Loading...
HomeMy WebLinkAboutFIN 26-15 C`is 00 -s- Report to •�=: -ice � � ` -:=�= Council I KERIN Report Number: FIN 26-15 Date: October 26, 2015 From: Paul Bigioni Director, Corporate Services & City Solicitor Subject: Veridian Corporation - Promissory Note Amending Agreement Recommendation: 1. That the maturity date on the Promissory Note in the amount of$7,095,000 owed by Veridian Corporation to the City be amended to December 31, 2018 at its face value subject to the existing terms and conditions and bearing interest at the greater of 6% or the Ontario Energy Board Deemed Rate as indicated on the Note; 2. That a By-law in the form attached providing for the approval and execution of a Note Amending Agreement be passed; 3. That the Mayor and Clerk be authorized to execute the Note Amending Agreement on behalf of the City of Pickering in the form attached; 4. That the Director, Corporate Services & City Solicitor be authorized to undertake any actions including negotiations or amendments to the terms and conditions of the Promissory Notes and/or the Note Amending Agreement which may be necessary in order to put the foregoing into effect; and 5. That the appropriate officials at the City of Pickering be given authority to take necessary action to give effect thereto. Executive Summary: Veridian Corporation, at its meeting of Thurdsay, September 24, 2015, approved renewing the Veridian Corporation Promissory Note of$7,095,000 for the City of Pickering, with a new maturity date of December 31, 2018. It is now appropriate for Council to approve the renewal of this Note and to provide the Director, Corporate Services & City Solicitor the necessary authority to give effect thereto. Financial Implications: The City currently receives $425,700 per year in interest from this investment. Amending the promissory note maturity date will ensure that the City continues to receive this revenue stream. FIN 26-15 October 26, 2015 Subject: Veridian Corporation — Promissory Note Amending Agreement Page 2 • Discussion: Should Council approve staffs recommendations, the amount of principal owing to the City of Pickering will remain unchanged at $7,095,000. However, the Veridian Corporation Note will be extended for a further three years from December 31, 2015 to December 31, 2018. It is anticipated that the rate of interest (6.0%)will remain the same or be higher during the three year renewal term. At the stated rate of interest, this investment provides the City's highest yielding rate of return on any of its corporate notes. At this time, there is no other form of investment with the same relatively low level of risk that provides this rate of return. The City also owns approximately 41% of Veridian, providing an additional level of assurance that the Note and all accruing interest will be repaid. Table One below provides a summary of the Veridian Promissary Notes held by the City. Table One Maturity Principal Interest Interest Promissory Note Desc. Dates Amount Rate Earned per year Due Dec Veridian Corporation (VC) 31, 2015 * $7,095,000 6.00% $425,700 Due Dec Veridian Conn Inc (VCI) 31, 2019 $17,974,000 4.47% 803,438 Total Interest Revenue $1,229,138 * Extending the maturity date to December 31, 2018 is the subject of this Report. CORP0227-07/01 revised FIN 26-15 October 26, 2015 Subject: Veridian Corporation — Promissory Note Amending Agreement Page 3 The decision by Council to merge Pickering Hydro with Clarington Hydro and Ajax Hydro to form Veridian Corporation continues to benefit the Pickering taxpayer. Table Two provides a financial snapshot of the dividends and interest payments received from Veridian from 2010 up to and including 2015. Table Two $4,000,000 $3,500,000 ■ $3,000,000 ■ . ■ $2,500,000 ■ . ■ ■ ■ $2,000,000 ■ , ■ ■ ■ $1,500,000 - . ■ � � ■ $1,000,000 2010 2011 2012 2013 2014 2015 ■ Dividends ■ Interest From 2010 to 2015, the City has received $21.1 million that is used to fund City general operations. The City's 2015 budget includes $3.1 million in Veridian revenues consisting of$1.9 in dividends and $1.2 in interest payments. Without the Veridian revenues, the 2015 property tax levy increase would have increased from 3.75% to 10.1% or the City would have had to make severe reductions to its operating and capital budgets. Attachments: 1. Veridian Corporation Resolution #2015-VC38 2. By-law to Approve and Authorize the Execution of a Note Amending Agreement 3. Note Amending Agreement CORP0227-07/01 revised FIN 26-15 October 26, 2015 Subject: Veridian Corporation — Promissory Note Amending Agreement Page 4 Prepared By: Appro • Endorsed By: t Stan Karwowski Paul Bi•ioni Division Head, Finance & Treasurer Director, Corpora.- Services & City Solicitor SK:ks Recommended for the consideration of Pickering City Council e92-0`5 l Tony Prevedel, P.Eng. Chief Administrative Officer CORP0227-07/01 revised • • ATTACHMENT# / TO REPORT# a 10- ,of... '‘f • MEMORANDUM VERIDIAN C O N N E C T I O N S To: Martin DeRond,Town of Ajax Cc: Laurie McLorg Matt MacDonald, City of Belleville Michael Angemeer Debbie Shields, City of Pickering George Armstrong Ann Greentree,Municipality of Tanya Laschuk, Clarington From: Adrienne Windsor • Date: October 5,2015 Re: Extension of Veridian Corporation Promissory Notes—Instructions to Municipal Shareholders I have received a request for directions as to the steps that are required to take in order to complete the extension of the Veridian Corporation Promissory Notes. Steps to be taken Veridian Corporation now wishes to extend the maturity date for an additional period of three years to December 31, 2018, such extension to be effective as of December 30,2015. This will be achieved by taking the following steps, which is the same process that was followed in 2012 to effect the extension of the Current Promissory Notes: 1. Veridian Corporation, Veridian Connections Inc. and Veridian Energy Inc. approved the following resolutions at their September 24,2015 board meetings. Resolution#2015-VC38(Veridian Corporation and Veridian Energy Inc.) Resolution#2015-VCI28 (Veridian Connections Inc.) RESOLVED THAT; WHEREAS the Promissory Notes owed by Veridian Corporation to the municipal shareholders mature on December 31st, 2015; and, WHEREAS Veridian Management and Treasurers of the municipal shareholders have met and agreed upon terms for renewal of the Promissory Notes; The Audit and Risk Management Committee recommends to the Veridian Corporation Board and the Veridian Connections Board the renewal of the Shareholder Promissory Notes as outlined in the report prepared by the Vice President Financial Services and Chief Financial Officer as presented to the Veridian Corporation Audit and Risk Management Committee meeting held on September 2,2015. :ATTACHMENT# � :TO REPORT# a(0- t S� Date: October 5,2015 a .of. °Z Page 2 Memo re: Extension of Veridian Corporation Promissory Notes— Instructions to Municipal Shareholders 2. Our solicitors, Borden, Ladner Gervais have prepared a by-law (attached) to be passed by each of the Municipal Shareholders in order to: (i) authorize the entry of such Municipal Shareholder into the Note Amending Agreement, (ii) Cu)i approve the issue by Veridian Corporation of its respective New Promissory Note,and (iii) agree to surrender its Current Promissory Note for cancellation. Each Municipal Shareholder should review and complete the required details in the draft by-law provided and pass such by-law at the required meeting of the Municipal Shareholder. Note: Borden Ladner Gervais holds the Current Promissory Notes in their vault, on behalf of the Municipal Shareholders;therefore there is no requirement for the Municipal Shareholders to physically surrender the Current Promissory Notes. 3. Once such by-law has been passed,each Municipal Shareholders should provide: (i) a scanned pdf copy by email to Adrienne Windsor; (awindsor@veridian.on.ca),and (ii) an original of the executed by-law, to Veridian Corporation, 55 Taunton Road E., Ajax,Ontario,Attention Adrienne Windsor. • 4. Once Veridian has received a copy of each by-law, I will commence circulating the Note Amending Agreement and New Promissory Note to be executed by each Municipal Shareholder. I will make contact with each one of you to schedule the date/time the agreement can be executed by yourself and your Mayor. 5. Once all relevant parties have signed the Note Amending Agreement and New Promissory Notes,Veridian will provide such documents, and the by-laws of the Municipal Shareholders, to Borden Ladner Gervais. The documents will be dated and come into effect on December 30, 2015. On December 30, we will arrange for the Current Promissory Notes, which are held in Borden, Ladner Gervais's vault, to be marked cancelled. With the permission of the Municipal Shareholders,we will then deposit the New Promissory Notes in Borden Ladner Gervais's vault to be held pending further instructions from the Municipal Shareholders. 6. Finally, pdf copies of the executed and dated Note Amending Agreement and New Promissory Notes to all parties will be delivered to each respective office for your records. I trust the above is helpful. Please do not hesitate to contact me should you have any additional questions regarding the process. ATTACHMENT# a TO REPORT# F./,- a(o -1ST .of. THE CORPORATION OF THE CITY OF PICKERING BY-LAW NO. 1.1/15 Being a by-law to approve and authorize the execution of a note amending agreement made as of the [_26th 1 day of [ October], 2015 in respect of fourth amended and restated promissory notes dated October 31, 2012 issued by Veridian Corporation in favour of The Corporation of the Town of Ajax, The Corporation of the City of Belleville,The Corporation of the Municipality of Clarington and The Corporation of the City of Pickering, and to approve the issue of fifth amended and restated promissory notes dated as of the [30th ] day of[December ],2015. WHEREAS the Electricity Act, 1998 authorized a municipality to make by-laws transferring employees, assets, liabilities, rights and obligations of the municipal corporation and to receive securities as consideration therefor and Veridian Corporation ("VC") issued promissory notes (the "Original Notes") dated September 28, 2001 in favour of The Corporation of the Town of Ajax("Ajax), The Corporation of the City of Belleville ("Belleville"), The Corporation of the Municipality of Clarington ("Clarington") and The Corporation of the City of Pickering("Pickering")due on the 31st day of October,2006; AND WHEREAS the Original Notes were amended and restated pursuant to note amending agreements dated as of October 1, 2006, October 31,2009 and October 31, 2012 and the fourth amended and restated promissory notes dated the 31st day of October, 2012 are due on the 31st day of December, 2015 (the "Fourth Restated Notes"); AND WHEREAS VC has requested an extension of the maturity date of the Fourth Restated Notes; NOW THEREFORE THE COUNCIL OF THE CORPORATION OF THE CITY OF PICKERING ENACTS AS FOLLOWS: 1. THAT Council approves the extension of the maturity date of the Fourth Restated Notes to the 31st day of December,2018. 2. THAT Council approves and authorizes the note amending agreement(the"Agreement") made as of the [26 ] day of[ October], 2015 amongst Ajax,Belleville, Clarington and Pickering, as the holders of the Fourth Restated Notes and VC, Veridian Connections Inc. and Veridian Energy Inc. in the form of the draft agreement presented to Council and attached hereto as Schedule"A". 3. THAT Council approves the issue of the fifth amended and restated promissory notes (each a"Fifth Restated Note")by VC pursuant to the Agreement. 4. THAT the Mayor and the Clerk are authorized to execute the Agreement. 5. THAT the Clerk is authorized and directed to surrender to VC the Fourth Restated Note in favour of this Municipality in the principal amount of$7,095,000 and to receive a Fifth Restated Note in favour of this Municipality pursuant to the Agreement. 6. THAT the Clerk is authorized to affix the Corporate Seal of The Corporation of the City of Pickering to the Agreement. ATTACHNIENT# TO REPORT# - 1 S� �- .of. a THIS BY-LAW SHALL COME INTO FORCE AND TAKE EFFECT IMMEDIATELY ON AND AFTER THE PASSING THEREOF. Read a first time this 26 day of October,2015. Read a second time this 26 day of October,2015. Read a third time this 26 day of October,2015. David Ryan,Mayor Debbie Shields,Clerk TOR01:5997237:v2 ATTACHMENT# TO REPORT# Fr ?to - /S� .Of a � NOTE AMENDING AGREEMENT THIS AGREEMENT made as of the 30th day of December, 2015. BETWEEN: The Corporation of the Town of Ajax ("Ajax") -and— The Corporation of the Municipality of Clarington ("Clarington") and— The Corporation of the City of Pickering("Pickering") -and— The Corporation of the City of Belleville("Belleville") (Ajax, Belleville, Clarington and Pickering are referred to collectively herein as the"Veridian Shareholders") -and— Veridian Corporation, a corporation existing under the laws of Ontario ("VC") -and— Veridian Connections Inc., a corporation existing under the laws of Ontario("VCI") -and— Veridian Energy Inc., a corporation existing under the laws of Ontario ("VEI") (VC,VCI and VEI are referred to collectively herein as the"Veridian Group") ATTACHMENT# TO REPORT# F/ a(, --/ S� -2-0faA RECITALS: A. VC has previously issued one promissory note to each of the Veridian Shareholders (collectively the "VC Notes") issued pursuant to the applicable transfer by-laws enacted pursuant to the authority granted under the Electricity Act, 1998, which VC Notes are outstanding as of the date hereof; B. The Veridian Shareholders wish to amend the VC Notes as provided herein; C. The Veridian Shareholders have consulted with the Veridian Group in connection With the proposed amendments to the VC Notes; NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the respective covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Amendment: The Veridian Shareholders will surrender forthwith to VC the existing VC Notes (the VC Notes hereinafter collectively, the "Predecessor Notes") (descriptions of such Predecessor Notes being set out in Appendix "A" attached hereto). VC will forthwith issue an amended and restated promissory note to each of the four Veridian Shareholders (the"Amended and Restated Promissory Notes") in the same principal amounts as the VC Notes in the forms attached hereto as Appendix `B". For greater clarity, the amendment and restatement of the Predecessor Notes shall not extinguish the debt created pursuant to the transfer by-laws and Predecessor Notes and such debt is continued as amended and restated in the Amended and Restated Promissory Notes. 2. Counterparts: This Note Amending Agreement may be executed in any number of counterparts, each of which will be deemed to be an original and all of which taken together will be deemed to constitute one and the same agreement. IN WITNESS WHEREOF the parties hereto have duly authorized and executed this Note Amending Agreement as of the day and year first above written. THE CORPORATION OF THE TOWN OF AJAX By: c/s Name: Steve Parish Title: Mayor By: c/s Name: Martin DeRond Title: Clerk _ i ATTACHMENT# 3 TO REPORT# r/hI -3 - 3 .of. a c c96—(s- THE CORPORATION OF THE CITY OF BELLEVILLE By: c/s Name: Taso Christopher Title: Mayor By: c/s Name: Matt MacDonald Title: Clerk THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON By: c/s Name: Adrian Foster Title: Mayor By: c/s Name: Ann Greentree Title: Clerk THE CORPORATION OF THE CITY OF PICKERING By: c/s Name: David Ryan Title: Mayor By: c/s • Name: Debbie Shields Title: Clerk ATTACHMENT# 3 TO REPORT# r/ri -4- cD, 6; '-/c VERIDIAN CORPORATION By: c/s Name: Title: President By: c/s Name: Title: Chair VERIDIAN CONNECTIONS INC. By: c/s Name: Title: President By: c/s Name: Title: Chair VERIDIAN ENERGY INC. By: c/s Name: Title: President By: c/s Name: Title: Director ATTACHMENT# J TO REPORT# Fi .of. �. oZ e::26 Appendix"A" "A" Four(4)VC Predecessor Notes described below. Issuer Holder Date Principal Amount 1. Veridian Corporation The Corporation of the October 31St, $5,550,000 Town of Ajax 2012 2. Veridian Corporation The Corporation of the October 31st, $2,355,000 Municipality of 2012 Clarington 3. Veridian Corporation The Corporation of the October 31St, $7,095,000 City of Pickering 2012 4. Veridian Corporation The Corporation of the October 31St, $2,206,000 City of Belleville 2012 • ATTACHMENT# 3 TO REPORT#//nI .of. a b-1C Appendix "B" Four(4)VC Amended and Restated Promissory Notes attached hereto. TOR01:5989554:v5 ATTACHMENT# TO REPORT# Fp, .of. op °� a(o-IS FIFTH AMENDED AND RESTATED TERM PROMISSORY NOTE Maturity Date: December 31St, 2018 Principal Amount: $5,550,000 This note amends and restates a Fourth Amended and Restated Promissory Note (the "Predecessor Note") issued by Veridian Corporation to the Corporation of the Town of Ajax(the "Holder") on October 31st, 2012 for the Principal Amount. The Predecessor Note was issued pursuant to By-law No. 135-2012 of the Holder. This note amends the terms of repayment of, and does not extinguish, the debt created pursuant to the transfer by-law (enacted pursuant to the authority granted under the Electricity Act, 1998) as set forth originally in By-Law 115-99 of the Holder, as amended by By-Law 135-2012, and the Predecessor Note. FOR VALUE RECEIVED, Veridian Corporation (the "Corporation"), hereby promises to pay to or to the order of the Corporation of the Town of Ajax, in lawful money of Canada, on December 31st, 2018 (the "Maturity Date") at the principal office of the Holder, the principal amount of FIVE MILLION, FIVE HUNDRED AND FIFTY THOUSAND Dollars ($5,550,000) (the "Principal Amount") together with interest on the unpaid Principal Amount. 1. Interest Rate. Interest on the Principal Amount shall be calculated annually, not in advance, for the period from January 1st, 2016 until the Maturity Date, at a rate equal to the greater of: (a) six percent (6%), and (b) a rate equal to the Ontario Energy Board ("OEB") deemed long-term debt rate as set forth on an annual basis in the OEB's Cost of Capital Parameter Updates for Cost of Service Applications, or as the deemed long-term debt rate may otherwise be established by the OEB (the "Interest Rate"). Interest at the Interest Rate shall be payable on December 31st in each year up to and including the Maturity Date. The Corporation acknowledges that the Interest Rate payable pursuant to this note shall be automatically amended from time to time to reflect the deemed rate established by the OEB from time to time and this note shall be automatically amended from time to time to reflect any change to the Interest Rate as determined by the OEB provided that such deemed rate is greater than six percent (6%). Notwithstanding that the Interest Rate pursuant to this note shall be amended, the effective date of any change in the Interest Rate pursuant to this note will be as of January 1st each year. 2. Acceleration on Default. Upon default in the payment of any principal or interest due hereunder, or if the undersigned shall become insolvent or bankrupt or make a proposal in bankruptcy, the entire unpaid principal indebtedness owing by the undersigned to the Holder evidenced hereby and all interest accrued thereon to the date of payment shall forthwith become due and payable upon demand by the Holder subject to any subordination and postponement to any other financial institution or lender. ATTACHMENT# TO REPORT# S .ofa a6"/� 3. Ranking of this Note. This Note shall rank equally in all respects as to the payment of principal and interest hereunder with promissory notes issued to the Corporation of the City of Pickering, to the Corporation of the Municipality of Clarington and to the Corporation of the City of Belleville (collectively the "Municipalities") described in Schedule "A" hereto (together the "Other Notes"). 4. Conversion of this Note. All (but not less than all) of the Principal Amount of this Note is convertible into fully-paid and non-assessable common shares of the Corporation based on the exchange ratio specified herein at the option of the Holder, which option may be exercised by the Holder by notice in writing to the Corporation on or before the Maturity Date. The exchange ratio for the conversion of the Principal Amount of this Note shall be on the basis that, for every $1,000.00 of Principal Amount, 1 fully paid and non-assessable common share of the Corporation shall be issued to the Holder. The conversion of the Principal Amount will be effected on the date determined by the Holder following consultation with the Corporation. 5. Subordination. The Holder acknowledges and agrees that the obligation of the Corporation to repay the Principal Amount and the principal amount of the Other Notes is subordinated and postponed to the obligations of the Corporation from time to time to any other financial institution or lender. The Holder will execute, promptly do, deliver or cause to be done, executed and delivered all further acts, documents and things as may be required to provide for the subordination and postponement of the Holder's rights evidenced by this Note. 6. Revisions and Replacement. At the sole option of the Holder, the Maturity Date and any of the terms of this Note may be revised, changed or restated by the Holder following consultation with the Corporation. If this Note is revised, changed or restated, the Corporation may cancel and replace this Note in which case,the Holder shall forthwith surrender this Note for cancellation. 7. Sale of Shares. In the event that the Holder transfers its common shares in the capital of the Corporation (in accordance with the terms of a shareholders' agreement among the Holder, the Municipalities, Veridian Connections Inc., Veridian Energy Inc. and the Corporation dated September 28, 2001, as amended and/or restated from time to time) prior to the Maturity Date, the Note shall remain due to the Holder in accordance with its terms. 8. Note Non-negotiable and Non-assignable. The Note shall be non-negotiable and non-assignable. ATTACHMENT# 3 TO REPORT#F(/J IN WITNESS WHEREOF Veridian Corporation has caused this Note to be signed under its corporate seal by its duly authorized officers as of this [ day of 1,2015. VERIDIAN CORPORATION By: Name: Title: Chair By: Name: Title: President • _4_ ATTACHMENT# J TO REPORT# /� c2(0.1c / O .of. SCHEDULE"A" 1. Fourth Amended and Restated Term Promissory Note issued by Veridian Connections Inc.to the Corporation of the Municipality of Clarington in the principal amount of$5,966,000 and dated March 30, 2010. 2. Fourth Amended and Restated Term Promissory Note issued by Veridian Connections Inc. to the Corporation of the City of Pickering in the principal amount of$17,974,000 and dated March 30, 2010. 3. Fifth Amended and Restated Term Promissory Note issued by Veridian Corporation to the Corporation of the Municipality of Clarington in the principal amount of$2,355,000 and dated [ -I,2015. 4. Fifth Amended and Restated Term Promissory Note issued by Veridian Corporation to the Corporation of the City of Pickering in the principal amount of $7,095,000 and dated [ -I, 2015. 5. Fifth Amended and Restated Term Promissory Note issued by Veridian Corporation to the Corporation of the City of Belleville in the principal amount of $2,206,000 and dated [ 1, 2015. 6. Fourth Amended and Restated Term Promissory Note issued by Veridian Connections Inc. to the Corporation of the City of Belleville in the principal amount of$5,588,000 and dated March 30, 2010. TOR01:5989550:v2 ATTACHMENT#3 TO REPORT#rp o?(,,/c ft .of. FIFTH AMENDED AND RESTATED TERM PROMISSORY NOTE Maturity Date: December 31st,2018 Principal Amount: $2,355,000 This note amends and restates a Fourth Amended and Restated Promissory Note (the "Predecessor Note") issued by Veridian Corporation to the Corporation of the Municipality of Clarington (the "Holder") on October 31st, 2012 for the Principal Amount. The Predecessor Note was issued pursuant to By-law No. 2012-077 of the Holder. This note amends the terms of repayment of, and does not extinguish, the debt created pursuant to the transfer by-law (enacted pursuant to the authority granted under the Electricity Act, 1998) as set forth originally in By-Law 99-173 of the Holder, as amended by By-Law 2012-077, and the Predecessor Note. FOR VALUE RECEIVED, Veridian Corporation (the "Corporation"), hereby promises to pay to or to the order of the Corporation of the Municipality of Clarington, in lawful money of Canada, on December 31St, 2018 (the "Maturity Date") at the principal office of the Holder, the principal amount of TWO MILLION, THREE HUNDRED AND FIFTY-FIVE THOUSAND Dollars ($2,355,000) (the "Principal Amount") together with interest on the unpaid Principal Amount. 1. Interest Rate. Interest on the Principal Amount shall be calculated annually, not in advance, for the period from January 1St, 2016 until the Maturity Date, at a rate equal to the greater of: (a) six percent (6%), and (b) a rate equal to the Ontario Energy Board ("OEB") deemed long-term debt rate as set forth on an annual basis in the OEB's Cost of Capital Parameter Updates for Cost of Service Applications, or as the deemed long-term debt rate may otherwise be established by the OEB (the "Interest Rate"). Interest at the Interest Rate shall be payable on December 31St in each year up to and including the Maturity Date. The Corporation acknowledges that the Interest Rate payable pursuant to this note shall be automatically amended from time to time to reflect the deemed rate established by the OEB from time to time and this note shall be automatically amended from time to time to reflect any change to the Interest Rate as determined by the OEB provided that such deemed rate is greater than six percent (6%). Notwithstanding that the Interest Rate pursuant to this note shall be amended, the effective date of any change in the Interest Rate pursuant to this note will be as of January 1St each year. 2. Acceleration on Default. Upon default in the payment of any principal or interest due hereunder, or if the undersigned shall become insolvent or bankrupt or make a proposal in bankruptcy, the entire unpaid principal indebtedness owing by the undersigned to the Holder evidenced hereby and all interest accrued thereon to the date of payment shall forthwith become due and payable upon demand by the Holder subject to any subordination and postponement to any other financial institution or lender. ATTACHMENT# TO REPORT# FP," oZ(p-6 -2 - fc 3. Ranking of this Note. This Note shall rank equally in all respects as to the payment of principal and interest hereunder with promissory notes issued to the Corporation of the Town of Ajax, to the Corporation of the City of Pickering and to the Corporation of the City of Belleville (collectively the "Municipalities") described in Schedule "A"hereto(together the "Other Notes"). 4. Conversion of this Note. All (but not less than all) of the Principal Amount of this Note is convertible into fully-paid and non-assessable common shares of the Corporation based on the exchange ratio specified herein at the option of the Holder, which option may be exercised by the Holder by notice in writing to the Corporation on or before the Maturity Date. The exchange ratio for the conversion of the Principal Amount of this Note shall be on the basis that, for every $1,000.00 of Principal Amount, 1 fully paid and non-assessable common share of the Corporation shall be issued to the Holder. The conversion of the Principal Amount will be effected on the date determined by the Holder following consultation with the Corporation. 5. Subordination. The Holder acknowledges and agrees that the obligation of the Corporation to repay the Principal Amount and the principal amount of the Other Notes is subordinated and postponed to the obligations of the Corporation from time to time to any other financial institution or lender. The Holder will execute, promptly do, deliver or cause to be done, executed and delivered all further acts, documents and things as may be required to provide for the subordination and postponement of the Holder's rights evidenced by this Note. 6. Revisions and Replacement. At the sole option of the Holder, the Maturity Date and any of the terms of this Note may be revised, changed or restated by the Holder following consultation with the Corporation. If this Note is revised, changed or restated, the Corporation may cancel and replace this Note in which case,the Holder shall forthwith surrender this Note for cancellation. 7. Sale of Shares. In the event that the Holder transfers its common shares in the capital of the Corporation (in accordance with the terms of a shareholders' agreement among the Holder, the Municipalities, Veridian Connections Inc., Veridian Energy Inc. and the Corporation dated September 28, 2001, as amended and/or restated from time to time) prior to the Maturity Date, the Note shall remain due to the Holder in accordance with its terms. 8. Note Non-negotiable and Non-assignable. The Note shall be non-negotiable and non-assignable. ATTACHMENT# _TO REPORT#Ffi■\ - 3 - ( 3 .of. a a(a-�S IN WITNESS WHEREOF Veridian Corporation has caused this Note to be signed under its corporate seal by its duly authorized officers as of this [ 1 day of I 1, 2015. VERIDIAN CORPORATION By: Name: Title: Chair By: • Name: Title: President • ATTACHMENT# TO REPORT#f, -4- / I-7Z-.Of. ,c9_a a6 SCHEDULE"A" 1. Fourth Amended and Restated Term Promissory Note issued by Veridian Connections Inc.to the Corporation of the Town of Ajax in the principal amount of$14,060,000 and dated March 30, 2010. 2. Fourth Amended and Restated Term Promissory Note issued by Veridian Connections Inc. to the Corporation of the City of Pickering in the principal amount of$17,974,000 and dated March 30,2010. 3. Fifth Amended and Restated Term Promissory Note issued by Veridian Corporation to the Corporation of the Town of Ajax in the principal amount of $5,550,000 and dated F 1,2015. 4. Fifth Amended and Restated Term Promissory Note issued by Veridian Corporation to the Corporation of the City of Pickering in the principal amount of $7,095,000 and dated [ 1, 2015. 5. Fifth Amended and Restated Term Promissory Note issued by Veridian Corporation to the Corporation of the City of Belleville in the principal amount of $2,206,000 and dated [ 1,2015. 6. Fourth Amended and Restated Term Promissory Note issued by Veridian Connections Inc. to the Corporation of the City of Belleville in the principal amount of$5,588,000 and dated March 30,2010. TOR01:5989549:v3 ' II • ATTACHMENT# 3 TO REPORT#F.-0J I S.of. a a a6-1ST_ FIFTH AMENDED AND RESTATED TERM PROMISSORY NOTE Maturity Date: December 31st, 2018 Principal Amount: $7,095,000 This note amends and restates a Fourth Amended and Restated Promissory Note (the "Predecessor Note") issued by Veridian Corporation to the Corporation of the City of Pickering (the "Holder") on October 31st, 2012 for the Principal Amount. The Predecessor Note was issued pursuant to By-law No. 7245/12 of the Holder. This note amends the terms of repayment of, and does not extinguish, the debt created pursuant to the transfer by-law (enacted pursuant to the authority granted under the Electricity Act, 1998) as set forth originally in By-Law 5586/99 of the Holder, as amended by By-Law 7245/12, and the Predecessor Note. FOR VALUE RECEIVED, Veridian Corporation (the "Corporation"), hereby promises to pay to or to the order of the Corporation of the City of Pickering, in lawful money of Canada, on December 31st, 2018 (the "Maturity Date") at the principal office of the Holder, the principal amount of SEVEN MILLION NINETY-FIVE THOUSAND Dollars ($7,095,000) (the "Principal Amount") together with interest on the unpaid Principal Amount. 1. Interest Rate. Interest on the Principal Amount shall be calculated annually, not in advance, for the period from January 1st, 2016 until the Maturity Date, at a rate equal to the greater of: (a) six percent (6%), and (b) a rate equal to the Ontario Energy Board ("OEB") deemed long-term debt rate as set forth on an annual basis in the OEB's Cost of Capital Parameter Updates for Cost of Service Applications, or as the deemed long-term debt rate may otherwise be established by the OEB (the "Interest Rate"). Interest at the Interest Rate shall be payable on December 31St in each year up to and including the Maturity Date. The Corporation acknowledges that the Interest Rate payable pursuant to this note shall be automatically amended from time to time to reflect the deemed rate established by the OEB from time to time and this note shall be automatically amended from time to time to reflect any change to the Interest Rate as determined by the OEB provided that such deemed rate is greater than six percent (6%). Notwithstanding that the Interest Rate pursuant to this note shall be amended, the effective date of any change in the Interest Rate pursuant to this note will be as of January 15t each year. 2. Acceleration on Default. Upon default in the payment of any principal or interest due hereunder, or if the undersigned shall become insolvent or bankrupt or make a proposal in bankruptcy, the entire unpaid principal indebtedness owing by the undersigned to the Holder evidenced hereby and all interest accrued thereon to the date of payment shall forthwith become due and payable upon demand by the Holder subject to any subordination and postponement to any other financial institution or lender. ATTACHMENT#3 TO REPORT#1N 6-/S -2 - /4, .0f. ac9„ 3. Ranking of this Note. This Note shall rank equally in all respects as to the payment of principal and interest hereunder with promissory notes issued to the Corporation of the Town of Ajax, to the Corporation of the Municipality of Clarington and to the Corporation of the City of Belleville (collectively the "Municipalities") described in Schedule "A" hereto (together the "Other Notes"). 4. Conversion of this Note. All (but not less than all) of the Principal Amount of this Note is convertible into fully-paid and non-assessable common shares of the Corporation based on the exchange ratio specified herein at the option of the Holder, which option may be exercised by the Holder by notice in writing to the Corporation on or before the Maturity Date. The exchange ratio for the conversion of the Principal Amount of this Note shall be on the basis that, for every $1,000.00 of Principal Amount, 1 fully paid and non-assessable common share of the Corporation shall be issued to the Holder. The conversion of the Principal Amount will be effected on the date determined by the Holder following consultation with the Corporation. 5. Subordination. The Holder acknowledges and agrees that the obligation of the Corporation to repay the Principal Amount and the principal amount of the Other Notes is subordinated and postponed to the obligations of the Corporation from time to time to any other financial institution or lender. The Holder will execute, promptly do, deliver or cause to be done, executed and delivered all further acts, documents and.things as may be required to provide for the subordination and postponement of the Holder's rights evidenced by this Note. 6. Revisions and Replacement. At the sole option of the Holder, the Maturity Date and any of the terms of this Note may be revised, changed or restated by the Holder following consultation with the Corporation. If this Note is revised, changed or restated, the Corporation may cancel and replace this Note in which case,the Holder shall forthwith surrender this Note for cancellation. 7. Sale of Shares. In the event that the Holder transfers its common shares in the capital of the Corporation (in accordance with the terms of a shareholders' agreement among the Holder, the Municipalities, Veridian Connections Inc., Veridian Energy Inc. and the Corporation dated September 28, 2001, as amended and/or restated from time to time) prior to the Maturity Date, the Note shall remain due to the Holder in accordance with its terms. 8. Note Non-negotiable and Non-assignable. The Note shall be non-negotiable and non-assignable. Ai iI CNMEN1 # 3 TO REPORT# 1•3 v0 ' C - 3 - 1 �.of.a � IN WITNESS WHEREOF Veridian Corporation has caused this Note to be signed under its corporate seal by its duly authorized officers as of this 1 day of I 1, 2015. VERIDIAN CORPORATION By: Name: Title: Chair By: Name: Title: President 3 ATTACHMENT# TO REPORT#[Ir -4- .of.ca c9,6-�� SCHEDULE "A" 1. Fourth Amended and Restated Tenn Promissory Note issued by Veridian Connections Inc.to the Corporation of the Municipality of Clarington in the principal amount of$5,966,000 and dated March 30, 2010. 2. Fourth Amended and Restated Term Promissory Note issued by Veridian Connections Inc. to the Corporation of the Town of Ajax in the principal amount of$14,060,000 and dated March 30, 2010. 3. Fifth Amended and Restated Term Promissory Note issued by Veridian Corporation to the Corporation of the Municipality of Clarington in the principal amount of$2,355,000 and dated [ 1,2015. 4. Fifth Amended and Restated Term Promissory Note issued by Veridian Corporation to the Corporation of the Town of Ajax in the principal amount of $5,550,000 and dated [ 1, 2015. 5. Fifth Amended and Restated Term Promissory Note issued by Veridian Corporation to the Corporation of the City of Belleville in the principal amount of $2,206,000 and dated [ 1, 2015. 6. Fourth Amended and Restated Term Promissory Note issued by Veridian Connections Inc. to the Corporation of the City of Belleville in the principal amount of$5,588,000 and dated March 30, 2010. TOR01:5989551:v2 Ai TACH LNT# 3 TO REPORT# FtiJ a c —/c- /7 .of. c=2 FIFTH AMENDED AND RESTATED TERM PROMISSORY NOTE Maturity Date: December 31St,2018 Principal Amount: $2,206,000 This note amends and restates a Fourth Amended and Restated Promissory Note (the "Predecessor Note") issued by Veridian Corporation to the Corporation of the City of Belleville (the "Holder") on October 31S1, 2012 for the Principal Amount. The Predecessor Note was issued pursuant to By-law No. 2012-174 of the Holder. This note amends the terms of repayment of, and does not extinguish, the debt created pursuant to the transfer by-law (enacted pursuant to the authority granted under the Electricity Act, 1998) as set forth originally in By-Law 2000-170 of the Holder, as amended by By-Law 2012-174, and the Predecessor Note. FOR VALUE RECEIVED, Veridian Corporation (the "Corporation"), hereby promises to pay to or to the order of the Corporation of the City of Belleville, in lawful money of Canada, on December 31St, 2018 (the "Maturity Date") at the principal office of the Holder, the principal amount of TWO MILLION, TWO HUNDRED AND SIX THOUSAND Dollars ($2,206,000) (the "Principal Amount") together with interest on the unpaid Principal Amount. 1. Interest Rate. Interest on the Principal Amount shall be calculated annually, not in advance, for the period from January 1st, 2016 until the Maturity Date, at a rate equal to the greater of: (a) six percent (6%), and (b) a rate equal to the Ontario Energy Board ("OEB") deemed long-term debt rate as set forth on an annual basis in the OEB's Cost of Capital Parameter Updates for Cost of Service Applications, or as the deemed long-term debt rate may otherwise be established by the OEB (the "Interest Rate"). Interest at the Interest Rate shall be payable on December 31st in each year up to and including the Maturity Date. The Corporation acknowledges that the Interest Rate payable pursuant to this note shall be automatically amended from time to time to reflect the deemed rate established by the OEB from time to time and this note shall be automatically amended from time to time to reflect any change to the Interest Rate as determined by the OEB provided that such deemed rate is greater than six percent (6%). Notwithstanding that the Interest Rate pursuant to this note shall be amended, the effective date of any change in the Interest Rate pursuant to this note will be as of January 1st each year. 2. Acceleration on Default. Upon default in the payment of any principal or interest due hereunder, or if the undersigned shall become insolvent or bankrupt or make a proposal in bankruptcy, the entire unpaid principal indebtedness owing by the undersigned to the Holder evidenced hereby and all interest accrued thereon to the date of payment shall forthwith become due and payable upon demand by the Holder subject to any subordination and postponement to any other financial institution or lender. ATTACHMENT# -3 TO REPORT# eF/■ -2- 010 .of. as cRb-/� 3. Ranking of this Note. This Note shall rank equally in all respects as to the payment of principal and interest hereunder with promissory notes issued to the Corporation of the Town of Ajax, to the Corporation of the Municipality of Clarington and to the Corporation of the City of Pickering (collectively the "Municipalities") described in Schedule "A" hereto (together the "Other Notes"). 4. Conversion of this Note. All (but not less than all) of the Principal Amount of this Note is convertible into fully-paid and non-assessable common shares of the Corporation based on the exchange ratio specified herein at the option of the Holder, which option may be exercised by the Holder by notice in writing to the Corporation on or before the Maturity Date. The exchange ratio for the conversion of the Principal Amount of this Note shall be on the basis that, for every $1,000.00 of Principal Amount, 1 fully paid and non-assessable common share of the Corporation shall be issued to the Holder. The conversion of the Principal Amount will be effected on the date determined by the Holder following consultation with the Corporation. 5. Subordination. The Holder acknowledges and agrees that the obligation of the Corporation to repay the Principal Amount and the principal amount of the Other Notes is subordinated and postponed to the obligations of the Corporation from time to time to any other financial institution or lender. The Holder will execute, promptly do, deliver or cause to be done, executed and delivered all further acts, documents and things as may be required to provide for the subordination and postponement of the Holder's rights evidenced by this Note. 6. Revisions and Replacement. At the sole option of the Holder, the Maturity Date and any of the terms of this Note may be revised, changed or restated by the Holder following consultation with the Corporation. If this Note is revised, changed or restated, the Corporation may cancel and replace this Note in which case,the Holder shall forthwith surrender this Note for cancellation. 7. Sale of Shares. In the event that the Holder transfers its common shares in the capital of the Corporation (in accordance with the terms of a shareholders' agreement among the Holder, the Municipalities, Veridian Connections Inc., Veridian Energy Inc. and the Corporation dated September 28, 2001, as amended and/or restated from time to time) prior to the Maturity Date, the Note shall remain due to the Holder in accordance with its terms. 8. Note Non-negotiable and Non-assignable. The Note shall be non-negotiable and non-assignable. ATTACHMENT# TO REPORT# jhl -3 - c9" .of. 0._ IN WITNESS WHEREOF Veridian Corporation has caused this Note to be signed under its corporate seal by its duly authorized officers as of this [ 1 day of I 1, 2015. VERIDIAN CORPORATION By: Name: Title: Chair By: Name: Title: President ATTACHMENT# 3 TO REPORT# 1/N -4 - ova .of. 002 a(o- c SCHEDULE "A" 1. Fourth Amended and Restated Term Promissory Note issued by Veridian Connections Inc.to the Corporation of the Municipality of Clarington in the principal amount of$5,966,000 and dated March 30, 2010. 2. Fourth Amended and Restated Term Promissory Note issued by Veridian Connections Inc. to the Corporation of the City of Pickering in the principal amount of$17,974,000 and dated March 30, 2010. 3. Fifth Amended and Restated Term Promissory Note issued by Veridian Corporation to the Corporation of the Municipality of Clarington in the principal amount of$2,355,000 and dated [ ], 2015. 4. Fifth Amended and Restated Term Promissory Note issued by Veridian Corporation to the Corporation of the City of Pickering in the principal amount of $7,095,000 and dated [ 1, 2015. 5. Fifth Amended and Restated Term Promissory Note issued by Veridian Corporation to the Corporation of the Town of Ajax in the principal amount of $5,550,000 and dated [ 1, 2015. 6. Fourth Amended and Restated Term Promissory Note issued by Veridian Connections Inc. to the Corporation of the Town of Ajax in the principal amount of$14,060,000 and dated March 30, 2010. TOR01:5989552:v2