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HomeMy WebLinkAboutCS 51-06 CiUI a~ -) .,.~. l: ( .) REPORT TO EXECUTIVE COMMITTEE Report Number: CS 51-06 Date: September 25, 2006 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: Veridian Corporation - Promissory Notes Recommendation: 1. It is recommended that Report CS 51-06 of the Director, Corporate Services & Treasurer be received for the Committee's consideration and recommendation to Council; and, 2. That the maturity dates on the Promissory Notes in the amount of $7,095,000 to Veridian Corporation and $17,974,000 to Veridian Connections Inc. be amended to November 1, 2009 at their face value with the existing terms and conditions including interest at 7.6% per annum; 3. That a By-law in the form attached providing for the approval and execution of a Note Amending Agreement be passed; 4. That the Mayor and Clerk be authorized to execute the Note Amending Agreement on behalf of the City of Pickering in the form attached; 5. That the Director, Corporate Services & Treasurer be authorized to undertake any actions including negotiations or amendments to the terms and conditions necessary in order to put the foregoing into effect; and, 6. That the appropriate officials at the City of Pickering be given authority to give effect thereto. Executive Summary: Veridian Corporation, at its meeting of Thursday, September 7, 2006 approved the terms and conditions including an interest rate of 7.6% per annum and amending the maturity date to November 1,2009. It is now appropriate for Council to provide the Director, Corporate Services & Treasurer with the authority to complete any necessary discussions or negotiations to effect the amending of the Notes. r\ t"'j l.' I Report CS 51-06 Date: September 25,2006 Subject: Veridian Corporation - Renewal of Promissory Notes Page 2 Financial Implications: Amending of the Promissory Notes will take place under the same or similar terms and conditions as those in place on the existing Notes over the last six years. This will provide for a continuation of the interest income of approximately $1,852,000 per annum for another three years. This income forms an important part of the City's annual budgeted revenues. Background: Should the Council of the City of Pickering approve the Recommendations, the amount of principal owing to the City of Pickering will remain unchanged at approximately $25,100,000, as will the interest at 7.6% per annum. The notes will however be extended for a further three years from October 31, 2006 to November 1, 2009 and the other terms and conditions remain unchanged. According to staff of Veridian Corporation, the extension will allow a level of comfort to other lenders in that the notes will note have to be repaid until a later date, thereby providing a further three years of assurance that there will not be a cash drain or a requirement for other financing. At the stated rate of interest, this investment provides the City's highest yielding rate of return on corporate notes. At this time there is no other form of investment with the same relatively low level of risk that would provide this level of return. The City also owns approximately 41 % of Veridian providing a more than reasonable level of security. Attachments: 1. By-law to Approve and Authorize the Execution of a Note Amending Agreement Prepared I Approved I Endorsed By: ~-~ -, L ~, Gillis A. Paterson Director, Corporate Services & Treasurer GAP:vw Attachment Co : Chief Administrative Officer Recommended for the consideration of Pickering Ci Coun iI \" ,1 THE CORPORATION OF THE CITY OF PICKERING C7~~) BY-lAW NO. Being a by-law to approve and authorize the execution of a note amending agreement made as of the 1 st day of October, 2006 in respect of promissory notes dated September 28, 2001 issued by Veridian Corporation and Veridian Connections Inc. 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 seconded amended and restated promissory notes dated as of the 1 st day of October, 2006. 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 there for and Veridian Corporation ("VC") and Veridian Connections Inc. ("VCI") have 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 31 st day of October, 2006; AND WHEREAS VC and VCI have requested an amendment to the maturity date of the Original Notes; NOW THEREFORE THE COUNCil OF THE CITY OF PICKERING ENACTS AS FOllOWS: 1. THAT Council approves the amendment to the maturity date of the Original Notes to the 1 st day of November, 2009; 2. THAT Council approves and authorizes the note amending agreement (the "Agreement") made as of the 1 st day of October, 2006 amongst Ajax, Belleville, Clarington and Pickering, as the holders of the Original Notes and VC, VCI 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 second amended and restated promissory notes (each a "Restated Note") by VC and VCI pursuant to the Agreement. Q7G 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 Original Note in favour of this Municipality in the principal amount of $7,095,000 and to receive a Restated Note pursuant to the Agreement; 6. THAT the Clerk is authorized and directed to surrender to VCI the Original Note in favour of this Municipality in the principal amount of $17,974,000 and to receive a Restated Note pursuant to the Agreement; 7. THAT the Clerk is authorized to affix the Corporate Seal of The City of Pickering to the Agreement. BY-LAW read a first, second and third time and finally passed this 3rd day of October, 2006. David Ryan, Mayor Debi Bentley, Clerk Schedule A C7? NOTE AMENDING AGREEMENT THIS AGREEMENT made as of the 1 st day of October, 2006. 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- VeridianEnergy Inc., a corporation existing under the laws of Ontario ("VEl") (VC, vel and VEl are referred to collectively herein as the "Veridian Group") 078 -2- RECITALS: A. VCI has previously issued one promissory note to each of the Veridian Shareholders (collectively the "VCI Notes") issued pursuant to the applicable transfer by-laws enacted pursuant to the authority granted under the Electricity Act, 1998, which VCI Notes are outstanding as of the date hereof; B. 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, J 998, which VC Notes are outstanding as of the date hereof; C. The Veridian Shareholders wish to extend the maturity date of the vcr Notes and the VC Notes; D. The Veridian Shareholders have consulted with the Veridian Group in connection with the proposed amendments to the VC Notes and the VCI 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 and VCI the existing VC Notes and vcr Notes (the "Predecessor Notes") (descriptions of such Predecessor Notes being set out in Appendix "A" attached hereto) and VC and VCI will forthwith issue amended and restated promissorynotesinthe form attached hereto as Appendix "B". There shall be eight amended and restated promissory notes (the "Amended and Restated Promissory Notes") in total. Four promissory notes will be issued by each ofVC and VCI to each ofthe four Veridian Shareholders in the same principal amounts as the VC Notes and VCI Notes. 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:_ Name: Steve Parish Title: Mayor cis - 3 - C73 cis By: Name: Marty de Rond Title: Clerk THE CORPORATION OF THE CITY OF BELLEVILLE cis By: Name: Mary-Anne Sills Title: Mayor cis By: Name: Julie C. Gram Title: Clerk THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON cis By: Name: John Mutton Title: Mayor cis By: Name: Patti L. Barrie Title: Clerk THE CORPORATION OF THE CITY OF PICKERING cis By: Name: Dave Ryan Title: Mayor cis By: Name: Debi A. Bentley Title: Clerk 0(1 " '0U - 4 - VERIDIAN CORPORATION By: Name: Mike Angemeer Title: President cis By: Name: John Mutton Title: Chair cis VERIDIAN CONNECTIONS INC. By: Name: Mike Angemeer Title: President cis By: Name: John Mutton Title: Chair cis VERIDIAN ENERGY INC. By: Name: Mike Angemeer Title: President cIs cis By: Name: John Mutton Title: Chair 08 '.. Appendix" A" Eight (8) Veridian Group Predecessor Notes described below. Issuer Holder Date Principal Amount 1. Veridian Corporation The Corporation of the Sept. 28/01 $5,550,000 Town of Ajax 2. Veridian Corporation The Corporation of the Sept. 28/01 $2,355,000 Municipality of Clarington 3. Veridian Corporation The Corporation of the Sept. 28/0 I $7,095,000 City of Pickering 4. Veridian Corporation The Corporation of the Sept. 28/01 $2,206,000 City of Belleville 5. Veridian Connections Inc, The Corporation of the Sept 28/01 $14,060,000 Town of Ajax 6. Veridian Connections Inc. The Corporation of the Sept. 28/01 $5,966,000 Municipality of Clarington 7. Veridian Connections Inc. The Corporation of the Sept. 28/01 $17,974,000 City of Pickering 8. Veridian Connections Inc. The Corporation of the Sept. 28/0 1 $5,588,000 City of Belleville '\8 lJ .:.. Appendix "B" Eight (8) Veridian Group Amended and Restated Promissory Notes attached hereto. ::ODMA \PCDOCS\TORO 1 \3354654\7 '\ 8 ,'~ u ,) SECOND AMENDED AND RESTATED TERM PROMISSORY NOTE Maturity Date: November 1,2009 Principal Amount: $5,550,000 This Note amends and restates the promissory note (the "Predecessor Note") issued by Veridian Corporation to the Corporation ofthe Town of Ajax (the "Holder") on September 28,2001 in the Principal Amount. The Predecessor Note was issued pursuant to By-law No. 115-99 of the Holder. This Note amends the maturity date of the Predecessor Note from November I, 2006 to November I, 2009. For certainty, this note amends and does not extinguish the debt created pursuant to the transfer by-law (enacted pursuant to the authority granted under the Electricity Act, J 998) referenced above 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 November 1,2009 (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 calculated annually, not in advance, from October 1, 2006 at a rate of7.6% per annum for the period up to and including October 31,2006 and at a rate of 7.6% per annum on and after November 1, 2006 until the Maturity Date. Interest at the said rate shall be payable on November 1 in each year up to and including the Maturity Date. t. 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. 2. Rankin!! of this Note This Note shall rank equally in all respects as to the payment of principal and interest hereunder with promissory notes issued as of the dates hereof 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"). 08 cl - 2 - 3. 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. 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 $1000 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. 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. 6. 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. 7. Note Non-neeotiable and Non.,.assienable The Note shall be non-negotiable and non-assignable. - 3 - IN WITNESS WHEREOF Veridian Corporation has caused this Note to be signed under its corporate seal by its duly authorized officers as of this 1st day of October, 2006. VERIDIAN CORPORA nON By: Name: John Mutton Title: Chair By: Name: Mike Angemeer Title: President "8 .... U ;) osrj -4- SCHEDULE "A" 1. 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 October 1, 2006. 2. 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 October 1, 2006. 3. Promissory Note issued by Veridian Corporation to the Corporation of the Municipality of Clarington in the principal amount of $2,355,000 and dated October 1, 2006. 4. Promissory Note issued by Veridian Corporation to the Corporation of the City of Pickering in the principal amount of $7,095,000 and dated October 1,2006. 5. Promissory Note issued by Veridian Corporation to the Corporation of the City of Belleville in the principal anlount of $2,206,000 and dated October 1, 2006. 6. 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 October 1, 2006. ::ODMA \PCDOCS\ TOROl \3355154\4 08~; SECOND AMENDED AND RESTATED TERM PROMISSORY NOTE Maturity Date: November 1, 2009 Principal Amount: $2,355,000 This Note amends and restates the promissory note (the "Predecessor Note") issued by Veridian Corporation to the Corporation of the Municipality of Clarington (the "Holder") on September 28, 2001 in the Principal Amount. The Predecessor Note was issued pursuant to By-law No. 99-173 of the Holder. This Note amends the maturity date of the Predecessor Note from November 1, 2006 to November 1, 2009. For certainty, this note amends and does not extinguish the debt created pursuant to the transfer by-law (enacted pursuant to the authority granted under the Electricity Act. 1998) referenced above 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 Cia ring ton, in lawful money of Canada, on November 1, 2009 (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 calculated annually, not in advance, from October 1, 2006 at a rate of 7.6% per annum for the period up to and including October 31, 2006 and at a rate of 7.6% per annum on and after November 1, 2006 until the Maturity Date. Interest at the said rate shall be payable on November 1 in each year up to and including the Maturity Date. 1. 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. 2. Rankine of this Note This Note shall rank equally in all respects as to the payment of principal and interest hereunder with promissory notes issued as of the dates hereof 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"). 08 () -2- 3. 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. 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 $1000 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. Revisions and Replacement At the sole option of the Holder, the Maturity Date and any of the temlS 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. 6. Sale of Shares In the event that the Holder transfers its common shares in the capital of the Corporation (in accordance with the temlS 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. 7. Note Non-neeotiable and Non-assienable The Note shall be non-negotiable and non-assignable. - 3 - 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 st day of October, 2006. VERIDIAN CORPORA nON By: Name: John Mutton Title: Chair By: Name: Mike Angemeer Title: President 08 :i Q8u - 4- SCHEDULE "A" 1. Promissory Note issued by Veridian Connections Inc. to the Corporation ofthe Town of Ajax in the principal amount of $14,060,000 and dated October 1,2006. 2. 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 October 1, 2006. 3. Promissory Note issued by Veridian Corporation to the Corporation of the Town of Ajax in the principal amount of$5,550,000 and dated October 1,2006. 4. Promissory Note issued by Veridian Corporation to the Corporation of the City of Pickering in the principal amount of $7,095,000 and dated October 1,2006. 5. Promissory Note issued by Veridian Corporation to the Corporation of the City of Belleville in the principal amount of $2,206,000 and dated October 1, 2006. 6. 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 October 1, 2006. ::ODMA\PCDOCS\ TORO I \3370599\2 (~ (1-: , vI.. SECOND AMENDED AND RESTATED TERM PROMISSORY NOTE Maturity Date: November 1, 2009 Principal Amount: $7,095,000 This Note amends and restates the promissory note (the "Predecessor Note") issued by Veridian Corporation to the Corporation of the City of Pickering (the "Holder") on September 28, 2001 in the Principal Amount. The Predecessor Note was issued pursuant to By-law No. 5586/99 of the Holder. This Note amends the maturity date of the Predecessor Note from November 1, 2006 to November 1, 2009. For certainty, this note amends and does not extinguish the debt created pursuant to the transfer by-law (enacted pursuant to the authority granted under the Electricity Act, 1998) referenced above 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 November I, 2009 (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 calculated annually, not in advance, from October 1,2006 at a rate of 7.6% per annum for the period up to and including October 31, 2006 and at a rate of 7.6% per annum on and after November 1, 2006 until the Maturity Date. Interest at the said rate shall be payable on November 1 in each year up to and including the Maturity Date. 1. 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. 2. Rankine of this Note This Note shall rank equally in all respects as to the payment of principal and interest hereunder with promissory notes issued as of the dates hereof 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"). C9t... -2- 3. 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. 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 $1000 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. Revisions and Replacement At the sole option of the Holder, the Maturity Date and any of the tenns 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. 6. 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. 7. Note Non-ne2otiable and Non-assi2nable The Note shall be non-negotiable and non-assignable. - 3 - 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 st day of October, 2006. VERIDIAN CORPORATION By: Name: John Mutton Title: Chair By: Name: Mike Angemeer Title: President C9"~ , : '-, ,) 09'-1 -4- SCHEDULE "A" 1. Promissory Note issued by Veridian Connections Inc. to the Corporation of the Municipality of Cia ring ton in the principal amount of $5,966,000 and dated October 1, 2006. 2. 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 October 1,2006. 3. Promissory Note issued by Veridian Corporation to the Corporation of the Municipality of Clarington in the principal amount of $2,355,000 and dated October 1, 2006. 4. Promissory Note issued by Veridian Corporation to the Corporation of the Town of Ajax in the principal amount of$5,550,000 and dated October 1,2006. 5. Promissory Note issued by Veridian Corporation to the Corporation of the City of Belleville in the principal amount of $2,206,000 and dated October 1, 2006. 6. 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 October 1, 2006. ;:ODMA\PCDOCS\TORO 1 \3370635\2 l'.' (9 ,- : d SECOND AMENDED AND RESTATED TERM PROMISSORY NOTE Maturity Date: November 1,2009 Principal Amount: $2,206,000 This Note amends and restates the promissory note (the "Predecessor Note") issued by 1437864 Ontario Limited to the Corporation of the City of Belleville (the "Holder") on September 28, 200 I in the Principal Amount. The Predecessor Note was issued pursuant to By-law No. 2000-170 of the Holder as amended by By-law No. 2000- 172. This Note amends the maturity date of the Predecessor Note from November I, 2006 to November 1, 2009. For certainty, this note amends and does not extinguish the debt created pursuant to the transfer by-law (enacted pursuant to the authority granted under the Electrici(v Act, 1998) referenced above 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 November 1, 2009 (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 calculated annually, not in advance, from October I, 2006 at a rate of 7.6% per annum for the period up to and including October 31,2006 and at a rate of 7.6% per annum on and after November 1, 2006 until the Maturity Date. Interest at the said rate shall be payable on November I in each year up to and including the Maturity Date. 1. 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. 2. Rankin!! of this Note This Note shall rank equally in all respects as to the payment of principal and interest hereunder with promissory notes issued as of the dates hereof to the Corporation of the City of Pickering, to the Corporation of the Municipality of Clarington and to the Corporation of the Town of Ajax (collectively the "Municipalities") described in Schedule "A" hereto (together the "Other Notes"). '\ 9 U'U -2- 3. 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. 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 $1000 of Principal Amount, I 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. S. 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. 6. Sale of Shares In the event that the Holder transfers its common shares in the capital of the Corporation (in accordance with the tenus 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. 7. Note Non~neeotiable and Non-assienable The Note shall be non-negotiable and non-assignable. C9i' - 3 - IN WITNESS WHEREOF Veridian Corporation has caused this Note to be signed under its corporate seal by its duly authorized officers as of this 151 day of October, 2006. VERIDIAN CORPORATION By: Name: John Mutton Title: Chair By: Name: Mike Angemeer Title: President " () ... l! '-J \.} -4- SCHEDULE "A" 1. 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 October 1, 2006. 2. 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 October I, 2006. 3. Promissory Note issued by Veridian Corporation to the Corporation of the Municipality of Clarington in the principal amount of $2,355,000 and dated October 1, 2006. 4. Promissory Note issued by Veridian Corporation to the Corporation of the City of Pickering in the principal amount of $7,095,000 and dated October 1, 2006. 5. Promissory Note issued by Veridian Corporation to the Corporation of the Town of Ajax in the principal amount of $5,550,000 and dated October 1, 2006. 6. 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 October 1,2006. ::ODMA \PCDOCS\ TORO 1 \3370664\2 09~j SECOND AMENDED AND RESTATED TER1\f PROMJSSORY NOTE Maturity Date: November 1,2009 Principal Amount: $14,060,000 This Note amends and restates the promissory note (the "Predecessor Note") issued by Veridian Connections Inc. to the Corporation of the Town of Ajax (the "Holder") on September 28, 2001 in the Principal Amount. The Predecessor Note was issued pursuant to By~law No. 115-99 of the Holder. This Note amends the maturity date of the Predecessor Note from November 1, 2006 to November 1, 2009. For certainty, this note amends and does not extinguish the debt created pursuant to the transfer by-law (enacted pursuant to the authority granted under the Electricity Act, 1998) referenced above and the Predecessor Note. FOR VALUE RECEIVED, Veridian Connections Inc. (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 November 1, 2009 (the "Maturity Date") at the principal office of the Holder, the principal amount of FOURTEEN MILLION, AND SIXTY THOUSAND Dollars ($14,060,000) (the "Principal Amount") together with interest on the unpaid Principal Amount calculated annually, not in advance, from October I, 2006 at a rate of7.6% per annum for the period up to and including October 31,2006 and at a rate of7.6% per annum on and after November 1,2006 until the Maturity Date. Interest at the said rate shall be payable on November 1 in each year up to and including the Maturity Date. 1. 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. 2. Rankine: ofthis Note This Note shall rank equally in all respects as to the payment of principal and interest hereunder with promissory notes issued as of the dates hereof 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"). .-. (".. 1 ~J U -2- 3. 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. 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 $1000 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. Revisions and Replacement At the sole option of the Holder, the Maturity Date and any of the tenns 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. 6. Sale of Shares In the event that the Holder transfers its common shares in the capital of the Corporation (in accordance with the tenns of a shareholders' agreement among the Holder, the Municipalities, Veridian Corporation, 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 tenns. 7. Note Non-net!otiable and Non-assit!nable The Note shall be non-negotiable and non-assignable. - 3 - IN WITNESS WHEREOF Veridian Connections Inc. has caused this Note to be signed under its corporate seal by its duly authorized officers as of this 1 st day of October. 2006. VERIDIAN CONNECTIONS INC. By: Name: John Mutton Title: Chair By: Name: Mike Angemeer Title: President .. 0 ,.. It, .l 44 t'\ ' J.u~_ -4- SCHEDULE "A" 1. 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 October 1, 2006. 2. 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 October 1, 2006. 3. Promissory Note issued by Veridian Corporation to the Corporation of the Municipality of Clarington in the principal amount of $2,355,000 and dated October 1, 2006. 4. Promissory Note issued by Veridian Corporation to the Corporation of the City of Pickering in the principal amount of $7,095,000 and dated October 1,2006. 5. Promissory Note issued by Veridian Corporation to the Corporation of the City of Belleville in the principal amount of $2,206,000 and dated October 1,2006. 6. 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 October 1, 2006. ::ODMA\PCDOCS\TORO I \3370569\2 "0" 1. oJ SECOND AMENDED AND RESTATED TERM PROMISSORY NOTE Maturity Date: November 1, 2009 Principal Amount: $5,966,000 This Note amends and restates the promissory note (the "Predecessor Note") issued by Veridian Connections Inc. to the Corporation of the Municipality of Clarington (the "Holder") on September 28, 2001 in the Principal Amount. The Predecessor Note was issued pursuant to By-law No. 99-173 of the Holder. This Note amends the maturity date of the Predecessor Note from November 1, 2006 to November 1, 2009. For certainty, this note amends and does not extinguish the debt created pursuant to the transfer by-law (enacted pursuant to the authority granted under the Electricity Act, 1998) referenced above and the Predecessor Note. FOR VALUE RECEIVED, Veridian Connections Inc. (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 November I, 2009 (the "Maturity Date") at the principal office of the Holder, the principal amount of FIVE MILLION, NINE HUNDRED AND SIXTY-SIX THOUSAND Dollars ($5,966,000) (the "Principal Amount") together with interest on the unpaid Principal Amount calculated annually, not in advance, from October 1, 2006 at a rate of 7.6% per annum for the period up to and including October 31,2006 and at a rate of 7.6% per annum on and after November I, 2006 until the Maturity Date. Interest at the said rate shall be payable on November 1 in each year up to and including the Maturity Date. 1. 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. 2. Rankin!! of this Note This Note shall rank equally in all respects as to the payment of principal and interest hereunder with promissory notes issued as of the dates hereof 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"). .. 0" " l' iJ - 2- 3. 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. 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 $1000 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. 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. 6. 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 Corporation, 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 tenns. 7. Note Non-nee:otiable and Non-assienable The Note shall be non-negotiable and non-assignable. - 3 - IN WITNESS WHEREOF Veridian Connections Inc. has caused this Note to be signed under its corporate seal by its duly authorized officers as of this 1st day of October, 2006. VERIDIAN CONNECTIONS INC. By: Name: John Mutton Title: Chair By: Name: Mike Angemeer Title: President .. n .~~ 1. U~J 10d -4- SCHEDULE "A" 1. 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 October 1,2006. 2. 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 October 1, 2006. 3. Promissory Note issued by Veridian Corporation to the Corporation of the Town of Ajax in the principal amount of $5,550,000 and dated October 1, 2006. 4. Promissory Note issued by Veridian Corporation to the Corporation of the City of Pickering in the principal amount of $7,095,000 and dated October 1,2006. 5. Promissory Note issued by Veridian Corporation to the Corporation of the City of Belleville in the principal amount of $2,206,000 and dated October 1, 2006. 6. 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 October 1, 2006. ::ODMNPCDOCS\TORO I \3370617\2 ..ow J. l t SECOND AMENDED AND RESTATED TERM PROMISSORY NOTE Maturity Date: November 1,2009 Principal Amount: $17,974,000 This Note amends and restates the promissory note (the "Predecessor Note") issued by Veridian Connections Inc. to the Corporation of the City of Pickering (the "Holder") on September 28, 200 I in the Principal Amount. The Predecessor Note was issued pursuant to By-law No. 5586i99 of the Holder. This Note amends the maturity date of the Predecessor Note from November I, 2006 to November 1, 2009. For certainty, this note amends and does not extinguish the debt created pursuant to the transfer by-law (enacted pursuant to the authority granted under the Electricity Act, 1998) referenced above and the Predecessor Note. FOR VALUE RECEIVED, Veridian Connections Inc. (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 November 1, 2009 (the "Maturity Date") at the principal office of the Holder, the principal amount of SEVENTEEN MILLION, NINE- HUNDRED AND SEVENTY FOUR THOUSAND Dollars ($17,974,000) (the "Principal Amount") together with interest on the unpaid Principal Amount calculated annually, not in advance, from October 1, 2006 at a rate of 7.6% per annum for the period up to and including October 31, 2006 and at a rate of 7.6% per annum on and after November 1, 2006 until the Maturity Date. Interest at the said rate shall be payable on November 1 in each year up to and including the Maturity Date. 1. 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. 2. Rankine: ofthis Note This Note shall rank equally in all respects as to the payment of principal and interest hereunder with promissory notes issued as of the dates hereof 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"). 103 -2- 3. 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. 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 $1000 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. 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. 6. 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 Corporation, 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. 7. Note Non-neeotiable and Non-assienable The Note shall be non-negotiable and non-assignable. 108 - 3 - IN WITNESS WHEREOF Veridian Connections Inc. has caused this Note to be signed under its corporate seal by its duly authorized officers as of this 1 st day of October, 2006. VERIDIAN CONNECTIONS INC. By: Name: John Mutton Title: Chair By: Name: Mike Angemeer Title: President .. '" ,~ 1.1.U -4- SCHEDULE "A" 1. Promissory Note issued by Veridian Connections Inc. to the Corporation of the Municipality of Cia ring ton in the principal amount of $5,966,000 and dated October 1, 2006. 2. 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 October 1, 2006. 3. Promissory Note issued by Veridian Corporation to the Corporation of the Municipality of Clarington in the principal amount of $2,355,000 and dated October 1,2006. 4. Promissory Note issued by Veridian Corporation to the Corporation of the Town of Ajax in the principal amount of$5,550,000 and dated October 1,2006. 5. Promissory Note issued by Veridian Corporation to the Corporation of the City of Belleville in the principal amount of $2,206,000 and dated October 1, 2006. 6. 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 October 1, 2006. ::ODMA IPCDOCSITORO 1 13370650\2 11J. SECOND AMENDED AND RESTATED TERM PROMISSORY NOTE Maturity Date: November 1, 2009 Principal Amount: $5,588,000 This Note amends and restates the promissory note (the "Predecessor Note") issued by Belleville Electric Corporation to the Corporation of the City of Belleville (the "Holder") on September 28, 2001 in the Principal Amount. The Predecessor Note was issued pursuant to By-law No. 2000-170 of the Holder as amended by By-law No. 2000- 172. This Note amends the maturity date of the Predecessor Note from November 1, 2006 to November I, 2009. For certainty, this note amends and does not extinguish the debt created pursuant to the transfer by-law (enacted pursuant to the authority granted under the Electricity Act, 1998) referenced above and the Predecessor Note. FOR VALUE RECEIVED, Veridian Connections Inc. (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 November 1, 2009 (the "Maturity Date") at the principal office of the Holder, the principal amount of FIVE MILLION, FIVE HUNDRED AND EIGHTY EIGHT THOUSAND Dollars ($5,588,000) (the "Principal Amount") together with interest on the unpaid Principal Amount calculated annually, not in advance, from October 1,2006 at a rate of 7.6% per annum for the period up to and including October 31, 2006 and at a rate of 7.6% per annum on and after November 1, 2006 until the Maturity Date. Interest at the said rate shall be payable on November 1 in each year up to and including the Maturity Date. 1. 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. 2. Rankinl;! of this Note This Note shall rank equally in all respects as to the payment of principal and interest hereunder with promissory notes issued as of the dates hereof to the Corporation of the City of Pickering, to the Corporation of the Municipality of Clarington and to the Corporation of the Town of Ajax (collectively the "Municipalities") described in Schedule "A" hereto (together the "Other Notes"). .. .A 11 (.. - 2 - 3. 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. 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 $1000 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. 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. 6. 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 Corporation, 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. 7. Note Non-nef?:otiable and Non-assif?:nable The Note shall be non-negotiable and non-assignable. - 3 - IN WITNESS WHEREOF Veridian Connections Inc. has caused this Note to be signed under its corporate seal by its duly authorized officers as of this 1 st day of October, 2006. VERIDIAN CONNECTIONS INC. By: Name: John Mutton Title: Chair By: Name: Mike Angemeer Title: President .. .. 11 ~) 11~ - 4- SCHEDULE "A" 1. Promissory Note issued by V eridian Connections Inc. to the Corporation of the Municipality of Clarington in the principal amount of $5,966,000 and dated October 1, 2006. 2. 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 October 1, 2006. 3. Promissory Note issued by Veridian Corporation to the Corporation of the Municipality of Clarington in the principal amount of $2,355,000 and dated October 1,2006. 4. Promissory Note issued by Veridian Corporation to the Corporation of the City of Pickering in the principal amount of $7,095,000 and dated October 1,2006. 5. Promissory Note issued by Veridian Corporation to the Corporation of the Town of Ajax in the principal amount of$5,550,000 and dated October 1,2006. 6. 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 October 1, 2006. ::ODMA \PCDOCS\ TORO I \3370686\2