXXXXX and it deals with the XXXXXXXXXX TSO.
(e) XXXXXXXXXX. It is a taxable Canadian corporation and a specified financial institution. XXXXXXXXXX Revenue Canada account number is XXXXXXXXXX and it deals with the XXXXXXXXXX TSO.
(f) XXXXXXXXXX. It is a taxable Canadian corporation and a specified financial institution. XXXXXXXXXX Revenue Canada account number is XXXXXXXXXX and it deals with the XXXXXXXXXX TSO.
(g) XXXXXXXXXX. It is a taxable Canadian corporation and a specified financial institution. XXXXXXXXXX Revenue Canada account number is XXXXXXXXXX and it deals with the XXXXXXXXXX TSO.
2. XXXXXXXXXX was incorporated on XXXXXXXXXX under the laws of the Province of XXXXXXXXXX and was inactive until XXXXXXXXXX. XXXXXXXXXX principal business activity is XXXXXXXXXX. XXXXXXXXXX authorized share capital consists of an unlimited number of common shares and XXXXXXXXXX non-voting Class XXXXXXXXXX Special Shares of which only XXXXXXXXXX common shares are issued and outstanding. XXXXXXXXXX is a taxable Canadian corporation and a Canadian controlled-private corporation.
3. XXXXXXXXXX owns all the issued and outstanding common shares of XXXXXXXXXX.
XXXXXXXXXX
XXXXXXXXXX authorized and issued share capital consists of the following:
Authorized:
- XXXXXXXXXX class XXXXXXXXXX preferred shares;
- an unlimited number of preferred shares;
-an unlimited number of class XXXXXXXXXX common shares, XXXXXXXXXX;
- XXXXXXXXXX class XXXXXXXXXX common shares, XXXXXXXXXX;
- XXXXXXXXXX class XXXXXXXXXX common shares;
- XXXXXXXXXX class XXXXXXXXXX common shares; and
- XXXXXXXXXX class XXXXXXXXXX special shares.
Issued:
- XXXXXXXXXX preferred shares;
-XXXXXXXXXX class XXXXXXXXXX common shares, XXXXXXXXXX; and
- XXXXXXXXXX class XXXXXXXXXX common shares.
XXXXXXXXXX
4. As discussed in more detail below, XXXXXXXXXX sole purpose is to act as the general partner of XXXXXXXXXX.
XXXXXXXXXX
5. XXXXXXXXXX is indirectly controlled by XXXXXXXXXX, an individual resident in Canada, through a series of corporations owned directly or indirectly by XXXXXXXXXX described as follows:
XXXXXXXXXX
6. XXXXXXXXXX
are taxable Canadian corporations and Canadian controlled-private corporations.
7. XXXXXXXXXX was formed on XXXXXXXXXX and registered under XXXXXXXXXX to carry on the business of operating XXXXXXXXXX. Other than XXXXXXXXXX interest in XXXXXXXXXX, as required by law, it has no other assets or liabilities, and carries on no other business other than the management of XXXXXXXXXX. The other units of XXXXXXXXXX were divided into XXXXXXXXXX limited partnership units and were marketed to members of the general public. As noted above,
XXXXXXXXXX
8. XXXXXXXXXX, under the Act such entities are considered to be related, and consequently, they are deemed not to deal with each other at arm's length.
XXXXXXXXXX
9. The XXXXXXXXXX units of XXXXXXXXXX are owned by over XXXXXXXXXX individuals and corporations that deal at arm's length with XXXXXXXXXX.
10. The TSO, taxation centre ("TC"), and the Revenue Canada account number ("RCT #") of the various members of XXXXXXXXXX are as follows:
Corporation TSO\TC RCT #
XXXXXXXXXX
11. XXXXXXXXXX is a taxable Canadian corporation and a public corporation whose shares are listed for trading on the XXXXXXXXXX. A total number of XXXXXXXXXX shares are issued and outstanding. The sole business of
XXXXXXXXXX
12. XXXXXXXXXX is a U.S. resident corporation with its corporate head office based in XXXXXXXXXX. XXXXXXXXXX shares are listed for trading on the XXXXXXXXXX. XXXXXXXXXX business includes
XXXXXXXXXX
XXXXXXXXXX
13. XXXXXXXXXX is a taxable Canadian corporation all the issued and outstanding shares of which are owned by XXXXXXXXXX, itself being a taxable Canadian corporation, which is XXXXXXXXXX% owned by XXXXXXXXXX. XXXXXXXXXX business operations is to provide XXXXXXXXXX, as discussed in more detail below. Its Revenue Canada account number is XXXXXXXXXX and it deals with the XXXXXXXXXX TSO.
14. Each of the corporations listed in 1 above deals at arm's length with XXXXXXXXXX.
15. XXXXXXXXXX deal at arm's length with XXXXXXXXXX.
Financial Difficulty
16. XXXXXXXXXX
XXXXXXXXXX
17. Under the terms of the XXXXXXXXXX agrees:
XXXXXXXXXX
18. In addition to the above requirements, under the terms of the XXXXXXXXXX,
XXXXXXXXXX
19. XXXXXXXXXX main assets (hereinafter collectively referred to as the "Assets") consist of:
(a) XXXXXXXXXX;
(b) real and immovable property, XXXXXXXXXX;
(c) equipment, machinery, goods, chattels and other tangible property;
(d) rights and benefits under various agreements and contracts, XXXXXXXXXX;
(e) intangibles, such as goodwill, patents, trademarks, tradenames, copyrights or other intellectual property or rights; and
(f) amounts owing to XXXXXXXXXX, including accounts receivable.
20. The main liabilities of XXXXXXXXXX are estimated to be:
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
21. XXXXXXXXXX
22. XXXXXXXXXX
XXXXXXXXXX
23. XXXXXXXXXX
24. XXXXXXXXXX
XXXXXXXXXX
25. XXXXXXXXXX
26. XXXXXXXXXX
XXXXXXXXXX
27. XXXXXXXXXX
28. XXXXXXXXXX
29. XXXXXXXXXX
XXXXXXXXXX
30. XXXXXXXXXX
31. XXXXXXXXXX
32. XXXXXXXXXX
33. XXXXXXXXXX
XXXXXXXXXX
34. XXXXXXXXXX
35. XXXXXXXXXX
36. XXXXXXXXXX
37. XXXXXXXXXX
XXXXXXXXXX
38. XXXXXXXXXX
39. The failure by XXXXXXXXXX to make any regular payment under any loan, including the XXXXXXXXXX and XXXXXXXXXX, constitutes an "Event of Default" under the terms of the XXXXXXXXXX. Where an Event of Default occurs the entire amount of principal and interest owing under the XXXXXXXXXX becomes due and payable.
XXXXXXXXXX
40. As a result of the defaults under the XXXXXXXXXX, the XXXXXXXXXX, and the XXXXXXXXXX, you advise that under the terms of the various agreements the full amounts of the following debts owing to XXXXXXXXXX automatically became due and payable on demand at the expiration of the grace period on XXXXXXXXXX, and subject to the XXXXXXXXXX:
XXXXXXXXXX
You also advise that it is the intention of XXXXXXXXXX that demand for repayment of the above loans will be made should the distress preferred share refinancing, which is the subject of this ruling letter, not proceed. Should such a demand occur XXXXXXXXXX does not otherwise have the ability to cure any such defaults.
41. As a result of the expected defaults under the XXXXXXXXXX, and the existing defaults under the XXXXXXXXXX, and the XXXXXXXXXX, the $XXXXXXXXXX owed by XXXXXXXXXX automatically became due and payable, again subject to the XXXXXXXXXX. You advise that in the event that the other lenders demand repayment of their debts, it is management's view that XXXXXXXXXX would also make such demand, and should that occur it is reasonable to expect that XXXXXXXXXX will default on the repayment of the XXXXXXXXXX at that time (see 44 below).
42. XXXXXXXXXX, is not personally in a position to advance additional funds to XXXXXXXXXX. For example,
XXXXXXXXXX
XXXXXXXXXX
As a result, and except as discussed below, XXXXXXXXXX is unable to sell these shares of XXXXXXXXXX before XXXXXXXXXX, nor can XXXXXXXXXX use these shares as collateral to secure any loan prior to XXXXXXXXXX.
XXXXXXXXXX
43. XXXXXXXXXX has been issued an advance income tax ruling that would allow it to issued distress preferred shares of approximately $XXXXXXXXXX, however, such shares have not yet been issued. XXXXXXXXXX is currently also in default under the terms of several of its other debt obligations and is attempting to restructure these remaining debts. Accordingly, XXXXXXXXXX does not generate any excess cash flow which can be used by XXXXXXXXXX.
In addition, for many of the same reasons as XXXXXXXXXX, as described in 22 to 26 above, XXXXXXXXXX has not been able to meet its operating financial targets. For XXXXXXXXXX fiscal year ended XXXXXXXXXX, an operating loss (before interest) of approximately $XXXXXXXXXX and a cash loss after interest charges of approximately $XXXXXXXXXX was incurred. As a consequence of this shortfall, and as described in 42 above, XXXXXXXXXX did not generate enough cash flow from operations to meet its payroll on XXXXXXXXXX. Without the XXXXXXXXXX line of credit secured from XXXXXXXXXX, as described above, and additional direct financial support from XXXXXXXXXX, XXXXXXXXXX would have defaulted on its payroll obligations several times.
On XXXXXXXXXX, agreement was reached between XXXXXXXXXX to provide additional funds to XXXXXXXXXX to allow it to fund operations for the current year XXXXXXXXXX. It is anticipated by XXXXXXXXXX that these additional funds, together with repayment of certain amounts due to XXXXXXXXXX from related parties, as described in 42 above and its own resources, will fund XXXXXXXXXX. As part of this transaction, the XXXXXXXXXX credit facilities were extended to XXXXXXXXXX and, conditional on there being no default or event of default at that time and payment of an extension fee, further extended to XXXXXXXXXX.
XXXXXXXXXX have relied and continue to rely heavily on XXXXXXXXXX for ongoing financial assistance and XXXXXXXXXX have any unencumbered assets or unused lines of credit which could be used to support XXXXXXXXXX. The other members of XXXXXXXXXX are also not in any position to advance funds to XXXXXXXXXX and have no unencumbered assets or unused lines of credit which could be used to support XXXXXXXXXX.
44. XXXXXXXXXX
As reflected above, without the issue of distress preferred shares by XXXXXXXXXX, XXXXXXXXXX would continue to generate negative cash flows each year and XXXXXXXXXX are prepared to provide any additional financing to XXXXXXXXXX under the existing circumstances. XXXXXXXXXX, initially as guarantor of the XXXXXXXXXX, and currently as XXXXXXXXXX is not prepared to continue to fund the annual payments to itself under the XXXXXXXXXX. As XXXXXXXXXX principal debt holder XXXXXXXXXX will definitely take whatever actions are available to it, as may be required, to prevent the ongoing cash drain on its business operations and to reduce its overall exposure in XXXXXXXXXX. Should the issue of the distress preferred shares, as described below, not proceed such action will include XXXXXXXXXX demanding repayment of the principal amount of the various debts owing to it by XXXXXXXXXX.
45. In the opinion of the management of XXXXXXXXXX and the management of XXXXXXXXXX, there is also no realistic prospect for XXXXXXXXXX to raise new equity at this time.
PROPOSED TRANSACTIONS
46. XXXXXXXXXX will incorporate, under the laws of XXXXXXXXXX subsidiary corporations, XXXXXXXXXX. Collectively, the XXXXXXXXXX subsidiary corporations will be referred to as XXXXXXXXXX.
47. The authorized share capital of XXXXXXXXXX will be XXXXXXXXXX common shares and XXXXXXXXXX Class XXXXXXXXXX Special Shares. On incorporation XXXXXXXXXX will issue XXXXXXXXXX common shares to XXXXXXXXXX for $XXXXXXXXXX and such amount will be added to the stated capital of the common shares. The principal attributes of the common shares of XXXXXXXXXX are as follows:
(a) The holders of the common shares shall be entitled, subject to the rights, privileges, restrictions and conditions attaching to the Class XXXXXXXXXX Special Shares, as described in 51 below, to receive any dividend declared by the directors on the common shares;
(b) In the event of a distribution of the property and assets of XXXXXXXXXX among its shareholders in connection with the liquidation, dissolution or winding-up of XXXXXXXXXX, whether voluntary or involuntary, or any other distribution of the property and assets of XXXXXXXXXX among its shareholders for the purpose of winding up its affairs, the holders of the common shares shall be entitled, subject to the rights, privileges, restrictions and conditions attaching to the Class XXXXXXXXXX Special Shares, to receive the Remaining Property (as defined in 55(i) below); and
(c) Each holder of common shares shall be entitled to receive notice of, and to attend, all meetings of shareholders of XXXXXXXXXX and to vote at such meetings, except meetings at which only holders of a specified class of shares (other than common shares) are entitled to vote. At all meetings at which the holders of common shares are entitled to vote, each holder of common shares shall be entitled to one vote in respect of each common share held by such holder;
However, as long as any of the Class XXXXXXXXXX Special Shares, as defined in 51 below, of XXXXXXXXXX remain outstanding, XXXXXXXXXX shall not make any capital distribution in respect of; repurchase or otherwise acquire; or pay or set aside for payment any dividends on any XXXXXXXXXX common shares.
48. The authorized share capital of XXXXXXXXXX will be XXXXXXXXXX common shares and XXXXXXXXXX Class XXXXXXXXXX Special Shares. On incorporation XXXXXXXXXX will issue XXXXXXXXXX common shares to XXXXXXXXXX for $XXXXXXXXXX and such amount will be added to the stated capital of the common shares. The principal attributes of the common shares of XXXXXXXXXX are as follows:
(a) The holders of the common shares shall be entitled, subject to the rights, privileges, restrictions and conditions attaching to the Class XXXXXXXXXX Special Shares, as described in 52 below, to receive any dividend declared by the directors on the common shares;
(b) In the event of a distribution of the property and assets of XXXXXXXXXX among its shareholders in connection with the liquidation, dissolution or winding-up of XXXXXXXXXX, whether voluntary or involuntary, or any other distribution of the property and assets of XXXXXXXXXX among its shareholders for the purpose of winding up its affairs, the holders of the common shares shall be entitled, subject to the rights, privileges, restrictions and conditions attaching to the Class XXXXXXXXXX Special Shares, to receive the Remaining Property; and
(c) Each holder of common shares shall be entitled to receive notice of, and to attend, all meetings of shareholders of XXXXXXXXXX and to vote at such meetings, except meetings at which only holders of a specified class of shares (other than common shares) are entitled to vote. At all meetings at which the holders of common shares are entitled to vote, each holder of common shares shall be entitled to one vote in respect of each common share held by such holder;
However, as long as any of the Class XXXXXXXXXX Special Shares, as defined in 52 below, of XXXXXXXXXX remain outstanding, XXXXXXXXXX shall not make any capital distribution in respect of; repurchase or otherwise acquire; or pay or set aside for payment any dividends on any XXXXXXXXXX common shares.
49. The authorized share capital of XXXXXXXXXX will be XXXXXXXXXX common shares and approximately XXXXXXXXXX Class XXXXXXXXXX Special Shares. On incorporation XXXXXXXXXX will issue XXXXXXXXXX common shares to XXXXXXXXXX for $XXXXXXXXXX and such amount will be added to the stated capital of the common shares. The principal attributes of the common shares of XXXXXXXXXX are as follows:
(a) The holders of the common shares shall be entitled, subject to the rights, privileges, restrictions and conditions attaching to the Class XXXXXXXXXX Special Shares, as described in 53 below, to receive any dividend declared by the directors on the common shares;
(b) In the event of a distribution of the property and assets of XXXXXXXXXX among its shareholders in connection with the liquidation, dissolution or winding-up of XXXXXXXXXX, whether voluntary or involuntary, or any other distribution of the property and assets of XXXXXXXXXX among its shareholders for the purpose of winding up its affairs, the holders of the common shares shall be entitled, subject to the rights, privileges, restrictions and conditions attaching to the Class XXXXXXXXXX Special Shares, to receive the Remaining Property; and
(c) Each holder of common shares shall be entitled to receive notice of, and to attend, all meetings of shareholders of XXXXXXXXXX and to vote at such meetings, except meetings at which only holders of a specified class of shares (other than common shares) are entitled to vote. At all meetings at which the holders of common shares are entitled to vote, each holder of common shares shall be entitled to one vote in respect of each common share held by such holder;
However, as long as any of the Class XXXXXXXXXX Special Shares, as defined in 53 below, of XXXXXXXXXX remain outstanding, XXXXXXXXXX shall not make any capital distribution in respect of; repurchase or otherwise acquire; or pay or set aside for payment any dividends on; any XXXXXXXXXX common shares.
50. XXXXXXXXXX will be related to XXXXXXXXXX and will be a single-purpose corporation used only to facilitate the refinancing of XXXXXXXXXX debts. As such, the activities of XXXXXXXXXX will be limited to acquiring, holding and realizing upon certain indebtedness, as described below, and activities ancillary thereto and issuing its special shares and activities ancillary thereto. XXXXXXXXXX will be a taxable Canadian corporation.
51. The principal attributes of the Class XXXXXXXXXX Special Shares of XXXXXXXXXX will be as follows:
(a) have an issue price of $XXXXXXXXXX per share and will rank ahead of the XXXXXXXXXX common shares with respect to dividends and distributions of the "Remaining Property" (as defined in 55(i) below);
(b) pay cumulative preferential quarterly dividends, as and when declared by the directors, in equal amounts per share determined as follows:
(i) dividends on the Class XXXXXXXXXX Special Shares shall accrue and accumulate on a day-to-day basis from and including the date of issue of the Class XXXXXXXXXX Special Shares and shall be payable in respect of each "Dividend Period" (as defined in 55(e) below), on the "Dividend Payment Date" (as defined in 55(f) below), applicable to such Dividend Period, to the Holders (as defined in 55(b)) at the close of business on the XXXXXXXXXX, preceding such Dividend Payment Date. Subject as hereinafter provided, the amount of the dividends payable on any such Dividend Payment Date on each Class XXXXXXXXXX Special Share then outstanding shall be equal to the amount calculated by multiplying the "Dividend Rate" (as defined in 55(h) below), in respect of a Class XXXXXXXXXX Special Share for the particular Dividend Period to which such Dividend Payment Date applies by the "Redemption Price" (as defined in 55(j) below); and
(ii) in the event (including for any reason under (iii) below) that any dividends accrued in respect of a Dividend Period on a Class XXXXXXXXXX Special Share (including any dividends accrued in accordance with this subparagraph) are not declared or are declared but not paid in full on the Dividend Payment Date applicable to such Dividend Period (any such dividends hereinafter referred to as an "Unpaid Amount"), then, from and including such Dividend Payment Date until declaration and payment in full of such Unpaid Amount, dividends on such Class XXXXXXXXXX Special Share shall accrue at the Dividend Rate on, and shall be calculated by reference to, such Unpaid Amount plus the Redemption Price;
(iii) subject to the provisions of XXXXXXXXXX, XXXXXXXXXX shall pay (to the extent not already paid pursuant to (d)(ii) or (e)(ii) below) on each Dividend Payment Date referred to in (b), dividends on the Class XXXXXXXXXX Special Shares outstanding on such Dividend Payment Date equal to the aggregate amount of the dividends accrued on the Class XXXXXXXXXX Special Shares in accordance with (b) during the Dividend Period to which such Dividend Payment Date applies; and
(iv) notwithstanding any other provision hereof but subject to the provisions of XXXXXXXXXX, Holders shall be entitled to receive, and XXXXXXXXXX shall pay, as and when declared by the directors, special dividends on Class XXXXXXXXXX Special Shares in such amounts as the directors may in their discretion determine are necessary upon the occurrence of an "Adverse Yield Event" (as defined in 92 below);
(c) In the event of a distribution of the property and assets of XXXXXXXXXX among its shareholders in connection with the liquidation, dissolution or winding-up of XXXXXXXXXX, whether voluntary or involuntary, or any other distribution of the property and assets of XXXXXXXXXX among its shareholders for the purpose of winding up its affairs, a Holder shall be entitled to receive out of the Remaining Property (as defined in 55(i) below), before any amount is paid or distributed to the holders of the common shares, an amount equal to the Aggregate Redemption Price (as defined in 55(j) below), of the Class XXXXXXXXXX Special Shares held by such Holder on the date of distribution. After payment to a Holder of the amounts payable to such Holder, as such, under this paragraph, such Holder shall not be entitled to share in any further distribution of Remaining Property;
(d) Subject to XXXXXXXXXX, a Holder may:
(i) require XXXXXXXXXX to redeem all of the Class XXXXXXXXXX Special Shares held by such Holder for an amount equal to the Aggregate Redemption Price of such Class XXXXXXXXXX Special Shares:
(A) upon the occurrence of an "Event of Retraction", as that term is defined in 56 below, and from time to time thereafter for so long as such Event of Retraction is continuing and whether or not such Holder has previously exercised its withdrawal rights in respect of such Event of Retraction;
(B) on, and from time to time after, the XXXXXXXXXX date of the issuance of the Class XXXXXXXXXX Special Shares; and
(C) as and when permitted in any unanimous shareholder agreement respecting XXXXXXXXXX;
(ii) notwithstanding (i), immediately prior to the redemption of any Retracted Shares pursuant to (i) XXXXXXXXXX shall pay to the Holder, all dividends (whether or not declared) that have accrued prior to the date of such redemption pursuant to (b)(i) and (ii) and all dividends that have been declared at or before such time in accordance with (b)(iv) but which dividends remain unpaid as at such time; provided, however that no failure by, or inability on the part of, XXXXXXXXXX to pay any such dividends prior to any such redemption shall preclude XXXXXXXXXX from redeeming such Retracted Shares pursuant to (i);
(e) Subject to XXXXXXXXXX may, at any time:
(i) redeem all, or from time to time any part, of the then outstanding Class XXXXXXXXXX Special Shares on payment for the Class XXXXXXXXXX Special Shares to be redeemed of the Aggregate Redemption Price of such shares, provided that XXXXXXXXXX shall redeem all of the outstanding Class XXXXXXXXXX Special Shares on the XXXXXXXXXX date of the issuance of the Class XXXXXXXXXX Special Shares; and
(ii) notwithstanding (i), immediately prior to the redemption of any Class XXXXXXXXXX Special Shares pursuant to (i), XXXXXXXXXX shall pay to the Holders all dividends (whether or not declared) that have accrued prior to the date of such redemption pursuant to (b)(i) and (ii) on the Class XXXXXXXXXX Special Shares and all dividends that have been declared at or before such time in accordance with (b)(iv) on the Class XXXXXXXXXX Special Shares but which remain unpaid as at such time; provided, however, that no failure by, or inability on the part of, XXXXXXXXXX to pay any such dividends prior to any such redemption shall prohibit XXXXXXXXXX from redeeming the Class XXXXXXXXXX Special Shares to be redeemed pursuant to (i);
(f) Except as otherwise provided in XXXXXXXXXX and (f)(ii):
(i) a Holder shall be entitled to receive notice of, and to attend, all meetings of shareholders of XXXXXXXXXX but shall not be entitled to vote at such meetings unless an Event of Retraction shall have occurred and shall be continuing, in which case, forthwith upon the occurrence of such Event of Retraction and for so long, as such Event of Retraction shall be continuing, a Holder shall:
(A) be entitled to vote at all meetings of shareholders of XXXXXXXXXX; and
(B) have one vote for each Class XXXXXXXXXX Special Share held by such Holder;
(ii) XXXXXXXXXX shall not take any of the following actions without the prior unanimous approval of the Holders:
(A) any amendment of the articles or confirmation of an amendment to the bylaws of XXXXXXXXXX;
(B) any voluntary dissolution, liquidation, bankruptcy or winding-up of XXXXXXXXXX;
(C) any amalgamation, consolidation, reorganization or merger of XXXXXXXXXX with any other corporation;
(D) any action (including without limitation, the giving of any notice required or permitted to be given under any applicable law or the commencement of, consenting to, or participation in, any proceedings) with respect to any general assignment for the benefit of XXXXXXXXXX creditors or any proceedings seeking relief on XXXXXXXXXX behalf as a debtor or to adjudicate XXXXXXXXXX a bankrupt or insolvent, or seeking liquidation, winding-up, dissolution, reorganization, arrangement, proposal, adjustment, composition or restructuring of or relating to, XXXXXXXXXX, the debts of XXXXXXXXXX or XXXXXXXXXX business or affairs under any law (federal, provincial or any other jurisdiction) relating to bankruptcy, insolvency, reorganization or relief of debtors or seeking the appointment of a receiver, manager, receiver and manager, liquidator, trustee, custodian, administrator or other similar official (with similar powers) for XXXXXXXXXX or for any part of XXXXXXXXXX property or assets;
(E) any continuance of XXXXXXXXXX under the laws of another jurisdiction; or
(F) any sale, lease or exchange of all or substantially all of the property, assets or undertaking of XXXXXXXXXX.
52. The principal attributes of the Class XXXXXXXXXX Special Shares of XXXXXXXXXX will be as follows:
(a) have an issue price of $XXXXXXXXXX per share and will rank ahead of the XXXXXXXXXX common shares with respect to distributions of the Remaining Property;
(b) pay cumulative preferential quarterly dividends, as and when declared by the directors, in equal amounts per share as determined as follows:
(i) dividends on the Class XXXXXXXXXX Special Shares shall accrue and accumulate on a day-to-day basis from and including the date of issue of the Class XXXXXXXXXX Special Shares and shall be payable in respect of each Dividend Period on the Dividend Payment Date applicable to such Dividend Period, to the Holders at the close of business on the XXXXXXXXXX preceding such Dividend Payment Date. Subject as hereinafter provided, the amount of the dividends payable on any such Dividend Payment Date on each Class XXXXXXXXXX Special Share then outstanding shall be equal to the amount calculated by multiplying the Dividend Rate in respect of the Class XXXXXXXXXX Special Shares, for the particular Dividend Period to which such Dividend Payment Date applies by $XXXXXXXXXX; and
(ii) in the event (including for any reason under (iii) below) that any dividends accrued in respect of a Dividend Period on a Class XXXXXXXXXX Special Share (including any dividends accrued in accordance with this subparagraph) are not declared or are declared but not paid in full on the Dividend Payment Date applicable to such Dividend Period (any such dividends hereinafter referred to as an "Unpaid Amount"), then, from and including such Dividend Payment Date until declaration and payment in full of such Unpaid Amount, dividends on such Class XXXXXXXXXX Special Share shall accrue at the Dividend Rate on, and shall be calculated by reference to, such Unpaid Amount plus the Redemption Price;
(iii) subject to the provisions of XXXXXXXXXX shall pay (to the extent not already paid pursuant to (d)(ii) or (e)(ii) below) on each Dividend Payment Date referred to in (b), dividends on the Class XXXXXXXXXX Special Shares outstanding on such Dividend Payment Date equal to the aggregate amount of the dividends accrued on the Class XXXXXXXXXX Special Shares in accordance with (b) during the Dividend Period to which such Dividend Payment Date applies; and
(iv) notwithstanding any other provision hereof but subject to the provisions of XXXXXXXXXX, Holders shall be entitled to receive, and XXXXXXXXXX shall pay, as and when declared by the directors, special dividends on Class XXXXXXXXXX Special Shares in such amounts as the directors may in their discretion determine are necessary upon the occurrence of an Adverse Yield Event;
(c) In the event of a distribution of the property and assets of XXXXXXXXXX among its shareholders in connection with the liquidation, dissolution or winding-up of XXXXXXXXXX, whether voluntary or involuntary, or any other distribution of the property and assets of XXXXXXXXXX among its shareholders for the purpose of winding up its affairs, a Holder shall be entitled to receive out of the Remaining Property before any amount is paid or distributed to the holders of the common shares, an amount equal to the Aggregate Redemption Price of the Class XXXXXXXXXX Special Shares held by such Holder on the date of distribution. After payment to a Holder of the amounts payable to such Holder, as such, under this paragraph, such Holder shall not be entitled to share in any further distribution of Remaining Property;
(d) Subject to XXXXXXXXXX, a Holder may:
(i) require XXXXXXXXXX to redeem all of the Class XXXXXXXXXX Special Shares held by such Holder for an amount equal to the Aggregate Redemption Price of such Class XXXXXXXXXX Special Shares:
(A) upon the occurrence of an Event of Retraction and from time to time thereafter for so long as such Event of Retraction is continuing and whether or not such Holder has previously exercised its withdrawal rights in respect of such Event of Retraction;
(B) on, and from time to time after, the XXXXXXXXXX date of the issuance of the Class XXXXXXXXXX Special Shares; and
(C) as and when permitted in any unanimous shareholder agreement respecting XXXXXXXXXX;
(ii) Notwithstanding (i), immediately prior to the redemption of any Retracted Shares pursuant to (i), XXXXXXXXXX shall pay to the Holder, all dividends (whether or not declared) that have accrued prior to the date of such redemption pursuant to (b)(i) and (ii) and all dividends that have been declared at or before such time in accordance with (b)(iv) but which dividends remain unpaid as at such time; provided, however that no failure by, or inability on the part of, XXXXXXXXXX to pay any such dividends prior to any such redemption shall preclude XXXXXXXXXX from redeeming such Retracted Shares pursuant to (i);
(e) Subject to XXXXXXXXXX may, at any time:
(i) redeem all, or from time to time any part, of the then outstanding Class XXXXXXXXXX Special Shares on payment for the Class XXXXXXXXXX Special Shares to be redeemed of the Aggregate Redemption Price of such shares, provided that XXXXXXXXXX shall redeem all of the outstanding Class XXXXXXXXXX Special Shares on the XXXXXXXXXX date of the issuance of the Class XXXXXXXXXX Special Shares; and
(ii) notwithstanding (i) immediately prior to the redemption of any Class XXXXXXXXXX Special Shares pursuant to (i), XXXXXXXXXX shall pay to the Holders all dividends (whether or not declared) that have accrued prior to the date of such redemption pursuant to (b)(i) and (ii) on the Class XXXXXXXXXX Special Shares and all dividends that have been declared at or before such time in accordance with (b)(iv) on the Class XXXXXXXXXX Special Shares but which remain unpaid as at such time; provided, however, that no failure by, or inability on the part of, XXXXXXXXXX to pay any such dividends prior to any such redemption shall prohibit XXXXXXXXXX from redeeming the Class XXXXXXXXXX Special Shares to be redeemed pursuant to (i);
(f) Except as otherwise provided in XXXXXXXXXX and (f)(ii):
(i) a Holder shall be entitled to receive notice of, and to attend all meetings of shareholders of XXXXXXXXXX but shall not be entitled to vote at such meetings unless an Event of Retraction shall have occurred and shall be continuing, in which case, forthwith upon the occurrence of such Event of Retraction and for so long, as such Event of Retraction shall be continuing, a Holder shall:
(A) be entitled to vote at all meetings of shareholders of XXXXXXXXXX; and
(B) have one vote for each Class XXXXXXXXXX Special Share held by such Holder;
(ii) XXXXXXXXXX shall not take any of the following actions without the prior unanimous approval of the Holders:
(A) any amendment of the articles or confirmation of an amendment to the bylaws of XXXXXXXXXX;
(B) any voluntary dissolution, liquidation, bankruptcy or winding-up of XXXXXXXXXX;
(C) any amalgamation, consolidation, reorganization or merger of XXXXXXXXXX with any other corporation;
(D) any action (including without limitation, the giving of any notice required or permitted to be given under any applicable law or the commencement of, consenting to, or participation in, any proceedings) with respect to any general assignment for the benefit of XXXXXXXXXX creditors or any proceedings seeking relief on XXXXXXXXXX behalf as a debtor or to adjudicate XXXXXXXXXX a bankrupt or insolvent, or seeking liquidation, winding-up, dissolution, reorganization, arrangement, proposal, adjustment, composition or restructuring of or relating to, XXXXXXXXXX, the debts of XXXXXXXXXX or XXXXXXXXXX business or affairs under any law (federal, provincial or any other jurisdiction) relating to bankruptcy, insolvency, reorganization or relief of debtors or seeking the appointment of a receiver, manager, receiver and manager, liquidator, trustee, custodian, administrator or other similar official (with similar powers) for XXXXXXXXXX or for any part of XXXXXXXXXX property or assets;
(E) any continuance of XXXXXXXXXX under the laws of another jurisdiction; or
(F) any sale, lease or exchange of all or substantially all of the property, assets or undertaking of XXXXXXXXXX;
53. The principal attributes of the Class XXXXXXXXXX Special Shares of XXXXXXXXXX will be as follows:
(a) have an issue price of $XXXXXXXXXX per share and will rank ahead of the XXXXXXXXXX common shares with respect to distributions of the Remaining Property;
(b) pay cumulative preferential quarterly dividends, as and when declared by the directors, in equal amounts per share determined as follows:
(i) dividends on the Class XXXXXXXXXX Special Shares shall accrue and accumulate on a day-to-day basis from and including the date of issue of the Class XXXXXXXXXX Special Shares and shall be payable in respect of each Dividend Period on the Dividend Payment Date applicable to such Dividend Period, to the Holders at the close of business on the XXXXXXXXXX preceding such Dividend Payment Date. Subject as hereinafter provided, the amount of the dividends payable on any such Dividend Payment Date on each Class XXXXXXXXXX Special Share then outstanding shall be equal to the amount calculated by multiplying the Dividend Rate in respect of the Class XXXXXXXXXX Special Shares, for the particular Dividend Period to which such Dividend Payment Date applies by $XXXXXXXXXX; and
(ii) in the event (including for any reason under (iii) below) that any dividends accrued in respect of a Dividend Period on a Class XXXXXXXXXX Special Share (including any dividends accrued in accordance with this subparagraph) are not declared or are declared but not paid in full on the Dividend Payment Date applicable to such Dividend Period (any such dividends hereinafter referred to as an "Unpaid Amount"), then, from and including such Dividend Payment Date until declaration and payment in full of such Unpaid Amount, dividends on such Class XXXXXXXXXX Special Share shall accrue at the Dividend Rate on, and shall be calculated by reference to, such Unpaid Amount plus the Redemption Price;
(iii) subject to the provisions of XXXXXXXXXX, XXXXXXXXXX shall pay (to the extent not already paid pursuant to (d)(ii) or (e)(ii) below) on each Dividend Payment Date referred to in (b), dividends on the Class XXXXXXXXXX Special Shares outstanding on such Dividend Payment Date equal to the aggregate amount of the dividends accrued on the Class XXXXXXXXXX Special Shares in accordance with (b) during the Dividend Period to which such Dividend Payment Date applies;
(iv) notwithstanding any other provision hereof but subject to the provisions of XXXXXXXXXX, Holders shall be entitled to receive, and XXXXXXXXXX shall pay, as and when declared by the directors, special dividends on Class XXXXXXXXXX Special Shares in such amounts as the directors may in their discretion determine are necessary upon the occurrence of an Adverse Yield Event;
(c) In the event of a distribution of the property and assets of XXXXXXXXXX among its shareholders in connection with the liquidation, dissolution or winding-up of XXXXXXXXXX, whether voluntary or involuntary, or any other distribution of the property and assets of XXXXXXXXXX among its shareholders for the purpose of winding up its affairs, a Holder shall be entitled to receive out of the Remaining Property before any amount is paid or distributed to the holders of the common shares, an amount equal to the Aggregate Redemption Price of the Class XXXXXXXXXX Special Shares held by such Holder on the date of distribution. After payment to a Holder of the amounts payable to such Holder, as such, under this paragraph such Holder shall not be entitled to share in any further distribution of Remaining Property;
(d) Subject to XXXXXXXXXX, a Holder may:
(i) require XXXXXXXXXX to redeem all of the Class XXXXXXXXXX Special Shares held by such Holder for an amount equal to the Aggregate Redemption Price of such Class XXXXXXXXXX Special Shares:
(A) upon the occurrence of an Event of Retraction and from time to time thereafter for so long as such Event of Retraction is continuing and whether or not such Holder has previously exercised its withdrawal rights in respect of such Event of Retraction;
(B) on, and from time to time after, the XXXXXXXXXX date of the issuance of the Class XXXXXXXXXX Special Shares; and
(C) as and when permitted in any unanimous shareholder agreement respecting XXXXXXXXXX;
(ii) notwithstanding (i), immediately prior to the redemption of any Retracted Shares pursuant to (i), XXXXXXXXXX shall pay to the Holder, all dividends (whether or not declared) that have accrued prior to the date of such redemption pursuant to (b)(i) and (ii) and all dividends that have been declared at or before such time in accordance with (b)(iv) but which dividends remain unpaid as at such time; provided, however that no failure by, or inability on the part of, XXXXXXXXXX to pay any such dividends prior to any such redemption shall preclude XXXXXXXXXX from redeeming such Retracted Shares pursuant to (i);
(e) Subject to XXXXXXXXXX may, at any time:
(i) redeem all, or from time to time any part, of the then outstanding Class XXXXXXXXXX Special Shares on payment for the Class XXXXXXXXXX Special Shares to be redeemed of the Aggregate Redemption Price of such shares, provided that XXXXXXXXXX shall redeem all of the outstanding Class XXXXXXXXXX Special Shares on the XXXXXXXXXX date of the issuance of the Class XXXXXXXXXX Special Shares; and
(ii) notwithstanding (i), immediately prior to the redemption of any Class XXXXXXXXXX Special Shares pursuant to (i), XXXXXXXXXX shall pay to the Holders all dividends (whether or not declared) that have accrued prior to the date of such redemption pursuant to (b)(i) and (ii) on the Class XXXXXXXXXX Special Shares and all dividends that have been declared at or before such time in accordance with (b)(iv) on the Class XXXXXXXXXX Special Shares but which remain unpaid as at such time; provided, however, that no failure by, or inability on the part of, XXXXXXXXXX to pay any such dividends prior to any such redemption shall prohibit XXXXXXXXXX from redeeming the Class XXXXXXXXXX Special Shares to be redeemed pursuant to (i);
(f) Except as otherwise provided in XXXXXXXXXX and (f)(ii):
(i) a Holder shall be entitled to receive notice of, and to attend all meetings of shareholders of XXXXXXXXXX but shall not be entitled to vote at such meetings;
(ii) XXXXXXXXXX shall not take any of the following actions without the prior unanimous approval of the Holders:
(A) any amendment of the articles or confirmation of an amendment to the bylaws of XXXXXXXXXX;
(B) any voluntary dissolution, liquidation, bankruptcy or winding-up of XXXXXXXXXX;
(C) any amalgamation, consolidation, reorganization or merger of XXXXXXXXXX with any other corporation;
(D) any action (including without limitation, the giving of any notice required or permitted to be given under any applicable law or the commencement of, consenting to, or participation in, any proceedings) with respect to any general assignment for the benefit of XXXXXXXXXX creditors or any proceedings seeking relief on XXXXXXXXXX behalf as a debtor or to adjudicate XXXXXXXXXX a bankrupt or insolvent, or seeking liquidation, winding-up, dissolution, reorganization, arrangement, proposal, adjustment, composition or restructuring of or relating to, XXXXXXXXXX, the debts of XXXXXXXXXX or XXXXXXXXXX business or affairs under any law (federal, provincial or any other jurisdiction) relating to bankruptcy, insolvency, reorganization or relief of debtors or seeking the appointment of a receiver, manager, receiver and manager, liquidator, trustee, custodian, administrator or other similar official (with similar powers) for XXXXXXXXXX or for any part of XXXXXXXXXX property or assets;
(E) any continuance of XXXXXXXXXX under the laws of another jurisdiction; or
(F) any sale, lease or exchange of all or substantially all of the property, assets or undertaking of XXXXXXXXXX;
54. Not included in the Class XXXXXXXXXX Special Share provisions of XXXXXXXXXX, but pursuant to the various Transaction Documents, XXXXXXXXXX will be required to make, subject to XXXXXXXXXX, mandatory XXXXXXXXXX redemptions (XXXXXXXXXX), which are equal in amount to the XXXXXXXXXX principal repayments that would have been made on the XXXXXXXXXX if that debt continued to be held by XXXXXXXXXX.
XXXXXXXXXX
55. For the purpose of the proposed transactions portion of this letter and the remainder of this letter the following terms are defined as follows:
(a) "DPS" means, individually, or collectively, the XXXXXXXXXX, to be issued by XXXXXXXXXX as described in 61, 66 and 70 below;
(b) "Holder" means the owner of a Class XXXXXXXXXX Special Share, a Class XXXXXXXXXX Special Share or a Class XXXXXXXXXX Special Share, as the case may be, as registered on the share register of XXXXXXXXXX respectively, at the relevant time. "Beneficial Holder" means the Class XXXXXXXXXX Purchaser, Class XXXXXXXXXX Purchaser or Class XXXXXXXXXX Purchaser, as defined in (n) below, as the case may be, or a permitted transferee of the such a Beneficial Holder as beneficial owner of such DPS;
(c) "Transactions" means, collectively, the transactions contemplated by the income tax ruling sought herein as it applies to XXXXXXXXXX, and the Beneficial Holders;
(d) "Transaction Documents" means the documentation required to effect, or otherwise delivered in connection with the Transactions including, without limitation, these provisions;
(e) "Dividend Period" means:
(i) in the case of the first Dividend Period, the period commencing on the date of issue of the DPS and ending on the XXXXXXXXXX, as that term is defined in 54(m) below, in which the DPS are issued, provided, however, that if the date of issue of the DPS is after the XXXXXXXXXX in which the DPS are issued, the first Dividend Period shall end on the XXXXXXXXXX immediately following the Fiscal Period in which the DPS were issued; and
(ii) in the case of every subsequent Dividend Period, the period commencing on the day immediately following the last day of the preceding Dividend Period and ending on the XXXXXXXXXX immediately following the Fiscal Period in which the particular subsequent Dividend Period commences;
(f) "Dividend Payment Date" means:
(i) with respect to a particular Dividend Period or with respect to the dividends accruing during such Dividend Period (as described in 51, 52 and 53(b)(i) to (iii), respectively), the XXXXXXXXXX in which such Dividend Period ends; and
(ii) with respect to any other dividends declared, the date upon which such dividends are to be paid;
(g) "Business Day" means any day on which banks are open for business in XXXXXXXXXX, other than a Saturday, Sunday or statutory holiday;
(h) "Dividend Rate" means,
(i) in the case of the Class XXXXXXXXXX Special Shares with respect to any particular Dividend Period, the product expressed as a percentage and determined by the formula:
XXXXXXXXXX
where
A is the XXXXXXXXXX Rate, as defined in (k);
B is the number of days in such Dividend Period;
and
C is the number of days in the calendar year in which such Dividend Period ends;
(ii) in the case of the Class XXXXXXXXXX Special Shares with respect to any particular Dividend Period, the product, expressed as a percentage and determined by the formula:
XXXXXXXXXX
where
A is the XXXXXXXXXX Rate, as defined in (k);
B is the number of days in such Dividend Period; and
C is the number of days in the calendar year in which such Dividend Period ends;
(iii) in the case of the Class XXXXXXXXXX Special Shares with respect to any particular Dividend Period, the product, expressed as a percentage and determined by the formula:
XXXXXXXXXX
where
A is the XXXXXXXXXX Rate, as defined in (k);
B is the number of days in such Dividend Period;
and
C is the number of days in the calendar year in which such Dividend Period ends;
(i) "Remaining Property" means the property and assets of XXXXXXXXXX, as the case may be, available for distribution to the shareholders of such corporation on a liquidation, dissolution or winding-up of the corporation, whether voluntary or involuntary, or any other distribution of the property and assets of XXXXXXXXXX, as the case may be, among its shareholders for the purpose of winding-up its affairs;
(j) "Aggregate Redemption Price" means; (i) with respect to Class XXXXXXXXXX Special Shares, the aggregate of the Redemption Prices for such Class XXXXXXXXXX Special Shares; (ii) with respect to Class XXXXXXXXXX Special Shares, the aggregate of the Redemption Prices for such Class XXXXXXXXXX Special Shares; and (iii) with respect to Class XXXXXXXXXX Special Shares the aggregate of the Redemption Prices for such Class XXXXXXXXXX Special Shares and "Redemption Price" means with respect to each DPS, $XXXXXXXXXX;
(k) "XXXXXXXXXX Rate", with respect to any particular Dividend Period, means the rate determined by XXXXXXXXXX, as that term is defined in (l), on the first Business Day of such Dividend Period, determined as follows:
(i) on the first Business Day of the applicable Dividend Period, XXXXXXXXXX shall determine the average of the annual rates for Cdn. Dollar bankers' acceptances having a XXXXXXXXXX term (or a term as closely as possible comparable to a XXXXXXXXXX term)
XXXXXXXXXX
XXXXXXXXXX
(l) "XXXXXXXXXX" means XXXXXXXXXX for the beneficial owners from time to time of the Class XXXXXXXXXX Special Shares, the Class XXXXXXXXXX Special Shares and the Class XXXXXXXXXX Special Shares;
(m) "Fiscal Period" means the fiscal quarters commencing XXXXXXXXXX;
(n) "Class XXXXXXXXXX Purchaser", "Class XXXXXXXXXX Purchaser" and "Class XXXXXXXXXX Purchaser" means the financial institutions who will be the beneficial owners of the Class XXXXXXXXXX Special Shares of XXXXXXXXXX, the Class XXXXXXXXXX Special Shares of XXXXXXXXXX, and the Class XXXXXXXXXX Special Shares of XXXXXXXXXX, as the case may be, when those shares are issued by each respective XXXXXXXXXX as described in 61, 66 and 70 below. Collectively the Class XXXXXXXXXX Purchasers, the Class XXXXXXXXXX Purchasers and the Class XXXXXXXXXX Purchasers may be referred to as the "Purchasers"; and
(o) "Fiscal Year" means 12 consecutive months commencing XXXXXXXXXX.
56. Subject to 56(s) below, an "Event of Retraction", with respect to any XXXXXXXXXX DPS shall include any of the following events:
(a) if XXXXXXXXXX shall have failed to declare and pay in full the regular dividend payable on its DPS as and when the same is payable in accordance with the terms and conditions of such DPS, without regard to the provisions of XXXXXXXXXX, and such failure continues unremedied for a period equal to the lesser of XXXXXXXXXX;
(b) if XXXXXXXXXX fails to redeem all or any part of its DPS at the time and in the manner required by the terms and conditions of such DPS or the terms and conditions of any of the Transaction Documents, without regard to the provisions of XXXXXXXXXX, and such failure continues unremedied for a specified period equal to the lesser of XXXXXXXXXX;
(c) if XXXXXXXXXX defaults in the payment of any other amount payable in respect of the Class XXXXXXXXXX Special Shares, the Class XXXXXXXXXX Special Shares or the Class XXXXXXXXXX Special Shares, as the case may be, or under the Transaction Documents or any of the documents relating to the XXXXXXXXXX, the XXXXXXXXXX or the XXXXXXXXXX, as the case may be, when the same becomes due and such default continues unremedied for a specified period; equal to the lesser of XXXXXXXXXX;
(d) if XXXXXXXXXX ceases to beneficially own, directly or indirectly, all of the issued common shares of XXXXXXXXXX;
(e) if there occurs any change in control of XXXXXXXXXX (other than to XXXXXXXXXX or an affiliate of XXXXXXXXXX) without the prior written consent of the Holders and XXXXXXXXXX;
(f) if XXXXXXXXXX or any XXXXXXXXXX ceases to maintain its corporate existence, or an order or agreement is made or any resolution is passed for the winding-up, dissolution or liquidation of XXXXXXXXXX;
(g) if XXXXXXXXXX makes a general assignment for the benefit of its creditors, or institutes or consents to proceedings or files a proposal under any law relating to bankruptcy, insolvency or reorganization, or shall be declared bankrupt or insolvent, or a custodian or sequestrator or receiver/manager or any other officer with similar power shall be appointed for any XXXXXXXXXX or for the property of any XXXXXXXXXX or any part thereof;
(h) if XXXXXXXXXX defaults in the payment of any amount payable by it under any of the Transaction Documents and such failure continues unremedied for the specified period;
(i) if XXXXXXXXXX fails to observe or perform any non-payment term, covenant, or agreement contained in any Transaction Document and such failure continues unremedied for a period of XXXXXXXXXX days;
(j) if an XXXXXXXXXX shall have occurred and be continuing under and as defined in the XXXXXXXXXX;
(k) if the letter of credit or cash collateral security required to be provided by XXXXXXXXXX pursuant to Put Agreement XXXXXXXXXX or XXXXXXXXXX Put Agreement XXXXXXXXXX, is not provided or renewed within the time and on the terms required by Put Agreement XXXXXXXXXX (as described in 79 below) or Put Agreement XXXXXXXXXX (as described in 83 below) as the case may be, or if any such letter of credit is terminated or subject to termination; provided that the Event of Retraction set out in this clause shall not be an Event of Retraction under the XXXXXXXXXX DPS;
(l) if any Adverse Yield Event occurs and either an Event of Retraction under (c) occurs in respect of any payment due as a result thereof or the Holders have determined that the effect is likely to materially adversely affect the intended purpose or effect of the Transactions;
(m) if an Event of Default shall have occurred and be continuing under and as defined in XXXXXXXXXX or XXXXXXXXXX; provided that the Event of Retraction set out in this clause shall not be an Event of Retraction under the XXXXXXXXXX DPS;
(n) if the payment by any XXXXXXXXXX of any dividend on the DPS or the purchase for cancellation or redemption of any of the DPS is made, or is subsequently determined to have been made, contrary to law, requiring the Holder or former Holder thereof to refund or payout moneys or assets previously received by it from any XXXXXXXXXX in respect of any such dividend or on such purchase or redemption;
(o) if XXXXXXXXXX fails to comply with or otherwise breaches any term or provision of the advance income tax ruling, when granted and the Holders notify the respective XXXXXXXXXX (and in the case of the Class XXXXXXXXXX Special Shares, XXXXXXXXXX), that the Holders have determined, in their discretion, that the effect of such failure or breach is likely to materially adversely affect the intended purpose or effect of the transactions;
(p) if an Event of Default occurs and is continuing
XXXXXXXXXX
(q) if any Transaction Document or any material provision thereof shall be terminated or shall cease to be a legal, valid and binding obligation of any party thereto (other than any of the Holders), provided that no Event of Retraction shall occur under this clause if the parties to such Transaction Document promptly execute and deliver an agreement substantially identical to the Transaction Document which was terminated or which ceased to be a legal, valid and binding obligation so that the Holders, either directly or through their agent, are able to avail themselves of the benefits of such agreement;
(r) if XXXXXXXXXX sells, or enters into an agreement to sell, all or a material part of its assets;
(s) if an "Event of Retraction" occurs under the share provisions relating to any DPS of XXXXXXXXXX provided that an Event of Retraction in respect of the XXXXXXXXXX DPS, in and of itself, shall not be an Event of Retraction under the XXXXXXXXXX DPS. An Event of Retraction in respect of the XXXXXXXXXX DPS, in and of itself, shall not be an Event of Retraction under the XXXXXXXXXX DPS. An Event of Retraction under (i),(l), (t) and (u) in respect of the XXXXXXXXXX DPS shall not be an Event of Retraction under the XXXXXXXXXX DPS;
(t) if XXXXXXXXXX exercises its right to call the Class XXXXXXXXXX Special Shares or XXXXXXXXXX pursuant to Put Agreement XXXXXXXXXX, as described in 79 below;
(u) if XXXXXXXXXX exercises its right to call the Class XXXXXXXXXX Special Shares or XXXXXXXXXX pursuant to Put Agreement XXXXXXXXXX, as described in 83 below; and
(v) Notwithstanding the Events of Retraction, listed above, if XXXXXXXXXX exercises its call on the Class XXXXXXXXXX Special Shares pursuant to Put Agreement XXXXXXXXXX, as described in 87 below, it will constitute an Event of Retraction with respect to the Class XXXXXXXXXX Special Shares.
57. As discussed in 20(a) above, XXXXXXXXXX purchased the XXXXXXXXXX on XXXXXXXXXX along with the related security, from the XXXXXXXXXX for its outstanding principal amount of approximately $XXXXXXXXXX plus accrued interest, transaction costs and an additional advance to fund the XXXXXXXXXX owing by XXXXXXXXXX under the XXXXXXXXXX to bring the total amount owing under the XXXXXXXXXX.
Prior to the Assignment Agreement XXXXXXXXXX (as defined in 58 below) being entered into, XXXXXXXXXX shall purchase a percentage interest in the XXXXXXXXXX and related security from XXXXXXXXXX equal to the percentage obtained by dividing the number of Class XXXXXXXXXX Special Shares to be purchased by XXXXXXXXXX as set out in 61 below to the total number of Class XXXXXXXXXX Special Shares to be issued.
58. XXXXXXXXXX will enter into an agreement XXXXXXXXXX with XXXXXXXXXX, under which XXXXXXXXXX shall agree to sell and XXXXXXXXXX shall agree to purchase from XXXXXXXXXX the full amount of XXXXXXXXXX owing by XXXXXXXXXX under the XXXXXXXXXX, plus accrued interest, along with the related security.
59. XXXXXXXXXX will then borrow XXXXXXXXXX as a daylight demand loan from XXXXXXXXXX, and XXXXXXXXXX will use the aggregate proceeds from such loans to purchase the XXXXXXXXXX plus accrued interest currently owing by XXXXXXXXXX under the XXXXXXXXXX and related security from XXXXXXXXXX, as described above. The XXXXXXXXXX demand loans will bear interest at the prime rate of XXXXXXXXXX, be secured by a security interest in all property and assets of XXXXXXXXXX and be evidenced by a demand promissory note issued by XXXXXXXXXX to XXXXXXXXXX on behalf of XXXXXXXXXX. XXXXXXXXXX shall make the demand loans by XXXXXXXXXX delivering two bank drafts XXXXXXXXXX payable to XXXXXXXXXX in the aggregate amount XXXXXXXXXX on that day along with related security, with XXXXXXXXXX in an amount equal to XXXXXXXXXX of the XXXXXXXXXX, XXXXXXXXXX and XXXXXXXXXX in an amount equal to XXXXXXXXXX remaining ownership interest in the XXXXXXXXXX and related security after XXXXXXXXXX purchase of the XXXXXXXXXX. XXXXXXXXXX shall satisfy the purchase price for the XXXXXXXXXX by endorsing the XXXXXXXXXX in favour of XXXXXXXXXX and delivering the endorsed XXXXXXXXXX to XXXXXXXXXX and by endorsing the XXXXXXXXXX in favour of XXXXXXXXXX and delivering the endorsed XXXXXXXXXX to XXXXXXXXXX.
60. Effective immediately after XXXXXXXXXX purchases the XXXXXXXXXX and related security from XXXXXXXXXX, as described above, and while the XXXXXXXXXX is owned by XXXXXXXXXX shall agree that no interest will accrue or be payable on the XXXXXXXXXX and subject to available "Excess Cash Flow", if any, as defined in 93 below, XXXXXXXXXX will not be otherwise required to make XXXXXXXXXX required under the existing terms of the XXXXXXXXXX. All other terms and conditions of the XXXXXXXXXX will remain in force and in effect.
61. Each Class XXXXXXXXXX Purchaser, other than XXXXXXXXXX, will then subscribe for that number of Class XXXXXXXXXX Special Shares of XXXXXXXXXX as set out opposite its name below under the heading "Number of Class XXXXXXXXXX Special Shares". XXXXXXXXXX will subscribe for that number of Class XXXXXXXXXX Special Shares of XXXXXXXXXX as required such that the total aggregate subscription price of the Class XXXXXXXXXX Special Shares will equal XXXXXXXXXX at that time. However it is anticipated that the XXXXXXXXXX will not exceed $XXXXXXXXXX. The subscription price will be paid by each Class XXXXXXXXXX Purchaser delivering funds to XXXXXXXXXX in the amount set out opposite its name below under the heading "Purchaser's Aggregate Class XXXXXXXXXX Special Share Subscription Price" and XXXXXXXXXX delivering a bank draft XXXXXXXXXX in an amount equal to XXXXXXXXXX. The entire amount of the subscription proceeds received by XXXXXXXXXX from the issuance of the Class XXXXXXXXXX Special Shares will be added to XXXXXXXXXX stated capital account in respect of the Class XXXXXXXXXX Special Shares issued. The Class XXXXXXXXXX Special Shares will be issued to XXXXXXXXXX:
Purchaser
Number of
Class XXXXXXXXXX Special Shares
Purchaser’s Aggregate Class XXXXXXXXXX Special Share Subscription Price
XXXXXXXXXX
Articles of Amendment will be filed by XXXXXXXXXX, if required, to reduce the authorized number of Class XXXXXXXXXX Special Share of XXXXXXXXXX to match the actual number of Class XXXXXXXXXX Special Shares issued.
62. XXXXXXXXXX will make additional advances to XXXXXXXXXX, in the amount of $XXXXXXXXXX under the security of the XXXXXXXXXX, bringing the total amount of principal and interest outstanding under the XXXXXXXXXX. Such additional advances will be used by XXXXXXXXXX to repay certain amounts owed by it as described in 75 below.
Prior to the Assignment Agreement XXXXXXXXXX (as defined in 63 below) being entered into, XXXXXXXXXX shall purchase a percentage interest in the XXXXXXXXXX and related security from XXXXXXXXXX equal to the percentage obtained by dividing the number of Class XXXXXXXXXX Special Shares to be purchased by XXXXXXXXXX as set out in 66 below to the total number of Class XXXXXXXXXX Special Shares to be issued.
63. XXXXXXXXXX will then enter into an agreement XXXXXXXXXX with XXXXXXXXXX, under which XXXXXXXXXX shall agree to sell and XXXXXXXXXX shall agree to purchase the full amount of the $XXXXXXXXXX owing under the XXXXXXXXXX along with the related security.
64. XXXXXXXXXX will borrow $XXXXXXXXXX as a daylight demand loan XXXXXXXXXX and use the aggregate proceeds from such loans to purchase the $XXXXXXXXXX owing by XXXXXXXXXX under the XXXXXXXXXX from XXXXXXXXXX, as described above. The demand loans will bear interest at the prime rate of XXXXXXXXXX, be repayable on demand, be secured by a security interest in all property and assets of XXXXXXXXXX, and be evidenced by a demand promissory note issued by XXXXXXXXXX on behalf of XXXXXXXXXX. XXXXXXXXXX shall each make the demand loans by XXXXXXXXXX delivering XXXXXXXXXX bank drafts XXXXXXXXXX payable to XXXXXXXXXX in the aggregate amount of $XXXXXXXXXX, with XXXXXXXXXX bank draft in an amount equal to the XXXXXXXXXX of the XXXXXXXXXX and related security XXXXXXXXXX, and XXXXXXXXXX bank draft in an amount equal to the remaining portion of the XXXXXXXXXX not otherwise purchased by XXXXXXXXXX and related security XXXXXXXXXX. XXXXXXXXXX shall satisfy the total purchase price for the XXXXXXXXXX and related security by endorsing XXXXXXXXXX in favour of XXXXXXXXXX and delivering the endorsed XXXXXXXXXX to XXXXXXXXXX and by endorsing the XXXXXXXXXX in favour of XXXXXXXXXX and delivering the endorsed XXXXXXXXXX to XXXXXXXXXX.
65. Effective immediately after XXXXXXXXXX purchases the XXXXXXXXXX and related security from XXXXXXXXXX, as described above, and while the XXXXXXXXXX is owned by XXXXXXXXXX shall agree that no interest will accrue or be payable on the XXXXXXXXXX (herein referred to as the "XXXXXXXXXX"). All other terms and conditions of the XXXXXXXXXX will remain in force and in effect.
66. Each Class XXXXXXXXXX Purchaser will then subscribe for that number of Class XXXXXXXXXX Special Shares of XXXXXXXXXX as set out opposite its name below under the heading "XXXXXXXXXX". The aggregate subscription price, of $XXXXXXXXXX will be paid by each Class XXXXXXXXXX Purchaser delivering funds to XXXXXXXXXX in the amount set out opposite its name below under the heading "XXXXXXXXXX" and XXXXXXXXXX delivering a bank draft (XXXXXXXXXX) in the amount of $XXXXXXXXXX to XXXXXXXXXX. The entire amount of the subscription proceeds received by XXXXXXXXXX from the issuance of the Class XXXXXXXXXX Special Shares will be added to XXXXXXXXXX stated capital account in respect of the Class XXXXXXXXXX Special Shares issued. The Class XXXXXXXXXX Special Shares will be issued to XXXXXXXXXX:
Purchaser
Number of
Class XXXXXXXXXX Special Shares
Purchaser’s Aggregate Class XXXXXXXXXX Special Share Subscription Price
XXXXXXXXXX
67. Prior to the XXXXXXXXXX (as defined below) being entered into, XXXXXXXXXX shall purchase a percentage interest in the XXXXXXXXXX and related security from XXXXXXXXXX equal to the percentage obtained by dividing the number of Class XXXXXXXXXX Special Shares to be purchased by XXXXXXXXXX as set out in 70 below to the total number of Class XXXXXXXXXX Special Shares to be issued.
XXXXXXXXXX will then enter into an agreement (XXXXXXXXXX) with XXXXXXXXXX, under which XXXXXXXXXX shall agree to sell and XXXXXXXXXX shall agree to purchase the full amount of $XXXXXXXXXX owing under the XXXXXXXXXX along with the related security.
However, before XXXXXXXXXX purchase of the XXXXXXXXXX of the XXXXXXXXXX, as described above, and before XXXXXXXXXX purchases the XXXXXXXXXX pursuant to an agreement between XXXXXXXXXX, as described in 68 below the terms and conditions of the XXXXXXXXXX will be revised as follows:
(a) on or following the date which is the completion of the XXXXXXXXXX term of the Class XXXXXXXXXX Special Shares or such earlier date on which the Class XXXXXXXXXX Special Shares are put to XXXXXXXXXX or called by XXXXXXXXXX, (XXXXXXXXXX) XXXXXXXXXX may cause the assignment of the XXXXXXXXXX and security without the consent of XXXXXXXXXX;
(b) effective as of the XXXXXXXXXX, XXXXXXXXXX shall pay the holder of the XXXXXXXXXX equal XXXXXXXXXX payments of principal and interest based upon an amortization period commencing on the XXXXXXXXXX and ending XXXXXXXXXX; and
the rate of interest on the XXXXXXXXXX shall be XXXXXXXXXX. The other terms and conditions of the XXXXXXXXXX will remain in force and in effect.
68. XXXXXXXXXX will borrow $XXXXXXXXXX and use the aggregate proceeds from such loans to purchase the $XXXXXXXXXX owing by XXXXXXXXXX under the XXXXXXXXXX and related security from XXXXXXXXXX, as described above. The demand loans will bear interest at the prime rate of XXXXXXXXXX, be repayable on demand, be secured by a security interest in all property and assets of XXXXXXXXXX, and be evidenced by demand promissory note issued by XXXXXXXXXX on behalf of XXXXXXXXXX. XXXXXXXXXX shall each make the demand loans by XXXXXXXXXX delivering XXXXXXXXXX bank drafts (XXXXXXXXXX), payable to XXXXXXXXXX in the aggregate amount of $XXXXXXXXXX with XXXXXXXXXX bank draft in an amount equal to the XXXXXXXXXX of the XXXXXXXXXX and related security (XXXXXXXXXX) and XXXXXXXXXX bank draft in an amount equal to XXXXXXXXXX remaining portion of the XXXXXXXXXX and related security not otherwise purchased by XXXXXXXXXX (XXXXXXXXXX). XXXXXXXXXX shall satisfy the purchase price for the XXXXXXXXXX by endorsing the XXXXXXXXXX in favour of XXXXXXXXXX and delivering the endorsed XXXXXXXXXX to XXXXXXXXXX and by endorsing the XXXXXXXXXX in favour of XXXXXXXXXX and delivering the endorsed XXXXXXXXXX to XXXXXXXXXX.
69. Effective immediately after XXXXXXXXXX purchases the XXXXXXXXXX from XXXXXXXXXX, as described above, XXXXXXXXXX shall agree that no interest will accrue or be payable on the XXXXXXXXXX while owned by XXXXXXXXXX. The other terms and conditions of the XXXXXXXXXX will remain in force and in effect.
70. Each Class XXXXXXXXXX Purchaser will then subscribe for that number of Class XXXXXXXXXX Special Shares of XXXXXXXXXX as set out opposite its name below under the heading "Number of Class XXXXXXXXXX Shares". The aggregate subscription price of $XXXXXXXXXX will be paid by each Class XXXXXXXXXX Purchaser delivering funds to XXXXXXXXXX in the amount set out opposite its name below under the heading "Purchaser's Aggregate Class XXXXXXXXXX Special Share Subscription Price" and XXXXXXXXXX delivering a bank draft (XXXXXXXXXX) in the amount of $XXXXXXXXXX to XXXXXXXXXX. The entire amount of the subscription proceeds received by XXXXXXXXXX from the issuance of the Class XXXXXXXXXX Special Shares will be added to XXXXXXXXXX stated capital account in respect of the Class XXXXXXXXXX Special Shares issued. It should be noted that before the issue of any Class XXXXXXXXXX Special Shares each of the Class XXXXXXXXXX Purchasers must obtain credit approval to acquire such shares. Provided such credit approval is received the Class XXXXXXXXXX Special Shares will issued to XXXXXXXXXX:
Purchaser
Number of
Class XXXXXXXXXX Special Shares
Purchaser’s Aggregate Class XXXXXXXXXX Special Share Subscription Price
XXXXXXXXXX
71. Each of XXXXXXXXXX will repay its respective daylight demand loans, described above in 59, 64 and 68, respectively, by endorsing the XXXXXXXXXX, as the case may be, in favour of XXXXXXXXXX for the applicable lender and delivering such endorsed XXXXXXXXXX, as the case may be, to XXXXXXXXXX for the applicable lender.
72. XXXXXXXXXX agrees to pay all costs related to the restructuring of the XXXXXXXXXX and agrees to pay or cause to be paid to XXXXXXXXXX, as a contribution of capital, such amount as may be required to allow XXXXXXXXXX to pay the costs associated with the issuance of its shares.
73. XXXXXXXXXX agrees to pay all costs related to the restructuring of the XXXXXXXXXX and agrees to pay or cause to be paid to XXXXXXXXXX, as a contribution of capital, such amount as may be required to allow XXXXXXXXXX to pay the costs associated with the issuance of its shares.
74. XXXXXXXXXX agrees to pay all costs related to the restructuring of the XXXXXXXXXX and agrees to pay or cause to be paid to XXXXXXXXXX, as a contribution of capital, such amount as may be required to allow XXXXXXXXXX to pay the costs associated with the issuance of its shares.
75. XXXXXXXXXX will use the aggregate $XXXXXXXXXX proceeds from the additional advances made by XXXXXXXXXX under the XXXXXXXXXX, referred to in 62 above, as follows:
(a) to pay $XXXXXXXXXX of costs (which are estimated to total $XXXXXXXXXX) associated with the restructuring of the debts of XXXXXXXXXX;
(b) to repay the $XXXXXXXXXX;
(c) to repay up to approximately $XXXXXXXXXX of the XXXXXXXXXX $XXXXXXXXXX;
(d) to repay the $XXXXXXXXXX; and
(f) to repay the $XXXXXXXXXX.
It is anticipated that the costs referred to in (a) will include structuring and underwriting fees to XXXXXXXXXX of approximately $XXXXXXXXXX, and legal and accounting fees for structuring of approximately $XXXXXXXXXX.
76. XXXXXXXXXX will enter into a unanimous shareholder agreement (XXXXXXXXXX) with XXXXXXXXXX. The XXXXXXXXXX will provide, among other things, that without the prior written consent of XXXXXXXXXX for the Beneficial Holders of the Class XXXXXXXXXX Special Shares of XXXXXXXXXX, or except as otherwise provided or required by the Transaction Documents:
(a) XXXXXXXXXX shall not transfer or encumber the common shares of XXXXXXXXXX except to XXXXXXXXXX;
(b) no additional shares of XXXXXXXXXX may be issued;
(c) no transfer or encumbrance of assets of XXXXXXXXXX will be effected; and
(d) the business and activities that XXXXXXXXXX may carry on and the powers that it may exercise are those permitted or required by the Transaction Documents and applicable law. XXXXXXXXXX will not incur any indebtedness or other liability, create any security over its assets, make any guarantee, amalgamate, merge or consolidate, or declare or pay any dividends other than on its Class XXXXXXXXXX Special Shares, or purchase or redeem any of its shares other than its Class XXXXXXXXXX Special Shares.
77. XXXXXXXXXX will enter into a unanimous shareholder agreement (XXXXXXXXXX) with XXXXXXXXXX. The XXXXXXXXXX will provide, among other things, that without the prior written consent of XXXXXXXXXX for the Beneficial Holders of the Class XXXXXXXXXX Special Shares of XXXXXXXXXX, or except as otherwise provided or required by the Transaction Documents:
(a) XXXXXXXXXX shall not transfer or encumber the common shares of XXXXXXXXXX except to XXXXXXXXXX;
(b) no additional shares of XXXXXXXXXX may be issued;
(c) no transfer or encumbrance of assets of XXXXXXXXXX will be effected; and
(d) the business and activities that XXXXXXXXXX may carry on and the powers that it may exercise are those permitted or required by the Transaction Documents and applicable law. XXXXXXXXXX will not incur any indebtedness or other liability, create any security over its assets, make any guarantee, amalgamate, merge or consolidate, or declare or pay any dividends other than on its Class XXXXXXXXXX Special Shares, or purchase or redeem any of its shares other than its Class XXXXXXXXXX Special Shares.
78. XXXXXXXXXX will enter into a unanimous shareholder agreement (XXXXXXXXXX) with XXXXXXXXXX and XXXXXXXXXX. XXXXXXXXXX will provide, among other things, that without the prior written consent of XXXXXXXXXX for the Beneficial Holders of the Class XXXXXXXXXX Special Shares of XXXXXXXXXX or except as otherwise provided or required by the Transaction Documents:
(a) XXXXXXXXXX shall not transfer or encumber the common shares of XXXXXXXXXX except to XXXXXXXXXX;
(b) no additional shares of XXXXXXXXXX may be issued;
(c) no transfer or encumbrance of assets of XXXXXXXXXX will be effected; and
(d) the business and activities that XXXXXXXXXX may carry on and the powers that it may exercise are those permitted or required by the Transaction Documents and applicable law. XXXXXXXXXX will not incur any indebtedness or other liability, create any security over its assets, make any guarantee, amalgamate, merge or consolidate, or declare or pay any dividends other than on its Class XXXXXXXXXX Special Shares, or purchase or redeem any of its shares other than its Class XXXXXXXXXX Special Shares.
79. XXXXXXXXXX, and XXXXXXXXXX will enter into an agreement, (the "Put Agreement XXXXXXXXXX"), under which XXXXXXXXXX may, upon the occurrence of an Event of Retraction, immediately prior to the time the Class XXXXXXXXXX Special Shares are to be redeemed and in certain other circumstances, require XXXXXXXXXX to acquire (i) all of the outstanding Class XXXXXXXXXX Special Shares registered in the name of XXXXXXXXXX on behalf of the Beneficial Holders or (ii) all of the XXXXXXXXXX and related security then held by XXXXXXXXXX or that is the subject of a call or put notice under Debt Put/Call Agreement XXXXXXXXXX (described in 81 below) for an amount in the case of a sale of Class XXXXXXXXXX Special Shares, equal to their Aggregate Redemption Price, plus accrued and unpaid dividends and plus such additional amounts as may be necessary to place the Beneficial Holders of such shares in the same after tax position as each would have been in had the purchase price for the shares (plus accrued and unpaid dividends) been received as a tax free intercorporate dividend and, in the case of a sale of the XXXXXXXXXX and related security, equal to the aggregate purchase price that would have applied to the Class XXXXXXXXXX Special Shares which were exchanged for, or redeemed by the assignment of, such XXXXXXXXXX and related security had such Class XXXXXXXXXX Special Shares been put to XXXXXXXXXX.
XXXXXXXXXX will also have the right to call all of the Class XXXXXXXXXX Shares registered in the name of XXXXXXXXXX on behalf of the Beneficial Holders or all of the XXXXXXXXXX and related security then held by XXXXXXXXXX or then the subject of a call or put notice under Debt Put/Call Agreement XXXXXXXXXX in certain circumstances for an amount equal to their Aggregate Redemption Price, plus accrued and unpaid dividends and plus such additional amounts as may be necessary to place the Beneficial Holders of such shares in the same after tax position as each would have been in had the purchase price for the shares (plus accrued and unpaid dividends) been received as a tax free intercorporate dividend. Put Agreement XXXXXXXXXX will be secured by XXXXXXXXXX providing security satisfactory to XXXXXXXXXX.
80. XXXXXXXXXX will pay an annual fee (the "Put Fee XXXXXXXXXX"), XXXXXXXXXX as consideration for entering into the Put Agreement XXXXXXXXXX described in paragraph 79.
81. XXXXXXXXXX, will enter into an agreement, (the "Debt Put/Call Agreement XXXXXXXXXX"), pursuant to which:
(a) XXXXXXXXXX will have the right at any time to require Beneficial Holders of its Class XXXXXXXXXX Special Shares to purchase all, but not less than all, of the XXXXXXXXXX and related security then outstanding;
and
(b) XXXXXXXXXX, will have the right in certain circumstances to require XXXXXXXXXX to sell to the Beneficial Holders of its Class XXXXXXXXXX Special Shares all, but not less than all, of the XXXXXXXXXX then outstanding;
for a purchase price equal to the principal amount of the XXXXXXXXXX then outstanding and owing to XXXXXXXXXX.
82. Under the Debt Put/Call Agreement XXXXXXXXXX, the Beneficial Holders of Class XXXXXXXXXX Special Shares of XXXXXXXXXX will pay the purchase price for the XXXXXXXXXX and related security, by way of certified cheques or bank drafts and, upon delivery of such cheques or bank drafts XXXXXXXXXX will redeem a number of its Class XXXXXXXXXX Special Shares, the Aggregate Redemption Amount of which will equal the purchase price of the XXXXXXXXXX and related security, sold by XXXXXXXXXX to the Beneficial Holders of Class XXXXXXXXXX Special Shares. XXXXXXXXXX will satisfy the Aggregate Redemption Amount for such Class XXXXXXXXXX Special Shares by endorsing such cheques or bank drafts in favour of XXXXXXXXXX, as registered Holder of the Class XXXXXXXXXX Special Shares being redeemed.
83. XXXXXXXXXX, and XXXXXXXXXX will enter into an agreement, (the "Put Agreement XXXXXXXXXX"), under which XXXXXXXXXX may, upon the occurrence of an Event of Retraction, immediately prior to the time the Class XXXXXXXXXX Special Shares are to be redeemed and in certain other circumstances, require XXXXXXXXXX to acquire (i) all of the outstanding Class XXXXXXXXXX Special Shares registered in the name of XXXXXXXXXX on behalf of the Beneficial Holders or (ii) all of the XXXXXXXXXX and related security then held by XXXXXXXXXX or that is the subject of a call or put notice under Debt Put/Call Agreement XXXXXXXXXX (described in 86 below) for an amount in the case of a sale of Class XXXXXXXXXX Special Shares, equal to their Aggregate Redemption Price, plus accrued and unpaid dividends and plus such additional amounts as may be necessary to place the Beneficial Holders of such shares in the same after tax position as each would have been in had the purchase price for the shares (plus accrued and unpaid dividends) been received as a tax free intercorporate dividend and, in the case of a sale of the XXXXXXXXXX and related security, equal to the aggregate purchase price that would have applied to the Class XXXXXXXXXX Special Shares which were exchanged for, or redeemed by the assignment of, such XXXXXXXXXX and related security had such Class XXXXXXXXXX Special Shares been put to XXXXXXXXXX.
XXXXXXXXXX will also have the right to call all of the Class XXXXXXXXXX Special Shares registered in the name of the Administrative Agent on behalf of the Beneficial Holders or all of the XXXXXXXXXX and related security then held by XXXXXXXXXX or then the subject of a call or put notice under Debt Put/Call Agreement XXXXXXXXXX in certain circumstances for an amount equal to their Aggregate Redemption Price, plus accrued and unpaid dividends and plus such additional amounts as may be necessary to place the Beneficial Holders of such shares in the same after tax position as each would have been in had the purchase price for the shares (plus accrued and unpaid dividends) been received as a tax free intercorporate dividend. Put Agreement XXXXXXXXXX will be secured by XXXXXXXXXX providing security satisfactory to XXXXXXXXXX.
84. XXXXXXXXXX will pay an annual fee (the "Put Fee XXXXXXXXXX"), XXXXXXXXXX as consideration for entering into the Put Agreement XXXXXXXXXX described in 83 above.
85. XXXXXXXXXX, will enter into an agreement, (the "Debt Put/Call Agreement XXXXXXXXXX"), pursuant to which:
(a) XXXXXXXXXX will have the right at any time to require any Beneficial Holders of its Class XXXXXXXXXX Special Shares to purchase all of the XXXXXXXXXX and related security then outstanding;
and
(b) XXXXXXXXXX will have the right in certain circumstances to require XXXXXXXXXX to sell to the Beneficial Holders of its Class XXXXXXXXXX Special Shares all, but not less than all, of the XXXXXXXXXX then outstanding;
for a purchase price equal to the principal amount of the XXXXXXXXXX then outstanding and owing to XXXXXXXXXX.
86. Under the Debt Put/Call Agreement XXXXXXXXXX, the Beneficial Holders of Class XXXXXXXXXX Special Shares of XXXXXXXXXX will pay the purchase price for the XXXXXXXXXX and related security by way of certified cheques or bank drafts and, upon delivery of such cheques or bank drafts XXXXXXXXXX will redeem a number of its Class XXXXXXXXXX Special Shares, the Aggregate Redemption Amount of which will equal the purchase price of the XXXXXXXXXX, and related security sold by XXXXXXXXXX to the Beneficial Holders of Class XXXXXXXXXX Special Shares. XXXXXXXXXX will satisfy the Aggregate Redemption Amount for such Class XXXXXXXXXX Special Shares by endorsing such cheques or bank drafts in favour of XXXXXXXXXX, of the Class XXXXXXXXXX Special Shares being redeemed.
87. XXXXXXXXXX and XXXXXXXXXX will enter into an agreement ("Put Agreement XXXXXXXXXX"), under which XXXXXXXXXX may, upon the occurrence of an Event of Retraction, immediately prior to the time when the Class XXXXXXXXXX Special Shares are to be redeemed, if XXXXXXXXXX puts the New XXXXXXXXXX Debt and related security to the Beneficial Holders of the Class XXXXXXXXXX Special Shares under the Debt Put/Call Agreement XXXXXXXXXX, and in certain other circumstances require XXXXXXXXXX, to acquire all of the outstanding Class XXXXXXXXXX Special Shares for an amount equal to the lesser of (i) their Aggregate Redemption Amount, plus accrued and unpaid dividends, if any and (ii) the principal amount that would have been outstanding on the XXXXXXXXXX if all XXXXXXXXXX redemptions as described in paragraph 54 had been made except for XXXXXXXXXX redemptions payable XXXXXXXXXX or less prior to the date of the exercise of the put or in the event the Beneficial Holders receive a put notice from XXXXXXXXXX under the Debt Put/Call Agreement XXXXXXXXXX (described in 89 below), (except for XXXXXXXXXX redemptions payable XXXXXXXXXX or less prior to the date of the exercise of the put, plus accrued and unpaid dividends, if any.
In the event XXXXXXXXXX puts the XXXXXXXXXX and related security to the Beneficial Holders of the Class XXXXXXXXXX Special Shares in connection therewith, the Put Agreement XXXXXXXXXX will enable XXXXXXXXXX to put the XXXXXXXXXX and related security to XXXXXXXXXX for the same purchase price as would have applied on the applicable closing date if the Class XXXXXXXXXX Special Shares redeemed by the assignment of the XXXXXXXXXX and related security to the beneficial Holders of the Class XXXXXXXXXX Special Shares had been put to XXXXXXXXXX on such closing date.
XXXXXXXXXX will also have the right to call the Class XXXXXXXXXX Special Shares from the Beneficial Holders in certain circumstances. The purchase price for such shares will be an amount equal to the lesser of (i) their Aggregate Redemption Price, plus accrued and unpaid dividends, if any, and (ii) the principal amount that would have been outstanding on the XXXXXXXXXX if XXXXXXXXXX redemptions , as described in 54, had been made except for XXXXXXXXXX redemptions payable XXXXXXXXXX or less prior to the date of the exercise of the put or in the event the Beneficial Holders receive a put notice from XXXXXXXXXX under the Debt Put/Call Agreement XXXXXXXXXX, described in 89 below (except for XXXXXXXXXX redemptions payable XXXXXXXXXX or less prior to the date of the exercise of the put), plus accrued and unpaid dividends, if any.
If XXXXXXXXXX is required to acquire all of the Class XXXXXXXXXX Special Shares as a result of the put described above, or as a result of exercising its call, XXXXXXXXXX undertakes to pay such amount (the "tax gross-up") as is necessary to place the Beneficial Holders of such shares in the same after-tax position as each would have been in had the amount paid in respect of accrued dividends been received as a tax-free intercorporate dividend.
88. XXXXXXXXXX will pay an annual fee (the "Put Fee XXXXXXXXXX"), XXXXXXXXXX as consideration for entering into the Put Agreement XXXXXXXXXX described in 87 above.
89. XXXXXXXXXX will enter into an agreement, (the "Debt Put/Call Agreement XXXXXXXXXX"), pursuant to which:
(a) XXXXXXXXXX will have the right at any time to require the Beneficial Holders of Class XXXXXXXXXX Special Shares to purchase all, but not less than all, of the XXXXXXXXXX, and related security then outstanding;
and
(b) XXXXXXXXXX will have the right in certain circumstances to require XXXXXXXXXX to sell to XXXXXXXXXX all, but not less than all, of the XXXXXXXXXX and related security then outstanding;
for a purchase price equal to the principal amount of the XXXXXXXXXX then outstanding and owing to XXXXXXXXXX. However, any closing of the sale referred to in (b) above would not occur until XXXXXXXXXX has become the Beneficial Holder of all the Class XXXXXXXXXX Special Shares pursuant to Put Agreement XXXXXXXXXX, as described above.
90. Under the Debt Put/Call Agreement XXXXXXXXXX, any call or put of the XXXXXXXXXX and related security, as set out in 89 above shall also constitute a retraction/redemption notice in accordance with the share conditions for the Class XXXXXXXXXX Special Shares then outstanding. If the Beneficial Holder of such shares is an entity other than XXXXXXXXXX on behalf of the Beneficial Holders of Class XXXXXXXXXX Special Shares or XXXXXXXXXX, as the case may be, will pay the purchase price for the XXXXXXXXXX and related security, by way of certified cheques or bank drafts in favour of XXXXXXXXXX on behalf of the Beneficial Holders of the Class XXXXXXXXXX Special Shares. If the Beneficial Holder of the Class XXXXXXXXXX Special Shares is XXXXXXXXXX will pay the purchase price XXXXXXXXXX to pay XXXXXXXXXX the Aggregate Redemption Price of the outstanding Class XXXXXXXXXX Special Shares being redeemed. The Aggregate Redemption Price of the Class XXXXXXXXXX Special Shares being redeemed will equal the purchase price of the XXXXXXXXXX and related security, or part thereof, sold by XXXXXXXXXX to the Beneficial Holders of the Class XXXXXXXXXX Special Shares or XXXXXXXXXX, as the case may be.
91. XXXXXXXXXX will enter into separate agreements with XXXXXXXXXX in respect of DPS of XXXXXXXXXX and with XXXXXXXXXX in respect of DPS of XXXXXXXXXX (the "Share Put Agreement XXXXXXXXXX", "Share Put Agreement XXXXXXXXXX", and "Share Put Agreement XXXXXXXXXX", respectively), which will provide that XXXXXXXXXX in respect of the DPS shares of XXXXXXXXXX and XXXXXXXXXX in respect of the DPS of XXXXXXXXXX, will have the right in certain circumstances to require XXXXXXXXXX to purchase all of the outstanding Class XXXXXXXXXX Special Shares or Class XXXXXXXXXX Special Shares held by XXXXXXXXXX on behalf of the Beneficial Holders of such shares, or Class XXXXXXXXXX Special Shares, held by XXXXXXXXXX, as the case may be, for a purchase price per share equal to the Redemption Price of such a share, plus accrued and unpaid dividends and plus such additional amounts as may be necessary to place the Beneficial Holder of such a share in the same after tax position as it would have been in had the amount paid in respect of accrued and unpaid dividends been received as a tax-free intercorporate dividend.
XXXXXXXXXX will provide security acceptable to XXXXXXXXXX, in respect of DPS of XXXXXXXXXX and to XXXXXXXXXX, in respect of DPS of XXXXXXXXXX to secure the obligations of XXXXXXXXXX under Share Put Agreement XXXXXXXXXX, as the case may be. XXXXXXXXXX will also provide security acceptable to XXXXXXXXXX, in respect of the DPS of XXXXXXXXXX and to XXXXXXXXXX, in respect of the DPS of XXXXXXXXXX, to secure the obligations of XXXXXXXXXX under Support Agreements XXXXXXXXXX and the other Transaction Documents. In each case, the above noted security to XXXXXXXXXX will be essentially the same security as currently exists for the XXXXXXXXXX, the XXXXXXXXXX and the XXXXXXXXXX. Additionally, XXXXXXXXXX will deposit funds with XXXXXXXXXX, in the amount of approximately $XXXXXXXXXX (the “Cash Collateral”) to be held by XXXXXXXXXX, to support its obligations to fund the tax gross-up referred to in 87 above.
92. "Adverse Yield Event" means:
(a) any new legislation or any change in any applicable existing or new legislation (and for these purposes "legislation" shall include any order-in-council, regulation, rule, guideline, treaty or directive, whether or not having the force of law) of Canada or any province of Canada (other than any such change which results in a change in any rate of tax, including surtax, applicable to financial institutions or corporations generally), any announcement by any governmental authority, entity or agency (including any central bank or other fiscal or monetary authority or agency) of Canada or any province of Canada regarding the enactment of such new legislation or the making of any such change, any change in the interpretation or administration of any applicable legislation by any governmental authority, entity or agency (including any central bank or other fiscal or monetary authority or agency) of Canada or any province of Canada, or any notice from Revenue Canada that the income tax ruling in respect of these transactions has ceased to be applicable in accordance with its terms for any reason whatsoever;
(b) any judgement or order of a court of competent jurisdiction in Canada or any province of Canada in any matter or case, whether or not an appeal has been instituted and notwithstanding the existence of any right of appeal;
(c) any change in the status of XXXXXXXXXX, as the case may be, (including, without limitation, the loss of its status as a taxable Canadian corporation) under any applicable legislation of Canada or any province of Canada;
(d) any request or direction (whether or not having the force of law) from any authority, entity or agency (including any central bank or other fiscal or monetary authority or agency) in Canada or any province of Canada;
(e) any assessment or reassessment of any person for any Canadian federal or provincial tax or both, which, in the sole opinion of any Holder or Beneficial Holder of XXXXXXXXXX, as the case may be, has, or may reasonably be expected to have, one or more of the following effects:
(i) requiring such Holder, in computing its income subject to tax, to include the amount of any dividends or other distribution, or any part thereof received or receivable or deemed to be received or receivable by such Holder, or accrued and unpaid (whether or not declared or set aside) on any of the XXXXXXXXXX, as the case may be, owned by such Holder, and precluding such Holder, in computing its taxable income, from deducting an amount equal to such amount;
(ii) precluding such Holder, in computing its income subject to tax, from deducting any amount paid or payable on account of interest on any indebtedness or on account of costs and expenses incurred, or considered by the relevant taxing authority to have been incurred, by such Holder in connection with, or arising directly or indirectly as a result of, its acquisition or holding or both of any of the XXXXXXXXXX, as the case may be;
(iii) imposing upon such Holder any tax (other than income tax on any amount described in (i) and (ii) above), or levying any penalty or other charge, on or in respect of any redemption proceeds or any dividend or other distribution or any part thereof received or receivable or deemed to be received or receivable by such Holder, or accrued and unpaid (whether or not declared or set aside), on any of the XXXXXXXXXX, as the case may be, owned by such Holder or otherwise on or in respect of the acquisition, holding or disposition (excluding any income or capital gains tax in respect of an actual gain on disposition other than, in the case of any Holder other than XXXXXXXXXX or any affiliate, as that term is defined in the XXXXXXXXXX, of XXXXXXXXXX, any gain realized as a result of exercising rights under any Share Put Agreement or any Debt Put/Call Agreement or any XXXXXXXXXX Put Agreement or XXXXXXXXXX Put Agreement) of any of the XXXXXXXXXX, as the case may be, or any combination of the foregoing:
(A) imposing, modifying or deeming applicable any reserve, liquidity, cash margin, special deposit, deposit insurance or similar requirement against assets held by, or deposits in or for the account of, or in respect of any acquisition of funds or loan by, a Canadian office of such Holder; or
(B) imposing on such Holder, or expecting there to be maintained by such Holder, any capital adequacy or additional capital requirement (including without limitation, a requirement that affects such Holder's allocation of capital resources to its obligations) in connection with the assets or obligations;
and the result of any of the foregoing is to increase the cost to such Holder or reduce the income receivable, or the effective return on capital or assets realizable, by such Holder with respect to or in connection with any of the XXXXXXXXXX, as the case may be, owned by such Holder, or to cause such Holder to make any payment or forego any interest, fees, dividends, distributions or other return on, or calculated by reference to, any sum received or receivable in connection with any of the XXXXXXXXXX, as the case may be, held by such Holder;
(f) increasing the after-tax cost by any amount to such Holder of holding any of the XXXXXXXXXX, as the case may be, or otherwise decreasing the after-tax return to such Holder on any of the XXXXXXXXXX, as the case may be, owned by such Holder by any amount;
(g) imposing upon such Holder any interest, penalty or other charge in respect of any amounts described in (e) or (f) above; or
(h) making it unlawful or impossible for such Holder to continue to hold any of the XXXXXXXXXX, as the case may be, owned by such Holder or to give effect to its obligations under the Transaction Documents relating to the issuance and holding of the XXXXXXXXXX, as the case may be, provided that, for the purpose of (e), (f) and (g) above, it is to be assumed that:
(i) the Holder referred to therein is, at all relevant times and throughout all relevant periods both taxable and paying tax at the highest Canadian federal corporate tax rate (including federal surtaxes) and the greatest of the maximum rates of provincial corporate tax applicable in any province of Canada (including provincial surtaxes) at such times and throughout such periods; and
(ii) each Holder has, as its sole assets, the XXXXXXXXXX, as the case may be, owned by it and has revenues, costs and expenses relating only to such XXXXXXXXXX, as the case may be.
For the purpose of this definition of "Adverse Yield Event":
(A) each event described in any of (a) to (e) above shall be deemed to have occurred upon the date such event first has or may have any of the effects described in any of (e), (f), (g) or (h) above notwithstanding that such date may precede the date of actual occurrence of such event and any reference to a Holder of XXXXXXXXXX, as the case may be, shall be a reference to any beneficial and/or registered Holder thereof; and
(B) any assessment or reassessment referred to in (e) above shall be deemed to include all other assessments or reassessments (for other taxation years and/jurisdictions) that may possibly be issued in respect of one or more of the issues contained in such assessment or reassessment.
93. Notwithstanding the terms and conditions of any XXXXXXXXXX DPS, or any mandatory redemptions of the DPS that may be required by XXXXXXXXXX on behalf of the Beneficial Holders or XXXXXXXXXX, an amount or amounts which, in aggregate, are equal to or greater than the "Excess Cash Flow" arising in any Fiscal Year shall be applied to redeem the DPS (and to pay the dividends required in connection with such redemptions) within XXXXXXXXXX after the end of that Fiscal Year. For the purpose of determining Excess Cash Flow for the first Fiscal Year in which any of the DPS are first issued, the Excess Cash Flow shall not include any month, or part thereof, that arose prior to the issue of such DPS.
"Excess Cash Flow" in respect of any Fiscal Year of XXXXXXXXXX is the increase in cash for that Fiscal Year from all sources, as would be reported on a Consolidated Statement of Changes in Financial Position prepared in accordance with generally accepted accounting principles if only directly and indirectly owned subsidiaries of XXXXXXXXXX were included, but before outlays for:
(a) the payment of dividends other than dividends paid on the DPS of any of the XXXXXXXXXX;
(b) capital expenditures or any payment on capital account other than in respect of:
(i) the purchase or redemption of the DPS of any of the XXXXXXXXXX, other than redemptions made in the period in respect of the prior Fiscal Year's Excess Cash Flow;
(ii) repayments of indebtedness incurred in the normal and ordinary course of business and in existence at the date the DPS of any of the XXXXXXXXXX are issued;
(iii) repayments of additional debt incurred for the specific purpose of funding current operating requirements;
(iv) expenditures or payments between any of XXXXXXXXXX and its directly or indirectly owned subsidiaries;
(v) reasonable capital expenditures or payments on capital account incurred in the normal and ordinary course of the existing business and repayments of additional debt for the specific purpose of making such capital expenditures or payments on capital account; and
(vi) repayments of additional debt incurred for the specific purpose of enabling XXXXXXXXXX to repay debt to any of the XXXXXXXXXX;
(c) payments or repayments of loans or amounts owing to shareholders of XXXXXXXXXX or to any other member of XXXXXXXXXX or redemptions of any of the shares of XXXXXXXXXX other than:
(i) repayment of the amounts owing to XXXXXXXXXX as described in 20(k) and (m) above; and
(ii) payment of any reasonable operating expenditure or costs to XXXXXXXXXX that is incurred by XXXXXXXXXX in the normal and ordinary course of XXXXXXXXXX business; and
(d) loans or other amounts advanced to directors, officers and shareholders of XXXXXXXXXX or to any other persons, firms, or corporations; and
For purposes of this definition of Excess Cash Flow, additional debt shall not include a debt which arose as a result of the use of cash or funds for a purpose that is not envisioned herein and shall exclude amounts required to be set aside for the XXXXXXXXXX, as that term is defined XXXXXXXXXX.
94. To the extent that XXXXXXXXXX has Excess Cash Flow at the end of any Fiscal Year, it will make repayments on the indebtedness it owes to one or more of the XXXXXXXXXX, as the case may be), and each such XXXXXXXXXX receiving such repayment will use such funds to make redemptions of its own DPS.
Notwithstanding the above, to the extent that there exists a XXXXXXXXXX, as defined in 54 in respect of any Fiscal Year, such XXXXXXXXXX will be first applied to the mandatory redemption of Class XXXXXXXXXX Special Shares due on XXXXXXXXXX of the following Fiscal Year and related dividends. From the remainder, an amount, XXXXXXXXXX will be set aside. The XXXXXXXXXX will be equal to the aggregate of:
(a) estimated required dividends payable on XXXXXXXXXX of the following Fiscal Year;
(b) XXXXXXXXXX redemptions required, as described in 54 above, payable on XXXXXXXXXX of the following Fiscal Year; and
(c) XXXXXXXXXX put fee payable on XXXXXXXXXX of the following Fiscal Year.
The balance of the XXXXXXXXXX will be applied in accordance with 54, as described. It is intended that the XXXXXXXXXX will be available to fund Class XXXXXXXXXX Special Share dividends, redemptions and Put Fee XXXXXXXXXX payments when due, and as required, throughout the period in which the Class XXXXXXXXXX Special Shares are outstanding.
95. XXXXXXXXXX, and XXXXXXXXXX, will enter into separate agreements with each of XXXXXXXXXX, pursuant to which XXXXXXXXXX will agree to:
(a) pay or cause to be paid to XXXXXXXXXX as the case may be, as a contribution of capital, such amounts as may be required from time to time to allow XXXXXXXXXX as the case may be, to pay its ongoing costs and expenses of the operation and administration, including such amounts described in 72 and 73, as the case may be;
(b) pay to each of XXXXXXXXXX, as a contribution of capital, such amounts as may be required by that XXXXXXXXXX from time to time to pay any dividends on its outstanding DPS;
(c) make such repayments on the XXXXXXXXXX or the XXXXXXXXXX, as the case may be, as may be required to enable that particular XXXXXXXXXX to satisfy all of the share redemption obligations relating to its DPS;
(d) in the event that there is an Adverse Yield Event, XXXXXXXXXX will pay to XXXXXXXXXX on behalf of the applicable Beneficial Holder such additional amount as is necessary so that, after taking into account the full effect of any Adverse Yield Event, and income taxes payable by a Beneficial Holder on any such additional amount, such Beneficial Holder will be in receipt of the same after-tax return from the acquisition, ownership and disposition of the DPS as such Beneficial Holder would have received in the absence of the applicable Adverse Yield Event.
96. XXXXXXXXXX, and XXXXXXXXXX, will enter into an agreement with XXXXXXXXXX pursuant to which XXXXXXXXXX will agree to:
(a) pay or cause to be paid to XXXXXXXXXX as a contribution of capital, such amounts as may be required from time to time to allow XXXXXXXXXX to pay its ongoing costs and expenses of the operation and administration, including such amounts described in 74 above, as the case may be;
(b) pay to XXXXXXXXXX as a contribution of capital, such amounts as may be required by that XXXXXXXXXX from time to time to pay any dividends on its outstanding DPS;
(c) make such repayments on the XXXXXXXXXX as may be required to enable that particular XXXXXXXXXX to satisfy all of the share redemption obligations relating to its DPS;
(d) in the event that there is an Adverse Yield Event, XXXXXXXXXX will pay to XXXXXXXXXX on behalf of the applicable Beneficial Holder such additional amount as is necessary so that, after taking into account the full effect of any Adverse Yield Event, and income taxes payable by a Beneficial Holder on any such additional amount, such Beneficial Holder will be in receipt of the same after-tax return from the acquisition, ownership and disposition of the DPS as such Beneficial Holder would have received in the absence of the applicable Adverse Yield Event; and
97. Each XXXXXXXXXX will agree to hold any payment it receives from XXXXXXXXXX under its particular XXXXXXXXXX for the benefit of XXXXXXXXXX until such time as such XXXXXXXXXX requires the funds for the purpose described in 95 or 96 above.
98. Each XXXXXXXXXX will be wound-up, subject to the operation of any applicable law, without any undue delay after the time that is the earlier of:
(a) sixty days after the time at which all of its DPS are redeemed or cancelled; and
(b) five years from the date when the DPS are issued by that particular XXXXXXXXXX.
In the event all of the DPS issued by that particular XXXXXXXXXX have not been redeemed by the date referred to in 98(b) and such XXXXXXXXXX is precluded by applicable law from redeeming such DPS, then such XXXXXXXXXX shall not be wound-up until all such DPS have been redeemed.
99. If the Class XXXXXXXXXX Special Shares, Class XXXXXXXXXX Special Shares and Class XXXXXXXXXX Special Shares, as the case may be, are beneficially owned by a Canadian chartered bank listed under Schedule I of the Bank Act, such beneficial owner will waive its right to a portion of each dividend to be paid on such shares. The waived amount will make the dividend they receive the same amount as if the Dividend Rate, as defined in 55(h) above, excluded the XXXXXXXXXX 55(h)(i), (ii) and (iii).
The purpose of waiving such portion of the dividends on the DPS by the Schedule I banks is to provide a non-Schedule I bank owner of such DPS with a higher return that would be required because of their higher cost of capital, without having different classes of special shares set up for each XXXXXXXXXX, which would complicate any subsequent syndication of DPS purchased by XXXXXXXXXX at closing.
OTHER
100. You advise that because of the circumstances described in 70 above, the Class XXXXXXXXXX Special Shares may not be issued at all, or may not be issued for a period not to exceed XXXXXXXXXX following the issue of the Class XXXXXXXXXX Special Shares and Class XXXXXXXXXX Special Shares. If the Class XXXXXXXXXX Special Shares are not issued or, if the Class XXXXXXXXXX Special Shares are redeemed prior to XXXXXXXXXX after their date of issue, the XXXXXXXXXX amounts charged and collected by XXXXXXXXXX in any Fiscal Year will be used for interest and principal repayments on the XXXXXXXXXX or the XXXXXXXXXX, as the case may be, and any excess of XXXXXXXXXX over the interest and principal repayments will be set aside in a reserve for future payments on such debt, as is required under its terms. The XXXXXXXXXX set aside for future payments on the Class XXXXXXXXXX Special Shares, or that would have been set aside if such shares had been issued, will be deductible in computing Excess Cash Flow, as described in 93 above, provided such reserve is used or held exclusively for interest and principal repayments on the XXXXXXXXXX or the XXXXXXXXXX, as the case may be.
RULINGS GIVEN
Provided the foregoing statements constitute a complete and accurate disclosure of all the relevant facts and proposed transactions, we confirm the following:
A. The Class XXXXXXXXXX Special Shares, the Class XXXXXXXXXX Special Shares and the Class XXXXXXXXXX Special Shares, which are to be issued to the respective Purchasers, as described in 61, 66 and 70 above, respectively, and where applicable sold to a Canadian resident corporate third party purchaser (hereinafter referred to as a "Third Party Purchaser"), will be
(a) shares described in subparagraph (e)(iii) of the definition of "term preferred share" in subsection 248(1) for a period not exceeding five years from the date of their issuance and,
(b) "exempt shares" pursuant to paragraph (c) of the definition thereof in subsection 112(2.6) for that same period
and, accordingly, subsections 112(2.1), (2.2), (2.3) and (2.4) will not apply to deny the Purchasers or a Third Party Purchaser, as the case may be, a deduction under subsection 112(1) for dividends received or deemed to have been received by it on such shares during such period;
B. No amount will be included in computing the income of any of XXXXXXXXXX, as the case may be, under paragraph 12(1)(c) or (x), or subsection 12(3), 12(9), 16(1) or 246(1), or section 9 in respect of capital contributions made or required to be made by XXXXXXXXXX, as the case may be, as described in 95 and 96 above, nor will such amounts constitute proceeds of disposition, as defined in section 54, to XXXXXXXXXX, as the case may be, from the disposition by such XXXXXXXXXX of any property;
C. Section 80 will not apply to XXXXXXXXXX by virtue of the fact that no interest will be paid or payable by XXXXXXXXXX to
(a) XXXXXXXXXX on the XXXXXXXXXX;
(b) XXXXXXXXXX on the XXXXXXXXXX; and
(c) XXXXXXXXXX on the XXXXXXXXXX;
as described in 60, 65 and 69 above, as the case may be, or by virtue of the failure of any of the above XXXXXXXXXX, as the case may be, to demand payment of the aforementioned debts owing to it by XXXXXXXXXX.
D. Subject to paragraph 20(1)(e.1):
(a) expenses incurred by XXXXXXXXXX, in the course of borrowing money and issuing its Class XXXXXXXXXX Special Shares, Class XXXXXXXXXX Special Shares and Class XXXXXXXXXX Special Shares, respectively, will be deductible by XXXXXXXXXX, as the case may be, pursuant to subparagraph 20(1)(e) to the extent such expenses are reasonable in the circumstances; and
(b) the expenses incurred by XXXXXXXXXX in the course of restructuring its debt obligations, will be deductible by XXXXXXXXXX pursuant to subparagraph 20(1)(e)(ii.2) to the extent such expenses are reasonable in the circumstances;
E. The cost amount, within the meaning of subsection 248(1), to each Purchaser or Third Party Purchaser of the Class XXXXXXXXXX Special Shares, Class XXXXXXXXXX Special Shares, and Class XXXXXXXXXX Special Shares, will immediately after the time that such shares are issued, be equal to the amount paid by the Purchaser for those shares as described in 61, 66 and 70 above;
F. The cost amount, within the meaning of subsection 248(1), to XXXXXXXXXX of XXXXXXXXXX of the XXXXXXXXXX, the XXXXXXXXXX and the XXXXXXXXXX will, immediately after such debt is acquired from XXXXXXXXXX by XXXXXXXXXX be equal to the purchase price paid by XXXXXXXXXX for XXXXXXXXXX of each such debt, as described in 57, 62 and 67 above;
G. The cost amount, within the meaning of subsection 248(1), to
(a) XXXXXXXXXX of the XXXXXXXXXX;
(b) XXXXXXXXXX of the XXXXXXXXXX; and
(c) XXXXXXXXXX of the XXXXXXXXXX;
will, immediately after such debt is acquired from each debt holder in 59, 64 and 68, as the case may be, by the respective XXXXXXXXXX, be equal to the purchase price paid therefor by each XXXXXXXXXX, as described in 59, 64 and 68 above, as the case may be;
H. No amount will be included in computing the income of any Purchaser under subsection 56(2) of the Act in respect of any capital contributions made by XXXXXXXXXX to XXXXXXXXXX, as described in 95 and 96 above, as the case may be;
I. If the XXXXXXXXXX or the XXXXXXXXXX, is reacquired by XXXXXXXXXX, immediately after it is reacquired the cost amount of each such debt within the meaning of subsection 248(1), to XXXXXXXXXX will be the purchase price paid therefor, as described in 79 and 83 above;
J. No amount will be included in the income of the XXXXXXXXXX pursuant to subsection 15(1) or 246(1) solely by virtue of the fact that no interest will be paid or payable by XXXXXXXXXX to:
(a) XXXXXXXXXX on the XXXXXXXXXX;
(b) XXXXXXXXXX on the XXXXXXXXXX; and
(c) XXXXXXXXXX on the XXXXXXXXXX,
as described respectively in 60, 65 and 69 above, as the case may be;
K. If the XXXXXXXXXX held by XXXXXXXXXX, the XXXXXXXXXX held by XXXXXXXXXX, or the XXXXXXXXXX held by XXXXXXXXXX, as the case may be, is acquired by a Beneficial Holder under the applicable Debt Put/Call Agreement, as described in 81, 85 and 89 above, as the case may be, immediately after it is acquired the cost amount, within the meaning of subsection 248(1), to each Beneficial Holder will be the purchase price paid therefor by that Beneficial Holder, as described in 82, 86 and 90 above, respectively;
L. Subsection 112(4) not apply to any loss realized by a Beneficial Holder on the XXXXXXXXXX, the XXXXXXXXXX, or the XXXXXXXXXX subsequent to such debt being acquired by a Beneficial Holder under the applicable Debt Put/Call Agreement as described in 82, 86 and 89 above, in respect of any dividends received by the Beneficial Holder or on the Class XXXXXXXXXX, Class XXXXXXXXXX or Class XXXXXXXXXX Special Shares;
M. The Put Fee XXXXXXXXXX, the Put Fee XXXXXXXXXX and the Put Fee XXXXXXXXXX payable by XXXXXXXXXX, as described in 80, 84 and 88, respectively, will be deductible to XXXXXXXXXX under subparagraph 20(1)(e)(ii.2);
N. Subsection 56(2) will not apply to any Beneficial Holder of a Class XXXXXXXXXX Special Share, Class XXXXXXXXXX Special Share or Class XXXXXXXXXX Special Share where that Beneficial Holder is a Canadian chartered bank listed in Schedule I of the Bank Act as a result of their waiving a portion of the dividends on the Class XXXXXXXXXX Special Shares, the Class XXXXXXXXXX Special Shares and the Class XXXXXXXXXX Special Shares, as the case may be, as described in 99 above;
N. As a result of the Proposed Transactions, in and of themselves, subsection 245(2) will not apply to redetermine the tax consequences confirmed in the rulings given.
These rulings are given subject to the general limitations and qualifications set forth in Information Circular 70-6R3, issued on December 30, 1996, and are binding on Revenue Canada provided the proposed transactions are carried out by XXXXXXXXXX. These rulings are based on the Act in its present form and does not take into account the effect of any proposed amendments.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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