Exhibit 4.2
GRYPHON GOLD CORPORATION
AND
COMPUTERSHARE TRUST COMPANY OF CANADA
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WARRANT INDENTURE
PROVIDING FOR THE ISSUE OF UP TO
__ CLASS A WARRANTS
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__, 2005
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
1.1 Definitions......................................................... 1
1.2 Construction........................................................ 5
1.3 Business Day........................................................ 6
1.4 Time of the Essence................................................. 6
1.5 Applicable Law...................................................... 6
1.6 Severability........................................................ 6
1.7 Schedule............................................................ 6
1.8 Conflicts........................................................... 7
ARTICLE 2
ISSUE OF WARRANTS
2.1 Issue of Warrants................................................... 7
2.2 Form and Terms of Warrants.......................................... 7
2.3 Signing of Warrant Certificates..................................... 7
2.4 Certification by the Trustee........................................ 8
2.5 Warrantholder Not a Shareholder, Etc................................ 8
2.6 Issue in Substitution for Lost Warrant Certificates................. 8
2.7 Warrants to Rank Pari Passu......................................... 9
2.8 Register for Warrants............................................... 9
2.9 Transferee Entitled to Registration................................. 10
2.10 Registers Open for Inspection....................................... 10
2.11 Exchange of Warrants................................................ 10
2.12 Ownership of Warrants............................................... 11
2.13 Adjustment of Exercise Rights....................................... 11
2.14 Adjustment Rules.................................................... 15
2.15 Postponement of Subscription........................................ 16
2.16 Notice of Adjustment of Exercise Rights............................. 16
2.17 No Action after Notice.............................................. 17
2.18 No Duty to Inquire.................................................. 17
2.19 Rights Issued in Respect of Underlying Securities Issued on
Exercise............................................................ 17
ARTICLE 3
EXERCISE OF WARRANTS
3.1 Method of Exercise of Warrants...................................... 18
3.2 Expiration of Warrants.............................................. 22
3.3 Effect of Exercise of Warrants...................................... 22
3.4 Cancellation of Warrant Certificates................................ 23
3.5 No Fractional Shares................................................ 23
3.6 Securities Restrictions; Legends.................................... 24
ARTICLE 4
COVENANTS
4.1 General Covenants................................................... 24
4.2 Trustee Remuneration and Expenses................................... 25
4.3 Performance of Covenants by Trustee................................. 26
ARTICLE 5
ENFORCEMENT
5.1 Suits by Warrantholders............................................. 26
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ARTICLE 6
MEETINGS OF WARRANTHOLDERS
6.1 Right to Convene Meetings........................................... 26
6.2 Notice.............................................................. 27
6.3 Chair............................................................... 27
6.4 Quorum.............................................................. 27
6.5 Power to Adjourn.................................................... 28
6.6 Show of Hands....................................................... 28
6.7 Poll and Voting..................................................... 28
6.8 Regulations......................................................... 28
6.9 Company, Trustee and Counsel May Be Represented..................... 29
6.10 Powers Exercisable by Extraordinary Resolution...................... 29
6.11 Meaning of Extraordinary Resolution................................. 30
6.12 Powers Cumulative................................................... 31
6.13 Minutes............................................................. 31
6.14 Instruments in Writing.............................................. 31
6.15 Binding Effect of Resolutions....................................... 32
6.16 Holdings by the Company or Subsidiaries Disregarded................. 32
ARTICLE 7
SUPPLEMENTAL INDENTURES
7.1 Supplemental Indentures............................................. 32
7.2 Successor Corporations.............................................. 33
ARTICLE 8
CONCERNING THE TRUSTEE
8.1 Trust Indenture Legislation......................................... 33
8.2 Rights and Duties of Trustee........................................ 34
8.3 Evidence, Experts and Advisers...................................... 34
8.4 Documents Held by Trustee........................................... 35
8.5 Actions by Trustee to Protect Interests............................. 36
8.6 Trustee Not Required to Give Security............................... 36
8.7 Protection of Trustee............................................... 36
8.8 Replacement of Trustee.............................................. 36
8.9 Conflict of Interest................................................ 37
8.10 Acceptance of Trusts................................................ 38
8.11 Trustee Not to Be Appointed Receiver................................ 38
8.12 Indemnity of Trustee................................................ 38
8.13 Notice.............................................................. 38
8.14 Additional Provisions............................................... 39
ARTICLE 9
GENERAL
9.1 Notice.............................................................. 39
9.2 Accidental Failure to Give Notice to Warrantholders................. 41
9.3 Counterparts and Formal Date........................................ 41
9.4 Satisfaction and Discharge of Indenture............................. 41
9.5 Provisions of Indenture and Warrants for the Sole Benefit of Parties
and Warrantholders.................................................. 41
9.6 Language............................................................ 41
9.7 Purchase of Warrants by Company..................................... 42
9.8 Assignment.......................................................... 42
9.9 No Waiver, etc...................................................... 42
9.10 Further Assurances.................................................. 42
THIS WARRANT INDENTURE dated __, 2005.
BETWEEN:
GRYPHON GOLD CORPORATION,
a corporation existing under the laws of the State of Nevada,
(hereinafter referred to as the "COMPANY"),
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COMPUTERSHARE TRUST COMPANY OF CANADA,
a trust company organized and existing under the laws of Canada and
duly authorized to carry on the trust business in each province of
Canada,
(hereinafter referred to as the "TRUSTEE"),
WHEREAS the Company is duly authorized to create and issue the common
stock purchase warrants designated as "Class A Warrants" to be issued as herein
provided;
AND WHEREAS all things necessary have been done and performed to make
the Class A Warrants, when certified by the Trustee and issued as in this
Indenture provided, legal, valid and binding upon the Company with the benefits
of and subject to the terms of this Indenture;
AND WHEREAS the Trustee has agreed to enter into this Indenture and to
hold all rights, interests and benefits contained herein for and on behalf of
those persons who from time to time become holders of Class A Warrants issued
pursuant to this Indenture;
NOW THEREFORE THIS INDENTURE WITNESSES that for good and valuable
consideration mutually given, the receipt and sufficiency of which are hereby
acknowledged, the Company hereby appoints the Trustee as warrant trustee for the
holders of Class A Warrants, to hold all rights, interests and benefits
contained herein for and on behalf of those persons who from time to time become
holders of Class A Warrants issued pursuant to this Indenture, and it is hereby
agreed and declared as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Indenture, unless there is something in the subject matter or
context inconsistent therewith, the following phrases and words shall have the
meanings set out below and grammatical variations of such terms shall have
corresponding meanings:
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"ACCREDITED INVESTOR" means an "accredited investor" as defined in Rule 501(a)
of Regulation D;
"APPLICABLE LEGISLATION" has the meaning set out in Section 8.1(a);
"BUSINESS DAY" means a day other than a Saturday, Sunday or civic or statutory
holiday in Toronto, Ontario or the City of Golden, Colorado;
"CAPITAL REORGANIZATION" has the meaning set out in Section 2.13(e);
"COMMON SHARES" means the fully paid and non-assessable shares of common stock
in the capital of the Company, as currently constituted;
"COMPANY" means Gryphon Gold Corporation, a corporation existing under the laws
of the State of Nevada, and its successors from time to time;
"COMPANY'S AUDITORS" means Ernst & Young LLP or any other independent chartered
accountant or firm of chartered accountants duly appointed as auditors of the
Company from time to time;
"COUNSEL" means a lawyer or a firm of lawyers (who may be counsel for the
Company) acceptable to the Trustee, acting reasonably;
"CURRENT MARKET PRICE PER COMMON SHARE" means, at any date, the Canadian dollar
volume weighted average closing price per Common Share for the 20 consecutive
Trading Days commencing on the Trading Day immediately before such date on the
TSX or, if the Common Shares are not then listed on the TSX then on such other
stock exchange or Nasdaq on which the Common Shares are then listed or quoted as
may be selected by the directors of the Company or, if the Common Shares are not
then listed or quoted on any stock exchange or Nasdaq then on such other stock
exchange on which the Common Shares are then listed as may be selected by the
directors of the Company or, if the Common Shares are not then listed on a stock
exchange, on the over-the-counter market (provided that, in each case, if such
average price is not in U.S. dollars, such price will be translated into U.S.
dollars using the then applicable Exchange Rate); provided that, if there is no
market for the Common Shares during all or part of such period during which the
Current Market Price per Common Share would otherwise be determined, the Current
Market Price per Common Share shall in respect of all or such part of the period
be determined by a nationally-recognized firm of chartered accountants
appointed by the Company (who may be the Company's auditors), in each case
appropriately adjusted to take into account the occurrence during such
20-Trading Day period of any event that would result in an adjustment of the
Exercise Price pursuant to Section 2.13;
"DIRECTOR" means a director of the Company for the time being and, unless
otherwise specified herein, reference herein to an "ACTION OF THE DIRECTORS"
means an action by the directors of the Company as a board or, whenever duly
empowered, an action by a committee of directors;
"DIVIDENDS PAID IN ORDINARY COURSE" means such dividends paid in cash on the
Common Shares in any fiscal year of the Company to the extent that such
dividends in the aggregate do not exceed in amount or value the greatest of:
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(a) 110% of the aggregate amount or value of the dividends paid by the
Company on its Common Shares in the 12 consecutive months ended
immediately prior to the first day of such fiscal year;
(b) 25% of the consolidated net earnings of the Company before
extraordinary items and after dividends paid on any and all preferred
shares of the Company for the most recently completed fiscal year
(such consolidated net earnings to be shown in the audited financial
statements of the Company prepared in accordance with United States
generally accepted accounting principles); and
(c) 10% of the Shareholders' Equity.
"ELIGIBLE INSTITUTION" means a Canadian chartered bank, a major trust company in
Canada, a firm which is a member of a recognized stock exchange in Canada, a
member of the Investment Dealers Association of Canada, a national securities
exchange in the United States or the National Association of Securities Dealers,
Inc., or a participant in the Securities Transfer Agents Medallion (STAMP)
Program;
"EXCHANGE RATE" means, on any date for determination, the rate at which United
States dollars may be exchanged into Canadian dollars calculated using the noon
buying rate in The City of New York for cable transfers in Canadian dollars as
certified for customs purposes by the Federal Reserve Bank of New York; provided
that in the event that such rate is not quoted or published by the Federal
Reserve Bank of New York, the Exchange Rate shall be determined by reference to
such other publicly available service for displaying exchange rates as may be
determined by the Company;
"EXERCISE DATE", with respect to any Warrant, means the date during the Exercise
Period on which such Warrant is surrendered for exercise in accordance with the
provisions of Article 3;
"EXERCISE PERIOD", with respect to any Warrant, means the period beginning at
the date hereof and ending at the Expiry Time;
"EXERCISE PRICE" means, at any time, CDN$__ per Common Share, unless such price
shall have been adjusted in accordance with the provisions of Sections 2.13 and
2.14, in which case it shall mean the adjusted price in effect at such time;
"EXPIRY DATE", with respect to any Warrant, means __, __;
"EXPIRY TIME" means 5:00 p.m. (Toronto time) on the Expiry Date;
"EXTRAORDINARY RESOLUTION" has the meaning set out in Section 6.11;
"ISSUER BID" has the meaning set out in Section 2.13(d);
"NASDAQ" means the Nasdaq National Market;
"PERSON" includes, without limitation, an individual, corporation, partnership,
joint venture, trust, firm, unincorporated organization or any other legal or
business entity;
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"REGISTRATION STATEMENT" means the Company's registration statement filed with
the SEC under the 1933 Act, registering the Common Shares issuable upon exercise
of the Class A Warrants;
"REGULATION D" means Regulation D under the 1933 Act;
"REGULATION S" means Regulation S under the 1933 Act;
"RIGHTS OFFERING" has the meaning set out in Section 2.13(b);
"RIGHTS PERIOD" has the meaning set out in Section 2.13(b);
"SEC" means the United States Securities and Exchange Commission;
"SHARE REORGANIZATION" has the meaning set out in Section 2.13(a);
"SHAREHOLDER" means a holder of record on the books of the Company of one or
more Common Shares;
"SHAREHOLDERS' EQUITY" means the aggregate of all classes of share capital,
other paid in capital, retained earnings/deficit and any and all surplus
accounts and reserves as shown on the audited financial statements of the
Company for the most recently ended fiscal year prepared in accordance with
United States generally accepted accounting principles;
"SPECIAL DISTRIBUTION" has the meaning set out in Section 2.13(c);
"SUCCESSOR" has the meaning set out in Section 7.2, unless the context otherwise
requires;
"TRADING DAY" means any day on which trading occurs on the TSX (or such other
exchange or market provided for in the definition of "CURRENT MARKET PRICE"),
and at least one trade of at least one board lot of Common Shares occurs on such
day;
"TRUSTEE" means Computershare Trust Company of Canada, a trust company organized
and existing under the laws of Canada, or its successors for the time being in
the trusts hereby created;
"TSX" means The Toronto Stock Exchange;
"UNDERLYING SECURITIES" means the Common Shares issuable upon the exercise of
the Warrants, including the shares or other securities or property issuable upon
the exercise of the Warrants as a result of any adjustment of exercise rights
pursuant to Sections 2.13 and 2.14;
"UNITED STATES" means "UNITED STATES" as defined in 902(l) of Regulation S;
"U.S. PERSON" means a "U.S. PERSON" as defined in Rule 902(k) of Regulation S;
"U.S. PROSPECTUS" means a prospectus meeting the requirements of Section 10(a)
of the 1933 Act;
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"U.S. PURCHASER" means (i) a person in the United States, (ii) a U.S. Person or
person purchasing on behalf, or for the benefit or account, of any U.S. Person
or person in the United States, (iii) a person who was in the United States at
the time the order was made to exercise Class A Warrants or (iv) a person who
executed or delivered a Warrant Exercise Form while in the United States;
"U.S. AGENT" means Computershare Trust Company, Inc. or any replacement agent of
the Trustee designated by the Trustee, with the approval of the Company, from
time to time;
"WARRANT CERTIFICATES" has the meaning set out in Section 2.1;
"WARRANT EXERCISE FORM" means the warrant exercise form attached to the Warrant
Certificates;
"WARRANTHOLDER" or "HOLDER" means a person whose name is entered for the time
being in the register maintained pursuant to Section 2.8(b) and, for greater
certainty, in respect of any action to be taken by a holder in respect of his
Warrants, means the holder or his successors, executors, administrators or other
legal representatives or his or their attorney duly appointed by instrument in
writing in form, substance and execution satisfactory to the Trustee with
signatures guaranteed by an Eligible Institution;
"WARRANTHOLDERS' REQUEST" means an instrument signed in one or more counterparts
by Warrantholders holding in the aggregate not fewer than 25% of the then
outstanding Warrants, requesting the Trustee to take some action or proceeding
specified therein;
"WARRANTS" or "CLASS A WARRANTS" means the up to __ Class A Warrants of the
Company issuable hereunder;
"WRITTEN ORDER OF THE COMPANY", "WRITTEN REQUEST OF THE COMPANY", "WRITTEN
CONSENT OF THE COMPANY", "CERTIFICATE OF THE COMPANY" and any other document
required to be signed by the Company means, respectively, a written order,
request, consent, certificate or other document signed in the name of the
Company by any one of the chairman of the board of directors, chief executive
officer, president, secretary, or any vice-president of the Company, and may
consist of one or more instruments so executed; and
"1933 ACT" or "SECURITIES ACT" means the United States Securities Act of 1933,
as amended.
1.2 CONSTRUCTION
In this Indenture, unless otherwise expressly stated or the context
otherwise requires:
(a) the division of this Indenture into Articles and Sections, the
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Indenture;
(b) the terms, "THIS INDENTURE", "HEREIN", "HEREBY", "HEREOF" and
"HEREUNDER" and similar expressions refer to this warrant indenture
and not to any particular
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Article, Section or other portion hereof and include any agreement or
instrument supplemental or ancillary hereto;
(c) references to Articles, Sections and Schedules are to the specified
Articles or Sections of or Schedules to this Indenture;
(d) words importing the singular include the plural and vice versa and
words importing any gender shall include the masculine, feminine and
neutral genders;
(e) all references herein and in the Warrant Certificates to dollar
amounts are references to United States dollars; and
(f) the words "INCLUDES" and "INCLUDING", when following any general term
or statement, is not to be construed as limiting the general term or
statement to the specific items or matters set forth or to similar
items or matters, but rather as referring to all other items or
matters that could reasonably fall within the broadest possible scope
of the general term or statement.
1.3 BUSINESS DAY
In the event that any day on or before which any action is required or
permitted to be taken hereunder is not a Business Day, then such action shall be
required or permitted to be taken on or before the requisite time on the next
succeeding day that is a Business Day.
1.4 TIME OF THE ESSENCE
Time shall be of the essence in all respects in this Indenture and the
Warrants.
1.5 APPLICABLE LAW
This Indenture (and any amendments hereto and instruments supplemental
hereto), and the Warrants shall be governed by and construed and enforced in
accordance with the laws of the Province of Ontario, subject to the Nevada
General Business Corporation Law of the State of Nevada. The parties irrevocably
attorn and submit to the non-exclusive jurisdiction of the courts of the
Province of Ontario with respect to any matter arising under or related to the
Indenture.
1.6 SEVERABILITY
If any provision of this Indenture shall be held by any court of competent
jurisdiction to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remaining provisions, or part thereof, of this Indenture and such
remaining provisions, or part thereof, shall remain enforceable and binding.
1.7 SCHEDULE
The following schedule is attached to and forms part of this Indenture:
Schedule A - Form of Warrant Certificate
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Schedule B - Form of Warrant Exercise Certification
1.8 CONFLICTS
In the event there is any conflict between this Indenture and any Warrant
Certificate, the provisions under this Indenture shall govern and prevail.
ARTICLE 2
ISSUE OF WARRANTS
2.1 ISSUE OF WARRANTS
A maximum of __ Warrants entitling the holders thereof to purchase an
aggregate maximum of __ Common Shares (or such other kind and amount of
Underlying Securities determined pursuant to the provisions of Sections 2.13 and
2.14, if applicable) are hereby created and authorized to be issued hereunder
upon the terms and conditions herein set forth. Certificates evidencing the
Warrants (the "WARRANT CERTIFICATES") shall be executed by the Company and
certified by or on behalf of the Trustee upon written order of the Company and
delivered by the Company in accordance with Sections 2.3 and 2.4.
2.2 FORM AND TERMS OF WARRANTS
(a) The Warrant Certificates shall be substantially in the form set out in
Schedule A hereto, shall be dated as of the date hereof (regardless of
their actual date of issue), shall be fully registered and shall have
such distinguishing letters and numbers as the Company may, with the
approval of the Trustee, prescribe and may include a translation into
the French language. Warrant Certificates may be typewritten,
engraved, lithographed, printed or mimeographed as the Company may
determine. No change in the form of the Warrant Certificate shall be
required by reason of any adjustment made pursuant to this Article 2.
(b) Each Warrant authorized to be issued hereunder shall entitle the
holder thereof to purchase (subject to Sections 2.13, 2.14 and 3.1),
for the Exercise Price, one Common Share, or such other kind and
amount of Underlying Securities calculated pursuant to the provisions
of Sections 2.13 and 2.14, as the case may be, at any time after the
issuance of such Warrant and prior to the Expiry Time in accordance
with the provisions of this Indenture.
(c) Any legends to be typed on to the Warrant Certificates or the
Underlying Securities shall be typed thereon in accordance with the
provisions of this Indenture upon the written direction of the
Company. The Trustee and the Company shall have no duty to ensure that
the Warrantholders comply with the provisions of any such legend.
2.3 SIGNING OF WARRANT CERTIFICATES
The Warrant Certificates shall be signed by any officer of the Company, and
may but need not be under the corporate seal of the Company or a reproduction
thereof. The signature of
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such officer may be mechanically reproduced in facsimile, and Warrant
Certificates bearing such facsimile signatures shall be binding upon the Company
as if they had been manually signed by such officer. Notwithstanding that the
person whose manual or facsimile signature appears on any Warrant Certificate as
such officer may no longer hold office at the date of issue of such Warrant
Certificate or at the date of certification or delivery thereof, any Warrant
Certificate signed as aforesaid shall, subject to Section 2.4, be valid and
binding upon the Company and the registered holder thereof shall be entitled to
the benefits of this Indenture.
2.4 CERTIFICATION BY THE TRUSTEE
(a) No Warrant Certificate shall be issued or, if issued, shall be valid
for any purpose or entitle the registered holder to the benefit hereof
or thereof until it has been certified by manual signature by or on
behalf of the Trustee in the form of the certificate set out in
Schedule A and such certification by the Trustee upon any Warrant
Certificate shall be conclusive evidence as against the Company that
the Warrant Certificate so certified has been duly issued hereunder
and the holder is entitled to the benefits hereof.
(b) The certification of the Trustee on Warrant Certificates issued
hereunder shall not be construed as a representation or warranty by
the Trustee as to the validity of this Indenture or the Warrants
(except the due certification thereof), and the Trustee shall in no
respect be liable or answerable for the use made of the Warrants or
any of them or of the consideration therefor except as otherwise
specified herein.
2.5 WARRANTHOLDER NOT A SHAREHOLDER, ETC.
The holding of a Warrant shall not be construed as conferring upon a
Warrantholder any right or interest whatsoever as a Shareholder nor entitle the
holder to any right or interest in respect thereof (including the right to vote
at, to receive notice of or to attend meetings of Shareholders or any other
proceedings of the Company, or any right to receive dividends and other
distributions) except as expressly provided herein or in the Warrants.
2.6 ISSUE IN SUBSTITUTION FOR LOST WARRANT CERTIFICATES
(a) In the case where any Warrant Certificate shall become mutilated or be
lost, destroyed or stolen, the Company, subject to applicable law and
Section 2.6(b), shall issue and thereupon the Trustee shall certify
and deliver a new Warrant Certificate of like tenor as the one
mutilated, lost, destroyed or stolen in exchange for and in place of
and upon cancellation of such mutilated certificate, or in lieu of and
in substitution for such lost, destroyed or stolen certificate, and
the substituted certificate shall be in a form approved by the Trustee
and shall be entitled to the benefits hereof and such substituted
certificate shall rank equally in accordance with its terms with all
other Warrant certificates issued or to be issued hereunder.
(b) The applicant for the issue of a new Warrant Certificate pursuant to
this Section 2.6 shall bear the cost of the issue thereof and in case
of loss, destruction or theft shall, as a condition precedent to the
issue thereof, furnish to the Company and to
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the Trustee such evidence of ownership and of the loss, destruction or
theft of the certificate so lost, destroyed or stolen as shall be
satisfactory to the Company and to the Trustee in their sole
discretion, and such applicant also may be required to furnish an
indemnity or security in amount and form satisfactory to the Company
and the Trustee in their sole discretion and shall pay the reasonable
charges of the Company and the Trustee in connection therewith.
2.7 WARRANTS TO RANK PARI PASSU
All Warrants shall rank pari passu, whatever may be the actual date of
issue of the Warrant Certificates evidencing same.
2.8 REGISTER FOR WARRANTS
(a) The Company hereby appoints the Trustee as registrar of the Warrants.
The Company may hereafter, with the consent of the Trustee, appoint
one or more additional registrars of the Warrants.
(b) The Company shall cause to be kept by the Trustee at its principal
office in the City of Toronto, Ontario:
(i) a register of holders of Warrants in which shall be entered the
names and addresses of the holders of the Warrants and of the
number of Warrants held by them; and
(ii) a register of transfers of Warrants in which shall be entered the
date and other particulars of each transfer of Warrants.
(c) No transfer of a Warrant shall be valid unless made by:
(i) the holder or his successors, executors, administrators or other
legal representatives or his or their attorney duly appointed by
an instrument in writing in form and execution satisfactory to
the Trustee with signatures guaranteed by an Eligible
Institution; or
(ii) the liquidator of, or a trustee in bankruptcy for, a
Warrantholder,
and in compliance with such reasonable requirements as the Trustee and the
Company may prescribe (including the requirement to provide evidence of
satisfactory compliance with applicable securities laws) and recorded on the
register of transfers maintained by the Trustee pursuant to Section 2.8(b), nor
until all stamp taxes or governmental or other charges arising by reason of such
transfer have been paid by the Warrantholder. Subject to the Trustee complying
with the provisions of this Indenture, the Trustee may assume compliance with
applicable securities laws unless otherwise notified in writing by the Company.
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2.9 TRANSFEREE ENTITLED TO REGISTRATION
The transferee of a Warrant shall, after the transfer form printed on the
Warrant Certificate and any other form of transfer acceptable to the Trustee is
duly completed and the Warrant is lodged with the Trustee at its principal
office in the City of Toronto, Ontario, or at the principal office of the U.S.
Agent in the City of Golden, Colorado (or at such additional place or places as
may be designated by the Company from time to time with the approval of the
Trustee) and upon compliance with all other conditions in that regard required
by this Indenture or by law, be entitled to have his name entered on the
register of holders as the owner of such Warrant free from all equities or
rights of set-off or counterclaim between the Company and the transferor or any
previous holder of such Warrant, save in respect of equities of which the
Company or the transferee is required to take notice by statute or by order of a
court of competent jurisdiction.
2.10 REGISTERS OPEN FOR INSPECTION
The registers referred to in Section 2.8 shall be open at all reasonable
times during business hours on a Business Day for inspection by the Company, the
Trustee or any Warrantholder. The Trustee shall, from time to time when
requested to do so by the Company, furnish the Company with a list of the names
and addresses of holders of Warrants entered in the register of holders kept by
the Trustee and showing the number of Underlying Securities that might then be
acquired upon the exercise of the Warrants held by each such holder.
2.11 EXCHANGE OF WARRANTS
(a) Warrant Certificates may, upon compliance with the reasonable
requirements of a Trustee, be exchanged for Warrant Certificates in
any other authorized denomination representing in the aggregate the
same number of Warrants. The Company shall sign and the Trustee shall
certify, in accordance with Sections 2.3 and 2.4, all Warrant
Certificates necessary to carry out the exchanges contemplated herein.
(b) Warrant Certificates may be exchanged at the principal stock and bond
transfer office of the Trustee in the City of Toronto, Ontario and may
be tendered for exchange at the principal office of the U.S. Agent in
the City of Golden, Colorado or at any other place that is designated
by the Company with the approval of the Trustee. Any Warrant
Certificates tendered for exchange shall be surrendered to the Trustee
and cancelled.
(c) No charge will be levied by the Company or the Trustee upon a
presenter of a Warrant Certificate pursuant to this Indenture for the
transfer of any Warrant or for the exchange of any Warrant Certificate
but reimbursement to the Trustee or the Company for any and all taxes
or governmental or other charges required to be paid shall be made by
the person requesting such exchange as a condition precedent to such
exchange.
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2.12 OWNERSHIP OF WARRANTS
The Company and the Trustee shall deem and treat the registered holder of
any Warrant Certificate as the absolute owner of the Warrant represented thereby
for all purposes, and the Company and the Trustee shall not be affected by any
notice or knowledge to the contrary except where such person is required to take
notice by statute or by order of a court of competent jurisdiction.
2.13 ADJUSTMENT OF EXERCISE RIGHTS
The Exercise Price per Common Share and the number of Common Shares which
may be subscribed for upon exercise of a Warrant shall be subject to adjustment
from time to time upon the occurrence of any of the events and in the manner
provided as follows:
(a) If and whenever at any time prior to the Expiry Time the Company
shall:
(i) declare a dividend or make a distribution on its Common Shares in
each case payable in Common Shares (or securities exchangeable
for or convertible into Common Shares), or
(ii) subdivide or change its outstanding Common Shares into a greater
number of Common Shares, or
(iii) reduce, combine or consolidate its outstanding Common Shares
into a lesser number,
(any of such events in these clauses 2.13(a)(i), (ii) and (iii) being
called a "SHARE REORGANIZATION"), then effective immediately after the
record date or effective date, as the case may be, at which the
holders of Common Shares are determined for the purposes of the Share
Reorganization, the Exercise Price shall be adjusted to a price
determined by multiplying the applicable Exercise Price in effect on
such effective date or record date by a fraction, the numerator of
which shall be the number of Common Shares outstanding on such
effective date or record date before giving effect to such Share
Reorganization and the denominator of which shall be the number of
Common Shares outstanding immediately after giving effect to such
Share Reorganization (including, in the case where securities
exchangeable for or convertible into Common Shares are distributed,
the number of additional Common Shares that would have been
outstanding had such securities been exchanged for or converted into
Common Shares immediately after giving effect to such Share
Reorganization).
(b) If and whenever at any time prior to the Expiry Time the Company shall
fix a record date for the issuing of rights, options or warrants to
all or substantially all of the holders of the Common Shares entitling
them for a period expiring not more than 45 days after such record
date (the "RIGHTS PERIOD") to subscribe for or purchase Common Shares
(or securities convertible into or exchangeable for Common Shares) at
a price per share (or having a conversion or exchange price per share)
which is less than 95% of the Current Market Price per Common Share
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on the record date for such issue (any of such events being called a
"RIGHTS OFFERING"), then effective immediately after the end of the
Rights Period the Exercise Price shall be adjusted to a price
determined by multiplying the applicable Exercise Price in effect at
the end of the Rights Period by a fraction the numerator of which
shall be the sum of:
(i) the number of Common Shares outstanding as of the record date for
the Rights Offering, and
(ii) a number determined by dividing (A) either the product of (i) the
number of Common Shares issued during the Rights Period upon
exercise of the rights, warrants or options under the Rights
Offering and (ii) the price at which such Common Shares are
issued, or, as the case may be, the product of (iii) the number
of Common Shares for or into which the convertible or
exchangeable securities issued during the Rights Period upon
exercise of the rights, warrants or options under the Rights
Offering are exchangeable or convertible and (iv) the exchange or
conversion price of the convertible or exchangeable securities so
issued, by (B) the Current Market Price per Common Share as of
the record date for the Rights Offering, and
the denominator of which shall be the number of Common Shares
outstanding (including the number of Common Shares actually issued or
subscribed for during the Rights Period upon exercise of the rights,
warrants or options under the Rights Offering) or which would be
outstanding upon the conversion or exchange of all convertible or
exchangeable securities issued during the Rights Period upon exercise
of the rights, warrants or options under the Rights Offering, as
applicable, in each case after giving effect to the Rights Offering.
Common Shares owned by or held (otherwise than as security) for the
account of the Company or any subsidiary of the Company shall be
deemed not to be outstanding for the purpose of any such computation.
In order to give effect to the provisions of Section 2.13(f) in the
circumstances described below, any holder who shall have exercised his
right to purchase Common Shares during the period beginning
immediately after the record date for a Rights Offering and ending on
the last day of the Rights Period therefor, in addition to the Common
Shares to which he is otherwise entitled upon such exercise, shall be
entitled to that number of additional Common Shares equal to the
result obtained when the difference, if any, between the Exercise
Price per Common Share in effect immediately prior to the end of such
Rights Offering and the Exercise Price per Common Share, as adjusted
for such Rights Offering pursuant to this Section 2.13(b), is
multiplied by the number of Common Shares purchased upon exercise of
the Warrant held by such holder during such period, and the resulting
product is divided by the Exercise Price per Common Share, as adjusted
for such Rights Offering pursuant to this Section 2.13(b). Such
additional Common Shares shall be deemed to have been issued to the
holder immediately following the end of the Rights Period and a
certificate for such additional Common Shares shall be delivered to
such holder within 10 Business Days following the end of the Rights
Period.
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(c) If and whenever at any time prior to the Expiry Time the Company shall
fix a record date for the payment, issue or distribution to all or
substantially all of the holders of the Common Shares of (i) a
dividend, (ii) cash or assets (including evidences of the Company's
indebtedness), or (iii) rights, options, warrants or other securities
(including securities convertible into or exchangeable for Common
Shares), and such payment, issue or distribution does not constitute a
Dividend Paid in Ordinary Course, a Share Reorganization or a Rights
Offering (any of such non-excluded events being herein called a
"SPECIAL DISTRIBUTION" ), the Exercise Price shall be adjusted
effective immediately after such record date to a price determined by
multiplying the applicable Exercise Price in effect on such record
date by a fraction:
(i) the numerator of which shall be:
(A) the product of the number of Common Shares outstanding on
such record date and the Current Market Price per Common
Share on such record date; less
(B) the fair market value, as determined in good faith by action
of the directors (based on the advice of an independent
valuator with recognized expertise in the valuation of the
type of property that is the subject matter of the Special
Distribution), whose determination shall be conclusive, to
the holders of the Common Shares of such dividend, cash,
assets, rights or securities so paid, issued or distributed
less the fair market value, as determined in good faith by
action of the directors (based on the advice of an
independent valuator with recognized expertise in the
valuation of the type of property that is the subject matter
of the Special Distribution), whose determination shall be
conclusive, of the consideration, if any, received therefor
by the Company, and
(ii) the denominator of which shall be the number of Common Shares
outstanding on such record date multiplied by the Current Market
Price per Common Share on such record date.
Such adjustment shall be made successively whenever such a record date
is fixed. To the extent that such payment, issuance or distribution is
not so made, the Exercise Price shall be readjusted effective
immediately to the Exercise Price which would then be in effect based
upon such payment, issuance or distribution actually made.
(d) If and whenever at any time prior to the Expiry Time an issuer bid or
a tender or exchange offer (other than an odd lot offer or a normal
course issuer bid) made by the Company or a subsidiary of the Company
to all or substantially all of the shareholders of the Company for all
or any portion of the Common Shares where the cash and the value of
any other consideration included in such payment per Common Share
exceeds the Current Market Price per Common Share on the
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Trading Day immediately preceding the commencement of the issuer bid
or tender or exchange offer (any such issuer bid or tender or exchange
offer being called an "ISSUER BID"), the Exercise Price shall be
adjusted to a price determined by multiplying the applicable Exercise
Price in effect on the date of the completion of such Issuer Bid by a
fraction, the numerator of which shall be the product of (i) the
number of Common Shares outstanding immediately prior to the
completion of the Issuer Bid (without giving effect to any reduction
in respect of any tendered or exchanged shares) and, (ii) the Current
Market Price per Common Share on the Trading Day immediately preceding
the commencement of the Issuer Bid, and the denominator of which shall
be the sum of (i) the fair market value (determined in good faith by
the board of directors of the Company whose determination shall be
conclusive and described in a resolution of the board of directors of
the Company) of the aggregate consideration paid by the Company or
subsidiary to holders of Common Shares upon the completion of such
Issuer Bid, and (ii) the product of (A) the difference between the
number of Common Shares outstanding immediately prior to the
completion of the Issuer Bid (without giving effect to any reduction
in respect of tendered or exchanged shares) and the number of Common
Shares actually purchased by the Company or subsidiary pursuant to the
Issuer Bid, and (B) the Current Market Price Per Common Share on the
Trading Day immediately preceding the commencement of the Issuer Bid.
(e) If and whenever at any time prior to Expiry Time there shall be a
reorganization, reclassification or other change of Common Shares
outstanding at such time or change of the Common Shares into other
shares or into other securities (other than a Share Reorganization),
or a consolidation or merger of the Company with or into any other
corporation or other entity (other than a consolidation or merger
which does not result in any reclassification of the outstanding
Common Shares or a change of the Common Shares into other shares), or
a sale, conveyance or transfer of the undertaking or assets of the
Company as an entirety or substantially as an entirety to another
corporation or entity in which the holders of Common Shares are
entitled to receive shares, other securities or property, including
cash (any of such events being herein called a "CAPITAL
REORGANIZATION"), any holder who exercises his right to subscribe for
and purchase Common Shares pursuant to the exercise of Warrants after
the effective date of such Capital Reorganization shall be entitled to
receive, and shall accept for the same aggregate consideration 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 such holder would have received as
a result of such Capital Reorganization had he exercised his right to
acquire Underlying Securities immediately prior to the effective date
or record date, as the case may be, of the Capital Reorganization and
had he been the registered holder of such Underlying Securities on
such effective date or record date, as the case may be, subject to
adjustment thereafter in accordance with provisions the same, as
nearly as may be possible, as those contained in Sections 2.13(b) and
(c) hereof. If determined appropriate by the directors, acting in good
faith, appropriate adjustments shall be made as a result of any such
Capital Reorganization in the application of the provisions set forth
in this Section 2.13, with respect to the rights and interests
-15-
thereafter of the holder of a Warrant to the end that the provisions
set forth in this Section 2.13 shall thereafter correspondingly be
made applicable as nearly as may be reasonably possible in relation to
any shares, other securities or other property thereafter deliverable
upon the exercise of the Warrant. Any such adjustment shall be made by
and set forth in an agreement supplemental hereto approved by action
of the directors, acting in good faith, and shall for all purposes be
conclusively deemed to be an appropriate adjustment.
(f) If and whenever at any time prior to the Expiry Time there shall occur
a Share Reorganization, a Rights Offering, a Special Distribution or
an Issuer Bid and any such event results in an adjustment to the
Exercise Price pursuant to the provisions of this Section 2.13, the
number of Common Shares purchasable upon the exercise of each Warrant
(at the adjusted Exercise Price) shall be adjusted contemporaneously
with the adjustment of the Exercise Price by multiplying the number of
Common Shares theretofore purchasable on the exercise thereof by a
fraction, the numerator of which shall be the applicable Exercise
Price in effect immediately prior to such adjustment and the
denominator of which shall be the applicable Exercise Price resulting
from such adjustment.
(g) In case the Company after the date of issue of the Warrants shall take
any action affecting the Common Shares, other than action described in
this Section 2.13, which in the opinion of the directors, acting
reasonably, would materially adversely affect the rights of the
Warrantholders, the Exercise Price or the number of Common Shares
purchasable upon the exercise of each Warrant shall be adjusted in
such manner, if any, and at such time, by action of the directors,
acting reasonably, as they may determine to be equitable in the
circumstances, but subject in all cases to any necessary regulatory
approvals.
2.14 ADJUSTMENT RULES
For the purposes of Section 2.13, any adjustment shall be made successively
whenever an event referred to therein shall occur, subject to the following
provisions:
(a) all calculations shall be made to the nearest 1/100th of a Common
Share;
(b) no adjustment to an Exercise Price shall be required unless such
adjustment would result in a change of at least one per cent in the
prevailing Exercise Price and no adjustment shall be made in the
number of Common Shares which may be subscribed for upon exercise of
the Warrant unless it would require a change of at least 1/100th of a
Common Share; provided, however, that any adjustments which, except
for the provisions of this Section 2.14(b) would otherwise have been
required to be made shall be carried forward and taken into account in
any subsequent adjustment;
(c) if any question shall arise with respect to adjustments provided for
in this Article 2, such question shall, absent manifest error, be
conclusively determined by a firm of chartered accountants appointed
by the Company (who may be the Company's
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auditors) and acceptable to the Trustee, acting reasonably; such
chartered accountants shall have access to all necessary records of
the Company and such determination shall be binding on the Company,
the Trustee and the Warrantholders, absent manifest error. In the
event that any such determination is made, the Company shall deliver a
certificate to the Trustee describing such determination and
confirming such consent;
(d) if the Company shall set a record date to determine the holders of its
Common Shares for the purpose of entitling them to receive any
dividend or distribution or any subscription or purchase rights,
options or warrants and shall thereafter and before the distribution
to such Shareholders of any such dividend, distribution or
subscription or purchase rights legally abandon its plan to pay or
deliver such dividend, distribution or subscription or purchase
rights, then no adjustment in the Exercise Price or the number of
Common Shares purchasable upon exercise of the warrant shall be
required by reason of the setting of such record date; and
(e) as a condition precedent to the taking of any action which would
require any adjustment in any of the subscription rights pursuant to
any of the Warrants, the Company shall take any corporate action which
may, in the opinion of counsel, 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 of the
Underlying Securities that the Warrantholders are entitled to receive
on full exercise thereof in accordance with the provisions hereof.
2.15 POSTPONEMENT OF SUBSCRIPTION
In any case where the application of Section 2.13 results in an increase in
the number of Common Shares issuable upon the exercise of the Warrants taking
effect immediately after the record date for a specific event, if any Warrant is
exercised after that record date and prior to completion of the event, the
Company may postpone the issuance to the holder of the Warrant of the Common
Shares to which such Warrantholder is entitled by reason of such adjustment but
such Common Shares shall be so issued and delivered to that holder upon
completion of that event, with the number of such Common Shares calculated on
the basis of the number of Common Shares on the date that the Warrant was
adjusted for completion of that event and the Company shall deliver to the
person or persons in whose name or names the Common Shares are to be issued an
appropriate instrument evidencing the right of such person or persons to receive
such Common Shares and the right to receive any dividends or other distributions
which, but for the provisions of this Section 2.15, such person or persons would
have been entitled to receive in respect of such Common Shares from and after
the date that the Warrant was exercised in respect thereof.
2.16 NOTICE OF ADJUSTMENT OF EXERCISE RIGHTS
(a) At least 10 days prior to the effective date or record date, as the
case may be, of any event that requires or that may require an
adjustment in any of the exercise rights pursuant to any of the
Warrants, including the number of Underlying Securities that may be
acquired upon the exercise thereof, the Company shall:
-17-
(i) file with the Trustee a certificate of the Company specifying the
particulars of such event (including the record date or the
effective date for such event) and, if determinable, the required
adjustment and the computation of such adjustment; and
(ii) give notice to the Warrantholders of the particulars of such
event (including the record date or the effective date for such
event) and, if determinable, the required adjustment, in
accordance with the provisions set out in Section 9.1.
(b) In case any adjustment for which a notice in Section 2.16(a) has been
given is not then determinable, the Company shall promptly after such
adjustment is determinable:
(i) file a certificate of the Company with the Trustee showing how
such adjustment was computed; and
(ii) give notice to the Warrantholders of the adjustment, in
accordance with the provisions set out in Section 9.1.
(c) The Trustee may act and rely for all purposes upon any certificates
and any other filed by the Company pursuant to this Section 2.16.
2.17 NO ACTION AFTER NOTICE
The Company shall not take any other corporate action that might deprive
any Warrantholder of the opportunity to exercise Warrants during the 10 day
period after the giving of the notice set forth in Section 2.16(a).
2.18 NO DUTY TO INQUIRE
Except as provided in Section 8.2, the Trustee shall not at any time be
under any duty or responsibility to any Warrantholder to determine whether any
facts exist which may require any adjustment contemplated by Sections 2.13 and
2.14, or with respect to the nature or extent of any such adjustment when made,
or with respect to the method employed in making the same. The Trustee shall not
be accountable with respect to the validity or value (or the kind or amount) of
any securities or property which may at any time be issued or delivered upon the
exercise of any Warrant.
2.19 RIGHTS ISSUED IN RESPECT OF UNDERLYING SECURITIES ISSUED ON EXERCISE
Each Common Share issued on the exercise of Warrants shall be entitled to
receive the appropriate number of purchase rights ("RIGHTS "), if any, that all
Common Shares are entitled to receive, and the certificates representing such
Common Shares shall bear such legends, if any, in each case as may be provided
by the terms of any shareholder rights agreement adopted by the Company, as the
same may be amended from time to time (a "RIGHTS AGREEMENT") provided that such
Rights Agreement requires that each Common Share issued on exercise of Warrants
at any time prior to the distribution of separate certificates representing the
Rights be entitled to
-18-
receive such Rights, then, not withstanding anything else to the contrary in
this Indenture, there shall not be any adjustment made pursuant to this Article
2 as a result of the issuance of Rights, the distribution of separate
certificates representing the Rights, the exercise or redemption of such Rights
in accordance with any such Rights Agreement, or the termination or invalidation
of such Rights.
ARTICLE 3
EXERCISE OF WARRANTS
3.1 METHOD OF EXERCISE OF WARRANTS
(a) Subject to Section 3.1(b), the holder of any Warrant may during the
Exercise Period exercise the right thereby conferred on such holder to
purchase the Underlying Securities to which such Warrant entitles the
holder, by surrendering the certificate representing such Warrant to
the Trustee at any time during the Exercise Period at its principal
office in the City of Toronto, Ontario or at the principal office of
the U.S. Agent in the City of Golden, Colorado (or at such additional
place or places as may be decided by the Company from time to time
with the approval of the Trustee), with: (i) a duly completed and
executed exercise form substantially in the form set out on the
Warrant Certificate and a Warrant Exercise Certification if no
Registration Statement is available (in the form attached hereto as
Schedule B); and (ii) a certified cheque, bank draft or money order
payable at par to or to the order of Gryphon Gold Corporation in an
amount equal to the Exercise Price multiplied by the number of
Underlying Securities subscribed for. A Warrant Certificate with the
duly completed and executed exercise form shall be deemed to be
surrendered only upon personal delivery thereof to, or if sent by mail
or other means of transmission upon actual receipt thereof by, the
Trustee. If the holder subscribes for a lesser number of Underlying
Securities than the aggregate number of Underlying Securities then
issuable pursuant to the exercise of the Warrants represented by the
Warrant Certificate surrendered, the holder shall be entitled to
receive a further Warrant Certificate in respect of the Warrants
represented by the Warrant Certificates that have not been exercised.
Any such surrender for exercise shall be irrevocable.
(b) Notwithstanding any provision to the contrary contained in this
Indenture, if the Company advises the Trustee in writing that the
issuance of Common Shares upon the exercise of Warrants requires the
maintenance of an effective Registration Statement, with respect to
such Shares under the 1933 Act, in no event shall such Common Shares
be issued unless the Common Shares are registered under the 1933 Act
pursuant to an effective Registration Statement and the Company causes
to be delivered to the holder a U.S. Prospectus; provided, however,
that if the Registration Statement ceases to be effective, prior to
the Expiry Time and for so long as the Registration Statement is not
effective, subject to applicable law, a holder of any Warrant may only
exercise the right to purchase Underlying Securities in the
circumstances noted below:
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(i) exercise such Warrants, if the holder is not a U.S. Purchaser and
the holder delivers a duly completed and executed Warrant
Exercise Certification (in the form attached hereto as Schedule
B) certifying that the holder: (A)(1) is not in the United
States; (2) is not a U.S. Person and is not exercising the
Warrants for, or on behalf or benefit of, a U.S. Person or person
in the United States; (3) did not execute or deliver the Warrant
Exercise Form in the United States; (4) agrees not to engage in
hedging transactions with regard to the Securities prior to the
expiration of the one-year distribution compliance period set
forth in Rule 903(b)(3) of Regulation S; (5) acknowledges that
the Common Shares issuable upon exercise of the Warrants are
"restricted securities" as defined in Rule 144 of the 1933 Act
and upon the issuance thereof, and until such time as the same is
no longer required under the applicable requirements of the 1933
Act or applicable U.S. state laws and regulations, the
certificates representing the Common Shares will bear a
restrictive legend; and (6) acknowledges that the Company shall
refuse to register any transfer of the Securities not made in
accordance with the provisions of Regulation S, pursuant to
registration under the 1933 Act, or pursuant to an available
exemption from registration under the 1933 Act; and (B) neither
the Corporation nor the holder has engaged in any "directed
selling efforts" (as defined in Regulation S) in the United
States; or
(ii) exercise such Warrants in a transaction that does not require
registration under the 1933 Act or any applicable U.S. state laws
and regulations and the holder has (A) delivered a duly completed
and executed Warrant Exercise Certification (in the form attached
hereto as Schedule B) certifying that the holder is exercising
the Warrants pursuant to such exemptions and (B) furnished to the
Company, prior to such exercise, an opinion of counsel of
recognized standing in form and substance satisfactory to the
Company to such effect; or
(iii) if (A) the Current Market Price of one Common Share is greater
than the Exercise Price (at the date of calculation as set forth
below) and (B) a Registration Statement is not then effective, in
lieu of exercising the Warrants by payment of cash, a holder may
exercise such Warrants to receive the number of Common Shares
determined in accordance with the formula set out below (and no
more) by surrendering the certificate representing such Warrant
to the company at its principal office with a copy to the trustee
at its principal office in the City of Toronto, Ontario or at the
principal office of the U.S. Agent in the City of Golden,
Colorado (or at such additional place or places as may be decided
by the Company from time to time with the approval of the
Trustee), with a duly completed and executed Warrant Exercise
Certification (in the form attached hereto as Schedule B)
electing to exercise the Warrant without payment of the Exercise
Price in cash (also referred to as a "cashless" exercise). Upon
such election, the Company shall issue to the holder a number of
Common Shares computed using the following formula:
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X = Y (B-A)
-------
B
Where X = the number of Common Shares to be issued to the holder.
Y = the number of Common Shares purchasable upon exercise
of all of the Warrant or, if only a portion of the
Warrant is being exercised, the portion of the Warrant
being exercised.
A = the Exercise Price.
B = the Current Market Price of one Common Share.
The Company shall deliver to the Trustee a certificate setting
out the calculation of the number of Common Shares to be issued
to any holder within three(3) Business Days of a "cashless"
exercise pursuant to this Section 3.1(b)(iii). No fractional
shares shall be issued.
If the holder exercises the right provided for in this Section
3.1(b)(iii) in respect of a lesser number of Warrants than the
aggregate number of Warrants represented by the Warrant
Certificate surrendered, the holder shall be entitled to receive
a further Warrant Certificate in respect of the Warrants
represented by the Warrant Certificates that have not been
exercised. Any such surrender for cashless exercise shall be
irrevocable.
(c) Unless the Warrant is exercised pursuant to an effective Registration
Statement or under the conditions set forth in Section 3.1(b)(iii),
the certificate representing the Common Shares is issued upon exercise
of the Warrant will bear legends restricting the transfer without
registration under the U.S. Securities Act and applicable state
securities laws and restricting transfer under the Toronto Stock
Exchange, substantially in the form set forth below:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND MAY BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY,
(II) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (III) IN COMPLIANCE WITH
THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED
BY RULE 144 THEREUNDER, OR (IV) IN COMPLIANCE WITH ANOTHER
EXEMPTION FROM REGISTRATION, IN EACH CASE AFTER PROVIDING A LEGAL
OPINION OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH
TRANSFER MAY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES
ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED
HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH U.S.
SECURITIES LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE
TORONTO STOCK EXCHANGE ("TSX"); HOWEVER, THE SAID SECURITIES
CANNOT BE TRADED THROUGH THE FACILITIES OF TSX
-21-
SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY
CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY"
IN SETTLMENT OF TRANSACTIONS ON TSX.
(d) If any Common Shares issuable upon the exercise of Warrants require
the maintenance of a current Registration Statement, with respect to
such Shares under the 1933 Act, the Company shall have the authority
to suspend the exercise of any or all Warrants while such registration
statement is not current. Similarly, a Holder residing in a state
where a required registration or governmental approval of issuance of
the Shares is not in effect as of or has not been obtained within a
reasonable time after the surrender date of the Warrant Certificate
for exercise shall not be entitled to exercise Warrants, unless in the
opinion of counsel to the Company such registration or approval in
such state shall not be required or the Company otherwise authorizes
the issuance. In such event, the Warrant Holder shall be entitled to
transfer the Warrants to others, but only prior to the Expiration Date
for the Warrants being transferred. If no Registration Statement is
effective at any time when any Warrant is exercised, such
Warrantholder shall be notified forthwith by the Trustee that such
Warrantholder is entitled, at his or her option, to exercise the
Warrant only in accordance with the conditions set forth in Sections
3.1(b)(i)-(iii) and upon delivery of a Warrant Exercise Certification
(in the form attached hereto as Schedule B) to the Trustee and the
Company.
(e) Any exercise form referred to in Section 3.1(a) shall be signed by the
Warrantholder and shall specify the person or persons in whose name or
names the Underlying Securities to be issued upon exercise are to be
registered, such person's or persons' address or addresses and the
number of Underlying Securities to be issued to each person if more
than one is so specified. If any of the Underlying Securities issuable
upon the exercise of Warrants by a holder are to be issued to a person
or persons other than the Warrantholder, the signature(s) set out in
the exercise form referred to in Section 3.1(a) shall be guaranteed by
an Eligible Institution, and the Warrantholder shall pay to the
Company or the Trustee all applicable transfer or similar taxes and
the Company shall not be required to issue or deliver certificates
evidencing Underlying Securities unless or until such Warrantholder
shall have paid to the Company or the Trustee on behalf of the Company
the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid or that no tax is due.
(f) Any Warrantholder may elect to make payment of the Exercise Price
pursuant to Section 3.1(a) in United States dollars. In such an event,
the Exercise Price payable by such Warrantholder shall be the United
States dollar equivalent of the Exercise Price payable in United
States dollars based on the Exchange Rate on the Business Day
immediately preceding the date on which the relevant Warrant is
exercised, rounded to the nearest tenth of a cent. At the request of
the Trustee, the Company shall provide a certificate to the Trustee
setting out the applicable Exchange Rate.
-22-
(g) Notwithstanding that the Company may not have maintained a current
Registration Statement in respect of Shares under the 1933 Act, no
Warrantholder (whether a U.S. Purchaser or otherwise) shall have any
right to receive, and the Company shall be under no obligation to pay
to any Warrantholder (whether a U.S. Purchaser or otherwise), any cash
amount or other consideration or compensation upon exercise of the
Warrants, other than as expressly provided by this Indenture, and the
Company shall not be under any obligation to redeem or otherwise
purchase any Warrants in any circumstance; provided, however, that
nothing in this clause shall limit or restrict any remedies of the
Trustee or any Warrantholder or Warrantholders in respect of a breach
by the Company of a representation, warranty or covenant hereunder,
including without limitation the covenant in Section 4.1(i) of this
Indenture.
3.2 EXPIRATION OF WARRANTS
(a) After the Expiry Time, all rights under any Warrant in respect of
which the right of subscription and purchase herein and therein
provided for shall not theretofore have been exercised shall wholly
cease and terminate, and such Warrant shall be void and of no effect.
(b) Not less than 90 and not more than 120 days prior to the Expiry Date
the Company shall issue a press release and publish a notice in a
newspaper of general circulation in the City of Toronto, Ontario and a
newspaper of general circulation in the City of New York, New York to
the effect that the Warrants will terminate and become void as of the
Expiry Time; provided that accidental error or omission in such press
release or notice or accidental failure to issue such press release or
publish such notice shall not extend the Exercise Period and
accidental failure to issue such press release or publish such notice
shall not give rise to any claim against or liability of the Company
whatsoever arising from such failure.
3.3 EFFECT OF EXERCISE OF WARRANTS
(a) Upon compliance by the Warrantholder with the provisions of Section
3.1, the Underlying Securities issuable upon the exercise of the
Warrants shall be deemed to have been issued and the person to whom
such Underlying Securities are to be issued shall be deemed to have
become the holder of record of such Underlying Securities on the
Exercise Date unless the transfer registers of the Company for the
Underlying Securities shall be closed on such date, in which case the
Underlying Securities subscribed for shall be deemed to have been
issued and such person shall be deemed to have become the holder of
record of such Underlying Securities on the date on which such
transfer registers are reopened.
(b) Forthwith following the due exercise by a Warrantholder in accordance
with Section 3.1 and the surrender of the Warrant Certificate(s)
representing such Warrants as required by the terms thereof, the
Trustee shall deliver to the Company a notice setting out the
particulars of the Warrants exercised, the person
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in whose name the Underlying Securities are to be issued and the
address of such person.
(c) Funds in an amount equal to the aggregate Exercise Price of the
Warrants exercised shall be forwarded by the Trustee to the Company
forthwith upon the exercise of the Warrants.
(d) Within three Business Days of receipt of the notice referred to in
Section 3.3(b), the Company shall cause to be mailed to the person in
whose name the Underlying Securities issuable upon the exercise of the
Warrants are to be issued, as specified in the completed exercise form
attached to the Warrant Certificate, at the address specified in such
exercise form, or, if so specified in such exercise form, cause to be
made available for pick up by such person at the office of the Trustee
or cause to be mailed to the office of the U.S. Agent to be made
available for pick up by such person, a certificate or certificates
for the Underlying Securities to which the Warrantholder is entitled.
In addition, the Company shall cause to be delivered to the holder
upon the exercise of the Warrants are to be issued a U.S. Prospectus
with respect to the Common Shares issuable upon the exercise of the
Warrants.
3.4 CANCELLATION OF WARRANT CERTIFICATES
All Warrant Certificates surrendered to the Trustee pursuant to Section
2.6, 2.11, 3.1, or 9.7 shall be cancelled by the Trustee and the Trustee shall
record the cancellation of such Warrant Certificates on the register of holders
maintained by the Trustee pursuant to Section 2.8. The Trustee shall, if
required by the Company, furnish the Company with a certificate identifying the
Warrant Certificates so cancelled and deemed to have been cancelled. All
Warrants represented by Warrant Certificates that have been cancelled or have
been deemed to have been cancelled pursuant to this Section 3.4 shall be without
further force or effect whatsoever.
3.5 NO FRACTIONAL SHARES
Notwithstanding anything herein contained, including any adjustment
provided for in Article 2, the Company shall not be required, upon the exercise
of any Warrants, to issue fractional Underlying Securities or to distribute
certificates which evidence fractional Underlying Securities. If more than one
Warrant shall be presented for exercise in full at the same time by the same
Warrantholder, the number of full Underlying Securities shall be issuable upon
the exercise thereof shall be computed on the basis of the aggregate number of
Underlying Securities purchasable on exercise of the Warrants so presented. If
any fraction of an Underlying Security would, except for the provisions of this
Section 3.5, be issuable upon the exercise of any such Warrants (or specified
portion thereof), the Company shall notify the Trustee in writing of the amount
to be paid in lieu of a fraction of an Underlying Security and concurrently pay
or provide to the Trustee for payment to the Warrantholder, an amount in cash
equal to the Current Market Price per Common Share on the Trading Day
immediately preceding the day the Warrant is surrendered for exercise,
multiplied by such fraction, computed to the nearest whole cent.
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3.6 SECURITIES RESTRICTIONS; LEGENDS
Notwithstanding any provision to the contrary contained in this Indenture,
no Common Shares will be issued pursuant to the exercise of any Warrant if the
issuance of such securities would constitute a violation of the securities laws
of any applicable jurisdiction, and, without limiting the generality of the
foregoing, the Company will legend the certificates representing the Common
Shares if, in the opinion of counsel to the Company such legend is necessary in
order to avoid a violation of any securities laws of any applicable jurisdiction
or to comply with the requirements of any stock exchange on which the Common
Shares are listed, provided that if, at any time, in the opinion of outside
counsel to the Company, acting reasonably, such legends are no longer necessary
in order to avoid a violation of any such laws, or the holder of any such
legended certificate, at his expense, provides the Company with evidence
satisfactory in form and substance to the Company (which may include an opinion
of counsel of recognized standing satisfactory to the Company) to the effect
that such holder is entitled to sell or otherwise transfer such securities in a
transaction in which such legends are not required, such legended certificates
may thereafter be surrendered to the Company in exchange for a certificate which
does not bear such legends. For greater certainty, should no Registration
Statement be effective, the Company shall issue legended Underlying Securities
in accordance with Section 3.1(c).
ARTICLE 4
COVENANTS
4.1 GENERAL COVENANTS
The Company covenants with the Trustee that so long as any Warrants remain
outstanding:
(a) It will at all times maintain its corporate existence and carry on and
conduct its business in a proper and business-like manner;
(b) It will reserve a sufficient number of Common Shares to satisfy the
rights of acquisition provided for herein.
(c) It will cause the Common Shares from time to time subscribed and paid
for pursuant to the Warrants in the manner herein provided and the
certificates representing such Common Shares to be duly issued and
delivered in accordance with the Warrants and the terms hereof.
(d) The Warrant Certificates, when issued and certified as provided
herein, shall represent legal, valid and binding obligations of the
Company in respect of the Warrants evidenced thereby.
(e) All Common Shares that shall be issued upon exercise of the right to
purchase provided for herein, upon payment of the Exercise Price,
shall be issued as fully paid and non-assessable.
(f) It will use its commercially reasonable efforts to maintain the
listing of the Common Shares on the TSX.
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(g) It will use its commercially reasonable efforts to maintain its status
as a reporting issuer or equivalent not in default, and not be in
default in any material respect of the applicable requirements of, the
applicable securities laws of each of the provinces of Canada and the
federal securities laws of the United States.
(h) If at any time no Registration Statement is effective, the Company
will give notice to the Trustee forthwith and will give notice, in
accordance with the provisions set out in Section 9.1, as soon as
reasonably practicable, but in any event within 5 Business Days, after
learning that no Registration Statement is effective. Such notice must
be sent by fax, if possible, to any securities depositary that is a
registered holder.
(i) It will use its commercially reasonable efforts to maintain the
Registration Statement continuously effective under the 1933 Act.
(j) If, in the opinion of outside counsel, any instrument is required to
be filed with, or any permission, order or ruling is required to be
obtained from any securities administrator, regulatory agency or
governmental authority in Canada or the United States or any other
step is required under any federal or provincial law of Canada or any
federal or state law of the United States before the Underlying
Securities may be issued or delivered to a Warrantholder, the Company
will use its reasonable efforts to file such instrument, obtain such
permission, order or ruling or take all such other actions, at its
expense, as are required.
(k) It will perform all its covenants and carry out all of the acts or
things to be done by it as provided in this Indenture.
The Company and the Trustee acknowledge and agree that: (i) none of the
foregoing covenants shall be interpreted or applied so as to prohibit or
restrict or otherwise limit the Company's ability, right and authority to
implement one or more of the actions contemplated by Section 2.13 or 7.2; and
(ii) the foregoing covenants shall be interpreted and applied following each
such action with reference to any successor to the Company and with reference to
any securities into which the Common Shares and/or the Warrants may be changed
or for which they may be exercisable as a result of such action or actions.
4.2 TRUSTEE REMUNERATION AND EXPENSES
The Company covenants that it will pay to the Trustee the fees agreed to by
the Company and the Trustee from time to time for its services hereunder and
will pay or reimburse the Trustee upon its request for all reasonable expenses
and disbursements of the Trustee in the administration or execution of the
trusts hereby created (including the reasonable compensation and the
disbursements of its counsel and all other advisers, experts, accountants and
assistants not regularly in its employ) both before any default hereunder and
thereafter until all duties of the Trustee hereunder shall be finally and fully
performed, except any such expense or disbursement in connection with or related
to or required to be made as a result of the negligence, wilful misconduct or
bad faith of the Trustee.
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4.3 PERFORMANCE OF COVENANTS BY TRUSTEE
If the Company should fail to perform any of its covenants contained in
this Indenture and the Company has not rectified such failure within 15 Business
Days after receiving written notice from the Trustee of such failure, the
Trustee may notify the Warrantholders of such failure on the part of the Company
or may itself perform any of the said covenants capable of being performed by
it, but shall be under no obligation to perform said covenants or to notify the
Warrantholders of such performance by it. All reasonable sums expended or
disbursed by the Trustee in so doing shall be repayable as provided in Section
4.2. No such performance, expenditure or disbursement by the Trustee shall be
deemed to relieve the Company of any default hereunder or of its continuing
obligations under the covenants herein contained.
ARTICLE 5
ENFORCEMENT
5.1 SUITS BY WARRANTHOLDERS
All or any of the rights conferred upon a Warrantholder by the terms of
this Indenture may be enforced by such Warrantholder by appropriate legal
proceedings, but subject to the rights that are hereby conferred upon the
Trustee and subject to the provisions of Section 6.10. No Warrantholder shall
have any right to institute any action, suit or proceeding for the purpose of
the appointment of a liquidator or receiver or for a receiving order under
applicable bankruptcy or insolvency legislation or to have the Company wound up
or to file a proof of claim in any liquidation or bankruptcy proceedings unless:
(i) the Warrantholders by Extraordinary Resolution shall have made a request to
the Trustee and the Trustee shall have been afforded reasonable opportunity to
proceed to complete any action or suit for any such purpose whether or not on
its own; (ii) the Warrantholders or any of them shall have furnished to the
Trustee, once requested by the Trustee, sufficient funds or security and
indemnity satisfactory to it against costs, expenses and liabilities to be
incurred therein or thereby; and ( iii) the Trustee shall have failed to act
within a reasonable time or the Trustee shall have failed to have actively
pursued any such action, suit or proceeding.
ARTICLE 6
MEETINGS OF WARRANTHOLDERS
6.1 RIGHT TO CONVENE MEETINGS
The Trustee may at any time and from time to time, and shall on receipt of
a written request of the Company or of a Warrantholders' Request, convene a
meeting of the Warrantholders, provided that the Trustee is indemnified and
funded to its reasonable satisfaction by the Company or by the Warrantholders
signing such Warrantholders' Request against the costs, charges, expenses and
liabilities that may be incurred in connection with the calling and holding of
such meeting. If within 15 Business Days after the receipt of a written request
of the Company or a Warrantholders' Request and funding and indemnity given as
aforesaid the Trustee fails to give the requisite notice specified in Section
6.2 to convene a meeting, the Company or such Warrantholders, as the case may
be, may convene such meeting.
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Every such meeting shall be held in the City of Toronto, Ontario or at such
other place in Canada or the United States as may be approved by the Trustee.
6.2 NOTICE
At least 21 days' prior notice of any meeting of Warrantholders shall be
given to the Warrantholders in the manner provided for in Section 9.1, and a
copy of such notice shall be delivered to the Trustee unless the meeting has
been called by it and to the Company unless the meeting has been called by it.
Such notice shall state the time and place of the meeting, the general nature of
the business to be transacted and shall contain such information as is
reasonably necessary to enable the Warrantholders to make a reasoned decision on
such matters, but it shall not be necessary for any such notice to set out the
terms of any resolution to be proposed or any of the provisions of this Article
6. The notice convening any such meeting may be signed by an appropriate officer
of the Trustee or of the Company or the person designated by the Warrantholders
convening the meeting, as the case may be.
6.3 CHAIR
The Trustee may nominate in writing an individual to be chair of the
meeting and if no individual is so nominated, or if the individual so nominated
is not present within 15 minutes after the time fixed for the holding of the
meeting, the Warrantholders present in person or by proxy shall appoint an
individual present to be chair. The Chair of the meeting need not be a
Warrantholder.
6.4 QUORUM
Subject to the provisions of Section 6.11, at any meeting of the
Warrantholders a quorum shall consist of Warrantholders present in person or
represented by proxy and holding or representing at least 25% of the aggregate
number of Warrants then unexercised and outstanding, provided that at least two
persons entitled to vote thereat are personally present. If a quorum of the
Warrantholders shall not be present within one half-hour from the time fixed for
holding any meeting, the meeting, if summoned by the Warrantholders or on a
Warrantholders' Request, shall be dissolved; but in any other case the meeting
shall be adjourned to the same day in the next week (unless such day is not a
Business Day in which case it shall be adjourned to the next following Business
Day) at the same time and place to the extent possible and, subject to the
provisions of Section 6.11, no notice of the adjournment need be given. Any
business may be brought before or dealt with at an adjourned meeting which might
have been dealt with at the original meeting in accordance with the notice
calling the same. At the adjourned meeting, the Warrantholders present in person
or represented by proxy shall form a quorum and may transact the business for
which the meeting was originally convened, notwithstanding that they may not
hold or represent at least 25% of the aggregate number of Warrants then
unexercised and outstanding. No business shall be transacted at any meeting
unless a quorum is present at the commencement of business.
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6.5 POWER TO ADJOURN
The chair of any meeting at which a quorum of the Warrantholders is present
may, with the consent of the meeting, adjourn any such meeting, and no notice of
such adjournment need be given except such notice, if any, as the meeting may
prescribe.
6.6 SHOW OF HANDS
Every question submitted to a meeting shall be decided in the first place
by a majority of the votes given on a show of hands except that votes on an
Extraordinary Resolution shall be given in the manner hereinafter provided. At
any such meeting, unless a poll is duly demanded as herein provided, a
declaration by the chair that a resolution has been carried or carried
unanimously or by a particular majority or lost or not carried by a particular
majority shall be conclusive evidence of the fact.
6.7 POLL AND VOTING
On every Extraordinary Resolution, and when demanded by the chair or by one
or more of the Warrantholders acting in person or by proxy on any other question
submitted to a meeting and after a vote by show of hands, a poll shall be taken
in such manner as the chair shall direct. Questions other than those required to
be determined by Extraordinary Resolution shall be decided by a majority of the
votes cast on a poll. On a show of hands, every person who is present and
entitled to vote, whether as a Warrantholder or as proxy for one or more absent
Warrantholders, or both, shall have one vote. On a poll, each Warrantholder
present in person or represented by a proxy duly appointed by instrument in
writing shall be entitled to one vote in respect of each unexercised Warrant
held by him. A proxyholder need not be a Warrantholder. The chair of any meeting
shall be entitled, both on a show of hands and on a poll, to vote in respect of
the Warrants, if any, held or represented by him.
6.8 REGULATIONS
Subject to the provisions of this Indenture, the Trustee or the Company
with the approval of the Trustee may from time to time make and from time to
time vary such regulations as it shall consider necessary or appropriate:
(a) for the deposit of instruments appointing proxies at such place and
time as the Trustee, the Company or the Warrantholders convening the
meeting, as the case may be, may in the notice convening the meeting
direct;
(b) for the deposit of instruments appointing proxies at some approved
place other than the place at which the meeting is to be held and
enabling particulars of such instruments appointing proxies to be
mailed or faxed before the meeting to the Company or to the Trustee at
the place where the same is to be held and for the voting of proxies
so deposited as though the instruments themselves were produced at the
meeting;
(c) for the form of the instrument of proxy; and
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(d) generally for the calling of meetings of Warrantholders and the
conduct of business thereat.
Any regulations so made shall be binding and effective and the votes given
in accordance therewith shall be valid and shall be counted. Save as such
regulations may provide, the only persons who shall be recognized at any meeting
as a Warrantholder, or be entitled to vote or be present at the meeting in
respect thereof (subject to Section 6.9), shall be Warrantholders or persons
holding proxies of Warrantholders.
6.9 COMPANY, TRUSTEE AND COUNSEL MAY BE REPRESENTED
The Company and the Trustee, by their respective employees, directors and
officers, and the counsel for each of the Company, the Warrantholders and the
Trustee may attend any meeting of the Warrantholders and speak thereto but shall
have no vote as such.
6.10 POWERS EXERCISABLE BY EXTRAORDINARY RESOLUTION
In addition to all other powers conferred upon them by any other provisions
of this Indenture or by law, the Warrantholders at a meeting shall have the
power, exercisable from time to time by Extraordinary Resolution:
(a) to agree with the Company to any modification, abrogation, alteration,
compromise or arrangement of the rights of Warrantholders and/or,
subject to the prior consent, the Trustee in its capacity as trustee
hereunder or on behalf of the Warrantholders against the Company
whether such rights arise under this Indenture or otherwise.
(b) to amend or repeal any Extraordinary Resolution previously passed or
sanctioned by the Warrantholders;
(c) to direct or authorize the Trustee, subject to receipt of funding and
indemnity, to enforce any of the covenants on the part of the Company
contained in this Indenture or to enforce any of the rights of the
Warrantholders in any manner specified in such Extraordinary
Resolution or to refrain from enforcing any such covenant or right;
(d) to waive and direct the Trustee to waive any default on the part of
the Company in complying with any provisions of this Indenture or
Warrants, either unconditionally or upon any conditions specified in
such Extraordinary Resolution;
(e) to assent to any change in or omission from the provisions contained
herein or in the Warrant Certificates or any ancillary or supplemental
instrument which is agreed to by the Company and to authorize the
Trustee to concur in and execute any ancillary or supplemental
indenture embodying the change or omission;
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(f) to assent to a compromise or arrangement with a creditor or creditors
or a class or classes of creditors, whether secured or otherwise, and
with holders of any shares or other securities of the Company;
(g) to restrain any Warrantholder from taking or instituting any suit,
action or proceeding against the Company for the enforcement of any of
the covenants on the part of the Company contained in this Indenture
or Warrants or to enforce any of the rights of the Warrantholders;
(h) to direct any Warrantholder who, as such, has brought any suit, action
or proceeding to stay or discontinue or otherwise deal with any such
suit, action or proceeding, upon payment of the costs, charges and
expenses reasonably and properly incurred by such Warrantholder in
connection therewith; and
(i) power from time to time and at any time to remove the Trustee and
appoint a successor trustee;
provided, however, that Trustee and the Company shall be bound by any
Extraordinary Resolution varying the rights or protections of the Trustee
hereunder without its consent.
6.11 MEANING OF EXTRAORDINARY RESOLUTION
(a) The expression "EXTRAORDINARY RESOLUTION" when used in this Indenture
means, subject as hereinafter in this Section 6.11 and in Section 6.14
provided, a resolution proposed at a meeting of Warrantholders duly
convened for that purpose and held in accordance with the provisions
of this Article 6 at which there are present in person or represented
by proxy Warrantholders holding at least 25% of the aggregate number
of then outstanding unexercised Warrants and passed by the affirmative
votes of Warrantholders holding not less than 66-2/3% of the aggregate
number of the then outstanding unexercised Warrants represented at the
meeting and voted on a poll upon such resolution.
(b) If, at any meeting called for the purpose of passing an Extraordinary
Resolution, Warrantholders holding at least 25% (50% for any
Extraordinary Resolution that would increase the Exercise Price,
reduce the number of Underlying Securities issuable upon exercise of
Warrants (other than pursuant to adjustments provided for herein) or
shorten the Exercise Period) of the aggregate number of then
outstanding unexercised Warrants are not present in person or by proxy
within one half-hour after the time appointed for the meeting, then
the meeting, if convened by Warrantholders or on a Warrantholders'
Request, shall be dissolved; but in any other case it shall stand
adjourned to such day, being not less than four or more than 10
Business Days later, and to such place in Canada and the United States
and time as may be appointed by the Chairman. Not less than three
Business Days' prior notice shall be given of the time and place of
such adjourned meeting in the manner provided in Article 9. Such
notice shall state that at the adjourned meeting the Warrantholders
present in person or represented by proxy shall form a quorum but it
shall not be necessary to set forth the purposes for
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which the meeting was originally called or any other particulars. At
the adjourned meeting the Warrantholders present in person or
represented by proxy shall form a quorum and may transact the business
for which the meeting was originally convened and a resolution
proposed at such adjourned meeting and passed by the requisite vote as
provided in Section 6.11(a) shall be an Extraordinary Resolution
within the meaning of this Indenture notwithstanding that
Warrantholders holding at least 25% or 50%, as the case may be, of the
aggregate number of then outstanding unexercised Warrants are not
present in person or represented by proxy at such adjourned meeting.
(c) Votes on an Extraordinary Resolution shall always be given on a poll
and no demand for a poll on an Extraordinary Resolution shall be
necessary.
6.12 POWERS CUMULATIVE
It is hereby declared and agreed that any one or more of the powers or any
combination of the powers in this Indenture stated to be exercisable by the
Warrantholders by Extraordinary Resolution or otherwise may be exercised from
time to time and the exercise of any one or more of such powers or any
combination of powers from time to time shall not be deemed to exhaust the right
of the Warrantholders to exercise such powers or combination of powers then or
thereafter from time to time.
6.13 MINUTES
Minutes of all resolutions and proceedings at every meeting of
Warrantholders shall be made and duly entered in books to be from time to time
provided for that purpose by the Trustee at the reasonable expense of the
Company, and any such minutes as aforesaid, if signed by the chair of the
meeting at which such resolutions were passed or proceedings held, or by the
chair of the next succeeding meeting of the Warrantholders, shall be prima facie
evidence of the matters therein stated and, until the contrary is proved, every
such meeting in respect of the proceedings of which minutes shall have been made
shall be deemed to have been duly convened and held, and all resolutions passed
thereat or proceedings taken shall be deemed to have been duly passed and taken.
6.14 INSTRUMENTS IN WRITING
All actions that may be taken and all powers that may be exercised by the
Warrantholders at a meeting held as provided in this Article 6 also may be taken
and exercised by Warrantholders holding, in the case of such actions and powers
not requiring an Extraordinary Resolution, at least 51%, and, in the case of
such actions and powers requiring an Extraordinary Resolution, at least 66-2/3%,
of the aggregate number of then outstanding unexercised Warrants by an
instrument in writing signed in one or more counterparts by such Warrantholders
in person or by attorney duly appointed in writing, and the expression
"EXTRAORDINARY RESOLUTION" when used in this Indenture shall include an
instrument so signed.
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6.15 BINDING EFFECT OF RESOLUTIONS
Every resolution and every Extraordinary Resolution passed in accordance
with the provisions of this Article 6 at a meeting of Warrantholders shall be
binding upon all the Warrantholders, whether present at or absent from such
meeting, and every instrument in writing signed by Warrantholders in accordance
with Section 6.14 shall be binding upon all the Warrantholders, whether
signatories thereto or not, and each and every Warrantholder and the Trustee
(subject to the provisions for indemnity herein contained) shall be bound to
give effect accordingly to every such resolution and instrument in writing. In
the case of an instrument in writing, the Trustee shall give notice in the
manner contemplated in Section 9.1 of the effect of the instrument in writing to
all Warrantholders and the Company as soon as is reasonably practicable.
6.16 HOLDINGS BY THE COMPANY OR SUBSIDIARIES DISREGARDED
In determining whether Warrantholders holding the required number of
outstanding and unexercised Warrants there are present in person or represented
by proxy at a meeting of Warrantholders for the purpose of determining a quorum
or have concurred in any consent, waiver, Extraordinary Resolution,
Warrantholders' Request or other action under this Indenture, Warrants owned
legally or beneficially by the Company or any subsidiary (as that term is
defined in the Securities Act (Ontario)) of the Company shall be disregarded.
The Company shall provide to the Trustee, upon request, a certificate of the
Company detailing the number of Warrants owned legally or beneficially by the
Company or any subsidiary (as that term is defined in the Securities Act
(Ontario)) of the Company, together with the registration thereof.
ARTICLE 7
SUPPLEMENTAL INDENTURES
7.1 SUPPLEMENTAL INDENTURES
From time to time the Company and the Trustee may, subject to the
provisions of this Indenture, and shall, when so directed by this Indenture,
execute and deliver by their proper officers, indentures or instruments
supplemental hereto, which thereafter shall form part hereof, for any one or
more or all of the following purposes:
(a) setting forth adjustments in the application of Article 2;
(b) adding to the provisions hereof such additional covenants and
enforcement provisions as in the opinion of counsel are necessary or
advisable, provided that the same are acceptable to the Trustee;
(c) giving effect to any Extraordinary Resolution passed as provided in
Article 6;
(d) making such provisions not inconsistent with this Indenture as may be
necessary or desirable with respect to matters or questions arising
hereunder, provided that such provisions are acceptable to the
Trustee;
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(e) adding to or amending the provisions hereof in respect of the transfer
of Warrants, making provision for the exchange of Warrants, and making
any modification in the forms of the certificates for the Warrants
that does not affect the substance thereof;
(f) making any additions to, deletions from or alterations of the
provisions of this Indenture which, in the opinion of the Trustee do
not materially and adversely affect the interests of the
Warrantholders and are necessary or advisable in order to incorporate,
reflect or comply with any Applicable Legislation; and
(g) for any other purpose not inconsistent with the terms of this
Indenture, including the correction or rectification of any
ambiguities, defective or inconsistent provisions, errors or omissions
herein, provided that the same is acceptable to the Trustee,
provided, however, that no amendment may be made to this Indenture, by
supplement or otherwise, without the prior written consent of each of the TSX
(to the extent required by the rules and regulations thereof).
7.2 SUCCESSOR CORPORATIONS
In the case of the consolidation, amalgamation, arrangement, merger or
transfer of the undertaking or assets of the Company as an entirety or
substantially as an entirety to another person (a "SUCCESSOR"), forthwith
following the occurrence of such event the successor resulting from such
consolidation, amalgamation, arrangement, merger or transfer (if not the
Company) shall expressly assume, by supplemental indenture satisfactory in form
to the Trustee and executed and delivered to the Trustee, the due and punctual
performance and observance of each and every covenant and condition of this
Indenture to be performed and observed by the Company, and in any event, shall
be bound by the provisions hereof and all obligations for the due and punctual
performance and observance of each and every covenant and obligation contained
in this Indenture to be performed by the Company. Such changes may be made in
the Warrants as may be appropriate in view of such consolidation, amalgamation,
arrangement, merger or transfer and as may be necessary to ensure that the
Warrantholders are not adversely affected by such consolidation.
ARTICLE 8
CONCERNING THE TRUSTEE
8.1 TRUST INDENTURE LEGISLATION
(a) In this Article, the term "APPLICABLE LEGISLATION" means the
provisions, if any, of any statute of Canada or the United States or a
province or territory of Canada or a state of the United States and
the regulations under any such named or other statute relating to
trust indentures and/or to the rights, duties and obligations of
trustees and of corporations under trust indentures, to the extent
that such provisions are at the time in force and applicable to this
Indenture.
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(b) If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with a mandatory requirement of Applicable
Legislation, such mandatory requirement shall prevail.
(c) The Company and the Trustee agree that each will at all times in
relation to this Indenture and any action to be taken hereunder
observe and comply with and be entitled to the benefit of Applicable
Legislation.
8.2 RIGHTS AND DUTIES OF TRUSTEE
(a) In the exercise of the rights and duties prescribed or conferred by
the terms of this Indenture, the Trustee shall act honestly and in
good faith with a view to the best interests of the Warrantholders and
shall exercise the degree of care, diligence and skill that a
reasonably prudent trustee would exercise in comparable circumstances.
No provision of this Indenture shall be construed to relieve the
Trustee from, or require any other person to indemnify the Trustee
against, liability for its own negligence, wilful misconduct or bad
faith.
(b) Subject only to Section 8.2(a), the Trustee shall not be bound to do
or take any act, action or proceeding for the enforcement of any of
the obligations of the Company under this Indenture unless and until
it shall have received a Warrantholders' Request specifying the act,
action or proceeding that the Trustee is requested to take. The
obligation of the Trustee to commence or continue any act, action or
proceeding for the purpose of enforcing any rights of the Trustee or
the Warrantholders hereunder shall be conditional upon the
Warrantholders furnishing, when required by notice in writing by the
Trustee, sufficient funds to commence or continue such act, action or
proceeding and an indemnity reasonably satisfactory to the Trustee to
protect and hold harmless the Trustee against the costs, charges,
expenses and liabilities to be incurred thereby and any loss and
damage it may suffer by reason thereof. None of the provisions
contained in this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers unless indemnified as aforesaid.
(c) The Trustee may, before commencing or at any time during the
continuance of any such act, action or proceeding, require the
Warrantholders, at whose instance it is acting, to deposit with the
Trustee the Warrants held by them, for which Warrants the Trustee
shall issue receipts.
(d) Every provision of this Indenture that by its terms relieves the
Trustee of liability or entitles it to rely upon any evidence
submitted to it is subject to the provisions of Applicable
Legislation, of this Section 8.2 and of Section 8.3.
8.3 EVIDENCE, EXPERTS AND ADVISERS
(a) In addition to the reports, certificates, opinions and other evidence
required by this Indenture, the Company shall furnish to the Trustee
such additional evidence of compliance with any provision hereof in
such form as may be prescribed by
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Applicable Legislation, or as the Trustee may reasonably require by
written notice to the Company.
(b) In the exercise of its rights and duties hereunder, the Trustee may,
if it is acting in good faith, rely as to the truth of the statements
and the accuracy of the opinions expressed therein, upon statutory
declarations, opinions, reports, written requests, consents or orders
of the Company, certificates of the Company or other evidence
furnished to the Trustee, provided that such evidence complies with
Applicable Legislation and the Trustee examines the same and
determines that such evidence complies with the applicable
requirements of this Indenture.
(c) Whenever Applicable Legislation requires that evidence referred to in
Section 8.3(a) be in the form of a statutory declaration, the Trustee
may accept such statutory declaration in lieu of a certificate of the
Company required by any provision hereof. Any such statutory
declaration may be made by one or more of the chairman of the board of
directors, the chief executive officer, the president, the secretary,
a senior vice-president or a vice-president of the Company.
(d) Proof of the execution of an instrument in writing, including a
Warrantholders' Request, by any Warrantholder may be made by the
certificate of a notary public, or other officer with similar powers,
that the person signing such instrument acknowledged to him the
execution thereof, or by an affidavit of a witness to such execution
or in any other manner that the Trustee may consider adequate.
(e) The Trustee may employ or retain such counsel, accountants or other
experts or advisers as it may reasonably require for the purpose of
determining and discharging its duties hereunder, may act on and rely
upon the advice or opinions so obtained and may pay reasonable
remuneration for all services so performed by any of them, and shall
not be responsible for any misconduct on the part of such experts or
advisors who have been appointed with due care by the Trustee. The
Company shall pay, or reimburse the Trustee for, the costs of
obtaining such advice in accordance with Section 4.2.
8.4 DOCUMENTS HELD BY TRUSTEE
(a) Any securities, documents of title or other instruments that may at
any time be held by the Trustee subject to the trusts hereof may be
placed in the deposit vaults of the Trustee or of any Canadian
chartered bank or trust company or deposited for safekeeping with any
such bank or trust company.
(b) Unless herein otherwise expressly provided, any money held pending the
application or withdrawal thereof under any provision of this
Indenture may be deposited in the name of the Trustee in any Schedule
A Canadian chartered bank at the rate of interest then current on
similar deposits or, with the consent of the Company, may be:
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(i) deposited in the deposit department of the Trustee or of any
other loan or trust company authorized to accept deposits under
the laws of Canada or a province thereof; or
(ii) invested in securities issued or guaranteed by the Government of
Canada or a province thereof or in obligations, maturing not more
than one year from the date of investment, of any Schedule A
Canadian chartered bank.
(c) All interest or other income received by the Trustee in respect of
deposits and investments will belong to the Company.
8.5 ACTIONS BY TRUSTEE TO PROTECT INTERESTS
The Trustee shall have the power to institute and to maintain such actions
and proceedings as it may consider necessary or expedient to preserve, protect
or enforce its interests and the interests of the Warrantholders.
8.6 TRUSTEE NOT REQUIRED TO GIVE SECURITY
Subject to the provisions of this Indenture and Applicable Legislation, the
Trustee shall not be required to give any bond or security in respect of the
execution of the trusts and powers of this Indenture or otherwise.
8.7 PROTECTION OF TRUSTEE
By way of supplement to the provisions of any law for the time being
relating to trustees, it is expressly declared and agreed as follows:
(a) The Trustee shall not be liable for or by reason of any statements of
fact or recitals in this Indenture (except the representation
contained in Section 8.9) or be required to verify the same.
(b) Nothing herein contained shall impose any obligation on the Trustee to
see to or to require evidence of the registration or filing (or
renewal thereof) of this Indenture or any instrument ancillary or
supplemental hereto.
(c) The Trustee shall not be bound to give notice to any person of the
execution hereof.
(d) The Trustee shall not incur any liability or responsibility whatsoever
or be in any way responsible for the consequence of any breach on the
part of the Company of any of the covenants herein contained or of any
acts of any directors, officers, employees, agents or servants of the
Company.
8.8 REPLACEMENT OF TRUSTEE
(a) The Trustee may resign its trust and be discharged from all further
duties and liabilities hereunder by giving to the Company not less
than 45 days' prior notice
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in writing or such shorter prior notice as the Company may accept as
sufficient. The Warrantholders by Extraordinary Resolution shall have
the power at any time to remove the existing Trustee and to appoint a
new trustee. In the event of the Trustee resigning or being removed as
aforesaid or being dissolved, becoming bankrupt, going into
liquidation or otherwise becoming incapable of acting hereunder, the
Company shall forthwith appoint a new trustee unless a new trustee has
already been appointed by the Warrantholders; failing such appointment
by the Company, within 10 days the retiring Trustee or any
Warrantholder may apply to a justice of the Ontario Court (General
Division) at the Company's expense, on such notice as such justice may
direct, for the appointment of a new trustee; but any new trustee so
appointed by the Company or by the Court shall be subject to removal
as aforesaid by the Warrantholders. Any new trustee appointed under
any provision of this Section 8.8 shall be a corporation authorized to
carry on the business of a trust company in the Province of Ontario
such other jurisdiction as may be required by Applicable Legislation
and shall maintain an office or agency in the City of Golden, Colorado
where Warrants may be exercised pursuant to Section 3.1 or transferred
pursuant to Section 2.9. On any such appointment, the new trustee
shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as Trustee
without any further assurance, conveyance, act or deed; but there
shall be immediately executed, at the expense of the Company, all such
conveyances or other instruments as may, in the opinion of counsel, be
necessary or advisable for the purpose of assuring the same to the new
trustee, provided that any resignation or removal of the Trustee and
appointment of a successor trustee shall not become effective until
the successor trustee shall have executed an appropriate instrument
accepting such appointment and, at the request of the Company, the
predecessor Trustee, upon payment of its outstanding remuneration and
expenses, shall execute and deliver to the successor trustee an
appropriate instrument transferring to such successor trustee all
rights and powers of the predecessor Trustee hereunder.
(b) Upon the appointment of a successor trustee, the Company shall
promptly notify the Warrantholders thereof.
(c) Any corporation into or with which the Trustee may be merged or
consolidated or amalgamated, or any corporation succeeding to the
trust business of the Trustee, shall be the successor to the Trustee
hereunder without any further act on its part or of any of the parties
hereto, provided that such corporation would be eligible for
appointment as a new trustee under Section 8.8(a).
(d) Any Warrants certified but not delivered by a predecessor trustee may
be certified by the successor trustee in the name of the predecessor
or successor trustee.
8.9 CONFLICT OF INTEREST
(a) The Trustee represents to the Company that at the time of execution
and delivery hereof no material conflict of interest exists which it
is aware of in the Trustee's
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role as a fiduciary hereunder and agrees that in the event of a
material conflict of interest arising which it becomes aware of
hereafter it will, within 90 days after ascertaining that it has such
a material conflict of interest, either eliminate the same or resign
its trust hereunder to a successor trustee approved by the Company. If
any such material conflict of interest exists or hereafter shall
exist, the validity and enforceability of this Indenture and the
Warrants shall not be affected in any manner whatsoever by reason
thereof.
(b) Subject to Section 8.9(a), the Trustee, in its personal or any other
capacity, may buy, lend upon and deal in securities of the Company and
generally may contract and enter into financial transactions with the
Company or any subsidiary of the Company without being liable to
account for any profit made thereby.
8.10 ACCEPTANCE OF TRUSTS
The Trustee hereby accepts the trusts in this Indenture declared and
provided for and agrees to perform the same upon the terms and conditions herein
set forth, and to hold all rights, interests and benefits contained herein for
and on behalf of those persons who become Warrantholders from time to time.
8.11 TRUSTEE NOT TO BE APPOINTED RECEIVER
Neither the Trustee nor any person related to the Trustee shall be
appointed a receiver or receiver and manager or liquidator of all or any part of
the assets or undertaking of the Company.
8.12 INDEMNITY OF TRUSTEE
The Company hereby indemnifies and holds harmless the Trustee and its
officers from and against all reasonable costs, liabilities, expenses and
disbursements (including reasonable legal fees and disbursements) that it might
incur or to which it might have become subject in any action, suit or other
similar legal proceeding that might be instituted against the Trustee arising
from or out of any act, omission or error of the Trustee arising pursuant to
this Indenture, provided that the Trustee acted in accordance with the standards
set forth in Section 8.2 and that any such act, omission or error did not
constitute negligence, wilful misconduct or bad faith on the part of the
Trustee. This Section 8.12 shall survive the resignation or removal of the
Trustee or the termination of this Indenture.
8.13 NOTICE
(a) The Trustee shall not be bound to give any notice or to do or take any
act, action, or proceeding by virtue of the powers conferred on it
hereby unless and until it shall have been required so to do under the
terms hereof and the Trustee shall not be required to take notice of
any default of the Company hereunder unless and until notified in
writing of the default (which notice must specify the nature of the
default) and, in the absence of such notice, the Trustee may for all
purposes hereunder conclusively assume that no default by the Company
hereunder has occurred. The giving of any notice shall in no way limit
the discretion of the
-39-
Trustee hereunder as to whether any action is required to be taken in
respect of any default hereunder.
(b) Whenever any confirmation or instruction is required to be given to
the Trustee pursuant to this Indenture, such confirmation or
instruction must be in writing to be valid and effectively given.
8.14 ADDITIONAL PROVISIONS
(a) All determination with respect to the validity of the exercise of
Warrants, including the determination of the time of receipt by the
Trustee of any Warrant Certificate or any other documents or
instruments to be delivered in connection with the exercise of any
Warrants, shall be determined by the Trustee in its sole and absolute
discretion. The determination thereof by the Trustee shall be final
and binding upon the Company and all Warrantholders affected by such
determination.
(b) The Trustee shall not be liable for any error of judgment made in good
faith by a responsible officer or employee, unless it shall be proved
that the Trustee was negligent.
(c) The Trustee shall not be accountable with respect to the validity or
value of any Underlying Securities which may at any time be issued and
delivered upon the exercise of any Warrant.
(d) The Trustee shall not be responsible for any failure of the Company to
make any cash payment to issue, transfer or deliver the Underlying
Securities upon the surrender of any Warrant for the purpose of
exercise.
ARTICLE 9
GENERAL
9.1 NOTICE
(a) Unless herein otherwise expressly provided, any notice, document or
thing required or permitted to be given or delivered hereunder shall
be deemed to be properly given or delivered if:
(i) delivered in person to the address set out below and acknowledged
by written receipt signed by the person receiving such notice;
(ii) telecopied and confirmed by prepaid registered letter addressed
to the party receiving such notice at its respective addresses
set out below; or
(iii) sent by prepaid registered letter (provided that any notice to
be so given is not unlikely to reach its destination as a result
of any actual or threatened interruption of mail services) or
courier delivery addressed to the party receiving such notice at
its respective address set out below:
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the Company: Gryphon Gold Corporation
Suite 810, Box 36
1130 West Pender Street
Vancouver, B.C. V6E 4A4
Attention: Chief Financial Officer
Fax: (604) 608-3262
with a copy to: Gryphon Gold Corporation
390 Union Boulevard, Suite 360
Lakewood, Colorado
80228
Attention: Chief Financial Officer
the Trustee: Computershare Trust Company of Canada
1500 University Street, Suite 700
Montreal, Quebec H2A 3S8
Attention: Manager, Corporate Trust
Fax: (514) 982-7677
a Warrantholder: the address appearing in the register of holders
(b) Any notice or delivery given in accordance with this Section 9.1 shall
be deemed to have been given and received:
(i) if delivered in person in accordance with Section 9.1(a)(i), on
the day of delivery in person (provided that such day is a
Business Day at the place of receipt and delivery occurs prior to
4:00 p.m. (local time of the recipient) and, if it is not, on the
next following Business Day);
(ii) if telecopied in accordance with Section 9.1(a)(ii) during the
business hours of the recipient, on the date of receipt of the
telecopy (provided that such day is a Business Day at the place
of receipt and, if it is not, on the next following Business Day)
and if telecopied other than during business hours, on the next
following Business Day; and
(iii) if sent by prepaid registered letter or courier delivery in
accordance with Section 9.1(a)(iii), on the date the letter is
actually received by the addressee.
(c) For greater certainty, a letter delivered by courier where such
courier obtains a written acknowledgment of receipt from the party
receiving the letter shall be considered a delivery in person in
accordance with Section 9.1(a)(i) rather than the sending of a letter
in accordance with Section 9.1(a)(iii).
-41-
(d) The Company or the Trustee, as the case may be, may from time to time
by notice in writing delivered in accordance with Section 9.1 change
its address for purposes hereof.
9.2 ACCIDENTAL FAILURE TO GIVE NOTICE TO WARRANTHOLDERS
Accidental error or omission in giving notice or accidental failure to give
notice to any Warrantholder shall not invalidate any action or proceeding
founded thereon.
9.3 COUNTERPARTS AND FORMAL DATE
This Indenture may be executed in several counterparts, each of which when
so executed shall be deemed to be an original and such counterparts together
shall constitute one and the same instrument and notwithstanding their date of
execution shall be deemed to be dated as of the date hereof.
9.4 SATISFACTION AND DISCHARGE OF INDENTURE
Upon the earlier of: (i) the date by which all Warrants theretofore
certified hereunder have been cancelled or deemed to be cancelled in accordance
with Section 3.4; and (ii) the Expiry Time, this Indenture, except to the extent
that Underlying Securities and certificates therefor have not been issued and
delivered hereunder or the Company has not performed any of its obligations
hereunder, shall cease to be of further effect in respect of the Company, and
the Trustee, on written demand of and at the cost and expense of the Company,
and upon delivery to the Trustee of a certificate of the Company stating that
all conditions precedent to the satisfaction and discharge of this Indenture
have been complied with and upon payment to the Trustee of the expenses, fees
and other remuneration payable to the Trustee, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture; provided that if
the Trustee has not then performed any of its obligations hereunder, any such
satisfaction and discharge of the Company's obligations hereunder shall not
affect or diminish the rights of any Warrantholder or the Company against the
Trustee.
9.5 PROVISIONS OF INDENTURE AND WARRANTS FOR THE SOLE BENEFIT OF PARTIES AND
WARRANTHOLDERS
Nothing in this Indenture, expressed or implied, shall give or be construed
to give to any person other than the parties hereto and the holders from time to
time of the Warrants any legal or equitable right, remedy or claim under this
Indenture, or under any covenant or provision herein contained, all such
covenants and provisions being for the sole benefit of the parties hereto and
the Warrantholders.
9.6 LANGUAGE
The parties hereto confirm their express wish that this Indenture and all
documents and agreements directly or indirectly relating thereto be drawn up in
the English language. Notwithstanding such express wish, the parties agree that
any such document or agreement, or any part thereof or of this Indenture, may be
drawn up in the French language.
-42-
Les parties aux presentes confirment leur volonte expresse que la presente
convention ainsi que tous les documents et conventions s'y rattachant
directement ou indirectement soient rediges en anglais. Nonobstant cette volonte
expresse, les parties aux presentes conviennent que la presente convention ainsi
que tous les documents et conventions s'y rattachant directement ou
indirectement, ou toute partie de ceux-ci, puissent etre rediges en francais.
9.7 PURCHASE OF WARRANTS BY COMPANY
Subject to applicable law, the Company may from time to time purchase on
any stock exchange in the open market, by invitation for tender, by private
contract or otherwise any of the Warrants, on such terms as the Company may
determine. Any such purchase may be made in such manner, from such persons, on
such other terms and at such prices as the Company in its sole discretion may
determine. The Warrant Certificates representing the Warrants purchased pursuant
to this Section 9.7 shall forthwith be delivered to and cancelled by the
Trustee. If requested by the Company, the Trustee shall furnish the Company with
a certificate as to such destruction.
9.8 ASSIGNMENT
This Indenture may not be assigned by either party hereto without the
consent in writing of the other party. This Indenture shall enure to and bind
the parties and their lawful successors and permitted assigns.
9.9 NO WAIVER, ETC.
No act, omission, delay, acquiescence or course of conduct on the part of
the party hereto, other than a specific written instrument, shall constitute a
waiver of or consent to any breach or default by the other party hereto, or
affect or limit the right of the party to insist on strict or timely performance
of the obligation of the other party.
9.10 FURTHER ASSURANCES
Each of the parties hereto shall do or cause to be done all such acts and
things and execute such further documents, agreements and assurances as may
reasonably be necessary or advisable from time to time to carry out the
provisions of this Indenture in accordance with their true intent.
IN WITNESS WHEREOF the parties hereto have executed this Indenture under
the hands of their proper officers in that behalf.
GRYPHON GOLD CORPORATION
by
----------------------------------
Name:
-------------------------------
Title:
------------------------------
by
----------------------------------
Name:
-------------------------------
Title:
------------------------------
COMPUTERSHARE TRUST COMPANY OF CANADA
by
----------------------------------
Name:
-------------------------------
Title:
------------------------------
by
----------------------------------
Name:
-------------------------------
Title:
------------------------------
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SCHEDULE A
FORM OF WARRANT CERTIFICATE/
ANNEXE A
FORMULAIRE DE BONS DE SOUSCRIPTION
Copy of specimen warrant certificate attached.
*French translation has been omitted.
VOID AFTER 5:00 P.M. (TORONTO TIME) ON THE EXPIRY DATE REFERENCED BELOW
No./No
WARRANTS TO PURCHASE COMMON SHARES OF
GRYPHON GOLD CORPORATION
(INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA)
NUMBER OF WARRANTS : __________ CUSIP __
THIS CERTIFIES that, for value received, the holder hereof
COMPUTERSHARE TRUST COMPANY OF CANADA
is the registered holder of the number of common share purchase warrants (the
"WARRANTS") stated above and is entitled at any time at or after the date hereof
and prior to 5:00 p.m. (Toronto time) on __ (the "EXPIRY TIME") to purchase in
accordance with the provisions of the Indenture (as defined below) one common
share (a "COMMON SHARE") of Gryphon Gold Corporation (the "COMPANY") for each
such Warrant represented hereby at a price of Cdn$ __ per Common Share or the
Canadian dollar equivalent thereof in accordance with the terms of the Indenture
referred to below (the "EXERCISE PRICE") by surrendering to Computershare Trust
Company of Canada (the "TRUSTEE") at its principal office in the City of
Toronto, Ontario or at the principal office of Computershare Trust Company, Inc.
(the "U.S. AGENT") in the City of Golden, Colorado this certificate together
with an executed exercise form (the "EXERCISE
*French translation has been omitted.
-2-
FORM") in the form of the attached Exercise Form or any other written notice in
a form satisfactory to the applicable Trustee, in either case duly completed and
executed, and a certified cheque, bank draft or money order payable at par to or
to the order of Gryphon Gold Corporation in the amount equal to the Exercise
Price multiplied by the number of Common Shares subscribed for (subject to
adjustment in certain circumstances); provided that unless the holder has
surrendered the Warrants represented hereby for exercise pursuant to the
provisions hereof and of the Indenture on or prior to the Expiry Time, the
Warrants represented hereby shall be void and of no effect.
Upon the exercise of the Warrants evidenced hereby, the Company shall cause to
be issued to the person(s) in whose name(s) the Common Shares so subscribed for
are to be issued (provided that if the Common Shares are to be issued to a
person other than a holder of this Warrant certificate, the holder's signature
on the Exercise Form herein shall be guaranteed by a Canadian chartered bank, a
major trust company in Canada, a firm which is a member of a recognized stock
exchange in Canada, a member of the Investment Dealers Association of Canada, a
national securities exchange in the United States, or the National Association
of Securities Dealers, Inc. or a participant in the Securities Transfer Agents
Medallion (STAMP) Program (an "ELIGIBLE INSTITUTION")) the number of Common
Shares to be issued to such person(s), and such person(s) shall become a holder
in respect of Common Shares with effect from the date of such exercise and upon
the due surrender of this Warrant certificate the Company will, within three
Business Days after receipt of notice from the Trustee of the exercise of such
Warrants, cause a certificate(s) representing
*French translation has been omitted.
-3-
such Common Shares to be made available for pick-up by such person(s) at the
principal office of the Trustee in the City of Toronto, Ontario or mailed to be
available for pick-up at the principal office of the U.S. Agent in the City of
Golden, Colorado or mailed to such person(s) at the address(es) specified in
such Exercise Form.
If any Common Shares issuable upon the exercise of Warrants require the
maintenance of a current Registration Statement, with respect to such Shares
under the Securities Act of 1933, as amended (the "1933 ACT"), in no event shall
such Common Shares be issued unless the Common Shares are registered under the
1933 Act pursuant to an effective Registration Statement and the Company causes
to be delivered to the holder a U.S. Prospectus; provided, however that, if the
Registration Statement ceases to be effective, prior to the Expiry Time and for
so long as the Registration Statement is not effective, subject to applicable
law, a holder of any Warrant may, at its option: (i) exercise such Warrants, if
the holder is not a U.S. Purchaser and the holder delivers a duly completed and
executed Warrant Exercise Certification (in the form attached as Schedule B to
the Indenture) certifying that the holder: (A)(1) is not in the United States;
(2) is not a U.S. Person and is not exercising the Warrants for, or on behalf or
benefit of, a U.S. Person or person in the United States; (3) did not execute or
deliver the Warrant Exercise Form in the United States; (4) agrees not to engage
in hedging transactions with regard to the Securities prior to the expiration of
the one-year distribution compliance period set forth in Rule 903(b)(3) of
Regulation S; (5) acknowledges that the Common Shares issuable upon exercise of
the Warrants are "restricted securities" as defined in Rule 144 of the 1933 Act
and upon the issuance thereof, and until such time as the
*French translation has been omitted.
-4-
same is no longer required under the applicable requirements of the 1933 Act or
applicable U.S. state laws and regulations, the certificates representing the
Common Shares will bear a restrictive legend; and (6) acknowledges that the
Company shall refuse to register any transfer of the Securities not made in
accordance with the provisions of Regulation S, pursuant to registration under
the 1933 Act, or pursuant to an available exemption from registration under the
1933 Act; and (B) neither the Corporation nor the holder has engaged in any
"directed selling efforts" (as defined in Regulation S) in the United States; or
(ii) exercise such Warrants in a transaction that does not require registration
under the 1933 Act or any applicable U.S. state laws and regulations and the
holder has (A) delivered a duly completed and executed Warrant Exercise
Certification (in the form attached hereto as Schedule B) certifying that the
holder is exercising the Warrants pursuant to such exemptions and (B) furnished
to the Company, prior to such exercise, an opinion of counsel of recognized
standing in form and substance satisfactory to the Company to such effect; or
(iii) if (A) the Current Market Price of one Common Share is greater than the
Exercise Price and (B) a Registration Statement is not then effective, in lieu
of exercising the Warrants by payment of cash, a holder may exercise such
Warrants by a cashless exercise and shall receive the number of Common Shares
equal to an amount as determined in Section 3.1(b)(iii) of the Indenture. If no
Registration Statement is effective at any time when any Warrant is exercised,
the holder shall deliver a completed Warrant Exercise Certification (attached as
Schedule B to the Indenture) to the Trustee and the Company.
*French translation has been omitted.
-5-
This Warrant Certificate represents Warrants of the Company issued under the
provisions of an Indenture (which indenture, together with all other instruments
supplemental or ancillary thereto, is herein referred to as the "INDENTURE")
dated __ between the Company and the Trustee, to which Indenture reference is
hereby made for particulars of the rights of the holders and the Company and of
the Trustee in respect thereof and the terms and conditions upon which the
Warrants are issued and held, all to the same effect as if the provisions of the
Indenture were herein set forth, to all of which the holder by acceptance hereof
assents. A copy of the Indenture will be provided at no cost to a holder who
makes a request for such copy to the Company or to the Trustee. If any conflict
exists between the provisions contained herein and the provisions of the
Indenture, the provisions of the Indenture shall govern.
The Indenture provides for adjustments to the right of exercise, including the
Exercise Price and the amount of and class and kind of securities or other
property issuable upon exercise, upon the happening of certain stated events,
including the subdivision or consolidation of the Common Shares, certain
distributions of Common Shares or securities convertible into Common Shares or
of other securities or assets of the Company, certain offerings of rights,
warrants or options, certain reorganizations, certain issuer bids, tender offers
or exchange offers and the declaration of certain dividends.
*French translation has been omitted.
-6-
No fractional Common Shares are issuable upon the exercise of this Warrant. The
Company will pay an amount in cash in lieu of issuing fractional Common Shares,
in accordance with the Indenture. Holders of Warrants will not have any rights
as shareholders of the Company by virtue of holding such Warrants.
Upon presentation to the Trustee at its principal office in the City of Toronto,
Ontario or at the principal office of the U.S. Agent in the City Golden,
Colorado, subject to the provisions of the Indenture and upon compliance with
the reasonable requirements of the Trustee, this Warrant certificate may be
exchanged for Warrant certificates in any other denomination representing in the
aggregate the same number of Warrants. If the holder subscribes for a lesser
number of Common Shares than the number of shares referred to in this Warrant
certificate, the holder shall be entitled to receive a further Warrant
certificate in respect of Common Shares referred to in this Warrant certificate
but not subscribed for. The Company and the Trustee may treat the registered
holder of this Warrant certificate for all purposes as the absolute owner
hereof. The holding of this Warrant certificate shall not constitute the holder
thereof a holder of Common Shares or entitle him to any right or interest in
respect thereof except as herein and in the Indenture expressly provided.
Warrants may be transferred upon compliance with the conditions described in the
Indenture, on the register to be kept at the principal office of the Trustee in
the City of Toronto, by the registered holder thereof or his executors or
administrators or other legal representatives, or his or their attorney
appointed by instrument in
*French translation has been omitted.
-7-
writing in form and execution satisfactory to the Trustee with a signature
guaranteed by an Eligible Institution and upon compliance with such reasonable
requirements as the Trustee may prescribe (including the requirement to provide
evidence of satisfactory compliance with applicable securities laws).
The Indenture contains provisions making binding upon the holders of Warrants
outstanding thereunder resolutions passed at meetings of such holders held in
accordance with such provisions and instruments in writing signed by the holders
holding a specified percentage of the then unexercised Warrants.
This Warrant certificate and the Indenture shall be governed by the laws of the
Province of Ontario and the federal laws of Canada applicable in that province.
Time shall be of the essence hereof and of the Indenture. This Warrant
certificate shall not be valid for any purpose until it has been certified by or
on behalf of the Trustee for the time being under the Indenture.
IN WITNESS WHEREOF the Corporation has caused this Warrant certificate to be
signed by its duly authorized officer as of __.
GRYPHON GOLD CORPORATION
Per/par:
Authorized Signing Officer/Signaire autorise
*French translation has been omitted.
EXERCISE FORM/FORMULAIRE D'EXERCICE
TO: GRYPHON GOLD CORPORATION (the "CORPORATION")
The undersigned holder of the within Warrants hereby irrevocably exercises the
Warrants represented hereby and subscribes for the maximum number of Common
Shares (or other shares or securities or property issuable in accordance with
the Indenture) of Gryphon Gold Corporation issuable pursuant to the number of
warrants being exercised as specified below on the terms specified in the said
Warrants and the Indenture at the Exercise Price and on the terms and conditions
set forth in this certificate and in the Indenture and encloses herewith a
certified cheque, bank draft or money order payable at par to the order of
Gryphon Gold Corporation in an amount equal to the Exercise Price multiplied by
the number of Common Shares subscribed for (subject to adjustment in certain
circumstances). The undersigned hereby directs that the said Common Shares be
issued in the name of the undersigned and delivered to the address of the
undersigned as shown on the register of holders of Warrants, unless otherwise
specified in the space provided below.
Name: __________________________________________________________________________
Nom : __________________________________________________________________________
Please print or type name and address (including postal code) -
Address: _________________________
Number of Warrants being Exercised: ____________________________________________
*French translation has been omitted.
-2-
SOCIAL INSURANCE OR -----------------------
OTHER TAXPAYER
IDENTIFICATION NUMBER -----------------------
DATED this ________________ day of ______________,
Signature guaranteed by: ________________________
Signature garantie par : ________________________
Note: If the signature of the person executing this form is to be guaranteed, it
must be guaranteed by an Eligible Institution. The guarantor must affix a stamp
bearing the actual words: "Signature Guarantee"
Please indicate desired delivery method:
[ ] Please mail the certificate representing the aforesaid Common Shares (and
certificate representing warrants not being exercised, if any) to the following
address:
________________________________________________________________________________
________________________________________________________________________________
*French translation has been omitted.
-3-
[ ] Please hold the certificate representing the aforesaid Common Shares for
pick up by the undersigned at 100 University Avenue, 9th Floor, Toronto, Ontario
M5J 2Y1, Attention: Corporate Trust.
[ ] Please hold the certificate representing the aforesaid Common Shares for
pick up by the undersigned at __.
Please note that if Common Shares are to be issued to a person other than the
registered holder, the registered holder must pay to the Trustee all exigible
taxes and duly execute the form of transfer and the signature of the registered
holder must be guaranteed.
TRANSFER FORM
FOR VALUE RECEIVED, ________________ hereby sells, assigns and transfers unto
________________________________________________________________________________
Please print or type name and address of assignee -
________________________________________________________________________________
Warrants represented by the within Warrant certificate and does hereby
irrevocably constitute and appoint
________________________________________________________________________________
as attorney, such attorney may substitute another to act for him, to transfer
the said Warrants on the books of the Trustee and/or the Corporation.
DATED this ___ day of __________________,
*French translation has been omitted.
-4-
Signature guaranteed by: ___________________________
___________________________
Name of registered holder
(please print)
___________________________
Signature of or on
behalf of registered holder
___________________________
Officer, Title or
other Authorization
(if holder not an individual)
Note: Signature of holder must be guaranteed by an Eligible Institution. The
guarantor must affix a stamp bearing the actual words: "SIGNATURE GUARANTEE".
Upon any due transfer of Warrants, the transferee of a Warrant shall be a
permitted assignee of the transferring holder and shall be entitled to the
benefits of the covenants of the Corporation contained in the Warrant Indenture
and granted by the Corporation, subject to the restrictions and limitations
described therein.
NOTICE: The signature on this assignment must correspond exactly with the name
as written upon the face of this certificate.
*French translation has been omitted.
-5-
SCHEDULE B
WARRANT EXERCISE CERTIFICATION
(TO BE COMPLETED ONLY IF A REGISTRATION STATEMENT
IS NOT EFFECTIVE)
To: GRYPHON GOLD CORPORATION
And To: COMPUTERSHARE TRUST COMPANY OF CANADA
The undersigned holder of the within Warrant Certificate, pursuant to the
Warrant Indenture mentioned therein, hereby exercises certain Warrants (the
"Exercised Warrants") evidenced thereby and hereby subscribes for a number of
Common Shares of GRYPHON GOLD CORPORATION equal to such number of Common Shares
or number or amount of other securities or property, or combination thereof, to
which such exercise entitles him under the provisions of the Warrant Indenture
at an aggregate price equal to the product of the Exercise Price and the number
of Exercised Warrants, and on the terms specified in such Warrant Certificate
and the Warrant Indenture, and in payment therefor, delivers herewith a bank
draft, certified cheque or money order payable to GRYPHON GOLD CORPORATION.
Capitalized terms not defined herein shall have the definitions set forth in the
Warrant Indenture.
The undersigned represents that it (A) has had access to such current public
information concerning GRYPHON GOLD CORPORATION as it considered necessary in
connection with its investment decision and (B) understands that the securities
issuable upon exercise hereof have not been registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act").
The undersigned represents and warrants that it: [CHECK ONE ONLY]
[ ] A. is not a U.S. Purchaser and it (1) is not in the United States; (2)
is not a U.S. Person and is not exercising the Warrants for, or on
behalf or benefit of, a U.S. Person or person in the United States;
(3) did not execute or deliver the Warrant Exercise Form in the
United States; (4) agrees not to engage in hedging transactions with
regard to the Securities prior to the expiration of the one-year
distribution compliance period set forth in Rule 903(b)(3) of
Regulation S; (5) acknowledges that the Common Shares issuable upon
exercise of the Warrants are "restricted securities" as defined in
Rule 144 of the 1933 Act and upon the issuance thereof, and until
such time as the same is no longer required under the applicable
requirements of the 1933 Act or applicable U.S. state laws and
regulations, the certificates representing the Common Shares will
bear a restrictive legend; and (6) acknowledges that the Company
shall refuse to register any transfer of the Securities not made in
accordance with the provisions of Regulation S, pursuant to
registration under the 1933 Act, or pursuant to an available
exemption from registration under the 1933 Act; and (B) it holder has
not engaged in any "directed selling efforts" (as defined in
Regulation S) in the United States.
*French translation has been omitted.
-6-
[ ] B. the undersigned is delivering a written opinion of U.S. Counsel or a
written confirmation from the Company to the effect that the Warrants
and the Common Shares to be delivered upon exercise hereof have been
registered under the United States Securities Act of 1933, as amended
(the "U.S. Securities Act") or are exempt from registration
thereunder.
[ ] C. the undersigned elects to exercise its the "cashless" exercise right
in accordance with the terms hereof and Section 3(b)(iii) of the
Warrant Indenture with respect to ________ Warrants. The undersigned
will receive that number of Common Shares equal to the product of (x)
the number of Warrants as to which is being exercised multiplied by
(y) a fraction, the numerator of which is the Current Market Price
per Common Share (as defined in the Warrant Indenture) less the
Exercise Price and the denominator of which is such Current Market
Price per Common Share.
Unless Box C above is checked, the undersigned holder understands that the
certificate representing the Company's Common Shares is issued upon exercise of
this Warrant will bear a legend restricting the transfer without registration
under the U.S. Securities Act and applicable state securities laws substantially
the form set forth in Section 3.1(c) of the Warrant Indenture.
If the holder has checked Box C above, upon exercise of the Warrants pursuant to
the cashless exercise provision in Section 3.1(b)(iii) of the Indenture, the
holder must tender the original warrant certificate; the exercise form and this
Schedule B -- Warrant Exercise Certification directly to Gryphon Gold
Corporation, Suite 810, 1130 West Pender St. Vancouver, B.C. V6E 4A4.
Name: __________________________________________________________________________
Please print or type name and address (including postal code)
Address: __________________________
Number of Warrants being Exercised: ____________________________________________
____________________________________________
DATED this __________________ day of _________,
Signature guaranteed by: _____________________
----------------------------------------
Name of registered holder (please print)
----------------------------------------
Signature of or on behalf of
registered holder
----------------------------------------
Office, Title or other Authorization (if
holder not an individual)
*French translation has been omitted.