BOARDWALK REAL ESTATE INVESTMENT ... - Boardwalk REIT

- 47 -and held in accordance with the Debenture Indenture, all upon compliance with the procedures specified in theDebenture Indenture.―GAAP‖ means, as at any date of determination, generally accepted accounting principles in effect in Canada asof January 21, 2005."Indebtedness" of any person means (without duplication), on a consolidated basis, (i) any obligation of suchperson for borrowed money (including, for greater certainty, the full principal amount of convertible debt,notwithstanding its presentation under GAAP), (ii) any obligation of such person incurred in connection with theacquisition of property, assets or businesses, (iii) any obligation of such person issued or assumed as the deferredpurchase price of property, (iv) any Capital Lease Obligation of such person, and (v) any obligations of the typereferred to in clauses (i) through (iv) of another person, the payment of which such person has guaranteed or forwhich such person is responsible or liable; provided that, for the purpose of clauses (i) through (v) (except inrespect of convertible debt, as described above), an obligation will constitute Indebtedness only to the extent thatit would appear as a liability on the consolidated balance sheet of such person in accordance with GAAP.Obligations referred to in clauses (i) through (iii) exclude (i) trade accounts payable, (ii) distributions payable toUnitholders, (iii) accrued liabilities arising in the ordinary course of business which are not overdue or which arebeing contested in good faith, (iv) indebtedness with respect to the unpaid balance of instalment receipts, wheresuch indebtedness has a term not in excess of 12 months, (v) intangible liabilities and (vi) deferred revenues, all ofwhich will be deemed not to be Indebtedness for the purposes of this definition."Material Subsidiary" means, at any date, any Subsidiary which constitutes more than 5% of the AdjustedUnitholders' Equity calculated as at such date."Non-Recourse Indebtedness" means any Indebtedness of a Subsidiary of Boardwalk REIT which is a singlepurpose entity or whose principal assets and business are constituted by a particular project and pursuant to theterms of which Indebtedness payment is to be made from the revenues arising out of such project with recoursefor such payment being available only to the revenues or the assets of such single purpose entity or the project."Subsidiary" means, with respect to any person (other than an individual), any other person (other than anindividual) the financial results of which would be required to be consolidated with those of the first person's inthe preparation of the first person's consolidated financial statements if prepared in accordance with GAAP."Units" means units of the REIT outstanding from time to time, including both REIT Units and special votingunits.GuaranteeAll current and future subsidiaries of the Trust which own material assets have provided a guarantee ofthe Debentures. In the case of default by Boardwalk REIT, the Indenture Trustee will, subject to the DebentureIndenture, seek redress from such subsidiaries for the guaranteed indebtedness. These guarantees are intended toeliminate structural subordination which arises as a consequence of Boardwalk REIT's assets being held invarious subsidiaries. See "Risk Factors – Structural Subordination of Debentures".RankThe Debentures are direct senior unsecured obligations of Boardwalk REIT and rank equally and rateablywith one another and with all other unsecured and unsubordinated Indebtedness of Boardwalk REIT except forsinking fund provisions (if any) applicable to different series of Debt Securities or other obligations of BoardwalkREIT, except to the extent prescribed by law.Redemption by Boardwalk REITAt its option, Boardwalk REIT may redeem the Debentures, in whole or in part, at any time and from timeto time, on payment of a redemption price equal to the greater of (i) the Canada Yield Price and (ii) par, together