Page | ||||
ARTICLE 1 SCOPE AND EFFECT OF AGREEMENT | 1 | |||
Section 1.1 Support of Terms | 1 | |||
Section 1.2 Terms to Prevail over Constating Documents | 2 | |||
ARTICLE 2 GOVERNANCE AND MANAGEMENT OF THE COMPANY | 2 | |||
Section 2.1 Board Rights | 2 | |||
Section 2.2 Pinnacle Advisor | 7 | |||
Section 2.3 Access to Information | 8 | |||
Section 2.4 Transfer of Certain Rights | 10 | |||
ARTICLE 3 TRANSFERS AND RELATED COVENANTS | 10 | |||
Section 3.1 Transfer Restrictions | 10 | |||
Section 3.2 Tag-Along Right | 19 | |||
Section 3.3 Drag-Along Right | 23 | |||
Section 3.4 Investor Exit Sale Right | 26 | |||
Section 3.5 Right of First Negotiation | 26 | |||
Section 3.6 Disposition of Securities | 27 | |||
Section 3.7 Recognition of Transfers and Endorsement on Certificates | 28 | |||
Section 3.8 Waiver of Rights | 28 | |||
ARTICLE 4 PREEMPTIVE RIGHTS | 28 | |||
Section 4.1 Preemptive Rights | 28 | |||
Section 4.2 Waiver of Rights | 31 | |||
Section 4.3 Harbinger Agreement Not to Assert Other Preemptive Rights | 31 | |||
ARTICLE 5 REGISTRATION RIGHTS | 31 | |||
Section 5.1 Registration Rights | 31 | |||
ARTICLE 6 CONSENT RIGHTS AND ADDITIONAL COVENANTS | 31 | |||
Section 6.1 Majority Vote Consent Rights | 31 | |||
Section 6.2 Minority Consent Rights | 35 | |||
Section 6.3 Covenants of the Company | 40 | |||
Section 6.4 Additional Harbinger Covenants and Representations | 44 |
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Page | ||||
ARTICLE 7 DEFINITIONS AND INTERPRETATION | 45 | |||
Section 7.1 Certain Definitions | 45 | |||
Section 7.2 Headings | 57 | |||
Section 7.3 Extended Meanings | 57 | |||
Section 7.4 Currency | 57 | |||
ARTICLE 8 CONFIDENTIALITY | 57 | |||
Section 8.1 Confidentiality Covenant | 57 | |||
Section 8.2 Other Permitted Disclosure | 58 | |||
Section 8.3 Remedies | 58 | |||
ARTICLE 9 [INTENTIONALLY OMITTED] | 59 | |||
ARTICLE 10 MISCELLANEOUS | 59 | |||
Section 10.1 Termination | 59 | |||
Section 10.2 Amendments | 59 | |||
Section 10.3 Waiver | 61 | |||
Section 10.4 Assignment | 60 | |||
Section 10.5 Enforcement | 60 | |||
Section 10.6 Notices | 60 | |||
Section 10.7 Further Assurances | 62 | |||
Section 10.8 Binding Effect | 63 | |||
Section 10.9 No Third Party Beneficiaries | 63 | |||
Section 10.10 Severability | 63 | |||
Section 10.11 Entire Agreement | 63 | |||
Section 10.12 Governing Law | 63 | |||
Section 10.13 Independent Legal Advice | 64 | |||
Section 10.14 Expenses | 64 | |||
Section 10.15 Counterparts | 64 | |||
Section 10.16 English Language | 64 |
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666 Burrard Street — Suite 2348
Vancouver, British Columbia
Canada V6C 2X8
Attention: Lloyd Nathan
Facsimile: (778) 329-0439
Email: lnathan@asiancoastdevelopment.com
#2200 — 1055 West Hastings Street
Vancouver, British Columbia
Canada V6E 2E9
Attention: John Legge
Facsimile: (604) 669-5101
Email: JLegge@heenan.ca
412F, route d’Esch
L-1471 Luxembourg
Attention: Christine Bourg, Senior Corporate Officer
Facsimile: (+352) 47 11 01
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1 Chase Manhattan Plaza
New York, NY 10005
Attention: Alexander Kaye
Facsimile: (212) 822-5171
Email: akaye@milbank.com
c/o Harbinger Capital Partners
450 Park Avenue, 30th Floor
New York NY 10022
Attention: General Counsel
Facsimile: (212) 898-1309
Email: rroger@harbingercapital.com
8918 Spanish Ridge Ave.
Las Vegas, NV 89148
Attention: Corporate Secretary
Facsimile: (702) 784-7773
1800 Avenue of the Stars
Suite 900
Los Angeles, CA 90067-4276
Attention: Ashok Mukhey
Facsimile: (310) 203-7199
Email: amukhey@irell.com
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ASIAN COAST DEVELOPMENT (CANADA) LTD. | HARBINGER II S.A.R.L. | |||||||
Per: | /s/ Lloyd C. Nathan | Per: | /s/ Robin Rogers | |||||
Name: | Lloyd C. Nathan | Name: | Robin Rogers | |||||
Title: | Chief Executive Officer | Title: | A Manager | |||||
BLUE LINE ACDL, INC. | ||||||||
Per: | /s/ Keith Hladek | Per: | /s/ Lorenzo Barcaglioni | |||||
Name: | Keith Hladek | Name: | Lorenzo Barcaglioni | |||||
Title: | Chief Financial Officer | Title: | B Manager | |||||
CREDIT DISTRESSED BLUE LINE MASTER FUND, LTD. | BREAKAWAY ACDL, INC. | |||||||
Per: | /s/ Keith Hladek | Per: | /s/ Keith Hladek | |||||
Name: | Keith Hladek | Name: | Keith Hladek | |||||
Title: | Chief Financial Officer | Title: | Chief Financial Officer | |||||
PNK DEVELOPMENT 18, LLC | GLOBAL OPPORTUNITIES BREAKAWAY LTD. | |||||||
Per: | /s/ Anthony Sanfilippo | Per: | /s/ Keith Hladek | |||||
Name: | Anthony Sanfilippo | Name: | Keith Hladek | |||||
Title: | Chairman of the Board and Chief Executive Officer | Title: | Chief Financial Officer |
(a) | the Company will have 100 Common Shares issued and outstanding. | ||
(b) | Harbinger will own 70 Common Shares on a Fully Diluted Basis. | ||
(c) | Pinnacle will own 26 Common Shares on a Fully Diluted Basis. | ||
(d) | As a result, relative to one another: |
(i) | Harbinger will own (A) 73% of the Common Shares collectively held by Harbinger and Pinnacle and (B) 70% of the Common Shares on a Fully Diluted Basis; and | ||
(ii) | Pinnacle will own (A) 27% of the Common Shares collectively held by Harbinger and Pinnacle and (B) 26% of the Common Shares on a Fully Diluted Basis. |
(e) | For purposes of thisSchedule 6.2(b)(ii)(B), the terms “Harbinger” and “Pinnacle” shall include their respective Entity Affiliates that own Equity Securities. |
1
• | Three issuances of Common Shares by the Company. | ||
• | Harbinger fully exercises its preemptive rights from Company in all issuances. | ||
• | Pinnacle’s exercises of its preemptive rights varies by issuance. | ||
• | Pinnacle exercises Look Back Right related to Issuance 2. |
(1) | The Company issues 100 Common Shares on Day 1 (“Issuance 1”). |
(a) | Harbinger fully exercises its preemptive rights underArticle 4, and as a result of the calculations set forth inSection 4.1(a)(i)(C), acquires 72.92 Common Shares from the Company in Issuance 1. |
(i) | i.e., 72.92 Common Shares equals: |
(A) | 100 Common Shares issued by the Company in Issuance 1multiplied by | ||
(B) | a fraction, the numerator of which is 70 Common Shares held by Harbinger prior to Issuance 1 and the denominator of which is 96 Common Shares held collectively by Harbinger and Pinnacle prior to Issuance 1. |
(b) | Pinnacle fully exercises its preemptive rights underArticle 4, and as a result of the calculations set forth inSection 4.1(a)(i)(C), acquires the remaining 27.08 Common Shares from the Company in Issuance 1. |
(i) | i.e., 27.08 Common Shares equals: |
(A) | 100 Common Shares issued by the Company in Issuance 1multiplied by |
(B) | a fraction, the numerator of which is 26 Common Shares held by Pinnacle prior to Issuance 1 and the denominator of which is 96 Common Shares held collectively by Harbinger and Pinnacle prior to Issuance 1. |
(c) | No remaining Common Shares in Issuance 1. |
(2) | Exactly one year following Issuance 1, the Company issues another 100 Common Shares (“Issuance 2”). |
(a) | Harbinger fully exercises its preemptive rights underArticle 4, and as a result of the calculations set forth inSection 4.1(a)(i)(C), acquires 72.92 Common Shares from the Company in Issuance 2. |
(i) | i.e., 72.92 Common Shares equals: |
(A) | 100 Common Shares issued by the Company in Issuance 2multiplied by |
2
(B) | a fraction, the numerator of which is 142.92 Common Shares held by Harbinger prior to Issuance 2 and the denominator of which is 196.00 Common Shares held collectively by Harbinger and Pinnacle prior to Issuance 2. |
(b) | Pinnacle exercises 50% of its preemptive rights underArticle 4, and as a result of the calculations set forth inSection 4.1(a)(i)(C), acquires 13.54 Common Shares from the Company in Issuance 2. |
(i) | i.e., 13.54 Common Shares equals: |
(A) | 100 Common Shares issued by the Company in Issuance 2multiplied by | ||
(B) | a fraction, the numerator of which is 53.08 Common Shares held by Pinnacle prior to Issuance 2 and the denominator of which is 196.00 Common Shares held collectively by Harbinger and Pinnacle prior to Issuance 2divided by | ||
(C) | 2 (i.e., 50%). |
(c) | The remaining Common Shares from Issuance 2 (i.e., 13.54 Common Shares) are acquired by stockholders other than Harbinger or Pinnacle. |
(3) | Look Back Right: |
(a) | During the notice period with respect to Issuance 3 as provided for inSection 4.1(c) and prior to the issuance in Issuance 3, Pinnacle fully exercises its Look Back Right with respect to Issuance 2 to acquire 6.21 Common Shares from the 72.92 Common Shares that Harbinger acquired in Issuance 2. |
(i) | i.e., 6.21 Common Shares equals the difference between: |
(A) | the product of: |
(I) | Pinnacle’s Common Share ownership interest relative to Harbinger’s Common Share ownership interest immediately prior to Issuance 2, expressed as a percentage (27.08%),multiplied by | ||
(II) | the Common Shares purchased by Harbinger from the Company in Issuance 2 (72.92 Common Shares). |
(B) | 13.54 Common Shares that Pinnacle purchased from the Company in Issuance 2. |
** | Note: Because this Look Back Right is exercised before the First Anniversary of Issuance 2, there is no Sliding Pro Rata Adjustment. |
3
(4) | On the second anniversary of Issuance 1, the Company issues another 100 Common Shares (“Issuance 3”). |
(a) | Harbinger fully exercises its preemptive rights underArticle 4, and as a result of the calculations set forth inSection 4.1(a)(i)(C), acquires 74.22 Common Shares from the Company in Issuance 3. |
(i) | i.e., 74.22 Common Shares equals: |
(A) | 100 Common Shares issued by the Company in Issuance 3multiplied by | ||
(B) | a fraction, the numerator of which is 209.63 Common Shares held by Harbinger prior to Issuance 3 and the denominator of which is 282.46 Common Shares held collectively by Harbinger and Pinnacle prior to Issuance 3. |
(b) | Pinnacle fully exercises its preemptive rights underArticle 4, and as a result of the calculations set forth inSection 4.1(a)(i)(C), acquires 25.78 Common Shares from the Company in Issuance 3. |
(i) | i.e., 25.78 Common Shares equals: |
(A) | 100 Common Shares issued by the Company in Issuance 3multiplied by | ||
(B) | a fraction, the numerator of which is 72.83 Common Shares held by Pinnacle prior to Issuance 3 and the denominator of which is 282.46 Common Shares held collectively by Harbinger and Pinnacle prior to Issuance 3. |
4
• | Issuance of New Class of Securities by the Company (e.g., Series VI Special Shares). | ||
• | Two additional issuances of Series VI Special Shares over a 2—year period. | ||
• | Harbinger fully exercises its preemptive rights from Company in all issuances. | ||
• | Pinnacle’s exercise of its preemptive rights varies with issuance. | ||
• | Pinnacle exercises Look Back Rights. |
(1) | On Day 1, the Company issues 100 shares of a New Class of Securities — the Series VI Special Shares (“Issuance 1”). |
(a) | Harbinger fully exercises its preemptive rights underArticle 4, and as a result of the calculations set forth inSection 4.1(a)(i)(A), acquires 72.92 Series VI Special Shares from the Company in Issuance 1. |
(i) | i.e., 72.92 Series VI Special Shares equals: |
(A) | 100 Series VI Special Shares issued by the Company in Issuance 1multiplied by | ||
(B) | a fraction, the numerator of which is 70 Common Shares held by Harbinger prior to Issuance 1 and the denominator of which is 96 Common Shares held collectively by Harbinger and Pinnacle prior to Issuance 1. |
(b) | Pinnacle exercises 25% of its preemptive rights underArticle 4, and as a result of the calculations set forth inSection 4.1(a)(i)(A), acquires 6.77 Series VI Special Shares from the Company in Issuance 1. |
(i) | i.e., 6.77 Series VI Special Shares equals: |
(A) | 100 Series VI Special Shares issued by the Company in Issuance 1multiplied by |
(B) | a fraction, the numerator of which is 26 Common Shares held by Pinnacle prior to Issuance 1 and the denominator of which is 96 Common Shares held collectively by Harbinger and Pinnacle prior to Issuance 1divided by | ||
(C) | 4 (i.e., 25%). |
(c) | The remaining Series VI Special Shares from Issuance 1 (i.e., 20.31 Series VI Special Shares) are acquired by stockholders other than Harbinger or Pinnacle. |
5
(2) | Exactly six months following Issuance 1, the Company issues Add-On Securities by issuing another 100 Series VI Special Shares (“Issuance 2”). |
(a) | Harbinger fully exercises its preemptive rights underArticle 4, and as a result of the calculations set forth inSection 4.1(a)(i)(B), acquires 72.92 Series VI Special Shares from the Company in Issuance 2. |
(i) | i.e., 72.92 Series VI Special Shares equals: |
(A) | 100 Series VI Special Shares issued by the Company in Issuance 2multiplied by | ||
(B) | a fraction, the numerator of which is 72.92 Series VI Special Shares held by Harbinger prior to Issuance 2 and the denominator of which is 100 Series VI Special Shares issued and outstanding on a Fully Diluted Basis prior to Issuance 2. |
(b) | Pinnacle fully exercises its preemptive rights underArticle 4, and as a result of the calculations set forth inSection 4.1(a)(i)(B), acquires 6.77 Series VI Special Shares from the Company in Issuance 2. |
(i) | i.e., 6.77 Series VI Special Shares equals: |
(A) | 100 Series VI Special Shares issued by the Company in Issuance 2multiplied by | ||
(B) | a fraction, the numerator of which is 6.77 Series VI Special Shares held by Pinnacle prior to Issuance 2 and the denominator of which is 100 Series VI Special Shares issued and outstanding on a Fully Diluted Basis prior to Issuance 2. |
(c) | The remaining Series VI Special Shares from Issuance 2 (i.e., 20.31 Series VI Special Shares) are acquired by stockholders other than Harbinger or Pinnacle. |
(3) | Look Back Right — With Respect to Issuance 1: |
(a) | One day prior to the issuance in Issuance 3 (and during the notice period with respect to Issuance 3 as provided for inSection 4.1(c)), Pinnacle fully exercises its Look Back Right with respect to Issuance 1 to acquire 6.51 Series VI Special Shares from the 72.92 Series VI Special Shares that Harbinger acquired in Issuance 1. |
(i) | i.e., 6.51 Series VI Special Shares equals the amount determined by: |
(A) | the product of: |
(I) | Pinnacle’s Common Share ownership interest relative to Harbinger’s Common Share ownership interest immediately prior to Issuance 1, expressed as a percentage (27.08%),multiplied by | ||
(II) | the Series VI Special Shares purchased by Harbinger from the Company in Issuance 1 (72.92 Series VI Special Shares) |
6
(B) | 6.77 Series VI Special Shares that Pinnacle purchased from the Company in Issuance 1 |
(C) | 0.50, which represents the Sliding Pro Rata Preemptive Portion, which is equal to: |
(I) | 366 (representing the number of days between the date on which Pinnacle exercised the Look Back Right with respect to Issuance 1 and the Third Anniversary of Issuance 1)divided by | ||
(II) | 730. |
(4) | Look Back Right — With Respect to Issuance 2: |
(a) | One day prior to the issuance in Issuance 3 and immediately following the exercise of the Look Back Right on Issuance 1 (and during the notice period with respect to Issuance 3 as provided for inSection 4.1(c)), Pinnacle fully exercises its Look Back Right with respect to Issuance 2 to acquire 9.80 Series VI Special Shares from the 72.92 Series VI Special Shares that Harbinger acquired in Issuance 2. |
(i) | i.e., 9.80 Series VI Special Shares equals the amount determined by: |
(A) | the product of: |
(I) | Pinnacle’s Common Share ownership interest relative to Harbinger’s Common Share ownership interest immediately prior to Issuance 2, expressed as a percentage (27.08%),multiplied by | ||
(II) | the Series VI Special Shares purchased by Harbinger from the Company in Issuance 2 (72.92 Series VI Special Shares) |
(B) | 6.77 Series VI Special Shares that Pinnacle purchased from the Company in Issuance 2 |
(C) | 0.75, which represents the Sliding Pro Rata Preemptive Portion, which is equal to: |
(I) | 551 (representing the number of days between the date on which Pinnacle exercised the Look Back Right with respect to Issuance 2 and the Third Anniversary of Issuance 2)divided by | ||
(II) | 730. |
7
(5) | On the second anniversary of Issuance 1, the Company issues Add-On Securities by issuing another 100 Series VI Special Shares (“Issuance 3”). |
(a) | Harbinger fully exercises its preemptive rights underArticle 4, and as a result of the calculations set forth inSection 4.1(a)(i)(B) and taking into account the Look Back Rights exercised above, acquires 64.77 Series VI Special Shares from the Company in Issuance 3. |
(i) | i.e., 64.77 Series VI Special Shares equals: |
(A) | 100 Series VI Special Shares issued by the Company in Issuance 3multiplied by | ||
(B) | a fraction, the numerator of which is 129.53 Series VI Special Shares held by Harbinger prior to Issuance 3 and the denominator of which is 200 Series VI Special Shares issued and outstanding on a Fully Diluted Basis prior to Issuance 3. |
(b) | Pinnacle fully exercises its preemptive rights underArticle 4, and as a result of the calculations set forth inSection 4.1(a)(i)(B), acquires 14.92 Series VI Special Shares from the Company in Issuance 3. |
(i) | i.e., 14.92 Series VI Special Shares equals: |
(A) | 100 Series VI Special Shares issued by the Company in Issuance 3multiplied by | ||
(B) | a fraction, the numerator of which is 29.84 Common Shares held by Pinnacle prior to Issuance 3 and the denominator of which is 200 Series VI Special Shares issued and outstanding on a Fully Diluted Basis prior to Issuance 3. |
(c) | The remaining Series VI Special Shares from Issuance 3 (i.e., 20.31 Series VI Special Shares) are acquired by stockholders other than Harbinger or Pinnacle. |
8
Scenario #1 | Three Common Shares Issuances; Look Back Righton Issuance 2 Exercised | |||
Background | ||||
100.00 | Total Common Shares issued and outstanding prior to Issuance 1 | |||
70.00 | Harbinger’s Common Share ownership prior to Issuance 1 | |||
26.00 | Pinnacle’s Common Share ownership prior to Issuance 1 | |||
96.00 | Harbinger’s and Pinnacle’s Common Share Ownership prior to Issuance 1 | |||
70.00 | % | Harbinger’s % of total Common Shares issued and outstanding prior to Issuance 1 | ||
26.00 | % | Pinnacle’s % of total Common Shares issued and outstanding prior to Issuance 1 | ||
72.92 | % | Harbinger’s % of total Common Shares held by Harbinger and Pinnacle prior to Issuance 1 | ||
27.08 | % | Pinnacle’s % of total Common Shares held by Harbinger and Pinnacle prior to Issuance 1 | ||
Issuance 1 (Day 1) | Issuance of Common Shares | |||
100.00 | Total Common Shares Issued in Issuance 1 | |||
72.92 | Harbinger’s 100% Common Share acquisition from the Company in Issuance 1 | |||
27.08 | Pinnacle’s 100% Common Share acquisition from the Company in Issuance 1 | |||
0.00 | Third Party acquisition from the Company in Issuance 1 | |||
200.00 | Total Common Shares issued and outstanding following Issuance 1 | |||
Issuance 2 (1 year later) | Issuance of Common Shares | |||
142.92 | Harbinger’s Common Share ownership prior to Issuance 2 | |||
53.08 | Pinnacle’s Common Share ownership prior to Issuance 2 | |||
196.00 | Harbinger’s and Pinnacle’s Common Share ownership prior to Issuance 2 | |||
71.46 | % | Harbinger’s % of total Common Shares issued and outstanding prior to Issuance 2 | ||
26.54 | % | Pinnacle’s % of total Common Shares issued and outstanding prior to Issuance 2 | ||
72.92 | % | Harbinger’s % of total Common Shares held by Harbinger and Pinnacle prior to Issuance 2 | ||
27.08 | % | Pinnacle’s % of total Common Shares held by Harbinger and Pinnacle prior to Issuance 2 | ||
100.00 | Total Common Shares issued in Issuance 2 | |||
72.92 | Harbinger’s 100% Common Share acquisition from the Company in Issuance 2 | |||
13.54 | Pinnacle’s 50% Common Share acquisition from the Company in Issuance 2 | |||
13.54 | Third Party acquisition from the Company in Issuance 2 | |||
300.00 | Total Common Shares issued and outstanding following Issuance 2 | |||
Look Back Right | Prior to Issuance 3 | |||
27.08 | % | Pinnacle’s % of total Common Shares held by Harbinger and Pinnacle prior to Issuance 2 | ||
72.92 | Harbinger’s 100% Common Share acquisition from the Company in Issuance 2 | |||
13.54 | Pinnacle’s purchased Common Shares in Issuance 2 | |||
6.21 | Maximum number of Common Shares subject to Look Back on Issuance 2 | |||
0.00 | Sliding Pro Rata Adjustment (N/A) | |||
6.21 | Common Shares purchased by Pinnacle from Harbinger via Look Back Right on Issuance 2 | |||
72.83 | Pinnacle’s Common Share ownership following Look Back Right on Issuance 2 | |||
209.63 | Harbinger’s Common Share ownership following Look Back Right on Issuance 2 | |||
Issuance 3 (2 years later) | Issuance of Common Shares | |||
209.63 | Harbinger’s Common Share ownership prior to Issuance 3 | |||
72.83 | Pinnacle’s Common Share ownership prior to Issuance 3 | |||
282.46 | Harbinger’s and Pinnacle’s Common Share Ownership prior to Issuance 3 | |||
69.88 | % | Harbinger’s % of total Common Shares issued and outstanding prior to Issuance 3 | ||
24.28 | % | Pinnacle’s % of total Common Shares issued and outstanding prior to Issuance 3 | ||
74.22 | % | Harbinger’s % of total Common Shares held by Harbinger and Pinnacle prior to Issuance 3 | ||
25.78 | % | Pinnacle’s % of total Common Shares held by Harbinger and Pinnacle prior to Issuance 3 | ||
100.00 | Total Common Shares issued in Issuance 3 | |||
74.22 | Harbinger’s 100% Common Share acquisition from the Company in Issuance 3 | |||
25.78 | Pinnacle’s 100% Common Share acquisition from the Company in Issuance 3 | |||
Results | ||||
400.00 | Total Common Shares issued and outstanding following Issuance 3 | |||
283.84 | Harbinger’s Common Share ownership following Issuance 3 | |||
98.62 | Pinnacle’s Common Share ownership following Issuance 3 | |||
382.46 | Harbinger’s and Pinnacle’s Common Share Ownership following Issuance 3 | |||
70.96 | % | Harbinger’s % of total Common Shares issued and outstanding following Issuance 3 | ||
24.65 | % | Pinnacle’s % of total Common Shares issued and outstanding following Issuance 3 | ||
74.22 | % | Harbinger’s % of total Common Shares held by Harbinger and Pinnacle following Issuance 3 | ||
25.78 | % | Pinnacle’s % of total Common Shares held by Harbinger and Pinnacle following Issuance 3 |
Scenario #2 | New Class of Securities Issuance with Add-Ons; Look Back Rights Exercised | |||||||||||
Background | ||||||||||||
100.00 | Total Common Shares issued and outstanding prior to Issuance 1 | |||||||||||
70.00 | Harbinger’s Common Share ownership prior to Issuance 1 | |||||||||||
26.00 | Pinnacle’s Common Share ownership prior to Issuance 1 | |||||||||||
96.00 | Harbinger’s and Pinnacle’s Common Share Ownership prior to Issuance 1 | |||||||||||
70.00 | % | Harbinger’s % of total Common Shares issued and outstanding prior to Issuance 1 | ||||||||||
26.00 | % | Pinnacle’s % of total Common Shares issued and outstanding prior to Issuance 1 | ||||||||||
72.92 | % | Harbinger’s % of total Common Shares held by Harbinger and Pinnacle prior to Issuance 1 | ||||||||||
27.08 | % | Pinnacle’s % of total Common Shares held by Harbinger and Pinnacle prior to Issuance 1 | ||||||||||
Issuance 1 (Day 1) | Issuance of New Class of Securities — Series VI Special Shares | |||||||||||
100.00 | Total Series VI Special Shares Issued in Issuance 1 | |||||||||||
72.92 | Harbinger’s 100% Series VI Special Shares acquisition from the Company in Issuance 1 | |||||||||||
6.77 | Pinnacle’s 25% Series VI Special Shares acquisition from the Company in Issuance 1 | |||||||||||
20.31 | Third Party acquisition from the Company in Issuance 1 | |||||||||||
100.00 | Total Common Shares issued and outstanding following Issuance 1 | |||||||||||
100.00 | Total Series VI Special Shares issued and outstanding following Issuance 1 | |||||||||||
Issuance 2 (6 months later) | Issuance of Add-On Securities — Series VI Special Shares | |||||||||||
72.92 | Harbinger’s Series VI Special Shares ownership prior to Issuance 2 | |||||||||||
6.77 | Pinnacle’s Series VI Special Shares ownership prior to Issuance 2 | |||||||||||
100.00 | Total Series VI Special Shares issued and outstanding prior to Issuance 2 | |||||||||||
100.00 | Total Series VI Special Shares issued in Issuance 2 | |||||||||||
72.92 | Harbinger’s 100% Series VI Special Shares acquisition from the Company in Issuance 2 | |||||||||||
6.77 | Pinnacle’s 100% Series VI Special Shares acquisition from the Company in Issuance 2 | |||||||||||
20.31 | Third Party acquisition from the Company in Issuance 2 | |||||||||||
100.00 | Total Common Shares issued and outstanding following Issuance 2 | |||||||||||
200.00 | Total Series VI Special Shares issued and outstanding following Issuance 2 | |||||||||||
Look Back Rights (1 day prior to Issuance 3) | ||||||||||||
With respect to Issuance 1 | ||||||||||||
27.08 | % | Pinnacle’s % of total Common Shares held by Harbinger and Pinnacle prior to Issuance 1 | ||||||||||
72.92 | Harbinger’s 100% Series VI Special Shares acquisition from the Company in Issuance 1 | |||||||||||
6.77 | Pinnacle’s purchased Series VI Special Shares in Issuance 1 | |||||||||||
12.98 | Maximum number of Series VI Special Shares subject to Look Back on Issuance 1 | |||||||||||
0.50 | Sliding Pro Rata Preemptive Portion (Third Anniversary — Exercise Date / 730) | 366.00 | 3rd Ann - Exercise Date | |||||||||
6.51 | Series VI Special Shares purchased by Pinnacle from Harbinger via Look Back Right on Issuance 1 | |||||||||||
20.05 | Pinnacle’s Series VI Special Share ownership following Look Back Right on Issuance 1 | |||||||||||
139.33 | Harbinger’s Series VI Special Share ownership following Look Back Right on Issuance 1 | |||||||||||
With respect to Issuance 2 | ||||||||||||
27.08 | % | Pinnacle’s % of total Common Shares held by Harbinger and Pinnacle prior to Issuance 2 | ||||||||||
72.92 | Harbinger’s 100% Series VI Special Shares acquisition from the Company in Issuance 2 | |||||||||||
6.77 | Pinnacle’s purchased Series VI Special Shares in Issuance 2 | |||||||||||
12.98 | Maximum number of Series VI Special Shares subject to Look Back on Issuance 2 | |||||||||||
0.75 | Sliding Pro Rata Preemptive Portion (Third Anniversary — Exercise Date / 730) | 551.00 | 3rd Ann - Exercise Date | |||||||||
9.80 | Series VI Special Shares purchased by Pinnacle from Harbinger via Look Back Right on Issuance 2 | |||||||||||
29.84 | Pinnacle’s Series VI Special Share ownership following Look Back Right on Issuance 2 | |||||||||||
129.53 | Harbinger’s Series VI Special Share ownership following Look Back Right on Issuance 2 | |||||||||||
Issuance 3 (2 years later) | Issuance of Add-On Securities — Series VI Special Shares | |||||||||||
129.53 | Harbinger’s Series VI Special Shares ownership prior to Issuance 3 | |||||||||||
29.84 | Pinnacle’s Series VI Special Shares ownership prior to Issuance 3 | |||||||||||
200.00 | Total Series VI Special Shares issued and outstanding prior to Issuance 3 | |||||||||||
100.00 | Total Series VI Special Shares issued in Issuance 3 | |||||||||||
64.77 | Harbinger’s 100% Series VI Special Shares acquisition from the Company in Issuance 3 | |||||||||||
14.92 | Pinnacle’s 100% Series VI Special Shares acquisition from the Company in Issuance 3 | |||||||||||
20.31 | Third Party acquisition from the Company in Issuance 3 | |||||||||||
Results | ||||||||||||
Common Shares | ||||||||||||
100.00 | Total Common Shares issued and outstanding following Issuance 3 | |||||||||||
70.00 | Harbinger’s Common Share ownership following Issuance 3 | |||||||||||
26.00 | Pinnacle’s Common Share ownership following Issuance 3 | |||||||||||
96.00 | Harbinger’s and Pinnacle’s Common Share Ownership following Issuance 3 | |||||||||||
70.00 | % | Harbinger’s % of total Common Shares issued and outstanding following Issuance 3 | ||||||||||
26.00 | % | Pinnacle’s % of total Common Shares issued and outstanding following Issuance 3 | ||||||||||
72.92 | % | Harbinger’s % of total Common Shares held by Harbinger and Pinnacle following Issuance 3 | ||||||||||
27.08 | % | Pinnacle’s % of total Common Shares held by Harbinger and Pinnacle following Issuance 3 | ||||||||||
Series VI Special Shares | ||||||||||||
300.00 | Total Series VI Special Shares issued and outstanding following Issuance 3 | |||||||||||
194.30 | Harbinger’s Series VI Special Shares ownership following Issuance 3 | |||||||||||
44.77 | Pinnacle’s Series VI Special Shares ownership following Issuance 3 | |||||||||||
60.94 | Third Party’s Series VI Special Shares ownership following Issuance 3 | |||||||||||
239.06 | Harbinger’s and Pinnacle’s Series VI Special Shares Ownership following Issuance 3 | |||||||||||
64.77 | % | Harbinger’s % of total Series VI Special Shares issued and outstanding following Issuance 3 | ||||||||||
14.92 | % | Pinnacle’s % of total Series VI Special Shares issued and outstanding following Issuance 3 | ||||||||||
20.31 | % | Third Party’s % of total Series VI Special Shares issued and outstanding following Issuance 3 | ||||||||||
81.27 | % | Harbinger’s % of total Series VI Special Shares held by Harbinger and Pinnacle following Issuance 3 | ||||||||||
18.73 | % | Pinnacle’s % of total Series VI Special Shares held by Harbinger and Pinnacle following Issuance 3 |
Schedule 6.2(b)(ii)(B) Scenario #1 Day 1 Issuance 1 100 Common Shares issued H exercises 100% = 72.92 Common Shares PNK exercises 100% = 27.08 Common Shares Year 1 Issuance 2 100 Common Shares issued H exercises 100% = 72.92 Common Shares PNK exercises 50% = 13.54 Common Shares Year 2 Issuance 3 100 Common Shares issued H exercises 100% = 74.22 Common Shares PNK exercises 100% = 25.78 Common Shares Look Back Right on Issuance 2 PNK fully exercises to acquire 6.21 Common Shares from the 72.92 that Harbinger acquired in Issuance 2 General Timeline |
Schedule 6.2(b)(ii)(B) Scenario #2 Day 1 Issuance 1 100 Series VI issued H exercises 100% = 72.92 Series VI PNK exercises 25% = 6.77 Series VI Third Party = 20.31 Series VI 6 months Issuance 2 100 Series VI issued H exercises 100% = 72.92 Series VI PNK exercises 100% = 6.77 Series VI Third Party = 20.31 Series VI Year 2 Issuance 3 100 Series VI issued H exercises 100% = 64.77 Series VI PNK exercises 100% = 14.92 Series VI Third Party = 20.31 Series VI Look Back Right on Issuance 1 PNK fully exercises to acquire 6.51 Series VI from the 72.92 that Harbinger acquired in Issuance 1 General Timeline Look Back Right on Issuance 2 PNK fully exercises to acquire 9.80 Series VI from the 72.92 that Harbinger acquired in Issuance 2 |
(a) | “Business Day” means any day of the year except a Saturday or Sunday or other day that is a statutory or civic holiday that banks are generally open for business in the Provinces of Ontario, British Columbia or in the State of New York; | |
(b) | “Common Shares” means the common shares of the Company; | |
(c) | “Common Special Shares” means the series II special shares of the Company; | |
(d) | “Current Market Price” at any date, means the price as determined by the directors of the Company or such firm of independent chartered accountants as may be selected by the directors acting reasonably and in good faith in their sole discretion; | |
(e) | “Exercise Price” means $0.01 per One Hundred (100) Common Shares. | |
(f) | “Expiry Time” means 5:00 p.m. (Vancouver time) on a date that is 20 years from the date hereof; | |
(g) | “Fully Diluted Basis” means the aggregate number of Common Shares and Common Special Shares, including without limitation all issued and outstanding Common Shares and Common Special Shares, determined assuming the issuance, conversion or exercise (as the case may be) into Common Shares or Common Special Shares of any and all options, warrants and convertible or exchangeable securities issued by the Company. |
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(h) | “Form of Transfer” means the form of transfer annexed hereto as Schedule “B”; | |
(i) | “Governmental Entity” means any applicable (i) multi-national, federal, provincial, state, municipal, local or other governmental or public department, central bank, court, commission, board, bureau, agency or instrumentality, domestic or foreign, (ii) any subdivision or authority of any of the foregoing, or (iii) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the above; | |
(j) | “Holder” means PNK Development 18, LLC or its successor in interest, and after any transfer by PNK Development 18, LLC or its successor in interest, as applicable, the registered holder of this Warrant; | |
(k) | “Person” means an individual, corporation, general partnership, limited partnership, limited liability company, association, joint stock company, trust or trustee thereof, estate or executor thereof, governmental entity, or any other legally recognizable entity; | |
(l) | “Subscription Form” means the form of subscription annexed hereto as Schedule “A”; | |
(m) | “this Warrant”, “Warrant”, “herein”, “hereby”, “hereof”, “hereto”, “hereunder” and similar expressions mean or refer to this Warrant and any deed or instrument supplemental or ancillary thereto and any schedules hereto or thereto and not to any particular article, section, subsection, clause, subclause or other portion hereof. |
(a) | this Warrant, with the Subscription Form duly completed and executed by the Holder or its legal representative or attorney, duly appointed by an instrument in writing in form and manner satisfactory to the Company, and | ||
(b) | cash or a certified cheque, money order or bank draft payable to or to the order of the Company in lawful money at par in the City of Vancouver in an amount equal to the Exercise Price multiplied by the number of Common Shares for which subscription is being made. |
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(a) | The Company covenants and agrees that: |
(i) | so long as any Warrants evidenced hereby remain outstanding, it shall reserve and there shall remain unissued out of its authorized capital a sufficient number of Common Shares to satisfy the right of purchase herein provided for should the Holder determine to exercise its rights in respect of all the Common Shares for the time being called for by such outstanding Warrants; and | ||
(ii) | all Common Shares which shall be issued upon the exercise of the right to purchase herein provided for, upon payment therefor of the amount at which such Common Shares may at the time be purchased pursuant to the provisions hereof, shall be issued as fully paid and non-assessable Common Shares and the holders thereof shall not be liable to the Company or to its creditors in respect thereof. |
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(a) | the Corporation |
(i) | subdivides (or redivides or changes) (A) the Common Shares or Common Special Shares into a greater number of shares, or (B) securities exchangeable for or convertible into Common Shares or Common Special Shares into a greater number of shares or into securities exchangeable or convertible into a greater number of shares (other than any subdivision, redivision or change which is effected as a result of an automatic adjustment mechanism under such securities exchangeable for or convertible into Common Shares or Common Special Shares); or | ||
(ii) | consolidates (or reduces or combines) (A) the Common Shares or Common Special Shares into a lesser number of shares, or (B) securities exchangeable for or convertible into Common Shares or Common Special Shares into a lesser number of shares or into securities exchangeable or convertible into a lesser number of shares (other than any consolidation, reduction or combination which is effected as a result of an automatic adjustment mechanism under such securities exchangeable for or convertible into Common Shares or Common Special Shares); or | ||
(iii) | issues Common Shares or Common Special Shares, or securities exchangeable for or convertible into Common Shares or Common Special Shares, to the holders of all or substantially all of the outstanding Common Shares or Common Special Shares by way of stock dividend or other distribution, or | ||
(iv) | issues Common Shares or Common Special Shares for no additional consideration to any one or more holders of Common Shares or Common Special Shares, respectively, |
the Exercise Price shall be adjusted to equal the price determined by multiplying the Exercise Price most recently in effect prior to such event by a fraction of which the numerator shall be the total number of Common Shares and Common Special Shares outstanding immediately prior to such event and the denominator shall be the total number of Common Shares and Common Special Shares outstanding immediately after such event (including, in the case where securities exchangeable for or convertible into Common Shares or Common Special Shares are distributed, the number of Common Shares or Common Special Shares that would have been outstanding had all such securities been exchanged for or converted into Common Shares or Common Special Shares, as applicable, immediately after such event). Upon any adjustment of the Exercise Price pursuant to this Section 11(a), the number of Common Shares issuable pursuant to this Warrant shall be adjusted by multiplying the number of Common Shares which were theretofore issuable on the exercise of this Warrant by a fraction of which the numerator shall be the total number of Common Shares and Common Special Shares outstanding immediately after such event (including, in the case where securities exchangeable for or convertible into Common Shares or Common Special Shares are distributed, the number of Common Shares or Common Special Shares that would have been outstanding had all such securities been exchanged for or converted into Common Shares or Common Special Shares, as applicable, immediately after such event) and the denominator shall be the total number of Common Shares and Common Special Shares outstanding immediately prior to such event ; or |
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(b) | there is a consolidation, merger or amalgamation of the Company with or into another body corporate including a transaction whereby all or substantially all of the Company’s undertaking and assets become the property of any other corporation (any such event being herein called a “Capital Reorganization”), the Holder, upon exercising this Warrant after the effective date of such Capital Reorganization, will be entitled to receive in lieu of the number of Common Shares to which such Holder was theretofore entitled upon such exercise, the aggregate number of shares, other securities or other property which the Holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the Holder had been the registered holder of the number of Common Shares to which the Holder was theretofore entitled upon exercise of this Warrant. If determined appropriate by action of the directors of the Company, appropriate adjustments will be made as a result of any such Capital Reorganization in the application of the provisions set forth in this Section 11 with respect to the rights and interests thereafter of the Holder to the end that the provisions set forth in this Section 11 will thereafter correspondingly be made applicable as nearly as may reasonably be in relation to any shares, other securities or other property thereafter deliverable upon the exercise hereof. Any such adjustment must be made by and set forth in an amendment to this Warrant approved by the Holder and the Company and will for all purposes be conclusively deemed to be an appropriate adjustment. |
(a) | No adjustment will be made in respect of any event described in Section 11 if the Holder is entitled to participate in the Capital Reorganization on the same terms,mutatis mutandis, as if the Holder had exercised this Warrant prior to or on the effective date or record date of such event. | |
(b) | If at any time a dispute arises with respect to adjustments provided for in Section 11, such dispute will be conclusively determined by a firm of independent chartered accountants as may be selected by action by the Holder and the Company and any such determination, where required, will be binding upon the Company, the Holder and shareholders of the Company. The Company will provide such auditors or accountants with access to all necessary records of the Company. | |
(c) | In case the Company after the date of issuance of this Warrant takes any action affecting the Common Shares or the Common Special Shares, as applicable, other than action described in Section 11, which in the opinion of the board of directors of the Company would materially affect the rights of the Holder, the number of Common Shares to which the Holder will be entitled hereunder and the number of additional Common Shares which forms the basis of contingent entitlement hereunder, will be adjusted in an equitable manner as agreed to by the Holder and the Company, both acting reasonably. |
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(d) | As a condition precedent to the taking of any action which would require any adjustment to this Warrant, the Company must take any corporate action which may be necessary in order that the Company have unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all the shares or other securities which the Holder is entitled to receive on the full exercise thereof in accordance with the provisions hereof. | |
(e) | The Company will from time to time, immediately after the occurrence of any event which requires an adjustment or readjustment as provided in Section 11, forthwith give notice to the Holder specifying the event requiring such adjustment or readjustment and the results thereof. | |
(f) | The Company covenants to and in favour of the Holder that so long as this Warrant remains outstanding, it will give notice to the Holder of its intention to fix a record date for any event referred to in Section 11 which may give rise to an adjustment, and, in each case, such notice must specify the particulars of such event and the record date and the effective date for such event; provided that the Company is only required to specify in such notice such particulars of such event as have been fixed and determined on the date on which such notice is given. Such notice shall be given not less than 10 Business Days prior to each such applicable record date or effective date. |
(a) | The Company shall not enter into any transaction whereby all or substantially all of its undertaking, property and assets would become the property of any other corporation (herein called a “successor corporation”) whether by way of reorganization, reconstruction, consolidation, amalgamation, merger, transfer, sale, disposition or otherwise, including without limitation a Capital Reorganization, unless prior to or contemporaneously with the consummation of such transaction the Company and the successor corporation shall have executed such instruments and done such things as, in the opinion of counsel to the Holder, are necessary or advisable to establish that upon the consummation of such transaction: |
(i) | the successor corporation will have assumed all the covenants and obligations of the Company under this Warrant; | ||
(ii) | the Warrant will be a valid and binding obligation of the successor corporation entitling the Holder, as against the successor corporation, to all the rights of the Holder under this Warrant; and |
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(iii) | any adjustments required to be made pursuant to Section 11 or Section 12 shall be the subject of a binding agreement between the Holder and the successor corporation. |
(b) | Whenever the conditions of subsection 13(a) shall have been duly observed and performed the successor corporation shall possess, and from time to time may exercise, each and every right and power of the Company under this Warrant in the name of the Company or otherwise and any act or proceeding by any provision hereof required to be done or performed by any director or officer of the Company may be done and performed with like force and effect by the like directors or officers of the successor corporation. |
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(i) | the validity, legality or enforceability of such remaining provisions or parts thereof shall not in any way be affected or impaired by the severance of the provisions or parts thereof severed; and | ||
(ii) | the invalidity, illegality or unenforceability of any provision or part thereof contained in this Warrant in any jurisdiction shall not affect or impair such provision or part thereof or any other provisions of this Warrant in any other jurisdiction. |
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(a) | to the Holder, at the address register to be maintained pursuant to Section 5 hereof, which shall initially be: | |
PNK Development 18, LLC 8918 Spanish Ridge Avenue Las Vegas, Nevada U.S.A. 89148 Attention: Corporate Secretary Facsimile: 702) 541 7773 | ||
with a copy, not constituting notice, to: | ||
[insert] Attention: [•] Facsimile: [•] Email: [•] |
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(b) | to the Company at: | |
Asian Coast Development (Canada) Ltd. 2200- 1055 West Hastings Street, Vancouver, British Columbia Canada V6E 2E9 Attention: Chief Executive Officer Facsimile: (778) 329-0439 Email: lnathan@asiancoastdevelopment.com | ||
with a copy, not constituting notice, to: | ||
Osler, Hoskin & Harcourt LLP 1 First Canadian Place, Suite 6300 Toronto, Ontario, Canada M5X 1B8 Attention: Chris Murray Facsimile: (416) 862-6666 Email: cmurray@osler.com |
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PNK DEVELOPMENT 18, LLC | ||||
Per: | ||||
Authorized Signing Officer | ||||
(I have authority to bind the Corporation) | ||||
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NAME: | ||||||
Signature: | ||||||
Address: | ||||||
o | Please check box if these Common Share certificates are to be delivered at the office where this Warrant certificate is surrendered, failing which the Common Shares certificates will be mailed to the subscriber at the address set out above. |
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Signature Guaranteed | (Signature of Warrant Holder, to be the same as appears on the face of this Warrant Certificate) |