-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EdUOfwnKO88zm/COMJ5Zi0xIgHCbb8C+Qg4h/G7HWvmmu/llRsq963bJ48Uqm/sm S4I+o8Wv+zw/G2/z9bqL8A== 0000891836-03-000256.txt : 20030423 0000891836-03-000256.hdr.sgml : 20030423 20030422213539 ACCESSION NUMBER: 0000891836-03-000256 CONFORMED SUBMISSION TYPE: F-10 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 20030423 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INCO LTD CENTRAL INDEX KEY: 0000049996 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 980000676 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: F-10 SEC ACT: 1933 Act SEC FILE NUMBER: 333-104688 FILM NUMBER: 03659049 BUSINESS ADDRESS: STREET 1: 145 KING ST WEST STREET 2: SUITE 1500 CITY: TORONTO ONTARIO CAN STATE: A6 ZIP: M5H 4B7 BUSINESS PHONE: 4163617511 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL NICKEL CO OF CANADA LTD DATE OF NAME CHANGE: 19770605 F-10 1 sc0126.txt FORM F-10 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 22, 2003 REGISTRATION NO. 333- =============================================================================== U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- FORM F-10 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------------------- INCO LIMITED (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CANADA N/A 98-0000676 (PROVINCE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL CLASSIFICATION (I.R.S. EMPLOYER IDENTIFICATION NUMBER OF INCORPORATION OR ORGANIZATION) CODE NUMBER (IF APPLICABLE)) (IF APPLICABLE))
145 KING STREET WEST, SUITE 1500, TORONTO, ONTARIO, M5H 4B7 (416) 361-7511 (ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) CT CORPORATION SYSTEM 111 EIGHTH AVENUE NEW YORK, NEW YORK 10011 (212) 894-8940 (NAME, ADDRESS, (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF AGENT FOR SERVICE IN THE UNITED STATES) ----------------------- COPIES TO: DONALD R. CRAWSHAW, ESQ. STUART F. FEINER, ESQ. SULLIVAN & CROMWELL LLP EXECUTIVE VICE-PRESIDENT, 125 BROAD STREET GENERAL COUNSEL & SECRETARY NEW YORK, NEW YORK 10004-2498 INCO LIMITED 145 KING STREET WEST, SUITE 1500 TORONTO, ONTARIO M5H 4B7 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE PUBLIC: FROM TIME TO TIME AFTER EFFECTIVENESS OF THIS REGISTRATION STATEMENT. PROVINCE OF ONTARIO (PRINCIPAL JURISDICTION REGULATING THIS OFFERING (IF APPLICABLE)) ----------------------- It is proposed that this filing shall become effective (check appropriate box): A.|_| Upon filing with the Commission, pursuant to Rule 467(a) (if in connection with an offering being made contemporaneously in the United States and Canada) B.|X| At some future date (check the appropriate box below): 1.|_| pursuant to Rule 467(b) on at (designate a time not sooner than 7 calendar days after filing) 2.|_| pursuant to Rule 467(b) on at (designate a time 7 calendar days or sooner after filing) because the securities regulatory authority in the review jurisdiction has issued a receipt or notification of clearance on . 3.|_| pursuant to Rule 467(b) as soon as practicable after notification of the Commission by the Registrant or the Canadian securities regulatory authority of the review jurisdiction that a receipt or notification of clearance has been issued with respect hereto. 4.|X| After the filing of the next amendment to this form (if preliminary material is being filed). If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to the home jurisdiction's shelf short form prospectus offering procedures, check the following box. |X| -----------------------
CALCULATION OF REGISTRATION FEE ============================================================================================================================= PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS AMOUNT TO BE OFFERING AGGREGATE OFFERING AMOUNT OF OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT (1) PRICE (1) REGISTRATION FEE - ----------------------------------------------------------------------------------------------------------------------------- 3 1/2% Subordinated Convertible Debentures $227,100,000 96.81% $219,855,510 $17,786.31 due 2052 ("Subordinated Debentures") - ----------------------------------------------------------------------------------------------------------------------------- Common Shares, without nominal or par value (2) (3) (3) (3) (and accompanying Common Share purchase rights) - ----------------------------------------------------------------------------------------------------------------------------- 1. This estimate is made pursuant to Rule 457(c) of the Securities Act solely for purposes of determining the registration fee. The above calculation is based on the average of the bid and ask prices for the Subordinated Debentures in the secondary market on April 16, 2003, as reported to the Registrant by the initial purchasers. 2. Includes such indeterminate number of Common Shares and accompanying Common Share purchase rights as may be issuable upon the conversion, redemption, repayment or maturity of the Subordinated Debentures, including such additional Common Shares and Common Share purchase rights as may be issuable as a result of adjustments to the conversion rate of the Subordinated Debentures. 3. Such Common Shares and accompanying Common Share purchase rights will, when and if issued, be issued for no additional consideration, and therefore no registration fee is required. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE AS PROVIDED IN RULE 467 UNDER THE SECURITIES ACT OF 1933 OR ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A) OF THE ACT, MAY DETERMINE. - ---------------------------------------------------------------------------------------------------------------------------- ============================================================================================================================
The information in this prospectus is not complete and may be changed. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer is not permitted. PART I INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS SUBJECT TO COMPLETION, DATED APRIL 22, 2003 $227,100,000 BASE SHELF PROSPECTUS - --------------------- INCO LIMITED 3 1/2% SUBORDINATED CONVERTIBLE DEBENTURES DUE 2052 -------------------- We issued $227,100,000 aggregate principal amount of 3 1/2% Subordinated Convertible Debentures due 2052 (the "Subordinated Debentures") on a private placement basis on March 7, 2003 and March 18, 2003. This prospectus may be used by selling securityholders in connection with resales of the Subordinated Debentures and the common shares issuable upon the conversion, redemption, purchase or payment of the Subordinated Debentures. Such common shares are sometimes referred to in this prospectus as the underlying shares. The Subordinated Debentures are currently eligible for trading on the PORTAL market of the National Association of Securities Dealers, Inc. Our common shares currently trade under the symbol "N" on the New York Stock Exchange and the Toronto Stock Exchange. The last reported sale price of our common shares on the New York Stock Exchange on April 21, 2003 was $19.65 per share. -------------------- INVESTING IN OUR COMMON SHARES OR THE SUBORDINATED DEBENTURES INVOLVES RISKS. PLEASE CAREFULLY CONSIDER THE "RISK FACTORS" SECTION BEGINNING ON PAGE 4 OF THIS PROSPECTUS. -------------------- The Subordinated Debentures and the underlying shares may be offered in negotiated transactions or otherwise, at varying prices determined at the time of the sale or at negotiated prices. In addition, the underlying shares may be offered from time to time through ordinary brokerage transactions on the New York Stock Exchange. See "Plan of Distribution". This prospectus has not been filed in respect of, and will not qualify, any distribution of Subordinated Debentures or underlying shares in Ontario or any other province or territory of Canada. The selling securityholders may be deemed to be "underwriters" as defined in the U.S. Securities Act of 1933, as amended. Any profits realized by the selling securityholders may be deemed to be underwriting commissions. If the selling securityholders use any broker-dealers, any commissions paid to broker-dealers and, if broker-dealers purchase any Subordinated Debentures or underlying shares as principals, any profits received by such broker-dealers on the resale of the Subordinated Debentures or underlying shares, may be deemed to be underwriting discounts or commissions under the Securities Act. We will not receive any of the proceeds from the resale of the Subordinated Debentures or the underlying shares by any of the selling securityholders. -------------------- UNDER THE MULTIJURISDICTIONAL DISCLOSURE SYSTEM ADOPTED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION, WE ARE PERMITTED TO PREPARE THIS PROSPECTUS IN ACCORDANCE WITH CANADIAN DISCLOSURE REQUIREMENTS, WHICH ARE DIFFERENT FROM THOSE OF THE UNITED STATES. WE PREPARE OUR FINANCIAL STATEMENTS IN ACCORDANCE WITH CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, AND ARE SUBJECT TO CANADIAN AUDITING AND AUDITOR INDEPENDENCE STANDARDS. THEY MAY BE NOT BE COMPARABLE TO FINANCIAL STATEMENTS OF UNITED STATES COMPANIES. OWNING SUBORDINATED DEBENTURES OR UNDERLYING SHARES MAY SUBJECT YOU TO TAX CONSEQUENCES BOTH IN THE UNITED STATES AND CANADA. THIS PROSPECTUS MAY NOT DESCRIBE THESE TAX CONSEQUENCES FULLY. YOU SHOULD READ THE TAX DISCUSSION UNDER "CERTAIN INCOME TAX CONSIDERATIONS". YOUR ABILITY TO ENFORCE CIVIL LIABILITIES UNDER THE UNITED STATES FEDERAL SECURITIES LAWS MAY BE AFFECTED ADVERSELY BECAUSE WE ARE INCORPORATED IN CANADA, SOME OF OUR OFFICERS AND DIRECTORS AND SOME OF THE EXPERTS NAMED IN THIS PROSPECTUS ARE CANADIAN RESIDENTS, AND MOST OF OUR ASSETS ARE LOCATED OUTSIDE THE UNITED STATES. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is o, 2003. TABLE OF CONTENTS Page CURRENCY REFERENCES............................................................2 CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS.........................3 ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES....................................3 INCO LIMITED...................................................................4 RISK FACTORS...................................................................4 USE OF PROCEEDS...............................................................14 PRICE RANGE OF COMMON SHARES..................................................15 DIVIDEND POLICY...............................................................15 EARNINGS COVERAGE.............................................................15 RATINGS.......................................................................16 DESCRIPTION OF SUBORDINATED DEBENTURES........................................16 LEGAL OWNERSHIP...............................................................32 DESCRIPTION OF SHARE CAPITAL..................................................34 CERTAIN INCOME TAX CONSIDERATIONS.............................................38 PLAN OF DISTRIBUTION..........................................................42 VALIDITY OF THE SUBORDINATED DEBENTURES.......................................44 EXPERTS.......................................................................44 AVAILABLE INFORMATION.........................................................44 DOCUMENTS INCORPORATED BY REFERENCE...........................................44 LIST OF DOCUMENTS FILED WITH THE SEC..........................................45 SCHEDULE A - LIST OF ELECTING HOLDERS.........................................45 You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. These securities are not being offered or sold in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus and the documents incorporated by reference is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed since those dates. IN THIS PROSPECTUS, UNLESS WE STATE OTHERWISE, "INCO", THE "COMPANY", "WE", "US" AND "OUR" REFER TO INCO LIMITED AND ALL OF ITS CONSOLIDATED SUBSIDIARIES, UNINCORPORATED UNITS AND DIVISIONS. CURRENCY REFERENCES Unless we state otherwise or the context otherwise requires, all references to dollar amounts in this prospectus are references to U.S. dollars. The exchange rate between the Canadian dollar and the U.S. dollar used in this prospectus varies depending on the date and context of the information contained herein. On April 21, 2003, the noon buying rate for U.S. dollars reported by the Bank of Canada was Cdn.$1.4544 for each U.S.$1.00. 2 CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS Certain statements contained in, or incorporated by reference into, this document are forward-looking statements as defined in the U.S. federal securities laws. Examples of such statements include, but are not limited to, statements concerning: (1) the price volatility for nickel and other primary metals products produced by us; (2) the long-term demand for and supply of nickel, copper and other metals as well as the availability of, and prices for, intermediates containing nickel purchased by us, and nickel-containing stainless steel scrap and other substitutes for primary nickel; (3) our premiums realized over London Metal Exchange cash prices and the sensitivity of our financial results to changes in metals prices and interest rates; (4) our strategies and objectives; (5) our interest and other expenses; (6) our energy, pension and other costs; (7) our position as a low-cost producer of nickel; (8) our debt-equity ratio and tangible net worth; (9) the political unrest or instability in countries such as Indonesia and its impact on our Indonesian subsidiary, PT International Nickel Indonesia Tbk, and political developments in other countries in which we operate and elsewhere; (10) the completion and results of a comprehensive review of the capital cost, scope, schedule and other key aspects of our Goro project and the results of the bankable feasibility study for our Voisey's Bay project; (11) the timing of the start of production and the costs of construction with respect to, and the issuance of the necessary permits and other authorizations required for, and engineering and construction timetables for, and the necessary financing plans and arrangements for, our Goro and Voisey's Bay projects, and, in the case of our Goro project, joint venture or similar investment and other agreements or arrangements; (12) our estimates of the quantity and quality of ore reserves; (13) planned capital expenditures; (14) our costs of production and production levels, including the costs and potential impact of complying with existing and proposed environmental laws and regulations and net reductions in environmental emissions; (15) the impact of changes in Canadian-U.S. dollar and other foreign exchange rates on our costs and results; (16) sales of speciality nickel products; (17) our cost reduction and other financial and operating objectives; (18) the commercial viability of new production processes; (19) our productivity, exploration and research and development initiatives as well as environmental, health and safety initiatives; (20) the negotiation of collective agreements with unionized employees; (21) our sales organization and personnel requirements; (22) business and economic conditions and (23) the enforceability of certain liabilities. Inherent in forward-looking statements are risks and uncertainties well beyond our ability to predict or control. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in, or incorporated by reference into, this document. Such statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, assumptions about: (a) business and economic conditions, including exchange rates and energy, pension and other costs and other anticipated and unanticipated costs; (b) the supply and demand for, deliveries of, and the level and volatility of prices of, nickel, copper, cobalt and our other metals products, purchased intermediates and nickel-containing stainless steel scrap and other substitutes and competing products for the primary nickel and other metal products we produce; (c) the timing of the receipt of regulatory and governmental approvals for our Goro and Voisey's Bay projects and other operations; (d) the availability of financing, including partner or other investment arrangements in the case of our Goro project, for our development projects on reasonable terms; (e) our costs of production and our production and productivity levels, as well as those of our competitors; (f) engineering and construction timetables and capital and operating costs for our Goro and Voisey's Bay projects; (g) market competition; (h) mining, processing, exploration and research and development activities; (i) the accuracy of ore reserve estimates; (j) premiums realized over London Metal Exchange cash and other benchmark prices; (k) tax benefits; (l) the resolution of environmental and other proceedings and the impact on us of the Kyoto Protocol and various other environmental regulations and initiatives; (m) political instability in Indonesia and other countries or locations in which we operate or otherwise; and (n) our ongoing relations with our employees at our operations throughout the world. See "Risk Factors" for more information about certain factors that, among others, may cause actual results and developments to differ from those expressed or implied by forward-looking statements contained in, or incorporated by reference into, this document. ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES We are a corporation organized under the laws of Canada and a majority of our assets are located in, and most of our directors and officers are residents of, Canada. As a result, it may be difficult for United States investors to effect service of process within the United States upon those directors or officers who are not residents of the United States, or to realize in the United States upon judgments of courts of the United States predicated upon civil liability of such directors or officers under U.S. federal securities laws. We have been advised by Osler, Hoskin & Harcourt LLP, our Canadian counsel, that a judgment of a U.S. court predicated solely upon civil liability under such laws would probably be enforceable in Canada if the U.S. court in which the judgment was obtained had a basis for jurisdiction in the matter that was recognized by a Canadian court for such purposes. We have also been advised by such counsel, however, that there is substantial doubt whether an action could be brought in Canada in the first instance on the basis of liability predicated solely upon such laws. INCO LIMITED Inco Limited is one of the world's premier mining and metals companies. We are a leading producer of nickel, a hard, malleable metal which, given its properties and wide range of applications, can be found in thousands of products. We are also an important producer of copper, precious metals and cobalt, and we produce sulphuric acid and liquid sulphur dioxide as by-products of our operations at Sudbury, Ontario. Our principal mines and processing operations are located in the Sudbury area of Ontario, the Thompson area of Manitoba, and, through our 59 per cent-owned subsidiary, PT International Nickel Indonesia Tbk ("PT Inco"), on the island of Sulawesi, Indonesia. We have additional wholly-owned metals refineries at Port Colborne, Ontario and in the United Kingdom at Clydach, Wales and Acton, England. We also have interests in nickel refining capacity and nickel salts production facilities located in Japan, Taiwan, South Korea and the People's Republic of China. We currently have two major development projects, our Goro and Voisey's Bay projects. We indirectly own an 85 per cent interest in Goro Nickel which holds a number of claims covering nickel-cobalt properties in the French Overseas Territory of New Caledonia, which we refer to as our Goro deposit. Our wholly-owned subsidiary, Voisey's Bay Nickel Company Limited, holds the mineral licenses covering the Voisey's Bay deposit and certain other mineral licenses and claims in the Province of Newfoundland and Labrador. We are currently in the process of undertaking a review of our Goro project. See "Risk Factors--Risks Associated with, and Importance of, Future Low-Cost Nickel Projects--Uncertainty of Production and Capital and Other Cost Estimates". Our executive offices are located at 145 King Street West, Suite 1500, Toronto, Ontario, Canada M5H 4B7. You should refer to our annual report on Form 10-K for the year ended December 31, 2002 (the "2002 10-K") for additional information regarding us and our operations throughout the world, including our exploration programs and our ore reserves. RISK FACTORS Investment in the Subordinated Debentures involves certain risks. Prospective purchasers of the Subordinated Debentures should consider carefully the risk factors set forth below as well as the other information contained and incorporated by reference in this prospectus before purchasing the Subordinated Debentures, including the information contained in our 2002 10-K. RISKS RELATING TO OUR BUSINESS VOLATILITY OF PRICE OF NICKEL AND OTHER PRICES AND THEIR EFFECT ON OUR FINANCIAL RESULTS The price of nickel has represented, and is currently expected to continue to represent, the principal determinant of our profitability. Accordingly, our financial performance has been, and is expected to continue to be, closely linked to the price of nickel and, to a lesser extent, the price of copper and other primary metals produced by us. Since we sell our nickel products in all major geographical markets, the prices for primary nickel and other primary metals products realized by us are influenced by both global and regional supply and demand factors and by the availability and prices of secondary or metal-containing scrap material, including nickel-containing scrap generated by the stainless steel industry, and other substitute or competing commodity products for the primary nickel and other metal products produced by us. In recent times, the world's nickel and copper markets have been adversely affected by excess supply conditions. Based upon available data, we believe that between mid-1999 and the second half of 2000, global nickel demand exceeded supply, but for most, if not all, of 2001, a surplus condition existed in the global nickel market. For 2002, we estimate that, with the improvement in global nickel demand, the global nickel market experienced a modest surplus position. There can be no assurance that the excess supply situations which have existed historically in the nickel markets will not occur in the future. Any such excess supply condition would have an adverse effect on the prices realized by us for our nickel products. Other international economic trends, including an uncertain global economic environment, expectations of inflation and political events in major nickel-producing and consuming countries can also affect nickel prices and the prices of other metals produced by us. These factors are beyond our control and have resulted, and are expected to continue to result, in a high degree of price volatility for nickel and other primary metals produced by us. There can be no assurance that the price for nickel or other metals produced by us will not decline significantly from current levels. A return to the relatively low price of nickel reflected by the London Metal Exchange ("LME") cash nickel price which prevailed through most of 1998 and into the first half of 1999 and during a portion of the second half of 2001 would have a material adverse impact on our business, results of operations, financial condition and liquidity. The price of nickel, as the principal determinant of our profitability, has fluctuated significantly for many years. Over the past two years, there have been significant fluctuations in the LME cash nickel price. The LME cash nickel price on January 2, 2001 was $6,995 per tonne ($3.17 per pound) and fell during the course of that year through the end of October 2001, reaching a low of $4,420 per tonne ($2.00 per pound) on October 31, 2001. The LME cash nickel price improved during the remainder of the fourth quarter of 2001, averaging $5,039 per tonne ($2.29 per pound) for that quarter and was $5,680 per tonne ($2.58 per pound) on December 31, 2001. The LME cash nickel price opened 2002 at $5,680 per tonne ($2.58 4 per pound) and increased during the first half of 2002 as the economies of certain industrialized countries began to recover from their relatively low fourth quarter 2001 levels, ending the first half of the year at $7,080 per tonne ($3.21 per pound). Prices declined through the third quarter, reaching a low of $6,305 per tonne ($2.86 per pound) as concern over the pace of economic recovery and uncertainty about a potential war with Iraq adversely affected the nickel markets. Prices increased in the fourth quarter of 2002, and the LME cash nickel price ended 2002 at $7,100 per tonne ($3.22 per pound). As of April 17, 2003, the LME cash nickel price was $8,070 per tonne ($3.66 per pound). We believe that the improvement in the LME cash nickel price in late 2002 and through April 21, 2003 has been due principally to the recovery in stainless steel production levels and demand for certain other end-use applications for nickel in certain geographic regions. However, we have not seen any recovery in certain other important end-use markets for nickel, in particular the high nickel alloys industry, during 2002 and into 2003. Global nickel demand has historically been closely correlated with global industrial production. Copper is also an important product for us and, like nickel, copper prices have been volatile for many years. For 2001, while the early part of the year saw some improvement in global copper demand, copper prices declined during the course of the year based upon the overall global economic slowdown and increased copper inventories. The COMEX first position cash copper price, the principal price upon which our copper sales are based, averaged $1,600 per tonne ($0.73 per pound) in 2001, down 14 per cent from its average of $1,851 per tonne ($0.84 per pound) in 2000. Copper prices for 2002 did not change significantly from the 2001 average, with the average COMEX first position cash copper price at $1,560 per tonne ($0.72 per pound) for 2002. On April 21, 2003 the COMEX first position cash copper price was $1,609 per tonne ($0.73 per pound). Our development projects discussed under "Risks Associated with, and Importance of, Future Low-Cost Nickel Projects" below, in addition to the quantities of nickel projected to be produced by them, are expected to produce significant quantities of cobalt given the currently estimated quantities of cobalt in the mineral deposits to be mined as part of these projects. With significant increases in the global supply of cobalt and changes in demand, the price of cobalt has fluctuated significantly over the past several years, reaching a high of $70.30 per kilogram ($31.90 per pound) in January 1996 and declining significantly from that peak to an average price, based upon the Metal Bulletin 99.8 per cent average cobalt reference price, of $15.66 per kilogram ($7.10 per pound) for 2002 and was $20.83 per kilogram ($9.45 per pound) on April 17, 2003. The financial analyses undertaken by us in support of the substantial investment to be made with respect to these projects has been based upon a long-term price of cobalt of $15.40 per kilogram ($7.00 per pound). If realized cobalt prices, as well as realized prices for the other metals to be produced by these projects, were to be below the long-term prices assumed by us, the expected financial returns from, and expected cash and other unit costs of production for, these projects would be adversely affected. For information concerning the sensitivity of our results of operations to certain changes in the price of nickel and other metals refer to "Risks and Uncertainties--Sensitivities" in the Management's Discussion and Analysis included as an exhibit to our 2002 10-K. RISKS ASSOCIATED WITH, AND IMPORTANCE OF, FUTURE LOW-COST NICKEL PROJECTS As part of our strategy to be the world's lowest-cost and most profitable nickel producer, we have continued our efforts to develop new low-cost sources of nickel. Following the completion of the PT Inco expansion project in late 1999, we have focused on potential future projects to commercialize our Goro nickel-cobalt deposit and Voisey's Bay nickel-copper-cobalt deposit. A number of risks and uncertainties are associated with the development of these projected low-cost sources of nickel and other metals, including political, regulatory, design, construction, labor, operating, technical and technological risks, uncertainties relating to capital and other costs and financing risks and, in the case of Goro, those risks related to the possible transition to independence in the future of the French overseas territorial community of New Caledonia. In addition to the risks and uncertainties referred to above, there are certain issues that must be resolved to enable the commercial development of each of these deposits to proceed. For the Goro deposit, we still need to receive the necessary environmental and operating permits, complete our comprehensive review of the schedule, capital costs, scope and other key aspects of this project and develop an acceptable updated capital cost estimate (as discussed under "Uncertainty of Production and Capital and Other Cost Estimates" below) and, as discussed below, complete the required financing, including bringing in a partner for the project, on acceptable terms. In the case of our Voisey's Bay deposit, the principal issues that would have to be resolved before commercial development can begin include issuance of the necessary construction and operating permits, meeting the conditions to be met with respect to the overall effectiveness of the definitive agreements on the development of the Voisey's Bay deposit reached in October 2002 between the Government of Newfoundland and Labrador and us and the availability of financing required for development on acceptable terms. In connection with raising the significant financing which we currently believe will be required for the commercial development of the Goro and Voisey's Bay deposits, we currently expect that, in order to meet such financing needs, we will be required to borrow additional funds and/or issue additional debt and/or equity or arrange other forms of financing and/or enter 5 into strategic or other arrangements. Our current plans for development of Goro contemplate finalization of at least approximately $350 million in tax-advantaged financing under an existing French legislative program. Our plans also contemplate finalization of the terms and conditions under which a Japanese consortium to be led by Sumitomo Metal Mining Co., Ltd. would acquire a 25 per cent interest in Goro and assume, subject to certain limitations, the obligation to fund 25 per cent of the capital costs of the Goro project. There can be no assurance that these arrangements will be finalized or that we will be able to raise additional required funds on acceptable terms when financing is needed for either project. As discussed under "Uncertainty of Production and Capital and Other Cost Estimates" below, while we have certain potential new mine development projects at existing operations in Canada, as well as additional resources that could be developed in Indonesia, in addition to the Voisey's Bay and Goro projects, if sufficient new low-cost sources of nickel are not developed by us on a timely basis, our overall nickel production, particularly at our Manitoba operations, could decline by 2004, and our unit cost of production could increase significantly with any material decline in mine production from the Canadian operations if such operations were not significantly restructured. These developments could materially adversely affect our business, results of operations, financial condition and liquidity. CONSTRUCTION RISKS AND TECHNOLOGICAL RISKS The mine, processing plant and related infrastructure required for development of the Goro and Voisey's Bay deposits have not yet been constructed and no commercial mining has commenced. While certain necessary construction permits have been obtained in respect of the Goro deposit and detailed exploration and related studies with respect to the Goro deposit and a portion of the Voisey's Bay deposit have been completed based on (1) significant surface exploratory drilling, (2) extensive investigations of certain of the mineralization delineated to date, (3) construction and mine plans, and (4) production and cost estimates, we are not currently in a position to predict when all of the required approvals would be in place for us to develop either project and, in the case of the Goro project, when construction would be restarted given the status of the comprehensive review, as discussed under "Uncertainty of Production and Capital and Other Cost Estimates", currently being undertaken, and, in the case of the Voisey's Bay deposit, when construction will be able to commence. Depending on the severity of winter conditions and other factors applicable to the Voisey's Bay deposit, a period of approximately 36 months from site mobilization will be required to complete construction of the initial phase, the mine, mill and related facilities necessary for the commercial development of such deposit after all necessary approvals and permits have been secured. Unforeseen conditions or developments could arise during the construction period for either project which could delay or prevent completion, and/or substantially increase the cost of construction of the necessary facilities and infrastructure to develop the Goro and the Voisey's Bay deposits. Such events may include, without limitation, shortages of equipment, materials or labor, delays in delivery of equipment or materials, labor disruptions, political events, local or political opposition, civil disturbances, litigation, adverse weather conditions, unanticipated increases in costs, natural or man-made disasters, accidents and unforeseen engineering, technical and technological, design, environmental, geological or geotechnical problems. Any delay in construction would delay the production of nickel and other products from the Goro and/or the Voisey's Bay deposits, and the expected significant source of revenue for us that production from these deposits would represent. Any such delay could also materially adversely impact our business, results of operations, financial condition and liquidity. Our Goro project will involve the application of new processing and other technologies and, depending upon the results of the hydrometallurgical process research and development program we plan to conduct for our Voisey's Bay project, that project could also utilize new processing and other technologies to produce one or more refined or finished nickel products. There can be no assurance that these technologies will be successfully developed and applied on a commercial basis or that the costs associated with and/or the timing of their implementation will not have a material adverse effect on the timing of the start-up of commercial production, the capital and/or operating costs for either or both projects and on other factors impacting the profitability of these projects. These developments could materially adversely impact our business, results of operations, financial condition and liquidity. UNCERTAINTY OF PRODUCTION AND CAPITAL AND OTHER COST ESTIMATES In the case of our Goro project, in September 2002, at the time the project was experiencing certain labor disruptions, we initiated a review of the status of certain key aspects of the project, including the necessary permitting, capital cost estimate, schedule and organization. Work over the September -- November 2002 period on certain critical parts of the project, including engineering, continued during this initial review. On December 5, 2002, we announced that we would be undertaking a comprehensive review of the Goro project. The objective of the comprehensive review is to assess all information on our Goro project, including the various cost estimates and trends, and determine what changes in the capital cost estimate and the project can be made to maintain the project's economic feasibility. The review of the capital cost estimate will cover what downward adjustments can be made in such estimate through scope or design changes, modifications to construction and related plans and civil and other contractual arrangements, and alternative project execution strategies. Since that announcement, we have been evaluating what onsite and offsite work should be curtailed or stopped and what work should be 6 continued while this review is ongoing. The comprehensive review was commenced in response to information we received from the principal firms providing project engineering, procurement and construction management services that, if confirmed, would indicate an increase in the capital cost for the project in the range of 30 to 45 per cent above the then current capital cost estimate of $1,450 million. As a result of the temporary suspension of certain development activities and other actions which had been taken by year-end 2002 during this review process, we recorded a pre-tax charge of $25 million in the fourth quarter of 2002. This charge was comprised of pre-tax expenses of $62 million relating to the cancellation or termination of certain outstanding contractual obligations, to accrue for demobilization costs and to reduce the carrying value of certain assets relating to the project, partially offset by currency gains of $37 million from the early settlement of certain forward currency contracts that had been entered into for hedging purposes. Based upon this ongoing evaluation, we have also been reviewing various contractual and other arrangements covering construction and other work relating to the Goro project and implementing certain actions to suspend or terminate certain of those contractual arrangements. As of December 31, 2002, we had spent approximately $385 million on the Goro project since July 1, 2001 when this project was formally launched. This amount excludes a current estimate of approximately $260 million that would still have to be spent for equipment, services and other requirements under existing contracts and commitments, and accruals of approximately $120 million relating to such requirements as of year-end 2002, most of which is expected to have value for the project. Since the Goro project review process is still in its preliminary stages given its planned scope, we do not currently expect to be in a position to report on the results of this review, including an updated capital cost estimate for the project and the additional effect, if any, that this review could have on our financial results, until at least the end of the second quarter or early in the third quarter of 2003. We have been working with various parties to assist us in the review process. While the key objective of this comprehensive review is to implement such actions and steps, if required, to have a project that will meet an acceptable rate of return on the investment to be made in this project, if, upon completion of the review, we were to conclude that the Goro project could not be restructured to meet our rate of return on investment requirements, we would likely write off all or a substantial portion of the carrying value of the Goro project and we would also lose the expected future production from Goro. Such a result would have a material adverse effect on our business, results of operations, financial condition and liquidity. During 2002, as mine production at our Manitoba operations transitioned from the Thompson mine to the lower grade Birchtree mine, we experienced lower mine production. As this transition moves forward, we expect to see declining mine production in Manitoba in 2003 and in future years. We have recently been relying upon, and will continue to rely upon, on an increasing basis, the availability of purchased intermediates to maintain Manitoba's nickel production at around the 45,000 tonne annual level. While we have entered into agreements and other arrangements to purchase intermediates to maintain Manitoba's production levels at or near the 45,000 tonne annual level for the next few years, until the Voisey's Bay project produces intermediates in the form of concentrates for further processing at the Manitoba and Ontario operations, if suppliers of the purchased intermediates were to experience production problems or other disruptions, this could have a material adverse effect on our nickel production, business, results of operations, financial condition and liquidity. While we have certain potential new mine development projects at our existing operations in Canada, if sufficient new low-cost sources of nickel such as our Voisey's Bay and Goro projects are not developed on a timely basis, our overall nickel production, particularly at our Manitoba operations, could decline by 2004, and our unit cost of production could increase significantly with any material decline in mine production from our Canadian operations if such operations were not significantly restructured. These developments could materially adversely impact our business, results of operations, financial condition and liquidity. The level of production and capital and operating cost estimates relating to the Goro project, the Voisey's Bay project and other projects of ours, which are used in establishing ore reserve estimates and for determining and obtaining financing and other purposes, are based on certain assumptions and are inherently subject to significant uncertainties. In the case of our Goro project, as discussed above, the review by us could result in a capital cost estimate substantially higher than the 15 per cent increase in the estimate that we had indicated in the third quarter of 2002 could occur given the then current state of project procurement and engineering. We announced on March 20, 2003 (i) the results of our bankable feasibility study for the mine for the Ovoid and adjacent surface deposits, concentrator and related facilities representing part of the initial phase of the Voisey's Bay project and (ii) that we plan to proceed with this initial phase. 7 Based upon the results of the study, the estimated total capital cost for the mine and 6,000-tonne per-day concentrator and related facilities representing the mine, concentrator and related facilities and infrastructure in the Voisey's Bay area (the "Mine/Concentrator Project") will be $582 million, including $35 million spent since July 2002 on infrastructure and related work. The $582 million amount represents an increase of $77 million or about 15 per cent over the prefeasibility study estimates for the Mine/Concentrator Project. This estimate includes a $54 million contingency. The initial phase of the Voisey's Bay project will also involve a research and development program covering hydrometallurgical processing technologies (the "Hydromet R&D Program") for the treatment of the Voisey's Bay nickel and cobalt-containing concentrates to be produced into finished nickel and cobalt product, including the demonstration plant to be constructed in Argentia, Newfoundland. The Hydromet R&D Program is expected to cost approximately $134 million or about 14 per cent above the initial estimate for this program. In addition to the Mine/Concentrator Project and the Hydromet R&D Program, the initial phase will include handling facilities to be constructed at our Canadian operations for the nickel and cobalt-containing concentrates to be processed over the 2006 - 2011 period once the Mine/Concentrator Project and the demonstration plant are in operation, at an estimated cost of $47 million, and an exploration program at an estimated cost of $13 million. The total capital cost estimate for all four parts of the initial phase of the Voisey's Bay project is $776 million, or about 14 per cent above the prefeasibility study estimates of $680 million. The engineering firm retained to complete the study has indicated that it believes that the capital cost estimate is within a range of plus 15% and minus 5% of the $547 million figure still to be spent for the Mine/Concentrator Project. It is very likely that actual results for these projects will differ from our current estimates and assumptions, and these differences may be material. In addition, experience from actual mining or processing operations may identify new or unexpected conditions which could reduce production below, and/or increase capital and/or operating costs above, our current estimates. If actual results are less favorable than we currently estimate, our business, results of operations, financial condition and liquidity could be materially adversely impacted. RISKS ASSOCIATED WITH PT INCO Our investment in PT Inco at book value as of December 31, 2002 totalled $364 million. Approximately 30 per cent of our 2003 planned total production of primary nickel, including intermediate product, is currently expected to come from PT Inco. 8 In 1999, to meet PT Inco's cash shortfalls attributable principally to the increase in the capital cost of the new hydroelectric facilities which were part of PT Inco's expansion project, the relatively low nickel prices, and constraints on PT Inco's production attributable to then reduced hydroelectric power generation caused by below average rainfall, we advanced $88 million in total to PT Inco. These advances have since been repaid. PT Inco may experience cash shortfalls in the future, particularly if there were to be a significant decline in primary nickel demand and nickel prices. In the event of such a cash shortfall, we may again conclude that it would be necessary to advance cash to PT Inco in order to meet PT Inco's cash needs. The uncertain political situation in Indonesia, primarily as a result of the ongoing economic and political problems facing that country, could adversely affect PT Inco's ability to operate. While there has been no indication that the Government of the Republic of Indonesia is considering currency controls, nationalization of certain properties or facilities or other similar actions, regional and local governmental authorities have sought to take greater control of the development of their resources and these or other political developments, including, but not limited to, the possibility of disruptions in PT Inco's operations arising out of the actions of non-governmental organizations or community activist groups, could have a material adverse effect on PT Inco's, and therefore our, nickel production, business, results of operations, financial condition and liquidity. ENVIRONMENTAL RISKS Environmental legislation affects nearly all aspects of our operations worldwide. These laws apply to us along with other companies in the mining and metals industry. This type of legislation requires us to obtain operating licenses, permits and other approvals and imposes standards and controls on activities relating to mining, exploration, development, production, closure and the refining, distribution and marketing of nickel and other metals products. Environmental assessments are required before initiating most new projects or undertaking significant changes to existing operations. In addition to current requirements, we expect that additional environmental regulations will likely be implemented to protect the environment and quality of life, given issues of sustainable development and other similar requirements which governmental and supragovernmental organizations and other bodies have been pursuing. Some of the issues currently under review by environmental regulatory agencies include (1) further reducing or stabilizing various emissions, including sulphur dioxide, metal and greenhouse gas emissions, (2) mine reclamation and restoration, and (3) water, air and soil quality and waste treatment and disposal. Although the ultimate amount to be incurred is uncertain, the total liability for future removal and site restoration costs in respect of our worldwide operations, to be incurred primarily after cessation of operations, is estimated to be approximately $415 million at December 31, 2002, up from $315 million at December 31, 2001. The increase was primarily due to the inclusion of new estimates for certain sites. In recognition of this future liability, we have recorded annually commencing in 1995 an accounting provision of $10 million for future removal and site restoration costs, which is included in cost of sales and operating expenses. This amount is based upon the estimated remaining lives of our applicable ore reserves and facilities and is in addition to ongoing operating and capital expenditures. The estimate of the total liability for future removal and site restoration costs has been developed from independent environmental studies, which include an evaluation of, among other factors, currently available information with respect to closure plans and closure alternatives, the anticipated method and extent of site restoration using current costs and existing technology, and compliance required by presently enacted laws, regulations and existing industry standards. The total liability for future removal and site restoration costs represents estimated expenditures associated with closure, progressive rehabilitation and post-closure care and maintenance. Potential recoveries of funds from the future sale of assets upon the ultimate closure of operations have not been reflected in the estimate of the total liability or related annual provision. Future changes, if any, to the estimated total liability, as a result of amended requirements, laws, regulations and operating assumptions may be significant and would be recognized prospectively as a change in accounting estimate, when applicable. Environmental laws and regulations are continually evolving in all areas in which we operate. Changes made in 2000 to mining regulations in the Province of Ontario will require us to provide letters of credit or other forms of financial security to fund our future reclamation and restoration costs, which are not expected to be incurred for many years, if we were to no longer meet certain minimum investment grade credit ratings for our outstanding publicly traded debt securities. Although our debt securities are currently rated investment grade, they were rated below investment grade in recent times and there can be no assurance that this situation will not reoccur. If we are not able to maintain the minimum investment grade credit ratings, it is currently estimated that letters of credit or other forms of financial security associated with the currently estimated costs of the eventual future closure of our mines and other facilities in Ontario would have to cover approximately $310 million in such closure costs. Due to the recent closure of three mines in Ontario in 2002, we were required under such mining regulations to provide surety bonds in the amount of $17 million as of December 31, 2002 to secure closure costs. In addition, we are subject to certain Indonesian regulations which require us to provide security for the reclamation of land areas that have been mined. In the case of our Manitoba operations we expect that, based upon recently enacted regulations in the Province of Manitoba, we will be required to provide some form of financial security for our future reclamation and restoration costs in that Province. However, it is not currently expected that these costs and related security 9 with respect to our Manitoba operations (beyond what has been included in the $415 million estimate referred to above) and for our Indonesian operations will be of a material amount. These potential costs might not be incurred until many years in the future. If these requirements for letters of credit or other forms of financial security had to be satisfied, they could have an adverse effect on the amounts available for borrowing under our bank credit facilities. In February 2002, the Ontario government issued a control order that requires us to reduce sulphur dioxide emissions by 34 per cent at our Ontario smelting operations by the end of 2006. We are implementing a $76 million investment in fluid bed roaster off-gas scrubbing technology intended to reduce sulfur dioxide emissions to the new levels mandated by this new control order by the end of 2006. As part of the control order, we will also be required to (1) reduce ground level concentrations of sulfur dioxide, (2) continue research into the technology and economics of further reductions in sulphur dioxide emissions and (3) report annually to the Ontario Ministry of the Environment and the public on the progress of this research program. The control order calls for a final report on achieving the additional reductions to be submitted by December 31, 2010. We do not currently expect that compliance with the annual sulphur dioxide emission levels from our smelter operations or ground level concentrations levels as set forth in the control order will have any significant effect on our costs, operating procedures or annual production of nickel and other primary metals from our Ontario operations. The Province of Ontario recently issued a discussion paper covering proposals for further reductions in sulfur dioxide emissions by non-ferrous smelting operations, including our operations, and the federal government of Canada has recently designated for further regulation certain sulfur dioxide and particulate emissions from copper-smelting operations such as those we have in Ontario. While we are not able to determine the effect, if any, of these recent developments and significant future changes in regulatory emission limits and other environmental laws and regulations that may be enacted in the future due to the uncertainty surrounding the timing and ultimate form that such changes may take, any such changes could have a material adverse effect on our business, results of operations, financial condition and liquidity. Canada signed and ratified the Kyoto Protocol to the United Nations Framework Convention on Climate Change ("Kyoto Protocol") in December 2002. The Kyoto Protocol calls for significant reductions in the emissions of greenhouse gases, such as carbon dioxide, and nationwide ceilings on such emissions. In November 2002, the federal government of Canada released an initiative to address certain causes of climate changes. The specific requirement of this initiative is also to limit the discharge of carbon dioxide and other greenhouse gases. Neither of these initiatives has as yet established what the allocation of restrictions among various sources of greenhouse gases would be. While the precise impact on our Canadian operations and the operations of others who provide energy or other products or services to us is uncertain at this time, we anticipate that compliance with these initiatives could have a significant adverse effect on our results of operations and costs. In 2002, the Danish Environmental Protection Agency, as part of the authority granted to it under certain environmental regulations of the European Union Commission, published draft risk assessment reports, including certain conclusions concerning potential human health hazards associated with nickel metal and certain soluble nickel compounds, including nickel sulphate, nickel chloride and nickel nitrate. This Agency determined, based on certain animal studies, that soluble nickel is a reproductive toxin and has proposed certain product labelling requirements as a result of this determination. It has also assessed certain other environmental issues. In addition, based upon these draft reports and taking into consideration certain studies, this Agency has proposed that soluble nickel be classified under its hazard classification system as a known human carcinogen. Before any such proposed classification could come into effect, a number of regulatory and administrative steps would have to be completed. If this proposed classification were to come into effect as currently proposed, it could result in use restrictions and other requirements which could have a material adverse impact on certain producers and end users of the forms of nickel covered by such classification and on our business, results of operations, financial condition and liquidity. The European Union Commission also in 2002 proposed a directive on air pollution which includes target limit values for nickel since nickel is considered by this Commission to be a possible carcinogenic pollutant. Member states of the European Union will have until 2010 to achieve the target limit values, after which more stringent binding limit values may be considered. The technical and socio-economic feasibility of meeting such limits are currently being considered by the European Union Commission and those industries that would be affected, including nickel producers. Further changes in environmental laws, the restrictions on our discharge of greenhouse gases as a result of Canada's program to comply with the Kyoto Protocol and similar developments that may be imposed, new information on existing environmental conditions and other events, including legal proceedings brought based upon such conditions or an inability to obtain necessary permits, could require increased financial reserves or compliance or other expenditures or otherwise have a material adverse effect on our business, results of operation, financial condition and liquidity. Other changes in environmental legislation could have a material adverse effect on product demand, product quality and methods of production and distribution. The complexity and breadth of these issues make it extremely difficult to predict their future impact on us. We anticipate capital expenditures and operating expenses will increase in the future as a result of the implementation of new and increasingly stringent environmental regulations. Compliance with environmental legislation can require significant expenditures and failure to comply with environmental legislation may result in the imposition of fines and 10 penalties, liability for clean up costs, damages and the loss of important permits. There can be no assurance that we will at all times be in compliance with all environmental regulations or that steps to bring us into compliance would not materially adversely affect our business, results of operation, financial condition or liquidity. We may also be subject to claims from persons alleging that they have suffered significant damages as a result of the environmental impact of our operations, including operations that have ceased to exist for many years. COMPETITION The nickel industry is highly competitive in all aspects of operations, including the exploration for, and the development of, new sources of supply, the acquisition of deposits, and the processing, distribution and marketing of nickel products. The level of production and export of primary nickel and secondary or nickel-containing scrap material from the Russian Federation as well as other sources of such scrap, together with the continuing relatively limited level of domestic consumption of nickel in the Russian Federation since the break-up of the former Soviet Union, has had, and is expected to continue to have, a significant impact on the nickel industry's supply-demand balance. During 1999, three new nickel projects in Australia began commercial production at costs of production which the sponsors of such projects had estimated to be very favorable relative to other industry participants, including us. While these projects still have not operated at close to their aggregate indicated production capacity, which had been estimated by their sponsors to be approximately 65,000 tonnes annually in total, increases in the supply of nickel resulting from those projects, and from other new sources of nickel, if developed, could create downward pressure on prices realized by us for our primary nickel products. While we expect that the demand for nickel will continue to grow over the longer term, increases in supply in excess of increases in demand could cause nickel prices to remain at current levels or to decrease further. Any such situation could materially adversely affect our business, results of operations, financial condition and liquidity. See "--Volatility of Price of Nickel and Other Prices and their Effect on Our Financial Results" above. As we expect to become a significant producer of cobalt once our development projects begin commercial production, our results will also be affected by the currently projected highly competitive market for cobalt. GOVERNMENTAL REGULATIONS In addition to environmental regulations referred to above, the mining and metals industry in Canada operates under federal, provincial and municipal legislation, regulation and intervention by governments in such matters as land tenure, limitations on areas in which mining can be conducted, production rates, income and other taxes and the export of ore and other products, as well as other matters. Our operations in Indonesia, the United Kingdom, New Caledonia and other countries outside Canada are also subject to various environmental and other applicable laws and regulations and governmental interventions, some of which are similar to those in Canada and all of which are subject to change. The mining and metals industry is also subject to regulation and intervention by governments in such matters as control over the development and abandonment of mine sites (including restrictions on production) and possible expropriation or cancellation of contract and mineral rights. Before proceeding with major projects, including significant changes to existing operations, we must obtain regulatory approvals. The regulatory approval process can involve stakeholder consultation, environmental impact assessments and public hearings, among other things. In addition, regulatory approvals may be subject to conditions, including the obligation to post security deposits and other financial commitments. Failure to obtain regulatory approvals, or failure to obtain them on a timely basis, could result in delays and abandonment or restructuring of projects and increased costs, all of which could negatively affect our future earnings and cash flow. In addition, such regulations may be changed from time to time in response to economic or political conditions, and the implementation of new regulations or the modification of existing regulations affecting the mining and metals industry could increase our costs and have a material adverse impact on business, results of operations, financial condition and liquidity. There can be no assurance that we will be in compliance with all applicable statutes or regulations at all times or that steps to bring us into compliance would not materially adversely impact our business, results of operations, liquidity or financial condition. See "--Environmental Risks" above. CAPITAL REQUIREMENTS AND OPERATING RISKS Each of our two current principal primary metals business units, the Canadian and U.K. operations and our 59 per cent owned Indonesian subsidiary, PT Inco, has required, and is expected to continue to require, certain levels of investment to sustain its current levels of production. For 2003, we currently forecast capital expenditures totalling approximately $680 million, covering sustaining capital projects for these units as well as planned expenditures for our Goro and Voisey's Bay projects and other development projects. This total amount assumes a level of capital expenditures for our Goro project of $260 11 million, which may be higher or lower depending upon the results of the review referred to under "--Uncertainty of Production and Capital and Other Cost Estimates" above and other developments, and $185 million for our Voisey's Bay project, which may be higher or lower depending upon the results of the bankable feasibility study referred to above and other developments. We anticipate very substantial continuing capital expenditures in 2004 and subsequent years for sustaining capital projects and for our development projects. The expected capital costs of each of our two major development projects are under review and may ultimately be much higher than what we currently anticipate. To meet such capital expenditure requirements, we must generate sufficient positive internal cash flow and/or utilize available financing sources. In addition, our mining operations and processing and related infrastructure facilities are subject to risks normally encountered in the mining and metals industry. Such risks include, without limitation, environmental hazards, industrial accidents, labor disputes, changes in laws, technical difficulties or failures, late delivery of supplies or equipment, unusual or unexpected geological formations or pressures, cave-ins, pit-wall failures, rock falls, unanticipated ground, grade or water conditions, flooding, periodic or extended interruptions due to the unavailability of materials and force majeure events. Such risks could result in damage to, or destruction of, mineral properties or producing facilities, personal injury, environmental damage, delays in mining or processing, losses and possible legal liability. Any prolonged downtime or shutdowns at our mining or processing operations could materially adversely affect our business, results of operations, financial condition and liquidity. For example, we recently experienced certain seismic conditions at two of our mines at our Ontario operations which required us to curtail mining activities while these conditions were evaluated. These conditions did not result in any significant production disruptions but could reoccur in the future and could adversely affect our production. In addition, our Indonesian subsidiary recently experienced an unexpected maintenance requirement covering one of its two hydroelectric generating facilities which will require a limited shutdown of the facility to repair the facility's two turbines. We do not currently expect that this shutdown will affect PT Inco's 2003 planned production, although there can be no assurances in this regard. The wholesale electricity markets in Ontario were deregulated for a portion of 2002 and as a result we experienced fluctuations in some of our electricity costs at our Ontario operations. Depending upon future changes in the regulatory environment for these markets, we could experience future fluctuations in such costs. We have from time to time experienced adverse production and production cost trends at our operations in Canada and elsewhere and could experience similar adverse trends in the future. LABOR RELATIONS Collective agreements with unionized hourly production and maintenance workers at our Ontario operations remain in effect until May 31, 2003 and a three-year collective agreement with our unionized office, clerical and technical employees at our Ontario operations remains in effect until March 31, 2004. On September 15, 2002, a new three-year collective agreement with our unionized workers at our Manitoba operations was successfully negotiated. Our PT Inco subsidiary entered into a new two-year collective labor agreement with its union in January 2003. While there were no significant problems in reaching agreement on this new agreement with PT Inco's labor force, with the increased potential for actions of non-government organizations and other activist groups, as part of the current uncertain economic and political situation in Indonesia, and the general increase in labor activism in that country, there can be no assurance that such activism will not adversely affect PT Inco's ability to successfully operate. Any disruption in PT Inco's operations as a result of labor issues or other issues may adversely affect its operations and could materially adversely impact our business, results of operations, financial condition and liquidity. At Goro, we currently have two unions representing some of our employees. In early September 2002, Goro experienced labor disruptions by personnel associated with certain project construction subcontractors. As a result of these disruptions, the decision was made to curtail certain activities at the project's site to enable the project company, Goro Nickel, contractors, subcontractors and other interested parties to develop procedures to avoid future disruptions. A number of procedures have been put in place and we and Goro Nickel have been seeking to complete the implementation of these procedures. Through an employer's association, of which we are the controlling member, we negotiated a collective agreement effective September 2002 covering the construction phase of the Voisey's Bay project. There can be no assurance that we will continue to have a positive relationship with our employees at our operations in Canada and elsewhere or that new collective agreements will be entered into without work interruptions. We could also be adversely affected by labor disruptions involving third parties who may provide us with goods or services at our operations in Canada and elsewhere. For example, as discussed above, our Goro project has experienced labor disruptions by employees of our construction contractors. Any lengthy work interruptions at our Goro or Voisey's Bay projects could materially adversely affect the timing of completion and the cost of either project, as well as our business, results of operations, financial condition and liquidity. 12 UNCERTAINTY OF RESERVE ESTIMATES Our reported ore reserves are estimated quantities of proven and probable ore that under present and anticipated conditions can be legally and economically mined and processed by the extraction of their mineral content. We determine the amount of our ore reserves in accordance with the requirements of the applicable securities regulatory authorities and established industry practices, based upon a number of assumptions, including long-term prices for nickel, copper and cobalt. In some cases, we assume long-term prices that are above current and recent prices. Changes in these assumptions, including any reduction in the assumed metals prices, could materially adversely affect the calculation of the quantities of proven and probable ore reserves and any significant reduction in such reserves could adversely affect our production levels and, accordingly, our financial results. The volume and grade of reserves actually recovered and rates of production from our present ore reserves may be less than what is indicated by geological measurements of the reserves. Further, market price fluctuations in nickel, other metals and exchange rates, and changes in operating and capital costs may in the future render certain ore reserves uneconomic to mine. See also "--Volatility of Price of Nickel and Other Prices and their Effect on Our Financial Results" and "--Uncertainty of Production and Capital and Other Cost Estimates". No assurance can be given that the indicated amount of ore will be recovered or that it will be recovered at the rates anticipated by us. Our reserve estimates are based on limited sampling and, consequently, are uncertain because the samples may not be representative of the entire orebody. As more knowledge and understanding of the ore body is obtained, the reserve estimates may change significantly, either positively or negatively. RISKS RELATING TO BANK FACILITIES To provide liquidity for our operations, we maintain committed bank credit facilities currently aggregating $675 million, none of which was drawn as of the date hereof. Covenants contained in these bank credit facilities require us to maintain a consolidated indebtedness to tangible net worth ratio, as defined in such credit facilities ("debt:equity ratio"), of not more than 50:50 and a minimum tangible net worth (as defined in such credit facilities) of at least $1.5 billion. At December 31, 2002, pursuant to these covenants and taking into account the non-cash impairment charge taken by us in the second quarter of 2002 relating to the reduction in the net carrying value of our Voisey's Bay project and certain other assets and the charge referred to above taken in the fourth quarter of 2002 relating to our Goro project, the debt:equity ratio was approximately 31:69 and our tangible net worth was $3.3 billion. There can be no assurance that future material adverse developments would not result in a breach of these covenants. If we are unable to maintain a debt:equity ratio of not more than 50:50 and tangible net worth of at least $1.5 billion, our bank lenders generally would have the right to declare a default and require all then outstanding loans to be repaid and pursue the various remedies available to them under the bank credit facilities, including declining to make any new loans under such facilities. Any such action by the lenders could materially adversely affect our ability to finance our operating and development projects, and our results of operations, financial condition and liquidity. EXCHANGE RATE FLUCTUATIONS Our results of operations are affected by various exchange rates, in particular between the Canadian dollar and the U.S. dollar and, to a lesser extent, other exchange rates. These exchange rates have varied substantially over time, including over the last five years. For example, the Canadian dollar has strengthened significantly compared to the U.S. dollar to date in 2003, rising from $0.6350 per Cdn.$1.00 on January 2, 2003 to $0.6876 per Cdn.$1.00 on April 21, 2003. A substantial portion of our revenue is received in U.S. dollars since the price of nickel and other metals produced by us are generally referenced in U.S. dollars, while a significant portion of our costs and expenses are incurred in Canadian dollars. Our consolidated financial statements are expressed in U.S. dollars. Fluctuations in exchange rates between the U.S. dollar and the Canadian dollar and between the U.S. dollar and other currencies may give rise to foreign currency exposure, either favorable or unfavorable, which have materially impacted and may in the future materially impact our financial results. We from time to time hedge a portion of our Canadian dollar and other currency requirements to limit any adverse effect of exchange rate fluctuations with respect to our Canadian dollar and other costs, but such hedges have not eliminated the potential material adverse effect that such fluctuations could have on our results of operations or financial condition. INTEREST RATE AND COUNTERPARTY RISK Our exposure to changes in interest rates results from investing and borrowing activities undertaken to manage our liquidity and capital requirements. We generally have used fixed-rate debt to finance long-term investments, while variable-rate debt has been used to meet working capital requirements and related requirements on a more near-term basis. At the end of 2002, we entered into an interest rate swap agreement to manage the interest rate risk associated with a portion of our fixed-rate debt. The interest rate swap changes our exposure to interest risk by effectively converting a portion of our fixed-rate debt to a floating rate. We may elect in the future to enter into interest rate swaps to effectively convert floating-rate debt to fixed-rate debt and enter into additional fixed-rate to floating-rate swaps. At December 31, 2002, approximately $448 million, or 27 per 13 cent, of our total debt of $1,643 million was effectively subject to variable interest rates. Based upon our level of debt that is effectively floating rate, as of December 31, 2002 the impact of a 10 per cent change in interest rates, or 14 basis points (based on certain benchmark interest rates as at December 31, 2002), over the course of a full year would change our interest expense by less than $1 million over a full year. As noted above, we may be required to raise additional debt in the future and, accordingly, we could be materially adversely affected by changes in interest rates in the future despite any interest rate swaps we then might have in effect. Since year-end 2002, we have entered into an interest rate swap covering 100 per cent of our $400 million aggregate principal amount of 7 3/4% Notes due 2012 that effectively converts all of those securities to floating rate debt and increases the sensitivity of our interest expense to changes in interest rates proportionately. There can be no assurance that we will not be materially adversely affected by interest rate changes in the future, notwithstanding our use of interest rate swaps. In addition, our interest rate swaps, metals hedging and foreign currency risk management activities expose us to the risk of default by the counterparties to such arrangements. Any such default could have a material adverse effect on our business and financial condition. RISKS RELATING TO THE SUBORDINATED DEBENTURES POSSIBLE VOLATILITY OF OUR COMMON SHARES The Subordinated Debentures are convertible into common shares; accordingly, fluctuations in the market price of our common share may affect the market price of the Subordinated Debentures. We cannot predict whether the market price of our common shares will rise or fall. Factors that will affect the trading price of our common shares include the following: our operating results and future prospects; nickel prices and expectations concerning future nickel prices; material public announcements by us or our competitors; the extent to which we pay dividends or make other distributions to holders of our common shares; whether we or another person issues securities like the Subordinated Debentures or issues or sells a large number of our common shares; trading on the New York Stock Exchange and the Toronto Stock Exchange where our common shares are traded; conditions in the capital markets generally; and political, financial and economic conditions. In addition, the common shares have from time to time in recent years experienced significant price and volume fluctuations that often have been unrelated and disproportionate to our operating performance. See "Price Range of Common Shares" and "Dividend Policy". TERMS OF THE SUBORDINATED DEBENTURES The Subordinated Debentures are subordinated in right of payment to all of our existing and future senior indebtedness. The Subordinated Debentures are unsecured obligations and are subordinated in right of payment to all of our existing and future senior indebtedness. This means that we cannot make any payments on the Subordinated Debentures if we default on a payment of any of our senior indebtedness or if any of our senior indebtedness becomes immediately due because of a default and has not yet been paid in full. In the event of our bankruptcy, liquidation or reorganization or upon acceleration of the Subordinated Debentures due to an event of default, our assets will be available to pay obligations on the Subordinated Debentures only after all of our senior indebtedness has been paid, and there may not be sufficient assets remaining to pay amounts due on any or all of the Subordinated Debentures then outstanding. If we incur additional indebtedness it could adversely affect our ability to pay our obligations on the Subordinated Debentures. The indenture does not limit our ability to incur additional indebtedness, including indebtedness that ranks senior in priority of payment to, or pari passu with, the Subordinated Debentures. We have the right to defer interest payments. We have the right to defer interest payments on the Subordinated Debentures for up to 10 consecutive interest periods, but not beyond March 14, 2052. If we defer our payment of interest on the Subordinated Debentures, you will be required to recognize interest income for United States federal income tax purposes in respect of interest payments on the Subordinated Debentures held by you before you receive any cash distributions relating to this interest. In addition, you will not receive this cash if you sell the Subordinated Debentures before the end of any deferral period or before the record date relating to interest payments which are to be paid. As a result, the Subordinated Debentures may trade at a price that does not fully reflect the value of accrued but unpaid interest on the Subordinated Debentures. The existence of our right to defer payments of interest on the Subordinated Debentures may mean that the market price for the Subordinated Debentures may be more volatile than other securities that do not have these rights. Your conversion right is conditional. The Subordinated Debentures have several features, including conditions to conversion, which, if not satisfied, could prevent you from converting your Subordinated Debentures and result in you 14 receiving less than the value of our common shares into which the Subordinated Debentures are otherwise convertible. These features could adversely affect the value and the trading prices of the Subordinated Debentures. See "Description of Subordinated Debentures--Conversion Rights". The Subordinated Debentures are subject to early redemption. If the trading price of our common shares exceeds certain thresholds, the Subordinated Debentures may be redeemed at our option at any time on or after March 19, 2008, in cash or common shares, or a combination of cash and common shares, at the redemption price set forth in this prospectus. You should assume that this redemption option will be exercised if the trading price of our common shares exceeds such thresholds and (1) we are able to refinance at a lower interest rate or (2) it is otherwise in our interest to redeem the Subordinated Debentures. A change in control may not result upon the occurrence of certain important corporate events. Certain important corporate events, such as leveraged recapitalizations that would increase the level of our indebtedness, would not constitute a "change in control" under the indenture and therefore do not require us to purchase the Subordinated Debentures. See "Description of Subordinated Debentures--Change in Control Requires Offer to Purchase the Subordinated Debentures". TRADING MARKET FOR THE SUBORDINATED DEBENTURES The Subordinated Debentures comprise a new issue of securities for which there may be no trading market. The Subordinated Debentures are not listed on any securities exchange or included in any automated quotation system. The Subordinated Debentures may trade at a discount from their initial offering price, depending on prevailing interest rates, the market for similar securities, the price of our common shares, our performance and other factors. We do not know whether an active trading market will develop for the Subordinated Debentures. To the extent that an active trading market does not develop, the price at which you may be able to sell the Subordinated Debentures, if at all, may be less than the price you pay for them in this offering. INABILITY TO FUND PURCHASE OF SUBORDINATED DEBENTURES Upon the occurrence of specified change in control events, we will be required to offer to purchase all outstanding Subordinated Debentures for cash, common shares, or a combination of cash and common shares. However, it is possible that if we elect to pay the purchase price in cash upon such a change in control, we may not have sufficient funds at that time to make the required purchase of Subordinated Debentures or that restrictions in our credit facilities or other indebtedness may not allow those purchases of the Subordinated Debentures for cash. USE OF PROCEEDS Neither the sale of any Subordinated Debentures by any holders thereof nor the issue of any underlying common shares will result in any proceeds to Inco. 15 PRICE RANGE OF COMMON SHARES Our common shares are listed on the New York Stock Exchange ("NYSE") and the Toronto Stock Exchange ("TSX"). The high and low closing sale prices of our common shares on the NYSE and the TSX for the periods indicated are set forth in the following table:
NYSE TSX ---------------------- ------------------------- HIGH LOW HIGH LOW ------------- ------- ------------- ------- YEAR ENDED DECEMBER 31, 2001 First quarter....................... $ 18.83 $ 14.60 Cdn.$29.09 Cdn.$22.10 Second quarter...................... 20.51 14.25 30.70 22.54 Third quarter....................... 17.70 11.35 27.10 17.90 Fourth quarter...................... 16.94 12.20 27.05 19.50 YEAR ENDING DECEMBER 31, 2002 First quarter....................... $ 19.82 $ 16.52 Cdn.$31.40 Cdn.$26.35 Second quarter...................... 23.66 18.98 36.25 30.16 Third quarter....................... 22.45 15.30 33.91 24.30 Fourth quarter...................... 21.99 15.51 34.25 24.80 YEAR ENDING DECEMBER 31, 2003 First quarter ...................... $ 23.12 $ 18.00 Cdn.$35.40 Cdn.$26.35 Second quarter (through April 21, 2003) 19.70 18.30 28.49 26.78
On April 21, 2003, the last reported sale price of our common shares on the NYSE was $19.65 and on the TSX was Cdn.$28.47. DIVIDEND POLICY Our dividend policy, under normal circumstances and after taking into account our short-term and long-term needs and objectives, is to declare and pay dividends on the common shares averaging approximately one-third of reported net earnings over a period of years. A sustainable level of regular quarterly dividends would be paid, adjusted, when appropriate, by extra dividends. The quarter-to-quarter decision as to the amount of the quarterly dividend per common share is determined with reference to current business results and cash needs. In February 1999, our board of directors eliminated the payment of quarterly dividends on our common shares. This action was taken as part of our other actions to maintain our financial flexibility in the commodity price environment prevailing at that time. Our board of directors has reviewed, and will continue to review, on a periodic basis, a possible decision to restore and, accordingly, declare and pay dividends on our common shares in the future. EARNINGS COVERAGE For 2002, we recorded total non-cash charges of $1,626 million, net of deferred income and mining taxes of $789 million, under Canadian GAAP. As a result of these non-cash charges, we had a net loss, before deduction of interest and income and mining taxes, of $2,070 million for the twelve months ended December 31, 2002 and, after giving effect to our initial offering of Subordinated Debentures and our concurrent offering of convertible debentures due 2023 (the "Convertible Debentures"), as if made as of January 1, 2002, we would have had a deficiency of $2,181 million in the amount required to cover our interest requirement of $111 million. Excluding these non-cash charges, after giving effect to our initial offering of Subordinated Debentures and our concurrent offering of the Convertible Debentures as if made as of January 1, 2002, consolidated net earnings, before deduction of interest and income and mining taxes of $345 million for the twelve months ended December 31, 2002, would have been 3.1 times our interest requirement for 2002 of $111 million. If our initial offering of Subordinated Debentures and our concurrent offering of Convertible Debentures had been made as of April 1, 2002, excluding non-cash charges of $1,613 million, net of deferred income and mining taxes of $785 million, consolidated net earnings, before deduction of interest and income and mining taxes of $302 million for the twelve months ended March 31, 2003 would have been 2.7 times our interest requirement of $112 million. As our zero coupon convertible notes ("LYON Notes"), the Subordinated Debentures and the Convertible Debentures are treated as equity for Canadian GAAP purposes, our interest requirement does not include the carrying charges associated with these securities. Had we accounted for the LYON Notes, the Subordinated Debentures and the Convertible Debentures as debt, as is required by U.S. GAAP, the carrying charges of the LYON Notes, the Subordinated Debentures and the Convertible Debentures would have been reflected in interest expense and we would have had a deficiency of $2,193 million and $2,220 million in the amount required to cover our interest requirement for the twelve months ended December 31, 2002 and March 31, 2003, respectively. The information included in this section is based upon our audited financial statements prepared in accordance with 16 Canadian GAAP, which differ in certain material respects from U.S. GAAP. As a result of the above-referenced non-cash charges, which totaled $2,247 million, net of deferred income and mining taxes of $947 million, for U.S. GAAP purposes, we had a net loss, before deduction of the cumulative effect of a change in accounting principles of $18 million interest and income and mining tax expenses, of $2,867 million for the twelve months ended December 31, 2002 and, after giving effect to our initial offering of Subordinated Debentures and our concurrent offering of Convertible Debentures, as if made as of January 1, 2002, we would have had a deficiency of $2,990 million in the amount required to cover our interest requirement of $123 million for the twelve months ended December 31, 2002. Excluding these non-cash charges, after giving effect to our initial offering of Subordinated Debentures and our concurrent offering of Convertible Debentures as if made as of January 1, 2002, consolidated net earnings, before deduction of interest and income and mining taxes of $327 million for the twelve months ended December 31, 2002, would have been 2.7 times our interest requirement of $123 million. If our offering of Subordinated Debentures and our concurrent offering of Convertible Debentures had been made as of April 1, 2002, excluding the cumulative effect of a change in accounting principles of $18 million, non-cash charges of $2,234 million, net of deferred income and mining taxes of $943 million, consolidated net earnings, before deduction of interest and income and mining taxes of $___ million for the twelve months ended March 31, 2003, would have been ___ times our interest requirement of $124 million. For further information regarding the differences between Canadian GAAP and U.S. GAAP, see Note 22 to our consolidated financial statements included as an Exhibit to our 2002 10-K. RATINGS On February 26, 2003, Standard & Poor's Corporation ("S&P") assigned a "BB+" rating to the Subordinated Debentures and on March 6, 2003, Moody's Investors Service, Inc. ("Moody's") assigned a "Ba1" rating to the Subordinated Debentures. Credit ratings are intended to provide investors with an independent measure of credit quality of any issue of securities. The credit ratings accorded to the Subordinated Debentures by the rating agencies are not recommendations to purchase, hold or sell the Subordinated Debentures inasmuch as such ratings do not comment as to market price or suitability for a particular investor. Each rating should be evaluated independently of any other rating. These is no assurance that any rating will remain in effect for any given period of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future if in its judgment circumstances so warrant. S&P's credit ratings are on a long-term debt rating scale that ranges from AAA to D, which represents the range from highest to lowest quality of such securities rated. According to the S&P rating system, debt securities rated BB exhibit adequate protection parameters. However, insofar as a BB rating is concerned, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments on the securities. The ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major categories. Moody's credit ratings are on a long-term debt rating scale that ranges from Aaa for C, which represents the range from highest to lowest quality for such securities rated. According to the Moody's rating system, debt securities rated Ba are considered as medium grade obligations, that is, they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such securities lack outstanding investment characteristics and in fact have speculative investment characteristics as well. Moody's applies numerical modifiers 1, 2 and 3 in each generic rating classification from Aa through Caa in its corporate bond rating system. The modifier 1 indicates that the issue ranks in the higher end of its generic rating category, the modifier 2 indicates a mid-range ranking and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category. DESCRIPTION OF SUBORDINATED DEBENTURES The Subordinated Debentures were issued under a subordinated indenture dated as of March 7, 2003, as supplemented by a first supplemental indenture dated as of March 7, 2003, between us and The Bank of New York, as trustee. References in this description to the indenture are to the indenture as so supplemented. The following description summarizes the material provisions of the Subordinated Debentures and the indenture. The following summary does not purport to be complete and is subject to, and qualified by reference to, the definitions and other provisions of the indenture. As used in this description, the words "we", "us", "our" and "Inco" do not include any of our current or future subsidiaries. GENERAL The Subordinated Debentures are unsecured obligations and are subordinated in right of payment to all of our existing and future senior indebtedness. The indenture does not limit our ability to incur additional indebtedness, including indebtedness that ranks senior to or pari passu with the Subordinated Debentures. As of December 31, 2002, after giving effect to our initial offering of the Subordinated Debentures, our concurrent offering of the Convertible Debentures and the use of proceeds 17 therefrom, we would have had approximately $2 billion of senior indebtedness outstanding to which the Subordinated Debentures would be subordinated. The Subordinated Debentures are limited to $227,100,000 aggregate principal amount. The Subordinated Debentures mature on March 14, 2052. We may, at our option, elect to pay the principal amount of the Subordinated Debentures in cash or our common shares or any combination of cash and common shares. If we elect to pay all or any part of this amount in common shares, the number of common shares we will deliver will be equal to the portion of the amount to be paid in common shares divided by the average market price of one common share, which we define under "--Delivery of Shares; Fractional Shares". The Subordinated Debentures are payable at the office of the paying agent (currently, the trustee), or an office or agency we maintain for this purpose, in the Borough of Manhattan, The City of New York. We discuss the tax treatment of payments to holders in respect of the Subordinated Debentures under "Certain Income Tax Considerations". The Subordinated Debentures bear interest at the rate of 3 1/2% per year on the principal amount from the issue date, or from the most recent date to which interest has been paid or duly provided, until the Subordinated Debentures are converted in accordance with the indenture or paid in full, or until funds or common shares, or any combination of funds and common shares are made available for their payment in full in accordance with the indenture. Interest is computed on the basis of a 360-day year comprised of twelve 30-day months. Interest is payable at the stated maturity (or earlier date of redemption, purchase or, in certain circumstances, conversion) and semi-annually in arrears on March 14 and September 14 of each year, beginning on September 14, 2003 to holders of record at the close of business on the March 1 or September 1 (whether or not a business day) immediately preceding such interest payment date, subject to our right to defer interest payments discussed below under "--Deferral of Interest Payments". Each payment of interest on the Subordinated Debentures includes interest accrued through the day before the applicable interest payment date or the stated maturity (or earlier purchase, redemption or, in certain circumstances, conversion), as the case may be. Any payment required to be made on any date that is not a business day will be made on the next succeeding business day as if made on the date that payment was due and no interest will accrue on that payment for the period from and after the date that payment was due to the date of payment on the next succeeding business day. In the event of the maturity, conversion, purchase or redemption of a Subordinated Debenture as described below, interest will cease to accrue on such Subordinated Debenture under the terms of and subject to the conditions in the indenture. We may not reissue a Subordinated Debenture that has matured or been converted, purchased, redeemed or otherwise cancelled, except for registration of transfer, exchange or replacement of such Subordinated Debenture. Subordinated Debentures may be presented for conversion at the office of the conversion agent, and for exchange or registration of transfer at the office of the registrar. The trustee is currently the conversion agent and the registrar. The indenture does not limit our right to incur additional indebtedness or pay dividends, except during an interest deferral period, or contain any other financial covenants. These provisions of the indenture would not necessarily afford holders of the Subordinated Debentures protection from a decline in the value of their investment in the event of a highly leveraged or other transaction involving us that may adversely affect such holders. DEFERRALS OF INTEREST PAYMENTS We have the right under the indenture to defer interest payments on the Subordinated Debentures for an extension period not exceeding 10 consecutive interest periods. A deferral of interest payments cannot extend, however, beyond the stated maturity of the Subordinated Debentures. During an extension period, the amount of interest payments due on the Subordinated Debentures would continue to accumulate and such deferred interest payments will themselves accrue interest (additional interest). In the event that we exercise our right to extend an interest payment period, then: (1) we will not declare or pay any dividend on, make any distributions relating to, or redeem, purchase, acquire or make a liquidation payment relating to, any of our capital stock or make any guarantee payment relating thereto other than: o purchases, redemptions or other acquisitions of shares of our capital stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants; o as a result of an exchange or conversion of any class or series of our capital stock for any other class or series of our capital stock; or o the purchase of fractional interests in shares of our capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged; and 18 (2) we may not make any payment of interest on or principal of, or premium, if any, on, or repay, purchase or redeem, any debt securities issued by us which rank equally with or junior to the Subordinated Debentures. The foregoing, however, will not apply to any stock dividends paid by us where the stock dividend is the same stock as that on which the dividend is being paid. Prior to the termination of any extension period, we may further extend the extension period, so long as that extension period, together with all such previous and further extensions of the period, does not exceed 10 consecutive interest periods. An extension period cannot extend beyond the stated maturity of the Subordinated Debentures. Upon the termination of any extension period and the payment of all amounts then due, we may commence a new extension period which must comply with the above requirements. We will give holders and the trustee notice of our intention to defer interest at least five business days prior to the record date for the next succeeding interest payment date. The trustee will give the holders of the Subordinated Debentures notice of any extension period upon its receipt of notice from us. If payments of interest are deferred, the deferred interest payments and accrued interest on such deferred interest payments will be paid to holders of record of the Subordinated Debentures as they appear on our books and records on the record date next following the termination of such extension period. BOOK-ENTRY SYSTEM The Subordinated Debentures were issued in the form of two global securities held in book-entry form. The Depository Trust Company ("DTC") or its nominee is the sole registered holder of the Subordinated Debentures for all purposes under the indenture. Owners of beneficial interests in the Subordinated Debentures represented by the global securities hold such interests pursuant to DTC's procedures and practices. As a result, beneficial interests in any such securities are shown on, and transfers thereof may only be effected through, records maintained by DTC and its direct and indirect participants and any such interests may not be exchanged for certificated securities, except in limited circumstances. Owners of beneficial interests must exercise any rights in respect of their interests in accordance with DTC's procedures and practices. Beneficial owners are not holders and are not entitled to any rights under the global securities or the indenture provided to the holders of the Subordinated Debentures. Inco and the trustee, and any of their respective agents, may treat DTC as the sole holder and registered owner of the global securities. See "Legal Ownership" below. DTC has advised us that it is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"). DTC holds securities that its participants deposit with it and facilitates the settlement among participants of securities transactions in deposited securities through electronic computerized book-entry changes in participants' accounts, thereby eliminating the need for physical movement of securities certificates. Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its participants and by the New York Stock Exchange, Inc., The American Stock Exchange LLC and the National Association of Securities Dealers, Inc. Access to DTC's book-entry system is also available to securities brokers and dealers, banks and trust companies, and others that clear through or maintain a custodial relationship with a participant, either directly or indirectly. The rules applicable to DTC and its participants are on file with the Securities and Exchange Commission (the "SEC"). RANKING OF SUBORDINATED DEBENTURES The indenture provides that the Subordinated Debentures are unsecured obligations and are subordinated in right of payment to all of our existing and future senior indebtedness. As of December 31, 2002, after giving effect to our initial offering of the Subordinated Debentures, our concurrent offering of the Convertible Debentures and the use of proceeds therefrom, we would have had approximately $2 billion of senior indebtedness outstanding to which the Subordinated Debentures would be subordinated. If we default in the payment of any principal or interest on, or any other amount payable in respect of, any Senior Indebtedness, as defined below, when it becomes due and payable, whether at stated maturity or at a date fixed for redemption or by declaration of acceleration or otherwise, then, unless and until: o the default has been cured or waived or has ceased to exist; or o all amounts due and payable in respect of such Senior Indebtedness, as defined below, has been paid; no direct or indirect payment, whether in cash, property, securities, by set-off or otherwise, may be made 19 or agreed to be made on the Subordinated Debentures, or in respect of any redemption, purchase or other acquisition of any of the Subordinated Debentures. If we file for bankruptcy in Canada or certain other events of bankruptcy, insolvency or reorganization occur, then all Senior Indebtedness, including any interest on that Senior Indebtedness accruing after the commencement of any proceedings, will first be paid in full before any payment or distribution, whether in cash, securities or other property, will be made on account of the Subordinated Debentures. If that occurs, any payment or distribution on account of the Subordinated Debentures that would be payable or deliverable but for the subordination provisions will be paid or delivered directly to the holders of Senior Indebtedness. It will be paid or delivered in accordance with the priorities then existing among these holders until all Senior Indebtedness and any interest on that debt accruing after the commencement of any proceedings has been paid in full. The term "Senior Indebtedness" means, with respect to us: (1) the principal, premium, if any, interest, fees, expenses, indemnity payments or other obligation in respect of (a) indebtedness for money borrowed and (b) indebtedness evidenced by securities, notes, debentures, bonds or other similar instruments issued by us; (2) all of our capital lease obligations; (3) all obligations issued or assumed by us as the deferred purchase price of property, all of our conditional sale obligations and all of our obligations under any conditional sale or title retention agreement, but excluding trade accounts payable arising in the ordinary course of business; (4) all of our obligations, contingent or otherwise, in respect of any letters of credit, banker's acceptance, security purchase facilities or similar credit transactions; (5) all obligations in respect of interest rate swap, cap, forward or other agreements, interest rate futures or option contracts, currency swap, cap forward or other agreements, currency futures or option contracts, commodity swap, cap, forward or other agreements in respect of any metal or other product produced or marketed by us and any commodity used or consumed by us and any other commodity futures or option contracts and other similar agreements; (6) all obligations of the type referred to in clauses (1) through (5) above of other persons for the payment of which we are responsible or liable as obligor, guarantor or otherwise; and (7) all obligations of the type referred to in clauses (1) through (6) above of other persons secured by any lien on any property or asset of ours, whether or not such obligation is assumed by such obligor. Notwithstanding the foregoing, Senior Indebtedness does not include: (a) any indebtedness that is by its terms subordinated to or ranked equally with the Subordinated Debentures; and (b)any indebtedness between or among us or our affiliates. Senior Indebtedness shall continue to be Senior Indebtedness and be entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any term of such Senior Indebtedness. There are no terms in the Subordinated Debentures that limit our ability to incur additional indebtedness, including indebtedness that ranks senior or pari passu to the Subordinated Debentures. CONVERSION RIGHTS A holder may convert its outstanding Subordinated Debentures, in multiples of $1,000 principal amount, into our common shares prior to 5:00 p.m. New York City time at stated maturity only under the circumstances described below. If a holder has submitted a change in control purchase notice requiring us to purchase any Subordinated Debentures, the holder may convert these Subordinated Debentures as described in this section only if the holder has withdrawn its change in control purchase notice in accordance with the requirements of the indenture. A holder may convert a Subordinated Debenture into common shares only under the following circumstances: o in a calendar quarter (and only during such calendar quarter) beginning with the quarter ending September 30, 2003, if, 20 as of the last day of the immediately preceding calendar quarter, the closing sale price of our common shares for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of such preceding quarter is more than 120% of the conversion price per common share on the last trading day of such preceding quarter; or o during the five business-day period following any ten consecutive trading-day period in which the trading price of the Subordinated Debentures for each day of such period was less than 95% of the product of the closing sale price of our common shares multiplied by the conversion rate in effect for that period; or o if the Subordinated Debentures have been called for redemption; or o upon the occurrence of the corporate events described below under "--Conversion upon Specified Corporate Events". CONVERSION UPON SATISFACTION OF MARKET PRICE CONDITION A holder may surrender any of its Subordinated Debentures for conversion into our common shares in a calendar quarter (and only during such calendar quarter) beginning with the quarter ending September 30, 2003, if, as of the last day of the immediately preceding calendar quarter, the closing sale price of our common shares for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of such preceding quarter is more than 120% of the conversion price per common share on the last trading day of such preceding quarter. The "closing sale price" of the common shares on any date means the closing sale price per common share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on such date as reported in composite transactions for the principal U.S. securities exchange on which the common shares are traded (currently being the New York Stock Exchange) or, if the common shares are not listed on a U.S. national or regional securities exchange, as reported by the Nasdaq System or, if no such price is reported, as reported by the principal non-United States market on which the common shares are traded (currently being the Toronto Stock Exchange), such price to be converted into U.S. dollars based on the Bank of Canada noon exchange rate as reported for conversion into U.S. dollars on such date. In the absence of such quotation, we will determine the closing sale price on the basis of such quotations as we consider appropriate. CONVERSION UPON SATISFACTION OF TRADING PRICE CONDITION A holder may surrender any of its Subordinated Debentures for conversion into our common shares prior to stated maturity during the five business-day period following any ten consecutive trading-day period in which the trading price of the Subordinated Debentures for each day of that period was less or was deemed to be less than 95% of the product of the closing sale price of our common shares multiplied by the applicable conversion rate. The "trading price" of the Subordinated Debentures on any date of determination means the average of the secondary market bid quotations per Subordinated Debenture obtained by the conversion agent for $5,000,000 principal amount of the Subordinated Debentures at approximately 3:30 p.m., New York City time, on such determination date from two independent nationally recognized securities dealers we select; provided that if the conversion agent cannot reasonably obtain at least two such bids, but can reasonably obtain one such bid, this one bid shall be used. If for any date the conversion agent cannot reasonably obtain at least one bid for $5,000,000 principal amount of the Subordinated Debentures from a nationally recognized securities dealer or in our reasonable judgment, the bid quotations are not indicative of the secondary market value of the Subordinated Debentures, then the trading price of the Subordinated Debentures for that date will be deemed to be less than 95% of the product of the closing sale price of our common shares multiplied by the applicable conversion rate. The conversion agent shall be obligated to determine the trading price of the Subordinated Debentures only upon our request. We must make such a request only if a holder provides us with reasonable evidence that the trading price of the Subordinated Debentures would be less than 95% of the product of the closing sale price of our common shares and the applicable conversion rate for the applicable period. If a holder provides such evidence, we will instruct the conversion agent to determine the trading price of the Subordinated Debentures for the applicable period. CONVERSION UPON NOTICE OF REDEMPTION If we call the Subordinated Debentures for redemption, a holder may convert the Subordinated Debentures from the date of the notice of redemption until the close of business on the business day immediately preceding the redemption date, after which time the right to convert will expire unless we fail to pay the redemption price. 21 CONVERSION UPON SPECIFIED CORPORATE EVENTS If we elect to: o distribute to all holders of our common shares certain rights entitling them to purchase, for a period expiring within 45 days, our common shares at less than the then current market price (measured by averaging the closing sale prices of our common shares for the 10 trading days preceding the date of the first public announcement of such distribution); or o distribute to all holders of our common shares, assets, debt securities or certain rights to purchase our securities, which distribution has a per share value exceeding 15% of the closing sale price of our common shares on the day preceding the date of the first public announcement of such distribution; we must notify the holders at least 10 days prior to the ex-dividend date for the distribution. Once we have given this notice, the holders may surrender Subordinated Debentures for conversion at any time until the earlier of the close of business on the business day prior to the ex-dividend date or any announcement by us that the distribution will not take place. No distribution will entitle the holder of a Subordinated Debenture to convert if the holder would otherwise participate in the distribution without conversion. In addition, if o we are a party to a consolidation, amalgamation, merger, statutory arrangement (involving a business combination) or sale of all or substantially all of our consolidated assets; o we are not the resulting or surviving entity; o the transaction is not with one of our affiliates; and o after the transaction, either o more than 50% of the surviving or resulting entity's total voting power is not held by our pre-transaction shareholders, or o more than 50% of the surviving or resulting entity's directors were not directors of ours or approved by our pre-transaction board of directors, then holders may surrender Subordinated Debentures for conversion at any time from and after the date that is 15 days prior to the anticipated effective date of the transaction until and including the date that is 15 days after the actual date of such transaction. If the transaction also constitutes a "change in control," as defined below, the holder instead can require us to purchase all or a portion of its Subordinated Debentures as described under "--Change in Control Requires Offer to Purchase Subordinated Debentures". CONVERSION RATE AND CONVERSION PROCEDURES The conversion rate is 38.4423 common shares per $1,000 principal amount of Subordinated Debentures, subject to adjustment upon the occurrence of the events described below. This is equivalent to a conversion price of approximately $26.01 per common share. On conversion, we will pay cash for any fractional shares in an amount equal to their average market price, determined as described under "--Delivery of Shares; Fractional Shares". We will have the option to deliver cash in lieu of some or all of the common shares to be delivered upon conversion of the Subordinated Debentures. We will give notice of our election to deliver part or all of the conversion consideration in cash to the holder converting the Subordinated Debentures within two business days of our receipt of the holder's notice of conversion unless we have already informed holders of our election in connection with our optional redemption of the Subordinated Debentures as described under "--Redemption of Subordinated Debentures at the Option of Inco". The amount of cash to be delivered per Subordinated Debenture will be equal to the number of common shares in respect of which the cash payment is being made multiplied by the average of the closing sale prices of our common shares on the five consecutive trading days commencing one day after (a) the date of our notice of election to deliver part or all of the conversion consideration in cash if we have not given notice of redemption, or (b) the conversion date, in the case of a conversion following our notice of redemption specifying our intention to deliver cash upon conversion. 22 If we elect to deliver cash in lieu of some or all of the common shares issuable upon conversion, we will make the payment, including the delivery of any common shares, through the conversion agent, to holders surrendering Subordinated Debentures no later than the tenth business day following the conversion date. Otherwise, we will deliver the shares, together with any cash payment for fractional shares, through the conversion agent no later than the fifth business day following the conversion date. We may not deliver cash in lieu of any common shares issuable upon a conversion (other than cash in lieu of fractional shares) if an Event of Default with respect to the Subordinated Debentures has occurred and is continuing, other than a default in payment of the conversion consideration. We discuss the tax treatment upon conversion under "Certain Income Tax Considerations--Certain United States Federal Income Tax Considerations--Disposition or Conversion of the Subordinated Debentures" and "Certain Income Tax Considerations--Certain Canadian Federal Income Tax Considerations--Ownership of Subordinated Debentures". Except as noted below, on conversion of a Subordinated Debenture the holder will not receive any cash payment representing accrued and unpaid interest. Accordingly, Subordinated Debentures surrendered for conversion by a holder during the period from the close of business on any regular record date to the opening of business of the next interest payment date, except for Subordinated Debentures to be redeemed on a date within this period or on the next interest payment date, must be accompanied by payment of an amount equal to the interest that the registered holder is to receive on the Subordinated Debenture. Our delivery to the holder of the fixed number of common shares into which the Subordinated Debenture is convertible together with any cash payment for fractional shares, or cash in lieu of such common shares, will fully satisfy our obligation to pay the principal amount of the Subordinated Debenture plus any accrued and unpaid interest attributable to the period from the issue date through the conversion date. As a result, accrued and unpaid interest is deemed paid in full rather than cancelled, extinguished or forfeited. To exercise its conversion right, a holder must: o complete and manually sign an original or facsimile copy of a conversion notice and deliver such conversion notice to the conversion agent; o surrender the Subordinated Debenture to the conversion agent; o if required by the conversion agent, furnish appropriate endorsements and transfer documents; and o if required, pay all transfer or similar taxes. Pursuant to the indenture, the date on which all of the foregoing requirements have been satisfied is the conversion date. Beneficial holders of Subordinated Debentures who wish to convert a Subordinated Debenture into common shares must do so in accordance with the procedures established by DTC. The conversion rate will be adjusted for: o dividends or distributions on common shares payable in common shares or other shares; o subdivisions or combinations of common shares; o distributions to all holders of common shares of certain rights to purchase common shares for a period expiring within 45 days at less than the current market price per common share, as defined below, subject to certain conditions; o distributions to all holders of common shares of evidences of indebtedness, equity securities (other than common shares) or other assets (other than cash dividends or cash distributions described below); o distributions consisting of cash to all holders of our common shares in an aggregate amount that, when combined with (a) other all cash distributions made within the preceding 12 months and (b) the cash and the fair market value, as of the date of expiration of the tender or exchange offer referred to below, of the consideration paid in respect of any tender or exchange offer by us or a subsidiary of ours for our common shares concluded within the preceding 12 months, exceeds 5% of the product of the current market price of our common shares multiplied by the number of common shares then outstanding on the date fixed for the determination of shareholders entitled to receive the distribution; o the successful completion of a tender or exchange offer made by us or any subsidiary of ours for our common shares 23 that involves an aggregate consideration that, when combined with any cash and the fair market value of other consideration payable in respect of any other tender or exchange offer by us or a subsidiary of ours for our common shares concluded within the preceding 12 months, exceeds 5% of the product of the current market price of our common shares multiplied by the number of common shares then outstanding on the date of expiration of the tender or exchange offer; and o any reclassification of our common shares or any reorganization or sale of Inco in which holders of our common shares are entitled to receive common equity, other securities or other property or assets in exchange for such common shares. For the purpose of (1) cash distributions and (2) distributions in connection with a tender or exchange offer as described above, any adjustment required for a cash distribution or distribution in connection with a tender or exchange offer would be based upon the amount by which such distribution exceeds the amount permitted to be excluded. Any adjustment based on any other distribution would be based upon the full amount of the distribution. The "current market price" per common share on any date shall be deemed to be the average of the daily closing sale price for the five consecutive trading days ending on the earlier of the day in question and the day before the related ex-date with respect to any distribution, issuance or other event requiring such computation. The conversion rate will not be adjusted for accrued and unpaid interest. Furthermore, no adjustment need be made unless such adjustment would require an increase or decrease of at least 1%. The indenture permits us to increase the conversion rate from time to time. Our Shareholder Rights Plan Agreement provides that each common share of Inco, including any we issue at the stated maturity or upon conversion redemption or purchase of the Subordinated Debentures, issued at any time prior to the distribution of separate certificates representing our rights, will be entitled to receive such rights. However, there shall not be any adjustment to the conversion privilege or conversion rate as a result of: o the issuance of the rights to purchase common shares pursuant to our Shareholder Rights Plan Agreement or any successor agreement; o the distribution of any entitlement to receive the common share purchase rights; o the exercise or redemption of such rights in accordance with our Shareholder Rights Plan Agreement; or o the termination or invalidation of the common share purchase rights or similar rights. We describe the Shareholder Rights Plan Agreement in more detail under "Description of Share Capital-- Shareholder Rights Plan". If we are party to a consolidation, amalgamation, merger or binding share exchange or a transfer of all or substantially all of our assets, the right to convert a Subordinated Debenture into our common shares may be changed into a right to convert it into the kind and amount of securities, cash or other assets of Inco or another person which the holder would have received if the holder had converted its Subordinated Debentures immediately prior to such event or transaction. However, if such event or transaction occurs before March 7, 2008 the consideration into which the Subordinated Debentures will be convertible will be limited to Inco common shares or other prescribed securities (within the meaning of the Income Tax Act (Canada) (the "Canadian Tax Act")), which includes shares not redeemable by the holder within five years after their issue. As a result, in these circumstances, the consideration issuable on exercise of the conversion right could differ from the consideration received by the holders of common shares pursuant to the event or transaction, but the conversion rate would be adjusted so that the consideration into which the Subordinated Debentures are convertible is equivalent in value at the date of the event or transaction to the value of the consideration received by the holders of common shares pursuant to the event or transaction. Holders of the Subordinated Debentures may, in certain circumstances, be deemed to have received a distribution subject to U.S. federal income tax as a dividend in the amount of: o a taxable distribution to holders of common shares which results in an adjustment of the conversion rate; or o an increase in the conversion rate at our discretion. See "Certain Income Tax Considerations--Certain United States Federal Income Tax Considerations--Constructive 24 Dividend". REDEMPTION OF SUBORDINATED DEBENTURES AT THE OPTION OF INCO No sinking fund is provided for the Subordinated Debentures. Except as described below under "--Redemption for Tax Reasons", we may not redeem the Subordinated Debentures prior to March 19, 2008. In addition, we may extend the time during which we may not redeem the Subordinated Debentures upon providing notice by mail to the holders of the Subordinated Debentures. On or after March 19, 2008, we may redeem at our option all or a portion of the Subordinated Debentures in cash, common shares or a combination thereof, for a redemption price equal to 100% of the principal amount of the Subordinated Debentures to be redeemed, if the closing sale price of our common shares for at least 20 trading days in any period of 30 consecutive trading days ending on the fifth day preceding the date of such notice is more than 125% of the conversion price. If redeemed, we will also pay accrued and unpaid cash interest to the date of redemption. We will give not less than 20 business days' nor more than 60 business days' notice of redemption by mail to holders of Subordinated Debentures. The notice of redemption will inform the holders of our election to deliver common shares or to pay cash in lieu of delivery of common shares with respect to any Subordinated Debentures converted after such notice and prior to the redemption date. If we elect to pay the redemption price, in whole or in part, in common shares, the number of common shares to be delivered by us will be equal to the portion of the redemption price to be paid in common shares divided by the average market price of one common share. See "--Delivery of Shares; Fractional Shares". If we redeem less than all of the outstanding Subordinated Debentures, the trustee shall select the Subordinated Debentures to be redeemed in principal amounts of $1,000 or integral multiples of $1,000. In this case, the trustee may select the Subordinated Debentures by lot, pro rata or by any other method the trustee considers fair and appropriate. If a portion of a holder's Subordinated Debentures is selected for partial redemption and the holder converts a portion of such Subordinated Debentures, the converted portion shall be deemed to be from the portion selected for redemption. REDEMPTION FOR TAX REASONS We may also redeem all but not less than all of the Subordinated Debentures for cash or common shares or a combination thereof if we have or would become obligated (including on the future enactment of a proposed change) to pay to the holder of any Subordinated Debenture "additional amounts" (which are more than a de minimis amount) as a result of any change from March 4, 2003 (including any announced prospective change) in the laws or any regulations of Canada or any Canadian political subdivision or taxing authority, or any change from March 4, 2003 in an interpretation or application of such laws or regulations by any legislative body, court, governmental agency, taxing authority or regulatory authority (including the enactment of any legislation and the publication of any judicial decision or regulatory or administrative determination) and if we cannot avoid these obligations by taking reasonable measures available to us. We define the term "additional amounts" under "--Canadian Withholding Taxes". This redemption would be at the principal amount plus accrued and unpaid interest but without reduction for applicable Canadian withholding taxes (except in respect of certain excluded holders). We will give holders not less than 20 business days' nor more than 60 business days' notice of this redemption, except that (i) we will not give notice of redemption earlier than 60 business days prior to the earliest date on or from which we would be obligated to pay any such additional amounts, and (ii) at the time we give the notice, the circumstances creating our obligation to pay such additional amounts remain in effect. If we elect to pay the redemption price, in whole or in part, in common shares, the number of common shares we deliver will be equal to the portion of the redemption price to be paid in common shares divided by the average market price of one common share. See "--Delivery of Shares; Fractional Shares". CHANGE IN CONTROL REQUIRES OFFER TO PURCHASE SUBORDINATED DEBENTURES Upon the occurrence of a change in control (as defined below), we will be required to offer to purchase all the Subordinated Debentures as of the date that is 35 business days after notice of the occurrence of such change in control (a "change in control purchase date") at a price equal to the principal amount plus accrued and unpaid interest to the change in control purchase date. We may, at our option, elect to pay the change in control purchase price in cash or common shares or any combination thereof. See "--Delivery of Shares; Fractional Shares", "Certain Income Tax Considerations--Certain United States Federal Income Tax Considerations--Disposition or Conversion of the Subordinated Debentures" and "Certain Income Tax Considerations-- Certain Canadian Federal Income Tax Considerations--Ownership of Subordinated Debentures". Within 15 business days after the occurrence of a change in control, we are obligated to mail to the trustee and to all holders of Subordinated Debentures at their addresses shown in the register of the registrar, and to beneficial owners as required by applicable law, a notice regarding the change in control, which notice shall state, among other things: o the events causing a change in control; 25 o the date of such change in control; o the last date on which the change in control purchase notice must be given; o the change in control purchase price; o the change in control purchase date; o whether we will pay the change in control purchase price in cash or common shares or any combination thereof, specifying the percentages of each; o if we elect to pay in common shares, the method of calculating the average market price of common shares; o the name and address of the paying agent; o the conversion rate and any adjustments to the conversion rate; o that Subordinated Debentures with respect to which a change in control purchase notice is given by the holder may be converted only if the change in control purchase notice has been withdrawn in accordance with the terms of the indenture; and o the procedures that holders must follow to exercise these rights. To accept the change in control purchase offer, the holder must deliver a written change in control purchase notice (a "change in control purchase notice") to the paying agent prior to the close of business on the change in control purchase date. The required change in control purchase notice shall state: o the certificate numbers of the Subordinated Debentures to be delivered by the holder; o the portion of the aggregate principal amount of the Subordinated Debentures to be purchased, which portion must be $1,000 or an integral multiple of $1,000; o that we are to purchase such Subordinated Debentures pursuant to the change in control offer; and o in the event that we elect, pursuant to the notice that we are required to give, to pay the change in control purchase price in common shares, in whole or in part, but the change in control purchase price is ultimately to be paid to the holder entirely in cash because any of the conditions to payment of such price or portion of such price in common shares is not satisfied prior to the close of business on the change in control purchase date, as described below, whether the holder elects: (1) to withdraw the change in control purchase notice as to some or all of the Subordinated Debentures to which it relates, or (2) to receive cash in respect of the entire change in control purchase price for all Subordinated Debentures or portions of Subordinated Debentures subject to such change in control purchase notice. If the holder fails to indicate its choice with respect to the election described in the final bullet point above, the holder shall be deemed to have elected to receive cash in respect of the entire purchase price for all Subordinated Debentures subject to the change in control purchase notice in these circumstances. A holder may withdraw any change in control purchase notice by delivering a written notice of withdrawal to the paying agent prior to the close of business on the change in control purchase date. The notice of withdrawal shall state: o the principal amount of the Subordinated Debentures being withdrawn; o the certificate numbers of the Subordinated Debentures being withdrawn; and o the principal amount, if any, of the Subordinated Debentures that remain subject to a change in control purchase notice. 26 Payment of the change in control purchase price for a Subordinated Debenture for which a change in control purchase notice has been delivered and not validly withdrawn is conditioned upon delivery of the Subordinated Debenture, together with necessary endorsements, to the paying agent at any time after the delivery of such change in control purchase notice. Payment of the change in control purchase price for such Subordinated Debenture will be made promptly following the later of the change in control purchase date or the time of delivery of such Subordinated Debenture. If the paying agent holds money or securities sufficient to pay the change in control purchase price of the Subordinated Debenture on the business day following the change in control purchase date in accordance with the terms of the indenture, then immediately after the change in control purchase date, such Subordinated Debenture will cease to be outstanding and interest on such Subordinated Debenture will cease to accrue, and be deemed to be paid, whether or not the Subordinated Debenture is delivered to the paying agent. Thereafter, all other rights of the holder shall terminate, other than the right to receive the change in control purchase price upon delivery of the Subordinated Debenture. A "change in control" of Inco will be deemed to have occurred at such time as: o any person, including its affiliates and associates, other than Inco, its subsidiaries or their employee benefit plans, files or is required to file a Schedule 13D or Schedule TO (or any successor schedule, form or report under the Exchange Act), or a comparable report with any securities commission or securities regulatory authority in Canada, disclosing that such person has become the beneficial owner of 50% or more of the total number of votes attached to our share capital entitled to general voting rights (currently our common shares and our Series E Preferred Shares) (collectively, "Voting Securities") or other securities into which the Voting Securities are reclassified or changed, with certain exceptions; or o there shall be consummated any consolidation, merger, amalgamation, statutory arrangement (involving a business combination) or similar transaction of Inco in which Inco is not the continuing or surviving corporation or pursuant to which the common shares would be converted into cash, securities or other property, in each case, other than a consolidation, merger, statutory arrangement (involving a business combination) or similar transaction of Inco in which the holders of the Voting Securities immediately prior to such transaction have, directly or indirectly, at least a majority of the voting shares of the continuing or surviving corporation immediately after such transaction. The indenture does not permit our board of directors to waive our obligation to offer to purchase all of the Subordinated Debentures upon a change in control. In connection with any purchase offer in the event of a change in control, we will: o comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act and any Canadian laws which may then be applicable; and o file a Schedule TO or any other schedule under the Exchange Act rules which may then be applicable. To the extent any time period set forth in the indenture is inconsistent with the requirements of the Exchange Act or Canadian law or any rules thereunder, we will comply with the provisions of such laws or rules. The change in control purchase feature of the Subordinated Debentures may in certain circumstances make more difficult or discourage a takeover of Inco. The change in control purchase feature, however, is not the result of our knowledge of any specific effort: o to accumulate Voting Securities; o to obtain control of Inco by means of a merger, amalgamation, tender offer, solicitation or otherwise; or o part of a plan by management to adopt a series of anti-takeover provisions. Instead, the change in control purchase feature is a standard term contained in other offerings that have been marketed by the initial purchasers of the Subordinated Debentures. The terms of the change in control purchase feature resulted from negotiations between the initial purchasers and us. We could, in the future, enter into certain transactions, including certain recapitalizations, that would not constitute a change in control with respect to the purchase feature of the Subordinated Debentures but that would increase the amount of 27 our outstanding indebtedness. Our ability to purchase Subordinated Debentures upon the occurrence of a change in control may be limited by the terms of our then existing credit agreements. No Subordinated Debentures may be purchased for cash or a combination of cash and common shares by Inco pursuant to a change in control purchase if there has occurred and is continuing an Event of Default with respect to the Subordinated Debentures, other than a default in the payment of the change in control purchase price with respect to the Subordinated Debentures. DELIVERY OF SHARES; FRACTIONAL SHARES DELIVERY OF SHARES We may, at our option, elect to pay the principal amount of the Subordinated Debentures in cash or common shares or any combination of cash and common shares. We may also, at our option, elect to pay the redemption price or change in control purchase price in cash or common shares or any combination thereof, or deliver cash in lieu of some or all of the common shares issuable upon conversion. Our right to issue common shares in these circumstances is subject to our satisfying various conditions, including: o listing of the common shares on the principal United States or Canadian securities exchange on which our common shares are then listed or, if not so listed, on Nasdaq; o the registration of the common shares under the Securities Act and the Exchange Act, if required; and o any necessary qualification or registration under applicable state securities laws or the availability of an exemption from such qualification and registration. If these conditions are not satisfied with respect to a holder prior the close of business on the applicable payment date, we will make the required payment on the Subordinated Debentures of the holder entirely in cash. We may not change the form of components or percentages of components of consideration to be paid for the Subordinated Debentures once we have given the notice that we are required to give to holders of Subordinated Debentures, except as described in the preceding sentence. If we elect to satisfy any payment at stated maturity, the redemption price, or the change in control purchase price of the Subordinated Debentures in common shares, the number of common shares to be delivered by us will be equal to the amount of the payment to be made in common shares divided by the average market price of one common share. For any payment in respect of the Subordinated Debentures, including payment of the principal amount of the Subordinated Debentures at stated maturity, the "average market price" means the average of the closing sale prices of the common shares for the five trading day period ending on the third business day prior to the applicable redemption, conversion, purchase, maturity or record date (if the third business day prior to the applicable redemption, purchase, stated maturity or record date is a trading day, or if not, then on the last trading day prior thereto), appropriately adjusted to take into account the occurrence, during the period commencing on the first of such trading days during such five trading day period and ending on such redemption, purchase, stated maturity or record date, of certain events that would result in an adjustment of the conversion rate with respect to the common shares. If we elect to satisfy any payment of the principal amount, the redemption price, or the change in control purchase price of the Subordinated Debentures in common shares, we will give you notice at least 20 business days before the payment date. Our notice will state: o whether we will make the payment in cash or common shares or any combination thereof; o if both cash and common shares are payable, the percentage of each applicable on a per Subordinated Debenture basis; and o the method of calculating the average market price of the common shares. When we determine the actual number of common shares in accordance with the foregoing provisions, we will publish the information on our web site or through such other public medium as we may use at that time. 28 Because the average market price of the common shares is determined prior to the applicable payment date, holders of Subordinated Debentures bear the market risk with respect to the value of the common shares to be received from the date such average market price is determined to such payment date. We may deliver common shares as payment for the principal amount of the Subordinated Debentures, the redemption price or the change in control purchase price of the Subordinated Debentures only if the information necessary to calculate the average market price is published daily in a newspaper of U.S. national circulation or on our website or through such other public medium as we may use at that time. FRACTIONAL SHARES We will not issue any fractional common shares. Instead, we will pay cash based on the average market price on the applicable payment date or conversion date for any fractional common shares we would otherwise deliver on account of the Subordinated Debentures. AMALGAMATION AND MERGER We have covenanted in the indenture that we will not enter into any consolidation, amalgamation or merger with or into any other corporation, or statutory arrangement in which Inco participates, or any sale, conveyance or lease of all or substantially all of our property unless (1) immediately after such consolidation, amalgamation, merger, statutory arrangement, sale, conveyance or lease the corporation (whether Inco or such other corporation) formed by or surviving any such consolidation, amalgamation or merger, or to which such sale, conveyance or lease shall have been made, shall not be in default in the performance or observance of any of the terms, covenants and conditions of the indenture to be kept or performed by Inco; (2) the due and punctual payment of the principal of and interest on the Subordinated Debentures, and the due and punctual performance and observance of all of the covenants and conditions of the indenture to be performed or observed by Inco and, for which each security by its terms provided for conversion, shall have provided for the right to convert such security in accordance with its terms, shall be expressly assumed, by a supplemental indenture satisfactory in form to the trustee, executed and delivered to the trustee, by the corporation (if other than Inco) formed by or surviving any such consolidation, amalgamation, merger or statutory arrangement or into which Inco shall have been merged, or by the corporation which shall have acquired or leased such property and (3) if the corporation (whether Inco or another corporation) formed by or surviving any such consolidation, amalgamation, merger or statutory arrangement, or to which such sale, conveyance or lease will have been made, is organized under the laws of a jurisdiction other than Canada or the United States or any province, territory, state or district thereof (each, a "relevant taxing jurisdiction"), we become or such successor corporation becomes obligated by a supplemental indenture satisfactory in form to the trustee to make all payments on account of the Subordinated Debentures without withholding of a deduction for, or on account of, any present or future taxes or governmental charges ("specified taxes") imposed or levied by a relevant taxing jurisdiction, unless we are required by law or the interpretation or administration thereof to withhold or deduct such specified taxes. In that event, we will pay as additional interest such additional amounts ("other additional amounts") as may be necessary in order that the net amounts received by each holder of Subordinated Debentures after such withholding or deduction, including any withholding or deduction with respect to such other additional amounts, shall equal the respective amounts of principal and interest which would have been receivable in respect of the Subordinated Debentures in the absence of such withholding or deduction, except that no such other additional amounts shall be payable with respect to payments made to a holder: (a) if such holder is liable for such taxes by reason of such holder or the beneficial owner of the Subordinated Debenture having a present or former direct or indirect connection with the relevant taxing jurisdiction other than the mere holding of the Subordinated Debenture or the receipt of payment in respect thereof; (b) for any taxes imposed as a result of the failure of such holder or beneficial owner to comply with certification, identification, declaration or similar reporting requirements, if such compliance is required by statute or by regulation, administrative practice or an applicable treaty, as a precondition to relief or exemption from such tax; (c) for any estate, inheritance, gift, sales, transfer, personal property or similar tax, duty or fine, assessment or other governmental charge; (d) for any tax which is payable otherwise than by withholding or deduction from payment by us of principal of, or interest on, the Subordinated Debenture; (e) if the payment of other additional amounts would be for any withholding or deduction imposed on a payment to an individual which is required to be made pursuant to a European Union directive on the taxation of savings implementing the conclusions of ECOFIN Council meeting of November 26-27, 2000 or any law implementing or complying with or introduced in order to conform to such directive; or 29 (f) any combination of items (a) to (e); nor will such other additional amounts be paid with respect to a payment on the Subordinated Debenture to a holder who is a fiduciary or partnership or other than the sole beneficial owner of such Subordinated Debenture to the extent that a beneficiary or settlor with respect to such fiduciary, or a member of such partnership or a beneficial owner thereof, would not have been entitled to receive a payment of such other additional amounts had such beneficiary, settlor, member or beneficial owner received directly its beneficial or distributive share of such payment. We shall have the right reasonably to require a holder as a condition of payment of amounts on the Subordinated Debentures to present at such place as we shall reasonably designate a certificate in such form as we may from time to time prescribe to enable us to determine our duties and liabilities with respect to (i) any specified taxes that we or any withholding agent may be required to deduct or withhold from payments in respect of a Subordinated Debenture under any present or future law of any relevant taxing jurisdiction or any regulation of any taxing authority thereof and (ii) any reporting or other requirements under such laws or regulations. To the extent not otherwise prohibited by applicable laws and regulations, we shall be entitled to determine our duties and liabilities with respect to such deduction, withholding, reporting or other requirements on the basis of information contained in such certificate, or, if no certificate shall be presented, on the basis of any presumption created by any such law or regulation, and shall be entitled to act in accordance with such determination. DEFAULT AND RELATED MATTERS EVENTS OF DEFAULT You will have special rights if an Event of Default occurs and is not cured, as described later in this subsection. The term "Event of Default" means any of the following: o we do not pay or deliver (in cash or common shares, as applicable) the principal amount, the redemption price, conversion consideration or change in control purchase price with respect to any Subordinated Debenture when such becomes due and payable; o if we fail to pay interest (including additional interest) when due and such failure continues for 30 days (subject to our right to defer payment of interest); o we remain in breach of a restrictive covenant or any other term of the indenture for 90 days after we receive a notice of default stating we are in breach. The notice must be sent by either the trustee or the holders of at least 25% of the principal amount of the Subordinated Debentures; o our obligation to repay any outstanding debt is accelerated by our lenders, and this repayment obligation remains accelerated for 10 days after we receive a notice of default as described in the second sentence of the previous bullet; or o we file for bankruptcy in Canada or certain other events in bankruptcy, insolvency or reorganization occur. REMEDIES IF AN EVENT OF DEFAULT OCCURS If an Event of Default has occurred and has not been cured, the trustee or the holders of at least 25% in principal amount of the Subordinated Debentures may declare the principal amount plus accrued and unpaid interest on the Subordinated Debentures to be due and immediately payable. This is called a declaration of acceleration of stated maturity. If an Event of Default occurs because of certain events in bankruptcy, insolvency or reorganization, the principal amount plus accrued and unpaid interest on the Subordinated Debentures will be automatically accelerated, without any action by the trustee or any holder. A declaration of acceleration of stated maturity may be cancelled by the holders of at least a majority in principal amount of the Subordinated Debentures. Except in cases of default, where the trustee has some special duties, the trustee is not required to take any action under the indenture at the request of any Subordinated Debentures holders unless the holders offer the trustee reasonable protection from expenses and liability (called an "indemnity"). If reasonable indemnity is provided, the holders of a majority in principal amount of the outstanding Subordinated Debentures may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee. These majority holders may also direct the trustee in 30 performing any other action under the indenture. Before you bypass the trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights or protect your interests relating to the Subordinated Debentures, the following must occur: o you must give the trustee written notice that an Event of Default has occurred and remains uncured; o the holders of at least 25% in principal amount of all outstanding Subordinated Debentures must make a written request that the trustee take action because of the default, and must offer reasonable indemnity to the trustee against the cost and other liabilities of taking that action; o the trustee must have not taken action for 60 days after receipt of the above notice and offer of indemnity; and o the trustee has not received inconsistent directions from holders of a majority in principal amount during such 60-day period. However, you are entitled at any time to bring a lawsuit for the payment of money due on your Subordinated Debenture on or after its due date. We will furnish to the trustee every year a written statement of certain of our officers certifying that to their knowledge we are in compliance with the indenture and the Subordinated Debentures, or else specifying any default. CANADIAN WITHHOLDING TAXES We will make payments on account of the Subordinated Debentures without withholding or deducting on account of any present or future Canadian tax or other government charge ("Canadian taxes"), unless we are required by law or the interpretation or administration thereof, to withhold or deduct Canadian taxes. If we are required to withhold or deduct any amount on account of Canadian taxes, we will make such withholding or deduction and pay as additional interest the additional amounts ("additional amounts") necessary so that the net amount received by each holder of Subordinated Debentures after the withholding or deduction (including with respect to additional amounts) will not be less than the amount the holder would have received if the Canadian taxes had not been withheld or deducted. We will make similar payment of additional amounts to holders of Subordinated Debentures (other than excluded holders) that are exempt from withholding but are required to pay tax directly on amounts otherwise subject to withholding. However, no additional amounts will be payable with respect to a payment made to holders (referred to as "excluded holders") subject to Canadian tax on those payments because they carry on business in Canada, or who fail to comply with any administrative requirements necessary as a precondition to exemption from withholding Canadian taxes, or to certain other excluded holders, as described in the indenture. We will remit the amount we withhold or deduct to the relevant authority. Additional amounts will be paid in cash, as applicable, at stated maturity, on any redemption date, on a conversion date or on any purchase date. MODIFICATION AND WAIVER There are three types of changes we can make to the indenture and the Subordinated Debentures. Changes Requiring Your Approval. First, there are changes that cannot be made to your Subordinated Debentures without your specific approval. The following is a list of those types of changes: o alter the manner or rate of accrual of interest on any Subordinated Debenture; o change the stated maturity of the principal on any Subordinated Debenture; o reduce any amount payable upon conversion (except as provided for in the indenture), redemption or purchase of a Subordinated Debenture, including any additional amounts; o make any Subordinated Debenture payable in money or securities other than that stated in the indenture; o make any change that adversely affects our obligation to offer to purchase, or to purchase, a Subordinated Debenture; o adversely affect the right to convert any Subordinated Debenture (except as permitted by the indenture); 31 o change the place or currency of payment on a Subordinated Debenture; o impair your right to sue for payment or conversion; o modify the subordination provisions of the indenture in a manner adverse to the holders of Subordinated Debentures; o reduce the percentage of holders of Subordinated Debentures whose consent is needed to modify or amend the indenture; o reduce the percentage of holders of Subordinated Debentures whose consent is needed to waive compliance with certain provisions of the indenture or to waive certain defaults; or o modify any other aspect of the provisions dealing with modification and waiver of the indenture. Changes Requiring a Super-Majority Vote. The second type of change to the indenture and the Subordinated Debentures is the kind that requires a vote in favor by holders of Subordinated Debentures owning 66 2/3% of the principal amount of the Subordinated Debentures. Most changes fall into this category, except for clarifying changes and certain other changes that would not adversely affect holders of the Subordinated Debentures. The same vote would be required for us to obtain a waiver of all or part of the covenants described in the indenture, or a waiver of a past default. However, we cannot obtain a waiver of a payment default or any other aspect of the indenture or the Subordinated Debentures listed in the first category described previously under "Changes Requiring Your Approval" unless we obtain your individual consent to the waiver. Changes Not Requiring Approval. The third type of change does not require any vote by holders of Subordinated Debentures. This type is limited to clarifications and certain other changes that would not adversely affect holders of the Subordinated Debentures. Further Details Concerning Voting. When taking a vote, we will use the principal amount of the Subordinated Debentures outstanding. Your Subordinated Debentures are not considered "outstanding", and therefore will not be eligible to vote, if we have deposited or set aside in trust for you money or securities for their payment or redemption. We will generally be entitled to set any day as a record date for the purpose of determining the holders of outstanding Subordinated Debentures that are entitled to vote or take other action under the indenture. If we set a record date for a vote or other action to be taken by holders, that vote or action may be taken only by persons who are holders of outstanding Subordinated Debentures on the record date. - -------------------------------------------------------------------------------- "STREET NAME" AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW APPROVAL MAY BE GRANTED OR DENIED IF WE SEEK TO CHANGE THE INDENTURE OR THE SUBORDINATED DEBENTURES OR REQUEST A WAIVER. - -------------------------------------------------------------------------------- GOVERNING LAW The indenture and the Subordinated Debentures are governed by, and construed in accordance with, the laws of the State of New York. CONSENT TO SERVICE In connection with the indenture, we have designated and appointed CT Corporation System as our authorized agent upon which process may be served in any suit or proceeding arising out of or relating to the indenture or the Subordinated Debentures that may be instituted in any federal or New York state court located in the Borough of Manhattan, in the City of New York, or brought by the trustee (whether in its individual capacity or in its capacity as trustee under the indenture), and we irrevocably submit to the non-exclusive jurisdiction of such courts. ENFORCEABILITY OF JUDGMENTS Since substantially all of our assets, as well as the assets of most of our directors and officers, are located outside the United States, any judgment obtained in the United States against us or certain of our directors or officers, including judgments with respect to the payment of principal on the Subordinated Debentures, may not be collectible within the United States. 32 We have been informed by Osler, Hoskin & Harcourt LLP, our Canadian counsel, that the laws of the Province of Ontario and the federal laws of Canada applicable therein permit an action to be brought in a court of competent jurisdiction in the Province of Ontario on any final and conclusive judgment in personam of any federal or state court located in the State of New York (a "New York Court") against Inco, which judgment is subsisting and unsatisfied for a sum certain with respect to the enforcement of the indenture and the Subordinated Debentures that is not impeachable as void or voidable under the internal laws of the State of New York if (1) the New York Court rendering such judgment had jurisdiction over the judgment debtor, as recognized by the courts of the Province of Ontario (and submission by Inco in the indenture to the jurisdiction of the New York Court will be sufficient for that purpose); (2) such judgment was not obtained by fraud or in a manner contrary to natural justice and the enforcement thereof would not be inconsistent with public policy, as such terms are understood under the laws of the Province of Ontario, or contrary to any order made by the Attorney General of Canada under the Foreign Extraterritorial Measures Act (Canada); (3) the enforcement of such judgment would not be contrary to the laws of general application limiting the enforcement of creditors' rights and does not constitute, directly or indirectly, the enforcement of foreign revenue, expropriatory or penal laws in the Province of Ontario; (4) no new admissible evidence relevant to the action is discovered prior to the rendering of judgment by the court in the Province of Ontario; (5) interest payable on the Subordinated Debentures is not characterized by a court in the Province of Ontario as interest payable at a criminal rate within the meaning of Section 347 of the Criminal Code (Canada); and (6) the action to enforce such judgment is commenced within the appropriate limitation period; except that any court in the Province of Ontario may only give judgment in Canadian dollars. In the opinion of such counsel, there are no reasons under present laws of the Province of Ontario for avoiding recognition of such a judgment of a New York Court under the indenture or on the Subordinated Debentures based upon public policy. DISCHARGE OF THE INDENTURE We may satisfy and discharge our obligations under the indenture by delivering to the trustee for cancellation all outstanding Subordinated Debentures or by depositing with the trustee, the paying agent or the conversion agent, if applicable, after the Subordinated Debentures have become due and payable, whether at stated maturity, on any redemption date, a change in control purchase date, or upon conversion or otherwise, cash or common shares, or any combination thereof (as applicable under the terms of the indenture) sufficient to pay all of the outstanding Subordinated Debentures and paying all other sums payable under the indenture by us. INFORMATION CONCERNING THE TRUSTEE We have appointed The Bank of New York as the trustee under the indenture and as paying agent, conversion agent, Subordinated Debentures registrar and custodian for the Subordinated Debentures. The trustee or its affiliates may provide banking and other services to us in the ordinary course of their business. The Bank of New York currently acts as our trustee with respect our existing indentures, including those related to our 5 3/4% Convertible Debentures due 2004, our 7 3/4% Convertible Debentures due 2016, our 9 7/8% Sinking Fund Debentures due 2019, our 9.60% Debentures due 2022, our Liquid Yield Option Notes due 2021, our 7.20% Debentures due 2032, our 7 3/4% Notes due 2012 and our Convertible Debentures due 2023. LEGAL OWNERSHIP STREET NAME AND OTHER INDIRECT HOLDERS Investors who hold Subordinated Debentures in accounts at banks or brokers will generally not be recognized by us as legal holders of Subordinated Debentures. This is called holding in "street name". Instead, we would recognize only the bank or broker, or the financial institution the bank or broker uses to hold Subordinated Debentures. These intermediary banks, brokers and other financial institutions pass along principal, interest and other payments on Subordinated Debentures, either because they agree to do so in their customer agreements or because they are legally required to. If you hold Subordinated Debentures in street name, you should check with your own institution to find out: o how it handles securities payments, conversions, redemptions, purchases and notices; o whether it imposes fees or charges; o how it would handle voting if ever required; o whether and how you can instruct it to send you Subordinated Debentures registered in your own name so you can be a direct holder in the limited circumstances described below; and 33 o how it would pursue rights under the Subordinated Debentures if there was a default or other event triggering the need for holders to act to protect their interests. DIRECT HOLDERS Our obligations, as well as the obligations of the trustee and those of any third parties employed by us or the trustee, run only to persons or entities who are the direct holders of the Subordinated Debentures, i.e., those who are registered as holders of the Subordinated Debentures. As noted above, we do not have obligations to you if you hold in street name or through other indirect means, either because you choose to hold the Subordinated Debentures in that manner or because the Subordinated Debentures are issued in the form of global securities as described below. For example, once we make payment to the registered holder, we have no further responsibility for the payment even if that registered holder is legally required to pass the payment along to you as a street name customer but does not do so. GLOBAL SECURITIES A global security is a special type of indirectly held security, as described above under "--Street Name and Other Indirect Holders". Since the Subordinated Debentures were issued in the form of global securities, the ultimate beneficial owners can only be indirect holders. DTC is the depositary. The Subordinated Debentures included in the global securities may not be transferred to the name of any other direct holder unless the special circumstances described below occur. Any person wishing to own a Subordinated Debenture included in a global security must do so indirectly by virtue of an account with a broker, bank or other financial institution that in turn has an account with the depositary. SPECIAL INVESTOR CONSIDERATIONS FOR GLOBAL SECURITIES As an indirect holder, an investor's rights relating to a global security is governed by the account rules of the investor's financial institution and of the depositary, as well as general laws relating to securities transfers. We do not recognize this type of investor as a registered holder of Subordinated Debentures and instead deal only with the depositary that holds the global securities. As an investor in Subordinated Debentures that are issued only in the form of global securities, you should be aware that except in limited circumstances described in the indenture: o you cannot get Subordinated Debentures registered in your own name; o you cannot receive physical certificates for your interest in the Subordinated Debentures; o you will be a street name holder and must look to your own bank or broker for payments on the Subordinated Debentures and protection of your legal rights relating to the Subordinated Debentures. See "--Street Name and Other Indirect Holders"; o you may not be able to sell interests in the Subordinated Debentures to some insurance companies and other institutions that are required by law to own their securities in the form of physical certificates; o the depositary's policies will govern conversions, payments, transfers, exchange and other matters relating to your interest in the global securities. We and the trustee have no responsibility for any aspect of the depositary's actions or for its records of ownership interests in the global securities. We and the trustee also do not supervise the depositary in any way. SPECIAL SITUATIONS WHEN GLOBAL SECURITIES WILL BE TERMINATED In a few special situations described later, the global securities will terminate and interests in the global securities will be exchanged for physical certificates representing Subordinated Debentures. After that exchange, the choice of whether to hold the Subordinated Debentures directly or in street name will be up to you. You must consult your own bank or broker to find out how to have your interests in the Subordinated Debentures transferred to your own name, so that you will be a direct holder. The rights of street name investors and direct holders in the Subordinated Debentures have been described in the sections 34 entitled, "--Street Name and Other Indirect Holders" and "--Direct Holders" above. The special situations for termination of global securities are: o when the depositary notifies us that it is unwilling, unable or no longer qualified to continue as depositary; o when we notify the trustee that we wish to terminate the global securities; or o when an Event of Default on the Subordinated Debentures has occurred and has not been cured. Defaults are discussed above under "Description of Subordinated Debentures--Default and Related Matters". EXCEPT UNDER THE HEADING "LEGAL OWNERSHIP", IN THIS PROSPECTUS "YOU" MEANS DIRECT HOLDERS AND NOT STREET NAME OR OTHER INDIRECT HOLDERS OF SUBORDINATED DEBENTURES. INDIRECT HOLDERS SHOULD READ THE PREVIOUS SECTIONS ENTITLED "--STREET NAME AND OTHER INDIRECT HOLDERS" AND "--SPECIAL INVESTOR CONSIDERATIONS FOR GLOBAL SECURITIES". DESCRIPTION OF SHARE CAPITAL We are authorized to issue an unlimited number of common shares (without nominal or par value) and 45,000,000 Preferred Shares, issuable in series, for a maximum consideration of Cdn.$1,500,000,000 (or its equivalent in other currencies) with such rights, privileges, restrictions and conditions of each series as the board of directors may determine before the issue thereof. As of April 21, 2003, there were issued and outstanding 183,496,950 common shares and 9,439,600 5.5% Convertible Redeemable Preferred Shares Series E (the "Series E Preferred Shares"). COMMON SHARES Our common shares (together with the Series E Preferred Shares) have general voting rights; that is, each holder is entitled to receive notice of, to attend and to vote at, on the basis of one vote for each share held, all meetings of shareholders of Inco other than meetings at which the holders of another class or series of shares are entitled to vote separately. Subject to the rights and priorities of the holders of Preferred Shares and any other class or series of shares in our capital stock authorized from time to time and ranking in priority to the common shares, the holders of common shares are entitled to: (i) receive such dividends as may be declared by our board of directors in its discretion out of funds legally available therefor, and (ii) in the event of a distribution of our assets among our shareholders on a liquidation, dissolution or winding-up, whether voluntary or involuntary, or any other distribution of our assets among our shareholders for the purpose of winding up our affairs, receive, in respect of each share so held, a pro rata amount of such assets of Inco equivalent to the proportion equal to the common shares then outstanding divided by the number of common shares then outstanding. The holders of common shares have no pre-emptive, redemption or conversion rights. The common shares rank junior to all Preferred Shares both as to return of capital and as to dividends. PREFERRED SHARES AS A CLASS ISSUABLE IN SERIES Our Preferred Shares are issuable in series, each series consisting of such number of shares and having such provisions attached thereto as may be determined by our board of directors. PRIORITY The Preferred Shares of each series rank on a parity with the Preferred Shares of every other series, and prior to the common shares, with respect to the payment of cumulative dividends and the distribution of assets on a liquidation, dissolution or winding up of Inco or for the purpose of winding up our affairs ("liquidation"). CREATION AND ISSUE OF ADDITIONAL PREFERRED SHARES Subject to applicable law, we may, without the consent of the holders of the Preferred Shares as a class, (1) create additional Preferred Shares, (2) create Preferred Shares of another class or classes ranking on a parity with the Preferred Shares with respect to the payment of dividends and/or the distribution of assets on liquidation or (3) increase any maximum number 35 of authorized shares of any one or more of such other classes of shares. If (but only so long as) any dividends are in arrears on any outstanding series of the Preferred Shares, we may not, without the consent, by a simple majority of the votes cast, of the holders of the Preferred Shares as a class, (i) issue any additional series of the Preferred Shares, or (ii) issue Preferred Shares of another class ranking on a parity with the Preferred Shares with respect to the payment of dividends and/or the distribution of assets on liquidation. CLASS VOTING RIGHTS The holders of the Preferred Shares are not entitled to any voting rights as a class except (1) as provided above, (2) as provided by law, or (3) with respect to the right to vote on certain matters as described under "--Modification" below. When the holders of Preferred Shares vote as a class, or when two or more series of Preferred Shares vote together at a joint meeting, each holder has one one-hundredth of a vote in respect of each Canadian dollar (or its equivalent in a foreign currency at the date of issuance) of the issue price of the Preferred Shares he or she holds. Our board of directors may, at the time of creation of any series of Preferred Shares, confer voting rights on such series in addition to the voting rights of the holders of the Preferred Shares as a class. The voting rights attached to the only currently outstanding series, our Series E Preferred Shares are summarized below. It is our board of directors' current intention that, with respect to the creation of any future series of Preferred Shares, to the extent that such Preferred Shares would have general voting rights then such shares would not have more than one vote in respect of each Preferred Share. The voting rights attached to the Series E Preferred Shares as a series are summarized below under "--Series E Preferred Shares--Series Voting Rights". MODIFICATION The class provisions attaching to the Preferred Shares may be amended at any time with such approval of the holders of such shares as may then be required by law, which currently is approval by at least two-thirds of the votes cast at a meeting of such holders duly called for the purpose and at which a quorum is present, or as are required by the rules of any stock exchange upon which the shares of any series of Preferred Shares are then listed. In addition, the approval by at least two-thirds of the votes cast at a meeting of the holders of all our shares carrying general voting rights is currently required by law for the amendment of such class provisions. SERIES E PREFERRED SHARES In August 1996, we issued 9.4 million Series E Preferred Shares of the 10 million authorized Series E Preferred Shares at an issue price of $50 per share for an aggregate issue price of $471 million in connection with the acquisition of Diamond Fields. By notice of redemption dated March 28, 2003, we announced our intention to redeem the Series E Preferred Shares effective May 1, 2003. In addition to the foregoing class provisions, the Series E Preferred Shares have the following provisions. DIVIDENDS The holders of the Series E Preferred Shares are entitled to receive, as and when declared by our board of directors, fixed cumulative cash dividends accruing from their issue date at the rate of 5.5 per cent per annum. Such dividends are payable in dollars (or, at the election of the holder, Canadian dollars) quarterly in arrears on the first business day of March, June, September, and December in each year. OPTIONAL AND MANDATORY REDEMPTION The Series E Preferred Shares, in whole or in part, are currently redeemable at our option upon 30 days' notice specifying the redemption date at the applicable optional redemption price of $51.10 per share, which price declines by $0.275 per year until such redemption price reaches $50.00 in 2006. The optional redemption price is payable in dollars or, at the option of the holder, Canadian dollars, provided that we have the right to satisfy the optional redemption price payable to each holder by requiring such holder to exchange the Series E Preferred Shares so redeemed for that number of common shares obtained by dividing the aggregate optional redemption price of the shares of such holder to be so redeemed by 95 per cent of a 20-day weighted average trading price on the New York Stock Exchange ending five days before the optional redemption date. However, we will not have the right to issue common shares in satisfaction of the optional redemption price payable to any particular holder if: (i) at the time of such redemption we have ceased to qualify as a "foreign private issuer" as defined in Rule 3b-4 under the Exchange Act; and (ii) as a result of such issuance of common shares, that particular holder would thereby be deemed to be a greater-than-10 per cent beneficial owner of common shares for purposes of Section 13(d) of the Exchange Act. 36 We are required to redeem all of the then outstanding Series E Preferred Shares on August 21, 2006 upon 30 days' notice at a redemption price of $50 per share, together with all accrued and unpaid dividends thereon. This mandatory redemption price is payable in dollars or, at the option of the holder, in Canadian dollars, provided that we have the right to satisfy the redemption price payable to each holder by requiring such holder to exchange the Series E Preferred Shares so redeemed for that number of common shares obtained by dividing the aggregate redemption price of the shares of such holder to be so redeemed by 95 per cent of a 20-day weighted average trading price on the New York Stock Exchange ending five days before the mandatory redemption date. However, we do not have the right to issue common shares in satisfaction of the mandatory redemption price payable to any particular holder in the same circumstances as those in which we would not have the right to issue common shares in satisfaction of the optional redemption price. CONVERSION The Series E Preferred Shares are convertible at the holder's option into common shares at any time, at a conversion rate of 1.19474 common shares for each Series E Preferred Share (representing an effective conversion price of $41.85 per Series E Preferred Share), subject to certain adjustments, including stock splits, distributions of common shares other than as "dividends paid in the ordinary course" (as defined in the terms and conditions of the Series E Preferred Shares) and certain right offerings. SERIES VOTING RIGHTS The Series E Preferred Shares (together with our common shares) carry general voting rights. The holders of Series E Preferred Shares are entitled to receive notice of, to attend (in person or by proxy) and be heard and to vote on the basis of one vote in respect of each such share held, at all meetings of our shareholders other than meetings at which holders of another class or series of shares are entitled to vote separately. The holders of Series E Preferred Shares shall also be entitled, voting exclusively and separately as a series, to one vote in respect of each Series E Preferred Share held in respect of certain amendments to our articles or any action which under any legislation, regulation or rule applicable to us requires the approval or authorization of a class vote. In the event that, and as long as, we fail to make six quarterly dividend payments, the holders of Series E Preferred Shares shall have the right as a series to elect two directors to our board of directors while such dividends remain in arrears. RESTRICTIONS ON DIVIDENDS AND EXCHANGE OR OTHER RETIREMENT OF SHARES AND ISSUANCE OF SENIOR SHARES So long as any of the Series E Preferred Shares are outstanding, we are not entitled to: (1) declare or pay any dividend on the common shares or any of our other shares ranking junior to the Series E Preferred Shares in respect of the payment of dividends and the distribution of assets on liquidation (other than stock dividends in common shares or any such other junior shares); (2) redeem, purchase or otherwise retire for value any common shares or any of our other shares ranking junior to the Series E Preferred Shares in respect of the payment of dividends and the distribution of assets on liquidation; or (3) redeem, purchase or otherwise retire for value (i) less than all the Series E Preferred Shares, (ii) any other Series E Preferred Shares, or (iii) any of our other shares ranking prior to or on a parity with the Series E Preferred Shares in respect of the distribution of assets on liquidation; unless all dividends then payable on the Series E Preferred Shares and on all other shares ranking prior to or on a parity therewith in respect of the payment of dividends shall have been paid or set apart for payment. TAX ELECTION The Series E Preferred Shares are "taxable preferred shares" as defined in the Canadian Tax Act. The terms of the Series E Preferred Shares require us to make the necessary elections under Part VI.1 of the Canadian Tax Act so that holders will not be subject to tax under Part IV.1 of the Canadian Tax Act on dividends received (or deemed to be received) on the Series E Preferred Shares. COMMON SHARE PURCHASE WARRANTS We have approximately 11,000,000 common share purchase warrants issued and outstanding as of April 21, 2003. Each whole warrant entitles the holder to purchase one common share at an exercise price of Cdn.$30.00 (or at the option of the holder, the equivalent in U.S. dollars based upon exchange rates prevailing at the time of exercise), subject to certain 37 adjustments, until 5:00 p.m. (Toronto time) on August 21, 2006. Any warrants not exercised prior to such time will expire. SHAREHOLDER RIGHTS PLAN On September 14, 1998, our board of directors adopted a shareholder rights plan that took effect on October 3, 1998, replacing a prior plan. The plan was amended in certain respects by the board of directors in February 1999, and was ratified and approved by shareholders at the 1999 Annual and Special Meeting of Shareholders. It was further amended in certain limited respects and restated by the board of directors in February 2002 and reconfirmed, as so amended and restated, by the shareholders at the 2002 Annual and Special Meeting. This current plan, set forth in an amended and restated rights plan agreement (the "Shareholder Rights Plan Agreement") entered into between us and CIBC Mellon Trust Company, as rights agent, is designed to (i) encourage the fair and equal treatment of shareholders in connection with any take-over offer by providing them with more time than the minimum statutory period during which a take-over bid must remain open in order to fully consider their options, and (ii) provide the board of directors with additional time, if appropriate, to pursue other alternatives to maximize shareholder value. The new plan is in effect until October 2008 subject to reconfirmation by holders of our Voting Securities (as defined below) at our annual meeting in the year 2005. The rights issued under the new plan attach to and trade with our common shares, and no separate certificates will be issued unless an event triggering these rights occurs. Certificates evidencing common shares will be legended to reflect that they evidence the rights until the Separation Time (as defined below). Holders of our 7 3/4% Convertible Debentures, 5 3/4% Convertible Debentures, Series E Preferred Shares, LYONs, Convertible Debentures and Subordinated Debentures will generally be entitled to receive, upon conversion of the relevant security, rights in an amount equal to the number of common shares issued upon conversion of such securities. The rights will separate from the common shares ("Separation Time") and be transferable, trade separately from the common shares and become exercisable only when a person, including any party related to or acting jointly or in concert with such person, acquires, or announces its intention to acquire beneficial ownership of 20 per cent or more of (1) our then outstanding Voting Securities (defined to include our common shares and Series E Preferred Shares) or (2) its then outstanding common shares alone, in either case without complying with the "permitted bid" provisions of the plan (as summarized below), or without the approval of the board of directors. Should such an acquisition occur, each right would entitle its holder, other than the acquiring person or persons related to or acting jointly or in concert with such person, to purchase additional common shares of Inco at a 50 per cent discount to the then current market price. The acquisition by any person (an "Acquiring Person") of 20 per cent or more of our common shares or Voting Securities, other than by way of a permitted bid, is referred to as a "Flip-in-Event". Any rights held by an Acquiring Person will become void upon the occurrence of a Flip-in Event. A "permitted bid" is a bid made to all holders of our outstanding Voting Securities that is open for at least 60 days. If, at the end of such 60 day period, more than 50 per cent of our then outstanding common shares, other than those securities owned by the party making the bid and certain related persons, have been tendered, such party may take up and pay for the common shares but must extend the bid for a further 10 business days to allow other shareholders to tender. This feature is designed to provide shareholders who had not tendered to the bid with enough time to tender to the bid once it is clear that a majority of common shares have been tendered to that bid. We will be entitled (1) to waive the application of the plan to enable a particular take-over bid to proceed, in which case the plan will be deemed to have been waived with respect to any other take-over bid made prior to the expiry of any bid subject to such waiver and (2) with the prior approval of the holders of Voting Securities or rights, to redeem the rights for normal consideration at any time prior to a Flip-in Event. CERTAIN INCOME TAX CONSIDERATIONS CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY PARTICULAR HOLDER OF SUBORDINATED DEBENTURES OR INCO COMMON SHARES AND NO REPRESENTATION IS MADE WITH RESPECT TO THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO ANY PARTICULAR HOLDER. ACCORDINGLY, PROSPECTIVE PURCHASERS OF SUBORDINATED DEBENTURES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE U.S. FEDERAL INCOME TAX CONSIDERATIONS RELEVANT TO THEM, HAVING REGARD TO THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY U.S. STATE, LOCAL OR NON-U.S. TAX LAWS. This section describes the material U.S. federal income tax consequences to you if you are a U.S. holder of Subordinated Debentures and common shares into which the Subordinated Debentures may be converted. It applies to you only if you acquire your Subordinated Debentures in this offering and you hold your Subordinated Debentures and common shares into 38 which those Subordinated Debentures may be converted as capital assets for U.S. federal income tax purposes. This section does not apply to you if you are a member of a special class of holders subject to special rules, including: o a dealer in securities, o a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings, o a financial institution, o a tax-exempt organization, o a life insurance company, o a person liable for alternative minimum tax, o a person that actually or constructively owns 10 per cent or more of our voting stock, o a person that holds Subordinated Debentures or common shares as part of a straddle or a hedging or conversion transaction, or o a person whose functional currency is not the dollar. This section is based on the Internal Revenue Code of 1986, as amended (the "Code"), its legislative history, existing and proposed U.S. Treasury regulations, published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly on a retroactive basis. You are a U.S. holder if you are a beneficial owner of common shares and you are: o a citizen or resident of the United States, o a domestic corporation, o an estate whose income is subject to U.S. federal income tax regardless of its source, or o a trust if a U.S. court can exercise primary supervision over the trust's administration and one or more U.S. persons are authorized to control all substantial decisions of the trust. CHARACTER OF THE SUBORDINATED DEBENTURES The following discussion assumes that the Subordinated Debentures should be classified as indebtedness of Inco for U.S. federal income tax purposes. If the Internal Revenue Service (the "IRS") were to successfully assert that the Subordinated Debentures should be treated as equity, the U.S. federal income tax consequences to you would be similar to that of a holder of common shares after conversion as described under the heading "Common Shares" below. INTEREST AND ORIGINAL ISSUE DISCOUNT Except as set forth below, stated interest on a Subordinated Debenture will generally be taxable to you as ordinary income at the time it is paid or accrued in accordance with your method of accounting for U.S federal income tax purposes. We have the option to defer interest payments on the Subordinated Debentures for a period not exceeding 20 consecutive interest periods. Under applicable U.S. Treasury regulations, a "remote" contingency that stated interest will not be timely paid will be ignored in determining whether a debt instrument is issued with original issue discount. We believe that the likelihood of exercising our option is remote within the meaning of the U.S. Treasury regulations. Based on the forgoing we believe that, while the matter is not free from doubt, the Subordinated Debentures should not be considered to be issued with original issue discount. If our option to defer any payment of interest was determined not to be "remote" within the meaning of the U.S. Treasury regulations or if we exercised our option to defer payments, the Subordinated Debentures would treated as issued with original issue discount at the time of issuance or at the time of such exercise, as the case may be. As a result, all stated interest on the 39 Subordinated Debentures would be treated a original issue discount as long as the Subordinated Debenture remained outstanding. In such an event, all of your taxable interest income relating to the Subordinated Debentures would have to be included in income on an economic accrual basis before the receipt of cash attributable to the interest regardless of your method of tax accounting, and actual distributions of stated interest would not be reported as taxable income. Consequently, you would be required to include in gross income original issue discount even though we would not make any actual cash payments during an extension period. No rulings or other interpretations have been issued by the IRS which have addressed the meaning of the term "remote" as used in the U.S. Treasury regulations and it is possible that the IRS could take the position that the likelihood of deferral was not remote. Stated interest and original issue discount (if any) accrued with respect to your Subordinated Debentures will constitute income from sources outside the United States, but, with certain exceptions, will be "passive" or "financial services" income, which is treated separately form other types of income for purposes of computing the U.S. foreign tax credit allowable to you as a U.S. holder. DISPOSITION OR CONVERSION OF THE SUBORDINATED DEBENTURES Except as described below, upon the sale or other disposition of a Subordinated Debenture, a U.S. holder will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the dollar value of the amount realized (except to the extent that such amount is attributable to accrued interest income not previously included in income, which will be taxable as ordinary income) and the U.S. holder's adjusted tax basis (determined in dollars) in such Subordinated Debenture. Such gain or loss will generally be capital gain or loss and will be long-term capital gain or loss if your holding period for the Subordinated Debenture exceeds one year. Such gain or loss will be income or loss from sources within the United States for U.S. foreign tax credit limitation purposes. Long-term capital gain of a noncorporate U.S. holder is generally subject to a maximum tax rate of 20 per cent. If a Subordinated Debenture held by you is converted to common shares or cash or a combination of common shares and cash pursuant to your conversion right or our optional redemption right or right to convert a Subordinated Debenture upon a change in control, you will not recognize any gain or loss to the extent that you receive common shares in exchange for the Subordinated Debenture, but you will recognize any realized gain to the extent that you receive cash. Your realized gain will be measured by the difference between the value of the consideration you receive for the Subordinated Debenture and your tax basis in the Subordinated Debenture. Any gain recognized will generally be capital gain, and will be long-term capital gain if the tendered Subordinated Debenture has been held for more than one year. Your tax basis in any common shares received in exchange for a Subordinated Debenture (including any fractional shares for which cash is received) will be the same as your tax basis in the Subordinated Debenture tendered to us in exchange, decreased by the amount of any cash received in exchange for the Subordinated Debenture and increased by the amount of any gain you recognize on the exchange. Your holding period for common shares received in the exchange will include the holding period for the Subordinated Debenture tendered to us in the exchange. However, to the extent that the holding period for common shares is attributable to accrued original issue discount it will commence on the day following the conversion. Cash received in lieu of a fractional common share upon conversion or redemption of a Subordinated Debenture or upon a tender of a Subordinated Debenture to us on a purchase date should be treated as a payment in exchange for the fractional share. Accordingly, if the common share is a capital asset in your hands, the receipt of cash in lieu of a fractional common share should generally result in capital gain or loss, if any, measured by the difference between the cash received for the fractional share and your tax basis in the fractional share. CONSTRUCTIVE DIVIDEND If at any time we make a distribution of property to our shareholders that would be taxable to the shareholders as a dividend for U.S. federal income tax purposes and, in accordance with the anti-dilution provisions of the Subordinated Debentures, the conversion rate of the Subordinated Debentures is increased, such increase may be deemed to be the payment of a constructive dividend to holders of the Subordinated Debentures that is taxable to the extent paid out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes). DIVIDENDS ON COMMON SHARES You will include in gross income the gross amount of any dividend paid (before reduction for Canadian withholding taxes) by us out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) as ordinary income when you actually or constructively receive the dividend. The dividend will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations. The amount of a dividend paid in foreign currency that you must include in your income as a U.S. holder will be the U.S. dollar value of the 40 foreign currency payments made, determined at the spot conversion rate for that foreign currency on the date of the dividend distribution, and will be includible in your income, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into U.S. dollars will be treated as ordinary income or loss. The gain or loss generally will be income or loss from sources within the United States for U.S. foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for U.S. federal income tax purposes, will be treated as a return of capital to the extent of your tax basis in the common shares and thereafter as capital gain. Subject to certain limitations and the provisions of the next paragraph, the Canadian tax withheld and paid over to Canada will be creditable against your U.S. federal income tax liability. For U.S. foreign tax credit limitation purposes, the dividend will be income from sources without the United States, but generally will be treated separately, together with other items of "passive income" (or, in the case of certain holders, "financial services income"). It is possible that, on the date a dividend is paid, the Company will be at least 50 per cent owned by U.S. persons. Under Section 904(g) of the Code, dividends paid by a foreign corporation that is at least 50 per cent owned by U.S. persons may be treated as U.S. source income (rather than foreign source income) for U.S. foreign tax credit purposes to the extent the foreign corporation has more than an insignificant amount of U.S. source income. The effect of this rule may be to treat a portion of the dividends paid by the Company as U.S. source income. The rules relating to the determination of the U.S. foreign tax credit are complex and you should consult with your own tax advisors to determine whether and to what extent a credit would be available. DISPOSITION OF COMMON SHARES Upon the sale, exchange or other disposition of common shares, you will recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the U.S. dollar value of the amount realized and the U.S. holder's tax basis (determined in U.S. dollars) in such common shares. Generally, such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the U.S. holder's holding period for such common shares exceeds one year and any such gain or loss will be income or loss from sources within the United States for U.S. foreign tax credit limitation purposes. Long-term capital gain of a noncorporate U.S. holder is generally subject to a maximum tax rate of 20 per cent. PASSIVE FOREIGN INVESTMENT COMPANY We believe that we currently are not, and should not become, a passive foreign investment company (a "PFIC") for U.S. federal income tax purposes, but this conclusion is a factual determination that is made annually and thus may be subject to change. If we were to be treated as a PFIC, unless you elect to be taxed annually on a mark-to-market basis with respect to the common shares, gain realized on the sale or other disposition of your Subordinated Debentures or common shares would in general not be treated as capital gain. Instead, if you are a U.S. holder, you would be treated as if you had realized such gain and certain "excess distributions" ratably over your holding period for the Subordinated Debentures or common shares and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. BACKUP WITHHOLDING AND INFORMATION REPORTING If you are a noncorporate U.S. holder, information reporting requirements, on IRS Form 1099, generally will apply to: o payments of principal and interest on your Subordinated Debentures within the United States, including payments made by wire transfer from outside the United States to an account you maintain in the United States, o dividend payments or other taxable distributions made to you on your common shares within the United States, and o the payment of the proceeds from the sale of your Subordinated Debentures or common shares effected at a U.S. office of a broker. Additionally, backup withholding will apply to such payments if you are a noncorporate U.S. holder that: o fails to provide an accurate taxpayer identification number, 41 o is notified by the IRS that you have failed to report all interest and dividends required to be shown on your federal income tax returns, or o in certain circumstances, fails to comply with applicable certification requirements. CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS The following is a summary of the principal Canadian federal income tax considerations generally applicable to a holder (a "Non-Canadian holder") in respect of the acquisition, holding, conversion and disposition of Subordinated Debentures purchased pursuant to this prospectus who, for the purposes of the Canadian Tax Act and any applicable income tax convention, and at all relevant times, is not, and is not deemed to be, resident in Canada, deals at arm's length with Inco, is not affiliated with Inco, holds Subordinated Debentures and will hold Inco common shares acquired in respect of the Subordinated Debentures as capital property and does not use or hold and is not deemed to use or hold the Subordinated Debentures or the Inco common shares in or in the course of carrying on business in Canada. Special rules, which are not discussed in this summary, may apply to a Non-Canadian holder that is an insurer that carries on an insurance business in Canada and elsewhere. This summary is based on the current provisions of the Canadian Tax Act and the Regulations, all specific proposals to amend the Canadian Tax Act and the Regulations announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof, and our understanding of the published administrative practices of the Canada Customs and Revenue Agency. This summary is not exhaustive of all Canadian federal income tax considerations and, except as mentioned above, does not take into account or anticipate any changes in law, whether by judicial, governmental or legislative decision or action or changes in administrative practices of the Canada Customs and Revenue Agency, nor does it take into account provincial, territorial or foreign income tax considerations which may vary from the Canadian federal income tax considerations described herein. All amounts relating to the ownership of the Subordinated Debentures and Inco common shares must be converted into Canadian dollars for the purpose of the Canadian Tax Act and the Regulations. THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY PARTICULAR HOLDER OF SUBORDINATED DEBENTURES OR INCO COMMON SHARES AND NO REPRESENTATION IS MADE WITH RESPECT TO THE CANADIAN TAX CONSEQUENCES TO ANY PARTICULAR HOLDER. ACCORDINGLY, PROSPECTIVE PURCHASERS OF SUBORDINATED DEBENTURES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE CANADIAN TAX CONSIDERATIONS RELEVANT TO THEM, HAVING REGARD TO THEIR PARTICULAR CIRCUMSTANCES. OWNERSHIP OF SUBORDINATED DEBENTURES Under the Canadian Tax Act, the payment to a Non-Canadian holder by Inco of interest under a Subordinated Debenture will be exempt from Canadian withholding tax. In general, a Non-Canadian holder will not be subject to Canadian income tax on capital gains arising on the disposition of Subordinated Debentures unless the Subordinated Debenture constitutes "taxable Canadian property" to the Non-Canadian holder. A Subordinated Debenture will constitute taxable Canadian property to a Non-Canadian holder if, at any time during the five-year period immediately preceding the disposition, the Non-Canadian holder, persons with whom such holder did not deal at arm's length, or the Non-Canadian holder and persons with whom such holder did not deal at arm's length owned 25 per cent or more of the shares of any class or series of the capital stock of Inco. OWNERSHIP OF INCO COMMON SHARES Under the Canadian Tax Act, dividends on Inco common shares paid or credited, or deemed to be paid or credited, to a Non-Canadian holder will be subject to Canadian withholding tax at the rate of 25 per cent of the gross amount of such dividends. The rate of this withholding tax may be reduced under the terms of an applicable income tax convention. Under the Canada--United States Income Tax Convention (1980), this withholding tax rate is reduced to 15 per cent or, in the case of a Non-Canadian holder that is a corporation which beneficially owns at least 10 per cent of the voting shares of Inco, 5 per cent. In general, a Non-Canadian holder will not be subject to Canadian income tax on capital gains arising on the disposition of Inco common shares unless those Inco common shares constitute "taxable Canadian property" to the Non-Canadian holder. An Inco common share will constitute taxable Canadian property to a Non-Canadian holder if, at any time in the five-year period immediately preceding the disposition, the Non-Canadian holder, persons with whom such holder did not deal at arm's length or the Non-Canadian holder and persons with whom such holder did not deal at arm's length owned 25 per cent or more of the 42 shares of any class or series of the capital stock of Inco. PLAN OF DISTRIBUTION The Subordinated Debentures were issued on March 7, 2003 and March 18, 2003 and offered and sold in the United States to qualified institutional buyers in reliance on Rule 144A under the Securities Act. This prospectus has not been filed in respect of, and will not qualify, any distribution of Subordinated Debentures or underlying shares in Ontario or any other province or territory of Canada. The holders of the Subordinated Debentures and the underlying shares (together the "Registrable Securities") are entitled to the benefits of a registration rights agreement, entered into as of March 7, 2003, between us and Morgan Stanley & Co. Incorporated and Salomon Smith Barney Inc. (the "Registration Rights Agreement"), pursuant to which we have filed this short form prospectus with the Ontario Securities Commission under the Canadian shelf prospectus system and a registration statement including this prospectus with the Securities and Exchange Commission under the Securities Act (the "Shelf Registration Statement") covering resales of the Registrable Securities. A list of the holders of Registrable Securities who have delivered a completed selling securityholder's questionnaire to us (each, an "Electing Holder") is set out in Schedule A to this prospectus, which is incorporated into and forms part of this prospectus and which may be updated by way of supplement to this prospectus. All shelf information omitted from this base shelf prospectus will be contained in a shelf supplement that will be delivered to purchasers together with this base shelf prospectus. Each shelf prospectus supplement will be incorporated by reference into this base shelf prospectus as of the date of the shelf prospectus supplement and only for the purposes of the distribution to which the shelf prospectus supplement pertains. Each shelf prospectus supplement to this base shelf prospectus will contain a current list of the Electing Holders. Each Electing Holder is the beneficial, but not the registered, holder of the aggregate principal amount of Subordinated Debentures shown in Schedule A, any or all of which may be sold by the Electing Holder at any time, or from time to time, pursuant to this prospectus, and the aggregate principal amount of Subordinated Debentures held by such Electing Holder shall thereafter be reduced to the extent of such sales. All of the Subordinated Debentures held by the Electing Holders were either acquired by them upon the issuance of the Subordinated Debentures on March 7, 2003 or March 18, 2003, or in subsequent transactions thereafter. We are registering the Subordinated Debentures and the underlying shares covered by this prospectus under the Securities Act to permit any of the Electing Holders to conduct public secondary trading of these securities from time to time after the date of this prospectus in accordance with the federal securities laws of the United States. We have agreed in the Registration Rights Agreement to bear all fees and expenses, other than underwriting discounts and selling commissions, in connection with the registration and sale of the Registrable Securities covered by this prospectus. Additionally, we have agreed to indemnify the holders of Registrable Securities against certain liabilities, including liabilities under the Securities Act, and each Electing Holder has agreed to indemnify us, other holders and any persons who control us, as defined in the federal securities laws of the United States, against any liability with respect to any information furnished by such holder in writing to us (including the selling securityholder's questionnaire) expressly for use in the Shelf Registration Statement. We will not receive any of the proceeds from the sale of the Registrable Securities by the Electing Holders. We have been advised by the Electing Holders that the Electing Holders may sell all or any portion of the Registrable Securities beneficially owned by them and offered hereby from time to time: o directly; or o through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, commissions or concessions from the Electing Holders or from the purchasers of the Registrable Securities from whom they may act as agent. The Registrable Securities may be sold from time to time in one or more transactions at: o fixed prices, which may be changed; o varying prices determined at the time of sale; or o negotiated prices. 43 The prices will be determined by the Electing Holders or by agreement between the Electing Holders and underwriters or dealers who may receive fees or commissions in connection with the sale. The aggregate proceeds to the Electing Holders from the sale of the Registrable Securities offered by them hereby will be the purchase price of the Registrable Securities less discount and commissions, if any. The sales described in the preceding paragraph may be effected in transactions: o on any U.S. national securities exchange or quotation service on which the Registrable Securities may be listed or quoted at the time of the sale, including the NYSE in the case of the underlying shares; o in the over-the-counter market; o in transactions otherwise than on such exchanges or services or in the over-the-counter market; or o through the writing of options. These transactions may include block transactions or crosses. Crosses are transactions in which the same broker acts as agent on both sides of the trade. Once any Registrable Security is sold by any Electing Holder pursuant to the Shelf Registration Statement, such Registrable Security is not thereafter covered by the Shelf Registration Statement even if subsequently reacquired by an Electing Holder. Our outstanding common shares are listed on the NYSE and the TSX, each of which has approved the listing of the underlying shares. We do not intend to list the Subordinated Debentures for trading on any national securities exchange. Accordingly, no assurance can be given as to the development of any trading market for the Subordinated Debentures. See Risk Factors - Trading Market for the Subordinated Debentures". In order to comply with the securities laws of certain states, if applicable, the Subordinated Debentures and underlying shares may be sold in such jurisdictions only through registered or licensed brokers or dealers. The selling securityholders and any underwriters, dealers or agents that participate in the distribution of the Subordinated Debentures and underlying shares offered under this prospectus may be deemed to be underwriters within the meaning of Section 2(11) of the Securities Act, and any discounts, commissions or concessions received by them pursuant to the sale of such securities by them might be deemed to be underwriting discounts and commissions under the Securities Act. We will be permitted pursuant to the Registration Rights Agreement to suspend the use of this prospectus that is part of the Shelf Registration Statement under certain circumstances relating to pending corporate developments, public filings with the SEC and similar events for a period not to exceed 45 days in any three-month period and 120 days in any 12-month period. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to this prospectus. There is no assurance that any selling securityholder will sell any or all of the Subordinated Debentures or underlying shares described in this prospectus, and any selling securityholder may transfer, devise or gift such securities by other means not described in this prospectus. VALIDITY OF THE SUBORDINATED DEBENTURES The validity of the Subordinated Debentures under New York law was passed upon for us by Sullivan & Cromwell LLP, New York, New York. Certain other legal matters were passed on for us by Stuart F. Feiner, Inco's Executive Vice President, General Counsel and Secretary, Mark J. Travers, Inco's Assistant General Counsel, and Osler, Hoskin & Harcourt LLP, Toronto, Ontario. As of the date hereof, certain lawyers with Osler, Hoskin & Harcourt LLP, own, directly or indirectly, in the aggregate, less than one per cent of our outstanding common shares. EXPERTS The consolidated financial statements incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended December 31,2002 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. The statements as to our 44 reserves which appear in our 2002 10-K have been incorporated by reference herein upon the authority, as experts, of Robert A. Horn, Vice-President, Exploration, and Robert C. Osborne, Consulting Geologist, Laterites, to the extent described in our 2002 10-K. AVAILABLE INFORMATION We are subject to the informational requirements of the Securities Exchange Act of 1934, and in accordance therewith file reports and other information with the SEC. Our recent SEC filings are available over the Internet at the SEC's web site at http://www.sec.gov. You may also read and copy any document we file with the SEC at the public reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Please call 1-800-SEC-0330 for further information on the operations of the public reference facilities and copying charges. Copies of reports and other information concerning Inco may be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. DOCUMENTS INCORPORATED BY REFERENCE The following documents, filed with the SEC and with the applicable securities commissions or similar authorities in all of the provinces of Canada, are incorporated by reference herein and form an integral part of this prospectus: o our Annual Report on Form 10-K for the fiscal year ended December 31, 2002; o our Proxy Circular and Statement dated February 10, 2003 other than the sections entitled "Report of the Management Resources and Compensation Committee on Executive Compensation" and "Comparative Shareholder Return"; o our Current Report on Form 8-K dated February 26, 2003; o our material change report dated March 4, 2003 relating to the issuance of the Subordinated Debentures and the Convertible Debentures; o our Current Report on Form 8-K dated March 11, 2003; and o our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2003, as filed with the SEC on April o, 2003. Although not incorporated by reference, a technical report pertaining to our Goro nickel-cobalt project, dated effective as of December 31, 2002, has been filed with the Canadian securities regulatory authorities. All documents we file with the SEC or with the applicable securities commissions or similar authorities in all of the provinces of Canada, after the date of this prospectus and prior to the termination of the distribution of Subordinated Debentures under this prospectus shall be deemed to be incorporated by reference into this prospectus. ANY STATEMENT CONTAINED IN A DOCUMENT INCORPORATED OR DEEMED TO BE INCORPORATED BY REFERENCE HEREIN SHALL BE DEEMED TO BE MODIFIED OR SUPERSEDED FOR THE PURPOSES OF THIS PROSPECTUS TO THE EXTENT THAT A STATEMENT CONTAINED HEREIN, OR IN ANY OTHER SUBSEQUENTLY FILED DOCUMENT WHICH ALSO IS OR IS DEEMED TO BE INCORPORATED BY REFERENCE HEREIN, MODIFIES OR SUPERSEDES THAT STATEMENT. THE MODIFYING OR SUPERSEDING STATEMENT NEED NOT STATE THAT IT HAS MODIFIED OR SUPERSEDED A PRIOR STATEMENT OR INCLUDE ANY OTHER INFORMATION SET FORTH IN THE DOCUMENT THAT IT MODIFIES OR SUPERSEDES. THE MAKING OF A MODIFYING OR SUPERSEDING STATEMENT SHALL NOT BE DEEMED AN ADMISSION FOR ANY PURPOSES THAT THE MODIFIED OR SUPERSEDED STATEMENT, WHEN MADE, CONSTITUTED A MISREPRESENTATION, AN UNTRUE STATEMENT OF A MATERIAL FACT OR AN OMISSION TO STATE A MATERIAL FACT THAT IS REQUIRED TO BE STATED OR THAT IS NECESSARY TO MAKE A STATEMENT NOT MISLEADING IN LIGHT OF THE CIRCUMSTANCES IN WHICH IT WAS MADE. ANY STATEMENT SO MODIFIED OR SUPERSEDED SHALL NOT BE DEEMED, EXCEPT AS SO MODIFIED OR SUPERSEDED, TO CONSTITUTE A PART OF THIS PROSPECTUS. Copies of the documents incorporated in this prospectus by reference may be obtained on request without charge from the Office of the Secretary, Inco Limited, 145 King Street West, Suite 1500, Toronto, Ontario, M5H 4B7, telephone (416) 361-7511. 45 LIST OF DOCUMENTS FILED WITH THE SEC The following documents have been filed with the SEC as part of the Registration Statement of which this short form prospectus forms a part: the documents referred to under the heading "Documents Incorporated by Reference"; consents of the independent public accountant, Robert Horn, Robert Osborne and Osler, Hoskin & Harcourt LLP; powers of attorney; the indenture; the first supplemental indenture; and the Statement of Eligibility of the Trustee on Form T-1. 46 SCHEDULE A LIST OF ELECTING HOLDERS NAME OF SELLING SECURITYHOLDER PRINCIPAL AMOUNT - ------------------------------ ---------------- Alpine Associates $10,220,000 Alpine Partners, L.P. $ 1,380,000 Akela Capital Master Fund, Ltd. $10,000,000 B.G.I. Global Investors $ 453,000 Bear, Stearns & Co. Inc. $ 2,000,000 BTES - Convertible ARB $ 200,000 BTOP Growth vs Value $ 800,000 Citigroup Global Markets Inc. $11,950,000 Credit Suisse First Boston LLC $ 1,250,000 Forest Fulcrum Fund L.L.P. $ 1,770,000 Forest Global Convertible Fund Series A-5 $ 6,168,000 Forest Multi-Strategy Master Fund SPC $ 977,000 JP Morgan Securities Inc. $ 3,000,000 KBC Convertible Arbitrage Fund $18,920,000 KBC Convertible Mac 28 Ltd. $ 1,720,000 LLT Limited $ 350,000 Lyxor Master Fund $ 6,308,000 Melody IAM Ltd. $ 860,000 OIP Limited $ 1,683,000 RBC Alternative Assets LP $ 397,000 Relay 11 Holdings $ 247,000 Silvercreek II Limited $ 1,020,000 Silvercreek Limited Partnership $ 2,397,000 Sphinx Convertible Arbitrage $ 125,000 Sunrise Partners Limited Partnership $ 500,000 TD Securities (USA) Inc. $ 3,000,000 White River Securities L.L.C. $ 2,000,000 Zurich Master Hedge Fund $ 610,000 $227,100,000 INCO LIMITED 3 1/2% SUBORDINATED CONVERTIBLE DEBENTURES DUE 2052 ============================== BASE SHELF PROSPECTUS ============================== o, 2003 ---------------------------------------- PART II INFORMATION NOT REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS INDEMNIFICATION Section 3.12 of Part 3 of By-law No. 1 of the Company provides, with regard to indemnity and insurance under the Canada Business Corporations Act (the "CBCA"), in part as follows: "Indemnity and Insurance. Subject to the limitations contained in the CBCA but without limit to the right of the Company to indemnify any person under the CBCA or otherwise, the Company shall indemnify a Director or Officer, a former Director or Officer, or a person who acts or acted at the Company's request as a director or officer of a body corporate of which the Company is or was a shareholder or creditor, and his heirs and legal representatives, against all costs, charges and expenses including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him in respect of any civil, criminal or administrative action or proceeding to which he is made a party by reason of being or having been a Director or Officer or a director or officer of body corporate, if, (a) he acted honestly and in good faith with a view to the best interests of the Company, and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, he had reasonable grounds for believing that his conduct was lawful." However, the CBCA also provides that no officer or director of the Company may be indemnified with respect to any security holder's derivative action brought pursuant to the CBCA unless a court of competent jurisdiction has approved the terms of such indemnification. The CBCA provides that as of right, in general, any officer or director as such, is entitled to indemnity if (i) he was substantially successful on the merits in his defense of the relevant action or proceeding to which he was a party, (ii) he acted honestly and in good faith with a view to the best interests of the corporation and (iii) where a criminal or administrative action or monetary penalty is involved, he had reasonable grounds for believing that his conduct was lawful. The Company has an insurance policy which indemnifies directors and officers against certain liabilities incurred by them in their capacities as such, including among other things, certain liabilities under the Securities Act of 1933. Insofar as indemnification for liabilities arising from the Securities Act of 1933 may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in such Act and is therefore unenforceable. EXHIBIT INDEX EXHIBIT DESCRIPTION NUMBER 3.1 Prospectus, incorporated by reference to Part I of this Registration Statement 4.1 Annual Report on Form 10-K for the fiscal year ended December 31, 2002, which Report is incorporated herein by reference (File No. 1-1143) 4.2 Proxy Circular and Statement of the Company dated February 10, 2003 other than the sections entitled "Report of the Management Resources and Compensation Committee on Executive Compensation" and "Comparative Shareholder Return" (incorporated by reference to Exhibit 99 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File No. 1-1143)) 4.3 Quarterly Report on Form 10-Q for the quarter ended March 31, 2003* 4.4 Current Report on Form 8-K of the Company, dated February 26, 2003, which Report is incorporated herein by reference (File No. 1-1143) 4.5 Current Report on Form 8-K of the Company, dated March 11, 2003, which Report is incorporated herein by reference (File No. 1-1143) 4.6 Material Change Report of the Company, dated March 4, 2003, filed with the Ontario Securities Commission 5.1 Consent of PricewaterhouseCoopers LLP 5.2 Consent of Osler, Hoskin & Harcourt LLP 5.3 Consent of Mr. Robert C. Osborne 5.4 Consent of Mr. Robert A. Horn 6.1 Powers of Attorney 7.1 Indenture, dated March 7, 2003, between the Company and The Bank of New York 7.2 First Supplemental Indenture, dated March 7, 2003, between the Company and The Bank of New York 8.1 Statement of Eligibility of The Bank of New York on Form T-1 - ------ * To be filed by amendment. PART III UNDERTAKING AND CONSENT TO SERVICE OF PROCESS ITEM 1. UNDERTAKING. The Company undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to the securities registered pursuant to Form F-10 or to transactions in said securities. ITEM 2. CONSENT TO SERVICE OF PROCESS. Concurrently with the filing of this Registration Statement on Form F-10, the Company is filing with the Commission a written irrevocable consent and power of attorney on Form F-X. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on this Form F-10 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Toronto, Province of Ontario, Canada, on the 22nd day of April, 2003. INCO LIMITED By /S/ STUART F. FEINER ------------------------------------- (Stuart F. Feiner, Executive Vice-President, General Counsel and Secretary) Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated, on the 22nd day of April, 2003.
/S/ SCOTT M. HAND Chairman and Chief Executive Officer and Director - ----------------------------------- (Principal Executive Officer) (Scott M. Hand) /S/ FAROKH S. HAKIMI Executive Vice-President and Chief Financial Officer - ----------------------------------- (Principal Financial Officer) (Farokh S. Hakimi) /S/ RONALD A. LEHTOVAARA Vice-President and Comptroller - ----------------------------------- (Principal Accounting Officer) (Ronald A. Lehtovaara) * Director - ----------------------------------- (Glenn A. Barton) * Director - ----------------------------------- (Angus A. Bruneau) Director - ----------------------------------- (Ronald C. Cambre) * Director - ----------------------------------- (Judith A. Erola) * Director - ----------------------------------- (Chaviva M. Hosek) * Director - ----------------------------------- (Peter C. Jones) Director - ----------------------------------- (John T. Mayberry) * Director - ----------------------------------- (David P. O'Brien) Director - ----------------------------------- (Roger Phillips) * Director - ----------------------------------- (James M. Stanford) * Director - ----------------------------------- (Richard M. Thomson) /S/ EDWARD A. STEEN Authorized Representative in the United States - ----------------------------------- Edward A. Steen Inco United States, Inc.
* Pursuant to powers of attorney executed by the persons named above whose names are preceded by an asterisk, Stuart F. Feiner, as attorney-in-fact, does hereby sign this Registration Statement on behalf of each such person, in each case in the capacity indicated, on the date indicated. By /S/ STUART F. FEINER ------------------------------------- (Stuart F. Feiner, Attorney-in-Fact) EX-99.4.6 3 sc0126f.txt EXHIBIT 4.6: MATERIAL CHANGE REPORT OF CO. MATERIAL CHANGE REPORT PURSUANT TO SECTION 85(1) OF THE SECURITIES ACT (BRITISH COLUMBIA) SECTION 142(1) OF THE SECURITIES ACT (ALBERTA) SECTION 84(1) OF THE SECURITIES ACT (SASKATCHEWAN) SECTION 75(2) OF THE SECURITIES ACT (ONTARIO) SECTION 73 OF THE SECURITIES ACT (QUEBEC) SECTION 81(2) OF THE SECURITIES ACT (NOVA SCOTIA) SECTION 76(2) OF THE SECURITIES ACT (NEWFOUNDLAND) ITEM 1: REPORTING ISSUER Inco Limited 145 King Street West Suite 1500 Toronto, Ontario M5H 4B7 ITEM 2: DATE OF MATERIAL CHANGE March 4, 2003 ITEM 3: PRESS RELEASE The attached press release was issued by Inco in Toronto on March 4, 2003. ITEM 4: SUMMARY OF MATERIAL CHANGE Inco Limited ("Inco") has entered into agreements with a group of initial purchasers to issue and sell (1) U.S. $241 million (U.S. $274 million if the overallotment option granted to the initial purchasers is exercised in full) aggregate amount payable at maturity of its Convertible Debentures due March 14, 2023 and (2) U.S. $220 million (U.S. $250 million if the overallotment option granted to the initial purchasers is exercised in full) aggregate principal amount of its Subordinated Convertible Debentures due March 14, 2052. ITEM 5: FULL DESCRIPTION OF MATERIAL CHANGE The information contained in the attached March 4, 2003 press release of Inco is incorporated herein. ITEM 6: RELIANCE ON CONFIDENTIALITY SECTION OF THE ACT Not applicable. -2- ITEM 7: OMITTED INFORMATION Not applicable. ITEM 8: SENIOR OFFICER - FOR FURTHER INFORMATION CONTACT: For further information, contact Stuart F. Feiner (416) 361-7680 (Executive Vice-President, General Counsel & Secretary). ITEM 9: STATEMENT OF SENIOR OFFICER The foregoing accurately discloses the material change referred to herein. DATED this 4th day of March, 2003. INCO LIMITED By: "STUART F. FEINER" ----------------------------------------- Stuart F. Feiner Executive Vice-President, General Counsel and Secretary IT IS AN OFFENCE FOR A PERSON TO MAKE A STATEMENT IN A DOCUMENT REQUIRED TO BE FILED OR FURNISHED UNDER THE ACT OR THIS REGULATION THAT AT THE TIME AND IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH IT IS MADE, IS A MISREPRESENTATION. [INCO LOGO] INCO ENTERS INTO AGREEMENTS TO SELL PRIVATELY TWO ISSUES OF CONVERTIBLE DEBENTURES IN SEPARATE CONCURRENT OFFERINGS Toronto, March 4, 2003 - Inco Limited ("Inco") announced today that it has entered into agreements with a group of initial purchasers to issue and sell (1) U.S $241 million (U.S. $274 million if the overallotment option granted to the initial purchasers is exercised in full) aggregate amount payable at maturity of its Convertible Debentures due March 14, 2023 ("Convertible Debentures"), representing U.S.$ 220 million in gross proceeds to Inco (U.S. $ 250 million if the overallotment option is exercised in full) and (2) U.S. $220 million (U.S. $250 million if the overallotment option granted to the initial purchasers is exercised in full) aggregate principal amount of its Subordinated Convertible Debentures due March 14, 2052 ("Subordinated Convertible Debentures"). Each Convertible Debenture is being offered and sold at a price of U.S.$913.81 and will have a semi-annual cash interest coupon equal to approximately 1.09% per year on the issue price (equivalent to 1.00% per year on the U.S. $1,000 amount per Convertible Debenture payable at maturity). The Subordinated Convertible Debentures are being offered and sold at their stated principal amount (U.S $1,000 per Subordinated Convertible Debenture) and will have a semi-annual cash interest coupon of 3 1/2% per year, subject to the Company's right to defer interest payments thereon securities for up to five years. The offerings are currently expected to close on March 7, 2003, subject to the satisfaction of customary closing conditions, and to result in combined gross proceeds to Inco of U.S.$440 million (U.S.$500 million if the initial purchasers exercise in full their over-allotment options). The net proceeds from the concurrent offerings will enable Inco to redeem all or a portion of either or both of its (i) 5.5% Convertible Redeemable Preferred -2- Shares Series E having a U.S.$472 million aggregate liquidation preference and which are subject to mandatory redemption in 2006 and/or (ii) U.S.$173 million aggregate principal amount of 5 3/4% Convertible Debentures due 2004 and, accordingly, reduce the Company's fixed charges. The closing of each offering is not conditioned on the other offering being completed. The Convertible Debentures and the Subordinated Convertible Debentures will be convertible at the option of the holders into Common Shares of Inco at the conversion rates referred to below, subject to certain anti-dilution adjustment provisions, only in the following circumstances: (i) Inco's Common Share price, calculated over a specified period, has exceeded 120% of the effective conversion price of the Convertible Debentures or the Subordinated Convertible Debentures, as applicable; (ii) the trading price of the Convertible Debentures or the Subordinated Convertible Debentures, as applicable, over a specified period has fallen below 95% of the amount equal to Inco's then prevailing Common Share price times the applicable conversion rate; (iii) Inco were to call the Convertible Debentures or the Subordinated Debentures, as applicable, for redemption; or (iv) certain specified corporate events were to occur. Each Convertible Debenture will be convertible into 31.9354 Common Shares, representing an initial conversion price of approximately U.S. $28.61 per Common Share or 43% above the closing sale price of Inco's Common Shares on the New York Stock Exchange on March 3, and each Subordinated Convertible Debenture will be convertible into 38.4423 Common Shares, representing a conversion price of approximately U.S. $26.01 per Common Share or 30% above the closing sale price of Inco's Common Shares on the New York Stock Exchange on March 3. Holders of the Convertible Debentures will have the right to have Inco redeem these Debentures at their issue price plus accrued interest on March 7 in each of 2010, 2014 and 2018. The Company will have the right to redeem the Convertible Debentures at any time on or after March 19, 2010. The Company will have the right to redeem the -3- Subordinated Convertible Debentures on or after March 19, 2008 if Inco's Common Shares trade over a specified period above 125% of the conversion price for these subordinated securities. Holders of the Subordinated Convertible Debentures will have no right to require Inco to redeem these subordinated securities. In the case of the Convertible Debentures, these securities will rank equally and ratably with all of Inco's existing and future unsecured and unsubordinated indebtedness. The Subordinated Convertible Debentures will be subordinated to all of Inco's senior indebtedness, which includes, among other obligations, all of its existing and future unsecured and unsubordinated indebtedness. In meeting the conversion, redemption, payment at maturity and other related terms of these securities, the Company will have the right to satisfy these obligations in cash, its Common Shares or any combination thereof. The offering and sale of the Convertible Debentures and the Subordinated Convertible Debentures are being made pursuant to Rule 144A under the U.S. Securities Act of 1933 (the "1933 Act"). The offerings have not been registered under the 1933 Act and none of the Convertible Debentures, the Subordinated Convertible Debentures or the Common Shares issuable upon conversion or certain other events may be offered or sold in the United States or to U.S. persons absent registration under the 1933 Act or the availability of an applicable exemption from such registration. None of these securities are being offered in Canada. THIS ANNOUNCEMENT DOES NOT CONSTITUTE A SOLICITATION OF AN OFFER TO PURCHASE, OR AN OFFER TO SELL, SECURITIES IN THE UNITED STATES OR ELSEWHERE. -4- This news release contains forward-looking statements regarding the Company and its financing arrangements, including our expectations that these offerings will be successfully completed consistent with the terms outlined above. Actual results and developments may differ materially from those contemplated by these statements depending on, among others, satisfaction of customary closing conditions which may be affected by market conditions and global political developments. IN 03/07 March 4, 2003 EX-99.5.1 4 sc0126i.txt EX 5.1: CONSENT OF PRICEWATERHOUSECOOPERS LLP CONSENT OF INDEPENDENT AUDITORS We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statement on Form F-10 of Inco Limited of our report dated February 4, 2003 appearing on page 119 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002 dated March 20, 2003. We also consent to the references to us under the heading "Experts". /S/ PRICEWATERHOUSECOOPERS LLP Chartered Accountants Toronto, Ontario April 22, 2003 EX-99.5.2 5 sc0126e.txt EX 5.2: CONSENT OF OSLER, HOSKIN & HARCOURT LLP CONSENT OF OSLER, HOSKIN & HARCOURT LLP Direct Dial: (212) 907-0504 Our Matter Number: 1037011 April 22, 2003 Inco Limited 145 King Street West, Suite 1500 Toronto, Ontario M5H 4B7 Dear Sirs/Mesdames: Re: Registration Statement on Form F-10 for Inco Limited - --------------------------------------------------------- We have acted as Canadian counsel to Inco Limited (the "Company") in connection with the registration statement on Form F-10 (the "Registration Statement") being filed today by the Company with the Securities and Exchange Commission under the United States Securities Act of 1933, as amended, with respect to the 3 1/2% Subordinated Convertible Debentures due 2052. We know that we are referred to under the headings "Enforceability of Certain Civil Liabilities", "Description of Subordinated Debentures - Enforceability of Judgments" and "Validity of the Subordinated Debentures" in the prospectus forming a part of the Registration Statement and we hereby consent to such use of our name in the Registration Statement. Yours very truly, /S/ OSLER, HOSKIN & HARCOURT LLP RCL/ALW EX-99.5.3 6 sc0126g.txt EXHIBIT 5.3: CONSENT OF MR. ROBERT C. OSBORNE CONSENT OF ROBERT C. OSBORNE The undersigned hereby consents to the incorporation by reference into the prospectus (the "Prospectus") included in the Registration Statement on Form F-10 of Inco Limited (the "Company") relating to the offering of debentures by the Company of references to him in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002 under the heading "PT International Nickel Indonesia Tbk" and to the reference to him in the Prospectus under the heading "Experts" as the person responsible for the statements as to reserves. Dated the 17th day of April, 2003 /S/ ROBERT C. OSBORNE --------------------- Robert C. Osborne EX-99.5.4 7 sc0126h.txt EXHIBIT 5.4: CONSENT OF MR. ROBERT A. HORN CONSENT OF ROBERT A. HORN The undersigned hereby consents to the incorporation by reference into the prospectus (the "Prospectus") included in the Registration Statement on Form F-10 of Inco Limited (the "Company") relating to the offering of debentures by the Company of references to him in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002 under the headings "Ore Reserves and Mining Rights in Canada", "PT International Nickel Indonesia Tbk" and "Goro Nickel S.A." and to the reference to him in the Prospectus under the heading "Experts" as the person responsible for the statements as to reserves. Dated the 17th day of April, 2003 /S/ ROBERT A. HORN ------------------ Robert A. Horn EX-99.6.1 8 sc0126d.txt EXHIBIT 6.1: POWERS OF ATTORNEY POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and appoints Julie A. Lee Harrs, Richard L. Guido, Ronald A. Lehtovaara, Donald T. Hurley and Stuart F. Feiner, and each of them with full power to act alone, his or her true and lawful attorneys and agents in his or her name and on his or her behalf, to do any and all acts and things and to execute any and all instruments which the said attorneys and agents, or any of them, may deem necessary or advisable to enable Inco Limited (the "Company"), pursuant to the requirements of the Registration Rights Agreements made and entered into as of March 7, 2003 covering the Convertible Debentures and the Subordinated Convertible Debentures (as such terms are defined below), respectively, by and between the Company and Salomon Smith Barney Inc. and Morgan Stanley & Co. Inc. ("Registration Rights Agreements"), to comply with (i) the requirements of any provincial securities commission or regulatory authority in Canada or any stock exchange in Canada (the "Canadian Securities Regulators"), (ii) the United States Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the United States Securities and Exchange Commission in respect thereof and (iii) the requirements of (x) any other jurisdiction in which the Convertible Debentures, the Subordinated Convertible Debentures and the Underlying Common Shares (as defined below) may be qualified for resale or (y) any other stock exchange, in each case in connection with the registration and/or qualification for resale under the laws of the United States pursuant to Rule 415 of the Act or any of the provinces of Canada and any other jurisdictions in which the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares (as defined below) may be registered and/or qualified for resale of up to (1) $272,679,000 (U.S.) amount payable at maturity of Convertible Debentures of the Company due 2023 (the "Convertible Debentures"), (2) $227,100,000 (U.S.) aggregate principal amount of 3 1/2% Subordinated Convertible Debentures due 2052 (the "Subordinated Convertible Debentures") and (3) the number of Common Shares in the capital of the Company (the "Common Shares") issuable upon conversion, redemption or certain other provisions or features of the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, including the exercise by any holder of any special conversion redemption or purchase features of the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, or any other events, in accordance with their terms (as such number of Common Shares may be increased or decreased, as the case may be, as a result of any adjustments to the number of Common Shares issuable upon conversion, redemption, purchase or other events relating to the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, pursuant to the terms thereof) ("Underlying Common Shares"), whereby the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares will be so registered under the Act and registered and/or qualified under all other applicable laws and regulations, including specifically, but without limiting the generality of the foregoing, the power and authority to sign on his or her behalf as a Director of the Company one or more registration statements of the Company on Form F-10 (or any comparable form or forms) ("Registration Statements") pursuant to Rule 415 of the Act and one or more preliminary and final short form prospectuses ("Prospectuses") with the Canadian Securities Regulators, as determined upon the advice of counsel, to be filed with said Securities and Exchange Commission and Canadian Securities Regulators in respect of the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares, and to any and all amendments or supplements (including, but not limited to, post-effective amendments) to the said Registration Statement or Statements and Prospectuses, in accordance with the Registration Rights Agreements, and the undersigned Director hereby ratifies and confirms all that the said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 15th day of April 2003. /S/ GLEN A. BARTON ------------------- Glen A. Barton POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and appoints Julie A. Lee Harrs, Richard L. Guido, Ronald A. Lehtovaara, Donald T. Hurley and Stuart F. Feiner, and each of them with full power to act alone, his or her true and lawful attorneys and agents in his or her name and on his or her behalf, to do any and all acts and things and to execute any and all instruments which the said attorneys and agents, or any of them, may deem necessary or advisable to enable Inco Limited (the "Company"), pursuant to the requirements of the Registration Rights Agreements made and entered into as of March 7, 2003 covering the Convertible Debentures and the Subordinated Convertible Debentures (as such terms are defined below), respectively, by and between the Company and Salomon Smith Barney Inc. and Morgan Stanley & Co. Inc. ("Registration Rights Agreements"), to comply with (i) the requirements of any provincial securities commission or regulatory authority in Canada or any stock exchange in Canada (the "Canadian Securities Regulators"), (ii) the United States Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the United States Securities and Exchange Commission in respect thereof and (iii) the requirements of (x) any other jurisdiction in which the Convertible Debentures, the Subordinated Convertible Debentures and the Underlying Common Shares (as defined below) may be qualified for resale or (y) any other stock exchange, in each case in connection with the registration and/or qualification for resale under the laws of the United States pursuant to Rule 415 of the Act or any of the provinces of Canada and any other jurisdictions in which the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares (as defined below) may be registered and/or qualified for resale of up to (1) $272,679,000 (U.S.) amount payable at maturity of Convertible Debentures of the Company due 2023 (the "Convertible Debentures"), (2) $227,100,000 (U.S.) aggregate principal amount of 3 1/2% Subordinated Convertible Debentures due 2052 (the "Subordinated Convertible Debentures") and (3) the number of Common Shares in the capital of the Company (the "Common Shares") issuable upon conversion, redemption or certain other provisions or features of the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, including the exercise by any holder of any special conversion redemption or purchase features of the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, or any other events, in accordance with their terms (as such number of Common Shares may be increased or decreased, as the case may be, as a result of any adjustments to the number of Common Shares issuable upon conversion, redemption, purchase or other events relating to the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, pursuant to the terms thereof) ("Underlying Common Shares"), whereby the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares will be so registered under the Act and registered and/or qualified under all other applicable laws and regulations, including specifically, but without limiting the generality of the foregoing, the power and authority to sign on his or her behalf as a Director of the Company one or more registration statements of the Company on Form F-10 (or any comparable form or forms) ("Registration Statements") pursuant to Rule 415 of the Act and one or more preliminary and final short form prospectuses ("Prospectuses") with the Canadian Securities Regulators, as determined upon the advice of counsel, to be filed with said Securities and Exchange Commission and Canadian Securities Regulators in respect of the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares, and to any and all amendments or supplements (including, but not limited to, post-effective amendments) to the said Registration Statement or Statements and Prospectuses, in accordance with the Registration Rights Agreements, and the undersigned Director hereby ratifies and confirms all that the said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 15th day of April 2003. /S/ ANGUS A. BRUNEAU -------------------- Angus A. Bruneau POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and appoints Julie A. Lee Harrs, Richard L. Guido, Ronald A. Lehtovaara, Donald T. Hurley and Stuart F. Feiner, and each of them with full power to act alone, his or her true and lawful attorneys and agents in his or her name and on his or her behalf, to do any and all acts and things and to execute any and all instruments which the said attorneys and agents, or any of them, may deem necessary or advisable to enable Inco Limited (the "Company"), pursuant to the requirements of the Registration Rights Agreements made and entered into as of March 7, 2003 covering the Convertible Debentures and the Subordinated Convertible Debentures (as such terms are defined below), respectively, by and between the Company and Salomon Smith Barney Inc. and Morgan Stanley & Co. Inc. ("Registration Rights Agreements"), to comply with (i) the requirements of any provincial securities commission or regulatory authority in Canada or any stock exchange in Canada (the "Canadian Securities Regulators"), (ii) the United States Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the United States Securities and Exchange Commission in respect thereof and (iii) the requirements of (x) any other jurisdiction in which the Convertible Debentures, the Subordinated Convertible Debentures and the Underlying Common Shares (as defined below) may be qualified for resale or (y) any other stock exchange, in each case in connection with the registration and/or qualification for resale under the laws of the United States pursuant to Rule 415 of the Act or any of the provinces of Canada and any other jurisdictions in which the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares (as defined below) may be registered and/or qualified for resale of up to (1) $272,679,000 (U.S.) amount payable at maturity of Convertible Debentures of the Company due 2023 (the "Convertible Debentures"), (2) $227,100,000 (U.S.) aggregate principal amount of 3 1/2% Subordinated Convertible Debentures due 2052 (the "Subordinated Convertible Debentures") and (3) the number of Common Shares in the capital of the Company (the "Common Shares") issuable upon conversion, redemption or certain other provisions or features of the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, including the exercise by any holder of any special conversion redemption or purchase features of the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, or any other events, in accordance with their terms (as such number of Common Shares may be increased or decreased, as the case may be, as a result of any adjustments to the number of Common Shares issuable upon conversion, redemption, purchase or other events relating to the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, pursuant to the terms thereof) ("Underlying Common Shares"), whereby the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares will be so registered under the Act and registered and/or qualified under all other applicable laws and regulations, including specifically, but without limiting the generality of the foregoing, the power and authority to sign on his or her behalf as a Director of the Company one or more registration statements of the Company on Form F-10 (or any comparable form or forms) ("Registration Statements") pursuant to Rule 415 of the Act and one or more preliminary and final short form prospectuses ("Prospectuses") with the Canadian Securities Regulators, as determined upon the advice of counsel, to be filed with said Securities and Exchange Commission and Canadian Securities Regulators in respect of the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares, and to any and all amendments or supplements (including, but not limited to, post-effective amendments) to the said Registration Statement or Statements and Prospectuses, in accordance with the Registration Rights Agreements, and the undersigned Director hereby ratifies and confirms all that the said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 15th day of April 2003. /S/ JUDITH A. EROLA ------------------- Judith A. Erola POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and appoints Julie A. Lee Harrs, Richard L. Guido, Ronald A. Lehtovaara, Donald T. Hurley and Stuart F. Feiner, and each of them with full power to act alone, his or her true and lawful attorneys and agents in his or her name and on his or her behalf, to do any and all acts and things and to execute any and all instruments which the said attorneys and agents, or any of them, may deem necessary or advisable to enable Inco Limited (the "Company"), pursuant to the requirements of the Registration Rights Agreements made and entered into as of March 7, 2003 covering the Convertible Debentures and the Subordinated Convertible Debentures (as such terms are defined below), respectively, by and between the Company and Salomon Smith Barney Inc. and Morgan Stanley & Co. Inc. ("Registration Rights Agreements"), to comply with (i) the requirements of any provincial securities commission or regulatory authority in Canada or any stock exchange in Canada (the "Canadian Securities Regulators"), (ii) the United States Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the United States Securities and Exchange Commission in respect thereof and (iii) the requirements of (x) any other jurisdiction in which the Convertible Debentures, the Subordinated Convertible Debentures and the Underlying Common Shares (as defined below) may be qualified for resale or (y) any other stock exchange, in each case in connection with the registration and/or qualification for resale under the laws of the United States pursuant to Rule 415 of the Act or any of the provinces of Canada and any other jurisdictions in which the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares (as defined below) may be registered and/or qualified for resale of up to (1) $272,679,000 (U.S.) amount payable at maturity of Convertible Debentures of the Company due 2023 (the "Convertible Debentures"), (2) $227,100,000 (U.S.) aggregate principal amount of 3 1/2% Subordinated Convertible Debentures due 2052 (the "Subordinated Convertible Debentures") and (3) the number of Common Shares in the capital of the Company (the "Common Shares") issuable upon conversion, redemption or certain other provisions or features of the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, including the exercise by any holder of any special conversion redemption or purchase features of the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, or any other events, in accordance with their terms (as such number of Common Shares may be increased or decreased, as the case may be, as a result of any adjustments to the number of Common Shares issuable upon conversion, redemption, purchase or other events relating to the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, pursuant to the terms thereof) ("Underlying Common Shares"), whereby the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares will be so registered under the Act and registered and/or qualified under all other applicable laws and regulations, including specifically, but without limiting the generality of the foregoing, the power and authority to sign on his or her behalf as a Director of the Company one or more registration statements of the Company on Form F-10 (or any comparable form or forms) ("Registration Statements") pursuant to Rule 415 of the Act and one or more preliminary and final short form prospectuses ("Prospectuses") with the Canadian Securities Regulators, as determined upon the advice of counsel, to be filed with said Securities and Exchange Commission and Canadian Securities Regulators in respect of the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares, and to any and all amendments or supplements (including, but not limited to, post-effective amendments) to the said Registration Statement or Statements and Prospectuses, in accordance with the Registration Rights Agreements, and the undersigned Director hereby ratifies and confirms all that the said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 15th day of April 2003. /S/ Chaviva Hosek ----------------- Chaviva Hosek POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and appoints Julie A. Lee Harrs, Richard L. Guido, Ronald A. Lehtovaara, Donald T. Hurley and Stuart F. Feiner, and each of them with full power to act alone, his or her true and lawful attorneys and agents in his or her name and on his or her behalf, to do any and all acts and things and to execute any and all instruments which the said attorneys and agents, or any of them, may deem necessary or advisable to enable Inco Limited (the "Company"), pursuant to the requirements of the Registration Rights Agreements made and entered into as of March 7, 2003 covering the Convertible Debentures and the Subordinated Convertible Debentures (as such terms are defined below), respectively, by and between the Company and Salomon Smith Barney Inc. and Morgan Stanley & Co. Inc. ("Registration Rights Agreements"), to comply with (i) the requirements of any provincial securities commission or regulatory authority in Canada or any stock exchange in Canada (the "Canadian Securities Regulators"), (ii) the United States Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the United States Securities and Exchange Commission in respect thereof and (iii) the requirements of (x) any other jurisdiction in which the Convertible Debentures, the Subordinated Convertible Debentures and the Underlying Common Shares (as defined below) may be qualified for resale or (y) any other stock exchange, in each case in connection with the registration and/or qualification for resale under the laws of the United States pursuant to Rule 415 of the Act or any of the provinces of Canada and any other jurisdictions in which the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares (as defined below) may be registered and/or qualified for resale of up to (1) $272,679,000 (U.S.) amount payable at maturity of Convertible Debentures of the Company due 2023 (the "Convertible Debentures"), (2) $227,100,000 (U.S.) aggregate principal amount of 3 1/2% Subordinated Convertible Debentures due 2052 (the "Subordinated Convertible Debentures") and (3) the number of Common Shares in the capital of the Company (the "Common Shares") issuable upon conversion, redemption or certain other provisions or features of the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, including the exercise by any holder of any special conversion redemption or purchase features of the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, or any other events, in accordance with their terms (as such number of Common Shares may be increased or decreased, as the case may be, as a result of any adjustments to the number of Common Shares issuable upon conversion, redemption, purchase or other events relating to the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, pursuant to the terms thereof) ("Underlying Common Shares"), whereby the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares will be so registered under the Act and registered and/or qualified under all other applicable laws and regulations, including specifically, but without limiting the generality of the foregoing, the power and authority to sign on his or her behalf as a Director of the Company one or more registration statements of the Company on Form F-10 (or any comparable form or forms) ("Registration Statements") pursuant to Rule 415 of the Act and one or more preliminary and final short form prospectuses ("Prospectuses") with the Canadian Securities Regulators, as determined upon the advice of counsel, to be filed with said Securities and Exchange Commission and Canadian Securities Regulators in respect of the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares, and to any and all amendments or supplements (including, but not limited to, post-effective amendments) to the said Registration Statement or Statements and Prospectuses, in accordance with the Registration Rights Agreements, and the undersigned Director hereby ratifies and confirms all that the said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 22nd day of April 2003. /S/ Peter C. Jones ----------------- Peter C. Jones POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and appoints Julie A. Lee Harrs, Richard L. Guido, Ronald A. Lehtovaara, Donald T. Hurley and Stuart F. Feiner, and each of them with full power to act alone, his or her true and lawful attorneys and agents in his or her name and on his or her behalf, to do any and all acts and things and to execute any and all instruments which the said attorneys and agents, or any of them, may deem necessary or advisable to enable Inco Limited (the "Company"), pursuant to the requirements of the Registration Rights Agreements made and entered into as of March 7, 2003 covering the Convertible Debentures and the Subordinated Convertible Debentures (as such terms are defined below), respectively, by and between the Company and Salomon Smith Barney Inc. and Morgan Stanley & Co. Inc. ("Registration Rights Agreements"), to comply with (i) the requirements of any provincial securities commission or regulatory authority in Canada or any stock exchange in Canada (the "Canadian Securities Regulators"), (ii) the United States Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the United States Securities and Exchange Commission in respect thereof and (iii) the requirements of (x) any other jurisdiction in which the Convertible Debentures, the Subordinated Convertible Debentures and the Underlying Common Shares (as defined below) may be qualified for resale or (y) any other stock exchange, in each case in connection with the registration and/or qualification for resale under the laws of the United States pursuant to Rule 415 of the Act or any of the provinces of Canada and any other jurisdictions in which the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares (as defined below) may be registered and/or qualified for resale of up to (1) $272,679,000 (U.S.) amount payable at maturity of Convertible Debentures of the Company due 2023 (the "Convertible Debentures"), (2) $227,100,000 (U.S.) aggregate principal amount of 3 1/2% Subordinated Convertible Debentures due 2052 (the "Subordinated Convertible Debentures") and (3) the number of Common Shares in the capital of the Company (the "Common Shares") issuable upon conversion, redemption or certain other provisions or features of the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, including the exercise by any holder of any special conversion redemption or purchase features of the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, or any other events, in accordance with their terms (as such number of Common Shares may be increased or decreased, as the case may be, as a result of any adjustments to the number of Common Shares issuable upon conversion, redemption, purchase or other events relating to the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, pursuant to the terms thereof) ("Underlying Common Shares"), whereby the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares will be so registered under the Act and registered and/or qualified under all other applicable laws and regulations, including specifically, but without limiting the generality of the foregoing, the power and authority to sign on his or her behalf as a Director of the Company one or more registration statements of the Company on Form F-10 (or any comparable form or forms) ("Registration Statements") pursuant to Rule 415 of the Act and one or more preliminary and final short form prospectuses ("Prospectuses") with the Canadian Securities Regulators, as determined upon the advice of counsel, to be filed with said Securities and Exchange Commission and Canadian Securities Regulators in respect of the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares, and to any and all amendments or supplements (including, but not limited to, post-effective amendments) to the said Registration Statement or Statements and Prospectuses, in accordance with the Registration Rights Agreements, and the undersigned Director hereby ratifies and confirms all that the said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 15th day of April 2003. /S/ David P. O'Brien -------------------- David P. O'Brien POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and appoints Julie A. Lee Harrs, Richard L. Guido, Ronald A. Lehtovaara, Donald T. Hurley and Stuart F. Feiner, and each of them with full power to act alone, his or her true and lawful attorneys and agents in his or her name and on his or her behalf, to do any and all acts and things and to execute any and all instruments which the said attorneys and agents, or any of them, may deem necessary or advisable to enable Inco Limited (the "Company"), pursuant to the requirements of the Registration Rights Agreements made and entered into as of March 7, 2003 covering the Convertible Debentures and the Subordinated Convertible Debentures (as such terms are defined below), respectively, by and between the Company and Salomon Smith Barney Inc. and Morgan Stanley & Co. Inc. ("Registration Rights Agreements"), to comply with (i) the requirements of any provincial securities commission or regulatory authority in Canada or any stock exchange in Canada (the "Canadian Securities Regulators"), (ii) the United States Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the United States Securities and Exchange Commission in respect thereof and (iii) the requirements of (x) any other jurisdiction in which the Convertible Debentures, the Subordinated Convertible Debentures and the Underlying Common Shares (as defined below) may be qualified for resale or (y) any other stock exchange, in each case in connection with the registration and/or qualification for resale under the laws of the United States pursuant to Rule 415 of the Act or any of the provinces of Canada and any other jurisdictions in which the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares (as defined below) may be registered and/or qualified for resale of up to (1) $272,679,000 (U.S.) amount payable at maturity of Convertible Debentures of the Company due 2023 (the "Convertible Debentures"), (2) $227,100,000 (U.S.) aggregate principal amount of 3 1/2% Subordinated Convertible Debentures due 2052 (the "Subordinated Convertible Debentures") and (3) the number of Common Shares in the capital of the Company (the "Common Shares") issuable upon conversion, redemption or certain other provisions or features of the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, including the exercise by any holder of any special conversion redemption or purchase features of the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, or any other events, in accordance with their terms (as such number of Common Shares may be increased or decreased, as the case may be, as a result of any adjustments to the number of Common Shares issuable upon conversion, redemption, purchase or other events relating to the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, pursuant to the terms thereof) ("Underlying Common Shares"), whereby the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares will be so registered under the Act and registered and/or qualified under all other applicable laws and regulations, including specifically, but without limiting the generality of the foregoing, the power and authority to sign on his or her behalf as a Director of the Company one or more registration statements of the Company on Form F-10 (or any comparable form or forms) ("Registration Statements") pursuant to Rule 415 of the Act and one or more preliminary and final short form prospectuses ("Prospectuses") with the Canadian Securities Regulators, as determined upon the advice of counsel, to be filed with said Securities and Exchange Commission and Canadian Securities Regulators in respect of the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares, and to any and all amendments or supplements (including, but not limited to, post-effective amendments) to the said Registration Statement or Statements and Prospectuses, in accordance with the Registration Rights Agreements, and the undersigned Director hereby ratifies and confirms all that the said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 15th day of April 2003. /S/ James M. Stanford --------------------- James M. Stanford POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and appoints Julie A. Lee Harrs, Richard L. Guido, Ronald A. Lehtovaara, Donald T. Hurley and Stuart F. Feiner, and each of them with full power to act alone, his or her true and lawful attorneys and agents in his or her name and on his or her behalf, to do any and all acts and things and to execute any and all instruments which the said attorneys and agents, or any of them, may deem necessary or advisable to enable Inco Limited (the "Company"), pursuant to the requirements of the Registration Rights Agreements made and entered into as of March 7, 2003 covering the Convertible Debentures and the Subordinated Convertible Debentures (as such terms are defined below), respectively, by and between the Company and Salomon Smith Barney Inc. and Morgan Stanley & Co. Inc. ("Registration Rights Agreements"), to comply with (i) the requirements of any provincial securities commission or regulatory authority in Canada or any stock exchange in Canada (the "Canadian Securities Regulators"), (ii) the United States Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the United States Securities and Exchange Commission in respect thereof and (iii) the requirements of (x) any other jurisdiction in which the Convertible Debentures, the Subordinated Convertible Debentures and the Underlying Common Shares (as defined below) may be qualified for resale or (y) any other stock exchange, in each case in connection with the registration and/or qualification for resale under the laws of the United States pursuant to Rule 415 of the Act or any of the provinces of Canada and any other jurisdictions in which the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares (as defined below) may be registered and/or qualified for resale of up to (1) $272,679,000 (U.S.) amount payable at maturity of Convertible Debentures of the Company due 2023 (the "Convertible Debentures"), (2) $227,100,000 (U.S.) aggregate principal amount of 3 1/2% Subordinated Convertible Debentures due 2052 (the "Subordinated Convertible Debentures") and (3) the number of Common Shares in the capital of the Company (the "Common Shares") issuable upon conversion, redemption or certain other provisions or features of the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, including the exercise by any holder of any special conversion redemption or purchase features of the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, or any other events, in accordance with their terms (as such number of Common Shares may be increased or decreased, as the case may be, as a result of any adjustments to the number of Common Shares issuable upon conversion, redemption, purchase or other events relating to the Convertible Debentures or the Subordinated Convertible Debentures, as the case may be, pursuant to the terms thereof) ("Underlying Common Shares"), whereby the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares will be so registered under the Act and registered and/or qualified under all other applicable laws and regulations, including specifically, but without limiting the generality of the foregoing, the power and authority to sign on his or her behalf as a Director of the Company one or more registration statements of the Company on Form F-10 (or any comparable form or forms) ("Registration Statements") pursuant to Rule 415 of the Act and one or more preliminary and final short form prospectuses ("Prospectuses") with the Canadian Securities Regulators, as determined upon the advice of counsel, to be filed with said Securities and Exchange Commission and Canadian Securities Regulators in respect of the Convertible Debentures, the Subordinated Convertible Debentures and Underlying Common Shares, and to any and all amendments or supplements (including, but not limited to, post-effective amendments) to the said Registration Statement or Statements and Prospectuses, in accordance with the Registration Rights Agreements, and the undersigned Director hereby ratifies and confirms all that the said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 15th day of April 2003. /S/ Richard M. Thomson ---------------------- Richard M. Thomson EX-99.7.1 9 sc0126b.txt EXHIBIT 7.1: SUBORDINATED INDENTURE EXECUTION COPY ================================================================================ INCO LIMITED TO THE BANK OF NEW YORK, Trustee -------------- SUBORDINATED INDENTURE Dated as of March 7, 2003 -------------- ================================================================================ INCO LIMITED CERTAIN SECTIONS OF THIS INDENTURE RELATING TO SECTIONS 310 THROUGH 318, INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939: TRUST INDENTURE INDENTURE SECTION ACT SECTION ss.310(a)(1) ........................................ 609 (a)(2) ........................................ 609 (a)(3) ........................................ Not Applicable (a)(4) ........................................ Not Applicable (b) ........................................ 608 610 ss.311(a) ........................................ 613 (b) ........................................ 613 ss.312(a) ........................................ 701 702 (b) ........................................ 702 (c) ........................................ 702 ss.313(a) ........................................ 703 (b) ........................................ 703 (c) ........................................ 703 (d) ........................................ 703 ss.314(a) ........................................ 704 (a)(4) ........................................ 101 1004 (b) ........................................ Not Applicable (c)(1) ........................................ 102 (c)(2) ........................................ 102 (c)(3) ........................................ Not Applicable (d) ........................................ Not Applicable (e) ........................................ 102 ss.315(a) ........................................ 601 (b) ........................................ 602 (c) ........................................ 601 (d) ........................................ 601 (e) ........................................ 514 ss.316(a) ........................................ 101 (a)(1)(A) ........................................ 502 512 (a)(1)(B) ........................................ 513 (a)(2) ........................................ Not Applicable (b) ........................................ 508 (c) ........................................ 104 ss.317(a)(1) ........................................ 503 (a)(2) ........................................ 504 (b) ........................................ 1003 ss.318(a) ........................................ 107 TABLE OF CONTENTS ---------- PAGE ---- PARTIES........................................................................1 RECITALS.......................................................................1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION............1 Section 101. Definitions.......................................................1 Accredited Investor Letter................................................2 Act.......................................................................2 Additional Interest.......................................................2 Additional Trustee........................................................2 Affiliate.................................................................2 Agent Member..............................................................2 Applicable Procedures.....................................................2 Authenticating Agent......................................................2 Board of Directors........................................................2 Board Resolution..........................................................2 Business Day..............................................................3 Certificated Security.....................................................3 Clearstream...............................................................3 Commission................................................................3 Company...................................................................3 Company Request...........................................................3 Corporate Trust Office....................................................3 corporation...............................................................3 Defaulted Interest........................................................3 Depositary................................................................3 Depository Securities Certification.......................................3 DTC.......................................................................3 Euroclear.................................................................3 Event of Default..........................................................4 Exchange Act..............................................................4 Exchange Offer............................................................4 Exchange Registration Statement...........................................4 Exchange Security.........................................................4 Expiration Date...........................................................4 Expiration Period.........................................................4 GAAP......................................................................4 Global Security...........................................................4 - ----------- NOTE: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. -i- PAGE ---- Holder....................................................................4 Indenture.................................................................4 Institutional Accredited Investor.........................................4 interest..................................................................4 Interest Payment Date.....................................................5 Investment Company Act....................................................5 Issue Date................................................................5 Maturity..................................................................5 Notice of Default.........................................................5 Officers' Certificate.....................................................5 Opinion of Counsel........................................................5 Original Issue Discount Security..........................................5 Original Securities.......................................................5 Other Additional Amounts..................................................5 Outstanding...............................................................5 Paying Agent..............................................................6 Person....................................................................6 Place of Payment..........................................................6 Predecessor Security......................................................6 Purchase Agreement........................................................7 Qualified Institutional Buyer.............................................7 Record Date...............................................................7 Record Date Period........................................................7 Redemption Date...........................................................7 Redemption Price..........................................................7 Registered Securities.....................................................7 Registration Default......................................................7 Registration Rights Agreement.............................................7 Regular Record Date.......................................................7 Regulation S..............................................................7 Regulation S Certificate..................................................7 Regulation S Global Security..............................................7 Regulation S Legend.......................................................7 Regulation S Securities...................................................7 Relevant Taxing Jurisdiction..............................................7 Repayment Date............................................................8 Repayment Price...........................................................8 Resale Registration Statement.............................................8 Responsible Officer.......................................................8 Restricted Global Security................................................8 Restricted Period.........................................................8 Restricted Securities.....................................................8 Restricted Securities Certificate.........................................8 Restricted Securities Legend..............................................8 Rule 144A.................................................................8 Rule 144A Securities......................................................8 - ----------- NOTE: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. -ii- PAGE ---- Securities................................................................8 Securities Act............................................................8 Securities Act Legend.....................................................9 Securities Register.......................................................9 Senior Indebtedness.......................................................9 Special Interest..........................................................9 Special Record Date.......................................................9 Specified Taxes...........................................................9 Stated Maturity...........................................................9 Subsidiary................................................................9 Successor Corporation....................................................10 Successor Security.......................................................10 Temporary Regulation S Global Security...................................10 Transferee Securities Certification......................................10 Trust Indenture Act......................................................10 Trustee..................................................................10 Vice President...........................................................10 Section 102. Compliance Certificates and Opinions.............................10 Section 103. Form of Documents Delivered to Trustee...........................11 Section 104. Acts of Holders; Record Dates....................................11 Section 105. Notices, Etc., to Trustee and Company............................13 Section 106. Notice to Holders; Waiver........................................13 Section 107. Conflict with Trust Indenture Act................................14 Section 108. Effect of Headings and Table of Contents.........................14 Section 109. Successors and Assigns...........................................14 Section 110. Separability Clause..............................................14 Section 111. Benefits of Indenture............................................14 Section 112. Governing Law....................................................14 Section 113. Legal Holidays...................................................15 ARTICLE TWO SECURITY FORMS....................................................15 Section 201. Forms Generally..................................................15 Section 202. Form of Face of Security.........................................17 Section 203. Form of Reverse of Security......................................21 Section 204. Form of Legend for Securities....................................25 Section 205. Form of Trustee's Certificate of Authentication..................28 ARTICLE THREE THE SECURITIES..................................................28 Section 301. Amount Unlimited; Issuable in Series.............................28 Section 302. Denominations....................................................31 Section 303. Execution, Authentication, Delivery and Dating...................31 Section 304. Temporary Securities.............................................33 - ----------- NOTE: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. -iii- PAGE ---- Section 305. Registration, Registration of Transfer and Exchange; Certain Transfers and Exchanges.................................33 Section 306. Mutilated, Destroyed, Lost and Stolen Securities.................41 Section 307. Payment of Interest and Additional Interest; Interest Rights Preserved................................................42 Section 308. Persons Deemed Owners............................................43 Section 309. Cancellation.....................................................43 Section 310. Computation of Interest..........................................44 Section 311. Deferrals of Interest Payment Dates..............................44 Section 312. CUSIP Numbers....................................................45 ARTICLE FOUR SATISFACTION AND DISCHARGE.......................................46 Section 401. Satisfaction and Discharge of Indenture..........................46 Section 402. Application of Trust Money.......................................47 ARTICLE FIVE REMEDIES.........................................................47 Section 501. Events of Default................................................47 Section 502. Acceleration of Maturity; Rescission and Annulment...............49 Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee......................................................50 Section 504. Trustee May File Proofs of Claim.................................51 Section 505. Trustee May Enforce Claims Without Possession of Securities...................................................51 Section 506. Application of Money Collected...................................51 Section 507. Limitation on Suits..............................................52 Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest and to Convert.............................52 Section 509. Restoration of Rights and Remedies...............................53 Section 510. Rights and Remedies Cumulative...................................53 Section 511. Delay or Omission Not Waiver.....................................53 Section 512. Control by Holders...............................................53 Section 513. Waiver of Past Defaults..........................................53 Section 514. Undertaking for Costs............................................54 Section 515. Waiver of Stay or Extension Laws.................................54 ARTICLE SIX THE TRUSTEE.......................................................54 Section 601. Certain Duties and Responsibilities..............................54 Section 602. Notice of Defaults...............................................56 Section 603. Certain Rights of Trustee........................................56 Section 604. Not Responsible for Recitals or Issuance of Securities...........57 Section 605. May Hold Securities..............................................57 Section 606. Money Held in Trust..............................................58 Section 607. Compensation and Reimbursement...................................58 - ----------- NOTE: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. -iv- PAGE ---- Section 608. Disqualification; Conflicting Interests..........................59 Section 609. Corporate Trustee Required; Eligibility..........................59 Section 610. Resignation and Removal; Appointment of Successor................59 Section 611. Acceptance of Appointment by Successor...........................60 Section 612. Merger, Conversion, Consolidation or Succession to Business.....................................................61 Section 613. Preferential Collection of Claims Against Company................62 Section 614. Appointment of Authenticating Agent..............................62 Section 615. Appointment of Additional Trustees...............................63 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY...............64 Section 701. Company to Furnish Trustee Names and Addresses of Holders........64 Section 702. Preservation of Information; Communications to Holders...........64 Section 703. Reports by Trustee...............................................65 Section 704. Reports by Company...............................................65 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE............65 Section 801. Company May Consolidate, Etc., Only on Certain Terms.............65 Section 802. Taxing Jurisdiction..............................................66 Section 803. Successor Corporation Substituted................................67 ARTICLE NINE SUPPLEMENTAL INDENTURES..........................................68 Section 901. Supplemental Indentures Without Consent of Holders...............68 Section 902. Supplemental Indentures With Consent of Holders..................69 Section 903. Execution of Supplemental Indentures.............................70 Section 904. Effect of Supplemental Indentures................................70 Section 905. Conformity with Trust Indenture Act..............................70 Section 906. Reference in Securities to Supplemental Indentures...............71 Section 907. Subordination Unimpaired.........................................71 Section 908. Notice of Supplemental Indentures................................71 ARTICLE TEN COVENANTS.........................................................71 Section 1001. Payment of Principal; Premium and Interest......................71 Section 1002. Maintenance of Office or Agency.................................71 Section 1003. Money for Securities Payments to Be Held in Trust...............72 Section 1004. Corporate Existence.............................................73 Section 1005. Maintenance of Properties.......................................73 Section 1006. Payment of Taxes and Other Claims...............................73 Section 1007. Statement by Officers as to Default.............................74 - ----------- NOTE: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. -v- PAGE ---- Section 1008. Waiver of Certain Covenants.....................................74 ARTICLE ELEVEN REDEMPTION OF SECURITIES.......................................74 Section 1101. Applicability of Article........................................74 Section 1102. Election to Redeem; Notice to Trustee...........................74 Section 1103. Selection by Trustee of Securities to Be Redeemed...............74 Section 1104. Notice of Redemption............................................75 Section 1105. Deposit of Redemption Price.....................................76 Section 1106. Securities Payable on Redemption Date...........................76 Section 1107. Securities Redeemed in Part.....................................77 Section 1108. Purchase of Securities..........................................77 ARTICLE TWELVE PURCHASE OR REPAYMENT OF SECURITIES BY THE COMPANY AT OPTION OF HOLDERS..........................................................77 Section 1201. Applicability of Article........................................77 Section 1202. Notice of Repayment Date........................................77 Section 1203. Deposit of Repayment Price......................................78 Section 1204. Securities Payable on Repayment Date............................78 Section 1205. Securities Repaid in Part.......................................78 ARTICLE THIRTEEN SINKING FUNDS................................................79 Section 1301. Applicability of Article........................................79 Section 1302. Satisfaction of Sinking Fund Payments with Securities...........79 Section 1303. Redemption of Securities for Sinking Fund.......................79 ARTICLE FOURTEEN CONCERNING THE HOLDERS.......................................80 Section 1401. Action by Holders...............................................80 Section 1402. Proof of Record of Holders' Meeting.............................80 Section 1403. Identification of Company-Owned Securities......................80 Section 1404. Revocation of Consents; Future Holders Bound....................80 ARTICLE FIFTEEN HOLDERS' MEETINGS.............................................81 Section 1501. Purposes of Meetings............................................81 Section 1502. Call of Meetings By Trustee.....................................81 Section 1503. Call of Meetings By Company or Holders..........................81 Section 1504. Qualifications for Voting.......................................82 Section 1505. Regulations.....................................................82 - ----------- NOTE: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. -vi- PAGE ---- Section 1506. Voting..........................................................83 Section 1507. No Delay of Rights by Meeting...................................83 ARTICLE SIXTEEN SUBORDINATION OF SECURITIES...................................83 Section 1601. Securities Subordinate to Senior Indebtedness...................83 Section 1602. No Payment When Senior Indebtedness in Default; Payment Over of Proceeds Upon Dissolution, Etc.................84 Section 1603. Payment Permitted If No Default.................................85 Section 1604. Subrogation to Rights of Holders of Senior Indebtedness.........86 Section 1605. Provisions Solely to Define Relative Rights.....................86 Section 1606. Trustee to Effectuate Subordination.............................86 Section 1607. No Waiver of Subordination Provisions...........................87 Section 1608. Notice to Trustee...............................................87 Section 1609. Reliance on Judicial Order or Certificate of Liquidating Agent..........................................................88 Section 1610. Trustee Not Fiduciary for Holders of Senior Indebtedness........88 Section 1611. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights...............................88 Section 1612. Article Applicable to Paying Agents.............................89 Section 1613. Effect on Events of Default.....................................89 Section 1614. Acceleration of Securities......................................89 ARTICLE SEVENTEEN MISCELLANEOUS PROVISIONS....................................89 Section 1701. Consent to Jurisdiction and Service of Process..................89 Section 1702. Indenture and Securities Solely Corporate Obligations...........90 Section 1703. Execution in Counterparts.......................................91 TESTIMONIUM...................................................................88 - ----------- NOTE: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. -vii- Annex A-1 - Form of Transfer Certificate - Restricted Global Security to Temporary Regulation S Global Security Annex A-2 - Form of Transfer Certificate - Restricted Global Security to Regulation S Global Security Annex B - Form of Transfer Certificate - Temporary Regulation S Global Security or Regulation S Global Security to Restricted Global Security Annex C-1 - Form of Certification to be Given by Holders of Beneficial Interest in a Temporary Regulation S Global Security to Euroclear or Clearstream Annex C-2 - Form of Certification to be Given by Euroclear Bank S.A./N.V., as operator of the Euroclear System, or Clearstream Banking Annex C-3 - Form of Certification to be Given by Transferee of Beneficial Interest in a Temporary Regulation S Global Security After the Restricted Period Annex D-1 - Form of Transfer Certificate - Non-Global Restricted Security to Restricted Global Security Annex D-2 - Form of Certificate - Non-Global Restricted Security to Regulation S Global Security or Temporary Regulation S Global Security Annex E - Institutional Accredited Investor Letter Annex F - Form of Instruction for Exchange - ----------- NOTE: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. -viii- SUBORDINATED INDENTURE, dated as of March 7, 2003, between INCO LIMITED, a corporation duly organized and existing under the laws of Canada (herein called the "Company"), having its principal office at 145 King Street West, Suite 1500, Toronto, Ontario Canada M5H 4B7, and THE BANK OF NEW YORK, a New York banking corporation duly organized and existing under the laws of the State of New York, as Trustee (herein called the "Trustee"). RECITALS The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of the Company's subordinated debentures, notes or other evidences of indebtedness (herein called the "Securities"), to be issued in one or more series as provided in this Indenture. All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities or of any series thereof, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; (4) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Indenture; (5) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (6) All references to dollars and $ shall mean U.S. dollars unless otherwise indicated; and (7) when used with respect to any Security, the words "convert", "converted" and "conversion" are intended to refer to the right of the Holder or the Company to convert or exchange such Security into or for securities or other property in accordance with such terms, if any, as may hereafter be specified for such Security as contemplated by Section 301, and these words are not intended to refer to any right of the Holder or the Company to exchange such Security for other Securities of the same series and like tenor pursuant to Section 304, 305, 306, 906, 1107 or 1205 or another similar provision of this Indenture, unless the context otherwise requires; and references herein to the terms of any Security that may be converted mean such terms as may be specified for such Security as contemplated in Section 301. "Accredited Investor Letter" has the meaning specified in Section 201. "Act", when used with respect to any Holder, has the meaning specified in Section 104. "Additional Interest", means the interest, if any, that shall accrue on any interest on the Securities of any series the payment of which has been deferred pursuant to Section 311 and which shall accrue at the rate per annum specified or determined as specified in such Security. "Additional Trustee", has the meaning specified in Section 615. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent Member" means any member of, or participant in, the Depositary. "Applicable Procedures" means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Security, Euroclear and Clearstream, in each case to the extent applicable to such transaction and as in effect from time to time. "Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 614 to act on behalf of the Trustee to authenticate Securities of one or more series. "Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. -2- "Business Day", (i) when used with respect to any Place of Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment are authorized or obligated by law to close and (ii) when used in any other context, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York are authorized or obligated by law or executive order to close. "Certificated Security" has the meaning set forth in Section 201. "Clearstream" means Clearstream Banking, societe anonyme, Luxembourg (or any successor securities clearing agency). "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by any one of its Chairman, any Vice Chairman, its President, any Executive Vice President or any Vice President, together with any one of its Treasurer, any Assistant Treasurer, its Secretary or any Assistant Secretary, and delivered to the Trustee. "Corporate Trust Office" means the principal office of the Trustee in The City of New York at which at any particular time its corporate trust business shall be administered, which office at the date hereof is located at 101 Barclay Street, Floor 8 West, New York, New York 10286, Attention: Corporate Trust Administration, or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the principal corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Holders and the Company). "corporation" means a corporation, association, company, limited liability company, business trust or other entity. "Defaulted Interest" has the meaning specified in Section 307. "Depositary" means, with respect to Securities of any series issuable in whole or in part in the form of one or more Global Securities, a clearing agency registered under the Exchange Act that is designated to act as Depositary for such Securities as contemplated by Section 301. "Depository Securities Certification" has the meaning specified in Section 201. "DTC" means The Depository Trust Company. "Euroclear" means the Euroclear Bank S.A./N.V., as operator of the Euroclear System (or any successor securities clearing agency). -3- "Event of Default" has the meaning specified in Section 501. "Exchange Act" means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time. "Exchange Offer" has the meaning set forth in the form of the Securities contained in Section 202. "Exchange Registration Statement" has the meaning set forth in the form of the Securities contained in Section 202. "Exchange Security" means any Security issued in exchange for an Original Security or Original Securities pursuant to the Exchange Offer or otherwise, and registered under the Securities Act, and any Security with respect to which the next preceding Predecessor Security of such Security was an Exchange Security. "Expiration Date" has the meaning specified in Section 104. "Extension Period" has the meaning specified in Section 311. "GAAP" means such accounting principles as are generally accepted in Canada in respect of the date or period for any computation or statement hereunder; provided, however, that in the event that the audited financial statements of the Company set forth in its annual report to shareholders in respect of any fiscal year shall be prepared in accordance with generally accepted United States accounting principles, then "Generally Accepted Accounting Principles" shall mean such principles for the purpose of any computation or statement hereunder made during, or in respect of, such fiscal year (or portion thereof). "Global Security" means a Security that evidences all or part of the Securities of any series, registered in the name of the Depositary, and bears the legend set forth in Section 204 (or such legend as may be specified as contemplated by Section 301 for such Securities). "Holder" means a Person in whose name a Security is registered in the Securities Register. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. The term "Indenture" shall also include the terms of any particular series of Securities established as contemplated by Section 301. "Institutional Accredited Investor" means an institution that is an "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act. "interest", when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity. -4- "Interest Payment Date", when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security. "Investment Company Act" means the Investment Company Act of 1940 and any statute successor thereto, in each case as amended from time to time. "Issue Date" means, with respect to any series, the first date on which the Securities of such series are initially issued. "Maturity", when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption, exercise of a Holder's option to require the Company to purchase or repay the Security or otherwise. "Notice of Default" means a written notice of the kind specified in Section 501(4). "Officers' Certificate" means a certificate signed by any one of the Chairman, any Vice Chairman, the President, any Executive Vice President or any Vice President, together with any one of the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary, of the Company, and delivered to the Trustee. One of the officers signing an Officers' Certificate given pursuant to Section 1005 shall be the principal executive, financial or accounting officer of the Company. "Opinion of Counsel" means a written opinion of counsel who may be internal legal counsel for the Company, and who shall be acceptable to the Trustee. "Original Issue Discount Security" means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502. "Original Securities" means all Securities other than Exchange Securities. "Other Additional Amounts" has the meaning specified in Section 802. "Outstanding", when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (1) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (2) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; (3) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to -5- this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; (4) Securities as to which any property deliverable upon conversion thereof has been delivered (or such delivery has been duly provided for), or as to which any other particular conditions have been satisfied, in each case as may be provided for such Securities as contemplated in Section 301; provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder (i) the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon acceleration of the Maturity thereof pursuant to Section 502, (ii) the principal amount of a Security denominated in a foreign currency or currencies shall be the U.S. dollar equivalent, determined on the date of the original issuance of such Security, of the principal amount (or, in the case of an Original Issue Discount Security, the U.S. dollar equivalent on the date of original issuance of such Security of the amount determined as provided in (i) above) of such Security, and (iii) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor. In the case of a dispute to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. "Owner Securities Certification" has the meaning specified in Section 201. "Paying Agent" means any Person authorized by the Company to pay the principal of (and any premium, if any) or interest on any Securities on behalf of the Company. "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment" when used with respect to the Securities of any series, means the place or places where the principal of (and premium, if any) and interest on the Securities of that series are payable as specified as contemplated by Section 301. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. -6- "Purchase Agreement" means, with respect to a series of Securities, the agreement between the Company, on the one hand, and the initial purchasers of such series of Securities named therein as such, on the other hand, setting forth the terms and conditions for the initial offer and sale of such Securities. "Qualified Institutional Buyer" means a "qualified institutional buyer" as defined in Rule 144A. "Record Date" means any Regular Record Date or Special Record Date. "Record Date Period" means the period from the close of business of any Regular Record Date next preceding any Interest Payment Date to the opening of business on such Interest Payment Date. "Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Registered Securities" means the Exchange Securities and all other Securities sold or otherwise disposed of pursuant to an effective registration statement under the Securities Act, together with their respective Successor Securities. "Registration Default" has the meaning specified in Section 202. "Registration Rights Agreement" means, with respect to Securities of any series, the Registration Rights Agreement between the Company and the initial purchasers named under the Purchase Agreement in respect of the Securities of such series. "Regular Record Date" for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as contemplated by Section 301. "Regulation S" means Regulation S under the Securities Act (or any successor provision), as it may be amended from time to time. "Regulation S Certificate" means a certificate substantially in the form set forth in Annex A. "Regulation S Global Security" has the meaning specified in Section 201. "Regulation S Legend" means a legend substantially in the form set forth in Section 204 to be placed upon each Regulation S Security. "Regulation S Securities" means all Securities offered and sold pursuant to Regulation S. Such term includes the Regulation S Global Security. "Relevant Taxing Jurisdiction" has the meaning specified in Section 802. -7- "Repayment Date", when used with respect to Securities of any series the terms of which provide each Holder an option to require the Company to purchase or repay the Securities held by such Holder, means the date, if any, fixed for such purchase or repayment pursuant to this Indenture. "Repayment Price", when used with respect to Securities of any series the terms of which provide each Holder an option to require the Company to purchase or repay the Securities held by such Holder means the price, if any, at which such purchase or repayment is to occur pursuant to this Indenture. "Resale Registration Statement" has the meaning set forth in the form of the Securities contained in Section 202. "Responsible Officer", when used with respect to the Trustee, means any vice president, any assistant vice president who shall have direct responsibility for the administration of this Indenture, any assistant secretary, any assistant treasurer or any trust officer or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture. "Restricted Global Security" has the meaning specified in Section 201. "Restricted Period" for a series means the period of 40 consecutive days beginning on and including the later of (i) the day on which Securities of that series are first offered to persons other than distributors (as defined in Regulation S) in reliance on Regulation S and (ii) the original issuance date of the Securities of that series. "Restricted Securities" means all Securities offered and sold pursuant to Rule 144A or to Institutional Accredited Investors in a transaction that is not registered under the Securities Act. Such term includes the Restricted Global Security and Certificated Securities. "Restricted Securities Certificate" means a certificate substantially in the form set forth in Annex B. "Restricted Securities Legend" means, collectively, the legends substantially in the forms set forth in Section 204 to be placed upon each Restricted Security. "Rule 144A" means Rule 144A under the Securities Act (or any successor provision), as it may be amended from time to time. "Rule 144A Securities" means the Securities of a series purchased upon their original issuance by the initial purchasers from the Company for resale pursuant to Rule 144A. "Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture. "Securities Act" means the Securities Act of 1933 and any statute successor thereto, in each case as amended from time to time. -8- "Securities Act Legend" means a Restricted Securities Legend or a Regulation S Legend. "Securities Register" and "Security Registrar" have the respective meanings specified in Section 305. "Senior Indebtedness" means, with respect to the Company, (i) the principal, premium, if any, interest, fees, expenses, indemnity payments or other obligation in respect of (A) indebtedness of the Company for money borrowed and (B) indebtedness evidenced by securities, notes, debentures, bonds or other similar instruments issued by the Company; (ii) all capital lease obligations of the Company; (iii) all obligations issued or assumed by the Company as the deferred purchase price of property, all conditional sale obligations of the Company and all obligations of the Company under any conditional sale or title retention agreement (but excluding trade accounts payable in the ordinary course of business); (iv) all obligations, contingent or otherwise, of the Company in respect of any letters of credit, banker's acceptance, security purchase facilities or similar credit transactions; (v) all obligations in respect of interest rate swap, cap, forward or other agreements, interest rate futures or option contracts, currency swap, cap forward or other agreements, currency futures or option contracts, commodity swap, cap, forward or other agreements in respect of any metal or other product produced or marketed by the Company and any commodity used or consumed by the Company and any other commodity futures or option contracts and other similar agreements; (vi) all obligations of the type referred to in clauses (i) through (v) of other Persons for the payment of which the Company is responsible or liable as obligor, guarantor or otherwise; and (vii) all obligations of the type referred to in clauses (i) through (vi) of other Persons secured by any lien on any property or asset of the Company (whether or not such obligation is assumed by such obligor). Notwithstanding the foregoing, Senior Indebtedness does not include (1) any such indebtedness that is by its terms subordinated to or pari passu with the Securities, and (2) any indebtedness between or among the Company and its Affiliates. "Special Interest" has the meaning set forth in Section 202. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307. "Specified Taxes" has the meaning specified in Section 802. "Stated Maturity", when used with respect to any Security or any installment of principal thereof (and premium, if any) or interest (including any Additional Interest) thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal (and premium, if any) or interest (including any Additional Interest) is due and payable, as such date may, in the case of the stated maturity of the principal of any Security, be shortened or extended as provided pursuant to the terms of such Security and this Indenture and, in the case of any installment of interest, subject to the deferral of any such date in the case of any Extension Period. "Subsidiary" means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For the purposes of this definition, "voting stock" means stock which ordinarily has voting power for the election of directors, whether at all -9- times or only so long as no senior class of stock has such voting power by reason of any contingency. "Successor Corporation" has the meaning specified in Section 801. "Successor Security" of any particular Security means every Security issued after, and evidencing all or a portion of the same debt as that evidenced by, such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Temporary Regulation S Global Security" has the meaning specified in Section 201. "Transferee Securities Certification" has the meaning specified in Section 305(b). "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. "Vice President", when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". Section 102. Compliance Certificates and Opinions. Except as otherwise expressly provided by this Indenture, upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include, (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; -10- (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of any officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Section 104. Acts of Holders; Record Dates. Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. -11- The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. The ownership of any Security shall be proved by the Securities Register. Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities of such series, provided that the Company may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in the next paragraph. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities of the relevant series on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 106. The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration referred to in Section 502, (iii) any request to institute proceedings referred to in Section 507(2) or (iv) any direction referred to in Section 512, in each case with respect to Securities of such series. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of such series on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing in this -12- paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities of the relevant series on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company's expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 106. With respect to any record date set pursuant to this Section, the party hereto which sets such record dates may designate any day as the "Expiration Date" and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities of the relevant series in the manner set forth in Section 106, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto which set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date. Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. Section 105. Notices, Etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing (which may be by facsimile) to or with the Trustee at its Corporate Trust Offices, Attention: Corporate Trust Administration, 21 West Street, 12th Floor, New York, New York 10286, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company. Section 106. Notice to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid or delivered by an overnight delivery service, to each Holder affected by such -13- event, at his address as it appears in the Securities Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee, which approval shall not be unreasonably withheld, shall constitute a sufficient notification for every purpose hereunder. Section 107. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act which is required under such Act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act which may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. Section 108. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 109. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. Section 110. Separability Clause. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 111. Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the holders of Senior Indebtedness and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 112. Governing Law. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. -14- Section 113. Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Repayment Date or Stated Maturity of any Security, or on any date on which a Holder has a right to convert his Security, shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the Securities (other than a provision of any Security which specifically states that such provision shall apply in lieu of this Section)) payment of interest or principal (and premium, if any), or conversion of such Security need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity; provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, or on such date for conversion, as the case may be. ARTICLE TWO SECURITY FORMS Section 201. Forms Generally. (a) The Securities of each series shall be in substantially the form set forth in this Article, or in such other form as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other mark of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or Depositary therefor or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 for the authentication and delivery of such Securities. The Trustee's certificates of authentication shall be in substantially the form set forth in this Article. The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities. In certain cases described elsewhere herein, the legends set forth in Section 204 may be omitted from Securities issued hereunder. (b) (i) Securities of a series offered and sold in their initial distribution in reliance on Regulation S shall be initially issued in the form of one or more temporary Global Securities, in fully registered form without interest coupons, substantially in the form of Security set forth in Sections 202 and 203, as the case may be, with such applicable legends as are provided for in Section 202 and Section 204, as the case may be. Such Global Securities shall be registered in the name of the Depositary or its nominee, and deposited with the Trustee, at its New York -15- offices, as custodian for the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided, for credit to the respective accounts at the Depositary of the depositories for Euroclear and for Clearstream, for credit to the respective accounts of owners of beneficial interests in such Securities or to such other accounts as they may direct. Until such time as the Restricted Period in respect of securities of a series shall have terminated, such temporary Global Securities shall be referred to herein as "Temporary Regulation S Global Securities". On or after the termination of the Restricted Period, interests in any Temporary Regulation S Global Security of a series shall be exchangeable for corresponding interests in an unrestricted Regulation S Global Security of the same series (each a "Regulation S Global Security") in fully registered form without interest coupons, substantially in the form set forth in Sections 202 and 203, with such applicable legends as are provided for in Section 202 and Section 204 and in accordance with the immediately following paragraph. (ii) Interests in a Temporary Regulation S Global Security of a series may be exchanged for interests in a Regulation S Global Security of the same series representing the same underlying indebtedness only on or after the termination of the Restricted Period with respect to such securities after delivery by a beneficial owner of an interest therein to Euroclear or Clearstream of a written certification (an "Owner Securities Certification") substantially in the form of Annex C-1 hereto, and upon delivery by Euroclear or Clearstream to the Trustee of a written certification (a "Depository Securities Certification") substantially in the form attached hereto as Annex C-2. Upon receipt of such certification, the Trustee shall exchange the portion of the Temporary Regulation S Global Security covered by such certification for interests in a Regulation S Global Security representing the same underlying indebtedness. Upon: (A) the expiration of the Restricted Period, (B) receipt by Euroclear or Clearstream, as the case may be, and the Paying Agent of the certificates described in the preceding paragraph, (C) receipt by the Depositary of (i) written instructions given in accordance with the Applicable Procedures from an Agent Member directing the Depositary to credit or cause to be credited to a specified Agent Member's account a beneficial interest in the Regulation S Global Security in a principal amount equal to that of the beneficial interest in the Temporary Regulation S Global Security for which the necessary certificates have been delivered, and (ii) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Agent Member, and the Euroclear or Clearstream account for which such Agent Member's account is held, to be credited with, and the account of the Agent Member to be debited for, such beneficial interest, and (D) receipt by the Trustee of notification from the Depositary of the transactions described in (C) above, the Trustee, as Security Registrar, shall instruct the Depositary to reduce the principal amount of the Temporary Regulation S Global Security and to increase the principal amount of the Regulation S Global Security, by the principal amount of the beneficial interest in such Temporary Regulation S Global Security to be so transferred, and to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Regulation S -16- Global Security having a principal amount equal to the amount by which the principal amount of the Temporary Regulation S Global Security was reduced upon such transfer. The aggregate principal amount of a Regulation S Global Security of a series may be increased or decreased from time to time by adjustments made on the records of the Trustee, as custodian for the Depositary, in connection with a corresponding decrease or increase in the aggregate principal amount, as hereinafter provided. (iii) Until such time as the Restricted Period shall have terminated, investors may hold interests in the Regulation S Temporary Global Security only through Euroclear and Clearstream, unless delivery of such beneficial interest upon transfer shall be made through a Restricted Global Security in accordance with the certification requirements discussed below in Section 305(b)(v). (c) Securities of a series offered and sold in their initial distribution in reliance on Rule 144A shall be issued in the form of one or more Global Securities (each, a "Restricted Global Security"), in definitive, fully registered form without interest coupons, substantially in the form of Security set forth in Sections 202 and 203 with such applicable legends as are provided for in Section 202 and Section 204, except as otherwise permitted herein. Such Global Securities shall be registered in the name of the Depositary or its nominee and deposited with the Trustee, as custodian for the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided for credit to the respective accounts of owners of beneficial interests in such Securities or to such other accounts as they may direct. The aggregate principal amount of a Restricted Global Security of a series may be increased or decreased from time to time by adjustments made on the records of the Trustee, as custodian for the Depositary, in connection with a corresponding decrease or increase in the aggregate principal amount, as hereinafter provided. (d) Securities that are to be offered and sold to Institutional Accredited Investors that are not Qualified Institutional Buyers, sold in each case to an Institutional Accredited Investor that has executed and delivered to the Trustee, as Security Registrar, a letter substantially in the form of Annex E hereto (an "Accredited Investor Letter"), shall be issued in definitive, fully registered form without interest coupons, substantially in the form set forth in Section 202 and Section 203, with such applicable legends as are provided for in Section 202 and Section 204. The Securities sold to Institutional Accredited Investors in accordance with the foregoing sentence (individually, a "Certificated Security" and collectively, the "Certificated Securities") shall not be issued in the form of Global Securities. Certificated Securities acquired from the initial purchasers named in the Purchase Agreement in respect of the Securities of such series may be transferred initially only to Qualified Institutional Buyers in accordance with Rule 144A, to a transferee who will acquire such security in reliance on Regulation S or pursuant to Rule 144 under the Securities Act, if available, and exchanged for interests in Global Securities pursuant to Section 305(b)(vi)(1). Certificated Securities shall be duly executed by the Company and authenticated by the Trustee as provided herein, and shall be registered in the name of the Institutional Accredited Investor purchasing such Security and shall bear the Restricted Securities Legend. Section 202. Form of Face of Security. [Insert any legend as required by Section 204] -17- [Insert any legend required by the Internal Revenue Code and the Income Tax Act (Canada) and the regulations thereunder.] INCO LIMITED [Insert title of Securities] No. ......... $ ........ Inco Limited, a corporation duly organized and existing under the laws of Canada (herein called the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to ..............................................., or registered assigns, the principal sum of $__________ Dollars on ........................................................., [If this Security is to bear interest prior to Maturity insert--and to pay interest thereon from ................. or from the most recent Interest Payment Date to which interest has been paid or as duly provided for, semi-annually on ............ and ............. in each year, commencing ........., and at the Stated Maturity thereof, at the rate of ....% per annum, until the principal amount hereof is paid or made available for payment [if applicable, insert--; provided that any overdue principal, if any, premium and any overdue installment of interest shall bear interest at the rate of ....% per annum (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand] [from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand], [If Original Securities are not also Registered Securities, then insert, as appropriate, --provided, however, that if (i) the Company has not filed a registration statement (the "Exchange Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), to register a security substantially identical to this Security (except that such Security shall not contain terms with respect to the Special Interest payments described below or transfer restrictions) pursuant to an exchange offer (the "Exchange Offer") within __ days after the Issue Date of this Security (or, if required pursuant to the Registration Rights Agreement, a registration statement registering this Security for resale (a "Resale Registration Statement") within __ days after the later of the Issue Date of this Security or the date of the change in applicable law or interpretations of the staff of the Securities and Exchange Commission, as set forth in the Registration Rights Agreement), or (ii) the Exchange Registration Statement or, if applicable, the Resale Registration Statement, is not declared effective on or prior to the date that is the later of the date __ days after the Issue Date of this Security or, in the case of the Resale Registration Statement, the date of the change in applicable law or interpretations of the staff of the Securities and Exchange Commission, as set forth in the Registration Rights Agreement, or (iii) the Exchange Offer has not been completed on or prior to the date that is __ days after the Issue Date of this Security, unless applicable law or interpretations of the staff of the Securities and Exchange Commission do not permit the Company to effect the Exchange Offer, in each case of clause (i), (ii) or (iii), upon the terms and conditions set forth in the Registration Rights Agreement (each such event referred to in clause (i), (ii) or (iii), a "Registration Default"), to the extent required pursuant thereto, then Special Interest shall accrue (in addition to the stated interest on the Securities) at an additional annual rate of __% immediately following the Registration Default until the Registration Default is cured by meeting the applicable requirement in clause (i), (ii) or (iii), as the case may be. Notwithstanding the existence of more than one Registration Default, in no event shall Special Interest accrue at an annual rate in excess of __%. Interest accruing as a result of a Registration Default is referred to herein as "Special Interest". -18- Whenever in this Security or in the Indenture there is a reference, in any context, to the payment of the principal of, premium, if any, or interest on, or in respect of, any Security, such mention shall be deemed to include mention of the payment of Special Interest (if applicable) payable as described in the preceding paragraph to the extent that, in such context, Special Interest is, was or would be payable in respect of such Security and express mention of the payment of Special Interest (if applicable) in any provisions of this Security shall not be construed as excluding Special Interest in those provisions of this Security where such express mention is not made. Any accrued and unpaid interest (including Special Interest) on this Security upon the issuance of an Exchange Security (as defined in the Indenture) in exchange for this Security shall cease to be payable to the Holder hereof but such accrued and unpaid interest (including Special Interest) shall be payable on the next Interest Payment Date for such Exchange Security to the Holder thereof on the related Regular Record Date.] [If the Security is to bear interest prior to Maturity, insert - The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the ....... or ....... (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.] [If the Security is not to bear interest prior to Maturity, insert -- The principal of this Security shall not bear interest except in the case of a default in payment of principal upon acceleration, upon redemption, upon repayment at the option of the Holder or at Stated Maturity and in such case the overdue principal of this Security shall bear interest at the rate of ....% per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such default in payment to the date payment of such principal has been made or duly provided for. Interest on any overdue principal shall be payable on demand. [Any such interest on any overdue principal that is not paid on demand shall bear interest at the rate of .....% per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such demand for payment to the date payment of such interest has been made or duly provided for, and such interest shall also be payable on demand.]] [If applicable, insert--So long as no Event of Default has occurred and is continuing, the Company shall have the right, at any time during the term of this Security, from time to time to defer the payment of interest (other than Special Interest, if any) on this Security for up to __ consecutive semi-annual interest payment periods with respect to each deferral period (each an "Extension Period") [if applicable, insert--, during which Extension Periods the Company shall have the right to make partial payments of interest on any Interest Payment Date, and] at the end of which the Company shall pay all interest then accrued and unpaid including any Additional -19- Interest, as provided below; provided, however, that no Extension Period shall extend beyond the Stated Maturity of the principal of this Security; and provided, further, that during any such Extension Period, the Company shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock or make any guarantee payment with respect thereto (other than (i) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, (ii) as a result of an exchange or conversion of any class or series of the Company's capital stock for any other class or series of the Company's capital stock, or (iii) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged), and (b) the Company shall not make any payment of interest on, principal of or premium, if any, on, or repay, repurchase or redeem, any debt securities issued by the Company which rank pari passu with or junior to the Securities of such series (including the Securities of any other series); provided, however, the Company may declare and pay a stock dividend where the stock dividend is the same stock as that on which the dividend is being paid. Prior to the termination of any such Extension Period, the Company may further defer the payment of interest, provided that no Extension Period shall exceed ___ consecutive semi-annual interest payment periods, extend beyond the Stated Maturity of the principal of this Security. Upon the termination of any such Extension Period and upon the payment of all accrued and unpaid interest and (to the extent permitted by applicable law) any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Extension Period, subject to the above conditions. No interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension shall bear Additional Interest (to the extent that the payment of such interest shall be legally enforceable) at the rate of ____% per annum, calculated as set forth in the first paragraph of this Security, from the dates on which such amounts would otherwise have been due and payable until paid or made available for payment. If the principal of any Securities shall become due and payable on a day or if any Securities become subject to Redemption on a Redemption Date that would otherwise occur during an Extension Period, such Extension Period will automatically end on the immediately preceding day (which will be the last day of the period). The Company shall give the Holder of this Security and the Trustee notice of its election to begin any Extension Period at least one Business Day prior to the next succeeding Interest Payment Date on which interest on this Security would be payable but for such deferral. The Company's written notice of its election to begin an Extension Period shall set forth the first Interest Payment Date in such period and, if known, the date on which payment of interest (and Additional Interest, if any) on the Securities will be resumed, and shall be given in the manner set forth in Section 106 of the Indenture. If such resumption date is not known, the notice must state that the length of the Extension Period will be indefinite.] Payment of the principal of (and premium, if any) and interest [(including any Additional Interest)] on this Security will be made at the office or agency of the Company maintained for that purpose in the [insert Place of Payment], in such coin or currency of the [United States of America] [other country] as at the time of payment is legal tender for payment of public and private debts [if other form of payment - insert other form of payment] [if applicable, insert--; provided, however, that at the option of the Company payment of interest may be made (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register, or (ii) by wire transfer in immediately available funds at such place and to -20- such account as may be designated by the Person entitled thereto as specified in the Securities Register. The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate in right of payment to the prior payment in full of all Senior Indebtedness, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided, and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. [Insert a reference to any option of the Holders to require purchase or repayment by the Company.] [Insert a reference to any requirement for an adjustment to the interest rate.] Unless the certificate of authentication hereon has been duly executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company, has caused this instrument to be duly executed. Dated: INCO LIMITED By: ------------------------------- By: ------------------------------- Section 203. Form of Reverse of Security. This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under a Subordinated Indenture, dated as of March 7, 2003 (herein called the "Indenture", between the Company and The Bank of New York, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the holders of Senior Indebtedness and the Holders of the Securities and of the terms upon which the Securities are, and are to be, -21- authenticated and delivered. This Security is one of the series designated on the face hereof[, limited in aggregate principal amount to $____________.] [If applicable, insert-- At any time [on or after .........., 20..], [or such later date as the Company may by notice in writing to the Holders stipulate,] [if applicable, insert-- or on ........... in any year commencing with the year ...... and ending with the year ...... through operation of the sinking fund for this series at a Redemption Price equal to 100% of the principal amount,] the Securities of this series will be subject to redemption at the option of the Company as provided in the Indenture, in whole or in part, at a "Redemption Price" equal to 100% of the principal amount of the Securities of this series. In the event of redemption, the Company will also pay the Holder, in addition to the Redemption Price, an amount equal to the accrued and unpaid interest to the Redemption Date. In the event of a redemption of less than all of the Securities of this series, the Company shall not be required (a) to register the transfer or exchange of the Securities of this series for a period of 15 days immediately preceding the date notice is given identifying the serial numbers of the Securities of this series called for such redemption or (b) to register the transfer or exchange of any Securities of this series, or portion thereof, called for redemption.] [If applicable, insert-- The Securities of this series are subject to redemption upon not less than 30 days' notice by mail, [if applicable, insert-- (1) on ........... in any year commencing with the year ...... and ending with the year ...... through operation of the sinking fund for this series at a Redemption Price equal to 100% of the principal amount, and (2)] at any time [on or after .........., 20..], as a whole or in part, at the election of the Company, at the following Redemption Prices (expressed as percentages of the principal amount): If redeemed [on or before ..............., ...%, and if redeemed] during the 12-month period beginning ............. of the years indicated, Redemption Redemption Year Price Year Price - ---------------- ----------------------- ----------------- ------------------ and thereafter at a Redemption Price equal to ......% of the principal amount, together in the case of any such redemption [if applicable, insert -- (whether through operation of the sinking fund or otherwise)] with accrued interest [if applicable, insert--, including any Additional Interest,] to the Redemption Date, but installments of interest [(including any Additional Interest)] whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.] (if applicable, insert -- the securities of this series are also redeemable as set forth hereinafter.] [If applicable, insert-- The Securities of this series are subject to redemption upon not less than 30 Business Days notice by mail, (1) on ............. in any year commencing with the year .... and ending with the year ..... through operation of the sinking fund for this series at the -22- Redemption Prices for redemption through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below, and (2) at any time [on or after ............], as a whole or in part, at the election of the Company, at the Redemption Prices for redemption otherwise than through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below: If redeemed during the 12-month period beginning ............ of the years indicated, Redemption Price For Redemption Price For Redemption Otherwise Than Redemption Through Operation Through Operation of the Year of the Sinking Fund Sinking Fund - ------------------- ---------------------------- ------------------------- and thereafter at a Redemption Price equal to .....% of the principal amount, together in the case of any such redemption (whether through operation of the sinking fund or otherwise) with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.] [If applicable, insert-- Notwithstanding the foregoing, the Company may not, prior to ............., redeem any Securities of this series as contemplated by clause (2) of the preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of moneys borrowed having an interest cost to the Company (calculated in accordance with generally accepted financial practice) of less than .....% per annum.] [The sinking fund for this series provides for the redemption on ............. in each year beginning with the year ....... and ending with the year ...... of [not less than] $.......... [("mandatory sinking fund") and not more than $.........] aggregate principal amount of Securities of this series. [Securities of this series acquired or redeemed by the Company otherwise than through [mandatory] sinking fund payments may be credited against subsequent [mandatory] sinking fund payments otherwise required to be made in the inverse order in which they become due.] In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. [If applicable, insert reference to any other right of the Company to redeem a Security of this Series.] [If applicable, insert provisions with respect to the option of Holders to require purchase or repayment of Securities of this series by the Company at the option of the Holder and the issuance of Securities in lieu of Securities purchased or repaid by the Company at the option of the Holder.] -23- [If applicable, insert provisions requiring an adjustment to the interest rate in certain circumstances.] [If the Security is not an Original Issue Discount Security, insert -- If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.] [If the Security is an Original Issue Discount Security, insert -- If an Event of Default with respect to Securities of this series shall occur and be continuing, an amount of principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Such amount shall be equal to [insert formula for determining the amount]. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company's obligations in respect of the payment of the principal of and interest, if any, on the Securities of this series shall terminate.] The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of 66 2/3 % in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and the Trustee shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest (including any Additional Interest) on this Security at the times, place and rate, and in the coin or currency, herein prescribed. -24- For disclosure purposes under the Interest Act (Canada), whenever in the Securities of this series or the Indenture interest at a specified rate is to be calculated on the basis of a period less than a calendar year, the yearly rate of interest to which such rate is equivalent is such rate multiplied by the actual number of days in the relevant calendar year and divided by the number of days in such period. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of (and premium, if any) and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. This Security is a Global Security and is subject to the provisions of the Indenture relating to Global Securities, including the limitations in Section 305 thereof on transfers and exchanges of Global Securities. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. Section 204. Form of Legend for Securities. Unless otherwise specified as contemplated by Section 301 for the Securities evidenced thereby, every Security that is a Global Security, a Restricted Security or a Regulation S Security authenticated and delivered hereunder shall bear one or more of the appropriate legends in substantially the following forms, as appropriate: [IF THE SECURITY IS A RESTRICTED SECURITY OR A TEMPORARY REGULATION S SECURITY, THEN INSERT - -25- THIS SECURITY [AND THE COMMON SHARES AND ASSOCIATED COMMON SHARE PURCHASE RIGHTS ISSUABLE UPON CONVERSION] REDEMPTION, PURCHASE OR PAYMENT OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY [NOR SUCH COMMON SHARES AND ASSOCIATED COMMON SHARE PURCHASE RIGHTS] MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY (1) (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) AS LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" WITHIN THE MEANING OF RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR 904 OF REGULATION S, (E) IN THE CASE OF AN INITIAL HOLDER THAT ACQUIRED THIS SECURITY IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PURSUANT TO RULE 144A OR RULE 904 THEREUNDER AND IN THE CASE OF SUBSEQUENT HOLDERS, IN A PRINCIPAL AMOUNT OF NOT LESS THAN $250,000 INSIDE THE UNITED STATES TO "AN INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT THAT, PRIOR TO THE TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFERS OF THE SECURITIES (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (F) PURSUANT TO THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF AVAILABLE) OR (G) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (2) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.] [INCLUDE IF SECURITY IS A TEMPORARY REGULATION S GLOBAL SECURITY - THIS SECURITY IS A TEMPORARY REGULATION S GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE REFERRED TO HEREINAFTER. EXCEPT IN THE CIRCUMSTANCES DESCRIBED IN SECTION 305(b) OF THE INDENTURE, NO TRANSFER OR EXCHANGE OF AN INTEREST IN THIS TEMPORARY GLOBAL SECURITY MAY BE MADE FOR AN INTEREST IN THE RESTRICTED GLOBAL SECURITY. NO EXCHANGE OF AN INTEREST IN THIS TEMPORARY GLOBAL SECURITY MAY BE MADE FOR AN INTEREST IN THE REGULATION S GLOBAL SECURITY EXCEPT ON OR AFTER THE TERMINATION OF THE DISTRIBUTION COMPLIANCE PERIOD AND UPON DELIVERY OF THE OWNER SECURITIES -26- CERTIFICATION AND THE DEPOSITORY SECURITIES CERTIFICATION RELATING TO SUCH INTEREST IN ACCORDANCE WITH THE TERMS OF THE INDENTURE.] [IF THE SECURITY IS A REGULATION S SECURITY, THEN INSERT - THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, OR DELIVERED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON, UNLESS THIS SECURITY IS REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF IS AVAILABLE.] [IF THE SECURITY IS A GLOBAL SECURITY, THEN INSERT - THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.] [IF THE SECURITY IS A GLOBAL SECURITY AND DTC IS TO BE THE DEPOSITARY THEREFOR, THEN INSERT - UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] [IF CERTIFICATED SECURITIES, THEN INSERT - THIS SECURITY WILL NOT BE ACCEPTED IN EXCHANGE FOR A BENEFICIAL INTEREST IN A GLOBAL SECURITY UNLESS THE HOLDER OF THIS SECURITY, SUBSEQUENT TO SUCH EXCHANGE, WILL HOLD A MINIMUM OF AGGREGATE BENEFICIAL INTEREST IN SUCH GLOBAL SECURITY OF AT LEAST TWO HUNDRED AND FIFTY THOUSAND DOLLARS ($250,000).] -27- Section 205. Form of Trustee's Certificate of Authentication. Subject to Section 614, each of the Trustee's certificates of authentication shall be in substantially the following form: This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. Dated: The Bank of New York, As Trustee By........................ Authorized Signatory ARTICLE THREE THE SECURITIES Section 301. Amount Unlimited; Issuable in Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. There shall be established in or pursuant a Board Resolution and, subject to Section 303, set forth, or determined in the manner provided, in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series, (1) the title of the Securities of the series (which shall distinguish the Securities of the series from all other securities); (2) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 304, 305, 306, 906, 1107 or 1205 and except for any Securities which, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder); (3) the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest; (4) the date or dates on which the principal of any Securities of the series is payable; (5) the rate or rates (which may be fixed or variable) at which the Securities of the series shall bear interest, if any, the rate or rates and extent to which Additional -28- Interest, if any, shall be payable in respect of any Securities of the series, the date or dates from which any such interest or Additional Interest shall accrue, the Interest Payment Dates on which any such interest shall be payable, the right, pursuant to Section 311 or as otherwise set forth herein, of the Company to defer or extend an Interest Payment Date and the Regular Record Date for the interest payable on any Interest Payment Date or the method by which any of the foregoing shall be determined; (6) the place or places where the principal of (and premium, if any) and interest (including any Additional Interest) on any Securities of the series shall be payable, the place or places where the Securities of such series may be presented for registration of transfer or exchange, any restrictions that may be applicable to any such transfer or exchange in addition to or in lieu of those set forth herein, and the place or places where notices and demands to or upon the Company in respect of the Securities of such series may be made; (7) the period or periods if any, within which, the price or prices at which and the terms and conditions upon which any Securities of the series may be redeemed, in whole or in part, at the option of the Company; (8) the obligation, if any, of the Company to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the date or dates on which, the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation; (9) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which any such Securities of the series shall be issuable; (10) if the amount of principal of or any premium or interest on any Securities of the series may be determined with reference to an index or pursuant to a formula, the manner in which such amounts shall be determined; (11) if other than the currency of the United States of America, the currency, currencies, composite currency, composite currencies or currency units in which the principal of or any premium or interest (including any Additional Interest) on any Securities of the series shall be payable and the manner of determining the equivalent thereof in the currency of the United States of America for any purpose, including for the purposes of making payment in the currency of the United States of America and applying the definition of "Outstanding" in Section 101; (12) if other than cash, the form of payment in which the principal of or any premium or interest (including any Additional Interest) on any Securities of the series shall be payable and the manner of determining the equivalent value thereof in the currency of the United States of America for any purpose, including for the purposes of making payment in the currency of the United States of America and applying the definition of "Outstanding" in Section 101; (13) if the principal of or any premium or interest on any Securities of the series is to be payable, at the election of the Company or the Holder thereof, in one or -29- more currencies, composite currencies or currency units other than that or those in which such Securities are stated to be payable, the currency, currencies, composite currency, composite currencies or currency units in which the principal of or any premium or interest on such Securities as to which such election is made shall be payable, the periods within which and the terms and conditions upon which such election is to be made and the amount so payable (or the manner in which such amount shall be determined); (14) if other than the entire principal amount thereof, the portion of the principal amount of any Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502; (15) if the principal amount payable at the Stated Maturity of any Securities of the series will not be determinable as of any one or more dates prior to the Stated Maturity, the amount which shall be deemed to be the principal amount of such Securities as of any such date for any purpose thereunder or hereunder, including the principal amount thereof which shall be due and payable upon any Maturity other than the Stated Maturity or which shall be deemed to be Outstanding as of any date prior to the Stated Maturity (or, in any such case, the manner in which such amount deemed to be the principal amount shall be determined); (16) if applicable, that any Securities of the series shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the respective Depositaries for such Global Securities, the form of any legend or legends which shall be borne by any such Global Security in addition to or in lieu of that set forth in Section 204, any addition to, elimination of or other change in the circumstances set forth in Clause (2) of the last paragraph of Section 305(a) in which any such Global Security may be exchanged in whole or in part for Securities registered, and any transfer of such Global Security in whole or in part may be registered, in the name or names of Persons other than the Depositary for such Global Security or a nominee thereof and any other provisions governing exchanges or transfers of any such Global Security; (17) any addition to, elimination of or other change in the Events of Default which applies to any Securities of the series and any change in the right of the Trustee or the requisite Holders of such Securities to declare the principal amount thereof due and payable pursuant to Section 502; (18) any addition to, elimination of or other change in the covenants set forth in Article Ten which applies to Securities of the series; (19) any provisions necessary to permit or facilitate the issuance, payment or conversion of any Securities of the series that may be converted into securities or other property other than Securities of the same series and of like tenor, whether in addition to, or in lieu of, any payment of principal or other amount and whether at the option of the Company or otherwise, and the terms and conditions upon which such conversion or exchange shall be effected (including, without limitation, the initial conversion or exchange price or rate, the conversion or exchange period and any other provisions in addition to or in lieu of those set forth in this Indenture relative to such obligations; and -30- (20) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture, except as permitted by Section 901(5)). All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to the Board Resolution referred to above and (subject to Section 303) set forth in the Officers' Certificate referred to above or in any such indenture supplemental hereto. Not all Securities of any one series need be issued at the same time and, unless otherwise provided, a series may be reopened for additional issuance of Securities of such series. If any of the terms of the series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate setting forth the terms of the series. The Securities shall be subordinated in right of payment to all Senior Indebtedness as provided in Article Sixteen. Section 302. Denominations. The Securities of each series shall be issuable only in registered form without coupons in such denominations as shall be specified as contemplated by Section 301. In the absence of any such provisions with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof. Section 303. Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by any one of its Chairman, Vice Chairman, President, any Executive Vice or any Vice President, together with any one of the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. If not all the Securities of any series are to be issued at one time and if the Board Resolution or supplemental indenture establishing such series shall so permit, such Company Order may set forth procedures acceptable to the Trustee for the issuance of such Securities and determining terms of particular Securities of such series such as interest rate, stated maturity, date of issuance and date from which interest shall accrue. If the form or terms of the Securities of the series have been established in or pursuant to one or more Board Resolutions as permitted by Sections 201 and 301, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to -31- receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating, (1) if the form of such Securities has been established by or pursuant to Board Resolution as permitted by Section 201, that such form has been established in conformity with the provisions of this Indenture; (2) if the terms of such Securities have been established by or pursuant to Board Resolution as permitted by Section 301, that such terms have been established in conformity with the provisions of this Indenture; and (3) that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will materially and adversely affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. Notwithstanding the provisions of Section 301 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officers' Certificate otherwise required pursuant to Section 301 or the Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the time of authentication upon original issuance of the first Security of such series to be issued. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 309 together with a written statement (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) stating that such Security has never been issued and sold by the Company, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. -32- Section 304. Temporary Securities. Pending the preparation of definitive Securities of any Series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities, which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. If temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of the same series, of any authorized denominations and of like tenor and aggregate principal amount. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series and tenor. Section 305. Registration, Registration of Transfer and Exchange; Certain Transfers and Exchanges. (a) Registration, Registration of Transfer and Exchange Generally. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to as the "Securities Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. Upon surrender for registration of transfer of any Security of any series at the office or agency in a Place of Payment for that series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor. Subject to this Section 305(a) and to Section 305(b), at the option of the Holder, Securities of any series may be exchanged for other Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. -33- Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 906 or 1107 not involving any transfer. If the Securities of any series (or of any series and specified tenor) are to be redeemed in part, the Company shall not be required (i) to issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of that series selected for redemption under Section 1103 and ending at the close of business on the day of such mailing, or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. The provisions of Clauses (1), (2), (3) and (4) below shall apply only to Global Securities: (1) Each Global Security authenticated under this Indenture shall be registered in the name of the Depositary designated for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture. (2) Notwithstanding any other provision in this Indenture or the Securities, no Global Security of any series may be exchanged in whole or in part for Securities of that series registered, and no transfer of a Global Security of a series in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (A) the Depositary (i) has notified the Company that it is unwilling or unable to continue as Depositary for the Global Security and a successor Depositary has not been appointed by the Company within 90 days of receipt by the Company of such notification or (ii) has ceased to be a clearing agency registered under the Exchange Act and a successor Depositary has not been appointed by the Company within 90 days after the Company became aware of such cessation, (B) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Certificated Securities, (C) there shall have occurred and be continuing an Event of Default with respect to such Global Security or (D) there shall exist such circumstances, if any, in addition to or in lieu of the foregoing as have been specified for this purpose as contemplated by Section 301. Any Global Security of a series exchanged pursuant to clause (A) above shall be so exchanged in whole and not in part and any Global Security of a series exchanged pursuant to clause (B), (C) or (D) above may be exchanged in whole or from time to time in part as directed by the Company or the Trustee. (3) Securities issued in exchange for a Global Security of a series or any portion thereof pursuant to clause (2) above shall be issued in definitive, fully registered form without interest coupons, shall have an aggregate principal amount equal to that of -34- such Global Security or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear any legends required hereunder. Any Global Security of a series to be exchanged in whole shall be surrendered by the Depositary to the Trustee, as Security Registrar. With regard to any Global Security of a series to be exchanged in part, either such Global Security shall be so surrendered for exchange or, if the Trustee is acting as custodian for the Depositary or its nominee with respect to such Global Security, the principal amount thereof shall be reduced by an amount equal to the portion thereof to be so exchanged by means of an appropriate adjustment made on the records of the Trustee. Upon any such surrender or adjustment, the Trustee shall authenticate and make available for delivery a Security of such series issuable on such exchange to or upon the written order of the Depositary or an authorized representative thereof. (4) In the event of the occurrence of any of the events specified in clause (2) above, the Company shall promptly make available to the Trustee a reasonable supply of Certificated Securities in definitive, registered form without interest coupons. (5) No Agent Members nor any other Persons on whose behalf Agent Members may act (including Euroclear and Clearstream and account holders and participants therein and any holder or owner of any beneficial interest in any Global Security) shall have any rights under the Indenture with respect to any Global Security, or under any Global Security, and the Depositary or such nominee, as the case may be, may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and holder of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or such nominee, as the case may be, or impair, as between the Depositary, its Agent Members and any other person on whose behalf an Agent Member may act, the operation of customary practices of such Persons governing the exercise of the rights of a holder of any Security. Neither the Company, the Trustee nor the Securities Registrar shall have any liability in respect of any transfers effected by the Depositary or by any Agent Member or any other Person that acquires a beneficial interest in a Security. Neither the Trustee nor the Depositary shall have any duty or obligation to monitor compliance with any restrictions on transfer with respect to the transfer of any interest in the Securities (including transfers between Agent Members or any such other Persons that acquire a beneficial interest in a Security) other than to require delivery of any documents or certificates specifically required by this Indenture. (b) Certain Transfers and Exchanges. Notwithstanding any other provision of this Indenture or the Securities, transfers and exchanges of Securities and beneficial interests in a Global Security of the kinds specified in this Section 305(b) shall be made only in accordance with this Section 305(b). (i) Limitation on Transfers of a Global Security. A Global Security of a series may not be transferred, in whole or in part, to any Person other than DTC or a nominee thereof, and no such transfer to any such other Person may be registered; provided that this clause (i) shall not prohibit any transfer of a Security of a series that is issued in exchange for a Global Security of that series but is not itself a Global Security -35- pursuant to Section 305(a). No transfer of a Security of a series to any Person shall be effective under this Indenture or the Securities unless and until such Security has been registered in the name of such Person. Nothing in this Section 305(b)(i) shall prohibit or render ineffective any transfer of a beneficial interest in a Global Security effected in accordance with the other provisions of this Section 305(b). (ii) Temporary Regulation S Global Security. If the owner of a beneficial interest in a Temporary Regulation S Global Security of a series wishes at any time to transfer such interest to a Person who wishes to take delivery thereof in the form of a beneficial interest in such Temporary Regulation S Global Security, such transfer may be effected, subject to the rules and procedures of the Depositary, Euroclear and Clearstream, in each case to the extent applicable and as in effect from time to time (the "Applicable Procedures"), only in accordance with this Section 305(b)(ii). Upon delivery (A) by a beneficial owner of an interest in a Temporary Regulation S Global Security to Euroclear or Clearstream, as the case may be, of an Owner Securities Certification substantially in the form of Annex C-1 hereto, (B) by the transferee of such beneficial interest in the Temporary Regulation S Global Security to Euroclear or Clearstream, as the case may be, of a written certification (a "Transferee Securities Certification") substantially in the form of Annex C-3 hereto and (C) by Euroclear or Clearstream, as the case may be, to the Trustee, as Security Registrar, of a Depository Securities Certification substantially in the form of Annex C-2 hereto, the Trustee may direct either Euroclear or Clearstream, as the case may be, to reflect on its records the transfer of a beneficial interest in the Temporary Regulation S Global Security from the beneficial owner providing the Owner Securities Certification to the Person providing the Transferee Securities Certification. (iii) Restricted Global Security to Temporary Regulation S Global Security. If the holder of a beneficial interest in the Restricted Global Security wishes at any time to transfer such interest to a Person who wishes to take delivery thereof in the form of a beneficial interest in the Temporary Regulation S Global Security, such transfer may be effected, subject to the Applicable Procedures, only in accordance with the provisions of this Section 305(b)(iii). Upon receipt by the Trustee, as Security Registrar, of (A) written instructions given in accordance with the Applicable Procedures from a Agent Member directing the Trustee to credit or cause to be credited to a specified Agent Member's account a beneficial interest in the Temporary Regulation S Global Security in a principal amount equal to that of the beneficial interest in the Restricted Global Security to be so transferred, (B) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Agent Member (and the Euroclear or Clearstream account, as the case may be) to be credited with, and the account of the Agent Member to be debited for, such beneficial interest and (C) a certificate in substantially the form set forth in Annex A-1 given by the holder of such beneficial interest, the Trustee, as Security Registrar, shall instruct the Depositary to reduce the principal amount of the applicable Restricted Global Security, and to increase the principal amount of the Temporary Regulation S Global Security, by the principal amount of the beneficial interest in the Restricted Global Security to be so transferred, and to credit or cause to be credited to the account of the Person specified in such instructions (which shall be the Agent Member for Euroclear or Clearstream or both , as the case may be) a beneficial interest in the Temporary Regulation S Global Security -36- having a principal amount equal to the amount by which the principal amount of the Restricted Global Security was reduced upon such transfer. (iv) Restricted Global Security to Regulation S Global Security. If the holder of a beneficial interest in a Restricted Global Security wishes at any time to transfer such interest to a Person who wishes to take delivery thereof in the form of a beneficial interest in the Regulation S Global Security, such transfer may be effected, subject to the Applicable Procedures, only in accordance with this Section 305(b)(iv). Upon receipt by the Trustee, as Security Registrar, of (A) written instructions given in accordance with the Applicable Procedures from an Agent Member directing the Trustee to credit or cause to be credited to a specified Agent Member's account a beneficial interest in a Regulation S Global Security in a principal amount equal to that of the beneficial interest in the Restricted Global Security to be so transferred, (B) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Agent Member (and, if applicable, the Euroclear or Clearstream account, as the case may be) to be credited with, and the account of the Agent Member to be debited for, such beneficial interest and (C) a certificate in substantially the form set forth in Annex A-2 given by the holder of such beneficial interest, the Trustee, as Security Registrar, shall instruct the Depositary to reduce the principal amount of the applicable Restricted Global Security, and to increase the principal amount of the Regulation S Global Security, by the principal amount of the beneficial interest in the Restricted Global Security to be so transferred, and to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Regulation S Global Security having a principal amount equal to the amount by which the principal amount of the Restricted Global Security was reduced upon such transfer. (v) Temporary Regulation S Global Security or Regulation S Global Security to Restricted Global Security. If the holder of a beneficial interest in a Temporary Regulation S Global Security or a Regulation S Global Security wishes at any time to transfer such interest to a Person who wishes to take delivery thereof in the form of a beneficial interest in the Restricted Global Security, such transfer may be effected, subject to the Applicable Procedures, only in accordance with this Section 305(b)(v). Upon receipt by the Trustee, as Security Registrar, of (A) written instructions given in accordance with the Applicable Procedures from an Agent Member directing the Trustee to credit or cause to be credited to a specified Agent Member's account a beneficial interest in a Restricted Global Security in a principal amount equal to that of the beneficial interest in the Temporary Regulation S Global Security or the Regulation S Global Security to be so transferred, (B) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Agent Member to be credited with, and the account of the Agent Member (and, if applicable, the Euroclear or Clearstream account, as the case may be) to be debited for, such beneficial interest and (C) a certificate in substantially the form set forth in Annex B given by the owner of such beneficial interest, the Trustee, as Security Registrar, shall instruct the Depositary to reduce the principal amount of the applicable Temporary Regulation S Global Security or the Regulation S Global Security, as the case may be, and to increase the principal amount of the Restricted Global Security, by the principal amount of the beneficial interest in the Temporary Regulation S Global Security or the Regulation S Global Security to be so transferred, and to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Restricted Global -37- Security having a principal amount equal to the amount by which the principal amount of the Temporary Regulation S Global Security or the Regulation S Global Security, as the case may be, was reduced upon such transfer. (vi) Non-Global Restricted Security to Global Security. If the Holder of a Restricted Security (other than a Global Security) wishes at any time to transfer all or a portion of such Security to a Person who wishes to take delivery thereof in the form of a beneficial interest in the Restricted Global Security, the Temporary Regulation S Global Security or the Regulation S Global Security, in each case, such transfer may be effected, subject to the Applicable Procedures, only in accordance with this Section 305(b)(vi). Upon receipt by (1) the Depositary of (A) written instructions given in accordance with the Applicable Procedures from an Agent Member directing the Depositary to credit or cause to be credited to a specified Agent Member's account a beneficial interest in the Restricted Global Security, the Temporary Regulation S Global Security or the Regulation S Global Security, as the case may be, in a specified principal amount equal to the principal amount of the Restricted Security (or portion thereof) to be so transferred, (B) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Agent Member (and, in the case of any transfer pursuant to Regulation S, the Euroclear and Clearstream account for which such Agent Member's account is held, or if such account is held for Euroclear or Clearstream, the Euroclear or Clearstream account, as the case may be) to be credited with such beneficial interest, and (C) an appropriately completed certificate substantially in the form set forth in Annex D-1 hereto, if the specified account is to be credited with a beneficial interest in a Restricted Global Security, or Annex D-2 hereto, if the specified account is to be credited with a beneficial interest in the Temporary Regulation S Global Security or the Regulation S Global Security, given by the holder of such beneficial interest, and (2) the Trustee of (A) the Restricted Security to be so transferred, (B) the notification from the Depositary of the transaction described in (1) above and (C) the certificate described in (1)(C) above, the Trustee, as Security Registrar, shall cancel such Restricted Security (and issue a new Security in respect of any untransferred portion thereof) as provided in Section 305(a) and increase the principal amount of the Restricted Global Security, Temporary Regulation S Global Security or Regulation S Global Security, as the case may be, by the specified principal amount as provided in Section 305(b)(iii). The Trustee shall not be required to accept for such registration of transfer or exchange any Restricted Security unless the Trustee and the Company are satisfied that such transfer or exchange is being effected in compliance with the restrictions on transfer as set forth in this Indenture and in such Security. In addition, in connection with a transfer of a Certificated Security by an Institutional Accredited Investor, such Institutional Accredited Investor shall be required, prior to such transfer, to furnish to the Company and the Trustee such certifications, legal opinions or other information as they or either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. (vii) Other Exchanges. (1) In the event that a Global Security or any portion thereof is exchanged for Securities other than Global Securities, such other Securities may in turn be exchanged (on transfer or otherwise) for Securities that are not Global -38- Securities or for beneficial interests in a Global Security (if any is then outstanding) only in accordance with such procedures, which shall be substantially consistent with the provisions of clauses (i) through (vi) above and (viii) below (including the certification requirements intended to insure that transfers and exchanges of beneficial interests in a Global Security comply with Rule 144A, Rule 144 (if available) or Regulation S, as the case may be) and any Applicable Procedures, as may be from time to time adopted by the Company and the Trustee; provided that except as permitted in (3) hereof, no beneficial interest in a Temporary Regulation S Global Security shall be exchangeable for a definitive Security until the expiration of the Restricted Period and then only if the certifications described in Section 201 shall have been provided in respect of such interest. (2) Subject to Section 201(d), in connection with a transfer of a Restricted Security or of an interest therein to an Institutional Accredited Investor, such Institutional Accredited Investor shall be required, prior to such transfer, to furnish to the Company and the Trustee, an appropriately completed certificate substantially in the form of Annex E and such other certifications, legal opinions or other information as they or either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act; provided, however, that the purchaser of a Certificated Security directly from the initial purchaser thereof named as such in the Purchase Agreement in respect of the securities of such series may, so long as such security is a Restricted Security, transfer such security only in accordance with clause (vi) above. (3) Notwithstanding any other provision of this Section 305, an initial purchaser named as such in the Purchase Agreement in respect of the Securities of a series may exchange beneficial interests in the Temporary Regulation S Global Securities of that series held by it for one or more Restricted Securities of that series (including an interest in the Restricted Global Security of that series) upon delivery by such initial purchaser of instructions for such exchange substantially in the form of Annex F. Upon receipt of the instruction described in the preceding sentence, the Trustee shall instruct the Depositary to reduce the principal amount of a Temporary Regulation S Global Security by the principal amount of the beneficial interest in such Temporary Regulation S Global Security to be so transferred and either (A) the Trustee shall instruct the Depositary to increase the principal amount of the Restricted Global Security and credit or cause to be credited to the account of such initial purchaser a beneficial interest in such Restricted Global Security having a principal amount equal to the amount by which the principal amount of the Temporary Regulation S Global Security was reduced upon such transfer or (B) authenticate and deliver one or more Restricted Securities in definitive form and in the aggregate principal amount of the beneficial interest in the Temporary Regulation S Global Security to be so transferred, pursuant to the instructions described in the first sentence of this paragraph. (viii) Interests in Temporary Regulation S Global Security to be Held Through Euroclear or Clearstream. Until the termination of the Restricted Period, interests in the Temporary Regulation S Global Securities may be held only through Agent Members acting for and on behalf of Euroclear and Clearstream, provided that this clause (viii) shall not prohibit any transfer in accordance with Section 305(b)(v) hereof. -39- (ix) In addition to the foregoing, the Trustee, as Security Registrar, shall effect and register, upon receipt of a written request from the Company to do so, a transfer not otherwise permitted by this Section 305(b), such registration to be done in accordance with the otherwise applicable provisions of this Section 305, upon the furnishing by the proposed transferor or transferee of a written opinion of counsel (which opinion and counsel are satisfactory to the Company and the Trustee) to the effect that, and such other certifications or information as the Company or the Trustee may require to confirm that, the proposed transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Company may require such transfer to be effected by the issuance of Certificated Securities. (c) Securities Act Legends. Restricted Securities and their Successor Securities shall bear the legends required by Section 202 and Section 204, subject to the following: (i) subject to the following Clauses of this Section 305(c), a Security of a series or any portion thereof which is exchanged, upon transfer or otherwise, for a Global Security of that series or any portion thereof shall bear the Securities Act Legend borne by such Global Security while represented thereby; (ii) subject to the following Clauses of this Section 305(c), a new Security of a series which is not a Global Security and is issued in exchange for another Security of that series (including a Global Security) or any portion thereof, upon transfer or otherwise, shall bear the Securities Act Legend borne by such other Security, provided that, if such new Security is required pursuant to Section 305(b)(v) to be issued in the form of a Restricted Security, it shall bear a Restricted Securities Legend and, if such new Security is so required to be issued in the form of a Regulation S Security, it shall bear a Regulation S Legend; (iii) Registered Securities and Regulation S Securities that are not Temporary Regulations S Securities shall not bear a Securities Act Legend; (iv) at any time after the Securities of a series may be freely transferred without registration under the Securities Act or without being subject to transfer restrictions pursuant to the Securities Act, a new Security of that series which does not bear a Securities Act Legend may be issued in exchange for or in lieu of a Security of that series (other than a Global Security) or any portion thereof which bears such a legend if the Trustee has received an Unrestricted Securities Certificate, satisfactory to the Trustee and duly executed by the Holder of such legended Security or his attorney duly authorized in writing, and after such date and receipt of such certificate, the Trustee shall authenticate and deliver such a new Security in exchange for or in lieu of such other Security as provided in this Article Three; (v) a new Security of a series which does not bear a Securities Act Legend may be issued in exchange for or in lieu of a Security of that series (other than a Global Security) or any portion thereof which bears such a legend if, in the Company's judgment, placing such a legend upon such new Security is not necessary to ensure compliance with the registration requirements of the Securities Act, and the Trustee, at -40- the direction of the Company, shall authenticate and deliver such a new Security as provided in this Article Three; and (vi) notwithstanding the foregoing provisions of this Section 305(c), a Successor Security of a Security of a series that does not bear a particular form of Securities Act Legend shall not bear such form of legend unless the Company has reasonable cause to believe that such Successor Security is a "restricted security" within the meaning of Rule 144 under the Securities Act, in which case the Trustee, at the direction of the Company, shall authenticate and deliver a new Security of that series bearing a Restricted Securities Legend in exchange for such Successor Security as provided in this Article Three. The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Agent Members or beneficial owners of interests in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. The Trustee shall not have any responsibility for any actions taken or not taken by the Depositary. Section 306. Mutilated, Destroyed, Lost and Stolen Securities. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by -41- anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. Section 307. Payment of Interest and Additional Interest; Interest Rights Preserved. Unless otherwise provided as contemplated by Section 301 with respect to any series of Securities, interest and Additional Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest at the office or agency of the Company maintained for such purpose pursuant to Section 1002; provided, however, that each installment of interest, if any, on any Security may at the Company's option be paid by (i) mailing a check for such interest, payable to or upon the written order of the Person entitled thereto pursuant to Section 309, to the address of such Person as it appears on the Securities Register or (ii) wire transfer in immediately in available funds at such place and to such account as may be designated by the Person entitled thereto as specified in the Securities Register. Any interest on any Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date, other than any interest the payment of which the Company has duly deferred pursuant to Section 311 (herein called "Defaulted Interest"), shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner ("the Special Record Date"): The Company shall, not less than 30 days prior to the date of any proposed payment of Defaulted Interest, notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class postage prepaid, to each Holder of Securities of such series, at his address as it appears in the Securities Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such -42- Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). (2) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. In the case of any Security which is converted after any Regular Record Date and on or prior to the next succeeding Interest Payment Date (other than any Security whose Maturity is prior to such Interest Payment Date), interest whose Stated Maturity is on such Interest Payment Date shall be payable on such Interest Payment Date notwithstanding such conversion, and such interest (whether or not punctually paid or duly provided for) shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on such Regular Record Date. Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Security which is converted, interest whose Stated Maturity is after the date of conversion of such Security shall not be payable. Notwithstanding the foregoing, the terms of any Security that may be converted may provide that the provisions of this paragraph do not apply, or apply with such additions, changes or omissions as may be provided thereby, to such Security. Section 308. Persons Deemed Owners. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee, any Paying Agent, the Security Registrar and any agent of the Company or the Trustee hereunder may treat the Person in whose name such Security is registered upon the Securities Register as the owner of such Security for the purpose of receiving payment of principal of (and premium, if any) and (subject to Section 307) any interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, nor the Trustee, nor any Paying Agent, nor the Security Registrar nor any agent of the Company or the Trustee shall be affected by notice to the contrary. All such payments so made to any Holder for the time being, or upon his order shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Security. Section 309. Cancellation. All Securities surrendered for payment, redemption, purchase or repayment by the Company at the option of Holders, registration of transfer or exchange or conversion or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be -43- delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall be promptly cancelled by the Trustee. If the Company shall so acquire any of the Securities, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are surrendered to the Trustee for cancellation. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of as directed by a Company Order (provided that in no event shall the Trustee be directed to destroy any such cancelled Securities) and, as directed by Company Order from time to time, the Trustee shall furnish to the Company a certificate evidencing the cancellation of cancelled Securities. Section 310. Computation of Interest. Except as otherwise specified as contemplated by Section 301 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. For disclosure purposes under the Interest Act (Canada), whenever in this Indenture or any Securities issued hereunder interest at a specified rate is to be calculated on the basis of a period less than a calendar year, the yearly rate of interest to which such rate is equivalent is such rate multiplied by the actual number of days in the relevant calendar year and divided by the number of days in such period. Section 311. Deferrals of Interest Payment Dates. If specified as contemplated by Section 201 or Section 301 with respect to the Securities of a particular series, so long as no Event of Default has occurred and is continuing, the Company shall have the right, at any time during the term of such series, from time to time to defer the payment of interest (other than Special Interest, if any) on such Securities for such period or periods as may be specified as contemplated by Section 301 (each, an "Extension Period"), during which Extension Periods the Company shall, if so specified as contemplated by Section 301, have the right to make partial payments of interest on any Interest Payment Date. At the end of any such Extension Period the Company shall pay all interest then accrued and unpaid on the Securities (together with Additional Interest thereon, if any, at the rate specified for the Securities of such series to the extent permitted by applicable law); provided, however, that no Extension Period shall extend beyond the Stated Maturity of the principal of the Securities of such series; and provided, further, that during any such Extension Period, (a) the Company shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock or make any guarantee payment with respect thereto (other than (i) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, (ii) as a result of an exchange or conversion of any class or series of the Company's capital stock for any other class or series of the Company's capital stock, or (iii) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or -44- exchanged), and (b) the Company shall not make any payment of interest on, principal of or premium, if any, on, or repay, repurchase or redeem, any debt securities issued by the Company which rank pari passu with or junior to the Securities of such series (including the Securities of any other series); provided, however, the Company may declare and pay a stock dividend where the dividend stock is the same stock as that on which the dividend is being paid. Prior to the termination of any such Extension Period, the Company may further defer the payment of interest, provided that no Extension Period shall exceed the period or periods specified in such Securities, extend beyond the Stated Maturity of the principal of such Securities. Upon the termination of any such Extension Period and upon the payment of all accrued and unpaid interest and (to the extent permitted by applicable law) any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Extension Period, subject to the above conditions. No interest or Additional Interest shall be due and payable during an Extension Period, but shall be due and payable on the day after such Extension Period ends. Each installment of interest that would otherwise have been due and payable during an Extension Period shall bear Additional Interest as and to the extent as may be specified as contemplated by Section 301. If the principal of any Securities shall become due and payable on a day or if any Securities become subject to redemption on a Redemption Date that would otherwise occur during an Extension Period, such Extension Period will automatically end on the immediately preceding day (which will be the last day of the period). The Company shall give the Holders of the Securities of such series and the Trustee written notice of its election to begin any such Extension Period at least five Business Day prior to the Regular Record Date for the next succeeding Interest Payment Date on which interest on Securities of such series would be payable but for such deferral. The Company's written notice of its election to begin an Extension Period shall set forth the first Interest Payment Date in such period and, if known, the date on which payment of interest (and Additional Interest, if any) on the Securities will be resumed (and if such date is an Interest Payment Date, the Regular Record Date), and shall be given in the manner set forth in Section 106. If such resumption date is not known, the notice must state that the length of the Extension Period will be indefinite. The Trustee shall promptly give notice of the Company's election to begin any such Extension Period to the Holders of the Outstanding Securities of such series. Section 312. CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the "CUSIP" numbers. -45- ARTICLE FOUR SATISFACTION AND DISCHARGE Section 401. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request cease to be of further effect with respect to any series of Securities specified in such Company Request (except as to any surviving rights of conversion, registration of transfer or exchange of Securities herein expressly provided for), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities of such series theretofore authenticated and delivered (other than (i) Securities of such series which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or (B) all such Securities of such series not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) if redeemable at the option of the Company, are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be deposited with the Trustee as funds (or such other form of payment as may be permitted for payments with respect to Securities of such series) in trust for the purpose and in an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest (including any Additional Interest) to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and -46- (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 607 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive. Section 402. Application of Trust Money. Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest (including any Additional Interest) for whose payment such money has been deposited with the Trustee. All moneys deposited with the Trustee pursuant to Section 401 (and held by it or any Paying Agent) for the payment of Securities subsequently converted shall be returned to the Company upon Company Request. ARTICLE FIVE REMEDIES Section 501. Events of Default. "Event of Default", wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest (including Special Interest and Additional Interest) upon any Security of that series when it becomes due and payable, and continuance of such default for a period of 30 days (subject to the deferral of any due date in the case of an Extension Period); or (2) default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity; or (3) default in the deposit of any sinking fund payment, when and as due by the terms of a Security of that series, and continuance of such default for a period of 30 days; or (4) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of series of Securities -47- other than that series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (5) a default under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company (including a default with respect to Securities of any series other than that series) or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company including this Indenture, whether such indebtedness now exists or shall hereafter be created, which default shall have resulted in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, if such indebtedness shall not have been discharged or such acceleration shall not have been rescinded or annulled within a period of 10 days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default and requiring the Company to cause such acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default" hereunder; provided, however ,that if such event of default under such bond, debenture, note or other evidence of indebtedness for money borrowed by the Company or mortgage, indenture or instrument shall be remedied or cured by the Company or waived by the holder of such indebtedness, then the Event of Default hereunder by reason thereof shall be deemed likewise to have been thereupon remedied, cured, or waived without further action upon the part of either the Trustee or any of the Holders of Outstanding Securities; and provided, further, that, subject to the provisions of Sections 601 and 602, the Trustee shall not be deemed to have knowledge of such default unless either (A) a Responsible Officer of the Trustee assigned to its Corporate Trust Department shall have actual knowledge of such default or (B) the Trustee shall have received at its principal Corporate Trust Office written notice thereof from the Company, from any Holder, from the holder of any such indebtedness or from the trustee under any such mortgage, indenture or other instrument; or (6) the entry of a decree or order by a court having jurisdiction in the premises adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization or winding-up of the Company under the Companies' Creditors Arrangement Act (Canada), the Bankruptcy and Insolvency Act (Canada) or the Winding-Up Act (Canada) or any other bankruptcy, insolvency or analogous laws, or the issuing of a sequestration order or process of execution against the Company or any substantial part of its property, or appointing a receiver of the Company or of any substantial part of its property, or ordering the winding-up or liquidation of its affairs, and the continuance of any such decree or order or appointment unstayed, undischarged and in effect for a period of 60 days from the date thereof; or (7) the institution by the Company of proceedings to be adjudicated bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking -48- reorganization or relief under the Companies' Creditors Arrangement Act (Canada), the Bankruptcy and Insolvency Act (Canada) or the Winding-Up Act (Canada) or any other bankruptcy, insolvency or analogous laws, or the consent by it to the filing of any such petition or to the appointment of a receiver or similar official of the Company or of any substantial part of its property, or the making by it of a general assignment for the benefit of creditors, or the Company's admitting in writing its inability to pay its debts generally as they become due or taking corporate action in furtherance of any of the aforesaid purposes; or (8) any other Event of Default provided with respect to Securities of that series. Section 502. Acceleration of Maturity; Rescission and Annulment. If an Event of Default (other than an Event of Default specified in Section 501(6) or 501(7)) with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of that series may declare the principal amount (or, if any of the Securities of that series are Original Issue Discount Securities, such portion of the principal amount of such Securities as may be specified in the terms thereof) of, and accrued interest and any Additional Interest on, all of the Securities of that series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable. If an Event of Default specified in Section 501(6) or 501(7) with respect to Securities of any series at the time Outstanding occurs, the principal amount of (together with accrued interest and any Additional Interest thereon) all the Securities of that series (or, if any Securities of that series are Original Issue Discount Securities, such portion of the principal amount of such Securities as may be specified by the terms thereof) shall automatically, and without any declaration or other action on the part of the Trustee or any Holder, become immediately due and payable. Payment of principal and interest (including any Additional Interest) on such Securities shall remain subordinated to all Senior Indebtedness to the extent provided in Article Sixteen notwithstanding that such amount shall become immediately due and payable as herein provided. At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (1) the Company has paid or deposited with the Trustee a sum (or such other form of payment as may be permitted for payments with respect to Securities of such series) sufficient to pay: (A) all overdue interest on all Outstanding Securities of that series, (B) any accrued Additional Interest (to the extent that payment thereof is lawful) on all Outstanding Securities of that series, -49- (C) the principal of (and premium, if any, on) any Outstanding Securities of that series which have become due otherwise than by such declaration of acceleration and any interest and Additional Interest thereon at the rate or rates prescribed therefor in such Outstanding Securities, (D) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Securities, and (E) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to Securities of that series, other than the non-payment of the principal of (or premium, if any, on) or interest on the Securities of that series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if: (1) default is made in the payment of any interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to the Trustee (in cash or in such other form of payment as may be permitted for payments with respect to Securities of such series), for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and on any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated. -50- If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Section 504. Trustee May File Proofs of Claim. In case of any judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such Judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 505. Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. Section 506. Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (and premium if any) or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 607; and SECOND: To the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest (including any Additional Interest) on the Securities in -51- respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and any (and premium, if any) and interest (including any Additional Interest), respectively. Section 507. Limitation on Suits. No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series; (2) the Holders of not less than 25% in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceeding in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series; it being understood and intended that no one or more of such Holder shall have any right in any manner whatever by virtue of, or by availing themselves of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest and to Convert. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any,) and (subject to Sections 307 and 311) interest (including any Additional Interest) on such Security on the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date or, in the case of purchase or repayment by the Company at the option of the Holder, on the Repayment Date), and, if the terms of such Security so provide, to convert such Security in accordance with its terms, and to institute suit for the enforcement of any such payment and, if applicable, any such right to convert, and such rights shall not be impaired without the consent of such Holder. -52- Section 509. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 510. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. Section 512. Control by Holders. The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that (1) such direction shall not be in conflict with any rule of law or with this Indenture, and (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Section 513. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series waive any past default hereunder with respect to such series and its consequences, except a default: -53- (1) in the payment of the principal of (or premium, if any) or interest (including any Additional Interest) on any Security of such series, or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Section 514. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 25% in principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest (including any Additional Interest) on any Security on or after the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date or, in the case of purchase or repayment by the Company at the option of the Holder, on or after the Repayment Date). Section 515. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time plead or in any manner whatsoever claim or take the benefit or advantage of any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE SIX THE TRUSTEE Section 601. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, -54- (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Securities of any series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities. of such series; and (4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. -55- Section 602. Notice of Defaults. Within 90 days after the occurrence of any default hereunder with respect to the Securities of any series, the Trustee shall transmit by mail to all Holders of Securities of such series, as their names and addresses appear in the Securities Register, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest (including any Additional Interest) on any Security of such series or in the payment of any sinking fund installment with respect to Securities of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders of Securities of such series; and provided, further, that in the case of any default of the character specified in Section 501(4) with respect to Securities of such series, no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series. Section 603. Certain Rights of Trustee. Subject to the provisions of Section 601: (1) the Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (2) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order or as otherwise expressly provided herein, and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (4) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities (including the reasonable compensation and the expenses and disbursements of its agents and counsel) which might be incurred by it in compliance with such request or direction; -56- (6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (8) the Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; (9) the Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture; (10) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder; and (11) the Trustee may request that the Company deliver an Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers' Certificate may be signed by any person authorized to sign an Officers' Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded. Section 604. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. Section 605. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or -57- pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent. Section 606. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. Neither the Trustee nor any Paying Agent shall be under any liability for interest on any money received by it hereunder except such as it may agree with the Company to pay thereon. So long as no Event of Default shall have occurred and be continuing, all interest allowed on any such money shall be paid from time to time upon receipt by the Trustee of a Company Order. Section 607. Compensation and Reimbursement. The Company agrees: (1) to pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation agreed to in writing by the parties from time to time and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense, including taxes (other than taxes based upon, measured by or determined by the income, capital, profit or assets of the Trustee), incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. Such indemnification shall survive the resignation or removal of the Trustee, the termination of this Agreement and the satisfaction and discharge of the trust. The Trustee shall have a lien prior to the Securities as to all property and funds held by it hereunder for any amount owing it or any predecessor Trustee pursuant to this Section 607, except with respect to funds held in trust for the benefit of the Holders of particular Securities. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 501(6) or Section 501(7), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable Federal or State bankruptcy, insolvency or other similar law. -58- Section 608. Disqualification; Conflicting Interests. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. To the extent permitted by such Act, the Trustee shall not be deemed to have a conflicting interest by virtue of being a trustee under this Indenture with respect to Securities of more than one series or a trustee under the indentures relating to the Company's 5 3/4% Convertible Debentures due 2004, the Company's 7 3/4% Convertible Debentures due 2016, the Company's 9 7/8% Sinking Fund Debentures due 2019, the Company's 9.60% Debentures due 2022, the Company's 7.20% Debentures due 2032, the Company's 7 3/4% Notes due 2012, the Company's Liquid Yield Option Notes due 2021 and the Company's Convertible Debentures due 2023. Section 609. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust power, having a combined capital and surplus of at least $50,000,000 subject to supervision or examination by Federal or State authority and having its Corporate Trust Office in the Borough of Manhattan, The City of New York. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Section 610. Resignation and Removal; Appointment of Successor. No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 611. The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 611 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company. If at any time: (1) the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or -59- (2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company by a Board Resolution may remove the Trustee with respect to all securities, or (ii) subject to Section 514, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees. If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 611. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any Series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 611, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any Series shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 611, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to all Holders of Securities of such series as their names and addresses appear in the Securities Register. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office. Section 611. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the -60- successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees as co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in Subsections (a) and (b) of this section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 612. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such -61- authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. Section 613. Preferential Collection of Claims Against Company. If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). Section 614. Appointment of Authenticating Agent The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent (including the authenticating agency contemplated by this Indenture), shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall give notice of such appointment in the manner provided in Section 106 -62- to all Holders of Securities of the series with respect to which such Authenticating Agent will serve. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section, and the Trustee shall be entitled to be reimbursed for such payments, subject to the provisions of Section 607. If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternative certificate of authentication in the following form: This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. Dated: The Bank of New York, As Trustee By......................, As Authenticating Agent By....................... Authorized Officer Section 615. Appointment of Additional Trustees. At any time or times, for the purpose of conforming to any legal requirements, restrictions or conditions in any jurisdiction, or if the Trustee shall deem it necessary or prudent in the interest of the Holders of Outstanding Securities so to do, the Company and the Trustee shall have the power to appoint and, upon the request of the Trustee, the Company shall for such purpose join with the Trustee in the execution, delivery and performance of an indenture supplemental hereto and all other instruments and agreements necessary or proper (i) to appoint one or more Persons (in this Indenture called "Additional Trustees") approved by the Trustee , either to act as co-trustee or co-trustees jointly with the Trustee or to act as separate trustee or trustees for the purpose of exercising such right. and powers as may be provided in such supplemental indenture and (ii) to vest in any Additional Trustee any right or power of the Trustee hereunder, subject to the remaining provisions of this Section 615. Any such supplemental indenture shall include all provisions required to be included by the Trust Indenture Act as then in effect with respect to the eligibility, qualification, rights, power, duties, obligations, liabilities and immunities of such Additional Trustee. The rights, powers, duties and obligations conferred or imposed upon the trustees or any of them shall be conferred or imposed upon and exercised or performed by the Trustee and any Additional Trustee jointly, as provided in such supplemental indenture or any such instrument and agreement, except to the extent that, under -63- any law of any jurisdiction in which any particular act or acts are to be performed, the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by the Additional Trustee. No Additional Trustee shall be given the power to authenticate Securities. In case the Company shall not have joined in the execution of such supplemental indenture or any such instruments or agreements within 15 days after the receipt by it of a written request so to do, or in case any Event of Default shall have occurred and be continuing, the Trustee along shall have power to make such appointment. ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 701. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee: (a) semi-annually not later than 15 days after the Regular Record Date for interest for each series of Securities, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Securities of such series as of such Regular Record Date or if there is no Regular Record Date for interest for such series of Securities, semi-annually, upon such dates as are set forth in the Board Resolution or indenture supplemental hereto authorizing such series, and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; excluding from any such list names and addresses received by the Trustee in its capacity as Security Registrar. Section 702. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided by the Trust Indenture Act. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act. -64- Section 703. Reports by Trustee. (a) The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within sixty days after each May 15 following the date of the initial issuance of Securities under this Indenture deliver to Holders a brief report, dated as of such May 15, which complies with the provisions of such Section 313(a). (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed, with the Commission and with the Company. The Company will notify the Trustee when any Securities are listed on any stock exchange. Section 704. Reports by Company. The Company shall file with the Trustee and the Commission, and transmit to Holders such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 801. Company May Consolidate, Etc., Only on Certain Terms. Nothing contained in this Indenture or in any of the Securities shall prevent any consolidation, amalgamation, merger or statutory arrangement of the Company with or into any other corporation or corporations (whether or not an Affiliate), or successive consolidations, amalgamations, mergers or statutory arrangements in which the Company or its successor or successors shall be a party or parties, or shall prevent any sale, conveyance or lease of all or substantially all the property of the Company, to any other corporation (whether or not an Affiliate) authorized to acquire and operate the same; provided, however, and the Company hereby covenants and agrees, that any such consolidation, amalgamation, merger, statutory arrangement, sale, conveyance or lease shall be upon the condition that (i) immediately after such consolidation, amalgamation, merger, statutory arrangement, sale, conveyance or lease the corporation (whether the Company or such other corporation) formed by or surviving any such consolidation, amalgamation or merger, or to which such sale, conveyance or lease shall have been made (the "Successor Corporation"), shall not be in default in the performance or observance of any of the term, covenants and conditions of this Indenture to be kept or performed by the Company; and (ii) the due and punctual payment of the principal of (and premium, if any) -65- and interest (including any Additional Interest) on all of the Securities, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed or observed by the Company, and, for each Security that by its terms provides for conversion, shall have provided for the right to convert such Security in accordance with its terms, shall be expressly assumed, by supplemental indenture satisfactory in form to the Trustee, executed and delivered to the Trustee, by the Successor Corporation (if other than the Company). Section 802. Taxing Jurisdiction. If (i) the Company enters into (A) a consolidation, amalgamation, or merger with or into any other corporation, or statutory arrangement in which the Company participates or (B) any sale, conveyance or lease of all or substantially all of its property and (ii) the corporation (whether the Company or another corporation) formed by or surviving any such consolidation, amalgamation, merger or statutory arrangement, or to which such sale, conveyance or lease will have been made, is organized under the laws of a jurisdiction other than Canada or the United States or any province, territory, state or district thereof (each, a "Relevant Taxing Jurisdiction"), then the Company or successor corporation, as the case may be, will enter into a supplemental indenture, satisfactory in form to the Trustee, obligating it to make all payments on account of any series of Securities without withholding of or deduction for, or on account of, any present or future taxes or governmental charges ("Specified Taxes") imposed or levied by a Relevant Taxing Jurisdiction, unless the Company (or successor corporation) is required by law, or the interpretation or administration thereof, to withhold or deduct such Specified Taxes. In that event, the Company (or successor corporation) will pay as additional interest such additional amounts ("Other Additional Amounts") as may be necessary in order that the net amounts received by each Holder of such series of Securities after such withholding or deduction, including any withholding or deduction with respect to such Other Additional Amounts, shall equal the respective amounts of principal and interest which would have been receivable in respect of the Securities of such series in the absence of such withholding or deduction, except that no such Other Additional Amounts shall be payable with respect to payments made to a Holder: (1) if such Holder is liable for such taxes by reason of such Holder or the beneficial owner of the Security of such series having a present or former direct or indirect connection with the Relevant Taxing Jurisdiction other than the mere holding of the Security of such series or the receipt of payment in respect thereof; (2) for any taxes imposed as a result of the failure of such Holder or beneficial owner to comply with certification, identification, declaration or similar reporting requirements, if such compliance is required by statute or by regulation, administrative practice or any applicable treaty, as a precondition to relief or exemption from such tax; (3) for any estate, inheritance, gift, sales, transfer, personal property or similar tax, duty or fine, assessment or other governmental charge; (4) for any tax which is payable otherwise than by withholding or deduction from payment by us of principal of, or interest on, the Security of such series; -66- (5) if the payment of Other Additional Amounts would be for any withholding or deduction imposed on a payment to an individual which is required to be made pursuant to an European Union directive on the taxation of savings implementing the conclusions of ECOFIN Council meeting of November 26-27, 2000 or any law implementing or complying with or introduced in order to conform to such directive; or (6) any combination of items (1) - (5) above; nor will such Other Additional Amounts be paid with respect to a payment on the Security to a Holder who is a fiduciary or partnership or other than the sole beneficial owner of such Security to the extent that a beneficiary or settlor with respect to such fiduciary, or a member of such partnership or a beneficial owner thereof, would not have been entitled to receive a payment of such Other Additional Amounts had such beneficiary, settlor, member or beneficial owner received directly its beneficial or distributive share of such payment. The Company shall have the right reasonably to require a Holder as a condition of payment of amounts on the Securities of such series to present at such place as the Company shall reasonably designate a certificate in such form as the Company may from time to time prescribe to enable the Company to determine its duties and liabilities with respect to (i) any Specified Taxes that the Company or any withholding agent may be required to deduct or withhold from payments in respect of a Security under any present or future law of any Relevant Taxing Jurisdiction or any regulation of any taxing authority thereof and (ii) any reporting or other requirements under such laws or regulations. To the extent not otherwise prohibited by applicable laws and regulations, the Company shall be entitled to determine its duties and liabilities with respect to such deduction, withholding, reporting or other requirements on the basis of information contained in such certificate, or, if no certificate shall be presented, on the basis of any presumption created by any such law or regulation, and shall be entitled to act in accordance with such determination. References to the "Company" in this Section 802 shall also be deemed to refer to any successor thereof. Section 803. Successor Corporation Substituted. In case of any such consolidation, amalgamation, merger, statutory arrangement, sale, conveyance or lease and upon the assumption by the Successor Corporation, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of and interest on all of the Securities and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Company, and, for each Security that by its terms provides for conversion, shall have provided for the right to convert such Security in accordance with its terms, such Successor Corporation shall succeed to and be substituted for the Company, with the same effect as if it had been the Company and the Company shall thereupon be relieved of any further obligation or liabilities hereunder or upon the Securities, and the Company as the predecessor corporation may thereupon or at any time thereafter be dissolved, wound-up or liquidated. Such Successor Corporation thereupon may cause to be signed, and may issue either in its own name or in the name of the Company any or all the Securities issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such Successor Corporation instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities which previously shall have been signed and delivered by the officers of the Company -67- to the Trustee for authentication, and any Securities which such Successor Corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of this Indenture. In case of any such consolidation, amalgamation, merger, statutory arrangement, sale, conveyance or lease, or change in the name of the Company, such changes in phraseology and form (but not in substance) may be made in the Securities thereafter to be issued as may, in the opinion of the Trustee, be appropriate. The Trustee shall receive an Opinion of Counsel as conclusive evidence that any such consolidation, amalgamation, merger, statutory arrangement, sale, conveyance or lease and any such assumption complies with the provisions of this Article 8. ARTICLE NINE SUPPLEMENTAL INDENTURES Section 901. Supplemental Indentures Without Consent of Holders. Without the consent of any Holders, the Company, when authorized by or pursuant to a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities; or (2) to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company; or (3) to add any additional Events of Default; or (4) to add to or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of Securities in uncertificated form; or (5) to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination shall become effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; or (6) to secure the Securities; or -68- (7) to establish the form or terms of Securities of any series as permitted by Sections 201 and 301; or (8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 611(b); or (9) to add to or change any of the provisions of this Indenture with respect to any Securities that by their terms may be converted into securities or other property other than Securities of the same series and of like tenor, in order to permit or facilitate the issuance, payment or conversion of such Securities; or (10) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided such action shall not adversely affect the interests of the Holders of Securities of any series in any material respect. Section 902. Supplemental Indentures With Consent of Holders. With the consent of the Holders of not less than 66 2/3% in principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) change the Stated Maturity of the principal of, or any installment of principal of or interest (including any Additional Interest) on, any Security, or reduce the principal amount thereof or the rate of interest (including any Additional Interest) thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, or change any Place of Payment where, or the coin or currency in which, any Security or any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date or, in the case of purchase or repayment by the Company at the option of the Holder, on or after the Repayment Date), or (2) if any Security provides that the Holder may require the Company to repurchase or convert such Security, impair such Holder's right to require repurchase or conversion of such Security on the terms provided therein, or (3) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental -69- indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or (4) modify any of the provisions of this Section or Section 513, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section, or the deletion of this proviso, in accordance with the requirements of Sections 611(b) and 901(8); or (5) modify the obligations to deliver information as set forth in Section 1007; or (6) modify any of the provisions of Article 16 in a manner adverse to the Holders of any Outstanding Securities. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. Section 903. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 905. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act. -70- Section 906. Reference in Securities to Supplemental Indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. Section 907. Subordination Unimpaired. This Indenture may not be amended at any time to alter the subordination, as provided herein, of any of the Securities then Outstanding without the written consent of each holder of Senior Indebtedness then outstanding that would be adversely affected thereby. Section 908. Notice of Supplemental Indentures. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of Section 902, the Company shall give notice thereof to the Holders of each Outstanding Security affected, in the manner provided for in Section 106, setting forth in general terms the substance of such supplemental indenture. ARTICLE TEN COVENANTS Section 1001. Payment of Principal; Premium and Interest. The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of (and premium, if any) and interest (including any Additional Interest) on the Securities of that series in accordance with the terms of the Securities and this Indenture. Section 1002. Maintenance of Office or Agency. The Company will maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series may be presented or surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange, where Securities may be surrendered for conversion, redemption or purchase and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. -71- The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. Section 1003. Money for Securities Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of (and premium, if any) or interest (including any Additional Interest) on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest (including any Additional Interest) so becoming due until such sum shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, prior to each due date of the principal of (and premium, if any) or interest (including any Additional Interest) on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest (including any Additional Interest) so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (a) hold all sums held by it for the payment of the principal of (and premium, if any) or interest on Securities of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (b) give the Trustee notice of any default by the Company (or any other obligor upon the Securities of that series) in the making of any payment of principal (and premium, if any) or interest (including any Additional Interest) on the Securities of that series; and (c) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest (including -72- any Additional Interest) on any Security of any series and remaining unclaimed for one year after such principal (and premium, if any) or interest (including any Additional Interest) has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. Section 1004. Corporate Existence. Subject to Article Eight, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders. Section 1005. Maintenance of Properties. The Company will cause all properties used or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the operation or maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Holders. Section 1006. Payment of Taxes and Other Claims. The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (l) all taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. -73- Section 1007. Statement by Officers as to Default. The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of Sections 1004 to 1006, inclusive, and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. Section 1008. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any term, provision or condition set forth in Sections 1004 to 1006, inclusive, with respect to the Securities of any series if before the time for such compliance the Holders of at least 66-2/3% in principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect. ARTICLE ELEVEN REDEMPTION OF SECURITIES Section 1101. Applicability of Article. Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for Securities of any series) in accordance with this Article. Section 1102. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities shall be evidenced by a Board Resolution or in another manner specified as contemplated by Section 301 for such Securities. In case of any redemption at the election of the Company of less than all the Securities of any series, the Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction. Section 1103. Selection by Trustee of Securities to Be Redeemed. If less than all the Securities of any series are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for -74- redemption of a portion of the principal amount of any Security of such series, provided that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security. If less than all the Securities of such series and of a specified tenor are to be redeemed (unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series and specified tenor not previously called for redemption in accordance with the preceding sentence. If any Security selected for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Security so selected, the converted portion of such Security shall be deemed (so far as may be) to be the portion selected for redemption. Securities which have been converted during a selection of Securities to be redeemed shall be treated by the Trustee as Outstanding for the purpose of such selection. The provisions of the two preceding paragraphs shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security. The Trustee shall promptly notify the Company and each Security Registrar in writing of the Securities selected for redemption as aforesaid and, in the case of any Securities selected for partial redemption as aforesaid, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. Section 1104. Notice of Redemption. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 20 nor more than 60 Business Days prior to the Redemption Date, to each Holder of Securities to be redeemed, at his address appearing in the Securities Register. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, (3) if less than all the Outstanding Securities of any series consisting of more than a single Security are to be redeemed, the identification (and, in the case of partial redemption of any such Securities, the principal amounts) of the particular Securities to be redeemed and, if less than all the Outstanding Securities of any series consisting of a single Security are to be redeemed, the principal amount of the particular Security to be redeemed, -75- (4) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest (including any Additional Interest) thereon shall cease to accrue on and after said date, (5) the place or places where each such Security is to be surrendered for payment of the Redemption Price, (6) for any Securities that by their terms may be converted, the terms of conversion, the date on which the right to convert the Security to be redeemed will terminate and the place or places where such Securities may be surrendered for conversion, (7) that the redemption is for a sinking fund, if such is the case, and (8) the CUSIP numbers, if any. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request delivered a reasonable time prior to the date such notice is to be given, by the Trustee in the name and at the expense of the Company. Section 1105. Deposit of Redemption Price. One Business Day prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest (including any Additional Interest) on, all the Securities which are to be redeemed on that date, other than any Securities called for redemption on that date which have been converted prior to the date of such deposit. If any Security called for redemption is converted, any money deposited with the Trustee or with any Paying Agent or so segregated and held in trust for the redemption of such Security shall (subject to any right of the Holder of such Security or any Predecessor Security to receive interest as provided in the second penultimate paragraph of Section 307 or in the terms of such Security) be paid to the Company upon Company Request or, if then held by the Company, shall be discharged from such trust. Section 1106. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued and unpaid interest (including any Additional Interest)) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued and unpaid interest (including any Additional Interest) to the Redemption Date; provided, however, that installments of interest (including any Additional Interest) whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close -76- of business on the relevant Record Dates according to their terms and the provisions of Section 307. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security. Section 1107. Securities Redeemed in Part. Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and of like tenor, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. Section 1108. Purchase of Securities. The Company shall have the right at any time and from time to time to purchase Securities in the open market or otherwise at any price. ARTICLE TWELVE PURCHASE OR REPAYMENT OF SECURITIES BY THE COMPANY AT OPTION OF HOLDERS Section 1201. Applicability of Article. Securities of any series the terms of which provide to each Holder the option to require the Company to purchase or repay such Securities in certain circumstances shall, upon exercise of such option, be repayable in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for Securities of any series) in accordance with this Article. Section 1202. Notice of Repayment Date. Notice of any Repayment Date with respect to Securities of any series shall, unless otherwise specified by the terms of the Securities of such series, be given by the Company not less than 30 nor more than 90 days prior to such Repayment Date to each Holder of Securities of such series in accordance with Section 106. Such notice shall state: (a) the Repayment Date; (b) the Repayment Price; (c) the place or places where, and the date by which, such Securities are to be surrendered for payment of the Repayment Price; -77- (d) a description of the procedure which a Holder must follow to exercise the purchase or repayment option; (e) that exercise of the purchase or repayment option to elect repayment is irrevocable; and (f) such other information as the Company may consider appropriate for inclusion. No failure of the Company to give the foregoing notice shall limit any Holder's right to exercise a repayment right. Section 1203. Deposit of Repayment Price. One Business Day prior to the Repayment Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Repayment Price of and (unless the Repayment Date shall be an Interest Payment Date) accrued and unpaid interest and Additional Interest, if any, on all of the Securities of such series which are to be repaid on that date. Section 1204. Securities Payable on Repayment Date. Holders having duly exercised the option to require purchase or repayment by the Company on any Repayment Date as specified in the form of Security for such series as provided in Section 203, the Securities of such series so to be purchased or repaid shall, on the Repayment Date, become due and payable at the Repayment Price applicable thereto and from and after such date (unless the Company shall default in the payment of the Repayment Price and accrued interest (including any Additional Interest)) such Securities shall cease to bear interest. Upon surrender of any such Security for purchase or repayment in accordance with the terms of such Security, provided the option has been duly exercised and the Security duly surrendered as specified in the form of such Security, such Security shall be paid by the Company at the Repayment Price together with accrued interest (including any Additional Interest) to the Repayment Date; provided, however, that installments of interest (including any Additional Interest) whose Stated Maturity is on or prior to such Repayment Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307. If any Security shall not be paid upon due exercise of the option and surrender thereof for purchase or repayment, the principal (and premium, if any) shall, until paid, bear interest from the Repayment Date at the rate prescribed therefor in such Security. Section 1205. Securities Repaid in Part. Any Security which by its terms may be purchased or repaid by the Company in part at the option of the Holder and which is to be purchased or repaid only in part by the Company shall be surrendered at any office or agency of the Company designated for that purpose pursuant to Section 1002 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the -78- Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unpurchased or unrepaid portion of the principal of the Security so surrendered. ARTICLE THIRTEEN SINKING FUNDS Section 1301. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of any series except as otherwise specified as contemplated by Section 301 for Securities of such series. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of any Securities, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1302. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of such Securities of any series. Section 1302. Satisfaction of Sinking Fund Payments with Securities. The Company (1) may deliver Outstanding Securities of a series (other than any previously called for redemption) and (2) may apply as a credit Securities of a series which have been converted in accordance with their terms or which have been redeemed either at the election of the Company (a) pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to any Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such series or (b) have been purchased or repaid by the Company through the exercise of an option by the Holder as provided for in the terms of such Securities; provided that such Securities have not been previously so credited. Such Securities to be so credited shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. Section 1303. Redemption of Securities for Sinking Fund. Not less than 60 days prior to each sinking fund payment date for any Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 1302 and will also deliver to the Trustee any Securities to be so delivered. Not less than 30 days before each such sinking fund payment date, the Trustee shall select the Securities to be redeemed upon -79- such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 1106 and 1107. ARTICLE FOURTEEN CONCERNING THE HOLDERS Section 1401. Action by Holders. Whenever in this Indenture it is provided that the Holders of a specified percentage in aggregate principal amount of Securities of any series may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action) the fact that at the time of taking any such action the Holders of such specified percentage have joined therein may be evidenced (a) by an instrument or a number of instruments as provided in Section 104, or (b) by the record of the Holders voting in favor thereof at any meeting of Holders duly called and held in accordance with the provisions of Article Fifteen, or (c) by a combination of such instrument or instruments and any such record of such a meeting of Holders. Section 1402. Proof of Record of Holders' Meeting. Subject to the provisions of Sections 601 and 1505, the record of any Holders' meeting shall be proved in the manner provided in Section 1506. Section 1403. Identification of Company-Owned Securities. Upon request of the Trustee, the Company shall furnish to the Trustee promptly an Officers' Certificate listing and identifying all Securities, if any, known by the Company to be owned or held by or for the account of the Company or any other obligor on the Securities or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Securities; and, subject to the provisions of Section 601, the Trustee shall be entitled to accept such Officers' Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination. Section 1404. Revocation of Consents; Future Holders Bound. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 1401, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Securities specified in this Indenture in connection with such action, any holder of a Security the serial number of which is shown by the evidence to be included in the Securities the Holders of which have consented to or are bound by consents to such action may, by filing written notice with the Trustee at its principal office and upon proof of holding as provided in Section 1402, revoke such action so far as concerns such Security. Except as aforesaid any such action taken by the Holder of any Security shall be conclusive and binding upon such Holder and upon all future holders and owners of such Security and of any Security issued on registration of transfer thereof or in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Security or such other Security. -80- ARTICLE FIFTEEN HOLDERS' MEETINGS Section 1501. Purposes of Meetings. A meeting of Holders of any or all series of Securities may be called at any time and from time to time pursuant to the provisions of this Article Fifteen for any of the following purposes: (1) to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to consent to the waving of any default hereunder and its consequences, or to take any other action authorized to be taken by Holders of any or all series of Securities pursuant to any of the provisions of Article Five; (2) to remove the Trustee and nominate a successor trustee with respect to the Securities of such series pursuant to the provisions of Article Six; (3) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 902; or (4) to take any other action authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Securities of such series under any other provision of this Indenture or under applicable law. Section 1502. Call of Meetings By Trustee. The Trustee may at any time call a meeting of Holders of any or all series of Securities to take any action specified in Section 1501, to be held at such time and at such place in the Borough of Manhattan, The City of New York, as the Trustee shall determine. Notice of every meeting of the Holders of any series of Securities, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed to all Holders of Securities of such series at their addresses as they shall appear on the Securities Register. Such notice shall be mailed not less than 20 nor more than 180 days prior to the date fixed for the meeting. Section 1503. Call of Meetings By Company or Holders. In case at any time the Company, pursuant to a resolution of its Board of Directors, or the Holders of at least 25% in aggregate principal amount of the Outstanding Securities of any series, shall have requested the Trustee to call a meeting of the Holders of such series, by written request setting forth in reasonable detail the action proposed to be taken at the meeting and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or such Holders may determine the time and the place in said Borough of Manhattan for such meeting and may call such meeting to take any action authorized in Section 1501, by mailing notice thereof as provided in Section 1502. -81- Section 1504. Qualifications for Voting. To be entitled to vote at any meeting of Holders a Person shall (a) be a Holder of one or more Securities or (b) be a Person appointed by an instrument in writing as proxy by a Holder of one or more Securities. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. Section 1505. Regulations. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders, in regard to proof of the holding of Securities and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit. Except as otherwise permitted or required by any such regulation, the holding of Securities shall be proved in the manner specified in Section 1402 and the appointment of any proxy shall be proved in the manner specified in said Section 1402 or by having the signature of the Person executing the proxy witnessed or guaranteed by any bank, broker or trust company. The Trustee shall, by an instrument in writing, appoint a temporary chairman and a temporary secretary of the meeting, unless the meeting shall have been called by the Company or by Holders as provided in Section 1503, in which case the Company or the Holders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman and a temporary secretary. A permanent chairman and a permanent secretary of the meeting shall be elected by the Persons holding or representing a majority of the Securities represented at the meeting. Subject to the provisions of Section 1404, at any meeting each Holder or proxy shall be entitled to one vote for each $1,000 principal amount of Securities held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the permanent chairman (or the temporary chairman, if no permanent chairman shall have been elected pursuant to this Section) of the meeting to be not Outstanding. Neither the temporary chairman nor the permanent chairman of the meeting shall have a right to vote other than by virtue of Securities held by him or instruments in writing as aforesaid duly designating him as the Person to vote on behalf of other Holders. Any meeting of Holders duly called pursuant to the provisions of Section 1502 or 1503 may be adjourned from time to time by the Persons holding or representing a majority of the Securities represented at the meeting, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice. At any meeting of Holders, the presence of Persons holding or representing Securities in an aggregate principal amount sufficient to take action upon the business for the transaction of which such meeting was called shall be necessary to constitute a quorum; but, if less than a quorum be present, the Persons holding or representing a majority of the Securities represented at the meeting may adjourn such meeting with the same effect for all intents and purposes, as though a quorum had been present. -82- Section 1506. Voting. The vote upon any resolutions submitted to any meeting of Holders shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities or of their representatives by proxy and the serial number or numbers of the Securities held or represented by them. The permanent chairman (or the temporary chairman, if no permanent chairman shall have been elected pursuant to Section 1505) of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the permanent secretary (or the temporary secretary, if no permanent secretary shall have been elected pursuant to Section 1505) of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Holders shall be prepared by the permanent secretary (or the temporary secretary, if no permanent secretary shall have been elected pursuant to Section 1505) of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in Section 1502. The record shall show the serial numbers of the Securities voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and the permanent secretary of the meeting (or if no permanent chairman and/or permanent secretary shall have been elected pursuant to Section 1505, then the temporary chairman and/or the temporary secretary, as the case may be, shall take such action) and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. Section 1507. No Delay of Rights by Meeting. Nothing in this Article Fifteen contained shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Holders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Holders under any of the provisions of this Indenture or of the Securities. ARTICLE SIXTEEN SUBORDINATION OF SECURITIES Section 1601. Securities Subordinate to Senior Indebtedness. The Company covenants and agrees, and each Holder of a Security, by his or her acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article, the indebtedness represented by the Securities and the payment of the principal of (and premium, if any) and interest (including any Additional Interest) on each and all of the Securities of each and every series are hereby expressly made subordinate and subject in right of payment as provided in this Article to the prior payment in full of all Senior Indebtedness. -83- Section 1602. No Payment When Senior Indebtedness in Default; Payment Over of Proceeds Upon Dissolution, Etc. If the Company shall default in the payment of any principal of (or premium, if any), interest on or other amounts payable in respect of any Senior Indebtedness when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of Senior Indebtedness or any trustee therefor, and unless and until such default shall have been cured or waived or shall have ceased to exist or all amounts then due and payable in respect of such Senior Indebtedness shall have been paid in full, no direct or indirect payment (in cash, property, securities (other than newly issued equity or securities of the Company subordinated to Senior Indebtedness), by set-off or otherwise) shall be made or agreed to be made on account of the principal of (or premium, if any) or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities. In the event of (a) the entry of a decree or order by a court having jurisdiction in the premises adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization or winding-up of the Company under the Companies' Creditors Arrangement Act (Canada), the Bankruptcy and Insolvency Act (Canada) or the Winding-Up Act (Canada) or any other bankruptcy, insolvency or analogous laws, or issuing sequestration or process of execution against the Company or any substantial part of its property, or appointing a receiver of the Company or of any substantial part of its property, or ordering the winding-up or liquidation of its affairs, and the continuance of any such decree or order or appointment unstayed, undischarged and in effect for a period of 60 days from the date thereof; or (b) the institution by the Company of proceedings to be adjudicated bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under the Companies' Creditors Arrangement Act (Canada), the Bankruptcy and Insolvency Act (Canada) or the Winding-Up Act (Canada) or any other bankruptcy, insolvency or analogous laws, or the consent by it to the filing of any such petition or to the appointment of a receiver of the Company or of any substantial part of its property, or the making by it of a general assignment for the benefit of creditors, or the Company's admitting in writing its inability to pay its debts generally as they become due or taking corporate action in furtherance of any of the aforesaid purposes, (each such event in (a) or (b), if any, herein sometimes referred to as a "Proceeding"), all Senior Indebtedness (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than equity or subordinated securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which are subordinate, at least to the extent provided in this Article with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Indebtedness at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities of any series shall be paid or delivered directly to the holders of Senior Indebtedness in accordance with the priorities then existing among such holders until all Senior Indebtedness (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full. -84- In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Indebtedness, the Holders of the Securities, together with the holders of any obligations of the Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of (and premium, if any) and interest (including Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, securities or other property, shall be made on account of any capital stock or any obligations of the Company ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than equity or subordinated securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which are subordinate, at least to the extent provided in this Article with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Indebtedness at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), shall be (or payment thereof provided for) received by the Trustee or any Holder before all Senior Indebtedness shall have been paid in full or otherwise in contravention of any of the terms hereof, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Indebtedness at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all such Senior Indebtedness in full, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Indebtedness is hereby irrevocably authorized to endorse or assign the same. The Trustee and the Holders shall take such action (including, without limitation, the delivery of this Indenture to an agent for the holders of Senior Indebtedness or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the Senior Indebtedness at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions. The provisions of this Section shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture. The securing of any obligations of the Company, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities. Section 1603. Payment Permitted If No Default. Nothing contained in this Article or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time, except during the pendency of the conditions described in the first paragraph of Section 1602 or of any Proceeding referred to in Section 1602, from making payments at any time of principal of (and premium, if any) or interest (including -85- any Additional Interest) on the Securities, or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of (and premium, if any) or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge that such payment would have been prohibited by the provisions of this Article. Section 1604. Subrogation to Rights of Holders of Senior Indebtedness. Subject to the payment in full of all amounts due or to become due on all Senior Indebtedness, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Indebtedness, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Indebtedness pursuant to the provisions of this Article (equally and ratably with the holders of all indebtedness of the Company that by its express terms is subordinated to Senior Indebtedness of the Company to substantially the same extent as the Securities are subordinated to the Senior Indebtedness and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Indebtedness) to the rights of the holders of such Senior Indebtedness to receive payments and distributions of cash, securities and other property applicable to the Senior Indebtedness until the principal of (and premium, if any) and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Indebtedness of any cash, securities or other property to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article, and no payments pursuant to the provisions of this Article to the holders of Senior Indebtedness by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Indebtedness, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Indebtedness. Section 1605. Provisions Solely to Define Relative Rights. The provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Indebtedness on the other hand. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of (and premium, if any) and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this Article of the holders of Senior Indebtedness to receive cash, securities and other property otherwise payable or deliverable to the Trustee or such Holder. Section 1606. Trustee to Effectuate Subordination. Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to effectuate -86- the subordination provided in this Article and appoints the Trustee his or her attorney-in-fact for any and all such purposes. Section 1607. No Waiver of Subordination Provisions. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any non-compliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with. Without in any way limiting the generality of the immediately preceding paragraph, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Securities of any series, without incurring responsibility to such Holders of the Securities and without impairing or releasing the subordination provided in this Article or the obligations hereunder of such Holders of the Securities to the holders of Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness or otherwise amend or supplement in any manner Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any Person liable in any manner for the collection of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company and any other Person. Section 1608. Notice to Trustee. The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until the Trustee shall have received written notice thereof from the Company or a holder of Senior Indebtedness or from any trustee, agent or representative therefor; and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Section 601, shall be entitled in all respects to assume that no such facts exist; provided, however, that if a Responsible Officer of the Trustee shall not have received, at least two Business Days prior to the date upon which by the terms hereof any such money may become payable for any purpose (including the payment of the principal of (and premium, if any, on) or interest (including any Additional Interest on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purpose for which such money was received and shall not be affected by any notice to the contrary which may be received by it within two Business Days prior to such date. Subject to the provisions of Section 601, the Trustee shall be entitled to conclusively rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Indebtedness (or a trustee or attorney-in-fact therefor) to establish that such notice has -87- been given by a holder of Senior Indebtedness (or a trustee or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. Section 1609. Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of the Company referred to in this Article, the Trustee, subject to the provisions of Section 601, and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution, winding up or similar case or proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. Section 1610. Trustee Not Fiduciary for Holders of Senior Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders or creditors if it shall in good faith pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article or otherwise. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants or obligations as are specifically set forth in this Article and no implied covenants or obligations with respect to holders of Senior Indebtedness shall be read into this Indenture against the Trustee. Section 1611. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. Nothing in this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section 607. -88- Section 1612. Article Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however, that Section 1611 shall not apply to the Company or any Affiliates of the Company if it or such Affiliate acts as Paying Agent. Section 1613. Effect on Events of Default. The failure to make a payment on account of principal of (and premium, if any) or interest (including any Additional Interest) on the Securities by reason of any provision of this Article shall not be construed as preventing the occurrence of an Event of Default as specified in clauses (1) or (2) of Section 501 (subject to the permitted deferral pursuant to Section 311 of any due date in the case of an Extension Period). Section 1614. Acceleration of Securities. If payment on the Securities is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Indebtedness of the acceleration to the extent required to provide such notice pursuant to the instruments governing such Senior Indebtedness. ARTICLE SEVENTEEN MISCELLANEOUS PROVISIONS Section 1701. Consent to Jurisdiction and Service of Process. The Company irrevocably submits to the jurisdiction of any New York State or Federal court sitting in The City of New York over any suit, action or proceeding arising out of or relating to this Indenture or any Security. The Company irrevocably waives, to the fullest extent permitted by law, any objection which it may have to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in any inconvenient forum. The Company agrees that final judgment in any such suit, action or proceeding brought in such a court shall be conclusive and binding upon the Company and may be enforced in the courts of Canada (or any other courts to the jurisdiction of which the Company is subject) by a suit upon such judgment, provided that service of process is effected upon the Company in the manner specified in the following paragraph or as otherwise permitted by law; provided, however, that the Company does not waive, and the foregoing provisions of this sentence shall not constitute or be deemed to constitute a waiver of, (i) any right to appeal any such judgment, to seek any stay or otherwise to seek reconsideration or review of any such judgment or (ii) any stay of execution or levy pending an appeal from, or a suit, action or proceeding for reconsideration or review of, any such judgment. As long as any of the Securities remain outstanding, the Company will at all times have an authorized agent in the Borough of Manhattan, The City of New York upon whom process -89- may be served in any legal action or proceeding arising out of or relating to the Indenture or any Security. Service of process upon such agent and written notice of such service mailed or delivered to the Company shall to the extent permitted by law be deemed in every respect effective service of process upon the Company in any such legal action or proceeding. The Company hereby appoints CT Corporation System as its agent for such purpose, and covenants and agrees that service of process in any such legal action or proceeding may be made upon it at the office of such agent at 111 Eighth Avenue, New York, New York 10011 (or at such other address in the Borough of Manhattan, The City of New York, as the Company may designate by written notice to the Trustee). The Company hereby consents to process being served in any suit, action or proceeding of the nature referred to in the preceding paragraphs by service upon such agent together with the mailing of a copy thereof by registered or certified mail, postage prepaid, return receipt requested, to the address of the Company set forth in the first paragraph of this instrument or to any other address of which the Company shall have given written notice to the Trustee. The Company irrevocably waives, to the fullest extent permitted by law, all claim of error by reason of any such service (but does not waive any right to assert lack of subject matter jurisdiction) and agrees that such service (i) shall be deemed in every respect effective service of process upon the Company in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by law, be taken and held to be valid personal service upon and personal delivery to the Company. Nothing in this Section shall affect the right of the Trustee or any Holder to serve process in any manner permitted by law or limit the right of the Trustee to bring proceedings against the Company in the courts of any jurisdiction or jurisdictions. Section 1702. Indenture and Securities Solely Corporate Obligations. No recourse under or upon any obligation, covenant or agreement of this Indenture, any supplemental indenture, or of any Security, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, shareholders, officers or directors, as such, of the Company or of any successor corporation, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or any of the Securities or implied therefrom; and that any and all such personal liability, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, shareholder, officer or director, as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of such Securities. -90- Section 1703. Execution in Counterparts. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. -91- IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the day and year first above written. INCO LIMITED By: /s/ Stuart F. Feiner ------------------------------------ Name: Stuart F. Feiner Title: Executive Vice President, General Counsel and Secretary By: /s/ Farokh S. Hakimi ------------------------------------ Name: Farokh S. Hakimi Title: Executive Vice President and Chief Financial Officer THE BANK OF NEW YORK, as Trustee By: /s/ Kisha A. Holder ------------------------------------ Name: Kisha A. Holder Title: Assistant Treasurer -92- ANNEX A-1 FORM OF TRANSFER CERTIFICATE -- RESTRICTED GLOBAL SECURITY TO TEMPORARY REGULATION S GLOBAL SECURITY REGULATION S GLOBAL NOTE CERTIFICATE (for transfers pursuant to Section 305(b)(iii) of the Indenture) THE BANK OF NEW YORK, as Trustee Re: [title of series] Inco Limited (the "Securities") ------------------------------------------------- Reference is hereby made to the Indenture, dated as of March 7, 2003 (the "Indenture"), between Inco Limited (the "Company") and The Bank of New York, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This certificate relates to U.S. $_____________ aggregate principal amount of Securities which are evidenced by the Restricted Global Security (CUSIP No. _________) and held with the Depositary in the name of [insert name of transferor] (the "Transferor"). The Transferor has requested a transfer of such beneficial interest in the Securities to a Person who will take delivery thereof in the form of an equal aggregate principal amount of Securities evidenced by the Temporary Regulation S Global Security (CUSIP No. _____________), which amount, immediately after such transfer, is to be held with the Depositary through Euroclear or Clearstream or both. In connection with such request and in respect of such Securities, the Transferor does hereby certify that such transfer has been effected pursuant to and in accordance with Rule 903 or Rule 904 under the United States Securities Act of 1933, as amended (the "Securities Act"), and accordingly the Transferor does hereby further certify that: (a) the offer of the Securities was not made to a person in the United States; (b) either: (i) at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed that the transferee was outside the United States, (ii) in the case of Rule 903, the transaction was executed in, on or through a physical trading floor of an established foreign securities exchange that is located outside the United States; or (iii) in the case of Rule 904, the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the Transferor nor any person acting on its behalf knows that the transaction was prearranged with a buyer in the United States; A-1-1 (c) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or 904(a) of Regulation S, as applicable; (d) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and (e) upon completion of the transaction, the beneficial interest being transferred as described above will be held with the Depositary through Euroclear or Clearstream or both. We understand that this certificate is required in connection with certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate to any interested party in such proceeding. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and the Initial Purchasers of the Securities under the Purchase Agreement, dated _______ with the Company relating to the Securities. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act. Dated: [Insert Name of Transferor] By: ------------------------------------ Name: Title: (If the Transferor is a corporation, partnership or fiduciary, the title of the Person signing on behalf of such registered owner must be stated.) A-1-2 ANNEX A-2 FORM OF TRANSFER CERTIFICATE -- RESTRICTED GLOBAL SECURITY TO REGULATION S GLOBAL SECURITY REGULATION S GLOBAL NOTE CERTIFICATE (for transfers pursuant to Section 305(b)(iv) of the Indenture) THE BANK OF NEW YORK, as Trustee Re: [title of series] of Inco Limited (the "Securities") ---------------------------------------------------- Reference is hereby made to the Indenture, dated as of March 7, 2003 (the "Indenture"), between Inco Limited (the "Company") and The Bank of New York, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This certificate relates to U.S. $_____________ aggregate principal amount of Securities which are evidenced by the Restricted Global Security (CUSIP No. _________) and held with the Depositary in the name of [insert name of transferor] (the "Transferor"). The Transferor has requested a transfer of such beneficial interest in the Securities to a Person who will take delivery thereof in the form of an equal aggregate principal amount of Securities evidenced by the Regulation S Global Security (CUSIP No. _____________). In connection with such request and in respect of such Securities, the Transferor does hereby certify that: (a) with respect to transfers made in reliance on Regulation S under the Securities Act of 1933, as amended (the "Securities Act"): (i) the offer of the Securities was not made to a person in the United States; (ii) either: (1) at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed that the transferee was outside the United States, (2) in the case of Rule 903, the transaction was executed in, on or through a physical trading floor of an established foreign securities exchange that is located outside the United States; or (3) in the case of Rule 904, the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the Transferor nor any person acting on its behalf knows that the transaction was prearranged with a buyer in the United States; A-2-1 (iii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or 904(a) of Regulation S, as applicable; and (iv) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; or (b) with respect to transfers made in reliance on Rule 144 under the Securities Act, the Securities are being transferred in a transaction permitted by Rule 144 under the Securities Act. We understand that this certificate is required in connection with certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate to any interested party in such proceeding. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and Initial Purchasers of the Securities under the Purchase Agreement, dated _________ with the Company relating to the Securities. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act. Dated: [Insert Name of Transferor] By: ------------------------------------ Name: Title: (If the Transferor is a corporation, partnership or fiduciary, the title of the Person signing on behalf of such registered owner must be stated.) A-2-2 ANNEX B FORM OF TRANSFER CERTIFICATE -- TEMPORARY REGULATION S GLOBAL SECURITY OR REGULATION S GLOBAL SECURITY TO RESTRICTED GLOBAL SECURITY RESTRICTED GLOBAL NOTE CERTIFICATE (for transfers pursuant to Section 305(b)(v) of the Indenture) THE BANK OF NEW YORK, as Trustee Re: [title of series] of Inco Limited (the "Securities") ---------------------------------------------------- Reference is hereby made to the Indenture, dated as of March 7, 2003 (the "Indenture"), between Inco Limited (the "Company") and The Bank of New York, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This certificate relates to U.S. $_________________ aggregate principal amount of Securities which are evidenced by the Temporary Regulation S Global Security or the Regulation S Global Security (CUSIP No. _________) and held with the Depositary through Euroclear or Clearstream or both in the name of [insert name of transferor] (the "Transferor") during the Restricted Period. The Transferor has requested a transfer of such beneficial interest in the Securities to a Person that will take delivery thereof in the form of an equal principal amount of Securities evidenced by the Restricted Global Security (CUSIP No. _________). In connection with such request and in respect of such Securities, the Transferor does hereby certify that such transfer has been effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended, and accordingly the Transferor does hereby further certify that the Securities are being transferred to a person that the Transferor reasonably believes is purchasing the Securities for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A and the Securities have been transferred in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the United States. B-1 We understand that this certificate is required in connection with certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate to any interested party in such proceeding. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and the Initial Purchasers of the Securities under the Purchase Agreement, dated __________ with the Company relating to the Securities. Dated: [Insert Name of Transferor] By: ------------------------------------ Name: Title: (If the Transferor is a corporation, partnership or fiduciary, the title of the Person signing on behalf of such registered owner must be stated.) B-2 ANNEX C-1 FORM OF CERTIFICATION TO BE GIVEN BY HOLDERS OF BENEFICIAL INTEREST IN A TEMPORARY REGULATION S GLOBAL SECURITY TO EUROCLEAR OR CLEARSTREAM OWNER SECURITIES CERTIFICATION [EUROCLEAR BANK S.A./N.V., as operator of the Euroclear System] [or] [CLEARSTREAM BANKING, SOCIETE ANONYME] Re: [title of series] of Inco Limited (the "Securities") ---------------------------------------------------- Reference is hereby made to the Indenture, dated as of March 7, 2003 (the "Indenture"), between Inco Limited (the "Company") and The Bank of New York, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This certificate relates to U.S. $_________________ aggregate principal amount of Securities which are evidenced by the Temporary Regulation S Global Security (CUSIP No. _________) and held with the Depositary through Euroclear or Clearstream or both in the name of [insert name of holder] (the "Holder"). In respect of such Securities, the Holder does hereby certify that as of the date hereof, the above-captioned Securities are beneficially owned by non-U.S. Persons and are not held for purposes of resale directly or indirectly to a U.S. Person or to a person within the United States or its possessions. As used herein, "United States" means the United States of America, its territories and possessions, any state of the United States, and the District of Columbia. As used herein, U.S. Person has the meaning assigned to it in Rule 902 under the Securities Act of 1933, as amended. We undertake to advise you immediately by tested telex on or prior to the date on which you intend to submit your certification relating to the Securities held by you for our account in accordance with your operating procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certification applies as of such date. C-1-1 We understand that this certification is required in connection with certain securities laws in the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorize you to produce this certification or a copy thereof to any interested party in such proceedings. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and the Initial Purchasers of the Securities under the Purchase Agreement, dated ________ with the Company relating to the Securities. Date:______________, ____[1] ------------------------------------- [Name of Person Making Certification] - --------------------------- [1] to be dated no earlier than 15 days prior to the transfer or exchange date to which the certification relates. C-1-2 ANNEX C-2 FORM OF CERTIFICATION TO BE GIVEN BY EUROCLEAR BANK S.A./N.V., AS OPERATOR OF THE EUROCLEAR SYSTEM, OR CLEARSTREAM BANKING, SOCIETE ANONYME DEPOSITARY SECURITIES CERTIFICATION THE BANK OF NEW YORK., as Trustee Re: [title of series] of Inco Limited (the "Securities") ---------------------------------------------------- Reference is hereby made to the Indenture, dated as of March 7, 2003 (the "Indenture"), between Inco Limited (the "Company") and The Bank of New York, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This is to certify that, based solely on certifications we have received in writing, by tested telex or by electronic transmission from member organizations appearing in our records as persons being entitled to a portion of the principal amount set forth below (our "Member Organizations") substantially to the effect set forth in the Indenture, as of the date hereof, $__________ aggregate principal amount of the above-captioned Securities are beneficially owned by non-U.S. Persons and are not held for purposes of resale directly or indirectly to a U.S. Person or to a person within the United States or its possessions. As used herein, "United States" means the United States of America, its territories and possessions, any state of the United States, and the District of Columbia. As used herein, U.S. Person has the meaning assigned to it in Rule 902 under the Securities Act of 1933, as amended. We further certify (i) that we are not making available herewith for exchange any portion of the Temporary Regulation S Global Security excepted in such certifications and (ii) that as of the date hereof we have not received any notification from any of our Member Organizations to the effect that the statements made by such Member Organizations with respect to any portion of the part submitted herewith for exchange are no longer true and cannot be relied upon as of the date hereof. We understand that this certification is required in connection with certain securities laws of the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorize you to produce this certification or a copy thereof to any interested party in such proceedings. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and the Initial Purchasers of the Securities under the Purchase Agreement, dated _________ with the Company relating to the Securities. C-2-1 Dated: By: ------------------------------------ [EUROCLEAR BANK S.A./N.V., as operator of the Euroclear System] [or] [CLEARSTREAM BANKING, SOCIETE ANONYME] C-2-2 ANNEX C-3 FORM OF CERTIFICATION TO BE GIVEN BY TRANSFEREE OF BENEFICIAL INTEREST IN A TEMPORARY REGULATION S GLOBAL SECURITY AFTER THE RESTRICTED PERIOD TRANSFEREE SECURITIES CERTIFICATION [EUROCLEAR BANC S.A./N.V., as Operator of the Euroclear Clearance system] [or] [CLEARSTREAM BANKING, SOCIETE ANONYME, LUXEMBOURG] Re: [title of series] of Inco Limited (the "Securities") ---------------------------------------------------- Reference is hereby made to the Indenture, dated as of March 7, 2003 (the "Indenture"), between Inco Limited (the "Company") and The Bank of New York, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. For purposes of acquiring a beneficial interest in the Temporary Regulation S Global Security, the undersigned certifies that it is not a U.S. Person as defined by Regulation S under the Securities Act of 1933, as amended. We undertake to advise you promptly by tested telex on or prior to the date on which you intend to submit your certification relating to the Securities held by you in which we intend to acquire a beneficial interest in accordance with your operating procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certification applies as of such date. We understand that this certificate is required in connection with certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate to any interested party in such proceeding. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and the Initial Purchasers of the Securities under the Purchase Agreement, dated _________ with the Company relating to the Securities. Dated: By: ------------------------------------ As, or as agent for, the beneficial acquiror of the Securities to which this certificate relates. C-3-1 ANNEX D-1 FORM OF TRANSFER CERTIFICATE -- NON-GLOBAL RESTRICTED SECURITY TO RESTRICTED GLOBAL SECURITY RESTRICTED GLOBAL NOTE CERTIFICATE (for transfers pursuant to Section 305(b)(vi) of the Indenture) THE BANK OF NEW YORK, as Trustee Re: [title of series] of Inco Limited (the "Securities") ---------------------------------------------------- Reference is hereby made to the Indenture, dated as of March 7, 2003 (the "Indenture"), between Inco Limited (the "Company") and The Bank of New York, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This certificate relates to $_____________ aggregate principal amount of Securities held in definitive form (CUSIP No. _______) by [insert name of transferor] (the "Transferor"). The Transferor has requested a transfer of such Securities to a Person that will take delivery in the form of an equal principal amount of Securities evidenced by the Restricted Global Security (CUSIP No. ___________). In connection with such request and in respect of such Securities, the Transferor does hereby certify that such transfer has been effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended, and accordingly the Transferor does hereby further certify that the Securities are being transferred to a person that the Transferor reasonably believes is purchasing the Securities for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A and the Securities have been transferred in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the United States. We understand that this certificate is required in connection with certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate to any interested party in such proceeding. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and the Initial Purchasers of the Securities under the Purchase Agreement, dated ________ with the Company relating to the Securities. Dated: [Insert Name of Transferor] By: ------------------------------------ Name: Title: D-1-1 ANNEX D-2 FORM OF CERTIFICATE -- NON-GLOBAL RESTRICTED SECURITY TO REGULATION S GLOBAL SECURITY OR TEMPORARY REGULATION S GLOBAL SECURITY REGULATION S GLOBAL NOTE CERTIFICATE (for transfers pursuant to Section 305(b)(vi) of the Indenture) THE BANKOF NEW YORK, as Trustee Re: [title of series] of Inco Limited (the "Securities") ---------------------------------------------------- Reference is hereby made to the Indenture, dated as of March 7, 2003 (the "Indenture"), between Inco Limited (the "Company") and The Bank of New York, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This certificate relates to $____________ aggregate principal amount of Securities held in definitive form (CUSIP No. _____) by [insert name of transferor] (the "Transferor"). The Transferor has requested an exchange or transfer of such Securities to a Person that will take delivery in the form of an equal principal amount of Securities evidenced by the Regulation S Global Security or the Temporary Regulation S Global Security (CUSIP No. ___________). In connection with such request and in respect of such Securities, the Transferor does hereby certify that such transfer has been effected pursuant to and in accordance with (A) Rule 903 or Rule 904 under the Securities Act of 1933, as amended (the "Act"), or (B) Rule 144 under the Act, if available, and accordingly the Transferor does hereby further certify that: (a) if the transfer has been effected pursuant to Rule 903 or Rule 904: (i) the offer of the Securities was not made to a person in the United States; (ii) either: (1) at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed that the transferee was outside the United States, (2) in the case of Rule 903, the transaction was executed in, on or through a physical trading floor of an established foreign securities exchange that is located outside the United States; or (3) in the case of Rule 904, the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the Transferor nor any person acting on its behalf D-2-1 knows that the transaction was prearranged with a buyer in the United States; (iii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or 904(b) of Regulation S, as applicable; (iv) the transaction is not part of a plan or scheme to evade the registration requirements of the Act; and (v) if such transfer is to occur during the Restricted Period, upon completion of the transaction, the beneficial interest being transferred as described above was held with the Depositary through [Euroclear] [Clearstream]; or (b) if the transfer has been effected pursuant to Rule 144: (i) more than two years has elapsed since the date of the closing of the initial placement of the Securities pursuant to the Purchase Agreement, dated ________, between the Company and the representatives of the several purchasers named therein; and (ii) the Securities have been transferred in a transaction permitted by Rule 144 and made in accordance with any applicable securities laws of any state of the United States. We understand that this certificate is required in connection with certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate to any interested party in such proceeding. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and the Initial Purchasers of the Securities under the Purchase Agreement, dated _________ with the Company relating to the Securities. Dated: [Insert Name of Transferor] By: ------------------------------------ Name: Title: D-2-2 ANNEX E INSTITUTIONAL ACCREDITED INVESTOR LETTER Inco Limited 145 King Street West, Suite 1500 Toronto, Ontario M5H4B7 Canada [Insert name and address of initial purchasers] The Bank of New York Ladies and Gentlemen: In connection with our proposed purchase of [title of securities] (collectively, the "Securities") of Inco Limited (the "Issuer"), we confirm that: 1. We are an "accredited investor" (as defined in Rule 501(a) (1), (2), (3) or (7) of Regulation D under the Securities Act of 1933, as amended (the "Securities Act"), purchasing for our own account, and we have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Securities, and we are able to bear the economic risk of our investment. 2. We understand and acknowledge that the Securities have not been registered under the Securities Act or any other applicable securities law, and that the Securities may not be offered or sold except as permitted in the following paragraphs. We agree that if we should sell any Securities, we will do so only (A) to the Issuer or any subsidiary thereof, (B) pursuant to an effective registration statement under the Securities Act, (C) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (D) outside the Untied States in accordance with Rule 904 of Regulation S under the Securities Act, (E) to an institutional accredited investor (as defined in the indenture governing the Securities (the "Indenture")) that, prior to such transfer, furnishes to the trustee under the Indenture a signed letter containing certain representations and agreements relating to the restrictions on transfer of the Securities (the form of which letter can be obtained from the trustee) and in a principal amount of at least $250,000, or (F) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available) or any other available exemption from the registration requirements of the Securities Act, and we further agree to provide to any person purchasing any of the Securities from us a notice advising such purchaser that resales of the Securities are restricted as stated herein. 3. We understand that, on any proposed resale of any Securities, we may be required to furnish to the Issuer and the trustee a legal opinion satisfactory to them and such certifications and other information as the Issuer may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Securities purchased by us will bear a legend to the foregoing effect. E-1 4. We are acquiring the Securities for investment purposes and not with a view to distribution thereof or with any present intention of offering or selling any Securities, except as permitted above. You are entitled to rely upon this letter and you are irrevocably authorized to produce this letter or a copy hereto to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Very truly yours, By: Name: Title: Date: Securities to be Purchased: $__________ principal amount of the $___Securities E-2 ANNEX F FORM OF INSTRUCTION FOR EXCHANGE (For use prior to the exchange of a Temporary Regulation S for one or more Restricted Securities.) EXCHANGE INSTRUCTIONS INCO LIMITED [TITLE OF SERIES] (THE "SECURITIES") Pursuant to Section 305(b)(vii)(2) of the Indenture, dated as of March 7, 2003 (the "Indenture"), between Inco Limited and The Bank of New York, as Trustee, [Name of Initial Purchaser] hereby requests that U.S.$___________ aggregate principal amount of the above-captioned Securities held by you for our account in the Temporary Regulation S Security (CUSIP No. ______) (as defined in the Indenture) be exchanged for one or more Restricted [Global] Securities [(CUSIP No. _______)] in the denominations and registered in the names of the holders requested as set forth below: Denominations Registered Name - ----------------------- --------------------------------- - ----------------------- --------------------------------- - ----------------------- --------------------------------- - ----------------------- --------------------------------- Dated: [Name of Initial Purchaser] --------------------- By: ------------------------ EX-99.7.2 10 sc0126c.txt EXHIBIT 7.2: FIRST SUPPLEMENTAL INDENTURE EXECUTION COPY ================================================================================ INCO LIMITED TO THE BANK OF NEW YORK, Trustee ______________ FIRST SUPPLEMENTAL INDENTURE Dated as of March 7, 2003 ______________ SUPPLEMENT TO SUBORDINATED INDENTURE DATED MARCH 7, 2003 3 1/2% Subordinated Convertible Debentures due 2052 ================================================================================ TABLE OF CONTENTS Page No. -------- ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 101. Definitions.....................................................1 Section 102. Section References..............................................6 ARTICLE TWO GENERAL TERMS AND CONDITIONS OF THE DEBENTURES Section 201. Title of the Subordinated Debentures............................6 Section 202. Stated Maturity.................................................6 Section 203. Limit on Amount of Series.......................................6 Section 204. Interest........................................................7 Section 205. Form............................................................7 Section 206. Company's Right to Elect Manner of Payment in Certain Events..................................................7 Section 207. Payment by Issuance of Common Shares............................8 Section 208. Fractional Shares..............................................10 Section 209. Other Provisions...............................................10 ARTICLE THREE SUBORDINATED DEBENTURE FORMS Section 301. Form of Face of Subordinated Debenture.........................10 Section 302. Form of Reverse of Subordinated Debenture......................14 Section 303. Form of Conversion Notice......................................18 Section 304. Form of Change in Control Purchase Notice......................19 Section 305. Legends For Subordinated Debentures............................21 ARTICLE FOUR CONVERSION Section 401. Conversion Privilege; Conversion Rate..........................21 Section 402. Conversion Conditions..........................................22 Section 403. Exercise of Conversion Privilege...............................24 Section 404. Adjustment of Conversion Rate and Conversion Price.............26 Section 405. Reclassification, Reorganization, Sale and Further Adjustment of Conversion Rate..................................30 Section 406. Notice of Certain Events.......................................32 Section 407. Taxes on Conversion............................................33 Section 408. Company to Provide Shares......................................33 Section 409. Rights under Rights Agreement..................................34 -2- ARTICLE FIVE REDEMPTION AT THE OPTION OF THE COMPANY Section 501. Right to Redeem................................................34 Section 502. Redemption Tax Event...........................................35 Section 503. Conversion Arrangements on Call for Redemption.................35 Section 504. No Sinking Fund................................................36 ARTICLE SIX CHANGE IN CONTROL PURCHASE OFFER Section 601. Offer to Purchase Upon a Change in Control.....................36 Section 602. Notices; Method of Exercising Purchase Election, Etc...........36 Section 603. Withdrawal of Change in Control Purchase Notice................39 ARTICLE SEVEN COVENANTS Section 701. Additional Amounts.............................................40 Section 702. Amendment of Rights Agreement..................................41 ARTICLE EIGHT MISCELLANEOUS PROVISIONS Section 801. Trustee........................................................41 Section 802. Ratification...................................................41 Section 803. Governing Law..................................................42 Section 804. Execution in Counterparts......................................42 -3- EXECUTION COPY FIRST SUPPLEMENTAL INDENTURE, dated as of March 7, 2003, between INCO LIMITED, a corporation duly organized and existing under the laws of Canada (herein called the "Company"), having its principal office at 145 King Street West, Suite 1500, Toronto, Ontario Canada M5H 4B7, and THE BANK OF NEW YORK, a New York banking corporation duly organized and existing under the laws of the State of New York, as Trustee (herein called the "Trustee"). RECITALS The Company has executed and delivered to the Trustee the Subordinated Indenture, dated as of March 7, 2003 (the "Original Indenture"), providing for the issuance from time to time of one or more series of the Company's debentures, notes or other evidences of indebtedness as provided in the Original Indenture (herein and in the Original Indenture called the "Securities"). Section 901 of the Original Indenture provides, among other things, that the Company and the Trustee may enter into indentures supplemental to the Original Indenture for, among other things, the purpose of establishing the form or terms of Securities of any series as permitted by Sections 201 and 301 of the Original Indenture. The Company desires to create a series of Securities in an aggregate principal amount of $220,000,000 (which amount may be increased by up to $30,000,000 to the extent the Over-Allotment Option (as hereafter defined) is exercised), which series shall be designated the 3 1/2% Subordinated Convertible Debentures due 2052 (the "Subordinated Debentures"), and all action on the part of the Company necessary to authorize the issuance of the Subordinated Debentures under the Original Indenture and this First Supplemental Indenture has been duly taken. All acts and things necessary to make the Subordinated Debentures, when executed by the Company and completed, authenticated and delivered by the Trustee as provided in the Original Indenture and this First Supplemental Indenture, the valid and binding obligations of the Company, have been done and performed. NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Subordinated Debentures by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Subordinated Debentures, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 101. Definitions. For all purposes of the Original Indenture and this First Supplemental Indenture relating to the Subordinated Debentures, except as otherwise expressly provided herein or unless the context otherwise requires, the terms defined in this Article have the meanings assigned to them in this Article. Each capitalized term that is used in the Original Indenture and this First Supplemental Indenture but not defined herein shall have the meaning specified in the Original Indenture. "Additional Amounts" has the meaning set forth in Section 701. "Applicable Price" means, in the event of any Reclassification, Reorganization or Sale, the average of the Closing Sale Price for the Common Shares (determined as set forth in Section 404(f)) for each of the last ten Trading Days prior to (x) the record date for the determination of the holders of Common Shares entitled to receive shares of common equity, other securities or other property or assets (including cash) in connection with such Reclassification, Reorganization or Sale, or (y) if there is no such record date, the date upon which the holders of Common Shares shall have the right to receive shares of common equity, other securities or other property or assets (including cash) in connection with such Reclassification, Reorganization or Sale. "Average Market Price" means, at any date, the average of the Closing Sale Prices per share of the Common Shares for the five Trading-Day period ending on the third Business Day prior to the date in question (if the third Business Day prior to the date in question is a Trading Day or, if not, then on the last Trading Day prior thereto), appropriately adjusted to take into account the occurrence, during the period commencing on the first of such five Trading-Day period and ending on such date, of any events that would result in an adjustment of the Conversion Rate with respect to the Common Shares pursuant to this First Supplemental Indenture. "Canadian Taxes" has the meaning set forth in Section 701. "Change in Control" shall be deemed to have occurred at such time as (i) any person (as the term "person" is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act), other than the Company, any Subsidiary or their Affiliates (or their legal representatives) or any employee benefit plan of the Company or any Subsidiary, files or is required to file a Schedule 13D or Schedule TO (or any successor schedule, form or report under the Exchange Act) disclosing that such person has become the beneficial owner (as the term "beneficial owner" is used in Rule 13d-3 under the Exchange Act) of 50% or more of the total number of votes attached to the Voting Securities then outstanding, (ii) any offeror (as the term "offeror" is defined in Section 89(1) of the Securities Act (Ontario) for the purpose of Section 101 of the Securities Act (Ontario), or any successor provision to either of the foregoing) files or is required to file a report with any securities commission or securities regulatory authority in Canada, disclosing that the offeror has acquired beneficial ownership (within the meaning of the Securities Act (Ontario)) of, or the power to exercise control or direction over, or securities convertible into, any voting or equity shares of the Company that, together with such offeror's securities (as the term "offeror's securities" is defined in Section 89(1) of the Securities Act (Ontario) or any successor provision thereto in relation to the voting or equity shares of the Company) would constitute voting or equity shares of the Company representing more than 50% of the total number of votes attached to all Voting Securities of the Company then outstanding, or (iii) there is consummated any consolidation, merger, amalgamation, statutory arrangement (involving a business combination) or similar transaction of the Company (A) in which the Company is not the continuing or surviving corporation or (B) pursuant to which the Common Shares would be redeemed, changed -2- or converted into or exchanged for cash, securities or other property, other than (in each case) an amalgamation, consolidation, statutory arrangement (involving a business combination), merger or similar transaction of the Company in which the holders of the Voting Securities of the Company immediately prior to the amalgamation, consolidation, statutory arrangement, merger or similar transaction have, directly or indirectly, more than 50% of the Voting Securities of the continuing or surviving corporation immediately after such transaction. "Change in Control Purchase Date" has the meaning set forth in Section 302. "Change in Control Purchase Notice" has the meaning set forth in Section 302. "Change in Control Purchase Offer" has the meaning set forth in Section 601. "Change in Control Purchase Offer Notice" has the meaning set forth in Section 302. "Change in Control Purchase Price" has the meaning set forth in Section 302. "Close of Business" means, as of any determination date, 5:00 p.m., New York City time, on such determination date. "Closing Sale Price" of the Common Shares on any date means the closing sale price per Common Share (or, if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and average ask prices) on such date as reported in composite transactions for the principal United States securities exchange on which the Common Shares are traded (currently the New York Stock Exchange) or, if the Common Shares are not listed on a United States national or regional securities exchange, as reported by the Nasdaq National Market or, if no such price is reported, as reported by the principal non-United States market on which the Common Shares are traded (currently the Toronto Stock Exchange). To the extent such price is in Canadian currency, it shall be converted into U.S. dollars based on the Bank of Canada noon exchange rate as reported for conversion into U.S. dollars on such date. In the absence of such quotation, the Company will determine the Closing Sale Price on the basis of such quotation as the Company considers appropriate. "Code" means the United States Internal Revenue Code of 1986, as amended. "Common Shares" includes any shares of any class of the Company, which has voting rights, no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which is not subject to redemption by the Company. However, subject to the provisions of Section 405, shares issuable on conversion, redemption, purchase or at Maturity of Subordinated Debentures shall include only shares of the class designated as Common Shares of the Company at the date of this instrument or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which are not subject to redemption by the Company; provided that, if at any time there is more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. -3- "Company Notice" has the meaning set forth in Section 206(c). "Company Notice Date" means a date that is not less than 20 Business Days prior to the Stated Maturity or the Redemption Date or 29 Business Days prior to the Change in Control Purchase Date, as applicable. "Conversion Agent" means any Person authorized by the Company to convert Subordinated Debentures in accordance with Article Four. The Company has initially appointed the Trustee as its Conversion Agent, which shall maintain an office or agency in the Borough of Manhattan, The City of New York, New York. "Conversion Amount" means the number of Common Shares to be delivered pursuant to a conversion under Article Four. "Conversion Consideration" means the Conversion Amount or, where the Company has elected to satisfy its obligation to deliver the Conversion Amount in whole or in part in cash (other than in respect of a fraction of a Common Share), the amount of such cash together with the Common Shares, if any, deliverable in satisfaction of the Conversion Amount, in each case including any Additional Amounts. "Conversion Date" has the meaning set forth in Section 403(a). "Conversion Notice" has the meaning set forth in Section 403(a). "Conversion Price" at any time shall equal $1,000 divided by the Conversion Rate in effect at such time. "Conversion Rate" means the number of Common Shares issuable upon conversion per $1,000 aggregate principal amount of a Debenture, which shall initially be 38.4423 Common Shares, as adjusted pursuant to Article Four hereof. "Ex-Dividend Time" has the meaning set forth in Section 402(b). "Excluded Holder" has the meaning set forth in Section 701. "Expiration Date" has the meaning set forth in Section 404(e). "Extension Period" has the meaning set forth in Section 301(a). "Indenture" means the Original Indenture as supplemented by the First Supplemental Indenture, as may be amended or supplemented from time to time. "Interest Payment Date" has the meaning set forth in Section 204. "Option Exercise Date" has the meaning set forth in Section 302. "Over-Allotment Option" means the option granted to the initial purchasers pursuant to the Purchase Agreement, dated as of March 4, 2003, between the Company and the initial purchasers named therein, to purchase Additional Debentures (as defined therein) in accordance with the terms thereof. -4- "Prescribed Security" means a security prescribed for purposes of clause 212(1)(b)(vii)(E) of the Tax Act. "Purchased Shares" has the meaning set forth in Section 404(e). "Purchaser Share Price" means, with respect to any Reclassification, Reorganization or Sale, the average of the Closing Sale Price for the common equity (determined as set forth for Common Shares in Section 404(f)) received in such Reclassification, Reorganization or Sale for each of the last ten Trading Days prior to (x) the record date for the determination of the holders of Common Shares entitled to receive such common equity, or (y) if there is no such record date, the date upon which the holders of the Common Shares shall have the right to receive such common equity. "Reclassification" means any reclassification of the Common Shares (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination). "Redemption Notice" shall mean any notice of redemption delivered by the Company pursuant to Section 1104 of the Original Indenture. "Redemption Price" has the meaning set forth in Section 302. "Redemption Tax Event" means (a) any amendment to or change after March 4, 2003 (including any announced prospective change) in the laws (or any regulations thereunder) of Canada or any political subdivision or taxing authority thereof or therein, as applicable, or (b) any change in an interpretation or application of such laws or regulations after March 4, 2003 by any legislative body, court, governmental agency, taxing authority or regulatory authority (including the enactment of any legislation and the publication of any judicial decision or regulatory or administrative determination), in either case, as a result of which the Company has or would become obligated to pay Additional Amounts that are more than de minimis to the Holder of any Subordinated Debenture, and such obligations cannot be avoided by the Company taking reasonable measures available to it. "Reorganization" means a consolidation, merger, amalgamation or statutory arrangement or similar transaction involving the Company. "Repurchasers" has the meaning set forth in Section 503. "Rights" means Rights as defined in the Rights Agreement. "Rights Agreement" means the Shareholder Rights Plan Agreement dated as of September 14, 1998, as amended as of April 28, 1999 and amended and restated as of April 17, 2002, between the Company and CIBC Mellon Trust Company, as Rights Agent, as the same may be amended or replaced from time to time. "Sale" means any sale or conveyance of the property and assets of the Company as an entirety or substantially as an entirety. -5- "Subordinated Debenture Payment" means any of the following payments, in cash or Common Shares or a combination thereof, with respect to the Subordinated Debentures: the principal amount, Redemption Price, Change in Control Purchase Price and interest on any Subordinated Debenture, in each case including any Additional Amounts. "Subordinated Debenture Payment Date" means the date on which any Subordinated Debenture Payment is to be made hereunder. "Tax Act" means the Income Tax Act (Canada) as amended from time to time. "Trading Days" with respect to Common Shares means (i) if the Common Shares are listed or admitted for trading on any national securities exchange, days on which such national securities exchange is open for business or (ii) if the Common Shares are quoted on the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation System or any similar system of automated dissemination of quotations of securities prices, days on which trades may be made on such system. "Trading Price" has the meaning set forth in Section 402(b). "Voting Securities" means the Company's share capital entitled to vote in the election of the directors of the Company, either under all circumstances or under circumstances that have occurred and are continuing. Section 102. Section References. Each reference to a particular section or article set forth in this First Supplemental Indenture shall, unless the context otherwise requires, refer to this First Supplemental Indenture. ARTICLE TWO GENERAL TERMS AND CONDITIONS OF THE DEBENTURES Section 201. Title of the Subordinated Debentures. The Subordinated Debentures shall be known and designated as the "3 1/2% Subordinated Convertible Debentures due 2052" of the Company. Section 202. Stated Maturity. The Stated Maturity of the Subordinated Debentures shall be March 14, 2052. Section 203. Limit on Amount of Series. The aggregate principal amount of Subordinated Debentures which may be authenticated and delivered under this First Supplemental Indenture is limited to $220,000,000 (which amount may be increased by up to $30,000,000 to the extent the Over-Allotment Option is exercised), except for Subordinated Debentures authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Subordinated Debentures pursuant to Section 304, 305, 306, 906, 1107 or 1205 of the Original Indenture. -6- Section 204. Interest. The Subordinated Debentures shall bear interest at a rate of 3 1/2% per annum on the principal amount from the Issue Date or from the most recent Interest Payment Date to which interest has been paid or duly provided for, payable semi-annually in arrears on March 14 and September 14 of each year (each, an "Interest Payment Date"), commencing September 14, 2003, computed on a semi-annual bond equivalent basis using a 360-day year composed of twelve 30-day months, to the Persons in whose names the Subordinated Debentures are registered at the Close of Business on the Regular Record Date for such interest, which shall be March 1 or September 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. The Company shall have the right to defer payments of interest on any Interest Payment Date pursuant to Section 311 of the Original Indenture. Section 205. Form. (a) The Subordinated Debentures, offered and sold in their initial distribution in reliance on Rule 144A, on original issuance, shall be issued in the form of a Restricted Global Security registered in the name of DTC, as Depositary, or its nominee, and deposited with the Trustee, as custodian for DTC. (b) DTC shall serve as the initial Depositary for the Global Security. (c) Unless and until it is exchanged for definitive Subordinated Debentures in registered form in accordance with the terms of the Original Indenture, a Global Security may be transferred, in whole but not in part, only to another nominee of the Depositary, or to a successor Depositary selected or approved by the Company or to a nominee of such successor Depositary; provided that interests in the Restricted Global Security may be exchanged for interests in a Global Security that is a Registered Security registered in the name of the Depositary or a nominee of the Depositary in accordance with the terms of the Original Indenture. Section 206. Company's Right to Elect Manner of Payment in Certain Events. (a) The Company may satisfy its obligation to pay the principal amount, Redemption Price and Change in Control Purchase Price with respect to any Subordinated Debentures in cash, Common Shares, or any combination thereof as provided in this Section 206 and in Section 207 and Articles Five and Six. (b) The Company may satisfy its obligations to issue Common Shares on a Conversion Date by paying cash or any combination of cash and Common Shares as provided in Article Four. (c) The Company shall designate in the Redemption Notice, the Change in Control Purchase Offer Notice or, with respect to the principal amount, a written notice (the "Company Notice") delivered to Holders (and to beneficial owners as required by applicable law) no later than the applicable Company Notice Date: (i) whether the Company will redeem, pay or purchase the Subordinated Debentures for cash or Common Shares or a combination thereof, -7- (ii) if a combination thereof, the percentages of the applicable Subordinated Debenture Payment in respect of which it will deliver cash and Common Shares, and (iii) if any portion will be redeemed, paid or purchased for Common Shares, the method of calculating the Average Market Price; provided that the Company will deliver cash for fractional interests in Common Shares. (d) Each Holder whose Subordinated Debentures are purchased or redeemed, or as to which a payment is made, at any due date shall receive the same percentage of cash or Common Shares in payment of the applicable Subordinated Debenture Payment for such Subordinated Debentures, except: (i) as provided in Section 208 with regard to the payment of cash in lieu of fractional Common Shares, and (ii) in the event that the Company is unable to purchase or make a payment with respect to the Subordinated Debentures of a Holder or Holders for Common Shares because any necessary qualifications or registrations of the Common Shares under applicable state securities laws cannot be obtained, the Company may purchase or make the payment with respect to the Subordinated Debentures of such Holder or Holders for cash. (e) The Company may not change its election with respect to the consideration (or components or percentages of components thereof) to be paid once the Company has given the Redemption Notice, the Change in Control Purchase Offer Notice or the Company Notice, as applicable, except in the event of a failure to satisfy, prior to the Close of Business at Stated Maturity, Redemption Date or Change in Control Purchase Date, as applicable, any condition to the payment of the applicable Subordinated Debenture Payment, in whole or in part, in Common Shares. Section 207. Payment by Issuance of Common Shares. (a) If the Company elects to make all or part of any Subordinated Debenture Payment by the issuance of any Common Shares at Stated Maturity or on any Redemption Date and Change in Control Purchase Date, as applicable, in accordance with Section 206, the applicable Subordinated Debenture Payment, or the specified percentage thereof indicated in the notice provided pursuant to Section 206(c), shall be paid by the Company by the issuance of a number of Common Shares equal to the quotient obtained by dividing (i) the amount of cash to which the Holders would have been entitled had the Company elected to pay all or such specified percentage, as the case may be, of such Subordinated Debenture Payment in cash by (ii) the Average Market Price. (b) The Company's right to exercise its election to make all or part of any Subordinated Debenture Payment pursuant to Section 206 and this Section 207 through the issuance of Common Shares shall be conditioned upon: -8- (1) the Company's not having previously delivered a Redemption Notice, Change in Control Purchase Notice or Company Notice electing to make such Subordinated Debenture Payment entirely in cash and its satisfaction of the notice requirements set forth in Section 206(c); (2) such Common Shares being listed on a principal U.S. or Canadian securities exchange or quoted on the Nasdaq National Market (or a similar U.S. system for automated dissemination of quotations of securities); (3) the registration of such Common Shares under the Securities Act and the Exchange Act, if required for the initial issuance thereof; (4) any necessary qualification or registration under applicable state securities laws or the availability of an exemption from such qualification and registration; (5) the information necessary to calculate the Average Market Price is published daily in The Wall Street Journal or another newspaper of U.S. national circulation or on the Company's website or through such other public medium as the Company may use at such time; and (6) the receipt by the Trustee of an Officers' Certificate and an Opinion of Counsel each stating that (A) the terms of the issuance of the Common Shares are in conformity with the Indenture and (B) the Common Shares to be issued by the Company in payment of the applicable Subordinated Debenture Payment have been duly authorized and, when issued, will be fully paid and non-assessable and, to the best of such counsel's knowledge, free from preemptive rights, and, in the case of such Officers' Certificate, stating that conditions (1) through (5) above have been satisfied and, in the case of such Opinion of Counsel, stating that conditions (3) and (4) above have been satisfied. (c) The Officers' Certificate referred to in paragraph (5) above shall also (i) set forth the number of Common Shares to be issued for each $1,000 principal amount of Subordinated Debentures and the Closing Sale Price of the Common Shares on each Trading Day during the period in which the Average Market Price is calculated, and (ii) if delivered in connection with a Company Notice, be delivered to the Trustee at least three Business Days before the Company Notice Date and specify (A) the information required to be included in the Company Notice pursuant to Section 206 and (B) whether the Company desires the Trustee to send the Company Notice. (d) If any of the conditions set forth in Section 207(b) is not satisfied with respect to a Holder or Holders prior to the Close of Business at Stated Maturity or any Redemption Date or Change in Control Purchase Date, as applicable, and the Company has elected to pay or purchase the Subordinated Debentures or make a payment with respect to the Subordinated Debentures pursuant to Section 206 and this Section 207 through the issuance of Common Shares, the Company shall pay, without further notice, the entire applicable Subordinated Debenture Payment in cash. -9- (e) If the Redemption Notice, Change in Control Purchase Offer Notice or Company Notice with respect to any Subordinated Debenture Payment states that the Company elects to pay any portion of the Subordinated Debenture Payment in Common Shares, then when the Company determines the actual number of Common Shares to be issued, it shall publish such information on its website or through such other public medium as the Company may use at such time. (f) Each Common Share issued pursuant to this Section 207 upon redemption, purchase or at Maturity of Subordinated Debentures shall be entitled to receive the appropriate number of Rights under the Rights Agreement, and the certificates, representing the Common Shares issued upon redemption, purchase or at Maturity and shall bear such legends, if any, in each case as may be provided by the terms of the Rights Agreement. Section 208. Fractional Shares. The Company will not issue fractional Common Shares in payment of a Subordinated Debenture Payment. Instead, the Company will pay cash equal to the Average Market Price of the fractional Common Share at Stated Maturity or on the Redemption Date or Change in Control Purchase Date, as applicable, rounded to the nearest whole cent with one-half cent being rounded upwards. For purposes of determining the existence of potential fractional interests, all Subordinated Debentures subject to payment, purchase or redemption by the Company held by a Holder shall be considered together (no matter how many separate certificates are to be presented). Section 209. Other Provisions. (a) The Subordinated Debentures shall be convertible by the Holder as provided in Article Four. (b) The Subordinated Debentures shall be redeemable at the option of the Company as provided in Article Five. ARTICLE THREE SUBORDINATED DEBENTURE FORMS Section 301. Form of Face of Subordinated Debenture. [Insert any legends required by Section 204 of the Original Indenture.] [FORM OF FACE OF DEBENTURE] -10- INCO LIMITED 3 1/2% SUBORDINATED CONVERTIBLE DEBENTURES DUE 2052 No.____________ CUSIP No. 453258 AQ 8 Issue Date: [March 7, 2003] Stated Maturity: March 14, 2052 Inco Limited, a corporation duly organized and existing under the laws of Canada (herein called the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to __________, or registered assigns, the principal sum of $__________ Dollars on March 14, 2052, and to pay interest thereon from March 7, 2003 or from the most recent Interest Payment Date to which interest has been paid or as duly provided for, semi-annually on March 14 and September 14 in each year, commencing September 14, 2003, and at the Stated Maturity thereof, at the rate of 3 1/2% per annum, computed on a semi-annual bond equivalent basis using a 360-day year composed of twelve 30-day months, until the principal amount hereof is paid or made available for payment; provided that any overdue principal and premium, if any, and any overdue installment of interest shall bear interest at the rate of 3 1/2% per annum (to the extent that the payment of such interest shall be legally enforceable) from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand; and provided, further, that, if (i) the Company has not filed a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), registering this Subordinated Debenture for resale (a "Resale Registration Statement") within 120 days after the Issue Date of this Subordinated Debenture, (ii) the Resale Registration Statement is not declared effective within 210 days after the Issue Date of this Subordinated Debenture, as set forth in the Registration Rights Agreement, (iii) the Company has failed to perform its obligations pursuant to Section 2(d) of the Registration Rights Agreement within the time frames specified therein, or (iv) the Company has suspended the use of the Resale Registration Statement for an aggregate period longer than the period permitted pursuant to the Registration Rights Agreement (each such event referred to in clause (i), (ii), (iii) or (iv), a "Registration Default"), to the extent required pursuant thereto, then Special Interest shall accrue (in addition to the stated interest on the Subordinated Debentures) at an additional annual rate of 0.25% for the first 90 days immediately following the Registration Default, and thereafter at an additional annual rate of 0.50% until the Registration Default is cured by meeting the applicable requirement in clause (i), (ii), (iii) or (iv) as the case may be. Notwithstanding the existence of more than one Registration Default, in no event shall Special Interest accrue at an annual rate in excess of 0.50%. Interest accruing as a result of a Registration Default is referred to herein as "Special Interest". Whenever in this Subordinated Debenture or in the Indenture there is a reference, in any context, to the payment of the principal of, premium, if any, or interest on, or in respect of, any Subordinated Debenture, such mention shall be deemed to include mention of the payment of Special Interest (if applicable) payable as described in the preceding paragraph to the extent that, in such context, Special Interest is, was or would be payable in respect of such Subordinated Debenture and express mention of the payment of Special Interest (if applicable) in any provisions of this Subordinated Debenture shall not be construed as excluding Special Interest in those provisions of this Subordinated Debenture where such express mention is not made. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this -11- Subordinated Debenture (or one or more Predecessor Securities) is registered at the Close of Business on the Regular Record Date for such interest, which shall be in each year March 1 or September 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Subordinated Debenture (or one or more Predecessor Securities) is registered at the Close of Business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of the Subordinated Debentures not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Subordinated Debentures of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. So long as no Event of Default has occurred and is continuing, the Company shall have the right, at any time during the term of this Subordinated Debenture, from time to time to defer the payment of interest (other than Special Interest, if any) on this Subordinated Debenture for up to 10 consecutive semi-annual interest payment periods with respect to each deferral period (each an "Extension Period"), during which Extension Periods the Company shall have the right to make partial payments of interest on any Interest Payment Date, and at the end of which the Company shall pay all interest then accrued and unpaid including any Additional Interest, as provided below; provided, however, that no Extension Period shall extend beyond the Stated Maturity of the principal of this Subordinated Debenture; and provided, further, that during any such Extension Period, the Company shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock or make any guarantee payment with respect thereto (other than (i) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, (ii) as a result of an exchange or conversion of any class or series of the Company's capital stock for any other class or series of the Company's capital stock, or (iii) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged), and (b) the Company shall not make any payment of interest on, principal of or premium, if any, on, or repay, repurchase or redeem, any debt securities issued by the Company which rank pari passu with or junior to the Subordinated Debentures (including the Securities of any other series); provided, however, the Company may declare and pay a stock dividend where the stock dividend is the same stock as that on which the dividend is being paid. Prior to the termination of any such Extension Period, the Company may further defer the payment of interest, provided that no Extension Period shall exceed 10 consecutive semi-annual interest payment periods or extend beyond the Stated Maturity of the principal of this Subordinated Debenture. Upon the termination of any such Extension Period and upon the payment of all accrued and unpaid interest and (to the extent permitted by applicable law) any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Extension Period, subject to the above conditions. No interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension shall bear Additional Interest (to the extent that the payment of such interest shall be legally enforceable) at the rate of 3 1/2% per annum, calculated as set forth in the first paragraph of this Subordinated Debenture, from the dates on which such amounts would otherwise have been due and payable until paid or made available for payment. If the principal of any Subordinated Debentures shall become due -12- and payable on a day or if any Subordinated Debentures become subject to Redemption on a Redemption Date that would otherwise occur during an Extension Period, such Extension Period will automatically end on the immediately preceding day (which will be the last day of the period). The Company shall give the Holder of this Subordinated Debenture and the Trustee notice of its election to begin any Extension Period at least five Business Days prior to the Regular Record Date on the next succeeding Interest Payment Date on which interest on this Subordinated Debenture would be payable but for such deferral. The Company's written notice of its election to begin an Extension Period shall set forth the first Interest Payment Date in such period and, if known, the date on which payment of interest (and Additional Interest, if any) on the Subordinated Debentures will be resumed, and shall be given in the manner set forth in Section 106 of the Original Indenture. If such resumption date is not known, the notice must state that the length of the Extension Period will be indefinite. Payment of the principal, Redemption Price or Change in Control Purchase Price of this Subordinated Debenture may be made, at the option of the Company, (i) in cash, (ii) by the issuance of Common Shares at the Average Market Price at the applicable Subordinated Debenture Payment Date, or (iii) in any combination thereof. The Conversion Amount may be satisfied, at the option of the Company, in whole or in part in cash as determined pursuant to Article Four of the First Supplemental Indenture. No fractional Common Shares will be issued for payment with respect to any Subordinated Debentures or upon conversion of any Subordinated Debentures but a payment in cash will be made, as provided in the Indenture, in respect of any fraction of a Common Share which would otherwise be issuable upon the surrender of any Subordinated Debenture for payment or conversion. Any payments in cash on this Subordinated Debenture, including payment of interest (and Additional Interest, if any), will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided that, at the option of the Company, payment of interest (including Special Interest and Additional Interest, if any) may be made (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register, or (ii) by wire transfer in immediately available funds at such place and to such account as may be designated by the Person entitled thereto as specified in the Securities Register. The indebtedness evidenced by this Subordinated Debenture is, to the extent provided in the Indenture, subordinate in right of payment to the prior payment in full of all Senior Indebtedness, and this Subordinated Debenture is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Subordinated Debenture, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided, and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. Reference is hereby made to the further provisions of this Subordinated Debenture set forth on the reverse hereof, including provisions relating to certain conversion, purchase and redemption rights and obligations of the Company and the Holder, which further provisions shall for all purposes have the same effect as if set forth at this place. -13- Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Subordinated Debenture shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. Dated: INCO LIMITED By: ---------------------------- Name: Title: By: ---------------------------- Name: Title: Section 302. Form of Reverse of Subordinated Debenture. This Subordinated Debenture is one of a duly authorized issue of securities of the Company (herein called the "Subordinated Debentures"), issued and to be issued in one or more series under a Subordinated Indenture, dated as of March 7, 2003 (the "Original Indenture"), as supplemented by the First Supplemental Indenture, dated as of March 7, 2003 (together, the "Indenture"), between the Company and The Bank of New York, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the holders of Senior Indebtedness and the Holders of the Subordinated Debentures and of the terms upon which the Subordinated Debentures are, and are to be, authenticated and delivered. This Subordinated Debenture is one of the series designated on the face hereof, limited in aggregate principal amount to $220,000,000 (which amount may be increased by up to $30,000,000 to the extent the Over-Allotment Option is exercised). No sinking fund is provided for the Subordinated Debentures. At any time on or after March 19, 2008, or such later date as the Company may by notice in writing to the Holders stipulate, if the Closing Sale Price of the Common Shares for at least 20 consecutive Trading Days in a period of 30 consecutive Trading Days ending on the fifth Business Day preceding the date of the Redemption Notice exceeds 125% of the Conversion Price, the Subordinated Debentures will be subject to redemption at the option of the Company as provided in the Indenture, in whole or in part, at a "Redemption Price" equal to 100% of the principal amount of the Subordinated Debenture. The Subordinated Debentures are also redeemable at the Company's option prior to their Stated Maturity upon the occurrence of a Redemption Tax Event as a result of which the Company has or would become obligated to pay Additional Amounts that are more than de -14- minimis to the Holder of any Subordinated Debenture, and in the opinion of the Company (evidenced by an Officers' Certificate delivered to the Trustee) such obligations cannot be avoided by the Company taking reasonable measures available to it. In such event the Company may, at its option, redeem the Subordinated Debentures in whole but not in part, upon not less than 20 Business Days' nor more than 60 Business Days' notice given in accordance with the terms of the Indenture, at the then applicable Redemption Price, equal to 100% of the principal amount of the Subordinated Debenture, but without reductions for applicable Canadian withholding taxes, except that (i) no such notice of redemption may be given earlier than 60 Business Days prior to the earliest date on or from which the Company would be obligated to pay any such Additional Amounts, and (ii) at the time such notice is given, the circumstances creating such obligation to pay such Additional Amounts remain in effect. In the event of any redemption, the Company will also pay the Holder, in addition to the Redemption Price, an amount equal to the accrued and unpaid interest to the Redemption Date. In the event of a redemption of less than all of the Subordinated Debentures, the Company shall not be required (a) to register the transfer or exchange of Subordinated Debentures for a period of 15 days immediately preceding the date notice is given identifying the serial numbers of the Subordinated Debentures called for such redemption or (b) to register the transfer or exchange of any Subordinated Debenture, or portion thereof, called for redemption. In the event of redemption of this Subordinated Debenture in part only, a new Subordinated Debenture or Subordinated Debentures of this series and of like tenor for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. The Holder of any Subordinated Debenture is entitled at such Holder's option, prior to the Close of Business at Stated Maturity, to convert the principal amount of any such Subordinated Debenture or any portion of such principal amount into fully paid and non-assessable Common Shares at any time when one or more of the following conditions shall be satisfied: (a) The Subordinated Debentures shall be convertible in any calendar quarter (and only during such calendar quarter) beginning with the quarter ending September 30, 2003, if, as of the last day of the immediately preceding calendar quarter, the Closing Sale Price of the Common Shares for at least 20 Trading Days in the period of 30 consecutive Trading Days ending on the last Trading Day of such preceding quarter is more than 120% of the Conversion Price per Common Share on the last Trading Day of such preceding quarter. (b) The Subordinated Debentures shall be convertible during the five Business Days following any ten consecutive Trading Days in which the Trading Price of the Subordinated Debenture for each day of such period was less or was deemed to be less than 95% of the product of the Closing Sale Price of the Common Shares multiplied by the Conversion Rate. (c) In the event the Company has called the Subordinated Debentures for redemption, the Subordinated Debentures shall be convertible at any time on or after the date the Redemption Notice has been given until the Close of Business on the Business Day immediately preceding the Redemption Date. -15- (d) Upon the occurrence of certain corporate events specified in the Indenture. Each Subordinated Debenture will be convertible into 38.4423 fully paid and non-assessable Common Shares, as said shares shall be constituted at the date of conversion, per $1,000 principal amount of the Subordinated Debenture or portion thereof to be converted (the "Conversion Rate") or such Conversion Rate as adjusted from time to time as provided in the Indenture, upon surrender of this Subordinated Debenture, together with a Conversion Notice as provided in the Indenture, to the Conversion Agent and, unless the Common Shares issuable on conversion are to be issued in the same name as this Subordinated Debenture, duly endorsed by, or accompanied by instruments of transfer in form satisfactory to the Conversion Agent duly executed by the Holder or by its duly authorized attorney. The Company has the option to satisfy its obligation to deliver Common Shares upon such conversion by paying cash in lieu of some or all of such Common Shares. In case a Subordinated Debenture or portion thereof is called for redemption, such conversion right in respect of the Subordinated Debenture or portion so called shall expire immediately prior to the Close of Business on the last Business Day prior to the Redemption Date, unless the Company defaults in making the payment due upon such redemption. On any conversion of a Subordinated Debenture, the accrued and unpaid interest (including Additional Interest, if any) attributable to the period from the Issue Date to the conversion date with respect to the converted Subordinated Debenture shall not be canceled, extinguished or forfeited, but rather shall be paid in full to the Holder thereof through the delivery of the Conversion Consideration except as provided in the Indenture; and the fair market value of such consideration shall be applied, first in satisfaction of the accrued and unpaid interest (including Additional Interest, if any) to the conversion date, and the balance, if any, of such fair market value of such consideration shall be applied in satisfaction of the principal amount of the Subordinated Debenture being converted pursuant to the provisions hereof. A Holder may convert a portion of a Subordinated Debenture if the principal amount of such portion is $1,000 or an integral multiple of $1,000. No payment or adjustment shall be made for any dividends on the Common Shares except as provided in the Indenture. If a Change in Control occurs, then the Company shall offer to purchase all of the Subordinated Debentures at a price (the "Change in Control Purchase Price") equal to the principal amount of the Subordinated Debenture plus accrued and unpaid interest to such date (the "Change in Control Purchase Date") that is 35 Business Days after notice of the occurrence of such Change in Control. The Company shall mail to all Holders a notice (the "Change in Control Purchase Offer Notice") of the occurrence of such Change in Control and of the purchase offer arising as a result thereof within 15 Business Days after the occurrence of such Change in Control. For a Subordinated Debenture to be purchased, the Paying Agent must receive a notice of acceptance from the Holder in the form set forth in Section 304 of the First Supplemental Indenture (the "Change in Control Purchase Notice") to purchase on or before the Close of Business on the Change in Control Purchase Date and the Trustee or Paying Agent must receive such Subordinated Debenture duly endorsed for transfer. All questions as to the validity, eligibility (including time of receipt) and acceptance of any Subordinated Debenture for purchase shall be determined by the Company, whose determination shall be final and binding. -16- Holders have the right to withdraw any Change in Control Purchase Notice by delivering to the Paying Agent written notice of withdrawal prior to the Close of Business on the Change in Control Purchase Date in accordance with the provisions of the Indenture. The Company has the option to pay the Redemption Price (including on the occurrence of a Redemption Tax Event) and the Change in Control Purchase Price in cash, by the issuance of Common Shares at the Average Market Price, or in any combination thereof. If an Event of Default with respect to the Subordinated Debentures shall occur and be continuing, the principal of, together with accrued and unpaid interest and any Additional Interest, if any, on the Subordinated Debentures may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of 66 2/3% of the principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages of the principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Subordinated Debenture shall be conclusive and binding upon such Holder and upon all future Holders of this Subordinated Debenture and of any Subordinated Debenture issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Subordinated Debenture. As provided in and subject to the provisions of the Indenture, the Holder of this Subordinated Debenture shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Subordinated Debentures, the Holders of not less than 25% of the principal amount of the Subordinated Debentures at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee indemnity satisfactory to the Trustee, and the Trustee shall not have received from the Holders of a majority of the principal amount of the Subordinated Debentures at the time Outstanding a direction inconsistent with such request, and the Trustee shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Subordinated Debenture for the enforcement of any payment of principal hereof or any premium or interest hereon or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Subordinated Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal amount and interest and any other amounts due on, or in respect of, this Subordinated Debenture at the times, place and rate, and in the coin or currency or other form of payment, herein prescribed. -17- For disclosure purposes under the Interest Act (Canada), whenever in the Subordinated Debentures or the Indenture interest at a specified rate is to be calculated on the basis of a period less than a calendar year, the yearly rate of interest to which such rate is equivalent is such rate multiplied by the actual number of days in the relevant calendar year and divided by the number of days in such period. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Subordinated Debenture is registrable in the Securities Register, upon surrender of this Subordinated Debenture for registration of transfer at the office or agency of the Company in any place where the principal of (and premium, if any) and interest on this Subordinated Debenture payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Subordinated Debenture Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Subordinated Debentures and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Subordinated Debentures are issuable only in registered form without coupons in denominations of $1,000 principal amount and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Subordinated Debentures are exchangeable for a like aggregate principal amount of Subordinated Debentures and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Subordinated Debenture for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Subordinated Debenture is registered as the owner hereof for all purposes, whether or not this Subordinated Debenture be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. This Subordinated Debenture is a Global Security and is subject to the provisions of the Indenture relating to Global Securities, including the limitations in Section 305 of the Original Indenture on transfers and exchanges of Global Securities. All terms used in this Subordinated Debenture which are defined in the Indenture shall have the meanings assigned to them in the Indenture. Section 303. Form of Conversion Notice. CONVERSION NOTICE The undersigned owner of this Subordinated Debenture hereby irrevocably exercises the option to convert this Subordinated Debenture, or the portion below designated, into Common Shares of Inco Limited in accordance with the terms of Article Four of the First Supplemental Indenture referred to in this Subordinated Debenture, and directs that the Common Shares issuable and deliverable upon conversion, together with any check in payment for fractional shares, be issued in the name of and delivered to the undersigned registered Holder hereof, unless -18- a different name has been indicated in this notice below. If Common Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any amount required to be paid by the undersigned on account of interest accompanies this Subordinated Debenture. Dated: ----------------- ----------------------------------- Signature NOTICE: The signature to the foregoing notice must correspond to the name as written upon the face of this Subordinated Debenture in every particular, without alteration or any change whatsoever. If Common Shares are to be issued If only a portion of the Subordinated and registered otherwise than to the Debentures is to be converted, please registered Holder named above, indicate: please print or typewrite name and address, including zip code, and Principal amount to be converted social security or other taxpayer ($1,000 or multiples thereof): identification number: ---------------------------------------- - ------------------------------------ Remaining principal amount following Name such conversion ($1,000 or multiples thereof): - ------------------------------------ ---------------------------------------- Address - ------------------------------------ Social Security or other Taxpayer Identification Number, if any Signature(s) must be guaranteed by a commercial bank or trust company or a member firm of a major stock exchange with membership in an approved signature guarantee medallion program pursuant to the Securities and Exchange Commission Rule 17Ad-15 if Common Shares are to be issued, or Subordinated Debentures to be delivered, other than to or in the name of the registered Holder. - ------------------------------------ Signature Guaranteed NOTICE: The signature to the foregoing notice must correspond to the name as written upon the face of this Subordinated Debenture in every particular, without alteration or any change whatsoever. Section 304. Form of Change in Control Purchase Notice. NOTICE OF ACCEPTANCE BY HOLDER OF COMPANY'S OFFER TO PURCHASE UPON CHANGE IN CONTROL -19- Pursuant to Section 602 of the First Supplemental Indenture, the undersigned hereby accepts the Company's offer to purchase this Subordinated Debenture. The undersigned hereby directs the Company to pay it or ____________ the Change in Control Purchase Price as provided in the First Supplemental Indenture. [Insert if the Company elects to pay all or part of the Change in Control Purchase Price in Common Shares - In the event the Company is not permitted to deliver Common Shares in lieu of cash, the undersigned elects [to withdraw its Change in Control Purchase Notice with respect to ________ principal amount represented by certificate numbers ____.][to receive cash in respect of the entire Change in Control Purchase Price for all Subordinated Debentures subject to this Change in Control Purchase Notice.]] Dated: ---------------- ----------------------------------- Signature If Common Shares are to be issued If only a portion of the Subordinated and registered otherwise than to the Debentures is to be purchased, please registered Holder named above, indicate: please print or typewrite name and address, including zip code, and Principal amount to be purchased social security or other taxpayer ($1,000 or multiples thereof): identification number: ---------------------------------------- - ------------------------------------ Remaining principal amount following Name such purchase ($1,000 or multiples thereof): - ------------------------------------ ---------------------------------------- Address - ------------------------------------ Social Security or other Taxpayer Identification Number, if any Signature(s) must be guaranteed by a commercial bank or trust company or a member firm of a major stock exchange with membership in an approved signature guarantee medallion program pursuant to the Securities and Exchange Commission Rule 17Ad-15 if Common Shares are to be issued, or Subordinated Debentures to be delivered, other than to or in the name of the registered Holder. - ------------------------------------ Signature Guaranteed NOTICE: The signature to the foregoing notice must correspond to the name as written upon the face of this Subordinated Debenture in every particular, without alteration or any change whatsoever. -20- Section 305. Legends For Subordinated Debentures. The Subordinated Debentures shall bear the legends required by Section 204 of the Original Indenture. ARTICLE FOUR CONVERSION Section 401. Conversion Privilege; Conversion Rate. (a) Prior to the Close of Business at Stated Maturity, so long as one or more of the conditions set forth in Section 402(a) is satisfied, the Holder of any Subordinated Debenture is entitled at such Holder's option to convert such Subordinated Debenture or any portion of such Subordinated Debenture the principal amount of which is $1,000 or an integral multiple thereof, into that number of fully paid and non-assessable Common Shares determined using the Conversion Rate then in effect by surrender of the Subordinated Debenture to be converted in whole or in part in the manner provided in Section 403. In case a Subordinated Debenture or portion thereof is called for redemption, such conversion right in respect of the Subordinated Debenture or portion so called shall expire immediately prior to the Close of Business on the last Business Day prior to the Redemption Date, unless the Company defaults in making the payment due upon such redemption. In case a Change in Control Purchase Notice has been delivered with respect to such Subordinated Debenture or a portion thereof, such conversion right in respect of the Subordinated Debenture or portion thereof subject to such notice cannot be exercised unless such Change in Control Purchase Notice has been withdrawn in accordance with the provisions of the Indenture prior to the Close of Business on the Change in Control Purchase Date. (b) The Conversion Rate shall be as specified in the form of Subordinated Debenture set forth in Section 302, and subject to adjustment as provided in this Article Four. In addition, the Company may, at its option, increase the Conversion Rate from time to time but, except as otherwise provided herein, shall have no obligation to do so. The Conversion Rate shall not be adjusted at any time during the term of the Subordinated Debentures for accrued and unpaid interest. (c) The Company has the option to deliver cash in lieu of some or all of the Conversion Amount. The Company will give notice of its election to deliver cash in lieu of part or all of the Conversion Amount in cash to the Holder converting Subordinated Debentures within ten Business Days of its receipt of the Holder's Conversion Notice, unless the Company has already informed Holders of its election in connection with a Redemption Notice or a Change in Control Purchase Offer Notice. (d) The Company will not issue fractional Common Shares in satisfaction of the Conversion Amount, but will instead pay cash equal to the Closing Sale Price of the fractional Common Share on the Trading Day immediately preceding Conversion Date, rounded to the nearest whole cent with one-half cent being rounded upwards. For purposes of determining the existence of potential fractional interests, all Subordinated Debentures held by a Holder subject to -21- conversion shall be considered together (no matter how many separate certificates are to be presented). (e) If the Company elects to exercise its option to deliver cash in lieu of part or all of the Conversion Amount, the amount of cash to be delivered on conversion by a Holder in lieu of each such Common Share will be equal to the average of the Closing Sale Prices of the Common Shares for the five consecutive Trading Days immediately following (i) the date of the Company's notice of election to deliver part or all of the Conversion Amount in cash if the Company has not given a Redemption Notice, or (ii) the Conversion Date, in the case of a conversion following the giving by the Company of a Redemption Notice specifying its intention to deliver cash upon conversion. If the Company elects to pay all or a portion of the Conversion Amount in cash, the payment, including the delivery of any Common Shares, will be made to Holders surrendering Subordinated Debentures no later than the tenth Business Day following the Conversion Date. If the Company does not so elect, the Common Shares, together with any cash payment for fractional shares, will be delivered through the Conversion Agent no later than the fifth Business Day following the Conversion Date. If an Event of Default (other than a default in payment upon conversion of the Subordinated Debentures), has occurred and is continuing, the Company may not deliver cash upon conversion of any Subordinated Debentures (other than cash in lieu of fractional shares). (f) A Holder of Subordinated Debentures is not entitled to any rights of a holder of Common Shares until such Holder has converted its Subordinated Debentures into Common Shares. Section 402. Conversion Conditions. (a) The Subordinated Debentures shall be convertible only so long as one or more of the following conditions is satisfied. (i) The Subordinated Debentures may be surrendered for conversion during any calendar quarter (and only during such calendar quarter) beginning with the quarter ending September 30, 2003, if, as of the last day of the immediately preceding calendar quarter, the Closing Sale Price of the Common Shares for at least 20 Trading Days in the period of 30 consecutive Trading Days ending on the last Trading Day of such preceding quarter is more than 120% of the Conversion Price per Common Share on the last Trading Day of such preceding quarter. (ii) The Subordinated Debentures may be surrendered for conversion during the five Business Days following any ten consecutive Trading Days in which the Trading Price of the Subordinated Debentures for each day of such period was less or was deemed to be less than 95% of the product of the Closing Sale Price of Common Shares multiplied by the Conversion Rate. For the purpose of the foregoing sentence, a Trading Price shall be deemed to be less than 95% in the circumstances provided in Section 402(b)(i). (iii) In the event the Company has called the Subordinated Debentures for redemption pursuant to Article Five, the Subordinated Debentures may be surrendered for conversion at any time on or after the date the Redemption Notice has -22- been given until the Close of Business on the Business Day immediately preceding the Redemption Date. (iv) In the event that (A) the Company distributes to all Holders of its Common Shares rights or warrants entitling them (for a period expiring within 45 days of the record date for the determination of the shareholders entitled to receive such distribution) to subscribe for or purchase Common Shares, at a price per share less than the average of the Closing Sale Prices of the Common Shares for the ten Trading Days immediately preceding, but not including, the date such distribution is first publicly announced by the Company, or (B) the Company distributes to all Holders of its Common Shares, assets, debt securities or rights or warrants to purchase its securities, where the fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) of such distribution per share of Common Stock exceeds 15% of the Closing Sale Price of the Common Shares on the Trading Day immediately preceding, but not including, the date such distribution is first publicly announced by the Company, then, in either case, the Subordinated Debentures may be surrendered for conversion at any time on or after the date that the Company gives notice to the Holders of such right, which date shall be not less than 10 days prior to the Ex-Dividend Time for such distribution, until the earlier of the Close of Business on the Business Day immediately preceding, but not including, the Ex-Dividend Time or the date on which the Company publicly announces that such distribution will not take place; provided that no distribution will entitle the Holder to convert if the Holder will otherwise participate in such distribution without conversion. (v) In the event that (A) the Company is a party to a consolidation, amalgamation, merger, statutory arrangement (involving a business combination) or the Company conveys, transfers, sells, leases or otherwise disposes of all or substantially all of its properties and assets, (B) the Company is not the resulting or surviving entity, (C) such transaction is not with an Affiliate of the Company and (D) after the completion or consummation of such transaction either (i) more than 50% of the surviving or resulting entity's voting stock is not held by the Company's pre-transaction shareholders or (ii) more than 50% of the surviving or resulting entity's directors were not directors of the Company or directors approved by the Board of Directors immediately prior to the transaction, then the Subordinated Debentures may be surrendered for conversion at any time from and after the date 15 days prior to the anticipated effective date of the transaction and ending on and including the date 15 days after the consummation of the transaction. The Board of Directors shall determine the anticipated effective date of the transaction, and such determination shall be conclusive and binding on the Holders and shall be publicly announced by the Company and posted on its website or such other public medium as the Company may use at the time not later than two Business Days prior to the 30-day period described in the preceding sentence. (b) As used herein the following terms shall have the following meanings: (i) The "Trading Price" of the Subordinated Debentures on any date of determination means the average of the secondary market bid quotations per Subordinated Debenture obtained by the Conversion Agent for $5,000,000 principal amount of the Subordinated Debentures at approximately 3:30 p.m., New York City time, on such determination date from two independent nationally recognized securities dealers -23- selected by the Company; provided that, if the Conversion Agent cannot reasonably obtain at least two such bids, but can reasonably obtain one such bid, this one bid shall be used. If, for any date the Conversion Agent has been instructed by the Company to determine the Trading Price pursuant to the last sentence of this paragraph, the Conversion Agent cannot reasonably obtain at least one bid for $5,000,000 principal amount of the Subordinated Debentures from a nationally recognized securities dealer or in the Company's reasonable judgment, the bid quotation(s) are not indicative of the secondary market value of the Subordinated Debentures, then the Trading Price of the Subordinated Debentures for that date will be deemed to be less than 95% of the product of the Closing Sale Price of the Common Shares multiplied by Conversion Rate. The Conversion Agent shall have no obligation to determine the Trading Price of the Subordinated Debentures unless the Company has requested such a determination; and the Company shall have no obligation to make such request unless a Holder provides it with reasonable evidence that the Trading Price of the Subordinated Debentures would be less than 95% of the product of the Closing Sale Price of the Common Stock and the Conversion Rate. If such evidence is provided, the Company shall instruct the Conversion Agent to determine the Trading Price of the Subordinated Debentures beginning on the next Trading Day and on each successive Trading Day until the Trading Price is greater than or equal to 95% of the product of the Closing Sale Price of the Common Stock and the Conversion Rate. (ii) "Ex-Dividend Time" means, with respect to any issuance or distribution on Common Shares, the first date on which the Common Shares trade regular way on the principal securities market on which the Common Shares are then traded without the right to receive such issuance or distribution. Section 403. Exercise of Conversion Privilege. (a) To convert a Subordinated Debenture into Common Shares, a Holder must (a) complete and manually sign the conversion notice in the form set forth in Section 303 (the "Conversion Notice") (or complete and manually sign a facsimile thereof) and deliver such notice to the Conversion Agent, (b) surrender the Subordinated Debentures to the Conversion Agent, (c) if required by the Conversion Agent, furnish appropriate endorsements and transfer documents, and (d) if required, pay all transfer or similar taxes. The date on which the foregoing requirements have been satisfied is the "Conversion Date". The Conversion Agent shall promptly deliver to the Company and the Common Shares stock transfer agent notification of such Conversion Notice received by the Conversion Agent from a Holder. (b) The Person or Persons in whose name or names any certificate or certificates for Common Shares shall be issuable upon conversion shall be deemed to have become at the Close of Business on the Conversion Date the Holder or Holders of record of the Common Shares issuable upon such conversion; provided that, if the Conversion Date is on any date when the stock transfer books of the Company are closed, the Person or Persons in whose name or names the certificate or certificates for such Common Shares are to be issued shall constitute the record holder or holders thereof for all purposes at the opening of business on the next succeeding day on which such stock transfer books are open but such conversion shall nevertheless be at the Conversion Rate in effect on the Conversion Date. -24- (c) No payment or adjustment shall be made for dividends on, or other distributions with respect to, any Common Shares except as provided in this Article Four. On conversion of a Subordinated Debenture, accrued interest (including Additional Interest, if any) attributable to the period from the Issue Date of the Subordinated Debenture through the Conversion Date with respect to the converted Subordinated Debenture shall not be canceled, extinguished or forfeited, but rather shall be paid in full to the Holder thereof through delivery of the Conversion Consideration and the fair market value of such consideration shall be applied, in satisfaction of the principal amount of the Subordinated Debentures being converted pursuant to the provisions hereof. The interest payable on any Interest Payment Date on any Subordinated Debenture (or portion thereof, if applicable) being surrendered for conversion during the period from the Close of Business on any Regular Record Date to the opening of business of the next Interest Payment Date shall be paid to the Holder of such Subordinated Debenture as of the Regular Record Date for such Interest Payment Date in an amount equal to the interest that would have been payable on such Subordinated Debenture if such Subordinated Debenture (or a portion thereof) had not been converted. Interest payable in respect of any Subordinated Debenture surrendered on an Interest Payment Date shall be paid to the Holder of such Subordinated Debenture as of the next preceding Regular Record Date, notwithstanding the exercise of the right of conversion. A Holder surrendering Subordinated Debentures for conversion during the period from the Close of Business on any Regular Record Date to the opening of business of the next Interest Payment Date, except for Subordinated Debentures to be redeemed on a date within this period or on the next Interest Payment Date, must accompany such Holder's Conversion Notice with a payment of an amount equal to the interest that the Holder is entitled to receive on the Subordinated Debenture. (d) Except to the extent that the Company satisfies the Conversion Amount by delivering cash, each Subordinated Debenture surrendered for conversion shall be converted into Common Shares in registered form. (e) Subordinated Debentures shall be deemed to have been converted immediately prior to the Close of Business on the Conversion Date, in accordance with the foregoing provisions. (f) In case any Subordinated Debenture is converted in part only, upon such conversion the Company shall execute and the Trustee shall authenticate and deliver to the Holder a new Subordinated Debenture or Subordinated Debentures of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to the unconverted portion of the principal amount of such Subordinated Debenture. A Subordinated Debenture may be converted in part, but only if the principal amount of such Subordinated Debenture to be converted is any integral multiple of $1,000 and the principal amount of such security to remain Outstanding after such conversion is equal to $1,000 or any integral multiple thereof. (g) Subject to Section 403(c), the Company's delivery to the Holder of the Conversion Consideration shall be deemed to satisfy the Company's obligation to pay the principal amount of, and the interest (including Additional Interest, if any) on, the Subordinated Debenture. -25- Section 404. Adjustment of Conversion Rate and Conversion Price. The Conversion Rate (and, consequently, the Conversion Price) shall be subject to adjustment from time to time as follows: (a) In case the Company shall (1) pay a dividend or make a distribution in Common Shares on its Common Shares, (2) subdivide its outstanding Common Shares into a greater number of shares or (3) combine its outstanding Common Shares into a smaller number of shares, the Conversion Rate in effect immediately prior to such action shall be adjusted so that the holder of any Subordinated Debenture thereafter surrendered for conversion shall be entitled to receive the number of Common Shares that such Holder would have owned or have been entitled to receive immediately following such action had such Subordinated Debenture been converted immediately prior thereto. An adjustment made pursuant to this subsection (a) shall become effective immediately, except as provided in subsection (g) below, after the record date in the case of a dividend and shall become effective immediately after the effective date in the case of a subdivision or combination. (b) If (1) the Company shall issue rights or warrants to all holders of Common Shares entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase Common Shares at a price per share less than the current market price per Common Share (as defined pursuant to subsection (f) below) on the record date for the determination of shareholders entitled to receive such rights or warrants, except as provided in subsection (f) below, or (2) rights (including the Rights) or warrants which were not immediately exercisable when issued to all holders of Common Shares, shall become exercisable and entitle the holders thereof to purchase Common Shares at a price per share less than the current market price per Common Share (as defined pursuant to subsection (f) below) on the date such rights or warrants become so exercisable, then, in each case, the Conversion Rate shall be adjusted to a rate, computed to the nearest 1/10,000, so that the same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the date of issuance of, or, as the case may be, exercisability of, such rights or warrants by a fraction, of which (1) the numerator shall be (A) the number of Common Shares outstanding on the date of issuance of, or as the case may be, exercisability of, such rights or warrants, immediately prior to such issuance, plus (B) the number of additional Common Shares which are so offered for subscription or purchase, and (2) the denominator shall be (A) the number of Common Shares outstanding on the date of issuance of, or, as the case may be, exercisability of, such rights or warrants, immediately prior to such issuance, plus (B) the number of shares which the aggregate offering price of the total number of shares so offered for subscription or purchase would purchase at such current market price per Common Share (determined by multiplying such total number of shares by the exercise price of such rights or warrants and dividing the product so obtained by such current market price per Common Share). Such adjustment shall be made successively whenever any such rights or warrants are issued or, as the case may be, become exercisable, and shall, except as provided in subsection (g) below, become effective immediately after such record date. Except as provided in subsection (f) -26- below, in determining whether any rights or warrants entitle the holders to subscribe for or purchase Common Shares at less than the current market price per Common Share, and, in determining the aggregate offering price of such Common Shares, there shall be taken into account any consideration received by the Company for such rights or warrants, the value of such consideration, if other than cash, to be determined in good faith by the Board of Directors of the Company whose determination shall be conclusive and described in a certificate filed with the Trustee. Upon the expiration of any right or warrant to purchase Common Shares the issuance of which, or the exercisability of which, resulted in an adjustment in the Conversion Rate pursuant to this subsection (b), if any such right or warrant shall expire and shall not have been exercised, the Conversion Rate shall immediately upon such expiration be recomputed to the Conversion Rate which would have been in effect had the adjustment of the Conversion Rate made upon the issuance of such rights or warrants been made on the basis of offering for subscription or purchase only that number of Common Shares actually purchased upon the exercise of such rights or warrants actually exercised. (c) In case the Company shall distribute to all holders of Common Shares, evidences of indebtedness, equity securities (other than Common Shares) or other assets (other than cash dividends or other cash distributions referred to in subsection (d) below), or shall distribute to all holders of Common Shares rights or warrants to subscribe for or purchase securities (other than those referred to in subsection (b) above), then, in each such case the Conversion Rate shall be adjusted so that the adjusted Conversion Rate shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the date of such distribution by a fraction the numerator of which shall be the current market price per Common Share on such record date (determined as provided in subsection (f) below), and of which the denominator shall be the current market price per Common Share (determined as provided in subsection (f) below) on the record date mentioned below less the then fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution)of the portion of the evidences of indebtedness, equity securities or other assets so distributed or of such subscription rights or warrants applicable to one Common Share. Such adjustment shall become effective immediately, except as provided in subsection (g) below, after the record date for the determination of shareholders entitled to receive such distribution, except as provided in subsection (f) below. (d) In case the Company shall, (i) by dividend or otherwise, declare for distribution to all holders of its Common Shares cash in an aggregate amount that, combined with (ii) the aggregate amount of any other distributions to all holders of its Common Shares made exclusively in cash within the 12 months preceding the date of payment of such distribution and (iii) the aggregate of any cash plus the fair market value as of the date of the expiration of the tender or exchange offer referred to below (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) of consideration payable in respect of any tender or exchange offer by the Company or any of its subsidiaries for all or any portion of the Common Shares concluded within the 12 months preceding the date of payment of the distribution described in clause (i) above exceeds 5% of the current market price per Common Share on the date for the determination of holders of Common Shares entitled to receive such distribution times the number of Common Shares outstanding on such date, then, in such case, the Conversion Rate shall be adjusted so that the same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the record date for such cash distribution by a fraction of which the numerator shall be the current market price per Common Share on such record date, and the denominator shall be the current market price per Common -27- Share on such record date minus the amount by which such distribution, together with any other distribution in the 12 months preceding the date of payment of such distribution, applicable to one Common Share exceeds 5% of the current market price per Common Share, but excluding any amount for which an adjustment pursuant to this subsection (d) or subsection (e) of this Section has been previously made, such adjustment to be effective immediately after such record date. If such dividend or distribution is not so paid or made, the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such dividend or distribution had not been declared. (e) In case (i) a tender or exchange offer made by the Company or any Subsidiary of the Company for all or any portion of the Common Shares shall expire and such tender or exchange offer (as amended upon the expiration thereof) shall require the payment to shareholders (based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of Purchased Shares (as defined below)) of an aggregate consideration having a fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) that combined with (ii) the aggregate of the cash plus the fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution), as of the expiration of such tender or exchange offer, of consideration payable in respect of any other tender or exchange offer, by the Company or any Subsidiary of the Company for all or any portion of the Common Shares expiring within the 12 months preceding the expiration of such tender or exchange offer and in respect of which no adjustment pursuant to subsection (d) of this Section or this subsection (e) has been made and (iii) the aggregate amount of any distributions to all holders of the Company's Common Shares made exclusively in cash within the 12 months preceding the expiration of such tender or exchange offer and in respect of which no adjustment pursuant to subsection (d) of this Section or this subsection (e) has been made, exceeds 5% of the current market price per Common Share as of the last time (the "Expiration Date") tenders could have been made pursuant to such tender or exchange offer (as it may be amended) times the number of shares of Common Stock outstanding (including any tendered shares) at the Expiration Date, then the Conversion Rate shall be adjusted so that the same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the Expiration Date by a fraction of which the numerator shall be the sum of (x) the fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution)of the aggregate consideration payable to shareholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Date (the shares deemed so accepted up to any such maximum, being referred to as the "Purchased Shares") minus the product of 5% of the current market price per Common Share times the number of Purchased Shares and (y) the product of the number of Common Shares outstanding (less any Purchased Shares) on the Expiration Date and the current market price per Common Share on the Expiration Date, and the denominator shall be the number of Common Shares outstanding (including any tendered or exchanged shares) on the Expiration Date multiplied by the current market price per Common Share on the Expiration Date, such adjustment to become effective immediately prior to the opening of business on the day following the Expiration Date. If the Company is obligated to purchase shares pursuant to any such tender or exchange offer, but the Company is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such tender or exchange offer had not been made. -28- (f) For the purpose of any computation under subsections (b), (c), (d) and (e) above: (i) the "current market price per Common Share" on any date shall be deemed to be the average of the daily Closing Sale Price for each of the five consecutive Trading Days (as defined below) ending on the earlier of the day in question and the day before the related ex-date with respect to any distribution, issuance or other event requiring such computation; and (ii) the term "ex-date", when used with respect to any issuance or distribution, shall mean the first date on which the Common Shares trade regular way on such exchange or in such market without the right to receive such issuance or distribution and, when used with respect to any tender or exchange offer, shall mean the first date on which the Common Shares trade regular way on such exchange or in such market after the Expiration Date of such offer. In addition, for purposes of any computation under subsections (b) and (c) above: (x) the market value or exercise price of any rights or warrants shall be determined without giving effect to any potential adjustment that is contingent upon the occurrence of any event other than the passage of time; and (y) to the extent that any right or warrant is subject to any condition (other than the passage of time), the date of issuance or distribution of such right or warrant and the record date for the determination of shareholders entitled to receive such rights or warrants shall be deemed to be the date of satisfaction of such condition. (g) In any case in which this Section shall require that an adjustment be made immediately following a record date, the Company may elect to defer the effectiveness of such adjustment (but in no event until a date later than the effective time of the event giving rise to such adjustment), in which case the Company shall, with respect to any Subordinated Debenture converted after such record date and before such adjustment shall have become effective (i) defer issuing to the holder of such Subordinated Debenture the number of Common Shares issuable upon such conversion in excess of the number of Common Shares issuable thereupon or delivering any cash that the Company has elected to deliver pursuant to Section 401, in each case only on the basis of the Conversion Rate prior to adjustment, and (ii) not later than five Business Days after such adjustment shall have become effective, issue to such holder the additional Common Shares issuable on such conversion or deliver to such holder the appropriate cash payment, if any, pursuant to Section 401. (h) No adjustment in the Conversion Rate shall be required pursuant to this Section unless such adjustment would require an increase or decrease of at least 1% in such Conversion Rate; provided that any adjustments, which by reason of this subsection (h) are not required to be made, shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Article Four shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. (i) Whenever the Conversion Rate is adjusted, as herein provided, the Company shall promptly (i) file with the Trustee and each additional Conversion Agent, if any, an Officers' Certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such adjustment, which certificate shall be conclusive evidence of the correctness of such adjustment, and (ii) mail or cause to be mailed a notice of -29- such adjustment to each Holder of Subordinated Debentures at his address as the same appears on the registry books of the Company. Neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any adjustment to the Conversion Rate to be made pursuant to this Section. The Trustee has no duty to determine when an adjustment under this Article Four should be made, how it should be made or what it should be. The Trustee has no duty to determine whether a supplemental indenture under Section 404 need be entered into or whether any provisions of any supplemental indenture are correct. The Trustee shall not be accountable for and makes no representation as to the validity or value of any securities or asset issued upon conversion of Subordinated Debentures. The Trustee shall not be responsible for the Company's failure to comply with this Article Four. Each Conversion Agent (other than the Company or an Affiliate of the Company), if any, shall have the same protection under this Section as the Trustee. Anything in this Section to the contrary notwithstanding, the Company shall be entitled to make such adjustments in the Conversion Rate, in addition to those required by this Section, and to make any election under Treasury Regulation ss. 1.305-3(d)(2), as it in its discretion shall determine to be advisable in order that any stock dividend, subdivision of shares, distribution of rights or warrants to purchase stock or securities, or distribution of other assets (other than cash dividends) hereafter made by the Company to its shareholders shall not be taxable. Section 405. Reclassification, Reorganization, Sale and Further Adjustment of Conversion Rate. (a) If there occurs any: (i) Reclassification, (ii) Reorganization or (iii) Sale, and as a result holders of Common Shares are entitled to receive common equity, other securities or other property or assets (including cash) with respect to or in exchange for such Common Shares, then the holder of each Subordinated Debenture then Outstanding will be entitled, at the option of the Company: (1) to convert such Subordinated Debenture into Common Shares (as reclassified or changed in the case of a Reclassification), or, in the case of a Reorganization, into shares of common equity of the resulting company, at the Conversion Rate calculated as follows: (A) If the consideration to be received on such conversion consists solely of common equity which is traded on a national securities exchange or the New York Stock Exchange or the Toronto Stock Exchange or quoted on the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation System, the Conversion Rate shall equal the then applicable Conversion Rate (after giving effect to any adjustment required pursuant to Section 404) adjusted by multiplying such then applicable Conversion Rate by a fraction, the numerator of which shall equal the Applicable Price and the denominator of which shall equal the Purchaser Share Price; (B) If the consideration to be received on such conversion consists solely of Common Shares, the Conversion Rate shall equal the then applicable Conversion Rate (after giving effect to any -30- adjustment required pursuant to Section 404) adjusted by multiplying such then applicable Conversion Rate by a fraction, the numerator of which shall equal the average of the Closing Sale Price for such Common Shares for each of the last ten Trading Days prior to such Reclassification, Reorganization or Sale and the denominator of which shall equal the average of the Closing Sale Price for such Common Shares during the ten Trading Days following such Reclassification, Reorganization or Sale; or (C) If the consideration to be received on such conversion is not as indicated in (A) or (B) above, the Conversion Rate shall be equal to the then applicable Conversion Rate (after giving effect to any adjustment required pursuant to Section 404); (2) to convert such Subordinated Debenture into the kind and amount of shares of common equity, other securities or other property or assets (including cash) which the holder of such Subordinated Debenture would have been entitled to receive upon such Reclassification, Reorganization or Sale had such Subordinated Debenture been converted at the then applicable Conversion Rate (after giving effect to any adjustment required pursuant to Section 404) immediately prior thereto; or (3) to exchange such Subordinated Debenture with a third party that is not an Affiliate of the Company for the kind and amount of shares of common equity, other securities or other property or assets (including cash) which the holder of such Subordinated Debenture would have been entitled to receive upon such Reclassification, Reorganization or Sale had such Subordinated Debentures been converted at the then applicable Conversion Rate (after giving effect to any adjustment required pursuant to Section 404) immediately prior thereto. If the event referred to above is one to which the Company is a party, then the Company may elect the option specified in clause (1) above only if the Common Shares (as reclassified or changed in the case of a Reclassification) or shares of common equity into which the Subordinated Debentures are thereafter convertible are, and the Company in good faith believes will remain, listed on the Toronto Stock Exchange or the New York Stock Exchange, in the case of the Common Shares, or on a national securities exchange or the Toronto Stock Exchange or quoted on the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation System, in the case of common equity. If the event referred to above is not one to which the Company is a party, then the Company may elect the option specified in clause (1) above only if the Company uses its best efforts to so list such Common Shares (as reclassified or changed in the case of a Reclassification) or shares of common equity, as the case may be, into which the Subordinated Debentures are thereafter convertible. Notwithstanding any provision of the Indenture, if any transaction, including any Reclassification, Reorganization or Sale contemplated in this Section 405(a), occurs before March 7, 2008 as a result of which holders of Common Shares would be entitled to receive any property (including cash) other than Prescribed Securities with respect to or in exchange for such Common Shares, then the Company or the successor or purchasing corporation, as the case may be, shall execute with the Trustee a supplemental indenture as contemplated in Section 405(b) -31- providing that in respect of any Subordinated Debentures surrendered for conversion following such event and prior to March 7, 2008, the Subordinated Debentures shall be convertible into Prescribed Securities of a type specified by the Board of Directors and identified in such supplemental indenture and the Conversion Rate shall, if necessary, be adjusted so that the value of the Prescribed Securities immediately following such event into which each Subordinated Debenture is convertible immediately following such event is equivalent (as determined in good faith by the Board of Directors whose determination shall be conclusive and binding) to the value of the property a Holder of the Subordinated Debenture would have been entitled to receive had the Holder converted the Subordinated Debenture into Common Shares immediately prior to such event and, in the circumstances contemplated by this paragraph, no Holder shall have the right upon the surrender of Subordinated Debentures for conversion prior to March 7, 2008 to the property which holders of Common Shares shall be entitled to receive as a result of such event. (b) The Company, or such successor or purchasing corporation, as the case may be, shall, as a condition precedent to such Reclassification, Reorganization or Sale, execute and deliver to the Trustee a supplemental indenture (which shall conform to the Trust Indenture Act as in force at the date of the execution thereof) providing that the holder of each Subordinated Debenture then outstanding shall have the right to convert such Subordinated Debenture as described in this Section. Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article Four. If, in the case of any such Reclassification, Reorganization or Sale, the common equity or other securities and property receivable thereupon by a holder of Common Shares includes shares of common equity or other securities and property of a corporation other than the successor or purchasing corporation, as the case may be, in such Reclassification, Reorganization or Sale, then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the holders of the Subordinated Debentures as the Board of Directors shall reasonably consider necessary by reason of the foregoing. The provisions of this Section shall similarly apply to any successive Reclassification, Reorganization or Sale. Notice of the execution of each such supplemental indenture shall be mailed to each Holder of Subordinated Debentures at his address as the same appears on the registry books of the Company. Neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any such supplemental indenture relating either to the kind or amount of shares of common equity, other securities or other property or assets (including cash) receivable by holders of Subordinated Debentures upon the conversion of their Subordinated Debentures after any such Reclassification, Reorganization or Sale or to any adjustment to be made with respect thereto, but, subject to the provisions of Sections 601 and 603 of the Original Indenture, may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers' Certificate (which the Company shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto. Section 406. Notice of Certain Events. In case: -32- (a) the Company shall declare a dividend (or any other distribution) payable to all holders of Common Shares that requires no adjustment to the Conversion Rate pursuant to Section 404, (b) the Company shall authorize the granting to the holders of Common Shares of rights to subscribe for or purchase any shares of any class or of any other rights, (c) the Company shall become involved in any Reclassification, Reorganization or Sale, or (d) any voluntary or involuntary dissolution, liquidation or winding-up of the Company is proposed, then the Company shall cause to be filed at the office or agency maintained for the purpose of conversion of the Subordinated Debentures as provided in Section 1002 of the Original Indenture, and shall cause to be mailed to each holder of Subordinated Debentures at his address as it shall appear on the registry books of the Company at least 20 days before the date hereinafter specified (or the earlier of the dates hereinafter specified, in the event that more than one date is specified) a notice stating the date on which (1) a record is expected to be taken for the purpose of such dividend, distribution or rights, or if a record is not to be taken, the date as of which the holders of Common Shares of record to be entitled to such dividend, distribution or rights are to be determined, or (2) such Reclassification, Reorganization, Sale, dissolution, liquidation or winding-up is expected to become effective and the date, if any is to be fixed, as of which it is expected that holders of Common Shares of record shall be entitled to exchange their Common Shares for securities or other property deliverable upon such Reclassification, Reorganization or Sale, dissolution, liquidation or winding-up. Section 407. Taxes on Conversion. The Company will pay any and all documentary, stamp or similar taxes payable to the United States of America or Canada or any political subdivision or taxing authority thereof or therein in respect of the issue or delivery of Common Shares on conversion of Subordinated Debentures pursuant hereto; provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of Common Shares in a name other than that of the holder of the Subordinated Debentures to be converted and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid. The Company extends no protection with respect to any other taxes imposed in connection with conversion of Subordinated Debentures. Section 408. Company to Provide Shares. (a) The Company covenants to maintain, free from preemptive rights, out of its authorized but unissued shares, sufficient Common Shares to provide for the conversion of the Subordinated Debentures from time to time as such Subordinated Debentures are presented for conversion. -33- (b) If any Common Shares to be maintained for the purpose of conversion of Subordinated Debentures hereunder require registration with or approval of any governmental authority under any Canadian federal or provincial law or United States federal or state law before such shares may be validly issued or delivered upon conversion, then the Company covenants that it will in good faith and as expeditiously as commercially reasonable endeavor to secure such registration or approval, as the case may be; provided that nothing in this Section shall be deemed to affect in any way the obligations of the Company to convert Subordinated Debentures into Common Shares as provided in this Article Four. (c) Before taking any action which would cause an adjustment of the Conversion Rate that would cause the Conversion Price to be less than the then par value, if any, of the Common Shares, the Company will take all commercially reasonable corporate action which may, in the Opinion of Counsel, be necessary in order that the Company may validly and legally issue fully paid and non-assessable Common Shares at such adjusted Conversion Rate. (d) The Company covenants that all Common Shares which may be issued upon conversion of Subordinated Debentures will upon issue be fully paid and non-assessable by the Company and free of preemptive rights. Section 409. Rights under Rights Agreement. Each Common Share issued upon conversion of Subordinated Debentures pursuant to this Article Four shall be entitled to receive the appropriate number of Rights under the Rights Agreement, and the certificates representing the Common Shares issued upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of the Rights Agreement. Provided that the Rights Agreement requires that each Common Share issued upon conversion of Subordinated Debentures at any time prior to the distribution of separate certificates representing the Rights be entitled to receive the Rights, then, notwithstanding anything else to the contrary in this Article Four, there shall not be any adjustment to the Conversion Rate as a result of the issuance of Rights, the distribution of any entitlement to receive the Rights, the exercise or redemption of such Rights in accordance with the Rights Agreement, or the termination or invalidation of the Rights or similar rights. ARTICLE FIVE REDEMPTION AT THE OPTION OF THE COMPANY Section 501. Right to Redeem. The Company, at its option, may elect to redeem at the Redemption Price set forth in Section 302 all or a portion of the Subordinated Debentures at any time on or after March 19, 2008 in accordance with their terms and in accordance with Article Eleven of the Original Indenture if the Closing Sale Price of the Common Shares for at least 20 consecutive Trading Days in a period of 30 consecutive Trading Days ending on the fifth Business Day preceding the date of the Redemption Notice exceeds 125% of the Conversion Price. In addition to the Redemption Price, the Company shall pay the Holder an amount equal to the accrued and unpaid interest to the Redemption Date. -34- Section 502. Redemption Tax Event. On or after the occurrence of a Redemption Tax Event, the Company may, at its option, redeem the Subordinated Debentures in whole but not in part, upon providing notice in accordance with their terms and in accordance with Article Eleven of the Original Indenture and this Section 502, at the then applicable Redemption Price but without reduction for applicable Canadian withholding taxes (except for Excluded Holders). Such notice shall be given not less than 20 Business Days nor more than 60 Business Days prior to the Redemption Date; provided that (i) no such Redemption Notice may be given earlier than 60 Business Days prior to the earliest date on or from which the Company would be obligated to pay any Additional Amounts were a payment in respect of the Subordinated Debentures then due, and (ii) at the time such notice is given, the circumstances creating such obligation to pay such Additional Amounts remain in effect. In addition to the Redemption Price, the Company shall pay the Holder an amount equal to the accrued and unpaid interest to the Redemption Date. Prior to the giving of any such notice under this Section 502, the Company must deliver to the Trustee (x) a certificate stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right to the Company so to redeem have occurred and (y) an opinion of a nationally recognized Canadian tax counsel acceptable to the Trustee, acting reasonably, to the effect that the Company has or would become obligated to pay any Additional Amounts (which are more than a de minimis amount) as a result of the Redemption Tax Event. The Company's right to redeem the Subordinated Debentures shall continue as long as the Company is obligated to pay such Additional Amounts, notwithstanding that the Company shall have made payments of Additional Amounts. Section 503. Conversion Arrangements on Call for Redemption. In connection with any redemption of Subordinated Debentures, the Company may arrange for the purchase and conversion of any Subordinated Debentures called for redemption by an agreement with one or more investment bankers or other purchasers (the "Repurchasers") to purchase such Subordinated Debentures by paying to the Trustee in trust for the Holders, on or before the Close of Business on the Redemption Date, an amount that, together with any amounts deposited with the Trustee by the Company for the redemption of such Subordinated Debentures, is not less than the Redemption Price of such Subordinated Debentures. Notwithstanding anything to the contrary contained in this Article Five and in Article Eleven of the Original Indenture, the obligation of the Company to pay the Redemption Price shall be deemed to be satisfied and discharged to the extent such amount is so paid by such Repurchasers. If such an agreement is entered into (a copy of which shall be filed with the Trustee three days prior to the Redemption Date), any Subordinated Debentures called for redemption that are not duly surrendered for conversion by the Holders thereof may, at the option of the Company, be deemed, to the fullest extent permitted by law, and consistent with any agreement or agreements with such Repurchasers, to be acquired by such Repurchasers from such Holders and (notwithstanding anything to the contrary contained in Article Four) surrendered by such Repurchasers for conversion, all as of immediately prior to the Close of Business on the Redemption Date (and the right to convert any such Subordinated Debentures shall be extended through such time), subject to payment of the above amount as aforesaid. At the direction of the Company, the Trustee shall hold and dispose of any such amount deposited with it to the Holders in the same manner as it would monies deposited with it by the Company for the redemption of Subordinated Debentures. Without the Trustee's prior written consent, no arrangement between the Company and such Repurchasers for the purchase and conversion of any Subordinated Debentures shall increase or -35- otherwise affect any of the powers, duties, responsibilities or obligations of the Trustee as set forth in the Indenture, and the Company agrees to indemnify the Trustee from, and hold it harmless against, any loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of any Subordinated Debentures between the Company and such Repurchasers, including the costs and expenses, including reasonable legal fees, incurred by the Trustee in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of its powers, duties, responsibilities or obligations under the Indenture. Section 504. No Sinking Fund. The Subordinated Debentures shall not be entitled to the benefit of any sinking fund, and the provisions of Article Thirteen of the Original Indenture shall not apply to the Subordinated Debentures. ARTICLE SIX CHANGE IN CONTROL PURCHASE OFFER Section 601. Offer to Purchase Upon a Change in Control. In the event that a Change in Control shall occur, the Company shall offer ("Change in Control Purchase Offer") to purchase all of the Outstanding Subordinated Debentures, and upon the acceptance of all or part of such offer by any Holder, shall purchase all of such Holder's Subordinated Debentures, or any portion of the principal amount thereof that is equal to a $l,000 multiple thereof as specified by such Holder in the Change in Control Notice, on the Change in Control Purchase Date, at the Change in Control Purchase Price. Section 602. Notices; Method of Exercising Purchase Election, Etc. (a) Unless the Company shall have theretofore called for redemption all of the Outstanding Subordinated Debentures, within 15 Business Days after the occurrence of a Change in Control, the Company or, at the request and expense of the Company, the Trustee, shall deliver a Change in Control Purchase Offer Notice to all Holders of Subordinated Debentures and to beneficial owners as required by law, in the manner provided in Section 106 of the Original Indenture, notifying such Holders of the occurrence of the Change in Control and of the offer by the Company to purchase all of the Subordinated Debentures arising as a result thereof. The Company shall also deliver a copy of such Change in Control Purchase Offer Notice to the Trustee. Each Change in Control Purchase Offer Notice shall state: (i) the events causing a Change in Control and the date of such Change in Control; (ii) the last date on which the Change in Control Purchase Notice must be given; -36- (iii) the Change in Control Purchase Price; (iv) the Change in Control Purchase Date; (v) the election of the Company to pay the Change in Control Purchase Price in cash or Common Shares or any combination thereof, pursuant to Section 206, and the percentages of each; (vi) if the Company elects to pay all or some of the Change in Control Purchase Price in Common Shares, the method of calculating the Average Market Price of Common Shares; (vii) the name and address of the Paying Agent; (viii) the Conversion Rate and any adjustments thereto; (ix) that Subordinated Debentures with respect to which a Change in Control Purchase Notice has been given by the Holder may be converted pursuant to Article Four hereof only if the Change in Control Purchase Notice has been withdrawn in accordance with the terms of the Indenture; (x) that Subordinated Debentures, together with all necessary endorsements, must be surrendered to the Paying Agent to collect payment; (xi) that the Change in Control Purchase Price for any Subordinated Debenture as to which a Change in Control Purchase Notice has been duly given and not withdrawn will be paid promptly following the later of the Change in Control Purchase Date and the time of surrender of such Subordinated Debenture as described in Section 602(b); (xii) briefly, the procedures the Holder must follow to exercise rights under this Section; (xiii) the procedures for withdrawing a Change in Control Purchase Notice; (xiv) briefly, the conversion rights of the Subordinated Debentures; (xv) the CUSIP number or numbers of the Subordinated Debentures being purchased; and (xvi) a copy of the Company Notice as provided for in Section 206, if applicable. No failure of the Company to give the foregoing notice to a particular Holder and no defect therein shall limit the Company's obligation to make the Change in Control Purchase Offer or any Holder's right to accept such offer or affect the validity of the proceedings for the purchase of Subordinated Debentures pursuant thereto. -37- If any of the foregoing provisions or other provisions of this Article are inconsistent with applicable law, such law shall govern. (b) To accept a Change in Control Purchase Offer in whole or in part, a Holder shall deliver to the Trustee or any Paying Agent at any time prior to the Close of Business on the Change in Control Purchase Date (or if such day is not a Business Day, the immediately preceding Business Day) a Change in Control Purchase Notice. The Change in Control Purchase Notice shall state: (1) the certificate number of the Subordinated Debenture or Subordinated Debentures which the Holder will deliver to be purchased; (2) the portion of the principal amount of the Subordinated Debenture which the Holder will deliver to be purchased, which portion must be $1,000 or an integral multiple thereof; (3) that such Subordinated Debenture shall be purchased as of the Change in Control Purchase Date pursuant to the Change in Control Purchase Offer Notice; and (4) in the event that the Company elects, pursuant to Section 206 hereof, to pay the Change in Control Purchase Price to be paid as of such Change in Control Purchase Date (which must be a multiple of $1,000 principal amount), in whole or in part, in Common Shares but such portion of the Change in Control Purchase Price shall ultimately be payable to such Holder entirely in cash because any of the conditions to payment of the Change in Control Purchase Price in Common Shares is not satisfied prior to the Close of Business on such Change in Control Purchase Date, as set forth in Section 207 hereof, whether such Holder elects (i) to withdraw such Change in Control Purchase Notice as to some or all of the Subordinated Debentures to which such Change in Control Purchase Notice relates (stating the principal amount and certificate numbers of the Subordinated Debentures as to which such withdrawal shall relate), or (ii) to receive cash in respect of the entire Change in Control Purchase Price for all Subordinated Debentures (or portions thereof) to which such Change in Control Purchase Notice relates. If the Holder fails to indicate the Holder's choice with respect to the election described in paragraph (4) above, the Holder shall be deemed to have elected to receive cash in respect of the entire Change in Control Purchase Price for all Subordinated Debentures subject to the Change in Control Purchase Notice. Anything herein to the contrary notwithstanding, in the case of Global Securities, Change in Control Purchase Notices may be delivered and such Subordinated Debentures may be surrendered for redemption in accordance with the applicable procedures of the Depositary as in effect from time to time. The Holder shall deliver such Subordinated Debenture to the Paying Agent prior to, on or after the Change in Control Purchase Date (together with all necessary endorsements) at the offices of the Paying Agent, such delivery being a condition to receipt by the Holder of the Change in Control Purchase Price therefor; provided that such Change in Control Purchase Price shall be so paid pursuant to this Article only if the Subordinated Debenture so delivered to the -38- Paying Agent shall conform in all respects to the description thereof in the related Change in Control Purchase Notice. The right of the Holder to convert the Subordinated Debentures subject to a Change in Control Purchase Notice shall continue until the Close of Business on the Change in Control Purchase Date. (c) In the event a Change in Control Purchase Offer shall be accepted in accordance with the terms hereof, the Company shall pay or cause to be paid to the Trustee or the Paying Agent the Change in Control Purchase Price in cash, as provided above, or Common Shares, as provided in Section 206, or any combination thereof for payment to the Holder at the Close of Business on the Change in Control Purchase Date payable with respect to the Subordinated Debentures with respect to which the Change in Control Purchase Offer has been accepted. If the Paying Agent holds cash and/or Common Shares sufficient to pay the Change in Control Purchase Price of the Subordinated Debentures on the Business Day following the Change in Control Purchase Date in accordance with the terms of the Indenture, then as of the Close of Business on the Change in Control Purchase Date, such Subordinated Debenture will cease to be outstanding and interest on such Subordinated Debenture will cease to accrue, and be deemed to be paid, whether or not the Subordinated Debenture is delivered to the Paying Agent. Thereafter, all other rights of the Holder shall terminate, other than the right to receive the Change in Control Purchase Price upon delivery of the Subordinated Debenture. (d) Any Subordinated Debenture which is to be purchased only in part shall be surrendered to the Trustee (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder, a new Subordinated Debenture or Subordinated Debentures, of any authorized denomination as requested by such Holder in an aggregate principal amount equal to the portion of the principal amount of the Subordinated Debenture so surrendered that was not to be purchased. (e) All Subordinated Debentures delivered for purchase shall be delivered to the Trustee, the Paying Agent or any other agents (as shall be set forth in the Change in Control Purchase Offer Notice) to be canceled by or at the direction of the Trustee, which shall dispose of the same as provided in Section 309 of the Original Indenture. (f) The Company will comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act and any Canadian laws which may then be applicable in connection with the Change in Control Purchase Offer, and will file a Schedule TO or any other Schedule or filing required under the rules under the Exchange Act, and any Canadian laws which may then be applicable in connection with the Change in Control Purchase Offer. Section 603. Withdrawal of Change in Control Purchase Notice. A Change in Control Purchase Notice may be withdrawn by means of a written notice of withdrawal delivered to the office of the Paying Agent in accordance with the Change in Control Purchase Offer Notice at any time prior to the Close of Business on the Change in Control Purchase Date, specifying: -39- (i) the principal amount of the Subordinated Debentures with respect to which such notice of withdrawal is being submitted, (ii) the certificate number of the Subordinated Debentures being withdrawn in respect of which such notice of withdrawal is being submitted, and (iii) the principal amount, if any, of such Subordinated Debentures which remains subject to the original Change in Control Purchase Notice and which has been or will be delivered for purchase by the Company. There shall be no purchase of any Subordinated Debentures pursuant to this Section (other than through the issuance of Common Shares in payment of the Change in Control Purchase Price, including cash in lieu of fractional shares) if there has occurred (prior to, on or after, as the case may be, the giving, by the Holders of such Subordinated Debentures, of the required Change in Control Purchase Notice) and is continuing an Event of Default (other than a default in the payment of the Change in Control Purchase Price with respect to such Subordinated Debentures). The Paying Agent will promptly return to the respective Holders thereof any Subordinated Debentures (x) with respect to which a Change in Control Purchase Notice has been withdrawn in compliance with the Indenture, or (y) held by it during the continuance of an Event of Default (other than a default in the payment of the Change in Control Purchase Price with respect to such Subordinated Debentures) in which case, upon such return, the Change in Control Purchase Notice with respect thereto shall be deemed to have been withdrawn. ARTICLE SEVEN COVENANTS Section 701. Additional Amounts. All payments made by the Company under or with respect to the Subordinated Debentures, including the Subordinated Debenture Payments, if any, or delivery of Common Shares (including cash in lieu of fractional shares) made by or on behalf of the Company will be made without withholding or deduction for or on account of any present or future tax, duty, levy impost, assessment or other government charge (including penalties, interest and other liabilities related thereto) imposed or levied by or on behalf of the Government of Canada or of any province or territory thereof or by any authority or agency therein or thereof having power to tax ("Canadian Taxes"), unless the Company is required to withhold or deduct Canadian Taxes by law or by the interpretation or administration thereof by the relevant government authority or agency. If the Company is so required to withhold or deduct any amount for or on account of Canadian Taxes from any payment made under or with respect to the Subordinated Debentures as described above, the Company will pay as additional interest such additional amounts ("Additional Amounts") necessary so that the net amount received by each Holder of Subordinated Debentures after such withholding or deduction (including with respect to Additional Amounts) will not be less than the amount the Holder would have received if such Canadian Taxes had not been withheld or deducted (a similar payment will also be made to Holders (other than Excluded Holders (as defined herein)) that are exempt from withholding but are required to pay tax directly on amounts otherwise subject to withholding); provided that no Additional Amounts will be payable with respect to a payment made to a Holder or beneficial -40- owner of a Subordinated Debenture (an "Excluded Holder") (i) with which the Company does not deal at arm's length (for purposes of the Tax Act) at the time of the making of such payment, (ii) which is subject to such Canadian Taxes by reason of its failure to comply with any certification, identification, information, documentation or other reporting requirement if compliance is required by law, regulation, administrative practice or an applicable treaty as a precondition to exemption from, or a reduction in the rate of deduction or withholding of, such Canadian Taxes or (iii) which is subject to such Canadian Taxes by reason of its carrying on business in or otherwise being connected with Canada or any province or territory thereof otherwise than by the mere holding of Subordinated Debentures or the receipt of payment thereunder. Additional Amounts will be paid in cash, as applicable, at Maturity, on any Redemption Date, on a Conversion Date, on any Purchase Date or on any semi-annual interest payment date. The Company will make such withholding or deduction and remit the full amount deducted or withheld to the relevant authority as and when required in accordance with applicable law. The Company will pay all taxes, interest and other liabilities of the Company and any Holder which arise by virtue of any failure of the Company to withhold, deduct and remit to the relevant authority on a timely basis the full amounts required in accordance with applicable law. The Company will furnish to the Holders, within 30 days after the date the payment of any Canadian Taxes is due pursuant to applicable law, evidence of such payment by the Company. For greater certainty, this Section 701 does not apply to any payments made on Common Shares (or other securities) issued on redemption, purchase, conversion or Maturity. Section 308 of the Original Indenture shall not apply with respect to the payment of any Additional Amounts. Section 702. Amendment of Rights Agreement. The Company will not amend the Rights Agreement in any way that adversely affects the interests of Holders. ARTICLE EIGHT MISCELLANEOUS PROVISIONS Section 801. Trustee. The Trustee makes no undertaking or representations in respect of, and shall not be responsible in any manner whatsoever for and in respect of, the validity or sufficiency of this First Supplemental Indenture or the proper authorization or the due execution hereof by the Company or for or in respect of the recitals and statements contained herein, all of which recitals and statements are made solely by the Company. Section 802. Ratification. Except as expressly amended hereby, the Original Indenture shall continue in full force and effect in accordance with the provisions thereof and the Original Indenture is in all respects hereby ratified and confirmed. This First Supplemental Indenture and all its provisions shall be deemed a part of the Original Indenture in the manner and to the extent herein and therein provided. -41- Section 803. Governing Law. THIS FIRST SUPPLEMENTAL INDENTURE AND THE SUBORDINATED DEBENTURES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Section 804. Execution in Counterparts. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. -42- EXECUTION COPY IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, all as of the day and year first above written. INCO LIMITED By: /s/ Stuart F. Feiner ---------------------------- Name: Stuart F. Feiner Title: Executive Vice President, General Counsel and Secretary By: /s/ Farokh S. Hakimi ---------------------------- Name: Farokh S. Hakimi Title: Executive Vice President and Chief Financial Officer THE BANK OF NEW YORK, as Trustee By: /s/ Kisha A. Holder ---------------------------- Name: Kisha A. Holder Title: Assistant Treasurer EX-99.8.1 11 sc0126j.txt EXHIBIT 8.1: FORM T-1 = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| --------------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) --------------------------- INCO LIMITED (Exact name of obligor as specified in its charter) Canada 98-0000676 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 145 King Street West Suite 1500 Toronto, Ontario M5H 4B7 (Address of principal executive offices) (Zip code) 3 1/2% Subordinated Convertible Debentures due 2052 (Title of the indenture securities) = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. - -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Superintendent of Banks of the State 2 Rector Street, New York, N.Y. of New York 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005 (B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 17th day of April, 2003. THE BANK OF NEW YORK By: /S/ MARY LAGUMINA ------------------------------ Name: MARY LAGUMINA Title: VICE PRESIDENT EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 2002, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS In Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin.......................................... $4,706,760 Interest-bearing balances........................... 4,418,381 Securities: Held-to-maturity securities......................... 954,049 Available-for-sale securities....................... 16,118,007 Federal funds sold in domestic offices................. 460,981 Securities purchased under agreements to resell.............................................. 837,242 Loans and lease financing receivables: Loans and leases held for sale...................... 765,097 Loans and leases, net of unearned income...............31,906,960 LESS: Allowance for loan and lease losses............798,223 Loans and leases, net of unearned income and allowance.............................. 31,108,737 Trading Assets......................................... 6,969,387 Premises and fixed assets (including capitalized leases)................................. 823,932 Other real estate owned................................ 660 Investments in unconsolidated subsidiaries and associated companies............................ 238,412 Customers' liability to this bank on acceptances outstanding............................. 307,039 Intangible assets Goodwill............................................ 2,003,150 Other intangible assets............................. 74,880 Other assets........................................... 5,161,558 ----------- Total assets........................................... $74,948,272 =========== LIABILITIES Deposits: In domestic offices................................. $33,108,526 Noninterest-bearing.......................13,141,240 Interest-bearing..........................19,967,286 In foreign offices, Edge and Agreement subsidiaries, and IBFs............................ 22,650,772 Noninterest-bearing..........................203,426 Interest-bearing..........................22,447,346 Federal funds purchased in domestic offices............................................. 513,773 Securities sold under agreements to repurchase.......................................... 334,896 Trading liabilities.................................... 2,673,823 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases)............... 644,395 Bank's liability on acceptances executed and outstanding......................................... 308,261 Subordinated notes and debentures...................... 2,090,000 Other liabilities...................................... 5,584,456 ----------- Total liabilities...................................... $67,908,902 =========== Minority interest in consolidated subsidiaries........................................ 519,470 EQUITY CAPITAL Perpetual preferred stock and related surplus............................................. 0 Common stock........................................... 1,135,284 Surplus................................................ 1,056,295 Retained earnings...................................... 4,208,213 Accumulated other comprehensive income................. (120,108) Other equity capital components........................ 0 Total equity capital................................... 6,519,900 ----------- Total liabilities minority interest and equity capital............................................. $74,948,272 =========== I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief. Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct. Thomas A. Renyi Gerald L. Hassell Directors Alan R. Griffith - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----