WARRANT INDENTURE Providing for the Issue of Warrants BETWEEN RED MILE ENTERTAINMENT, INC. - and - OLYMPIA TRUST COMPANY Dated as of July 18, 2007
Exhibit
10.21
Providing
for the Issue of Warrants
BETWEEN
RED
MILE ENTERTAINMENT, INC.
-
and
-
OLYMPIA
TRUST COMPANY
Dated
as
of July 18, 2007
TABLE
OF CONTENTS
|
Article 1
INTERPRETATION
|
1
|
|
|
1.1
|
Definitions
|
1
|
|
1.2
|
Gender
and Number
|
5
|
|
1.3
|
Interpretation
not Affected by Headings, etc.
|
5
|
|
1.4
|
Day
not a Business Day
|
5
|
|
1.5
|
Time
of the Essence
|
5
|
|
1.6
|
Currency
|
5
|
|
1.7
|
Applicable
Law
|
5
|
|
Article 2
ISSUE OF WARRANTS
|
5
|
|
|
2.1
|
Creation
and Issue of Warrants
|
5
|
|
2.2
|
Terms
of Warrants
|
5
|
|
2.3
|
Warrantholder
not a Shareholder
|
6
|
|
2.4
|
Warrants
to Rank Pari Passu
|
6
|
|
2.5
|
Form
of Warrants
|
6
|
|
2.6
|
Signing
of Warrant Certificates
|
6
|
|
2.7
|
Certification
by the Trustee
|
6
|
|
2.8
|
Issue
in Substitution for Warrant Certificates Lost, etc.
|
7
|
|
2.9
|
Exchange
of Warrant Certificates
|
7
|
|
2.1
|
Transfer
and Ownership of Warrants
|
7
|
|
2.11
|
Charges
for Exchange or Transfer
|
8
|
|
2.12
|
Cancellation
of Surrendered Warrants
|
8
|
|
2.13
|
Registration
of Warrants
|
8
|
|
Article 3
EXERCISE OF WARRANTS
|
9
|
|
|
3.1
|
Vesting
and Restriction On Exercise
|
9
|
|
3.2
|
Holders
Eligible to Exercise Warrants
|
9
|
|
3.3
|
Method
of Exercise of Warrants
|
9
|
|
3.4
|
Effect
of Exercise of Warrants
|
10
|
|
3.5
|
Fractions
|
10
|
|
3.6
|
Common
Share Certificates
|
11
|
|
3.7
|
Expiration
of Warrants
|
11
|
|
3.8
|
Accounting
and Recording
|
12
|
|
3.9
|
Securities
Restrictions
|
12
|
|
Article 4
ADJUSTMENT OF NUMBER OF COMMON SHARES
|
12
|
|
|
4.1
|
Adjustment
of Number of Common Shares
|
12
|
|
4.2
|
Entitlement
to Shares on Exercise of Warrant
|
14
|
|
4.3
|
No
Adjustment for Certain Transactions
|
14
|
|
4.4
|
Determination
by Corporation's Auditors
|
14
|
|
4.5
|
Proceedings
Prior to any Action Requiring Adjustment
|
14
|
|
4.6
|
Certificate
of Adjustment
|
14
|
|
4.7
|
Notice
of Special Matters
|
15
|
|
4.8
|
No
Action after Notice
|
15
|
|
4.9
|
Other
Action
|
15
|
|
4.10
|
Protection
of Trustee
|
15
|
|
4.11
|
Participation
by Warrantholder
|
16
|
|
Article 5
RIGHTS OF THE CORPORATION AND COVENANTS
|
16
|
|
|
5.1
|
Optional
Purchases by the Corporation
|
16
|
|
5.2
|
General
Covenants
|
16
|
ii
|
5.3
|
Trustee's
Remuneration and Expenses
|
17
|
|
5.4
|
Securities
Qualification Requirements
|
17
|
|
5.5
|
Performance
of Covenants by Trustee
|
17
|
|
5.6
|
Enforceability
of Warrants
|
17
|
|
Article 6
ENFORCEMENT
|
17
|
|
|
6.1
|
Suits
by Warrantholders
|
17
|
|
6.2
|
Limitation
of Liability
|
18
|
|
6.3
|
Waiver
of Default
|
18
|
|
Article 7
MEETINGS OF WARRANTHOLDERS
|
18
|
|
|
7.1
|
Right
to Convene Meetings
|
18
|
|
7.2
|
Notice
|
18
|
|
7.3
|
Chairman
|
19
|
|
7.4
|
Quorum
|
19
|
|
7.5
|
Power
to Adjourn
|
19
|
|
7.6
|
Show
of Hands
|
19
|
|
7.7
|
Poll
and Voting
|
19
|
|
7.8
|
Regulations
|
20
|
|
7.9
|
Corporation,
Agent and Trustee May be Represented
|
21
|
|
7.10
|
Powers
Exercisable by Extraordinary Resolution
|
21
|
|
7.11
|
Meaning
of Extraordinary Resolution
|
22
|
|
7.12
|
Powers
Cumulative
|
22
|
|
7.13
|
Minutes
|
22
|
|
7.14
|
Instruments
in Writing
|
23
|
|
7.15
|
Binding
Effect of Resolutions
|
23
|
|
7.16
|
Holdings
by Corporation Disregarded
|
23
|
|
Article 8
SUPPLEMENTAL INDENTURES
|
23
|
|
|
8.1
|
Provision
for Supplemental Indentures for Certain Purposes
|
23
|
|
8.2
|
Successor
Corporations
|
24
|
|
Article 9
CONCERNING THE TRUSTEE
|
24
|
|
|
9.1
|
Trust
Indenture Legislation
|
24
|
|
9.2
|
Rights
and Duties of Trustee
|
24
|
|
9.3
|
Evidence,
Experts and Advisers
|
25
|
|
9.4
|
Documents,
Monies, etc. Held by Trustee
|
26
|
|
9.5
|
Actions
by Trustee to Protect Interest
|
26
|
|
9.6
|
Trustee
Not Required to Give Security
|
26
|
|
9.7
|
Protection
of Trustee
|
26
|
|
9.8
|
Replacement
of Trustee; Successor by ▇▇▇▇▇▇
|
27
|
|
9.9
|
Conflict
of Interest
|
27
|
|
9.10
|
Acceptance
of Trust
|
28
|
|
9.11
|
Trustee
Not to be Appointed Receiver
|
28
|
|
9.12
|
Trustee
Not Required to Give Notice
|
28
|
|
Article 10
GENERAL
|
28
|
|
|
10.1
|
Notice
to the Corporation and the Trustee
|
28
|
|
10.2
|
Notice
to Warrantholders
|
29
|
|
10.3
|
Ownership
of Warrants
|
29
|
|
10.4
|
Evidence
of Ownership
|
30
|
|
10.5
|
Counterparts
|
30
|
|
10.6
|
Satisfaction
and Discharge of Indenture
|
30
|
iii
|
10.7
|
Provisions
of Indenture and Warrants for the Sole Benefit of Parties and
Warrantholders
|
30
|
|
10.8
|
Common
Shares or Warrants Owned by the Corporation or its Subsidiaries
-
Certificate to be Provided
|
31
|
|
10.9
|
Anti-Money
Laundering
|
31
|
|
10.1
|
Privacy
Laws
|
31
|
|
10.11
|
Third
Party Interests
|
SCHEDULE
"A" Warrant
Certificate
THIS
WARRANT INDENTURE is made as of the 18th day of
July,
2007.
BETWEEN:
RED
MILE ENTERTAINMENT, INC., a corporation incorporated under the laws of
the State of Delaware and having its head office in the State of California
(hereinafter referred to as the "Corporation")
OF
THE
FIRST PART
AND
OLYMPIA
TRUST COMPANY, a trust company existing under the laws of the Province
of Alberta with an office in Calgary in the Province of Alberta (hereinafter
referred to as the "Trustee")
OF
THE
SECOND PART
WHEREAS:
(A) the
Corporation proposes to issue up to 992,000 Warrants pursuant to this Warrant
Indenture, each whole Warrant which shall, subject to adjustment, entitle the
holder thereof at any time following vesting in accordance with Section 2.1
hereof to acquire one Common Share upon the terms and conditions herein set
forth; and
(B) all
acts
and deeds necessary have been done and performed to make the Warrants, when
created and issued as provided in this Indenture, legal, valid and binding
upon
the Corporation with the benefits and subject to the terms of this
Indenture;
NOW
THEREFORE, in consideration of the premises and mutual covenants hereinafter
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Corporation hereby appoints the Trustee
as
trustee to hold the rights, interests and benefits contained herein for and
on
behalf of those persons who from time to time become the holders of Warrants
issued pursuant to this Indenture and the parties hereto agree as
follows:
ARTICLE 1
INTERPRETATION
|
1.1
|
Definitions
|
In
this
Indenture, including the recitals and schedules hereto, and in all indentures
supplemental hereto:
|
(a)
|
"Adjustment
Period" means the period from the date of this Indenture up to
and including the Expiry Time;
|
|
(b)
|
"Agent"
means ▇.▇. ▇▇▇▇▇▇ & Company
Ltd.;
|
|
(c)
|
"Applicable
Legislation" means the provisions of the Business
Corporations Act, R.S.A. 2000, c. B-9, as from time to time
amended, and any statute of Canada or a province thereof, and the
regulations under any such named or other statute, relating to trust
indentures or to the rights, duties and obligations of trustees and
of
corporations under trust indentures, to the extent that such provisions
are at the time in force and applicable to this
Indenture;
|
2
|
(d)
|
"Business
Day" means a day which is not Saturday or Sunday or a legal
holiday in the City of Calgary,
Alberta;
|
|
(e)
|
"Canadian
Selling Jurisdictions" means the Provinces of Alberta, British
Columbia, Saskatchewan, Ontario and Nova
Scotia;
|
|
(f)
|
"Common
Shares" means, subject to Article 4, fully paid and non-assessable
common shares of the Corporation as presently
constituted;
|
|
(g)
|
"Corporation's
Auditors" means a firm of chartered accountants duly appointed as
auditors of the Corporation;
|
|
(h)
|
"Counsel"
means a barrister or solicitor or a firm of barristers and solicitors
retained by the Trustee or retained by the Corporation and acceptable
to
the Trustee;
|
|
(i)
|
"Current
Market Price" of the Common Shares at any date means the simple
average of the closing trading price per share for such shares for
the 20
consecutive Trading Days immediately preceding such date on the OTC
Bulletin Board, or if on such date the Common Shares are not listed
on the
OTC Bulletin Board, on such stock exchange upon which such shares
are
listed (provided that if on any day in such 20 Trading Day period
no
closing price per share is reported by such exchange, the average
of the
reported closing bid and ask price on such exchange shall be deemed
to be
the closing price per share for such day), or, if such shares are
not
listed on any stock exchange, then on such over-the-counter market
as may
be selected for such purpose by the
directors;
|
|
(j)
|
"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
duly
empowered, action by any committee of such
board;
|
|
(k)
|
"Dividends
Paid in the Ordinary Course" means cash dividends declared
payable on the Common Shares in any fiscal year of the Corporation
to the
extent that such cash dividends do not exceed, in the aggregate,
greater
than:
|
|
(i)
|
fifty
(50%) percent of the retained earnings of the Corporation as at the
end of
its immediately preceding fiscal year;
and
|
|
(ii)
|
one
hundred (100%) percent of the aggregate consolidated net income of
the
Corporation, determined before computation of extraordinary items,
for its
immediately preceding fiscal year;
|
|
(l)
|
"Exercise
Date" means, with respect to any Warrant, the date on which
the
Warrant Certificate representing such Warrant is surrendered for
exercise
in accordance with
Section 3.3;
|
|
(m)
|
"Expiry
Date" means the date upon which the
Corporation completes a Liquidity Transaction, or, if no such Liquidity
Transaction is completed within eight months of the Issue Date, means
the
date which is 18 months following the Issue
Date;
|
|
(n)
|
"Expiry
Time" means 4:00 p.m. (MST) on the Expiry
Date;
|
3
|
(o)
|
"extraordinary
resolution" has the meaning set forth in Section 7.11;
|
|
(p)
|
"Issue
Date" means the date upon which the Warrants are
issued;
|
|
(q)
|
"Liquidity
Transaction" means any of:
|
|
|
1.
|
the
Common Shares being listed on the TSX Venture Exchange, the Toronto
Stock
Exchange, or any other exchange (a "Recognized Exchange")
acceptable to the Agent and the Corporation becoming a "reporting
issuer"
(as defined in applicable securities legislation) in at least one
of the
Canadian Selling Jurisdictions;
|
|
|
2.
|
all
of the issued and outstanding Common Shares having been sold, transferred
or exchanged pursuant to an amalgamation, plan of arrangement or
other
business combination, for cash or securities ("Free Trading
Securities") that are listed on a Recognized Exchange and that
are not subject to any restricted period or hold period under applicable
securities laws in Canada (other than in respect of resales by control
persons);
|
|
|
3.
|
the
sale by the Corporation of all or substantially all of its assets
for cash
or Free Trading Securities and the subsequent distribution of all
of such
consideration to all of the Corporation's shareholders (including
the
investors who subscribed for Units), on a pro-rata
basis;
|
|
|
4.
|
the
acceptance of a takeover bid or an issuer bid, made to all holders
of
Common Shares for proceeds consisting of cash or Free Trading Securities,
by holders of Common Shares: (A) who hold not less than 662/3%
of the
outstanding Common Shares; and (B) who hold not less than 662/3%
of the
outstanding Warrants; or
|
|
|
5.
|
any
combination of the events or circumstances described in Subsections
1, 2,
3 or 4 above.
|
|
(r)
|
"person"
means an individual, body corporate, partnership, trust, trustee,
executor, administrator, legal representative or any unincorporated
organization;
|
|
(s)
|
"Privacy
Laws" has the meaning given in Section 10.10;
|
|
(t)
|
"Regulation
S" means Regulation S under the U.S. Securities
Act;
|
|
(u)
|
"Shareholder"
means a holder of record of one or more Common
Shares;
|
|
(v)
|
"Subsidiary
of the Corporation" or "Subsidiary" means any
corporation of which more than fifty (50%) percent of the outstanding
Voting Shares are owned, directly or indirectly, by or for the
Corporation, provided that the ownership of such shares confers the
right
to elect at least a majority of the board of directors of such corporation
and includes any corporation in like relation to a
Subsidiary;
|
|
(w)
|
"successor
corporation" has the meaning set forth in Section 8.2;
|
|
(x)
|
"this
Warrant Indenture", "this Indenture",
"herein", "hereby",
"hereof" and similar expressions mean and refer to this
Indenture and any indenture, deed or instrument supplemental hereto;
and
the expressions "Article", "Section",
"Subsection" and "paragraph" followed by
a number, letter or both mean and refer to the specified article,
section,
Subsection or paragraph of this
Indenture;
|
4
|
(y)
|
"Trading
Day" means, with respect to a stock exchange, a day on which
such
exchange is open for the transaction of business and with respect
to the
over-the-counter market means a day on which the TSX Venture Exchange
is
open for the transaction of
business;
|
|
(z)
|
"Transfer
Agent" means Corporate Stock Transfer, Inc. or such other company
as may from time to time be appointed as transfer agent of the Common
Shares;
|
|
(aa)
|
"Trustee"
means Olympia Trust Company or its successors from time to time in
the
trust hereby created;
|
|
(bb)
|
"United
States" means the United States of America, its territories and
possessions, any state of the United States, and the District of
Columbia;
|
|
(cc)
|
"Units"
means the units, each consisting of one Common Share and 0.2 of one
Warrant, issued by the Corporation to subscribers pursuant to an
agency
agreement dated effective June 22, 2007 between the Corporation and
the
Agent;
|
|
(dd)
|
"U.S.
Securities Act" means the United States Securities Act of
1933, as amended;
|
|
(ee)
|
"Vesting
Date" has the meaning ascribed thereto in Section 3.1
hereof;
|
|
(ff)
|
"Voting
Shares" means shares of the capital stock of any class of any
corporation carrying voting rights under all circumstances, provided
that,
for the purposes of such definition, shares which only carry the
right to
vote conditionally on the happening of an event shall not be considered
Voting Shares, whether or not such event shall have occurred, nor
shall
any shares be deemed to cease to be Voting Shares solely by reason
of a
right to vote accruing to shares of another class or classes by reason
of
the happening of any such event;
|
|
(gg)
|
|
(hh)
|
"Warrant
Certificate" means a certificate, substantially in the form set
forth in Schedule "A" hereto, issued on or after the Issue Date to
evidence Warrants;
|
|
(ii)
|
"Warrantholders",
or "holders" without reference to Common Shares, means
the persons who are registered owners of
Warrants;
|
|
(jj)
|
"Warrantholders'
Request" means an instrument signed in one or more counterparts
by Warrantholders entitled to acquire in the aggregate not less than
25%
of the aggregate number of Common Shares which could be acquired
pursuant
to all Warrants then unexercised and outstanding, requesting the
Trustee
to take some action or proceeding specified
therein;
|
|
(kk)
|
"Warrants"
means the warrants created by and authorized by and issuable under
this
Indenture; and
|
|
(ll)
|
"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 and certificate signed in the name of the Corporation by
its
Chairman, Chief Executive Officer, President, Chief Financial Officer,
Vice-President or Corporate Secretary, and may consist of one or
more
instruments so executed.
|
5
|
1.2
|
Gender
and Number
|
Unless
herein otherwise expressly provided or unless the context otherwise requires,
words importing the singular include the plural and vice versa and words
importing gender include all genders.
|
1.3
|
Interpretation
not Affected by Headings,
etc.
|
The
division of this Indenture into Articles and Sections, the provision of a table
of contents and the insertion of headings are for convenience of reference
only
and shall not affect the construction or interpretation of this
Indenture.
|
1.4
|
Day
not a Business Day
|
In
the
event that any day on or before which any action is required to be taken
hereunder is not a Business Day, then such action shall be required to be taken
at or before the requisite time on the next succeeding day that is a Business
Day.
|
1.5
|
Time
of the Essence
|
Time
shall be of the essence of this Indenture.
|
1.6
|
Currency
|
Except
as
otherwise expressly provided, all dollar amounts herein are expressed in United
States dollars.
|
1.7
|
Applicable
Law
|
This
Indenture and the Warrant Certificates and all documents relating thereto,
which
by common accord have been and will be drafted in English, shall be construed
in
accordance with the laws of the Province of Alberta and the federal laws
applicable therein and shall be treated in all respects as Alberta
contracts. Each of the parties hereto, which shall include the
Warrantholders, irrevocably attorns to the exclusive jurisdiction of the courts
of the Province of Alberta with respect to all matters arising out of this
Indenture and the transactions contemplated herein.
ARTICLE 2
ISSUE
OF WARRANTS
|
2.1
|
Creation
and Issue of Warrants
|
A
maximum
of up to 992,000 Warrants are hereby created and authorized to be issued in
accordance with the terms and conditions hereof. The Warrant
Certificates shall be certified and delivered by the Trustee to such persons
as
the Corporation may direct by written order of the Corporation.
|
2.2
|
Terms
of Warrants
|
|
(a)
|
Subject
to adjustment in accordance with Article 4 and vesting in accordance with
Section 3.1, each whole Warrant shall entitle the holder thereof
to
acquire, upon exercise at any time after the Issue Date and prior
to the
Expiry Time, one (1) Common Share and the Corporation acknowledges
and
agrees that payment of the exercise price for such Warrant has been
previously received as part of, and in connection with, the
Warrantholder's subscription for
Units.
|
6
|
(b)
|
No
fractional Warrants shall be issued or otherwise provided for
hereunder.
|
|
(c)
|
Each
Warrant shall entitle the holder thereof to such other rights and
privileges as are set forth in this
Indenture.
|
|
(d)
|
The
number of Common Shares which may be purchased pursuant to the Warrants
shall be adjusted in the events and in the manner specified in Article 4.
|
|
2.3
|
Warrantholder
not a Shareholder
|
Except
as
may be specifically provided herein, nothing in this Indenture or in the holding
of a Warrant or Warrant Certificate or otherwise, shall, in itself, confer
or be
construed as conferring upon a Warrantholder any right or interest whatsoever
as
a Shareholder or as any other shareholder of the Corporation, 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 and other distributions.
|
2.4
|
Warrants
to Rank Pari Passu
|
All
Warrants shall rank equally and without preference over each other, whatever
may
be the actual date of issue of the Warrant Certificates representing the
Warrants.
|
2.5
|
Form
of Warrants
|
The
Warrant Certificates (including all replacements issued in accordance with
this
Indenture) shall be substantially in the form set out in Schedule "A" hereto,
shall be dated as of the Issue Date, shall bear such distinguishing letters
and
numbers as the Corporation may, with the approval of the Trustee, prescribe,
and
shall be issuable in any denomination excluding fractions.
|
2.6
|
Signing
of Warrant Certificates
|
The
Warrant Certificates shall be signed by any one of the directors or officers
of
the Corporation and may, but need not be, under seal of the Corporation or
a
reproduction thereof. The signatures of any such director or officer
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 director or officer. Notwithstanding
that any person whose manual or facsimile, photocopy or other similar mechanical
means of reproduction signature appears on any Warrant Certificate as a director
or an officer may no longer hold office at the date of such Warrant Certificate
or at the date of certification or delivery thereof, any Warrant Certificate
signed as aforesaid shall, subject to Section 2.7, be valid and binding upon the Corporation and
the
holder thereof shall be entitled to the benefits of this Indenture.
|
2.7
|
Certification
by the Trustee
|
|
(a)
|
No
Warrant Certificate shall be issued or, if issued, shall be valid
for any
purpose or entitle the holder to the benefit hereof until it has
been
certified by manual signature by or on behalf of the Trustee by its
authorized signing officers substantially in the form of the certificate
set out in Schedule "A" hereto, and such certification by the Trustee
upon
any Warrant Certificate shall be conclusive evidence as against the
Corporation that the Warrant Certificate so certified has been duly
issued
hereunder and that the holder is entitled to the benefits
hereof.
|
7
|
(b)
|
The
certification of the Trustee on Warrant Certificates issued hereunder
shall not be construed as a representation or warranty by the Trustee
as
to the validity of this Indenture or the Warrant Certificates (except
the
due certification thereof) or as to the performance by the Corporation
of
its obligations under this Indenture and the Trustee shall in no
respect
be liable or answerable for the use made of the Warrant Certificates
or
any of them or of the consideration therefor except as otherwise
specified
herein.
|
|
2.8
|
Issue
in Substitution for Warrant Certificates Lost,
etc.
|
|
(a)
|
If
any Warrant Certificate becomes mutilated or is lost, destroyed or
stolen,
the Corporation, subject to applicable law, shall issue and thereupon
the
Trustee shall certify and deliver, a new Warrant Certificate of like
tenor
as the one mutilated, lost, destroyed or stolen in exchange for and
in
place of and upon cancellation of such mutilated Warrant Certificate,
or
in lieu of and in substitution for such lost, destroyed or stolen
Warrant
Certificate, and the substituted Warrant Certificate shall be in
a form
approved by the Trustee and the Warrants evidenced thereby shall
be
entitled to the benefits hereof and shall rank equally in accordance
with
its terms with all other Warrants issued or to be issued
hereunder.
|
|
(b)
|
The
applicant for the issue of a new Warrant Certificate pursuant to
this
Section 2.8 shall bear the cost of the
issue thereof and in case of loss, destruction or theft shall, as
a
condition precedent to the issuance thereof, furnish to the Corporation
and to the Trustee such evidence of ownership and of the loss, destruction
or theft of the Warrant Certificate so lost, destroyed or stolen
as shall
be satisfactory to the Corporation and to the Trustee, in their sole
discretion, and such applicant may also be required to furnish an
indemnity or security in amount and form satisfactory to the Corporation
and the Trustee, in their sole discretion, and shall pay the reasonable
charges of the Corporation and the Trustee in connection
therewith.
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|
2.9
|
Exchange
of Warrant Certificates
|
|
(a)
|
Any
one or more Warrant Certificates representing any number of Warrants
may,
upon compliance with the reasonable requirements of the Trustee (including
compliance with applicable securities legislation), be exchanged
for one
or more other Warrant Certificates representing the same aggregate
number
of Warrants as represented by the Warrant Certificate or Warrant
Certificates so exchanged, provided that such other Warrant Certificates
are registered in the name of the beneficial owner (or his nominee)
of the
Warrant Certificates so exchanged.
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|
(b)
|
Warrant
Certificates may be exchanged only at the Warrant Agency or at any
other
place that is designated by the Corporation with the approval of
the
Trustee. Any Warrant Certificate tendered for exchange shall be
cancelled by the Trustee and, after the expiry of any period of retention
prescribed by law, destroyed by the
Trustee.
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|
2.10
|
Transfer
and Ownership of Warrants
|
|
(a)
|
The
Warrants may only be transferred in connection with a transfer of
those
Common Shares which, together with such Warrants to be transferred,
constitute a Unit or Units and further, may only be transferred on
the
register kept by the Trustee at the Warrant Agency, by the holder
or its
legal representative or its attorney duly appointed by an instrument
in
writing in form and execution satisfactory to the Trustee, only upon
surrendering to the Trustee at the Warrant Agency the Warrant Certificates
representing the Warrants to be transferred and upon compliance
with:
|
8
|
(i)
|
the
conditions herein;
|
|
(ii)
|
such
reasonable requirements as the Trustee may prescribe;
and
|
|
(iii)
|
all
applicable securities legislation and requirements of regulatory
authorities;
|
and
such
transfer shall be duly noted in such register by the Trustee. Upon
compliance with such requirements, the Trustee shall issue to the transferee
a
Warrant Certificate representing the Warrants transferred.
|
(b)
|
The
Trustee acknowledges that the Warrants and the Common Shares issuable
upon
exercise thereof have not been registered under the U.S. Securities
Act,
or the securities laws of any state of the United States, and may
not be
transferred in the United States or to a U.S. Person unless the Warrants
and the Common Shares issuable upon exercise thereof have been registered
under the U.S. Securities Act and the securities laws of all applicable
states of the United States or an exemption from such registration
requirements is available.
|
|
(c)
|
Subject
to the provisions of this Indenture and applicable law, the Warrantholder
shall be entitled to the rights and privileges attaching to the Warrants
and the issue of Common Shares by the Corporation upon the exercise
of
Warrants in accordance with the terms and conditions herein contained
shall discharge all responsibilities of the Corporation and the Trustee
with respect to such Warrants and neither the Corporation nor the
Trustee
shall be bound to inquire into the title of any such
holder.
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|
2.11
|
Charges
for Exchange or Transfer
|
A
reasonable charge may be levied in respect of the exchange of any Warrant
Certificate or the issue of a new Warrant Certificate(s) pursuant hereto
provided that the reimbursement of the Trustee or the Corporation for any and
all transfer, stamp or similar taxes or other governmental charges required
to
be paid shall be made by the holder requesting such transfer or exchange as
a
condition precedent to such transfer or exchange.
|
2.12
|
Cancellation
of Surrendered Warrants
|
All
Warrant Certificates surrendered pursuant to Sections 2.8, 2.9, 2.10, 3.3, 3.4
or 3.5 shall be returned to the Trustee for cancellation and, after the expiry
of any period of retention prescribed by law, destroyed by the
Trustee. Upon request by the Corporation, the Trustee shall furnish
to the Corporation a destruction certificate identifying the Warrant
Certificates so destroyed, the number of Warrants evidenced thereby, the number
of Common Shares, if any, issued pursuant to such Warrants and the details
of
any Warrant Certificates issued in substitution or exchange for such Warrant
Certificates destroyed.
|
2.13
|
Registration
of Warrants
|
The
Trustee shall keep at the Warrant Agency: (i) a register of Warrantholders
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, issuances and exchanges in which all transfers, issuances
and exchanges of Warrants have been made and the date and other particulars
of
each transfer, issuance and exchange shall be entered.
9
Branch
registers shall also be kept at such other place or places, if any, as the
Corporation, with the approval of the Trustee, may designate. Such
registers will at all reasonable times be open for inspection by the Corporation
and/or any Warrantholder. The Trustee will from time to time when
requested to do so by the Corporation or any Warrantholder, upon payment of
the
Trustee's reasonable charges, furnish a list of the names and addresses of
Warrantholders showing the number of Warrants held by each such
Warrantholder.
ARTICLE 3
EXERCISE
OF WARRANTS
|
3.1
|
Vesting
and Restriction On
Exercise
|
The
Warrants may not be exercised by any person unless and until the Warrants have
fully vested. The Warrants shall become vested upon the date that is
eight (8) months from the Issue Date in the event that the Corporation has
not
unconditionally completed a Liquidity Transaction on or before such date (the
"Vesting Date"). For greater certainty, in the event
that the Corporation successfully and unconditionally completes a Liquidity
Transaction on or before the date that is eight (8) months from the Issue Date,
the Warrant shall not vest, shall be immediately cancelled, and shall cease
to
represent any interest in, or obligation of, the Corporation upon the date
of
the completion of such Liquidity Transaction.
|
3.2
|
Holders
Eligible to Exercise
Warrants
|
The
Warrants may not be exercised within the United States or by or on behalf of
any
person in the United States, nor will certificates representing Common Shares
be
delivered in the United States or to residents of the United States unless
the
Common Shares issuable upon exercise of the Warrants are registered under the
U.S. Securities Act and the securities laws of all applicable states of the
United States or any exemption from such registration requirements is
available. Any person who exercises a Warrant shall provide to the
Trustee one of the following:
|
(a)
|
written
certification that it was not offered and did not acquire the Warrants
in
the United States, such Warrant is not being exercised within the
United
States or on behalf of, or for the account or benefit of, a person
in the
United States; or
|
|
(b)
|
written
certification that (i) it was the original purchaser in the Corporation’s
private placement of the Units pursuant to which the Warrant was
issued,
(ii) it acquired the Units for its own account for investment purposes
only and (iii) except for the fact that the Warrants are being exercised
by the undersigned in the United States, if applicable, the
representations and warranties made to the Corporation in connection
with
the acquisition of the Units remain true and correct on the date
of such
exercise; or
|
|
(c)
|
a
written opinion of counsel or other evidence satisfactory to the
Corporation to the effect that the issuance of the Common Shares
upon
exercise of the Warrants has been registered under the U.S. Securities
Act
and applicable state securities laws or is exempt from registration
thereunder.
|
|
3.3
|
Method
of Exercise of Warrants
|
|
(a)
|
The
holder of any Warrant may exercise the right conferred on such holder
to
acquire Common Shares by surrendering, after the Vesting Date and
prior to
the Expiry Time, to the Warrant Agency the Warrant Certificate
representing such Warrant, with a duly completed and executed exercise
form.
|
10
A
Warrant
Certificate with the duly completed and executed exercise form referred to
in
this Subsection 3.3(a) shall be deemed to be
surrendered only upon personal delivery thereof or, if sent by mail or other
means of transmission, upon actual receipt thereof at, in each case, the Warrant
Agency.
|
(b)
|
Any
exercise form referred to in Subsection 3.3(a) shall be signed by the Warrantholder
and
shall specify:
|
|
(i)
|
the
person or persons in whose name or names such Common Shares are to
be
issued;
|
|
(ii)
|
the
address or addresses of such persons;
and
|
|
(iii)
|
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 Corporation or the
Warrant Agency on behalf of the Corporation, all applicable transfer or similar
taxes and the Corporation shall not be required to issue or deliver certificates
evidencing Common Shares unless or until such Warrantholder shall have paid
to
the Corporation, or the Warrant Agency on behalf of the Corporation, the amount
of such tax or shall have established to the satisfaction of the Corporation
that such tax has been paid or that no tax is due.
|
(c)
|
In
connection with the exchange of Warrant Certificates and exercise
of
Warrants and compliance with such other terms and conditions hereof
as may
be required, the Corporation has appointed the principal office of
the
Trustee in Calgary, Alberta as the agency at which Warrant Certificates
may be surrendered for exchange or at which Warrants may be exercised
and
the Trustee has accepted such appointment. The Corporation may
from time to time designate alternate or additional places as the
Warrant
Agency and shall give notice to the Trustee of any change of the
Warrant
Agency.
|
|
3.4
|
Effect
of Exercise of Warrants
|
|
(a)
|
Upon
the exercise of Warrants pursuant to Section 3.3 and subject to
Section 3.5, the Common Shares to be issued pursuant to the Warrants
exercised 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
unless the transfer registers of the Transfer Agent shall be closed
on
such date, in which case the Common Shares subscribed for shall be
deemed
to have been issued and such person or persons deemed to have become
the
holder or holders of record of such Common Shares, on the date on
which
such transfer registers are
reopened.
|
|
(b)
|
Within
five (5) Business Days after the Exercise Date with respect to a
Warrant,
the Corporation shall cause to be delivered or mailed to the person
or
persons in whose name or names a Warrant is registered or, if so
specified
in writing by the holder, cause to be delivered to such person or
persons
at the Warrant Agency where the Warrant Certificate was surrendered,
a
certificate or certificates for the appropriate number of Common
Shares
subscribed for.
|
|
3.5
|
Fractions
|
|
(a)
|
Notwithstanding
anything herein contained including any adjustment provided for in
Article
4, the Corporation shall not be required, upon the exercise of any
Warrants, to issue fractions of Common Shares or to distribute
certificates which evidence fractional Common Shares, provided that
all
such fractional interests the holder would otherwise be entitled
to if not
for the foregoing shall be aggregated and, if as a result of such
aggregation the holder would be entitled to one or more whole Common
Shares, the Corporation shall cause such shares to be issued to the
holder.
|
11
|
(b)
|
In
the event of the exercise of Warrants prior to the expiry of the
applicable "restricted period" under applicable securities laws the
Trustee shall cause the Transfer Agent to legend the certificates
representing the Common Shares issued on such exercise with the following
legend:
|
UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE THE DATE THAT IS FOUR (4) MONTHS AND A DAY AFTER
THE
LATER OF [THE ISSUE DATE] AND THE DATE THE CORPORATION BECAME A REPORTING ISSUER
IN ANY PROVINCE OR TERRITORY OF CANADA.
|
3.6
|
Common
Share Certificates
|
Common
Shares issued upon exercise of Warrants to a person who does not provide the
certificate referred to in Subsection 3.2(a)
hereof in connection with the exercise of the Warrants shall bear a legend
in
substantially the following form:
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR STATE SECURITIES
LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT
OF RED MILE ENTERTAINMENT, INC. THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED ONLY (A) TO RED MILE ENTERTAINMENT, INC.,
(B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES IN ACCORDANCE WITH
RULE 144A UNDER THE SECURITIES ACT, OR (D) INSIDE THE UNITED STATES,
PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS AFTER PROVIDING A LEGAL OPINION REASONABLY
SATISFACTORY TO RED MILE ENTERTAINMENT, INC.
For
the
purposes of issuing certificates representing the Common Shares issuable upon
the exercise of the Warrants, the Trustee and the Transfer Agent for the Common
Shares may rely upon the representation and warranty of the Warrantholder made
in the Exercise Form attached to the Warrant certificate for the purpose of
determining whether such person is in the United States.
|
3.7
|
Expiration
of Warrants
|
Immediately
after the Expiry Time, all rights under any Warrant in respect of which the
right of acquisition provided for herein shall not have been exercised shall
cease and terminate and each Warrant shall be void and of no further force
or
effect except to the extent that the Warrantholder has not received in full
all
monies to which it is entitled pursuant to Article 4 hereof or has not received certificates
representing the Common Shares issued upon exercise of Warrants held by it,
in
which instances the Warrantholders' rights hereunder shall continue until it
has
received that to which it is entitled hereunder.
12
|
3.8
|
Accounting
and Recording
|
|
(a)
|
The
Trustee shall promptly account to the Corporation with respect to
Warrants
exercised. Any securities or other instruments, from time to
time received by the Trustee shall be received in trust for, and
shall be
segregated and kept apart by the Trustee, the Warrantholders and
the
Corporation as their interests may
appear.
|
|
(b)
|
The
Trustee shall record the particulars of Warrants exercised, which
particulars shall include the names and addresses of the persons
who
become holders of Common Shares on exercise and the Exercise Date,
in
respect thereof. The Trustee shall provide such particulars in
writing to the Corporation within five Business Days of any request
by the
Corporation therefor.
|
|
(c)
|
The
Trustee will maintain a register of numbers of all Warrant Certificates
outstanding and the number of Warrants represented by each such Warrant
Certificate.
|
|
3.9
|
Securities
Restrictions
|
Notwithstanding
anything herein contained, Common Shares will only be issued pursuant to any
Warrant in compliance with the securities and corporate laws of any applicable
jurisdiction.
ARTICLE 4
ADJUSTMENT
OF NUMBER OF COMMON SHARES
|
4.1
|
Adjustment
of Number of Common Shares
|
The
acquisition rights as they relate to Common Shares, in effect at any date
attaching to the Warrants shall be subject to adjustment from time to time
as
follows:
|
(a)
|
if
and whenever at any time during the Adjustment Period, the Corporation
shall:
|
|
(i)
|
subdivide
or redivide the outstanding Common Shares into a greater number of
Common
Shares;
|
|
(ii)
|
reduce,
combine or consolidate its outstanding Common Shares into a smaller
number
of Common Shares; or
|
|
(iii)
|
issue
Common Shares to the holders of all or substantially all of the
outstanding Common Shares by way of a stock dividend (other than
the issue
of Common Shares to such holders as a Dividend Paid in the Ordinary
Course);
|
the
number of Common Shares subject to the right of purchase under each Warrant
(the
"Exchange Rate") shall be adjusted by multiplying the number of
Common Shares theretofore obtainable on the exercise thereof by a fraction
of
which the numerator shall be the number of Common Shares outstanding on such
effective date or record date after giving effect to the event(s) referred
to in
(i), (ii) or (iii) above and the denominator of which shall be the number of
Common Shares outstanding as of the effective date or record date before giving
effect to the event(s) referred to in (i), (ii) or (iii) above.
13
|
(b)
|
if
and whenever at any time during the Adjustment Period, there is a
reclassification of the Common Shares or a capital reorganization
of the
Corporation other than as described in Subsection 4.1(a) or a consolidation, amalgamation,
arrangement, merger, reorganization of the Corporation with or into
any
other body corporate, trust, partnership or other entity, or a sale
or
conveyance of the property and assets of the Corporation as an entirety
or
substantially as an entirety to any other body corporate, trust,
partnership or other entity, any Warrantholder who has not exercised
its
right of acquisition prior to the effective date of such reclassification,
capital reorganization, consolidation, amalgamation, arrangement,
merger,
reorganization, sale or conveyance, upon the exercise of such right
thereafter, shall be entitled to receive and shall accept, in lieu
of the
number of Common Shares then sought to be acquired by it, the number
of
shares or other securities or property of the Corporation or of the
body
corporate, trust, partnership or other entity resulting from such
merger,
amalgamation or consolidation, or to which such sale or conveyance
may be
made, as the case may be, that such Warrantholder would have been
entitled
to receive on such reclassification, capital reorganization,
consolidation, amalgamation, arrangement or merger, sale or conveyance,
if, on the record date or the effective date thereof, as the case
may be,
the Warrantholder had been the registered holder of the number of
Common
Shares sought to be acquired by it and to which it was entitled to
acquire
upon the exercise of the Warrants. The Corporation, its
successor, or such purchasing body corporate, partnership, trust
or other
entity, as the case may be, shall, prior to or contemporaneously
with any
such reclassification, capital reorganization, consolidation,
amalgamation, arrangement, merger, reorganization, sale or conveyance,
enter into an indenture which shall provide, to the extent possible,
for
the application of the provisions set forth in this Indenture with
respect
to the rights and interests thereafter of the Warrantholders to the
end
that the provisions set forth in this Indenture shall thereafter
correspondingly be made applicable, as nearly as may reasonably be,
with
respect to any shares, other securities or property to which a
Warrantholder is entitled on the exercise of its acquisition rights
thereafter. Any indenture entered into between the Corporation
and the Trustee pursuant to the provisions of this Subsection 4.1(b) shall be a supplemental indenture
entered
into pursuant to the provisions of Article 8 hereof. Any indenture
entered into between the Corporation, any successor to the Corporation
or
such purchasing body corporate, partnership, trust or other entity
and the
Trustee shall provide for adjustments which shall be as nearly equivalent
as may be practicable to the adjustments provided in this Section 4.1 and which shall apply to successive
reclassifications, capital reorganizations, amalgamations, consolidations,
mergers, reorganization, sales or conveyances;
and
|
|
(c)
|
in
any case in which this Section 4.1 shall
require that an adjustment shall become effective immediately after
a
record date for an event referred to herein, the Corporation may
defer,
until the occurrence of such event, issuing to the holder of any
Warrant
exercised after such event the additional Common Shares or other
securities or property issuable upon such exercise by reason of the
adjustment required by such event before giving effect to such adjustment;
provided, however, that the Corporation shall deliver to such holder,
as
soon as reasonably practicable an appropriate instrument evidencing
such
holder's right to receive such additional Common Shares or other
securities or property upon the occurrence of the event requiring
such
adjustment and the right to receive any distributions made on such
additional Common Shares or other securities or property declared
in
favour of holders of record of Common Shares or other securities
or
property on and after the relevant date of exercise or such later
date as
such holder would, but for the provisions of this Subsection 4.1(c), have become the holder of record
of such
additional Common Shares or other securities or property pursuant
to this
Section 4.1;
|
|
(d)
|
after
any adjustment pursuant to this Section 4.1, the term "Common Shares" where used
in this
Indenture shall be interpreted to mean securities of any class or
classes
which, as a result of such adjustment and all prior adjustments pursuant
to this Section 4.1, the Warrantholder
is entitled to receive upon the exercise of his Warrant, and the
number of
Common Shares indicated by any exercise made pursuant to a Warrant
shall
be interpreted to mean the number of Common Shares or other property
or
securities a Warrantholder is entitled to receive, as a result of
such
adjustment and all prior adjustments pursuant to this Section 4.1, upon the full exercise of a
Warrant.
|
14
|
4.2
|
Entitlement
to Shares on Exercise of
Warrant
|
All
shares of any class or other securities which a Warrantholder is at the time
in
question entitled to receive on the exercise of its Warrants, whether or not
as
a result of adjustments made pursuant to this Article 4, shall, for the purposes
of the interpretation of this Indenture, be deemed to be shares which such
Warrantholder is entitled to acquire pursuant to such Warrants.
|
4.3
|
No
Adjustment for Certain
Transactions
|
Notwithstanding
anything in this Article 4, no adjustment shall be made in the acquisition
rights attached to the Warrants if the issue of Common Shares is being made
on
exercise of any Warrants pursuant to this Indenture or in connection with:
(a) any stock option or stock purchase plan in force from time to time for
directors, officers, employees, consultants or other service providers of the
Corporation; (b) the satisfaction of existing instruments issued at the
date hereof including any convertible promissory notes; (c) the conversion
into
Common Shares of any debentures of the Corporation issued pursuant to the trust
indenture dated October 19, 2006 between the Corporation and the Trustee; or
(d)
any further issuances of Common Shares or other issuances of securities of
the
Corporation.
|
4.4
|
Determination
by Corporation's Auditors
|
In
the
event of any question arising with respect to the adjustments provided for
in
this Article 4 such question shall be
conclusively determined by the Corporation's Auditors (or alternate firm of
chartered accountants if, for any reason, the Corporation's Auditors are unable
to act) who shall have access to all necessary records of the Corporation,
and
such determination shall be binding upon the Corporation, the Trustee, all
Warrantholders and all other persons interested therein.
|
4.5
|
Proceedings
Prior to any Action Requiring
Adjustment
|
As
a
condition precedent to the taking of any action which would require an
adjustment in any of the acquisition rights pursuant to any of the Warrants,
including the number of Common Shares which are to be received upon the exercise
thereof, the Corporation shall take any corporate action which may, in the
opinion of Counsel, be necessary in order that the Corporation has unissued
and
reserved in its authorized capital and may validly and legally issue as fully
paid and non-assessable all the shares which the holders of such Warrants are
entitled to receive on the full exercise thereof in accordance with the
provisions hereof.
|
4.6
|
Certificate
of Adjustment
|
The
Corporation shall from time to time immediately after the occurrence of any
event which requires an adjustment or readjustment as provided in this Article
4, deliver a certificate of the Corporation to the Trustee specifying the nature
of the event requiring the same and the amount of the adjustment or readjustment
necessitated thereby and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based, which
certificate and the amount of the adjustment or re-adjustment specified therein
shall be supported by a certificate of the Corporation's Auditors verifying
such
calculation.
15
|
4.7
|
Notice
of Special Matters
|
The
Corporation covenants with the Trustee that, so long as any Warrant remains
outstanding, it will give written notice to the Trustee and to the
Warrantholders of its intention to fix a record date that is prior to the Expiry
Date for the issuance of rights, options or warrants (other than the Warrants)
to all or substantially all the holders of its outstanding Common
Shares. Such notice shall specify the particulars of such event and
the record date for such event, provided that the Corporation shall only be
required to specify in the notice such particulars of the event as shall have
been fixed and determined on the date on which the notice is
given. The notice shall be given in each case not less than
twenty-one (21) days prior to such applicable record date.
|
4.8
|
No
Action after Notice
|
The
Corporation covenants with the Trustee that it will not close its transfer
books
or take any other corporate action which might deprive the holder of a Warrant
of the opportunity to exercise its right of acquisition pursuant thereto during
the period of fourteen (14) days after the giving of the certificate or notices
set forth in Sections 4.6 and 4.7.
|
4.9
|
Other
Action
|
In
case
the Corporation, after the date hereof, shall take any action affecting the
Common Shares other than action described in this Article 4, which in the reasonable opinion of the
directors of the Corporation would materially affect the rights of
Warrantholders, the number of Common Shares which may be acquired upon exercise
of the Warrants shall be adjusted in such manner and at such time, by action
of
the directors, acting reasonably, in their sole discretion as they may determine
to be equitable in the circumstances, provided that no such adjustment will
be
made unless prior approval of any stock exchange on which the Common Shares
are
listed for trading has been obtained, if required. 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 conclusive evidence that the directors have determined that it is
equitable to make no adjustment in the circumstances.
|
4.10
|
Protection
of Trustee
|
Except
as
provided in Section 9.2, the Trustee shall
not:
|
(a)
|
at
any time be under any duty or responsibility to any Warrantholder
to
determine whether any facts exist which may require any adjustment
contemplated by Section 4.1, or with
respect to the nature or extent of any such adjustment when made,
or with
respect to the method employed in making the
same;
|
|
(b)
|
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
the
rights attaching to any Warrant;
|
|
(c)
|
be
responsible for any failure of the Corporation to issue, transfer
or
deliver Common Shares or certificates for the same upon the surrender
of
any Warrants for the purpose of the exercise of such rights or to
comply
with any of the covenants contained in this Article 4;
and
|
|
(d)
|
incur
any liability or be in any way responsible for the consequences of
any
breach on the part of the Corporation of any of the representations,
warranties or covenants herein contained or of any acts of the directors,
officers, employees, agents or servants of the
Corporation.
|
16
|
4.11
|
Participation
by Warrantholder
|
No
adjustments shall be made pursuant to this Article 4 if the Warrantholders are entitled to
participate in any event described in this Article 4 on the same terms, mutatis mutandis, as
if the Warrantholders had exercised their Warrants prior to, or on the effective
date or record date of, such event.
ARTICLE 5
RIGHTS
OF THE CORPORATION AND COVENANTS
|
5.1
|
Optional
Purchases by the
Corporation
|
Subject
to compliance with applicable securities legislation and approval of applicable
regulatory authorities, the Corporation may from time to time purchase by
private contract or otherwise any of the Warrants. Any such purchase
shall be made at the lowest price or prices at which, in the opinion of the
directors, such Warrants are then obtainable, plus reasonable costs of purchase,
and may be made in such manner, from such persons and on such other terms as
the
Corporation, in its sole discretion, may determine. Any Warrant
Certificates representing the Warrants purchased pursuant to this
Section 5.1 shall forthwith be delivered to
and cancelled by the Trustee. No Warrants shall be issued in
replacement thereof.
|
5.2
|
General
Covenants
|
The
Corporation covenants with the Trustee and the Warrantholders that so long
as
any Warrants remain outstanding:
|
(a)
|
it
will reserve and keep available a sufficient number of Common Shares
for
the purpose of enabling it to satisfy its obligations to issue Common
Shares upon the exercise of the
Warrants;
|
|
(b)
|
it
will cause the Common Shares and the certificates representing the
Common
Shares from time to time acquired pursuant to the exercise of the
Warrants
to be duly issued and delivered in accordance with the Warrant
Certificates and the terms hereof;
|
|
(c)
|
all
Common Shares which shall be issued upon exercise of the right to
acquire
provided for herein and in the Warrant Certificates, upon compliance
with
all of the applicable terms and conditions hereof and thereof, shall
be
fully paid and non-assessable;
|
|
(d)
|
it
will use reasonable commercial efforts to maintain its corporate
existence
or, if applicable, the corporate existence of any successor corporation
(as defined in Section 8.2) and carry on
its business in the ordinary course, provided that the foregoing
shall not
prevent or be construed to prevent or impair the Corporation from
completing any merger, arrangement, reorganization, amalgamation,
recapitalization, business combination or other similar
transaction;
|
|
(e)
|
it
will use reasonable commercial efforts to make all requisite filings
under
applicable Canadian securities legislation and stock exchange rules
including those necessary to report the exercise of the right to
acquire
Common Shares pursuant to Warrants, provided that the foregoing shall
not
prevent or be construed to prevent or impair the Corporation from
completing any merger, arrangement, reorganization, amalgamation,
recapitalization, business combination or other similar transaction;
and
|
|
(f)
|
generally,
it will well and truly perform and carry out all of the acts or things
to
be done by it as provided in this
Indenture.
|
17
|
5.3
|
Trustee's
Remuneration and Expenses
|
The
Corporation covenants that it will pay to the Trustee from time to time
reasonable remuneration for its services hereunder and will pay or reimburse
the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in the administration or execution of the trusts
hereby created (including the reasonable compensation and the disbursements
of
its Counsel and all other advisers and assistants not regularly in its employ)
both before any default hereunder and thereafter until all duties of the Trustee
hereunder shall be finally and fully performed, except any such expense,
disbursement or advance as may arise out of or result from the Trustee's
negligence, wilful misconduct or bad faith. The Trustee will not have
any recourse against any monies, securities or other property held by it for
the
benefit of the Warrantholders pursuant to this Indenture for the payment of
its
fee.
|
5.4
|
Securities
Qualification Requirements
|
If,
in
the opinion of Counsel, any instrument (other than a prospectus) is required
to
be filed with, or any permission is required to be obtained from any
governmental authority in Canada or any other step is required under any federal
or provincial law of Canada before any Common Shares which a Warrantholder
is
entitled to acquire pursuant to the exercise of any Warrant may properly and
legally be issued upon due exercise thereof and, after the expiration of any
applicable restricted trading period from the date hereof, traded, without
further formality or restriction, the Corporation covenants that it will take
such required action (other than filing a prospectus).
|
5.5
|
Performance
of Covenants by Trustee
|
If
the
Corporation shall fail to perform any of its covenants contained in this
Indenture, the Trustee may notify the Warrantholders of such failure on the
part
of the Corporation or may itself perform any of the covenants capable of being
performed by it but, subject to Section 9.2,
shall be under no obligation to perform said covenants or to notify the
Warrantholders of such performance by it. All sums expended or
advanced by the Trustee in so doing shall be repayable as provided in
Section 5.3. No such performance,
expenditure or advance by the Trustee shall relieve the Corporation of any
default hereunder or of its continuing obligations under the covenants herein
contained.
|
5.6
|
Enforceability
of Warrants
|
The
Corporation covenants and agrees that it is duly authorized to create and issue
the Warrants to be issued hereunder and that the Warrants, when issued and
countersigned as herein provided, will be valid and enforceable against the
Corporation in accordance with the provisions hereof and the terms hereof and
that, subject to the provisions of this Indenture, the Corporation will cause
the Common Shares from time to time acquired pursuant to the Warrants under
this
Indenture and the certificates representing such Common Shares to be duly issued
and delivered in accordance with the terms of this Indenture.
ARTICLE 6
ENFORCEMENT
|
6.1
|
Suits
by Warrantholders
|
All
or
any of the rights conferred upon any Warrantholder by any of the terms of the
Warrant Certificates or of this Indenture, or of both, may be enforced by the
Warrantholder by appropriate proceedings but without prejudice to the right
which is hereby conferred upon the Trustee to proceed in its own name to enforce
each and all of the provisions herein contained for the benefit of the
Warrantholders. The Warrantholder may enforce such rights whether or not the
Trustee has waived any default pursuant to Section 6.3(c).
18
|
6.2
|
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 any successor corporation or
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.
|
6.3
|
Waiver
of Default
|
Upon
the
happening of any default hereunder:
|
(a)
|
the
Trustee will provide a notice as provided in Section 10.2 to the Warrantholders setting out,
in
reasonable detail, the particulars of such
default;
|
|
(b)
|
the
holders of not less than 51% of the Warrants then outstanding shall
have
power (in addition to the powers exercisable by extraordinary resolution)
by requisition in writing to instruct the Trustee to waive any default
hereunder and the Trustee shall thereupon waive the default upon
such
terms and conditions as shall be prescribed in such requisition;
or
|
|
(c)
|
the
Trustee shall have power to waive any default hereunder upon such
terms
and conditions as the Trustee may deem advisable, if, in the Trustee's
reasonable opinion, the same shall have been cured or adequate provision
made therefor;
|
provided
that no delay or omission of the Trustee or of the Warrantholders to exercise
any right or power accruing upon any default shall impair any such right or
power or shall be construed to be a waiver of any such default or acquiescence
therein and provided further that no act or omission either of the Trustee
or of
the Warrantholders in the premises shall extend to or be taken in any manner
whatsoever to affect any subsequent default hereunder of the rights resulting
therefrom.
ARTICLE 7
MEETINGS
OF WARRANTHOLDERS
|
7.1
|
Right
to Convene Meetings
|
The
Trustee may at any time and from time to time, and shall on receipt of a written
request of the Corporation or of a Warrantholders' Request and upon being
indemnified and funded to its reasonable satisfaction by the Corporation or
by
the Warrantholders signing such Warrantholders' Request against the costs which
may be incurred in connection with the calling and holding of such meeting,
convene a meeting of the Warrantholders. In the event of the Trustee
failing to so convene a meeting within seven (7) Business Days after receipt
of
such written request of the Corporation or such Warrantholders' Request and
the
indemnity and funding given as aforesaid, the Corporation or such
Warrantholders, as the case may be, may convene such meeting. Every
such meeting shall be held in the City of Calgary or at such other place as
may
be approved or determined by the Trustee.
|
7.2
|
Notice
|
19
At
least
twenty-one (21) days' prior written notice of any meeting of Warrantholders
shall be given to the Warrantholders in the manner provided for in
Section 10.2 and a copy of such notice shall
be sent by mail to the Trustee (unless the meeting has been called by the
Trustee) and to the Corporation (unless the meeting has been called by the
Corporation). Such notice shall state the time when and the place
where the meeting is to be held, shall state briefly the general nature of
the
business to be transacted thereat and shall contain such information as is
reasonably necessary to enable the Warrantholders to make a reasoned decision
on
the matter, but it shall not be necessary for any such notice to set out the
terms of any resolution to be proposed or any of the provisions of this Article 7.
|
7.3
|
Chairman
|
An
individual (who need not be a Warrantholder) designated in writing by the
Trustee shall be chairman of the meeting and if no individual is so designated,
or if the individual so designated is not present within fifteen (15) minutes
from the time fixed for the holding of the meeting, the Warrantholders present
in person or by proxy shall choose some individual present to be
chairman.
|
7.4
|
Quorum
|
Subject
to the provisions of Section 7.11, at any
meeting of the Warrantholders a quorum shall consist of Warrantholders present
in person or by proxy and entitled to purchase at least 20% of the aggregate
number of Common Shares which could be acquired pursuant to all the then
outstanding Warrants, provided that at least two persons entitled to vote
thereat are personally present. If a quorum of the Warrantholders
shall not be present within thirty (30) minutes from the time fixed for holding
any meeting, the meeting, if summoned by Warrantholders or on a Warrantholders'
Request, shall be dissolved; but in any other case the meeting shall be
adjourned to the same day in the next week (unless such day is not a Business
Day, in which case it shall be adjourned to the next following Business Day)
at
the same time and place and no notice of the adjournment need be
given. Any business may be brought before or dealt with at an
adjourned meeting which might have been dealt with at the original meeting
in
accordance with the notice calling the same. No business shall be
transacted at any meeting unless a quorum be present at the commencement of
business; provided that at the adjourned meeting the Warrantholders present
in
person or represented by proxy shall form a quorum and may transact the business
for which the meeting was originally convened, notwithstanding that they may
not
be entitled to acquire at least 20% of the aggregate number of Common Shares
which may be acquired pursuant to all then outstanding Warrants.
|
7.5
|
Power
to Adjourn
|
The
chairman of any meeting at which a quorum of the Warrantholders is present
may,
with the consent of the meeting, adjourn any such meeting, and no notice of
such
adjournment need be given except such notice, if any, as the meeting may
prescribe.
|
7.6
|
Show
of Hands
|
Every
question submitted to a meeting shall be decided in the first place by a
majority of the votes given on a show of hands except that votes on an
extraordinary resolution shall be given in the manner hereinafter
provided. At any such meeting, unless a poll is duly demanded as
herein provided, a declaration by the chairman that a resolution has been
carried or carried unanimously or by a particular majority or lost or not
carried by a particular majority shall be conclusive evidence of the
fact.
|
7.7
|
Poll
and Voting
|
On
every
extraordinary resolution, and on any other question submitted to a meeting
and
after a vote by show of hands when demanded by the chairman or by one or more
of
the Warrantholders acting in person or by proxy and entitled to acquire in
the
aggregate at least 5% of the aggregate number of Common Shares which could
be
acquired pursuant to all the Warrants then outstanding, a poll shall be taken
in
such manner as the chairman shall direct. Questions other than those
required to be determined by extraordinary resolution shall be decided by a
majority of the votes cast on the poll.
20
On
a show
of hands, every person who is present and entitled to vote, whether as a
Warrantholder or as proxy for one or more absent Warrantholders, or both, shall
have one vote. On a poll, each Warrantholder present in person or
represented by a proxy duly appointed by instrument in writing shall be entitled
to one vote in respect of each whole Common Share which it is entitled to
acquire pursuant to the Warrant or Warrants then held or represented by
it. 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.
|
7.8
|
Regulations
|
The
Trustee, or the Corporation with the approval of the Trustee, may from time
to
time make and from time to time vary such regulations as it shall think fit
for:
|
(a)
|
the
setting of the record date for a meeting for the purpose of determining
Warrantholders entitled to receive notice of and to vote at the
meeting;
|
|
(b)
|
the
issue of voting certificates by any bank, trust company or other
depositary satisfactory to the Trustee stating that the Warrant
Certificates specified therein have been deposited with it by a named
person and will remain on deposit until after the meeting, which
voting
certificate shall entitle the persons named therein to be present
and vote
at any such meeting and at any adjournment thereof or to appoint
a proxy
or proxies to represent them and vote for them at any such meeting
and at
any adjournment thereof in the same manner and with the same effect
as
though the persons so named in such voting certificates were the
actual
bearers of the Warrant Certificates specified
therein;
|
|
(c)
|
the
deposit of voting certificates and instruments appointing proxies
at such
place and time as the Trustee, the Corporation or the Warrantholders
convening the meeting, as the case may be, may in the notice convening
the
meeting direct;
|
|
(d)
|
the
deposit of voting certificates and 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 or telecopied before the meeting to the Corporation or
to the
Trustee at the place where the same is to be held and for the voting
of
proxies so deposited as though the instruments themselves were produced
at
the meeting;
|
|
(e)
|
the
form of the instrument of proxy;
and
|
|
(f)
|
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, provided that such
regulations are not inconsistent with the other provisions of this
Indenture. Save as such regulations may provide, the only persons who
shall be recognized at any meeting as a Warrantholder, or be entitled to vote
or
be present at the meeting in respect thereof (subject to Section 7.9), shall be Warrantholders or proxies of
Warrantholders.
21
|
7.9
|
Corporation,
Agent and Trustee May be
Represented
|
The
Corporation, Agent and the Trustee, by their respective directors, officers,
and
employees and the Counsel for the Corporation and for the Trustee may attend
any
meeting of the Warrantholders, but, subject to the right of the Agent to vote
Warrants held by them, shall not be entitled to vote thereat.
|
7.10
|
Powers
Exercisable by Extraordinary
Resolution
|
In
addition to all other powers conferred upon them by any other provisions of
this
Indenture or by law, the Warrantholders at a meeting shall, subject to the
provisions of Section 7.11, have the power,
exercisable from time to time by extraordinary resolution:
|
(a)
|
to
agree to any modification, abrogation, alteration, compromise or
arrangement of the rights of Warrantholders or the Trustee in its
capacity
as trustee hereunder (subject to the Trustee's prior consent, acting
reasonably) or on behalf of the Warrantholders against the Corporation
whether such rights arise under this Indenture or the Warrant Certificates
or otherwise;
|
|
(b)
|
to
amend, alter or repeal any extraordinary resolution previously passed
or
sanctioned by the Warrantholders;
|
|
(c)
|
to
direct or to authorize the Trustee, subject to Subsection 9.2(b) hereof, to enforce any of the covenants
on the part of the Corporation contained in this Indenture or the
Warrant
Certificates or to enforce any of the rights of the Warrantholders
in any
manner specified in such extraordinary resolution or to refrain from
enforcing any such covenant or
right;
|
|
(d)
|
to
waive, and to direct the Trustee to waive, any default on the part
of the
Corporation in complying with any provisions of this Indenture or
the
Warrant Certificates either unconditionally or upon any conditions
specified in such extraordinary
resolution;
|
|
(e)
|
to
restrain any Warrantholder from taking or instituting any suit, action
or
proceeding against the Corporation for the enforcement of any of
the
covenants on the part of the Corporation in this Indenture or the
Warrant
Certificates or to enforce any of the rights of the
Warrantholders;
|
|
(f)
|
to
direct any Warrantholder who, as such, has brought any suit, action
or
proceeding to stay or to discontinue or otherwise to deal with the
same
upon payment of the costs, charges and expenses reasonably and properly
incurred by such Warrantholder in connection
therewith;
|
|
(g)
|
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
Trustee to concur in and execute any ancillary or supplemental indenture
embodying the change or omission;
|
|
(h)
|
with
the consent of the Corporation, such consent not to be unreasonably
withheld or delayed, to remove the Trustee or its successor in office
and
to appoint a new trustee or trustees to take the place of the Trustee
so
removed; and
|
|
(i)
|
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.
|
22
|
7.11
|
Meaning
of Extraordinary
Resolution
|
|
(a)
|
The
expression "extraordinary resolution" when used in this Indenture
means,
subject as hereinafter provided in this Section 7.11 and in Section 7.14, a resolution
proposed at a meeting of
Warrantholders duly convened for that purpose and held in accordance
with
the provisions of this Article 7 at
which there are present in person or by proxy Warrantholders entitled
to
acquire at least 20% of the aggregate number of Common Shares which
may be
acquired pursuant to all the then outstanding Warrants and passed
by the
affirmative votes of Warrantholders entitled to acquire not less
than
662/3%
of the
aggregate number of Common Shares which may be acquired pursuant
to all
the then outstanding Warrants represented at the meeting and voted
on the
poll upon such resolution.
|
|
(b)
|
If,
at the meeting at which an extraordinary resolution is to be considered,
Warrantholders entitled to acquire at least 20% of the aggregate
number of
Common Shares which may be acquired pursuant to all the then outstanding
Warrants are not present in person or by proxy within thirty (30)
minutes
after the time appointed for the meeting, then the meeting, if convened
by
Warrantholders or on a Warrantholders' Request, shall be dissolved;
but in
any other case it shall stand adjourned to such day, being not less
than
fifteen (15) or more than sixty (60) days later, and to such place
and
time as may be appointed by the chairman. Not less than ten
(10) days' prior notice shall be given of the time and place of such
adjourned meeting in the manner provided for in Section 10.2. 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 set forth the
purposes for which the meeting was originally called or any other
particulars. At the adjourned meeting the Warrantholders
present in person or by proxy shall form a quorum and may transact
the
business for which the meeting was originally convened and a resolution
proposed at such adjourned meeting and passed by the requisite vote
as
provided in Subsection 7.11(a) shall be
an extraordinary resolution within the meaning of this Indenture
notwithstanding that Warrantholders entitled to acquire at least
20% of
the aggregate number of Common Shares which may be acquired pursuant
to
all the then outstanding Warrants are not present in person or by
proxy at
such adjourned meeting.
|
|
(c)
|
Subject
to Section 7.14, 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.
|
|
7.12
|
Powers
Cumulative
|
Any
one
or more of the powers or any combination of the powers in this Indenture stated
to be exercisable by the Warrantholders by extraordinary resolution or otherwise
may be exercised from time to time and the exercise of any one or more of such
powers or any combination of powers from time to time shall not be deemed to
exhaust the right of the Warrantholders to exercise such power or powers or
combination of powers then or thereafter from time to time.
|
7.13
|
Minutes
|
Minutes
of all resolutions and proceedings at every meeting of Warrantholders shall
be
made and duly entered in books to be provided from time to time for that purpose
by the Trustee at the expense of the Corporation, and any such minutes as
aforesaid, if signed by the chairman or the secretary of the meeting at which
such resolutions were passed or proceedings had shall be prima facie evidence
of
the matters therein stated and, until the contrary is proved, every such meeting
in respect of the proceedings of which minutes shall have been made shall be
deemed to have been duly convened and held, and all resolutions passed thereat
or proceedings taken shall be deemed to have been duly passed and
taken.
23
|
7.14
|
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 7 may also be taken and exercised by
Warrantholders entitled to acquire at least 66 2/3% of the aggregate number
of
Common Shares which may be acquired pursuant to all the then outstanding
Warrants by an instrument in writing signed in one or more counterparts by
such
Warrantholders in person or by attorney duly appointed in writing, and the
expression "extraordinary resolution" when used in this Indenture shall include
an instrument so signed.
|
7.15
|
Binding
Effect of Resolutions
|
Every
resolution and every extraordinary resolution passed in accordance with the
provisions of this Article 7 at a meeting of
Warrantholders shall be binding upon all the Warrantholders, whether present
at
or absent from such meeting, and every instrument in writing signed by
Warrantholders in accordance with Section 7.14
shall be binding upon all the Warrantholders, whether signatories thereto or
not, and each and every Warrantholder and the Trustee (subject to the provisions
for indemnity herein contained) shall be bound to give effect accordingly to
every such resolution and instrument in writing.
|
7.16
|
Holdings
by Corporation Disregarded
|
In
determining whether Warrantholders holding Warrant Certificates evidencing
the
entitlement to acquire the required number of Common Shares are present at
a
meeting of Warrantholders for the purpose of determining a quorum or have
concurred in any consent, waiver, extraordinary resolution, Warrantholders'
Request or other action under this Indenture, Warrants owned legally or
beneficially by the Corporation or any Subsidiary of the Corporation shall
be
disregarded in accordance with the provisions of Section 10.8.
ARTICLE 8
SUPPLEMENTAL
INDENTURES
|
8.1
|
Provision
for Supplemental Indentures for Certain
Purposes
|
From
time
to time the Corporation (when authorized by action of the directors) and the
Trustee may, subject to the provisions hereof, and they shall, when so directed
in accordance with the provisions hereof, 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 any adjustments resulting from the application of the provisions
of
Article 4;
|
|
(b)
|
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
Trustee
prejudicial to the interests of the
Warrantholders;
|
|
(c)
|
giving
effect to any extraordinary resolution passed as provided in Article 7;
|
|
(d)
|
making
such provisions not inconsistent with this Indenture as may be necessary
or desirable with respect to matters or questions arising hereunder
or for
the purpose of obtaining a listing or quotation of the Warrants on
any
stock exchange, provided that such provisions are not, in the opinion
of
the Trustee, prejudicial to the interests of the
Warrantholders;
|
24
|
(e)
|
adding
to or altering the provisions hereof in respect of the transfer of
Warrants, making provision for the exchange of Warrant Certificates,
and
making any modification in the form of the Warrant Certificates which
does
not affect the substance thereof;
|
|
(f)
|
with
the prior approval of the OTC Bulletin Board or such other stock
exchange
upon which the Common Shares of the Corporation are listed and posted
for
trading, if required, modifying any of the provisions of this Indenture,
including relieving the Corporation from any of the obligations,
conditions or restrictions herein contained, provided that such
modification or relief shall be or become operative or effective
only if,
in the opinion of the Trustee, such modification or relief in no
way
prejudices any of the rights of the Warrantholders or of the Trustee,
and
provided further that the Trustee may in its sole discretion decline
to
enter into any such supplemental indenture which in its opinion may
not
afford adequate protection to the Trustee when the same shall become
operative; and
|
|
(g)
|
for
any other purpose not inconsistent with the terms of this Indenture,
including the correction or rectification of any ambiguities, defective
or
inconsistent provisions, errors, mistakes or omissions herein, provided
that in the opinion of the Trustee the rights of the Trustee and
of the
Warrantholders are in no way prejudiced
thereby.
|
|
8.2
|
Successor
Corporations
|
In
the
case of the consolidation, amalgamation, arrangement, merger or transfer of
the
undertaking or assets of the Corporation as an entirety or substantially as
an
entirety to another corporation ("successor corporation"), the
successor corporation resulting from such consolidation, amalgamation,
arrangement, merger or transfer (if not the Corporation) shall expressly assume,
by supplemental indenture satisfactory in form to the Trustee and executed
and
delivered to the Trustee, the due and punctual performance and observance of
each and every covenant and condition of this Indenture to be performed and
observed by the Corporation.
ARTICLE 9
CONCERNING
THE TRUSTEE
|
9.1
|
Trust
Indenture Legislation
|
|
(a)
|
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)
|
The
Corporation and the Trustee agree that each will, at all times in
relation
to this Indenture and any action to be taken hereunder, observe and
comply
with and be entitled to the benefits of Applicable
Legislation.
|
|
9.2
|
Rights
and Duties of Trustee
|
|
(a)
|
In
the exercise of the rights and duties prescribed or conferred by
the terms
of this Indenture, the Trustee shall 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 Trustee from liability for its own negligent
action, its own negligent failure to act, or its own wilful misconduct
or
bad faith or any breach by it of its obligations or duties under
this
Indenture.
|
25
|
(b)
|
The
obligation of the Trustee to commence or continue any act, action
or
proceeding for the purpose of enforcing any rights of the Trustee
or the
Warrantholders hereunder shall be conditional upon the Warrantholders
furnishing, when required by notice by the Trustee, sufficient funds
to
commence or to continue such act, action or proceeding and an indemnity
reasonably satisfactory to the Trustee to protect and to hold harmless
the
Trustee against the costs, charges and expenses and liabilities to
be
incurred thereby and any loss and damage it may suffer by reason
thereof. None of the provisions contained in this Indenture
shall require the Trustee to expend or to risk its own funds or otherwise
to incur financial liability in the performance of any of its duties
or in
the exercise of any of its rights or powers unless indemnified as
aforesaid.
|
|
(c)
|
The
Trustee may, before commencing or at any time during the continuance
of
any such act, action or proceeding, require the Warrantholders, at
whose
instance it is acting to deposit with the Trustee the Warrants held
by
them, for which Warrants the Trustee shall issue
receipts.
|
|
(d)
|
|
9.3
|
Evidence,
Experts and Advisers
|
|
(a)
|
In
addition to the reports, certificates, opinions and other evidence
required by this Indenture, the Corporation shall furnish to the
Trustee
such additional evidence of compliance with any provision hereof,
and in
such form, as may be prescribed by Applicable Legislation or as the
Trustee may reasonably require by written notice to the
Corporation.
|
|
(b)
|
In
the exercise of its rights and duties hereunder, the Trustee may,
if it is
acting in good faith, rely as to the truth of the statements and
the
accuracy of the opinions expressed in statutory declarations, opinions,
reports, written requests, consents, or orders of the Corporation,
certificates of the Corporation or other evidence furnished to the
Trustee
pursuant to a request of the Trustee, provided that such evidence
complies
with Applicable Legislation and that the Trustee complies with Applicable
Legislation and that the Trustee examines the same and determines
that
such evidence complies with the applicable requirements of this
Indenture.
|
|
(c)
|
Whenever
it is provided in this Indenture or under Applicable Legislation
that the
Corporation shall deposit with the Trustee resolutions, certificates,
reports, opinions, requests, orders or other documents, it is intended
that the trust, accuracy and good faith on the effective date thereof
and
the facts and opinions stated in all such documents so deposited
shall, in
each and every such case, be conditions precedent to the right of
the
Corporation to have the Trustee take the action to be based
thereon.
|
|
(d)
|
Proof
of the execution of an instrument in writing, including a Warrantholders'
Request, by any Warrantholder may be made by the certificate of a
notary
public, or other officer with similar powers, that the person signing
such
instrument acknowledged to it the execution thereof, or by an affidavit
of
a witness to such execution or in any other manner which the Trustee
may
consider adequate.
|
|
(e)
|
The
Trustee may employ or retain such Counsel, accountants, appraisers
or
other experts or advisers as it may reasonably require for the purpose
of
discharging its duties hereunder and may pay reasonable remuneration
for
all services so performed by any of them, without taxation of costs
of any
Counsel, and shall not be responsible for any misconduct or negligence
on
the part of any such experts or advisers who have been appointed
with due
care by the Trustee.
|
26
|
(f)
|
The
Trustee may act and rely and shall be protected in acting and relying
in
good faith on the opinion or advice of or information obtained from
any
Counsel, accountant, appraiser, engineer or other expert or adviser,
whether retained or employed by the Corporation or by the Trustee,
in
relation to any matter arising in the administration of the trusts
hereof.
|
|
9.4
|
Documents,
Monies, etc. Held by
Trustee
|
Any
securities, documents of title or other instruments that may at any time be
held
by the Trustee subject to the trusts hereof may be placed in the deposit vaults
of the Trustee or of any Canadian chartered bank listed in Schedule I to the
Bank Act (Canada) or of any trust company registered to do business in
Canada or deposited for safekeeping with any such bank or trust
company. Unless herein otherwise expressly provided, any monies so
held pending the application or withdrawal thereof under any provisions of
this
Indenture upon the written direction of the Corporation shall be or, with the
consent of the Corporation may be: (i) deposited in the name of the Trustee
in any Canadian chartered bank listed in Schedule I to the Bank Act
(Canada) or any trust company registered to do business in Canada at the rate
of
interest (if any) then current on similar deposits; (ii) deposited in the
deposit department of the Trustee; or (iii) invested in treasury bills or
short term interest bearing or discounted obligations issued or guaranteed
by
the Government of Canada or a province thereof, of any Canadian chartered bank
listed in Schedule I of the Bank Act (Canada) or of the Trustee,
provided that the securities shall not have a maturity date of more than sixty
(60) days from the date of such investment. Unless the Corporation
shall be in default hereunder or unless otherwise specifically provided herein,
all interest or other income received by the Trustee in respect of such deposits
and investments shall belong to the Corporation.
|
9.5
|
Actions
by Trustee to Protect
Interest
|
The
Trustee shall have power to institute and to maintain such actions and
proceedings as it may consider necessary or expedient to preserve, protect
or
enforce its interests and the interests of the Warrantholders.
|
9.6
|
Trustee
Not Required to Give
Security
|
The
Trustee shall not be required to give any bond or security in respect of the
execution of the trusts and powers of this Indenture or otherwise in respect
of
the premises.
|
9.7
|
Protection
of Trustee
|
By
way of
supplement to the provisions of any law for the time being relating to trustees
it is expressly declared and agreed as follows:
|
(a)
|
the
Trustee shall not be liable for or by reason of any statements of
fact or
recitals in this Indenture or in the Warrant Certificates (except
the
representation contained in Section 9.9
or in the certificate of the Trustee on the Warrant Certificates)
or be
required to verify the same, but all such statements or recitals
are and
shall be deemed to be made by the
Corporation;
|
|
(b)
|
nothing
herein contained shall impose any obligation on the Trustee to see
to or
to require evidence of the registration or filing (or renewal thereof)
of
this Indenture or any instrument ancillary or supplemental
hereto;
|
|
(c)
|
the
Trustee shall not be bound to give notice to any person or persons
of the
execution hereof;
|
|
(d)
|
the
Trustee shall not incur any liability or responsibility whatever
or be in
any way responsible for the consequence of any breach on the part
of the
Corporation of any of its covenants herein contained or of any acts
of any
directors, officers, employees, agents or servants of the Corporation;
and
|
27
|
(e)
|
the
Corporation hereby indemnifies and agrees to hold harmless the Trustee
from and against any and all liabilities, losses, damages, penalties,
claims, actions, suits, costs, expenses and disbursements, including
reasonable legal fees and disbursements of whatever kind and nature
which
may at any time be imposed on or incurred by or asserted against
the
Trustee, whether groundless or otherwise, arising from or out of
any act,
omission or error of the Trustee made in good faith in the conduct
of its
duties hereunder, provided that the Trustee has met the standard
of care,
diligence and skill provided for in Subsection 9.2(a) and, provided further, that the
Corporation shall not be required to indemnify the Trustee in the
event of
the negligence or wilful misconduct of the Trustee, as provided in
Subsection 9.2(a), and this provision
shall survive the resignation or removal of the Trustee or the termination
or discharge of this Agreement.
|
|
9.8
|
Replacement
of Trustee; Successor by
▇▇▇▇▇▇
|
|
(a)
|
The
Trustee may resign its trust and be discharged from all further duties
and
liabilities hereunder, subject to this Section 9.8, by giving to the Corporation not
less than
90 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
existing Trustee and to appoint a new Trustee. In the event of
the Trustee resigning or being removed as aforesaid or being dissolved,
becoming bankrupt, going into liquidation or otherwise becoming incapable
of acting hereunder, the Corporation shall forthwith appoint a new
trustee
unless a new trustee has already been appointed by the Warrantholders;
failing such appointment by the Corporation, the retiring Trustee
or any
Warrantholder may apply to a justice of the Court of Queen's Bench
of the
Province of Alberta on such notice as such justice may direct, for
the
appointment of a new trustee; but any new trustee so appointed by
the
Corporation or by the Court shall be subject to removal as aforesaid
by
the Warrantholders. Any new trustee appointed under any
provision of this Section 9.8 shall be a
corporation authorized to carry on the business of a trust company
in the
Province of Alberta and, if required by the Applicable Legislation
for any
other provinces, 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
Trustee hereunder.
|
|
(b)
|
Upon
the appointment of a successor trustee, the Corporation shall promptly
notify the Warrantholders thereof in the manner provided for in
Section 10.2.
|
|
(c)
|
Any
Warrant Certificates certified but not delivered by a predecessor
trustee
may be certified by the successor trustee in the name of the predecessor
or successor trustee.
|
|
(d)
|
Any
corporation in to which the Trustee may be merged or consolidated
or
amalgamated, or any corporation resulting therefrom to which the
Trustee
shall be a party, or any corporation succeeding to the trust business
of
the Trustee shall be the successor to the Trustee hereunder without
any
further act on its part or any of the parties hereto, provided that
such
corporation would be eligible for appointment as successor trustee
under
Subsection 9.8(a).
|
|
9.9
|
Conflict
of Interest
|
|
(a)
|
The
Trustee represents to the Corporation that at the time of execution
and
delivery hereof no material conflict of interest exists between its
role
as a trustee hereunder and its role in any other capacity and agrees
that
in the event of a material conflict of interest arising hereafter
it will,
within 90 days after ascertaining that it has 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 9.8(a). Notwithstanding the foregoing
provisions of this Subsection 9.9(a), if
any such material conflict of interest exists or hereafter shall
exist,
the validity and enforceability of this Indenture and the Warrant
Certificates shall not be affected in any manner whatsoever by reason
thereof.
|
28
|
(b)
|
Subject
to Subsection 9.9(a), the 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.
|
|
9.10
|
Acceptance
of Trust
|
The
Trustee hereby accepts the trusts in this Indenture declared and provided for
and agrees to perform the same upon the terms and conditions herein set
forth.
|
9.11
|
Trustee
Not to be Appointed
Receiver
|
The
Trustee and any person related to the Trustee shall not be appointed a receiver,
a receiver and manager or liquidator of all or any part of the assets or
undertaking of the Corporation.
|
9.12
|
Trustee
Not Required to Give
Notice
|
The
Trustee shall not be bound to give any notice or do or take any act, action
or
proceeding by virtue of the powers conferred on it hereby unless and until
it
shall have been required so to do under the terms hereof; nor shall the Trustee
be required to take notice of any default hereunder, unless and until notified
in writing of such default, which notice shall distinctly specify the default
desired to be brought to the attention of the Trustee and in the absence of
any
such notice the Trustee may for all purposes of this Indenture conclusively
assume that no default has been made in the observance or performance of any
of
the representations, warranties, covenants, agreements or conditions contained
herein. Any such notice shall in no way limit any discretion herein
given to the Trustee to determine whether or not the Trustee shall take action
with respect to any default.
ARTICLE 10
GENERAL
|
10.1
|
Notice
to the Corporation and the
Trustee
|
|
(a)
|
Unless
herein otherwise expressly provided, any notice to be given hereunder
to
the Corporation or the Trustee shall be deemed to be validly given
if
delivered, sent by registered letter, postage prepaid or
telecopied:
|
If
to the
Corporation:
Red
Mile
Entertainment, Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief
Financial Officer
Telecopy: (▇▇▇)
▇▇▇-▇▇▇▇
29
If
to the
Trustee:
Olympia
Trust Company
Suite
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇
Calgary,
AB T2G 0P6
Attention: Manager,
Corporate Trust Department
Telecopy: (▇▇▇)
▇▇▇-▇▇▇▇
and
any
such notice delivered in accordance with the foregoing shall be deemed to have
been received on the date of delivery if that date is a Business Day or else
on
the next Business Day or, if mailed, on the fifth Business Day following the
date of the postmark on such notice or, if telecopied, on the next Business
Day
following the date of transmission, provided that its contents are transmitted
and received completely and accurately.
|
(b)
|
The
Corporation or the Trustee, as the case may be, may from time to
time
notify the other in the manner provided in Subsection 10.1(a) 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 Trustee, as the case may be,
for all
purposes of this Indenture.
|
|
(c)
|
If,
by reason of a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, any notice to be given to
the
Trustee or to the Corporation hereunder could reasonably be considered
unlikely to reach its destination, such notice shall be valid and
effective only if it is delivered to the named officer of the party
to
which it is addressed or, if it is delivered to such party at the
appropriate address provided in Subsection 10.1(a), by telecopy or other means of prepaid,
transmitted and recorded
communication.
|
|
10.2
|
Notice
to Warrantholders
|
|
(a)
|
Unless
otherwise provided herein, notice to the Warrantholders under the
provisions of this Indenture shall be valid and effective if delivered
or
sent by telecopy or by ordinary post addressed to such holders at
their
post office addresses appearing on the register hereinbefore mentioned
and
shall be deemed to have been effectively given on the date of delivery
or,
if mailed, on the fifth Business Day following the date of the postmark
on
such notice or, if telecopied, on the next Business Day following
the date
of transmission, provided that its contents are transmitted and received
completely and accurately.
|
|
(b)
|
If,
by reason of a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, any notice to be given to
the
Warrantholders hereunder could reasonably be considered unlikely
to reach
its destination, such notice shall be valid and effective only if
it is
delivered personally to such Warrantholders or if delivered to the
address
for such Warrantholders contained in the register of Warrants maintained
by the Trustee, by telecopy or other means of prepaid transmitted
and
recorded communication.
|
|
10.3
|
Ownership
of Warrants
|
The
Corporation and the Trustee may deem and treat the registered owner of any
Warrants as the absolute owner thereof for all purposes, and the Corporation
and
the Trustee shall not be affected by any notice or knowledge to the contrary
except where the Corporation or the Trustee is required to take notice by
statute or by order of a court of competent jurisdiction. A
Warrantholder shall be entitled to the rights evidenced by its Warrant
Certificate and all persons may act accordingly. The receipt of any
such Warrantholder for the Common Shares which may be acquired pursuant thereto
shall be a good discharge to the Corporation and the Trustee for the same and
neither the Corporation nor the Trustee shall be bound to inquire into the
title
of any such holder except where the Corporation or the Trustee is required
to
take notice by statute or by order of a court of competent
jurisdiction.
30
|
10.4
|
Evidence
of Ownership
|
|
(a)
|
Upon
receipt of a certificate of any bank, trust company or other depositary
satisfactory to the Trustee stating that the Warrants specified therein
have been deposited by a named person with such bank, trust company
or
other depositary and will remain so deposited until the expiry of
the
period specified therein, the Corporation and the Trustee may treat
the
person so named as the owner, and such certificate as sufficient
evidence
of the ownership by such person of such Warrant during such period,
for
the purpose of any requisition, direction, consent, instrument or
other
document to be made, signed or given by the holder of the Warrant
so
deposited.
|
|
(b)
|
The
Corporation and the Trustee may accept as sufficient evidence of
the fact
and date of the signing of any requisition, direction, consent, instrument
or other document by any person (i) the signature of any officer of
any bank, trust company, or other depositary satisfactory to the
Trustee
as witness of such execution, (ii) the certificate of any notary
public or other officer authorized to take acknowledgments of deeds
to be
recorded at the place where such certificate is made that the person
signing acknowledged to him the execution thereof, (iii) a statutory
declaration of a witness of such execution, or (iv) any other
documentation satisfactory to the Corporation and the
Trustee.
|
|
10.5
|
Counterparts
|
This
Indenture may be executed in several counterparts, each of which when so
executed shall be deemed to be an original and such counterparts together shall
constitute one and the same instrument and notwithstanding their date of
execution they shall be deemed to be dated as of the date hereof.
|
10.6
|
Satisfaction
and Discharge of Indenture
|
Upon
the
earlier of:
|
(a)
|
the
date by which there shall have been delivered to the Trustee for
exercise
or destruction all Warrant Certificates theretofore certified hereunder;
or
|
|
(b)
|
the
Expiry Time;
|
and
if
all certificates representing Common Shares required to be issued in compliance
with the provisions hereof have been issued and delivered hereunder or to the
Trustee in accordance with such provisions, this Indenture shall cease to be
of
further effect and the Trustee, on demand of and at the cost and expense of
the
Corporation and upon delivery to the Trustee 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. Notwithstanding the foregoing, the indemnities provided to
the Trustee by the Corporation hereunder shall remain in full force and effect
and survive the termination of this Indenture.
|
10.7
|
Provisions
of Indenture and Warrants for the Sole Benefit of Parties and
Warrantholders
|
Nothing
in this Indenture or in the Warrant Certificates, expressed or implied, shall
give or be construed to give to any person other than the parties hereto and
the
Warrantholders, as the case may be, any legal or equitable right, remedy or
claim under this Indenture, or under any covenant or provision herein or therein
contained, all such covenants and provisions being for the sole benefit of
the
parties hereto and the Warrantholders.
31
|
10.8
|
Common
Shares or Warrants Owned by the Corporation or its Subsidiaries -
Certificate to be Provided
|
For
the
purpose of disregarding any Warrants owned legally or beneficially by the
Corporation or any Subsidiary of the Corporation in Section 7.16, the Corporation shall provide to the Trustee,
from time to time, a certificate of the Corporation setting forth as at the
date
of such certificate:
|
(a)
|
the
names (other than the name of the Corporation) of the registered
holders
of Warrants which, to the knowledge of the Corporation, are owned
by or
held for the account of the Corporation or any Subsidiary of the
Corporation; and
|
|
(b)
|
the
number of Warrants owned legally or beneficially by the Corporation
or any
Subsidiary of the Corporation;
|
and
the
Trustee, in making the computations in Section 7.16, shall be entitled to rely on such certificate
without any additional evidence.
|
10.9
|
Anti-Money
Laundering
|
The
Trustee shall retain the right not to act and shall not be liable for refusing
to act if, due to a lack of information or for any other reason whatsoever,
the
Trustee, in its sole judgement, determines that such act might cause it to
be in
non-compliance with any applicable anti-money laundering or anti-terrorist
legislation, regulation or guideline. Further, should the Trustee, in
its sole judgement, determine at any time that its acting under this Indenture
has resulted in its being in non-compliance with any applicable anti-money
laundering or anti-terrorist legislation, regulation or guideline, then it
shall
have the right to resign on 10 days written notice provided that (i) the
Trustee's written notice shall describe the circumstances of such
non-compliance; and (ii) if such circumstances are rectified to the
Trustee's satisfaction within such 10 day period, then such resignation shall
not be effective.
|
10.10
|
Privacy
Laws
|
The
parties acknowledge that federal and/or provincial legislation that addresses
the protection of individuals' personal information (collectively,
"Privacy Laws") applies to obligations and activities under
this Indenture. Despite any other provision of this Indenture,
neither party shall take or direct any action that would contravene, or cause
the other to contravene, applicable Privacy Laws. The Corporation
shall, prior to transferring or causing to be transferred personal information
to the Trustee, obtain and retain required consents of the relevant individuals
to the collection, use and disclosure of their personal information, or shall
have determined that such consents either have previously been given upon which
the parties can rely or are not required under the Privacy Laws. The
Trustee shall use commercially reasonable efforts to ensure that is services
hereunder comply with Privacy Laws. Specifically, the Trustee agrees:
(a) to have a designated chief privacy officer; (b) to maintain
policies and procedures to protect personal information and to receive and
respond to any privacy complaint or inquire; (c) to use personal
information solely for the purposes of providing its services under or ancillary
to this Agreement and not to use it for any other purpose except with the
consent of or direction from the Corporation or the individual involved;
(d) not to sell or otherwise improperly disclose personal information to
any third party; and (e) to employ administrative, physical and
technological safeguards to reasonably secure and protect personal information
against loss, theft or unauthorized access, use or modification.
32
|
10.11
|
Third
Party Interests
|
Each
party to this Indenture hereby represents to the Trustee that any account to
be
opened by, or interest to held by the Trustee in connection with this Indenture,
for or to the credit of such party, either (i) is not intended to be used
by or on behalf of any third party; or (ii) is intended to be used by or on
behalf of a third party, in which case such party hereto agrees to complete
and
execute forthwith a declaration in the Trustee's prescribed form as to the
particulars of such third party.
THE
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
33
This
is the Signature Page to a Warrant Indenture Dated July 18, 2007 Between the
Parties Indicated Below.
IN
WITNESS WHEREOF the parties hereto have executed this Indenture under the hands
of their proper officers in that behalf.
RED
MILE ENTERTAINMENT, INC.
Per: /s/
▇▇▇
▇▇▇▇▇
OLYMPIA
TRUST COMPANY
Per: /s/
▇▇▇▇▇
▇▇▇▇▇▇▇
Per:
/s/ ▇▇▇▇
▇▇▇▇▇▇▇
THIS
IS
SCHEDULE "A" to the Warrant Indenture made as of July 18, 2007 between RED
MILE
ENTERTAINMENT, INC. and OLYMPIA TRUST COMPANY as Trustee.
THE
WARRANTS REPRESENTED BY THIS CERTIFICATE WILL BE VOID AND OF NO VALUE AS AT
THE
DATE THE CORPORATION COMPLETES A LIQUIDITY TRANSACTION (AS DEFINED IN THE
INDENTURE), OR, IF NO SUCH LIQUIDITY TRANSACTION IS COMPLETED WITHIN 8 MONTHS
OF
THE ISSUE DATE (AS DEFINED IN THE INDENTURE), UNLESS EXERCISED BY 4:00 P.M.
(MOUNTAIN STANDARD TIME) ON THE DATE THAT IS 18 MONTHS FROM THE ISSUE
DATE.
UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE THE DATE THAT IS FOUR (4) MONTHS AND A DAY AFTER
THE
LATER OF JULY 18, 2007 AND THE DATE THE CORPORATION BECAME A REPORTING ISSUER
IN
ANY PROVINCE OR TERRITORY OF CANADA.
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR STATE SECURITIES
LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT
OF RED MILE ENTERTAINMENT, INC. THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED ONLY (A) TO RED MILE ENTERTAINMENT, INC., (B) OUTSIDE
THE
UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 144A UNDER THE
SECURITIES ACT, OR (D) INSIDE THE UNITED STATES, PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS
AFTER
PROVIDING A LEGAL OPINION REASONABLY SATISFACTORY TO RED MILE ENTERTAINMENT,
INC.
THIS
WARRANT AND THE SECURITIES TO BE ISSUED UPON THE EXERCISE THEREOF HAVE NOT
BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 AS AMENDED (THE “1933
SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND THE WARRANTS MAY NOT BE
EXERCISED IN THE UNITED STATES OR BY OR FOR THE ACCOUNT OR BENEFIT OF A PERSON
IN THE UNITED STATES OR A U.S. PERSON (AS DEFINED IN REGULATION S UNDER THE
1933
SECURITIES ACT) WITHOUT REGISTRATION OF SUCH SECURITIES UNDER ALL APPLICABLE
UNITED STATES FEDERAL AND STATE SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE
EXEMPTION THEREFROM AND THE CORPORATION SHALL HAVE RECEIVED AN OPINION OF
COUNSEL TO SUCH EFFECT SATISFACTORY TO IT.
WARRANT
CERTIFICATE
RED
MILE ENTERTAINMENT, INC.
(Incorporated
under the laws of Delaware)
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WARRANT
CERTIFICATE
NO. ________
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_____________
WARRANTS
entitling
the holder to acquire, subject to adjustment, one Common Share for
each
whole Warrant represented hereby
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2
THIS
IS
TO CERTIFY THAT ____________________
(hereinafter
referred to as the "holder") is entitled to acquire, in the
manner and subject to the restrictions and adjustments set forth herein, one
fully paid and non-assessable common share ("Common Share")
without nominal or par value of Red Mile Entertainment, Inc. (the
"Corporation"), as such shares were constituted on July 18,
2007, for no additional consideration to that already received by the
Corporation, at any time and from time to time following the Vesting Date (as
defined in the Warrant Indenture (the "Indenture") made as of
July 18, 2007 between the Corporation and Olympia Trust Company) and until
4:00
p.m. (Mountain Standard Time) on the date that is 18 months from the Issue
Date,
as that term is defined in the Indenture, (the "Expiry
Time").
The
right
to acquire Common Shares may be exercised by the holder within the time set
forth above by:
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(a)
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duly
completing and executing the Exercise Form attached hereto;
and
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(b)
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surrendering
this Warrant Certificate and the Exercise Form to Olympia Trust Company
(the "Trustee") at the principal office of the Trustee in
the city of Calgary, Alberta.
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These
Warrants shall be deemed to be surrendered only upon personal delivery hereof
or, if sent by mail or other means of transmission, upon actual receipt thereof
by the Trustee at the office referred to above.
Upon
surrender of these Warrants, the person or persons in whose name or names the
Common Shares issuable upon exercise of the Warrants are to be issued shall
be
deemed for all purposes (except as provided in the Indenture hereinafter
referred to) to be the holder or holders of record of such Common Shares and
the
Corporation has covenanted that it will (subject to the provisions of the
Indenture) cause a certificate or certificates representing such Common Shares
to be delivered or mailed to the person or persons at the address or addresses
specified in the Exercise Form within five Business Days of the receipt of
this
Warrant Certificate, and the Exercise Form duly completed.
No
fractional Common Share will be issued upon exercise of any Warrants and the
Corporation shall not make any payment to the holder in respect thereof,
provided that all such fractional interests the holder would otherwise be
entitled to if not for the foregoing shall be aggregated and, if as a result
of
such aggregation the holder would be entitled to one or more whole Common
Shares, the Corporation shall cause such shares to be issued to the
holder.
The
Common Shares issuable upon the exercise hereof have not been registered under
the U.S. Securities Act and these Warrants may not be exercised within the
United States or by or on behalf of any person in the United States, nor will
certificates representing Common Shares be delivered in the United States unless
the Common Shares are registered under the U.S. Securities Act and the
securities laws of all applicable states of the United States or any exemption
from such registration requirements is available. Any person who
exercises Warrants shall provide to the Trustee either:
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(i)
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written
certification that it was not offered and did not acquire the Warrants
in
the United States, such Warrant is not being exercised within the
United
States or on behalf of, or for the account or benefit of, a person
in the
United States; or
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(ii)
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written
certification that (i) it was the original purchaser in the Corporation's
private placement of the Units pursuant to which the Warrant was
issued,
(ii) it acquired the Units for its own account for investment purposes
only, and (iii) except for the fact that the Warrants are being exercised
by the undersigned in the United States, if applicable, the
representations and warranties made to the Corporation in connection
with
the acquisition of the Units remains true and correct on the date
of such
exercise; or
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3
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(iii)
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a
written opinion of counsel or other evidence satisfactory to the
Corporation, acting reasonably, to the effect that the issuance of
the
Common Shares and Warrants have been registered under the U.S. Securities
Act and applicable state securities laws or is exempt from registration
thereunder.
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The
Warrants represented by this certificate are issued under and pursuant to the
Indenture. Reference is made to the Indenture and any
instruments supplemental thereto for a full description of the rights of the
holders of the Warrants and the terms and conditions upon which the Warrants
are, or are to be, issued and held, with the same effect as if the provisions
of
the Indenture and all instruments supplemental thereto were herein set
forth. By acceptance hereof, the holder assents to all
provisions of the Indenture. In the event of a conflict between the
provisions of this Warrant Certificate and the Indenture, the provisions of
the
Indenture shall govern. Capitalized terms used in the Indenture have
the meaning herein as therein, unless otherwise defined.
The
Indenture provides that on subdivision, consolidation or reclassification of
the
Common Shares, the number of Common Shares issuable on the exercise of the
Warrants will be adjusted proportionately, and that in the event of any
reclassification or change of the Common Shares or consolidation, amalgamation
or merger of the Corporation or any transfer of its undertaking or assets as
an
entirety or substantially as an entirety, a holder shall be entitled to receive
the kind and amount of shares and other securities or property which he would
have been entitled to receive as a result of such event if, on the effective
date thereof, he had been the registered owner of the number of Common Shares
to
which he was theretofore entitled upon exercise.
The
registered holder of this Warrant Certificate may, at any time following the
Vesting Date and prior to the Expiry Time, upon surrender hereof to the Trustee
at its principal office in the city of Calgary, Alberta, exchange this Warrant
Certificate for other Warrant Certificates entitling the holder to acquire,
in
the aggregate, the same number of Common Shares as may be acquired under this
Warrant Certificate.
The
holding of the Warrants evidenced by this Warrant Certificate shall not
constitute the holder hereof a shareholder of the Corporation or entitle the
holder to any right or interest in respect thereof except as expressly provided
in the Indenture and in this Warrant Certificate.
The
Indenture provides that all holders of Warrants shall be bound by any resolution
passed at a meeting of the holders held in accordance with the provisions of
the
Indenture and resolutions signed by the holders of Warrants entitled to acquire
a specified majority of the Common Shares which may be acquired pursuant to
all
then outstanding Warrants.
The
Warrants evidenced by this Warrant Certificate may only be transferred in
connection with the transfer of the Common Shares which, together with the
Warrants evidenced by this Warrant Certificate, constitute Units, as defined
in
the Indenture. In addition, the Warrants evidenced by this Warrant Certificate
may only be transferred on the register kept at the offices of the Trustee
by
the registered holder hereof or its legal representatives or its attorney duly
appointed by an instrument in writing in form and execution satisfactory to
the
Trustee, upon compliance with the conditions prescribed in the Indenture and
upon compliance with such reasonable requirements as the Trustee may
prescribe.
4
This
Warrant Certificate shall not be valid for any purpose whatever unless and
until
it has been certified by or on behalf of the Trustee.
Time
shall be of the essence hereof.
IN
WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be signed
by its duly authorized officer as of __________,
2007.
RED
MILE ENTERTAINMENT, INC.
Per: ____________________________
Certified
by:
OLYMPIA
TRUST COMPANY
By: ____________________________________
5
EXERCISE
FORM
TO: Red
Mile Entertainment, Inc.
Olympia
Trust Company
The
undersigned hereby exercises the right to acquire Common Shares of Red Mile
Entertainment, Inc. (the "Corporation") as constituted on July
18, 2007 (or such number of other securities or property to which such Warrants
entitle the undersigned in lieu thereof or in addition thereto under the
provisions of the Indenture referred to in the accompanying Warrant Certificate)
in accordance with and subject to the provisions of such Indenture.
The
Common Shares (or other securities or property) are to be issued as
follows:
Name:
(print clearly)
(print clearly)
Address
in full:
Number
of
Common Shares:
Note: If
further nominees intended, please attach (and initial) schedule giving these
particulars.
No
certificates will be registered or delivered to an address in the United States
unless Box B below is checked.
The
undersigned certifies that each of the representations and warranties made
by
the undersigned to the Corporation is connection with the undersigned's
acquisition of the Warrants remains true and correct and correct on the date
hereof.
The
undersigned represents that: [check one only]
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¨
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A
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it
is not in the United States as defined in Rule 902 of Regulation
S under
the United States Securities Act of 1933, as amended (the "1933
Act"), was not offered and did not acquire the Warrants in
the
United States, and is not exercising the Warrant for the account
or
benefit of a person in the United
States.
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¨
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B
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(i)
it was the original purchaser in the Corporation’s private placement of
the Units pursuant to which the Warrant was issued, (ii) it acquired
the
Units for its own account for investment purposes only, and (iii)
except
for the fact that the Warrants are being exercised by the undersigned
in
the United States, if applicable, the representations and warranties
made
to the Corporation in connection with the acquisition of the Units
remain
true and correct on the date of this Exercise
Form.
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¨
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C
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enclosed
herewith is an opinion of counsel to the effect that an exemption
from
registration under the 1933 Act and applicable state securities laws
is
available in connection with the exercise of the Warrants. The
undersigned understands such opinion must be reasonably acceptable
to the
Corporation, and that the exercise of the Warrants in the United
States or
by or for the account or benefit of a person in the United States
is
limited by the terms of the Warrants and the Warrant
Indenture.
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6
Certificates
representing Warrants issued to a subscriber who does not check Box A will
bear
legends restricting transfer as set forth in the Warrant Indenture.
DATED
this ____ day of __________, ________.
____________________________
____________________________________
Signature
Guaranteed (Signature
of Warrantholder)
___________________________________________
Print
full name
___________________________________________
___________________________________________
Print
full address
Instructions:
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1.
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The
registered holder may exercise its right to receive Common Shares
by
completing this form and surrendering this form and the Warrant
Certificate representing the Warrants being exercised to Olympia
Trust
Company at its principal office at ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇. Certificates for Common Shares will
be delivered or mailed within five (5) business days after the exercise
of
the Warrants.
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2.
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If
the Exercise Form indicates that Common Shares are to be issued to
a
person or persons other than the registered holder of the Certificate,
the
signature of such holder on the Exercise Form must be guaranteed
by an
authorized officer of a Canadian chartered bank, Canadian trust company
or
member of an acceptable Medallion Guarantee Program. The
guarantor must affix a stamp bearing the actual words "Signature
Guaranteed". Please note signature guarantees are not accepted
from Treasury Branches or Credit Unions unless they are members of
the
Stamp Medallion Program. Please note that in the United States,
signature guarantees must be done by members of the Medallion Signature
Guarantee Program only.
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3.
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If
the Exercise Form is signed by a trustee, executor, administrator,
curator, guardian, attorney, officer of a corporation or any person
acting
in a fiduciary or representative capacity, the certificate must be
accompanied by evidence of authority to sign satisfactory to the
Trustee
and the Corporation.
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4.
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If
the registered holder exercises its right to receive Common Shares
prior
to the expiry of the "restricted period", the Common Shares will
be
subject to a restricted period and may be issued with a legend reflecting
such restricted period.
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7
TRANSFER
OF WARRANTS
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers to
___________________________________ [name of Transferee], _________________
[number of Warrants] Warrants of Red Mile Entertainment, Inc. (the
"Corporation") registered in the name of the undersigned on the records of
Olympia Trust Company represented by the Warrant Certificate attached and
irrevocably appoints Olympia Trust Company the attorney of the undersigned
to
transfer the said securities on the books or register with full power of
substitution. The undersigned further represents and warrants that
the Warrants to be transferred by this instrument are being transferred
concurrently with common shares of the Corporation, originally acquired by
private placement from the Corporation on the date of the issuance of
the Warrants, with each such common share and 0.2 of a Warrant constituting
a
"Unit".
DATED
the
_____ day of __________, ______.
_______________________________ __________________________________
Signature
Guaranteed (Signature
of Warrantholder)
Instructions:
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1.
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Signature
of the Warrantholder must be the signature of the person appearing
on the
face of this Warrant Certificate.
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2.
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If
the Transfer Form is signed by a trustee, executor, administrator,
curator, guardian, attorney, officer of a corporation or any person
acting
in a fiduciary or representative capacity, the certificate must be
accompanied by evidence of authority to sign satisfactory to the
Trustee
and the Corporation.
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3.
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The
signature on the Transfer Form must be guaranteed by an authorized
officer
of a Canadian chartered bank, Canadian trust company, or member of
an
acceptable Medallion Guarantee Program. The guarantor must
affix a stamp bearing the actual words "Signature
Guaranteed". Please note signature guarantees are not accepted
from Treasury Branches or Credit Unions unless they are members of
the
Stamp Medallion Program. Please note that in the United States,
signature guarantees must be done by members of the Medallion Signature
Guarantee Program only.
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Warrants
shall only be transferable in accordance with applicable securities
and
other laws and together with such number of common shares as to constitute
a transfer of Units.
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