SHARE PURCHASE WARRANT AGREEMENT
THIS SHARE PURCHASE WARRANT AGREEMENT is dated as of April 27, 2000
BETWEEN:
▇▇▇▇▇▇.▇▇, INC., a body corporate incorporated in the State of Nevada,
having an office at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇,
(the "Company");
A N D:
PACIFIC CORPORATE TRUST COMPANY, a Canadian trust company incorporated
under the laws of British Columbia, located at ▇▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇,
(the "Trustee");
WHEREAS:
A. Pursuant to the Agency Agreement (hereinafter defined), and in
accordance with the provisions of the Special Warrant Agreement
(hereinafter defined), the Company proposes to issue, upon the exercise
or deemed exercise of the Special Warrants (hereinafter defined), share
purchase warrants ("Unit Warrants") each exercisable by the holder on
the terms set out in this Agreement into securities of the Company as
described in this Agreement;
B. All acts and deeds necessary have been done and performed to make
the Unit Warrants, when issued as provided in this Agreement, legal,
valid and binding upon the Company with the benefits and subject to the
terms of this Agreement; and
C. The foregoing recitals are made as representations and statements
of fact by the Company and not by the Trustee;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
mutual covenants herein, the parties agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement, unless otherwise specified:
(a) "Agency Agreement" means the agency agreement dated as of April
10, 2000, between the Company and the Agent relating to the offering of
Special Warrants;
(b) "Agent" means Groome ▇▇▇▇▇▇▇.▇▇▇ Inc.;
(c) "Applicable Legislation" means the provisions of the Company Act
(British Columbia) as from time to time amended, and any statute of
Canada or its provinces and the regulations under those statutes
relating to trust agreements or the rights, duties or obligations of
corporations and trustees under trust agreements as are from time to
time in force and applicable to this Agreement;
(d) "Applicable Securities Laws" means, collectively, the applicable
securities laws of the Qualifying Provinces, the regulations, rules,
rulings and orders made thereunder, the applicable policy statements
issued by the Commissions and the securities legislation and policies of
each other relevant jurisdiction in Canada, US Securities Laws and the
applicable rules, regulations and policies of the Exchange;
(e) "business day" means a day that is not a Saturday, Sunday, or
civic or statutory holiday in British Columbia;
(f) "Closing" means the closing of the Private Placement;
(g) "Closing Date" means April 27, 2000, or such other day as may be
mutually agreed upon between the Company and the Agent;
(h) "Commissions" means the Alberta Securities Commission, the British
Columbia Securities Commission, the Ontario Securities Commission, and
the Commission de valeurs mobilie du Quebec (Quebec Securities
Commission);
(i) "Common Shares" means fully paid and non-assessable common shares
with a par value of $0.001 per share in the capital of the Company;
provided that if the exercise rights are subsequently adjusted or
altered pursuant to section 7.7 or 7.8, "Common Shares" will thereafter
mean the shares or other securities or property that a Warrantholder is
entitled to on an exchange after the adjustment;
(j) "Company's auditors" means such firm of chartered accountants as
may be duly appointed as the auditors of the Company.
(k) "Convertible Security" means a security of the Company (other than
the Special Warrants or Unit Warrants) convertible into or exchangeable
for or otherwise carrying the right to acquire Common Shares;
(l) "Current Market Price" at any date means the average of the
closing prices of the Common Shares at which the Common Shares have
traded on the Exchange, or, if the Common Shares in respect of which a
determination of current market price is being made are not listed on
the Exchange, on such stock exchange on which such shares are listed as
may be selected for such purpose by the directors and approved by the
Trustee, or, if the Common Shares are not listed on any stock exchange,
then on the over-the-counter market, during the 20 consecutive trading
days (on each of which at least 500 Common Shares are traded in board
lots) ending on the third trading day prior to such date, and the
weighted average price will be determined by dividing the aggregate sale
price of all Common Shares sold in board lots on the exchange or market,
as the case may be, during the 20 consecutive trading days by the number
of Common Shares sold, or in the event that at any date the Common
Shares are not listed on any exchange or on the over-the-counter market,
the current market price shall be as determined by the directors and
approved by the Trustee;
(m) "director" means a director of the Company for the time being, and
unless otherwise specified herein, "by the directors" means action by
the directors of the Company as a board or, whenever duly empowered,
action by any committee of such board;
(n) "Dividends Paid in the Ordinary Course" means dividends paid in
any financial year of the Company, whether in (i) cash, (ii) shares of
the Company, (iii) warrants or similar rights to purchase any shares of
the Company or property or other assets purchasable as of the date of
distribution of such warrants or similar rights, or (iv) property or
other assets of the Company, as the case may be, as determined by action
by the directors except that, in the case of warrants or similar rights
to purchase Common Shares or securities convertible into or exchangeable
for Common Shares, such fair market value of the warrants or similar
rights shall be equal to the number of Common Shares which may be
purchased thereby (or the number of Common Shares issuable upon
conversion or exchange) as of the date of distribution of such warrants
or similar rights, multiplied by the Current Market Price of the Common
Shares on the date of such distribution, provided that the value of
such dividends does not in such financial year exceed the greater of:
(i) the lesser of 50% of the retaining earnings of the Company as
at the end of the immediately preceding financial year and 200% of the
aggregate amount of dividends paid by the Company on the Common Shares
in the 12 month period ending immediately prior to the first day of such
financial year; and
(ii) 100% of the consolidated net earnings from continuing
operations of the Company, before any extraordinary items, for the 12
month period ending immediately prior to the first day of such financial
year (such consolidated net earnings from continuing operations to be
computed in accordance with generally accepted accounting principles in
Canada consistent with those applied in the preparation of the most
recent audited financial statements of the Company);
(o) "Effective Date" means the date of this Warrant Agreement;
(p) "Exchange" means the Over the Counter Bulletin Board in the United
States;
(q) "Exchange Number" means the number of Warrant Shares to be
received by a Holder upon exercise of the Unit Warrants, as may be
adjusted under the provisions of this Agreement;
(r) "Exercise Period" means the period during which a Unit Warrant may
be exercised, commencing on the date of issuance of the Unit Warrant and
ending at 4:30 p.m. (Toronto time) on the day which is 24 months from
the Closing Date;
(s) "person" means an individual, a corporation, a partnership, trust,
trustee, executor, administrator, legal representative or any
unincorporated organization and words importing persons have a similar
meaning;
(t) "Private Placement" means the offering of the Special Warrants
pursuant to the Agency Agreement;
(u) "Qualifying Provinces" means the Provinces of Alberta, British
Columbia, Ontario and Quebec;
(v) "Regulatory Authorities" means the Exchange and the Commissions;
(w) "SEC" means the United States Securities and Exchange
Commission;
(x) "shareholder" means a holder of record or one or more Common
Shares;
(y) "Special Resolution" has the meaning given in sections 10.12 and
10.15;
(z) "Special Warrants" means the special warrants authorized to be
created by the Company and issued and certified under the Special
Warrant Agreement entitling the holder to acquire one Unit;
(aa) "Special Warrant Agreement" means the special warrant agreement,
dated for reference April 27, 2000, entered into between the Company and
the Trustee governing the Special Warrants;
(ab) "trading day" with respect to a stock exchange means a day on
which the stock exchange is open for business;
(ac) "Trustee" means Pacific Corporate Trust Company, or any lawful
successor thereto including through the operation of section 12.8;
(ad) "Unit" means a unit of the Company issuable, for no additional
consideration, upon the exercise or deemed exercise of the Special
Warrants, each consisting of one Unit Share and one-half of one Unit
Warrant, subject to adjustment as provided under Article 7;
(ae) "Unit Warrants" means the share purchase warrants of the Company
to be issued as part of the Units upon the exercise or deemed exercise
of the Special Warrants, with each whole Unit Warrant entitling the
holder to purchase one additional Common Share, at a price of US$5.00
per Common Share, at any time up to 5:00 p.m. (Toronto time) on the day
which is 24 months from the Closing Date;
(af) "U.S. Securities Laws" means, collectively, all applicable federal
and state laws in the United States, including all "Blue Sky" laws, and
all regulations and forms prescribed thereunder, together with all
applicable published policy statements, releases, and rulings of the SEC
and any applicable state securities regulatory authorities;
(ag) "Warrant Certificates" means the certificates evidencing the Unit
Warrants, substantially in the form attached as Schedule "A" to this
Agreement, or such other form as may be approved under section 2.4;
(ah) "Warrant Exercise Date" with respect to any Unit Warrant means the
date of exercise of the Unit Warrants pursuant to section 6.3;
(ai) "Warrant Share" means a Common Share issuable upon the exercise of
one Unit Warrant, subject to adjustment as provided in Article 7;
(aj) "Warrant Share Certificates" means the certificates evidencing the
Warrant Shares;
(ak) "Warrant Share Purchase Price" means US$5.00 per Warrant Share;
(al) "Warrantholders" or "Holders" means the registered holders of Unit
Warrants for the time being;
(am) "Warrantholders' Request" means an instrument signed in one or
more counterparts by Warrantholders holding, in the aggregate, not less
than 25% of the aggregate number of Unit Warrants then outstanding,
requesting the Trustee to take some action or proceeding specified
therein; and
(an) "written request of the Company" and "certificate of the Company"
mean respectively a written request and certificate signed in the name
of the Company by any one director or officer and may consist of one or
more instruments so executed.
1.2 Interpretation
For the purposes of this Agreement and unless otherwise provided or
unless the context otherwise requires:
(a) "this Agreement", "this Warrant Agreement", "herein", "hereby" and
similar expressions mean or refer to this Warrant Agreement and any
agreement, deed or instrument supplemental or ancillary hereto; and the
expressions "Article", "section" or "subsection" followed by a number or
letter mean and refer to the specified Article, section or subsection of
this Agreement;
(b) words importing the singular include the plural and vice versa and
words importing the masculine gender include the feminine and neuter
genders;
(c) the division of this Agreement into Articles, sections,
subsections and paragraphs, the provision of a table of contents and the
insertion of headings are for convenience of reference only and will not
affect the construction or interpretation of this Agreement;
(d) the word "including", when following any general statement, term
or matter, is not to be construed to limit such general statement, term
or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not
non-limiting language (such as "without limitation" or "but not limited
to" or words of similar import) is used with reference thereto but
rather refers to all other items or matters that could reasonably fall
within the broadest possible scope of such general statement, term or
matter;
(e) any reference to a statute includes and, unless otherwise
specified herein, is a reference to such statute and to the regulations
made pursuant thereto, with all amendments made thereto and in force
from time to time, and to any statute or regulations that may be passed
which has the effect of supplementing or superseding such statute or
such regulation;
(f) any capitalized term in this Agreement which is not defined in
section 1.1 will have the meanings ascribed elsewhere in this Agreement;
and
(g) in the event that any day on which the Exercise Period expires or
on or before which any action is required to be taken hereunder is not a
business day, then the Exercise Period will expire on or the action will
be required to be taken on or before the next succeeding day that is a
business day.
1.3 Schedule
The schedule attached to this Agreement is incorporated herein by
reference.
1.4 Time of the Essence
Time is of the essence in this Agreement.
1.5 Applicable Law
This Agreement and the Warrant Certificates will be construed and
enforced in accordance with the laws of the Province of British Columbia
and the laws of Canada applicable therein, and will be treated in all
respects as British Columbia contracts.
1.6 Currency
Except as otherwise stated, all dollar amounts herein are expressed in
U.S. dollars.
ARTICLE 2
ISSUE OF UNIT WARRANTS
2.1 Issue of Unit Warrants
A total of up to <> whole Unit Warrants, each of which entitles the
holder to acquire one Common Share, at a price of US$5.00 each, are
hereby created and authorized to be issued. Subject to section 2.2 and
Articles 5 and 6, upon receipt by the Company of notice of exercise or
deemed exercise of the Special Warrants in accordance with the
provisions of the Special Warrant Agreement, the Company will execute
and the Trustee will certify up to <> Unit Warrants. Notwithstanding
the foregoing, if the penalty provisions of Article 8 of the Special
Warrant Agreement are effected, then the number of whole Unit Warrants
referred to in this section 2.1 shall be deemed to be <> (rather than
<>).
2.2 Terms of Unit Warrants
Subject to the provisions of Articles 5 and 6, each whole Unit Warrant
will entitle the holder thereof, upon exercise at any time during the
Exercise Period and payment to the Issuer of the Warrant Share Purchase
Price by way of certified cheque or bank draft, to be issued, subject to
adjustment in accordance with Article 7, one Warrant Share.
2.3 Fractional Unit Warrants
Notwithstanding any adjustments provided for in this Agreement, the
Company shall not be required upon the exercise of any Unit Warrants to
issue fractional Warrant Shares in satisfaction of its obligations
hereunder. Where a fractional Warrant Share, but for this section 2.3,
would have been issued upon exercise of a Unit Warrant, in lieu thereof
there shall be paid to the holder an amount equal (rounded to the
nearest $0.01) to the product obtained by multiplying such fractional
share interest by the Current Market Price at the date of delivery of
each respective Warrant Certificate, which payment shall be made within
ten business days of such delivery. Notwithstanding the foregoing, the
Company shall not be required to make any payment, calculated as
aforesaid, that is less than $5.00.
2.4 Form of Warrant Certificates
Unit Warrants will be issued in registered form only and will be
evidenced only by Warrant Certificates, which will be substantially in
the form attached as Schedule "A" or in such other form as may be
approved by the Company, the Agent and the Trustee, will be dated as of
the Exercise Date (as defined in the Special Warrant Agreement),
regardless of their actual dates of issue, and will bear such
distinguishing letters and numbers as the Company will prescribe with
the approval of the Trustee and will bear such legends as may be
required under the Applicable Securities Laws and shall be issuable in
any denomination excluding fractions.
2.5 Delivery of Warrant Certificates
The Warrant Certificates will be delivered to the Warrantholders in
accordance with the provisions of the Special Warrant Agreement.
2.6 Issue in Substitution of Unit Warrants
If any of the Warrant Certificates becomes mutilated, lost, destroyed or
stolen (the "Old Certificate"), the Company, subject to applicable law
and to section 2.7, will issue and the Trustee will certify and deliver
a new Warrant Certificate of like date and tenor as the Old Certificate,
upon surrender of, in place of and upon cancellation of the mutilated
Old Certificate or in substitution for the lost, destroyed or stolen Old
Certificate, and the substituted Warrant Certificate will be in a form
approved by the Trustee and will be entitled to the benefit hereof and
rank equally in accordance with its terms with all other Warrant
Certificates issued or to be issued under this Agreement.
2.7 Conditions for Replacement of Unit Warrants
The applicant for the issue of a new Warrant Certificate pursuant to
section 2.6 will bear the cost of the issue thereof and in case of loss,
destruction or theft will, as a condition precedent to the issue thereof
furnish to the Company and to the Trustee such evidence of ownership and
of the loss, destruction or theft of the Warrant Certificate so lost,
destroyed or stolen as will be satisfactory to the Company and to the
Trustee in their discretion and the applicant may also be required to
furnish an indemnity and surety bond or such security in amount and form
satisfactory to them in their discretion, and will pay the reasonable
charges of the Company and the Trustee in connection with the issue of
the new Warrant Certificate.
2.8 Warrantholder not a Shareholder
Nothing in this Agreement or in the holding of a Unit Warrant evidenced
by a Warrant Certificate, or otherwise, will be construed as conferring
upon a Warrantholder any right or interest whatsoever as a shareholder,
including but not limited to the right to vote at, to receive notice of,
or to attend meetings of shareholders or any other proceedings of the
Company or the right to receive any dividend and other distribution.
2.9 Unit Warrants to Rank Pari Passu
Each Unit Warrant will rank pari passu with all other Unit Warrants,
whatever may be the actual date of issue.
2.10 Signing of Unit Warrants
The Warrant Certificates will be signed by any one of the directors or
officers of the Company and need not be under the seal of the Company.
The signatures of any of these directors or officers may be mechanically
reproduced in facsimile and Warrant Certificates bearing those facsimile
signatures will be binding upon the Company as if they had been manually
signed by the directors or officers. Notwithstanding that any of the
persons whose manual or facsimile signature appears on any Warrant
Certificate as a director or officer may no longer hold office at the
date of the Warrant Certificate or at the date of certification or
delivery thereof, any Warrant Certificate signed as aforesaid will,
subject to section 2.11, be valid and binding upon the Company.
2.11 Certification by the Trustee
No Warrant Certificate will be issued or, if issued, will 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 in the
form of the certificate set out in Schedule "A" hereto, and the
certification by the Trustee upon any Warrant Certificate will be
conclusive evidence as against the Company that the Warrant Certificate
so certified has been duly issued under this Agreement and that the
Holder is entitled to the benefit of this Agreement.
2.12 Certification Not a Representation or Warranty
The certification of the Trustee on Warrant Certificates issued under
this Agreement will not be construed as a representation or warranty by
the Trustee as to the validity of this Agreement or of the Warrant
Certificates (except the due certification thereof) and the Trustee will
in no respect be liable or answerable for the use made of the Unit
Warrants or any of them or of the consideration therefor, except as
otherwise specified in this Agreement.
ARTICLE 3
EXCHANGE AND OWNERSHIP OF UNIT WARRANTS
3.1 Exchange of Warrant Certificates
Any Warrant Certificate representing a certain number of Unit Warrants
may, upon compliance with the reasonable requirements of the Trustee, be
exchanged for one or more Warrant Certificates representing an equal
aggregate number of Unit Warrants.
3.2 Place for Exchange of Warrant Certificates
Unit Warrants may be exchanged only at the principal transfer office of
the Trustee in the city of Vancouver, Canada or at any other place that
is designated by the Company with the Trustee's approval. Any Unit
Warrants tendered for exchange will be surrendered to the Trustee and
canceled. The Company will sign all Warrant Certificates necessary to
carry out exchanges as aforesaid and those Warrant Certificates will be
certified by or on behalf of the Trustee.
3.3 Charges for Exchange
For each Warrant Certificate exchanged, the Trustee, except as otherwise
herein provided, will charge if required by the Company a reasonable sum
for each new Warrant Certificate issued. The party requesting the
exchange, as a condition precedent to such exchange, will pay such
charges and will pay or reimburse the Trustee or the Company for all
exigible transfer taxes or governmental or other similar transfer
charges required to be paid in connection with such exchange.
3.4 Ownership of Unit Warrants
The Company and the Trustee and their respective agents may deem and
treat the holder of any Unit Warrant as the absolute owner of that Unit
Warrant for all purposes, and the Company and the Trustee and their
respective agents will not be affected by any notice or knowledge to the
contrary except where so required by court order or by statute,
concerning which the Company and the Trustee shall be entitled to rely
upon advice from legal counsel. Subject to the provisions of this
Agreement and applicable law, the holder of any Unit Warrant will be
entitled to the rights evidenced by that Unit Warrant free from all
equities or rights of set-off or counterclaim between the Company and
the original or any intermediate holder thereof and all persons may act
accordingly and the receipt from any Holder for the Warrant Shares or
monies obtainable pursuant thereto will be a good discharge to the
Company and the Trustee for the same and neither the Company nor the
Trustee will be bound to inquire into the title of any Holder except
where so required by court order or by statute, concerning which the
Company and the Trustee shall be entitled to rely upon advice from legal
counsel.
ARTICLE 4
REGISTRAR AND TRANSFER AGENCIES
4.1 Appointment of Trustee as Registrar
The Company hereby appoints the Trustee as registrar of the Unit
Warrants. The Company may hereafter with the consent of the Trustee,
appoint one or more other additional registrars of the Unit Warrants.
4.2 Register
The Trustee shall maintain a register, at its principal transfer office
in the city of Vancouver, in which will be entered the names and
addresses of the Warrantholders and other particulars of the Unit
Warrants held by each of them respectively and of all transfers of Unit
Warrants permitted by this Agreement.
4.3 Register to be Open for Inspection
The register referred to in section 4.2 will at all reasonable times be
open for inspection by the Company by the Trustee and by any
Warrantholder. The register required to be kept at the city of Vancouver
will not be closed at any time.
4.4 List of Warrantholders
The Trustee will, when requested so to do by the Company, furnish the
Company with a list of names and addresses of the Warrantholders showing
the number of Unit Warrants held by each Warrantholder.
4.5 Obligations of Trustee
Except as required by law, neither the Trustee nor any other registrar
nor the Company will be charged with notice of or be bound to see to the
execution of any trust, whether express, implied or constructive, in
respect of any Unit Warrant.
ARTICLE 5
TRANSFER OF SPECIAL WARRANT CERTIFICATES
5.1 Transfer of Warrant Certificates
Subject to compliance with all applicable securities laws and
requirements of regulatory authorities, including without limitation,
any undertaking required to be given to the Exchange by the transferor
and transferee, the holder of a Unit Warrant may at any time and from
time to time have the Unit Warrants transferred by the Trustee in
accordance with the conditions herein and such reasonable requirements
as the Trustee may prescribe. Any such transfer shall be duly noted in
the register of Unit Warrants maintained by the Trustee. Upon
compliance with the foregoing requirements, the Trustee shall issue to
the transferee a Warrant Certificate representing the Unit Warrants
transferred. Compliance with all applicable securities laws and
requirements of regulatory authorities shall be the Holder's
responsibility and not that of the Trustee.
5.2 Validity of Transfer
No transfer of Unit Warrants will be valid unless made by the Holder or
the Holder's executors or administrators or other legal representatives
or the Holder's attorney duly appointed by an instrument in writing in
form and executed in a manner satisfactory to the registrar, and upon
compliance with such requirements as the registrar may prescribe.
ARTICLE 6
EXERCISE OF UNIT WARRANTS
6.1 Exercise During Exercise Period
The holder of a Warrant Certificate may exercise the Unit Warrants
represented by the Warrant Certificate at any time and from time to time
in whole or in part during the Exercise Period. Any such exercise will
be subject to the Holder providing such assurances and executing such
documents as may, in the reasonable opinion of the Company or the
Trustee, be required to ensure compliance with Applicable Securities
Laws.
6.2 Method of Exercise of Unit Warrants
A Warrantholder may, during the Exercise Period, exercise the right
under a Unit Warrant to acquire a Warrant Share by surrendering to the
Trustee at its principal transfer office in the city of Vancouver or at
any other place or places that may be designated by the Company with the
approval of the Trustee, a certificate or certificates representing one
whole Unit Warrant for each whole Unit Warrant exercised, together with
the full Warrant Share Purchase Price payable and a fully completed and
duly executed exercise form in the form attached to the Unit Warrant
Certificate.
6.3 Surrender of Unit Warrants
The Unit Warrants will only be deemed to have been surrendered upon
personal delivery of the applicable Warrant Certificate(s) and
accompanying documents to, or if sent by mail or other means of
transmission, upon actual receipt thereof by the Trustee.
6.4 Completion and Execution of Exercise Form
Any exercise form referred to in section 6.3 will be signed by the
Warrantholder or the Warrantholder's executors or administrators,
successors or other legal representatives or an attorney of the
Warrantholder duly appointed by an instrument in writing satisfactory to
the Trustee. The exercise form attached to the Warrant Certificate will
be completed to specify the number of Unit Warrants being exercised and
the address to which the Warrant Share Certificates should be delivered
if different from that appearing on the Warrant Certificate surrendered.
If any of the Warrant Shares to be acquired are to be issued to a
person or persons other than the Warrantholder, the Warrantholder will
pay, as a condition to the issue and delivery of the certificates
evidencing the Warrant Shares, to the Trustee or to its agent, on behalf
of the Company, all exigible transfer taxes or governmental or other
charges required to be paid in respect of the transfer of the Unit
Warrants or Warrant Shares.
6.5 Resale Restriction Legends
If, at the time of exercise of the Unit Warrants, there remain
restrictions on resale under applicable securities legislation on the
Warrant Shares acquired, the Company may, on the advice of counsel,
endorse the certificates representing the Warrant Shares with respect to
those restrictions, and prior to the issuance of any such certificates
the Trustee shall consult with the Company to determine whether such
endorsing or legending is required.
6.6Effect of Exercise of Unit Warrants
Upon exercise of the Unit Warrants and compliance by the Warrantholder
with sections 6.4 and 6.5 subject to sections 6.9, 6.10 and 7.9, the
holder of the Unit Warrants will be entitled to receive, upon payment of
the Warrant Share Purchase Price, one Warrant Share for each whole Unit
Warrant exercised, subject to adjustment as provided in this Agreement,
and the Trustee will cause the holder thereof to be entered forthwith on
its register of shareholders as the holder of the Warrant Shares on the
Warrant Exercise Date.
6.7 Delivery of Warrant Share Certificates
Upon the due exercise of the Unit Warrants as described in this Article
6, the Company will, within five business days after the Warrant
Exercise Date, without charge therefor except as provided in section
6.5, forthwith cause to be mailed to Holders at such person's address
specified in the exercise form, or if not specified in the exercise
form, then at the address recorded in the register of Unit Warrants,
certificates for the appropriate number of Warrant Shares to which the
Holder is entitled.
6.8 No Fractional Warrant Shares
Notwithstanding any adjustments provided for in this Agreement, the
Company shall not be required upon the exercise of the Unit Warrants to
issue fractional Warrant Shares in satisfaction of its obligations
hereunder. Where a fractional Warrant Share, but for this section 6.9,
would have been issued upon the exercise of a Unit Warrant, in lieu
thereof, there shall be paid to the holder an amount equal (rounded to
the nearest $0.01) to the product obtained by multiplying such
fractional share interest by the closing price of the Common Shares on
the Exchange (or if the Common Shares are not then listed thereon on
such other exchange on which the Common Shares are then listed, or, if
not listed on, in the over-the-counter market as designated by the
directors) for the last trading day prior to the Warrant Exercise Date
at the date of delivery of each respective certificate, which payment
shall be made within ten business days of such delivery.
Notwithstanding the foregoing, the Company shall not be required to make
any payment, calculated as aforesaid, that is less than $5.00.
6.9 Expiration of Unit Warrants
The Unit Warrants and the rights thereunder shall terminate and be of no
further effect upon their exercise and all rights under any Unit Warrant
which have not been exercised prior to the expiry of the Exercise Period
will cease and terminate and the Unit Warrant will be void and of no
effect.
6.10 Accounting and Recording
The Trustee will promptly notify the Company in writing with respect to
Unit Warrants exercised. The Trustee will, within five business days of
each Warrant Exercise Date, specify the particulars of the Unit Warrants
exercised which will include the names and addresses of the Holders
whose Unit Warrants have been exercised and the Warrant Exercise Date,
and will deliver to the Company the Warrant Share Purchase Price.
6.11 Cancellation of Surrendered Unit Warrants
All Warrant Certificates surrendered to the Trustee in accordance with
the provisions of this Agreement will be canceled by the Trustee and
upon request therefor of the Company, the Trustee will furnish the
Company with written confirmation of the Warrant Certificates so
canceled and the number of Warrant Shares which could have been acquired
pursuant to each.
ARTICLE 7
ADJUSTMENT OF EXCHANGE NUMBER
7.1 Definitions
In this Article the terms "record date" and "effective date" means the
close of business on the relevant date.
7.2 Adjustment of Exchange Number
The Exchange Number (or the number and kind of shares or securities to
be received upon exercise in the case of sections 7.6 and 7.7) will be
subject to adjustment from time to time in the events and in the manner
provided in this Article.
7.3 Share Reorganization
If and whenever at any time from the date of issuance of the Unit
Warrants during the Exercise Period the Company:
(a) issues to all or substantially all the holders of the Common
Shares, by way of a stock dividend or other distribution, other than
Dividends Paid in the Ordinary Course, Common Shares or Convertible
Securities; or
(b) subdivides, redivides or changes its outstanding Common Shares
into a greater number of shares; or
(c) combines, consolidates or reduces its outstanding Common Shares
into a smaller number of shares,
(any of those events being a "Share Reorganization"), the Exchange
Number will be adjusted effective immediately after the record date at
which the holders of Common Shares are determined for the purposes of
the Share Reorganization to a number that is the product of (1) the
Exchange Number in effect on the record date and (2) a fraction:
(d) the numerator of which will be the number of Common Shares
outstanding after giving effect to the Share Reorganization; and
(e) the denominator of which will be the number of Common Shares
outstanding on the record date before giving effect to the Share
Reorganization.
For the purposes of determining the number of Common Shares outstanding
at any particular time for the purpose of this section 7.3 there will be
included that number of Common Shares which would have resulted from the
conversion at that time of all outstanding Convertible Securities
(which, for greater certainty, includes the Warrant Shares issuable upon
exercise of the Unit Warrants then outstanding).
7.4 Rights Offering
If and whenever at any time during the Exercise Period, the Company
shall fix a record date for the issue of rights, options or warrants to
all or substantially all of the holders of Common Shares entitling the
holders thereof, within a period expiring not more than 45 days after
the record date for such issue, to subscribe for or purchase Common
Shares (or Convertible Securities) at a price per share (or having a
conversion or exchange price per share) less than 95% of the Current
Market Price on such record date, then the Exchange Number will be
adjusted immediately after such record date so that it will equal the
rate determined by multiplying the Exchange Number in effect on such
record date by a fraction, of which the denominator shall be the total
number of Common Shares outstanding on such record date plus the number
of Common Shares equal to the number arrived at by dividing the
aggregate price of the total number of additional Common Shares so
offered for subscription or purchase (or the aggregate conversion or
exchange price of the convertible or exchangeable securities so offered)
by such Current Market Price, and of which the numerator shall be the
total number of Common Shares outstanding on such record date plus the
total number of additional Common Shares so offered for subscription or
purchase (or into or for which the convertible or exchangeable
securities so offered are convertible or exchangeable). Any Common
Shares owned by or held for the account of the Company or any subsidiary
of the Company shall be deemed not to be outstanding for the purpose of
any such computation. Such adjustment will be made successively
whenever such a record date is fixed, provided that if two or more such
record dates or record dates referred to in this Section 2.1(b)(ii) are
fixed within a period of 25 trading days, such adjustment will be made
successively as if each of such record dates occurred on the earliest of
such record dates. To the extent that any such rights, options or
warrants are not exercised prior to the expiration thereof, the Exchange
Number will then be readjusted to the Exchange Number which would then
be in effect based upon the number of Common Shares (or securities
convertible into or exchangeable for Common Shares) actually issued upon
the exercise of such rights, options or warrants, as the case may be.
7.5 Special Distribution
If and whenever at any time from the date of issuance of the Unit
Warrants during the Exercise Period the Company will issue or distribute
to all or substantially all the holders of Common Shares:
(a) shares of any class other than shares distributed to holders of
Common Shares pursuant to their exercise of options to receive dividends
in the form of such shares in lieu of Dividends Paid in the Ordinary
Course on the Common Shares;
(b) rights, options or warrants other than Unit Warrants and other
than rights, options or warrants exercisable within 45 days from the
date of issue thereof at a price, or at a conversion price, of at least
95% of the Current Market Price at the record date for such
distribution;
(c) evidences of indebtedness; or
(d) any other assets including shares of other corporations (excluding
cash dividends that Warrantholders receive under section 8.3) and that
issuance or distribution does not constitute a Share Reorganization or a
Rights Offering,
(any of those events being a "Special Distribution"), the Exchange
Number will be adjusted effective immediately after the record date at
which the holders of Common Shares are determined for purposes of the
Special Distribution to an Exchange Number that is the product of (1)
the Exchange Number in effect on the record date and (2) a fraction:
(e) the numerator of which will be the product of (A) the sum of the
number of Common Shares outstanding on the record date plus the number
of Common Shares which the Warrantholders would be entitled to receive
upon exercise of all their outstanding Unit Warrants if they were
exercised on the record date and (B) the Current Market Price thereof on
that date; and
(f) the denominator of which will be the product of:
(i) the sum of the number of Common Shares outstanding on the
record date plus the number of Common Shares which the Special
Warrantholders would be entitled to receive upon exercise of all their
outstanding Special Warrants if they were exercised on the record date;
and
(ii) the Current Market Price thereof on that date, less the
aggregate fair market value, as determined by the board, whose
determination, absent manifest error, will be conclusive, of the shares,
rights, options, warrants, evidences of indebtedness or other assets
issued or distributed in the Special Distribution.
Any Common Shares owned by or held for the account of the Company will
be deemed not to be outstanding for the purpose of any such computation;
to the extent that the distribution of shares, rights, options,
warrants, evidences of indebtedness or assets is not so made or to the
extent that any rights, options or warrants so distributed are not
exercised, the Exchange Number will be readjusted to the Exchange Number
that would then be in effect based upon shares, rights, options,
warrants, evidences of indebtedness or assets actually distributed or
based upon the number of Common Shares or Convertible Securities
actually delivered upon the exercise of the rights, options or warrants,
as the case may be, but subject to any other adjustment required
hereunder by reason of any event arising after the record date.
7.6 Capital Reorganization
If and whenever at any time from the date of issuance of the Unit
Warrants during the Exercise Period there is a reorganization of the
Company not otherwise provided for in section 7.3 or a consolidation or
merger or amalgamation of the Company with or into another body
corporate or other entity including a transaction whereby all or
substantially all of the Company's undertaking and assets become the
property of any other body corporate, trust, partnership or other entity
(any such event being a "Capital Reorganization"), any Warrantholder
who has not exercised his Unit Warrants prior to the effective date of
the Capital Reorganization will be entitled to receive and will accept,
upon the exercise of his right at any time after the effective date of
the Capital Reorganization, in lieu of the number of Warrant Shares to
which he would have been entitled upon exercise of the Unit Warrants,
the aggregate number of shares or other securities or property of the
Company, or the continuing, successor or purchasing body corporate,
trust, partnership or other entity, as the case may be, under the
Capital Reorganization that the holder would have been entitled to
receive as a result of the Capital Reorganization if, on the effective
date thereof, he had been the holder of the number of Warrant Shares to
which immediately before the transaction he was entitled upon exercise
of the Unit Warrants; no Capital Reorganization will be carried into
effect unless all necessary steps will have been taken so that the
holders of Unit Warrants will thereafter be entitled to receive the
number of shares or other securities or property of the Company, or of
the continuing, successor or purchasing body corporate, trust,
partnership or other entity, as the case may be, under the Capital
Reorganization, subject to adjustment thereafter in accordance with
provisions the same, as nearly as may be possible, as those contained in
sections 7.2 to 7.8. If determined appropriate by the Trustee to give
effect to or to evidence the provisions of this section 7.6, the
Company, 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 Capital Reorganization, enter into an
agreement which shall provide, to the extent possible, for the
application of the provisions set forth in this Agreement with respect
to the rights and interests thereafter of the Warrantholders to the end
that the provisions set forth in this Agreement 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 agreement entered into between the Company and the
Trustee pursuant to the provisions of this section 7.6 shall be a
supplemental agreement entered into pursuant to the provisions of
Article 11 hereof. Any agreement entered into between the Company, any
successor to the Company 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 Article 7 and which shall apply to
successive reclassifications, reorganizations, amalgamations,
consolidations, mergers, sales or conveyances.
7.7 Reclassification of Common Shares
If the Company reclassifies or otherwise changes the outstanding Common
Shares, the exercise right will be adjusted effective immediately upon
the reclassification becoming effective so that holders of Unit Warrants
who exercise their rights thereafter will be entitled to receive such
shares as they would have received had the Unit Warrants been exercised
immediately prior to the effective date, subject to adjustment
thereafter in accordance with provisions the same, as nearly as may be
possible, as those contained in sections 7.3 to 7.8.
7.8 Subscription Rights Adjustment Rules
The following rules and procedures will be applicable to adjustments
made pursuant to sections 7.3 to 7.7:
(a) the adjustments and readjustments provided for in this Article 7
are cumulative and subject to subsection 7.8(b), will apply (without
duplication) to successive issues subdivisions, combinations,
consolidations, distributions and any other events that require
adjustment of the Exchange Number or the number or kind of shares or
securities to be issued upon exercise of the Unit Warrants;
(b) no adjustment in the Exchange Number will be required unless the
adjustment would result in a change of at least 1% in the Exchange
Number then in effect provided however, that any adjustments that,
except for the provisions of this subsection 7.8(b) would otherwise have
been required to be made, will be carried forward and taken into account
in any subsequent adjustment;
(c) no adjustment in the Exchange Number will be made in respect of
any event described in subsection 7.3(a) or sections 7.4 or 7.5 if the
Warrantholders are entitled to participate in the event on the same
terms mutatis mutandis as if they had exercised their Unit Warrants
immediately prior to the effective date or record date of the event;
(d) no adjustment in the Exchange Number will be made pursuant to any
of sections 7.3 to 7.7 in respect of the issue of Warrant Shares
issuable from time to time as Dividends Paid in the Ordinary Course;
(e) if a dispute arises with respect to adjustments of the Exchange
Number, the dispute will be conclusively determined by the auditors of
the Company or, if they are unable or unwilling to act, by such firm of
independent chartered accountants as may be selected by the directors of
the Company and any such determination, absent manifest error, will be
binding upon the Company, the Trustee and all Warrantholders;
(f) if and whenever at any time from the date hereof during the
Exercise Period the Company takes any action affecting the Common
Shares, other than actions described in this Article, which in the
opinion of the board of directors of the Company would materially affect
the rights of the Holder, the Exchange Number will be adjusted in such
manner, if any, and at such time, by action by the directors of the
Company in such manner as they may reasonably determine to be equitable
in the circumstances but subject in all cases to any necessary
regulatory approval. Failure of the taking of action by the directors
of the Company so as to provide for an adjustment on or prior to the
effective date of any action by the Company affecting the Common Shares
will be conclusive evidence that the board of directors of the Company
has determined that it is equitable to make no adjustment in the
circumstances; and
(g) if the Company sets a record date to determine the holders of
Common Shares for the purpose of entitling them to receive any dividend
or distribution or any subscription or purchase rights and thereafter
legally abandons its plans to pay or deliver the dividend, distribution
or subscription or purchase rights then no adjustment in the Exchange
Number will be required by reason of the setting of the record date.
7.9 Postponement of Subscription
In any case where the application of any of sections 7.3 to 7.7 results
in an increase of the Exchange Number taking effect immediately after
the record date for or occurrence of a specific event, if any Unit
Warrants are exercised after that record date or occurrence and prior to
completion of the event or of the period for which a calculation is
required to be made, the Company may postpone the issuance, to the
Holder, of the Warrant Shares to which the Holder is entitled by reason
of the increase of the Exchange Number but the Warrant Shares will be so
issued and delivered to that holder upon completion of that event or
period, with the number of those Warrant Shares calculated on the basis
of the Exchange Number on the Warrant Exercise Date adjusted for
completion of that event or period, and the Company will forthwith after
the Warrant Exercise Date deliver to the person or persons in whose name
or names the Warrant Shares are to be issued an appropriate instrument
evidencing the person's or persons' right to receive the Warrant Shares.
7.10 Notice of Certain Events
Upon the occurrence of any event referred to in sections 7.3 to 7.8 that
requires an adjustment or readjustment in the Exchange Number, the
Company will promptly thereafter:
(a) file with the Trustee a certificate of the Company specifying the
particulars of the event giving rise to the adjustment or readjustment
and, if determinable, the adjustment and setting forth in reasonable
detail a computation of the adjustment including the method of
computation and which certificate shall be supported by a certificate of
the Company's auditors verifying such calculation; and
(b) give notice to the Warrantholders of the particulars of the event
and, if determinable, the adjustment.
If notice has been given under this section 7.10 and the adjustment is
not then determinable, the Company will promptly after the adjustment is
determinable:
(c) file with the Trustee a computation of the adjustment together
with a certificate of the Company's auditors verifying such calculation;
and
(d) give notice to the Warrantholders of the adjustment.
7.11 Protection of Trustee
The Trustee:
(a) will not at any time be under any duty or responsibility to any
Warrantholder to determine whether any facts exist which may require any
adjustment contemplated by sections 7.3 to 7.7, or with respect to the
nature or extent of any such adjustment when made, or with respect to
the method employed in making such adjustment;
(b) is not accountable with respect to the validity or value (or the
kind or amount) of any shares or other securities or property which may
at any time be issued or delivered upon the exercise of the rights
attaching to any Unit Warrant;
(c) is not responsible for any failure of the Company to make any cash
payment or to issue, transfer or deliver Common Shares or certificates
for the same upon the surrender of any Unit Warrants for the purpose of
the exercise of such rights or to comply with any of the covenants
contained in this Article 7; and
(d) will not incur any liability or responsibility whatever or be in
any way responsible for the consequence of any breach on the part of the
Company of any of the representations, warranties or covenants in this
Agreement contained or any acts of the agents or servants of the
Company.
7.12 Entitlement to Common Shares on Exercise of Unit 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 Unit
Warrant, whether or not as a result of adjustments made pursuant to this
section, shall, for the purposes of the interpretation of this Agreement
be deemed to be shares which such Warrantholder is entitled to acquire
pursuant to such Warrant.
7.13 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
Unit Warrants, including the number of Warrant Shares which are to be
received upon the exercise thereof, the Company shall take any corporate
action which may, in the opinion of counsel, be necessary in order that
the Company has unissued and reserved in its authorized capital and may
validly and legally issue as fully paid and non-assessable all the
shares which the Warrantholders are entitled to receive on the full
exercise thereof in accordance with the provisions hereof.
7.14 Notice of Special Matters
The Company covenants with the Trustee that, so long as any Unit Warrant
remains outstanding, it will give notice to the Trustee and to the
Warrantholders of its intention to fix the record date for any event
referred to in Article 7 which may give rise to an adjustment in the
Exchange Number. Such notice shall specify the particulars of such
event, to the extent determinable, any adjustment required and the
computation of such adjustment and the record date for such event,
provided that the Company 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 cash not less than fourteen days prior to such
applicable record date. If any adjustment for which notice is given is
not then determinable, the Company shall, promptly after such adjustment
is determinable, give notice.
ARTICLE 8
RIGHTS AND COVENANTS
8.1 General Covenants of the Company
The Company covenants with the Trustee that so long as any Unit Warrants
remain outstanding and may be exchanged for the Warrant Shares:
(a) the Company will at all times maintain its corporate existence;
(b) the Company will reserve and keep available out of its authorized
common stock a sufficient number of Warrant Shares for issuance upon the
exercise of all outstanding Unit Warrants including with respect to any
adjustments required pursuant to Article 7;
(c) the Company will cause the Warrant Shares and the certificates
representing the Warrant Shares to be duly issued in accordance with the
Warrant Certificate and the terms of this Agreement;
(d) all Warrant Shares that will be issued by the Company upon
exercise of the rights provided for in this Agreement will be issued as
fully paid and non-assessable and free from all taxes, liens and charges
with respect to the issue thereof and that upon issuance such shares
shall be listed on each national securities exchange on which the other
shares of outstanding common stock of the Company are then listed or
shall be eligible for inclusion in the Nasdaq National Market or the
Nasdaq SmallCap Market if the other shares of outstanding common stock
of the Company are so included;
(e) the Company will use its best efforts to ensure that all Common
Shares outstanding or issuable from time to time (including without
limitation the Warrant Shares) continue to be or are listed for trading
on the Exchange and that it will use its commercial best efforts to list
the Warrant Shares and all other outstanding shares of its common stock
on the NASDAQ NATIONAL MARKET or if the Company does not meet the
listing requirements of the NASDAQ National Market on the NASDAQ
SmallCap Market as soon as possible after the Closing Date;
(f) the Company will maintain its status as a reporting issuer in the
Qualifying Provinces and as a "reporting company" with a class of equity
securities registered pursuant to section 12(g) of the United States
Securities Act of 1934, as amended not in default of any reporting or
filing requirements under U.S. Securities Laws;
(g) the Company will generally well and truly perform and carry out
all the acts or things to be done by it as provided in this Agreement or
as the Trustee may reasonably require for the better accomplishing and
effecting of the intentions and provisions of this Agreement; and
(h) the Company shall pay all documentary, stamp or similar taxes and
other governmental charges that may be imposed with respect to the
issuance of the Special Warrants or the issuance or delivery of any
Common Shares or Unit Warrants upon the exercise of the Special
Warrants.
8.2 Trustee's Remuneration and Expenses
The Company covenants that it will pay to the Trustee from time to time
reasonable remuneration for its services under this Agreement 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 hereof (including the reasonable
compensation and the disbursements of counsel and all other advisers and
assistants not regularly in its employ), both before any default under
this Agreement and thereafter until all duties of the Trustee under this
Agreement will be finally and fully performed, except any expense,
disbursement or advance as may arise from the negligence or willful
misconduct of the Trustee or of persons for whom the Trustee is
responsible.
8.3 Right to Dividends or Distributions
If the Company pays a dividend or makes any distribution to all or
substantially all of the holders of Common Shares or if the Company
declares any dividend, or provides for any distribution, payable to all
or substantially all the holders of Common Shares of record the Exercise
Period, the Company agrees that it will pay the same amount of such
dividend of make same distribution of cash, property or securities as a
deposit to the Trustee, as if the Holders were the holders of the number
of Common Shares that they are entitled to receive upon exercise of the
Unit Warrants, and such payments or distributions shall be held and
dealt with by the Trustee in accordance with the provisions of this
Agreement.
8.4 Performance of Covenants by Trustee
If the Company fails to perform any of its covenants contained in this
Agreement, the Trustee may notify the Warrantholders of the failure on
the part of the Company or may itself perform any of the said covenants
capable of being performed by it, but will be under no obligation to do
so or to notify the Warrantholders. All sums expended or advanced by the
Trustee in so doing will be repayable as provided in section 8.2. No
performance, expenditure or advance by the Trustee will be deemed to
relieve the Company of any default under this Agreement.
8.5 Securities Qualification Requirements
(a) If, in the opinion of counsel, any instrument (not including 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 Warrant Shares which a Warrantholder is entitled to acquire
pursuant to the exercise of any Unit Warrant may properly and legally be
issued upon due exercise thereof and thereafter traded, without further
formality or restriction, the Company covenants that it will take such
required action.
(b) The Company or, if required by the Company, the Trustee will give
notice of the issue of Warrant Shares pursuant to the exercise of Unit
Warrants, in such detail as may be required, to each securities
commission or similar regulatory authority in each jurisdiction in
Canada in which there is legislation or regulation permitting or
requiring the giving of any such notice in order that such issue and
subsequent disposition of Warrant Shares so issued will not be subject
to the prospectus qualification requirements of such legislation or
regulation.
ARTICLE 9
ENFORCEMENT
9.1 Suits by Warrantholders
All or any of the rights conferred upon a Warrantholder by the terms of
a Unit Warrant or of this Agreement may be enforced by the holder by
appropriate legal proceedings but without prejudice to the right that 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
holder of Unit Warrants from time to time outstanding.
9.2 Immunity of Shareholders, Officers & Directors
The Trustee, and by their acceptance of the Warrant Certificates and as
part of the consideration for the issue of the Unit Warrants, the
Warrantholders, hereby waive and release any right, cause of action or
remedy now or hereafter existing in any jurisdiction against any past,
present or future shareholder, director, officer, employee or agent of
the Company in their capacity as such, either directly or through the
Company, relating to any obligations, representations, warranties and
covenants under the Unit Warrants or this Agreement, it being
acknowledged that all such obligations, representations, warranties and
covenants are solely those of the Company. Accordingly, the obligations
under the Unit Warrants and this Agreement are not personally binding
upon, nor will resort hereunder be had to, the private properly of any
of the past, present or future directors, officers, shareholders,
employees or agents of the Company but only the property of the Company
(or any successor corporation) will be bound in respect hereof. The
protection afforded under this paragraph shall not extend to
misrepresentations knowingly made.
9.3 Waiver of Default
Upon the happening of any default hereunder:
(a) the holders of not less than 51% of the Unit Warrants then
outstanding shall have the 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
(b) the Trustee shall have the power to waive any default hereunder
upon such terms and conditions as the Trustee may deem advisable if, in
the Trustee's 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 10
MEETINGS OF WARRANTHOLDERS
10.1 Right to Convene Meetings
The Trustee may at any time and from time to time and will, on receipt
of a written request of the Company or of a Warrantholders' Request and
upon being indemnified to its reasonable satisfaction by the Company or
by the Warrantholders signing the Warrantholders' Request against the
cost that may be incurred in connection with the calling and holding of
the meeting, convene a meeting of the Warrantholders. If, within 21 days
after receipt of the written request of the Company or Warrantholders'
Request and such indemnity has been given, the Trustee fails to give
notice convening a meeting, the Company or the Warrantholders, as the
case may be, may convene the meeting. Every meeting will be held in the
City of Vancouver or at such other place as may be approved or
determined by the Trustee.
10.2 Notice
At least 10 days' notice of any meeting will be given to the
Warrantholders in the manner provided in section 13.2 and a copy of the
notice will be sent by mail to the Trustee unless the meeting has been
called by it, and to the Company unless the meeting has been called by
it. Each notice will state the time when and the place where the meeting
is to be held and will 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 will not be necessary for the notice to
set out the terms of any resolution to be proposed or any of the
provisions of this Article 10.
10.3 Chairman
A person, who need not be a Warrantholder, designated in writing by the
Trustee will chair the meeting and if no person is so nominated, or if
the person so nominated is not present within 15 minutes from the time
fixed for the holding of the meeting, the Warrantholders present in
person or by proxy will choose a person present to chair the meeting.
10.4
With respect to the quorum required for a meeting of Warrantholders:
(a) subject to the provisions of section 10.12, at any meeting of the
Warrantholders a quorum will consist of Warrantholders present in person
or by proxy constituting at least 20% of the aggregate number of Unit
Warrants then outstanding, provided at least two persons entitled to
vote thereat are personally present;
(b) if a quorum of the Warrantholders is not present within 30 minutes
from the time fixed for holding any meeting, the meeting, if summoned by
the Warrantholders or on a Warrantholders' Request, will be dissolved;
but, subject to section 10.12, in any other case the meeting will be
adjourned to the same day in the next week (unless that day is not a
business day, in which event the meeting will be reconvened on the next
day that is a business day) at the same time and place and no notice
need be given; and
(c) at the adjourned meeting, the Warrantholders present in person or
by proxy will form a quorum and may transact the business for which the
meeting was originally convened, notwithstanding that they may not hold
at least 20% of the aggregate number of Unit Warrants then outstanding.
10.5 Power to Adjourn
The chairman of any meeting at which a quorum of the Warrantholders is
present may, with the consent of the meeting, adjourn the meeting and no
notice of the adjournment need be given except such notice, if any, as
the meeting may prescribe.
10.6 Show of Hands
Every question submitted to a meeting will be decided in the first place
by a majority of the votes given on a show of hands except that votes on
an Special Resolution will be given in the manner provided in section
10.12. At any 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 will be conclusive evidence of the
fact.
10.7 Poll
On every Special Resolution, and on any other question submitted to a
meeting upon which a poll is directed by the chairman or requested by
one or more of the Warrantholders acting in person or by proxy and
representing in the aggregate at least 5% of the aggregate number of
Unit Warrants then outstanding, a poll will be taken in such manner as
the chairman will direct. Questions other than an Special Resolution
will be decided by a majority of the votes cast on a poll.
10.8 Voting
On a show of hands every person who is present and entitled to vote,
whether as a Warrantholder or as proxy for one or more absent
Warrantholders or both, will have one vote. On a poll each Warrantholder
present in person or represented by a proxy duly appointed by instrument
in writing will be entitled to one vote in respect of each Unit Warrant
then held by him. A proxy need not be a Warrantholder.
10.9 Regulations
The Trustee or the Company with the approval of the Trustee may from
time to time make or vary such regulations as they will think fit:
(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) for the issue of voting certificates by any bank, trust company or
other depositary satisfactory to the Trustee stating that the Unit
Warrants specified therein have been deposited with the depository by a
named person and will remain on deposit until after the meeting, which
voting certificates will entitle the persons named therein to be present
and vote at the meeting and at any adjournment thereof or to appoint a
proxy or proxies to represent them and vote for them at that meeting and
at any adjournment thereof in the same manner and with the same effect
as though the persons so named in the voting certificates were the
actual holders of the Unit Warrants specified therein;
(c) for the deposit of voting certificates and/or instruments
appointing proxies at such place and time as the Trustee, the Company or
the Warrantholders convening the meeting, as the case may be, may in the
notice convening the meeting direct;
(d) for the deposit of voting certificates and/or instruments
appointing proxies at some approved place or places other than the place
at which the meeting is to be held and enabling particulars of the
voting certificates and/or instruments appointing proxies to be sent by
mail, cable, fax or other means of prepaid, transmitted, recorded
communication before the meeting to the Company or to the Trustee at the
place where the same is to be held and for the voting of proxies so
deposited as though the instruments themselves were produced at the
meeting;
(e) for the form of instrument appointing a proxy; and
(f) generally for the calling of meetings of Warrantholders and the
conduct of business thereat.
Any regulations so made will be binding and effective and the votes
given in accordance therewith will be valid and will be counted. Except
as the regulations may provide, the only persons who will be recognized
at any meeting as the holders of any Special Warrants, or as entitled to
vote or, subject to section 10.10, be present at the meeting in respect
thereof, will be persons who are the registered holders of Unit Warrants
or their duly appointed proxies.
10.10 Company and Trustee may be Represented
The Company and the Trustee by their respective officers or directors,
and the counsel to the Company and the Trustee may attend any meeting of
the Warrantholders, but will have no vote as such.
10.11 Powers Exercisable by Special Resolution
In addition to all other powers conferred upon them by any other
provisions of this Agreement or by law the Warrantholders at a meeting
will have the following powers exercisable from time to time by Special
Resolution:
(a) power to agree to any modification, abrogation, alteration,
compromise or arrangement of the rights of Warrantholders and/or the
Trustee in its capacity as trustee under this Agreement or on behalf of
the Warrantholders against the Company, whether those rights arise under
this Agreement or the Unit Warrant certificates;
(b) power to direct or authorize the Trustee to enforce any of the
covenants on the part of the Company contained in this Agreement or the
Unit Warrants or to enforce any of the rights of the Warrantholders in
any manner specified in the Special Resolution or to refrain from
enforcing any such covenant or right;
(c) power to restrain any Warrantholder from taking or instituting any
suit, action or proceeding against the Company for the enforcement of
any of the covenants on the part of the Company contained in this
Agreement or the Unit Warrants or to enforce any of the rights of the
Warrantholders except for a suit or action against the Company to compel
payment to a Warrantholder in respect of monies owing to him in
accordance with the provisions of section 8.3;
(d) power to direct any Warrantholder who, as such, has brought any
suit, action or proceeding to stay or discontinue or otherwise deal with
the same upon payment of the costs, charges and expenses reasonably and
properly incurred by the Warrantholder in connection therewith;
(e) power from time to time and at any time to remove the Trustee and
appoint a successor trustee;
(f) power to amend, alter or repeal any special resolution previously
passed or sanctioned by the Warrantholders; and
(g) power to assent to any compromise or arrangement with any creditor
or creditors or any class or classes of creditors, whether secured or
otherwise, and with holders of any shares or other securities of the
Company.
10.12 Meaning of "Special Resolution"
(a) The expression "Special Resolution" when used in this Agreement
means, subject to the provisions in this subsection 10.12(b) and
10.12(c) and in sections 10.15 and 10.16 provided, a resolution proposed
at a meeting of the Warrantholders duly convened for that purpose and
held in accordance with the provisions of this Article 10 at which there
are present in person or by proxy Warrantholders holding at least 20% of
the aggregate of the Unit Warrants then outstanding and passed by the
affirmative votes of Warrantholders holding not less than two-thirds of
the aggregate number of Unit Warrants represented at the meeting and
voted on the poll upon the resolution.
(b) If, at any meeting called for the purpose of passing a Special
Resolution, Warrantholders entitled to acquire 51% of the aggregate
number of Unit Warrants then outstanding are not present in person or by
proxy within 30 minutes after the time appointed for the meeting, then
the meeting, if convened by Warrantholders or on a Warrantholders'
Request, will be dissolved; but in any other case it will stand
adjourned to such day, being not less than 15 or more than 60 days
later, and to such place and time as may be appointed by the chairman.
Not less than 10 days' notice will be given of the time and place of the
adjourned meeting in the manner provided in section 13.2. The notice
will state that at the adjourned meeting the Warrantholders present in
person or by proxy will form a quorum but it will 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 will form a quorum and may transact the
business for which the meeting was originally convened and a resolution
proposed at the adjourned meeting and passed by the requisite vote as
provided in subsection 10.12(a) will be a Special Resolution within the
meaning of this Agreement notwithstanding that Warrantholders holding at
least 20% of the aggregate number of Unit Warrants then outstanding are
not present in person or by proxy at the adjourned meeting.
(c) Votes on a Special Resolution will always be given on a poll and
no demand for a poll on a Special Resolution will be necessary.
10.13 Powers Cumulative
It is hereby declared and agreed that any one or more of the powers or
any combination of the powers in this Agreement stated to be exercisable
by the Warrantholders by Special Resolution or otherwise may be
exercised from time to time and the exercise of any one or more of the
powers or any combination of the powers from time to time will not be
deemed to exhaust the right of the Warrantholders to exercise that power
or those powers or combination of powers then or any other power or
powers or combination of powers thereafter from time to time.
10.14 Minutes
Minutes of all resolutions and proceedings at every meeting of
Warrantholders convened and held pursuant to this Article 10 will be
made and duly entered in books to be provided for that purpose by the
Trustee at the expense of the Company, and any such minutes, if signed
by the chairman of the meeting at which resolutions were passed or
proceedings had, or by the chairman of the next succeeding meeting of
the Warrantholders, will be prima facie evidence of the matters as
stated in the minutes and, until the contrary is proved, every meeting,
in respect of the proceedings of which minutes will have been made, will
be deemed to have been duly convened and held, and all resolutions
passed thereat or proceedings taken, to have been duly passed and taken.
10.15 Instruments in Writing
All actions that may be taken and all powers that may be exercised by
the Warrantholders at a meeting held as provided in this Article 10 may
also be taken and exercised by Warrantholders holding not less than
two-thirds of the aggregate number of Unit Warrants then outstanding by
an instrument in writing signed in one or more counterparts by
Warrantholders in person or by attorney duly appointed in writing and
the expression "Special Resolution" when used in this Agreement will
include an instrument so signed.
10.16 Binding Effect of Resolutions
Every resolution and every Special Resolution passed in accordance with
the provisions of this Article 10 at a meeting of Warrantholders will be
binding upon all the Warrantholders, whether present at or absent from
the meeting, and every instrument in writing signed by Warrantholders in
accordance with section 10.15 will be binding upon all the
Warrantholders, whether signatories thereto or not, and each and every
Warrantholder and the Trustee (subject to the provisions for its
indemnity herein contained) will be bound to give effect accordingly to
every resolution and instrument in writing passed or executed in
accordance with these provisions.
10.17 Holdings by Company Disregarded
In determining whether the requisite number of Warrantholders are
present for the purpose of obtaining a quorum or have voted or consented
to any resolution, Special Resolution, consent, waiver, Warrantholders'
Request or other action under this Agreement, Unit Warrants owned by the
Company or any subsidiary of the Company will be deemed to be not
outstanding.
ARTICLE 11
SUPPLEMENTAL AGREEMENTS AND SUCCESSOR COMPANIES
11.1 Provision for Supplemental Agreements for Certain Purposes
From time to time the Company (when authorized by action of the
directors) and the Trustee may, subject to the provisions hereof, and
they will, when so directed hereby, execute and deliver by their proper
officers, agreements or instruments supplemental to this Agreement,
which thereafter will form part of this Agreement, 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 7;
(b) adding to the provisions of this Agreement such additional
covenants and enforcement provisions as, in the opinion of counsel, are
necessary or advisable, provided that the same are not in the opinion of
counsel to the Trustee prejudicial to the interest of the Warrantholders
as a group;
(c) giving effect to any Special Resolution passed as provided in
Article 10;
(d) making provisions not inconsistent with this Agreement as may be
necessary or desirable with respect to matters or questions arising
under this Agreement provided that the provisions are not, in the
opinion of counsel to the Trustee, prejudicial to the interests of the
Warrantholders as a group;
(e) adding to or altering the provisions of this Agreement in respect
of the transfer of Unit Warrants, making provision for the exchange of
Unit Warrants, and making any modification in the form of the Unit
Warrants that does not affect the substance of the Unit Warrants;
(f) modifying any of the provisions of this Agreement or relieving the
Company from any of the obligations, conditions or restrictions
contained in this Agreement, provided that no such modification or
relief will be or become operative or effective if in the opinion of
counsel to the Trustee the modification or relief impairs any of the
rights of the Warrantholders, as a group, or of the Trustee, and
provided that the Trustee may in its uncontrolled discretion decline to
enter into any supplemental agreement which in its opinion may not
afford adequate protection to the Trustee when the such supplemental
agreement becomes operative; and
(g) for any other purpose not inconsistent with the terms of this
Agreement, including the correction or rectification of any ambiguities,
defective provisions, errors or omissions in this Agreement, provided
that in the opinion of counsel to the Trustee the rights of the Trustee
and the Warrantholders, as a group, are in no way prejudiced thereby.
11.2 Successor Companies
In the case of the consolidation, amalgamation, merger or transfer of
the undertaking or assets of the Company as an entirety or substantially
as an entirety to another corporation ("successor corporation"), the
successor corporation resulting from the consolidation, amalgamation,
merger or transfer (if not the Company) will be bound by the provisions
of this Agreement and all obligations for the due and punctual
performance and observance of each and every covenant and obligation
contained in this Agreement to be performed by the Company and, if
requested by the Trustee, the successor corporation will, by
supplemental agreement satisfactory in form to the Trustee and executed
and delivered to the Trustee, expressly assume those obligations.
ARTICLE 12
CONCERNING THE TRUSTEE
12.1 Trust Agreement Legislation
If and to the extent that any provision of this Agreement limits,
qualifies or conflicts with a mandatory requirement of Applicable
Legislation, the mandatory requirement will prevail. The Company and the
Trustee agree that each will at all times, in relation to this Agreement
and any action to be taken under this Agreement, observe and comply with
and be entitled to the benefits of Applicable Legislation.
12.2 Rights and Duties of Trustee
The rights and duties of the Trustee are as follows:
(a) In the exercise of the rights and duties prescribed or conferred
by the terms of this Agreement, the Trustee will act honestly and in
good faith with a view to the best interests of the Warrantholders and
will exercise that degree of care, diligence and skill that a reasonably
prudent trustee would exercise in comparable circumstances. In the
absence of negligence or fraud, the Company shall indemnify and save
harmless the Trustee from all loss, costs or damages it may suffer in
administering the trusts of this Agreement. No provision of this
Agreement shall be construed to relieve the Trustee from liability for
its own negligent action, its own negligent failure to act, or its own
negligence or fraud;
(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 under this Agreement will be conditional
upon the Warrantholders furnishing, when required by notice in writing
by the Trustee, sufficient funds to commence or continue the act, action
or proceeding and indemnity reasonably satisfactory to the Trustee to
protect and hold harmless the Trustee against the costs, charges and
expenses and liabilities to be incurred thereby and any loss and damage
it may suffer by reason thereof. None of the provisions contained in
this Agreement will require the Trustee to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers unless
indemnified and funded as required in this subsection 12.2(b);
(c) The Trustee may, before commencing action or proceeding, or at any
time during the continuance thereof, require the Warrantholders at whose
instance it is acting to deposit with the Trustee the Warrant
Certificates held by them, for which Warrant Certificates the Trustee
will issue receipts; and
(d) Every provision of this Agreement that by its terms relieves the
Trustee of liability or entitles it to rely upon any evidence submitted
to it is subject to the provisions of the Applicable Legislation, of
this section 12.2 and of section 12.4.
12.3 Evidence, Experts and Advisers
(a) In addition to the reports, certificates, opinions and other
evidence required by this Agreement, the Company will furnish to the
Trustee such additional evidence of compliance with any provision of
this Agreement, and in such form, as may be prescribed by Applicable
Legislation or as the Trustee may reasonably require by written notice
to the Company.
(b) In the exercise of its rights and duties, the Trustee may, if it
is acting in good faith, rely as to the truth of the statements and the
accuracy of the opinions expressed therein, upon statutory declarations,
opinions, reports, certificates or other evidence furnished to the
Trustee pursuant to any provision of this Agreement or of Applicable
Legislation or pursuant to a request of the Trustee, provided that the
Trustee examines the evidence and determines that the evidence complies
with the applicable requirements of this Agreement.
(c) Whenever Applicable Legislation requires that evidence referred to
in subsection 12.3(a) be in the form of a statutory declaration, the
Trustee may accept a statutory declaration in lieu of a certificate of
the Company required by any provision of this Agreement. Any such
statutory declaration may be made by one or more of the officers of the
Company.
(d) The Trustee may employ or retain such counsel, accountants,
engineers, appraisers, or other experts or advisers as it may reasonably
require for the purpose of discharging its duties under this Agreement
and may pay reasonable remuneration for all services so performed by any
of them, without taxation of costs of any counsel, and will not be
responsible for any misconduct on the part of any of them.
(e) The Trustee may, as a condition precedent to any action to be
taken by it under this Agreement, require such opinions, statutory
declarations, reports, certificates or other evidence as it, acting
reasonably, considers necessary or advisable in the circumstances.
(f) Proof of the execution of an instrument in writing, including a
Warrantholder's 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 acknowledges to the execution
thereof, or by an affidavit of a witness to such execution or in any
other manner which the Trustee may consider adequate.
12.4 Securities, Documents and Monies Held by Trustee
Any securities, documents of title or other instruments that may at any
time be held by the Trustee subject to the trusts hereof may be placed
in the deposit vaults of the Trustee or of any of the Canadian Imperial
Bank of Commerce, Bank of Montreal, Bank of Nova Scotia, The
Toronto-Dominion Bank, the Royal Bank of Canada and the Hongkong Bank of
Canada or deposited for safekeeping with any of those Canadian chartered
banks. Unless otherwise expressly provided in this Agreement, any monies
held pending the application or withdrawal thereof under any provision
of this Agreement, may be deposited in the name of the Trustee in any of
the foregoing Canadian chartered banks at the rate of interest then
current on similar deposits or, with the consent of the Company may be
(i) deposited in the deposit department of the Trustee or any other loan
or trust company authorized to accept deposits under the laws of Canada
or a province thereof whose short term debt obligations or deposits have
a rating of at least R1 as rated by Dominion Bond Rating Service, or
(ii) invested in securities issued or guaranteed by the Government of
Canada or a province thereof or in obligations, maturing not more than
one year from the date of investment, of or guaranteed by any of the
foregoing Canadian chartered banks or loan or trust companies. All
interest or other income received by the Trustee in respect of such
deposits and investments will belong to the Company.
12.5 Action by Trustee to Protect Interests
The Trustee will 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 holders of
Unit Warrants.
12.6 Trustee not Required to Give Security
The Trustee will not be required to give any bond or security in respect
of the execution of the trusts and powers of this Agreement or otherwise
in respect of the premises.
12.7 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 will not be liable for or by reason of any
representations, statements of fact or recitals in this Agreement or in
the Unit Warrants (except the representation contained in section 12.9
or in the certificate of the Trustee on the Unit Warrants) or required
to verify the same, but all those statements or recitals are and will be
deemed to be made by the Company;
(b) nothing in this Agreement will impose any obligation on the
Trustee to see to or to require evidence of the registration (or filing
or renewal thereof) of this Agreement or any instrument ancillary or
supplemental to this Agreement;
(c) the Trustee will not be bound to give notice to any person or
persons of the execution of this Agreement;
(d) the Trustee shall not incur any liability or responsibility
whatever or be in any way responsible for the consequence of any breach
on the part of the Company of any of the covenants herein contained or
of any acts of any directors, officers, employees, agents or servants of
the Company; and
(e) 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 it shall have been required to do so 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 Agreement 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.
12.8 Replacement of Trustee
(a) The Trustee may resign its trust and be discharged from all
further duties and liabilities under this Agreement by giving to the
Company not less than 90 days' notice in writing or such shorter notice
as the Company may accept as sufficient. The Warrantholders by Special
Resolution will have power at any time to remove the Trustee and to
appoint a new Trustee. In the event of the Trustee resigning or being
removed as pursuant to this subsection 12.8(a) or being dissolved,
becoming bankrupt, going into liquidation or otherwise becoming
incapable of acting under this Agreement, the Company will forthwith
appoint a new Trustee unless a new Trustee has already been appointed by
the Warrantholders; failing that appointment by the Company the retiring
Trustee or any Warrantholder may apply to a Justice of the Supreme Court
of British Columbia, on such notice as the Justice may direct, for the
appointment of a new Trustee; but any new Trustee so appointed the
Company or by the Court will be subject to removal as aforesaid by the
Warrantholders. Any new Trustee appointed under any provision of this
section 12.8 will be a corporation authorized to carry on the business
of a trust company in the Province of British Columbia and, if required
by the Applicable Legislation of any other Province, in that other
Province. On any appointment the new Trustee will be vested with the
same powers, rights, duties and responsibilities as if it had been
originally named in this Agreement as Trustee without any further
assurance, conveyance, act or deed; but there will be immediately
executed, at the expense of the Company, all such conveyances or other
instruments as may, in the opinion of counsel, be necessary or advisable
for the purpose of assuring the same of the new Trustee.
(b) Upon the appointment of a new Trustee, the Company will promptly
give notice to the Warrantholders of the new Trustee.
(c) Any corporation into or with which the Trustee may be merged or
consolidated or amalgamated, or any corporation succeeding to the trust
business of the Trustee will be the successor to the Trustee under this
Agreement without any further act on its part or any of the parties
hereto provided that the corporation would be eligible for appointment
as a new Trustee under subsection 12.8(a).
(d) Any Unit Warrants certified but not delivered by a predecessor
Trustee may be certified by the new or successor Trustee in the name of
the predecessor or new or successor Trustee.
12.9 Conflict of Interest
(a) The Trustee represents to the Company that at the time of the
execution and delivery of this Agreement no material conflict of
interest exists in the Trustee's role as a fiduciary under this
Agreement and agrees that in the event of a material conflict of
interest it will, within 90 days after ascertaining that it has a
material conflict of interest, either eliminate the same or resign its
trust under this Agreement to a successor trustee approved by the
Company and meeting the requirements set forth in section 12.8.
Notwithstanding the foregoing provisions of this section 12.9(a), if any
such material conflict of interest exists or hereafter shall exist, the
validity and enforceability of this Agreement and the Warrant
Certificate shall not be affected in any manner whatsoever by reason
thereof.
(b) Subject to subsection 12.9(a), the Trustee, in its personal or any
other capacity may buy, lend upon and deal in securities of the Company,
may act as registrar and transfer agent for the Common Shares and
trustee for the Special Warrants under the Special Warrant Agreement,
and generally may contract and enter into financial transactions with
the Company or any subsidiary of the Company, all without being liable
to account for any profit made thereby.
12.10Acceptance of Trust
The Trustee hereby accepts the trusts declared and provided for in this
Agreement, agrees to perform the same upon the terms and conditions set
out in this Agreement and agrees to hold all rights, interests and
benefits contained in this Agreement for and on behalf of those persons
who become holders of Unit Warrants from time to time issued pursuant to
this Agreement.
12.11 Indemnity
Without limiting any protection or indemnity of the Trustee under any
other provisions hereof, or otherwise at law, the Company hereby agrees
to indemnify and hold harmless the Trustee from and against any and all
liabilities, losses, damages, penalties, claims, actions, suits, costs,
expenses and disbursements, including reasonable legal or advisor fees
and disbursements, of whatever kind and nature which may at any time be
imposed on, incurred by or asserted against the Trustee in connection
with the performance of its duties and obligations hereunder, other than
such liabilities, losses, damages, penalties, claims, actions, suits,
costs, expenses and disbursements arising by reason of the negligence or
fraud of the Trustee. This provision shall survive the resignation or
removal of the Trustee, or the termination of the Agreement. The
Trustee shall not be under any obligation to prosecute or to defend any
action or suit in respect of the relationship which, in the opinion of
its counsel, may involve it in expense or liability, unless the Company
shall, so often as required, furnish the Trustee with satisfactory
indemnity and funding against such expense or liability.
12.12 Survival on Termination
The indemnity of the Trustee provided for herein shall survive the
termination of this Agreement and the rights and obligations of the
parties hereunder.
12.13 Unit Warrants Owned by the Company or its Subsidiaries
For the purpose of disregarding any Unit Warrants owned legally or
beneficially by the Company or any Subsidiary of the Company in Section
7.4, the Company shall provide to the Trustee, from time to time, a
certificate of the Company setting forth as at the date of such
certificate:
(a) the names (other than the name of the Company) of the registered
holders of Unit Warrants which, to the knowledge of the Company, are
owned by or held for the account of the Company or any Subsidiary of the
Company; and
(b) the number of Unit Warrants owned legally or beneficially by the
Company or any Subsidiary of the Company,
and the Trustee, in making the computations in Section 7.4, shall be
entitled to rely on such certificate without any additional evidence.
ARTICLE 13
GENERAL
13.1 Notice to Company and Trustee
(a) Unless otherwise expressly provided in this Agreement, any notice
to be given under this Agreement to the Company or the Trustee will be
deemed to be validly given if delivered or if sent by registered letter,
postage prepaid or if transmitted by fax:
(i) if to the Company:
▇▇▇▇▇▇.▇▇, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Maitland & Company
Barristers and Solicitors
▇▇▇ - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
Attention: ristopher ▇. ▇▇▇▇▇▇
Telephone: (604) 681 -7474
Fax: (604) 681 -3896
(ii) if to the Trustee:
Pacific Corporate Trust Company
▇▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and any notice given in accordance with the foregoing will be deemed to
have been received on the date of delivery or, if mailed, on the fifth
business day following the day of the mailing of the notice or, if
transmitted by fax, at the time of transmission.
(b) The Company or the Trustee, as the case may be, may from time to
time notify the other, in the manner provided above, of a change of
address which, from the effective date of the notice and until changed
by like notice, will be the address of the Company or the Trustee, as
the case may be, for all purposes of this Agreement.
(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 Company under this Agreement could reasonably be
considered unlikely to reach its destination, the notice will be valid
and effective only if it is delivered to an officer of the party to
which it is addressed or if it is delivered to that party at the
appropriate address provided above by cable, telegram, telex, fax or
other means of prepaid, transmitted, or recorded communication and any
notice delivered in accordance with the foregoing will be deemed to have
been received on the date of delivery to the officer or if delivered by
cable, telegram, telex, fax or other means of prepaid, transmitted,
recorded communication, on the first business day following the date of
the sending of the notice by the person giving the notice.
13.2 Notice to Warrantholders
(a) Unless otherwise expressly provided in this Agreement, any notice
to be given under this Agreement to Warrantholders will be deemed to be
validly given if the notice is sent by prepaid mail, addressed to the
holder or delivered by hand or transmitted by fax (or so mailed to
certain holders and so delivered to other holders and so faxed to other
holders) at their respective addresses and fax number appearing on the
register maintained by the Trustee and if in the case of joint holders
of any Unit Warrants more than one address or fax number appears on the
register in respect of that joint holding, the notice will be addressed
or delivered, as the case may be, only to the first address or fax
number, as the case may be so appearing. The Trustee will give, in the
same manner as for Warrantholders set out above, a copy of each such
notice to Maitland & Company, Barristers & Solicitors, 700 - ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ (fax no.: (▇▇▇) ▇▇▇-▇▇▇▇)
(Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇). Any notice so given will be deemed
to have been given and received on the day of delivery by hand or fax,
or on the next business day if delivered by mail.
(b) If, by reason of strike, lock-out or other work stoppage, actual
or threatened, involving postal employees, any notice to be given to the
Warrantholders could reasonably be considered unlikely to reach its
destination, the notice may be published or distributed once in The
Globe and Mail newspaper, or, in the event of a disruption in the
circulation of that newspaper, once in the National Post provided that
in the case of a notice convening a meeting of the holders of Unit
Warrants, the Trustee may require such additional publications of that
notice, in the same or in other cities or both, as it may deem necessary
for the reasonable protection of the holders of Unit Warrants or to
comply with any applicable requirement of law or any stock exchange. Any
notice so given will be deemed to have been given on the day on which it
has been published in all of the cities in which publication was
required (or first published in a city if more than one publication in
that city is required). In determining, under any provision of this
Agreement, the date when notice of any meeting or other event must be
given, the date of giving notice will be included and the date of the
meeting or other event will be excluded.
13.3 Satisfaction and Discharge of Agreement
Upon the date which there shall have been delivered to the Trustee for
exercise all Unit Warrant Certificates certified hereunder and if all
certificates representing Warrant Shares will have been delivered to
Warrantholders to the full extent of the rights attached to all Unit
Warrants theretofore certified under this Agreement and the monies to be
paid under this Agreement have been paid, this Agreement will cease to
be of further effect and the Trustee, on demand of and at the cost and
expense of the Company and upon delivery to the Trustee of a certificate
of the Company stating that all conditions precedent to the satisfaction
and discharge of this Agreement have been complied with and upon payment
to the Trustee of the fees and other remuneration payable to the
Trustee, the parties hereto will execute proper instruments
acknowledging satisfaction of and discharging this Agreement.
Notwithstanding the foregoing, the indemnities provided to the Trustee
by the Company shall remain in full force and effect and survive the
termination of this Agreement.
13.4 Sole Benefit of Parties and Warrantholders
Nothing in this Agreement or in the Unit Warrants, expressed or implied,
will give or be construed to give to any person other than the parties
hereto and the Warrantholders any legal or equitable right, remedy or
claim under this Agreement, or under any covenant or provision therein
contained, all such covenants and provisions being for the sole benefit
of the parties hereto and the Warrantholders.
13.5 Counterparts and Formal Date
This Agreement may be simultaneously executed in several counterparts,
each of which when so executed will be deemed to be an original and the
counterparts together will constitute one and the same instrument and
notwithstanding their date of execution will be deemed to bear the date
as of April 27, 2000.
13.6 Successors
This Agreement shall enure to the benefit of, and be binding upon, the
Company and the Trustee and their respective successors (including
successors by reason of amalgamation, merger, business combination or
arrangement) and legal representatives and nothing expresses or
mentioned in this Agreement is intended and shall be construed to give
any other person any legal or equitable right, remedy or claim under or
in respect of this Agreement, or any provision herein contained, this
Agreement and all conditions and provisions hereof being intended to be
and being for the sole and exclusive benefit of such persons and for the
benefit of no other person.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed
by their proper officers in that behalf.
▇▇▇▇▇▇.▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
PACIFIC CORPORATE TRUST COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, President
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Vice President