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GRANGES INC.
- AND -
MONTREAL TRUST COMPANY OF CANADA
---------------------------------
WARRANT INDENTURE
Providing for the issue of up to
4,849,900 Common Share Purchase Warrants
---------------------------------
April 25, 1996
LADNER DOWNS
McCARTHY TETRAULT
2
TABLE OF CONTENTS
Page
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ARTICLE ONE
Interpretation 2
1.1 Definitions 2
1.2 Words Importing the Singular 5
1.3 Interpretation not Affected by Headings 6
1.4 Day Not a Business Day 6
1.5 Time of the Essence 6
1.6 Currency 6
1.7 Applicable Law 6
1.8 English Language 6
1.9 Meaning of "outstanding" for Certain Purposes 6
ARTICLE TWO
Issue of Warrants 7
2.1 Creation and Issue of Warrants 7
2.2 Terms of Warrants 7
2.3 Warrant Certificates 8
2.4 Issue in Substitution for Lost Certificates 9
2.5 Warrantholder not a Shareholder 9
2.6 Warrants to Rank Pari Passu 10
2.7 Signing of Warrant Certificates 10
2.8 Certification by the Trustee or Co-transfer Agent 10
ARTICLE THREE
Exchange and Ownership of Warrants 11
3.1 Exchange of Warrants 11
3.2 Charges for Exchange or Transfer 11
3.3 Ownership of Warrants 11
3.4 Registration and Transfer of Warrants 12
ARTICLE FOUR
Exercise of Warrants 13
4.1 Method of Exercise of Warrants 13
4.2 Effect of the Exercise of Warrants 15
4.3 Partial Exercise of Warrants 16
4.4 No Fractional Shares 16
4.5 Expiration of Warrants 16
4.6 Cancellation of Warrants 16
ARTICLE FIVE
Adjustment to Subscription Rights 17
5.1 Adjustment of the Subscription
Price and Subscription Rights 17
5.2 Subscription Rights Adjustment Rules 22
5.3 Postponement of Issue of Shares, etc. 23
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5.4 Notice of Certain Events 24
5.5 Reclassifications, Reorganizations, etc. 24
5.6 Protection of Trustee 25
5.7 Proceedings Prior to Any Action Requiring Adjustment 25
ARTICLE SIX
Rights and Covenants 26
6.1 Purchase of Warrants 26
6.2 General Covenants 26
6.3 Trustee's Remuneration and Expenses 27
6.4 Performance of Covenants by Trustee 28
6.5 Notice to Warrantholders of Certain Events 28
6.6 Closure of Share Transfer Books 29
ARTICLE SEVEN
Enforcement 29
7.1 Enforcement of Rights of Warrantholders 29
7.2 Immunity of Shareholders 30
7.3 Limitation of Liability 30
ARTICLE EIGHT
Meetings of Warrantholders 30
8.1 Right to Convene Meetings 30
8.2 Notice 31
8.3 Chairman 31
8.4 Quorum 31
8.5 Power to Adjourn 31
8.6 Show of Hands 31
8.7 Poll 32
8.8 Voting 32
8.9 Regulations 32
8.10 Company and Trustee may be Represented 33
8.11 Powers Exercisable by Extraordinary Resolution 33
8.12 Meaning of "Extraordinary Resolution" 34
8.13 Powers Cumulative 35
8.14 Minutes 35
8.15 Instruments in Writing 36
8.16 Binding Effect of Resolutions 36
8.17 Holdings by Company Disregarded 36
ARTICLE NINE
Supplemental Indentures and Successor Companies 37
9.1 Provision for Supplemental
Indentures for Certain Purposes 37
9.2 Successor Companies 38
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ARTICLE TEN
Concerning the Trustee 38
10.1 Trust Indenture Legislation 38
10.2 Rights and Duties of Trustee 39
10.3 Evidence, Experts and Advisors 39
10.4 Documents, Monies, etc. Held by Trustee 40
10.5 Action by Trustee to Protect Interests 41
10.6 Trustee not Required to Give Security 41
10.7 Protection of Trustee 41
10.8 Replacement of Trustee 42
10.9 Conflict of Interest 43
10.10 Acceptance of Trust 43
10.11 Trustee Not to be Appointed Receiver 44
10.12 Indemnity 44
ARTICLE ELEVEN
General 44
11.1 Notice to the Company or the Trustee 44
11.2 Notice to Warrantholders 45
11.3 Satisfaction and Discharge of Indenture 46
11.4 Sole Benefit of Parties and Warrantholders 47
11.5 Discretion of Directors 47
11.6 Counterparts and Formal Date 47
SCHEDULE "A" - COMMON SHARE PURCHASE WARRANT A-1
SCHEDULE "B" - FORM OF DECLARATION FOR REMOVAL OF LEGEND B-1
SCHEDULE "C" - EXERCISE FORM C-1
SCHEDULE "D" - INSTRUCTIONS FOR THE TRANSFER OF COMMON
SHARES BEARING A U.S. SECURITIES ACT LEGEND D-1
SCHEDULE "E" - TRANSFER OF WARRANTS E-1
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THIS 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 has agreed to create and issue 9,699,800 Special Warrants
pursuant to the Special Warrant Indenture, each Special Warrant exercisable to
acquire one Share in the capital of the Company and one-half of a Warrant,
subject to adjustment as provided for in the Special Warrant Indenture;
B. The Company is duly authorized to create and issue the Warrants to be
issued as herein provided;
C. Subject to adjustment in the circumstances herein provided, one whole
Warrant will entitle the holder thereof to purchase one Share upon the payment
of the Subscription Price;
D. Subject to adjustment in the circumstances herein provided, up to 4,849,900
Warrants will be issued entitling the holders thereof to purchase in the
aggregate up to 4,849,900 Shares;
E. All things necessary have been done and performed to make the Warrants,
when certified by the Trustee and issued and delivered as herein provided,
legal, valid and binding upon the Company with the benefits of and subject to
the terms of this Indenture;
F. 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 Warrants from time to time issued pursuant to this Indenture;
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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 Warrantholders, to hold all rights, interests and
benefits contained herein for and on behalf of those persons who become holders
of Warrants from time to time issued pursuant to this Indenture and it is
hereby agreed and declared as follows:
ARTICLE ONE
Interpretation
1.1 Definitions
In this Indenture and in the recitals and schedules hereto, unless the
subject matter or context is 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., a company incorporated under the laws
of the Province of British Columbia, 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 or 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) "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;
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(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
(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;
(i) "director" means a director of the Company from time to time, and
reference without more to action by the directors shall mean action
by the directors as a board or by any authorized committee thereof,
in each case by resolution duly passed;
(j) "dividends" means dividends or distributions (payable in cash or in
securities, property or assets of equivalent value) declared payable
on Shares;
(k) "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 Subscription
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;
(l) "Exercise Date", with respect to any Warrant, means the date on which
the Warrant Certificate evidencing such Warrant is duly surrendered
in accordance with the provisions of section 4.1;
(m) "Extraordinary Resolution" means an extraordinary resolution of
Warrantholders as defined in section 8.12 and includes a written
instrument signed by Warrantholders pursuant to the provisions of
section 8.15;
(n) "Original Exercise Price" means $3.00 per Share;
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(o) "person" means an individual, a corporation, a partnership, a trust,
or any unincorporated organization, and words importing persons have
a similar meaning;
(p) "Price Adjustment Factor", at any time, means that number, as may be
adjusted by Article Five hereof, which when multiplied by the
Original Exercise Price gives the Subscription Price, and that
number, as at the date hereof, is equal to one;
(q) "Registrar" means a registrar, from time to time, of the Warrants
appointed pursuant to subsection 3.4(1);
(r) "Regulation S" means Regulation S under the U.S. Securities Act;
(s) "Shares" means the fully paid and non-assessable common shares
without par value in the capital of the Company; provided that in the
event of any adjustment pursuant to Article Five, "Shares" shall
thereafter mean the shares or other securities or property that a
Warrantholder is entitled to on an exchange after the adjustment;
(t) "Special Warrants" means the special warrants issued under the
Special Warrant Indenture entitling registered holders thereof to
acquire, at no additional cost to the holder, Shares and Warrants,
upon the exercise of the Special Warrant;
(u) "Special Warrant Indenture" means the special warrant indenture dated
as of April 25, 1996 between the Company and the Trustee, pursuant to
which the Company authorized the creation and issuance of 9,688,900
Special Warrants;
(v) "Subscription Price", at any time, means the subscription price
payable for one Share upon the exercise at that time of any whole
Warrant and calculated as the price that is the product of the
Original Exercise Price at that time and the Price Adjustment Factor
as at that time;
(w) "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
of the subsidiaries of the Company. 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 have or might have the right to vote for directors by
reason of the happening of any contingency;
(x) "this Indenture", "hereto", "herein", "hereby", "hereunder", "hereof"
and similar expressions refer to
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this instrument and not to any particular Article, section,
subsection, paragraph, clause, or other portion hereof, and include
any and every instrument supplemental or ancillary hereto or in
implementation hereof;
(y) "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;
(z) "U.S. Person" means a U.S. person as that term is defined in
Regulation S;
(aa) "U.S. Securities Act" means the Securities Act of 1933, as amended,
of the United States;
(ab) "Underwriters" means, collectively, ScotiaMcLeod Inc., First Marathon
Securities Limited, Yorkton Securities Inc. and Goepel Shields &
Partners Inc.;
(ac) "United States" means the United States as that term is defined in
Regulation S;
(ad) "Warrant" means a common share purchase warrant of the Company
authorized to be created by the Company under section 2.1 and issued
and certified under this Indenture and for the time being
outstanding;
(ae) "Warrant Certificate" means a certificate in the form attached as
Schedule "A" hereto, or such other form as may be approved under
subsection 2.3(1) evidencing one or more Warrants;
(af) "Warrant Expiry Date" means October 31, 1997;
(ag) "Warrant Expiry Time" means 4:30 p.m. (local time) on the Warrant
Expiry Date;
(ah) "Warrantholder", "holder" or "holder of Warrants" means with respect
to the Warrants, a person entered on a register to be maintained
under section 3.3 as the registered holder of a Warrant for the time
being; and
(ai) "Warrantholder's Request" means an instrument signed in one or more
counterparts by Warrantholders holding Warrants sufficient to
purchase not less than 25% of the aggregate number of Shares that
could be purchased under all Warrants then outstanding requesting the
Trustee to take some action or proceeding specified therein.
1.2 Words Importing the Singular
Words importing the singular include the plural and vice versa, and words
importing a particular gender include all genders.
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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 the Warrant Expiry Date or any day on or before which any
action is required to be taken hereunder is not a business day, then the
Warrant Expiry Date shall be or the action shall be required to be taken on or
before the requisite time 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
Warrants and the Warrant Certificates.
1.6 Currency
Except as otherwise stated, all dollar amounts herein are expressed in
Canadian dollars.
1.7 Applicable Law
This Indenture and the 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 lanque anglaise.
1.9 Meaning of "outstanding" for Certain Purposes
Every Warrant Certificate certified and delivered by the Trustee hereunder
is deemed to be outstanding until the Warrant Expiry Time, or until it is
surrendered to the Trustee pursuant to this Indenture, provided that:
(a) a Warrant which has been partially exercised shall be deemed to be
outstanding only to the extent of the unexercised part of the
Warrant;
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(b) where a Warrant Certificate has been issued in substitution for a
Warrant Certificate which has been lost, stolen or destroyed, only
the latest Warrant Certificate issued shall be counted for the
purpose of determining the Warrants outstanding; and
(c) for the purpose of any provision of this Indenture entitling holders
of outstanding Warrants to vote, sign consents, requests or other
instruments or take any other action under this Indenture, 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 such vote, consent, request or other
instrument or other action, only the Warrants of which the
Trustee has notice that they are so owned shall be so
disregarded; and
(ii) Warrants so owned which 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 shall establish to the
satisfaction of the Trustee the pledgee's right to vote the
Warrants in his 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 Warrants
2.1 Creation and Issue of Warrants
A total of up to 4,849,900 Warrants, each entitling the holder thereof to
acquire from the Company on the exercise thereof one Share, as adjusted from
time to time pursuant to this Indenture, are hereby authorized to be created
and issued upon the due and valid exercise of Special Warrants in accordance
with the terms of the Special Warrant Indenture. The Warrants so exercised
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 a "Co-transfer Agent") and
delivered by the Company in accordance with subsection 2.3(3).
2.2 Terms of Warrants
(1) Subject to the provisions of Articles Four and Five, each whole
Warrant issued under section 2.1 shall entitle the holder thereof to purchase
one Share at any time from and after the date
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of issue of the Warrant up to and including the Warrant Expiry Time at the
Subscription Price.
(2) Fractional Warrants shall not be issued or provided for.
2.3 Warrant Certificates
(1) Warrants shall be issued in registered form only and shall be
evidenced only by 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 date hereof (regardless of their actual dates of issue), shall bear 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 each Warrant Certificate issued upon the exercise of a
Special Warrant the certificate of which contains the legend set forth in
subsection 2.3(2) of the Special Warrant Indenture, 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 Warrant is 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 B
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attached hereto, and provided, further, that if any such Warrant is 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.
(2) The Trustee shall maintain and make available to the Company lists of
all persons who are entitled to Warrant Certificates, and the Trustee shall
mail or deliver Warrant Certificates evidencing whole Warrants to those persons
or as directed by the Company.
2.4 Issue in Substitution for Lost Certificates
(1) If a 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 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 Warrant Certificate or in lieu of and in substitution for the
lost, destroyed or stolen Warrant Certificate. The substituted Warrant
Certificate shall be in a form approved by the Trustee, be entitled to the
benefit hereof, rank equally in accordance with its terms with all other
Warrant Certificates issued or to be issued hereunder and bear the same legends
as the Warrant Certificate being replaced.
(2) The applicant for the issue of a new Warrant Certificate pursuant to
this section 2.4 shall bear the cost of the issue thereof and in case of loss,
destruction or theft will, 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 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 the Company and to the Trustee in their discretion and pay the
reasonable charges of the Company and the Trustee in connection therewith.
2.5 Warrantholder not a Shareholder
Nothing in this Indenture or in the holding of a Warrant evidenced by a
Warrant Certificate, or otherwise, will be construed as conferring on a
Warrantholder any right or interest whatsoever as a shareholder of the Company,
including but not limited to any right to vote at, to receive notice of, or to
attend, meetings of shareholders or any other proceedings of the Company or any
right to receive any dividend or other distribution.
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2.6 Warrants to Rank Pari Passu
Except as otherwise provided herein, a Warrant shall rank pari passu with
all other Warrants issued under this Indenture, whatever may be the actual
dates of issue of the Warrant Certificates that evidence them.
2.7 Signing of Warrant Certificates
The Warrant Certificates shall be signed by any two or more of the
directors or officers of the Company and need not be under the Seal of the
Company. The signature of any of these directors or officers may be
mechanically reproduced in facsimile and Warrant Certificates bearing those
facsimile signatures shall be binding upon the Company as if they had been
manually signed by the director or officer. Notwithstanding that any of the
persons whose manual or facsimile signature appears on any Warrant Certificates
as an officer or director may no longer hold office at the date of the Warrant
Certificate or at the date of certification or delivery thereof, any 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 Warrant Certificates upon the written
direction of the Company. No 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 Warrant Certificate shall be conclusive evidence as
against the Company that the Warrant Certificate so certified has been duly
issued hereunder and is a valid obligation of the Company, and that the holder
is entitled to the attributes and characteristics of the Warrants provided for
in this Indenture.
(2) The certificate of the Trustee or of the Co-transfer Agent on any
Warrant Certificate 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 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 Warrants, Certificate or of the
consideration therefor, except as otherwise specified herein.
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ARTICLE THREE
Exchange and Ownership of Warrants
3.1 Exchange of Warrants
(1) One or more Warrant Certificates may, upon compliance with the
reasonable requirements of the Trustee, be exchanged for one or more Warrant
Certificates of different denominations evidencing, in the aggregate, the same
number of Warrants as the Warrant Certificate or Warrant Certificates being
exchanged.
(2) 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 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
Warrant Certificates in exchange therefore, cancelled. The Company shall sign
all Warrant Certificates necessary to carry out exchanges as aforesaid and
those Warrant Certificates shall be certified by or on behalf of the Trustee
and will bear the same legends as the Warrant Certificates being exchanged.
3.2 Charges for Exchange or Transfer
For each Warrant transferred or Warrant Certificate exchanged, 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 Warrant
transferred or 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 similar transfer charges required to
be paid in connection therewith.
3.3 Ownership of Warrants
The Company and the Trustee and their respective agents may deem and treat
the holder of any Warrant as the absolute owner of that 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
Warrant shall be entitled to the rights evidenced by that 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 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 Warrants
(1) The Company hereby appoints the Trustee as Registrar of the Warrants.
The Company may hereafter, with the consent of the Trustee, appoint one or more
other additional Registrars of the Warrants, including the 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 offices in
the City of Vancouver, in which shall be entered alphabetically, the names and
addresses of the holders of Warrants and other particulars of the Warrants held
by them respectively and a register of all transfers of Warrants and the date
and other particulars of each transfer. Such registration shall be noted on the
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 office 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 Warrant shall be valid unless made on any one of the
registers upon surrender of the 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 Warrant be valid, except in the case where a new Warrant
Certificate is issued upon a transfer, unless the transfer shall have been
noted on the Warrant Certificate by the Trustee or other Registrar duly
appointed pursuant to subsection 3.4(1).
(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
Warrantholder.
(5) The registered holder of a Warrant may at any time and from time to
time have the registration of the 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), (8) and (9), the holder of a Warrant
may at any time and from time to time have the Warrant transferred at any
Transfer Agency in accordance with the
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conditions herein, such reasonable requirements as the registrar may prescribe
and all applicable securities legislation and requirements of regulatory
authorities, provided however that the transfer of Warrants shall be
accompanied by a Transfer Form.
(7) If a 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 Warrant Certificate, representing the number of
Warrants so transferred, bearing the U.S. Legend; provided, that if the
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 B hereto, the Trustee or other
Registrar shall authenticate, register and deliver in the name of the
transferee a new Warrant Certificate, representing the number of Warrants so
transferred, without the U.S. Legend and, provided, further, that if the
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 Warrant Certificate, representing the number of Warrants so
transferred, without the U.S. Legend.
(8) Except as required by law, neither the Company nor the Trustee nor any
Registrar duly appointed pursuant to subsection 3.4(1) shall be bound to take
notice of or see to the execution of any trust, whether express, implied or
constructive, in respect of any Warrant, and may, transfer any Warrant on the
written direction of the person registered as the holder thereof, whether named
as Trustee or otherwise, as though that person were the beneficial owner
thereof.
(9) 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 Warrantholder, furnish the Company, the Trustee or, upon
payment by the Warrantholder of a reasonable fee, the Warrantholder, as the
case may be, with a list of names and addresses of holders of Warrants entered
on the registers kept by such Trustee or Registrar and showing the number of
Warrants held by each such holder.
ARTICLE FOUR
Exercise of Warrants
4.1 Method of Exercise of Warrants
(1) Subject to and upon compliance with the provisions of this Article
Four and Article Five, the holder of any Warrant Certificate or Warrant
Certificates may exercise the right of
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purchase therein provided for by surrendering the Warrant Certificate or
Warrant Certificates to the Trustee at its principal transfer offices in either
of the cities of Toronto or 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,
during normal business hours on a business day at that place, prior to the
Warrant Expiry Time, together with a duly completed and executed exercise form
attached to the Warrant Certificate in the form set out in Schedule "C"
attached hereto for the number of Shares which the holder desires to purchase
and the Subscription Price applicable at the time of the surrender calculated
in accordance with the provisions of this Indenture. Any such exercise shall
be subject to the holder providing such assurances and executing such documents
as may, in the reasonable opinion of the Company, the Trustee or the
Co-transfer Agent, be required to ensure compliance with all applicable
securities legislation.
(2) The Subscription Price for Shares subscribed for under Warrants shall
be paid in cash, by certified cheque, bank draft or money order payable to or
to the order of the Company or to the Trustee at par at the city where the
Warrant Certificate is surrendered.
(3) Surrender of a Warrant Certificate and the exercise form and payment
of the Subscription Price will be deemed to have been effected only on personal
delivery thereof to or, if sent by mail or other means of transmission on
actual receipt thereof, by the Trustee or the Co-transfer Agent at one of the
offices specified in subsection 4.1(1).
(4) Any exercise form referred to in subsection 4.1(1) shall be signed by
the Warrantholder or the Warrantholder's executors or administrators or other
legal representatives or an attorney of the 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 Warrant Certificate shall
specify the number of Shares that the subscriber wishes to purchase (being not
more than he is entitled to purchase under the Warrant Certificate), the person
or persons in whose name or names the Shares which the subscriber desires to
purchase are to be issued and his or their address or addresses and the number
of Shares to be issued to each such person. If any Shares subscribed for are to
be issued to a person or persons other than the Warrantholder, the
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 Warrants or Shares and the Company will not be required to
issue or deliver any certificate evidencing any Shares unless or until that
amount has been so paid or the 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.
(5) Unless box B has been checked on the exercise form referred to in
subsection 4.1(1), (i) Warrants may not be exercised
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within the United States or by or on behalf of any U.S. Person, (ii) no Shares
shall be issued to any person who has an address in the United States on the
exercise form and (iii) no Shares issued upon exercise of Warrants will be
delivered to any address in the United States.
(6) In the event that any Warrant Certificate or Warrant Certificates have
been delivered to the Trustee pursuant to subsection 4.1(1) and box B has been
checked on the accompanying exercise form, then the Trustee shall cause the
certificates representing the Shares issued upon exercise of any such Warrants
to be affixed with the U.S. Legend.
(7) If, at the time of exercise of the Warrants, there remain restrictions
on resale under applicable securities legislation in respect of the Shares
issuable upon exercise of the Warrants, the Company may, on the advice of
counsel, endorse the certificate representing the Shares with respect to those
restrictions.
4.2 Effect of the Exercise of Warrants
(1) Upon exercise of a Warrant in accordance with section 4.1 and subject
to sections 4.4, 4.5 and 5.3, the Company shall cause the holder thereof to be
entered forthwith on its register of shareholders as the holder of the Shares
so subscribed for, and the number of Shares to be issued to such person or
persons shall be issued to the person or persons in whose name or names the
Shares so subscribed for are to be issued as specified in the exercise form.
Such person or persons shall become the shareholder or shareholders of record
of those Shares with effect from the date on which the Warrant is exercised
unless the register of the Company shall be closed on that date, in which case
the Shares so subscribed for shall be deemed to be issued and the person or
persons shall be deemed to become the shareholder or shareholders of record of
the Shares on the date on which the register is reopened and the Shares shall
be issued on the later date.
(2) Upon the due exercise of the Warrants as aforesaid the Company shall,
without charge therefor except as provided in subsection 4.1(4), forthwith
cause to be delivered to the Trustee, as agent for the person or persons in
whose name or names the Shares so subscribed for are to be issued as specified
in the exercise forms attached to the Warrant Certificates, certificates for
the appropriate number of Shares that the Warrantholders are entitled to and
have elected to acquire pursuant to the Warrants surrendered. 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 in whose names the Shares have been issued at
the addresses specified in the exercise forms.
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4.3 Partial Exercise of Warrants
A Warrantholder may subscribe for and purchase any number of Shares up to
the aggregate number of Warrants represented by the Warrant Certificates
surrendered. In the event of any exercise of a number of Warrants less than the
number which the holder is entitled to exercise, the holder of the Warrants
upon such exercise shall, in addition, be entitled to receive, without charge
therefor, a new Warrant Certificate in respect of the balance of the Warrants
represented by the surrendered Warrant Certificate and which were not then
exercised. The Trustee shall issue a new Warrant Certificate upon surrender of
the Warrant Certificate, if satisfied that the new Warrant Certificate is
properly issuable.
4.4 No Fractional Shares
The Company will not, pursuant to section 5.1 or under any other
circumstances, be obligated to issue any fraction of a Share on the exercise of
a Warrant or Warrants. If any fractional interest in a Share would, except for
the provisions of this section, be deliverable upon the exercise of any
Warrant, the Company shall in lieu of delivering a fractional Share therefor,
satisfy the right to receive the fractional Share by payment to the holder of
the Warrant of an amount in cash (computed, in the case of a fraction of a
cent, to the next lower cent) equal to the same fraction of the Current Market
Price per Share on the date of exercise of the Warrant.
4.5 Expiration of Warrants
(1) After the Warrant Expiry Time, all rights under this Indenture and
under any Warrant that has not been exercised shall wholly cease and terminate
and the Warrant Certificate therefor shall be wholly void and of no effect.
(2) The Company shall give notice to the Warrantholders of the Warrant
Expiry Time not more than 60 and not less than 30 days prior to the Warrant
Expiry Time.
4.6 Cancellation of Warrants
All Warrants exercised as provided in section 4.1, partially exercised as
provided in section 4.3 or exchanged for other Warrants as provided in section
3.1 shall be cancelled and destroyed by the Trustee and, if required by the
Company, the Trustee shall furnish the Company with a certificate identifying
the Warrant Certificates so cancelled and the number of Shares which have been
issued pursuant to each.
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ARTICLE FIVE
Adjustment to Subscription Rights
5.1 Adjustment of the Subscription Price and Subscription Rights
(1) In this section the terms "record date" and "effective date" where
used herein shall mean 4:30 p.m. (Vancouver time) on the relevant date.
(2) The number of Shares to be acquired by a Warrantholder on exercise of
a Warrant will be adjusted from time to time in the events and in the manner
provided and in accordance with the provisions of and rules set out in this
Article Five.
(3) If and whenever at any time from the date hereof to the Warrant Expiry
Time, the Company:
(a) issues to all or substantially all of the holders of Shares by way of
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,
(b) subdivides or redivides the outstanding Shares into a greater number
of shares, or
(c) combines, consolidates or reduces the outstanding Shares into a
lesser number of shares
(any of those events being herein called a "Share Reorganization"),
the Price Adjustment Factor will 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
the number that is the product of (1) the Price Adjustment Factor in effect on
that effective date or record date, and (2) the fraction:
(i) the numerator of which shall be the total number of Shares
outstanding on that effective date or record date before giving
effect to the Share Reorganization; and
(ii) the denominator of which shall be the total number of Shares
that are or would be outstanding immediately after that
effective date or record date after giving effect to the Share
Reorganization and assuming all
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Convertible Securities issued as part of the Share
Reorganization had then been converted into or exchanged for
Shares or all rights to acquire Shares had then been exercised.
For the purposes of determining the number of Shares outstanding at any
particular time, there shall be included therein that number of Shares which
would have resulted from the conversion or exchange at that time of all
Convertible Securities of the Company (other than any Convertible Securities
issued to holders of Shares by way of a stock dividend and otherwise included
in computing the denominator in clause (ii) hereof). Shares (and Shares
issuable upon conversion or exchange of Convertible Securities) issued or to be
issued under a Share Reorganization shall be deemed to be outstanding on the
record date or effective date for such Share Reorganization for the purpose of
calculating the number of outstanding Shares under subsections (4) and (6). To
the extent that any Convertible Securities issued to holders of Shares by way
of a stock dividend are not so converted or exchanged into or for Shares prior
to the expiration of the right to do so, the conversion price shall then be
readjusted to the conversion price which would then be in effect based upon the
number of Shares actually issued upon the conversion or exchange of the
Convertible Securities.
(4) If and whenever at any time from the date hereof to the Warrant Expiry
Time, the Company shall issue rights, options or warrants to all or
substantially all of the holders of the Shares pursuant to which those holders
are entitled to subscribe for, purchase or otherwise acquire Shares or
Convertible Securities, to subscribe for or purchase Shares or Convertible
Securities within a period of 45 days from the record date, at a price per
share or at a conversion price per share of less than 95% of the Current Market
Price on the earlier of the record date and the date on which the Company
announces its intention to make such issuance (any such issuance being herein
called a "Rights Offering" and Shares that may be acquired and exercised the
Rights Offering or upon conversion of the Convertible Securities offered by the
Rights Offering, being herein called "Offered Shares"), the Price Adjustment
Factor shall be adjusted effective immediately after the record date so that it
shall equal the number which is the product of (1) the Price Adjustment Factor
in effect immediately prior to the record date, and (2) the fraction:
(i) the numerator of which shall be the total number of Shares
outstanding immediately prior to the record date plus a number
of Shares equal to the number arrived at by multiplying the
total number of additional Shares offered for subscription or
purchase or into or for which the total number of Convertible
Securities so offered are convertible or exchangeable by the
quotient obtained by dividing the purchase or subscription price
for each Share offered for subscription or
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purchase or the conversion price for each Convertible Security
so offered by such Current Market Price for the Shares; and
(ii) the denominator of which shall be the total number of Shares
outstanding immediately prior to such record date plus the total
number of additional Shares offered for subscription or purchase
or into or for which the total number of Convertible Securities
so offered are convertible or exchangeable.
The adjustment shall be made successively whenever a record date is fixed,
provided that if two or more such record dates or dates of announcement, as
applicable, or record dates or dates of announcement, as applicable, referred
to in subsection (6) are fixed within a period of 35 trading days, the
adjustment shall be made successively as if each of such record dates occurred
on the earliest of such record dates. To the extent that any rights, options
or warrants are not so issued or any of the rights, options or warrants so
issued are not exercised prior to the expiration thereof, or any Convertible
Securities are not so converted into or exchanged for Shares prior to the
expiration of the right to do so, the Price Adjustment Factor will be
readjusted to the Price Adjustment Factor in effect immediately prior to the
record date, and the Price Adjustment Factor will be further adjusted based
upon the number of additional Shares actually delivered upon the exercise of
the rights, options or warrants, or issued upon the conversion or exchange of
the Convertible Securities, as the case may be.
(5) If and whenever at any time from the date hereof to the Warrant Expiry
Time, the Company shall fix a record date for the issue of rights, options or
warrants to all or substantially all the holders of the outstanding Shares
entitling them, for a period expiring not more than 45 days after such record
date, to subscribe for or purchase Shares or Convertible Securities at a price
per share (or having a conversion price per share) not less than 95% of the
Current Market Price on the earlier of the record date and the date on which
the Company announces its intention to make such issuance, the Price Adjustment
Factor will not be adjusted.
(6) If and whenever at any time from the date hereof to the Warrant Expiry
Time the Company shall fix a record date for the making of an issue or
distribution to all or substantially all the holders of its outstanding Common
Shares resident in Canada of (a) shares of any class, excluding Shares or
Convertible Securities referred to in paragraph 3(a), whether of the Company or
any other corporation, or (b) rights, options or warrants, excluding those
referred to in subsections (4) or (5), or (c) evidences of its indebtedness, or
(d) property, cash or other assets, excluding dividends in the ordinary course
or property distributed in lieu thereof at the option of the shareholders (any
of such events being herein called a "Special Distribution") then, in each such
case, the Price Adjustment Factor shall be adjusted on the record date so
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that it shall equal the number that is the product of the Price Adjustment
Factor in effect immediately prior to the record date, and the fraction:
(i) the numerator of which shall be the total number of Shares
outstanding immediately prior to the record date multiplied by
the Current Market Price on the earlier of the day immediately
prior to such record date and the date on which the Company
announces its intention to make such issuance, less the
aggregate fair market value (as determined by the directors with
the approval of the Trustee, which determination shall be
conclusive) of the shares or rights, options or warrants or
evidences of indebtedness or property, cash or assets so
distributed; and
(ii) the denominator of which shall be the total number of Shares
outstanding immediately prior to the record date multiplied by
such Current Market Price.
The adjustment shall be made successively whenever a record date is fixed,
provided that if two or more such record dates or dates of announcement, as
applicable, or record dates or dates of announcement, as applicable, referred
to in subsection (4) are fixed within a period of 35 trading days, the
adjustment shall be made successively as if each of such record dates occurred
on the earliest of such record dates. To the extent that any distribution is
not so made, the Price Adjustment Factor shall then be readjusted to the Price
Adjustment Factor which would then be in effect if the record date had not been
fixed or to the Price Adjustment Factor which would then be in effect based
upon the shares or rights, options or warrants or evidences of indebtedness or
property, cash or assets actually distributed, as the case may be.
(7) On any adjustment of the Price Adjustment Factor pursuant to
subsections (3), (4) or (6), including any readjustment, the number of Shares
purchasable on exercise of a Warrant will be adjusted, effective at the same
time as the adjustment of the Price Adjustment Factor, by multiplying the
number of Shares so purchasable immediately before the adjustment by a fraction
which is the reciprocal of the fraction used in the adjustment of the Price
Adjustment Factor.
(8) If and whenever at any time from the date hereof to the Warrant Expiry
Time there is:
(a) a reclassification of the Shares outstanding, a change of Shares into
other shares or securities, or any other capital reorganization of
the Company except as described in subsections (3), (4), (5) and (6),
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(b) a consolidation, merger or amalgamation of the Company with or into
another body corporate resulting in a reclassification of outstanding
Shares or a change of Shares into other shares or securities, or
(c) a transaction whereby all or substantially all the Company's
undertaking and assets become the property of another corporation,
through sale, lease, exchange or otherwise,
(any of those events being herein called a "Corporate Reorganization"), a
holder who thereafter exercises Warrants will, subject to the prior written
consent of The Toronto Stock Exchange, be entitled to receive and will accept,
for the Subscription Price then in effect, in lieu of the Shares (and any other
securities to which Warrantholders are then entitled on the exercise of
Warrants) to which he would otherwise have been entitled on exercise
immediately prior to the Corporate Reorganization, the kind and amount of
shares or other securities or property (including cash) that he would have been
entitled to receive as a result of the Corporate Reorganization if, on the
effective date thereof, he had been the holder of the number of Shares (and any
other securities to which Warrantholders are then entitled on the exercise of
Warrants) to which he would have been entitled on the exercise of the Warrant
or Warrants immediately prior to the Corporate Reorganization.
(9) As a condition precedent to taking any action that would require an
adjustment pursuant to subsection (8), the Company will take all action that,
in the opinion of counsel, is necessary in order that the Company, any
successor or any successor to its assets and undertaking, shall be obligated to
and may validly and legally issue as fully paid and non-assessable all the
Shares or other shares or securities or property to which Warrantholders will
be entitled on the exercise of Warrants thereafter.
(10) If necessary as a result of any Corporate Reorganization, appropriate
adjustments will be made in the application of the provisions set forth in this
Article Five with respect to the rights and interests of Warrantholders to the
end that the provisions set forth in this Article Five will thereafter
correspondingly be made applicable as nearly as may reasonably be possible to
any shares or other securities or property thereafter deliverable on the
exercise of a Warrant. Any such adjustment will be subject to the prior written
consent of The Toronto Stock Exchange, will be made by and set forth in an
amendment hereto approved by the Directors and by the Trustee and will for all
purposes be conclusively deemed to be an appropriate adjustment.
(11) If the purchase price provided for in any right, warrant or option
issued in connection with a Rights Offering is decreased, or the conversion
price for Convertible Securities issued in connection with a Share
Reorganization is increased, the Price Adjustment Factor shall forthwith be
changed to whatever Price Adjustment Factor would have been obtained had the
adjustment made
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in connection with the issuance of all such rights, warrants, options or
Convertible Securities been made upon the basis of the purchase price as so
decreased or the conversion price as so increased, provided that the provisions
of this subsection shall not apply to any increase or decrease resulting from
provisions in any rights, warrants, options or securities designed to prevent
dilution if the increase or decrease shall not have been proportionately
greater than the change, if any, in the Price Adjustment Factor to be made at
the same time pursuant to the provisions of this section 5.1.
5.2 Subscription Rights Adjustment Rules
The following rules and procedures will be applicable to adjustments made
pursuant to section 5.1:
(a) the adjustments and readjustments provided for in section 5.1 shall
be cumulative and, subject to paragraph (b), will apply (without
duplication) to successive issues, subdivisions, combinations,
consolidations, distributions and other events that require an
adjustment;
(b) no adjustment in the Price Adjustment Factor, or resulting adjustment
in the number of Shares issuable on exercise of Warrants, will be
made unless the adjustment would result in a change of at least 1% in
the prevailing Price Adjustment Factor or the number of Shares
purchasable upon the exercise of the Warrants would change by at
least one one-hundredth of a share, provided that any adjustment that
would have been required to be made except for the provisions of this
paragraph, will be carried forward and taken into account in the next
adjustment;
(c) no adjustment will be made in respect of an event described in
paragraph (3)(a) or subsection (4) or (6) of section 5.1 if the
Warrantholders are entitled to participate in the event on the same
terms, mutatis mutandis, as if they had exercised their Warrants
immediately before the effective date of or record date for the event
and Warrantholders shall not be entitled to so participate without
the prior written consent of The Toronto Stock Exchange;
(d) no adjustment in the Price Adjustments Factor shall be made pursuant
to section 5.1 in respect of the issue of shares, rights, options or
warrants pursuant:
(i) to this Indenture,
(ii) the issuance of Shares pursuant to the exercise of directors,
officers and employees options or options granted for services
in
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accordance with the requirements of The Toronto Stock Exchange,
or
(iii) 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 issues shall be deemed not to be a Share
Reorganization, a Rights Offering or a Special Distribution;
(e) for the purposes of subsections (3), (4), (5) and (6) of section 5.1,
there will be deemed not to be outstanding:
(i) any Share owned by or held for the account of the Company; or
(ii) any Share owned by or held for the account of any Subsidiary of
the Company;
(f) any dispute that arises at any time with respect to any adjustment
pursuant to this Indenture will be conclusively determined (as
between the Company, the 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 is selected by the directors and
is acceptable to the Trustee, and any determination by them will be
binding on the Company, the Warrantholders, the Trustee and all
transfer agents and shareholders of the Company; and
(g) in the absence of a resolution of the directors fixing the record
date for an event referred to in section 5.1, the Company will be
deemed to have fixed as the record date therefor the date on which
the event is effected or such date as may be required by law.
5.3 Postponement of Issue of Shares, etc.
In any case in which section 5.1 requires an adjustment to take effect
immediately after the effective date of or record date for an event, and a
Warrant is exercised after that date and before the consummation of the event
(which in the case of rights,
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options and warrants will be the date the rights, options and warrants are
issued), the Company may postpone, until such consummation, issuing to the
Warrantholder such of the shares, securities or property to which he is
entitled pursuant to the exercise as exceeds those to which he would have been
entitled if the Warrant had been exercised immediately before that date,
provided however, that the Company will deliver to the Warrantholder an
appropriate instrument evidencing such holder's right to receive such
additional shares, securities or property upon the occurrence and consummation
of such event and the right to receive any dividend or other distribution in
respect of such additional shares, securities or property declared in favour of
the holders of record of Shares or of such securities or property on or after
that date or such later date as such holder would, but for the provisions of
this section, have become the holder of record of such additional shares or of
such securities or property pursuant to section 4.2.
5.4 Notice of Certain Events
(1) At least 21 days before the effective date of or record date for any
event referred to in section 5.1, other than a subdivision or consolidation of
the Shares, that requires or might require an adjustment in the subscription
rights pursuant to a Warrant, including the Price Adjustment Factor and the
number of Shares purchasable on exercise of a Warrant, the Company will:
(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 Warrantholders of the particulars of the event
and, if determinable, the adjustment.
The notice need only set forth particulars as have been determined at the date
that notice is given.
(2) If notice has been given under subsection (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 showing the
computation of the adjustment; and
(b) give notice to the Warrantholders of the adjustment.
5.5 Reclassifications, Reorganizations, etc.
(1) In case of:
(a) any reclassifications or change of the Shares (other than a change in
par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or consolidation),
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(b) any amalgamation, consolidation or merger of the Company with, or
amalgamation, consolidation or merger of the Company into, any other
corporation (other than an amalgamation, consolidation or merger in
which the Company is the continuing corporation and which does not
result in any reclassification or change, other than as aforesaid, of
the Shares),
(c) any reorganization of the Company, or
(d) any sale, transfer or other disposition of all or substantially all
of the assets of the Company,
the Company, the corporation formed by the amalgamation, the corporation into
which the Company shall have been merged, the reorganized Company, or the
corporation which shall have acquired such assets, as the case may be, shall
execute and deliver to the Trustee a supplemental indenture providing that the
holder of each Warrant then outstanding shall have the right thereafter (until
the Warrant Expiry Time) to exercise Warrants only into the kind and amount of
shares and other securities and property (including cash) receivable upon such
reclassification, change, amalgamation, merger, reorganization, sale, transfer
or other disposition by a holder of the number of Shares which were purchasable
upon the exercise of the Warrants had the Warrants been exercised immediately
prior to the reclassification, change, amalgamation, merger, reorganization,
sale, transfer or other disposition.
(2) The supplemental indenture shall provide for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments provided for
in this Article Five.
(3) The provisions of this section 5.5 shall apply to successive
reclassifications, changes, amalgamation, mergers, reorganizations, sales,
transfers or other dispositions.
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 Warrantholder to determine whether any
facts exist which may require any adjustment contemplated by section 5.1, 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 these subscription rights pursuant to any of the
Warrants, including the number of Shares which are to be issued by the exercise
of the 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
preserved in its authorized capital and may validly and legally issue as fully
paid and non-accessible, all the Shares which the
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holders of such 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 Warrants
(1) The Company, when not in default under this Indenture, may purchase in
the market, by private contract, by tender or otherwise all or any portion of
the Warrants in such manner, from such persons and on such terms as the Company
and such persons may determine. All Warrants so purchased shall forthwith be
delivered to the Trustee and cancelled by it and no Warrants shall be issued in
substitution therefor.
(2) If, upon an invitation for tenders, more Warrants are tendered at the
same lowest price than the Company is prepared to accept at that price, the
Warrants to be purchased by the Company shall be selected by the Trustee by
lot, or in any other manner as the Trustee may deem equitable, from the
Warrants tendered by each tendering Warrantholder who tendered at such lowest
price. For this purpose the Trustee may make, and from time to time amend,
regulations with respect to the manner in which Warrants may be so selected and
regulations so made shall be valid and binding upon all Warrantholders
notwithstanding the fact that, as a result thereof, the Warrants held by a
holder or represented by a Warrant Certificate become subject to purchase in
part only.
6.2 General Covenants
The Company covenants with the Trustee that so long as any Warrants remain
outstanding and may be exercised:
(a) the Company will at all times maintain its existence, carry on and
conduct its business in a prudent manner and 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 with the
Trustee copies of all annual financial statements of the Company
furnished to its shareholders during the term of this Indenture;
(b) 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 Warrants will be listed and
posted for trading on The Toronto Stock Exchange upon their issue;
(c) the Company will reserve and keep available a sufficient number of
Shares for issuance upon the exercise of Warrants issued by the
Company hereunder;
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(d) the Company will cause the Shares from time to time subscribed for
and purchased pursuant to the exercise of the Warrants, issued by the
Company hereunder, in the manner herein provided, to be duly issued
in accordance with the Warrants and the terms hereof;
(e) the Company will cause the certificates representing the Shares
issuable upon exercise of the Warrants from time to time in the
manner herein provided, to be duly issued and delivered in accordance
with the Warrants and the terms hereof;
(f) upon the exercise by the holder of any Warrant of the right of
purchase provided for therein and herein and, upon payment of the
Subscription Price applicable thereto for each Share in respect of
which the right of purchase is so exercised, all Shares issuable upon
the exercise of Warrants shall be issued by the Company as fully paid
and non-assessable;
(g) the Company will use its best efforts to maintain its status as a
"reporting issuer" (or the equivalent thereof) not in default of the
requirements of the Securities Act (British Columbia) and the
Securities Act (Ontario);
(h) the Company is duly authorized to create and issue the Warrants to be
issued hereunder, and the Warrant Certificates when issued and
certified as herein provided will be legal, valid and binding
obligations of the Company;
(i) if, in the opinion of counsel, any prospectus or registration
statement is required to be filed with, or any permission is required
to be obtained from, any governmental authority or any other step is
required under any applicable securities laws before any Shares which
a Warrantholder is entitled to purchase pursuant to his Warrant may
properly and legally be issued upon the due exercise thereof, the
Company will take such action so required; and
(j) 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
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 properly
incurred or made by the Trustee in the administration or execution of the
trusts hereby created (including the reasonable compensation and
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the disbursements of counsel and all other advisors 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.
6.4 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 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 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.
6.5 Notice to Warrantholders of Certain Events
The Company covenants with the Trustee for the benefit of the Trustee and
the Warrantholders that, so long as any of the Warrants are outstanding, it
will not:
(a) pay any dividend payable in shares of any class to the holders of its
Shares or make any other distribution (other than a cash distribution
made as a dividend out of retained earnings or contributed surplus
legally available for the payment of dividends) to the holders of its
Shares,
(b) offer to the holders of its Shares rights to subscribe for or to
purchase any Shares or shares of any class or any other securities,
rights, warrants or options,
(c) make any repayment of capital on, or distribution of evidences of
indebtedness or any of its assets (excluding cash dividends) to the
holders of, its Shares,
(d) amalgamate, consolidate or merge with any other person or sell or
lease the whole or substantially the whole of its assets or
undertaking,
(e) effect any subdivision, consolidation or reclassification of its
Shares, or
(f) liquidate, dissolve or wind-up,
unless, in each such case, the Company shall have given notice, in the manner
specified in section 11.2, to each Warrantholder, of the action proposed to be
taken and the date on which (a) the books of the Company shall close or a
record shall be taken for such
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dividend, repayment, distribution, subscription rights or other rights,
warrants or securities, or (b) such subdivision, consolidation,
reclassification, amalgamation, merger, sale or lease, dissolution, liquidation
or winding-up shall take place, as the case may be, provided that the Company
shall only be required to specify in the notice those particulars of the action
as shall have been fixed and determined at the date on which the notice is
given. The notice shall also specify the date as of which the holders of
Shares of record shall participate in the dividend, repayment, distribution,
subscription of rights or other rights, warrants or securities, or shall be
entitled to exchange their Shares for securities or other property deliverable
upon such reclassification, amalgamation, merger, sale or lease, other
disposition, dissolution, liquidation or winding-up, as the case may be. The
notice shall be given, with respect to the actions described in subsections
(a), (b), (c), (d), (e) and (f) not less than 21 days prior to the record date
or the date on which the Company's transfer books are to be closed with respect
thereto.
6.6 Closure of Share Transfer Books
The Company further covenants and agrees that it will not during the
period of any notice given under section 6.5 close its share transfer books or
take any other corporate action which might deprive the Warrantholders of the
opportunity of exercising their Warrants, provided that nothing contained in
this section 6.6 shall be deemed to affect the right of the Company to do or
take part in any of the things referred to in section 6.5 or to pay cash
dividends on the shares of any class or classes in its capital from time to
time outstanding.
ARTICLE SEVEN
Enforcement
7.1 Enforcement of Rights of Warrantholders
(1) No Warrantholder shall have the right to institute any action or
proceeding or to exercise any other remedy authorized by this Indenture for the
purpose of enforcing any rights on behalf of all Warrantholders for the
execution of any trust or power hereunder unless a requisition, in writing
signed by holders of Warrants sufficient to purchase not less than 25% of the
aggregate number of Shares which could be purchased under the Warrants then
outstanding, requesting the Trustee to so act, and the indemnity referred to in
subsection 10.2(3), have been tendered to the Trustee and the Trustee shall
have failed to act within a reasonable time thereafter. In such case, but not
otherwise, any Warrantholder acting on behalf of himself and all other
Warrantholders shall be entitled to take proceedings in any court of competent
jurisdiction such as the Trustee might have taken.
(2) No one or more Warrantholders shall have any right in any manner
whatsoever to affect, disturb or prejudice the rights hereby
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created by his or their action, or to enforce any right hereunder or under any
Warrant Certificate, except subject to the conditions and in the manner herein
provided and all powers and trusts hereunder shall be exercised and all
proceedings at law shall be instituted, had and maintained by the Trustee,
except only as herein provided, and in any event for the equal benefit of all
Warrantholders.
7.2 Immunity of Shareholders
The Trustee, and by their acceptance of the Warrant Certificates and as
part of the consideration for the issue of the Warrants, the 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 pursuant to any Warrants or on any covenant, agreement,
representation or warranty by the Company contained herein or in the 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 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 Warrantholders' Request and upon being
indemnified to its reasonable satisfaction by the Company or by one or more
Warrantholders signing the Warrantholders' Request against the costs that may
be incurred in connection with the calling and holding of the meeting, convene
a meeting of the Warrantholders. In the event of the Trustee failing, within 15
days after receipt of the written request of the Company or Warrantholders'
Request and indemnity given as aforesaid, to give notice convening a meeting,
the Company or the 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.
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8.2 Notice
At least 21 days notice of any meeting shall be given to the
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.
8.3 Chairman
A person (who need not be a 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 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 Warrantholders present in
person or by proxy holding Warrants sufficient to purchase not less than 20% of
the aggregate number of Shares that could be purchased under all the Warrants
then outstanding. If a quorum of the Warrantholders shall not be present within
half an hour from the time fixed for holding any meeting, the meeting, if
summoned by the Warrantholders pursuant to a 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 need be given. At the
adjourned meeting the Warrantholders present in person or by proxy shall form a
quorum and may transact the business for which the meeting was originally
convened, notwithstanding the outstanding Warrants that such Warrantholders
hold.
8.5 Power to Adjourn
The chairman of any meeting at which a quorum of the 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
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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 the chairman or requested by one or
more of the Warrantholders acting in person or by proxy and holding Warrants
sufficient to purchase not less than 5% of the aggregate number of Shares that
could be purchased under 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 Warrantholders.
8.8 Voting
On a show of hands, every person who is present and entitled to vote,
whether as a Warrantholder or as proxy for one or more absent Warrantholders or
both, shall have one vote. On a poll each Warrantholder present in person or
represented by proxy duly appointed by instrument in writing shall be entitled
to one vote in respect of each Share purchasable under Warrants then held by
him. A proxy need not be a 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
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 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 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
Warrantholders convening the meeting,
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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 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 Warrantholder; and
(e) generally, for the calling of meetings of Warrantholders and the
conduct of business thereat.
Any regulations so made shall be binding and effective and the votes given in
accordance therewith shall be valid and shall be counted. Except as the
regulations may provide, the only persons who shall be recognized at any
meeting as the holders of any 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 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
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 Warrant- holders at a meeting shall
have the following powers exercisable from time to time by Extraordinary
Resolution:
(a) power to agree to or sanction any amendment, modification,
abrogation, alteration, compromise or arrangement of the rights of
Warrantholders and/or the Trustee in its capacity as trustee
hereunder or on behalf of the Warrantholders against the Company,
whether those rights arise under this Indenture or the Warrants 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
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in the Warrant Expiry Date or Warrant Expiry Time or the Subscription
Price, the amendment shall not be binding upon a 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 Warrants or to enforce any of the rights of the Warrantholders in
any 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 Warrants, either unconditionally or upon any
conditions specified in the Extraordinary Resolution;
(d) power to restrain any 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 the Warrants or to enforce any of the rights of the
Warrantholders;
(e) power to direct any 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 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 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 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 Warrantholders
holding Warrants sufficient to purchase not less than 51% of the aggregate
number of Shares that could be purchased under all of the Warrants then
outstanding and passed by the affirmative votes of Warrantholders
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holding Warrants sufficient to purchase not less than 66.67% of the aggregate
number of Shares that could be purchased under all the Warrants then
outstanding and represented at the meeting and voted on the poll upon the
resolution.
(2) If, at any meeting called for the purpose of passing an Extraordinary
Resolution, Warrantholders holding Warrants sufficient to purchase not less
than 51% of the aggregate number of Shares that could be purchased under all of
the Warrants then outstanding 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 Warrantholders or on a Warrantholders' Request, shall be dissolved, but in
any other case it shall stand adjourned to such day, being not less than 15 or
more than 30 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 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
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 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 Warrantholders holding Warrants sufficient to
purchase not less than 51% of the aggregate number of Shares that could be
purchased under all of the Warrants then outstanding 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
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
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
Warrantholders 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 if purporting to be signed by the chairman of the meeting or by the
chairman of the
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next succeeding meeting of Warrantholders, shall be prima facie evidence of the
matters therein stated and, until the contrary is proved, every meeting for
which minutes have been made, shall be deemed to have been duly convened and
held and all resolutions passed or proceedings taken thereat 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
Warrantholders at a meeting held as in this Article Eight provided may also be
taken and exercised by Warrantholders holding Warrants sufficient to purchase
not less than 66.67% of the aggregate number of Shares that could be purchased
under all of the Warrants then outstanding by an instrument in writing signed
in one or more counterparts by each 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 Warrantholders shall
be binding upon all the 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 Warrantholders in accordance with section 8.15 shall be binding upon all the
Warrantholders, except as provided in subsection 8.11(a) whether signatories
thereto or not, and each and every 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 Warrantholders holding the requisite number of
Warrants are present for the purpose of obtaining a quorum or have voted or
consented to any resolution, Extraordinary Resolution, consent, waiver,
Warrantholders' Request or other action under this Indenture, 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 hereto 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 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 Warrants, the exchange of Warrants and the making of
any modification in the form of a Warrant Certificate which, in the
opinion of the Trustee, does 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
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 upon exercise of the 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 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
the modification or relief impairs any of the rights of the
Warrantholders provided hereunder, or of the Trustee,
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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 Warrant Certificates as
provided hereafter in this Article Nine;
(i) adding to, deleting or altering the provisions hereof relating to any
adjustment in the provisions of Article Five relating to the
subscription for Shares upon exercise of the Warrants; and
(j) 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 or of the 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) will be bound by the
provisions hereof and 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 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 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
Warrantholders or obligations of the Company hereunder shall be conditional
upon either the Warrantholders or the Company furnishing, when required by
notice in writing by the Trustee, sufficient funds to commence or continue such
act, action or proceeding and an indemnity reasonably satisfactory to the
Trustee to protect and hold harmless the Trustee against the costs, charges 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 or at any time during the
continuance of any such act, action or proceeding require the Warrantholders at
whose instance it is acting to deposit with the Trustee the Warrant
Certificates held by them, for which 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 Advisors
(1) In addition to the reports, certificates, opinions and other evidence
required by this Indenture, the Company will furnish to the Trustee such
additional evidence of compliance with any provision hereof, and in such form,
as is prescribed by Applicable Legislation or as the Trustee may reasonably
require by written notice to the Company.
(2) In the exercise of its right or duty hereunder, the Trustee may, if it
is acting in good faith, rely as to the truth of the statements or the accuracy
of the opinions expressed therein, upon statutory declarations, opinions,
reports, certificates or other evidence furnished to the Trustee pursuant to a
provision hereof or of Applicable Legislation or pursuant to a request of the
Trustee, provided the evidence complies with Applicable Legislation
- 39 -
44
and that the Trustee examines such evidence and determines that it 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 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
Warrantholders' Request, by a Warrantholder may be made by the certificate of a
notary public, or other officer 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 will not be responsible for any misconduct or negligence on the
part of any of them who has been selected with due care by the Trustee.
(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 under the circumstances.
10.4 Documents, Monies, etc. Held by Trustee
(1) Any securities, documents of title or other instruments that may at
any time be held by the Trustee subject to the trusts hereof may be placed in
the deposit vaults of the Trustee or of any Canadian 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 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 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
- 40 -
45
(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.
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 the power to institute and to maintain such actions
and proceedings as it may consider necessary or expedient to preserve or
protect its interests and the interests of the 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:
(a) the Trustee shall not be liable for or by reason of any statements of
fact or recitals in this Indenture or in the Warrant Certificates
(except the representation contained in section 10.9 and by virtue of
the certification by the Trustee of the Warrant Certificates) or
required to verify the same, but all such statements or recitals are
and shall be deemed to be made by the Company;
(b) nothing herein contained shall impose any obligation on the Trustee
to see or to require evidence of the registration (on filing or
renewal thereof) of this Indenture or any instrument ancillary or
supplemental hereto;
(c) the Trustee shall not be bound to give notice to any person or
persons of the execution hereof;
(d) 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 obligation herein contained or of any acts
of any director, officer, employee or agent of the Company;
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(e) 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 to do so 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;
(f) the Trustee shall not be accountable with respect to the validity or
value (or the kind or amount) of any Shares or other securities or
property which may at any time be issued or delivered upon the
exercise of the rights attaching to any Warrant; and
(g) the Trustee is not responsible for any failure of the Company to make
any cash payment or to issue, transfer or deliver Shares or
certificates for the same upon the surrender of any Warrant
Certificates and payment of the Subscription Price applicable thereto
for the purpose of the exercise of the Warrants represented by such
Warrant Certificates or to comply with any of the covenants contained
in Article Six.
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 Warrantholders not less than 90 days notice in
writing or, if a new Trustee has been appointed, such shorter notice as the
Company accepts as sufficient. The 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 Warrantholders.
If for any reason the Company is unable to appoint a new Trustee, the retiring
Trustee or any 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. Any new Trustee so appointed by the Company or by the Court shall be
subject to removal as aforesaid by the Warrantholders and 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
Province of British Columbia and Ontario and, if required by the Applicable
Legislation of any other Province, in that other
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Province. On any such appointment the new Trustee shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
herein as Trustee without any further assurance, conveyance, act or deed, but
there shall be immediately executed, at the expense of the Company, all such
conveyances or other instruments as may, in the opinion of counsel, be
necessary or advisable for the purpose of assuring 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 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) A Warrant Certificate certified but not delivered by a predecessor
Trustee may be delivered by the new or successor Trustee in the name of the
predecessor Trustee 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 that if a material conflict of interest arises hereafter it will, within 90
days after ascertaining that it has a material conflict of interest, either
eliminate the conflict of interest 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 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 on and deal in securities of the Company, may act
as registrar and transfer agent for the Shares and trustee for the Special
Warrants under the Special Warrant Indenture and generally may contract and
enter into financial transactions with the Company or any subsidiary of the
Company without being liable to account for any profit made thereby.
10.10 Acceptance of Trust
The Trustee hereby accepts the trusts in this Indenture declared and
provided for and agrees to perform them on the terms
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48
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 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 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, bad faith or wilful misconduct of the
Trustee or of 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 the Company or the 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:
(a) if to the Company:
Granges Inc.
Suite 3000
370 Seventeenth Street
Denver, Colorado
U.S.A. 80202
Attention: Mr. Michael B. Richings
Facsimile No.: (303) 629-2499
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49
and to:
Ladner Downs
Barristers & Solicitors
1200 - 200 Burrard Street
Vancouver, British Columbia
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) 683-3694
and any notice delivered 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, a 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
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, facsimile, telegram, telex or other means of
prepaid, transmitted, 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, facsimile, telegram, telex
or other means of prepaid, transmitted, recorded communication, on the first
business day following the date of the sending of the notice by the persons
giving the notice.
11.2 Notice to Warrantholders
(1) Unless herein otherwise expressly provided, a notice to be given
hereunder to Warrantholders shall be written and shall be
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deemed to be validly given if the notice is sent by prepaid mail, addressed to
the holders or delivered by hand or facsimile (or so mailed to certain holders
and so delivered or facsimiled to the 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 Warrant, more than one
address or facsimile number appears on the register in respect of the joint
holding, the notice shall be addressed or delivered, as the case may be, only
to the first address or facsimile number so appearing. The Trustee shall give,
in the same manner as for 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 given 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 a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, any notice to be given to the
Warrantholders hereunder could reasonably be considered unlikely to reach or to
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 of 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 Warrantholders, the Trustee may require such addition 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 Warrants or to comply
with any applicable requirement of law or any stock exchange. A notice so given
will be deemed to have been given on the day on which it has been published in
all of the cities in which publication was 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
On the earlier of:
(a) the date by which there has been delivered to the Trustee for
exercise or destruction all Warrant Certificates theretofore
certified hereunder, or
(b) the 61st day following the Warrant Expiry Date,
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51
and if all Shares required to be issued in compliance with the provisions
hereof have been issued and delivered hereunder, this Indenture will cease to
be of further effect and the Trustee, on demand of and at the cost and expense
of the Company and on delivery to the Trustee by the Company of a certificate
of the Company stating that all conditions precedent to the satisfaction and
discharge of this Indenture have been complied with and on payment to the
Trustee of the fees and other remuneration payable to the Trustee, will execute
proper instruments acknowledging satisfaction of and discharging this
Indenture.
11.4 Sole Benefit of Parties and Warrantholders
Nothing in this Indenture or in the Warrant Certificates expressed or
implied, shall give or be construed to give to any person other than the
parties hereto and the Warrantholders, as the case may be, any legal or
equitable right, remedy or claim under this Indenture, or under any covenant or
provision herein contained, all covenants and provisions being for the sole
benefit of the parties hereto and the Warrantholders.
11.5 Discretion of Directors
Any matter provided herein to be determined by the directors will be
determined by the directors 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 will be deemed to be an original, and the counterparts together
will constitute one and the same instrument and notwithstanding the date of
their execution will be deemed to be dated as of April 25, 1996.
IN WITNESS WHEREOF the parties hereto have executed these presents under
their respective seals and the hands of their proper officers in that behalf.
GRANGES INC.
By:
-----------------------------------
(C/S)
By:
-----------------------------------
MONTREAL TRUST COMPANY OF CANADA
By:
-----------------------------------
(C/S)
By:
-----------------------------------
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SCHEDULE "A"
COMMON SHARE PURCHASE WARRANT
to acquire Common Shares of
GRANGES INC.
(incorporated under the laws of British Columbia)
THE RIGHT TO PURCHASE COMMON SHARES UNDER THIS WARRANT EXPIRES AT 4:30 P.M.
(LOCAL TIME) ON OCTOBER 31, 1997.
Warrant Certificate CERTIFICATE FOR _______________________
No. W- Warrants, each entitling the holder
thereof to acquire one Share of
Granges Inc.
THIS IS TO CERTIFY THAT,
- -------------------------------------------------------------------------------
(the "holder") is the registered holder of the number of common share purchase
warrants (the "Warrants") of Granges Inc. (the "Company") set forth above, and
is entitled, on exercise of these Warrants upon and subject to the terms and
conditions set forth herein and in the Warrant Indenture hereinafter referred
to, to purchase at any time, before 4:30 p.m. (local time) on October 31, 1997,
one fully-paid and non-assessable common share (a "Share") without par value in
the capital of the Company as constituted on the date hereof for each Warrant
by surrendering to Montreal Trust Company of Canada (the "Trustee") at its
principal transfer office in either of the cities of Toronto or Vancouver, an
exercise form in the form attached hereto duly completed and executed,
accompanied by this certificate, cash, a certified cheque, bank draft or money
order in lawful money of Canada payable to or to the order of the Company or to
the Trustee at par in the city where this Warrant Certificate is so surrendered
in an amount equal to the purchase price of the Shares so subscribed for.
Surrender of this Warrant Certificate, the duly completed exercise form
with payment as provided above will be deemed to have been effected only on
personal delivery thereof to, or if sent by mail or other means of transmission
on actual receipt thereof by, the Trustee at its principal transfer office in
either of the cities of Toronto or Vancouver.
The Warrants represented by this Warrant Certificate and the Shares to be
issued upon exercise thereof have not been and will not be 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. Accordingly, this
Warrant does not constitute an offer to any person within the
A-1
53
United States or to any "U.S. Person" within the meaning of Regulation S under
the U.S. Securities Act and may not be exercised within the United States or by
or on behalf of any U.S. Person unless such person is an institutional
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) of the U.S.
Securities Act and has checked box B of the attached exercise form.
Subject to adjustment thereof in the events and in the manner set forth in
the Warrant Indenture hereinafter referred to, the price payable for each Share
upon the exercise of Warrants shall be $3.00 in lawful money of Canada.
Certificates for the Shares subscribed for will be mailed to the persons
specified in the exercise form at their respective addresses specified therein
or, if so specified in the exercise form, delivered to such persons at the
office where this Warrant Certificate is surrendered. If fewer Shares are
purchased than the number that can be purchased pursuant to this Warrant
Certificate, the holder hereof will be entitled to receive without charge a new
Warrant Certificate in respect of the balance of the Shares not so purchased.
No fractional Shares will be issued upon exercise of any Warrant. In lieu of
such fractional share, the holder will receive a cash payment therefor.
This Warrant Certificate evidences Warrants of the Company issued or
issuable under the provisions of a warrant indenture (which indenture together
with all other instruments supplemental or ancillary thereto is herein referred
to as the "Warrant Indenture") dated as of April 25, 1996 between the Company
and the Trustee, as trustee, to which Warrant Indenture reference is hereby
made for particulars of the rights of the Warrantholders, the Company and the
Trustee in respect thereof and the terms and conditions on which the Warrants
are issued and held, all to the same effect as if the provisions of the Warrant
Indenture were herein set forth, to all of which the holder by acceptance
hereof assents. The Company will furnish to the holder, on request and without
charge, a copy of the Warrant Indenture.
On presentation at the principal transfer office of the Trustee in either
of the cities of Toronto or Vancouver as specified below, subject to the
provisions of the Warrant Indenture and on compliance with the reasonable
requirements of the Trustee, one or more Warrant Certificates may be exchanged
for one or more Warrant Certificates entitling the holder thereof to purchase
in the aggregate an equal number of Shares as are purchasable under the Warrant
Certificate or Certificates so exchanged.
The Warrant Indenture contains provisions for the adjustment of the price
payable for each Share upon the exercise of Warrants and the number of Shares
issuable upon the exercise of Warrants in the events and in the manner set
forth therein.
The Warrant Indenture also contains provisions making binding on all
holders of Warrants outstanding thereunder resolutions passed at meetings of
Warrantholders held in accordance
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54
with the provisions of the Warrant Indenture and instruments in writing signed
by holders of Warrants entitled to purchase a specific majority of the Shares
that can be purchased pursuant to such Warrants.
Nothing contained in this Warrant Certificate, the Warrant Indenture or
elsewhere shall be construed as conferring upon the holder hereof any right or
interest whatsoever as a holder of Shares or any other right or interest except
as herein and in the Warrant Indenture expressly provided.
Warrants are issuable only as fully registered Warrants. Warrants may only
be transferred in compliance with the conditions of the Warrant Indenture on
one of the registers to be kept by and at the principal offices of the Trustee
in either of the cities of Toronto or Vancouver, and by the Trustee or such
other registrar as the Company, with the approval of the Trustee, may appoint
at such other place or places, if any, as may be designated, upon surrender of
this Warrant Certificate to the Trustee or other registrar accompanied by a
written instrument of transfer in form and execution satisfactory to the
Trustee or other registrar and upon compliance with the conditions prescribed
in the Warrant Indenture and with such reasonable requirements as the Trustee
or other registrar may prescribe and upon the transfer being duly noted thereon
by the Trustee or other registrar.
Time is of the essence hereof.
This Warrant Certificate will not be valid for any purpose until it has
been countersigned by or on behalf of the Trustee from time to time under the
Warrant Indenture.
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.
IN WITNESS WHEREOF Granges Inc. has caused this Warrant Certificate to be
duly signed on _______________________, 199__.
GRANGES INC.
By:
---------------------------------------
Authorized Signatory
By:
---------------------------------------
Authorized Signatory
A-3
55
Countersigned and Registered by:
MONTREAL TRUST COMPANY OF CANADA,
Toronto
Vancouver
Per:
-----------------------------------
Authorized Signatory
A-4
56
SCHEDULE "B"
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:
B-1
57
SCHEDULE "C"
EXERCISE FORM
To: Granges Inc.
c/o Montreal Trust Company of Canada
(1) The undersigned holder of the within Warrant Certificate hereby
subscribes for ________ common shares ("Shares") of Granges Inc. (or such
number of Shares or other securities or property to which such subscription
entitles him in lieu thereof or in addition thereto under the provisions of the
Warrant Indenture mentioned in the Warrant Certificate) at the price determined
under, and on the terms specified in, the Warrant Certificate and Warrant
Indenture and encloses herewith cash or a bank draft, certified cheque or money
order payable at par to or to the order of Granges Inc. or to Montreal Trust
Company of Canada in payment therefor.
(2) The undersigned certifies as follows (check one box):
A[ ] The undersigned (and any person named in Section 3 below) is not
a "U.S. Person" within the meaning of Regulation S under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and is not
exercising this Warrant on behalf of any U.S. Person.
B[ ] The undersigned is an institutional "accredited investor", as
defined in Rule 501(a)(1), (2), (3) or (7) of the Securities Act and
is exercising this Warrant for its own account or the account of an
institutional accredited investor over which it exercises sole
investment discretion.
By checking box B above, the undersigned represents that it (and any
person named in Section 3 below) has had access to such current public
information concerning Granges Inc. as it has considered necessary in
connection with its investment decision and understands that the Shares have
not been and will not be registered under the Securities Act and agrees that it
will only resell the Shares (i) to Granges Inc., (ii) outside the United States
in accordance with Rule 904 of Regulation S under the Securities Act, (iii)
inside the United States pursuant to the exemption from registration under the
Securities Act provided by Rule 144A or Rule 144 thereunder and in accordance
with applicable state securities laws or (iv) in a transaction that does not
require registration under the Securities Act or any applicable state
securities laws. If box B above is checked, the Shares issued pursuant to this
exercise form will bear a legend to the foregoing effect which may be removed
by providing a declaration to the registrar and transfer agent for the Shares
to the effect that such Shares have been sold in accordance with Rule 904 of
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Regulation S under the U.S. Securities Act or by providing the registrar and
transfer agent an opinion of counsel, of recognized standing reasonably
satisfactory to Granges Inc., to the effect that such legend is no longer
required under applicable requirements of the U.S. Securities Act or state
securities laws.
(3) The undersigned hereby irrevocably directs that the said Shares be
issued and delivered as follows:
Name(s) in Full Address(es) Number(s) of
(Include Postal Code) Common shares
- ----------------------- ----------------------------- ----------------------
- ----------------------- ----------------------------- ----------------------
- ----------------------- ----------------------------- ----------------------
(Please print full name in which share certificates are to be issued. If any
shares are to be issued to a person or persons other than the Warrantholder,
the Warrantholder must pay to the Trustee all exigible transfer taxes or other
government charges.)
DATED this day of , 19 .
----- ------------------------ --
- ---------------------------------- ------------------------------------
Signature Guaranteed By: Signature of Subscriber*
------------------------------------
Name of Subscriber
------------------------------------
------------------------------------
Address of Subscriber
(Include Postal Code)
* This signature must correspond exactly with the name appearing on the
registration panel.
Please check box if the share certificates are to be delivered at the office
where this Warrant Certificate is surrendered, failing which the certificates
will be mailed. [ ]
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59
THE RIGHT TO PURCHASE SHARES UNDER THIS WARRANT EXPIRES AT 4:30 P.M. (VANCOUVER
TIME) ON OCTOBER 31, 1997.
REGISTRATION PANEL
(No writing hereon except by the Trustee or other Registrar)
In Whose Name Place of Trustee or other
Date of Registration Registered Registration Registrar
- -------------------- -------------- ------------ ----------------
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SCHEDULE "D"
INSTRUCTIONS FOR THE TRANSFER OF COMMON SHARES
BEARING A U.S. SECURITIES ACT LEGEND
--------------------------------------------
Granges Inc.
Common Shares
--------------------------------------------
Set forth below are the instructions to be followed by Montreal Trust
Company of Canada, as transfer agent and registrar of the common shares
("Shares") of Granges Inc. (the "Company"), in connection with (A) transfers of
Shares, bearing the U.S. Securities Act legend (the "U.S. Legend") set forth in
paragraph 2 below ("U.S. Legended Shares") to a person outside the United
States through a trade on The Toronto Stock Exchange or otherwise in compliance
with Rule 904 of Regulation S under the United States Securities Act of 1933
(the "U.S. Securities Act") or (B) transfers of U.S. Legended Shares other than
in the manner described in clause (A).
1. Transfers of U.S. Legended Shares through the facilities of The Toronto
Stock Exchange or otherwise in compliance with Rule 904 of Regulation S
Upon surrender for registration of transfer of any U.S. Legended Share
certificate at an authorized office of Montreal Trust Company of Canada by
a person who sold the Shares represented thereby on or through the
facilities of The Toronto Stock Exchange or otherwise in compliance with
Rule 904 of Regulation S under the U.S. Securities Act, Montreal Trust
Company of Canada shall certify, register and deliver in the name of such
transferee a new Share certificate without the U.S. Legend representing
the number of Shares so transferred, provided that such transferor has
delivered (by facsimile transmission or otherwise) to Montreal Trust
Company of Canada a duly executed declaration stating the following:
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
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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.
2. Transfers of U.S. Legended Shares other than in the manner described in
Paragraph 1 above
Upon surrender for registration of transfer of any U.S. Legended Share
certificate at an authorized office of Montreal Trust Company of Canada,
Montreal Trust Company of Canada shall certify, register and deliver in
the name of the transferee a new Share certificate with the U.S. Legend in
the following form printed on the face or reverse thereof representing the
aggregate number of Shares so transferred.
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, however, that Montreal Trust Company of Canada shall certify,
register and deliver in the name of such transferee a new Share
certificate without the U.S. Legend representing
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the number of Shares so transferred if such transferor has delivered to
Montreal Trust Company of Canada 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 and state securities laws.
3. Exchanges of U.S. Legended Shares
If U.S. Legended Share certificates are presented to Montreal Trust
Company of Canada in exchange for new Share Certificates that are not
being transferred pursuant to paragraph 1 or 2 above (including any Shares
remaining untransferred after certificates are presented for transfer
pursuant to Paragraph 1 or 2 above), Montreal Trust Company of Canada
shall deliver to the holder thereof new Share certificates bearing the
U.S. Legend in the number requested, representing the appropriate
aggregate number of Shares.
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SCHEDULE "E"
TRANSFER OF WARRANTS
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
- -------------------------------------------------------------------------------
(name) (the "transferee")
- -------------------------------------------------------------------------------
(address)
_______________ of the Warrants registered in the name of the undersigned
represented by the within certificate.
DATED the _____ day of ______________, 199___.
Signature of Special Warrantholder
----------------------------------------------
(Signature of Warrantholder)
Guaranteed by:
- ------------------------------------ [* ]
* Authorized Signature Number
NOTE: The signature to this transfer must correspond with the name as recorded
on the 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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