EXHIBIT
SHARE EXCHANGE AGREEMENT
Dated July 8, 2004
Between
BREAKWATER RESOURCES LTD.
and
BOLIDEN LIMITED
TABLE OF CONTENTS
1. INTERPRETATION............................................................2
1.1 DEFINITIONS..........................................................2
1.2 CONSTRUCTION AND INTERPRETATION......................................7
1.3 BUSINESS DAY.........................................................7
1.4 USE OF THE WORD "INCLUDING"..........................................7
1.5 USE OF THE WORDS "BEST KNOWLEDGE"....................................8
1.6 GOVERNING LAW........................................................8
1.7 SEVERABILITY.........................................................8
1.8 TIME OF ESSENCE......................................................8
1.9 SCHEDULES............................................................8
2. SHARE EXCHANGE............................................................8
2.1 SHARE EXCHANGE.......................................................8
2.2 CASH ADVANCES ADJUSTMENT PAYMENT.....................................8
2.3 ALLOCATION OF CONSIDERATION..........................................9
3. REPRESENTATIONS OF BOLIDEN................................................9
3.1 CORPORATE AND SHARE REPRESENTATIONS..................................9
3.2 FINANCIAL AND TAX REPRESENTATIONS...................................10
3.3 BUSINESS AND ASSET REPRESENTATIONS..................................11
3.4 EMPLOYEE AND EMPLOYEE BENEFITS REPRESENTATIONS......................12
3.5 GENERAL VENDOR REPRESENTATIONS......................................12
3.6 ACKNOWLEDGMENT......................................................13
3.7 CERTIFICATES........................................................13
4. REPRESENTATIONS OF BREAKWATER............................................13
4.1 REPRESENTATIONS OF BREAKWATER.......................................13
4.2 CERTIFICATES........................................................14
5. PRE AND POST CLOSING COVENANTS...........................................15
5.1 PRE CLOSING TRANSFER OF ASSETS AND LIABILITIES......................15
5.2 CONDUCT OF BUSINESS DURING INTERIM PERIOD...........................15
5.3 ACCESS FOR DUE DILIGENCE............................................16
5.4 MYRA FALLS LETTER OF CREDIT.........................................16
5.5 CHANGE OF NAME......................................................16
5.6 CONSENTS AND AUTHORIZATIONS.........................................16
5.7 NOTICE OF UNTRUE REPRESENTATION OR WARRANTY.........................17
5.8 ACTIONS TO SATISFY CLOSING CONDITIONS...............................17
5.9 TRANSFER AND ISSUANCE OF SHARES AND WARRANTS........................17
5.10 INDEBTEDNESS BY AND TO BOLIDEN......................................17
5.11 BREAKWATER SHARE AND WARRANT OBLIGATIONS............................17
5.12 BREAKWATER BOARD OF DIRECTORS.......................................18
5.13 CONFIDENTIALITY.....................................................18
5.14 CONDUCT OF BUSINESS AFTER CLOSING...................................18
5.15 BWCFL NOTE..........................................................19
6. CONDITIONS OF CLOSING....................................................19
6.1 BREAKWATER CONDITIONS OF CLOSING....................................19
6.2 BOLIDEN CONDITIONS OF CLOSING.......................................20
7. CLOSING..................................................................21
7.1 CLOSING DATE........................................................21
7.2 BOLIDEN CLOSING DOCUMENTS...........................................21
7.3 BREAKWATER CLOSING DOCUMENTS........................................22
7.4 CLOSING.............................................................23
7.5 WAIVER..............................................................23
7.6 CONSENT NOT RECEIVED BY CLOSING.....................................23
8. BOLIDEN INDEMNIFICATION..................................................24
8.1 RELIANCE............................................................24
8.2 INDEMNIFICATION BY BOLIDEN..........................................24
8.3 TIME LIMITATION.....................................................25
8.4 AMOUNT LIMITATION...................................................25
8.5 SUSPENSION OF OBLIGATION TO INDEMNIFY...............................25
8.6 NOTICE AND CONDUCT OF CLAIM.........................................25
8.7 NO RIGHT OF SET-OFF.................................................25
8.8 RIGHT TO ACTION.....................................................26
9. BREAKWATER INDEMNIFICATION...............................................26
9.1 RELIANCE............................................................26
9.2 INDEMNIFICATION BY BREAKWATER.......................................26
9.3 TIME LIMITATION.....................................................27
9.4 AMOUNT LIMITATION...................................................27
9.5 NOTICE AND CONDUCT OF CLAIM.........................................27
9.6 NO RIGHT OF SET-OFF.................................................27
9.7 RIGHT TO ACTION.....................................................28
10. TERMINATION..............................................................28
10.1 TERMINATION WITHOUT NOTICE..........................................28
10.2 TERMINATION BY BREAKWATER...........................................28
10.3 TERMINATION BY BOLIDEN..............................................28
10.4 EFFECT OF WAIVER....................................................28
10.5 WITHOUT PREJUDICE...................................................28
11. GENERAL..................................................................28
11.1 SURVIVAL OF REPRESENTATIONS.........................................28
11.2 ACCESS TO BWCL BOOKS AND RECORDS WITHIN BRITISH COLUMBIA............29
11.3 BOLIDEN'S RIGHT TO INSPECT BWCL BOOKS AND RECORDS...................29
11.4 ACCESS TO BWCL BOOKS AND RECORDS OUTSIDE BRITISH COLUMBIA...........29
11.5 PREMIER GOLD BOOKS AND RECORDS......................................29
11.6 BREAKWATER'S RIGHT TO INSPECT OTHER RECORDS AND PREMIER
GOLD RECORDS.....................................................29
11.7 BOLIDEN'S RIGHT TO INSPECT PREMIER GOLD RECORDS.....................29
11.8 COMMISSIONS, LEGAL FEES.............................................30
11.9 PUBLIC ANNOUNCEMENTS................................................30
11.10 ASSIGNMENT..........................................................30
11.11 ENUREMENT...........................................................30
11.12 NOTICES.............................................................30
11.13 WAIVERS.............................................................31
11.14 FURTHER ASSURANCES..................................................31
11.15 REMEDIES CUMULATIVE.................................................31
11.16 THIRD PARTY BENEFICIARIES...........................................31
11.17 AMENDMENTS..........................................................31
11.18 SUBMISSION TO JURISDICTION..........................................31
11.19 ARBITRATION.........................................................32
11.20 ENTIRE AGREEMENT....................................................32
11.21 DELIVERY BY FAX.....................................................33
11.22 COUNTERPARTS........................................................33
SHARE EXCHANGE AGREEMENT
THIS AGREEMENT made this 8th day of July, 2004.
BETWEEN
BOLIDEN LIMITED
Suite 4400, Bay Wellington Tower, BCE Place
181 Bay Street
Toronto, Ontario, M5J 2T3
("BOLIDEN")
AND:
BREAKWATER RESOURCES LTD.
Suite 950 - 95 Wellington Street West,
Toronto, Ontario, M5J 2N7
("BREAKWATER")
WHEREAS:
A. Boliden is the registered holder and beneficial owner of all the issued
and outstanding shares of Boliden Westmin (Canada) Limited ("BWCL") as follows:
IN THE NAME OF CLASS AND NUMBER OF SHARES
Boliden Limited 10,000 Class A Common shares
Boliden Limited 11,057 Class B Common shares
B. As at June 1, 2004, BWCL is indebted to Boliden and its Affiliates on
the following terms and in the following approximate amounts:
CREDITOR INDEBTEDNESS AMOUNT
Boliden Limited CDN$281,547,650
Boliden Mineral AB CDN$ 31,467,850
C. In addition, on the Closing Date, BWCL anticipates being indebted to
Boliden in the sum of $8,699,600, such indebtedness to be evidenced by a
non-interest bearing demand promissory note to Boliden (the "BWCFL NOTE");
D. Boliden wishes to transfer the BWCL Shares and the BWCFL Note, and
Breakwater wishes to acquire the BWCL Shares and the BWCFL Note, in exchange for
Breakwater issuing common shares and warrants to Boliden on the terms and
conditions hereinafter set out.
IN CONSIDERATION of the covenants and agreements in this Agreement, the Parties
agree as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement except as expressly provided or as the context otherwise
requires:
(a) "AFFILIATE" has the meaning given to such term in the CANADA
BUSINESS CORPORATIONS ACT;
(b) "AGREEMENT" means this agreement including any recitals and
Schedules attached to this agreement, as amended, supplemented
or restated from time to time;
(c) "ANCILLARY AGREEMENTS" means all agreements, certificates and
other instruments delivered or given pursuant to this Agreement;
(d) "APPLICABLE LAWS" in respect of any Person, property,
transaction or event, means all laws, statutes, ordinances,
regulations, municipal by-laws, treaties, judgments and decrees
applicable to that Person, property, transaction or event and,
whether or not having the force of law, all applicable official
directives, rules, consents, approvals, authorizations, permits,
licences, guidelines, orders and policies of any Governmental
Authority having or purporting to have authority over that
Person, property transaction or event and all general principles
of common law and equity;
(e) "APPLICABLE SECURITIES LAWS" has the meaning given to such term
in Section 4.1(b);
(f) "ASSOCIATES" as describing the relationship between two Persons,
means that they are "related persons" as defined in the TAX ACT;
(g) "BOLIDEN INDEBTEDNESS" means the loans, advances and other
indebtedness owing to Boliden and its Affiliates by BWCL as of
June 1, 2004 as described in Recital B, being the approximate
sum of CDN$313,015,500, plus or minus payments or other
adjustments made in the course of the Pre-Closing BWCL
Transactions but excluding the Net Cash Advance Amount and the
indebtedness evidenced by the BWCFL Note;
(h) "BOLIDEN INDEMNIFIED PERSONS" has the meaning given to such term
in Section 9.2;
(i) "BOLIDEN WESTMIN LIMITED" means the B.V.I. company formerly
named Westmin Resources Limited and extra-provincially
registered in British Columbia under no. A-61092;
(j) "BOOKS AND RECORDS" means all books of account, tax records,
sales and purchase records, customer and supplier lists,
computer software, formulae, business reports, plans and
projections and all other documents, files, correspondence and
other information of BWCL (whether or not in written, printed,
electronic or computer printout form) including minute books,
share register books, share certificate books and annual
reports;
(k) "BREAKWATER INDEMNIFIED PERSONS" has the meaning given to such
term in Section 8.2;
(l) "BREAKWATER SHARES" means the 18,000,000 common shares of
Breakwater to be issued on the Closing Date to Boliden or its
nominees as designated by Boliden at least three Business Days
before the Closing Date;
(m) "BREAKWATER WARRANTS" means the 5,000,000 transferable warrants
of Breakwater to be issued on the Closing Date to Boliden or its
nominees (as designated by Boliden within three Business Days
before the Closing Date) pursuant to the warrant indenture dated
January 28, 2004 between Breakwater and Computershare Trust
Company of Canada (a copy of which is attached as Schedule
1.1(m)), each of which will allow the holder to buy one common
share of Breakwater for a price of $1 per common share so long
as the right to purchase is exercised on or before January 28,
2009 in accordance with the terms of such warrant indenture;
(n) "BUSINESS" means the business of operating the Myra Falls Mine
and the Discovery Terminal as now conducted by BWCL;
(o) "BUSINESS DAY" means a day other than a Saturday, Sunday or
statutory holiday in either Ontario or British Columbia;
(p) "BWCL" means Boliden Westmin (Canada) Limited, a corporation
incorporated under the CANADA BUSINESS CORPORATIONS ACT;
(q) "BWCL SHARES" means all (and not less than all) of the issued
and outstanding shares of BWCL as more particularly described in
Recital A;
(r) "BWCL LIABILITIES " means (i) all Environmental Liabilities and
(ii) all those Liabilities of BWCL and its Subsidiaries not
included in (i) above including all Liabilities to Glencore for
pre payment of copper concentrate, if any, (such Glencore
Liabilities not to exceed in the aggregate US$1,510,000
including accrued interest as at June 1, 2004), and all other
Liabilities of Boliden Westmin Limited assumed in 1998 by BWCL
or for which BWCL became liable or responsible as a consequence
of or in connection with the acquisition of the Myra Falls Mine,
the Discovery Terminal, the Gibraltar Mine and other assets, but
excluding (iii) all Premier Gold Liabilities, (iv) all Boliden
Indebtedness and (v) all Liabilities related to or associated
with the Sold Corporations;
(s) "BWCFL" means BW Finance Limited, a corporation incorporated
under the BRITISH COLUMBIA BUSINESS CORPORATIONS ACT;
(t) "BWCFL NOTE" has the meaning given to such phrase in Recital C;
(u) "CLOSING" has the meaning given to such word in Section 2.1;
(v) "CLOSING DATE" has the meaning given to such term in Section 7.1
or any other date to which the Parties agree;
(w) "DISCOVERY TERMINAL" means the deep water shipping terminal and
wharf located in or about Spit Road at Campbell River, British
Columbia, on land and a water [Intentionally deleted -
commercially sensitive information];
(x) "DUE DILIGENCE DATE" means July 7, 2004 or such earlier or later
date as the Parties may mutually agree upon;
(y) "EFFECTIVE DATE" means June 1, 2004;
(z) "EMPLOYEE PLAN" means any written retirement, pension, RRSP,
bonus, profit sharing, incentive, phantom stock, stock purchase
or option, deferred compensation, severance or termination pay,
insurance, health care, disability, salary continuation, legal
benefits, vacation, incentive or other employee compensation or
benefit plan, trust, arrangement, agreement, policy or practice
(whether
provided before or after retirement, funded or insured or not,
formal or informal) which is maintained or otherwise made
available for the benefit of any present or former employee,
officer, or director of BWCL or any Subsidiary of BWCL;
(aa) "ENVIRONMENTAL AUTHORITIES" means the Governmental Authorities
having jurisdiction under any Environmental Laws, including any
department, commission, bureau, board, administrative agency or
body of any of the foregoing and including, the Ministry of
Water, Land and Air Protection (British Columbia), the
Department of Fisheries and Oceans (Canada) and Environment
Canada (Canada); Alberta Environment (Alberta Ministry of
Environment)
(bb) "ENVIRONMENTAL LAWS" means all Applicable Laws relating to
pollution, contamination, protection or preservation of land,
water, groundwater, sediment or the environment, including
wildlife and fisheries, or health and safety of any Person,
including all common law, the ENVIRONMENTAL ASSESSMENT ACT
(Canada), the TRANSPORTATION OF DANGEROUS GOODS ACT (Canada),
the FISHERIES ACT (Canada), the CANADIAN ENVIRONMENTAL
PROTECTION ACT (Canada), the WORKERS COMPENSATION ACT (British
Columbia), the WASTE MANAGEMENT ACT (British Columbia), THE
ENVIRONMENTAL ASSESSMENT ACT (British Columbia), the WATER ACT
(British Columbia) , the MINES ACT (British Columbia), the
MINERAL TENURE ACT (British Columbia and the ENVIRONMENTAL
PROTECTION AND ENHANCEMENT ACT (Alberta);
(cc) "ENVIRONMENTAL LIABILITIES" means (i) all Liabilities of BWCL
relating to matters generally under all Environmental Laws and;
(ii) all Liabilities of BWCL and Boliden Indemnified Persons
relating to or arising from the properties (including Myra Falls
Mine, Discovery Terminal and Gibraltar Mine) owned, leased or
occupied from time to time by BWCL or its predecessors in title
(including Boliden Westmin Limited and its predecessors),
including reclamation, remediation, rehabilitation and
restoration of mining, milling and tailings disposal properties,
metal concentrate storage, handling and loading properties,
access roads and rights of way and of the environment generally
and all Liabilities for the removal or clean-up of Hazardous
Substances or damages caused by same at or near such properties,
whether or not initiated by Environmental Authorities or other
Persons under Environmental Laws;
(dd) "ENVIRONMENTAL NOTICE" means a Notice from a Governmental
Authority which is based upon Environmental Laws and which
requires any action enforceable by law;
(ee) "ENVIRONMENTAL REPORTS" means the reports and documents listed
in Schedule 3.3(k) relating to environmental matters in
connection with BWCL and its Business;
(ff) "EXPATRIATE" means Expatriate Resources Ltd., a reporting
company whose common shares are traded on the TSX Venture
Exchange;
(gg) "FINANCIAL STATEMENTS" has the meaning given to such term in
Section 3.2(a);
(hh) "GAAP" means generally accepted accounting principles in effect
in Canada including the accounting recommendations published in
the Handbook of the Canadian Institute of Chartered Accountants;
(ii) "GIBRALTAR MINE" means the Gibraltar Mine, the processing and
concentrate loadout facilities and other related or ancillary
operations formerly owned or operated by BWCL and located
approximately 17 Km northeast of McLeese Lake in the Cariboo
Mining Division, British Columbia;
(jj) "GLENCORE" means Glencore International AG;
(kk) "GOVERNMENTAL AUTHORITY" means any domestic or foreign
government, including any federal, provincial, state,
territorial or municipal government, and any government agency,
tribunal, commission or other authority exercising executive,
legislative, judicial, regulatory or administrative functions
of, or pertaining to, government;
(ll) "HAZARDOUS SUBSTANCE" means any substance which is regulated
under Environmental Laws, including any hazardous product,
contaminant, toxic substance, deleterious substance, waste,
special waste, dangerous goods or reportable substance;
(mm) "INTELLECTUAL PROPERTY" means the trade-marks, trade names,
business names, service names, copyrights, patents, technology
rights, inventions, computer software, trade secrets, know-how,
industrial designs and other industrial or intellectual property
owned by BWCL or any Affiliate of BWCL and used exclusively in
the Business and all applications therefore, including, all
licences or similar rights used by or granted to BWCL or any
Affiliate of BWCL in connection therewith and including those
trademarks, proprietary software and other items listed in
Schedule 1.1(mm);
(nn) "INTERIM PERIOD" means the period between the Effective Date and
the Closing Date;
(oo) "INVENTORY" means all inventory of BWCL including ore, zinc,
copper and gold concentrates, supplies, parts and stores;
(pp) "LIABILITIES" means, in relation to a Person or to a property,
all indebtedness, debts, adverse claims, liabilities and
obligations of that Person or relating to that property, whether
present or future, direct or indirect by way of guarantee,
absolute or contingent, known or unknown, whether accrued or
not, vested or otherwise, determined or determinable, including
those arising under any Applicable Law (including any
Environmental Law) and whether in contract, tort, strict
liability or otherwise.
(qq) "LEASES" means those leases which are material to the Business
and listed in Schedule 3.3(e)
(rr) "LIEN" means any mortgage, lien, charge, adverse claim, hypothec
or encumbrance, whether fixed or floating, on, or any security
interest in, any property, whether real, personal or mixed,
tangible or intangible, any pledge or hypothecation of any
property, any deposit arrangement, priority, conditional sale
agreement, other title retention agreement or equipment trust,
capital lease or other security arrangements of any kind (and
including, in the case of shares or other securities,
shareholders agreements, voting trust agreements and similar
arrangements);
(ss) "MATERIAL CONTRACT" means any written contract relating to the
Business made after February 12, 1998 to which BWCL is a party
which:
involves total expenditures to be made by BWCL after the Closing Date in excess
of $500,000;
involves total revenues to be earned by BWCL after the Closing Date in excess of
$500,000; or
cannot be terminated on less than six month's notice without the payment of
$250,000 or more but excluding those contracts relating to Premier Gold which
are being assigned to and assumed by Boliden as part of the Pre Closing BWCL
Transactions;
(tt) "MINERAL AND OTHER PROPERTY RIGHTS" means the mineral claims,
mining leases and other subsurface rights, land, rights-of-way,
licenses or rights of occupation, easements road use
permits, special use permits or other similar rights held by
BWCL or any Affiliate of BWCL which are material to the Business
and listed in Schedule 1.1(tt);
(uu) "MYRA FALLS LETTERS OF CREDIT" and "MYRA FALLS REPLACEMENT
SECURITY" have the meanings set out in Section 5.4;
(vv) "MYRA FALLS MINE" means the zinc and copper mine and milling
operation known as the Myra Falls Mine located in
Strathcona-Westmin Provincial Park on Vancouver Island, British
Columbia;
(ww) "NET CASH ADVANCE AMOUNT" means the net amount of cash advances
(including interest) provided by Boliden and its Affiliates
(including Boliden AB) to BWCL in the period between the
Effective Date and the Closing Date as verified in accordance
with Section 2.2;
(xx) "NOTICE" means any notice, citation, directive, order, claim,
litigation, investigation, proceeding, judgment, letter or other
communication, written or oral, actual or threatened, from any
Person;
(yy) "PARTIES" means the parties to this Agreement and "PARTY" means
any one of them;
(zz) "PERMITS" means the licences, permits, operating authorities,
registrations or authorizations issued by any Governmental
Authority which are material to the Business and are listed in
Schedule 3.3(c);
(aaa) "PERMITTED ACTION" means any suit, action, or other proceeding
in any way related to or arising out of this Agreement commenced
in the courts of British Columbia or Ontario and all courts
having appellate jurisdiction over those courts, by any Party to
this Agreement against any other Party to this Agreement;
(bbb) "PERMITTED ENCUMBRANCES" means the Liens and other encumbrances
described in Schedule 1.1(bbb);
(ccc) "PERSON" means any natural person, sole proprietorship,
partnership, corporation, trust, joint venture, any Governmental
Authority or any other incorporated or unincorporated entity or
association of any nature;
(ddd) "PRE CLOSING BWCL TRANSACTIONS" means the transactions described
in Section 5.1;
(eee) "PREMIER GOLD LIABILITIES" means all Liabilities of BWCL related
to or associated with the Premier Gold property near Stewart,
British Columbia;
(fff) "PRIME RATE" on any day means the annual rate of interest
announced by Royal Bank of Canada from time to time as its
reference rate then in effect for determining interest rates on
Canadian dollar commercial loans made by it in Canada;
(ggg) "REQUIRED APPROVALS" means approvals, waivers, authorizations or
consents by any Governmental Authority or other Person and
declarations, filings or registrations with any Governmental
Authority or other Person required in connection with the
entering into and the performance of this Agreement;
(hhh) "SOLD CORPORATIONS" means Strata Gold and Gibraltar Mines
Finance Limited;
(iii) "SOLD CORPORATIONS LIABILITIES" means all Liabilities of BWCL to
the Sold Corporations;
(jjj) "STRATA GOLD" means Strata Gold Corporation, a reporting company
whose shares are traded on the TSX Venture Exchange;
(kkk) "SUBSIDIARY" has the meaning given to such term in the CANADA
BUSINESS CORPORATIONS ACT;
(lll) "TAX" or "TAXES" includes all present and future taxes,
surtaxes, duties, levies, imposts, rates, fees, assessments,
withholdings, dues and other charges of any nature imposed by
any Governmental Authority (including income, capital (including
large corporations), withholding, capital gains, consumption,
sales, use, transfer, goods and services or other value-added,
excise, customs, anti-dumping, mineral, royalties, net worth,
stamp, registration, franchise, payroll, employment, health,
education, business, school, property, local improvement,
development, education development and occupation taxes,
surtaxes, duties, levies, imposts, rates, fees, assessments,
withholdings, dues and charges) together with all fines,
interest, penalties on or in respect of, or in lieu of or for
non-collection of, those taxes, surtaxes, duties, levies,
imposts, rates, fees, assessments, withholdings, dues and other
charges; and
(mmm) "TAX ACT" means the INCOME TAX ACT (Canada).
1.2 CONSTRUCTION AND INTERPRETATION
The division of this Agreement into Sections, the insertion of headings and the
provision of a table of contents are for convenience only, do not form a part of
this Agreement and will not be used to affect the construction or interpretation
of this Agreement. Unless otherwise specified:
(a) each reference in this Agreement to "SECTION" and "SCHEDULE" is
to a Section of, and a Schedule to, this Agreement respectively;
(b) each reference to a statute is deemed to be a reference to that
statute, and to the regulations made under that statute, as
amended, re-enacted or replaced from time to time;
(c) words importing the singular include the plural and vice versa
and words importing gender or the neuter include both genders
and neuter;
(d) references to a time of day or a date mean the local time or
date in Vancouver, British Columbia,
(e) all references to amounts of money mean lawful currency of
Canada, and
(f) an accounting term has the meaning assigned to such term, and
all accounting matters will be determined, in accordance with
GAAP consistently applied.
1.3 BUSINESS DAY
If under this Agreement any payment or calculation is to be made, or any other
action is to be taken, on or as of a day which is not a Business Day, the
payment or calculation is to be made, or that other action is to be taken, on or
as of the next day that is a Business Day.
1.4 USE OF THE WORD "INCLUDING"
The word "INCLUDING" when following any general term or statement will not be
construed as limiting the general term or statement to the specific matter
immediately following the word "including" or to similar matters, and the
general term or statement will be construed as referring to all matters that
reasonably could fall within the broadest possible scope of the general term or
statement.
1.5 USE OF THE WORDS "BEST KNOWLEDGE"
The words "BEST KNOWLEDGE", "TO THE BEST OF ITS KNOWLEDGE", or "OF WHICH IT IS
AWARE" or other expressions limiting the scope of any representation, warranty,
acknowledgment, covenant or statement made by Boliden means that, as of the date
of this Agreement, after having made reasonable inquiry, no information has come
to the attention of the Chief Executive Officer (Jan Johansson), the Deputy
Chief Executive Officer (Tom Niemi), Senior Vice President - Group Controlling
(Jan Ohman), the Vice-President/ Corporate Counsel (Marianne Lindholm) or the
General Manager - Business Development (Jim Jack) of Boliden AB, which has given
any of them actual knowledge of facts contrary to the existence or absence of
the facts indicated.
1.6 GOVERNING LAW
This Agreement and each of the documents contemplated by or delivered under or
in connection with this Agreement are governed exclusively by, and are to be
enforced, construed and interpreted exclusively in accordance with, the laws of
British Columbia and the laws of Canada applicable in British Columbia which
will be deemed to be the proper law of the Agreement.
1.7 SEVERABILITY
Each provision of this Agreement is several. If any provision of this Agreement
is or becomes illegal, invalid or unenforceable in any jurisdiction, the
illegality, invalidity or unenforceability of that provision will not affect the
legality, validity or enforceability of the remaining provisions of this
Agreement or the legality, validity or enforceability of that provision in any
other jurisdiction except that if on the reasonable construction of this
Agreement as a whole, the applicability of the other provision presumes the
validity and enforceability of the particular provision, the other provision
will be deemed also to be invalid or unenforceable.
1.8 TIME OF ESSENCE
Time is of the essence of this Agreement.
1.9 SCHEDULES
The schedules attached to this Agreement will, for all purposes, form an
integral part of the Agreement.
2. SHARE EXCHANGE
2.1 SHARE EXCHANGE
On the basis of the representations, warranties and covenants contained in this
Agreement and subject to the fulfilment of any condition that has not been
waived by the Party entitled to the benefit thereof, Boliden and Breakwater will
exchange the BWCL Shares and the BWCFL Note for the Breakwater Shares and the
Breakwater Warrants on the terms and conditions herein set forth (such
completion of the exchange being for the purposes of this Agreement the
"Closing").
The Parties intend that the acquisition of BWCL by Breakwater contemplated by
this Agreement will have economic effect as of the Effective Date and
accordingly an adjustment may be required to be made as described in Section
2.2.
2.2 CASH ADVANCES ADJUSTMENT PAYMENT
Boliden will cause Deloitte & Touche LLP to provide Breakwater with its
verification, together with supporting details, of the Net Cash Advance Amount
not less than four Business Days before the Closing Date and, in addition
to the Breakwater Shares and Breakwater Warrants, Breakwater will pay or cause
to be paid the Net Cash Advance Amount at the Closing by wire transfer to such
bank account as Boliden directs. Upon payment of the Net Cash Advance Amount,
Boliden, on its behalf and on behalf of its Affiliates, will assign to
Breakwater (or the Person designated by Breakwater) all its right, title and
interest in and to all amounts included in the determination of the Net Cash
Advance Amount as being owing by BWCL to Boliden and its Affiliates.
2.3 ALLOCATION OF CONSIDERATION
The Breakwater Shares and Breakwater Warrants will be allocated between the BWCL
Shares and the BWCFL Note as follows:
BWCL Shares 1,000 Breakwater Shares
BWCFL Note 17,999,000 Breakwater Shares and 5,000,000 Breakwater Warrants
Neither Party will take a position with any Governmental Authority charged with
the collection of any Taxes or in any judicial proceeding which would be
inconsistent with the terms of any such allocation, without the written consent
of the other Party.
3. REPRESENTATIONS OF BOLIDEN
3.1 CORPORATE AND SHARE REPRESENTATIONS
As of the Effective Date, Boliden represents and warrants to Breakwater that:
(A) INCORPORATION. BWCL is a corporation duly incorporated,
organized and existing under the CANADA BUSINESS CORPORATIONS
ACT (Canada), is a valid and subsisting corporation in good
standing with respect to filing of annual reports with the
Director of Corporations and is in good standing as an
extra-provincial corporation in the jurisdictions listed in
Schedule 3.1(a);
(B) BUSINESS QUALIFICATION. BWCL carries on business only in and is
duly qualified, licensed or registered in each of the
jurisdictions listed in Schedule 3.1(a), does not carry on
business or own or lease any assets and is not required to be
registered or qualified in any other province or territory of
Canada or in any other jurisdiction and BWCL has the corporate
power to own, lease and operate its property and carry on the
Business;
(C) AUTHORIZED AND ISSUED CAPITAL. The authorized capital of BWCL is
an unlimited number of Class A common shares, an unlimited
number of Class B common shares and 10,000 preferred shares of
which there are issued and outstanding as fully paid and
non-assessable shares only 10,000 Class A common shares and
11,057 Class B common shares;
(D) OWNERSHIP. The facts and information contained in the recitals
to this Agreement are true in every respect;
(E) VALID ISSUANCE AND TRANSFER. The BWCL Shares are validly issued
and outstanding as fully paid and non-assessable shares of BWCL
and have been issued in compliance with all Applicable Laws;
(F) LIENS. The BWCL Shares are free and clear of all Liens;
(G) AUTHORITY. Subject to obtaining the consent of Boliden's
lenders, Boliden has good and sufficient right and authority to
enter into this Agreement on the terms and conditions herein set
forth and to
implement this Agreement and, in particular, to transfer to
Breakwater the legal title and beneficial ownership of the BWCL
Shares free and clear of all Liens;
(H) NO OPTIONS, ETC. No Person, other than Breakwater or its
nominee, has any right, present or future, contingent or
absolute (whether by law, pre-emptive or contract), to purchase
or acquire the BWCL Shares or to require BWCL to issue any share
in its capital and, in particular, there are no outstanding
securities of BWCL which are convertible into shares of BWCL and
there are no outstanding options on or rights to subscribe for
any of the unissued shares of BWCL;
(I) CONSTATING DOCUMENTS. The articles and bylaws of BWCL have not
been altered since December 20, 2000; and
(J) DIRECTORS AND OFFICERS. The directors and officers of BWCL are
listed together with their respective position in Schedule
3.1(j).
3.2 FINANCIAL AND TAX REPRESENTATIONS
As of the Effective Date, Boliden represents and warrants that:
(A) ANNUAL FINANCIAL STATEMENTS. The audited financial statements of
BWCL for the fiscal years ending December 31, 2002 and 2003
attached to this Agreement as Schedule 3.2(a) (the "FINANCIAL
STATEMENTS") were prepared by BWCL in accordance with GAAP and
were audited by Deloitte & Touche LLP;
(B) INTERIM FINANCIAL STATEMENTS. The internally prepared financial
statements of BWCL for the period ending March 31, 2004 attached
to this Agreement as Schedule 3.2(b) were prepared by BWCL on a
basis consistent with previous monthly statements during 2004
but have not been reconciled with the Financial Statements;
(C) LOANS AND ADVANCES. Except for leasing arrangements in the
normal course of business, BWCL has no liability for, or
obligation in respect of, any amount borrowed from or advanced
by any Person, other than Boliden or an Affiliate thereof as set
out in Recital B, except that, on the Closing Date, (i) the
amount of the Boliden Indebtedness (other than any amount of Net
Cash Advance Amount included therein and the BWCFL Note, both of
which will be assigned to and paid for by Breakwater or its
nominee at Closing) will be zero and (ii) the Liability to
Glencore will be paid in full;
(D) GUARANTEES. BWCL has not guaranteed, or agreed to guarantee, any
debt, liability or other obligation of any Person other than
Boliden and its Affiliates as set out in Schedule 3.2(d) and
each of such guarantees will be released to the satisfaction of
Breakwater at Closing;
(E) TAX RETURNS. All Tax returns and reports of BWCL required by
Applicable Laws to be filed prior to the date hereof have been
filed within the times and in the manner prescribed by law and
all Taxes charged have been paid when due except as disclosed in
Schedule 3.2(e);
(F) TAX ASSESSMENTS. BWCL has received notices of assessments or
reassessments for those Taxes described in Schedule 3.2(f) for
years to and including the fiscal years set out in Schedule
3.2(f);
(G) BOOKS AND RECORDS. The accounting and financial Books and
Records of BWCL set out and disclose all material financial
transactions of BWCL to the extent required by GAAP and are true
and correct in all material respects. The Books and Records are
not wholly or partly, recorded, stored or maintained or
otherwise held by any means (including any electronic,
mechanical or
photographic process) not available to BWCL in the ordinary
course of its business and the Books and Records are all located
in Canada;
(H) MINUTE BOOKS. The minute books and corporate records of BWCL
contain, in all material respects, complete minutes of all
meetings and proceedings of the shareholders, directors and
committees of BWCL and the share certificate books, registers of
transfer, registers of shareholders and registers of directors
are complete in all material respects; and
(I) BANK ACCOUNTS. Schedule 3.2(i) is a correct and complete list
showing (i) the name of each bank with which BWCL has an account
or safety deposit box and the names of all persons authorized to
draw on the account or to have access to the safety deposit box
or who holds a power of attorney from BWCL.
3.3 BUSINESS AND ASSET REPRESENTATIONS
As of the Effective Date, Boliden represents and warrants that, except as
disclosed in Schedule 3.3:
(A) BUSINESS. The Business is the only material business operation
carried on by BWCL at present;
(B) REGISTERED HOLDER. BWCL is the registered or recorded holder of
the Mineral and Other Property Rights and, to the knowledge of
Boliden, holds the Mineral and Other Property Rights free and
clear of all Liens except Permitted Encumbrances;
(C) PERMITS. BWCL holds the Permits described in Schedule 3.3(c),
the Permits are valid and in full force and effect and, to the
knowledge of Boliden, (i) there is no proceeding, pending or
threatened, to revoke, amend or limit any of the Permits and
(ii) BWCL complies with the terms and conditions of the Permits
in all material respects;
(D) MATERIAL CONTRACTS. BWCL is a party to the contracts described
in Schedule 3.3(d) and, to the knowledge of Boliden, (i) BWCL
has complied with the terms and conditions of those contracts in
all material respects, (ii) there are no material defaults by
BWCL or the other party to any of those contracts and (iii)
Schedule 3.3(d) includes all Material Contracts;
(E) LEASES. BWCL is a party to the Leases described in Schedule
3.3(e), the Leases are the only leases material to the Business
and, to the knowledge of Boliden, (i) BWCL has not made any
material default in the performance of the terms of the Leases
that would entitle any of the lessors thereunder to terminate
any of the Leases or would render BWCL liable in damages, (ii)
BWCL has not assigned or encumbered any Leases and (iii) no
written waiver, indulgence or postponement of BWCL's obligations
have been granted by the lessors;
(F) INTELLECTUAL PROPERTY. Boliden is not aware of any infringement
of the Intellectual Property of BWCL and is not aware of any
infringement by BWCL of any Intellectual Property of a third
party;
(G) EXPROPRIATION. Boliden has received no notice and has no
knowledge of any intention of any Governmental Authority to
expropriate all or a substantial portion of the Mineral and
Other Property Rights;
(H) LITIGATION. To the knowledge of Boliden, there are no actions,
suits, judgments, investigations, arbitrations, alternative
dispute resolution processes or proceedings outstanding or
pending or threatened in writing against or affecting BWCL at
law or at equity or before or by any Governmental Authority;
(I) ENVIRONMENTAL NOTICES. To the knowledge of Boliden, BWCL has not
received any Environmental Notice within the preceding three
years with respect to either the Myra Falls Mine or Discovery
Terminal which has not been resolved to the satisfaction of the
issuer of the Environmental Notice;
(J) PROSECUTION. BWCL has not been prosecuted for an offence
alleging non-compliance with any Environmental Law, and since
December 31, 2000, BWCL has not settled any written allegation
of non-compliance short of prosecution;
(K) ENVIRONMENTAL REPORTS. Boliden has provided Breakwater with
access to copies of all Environmental Reports.
3.4 EMPLOYEE AND EMPLOYEE BENEFITS REPRESENTATIONS
As of the Effective Date, Boliden represents and warrants that:
(A) EMPLOYEES. As at the Effective Date, BWCL has approximately 405
employees and Schedule 3.4 contains a substantially complete
list of each employee of BWCL, whether actively at work or not,
their salaries, wage rates, bonus arrangements, benefits,
positions, status as full-time or part-time employees and length
of service;
(B) UNIONIZATION. As described in Schedule 3.4, BWCL is a party to
collective agreements with trade unions, BWCL has been certified
by the Labour Relations Board, or its predecessor, and BWCL has
recognized the trade unions as bargaining agent for its
employees as described in Schedule 3.4;
(C) COMPLIANCE WITH LAWS. To the knowledge of Boliden, BWCL is in
material compliance with all Applicable Laws respecting
employment and employment practices, terms and conditions of
employment, pay equity and wages and hours of work;
(D) DISABILITIES. As at the Effective Date, no employees are on long
term disability except those employees identified as such in
Schedule 3.4;
(E) LAID OFF EMPLOYEES. As at the Effective Date, no employees are
laid off except those employees identified as such in Schedule
3.4; and
(F) EMPLOYEE PLANS. There are no Employee Plans affecting BWCL other
than those specified in Schedule 3.4 and, to the knowledge of
Boliden, there are no impending investigations by any
Governmental Authority involving or relating to any Employee
Plan and no pending or threatened claims (except for claims for
benefits payable in the normal operation of the Employee Plans),
suits or proceedings relating to any Employee Plan.
3.5 GENERAL VENDOR REPRESENTATIONS
As of the Effective Date, Boliden represents and warrants that:
(A) CORPORATE STATUS. Boliden is a corporation validly existing
under the CANADA BUSINESS CORPORATIONS ACT and has all necessary
corporate power and authority to enter into this Agreement and
carry out its obligations hereunder and to sell or cause the
sale of the BWCL Shares and the BWCFL Note;
(B) NO CONFLICT. Subject to obtaining the consent of Boliden's
lenders, the making of this Agreement and the completion of the
transactions contemplated hereby and the performance of and
compliance with the terms hereof does not conflict with or
result in the breach of, or the acceleration of, any terms,
provisions or conditions of or constitute a default under the
articles or bylaws of BWCL, Boliden or any indenture, mortgage,
deed of trust, agreement, lease, franchise, certificate, or
other instrument to which BWCL or Boliden is a party or are
bound or subject to obtaining the Required Approvals, any term
or provision of any licenses, registrations or qualifications of
Boliden or any order of any Governmental Authority or Applicable
Laws;
(C) AUTHORIZATIONS. Schedule 3.5(c) sets forth a true and complete
list of the Required Approvals required by Boliden in connection
with the completion of the transactions, performance of and
compliance with the terms of this Agreement by Boliden and BWCL;
(D) CANADIAN RESIDENT. Boliden is not a non-resident of Canada for
all purposes of the Tax Act;
(E) ENFORCEABILITY. This Agreement has been duly executed and
delivered by Boliden and is a legal, valid and binding
obligation of Boliden, enforceable by Breakwater against Boliden
in accordance with its terms subject to applicable bankruptcy,
insolvency and other laws affecting creditors' remedies
generally and subject to the availability of equitable remedies
including specific performance or injunctive relief; and
(F) ACCREDITED INVESTOR. Boliden is an "accredited investor" as
defined in Ontario Securities Commission Rule 45 - 501 and
Multilateral Instrument 45-103 in that it is a company that has
net assets of at least $5,000,000 as reflected in its most
recently prepared financial statements and Boliden is acquiring
the Breakwater Shares and the Breakwater Warrants as principal.
3.6 ACKNOWLEDGMENT
Boliden makes no representation or warranty regarding environmental matters
relating to BWCL or any of its Affiliates and Associates, the Business, the
assets or any other property owned, leased or used from time to time by BWCL or
the existence of Hazardous Substances or any other substances detrimental to the
environment or to health on or about any property or asset owned, leased or used
from time to time by BWCL except as set out in Sections 3.3 (i) through (k).
Breakwater has inspected or has had the opportunity to inspect all assets and
properties owned, leased or used in the Business or otherwise by BWCL which
Breakwater has been advised are owned, leased or used by BWCL and has satisfied
itself as to their environmental condition and existence of Hazardous Substances
or any other detrimental substances on or about any of such properties.
Breakwater accepts the environmental condition of the assets and properties
owned, leased or used from time to time by BWCL on an "as is" basis.
3.7 CERTIFICATES
All certificates of Boliden delivered to Breakwater and its representatives
pursuant to this Agreement, and the information contained in each, will be
deemed to be part of the representations and warranties of Boliden contained in
this Section 3.
4. REPRESENTATIONS OF BREAKWATER
4.1 REPRESENTATIONS OF BREAKWATER
As of the Effective Date, Breakwater represents and warrants that:
(A) CORPORATE STATUS. Breakwater is a corporation duly incorporated
under the CANADA BUSINESS CORPORATIONS ACT, is a valid and
subsisting company in good standing with respect to filing of
annual reports with the Director of Corporations and is in good
standing as an extra-provincial corporation in the Office of the
Registrar of Companies of the Province of British Columbia;
(B) REPORTING ISSUER STATUS. Breakwater is a reporting issuer in all
provinces and territories of Canada and, to the best of its
knowledge, Breakwater is not in default of any material
requirement of the Applicable Laws relating to securities
("APPLICABLE SECURITIES LAWS");
(C) NO CONFLICT. The making of this Agreement and the completion of
the transactions contemplated hereby and the performance of and
compliance with the terms hereof does not conflict with or
result in the breach of, or the acceleration of, any terms,
provisions or conditions of or constitute a default under: (i)
the articles or bylaws of Breakwater; (ii) any indenture,
mortgage, deed of trust, agreement, lease, franchise,
certificate or other instrument to which Breakwater is a party
or is bound; or (iii) any term or provision of any licenses,
registrations or qualifications of Breakwater or any order of
any Governmental Authority or Applicable Law;
(D) AUTHORIZATIONS. Schedule 4.1(d) sets forth a true and complete
list of the Required Approvals required by Breakwater in
connection with the completion of the transactions contemplated
herein;
(E) LISTED SHARES. The common shares of Breakwater are listed on the
Toronto Stock Exchange ("TSE") and Breakwater is not in default
of any of the material listing requirements or policies of the
TSE;
(F) MATERIAL FACTS. All prospectuses, annual information forms,
material change reports, shareholder communications, press
releases and other disclosure documents of Breakwater, including
all publicly filed financial statements, were prepared in
accordance with and complied with Applicable Securities Laws as
at the date of preparation in all material respects;
(G) MATERIAL CHANGES. Since December 31, 2003 there has not been any
adverse Material Change (as that term is used under Applicable
Securities Laws) of any kind whatsoever in the financial
position or condition of Breakwater, or any damage, loss or
other change of any kind whatsoever in circumstances materially
affecting the business or assets of Breakwater, or the right or
capacity of Breakwater to carry on its business as now
conducted;
(H) INVESTMENT CANADA. Breakwater is not a non-Canadian as that term
is defined in the INVESTMENT CANADA Act; and
(I) ENFORCEABILITY. This Agreement has been duly executed and
delivered by Breakwater and is a legal, valid and binding
obligation of Breakwater, enforceable by Boliden against
Breakwater in accordance with its terms subject to applicable
bankruptcy, insolvency and other laws affecting creditors'
remedies generally and subject to the availability of equitable
remedies including specific performance or injunctive relief.
4.2 CERTIFICATES
All certificates of Breakwater delivered to Boliden and its representatives
pursuant to this Agreement, and the information contained in each, will be
deemed to be part of the representations and warranties of Breakwater contained
in this Section 4.
5. PRE AND POST CLOSING COVENANTS
5.1 PRE CLOSING TRANSFER OF ASSETS AND LIABILITIES
Before the Closing, Boliden will, at its cost and subject to the receipt of all
necessary third party consents and approvals, which Boliden will use all
reasonable commercial efforts to obtain and will not agree to conditions to the
granting of such consents and approvals which impose costs or liabilities (other
than those that are incidental or immaterial) against BWCL without first
obtaining the consent of Breakwater, acting reasonably, complete the
transactions described in Schedule 5.1 ("PRE CLOSING BWCL TRANSACTIONS").
5.2 CONDUCT OF BUSINESS DURING INTERIM PERIOD
During the Interim Period, Boliden will cause BWCL to carry on its business in
the ordinary and normal course in a prudent, businesslike, and efficient manner
and substantially in accordance with the procedures and practices in effect on
the date hereof. Boliden will consult with and obtain the consent of Breakwater
before making any decision or taking any action concerning or with respect to
BWCL that would reasonably be expected to have a material effect on BWCL or the
Business.
Without limiting the generality of the foregoing, during the Interim Period
Boliden will not, and will not permit BWCL to, without the prior consent in
writing of Breakwater or except as expressly permitted herein:
(a) purchase or sell, consume or otherwise dispose of any of its
assets except Inventories sold in the ordinary course of
business or assets which are not material to the Business or
assets which are obsolete or in the aggregate do not exceed
$100,000;
(b) enter into any contract or assume or incur any liability except
in the ordinary course of business;
(c) waive or surrender any material right;
(d) make any capital expenditures or commitment therefor in excess
of $50,000;
(e) issue any shares in its capital or any rights or options to
acquire any shares in its capital;
(f) increase or improve any compensation, pension, bonus, share of
profits or other benefit to, or for the benefit of, any
employee, director, or officer of BWCL except in the ordinary
course of business;
(g) pay or declare any dividends, make any distributions, or redeem
or repurchase any of the shares of BWCL;
(h) take any steps or proceedings that will have or would reasonably
be expected to have a material adverse affect on the working
capital of BWCL (other than causing BWCL to pay all its cash on
hand to Boliden or its Affiliates on or about May 31, 2004);
(i) alter the articles and/ or the by-laws of BWCL; or
(j) pay out any cash from BWCL to Boliden or its Affiliates except
the payment made on May 28, 2004 of US$3,664,883 except as
expressly contemplated and in accordance with the Pre Closing
BWCL Transactions.
5.3 ACCESS FOR DUE DILIGENCE
During the Interim Period, Boliden will cause BWCL at all reasonable times to
permit representatives of Breakwater full access to the Material Contracts, the
Employee Plan documents, the Environmental Reports, the Books and Records and
other information relating to BWCL, the Business and assets of BWCL as
reasonably required by Breakwater and to give Breakwater and its representatives
copies of such information as may be reasonably required and to permit
Breakwater to make such audit of the books of account of BWCL and physical
verification of the Inventory of BWCL as Breakwater may see fit. Boliden will
cause BWCL to cause its senior officers to discuss and answer fully any and all
questions relating to the business and affairs of BWCL. Breakwater acknowledges
that all information which has been or will be provided by Boliden, BWCL or
third parties is subject to the provisions of Sections 5.13 and 11.20.
5.4 MYRA FALLS LETTER OF CREDIT
As soon as practicable after Closing and in any event on or before June 13,
2005, Breakwater will arrange for the issuance of letters of credit by a
Canadian chartered bank or other form of security that is acceptable to the
applicable Governmental Authorities ("MYRA FALLS REPLACEMENT SECURITY") so that
the applicable Governmental Authorities will agree to release and return to
Boliden or its Affiliate the letters of credit in place from Boliden or its
Affiliates to support environmental and reclamation security requirements
associated with the Myra Falls Mine and the Business in an aggregate amount of
approximately $13,800,000 as further described in Schedule 5.4 ("MYRA FALLS
LETTERS OF CREDIT"). On or before June 13, 2005, Breakwater will make the
necessary arrangements with the applicable Governmental Authorities to exchange
the Myra Falls Letters of Credit with the Myra Falls Replacement Security and to
deliver the Myra Falls Letters of Credit to Boliden together with evidence,
acceptable to Boliden acting reasonably that the Myra Falls Letters of Credit
are thereby released.
On or before the Closing Date, Boliden will use all reasonable commercial
efforts to amend the Myra Falls Letters of Credit that now expire in July and
December, 2004 so that they will expire on or about June 30, 2005.
5.5 CHANGE OF NAME
On or before the Closing Date, Boliden will cause BWCL to pass the necessary
corporate resolutions to change its name to NVI Mining Ltd. or such other name
as is acceptable to Breakwater. Breakwater will not use, and will not permit any
of its Affiliates to use the name "Boliden" or the Boliden trade mark for any
purpose including as a corporate, business or trade name or mark. Breakwater
consents to Boliden filing such change of name with the Director of Corporations
after the Closing.
5.6 CONSENTS AND AUTHORIZATIONS
Both before and after the Closing Date:
(a) Boliden will use its reasonable commercial efforts to assist
Breakwater in obtaining all Required Approvals in form and terms
satisfactory to counsel for Breakwater as are necessary or
required in order to permit the transfer and assignment of all
of the right, title and interest of Boliden in and to the BWCL
Shares to Breakwater; and
(b) Breakwater will use its reasonable commercial efforts to assist
Boliden in obtaining all required third party consents and
approvals in form and terms satisfactory to counsel for Boliden
as are necessary or required in order to carry out the Pre
Closing BWCL Transactions.
5.7 NOTICE OF UNTRUE REPRESENTATION OR WARRANTY
Boliden will promptly notify Breakwater, and Breakwater will promptly notify
Boliden, if any representation or warranty made by it in this Agreement or any
Ancillary Agreement becomes untrue or incorrect in any material respect during
the Interim Period and such notice will set out particulars of the untrue or
incorrect representation and details of any actions being taken to rectify that
state of affairs.
5.8 ACTIONS TO SATISFY CLOSING CONDITIONS
Boliden will use reasonable commercial efforts to ensure compliance with all of
the conditions set forth in Section 6.1 within its control including ensuring
that during the Interim Period and at Closing, there is no breach of any of its
representations and warranties. Breakwater will use its reasonable commercial
efforts to ensure compliance with all of the conditions set forth in Section 6.2
within its control including ensuring that during the Interim Period and at
Closing, there is no breach of any of its representations and warranties.
5.9 TRANSFER AND ISSUANCE OF SHARES AND WARRANTS
Boliden will take all necessary corporate steps and corporate proceedings to
permit good title to the BWCL Shares and the BWCFL Note to be duly and validly
transferred and assigned to Breakwater at the Closing, free of all Liens (other
than Liens in favour of the creditors of Breakwater). Breakwater will take all
necessary corporate steps and corporate proceedings to duly and validly issue
the Breakwater Shares from treasury and to duly and validly issue Breakwater
Warrants to Boliden at the Closing, subject to voting restrictions and trade
restrictions as may be imposed by operation of Applicable Securities Laws and
the policies of the TSE.
5.10 INDEBTEDNESS BY AND TO BOLIDEN
At Closing, Boliden, on its own behalf and on behalf of its Affiliates and
Associates, will take all steps and proceedings to release BWCL from any Boliden
Indebtedness (other than the Net Cash Advance Amount and the BWCFL Note, both of
which will be assigned to and paid for by Breakwater or its nominee at Closing)
and will cause BWCL to release Boliden, its Affiliates and Associates from all
Liabilities of Boliden, its Affiliates and Associates to BWCL.
5.11 BREAKWATER SHARE AND WARRANT OBLIGATIONS
At Closing, Breakwater will represent and warrant that as at the Closing Date:
(a) the Breakwater Shares are validly issued and outstanding as
fully paid and non-assessable common shares of Breakwater
registered in the names of Boliden or its nominees, subject to
voting restrictions and trade restrictions as may be imposed by
operation of Applicable Securities Laws and the policies of the
TSE;
(b) the Breakwater Warrants are validly issued and outstanding in
the name of Boliden or its nominees, subject to voting
restrictions and trade restrictions as may be imposed by
operation of Applicable Securities Laws and the policies of the
TSE;
(c) Breakwater has filed with the TSE all required documents and has
done all things required by the rules and policies of the TSE in
order to obtain the approval of the TSE for the issuance and
trading of the Breakwater Shares and the Breakwater Warrants
issued to Boliden or its nominees, subject only to the filing of
required documents and fees; and
(d) the Breakwater Shares and Breakwater Warrants have been issued
on a private placement basis in Ontario and British Columbia by
way of exemptions from the prospectus filing and registration
requirements of Applicable Securities Laws.
5.12 BREAKWATER BOARD OF DIRECTORS
On or before the Closing Date, Breakwater will appoint Jan Johansson to its
Board of Directors as Boliden's nominee to the Breakwater Board. If Mr.
Johansson or other nominee resigns or otherwise is no longer a director, then
Boliden will be entitled to nominate a new director acceptable to Breakwater,
acting reasonably, to fill such vacancy and, upon receipt of such notice,
Breakwater will appoint such nominee to the Board. At any time and from time to
time, Boliden may give notice to remove its nominee and to designate a
replacement director acceptable to Breakwater and, upon receipt of such notice,
Breakwater will appoint such nominee to the Board. The rights of Boliden under
this Section 5.12 will end when Breakwater fully satisfies its obligations under
Section 5.4.
5.13 CONFIDENTIALITY
If for any reason the transaction herein provided for is not consummated, and
except as required by Applicable Law, then for a period of two years after the
termination of this Agreement, Breakwater will not and will not permit its
Subsidiaries to:
(a) directly or indirectly, use for their own purposes any
information, trade secrets or confidential data relating to
BWCL, its business (including its customers, its operations or
the methods of conducting its business) discovered or acquired
by Breakwater or its authorized representatives as a result of
Boliden making available to Breakwater or its authorized
representatives any of the information and materials in
connection with the transaction contemplated under this
Agreement; or
(b) disclose, divulge or communicate, orally, in writing or
otherwise, any such information, trade secrets or confidential
data to any other Person;
and, upon request by Boliden, Breakwater will forthwith return to BWCL or
destroy all materials or documents containing any such information, trade
secrets or confidential data. Boliden acknowledges that the foregoing does not
apply to information or material that is or becomes publicly available other
than by breach of this Agreement or is lawfully received from a third party
without breach of any obligation of confidentiality by that third party to
Boliden.
If the transactions herein provided for are consummated, then the Parties will
continue to keep confidential the terms and conditions of this Agreement and any
other information regarding the business and affairs of the Parties and not
disclose such information or material to any Person except on a "need to know"
basis as is necessary or as required by Applicable Law except that this
provision will not apply to such information that is or becomes publicly
available other than by breach of this Agreement or is lawfully received from a
third party without breach of any obligation of confidentiality by that third
party.
5.14 CONDUCT OF BUSINESS AFTER CLOSING
At all times during the period from the Closing Date to the day Breakwater fully
satisfies its obligations under Section 5.4, Breakwater will cause BWCL to carry
on its business in the ordinary and normal course in a prudent, businesslike,
and efficient manner and will not permit BWCL to take, or fail to take any
action or proceeding that will or might cause a Governmental Authority to (i)
make a claim against or draw down on the Myra Falls Letters of Credit or any one
of them or (ii) amend the applicable Permit or Permits to change the form or
amount of security posted thereunder.
Until such time as Breakwater fully satisfies its obligations under Section 5.4,
the Myra Falls Mine and the Discovery Terminal will be owned or leased, and the
Business owned and operated, by a corporation that is, directly or indirectly, a
wholly owned subsidiary of Breakwater.
If, after the Closing Date and for any reason whatsoever, a Governmental
Authority makes a claim against or draws down on the Myra Falls Letters of
Credit or any one of them, then Breakwater will forthwith pay to Boliden the
principal amount of the claim or draw down plus any interest paid by Boliden or
its Affiliate as a consequence of the claim or draw down of the Myra Falls
Letters of Credit.
After the Closing Date, Breakwater will cause BWCL to perform all obligations
under all BWCL Liabilities including paying and fully satisfying all BWCL
Liabilities as they become due and payable.
5.15 BWCFL NOTE
At Closing, Boliden will represent and warrant that, as at the Closing Date,
(A) NO ASSIGNMENT. the BWCFL Note has not been previously assigned
and there is no outstanding option, right, commitment or other
agreement of any character obligating Boliden to sell, transfer,
pledge or otherwise encumber the BWCFL Note;
(B) LIENS. The BWCFL Note is free and clear of all Liens;
(C) AUTHORITY. Boliden has good and sufficient right and authority
to transfer to Breakwater the legal title and beneficial
ownership of the BWCFL Note free and clear of all Liens.
6. CONDITIONS OF CLOSING
6.1 BREAKWATER CONDITIONS OF CLOSING
Breakwater's obligation to carry out the terms of this Agreement and to complete
the exchange referred to in Section 2.1 is subject to the conditions, each
waivable unilaterally by Breakwater at its election, that:
(a) the representations and warranties of Boliden contained in this
Agreement, taken as a whole, or in any certificate or other
document delivered to Breakwater pursuant hereto, will be true
and correct in all material respects on or as of the Closing
Date except with respect to those Mineral and Other Property
Rights, Contracts, Permits and Leases which have expired or been
renewed in accordance with their terms during the Interim
Period;
(b) all the material obligations of Boliden under this Agreement to
be performed at or before the Closing will have been so
performed;
(c) on or before 5:00 p.m. (Vancouver time) on the Due Diligence
Date, Breakwater will have given notice to Boliden that it is
satisfied with the results of its due diligence investigation of
the business and affairs of BWCL and with the terms and
conditions of the indemnity provided by Governmental Authorities
in connection with the Gibraltar Mine;
(d) during the Interim Period, there will have been no material
adverse change in the affairs or the assets of BWCL (taken as a
whole) except as a consequence of the completion of the Pre
Closing BWCL Transactions;
(e) at or before the Closing Date, there will have been obtained
from all Governmental Authorities and any other Persons all
Required Approvals required by Breakwater as described in
Schedule
4.1(d) in form and on terms satisfactory to Breakwater, acting
reasonably, as may be required to permit the change of ownership
of the BWCL Shares and the BWCFL Note without resulting in any
cancellation or termination of any right under any Permit or
Material Contract held by BWCL;
(f) as at the Closing Date, the amount of the Net Cash Advance
Amount will not exceed $5,000,000 except that, if the Closing
Date is after July 23, 2004, then the Net Cash Advance Amount
will not exceed $7,000,000;
(g) on or before the Closing Date the Myra Falls Letters of Credit
that now expire in July and December, 2004 will have been
amended or replaced so that they will not expire before June 30,
2005;
(h) on or before the Due Diligence Date, Breakwater will have
received in writing consents from The Bank of Nova Scotia, on
its own behalf and/ or as agent, satisfactory to Breakwater,
acting reasonably, in respect of the completion of the
transactions contemplated hereby;
(i) no action or proceeding (excluding vexatious or frivolous
proceedings) will have been taken under Applicable Law which:
makes illegal or otherwise directly or indirectly restrains, enjoins or
prohibits the exchange of the BWCL Shares and the BWCFL Note for the Breakwater
Shares and the Breakwater Warrants contemplated hereby; or
results or could reasonably be expected to result in a judgment, order, decree
or assessment of damages, directly or indirectly, relating to the exchange of
BWCL Shares and the BWCFL Note for the Breakwater Shares and the Breakwater
Warrants contemplated hereby which is, or could be, materially adverse to
Breakwater; and
(j) subject to receiving all necessary consents and approvals from
Governmental Authorities and other third parties, the Pre
Closing BWCL Transactions will have been completed in a manner
satisfactory to Breakwater, acting reasonably.
6.2 BOLIDEN CONDITIONS OF CLOSING
The obligation of Boliden to carry out the terms of this Agreement and to
complete the exchange referred to in Section 2.1 is subject to the conditions,
each waivable unilaterally by Boliden at its election, that:
(a) the representations and warranties of Breakwater contained in
this Agreement, taken as a whole, or in any certificate or other
document delivered to Boliden pursuant hereto will have been
true and correct in all material respects on or as of the
Effective Date and will be true and correct in all material
respects on or as of the Closing Date;
(b) all the material obligations of Breakwater under this Agreement
to be performed at or before the Closing will have been so
performed;
(c) on or before 5:00 p.m. (Vancouver time) on the Due Diligence
Date, Boliden will have given notice to Breakwater that it is
satisfied with the results of its due diligence investigation of
the business and affairs of Breakwater;
(d) Glencore will have released and returned to Boliden Mineral AB
the guarantee to Glencore from Boliden Mineral AB dated May 21,
2002 after payment of approximately US$1,510,000;
(e) on or before the Closing Date, Boliden will have made the
necessary arrangements with the applicable Governmental
Authorities to exchange the existing Myra Falls Letters of
Credit that
now expire in July and December, 2004 with the Myra Falls
Letters of Credit that expire no later than June 30, 2005;
(f) at or before the Closing Date, there will have been obtained
from all Governmental Authorities and any other Persons
(including Breakwater's and Boliden's lenders) all Required
Approvals required by Boliden as described in Schedule 3.5(c) in
form and on terms satisfactory to Boliden acting reasonably;
(g) during the Interim Period, there will have been no material
adverse change in the affairs, business, ownership or the assets
of Breakwater;
(h) no action or proceeding (excluding vexatious or frivolous
proceedings) will have been taken under Applicable Law which:
(i) makes illegal or otherwise directly or indirectly restrains,
enjoins or prohibits the exchange of the BWCL Shares and the
BWCFL Note for the Breakwater Shares and the Breakwater Warrants
contemplated hereby; or
(j) results or could reasonably be expected to result in a judgment,
order, decree or assessment of damages, directly or indirectly,
relating to the exchange of BWCL Shares and the BWCFL Note for
the Breakwater Shares and the Breakwater Warrants contemplated
hereby which is, or could be, materially adverse to Boliden; and
(k) subject to receiving all necessary consents and approvals from
Governmental Authorities and other third parties, the Pre
Closing BWCL Transactions will have been completed in a manner
satisfactory to Boliden, acting reasonably.
7. CLOSING
7.1 CLOSING DATE
The closing date is, and the Closing of the exchange of the BWCL Shares and the
BWCFL Note for the Breakwater Shares and the Breakwater Warrants contemplated by
this Agreement will take place at 10:00 a.m. on the third Business Day following
notice from Boliden to Breakwater that the Pre-Closing BWCL Transactions have
been completed in a manner satisfactory to Boliden but in any event not before
July 15, 2004 ("CLOSING DATE") at the offices of Bull, Housser & Tupper,
Vancouver or such earlier or later time or date or other place as the parties
hereto may agree in writing.
If, on the Closing Date, either the Myra Falls Mine or Discovery Terminal is
shutdown due to strike, lockout or such similar labour disruption, then the
Closing will be delayed and the Closing Date will be automatically extended to
the third Business Day following notice from one Party to the other Party that
both Myra Falls Mine and Discovery Terminal are no longer shutdown except that
any notice given will not be effective if the Agreement has been terminated in
accordance with Section 10.1.
7.2 BOLIDEN CLOSING DOCUMENTS
At the Closing, Boliden will tender, or cause to be procured and tendered:
(a) a certificate of a senior officer of Boliden directed to the
accuracy of the representations and warranties of Boliden set
forth in Section 3 hereof (as if such representations and
warranties were made as of the Effective Date and as of the
Closing Date except for any representation that specifically
references a particular date in the applicable subsection of
Section 3 in which case the
certificate will only apply to the accuracy of that
representation on the date specified therein) and the fulfilment
at the Closing of the covenants of Boliden set forth in Section
5 hereof and providing particulars of any inaccuracy or
non-performance;
(b) resignations in writing of all directors and officers of BWCL
and any Subsidiaries;
(c) releases by each director or officer of BWCL and any
Subsidiaries so long as such releases will not require the
directors or officers to release BWCL from liability relating to
their employment or to release BWCL from any obligation to
indemnify for actions taken in their capacity as directors or
officers of BWCL and any Subsidiaries;
(d) certified copies of resolutions of the directors of BWCL
authorizing the transfer of the BWCL Shares and the BWCFL Note
and the registration of the BWCL Shares in the name of
Breakwater or a wholly owned subsidiary of Breakwater as
Breakwater may direct in writing and authorizing the issue of
new share certificates representing the BWCL Shares in the name
of Breakwater or its nominee;
(e) every common seal of BWCL;
(f) share certificates representing the BWCL Shares duly endorsed
for transfer and duly executed share certificates representing
the BWCL Shares in the name of Breakwater or such nominee as
Breakwater may direct in writing;
(g) an opinion satisfactory to Breakwater from Bull, Housser &
Tupper of Vancouver, British Columbia substantially in the form
attached as Schedule 7.2(g) and opining as to the validity of
the incorporation of BWCL, as to the good standing of BWCL, as
to the validity of the issue and non-assessibility of the
outstanding shares of BWCL, as to the validity of the sale and
transfer to Breakwater of the BWCL Shares and the BWCFL Note and
the enforceability of this Agreement, subject to the usual
qualifications;
(h) documents evidencing the release and discharge of any Liens on
the BWCL Shares in favour of Glencore;
(i) an assignment of the BWCFL Note; and
(j) all such instruments or documents, duly executed, which in the
opinion of Breakwater, acting reasonably, are necessary to
effect and evidence, or are desirable in connection with, the
transfer of the BWCL Shares and the BWCFL Note to Breakwater
free and clear of all Liens.
7.3 BREAKWATER CLOSING DOCUMENTS
At the Closing, Breakwater will tender and cause and procure to be tendered:
(a) a certificate of a senior officer of Breakwater directed to the
accuracy as of the Closing Date of the representations and
warranties of Breakwater set forth in Section 4 hereof and the
fulfilment at the Closing of the covenants of Breakwater set
forth in Section 5 hereof and providing particulars of any
inaccuracy or non-performance and that it has no knowledge that
any of the representations and warranties made by Boliden are
incorrect or untrue;
(b) certified copies of resolutions of the directors of Breakwater
authorizing the issuance of the Breakwater Shares and the
Breakwater Warrants and the registration of the Breakwater
Shares in the name of Boliden, authorizing the issue of share
certificates representing the Breakwater Shares
and warrant certificates representing the Breakwater Warrants in
the name of Boliden and appointing a person designated by
Boliden to the Board of Directors of Breakwater;
(c) duly executed share and warrant certificates representing the
Breakwater Shares and Breakwater Warrants in the name of Boliden
or its nominee;
(d) an opinion satisfactory to Boliden from Fraser Milner Casgrain
LLP substantially in the form attached as Schedule 7.3(d) and
opining as to the validity of the incorporation of Breakwater,
as to the good standing of Breakwater, as to the validity of the
issue and non-assessibility of the Breakwater Shares and the
validity of the issue of the Breakwater Warrants and the
enforceability of this Agreement, subject to the usual
qualifications; and
(e) all such instruments or documents, duly executed, which in the
opinion of Boliden, acting reasonably, are necessary to effect
and evidence, or are desirable in connection with, the issuance
of the Breakwater Shares and Breakwater Warrants to Boliden in
accordance with Section 5.11.
7.4 CLOSING
The Closing will be effected by:
(a) the delivery to Breakwater of the documents and other items
tendered by Boliden under Section 7.2; and
(b) the delivery to Boliden of the documents and other items
tendered by Breakwater under Section 7.3 and the payment of the
Net Cash Advance Amount by wire transfer to an account specified
by Boliden.
7.5 WAIVER
The conditions set forth in Section 6.1 of this Agreement are for the exclusive
benefit of Breakwater and may be waived by Breakwater in writing in whole or in
part at or prior to the Closing and the conditions set forth in Section 6.2 of
this Agreement are for the exclusive benefit of Boliden and may be waived by
Boliden in writing in whole or in part at or prior to the Closing. The
acceptance of the certificate referred to in Section 7.2(a) or in Section 7.3(a)
and the closing of the transaction herein provided for will not be or construed
as a waiver of any of the representations and warranties contained in this
Agreement.
7.6 CONSENT NOT RECEIVED BY CLOSING
If: (i) a consent, approval or acknowledgment of a third party is required to
permit the transfer or assignment of certain rights and other assets to BWCL as
contemplated in Section 5.1, (ii) such consent, approval or acknowledgment is
not received by BWCL or Boliden on or before the Closing and (iii) the
transactions contemplated in Section 2.1 complete on the Closing Date, then the
transfer or assignment of those rights and other assets in respect of which the
required consent, approval or acknowledgment has not been received on or before
the Closing will not be effective in each case until the applicable consent,
approval or acknowledgment has been received and such rights or asset will be
held by the owner thereof following the Closing in trust for the benefit and
exclusive use of BWCL. After Closing, Boliden and Breakwater will use all
reasonable efforts to obtain the required consent, approval or acknowledgment to
transfer such rights and other assets to BWCL and for BWCL to assume all
liabilities associated with the rights and assets being transferred.
If: (i) a consent, approval or acknowledgment of a third party is required to
permit the transfer or assignment of certain rights and other assets by BWCL to
Boliden or its Affiliates as contemplated in Section 5.1, (ii) such consent,
approval or acknowledgment is not received by BWCL or Boliden on or before the
Closing and (iii) the
transactions contemplated in Section 2.1 complete on the Closing Date, then the
transfer or assignment of those rights and other assets in respect of which the
required consent, approval or acknowledgment has not been received on or before
the Closing will not be effective in each case until the applicable consent,
approval or acknowledgment has been received and such rights and other assets
will be held by BWCL following the Closing in trust for the benefit and
exclusive use of the intended transferee. After Closing, Boliden and Breakwater
will use all reasonable efforts to obtain the required consent, approval or
acknowledgment to transfer the rights and other assets by BWCL to the intended
transferee and for the intended transferee to assume all liabilities of BWCL
associated with the rights and assets being transferred.
8. BOLIDEN INDEMNIFICATION
8.1 RELIANCE
Boliden acknowledges and agrees that Breakwater has entered into this Agreement
relying on the representations, warranties, covenants and agreements of Boliden.
Notwithstanding the foregoing or any other term of this Agreement, if Breakwater
knew, or should have known, before Closing that any of the representations and
warranties of Boliden in this Agreement or any Ancillary Agreement is or has
become untrue or incorrect in any material respect prior to Closing, and elects
to complete the Closing, then Breakwater will not have any right or recourse
against Boliden after Closing, including any right of indemnity under Section
8.2(a), in respect of that representation or warranty.
8.2 INDEMNIFICATION BY BOLIDEN
Subject to section 8.1, Boliden will indemnify and save harmless each of
Breakwater, its Affiliates and Associates and the current and former directors
and officers of Breakwater and its Affiliates and Associates (including BWCL and
the directors and officers thereof after the Closing Date) (the "BREAKWATER
INDEMNIFIED PERSONS") from and against:
(a) any and all losses, claims, damages (excluding lost profits and
consequential damages) liabilities and costs including lawyers
fees (on a solicitor and his own client basis) and disbursements
incurred or suffered by Breakwater Indemnified Persons by reason
of, resulting from, in connection with, or arising in any manner
whatsoever out of the breach of any covenant or the inaccuracy
of any representation or warranty of Boliden contained or
referred to in this Agreement or in any Ancillary Agreement; and
(b) any and all losses, claims, damages (excluding lost profits and
consequential damages) liabilities and costs including lawyers
fees (on a solicitor and his own client basis) and disbursements
incurred or suffered by Breakwater Indemnified Persons by reason
of, resulting from, in connection with, or arising in any manner
whatsoever out of the failure by Boliden to pay all amounts
(including interest and penalties) due and owing under any
assessment or re-assessment of BWCL by the Income Taxation
Branch of the British Columbia Ministry of Provincial Revenue
under the CORPORATION CAPITAL TAX ACT (British Columbia)
relating to the period up to the Closing Date; and
(c) any and all payments made by Breakwater or BWCL on account of
Premier Gold Liabilities or the Sold Corporations Liabilities
after the Closing Date and any other losses, claims, damages
(excluding lost profits and consequential damages), liabilities
and costs, including lawyers fees (on a solicitor and his own
client basis) and disbursements, incurred or suffered by
Breakwater Indemnified Persons by reason of, resulting from, in
connection with, or arising in any manner whatsoever out of the
failure of Boliden, its Affiliates or Associates, to make such
payments when due.
8.3 TIME LIMITATION
Any claim made by Breakwater, on its own behalf or on behalf of another
Breakwater Indemnified Persons, against Boliden will be in writing. If the claim
is made pursuant to Section 8.2(a) for a breach of a representation and warranty
or breach of a covenant to be performed on or before Closing, then such claim
must be made within two years after the Closing Date and if such claim is not
made within the time prescribed above will thereafter be barred. There will be
no time limit for claims made pursuant to Sections 8.2(b) or (c) or for claims
made for breach of a covenant that is to be performed by Boliden after the
Closing Date.
8.4 AMOUNT LIMITATION
Notwithstanding any inaccuracy or incorrectness of any provision in this
Agreement or any Ancillary Agreement, no claim for indemnification, damages or
other relief will be valid against Boliden except in accordance with and subject
to the following:
(a) the amount of the damages will be on a net after-tax basis;
(b) no claim may be made against Boliden for any single item of loss
or expense incurred or payable which is less than $100,000; and
(c) the aggregate of all claims against Boliden may not exceed
$10,000,000.
8.5 SUSPENSION OF OBLIGATION TO INDEMNIFY
Notwithstanding Section 8.2 but subject to the provisions of Section 8.6,
Boliden will have no obligation to satisfy any claim made by Breakwater, on its
own behalf or on behalf of the other Breakwater Indemnified Persons, against
Boliden before Breakwater has fully satisfied its obligations under Section 5.4
or if and for so long as Breakwater is in breach of its obligations under
Section 5.14. Nothing herein will be construed as limiting the rights and
remedies of Boliden against Breakwater under Part 9 or affecting the time
periods in Section 8.3 which will continue to run during the period of
suspension. For the purposes of this Section, if Breakwater has satisfied all
its obligations under Section 5.4 on or before June 14, 2005 except only the
obligation to proceed "as soon as practicable", then Breakwater will be deemed
to have fully satisfied its obligations under Section 5.4.
8.6 NOTICE AND CONDUCT OF CLAIM
If a claim is made by third parties against BWCL or a Breakwater Indemnified
Person for which claim Boliden is liable to compensate a Breakwater Indemnified
Person by virtue of Section 8.2, Breakwater will as soon as practicable notify
Boliden thereof and Boliden, in its sole discretion, may either take conduct of
or assist in any matter or proceeding involving third parties in order to
contest and/or settle such claim. Breakwater will not take any step or
proceeding to waive or extend any applicable limitation period. If Boliden takes
conduct of such matter or proceeding, Boliden is authorized to make such
investigations and negotiations as it deems expedient. No settlement will be
entered into without the written consent of both Boliden and Breakwater neither
of which will be unreasonably withheld. All expenses incurred in connection with
such contest or settlement will be paid by Boliden. [Sentence intentionally
deleted due to commercial sensitivity].
8.7 NO RIGHT OF SET-OFF
Boliden will not exercise, or purport to exercise, any right of set off or make
any claim of set off against any amount payable by Boliden to Breakwater under
this Agreement.
8.8 RIGHT TO ACTION
Any claim by Breakwater, on its own behalf or on behalf of another Breakwater
Indemnified Persons, against Boliden with respect to any matter arising out of
or relating to this Agreement and the transactions contemplated herein including
any incorrectness in, breach of or default under any representation and warranty
or covenant and including any claim for negligence or negligent misstatement
will only be made pursuant to and subject to the provisions of this Section 8.
9. BREAKWATER INDEMNIFICATION
9.1 RELIANCE
Breakwater acknowledges and agrees that Boliden has entered into this Agreement
relying on the representations, warranties, covenants and agreements of
Breakwater. Notwithstanding the foregoing or any other term of this Agreement,
if Boliden knows, or should have known, before Closing that any of the
representations and warranties of Breakwater in this Agreement or any Ancillary
Agreement is or has become untrue or incorrect in any material respect prior to
Closing, and elects to complete the Closing, then Boliden will not have any
right or recourse against Breakwater after Closing, including any right of
indemnity under Section 9.2(a), in respect of that representation or warranty.
9.2 INDEMNIFICATION BY BREAKWATER
Subject to section 9.1, Breakwater will indemnify and save harmless each of
Boliden and its Affiliates and Associates and the current and former directors
and officers of Boliden and its Affiliates and Associates (the "BOLIDEN
INDEMNIFIED PERSONS") from and against:
(a) any and all losses, claims, damages (excluding lost profits and
consequential damages) liabilities and costs including lawyers
fees (on a solicitor and his own client basis) and disbursements
incurred or suffered by Boliden Indemnified Persons by reason
of, resulting from, in connection with, or arising in any manner
whatsoever out of the breach of any covenant (other than a
breach of Section 5.4 or 5.14 to the extent dealt with in
Section 9.2(c) below) or the inaccuracy of any representation or
warranty of Breakwater contained or referred to in this
Agreement or in any Ancillary Agreement;
(b) any and all BWCL Liabilities whether or not incurred before or
after Closing and any and all losses, claims, damages (including
lost profits and consequential damages) liabilities and costs
including lawyers fees (on a solicitor and his own client basis)
and disbursements, costs of investigation, testing, repair,
clean-up, reclamation, restoration and remediation and all other
out-of-pocket expenses on account of any actual or alleged loss,
injury or damage to any Person or to any property or incurred or
suffered by Boliden Indemnified Persons by reason of, arising
out of or in connection with the failure of BWCL to pay or
otherwise fully satisfy the BWCL Liabilities;
(c) any and all amounts paid to or drawn down by Governmental
Authorities on account of one or more of the Myra Falls Letters
of Credit and any other losses, claims, damages (excluding lost
profits and consequential damages), liabilities and costs,
including lawyers fees (on a solicitor and his own client basis)
and disbursements, incurred or suffered by Boliden Indemnified
Persons by reason of, resulting from, in connection with, or
arising in any manner whatsoever out of the draw down by
Governmental Authorities of one or more of the Myra Falls
Letters of Credit or any breach by Breakwater of the terms and
conditions of Sections 5.4 and 5.14; and
(d) any and all losses, claims, damages (excluding lost profits and
consequential damages) liabilities and costs including lawyers
fees (on a solicitor and his own client basis) and disbursements
incurred or suffered by Boliden Indemnified Persons by reason
of, resulting from, in connection with, or arising in any manner
whatsoever out of any claim by Taseko Mines Limited and its
Affiliates under an asset purchase agreement dated April 22,
1999 between Boliden, BWCL , Boliden Westmin Limited, Taseko
Mines Limited and Gibraltar Mines Ltd.
9.3 TIME LIMITATION
Any claim made by Boliden against Breakwater, on its own behalf or on the behalf
of another Boliden Indemnified Person, will be in writing. If the claim is made
pursuant to Section 9.2(a) for a breach of representation and warranty or breach
of a covenant to be performed on or before Closing, then such claim must be made
within two years after the Closing Date and if such claim is not made within the
time prescribed above will thereafter be barred. There will be no time limit for
claims made pursuant to Sections 9.2(b), (c) or (d) or for claims made for
breach of a covenant that is to be performed by Breakwater after the Closing
Date.
9.4 AMOUNT LIMITATION
Notwithstanding any inaccuracy or incorrectness of any provision in this
Agreement or any Ancillary Agreement, no claim for indemnification, damages or
other relief will be valid against Breakwater except in accordance with and
subject to the following:
(a) the amount of the damages will be on a net after-tax basis; and
(b) no claim may be made against Breakwater for any single item of
loss or expense incurred or payable which is less than $100,000;
and
(c) the aggregate of all claims against Breakwater other than claims
referred to in items (i) and (ii) below may not exceed
$10,000,000. With respect to (i) claims relating to or arising
out of Environmental Liabilities or under Section 9.2(d) and
(ii) claims for a breach of, or the failure to fully satisfy the
terms and conditions of, Sections 5.4 or 5.14, there will be no
limit.
9.5 NOTICE AND CONDUCT OF CLAIM
If a claim is made by third parties against a Boliden Indemnified Person for
which Breakwater is liable to compensate a Boliden Indemnified Person by virtue
of Section 9.2, Boliden will as soon as practicable notify Breakwater thereof
and Breakwater, in its sole discretion, may either take conduct of or assist in
any matter or proceeding involving third parties in order to contest and/or
settle such claim. Boliden will not take any step or proceeding to waive or
extend any applicable limitation period. If Breakwater takes conduct of such
matter or proceeding, Breakwater is authorized to make such investigations and
negotiations as it deems expedient. No settlement will be entered into without
the written consents of Boliden and Breakwater which will not be unreasonably
withheld. All expenses incurred in connection with such contest or settlement
will be paid by Breakwater.
9.6 NO RIGHT OF SET-OFF
Breakwater will not exercise, or purport to exercise, any right of set off or
make any claim of set off against any amount payable by Breakwater to Boliden
under this Agreement.
9.7 RIGHT TO ACTION
Any claim by Boliden against Breakwater, on its own behalf or on the behalf of
another Boliden Indemnified Person, with respect to any matter arising out of or
relating to this Agreement and the transactions contemplated herein including
any incorrectness in, breach of or default under any representation, warranty or
covenant and including any claim for negligence or negligent misstatement will
only be made pursuant to and subject to the provisions of this Section 9.
10. TERMINATION
10.1 TERMINATION WITHOUT NOTICE
This Agreement may be terminated by any Party upon notice to the other Parties
if the Closing has not taken place by August 13, 2004.
10.2 TERMINATION BY BREAKWATER
If any of the conditions set forth in Section 6.1 has not been fulfilled or
waived at or before the Closing, Breakwater may terminate this Agreement by
notice in writing to Boliden whereupon Breakwater will be released from all
obligations except for its obligations under Sections 5.13, 11.8 and 11.9 which
will survive. Boliden will only be released from its obligations if the
condition or conditions for the non-performance of which Breakwater has
terminated this Agreement are not reasonably capable of being performed or
caused to be performed by Boliden.
10.3 TERMINATION BY BOLIDEN
If any of the conditions set forth in Section 6.2 has not been fulfilled or
waived at or before the Closing, Boliden may terminate this Agreement by notice
in writing to Breakwater whereupon Boliden will be released from all obligations
hereunder except for its obligations under Sections 11.8 and 11.9 which will
survive. Breakwater will only be released from its obligations if the condition
or conditions for the non-performance of which Boliden have terminated this
Agreement are not reasonably capable of being performed or caused to be
performed by Breakwater.
10.4 EFFECT OF WAIVER
A waiver by either Breakwater or Boliden of any one or more of the conditions
referred to in Section 10.2 or Section 10.3 will be without prejudice to its
right to terminate in respect of any other non-fulfillment of any other of the
conditions.
10.5 WITHOUT PREJUDICE
Termination by Breakwater pursuant to Section 10.2 or by Boliden pursuant to
Section 10.3 will be without prejudice to the right, subject to the limitations,
exceptions and restrictions set out in this Agreement, to recover damages for
any misrepresentations, breach of warranty or non-fulfillment of any covenant or
agreement of the other.
11. GENERAL
11.1 SURVIVAL OF REPRESENTATIONS
The representations, warranties, covenants and agreements of the Parties
contained in this Agreement and any Ancillary Agreement will survive the closing
of the transactions contemplated herein and, subject to Sections 8 and 9, will
remain in full force and effect notwithstanding any waiver by an aggrieved Party
unless such waiver was made after notice in writing by the aggrieved Party
setting forth the breach.
11.2 ACCESS TO BWCL BOOKS AND RECORDS WITHIN BRITISH COLUMBIA
On Closing, Boliden will, subject to Section 11.5, deliver to Breakwater all
Books and Records for the period before Closing ("BC RECORDS") in its possession
within British Columbia. For a period of six years from the Closing Date or
longer if required by Applicable Law, Breakwater will or will cause BWCL to
retain all original BC Records at its Vancouver or Myra Falls office (or at the
offices of such other Person as Breakwater may designate from time to time), but
Breakwater or BWCL will not be responsible or liable to Boliden for any
accidental loss, destruction or damage of or to any of the BC Records.
11.3 BOLIDEN'S RIGHT TO INSPECT BWCL BOOKS AND RECORDS
So long as the BC Records are retained by Breakwater or BWCL, Boliden will have
the reasonable right to inspect and make copies (at its own expense) of them,
during normal business hours and upon reasonable notice, for any proper purpose
and without undue interference to the business operations of BWCL. Breakwater
will have the right to have its representatives present during any such
inspection.
11.4 ACCESS TO BWCL BOOKS AND RECORDS OUTSIDE BRITISH COLUMBIA
To the extent that any of the Books and Records for the period before Closing
are in the possession of Boliden within Canada outside of British Columbia
("OTHER RECORDS"), Boliden will retain all original Other Records in Ontario at
the offices of Iron Mountain (195 Summerlea Road, Brampton, Ontario, L6T 4P6) or
such other Person as Boliden may designate for a period of six years from the
Closing Date or longer if required by Applicable Law, but Boliden will not be
responsible or liable to Breakwater for any accidental loss, destruction or
damage of or to any of the Other Records.
11.5 PREMIER GOLD BOOKS AND RECORDS
To the extent that Boliden wishes to take or retain any of the Books and Records
for the period before Closing which pertain to Premier Gold or the Sold
Corporations ("PREMIER GOLD RECORDS"), Boliden may take and retain such Premier
Gold Records either in Ontario or British Columbia at the offices of Iron
Mountain (195 Summerlea Road, Brampton, Ontario, L6T 4P6) or such other Person
as Boliden may designate for a period of six years from the Closing Date or
longer if required by Applicable Law, but Boliden will not be responsible or
liable to Breakwater for any accidental loss, destruction or damage of or to any
of the Premier Gold Records. To the extent that Boliden does not wish to take
any Premier Gold Records now held by BWCL, Breakwater will cause BWCL to retain
all such Premier Gold Records at its Vancouver or Myra Falls office (or at the
offices of such other Person as Breakwater may designate from time to time) for
a period of six years from the Closing Date or longer if required by Applicable
Law, but Breakwater or BWCL will not be responsible or liable to Boliden for any
accidental loss, destruction or damage of or to any of the Premier Gold Records.
11.6 BREAKWATER'S RIGHT TO INSPECT OTHER RECORDS AND PREMIER GOLD RECORDS
So long as the Other Records or the Premier Gold Records are held by Boliden,
Breakwater will have the reasonable right to inspect and make copies (at its own
expense) of them, during normal business hours and upon reasonable notice, for
any proper purpose. Boliden will have the right to have its representatives
present during any such inspection.
11.7 BOLIDEN'S RIGHT TO INSPECT PREMIER GOLD RECORDS
So long as the Premier Gold Records are held by Breakwater or BWCL, Boliden will
have the reasonable right to inspect and make copies (at its own expense) of
them, during normal business hours and upon reasonable notice, for any proper
purpose. Breakwater will have the right to have its representatives present
during any such inspection.
11.8 COMMISSIONS, LEGAL FEES
Each of the Parties will bear the fees and disbursements of the respective
lawyers, accountants and consultants engaged by them in connection with this
Agreement.
11.9 PUBLIC ANNOUNCEMENTS
The Parties will coordinate public disclosure with respect to the transactions
contemplated herein and will not make any public announcement or other
disclosure with respect to the matters dealt with herein except as mutually
agreed or if otherwise required by Applicable Law based on the advice of
counsel. If either Party is required by Applicable Law to make a public
announcement with respect to the matters dealt with herein, such Party will
provide as much notice to the other Party as is reasonably possible, including
the proposed text of the announcement.
11.10 ASSIGNMENT
No Party will assign this Agreement, or any part of this Agreement, without the
consent of the other Party, which consent may be unreasonably withheld or
delayed except that either Party may assign this Agreement to its wholly owned
subsidiary without further consent so long as the assignment is substantially in
the form as attached as Schedule 11.10. Any purported assignment without the
required consent is not binding or enforceable against any Party. No permitted
assignment will release or relieve the assignor of any of its obligations, and
the assignor will remain jointly and severally liable with the assignee, as
principal and not as surety, under this Agreement.
11.11 ENUREMENT
This Agreement enures to the benefit of and binds the Parties and their
respective successors and permitted assigns.
11.12 NOTICES
Each Notice to a Party must be given in writing. A Notice may be given by
delivery to an individual or by fax, and will be validly given if delivered on a
Business Day to an individual at the following address, or, if transmitted on a
Business Day by fax addressed to the following Party:
(a) if to Boliden:
BOLIDEN LIMITED
c/o Boliden AB
P.O. Box 44
Klarabergsviadukten 90
SE-101 20
Stockholm, Sweden
Attention: Marianne Lindholm, VP and Corporate Counsel
Fax No.: +46 8 309 536
(b) if to Breakwater:
BREAKWATER RESOURCES LTD.
95 Wellington Street West
Suite 950
Toronto, Ontario, M5J 2N7
Attention: Colin Benner, President & CEO
Fax No.: 416.363.8020
or to any other address, fax number or individual that the party designates. Any
Notice:
(a) if validly delivered, will be deemed to have been given when
delivered;
(b) if validly transmitted by fax before 3:00 p.m. (local time at
the place of receipt) on a Business Day, will be deemed to have
been given on that Business Day, and
(c) if validly transmitted by fax after 3:00 p.m. (local time at the
place of receipt) on a Business Day, will be deemed to have been
given on the Business Day after the date of the transmission.
11.13 WAIVERS
No waiver of any provision of this Agreement is binding unless it is in writing
and signed by all the Parties except that any provision which does not give
rights or benefits to particular Parties may be waived in writing, signed only
by those parties who have rights under, or hold the benefit of, the provision
being waived if those Parties promptly send a copy of the executed waiver to all
other Parties. No failure to exercise, and no delay in exercising, any right or
remedy under this Agreement will be deemed to be a waiver of that right or
remedy. No waiver of any breach of any provision of this Agreement will be
deemed to be a waiver of any subsequent breach of that provision or of any
similar provision.
11.14 FURTHER ASSURANCES
Before and after the Closing Date, each Party will execute and deliver promptly
at the other Party's expense and request all further documents and take all
further action reasonably necessary or appropriate to give effect to the
provisions and intent of this Agreement and to complete the transactions
contemplated by this Agreement.
11.15 REMEDIES CUMULATIVE
The rights and remedies under this Agreement are cumulative and are in addition
to and not in substitution for any other rights and remedies available at law or
in equity or otherwise. No single or partial exercise by a Party of any right or
remedy precludes or otherwise affects the exercise of any other right or remedy
to which that Party may be entitled.
11.16 THIRD PARTY BENEFICIARIES
Except as otherwise provided in Section 11.10, the Parties intend that this
Agreement will not benefit or create any right or cause of action in, or on
behalf of, any other Person and no other Person, will be entitled to rely on the
provisions of this Agreement in any action, suit, proceeding, hearing or other
forum. Boliden is and will be deemed to be acting as agent or trustee on behalf
of and for the benefit of each of the Boliden Indemnified Persons and Breakwater
is and will be deemed to be acting as agent or trustee on behalf of and for the
benefit of each of the Breakwater Indemnified Persons.
11.17 AMENDMENTS
Except as permitted for certain waivers in Section 11.13, no amendment,
supplement, restatement or termination of any provision of this Agreement is
binding unless it is in writing and signed by each Person that is a party to
this Agreement at the time of the amendment, supplement, restatement or
termination.
11.18 SUBMISSION TO JURISDICTION
Subject to Section 11.19, each of the Parties irrevocably submits to the
exclusive jurisdiction of the courts of British Columbia and Ontario in any
Permitted Action and each Party to this Agreement waives, and will not assert by
way of motion, as a defence, or otherwise, in any Permitted Action, any claim
that:
(a) that Party is not subject to the jurisdiction of the courts of
Ontario or British Columbia;
(b) the Permitted Action is brought in an inconvenient forum;
(c) the venue of the Permitted Action is improper; or
(d) any subject matter of the Permitted Action may not be enforced
in or by the courts of Ontario or British Columbia.
In any suit or action brought to obtain a judgment for the recognition or
enforcement of any final judgment rendered in a Permitted Action, no Party to
this Agreement will seek any review with respect to the merits of any Permitted
Action, whether or not that Party appears in or defends the Permitted Action.
11.19 ARBITRATION
If there is a dispute or other failure to agree arising out of or in connection
with this Agreement, a Party may give notice to the other Party requiring that
the dispute or issue be referred to the chief executive officer of each Party.
When this notice is given, each Party will cause its respective chief executive
officer to promptly begin discussions with each other with a view to settling
the dispute or issue. A unanimous decision of the chief executive officers which
is communicated by notice from them to the Parties will be binding on the
Parties. If the chief executive officers do not communicate a unanimous decision
by notice within 15 days after the date of the Notice referring the matter to
them, then the dispute or issue will be submitted to a single arbitrator under
the COMMERCIAL ARBITRATION ACT (British Columbia). The place of arbitration will
be Vancouver, British Columbia. The award of the arbitrator will be final and
binding on the Parties.
11.20 ENTIRE AGREEMENT
This Agreement and the Ancillary Agreements delivered under or in connection
with this Agreement, constitute the entire agreement between the Parties with
respect to the subject matter of this Agreement and supersede the letter of
intent between the Parties dated February 16, 2004 (which is hereby terminated)
and all other prior agreements, negotiations, discussions, undertakings,
representations, warranties and understandings, whether written or oral, express
or implied, statutory or otherwise. There are no warranties, representations or
other agreements or understandings between the Parties in connection with BWCL,
its Business, assets or Liabilities except as specifically set forth herein.
Breakwater acknowledges that no Person (including employees or other
representatives of BWCL and Boliden) has any authority to make any
representation, warranty or covenant and that Breakwater has executed this
Agreement without reliance upon any such representation, warranty or covenant
from such Person. Breakwater specifically disclaims reliance on any statements,
information or data, written or oral, provided by any Person to Breakwater or
its representatives with respect to BWCL, the BWCL Shares, and the BWCFL Note,
the Business or the assets or Liabilities of BWCL that does not expressly form
part of this Agreement.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
11.21 DELIVERY BY FAX
Any Party may deliver an executed copy of this Agreement by fax but that Party
will immediately dispatch by delivery in person to the other Parties an
originally executed copy of this Agreement.
11.22 COUNTERPARTS
This Agreement and all documents contemplated by or delivered under or in
connection with this Agreement may be executed and delivered in any number of
counterparts with the same effect as if all Parties had all signed and delivered
the same document and all counterparts will be construed together to be an
original and will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first written above.
BOLIDEN LIMITED BREAKWATER RESOURCES LTD.
Per: ______________________ Per: _______________________
Authorized Signatory Authorized Signatory
LIST OF SCHEDULES FILED HEREWITH
SCHEDULE DESCRIPTION
-------- -----------
1.1(m) Breakwater Warrant Indenture
1.1(tt) Mineral Claims and Other Property Rights
1.1(bbb) Permitted Encumbrances
3.1(a) Jurisdictions
3.1(j) Directors and Officers
3.3(c) Permits
3.2(a) Financial Statements
11.10 Assignment and Assumption Agreement
The balance of the schedules have not been filed because they are either subject
to confidentiality obligations or contain commercially sensitive information.
SCHEDULE 1.1(M)
BREAKWATER RESOURCES LTD.
- and -
COMPUTERSHARE TRUST COMPANY OF CANADA
WARRANT INDENTURE
Dated as of January 28, 2004
Fraser Milner Casgrain LLP
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS AND INTERPRETATION
Section 1.01 Definitions:.............................................1
Section 1.02 Number and Gender:.......................................5
Section 1.03 Interpretation Not Affected by Headings Etc.:............5
Section 1.04 Day Not a Business Day:..................................5
Section 1.05 Currency:................................................5
Section 1.06 Applicable Law:..........................................5
Section 1.07 References to This Indenture:............................5
Section 1.08 Schedule:................................................6
ARTICLE TWO
ISSUE AND FORM OF WARRANTS
Section 2.01 Issue and Form of Warrants:..............................6
Section 2.02 Terms and Delivery of Warrants:..........................7
Section 2.03 Warrantholder Not a Shareholder:.........................7
Section 2.04 Signing of Warrant Certificate:..........................7
Section 2.05 Countersignature by the Warrant Agent:...................7
Section 2.06 Issue in Substitution for Lost Warrant Certificate:......8
Section 2.07 Exchange of Warrant Certificates:........................8
Section 2.08 Registration and Transfer of Warrants:...................9
Section 2.09 Ownership of Warrants:..................................11
Section 2.10 Warrants to Rank Pari Passu:............................11
ARTICLE THREE
DISTRIBUTION OF WARRANT CERTIFICATES
Section 3.01 Warrant Certificates:...................................11
ARTICLE FOUR
EXERCISE OF WARRANTS
Section 4.01 Method of Exercise of Warrants:.........................11
Section 4.02 Effect of Exercise of Warrants:.........................14
Section 4.03 Subscription for Less Than Entitlement:.................14
Section 4.04 Warrant Certificates for Fractions of Common Shares:....15
Section 4.05 Expiration of Warrants:.................................15
ARTICLE FIVE
ADJUSTMENTS
Section 5.01 Adjustment of Exercise Price and Number of Common
Shares Purchasable Upon Exercise:....................15
Section 5.02 Rules Regarding Calculation of Adjustment of Exercise
Price and Number of Common Shares Purchasable Upon
Exercise:............................................18
Section 5.03 Postponement of Subscription:...........................20
Section 5.04 Notice of Adjustment of Exercise Price and Number of
Common Shares Purchasable Upon Exercise:.............20
ARTICLE SIX
PURCHASES BY THE CORPORATION
Section 6.01 Optional Purchases by the Corporation:..................21
Section 6.02 Surrender of Warrant Certificates:......................21
ARTICLE SEVEN
COVENANTS OF THE CORPORATION
Section 7.01 General Covenants of the Corporation:...................21
Section 7.02 Warrant Agent's Remuneration and Expenses:..............22
Section 7.03 Notice of Issue:........................................23
Section 7.04 Performance of Covenants by Warrant Agent:..............23
ARTICLE EIGHT
ENFORCEMENT
Section 8.01 Suits by Warrantholders, Etc.:..........................23
Section 8.02 Immunity of Shareholders, Etc.:.........................23
Section 8.03 Limitation of Liability:................................23
ARTICLE NINE
MEETINGS OF WARRANTHOLDERS
Section 9.01 Right to Convene Meetings:..............................23
Section 9.02 Notice:.................................................24
Section 9.03 Chairman:...............................................24
Section 9.04 Quorum:.................................................24
Section 9.05 Power to Adjourn:.......................................24
Section 9.06 Show of Hands:..........................................24
Section 9.07 Poll:...................................................24
Section 9.08 Voting:.................................................25
Section 9.09 Regulations:............................................25
Section 9.10 Corporation and Warrant Agent May be Represented:.......25
Section 9.11 Powers Exercisable by Extraordinary Resolution:.........25
Section 9.12 Extraordinary Resolution:...............................26
Section 9.13 Powers Cumulative:......................................27
Section 9.14 Minutes:................................................27
Section 9.15 Instruments in Writing:.................................27
Section 9.16 Binding Effect of Resolutions:..........................28
Section 9.17 Holdings by Corporation Disregarded:....................28
ARTICLE TEN
SUPPLEMENTAL INDENTURES
Section 10.01 Provision for Supplemental Indentures for
Certain Purposes:....................................28
Section 10.02 Successor Corporation:..................................29
2.
ARTICLE ELEVEN
CONCERNING THE WARRANT AGENT
Section 11.01 Trust Indenture Legislation:............................29
Section 11.02 Rights and Duties of Warrant Agent:.....................29
Section 11.03 Evidence:...............................................30
Section 11.04 Experts and Advisers:...................................30
Section 11.05 Warrant Agent Not Required to Give Security:............31
Section 11.06 Protection of Warrant Agent:............................31
Section 11.07 Replacement of Warrant Agent; Successor by Merger:......31
Section 11.08 Conflict of Interest:...................................32
Section 11.09 Acceptance of Trust:....................................32
Section 11.10 Actions by Warrant Agent to Protect Interest:...........33
Section 11.11 Documents, Money, Etc. Held by Warrant Agent:...........33
Section 11.12 Warrant Agent Not to be Appointed Receiver:.............33
ARTICLE TWELVE
NOTICE TO WARRANTHOLDERS
Section 12.01 Notice:.................................................33
ARTICLE THIRTEEN
GENERAL
Section 13.01 Notice to the Corporation and the Warrant Agent:........33
Section 13.02 Time of the Essence:....................................34
Section 13.03 Counterparts:...........................................35
Section 13.04 Satisfaction and Discharge of Indenture:................35
Section 13.05 Provisions of Indenture and Warrant Certificate
for the Sole Benefit of Parties and Warrantholders:..35
Schedule A - Form of Warrant Certificate
3.
THIS WARRANT INDENTURE dated as of the 28th day of January,
2004.
B E T W E E N:
BREAKWATER RESOURCES LTD. a corporation existing under the
CANADA BUSINESS CORPORATIONS ACT
(hereinafter called the "Corporation")
OF THE FIRST PART
- and -
COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company existing
under the laws of Canada
(hereinafter called the "Warrant Agent"),
OF THE SECOND PART
WHEREAS the Corporation is authorized to issue an unlimited
number of Common Shares (as hereinafter defined);
AND WHEREAS the Corporation proposes to issue up to 57,142,858
units, each such unit being comprised of one Common Share and one-half of one
Warrant (as hereinafter defined), and with each one Warrant entitling the holder
thereof to subscribe for and purchase one Common Share at the price and upon the
other terms and conditions hereinafter set forth;
AND WHEREAS the Corporation is authorized under the laws
applicable to it to create and issue the Warrants as hereinafter provided;
AND WHEREAS the Warrants will be represented by Warrant
Certificates issued and countersigned in accordance with the provisions hereof;
AND WHEREAS all things necessary have been or will be done and
performed by the Corporation to make each of the Warrants and the Warrant
Certificates, when countersigned by the Warrant Agent and issued in accordance
with the provisions hereof, legal, valid and binding obligations of the
Corporation with the benefits and subject to the provisions hereof;
NOW THEREFORE THIS INDENTURE WITNESSETH that for good and
valuable consideration mutually given and received, the receipt and sufficiency
of which is hereby acknowledged, it is hereby agreed and declared as follows:
ARTICLE ONE
DEFINITIONS AND INTERPRETATION
SECTION 1.01 DEFINITIONS:
In this Indenture and in the Warrant Certificates, unless there is something in
the subject matter or context inconsistent therewith, the words and terms
defined in this section 0 shall, for the purpose of this Indenture and all
supplemental indentures hereto and for the purpose of the Warrant Certificates,
have the respective meanings specified in this section 0:
(a) "1933 Act" means the United States SECURITIES ACT OF 1933, as
amended;
(b) "Applicable Legislation" means such provisions of any statute of
Canada or a province thereof, and of the regulations under any
such statutes, relating to warrant indentures or to the rights,
duties and obligations of trustees and of corporations under
warrant indentures, to the extent that such provisions are at
the time in force and applicable to this Indenture;
(c) "Business Day" means a day which is not a Saturday or Sunday or
a civic or statutory holiday in any of the cities where Warrant
Certificates may be surrendered to the Warrant Agent pursuant to
the provisions hereof;
(d) "Capital Reorganization" means any of the events described in
subparagraphs 0, 0 or 0 hereof;
(e) "Certified Resolution" means a copy of a resolution certified by
the President or the Secretary of the Corporation, which may but
need not be under the corporate seal of the Corporation, which
has been passed by the Directors and is in full force and effect
on the date of such certification;
(f) "Common Shares" means the common shares which the Corporation is
authorized to issue as such common shares are constituted at the
close of business on the Effective Date; provided that in the
event of any adjustment pursuant to the provisions of article
five hereof, "Common Shares" shall thereafter mean the shares or
other securities or property resulting from such adjustment;
(g) "Corporation" means Breakwater Resources Ltd, a corporation
existing under the CANADA BUSINESS CORPORATIONS ACT and includes
any successor corporation thereto;
(h) "Corporation's Auditors" means the firm of chartered accountants
appointed as the auditors of the Corporation at the particular
time;
(i) "Counsel" means a barrister and solicitor or a firm of
barristers and solicitors, who may be counsel for the
Corporation, acceptable to the Warrant Agent;
(j) "Current Market Price" of the Common Shares at any date means
the price per share equal to the weighted average trading price
at which the Common Shares have traded on the Toronto Stock
Exchange or, if the Common Shares are not then listed on the
Toronto Stock Exchange, on such other stock exchange as may be
selected by the directors of the Corporation for such purpose
or, if the Common Shares are not then listed on any stock
exchange, in the over-the-counter market, during the period of
any 20 consecutive trading days ending not more than five
Business Days before such date; provided that the weighted
average trading price shall be determined by dividing the
aggregate sale price of all Common Shares sold on the said
exchange or market, as the case may be, during the said 20
consecutive trading days by the total number of Common Shares so
sold; and provided further that if the Common Shares are not
then listed on any stock exchange or traded in the
over-the-counter market, then the Current Market Price shall be
determined by a firm of independent chartered accountants
selected by the Directors;
(k) "Director" means a director of the Corporation for the time
being, and, unless otherwise specified herein, reference to
"action by the Directors" means action by the directors of the
Corporation as a board or, whenever empowered, action by any
committee of the directors;
(l) "Dividends Paid In The Ordinary Course" means dividends paid in
any financial year of the Corporation, whether in (i) cash, (ii)
shares of the Corporation, (iii) warrants or similar rights to
2.
purchase any shares of the Corporation or property or other
assets of the Corporation, or (iv) property or other assets of
the Corporation, as the case may be, as determined by action of
the Directors except that, in the case of warrants or similar
rights to purchase Common Shares or securities convertible into
or exchangeable for Common Shares such fair market value of the
warrants or similar rights shall be equal to the number of
Common Shares which may be purchased thereby (or the number of
Common Shares issuable upon conversion or exchange) as of the
date of distribution of such warrants or similar rights,
multiplied by the Current Market Price of the Common Shares on
the date of such distribution, provided that the value of such
dividends does not in such financial year in the aggregate
exceed the greater of
(1) 150% of the aggregate amount of dividends paid by the
Corporation on the Common Shares in the 12 month period ending
immediately prior to the first day of such financial year, and
(2) 100% of the consolidated net income from continuing
operations of the Corporation, before any extraordinary items,
for the 12-month period ending immediately prior to the first
day of such financial year (such consolidated net income from
continuing operations to be computed in accordance with
generally accepted accounting principles in Canada);
(m) "Effective Date" means the date of issue of the Warrants;
(n) "Exercise Date" with respect to any Warrant means the date on
which such Warrant is surrendered for exercise in accordance
with the provisions of article four hereof;
(o) "Exercise Price" means $1.00 per Common Share, unless such
amount shall have been adjusted pursuant to the provisions of
article five hereof in which case such term shall mean the
adjusted price in effect at the applicable time;
(p) "Expiry Date" means January 28, 2009;
(q) "Extraordinary Resolution" means, subject as hereinafter
provided in sections 0, 0 and 0 hereof, a motion proposed at a
meeting of Warrantholders called for that purpose and held in
accordance with the provisions of article nine hereof at which
there are present in person or represented by proxy
Warrantholders entitled to subscribe for and purchase at least
35% of the aggregate number of Common Shares which could be
subscribed for and purchased pursuant to all of the Warrants
outstanding as of the date of the meeting and passed by the
affirmative votes of Warrantholders entitled to subscribe for
and purchase not less than 66 2/3% of the aggregate number of
Common Shares which could be subscribed for and purchased
pursuant to all of the Warrants represented at the meeting and
voted on such motion;
(r) "Original U.S. Purchaser" means a U.S. Person or a Person in the
United States who purchased the Warrant from the Corporation;
(s) "Person" means an individual, corporation, partnership, trust or
any unincorporated organization;
(t) "Regulation S" means Regulation S adopted by the United States
Securities and Exchange Commission under the 1933 Act;
(u) "Rights Offering" means any of the events described in
subsection 0 hereof;
3.
(v) "Rights Period" means any period determined for the purposes of
subsection 0 hereof;
(w) "Shareholder" means a holder of record of one or more Common
Shares;
(x) "Share Reorganization" means any of the events described in
paragraphs 0, 0, iv) or 0 hereof;
(y) "Special Distribution" means any of the events described in
subsection 0 hereof;
(z) "Subsidiary" means a corporation, of which voting securities
carrying a majority of the votes attached to all outstanding
voting securities, directly or indirectly, are owned by the
Corporation, by the Corporation and one or more subsidiaries
thereof, or by one or more of the subsidiaries of the
Corporation, and, as used in this definition, "voting
securities" means securities, other than debt securities,
carrying the right to elect directors either under all
circumstances or under some circumstances that have occurred and
are continuing;
(aa) "Time of Expiry" means 5:00 o'clock in the afternoon, Toronto
time, on the Expiry Date;
(bb) "Trading Day" with respect to any stock exchange or
over-the-counter market, means a day on which shares may be
traded through the facilities of such stock exchange or in such
over-the-counter market and otherwise means a day on which
shares may be traded through the facilities of the principal
stock exchange on which the Common Shares are then listed (or if
the Common Shares are not then listed on any stock exchange,
then in the over-the-counter market);
(cc) "Transfer Agent" means the transfer agent for the time being of
the Common Shares;
(dd) "United States" means the United States of America, the
territories or possessions thereof, any state thereof or the
District of Columbia;
(ee) "U.S. Person" means any natural person resident in the United
States, any partnership or corporation organized or incorporated
under the laws of the United States, any estate of which any
executor or administrator is a U.S. Person, any trust of which
any trustee is a U.S. Person, any agency or branch of a foreign
entity located in the United States, any non-discretionary
custodial account or similar account (other than a trust or
estate) held by a dealer or other fiduciary for the benefit or
the account of a U.S. Person and any discretionary custodial
account or similar account (other than a trust or estate) held
by a dealer or other professional fiduciary organized or
incorporated, or, if an individual, resident, in the United
States or any partnership or corporation organized or
incorporated under the laws of a jurisdiction other than the
United States if formed by a U.S. Person principally for the
purpose of investing in securities not registered under the 1933
Act;
(ff) "Warrant Agent" means Computershare Trust Company of Canada, or
the successor thereof for the time being of the trusts hereby
created;
(gg) "Warrant Certificates" means the certificates representing the
Warrants substantially in the form attached as schedule A hereto
issued and countersigned hereunder and for the time being
outstanding;
4.
(hh) "Warrantholders" or "holders" without reference to Common Shares
means the persons for the time being who are registered holders
of Warrant Certificates;
(ii) "Warrantholders' Request" means an instrument signed in one or
more counterparts by Warrantholders entitled to purchase in the
aggregate not less than 25% of the aggregate number of Common
Shares which could be purchased pursuant to all Warrants then
unexercised and outstanding, requesting the Warrant Agent to
take some action or proceeding specified therein;
(jj) "Warrants" means the warrants issued hereunder, each one of
which warrants will entitle the holder thereof to purchase one
Common Share for an exercise price of $1.00 at any time up to
the Time of Expiry, subject to adjustment in accordance with
article five hereof; and
(kk) "Written Order of the Corporation", "Written Request of the
Corporation", "Written Consent of the Corporation" and
"Certificate of the Corporation" mean respectively a written
order, request, consent or certificate signed in the name of the
Corporation by its President, a Vice-President or a Director
and, in addition, by its Secretary or a Director, and may
consist of one or more instruments so executed.
SECTION 1.02 NUMBER AND GENDER:
Unless herein otherwise expressly provided or unless the context otherwise
requires, words importing the singular include the plural and vice versa and
words importing the masculine include the feminine and neuter genders.
SECTION 1.03 INTERPRETATION NOT AFFECTED BY HEADINGS ETC.:
The division of this Indenture into articles, sections, subsections and
paragraphs, the provision of the 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.
SECTION 1.04 DAY NOT A BUSINESS DAY:
If the day on or before which any action that would otherwise be required to be
taken hereunder is not a Business Day in the place where the action is required
to be taken, that action will be required to be taken on or before the requisite
time on the next succeeding day that is a Business Day.
SECTION 1.05 CURRENCY:
All references to currency herein and in the Warrant Certificates are to lawful
money of Canada unless otherwise specified herein.
SECTION 1.06 APPLICABLE LAW:
This Indenture, the Warrant Certificates and the Warrants represented by the
Warrant Certificates shall be governed by and performed, construed and enforced
in accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein.
SECTION 1.07 REFERENCES TO THIS INDENTURE:
The words and phrases "this Warrant Indenture", "this Indenture", "herein",
"hereby" and similar expressions mean or refer to this indenture and any
indenture, deed or instrument supplemental hereto and the words "article",
"section", "subsection" and "paragraph" followed by a number mean and refer to
the specified article, section, subsection or paragraph of this Indenture
5.
SECTION 1.08 SCHEDULE:
The following schedule is attached to, forms part of and shall be deemed to be
incorporated into this Indenture.
SCHEDULE TITLE
A Form of Warrant Certificate
12.
ISSUE AND FORM OF WARRANTS
SECTION 2.01 ISSUE AND FORM OF WARRANTS:
a) AUTHORIZATION OF WARRANTS:
(i) Warrants: The Warrants authorized to be issued hereunder
are limited in respect of the aggregate number of Common
Shares which can be subscribed for and purchased
pursuant thereto, and Warrants may be issued only upon
and subject to the terms and conditions hereinafter set
forth. The Corporation is hereby authorized to issue up
to 28,571,429 Warrants entitling the holders thereof to
subscribe for and purchase up to an aggregate of
28,571,429 Common Shares together with such additional
indeterminate number of Common Shares as may be required
to be issued pursuant to any adjustment required to be
made by the provisions of article five hereof, and such
Warrants are hereby authorized to be issued.
b) Form of Warrant Certificate:
i. WARRANTS: The Warrant Certificates shall be
substantially in the form of the certificate attached
hereto as schedule A, shall be dated as of the date of
issue thereof (including all replacements issued in
accordance with this Indenture) and may bear a facsimile
of the seal of the Corporation and such distinguishing
letters and numbers as the Corporation may, with the
approval of the Warrant Agent, prescribe. Irrespective
of any adjustments required to be made by the provisions
of article five hereof, all replacement Warrant
Certificates shall continue to express the number of
Common Shares purchasable upon the exercise of the
Warrants represented thereby and the Exercise Price as
if such Warrant Certificates were issued as of the
initial date of issue thereof pursuant hereto.
c) LEGENDS ON WARRANT CERTIFICATES:
i. U.S. PERSONS: Warrant Certificates representing Warrants
issued to U.S. Persons, to Persons in the United States
or to Persons for the account or benefit of a U.S.
Person or a Person in the United States shall bear the
following legend:
"THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES
ISSUABLE 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"). THE
HOLDER HEREOF BY PURCHASING SUCH SECURITIES AGREES FOR
THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO
THE CORPORATION, OR (B) OUTSIDE THE UNITED STATES IN
ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S.
SECURITIES ACT."
6.
SECTION 2.02 TERMS AND DELIVERY OF WARRANTS:
a) TERMS: Each one Warrant issued hereunder shall entitle
the holder thereof to subscribe for and purchase one Common
Share at the Exercise Price at any time after the date of issue
thereof until the Time of Expiry, subject to any adjustments
required to be made pursuant to article five hereof.
b) DELIVERY OF WARRANT CERTIFICATES: Warrant Certificates
in definitive form representing the Warrants authorized to be
issued in paragraph 1(a)(i) hereof shall be created and executed
by the Corporation, shall be countersigned by the Warrant Agent
and shall be delivered by the Warrant Agent.
c) ADJUSTMENT: The Exercise Price and the number of Common
Shares which can be subscribed for and purchased pursuant to the
Warrants shall be adjusted in the events and in the manner
specified in article five hereof.
d) NO FRACTIONAL WARRANTS: No Warrant Certificate
representing a fractional Warrant shall be issued or otherwise
provided for, and a holder of a Warrant Certificate shall not be
entitled to subscribe for or purchase a fractional Common Share
or be entitled to any cash or other consideration such holder
might otherwise be entitled to based upon the holding of such
Warrant Certificate. If the number of Warrants to which a
Warrantholder would otherwise be entitled is not a whole number,
then the number of Warrants to be issued to such Warrantholder
shall be rounded down to the next whole number and the
Warrantholder shall not be entitled to any compensation in
respect of such fractional Warrant.
e) SPLITS, COMBINATIONS ETC.: Subject to section 0 hereof,
the number of Warrants represented by any Warrant Certificate or
any Warrant Certificates may be split, combined or exchanged for
a Warrant Certificate or Warrant Certificates representing the
same number of Warrants in the aggregate.
f) ISSUE OF COMMON SHARES: The Corporation shall issue
Common Shares to give effect to any exercise of Warrants.
SECTION 2.03 WARRANTHOLDER NOT A SHAREHOLDER:
Nothing in this Indenture nor in the holding of a Warrant represented by a
Warrant Certificate, or otherwise, shall be construed as conferring upon a
Warrantholder any right or interest whatsoever as a Shareholder including, but
not limited to, the right to vote at, to receive notice of, or to attend,
meetings of Shareholders or any other proceedings of the Corporation or the
right to receive dividends or other distributions.
SECTION 2.05 SIGNING OF WARRANT CERTIFICATE:
Warrant Certificates shall be signed by (a) the Chairman, the President, the
Chief Executive Officer or any Vice-President of the Corporation and by (b) the
Secretary, the Chief Financial Officer or the Treasurer of the Corporation and
may, but need not be, under the seal of the Corporation or a reproduction
thereof (which shall be deemed to be the seal of the Corporation). The
signatures of such officers may be mechanically reproduced in facsimile and
Warrant Certificates bearing such facsimile signatures shall be binding upon the
Corporation as if they had been manually signed by such officers.
Notwithstanding that any of the persons whose manual or facsimile signature
appears on any Warrant Certificate as one of such officers may no longer hold
office at the date of such Warrant Certificate or at the date of the
countersigning or delivery thereof, any Warrant Certificate signed as aforesaid
and countersigned by the Warrant Agent shall be valid and binding upon the
Corporation and the holder thereof shall be entitled to the benefits of this
Indenture.
7.
SECTION 2.06 COUNTERSIGNATURE BY THE WARRANT AGENT:
a) COUNTERSIGNATURE: No Warrant Certificate shall be issued
or, if issued, shall be valid for any purpose or entitle the
holder to the benefits hereof until it has been countersigned by
the Warrant Agent by means of a manual signature of one of its
authorized officers, substantially in the form of the
countersignature contained on the Warrant Certificate or in some
other form approved by the Corporation and the Warrant Agent and
such countersignature by the Warrant Agent upon any Warrant
Certificate shall be conclusive evidence as against the
Corporation that the Warrant Certificate so countersigned has
been issued hereunder and that the holder thereof is entitled to
the benefits hereof.
b) NO REPRESENTATION: The countersignature by the Warrant
Agent on Warrant Certificates issued hereunder shall not be
construed as a representation or warranty by the Warrant Agent
as to the validity of this Indenture or of the Warrant
Certificate (except the due countersignature thereof) or as to
the performance by the Corporation of its obligations under this
Indenture and the Warrant Agent shall in no respect be liable or
answerable for the use made of the Warrant Certificates or any
of them or of the consideration ~herefore, except as otherwise
specified herein.
SECTION 2.07 ISSUE IN SUBSTITUTION FOR LOST WARRANT CERTIFICATE:
a) SUBSTITUTION: In case any Warrant Certificate issued and
countersigned hereunder shall become mutilated, lost, destroyed
or stolen, the Corporation, subject to applicable law, shall
issue and thereupon the Warrant Agent shall countersign and
deliver a new certificate for the same class of Warrants and of
like date and tenor, and bearing the same legends, if any, as
the one mutilated, lost, destroyed or stolen (i) in exchange for
and in place of and upon cancellation of such mutilated
certificate, or (ii) in lieu of and in substitution for such
lost, destroyed or stolen certificate and the substituted
certificate shall be in a form approved by the Warrant Agent and
shall be entitled to the benefit hereof and shall rank equally
in accordance with its terms with all Warrants of the same class
either issued or to be issued hereunder.
b) ISSUE OF NEW WARRANT CERTIFICATES: The applicant for the
issue of a new Warrant Certificate pursuant to subsection 0
hereof shall bear the cost of the issue thereof and in case of
loss, destruction or theft shall, as a condition precedent to
the issue thereof, furnish to the Corporation and to the Warrant
Agent such evidence of ownership and of the loss, destruction or
theft, as the case may be, of the certificate so lost, destroyed
or stolen as shall be satisfactory to the Corporation and to the
Warrant Agent in their discretion, acting reasonably, and such
applicant may also be required to furnish indemnity or security
in amount and form satisfactory to the Corporation and the
Warrant Agent in their discretion, acting reasonably, to save
each of them harmless, and shall pay the reasonable expenses,
charges and any taxes applicable thereto of the Corporation and
the Warrant Agent in connection therewith.
SECTION 2.07 EXCHANGE OF WARRANT CERTIFICATES:
a) EXCHANGE: Warrant Certificates issued and countersigned
hereunder representing any specified number of Warrants to
subscribe for and purchase Common Shares may, upon compliance
with the reasonable requirements of the Warrant Agent, be
exchanged for Warrant Certificates representing in the aggregate
the same number of Warrants and entitling the holder thereof to
subscribe for and purchase an equal aggregate number of Common
Shares at the same Exercise Price and on the same terms as the
Warrant Certificates so exchanged.
b) PLACES OF EXCHANGE: Warrant Certificates may be
exchanged at the principal office of the Warrant Agent in the
City of Toronto, Ontario, or at any other place that is
designated by the Corporation with the approval of the Warrant
Agent. Any Warrant Certificate tendered for exchange shall be
surrendered to the Warrant Agent and cancelled by the Warrant
Agent. The Corporation shall sign and the Warrant Agent shall
countersign all Warrant Certificates necessary to carry out such
exchanges.
8.
c) CHARGES FOR EXCHANGE: For each Warrant Certificate
exchanged, the Warrant Agent, except as otherwise herein
provided, shall, if required by the Corporation, charge the
Warrantholder a reasonable amount for each new Warrant
Certificate issued. Payment for any and all taxes or
governmental or other charges required to be paid shall be made
by the Warrantholder requesting such exchange, as a condition
precedent thereto.
SECTION 2.08 REGISTRATION AND TRANSFER OF WARRANTS:
a) REGISTER: The Corporation will cause to be kept by the
Warrant Agent at the principal office in Toronto, Ontario, of
the Warrant Agent:
i. a register of holders in which shall be entered
in alphabetical order the names and addresses of
the holders of Warrants and particulars of the
Warrants held by them; and
ii. a register of transfers in which all transfers
of Warrants and the date and other particulars
of each such transfer shall be entered.
b) VALID TRANSFERS: No transfer of any Warrant will be
valid unless entered on the appropriate register of transfers
referred to in subsection 0 hereof, or on any branch registers
maintained pursuant to subsection 0 hereof. Upon surrender to
the Warrant Agent of the Warrant Certificate representing such
Warrant, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Warrant Agent
executed by the registered holder or his executors,
administrators or other legal representatives or his or their
attorney duly appointed by an instrument in writing in form and
execution satisfactory to the Warrant Agent, and, upon
compliance with such requirements and such other reasonable
requirements as the Warrant Agent may prescribe, such transfer
will be recorded on the appropriate register of transfers by the
Warrant Agent.
c) REGISTER OF TRANSFERS: The transferee of any Warrant
will, after surrender to the Warrant Agent of the Warrant
Certificate representing such Warrant as required by subsection
00 hereof and upon compliance with all other conditions in
respect thereof required by this Indenture or by law, be
entitled to be entered on the appropriate register of holders
referred to in subsection 0 hereof, or on any branch registers
of holders maintained pursuant to subsection 0 hereof, as the
owner of such Warrant free from all equities or rights of
set-off or counterclaim between the Corporation and the
transferor or any previous holder of such Warrant, except in
respect of equities of which the Corporation is required to take
notice by statute or by order of a court of competent
jurisdiction.
d) REFUSAL OF REGISTRATION: The Corporation will be
entitled, and may direct the Warrant Agent, to refuse to
recognize any transfer, or enter the name of any transferee, of
any Warrant on the registers referred to in subsection 0 hereof,
or on any branch registers maintained pursuant to subsection 0
hereof, if such transfer would constitute a violation of the
securities laws of any jurisdiction or the rules, regulations or
policies of any regulatory authority having jurisdiction.
e) NO NOTICE OF TRUSTS: Subject to applicable law, neither
the Corporation nor the Warrant Agent will 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 direction of the person registered
as the holder thereof, whether named as trustee or otherwise, as
though that person were the beneficial owner thereof.
f) INSPECTION: The registers referred to in subsection 0
hereof, and any branch registers maintained pursuant to
subsection 0 hereof, will at all reasonable times be open for
inspection by the Corporation and any Warrantholder. The Warrant
Agent will from time to time when requested to do so in writing
by the Corporation or any Warrantholder (upon payment of the
reasonable charges of the Warrant Agent and upon providing the
Warrant Agent with an affidavit
9.
setting out the information required to be stated by subsection
21(7) of the CANADA BUSINESS CORPORATIONS ACT (or any successor
or replacement for such subsection under such statute or
replacement for such statute)), furnish the Corporation or such
Warrantholder with a list of the names and addresses of holders
of Warrants (in the case of a Warrantholder of the same class as
such Warrantholder) entered on such registers and showing the
number of Warrants (in the case of a Warrantholder of the same
class as such Warrantholder) held by each such holder thereof.
g) LOCATION OF REGISTERS: The Corporation may at any time
and from time to time change the place at which the registers
referred to in subsection 0 hereof are kept, cause branch
registers of holders or transfers to be kept at other places and
close such branch registers or change the place at which such
branch registers are kept, in each case subject to the approval
of the Warrant Agent. Notice of all such changes or closures
shall be given by the Corporation to the Warrant Agent and to
holders of Warrants in accordance with article twelve hereof.
h) TRANSFERS BY U.S. PERSONS: If the Warrant Certificate
surrendered pursuant to subsection 0 hereof bears the legend set
forth in paragraph 0 hereof, the Warrant Agent shall not
register such transfer unless (A) the transfer is made to the
Corporation or (B) the holder thereof delivers to the Warrant
Agent a declaration to substantially the following affect (or
such other form as the Corporation may otherwise prescribe from
time to time):
"The undersigned:
i. acknowledges that the sale of the warrants of Breakwater
Resources Ltd. (the "Corporation") 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 "U.S. Securities Act"); and
ii. certifies that (1) the undersigned is not an "affiliate"
of the Corporation (as that term is defined in Rule 405
under the U.S. Securities Act), (2) the offer of such
warrants 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 in, on or through the
facilities of a "Designated Offshore Securities Market"
as defined in Rule 902 of Regulation S under the U.S.
Securities Act 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, (3)
neither the seller nor any affiliate of the seller nor
any person acting on behalf of any of them has engaged
or will engage in any directed selling efforts in the
United States in connection with the offer and sale of
such securities, (4) the sale is bona fide and not for
the purpose of "washing off" the resale restrictions
imposed because the securities are "restricted
securities" (as such term is defined in Rule 144(a)(3)
under the U.S. Securities Act), and (5) the contemplated
sale is not a transaction, or part of a series of
transactions which, although in technical compliance
with Regulation S, is part of a plan or scheme to evade
the registration provisions of the U.S. Securities Act.
Terms used herein have the meanings given to them by
Regulation S."
provided, that if any Warrants are being sold outside the United
States in accordance with Rule 904 of Regulations S under the
1933 Act, and provided that the Corporation is a "foreign
issuer" within the meaning of Regulation S under the 1933 Act at
the time of such sale, any such legend may be removed upon
receipt by the Warrant Agent of the declaration set forth in
this subsection 00.
i) RELIANCE BY WARRANT AGENT: The Warrant Agent shall have
no obligation to ensure or verify compliance with any Applicable
Legislation or regulatory requirements on the issue, exercise or
transfer of any Warrants or any Common Shares or other
securities issued upon the exercise of any Warrants. The Warrant
Agent shall be entitled to process all proferred transfers and
exercises of Warrants upon the presumption that such transfers
or exercises are permissible pursuant to all Applicable
Legislation and regulatory requirements and the terms of the
Indenture
10.
and the related Warrant Certificates in the absence of prima
facie evidence to the contrary. The Warrant Agent may assume for
the purposes of this Indenture that the address on the register
of Warrantholders of any Warrantholder is the actual address of
such Warrantholder and is also determinative of the residency of
such Warrantholder and that the address of any transferee to
whom any Warrants or Common Shares or other securities issuable
upon the exercise of any Warrants are to be registered, as shown
on the transfer document, is the actual address of the
transferee and is also determinative of the residency of the
transferee.
SECTION 2.09 OWNERSHIP OF WARRANTS:
a) OWNER: The Corporation and the Warrant Agent may deem
and treat the person in whose name any Warrant is registered as
the absolute owner of such Warrant for all purposes, and such
person will for all purposes of this Indenture be and be deemed
to be the absolute owner thereof, and the Corporation and the
Warrant Agent will 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.
b) RIGHTS OF REGISTERED HOLDER: The registered holder of
any Warrant will be entitled to the rights evidenced thereby
free from all equities and rights of set-off or counterclaim
between the Corporation and the original or any intermediate
holder thereof and all persons may act accordingly, and the
issue and delivery to any such registered holder of the Common
Shares issuable pursuant thereto will be a good discharge to the
Corporation and the Warrant Agent ~herefore and neither the
Corporation nor the Warrant Agent will be bound to inquire into
the title of any such registered holder.
SECTION 2.10 WARRANTS TO RANK PARI PASSU:
All Warrants shall rank pari passu, whatever may be the actual date of issue of
any Warrants.
ARTICLE THREE
DISTRIBUTION OF WARRANT CERTIFICATES
SECTION 3.01 WARRANT CERTIFICATES:
Warrant Certificates, issuable only in registered form, will be issued and
mailed or delivered to the holders of Warrants upon the exchange thereof in
accordance with the terms thereof.
ARTICLE FOUR
EXERCISE OF WARRANTS
SECTION 4.01 METHOD OF EXERCISE OF WARRANTS:
a) EXERCISE: Subject to subsection 0 hereof, the holder of
any Warrant may exercise the right thereby conferred on such
holder to subscribe for and purchase Common Shares by
surrendering, after the date of issue of the Warrant but prior
to the Time of Expiry, to the Warrant Agent at the place
specified in subsection 0 hereof or any other place or places
that may be designated by the Corporation with the approval of
the Warrant Agent:
iii. the Warrant Certificate, with a properly completed and
executed subscription form in substantially the form
contained on the Warrant Certificate; and
iv. a certified cheque, bank draft or money order in lawful
money of Canada payable to or to the order of the
Corporation at par in the city where such Warrant
Certificate is surrendered for exercise, in an amount
equal to the product obtained by multiplying the
Exercise Price by the number of Common Shares subscribed
for pursuant to such Warrant Certificate.
11.
A Warrant Certificate with the completed and executed
subscription form referred to in paragraph i.a.i.1.iii
above, together with the certified cheque, bank draft or
money order referred to in paragraph 00iv above, shall
be deemed to be surrendered only upon delivery thereof
or, if sent by mail or other means of transmission, upon
receipt thereof, in each case at the office of the
Warrant Agent provided for in subsection 0 hereof or any
such other place designated by the Corporation with the
approval of the Warrant Agent.
b) PROHIBITION ON EXERCISE BY U.S. PERSONS: The Common
Shares to be issued upon the exercise of the Warrants have not
been and will not be registered under the 1933 Act, and Warrants
may not be exercised by any U.S. Person, by any Person in the
United States or by any other Person for the account or benefit
of a U.S. Person or a Person in the United States other than by
the Original U.S. Purchaser and no Common Shares issuable upon
the exercise of Warrants will be delivered into the United
States other than to the Original U.S. Purchaser of such
Warrants, provided that such Original U.S. Purchaser signs and
delivers to the Corporation and the Warrant Agent a letter
substantially in the form attached hereto as schedule B.
Accordingly, neither the Corporation nor the Warrant Agent shall
be obligated to or will accept subscriptions for Common Shares
pursuant to the exercise of Warrants from any Person who is,
appears to be, or who either of them believes to be, a U.S.
Person, a Person in the United States or any other Person who
is, appears to be, or who either of them believes to be,
exercising Warrants for the account or benefit of a U.S. Person
or a Person in the United States other than the Original U.S.
Purchaser of such Warrants. Any certificate representing Common
Shares issued upon the exercise in accordance with this article
four of Warrants represented by a Warrant Certificate bearing
the legend set forth in paragraph 0 hereof shall bear the
following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"U.S. SECURITIES ACT") OR ANY STATE SECURITIES LAWS. THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF
THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE
THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S
UNDER THE U.S. SECURITIES ACT, OR (C) WITHIN THE UNITED STATES
(1) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE
U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF
APPLICABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE
SECURITIES LAWS, OR (2) IN A TRANSACTION THAT DOES NOT REQUIRE
REGISTRATION UNDER THE U.S. SECURITIES ACT OR APPLICABLE STATE
SECURITIES LAWS AND THE SELLER HAS FURNISHED TO THE CORPORATION
AN OPINION TO SUCH EFFECT FROM COUNSEL OF RECOGNIZED STANDING
REASONABLY SATISFACTORY TO THE CORPORATION PRIOR TO SUCH OFFER,
SALE OR TRANSFER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE LISTED ON THE TORONTO STOCK EXCHANGE; HOWEVER, THE SAID
SECURITIES MAY NOT BE TRADED THROUGH THE FACILITIES OF SUCH
EXCHANGE SINCE THEY ARE NOT FREELY TRANSFERABLE, AND
CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT
'GOOD DELIVERY' IN SETTLEMENT OF TRANSACTIONS ON THE TORONTO
STOCK EXCHANGE. IF THE CORPORATION IS A "FOREIGN ISSUER" WITHIN
THE MEANING OF REGULATION S AT THE TIME OF TRANSFER, A NEW
CERTIFICATE BEARING NO LEGEND MAY BE OBTAINED FROM COMPUTERSHARE
TRUST COMPANY OF CANADA, AS REGISTRAR AND TRANSFER AGENT OF THE
CORPORATION, UPON DELIVERY OF THIS CERTIFICATE AND AN EXECUTED
DECLARATION, IN A FORM SATISFACTORY TO COMPUTERSHARE TRUST
COMPANY OF CANADA AND THE CORPORATION, TO THE EFFECT THAT SUCH
SALE IS BEING MADE IN ACCORDANCE WITH RULE 904 OF REGULATION S
UNDER THE U.S. SECURITIES ACT.";
provided, that if any Common Shares are being sold outside the
United States in accordance with Rule 904 of Regulations S under
the 1933 Act, and provided that the Corporation is a "foreign
12.
issuer" within the meaning of Regulation S under the 1933 Act at
the time of such sale, any such legend may be removed by
providing a declaration to the registrar and transfer agent for
the Common Shares to the following effect (or as the Corporation
may otherwise prescribe from time to time):
"The undersigned:
i. acknowledges that the sale of the common shares of
Breakwater Resources Ltd. (the "Corporation") 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 "U.S. Securities
Act"); and
ii. certifies that (1) the undersigned is not an "affiliate"
of the Corporation (as that term is defined in Rule 405
under the U.S. Securities Act), (2) the offer of such
common shares 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 in,
on or through the facilities of a "Designated Offshore
Securities Market" as defined in Rule 902 of Regulation
S under the U.S. Securities Act 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, (3) neither the seller nor any affiliate
of the seller nor any person acting on behalf of any of
them has engaged or will engage in any directed selling
efforts in the United States in connection with the
offer and sale of such securities, (4) the sale is bona
fide and not for the purpose of "washing off" the resale
restrictions imposed because the securities are
"restricted securities" (as such term is defined in Rule
144(a)(3) under the U.S. Securities Act), and (5) the
contemplated sale is not a transaction, or part of a
series of transactions which, although in technical
compliance with Regulation S, is part of a plan or
scheme to evade the registration provisions of the U.S.
Securities Act. Terms used herein have the meanings
given to them by Regulation S.";
and provided, further, that, if any Common Shares are being sold
within the United States pursuant to Rule 144 under the 1933
Act, the legend may be removed by delivery to the registrar and
transfer agent for the Common Shares and the Corporation of an
opinion of counsel, of recognized standing reasonably
satisfactory to the Corporation, that such legend is no longer
required under applicable requirements of the 1933 Act or state
securities laws.
c) SUBSCRIPTION FORM COMPLETION: Any subscription form
referred to in subsection 0 hereof shall be signed by the
Warrantholder and shall specify, among other things, (A) the
number of Common Shares which the holder desires to subscribe
for and purchase, such number being not more than the number
which the holder is entitled to subscribe for and purchase
pursuant to the Warrant Certificate surrendered, (B) the name
and address of the person or persons in whose name or names such
Common Shares are to be issued, and (C) the number of Common
Shares to be issued to each such person if more than one is so
specified. If any of the Common Shares subscribed for are to be
issued to a person or persons other than the Warrantholder, the
Warrantholder shall pay to the Warrant Agent all applicable
transfer or similar taxes, if any, and, the Corporation and the
Warrant Agent shall not be required to issue or deliver
certificates representing Common Shares unless or until such
Warrantholder shall have paid to the Warrant Agent the amount of
such tax, if any, or shall have established to the satisfaction
of the Warrant Agent that such tax has been paid or that no tax
is due.
d) PLACES FOR EXERCISE: The Corporation has appointed the
Warrant Agent, at its principal office in the City of Toronto,
Ontario, as the place at which the Warrants may be exercised.
The Corporation will give notice to the Warrantholders pursuant
to article twelve hereof of the location of any other place
appointed by the Corporation and approved by the Warrant Agent
and of the change in the location of any new or existing place
where Warrants may be exercised.
13.
e) ACCOUNTING TO CORPORATION: The Warrant Agent shall as
soon as practicable account to the Transfer Agent and the
Corporation with respect to Warrants exercised. All such monies,
and any securities or other instruments, from time to time
received by the Warrant Agent shall be received in trust for the
Corporation. Within five Business Days after receipt thereof the
Warrant Agent shall forward to the Corporation all monies
received through the exercise of Warrants pursuant to this
article four.
f) RECORD OF EXERCISE: The Warrant Agent shall record the
particulars of the Warrants exercised which particulars shall
include the names and addresses of the persons who become
holders of Common Shares, if any, on exercise, the Exercise Date
and the Exercise Price. Within five Business Days of each
Exercise Date, the Warrant Agent shall provide such particulars
in writing to the Corporation and the Transfer Agent.
SECTION 4.02 EFFECT OF EXERCISE OF WARRANTS:
a) EFFECT OF EXERCISE: Upon compliance by the holder of any
Warrant Certificate with the provisions of section 0 hereof, but
subject to the provisions of subsection 0 hereof, the number of
Common Shares subscribed for and purchased shall be deemed to
have been issued and the person or persons to whom such Common
Shares are to be issued shall be deemed to have become the
holder or holders of record of such Common Shares on the
Exercise Date thereof unless the transfer books of the
Corporation shall be closed on such date, in which case the
Common Shares subscribed for and purchased shall be deemed to
have been issued, and such person or persons shall be deemed to
have become the holder or holders of record of such Common
Shares on the date on which such transfer books are reopened but
such Common Shares shall be issued at the Exercise Price in
effect on the Exercise Date.
b) ISSUE OF SHARE CERTIFICATES: When the transfer books of
the Corporation have been open for three Business Days after the
exercise of a Warrant as aforesaid, the Corporation shall
forthwith (A) cause to be mailed to the person or persons in
whose name or names the Common Shares so subscribed for and
purchased are to be issued, as specified in the subscription
completed on the Warrant Certificate, at the address specified
in such subscription form, or (B) if specified in such
subscription form, cause to be delivered to such person or
persons at the office of the Warrant Agent where such Warrant
Certificate was surrendered, a certificate or certificates
representing the appropriate number of Common Shares to which
the Warrantholder is entitled and elected to subscribe for and
purchase pursuant to the Warrant Certificate surrendered to the
Warrant Agent.
SECTION 4.03 SUBSCRIPTION FOR LESS THAN ENTITLEMENT:
a) EXERCISE FOR LESS THAN MAXIMUM: The holder of any
Warrant Certificate may subscribe for and purchase a number of
Common Shares less than the maximum number which the holder is
entitled to subscribe for and purchase pursuant to the
surrendered Warrant Certificate, provided that in no event shall
fractional Common Shares be issued in connection with the
exercise of Warrants. In such event, the holder thereof upon
exercise thereof shall, in addition, be entitled to receive a
new Warrant Certificate complying with section 0 hereof in
respect of the balance of the Common Shares which such holder
was entitled to subscribe for and purchase and which were not
then subscribed for and purchased.
b) NO FRACTIONAL COMMON SHARES: Notwithstanding any
adjustment provided for in article five hereof or otherwise, the
Corporation shall not be required upon the exercise of a Warrant
to issue fractions of Common Shares or to distribute
certificates which evidence fractional Common Shares. If the
number of Common Shares to which a Warrantholder would otherwise
be entitled upon the exercise of a Warrant is not a whole number
then the number of Common Shares to be issued shall be rounded
down to the next whole number and the holder of such Warrant
Certificate shall not be entitled to any compensation in respect
of any fractional Common Share.
14.
SECTION 4.04 WARRANT CERTIFICATES FOR FRACTIONS OF COMMON SHARES:
To the extent that the holder of a Warrant Certificate is entitled to receive on
the exercise or partial exercise thereof a fraction of a Common Share, such
right may only be exercised in respect of such fraction in combination with
another Warrant Certificate which in the aggregate entitles the Warrantholder to
receive a whole number of Common Shares.
SECTION 4.05 EXPIRATION OF WARRANTS:
After the Time of Expiry all rights under any Warrant in respect of which the
right of subscription and purchase therein and herein provided shall not
theretofore have been exercised shall wholly cease and terminate and such
Warrant shall be void, of no force or effect and of no value whatsoever.
ARTICLE FIVE
ADJUSTMENTS
SECTION 5.01 ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF COMMON SHARES
PURCHASABLE UPON EXERCISE:
The Exercise Price and the number of Common Shares purchasable upon the exercise
of the Warrants shall be subject to adjustment from time to time in the events
and in the manner provided in the following subsections:
a) STOCK DIVIDEND; DISTRIBUTION OF COMMON SHARES;
SUBDIVISION; CONSOLIDATION: If at any time after the Effective
Date but prior to the Expiry Date, the Corporation shall:
i) fix a record date for the issue of, or issue, Common
Shares to the holders of all or substantially all of the
holders of Common Shares as a stock dividend or
otherwise, other than as a Dividend Paid In The Ordinary
Course,
ii) fix a record date for the distribution to, or make a
distribution to, the holders of all or substantially all
of the outstanding Common Shares payable in Common
Shares or securities exchangeable for or convertible
into Common Shares, other than as a Dividend Paid In The
Ordinary Course,
iv) subdivide, redivide or change the outstanding Common
Shares into a greater number of Common Shares, or
iv) consolidate, reduce or combine the outstanding Common
Shares into a lesser number of Common Shares,
(any of such events in subclauses (i), (ii), (iii) and (iv)
above being herein called a "Share Reorganization"), the
Exercise Price shall be adjusted on the earlier of the record
date on which holders of Common Shares are determined for the
purposes of the Share Reorganization and the effective date of
the Share Reorganization to the amount determined by multiplying
the Exercise Price in effect immediately prior to such record
date or effective date, as the case may be, by a fraction:
A. the numerator of which shall be the number of
Common Shares outstanding on such record date or
effective date, as the case may be, before
giving effect to such Share Reorganization; and
B. the denominator of which shall be the number of
Common Shares which will be outstanding
immediately after giving effect to such Share
Reorganization (including in the case of a
distribution of securities exchangeable for or
convertible into Common Shares the number of
Common Shares that would have been outstanding
had such securities been exchanged for or
converted into Common Shares on such date).
15.
To the extent that any adjustment in the Exercise Price occurs
pursuant to this subsection 00 as a result of the fixing by the
Corporation of a record date for the distribution of securities
exchangeable for or convertible into Common Shares, the Exercise
Price shall be readjusted immediately after the expiry of any
relevant exchange or conversion right to the Exercise Price
which would then be in effect based upon the number of Common
Shares actually issued and remaining issuable after such expiry
and shall be further readjusted in such manner upon the expiry
of any further such right. Any Warrantholder who has not
exercised his right to subscribe for and purchase Common Shares
on or prior to the record date of such stock dividend or
distribution or the effective date of such subdivision or
consolidation, as the case may be, upon the exercise of such
right thereafter shall be entitled to receive and shall accept
in lieu of the number of Common Shares then subscribed for and
purchased by such Warrantholder, at the Exercise Price
determined in accordance with this subsection 0 the aggregate
number of Common Shares that such Warrantholder would have been
entitled to receive as a result of such Share Reorganization,
if, on such record date or effective date, as the case may be,
such Warrantholder had been the holder of record of the number
of Common Shares so subscribed for and purchased.
b) ISSUE OF RIGHTS, OPTIONS OR WARRANTS: If at any time
after the Effective Date but prior to the Expiry Date, the
Corporation shall fix a record date for the issue or
distribution to the holders of all or substantially all of the
outstanding Common Shares of rights, options or warrants
pursuant to which such holders are entitled, during a period
expiring not more than forty-five days after the record date for
such issue (such period being the "Rights Period"), to subscribe
for or purchase Common Shares or securities exchangeable for or
convertible into Common Shares at a price per share to the
holder (or in the case of securities exchangeable for or
convertible into Common Shares, at an exchange or conversion
price per share) at the date of issue of such securities of less
than 95% of the Current Market Price of the Common Shares on
such record date (any of such events being called a "Rights
Offering"), the Exercise Price shall be adjusted effective
immediately after the record date for such Rights Offering to
the amount determined by multiplying the Exercise Price in
effect on such record date by a fraction:
i) the numerator of which shall be the aggregate of
A. the number of Common Shares outstanding on the
record date for the Rights Offering, and
B. the quotient determined by dividing
I. either (a) the product of the number of
Common Shares offered during the Rights
Period pursuant to the Rights Offering
and the price at which such Common
Shares are offered, or, (b) the product
of the exchange or conversion price of
the securities so offered and the number
of Common Shares for or into which the
securities offered pursuant to the
Rights Offering may be exchanged or
converted, as the case may be, by
II. the Current Market Price of the Common
Shares as of the record date for the
Rights Offering; and
ii) the denominator of which shall be the aggregate of the
number of Common Shares outstanding on such record date
and the number of Common Shares offered pursuant to the
Rights Offering (including in the case of the issue or
distribution of securities exchangeable for or
convertible into Common Shares the number of Common
Shares for or into which such securities may be
exchanged or converted).
If by the terms of the rights, options, or warrants referred to
in this subsection 00, there is more than one purchase,
conversion or exchange price per Common Share, the aggregate
price of the total number of additional Common Shares offered
for subscription or purchase, or the aggregate conversion or
exchange price of the convertible or exchangeable securities so
offered, shall be
16.
calculated for purposes of the adjustment on the basis of the
lowest purchase, conversion or exchange price per Common Share,
as the case may be. Any Common Shares owned by or held for the
account of the Corporation shall be deemed not to be outstanding
for the purpose of any such calculation. To the extent that any
adjustment in the Exercise Price occurs pursuant to this
subsection 00 as a result of the fixing by the Corporation of a
record date for the issue or distribution of rights, options or
warrants referred to in this subsection 00, the Exercise Price
shall be readjusted immediately after the expiry of any relevant
exchange, conversion or exercise right to the Exercise Price
which would then be in effect based upon the number of Common
Shares actually issued and remaining issuable after such expiry
and shall be further readjusted in such manner upon the expiry
of any further such right.
c) SPECIAL DISTRIBUTIONS: If at any time after the
Effective Date but prior to the Expiry Date, the Corporation
shall fix a record date for the issue or distribution to the
holders of all or substantially all of the outstanding Common
Shares of:
i) shares of the Corporation of any class other than Common
Shares;
ii) rights, options or warrants to acquire Common Shares or
securities exchangeable for or convertible into Common
Shares or shares of any other class or securities
exchangeable or convertible into any such shares;
iii) evidences of indebtedness of the Corporation; or
iv) cash, securities or any property or assets of the
Corporation;
and if such issue or distribution does not constitute a Dividend
Paid In The Ordinary Course, a Share Reorganization or a Rights
Offering (any of such non-excluded events being herein called a
"Special Distribution"), the Exercise Price shall be adjusted
effective immediately after the record date for the Special
Distribution to the amount determined by multiplying the
Exercise Price in effect on the record date for the Special
Distribution by a fraction:
A. the numerator of which shall be the difference
between
I. the product of the number of Common
Shares outstanding on such record date
and the Current Market Price of the
Common Shares on such record date, and
II. the fair value, as determined by the
directors of the Corporation, to the
holders of Common Shares of the shares,
rights, options, warrants, evidences of
indebtedness or property or assets to be
issued or distributed in the Special
Distribution, and
B. the denominator of which shall be the product
obtained by multiplying the number of Common
Shares outstanding on such record date by the
Current Market Price of the Common Shares on
such record date.
Any Common Shares owned by or held for the account of the
Corporation shall be deemed not to be outstanding for the
purpose of such calculation. To the extent that any adjustment
in the Exercise Price occurs pursuant to this subsection 00 as a
result of the fixing by the Corporation of a record date for the
issue or distribution of rights, options or warrants to acquire
Common Shares or securities exchangeable for or convertible into
Common Shares referred to in this subsection 0, the Exercise
Price shall be readjusted immediately after the expiry of any
relevant exercise, exchange or conversion right to the amount
which would then be in effect based upon the number of Common
Shares issued and remaining issuable after such expiry and shall
be further readjusted in such manner upon the expiry of any
further such right.
17.
d) RECLASSIFICATION OF COMMON SHARES; CONSOLIDATION;
AMALGAMATION; MERGER: If at any time after the Effective Date
but prior to the Expiry Date there shall occur:
i) a reclassification or redesignation of the Common
Shares, any change of the Common Shares into other
shares or securities or any other capital reorganization
involving the Common Shares other than a Share
Reorganization;
ii) a consolidation, amalgamation or merger of the
Corporation with or into another body corporate which
results in a reclassification or redesignation of the
Common Shares or a change of the Common Shares into
other shares or securities;
iii) the transfer of the undertaking or assets of the
Corporation as an entirety or substantially as an
entirety to another corporation or entity;
(any of such events being called a "Capital Reorganization"),
after the effective date of the Capital Reorganization the
Warrantholder shall be entitled to receive, and shall accept,
for the same aggregate consideration, upon exercise of the
Warrants, in lieu of the number of Common Shares to which the
Warrantholder was theretofor entitled upon the exercise of the
Warrants, the kind and aggregate number of shares and other
securities or property resulting from the Capital Reorganization
which the Warrantholder would have been entitled to receive as a
result of the Capital Reorganization if, on the effective date
thereof, the Warrantholder had been the registered holder of the
number of Common Shares which the Warrantholders was theretofore
entitled to purchase or receive upon the exercise of the
Warrants. If necessary, as a result of any such Capital
Reorganization, appropriate adjustments shall be made in the
application of the provisions of this Warrant Indenture with
respect to the rights and interests thereafter of the
Warrantholder to the end that the provisions shall thereafter
correspondingly be made applicable as nearly as may reasonably
be possible in relation to any shares or other securities or
property thereafter deliverable upon the exercise of the
Warrants. Any such adjustments shall be made by and set forth in
an indenture supplemental hereto approved by action by the
Directors and shall for all purposes be conclusively deemed to
be an appropriate adjustment.
c) If at any time after the Effective Date but prior to the Expiry
Date any adjustment or readjustment in the Exercise Price shall
occur pursuant to the provisions of subsections 00, 00 or 00 of
this Indenture, then the number of Common Shares purchasable
upon the subsequent exercise of Warrants shall be simultaneously
adjusted or readjusted, as the case may be, by multiplying the
number of Common Shares purchasable upon the exercise of
Warrants immediately prior to such adjustment or readjustment by
a fraction which shall be the reciprocal of the fraction used in
the adjustment or readjustment of the Exercise Price.
SECTION 5.02 RULES REGARDING CALCULATION OF ADJUSTMENT OF EXERCISE PRICE AND
NUMBER OF COMMON SHARES PURCHASABLE UPON EXERCISE:
For the purposes of section 0 hereof the following subsections shall apply:
a) SUCCESSIVE ADJUSTMENTS: Any adjustment made pursuant to
section 0 hereof shall be cumulative and made successively
whenever an event referred to therein shall occur, subject to
the following subsections of this section 0.
b) MINIMUM ADJUSTMENTS: No adjustment in the Exercise Price
shall be required unless such adjustment would result in a
change of at least 1% in the Exercise Price and no adjustment
shall be made in the number of Common Shares purchasable upon
exercise of a Warrant unless it would result in a change of at
least one one-hundredth of a Common Share; provided, however,
that any adjustments which, except for the provisions of this
subsection 0, would otherwise have been required to be made,
shall be carried forward and taken into account in any
subsequent adjustment, and provided further that in no event
shall the Corporation be obligated to issue
18
fractional Common Shares upon exercise of Warrants.
Notwithstanding any other provision of section 0 hereof, no
adjustment of the Exercise Price shall be made which would
result in an increase in the Exercise Price or a decrease in the
number of Common Shares issuable upon exercise of a Warrant
(except in respect of the Share Reorganization described in
paragraph 0 hereof or a Capital Reorganization described in
paragraph 0 hereof).
c) MUTATIS MUTANDIS ADJUSTMENT: Subject to the prior
written consent of the Toronto Stock Exchange, no adjustment in
the Exercise Price or in the number of Common Shares purchasable
upon exercise of a Warrant shall be made in respect of any event
described in section 0 hereof if Warrantholders are entitled to
participate in such event on the same terms MUTATIS MUTANDIS as
if Warrantholders had exercised their Warrants prior to or on
the effective date or record date, as the case may be, of such
event.
d) NO ADJUSTMENT FOR CERTAIN EVENTS: No adjustment in the
Exercise Price or in the number of Common Shares purchasable
upon the exercise of Warrants shall be made pursuant to section
0 hereof in respect of the issue from time to time of Common
Shares pursuant to this Indenture or pursuant to any stock
option, stock purchase or stock bonus plan in effect from time
to time for directors, officers or employees of the Corporation
and/or any Subsidiary of the Corporation and any such issue, and
any grant of options in connection therewith, shall be deemed
not to be a Share Reorganization, a Rights Offering nor any
other event described in section 0 hereof.
e) DISPUTES: If a dispute shall at any time arise with
respect to adjustments of the Exercise Price or the number of
Common Shares purchasable upon exercise of Warrants, such
disputes shall be conclusively determined by the auditors of the
Corporation or if they are unable or unwilling to act, by such
other firm of independent chartered accountants as may be
selected by action by the Directors and acceptable to the
Warrant Agent and any such determination shall be conclusive
evidence of the correctness of any adjustment made under section
0 hereof and shall be binding upon the Corporation, the Warrant
Agent and the Warrantholders.
f) OTHER ACTIONS: If at any time after the Effective Date
but prior to the Expiry Date the Corporation shall take any
action affecting the Common Shares, other than an action
described in section 0 hereof, which in the opinion of the
Directors would have a material effect upon the rights of
Warrantholders, either or both the Exercise Price and the number
of Common Shares purchasable upon exercise of Warrants shall be
adjusted in such manner and at such time, by action by the
Directors, in their sole discretion, acting reasonably and in
good faith, but subject to the prior written consent of the
Toronto Stock Exchange, as may be equitable in the
circumstances. Failure of the taking of action by the Directors
so as to provide for an adjustment prior to the effective date
of any action by the Corporation affecting the Common Shares
shall be deemed to be conclusive evidence that the Directors
have determined that it is equitable to make no adjustment in
the circumstances.
g) ABANDONMENT OF EVENT: If the Corporation shall set a
record date to determine the holders of Common Shares for the
purpose of entitling such holders to receive any dividend or
distribution or any subscription or purchase rights and shall,
thereafter and before the distribution to such Shareholders of
any such dividend, distribution or subscription or purchase
rights, legally abandon its plan to pay or deliver such
dividend, distribution or subscription or purchase rights, then
no adjustment in the Exercise Price or the number of Common
Shares purchasable upon exercise of any Warrant shall be
required by reason of the setting of such record date.
h) DEEMED RECORD DATE: In the absence of a resolution of
the Directors fixing a record date for a Rights Offering, the
Corporation shall be deemed to have fixed as the record date
therefor the date of the issue of the rights, options or
warrants issued pursuant to the Rights Offering.
i) CORPORATE AFFAIRS: As a condition precedent to the
taking of any action which would require any adjustment in any
of the subscription rights pursuant to the Warrants, including
the Exercise Price and the number or class of shares or other
securities which are to be received upon
19
the exercise thereof, the Corporation shall take any corporate
action which may, in the opinion of Counsel, be necessary in
order that the Corporation may validly and legally issue as
fully paid and non-assessable all the shares or other securities
which all holders of Warrants are entitled to receive in
accordance with the provisions thereof.
SECTION 5.03 POSTPONEMENT OF SUBSCRIPTION:
In any case in which this article five shall require that an adjustment shall be
effective immediately after a record date for an event referred to herein, the
Corporation may defer, until the occurrence of such event:
a) issuing to the holder of any Warrant exercised after
such record date and before the occurrence of such event, the
additional Common Shares or other securities issuable upon such
exercise by reason of the adjustment required by such event; and
b) delivering to such holder any distributions declared
with respect to such additional Common Shares after such
exercise date and before such event;
provided, however, that the Corporation shall deliver to such holder an
appropriate instrument evidencing such holder's right, upon the occurrence of
the event requiring the adjustment, to an adjustment in the Exercise Price or
the number of Common Shares purchasable on the exercise of any Warrant and to
such distributions declared with respect to any additional Common Shares
issuable on the exercise of any Warrant.
SECTION 5.04 NOTICE OF ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF COMMON
SHARES PURCHASABLE UPON EXERCISE:
a) NOTICE OF EFFECTIVE OR RECORD DATE: At least 14 days
prior to the effective date or record date, as the case may be,
of any event which requires or might require an adjustment in
any of the subscription rights pursuant to any of the Warrants,
including the Exercise Price and the number of Common Shares
which are purchasable upon the exercise thereof, the Corporation
shall:
i) file with the Warrant Agent a Certificate of the
Corporation specifying the particulars of such event to
the extent then known including, if determinable, the
required adjustment and the computation of such
adjustment; and
ii) give notice to the Warrantholders in the manner provided
for in article 12 hereof of the particulars of such
event (including the record date or the effective date
for such event) to the extent then known including, if
determinable, the required adjustment.
b) ADJUSTMENT NOT DETERMINABLE: In case any adjustment for
which a notice pursuant to subsection 0 hereof has been given is
not then determinable, the Corporation shall promptly after such
adjustment is determinable:
i) file with the Warrant Agent a computation of such
adjustment; and
ii) give notice to the Warrantholders in the manner provided
for in article twelve hereof of the adjustment.
Where a notice pursuant to this subsection has been given, the
Warrant Agent shall be entitled to act and rely on any
adjustment calculation of the Corporation or of the auditors of
the Corporation.
20
c) DUTY OF WARRANT AGENT: Subject to subsection 0 hereof,
the Warrant Agent shall not:
i) at any time be under any duty or responsibility to any
Warrantholder to determine whether any facts exist which
may require any adjustment in the Exercise Price or
number of Common Shares issuable upon the exercise of
the Warrants, or with respect to the nature or extent of
any such adjustment when made, or with respect to the
method employed in making such adjustment;
ii) be accountable with respect to the validity or value (or
the kind or amount) of any Common Shares or of any
shares or other securities or property which may at any
time be issued or delivered upon the exercise of any
Warrant; or iii) be responsible for any failure of the
Corporation to make any cash payment or to issue,
transfer or deliver Common Shares or share certificates
upon the surrender of any Warrants for the purpose of
exercise, or to comply with any of the covenants
contained in this section 0.
ARTICLE SIX
PURCHASES BY THE CORPORATION
SECTION 6.01 OPTIONAL PURCHASES BY THE CORPORATION:
The Corporation may from time to time purchase Warrants on any stock exchange,
in the open market, by private contract or otherwise. Any such purchase may be
made in such manner, from such persons, at such prices and on such terms as the
Corporation in its sole discretion may determine. The Warrant Certificates
representing the Warrants purchased pursuant to this section 0 shall forthwith
be delivered to and cancelled by the Warrant Agent.
SECTION 6.02 SURRENDER OF WARRANT CERTIFICATES:
Warrant Certificates representing Warrants purchased pursuant to section 0
hereof shall be surrendered to the Warrant Agent for cancellation and shall be
accompanied by a direction of the Corporation to cancel the Warrants represented
thereby.
ARTICLE SEVEN
COVENANTS OF THE CORPORATION
SECTION 7.01 GENERAL COVENANTS OF THE CORPORATION:
The Corporation covenants with the Warrant Agent that so long as any Warrants
remain outstanding:
a) the Corporation will at all times maintain its corporate
existence, will carry on and conduct its business in a proper,
efficient and business like manner and in accordance with good
business practice;
b) the Corporation will cause certificates representing the
Common Shares, if any, from time to time subscribed and paid for
pursuant to the exercise of Warrants to be issued and delivered
in accordance with the terms hereof;
c) all Common Shares which are issued upon exercise of the
right to subscribe for and purchase provided for herein, upon
payment of the Exercise Price herein provided for, shall be
fully paid and non-assessable shares;
d) the Corporation will reserve and keep available a
sufficient number of Common Shares for the purpose of enabling
the Corporation to satisfy its obligations to issue Common
Shares upon the exercise of the Warrants;
21
e) the Corporation will give to the Warrantholders, in the
manner provided in article twelve hereof, and to the Warrant
Agent, notice of its intention to fix a record date, or
effective date, as the case may be, for any event referred to in
section 0 hereof which may give rise to an adjustment in the
Exercise Price or in the number of Common Shares purchasable
upon the exercise of Warrants and, in each case, such notice
shall specify the particulars of such event and the record date,
or the effective date, for such event; provided that the
Corporation shall only be required to specify in such notice
such particulars of such event as shall have been fixed and
determined on the date on which such notice is given, and such
notice shall be given in each case not less than 14 days prior
to the applicable record date or effective date, as the case may
be;
f) the Corporation will not close its transfer books nor
take any other action which might deprive a Warrantholder of the
opportunity of exercising the right of purchase pursuant to the
Warrants held by such person during the period of ten days after
the giving of a notice required by this section 0 or unduly
restrict such opportunity;
g) the Corporation will, at all times, use commercially
reasonable efforts to preserve and maintain its status as a
"reporting issuer" or the equivalent thereof under the
SECURITIES ACT (Ontario) and the securities legislation of each
of the other provinces of Canada under which the Corporation has
or obtains status as a reporting issuer or the equivalent
thereof prior to the Expiry Date which contain continuous
disclosure requirements and shall in a timely fashion file or
deposit all documents and reports with the relevant securities
commissions and similar securities authorities required to be
filed or deposited pursuant to such legislation;
h) the Corporation will, upon request in writing from a
Warrantholder, provide such Warrantholder with a copy of all of
the financial statements of the Corporation mailed to the
holders of Common Shares after the date hereof and until the
Warrants owned by such Warratholder remain outstanding;
i) the Corporation will use commercially reasonable efforts
to maintain a listing of the Common Shares on the Toronto Stock
Exchange;
j) if the Corporation is a party to any transaction in
which the Corporation is not the continuing corporation, the
Corporation shall use commercially reasonable efforts to obtain
all consents which may be necessary or appropriate under
Canadian law to enable the continuing corporation to give effect
to the Warrants;
k) generally, the Corporation will use commercially
reasonable efforts to perform and carry out all of the acts or
things to be done by the Corporation as provided in this
Indenture; and
l) the Corporation will promptly advise the Warrant Agent
and the Warratholders in writing of any default of the
Corporation under the terms of this Indenture.
SECTION 7.02 WARRANT AGENT'S REMUNERATION AND EXPENSES:
The Corporation covenants that it will pay to the Warrant Agent from time to
time reasonable remuneration for its services hereunder and the Corporation will
pay or reimburse the Warrant Agent upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Warrant Agent in the
administration or execution of its duties hereunder (including the reasonable
compensation and the disbursements of its counsel and all other advisers not
regularly in its employ) both before any default hereunder and thereafter until
all duties of the Warrant Agent hereunder shall be finally and fully performed,
except any such expense, disbursement or advance as may arise out of or result
from the Warrant Agent's own negligent action, negligent failure to act, wilful
misconduct or bad faith.
SECTION 7.03 NOTICE OF ISSUE:
22
The Corporation will give written notice of the issue of Common Shares pursuant
to the exercise of any Warrants, in such detail as may be required, to each
securities commission or similar regulatory authority in each jurisdiction in
Canada in which there is legislation or regulations requiring the giving of any
such notice in order that such issue of Common Shares and the subsequent
disposition of the Common Shares so issued will not be subject to the prospectus
requirements, if any, of such legislation or regulations.
SECTION 7.04 PERFORMANCE OF COVENANTS BY WARRANT AGENT:
If the Corporation shall fail to perform any of its covenants contained in this
Indenture, the Warrant Agent may notify the Warrantholders of such failure on
the part of the Corporation 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 that it is so doing. All amounts so expended or
advanced by the Warrant Agent shall be repayable upon request of the Warrant
Agent as provided in section 0 hereof. No such performance or advance by the
Warrant Agent shall be deemed to relieve the Corporation of any default
hereunder.
ARTICLE EIGHT
ENFORCEMENT
SECTION 8.01 SUITS BY WARRANTHOLDERS, ETC.:
All or any of the rights conferred upon the holder of any Warrant Certificate by
the terms of such Warrant Certificate or the provisions of this Indenture may be
enforced by the holder of such Warrant Certificate by appropriate legal
proceedings but without prejudice to the right which is hereby conferred upon
the Warrant Agent to proceed in its own name to enforce each and all of the
provisions herein contained for the benefit of the Warrantholder.
SECTION 8.02 IMMUNITY OF SHAREHOLDERS, ETC.:
By the acceptance of the Warrant Certificate, Warrantholders and the Warrant
Agent hereby waive and release any right, cause of action or remedy now or
hereafter existing in any jurisdiction against any past, present or future
incorporator, Shareholder, Director, officer, employee or agent of the
Corporation for the issue of Common Shares pursuant to the exercise of any
Warrant.
SECTION 8.03 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 or Shareholders of the Corporation or of any successor corporation or
to any of the past, present or future officers, employees or agents of the
Corporation or any successor corporation, but only the property of the
Corporation or any successor corporation shall be bound in respect hereof.
ARTICLE NINE
MEETINGS OF WARRANTHOLDERS
SECTION 9.01 RIGHT TO CONVENE MEETINGS:
The Warrant Agent may at any time and from time to time and shall on receipt of
a Written Request of the Corporation or of a Warrantholders' Request and upon
receiving sufficient funds and being indemnified to its reasonable satisfaction
by the Corporation or by the Warrantholders signing such Warrantholders'
Request, as the case may be, against the costs which may be incurred by the
Warrant Agent in connection with the calling and holding of such meeting,
convene a meeting of the Warrantholders. In the event of the Warrant Agent
failing within 15 days after receipt of such written request by the Corporation
or of a Warrantholders' Request and of the required funds and indemnity as
aforesaid to give notice to convene a meeting, the Corporation or such
Warrantholders, as the case may be, may convene such meeting. Every such meeting
shall be held in the City of Toronto, Ontario, or at such other place as may be
approved or determined by the Warrant Agent.
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SECTION 9.02 NOTICE:
At least 21 days' notice of any meeting of Warrantholders shall be given to the
Warrantholders in the manner provided in article twelve hereof and a copy
thereof shall be sent by prepaid mail to the Warrant Agent unless the meeting
has been called by it and to the Corporation unless the meeting has been called
by it. Such 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. It shall not be necessary for any such notice to set out the
terms of any resolution to be proposed or any of the provisions of this article
nine. The notice convening any such meeting may be signed by an appropriate
officer of the Warrant Agent or of the Corporation or the person or persons
designated by the Warrantholders signing such Warrantholders' Request, as the
case may be.
SECTION 9.03 CHAIRMAN:
An individual (who need not be a Warrantholder) nominated in writing by the
Warrant Agent shall be chairman of the meeting and if no individual is so
nominated, or if the individual so nominated is not present within 15 minutes
from the time fixed for the holding of the meeting, or if such person is unable
or unwilling to act as chairman, the Warrantholders present in person or by
proxy shall choose some individual to be chairman.
SECTION 9.04 QUORUM:
Subject to the provisions of section 0 hereof, at any meeting of the
Warrantholders a quorum shall consist of Warrantholders present in person or by
proxy and entitled to subscribe for and purchase at least 10% of the aggregate
number of Common Shares which could be subscribed for and purchased pursuant to
all of the Warrant Certificates outstanding as of the date of the meeting,
provided that at least two persons entitled to vote thereat are personally
present. If a quorum of the Warrantholders shall not be present within 30
minutes from the time fixed for holding any meeting, the meeting, if summoned by
the Warrantholders or on a Warrantholders' Request, shall be dissolved, but in
any other case the meeting shall be adjourned to the same day in the next
following week (unless such day is not a Business Day in which case it shall be
adjourned to the next following Business Day thereafter) at the same time and
place. 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 called notwithstanding that they may not be entitled to subscribe for
and purchase at least 10% of the aggregate number of Common Shares which can be
subscribed for and purchased pursuant to all of the then outstanding Warrant
Certificates.
SECTION 9.05 POWER TO ADJOURN:
Subject to the provisions of section 0 hereof, the chairman of any meeting at
which a quorum of the Warrantholders is present may, with the consent of the
meeting, adjourn any such meeting and no notice of such adjournment need be
given except such notice, if any, as the meeting may prescribe.
SECTION 9.06 SHOW OF HANDS:
Every question submitted to a meeting shall be decided in the first place by a
majority of the votes given on a show of hands except that votes on
Extraordinary Resolutions shall be given in the manner hereinafter provided. At
any such meeting, unless a poll is demanded 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 such fact. Any Warrantholder present in person or by
proxy can demand a poll at any meeting in accordance with the provisions of
section 0 hereof.
SECTION 9.07 POLL:
On every Extraordinary Resolution, and on any other question submitted to a
meeting and after a vote by show of hands in respect of such question if
requested by the chairman or by one of or more of the Warrantholders acting in
person or by proxy and entitled to subscribe for and purchase in the aggregate
at least 5% of the aggregate number of Common Shares which could be subscribed
for and purchased pursuant to all of the Warrant Certificates
24
then outstanding, a poll shall be taken in such manner as the chairman shall
direct. Questions other than Extraordinary Resolutions shall be decided by a
majority of the votes cast on the poll.
SECTION 9.08 VOTING:
On a show of hands every person who is present and entitled to vote, whether as
a Warrantholder or as a proxy for one or more absent Warrantholders or both,
shall have one vote. On a poll, each Warrantholder present in person or
represented by a proxy appointed by instrument in writing shall be entitled to
one vote in respect of each one Common Share which such Warrantholder is
entitled to purchase pursuant to the Warrant Certificates then held by him. A
proxy need not be a Warrantholder. The chairman of any meeting shall be entitled
both on a show of hands and on a poll to vote in respect of the Warrants, if
any, held or represented by him.
SECTION 9.09 REGULATIONS:
The Warrant Agent or the Corporation with the approval of the Warrant Agent may
from time to time make regulations and from time to time vary such regulations
as it shall from time to time think fit:
a) for the deposit of instruments appointing proxies at
such place and time as the Warrant Agent, the Corporation or the
Warrantholder calling the meeting, as the case may be, may
direct in the notice calling the meeting;
b) for the deposit of 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 such
instruments appointing proxies to be mailed, cabled or
telecopied before the meeting to the Corporation or to the
Warrant Agent at the place where the same is to be held and for
the voting of proxies so deposited as though the instruments
themselves were produced at the meeting;
c) for the form of the instrument appointing a proxy, the
manner in which it may be executed and verification of the
authority of a person who executes it on behalf of a
Warrantholder; and
d) generally for the calling of meetings of Warrantholders
and the conduct of business thereat.
Any regulations so made shall be binding and effective and the votes given in
accordance therewith shall be valid and shall be counted. Save as such
regulations may provide, the only persons who shall be recognized at any meeting
as the holders of any Warrant Certificates, or as entitled to vote or be present
at the meeting in respect thereof, shall be registered holders of Warrant
Certificates or proxies thereof.
SECTION 9.10 CORPORATION AND WARRANT AGENT MAY BE REPRESENTED:
The Corporation and the Warrant Agent, by their respective employees, officers
or directors, and the legal advisers of the Corporation and the Warrant Agent,
may attend any meeting of the Warrantholders, but shall have no vote as such.
SECTION 9.11 POWERS EXERCISABLE BY EXTRAORDINARY RESOLUTION:
In addition to all other powers conferred upon them by any other provision of
this Indenture or by law, the Warrantholders at a meeting shall have the
following powers exercisable from time to time by Extraordinary Resolution:
a) power to consent and agree to any modification,
abrogation, alteration, compromise or arrangement of the rights
of Warrantholders or, with the reasonable consent of the Warrant
Agent, of the Warrant Agent (in its capacity as trustee
hereunder or on behalf of the Warrantholders) with
25
the Corporation, whether such rights arise under this Indenture
or the Warrant Certificates or otherwise;
b) subject to arrangements as to financing and indemnity
satisfactory to the Warrant Agent, power to direct or authorize
the Warrant Agent (i) to enforce any of the covenants of the
Corporation contained in this Indenture or the Warrant
Certificates, (ii) to enforce any of the rights of the
Warrantholders in any manner specified in such Extraordinary
Resolution, or (iii) to refrain from enforcing any such covenant
or right;
c) power to waive and direct the Warrant Agent to waive any
default on the part of the Corporation in complying with any
provision of this Indenture or the Warrant Certificates, either
unconditionally or upon any conditions specified in such
Extraordinary Resolution;
d) power to restrain any Warrantholder from taking or
instituting any suit, action or proceeding against the
Corporation (i) for the enforcement of any of the covenants of
the Corporation contained in this Indenture or the Warrant
Certificates, or (ii) 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 such
Warrantholder in connection therewith;
f) power to appoint any persons (whether Warrantholders or
not) as a committee to represent the interests of the
Warrantholders and to confer upon such committee any powers or
discretions which the Warrantholders could themselves exercise
by Extraordinary Resolution or otherwise;
g) power from time to time and at any time to remove the
Warrant Agent and to appoint a successor Warrant Agent.
h) power to amend, alter or repeal any Extraordinary
Resolution previously passed;
i) power to assent to any change in or omission from the
provisions contained in the Warrant Certificates and this
Indenture or any ancillary or supplemental instrument which may
be agreed to by the Corporation, and to authorize the Warrant
Agent to concur in and execute any ancillary or supplemental
indenture embodying the change or omission; and
j) power to assent to any compromise or arrangement with
any creditor or creditors or any class or classes of creditors,
whether secured or otherwise, and with holders of any shares or
other securities of the Corporation.
SECTION 9.12 EXTRAORDINARY RESOLUTION:
a) EXTRAORDINARY RESOLUTION: If, at any meeting called for
the purpose of passing an Extraordinary Resolution,
Warrantholders entitled to purchase 35% of the aggregate number
of Common Shares which can be subscribed for and purchased
pursuant to all of the outstanding Warrant Certificates as of
the date of such meeting are not present in person or by proxy
within 30 minutes from the time fixed for holding the meeting,
then the meeting, if called 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 5
Business Days or more than 21 Business Days later, and to such
place and time as may be determined by the chairman. Not less
than three Business Days' notice to Warrantholders shall be
given of the time and place of such adjourned meeting in the
manner provided in article twelve hereof. Such 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
26
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
notwithstanding the provisions of this subsection 0 to the
contrary and may transact the business for which the meeting was
originally called and a motion proposed at such adjourned
meeting and passed by the affirmative vote of Warrantholders
entitled to subscribe for and purchase not less than 66 2/3% of
the aggregate number of Common Shares which can be subscribed
for and purchased pursuant to all of the Warrants represented at
the adjourned meeting and voted on the motion shall be an
Extraordinary Resolution within the meaning of this Indenture,
notwithstanding that Warrantholders entitled to purchase 35% of
the aggregate number of Common Shares which can be subscribed
for and purchased pursuant to all of the then outstanding
Warrant Certificates are not present in person or by proxy at
such adjourned meeting.
b) POLL TO BE TAKEN: 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.
SECTION 9.13 POWERS CUMULATIVE:
It is hereby declared and agreed that any one or more of the powers in this
Indenture, stated to be exercisable by the Warrantholders by Extraordinary
Resolution or otherwise, may be exercised from time to time and the exercise of
any one or more of such powers from time to time shall not be deemed to exhaust
the right of the Warrantholders to exercise such power or powers then or
thereafter from time to time.
SECTION 9.14 MINUTES:
Minutes of all resolutions and Extraordinary Resolutions and proceedings at
every meeting of Warrantholders shall be made and entered in books to be from
time to time provided for that purpose by the Warrant Agent at the expense of
the Corporation, and any such minutes, if signed by the chairman of the meeting
at which such resolutions or Extraordinary Resolutions were passed or
proceedings had, or by the chairman of the next succeeding meeting of the
Warrantholders, shall be prima facie evidence of the matters therein stated and,
until the contrary is proved, every such meeting, in respect of the proceedings
of which minutes shall have been made, shall be deemed to have been called and
held, and all resolutions passed thereat or proceedings taken, to have been
passed and taken.
SECTION 9.15 INSTRUMENTS IN WRITING:
All actions which may be taken and all powers that may be exercised by the
Warrantholders at a meeting held as provided in this article nine may also be
taken and exercised by Warrantholders entitled to subscribe for and purchase 66
2/3% of the aggregate number of Common Shares which can be subscribed for and
purchased pursuant to all of the then outstanding Warrant Certificates, by an
instrument in writing signed in one or more counterparts by such Warrantholders
in person or by attorney appointed in writing and the expression "Extraordinary
Resolution" when used in this Indenture shall include an instrument so signed.
In such instance, the Warrant Agent shall give notice to the Warrantholders of
the effect of such instrument in writing within three Business Days after the
receipt of such instrument in writing.
SECTION 9.16 BINDING EFFECT OF RESOLUTIONS:
Every resolution and every Extraordinary Resolution passed in accordance with
the provisions of this article nine at a meeting of Warrantholders shall be
binding upon all of the Warrantholders, whether present or absent at such
meeting, and every instrument in writing signed by Warrantholders in accordance
with the provisions of section 0 hereof shall be binding upon all of the
Warrantholders, whether signatories thereto or not, and each and every
Warrantholder and the Warrant Agent (subject to the provisions for indemnity
herein contained) shall be bound to give effect accordingly to every such
resolution, Extraordinary Resolution and instrument in writing.
SECTION 9.17 HOLDINGS BY CORPORATION DISREGARDED:
27
In determining whether Warrantholders are present at a meeting of Warrantholders
for the purpose of determining a quorum or have concurred in any consent,
resolution, Extraordinary Resolution, Warrantholders' Request, waiver or other
action under this Indenture, Warrants owned beneficially by the Corporation or
any Subsidiary of the Corporation shall be deemed not to be outstanding and
shall be disregarded. The Corporation shall provide the Warrant Agent with a
Certificate of the Corporation providing details of any Warrants owned
beneficially by the Corporation or by a Subsidiary of the Corporation upon the
written request of the Warrant Agent.
ARTICLE TEN
SUPPLEMENTAL INDENTURES
SECTION 10.01 PROVISION FOR SUPPLEMENTAL INDENTURES FOR CERTAIN PURPOSES:
From time to time the Corporation (when authorized by action by the Directors)
and the Warrant Agent may, subject to the provisions of this Indenture, and they
shall, when so directed by the provisions of this Indenture, execute and deliver
by their proper officers, indentures or instruments supplemental hereto, which
thereafter shall form part hereof, for any one or more or all of the following
purposes:
a) setting forth adjustments pursuant to the provisions of
article five hereof;
b) increasing the number of Warrants, and the number of
Common Shares issuable upon the exercise of Warrants, which the
Corporation is authorized to issue under this Indenture and any
consequential amendment thereto as may be required by the
Warrant Agent acting on the advice of counsel;
c) listing the Warrants, or arranging for the Warrants to
be traded, on any stock exchange or market;
d) adding to the provisions hereof such additional
covenants and enforcement provisions as, in the opinion of
Counsel, are necessary or advisable in the premises, provided
that the same are not, in the opinion of the Warrant Agent,
prejudicial to the interests of the Warrantholders;
e) giving effect to any resolution or Extraordinary
Resolution passed as provided in article nine hereof;
f) making such provisions not inconsistent with this
Indenture as may be necessary or desirable with respect to
matters or questions arising hereunder, provided that such
provisions are not, in the opinion of the Warrant Agent,
prejudicial to the interests of the Warrantholders;
g) adding to or altering the provisions hereof in respect
of the transfer of Warrants, making provision for the exchange
of Warrant Certificates, or making any modification in the form
of the Warrant Certificates which does not affect the substance
thereof;
h) modifying any of the provisions of this Indenture or
relieving the Corporation from any of the obligations,
conditions or restrictions herein contained, provided that no
such modification or relief shall be or become operative or
effective in such manner as to impair any of the rights of the
Warrantholders or of the Warrant Agent and provided further that
the Warrant Agent may in its sole discretion decline to enter
into any such supplemental indenture which in its opinion may
not afford adequate protection to the Warrant Agent when the
same shall become operative; or
i) 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 Warrant Agent, the rights
of the Warrant Agent and of the Warrantholders are in no way
prejudiced thereby.
SECTION 10.02 SUCCESSOR CORPORATION:
28
In the case of a consolidation, amalgamation, merger, separation or transfer of
the undertaking or assets of the Corporation as an entirety or substantially as
an entirety, the successor entity resulting from such consolidation,
amalgamation, merger, separation or transfer (if not the Corporation) shall
expressly assume, by supplemental indenture satisfactory in form to the Warrant
Agent and executed and delivered to the Warrant Agent, the performance and
observance of each and every covenant and obligation contained in this Indenture
to be performed by the Corporation, as the case may be.
ARTICLE ELEVEN
CONCERNING THE WARRANT AGENT
SECTION 11.01 TRUST INDENTURE LEGISLATION:
a) MANDATORY REQUIREMENTS: If and to the extent that any
provision of this Indenture limits, qualifies or conflicts with
a mandatory requirement of Applicable Legislation, such
mandatory requirement shall prevail.
b) APPLICABLE LEGISLATION: The Corporation and the Warrant
Agent agree that each of them 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.
SECTION 11.02 RIGHTS AND DUTIES OF WARRANT AGENT:
a) DEGREE OF SKILL: In the exercise of the rights and
duties prescribed or conferred by the terms of this Indenture,
the Warrant Agent shall exercise that degree of care, diligence
and skill that a reasonably prudent trustee would exercise in
comparable circumstances. No provision of this Indenture shall
be construed to relieve the Warrant Agent from liability for its
own negligent action, its own negligent failure to act or its
own wilful misconduct or bad faith.
b) CONDITIONS FOR ACTION: Subject to subsection 0 hereof,
the Warrant Agent shall not be bound to do any thing or take any
act or action for the enforcement of any of the obligations of
the Corporation under this Indenture unless and until the
Warrant Agent shall have received a Warrantholders' Request
setting out the action which the Warrant Agent is required to
take and the obligation of the Warrant Agent to commence or
continue any act, action or proceeding for the purpose of
enforcing any rights of the Warrant Agent or the Warrantholders
hereunder shall be conditional upon the Warrantholders
furnishing, when required by notice by the Warrant Agent,
sufficient funds to commence or continue such act, action or
proceeding and an indemnity reasonably satisfactory to the
Warrant Agent to protect and hold harmless the Warrant Agent
against the costs, charges, expenses and liabilities to be
incurred thereby and any loss or damage it may suffer by reason
thereof. None of the provisions contained in this Indenture
shall require the Warrant Agent to expend or risk its own funds
or otherwise incur financial liability in the performance of any
of its duties or in the exercise of any of its rights or powers
unless indemnified as aforesaid.
c) DEPOSIT OF WARRANT CERTIFICATES: The Warrant Agent may,
before commencing or at any time during the continuance of any
act, action or proceeding for the purpose of enforcing any
rights of the Warrant Agent or the Warrantholders hereunder,
require the Warrantholders at whose instance it is acting to
deposit with the Warrant Agent the Warrant Certificates held by
them, for which Warrant Certificates the Warrant Agent shall
issue receipts.
d) SUPREMACY OF APPLICABLE LEGISLATION: Every provision of
this Indenture that by its terms relieves the Warrant Agent of
liability or entitles it to rely upon any evidence submitted to
it is subject to the provisions of Applicable Legislation and of
this article eleven.
SECTION 11.03 EVIDENCE:
29
a) ENTITLEMENT TO RELY ON EVIDENCE: Whenever it is provided
in this Indenture that the Corporation shall deposit with the
Warrant Agent resolutions, certificates, reports, opinions,
requests, orders or other documents, it is intended that the
truth, accuracy and good faith on the effective date thereof of
the facts and opinions stated in all documents so deposited
shall, in each and every such case, be conditions precedent to
the right of the Corporation to have the Warrant Agent take the
action to be based thereon. The Warrant Agent may rely and shall
be protected in acting upon any such documents deposited with it
in purported compliance with any such provision or for any other
purpose hereof, but may, in its discretion, require further
evidence before acting or relying thereon. The Warrant Agent may
also rely and shall be protected in acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, consent, order, letter, telegram, cablegram or other
paper or document believed by it to be genuine and to have been
signed, sent or presented by or on behalf of the proper party or
parties.
b) ADDITIONAL EVIDENCE: In addition to the reports,
certificates, opinions and other evidence required by this
Indenture, the Corporation shall furnish to the Warrant Agent
such additional evidence of compliance with any provision
hereof, and in such form, as may be prescribed by Applicable
Legislation or as the Warrant Agent may reasonably require by
written notice to the Corporation.
c) STATUTORY DECLARATIONS: Whenever Applicable Legislation
requires that evidence referred to in subsection 0 hereof be in
the form of a statutory declaration, the Warrant Agent may
accept such statutory declaration in lieu of a Certificate of
the Corporation required by any provision hereof. Any such
statutory declaration may be made by one or more of the
President, any Vice-President, the Chief Financial Officer, the
Secretary, the Treasurer, any Assistant Secretary or any
Assistant Treasurer of the Corporation.
d) PROOF OF EXECUTION: Proof of execution of an instrument
in writing by any Warrantholder may be made by the certificate
of a notary public, or other officer with similar powers, that
the person signing such instrument acknowledged to him the
execution thereof, or by an affidavit of a witness to such
execution or in any other manner which the Warrant Agent may
consider adequate.
SECTION 11.04 EXPERTS AND ADVISERS:
The Warrant Agent may employ or retain, at the expense of the Corporation, such
counsel, accountants or other experts or advisers as it may reasonably require,
said counsel, accountants, experts or advisers to be designated jointly by the
Warrant Agent and the Corporation for the purpose of determining and discharging
its duties hereunder, may pay reasonable remuneration for all services performed
by any of them without taxation of any costs of any counsel and shall not be
responsible for any misconduct on the part of any of them. The Warrant Agent may
act or not act and shall be protected in acting or not acting in good faith on
the opinion or advice of or information obtained from any counsel, accountant or
other expert or adviser, whether retained or employed by the Corporation or by
the Warrant Agent, in relation to any matter arising in relation to this
Indenture.
SECTION 11.05 WARRANT AGENT NOT REQUIRED TO GIVE SECURITY:
The Warrant Agent 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 these premises.
SECTION 11.06 PROTECTION OF WARRANT AGENT:
a) PROTECTION: By way of supplement to the provisions of
any law for the time being relating to trustees, it is expressly
declared and agreed as follows:
i) the Warrant Agent shall not be liable for, or by reason
of, any statement of fact or recital in this Indenture
or in the Warrant Certificates (except the
representation contained in
30
section 0 hereof and in the countersignature of the
Warrant Agent on 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 Corporation;
ii) the Warrant Agent shall not be bound to give notice to
any person or persons of the execution hereof;
iii) the Warrant Agent 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
Corporation of any of the representations, warranties or
covenants herein contained or of any acts of Directors,
officers, employees, agents or servants of the
Corporation;
iv) the Warrant Agent, in its personal or any other
capacity, may buy, lend upon and deal in shares of the
Corporation and in the Warrant Certificates and
generally may contract and enter into financial
transactions with the Corporation or any corporation
related to the Corporation without being liable to
account for any profit made thereby; and
v) nothing herein contained shall impose any obligation on
the Warrant Agent to see to or to require evidence of
the registration or filing (or renewal thereof) of this
Indenture or any instrument ancillary or supplemental
hereto.
b) INDEMNITY: In addition to and without limiting any
protection of the Warrant Agent hereunder or otherwise by law,
the Corporation agrees to indemnify and save harmless the
Warrant Agent and its directors, officers and employees from all
liabilities, suits, damages, costs, expenses and actions which
may be brought against or suffered by it arising out of or
connected with performance by it of its duties hereunder except
to the extent that such liabilities, suits, damages, costs and
actions are attributable to the negligence or wilful misconduct
of the Warrant Agent. Notwithstanding any other provision
hereof, this indemnity shall survive any removal or resignation
of the Warrant Agent, discharge of this Indenture and
termination of any trusts hereunder.
SECTION 11.07 REPLACEMENT OF WARRANT AGENT; SUCCESSOR BY MERGER:
a) RESIGNATION: The Warrant Agent may resign its trust and
be discharged from all further duties and liabilities hereunder,
subject to this subsection 0, by giving to the Corporation not
less than 30 days' prior notice in writing or such shorter prior
notice as the Corporation may accept as sufficient. The
Warrantholders, by Extraordinary Resolution, shall have power at
any time to remove the Warrant Agent and to appoint a new
trustee. In the event of the Warrant Agent resigning or being
removed as aforesaid or being dissolved, becoming bankrupt,
going into liquidation or otherwise becoming incapable of acting
hereunder, the Corporation shall forthwith appoint a new trustee
unless such Extraordinary Resolution has appointed a new
trustee; failing such appointment by the Corporation, the
retiring Warrant Agent, at the expense of the Corporation, or
any Warrantholder may apply to a judge of the Ontario Court of
Justice (General Division), on such notice as such judge may
direct for the appointment of a new trustee; provided that any
new Warrant Agent so appointed by the Corporation or by the
Court shall be subject to removal as aforesaid by the
Warrantholders. Any new trustee appointed under this subsection
0 shall be a corporation authorized to carry on the business of
a trust company in the Province of Ontario and, if required by
Applicable Legislation of any other province in Canada, in such
other provinces. 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
Warrant Agent without any further assurance, conveyance, act or
deed, but there shall be immediately executed, at the expense of
the Corporation, all such conveyances or other instruments as
may, in the opinion of Counsel, be necessary or advisable for
the purpose of assuring the same to the new trustee, provided
that, following any resignation or removal of the Warrant Agent
and appointment of a successor trustee, the successor trustee
shall have executed an appropriate instrument accepting such
appointment and, at the request of the Corporation, the
predecessor Warrant Agent shall execute
31
and deliver to the successor trustee an appropriate instrument
transferring to such successor trustee all rights and powers of
the Warrant Agent hereunder so ceasing to act.
b) NOTICE OF SUCCESSOR: Upon the appointment of a successor
trustee, the Corporation shall promptly notify the
Warrantholders thereof in the manner provided for in article
twelve hereof.
c) NO FURTHER ACT FOR MERGER: Any corporation into or with
which the Warrant Agent may be merged or consolidated or
amalgamated, or any corporation resulting therefrom, or any
corporation succeeding to the corporate trust business of the
Warrant Agent shall be the successor to the Warrant Agent
hereunder without any further act on its part or any of the
parties hereto, provided that such corporation would be eligible
for appointment as a successor trustee under subsection 0
hereof.
d) CERTIFICATION: Any Warrant Certificate countersigned but
not delivered by a predecessor Warrant Agent may be delivered by
the successor trustee in the name of the predecessor or
successor trustee.
SECTION 11.08 CONFLICT OF INTEREST:
a) REPRESENTATION: The Warrant Agent represents to the
Corporation that at the time of the execution and delivery
hereof no material conflict of interest exists in the Warrant
Agent's role as a fiduciary hereunder and agrees that in the
event of a material conflict of interest arising hereafter it
will, within 90 days after ascertaining that it has such
material conflict of interest, either eliminate the same or
assign its trust hereunder to a successor trustee approved by
the Corporation and meeting the requirements set forth in
subsection 0 hereof.
b) DEALING IN SECURITIES: Subject to subsection 0 hereof,
the Warrant Agent or a successor trustee, in its personal or any
other capacity, may buy, lend upon and deal in securities of the
Corporation and generally may contract and enter into financial
transactions with the Corporation or any Subsidiary of the
Corporation without being liable to account for any profit made
thereby.
SECTION 11.09 ACCEPTANCE OF TRUST:
The Warrant Agent hereby accepts the trusts in this Indenture declared and
provided for and agrees to perform the same upon the terms and conditions
hereinbefore set forth unless and until discharged therefrom.
SECTION 11.10 ACTIONS BY WARRANT AGENT TO PROTECT INTEREST:
The Warrant Agent shall have power to institute and to maintain such actions and
proceedings as it may consider necessary or expedient to preserve, protect or
enforce its interest and the interests of the Warrantholders.
SECTION 11.11 DOCUMENTS, MONEY, ETC. HELD BY WARRANT AGENT:
Any securities, documents of title or other instruments that may at any time be
held by the Warrant Agent subject to the trusts hereof may be placed in the
deposit vaults of the Warrant Agent or of any bank listed in Schedule I of the
BANK ACT (Canada), as amended, or deposited for safekeeping with any such bank.
Unless herein otherwise expressly provided, any money so held pending the
application or withdrawal thereof under any provisions of this Indenture, may be
deposited in the name of the Warrant Agent in any such bank at the rate of
interest, if any, then current on similar deposits or, with the consent of the
Corporation, may be deposited in the deposit department of the Warrant Agent or
any other loan or trust company or chartered bank authorized to accept deposits
under the laws of Canada or a province thereof. All interest or other income
received by the Warrant Agent in respect of such deposits and investments shall
belong to the Corporation.
SECTION 11.12 WARRANT AGENT NOT TO BE APPOINTED RECEIVER:
32
The Warrant Agent and any person related to the Warrant Agent shall not be
appointed a receiver or receiver and manager or liquidator of all or any part of
the assets or undertaking of the Corporation.
ARTICLE TWELVE
NOTICE TO WARRANTHOLDERS
SECTION 12.01 NOTICE:
a) NOTICE: Unless herein otherwise expressly provided, a
notice to be given hereunder to Warrantholders will be deemed to
be validly given if the notice is sent by ordinary surface or
air mail, postage prepaid, addressed to the Warrantholders or
delivered (or so mailed to certain Warrantholders and so
delivered to the other Warrantholders) at their respective
addresses appearing on the registers of holders described in
section 0 hereof, provided, however, that if, by reason of a
strike, lockout or other work stoppage, actual or threatened,
involving Canadian postal employees, the notice could reasonably
be considered unlikely to reach or likely to be delayed in
reaching its destination, the notice will be valid and effective
only if it is so delivered or is given by publication twice in
the Report on Business section in the national edition of The
Globe and Mail newspaper.
b) DATE OF NOTICE: A notice so given by mail or so
delivered will be deemed to have been given on the third
Business Day after it has been mailed or on the day on which it
has been delivered, as the case may be, and a notice so given by
publication will be deemed to have been given on the second day
on which it has been published as required. In determining under
any provision hereof the date when notice of a meeting or other
event must be given, the date of giving notice will be included
and the date of the meeting or other event will be excluded.
Accidental failure or omission in giving notice or accidental
failure to mail notice to any Warrantholder will not invalidate
any action or proceeding founded thereon.
ARTICLE THIRTEEN
GENERAL
SECTION 12.02 NOTICE TO THE CORPORATION AND THE WARRANT AGENT:
a) NOTICES: Unless herein otherwise expressly provided, any
notice to be given hereunder to the Corporation or to the
Warrant Agent shall be deemed to be validly given if delivered
by prepaid courier, if transmitted by telecopier or other means
of prepaid, transmitted, recorded communication or if sent by
registered mail, postage prepaid:
i) to the Corporation:
Breakwater Resources Ltd.
Suite 950
95 Wellington Street West
Toronto, Ontario
M5J 2N7
Attention: President
Facsimile: 416-363-1315
with a copy to:
Fraser Milner Casgrain LLP
Suite 3900
100 King Street West
Toronto, Ontario
M5X 1B2
33
Attention: Mr. Frank Davis
Facsimile: 416-863-4592
ii) to the Warrant Agent:
Computershare Trust Company of Canada
9th Floor
100 University Avenue
Toronto, Ontario
M5J 2Y1
Attention: Manager, Corporate Trust Services
Facsimile: 416-981-9777
and any such notice delivered or transmitted in accordance with
the foregoing shall be deemed to have been received on the date
of delivery or transmission or, if mailed, on the third Business
Day following the date of the postmark on such notice. The
original of any notice sent by facsimile transmission to the
Warrant Agent shall be subsequently mailed to the Warrant Agent.
b) CHANGE OF ADDRESS: The Corporation or the Warrant Agent
may from time to time notify the other in the manner provided in
subsection 0 hereof of a change of address which, from the
effective date of such notice and until changed by like notice,
shall be the address of the Corporation or the Warrant Agent, as
the case may be, for all purposes of this Indenture.
c) POSTAL DISRUPTION: If, by reason of a strike, lockout or
other work stoppage, actual or threatened, involving postal
employees, any notice to be given to the Warrant Agent or to the
Corporation hereunder could reasonably be considered unlikely to
reach its destination, such notice shall be valid and effective
only if it is delivered by prepaid courier or transmitted by
telecopier or other means of prepaid, transmitted, recorded
communication, such notice to be deemed to have been received on
the date of delivery or transmission.
SECTION 13.02 TIME OF THE ESSENCE:
Time shall be of the essence of this Indenture.
SECTION 13.03 COUNTERPARTS:
The Indenture may be executed in several counterparts, each of which when so
executed shall be deemed to be an original and such counterparts together shall
constitute one and the same instrument and notwithstanding their date of
execution shall be deemed to be dated as of January 28, 2004.
SECTION 13.04 SATISFACTION AND DISCHARGE OF INDENTURE:
Upon all Common Shares required to be issued in respect of Warrant Certificates
delivered to the Warrant Agent prior to the Time of Expiry having been issued,
this Indenture shall cease to be of further force or effect and the Warrant
Agent, on demand of and at the cost and expense of the Corporation and upon
delivery to the Warrant Agent of a Certificate of the Corporation stating that
all conditions precedent to the satisfaction and discharge of this Indenture
have been complied with, shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture.
SECTION 13.05 PROVISIONS OF INDENTURE AND WARRANT CERTIFICATE FOR THE SOLE
BENEFIT OF PARTIES AND WARRANTHOLDERS:
Nothing in this Indenture or the Warrant Certificates, expressed or implied,
shall give or be construed to give to any person other than the parties hereto
and the holders of the Warrant Certificates, as the case may be, any legal
34
or equitable right, remedy or claim under this Indenture or the Warrant
Certificates, or under any covenant or provision therein contained, all such
covenants and provisions being for the sole benefit of the parties hereto and
the Warrantholders.
IN WITNESS WHEREOF the parties have executed this Indenture as of the
day and year first above written.
BREAKWATER RESOURCES LTD.
By:
------------------------------------
Name:
Title:
COMPUTERSHARE TRUST COMPANY OF CANADA
By:
------------------------------------
Name:
Title:
------------------------------------
Name:
Title:
35
SCHEDULE A TO THE WARRANT INDENTURE
DATED AS OF JANUARY 28, 2004 BETWEEN
BREAKWATER RESOURCES LTD AND
COMPUTERSHARE TRUST COMPANY OF CANADA
WARRANT CERTIFICATE
[CERTIFICATES REPRESENTING WARRANTS SOLD TO U.S. PERSONS OR PERSONS IN THE
UNITED STATES MUST BEAR THE FOLLOWING LEGEND:
"THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE 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"). THE HOLDER
HEREOF BY PURCHASING SUCH SECURITIES AGREES FOR THE BENEFIT OF THE CORPORATION
THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO
THE CORPORATION, OR (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF
REGULATION S UNDER THE U.S. SECURITIES ACT."]
CUSIP 106 902 158
EXERCISABLE ONLY PRIOR TO 5:00 P.M., TORONTO TIME, ON JANUARY 28, 2009
AFTER WHICH TIME THIS WARRANT CERTIFICATE SHALL BE NULL AND VOID.
- -------------------------------- ---------------------------------
NUMBER ________ CERTIFICATE FOR
- -------------------------------- ---------------------------------
WARRANTS
---------------------------------
WARRANT TO PURCHASE COMMON SHARES
OF BREAKWATER RESOURCES LTD.
THIS IS TO CERTIFY THAT, for value received, (the "holder") is entitled
to subscribe for and to purchase, AT ANY TIME PRIOR TO 5:00 P.M., TORONTO TIME,
ON JANUARY 28, 2009 (the "Expiry Date"), _____________ fully paid and
non-assessable common shares ("Common Shares") of Breakwater Resources Ltd. (the
"Corporation") as constituted on the date hereof (as hereinafter defined), on
the basis of one Common Share for each one Warrant, at an exercise price of
$1.00 (Canadian) per Common Share, by surrendering this Warrant Certificate to
the Warrant Agent (as hereinafter defined) with a subscription form (FORM 1)
properly completed and executed, and a certified cheque, bank draft or money
order in lawful money of Canada payable to or to the order of the Corporation,
for the total purchase price of the Common Shares so subscribed for and
purchased. The holder of this Warrant Certificate may subscribe for and purchase
less than the number of Common Shares entitled to be subscribed for and
purchased on surrender of this Warrant Certificate. If the subscription does not
exhaust the Warrants represented by this Warrant Certificate, a Warrant
Certificate representing the balance of the Warrants will be issued to the
holder.
No Warrant Certificate representing fractional Warrants will be issued
and the holder hereof understands and agrees that such holder will not be
entitled to any cash payment or other form of compensation in respect of a
fractional Warrant. By acceptance hereof, the holder expressly waives any right
to receive fractional Common Shares upon exercise hereof. If the number of
Common Shares to which a Warrantholder would otherwise be entitled upon the
exercise of this Warrant Certificate is not a whole number, then the number of
Common Shares to be issued will be rounded down to the next whole number.
The principal office of Computershare Trust Company of Canada (the
"Warrant Agent") in the City of Toronto, Ontario, has been appointed the warrant
agent to receive subscriptions for Common Shares and
payments from holders of Warrant Certificates. This Warrant Certificate, the
subscription form (FORM 1), and a certified cheque, bank draft or money order
shall be deemed to be surrendered to the Warrant Agent only upon personal
delivery thereof or, if sent by post or other means of transmission, upon
receipt thereof by the Warrant Agent at the office specified above. The
Corporation may also provide for other places at which this Warrant Certificate
may be surrendered for exchange or exercise. If mail is used for delivery of a
Warrant Certificate, for the protection of the holder, registered mail should be
used and sufficient time should be allowed to avoid the risk of late delivery.
Subject to adjustment hereof in the events and in the manner set forth in the
Warrant Indenture hereafter mentioned and summarized below, the price payable
for each Common Share upon exercise of this Warrant Certificate shall be $1.00
(Canadian).
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE AND THE COMMON
SHARES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT").
Execution of the subscription form (FORM 1) will constitute a representation by
the holder to the Corporation that the person exercising the Warrants is not a
U.S. Person, or a Person in the United States, and is not acquiring any of the
Common Shares issuable upon the exercise of the Warrants for, a U.S. Person or a
Person in the United States other than the Original U.S. Purchaser. For purposes
hereof, (a) "United States" means the United States of America, its territories
or possessions, any state thereof or the District of Columbia, (b) a "U.S.
Person" means any natural person resident in the United States, any partnership
or corporation organized or incorporated under the laws of the United States,
any estate of which any executor or administrator is a U.S. Person, any trust of
which any trustee is a U.S. Person, any agency or branch of a foreign entity
located in the United States, any non-discretionary account or similar account
(other than an estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. Person, any discretionary account or similar
account (other than an estate or trust) held by a dealer or other fiduciary
organized or incorporated, or, if an individual, resident, in the United States
or any partnership or corporation organized or incorporated under the laws of a
country other than the United States if formed by a U.S. Person principally for
the purpose of investing in securities not registered under the 1933 Act and (c)
"Original U.S. Purchaser" means the U.S. Person or Person in the United States
who purchased the Warrants from the Corporation. In addition to the subscription
form (FORM 1), the Original U.S. Purchaser must also provide an executed letter
to the Warrant Agent and the Corporation substantially in the form of schedule B
attached to the Warrant Indenture, a copy of which may be obtained upon request
from the Warrant Agent. No Common Shares issuable upon exercise of Warrants will
be delivered into the United States other than as set forth in this paragraph.
Certificates representing Common Shares subscribed for and purchased
will be mailed to the persons specified in the subscription form (FORM 1) at the
respective addresses specified therein or, if so specified in the subscription
form (FORM 1), delivered to such persons at the office of the Warrant Agent
where the applicable Warrant Certificate was surrendered, when the transfer
books of the Corporation have been opened for three Business Days after the due
surrender of such Warrant Certificate and payment as aforesaid, including any
applicable taxes.
This Warrant Certificate may, upon compliance with the reasonable
requirements and charges of the Warrant Agent, be divided by completing and
executing FORM 2 and delivering the Warrant Certificate to the Warrant Agent.
The Warrants represented by this Warrant Certificate may only be
transferred, upon compliance with the conditions prescribed in the Warrant
Indenture, on the register of transfers to be kept at the principal office of
the Warrant Agent in Toronto, Ontario, by the holder or his executors,
administrators or other legal representatives or his or their attorney duly
appointed by an instrument in writing in form and executed in a manner
satisfactory to the Warrant Agent and, upon compliance with such requirements
and such other reasonable requirements as the Warrant Agent may prescribe, such
transfer will be duly recorded on such register of transfers by the Warrant
Agent. Notwithstanding the foregoing, the Corporation will be entitled, and may
direct the Warrant Agent, to refuse to record any transfer of any Warrant on
such register if such transfer would constitute a violation of the securities
laws of any jurisdiction.
This Warrant Certificate represents warrants of the Corporation issued
or issuable under the provisions of an indenture (which indenture together with
all other instruments supplemental or ancillary thereto is herein referred to as
the "Warrant Indenture") dated as of January 28, 2004, between the Corporation
and the
2
Warrant Agent, to which reference is hereby made for particulars of the rights
of the holders of the Warrant Certificates, the Corporation and the Warrant
Agent in respect thereof and the terms and conditions upon which the Warrants
represented hereby are issued and held, all to the same effect as if the
provisions of the Warrant Indenture were herein set forth in full, to all of
which the holder of this Warrant Certificate by acceptance hereof assents, it
being expressly understood that the provisions of the Warrant Indenture and this
Warrant Certificate are for the sole benefit of the Corporation, the Warrant
Agent and the Warrantholders. A copy of the Warrant Indenture may be obtained on
request without charge from the secretary of the Corporation, at Suite 950, 95
Wellington Street West, Toronto, Ontario M5J 2N7, telephone: 416-363-4798. Words
and terms in this Warrant Certificate with the initial letter or letters
capitalized and not defined herein shall have the meanings ascribed to such
capitalized words and terms in the Warrant Indenture.
Nothing contained in this Warrant Certificate, the Warrant Indenture or
otherwise shall be construed as conferring upon the holder hereof any right or
interest whatsoever as a holder of Common Shares or other shareholder of the
Corporation or any other right or interest except as herein and in the Warrant
Indenture expressly provided.
The Warrant Indenture provides for adjustments to the exercise price of
the Warrants and to the number and kind of securities purchaseable upon exercise
upon the happening of certain stated events including the subdivision or
consolidation of the Common Shares, certain distributions of Common Shares or
securities exchangeable for or convertible into Common Shares or of other assets
or property of the Corporation, certain offerings of rights, warrants or options
and certain reorganizations.
This Warrant Certificate, the Warrants represented by this Warrant
Certificate and the Warrant Indenture shall be governed by and performed,
construed and enforced in accordance with the laws of the Province of Ontario
and the federal laws of Canada applicable therein.
The Warrant Indenture provides for the giving of notice by the
Corporation prior to taking certain actions specified therein. The Corporation
may from time to time purchase any of the Warrants by private contract or
otherwise. Any such Warrants purchased by the Corporation shall be cancelled.
This Warrant Certificate shall not be valid for any purpose until it has
been countersigned by or on behalf of the Warrant Agent for the time being under
the Warrant Indenture.
IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate
to be signed by its officers or other individuals duly authorized in that behalf
as of January 28, 2004.
BREAKWATER RESOURCES LTD.
By: _____________________
This Warrant Certificate is one of the Warrant Certificates referred to
in the Warrant Indenture.
COMPUTERSHARE TRUST COMPANY OF
CANADA
By: _____________________
3
SUBSCRIPTION FORM
(FORM 1)
THE HOLDER HEREBY SUBSCRIBES FOR _____________ Common Shares of Breakwater
Resources Ltd. at $1.00 (Canadian) per Common Share and on the other terms set
out in the Warrant Certificate and Warrant Indenture and encloses herewith a
certified cheque, bank draft or money order in Canadian dollars payable to
"Breakwater Resources Ltd." in payment of the aggregate subscription price
therefor.
The undersigned hereby irrevocably directs that the Common Shares be delivered,
subject to the conditions set out in this certificate and the provisions of the
Warrant Indenture, and that the said Common Shares be registered as follows:
Name(s) in Full and Social Address(es) (include postal Number of Common Shares
Insurance Number(s) code)
- -------------------------- ---------------------------- -----------------------
- -------------------------- ---------------------------- -----------------------
- -------------------------- ---------------------------- -----------------------
- -------------------------- ----------------------------
TOTAL:
------------------------
Please print full name in which certificate(s) are to be issued. If any of the
Common Shares are to be issued to a person or persons other than the
Warrantholder, the Warrantholder must pay to the Warrant Agent all requisite
taxes or other government charges, if any and complete a Form of Transfer (FORM
By executing this subscription form, the undersigned represents and warrants
that the undersigned is:
the Original U.S. Purchaser; or
not a U.S. Person, or a Person in the United States, and is not
acquiring any of the Common Shares issuable upon the exercise of
the Warrants for the account or benefit of, a U.S. Person or
Person in the United States and none of the persons listed above
is a U.S. Person or a Person in the United States other than the
Original U.S. Purchaser. For purposes hereof, (a) "United
States" means the United States of America, its territories or
possessions, any state thereof or the District of Columbia, (b)
a "U.S. Person" means any natural person resident in the United
States, any partnership or corporation organized or incorporated
under the laws of the United States, any estate of which any
executor or administrator is a U.S. Person, any trust of which
any trustee is a U.S. Person, any agency or branch of a foreign
entity located in the United States, any non-discretionary
account or similar account (other than an estate or trust) held
by a dealer or other fiduciary for the benefit or account of a
U.S. Person, any discretionary account or similar account (other
than an estate or trust) held by a dealer or other fiduciary
organized or incorporated, or, if an individual, resident, in
the United States or any partnership or corporation organized or
incorporated under the laws of a country other than the United
States if formed by a U.S. Person principally for the purpose of
investing in securities not registered under the United States
SECURITIES ACT OF 1933, as amended and (c) "Original U.S.
Purchaser" means the U.S. Person or Person in the United States
who purchased the Warrants from the Corporation.
In addition to this subscription form, the Original U.S. Purchaser must also
provide an executed letter to the Warrant Agent and the Corporation
substantially in the form of schedule B to the Warrant Indenture, a copy of
which may be obtained upon request from the Warrant Agent.
4
DATED this ______ day of ______, 20____.
__________________________________ _________________________________
Signature of Warrantholder Witness
Print name and address of Warrantholder in full below:
Name ________________________________________________________________
Address ________________________________________________________________
________________________________________________________________
________________________________________________________________
(Include Postal Code)
[ ] Please check box if certificates representing the Common Shares are to
be delivered at the office of the Warrant Agent where this Warrant Certificate
is surrendered, failing which the certificates will be mailed to the address set
forth above.
PRIVACY NOTICE: In the course of providing services to you, the Warrant Agent
receives non-public personal information about you, including, but not limited
to, your name, address, social insurance number, securities holdings and
transactions. The Warrant Agent uses this information in order to administer
your account, to better serve you and for other lawful purposes. The Warrant
Agent has prepared a PRIVACY CODE to tell you more about its information
practices and how your privacy is protected. A copy of such code is available of
the website of the Warrant Agent (computershare.com) or by request in writing at
Computershare Trust Company of Canada, 9th Floor, 100 University Avenue,
Toronto, Ontario M5J 2Y1. You are required to provide your social insurance
number if you will receive income on the securities represented by this Warrant
Certificate. The Warrant Agent will use your social insurance number for income
reporting. The Warrant Agent may also ask for your social insurance number as an
identification-security measure if you call or write to request service on your
account, however, you may decline this usage.
MAIL TO:
Computershare Trust Company of Canada
9th Floor
100 University Avenue
Toronto, Ontario
M5J 2Y1
5
TO DIVIDE OR COMBINE WARRANT CERTIFICATES
(FORM 2)
Fill in and sign this FORM 2 and surrender this Warrant Certificate to the
Warrant Agent in ample time for new Warrant Certificates to be issued and used.
Deliver to the undersigned Warrantholder, at the address mentioned below, new
certificates as follows:
_______________________________ _________________________ Certificate(s) for
Warrants each
_______________________________ _________________________ Certificate(s) for
Warrants each
_______________________________ _________________________ Certificate(s) for
Warrants each
DATED this ______ day of ______, 20____.
________________________________
Signature of Warrantholder
Print name and address of Warrantholder in full below.
Name ________________________________________________________________
Address ________________________________________________________________
________________________________________________________________
(Include Postal Code)
MAIL TO:
Computershare Trust Company of Canada
9th Floor
100 University Avenue
Toronto, Ontario
M5J 2Y1
6
FORM OF TRANSFER
(FORM 3)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
the Warrants represented by this Warrant Certificate to:
Name ________________________________________________________________
Address ________________________________________________________________
________________________________________________________________
________________________________________________________________
(Include Postal Code)
Social Insurance Number(s) ____________________________________________________
and hereby irrevocably constitutes and appoints _______________________________
(LEAVE THIS SPACE BLANK)
as the attorney of the undersigned to transfer the Warrants on the books of
Breakwater Resources Ltd. with full power of substitution.
DATED this ___ day of __________, 20____.
Signature of Transferor guaranteed by:
_______________________________ ___________________________________
Name of Bank or Trust Company Signature of Transferor
Print name and address of Transferor in full below:
Name ________________________________________________________________
Address ________________________________________________________________
________________________________________________________________
________________________________________________________________
(Include Postal Code)
The signature of the transferor must correspond in every particular respect with
the surname and the first name(s) or initials shown on the face of this
certificate and the endorsement must be signature guaranteed, in either case, by
a Canadian chartered bank or a member of a recognized securities transfer agents
medallion program (STAMP). The stamp affixed thereon by the guarantor must bear
the actual words "signature guarantee", or "signature medallion guaranteed" and
otherwise be in accordance with industry standards.
PRIVACY NOTICE: In the course of providing services to you, the Warrant Agent
receives non-public personal information about you, including, but not limited
to, your name, address, social insurance number, securities holdings and
transactions. The Warrant Agent uses this information in order to administer
your account, to better serve you and for other lawful purposes. The Warrant
Agent has prepared a PRIVACY CODE to tell you more about its
7
information practices and how your privacy is protected. A copy of such code is
available of the website of the Warrant Agent (computershare.com) or by request
in writing at Computershare Trust Company of Canada, 9th Floor, 100 University
Avenue, Toronto, Ontario M5J 2Y1. You are required to provide your social
insurance number if you will receive income on the securities represented by
this Warrant Certificate. The Warrant Agent will use your social insurance
number for income reporting. The Warrant Agent may also ask for your social
insurance number as an identification-security measure if you call or write to
request service on your account, however, you may decline this usage.
MAIL TO:
Computershare Trust Company of Canada
9th Floor
100 University Avenue
Toronto, Ontario
M5J 2Y1
8
SCHEDULE B TO THE WARRANT INDENTURE
DATED AS OF JANUARY 28, 2004 BETWEEN
BREAKWATER RESOURCES LTD. AND
COMPUTERSHARE TRUST COMPANY OF CANADA
Form of Letter to be Delivered by an
Original U.S. Purchaser
upon Exercise of Warrants
Breakwater Resources Ltd.
- - and to -
Computershare Trust Company of Canada,
as Warrant Agent
Dear Sirs:
We are delivering this letter in connection with the purchase of common shares
(the "Shares") of Breakwater Resources Ltd. (the "Corporation"), a corporation
existing under the CANADA BUSINESS CORPORATIONS ACT, upon the exercise of
warrants of the Corporation ("Warrants"), issued under the warrant indenture
dated as of January 28, 2004 between the Corporation and Computershare Trust
Company of Canada.
We hereby confirm that:
(i) we are an institutional "accredited investor" within the meaning
of Rule 501 (a)(1),(2),(3) or (7) of Regulation D under the
United States SECURITIES ACT OF 1933 (the "U.S. Securities
Act");
we are purchasing the Shares for our own account;
we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks
of purchasing the Shares;
we are not acquiring the Shares with a view to distribution
thereof or with any present intention of offering or selling any
of the Shares, except (A) to the Corporation, (B) outside the
United States in accordance with Rule 904 under the U.S.
Securities Act or (C) inside the United States (1) in accordance
with the exemption from registration under the U.S. Securities
Act provided by Rule 144 thereunder, if applicable, and in
compliance with applicable state securities laws or (2) in a
transaction that does not require registration under the U.S.
Securities Act or applicable state securities laws and the
seller has furnished to the Corporation an opinion to such
effect of counsel of recognized standing reasonably satisfactory
to the Corporation prior to such offer, sale or transfer;
we acknowledge that we have had access to such financial and
other information as we deem necessary in connection with our
decision to purchase the Shares; and
we acknowledge that we are not purchasing the Shares as a result
of any general solicitation or general advertising, including
advertisements, articles, notices or other communications
published
in any newspaper, magazine or similar media or broadcast over
radio, television, or any seminar or meeting whose attendees
have been invited by general solicitation or general
advertising.
We understand that the Shares are being offered in a transaction not involving
any public offering within the United States within the meaning of the U.S.
Securities Act and that the Shares have not been and will not be registered
under the U.S. Securities Act. We further understand that any Shares acquired by
us will be in the form of definitive physical certificates and that such
certificates will bear a legend reflecting the substance of paragraph (d) above.
We acknowledge that you will be relying upon our confirmations, acknowledgements
and agreements set forth herein, and we agree to notify you promptly in writing
if any of our representations or warranties herein ceases to be accurate or
complete.
____________________________
(Name of Purchaser)
By:_________________________
Name:
Title:
SCHEDULE 1.1(TT)
MINERAL AND OTHER PROPERTY RIGHTS
1. MINERAL CLAIMS
- --------------------------------------------------------------------------------
TENURE NUMBER CLAIM NAME MAP NUMBER STATUS MINING DIVISION
- --------------------------------------------------------------------------------
201415 #W 56 092F12E Good Standing 2007.12.22 01 Alberni
- --------------------------------------------------------------------------------
201491 W-87 092F12E Good Standing 2007.11.08 01 Alberni
- --------------------------------------------------------------------------------
201493 W-116 FR. 092F12E Good Standing 2007.08.13 01 Alberni
- --------------------------------------------------------------------------------
201492 W-100 092F12E Good Standing 2007.06.13 01 Alberni
- --------------------------------------------------------------------------------
201366 W. NO. 3 092F12E Good Standing 2007.05.24 01 Alberni
- --------------------------------------------------------------------------------
201367 W. NO. 4 092F12E Good Standing 2007.05.24 01 Alberni
- --------------------------------------------------------------------------------
201368 W. NO. 5 092F12E Good Standing 2007.05.24 01 Alberni
- --------------------------------------------------------------------------------
201369 W. NO. 6 092F12E Good Standing 2007.05.24 01 Alberni
- --------------------------------------------------------------------------------
201370 W. NO. 7 092F12E Good Standing 2007.05.24 01 Alberni
- --------------------------------------------------------------------------------
201371 W. NO. 8 092F12E Good Standing 2007.05.24 01 Alberni
- --------------------------------------------------------------------------------
201372 W. NO. 10 092F12E Good Standing 2007.05.24 01 Alberni
- --------------------------------------------------------------------------------
201373 W. NO. 12 092F12E Good Standing 2007.05.24 01 Alberni
- --------------------------------------------------------------------------------
201374 W. NO. 13 092F12E Good Standing 2007.05.24 01 Alberni
- --------------------------------------------------------------------------------
201375 W. NO. 14 092F12E Good Standing 2007.05.24 01 Alberni
- --------------------------------------------------------------------------------
201376 W. NO. 15 092F12E Good Standing 2007.05.24 01 Alberni
- --------------------------------------------------------------------------------
201377 W. NO. 16 092F12E Good Standing 2007.05.24 01 Alberni
- --------------------------------------------------------------------------------
201378 W. NO. 17 092F12E Good Standing 2007.05.24 01 Alberni
- --------------------------------------------------------------------------------
201379 W. NO. 18 092F12E Good Standing 2007.05.24 01 Alberni
- --------------------------------------------------------------------------------
201380 W. NO. 19 092F12E Good Standing 2007.05.24 01 Alberni
- --------------------------------------------------------------------------------
201381 W. NO. 20 092F12E Good Standing 2007.05.24 01 Alberni
- --------------------------------------------------------------------------------
201486 W-80 092F12E Good Standing 2007.05.17 01 Alberni
- --------------------------------------------------------------------------------
201487 W-81 092F12E Good Standing 2007.05.17 01 Alberni
- --------------------------------------------------------------------------------
201488 W-82 092F12E Good Standing 2007.05.17 01 Alberni
- --------------------------------------------------------------------------------
201494 W-121 092F12E Good Standing 2007.05.08 01 Alberni
- --------------------------------------------------------------------------------
201495 W-122 092F12E Good Standing 2007.05.08 01 Alberni
- --------------------------------------------------------------------------------
201459 W 72 092F12E Good Standing 2007.04.03 01 Alberni
- --------------------------------------------------------------------------------
201460 W 74 092F12E Good Standing 2007.04.03 01 Alberni
- --------------------------------------------------------------------------------
201461 W 75 092F12E Good Standing 2007.04.03 01 Alberni
- --------------------------------------------------------------------------------
201462 W 76 092F12E Good Standing 2007.04.03 01 Alberni
- --------------------------------------------------------------------------------
201463 W 77 092F12E Good Standing 2007.04.03 01 Alberni
- --------------------------------------------------------------------------------
201464 W 78 092F12E Good Standing 2007.04.03 01 Alberni
- --------------------------------------------------------------------------------
201465 W 79 092F12E Good Standing 2007.04.03 01 Alberni
- --------------------------------------------------------------------------------
201403 W. NO. 59 092F12E Good Standing 2007.01.18 01 Alberni
- --------------------------------------------------------------------------------
201404 W. NO. 61 092F12E Good Standing 2007.01.18 01 Alberni
- --------------------------------------------------------------------------------
201405 W. NO. 62 092F12E Good Standing 2007.01.18 01 Alberni
- --------------------------------------------------------------------------------
201406 W. NO. 63 092F12E Good Standing 2007.01.18 01 Alberni
- --------------------------------------------------------------------------------
201407 W. NO. 64 092F12E Good Standing 2007.01.18 01 Alberni
- --------------------------------------------------------------------------------
201408 W. NO. 65 092F12E Good Standing 2007.01.18 01 Alberni
- --------------------------------------------------------------------------------
201409 W. NO. 66 092F12E Good Standing 2007.01.18 01 Alberni
- --------------------------------------------------------------------------------
201410 W. NO. 67 092F12E Good Standing 2007.01.18 01 Alberni
- --------------------------------------------------------------------------------
201411 W. NO. 68 092F12E Good Standing 2007.01.18 01 Alberni
- --------------------------------------------------------------------------------
201412 W. NO. 69 092F12E Good Standing 2007.01.18 01 Alberni
- --------------------------------------------------------------------------------
201413 W. NO. 70 092F12E Good Standing 2007.01.18 01 Alberni
- --------------------------------------------------------------------------------
201414 W. NO. 71 092F12E Good Standing 2007.01.18 01 Alberni
2. MINING LEASES
- --------------- ------------------ ------------------- ---------- ---------------- ----------------- ------------
TENURE DISPOSITION GRANT TYPE HA DUE DATE END OF TERM NTS
NUMBER NAME
- --------------- ------------------ ------------------- ---------- ---------------- ----------------- ------------
201320 Lease 26 Crown lease 496.2 March 27, 2005 March 27, 2007 092F/12E
- --------------- ------------------ ------------------- ---------- ---------------- ----------------- ------------
201321 Lease 27 Crown mineral 680.2 March 27, 2005 March 27, 2007 092F/12E
lease
- --------------- ------------------ ------------------- ---------- ---------------- ----------------- ------------
201322 Lease 28 Crown mineral 508.1 March 27, 2005 March 27, 2007 092F/12E
lease
- --------------- ------------------ ------------------- ---------- ---------------- ----------------- ------------
201323 Lease 29 Crown mineral 493.8 March 27, 2005 March 27, 2007 092F/12E
lease
- --------------- ------------------ ------------------- ---------- ---------------- ----------------- ------------
201324 Lease 51 Crown mineral 31.67 July 4, 2005 July 4, 2021 092F/12E
lease
- --------------- ------------------ ------------------- ---------- ---------------- ----------------- ------------
3. CROWN GRANTED MINERAL RIGHTS
The following undersurface rights were granted to BWCL by the Crown:
- ---------------------------- ----------------------------- -------------- -------------------------------
Parcel Identifier Number Charge Nos. District Lot Claim Name
- ---------------------------- ----------------------------- -------------- -------------------------------
000 049 336 EM88535 (see 292650G, as 1659 Mink Mineral Claim
assigned by EC62566 and
E88098)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 049 425 EM88535 (see 292650G, as 1665 Red Squirrel Mineral Claim
assigned by EC62566 and
E88098)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 049 476 EM88535 (see 292650G, as 1667 Bessie B. Mineral Claim
assigned by EC62566 and
E88098)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 312 592 EM88536 (see A10737 as 1971 Boulder Mineral Claim
assigned by EC62568 and )
EM88099
- ---------------------------- ----------------------------- -------------- -------------------------------
000 312 631 EM88536 (see A10737 as 1972 Barite Mineral Claim
assigned by EC62568 and
EM88099)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 312 649 EM88536 (see A10737 as 1973 Raven Mineral Claim
assigned by EC62568 and
EM88099)
- ---------------------------- ----------------------------- -------------- -------------------------------
- ---------------------------- ----------------------------- -------------- -------------------------------
000 312 665 EM88536 (see A10737 as 1974 Betty Mineral Claim
assigned by EC62568 and
EM88099)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 049 328 EM88533 (see 295908G, as 1341 betty Mineral Claim (lowercase)
assigned by EC62564 and
EM88096)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 312 584 EM88533 (see 295908G, as 1342 Elwood Mineral Claim
assigned by EC62564 and
EM88096)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 049 387 EM88533 (see 295908G, as 1663 Blue Grouse Mineral Claim
assigned by EC62564 and
EM88096)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 049 409 EM88533 (see 295908G, as 1664 Blue Jay Mineral Claim
assigned by EC62564 and
EM88096)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 312 576 EM88533 (see 295908G, as 1340 Pearl Mineral Claim
assigned by EC62564 and
EM88096) and EM88534 (see
313324G, as assigned by
EC62565 and EM88097)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 039 195 EM88532 (see A10735 as 1344 Bear Paw Mineral Claim
assigned by EC62567 and
EM88095)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 039 209 EM88532 (see A10735 as 1345 Beaver Paw Mineral Claim
assigned by EC62567 and
EM88095)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 039 187 EM88532 (see A10735 as 1346 Right Paw Mineral Claim
assigned by EC62567 and
EM88095)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 039 217 EM88532 (see A10735 as 1347 Left Paw Mineral Claim
assigned by EC62567 and
EM88095)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 049 352 EM88533 (see 295908G, as 1660 Lynx Mineral Claim
assigned by EC62564 and
EM88096) and EM88534 (see
313324G, as assigned by
EC62565 and EM88097)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 049 379 EM88533 (see 295908G, as 1661 Cougar Mineral Claim
assigned by EC62564 and
EM88096) and EM88534 (see
313324G, as assigned by
EC62565 and EM88097)
- ---------------------------- ----------------------------- -------------- -------------------------------
- ---------------------------- ----------------------------- -------------- -------------------------------
000 049 468 EM88533 (see 295908G, as 1666 Grey Squirrel Mineral Claim
assigned by EC62564 and
EM88096) and EM88534 (see
313324G, as assigned by
EC62565 and EM88097)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 049 492 EM88532 (see A10735 as 1668 South Paw Mineral Claim
assigned by EC62567 and
EM88095)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 049 506 EM88532 (see A10735 as 1669 West Paw Mineral Claim
assigned by EC62567 and
EM88095)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 049 557 EM88532 (see A10735 as 1670 North Paw Mineral Claim
assigned by EC62567 and
EM88095)
- ---------------------------- ----------------------------- -------------- -------------------------------
000 049 573 EM88532 (see A10735 as 1671 East Paw Mineral Claim
assigned by EC62567 and
EM88095)
- ---------------------------- ----------------------------- -------------- -------------------------------
4. OTHER PROPERTY RIGHTS
- ------------ -------------------------------------- ----------------------
PERMIT NO. PERMIT DESCRIPTION ISSUING AGENCY
- ------------ -------------------------------------- ----------------------
ST9710029 Thelwood Power (was PUP 1261) MWLAP - BC Parks
- ------------ -------------------------------------- ----------------------
ST9710035 Main Permit (was PUP 1363) MWLAP - BC Parks
- ------------ -------------------------------------- ----------------------
ST9710036 Tennent Power (was PUP 1364, PUP 473) MWLAP - BC Parks
- ------------ -------------------------------------- ----------------------
SCHEDULE 1.1(BBB)
PERMITTED ENCUMBRANCES
The following are Permitted Encumbrances under the Agreement:
(a) the reservations, limitations, provisos, exceptions and conditions
contained in the original grant from the Crown;
(b) the provisions of the Land Act (British Columbia), and sections 23(2)
and 26 of the Land Title Act (British Columbia);
(c) the provisions of the Mineral Tenure Act (British Columbia) governing,
inter alia, the location, recording, transferring and maintenance of
mineral claims and mining leases;
(d) the endorsements on certificates of title in favour of Governmental
Authorities;
(e) charges granted by public utilities in respect of their interest, if
any, in a property;
(f) liens for Taxes which are not yet due;
(g) undetermined or inchoate liens and charges incidental to current
construction or current operation which have not been filed or
registered in accordance with applicable law or of which written notice
has not at the time been duly given in accordance with applicable law or
which relate to obligations not at the time due or delinquent;
(h) liens, charges and encumbrances incidental to the conduct of business
which, in the aggregate, do not materially detract from the value of the
Business or materially impair the operation of the Business; and
(i) a claim of right, title or jurisdiction which may be made or established
to or over any lands, waters or products harvested therefrom by any
aboriginal peoples by virtue of and relying solely upon their status as
aboriginal peoples.
SCHEDULE 3.1(A)
JURISDICTIONS
1. Canada (Federal) (3524396)
2. British Columbia (A0047906)
3. Alberta (217975234)
4. Saskatchewan (626253)
5. Manitoba (3888577)
6. Ontario (1309137)
SCHEDULE 3.1(J)
DIRECTORS AND OFFICERS
1. Directors:
David Bazowski
Jan Johansson
Marianne Lindholm
2. Officers: None appointed
SCHEDULE 3.2(A)
FINANCIAL STATEMENTS
See attached. These are draft audited financial statements only. The auditor has
not yet received information from the actuary and therefore cannot confirm that
the employee future benefits will not change as a result of the actuary's
calculations.
FINANCIAL STATEMENTS ARE INCORPORATED HEREIN BY REFERENCE TO THE "AUDITORS'
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS OF BOLIDEN WESTMIN (CANADA) LIMITED
- - DECEMBER 31, 2003 AND 2002" IN THE BUSINESS ACQUISITION REPORT FILED ON
OCTOBER 6, 2004 ON SEDAR AT WWW.SEDAR.COM.
SCHEDULE 3.3(C)
PERMITS
1. MINE PERMITS
- ------------------ --------------------------------------------- ------------------------------------- ------------------
PERMIT NO. PERMIT DESCRIPTION ISSUING AGENCY DATE ISSUED
- ------------------ --------------------------------------------- ------------------------------------- ------------------
M-26 Mining, Exploration and Reclamation Ministry of Energy and Mines June 7, 1979
- ------------------ --------------------------------------------- ------------------------------------- ------------------
2. PARK USE PERMITS
- ------------------ --------------------------------------------- ------------------------------------- ------------------
PERMIT NO. PERMIT DESCRIPTION ISSUING AGENCY DATE ISSUED
- ------------------ --------------------------------------------- ------------------------------------- ------------------
ST9710029 Thelwood Power (was PUP 1261) includes MWLAP - BC Parks June 1, 1983
Resources Permit #2081
- ------------------ --------------------------------------------- ------------------------------------- ------------------
ST9710035 Main Permit (was PUP 1363) MWLAP - BC Parks June 1, 1985
- ------------------ --------------------------------------------- ------------------------------------- ------------------
ST9710036 Tennent Power (was PUP 1364, PUP 473) MWLAP - BC Parks June 1, 1985
- ------------------ --------------------------------------------- ------------------------------------- ------------------
3. ENVIRONMENTAL PERMITS
- -------------------- ------------------------------------------- -------------------------------- -----------------------
PERMIT NO. PERMIT DESCRIPTION ISSUING AGENCY DATE ISSUED
- -------------------- ------------------------------------------- -------------------------------- -----------------------
PA-02408 Air Emissions MWLAP - Waste Management June 21, 1974
- -------------------- ------------------------------------------- -------------------------------- -----------------------
PE-06858 Effluent MWLAP - Waste Management June 4, 1984
- -------------------- ------------------------------------------- -------------------------------- -----------------------
PR-02561 Refuse Dump MWLAP- Waste Management May 21, 1974
- -------------------- ------------------------------------------- -------------------------------- -----------------------
99-HPAC-PA3-000-00016TDF Seismic Upgrade - Myra Creek instream Government of Canada - July 19, 1999,
works S. 35(2) Authorization for Works or Fisheries and Oceans Canada amended September 7,
Undertakings Affecting Fish Habitat 2001
- -------------------- ------------------------------------------- -------------------------------- -----------------------
Metal Mine Effluent Regulations - Environment Canada December 6, 2002
Transitional Authorization to discharge
effluent with pH range 6 to 11
- -------------------- ------------------------------------------- -------------------------------- -----------------------
4. CONDITIONAL WATER LICENSES
- -------------------- ------------------------------------------- -------------------------------- -----------------------
LICENSE NO. PERMIT DESCRIPTION ISSUING AGENCY DATE ISSUED
- -------------------- ------------------------------------------- -------------------------------- -----------------------
CWL-064124 Tennent Creek, Patchette Creek, Moulder MSRM - Land & Water April 3, 1986
Creek, McNish Lake, Ellis Lake, Griffiths
Lake, Moulder Lake and Patchette Lake -
storage/power
- -------------------- ------------------------------------------- -------------------------------- -----------------------
CWL-064123 Jim Mitchell Lake & Thelwood Creek - MSRM - Land & Water April 3, 1986
storage and use
- -------------------- ------------------------------------------- -------------------------------- -----------------------
CWL-063974 Thelwood Creek - storage/power MSRM - Land & Water January 5, 1987
- -------------------- ------------------------------------------- -------------------------------- -----------------------
CWL-061484 Myra Creek - diversion & use MSRM - Land & Water April 3, 1986
- -------------------- ------------------------------------------- -------------------------------- -----------------------
CWL-058458 Myra Creek - diversion & use MSRM - Land & Water May 15, 1985
- -------------------- ------------------------------------------- -------------------------------- -----------------------
- -------------------- ------------------------------------------- -------------------------------- -----------------------
LICENSE NO. PERMIT DESCRIPTION ISSUING AGENCY DATE ISSUED
- -------------------- ------------------------------------------- -------------------------------- -----------------------
CWL-043379 Arnica Creek - diversion & use MSRM - Land & Water November 1, 1971
- -------------------- ------------------------------------------- -------------------------------- -----------------------
CWL-043113 Webster Creek - diversion & use MSRM - Land & Water September 3, 1974
- -------------------- ------------------------------------------- -------------------------------- -----------------------
CWL-032063 Tennent Lake - diversion MSRM - Land & Water March 15, 1967
- -------------------- ------------------------------------------- -------------------------------- -----------------------
CWL-101665 Myra Creek - #4 Pumphouse glandwater MSRM - Land & Water June 22, 2001
- -------------------- ------------------------------------------- -------------------------------- -----------------------
CWL-029102 Tennent Creek Works MSRM - Land & Water August 25, 1964
- -------------------- ------------------------------------------- -------------------------------- -----------------------
5. OTHER PERMITS
- ------------------ -------------------------------------------------- -------------------------------- ------------------
PERMIT NO. PERMIT DESCRIPTION ISSUING AGENCY DATE ISSUED
- ------------------ -------------------------------------------------- -------------------------------- ------------------
1440494 Drinking Water System, Decal No. 00689 Ministry of Health Services August 12, 1992
- ------------------ -------------------------------------------------- -------------------------------- ------------------
BC-1390 TDG Exemption - to transport explosives on site Ministry of Transportation December 1, 1991
w/o documentation
- ------------------ -------------------------------------------------- -------------------------------- ------------------
BC-1239 / 2015 TDG Exemption - to haul concentrates to town w/o Insurance Corporation of B.C. February 4, 1998
documentation (Commercial Transportation and
Inspection Board)
- ------------------ -------------------------------------------------- -------------------------------- ------------------
10976-3-05.0 Radioisotope License (1 Ronan, 3 Kay-Ray) Cs-137 Canadian Nuclear Safety November 17, 2003
sources - Nuclear Substances and Radiation Commission -
Devices Licence Number (Supersedes 09-05509-99
from Atomic Energy C.B.)
- ------------------ -------------------------------------------------- -------------------------------- ------------------
113-3175980 Radio Station License for 2 frequencies (Company Dept. of Communications April 1, 1990
code 080016968)
- ------------------ -------------------------------------------------- -------------------------------- ------------------
BC 495 Explosive Storage and use Permit Ministry of Energy and Mines December 10, 1993
- ------------------ -------------------------------------------------- -------------------------------- ------------------
OTH00108 Gas Annual Permit (Unit Name: Other / Unit Ministry of Community, N/A
Class: 8 Other) Aboriginal and Women's Services
- ------------------ -------------------------------------------------- -------------------------------- ------------------
SCHEDULE 11.10
ASSIGNMENT AND ASSUMPTION OF SHARE EXCHANGE AGREEMENT
WHEREAS:
Boliden Limited ("BOLIDEN") and Breakwater Resources Ltd. ("BREAKWATER") entered
into a share exchange agreement dated July ___, 2004 ("SHARE EXCHANGE
AGREEMENT") whereby Breakwater agreed to purchase all of the issued and
outstanding shares of Boliden Westmin (Canada) Limited ("BWCL"). As permitted by
Section 11.10 of the Share Exchange Agreement, Breakwater now wishes to assign
its rights and benefits under the Share Exchange Agreement to its wholly-owned
Canadian subsidiary ("SUBCO") in consideration of Subco agreeing to assume
certain of Breakwater's obligations under the Share Exchange Agreement. In
consideration of the premises, covenants and agreements hereinafter set forth,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Breakwater, Subco and Boliden hereby covenant and agree
as follows:
1. DEFINED TERMS. All words and phrases which are defined in the Share
Exchange Agreement shall have the same respective meaning when used in this
Assignment.
2. ASSIGNMENT. From and after the date hereof, Breakwater hereby
irrevocably grants, assigns and sets over unto Subco all of its right, title,
benefit and interest in, under and to the Share Exchange Agreement to have and
to hold with full power to Subco to take all such measures for the enjoyment of
the rights under the Share Exchange Agreement as Breakwater might take.
3. ASSUMPTION. In consideration of the above assignment, Subco expressly
assumes and undertakes to pay, satisfy, discharge, perform and fulfil those
certain obligations and liabilities of Breakwater under the Share Exchange
Agreement as agreed upon by Breakwater and Subco (the "ASSUMED OBLIGATIONS").
4. BREAKWATER OBLIGATIONS. Breakwater and Subco agree that, notwithstanding
the terms of this Assignment, Breakwater will remain jointly and severally
liable with Subco, as principal and not as surety, with respect to all of the
representations, warranties, covenants, indemnities and agreements under the
Share Exchange Agreement that relate to or form part of the Assumed Obligations.
For greater clarity, Breakwater will remain liable as principal covenantor with
respect to all of the representations, warranties, covenants, indemnities and
agreements under the Share Exchange Agreement whether or not they form part of
the Assumed Obligations. Nothing contained in this Assignment should be
construed as a release of Breakwater from the Assumed Obligations under the
Share Exchange Agreement.
5. CORPORATE CHANGES. Until such time as Breakwater and Subco, as the case
may be, fully satisfy their obligations under Section 5.4 of the Share Exchange
Agreement, Subco will remain a wholly owned subsidiary of Breakwater, BWCL will
remain a wholly-owned subsidiary of Subco and the Myra Falls Mine and Discovery
Terminal will be owned or leased, and the Business will be owned and operated,
by a corporation that is, directly or indirectly, a wholly-owned subsidiary of
Breakwater.
6. STATUS OF ORIGINAL AGREEMENT. Each of the parties to this Assignment
agree that the Share Exchange Agreement is in full force and effect, unamended
and unmodified save as amended by this Assignment, and that the Share Exchange
Agreement and this Assignment will henceforth be read together.
7. ASSIGNMENT. None of the parties hereto may assign this Assignment, and
neither Boliden nor Breakwater may further assign the Share Exchange Agreement,
without the prior written consent of the other parties to this Assignment or the
Share Exchange Agreement, as the case may be.
8. AMENDMENTS. No amendment, supplement, restatement or termination of the
whole or any part of this Assignment is binding unless it is in writing and
signed by each of the parties hereto at the time of the amendment, supplement,
restatement or termination.
9. FURTHER ASSURANCES. Breakwater shall and will at all times hereafter, at
the request of Subco or Boliden, as the case may be, execute such further and
other documents and instruments and do such further and other acts and things as
may be necessary to implement and carry out the intent and purpose of this
Assignment.
10. ENUREMENT. This Assignment shall enure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
11. EXECUTION. This Assignment may be executed by the parties and
transmitted by facsimile and if so executed and transmitted, this Assignment
shall be for all purposes as effective as if the parties had delivered an
executed original Agreement.
IN WITNESS WHEREOF the parties have executed this Assignment as of the ____ day
of ___________, 2004.
BREAKWATER RESOURCES LTD. BOLIDEN LIMITED
Per: _______________________ Per: ______________________
Authorized Signatory Authorized Signatory
SUBCO
Per: _______________________
Authorized Signatory