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GRANGES INC.
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MONTREAL TRUST COMPANY OF CANADA
_____________________________
SPECIAL WARRANT INDENTURE
Providing for the Issue of
9,699,800 Special Warrants
_____________________________
April 25, 1996
LADNER DOWNS
McCARTHY TETRAULT
2
TABLE OF CONTENTS
Page
ARTICLE ONE
Interpretation . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Words Importing the Singular and Gender . . . . . . . . . . . . . 7
1.3 Interpretation Not Affected by Headings . . . . . . . . . . . . . 7
1.4 Day Not a Business Day . . . . . . . . . . . . . . . . . . . . . 7
1.5 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . 7
1.6 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.7 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.8 English Language . . . . . . . . . . . . . . . . . . . . . . . . 8
1.9 Meaning of "outstanding" for Certain Purposes . . . . . . . . . . 8
ARTICLE TWO
Issue of Special Warrants . . . . . . . . . . 9
2.1 Creation and Issue of Special Warrants . . . . . . . . . . . . . 9
2.2 Terms of Special Warrants . . . . . . . . . . . . . . . . . . . . 9
2.3 Special Warrant Certificates . . . . . . . . . . . . . . . . . . 9
2.4 Issue in Substitution for Lost Special Warrants . . . . . . . . . 11
2.5 Special Warrantholder not a Shareholder . . . . . . . . . . . . . 11
2.6 Special Warrants to Rank Pari Passu . . . . . . . . . . . . . . . 11
2.7 Signing of Special Warrant Certificates . . . . . . . . . . . . . 12
2.8 Certification by the Trustee or Co-transfer Agent . . . . . . . . 12
ARTICLE THREE
Exchange and Ownership of Special Warrants . . . . . . 12
3.1 Exchange of Special Warrants . . . . . . . . . . . . . . . . . . 12
3.2 Charges for Exchange or Transfer . . . . . . . . . . . . . . . . 13
3.3 Ownership of Special Warrants . . . . . . . . . . . . . . . . . . 13
3.4 Registration and Transfer of Special Warrants . . . . . . . . . . 14
ARTICLE FOUR
Exercise of Special Warrants . . . . . . . . . 16
4.1 Exercise During Exercise Period . . . . . . . . . . . . . . . . . 16
4.2 Notice of Compliance or Non-Compliance . . . . . . . . . . . . . 16
4.3 Notice of Retraction Right . . . . . . . . . . . . . . . . . . . 17
4.4 Retraction of Special Warrants . . . . . . . . . . . . . . . . . 17
4.5 Notice of Exercise Period . . . . . . . . . . . . . . . . . . . . 18
4.6 Method of Exercise of Special Warrants . . . . . . . . . . . . . 18
4.7 Effect of Exercise of Special Warrants . . . . . . . . . . . . . 19
4.8 Partial Exercise of Special Warrants . . . . . . . . . . . . . . 20
4.9 No Fractional Shares or Warrants . . . . . . . . . . . . . . . . 21
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4.10 Deemed Exercise of Special Warrants . . . . . . . . . . . . . . . 21
4.11 Accounting and Recording . . . . . . . . . . . . . . . . . . . . 21
4.12 Cancellation of Surrendered Special Warrants . . . . . . . . . . 21
4.13 Exercise Restrictions . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE FIVE
Adjustment of Exercise Number . . . . . . . . . 22
5.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.2 Adjustment of Exercise Number . . . . . . . . . . . . . . . . . . 22
5.3 Subscription Rights Adjustment Rules . . . . . . . . . . . . . . 26
5.4 Postponement of Subscription . . . . . . . . . . . . . . . . . . 28
5.5 Notice of Certain Events . . . . . . . . . . . . . . . . . . . . 28
5.6 Protection of Trustee . . . . . . . . . . . . . . . . . . . . . . 29
5.7 Proceedings Prior to Any Action Requiring Adjustment . . . . . . 29
ARTICLE SIX
Rights and Covenants . . . . . . . . . . . 29
6.1 Purchase of Special Warrants . . . . . . . . . . . . . . . . . . 29
6.2 General Covenants of the Company . . . . . . . . . . . . . . . . 29
6.3 Trustee's Remuneration and Expenses . . . . . . . . . . . . . . . 31
6.4 Escrow of Funds . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.5 Right to Dividends or Distributions . . . . . . . . . . . . . . . 33
6.6 Investment of Funds . . . . . . . . . . . . . . . . . . . . . . . 34
6.7 Performance of Covenants by Trustee . . . . . . . . . . . . . . . 34
6.8 Certificate of the Company . . . . . . . . . . . . . . . . . . . 34
6.9 Rescission Right . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE SEVEN
Enforcement . . . . . . . . . . . . . . 35
7.1 Suits by Special Warrantholders . . . . . . . . . . . . . . . . . 35
7.2 Immunity of Shareholders . . . . . . . . . . . . . . . . . . . . 35
7.3 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE EIGHT
Meetings of Special Warrantholders . . . . . . . . 36
8.1 Right to Convene Meetings . . . . . . . . . . . . . . . . . . . . 36
8.2 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.3 Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.4 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.5 Power to Adjourn . . . . . . . . . . . . . . . . . . . . . . . . 37
8.6 Show of Hands . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.7 Poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.8 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.9 Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.10 Company and Trustee may be Represented . . . . . . . . . . . . . 39
8.11 Powers Exercisable by Extraordinary Resolution . . . . . . . . . 39
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8.12 Meaning of "Extraordinary Resolution" . . . . . . . . . . . . . . 40
8.13 Powers Cumulative . . . . . . . . . . . . . . . . . . . . . . . . 41
8.14 Minutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.15 Instruments in Writing . . . . . . . . . . . . . . . . . . . . . 42
8.16 Binding Effect of Resolutions . . . . . . . . . . . . . . . . . . 42
8.17 Holdings by Company Disregarded . . . . . . . . . . . . . . . . . 42
ARTICLE NINE
Supplemental Indentures and Successor Companies . . . . . 43
9.1 Provision for Supplemental Indentures for Certain Purposes . . . 43
9.2 Successor Companies . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE TEN
Concerning the Trustee . . . . . . . . . . . 44
10.1 Trust Indenture Legislation . . . . . . . . . . . . . . . . . . . 44
10.2 Rights and Duties of Trustee . . . . . . . . . . . . . . . . . . 45
10.3 Evidence, Experts and Advisers . . . . . . . . . . . . . . . . . 45
10.4 Securities, Documents and Monies Held by Trustee . . . . . . . . 46
10.5 Action by Trustee to Protect Interests . . . . . . . . . . . . . 47
10.6 Trustee not Required to Give Security . . . . . . . . . . . . . . 47
10.7 Protection of Trustee . . . . . . . . . . . . . . . . . . . . . . 47
10.8 Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . 48
10.9 Conflict of Interest . . . . . . . . . . . . . . . . . . . . . . 49
10.10 Acceptance of Trust . . . . . . . . . . . . . . . . . . . . . . . 50
10.11 Trustee not to be Appointed Receiver . . . . . . . . . . . . . . 50
10.12 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE ELEVEN
General . . . . . . . . . . . . . . . 50
11.1 Notice to Company and Trustee . . . . . . . . . . . . . . . . . . 50
11.2 Notice to Special Warrantholders . . . . . . . . . . . . . . . . 52
11.3 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . 53
11.4 Sole Benefit of Parties and Special Warrantholders . . . . . . . 53
11.5 Discretion of Directors . . . . . . . . . . . . . . . . . . . . . 53
11.6 Counterparts and Formal Date . . . . . . . . . . . . . . . . . . 53
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THIS SPECIAL WARRANT INDENTURE is dated as of April 25, 1996,
BETWEEN:
GRANGES INC., a company incorporated under the laws of the Province of
British Columbia, having its head office at Suite 3000, 370 Seventeenth
Street, Denver, Colorado, U.S.A., 80202
(the "Company")
AND:
MONTREAL TRUST COMPANY OF CANADA, a trust company incorporated under the
laws of Canada, having an office at 510 Burrard Street, Vancouver, British
Columbia, V6C 3B9
(the "Trustee").
WHEREAS:
A. The Company proposes to create and issue 9,699,800 Special Warrants
exercisable by the holders thereof on the terms hereinafter set forth for the
acquisition of Shares in the capital of the Company and Warrants exercisable to
acquire Shares in the capital of the Company;
B. The Company is duly authorized to create and issue the Special Warrants to
be issued as herein provided;
C. All things necessary have been done and performed to make the Special
Warrants, when certified by the Trustee and issued and delivered as in this
Indenture provided, legal, valid and binding upon the Company with the benefits
of and subject to the terms of this Indenture;
D. 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
become holders of Special Warrants from time to time issued pursuant to this
Indenture;
NOW THEREFORE THIS INDENTURE WITNESSES that in consideration of the
premises and the covenants of the parties, the Company hereby appoints the
Trustee as trustee for the Special Warrantholders, to hold all rights,
interests and benefits contained herein for and on behalf of those persons who
become holders of Special Warrants from time to time issued pursuant to this
Indenture and it is hereby agreed and declared as follows:
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ARTICLE ONE
Interpretation
1.1 Definitions
In this Indenture and in the recitals and schedules hereto, unless there
is something in the subject matter or context inconsistent therewith, the
following phrases and words shall have the following meanings:
(a) "Applicable Legislation" means the provisions of any statute of
Canada or a province thereof, and the regulations under any such
statute, relating to trust indentures or the rights, duties or
obligations of corporations and trustees under trust indentures as
are from time to time in force and applicable to this Indenture;
(b) "board" means the Board of Directors of the Company;
(c) "business day" means a day that is not a Saturday, Sunday, or civic
or statutory holiday in the Cities of Toronto, Ontario and Vancouver,
British Columbia;
(d) "Company" means Granges Inc. and its lawful successors from time to
time as provided for in section 9.2;
(e) "Company's auditors" means the firm of chartered accountants duly
appointed as auditors of the Company from time to time;
(f) "Convertible Security" means a security of the Company (other than
the Special Warrants) convertible into or otherwise carrying the
right to acquire authorized but unissued Shares;
(g) "Co-transfer Agent" has the meaning given in section 2.1;
(h) "counsel" means a barrister or solicitor (who may be an employee of
the Company) or a firm of barristers and solicitors (who may be
counsel for the Company) in both cases acceptable to the Trustee;
(i) "Current Market Price" at any date, means the weighted average price
per Share at which the Shares have traded:
(i) on The Toronto Stock Exchange;
(ii) if the Shares are not listed on The Toronto Stock Exchange, on
any stock exchange upon which the Shares are listed as may be
selected for this purpose by the directors and approved by the
Trustee; or
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(iii) if the Shares are not listed, on any over-the-counter market as
may be selected for this purpose by the directors and approved
by the Trustee;
during the 20 consecutive trading days (on each of which at least 500
Shares are traded in board lots) ending the 15th trading day before
such date, and the weighted average price shall be determined by
dividing the aggregate sale price of all Shares sold in board lots on
the exchange or market, as the case may be, during the 20 consecutive
trading days by the aggregate number of Shares sold;
(j) "director" means a director of the Company for the time being, and
reference without more to action by the directors means action by the
directors of the Company as a board or, whenever duly empowered,
action by an executive committee of the board, in each case by
resolution duly passed;
(k) "dividends" means dividends or distributions (payable in cash or in
securities, property or assets of equivalent value) declared payable
on the Shares;
(l) "dividends paid in the ordinary course" means such dividends or
distributions declared payable on Shares in any fiscal year of the
Company to the extent that such dividends or distributions in the
aggregate do not exceed on a per Share basis 5% of the Special
Warrant Purchase Price and for such purposes the amount of any
dividends or distributions paid in other than cash or shares shall be
the fair market value of such dividends as determined by the
directors;
(m) "Exchange Right" means the right to acquire Shares and Warrants upon
due exercise of the rights attached to the Special Warrants as herein
provided;
(n) "Exercise Number" at any time, means that number of Shares that
Special Warrantholders are entitled to receive from time to time for
each Special Warrant held upon exercise of the rights attached to the
Special Warrant as that number may be adjusted by Article Five hereof
and that number, as at the date hereof, is equal to one Share for
each Special Warrant;
(o) "Exercise Date" with respect to any Special Warrant means the earlier
of:
(i) the date on which the Special Warrant Certificate evidencing
such Special Warrant is duly surrendered in accordance with the
provisions of section 4.6; and
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(ii) the date of deemed exercise of the Special Warrants pursuant to
section 4.10;
(p) "Exercise Period" means the period commencing on the date hereof and
ending at 4:30 p.m. (local time) on the fifth business day after the
earlier of:
(i) the Qualification Date; and
(ii) the Qualification Deadline;
(q) "Extraordinary Resolution" has the meaning given in sections 8.12 and
8.15;
(r) "Final Prospectus" means the final version of the prospectus to be
filed with each of the Securities Commissions relating to the
distribution of the Shares and Warrants issuable to the holders of
the Special Warrants upon exercise of the Special Warrants and
includes any amendments or supplements thereto;
(s) "Notice of Compliance" means notice in writing from the Company to
the Trustee and to the Underwriters to the effect that the
Qualification Date has occurred on or before the Qualification
Deadline;
(t) "Notice of Non-Compliance" means notice in writing from the Company
to the Trustee and to the Underwriters to the effect that the
Qualification Date has not occurred on or before the Qualification
Deadline;
(u) "person" means an individual, a corporation, a partnership, a trust
or any unincorporated organization, and words importing persons have
a similar meaning;
(v) "Provinces" means the provinces of British Columbia and Ontario;
(w) "Qualification Date" means the day on which a receipt is issued for
the Final Prospectus by the last of the Securities Commissions to do
so under the applicable Securities Laws of each of the Provinces;
(x) "Qualification Deadline" means July 24, 1996 or such later date as
the Underwriters may determine in a written notice delivered to the
Company and the Trustee provided that the Underwriters have obtained
the written consent thereto of each initial purchaser of the Special
Warrants who has not resold such Special Warrants;
(y) "Registrar" means a registrar, from time to time, of the Special
Warrants appointed pursuant to subsection 3.4(1);
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(z) "Regulation S" means Regulation S under the U.S. Securities Act;
(aa) "Retraction Period" means the period commencing on the first business
day following the Qualification Deadline and ending at 4:30 p.m.
(local time) on the date that is five business days after the
Qualification Deadline;
(ab) "Securities Commissions" means, collectively, the securities
commission or other securities regulatory authority under the
applicable Securities Laws of each of the Provinces;
(ac) "Securities Laws" means, collectively, the applicable securities laws
of each of the Provinces and the respective regulations and rules
made and forms prescribed thereunder together with all applicable
published policy statements, notices, blanket orders and rulings of
the Securities Commissions;
(ad) "Shares" means fully paid and non-assessable common shares without
par value in the capital of the Company; provided that if the
Exchange Rights are subsequently adjusted or altered pursuant to
subsection 5.2(4) or (5), "Shares" shall thereafter mean the shares
or other securities or property that a Special Warrantholder is
entitled to on an exchange after the adjustment;
(ae) "shareholder" means an owner of record of one or more Shares or
shares of any other class or series of the Company;
(af) "Special Warrantholders" or "holders" means the registered holders of
Special Warrants;
(ag) "Special Warrantholders' Request" means an instrument signed in one
or more counterparts by a Special Warrantholder or Special
Warrantholders entitled to acquire, upon exercise of the Exchange
Rights, in the aggregate, not less than 25% of the aggregate number
of Shares and Warrants that could be acquired pursuant to the
exercise of all of the Special Warrants then outstanding requesting
the Trustee to take some action or proceeding specified therein;
(ah) "Special Warrants" means the special warrants authorized to be
created by the Company under section 2.1 and issued and certified
under this Indenture entitling the holders thereof to acquire Shares
and Warrants evidenced by Special Warrant Certificates;
(ai) "Special Warrant Certificates" means certificates substantially in
the form attached as Schedule A hereto,
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or such other form as may be approved under subsection 2.3(1),
evidencing Special Warrants;
(aj) "Special Warrant Purchase Price" means $2.60 per Special Warrant;
(ak) "subsidiary of the Company" means a corporation, more than 50% of the
outstanding voting shares of which are owned, directly or indirectly,
other than by way of security only, by the Company or by one or more
subsidiaries of the Company; and, as used in this definition, "voting
shares" means shares of a class or classes ordinarily entitled to
vote for the election of a majority of the directors of a corporation
irrespective of whether or not shares of any other class or classes
shall have or might have the right to vote for directors by reason of
the happening of any contingency;
(al) "this Special Warrant Indenture", "this Indenture", "herein" "hereby"
and similar expressions mean or refer to this Special Warrant
Indenture and any indenture, deed or instrument supplemental or
ancillary hereto; and the expressions "Article", "section",
"subsection", "paragraph" or "clause" followed by a number or letter
mean and refer to the specified Article, section, subsection,
paragraph or clause of this Indenture;
(am) "trading day" with respect to a stock exchange means a day on which
Shares may be traded through the facilities of such stock exchange;
(an) "Transfer Agent" means the transfer agent for the time being of the
Shares;
(ao) "Trustee" means Montreal Trust Company of Canada, or any lawful
successor thereto in the trusts hereby created including through the
operation of section 10.8;
(ap) "Underwriters" means ScotiaMcLeod Inc., First Marathon Securities
Limited, Yorkton Securities Inc. and Goepel Shields & Partners Inc.,
the underwriters of the Special Warrants;
(aq) "U.S. Person" means a U.S. person as that term is defined in
Regulation S;
(ar) "U.S. Securities Act" means the Securities Act of 1933, as amended,
of the United States;
(as) "United States" means the United States as that term is defined in
Regulation S;
(at) "Warrants" means the common share purchase warrants authorized to be
created by the Company and issued and
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certified pursuant to the Warrant Indenture and entitling the holder
thereof, subject to adjustment in accordance with the terms of the
Warrant Indenture, to acquire one Share at any time from the date
hereof until 4:30 p.m., (local time) on October 31, 1997, at the
price of $3.00 per Share;
(au) "Warrantholders" means the registered holders of the Warrants for the
time being;
(av) "Warrant Indenture" means the warrant indenture dated the date hereof
between the Company and the Trustee, pursuant to which the Warrants
will be created and issued;
(aw) "written order of the Company", "written request of the Company",
"written consent of the Company" and "certificate of the Company"
mean respectively a written order, request, consent and certificate
signed in the name of the Company by any one director or officer and
may consist of one or more instruments so executed.
1.2 Words Importing the Singular and Gender
Words importing the singular include the plural and vice versa and words
importing a particular gender include all genders.
1.3 Interpretation Not Affected by Headings
The division of this Indenture into Articles, sections, subsections and
paragraphs, 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.
1.4 Day Not a Business Day
In the event that any day on which the Exercise Period expires or on or
before which any action is required to be taken hereunder is not a business
day, then the Exercise Period shall expire on or the action shall be required
to be taken on the next succeeding day that is a business day.
1.5 Time of the Essence
Time shall be of the essence in all respects in this Indenture, the
Special Warrants and the Special Warrant Certificates.
1.6 Currency
Except as otherwise stated, all dollar amounts herein are expressed in
Canadian dollars.
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1.7 Applicable Law
This Indenture, the Special Warrants and the Special Warrant Certificates
shall be governed by, construed and enforced in accordance with the laws of the
Province of British Columbia and shall be treated in all respects as British
Columbia contracts.
1.8 English Language
The parties hereby confirm that they accept this Indenture as well as
notices and certificates relating directly or indirectly to the subject matter
hereof as drawn in the English language.
Les parties confirment par les presentes qu'elles acceptent la presente
convention ainsi que les avis et certificats se rapportant directement ou
indirectement a l'objet des presentes tels que rediges en langue anglaise.
1.9 Meaning of "outstanding" for Certain Purposes
Except as provided in sections 4.8 and 4.10, every Special Warrant
Certificate certified and delivered by the Trustee hereunder shall be deemed to
be outstanding until it has been surrendered to the Trustee pursuant to this
Indenture, provided however that:
(a) a Special Warrant that has been partially exercised shall be deemed
to be outstanding only to the extent of the unexercised part of the
Special Warrants;
(b) where a Special Warrant Certificate has been issued in substitution
for a Special Warrant Certificate that has been lost, stolen or
destroyed, only the latest Special Warrant Certificate issued shall
be counted for the purpose of determining the Special Warrants
outstanding; and
(c) for the purpose of any provision of this Indenture entitling holders
of outstanding Special Warrants to vote, sign consents, requests or
other instruments or take any other action under this Indenture,
Special Warrants owned legally or equitably by the Company or any
subsidiary of the Company shall be disregarded, except that:
(i) for the purpose of determining whether the Trustee shall be
protected in relying on any vote, consent, request or other
instrument or other action, only the Special Warrants of which
the Trustee has notice that they are so owned shall be so
disregarded; and
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(ii) Special Warrants so owned that have been pledged in good faith
other than to the Company or any subsidiary of the Company shall
not be so disregarded if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right to vote the
Special Warrants in the pledgee's discretion free from the
control of the Company or any subsidiary of the Company pursuant
to the terms of the pledge.
ARTICLE TWO
Issue of Special Warrants
2.1 Creation and Issue of Special Warrants
A total of 9,699,800 Special Warrants, each entitling the holder thereof
to acquire from the Company on exercise thereof, subject to the conditions in
Article Four and adjustment as provided for in section 4.7 and Article Five,
one Share and one-half Warrant, are hereby authorized to be created and issued
by the Company and, upon receipt by the Company of the Special Warrant Purchase
Price for the Special Warrants, of which 100% shall be held in trust by the
Trustee in accordance with the provisions of section 6.4, the Special Warrant
Certificates shall be executed by the Company and certified by or on behalf of
the Trustee, or by such other person as the Company may from time to time
appoint with the approval of the Trustee (hereinafter referred to as the
"Co-transfer Agent"), and delivered by the Trustee in accordance with
subsection 2.3(3).
2.2 Terms of Special Warrants
(1) Subject to the provisions of Articles Four and Five, each of the
Special Warrants issued under section 2.1 shall entitle the holder thereof to
acquire from the Company, on exercise or deemed exercise hereunder, from the
Company, without further payment therefor one-half Warrant together with that
number of Shares equal to the Exercise Number in effect at the Exercise Date,
and to any entitlement under sections 6.4 and 6.5;
(2) Fractional Special Warrants shall not be issued or otherwise provided
for.
2.3 Special Warrant Certificates
(1) Special Warrants shall be issued in registered form only and shall be
evidenced only by Special Warrant Certificates, which shall be substantially in
the form attached as Schedule A hereto, with such additions, variations or
omissions as may be permitted by the provisions of this Indenture or may from
time to time be agreed upon between the Company and the Trustee, shall be dated
as of the date hereof (regardless of their actual dates of issue), shall bear
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such legends and distinguishing letters and numbers as the Company shall, with
the approval of the Trustee, prescribe, shall be issuable in any denomination
excluding fractions, and, if applicable, shall bear the additional legends set
forth under section 2.3(2).
(2) Each Special Warrant Certificate originally issued to a U.S. Person or
a person within the United States, and all certificates issued in exchange
therefor or in substitution thereof will bear a legend to the following effect
(the "U.S. Legend"):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO
THE COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE
904 OF REGULATION S UNDER THE SECURITIES ACT, OR (C) INSIDE THE
UNITED STATES IN ACCORDANCE WITH (1) CERTAIN PROCEDURES SATISFACTORY
TO THE COMPANY OR (2) RULE 144 UNDER THE SECURITIES ACT, IF
AVAILABLE. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD
DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.
A NEW CERTIFICATE BEARING NO LEGEND, DELIVERY OF WHICH WILL
CONSTITUTE "GOOD DELIVERY" MAY BE OBTAINED FROM MONTREAL TRUST
COMPANY OF CANADA UPON DELIVERY OF THIS CERTIFICATE AND A DULY
EXECUTED DECLARATION, IN A FORM SATISFACTORY TO MONTREAL TRUST
COMPANY OF CANADA AND THE COMPANY, TO THE EFFECT THAT THE SALE OF THE
SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE
904 OF REGULATION S UNDER THE SECURITIES ACT;
provided, that if any such Special Warrants are being sold or transferred in
compliance with Rule 904 of Regulation S, the U.S. Legend may be removed by
providing a declaration to the Trustee substantially in the form set forth in
Schedule D attached hereto, and provided, further, that if any such Special
Warrants are being sold in compliance with Rule 144 under the U.S. Securities
Act, the U.S. Legend may be removed by delivery to the Trustee of an opinion of
counsel, of recognized standing reasonably satisfactory to the Company, to the
effect that such legend is no longer required under the applicable requirements
of the U.S. Securities Act or state securities laws.
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(3) The Trustee shall maintain and make available to the Company lists of
all persons who are entitled to Special Warrant Certificates, and the Trustee
shall mail or deliver Special Warrant Certificates evidencing whole Special
Warrants to those persons or as directed by the Company.
2.4 Issue in Substitution for Lost Special Warrants
(1) If a Special Warrant Certificate becomes mutilated or is lost,
destroyed or stolen, the Company, subject to applicable law and to subsection
2.4(2), shall issue and thereupon the Trustee shall countersign or certify and
deliver a new Special Warrant Certificate of like date and tenor as the one
mutilated, lost, destroyed or stolen upon surrender of and in place of and upon
cancellation of the mutilated Special Warrant Certificate or in lieu of and in
substitution for the lost, destroyed or stolen Special Warrant Certificate and
the substituted Special Warrant Certificate shall be in a form approved by the
Trustee and shall be entitled to the benefit hereof, rank equally in accordance
with its terms with all other Special Warrant Certificates issued or to be
issued hereunder and will bear the same legends as the Special Warrant
Certificate being replaced.
(2) The applicant for the issue of a new Special Warrant Certificate
pursuant to this section 2.4 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 the Trustee such evidence of ownership
and of the loss, destruction or theft of the Special Warrant Certificate so
lost, destroyed or stolen as shall be satisfactory to the Company and to the
Trustee in their discretion, and if required, furnish an indemnity in amount
and form satisfactory to them in their discretion, and pay the reasonable
charges of the Company and the Trustee in connection therewith.
2.5 Special Warrantholder not a Shareholder
Nothing in this Indenture or in the holding of a Special Warrant evidenced
by a Special Warrant Certificate, or otherwise, shall be construed as
conferring upon a Special Warrantholder any right or interest whatsoever as a
shareholder of the Company, including but not limited to the right to vote at,
to receive notice of, or to attend meetings of shareholders or any other
proceedings of the Company or the right to receive any dividend and other
distribution, except as provided in sections 6.4 and 6.5.
2.6 Special Warrants to Rank Pari Passu
Except as otherwise provided herein, a Special Warrant shall rank pari
passu with all other Special Warrants issued under this Indenture, whatever may
be the actual date of issue of the Special Warrant Certificates that evidence
them.
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2.7 Signing of Special Warrant Certificates
The Special Warrant Certificates shall be signed by two of the directors
or officers of the Company and need not be under the seal of the Company. The
signatures of any of these directors or officers may be mechanically reproduced
in facsimile and Special Warrant Certificates bearing those facsimile
signatures shall be binding upon the Company as if they had been manually
signed by the directors or officers. Notwithstanding that any of the persons
whose manual or facsimile signature appears on any Special Warrant Certificate
as an officer or director may no longer hold office at the date of the Special
Warrant Certificate or at the date of certification or delivery thereof, any
Special Warrant Certificate signed as aforesaid shall, subject to section 2.8,
be valid and binding upon the Company.
2.8 Certification by the Trustee or Co-transfer Agent
(1) The Trustee shall certify Special Warrant Certificates upon the
written direction of the Company. No Special Warrant Certificate shall be
issued or, if issued, shall be valid or entitle the holder to the benefit
hereof until it has been certified by manual signature by or on behalf of the
Trustee, or by manual signature by the Co-transfer Agent, substantially in the
form approved by the Company and the Trustee and the certification by the
Trustee or by the Co-transfer Agent upon any Special Warrant Certificate shall
be conclusive evidence as against the Company that the Special Warrant
Certificate so certified has been duly issued hereunder and that the holder is
entitled to the attributes and characteristics of the Special Warrants provided
for in this Indenture.
(2) The certification of the Trustee or of the Co-transfer Agent on
Special Warrant Certificates issued hereunder shall not be construed as a
representation or warranty by the Trustee or by the Co-transfer Agent as to the
validity of this Indenture or of the Special Warrant Certificates (except the
due certification thereof) and the Trustee or the Co-transfer Agent shall in no
respect be liable or answerable for the use made of the Special Warrants or any
of them or of the consideration therefor, except as otherwise specified herein.
ARTICLE THREE
Exchange and Ownership of Special Warrants
3.1 Exchange of Special Warrants
(1) Upon the request of a Special Warrantholder one or more Special
Warrant Certificates may, upon compliance with the reasonable requirements of
the Trustee, be exchanged for one or more Special Warrant Certificates of
different denominations evidencing, in the aggregate, the same number of
Special Warrants
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as the Special Warrant Certificate or Special Warrant Certificates being
exchanged and shall bear the same legends as the Special Warrant Certificates
being exchanged.
(2) Special Warrants may be exchanged only at the principal transfer
offices of the Trustee in either of the Cities of Toronto or Vancouver or at
the principal transfer office of the Co-transfer Agent designated by the
Company or at any other place that is designated by the Company with the
approval of the Trustee. Any Special Warrant Certificates tendered for exchange
shall be surrendered to the Trustee or to its agent or the Co-transfer Agent
and, upon issuance of new Special Warrants in exchange therefor, cancelled. The
Company shall sign all Special Warrant Certificates necessary to carry out
exchanges as aforesaid and those Special Warrant Certificates shall be
certified by or on behalf of the Trustee.
3.2 Charges for Exchange or Transfer
For each Special Warrant transferred or Special Warrant Certificate
exchanged, other than on the exchange by the Underwriters of a global
certificate representing all Special Warrants and the transfer of all such
Special Warrants by the Underwriters, the Trustee, or the Co-transfer Agent
except as otherwise herein provided, shall charge if required by the Company a
reasonable sum in respect of each Special Warrant transferred or Special
Warrant Certificate exchanged. The party requesting the transfer or exchange,
as a condition precedent thereto, shall pay such charges and shall pay or
reimburse the Trustee, the Co-transfer Agent or the Company for all exigible
transfer taxes or governmental or other similar transfer charges required to be
paid in connection therewith.
3.3 Ownership of Special Warrants
The Company and the Trustee and their respective agents may deem and treat
the holder of any Special Warrant as the absolute owner of that Special Warrant
for all purposes, and the Company and the Trustee and their respective agents
shall not be affected by any notice or knowledge to the contrary except as
required by statute or by order of a court of competent jurisdiction. The
holder of any Special Warrant shall be entitled to the rights evidenced by that
Special Warrant free from all equities or rights of set-off or counterclaim
between the Company and the original or any intermediate holder thereof and all
persons may act accordingly and the receipt from any holder for the Shares,
Warrants or monies obtainable pursuant thereto shall be a good discharge to the
Company and the Trustee for the same and neither the Company nor the Trustee
shall be bound to inquire into the title of any such registered holder.
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3.4 Registration and Transfer of Special Warrants
(1) The Company hereby appoints the Trustee as Registrar of the Special
Warrants. The Company may hereafter, with the consent of the Trustee, appoint
one or more other additional Registrars of the Special Warrants, including any
Co-transfer Agent.
(2) The Company shall cause a register to be kept by the Trustee, and the
Trustee agrees to maintain such a register, at its principal transfer office in
the City of Vancouver, in which shall be entered alphabetically the names and
addresses of the holders of Special Warrants and other particulars of the
Special Warrants held by them respectively and a register of all transfers of
Special Warrants and the date and other particulars of each transfer. Such
registration shall be noted on the Special Warrant Certificates by the Trustee
or other Registrar duly appointed pursuant to subsection 3.4(1). The Company
shall also cause transfer agencies (each a "Transfer Agency") to be maintained
by the Trustee, and the Trustee shall maintain such Transfer Agencies at its
principal transfer offices in the Cities of Toronto and Vancouver and in such
other place or places and by such other agent as the Company with the approval
of the Trustee may designate.
(3) No transfer of a Special Warrant shall be valid unless made on any one
of the registers upon surrender of the Special Warrant Certificate to the
Trustee or other Registrar duly appointed pursuant to subsection 3.4(1)
accompanied by a written instrument of transfer in form satisfactory to the
Trustee or other Registrar duly appointed pursuant to subsection 3.4(1)
executed by the registered holder or his executors, administrator or other
legal representatives or his attorney duly appointed by an instrument in
writing in form and execution satisfactory to the Trustee or other Registrar
duly appointed pursuant to subsection 3.4(1) and upon compliance with such
reasonable requirements as the Trustee or other Registrar duly appointed
pursuant to subsection 3.4(1) may prescribe, nor shall a transfer of a Special
Warrant be valid, except in the case where a new Special Warrant Certificate is
issued upon a transfer, unless the transfer shall have been noted on the
Special Warrant Certificate by the Trustee or other Registrar duly appointed
pursuant to subsection 3.4(1), provided however and notwithstanding the
provisions of this subsection 3.4(3), an Underwriter shall be entitled to be
entered on any one of the registers as the holder of Special Warrants evidenced
by a particular Special Warrant Certificate upon delivery by that Underwriter
to the Trustee of:
(a) the particular Special Warrant Certificate; and
(b) a certificate of that Underwriter to the effect that the purchaser of
the Special Warrants evidenced by the particular Special Warrant
Certificate has declined or refused to accept delivery of, and make
payment for, the Special Warrants evidenced by the particular Special
Warrant Certificate in accordance with the subscription
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or purchase agreement between such purchaser, the Company and
ScotiaMcLeod Inc. (and ScotiaMcLeod (USA) Inc. in the case of a
United States purchaser).
(4) The registers referred to in this section 3.4 shall at all reasonable
times be open for inspection by the Company, by the Trustee and by any Special
Warrantholder.
(5) The registered holder of a Special Warrant may at any time and from
time to time have the registration of the Special Warrant transferred from the
register in which the registration thereof appears to another authorized
register upon compliance with such reasonable requirements as the Trustee or
other Registrar duly appointed pursuant to subsection 3.4(1) may prescribe.
(6) Subject to subsections 3.4(7), 3.4(8) and 3.4(9), the holder of a
Special Warrant may at any time and from time to time have the Special Warrant
transferred at any Transfer Agency in accordance with the conditions herein,
such reasonable requirements as the trustee or other Registrar duly appointed
pursuant to subsection 3.4(1) may prescribe and all applicable securities
legislation and requirements of regulatory authorities, provided however that
the transfer of Special Warrants shall be accompanied by a transfer form in the
form set forth in Schedule C hereto.
(7) If the Special Warrant Certificate tendered for transfer bears the
U.S. Legend, the Trustee or other Registrar shall authenticate, register and
deliver in the name of the transferee a new Special Warrant Certificate,
representing the number of Special Warrants so transferred, bearing the U.S.
Legend; provided, that if the Special Warrants are being sold in accordance
with Rule 904 of Regulation S and the transferor has delivered to the Trustee
or other Registrar a declaration substantially in the form set forth in
Schedule D attached hereto, the Trustee or other Registrar shall authenticate,
register and deliver in the name of the transferee a new Special Warrant
Certificate, representing the Special Warrants so transferred, without the U.S.
Legend and, provided, further, that if the Special Warrants are being sold
pursuant to Rule 144 under the U.S. Securities Act and the transferor has
delivered to the Trustee or other Registrar an opinion of counsel, of
recognized standing reasonably satisfactory to the Company, to the effect that
the U.S. Legend is no longer required under applicable requirements of the U.S.
Securities Act or state securities laws, then the Trustee or other Registrar
shall authenticate, register and deliver in the name of the transferee a new
Special Warrant Certificate, representing the number of Special Warrants so
transferred, without the U.S. Legend.
(8) Except as required by law, neither the Trustee nor any other Registrar
duly appointed pursuant to subsection 3.4(1) nor the Company shall be charged
with notice of or be bound to see to the execution of any trust, whether
express, implied or constructive, in respect of any Special Warrant and may
transfer any Special Warrant on the written direction of the person
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registered as the holder thereof, whether named as trustee or otherwise, as
though that person were the beneficial owner thereof.
(9) The registers required to be kept at the Cities of Vancouver and
Toronto shall not be closed at any time. In the event that an office of the
Transfer Agent or a Co-transfer Agent in any place is closed, notice of the
closing shall be given, in the manner provided in section 11.2, to the Special
Warrantholders.
(10) The Trustee and every Registrar duly appointed pursuant to subsection
3.4(1) shall from time to time, when requested so to do by the Company, by the
Trustee or by any Special Warrantholder, furnish the Company, the Trustee or,
upon payment by the Special Warrantholder of a reasonable fee, the Special
Warrantholder, as the case may be, with a list of names and addresses of the
holders of Special Warrant entered on the register kept by such Trustee or
Registrar showing the number of Special Warrants held by each such holder.
ARTICLE FOUR
Exercise of Special Warrants
4.1 Exercise During Exercise Period
A Special Warrantholder may exercise the Special Warrants represented by a
Special Warrant Certificate, unless the Special Warrants are retracted in
accordance with section 4.4, at any time and from time to time in whole or in
part during the Exercise Period in accordance with and subject to section 4.6.
Any such exercise, or any deemed exercise pursuant to section 4.10, shall be
subject to the holder providing such assurances and executing such documents as
may, in the reasonable opinion of the Company or the Trustee, be required to
ensure compliance with all applicable securities legislation.
4.2 Notice of Compliance or Non-Compliance
If the Qualification Date occurs on or before the Qualification Deadline,
the Company shall forthwith, and in any event not later than the second
business day thereafter, deliver a Notice of Compliance to the Trustee and to
the Underwriters and shall deliver to the Trustee the certificate set out in
section 6.8. If the Qualification Date does not occur on or before the
Qualification Deadline, the Company shall forthwith, and in any event not later
than the second business day thereafter, deliver a Notice of Non-Compliance to
the Trustee and to the Underwriters and shall deliver to the Trustee the
certificate set out in section 6.8.
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4.3 Notice of Retraction Right
Upon receipt by the Trustee of a Notice of Non-Compliance in accordance
with and subject to section 4.2, the Trustee shall on the same day give notice
to the Special Warrantholders specifying:
(a) that the Qualification Date has not occurred on or before the
Qualification Deadline;
(b) the duration and expiry of the Retraction Period;
(c) that each Special Warrantholders may elect to retract all but not
less than all of his Special Warrants in accordance with and subject
to section 4.4 or, alternatively, to exercise his Special Warrants in
accordance with and subject to section 4.6.
4.4 Retraction of Special Warrants
(1) If the Qualification Date has not occurred on or before the
Qualification Deadline, each Special Warrantholder may elect, by delivering a
duly completed and executed election form, in the form attached as Schedule F
hereto, to the Trustee at its principal transfer office in either of the Cities
of Toronto or Vancouver or any other additional place or places that may be
designated by the Company with the approval of the Trustee, or to the
Co-transfer Agent at its principal transfer office designated by the Company,
during the Retraction Period either to:
(a) retract all but not less than all of his Special Warrants and receive
payment from the Trustee of the Special Warrant Purchase Price for
each Special Warrant retracted plus all interest earned thereon in
the hands of the Trustee from the date hereof to the date immediately
preceding the date of payment in accordance with section 6.4; or
(b) exercise all of his Special Warrants pursuant to section 4.6 and in
accordance with the terms of this Indenture acquire the Shares and
the Warrants which the Special Warrantholder is entitled to acquire
upon such exercise, subject to any applicable hold periods, resale
restrictions and other requirements of the Securities Laws.
(2) If the Qualification Date has not occurred on or before the
Qualification Deadline and a Special Warrantholder has not delivered to the
Trustee his duly completed election form during the Retraction Period as
provided for in subsection 4.4(1), that Special Warrantholder shall be deemed
to have elected to have exercised all of his Special Warrants pursuant to
section 4.10 and upon such deemed exercise acquire the Shares and Warrants
which the Special Warrantholder is entitled to acquire upon such deemed
exercise of his Special Warrants, subject to any applicable hold
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periods, resale restrictions and other requirements of the Securities Laws.
(3) If a Special Warrantholder delivers a duly completed election form in
accordance with and subject to subsection 4.4(1) and surrenders a Special
Warrant Certificate or Special Warrant Certificates representing the Special
Warrants held by such holder that are to be retracted to the Trustee at its
principal transfer office in either of the Cities of Toronto or Vancouver or
any other place or places that may be designated by the Company with the
approval of the Trustee, or to the Co-Transfer Agent at its principle transfer
office designed by the Company, during the Retraction Period, the Trustee
shall, on or before the fifth business day after the end of the Retraction
Period, deliver to such Special Warrantholder, or to such person as such
Special Warrantholder may otherwise specify in its exercise form delivered
pursuant to subsection 4.4(1), at the address of such Special Warrantholder or,
if so specified, of such person, or, if specified in the duly completed
election form delivered pursuant to subsection 4.4(1), to such holder or person
at the place where such election form was delivered, a cheque made payable to
the order of such Special Warrantholder or, if so specified, such person, in an
amount equal to the Special Warrant Purchase Price multiplied by each Special
Warrant retracted plus all interest earned thereon in the hands of the Trustee
from the date hereof to and including the day immediately preceding the date of
such payment (less any tax required to be withheld therefrom) in accordance
with section 6.4. Any payment made in accordance with the provision of this
subsection 4.4(3) shall, to the extent of the sum represented thereby (plus the
amount of any tax so withheld), satisfy and discharge all liability of the
Company with respect to such payment, unless such cheque is not paid at par on
presentation. In the event of non-receipt of any such cheque by the person so
whom it is so delivered, or the loss or destruction thereof, the Trustee will
issue to such person a replacement cheque for a like amount upon being
furnished with such evidence of non-receipt, loss or destruction and with such
indemnity as the Trustee may reasonably require.
4.5 Notice of Exercise Period
Upon receipt by the Trustee of a Notice of Compliance in accordance with
and subject to section 4.2, the Trustee shall forthwith give notice to the
Special Warrantholders specifying:
(a) that the Qualification Date has occurred on or before the
Qualification Deadline; and
(b) the duration and expiry of the Exercise Period.
4.6 Method of Exercise of Special Warrants
(1) Subject to section 4.13, the holder of any Special Warrants that are
not retracted may, during the Exercise Period,
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exercise the right thereby conferred to acquire Shares and Warrants by
surrendering to the Trustee at its principal transfer offices in either of the
Cities of Toronto and Vancouver or at any other place or places that may be
designated by the Company with the approval of the Trustee, or to the
Co-transfer Agent at its principal transfer office designated by the Company, a
Special Warrant Certificate or Special Warrant Certificates representing the
Special Warrants held by such holder that are to be exercised, together with a
duly completed and executed exercise form in the form set out in Schedule B
hereto. Except as provided in section 4.10, Special Warrant Certificates shall
only be deemed to have been surrendered upon personal delivery thereof to, or
if sent by mail or other means of transmission upon actual receipt thereof by,
the Trustee or the Co-transfer Agent at one of the offices specified in this
section.
(2) Any exercise form delivered pursuant to subsection 4.6(1) shall be
signed by the Special Warrantholder or the Special Warrantholder's executors or
administrators or other legal representatives or an attorney of the Special
Warrantholder duly appointed by an instrument in writing satisfactory to the
Trustee or the Co-transfer Agent, as the case may be. The exercise form
attached to the Special Warrant Certificate shall specify the number of Special
Warrants being exercised, the person or persons in whose name or names the
Shares and Warrants to be issued upon exercise are to be issued, the person's
or persons' address or addresses and the number of Shares and Warrants to be
issued to each person if more than one is so specified. If any of the Shares
and Warrants to be acquired are to be issued to a person or persons other than
the Special Warrantholder, the Special Warrantholder shall pay to the Trustee
or to its agent all exigible transfer taxes or governmental or other charges
required to be paid in respect of the transfer of the Special Warrants or
Shares or Warrants and the Company will not be required to issue or deliver any
certificate evidencing any Shares or Warrants unless or until that amount has
been so paid or the Special Warrantholder has established to the satisfaction
of the Company that the taxes and charges have been paid or that no taxes or
charges are owing.
(3) If, at the time of exercise of the Special Warrants, there remain
restrictions on resale under applicable securities legislation on the Shares
and Warrants acquired, the Company may, on the advice of counsel, endorse the
certificates representing the Shares and Warrants with respect to those
restrictions.
4.7 Effect of Exercise of Special Warrants
(1) Upon the exercise or deemed exercise of any Special Warrants and
compliance by the holder with section 4.6 and subject to sections 4.9 and 5.4,
the holder of the Special Warrants shall be entitled without further payment
therefor to receive from the Company:
(a) one-half Warrant for each Special Warrant exercised; and
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(b) the number of Shares that is equal to the number of Special Warrants
exercised multiplied by the Exchange Number in effect at the Exercise
Date,
and the Company shall cause the holder thereof to be entered forthwith on its
register of shareholders as the holder of the Shares and on the register of
Warrantholders as the holder of the Warrants and the Shares and Warrants so
acquired shall be deemed to have been issued, and the person or persons to whom
those Shares and Warrants are to be issued shall be deemed to have become the
shareholder or shareholders of record of the Shares and the Warrantholder or
registered Warrantholder of the Warrants on the Exercise Date unless the
register of the Company or the register of Warrantholders shall be closed on
that date, in which case the Shares and Warrants so acquired shall be deemed to
be issued and the person or persons shall be deemed to become the holder or
holders of record thereof on the date or dates on which the registers are
reopened and the Shares and Warrants shall be issued on the later date or
dates.
(2) Upon the exercise or deemed exercise of the Special Warrants as
aforesaid, the Company shall, without charge therefor except as provided in
subsection 4.6(2), forthwith cause to be delivered to the Trustee as agent for,
upon exercise pursuant to section 4.6 the person or persons in whose name or
names the Shares and Warrants so acquired are to be issued as specified in the
exercise form attached to the Special Warrant Certificate, or upon deemed
exercise pursuant to section 4.10 the holder of the Special Warrants deemed
exercised certificates for the appropriate number of Shares and Warrants that
the Special Warrantholder is entitled to and has elected to acquire pursuant to
the Special Warrants exercised. Upon receipt by the Trustee of such
certificates the Trustee shall cause such certificates to be delivered
forthwith in accordance with the written delivery instructions of the holder,
or in the absence of such instructions, by registered mail without charge
therefor, to the person or persons in whose name or names the Shares and
Warrants have been issued at the addresses specified in, upon exercise pursuant
to section 4.6 the exercise form, or upon deemed exercise pursuant to section
4.10 the register for the Special Warrants deemed exercised, and if the
Qualification Date has occurred, a copy of the Final Prospectus, unless a copy
thereof has previously been given by the Company to such person or persons.
4.8 Partial Exercise of Special Warrants
Except as provided for in section 4.10 and paragraph 4.4(1)(b), a Special
Warrantholder may exercise any number of Special Warrants up to the aggregate
number of Special Warrants represented by the Special Warrant Certificate
surrendered. In the event of any exercise of a number of Special Warrants less
than the number which the holder is entitled to exercise, the holder of the
Special Warrants upon such exercise shall be entitled to receive, without
charge therefor, a new Special Warrant Certificate in respect of the balance of
the
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Special Warrants represented by the surrendered Special Warrant Certificate and
which were not then exercised and the Trustee shall issue a new Special Warrant
Certificate upon surrender of such Special Warrant Certificate, if satisfied
that the new Special Warrant Certificate is properly issuable.
4.9 No Fractional Shares or Warrants
Notwithstanding anything herein contained including any adjustment
provided for in Article Five, the Company shall not be obliged to issue any
fractional Shares or Warrants or to distribute certificates which evidence
fractional Shares or Warrants upon the exercise of one or more Special
Warrants. To the extent that the holder of one or more Special Warrants would
otherwise have been entitled to receive on the exercise or partial exercise
thereof a fraction of a Share or Warrant that holder may exercise that right in
respect of the fraction only in combination with other Special Warrants that in
the aggregate entitle the holder to purchase a whole number of Shares and
Warrants. If not so exercised, the Company shall not pay any amounts to the
holder in satisfaction of the right to otherwise have received a fraction of a
Share or Warrant.
4.10 Deemed Exercise of Special Warrants
Immediately prior to the expiry of the Exercise Period, all Special
Warrants not exercised by the holders thereof in accordance with section 4.6
and not retracted in accordance with section 4.4 shall be deemed to have been
then exercised and surrendered by the holder without any further action on the
part of the holder.
4.11 Accounting and Recording
The Trustee shall record the particulars of the Special Warrants
exercised, including the name or names and addresses of the persons who become
holders of Shares and Warrants on exercise and the Exercise Date. Within three
business days of each Exercise Date, the Trustee shall provide those
particulars in writing to the Company.
4.12 Cancellation of Surrendered Special Warrants
All Special Warrant Certificates surrendered to the Trustee shall be
cancelled by the Trustee and, upon request therefor by the Company, the Trustee
shall furnish the Company with a certificate identifying the Special Warrant
Certificates so cancelled and the number of Shares and Warrants which have been
issued pursuant to each.
4.13 Exercise Restrictions
Notwithstanding the foregoing, Special Warrant Certificates bearing the
U.S. Legend may only be exercised pursuant
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to this Article Four provided that the certificates representing the Shares and
Warrants delivered upon such exercise shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT
OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN
ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (C)
INSIDE THE UNITED STATES IN ACCORDANCE WITH (1) CERTAIN PROCEDURES
SATISFACTORY TO THE COMPANY OR (2) RULE 144 UNDER THE SECURITIES ACT, IF
AVAILABLE. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY"
IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A NEW
CERTIFICATE, BEARING NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD
DELIVERY" MAY BE OBTAINED FROM MONTREAL TRUST COMPANY OF CANADA UPON
DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM
SATISFACTORY TO MONTREAL TRUST COMPANY OF CANADA AND THE COMPANY, TO THE
EFFECT THAT THE SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN
COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT.
ARTICLE FIVE
Adjustment of Exercise Number
5.1 Definitions
In this Article the terms "record date" and "effective date" where used
herein shall mean 4:30 p.m. (Vancouver time) on the relevant date.
5.2 Adjustment of Exercise Number
The Exercise Number (or the number and kind of Shares or securities to be
received upon exercise in the case of subsections 5.2(4) and 5.2(5) below)
shall be subject to adjustment from time to time in the events and in the
manner provided in section 5.3 and as follows:
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(1) If during the Exercise Period the Company:
(a) issues to all or substantially all the holders of the Shares by way
of a stock dividend or otherwise Shares or Convertible Securities,
other than (i) the issue from time to time of Shares or Convertible
Securities by way of stock dividend to shareholders who elect to
receive Shares or Convertible Securities in lieu of cash dividends in
the ordinary course or pursuant to a dividend reinvestment plan or
(ii) as dividends paid in the ordinary course; or
(b) subdivides or redivides its outstanding Shares into a greater number
of Shares; or
(c) combines, consolidates or reduces its outstanding Shares into a
smaller number of Shares
(any of those events being herein called a "Share Reorganization"),
the Exercise Number shall be adjusted effective immediately after the record
date at which the holders of Shares are determined for the purposes of the
Share Reorganization or the effective date if no record date is fixed to a
number that is the product of (1) the Exercise Number in effect on the record
date and (2) a fraction:
(i) the numerator of which shall be the number of Shares outstanding
after giving effect to the Share Reorganization; and
(ii) the denominator of which shall be the number of Shares
outstanding on the record date before giving effect to the Share
Reorganization.
For the purposes of determining the number of Shares outstanding at any
particular time for the purpose of this subsection 5.2(1) there shall be
included that number of Shares which would have resulted from the conversion at
that time of all outstanding Convertible Securities (which, for greater
certainty, includes Warrants issued prior to the end of the Exercise Period,
pursuant to the exercise of Special Warrants).
(2) If during the Exercise Period the Company shall issue rights, options
or warrants (other than the Warrants) to all or substantially all the holders
of the Shares pursuant to which those holders are entitled to subscribe for,
purchase or otherwise acquire Shares or Convertible Securities within a period
of 45 days from the date of issue thereof at a price per share, or at a
conversion price per share, of less than 95% of the Current Market Price at the
record date for such distribution (any such issuance being herein called a
"Rights Offering" and Shares that may be acquired in exercise of the Rights
Offering, or upon conversion of
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the Convertible Securities offered by the Rights Offering, being herein called
the "Offered Shares"), the Exercise Number shall be adjusted effective
immediately after the record date at which holders of Shares are determined for
the purposes of the Rights Offering to an Exercise Number that is the product
of (1) the Exercise Number in effect on the record date and (2) a fraction:
(i) the numerator of which shall be the sum of (a) the number of
Shares outstanding on the record date plus (b) the number of
Offered Shares offered pursuant to the Rights Offering or the
maximum number of Offered Shares into which the Convertible
Securities so offered pursuant to the Rights Offering may be
converted, as the case may be; and
(ii) the denominator of which shall be the sum of:
(A) the number of Shares outstanding on the record date; and
(B) the number arrived at when (I) either the product of (a)
the number of Offered Shares so offered and (b) the price
at which those shares are offered, or the product of (c)
the conversion price thereof and (d) the maximum number of
Offered Shares for or into which the Convertible Securities
so offered pursuant to the Rights Offering may be
converted, as the case may be, is divided by (II) the
Current Market Price of the Shares on the record date.
Any Offered Shares owned by or held for the account of the Company or a
subsidiary of the Company shall be deemed not to be outstanding for the purpose
of any such computation; if all the rights, options or warrants are not so
issued or if all rights, options or warrants are not exercised prior to the
expiration thereof, the Exercise Number shall be readjusted to the Exercise
Number in effect immediately prior to the record date, and the Exercise Number
shall be further adjusted based upon the number of Offered Shares (or
Convertible Securities that are convertible into Offered Shares) actually
delivered upon the exercise of the rights, options or warrants, as the case may
be, but subject to any other adjustment required hereunder by reason of any
event arising after that record date.
(3) If during the Exercise Period the Company shall issue or distribute to
all or substantially all the holders of Shares, (i) shares of any class other
than Shares, or (ii) rights, options or warrants other than Warrants and other
than rights, options or warrants exercisable within 45 days from the date of
issue thereof at a price, or at a conversion price, of at least 95% of the
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Current Market Price at the record date for such distribution, or (iii)
evidences of indebtedness, or (iv) any other cash, securities or other property
or assets (excluding cash dividends that Special Warrantholders receive under
section 6.5) and that issuance or distribution does not constitute a Share
Reorganization or a Rights Offering (any of those events being herein called a
"Special Distribution"), the Exercise Number shall be adjusted effective
immediately after the record date at which the holders of Shares are determined
for purposes of the Special Distribution to an Exercise Number that is the
product of (1) the Exercise Number in effect on the record date and (2) a
fraction:
(i) the numerator of which shall be the product of (I) the sum of
the number of Shares outstanding on the record date plus the
number of Shares which the Special Warrantholders would be
entitled to receive upon exercise of all their outstanding
Special Warrants if they were exercised on the record date and
(II) the Current Market Price thereof on that date; and
(ii) the denominator of which shall be:
(A) the product of (I) the sum of the number of Shares
outstanding on the record date plus the number of Shares
which the Special Warrantholders would be entitled to
receive upon exercise of all their outstanding Special
Warrants if they were exercised on the record date and (II)
the Current Market Price thereof on the earlier of such
record date and the date on which the Company announces its
intention to make such distribution;
less
(B) the aggregate fair market value, as determined by the board
at the time such distribution is authorized, whose
determination shall be conclusive, of the shares, rights,
options, warrants, evidences of indebtedness or other
assets issued or distributed in the Special Distribution.
Any Shares owned by or held for the account of the Company shall be deemed not
to be outstanding for the purpose of any such computation; to the extent that
the distribution of shares, rights, options, warrants, evidences of
indebtedness or assets is not so made or to the extent that any rights, options
or warrants so distributed are not exercised, the Exercise Number shall be
readjusted to the Exercise Number that would then be in effect based upon
shares, rights, options, warrants, evidences of
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indebtedness or assets actually distributed or based upon the number of Shares
or Convertible Securities actually delivered upon the exercise of the rights,
options or warrants, as the case may be, but subject to any other adjustment
required hereunder by reason of any event arising after the record date.
(4) If during the Exercise Period there is a reorganization of the Company
not otherwise provided for in subsection 5.2(1) or a consolidation or merger or
amalgamation of the Company with or into another body corporate including a
transaction whereby all or substantially all of the Company's undertaking and
assets become the property of any other corporation through sale, lease,
exchange or otherwise (any such event being herein called a "Capital
Reorganization") any holder of a Special Warrant who has not exercised his
right to exchange his Special Warrant for Shares and Warrants prior to the
effective date of the Capital Reorganization shall be entitled to receive and
shall accept, upon the exercise of his right at any time after the effective
date of the Capital Reorganization, in lieu of the number of Shares and
Warrants (and any other securities or properties to which holders are entitled
upon exercise of the Special Warrants) to which he was theretofore entitled
upon exercise of the Special Warrant, the aggregate number of shares or other
securities or property of the Company, or the continuing, successor or
purchasing corporation, as the case may be, under the Capital Reorganization
that the holder would have been entitled to receive as a result of the Capital
Reorganization if, on the effective date thereof, he had been the holder of the
number of Shares and Warrants (and any other securities to which holders are
entitled upon exercise of the Special Warrants) to which immediately before the
transaction he was entitled upon exercise of the Special Warrants; no Capital
Reorganization shall be carried into effect unless all necessary steps shall
have been taken so that the holders of Special Warrants shall thereafter be
entitled to receive the number of shares or other securities or property of the
Company, or of the continuing, successor or purchasing corporation, as the case
may be, under the Capital Reorganization, subject to adjustment thereafter in
accordance with provisions the same, as nearly as may be possible, as those
contained in this section 5.2 and in section 5.3.
(5) If the Company shall reclassify or otherwise change the outstanding
Shares, the exercise right shall be adjusted effective immediately upon the
reclassification becoming effective so that holders of Special Warrants who
exercise their rights thereafter shall be entitled to receive such shares as
they would have received had the Special Warrants been exercised immediately
prior to the effective date, subject to adjustment thereafter in accordance
with provisions the same, as nearly as may be possible, as those contained in
this section 5.2 and in section 5.3.
5.3 Subscription Rights Adjustment Rules
The following rules and procedures shall be applicable to adjustments made
pursuant to section 5.2:
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(1) The adjustments and readjustments provided for in this Article Five
are cumulative and, subject to subsection 5.3(2), shall apply (without
duplication) to successive issues, subdivisions, combinations, consolidations,
distributions and any other events that require adjustment of the Exercise
Number or the number or kind of shares or securities purchasable hereunder.
(2) No adjustment in the Exercise Number shall be required unless the
adjustment would result in a change of at least 1% in the Exercise Number then
in effect provided, however, that any adjustments that, except for the
provisions of this subsection 5.3(2) would otherwise have been required to be
made, shall be carried forward and taken into account in any subsequent
adjustment.
(3) No adjustment in the Exercise Number shall be made in respect of any
event described in paragraph 5.2(l)(a) or subsections 5.2(2) or 5.2(3) if the
holders of the Special Warrants are entitled to participate in the event on the
same terms, mutatis mutandis, as if they had exercised their Special Warrants
immediately prior to the effective date or record date of the event.
(4) No adjustment in the Exercise Number shall be made pursuant to section
5.2 in respect of the issue of Shares, rights, options or warrants pursuant
(a) to this Indenture;
(b) the issuance of Shares pursuant to the exercise of directors,
officers and employees options or options granted for services in
accordance with the rules of The Toronto Stock Exchange;
(c) the issuance of Shares pursuant to the exercise of Warrants (except
that the number of Convertible Securities will increase if Warrants
are issued prior to the end of the Exercise Period); or
(d) the issuance of any special warrants to L.B. Mining Co. or any
affiliate thereof in part consideration for the acquisition of the
Guariche property in Venezuela, the issuance of any Shares pursuant
to the exercise of such special warrants, the issuance of any common
share purchase warrants pursuant to the exercise of such special
warrants, and the issuance of any Shares pursuant to the exercise of
such common share purchase warrants (except that the number of
Convertible Securities will increase if such common share purchase
warrants are issued prior to the expiry of their exercise period);
and any such issue shall be deemed not to be a Share Reorganization, a Rights
Offering or a Special Distribution.
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(5) If a dispute shall at any time arise with respect to adjustments of
the Exercise Number, the dispute shall be conclusively determined (as between
the Company, the Special Warrantholders, the Trustee and all transfer agents
and shareholders of the Company) by the auditors of the Company or if they are
unable or unwilling to act, by such firm of independent chartered accountants
as may be selected by the directors and any such determination shall be binding
upon the Company, the Special Warrantholders, the Trustee and all transfer
agents and shareholders of the Company.
(6) If the Company shall set a record date to determine the holders of
Shares for the purpose of entitling them to receive any dividend or
distribution or any subscription or purchase rights and shall, thereafter
legally abandon its plans to pay or deliver the dividend, distribution or
subscription or purchase rights, then no adjustment in the Exercise Number
shall be required by reason of the setting of the record date.
5.4 Postponement of Subscription
In any case where the application of section 5.2 results in an increase of
the Exercise Number taking effect immediately after the record date for or
occurrence of a specific event, if any Special Warrants are exercised after
that record date or occurrence and prior to completion of the event or of the
period for which a calculation is required to be made, the Company may postpone
the issuance to the holder of the Special Warrants of the Shares to which the
holder is entitled by reason of the increase of the Exercise Number but the
Shares shall be so issued and delivered to that holder upon completion of that
event or period, with the number of those Shares calculated on the basis of the
Exercise Number on the Exercise Date adjusted for completion of that event or
period, and the Company shall forthwith after the Exercise Date deliver to the
person or persons in whose name or names the Shares are to be issued an
appropriate instrument evidencing the person's or persons' right to receive the
Shares.
5.5 Notice of Certain Events
(1) Upon the occurrence of any event referred to in sections 5.2 or 5.3
that requires an adjustment in the Exercise Number, the Company shall promptly
thereafter:
(a) file with the Trustee a certificate of the Company specifying the
particulars of the event and, if determinable, the adjustment and a
computation of the adjustment; and
(b) give notice to the Special Warrantholders of the particulars of the
event and, if determinable, the adjustment.
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(2) If notice has been given under subsection 5.5(1) and the adjustment is
not then determinable, the Company shall promptly after the adjustment is
determinable:
(a) file with the Trustee a certificate of the Company evidencing the
computation of the adjustment; and
(b) give notice to the Special Warrantholders of the adjustment.
5.6 Protection of Trustee
Subject to sections 10.2 and 10.3, the Trustee shall not at any time be
under any duty or responsibility to any Special Warrantholder to determine
whether any facts exist which may require any adjustment contemplated by
section 5.2, 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.
5.7 Proceedings Prior to Any Action Requiring Adjustment
As a condition precedent to the taking of any action which would require
an adjustment in any of the acquisition rights pursuant to any of the Special
Warrants, including the number of Shares which are to be received upon the
exercise of the Special Warrants, the Company shall take any corporate action
which may, in the opinion of counsel, be necessary in order that the Company
has unissued and reserved in its authorized capital and may validly and legally
issue as fully paid and non-assessable all the Shares which the holders of such
Special Warrants are entitled to receive on the full exercise thereof in
accordance with the provisions hereof.
ARTICLE SIX
Rights and Covenants
6.1 Purchase of Special Warrants
(1) The Company may from time to time purchase any of the Special Warrants
in such manner, from such persons and on such terms as the Company may
determine.
6.2 General Covenants of the Company
The Company covenants with the Trustee that so long as any Special
Warrants remain outstanding and may be exercised for Shares and Warrants:
(1) The Company will at all times maintain its existence; carry on and
conduct its business in a prudent manner in accordance with industry standards
and good business practice; keep or cause to be kept proper books of account in
accordance with applicable law; and, if and whenever required in writing by the
Trustee, file
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with the Trustee copies of all annual financial statements of the Company
furnished to its shareholders during the term of this Indenture.
(2) The Company shall maintain the listing of the Shares on The Toronto
Stock Exchange, and will take all steps necessary to ensure that the Shares
issuable upon exercise of the Special Warrants and Warrants will be listed and
posted for trading on The Toronto Stock Exchange upon their issue.
(3) The Company will reserve and keep available a sufficient number of
Shares for issuance upon the exercise or deemed exercise of Special Warrants
issued by the Company hereunder and for issuance upon the exercise of Warrants.
(4) The Company will cause the Shares and Warrants from time to time
subscribed for pursuant to the exercise or deemed exercise of the Special
Warrants issued by the Company hereunder, in the manner herein provided, to be
duly issued in accordance with the Special Warrants and the terms hereof.
(5) The Company will cause the certificates representing the Shares and
Warrants from time to time to be acquired pursuant to the Special Warrants in
the manner herein provided, to be duly issued and delivered in accordance with
the Special Warrants and the terms hereof.
(6) All Shares that shall be issued by the Company upon exercise or deemed
exercise of the Special Warrants as provided for herein shall be issued as
fully paid and non-assessable.
(7) The Company will use its best efforts to maintain its status as a
"reporting issuer" not in default of the requirements of the Securities Laws
for a period of at least one year from the date hereof.
(8) As expeditiously as reasonably practicable, the Company shall prepare
and file under the Securities Laws a preliminary prospectus and other documents
required to be filed therewith relating to the proposed distribution of Shares
and Warrants to holders of Special Warrants upon the exercise thereof.
(9) The Company will use its reasonable best efforts to resolve any
comments on the preliminary prospectus by the Securities Commissions and to
prepare and file under the Securities Laws the Final Prospectus and other
related documents required to be filed therewith and to take all other steps
and proceedings that may be necessary in order to qualify the Shares and
Warrants to be issued upon exercise of the Special Warrants for distribution in
each of the Provinces through registrants who comply with the relevant
provisions of applicable Securities Laws.
(10) The Company shall use its reasonable best efforts to ensure that the
Qualification Date occurs on or before the
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Qualification Deadline. However, if the Qualification Date does not occur on
or before the Qualification Deadline, the Company shall continue to use its
reasonable best efforts to ensure that the Qualification Date occurs prior to
the end of the Exercise Period.
(11) Generally, the Company will well and truly perform and carry out all
the acts or things to be done by it as provided in this Indenture.
6.3 Trustee's Remuneration and Expenses
(1) The Company covenants that it will pay to the Trustee from time to
time such reasonable remuneration for its services hereunder as may be agreed
upon between the Company and the Trustee and will pay or reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in the administration or execution of the
trusts hereby created (including the reasonable compensation and the
disbursements of counsel and all other advisers and assistants not regularly in
its employ), both before any default hereunder and thereafter until all duties
of the Trustee under the trusts hereof shall be finally and fully performed,
except any expense, disbursement or advance as may arise from the negligence,
wilful misconduct or bad faith of the Trustee or of persons for whom the
Trustee is responsible.
(2) The Trustee shall not have a lien against any of the funds deposited
with it and held in escrow pursuant to section 6.4 in respect of its
remuneration or expenses, disbursements and advances.
6.4 Escrow of Funds
The Company agrees to deposit with the Trustee prior to the issue of each
Special Warrant all proceeds received by the Company from the issue and sale of
such Special Warrant, and the Trustee shall hold the proceeds received from the
Company in trust upon and subject to the following irrevocable authorizations
and instructions, and the Company hereby irrevocably authorizes and instructs
the Trustee:
(1) to retain the balance of the proceeds in trust for the benefit of the
Company and the Special Warrantholders, as their respective interests may
appear from time to time, to be distributed by the Trustee as hereinafter
provided;
(2) if, prior to the Trustee having received from the Company a Notice of
Compliance or a Notice of Non- Compliance, any Special Warrantholder exercises
any of his Special Warrants in accordance with Article 4:
(a) pay to such Special Warrantholder, within five business days of the
surrender of the Special Warrant Certificate
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or Special Warrant Certificates representing such Special Warrants
exercised, an amount for each Share issuable on the exercise of such
Special Warrants that is equal to the aggregate amount of cash
dividends paid on each Share from the date hereof until the Exercise
Date and, without duplication, the amount for each Share, if any, of
cash dividends declared payable but not paid to holders of Shares of
record from the date hereof and until the Exercise Date together with
a proportionate share of all interest earned thereon after the
dividend payment date; and
(b) pay to the Company either contemporaneously with any payment made
pursuant to paragraph 6.4(2)(a) above or, if no such payment is made,
within five business days of the surrender of the Special Warrant
Certificate or Special Warrant Certificates representing the Special
Warrants exercised in an amount equal to the Special Warrant Purchase
Price received by the Trustee in respect of such Special Warrants
together with the proportionate share of all interest earned thereon
in the hands of the Trustee from the date hereof to and including the
date immediately preceding the date of such payment, less the
aggregate amount paid in lieu of dividends pursuant to paragraph
6.4(2)(a) in respect of such Special Warrants;
(3) if the Trustee has received from the Company a Notice of Compliance in
accordance with section 4.2 and the certificate referred to in section 6.8:
(a) pay on or before the fifth business day following the end of the
Exercise Period to each Special Warrantholder who has surrendered or
is deemed to have surrendered his Special Warrants (other than any
previously exercised Special Warrants to which subsection 6.4(2)
applies) an amount for each Share issuable on the exercise or deemed
exercise of such Special Warrants (other than any previously
exercised Special Warrants to which subsection 6.4(2) applies) that
is equal to the aggregate amount of cash dividends paid on each Share
from the date hereof until the Exercise Date and, without
duplication, the amount for each Share, if any, of cash dividends
declared and payable but not paid to holders of Shares of record from
the date hereof until the Exercise Date, together with a
proportionate share of all interest earned thereon after the dividend
payment date; and
(b) pay to the Company on the fifth business day following the end of the
Exercise Period an amount equal to the aggregate Special Warrant
Purchase Price received by the Trustee in respect of Special Warrants
issued by the Company hereunder together with a proportionate share
of all interest earned thereon in the hands of the Trustee
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from the date hereof to and including the date immediately preceding
the date of such payment less:
(i) the aggregate amount paid to the Company pursuant to subsection
6.4(2);
(ii) the aggregate amount paid in lieu of dividends pursuant to
paragraphs 6.4(2)(a) and 6.4(3)(a) in respect of Special
Warrants issued by the Company hereunder; and
(iii) the Company's share of any amounts paid to the Trustee pursuant
to section 6.3;
(4) if the Trustee has received from the Company a Notice of
Non-Compliance in accordance with section 4.2:
(a) pay on or before the fifth business day following the end of the
Retraction Period to or at the written direction of each Special
Warrantholder who has elected to retract all of his Special Warrants
in accordance with the provisions of section 4.4, the aggregate
Special Warrant Purchase Price for his Special Warrants together with
all interest earned thereon in the hands of the Trustee from the date
hereof to and including the date immediately preceding the date of
such payment (less any tax required to be withheld therefrom); and
(b) pay on or before the fifth business day following the end of the
Retraction Period to the Special Warrantholders who have exercised or
are deemed to have exercised their Special Warrants pursuant to
sections 4.6 or 4.10 and pay on the fifth business day following the
end of the Retraction Period to the Company in respect of the Special
Warrants of Special Warrantholders who have not retracted their
Special Warrants and who have exercised or are deemed to have
exercised their Special Warrants pursuant to section 4.6 or 4.10 the
monies specified in subsection 6.4(3).
For purposes of the determination of proportionate shares of interest
earned in the hands of the Trustee to be paid under this section 6.4, the
determinations shall be based on the number of Special Warrants held by the
recipient at the time of the payment and the length of time the amount has been
on deposit for the benefit of the recipient, which in respect of any payment
payable in lieu of dividends shall be deemed to be from the date on which the
dividend was paid.
6.5 Right to Dividends or Distributions
If during the period commencing on the date hereof and ending on the
Exercise Date, the Company shall pay any dividend or make any distribution to
all or substantially all of the holders of
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Shares or if the Company declares any dividend, or provides for any
distribution, payable to all or substantially all the holders of Shares of
record during that period, Special Warrantholders who exercise or are deemed to
have exercised their Special Warrants shall be entitled to participate in the
dividend or distribution on the same terms, mutatis mutandis, as if they
exercised their Special Warrants immediately prior to the effective date or
record date of the dividend or distribution. For cash dividends this
entitlement shall be satisfied, to the extent of any payment received under
section 6.4, without duplication, by the payment received under section 6.4.
For stock dividends or distributions in respect of which an adjustment can be
made in the Exercise Number pursuant to paragraph 5.2(1)(a) or subsections
5.2(2) or 5.2(3), this entitlement shall be satisfied by such an adjustment.
6.6 Investment of Funds
Funds deposited hereunder with the Trustee shall, pending any payment out
thereof as required in accordance with section 6.4, be invested by the Trustee
in accordance with section 10.4 hereof.
6.7 Performance of Covenants by Trustee
If the Company shall fail to perform any of its covenants and obligations
contained in this Indenture, the Trustee may notify the Special Warrantholders
of the 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
do so or to notify the Special Warrantholders. All sums expended or advanced by
the Trustee in so doing shall be repayable as provided in section 6.3. No
performance, expenditure or advance by the Trustee shall be deemed to relieve
the Company of any default or of its continuing obligations hereunder.
6.8 Certificate of the Company
The Company shall deliver to the Trustee, on each exercise date and the
same date that it delivers either the Notice of Compliance or the Notice of
Non-Compliance to the Trustee, a certificate indicating the Exercise Number as
at that date and whether or not any dividends or distributions referred to in
section 6.5 have been made.
6.9 Rescission Right
The Company covenants with the Trustee to provide a right of rescission to
each Special Warrantholder as hereinafter set forth, which right shall be
exercisable either by the Trustee on behalf of a Special Warrantholder or by a
Special Warrantholder directly:
In the event that any holder of Special Warrants who acquires Shares and
Warrants upon the exercise or deemed exercise of his Special
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Warrants is or becomes entitled under applicable securities legislation to
the remedy of rescission by reason of the Final Prospectus or any
amendment thereto containing a misrepresentation, such holder shall be
entitled to rescission not only of such holder's exercise of such Special
Warrants but also of the purchase of such Special Warrants hereunder, and
shall be entitled in connection with such rescission to a full refund of
all consideration paid to the Company on the acquisition of such Special
Warrants. In the event such holder is a permitted assignee of the interest
of the original purchaser of such Special Warrants, such permitted
assignee shall be entitled to exercise the rights of rescission and refund
granted hereunder as if such permitted assignee were such original
purchaser. The foregoing is in addition to any other right or remedy
available to a holder of the Special Warrants under section 114 of the
Securities Act (British Columbia), section 130 of the Securities Act
(Ontario) or a corresponding provision of other securities legislation or
otherwise at law.
ARTICLE SEVEN
Enforcement
7.1 Suits by Special Warrantholders
(1) All or any of the rights conferred upon any Special Warrantholder by
any of the terms of the Special Warrants or of this Indenture, or both of them,
may be enforced by the Special Warrantholder by appropriate legal proceedings,
but without prejudice to the right which is hereby conferred upon the Trustee
to proceed in its own name to enforce each and all of the provisions herein
contained for the benefit of all Special Warrantholders, subject, in each case,
to the provisions of section 8.11.
7.2 Immunity of Shareholders
The Trustee, and by their acceptance of the Special Warrant Certificates
and as part of the consideration for the issue of the Special Warrants, the
Special Warrantholders, hereby waive and release any right, cause of action or
remedy now or hereafter existing in any jurisdiction against any past, present
or future shareholder, director or officer of the Company or of any of the
subsidiaries of the Company, or any subsidiary of the Company, in their
capacity as such, for the issue of Shares and Warrants
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pursuant to any Special Warrants or on any covenant, agreement, representation
or warranty by the Company contained herein or in the Special Warrant
Certificates.
7.3 Limitation of Liability
The obligations hereunder are not personally binding upon, nor shall
resort hereunder be had to, the private property of any of the past, present or
future directors, shareholders, officers, employees or agents of the Company or
any of the subsidiaries of the Company, or any subsidiary of the Company, but
only the property of the Company (or any successor corporation) shall be bound
in respect hereof.
ARTICLE EIGHT
Meetings of Special Warrantholders
8.1 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 Special Warrantholders' Request, and
upon being indemnified to its reasonable satisfaction by the Company or by one
or more of the Special Warrantholders signing the Special Warrantholders'
Request against the costs that may be incurred in connection with the calling
and holding of the meeting, convene a meeting of the Special Warrantholders. In
the event of the Trustee failing, within 15 days after receipt of the written
request of the Company or Special Warrantholders' Request and indemnity given
as aforesaid, to give notice convening a meeting, the Company or the Special
Warrantholders, as the case may be, may convene the meeting. Every meeting
shall be held in the City of Vancouver or at such other place as may be
approved or determined by the Trustee.
8.2 Notice
At least 14 days' notice of any meeting shall be given to the Special
Warrantholders in the manner provided in section 11.2 and a copy of the notice
shall be sent by mail to the Trustee unless the meeting has been called by it,
and to the Company unless the meeting has been called by it. Each notice shall
state the time when and the place where the meeting is to be held and shall
state briefly the general nature of the business to be transacted thereat and
it shall not be necessary for the notice to set out the terms of any resolution
to be proposed or any of the provisions of this Article Eight. Any accidental
omission in the notice of a meeting shall not invalidate any resolution passed
at the meeting.
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8.3 Chairman
A person (who need not be a Special Warrantholder) designated in writing
by the Trustee shall be chairman of the meeting, and if no person is so
designated, or if the person so designated is not present within 15 minutes
from the time fixed for the holding of the meeting, the Special Warrantholders
present in person or by proxy shall choose a person present to be chairman.
8.4 Quorum
Subject to the provisions of section 8.12, at any meeting of the Special
Warrantholders a quorum shall consist of one or more Special Warrantholders
present in person or by proxy and holding in aggregate, at least 20% of the
aggregate number of Shares and Warrants that could be acquired pursuant to all
the then outstanding Special Warrants. If a quorum of the Special
Warrantholders shall not be present within half an hour from the time fixed for
holding a meeting, the meeting, if summoned by the Special Warrantholders
pursuant to a Special Warrantholders' Request, shall be dissolved; but, subject
to section 8.12, in any other case the meeting shall be adjourned to the same
day in the next week (unless that day is not a business day, in which event the
meeting shall be reconvened on the next day that is a business day) at the same
time and place and no notice of the adjournment need be given. At the adjourned
meeting the Special Warrantholders present in person or by proxy shall form a
quorum and may transact the business for which the meeting was originally
convened, notwithstanding that they may not be entitled to acquire at least 20%
of the aggregate number of Shares and Warrants that can be acquired pursuant to
all the then outstanding Special Warrants.
8.5 Power to Adjourn
The chairman of any meeting at which a quorum of the Special
Warrantholders is present may, with the consent of the meeting, adjourn the
meeting and no notice of the adjournment need be given except such notice, if
any, as the meeting may prescribe.
8.6 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 meeting, unless a poll is duly demanded or required as herein provided, a
declaration by the chairman 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.
8.7 Poll
On every Extraordinary Resolution, and on any other question submitted to
a meeting upon which a poll is directed by
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the chairman or requested by one or more of the Special Warrantholders acting
in person or by proxy and holding in the aggregate not less than 5% of the
aggregate number of Shares and Warrants that could be acquired pursuant to all
the Special Warrants then outstanding, a poll shall be taken in such manner as
the chairman shall direct. Questions other than an Extraordinary Resolution
shall be decided by a majority of the votes cast on a poll. The results of a
poll shall be deemed to be the decision of the meeting at which the poll was
demanded and shall be binding on all Special Warrantholders.
8.8 Voting
On a show of hands, every person who is present and entitled to vote,
whether as a Special Warrantholder or as proxy for one or more absent Special
Warrantholders or both, shall have one vote. On a poll each Special
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 Special
Warrant then held by him. A proxy need not be a Special Warrantholder.
8.9 Regulations
The Trustee, or the Company with the approval of the Trustee, may from
time to time make or vary such regulations as they shall think fit:
(a) for the issue of voting certificates by any bank, trust company or
other depository satisfactory to the Trustee stating that the Special
Warrants specified therein have been deposited with the depository by
a named person and will remain on deposit until a specified date,
which voting certificates shall entitle the persons named therein to
be present and vote at the meeting of the Special Warrantholders and
at any adjournment thereof held before that date or to appoint a
proxy or proxies to represent them and vote for them at any such
meeting and at any adjournment thereof held before that date in the
same manner and with the same effect as though the persons so named
in the voting certificates were the actual holders of the Special
Warrants specified therein;
(b) for the deposit of voting certificates and/or instruments appointing
proxies at such place and time as the Trustee, the Company or the
Special Warrantholders convening the meeting, as the case may be, may
in the notice convening the meeting direct;
(c) for the deposit of voting certificates and/or instruments appointing
proxies at some approved place or places other than the place at
which the meeting is to be held and enabling particulars of the
voting certificates and/or instruments appointing proxies to be sent
by mail, cable, telex or other means of prepaid, transmitted,
recorded
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communication 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;
(d) for the form of instrument appointing a proxy (which shall be in
writing), the manner in which the same shall be executed and the
verification of any authority under which a person executes a proxy
on behalf of a Special Warrantholder; and
(e) generally for the calling of meetings of Special 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 the
regulations may provide, the only persons who shall be recognized at any
meeting as the holders of any Special Warrants, or as entitled to vote or,
subject to section 8.10, be present at the meeting in respect thereof, shall be
persons who are the registered holders of Special Warrants or their duly
appointed proxyholders.
8.10 Company and Trustee may be Represented
The Company and the Trustee, by their respective officers or directors,
and the counsel to the Company and the Trustee may attend any meeting of the
Special Warrantholders, but shall have no vote as such.
8.11 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 Special Warrantholders at a meeting
shall have the following powers exercisable from time to time by Extraordinary
Resolution:
(a) power to agree to or sanction any modification, abrogation,
alteration, compromise or arrangement of the rights of Special
Warrantholders and/or the Trustee in its capacity as trustee
hereunder or on behalf of the Special Warrantholders against the
Company, whether those rights arise under this Indenture or otherwise
which shall be agreed to by the Company, and to authorize the Trustee
to concur in and execute any indenture supplement, except that in
respect of a change in the Exercise Period or the Special Warrant
Consideration the amendment shall not be binding upon a Special
Warrantholder who does not consent thereto;
(b) power to direct or authorize the Trustee to enforce any of the
obligations on the part of the Company contained in this Indenture or
the Special Warrants or to enforce any of the rights of the Special
Warrantholders in any
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manner specified in the Extraordinary Resolution or to refrain from
enforcing any such covenant or right;
(c) power 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 the Special Warrants, either unconditionally or upon any
conditions specified in the Extraordinary Resolution;
(d) power to restrain any Special Warrantholder from taking or
instituting any suit, action or proceeding against the Company for
the enforcement of any of the obligations on the part of the Company
contained in this Indenture or to enforce any of the rights of the
Special Warrantholders except for a suit or action against the
Company to compel payment to a Special Warrantholder in respect of
monies owing to him in accordance with the provisions of section 6.5;
(e) power to direct any Special Warrantholder who, as such, has brought
any suit, action or proceeding to stay or discontinue or otherwise
deal with the same upon payment of the costs, charges and expenses
reasonably and properly incurred by the Special Warrantholder in
connection therewith;
(f) power from time to time and at any time, with the consent of the
Company, not to be unreasonably withheld, to remove the Trustee and
appoint a successor trustee;
(g) power to assent to any compromise or arrangement with any creditor or
any class of creditors, whether secured or otherwise, and with
holders of any Shares or other securities of the Company; and
(h) power to amend, alter or repeal any Extraordinary Resolution
previously passed or consented to by Special Warrantholders.
8.12 Meaning of "Extraordinary Resolution"
(1) The expression "Extraordinary Resolution" when used in this Indenture
means, subject as hereinafter in this section and in sections 8.15 and 8.16
provided, a resolution proposed at a meeting of the Special Warrantholders duly
convened for that purpose and held in accordance with the provisions of this
Article Eight at which there are present in person or by proxy one or more
Special Warrantholders entitled to acquire at least 51% of the aggregate number
of Shares and Warrants that can be acquired pursuant to all the then
outstanding Special Warrants and passed by the affirmative votes of Special
Warrantholders entitled to acquire not less than two-thirds of the aggregate
number of Shares and Warrants that can be acquired pursuant to all the Special
Warrants represented at the meeting and voted on the poll upon the resolution.
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(2) If, at any meeting called for the purpose of passing an Extraordinary
Resolution, Special Warrantholders entitled to acquire 51% of the aggregate
number of Shares and Warrants that can be acquired pursuant to all the then
outstanding Special Warrants are not present in person or by proxy within half
an hour after the time appointed for the meeting, then the meeting, if convened
by Special Warrantholders pursuant to a Special Warrantholders' Request, shall
be dissolved; but in any other case it shall stand adjourned to such day, being
not less than 15 or more than 60 days later, and to such place and time as may
be appointed by the chairman. Not less than ten days' notice shall be given to
the Special Warrantholders of the time and place of the adjourned meeting in
the manner provided in section 11.2. The notice shall state that at the
adjourned meeting the Special Warrantholders present in person or by proxy
shall form a quorum but it shall not be necessary to set forth the purposes for
which the meeting was originally called or any other particulars. At the
adjourned meeting the Special Warrantholders present in person or by proxy
shall form a quorum and may transact the business for which the meeting was
originally convened and a resolution proposed at the adjourned meeting and
passed by the requisite vote as provided in subsection 8.12(1) shall be an
Extraordinary Resolution within the meaning of this Indenture notwithstanding
that the Special Warrantholders entitled to acquire 51% of the aggregate number
of Shares and Warrants that can be acquired pursuant to all the then
outstanding Special Warrants are not present in person or by proxy at the
adjourned meeting.
(3) 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.
8.13 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
Special Warrantholders by Extraordinary Resolution or otherwise may be
exercised from time to time and the exercise of any one or more of the powers
or any combination of the powers from time to time shall not prevent the
Special Warrantholders from exercising that power or those powers or
combination of powers then or any other power or powers or combination of
powers thereafter from time to time.
8.14 Minutes
Minutes of all resolutions and proceedings at every meeting of Special
Warrantholders as aforesaid shall be made and duly entered in books from time
to time to be provided for that purpose by the Trustee at the expense of the
Company, and any minutes as aforesaid, if signed by the chairman of the meeting
at which such resolutions were passed or proceedings were taken, shall be prima
facie evidence of the matters therein stated and, until the contrary is proved,
every meeting, in respect of the
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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, to have been duly passed and taken.
8.15 Instruments in Writing
All actions that may be taken and all powers that may be exercised by the
Special Warrantholders at a meeting held as in this Article Eight provided may
also be taken and exercised by Special Warrantholders entitled to acquire
two-thirds of the aggregate number of Shares and Warrants that can be acquired
pursuant to all the then outstanding Special Warrants by an instrument in
writing signed in one or more counterparts by each Special Warrantholder in
person or by attorney duly appointed in writing and the expression
"Extraordinary Resolution" when used in this Indenture shall include a
resolution embodied in an instrument so signed.
8.16 Binding Effect of Resolutions
Every resolution and every Extraordinary Resolution passed in accordance
with the provisions of this Article Eight at a meeting of Special
Warrantholders shall be binding upon all the Special Warrantholders, except as
provided in subsection 8.11(a), whether present at or absent from the meeting,
and whether voting for or against the resolution or abstaining and every
instrument in writing signed by Special Warrantholders in accordance with
section 8.15 shall be binding upon all the Special Warrantholders, except as
provided in subsection 8.11(a), whether signatories thereto or not, and each
and every Special Warrantholder and the Trustee (subject to the provisions for
its indemnity herein contained) shall be bound to give effect accordingly to
every resolution and instrument in writing passed or executed in accordance
with these provisions.
8.17 Holdings by Company Disregarded
In determining whether the requisite number of Special Warrantholders are
present for the purpose of obtaining a quorum or have voted or consented to any
resolution, Extraordinary Resolution, consent, waiver, Special Warrantholders'
Request or other action under this Indenture, Special Warrants owned by the
Company or any subsidiary of the Company shall be deemed to be not outstanding.
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ARTICLE NINE
Supplemental Indentures and Successor Companies
9.1 Provision for Supplemental Indentures for Certain Purposes
From time to time the Company and the Trustee may, subject to the
provisions hereof, and they shall, when so directed hereby, execute and deliver
by their proper officers or directors, as the case may be, 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 any adjustments resulting from the application of the
provisions of Article Five;
(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 not in the opinion of the
Trustee prejudicial to the interests of the Special Warrantholders as
a group;
(c) giving effect to any Extraordinary Resolution passed as provided in
Article Eight;
(d) adding to, deleting or altering the provisions hereof in respect of
the transfer of Special Warrants, the exchange of Special Warrants
and the making of any modification in the form of a Special Warrant
Certificate which additions, deletions or alterations, in the opinion
of the Trustee, do not affect the substance thereof;
(e) 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 Special
Warrantholders and are necessary or advisable in order to
incorporate, reflect or comply with any Applicable Legislation;
(f) making provisions not inconsistent with this Indenture as may be
necessary or desirable with respect to matters or questions arising
hereunder or for the purpose of obtaining a listing or quotation of
the Shares issuable under the Special Warrants on a stock exchange,
bourse or over-the-counter market, provided that the provisions are
not, in the opinion of the Trustee, prejudicial to the interests of
the Special Warrantholders as a group;
(g) modifying any of the provisions of this Indenture or relieving the
Company from any of the obligations, conditions or restrictions
herein contained, provided that no such modification or relief shall
be or become operative or effective if in the opinion of the Trustee
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the modification or relief impairs any of the rights of the Special
Warrantholders provided hereunder, or of the Trustee, and provided
that the Trustee may in its uncontrolled discretion decline to enter
into any supplemental indenture which in its opinion may not afford
adequate protection to the Trustee when the same shall become
operative;
(h) evidencing any succession, or successive successions, of other bodies
corporate to the Company and the assumption by any successor of the
obligations of the Company herein and in the Special Warrant
Certificates as provided hereafter in this Article Nine; and
(i) for any other purpose not inconsistent with the terms of this
Indenture, including the correction or rectification of any
ambiguities, defective provisions, errors or omissions herein,
provided that, in the opinion of the Trustee, the rights of the
Trustee and the Special Warrantholders provided hereunder, are in no
way prejudiced thereby.
9.2 Successor Companies
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 corporation ("successor corporation"),
the successor corporation resulting from the consolidation, amalgamation,
arrangement, merger or transfer (if not the Company) 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 and, if requested by the Trustee, the
successor corporation shall by supplemental indenture satisfactory in form to
the Trustee and executed and delivered to the Trustee, expressly assume those
obligations.
ARTICLE TEN
Concerning the Trustee
10.1 Trust Indenture Legislation
(1) If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with a mandatory requirement of Applicable Legislation,
the mandatory requirement shall prevail.
(2) 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 benefits of Applicable Legislation.
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10.2 Rights and Duties of Trustee
(1) In the exercise of the rights, duties and obligations 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 Special Warrantholders and
shall exercise that degree of care, diligence and skill that a reasonably
prudent trustee would exercise in comparable circumstances.
(2) No provision of this Indenture will be construed to relieve the
Trustee from liability for its own negligent act, negligent failure to act,
wilful misconduct or bad faith.
(3) 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
Special Warrantholders or obligations of the Company hereunder shall be
conditional upon either the Special Warrantholders or the Company furnishing,
when required by notice in writing by the Trustee, sufficient funds to commence
or continue the act, action or proceeding and an indemnity reasonably
satisfactory to the Trustee to protect and hold harmless the Trustee against
the costs, charges and 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.
(4) The Trustee may, before commencing any such act, action or proceeding,
or at any time during the continuance thereof require the Special
Warrantholders at whose instance it is acting to deposit with the Trustee the
Special Warrant Certificates held by them, for which Special Warrant
Certificates the Trustee shall issue receipts.
(5) 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, and of this section
10.2 and section 10.3.
10.3 Evidence, Experts and Advisers
(1) 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, and in such form,
as may be prescribed by Applicable Legislation or as the Trustee may reasonably
require by written notice to the Company.
(2) 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, certificates or
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other evidence furnished to the Trustee pursuant to any provision hereof or of
Applicable Legislation or pursuant to a request of the Trustee, provided that
the evidence complies with Applicable Legislation and that the Trustee examines
such evidence and determines that the evidence complies with the applicable
requirements of this Indenture.
(3) Whenever Applicable Legislation requires that evidence referred to in
subsection 10.3(1) be in the form of a statutory declaration, the Trustee may
accept the 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 officers of the Company.
(4) Proof of the execution of an instrument in writing, including a
Special Warrantholders' Request, by any Special Warrantholder may be made by
the certificate of a notary public, or other person with similar powers, that
the person signing the instrument acknowledged to him the execution thereof, or
by an affidavit of a witness to the execution or in any other manner that the
Trustee may consider adequate.
(5) The Trustee may employ or retain such counsel, accountants, engineers,
appraisers, or other experts or advisers as it may reasonably require for the
purpose of discharging its duties hereunder and may pay reasonable remuneration
for all services so performed by any of them, without taxation of costs of any
counsel, and shall not be responsible for any misconduct on the part of any of
them.
(6) The Trustee may as a condition precedent to any action to be taken by
it under this Indenture require such opinions, statutory declarations, reports,
certificates or other evidence as it, acting reasonably, considers necessary or
advisable in the circumstances.
10.4 Securities, Documents and Monies Held by Trustee
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 of the Canadian Imperial Bank of
Commerce, Bank of Montreal, Bank of Nova Scotia, The Toronto-Dominion Bank, the
Royal Bank of Canada and the Hongkong Bank of Canada or deposited for
safekeeping with any of those Canadian chartered banks. Unless herein otherwise
expressly provided, any money so held pending the application or withdrawal
thereof under any provision of this Indenture shall be deposited in the name of
the Trustee in any of the foregoing Canadian chartered banks at the rate of
interest, if any, then current on similar deposits or, with the consent of the
Company, be:
(a) deposited in the deposit department of the Trustee or of any other
loan or trust company authorized to accept
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deposits under the laws of Canada or a province thereof whose short
term debt obligations or deposits have a rating of at least R1 as
rated by Dominion Bond Rating Service; or
(b) 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 or guaranteed by any of
the foregoing Canadian chartered bank or loan or trust company.
Subject to the provisions of section 6.4, unless the Company is in default
hereunder, all interest or other income received by the Trustee in respect of
deposits and investments will belong to the Company.
10.5 Action by Trustee to Protect Interests
The Trustee shall have 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 Special Warrantholders.
10.6 Trustee not Required to Give Security
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 in
respect of the premises contained herein.
10.7 Protection of Trustee
By way of supplement to the provisions of any law from time to time
applicable to trustees, it is expressly declared and agreed as follows:
(1) The Trustee shall not be liable for or by reason of any
representations, statements of fact or recitals in this Indenture or in the
Special Warrant Certificates (except the representation contained in section
10.9 or by virtue of the certification by the Trustee of the Special Warrant
Certificates) or required to verify the same, but all those statements or
recitals are and shall be deemed to be made by the Company.
(2) 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.
(3) The Trustee shall not be bound to give notice to any person or persons
of the execution hereof.
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(4) The Trustee shall not incur any liability or responsibility whatever
or be in any way responsible for the consequence of any breach on the part of
the Company of any of the covenants or warranties herein contained or of any
acts of any director, officer, employee or agent of the Company.
(5) 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 nor shall
the Trustee 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 that 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 Trustee hereunder as to whether any action is required to be
taken in respect of any default hereunder.
(6) The Trustee shall not be accountable with respect to the validity or
value (or the kind or amount) of any Shares or Warrants or other securities or
property which may at any time be issued or delivered upon the exercise of the
rights attaching to any Special Warrant.
(7) The Trustee is not responsible for any failure of the Company to make
any cash payment or to issue, transfer or deliver Shares or Warrants or
certificates for the same upon the surrender or deemed surrender of any Special
Warrant Certificates for the purpose of the exercise of the Special Warrants
represented by such Special Warrant Certificates or to comply with any of the
covenants contained in Article Five.
10.8 Replacement of Trustee
(1) The Trustee may resign its trust and be discharged from all further
duties and liabilities hereunder, except as provided in this Article Ten, by
giving to the Company and the Special Warrantholders not less than 90 days'
notice in writing or, if a new Trustee has been appointed such shorter notice
as the Company may accept as sufficient. The Special Warrantholders by
Extraordinary Resolution shall have power at any time, with the consent of the
Company, not to be unreasonably withheld, to remove the 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
Special Warrantholders; failing that appointment by the Company, the retiring
Trustee or any Special Warrantholder may apply to the Supreme Court of British
Columbia, on such notice as the Court 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 Special Warrantholders and
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the Company. Any new Trustee appointed under any provision of this section
10.8 shall be a corporation authorized to carry on the business of a trust
company in the Provinces of British Columbia and Ontario and, if required by
the Applicable Legislation of any other Province, in that other Province. On
any 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 such powers, rights, duties and responsibilities of
the new Trustee.
(2) Upon the appointment of a new Trustee, the Company shall promptly give
notice thereof to the Special Warrantholders.
(3) 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 any of the parties hereto provided that
the corporation would be eligible for appointment as a new Trustee under
subsection 10.8(1).
(4) Any Special Warrant Certificates certified but not delivered by a
predecessor Trustee may be certified by the new or successor Trustee in the
name of the predecessor or new or successor Trustee.
10.9 Conflict of Interest
(1) The Trustee represents to the Company that at the time of the
execution and delivery hereof no material conflict of interest exists between
the Trustee's role as a fiduciary hereunder and its role in any other capacity
and agrees that in the event of a material conflict of interest arising
hereafter it will, within 90 days after ascertaining that it has a material
conflict of interest, either eliminate the same or assign its trust hereunder
to a successor Trustee approved by the Company and meeting the requirements set
forth in subsection 10.8(1). Notwithstanding the foregoing provisions of this
subsection 10.9(1), if any such material conflict of interest exists or
hereafter shall exist, the validity and enforceability of this Indenture and
the Special Warrant Certificate shall not be affected in any manner whatsoever
by reason thereof.
(2) Subject to subsection 10.9(1), the Trustee, in its personal or any
other capacity, may buy, lend upon and deal in securities of the Company may
act as registrar and transfer agent for the Shares and trustee for the Warrants
under the Warrant Indenture and generally may contract and enter into financial
transactions with the Company or any subsidiary of the Company, all without
being liable to account for any profit made thereby.
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10.10 Acceptance of Trust
The Trustee hereby accepts the trusts in this Indenture declared and
provided for, agrees to perform the same upon the terms and conditions herein
set forth and agrees to hold all rights, interests and benefits contained
herein for and on behalf of those persons who become holders of Special
Warrants from time to time issued pursuant to this Indenture.
10.11 Trustee not to be Appointed Receiver
The Trustee and any person related to the Trustee shall not be appointed a
receiver, a receiver and manager or liquidator of all or any part of the assets
or undertaking of the Company.
10.12 Indemnity
Without limiting any protection or indemnity of the Trustee under any
other provision hereof, or otherwise at law, the Company hereby agrees to
indemnify and hold harmless the Trustee from and against any and all
liabilities, losses, damages, penalties, claims, actions, suits, costs,
expenses and disbursements, including reasonable legal or advisor fees and
disbursements, of whatever kind and nature which may at any time be imposed on,
incurred by or asserted against the Trustee in connection with the performance
of its duties and obligations hereunder, other than such liabilities, losses,
damages, penalties, claims, actions, suits, costs, expenses and disbursements
arising by reason of the negligence, wilful misconduct or bad faith of the
Trustee or persons for whom the Trustee is responsible. This provision shall
survive the resignation or removal of the Trustee, or the termination of the
Indenture.
ARTICLE ELEVEN
General
11.1 Notice to Company and Trustee
(1) Unless herein otherwise expressly provided, any notice to be given
hereunder to the Company or the Trustee shall be given in writing and shall be
deemed to be validly given if delivered or if sent by registered letter,
postage prepaid or if transmitted by facsimile:
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(a) If to the Company:
Granges Inc.
Suite 3000
370 Seventeenth Street
Denver, Colorado
U.S.A. 80202
Attention: Mr. Michael B. Richings
President and Chief Executive Officer
Facsimile No.: (303) 629-2499
and to:
Ladner Downs
Barristers & Solicitors
1200 Waterfront Centre
200 Burrard Street
P.O. Box 48600
Vancouver, British Columbia
Canada V7X 1T2
Attention: Mr. William F. Sirett
Facsimile No.: (604) 687-1415
(b) If to the Trustee:
Montreal Trust Company of Canada
Montreal Trust Centre
510 Burrard Street
Vancouver, British Columbia
V6C 3B9
Attention: Manager, Corporate Trust Department
Facsimile No.: (604) 685-4079
and any notice given in accordance with the foregoing shall be deemed to have
been received on the date of delivery or, if mailed, on the fifth business day
following the day of the mailing of the notice or, if transmitted by facsimile,
on the day following the transmission.
(2) The Company or the Trustee, as the case may be, may from time to time
notify the other in the manner provided in subsection 11.1(1) of a change of
address which, from the effective date of the notice and until changed by like
notice, shall be the address of the Company or the Trustee, as the case may be,
for all purposes of this Indenture.
(3) If, by reason of a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, any notice to be given to the Trustee
or to the Company hereunder could reasonably be considered unlikely to reach or
to be delayed in reaching its destination, the notice shall be valid and
effective
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only if it is delivered to an officer of the party to which it is addressed or
if it is delivered to that party at the appropriate address provided in
subsection 11.1(1) by cable, telegram, telex, facsimile or other means of
prepaid, transmitted, or written communication and any notice delivered in
accordance with the foregoing shall be deemed to have been received on the date
of delivery to the officer or if delivered by cable, telegram, telex, facsimile
or other means of prepaid, transmitted, recorded communication, on the first
business day following the date of the sending of the notice by the person
giving the notice.
11.2 Notice to Special Warrantholders
(1) Unless herein otherwise expressly provided, any notice to be given
hereunder to Special Warrantholders shall be written and shall be deemed to be
validly given if the notice is sent by prepaid mail, addressed to the holder or
delivered by hand or transmitted by facsimile (or so mailed to certain holders
and so delivered to other holders and so transmitted by facsimile to other
holders) at their respective addresses and facsimile numbers appearing on the
register maintained by the Trustee; and if in the case of joint holders of any
Special Warrants more than one address or facsimile number appears on the
register in respect of that joint holding, the notice shall be addressed or
delivered, as the case may be, only to the first address or facsimile number,
as the case may be, so appearing. The Trustee shall give, in the same manner as
for Special Warrantholders set out above, a copy of each such notice to
ScotiaMcLeod Inc. (Attention: John A. Macdonald) on behalf of the Underwriters,
at 1100 - 609 Granville Street, Vancouver, British Columbia, V7T 2T2 (Facsimile
No.: (604) 661-7496). Any notice so given shall be deemed to have been received
on the day of delivery by hand or facsimile or, if mailed, on the next business
day following the day of mailing of the notice. Accidental error or omission in
giving notice or accidental failure to mail notice to any Warrantholder shall
not invalidate any action or proceeding founded thereon.
(2) If, by reason of strike, lock-out or other work stoppage, actual or
threatened, involving postal employees, any notice to be given to the Special
Warrantholders hereunder could reasonably be considered unlikely to reach or be
delayed in reaching its destination, the notice shall be valid and effective if
published or distributed once in the Report on Business section of the national
edition of The Globe and Mail newspaper, or, in the event of a disruption in
the circulation of that newspaper, once in a daily newspaper in the English
language approved by the Trustee of general circulation in the Cities of
Toronto and Vancouver; provided that in the case of a notice convening a
meeting of the holders of Special Warrants, the Trustee may require such
additional publications of that notice, in the same or in other cities or both,
as it may deem necessary for the reasonable protection of the holders of
Special Warrants or to comply with any applicable requirement of law or any
stock exchange. Any notice so given shall be deemed to have been given on the
day on which it has been published in all of the cities in which publication
was
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required (or first published in a city if more than one publication in that
city is required). In determining under any provision hereof, the date when
notice of any meeting or other event must be given, the date of giving notice
shall be included and the date of the meeting or other event shall be excluded.
11.3 Satisfaction and Discharge of Indenture
Upon the date by which certificates representing Shares and Warrants shall
have been delivered to Special Warrantholders to the full extent of the rights
attached to all Special Warrants theretofore certified hereunder and the monies
to be paid hereunder, if any, have been paid, this Indenture shall cease to be
of further effect and the Trustee, on 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 fees
and other remuneration payable to the Trustee, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture.
11.4 Sole Benefit of Parties and Special Warrantholders
Nothing in this Indenture or in the Special Warrant Certificates,
expressed or implied, shall give or be construed to give to any person other
than the parties hereto and the Special Warrantholders any legal or equitable
right, remedy or claim under this Indenture, or under any covenant or provision
therein contained, all such covenants and provisions being for the sole benefit
of the parties hereto and the Special Warrantholders.
11.5 Discretion of Directors
Any matter provided herein to be determined by the directors will be
determined acting reasonably in their sole discretion, and a determination so
made will be conclusive.
11.6 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 the counterparts together
shall constitute one and the same
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58
instrument and notwithstanding their date of execution shall be deemed to bear
the date as of April 25, 1996.
IN WITNESS WHEREOF the parties hereto have executed these presents under
the hands of their proper officers in that behalf.
GRANGES INC.
(C/S) By:
---------------------------------
By:
---------------------------------
MONTREAL TRUST COMPANY OF CANADA
(C/S) By:
---------------------------------
By:
---------------------------------
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SCHEDULE A
SPECIAL WARRANT TO ACQUIRE
SHARES AND WARRANTS OF
GRANGES INC.
(Incorporated under the laws of British Columbia)
Special Warrant Certificate Certificate for ___________
NO. SW Special Warrants, each entitling the
holder to acquire one Share and one-half
Warrant of Granges Inc.
THIS IS TO CERTIFY THAT, for value received,
________________________________________________________________________________
(herein called the "holder") is the registered holder of the number of Special
Warrants of Granges Inc. (the "Company") set forth above, and is entitled to
receive on exercise of these Special Warrants in the manner herein provided and
without further payment therefor, subject as hereinafter provided and as more
specifically set forth in the Special Warrant Indenture (defined below):
(a) one fully paid and non-assessable common share (a "Share") without
par value in the capital of the Company; and
(b) one-half of a common share purchase warrant (a "Warrant"), each whole
Warrant entitling the holder thereof to acquire one Share for the
price of $3.00 per Share at any time until 4:30 p.m. (local time) at
the office of the Trustee (defined below) in Toronto or Vancouver on
October 31, 1997
for each of the Special Warrants evidenced by this certificate.
Each Warrant will be issued under the warrant indenture (the "Warrant
Indenture") dated as of April 25, 1996 between the Company and the Montreal
Trust Company of Canada (the "Trustee").
The Special Warrants represented by this Special Warrant Certificate are
issued under and pursuant to a special warrant indenture (herein called the
"Special Warrant Indenture") made as of April 25, 1996 between the Company and
the Trustee to which Special Warrant Indenture and any instruments supplemental
thereto reference is hereby made for a full description of the rights of the
holders of the Special Warrants and the terms and conditions upon which Special
Warrants are, or are to be, issued, held, exchanged and surrendered, all to the
same effect as if the provisions of the Special Warrant Indenture and all
instruments supplemental thereto were herein set forth, and to all of which
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provisions the holder of this Special Warrant Certificate by acceptance hereof
assents. Capitalized terms used in this Special Warrant Certificate and not
otherwise defined shall have the meanings ascribed to them in the Special
Warrant Indenture.
The Company will furnish to the holder, on request and without charge, a
copy of the Special Warrant Indenture.
The Exercise Period is the period commencing on April 25, 1996, and ending
at 4:30 p.m. (local time) on the fifth business day after the earlier of:
(a) the date on which a receipt is issued for the Final Prospectus
relating to the distribution of the Shares and Warrants to be
acquired upon the exercise of the Special Warrants by the last of the
securities regulatory authorities to do so in each of the Provinces
of British Columbia and Ontario (the "Qualification Date"); and
(b) July 24, 1996 or such later date as the underwriters of the offering
of the Special Warrants may determine in a written notice delivered
to the Company and the Trustee, provided that such underwriters have
obtained the written consent thereto of each initial purchaser of the
Special Warrants who have not resold their Special Warrants (the
"Qualification Deadline").
If the Qualification Date occurs on or before the Qualification Deadline,
the Trustee will give notice to each holder of Special Warrants specifying that
the Qualification Date has occurred on or before the Qualification Deadline and
specifying the duration and expiry of the Exercise Period.
The Special Warrants represented by this Special Warrant Certificate may
be exercised by the holder during the Exercise Period by:
(a) duly completing and executing the attached exercise form; and
(b) surrendering this Special Warrant Certificate to the Trustee at the
principal transfer office of the Trustee in either of the Cities of
Toronto or Vancouver.
The Special Warrants represented by this Special Warrant Certificate shall
be effectively surrendered (unless deemed to be surrendered) only upon personal
delivery hereof or, if sent by mail or other means of transmission, upon actual
receipt thereof by the Trustee at either of the offices referred to above.
Upon surrender of the Special Warrants, the person or persons in whose
name or names the Shares and Warrants issuable upon exercise of the Special
Warrants are issued shall be deemed for all purposes (except as provided in the
Special Warrant Indenture) to be the holder or holders of record of such Shares
and Warrants. The Company has covenanted that it will deliver (subject
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to the provisions of the Special Warrant Indenture) to the Trustee as agent for
such person or persons, certificates representing such Shares and Warrants and
the Trustee has covenanted that it will cause such certificates to be mailed by
registered mail to such person or persons at the address or addresses specified
to the Exercise Form forthwith.
The holders of these Special Warrants may exercise these Special Warrants
with respect to a lesser number of Special Warrants than the number represented
by this Special Warrant Certificate. In such event, the Holder shall be
entitled to receive a new Special Warrant Certificate for the balance of the
Special Warrants which remain unexercised. No fractional Shares or Warrants
will be issued.
The Special Warrant Indenture provides for: (i) adjustments to certain
rights of the holder, including the number of Shares issuable upon exercise or
deemed exercise, upon the happening of certain stated events, including the
subdivision or consolidation of the outstanding Shares, certain distributions
of Shares or securities convertible or exchangeable into Shares or of other
securities or assets of the Company, certain offerings of rights, warrants or
options, and certain capital reorganizations; and (ii) payment of an amount to
compensate for dividends paid on Shares prior to the exercise of the Special
Warrants.
If, immediately prior to the expiry of the Exercise Period, the Special
Warrants represented by this Special Warrant Certificate have not been
exercised, the Special Warrants represented hereby shall be deemed to have been
exercised and surrendered by the holder immediately after that time without any
further action on the part of the holder.
If the Special Warrants represented by this Special Warrant Certificate
are exercised or are deemed to be exercised by the holder notwithstanding that
the Qualification Date has not occurred, any such exercise or deemed exercise
shall be subject to the holder providing such assurances and executing such
documents as the Company or the Trustee, acting reasonably, may require to
ensure compliance with applicable securities legislation.
One hundred percent (100%) of the original consideration received by the
Company for the Special Warrants is held in escrow by the Trustee and may be
deposited with certain Canadian chartered banks or loan or trust companies or
invested in short-term debt obligations issued or guaranteed by the Government
of Canada or a province thereof. If the Qualification Date has not occurred on
or before the Qualification Deadline, the holder of the Special Warrants
represented by this Special Warrant Certificate may elect to retract such
Special Warrants by duly completing an election form and delivering such form
and to the Trustee at its principal office in either of the cities of Vancouver
or Toronto on or before 4:30 p.m. (local time) on the fifth business day after
the Qualification Deadline and the Trustee shall deliver to the holder the
purchase price for the Special Warrants so retracted, together with all
interest earned thereon. The purchase price held in
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escrow of each Special Warrant that has not been retracted will be released,
together with all interest earned thereon, to the Company on the exercise or
deemed exercise of each such Special Warrant. If the Qualification Date has
occurred on or before the Qualification Deadline, 100% of the gross proceeds
held in escrow from the issue of the Special Warrants will be released,
together with all interest earned thereon, to the Company on the fifth business
day after the Qualification Date.
The holder of this Special Warrant Certificate may, upon surrender hereof
to the Trustee at its principal transfer office in either of the Cities of
Toronto or Vancouver, subject to the provisions of the Special Warrant
Indenture and in compliance with the reasonable requirements of the Trustee,
exchange one or more Special Warrant Certificates for one or more Special
Warrant Certificates of different denomination evidencing Special Warrants
entitling the holder to receive in the aggregate the same number of Shares and
Warrants as may be acquired pursuant to the Special Warrant Certificate being
exchanged.
The holding of the Special Warrants evidenced by this Special Warrant
Certificate shall not constitute the holder hereof a shareholder of the Company
or entitle the holder to any right or interest in respect thereof except as
herein and in the Special Warrant Indenture expressly provided.
The parties hereto have declared that they have required that these
presents and all other documents related hereto be in the English language. Les
parties aux presentes declarent qu'elles ont exige que la presente convention,
de meme que tous les documents s'y rapportant, soient rediges en anglais.
The Special Warrants represented by this Special Warrant Certificate, the
Shares and Warrants to be issued upon exercise thereof, and the Shares to be
issued upon exercise of the Warrants, have not been registered under the United
States Securities Act of 1933, as amended (the "U.S. Securities Act") or any
applicable State securities laws of the United States. Subject to certain
exceptions Special Warrants, and the Warrants to be issued upon exercise of the
Special Warrants, may not be exercised by U.S. Persons or persons within the
United States unless such securities and Shares issuable upon exercise thereof
are registered under the U.S. Securities Act and the securities laws of all
applicable States of the United States or an exemption from such registration
requirements is available. Terms used in this paragraph have the meanings given
to them in Regulation S under the U.S. Securities Act.
This Special Warrant Certificate shall not be valid for any purpose
whatsoever unless and until it has been certified by or on behalf of the
Trustee under the Special Warrant Indenture.
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Time shall be of the essence hereof.
IN WITNESS WHEREOF Granges Inc. has caused this Special Warrant
Certificate to be duly executed as of the 25th day of April, 1996.
GRANGES INC.
By:
---------------------------------
Authorized Signatory
By:
---------------------------------
Authorized Signatory
Countersigned and Registered by:
MONTREAL TRUST COMPANY OF CANADA,
Toronto
Vancouver
By:
---------------------------------
Authorized Signatory
LEGEND
THE SECURITY REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO A HOLD PERIOD
AND MAY NOT BE TRADED IN BRITISH COLUMBIA UNTIL THE EXPIRY OF THE HOLD PERIOD
EXCEPT AS PERMITTED BY THE SECURITIES ACT (BRITISH COLUMBIA) AND THE RULES MADE
THEREUNDER. THE HOLD PERIOD EXPIRES ON APRIL 27, 1997.
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SCHEDULE B
EXERCISE FORM
TO: c/o Montreal Trust Company of Canada
151 Front Street, 8th Floor
Toronto, Ontario
M5J 2N1
Attention: Stock Transfer
Department
or c/o Montreal Trust Company of Canada
Montreal Trust Centre
510 Burrard Street
Vancouver, British Columbia
V6C 3B9
Attention: Stock Transfer
Department
The undersigned holder of the within Special Warrants hereby exercises
_____________ of the Special Warrants represented hereby and the right provided
for in such exercised Special Warrants to receive the common shares and common
share purchase warrants of Granges Inc. issuable pursuant to such Special
Warrants.
The undersigned hereby irrevocably directs that the said common shares and
common share purchase warrants be issued and delivered as follows:
Number(s) of
common shares and
common share
Name(s) in Full Address(es) purchase warrants
- ----------------------- ----------------------------- ----------------------
- ----------------------- ----------------------------- ----------------------
- ----------------------- ----------------------------- ----------------------
(Please print in full the name in which certificates are to be issued. If any
of the securities are to be issued to a person or persons other than the
Special Warrantholder, the Transfer of Special Warrants form must be completed
and the Special
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Warrantholder must pay to the Trustee all exigible transfer taxes or other
government charges.)
DATED this ______ day of ________________, 199___.
- ----------------------------- ------------------------------------
Witness Signature of Registered Holder
------------------------------------
Name of Registered Holder
------------------------------------
------------------------------------
Address of Registered Holder
[ ] Please check box if these certificates are to be delivered to the office
where this Special Warrant Certificate is surrendered, failing which the
certificates will be mailed to the address shown on the register.
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SCHEDULE C
TRANSFER OF SPECIAL WARRANTS
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
________________________________________________________________________________
(name) (the "transferee")
________________________________________________________________________________
(address)
_______________ of the Special Warrants of Granges Inc. registered in the name
of the undersigned represented by the within certificate.
DATED the _____ day of ______________, 199___.
Signature of Special Warrantholder _____________________________________________
Guaranteed by: (Signature of Special Warrantholder)
__________________________________ [* ]
* Authorized Signature Number
NOTE: The signature to this transfer must correspond with the name as recorded
on the Special Warrants in every particular without alteration or enlargement
or any change whatever. The signature of the person executing this transfer
must be guaranteed by a Bank or Trust Company or by a member of the Toronto,
Vancouver or Montreal stock exchanges.
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SCHEDULE D
FORM OF DECLARATION FOR REMOVAL OF LEGEND
To: Montreal Trust Company of Canada
Stock and Bond Transfer Department
The undersigned (A) acknowledges that the sale of the securities,
represented by certificate numbers __________________, to which this
declaration relates is being made in reliance on Rule 904 of Regulation S under
the United States Securities Act of 1933, as amended (the "Securities Act") and
(B) certifies that (1) it is not an "affiliate" of Granges Inc. (as defined in
Rule 405 under the Securities Act), (2) the offer of such securities was not
made to a person in the United States and either (a) at the time the buy order
was originated, the buyer was outside the United States, or the seller and any
person acting on its behalf reasonably believed that the buyer was outside the
United States or (b) the transaction was executed on or through the facilities
of The Toronto Stock Exchange and neither the seller nor any person acting on
its behalf knows that the transaction has been prearranged with a buyer in the
United States and (3) neither the seller nor any person acting on its behalf
engaged in any directed selling efforts in connection with the offer and sale
of such securities. Terms used herein have the meanings given to them by
Regulation S.
Dated:
By:
-----------------------------------
Name:
Title:
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SCHEDULE F
ELECTION FORM
[TO BE COMPLETED BY A SPECIAL WARRANTHOLDER UPON RECEIVING NOTICE FROM THE
TRUSTEE THAT THE QUALIFICATION DATE HAS NOT OCCURRED ON OR BEFORE THE
QUALIFICATION DEADLINE]
TO: c/o Montreal Trust Company of Canada
Montreal Trust Centre
510 Burrard Street
Vancouver, British Columbia
V6C 3B9
Attention: Stock Transfer Department
or c/o Montreal Trust Company of Canada
151 Front Street, 8th Floor
Toronto, Ontario
M5J 2N1
Attention: Stock Transfer Department
The undersigned holder of Special Warrants of Granges Inc. hereby gives
irrevocable notice of its election to: (check one)
[ ] exercise all of such holder's Special Warrants represented by the
Special Warrant Certificate(s) surrendered herewith and receive the common
shares in the capital of Granges Inc. and the common share purchase
warrants which such holder is entitled to acquire upon such exercise,
subject to any applicable hold periods, resale restrictions and other
requirements of applicable securities legislation; or
[ ] retract 100% of such holder's Special Warrants represented by the
Special Warrant Certificate(s) surrendered herewith and receive payment
from Montreal Trust Company of Canada (the "Trustee") of the purchase
price of the Special Warrants so retracted and all interest earned thereon
in the hands of the Trustee from April 25, 1996 to the date immediately
preceding the date of such payment (less any tax required to be withheld
therefrom) to either such holder or to such person as is specified below:
Name in Full Address
------------------------------ ---------------------------------------
DATED this ______ day of ________________, 199___.
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- ----------------------------- ------------------------------------
Witness Signature of Registered Holder
------------------------------------
Name of Registered Holder
------------------------------------
------------------------------------
Address of Registered Holder
[ ] Please check box if payment of the purchase price of any Special
Warrants that are retracted are to be delivered to the office where this
Special Warrant Certificate is delivered, failing which payment will be
made to the address shown on the register or above.
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